Georgia Capital (CGEO) Q2 2024 earnings summary

Executive summary

• NAV per share (GEL) declined 12.8% in Q2 2024, mainly due to increased cost of equity, market volatility, 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 H1 2024, 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 buybacks completed since demerger.

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

• Strong macroeconomic backdrop with 9% real GDP growth in H1 and low inflation; robust domestic consumption and labor market.

Financial highlights

• Portfolio value declined 12.1% quarter-on-quarter to GEL 3.5 billion in Q2 2024; private portfolio value down 8.8%, listed and observable down 16.4%.

• EBITDA increased 17.7% in Q2 and 17.5% in H1; operating cash flow up 4x in Q2 and 2x in H1 to GEL 111 million.

• Free cash flow in 2023 was $48 million, expected to be at least matched in 2024, reflecting robust dividend inflows and reduced interest expense.

• Dividend income in 1H24 was GEL 50.3 million; 2024 outlook is GEL 180-190 million.

• Net loss of GEL 483.1 million in Q2 2024, 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; solid dividend income outlook for 2024.

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

• GDP growth forecast above 7% for the year; strong macro expected to continue.