Georgia Capital (CGEO) Q2 2024 earnings summary

Executive summary

• NAV per share (GEL) declined 12.8% quarter-on-quarter in 2Q24, mainly due to market volatility, higher cost of equity, and regional geopolitical risks, despite strong operating performance from portfolio companies.

• Private portfolio companies delivered strong results: aggregated revenue up 7.3% and EBITDA up 17.5% year-over-year in 1H24, with net operating cash flow up 2.1x.

• Share buyback program increased by $15 million to $40 million, with 1.3 million shares repurchased since May 2024 and over $100 million in total buybacks representing 19% of share capital since demerger.

• At least GEL 300 million ($110 million) earmarked for share buybacks and dividends through 2026, with $40 million already allocated to buybacks.

• The company remains confident in its capital return strategy and sees current share price levels as an attractive investment opportunity.

Financial highlights

• Portfolio value declined 12.1% quarter-on-quarter to GEL 3.5 billion in 2Q24; private portfolio value down 8.8%, listed and observable down 16.4%.

• NAV per share (GEL) at 78.55 as of 30-Jun-24, down from 90.04 at 31-Mar-24; NAV per share (GBP) down 16.5% in 2Q24.

• Q2 EBITDA up 17.7%, first half EBITDA up 17.5%; Q2 revenue up 6%, first half revenue up 7.3% to nearly GEL 1.1 billion.

• Free cash flow in 2023 was $48 million, expected to match or exceed in 2024; GEL 50.3 million dividend income in 1H24, with 2024 outlook of GEL 180–190 million.

• Net loss of GEL 483.1 million in 2Q24, driven by negative portfolio value creation and BoG share price drop.

Outlook and guidance

• Capital return program of at least GEL 300 million ($110 million) for buybacks and dividends through 2026 is reaffirmed.

• Free cash flow in 2024 expected to match or exceed 2023 levels, supported by robust dividend inflows.

• Management expects continued NAV per share growth over the medium to long term, with further deleveraging and NCC ratio targeted below 15%.

• Second half expected to be as strong or stronger than first half in EBITDA growth.

• GDP growth forecast above 7% for the year, with strong macroeconomic fundamentals.