Georgia Capital Shareholder and Market Opportunity Overview
Private large
portfolio companies
EXTERNALLY VALUED
WATER UTILITY BUSINESS OVERVIEW
REGULATORY ENIVORNMENT
TARIFF DERIVATION FORMULA
INVESTMENT RATIONALE
Regulated monopoly in Tbilisi and surrounding districts with high entry barriers.
■ Stable regulatory environment with attractive return on investment.
■Full asset ownership of water and wastewater network and self-sufficient in terms of
electricity usage.
■ Diversified cash flow streams from water and electricity sales, the latter being USD
denominated and creating natural FX hedge.
■ Stable cash collection rates.
■ Growing electricity market as supply lags behind the increasing demand, creating
opportunities.
Ownership of the second largest hydro with the reservoir in Georgia, facilitating full-year
deals with the direct customers on electricity market.
VALUE CREATION POTENTIAL
■ EU harmonization reforms in progress in utilities sector, expected to drive water tariffs up,
as demonstrated in the current regulatory period.
■ Bullet repayment structure, coupled with decreased capital expenditures, leading to
strong cash-flow generation and strengthened liquidity position.
Existing
assets
+
New CAPEX
"
Ongoing reforms in electricity market positively affecting electricity sales price.
■ Stable dividend distribution capacity.
OWNERSHIP
■ Water Utility is 100% owned by Georgia Capital.
MEDIUM TERM STRATEGIC PRIORITIES
Robust profitability with 60%-65% EBITDA margin
ROIC enhancement to 13%-15% in GEL
Strong cash flow generation and managed leverage - operating cash flow over debt
service c.4.0x
Net book value
WACC
Return on assets
Depreciation
GEORGIA
CAPITAL
Total operating expenses
Time value correction¹
Allowed revenue
WATER TARIFF GROWTH IN 3-YEAR REGULATORY PERIODS
GEL per m3 of water sold
-0.4%
+ 47.8%
6.50
4.42
2017
Georgia Capital PLC 1. The COVID-19 related unearned revenue from water sales during 2020 was reimbursed
through time value correction in the tariff calculation methodology for 2021-2023 regulatory period.
0.27
4.40
+23.9%
0.33
2018-2020
+ 52.0%
Legal entities Residential customers
0.50
2021-2023
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