Georgia Capital PLC · LSE:CGEO
Georgia Capital — 9M22 Earnings Presentation
48 slides from Georgia Capital's earnings presentation, Nov 9, 2022
Slide 1: 3Q22 & 9M22 Results Call Presentation
3Q22 & 9M22 RESULTS CALL PRESENTATION 9 NOVEMBER 2022
Slide 2: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q22 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q22 & 9M22 PERFORMANCE OVERVIEW 04 3Q22 & 9M22 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 2
Slide 3: Key Developments in 3Q22
1 NAV PER SHARE (GEL) UP 8.2% IN 3Q22, UP 25.5% IN GBP TERMS 2 GEL 32.0 MILLION REGULAR DIVIDED INCOME IN 3Q22 (GEL 84.5 MILLION TO DATE, INCLUDING GEL 18.1 MILLION INTERIM DIVIDENDS COLLECTED FROM BOG IN OCT-22) KEY DEVELOPMENTS US$ 102 MILLION GCAP EUROBONDS RE-PURCHASED TO DATE, OF WHICH, US$ 65
Slide 4: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q22 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q22 & 9M22 PERFORMANCE OVERVIEW 04 3Q22 & 9M22 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 4
Slide 5: Real GDP continuing double-digit growth in 2022
REAL GDP CONTINUING DOUBLE-DIGIT GROWTH IN 2022 REAL GDP UP 10.2% Y-O-Y IN 9M22 50% 45% REAL GDP UP 10.2% Y-O-Y IN 9M22 40% 26% 30% 19% 18.0% KEY DRIVERS 20% 14.6% 10% 10% 12% 11.6% 9.7% 10.5% 8.8% 10% 7.2% 7% 7% ➢ Strong external demand supplemented by the migration effect, as 10% 4% 10.6% remittan
Slide 6: IMF projects the Georgian economy to grow by 9% in 2022
IMF PROJECTS THE GEORGIAN ECONOMY TO GROW BY 9% Y-O-Y IN 2022, THE 8TH HIGHEST GROWTH IN THE WORLD REAL GDP GROWTH FORECASTS FOR 2022 | IMF GDP PER CAPITA BY COUNTRIES # Country GDP growth forecast, 2022 50,000 180% 1 Guyana 57.8 2 Fiji 12.5 45,000 162% 160% 3 Seychelles 10.9 159% 4 Barbados 10.5 40
Slide 7: Georgian Lari – back to pre-pandemic levels
GEORGIAN LARI – BACK TO PRE-PANDEMIC LEVELS APPRECIATING SINCE MID-2021, BRIEFLY INTERRUPTED AFTER THE RUSSIAN INVASION OF UKRAINE, GEL HAS NOW STRENGTHENED TO PRE-PANDEMIC LEVELS AGAINST USD Sources: NBG GEL APPRECIATION DRIVERS 3.7 3.5 3.46 ➢ Record high remittance inflows, increasing by 65% y-o-y
Slide 8: 83.5K migrants have opened Georgian bank accounts
83.5K MIGRANTS HAVE OPENED GEORGIAN BANK ACCOUNTS, WORTH OVER $500 MN, SINCE THE START OF THE WAR NUMBER OF NEW BANK ACCOUNTS BY RESIDENCY, THOUSANDS NON-RESIDENTS’ DEPOSITS IN GEORGIAN BANKING SYSTEM BY RESIDENCY, GEL BLN 3.0 Russia Ukraine Belarus + US$ 635 MLN since war 12.5 0.2 2.5 0.2 0.5 2.0 0
Slide 9: Inflation to decelerate gradually in 2023
INFLATION TO DECELERATE GRADUALLY IN 2023 INFLATION Y-O-Y VS. INFLATION TARGET Sources: NBG, GeoStat INFLATION TO DECELERATE BUT REMAIN 16 Headline Inflation Core Inflation Target CLOSE TO DOUBLE DIGITS IN 2022 12 ➢ Annual inflation reached 10.6% in October 2022 (12.3% on average in 10.6 10M22) and
Slide 10: Public debt to fall below 2019 levels in 2022
PUBLIC DEBT TO FALL BELOW 2019 LEVELS IN 2022, WITH THE DEFICIT PROJECTED AT 3.2% OF GDP PUBLIC DEBT Sources: MoF FISCAL SUPPORT HAS BEGUN MODERATING External public debt to GDP, % Total public debt to GDP, % 59.9% ➢ Fiscal support moderated in 2022, with current expenditures 60% growing by 9% y-o-y
Slide 11: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q22 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q22 & 9M22 PERFORMANCE OVERVIEW ▪ RECENT DEVELOPMENTS ▪ AGGREGATED PORTFOLIO RESULTS OVERVIEW ▪ NAV PER SHARE DEVELOPMENT OVERVIEW 04 3Q22 & 9M22 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTL
Slide 12: We have once again demonstrated our superior access to capital
WE HAVE ONCE AGAIN DEMONSTRATED OUR SUPERIOR ACCESS TO CAPITAL IN OCTOBER 2022, OUR RENEWABLE ENERGY AND HOUSING BUSINESSES SUCCESSFULLY COMPLETED BOND PLACEMENTS ON THE GEORGIAN CAPITAL MARKET RENEWABLE ENERGY HOUSING DEVELOPMENT Transaction terms Transaction terms ▪ Offering amount: US$ 80 million
Slide 13: Strong progress on deleveraging GCAP
STRONG PROGRESS ON OUR KEY STRATEGIC PRIORITY OF DELEVERAGING GCAP GCAP EUROBOND BUYBACKS OVERVIEW (US$ MILLION) US$ 102 MILLION EUROBONDS RE- PURCHASED TO DATE In October 2022, we conducted a Modified Dutch Auction (“MDA”), through which, we bought back US$ US$ 37m 29 million GCAP Eurobonds. HELD I
Slide 14: Net Capital Commitment (NCC) Overview
NET CAPITAL COMMITMENT (NCC) OVERVIEW Pro-forma US$ MILLION 30-JUN-22 CHANGE 30-SEP-22 CHANGE 11-AUG-22 30-SEP-22 NCC REPRESENTS AN AGGREGATED Cash and liquid funds 226.5 -40.9% 133.9 13.3% 151.8 VIEW OF ALL CONFIRMED, AGREED Loans issued 8.7 NMF 89.3 -89.6% 9.3 AND EXPECTED CAPITAL OUTFLOWS Accrued
Slide 15: NCC Ratio Development Overview
NCC RATIO DEVELOPMENT OVERVIEW NCC AND NCC RATIO DEVELOPMENT OVERVIEW1 NCC RATIO DOWN BY 2.6 PPTS TO 24.4% IN 3Q22 385.8 365.9 345.7 Pro-forma NCC ratio down to 22.2%, reflecting the results of the MDA and subsequent movements in 42.5% BoG’s share price and FX. 248.5 39.8% 249.0 245.7 In light of a
Slide 16: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q22 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q22 & 9M22 PERFORMANCE OVERVIEW ▪ RECENT DEVELOPMENTS ▪ AGGREGATED PORTFOLIO RESULTS OVERVIEW ▪ NAV PER SHARE DEVELOPMENT OVERVIEW 04 3Q22 & 9M22 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTL
Slide 17: Aggregated Revenue Development Across Private Portfolio
AGGREGATED REVENUE DEVELOPMENT ACROSS PRIVATE PORTFOLIO GEL MILLION AGGREGATED REVENUE UP +35.3% 10.6% Y-O-Y IN 3Q22 AND +9.8% UP 9.8% Y-O-Y IN 9M22 1,400 +34.1% 1,275 350 +10.6% 239 ▪ Aggregated revenue excluding Hospitals and 1,035 Clinics & Diagnostics, which have been 121 125 495 198 temporarily
Slide 18: Aggregated EBITDA Development Across Private Portfolio
AGGREGATED EBITDA DEVELOPMENT ACROSS PRIVATE PORTFOLIO GEL MILLION AGGREGATED EBITDA UP 1.8% +20.6% Y-O-Y IN 3Q22 AND DOWN 7.4% Y-O-Y IN 9M22 -7.4% 201 +7.6% 186 ▪ Aggregated EBITDA excluding Hospitals and 28 Clinics & Diagnostics, is up 31.6% y-o-y in 154 30 +1.8% 3Q22 and up 9.1% y-o-y in 9M22. 47
Slide 19: Aggregated Cash Balance & Net Operating Cash Flow
AGGREGATED CASH BALANCE & NET OPERATING CASH FLOW DEVELOPMENT ACROSS PRIVATE PORTFOLIO ORGANIC TRANSITION TO REVENUE GROWTH STRATEGY FROM PREVIOUSLY ADOPTED CASH PRESERVATION STRATEGY TOTAL AGGREGATED NET OPERATING CASH FLOW TOTAL AGGREGATED CASH BALANCE OF PRIVATE BUSINESSES (GEL MILLION) (GEL MILL
Slide 20: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q22 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q22 & 9M22 PERFORMANCE OVERVIEW ▪ RECENT DEVELOPMENTS ▪ AGGREGATED PORTFOLIO RESULTS OVERVIEW ▪ NAV PER SHARE DEVELOPMENT OVERVIEW 04 3Q22 & 9M22 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTL
Slide 21: NAV per Share (GEL) Movement in 3Q22
NAV PER SHARE (GEL) MOVEMENT IN 3Q22 NAV PER SHARE (GEL) -4.7% +5.9% +6.1% +0.9% -0.4% +0.4% +8.2% +6.3% +14.5% UP 8.2% IN 3Q22 ▪ NAV per share (GBP) up 25.5% in 3Q22, reflecting the 16.0% appreciation of GEL against GBP during the third PRIVATE PORTFOLIO quarter and strong growth in GEL terms ▪ As
Slide 22: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q22 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q22 & 9M22 PERFORMANCE OVERVIEW 04 3Q22 & 9M22 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 22
Slide 23: Portfolio Value as of 30-Sep-22
PORTFOLIO VALUE AS OF 30-SEP-22 % SHARE IN TOTAL PORTFOLIO VALUE: 78% OF OUR PORTFOLIO 90% IS OF OUR PORTFOLIO 21% 5% 24% 15% 9% 6% 6% 4% 10% ISVALUED VALUED EXTERNALLY EXTERNALLY1 1 MULTIPLE: GBP 19.88 OPTION 8.6x 11.4x 10.7x – 12.7x 10.7x 14.8x 12.7x6 BGEO VALUATION2 LTM EV/EBITDA3 LTM EV/EBITDA3
Slide 24: Portfolio Value Development in 3Q22
PORTFOLIO VALUE DEVELOPMENT IN 3Q22 PORTFOLIO VALUE UP 5.6% TO GEL 2.9 BILLION IN 3Q22 LISTED AND OBSERVABLE PRIVATE PORTFOLIO VALUE UP BY GEL 9 MILLION GEL MILLION PORTFOLIO VALUE UP BY (0.4%) GEL 142 MILLION (23.4%) 24
Slide 25: Retail (Pharmacy) Business Operating Performance
RETAIL (PHARMACY) BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA1 DEVELOPMENT RETAIL (PHARMACY) +21.4% +2.6% KEY DRIVERS 566 581 +12.9% +18.9% ▪ 3Q22 and 9M22 revenues of Retail GEL MILLION 478 (Pharmacy) reflect the recalibration of product -1.8% +5.2% prices due to GEL’s apprec
Slide 26: Retail (Pharmacy) Business Valuation Overview
Externally valued1 RETAIL (PHARMACY) BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q22 IMPLIED LTM EV/EBITDA DEVELOPMENT (GEL MILLION) (incl. IFRS 16) Change q-o-q +0.9% -0.7% +3.8% +0.9% 8.6x 8.3x 30-Jun-22 30-Sep-22 VALUATION HIGHLIGHTS1 ADJUSTED NET DEBT TO EBITDA2 GEL million, unless
Slide 27: Hospitals Business Operating Performance
HOSPITALS BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA1 DEVELOPMENT +31.4% -7.2% HOSPITALS 233 216 KEY DRIVERS +12.3% ▪ 3Q22 and 9M22 performance of the +15.0% GEL MILLION 164 business reflects the suspension of COVID -32.5% -18.1% contracts by the Government in 1Q22 and the su
Slide 28: Hospitals Business Valuation Overview
Externally valued1 HOSPITALS BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q22 IMPLIED LTM EV/EBITDA DEVELOPMENT (GEL MILLION) (incl. IFRS 16) Change q-o-q -4.8% +8.5% -3.1% -9.6% 11.4x 10.5x 30-Jun-22 30-Sep-22 VALUATION HIGHLIGHTS1 NET DEBT TO EBITDA GEL million, unless noted otherwise
Slide 29: Insurance Business Operating Performance
INSURANCE BUSINESS OPERATING PERFORMANCE OVERVIEW EARNED PREMIUMS NET NET INCOME DEVELOPMENT +22.7% +10.3% 128 INSURANCE 116 +11.3% GEL MILLION 104 KEY DRIVERS 55 +10.5% P&C Insurance ▪ Increase in earned premiums net in 3Q22 and 54 +32.6% 51 +65.0% 18.0 9M22 is mainly driven by the growth in the 16
Slide 30: P&C Insurance Business Valuation Overview
Externally valued1 P&C INSURANCE BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q22 IMPLIED LTM P/E MULTIPLE DEVELOPMENT (GEL MILLION) Change q-o-q +6.7% 11.0x 10.7x 30-Jun-22 30-Sep-22 VALUATION HIGHLIGHTS1 NET DEBT TO EBITDA GEL million, unless noted otherwise 30-Sep-22 30-Jun-22 Change
Slide 31: Renewable Energy Business Operating Performance
RENEWABLE ENERGY BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA DEVELOPMENT +4.9% RENEWABLE ENERGY +12.0% +5.3% KEY DRIVERS +5.1% 12 +16.4% 11 • In US$ terms, revenue and EBITDA were up 10 US$ MILLION +6.2% 23.9% and 30.4% y-o-y in 3Q22, respectively, +23.9% reflecting an increas
Slide 32: Renewable Energy Business Valuation Overview
Externally valued1 RENEWABLE ENERGY BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q22 EQUITY FAIR VALUE COMPOSITION AT 30-SEP-22 (US$ MILLION) (US$ MILLION) Change q-o-q +2.2% 0.6% +4.5% 14 Total value US$ 61 47 Operational assets Pipeline projects VALUATION HIGHLIGHTS1 NET DEBT TO EBITD
Slide 33: Education Business Operating Performance
EDUCATION BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA DEVELOPMENT EDUCATION +68.9% +47.5% +107.2% KEY DRIVERS 29 GEL MILLION +65.2% ▪ In 3Q22, the education business increased its capacity by 590 learners to 5,650 9 learners. +113.9% 20 +78.6% ▪ Strong intakes in 2022-2023 aca
Slide 34: Education Business Valuation Overview
Externally valued1 EDUCATION BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q22 LTM EV/EBITDA DEVELOPMENT (GEL MILLION) Change q-o-q +6.6% +5.3% -16.8% +7.0% +7.7% 15.3x 14.8x 30-Jun-22 30-Sep-22 2 VALUATION HIGHLIGHTS1 NET DEBT TO EBITDA GEL million, unless noted otherwise 30-Sep-22 30-J
Slide 35: Clinics & Diagnostics Business Operating Performance
CLINICS & DIAGNOSTICS BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT2 EBITDA1 DEVELOPMENT +65.4% -9.1% CLINICS & DIAGNOSTICS 72 +20.0% 65 -48.9% KEY DRIVERS +27.0% 22 16 16 ▪ Similar to the hospitals business, our clinics GEL MILLION -29.7% 40 -62.6% business was also impacted by the su
Slide 36: Clinics & Diagnostics Business Valuation Overview
Externally valued1 CLINICS & DIAGNOSTICS BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 3Q22 IMPLIED LTM EV/EBITDA DEVELOPMENT (GEL MILLION) (incl. IFRS 16) Change q-o-q -2.6% -2.3% -9.0% -2.6% 12.7x 9.8x 30-Jun-22 30-Sep-22 VALUATION HIGHLIGHTS1 NET DEBT TO EBITDA GEL million, unless note
Slide 37: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q22 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q22 & 9M22 PERFORMANCE OVERVIEW 04 3Q22 & 9M22 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 37
Slide 38: Dividend Income Outlook
DIVIDEND INCOME OUTLOOK DIVIDEND INCOME FROM PORTFOLIO COMPANIES 94 DIVIDEND INCOME +31.3% PER SHARE (GEL) 1.6 c.2.1 ROBUST DIVIDEND INCOME IN 2022 GEL MILLION IN 2022 +26.4% c.94.0 DIVIDENDS INCOME 3Q22 TO DATE GEL MILLION (GEL million) c. 9.5 74.4 BOG - 40.9 14.5 2 40.91 Retail (Pharmacy) 16.0 16.
Slide 39: Liquidity Outlook
LIQUIDITY OUTLOOK LIQUIDITY DEVELOPMENT OVERVIEW (US$ MILLION) GROSS DEBT (US$ million) 300 300 365 365 365 365 300 * GCAP LIQUIDITY DOWN BY 42.8% IN 3Q22, MAINLY REFLECTING THE SHAREHOLDER LOAN ISSUED TO RENEWABLE ENERGY -42.8%* 232 234 ** LIQUIDITY UP BY 13.4% WHEN ADJUSTED FOR THE GCAP EUROBOND B
Slide 40: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q22 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q22 & 9M22 PERFORMANCE OVERVIEW 04 3Q22 & 9M22 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 40
Slide 41: 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 8.2% in 3Q22, up 25.5% in GBP terms ✓ GEL 32.0 million regular divided income in 3Q22 (GEL 84.5 million to date, including GEL 18.1 million interim dividends collected fro
Slide 42: Contents
CONTENTS 01 KEY DEVELOPMENTS IN 3Q22 02 MACROECONOMIC UPDATE | GEORGIA 03 3Q22 & 9M22 PERFORMANCE OVERVIEW 04 3Q22 & 9M22 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 42
Slide 43: NAV per Share (GEL) Movement in 9M22
NAV PER SHARE (GEL) MOVEMENT IN 9M22 NAV PER SHARE (GEL) -9.9% +1.3% -1.6% +4.1% -1.0% -2.3% -9.5% +5.3% -4.2% DOWN 9.5% IN 9M22 ▪ The decrease in NAV per share (GEL) reflects the impact of: • value reduction across our PRIVATE PORTFOLIO listed and observable and private portfolio companies with a 1
Slide 44: Progress on the Share Buyback and Cancellation Programme
PROGRESS ON THE SHARE BUYBACK AND CANCELLATION PROGRAMME DEVELOPMENT OF SHARE BUYBACK AND CANCELLATION PROGRAMME 3.1 MILLION SHARES (c.7% OF ISSUED 0.9 TOTAL CAPITAL) HAVE BEEN REPURCHASED 0.8 UNDER THE US$ 25 MILLION SHARE 0.5 0.6 3.1 BUYBACK AND CANCELLATION 0.4 MILLION PROGRAMME AS OF 30-SEP-22 7
Slide 45: Deleveraging Across Our Private Portfolio
DELEVERAGING ACROSS OUR PRIVATE PORTFOLIO TARGET AGGREGATED LEVERAGE ADJUSTED NET DEBT/EBITDA 30-JUN-22 CHANGE 30-SEP-22 (OVER THE CYCLE) ACROSS OUR PRIVATE LARGE AND INVESTMENT STAGE LARGE PORTFOLIO COMPANIES PORTFOLIO COMPANIES AT Retail (pharmacy)1 1.6x +0.1x 1.7x Up to 1.5x 2.5x AS OF 30-SEP-22
Slide 46: Private Portfolio Companies' Debt Maturity Profile
PRIVATE PORTFOLIO COMPANIES’ DEBT MATURITY PROFILE GROSS DEBT MATURITY AS OF 30 SEPTEMBER 2022 (GEL MILLION) 2022 2023 2024 2025+ Total Large portfolio companies 51.1 157.1 79.0 34.7 321.9 - 26.4 9.2 23.7 59.3 Retail (pharmacy) 51.1 130.7 69.8 11.0 262.6 Hospitals - - - - - Medical Insurance Investm
Slide 47: Valuation Peer Group
VALUATION PEER GROUP RETAIL P&C (PHARMACY) HOSPITALS INSURANCE • NEUCA S.A. | Poland • Medicover AB (publ) | Sweden • Dhipaya Insurance | Thailand • Sopharma Trading AD | Bulgaria • EMC Instytut Medyczny SAEMC SA | Poland • Zavarovalnica Triglav | Slovenia • S.C. Ropharma S.A. | Romania • Med Life S
Slide 48: 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