3rd Quarter Results
28/10/2024 07:10
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RNS Number : 7699J Georgia Capital PLC 28 October 2024
FINANCIAL PERFORMANCE HIGHLIGHTS (IFRS) 1 (#_ftn1)
GEL '000, unless otherwise noted Sep-24 Jun-24 Change Dec-23 Change
Georgia Capital NAV overview
NAV per share, GEL 83.41 78.55 6.2% 82.94 0.6%
NAV per share, GBP 22.82 22.10 3.3% 24.23 -5.8%
Net Asset Value (NAV) 3,194,592 3,140,721 1.7% 3,378,512 -5.4%
Shares outstanding(2) 38,301,132 39,983,227 -4.2% 40,736,528 -6.0%
Liquid assets and loans issued 113,596 82,014 38.5% 117,122 -3.0%
NCC ratio 2 (#_ftn2) 15.9% 18.9% -3.0 ppts 15.6% 0.3 ppts
Georgia Capital Performance 3Q24 3Q23 Change 9M24 9M23 Change
Total portfolio value creation 115,053 174,922 -34.2% (25,525) 457,386 NMF
of which, listed and observable businesses 522 221,148 -99.8% 66,422 391,939 -83.1%
of which, private businesses 114,531 (46,226) NMF (91,947) 65,447 NMF
Investments 1,364 30 NMF 7,432 20,453 -63.7%
Buybacks 3 (#_ftn3) 60,833 273 NMF 110,842 53,994 NMF
Dividend income 141,620 53,661 NMF 191,927 201,735 -4.9%
of which, recurring dividend income 4 (#_ftn4) 119,024 47,061 NMF 169,331 145,674 16.2%
of which, one-off dividend income 22,596 6,600 NMF 22,596 56,061 -59.7%
Net income / (loss) 110,194 148,354 -25.7% (85,262) 407,280 NMF
Private portfolio companies' performance(1, 5 (#_ftn5) ) 3Q24 3Q23 Change 9M24 9M23 Change
Large portfolio companies
Revenue 374,243 322,967 15.9% 1,080,332 982,651 9.9%
EBITDA 46,094 34,374 34.1% 126,406 121,056 4.4%
Net operating cash flow 58,078 32,110 80.9% 122,478 64,069 91.2%
Investment stage portfolio companies
Revenue 41,900 37,235 12.5% 135,913 110,830 22.6%
EBITDA 13,575 12,481 8.8% 47,681 40,035 19.1%
Net operating cash flow 22,028 20,180 9.2% 58,505 40,211 45.5%
Total portfolio 6 (#_ftn6)
Revenue 584,229 522,327 11.9% 1,655,707 1,520,559 8.9%
EBITDA 79,104 67,889 16.5% 226,578 196,538 15.3%
Net operating cash flow 102,370 50,907 101.1% 214,514 103,466 107.3%
KEY POINTS
Ø Sale of an 80% holding of our stake (an effective 73.9% equity stake 7
(#_ftn7) ) in the beer and distribution business to Royal Swinkels N.V.
("Royal Swinkels") at a premium to the business' investment value as at
30-Jun-24, with a clear exit path for the remaining stake. Closing of the
transaction and the receipt of US$ c.63.0 million net cash proceeds are
expected in 4Q24
Ø NAV per share (GEL) up 6.2% in 3Q24, reflecting the overall strong
operating performance of our private portfolio companies and the sale of the
beer and distribution business
Ø Record recurring quarterly dividend income of GEL 119.0 million in 3Q24,
driving the 3.0 ppts improvement in the NCC ratio to 15.9% as at 30-Sep-24
· Additional GEL 22.6 million one-off buyback dividend income from
temporarily reducing our stake in BoG to 19.1% in 3Q24 (from our targeted
holding level of 19.5%)
Ø Record aggregated quarterly revenues of GEL 584.2 million, up 11.9% y-o-y,
with a 16.5% y-o-y increase in EBITDA in 3Q24
Ø All-time high aggregate quarterly net operating cash flows of GEL 102.4
million, more than doubling y-o-y in 3Q24
Ø 2.0 million shares repurchased during 3Q24 and October 2024 (total bought
back since demerger now 10.8 million shares (US$ 123.3 million cost),
representing 22.5% 8 (#_ftn8) of GCAP's peak issued share capital)
Conference call: An investor/analyst conference call will be held on 28
October 2024, at 14:00 UK / 15:00 CET / 9:00 US Eastern Time. Please register
at the Registration Link
(https://gcap-ge.zoom.us/webinar/register/WN_J-_Q4vDeQoWJ8rDc2kOMfw) to attend
the event. Further details are available on the Group's webpage
(https://georgiacapital.ge/) .
CHAIRMAN AND CEO'S STATEMENT
I am pleased to present another strong performance in the third quarter of
2024, which demonstrates the significant strategic, financial, and operational
progress of Georgia Capital, that led to a 6.2% increase in NAV per share
during the quarter.
Sale of the beer and distribution business. Today we announced that we have
agreed to sell 80% of our holding (an effective 73.9% equity stake) in the
beer and distribution business to a high-quality international investor and
strategic purchaser, Royal Swinkels. The disposal creates substantial value
for GCAP shareholders and brings in significant net cash proceeds of at least
US$ 63.0 million, translating into a premium to the business' investment
value, and a 1.8% uplift to GCAP's NAV per share as at 30 June 2024. The sale
is consistent with GCAP's capital-light investment strategy and represents
another successful completion of the full investment cycle of our private
assets, from acquisition and development to cash exit, while also marking
further progress toward our key strategic priority of divesting our subscale
portfolio companies. In addition, the partnership with Royal Swinkels brings
high quality international expertise to the Group and further potential value
creation upside on our remaining minority interest in the business, where we
have put in place a put/call option structure. The use of the sales proceeds
will be announced following the completion of the transaction and receipt of
the proceeds, which is expected to take place prior to the end of 2024.
Further information about the transaction can be found on GCAP's website
(https://georgiacapital.ge/ir/news) .
Overview of the Georgian parliamentary elections. On 26 October 2024, Georgia
held its regular parliamentary election. Preliminary results show the ruling
party received 54% of the votes, translating into 89 of the 150 parliamentary
seats. Four opposition parties, that surpassed the 5% minimum threshold, will
collectively hold 61 seats. This enables the ruling party to form a
parliamentary majority and continue to govern for the next four years.
NAV per share (GEL) increased 6.2% to GEL 83.41 in 3Q24. The increase in NAV
per share (GEL) in 3Q24 reflects the excellent underlying operating
performances across our private portfolio. In 3Q24, the quarterly aggregated
revenue was up by 11.9% y-o-y to an all-time high of GEL 584.2 million, while
EBITDA increased by 16.5% y-o-y to GEL 79.1 million. The strong business
growth across our portfolio companies also led to a record aggregate quarterly
net operating cash flows of GEL 102.4 million, more than doubling y-o-y in
3Q24. This, coupled with the uplift from marking the beer and distribution
business' equity value to the agreed sale price, translated into GEL 114.5
million value creation from our private assets (+3.6 ppts impact). Value
creation from the listed and observable portfolio companies amounted to GEL
0.5 million in 3Q24, reflecting the net impact of GEL 5.0 million value
creation in Water Utility, deriving from its strong operating performance, and
GEL 4.5 million decrease in BoG's listed stock-market value in 3Q24. The NAV
per share growth was also supported by our share buyback and cancellation
programme (+2.4 ppts impact) and GEL's appreciation against US$, resulting in
a foreign currency gain of GEL 10.1 million on GCAP's net debt (+0.3 ppts
impact). The NAV per share (GEL) growth was slightly offset by management
platform-related costs and net interest expense (-0.5 ppts impact in total).
In GBP terms, the NAV per share growth in 3Q24 was 3.3%, driven by GEL's
slight depreciation against GBP during the quarter.
Update on share buybacks. During the second half of 2024 to date, under the
US$ 40 million share buyback and cancellation programme, we repurchased 2.0
million shares for a total consideration of GEL 73.4 million (US$ 26.9
million). This takes the capital returned to our shareholders since demerger
to a total of US$ 123.3 million or 10.8 million GCAP shares representing 22.5%
of GCAP's issued share capital at its peak. As a result, the gross number of
issued shares, including those held by the management trust, now stands at
39.8 million, down 8.1 million from the peak.
From a macroeconomic perspective, Georgia's economic performance remains
strong, with real GDP growth of 10.0% in the first eight months of 2024, while
inflation remains below its targeted level. Despite recent volatility in the
regional geopolitical environment, banking loan book growth is solid,
unemployment rates have fallen to historic lows, and continued wage growth is
boosting domestic consumption and overall economic growth. While external FX
inflows have moderated, the third quarter has shown a rebound, mainly driven
by growth in exports (up 26% y-o-y) and continued recoveries in tourism
revenues and remittances. Strong secondary income and rising service exports
are helping narrow the current account deficit. Macroeconomic policy remains
sound, with the monetary policy rate now at 8%, the fiscal deficit continuing
to narrow, and public debt as a percentage of GDP, at 39.2%, now standing at
its lowest level since 2015.
Outlook. The excellent performance of our portfolio companies, coupled with
our unwavering focus on delivering on our strategic priorities, were
instrumental to our outstanding 3Q24 results. This performance was underpinned
by the resilience of the Georgian economy, which has demonstrated consistent
and substantial growth over the past few years. Against this background, I
believe that Georgia Capital has all the key fundamentals in place to continue
delivering consistent NAV per share growth over the medium to long term - and
to progress further towards achieving our key strategic priorities.
Irakli Gilauri, Chairman and CEO
DISCUSSION OF GROUP RESULTS
The discussion below analyses the Group's unaudited net asset value at
30-Sep-24 and its income for the third quarter and nine-month period then
ended on an IFRS basis (see "Basis of Presentation" on page 23 below).
Net Asset Value (NAV) Statement
NAV statement summarises the Group's IFRS equity value (which we refer to as
Net Asset Value or NAV in the NAV Statement below) at the opening and closing
dates for the third quarter (30-Jun-24 and 30-Sep-24). The NAV Statement below
breaks down NAV into its components and provides a roll forward of the related
changes between the reporting periods. For the NAV Statement for the nine
months of 2024 see page 22.
NAV STATEMENT 3Q24
GEL '000, unless otherwise noted Jun-24 1. Value creation(( 9 (#_ftn9) )) 2a. 2b. 2c. Dividends 3. Operating expenses 4. Liquidity/ FX/Other Sep-24 Change
Investment and Divestments Buyback %
Listed and Observable Portfolio Companies
Bank of Georgia (BoG) 1,269,814 (4,478) - - (118,865) - - 1,146,471 -9.7%
Water Utility 155,000 5,000 - - - - - 160,000 3.2%
Total Listed and Observable Portfolio Value 1,424,814 522 - - (118,865) - - 1,306,471 -8.3%
Listed and Observable Portfolio value change % 0.0% 0.0% 0.0% -8.3% 0.0% 0.0% -8.3%
Private Portfolio Companies
Large Companies 1,251,822 62,972 - - (6,803) - 817 1,308,808 4.6%
Retail (Pharmacy) 619,321 38,494 - - - - 359 658,174 6.3%
Insurance (P&C and Medical) 391,457 22,625 - - (6,803) - 99 407,378 4.1%
Of which, P&C Insurance 295,548 21,481 - - (6,803) - 99 310,325 5.0%
Of which, Medical Insurance 95,909 1,144 - - - - - 97,053 1.2%
Hospitals 241,044 1,853 - - - - 359 243,256 0.9%
Investment Stage Companies 547,326 (11,321) 1,364 - (12,258) - 233 525,344 -4.0%
Renewable Energy 246,166 4,491 1,364 - (12,258) - - 239,763 -2.6%
Education 193,351 (12,490) - - - - 153 181,014 -6.4%
Clinics and Diagnostics 107,809 (3,322) - - - - 80 104,567 -3.0%
Other Companies 268,038 62,880 - - (3,694) - 53 327,277 22.1%
Total Private Portfolio Value 2,067,186 114,531 1,364 - (22,755) - 1,103 2,161,429 4.6%
Private Portfolio value change % 5.5% 0.1% 0.0% -1.1% 0.0% 0.1% 4.6%
Total Portfolio Value (1) 3,492,000 115,053 1,364 - (141,620) - 1,103 3,467,900 -0.7%
Total Portfolio value change % 3.3% 0.0% 0.0% -4.1% 0.0% 0.0% -0.7%
Net Debt (2) (350,624) - (1,364) (61,661) 145,205 (4,856) 3,920 (269,380) -23.2%
of which, Cash and liquid funds 70,610 - (1,364) (61,661) 116,356 (4,856) (17,203) 101,882 44.3%
of which, Loans issued 11,404 - - - - - 310 11,714 2.7%
of which, Accrued dividend income - - - - 28,849 - - 28,849 NMF
of which, Gross Debt (432,638) - - - - - 20,813 (411,825) -4.8%
Net other assets/ (liabilities) (3) (655) - - 828 (3,585) (3,407) 2,891 (3,928) NMF
of which, share-based comp. - - - - - (3,407) 3,407 - NMF
Net Asset Value (1)+(2)+(3) 3,140,721 115,053 - (60,833) - (8,263) 7,914 3,194,592 1.7%
NAV change % 3.7% 0.0% -1.9% 0.0% -0.3% 0.3% 1.7%
Shares outstanding(9) 39,983,227 - - (1,682,095) - - - 38,301,132 -4.2%
Net Asset Value per share, GEL 78.55 2.88 0.00 1.86 0.00 (0.21) 0.32 83.41 6.2%
NAV per share, GEL change % 3.7% 0.0% 2.4% 0.0% -0.3% 0.4% 6.2%
NAV per share (GEL) was up 6.2% q-o-q in 3Q24, driven by a) GEL 115.1 million
value creation across our portfolio companies (+3.7 ppts impact), b) share
buybacks (+2.4 ppts impact) and c) GEL's appreciation against US$, resulting
in a foreign currency gain of GEL 10.1 million on GCAP's net debt (+0.3 ppts
impact). The NAV per share (GEL) growth was slightly offset by management
platform-related costs and net interest expense (-0.5 ppts impact in total).
Portfolio overview
Total portfolio value amounted to GEL 3.5 billion in 3Q24, down by GEL 24.1
million (0.7%) q-o-q:
· The value of the private portfolio increased by GEL 94.2 million
(up 4.6%), resulting from a) GEL 114.5 million value creation, b) investments
of GEL 1.4 million and c) a decrease of GEL 22.8 million due to dividends paid
to GCAP.
· The value of the listed and observable portfolio decreased by GEL
118.3 million (down 8.3%), mainly resulting from GEL 118.9 million dividend
income from BoG.
Consequently, as of 30-Sep-24, the private portfolio value amounted to GEL 2.2
billion (62.3% of the total), and the listed and observable portfolio value
totalled GEL 1.3 billion (37.7% of the total portfolio value).
1) Value creation
Value creation across our private portfolio companies amounted to GEL 114.5
million in 3Q24. This reflects:
· Robust operating performance of our private assets, delivering
substantial growth in aggregated revenues (up 11.9% y-o-y) and EBITDA (up
16.5% y-o-y) in 3Q24. This, coupled with the uplift from marking the beer and
distribution business' equity value to the agreed sale price, translated into
a GEL 233.7 million operating performance-related value creation.
· GEL 119.2 million negative net impact from changes in implied
valuation multiples and FX rates.
Value creation from the listed and observable portfolio amounted to GEL 0.5
million in 3Q24, reflecting the net impact of:
· GEL 5.0 million value creation in Water Utility, deriving from
its strong operating performance, and
· GEL 4.5 million net decrease in BoG's value due to an 8.9%
decline in its share price, partially offset by the dividend income of GEL
118.9 million recorded in 3Q24.
As a result, the total portfolio value creation amounted to GEL 115.1 million
in 3Q24.
The table below summarises value creation drivers in our businesses in 3Q24:
Portfolio Businesses Operating Performance(( 10 (#_ftn10) )) Multiple Change Value Creation
and FX(( 11 (#_ftn11) ))
GEL '000, unless otherwise noted (1) (2) (1)+(2)
Listed and Observable portfolio 522
BoG (4,478)
Water Utility 5,000
Private portfolio 233,733 (119,202) 114,531
Large Portfolio Companies 169,863 (106,891) 62,972
Retail (pharmacy) 36,969 1,525 38,494
Insurance (P&C and Medical) 84,950 (62,325) 22,625
Of which, P&C Insurance 79,882 (58,401) 21,481
Of which, Medical Insurance 5,068 (3,924) 1,144
Hospitals 47,944 (46,091) 1,853
Investment Stage Portfolio Companies 10,011 (21,332) (11,321)
Renewable Energy 21,948 (17,457) 4,491
Education (15,972) 3,482 (12,490)
Clinics and Diagnostics 4,035 (7,357) (3,322)
Other 53,859 9,021 62,880
Total portfolio 233,733 (119,202) 115,053
Valuation overview 12 (#_ftn12)
In 3Q24, our private large and investment stage portfolio companies were
valued internally by incorporating the portfolio companies' 3Q24 results, in
line with International Private Equity Valuation ("IPEV") guidelines and
methodology deployed in 1H24 by an independent valuation company. The
independent valuation assessments, which serve as an input for Georgia
Capital's estimate of fair value, were performed by applying a combination of
an income approach (DCF) and a market approach (listed peer multiples and, in
some cases, precedent transactions). The independent valuations of large and
investment stage businesses are performed on a semi-annual basis. In line with
our strategy, from time to time we may receive offers from interested buyers
for our private portfolio companies, which would be considered in the overall
valuation assessment, where appropriate. In 3Q24, the beer and distribution
business was valued based on the sales price announced subsequent to 30
September 2024.
We perform quarterly sensitivity analyses on our valuations. In light of
prevailing market conditions, the 3Q24 assessment indicated that a
100-basis-point change in discount rates used in the income approach for
valuing unquoted investments would result in a GEL c.150 million, or 4.4%,
change in the fair value of equity investments.
The enterprise value ("EV") and equity value development of our businesses in
3Q24 is summarised in the following table:
Enterprise Value (EV) Equity Value
GEL '000, unless otherwise noted 30-Sep-24 30-Jun-24 Change % 30-Sep-24 30-Jun-24 Change % % share in total portfolio
Listed and Observable portfolio 1,306,471 1,424,814 -8.3% 37.7%
BoG 1,146,471 1,269,814 -9.7% 33.1%
Water Utility 160,000 155,000 3.2% 4.6%
Private portfolio 3,390,846 3,325,748 2.0% 2,161,429 2,067,186 4.6% 62.3%
Large portfolio companies 1,950,977 1,911,913 2.0% 1,308,808 1,251,822 4.6% 37.7%
Retail (pharmacy) 972,559 951,600 2.2% 658,174 619,321 6.3% 19.0%
Insurance (P&C and Medical) 433,910 421,043 3.1% 407,378 391,457 4.1% 11.7%
Of which, P&C Insurance 309,813 295,000 5.0% 310,325 295,548 5.0% 8.9%
Of which, Medical Insurance 124,097 126,043 -1.5% 97,053 95,909 1.2% 2.8%
Hospitals 544,508 539,270 1.0% 243,256 241,044 0.9% 7.0%
Investment stage portfolio companies 811,983 830,046 -2.2% 525,344 547,326 -4.0% 15.1%
Renewable Energy 431,327 441,327 -2.3% 239,763 246,166 -2.6% 6.9%
Education 13 (#_ftn13) 209,206 221,269 -5.5% 181,014 193,351 -6.4% 5.2%
Clinics and Diagnostics 171,450 167,450 2.4% 104,567 107,809 -3.0% 3.0%
Other 627,886 583,789 7.6% 327,277 268,038 22.1% 9.5%
Total portfolio 3,467,900 3,492,000 -0.7% 100.0%
Private large portfolio companies (37.7% of total portfolio value)
Retail (Pharmacy) (19.0% of total portfolio value) - The EV of Retail
(Pharmacy) was up by 2.2% to GEL 972.6 million in 3Q24, reflecting the strong
operating performance of the business. The significant recent expansion of the
retail chain coupled with the business' proactive approach aimed at enhancing
the sales and profitability margins of para-pharmacy products, led to a 4.6%
y-o-y revenue growth in 3Q24. This also contributed to the improvement of the
gross profit margin (up by 1.6 ppts y-o-y in 3Q24), notwithstanding the
challenges posed by price regulations introduced over the last two years.
Operating expenses were up 14.4% y-o-y in 3Q24, due to increased rent and
salary costs related to the chain expansion and the launch of a new warehouse
at the end of 2023. Consequently, the 3Q24 EBITDA increased by 2.1% y-o-y to
GEL 21.3 million. See page 11 for details. LTM EBITDA (incl. IFRS 16) was up
by 2.5% to GEL 111.0 million in 3Q24. Net debt (incl. IFRS 16) decreased by
5.5% to GEL 306.9 million as at 30-Sep-24, resulting from robust cash flow
generation during the quarter. As a result, the fair value of GCAP's 97.6%
holding increased by 6.3% to GEL 658.2 million in 3Q24. The implied LTM
EV/EBITDA valuation multiple (incl. IFRS 16) remained unchanged q-o-q at 8.8x
as at 30-Sep-24.
Insurance (P&C and Medical) (11.7% of total portfolio value) - The
insurance business combines: a) P&C Insurance valued at GEL 310.3 million
and b) Medical Insurance valued at GEL 97.1 million.
P&C Insurance revenues were up 25.7% y-o-y to GEL 41.1 million in 3Q24,
driven by the growth in the motor, agricultural and credit life insurance
lines. The revenue of the medical insurance business more than doubled y-o-y
and amounted to GEL 47.7 million in 3Q24, reflecting c.10% increase in
insurance policy prices as well as the positive impact of the acquisition of
Ardi insurance portfolio in April 2024, contributing GEL 21.4 million to the
3Q24 y-o-y revenue growth. The combined ratio of the P&C insurance
decreased by 15.1 ppts y-o-y in 3Q24, mainly resulting from an improved loss
ratio following the absence of several abnormal loss events observed during
3Q23. The combined ratio of the medical insurance decreased by 3.3 ppts y-o-y
in 3Q24, reflecting the strong topline growth of the business as well as the
consolidation of Ardi's portfolio. As a result, the pre-tax profit of the
combined insurance business increased 165.8% y-o-y to GEL 13.1 million in
3Q24. See page 13 for details. The equity value of the combined insurance
business was up 4.1% q-o-q to GEL 407.4 million in 3Q24 (Ardi's portfolio
continued to be measured at an equity investment cost). This translated into
an implied LTM P/E valuation multiple of 10.9x at 30-Sep-24 (down from 12.4x
at 30-Jun-24).
Hospitals (7.0% of total portfolio value) - Hospitals' EV increased by 1.0% to
GEL 544.5 million in 3Q24, driven by the strong operating performance of the
business. The total revenue increased by 9.9% y-o-y in 3Q24, reflecting the
business' gradual return to its normal operational levels following mandatory
regulatory renovations across all hospitals, most of which occurred between
the second half of 2023 and the first half of 2024. These renovations led to
the phased closure of certain sections of our healthcare facilities, resulting
in reduced patient intake during that period. The gross profit margin also
improved in 3Q24 (up 2.0 ppts y-o-y to 33.3%), reflecting the increased demand
for high-margin outpatient services - a key strategic growth area for the
business that has helped mitigate the impact of new regulations. Operating
expenses (excl. IFRS 16) increased by 4.9% y-o-y in 3Q24, primarily due to
higher salary costs associated with an increased headcount to support the
expansion of the services and overall business growth. This translated into a
36.6% y-o-y increase in EBITDA (excl. IFRS 16) in 3Q24. See page 14 for
details. Consequently, LTM EBITDA (incl. IFRS 16) was up by 9.6% to GEL 47.1
million in 3Q24. Net debt remained largely flat at GEL 273.8 million as at
30-Sep-24, up 1.1% q-o-q. As a result, the equity value of Hospitals was
assessed at GEL 243.3 million in 3Q24 (up 0.9% q-o-q), translating into an
implied LTM EV/EBITDA multiple (incl. IFRS 16) of 11.5x at 30-Sep-24 (down
from 12.5x at 30-Jun-24).
Private investment stage portfolio companies (15.1% of total portfolio value)
Renewable Energy (6.9% of total portfolio value) - The EV of the business was
up by 0.6% to US$ 158.0 million in 3Q24 (down 2.3% to GEL 431.3 million in GEL
terms), reflecting its strong operating performance. In US$ terms, the 3Q24
revenue increased by 7.6% y-o-y to US$ 5.9 million, resulting from both
improved electricity generation (up 5.5% y-o-y) and increased average
electricity selling price (up 2.0% y-o-y) during the quarter. Operating
expenses were well-managed (down 6.7% y-o-y). These developments translated
into an 11.2% y-o-y increase in EBITDA in 3Q24. See page 16 for details. The
pipeline renewable energy projects continued to be measured at an equity
investment cost of GEL 52.9 million (US$ 19.4 million) as at 30-Sep-24, up
2.6% q-o-q, reflecting an investment of GEL 1.4 million by GCAP in 3Q24. Net
debt was up by 1.0% to US$ 70.2 million in 3Q24, driven by the dividend
payment in the amount of US$ 4.5 million (GEL 12.3 million). As a result, the
equity value of the business was assessed at GEL 239.8 million in 3Q24 (down
2.6% q-o-q), (up 0.3% q-o-q to US$ 87.8 million in US$ terms). The blended
EV/EBITDA implied valuation multiple of the operational assets stood at 11.2x
as at 30-Sep-24 (down from 11.5x as at 30-Jun-24).
Education (5.2% of total portfolio value) - The EV of Education was down by
5.5% to GEL 209.2 million in 3Q24, reflecting near-term developments in the
operating performance of the business. The third quarter is usually a slow
season for the education business, as the schools are not operational during
the July-August holidays. Despite the seasonal slowdown, the 3Q24 revenue
increased by 15.9% y-o-y resulting from a) an organic growth through strong
learner intakes and a ramp-up of utilisation and b) an expansion of the
business through the launch and acquisition of two new campuses in 2023. The
expansion of the business also led to a 20.1% y-o-y increase in operating
expenses, which contributed to a 37.3% y-o-y decrease in 3Q24 EBITDA. See page
17 for details. LTM EBITDA was down by 5.1% to GEL 16.1 million in 3Q24. Net
debt was up by 53.7% q-o-q to GEL 13.6 million in 3Q24, mainly reflecting the
investments related to the expansion of existing campuses in the midscale and
affordable segments. As a result, GCAP's stake in the education business was
valued at GEL 181.0 million at 30-Sep-24 (down 6.4% q-o-q). The implied
valuation multiple remained unchanged q-o-q at 13.0x as of 30-Sep-24. The
forward-looking implied multiple is estimated at 10.5x for the 2024-2025
academic year.
Clinics and Diagnostics (3.0% of total portfolio value) 14 (#_ftn14) - The EV
of the business increased by 2.4% to GEL 171.5 million in 3Q24, resulting from
the strong operating performance of the business. The revenue and EBITDA (ex.
IFRS 16) of the combined clinics and diagnostics business were up 13.0% and
3.0% y-o-y, respectively. This growth reflects a) the increased demand for
high revenue-generating services driven by the business' proactive approach to
customer acquisition and service enhancements, and b) the expansion of the
business through the launch of two new ambulatory centres in 2023, which also
led to a 28.0% y-o-y increase in the operating expenses in 3Q24. See page 18
for details. The LTM EBITDA (incl. IFRS 16) of the business increased by 6.4%
to GEL 16.1 million in 3Q24. The net debt (incl. IFRS 16) was up by 12.7%
q-o-q at GEL 64.4 million primarily due to the increased lease liabilities in
line with the expansion of the business. As a result, the equity value of
Clinics and Diagnostics was assessed at GEL 104.6 million (down 3.0% q-o-q),
translating into an implied LTM EV/EBITDA multiple (incl. IFRS 16) of 10.6x at
30-Sep-24 (down from 11.0x at 30-Jun-24).
Other businesses (9.5% of total portfolio value) - Of the "other" private
portfolio businesses, Auto Service and Beverages (other than wine) are valued
based on LTM EV/EBITDA. Wine and Housing Development are valued based on DCF,
Hospitality is valued based on NAV. See performance highlights of other
businesses on page 20. The portfolio value of other businesses increased by
22.1% to GEL 327.3 million in 3Q24, primarily attributable to a) strong
operating performance-related increase in the value of these businesses,
including the uplift from marking the beer and distribution business' equity
value to the agreed sale price b) GEL 9.0 million value creation due to
changes in implied valuation multiples and foreign exchange rates.
Listed and observable portfolio companies (37.7% of total portfolio value)
BOG (33.1% of total portfolio value) - In 2Q24, BoG delivered an annualised
ROAE of 28.0% and a q-o-q loan book growth of 5.6% in Georgia and 7.2% in
Armenia on a constant currency basis. In 3Q24, BoG's share price was down by
8.9% q-o-q to GBP 36.8 at 30-Sep-24, which together with GEL 118.9 million
dividend income from the Bank, led to a 9.7% decrease in the value of GCAP's
stake in BoG in 3Q24 (down to 1.1 billion as at 30-Sep-24). The LTM P/E
valuation multiple was at 2.7x as of 30-Sep-24. BoG's public announcement of
their 3Q24 results, when published, will be available on BoG's website
(https://bankofgeorgiagroup.com/results/earnings) .
Water Utility (4.6% of total portfolio value) - The equity value of the
business increased by GEL 5.0 million to GEL 160.0 million in 3Q24. This
valuation assessment was performed by applying the put option valuation to
GCAP's 20% holding (where GCAP has a clear exit path through a put and call
structure at pre-agreed EBITDA multiples) and takes into account the strong
operating performance of the business in 3Q24.
2) Investments 15 (#_ftn15)
In 3Q24, GCAP invested GEL 1.4 million in Renewable Energy for the development
of pipeline projects.
3) Share buybacks
During 3Q24, 1,682,095 shares with a total value of US$ 22.3 million (GEL 60.8
million) were bought back under GCAP's US$ 40 million share buyback and
cancellation programme.
4) Dividends 16 (#_ftn16)
In 3Q24, GCAP recorded GEL 141.6 million dividend income from its portfolio
companies:
Dividend income Recurring One-off Total
GEL million
BoG 96.3 22.6 118.9
Of which, cash dividends 72.2 - 72.2
Of which, buyback dividends 24.0 22.6 46.6
Renewable Energy 12.3 - 12.3
P&C Insurance 6.8 - 6.8
Beer Business 3.7 - 3.7
Total 119.0 22.6 141.6
· GEL 72.2 million cash dividends from BoG consists of the final
dividend of GEL 43.4 million, received on 19 July 2024, and the interim
dividends of GEL 28.8 million, collected subsequent to 30 September 2024 on 11
October 2024.
· GEL 22.6 million one-off buyback dividend from BoG represents
advanced participation in the Bank's buyback programme, which temporarily
decreased our stake in BoG to 19.1%, below the targeted holding level of
19.5%.
9M24 NAV STATEMENT HIGHLIGHTS
GEL '000, unless otherwise noted Dec-23 1. Value creation(( 17 (#_ftn17) )) 2a. 2b. 2c. Dividend 3. Operating expenses 4. Liquidity/ FX/Other Sep-24 Change
Investment and divestments Buyback %
Total Listed and Observable Portfolio Value 1,384,847 66,422 - - (144,798) - - 1,306,471 -5.7%
Listed and Observable Portfolio value change % 4.8% 0.0% 0.0% -10.5% 0.0% 0.0% -5.7%
Total Private Portfolio Companies 2,287,098 (91,947) 7,432 - (47,129) - 5,975 2,161,429 -5.5%
Of which, Large Companies 1,436,231 (103,733) - - (26,560) - 2,870 1,308,808 -8.9%
Of which, Investment Stage Companies 566,614 (34,815) 4,432 - (12,258) - 1,371 525,344 -7.3%
Of which, Other Companies 284,253 46,601 3,000 - (8,311) - 1,734 327,277 15.1%
Private Portfolio value change % -4.0% 0.3% 0.0% -2.1% 0.0% 0.3% -5.5%
Total Portfolio Value 3,671,945 (25,525) 7,432 - (191,927) - 5,975 3,467,900 -5.6%
Total Portfolio value change % -0.7% 0.2% 0.0% -5.2% 0.0% 0.2% -5.6%
Net Debt (296,808) - (7,432) (109,784) 191,927 (16,441) (30,842) (269,380) -9.2%
Net Asset Value 3,378,512 (25,525) - (110,842) - (26,934) (20,619) 3,194,592 -5.4%
NAV change % -0.8% 0.0% -3.3% 0.0% -0.8% -0.6% -5.4%
Shares outstanding(17) 40,736,528 - - (3,101,773) - - 666,377 38,301,132 -6.0%
Net Asset Value per share, GEL 82.94 (0.63) (0.00) 3.89 (0.00) (0.67) (2.11) 83.41 0.6%
NAV per share, GEL change % -0.8% 0.0% 4.7% 0.0% -0.8% -2.5% 0.6%
NAV per share (GEL) was up by 0.6% in 9M24, driven by an accretive impact of
share buybacks (+4.7 ppts), offset by a) a GEL 25.5 million negative value
creation across our portfolio companies (-0.8 ppts impact), b) GEL's
depreciation against US$, resulting in a foreign currency loss of GEL 5.8
million on GCAP net debt (-0.2 ppts impact) and c) management platform-related
costs and net interest expense (-1.4 ppts impact in total).
Portfolio overview
Total portfolio value decreased by GEL 204.0 million (down 5.6%) in 9M24:
· The value of GCAP's holding in BoG was down by GEL 79.4 million,
as GEL 65.4 million value creation was more than offset by GEL 144.8 million
cash and buyback dividend income from the Bank in 9M24.
· The value of the water utility business increased by GEL 1.0
million.
· The value of the private portfolio decreased by GEL 125.7 million
in 9M24, mainly reflecting the net impact of a) GEL 91.9 million negative
value creation, b) a decrease of GEL 47.1 million due to dividends paid to
GCAP, and c) investments of GEL 7.4 million in the private portfolio
companies.
1) Value creation
Total portfolio value creation amounted to negative GEL 25.5 million in 9M24.
· A combination of a 7.5% decrease in BoG's share price in 9M24 and
dividend income of GEL 144.8 million, as well as GEL 1.0 million positive
value creation in Water Utility, led to GEL 66.4 million value creation from
the listed and observable portfolio companies.
· The value creation in the private portfolio amounted to negative
GEL 91.9 million in 9M24, reflecting:
o GEL 464.5 million value reduction from changes in valuation inputs due to
the increase in the country risk premium in 9M24.
o GEL 372.5 million operating performance-related increase in the value of
our private assets.
The table below summarises value creation drivers in our businesses in 9M24:
Portfolio Businesses Operating Performance(( 18 (#_ftn18) )) Multiple Change Value Creation
and FX(( 19 (#_ftn19) ))
GEL '000, unless otherwise noted (1) (2) (1)+(2)
Listed and Observable 66,422
BoG 65,422
Water Utility 1,000
Private 372,534 (464,481) (91,947)
Large Portfolio Companies 172,444 (276,177) (103,733)
Retail (pharmacy) 61,053 (107,910) (46,857)
Insurance (P&C and Medical) 106,745 (61,443) 45,302
Of which, P&C Insurance 97,384 (56,827) 40,557
Of which, Medical Insurance 9,361 (4,616) 4,745
Hospitals 4,646 (106,824) (102,178)
Investment Stage Portfolio Companies 130,381 (165,196) (34,815)
Renewable Energy 36,085 (55,797) (19,712)
Education 30,392 (39,062) (8,670)
Clinics and Diagnostics 63,904 (70,337) (6,433)
Other 69,709 (23,108) 46,601
Total portfolio 372,534 (464,481) (25,525)
The enterprise value and equity value development of our businesses in 9M24 is
summarised in the following table:
Enterprise Value (EV) Equity Value
GEL '000, unless otherwise noted 30-Sep-24 31-Dec-23 Change % 30-Sep-24 31-Dec-23 Change % % share in total portfolio
Listed and Observable portfolio 1,306,471 1,384,847 -5.7% 37.7%
BoG 1,146,471 1,225,847 -6.5% 33.1%
Water Utility 160,000 159,000 0.6% 4.6%
Private portfolio 3,390,846 3,463,259 -2.1% 2,161,429 2,287,098 -5.5% 62.3%
Large portfolio companies 1,950,977 2,021,278 -3.5% 1,308,808 1,436,231 -8.9% 37.7%
Retail (pharmacy) 972,559 1,043,800 -6.8% 658,174 714,001 -7.8% 19.0%
Insurance (P&C and Medical) 433,910 358,566 21.0% 407,378 377,874 7.8% 11.7%
Of which, P&C Insurance 309,813 285,566 8.5% 310,325 285,566 8.7% 8.9%
Of which, Medical Insurance 124,097 73,000 70.0% 97,053 92,308 5.1% 2.8%
Hospitals 544,508 618,912 -12.0% 243,256 344,356 -29.4% 7.0%
Investment stage portfolio companies 811,983 856,787 -5.2% 525,344 566,614 -7.3% 15.1%
Renewable Energy 431,327 456,236 -5.5% 239,763 266,627 -10.1% 6.9%
Education 20 (#_ftn20) 209,206 228,799 -8.6% 181,014 189,226 -4.3% 5.2%
Clinics and Diagnostics 171,450 171,752 -0.2% 104,567 110,761 -5.6% 3.0%
Other 627,886 585,194 7.3% 327,277 284,253 15.1% 9.5%
Total portfolio 3,467,900 3,671,945 -5.6% 100.0%
2) Investments 21 (#_ftn21)
In 9M24, GCAP invested GEL 7.4 million in private portfolio companies.
· GEL 4.4 million was invested in the renewable energy business for
the development of the pipeline projects.
· GEL 3.0 million was invested in the auto service business.
3) Share buybacks
During 9M24, 3,101,773 shares were bought back for a total consideration of
GEL 110.8 million.
· 2,981,245 shares with a total value of US$ 38.7 million (GEL
106.1 million) were bought back under GCAP's share buyback and cancellation
programmes during 9M24.
· 120,528 shares (GEL 4.7 million in value) represent the
tax-related statutory buyback for the management trust, where the average cost
of unawarded shares is GBP 7.9 as of 30 September 2024.
Subsequent to 9M24, additional 355,000 shares with a value of US$ 4.6 million
(GEL 12.6 million) have been repurchased under the ongoing share buyback
programme as at 25 October 2024.
4) Dividends 22 (#_ftn22)
In 9M24, GCAP recorded GEL 191.9 million dividend income:
Dividend income Recurring One-off Total
GEL million
BoG 122.2 22.6 144.8
Of which, cash dividends 72.2 - 72.2
Of which, buyback dividends 50.0 22.6 72.6
P&C Insurance 16.5 - 16.5
Renewable Energy 12.3 - 12.3
Retail (Pharmacy) 10.0 - 10.0
Beer Business 8.3 - 8.3
Total 169.3 22.6 191.9
Net Capital Commitment (NCC) overview
Below we describe the components of Net Capital Commitment (NCC) as of 30
September 2024, 30 June 2024 and 31 December 2023. NCC represents an
aggregated view of all confirmed, agreed and expected capital outflows
(including a buffer for contingencies) at both Georgia Capital PLC and JSC
Georgia Capital levels
Components of NCC 30-Sep-24 30-Jun-24 Change 31-Dec-23 Change
GEL '000, unless otherwise noted
Total cash and liquid funds 101,882 70,610 44.3% 107,910 -5.6%
Loans issued 11,714 11,404 2.7% 9,212 27.2%
Accrued dividend income 28,849 - NMF - NMF
Gross debt (411,825) (432,638) -4.8% (413,930) -0.5%
Net debt (1) (269,380) (350,624) -23.2% (296,808) -9.2%
Guarantees issued (2) - - NMF - NMF
Net debt and guarantees issued (3)=(1)+(2) (269,380) (350,624) -23.2% (296,808) -9.2%
Planned investments (4) (122,651) (127,668) -3.9% (125,143) -2.0%
of which, planned investments in Renewable Energy (74,433) (78,030) -4.6% (77,637) -4.1%
of which, planned investments in Education (48,218) (49,638) -2.9% (47,506) 1.5%
Announced Buybacks (5) (21,877) (42,896) -49.0% (18,087) 21.0%
Contingency/liquidity buffer (6) (136,485) (140,505) -2.9% (134,470) 1.5%
Total planned investments, announced buybacks and contingency/liquidity buffer (281,013) (311,069) -9.7% (277,700) 1.2%
(7)=(4)+(5)+(6)
Net capital commitment (3)+(7) (550,393) (661,693) -16.8% (574,508) -4.2%
Portfolio value 3,467,900 3,492,000 -0.7% 3,671,945 -5.6%
NCC ratio 15.9% 18.9% -3.0 ppts 15.6% 0.3 ppts
Cash and liquid funds. Total cash and liquid funds' balance was up by 44.3%
q-o-q to GEL 101.9 million in 3Q24 (down 5.6% in 9M24), mainly reflecting the
collection of dividends as described above, partially offset by cash outflows
for share buybacks, coupon payment and operating expenses during the quarter.
Loans issued. Issued loans' balance primarily refers to loans issued to our
private portfolio companies and are lent at market terms. The balance was up
by 2.7% in 3Q24, reflecting the interest accrual on the loans issued.
Gross debt. In US$ terms the balance was down 2.0% q-o-q in both 3Q24 and
9M24, reflecting the net impact of interest accrual and coupon payment on
GCAP's bonds. In GEL terms, the balance was down by 4.8% in 3Q24, further
reflecting the foreign exchange rate movements during the quarter.
Planned investments. Planned investments' balance represents expected
investments in renewable energy and education businesses over the next 2-3
years. The balance in US$ terms was down by 1.1% and 3.4% in 3Q24 and 9M24,
respectively, reflecting cash outflows for the investment projects as
described above.
Announced buybacks. The balance of the announced buybacks at 30-Sep-24
reflects the unutilised share buybacks under
GCAP's US$ 40 million share buyback and cancellation programme.
Contingency/liquidity buffer. The balance reflects the provision for cash and
liquid assets in the amount of US$ 50 million, for contingency/liquidity
purposes. The balance remained unchanged in US$ terms as at 30-Sep-24.
As a result of the movements described above, the NCC ratio as at 30-Sep-24
decreased by 3.0 ppts q-o-q to 15.9%, up 0.3 ppts in 9M24, further reflecting
a 0.7% and 5.6% decrease in the portfolio value in GEL terms in 3Q24 and 9M24,
respectively.
INCOME STATEMENT (ADJUSTED IFRS / APM)
Net income under IFRS was GEL 114.6 million in 3Q24 (GEL 152.9 million net
income in 3Q23) and net loss of GEL 77.7 million in 9M24 (GEL 395.4 million
net income in 9M23). The IFRS income statement is prepared on the Georgia
Capital PLC level and the results of all operations of the Georgian holding
company JSC Georgia Capital are presented as one line item. As we conduct
almost all of our operations through JSC Georgia Capital, through which we
hold all of our portfolio companies, the IFRS results provide little
transparency on the underlying trends.
Accordingly, to enable a more granular analysis of those trends, the following
adjusted income statement presents the Group's results of operations for the
period ending September 30 as an aggregation of (i) the results of GCAP (the
two holding companies Georgia Capital PLC and JSC Georgia Capital, taken
together) and (ii) the fair value change in the value of portfolio companies
during the reporting period. For details on the methodology underlying the
preparation of the adjusted income statement, please refer to page 94 in
Georgia Capital PLC 2023 Annual report.
INCOME STATEMENT (Adjusted IFRS/APM)
GEL '000, unless otherwise noted 3Q24 3Q23 Change 9M24 9M23 Change
Dividend income 141,620 53,661 NMF 191,927 201,735 -4.9%
Of which, regular dividend income 95,001 41,876 NMF 119,376 128,379 -7.0%
Of which, buyback dividend income 46,619 11,785 NMF 72,551 73,356 -1.1%
Interest income 2,081 4,304 -51.6% 5,401 14,296 -62.2%
Realised/unrealised gain/(loss) on liquid funds/ Loss on GCAP Eurobond 159 (3,430) NMF (802) (2,348) -65.8%
buybacks
Interest expense (8,909) (12,031) -25.9% (26,488) (38,782) -31.7%
Gross operating income 134,951 42,504 NMF 170,038 174,901 -2.8%
Operating expenses (8,263) (8,802) -6.1% (26,934) (27,973) -3.7%
GCAP net operating income 126,688 33,702 NMF 143,104 146,928 -2.6%
Fair value changes of portfolio companies
Listed and Observable Portfolio Companies (118,343) 209,363 NMF (78,376) 265,746 NMF
Of which, Bank of Georgia Group PLC (123,343) 209,363 NMF (79,376) 261,746 NMF
Of which, Water Utility 5,000 - NMF 1,000 4,000 -75.0%
Private Portfolio companies 91,776 (88,102) NMF (139,076) (10,095) NMF
Large Portfolio Companies 56,169 (94,155) NMF (130,293) (36,745) NMF
Of which, Retail (pharmacy) 38,494 (44,619) NMF (56,905) (45,904) 24.0%
Of which, Insurance (P&C and Medical) 15,822 (4,987) NMF 28,790 61,114 -52.9%
Of which, Hospitals 1,853 (44,549) NMF (102,178) (51,955) 96.7%
Investment Stage Portfolio Companies (23,579) (8,955) NMF (47,073) 7,842 NMF
Of which, Renewable energy (7,767) 12,989 NMF (31,970) 28,320 NMF
Of which, Education (12,490) (13,473) -7.3% (8,670) (4,302) NMF
Of which, Clinics and Diagnostics (3,322) (8,471) -60.8% (6,433) (16,176) -60.2%
Other businesses 59,186 15,008 NMF 38,290 18,808 NMF
Total investment return (26,567) 121,261 NMF (217,452) 255,651 NMF
Income/(loss) before foreign exchange movements and non-recurring expenses 100,121 154,963 -35.4% (74,348) 402,579 NMF
Net foreign currency gain/(loss)/impairment 10,073 (6,170) NMF (9,246) 6,460 NMF
Non-recurring expenses - (439) NMF (1,668) (1,759) -5.2%
Net income/(loss) 110,194 148,354 -25.7% (85,262) 407,280 NMF
The gross operating income stood at GEL 135.0 million in 3Q24, up by GEL 92.4
million y-o-y (down 2.8% to GEL 170.0 million in 9M24), reflecting robust
dividend income further supported by a decrease in interest expenses.
The components of GCAP's operating expenses are shown in the table below.
GCAP Operating Expenses Components
GEL '000, unless otherwise noted 3Q24 3Q23 Change 9M24 9M23 Change
Administrative expenses(( 23 (#_ftn23) )) (2,218) (2,523) -12.1% (7,975) (8,051) -0.9%
Management expenses - cash-based(( 24 (#_ftn24) )) (2,638) (2,919) -9.6% (8,466) (8,275) 2.3%
Management expenses - share-based(( 25 (#_ftn25) )) (3,407) (3,360) 1.4% (10,493) (11,647) -9.9%
Total operating expenses (8,263) (8,802) -6.1% (26,934) (27,973) -3.7%
Of which, fund type expense(( 26 (#_ftn26) )) (1,980) (2,103) -5.8% (6,768) (7,007) -3.4%
Of which, management fee type expenses(( 27 (#_ftn27) )) (6,283) (6,699) -6.2% (20,166) (20,966) -3.8%
GCAP management fee expenses starting from 2024 have a self-targeted cap of
0.75% of Georgia Capital's NAV. The LTM management fee expense ratio was 0.83%
at 30-Sep-24 (0.90% as of 30-Sep-23).
Total investment return represents the increase (decrease) in the fair value
of our portfolio. Total investment return was negative GEL 26.6 million in
3Q24 and GEL 217.5 million in 9M24, reflecting the changes in the value of our
portfolio companies. We discuss valuation drivers for our businesses on pages
4-6. The performance of each of our private large and investment stage
portfolio companies is discussed on pages 11-20.
GCAP's net foreign currency liability balance amounted to US$ 6.7 million (GEL
18.2 million) at 30-Sep-24, which includes the foreign currency forward
agreements put in place in 3Q24. As a result of the movements described above,
GCAP's adjusted IFRS net income was GEL 110.2 million in 3Q24 (net loss of GEL
85.3 million in 9M24).
DISCUSSION OF PORTFOLIO COMPANIES' RESULTS (STAND-ALONE IFRS)
The following sections present the IFRS results and business development
extracted from the individual portfolio company's IFRS accounts for large and
investment stage entities, where the 3Q24, 9M24, 3Q23 and 9M23 portfolio
company's accounts and respective IFRS numbers are unaudited. We present key
IFRS financial highlights, operating metrics and ratios along with commentary
explaining the developments behind the numbers. For the majority of our
portfolio companies, the fair value of our equity investment is determined by
the application of an income approach (DCF) and a market approach (listed peer
multiples and precedent transactions). Under the discounted cash flow (DCF)
valuation method, fair value is estimated by deriving the present value of the
business using reasonable assumptions of expected future cash flows and the
terminal value, and the appropriate risk-adjusted discount rate that
quantifies the risk inherent to the business. Under the market approach,
listed peer group earnings multiples are applied to the trailing twelve months
(LTM) stand-alone IFRS earnings of the relevant business. As such, the
stand-alone IFRS results and developments driving the IFRS earnings of our
portfolio companies are key drivers of their valuations within GCAP's
financial statements. See "Basis of Presentation" on page 23 for more
background.
Discussion of Retail (Pharmacy) Business Results
The retail (pharmacy) business, where GCAP owns a 97.6% equity interest, is
the largest pharmaceuticals retailer and wholesaler in Georgia, with a 32%
market share based on the 2022 revenues. The business consists of retail
pharmacy chain operating under two brands (GPC and Pharma Depot) and a
wholesale business that sells pharmaceuticals and medical supplies to
hospitals and other pharmacies. The business operates a total of 415
pharmacies (of which 399 are in Georgia and 16 in Armenia) and 19 franchise
stores (of which, 12 are in Georgia, 2 in Armenia and 5 in Azerbaijan).
3Q24 and 9M24 performance (GEL '000), Retail (pharmacy) 28 (#_ftn28)
INCOME STATEMENT HIGHLIGHTS 3Q24 3Q23 Change 9M24 9M23 Change
Revenue, net 206,453 197,282 4.6% 617,583 594,305 3.9%
Of which, retail 167,657 158,180 6.0% 498,909 470,876 6.0%
Of which, wholesale 38,796 39,102 -0.8% 118,674 123,429 -3.9%
Gross Profit 65,147 59,188 10.1% 188,248 173,844 8.3%
Gross profit margin 31.6% 30.0% 1.6 ppts 30.5% 29.3% 1.2 ppts
Operating expenses (ex. IFRS 16) (43,826) (38,309) 14.4% (131,845) (112,519) 17.2%
EBITDA (ex. IFRS 16) 21,321 20,879 2.1% 56,403 61,325 -8.0%
EBITDA margin, (ex. IFRS 16) 10.3% 10.6% -0.3 ppts 9.1% 10.3% -1.2 ppts
Net profit (ex. IFRS 16) 13,476 12,368 9.0% 24,669 45,716 -46.0%
CASH FLOW HIGHLIGHTS
Cash flow from operating activities (ex. IFRS 16) 22,580 435 NMF 56,707 18,151 NMF
EBITDA to cash conversion 105.9% 2.1% NMF 100.5% 29.6% 70.9 ppts
Cash flow used in investing activities 29 (#_ftn29) (1,949) 5,344 NMF (26,687) (72,795) -63.3%
Free cash flow, (ex. IFRS 16) 30 (#_ftn30) 19,148 (10,590) NMF 41,206 (76,777) NMF
Cash flow used in financing activities (ex. IFRS 16) (7,749) (621) NMF (53,744) 14,560 NMF
BALANCE SHEET HIGHLIGHTS 30-Sep-24 30-Jun-24 Change 31-Dec-23 Change
Total assets 593,737 590,200 0.6% 631,218 -5.9%
Of which, cash and bank deposits 36,380 23,506 54.8% 60,383 -39.8%
Of which, securities and loans issued 15,585 16,574 -6.0% 2,623 NMF
Total liabilities 544,949 553,787 -1.6% 597,611 -8.8%
Of which, borrowings 204,440 208,072 -1.7% 228,261 -10.4%
Of which, lease liabilities 149,409 151,788 -1.6% 151,916 -1.7%
Total equity 48,788 36,413 34.0% 33,607 45.2%
INCOME STATEMENT HIGHLIGHTS
Ø The developments in 3Q24 and 9M24 total revenue of Retail (Pharmacy)
reflect the combination of the following factors:
o A 6.0% y-o-y increase in retail revenue in both 3Q24 and 9M24, driven by
the significant expansion of the retail chain (the business added 21
pharmacies and 6 franchise stores over the last 12 months) and the business'
proactive approach aimed at enhancing the sales and profitability of
para-pharmacy products. The revenue from para-pharmacy, as a percentage of
retail revenue, was 39.6% in 3Q24 (37.9% in 9M24).
o Wholesale revenue was down by 0.8% and 3.9% y-o-y in 3Q24 and 9M24,
respectively, reflecting the State's recent approach to procuring certain
medicines directly from manufacturers.
o The total revenue growth was partially affected by price regulations,
which set a maximum selling price for both prescription and non-prescription
medicines. The negative impact of these regulations on the total revenue
growth amounted to GEL 3.5 million in 3Q24 (GEL 11.4 million in 9M24).
Ø The y-o-y increase in the 3Q24 and 9M24 gross profit margins was mainly
driven by a 6.7 ppts and 6.5 ppts y-o-y improvement in the gross profit margin
of para-pharmacy retail revenue in 3Q24 and 9M24, respectively.
Ø The y-o-y increase in operating expenses (excl. IFRS 16) in 3Q24 and 9M24
resulted from the increased rent and salary expenses in line with the
substantial expansion of the retail chain and the launch of the new warehouse
at the end of 2023.
Ø EBITDA (excl. IFRS 16) was up by 2.1% y-o-y in 3Q24 (down 8.0% y-o-y in
9M24) reflecting the positive outcomes of chain expansion and optimisation
efforts and indicates a rebound following the introduction of price
regulations.
Ø Net interest expense (excl. IFRS 16) was up by 16.9% y-o-y to GEL 4.9
million in 3Q24 and up by GEL 8.7 million y-o-y to GEL 15.7 million in 9M24,
attributable to the higher average net debt balance, utilised to finance the
minority shareholder buyout transaction in June 2023.
Ø The developments described above translated into a 9.0% y-o-y increase in
net profit (excl. IFRS 16) in 3Q24 (down 46.0% y-o-y in 9M24), which apart
from the developments described above, reflects the FX gain of GEL 0.5 million
in 3Q24 as opposed to the FX loss of GEL 1.8 million in 3Q23.
CASH FLOW AND BALANCE SHEET HIGHLIGHTS
Ø The net debt balance was down to GEL 152.5 million at 30-Sep-24, from GEL
168.0 million at 30-Jun-24, reflecting robust cash flow generation in 3Q24.
Ø Cash flow from operating activities was strong with 105.9% and 100.5%
EBITDA to cash conversion ratio in 3Q24 and 9M24, respectively. The y-o-y
improvement in both periods is attributable to a) the sale of a significant
portion of inventory stock and b) a low base in 2023, when the business made
advance payments to key vendors to secure substantial supplier discounts.
OTHER VALUATION DRIVERS AND OPERATING HIGHLIGHTS
Ø The business divested from its textile franchise brands "Carters" and
"Triumph" with 6 operating stores in Georgia. The total consideration (excl.
VAT) amounted to GEL 3.7 million.
Ø The number of pharmacies and franchise stores is provided below:
Sep-24 Jun-24 Change (q-o-q) Sep-23 Change (y-o-y)
Number of pharmacies 415 418 (3) 394 21
Of which, Georgia 399 402 (3) 381 18
Of which, Armenia 16 16 - 13 3
Number of franchise stores 19 22 (3) 13 6
Of which, Georgia 12 14 (2) 7 5
Of which, Armenia 2 2 - 2 -
Of which, Azerbaijan 5 6 (1) 4 1
Ø Retail (Pharmacy)'s key operating performance highlights for 3Q24 and 9M24
are noted below:
Key metrics 3Q24 3Q23 Change 9M24 9M23 Change
Same store revenue growth -2.0% 3.6% -5.6 ppts -2.5% 0.8% -3.3 ppts
Number of bills issued (mln) 7.7 7.6 1.3% 23.6 23.1 2.2%
Average bill size (GEL) 20.7 19.8 4.3% 20.0 19.3 3.5%
Discussion of Insurance (P&C and Medical) Business Results
As at 30-Sep-24, the insurance business comprises a) Property and Casualty
(P&C) insurance business, operating under the brand name "Aldagi" and b)
medical insurance business, operating under "Imedi L" and "Ardi" brands, the
latter acquired in April 2024. The P&C insurance business is a leading
player with a 28% market share in property and casualty insurance based on
gross premiums as of 30-Jun-24. P&C also offers a variety of non-property
and casualty products, such as life insurance. The medical insurance business
is the country's largest private health insurer, with a 34% market share based
on gross insurance premiums as of 30-Jun-24, offering a variety of health
insurance products primarily to corporate and (selectively) to state entities
and also to retail clients in Georgia. GCAP owns a 100% equity stake in both
insurance businesses.
3Q24 and 9M24 performance (GEL'000), Insurance (P&C and Medical) 31
(#_ftn31)
INCOME STATEMENT HIGHLIGHTS 3Q24 3Q23 Change 9M24 9M23 Change
Insurance revenue 88,823 53,831 65.0% 220,249 152,236 44.7%
Of which, P&C Insurance 41,129 32,707 25.7% 108,930 85,672 27.1%
Of which, Medical Insurance 47,694 21,124 NMF 111,319 66,564 67.2%
Net underwriting profit 24,312 10,019 NMF 57,791 37,517 54.0%
Net investment profit 3,675 4,043 -9.1% 11,214 10,393 7.9%
Pre-tax profit 13,051 4,910 NMF 32,221 21,505 49.8%
Of which, P&C Insurance 8,408 2,914 NMF 21,745 15,656 38.9%
Of which, Medical Insurance 4,643 1,996 NMF 10,476 5,849 79.1%
CASH FLOW HIGHLIGHTS
Net cash flows from operating activities 19,019 9,885 92.4% 42,793 31,600 35.4%
Free cash flow 16,907 8,313 NMF 40,931 28,288 44.7%
BALANCE SHEET HIGHLIGHTS 30-Sep-24 30-Jun-24 Change 31-Dec-23 Change
Total assets 334,416 328,581 1.8% 248,902 34.4%
Total equity 124,474 117,689 5.8% 130,684 -4.8%
INCOME STATEMENT HIGHLIGHTS
Ø The y-o-y increase in 3Q24 and 9M24 insurance revenue reflects a
combination of factors:
§ The revenue of the P&C insurance business was up by 25.7% y-o-y in
3Q24 (up 27.1% y-o-y in 9M24), resulting from:
o A GEL 4.9 million y-o-y increase in Motor Insurance revenues in 3Q24 (a
GEL 14.7 million y-o-y increase in 9M24), mainly attributable to the expansion
of both retail and corporate client portfolios.
o A GEL 1.7 million y-o-y increase in Agricultural Insurance revenues in
3Q24 (a GEL 2.1 million y-o-y increase in 9M24), driven by increased tariffs
on certain crops and regions.
o A GEL 1.5 million y-o-y increase in Credit Life insurance revenues in 3Q24
(a GEL 4.1 million y-o-y increase in 9M24), resulting from the growth of
partner banks' portfolios in the mortgage, consumer loan and other sectors.
o A GEL 0.3 million y-o-y increase in the revenues from other insurance
lines in 3Q24 (a GEL 2.4 million y-o-y increase in 9M24).
§ The revenue of the medical insurance business more than doubled y-o-y in
3Q24 (up 67.2% y-o-y in 9M24), reflecting c.10% increase in insurance policy
prices as well as the positive impact of the acquisition of Ardi insurance
portfolio in April 2024, contributing GEL 21.4 million to the 3Q24 y-o-y
revenue growth (GEL 35.5 million in 9M24).
Ø The insurance business' key performance ratios for 3Q24 and 9M24 are noted
below:
Key ratios P&C Insurance Medical Insurance
3Q24 3Q23 Change 9M24 9M23 Change 3Q24 3Q23 Change 9M24 9M23 Change
Combined ratio 84.4% 99.5% -15.1 ppts 86.5% 89.7% -3.2 ppts 91.3% 94.6% -3.3 ppts 92.4% 95.5% -3.1 ppts
Expense ratio 33.9% 35.2% -1.3 ppts 33.7% 34.8% -1.1 ppts 18.1% 17.0% 1.1 ppts 16.8% 15.8% 1.0 ppts
Loss ratio 51.3% 63.3% -12.0 ppts 52.7% 55.3% -2.6 ppts 73.2% 77.6% -4.4 ppts 75.6% 79.7% -4.1 ppts
FX ratio -0.8% 1.0% -1.8 ppts 0.1% -0.4% 0.5 ppts - - - - - -
ROAE 32 (#_ftn32) 37.6% 12.8% 24.8 ppts 34.1% 22.8% 11.3 ppts 54.4% 11.2% 43.1 ppts 32.8% 15.1% 17.6 ppts
§ The combined ratio of P&C Insurance decreased by 15.1 ppts to 84.4%
in 3Q24 and by 3.2 ppts y-o-y to 86.5% in 9M24, mainly resulting from
an improved loss ratio following a high base in 2023, which saw several
abnormal events, including an unprecedented landslide, an unusually high
number of hailstorms, and a large property insurance claim.
§ The combined ratio of Medical Insurance improved by 3.3 ppts y-o-y to
91.3% (down by 3.1 ppts y-o-y to 92.4% in 9M24), reflecting a) consolidation
of Ardi's portfolio and b) increased revenues, due to higher insurance tariffs
as described above.
Ø The net investment profit was down by 9.1% y-o-y in 3Q24 due to the FX
movements. A 7.9% y-o-y increase in 9M24 net investment profit is attributable
to the higher average liquid funds balance as well as the consolidation of
Ardi's insurance portfolio.
Ø As a result, the pre-tax profit of the insurance business was up by 165.8%
y-o-y in 3Q24 (up 49.8% y-o-y in 9M24). The acquisition of Ardi Insurance
contributed GEL 2.4 million to the 3Q24 y-o-y pre-tax profit growth (GEL 4.2
million in 9M24).
CASH FLOW AND BALANCE SHEET HIGHLIGHTS
Ø The solvency ratio of P&C and medical insurance businesses stood at
178% and 162%, respectively, as of 30 September 2024, above the required
minimum of 100%.
Ø A y-o-y increase in the net cash flows from operating activities is mainly
driven by higher underwriting cash flows of the business coupled with the
positive impact of the consolidation of Ardi's portfolio.
Ø GEL 6.8 million in dividends were paid to GCAP in 3Q24 (GEL 16.5 million in
9M24).
Discussion of Hospitals Business Results 33 (#_ftn33)
The hospitals business, where GCAP owns a 100% equity, is the largest
healthcare market participant in Georgia, comprised of 7 Large and Specialty
Hospitals, providing secondary and tertiary level healthcare services across
Georgia and 27 Regional and Community Hospitals, providing outpatient and
basic inpatient services.
3Q24 and 9M24 performance (GEL '000), Hospitals 34 (#_ftn34)
INCOME STATEMENT HIGHLIGHTS 3Q24 3Q23 Change 9M24 9M23 Change
Revenue, net 35 (#_ftn35) 78,966 71,854 9.9% 242,500 236,110 2.7%
Gross Profit 26,701 22,860 16.8% 81,738 81,571 0.2%
Gross profit margin 33.3% 31.3% 2.0 ppts 33.2% 34.1% -0.9 ppts
Operating expenses (ex. IFRS 16) (14,979) (14,277) 4.9% (43,954) (43,347) 1.4%
EBITDA (ex. IFRS 16) 11,722 8,583 36.6% 37,784 38,224 -1.2%
EBITDA margin (ex. IFRS 16) 14.6% 11.7% 2.9 ppts 15.3% 16.0% -0.7 ppts
Net loss (ex. IFRS 16) (6,586) (6,778) 2.8% (12,777) (9,290) -37.5%
CASH FLOW HIGHLIGHTS
Cash flow from operating activities (ex. IFRS 16) 16,478 21,791 -24.4% 23,052 14,320 61.0%
EBITDA to cash conversion (ex. IFRS 16) 140.6% 253.9% NMF 61.0% 37.5% 23.5 ppts
Cash flow used in investing activities 36 (#_ftn36) (16,656) (16,411) 1.5% (10,508) (31,715) -66.9%
Free cash flow (ex. IFRS 16) 37 (#_ftn37) 1,579 5,407 -70.8% 14,533 (17,841) NMF
Cash flow used in financing activities (ex. IFRS 16) (6,279) (8,483) -26.0% (16,375) (3,704) NMF
BALANCE SHEET HIGHLIGHTS 30-Sep-24 30-Jun-24 Change 31-Dec-23 Change
Total assets 703,165 698,365 0.7% 707,614 -0.6%
Of which, cash balance and bank deposits 5,454 12,140 -55.1% 9,753 -44.1%
Of which, securities and loans issued 7,827 9,397 -16.7% 9,557 -18.1%
Total liabilities 365,800 359,634 1.7% 357,658 2.3%
Of which, borrowings 278,495 282,907 -1.6% 281,352 -1.0%
Total equity 337,365 338,731 -0.4% 349,956 -3.6%
INCOME STATEMENT HIGHLIGHTS
Ø The Large and Specialty Hospitals and Regional and Community Hospitals
represent approximately 70% and 30%, respectively, of the consolidated
hospitals' business revenue.
Total revenue breakdown 3Q24 3Q23 Change 9M24 9M23 Change
Total revenue, net 78,966 71,854 9.9% 242,500 236,110 2.7%
Of which, Large and Specialty Hospitals 53,174 47,455 12.1% 164,683 152,698 7.8%
Of which, Regional and Community Hospitals 25,845 25,065 3.1% 78,488 84,586 -7.2%
Of which, Inter-business eliminations (53) (666) -92.0% (671) (1,174) -42.8%
Ø The total revenue growth in 3Q24 and 9M24 was primarily driven by the
rebound to normal operational levels following mandatory regulatory
renovations across all our hospitals, most of which occurred between the
second half of 2023 and the first half of 2024. These renovations led to the
phased closure of certain sections of our healthcare facilities, resulting in
reduced patient intake during that period. Out of the 34 hospitals, 32 have
now completed the required renovations, while the remaining two are expected
to finish by the end of 2024.
o The performance of the Large and Specialty Hospitals in 3Q24 and 9M24
further reflects the positive outcome of the business' efforts to expand its
range of high-margin outpatient services. In 3Q24, these services accounted
for 36.2% of the revenue of Large and Specialty Hospitals, marking a 2.7 ppts
y-o-y increase (34.2% in 9M24, up 2.9 ppts y-o-y).
o The completion of the renovation works was also evident in the performance
of our Regional and Community Hospitals, which saw revenue growth of 3.1%
y-o-y in 3Q24 (down 7.2% y-o-y in 9M24), notwithstanding the absence of the
revenues from "Batumi Hospital", one of the regional hospitals divested in
4Q23.
Ø As a result, the combined revenue of the hospitals business was up by 9.9%
and 2.7% y-o-y in 3Q24 and 9M24, respectively. Adjusted for the sale of the
above-mentioned "Batumi Hospital", the combined revenue was up by 15.5% y-o-y
in 3Q24 (up 8.4% in 9M24).
Ø The changes in the gross profit margin, apart from the revenue developments
described above, reflect the following trends in direct salary and materials
rates(( 38 (#_ftn38) )) and utility costs:
o The direct salary rate remained largely flat y-o-y at 41.1% in 3Q24, while
it increased by 1.9 ppts y-o-y to 40.6% in 9M24, resulting from the
introduction of minimum salary requirements for janitors and junior nurses by
the State in January 2024.
o The materials rate improved by 1.7 ppts y-o-y to 16.0% in 3Q24 (down 0.3
ppts y-o-y to 16.6% in 9M24), reflecting significant optimisations achieved in
tender participation processes.
o Utilities and other costs were managed effectively, down by 7.0% and 12.8%
y-o-y in 3Q24 and 9M24, respectively.
Ø Operating expenses (excl. IFRS 16) increased by 4.9% y-o-y in 3Q24 (up 1.4%
y-o-y in 9M24), primarily due to higher salary costs associated with
an increased headcount to support the expansion of the services and overall
business growth.
Ø The developments described above translated into a 36.6% y-o-y increase in
EBITDA (excluding IFRS 16) in 3Q24 (down 1.2% y-o-y in 9M24).
3Q24 3Q23 Change 9M24 9M23 Change
Total EBITDA (excl. IFRS 16), breakdown 11,722 8,583 36.6% 37,784 38,224 -1.2%
Of which, Large and Specialty Hospitals 8,614 6,713 28.3% 28,907 27,751 4.2%
Of which, Regional and Community Hospitals 3,108 1,871 66.1% 8,877 10,471 -15.2%
Ø Adjusted for the sale of the "Batumi Hospital", the combined EBITDA
(excluding IFRS 16) was up by 39.4% y-o-y in 3Q24 (up 3.3% in 9M24).
Ø Net interest expense (excluding IFRS 16) was down by 4.1% y-o-y in 3Q24, in
line with reduced interest rates on the market. Net interest expense
(excluding IFRS 16) remained largely flat in 9M24 (up by 0.3% y-o-y).
CASH FLOW AND BALANCE SHEET HIGHLIGHTS
Ø Capex investment was GEL 14.8 million in 3Q24 (GEL 38.2 million in 9M24),
comprising: a) the maintenance capex of GEL 4.8 million in 3Q24 (GEL 13.7
million in 9M24), b) development capex of GEL 3.7 million in 3Q24 (GEL 7.1
million in 9M24) to expand service offerings, and c) capex related to the new
regulations and obtaining required accreditations in the amount of GEL 2.8
million in 3Q24 (GEL 8.0 million in 9M24).
Ø The EBITDA to cash conversion ratio was at 140.6% in 3Q24 (61.0% in 9M24),
reflecting the receipt of the delayed receivables from the State.
OTHER VALUATION DRIVERS AND OPERATING HIGHLIGHTS
Ø The business key operating performance highlights for 3Q24 and 9M24 are
noted below:
Key metrics 3Q24 3Q23 Change 9M24 9M23 Change
Number of admissions (thousands): 382.0 368.5 3.7% 1,165.2 1,147.6 1.5%
Of which, Large and Specialty Hospitals 180.5 142.7 26.5% 521.6 443.1 17.7%
Of which, Regional and Community Hospitals 39 (#_ftn39) 201.5 225.8 -10.8% 643.6 704.5 -8.6%
Occupancy rates:
Of which, Large and Specialty Hospitals 62.9% 51.9% 11.0 ppts 65.9% 56.0% 9.9 ppts
Of which, Regional and Community Hospitals 49.3% 37.8% 11.5 ppts 58.2% 43.8% 14.4 ppts
Discussion of Renewable Energy Business Results
The renewable energy business operates three wholly-owned commissioned
renewable assets: 30MW Mestiachala HPP, 20MW Hydrolea HPPs and 21MW Qartli
wind farm. In addition, the business has a pipeline of renewable energy
projects in varying stages of development. The renewable energy business is
100% owned by Georgia Capital. As electricity sales in Georgia is a dollar
business, the financial data below is presented in US$.
3Q24 and 9M24 performance (US$ '000), Renewable Energy 40 (#_ftn40)
INCOME STATEMENT HIGHLIGHTS 3Q24 3Q23 Change 9M24 9M23 Change
Revenue 5,927 5,507 7.6% 13,462 11,472 17.3%
Of which, PPA 2,271 2,357 -3.6% 5,812 6,098 -4.7%
Of which, Non-PPA 3,656 3,150 16.1% 7,650 5,374 42.4%
Operating expenses (1,023) (1,096) -6.7% (3,069) (3,121) -1.7%
EBITDA 4,904 4,411 11.2% 10,393 8,351 24.5%
EBITDA margin 82.7% 80.1% 2.6 ppts 77.2% 72.8% 4.4 ppts
Net profit 2,355 1,971 19.5% 2,982 432 NMF
CASH FLOW HIGHLIGHTS
Cash flow from operating activities 4,443 4,358 2.0% 9,115 6,843 33.2%
Cash flow used in investing activities (812) (1,009) -19.5% (2,029) (3,163) -35.9%
Cash flow used in financing activities (5,857) 65 NMF (12,582) (2,589) NMF
Repayment of borrowings (1,909) - NMF (7,100) (9) NMF
Dividends paid out (4,500) - NMF (4,500) (2,000) NMF
BALANCE SHEET HIGHLIGHTS 30-Sep-24 30-Jun-24 Change 31-Dec-23 Change
Total assets 117,529 118,977 -1.2% 122,579 -4.1%
Of which, cash balance 4,872 7,151 -31.9% 10,525 -53.7%
Total liabilities 78,560 78,359 0.3% 83,911 -6.4%
Of which, borrowings 75,382 75,911 -0.7% 80,935 -6.9%
Total equity 38,970 40,619 -4.1% 38,667 0.8%
INCOME STATEMENT HIGHLIGHTS (GEL) 3Q24 3Q23 Change 9M24 9M23 Change
Revenue 16,082 14,590 10.2% 36,699 30,017 22.3%
EBITDA 13,304 11,689 13.8% 28,326 21,869 29.5%
INCOME STATEMENT HIGHLIGHTS
Ø The y-o-y increase in the 3Q24 revenue reflects:
o A 5.5% y-o-y improvement in electricity generation, despite a decrease in
the electricity generation of the wind farm due to regular maintenance works
executed on one of the six power-generating units during May-July 2024.
o An increase in the average electricity selling price (up 2.0% y-o-y to
57.5 US$/MWh in 3Q24, up 0.7% y-o-y to 56.8 US$/MWh in 9M24).
Ø The y-o-y revenue growth in 9M24 further reflects the resumption of
operations of two power-generating units of Hydrolea HPPs, which were taken
offline between November 2022 to June 2023 due to previously planned phased
rehabilitation works.
3Q24 and 9M24 revenue and generation breakdown by power assets:
3Q24 9M24
US$ '000, Revenue from Change Electricity Change Revenue from Change Electricity Change
electricity sales
y-o-y
generation (MWh)
y-o-y
electricity sales
y-o-y
generation (MWh)
y-o-y
unless otherwise noted
30MW Mestiachala HPP 3,247 5.5% 57,160 3.2% 5,248 4.8% 94,399 3.8%
20MW Hydrolea HPPs 1,325 47.9% 24,831 34.2% 4,302 99.7% 82,301 78.9%
21MW Qartli wind farm 1,355 -11.5% 20,853 -11.5% 3,912 -9.2% 60,183 -9.2%
Total 5,927 7.6% 102,844 5.5% 13,462 17.3% 236,883 16.6%
Ø The operating expenses were well-controlled, down 6.7% and 1.7% y-o-y in
3Q24 and 9M24, respectively.
Ø The developments described above, led to a 11.2% and 24.5% y-o-y increase
in EBITDA in 3Q24 and 9M24, respectively.
CASH FLOW AND BALANCE SHEET HIGHLIGHTS
Ø In 3Q24 the business repurchased and cancelled US$ 1.9 million of its green
bonds (US$ 7.0 million in 9M24). As a result, the gross debt balance of the
business currently stands at US$ 73.0 million, leading to a 6.7% and 5.5%
y-o-y decrease in the net interest expense in 3Q24 and 9M24, respectively.
Ø The business paid US$ 4.5 million dividends to GCAP in 3Q24.
Discussion of Education Business Results
Our education business currently combines majority stakes in four private
school brands operating across seven campuses acquired over the period
2019-2023: British-Georgian Academy and British International School of
Tbilisi (70% stake), the leading schools in the premium and international
segments; Buckswood International School (80% stake), well-positioned in the
midscale segment and Green School (80%-90% ownership), well-positioned in the
affordable segment.
3Q24 and 9M24 performance (GEL '000), Education 41 (#_ftn41)
INCOME STATEMENT HIGHLIGHTS 3Q24 3Q23 Change 9M24 9M23 Change
Revenue 8,967 7,737 15.9% 45,656 36,145 26.3%
Operating expenses (11,538) (9,609) 20.1% (36,815) (28,117) 30.9%
EBITDA (2,571) (1,872) -37.3% 8,841 8,028 10.1%
EBITDA Margin -28.7% -24.2% -4.5 ppts 19.4% 22.2% -2.8 ppts
Net (loss) / profit (4,688) (3,389) -38.3% 6,642 5,040 31.8%
CASH FLOW HIGHLIGHTS 3Q24 3Q23 Change 9M24 9M23 Change
Net cash flows from operating activities 5,823 6,151 -5.3% 21,866 17,478 25.1%
Net cash flows from investing activities (9,108) (7,911) 15.1% (18,280) (27,750) -34.1%
Net cash flows from financing activities 337 1,210 -72.1% 4,445 14,263 -68.8%
BALANCE SHEET HIGHLIGHTS 30-Sep-24 30-Jun-24 Change 31-Dec-23 Change
Total assets 217,932 214,355 1.7% 191,723 13.7%
Of which, cash 15,527 18,557 -16.3% 7,535 NMF
Total liabilities 80,628 72,257 11.6% 62,149 29.7%
Of which, borrowings 34,234 33,267 2.9% 27,750 23.4%
Total equity 137,304 142,098 -3.4% 129,574 6.0%
INCOME STATEMENT HIGHLIGHTS
Ø The third quarter is usually a slow season for the education business, as
the schools are not operational during the July-August holidays. The 15.9%
y-o-y increase in 3Q24 revenues (up 26.3% y-o-y in 9M24) was driven by a)
organic growth through strong intakes and a ramp-up of the utilisation and b)
expansion of the business through the launch of a new campus in the mid-scale
segment and the acquisition of the new campus in the affordable segment during
2023. The revenue growth in 9M24 was partially subdued by foreign exchange
rate movements, as the tuition fees for our premium and international schools
are denominated in US$.
Ø Operating expenses were up by 20.1% y-o-y in 3Q24 (up 30.9% y-o-y in 9M24),
mainly reflecting increased salary, catering and utility expenses, in line
with the expansion of the business.
Ø Consequently, EBITDA was down by 37.3% with a 4.5 ppts y-o-y decrease in
the EBITDA margin in 3Q24, which apart from the impact of seasonality as
described above, reflects the early ramp-up stage of the newly launched
campuses. The performance is expected to rebound as the utilisation rate of
the newly added learner capacity picks up gradually. EBITDA was up by 10.1%
y-o-y in 9M24.
Ø Net income was down 38.3% y-o-y in 3Q24 and increased by 31.8% y-o-y in
9M24, the latter also reflecting a gain from the first-time valuation of the
call option on the minority stake in one of the recently acquired campuses,
which was previously measured at an equity investment cost.
CASH FLOW AND BALANCE SHEET HIGHLIGHTS
Ø Cash collection rate was at 55.4% as of 30-Sep-24, in line with last year's
level.
Ø Investing cash outflows of GEL 9.1 million and GEL 18.3 million in 3Q24 and
9M24, respectively, reflect the investments related to the ongoing expansion
of existing campuses in the midscale and affordable segments.
OTHER VALUATION DRIVERS AND OPERATING HIGHLIGHTS
Ø The 2024-2025 academic year started with a significant increase in capacity
and the number of learners:
o The total learner capacity increased by 825 learners to 8,095 learners in
3Q24, of which the capacity of the midscale segment expanded to 1,645 learners
(up by 225 learners) and the capacity of the affordable segment increased to
5,300 learners (up by 600 learners).
o The total number of learners increased by 693 learners y-o-y to 6,593
learners at 30-Sep-24 (up by 710 learners q-o-q).
Ø The utilisation rate for the total 8,095 learner capacity was up by 0.3
ppts y-o-y to 81.4% as at 30-Sep-24.
o The utilisation rate for the pre-expansion 2,810 learner capacity was
100%.
o The utilisation of the newly added capacity of 5,285 learners was 71.6%.
Ø The number of campuses across the different segments is noted below:
Sep-24 Jun-24 Change (q-o-q) Sep-23 Change (y-o-y)
Total number of campuses 7 7 - 7 -
Premium and International segment 1 1 - 1 -
Mid-scale segment 2 2 - 2 -
Affordable segment 4 4 - 4 -
Discussion of Clinics and Diagnostics Business Results 42 (#_ftn42)
The clinics and diagnostics business, where GCAP owns a 100% equity interest,
is the second largest healthcare market participant in Georgia after our
hospitals business. The business comprises two segments: 1) 16 polyclinics
(providing outpatient diagnostic and treatment services) and retail lab retail
points at 14 of our GPC pharmacies; 2) Diagnostics, operating the largest
laboratory in the entire Caucasus region - "Mega Lab".
3Q24 and 9M24 performance (GEL '000), Clinics and Diagnostics 43 (#_ftn43)
INCOME STATEMENT HIGHLIGHTS 3Q24 3Q23 Change 9M24 9M23 Change
Revenue, net 44 (#_ftn44) 16,851 14,916 13.0% 53,558 44,676 19.9%
Of which, clinics 13,993 12,255 14.2% 43,266 35,453 22.0%
Of which, diagnostics 5,032 4,293 17.2% 15,862 13,485 17.6%
Of which, inter-business eliminations (2,174) (1,632) 33.2% (5,570) (4,262) 30.7%
Gross Profit 8,698 7,309 19.0% 27,047 20,890 29.5%
Gross profit margin 51.6% 48.9% 2.7% 50.4% 46.6% 3.8%
Operating expenses (ex. IFRS 16) (5,989) (4,679) 28.0% (17,142) (13,816) 24.1%
EBITDA (ex. IFRS 16) 2,709 2,630 3.0% 9,905 7,074 40.0%
EBITDA margin (ex. IFRS 16) 16.1% 17.6% -1.5 ppts 18.5% 15.8% 2.7 ppts
Net (loss) / profit (ex. IFRS 16) (95) (765) 87.6% 1,627 (1,602) NMF
CASH FLOW HIGHLIGHTS
Cash flow from operating activities (ex. IFRS 16) 4,019 2,429 65.5% 11,193 4,629 NMF
EBITDA to cash conversion (ex. IFRS 16) 148.4% 92.4% 56.0 ppts 113.0% 65.4% 47.6 ppts
Cash flow used in investing activities (856) (4,639) -81.5% (5,360) (10,402) -48.5%
Free cash flow (ex. IFRS 16) 45 (#_ftn45) 410 (604) NMF 3,702 (4,270) NMF
Cash flow from financing activities (ex. IFRS 16) (34) (2,100) -98.4% (1,901) 3,977 NMF
BALANCE SHEET HIGHLIGHTS 30-Sep-24 30-Jun-24 Change 31-Dec-23 Change
Total assets 140,638 131,991 6.6% 135,848 3.5%
Of which, cash balance and bank deposits 8,459 5,331 58.7% 4,500 88.0%
Of which, securities and loans issued - 3,049 NMF 8,357 NMF
Total liabilities 86,338 78,726 9.7% 83,901 2.9%
Of which, borrowings 43,871 43,162 1.6% 48,630 -9.8%
Total equity 54,300 53,265 1.9% 51,947 4.5%
Discussion of results, Clinics (GEL '000)
INCOME STATEMENT HIGHLIGHTS 3Q24 3Q23 Change 9M24 9M23 Change
Revenue, net 13,993 12,255 14.2% 43,266 35,453 22.0%
Gross Profit 7,097 6,249 13.6% 21,984 17,565 25.2%
Gross profit margin 50.7% 50.9% -0.2 ppts 50.7% 49.3% 1.4 ppts
Operating expenses (ex. IFRS 16) (4,968) (3,800) 30.7% (14,038) (11,325) 24.0%
EBITDA (ex. IFRS 16) 2,129 2,449 -13.1% 7,946 6,240 27.3%
EBITDA margin (ex. IFRS 16) 15.2% 19.9% -4.7 ppts 18.3% 17.5% 0.8 ppts
Net (loss) / profit (ex. IFRS 16) (273) (902) 69.7% 1,025 (987) NMF
CASH FLOW HIGHLIGHTS
Cash flow from operating activities (ex. IFRS 16) 3,625 2,290 58.3% 11,394 6,173 84.6%
EBITDA to cash conversion (ex. IFRS 16) 170.3% 93.5% 76.8 ppts 143.4% 98.9% 44.5 ppts
Cash flow used in investing activities 46 (#_ftn46) (740) (4,425) -83.3% (5,002) (9,450) -47.1%
Free cash flow (ex. IFRS 16) 132 (525) NMF 4,261 (1,760) NMF
Cash flow used in financing activities (ex. IFRS 16) 330 (2,060) NMF (2,243) 2,611 NMF
BALANCE SHEET HIGHLIGHTS 30-Sep-24 30-Jun-24 Change 31-Dec-23 Change
Total assets 109,427 100,804 8.6% 105,789 3.4%
Of which, cash balance and bank deposits 8,438 5,223 61.6% 4,261 98.0%
Of which, securities and loans issued - 3,049 NMF 8,357 NMF
Total liabilities 73,686 65,908 11.8% 71,840 2.6%
Of which, borrowings 36,674 35,797 2.4% 42,340 -13.4%
Total equity 35,741 34,896 2.4% 33,949 5.3%
INCOME STATEMENT HIGHLIGHTS
Ø The 14.2% y-o-y increase in 3Q24 revenue (up 22.0% y-o-y in 9M24) reflects:
o The increased demand for high revenue-generating services as well as the
growth in the number of registered patients, driven by the business' proactive
approach to customer acquisition and service enhancements.
o Ramp-up of two new ambulatory centres launched in 2H23.
o The acquisition of a portfolio of c.27,000 new customers in June 2024,
further contributing to the overall top-line growth in 3Q24.
o The revenue growth was partially subdued by the temporary closure of
certain departments of the largest polyclinic in Tbilisi in 3Q24, due to
previously planned renovation works.
Ø The cost of services in the clinics consists mainly of salaries, materials
and utilities, and the cost of providers:
o The trend in salary cost is captured in the direct salary rate(( 47
(#_ftn47) )). A significant portion of direct salaries is fixed, which on the
back of increased revenue improved by 0.4 ppts y-o-y to 31.6% in 3Q24 (down
1.2 ppts to 30.8% in 9M24), notwithstanding the impact of new regulatory
requirements regarding minimum salaries, as outlined in the discussion of the
hospitals business results above.
o The materials rate was well-managed, improving by 0.4 ppts y-o-y in 3Q24
(a 1.2 ppts y-o-y improvement in 9M24).
o The utilities and other expenses were largely flat, up 1.1% y-o-y in 3Q24
(down 2.7% y-o-y in 9M24).
o The cost of providers mainly consists of outsourced laboratory services,
which accounted for c.12% of revenue in 3Q24, (c.13% in 9M24). Increased
demand for such services led to a 1.6 ppts y-o-y increase in the provider cost
ratio in 3Q24 (up 1.5 ppts y-o-y in 9M24).
Ø Consequently, the gross profit margin decreased slightly by 0.2 ppts y-o-y
in 3Q24 (1.4 ppts y-o-y improvement in 9M24).
Ø Operating expenses (excl. IFRS 16) were up by 30.7% in 3Q24 and 24.0% y-o-y
in 9M24, reflecting increased salary and rent expenses in line with the
expansion of the business, as well as the sale of one of the polyclinic
buildings in 3Q23 and its leaseback in 2Q24.
Ø The development described above translated into a 13.1% y-o-y decrease in
EBITDA in 3Q24 (up 27.3% y-o-y in 9M24).
Ø The business posted a net loss (excl. IFRS 16) of GEL 0.3 million in 3Q24
and GEL 1.0 million net profit in 9M24, which also reflects one-off costs
associated with the termination of contracts due to changes in management.
CASH FLOW AND BALANCE SHEET HIGHLIGHTS
Ø The EBITDA to cash conversion ratio was at 170.3% in 3Q24 (143.4% in 9M24),
reflecting the strong business performance as well as the collection of
delayed receivables in 3Q24.
Ø In 3Q24, the business spent GEL 3.5 million on capex, primarily related to
the expansion of services and the polyclinics chain. Capex investment in 9M24
amounted to GEL 6.3 million.
OTHER VALUATION DRIVERS AND OPERATING HIGHLIGHTS
Ø The number of admissions at our clinics is highlighted below:
3Q24 3Q23 Change 9M24 9M23 Change
Number of admissions (thousands) 392 356 10.1% 1,291 1,148 12.4%
Ø The number of polyclinics operated by the business is provided below.
Sep-24 Sep-23 Change Dec-23 Change
Number of polyclinics 48 (#_ftn48) 16 15 1 16 -
As of 30-Sep-24, the total number of registered patients in our polyclinics in
Tbilisi reached c.337,000 (c.288,000 as of 30-Sep-23).
Discussion of results, Diagnostics (GEL '000)
INCOME STATEMENT HIGHLIGHTS 3Q24 3Q23 Change 9M24 9M23 Change
Revenue, net 5,032 4,293 17.2% 15,862 13,485 17.6%
Gross Profit 1,601 1,060 51.0% 5,063 3,325 52.3%
Gross profit margin 31.8% 24.7% 7.1 ppts 31.9% 24.7% 7.2 ppts
Operating expenses (ex. IFRS 16) (1,021) (879) 16.2% (3,104) (2,491) 24.6%
EBITDA (ex. IFRS 16) 580 181 NMF 1,959 834 NMF
EBITDA margin (ex. IFRS 16) 11.5% 4.2% 7.3 ppts 12.4% 6.2% 6.2 ppts
Net profit / (loss) (ex. IFRS 16) 178 (315) NMF 602 (1,067) NMF
INCOME STATEMENT HIGHLIGHTS
Ø The revenue developments in 3Q24 and 9M24 reflect the results of the
business' enhanced efforts to broaden its client base and diversify its range
of services, particularly in the high-margin category.
Ø Materials and direct salary rates improved by 3.0 ppts and 3.4 ppts y-o-y
in 3Q24, respectively (3.6 ppts and 2.6 ppts y-o-y improvement in 9M24,
respectively), which along with increased revenues, reflect significant
process optimisations.
Ø As a result, the business recorded a 51.0% y-o-y increase in gross profit
and a 3.2x y-o-y increase in EBITDA in 3Q24 (up 52.3% and 2.3x y-o-y in 9M24,
respectively).
OTHER VALUATION DRIVERS AND OPERATING HIGHLIGHTS
Ø The key operating performance highlights for 3Q24 and 9M24 are presented
below:
3Q24 3Q23 Change 9M24 9M23 Change
Number of patients served (thousands) 175 164 6.5% 593 577 2.7%
Number of tests performed (thousands) 593 564 5.2% 2,004 1,813 10.5%
Average revenue per test GEL 8.5 7.6 11.4% 7.9 7.4 6.4%
Average number of tests per patient 3.4 3.4 -1.2% 3.4 3.1 7.6%
Discussion of Other Portfolio Results
The four businesses in our "other" private portfolio are Auto Service,
Beverages, Hospitality and Housing. They had a combined value of GEL 327.3
million at 30-Sep-24, which represents 9.5% of our total portfolio.
3Q24 & 9M24 aggregated performance highlights (GEL '000), Other Portfolio
3Q24 3Q23 Change 9M24 9M23 Change
Revenue 168,087 162,125 3.7% 439,462 427,079 2.9%
EBITDA 19,435 21,034 -7.6% 52,490 35,447 48.1%
Net cash flows from operating activities 22,264 (1,383) NMF 33,531 (814) NMF
Ø Auto Service | The auto service business includes a periodic technical
inspection (PTI) business, and a car services and parts business.
o Periodic technical inspection (PTI) business | PTI business' revenue was
up by 13.0% y-o-y to GEL 6.7 million in 3Q24 (up by 16.6% y-o-y to GEL 17.6
million in 9M24), driven by an increase in primary and secondary vehicle
inspections. The number of total cars serviced was up by 12.2% and 15.7%
y-o-y, leading to a 15.1% and 21.9% y-o-y increase in EBITDA in 3Q24 and 9M24,
respectively.
o Car services and parts business | In 3Q24, revenue was up by 13.7% y-o-y
to GEL 17.7 million (up 11.9% y-o-y to GEL 45.3 million in 9M24) reflecting an
increase in the retail and corporate segment. Similarly, the gross profit was
up by 8.0% to GEL 4.3 million in 3Q24 and up 9.2% to GEL 11.7 million in 9M24,
y-o-y. In 3Q24, operating expenses increased by 14.7% y-o-y (up 21.7% y-o-y in
9M24), reflecting the business growth. As a result, the business posted a GEL
0.8 million EBITDA in 3Q24, down 14.4% y-o-y (GEL 1.6 million in 9M24, down
33.6% y-o-y).
Ø Beverages | The beverages business combines three business lines: a beer
business, a distribution business and a wine business. In October 2024, GCAP
announced the sale of an 80% holding of its beer and distribution business.
For further details, please refer to page 2 of this report.
o Beer business | The gross revenue of the beer business increased by 28.3%
y-o-y to GEL 52.7 million in 3Q24 and was up by 14.8% y-o-y to GEL 124.7
million in 9M24, resulting from increased product prices as well as the
increase sales in hectolitres (up by 18.8% and 5.3% y-o-y in 3Q24 and 9M24,
respectively). The average GEL price per litre (average for beer and lemonade)
increased by 8.0% y-o-y in 3Q24 (up by 9.1% y-o-y in 9M24). The operating
expenses were up by 21.4% and 19.8% y-o-y in 3Q24 and 9M24, respectively,
mainly due to the increased marketing expenses. Consequently, the EBITDA of
the business increased by 23.1% to GEL 9.8 million in 3Q24 (up 14.2% y-o-y to
GEL 20.8 million in 9M24).
o Distribution business | Revenue of the distribution business increased by
17.2% and 14.8% y-o-y to GEL 74.3 million and GEL 171.3 million in 3Q24 and
9M24, respectively, in line with the increased revenues of the beer business,
as described above. The gross profit margin was down by 2.0 ppts and 2.1 ppts
y-o-y in 3Q24 and 9M24, respectively, reflecting the change in product mix. In
3Q24, operating expenses were up by 10.6% y-o-y (up by 8.5% y-o-y in 9M24). As
a result, the business posted GEL 4.0 million EBITDA in 3Q24, down by 4.8%
y-o-y (GEL 7.1 million in 9M24, down by 12.5% y-o-y).
o Wine business | The net revenue of the wine business was down by 30.2% to
GEL 12.1 million in 3Q24, reflecting a 34.1% decrease in the number of bottles
sold in 3Q24, primarily due to weaker exports in 3Q24 (share of exports in
total sales was down by 6.1 ppts y-o-y to 80.4% in 3Q24). For 9M24, revenue
was down by 3.3% y-o-y to GEL 41.7 million with a 5.7% decrease in the number
of bottles sold. Operating expenses decreased by 11.3% y-o-y in 3Q24 (down by
7.0% y-o-y in 9Q24) due to the business' cost-saving initiatives.
Consequently, EBITDA was down by 69.2% to GEL 0.7 million in 3Q24 (up by 55.4%
to GEL 4.5 million in 9M24).
Ø Real estate businesses | The combined revenue of the real estate businesses
increased by 2.2% y-o-y to GEL 63.5 million in 3Q24 (down by 2.6% y-o-y to GEL
176.5 million in 9M24). The 3Q24 EBITDA decreased by GEL 1.6 million y-o-y to
negative GEL 1.0 million (up by GEL 13.1 million to GEL 9.6 million in 9M24),
mainly resulting from the reassessment of the construction progress for
ongoing residential projects at our housing development business. In August
2024, our housing development business successfully closed a US$ 25 million
local bond offering. The 2-year, US$-denominated notes carry an 8.5% coupon.
Proceeds were used to refinance US$ 35 million local bonds which matured in
October 2024.
ADDITIONAL FINANCIAL INFORMATION
The 9M24 NAV Statement shows the development of NAV since 31-Dec-23:
GEL '000, unless otherwise noted Dec-23 1. Value creation(( 49 (#_ftn49) )) 2a. 2b. 2c. Dividend 3.Operating expenses 4. Liquidity/ FX/Other Sep-24 Change
Investment and Divestments Buyback %
Listed and Observable Portfolio Companies
Bank of Georgia (BoG) 1,225,847 65,422 - - (144,798) - - 1,146,471 -6.5%
Water Utility 159,000 1,000 - - - - - 160,000 0.6%
Total Listed and Observable Portfolio Value 1,384,847 66,422 - - (144,798) - - 1,306,471 -5.7%
Listed and Observable Portfolio value change % 4.8% 0.0% 0.0% -10.5% 0.0% 0.0% -5.7%
Private Portfolio Companies
Large Companies 1,436,231 (103,733) - - (26,560) - 2,870 1,308,808 -8.9%
Retail (Pharmacy) 714,001 (46,857) - - (10,048) - 1,078 658,174 -7.8%
Insurance (P&C and Medical) 377,874 45,302 - - (16,512) - 714 407,378 7.8%
Of which, P&C Insurance 285,566 40,557 - - (16,512) - 714 310,325 8.7%
Of which, Medical Insurance 92,308 4,745 - - - - - 97,053 5.1%
Hospitals 344,356 (102,178) - - - - 1,078 243,256 -29.4%
Investment Stage Companies 566,614 (34,815) 4,432 - (12,258) - 1,371 525,344 -7.3%
Renewable Energy 266,627 (19,712) 4,432 - (12,258) - 674 239,763 -10.1%
Education 189,226 (8,670) - - - - 458 181,014 -4.3%
Clinics and Diagnostics 110,761 (6,433) - - - - 239 104,567 -5.6%
Other Companies 284,253 46,601 3,000 - (8,311) - 1,734 327,277 15.1%
Total Private Portfolio Value 2,287,098 (91,947) 7,432 - (47,129) - 5,975 2,161,429 -5.5%
Private Portfolio value change % -4.0% 0.3% 0.0% -2.1% 0.0% 0.3% -5.5%
Total Portfolio Value (1) 3,671,945 (25,525) 7,432 - (191,927) - 5,975 3,467,900 -5.6%
Total Portfolio value change % -0.7% 0.2% 0.0% -5.2% 0.0% 0.2% -5.6%
Net Debt (2) (296,808) - (7,432) (109,784) 191,927 (16,441) (30,842) (269,380) -9.2%
of which, Cash and liquid funds 107,910 - (7,432) (109,784) 163,078 (16,441) (35,449) 101,882 -5.6%
of which, Loans issued 9,212 - - - - - 2,502 11,714 27.2%
of which, Accrued dividend income - - - - 28,849 - - 28,849 NMF
of which, Gross Debt (413,930) - - - - - 2,105 (411,825) -0.5%
Net other assets/ (liabilities) (3) 3,375 - - (1,058) - (10,493) 4,248 (3,928) NMF
of which, share-based comp. - - - - - (10,493) 10,493 - NMF
Net Asset Value (1)+(2)+(3) 3,378,512 (25,525) - (110,842) - (26,934) (20,619) 3,194,592 -5.4%
NAV change % -0.8% 0.0% -3.3% 0.0% -0.8% -0.6% -5.4%
Shares outstanding(49) 40,736,528 - - (3,101,773) - - 666,377 38,301,132 -6.0%
Net Asset Value per share, GEL 82.94 (0.63) (0.00) 3.89 (0.00) (0.67) (2.11) 83.41 0.6%
NAV per share, GEL change % -0.8% 0.0% 4.7% 0.0% -0.8% -2.5% 0.6%
Basis of presentation
This announcement contains unaudited financial results presented in accordance
with UK-adopted international accounting standards ("IFRS"). The financial
results are unaudited and derived from management accounts.
Under IFRS 10, Georgia Capital PLC meets the "investment entity" definition.
For more details about the basis of preparation
please refer to page 94 in Georgia Capital PLC 2023 Annual report.
The presentation of the Income Statement (Adjusted) and some of the
information under the NAV Statement should be considered to be Alternative
Performance Measures (APM).
GLOSSARY
1. APM - Alternative Performance Measure.
2. GCAP refers to the aggregation of stand-alone Georgia Capital PLC
and stand-alone JSC Georgia Capital accounts.
3. Georgia Capital and "the Group" refer to Georgia Capital PLC and
its portfolio companies as a whole.
4. NMF - Not meaningful.
5. NAV - Net Asset Value, represents the net value of an entity and is
calculated as the total value of the entity's assets minus the total value of
its liabilities.
6. LTM - last twelve months.
7. EBITDA - Earnings before interest, taxes, non-recurring items, FX
gain/losses and depreciation and amortisation; The Group has presented these
figures in this document because management uses EBITDA as a tool to measure
the Group's operational performance and the profitability of its operations.
The Group considers EBITDA to be an important indicator of its representative
recurring operations.
8. ROIC - return on invested capital is calculated as EBITDA less
depreciation, divided by the aggregate amount of total equity and borrowed
funds.
9. Loss ratio equals net insurance claims expense divided by net
earned premiums.
10. Expense ratio in P&C Insurance equals sum of acquisition costs and
operating expenses divided by net earned premiums.
11. Combined ratio equals sum of the loss ratio and the expense ratio in the
insurance business.
12. ROAE - Return on average total equity (ROAE) equals profit for the
period attributable to shareholders divided by monthly average equity
attributable to shareholders of the business for the same period.
13. Net investment - gross investments less capital returns (dividends and
sell-downs).
14. EV - enterprise value.
15. Liquid assets & loans issued include cash, marketable debt
securities and issued short-term loans at GCAP level.
16. Total return / value creation - total return / value creation of each
portfolio investment is calculated as follows: we aggregate a) change in
beginning and ending fair values, b) gains from realised sales (if any) and c)
dividend income during period. We then adjust the net result to remove capital
injections (if any) to arrive at the total value creation / investment return.
17. WPP - Wind power plant.
18. HPP - Hydro power plant.
19. PPA - Power purchase agreement.
20. Number of shares outstanding - Number of shares in issue less total
unawarded shares in JSC GCAP's management trust.
21. Market Value Leverage ("MVL"), also Loan to Value ("LTV") -
Interchangeably used across the document and is calculated by dividing net
debt to the total portfolio value.
22. NCC - Net Capital Commitment, represents an aggregated view of all
confirmed, agreed and expected capital outflows at both Georgia Capital PLC
and JSC Georgia Capital levels.
23. NCC Ratio - Equals Net Capital Commitment divided by portfolio value.
ABOUT GEORGIA CAPITAL PLC
Georgia Capital PLC (LSE: CGEO LN) is a platform for buying, building and
developing businesses in Georgia (together with its subsidiaries, "Georgia
Capital" or "the Group"). The Group's primary business is to develop or buy
businesses, help them institutionalise their management and grow them into
mature businesses that can further develop largely on their own, either with
continued oversight or independently. Once Georgia Capital has successfully
developed a business, the Group actively manages its portfolio to determine
each company's optimal owner. Georgia Capital will normally seek to monetise
its investment over a 5-10 year period from initial investment.
Georgia Capital currently has the following portfolio businesses: (1) a retail
(pharmacy) business, (2) an insurance business (P&C and medical
insurance), (3) a hospitals business, (4) a renewable energy business (hydro
and wind assets), (5) an education business; and (6) a clinics and diagnostics
business. Georgia Capital also holds other small private businesses across
different industries in Georgia; a 20% equity stake in the water utility
business and a 19.1% equity stake in LSE listed Bank of Georgia Group PLC
("BoG"), a leading universal bank in Georgia and a bank in Armenia.
Forward looking statements
This announcement 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 intentions relating to
acquisitions, competitive strengths and weaknesses, plans or goals relating to
financial position and future operations and development. Although Georgia
Capital PLC believes that the expectations and opinions reflected in such
forward-looking statements are reasonable, no assurance can be given that such
expectations and opinions will prove to have been correct. By their nature,
these forward-looking statements are subject to a number of known and unknown
risks, uncertainties and contingencies, and actual results and events could
differ materially from those currently being anticipated as reflected in such
statements. Important factors that could cause actual results to differ
materially from those expressed or implied in forward-looking statements,
certain of which are beyond our control, include, among other things: regional
instability; currency fluctuations and risk, including depreciation of the
Georgian Lari, and macroeconomic risk, regulatory risk across a wide range of
industries; investment risk; liquidity risk; portfolio company strategic and
execution risks and other key factors that could adversely affect our business
and financial performance, which are contained elsewhere in this document and
in our past and future filings and reports and also the 'Principal Risks and
Uncertainties' included in 1H24 Results Announcement and in Georgia Capital
PLC's Annual Report and Accounts 2023. No part of this document constitutes,
or shall be taken to constitute, an invitation or inducement to invest in
Georgia Capital PLC or any other entity and must not be relied upon in any way
in connection with any investment decision. Georgia Capital PLC and other
entities undertake no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise, except to
the extent legally required. Nothing in this document should be construed as a
profit forecast.
COMPANY INFORMATION
Georgia Capital PLC
Registered Address
Central Square
29 Wellington Street
Leeds, LS1 4DL
United Kingdom
www.georgiacapital.ge (http://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
Georgia Capital PLC Investor Relations
Telephone: +44 (0) 203 178 4052; +995 322 000000
E-mail: ir@gcap.ge (mailto:ir@gcap.ge)
Auditors
PricewaterhouseCoopers LLP ("PwC")
Atria One, 144 Morrison Street,
Edinburgh EH3 8EX
United Kingdom
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgewater Road
Bristol BS13 8AE
United Kingdom
Please note that Investor Centre is a free, secure online service run by our
Registrar, Computershare,
giving you convenient access to information on your shareholdings.
Investor Centre Web Address - www.investorcentre.co.uk
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1 (#_ftnref1) See "Basis of Presentation" for more background on page 23.
Private portfolio companies' performance includes aggregated stand-alone IFRS
results for our portfolio companies, which can be viewed as APMs for Georgia
Capital, since Georgia Capital does not consolidate its subsidiaries and
instead measures them at fair value under IFRS.
2 (#_ftnref2) Please see definition in glossary on page 23.
3 (#_ftnref3) Includes both the buybacks under the share buyback and
cancellation programme and for the management trust.
(( 4 (#_ftnref4) )) Includes regular cash and buyback dividends.
5 (#_ftnref5) Private portfolio companies' performance highlights are
presented excluding the water utility business. Aggregated numbers are
presented like-for-like basis.
6 (#_ftnref6) The results of our four smaller businesses included in other
portfolio companies (described on page 20) are not broken out separately.
Performance totals, however, include the other portfolio companies' results
(and are therefore not the sum of large and investment stage portfolio
results).
7 (#_ftnref7) Georgia Capital is the ultimate owner of a 92.4% equity stake
in its beer and distribution business. The disposal entails the sale of 80% of
a 92.4% ownership stake.
8 (#_ftnref8) Determined by taking into account the peak number of 47.9
million shares issued as of 31-Dec-20.
9 (#_ftnref9) Please see definition in glossary on page 23.
10 (#_ftnref10) Change in the fair value attributable to the change in
actual or expected earnings of the business, as well as the change in net
debt.
11 (#_ftnref11) Change in the fair value attributable to the change in
valuation multiples and the effect of exchange rate movement on net debt.
12 (#_ftnref12) Please read more about valuation methodology on page 23 in
"Basis of presentation".
13 (#_ftnref13) Enterprise value is presented excluding the recently
acquired schools and non-operational assets, added to the equity value of the
education business at cost.
14 (#_ftnref14) The valuation inputs as at 30-Jun-24 reflect the
retrospective adjustment for GEL 2.9 million gain recorded from the sale of
one of the polyclinics buildings in 3Q23.
15 (#_ftnref15) Investments are made at JSC Georgia Capital level, the
Georgian holding company.
16 (#_ftnref16) Dividends are received at JSC Georgia Capital level, the
Georgian holding company.
17 (#_ftnref17) Please see definition in glossary on page 23.
18 (#_ftnref18) Change in the fair value attributable to the change in
actual or expected earnings of the business, as well as the change in net
debt.
19 (#_ftnref19) Change in the fair value attributable to the change in
valuation multiples and the effect of exchange rate movement on net debt.
20 (#_ftnref20) Excluding the recently launched schools and non-operational
assets, added to the equity value of the education business at cost.
21 (#_ftnref21) Investments are made and dividends are received at JSC
Georgia Capital level, the Georgian holding company.
22 (#_ftnref22) Dividends are received at JSC Georgia Capital level, the
Georgian holding company.
23 (#_ftnref23) Includes expenses such as external audit fees, legal
counsel, corporate secretary and other similar administrative costs.
24 (#_ftnref24) Cash-based management expenses are cash salary and cash
bonuses paid/accrued for staff and management compensation.
25 (#_ftnref25) Share-based management expenses are share salary and share
bonus expenses of management and staff.
26 (#_ftnref26) Fund type expenses include expenses such as audit and
valuation fees, fees for legal advisors, Board compensation and corporate
secretary costs.
27 (#_ftnref27) Management fee is the sum of cash-based and share-based
operating expenses (excluding fund-type costs).
28 (#_ftnref28) The detailed IFRS financial statements are included in
supplementary excel file, available at
https://georgiacapital.ge/ir/financial-results
(https://georgiacapital.ge/ir/financial-results) . In 2024, certain
transaction-related expenses, such as POS-terminal charges, courier services,
and other related expenses, have been reclassified from operating expenses to
components of gross profit. The comparative 3Q23 and 9M23 periods have been
adjusted retrospectively.
29 (#_ftnref29) Of which - cash outflow on capex of GEL 5.2 million in 3Q24
and GEL 17.7 million in 9M24 (GEL 11.0 million in 3Q23 and GEL 20.4 million in
9M23); proceeds from sale of PPE of GEL 1.8 million in 3Q24 and GEL 2.2
million in 9M24 (GEL 14.6 million in 9M23); cash outflow on minority
acquisition of GEL 89.1 million in 9M23.
30 (#_ftnref30) Calculated by deducting capex and minority acquisition from
operating cash flows and adding proceeds from the sale of PPE/IP.
31 (#_ftnref31) The detailed IFRS financial statements are included in
supplementary excel file, available at
https://georgiacapital.ge/ir/financial-results
(https://georgiacapital.ge/ir/financial-results) .
32 (#_ftnref32) Calculated based on average equity, adjusted for preferred
shares.
33 (#_ftnref33) The numbers were adjusted retrospectively to account for the
recent strategic reorganisation in the healthcare businesses that occurred in
December 2023.
34 (#_ftnref34) The detailed IFRS financial statements are included in
supplementary excel file, available at
https://georgiacapital.ge/ir/financial-results
(https://georgiacapital.ge/ir/financial-results) .
35 (#_ftnref35) Net revenue - Gross revenue less corrections and rebates.
Margins are calculated from gross revenue.
36 (#_ftnref36) Of which - capex of GEL 14.8 million and GEL 38.2 in 3Q24
and 9M24, respectively (GEL 16.4 million and GEL 34.4 in 3Q23 and 9M23
respectively); proceeds from the sale of property of GEL 30.1 million in 9M24
(GEL 2.3 million in 9M23).
37 (#_ftnref37) Operating cash flows less capex, plus net proceeds from the
sale of Batumi Hospital.
38 (#_ftnref38) The respective costs divided by gross revenues.
39 (#_ftnref39) Adjusted for the sale of Batumi Hospital, the number of
admissions in Regional and Community Hospitals was 214.1 thousand and 668.1
thousand in 3Q23 and 9M23, respectively (down 5.9% in 3Q24 and 3.7% y-o-y in
9M24).
40 (#_ftnref40) The detailed IFRS financial statements (in both US$ and GEL)
are included in supplementary excel file, available at
https://georgiacapital.ge/ir/financial-results
(https://georgiacapital.ge/ir/financial-results) .
41 (#_ftnref41) The detailed IFRS financial statements are included in
supplementary excel file, available at
https://georgiacapital.ge/ir/financial-results
(https://georgiacapital.ge/ir/financial-results) .
42 (#_ftnref42) The numbers were adjusted retrospectively to account for the
recent strategic reorganisation in the healthcare businesses. The 2023 numbers
reflect the retrospective adjustment for GEL 2.9 million gain recorded from
the sale of one of the polyclinics buildings in 3Q23.
43 (#_ftnref43) The detailed IFRS financial statements are included in
supplementary excel file, available at
https://georgiacapital.ge/ir/financial-results
(https://georgiacapital.ge/ir/financial-results) .
44 (#_ftnref44) Net revenue - Gross revenue less corrections and rebates.
Margins are calculated from Gross revenue.
45 (#_ftnref45) Operating cash flows less capex.
46 (#_ftnref46) Of which capex of GEL 3.5 million in 3Q24 and GEL 6.3
million in 9M24 (GEL 2.8 million in 3Q23 and GEL 7.9 million in 9M23).
47 (#_ftnref47) The respective costs divided by gross revenues.
48 (#_ftnref48) In 2024, two polyclinics located in rural areas of Georgia
were reclassified under the Regional and Community Hospitals. The comparative
2023 data has been adjusted retrospectively.
49 (#_ftnref49) Please see definition in glossary on page 23.
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