Georgia Capital PLC · LSE:CGEO
Georgia Capital — H1 2021 Earnings Presentation
47 slides from Georgia Capital's earnings presentation, Aug 10, 2021
Slide 1: 2Q21 & 1H21 Results Call Presentation
2Q21 & 1H21 RESULTS CALL PRESENTATION 10 August 2021
Slide 2: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 RECENT DEVELOPMENTS 03 2Q21 & 1H21 RESULTS OVERVIEW 04 2Q21 & 1H21 NAV DEVELOPMENT 05 2Q21 & 1H21 VALUATION OVERVIEW 06 WRAP-UP 07 ANNEX 2
Slide 3: COVID-19 Statistics
COVID-19 STATISTICS COVID-19 CASES: DYNAMICS IN GEORGIA 15.6% OF THE TOTAL ADULT POPULATION HAS RECEIVED AT LEAST ONE ECONOMY NEARINGWHILE DOSE OF VACCINE, FULL REOPENING 6.9% IS FULLY VACCINATED AS OF 9 AUGUST 2021 500 6 Total cases (LHS) Daily cases (RHS) 450 5 16% Pfizer-BioNTech 400 350 29% Astr
Slide 4: Real GDP increased by 29.8% y-o-y in 2Q21
REAL GDP INCREASED BY 29.8% Y-O-Y IN 2Q21 Real GDP y-o-y change 2021 REAL GDP UP 29.8% Y-O-Y IN 2Q21 (UP 13% Real GDP change vs 2019 45% COMPARED TO 2Q19) AND UP 12.7% Y-O-Y IN 1H21 (UP 5.7% COMPARED TO 1H19) KEY DRIVERS 26% 21% ➢ Expansionary fiscal policy boosting domestic demand and 19% contribut
Slide 5: Robust growth of FX inflows supporting economic activity and GEL performance
ROBUST GROWTH OF FX INFLOWS SUPPORTING ECONOMIC ACTIVITY AND GEL PERFORMANCE EXTERNAL INFLOWS SUPPORTED BY REMITTANCES AND MERCHANDISE TOURISM REVENUES SHOWING FIRST SIGNS OF RECOVERY EXPORTS 2021 2021 Tourism revenue (USD million) Remittances, USD Million Remittances, y/y Change vs 2019 193 161 74
Slide 6: Georgian Lari - top performer in the region
GEORGIAN LARI - TOP PERFORMER IN THE REGION GEL BEGAN STRENGTHENING IN MID-MAY AND APPRECIATED BY 5.5% COMPARED TO THE BEGINNING OF THE YEAR AND BY 11.3% COMPARED TO THE YEAR TO DATE LOW 150 GEL APPRECIATION DRIVERS 140 130 ➢ Record high remittance inflows, increasing by 41% y-o-y in 120 1H21; 110 ➢
Slide 7: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 RECENT DEVELOPMENTS 03 2Q21 & 1H21 RESULTS OVERVIEW 04 2Q21 & 1H21 NAV DEVELOPMENT 05 2Q21 & 1H21 VALUATION OVERVIEW 06 WRAP-UP 07 ANNEX 7
Slide 8: Sale of US$ 35 million commercial real estate assets and land plot
SALE OF US$ 35 MILLION COMMERCIAL REAL ESTATE ASSETS AND LAND PLOT DURING JUNE-AUGUST 2021 TRANSACTION DETAILS - US$ 4.7 MILLION PREMIUM TO 31 MARCH 2021 BOOK VALUES STRONG PROGRESS TOWARDS Premium to gross value OUR STRATEGIC PRIORITIES 15.4% 34.8 30.1 Premium to net asset value US Dollar Sold asse
Slide 9: Commencement of US$ 10 million share buyback and cancellation programme
COMMENCEMENT OF US$ 10 MILLION SHARE BUYBACK AND CANCELLATION PROGRAMME ATTRACTIVE OPPORTUNITY FOR DELIVERING GREATER RETURNS GCAP SHARE PRICE IS AT CORE OF OUR DECISION MAKING VIS-À-VIS INVESTMENTS Average discount % to NAV: 25% COVID-19 period TRANSACTION RATIONALE ▪ Outstanding performance of our
Slide 10: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 RECENT DEVELOPMENTS 03 2Q21 & 1H21 RESULTS OVERVIEW 04 2Q21 & 1H21 NAV DEVELOPMENT 05 2Q21 & 1H21 VALUATION OVERVIEW 06 WRAP-UP 07 ANNEX 10
Slide 11: Aggregated revenue development across private portfolio
AGGREGATED REVENUE DEVELOPMENT ACROSS PRIVATE PORTFOLIO +37.1% AGGREGATED REVENUE +26.5% UP 45.3% Y-O-Y IN 917 2Q21 AND UP 42.2% FROM 2Q19 +42.2% 150 724 37 +45.3% 669 GEL MILLION 115 502 77 ▪ 1H21 aggregated 2 33 revenue up 26.5% y-o-y 86 and up 37.1% from 1H19 353 345 23 48 64 2 18 302 263 393 590
Slide 12: Aggregated EBITDA development across private portfolio
AGGREGATED EBITDA DEVELOPMENT ACROSS PRIVATE PORTFOLIO +63.8% AGGREGATED EBITDA +58.4% UP 89.1% Y-O-Y IN 2Q21 189 AND UP 84.1% FROM +84.1% 20 2Q19 21 +89.1% GEL MILLION 115 119 ▪ 1H21 aggregated 114 1 3 EBITDA up 58.4% y-o-y 13 19 and up 63.8% from 1H19 15 62 60 2 5 12 62 44 86 119 97 148 (2) (5) 2Q
Slide 13: Operating performance: Healthcare services
OPERATING PERFORMANCE DEVELOPMENT ACROSS PRIVATE LARGE PORTFOLIO COMPANIES REVENUE DEVELOPMENT EBITDA1 DEVELOPMENT +29.2% HEALTHCARE SERVICES +48.9% 191 +32.5% KEY DRIVERS +37.8% GEL MILLION ➢ The number of admissions up 148 +120.5% 121.4% y-o-y at clinics and up +82.0% +42.9% 122.0% y-o-y at hospit
Slide 14: Operating performance: Retail (pharmacy)
OPERATING PERFORMANCE DEVELOPMENT ACROSS PRIVATE LARGE PORTFOLIO COMPANIES (CONT’D) REVENUE DEVELOPMENT EBITDA1 DEVELOPMENT +26.3% +16.9% RETAIL (PHARMACY) 373 +7.5% KEY DRIVERS 319 +33.2% 295 GEL MILLION -1.2% ➢ Scheduled expansion of the retail +38.4% (pharmacy) chain, rebounding +31.3% demand for
Slide 15: Operating performance: Water utility
OPERATING PERFORMANCE DEVELOPMENT ACROSS PRIVATE LARGE PORTFOLIO COMPANIES (CONT’D) REVENUE DEVELOPMENT EBITDA DEVELOPMENT +23.4% +51.3% WATER UTILITY 92 9 +30.3% +39.3% 75 KEY DRIVERS 8 +90.0% +82.0% 61 GEL MILLION +55.4% ➢ 2Q21 water supply revenue up 54 63.7% y-o-y, reflecting 24.6% y-o-y 2 56 in
Slide 16: Operating performance: Insurance
OPERATING PERFORMANCE DEVELOPMENT ACROSS PRIVATE LARGE PORTFOLIO COMPANIES (CONT’D) GROSS PREMIUMS WRITTEN NET INCOME DEVELOPMENT +7.3% INSURANCE +17.5% 117 109 +0.1% KEY DRIVERS 99 -9.5% GEL MILLION +23.9% 46 ➢ Net premiums earned up 14.9% y-o- -13.3% 10.8 y in 2Q21, reflecting rebounding 56 43 9.7
Slide 17: Operating performance: Renewable energy
OPERATING PERFORMANCE DEVELOPMENT ACROSS PRIVATE INVESTMENT STAGE PORTFOLIO COMPANIES REVENUE DEVELOPMENT EBITDA DEVELOPMENT +8.2% RENEWABLE ENERGY 20 19 +13.5% +5.5% 3 6 KEY DRIVERS +17.1% 14 GEL MILLION 4 15 ➢ Resilient results despite the ongoing 12 14 pandemic, as the revenue from the long-term
Slide 18: Operating performance: Education
OPERATING PERFORMANCE DEVELOPMENT ACROSS PRIVATE INVESTMENT STAGE PORTFOLIO COMPANIES (CONT’D) REVENUE DEVELOPMENT EBITDA DEVELOPMENT +16.4% EDUCATION 16.2 KEY DRIVERS GEL MILLION 14.0 +26.0% ➢ A 9.5% y-o-y increase in the number +40.6% of academic days in 2Q21, reflecting the modification of the ac
Slide 19: Aggregated cash balance & net operating cash flow across private portfolio
AGGREGATED CASH BALANCE & NET OPERATING CASH FLOW DEVELOPMENT ACROSS PRIVATE PORTFOLIO TOTAL AGGREGATED NET OPERATING CASH FLOW TOTAL AGGREGATED CASH BALANCE OF PRIVATE BUSINESSES (GEL MILLION) (GEL MILLION) +74% +22.7% 31-Dec-19 183 178 31-Dec-20 392 -37.3% +47.2% -19% -11.2% 112 31-Mar-21 347 -8%
Slide 20: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 RECENT DEVELOPMENTS 03 2Q21 & 1H21 RESULTS OVERVIEW 04 2Q21 & 1H21 NAV DEVELOPMENT 05 2Q21 & 1H21 VALUATION OVERVIEW 06 WRAP-UP 07 ANNEX 20
Slide 21: NAV per share (GEL) development overview
NAV PER SHARE (GEL) DEVELOPMENT OVERVIEW NAV PER SHARE UP 16.4% TO GEL 54.48 IN 2Q21 (UP 22.0% TO GEL CONTROLLABLE (PRIVATE) NAV PER SHARE UP 15.8% TO 57.09 AS AT 6-AUG-21) GEL 44.83 IN 2Q21 % Change q-o-q -35.6% +4.9% +19.5% +27.2% -2.7% % Change q-o-q -25.0% -0.5% +69.3% +22.1% -1.6% +22.0% +16.4%
Slide 22: NAV per share (GEL) movement in 2Q21
NAV PER SHARE (GEL) MOVEMENT IN 2Q21 NAV PER SHARE CHANGE % +3.3% +10.1% +1.7% +0.3% +0.1% -0.4% +16.4% +5.6% +22.0% +1.4% NAV PER SHARE (GEL) UP 16.4% IN 2Q21 Externally valued • NAV per share (GBP) up 24.9% in 2Q21 • 16.4% growth in 2Q21 NAV per share (GEL) mainly reflects value creation across ou
Slide 23: NAV per share (GEL) movement in 1H21
NAV PER SHARE (GEL) MOVEMENT IN 1H21 NAV PER SHARE CHANGE % +2.0% +10.4% +1.8% +1.2% +0.1% -0.8% -1.4% +13.2% +5.4% +18.6% NAV PER SHARE (GEL) UP 13.2% IN 1H21 Externally valued • NAV per share (GBP) up 15.2% in 1H21 • 13.2% growth in 2Q21 NAV per share (GEL) on the back of strong value creation acr
Slide 24: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 RECENT DEVELOPMENTS 03 2Q21 & 1H21 RESULTS OVERVIEW 04 2Q21 & 1H21 NAV DEVELOPMENT 05 2Q21 & 1H21 VALUATION OVERVIEW 06 WRAP-UP 07 ANNEX 24
Slide 25: Portfolio value development in 2Q21
PORTFOLIO VALUE DEVELOPMENT IN 2Q21 PORTFOLIO VALUE UP 11.1% TO GEL 3.25 BILLION IN 2Q21 % SHARE OF LISTED ASSETS 17.3% 17.7% 1% -1% 5% 6% (3) 15 6 20 28% 91 Externally valued 14% 45 TOTAL PORTFOLIO GEL MILLION VALUE GROWTH GEL 325 MILLION 70 81 22% 25% Water Utility Healthcare Services Bank of Geor
Slide 26: Portfolio value development in 1H21
PORTFOLIO VALUE DEVELOPMENT IN 1H21 PORTFOLIO VALUE UP 11.7% TO GEL 3.25 BILLION IN 1H21 % SHARE OF LISTED ASSETS 3% 2% 18.3% 17.7% 8% 11 8 26 8% 34% Externally valued 28 114 TOTAL PORTFOLIO VALUE GROWTH GEL MILLION 9% GEL 339 31 MILLION 44 13% 77 23% Healthcare Services Water Utility Bank of Georgi
Slide 27: Portfolio value as of 30-Jun-21
PORTFOLIO VALUE AS OF 30-JUN-21 % SHARE IN TOTAL PORTFOLIO VALUE: 18% 21% 18% 17% 8% 7% 4% 7% 82% OF OUR PORTFOLIO IS MULTIPLE: BGEO 10.6X 9.3X 9.3X 12.0X – 12.3X 10.3X 12.5X VALUED EXTERNALLY1 PRICE ON LSE GBP 13.44 LTM EV/EBITDA2 LTM EV/EBITDA2 LTM EV/EBITDA3 LTM P/E4 EV/EBITDA5 LTM EV/EBITDA 686
Slide 28: Healthcare services business valuation overview
Externally valued1 HEALTHCARE SERVICES BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 2Q21 (GEL MILLION) IMPLIED LTM EV/EBITDA 2 Change q-o-q +7.3% -6.4% +2.8% +13.3% DEVELOPMENT (incl. IFRS 16) 12.5x 10.6x 31-Mar-21 30-Jun-21 VALUATION HIGHLIGHTS GEL million, unless noted 30-Jun-21 31-Mar
Slide 29: Retail (pharmacy) business valuation overview
Externally valued1 RETAIL (PHARMACY) BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 2Q21 IMPLIED LTM EV/EBITDA (GEL MILLION) DEVELOPMENT Change q-o-q -1.4% +1.5% +8.4% (incl. IFRS 16) +5.4% 9.5x 9.3x 31-Mar-21 30-Jun-21 VALUATION HIGHLIGHTS GEL million, unless noted 30-Jun-21 31-Mar-21 Cha
Slide 30: Water utility business valuation overview
Externally valued1 WATER UTILITY BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 2Q21 (GEL MILLION) IMPLIED LTM EV/EBITDA Change q-o-q +6.7% -5.6% +20.0% MULTIPLE DEVELOPMENT 9.6x 9.3x 31-Mar-21 30-Jun-21 VALUATION HIGHLIGHTS GEL million, unless noted otherwise 30-Jun-21 31-Mar-21 Change 31
Slide 31: P&C insurance business valuation overview
Externally valued1 P&C INSURANCE BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 2Q21 IMPLIED LTM P/E (GEL MILLION) MULTIPLE DEVELOPMENT Change q-o-q NMF NMF NMF +0.85% 11.4x 12.0x 31-Mar-21 30-Jun-21 VALUATION HIGHLIGHTS GEL million, unless noted otherwise 30-Jun-21 31-Mar-21 Change 31-Dec
Slide 32: Medical insurance business valuation overview
Externally valued1 MEDICAL INSURANCE BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 2Q21 IMPLIED LTM P/E MULTIPLE (GEL MILLION) DEVELOPMENT Change q-o-q -7.1% -9.2% -6.7% 12.3x 9.8x 31-Mar-21 30-Jun-21 VALUATION HIGHLIGHTS GEL million, unless noted otherwise 30-Jun-21 31-Mar-21 Change 31-D
Slide 33: Renewable energy business valuation overview
Internally valued RENEWABLE ENERGY BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 2Q21 EQUITY FAIR VALUE COMPOSITION (GEL MILLION) AT 30-JUN-21 Change q-o-q -0.2% -5.1% +7.1% (GEL MILLION) 41 Total value 221 180 Operational assets Pipeline projects VALUATION HIGHLIGHTS GEL million, unless
Slide 34: Education business valuation overview
Internally valued EDUCATION BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 2Q21 LTM EV/EBITDA DEVELOPMENT (GEL MILLION) Change q-o-q +16.9% +14.7% -18.1% +21.3% +19.8% 12.5x 12.5x 2 31-Mar-21 30-Jun-21 VALUATION HIGHLIGHTS GEL million, unless noted otherwise 30-Jun-21 31-Mar-21 Change 31-D
Slide 35: Georgia Capital leverage & liquidity profile
GEORGIA CAPITAL LEVERAGE & LIQUIDITY PROFILE LTV RATIO1 IS ON TRACK TO THE TARGETED THRESHOLD OF <30% US$ 140 MILLION LIQUID FUNDS AS OF 30-JUN-21 44.1% 41.9% Pre-COVID average: 22% Cash 33.5% 50 30% 27.9% 28.9% 31.2% TOTAL 27.4% Marketable 60 20.0% 17.6% 19.2% 25.8% 26.4% securities 140 US$ MILLION
Slide 36: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 RECENT DEVELOPMENTS 03 2Q21 & 1H21 RESULTS OVERVIEW 04 2Q21 & 1H21 NAV DEVELOPMENT 05 2Q21 & 1H21 VALUATION OVERVIEW 06 WRAP-UP 07 ANNEX 36
Slide 37: Solid performance across our private portfolio, with outlook being even stronger
SOLID PERFORMANCE ACROSS OUR PRIVATE PORTFOLIO, WITH OUTLOOK BEING EVEN STRONGER PERFORMANCE HIGHLIGHTS NAV per share (GEL) up 16.4% to GEL 54.48 in 2Q21, reflecting GEL 262 million value creation across our private portfolio and a 22.2% increase in BoG’s ✓ share price during the quarter Robust oper
Slide 38: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 RECENT DEVELOPMENTS 03 2Q21 & 1H21 RESULTS OVERVIEW 04 2Q21 & 1H21 NAV DEVELOPMENT 05 2Q21 & 1H21 VALUATION OVERVIEW 06 WRAP-UP 07 ANNEX 38
Slide 39: Other businesses
OTHER BUSINESSES OTHER PORTFOLIO PERFORMANCE HIGHLIGHTS 2Q21 1H21 EBITDA Revenue EBITDA Revenue Operational Change Change 2021 Change Change Change Change 2Q21 1H21 GEL GEL GEL GEL metrics y-o-y y-o-y TARGET million y-o-y million y-o-y million y-o-y million y-o-y Number of WINE bottles solid 2.2 +58
Slide 40: Valuation peer group
VALUATION PEER GROUP HEALTHCARE RETAIL SERVICES MEDICAL (PHARMACY) INSURANCE • Med Life S.A. | Romania • NEUCA S.A. | Poland • Powszechny Zaklad Ubezpieczen SA | Poland • EMC Instytut Medyczny SA | Poland • Sopharma Trading AD | Bulgaria • European Reliance General Insurance Company S.A. | Greece •
Slide 41: Private portfolio companies' debt maturity profile
PRIVATE PORTFOLIO COMPANIES’ DEBT MATURITY PROFILE GROSS DEBT MATURITY AS OF 30 JUNE 2021 (GEL MILLION) 2021 2022 2023 2024+ Total Large portfolio companies 48.4 204.7 38.1 577.2 868.4 Healthcare Services 40.9 203.4 37.8 85.6 367.7 Retail (Pharmacy) 7.5 1.2 - - 8.7 Water Utility - 0.1 0.3 491.6 492.
Slide 42: NAV statement | 2Q21
NAV STATEMENT | 2Q21 1.Value 2a. 3.Operating 4. Liquidity 2c. GEL thousands unless otherwise noted 31-Mar-21 2b. Buybacks Management/ FX / 30-Jun-21 Change % Creation Investments Dividends Expenses Other Listed Portfolio Companies BoG 505,106 70,288 - - - - - 575,394 13.9% Listed Portfolio Value 505
Slide 43: NAV statement | 1H21
NAV STATEMENT | 1H21 1.Value 2a. 3.Operating 4. Liquidity GEL thousands unless otherwise noted 31-Dec-20 2b. Buybacks 2c. Dividends 30-Jun-21 Change % Creation Investments Expenses Management/ FX / Other Listed Portfolio Companies BoG1 531,558 43,836 - - - - - 575,394 8.2% Listed Portfolio Value 531
Slide 44: Value creation in private portfolio | 2Q21
VALUE CREATION IN PRIVATE PORTFOLIO | 2Q21 Operating Multiple Change Portfolio Businesses Greenfields Value Creation in 2Q21 331.9 Performance and FX GEL thousands (1) (2) (3) (1)+(2)+(3) BoG 70,288 Total Listed Portfolio Companies 70,288 Large Portfolio Companies 321,346 - (102,570) 218,776 Healthc
Slide 45: Value creation in private portfolio | 1H21
VALUE CREATION IN PRIVATE PORTFOLIO | 1H21 Operating Multiple Change Portfolio Businesses Greenfields Value Creation in 1H21 340.4 Performance and FX GEL thousands (1) (2) (3) (1)+(2)+(3) BoG 43,836 Total Listed Portfolio Companies 43,836 Large Portfolio Companies 332,823 - (102,733) 230,090 Healthc
Slide 46: Government measures
GOVERNMENT MEASURES ACCUMULATED BUFFERS AND INTERNATIONAL SUPPORT HAVE ALLOWED THE GOVERNMENT TO LAUNCH SIZEABLE MEASURES US$ 3 billion funding facility Economic Plan – US$ 3 billion (predominantly loans) from international Budget – GEL 3.5 billion (1st stage) Budget – GEL 1.1 billion (2nd stage) do
Slide 47: Forward looking statements
FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements, including, but not limited to, statements concerning expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or int