Georgia Capital PLC · LSE:CGEO
Georgia Capital — H1 2018 Earnings Presentation
99 slides from Georgia Capital's earnings presentation, Sep 20, 2018
Slide 1: Investor Presentation: 1H18 results
Georgia-focused investment company Investor Presentation: 1H18 results 10 x = 10 y 20 September Page 1 2018
Slide 2: Forward looking statements
Forward looking statements Disclaimer 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, p
Slide 3: Content
Content 1. 1H18 results discussion | Georgia Capital 2. Capital allocation 3. Investment strategy & portfolio overview 4. 1H18 results discussion | Investment portfolio 5. Georgian Macro Overview 6. Appendices Page 3
Slide 4: Georgia Capital at glance
Georgia Capital at glance Georgia Capital portfolio 1H18 results | Georgia Capital Investment company focused on investing in and allocation Capital developing businesses in Georgia Listed Private Pipeline Investment strategy & overview Late stage portfolio Bank of Georgia (Banking) Water utility Ho
Slide 5: CGEO:LN performance
CGEO:LN performance Historical GCAP share price vs. NAV per share & Analyst value per share GCAP shareholders allocation by geography 1H18 results | Georgia Capital 22.00 Scandinavia Analysts value per share 5.1% 2.3% 7.4% 20.00 USA 18.00 15.5% allocation Luxembourg Capital 16.00 NAV per share 14.00
Slide 6: 1H18 performance highlights (management accounts)
1H18 performance highlights (management accounts) 1H18 results Georgia Capital NAV overview Georgia Capital performance | Georgia Capital Change 1H18 change GEL billions, except for per share information 30-Jun-18 (YTD) Period ended 30 June 2018, GEL millions unless otherwise noted (y-o-y) GCAP net
Slide 7: Net Asset Value Overview
Investment company basis management accounts Net Asset Value Overview Number of Management Management Ownership % Change Change % Shares Adjusted Value Adjusted Value 1H18 results | Georgia Capital GEL thousand unless otherwise noted 30-Jun-18 31-Dec-17 Listed Equity Investments GHG (75,118,503 shar
Slide 8: Investment company basis management accounts
Investment company basis management accounts Investment company basis income statement Georgia Capital standalone cash flow highlights 1H18 results | Georgia Capital GEL thousands unless otherwise noted 1H18 1H17 % change GEL thousands unless otherwise noted 1H18 1H17 Change % Dividend income 31,340
Slide 9: Key portfolio highlights | June 2018
Key portfolio highlights | 30 June 2018 1H18 results Portfolio value | GEL 1.8 billion | Georgia Average of analyst valuation1 | GEL 2.6 billion Capital Listed | GEL 1.2 billion Private | GEL 624 million Listed | GEL 1.6 billion Private | GEL 989 million allocation Capital 931 GEL millions GEL milli
Slide 10: Liquidity and cash management at Georgia Capital (standalone)
Liquidity and cash management at Georgia Capital (standalone) GEL 352 million GEL 129 million GEL 22 million 1H18 results | Georgia Standalone GCAP net operating income | 30-Jun-2018 Capital Liquid assets | 30-Jun-2018 Net debt | 30-Jun-2018 ► Cash at bank of GEL 164 million ► Georgia Capital issued
Slide 11: 1H18 portfolio performance highlights
1H18 portfolio performance highlights 1H18 standalone performance highlights (IFRS) 1H18 results | Georgia Change Change Capital Private investments 1H18 Private investments 1H18 (y-o-y) (y-o-y) Water utility revenue 69.8 +15.3% Water utility EBITDA 37.2 +19.7% Renewable energy revenue - NMF Renewab
Slide 12: Content
Content 1. 1H18 results discussion | Georgia Capital 2. Capital allocation 3. Investment strategy & portfolio overview 4. 1H18 results discussion | Investment portfolio 5. Georgian Macro Overview 6. Appendices Page 12
Slide 13: Portfolio management principles
Portfolio management principles Investment Stage Early Late Exit 1H18 results | Georgia Capital Acquisition/Entrance Target to Exit Possible Completion of Exit Discovery Young Portfolio Large Portfolio Mature Portfolio allocation Companies Companies Companies Capital Education Renewable Beverages P&
Slide 14: Georgia Capital's early stage portfolio – 3x1,000 target
Georgia Capital’s early stage portfolio – 3x1,000 target 1H18 results | Georgia Capital Target Current | 30 June 2018 allocation 1,000 Capital Georgia Capital targets to have 1,000 hotel rooms in its Currently 822 rooms of which 152 are operational and 670 are in the hospitality business portfolio o
Slide 15: Value creation
Value creation 1H18 results Georgia Capital invested GEL 6341 million translating into GEL 1,2321 million portfolio value and generated ROI2 26.7% at 30 June 2018 | Georgia Capital Listed investments Late stage portfolio businesses Early stage portfolio businesses Pipeline allocation Capital Housing
Slide 16: Capital allocation outlook through 2022
Capital allocation outlook through 2022 Highly disciplined approach to unlock value through investments 1H18 results GEL millions 20181 2019 2020 2021 2022 | Georgia Capital BoG (24) (26) (27) (29) (31) Listed investments GHG - - - - - +137 million dividend inflows allocation Capital Private investm
Slide 17: Content
Content 1. 1H18 results discussion | Georgia Capital 2. Capital allocation 3. Investment strategy & portfolio overview 4. 1H18 results discussion | Investment portfolio 5. Georgian Macro Overview 6. Appendices Page 17
Slide 18: Georgia Capital strategy - 10x=10y
Georgia Capital strategy - 10x=10y 1H18 results Georgia Capital strategy is based on three pillars | Georgia Capital 1 2 3 allocation Capital allocation & Capital Georgia 3-fundamental enablers Managing investments Leading economy in the region Access to capital Capital allocation ▪ Diversified non-
Slide 19: Georgia: access to a market of 2.8bn population
1 2 3 Capital allocations & 3-fundamental Georgia managing enablers investments Access to a market with 2.8bn population without customs duties 1H18 results | Georgia Capital Georgia is the second country in the world, after Switzerland, with FTAs with both EU and China allocation Georgia highlights
Slide 20: Ground floor opportunity Georgia
1 2 3 Ground floor opportunity Georgia 3-fundamental enablers Capital allocations & managing investments 1H18 results | Georgia Georgian Economy 1990-2017: collapse, stabilization, acceleration, crisis, rebound, sustainable economic growth and finally Capital strong future growth potential Real GDP
Slide 21: Georgia Capital value proposition
Georgia Capital value proposition – 1 2 3 Capital allocations & 3-fundamental enablers 3-fundamental Georgia managing enablers investments 1 2 1H18 results Superior access to capital Access to management | Georgia Capital ▪ Only investment company in Georgia ▪ Reputation among talented managers as t
Slide 22: Capital allocation & harvesting investments
1 2 3 Capital allocation & harvesting investments Capital allocations & 3-fundamental Georgia managing enablers investments Georgia focused diversified investment company aiming to deliver total shareholder returns of 1H18 results | Georgia Capital 10-times over 10-years 1 ▪ Highly disciplined appro
Slide 23: Georgia Capital's board of directors
Georgia Capital’s board of directors Board of directors - Georgia Capital PLC 1H18 results | Georgia Capital Irakli Gilauri, Chairman & CEO David Morrison, Senior Independent Director Experience: formerly BGEO Group CEO; up to 20 years of Experience: formerly Director at Sullivan & Cromwell with a e
Slide 24: Georgia Capital's highly experienced management team
Georgia Capital’s highly experienced management team Georgia Capital Management 1H18 results | Georgia Capital Irakli Gilauri, Chairman & CEO Nikoloz Gamkrelidze, CEO, Georgia Healthcare Group Formerly CEO of BGEO Group since 2011, joined as CFO of Bank of Previously deputy CEO (Finance) of BGEO Gro
Slide 25: Pipeline: Education business
Pipeline Further value creation opportunity – education business Industry investment rationale Market opportunity 1H18 results | Georgia Capital Government spending on education as GDP % (2016) Secondary private school enrollment % (2016) LARGE AND GROWING MARKET 23.6 7.1 6.9 6.6 22.1 8.0 6.4 6.1
Slide 26: Bank of Georgia (BoG) Overview
Listed investments Bank of Georgia (BoG) Overview http://bankofgeorgiagroup.com/ Key facts Market opportunity 1H18 results | Georgia Banking sector assets, loans and deposits Capital Investment rationale ▪ The first entity from Georgia to be listed on the premium segment of the Main Market of the Lo
Slide 27: Healthcare and pharmacy business (GHG) overview
Listed investments Healthcare http://ghg.com.ge/ and pharmacy business (GHG) overview Key facts Market opportunity 1H18 results | Georgia Capital Investment rationale ▪ Very low base: healthcare services spending per capita only US$ 325 Total healthcare market (including healthcare services and phar
Slide 28: Water utility business overview
Private late stage portfolio Water utility business overview Key facts Consumption of self-produced electricity (KWh m) 1H18 results Investment rationale 350 | Georgia 330 Capital 325 321 322 kWh millions Natural monopoly in Tbilisi and surrounding district 313 ▪ 291 ▪ Utilities sector represents ~3
Slide 29: Housing development business overview
Private late stage portfolio Housing development business overview Key facts Market opportunity 1H18 results | Georgia Capital Investment rationale Average household size and home ownership ▪ Shortage of housing from Soviet era combined with Georgian tradition of multi generations living under one r
Slide 30: P&C insurance business overview
Private late stage portfolio P&C insurance business overview Key facts Market opportunity 1H18 results | Georgia Investment rationale Capital 10.2% 9.2% Georgia P&C • Significantly underpenetrated insurance market in Georgia 8.9% Penetration 0.6% • Market leader with a powerful distribution network
Slide 31: Renewable energy business overview
Private early stage portfolio Renewable energy business overview Key facts Market opportunity 1H18 results GWh | Georgia Capital Investment rationale 23,000 ▪ Underdeveloped energy market with potential for significant growth - Low per capita power usage ▪ Cheap to develop – up to US$1.5mln for 1MW
Slide 32: Hospitality and commercial real estate business overview
Private early stage portfolio Hospitality and commercial real estate business overview Key facts Market opportunity 1H18 results Investment rationale Arrivals of tourists and tourism revenue | Georgia Source: Georgian National Tourism Administration | Georgia Capital ▪ Record number of tourists visi
Slide 33: Beverages business overview
Private early stage portfolio Beverages business overview Key facts Market opportunity 1H18 results | Georgia Capital Investment rationale Low consumption per capita compared to peers • High growth sector, which has doubled during the last 5 years to GEL 1.9 billion market Beer consumption in Peer C
Slide 34: Water utility business
Content 1. 1H18 results discussion | Georgia Capital 2. Capital allocation 3. Investment strategy & portfolio overview 4. 1H18 results discussion | Investment portfolio • Water utility business 5. Georgian Macro Overview 6. Appendices Page 34
Slide 35: Water utility business financial highlights
Water utility business financial highlights Income statement Cash flow statement 1H18 results | Georgia Capital Change Change GEL thousands, unless otherwise noted 1H18 1H17 GEL thousands, unless otherwise noted 1H18 1H17 y-o-y y-o-y Cash received from customers 77,223 66,220 16.6% Revenue from wate
Slide 36: Water utility business financial highlights: balance sheet
Water utility business financial highlights Balance sheet Jun-18 Jun-17 Dec-17 1H18 results Change Change | Georgia GEL thousands, unless otherwise noted Capital Inventories 3,410 3,299 3.3% 3,787 -10.0% Trade and other receivables 17,684 21,846 -19.1% 23,738 -25.5% Prepaid taxes other than income t
Slide 37: Water utility business overview
Water utility business overview Utility 1H18 results | Georgia Capital GEL millions, unless otherwise noted Natural monopoly in water utility Key Highlights 1H18 1H17 change servicing c. 1.4m population (Provision of water and wastewater services in Tbilisi and LTM revenue 144.3 131.0 10.1% surround
Slide 38: Water utility business performance highlights
Water utility business performance highlights Strong performance 1H18 results | Georgia Capital EBITDA Revenue composition EBITDA margin 51.3% 53.3% Total revenue 61 70 Up 19.7% Up 15.3% 37 3 allocation 31 3 5 Capital GEL millions GEL millions 3 55 62 Investment strategy & overview portfolio 1H17 1H
Slide 39: Georgian utility market overview
Georgian utility market overview Largely privatized utility sector with high barriers to entry Coverage Coverage by population by population 1H18 results | Georgia Capital ■ Utilities sector represents ~3% of total economic output in Georgia and is constantly growing at a sustainable rate (CAGR 8.2%
Slide 40: Water utility business strategy
Water utility business strategy Business strategy 1H18 results | Georgia Capital Current standing Medium term goal Targeting Revenue 1H18 (LTM): GEL 144m Revenue 2022: GEL 195m + Stable dividend provider allocation Capital Water utility EBITDA 1H18 (LTM): GEL 79m EBITDA 2022: GEL 130m + IPO with ren
Slide 41: Renewable energy business
Content 1. 1H18 results discussion | Georgia Capital 2. Capital allocation 3. Investment strategy & portfolio overview 4. 1H18 results discussion | Investment portfolio • Renewable energy business 5. Georgian Macro Overview 6. Appendices Page 41
Slide 42: Renewable energy financial highlights
Renewable energy financial highlights Income statement Cash flow statement 1H18 results | Georgia Capital Change GEL thousands, unless otherwise noted 1H18 1H17 Change GEL thousands, unless otherwise noted 1H18 1H17 y-o-y y-o-y Total Revenue - - NMF Cash paid to suppliers (172) (1,505) -88.5% Salari
Slide 43: Renewable energy financial highlights: balance sheet
Renewable energy financial highlights Balance sheet 1H18 results | Georgia Jun-18 Jun-17 Change Dec-17 Change Capital GEL thousands, unless otherwise noted Total current assets 15,045 36,072 -58.3% 15,554 -3.3% Property, plant and equipment 71,333 7,094 NMF 47,953 48.8% allocation Capital Other non-
Slide 44: Renewable energy business overview
Renewable energy business overview Energy 1H18 results | Georgia Capital GEL millions, unless otherwise noted Renewable energy platform with (develops and invests in renewable energy projects in underdeveloped Key Highlights 1H18 1H17 change Georgian energy sector) LTM revenue n/a n/a n/a allocation
Slide 45: Georgian electricity market overview
Georgian electricity market overview Electricity supply and consumption, 2017 Actual and forecasted consumption 1H18 results | Georgia Capital GWh Source: ESCO GWh 23,000 1,500 6.1 TWh 18,000 1,000 13,000 allocation Capital 500 8,000 3,000 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Generation
Slide 46: Renewable energy project pipeline
Renewable energy project pipeline Project pipeline and capex forecast 1H18 results | Georgia Capital Generation ▪ Renewable energy continues to build ground for its 500MW operating Start of Target Project MWs Commissioning capacity capacity target and seeks acquisition opportunities among existing p
Slide 47: Renewable energy business strategy
Renewable energy business strategy Business strategy 1H18 results | Georgia Capital Current standing Medium term goal Targeting Value creation upside allocation Revenue 1H18 (LTM): GEL 0m Revenue 2022: GEL 185m Capital Renewable energy EBITDA 1H18 (LTM): GEL (1)m EBITDA 2022: GEL 150m IPO together w
Slide 48: Housing development business
Content 1. 1H18 results discussion | Georgia Capital 2. Capital allocation 3. Investment strategy & portfolio overview 4. 1H18 results discussion | Investment portfolio • Housing development business 5. Georgian Macro Overview 6. Appendices Page 48
Slide 49: Housing development business financial highlights
Housing development business financial highlights Income statement Cash Flow 1H18 results | Georgia Capital GEL thousands, unless otherwise noted 1H18 1H17 Change GEL thousands, unless otherwise noted 1H18 1H17 Change Revenue from apartments sale 52,136 34,325 51.9% Proceeds from sales of apartments
Slide 50: Housing development business financial highlights: balance sheet
Housing development business financial highlights Balance Sheet 1H18 results | Georgia Capital GEL thousands, unless otherwise noted Jun-18 Jun-17 change Dec-17 Change Cash and cash equivalents 13,521 50,337 -73.1% 19,945 -32.2% Amounts due from credit institutions 324 386 -16.1% 114 NMF allocation
Slide 51: m2 – a leading player on Georgian real estate market
m2 – a leading player on Georgian real estate market Housing Development – Market of US$ 1.1 bln1 1H18 results | Georgia Capital 1 Affordable housing 2 Franchise m2 3 Construction Management Fully Develop land bank with total Develop third-party land plots under Earn Construction management fees val
Slide 52: Housing development business performance highlights
Housing development business performance highlights Strong sales performance 1H18 results | Georgia Capital Key highlights 1H18 apartments sales track record 95% of apartments are sold-out All amounts in GEL millions 1H18 1H17 change 2 1,691 LTM revenue 121.1 122.3 -1.0% 217 61 1800 1600 11* allocat
Slide 53: Affordable housing track record
Affordable housing track record 1H18 results Operating/Financial data for completed and on-going projects at 30 June 2018 | Georgia Capital Deferred Actual / Number of Number of revenue Number of Construction Planned Recognised as Deferred Land value Number of apartments apartments Construction Tota
Slide 54: Housing development business – market opportunity
Housing development business – market opportunity Average household size and home ownership | 2016 # of housing units developed by time periods 1H18 results | Georgia Capital Source: Eurostat, Colliers International Source: Colliers International 93% 96% 90% 90% 86% 90% 83% 82% 81% Thousands 69% all
Slide 55: Hospitality & Commercial real estate business
Content 1. 1H18 results discussion | Georgia Capital 2. Capital allocation 3. Investment strategy & portfolio overview 4. 1H18 results discussion | Investment portfolio • Hospitality & Commercial real estate business 5. Georgian Macro Overview 6. Appendices Page 55
Slide 56: Hospitality & Commercial real estate financial highlights
Hospitality & Commercial real estate business financial highlights Income statement Cash Flow 1H18 results | Georgia Capital GEL thousands, unless otherwise noted Jun-18 Jun-17 Change GEL thousands, unless otherwise noted 1H18 1H17 change Revenue from operating lease 2,215 1,780 24.4% Net proceeds f
Slide 57: Hospitality & Commercial real estate balance sheet
Hospitality & Commercial real estate business financial highlights Balance Sheet 1H18 results | Georgia Capital GEL thousands, unless otherwise noted Jun-18 Jun-17 change Dec-17 change Cash and cash equivalents 9,209 2,480 NMF 14,806 -37.8% Prepayments 5,157 3,220 60.2% 3,436 50.1% allocation Capita
Slide 58: Targeting to spin-off yielding properties as a listed REIT
Targeting to spin-off yielding properties as a listed REIT managed by m2 Hospitality & Commercial real estate – Market of US$ 6.8bln1 1H18 results | Georgia Capital 1 Rent-earning assets 2 Hotels Grow Portfolio of rent-earning assets through Develop hotels with combined room-count of residential dev
Slide 59: Hospitality & commercial real estate performance highlights
Hospitality & commercial real estate business performance highlights Strong Performance 1H18 results | Georgia Capital Key highlights Yielding portfolio growth Yielding portfolio composition All amounts in GEL millions 1H18 1H17 change 30.3% LTM revenue 6.6 3.4 NMF 39 39 68.7% 5 allocation 30 Capita
Slide 60: Hospitality business overview
Hospitality business overview Hotel rooms by types | operational, construction, design stages Hotel rooms by types | operational, construction, design stages 1H18 results | Georgia Capital Luxury Hotel, Budget Hotel, 17% 29% Under Construction, Design, 46% allocation 38% Capital Business Hotel, 26%
Slide 61: Hospitality & commercial real estate – market opportunity
Hospitality & commercial real estate business – market opportunity Arrivals of tourists and tourism revenue | Georgia Key performance metrics of hotels | Tbilisi Arrivals at airports (mln) | Georgia 1H18 results | Georgia Capital Source: Georgian National Tourism Administration Source: STR 145 Sourc
Slide 62: P&C insurance business
Agenda 1. 1H18 results discussion | Georgia Capital 2. Capital allocation 3. Investment strategy & portfolio overview 4. 1H18 results discussion | Investment portfolio • P&C insurance business 5. Georgian Macro Overview 6. Appendices Page 62
Slide 63: P&C insurance business financial highlights
P&C insurance business financial highlights Income Statement Cash flow 1H18 results | Georgia Capital Change Change GEL thousands, unless otherwise noted 1H18 1H17 GEL thousands, unless otherwise noted 1H18 1H17 y-o-y y-o-y Gross premiums written Cash flows from operating activities 45,885 49,190 -6
Slide 64: P&C insurance business financial highlights: balance sheet
P&C insurance business financial highlights 1H18 results | Georgia Capital Balance Sheet GEL thousands, unless otherwise noted Jun-18 Jun-17 Change Dec-17 Change Cash and cash equivalents 2,740 3,900 -29.7% 4,186 -34.5% allocation Capital Amounts due from credit institutions 25,404 24,247 4.8% 25,96
Slide 65: P&C insurance market overview
P&C insurance market overview Market & Aldagi Revenue Market Share 1H18 (earned premium, gross) Market PL & Combined Ratio 1H18 1H18 results | Georgia Capital Market Aldagi Market share Total Market Profit 227 33% 7.7 * GEL 14.7 mln CAGR 2010-2017 202 129% Market – 11% 179 Aldagi – 17% 108% 105% all
Slide 66: P&C insurance business performance highlights
P&C insurance business performance highlights Earned Premium, gross (GEL ‘000) Earned Premium, gross | Composition Profit (GEL ‘000 ) 1H18 results | Georgia Capital +7.9% y-o-y +1.1% y-o-y GEL 42.6 mln GEL 7.7mln Government, Compulsory Other, 3% lines, 4% 13% 7,590 7,676 42,551 39,420 allocation Cap
Slide 67: P&C insurance business overview
P&C insurance business overview Well-diversified business model 1H18 results Motor Property Credit life Liability Other | Georgia Capital Key Segments CAR (2), Commercial property, Financial risk, employer's liability, Motor own damage, motor third party Household Property, Machinery professional in
Slide 68: Expansion into Motor service business
Expansion into Motor service business – opportunity to develop unique platform with significant synergy potential 1H18 results | Georgia Capital Key facts 51 Inspection Lines As part of the Georgia-EU Association Agreement, Georgia will Tbilisi • implement a mandatory vehicle inspection program in s
Slide 69: P&C insurance business targets & priorities
P&C insurance business targets & priorities 1H18 results ALDAGI PROFIT | Georgia 2017 Capital 2022 16.3 MLN GEL allocation Retail 50.0 Capital 5.8mln GEL 10.5mln GEL mln GEL Corporate 0mln GEL SME Investment strategy & overview portfolio Retail | Penetration SME | Penetration Zero Corporate | Penetr
Slide 70: Beverages
Content 1. 1H18 results discussion | Georgia Capital 2. Capital allocation 3. Investment strategy & portfolio overview 4. 1H18 results discussion | Investment portfolio • Beverages 5. Georgian Macro Overview 6. Appendices Page 70
Slide 71: Beverages financial highlights
Beverages financial highlights Income Statement Balance Sheet 1H18 results | Georgia Capital GEL thousands; unless otherwise noted 1H18 1H17 Change GEL thousands, unless otherwise noted Jun-18 Jun-17 Change Dec-17 Change y-o-y Cash and cash equivalents 6,774 13,508 -49.9% 17,455 -61.2% Wine Business
Slide 72: Beverages targets & priorities
Beverages targets & priorities Goal Become leading beverages producer and distributor in Caucasus 1H18 results | Georgia Capital Wine business Distribution business Beer production business Russian Federation Caspian Black Sea allocation Capital Sea Poti Georgia Batumi Tbilisi Rustavi Azerbaijan Bak
Slide 73: Beverages performance highlights
Beverages performance highlights Key Highlights Wine Exports Dynamics (millions of bottles) 1H18 results | Georgia GEL millions, unless otherwise noted Capital Export sales, are presented excluding wine sales to Russia 1H18 1H17 change 2017 2.1 28.9 LTM revenue 68.4 35.4 92.9% LTM EBITDA (4.3) 1.5 N
Slide 74: Georgian Macro Overview
Content 1. 1H18 results discussion | Georgia Capital 2. Capital allocation 3. Investment strategy & portfolio overview 4. 1H18 results discussion | Investment portfolio 5. Georgian Macro Overview 6. Appendices Page 74
Slide 75: Sovereign ratings with stable outlook and favourable macro fundamentals
Sovereign ratings with stable outlook and favourable macro fundamentals 1H18 results | Georgia Key Ratings Highlights General Facts Capital Rating Agency Rating Outlook Affirmed Ba2 Stable March 2018 allocation Capital BB- Stable May 2018 Georgia BB- Positive March 2018 Investment strategy & overvie
Slide 76: Georgia's key economic drivers
Georgia’s key economic drivers 1H18 results Top performer globally in WB Doing Business over the past 12 years | Georgia Capital Liberal economic ▪ Liberty Act (effective January 2014) ensures a credible fiscal and monetary framework: policy ▪ Public expenditure/GDP capped at 30%; Fiscal deficit/GDP
Slide 77: Institutional oriented reforms
Institutional oriented reforms Ease of Doing Business | 2018 (WB-IFC Doing Business Report) Economic Freedom Index | 2018 (Heritage Foundation) 1H18 results | Georgia Capital New Zealand 1 Estonia 7 Singapore 2 US 6 UK 8 Top 9 in Europe region out of 44 Georgia 16 Norway Georgia 8 9 up from 16th in
Slide 78: Diversified resilient economy
Diversified resilient economy Gross domestic product Diversified nominal GDP structure, 2017 1H18 results Source: Geostat | Georgia Source: Geostat Capital Growth was 6% in 2Q18 Education Other Agriculture 20 12.6% 16% Healthcare 5% 8% 5% Construction 6% 9.6% 9.4% 12% 9% 15 Public administration 7.2
Slide 79: Room for further job creation
Room for further job creation Unemployment rate down 0.1ppts y/y to 13.9% UNDP Human Development Index in 2017 Sources: UNDP 1H18 results | Georgia 0.77 Capital 0.77 Sources: GeoStat 18.3 0.76 2000 17.4 17.9 17.4 17.3 17.2 16.9 20 0.76 15.1 15.4 14.6 14.1 14.0 13.9 0.75 1900 13.5 13.9 12.4 12.6 12.7
Slide 80: Inflation and monetary indicators
-40 -20 0 20 40 60 80 Jul-11 Feb-00 Sep-11 Nov-11 Dec-00 Jan-12 Mar-12 Oct-01 May-12 Jul-12 Aug-02 Sep-12 Sources: Geostat, NBG Sources: NBG, GeoStat Nov-12 Jun-03 Jan-13 Mar-13 Apr-04 May-13 Jul-13 Feb-05 Sep-13 Nov-13 Dec-05 Jan-14 M2 Y/Y % LHS Mar-14 Oct-06 May-14 Aug-07 Jul-14 Sep-14 Jun-08 Nov-
Slide 81: Current account deficit supported by FDI
Current account deficit supported by FDI Current account balance (% of nominal GDP) Exports and Re-exports, US$ bln 1H18 results | Georgia Capital Sources: NBG Source: NBG 30 20 3.0 3.0 4.0 20 10 2.6 3.2 3.4 2.0 10 allocation 0 Capital 1.3 1.6 0 1.1 1.3 3.1 -10 2.5 3.1 -10 -5.8 0.7 0.9 2.5 3.1 -10.3
Slide 82: Diversified sources of capital
Diversified sources of capital Strong foreign investor interest Visitors and tourism revenues on the rise 1H18 results Sources: GeoStat Sources: GNTA, NBG | Georgia Capital 2,000 25% 3000 8.0 17.2% 20% 2500 1,500 15.1% 6.0 12.3% 12.3% 15% 2000 11.0%11.8%11.1% 1,000 9.7% 8.5% 7.3% 7.8% 6.5% 1500 4.0
Slide 83: Tourism sector on the rise
Tourism sector on the rise Tourism revenues to GDP Spending per arrival, 2016 1H18 results Sources: NBG Source: WDI | Georgia Capital 1600 3100 18.1% 20% US$ 15.1% 1400 2600 13.8% 15% 1200 2100 10.7% 10.8% 1000 US$ mln 8.9% 1600 6.6% 10% 800 5.7% allocation 3.8% 4.0% 3.8% 3.5% 4.4% Capital 1100 600
Slide 84: Diversified foreign trade
Diversified foreign trade Goods’ Trade Deficit Oil imports 1H18 results Sources: GeoStat Source: GeoStat | Georgia 1,200 100% Capital 0 50% 40% 900 75% -100 30% 600 50% -200 20% 300 25% allocation Capital -300 10% 0% 0 0% -400 -10% -300 -25% -500 -20% -600 -50% -600 -30% Investment strategy & overvi
Slide 85: Diversified foreign trade
Diversified foreign trade Imports of Goods Foreign Demand, 1H2018 Source: NBG 1H18 results Source:, Geostat | Georgia Capital 40% 40% Food and beverages 30% 30% 0% 20% 20% 13% Industrial supplies 22% 10% 10% 0% 0% Fuels and lubricants 13% allocation Capital -10% -10% Capital goods -20% -20% 4% -30%
Slide 86: Prudent monetary policy ensures macro-financial stability
Prudent monetary policy ensures macro-financial stability International reserves Monetary policy rate 1H18 results | Georgia Capital Sources: NBG Sources: NBG 14 3500 3500 NBG started gradual exit from moderately tightened 3000 3000 12 monetary policy and decreased its refinancing rate by 25 basis p
Slide 87: Flexible exchange rate regime
0 20 40 60 80 100 120 140 160 180 -50 0 50 -150 -100 -200 100 150 200 Dec-12 Jan-14 250 220 Sources: NBG Sources: NBG -80 Mar-13 Apr-14 Jun-13 Sep-13 Jul-14 -120 Dec-13 Oct-14 40 40 Mar-14 shock-absorber Jan-15 EUR/GEL 120 Jun-14 Apr-15 40 40 Sep-14 Dec-14 Jul-15 Mar-15 Oct-15 27 20 20 Jun-15 Jan-16
Slide 88: Low public debt
Low public debt Public debt as % of GDP is capped at 60% Breakdown of public debt 1H18 results | Georgia Sources: MOF Source: MOF, as of 31 December 2017 Capital 70% 70% 60% 60% 50% 50% 40% 40% allocation Multilateral Capital 30% 30% Domestic External 59% 20% 20% 21% 79% 10% 10% 0% 0% Bilateral 2017
Slide 89: Growth-oriented government reforms (2018-2020)
Growth-oriented government reforms (2018-2020) Structural Reforms Promoting Transit & Tourism Hub 1H18 results 1 2 | Georgia Capital ▪ Small government concept ▪ Roads ▪ Optimization of government units and decrease bureaucracy expenses to get small, efficient and ▪ Plan to finish all spinal project
Slide 90: Appendices
Content 1. 1H18 results discussion | Georgia Capital 2. Capital allocation 3. Investment strategy & portfolio overview 4. 1H18 results discussion | Investment portfolio 5. Georgian Macro Overview 6. Appendices Page 90
Slide 91: Investment company basis management accounts: balance sheet highlights
Investment company basis management accounts 1H18 results | Georgia Balance Sheet Highlights Capital Corporate June December Management Adjusted Average of Analyst Portfolio valuation Change Value Valuations GEL thousands unless otherwise noted 30-Jun-18 31-Dec-17 % 30-Jun-18 30-Jun-18 Cash and liqu
Slide 92: Group Consolidated IFRS Income Statement
Group Consolidated IFRS Accounts 1H18 results Consolidated IFRS Income Statement | Georgia Capital GEL thousands, unless otherwise noted 1H18 1H17 Change Revenue 192,922 163,592 17.9% Cost of sales (103,124) (73,305) 40.7% allocation Gross profit 89,798 90,287 -0.5% Capital Operating expenses (50,02
Slide 93: Group Consolidated IFRS Balance Sheet
Group Consolidated IFRS Accounts Consolidated IFRS Balance Sheet 1H18 results GEL thousands, unless otherwise noted Jun-18 Dec-17 change | Georgia Capital Cash and cash equivalents 187,446 346,241 -45.9% Amounts due from credit institutions 83,217 38,141 NMF Debt securities owned 94,424 31,907 NMF E
Slide 94: Group Consolidated IFRS Statement of Cash Flow
Group Consolidated IFRS Accounts Consolidated IFRS Statement of Cash Flow 1H18 results | Georgia Capital GEL thousands, unless otherwise noted 1H18 1H17 Change Net cash flows from operating activities from continuing operations (8,480) 20,630 NMF Net cash flows from operating activities from discont
Slide 95: Reconciliation to IFRS: six months ended 30 June 2018
Reconciliation of investment company basis management accounts to IFRS Income statement reconciliation for six months ended 30 June 2018 1H18 results | Georgia Inter- Capital GEL thousands, unless otherwise Commercial and Housing Renewable Corporate Business Group GHG BOG Water Utility P&C insurance
Slide 96: Reconciliation to IFRS: six months ended 30 June 2017
Reconciliation of investment company basis management accounts to IFRS Income statement reconciliation for six months ended 30 June 2017 1H18 results | Georgia Capital Inter- GEL thousands, unless otherwise Commercial and Housing Renewable Corporate Business Group GHG BOG Water Utility P&C insurance
Slide 97: Glossary
Glossary ● GCAP refers to the aggregation of standalone Georgia Capital PLC and standalone JSC Georgia Capital accounts ● Georgia Capital and “the Group” refer to Georgia Capital PLC and its portfolio companies as a whole ● NMF – Not meaningful ● NAV – net asset value ● LTM – last twelve month ● EBI
Slide 98: Georgia Capital PLC company information
Georgia Capital PLC company information Registered Address 84 Brook Street London W1K 5EH United Kingdom www.georgiacapital.ge Registered under number 10852406 in England and Wales Stock Listing London Stock Exchange PLC’s Main Market for listed securities Ticker: “CGEO.LN” Contact Information Georg
Slide 99: Georgia Capital
GEORGIA CAPITAL