Georgia Capital PLC · LSE:CGEO
Georgia Capital — H1 2020 Earnings Presentation
44 slides from Georgia Capital's earnings presentation, Aug 20, 2020
Slide 1: 1H20 results call presentation
1H20 results call presentation 20 August Page 2020 1
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: Today's key messages
Today’s key messages 1 Rebound in revenues across all portfolio companies at the end of lockdown ➢ Aggregated revenue growth of 11% y-o-y in Jun-20, reflecting high single-digit or even double-digit monthly revenue growth across the board 2 Strong operating cash flow generation across portfolio comp
Slide 4: Content
Content 1. COVID-19 update | Georgia 2. COVID-19 update | Georgia Capital 3. 1H20 NAV development 4. Portfolio overview 5. Key developments in 1H20 6. Appendix Page 4
Slide 5: COVID-19 statistics in Georgia
COVID-19 statistics Lowest number of confirmed cases and deaths per capita in the region Georgia: COVID-19 response COVID-19 cases: dynamics in Georgia* 1600 Total Recovered Total Cases Active Cases – Border checks began on 27 February and schools switched to distance learning from 29 February; 1400
Slide 6: Government measures
Government 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 billion intended for the private sector ➢ Social aid GEL 1.03 billion – US$1.5 billion for the public se
Slide 7: Macroeconomic fundamentals in 1H20
Macroeconomic fundamentals in 1H20 Monthly Economic Activity Estimate, y-o-y growth Fast indicators ➢ Economy contraction has been eased from April and GDP contraction in June was 7.7% y-o-y. ➢ Merchandise trade and money transfers have recovered significantly, with remittances posting 18% ➢ Strong
Slide 8: Macroeconomic fundamentals in 1H20 (cont'd)
Macroeconomic fundamentals in 1H20 (cont’d) Unemployment rate 1H20 tax revenues | Actual vs. Planned 6.0 +0.9ppts 100.4% 5.0 4.57 4.59 14.0% +0.4ppts 12.8% 4.0 13.0% 12.3% 12.3% GEL billions 12.1% 12.2% 11.9% 12.0% 11.4% 3.0 11.1% 10.9% 101.6% 11.0% 100.1% 2.0 1.63 1.63 1.68 1.71 10.0% 97.0% 103.3%
Slide 9: Content
Content 1. COVID-19 update | Georgia 2. COVID-19 update | Georgia Capital 3. 1H20 NAV development 4. Portfolio overview 5. Key developments in 1H20 6. Appendix Page 9
Slide 10: Our response to COVID-19
Our response to COVID-19 We implemented a cash accumulation and preservation strategy at the end of 1Q20 COVID-19 measures Progress in 2Q20 Limited capital allocations at GCAP level, only critical investments No capital allocations in 2Q20 throughout the remainder of 2020, if any Aggregated developm
Slide 11: Rebound in revenues across all portfolio companies
Rebound in revenues across all portfolio companies Rebound in revenues across all portfolio companies from April’s lows, resulting in 11% y-o-y aggregated revenue growth* in June Change (y-o-y) +12.6% +15.5% +12.0% -16.7% -12.8% +11.0% +6.9% 146 135 137 +48.0% 128 GEL millions Jul vs. Apr 125 116 98
Slide 12: Monthly performance analysis | impact of COVID-19
Monthly performance analysis | impact of COVID-19 GHG | Consolidated revenue GHG | Healthcare Services revenue Change (y-o-y) Change (y-o-y) +6.9% +15.7% +9.2% -19.4% -15.2% +6.0% +5.1% +0.7% +4.7% -15.9% -43.7% -26.7% +1.2% +0.1% 28.4 28.5 28.1 95.0 30.0 27.5 89.3 28.0 25.1 85.3 GEL millions 90.0 8
Slide 13: Monthly performance analysis | impact of COVID-19 (cont'd)
Monthly performance analysis | impact of COVID-19 (cont’d) Water Utility Water supply revenue Electricity sales revenue Change (y-o-y) Change (y-o-y) +9.1% +6.4% -13.7% -29.7% -24.8% -12.7% -5.5% +31.7% -130.1% -109.1% -6.1% -72.6% -80.4% -78.7% 13.0 12.5 11.1 11.2 12.0 1.2 1.0 11.0 10.0 9.6 GEL mil
Slide 14: Monthly performance analysis | impact of COVID-19 (cont'd)
Monthly performance analysis | impact of COVID-19 (cont’d) Renewable Energy Revenue Average selling price per kw, US$* Change (y-o-y) Change (y-o-y) +6.8% -21.9% +23.3% +18.8% +69.6% +29.8% +19.2% +0.2% -1.4% -2.7% -0.7% +22.1% +27.2% +14.6% 0.06 0.06 0.06 0.06 GEL millions 7.0 5.8 0.07 6.0 4.8 0.06
Slide 15: Monthly performance analysis | impact of COVID-19 (cont'd)
Monthly performance analysis | impact of COVID-19 (cont’d) Beverages Wine revenue Beer revenue Change (y-o-y) Change (y-o-y) -40.9% -63.5% -11.7% -42.3% -35.5% +18.7% +32.7% +55.8% +10.7% +24.1% +11.1% +12.6% +8.8% +11.4% 5.0 8.0 6.9 4.5 6.2 3.6 GEL millions GEL millions 3.5 7.0 4.0 3.5 2.8 6.0 4.8
Slide 16: Monthly performance analysis | Commercial Real Estate
Monthly performance analysis | impact of COVID-19 (cont’d) Commercial Real Estate Cash inflows at commercial RE Cash collection rate 87.2% 99.6% 96.4% 95.3% 96.8% 97.2% 97.2% 400 350 318 296 US$ thousands 300 268 247 254 250 215 218 200 150 100 January February March April May June July Hospitality
Slide 17: Strong operating cash flow generation across portfolio companies
Strong operating cash flow generation across portfolio companies Portfolio company aggregated* operating cash flow generation up 96.0% y-o-y to GEL 179.8 million in 1H20 Late stage: +48% Early stage: +4.9x GEL 42.7 GEL 63.1 GEL (7.3) GEL 28.0 +96.0% 179.8 +57.7% +63.1% -35.9% NMF -32.5% NMF NMF NMF
Slide 18: Content
Content 1. COVID-19 update | Georgia 2. COVID-19 update | Georgia Capital 3. 1H20 NAV development 4. Portfolio overview 5. Key developments in 1H20 6. Appendix Page 18
Slide 19: Total portfolio value change in 2Q20
Total portfolio value change in 2Q20 4. Liquidity GEL thousands unless otherwise 1. Value 2a. 3. Operating Share in total Mar-20 2b. Buybacks 2c. Dividends management/ FX Jun-20 Change % noted creation Investments expenses portfolio /Other Listed Portfolio Companies GHG1 295,455 40,212 - - - - - 335
Slide 20: NAV per share developments in 1H20
NAV per share developments in 1H20 NAV per share down 32.4% in 1H20 reflecting negative impact of COVID-19 NAV per share -21.0% -7.8% -1.0% -0.5% -5.4% -35.6% +6.2% -4.3% -0.6% +3.6% +4.9% change % GEL 46.84 (9.82) (3.65) (0.46) (0.21) (2.52) 1.86 (1.28) 1.08 (0.17) GEL 31.67 GEL 30.18 NAV per share
Slide 21: Content
Content 1. COVID-19 update | Georgia 2. COVID-19 update | Georgia Capital 3. 1H20 NAV development 4. Portfolio overview 5. Key developments in 1H20 6. Appendix Page 21
Slide 22: GHG overview
GHG overview 1H20 performance highlights | GHG Consolidated +0.3% Financial metrics* GEL millions, unless otherwise noted 1H20 1H19 Change 471.7 472.9 Revenue, net 472.9 471.7 0.3% Gross profit GEL millions 146.8 150.0 -2.1% Operating expenses (84.3) (75.3) 11.9% EBITDA 62.6 74.8 -16.3% 74.8 62.6 Ca
Slide 23: GHG overview cont'd
GHG overview cont’d Healthcare Services* Pharmacy and Distribution* Medical Insurance* +8.0% -13.6% 318.8 295.2 GEL millions GEL millions GEL millions 170.0 146.8 -5.0% 42.1 25.9 30.9 33.6 36.4 34.6 1.8 3.0 1H19 1H20 1H19 1H20 1H19 1H20 Revenue,net EBITDA Revenue,net EBITDA Revenue ,net EBITDA EBITD
Slide 24: Water utility business overview
Water utility business overview 1H20 performance highlights Valuation highlights | 30 June 2020 Financial metrics -18.5% GEL millions, unless otherwise noted Jun-20 Dec-19 Change GEL millions, unless otherwise noted 1H20 1H19 Change Revenue 60.8 74.5 -18.5% 74.5 LTM EBITDA 85 95 -11.0% Of which, uti
Slide 25: Housing development business overview
Housing development business overview 1H20 performance highlights Valuation highlights | 30 June 2020 Operating cash flow GEL millions, unless otherwise noted Financial metrics Jun-20 Dec-19 Change 24.5 GEL millions, unless otherwise noted 1H20 1H19 Change Enterprise value 182 205 -11.1% GEL million
Slide 26: P&C Insurance business overview
P&C Insurance business overview 1H20 performance highlights Valuation highlights | 30 June 2020 GEL millions, unless otherwise noted Financial metrics Jun-20 Dec-19 Change -4.5% GEL millions, unless otherwise noted 1H20 1H19 change LTM net income 18 18 -0.8% Gross premiums written 56.0 52.7 6.2% 36.
Slide 27: Renewable energy business overview
Renewable energy business overview 1H20 performance highlights Valuation highlights | 30 June 2020 Financial metrics ➢ Successful acquisitions, 18.9 GEL millions, unless otherwise noted Jun-20 Dec-19 Change contributing GEL 13.2mln GEL millions, unless otherwise noted 1H20 1H19 Change to 1H20 revenu
Slide 28: Hospitality & Commercial Real Estate business overview
Hospitality & Commercial Real Estate business overview 1H20 performance highlights Commercial Real Estate highlights Financial metrics2 Operating metrics GEL millions, unless otherwise noted 1H20 1H19 Change 1H20 1H19 Change Revenue 9.0 7.2 25.9% Commercial Real Estate portfolio, US$ 38.7 42.5 -9.0%
Slide 29: Beverages business overview
Beverages business overview 1H20 performance highlights Valuation highlights | 30 June 2020 Wine Business Wine business -12.6% Beer business +15.7% Financial metrics GEL millions, unless otherwise noted 1H20 1H19 Change 17.3 21.1 15.1 17.3 -12.6% 15.1 18.2 Revenue GEL millions GEL millions Gross pro
Slide 30: Education business overview
Education business overview 1H20 performance highlights Valuation highlights | 30 June 2020 +14.1% Financial metrics ➢ Education was valued using LTM EV/EBITDA GEL millions, unless otherwise noted 1H20 1H19 Change 14.0 at GEL 80.7 million at 30 June 2020. 12.2 Revenue 14.0 12.2 14.1% ➢ As a result o
Slide 31: Auto service (PTI, Amboli & Car trading) overview
Auto service (PTI, Amboli & Car trading) overview 1H20 performance highlights Valuation highlights | 30 June 2020 GEL millions, Up 3.0x Jun-20 Dec-19 Change Financial metrics unless otherwise noted 16.0 GEL millions, unless otherwise noted 1H20 1H19 Change PTI EBITDA 6.22 6.73 -7.9% Revenue 16.0 5.3
Slide 32: Content
Content 1. COVID-19 update | Georgia 2. COVID-19 update | Georgia Capital 3. 1H20 NAV development 4. Portfolio overview 5. Key developments in 1H20 6. Appendix Page 32
Slide 33: GGU issued US$ 250 million green bonds
GGU issued US$ 250 million green bonds First-ever Green Bonds from Georgia ➢ Considerable interest from investors, demonstrating our superior access to capital even during the current challenging times. ➢ The issuance of the bonds significantly improves the financial flexibility of GGU and enhances
Slide 34: Recommended final share exchange offer for GHG shareholders
Recommended final share exchange offer for GHG shareholders Final share exchange offer for GHG shareholders now complete and our holding in GHG will reach 100% on 28 August 2020 ➢ Further strengthening GCAP private portfolio with three strong overarching free cash flow generative businesses, being H
Slide 35: GHG agreed terms to sell HTMC hospital
GHG agreed terms to sell HTMC hospital ➢ Divestment of one of the lowest return generating hospital, improving GHG’s ROIC and leverage profile Transaction overview US$ 12mln ➢ On 19 August 2020, GHG’s signed a Sales and Purchase Agreement (“SPA”) to sell a 40% equity interest in High Technology Tota
Slide 36: Wrap up
Wrap up Rapid recovery hinting on sustainable NAV per share growth in the coming quarters Well-managed response to Continued Defensive portfolio the pandemic throughout the delivery on our with diversified country strategic priorities revenue streams and strong cash flows Rapid recovery in Cash accu
Slide 37: COVID-19 impact
COVID-19 impact Level of resilience across our portfolio High Medium Low Renewable Housing Hospitality Water Utility P&C Insurance Digital Services Energy Development Commercial GHG Education Beverages Auto Service Real Estate Having focused on financial discipline well before COVID-19, our portfoli
Slide 38: Content
Content 1. COVID-19 update | Georgia 2. COVID-19 update | Georgia Capital 3. 1H20 NAV development 4. Portfolio overview 5. Key developments in 1H20 6. Appendix Page 38
Slide 39: 1H20 performance highlights
1H20 performance highlights Georgia Capital NAV overview Georgia Capital performance GEL thousands, except per share information GEL thousands Change Change 30-Jun-20 31-Dec-19 (y-o-y) 1H20 1H19 (y-o-y) NAV per share, GEL 31.67 46.84 -32.4% Total portfolio value creation (482,736) 346,585 NMF Net As
Slide 40: Value creation in 1H20
Value creation in 1H20 Operating Multiple Change Portfolio Businesses Greenfields Value Creation Performance and FX GEL thousands (1) (2) (3) (1)+(2)+(3) Listed (297,745) GHG (94,412) BoG (203,333) Private (268,932) 55,482 28,459 (184,991) Late Stage (156,187) - 68,613 (87,574) Water Utility (130,17
Slide 41: Total portfolio value change in 1H20
Total portfolio value change in 1H20 ➢ Total portfolio value down 18.9% to GEL 1.8 billion, mainly reflecting negative impact of COVID-19 on listed asset prices and valuations of private assets 4. Liquidity GEL thousands unless otherwise 1. Value 2a. 3. Operating Share in total Dec-19 2b. Buybacks 2
Slide 42: Maturity profile across portfolio companies
Maturity profile across portfolio companies Gross debt maturity as of 30 June 20201 Gel millions, unless otherwise noted 2H20 2021 2022 2023 2024 2024+ Total GHG 70 94 181 33 77 - 455 Late Stage - 29 121 2 31 481 664 Water Utility - - - - - 477 477 Housing development2 - 29 121 2 31 4 187 P&C Insura
Slide 43: NAV Statement | 1H20
NAV Statement | 1H20 2b. 2c. 3. Operating 4. Liquidity GEL ‘000, unless otherwise noted Dec-19 1. Value creation 2a. Investments Jun-20 Change % Buybacks Dividends expenses mgmt./FX/Other Listed Portfolio Companies GHG1 430,079 (94,412) - - - - - 335,667 -22.0% BoG1 597,735 (203,333) - - - - - 394,4
Slide 44: NAV Statement | 2Q20
NAV Statement | 2Q20 2c. 3. Operating 4b. Liquidity GEL ‘000, unless otherwise noted Mar-20 1. Value creation 2a. Investments 2b. Buybacks Jun-20 Change % Dividends expenses mgmt./FX/Other Listed Portfolio Companies 660,067 70,002 - - - - - 730,069 10.6% GHG1 295,455 40,212 - - - - - 335,667 13.6% B