Georgia Capital PLC · LSE:CGEO
Georgia Capital — Q1 2023 Earnings Presentation
48 slides from Georgia Capital's earnings presentation, May 10, 2023
Slide 1: 1Q23 Results Call Presentation
1Q23 RESULTS CALL PRESENTATION 10 MAY 2023
Slide 2: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 1Q23 PERFORMANCE OVERVIEW 04 1Q23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 2
Slide 3: Recent Developments
RECENT DEVELOPMENTS KEY ACTIVITIES IN 1Q23 01 02 03 04 05 ROBUST OPERATIONAL TRANSFER TO LSE SALE OF HOSPITALITY EXPANSION OF THE SHARE AND FINANCIAL STANDARD LISTING BUSINESS ASSETS EDUCATION BUSINESS BUYBACKS PERFORMANCE IN 1Q23 ➢ NAV per share (GEL) up 3.3% ➢ Successful completion of the ➢ Sale o
Slide 4: Completion of the Transfer to LSE Standard Listing
COMPLETION OF THE TRANSFER TO LSE STANDARD LISTING FOLLOWING THE TRANSFER, GCAP CONTINUES FOLLOWING THE APPROVAL FROM A 99.99% OF THE VOTING SHAREHOLDERS, TO MAINTAIN THE HIGHEST LEVELS OF: THE TRANSFER TO LSE STANDARD LISTING BECAME EFFECTIVE ON 13 APRIL 2023 CORPORATE GOVERNANCE THE TRANSFER IS AN
Slide 5: Sale of Hospitality Business Assets
SALE OF HOSPITALITY BUSINESS ASSETS THE PROCEEDS FROM THE TRANSACTION WERE FULLY UTILISED FOR DELEVERAGING THE HOSPITALITY BUSINESS BALANCE SHEET ➢ In 1Q23, our hospitality business completed the sale of two operational hotels and a vacant land plot in Tbilisi for a total TRANSACTION HIGHTLIGHTS NET
Slide 6: Expansion of the Education Business
EXPANSION OF THE EDUCATION BUSINESS TOTAL LEARNER CAPACITY DEVELOPMENT OVERVIEW WE ARE SCALING UP OUR HIGH-QUALITY K-12 EDUCATION IN GEORGIA, IN LINE WITH +21.2% OUR CAPITAL ALLOCATION PROGRAMME 6,870 1,150 5,670 RECENT INVESTMENT PROJECTS: TOTAL CAPACITY AS AT 31-MAR-23 1,020 ✓ Acquisition of a new
Slide 7: Commencement of US$ 10 Million Share Buyback and Cancellation Programme
COMMENCEMENT OF US$ 10 MILLION SHARE BUYBACK AND CANCELLATION PROGRAMME DEVELOPMENT OF SHARE BUYBACK AND CANCELLATION PROGRAMME 665,921 SHARES (1.5% OF ISSUED CAPITAL) HAVE BEEN REPURCHASED UNDER THE BUYBACK PROGRAMME AS OF 5-MAY-23 Remaining funds earmarked for buybacks 3.5 10 6.5 Repurchased as of
Slide 8: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 1Q23 PERFORMANCE OVERVIEW 04 1Q23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 8
Slide 9: Real GDP Up by 7.2% in 1Q23
REAL GDP UP BY 7.2% IN 1Q23 PRELIMINARY ECONOMIC GROWTH STANDING AT 7.2% Y-O-Y IN 1Q23, FOLLOWING UP ON TWO YEARS OF DOUBLE-DIGIT EXPANSION (10.5% AND 10.1% IN 2021-2022 RESPECTIVELY) ECONOMIC GROWTH REMAINS STRONG 50% 45% 40% 30% 26% ➢ Strong external demand supplemented by the migration effect, 19
Slide 10: Georgia Ranks Among Top Performers in the World
GEORGIA RANKS AMONG TOP 10 PERFORMERS IN THE WORLD WITH RESPECT TO VARIOUS ECONOMIC GROWTH INDICATORS RECENT AND PROJECTED ECONOMIC GROWTH INDICATORS IN GEORGIA (IMF) 8th place 8th place 9th place 3rd place 9th place 9th place among all among all among all among countries among all among all countri
Slide 11: Georgian Lari – Now Above Pre-Pandemic Levels
GEORGIAN LARI – NOW ABOVE PRE-PANDEMIC LEVELS APPRECIATING SINCE MID-2021, BRIEFLY INTERRUPTED AFTER THE RUSSIAN INVASION OF UKRAINE, GEL HAS NOW STRENGTHENED TO ABOVE PRE-PANDEMIC LEVELS AGAINST USD GEL APPRECIATION DRIVERS 3.8 Series1 3.46 3.40 3.3 ➢ Record-high remittance inflows, surging by 130%
Slide 12: Current Account Deficit at a Record Low of 4.1% of GDP in 2022
CURRENT ACCOUNT DEFICIT AT A RECORD LOW OF 4.1% OF GDP IN 2022, ON THE BACK OF A RECORD-HIGH 5.7% SURPLUS IN 3Q22 CURRENT ACCOUNT COMPONENTS AND FDI INFLOWS (% OF NOMINAL GDP) 28% Goods, net Services, net Investment income, net EXTERNAL INFLOWS AT RECORD-HIGH LEVELS Current transfers, net Current ac
Slide 13: Inflation Below the Target Level in April 2023
INFLATION BELOW THE TARGET LEVEL IN APRIL 2023 INFLATION Y-O-Y VS. INFLATION TARGET Headline Inflation Core Inflation Target Monetary Policy Rate SIGNIFICANT DISINFLATION UNDERWAY 16 12 11.00 ➢ Annual inflation decelerated to 2.7% in April 2023, below the 3% 8 target, decelerating significantly comp
Slide 14: Public Debt Shrinking Below Pre-COVID Levels
PRELIMINARY ESTIMATES SHOW PUBLIC DEBT SHRINKING BELOW PRE- COVID LEVELS AND THE FISCAL DEFICIT FALLING UNDER 3% OF GDP IN 2022 GENERAL GOVERNMENT DEBT (% OF GDP) General Government Debt, External (% of GDP) General Government Debt, Total (% of GDP) FISCAL SUPPORT HAS CONTINUED MODERATING 60.1% 60%
Slide 15: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 1Q23 PERFORMANCE OVERVIEW ▪ AGGREGATED PORTFOLIO RESULTS OVERVIEW ▪ NAV PER SHARE DEVELOPMENT OVERVIEW ▪ UPDATE ON DELEVERAGING 04 1Q23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 0
Slide 16: Aggregated Revenue Development Across Private Portfolio
AGGREGATED REVENUE DEVELOPMENT ACROSS PRIVATE PORTFOLIO GEL MILLION AGGREGATED REVENUE UP 10.0% Y-O-Y IN 1Q23 AND UP BY 26.5% FROM 1Q21 +26.5% +2.3% +10.0% 1,902 1,945 ▪ Aggregated revenue excluding Hospitals and Clinics & Diagnostics, which are 484 529 completing their gradual organic return to 479
Slide 17: Aggregated EBITDA Development Across Private Portfolio
AGGREGATED EBITDA DEVELOPMENT ACROSS PRIVATE PORTFOLIO GEL MILLION AGGREGATED EBITDA UP 0.9% Y-O-Y IN 1Q23 AND UP BY +0.2% 0.6% FROM 1Q21 243 244 +0.6% ▪ Aggregated EBITDA excluding Hospitals and 35 37 Clinics & Diagnostics, is up 12.0% y-o-y in 1Q23. +0.9% 56 53 54 54 55 7 1 4 13 10 11 37 40 40 153
Slide 18: Aggregated Cash Balance & Net Operating Cash Flow Development
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 19: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 1Q23 PERFORMANCE OVERVIEW ▪ AGGREGATED PORTFOLIO RESULTS OVERVIEW ▪ NAV PER SHARE DEVELOPMENT OVERVIEW ▪ UPDATE ON DELEVERAGING 04 1Q23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 0
Slide 20: NAV per Share (GEL) Movement in 1Q23
NAV PER SHARE (GEL) MOVEMENT IN 1Q23 NAV PER SHARE (GEL) +2.0% +0.7% +1.1% -0.4% -0.2% +3.3% +4.3% +7.6% UP 3.3% IN 1Q23 ▪ NAV per share (GBP) up 6.4% in 1Q23. ▪ As of 5-May-23, NAV per share (GEL) up 7.6% and up 12.3% in GBP terms from 31- Dec-22, reflecting: (a) GCAP’s share buybacks, (b) particip
Slide 21: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 1Q23 PERFORMANCE OVERVIEW ▪ AGGREGATED PORTFOLIO RESULTS OVERVIEW ▪ NAV PER SHARE DEVELOPMENT OVERVIEW ▪ UPDATE ON DELEVERAGING 04 1Q23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 0
Slide 22: Net Capital Commitment (NCC) Overview
NET CAPITAL COMMITMENT (NCC) OVERVIEW US$ MILLION 31-DEC-22 CHANGE 31-MAR-23 NCC REPRESENTS AN AGGREGATED Cash and liquid funds 152.4 -11.8% 134.5 VIEW OF ALL CONFIRMED, AGREED Loans issued 9.9 39.8% 13.9 AND EXPECTED CAPITAL OUTFLOWS Gross debt (303.3) -1.4% (299.2) AT THE GCAP HOLDCO LEVEL Net deb
Slide 23: NCC Ratio Development Overview
NCC RATIO DEVELOPMENT OVERVIEW NCC AND NCC RATIO DEVELOPMENT OVERVIEW1 NCC RATIO DOWN BY 1.4 PPTS TO 19.7% IN 1Q23 385.8 365.9 345.7 Subsequent to 1Q23, we have received an additional GEL 26.3 million from participating in the BoG’s buybacks with 295,000 BoG shares sold. This coupled 42.5% 39.8% 250
Slide 24: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 1Q23 PERFORMANCE OVERVIEW 04 1Q23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 24
Slide 25: Portfolio Value as of 31-Mar-23
PORTFOLIO VALUE AS OF 31-MAR-23 % SHARE IN TOTAL PORTFOLIO VALUE: 78% OF OUR PORTFOLIO 91% IS OF OUR PORTFOLIO 25% 5% 23% 13% 9% 8% 5% 3% 9% ISVALUED VALUED EXTERNALLY EXTERNALLY1 1 MULTIPLE: GBP 27.50 OPTION 9.3x 12.8x 10.4x – 8.8x 12.6x 16.2x 21.0x6 BGEO VALUATION2 LTM EV/EBITDA3 LTM EV/EBITDA3 LT
Slide 26: Portfolio Value Development in 1Q23
PORTFOLIO VALUE DEVELOPMENT IN 1Q23 PORTFOLIO VALUE UP 2.2% TO GEL 3.3 BILLION IN 1Q23 LISTED AND OBSERVABLE PRIVATE PORTFOLIO VALUE GEL MILLION PORTFOLIO VALUE1 UP BY GEL 69 MILLION (3.1%) Georgia Capital PLC | 1. A 5.6% growth in BoG’s share price in 1Q23 was offset by GEL 21.2 million buyback div
Slide 27: Retail (Pharmacy) Business Operating Performance Overview
RETAIL (PHARMACY) BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA1 DEVELOPMENT +14.1% RETAIL (PHARMACY) -0.3% KEY DRIVERS ▪ 1Q23 revenue and EBITDA were largely flat, GEL MILLION notwithstanding a) a significant decrease in +56.7% product prices, due to GEL’s appreciation 199 198
Slide 28: Retail (Pharmacy) Business Valuation Overview
Externally valued1 RETAIL (PHARMACY) BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 1Q23 IMPLIED LTM EV/EBITDA DEVELOPMENT (GEL MILLION) (incl. IFRS 16) Change q-o-q +1.8% -7.3% +1.9% +3.6% 9.1x 9.3x 31-Dec-22 31-Mar-23 VALUATION HIGHLIGHTS1 ADJUSTED NET DEBT TO EBITDA2 GEL million, unless
Slide 29: Hospitals Business Operating Performance Overview
HOSPITALS BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA1 DEVELOPMENT +4.2% -4.4% HOSPITALS KEY DRIVERS ▪ 1Q23 performance of the business reflects: ➢ the temporary closure of Iashvili Hospital GEL MILLION due to the mandatory renovation works (the works commenced in October 2022
Slide 30: Hospitals Business Valuation Overview
Externally valued1 HOSPITALS BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 1Q23 IMPLIED LTM EV/EBITDA DEVELOPMENT (GEL MILLION) (incl. IFRS 16) Change q-o-q +1.5% +8.3% 0.0% -1.4% 12.8x 12.2x 31-Dec-22 31-Mar-23 VALUATION HIGHLIGHTS1 NET DEBT TO EBITDA GEL million, unless noted otherwise
Slide 31: Insurance Business Operating Performance Overview
INSURANCE BUSINESS OPERATING PERFORMANCE OVERVIEW INSURANCE REVENUE NET INCOME DEVELOPMENT +30.6% +19.3% INSURANCE 47 GEL MILLION KEY DRIVERS 39 P&C Insurance 36 22 ▪ The increase in insurance revenue is mainly driven by the growth in the credit life, motor 18 +21.6% and border MTPL insurance lines.
Slide 32: P&C Insurance Business Valuation Overview
Externally valued1 P&C INSURANCE BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 1Q23 IMPLIED LTM P/E MULTIPLE DEVELOPMENT (GEL MILLION) Change q-o-q +1.9% 10.6x 10.4x 31-Dec-22 31-Mar-23 VALUATION HIGHLIGHTS1 NET DEBT TO EBITDA GEL million, unless noted otherwise 31-Mar-23 31-Dec-22 Change
Slide 33: Renewable Energy Business Operating Performance Overview
RENEWABLE ENERGY BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA DEVELOPMENT RENEWABLE ENERGY -7.2% KEY DRIVERS • A y-o-y decrease in revenue and EBITDA in -12.8% 1Q23 reflect the net impact of: US$ MILLION ➢ A 49.7% y-o-y decrease in electricity -17.9% generation at Hydrolea HPPs
Slide 34: Renewable Energy Business Valuation Overview
Externally valued1 RENEWABLE ENERGY BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 1Q23 EQUITY FAIR VALUE COMPOSITION AT 31-MAR-23 (US$ MILLION) (US$ MILLION) Change q-o-q +9.6% +4.6% +14.0% 20 Total value US$ 95 75 Operational assets Pipeline projects VALUATION HIGHLIGHTS1 NET DEBT TO EBI
Slide 35: Education Business Operating Performance Overview
EDUCATION BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT EBITDA DEVELOPMENT +87.5% EDUCATION +29.0% KEY DRIVERS 14 GEL MILLION ▪ Increase in revenues reflect strong intakes and a ramp-up of utilization. 11 ▪ EBITDA margin down by 1.5ppts at 38.5% +95.1% y-o-y in 1Q23, reflecting increas
Slide 36: Education Business Valuation Overview
Externally valued1 EDUCATION BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 1Q23 LTM EV/EBITDA DEVELOPMENT (GEL MILLION) Change q-o-q +1.3% +58.4% +9.7% -0.3% +6.6% 16.9x 16.2x 4 31-Dec-22 31-Mar-23 2 VALUATION HIGHLIGHTS1 NET DEBT TO EBITDA GEL million, unless noted otherwise 31-Mar-23 31
Slide 37: Clinics & Diagnostics Business Operating Performance Overview
CLINICS & DIAGNOSTICS BUSINESS OPERATING PERFORMANCE OVERVIEW REVENUE DEVELOPMENT2 EBITDA1 DEVELOPMENT +3.0% CLINICS & DIAGNOSTICS KEY DRIVERS -21.7% ▪ Our clinics and diagnostics business’s 28 GEL MILLION -38.9% decreased revenue and EBITDA were due to 21 21 the significantly reduced number of COVI
Slide 38: Clinics & Diagnostics Business Valuation Overview
Externally valued1 CLINICS & DIAGNOSTICS BUSINESS VALUATION OVERVIEW VALUE DEVELOPMENT OVERVIEW | 1Q23 IMPLIED LTM EV/EBITDA DEVELOPMENT2 (GEL MILLION) (incl. IFRS 16) Change q-o-q +0.5% +5.9% -4.6% -2.4% 21.0x 16.5x 31-Dec-22 31-Mar-23 VALUATION HIGHLIGHTS1 NET DEBT TO EBITDA GEL million, unless no
Slide 39: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 1Q23 PERFORMANCE OVERVIEW 04 1Q23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 39
Slide 40: Liquidity Outlook
LIQUIDITY OUTLOOK LIQUIDITY DEVELOPMENT OVERVIEW (US$ MILLION) GROSS DEBT (US$ million) • LIQUIDITY DOWN BY 11.8% IN US$ TERMS IN 1Q23, MAINLY REFLECTING: A) GEL 23.9 MILLION COUPON 300 300 365 365 300 300 PAYMENT, B) GEL 19.3 MILLION CASH OUTFLOW FOR BUYBACKS, AND C) GEL 17.0 MILLION CAPITAL CASH R
Slide 41: Dividend Income Outlook
DIVIDEND INCOME OUTLOOK DIVIDEND INCOME FROM PORTFOLIO COMPANIES DIVIDEND INCOME 1.6 2.1 1.21 PER SHARE (GEL) DIVIDEND INCOME 1Q23 YTD1 (GEL million) Buyback dividend 21.2 47.5 Regular dividends from Renewable Energy 5.2 5.2 +26.2% TOTAL 26.4 52.7 GEL MILLION 94 * GEL 98-108 GEL 150-160 MILLION DIVI
Slide 42: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 1Q23 PERFORMANCE OVERVIEW 04 1Q23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 42
Slide 43: Solid Performance Across Our Portfolio, With Outlook Being Even Stronger
SOLID PERFORMANCE ACROSS OUR PORTFOLIO, WITH OUTLOOK BEING EVEN STRONGER PERFORMANCE HIGHLIGHTS ✓ NAV per share (GEL) up 3.3% in 1Q23 (up 6.4% in GBP terms), reflecting strong value creation across our portfolio companies ✓ NCC ratio decreased by 1.4 ppts to 19.7% in 1Q23, resulting from the continu
Slide 44: Contents
CONTENTS 01 RECENT DEVELOPMENTS 02 MACROECONOMIC UPDATE | GEORGIA 03 1Q23 PERFORMANCE OVERVIEW 04 1Q23 PORTFOLIO RESULTS AND VALUATIONS OVERVIEW 05 LIQUIDITY AND DIVIDEND INCOME OUTLOOK 06 WRAP-UP 07 ANNEX 44
Slide 45: Deleveraging Across Our Private Portfolio
DELEVERAGING ACROSS OUR PRIVATE PORTFOLIO TARGET AGGREGATED LEVERAGE ADJUSTED NET DEBT/EBITDA 31-DEC-22 CHANGE 31-Mar-23 (OVER THE CYCLE) ACROSS OUR PRIVATE LARGE AND INVESTMENT STAGE LARGE PORTFOLIO COMPANIES PORTFOLIO COMPANIES AT Retail (pharmacy)1 1.6x -0.2x 1.4x Up to 1.5x 2.7x AS OF 31-MAR-23
Slide 46: Private Portfolio Companies' Debt Maturity Profile
PRIVATE PORTFOLIO COMPANIES’ DEBT MATURITY PROFILE GROSS DEBT MATURITY AS OF 31 MARCH 2023 (GEL MILLION) 2023 2024 2025 2026+ Total Large portfolio companies 101.7 99.9 37.6 86.4 325.6 Retail (pharmacy) 73.9 17.0 15.6 25.9 132.4 Hospitals 27.8 82.9 22.0 60.5 193.2 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
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