REG - Georgia Capital PLC - 1st Quarter Results
Wed 07:00
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RNS Number : 5751H Georgia Capital PLC 07 May 2025
FINANCIAL PERFORMANCE HIGHLIGHTS (IFRS) 1 (#_ftn1)
GEL '000, unless otherwise noted Mar-25 Dec-24 Change
Georgia Capital NAV overview
NAV per share, GEL 106.73 95.95 11.2%
NAV per share, GBP 29.80 27.14 9.8%
Net Asset Value (NAV) 3,857,578 3,609,013 6.9%
Shares outstanding(2) 36,142,305 37,612,488 -3.9%
Cash and liquid funds 161,853 278,237 -41.8%
NCC ratio 2 (#_ftn2) 13.5% 12.8% 0.7 ppts
Georgia Capital Performance 1Q25 1Q24 Change
Total portfolio value creation 343,493 306,944 11.9%
of which, listed and observable businesses 247,949 324,544 -23.6%
of which, private businesses 95,544 (17,600) NMF
Investments 11,702 3,000 NMF
Buybacks 3 (#_ftn3) 87,876 22,669 NMF
Dividend income 4 (#_ftn4) 8,007 13,799 -42.0%
Net income 334,199 287,601 16.2%
Private portfolio companies' performance(1, 5 (#_ftn5) ) 1Q25 1Q24 Change
Large portfolio companies
Revenue 430,569 355,375 21.2%
EBITDA 57,181 39,216 45.8%
Net operating cash flow 43,096 34,411 25.2%
Total portfolio 6 (#_ftn6)
Revenue 523,599 479,134 9.3%
EBITDA 77,637 63,184 22.9%
Net operating cash flow 68,000 45,459 49.6%
KEY POINTS
Ø NAV per share (GEL) increased 11.2% in 1Q25, driven by continued growth in
Lion Finance Group's (Bank of Georgia's) share price and the robust operating
performance of the private portfolio companies
Ø Outstanding quarterly results across our large private portfolio companies
with 21.2% and 45.8% y-o-y increases in aggregated revenues and EBITDA in
1Q25, respectively, leading to a 25.2% y-o-y increase in net operating cash
flow
Ø NCC ratio increased by 0.7 ppts q-o-q to 13.5% as at 31-Mar-25, mainly
reflecting the announcement of a US$ 25 million increase to the buyback
programme in March 2025
Ø 2.1 million shares repurchased since the beginning of 2025 (total bought
back since demerger now 13.2 million shares (US$ 164 million cost),
representing 27.6(( 7 (#_ftn7) ))% of GCAP's peak issued share capital)
Conference call: An investor/analyst conference call will be held on
7-MAY-2025, 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_9PU6PhvyQf2Nc2RfVgfOCg) to attend
the event. Further details are available on the Group's webpage
(https://georgiacapital.ge/) .
CHAIRMAN AND CEO'S STATEMENT
Georgia Capital delivered another quarter of strong operational, financial,
and strategic performance in 1Q25.
NAV per share (GEL) increased by 11.2% to GEL 106.73 in 1Q25. The increase in
NAV per share (GEL) in 1Q25 reflects excellent underlying operating
performances across the portfolio. Value creation in our listed and observable
portfolio amounted to GEL 247.9 million (6.9 ppts positive impact on the NAV
per share), driven by a 15.9% increase in Lion Finance Group PLC's share price
during the quarter. The private portfolio companies delivered GEL 95.5 million
value creation (+2.7 ppts impact), underpinned by the strong performance of
our high-quality, resilient large businesses, as detailed below. The NAV per
share growth was further supported by our ongoing share buyback and
cancellation programme (+2.7 ppts impact), partially offset by management
platform-related costs and net interest expense (-0.4 ppts impact in total).
In GBP terms, the NAV per share in 1Q25 increased by 9.8%, reflecting GBP's
1.3% appreciation against GEL during the quarter. Since 2018, our NAV per
share (GEL) has grown at a 15.1% CAGR.
Updating the NAV format. To enhance stakeholder visibility into GCAP's private
assets and streamline the assessment of our portfolio companies, we are
implementing updates to our disclosures. Starting in 1Q25, our private
portfolio will be reported in two categories: a) large portfolio companies and
b) emerging and other businesses.
· Private large portfolio companies, which as at 31-Mar-25
represented 41.1% of the total portfolio value, consists of retail (pharmacy),
insurance (P&C and medical), and healthcare services businesses. The
healthcare services business will combine the previously separately reported
hospitals, clinics, and diagnostics businesses, reflecting their recently
integrated management oversight.
· The remaining private portfolio (13.8% of the total portfolio
divided between five businesses) will be reported under the emerging and other
businesses category. This category will include businesses such as our
education and renewable energy businesses, which are currently small but have
potential to emerge within the next 3-5 years as large-scale assets valued at
GEL 300 million+, alongside those that do not offer scalable growth potential.
We expect that this disclosure update will sharpen investors' focus on our
three large-scale private portfolio businesses which, together with our listed
asset Lion Finance Group PLC, account for more than 80% of the total portfolio
value as of 31-Mar-25. Although our quarterly disclosures will place greater
emphasis on large portfolio companies, detailed financial information for all
our private businesses will continue to remain accessible on our website.
Our private large portfolio companies continue to deliver excellent operating
performance. In 1Q25, the aggregated revenue of our private large portfolio
companies increased by 21.2% y-o-y to GEL 430.6 million, while EBITDA
increased by 45.8% y-o-y to GEL 57.2 million. This resulted in quarterly
aggregated net operating cash flows of GEL 43.1 million, up 25.2% y-o-y.
· Our retail (pharmacy) business had a very strong quarter. The
2.8% same-store revenue growth in the quarter, strong ramp-up of the pharmacy
stores launched in late 2023 and overall optimisation of the pharmacy chain
led to a 55.6% y-o-y increase in EBITDA in 1Q25. This performance also
reflects the positive outcome of renegotiated trading terms with key suppliers
across all major categories, which together with a strong topline growth,
translated into a 2.9 ppts y-o-y improvement in the 1Q25 gross profit margin.
· Our insurance business posted 13.6% y-o-y growth in pre-tax
profit in 1Q25, reflecting positive developments in both the P&C and
medical insurance segments, the latter partially boosted by the acquisition of
the Ardi insurance portfolio in April 2024.
· Within our healthcare services business, increased demand for
high revenue-generating outpatient services at our large and specialty
hospitals, optimisation of the facilities, and a significant improvement in
the sales mix at our regional and community hospitals, coupled with robust
performance of our clinics and diagnostics, led to a 46.8% y-o-y EBITDA growth
in 1Q25.
Overall, aggregated revenue and EBITDA of our private businesses were up by
9.3% and 22.9% y-o-y, respectively, contributing to a 49.6% y-o-y increase in
aggregated net operating cash flows in 1Q25.
Progress on share buybacks. In March 2025, reflecting GCAP's strong liquidity
position, we increased the ongoing US$ 25 million share buyback and
cancellation programme by an additional US$ 25 million to US$ 50 million. In
2025 to date, we have repurchased 2.1 million shares under our ongoing buyback
programme, for a total consideration of GEL 101.9 million (US$ 36.2 million).
This takes the capital returned to our shareholders since demerger to a total
of US$ 164 million or 13.2 million GCAP shares, representing 27.6% of GCAP's
issued share capital at its peak. As a result, the gross number of issued
shares now stands at 37.4 million, below the 39.4 million shares in issue at
the time of the demerger.
NCC ratio increased to 13.5% in 1Q25. A 0.7 ppts q-o-q increase in the NCC
ratio in 1Q25 was primarily driven by the announcement of a US$ 25 million
increase to the buyback programme and related cash outflows for share
repurchases, partially offset by a 9.3% growth in total portfolio value. On a
y-o-y basis, the progress on the NCC ratio was strong, down by 1.3 ppts.
From a macroeconomic perspective, Georgia's economy continued to perform
strongly in early 2025. Preliminary estimates indicate real GDP growth of 9.3%
y-o-y in 1Q25. Despite the continuing regional geopolitical volatility,
economic activity remained resilient, supported by robust loan book growth in
the bank sector, strong foreign currency inflows, declining unemployment and
rising wages, which bolstered domestic consumption. Looking ahead, the
economic outlook suggests some moderation in growth, reflecting heightened
geopolitical uncertainty and weaker global growth projections. Inflationary
pressures have re-emerged, with annual inflation reaching 3.5% in March,
exceeding NBG's 3% target. The rise in prices was driven by a combination of
domestic and imported inflationary pressures. Exchange rate movements
reflected global currency trends. The GEL appreciated by 2.3% against the US$,
but depreciated by 6.2% against the EUR, amid ongoing geopolitical
realignments and trade-related uncertainties. FX inflows remain resilient,
with goods exports increasing by 5.7% in 1Q25, driven primarily by growth in
re-export components. Remittances also showed positive trends, with transfers
from Russia returning to pre-war levels and inflows from other countries
strengthening. International reserves stood at US$ 4.3 billion, marking a 9.8%
decline y-o-y, mainly due to NBG's active foreign exchange market
interventions during the pre-election period to address exchange rate
volatility. The overall monetary policy stance remains appropriate, with the
GEL policy rate held at 8% since May 2024, and the fiscal position has
strengthened significantly. Ongoing deleveraging has improved the country's
external balance sheet, contributing to a narrower current account deficit and
reducing government debt to 36% of GDP - the lowest level since 2014.
Outlook. The excellent performance of our portfolio companies, coupled with
our continued focus on capital repatriation to our shareholders, were
instrumental to our outstanding 1Q25 results. This performance was underpinned
by the resilience of the Georgian economy, which has demonstrated consistent
and substantial growth over the past few years despite ongoing geopolitical
tensions and uncertainties. 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
31-Mar-25 and its income for the first quarter then ended on an IFRS basis
(see "Basis of Presentation" on page 14 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 first quarter (31-Dec-24 and 31-Mar-25). The NAV Statement below
breaks down NAV into its components and provides a roll forward of the related
changes between the reporting periods.
NAV STATEMENT 1Q25
GEL '000, unless otherwise noted Dec-24 1. Value creation(( 8 (#_ftn8) )) 2a. 2b. 2c. Dividends 3. Operating expenses 4. Liquidity/ FX/Other Mar-25 Change
Investment and Divestments Buyback %
Listed and observable portfolio companies
Lion Finance Group 1,421,035 247,949 - - - - - 1,668,984 17.4%
Water utility 188,000 - - - - - - 188,000 NMF
Total listed and observable portfolio value 1,609,035 247,949 - - - - - 1,856,984 15.4%
Listed and observable portfolio value change % 15.4% 0.0% 0.0% 0.0% 0.0% 0.0% 15.4%
Private portfolio companies
Large portfolio companies 1,557,951 135,553 - - (7,034) - 929 1,687,399 8.3%
Retail (pharmacy) 716,130 66,319 - - - - 559 783,008 9.3%
Insurance (P&C and medical) 427,945 20,043 - - (7,034) - 101 441,055 3.1%
Healthcare services 413,876 49,191 - - - - 269 463,336 12.0%
Emerging and other companies 594,504 (40,009) 11,702 - (973) - 986 566,210 -4.8%
Total private portfolio value 2,152,455 95,544 11,702 - (8,007) - 1,915 2,253,609 4.7%
Private portfolio value change % 4.4% 0.5% 0.0% -0.4% 0.0% 0.1% 4.7%
Total portfolio value (1) 3,761,490 343,493 11,702 - (8,007) - 1,915 4,110,593 9.3%
Total portfolio value change % 9.1% 0.3% 0.0% -0.2% 0.0% 0.1% 9.3%
Net debt (2) (154,425) - (11,702) (87,200) 8,007 (5,518) (4,990) (255,828) 65.7%
of which, cash and liquid funds 278,237 - (11,702) (87,200) 8,007 (5,518) (19,971) 161,853 -41.8%
of which, gross debt (432,662) - - - - - 14,981 (417,681) -3.5%
Net other assets/(liabilities) (3) 1,948 - - (676) - (4,267) 5,808 2,813 44.4%
of which, share-based comp. - - - - - (4,267) 4,267 - NMF
Net asset value (1)+(2)+(3) 3,609,013 343,493 - (87,876) - (9,785) 2,733 3,857,578 6.9%
NAV change % 9.5% 0.0% -2.4% 0.0% -0.3% 0.1% 6.9%
Shares outstanding(8) 37,612,488 - - (1,868,786) - - 398,603 36,142,305 -3.9%
Net asset value per share, GEL 95.95 9.13 0.00 2.56 0.00 (0.26) (0.67) 106.73 11.2%
NAV per share, GEL change % 9.5% 0.0% 2.7% 0.0% -0.3% -0.7% 11.2%
NAV per share (GEL) was up 11.2% q-o-q in 1Q25, reflecting a GEL 343.5 million
value creation across our portfolio companies with a positive 9.5 ppts impact,
share buybacks (+2.7 ppts impact) and a foreign currency gain on GCAP net debt
(+0.2 ppts impact). The NAV per share (GEL) growth was slightly offset by
management platform-related costs and net interest expense (-0.4 ppts impact
in total).
Portfolio overview
Total portfolio value amounted to GEL 4.1 billion in 1Q25, up by GEL 349.1
million (up 9.3%) q-o-q:
· The value of the listed and observable portfolio increased by GEL
247.9 million (up 15.4%), driven by the growth in Lion Finance Group's share
price.
· The value of the private portfolio increased by GEL 101.2 million
(up 4.7%), mainly resulting from a) GEL 95.5 million value creation, b)
investments of GEL 11.7 million and c) a decrease of GEL 8.0 million due to
dividends paid to GCAP.
Consequently, as of 31-Mar-25, the private portfolio value amounted to GEL 2.3
billion (54.8% of the total), and the listed and observable portfolio value
totalled GEL 1.9 billion (45.2% of the total portfolio value).
1) Value creation
· Value creation from the listed and observable portfolio amounted
to GEL 247.9 million in 1Q25, driven by a 15.9% increase in Lion Finance
Group's share price and a 1.3% appreciation of GBP against GEL in 1Q25.
· Value creation across our private portfolio companies amounted to
GEL 95.5 million in 1Q25. This reflects:
o Strong operating performance of our private large portfolio companies,
delivering substantial growth in aggregated revenues (up 21.2% y-o-y) and
EBITDA (up 45.8% y-o-y) in 1Q25, which translated into a GEL 155.3 million
operating performance-related value creation across our private assets.
o GEL 59.8 million negative net impact from changes in implied valuation
multiples and FX rates.
As a result, the total portfolio value creation amounted to GEL 343.5 million
in 1Q25.
The table below summarises value creation drivers in our businesses in 1Q25:
Portfolio Businesses Operating Performance(( 9 (#_ftn9) )) Multiple Change Value Creation
and FX(( 10 (#_ftn10) ))
GEL '000, unless otherwise noted (1) (2) (1)+(2)
Listed and observable portfolio 247,949
Lion Finance Group 247,949
Water utility -
Private portfolio 155,295 (59,751) 95,544
Large portfolio companies 172,285 (36,732) 135,553
Retail (pharmacy) 96,746 (30,427) 66,319
Insurance (P&C and medical) 19,051 992 20,043
Healthcare services 56,488 (7,297) 49,191
Emerging and other businesses (16,990) (23,019) (40,009)
Total portfolio 155,295 (59,751) 343,493
Valuation overview 11 (#_ftn11)
In 1Q25, our private portfolio companies were valued internally by
incorporating the portfolio companies' 1Q25 results, in line with
International Private Equity Valuation ("IPEV") guidelines and methodology
deployed at the end of 2024 by an independent valuation company, which
conducts external valuation assessment of the retail (pharmacy), insurance,
healthcare services, renewable energy and education businesses semi-annually.
The independent valuation assessments, which serve as the basis for Georgia
Capital's estimate of fair value, are performed by applying a combination of
an income approach (DCF) and a market approach (listed peer multiples and, in
some cases, precedent transactions). 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.
We perform quarterly sensitivity analyses on our valuations. In light of
prevailing market conditions, the 1Q25 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.166 million, or 4%,
change in the fair value of equity investments.
The enterprise value ("EV") and equity value development of our businesses in
1Q25 is summarised in the following table:
Enterprise Value (EV) Equity Value
GEL '000, unless otherwise noted 31-Mar-25 31-Dec-24 Change % 31-Mar-25 31-Dec-24 Change % % share in total portfolio
Listed and observable portfolio 1,856,984 1,609,035 15.4% 45.2%
Lion Finance Group 1,668,984 1,421,035 17.4% 40.6%
Water utility 188,000 188,000 NMF 4.6%
Private portfolio 3,371,214 3,287,665 2.5% 2,253,609 2,152,455 4.7% 54.8%
Large portfolio companies 2,393,949 2,262,744 5.8% 1,687,399 1,557,951 8.3% 41.1%
Retail (pharmacy) 1,067,124 1,021,000 4.5% 783,008 716,130 9.3% 19.0%
Insurance (P&C and medical) 482,111 463,144 4.1% 441,055 427,945 3.1% 10.7%
Healthcare services 844,714 778,600 8.5% 463,336 413,876 12.0% 11.3%
Emerging and other businesses 977,265 1,024,921 -4.6% 566,210 594,504 -4.8% 13.8%
Total portfolio 4,110,593 3,761,490 9.3% 100.0%
Private large portfolio companies (41.1% of total portfolio value)
Retail (Pharmacy) (19.0% of total portfolio value) - The EV of Retail
(Pharmacy) was up by 4.5% to GEL 1,067.1 million in 1Q25, reflecting the
strong operating performance of the business. The 2.8% same-store revenue
growth, strong ramp-up of the pharmacy stores launched in late 2023, and
increased demand for seasonal medicines due to higher flu activity led to a
4.4% y-o-y increase in retail revenue in 1Q25. This, combined with a 40.6%
y-o-y increase in wholesale revenues in 1Q25 on the back of higher revenues
from state healthcare programmes, translated into a 10.8% y-o-y increase in
the total revenue of the business. Gross profit margin improved by 2.9 ppts
y-o-y to 32.3% in 1Q25, further supported by the positive outcome of
renegotiated trading terms with key suppliers across all major categories and
overall shift in the sales mix towards higher-margin non-prescription
medicines. Operating expenses (excl. IFRS 16) were up 10.0% y-o-y in 1Q25, due
to increased salary and marketing expenses, attributable to the business
growth. Consequently, the 1Q25 EBITDA (excl. IFRS 16) increased by 55.6% y-o-y
to GEL 24.2 million. See page 9 for details. LTM EBITDA (incl. IFRS 16) was up
7.6% to GEL 130.1 million in 1Q25. Net debt (incl. IFRS 16) decreased by 7.0%
to GEL 277.2 million as at 31-Mar-25, resulting from robust cash flow
generation during the quarter. As a result, the fair value of GCAP's 97.8%
holding increased by 9.3% to GEL 783.0 million in 1Q25. The implied LTM
EV/EBITDA valuation multiple (incl. IFRS 16) decreased to 8.2x as of
31-Mar-25, down from 8.4x as of 31-Dec-24 and 9.7x as of 31-Mar-24.
Insurance (P&C and Medical) (10.7% of total portfolio value) - The
insurance business combines: a) P&C Insurance and b) Medical Insurance.
P&C Insurance revenues were up 21.0% y-o-y to GEL 38.1 million in 1Q25,
driven by growth in the motor and credit life insurance lines. The revenue of
the medical insurance business more than doubled y-o-y and amounted to GEL
51.6 million in 1Q25, reflecting organic portfolio growth, a mid-teen
percentage increase in insurance policy prices and the positive impact of the
acquisition of the Ardi insurance portfolio in April 2024, the latter
contributing GEL 22.4 million to the 1Q25 y-o-y revenue growth. The combined
ratio for P&C insurance increased by 0.6 ppts y-o-y in 1Q25, mainly due to
a few large property insurance claims during the quarter. The combined ratio
for medical insurance increased by 1.2 ppts y-o-y in 1Q25, reflecting a higher
expense ratio on the back of an increase in salaries in line with the business
expansion. As a result, the pre-tax profit of the combined insurance business
increased by 13.6% y-o-y to GEL 8.8 million in 1Q25. See page 10 for details.
The equity value of the business was up 3.1% q-o-q to GEL 441.1 million in
1Q25 (Ardi's equity value is measured at the price of recent investment). The
implied LTM P/E valuation multiple 12 (#_ftn12) stood at 9.8x as of 31-Mar-25
(9.7x as of 31-Dec-24).
Healthcare services (11.3% of total portfolio value) - Healthcare services EV
increased by 8.5% to GEL 844.7 million in 1Q25, resulting from the strong
operating performance of the business. Total revenue increased by 19.2% y-o-y
in 1Q25, reflecting a) increased demand for high revenue-generating outpatient
services at our large and specialty hospitals, b) optimisation of the
facilities and significant improvement in sales mix at our regional and
community hospitals, and c) robust performance of the clinics and diagnostics
business, driven by a growing customer base in alignment with enhanced service
offerings. Operating expenses (excl. IFRS 16) were up by 9.0% y-o-y in 1Q25,
primarily due to higher salary and rent expenses associated with the business
expansion. This translated into 46.8% y-o-y EBITDA (excl. IFRS 16) growth in
1Q25. See page 11 for details. Consequently, LTM EBITDA (incl. IFRS 16) was up
by 10.7% to GEL 82.1 million in 1Q25. Net debt (incl. IFRS 16) increased by
4.8% q-o-q to GEL 348.7 million as at 31-Mar-25, reflecting capex investments
for upgrading the medical equipment primarily in the outpatient direction. As
a result, the equity value of the healthcare services business was assessed at
GEL 463.3 million in 1Q25 (up 12.0% q-o-q), translating into an implied LTM
EV/EBITDA multiple (incl. IFRS 16) of 10.3x at 31-Mar-25, down from 10.5x at
31-Dec-24 (down from 12.9x at 31-Mar-24).
Emerging and other businesses (13.8% of total portfolio value) - Of the
emerging and other private portfolio businesses, renewable energy, education
and auto service are valued based on LTM EV/EBITDA. Wine and housing
development are valued based on DCF, hospitality is valued based on NAV.
Following the disposal of an 80% stake in the beer and distribution business,
its value is assessed based on the recent transaction price. The portfolio
value of emerging and other businesses decreased by 4.8% to GEL 566.2 million
in 1Q25, reflecting the net impact of GEL 40.0 million value reduction and GEL
11.7 million investments in these businesses. See performance highlights of
these businesses on page 13.
Listed and observable portfolio companies (45.2% of total portfolio value)
Lion Finance Group (40.6% of total portfolio value) - In 4Q24, Lion Finance
Group delivered an annualised ROAE of 29.6% and a q-o-q loan book growth of
4.6% in Georgia and 15.5% in Armenia on a constant currency basis. In 1Q25,
Lion Finance Group's share price was up by 15.9% q-o-q to GBP 54.6 at
31-Mar-25. On 25 February 2025, the Bank announced its board's intention to
recommend a final dividend for 2024 of GEL 5.62 per ordinary share at the
Bank's 2025 Annual General Meeting. This will make a total dividend paid in
respect of the Bank's 2024 earnings of GEL 9.00 per share (a 12.5% increase
compared to 2023). In addition, in February 2025, the Bank announced an
extension of its' share buyback and cancellation programme by an additional
GEL 107.7 million. As a result of the developments described above, the market
value of GCAP's equity stake in Lion Finance Group increased by 17.4% to GEL
1.7 billion in 1Q25. The LTM P/E valuation multiple was at 4.7x as of
31-Mar-25 (4.0x as of 31-Dec-24). Lion Finance Group's public announcement of
their 1Q25 results, when published, will be available on Lion Finance Group's
website (https://bankofgeorgiagroup.com/results/earnings) .
Water Utility (4.6% of total portfolio value) - In 1Q25, the fair value of
GCAP's 20% holding in the water utility business, where GCAP has a clear exit
path through a put and call structure at pre-agreed EBITDA multiples, remained
unchanged at GEL 188.0 million. This reflects the application of the put
option valuation to GCAP's holding in the business.
2) Investments 13 (#_ftn13)
In 1Q25, GCAP invested GEL 11.7 million in private portfolio companies, mainly
reflecting GEL 6.9 million and GEL 4.4 million investments in education and
renewable energy business, respectively.
3) Share buybacks
During 1Q25, 1,868,786 shares were bought back for a total consideration of
GEL 87.9 million.
· 1,737,332 shares with a total value of US$ 28.7 million (GEL 81.2
million) were bought back under GCAP's share buyback and cancellation
programme.
· 131,454 shares (GEL 6.7 million in value) represent the
tax-related statutory buyback for the management trust, where the average cost
of unawarded shares is GBP 8.6 as of 31 March 2025.
Subsequent to 1Q25, additional 401,800 shares with a value of US$ 7.5 million
(GEL 20.8 million) have been repurchased under the ongoing share buyback
programme as at 6 May 2025.
4) Dividends
In 1Q25, GCAP recorded GEL 8.0 million dividend income from its portfolio
companies:
· GEL 7.0 million dividend was received from the insurance
business, of which GEL 5.8 million was collected from P&C insurance and
GEL 1.2 million from medical insurance.
· GEL 1.0 million dividend was collected from the auto service
business.
Net Capital Commitment (NCC) overview
Below we describe the components of Net Capital Commitment (NCC) as of 31
March 2025 and as of 31 December 2024. 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 31-Mar-25 31-Dec-24 Change
GEL '000, unless otherwise noted
Total cash and liquid funds 161,853 278,237 -41.8%
Gross debt (417,681) (432,662) -3.5%
Net debt (1) (255,828) (154,425) 65.7%
Guarantees issued (2) - - NMF
Net debt and guarantees issued (3)=(1)+(2) (255,828) (154,425) 65.7%
Planned investments (4) (105,516) (118,480) -10.9%
of which, planned investments in renewable energy (64,110) (69,518) -7.8%
of which, planned investments in education (41,406) (48,962) -15.4%
Announced buybacks (5) (56,363) (67,421) -16.4%
Contingency/liquidity buffer (6) (138,365) (140,340) -1.4%
Total planned investments, announced buybacks and contingency/liquidity buffer (300,244) (326,241) -8.0%
(7)=(4)+(5)+(6)
Net capital commitment (3)+(7) (556,072) (480,666) 15.7%
Portfolio value 4,110,593 3,761,490 9.3%
NCC ratio 13.5% 12.8% 0.7 ppts
Cash and liquid funds. Total cash and liquid funds' balance decreased by 41.8%
q-o-q to GEL 161.9 million in 1Q25, mainly reflecting share buybacks during
the quarter, as described above and coupon payment on the US$ 150 million
sustainability-linked bond.
Gross debt. In US$ terms, the balance was down 2.1% q-o-q in 1Q25, reflecting
the net impact of interest accrual and coupon payment on GCAP's bonds. In GEL
terms, the balance was down by 3.5% in 1Q25, 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 9.7% in 1Q25, reflecting cash
outflows for the investment projects as described above.
Announced buybacks. The balance of the announced buybacks at 31-Mar-25
reflects the unutilised share buybacks under
GCAP's ongoing US$ 50 million share buyback and cancellation programme, which
was increased by US$ 25 million in March 2025.
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 31-Mar-25.
As a result of the movements outlined above, the NCC ratio increased by 0.7
ppts q-o-q to 13.5% as of 31 March 2025.
INCOME STATEMENT (ADJUSTED IFRS/APM)
Net income under IFRS was GEL 330.1 million in 1Q25 (GEL 285.3 million net
income in 1Q24). 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 March 31 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's 2024 Annual Report.
INCOME STATEMENT (Adjusted IFRS/APM)
GEL '000, unless otherwise noted 1Q25 1Q24 Change
Dividend income 8,007 13,799 -42.0%
Of which, regular dividend income 8,007 9,460 -15.4%
Of which, buyback dividend income - 4,339 NMF
Interest income 2,791 1,637 70.5%
Realised/unrealised gain/(loss) on liquid funds 49 (551) NMF
Interest expense (9,104) (8,610) 5.7%
Gross operating income 1,743 6,275 -72.2%
Operating expenses (9,785) (9,340) 4.8%
GCAP net operating loss (8,042) (3,065) NMF
Fair value changes of portfolio companies
Listed and observable portfolio companies 247,949 320,205 -22.6%
Of which, Lion Finance Group PLC 247,949 317,205 -21.8%
Of which, Water utility - 3,000 NMF
Private portfolio companies 87,537 (27,060) NMF
Large portfolio companies 128,519 (41,228) NMF
Of which, retail (pharmacy) 66,319 (19,999) NMF
Of which, insurance (P&C and medical) 13,009 (522) NMF
Of which, healthcare services 49,191 (20,707) NMF
Emerging and other businesses (40,982) 14,168 NMF
Total investment return 335,486 293,145 14.4%
Income before foreign exchange rate movements and non-recurring expenses 327,444 290,080 12.9%
Net foreign currency gain/(loss) 7,013 (1,157) NMF
Non-recurring expenses (258) (1,322) -80.5%
Net income 334,199 287,601 16.2%
The gross operating income for 1Q25 was down 72.2% y-o-y, mainly due to a
timing discrepancy in dividend collection.
The components of GCAP's operating expenses are shown in the table below.
GCAP Operating Expenses Components
GEL '000, unless otherwise noted 1Q25 1Q24 Change
Administrative expenses(( 14 (#_ftn14) )) (2,779) (2,860) -2.8%
Management expenses - cash-based(( 15 (#_ftn15) )) (2,739) (2,800) -2.2%
Management expenses - share-based(( 16 (#_ftn16) )) (4,267) (3,680) 16.0%
Total operating expenses (9,785) (9,340) 4.8%
Of which, fund type expense(( 17 (#_ftn17) )) (2,229) (2,501) -10.9%
Of which, management fee type expenses(( 18 (#_ftn18) )) (7,556) (6,839) 10.5%
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 0.70%
at 31-Mar-25 (0.73% as of 31-Mar-24).
Total investment return represents the increase (decrease) in the fair value
of our portfolio. Total investment return was GEL 335.5 million in 1Q25,
reflecting the changes in the value of our portfolio companies. We discuss
valuation drivers for our businesses on pages 5-6. The performance of each of
our private large portfolio companies is discussed on pages 9-13.
GCAP's net foreign currency liability balance amounted to US$ 98 million (GEL
272 million) at 31-Mar-25. As a result of the movements described above,
GCAP's adjusted IFRS net income was GEL 334.2 million in 1Q25.
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, where the
1Q25 and 1Q24 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 14 for
more background.
Discussion of retail (pharmacy) business results
The retail (pharmacy) business, where GCAP owns a 97.8% equity interest, is
the largest pharmaceuticals retailer and wholesaler in Georgia, with a 35.8%
market share in the organised retail market based on the 2023 revenues. The
business consists of a retail pharmacy chain operating under two brands (GPC
and Pharmadepot) and a wholesale business that sells pharmaceuticals and
medical supplies to hospitals and other pharmacies. The business operates a
total of 416 pharmacies (of which 401 are in Georgia and 15 in Armenia) and 19
franchise stores (of which, 12 are in Georgia, 2 in Armenia and 5 in
Azerbaijan).
1Q25 performance (GEL '000), retail (pharmacy) 19 (#_ftn19)
INCOME STATEMENT HIGHLIGHTS 1Q25 1Q24 Change
Revenue, net 225,625 203,711 10.8%
of which, retail 175,351 167,945 4.4%
of which, wholesale 50,274 35,766 40.6%
Gross Profit 72,889 59,815 21.9%
Gross profit margin 32.3% 29.4% 2.9 ppts
Operating expenses (ex. IFRS 16) (48,714) (44,275) 10.0%
EBITDA (ex. IFRS 16) 24,175 15,540 55.6%
EBITDA margin, (ex. IFRS 16) 10.7% 7.6% 3.1 ppts
Net profit (ex. IFRS 16) 16,808 6,748 NMF
CASH FLOW HIGHLIGHTS
Cash flow from operating activities (ex. IFRS 16) 27,809 19,566 42.1%
EBITDA to cash conversion 115.0% 125.9% -10.9 ppts
Cash flow used in investing activities 20 (#_ftn20) (3,652) (5,226) -30.1%
Free cash flow, (ex. IFRS 16) 21 (#_ftn21) 23,995 13,326 80.1%
Cash flow from/(used in) financing activities (ex. IFRS 16) 2,522 (25,511) NMF
BALANCE SHEET HIGHLIGHTS 31-Mar-25 31-Dec-24 Change
Total assets 625,578 608,576 2.8%
of which, cash and bank deposits 45,890 19,154 NMF
of which, securities and loans issued 18,080 19,087 -5.3%
Total liabilities 520,400 521,341 -0.2%
of which, borrowings 187,768 181,833 3.3%
of which, lease liabilities 148,388 149,348 -0.6%
Total equity 105,178 87,235 20.6%
INCOME STATEMENT HIGHLIGHTS
Ø The developments in the 1Q25 total revenue of the business reflect the
combination of the following factors:
o A 4.4% y-o-y increase in retail revenue in 1Q25, driven by a 2.8%
same-store revenue growth and a strong ramp-up in the performance of pharmacy
stores launched in late 2023. The growth was supported by increased demand for
seasonal medicines due to higher flu activity compared to 1Q24, as well as
overall economic growth in Georgia.
o A 40.6% y-o-y increase in wholesale revenue, driven by higher revenue from
state healthcare programmes, partially supported by a low base in 1Q24 due to
timing discrepancies in tender occurrences.
Ø The improvement in the gross profit margin in 1Q25 reflects a positive
outcome of renegotiated trading terms with key suppliers across all major
categories, as well as a shift in the sales mix towards higher-margin
non-prescription medicines.
Ø The y-o-y increase in operating expenses (excl. IFRS 16) in 1Q25 was mainly
driven by higher salary and marketing expenses, reflecting the business
growth. The increase in salary expenses (up 12.6% y-o-y in 1Q25) reflects
higher staff compensation in line with market trends and the implementation of
new sales incentive schemes targeted at improving the overall gross profit
margin.
Ø As a result, the business achieved a y-o-y EBITDA (excl. IFRS 16) growth of
55.6% in 1Q25 with a 3.1 ppts y-o-y improvement in EBITDA margin.
Ø Net interest expense (excl. IFRS 16) was down by 23.6% y-o-y to GEL 4.0
million in 1Q25, reflecting a lower average net debt balance in 1Q25.
Ø The developments outlined above resulted in more than a twofold increase in
net profit (excl. IFRS 16) y-o-y in 1Q25.
CASH FLOW AND BALANCE SHEET HIGHLIGHTS
Ø The net debt balance was down to GEL 123.8 million at 31-Mar-25, from GEL
143.6 million at 31-Dec-24, reflecting robust cash flow generation in 1Q25. As
a result, the net debt to EBITDA leverage ratio improved to 1.5x q-o-q as at
31-Mar-25 (down from 1.9x as at 31-Dec-24).
Ø The EBITDA to cash conversion ratio stood at 115.0% in 1Q25, reflecting the
strong business performance outlined above, as well as timing differences in
the collection of receivables.
OTHER VALUATION DRIVERS AND OPERATING HIGHLIGHTS
Ø The number of pharmacies and franchise stores is provided below:
Mar-25 Dec-24 Change (q-o-q) Mar-24 Change (y-o-y)
Number of pharmacies 416 410 6 418 (2)
of which, Georgia 401 395 6 402 (1)
of which, Armenia 15 15 - 16 (1)
Number of franchise stores 19 19 - 24 (5)
of which, Georgia 12 12 - 18 (6)
of which, Armenia 2 2 - 2 -
of which, Azerbaijan 5 5 - 4 1
Ø Retail (Pharmacy)'s key operating performance highlights for 1Q25 are noted
below:
Key metrics 1Q25 1Q24 Change
Same store revenue growth 2.8% 0.6% 2.2 ppts
Number of bills issued (million) 7.6 8.1 -5.3%
Average bill size (GEL) 21.6 19.6 9.8%
Discussion of insurance (P&C and medical) business results
As at 31-Mar-25, 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 29% market share in property and casualty insurance based on
gross premiums as of 31-Dec-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 35% market share based
on gross insurance premiums as of 31-Dec-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.
1Q25 performance (GEL'000), insurance (P&C and medical) 22 (#_ftn22)
INCOME STATEMENT HIGHLIGHTS 1Q25 1Q24 Change
Insurance revenue 89,663 54,991 63.1%
of which, P&C insurance 38,111 31,496 21.0%
of which, medical insurance 51,552 23,495 NMF
Net underwriting profit 20,091 14,218 41.3%
Net investment profit 4,198 3,322 26.4%
Pre-tax profit 8,827 7,768 13.6%
of which, P&C insurance 7,086 6,301 12.5%
of which, medical insurance 1,741 1,467 18.7%
CASH FLOW HIGHLIGHTS
Net cash flows from operating activities 3,589 7,616 -52.9%
Free cash flow 722 6,299 -88.5%
BALANCE SHEET HIGHLIGHTS 31-Mar-25 31-Dec-24 Change
Total assets 359,063 300,510 19.5%
Total equity 129,986 128,614 1.1%
INCOME STATEMENT HIGHLIGHTS
Ø The y-o-y increase in 1Q25 insurance revenue reflects the following
factors:
§ The revenue of the P&C insurance business was up by 21.0% y-o-y in
1Q25, resulting from:
o A GEL 4.3 million y-o-y increase in Motor Insurance revenues in 1Q25,
mainly attributable to the expansion of the retail client portfolio.
o A GEL 1.5 million y-o-y increase in Credit Life Insurance revenues in
1Q25, driven by the growth of partner banks' portfolios in the mortgage,
consumer loan, and other sectors.
o A GEL 0.8 million y-o-y increase in the revenues from other insurance
lines.
§ The revenue of the medical insurance business more than doubled y-o-y in
1Q25, reflecting organic growth of the portfolio, a mid-teen percentage
increase in insurance policy prices, and the positive impact of the
acquisition of the Ardi insurance portfolio in April 2024, the latter
contributing GEL 22.4 million to the 1Q25 y-o-y revenue growth.
Ø The insurance business' key performance ratios for 1Q25 are noted below:
Key ratios P&C insurance Medical insurance
1Q25 1Q24 Change 1Q25 1Q24 Change
Combined ratio 87.7% 87.1% 0.6 ppts 98.4% 97.2% 1.2 ppts
Expense ratio 33.2% 33.7% -0.5 ppts 17.8% 16.2% 1.6 ppts
Loss ratio 55.2% 54.0% 1.2 ppts 80.6% 81.0% -0.4 ppts
FX ratio -0.7% -0.6% -0.1 ppts - - -
ROAE 23 (#_ftn23) 29.0% 31.6% -2.6 ppts 20.5% 16.0% 4.5 ppts
Ø The combined ratio of P&C insurance increased by 0.6 ppt y-o-y to 87.8%
in 1Q25, primarily reflecting a higher loss ratio associated with a few large
property insurance claims during the quarter.
Ø The combined ratio of Medical Insurance increased by 1.2 ppts y-o-y to
98.4% in 1Q25, driven by an increase in the expense ratio, attributable to an
increase in marketing costs and salaries in line with the business expansion,
as well as the implementation of new incentive schemes aimed at improving
customer acquisition.
Ø The net investment profit was up by 26.4% y-o-y in 1Q25, reflecting a
higher average liquid funds balance and the addition of Ardi's portfolio.
Ø As a result, the pre-tax profit of the insurance business was up by 13.6%
y-o-y in 1Q25.
CASH FLOW AND BALANCE SHEET HIGHLIGHTS
Ø The solvency ratio of P&C and medical insurance businesses stood at
163% and 156%, respectively, as of 31 March 2025, significantly above the
required minimum of 100%.
Ø The net debt to EBITDA leverage ratio remained unchanged q-o-q at 0.5x as
at 31-Mar-25.
Ø A y-o-y decrease in net cash flows from operating activities is
attributable to timing differences related to the collection of P&C
insurance premiums and reinsurance outflows in 1Q25.
Ø GEL 7.0 million dividends were paid to GCAP in 1Q25.
Discussion of healthcare services business results 24 (#_ftn24)
The healthcare services business, where GCAP owns 100% equity, is the largest
healthcare market participant in Georgia comprising two segments: 1) hospitals
(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), and 2) clinics and
diagnostics (16 polyclinics - providing outpatient diagnostic and treatment
services and diagnostics - operating the largest laboratory in the entire
Caucasus region "Mega Lab").
1Q25 performance (GEL '000), healthcare services
INCOME STATEMENT HIGHLIGHTS 1Q25 1Q24 Change
Revenue, net 25 (#_ftn25) 115,281 96,673 19.2%
Gross Profit 45,829 36,532 25.4%
Gross profit margin 39.4% 37.4% 2.0 ppts
Operating expenses (ex. IFRS 16) (22,485) (20,625) 9.0%
EBITDA (ex. IFRS 16) 23,344 15,907 46.8%
EBITDA margin (ex. IFRS 16) 20.1% 16.3% 3.8 ppts
Net income/(loss) (ex. IFRS 16) 1,320 (2,242) NMF
CASH FLOW HIGHLIGHTS
Cash flow from operating activities (ex. IFRS 16) 11,697 7,230 61.8%
EBITDA to cash conversion (ex. IFRS 16) 50.1% 45.5% 4.6 ppts
Cash flow (used in)/from investing activities 26 (#_ftn26) (11,268) 17,491 NMF
Free cash flow (ex. IFRS 16) 27 (#_ftn27) (772) 24,564 NMF
Cash flow from/(used in) financing activities (ex. IFRS 16) 15,251 (30,883) NMF
BALANCE SHEET HIGHLIGHTS 31-Mar-25 31-Dec-24 Change
Total assets 864,016 828,101 4.3%
of which, cash balance and bank deposits 54,306 39,102 38.9%
of which, securities and loans issued 582 736 -20.9%
Total liabilities 473,213 441,552 7.2%
of which, borrowings 367,344 341,367 7.6%
Total equity 390,803 386,549 1.1%
INCOME STATEMENT HIGHLIGHTS
Ø The hospitals and clinics and diagnostics businesses represent
approximately 80% and 20%, respectively, of the consolidated revenue of the
healthcare services business.
Total revenue breakdown(( 28 (#_ftn28) )) 1Q25 1Q24 Change
Total revenue, net 115,281 96,673 19.2%
Hospitals 94,527 80,749 17.1%
of which, large and specialty hospitals 62,284 53,872 15.6%
of which, regional and community hospitals 32,472 27,244 19.2%
Clinics and diagnostics 22,586 17,714 27.5%
of which, clinics 18,127 14,086 28.7%
of which, diagnostics 6,672 5,378 24.1%
Ø The developments in 1Q25 total revenue of the business reflect:
§ At our large and specialty hospitals, increased demand for high
revenue-generating outpatient services accounting for 35.7% of the revenue
from this group of hospitals and marking a 2.5 ppts y-o-y increase. This
performance also reflects the onboarding of reputable doctors with loyal
patient bases in 1Q25.
§ At our regional and community hospitals, a 3.3 ppts increase in the share
of outpatient revenue in total, optimisation of the facilities and significant
improvement in sales mix leading to a 19.2% y-o-y increase in the revenue,
notwithstanding a 10.7% y-o-y reduction in the number of admissions in 1Q25.
§ Robust performance of clinics and diagnostics business on the back of the
favourable shift in sales mix and increased customer footprint resulting from
the overall service enhancements.
Ø A 2.0 ppts y-o-y increase in the gross profit margin, apart from the
revenue developments described above, reflects the following trends in direct
salary and materials rates 29 (#_ftn29) and utility costs:
§ Approximately 50% of direct salaries are fixed. This, on the back of
increased revenues, led to a 0.8 ppts y-o-y improvement in the direct salary
rate of the healthcare services business to 37.9% in 1Q25.
§The materials rate improved by 0.4 ppts y-o-y and stood at 16.0% in 1Q25.
§ The utilities and other expenses increased by 9.8% y-o-y in 1Q25, mainly
attributable to the unfaourable weather conditions in 1Q25 compared to 1Q24.
Ø Operating expenses (excl. IFRS 16) were up by 9.0% y-o-y in 1Q25,
reflecting increased salary and rent expenses in line with the business
expansion.
Ø The developments described above translated into a 46.8% y-o-y increase in
EBITDA in 1Q25.
Total EBITDA (excl. IFRS 16) breakdown 1Q25 1Q24 Change
Total EBITDA 23,344 15,907 46.8%
Hospitals 18,117 12,338 46.8%
of which, large and specialty hospitals 12,087 9,090 33.0%
of which, regional and community hospitals 6,030 3,248 85.7%
Clinics and diagnostics 5,227 3,569 46.5%
of which, clinics 3,954 2,907 36.0%
of which, diagnostics 1,273 662 92.3%
Ø Net interest expense (excluding IFRS 16) was up by 27.9% y-o-y in 1Q25,
reflecting increased interest rates on the market as well as increased net
debt balance as outlined below.
CASH FLOW AND BALANCE SHEET HIGHLIGHTS
Ø The net debt balance was up by 7.6% y-o-y in 1Q25, reflecting capex
investments in the amount of GEL 14.6 million in 1Q25 (GEL 12.2 million in
1Q24). This includes a) development capex of GEL 9.0 million in 1Q25 related
to an expansion of service offerings and upgrade of medical equipment
primarily for outpatient services, and b) maintenance capex of GEL 5.6
million.
Ø The EBITDA to cash conversion ratio stood at 50.1% in 1Q25, reflecting the
delay in the collection of receivables from the State, where the typical
collection period ranges from three to six months.
Ø The net debt to EBITDA leverage ratio improved to 4.1x q-o-q as at
31-Mar-25 (down from 4.3x as at 31-Dec-24).
OTHER VALUATION DRIVERS AND OPERATING HIGHLIGHTS
Ø The business key operating performance highlights for 1Q25 are noted below:
Key metrics 1Q25 1Q24 Change
Hospitals
Number of admissions (thousands): 400.0 409.7 -2.4%
of which, large and specialty hospitals 188.0 172.3 9.1%
of which, regional and community hospitals 212.0 237.4 -10.7%
Occupancy rates:
of which, large and specialty hospitals 73.8% 69.8% 4.0 ppts
of which, regional and community hospitals 76.9% 81.5% -4.7 ppts
Clinics
Number of admissions (thousands): 503.4 461.4 9.1%
Diagnostics
Number of patients served (thousands) 230 221 4.0%
Average number of tests per patient 3.0 2.9 3.2%
Discussion of emerging and other portfolio results
The five businesses in our "emerging and other" private portfolio are
renewable energy, education, auto service, wine and real estate (housing
development and hospitality). They had a combined value of GEL 566.2 million
at 31-Mar-25, which represents 13.8% of our total portfolio.
1Q25 aggregated performance highlights (GEL '000), emerging and other
portfolio 30 (#_ftn30)
1Q25 1Q24 Change
Revenue 93,031 123,759 -24.8%
EBITDA 20,455 23,967 -14.7%
Net cash flows from operating activities 24,905 11,048 NMF
Ø Renewable energy | The renewable energy business operates three
wholly-owned commissioned renewable assets with 71MW installed capacity in
aggregate. In addition, the business has a pipeline of renewable energy
projects in varying stages of development. The revenue of the business
decreased by 11.8% y-o-y to US$ 2.3 million in 1Q25, reflecting a) an 8.8%
y-o-y decrease in the electricity generation due to the unfavorable weather
conditions during the quarter and b) a 3.3% y-o-y decrease in the average
electricity selling price (down to 60.6 US$/kwh) in 1Q25. Operating expenses
remained largely flat, down 0.3% y-o-y to US$ 0.9 million in 1Q25. As a
result, the business posted a US$ 1.5 million EBITDA in 1Q25, down 17.4%
y-o-y.
Ø Education | Georgia Capital's education business is the largest player in
the private K-12 market in Georgia with 9.4% market share. It currently
combines majority stakes in four private school brands operating across seven
campuses, which are well-positioned in the premium, midscale and affordable
market segments. In 1Q25, the business recorded GEL 21.7 million revenue (up
17.3% y-o-y) primarily driven by a) organic growth through strong intakes and
a ramp-up of utilisation and b) expansion of the business through addition of
two new campuses (greenfield and acquisitions) during 2023. Operating expenses
were up by 15.2% y-o-y in 1Q25, mainly reflecting increased salary and
catering costs, in line with the recent business expansion. Consequently,
EBITDA amounted to GEL 7.2 million in 1Q25, up by 21.9% y-o-y.
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
decreased by 4.2% y-o-y to GEL 5.3 million in 1Q25, primarily driven by a 5.6%
decline in the number of total cars serviced. Consequently, the 1Q25 EBITDA
decreased by 14.2% y-o-y to GEL 2.5 million.
o Car services and parts business | In 1Q25, revenue was up by 6.0% y-o-y to
GEL 13.0 million, reflecting an increase in the wholesale, corporate and
retail segments. Similarly, the gross profit was up by 12.9% to GEL 3.7
million in 1Q25. Operating expenses increased by 2.0% y-o-y, reflecting the
business growth. As a result, the business posted a GEL 0.5 million EBITDA in
1Q25, up 3.1x y-o-y.
Ø Wine | In 1Q25, the wine business reported net revenue of GEL 9.8 million,
representing a 44.6% y-o-y decrease, mainly reflecting a timing difference in
exports that had led to an unusually high base in the prior year. This effect
is expected to even out over the course of the year, with minimal to no impact
on full-year revenues. Operating expenses were up by 1.7% y-o-y, leading to a
breakeven EBITDA in 1Q25.
Ø Real estate businesses | In 1Q25, the combined revenue of the real estate
business declined by 41.6% y-o-y to GEL 36.5 million in 1Q25, primarily driven
by a 53.3% y-o-y decrease in the number of apartments sold at our housing
business. This reflects a reduced level of outstanding inventory as the
business remains focused on completing existing residential projects. The
decline was partially offset by the strong operating performance of the
hospitality business, which posted a 23.1% y-o-y increase in revenue in 1Q25.
Operating expenses were up by 4.3%, reflecting increased salary and marketing
costs. As a result, in 1Q25 the real estate business posted EBITDA of GEL 5.8
million, down by 17.0% y-o-y.
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 2024 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 healthcare services business (hospitals and clinics and
diagnostics). Georgia Capital also holds other small private businesses across
different industries in Georgia; a 20.0% equity stake in the water utility
business and a 19.3% equity stake in LSE listed Lion Finance Group PLC ("Lion
Finance Group" or the "Bank"), formerly known as "Bank of Georgia Group PLC",
the holding company of leading universal banks in Georgia and 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 Georgia Capital PLC's Annual Report and Accounts
2024. 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 4034; +995 322 000000
E-mail: ir@gcap.ge (mailto:ir@gcap.ge)
Auditors
PricewaterhouseCoopers LLP ("PwC")
7 More London Riverside,
London SE1 2RT,
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
(http://www.investorcentre.co.uk) .
Investor Centre Shareholder Helpline: +44 (0) 370 873 5866
Share price information
Shareholders can access both the latest and historical prices via the website
www.georgiacapital.ge (http://www.georgiacapital.ge)
1 (#_ftnref1) See "Basis of Presentation" for more background on page 14.
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 14.
3 (#_ftnref3) Includes both the buybacks under the share buyback and
cancellation programme and for the management trust.
4 (#_ftnref4) Includes both cash and buyback dividends.
5 (#_ftnref5) Private portfolio companies' performance highlights are
presented excluding the water utility and beer and distribution businesses.
Aggregated numbers are presented like-for-like basis. Large portfolio figures
include the updated presentation format of the healthcare services business
(comparative periods have been adjusted retrospectively).
6 (#_ftnref6) The results of our five businesses included in the emerging
and other portfolio (described on page 13) are not broken out separately.
Performance totals, however, include the emerging and other portfolio
companies' results.
7 (#_ftnref7) Determined by taking into account the peak number of 47.9
million shares issued as of 31-Dec-20.
8 (#_ftnref8) Please see definition in glossary on page 14.
9 (#_ftnref9) 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.
10 (#_ftnref10) Change in the fair value attributable to the change in
valuation multiples and the effect of exchange rate movement on net debt.
11 (#_ftnref11) Please read more about valuation methodology on page 30 in
"Basis of presentation".
12 (#_ftnref12) Excluding the acquisition of Ardi, the implied LTM P/E
valuation multiple remained unchanged q-o-q at 11.1x at 31-Mar-25 (down from
12.4x at 31-Mar-24).
13 (#_ftnref13) Investments are made at JSC Georgia Capital level, the
Georgian holding company.
14 (#_ftnref14) Includes expenses such as external audit fees, legal
counsel, corporate secretary and other similar administrative costs.
15 (#_ftnref15) Cash-based management expenses are cash salary and cash
bonuses paid/accrued for staff and management compensation.
16 (#_ftnref16) Share-based management expenses are share salary and share
bonus expenses of management and staff.
17 (#_ftnref17) Fund type expenses include expenses such as audit and
valuation fees, fees for legal advisors, Board compensation and corporate
secretary costs.
18 (#_ftnref18) Management fee is the sum of cash-based and share-based
operating expenses (excluding fund-type costs).
19 (#_ftnref19) 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) .
20 (#_ftnref20) Of which - cash outflow on capex of GEL 4.6 million in 1Q25
(GEL 6.2 million in 1Q24); proceeds from sale of PPE of GEL 0.8 million in
1Q25.
21 (#_ftnref21) Calculated by deducting capex and minority acquisition from
operating cash flows and adding proceeds from the sale of PPE/IP.
22 (#_ftnref22) 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) .
23 (#_ftnref23) Calculated based on average equity, adjusted for preferred
shares.
24 (#_ftnref24) The numbers were adjusted retrospectively to account for the
strategic reorganisation in the healthcare businesses that occurred in
December 2023.
25 (#_ftnref25) Net revenue - Gross revenue less corrections and rebates.
Margins are calculated from gross revenue.
26 (#_ftnref26) Of which - capex of GEL 14.6 million in 1Q25 (GEL 12.2
million in 1Q24); proceeds from the sale of property of GEL 2.2 million in
1Q25 (GEL 29.6 million in 1Q25).
27 (#_ftnref27) Operating cash flows less capex, plus net proceeds from the
sale of assets.
(( 28 (#_ftnref28) )) Total figures take into account inter-business and
inter-segment eliminations, and therefore do not equal the sum of the
presented components.
29 (#_ftnref29) The respective costs divided by gross revenues.
30 (#_ftnref30) Emerging and other portfolio companies' performance
highlights are presented excluding the beer and distribution business, where
GCAP has a 20% minority holding. Aggregated numbers are presented
like-for-like basis.
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