Georgia Capital PLC · LSE:CGEO
Georgia Capital — H1 2024 Earnings Presentation
49 slides from Georgia Capital's earnings presentation, Aug 13, 2024
Slide 1: 2Q24 & 1H24 Results Call Presentation
2Q24 & 1H24 RESULTS CALL PRESENTATION 13 AUGUST 2024
Slide 2: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 2Q24 & 1H24 02 MACROECONOMIC UPDATE | GEORGIA 03 2Q24 & 1H24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 2
Slide 3: Key Developments
1 NAV per share (GEL) down 12.8% in 2Q24, reflecting the impact on portfolio asset valuations from market movements resulting from the recent volatility in the regional geopolitical environment 2 Strong performance of our private portfolio companies, aggregated revenue and EBITDA up 7.3% and 17.5% y
Slide 4: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 2Q24 & 1H24 NAV PER SHARE OVERVIEW AGGREGATED PORTFOLIO RESULTS OVERVIEW UPDATE ON DELEVERAGING 02 MACROECONOMIC UPDATE | GEORGIA 03 2Q24 & 1H24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 4
Slide 5: NAV per share (GEL) movement in 2Q24
NAV PER SHARE (GEL) MOVEMENT IN 2Q24 PRIVATE PORTFOLIO NAV PER SHARE (GEL) -7.1% +2.3% -7.5% -0.3% -1.5% +1.3% -12.8% DOWN 12.8% Q-O-Q IN 2Q24 ▪ The decrease in NAV per share in 2Q24, reflects the impact on portfolio asset valuations from market movements resulting from the recent volatility in the
Slide 6: Strong NAV per share growth
STRONG NAV PER SHARE GROWTH STRONG NAV PER SHARE (GEL) GROWTH NAV PER SHARE (GEL) DEVELOPMENT OVERVIEW WITH 11.0% CAGR SINCE DEC-18 +11.0% CAGR IN US$ AND GBP TERMS, NAV PER SHARE CAGR STANDS AT 10.0% AND 10.1%, RESPECTIVELY -12.8% 90.04 82.94 78.55 65.56 63.03 46.84 48.12 44.32 Dec-18 Dec-19 Dec-20
Slide 7: At least GEL 300 million earmarked for buybacks and dividends through 2026
AT LEAST GEL 300 MILLION (US$ 110 MILLION) EARMARKED FOR SHARE BUYBACKS AND DIVIDENDS THROUGH THE END OF 2026 AS PART OF THE US$ 110 MILLION CAPITAL RETURN PACKAGE, US$ 40 MILLION HAS ALREADY IN MAY-24, GCAP ANNOUNCED ITS BEEN ALLOCATED TO SHARE BUYBACKS BOARD’S INTENTION TO MAKE AVAILABLE AT LEAST
Slide 8: Share buyback and cancellation programme
SHARE BUYBACK AND CANCELLATION PROGRAMME DEVELOPMENT OF GCAP’S SHARE BUYBACK AND CANCELLATION PROGRAMMES 9.2 MILLION SHARES (US$ 103.3 Number of issued shares MILLION IN VALUE) REPURCHASED 39.4 40.2 47.92 47.1 44.8 43.2 41.4 AND CANCELLED SINCE DEMERGER IN 2018, REPRESENTING 19.3%1 OF THE $103 ISSUE
Slide 9: Free cash flow development
FREE CASH FLOW DEVELOPMENT GCAP’s FREE CASH FLOW DEVELOPMENT (US$ MILLION) SIGNIFICANT INCREASE IN FREE CASH INCLUDING BUYBACK DIVIDENDS FLOW, REFLECTING ROBUST DIVIDEND INFLOWS, WELL-MANAGED OPERATING EXPENSES, AND REDUCED INTEREST EXPENSE IN LINE WITH OUR DELEVERAGING PROGRESS 48 Free cash flow is
Slide 10: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 2Q24 & 1H24 NAV PER SHARE OVERVIEW AGGREGATED PORTFOLIO RESULTS OVERVIEW UPDATE ON DELEVERAGING 02 MACROECONOMIC UPDATE | GEORGIA 03 2Q24 & 1H24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 10
Slide 11: Aggregated revenue development across private portfolio
AGGREGATED REVENUE DEVELOPMENT ACROSS PRIVATE PORTFOLIO GEL MILLION AGGREGATED REVENUE UP 6.0% Y-O-Y IN 2Q24 AND UP +7.3% 7.3% Y-O-Y IN 1H24 1,071 998 271 265 ➢ Aggregated revenue of large and investment +6.0% stage portfolio companies up 10.4% and 9.1% 94 y-o-y in 2Q24 and 1H24, respectively. 74 55
Slide 12: Aggregated EBITDA development across private portfolio
AGGREGATED EBITDA DEVELOPMENT ACROSS PRIVATE PORTFOLIO GEL MILLION +17.5% AGGREGATED EBITDA UP 17.7% Y-O-Y IN 2Q24 AND UP 148 17.5% Y-O-Y IN 1H24 126 33 14 +17.7% 25 34 82 70 18 11 20 15 44 45 87 80 2Q23 2Q24 1H23 1H24 Other portfolio companies Other portfolio companies Investment stage portfolio co
Slide 13: Aggregated cash balance & net operating cash flow development
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) +2.1x 111 +17.6% 31-Dec-23 275 +3.7x 66 52 +27.3% 31-Mar-24 254 18 30-Jun-24 323 2Q23 2Q24 1
Slide 14: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 2Q24 & 1H24 NAV PER SHARE OVERVIEW AGGREGATED PORTFOLIO RESULTS OVERVIEW UPDATE ON DELEVERAGING 02 MACROECONOMIC UPDATE | GEORGIA 03 2Q24 & 1H24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 14
Slide 15: Net Capital Commitment (NCC) overview
NET CAPITAL COMMITMENT (NCC) OVERVIEW Change Change US$ Million 30-Jun-23 31-Mar-24 30-Jun-24 (y-o-y) (q-o-q) NCC RATIO INCREASED BY 4.1 PPTS Cash and liquid funds 173.41 -85.5% 25.7 -2.4% 25.1 Q-O-Q AND BY 1.5 PPTS Y-O-Y TO Loans issued 6.7 -39.2% 3.5 14.8% 4.1 18.9% AS AT 30-JUN-24 Gross debt (304
Slide 16: NCC ratio development overview
NCC RATIO DEVELOPMENT OVERVIEW NCC AND NCC RATIO DEVELOPMENT OVERVIEW1 NCC REPRESENTS AN AGGREGATED VIEW OF ALL CONFIRMED, AGREED 385.8 AND EXPECTED CAPITAL OUTFLOWS 365.9 AT THE GCAP HOLDCO LEVEL 345.7 42.5% ▪ NCC ratio as at 12-Aug-24 improved by 3.4 ppts to 39.8% 250.1 15.5%, reflecting collectio
Slide 17: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 2Q24 & 1H24 02 MACROECONOMIC UPDATE | GEORGIA 03 2Q24 & 1H24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 17
Slide 18: Strong real GDP growth in 1H24, with inflation below target
STRONG REAL GDP GROWTH IN 1H24, WITH INFLATION BELOW TARGET GEORGIA’S ECONOMY CONTINUES TO EXPAND, WITH PRELIMINARY ECONOMIC GROWTH ANNUAL INFLATION BELOW THE 3% TARGET SINCE APRIL 2023, WITH JULY 2024 INFLATION AT 9.0% Y-O-Y IN 1H24 AT 1.8% Y-O-Y Headline Inflation Target End of Period Monetary Pol
Slide 19: Robust domestic economic activity driving higher-than-expected growth
ROBUST DOMESTIC ECONOMIC ACTIVITY IS DRIVING HIGHER–THAN–EXPECTED GROWTH LOANS GROWTH DECOMPOSITION BY SECTORS (ADJUSTED FOR FX) GENERAL GOVERNMENT FISCAL EXPENSES, GEL BLN 25% Legal Entities Households Total Loans Growth rate, % Y-o-Y Current Expenditures Capital Expenditures Total Expenditures Tot
Slide 20: Current account deficit at historically low levels
CURRENT ACCOUNT DEFICIT AT HISTORICALLY LOW LEVELS CAB NARROWED TO -5.0% OF GDP, SUPPORTED BY GROWTH IN THE TRANSFER AND SERVICES FOREIGN CURRENCY INFLOWS HAVE MODERATED BUT REMAIN ABOVE PRE-WAR LEVELS BALANCE Export of goods Money Transfers Tourism revenues Total FX Inflows Goods, net Services, net
Slide 21: Depreciation expectations fading, sovereign spread reflects volatility
WHILE DEPRECIATION EXPECTATIONS ARE FADING, THE SOVEREIGN SPREAD CONTINUES TO REFLECT INCREASED VOLATILITY IN THE REGIONAL GEOPOLITICAL ENVIRONMENT WIDENED SOVEREIGN SPREAD REFLECTS RECENT GEOPOLITICAL VOLATILITY DESPITE RECENT DEPRECIATION, THE GEL HAS SINCE RECOVERED ITS VALUE, SHOWING ONLY O.2 %
Slide 22: Macro policy stance remains appropriate
MACRO POLICY STANCE REMAINS APPROPRIATE NET NBG INTERVENTIONS ON THE FX MARKET AND OFFICIAL RESERVE ASSETS THE OPERATING BALANCE SURGES DUE TO HIGHER-THAN-EXPECTED TAX REVENUE COLLECTION Net Interventions (LHS) Reserve Assets (RHS) 8000 600 6.0 Tax Revenues Current Expenses Capital Expenses Operatin
Slide 23: Macroeconomic wrap-up
STRONG GDP PERFORMACE DESPITE UNCERTAINTIES BELOW-TARGET INFLATION ROBUST EXTERNAL BALANCE SHEET MACROECONOMIC RECENT GEL DEPRECIATION PROVED TEMPORARY WRAP-UP MACROECONOMIC POLICY FRAMEWORK REMAINS APRROPRIATE 23
Slide 24: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 2Q24 & 1H24 02 MACROECONOMIC UPDATE | GEORGIA 03 2Q24 & 1H24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 24
Slide 25: Portfolio value as of 30-Jun-24
PORTFOLIO VALUE AS OF 30-JUN-24 % SHARE IN TOTAL PORTFOLIO VALUE: 78% OF OUR PORTFOLIO 92% IS OF OUR PORTFOLIO 36% 4% 18% 11% 7% 7% 6% 3% 8% ISVALUED VALUED EXTERNALLY EXTERNALLY1 1 GBP 40.4 OPTION MULTIPLE: 12.4x 12.5x 11.5x 13.0x 9.3x BGEO VALUATION2 8.8x LTM P/E LTM EV/EBITDA3 EV/EBITDA4 LTM EV/E
Slide 26: Portfolio value development in 2Q24
PORTFOLIO VALUE DEVELOPMENT IN 2Q24 PORTFOLIO VALUE DOWN 12.1% Q-O-Q TO GEL 3.5 , BILLION IN 2Q24 , PRIVATE PORTFOLIO VALUE CREATION IN 2Q24 PRIVATE PORTFOLIO VALUE CREATION GEL MILLION GEL million LISTED AND OBSERVABLE PORTFOLIO PRIVATE PORTFOLIO VALUE VALUE DOWN BY 16.4% DOWN BY 8.8% Insurance (P&
Slide 27: Retail (Pharmacy) business operating performance overview
RETAIL (PHARMACY) BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA1 DEVELOPMENT +3.6% 411 397 RETAIL (PHARMACY) +3.5% KEY DRIVERS 331 313 ▪ Total revenue growth in 2Q24 mainly reflects a 3.2% 207 +5.9% 200 y-o-y increase in retail revenues, driven by significant recent expansion of
Slide 28: Retail (Pharmacy) business valuation overview
Externally valued1 RETAIL (PHARMACY) BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 2Q24 IMPLIED LTM EV/EBITDA DEVELOPMENT (GEL MILLION) Change q-o-q -6.8% +1.6% -1.7% -10.8% 9.7x , 8.8x 31-Mar-24 30-Jun-24 VALUATION HIGHLIGHTS1 YTD PROGRESS ADJUSTED NET DEBT TO EBITDA2 (excl. IFRS 16) GEL
Slide 29: Insurance business operating performance overview
INSURANCE BUSINESS OPERATING PERFORMANCE OVERVIEW INSURANCE REVENUE PRE-TAX PROFIT DEVELOPMENT +33.6% 131 INSURANCE 98 +46.5% 64 KEY DRIVERS 76 +15.5% P&C Insurance GEL MILLION 45 ▪ The increase in insurance revenue is mainly 19.2 driven by the growth in the motor and credit life 52 +28.7% 16.6 insu
Slide 30: Insurance business valuation overview
Externally valued1 INSURANCE BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 2Q24 IMPLIED LTM P/E MULTIPLE (GEL MILLION) DEVELOPMENT Change q-o-q +3.6% 391 378 12.4x 12.4x 96 88 289 296 31-Mar-24 30-Jun-24 P&C Insurance Medical Insurance VALUATION HIGHLIGHTS1 YTD PROGRESS NET DEBT TO EBITDA
Slide 31: Hospitals business operating performance overview
HOSPITALS BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT1 EBITDA2 DEVELOPMENT -0.4% HOSPITALS 165 164 -12.1% KEY DRIVERS 60 53 -2.1% 29.6 ▪ 2Q24 revenue developments reflect the net impact of: 26.1 GEL MILLION o A 4.3% y-o-y increase in revenues of Large and -10.8% 8.6 85 83 Specialty H
Slide 32: Hospitals business valuation overview
Externally valued1 HOSPITALS BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 2Q24 IMPLIED LTM EV/EBITDA DEVELOPMENT (GEL MILLION) Change q-o-q -11.1% +4.4% -17.6% -23.3% 13.8x 12.5x 31-Mar-24 30-Jun-24 VALUATION HIGHLIGHTS1 YTD PROGRESS NET DEBT TO EBITDA (excl. IFRS 16) GEL million, unless
Slide 33: Renewable Energy business operating performance overview
RENEWABLE ENERGY BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA DEVELOPMENT +26.3% RENEWABLE ENERGY 7.5 +17.6% 6.0 KEY DRIVERS 4.9 4.0 ▪ A y-o-y increase in the 2Q24 revenue and US$ MILLION 4.2 2.2 +39.4% EBITDA reflects the increase in electricity generation, driven by the resum
Slide 34: Renewable Energy business valuation overview
Externally valued1 RENEWABLE ENERGY BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 2Q24 EQUITY FAIR VALUE COMPOSITION (US$ MILLION) AT 30-JUN-24 (US$ MILLION) Change q-o-q -7.8% -3.0% -11.4% 18 Total value US$ 88 69 Operational assets Pipeline projects VALUATION HIGHLIGHTS1 YTD PROGRESS NE
Slide 35: Education business operating performance overview
EDUCATION BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA DEVELOPMENT +29.2% EDUCATION 36.7 KEY DRIVERS GEL MILLION 28.4 ▪ A y-o-y increase in the 2Q24 revenue reflects: +15.3% +25.6% o The organic growth through strong intakes and a ramp-up of the utilisation; and o expansion of
Slide 36: Education business valuation overview
Externally valued1 EDUCATION BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 2Q24 LTM EV/EBITDA DEVELOPMENT4 (GEL MILLION) Change q-o-q -8.0% -23.4% -28.6% -24.2% -4.6% 16.2x 13.0x 31-Mar-24 30-Jun-24 2 VALUATION HIGHLIGHTS1 YTD PROGRESS NET DEBT TO EBITDA GEL million, unless noted otherwis
Slide 37: Clinics & Diagnostics business operating performance overview
CLINICS & DIAGNOSTICS BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT1 EBITDA2 DEVELOPMENT +23.8% 40.1 CLINICS & DIAGNOSTICS 32.4 10.8 +22.6% KEY DRIVERS 9.2 29.3 ▪ A y-o-y growth in the 2Q24 revenue and EBITDA 20.6 +61.9% GEL MILLION reflects: 16.8 23.2 5.5 o the increased demand for hi
Slide 38: Clinics & Diagnostics business valuation overview
Externally valued1 CLINICS & DIAGNOSTICS BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 2Q24 IMPLIED LTM EV/EBITDA DEVELOPMENT (GEL MILLION) Change q-o-q -5.9% +4.7% -9.6% -10.6% 10.6x 9.3x 31-Mar-24 30-Jun-24 VALUATION HIGHLIGHTS1 YTD PROGRESS NET DEBT TO EBITDA (excl. IFRS 16) GEL millio
Slide 39: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 2Q24 & 1H24 02 MACROECONOMIC UPDATE | GEORGIA 03 2Q24 & 1H24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 39
Slide 40: Liquidity outlook
LIQUIDITY OUTLOOK LIQUIDITY DEVELOPMENT OVERVIEW (US$ MILLION) GROSS DEBT (US$ million) LIQUIDITY UP BY 2.2x FROM 30-JUN-24, REFLECTING 300 300 365 365 300 150 150 150 150 DIVIDEND INFLOWS SUBSEQUENT TO 1H24 Cash receipt from the water utility business sale Cancellation of US$ 65 million GCAP Eurobo
Slide 41: Dividend income outlook
DIVIDEND INCOME OUTLOOK RECURRING CASH DIVIDEND INCOME FROM PORTFOLIO COMPANIES 1 180 GEL 50.3 MILLION DIVIDEND INCOME IN 1H24 DIVIDEND INCOME 2Q24 1H24 (GEL million) 55 GEL MILLION Retail (Pharmacy) 10.0 10.0 P&C Insurance 4.9 9.7 94 Beverages (beer business) - 4.6 44 BOG (buyback dividend) 21.6 25
Slide 42: Extension of debt maturities across our private portfolio companies
EXTENSION OF DEBT MATURITIES ACROSS OUR PRIVATE PORTFOLIO COMPANIES % OF TOTAL PRIVATE PORTFOLIO DEBT BY REMAINING MATURITY IN 2Q24, OUR PORTFOLIO COMPANIES MADE SUBSTANTIAL PROGRESS IN ENHANCING THEIR OVERALL FINANCIAL STANDING - LEVERAGE PROFILES WERE IMPROVED SIGNIFICANTLY DUE TO THE EXTENSION OF
Slide 43: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 2Q24 & 1H24 02 MACROECONOMIC UPDATE | GEORGIA 03 2Q24 & 1H24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 43
Slide 44: Solid performance across our portfolio
SOLID PERFORMANCE ACROSS OUR PORTFOLIO PERFORMANCE HIGHLIGHTS NAV per share (GEL) down 12.8% in 2Q24, reflecting the impact on portfolio asset valuations from market movements resulting from the recent ✓ volatility in the regional geopolitical environment Strong performance of our private portfolio
Slide 45: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 2Q24 & 1H24 02 MACROECONOMIC UPDATE | GEORGIA 03 2Q24 & 1H24 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 04 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 05 WRAP-UP 06 ANNEX 45
Slide 46: Deleveraging across our private portfolio
DELEVERAGING ACROSS OUR PRIVATE PORTFOLIO TARGET AGGREGATED LEVERAGE ADJUSTED NET DEBT/EBITDA 31-MAR-24 CHANGE 30-JUN-24 (OVER THE CYCLE) ACROSS OUR PRIVATE LARGE AND INVESTMENT STAGE LARGE PORTFOLIO COMPANIES PORTFOLIO COMPANIES AT Retail (pharmacy)1 2.3x +0.1x 2.4x Up to 1.5x 3.3x AS OF 30-JUN-24
Slide 47: Private portfolio companies' debt maturity profile
PRIVATE PORTFOLIO COMPANIES’ DEBT MATURITY PROFILE GROSS DEBT MATURITY AS OF 30 JUNE 2024 2024 2025 2026 2027-2036 Total (GEL MILLION) Large portfolio companies 55.5 134.9 106.8 235.2 532.4 Retail (Pharmacy)1 41.2 73.3 43.5 68.0 226.0 Insurance (P&C and Medical) - 3.0 6.5 19.9 29.4 Hospitals 14.3 58
Slide 48: Valuation peer group
VALUATION PEER GROUP RETAIL P&C MEDICAL HOSPITALS (PHARMACY) INSURANCE INSURANCE • NEUCA S.A. | Poland • Dhipaya Insurance | Thailand • Powszechny Zaklad Ubezpieczen SA | • Medicover AB | Sweden Poland • Sopharma Trading AD | Bulgaria • Zavarovalnica Triglav | Slovenia • EMC Instytut Medyczny SAEMC
Slide 49: 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