1Q20 Results Discussion
Private late
stage portfolio
Water utility business overview
Investment rationale
Regulated monopoly in Tbilisi and surrounding districts with high entry barriers
■ Sectoral output increasing at a robust growth rate (on average 9.5% in the last 10 years)
■ Stable regulatory environment with fair return on investment
■ Stable cash collection rates
■ Diversified cash flow streams from water and electricity sales, the latter being linked to US dollars
Value creation potential
■ EU harmonization reforms in progress in utilities sector, expected to drive water tariffs up
High GDP growth combined with tourism growth drive high demand from corporates
Energy market deregulation positively affecting electricity sales price
Upside opportunity from efficiency gains - continued decrease in self-consumption of energy, freeing up
electricity for market sales.
Stable dividend distribution capacity
WACC of 15.99% for the first regulation period (2018-2020)
Existing assets
Effect of new consumers on the market
13.6 TWh
6%
1st May
2019
13.6 TWh
20%
GEORGIA
CAPITAL
■ Direct consumers'
demand
■Direct consumers' with
own generation
■Distribution companies
79%
65%
■ Export
■ System Losses
Electricity market deregulation, effective from May
2019 enabled the company to immediately increase
the selling price per KWh by at least 1.5x
Efficiency gains (2019)
Down from
16% in 2014
Net book
WACC
value
Return
on assets
New CAPEX
Elevation kWh/m3
Depreciation
Level 4
2.3 1
0.1%
I
■ Independent regulator - GNERC¹
■ New tariff setting methodology since August, 2017
3-year tariff setting period
I
Level 3
2.2
3.6%
Metering program and grid
rehabilitation works focused
on higher elevation zones
Total operating
expenses
Level 2
0.8
9.9%
■ The WSS tariffs in Tbilisi have increased by 23.7% for residential customers and
decreased by 0.4% for legal entities, serving as a first step towards gradually
unifying WSS tariffs
Level 1
0.4
33.6%
Allowed revenue
Level 0
0.0
52.8%
% of total water supply
(1)
Georgian National Energy and Water Supply Regulatory Commission (GNERC) is an independent body that regulates the utilities market.
Page 41
Down from
49% in 2014
Up from 35%
in 2014View entire presentation