Investor Presentaiton
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