Georgia Capital PLC · LSE:CGEO
Georgia Capital — Q3 2020 Earnings Presentation
45 slides from Georgia Capital's earnings presentation, Nov 20, 2020
Slide 1: Investor Presentation: 3Q20 and 9M20 results
INVESTOR PRESENTATION 3Q20 and 9M20 results 20 November 2020
Slide 2: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 STRATEGY AND CAPITAL ALLOCATIONS 03 3Q20 & 9M20 RESULTS OVERVIEW 04 PORTFOLIO OVERVIEW | 3Q20 VALUATIONS 05 APPENDICES Georgia Capital PLC 2
Slide 3: COVID-19 Statistics
COVID-19 STATISTICS COVID-19 CASES: DYNAMICS IN GEORGIA GEORGIA’S STATISTICS AS OF 17-NOV-20: 100,000 80,000 89,395 Total cases 17,112 60,000 Total recoveries ➢ Active cases have started to 40,000 TOTAL CASES ACTIVE CASES Active cases decline since late October 20,000 2,370 5,763 0 17-Nov-20 10/Jun/
Slide 4: 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 donors (incl. US$ 450m from IMF): Total budget – GEL 3.5 billion – US$1.5 bi
Slide 5: Macroeconomic Fast Indicators in 9M20
MACROECONOMIC FAST INDICATORS IN 9M20 ECONOMIC RECOVERY UNDERWAY REAL GDP GROWTH IMPROVED EVERY MONTH SINCE APRIL 30% 15% Real GDP, y/y VAT Turnover, y/y 20% 28.7% 25.8% 22.1% 5% 10% 17.8% 5.1% 0% 8.6% 9.5% 2.2% -5% -0.7% -2.7% -10% -5.5% -5.3% -9.0% -7.7% -20% -15% -9.6% -13.5% -30% -16.6% -25% -40
Slide 6: The Labor Market Dynamics
THE LABOR MARKET DYNAMICS THE UNEMPLOYMENT RATE INCREASED BY 0.9 PPT THE NUMBER OF HIRED EMPLOYEES AND SALARIES HAVE Y-O-Y IN 2Q20 BOUNCED BACK AFTER FALLING IN APRIL-MAY 14.0 20% Number of hired employees, y/y, % +0.9 ppt 15% 13% 12.8 +0.4 ppt 11% 10% 10% 12.3 7% 12.3 12.1 12.2 5% 5% 11.9 5% 2% 11.
Slide 7: GEL Performance
90 100 110 120 130 140 03/Jan/20 16/Jan/20 29/Jan/20 11/Feb/20 24/Feb/20 08/Mar/20 USD/GEL USD/UAH Georgia Capital PLC | Source: NBG 21/Mar/20 03/Apr/20 16/Apr/20 29/Apr/20 12/May/20 25/May/20 07/Jun/20 GEL PERFORMANCE USD/TRY 20/Jun/20 USD/AMD 03/Jul/20 16/Jul/20 29/Jul/20 USD/GEL SENSITIVE BUT REL
Slide 8: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 STRATEGY AND CAPITAL ALLOCATIONS 03 3Q20 & 9M20 RESULTS OVERVIEW 04 PORTFOLIO OVERVIEW | 3Q20 VALUATIONS 05 APPENDICES Georgia Capital PLC 8
Slide 9: Enhanced Strategy as Announced on 2020 Investor Day
ENHANCED STRATEGY AS ANNOUNCED ON 2020 INVESTOR DAY GCAP invests in Georgia in large opportunities, which have a MONETISE potential to become GEL 0.5bln+ in equity value. GCAP develops and grows portfolio companies to equity value of GEL 0.5bln+ and realizes proceeds through exit, as investments mat
Slide 10: Our Portfolio Overview in Line with Enhanced Strategy
OUR PORTFOLIO OVERVIEW IN LINE WITH ENHANCED STRATEGY Following GHG transaction and in Portfolio breakdown before GHG Revised portfolio breakdown transaction & strategy enhancement line with the enhanced strategy, we will be changing breakdown of Listed assets Listed assets portfolio by listed, priv
Slide 11: Outlook for Our Private Portfolio in Line with Enhanced Strategy
OUTLOOK FOR OUR PRIVATE PORTFOLIO IN LINE WITH ENHANCED STRATEGY New Strategic New Strategic Priority #1 Priority #2 LARGE PORTFOLIO INVESTMENT STAGE PORTFOLIO SMALL COMPANIES COMPANIES COMPANIES (“OTHER ASSETS”) Exit from one large investment Total identified investment of US$ Divestment over the n
Slide 12: Investing in Renewable Energy
INVESTING IN RENEWABLE ENERGY INDUSTRY INVESTMENT RATIONALE TOTAL NET INVESTMENT OF c. US$ 36MLN IDENTIFIED FROM GCAP OVER THE NEXT 3 YEARS ▪ High margins, dollar linked cash flows ▪ Over the next 3 years we will be launching pipeline projects: wind farms in ▪ Growing market, with 35% of demand sati
Slide 13: Investing in Education
INVESTING IN EDUCATION INDUSTRY INVESTMENT RATIONALE TOTAL NET INVESTMENT OF c. US$ 14MLN IDENTIFIED FROM GCAP OVER ▪ Asset light industry THE NEXT 5 YEARS BY 2025 ▪ High quality revenue with high margins ▪ Scaling up to capacity of 21,000 learners through expansion plans in existing schools and M&A
Slide 14: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 STRATEGY AND CAPITAL ALLOCATIONS 03 3Q20 & 9M20 RESULTS OVERVIEW 04 PORTFOLIO OVERVIEW | 3Q20 VALUATIONS 05 APPENDICES Georgia Capital PLC 14
Slide 15: NAV Statement Snapshot in 3Q20
NAV STATEMENT SNAPSHOT IN 3Q20 GEL ‘000, UNLESS OTHERWISE NOTED 30-Jun-20 30-Sep-20 Change % Total Listed Portfolio Value 730,069 360,100 -50.7% STRONG 3Q20 RESULTS Large Portfolio Companies 584,360 1,545,818 NMF Investment Stage Portfolio Companies 265,446 282,175 6.3% Other Portfolio Companies 246
Slide 16: NAV per Share (GEL) Movement in 3Q20
NAV PER SHARE (GEL) MOVEMENT IN 3Q20 NAV PER SHARE CHANGE % -2.9% 36.0% -2.7% -0.7% -10.2% 19.5% 19.5% NAV PER SHARE GROWTH 7.7 million CGEO shares were issued as part of GHG transaction In 3Q20 GHG businesses were valued by an independent valuation company NAV Value creation GHG transaction Value c
Slide 17: Controllable (Private) NAV per Share Development History
CONTROLLABLE (PRIVATE) NAV PER SHARE (GEL) DEVELOPMENT HISTORY CONTROLLABLE (PRIVATE) NAV +23.6% PER SHARE +3.4% ADJUSTED FOR 26.34 25.47 GHG TRANSFER UP 3.4% TO GEL 21.31 26.34 IN 9M20 GEL Dec-18 Dec-19 Sep-20 Sep-20 excl. GHG Adjusted impact for GHG transfer1 Georgia Capital PLC | 1. Excludes tran
Slide 18: Total Revenue Development Across Private Portfolio in 3Q20
TOTAL REVENUE DEVELOPMENT ACROSS PRIVATE PORTFOLIO IN 3Q20 TOTAL REVENUE UP 3% Y-O-Y IN 3Q20 ON LIKE-FOR LIKE BASIS +3% +17% +1% 414 403 +15% 354 300 304 263 +10% -7% +26% +4% 82 91 21 19 73 18 3Q19 2Q20 3Q20 3Q19 2Q20 3Q20 3Q19 2Q20 3Q20 3Q19 2Q20 3Q20 Total portfolio Large portfolio companies Inve
Slide 19: Total Revenue Development Across Private Portfolio in 9M20
TOTAL REVENUE DEVELOPMENT ACROSS PRIVATE PORTFOLIO IN 9M20 TOTAL AGGREGATED REVENUE UP 4% Y-O-Y IN 9M20 ON LIKE-FOR LIKE BASIS +4% 1,161 1,121 17% 183 228 20% 4% 48 52 4% 79% 890 881 76% 9M19 9M20 Large portfolio companies Investment stage portfolio companies Other portfolio companies Total 19
Slide 20: Total Net Operating Cash Flow Across Private Portfolio in 3Q20
TOTAL NET OPERATING CASH FLOW DEVELOPMENT ACROSS PRIVATE PORTFOLIO IN 3Q20 TOTAL AGGREGATED NET OPERATING CASH FLOW UP 125% Y-O-Y IN 3Q20 TO GEL 113 MILLION +125% +29% 113 +101% 88 +30% 69 +131% 50 53 +373% +56% 34 -8% 29 16 19 3 15 13 3Q19 2Q20 3Q20 3Q19 2Q20 3Q20 3Q19 2Q20 3Q20 3Q19 2Q20 3Q20 LARG
Slide 21: Total Cash Balance & Net Operating Cash Flow in 9M20
TOTAL CASH BALANCE & NET OPERATING CASH FLOW DEVELOPMENT ACROSS PRIVATE PORTFOLIO IN 9M20 TOTAL NET OPERATING CASH FLOW UP 106% Y-O-Y IN 9M20 TO GEL 291 MILLION TOTAL AGGREGATED NET OPERATING CASH FLOW TOTAL AGGREGATED CASH BALANCE OF PRIVATE BUSINESSES (GEL MILLIONS) (GEL MILLIONS) +106% 31-Dec-19
Slide 22: Georgia Capital Leverage & Liquidity Profile
GEORGIA CAPITAL LEVERAGE & LIQUIDITY PROFILE LTV RATIO1 IS ON TRACK TO THE TARGETED THRESHOLD OF <30% US$ 81 MILLION LIQUID FUNDS AS OF 30-SEP-20 Pre-COVID average: 22% 44.1% 41.9% Cash 30 TOTAL 30% 33.5% Marketable securities Loans issued 81 43 US$ MILLION 25.8% 27.9% 20.0% 19.2% 8 17.6% TOTAL ANNU
Slide 23: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 STRATEGY AND CAPITAL ALLOCATIONS 03 3Q20 & 9M20 RESULTS OVERVIEW 04 PORTFOLIO OVERVIEW | 3Q20 VALUATIONS 05 APPENDICES Georgia Capital PLC 23
Slide 24: Portfolio Valuation Overview
PORTFOLIO VALUATION OVERVIEW STARTING FROM 4Q20, c. 80% OF THE TOTAL PORTFOLIO WILL BE VALUED EXTERNALLY % share in total Portfolio Company 3Q20 4Q20 portfolio at In 3Q20 we hired independent valuation 30-Sep-20 company Duff & Phelps to perform valuation assessment of GHG businesses BoG Public marke
Slide 25: Portfolio Value as of 30-Sep-20
PORTFOLIO VALUE AS OF 30-SEP-20 % SHARE IN TOTAL PORTFOLIO VALUE: 15% 20% 20% 17% 8% 8% 3% 9% MULTIPLE: BGEO 12.2X 8.7X 10X 8.0X – 8.3X 9.7X 12.5X 9 12 PRICE ON LTM LTM LTM LTM P/E2 EV/EBITDA3 LTM 12 LSE EV/EBITDA1 EV/EBITDA1 EV/EBITDA4 EV/EBITDA 16 474 475 412 360 36 OTHER PORTFOLIO BREAKDOWN 223 G
Slide 26: Portfolio Value Development Overview
PORTFOLIO VALUE DEVELOPMENT OVERVIEW PORTFOLIO VALUE UP 32% TO GEL 2.4 BILLION IN 3Q20 % SHARE OF LISTED ASSETS 40% 15% GEL MILLION Georgia Capital PLC 26
Slide 27: GHG Valuation Overview
GHG VALUATION OVERVIEW EQUITY FAIR VALUE COMPOSITION GHG’S LTM EV/EBITDA MULTIPLE HIGHLIGHTS (GEL MILLION) IMPLIED MULTIPLE IN TRADING MULTIPLE RECENT TRANSACTION OUR VALUATION BEFORE DELISTING MULTIPLE 45 13.5 10.1 4.6 TOTAL VALUE 474 993 30-Jun-20 Incl. IFRS 16 HTMC incl. IFRS 16 sale 475 WE HIRED
Slide 28: GHG Valuation Overview (Cont'd)
GHG VALUATION OVERVIEW (CONT’D) HISTORICAL VOLUME WEIGHTED AVERAGE PRICES (GBP) GEL million 31-DEC-15 31-DEC-16 31-DEC-17 31-DEC-18 31-DEC-19 30-SEP-202 LTM EBITDA (excl. IFRS 16) 56.1 78.0 108.1 132.3 154.2 137.0 Net debt (4.6) 176.5 296.9 342.4 331.2 230.8 TOTAL VOLUME WEIGHTED AVERAGE PRICE: 2.42
Slide 29: Healthcare Services Business Valuation Overview
Externally valued HEALTHCARE SERVICES BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 30-Jun-20 IMPLIED MULTIPLE HIGHLIGHTS (incl. IFRS 16) at 30-Jun-20 (GEL MILLION) EV/EBITDA MULTIPLE (LTM) 13.5x 12.2x 7.6% LTM FCF/EV 30-Jun-20 HTMC Sale NET REVENUE & EBITDA HIGHLIGHTS 3Q20 & 9M20 PERFORM
Slide 30: Retail (Pharmacy) Business Valuation Overview
Externally valued RETAIL (PHARMACY) BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 30-Jun-20 IMPLIED MULTIPLE HIGHLIGHTS (incl IFRS 16) at 30-Jun-20 (GEL MILLION) 8.7X 8.7% LTM EV/EBITDA LTM FCF/EV REVENUE & EBITDA HIGHLIGHTS 3Q20 & 9M20 PERFORMANCE HIGHLIGHTS (excl. IFRS 16) (GEL MILLION)
Slide 31: Medical Insurance Business Valuation Overview
Externally valued MEDICAL INSURANCE BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 30-Jun-20 IMPLIED MULTIPLE HIGHLIGHTS (incl. IFRS 16) at 30-Jun-20 (GEL MILLION) 8.0X IMPLIED LTM P/E 20.5% LTM ROAE REVENUE & NET INCOME HIGHLIGHTS 3Q20 & 9M20 PERFORMANCE HIGHLIGHTS (GEL MILLION) (GEL MILL
Slide 32: P&C Insurance Business Valuation Overview
Internally valued P&C INSURANCE BUSINESS VALUATION OVERVIEW VALUE & LTM P/E MULTIPLE DEVELOPMENT OVERVIEW LTM ROAE & DIVIDEND YIELD DEVELOPMENT (GEL MILLION) 9.0x 7.7x 8.0x 8.3x 35.0% 7.3% 7.1% 6.9% 7.1% 30.0% 165 25.0% 145 20.0% 30.4% 141 141 28.0% 28.7% 25.4% 15.0% 10.0% 31-Dec-19 31-Mar-20 30-Jun
Slide 33: Water Utility Business Valuation Overview
Internally valued WATER UTILITY BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 30-Sep-20 LTM EV/EBITDA DEVELOPMENT (GEL MILLION) 10.0x 9.8x 1 30-Jun-20 30-Sep-20 REVENUE & EBITDA HIGHLIGHTS 3Q20 & 9M20 PERFORMANCE HIGHLIGHTS (GEL MILLION) (GEL MILLION UNLESS NOTED OTHERWISE) EBITDA MARGIN
Slide 34: Renewable Energy Business Valuation Overview
Internally valued RENEWABLE ENERGY BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 30-Sep-20 EQUITY FAIR VALUE VALUATION HIGHLIGHTS (GEL MILLION) COMPOSITION AT 30-SEP-20 (OPERATIONAL ASSETS) (GEL MILLION) (GEL MILLION) Hydrolea HPPs Mestiachala 39 and Qartli WPP HPPs Valuation method EV/EB
Slide 35: Education Business Valuation Overview
Internally valued EDUCATION BUSINESS VALUATION OVERVIEW 3 VALUE DEVELOPMENT OVERVIEW | 30-Sep-20 LTM EV/EBITDA DEVELOPMENT LTM ROIC AT 30-SEP (GEL MILLION) 20%+ 12.5x 12.5x 1 2 30-Jun-20 30-Sep-20 REVENUE & EBITDA HIGHLIGHTS 3Q20 & 9M20 PERFORMANCE HIGHLIGHTS (GEL MILLION) (GEL MILLION UNLESS NOTED
Slide 36: Other Businesses Valuation Overview
Internally valued OTHER BUSINESSES VALUATION OVERVIEW % SHARE IN TOTAL PORTFOLIO % SHARE OF OTHER 18.3% 13.5% 9.3% BUSINESSES IN TOTAL PORTFOLIO DOWN TO 9.3% IN 9M20 • Other portfolio value down by GEL 190 million GEL MILLION in 9M20 and down by GEL 23 million in 3Q20 Georgia Capital PLC 36
Slide 37: Our Private Portfolio at a Glance
OUR PRIVATE PORTFOLIO AT A GLANCE DEFENSIVE, HIGH QUALITY ASSETS WITH STRONG AND GROWING CASH FLOW STREAMS EXPECTED TO CLOSE TO GEL STRONG CASH FLOW DOMINANT MARKET BECOME GEL 0.5BLN+ NON-CYCLICAL 0.5BLN+ VALUE GENERATION POSITION IN VALUE Healthcare Services ✓ ✓ ✓ ✓ LARGE PORTFOLIO Retail COMPANIES
Slide 38: Contents
CONTENTS 01 COVID-19 UPDATE | GEORGIA 02 STRATEGY AND CAPITAL ALLOCATIONS 03 3Q20 & 9M20 RESULTS OVERVIEW 04 PORTFOLIO OVERVIEW | 3Q20 VALUATIONS 05 APPENDICES Georgia Capital PLC 38
Slide 39: Private Portfolio Companies' Debt Maturity Profile
PRIVATE PORTFOLIO COMPANIES’ DEBT MATURITY PROFILE NO SIGNIFICANT MATURITIES IN 2020 GROSS DEBT MATURITY AS OF 30 SEPTEMBER 2020 (GEL MILLION) 4Q20 2021 2022 2023 2024+ Total Large portfolio companies 20.4 88.4 185.6 34.0 578.0 906.4 Healthcare Services 12.8 81.3 183.8 33.8 77.6 389.3 Retail (Pharma
Slide 40: NAV Statement | 3Q20
NAV STATEMENT | 3Q20 1. Value 2a. 2b. 2d. GHG 3.Operating 4. Liquidity/ Change GEL ‘000, unless otherwise noted Jun-20 2c. Dividend Sep-20 creation Investment Buyback delisting expenses FX/Other % Listed Portfolio Companies GHG 335,667 (100,935) 138,265 - - (372,997) - - - -100.0% BoG 394,402 (34,30
Slide 41: NAV Statement | 9M20
NAV STATEMENT | 9M20 1. Value 2a. 2b. 2d. GHG 3.Operating 4. Liquidity/ Change GEL ‘000, unless otherwise noted Dec-19 2c. Dividend Sep-20 creation Investment Buyback delisting expenses FX/Other % Listed Portfolio Companies GHG 430,079 (195,347) 138,265 - - (372,997) - - - -100.0% BoG 597,735 (237,6
Slide 42: 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 43: Georgia Capital (GCAP) Shareholders at 30-Sep-20
GEORGIA CAPITAL (GCAP) SHAREHOLDERS AT 30-SEP-20 GCAP SHAREHOLDERS ALLOCATION BY GEOGRAPHY GCAP TOP 10 SHAREHOLDERS Rank Shareholder name Ownership Other, 1 M&G Investment Management Ltd 6.01% 21% 2 Schroder Investment Management Ltd 4.01% UK2 3 Dunross & Co AB 3.64% 33% 4 T Rowe Price 3.63% Scandin
Slide 44: 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
Slide 45: Company Information
COMPANY INFORMATION Georgia Capital PLC 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