Capturing Sustainable
Investment Opportunities
to Create Value
Georgia Capital PLC | Annual Report 2024
1
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Location: Shaori Reservoir, Georgia
For more information on Georgia Capital,
visit georgiacapital.ge
Georgia Capital PLC (“Georgia Capital” or
“GCAP” or “the Company” – LSE: CGEO
LN) is a platform for buying, building and
developing businesses in Georgia and
monetising investments, as they mature.
Georgia Capital PLC holds 100% of the
share capital of JSC Georgia Capital
(“JSC GCAP”), which together are referred
to as the “Group” or “GCAP HoldCo”.
The Group’s primary business is to develop or buy
businesses, help them develop their management
and institutionalise their businesses so they can
further develop mainly on their own, either with
continued oversight or independently.
The Group’s focus is typically on larger-scale
investment opportunities in Georgia, which have the
potential to reach at least GEL 300 million equity value
over three to five years from the initial investment. As
investments mature, the focus shifts to monetising
them through exits. Georgia Capital manages its
portfolio companies individually and does not focus
on achieving intergroup synergies. The Group does
not have capital commitments or a primary mandate
to deploy funds or divest assets within a specific
time frame. As such, it focuses on shareholder returns
and on opportunities which meet its investment
return and growth criteria.
A platform for investing in,
upscaling and monetising
large opportunity
businesses in Georgia
In this report
Chairman and CEO statement
Read our Chairman and CEO Statement
on pages 10 to 13
Georgia Capital Strategy
Read about our strategy on pages 14
and 15
Our Portfolio Companies
Read about our portfolio companies on
pages 32 and 57
Strategic Review
Overview
4 Performance Highlights
8 2024 in Brief
10 Chairman and CEO Statement
Our Business
14 Georgia Capital Strategy
16 Market and Industry Overview
26 Capital Allocation and
Managing Portfolio Companies
30 Our Management Team
32 Our Portfolio Overview
58 S172 Statement
60 Risk Management
65 Risk Overview
76 Resources and Responsibilities
Discussion of Results
94 Alternative Performance Measures
97 Reconciliation of Adjusted IFRS
Measures to IFRS Figures
98 Valuation Methodology
100 Financial Review
Governance
120 Directors’ Governance Statement
122 Our Board of Directors
124 Corporate Governance Framework
134 Audit and Valuation Committee Report
142 Directors’ Remuneration Report
169 Nomination Committee Report
173 Statement of Directors’ Responsibilities
174 Directors’ Report
Financial Statements
180 Independent Auditors’ Report
186 Statement of Financial Position
187 Statement of Profit or Loss and Other
Comprehensive Income
188 Statement of Changes in Equity
189 Statement of Cash Flows
190 Notes to Financial Statements
Additional Information
225 Abbreviations
226 References
227 Glossary
228 Shareholder Information
Georgia Capital PLC Annual Report 2024
32
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Location: Utsera, Ratcha, Georgia
Overview
4 Performance Highlights
8 2024 in Brief
10 Chairman and CEO Statement
Our Business
14 Georgia Capital Strategy
16 Market and Industry Overview
26 Capital Allocation and Managing Portfolio Companies
30 Our Management Team
32 Our Portfolio Overview
58 S172 Statement
60 Risk Management
65 Risk Overview
76 Resources and Responsibilities
Discussion of Results
94 Alternative Performance Measures
97 Reconciliation of Adjusted IFRS Measures to IFRS Figures
98 Valuation Methodology
100 Financial Review
In this section
Strategic
Review
4 5
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
1,609
1,435
557
160
Performance Highlights
Georgia Capital NAV overview
NAV per share (GEL)
95.95 +15.7% y-o-y
Total portfolio value (GEL million)
3,761 +2.4% y-o-y
NAV per share (GBP)
27.14 +12.0% y-o-y
Cash and liquid funds (GEL million)
278 NMF
Net Asset Value (NAV) (GEL million)
3,609 +6.8% y-o-y
NCC
1
ratio
12.8% -2.8 ppts y-o-y
Portfolio breakdown (GEL million)
Total portfolio value
3,761
GEL million
Our portfolio
Value as at
31-Dec-24
% of the total
portfolio value
Listed and observable portfolio
1,609 42.8%
Lion Finance Group
2
1,421 37.8%
Water utility
188 5.0%
Private portfolio
2,152 57.2%
Large portfolio companies 1,435 38.1%
Retail (pharmacy)
716 19.0%
Insurance (P&C and medical)
428 11.4%
Hospitals
291 7.7%
Investment stage portfolio companies 557 14.8%
Renewable energy
253 6.7%
Education
182 4.8%
Clinics and diagnostics
123 3.3%
Other portfolio companies 160 4.3%
Total portfolio
3,761 100%
Value creation
in 2024
Multiple of
invested capital
(MOIC) unrealised Valuation methodology highlights
1
Listed and
observable
portfolio
340 15.8 London Stock Exchange (“LSE”)
29 3.8
2
Pre-agreed put option multiple
Private
portfolio
30 4.7 Valued externally (combination of DCF and
market approaches)
(11) 1.8 Valued externally (combination of DCF and
market approaches)
47
Total portfolio
435
Performance overview (GEL million)
1 The detailed Valuation Methodology is described on pages 98-99 of this report.
2 In 2022, Georgia Capital completed the sale of an 80% equity interest in the water utility business for a cash consideration of US$ 180 million. The sale valuation translates into 2.9x
MOIC in US$, of which 2.2x is realised (3.8x MOIC in GEL, of which 2.9x is realised).
3 Includes both the buybacks under the share buyback and cancellation programme and for the management trust.
4 For the detailed breakdown, please refer to page 29 of this report.
5 Includes regular cash and buyback dividends.
Certain financial measures presented in the Strategic Review are taken from unaudited management accounts. The figures from the management accounts are Alternative Performance
Measures (APMs) and are described on page 94, and the differences from, and the reconciliation to, the IFRS audited accounts are presented on page 97.
1 Net Capital Commitment – please see definition in glossary on page 227.
2 “Lion Finance Group PLC” or the “Bank”, formerly known as “Bank of Georgia Group PLC”.
Our strategy
Read about our strategy on page 14
Investments in 2024
17 -25.0% y-o-y
Divestments
168 NMF
Buybacks
3
137+78.5% y-o-y
Dividend income
4
202 -14.5% y-o-y
Of which, recurring dividend income
5
179 -0.4% y-o-y
Of which, one-off dividend income
23 -59.7% y-o-y
Value creation
1
Lion Finance Group
Water utility
Large portfolio companies
Investment stage
portfolio companies
Other portfolio companies
Listed and observable portfolio
Large portfolio companies
Investment stage portfolio companies
Other portfolio companies
6 7
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
565
575
187
155
1,499
1,337
2,251
2,068
20
24
20
23
299
139
20
24
20
23
66
43
64
52
181
154
311
249
20
24
20
23
281
260
20
24
20
23
Performance Highlights continued
Private portfolio
companies’
performance
highlights
(unaudited)
1
Georgia Capital’s 2024 results demonstrate very
strong operational and financial performances and
reflect significant achievements in delivering on our
strategic priorities.
Aggregated revenue (GEL million)
+8.9%
Aggregated EBITDA (GEL million)
+25.0%
Aggregated net operating cash flow
2
(GEL million)
+2.1x
Lion Finance Group PLC (“Lion Finance Group”), formerly known as
Bank of Georgia Group PLC (LSE: BGEO LN), is a FTSE 250 holding
company whose subsidiaries provide banking and financial services
focused on the high growth Georgian and Armenian markets through
leading, customer-centric, universal banks – Bank of Georgia (“BoG”)
in Georgia and Ameriabank in Armenia. The business comprises
a) retail banking and payment services (Retail Banking), b) banking
services for small and medium-sized businesses (SME Banking) and
c) corporate and investment banking operations (Corporate and
Investment Banking). Lion Finance Group expects to benefit from
superior growth of the Georgian and Armenian economy through
both its retail banking and corporate and investment banking services
and aims to deliver on its strategy and key medium-term objectives
– 20%+ return on average equity (ROAE) and c.15% growth of its
loan book. It targets to maintain a 30%-50% dividend/share buyback
payout ratio through regular and progressive semi-annual capital
distributions. Lion Finance Group’s Annual Report 2024, when
published, will be available at https://lionfinancegroup.uk. As
of 31 December 2024, Georgia Capital owns a 19.23% non-voting
equity stake in Lion Finance Group (31 December 2023: 19.71%).
The water utility business is a regulated
monopoly in Tbilisi and the surrounding area,
where it provides water and wastewater services
to 1.4 million residents representing more than
one-third of Georgia’s population and c.43,000
legal entities. The water utility business also
operates hydro power plants (HPPs) with a
total installed capacity of 149MW. In 2022,
Georgia Capital completed the sale of an 80%
equity interest in the business to FCC Aqualia
(“Aqualia”) for a cash consideration of US$ 180
million. As a consequence, GCAP owns a 20%
interest in the business as of 31 December
2024, which remains subject to the ongoing put/
call option structure.
Large portfolio companies
Investment stage portfolio companies
Other portfolio companies
The retail (pharmacy) business is the largest
pharmaceuticals retailer and wholesaler
in Georgia, with a 35.8% market share in
the organised retail market based on 2023
revenues. The business consists of a retail
pharmacy chain operating under two brands
(GPC and Pharmadepot) and a wholesale
business that sells pharmaceuticals and
medical supplies to hospitals and other
pharmacies. The business operates a total of
410 pharmacies (of which, 395 are in Georgia
and 15 in Armenia) and 19 franchise stores
(of which, 12 are in Georgia, two in Armenia
and five in Azerbaijan). As of 31 December
2024, GCAP owns a 97.8% equity stake in the
business (31 December 2023: 97.6%).
The renewable energy business operates three
wholly-owned commissioned renewable assets:
30MW Mestiachala HPP, 20MW Hydrolea
HPPs and 21MW Qartli wind farm. In addition,
the business has a pipeline of renewable energy
projects in varying stages of development. The
renewable energy business is 100% owned
by Georgia Capital as of 31 December 2024
(31 December 2023: 100%).
Our education business currently combines
majority stakes in four private school brands
operating across seven campuses, acquired
in 2019-2023: British-Georgian Academy
and British International School of Tbilisi (70%
stake), the leading schools in the premium
and international segments; Buckswood
International School (80% stake), well-
positioned in the mid-scale segment and Green
School (80%-90% ownership), well-positioned
in the affordable segment.
The clinics and diagnostics business, where
GCAP owns a 100% equity interest, is the
second largest healthcare market participant
in Georgia after our hospitals business. The
business comprises of two segments: 1) 16
polyclinics (providing outpatient diagnostic
and treatment services); and 2) diagnostics,
operating the largest laboratory in the entire
Caucasus region – “Mega Lab”. As of
31 December 2024, the clinics and diagnostics
business is 100% owned by Georgia Capital
(31 December 2023: 100%).
The insurance business comprises of the a)
property and casualty (P&C) insurance business,
operating under the brand name “Aldagi” and
b) medical insurance business, operating under
“Imedi L” and “Ardi” brands, the latter acquired
in April 2024. GCAP owns a 100% stake in
insurance business as of 31 December 2024
(31 December 2023: 100%).
•
P&C insurance business is a leading
player with a 30% market share in property
and casualty insurance based on gross
premiums as of 30 September 2024.
P&C insurance also offers a variety of
non-property and casualty products,
such as life insurance.
•
Our medical insurance business is the
country’s largest private health insurer,
with a 35% market share based on gross
insurance premiums as of 30 September
2024, offering a variety of health insurance
products primarily to corporate and
(selectively) to state entities and also
to retail clients in Georgia.
The hospitals business, where GCAP owns
100% equity, is the largest healthcare market
participant in Georgia, comprised of seven
Large and Specialty Hospitals, providing
secondary and tertiary level healthcare
services across Georgia and 27 Regional and
Community Hospitals, providing outpatient and
basic inpatient services.
1 The portfolio companies’ performance highlights include aggregated stand-alone unaudited IFRS results for our portfolio companies, which can be viewed as APMs for Georgia
Capital, since Georgia Capital does not consolidate its subsidiaries, but instead measures them at fair value under IFRS. In the Strategic Review, various stand-alone figures other than
those derived from our NAV statement for the individual portfolio companies and the discussion of their business developments are derived from their separate, individual unaudited
IFRS accounts. Private portfolio companies’ performance highlights are presented excluding the water utility business, while the beer and distribution business is included.
2 The total aggregated net operating cash flow reflects the performance of the beer and distribution business, while the total aggregated cash balance of private businesses is adjusted
to exclude the business’ cash balance, in alignment with the completion of the sales transaction in December 2024.
Listed and observable portfolio companies Private large portfolio companies
Private investment stage portfolio companies
Lion Finance
Group Water utility
Retail
(pharmacy)
Renewable
energy Education
Clinics and
diagnostic
Insurance
Hospitals
Aggregated cash balances of private businesses
2
(GEL million)
+8.1%
Read more about our portfolio companies
on pages 32-57
Georgia Capital PLC Annual Report 2024
98
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
197.7
175.3
114.3
92.4
89.5
(6.7)
9.0
5.5
31.2
24.1
2020 2021 20222019 2023
(7.4)%
EBITDA margin
7.9%5.9% 13.7% 15.8%
2024 in Brief
Key developments in 2024
Transaction overview
In 2024, GCAP announced the sale of 80% of its holding
(an effective 73.9% equity stake) in its beer and distribution
business to Royal Swinkels, a strategic and international
purchaser, for net cash proceeds of c.US$ 63 million.
Completion of the transaction and the receipt of full sales
proceeds occurred on 23 December 2024.
Following the sale, the business is now held through
a new holding company domiciled in the Netherlands,
where GCAP and its minority co-investor retains a 20%
holding which is subject to an ongoing put/call option
structure. GCAP’s put option will be exercisable during
each 12-month period following the end of the 2028, 2029
and 2030 financial years. Royal Swinkels’ call option will be
exercisable during each 12-month period following the end
of the 2031, 2032 and 2033 financial years.
Under GCAP’s management, the business has
demonstrated strong revenue and EBITDA growth,
with a 29% and 79% CAGR, respectively, over the
past three years.
Transaction rationale
The sale is in line with GCAP’s capital light investment
strategy and represents another successful exit from our
private assets. The disposal:
•
Realised material cash proceeds, translating into
apremium to the business’ investment value as
at30 June 2024.
•
Led to a 1.8% uplift to GCAP’s NAV per share as
at 30 June 2024.
•
Enabled and facilitated an important international
investor into Georgia, with significant industry expertise,
that will strengthen the beer and distribution business
to the benefit of its customers, employees and
other stakeholders.
•
Formed a strategic partnership between GCAP and
Royal Swinkels that will support the business at least
until such time as either the put option or call option
isexercised.
Operating performance development
Sale of an 80% holding in the beer and distribution business
1
Revenue (GEL million)
EBITDA (GEL million)
Announcement of the GEL 300 million capital return package
Strong NAV per share growth
In May 2024, GCAP announced its Board’s intention to make
available at least GEL 300 million for share buybacks and dividends
through to the end of 2026. Significantly improved leverage
profile, strong progress in free cash flow generation capabilities
and confidence in high-quality portfolio were the key drivers of
this strategic move. As part of the GEL 300 million capital return
package, GCAP launched a US$ 25 million share buyback and
cancellation programme in May 2024, which was subsequently
increased by an additional US$ 15 million in August 2024. In
December 2024, the Company launched another US$ 25 million
share buyback and cancellation programme, which was increased
by an additional US$ 25 million in March 2025.
Under the buyback programmes in total, the Company repurchased
3.7 million of its own shares in 2024, representing a nominal value
of US$ 48.1 million. In 2025 to date, an additional 1.5 million shares
(US$ 24.2 million value) have been repurchased. In total, as part of
the GEL 300 million capital return package, GEL 251 million has
already been allocated to share buybacks.
NAV per share (GEL) increased by 15.7% in 2024, reflecting a
GEL 435.3 million value creation across our portfolio companies
with a positive 12.9 ppts impact and share buybacks (+5.8 ppts).
The NAV per share growth was partially offset by a) management
platform-related costs and net interest expense with a negative
1.9 ppts impact and b) GEL’s depreciation against US$, resulting
in a foreign currency loss of GEL 15.1 million on GCAP net debt
(-0.5 ppts).
2
3
1 Determined by taking into account the peak number of 47.9 million shares issued as of 31 December 2020.
2 Represents shares issued during Georgia Healthcare Group share exchange facility.
152
128
80
61
43
3636
18
2019 2020 20212018
Since
demerger
2025
to date
202420232022
12.6
11.1
7.4
5.8
3.5
2.72.7
1.3
40. 2 47.9
2
47.139.4 38 .039.543.244.8
Development of GCAP’s share buybacks
Number of issued shares (million)
Value of shares repurchased (cumulative, US$ million)
Number of shares repurchased (cumulative, million)
96.0
82.9
65.6
63.0
48.1
46.8
44.3
Dec-18 Dec-19
Dec-20 Dec-21 Dec-22 Dec-23 Dec-24
+15.7%
+13.7% CAGR
NAV per share (GEL) development overview
12.6 million shares (US$ 151.7 million in value)
repurchased and cancelled since the demerger in 2018,
representing 26.2% of the issued share capital at
its peak
1
The gross number of issued shares, including
those held by the management trust, now stands
at 38.0 million, below the 39.4 million shares in
issue at the time of the demerger
Since December 2018, NAV per share (GEL) grew at
13.7% CAGR. In US$ and GBP terms, NAV per share
CAGR stands at 12.8% and 13.0%, respectively
10 11
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Georgia Capital PLC Annual Report 2024
10
Chairman and CEO Statement
“Our investments in
high-quality Georgian
businesses with great
market positions,
high returns and
the ability to deliver
sustainable earnings
growth through the
cycle, have continued
to deliver very strong
performances”
Irakli Gilauri
Chairman and Chief Executive Officer
Dear Fellow Shareholders,
In this, my seventh annual letter to Georgia
Capital shareholders, I want to highlight
the remarkable quality of our management
team and portfolio businesses during a
year characterised by a very challenging
political and geopolitical environment,
both in Georgia and neighbouring
countries. Despite the significant external
challenges and ongoing uncertainties,
our portfolio companies have delivered
very strong performances, culminating
in a 15.7% growth in Net Asset Value
per share in 2024, to GEL 95.95. This,
together with the combination of the sale
of the beer and distribution business and
our ongoing share buyback programme,
is an exceptional performance, again
underpinned by our three fundamental
drivers – strong corporate governance;
access to management; and access
to capital. My firm belief is that the
best companies and management
teams distinguish themselves in
challenging times – reflecting on that,
our management and employees truly
distinguished themselves during 2024.
I am particularly pleased that we
achieved a very consistent level of NAV
growth across both our private portfolio
businesses and in our listed investment.
Our listed investment, Lion Finance Group
PLC (formerly known as Bank of Georgia
Group PLC) had an exceptional year, both
in Georgia and in Armenia following the
March 2024 acquisition of Ameriabank. I’ll
comment on this in more detail later. In our
PERFORMANCE SNAPSHOT
GEL 435m
Value creation in 2024
US$ 152m
Returned to our investors through share
buybacks since demerger
Read more on page 9
portfolio businesses, we have completed
a number of senior management
changes, and delivered a very successful
restructuring of our healthcare businesses,
whilst also ensuring the businesses
weathered the significant storm of
external political uncertainty. They have
successfully absorbed all these pressures
and delivered outstanding operational
success. In short, I am delighted with
the resilience of Georgia Capital and our
businesses – conservative businesses in
relatively defensive sectors.
Our aim has always been: to invest in
high-quality businesses with great market
positions, high returns and the ability
to deliver sustainable earnings growth
through the cycle. This focus continued
to guide us in 2024 and will continue to
do so in the future, whilst at the same
time the Board always seeks to ensure
the sound, prudential management of
our balance sheet. This conservatism
has ensured that, as Georgia Capital
has developed over the last few years
throughout a prolonged period of
significant geopolitical challenge, the
Board has maintained a conservative
approach in the management of our
portfolio companies, and a very strong
balance sheet, characterised by further
deleveraging during 2024. We are
maintaining this conservative posture as
we move into 2025.
The discount of our share price to our
NAV per share has remained too wide,
despite our share price increasing by
17.4% during 2024, and we responded
to this by buying back more of our shares,
through our ongoing share buyback and
cancellation programmes, while at the
same time reducing leverage at both the
HoldCo and individual portfolio business
levels. I will talk more about this later.
In last year’s annual letter, I highlighted that
our strategy during 2024 was to reduce
leverage faster than our originally planned
NCC ratio target of 15% by December
2025, deliver our targeted reduction in
the management expense ratio, ensure
we focus on the opportunities to sell
businesses in our “other” portfolio, and
maintain our policy of opportunistic share
buybacks. In each of these aspirations
for 2024 we delivered. I will address each
aspect of our 2024 aspirations in this
letter. Over time, we aim to develop into
a sustainable permanent capital vehicle,
investing mainly in capital-efficient/
capital-light sectors and opportunities,
in association with the regular return of
capital to shareholders.
Our macroeconomic environment
From a macroeconomic perspective,
Georgia sustained strong economic
momentum in 2024, demonstrating
resilience and flexibility despite external
shocks and domestic political uncertainty.
Real GDP expanded by an estimated
9.5%, following 7.8% growth in 2023,
driven by robust domestic demand and
recovering foreign exchange inflows.
Credit expansion remained strong, with
the commercial bank loan portfolio
growing 17% y-o-y, while fiscal policy
remained expansionary, with current
and capital expenditures rising 16%
and 12% y-o-y, respectively. This
sustained economic growth supported
significant deleveraging, leading to
notable improvements in the external
balance sheet. The IMF modified fiscal
deficit narrowed to 2.5% of GDP, while
government debt declined to 36% of GDP.
Georgia’s external position improved
significantly, with the current account
deficit narrowing to -3.5% of GDP in
9M24, primarily due to strong growth in
the services sectors, particularly tourism
and transport. Tourism revenues reached
US$ 4.4 billion, exceeding pre-pandemic
levels by 35%, although visitor numbers
remained below 2019 levels, indicating
further growth potential.
Inflation remained below the 3% target
since April 2023, averaging 1.1% in
2024, allowing the NBG to further ease
its monetary policy by reducing the
refinancing rate to 8%. However, the
Georgian Lari depreciated as negative
sentiment increased demand for hard
currency. In response, the NBG actively
intervened in the foreign exchange market
to manage expectations. While it was a net
buyer of US$ 287 million from January to
April, it became a net seller, offloading US$
874 million between May and October.
As a result, international reserve assets
declined by 11.2% year-on-year, reaching
US$ 4.4 billion by December 2024.
Looking ahead, growth in 2025 is
expected to moderate from the high levels
of real GDP growth delivered over the last
few years, partly due to the heightened
levels of geopolitical uncertainty.
Delivering on our strategic priorities
This Annual Report will go into greater
detail later, but let me highlight here
how we continued to deliver on our key
strategic priorities in 2024.
2024 was an outstanding year for
the Group.
•
In December 2024, we completed
another milestone transaction,
selling an 80% holding in our beer
and distribution business to Royal
Swinkels, a high-quality international
investor and strategic buyer. The net
sale proceeds of c.US$ 63 million,
represented a substantial premium to
the independently valued Net Asset
Value of the business, and significantly
strengthened GCAP’s liquidity position
and reduced net debt at the GCAP
Holding Company level. Our remaining
20% holding in the business remains
subject to a put/call structure.
•
We continued to make disciplined
capital allocations. In May 2024,
we increased the consolidation of
Georgia’s Health Insurance market,
by acquiring the Ardi medical
insurance business.
•
We almost doubled the level of share
buybacks in 2024, compared to
2023, via our ongoing share buyback
and cancellation programmes, under
which US$ 48.1 million was allocated
to share buybacks. In May 2024, we
announced the Board’s intention to
make available at least GEL 300 million
for share buybacks and dividends
through the end of 2026, with the
programmes to be funded from
expected cash flows.
•
We significantly delevered the business
and, notwithstanding allocating US$
48.1 million to share buybacks, the
Net Capital Commitment ratio reduced
to 12.8%, from 15.6% a year earlier.
This is a significant achievement,
comfortably ahead of out initially
targeted 15% by December 2025.
•
We completed two significant
business restructurings – in the retail
(pharmacy) and hospitals businesses
– including the enhancement of the
senior management teams in both
businesses. Both businesses are now
delivering significant performance
improvements moving into 2025.
12 13
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Capital allocation, share buybacks
and dividends
During 2024, we allocated capital in a
number of key areas, with an investment
of GEL 16.9 million in our private
portfolio companies. This included:
GEL 11.3 million allocated to the
renewable energy business for the
ongoing development of pipeline projects;
and GEL 5.6 million allocated to the
education and other businesses.
In addition to these investments in our
private portfolio companies, we also
continued to invest in Georgia Capital
shares to take advantage of the discount
to NAV at which the shares currently trade.
During 2024, 3,669,889 shares with a total
value of GEL 131.9 million were bought
back under our buyback and cancellation
programmes. In addition, we continued
our buyback and cancellation programme
into 2025 and, in the first quarter of 2025
to date, an additional 1,512,332 shares,
at a cost of GEL 68.5 million, have been
repurchased for cancellation.
Consequently, the capital returned to
shareholders since our demerger in 2018
totalled US$ 151.7 million, or 12.6 million
Georgia Capital shares, representing
26.2% of GCAP’s share capital at its
peak. As a result, the gross number of
issued shares, including those held by
the management trust, now stands at
38.0 million, below the 39.4 million shares
in issue at the time of the demerger. In
essence, this reflects the repurchase of
more shares than we issued in 2019-2020
to purchase the then outstanding minority
stake in Georgia Healthcare Group.
During 2024, Georgia Capital collected
GEL 201.8 million in dividends, including
one-off dividends of GEL 22.6 million
(2023: GEL 235.9 million, which included
GEL 56.1 million of one-off dividends).
Excluding the one-off dividends, GEL
122.2 million was received from Lion
Finance Group, reflecting a combination
of regular cash dividends and our
participation in their share buybacks,
GEL 25.4 million from our insurance
businesses, GEL 10.0 million from retail
(pharmacy), and GEL 21.5 million from
renewable energy and other businesses.
Looking forward to 2025, we currently
anticipate receiving in excess of GEL
180 million in regular dividends from our
portfolio companies.
Portfolio valuation
Our total portfolio value increased
by GEL 89.5 million, or 2.4%, to
GEL 3.8 billion during the year.
•
The value of GCAP’s holding in Lion
Finance Group was up by GEL 195.2
million, reflecting the net impact of
GEL 340.0 million value creation and
GEL 144.8 million cash and buyback
dividend income from the Bank
during 2024.
•
The value of the water utility
business increased by GEL 29.0
million, reflecting its strong operating
performance during the year.
•
The value of the private portfolio
decreased by GEL 134.6 million in
2024, mainly reflecting the divestment
of an 80% holding in the beer and
distribution business and the collection
of GEL 57.0 million dividends from
the private portfolio companies.
The decrease was partially offset by
GEL 66.3 million value creation and
GEL 16.9 million investments in the
portfolio companies.
Value creation
The total portfolio value creation
amounted to GEL 435.3 million in 2024.
•
An 18.5% increase in Lion Finance
Group’s share price, supported by a
3.3% appreciation of GBP against
GEL in FY24, led to GEL 340.0 million
value creation.
•
GEL 29.0 million value was created in
our water utility business.
•
The value creation in the private
portfolio amounted to GEL 66.3 million,
reflecting a net impact of:
−
a GEL 671.5 million operating
performance-related increase in the
value of our private assets.
−
a GEL 605.1 million value reduction
from changes in valuation inputs,
largely reflecting the negative impact
from the increased country risk
premium during the year.
Our listed investment – Lion Finance
Group – continued to deliver strong
balance sheet growth in both customer
lending and deposits, and high profitability,
with an annualised ROAE of 30.0%,
underpinned by its continued focus on
digital transformation, and delivering
strong growth in the payments business.
The Bank is clearly making significant
progress, which has led to sustainable
customer franchise and revenue
generation growth. Reflecting the strong
performance, Lion Finance Group’s
share price increased by 18.5% in 2024,
strongly supporting our NAV growth
with GEL 340.0 million value creation. In
addition, the Bank has a robust capital
distribution policy, including share
buybacks and regular dividends and, on
25 February 2025, the Bank announced
its board’s intention to recommend a
final dividend for 2024 of GEL 5.62 per
ordinary share at the Bank’s 2025 Annual
General Meeting. This will make a total
dividend paid in respect of the Bank’s
2024 earnings of GEL 9.00 per share
(a 12.5% increase y-o-y). In addition, in
February 2025, the Bank announced an
extension of the buyback and cancellation
programme by an additional GEL 107.7
million. Overall, the Bank’s dividend and
share buyback payout ratio for 2024 was
31% of total earnings.
In March 2024, Lion Finance Group
completed its acquisition of 100% of
Ameriabank CJSC, a leading universal
bank in Armenia with an attractive
franchise. The transaction has already
started to deliver significant earnings
enhancement for Lion Finance Group,
with Ameriabank delivering high levels
of growth and profitability. We expect
this acquisition to continue to enhance
earnings for Lion Finance Group over
the next few years, supporting significant
value creation.
The value creation of the water utility
business amounted to GEL 29.0 million
in 2024 and the equity value increased
to GEL 188.0. This reflects the strong
operating performance of the business
on the back of the increased tariffs for
corporates effective from 1 January 2024,
and the application of the put option
valuation to GCAP’s 20% holding, where
GCAP has a clear exit path through
a put and call structure at pre-agreed
EBITDA multiples. GCAP’s put option is
exercisable in 2025 or 2026.
As mentioned above, the operating
performance of our various private
portfolio investments was extremely
strong against the backdrop of significant
regulatory changes reflecting the impact,
in particular, of management changes
and restructuring programmes in the retail
(pharmacy) and healthcare businesses.
I was particularly pleased with the
exceptional GEL 671.5 million operating
performance related value creation in our
private portfolio businesses, prior to
the negative impact from, in particular,
the increased country risk premium.
The individual performances of our private
businesses are described in greater detail
later in this report.
Environmental, social and
governance
We have continued to focus on reducing
our impact on the environment, with
environmental, social and governance
(ESG) issues remaining at the forefront
of our thinking and business operations.
Our progress in this regard during
2024 was excellent and, while there is
significantly more detail in this report and
in our Sustainability Report, I want to draw
out a few particularly noteworthy aspects
of our ESG commitment.
•
Georgia Capital was awarded
the Impact Award by the Asian
Development Bank (“ADB”), in
recognition of our longstanding
commitment to responsible investment.
•
For the first time in Georgia, we
successfully obtained third-party
assurance on our greenhouse
gas emissions.
•
We continued to invest in capital-light
businesses and industries that have
a positive impact on people and
our planet.
Our people are our business
We never lose sight of the fact that our
people are our business. They remain
critical to our ongoing success and we
have excellent people throughout the
business, at both the holding company
level and in all of our portfolio businesses.
During 2024, we continued to enhance
the quality of our management teams,
through a combination of internal
development, combined with some high
quality external hires.
Over the last 12 months, I have
continued to dedicate much of my time
to supporting and developing our people.
As always, I deeply appreciate the
considerable efforts of our management
teams and employees in driving the
continued success of Georgia Capital.
Outlook
I am delighted with how Georgia Capital
rose to the challenges of 2024. The
excellent performance of our portfolio
companies, coupled with our unwavering
focus on delivering on our strategic
priorities with the sale of our beer and
distribution business, were instrumental
to our outstanding 2024 results. I
am particularly pleased that we have
delivered very strong levels of cash
generation; made substantial further
progress in reducing our Net Capital
Commitment ratio; and continued to
focus on significant capital repatriation to
our shareholders via the ongoing share
buyback and cancellation programme.
This performance was underpinned in
2024 by the resilience of the Georgian
economy, which has demonstrated
consistent and substantial growth over
the past few years, despite ongoing
political and geopolitical tensions and
uncertainties. In 2025, we aim to further
optimise our portfolio by pursuing
selective divestments, executing
buybacks, strengthening our balance
sheet, and seizing new investment
opportunities aligned with our long-term
vision. While macroeconomic and political
uncertainties persist, we are confident in
our ability to create long-term value for
our shareholders through our resilient
investment platform, and to progress
further towards achieving our key
strategic priorities.
Irakli Gilauri
Chairman and CEO
20 March 2025
The Strategic Report as set out on
pages 4 to 117 was approved by
the Board of Directors on 20 March
2025 and signed on behalf by
Irakli Gilauri, Chairman and Chief
Executive Officer.
Chairman and CEO Statement continued
Georgia Capital PLC Annual Report 2024
1514
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Georgia Capital Strategy
Georgia Capital – a platform for investing in, upscaling
and monetising large opportunity businesses in Georgia
• Developing and growing businesses to the equity value of GEL 300 million to
realise proceeds through an exit, as investments mature.
• LSE listed, with c.90% institutional shareholder base.
• Running an efficient cost structure with no management or success fees.
Superior access to capital
1
•
Only Group of its size and scale focused
on investing in and developing businesses
in Georgia.
•
Uniquely positioned given access to capital
in a small frontier economy:
−
c.US$ 500 million raised in equity at LSE.
−
Issued seven Eurobonds totalling
c.US$ 2.1 billion.
−
US$ 3+ billion raised from IFIs (EBRD, IFC,
ADB, AIIB, etc.).
Commitment to maintaining
exemplary corporate governance
•
Strong Board comprised mainly of
independent Directors with extensive
international experience.
•
Outstanding track record in institutionalising
businesses and creating independently run/
managed institutions.
•
Highly experienced management team in
each portfolio company with a strong measure
of independence.
•
Aligned shareholders’ and management’s
interests by share compensation:
−
The Executive Director is solely remunerated
by way of long-term deferred shares
(six-year vesting) and receives no
cash compensation.
−
Salaries of the Company’s senior managers
are heavily weighted towards deferred
share remuneration, and bonuses for senior
managers are paid in deferred shares rather
than cash.
•
High level of transparent reporting.
•
Strong ESG practices.
Access to good management
•
Highly experienced senior management
team, which grew BGEO Group (predecessor
company) by c.33 times in asset size between
2005 and 2017.
•
Reputation among talented managers as the
“best group to work for”.
•
Attracted talents have demonstrated a solid
track record of successful delivery.
•
Proven track record in turning around
companies and growing them efficiently.
•
Proven track record in monetising investments
through cash exits.
•
A platform for entrepreneurs to build institutions
(entrepreneurship culture):
−
If we do not have the right people, then we
do not invest, no matter the attractiveness
of the opportunity.
Georgia Capital strategy is based on
three fundamentalenablers:
1 3
2
1 Figures and statements in this section include the track record of our predecessor company BGEO, prior to the 2018 demerger.
Our strategic priorities
Deleveraging GCAP HoldCo by
bringing down and maintaining the
NCC ratio below 15%.
Reduce and maintain portfolio
companies’ leverage to respective
targeted levels.
Return at least GEL 300 million to GCAP
investors through share buybacks and
dividends through the end of 2026.
Achieve ESG targets at both GCAP
HoldCo and portfolio company levels.
Continued progress on the divestment
of “other” portfolio companies.
“Other” portfolio companies comprise 4.3% of the
total portfolio value and include four subscale private
businesses, being the auto service, beverages, housing
development and hospitality businesses.
While a number of these businesses have interesting
potential, the Group currently believes that most will not
offer the scalable growth potential we seek. Absent a
change in that assessment, the Group is targeting to exit
“other” assets in a two to three-year period.
In 2024, GCAP sold 80% of its holding in the beer and
distribution business at a premium to the investment
value, securing a clear exit strategy for the remaining
portion of its holding (see more details on page 8).
Our long-term aspiration
Achievement of our strategic
priorities will enable GCAP
to gradually transform into
a Sustainable Permanent
Capital Vehicle.
•
Significantly reduced leverage at the
GCAP HoldCo level.
•
Capacity to redeploy our existing capital without
the need for new equity share issuance/raise.
•
Consistent NAV per share growth on the back
of resilient, capital-light investments.
•
Opportunity to return a significant portion of
GCAP’s cash inflows to our shareholders.
Location: Javakheti National Park, Georgia. Image source: https://nationalparks.ge/
16 17
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
2011
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
1
0
10
20
30
40
50
60
70
80
92
81
73
61
5050
45
41
37
35
32
29
28
26
-6 .3%
0
6
4
2
10
8
14
12
16
18
20
22
-8
-2
-4
-6
7.9%
6.6%
5.1%
4.1%
3.4%
3.4%
5.2%
6.1%
5.4%
10.6%
11.0%
7.8%
9.5%
2010 2011 2012 2013 2014 2015 2016 2017 20 18 2019 2020 2021 2022 2023
9M24
0
10
20
30
-10
-20
-30
9M23
7.0%
7.3%
6.2%
5.9%
10.2%
11.4%
10.7%
12.1%
7.5%
7.8%
3. 6%
9.0%
6.2%
6. 6%
7.2%
3.9%
-9.6%
-11.9%
-11.2%
-5.5%
-10.0%
-11.6%
-12.2%
-8.0%
-6.7%
-6.0%
-12.4%
-4.4%
-10.3%
-4. 8%
-5.6%
-3.5%
0%
-10%
-2%
-4%
-6%
-8%
-2.6%
-2.4%
-2.7%
-2.7%
-2.2%
-2 .1%
-9.2%
59.5%
47.1%
-6.0%
25.2%
36.1%
34.4%
21.1%
-2.4%
-3.0%
-2.5%
-2.5%
20%
25%
60%
50%
55%
40%
30%
35%
45%
-2.4%
-2.2%
-2.3%
2014
2015
2016
2017
2018
2019
2020
2021
2022
2024E
2023
2025F
2028F
2026F
20 27F
Market and Industry Overview
Georgia’s economy maintains strong
momentum with 9.5% growth in 2024
Preliminary estimates indicate that Georgia’s real economy expanded by 9.5% y-o-y in 2024,
sustaining impressive momentum following three years of rapid growth. This performance has
been driven by strong domestic activity and solid external inflows. Domestic demand has been
bolstered by rising real wages, strong credit growth, and increased public investments.
Georgia sustained strong momentum
in 2024, demonstrating resilience and
flexibility despite external shocks and
domestic political uncertainty. Strong
growth supported significant deleveraging,
leading to a notable improvement in the
country’s external balance sheet.
Macroeconomic overview
and outlook
In 2024, Georgia’s economy continued
its robust expansion, once again
demonstrating the flexibility and resilience
of its macroeconomic environment in the
face of various shocks. The growth was
primarily driven by strong domestic activity
and solid FX inflows. On the production
side, the major sectors contributing
positively included trade, information
and communication (ICT), education,
construction, public administration and
finance. Preliminary estimates indicate that
annual GDP growth reached 9.5%
in 2024, up from 7.8% in 2023, supported
by favourable developments across both
domestic and external sectors.
Recent data highlights the normalisation
of remittance inflows, with a decline in
remittances from Russia as the money
transfers returned to pre-war levels.
Conversely, remittances from the EU and
the US have shown significant growth,
increasing by 10% and 24% y-o-y,
respectively, in 2024.
In foreign trade, exports grew moderately
by 7.8% y-o-y in 2024, led by a
substantial rise in motor car exports/
re-exports, which reached US$ 2.4
billion with 14% growth. Ferro-alloys
rebounded positively with a 78% increase,
reversing their negative contribution in
2023. Precious metal ores also surged by
263% y-o-y. However, copper ore exports
declined sharply by 80%, driven by
shrinking global demand for copper due
to reduced industrial activity, acting as the
primary drag on overall export growth.
Tourism recovery remains strong, with
international travel revenues reaching US$
4.4 billion in 2024, 135% of 2019 levels,
reflecting a robust global travel rebound.
However, international visitor numbers
have recovered to only 84% of 2019
levels, indicating room for further growth.
Domestically, growth was supported by
continued credit expansion across both
local and foreign currencies in retail and
business sectors. The commercial bank
loan portfolio grew by 17.0% y-o-y as at
December 2024 (on a constant currency
basis), despite tight monetary conditions
and elevated global interest rates.
Fiscal policy remained expansionary,
with current expenditures rising by 15.8%
y-o-y and capital expenditures increasing
by 12% in 2024. Fiscal revenues also saw
Georgia is favourably
placed among peers
Czech Republic
Country rating
AA-
Fitch rating outlook
Stable
Azerbaijan
Country rating
BBB-
Fitch rating outlook
Stable
Armenia
Country rating
BB-
Fitch rating outlook
Stable
Kazakhstan
Country rating
BBB
Fitch rating outlook
Stable
Georgia
Country rating
BB
Fitch rating outlook
Negative
Türkiye
Country rating
BB-
Fitch rating outlook
Stable
Uzbekistan
Country rating
BB-
Fitch rating outlook
Stable
Strong economic growth of
9.5%
in 2024, following a 7.8%
growth in 2023.
Solid rebound in tourism revenues
in 2024
135%
compared to 2019.
a robust 16.3% increase, driven by strong
tax performance. Strengthened aggregate
demand led to a 8.6% y-o-y increase in
imports during 2024, driven by consumer
and investment goods. The trade deficit
widened by 9.1% y-o-y to US$ 10.4
billion. Re-exports reached a record US$
3.6 billion in 2024, growing 10% y-o-y
and accounting for 54% of total exports,
exceeding domestic exports for the first
time since April 2023.
The current account deficit narrowed to
3.5% of GDP in 9M24, down from 4.8%
in 9M23, supported by a 3.5% y-o-y
increase in current transfers and a
11.4% rise in the service balance. Total
FDI for 2024 stood at US$ 1.3 billion
(4% of GDP), marking a 30% y-o-y
decline following record highs in 2022 and
2023 (US$ 2.3 billion and US$ 1.9 billion,
respectively). This decline was mainly due
to reduced inflows in the manufacturing
and trade sectors, where FDI fell by
US$ 131 million and US$ 234 million
y-o-y, respectively.
NBG focused on rebuilding reserves early
in 2024, purchasing a net US$ 287 million
in the first four months. However, US$ 220
million was sold between May and June to
counteract negative market sentiment tied
to the “Transparency of Foreign Influence”
law, followed by an additional US$ 698
million during the pre-election period. As
a result, official reserves declined to US$
4.4 billion by the end of December 2024,
marking a 11% y-o-y decrease.
The unemployment rate fell to 13.9%
in 2024, while Labor force participation
exceeded pre-pandemic levels, reaching
54.8% in 2024. Additionally, average
monthly nominal earnings grew by 12%
y-o-y in 9M24, reaching GEL 2,002. The
highest wages were recorded in the ICT
and financial sectors, at GEL 3,965 and
GEL 3,783, respectively.
The consolidated budget deficit stood at
GEL 1.8 billion in 2024, with the annual
IMF-modified deficit projected at 2.5%
of GDP. The operating balance improved
significantly, increasing by 19% y-o-y from
GEL 3.6 billion in 2023 to GEL 4.2 billion
in 2024. Consolidated budget revenues
grew by 16% y-o-y, driven by a 18%
increase in tax revenues.
Overall balance (% of GDP) General Government debt, total (% of GDP)
General Government debt, external (% of GDP)
Nominal GDP (GEL billion) Real GDP growth rate (y-o-y %)
1 Preliminary estimate.
Goods, net Investment income, net Current account
Services, net Current transfers, net FDI, inflows
Real GDP growth
Current account balance (% of nominal GDP)
Public finances (% of GDP)
Georgia Capital PLC Annual Report 2024
1918
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-1 9
Oct-19
Jan-20
Apr-20
Jul-20
Oct-20
Jan-21
Apr-21
Jul-21
Oct-21
Jan-22
Apr-22
Jul-22
Oct-22
Jan-23
Apr-23
Jul-23
Oct-23
Jan-24
Apr-24
Jul-24
Oct-24
Jan-25
Feb-25
-1%
3%
7%
11%
9%
5%
1%
13%
0%
4%
8%
12%
10%
6%
2%
14%
15%
Market and Industry Overview continued
General Government gross debt reduced
to 36% of GDP by the end of 2024, lowest
since 2014, supported by four consecutive
years of high economic growth. These
improvements have bolstered significant
deleveraging of external balance sheet and
reduced vulnerabilities.
Tourism remains a vital sector for
the Georgian economy, contributing
significantly to FX inflows and the current
account balance. In 2024, the number of
international visitors grew by 4.6% y-o-y
to 6.5 million, recovering to 84% of 2019
levels. Tourism revenues reached US$ 4.4
billion, up 7.3% y-o-y, and accounted for
135% of 2019 levels. Income from Türkiye,
Iran, Russia, Israel, Saudi Arabia and the
EU exceeded 2019 levels. Particularly
strong growth was observed in revenues
from Israel, with 42% y-o-y growth in
2024. Visitor numbers from Central Asian
countries also surged significantly.
The Georgian Lari (GEL) experienced
fluctuations in 2024 due to domestic
political tensions and election-related
uncertainties. The Georgian Lari
depreciated as negative sentiment
increased demand for hard currency.
In response, the NBG actively intervened
in the foreign exchange market to manage
expectations. While it was a net buyer of
US$ 287 million from January to April, it
became a net seller, offloading US$ 874
million between May and October. Overall,
the GEL depreciated by 4.2% in 2024
despite strong economic fundamentals
and solid FX inflows. The nominal effective
exchange rate (NEER) rose by 0.7% y-o-y
in January 2025, while the real effective
exchange rate (REER) decreased by 7.1%
y-o-y in January 2025.
Inflation, like in much of the world, surged
during 2021-2022 but declined sharply in
2023, falling below the 3% target from April
2023 onward. In 2024, headline inflation
averaged to 1.1% supported by broad
based disinflation across the consumer
basket. Headline inflation started to pick up
slightly since November 2024 and reached
2.4% y-o-y in February 2025.
In response to slowing inflation, NBG
reduced its policy rate by 150 basis
points in early 2024, from 9.5% to 8.0%
by May 2024. However, both global and
domestic uncertainties continue to pose
inflationary risks, including volatility in
oil and food prices in the international
market, as well as weaker GEL pressuring
imported prices. Acknowledging these
risks, the NBG has kept the policy rate
steady at 8.0% during its last Monetary
Policy Committee meetings. The NBG is
prepared to adjust policy rate in line with
the macroeconomic developments.
Reflecting heightened political risks
and uncertainty, Fitch Ratings revised
Georgia’s sovereign credit rating outlook
from “positive” to “stable” in June 2024
and later from “stable” to “negative”
in December 2024. The agency cited
concerns that “a protracted political
crisis could undermine the institutional
framework and affect investor and
domestic confidence, exerting pressure
on external liquidity and the exchange
rate”. Although uncertainties remain high,
Fitch expects 2025 real GDP growth to
be at 5.3%, while inflation to be 2.1%
on average.
On the economic side, IMF revised its
GDP growth forecast for Georgia upwards
from 5.7% (World Economic Outlook
– April 2024) to 7.6% for 2024 (World
Economic Outlook – October 2024),
projecting 6.0% growth for 2025, the
highest in the region.
Inflation vs. inflation target
Headline inflation Core inflation Target
The medium-term growth forecast (2025-
2029) stands at 5.2%, positioning Georgia
among the fastest-growing economies.
According to the latest IMF Article IV staff
report, growth is expected to align with
its potential rate of 5% over the medium
term, with inflation stabilising around the
3% target and the current account deficit
at 5.5% of GDP.
Reform-driven success
Over the past two decades, Georgia has
implemented significant economic and
structural reforms, leading to notable
improvements in governance and
productivity. As a result, corruption has
declined, productivity has risen, and the
economy has become more diversified,
bolstering the country’s resilience to
external shocks.
Georgia consistently ranks highly in global
governance and business indicators.
According to the latest World Bank
Ease of Doing Business report (2020),
Georgia ranks 7
th
, making it one of the
top economies in the region for starting
a business. The country also leads in
transparency and fiscal management,
ranking 1
st
out of 125 countries in the
International Budget Partnership’s 2023
Open Budget Index, and 34
th
out of 184
countries in the 2025 Index of Economic
Freedom by the Heritage Foundation.
Inaddition, Georgia ranks 44
th
out of 194
countries in the 2024 Trace International
Business Bribery Risk Matrix. Notably,
itis on par with EU member states in the
2024 Corruption Perception Index by
Transparency International, ranking at the
top in the Eastern Europe and Central
Asia region.
The Economic Liberty Act, effective since
January 2014, has been instrumental in
maintaining a credible fiscal framework
by limiting the fiscal deficit to 3% of GDP
and public debt to 60% of GDP. Although
the Georgian Government temporarily
exceeded these thresholds during the
pandemic under an emergency escape
clause, both fiscal deficit and public
debt have since returned within the fiscal
rules–public debt as of 2021 and the fiscal
deficit as of 2022. The Act also mandates
a nationwide referendum for any new
taxes or increases in existing taxes, with
some exceptions.
Additionally, Georgia introduced a
groundbreaking corporate income tax
reform in January 2017, making tax
applicable only to distributed profits,
while reinvested or retained profits
remain exempt. This move is part of a
broader effort to create a favourable tax
environment; Georgia has reduced the
number of taxes from 21 in 2004 to just
six in 2020, earning recognition as having
one of the friendliest tax regimes in the
World Bank’s Doing Business report.
Recent structural reforms, including
the VAT reform (July 2020) and a new
insolvency framework (adopted in
September 2020 and implemented
in April 2021), further demonstrate
Georgia’s commitment to improving
the business environment.
Despite challenges arising from the global
disruptions, structural reforms and large
infrastructure projects to promote Georgia
as a transit and tourism hub and enhance
long-term growth are still underway.
A new pension law was adopted in 2018,
enhancing long-term fiscal sustainability,
supporting capital market development,
increasing the replacement rate,
narrowing the current account deficit
and boosting potential output. A new
bill on investment funds was adopted in
2020, in line with international practice
and harmonisation obligations with EU
law, providing an up-to-date regulatory
framework for investment activity. The
Georgian Government focuses on
addressing the shortcomings in employee
benefit schemes, further cutting non-
essential expenditures, consolidating
public sector institutions, making social
and healthcare spending more targeted,
privatisation schemes and increasing
capital expenditure efficiency. Within
the responsible lending framework,
NBG took macroprudential measures
to decrease household indebtedness,
enhance financial stability and strengthen
regulation, supporting the financial
system’s resilience to currency fluctuations
and FX-induced credit risks. A new
important reform adopting the framework
for issuing mortgage covered bonds
was adopted by the parliament in 2022,
aiming to provide an additional source for
a relatively cheap and stable source of
financing for credit institutions.
A business-friendly environment, well-
developed infrastructure, stable energy
supply, flexible labour legislation, a stable
and profitable banking sector, strategic
geography connecting European,
landlocked Central Asian and Middle
East countries, and preferential trading
agreements, support Georgia to become
a regional hub economy.
The Georgian Government’s ongoing
infrastructure investments and increased
spending on roads, energy, tourism
and municipal infrastructure will also
reinforce the potential. To enhance
Georgia’s competitiveness, the Georgian
Government continues to strengthen
integration in existing international systems
Below target inflation since
April 2023, standing at
2.4%
in February 2025
Medium-term (2025-2029) economic
growth rate
5.2%
one of the highest in the region
(IMF, October 2024)
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Market and Industry Overview continued
as well as new transit routes. Georgia is
a regional energy corridor. In November
2019, the Georgian PM, alongside the
Turkish and Azerbaijani presidents,
opened the Trans-Anatolian Pipeline,
allowing natural gas from Azerbaijan to
be exported to Europe through Georgia.
In December 2022, leaders of Azerbaijan,
Georgia, Hungary and Romania signed
an agreement to build an underwater
electric cable in the Black Sea, further
positioning Georgia as an important
player in the EU energy policy. The Black
Sea Submarine Cable project is one of
the largest energy infrastructure projects
currently under preparation. Also, a fiber-
optic submarine cable interconnection
across the Black Sea is considered,
which would be laid alongside the electric
cable, to strengthen internet connectivity
between the Caucasus and the EU.
Strengthening of Georgia’s domestic
power transmission system as well as its
digital connectivity should result from the
Black Sea Submarine Cable project, and
the World Bank, one of the contributors
of this project approved a US$ 35 million
loan in May 2024 for the first preparatory
phase. In 2025, the first phase of the
Black Sea Submarine Cable project is
planned to be implemented. This phase
includes studies of the Black Sea seabed
and related consultancy services (financial
and technical assistance). The project is
crucial for Europe and Georgia in several
aspects: energy security, economy, green
policy, and interregional connectivity.
Following the Russia-Ukraine conflict,
and the subsequent Western sanctions
imposed on Russia, the Georgian
Government has revived plans to build a
deep-sea port at Anaklia, which would be
located in the so-called Middle Corridor,
which connects China and the countries
of Central Asia to Europe through Georgia
and Azerbaijan. The port is expected to
be built with the co-participation of the
state and international investors. Recent
developments indicate that a consortium
led by Chinese and Singaporean
companies has been selected as the
private partner for the Anaklia Deep Sea
Port project. On 29 May 2024, Georgian
Minister of Economy and Sustainable
Development, Levan Davitashvili,
announced that the consortium, including
China Communications Construction
Company and China Harbor Investment,
was the sole bidder and would be officially
declared the winner. Additionally, an
agreement for constructing the port’s
marine infrastructure was signed with
the Belgian company “Jan De Nul”, a
leading firm in marine construction. These
partnerships support the Anaklia Deep
Sea Port project, aiming to enhance
Georgia’s role as a strategic transit hub
between Europe and Asia.
Georgia’s business-friendly environment,
coupled with its sustainable growth
prospects, attracted FDI on average 7.9%
of GDP over the past decade. These
capital flows boosted productivity and
accelerated growth. Public infrastructure
projects were also instrumental in driving
growth, as well as better realising the
country’s potential in logistics, transport
and tourism. Faced with low domestic
savings, FDI is an important source of
financing growth in Georgia, as well as a
reliable source of current account deficit
funding. Total FDI amounted to US$ 1.3
billion, down 30% y-o-y in 2024, following
record high FDI numbers in 2022-2023
(US$ 2.3 billion and US$ 1.9 billion,
respectively). Major sectors attracting
FDI in 2024 were: financial and insurance
activities (39% of the total), manufacturing
(13% of the total) and real estate
activities (12% of the total). The share
of reinvestment by foreign companies in
total FDI was 88% in 2024, more than
2019’s 47%. The increasing share of
reinvestment indicates investors trust in
Georgia’s growth model and the success
of the profit tax reform introduced in 2017.
Planned investment and infrastructure
programmes, a rising number of free
trade agreements (FTAs) and a business-
supportive environment will support further
FDI inflows in the medium term.
Free trade agreements
There have been significant changes in
Georgia’s export structure and destination
markets in recent years; however, Georgia
has not yet fully tapped into international
markets. One of the biggest changes
in destination markets has been a
reorientation from the Russian market after
the 2005 embargo, as the embargo forced
Georgian producers to redirect exports
to other Commonwealth of Independent
States (CIS) countries, the EU and the
Middle East. Exports to Russia picked
up again in 2013 as Russia reopened its
borders to Georgian products. Another
significant change concerns the growing
importance of China as a Georgian export
market, as the FTA effective from January
2018 has brought a major acceleration
of exports to China. China was the single
largest destination country for Georgian
exports for 2020-2022 years. Since
2013, Georgia’s developed logistics
and transport infrastructure has helped
shore up opportunities for new re-export
commodities, including copper and
pharmaceuticals. Georgia’s potential to
become a logistic hub has strengthened
since sanctions on Russia, with robust
demand observed from Kyrgyzstan,
Kazakhstan, Azerbaijan and Armenia
in 2023-2024. Importantly, re-exports
reached a record high of US$ 3.6 billion
in 2024, accounting for 54% of total
exports and growing by 10% y-o-y, first
time ever exceeding domestic exports
since April 2023.
Together with established destinations,
improved access to large new markets,
such as the EU, China and Hong Kong,
could increase market penetration.
Georgia’s existing FTAs (with the EU, CIS,
Public debt down to
36%
of GDP by the end of 2024,
lowest since 2014
EFTA, Türkiye, China and Hong Kong) and
the prospective FTA with India, as well as
an agreement with Israel and successfully
concluded economic partnership
negotiations with South Korea, offer
significant upside potential for Georgia’s
exports. Furthermore, the Comprehensive
Economic Partnership Agreement (CEPA)
was signed on 10 October 2023, between
Georgia and United Arab Emirates. The
CEPA will strengthen trade, economic
and investment cooperation between
the countries.
The EU-Georgia Association Agreement,
which came into force in July 2016,
and the related DCFTA, effective since
September 2014, have laid the solid
groundwork to improve governance,
strengthen the rule of law and provide
more economic opportunities by
expanding the EU market to Georgian
goods and services. Closer economic
ties with the EU and trust in prudent
policymaking are also expected to attract
foreign investments to Georgia. Visa-free
travel to the EU, granted to Georgian
passport holders in March 2017, is
another major success of the Georgian
foreign policy.
Following Ukraine’s plea to join the EU as
it battles Russia’s invasion, Georgia and
Moldova on 3 March 2022 submitted
their applications to join the EU. Georgia
previously planned to apply to join the EU
in 2024. The European Council granted
a conditional European perspective to
all three countries, with Ukraine and
Moldova receiving the candidate status
pre-emptively. For Georgia, however,
candidate status was made subject to
meeting a list of 12 conditions.
On 8 November 2023, the European
Commission adopted the 2023
Enlargement Package – a set of
documents explaining its policy on EU
enlargement. The final decision was made
on 14 December 2023 and the European
Council granted the status to Georgia
and called on Georgia to demonstrate a
clear commitment to EU values, continue
progress on its reform agenda and fulfil the
conditions specified in the Commission’s
report meaningfully and irreversibly.
Granting candidate status to Georgia is
a significant acknowledgment by the EU
of the progress made in recent years.
However, the reintroduction of
controversial “transparency of foreign
influence” law and a perceived lack of
commitment to key EU demands have
heightened tensions with the West and
put Georgia’s EU integration process
on hold. Even more, after the elections,
the Georgian Government announced a
postponement of its EU accession talks
until 2028. This decision has intensified
protests, as approximately 85% of the
population supports EU membership.
Individual sector overview
Banking
The banking sector has been one of the
most developed and fastest-growing
sectors of the Georgian economy.
The banking sector’s asset growth
rate of 16.6% (ten-year CAGR) has far
outstripped the nominal GDP growth rate
for the same period. However, despite
robust progress, there are plenty of
opportunities to further tap into growth
potential, as the financial market remains
at an early stage of development. The
sector has remained resilient in the face
of challenges such as COVID-19 and
the war in Ukraine, underscoring the
robustness of the banking system.
In December 2024, Fitch Rating
downgraded the outlook of Georgian
banks to “stable” from “positive” on the
back of increased political risks and
elevated uncertainty. Despite the revision,
rating agency highlighted that the risk
of liquidity and local-currency stability
are balanced by the banks’ asset
quality and capitalisation, exceeding
historical averages.
In December 2022, the parliament
adopted changes in the corporate
tax model for banks (as well as credit
unions and microfinance organisations),
setting the corporate tax rate at 20%,
combining the previous 15% rate with
the 5% dividend tax rate and abolishing
the latter. Moreover, commercial banks
adopted International Financial Reporting
Standards (IFRS) from January 2023, as
laid out in NBG’s 2020-2022 supervisory
strategy, aiming to increase harmonisation
with developed countries.
In 2022, NBG began implementing
a new bank recovery and resolution
framework, with assistance from IMF
technical missions. The IMF mission noted
Georgia’s “considerable progress” in
establishing the necessary infrastructure
for an effective bank recovery and
resolution regime, and identified key
priorities for further collaboration.
Additionally, NBG applied for membership
in the Single Euro Payments Area (SEPA),
emphasising that SEPA membership
would enhance the credibility of the
financial sector and simplify financial
services for Georgian citizens.
In January 2023, NBG introduced a new
methodology for defining systemically
important commercial banks and
establishing a systemic buffer for them,
with the aim of further strengthening
financial system resilience. This updated
methodology classified three banks—
Bank of Georgia, TBC Bank and Liberty
Bank—as systemically important,
assigning a 2.5% buffer for the first
two and a 1% buffer for Liberty Bank.
The decree also included provisions to
increase these buffers if any individual
bank’s deposit concentration exceeds
specified thresholds.
As part of the 2021 joint Financial
Sector Assessment Program by the
IMF and World Bank, NBG received
recommendations to establish a Minimum
Requirement for Own Funds and Eligible
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Liabilities (MREL) for domestic systemically
important banks within its resolution
framework. Based on the European Bank
Recovery and Resolution Directive, this
regulation sets a progressively increasing
MREL for systemic commercial banks:
10% from January 2024, 15% by
December 2025, and 20% by December
2027. Starting in 2024, these banks
are required to submit monthly reports
to NBG.
In November 2023, the NBG’s Financial
Stability Committee (FSC) decided to
gradually accumulate the countercyclical
capital buffer over the next few years:
0.25% by March 2024, 0.5% by March
2025, 0.75% by March 2026, and 1% by
March 2027. This buffer, introduced under
Basel III, is a key macroprudential policy
tool to curb excessive credit growth and
mitigate systemic risks.
In December 2023, the Georgian
parliament approved amendments to
the resolution fund legislation, requiring
commercial banks to make ex-ante
contributions to a resolution fund, which
will accumulate to a target amount
of 3% of insured deposits. This fund
is intended to support the resolution
process in case of emergency, ensuring
the early identification of banks’ financial
vulnerabilities. Contributions to the fund
will begin in 2025 and continue through
2033. The NBG will manage the fund,
with the option to transfer it to the Deposit
Insurance Agency.
De-dollarisation remains a priority for both
NBG and the Georgian Government.
Restrictions on foreign currency loans
have been in place since January 2017,
with the initial limit at GEL 100,000. As
part of the long-term de-dollarisation plan,
the FSC has gradually risen this limit, with
the most recent update, starting from
January 1, 2025, the cap on unhedged
foreign currency loans increased to GEL
500,000. In December 2024, due to the
increased deposit dollarisation caused by
domestic uncertainty, the FSC increased
the upper limit of the minimum reserve
requirements for funds attracted in foreign
currency by 5 percentage points to
curb excess liquidity risks. Additionally,
the maximum maturity for unsecured
consumer loans was extended from
three years to four years starting
November 2023.
The banking sector ended 2024 with
record net profits of GEL 3.1 billion,
14% increase compared to the 2023
profits. Interest income rose by 17.8%
y-o-y, reaching GEL 8.4 billion, while
interest expenses climbed by 25% to
GEL 4.1 billion. Non-performing loans
(NPLs) were 1.47% of total loans by the
end of 2024, slightly lower than the 1.48%
recorded at the end of 2023. Return on
assets (ROA) stood at 4.3% and return
on equity (ROE) at 25.2%, though slightly
lower than 2023 level. By the end of
2024, the average capital adequacy ratio
increased to 22.7% from 22.1% in 2023,
while the liquid asset ratio declined to
18.3% from 20.9% in 2023.
Despite tightened monetary conditions
and elevated foreign currency rates, the
loan portfolio demonstrated resilience.
Credit to the economy grew by 17.0%
y-o-y (excluding exchange rate effects) by
the end of 2024, with a 22.3% increase
in GEL loans and a 10.6% rise in foreign
currency loans. Mortgage loans grew by
12.4% by December 2024, while business
loans increased by 16.8%. Commercial
bank deposits rose by 13.0%, with
GEL deposits up 9.5% and foreign
currency deposits growing 16.4%
(excluding government deposits).
Deposit dollarisation increased to 52.8%
by the end of 2024, up from 50.7% at the
end of 2023. Loan dollarisation following
a decreasing trend, falling below 50% for
the first time in 2022, reaching 43.3% by
the end of 2024.
Retail (pharmacy)
The pharmaceutical market in Georgia
is highly concentrated, with three major
players holding approximately 95% of the
organised retail (pharmacy) market share
in 2023. The Georgian pharmaceutical
market is highly dependent on imports.
There are over 100 importers of
pharmaceutical products in Georgia,
but approximately 57% of all imports are
performed by three companies: GEPHA
(approximately 16%), PSP (approximately
21%) and Aversi (approximately 20%).
Pharmaceuticals market reforms have
made it possible to create a competitive
marketplace in Georgia. These have
included the introduction of parallel
imports and automatic registration of
medicines recognised by international
control bodies, such as the US Food and
Drug Administration and the European
Medicines Agency, as well as favourable
regimes for setting up pharmacies (0%
VAT on medicines, absence of customs
duties and no price controls).
Imports of medicines were the third
largest commodity group, amounting to
US$ 623 million (3.7% of total imports),
while export of medicines was the
eighth largest export commodity group,
amounting to US$ 129.5 million (1.97%
of total exports) in twelve months of 2024,
including US$ 104.1 million of re-exports
(2.9% of total re-exports).
Also, effective from 15 January 2023,
the Ministry of Health, Labour and
Social Affairs of Georgia (the “Ministry”)
implemented an External Reference
Pricing model on the pharmaceuticals
market, related to both prescription and
non-prescription medicine. Reference
Pricing is an approach where prices are
set according to the benchmark prices
for the same or similar medicines in
comparable countries. According to the
new initiative, the Ministry introduced
the maximum retail price on targeted
pharmaceutical products, in two
Market and Industry Overview continued
directions: Generic and Original drugs.
The price caps are set based on the
average of such medicine prices in the
following countries: Bulgaria, Latvia,
Macedonia and Montenegro.
Currently, approximately 297 Generic
drugs are subject to the new regulation.
Property and casualty (P&C)
insurance
From 2010 to 2023, the Georgian
property and casualty insurance sector
grew by 425%, with insurance revenue
increasing to GEL 557 million. According
to the Insurance State Supervision Service
of Georgia (“ISSSG”), the total value of
gross written premiums increased from
GEL 113 million in 2010 to GEL 588
million in 2023; an increase of 418%.
The largest six insurance providers in
Georgia account for approximately 78%
of the market. The level of insurance
market penetration in Georgia amounts
to 1.3% (of which 0.8% is attributable
to the property and casualty insurance
market) as at 31 December 2023. This
was lower than insurance penetration in
more developed countries such as the
UK, France, Switzerland and Belgium,
which had penetration rates of 9.7%,
8.7%, 6.9% and 5.5%, respectively,
and was also lower than penetration in
neighbouring countries such as Czech
Republic, Poland, Hungary and Türkiye,
which had penetration rates of 2.90%,
2.90%, 2.00% and 1.70%, respectively.
The Georgian retail insurance market
offers ample room for growth, as most of
its potential is yet to be unlocked. Motor
insurance accounts for 55% of the total
retail insurance market in Georgia, of
which 13% represents border Mandatory
Third Party Liability (MTPL) insurance,
effective from March 2018.
Moreover, the motor insurance segment
has great potential to increase, as only 7%
of registered cars are insured on the local
market. The new law requiring local MTPL
for all vehicles registered in Georgia is
expected to kick in and significantly boost
retail market penetration.
Medical insurance
Over the past decade, the private medical
insurance market expanded significantly
compared with the 2006 figure, when
only 40,000 Georgian citizens (or c.1%
of the total population) had a voluntary
medical insurance package, mostly
provided as part of a corporate benefits
programme. There were 735,000 private
health insurance (PHI) policies in force
at the end of June 2024. The corporate
segment accounts for the major portion
of the PHI market – 91.7% of all policies
are acquired by employers, and the rest
(61,000) are purchased by self-paying
individuals. In Georgia, PHI is primarily
intended to provide value-added services
in the form of more extensive coverage or
more convenience for the patient.
Hospitals and clinics and diagnostics
The Georgian healthcare industry
experienced important transformations
during the last decade. The key
components of the national healthcare
reform were massive privatisation,
infrastructure upgrade, sector liberalisation,
introduction of Universal Health Care
(UHC) and wider accessibility to healthcare
services as the major outcome.
To address high private healthcare costs
and basic healthcare coverage for the
entire population, UHC was introduced in
2013 and replaced previous state-funded
medical insurance plans. New initiatives
regarding the reimbursement and
differentiating coverage of Universal Health
Insurance were adopted in 2017.
In terms of health expenditure as a
percentage of GDP, Georgia achieved
a level consistent with that of major
developed economies, at approximately
8%, which is above most of its peer
emerging economies. However, there still
remains vast potential for further increase
since Georgia has one of the lowest per
capita expenditures on healthcare among
the benchmark countries. Healthcare
spending per capita is currently at a
very low base of only c.US$ 300, with
annual outpatient encounters of 3.7 per
capita, significantly lower than many
comparable countries. On average,
c.65% of healthcare spending is funded
by the private sector. Notwithstanding
a significant improvement in the bed
occupancy rate, from c.30% in 2003 to
c.50% currently, there is still potential
for even higher efficiency in order to
align Georgia with best practices. The
occupancy rate in Georgia is far below
EU (77%) and CIS average (83.4%)
indicators. The Georgian healthcare
market has shown solid growth in recent
years. According to management’s
estimates based on third-party data, the
total healthcare market grew by a CAGR
of 9% over 2011-2023 years. Outlook
for the healthcare sector is positive as
increasing GDP and disposable income
help domestic consumption to increase,
especially in elective care, diagnostics and
outpatient services.
To streamline the state funding
financing in healthcare and improve the
reimbursement process, the Georgian
Government introduced an initiative to
implement a Diagnosis Related Group
(DRG) financing system. The DRG system
categorises inpatient case types that are
clinically similar and expected to use the
same or similar resources into groups
by applying various criteria (age, sex,
intervention needed, comorbidity, etc.).
The new system became effective from
the beginning of 2023. The way the DRG
system was initially implemented had a
positive impact on the business EBITDA,
however the system was modified
several months into its implementation,
decreasing tariffs on a number of services,
and making the changes profit neutral.
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Market and Industry Overview continued
In 2024, the Georgian Government
announced changes to the DRG system,
introducing a co-payment component
to the universal healthcare programme.
Patients will now have the option to pay
out-of-pocket for additional services
that fall outside the established pricing
framework. These services include VIP
wards, premium-quality prosthetics
or specific doctors, all available at an
additional cost. It remains uncertain
whether participants in the universal
healthcare programme will be able to
utilise private insurance packages to
cover these extra services. The changes
are anticipated to have a positive impact
on both profitability and the quality of
healthcare services.
Renewable energy
Georgia is on track to develop a stable,
EU-aligned and competitively priced
energy sector. The country has overcome
the frequent energy shortages of electricity
and gas supply interruptions by renovating
and updating energy infrastructure,
improving transmission infrastructure
and increasingly diversifying its natural
gas and electricity importing markets.
Economic growth paired with transparent
and investor-friendly environment attracts
foreign investments in the sector.
In 2008, the power generation market
witnessed significant changes to facilitate
market liberalisation. All HPPs constructed
after August 2008 have been deregulated,
which served as a first step towards
the establishment of the free electricity
market. In 2014, the EU and Georgia
signed an Association Agreement and
Georgia became a full contracting party
member of the Energy Community in
2017. Further, the electricity law was
amended, deregulating all HPPs below
75MW.
In order to increase market liquidity, the
first step was to increase the number
of direct customers at the wholesale
electricity market. In accordance with
the new regulation enforced since 1 May
2019, consumers with at least 5GWh of
consumption per month were obliged
to register as direct customers. Direct
customers secure electricity directly
from generating companies or traders,
which enables the development of a
stable deregulated electricity market.
Deregulation continued in 2021 – all
entities with monthly consumption of more
than 0.4GWh and with 35-110kV access
lines were registered as direct consumers.
This process will continue in the following
years as well, further increasing the share
of the deregulated market.
Active energy sector reform started
when Georgia became a member of the
Energy Community. Georgia has signed
a protocol concerning the accession
of Georgia to the treaty establishing
the Energy Community of EU and its
neighbours in October 2016, ratified by
the parliament of Georgia in spring 2017.
With this agreement, Georgia undertook
an obligation to synchronise Georgian
legislation with EU standards in the energy
sector and to do so in a short period of
time. As Georgia is not directly connected
to the Energy Community member
countries via transmission line, it is exempt
from several directives. However, significant
changes apply to the market structure
in the electricity and natural gas sectors,
energy efficiency, and environmental
law. Energy Community regulations will
bring to Georgia a more competitive and
transparent market model.
The first step in the reform process
was the adoption of new laws by the
Parliament of Georgia, framing general
principles of the market organisation.
Later some decrees of the Georgian
Government and the Georgian National
Energy and Water Supply Regulatory
Commission followed, specifying the
details of the market organisation
and transition period. Although some
uncertainties remain to be cleared by
by-laws, the total framework is developing
gradually. The reforms affect many
sectors, including electricity and natural
gas, renewable energy, energy efficiency,
construction, environmental legislation, etc.
The Law on Energy was adopted by
the parliament of Georgia in December
2019. The Law on Energy defines general
principles of market organisation, main
participants and role sharing. According
to the Law on Energy, market reform
envisages the reform of both wholesale
and retail markets. As a result, new
players will emerge in both markets
to intensify competition and weaken
industry regulation.
The Electricity Market Model Concept
adopted by the Georgian Government
in April 2020 clarified the organisational
details regarding the wholesale market of
electricity. Based on the latest changes in
regulations, the first stage of the intraday
market (IDM) and day-ahead market
(DAM) was launched in July 2024.
Full market opening is scheduled for
July 2025 (including DAM, IDM, and
balancing market).
Education
The private K-12 education industry in
Georgia has been growing at a 10%
CAGR over the last decade. Based on
the business’ estimation, the market size
reached GEL 417 million in 2024, driven
by both increasing enrolments and rising
tuition fees. Currently, there are c.70,300
learners in private schools in Georgia,
representing 11% of the total general
education market. There is a consolidation
trend that represents an opportunity in a
fragmented market. Over the last decade,
average private school size has increased
by 51% and the number of private schools
has decreased by 13%. Private learners
are consolidating in the four largest cities
with populations over 100,000, namely
Tbilisi, Batumi, Kutaisi and Rustavi. Tbilisi
is the largest city in Georgia with the
majority share of private learners (64% of
the Georgian private market) and Georgia
Capital is the largest player on the market
with a 9.4% market share in terms of
learners, while the second largest player
holds 2.3%. Management believes that the
key growth drivers will be the large gap in
the quality of public schools as compared
to private schools as well as increasing
household income and decreasing
unemployment rates.
Data provided in this section was collated
from the following sources unless stated
otherwise:
•
Geostat
•
National Bank of Georgia
•
Ministry of Finance of Georgia
•
Georgian National Tourism
Administration
•
Insurance State Supervision Service
of Georgia
•
World Bank
•
International Monetary Fund
•
Fitch Ratings
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345.7
365.9
385. 8
250.1
213.6
171.3
201.0
2
Capital Allocation and Managing Portfolio Companies
The Group believes that in the long run Georgia will become
a service hub of the region. Since the Group is under no time
pressure to invest, it takes a selective and opportunistic approach
to new investments. The Group’s key principle is to buy assets
at affordable prices and to remain very disciplined in this regard.
To evaluate new acquisition opportunities Georgia Capital has
developed a 360-degree analysis framework.
360-degree analysis – a strong foundation
for value creation
Georgia Capital’s share price is at the core of decision-making
when it comes to new investments. The Group performs a
360-degree analysis each time it makes a capital allocation
decision and compares: a) the investment opportunity versus
buyback opportunity; and b) the sale opportunity versus buyback
opportunity. The Group intends to buy assets/companies at
a higher discount to their listed peers than GCAP’s fair value
discount. Georgia Capital is targeting to invest in opportunities
which produce greater returns than returns created by buying
back Georgia Capital’s shares.
Georgia Capital does not have capital commitments or a primary
mandate to deploy funds or divest assets within a specific time
frame. It focuses on shareholder returns and on opportunities
that meet its investment return and growth criteria. In line with its
capital allocation strategy, the Group emphasises capital-light,
larger-scale investment opportunities in Georgia, which have
the potential to reach at least GEL 300 million equity value over
three to five years and to be monetised through exits as they
mature. The Group believes that the superior exit opportunities
and improved liquidity associated with larger sized investments
will support the Group’s desire to reduce the current discount to
reported NAV per share.
•
Georgia Capital invests in Georgia in sectors not requiring
intensive capital commitments.
•
GCAP enables its large and capital-light portfolio companies to
explore regional growth opportunities, such as the expansion
of the retail (pharmacy) business into Armenia and Azerbaijan.
•
In capital heavy industries, Georgia Capital seeks to manage
third-party money and/or establish partnerships.
Businesses operating in a frontier economy such as Georgia
have limited access to capital and management personnel.
Consequently, those with access to these limited resources can
make investments in companies which then provide an attractive
risk return profile. The Group seeks to generate value for its
shareholders by: investing in opportunities in Georgia that are
currently not directly accessible to its shareholders; changing
management and governance structures; institutionalising
and scaling up the Company operations, often to benefit from
consolidating fragmented and underdeveloped markets; and
unlocking value by exiting these companies over time. The
Group’s approach to investing and managing companies entails
the following principles:
Highly disciplined entry approach
The Georgian economy entered into a period of significant
development and growth approximately 15 years ago and
different sectors and businesses are therefore at early stages
of formation.
Access to capital and management personnel is limited and
as a result, Georgia Capital can pursue attractive investment
opportunities and acquire assets on relatively attractive terms
with a view to consolidating fragmented and underdeveloped
sectors of the economy, particularly targeting high-multiple
service industries, not requiring significant capital commitments.
Monetise
Grow businesses to equity
value of GEL 300 million+
Invest in
capital-light
large opportunities
in Georgia
360-degree framework –
a strong foundation for
value creation
We perform 360-degree
analysis each time
we make acapital
allocation decision
and compare:
•
Investment opportunity
vs. buyback opportunity
•
Sale opportunity vs.
buyback opportunity
GCAP share price is at the core of our
investment decision-making
In 2022, the Group introduced an NCC Navigation Tool, which is
an integral part of GCAP’s existing 360-degree framework and
drives the Group’s share buyback and investment decisions.
NCC represents an aggregated view of all confirmed, agreed and
expected capital outflows at the GCAP holding company level. An
NCC ratio (NCC as a percentage of the total portfolio value) between
15%-40% guides us to tactical share buybacks/investments,
an NCC ratio below 15% would be expected to lead to more
meaningful share buybacks/investments, whilst a ratio above 40%
would lead us to implement a cash preservation strategy as we did
during the active phases of the COVID-19 pandemic.
Since its inception, GCAP has bought back 12.6 million shares
with the total value of US$ 151.7 million under its buyback
programmes to date.
•
The US$ 45 million share buyback programme, which
commenced in June 2018, was completed in August 2019.
Under the programme we bought back 3,336,843 shares,
of which 2,650,375 shares were cancelled and 686,468
shares were transferred to the management trust.
•
In August 2019, Georgia Capital initiated a US$ 20 million
share purchase programme for the management trust.
The management trust programme has repurchased
1,550,084 shares.
•
There was no buyback programme in 2020 in light of the cash
preservation strategy due to COVID-19.
•
In August 2021, Georgia Capital commenced a US$ 10 million
share buyback and cancellation programme, which was
extended by an additional US$ 15 million in 2022. Under the
US$ 25 million share buyback programme, 3,075,923 shares
have been repurchased and cancelled, corresponding to GEL
76.2 million (US$ 25.0 million) in value.
•
In 2023, GCAP launched two buyback programmes: a
US$ 10 million programme in April 2023, under which it
repurchased and cancelled 1,000,000 shares with a total
value of GEL 25.4 million (US$ 10.0 million), and a US$ 15
million buyback programme launched in October 2023, during
which 665,222 shares with a total value of GEL 22.5 million
(US$ 8.3 million) were repurchased in 2023.
•
In May 2024, GCAP initiated a US$ 25 million share buyback
and cancellation programme, which was subsequently
extended by an additional US$ 15 million in August. In
December 2024, the Company launched another US$
25 million share buyback and cancellation programme,
which was increased by an additional US$ 25 million in
March 2025. Under the buyback programmes in total, the
Company repurchased 3,669,889 of its own shares in 2024,
representing a nominal value of US$ 48.1 million. In 2025 to
date, additional 1,512,332 shares (US$ 24.2 million in value)
have been repurchased.
The table below summarises GCAP’s share buybacks in 2024.
Value of
shares
repurchased
(US$ million)
Number of
shares
repurchased
Georgia Capital share buybacks 49.8 3,790,417
of which, programme 48.1 3,669,889
of which, management trust 1.7 120,528
Number of Georgia Capital shares cancelled 47.8 3,656,705
Entering a new industry with a small ticket size
Another core principle of the Group’s investment philosophy
is to be mindful about the size of potential investments in new
industries. Georgia Capital typically starts with a small ticket
size and tests and develops a management track record before
stepping up the investment.
1 Reflects the retrospective conversion of the loans issued to our real estate and beverages businesses into equity.
2 Assuming the application of the 15% NCC ratio target to the total portfolio value as at 31 December 2024.
NCC and NCC ratio development overview
1
Over the past few years, the NCC
ratio has improved significantly
28 29
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Dividend income from private companies
Buyback dividend
Dividend income from listed companies
2023
2024
55
57
44
50
81
72
180
1
179
2
Dividend income per share (GEL)
4.1 4.3
GEL million
-0.4%
Dec-23
Dec-24
+2.5x
99
40
Capital Allocation and Managing Portfolio Companies continued
Liquidity is important
In order for the strategy to succeed, GCAP must be disciplined
in unlocking the value of companies in which it invests and that
it manages. In particular, it is crucial to set an exit strategy prior
to making an investment. A low investment entry point becomes
even more important in a small frontier economy, with limited
exit opportunities. The Group aims to have two potential liquidity
events for each of its assets:
•
The first exit: when entering a new industry Georgia Capital
intends to develop and grow portfolio companies. GCAP’s
key focus areas at portfolio company level are the ability to
grow operating cash and to make efficient capital expenditure
investments by targeting an appropriate level of return on
invested capital (ROIC). Once the business reaches its late
stage of development, GCAP expects to pursue its first exit
route, which envisages dividend flows for the Group; and
•
The second exit: as businesses mature, Georgia Capital
normally seeks to monetise its investment through
appropriate exit options, typically within five to ten years
from initial investment.
The Chief Strategy Officer is responsible for overseeing the
establishment of structured exit processes for the portfolio
companies, as Georgia Capital is actively engaged in the price
discovery of portfolio assets held.
Capital allocation outlook
Georgia Capital expects to allocate US$ 42.2 million net equity
capital in the renewable energy and education businesses over
the next three to five years.
Other than already identified greenfield projects in the renewable
energy and education businesses, the Group expects to focus
on acquisitions. By driving the development of these two
businesses, the Group expects to realise at least 2.0x MOIC at
each investment level.
No investments are expected in the clinics and diagnostics
business from GCAP.
Detailed information on the investments in these businesses are
set out on pages 32-57 of this report.
Focus on cash generation
Cash generation at both Georgia Capital and portfolio company
level is a key success factor for Georgia Capital.
Focus on management development
By developing top talent in Georgia Capital, the Group can add
value for the Company’s shareholders. Investing time in growing
and developing management continues to be critical for the
success of the Group’s strategy.
Good corporate governance
The Company believes that robust corporate governance is
a source of value creation for its shareholders. The Company
believes that alignment of the interests of shareholders and
management by awarding long-term deferred shares to the
Group’s senior executives enhances value creation.
GCAP role – vis-à-vis portfolio companies
•
Approval of all capital allocation decisions: equity,
debt, profit reinvestment, divestment, etc.
•
Strategy setting, business plan approval and monitoring.
•
Human capital (CEO and CFO) allocation and
KPIsetting.
•
Approval and monitoring of the ESG strategy.
Education
17.4
US$ million
Planned investments from GCAP in portfolio companies
Total net investment identified from GCAP over the next
3-5 years
Total
42.2
US$ million
as at
31-Dec-24
Renewable energy
24.8
US$ million
Key money
multiples at
GCAP level:
IRR MOIC
Key metric for reinvestment
decision-making at portfolio
companies’ level:
ROIC
IRR and MOIC are the key drivers for GCAP to invest in
newopportunities
ROIC is at the core of decision-making when our
portfolio companies are investing or divesting assets/
businesses
•
ROIC should exceed weighted average cost of capital
(WACC) for new investments.
•
Portfolio companies to continue divestment of low ROIC
and/or non-core assets and businesses to enhance ROIC.
Cash and liquid funds
balance increased 2.5x
y-o-y to US$ 99 million
at 31 December 2024,
primarily reflecting the
collection of the beer
and distribution business
sale proceeds.
Total cash and liquid funds (US$ million)
Strong dividend income from portfolio companies
GEL 179.2 million recurring dividend income in 2024
(GEL million) 2024
2
2023
1
Lion Finance Group 122.2 124.5
of which, cash dividends 72.2 80.5
of which, buyback dividends 50.0 44.0
Insurance 25.4 19.9
Renewable energy 12.3 5.2
Retail (pharmacy) 10.0 24.2
Beer business 8.3 –
Auto service 1.0 –
Hospitals – 6.0
Total 179.2 179.8
Recurring dividend income from portfolio companies
Strong balance sheet and cash management at Georgia Capital
GCAP management fee expenses starting from 2024 have
a self-targeted cap of 0.75% of Georgia Capital’s NAV.
The LTM management fee expense ratio was 0.72% at 31 December 2024 (0.80% as of 31 December 2023).
1 In addition to the recurring dividends, in 2023, GCAP received a one-off non-recurring inflow of GEL 56.1 million, of which GEL 29.4 million was collected from the participation in Lion
Finance Group’s 2022 share buybacks; and GEL 26.7 from the retail (pharmacy) business, following the minority buyout.
2 In 2024, GCAP recorded an additional one-off buyback dividend income of GEL 22.6 million from temporarily reducing our stake in Lion Finance Group to 19.1% in 3Q24 (from our
targeted holding level of 19.5%).
Georgia Capital PLC Annual Report 2024
3130
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
30
Georgia Capital PLC Annual Report 2024
Our Management Team
Georgia
Capital
Irakli Gilauri, Chairman and CEO
Irakli Gilauri formerly served as the CEO of BGEO Group from 2011 to May 2018. He joined as CFO
of Bank of Georgia in 2004 and was appointed as Chairman of the Bank in September 2015, having
previously served as CEO of the Bank since May 2006. Prior, he was an EBRD banker. Mr Gilauri
has almost 20 years of experience inbanking, investment and finance. Over the last decade, Irakli’s
leadership has been instrumental in creating major players in a number of Georgian industries, including
banking, healthcare, utilities and energy, real estate, insurance and wine. Holds an MSc in banking from
Cass Business School and acertificate in winemaking from the University of California, Davis.
Giorgi Alpaidze, Deputy CEO, Chief Financial Officer
Formerly BGEO Group CFO. Joined BGEO as Head of Finance, Funding and Investor Relations in
2016. He has extensive international experience in banking, accounting and finance. Previously, he
was a senior manager in Ernst & Young LLP’s Greater New York City’s assurance practice. Holds a
BBA from the European School of Management in Georgia. US Certified Public Accountant.
Ia Gabunia, Chief Strategy Officer
Formerly Investment Director at Georgia Capital. Joined BGEO as an Investment Director in 2017.
Ia has over ten years of experience in banking and investment management. Prior to joining BGEO
Ia served as Head of Corporate Banking at Bank Republic, Société Générale Group. Previously,
she held numerous executive positions in leading Georgian companies. Ia holds a BSc degree from
London School of Economics and Political Science, UK.
Giorgi Ketiladze, Managing Director, Head of Investments
Formerly Investment Officer at BGEO Group. Joined BGEO in 2017. Previously, worked at Deutsche
Bank in the Corporate Finance department and at KPMG consulting in Germany. Giorgi holds a
master’s degree from London Business School.
Nino Vakhvakhishvili, Chief Economist
Joined Georgia Capital in 2018. Nino is an IMF Short-term Expert and a visiting lecturer at the
University of Georgia. Before joining the Company, she spent over five years at the National Bank of
Georgia. Holds a master’s degree in economics from ISET.
Levan Dadiani, General Counsel
Formerly Senior Group Lawyer at BGEO Group. Joined BGEO in 2012. Levan has extensive
experience in commercial law, equity investments, corporate and project financing and energy
projects. Previously, he was a Partner at a leading Georgian law firm. Holds an LLM degree in
International Business Law from University of Texas at Austin, USA.
Eka Duchidze, Executive Director
Eka previously served as CEO of Amber Group, a hospitality business under Georgia Capital. She
joined Bank of Georgia as Corporate Secretary in 2005 and went on to hold key roles such as
Executive Assistant to the CEO and Head of Internal Branding, recently leading the development
of SOLO Banking and SOLO Lifestyle. Earlier, she spent eight years at the World Bank Group,
including two years in Washington, DC, as a Program Assistant in the OPIC Department.
Location: Borjomi-Kharagauli National Park, Georgia
Image Source: https://nationalparks.ge/
33
Georgia Capital PLC Annual Report 2024
32
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
1,813
1,375
1,132
727
295
514
25.8% 32.4% 29.9% 30.0%26.1% 13.0%
ROAE
20242019 2020 2021 2022 2023
73
188
162
254
181
184
347
360
146
2021 2022 2023 2024
257
522
582
535
37% 31%37%
35%
Payout ratio
An estimate based on a final dividend
of GEL 5.62 per share that Lion Finance
Group’s Board intends to recommend
at the 2025 AGM
27.0%
22.0%
18.9%
10.2%
13.9%
19.8 %
12.9%
4.3%
19.3%
19.6%
20.5%
20.0%
2019 2020 2021 2022 2023 2024
Our Portfolio Overview
Listed and observable portfolio
Banking
Value: GEL 1,421 million
37.8% of the total portfolio value
Overview
Lion Finance Group PLC (“Lion Finance
Group” or the “Bank”), formerly known
as Bank of Georgia Group PLC is a FTSE
250 holding company whose subsidiaries
provide banking and financial services
focused on the high-growth Georgian
and Armenian markets through leading,
customer-centric, universal banks – JSC
Bank of Georgia (“BoG”) in Georgia and
CJSC Ameriabank (“Ameriabank”) in
Armenia, the latter acquired in March
2024.
Bank of Georgia overview
BoG, a systemically important and leading
universal Georgian bank, offers a) retail
banking and payment services (Retail
Banking), b) banking services for small
and medium-sized businesses (SME
Banking) and c) corporate and investment
banking operations (Corporate and
Investment Banking) in Georgia. BoG
is well-positioned to benefit from the
growth of the Georgian economy through
its business segments and aims to
deliver on its growth strategy with strong
capital and liquidity positions. In Retail
Banking, a prominent component of the
banking business, BoG runs a client-
centric digital multi-brand offering with
the aim of reaching the entire spectrum
of retail customers, encompassing both
the mass retail segment (Mass Retail)
and affluent high-net-worth individuals
(Premium Banking). Bank of Georgia is
a digital banking and payments leader,
with a strong retail and corporate banking
franchise in Georgia.
Focusing on customer satisfaction and
enhancing its digital and advanced
analytics capabilities, BoG aims to
increase customer engagement and
maintain its relevance in customers’ daily
lives. The SME Banking segment, through
which BoG develops value propositions
for small and medium-sized enterprises,
has shown remarkable growth in recent
years. In Corporate and Investment
Banking, given the scale, the rich portfolio
of banking products and services, and
the industry and product expertise that
it possesses, BoG is a universal bank
of choice and top-of-mind advisor for
Georgian corporates. In the brokerage
business, under the Corporate and
Investment Banking business, BoG is
focused on profitable growth, through
unlocking retail brokerage potential and
fully digitalising brokerage services.
Ameriabank overview
Ameriabank is a highly attractive franchise
displaying many complementary
characteristics to Lion Finance Group.
Ameriabank is the market leader in
Armenia by total loan portfolio (20.9%
market share as at 31 December 2024)
and the second largest bank by total
deposits (18.5% market share as at
December 2024), with a strong loan and
deposit portfolio growth. Over the last
few years Ameriabank has significantly
expanded its loan portfolio, especially in
retail, with its mortgages and consumer
loan portfolio exhibiting high growth rates
(combined CAGR of 24.1% in 2020-
2022). Ameriabank also has a particularly
strong foothold in the corporate segment,
being a market leader with a market
position in loans to legal entities as at
31 December 2024. Ameriabank is
considered to have significant growth
potential and further scope to improve
commercial performance, particularly in
Investment rationale
•
The first entity from Georgia to be
listed on the premium segment of the
Main Market of the LSE (LSE: BGEO)
since February 2012.
•
High standards of transparency and
governance.
•
Leading market position in Georgia
by loans (37.6%) and deposits
(41.4%) as at 31 December 2024.
•
Leading market position in Armenia
by loans (20.9%) and deposits
(18.5%) as at 31 December 2024.
•
Digital leader in banking sector with a
strong retail banking franchise.
•
Growing market: The banking
sector’s y-o-y lending growth rate at
17.0% and 25.0% in Georgia and
Armenia, respectively.
•
Sustainable growth combined with
strong capital, liquidity and robust
profitability, with ROAE above 20%.
Ownership
Georgia Capital owns 19.23% of Lion
Finance Group PLC, as of 31 December
2024. As long as Georgia Capital’s stake
in Lion Finance Group is greater than
9.9%, it will exercise its voting rights in
accordance with the votes cast by all
other shareholders on all shareholder
votes at any general meeting.
Value creation potential
•
Annual loan book growth c.15%.
•
Regular progressive semi-annual
capital distribution with 30%-50%
dividend/share buyback payout ratio.
•
20%+ ROAE.
•
Significant additional growth potential
of Ameriabank within Lion Finance
Group by using its experience
and know-how in retail products,
digitalisation and payment business.
retail. This is expected to be achieved by
combining Ameriabank’s existing franchise
strengths with the Lion Finance Group’s
expertise, stemming from their proven
track record and leading digital products
and payments capabilities.
Ameriabank is also one of the leading
payments acquirers in Armenia, with
further potential upside on the back of the
group’s strong expertise in this area, as
well as supported by favourable market
fundamentals, as the Armenian economy
is predicted to become increasingly
cashless over the next few years.
Performance and strategy
Lion Finance Group delivered strong
results in FY24. Excellent top and bottom-
line growth and outstanding ROAE were
supported by the strong macroeconomic
environment in both Georgia and Armenia.
All sectors including Retail Banking, SME
Banking and Corporate and Investment
Banking exhibited excellent performance.
Lending activity was robust, loan book
quality remained strong and operating
income increased in FY24, the latter
driven by strong income generation
across key revenue lines. Lion Finance
Group continued its focus on customer
satisfaction, employee empowerment
and improving its digital banking and
payments business franchise, while
maintaining a healthy cost to income
structure. As a result, Lion Finance Group
delivered a ROAE of 30.0% (adjusted for
one-offs) in FY24, while maintaining robust
liquidity and capital positions.
On 25 February 2025, the Bank
announced its Board’s intention to
recommend a final dividend for 2024 of
GEL 5.62 per ordinary share at the Bank’s
2025 Annual General Meeting. This will
make a total dividend paid in respect of
the Bank’s 2024 earnings of GEL 9.00
per share (a 12.5% increase compared
to 2023). In addition, in February 2025,
the Bank announced an extension of the
buyback and cancellation programme by
an additional GEL 107.7 million. Overall,
the Bank’s dividend and share buyback
payout ratio for 2024 was 31% of
total earnings.
Performance track record
1
Capital distribution (GEL million)
Profit and ROAE (GEL million)
Loan book growth (BoG)
1 Numbers are derived from the business’ unaudited IFRS accounts. Certain numbers have been adjusted for presentation purposes. For details, please refer to the Lion Finance
Group’s disclosures at https://lionfinancegroup.uk/.
Total dividend paid for the year Share buyback
Loan book growth (nominal) Loan book growth (constant currency basis)
34
Georgia Capital PLC Annual Report 2024
35
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
May-24
Jun-24
Jan-24
Feb- 24
Mar-24
Apr-24
5
25
30
35
55
50
40
45
GBP 47.10
as at
31-Dec-24
Jul-24
Aug-24
Sep-24
Oct-24
Nov-24
De c-24
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Sep-22
Oct-22
Nov-22
Dec-22
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-23
Oct-23
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Nov-23
Dec-23
10
15
20
(558)
20
29
697
159
188
Equity value
31-Dec-21
Sale of 80%
equity interest
Put option
valuation
2022-2023
Equity value
31-Dec-23
Put option
valuation
2024
Equity value
31-Dec-24
Financial metrics
1
Operating metrics
Valuation highlights
Profit (Lion Finance Group)
(GEL million)
1,813
+31.9% y-o-y
LTM P/E
4.0
-0.3 YTD
Number of monthly
active retail customers – BoG
(million)
2.0
+10.7% y-o-y
Number of monthly active
retail customers – Ameriabank
(million)
0.4
+22.4% y-o-y
Tier 1 capital adequacy ratio
(BoG)
20.5%
+0.5 ppts y-o-y
ROAE
(Lion Finance Group)
30.0%
+0.1 ppts y-o-y
Price to book (P/B)
1.02
-0.2 y-o-y
Monthly active digital retail
users – BoG
(million)
1.6
+17.5% y-o-y
Monthly active digital retail
users – Ameriabank
(million)
0.2
+54.4% y-o-y
Liquidity coverage ratio
(BoG)
138.6%
+13.4 ppts y-o-y
Cost/Income
(Lion Finance Group)
34.3%
+4.5 ppts y-o-y
Tier 1 capital adequacy ratio
(Ameriabank)
14.4%
+0.3 ppts y-o-y
Cost of credit risk ratio
(Lion Finance Group)
0.5%
-0.2 ppts y-o-y
Liquidity coverage ratio
(Ameriabank)
195.7%
+78.3 ppts y-o-y
Stock price performance (GBP)
Implied multiple highlights at 31-Dec-24
1 Numbers are derived from the business’ unaudited IFRS accounts. Certain numbers have been adjusted for presentation purposes. For details, please refer to the Lion Finance
Group’s disclosures at https://lionfinancegroup.uk/.
Water utility
The water utility business is a regulated
natural monopoly in Tbilisi and the
surrounding area, providing water
and wastewater supply services to
approximately 1.4 million residents and
approximately 43,000 legal entities. The
business also operates HPPs with a total
installed capacity of 149MW. The water
utility business uses a portion of the
power generated by its HPPs associated
with the water infrastructure for internal
consumption at regulated electricity tariffs
to power its water distribution network,
while the remaining electricity is sold on
the market. Revenues come from two
main streams (water and electricity sales),
where the business benefits from both
earning fair regulatory returns on invested
capital made in upgrading the water utility
network and average electricity sales
price growth due to electricity market
deregulation in 2019.
In 2022, GCAP completed the sale
of an 80% interest in the water utility
business for a total consideration of US$
180 million. In 2024, the remaining 20%
equity interest in business was valued by
the application of pre-agreed put option
multiple to the normalised LTM EBITDA of
the business, leading to GEL 29.0 million
value creation. As of 31 December 2024,
the fair value of GCAP’s 20% holding in
the water utility business was assessed at
GEL 188.0 million.
In 2024, the water utility business
successfully issued US$ 300 million in
green bonds on the Irish Stock Exchange,
representing its second issuance of green
bonds, following its initial transaction
in 2020.
Our Portfolio Overview continued
Listed and observable portfolio continued
Value development overview
1
(GEL million)
GCAP’s put option
8.25x
EV/EBITDA
Exercisable in 2025-2026.
Majority shareholder’s
call option
8.90x
EV/EBITDA
Exercisable on the date of expiry of
the put option in 2026 and expiring
six months thereafter.
GCAP and the majority
shareholder have put and call
options for the minority vitality
business
1 The detailed valuation overview and related drivers are described on pages 100-117 of this report.
Value: GEL 188 million
5.0% of the total portfolio value
37
Georgia Capital PLC Annual Report 2024
36
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
20232022202120202019 20242017 2018
255
271 302
316
355 384 435 429
38.9
52.2
65.3
70.4
76.2
76.9
77.3
80.9
450.3
518.6
614.7
679.4
782.4
783 .6
815.0
850.1
Number of pharmacies and franchise stores
78.2
52.4
77.1
80.0
66.1
53.1
32.8
16.2
20232022202120202019 20242017
2018
Investment rationale
•
Largest retailer in the country with
more than 400 pharmacies and
franchise stores and over 2.5 million
customer interactions permonth.
•
Retail business with 95% out-of-
pocket payment.
•
Supported by the country’s growing
macroeconomic environment.
Ownership
Georgia Capital owns 97.8% of the
retail (pharmacy) business as at
31 December 2024 (31 December
2023: 97.6%).
Value creation potential
•
The largest player and purchaser of
pharmacy products on the Georgian
market with a cost advantage due
to the scale of operations: higher
discounts from manufacturers and
elimination of distributor margins.
•
High-growth potential driven
by growing macroeconomic
environment, expansion of the local
and international chains, and adding
highly synergetic products and
services.
Retail (pharmacy)
Value: GEL 716 million
19.0% of the total portfolio value
Our Portfolio Overview continued
Private large portfolio companies
Performance track record
1
Key focus areas in medium and long term Five-year financial targets
•
Strengthening and differentiating the retail brands,
GPC and Pharmadepot, to cultivate a loyal
customer base, elevate brand recognition, and
maximise their market potential
•
Focusing on the strategic growth of high-margin
priority product sales and expanding the para-
pharmacy segment’s contribution to revenue,
leveraging its exemption from state regulations
•
Exploring international investment opportunities
within the region
Expanding retail
footprint in Georgia
• Double-digit EBITDA CAGR
• 9%+ EBITDA margin
Revenue
enhancement
International
expansion
1
2
3
Revenue and EBITDA
2
(GEL million) Operating cash flow (excl. IFRS 16) (GEL million)
1 Numbers are derived from the business’ unaudited IFRS accounts.
2 In 2024, certain transaction-related expenses, such as POS-terminal charges, courier services, and other related expenses, have been reclassified from operating expenses
to components of gross profit. The comparative 2022 and 2023 periods have been adjusted retrospectively.
Revenue EBITDA (excluding IFRS 16)
Overview
The retail (pharmacy) business is the
largest pharmaceuticals retailer and
wholesaler in the country, with a 35.8%
market share in the organised retail
market based on 2023 revenues. The
business consists of a retail pharmacy
chain and a wholesale business that sells
pharmaceuticals and medical supplies
to hospitals and other pharmacies. The
business operates two brands, GPC
and Pharmadepot, with a total of 410
pharmacies (of which 395 are in Georgia,
and 15 in Armenia) and 19 franchise
stores (of which, two are in Armenia
and five in Azerbaijan). The business’
franchises include brands like The Body
Shop, a British company specialising in
cosmetics, skincare and perfumes, and
Alain Afflelou SA, a top optical retailer
inFrance.
Performance and strategy
The retail (pharmacy) business
successfully continued the growth of its
retail segment. The significant expansion
of the retail chain over the last few years,
coupled with the business’ proactive
approach aimed at enhancing the sales
and profitability margins of para-pharmacy
products, significantly contributed to the
business’ robust performance in 2024.
The business’ initiative to renegotiate
trading terms with key suppliers across
major product categories positively
impacted gross profit margins in FY24.
This was particularly evident in the para-
pharmacy retail segment, where gross
profit margin increased by 6.4 ppts y-o-y.
The retail (pharmacy) business
performance was partially affected by
price regulations, which set a maximum
selling retail price for both prescription
and non-prescription medicines. The list
of regulated products, initially identified
in 2023, was expanded further in 2024.
The negative impact of these regulations
on the total revenue in FY24 amounted to
GEL 14.5 million.
In 2024, the business divested from its
textile franchise brands “Carters” and
“Triumph” with six operating stores
in Georgia.
The business strategy aims to achieve
a double-digit CAGR in EBITDA over
the next five years while maintaining an
EBITDA margin above 9%. This will be
achieved by focusing on several key
areas: optimising the retail chain, which
has added over 100 pharmacies in
the past five years; enhancing revenue
by prioritising the sales of high-margin
products and increasing the share of
para-pharmacy products, which are not
subject to state regulations; boosting
sales through e-commerce channels;
and pursuing international expansion.
Aspart of its international growth strategy,
the business continues to expand in
Armenia and Azerbaijan and is exploring
investment opportunities in other countries
across the region.
38
Georgia Capital PLC Annual Report 2024
39
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
(298)
(7)
1,021
716
Net debt incl.
lease liabilities
Minority
interest
Enterprise value
31-Dec-24
Equity value
31-Dec-24
31-Dec-23 31-Dec-24 Target
<1.5x
1.9x
2.2x
Financial metrics
1
Operating metrics
Valuation highlights
2
Revenue (GEL million)
850.1
+4.3% y-o-y
LTM EV/EBITDA
8.4x
-1.3x y-o-y
Number of pharmacies and
franchise stores
429
-6 over 2023
Average bill size
(GEL)
20.4
+4.1% y-o-y
Gross profit margin
30.7%
+2.0 ppts y-o-y
EBITDA excluding IFRS 16
(GEL million)
80.9
+4.6% y-o-y
Peer companies
•
NEUCA S.A. | Poland
•
Sopharma Trading AD | Bulgaria
•
S.C. Ropharma S.A. | Romania
•
SALUS, Ljubljana, d. d. | Slovenia
•
Great Tree Pharmacy Co., Ltd. | Taiwan
•
Dis-Chem Pharmacies Limited | South Africa
•
Clicks Group Limited | South Africa
Number of bills issued
(million)
31.6
+0.9% y-o-y
Same store
revenue growth
(1.7)%
-1.6 ppts y-o-y
EBITDA margin excluding
IFRS 16
9.5%
NMF
Operating cash flow excluding
IFRS 16 (GEL million)
78.2
+49.4% y-o-y
EBITDA to cash conversion
excluding IFRS 16
96.7%
+29.0 ppts y-o-y
Free cash flow excluding
IFRS16 (GEL million)
54.8
NMF
Dividend paid to GCAP
(GEL million)
10.0
-80.3% y-o-y
Value development overview at 31-Dec-24 (GEL million) Adjusted net debt to EBITDA (excl. IFRS 16)
3
Implied multiple highlights at 31-Dec-24
1 Numbers are derived from the business’ unaudited IFRS accounts.
2 The detailed valuation overview and related drivers are described on pages 100-117 of this report.
3 Includes the application of the minority buyout agreement.
1 Source: ISSSG.
Insurance
P&C insurance
Value: GEL 428 million
11.4% of the total portfolio value
The insurance business comprises a)
property and casualty (P&C) insurance
business and b) medical insurance
business. As of the beginning of 2024,
Overview
Over nearly three decades in the Georgian
property and casualty insurance market,
Aldagi has achieved almost universal
brand awareness, leading positions in
retail insurance services, with the largest
product portfolio and exceptional financial
strength. The company has almost
doubled its retail portfolio over the last
four years, outperformed market growth,
delivered an average annual ROAE of
c.31% in 2014-2024 and consistently
distributed dividends within a 50%-80%
payout ratio each year since 2014. Based
on the latest available market data, as at
30 September 2024, Aldagi continues to
be one of the most profitable insurance
companies in the local market with a 19%
share of the insurance industry profit and
a market share of 30% based on gross
premiums written
1
.
The current low level of insurance market
penetration in Georgia (1.3%, of which
0.8% relates to property and casualty
the Georgian insurance sector adopted
the Estonian Taxation Model. Prior to
this change, the pre-tax profit of the
insurance businesses was levied by a
15% corporate income tax. Following
the enforcement of the Estonian Taxation
Model, a 15% corporate income tax
insurance and 0.5% to medical insurance)
provides enormous potential for growth
and Aldagi is well-equipped to capture
these opportunities. The company plans
to increase the P&C insurance business
profitability by strategically focusing on
each of its four main business lines set out
below:
•
Retail customers. The Georgian retail
insurance market offers ample room
for growth, as most of its potential is
yet to be unlocked. Motor insurance
accounts for 56% of the total retail
insurance market in Georgia, of which
13.5% third party liability insurance
(TPL) purchased at the border by
foreign-registered vehicles entering
Georgia, which became mandatory
from March 2018. Moreover, the
motor insurance segment has great
potential to increase, as only 7% of
registered cars are insured on the
local market. A new law making TPL
insurance mandatory for all vehicles
registered in Georgia is expected to
is applied to earnings distributed to
individuals or non-resident legal entities.
Consequently, GCAP’s insurance
businesses is no longer subject to the
corporate income tax payment, freeing
up the resources for both business
development and enhanced dividend
payments to GCAP.
be passed in the next few years which
will significantly boost retail market
penetration. Overall, Aldagi’s market
share in voluntary retail insurance
stands at 36% and Aldagi expects to
grow its retail segment concentration
by developing simple products for
mass retail as well as developing a
unique customer experience through
exclusive premium line services. Aldagi
aims to further strengthen customer
retention and its market leadership
position by continued development of
its digital insurance platform.
•
SME segment. Georgia’s insurance
market for SMEs is currently in its
infancy. Aldagi sees significant potential
to grow this segment of the portfolio
by developing tailor-made products
and providing them with established
multi-channel distribution networks
and digital portals, created especially
for SME clients. A separate SME sales
division was established at the end of
2019 as a part of this strategy. As a
result, Aldagi’s SME gross revenues
have grown by 42% in 2024 (from GEL
5.6 million to GEL 8.0 million).
•
Large corporates. Although the level
of insurance penetration within the
corporate segment is relatively high
compared to retail and SME segments,
a combination of favourable Georgian
macroeconomic conditions, a good
investment climate, stable economic
growth and an increase in infrastructure
projects will further increase customer
demand for insurance products.
Investment rationale
•
Significantly underpenetrated
insurance market in Georgia (0.8%
penetration in property and casualty
insurance market).
•
Market leader with a powerful
distribution network of point of sale
and sales agents.
Ownership
The P&C insurance business is 100%
owned by Georgia Capital.
Value creation potential
•
Compulsory border MTPL effective
from 1 March 2018.
•
Local MTPL is expected to kick in
and provide access to untapped
retail casualty and collision insurance
market with only 5% existing
penetration.
•
Increasing footprint in untapped
MSME sector, where Aldagi’s gross
revenues have grown by 42% in
2024 (from GEL 5.6 million to GEL
8.0 million).
•
Digitalisation.
•
Undisputed leader in providing
insurance solutions to corporate clients.
Our Portfolio Overview continued
Private large portfolio companies continued
40 41
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
201
160
134
123
102
98
90
86
71
68
51
CAGR +15%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
29
22
26
21
20
2121
19
17
13
9
CAGR +13%
64%
51%
61%
68%
55%
88%
81%
70%
94%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
28% 37% 37% 38% 34% 30% 25% 25% 30% 24% 33%
30%
21%
12%
6%6%
4%
3%
19%
TBC
Insurance
GPIHUnison IraoNew
Vision
AldagiOther
Hualing
PolandCzech
Republic
Georgia P&C
Penetration – 0.8%
Density – US$ 62
8.7%
9.7%
5.5%
5.5%
2.9%
2.9%
2.0%
1.7%
1.1%
1.3%
GermanyBelgiumSwitzer
-land
Hungary Türkiye Russia GeorgiaUK
France
110
155
224
437
464
881
2,910
2,978
6,830
3,867
4,759
6.9%
535
588
502
442
380
370
308
228
202
195
2021 2022 20232020201920182017 9M242015
2016
YTD Sep-24
market gross premiums
GEL 535 million
Aldagi share 30%
CAGR 2015-2023
Market – 15%
Aldagi – 12%
159
176
138
127
110
105
90
88
77
70
36%
38%
39%
29%
28%
29% 29%
27%
30% 30%
Performance track record
1
Earned premiums, gross (GEL million)
Pre-tax profit and dividend payout ratio
2
(GEL million)
1 Numbers are derived from the business’ unaudited IFRS accounts.
2 Calculated based on net income, adjusted for non-recurring items and average equity, adjusted for preferred shares where applicable.
3 Adjusted for non-recurring items.
•
International reinsurance. The P&C
insurance business entered regional
reinsurance markets of Armenia and
Azerbaijan. Aldagi became the first
insurance company on the local market
to obtain an international credit rating
of bb+ from AM Best. In 2024, AM
Best upgraded the outlook of the credit
rating from bb+ stable to bb+ positive.
Performance and strategy
2024 was a robust year in terms of
revenue growth for the P&C insurance
business, up by 27.5%, mainly reflecting
the growth in the motor, agricultural and
credit insurance lines. Likewise, loss
and combined ratios were down by 0.5
ppts and 2.0 ppts, respectively, mainly
resulting from an improved loss ratio
following a high base in 2023, which saw
several abnormal events, including an
unprecedented landslide, an unusually
high number of hailstorms, and a large
property insurance claim. These events
together translated into an 31.7% y-o-y
increase in the pre-tax profit of the
business in 2024.
Aldagi’s medium-term strategic focus
remains unchanged. The business
targets to gain a strategic edge by
focusing on underwriting excellence
and portfolio profitability backed by five
key pillars: 1. Strengthening customer
Pre-tax profit
3
Dividend payout ROAE
retention; 2. Introducing new digital
insurance products; 3. Improving
customer experience; Advancing
employee recognition; and 5. Getting
ready for local MTPL insurance launch.
As part of the strategy, Aldagi has the
following financial targets through
2025-2028:
•
Market share of 25%-30%.
•
ROAE of 25%-30%.
•
Dividend payout of 50%-80%.
•
Combined ratio of 80%-85%.
•
Solvency ratio of 170%+.
•
Retail concentration of 60%+.
Market opportunity
Market share, YTD Sep-24 gross premiums written
Market and Aldagi gross written premiums
2
(GEL million)
Insurance penetration and density
1
Source: ISSSG
Source: ISSSG
1 Penetration and density are stated including healthcare insurance (as of latest available data).
2 Calculated in line with the market approach.
3 Numbers are derived from the business’ unaudited IFRS accounts.
4 Calculated based on average equity, adjusted for preferred shares.
Source: Swiss Re Institute
Financial metrics
3
Operating metrics
Earned premium, gross
(GEL million)
200.9
+25.2% y-o-y
Number of policies written
(corporate)
114,620
+0.2% y-o-y
Number of claims
reported
24,892
-4.0% y-o-y
Dividend paid to GCAP
(GEL million)
18.0
+20.8% y-o-y
Pre-tax profit
(GEL million)
29.0
+31.7% y-o-y
Number of policies written
(retail)
248,563
+17.8% y-o-y
ROAE
4
33.3%
+8.9 ppts y-o-y
Combined ratio
87.5%
-2.0 ppts y-o-y
Insurance density (US$) Insurance penetration
Market Aldagi Market share
Our Portfolio Overview continued
Private large portfolio companies continued
42 43
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
24
14
24
31
38
130
140
UnisonPSPGlobalTBC
Insurance
OtherGCAP
medical
insurance
Vienna
Insurance
Group
35%
32% 9% 8% 6% 3% 7%
92
129
(54)
(25)
115
286
313
Operating
performance
Multiple change,
FX and other
Dividends
paid
Equity value
31-Dec-23
Equity value
31-Dec-24
428
378
2018 2019 2020 2021 2022 20242023
3.5
5.3
7.8
4.6
4.1
8.4
13.9
55.1
75.4
69.5
72.4
74.9
91.3
167.5
2018
16.8
14.7
17.6
18.1
18.5
16.6
16.8
77.3
81.4
73.0
79.3
81.0
78.2
76.3
2019 2020 2021 2022 20242023
94.1
96.1
90.6
97.4
99.5
93.1
94.8
31-Dec-23 31-Dec-24 Target
No
Leverage
0.5x
No
Leverage
Medical insurance
Overview
Our medical insurance business is the
largest private health insurer in Georgia,
holding a 35% market share based
on gross premiums as of September
2024. With a comprehensive distribution
network, we offer a diverse range of
medical insurance products tailored to
Georgian corporates, state entities and
retail clients. The business operates under
two distinct brands: Imedi L and Ardi.
Imedi L serves as a mass-market health
insurance provider, while Ardi focuses on
the upscale segment, enabling further
diversification of our insurance portfolio
and unlocking significant financial and
strategic synergies.
The Georgian health insurance market
remains underpenetrated, with a
penetration rate of just 0.5% and insurance
density at US$ 48 – substantially lower
than in neighbouring countries. Currently,
only 20% of the Georgian population holds
private medical insurance, highlighting
significant growth opportunities and
untapped market potential.
Performance and strategy
The significant growth achieved in 2024
reflects a combination of increased
insurance policy prices and the positive
impact of acquiring the Ardi insurance
portfolio in April 2024.
Looking ahead, Ardi will continue to
prioritise retail health insurance, with
growth driven by higher policy issuance
and stable premium adjustments.
Enhanced underwriting practices,
operational efficiency, and disciplined
expense management will further support
this momentum.
Imedi L’s primary focus will be on
increasing brand awareness and
introducing new products, strengthening
customer relationship management to
establish a robust market presence and
enhance service quality. A key medium
and long-term priority will be the launch
of new retail health insurance products
to expand the retail portfolio. Additionally,
developing multiple distribution channels
in health insurance remains a strategic
priority for Imedi L.
Strategic investments in technology
and branding will play a pivotal role in
sustaining growth and enhancing the
customer experience across our medical
insurance business.
Investment rationale
•
Being present in whole healthcare
ecosystem for any further potential
market structural changes.
•
High ROAE-generating business
with ample room for the market
share growth.
Ownership
The medical insurance business is
100% owned by Georgia Capital.
Value creation potential
•
The potential to leverage the
significantly increased scale to deliver
growth and extract synergies.
Competitive landscape, market share by
gross premium
1
(GEL million)
Key focus areas in medium and long term
1 ISSSG as of 30 September 2024.
Raising awareness
of the brand and
improving quality
and NPS
Portfolio
diversification
and entering new
markets
Maintaining
stable loss ratio
Our Portfolio Overview continued
Private large portfolio companies continued
Performance track record
1
Revenue Pre-tax profit
P&C Insurance Medical Insurance
Loss ratio Expense ratio
Financial metrics Operating metrics
Net premiums earned
(GEL million)
167.5
+83.4% y-o-y
Number of insured
366,446
+2.2x y-o-y
Loss ratio
76.3%
-1.9 ppts y-o-y
Combined ratio
93.1%
-1.7 ppts y-o-y
Renewal rate
83.5%
+1.7 ppts y-o-y
Pre-tax profit
(GEL million)
13.9
+65.8% y-o-y
Dividend paid to GCAP
(GEL million)
7.4
+47.0% y-o-y
Valuation highlights
2
Value development overview at 31-Dec-24 (GEL million) Net debt to EBITDA
Combined ratio (%)Revenue and pre-tax profit (GEL million)
1 Numbers are derived from the business’ unaudited IFRS accounts.
2 The detailed valuation overview and related drivers are described on pages 100-117 of this report.
P&C business peer companies
•
Dhipaya Insurance | Thailand
•
Zavarovalnica Triglav | Slovenia
•
Pozavarovalnica Sava | Slovenia
•
Aksigorta | Türkiye
•
Anadolu Sigorta | Türkiye
•
Bao Minh Insurance | Vietnam
•
Turkiye Sigorta | Türkiye
Medical insurance business peer companies
•
Powszechny Zaklad Ubezpieczen SA | Poland
•
Allianz SE | Germany
•
UNIQA Insurance Group AG | Austria
•
Ageas SA/NV | Belgium
45
Georgia Capital PLC Annual Report 2024
44
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
2018 2019 2020 20 21 2022 2023 2024
62.3
57.6
72.8
63.4
31.7
10.6
48.8
2018
112.4
117.8
108.7
150.0
115.8
110.6
107.0
173.1
149.5
142.9
201.6
198.9
204.7
226.6
2019 2020 2021 2022 20242023
285.5
267.3
251.6
351.6
314.7
333.6
315.2
2018
31.3
30.0
23.3
37.0
20.8
11.8
13.6
42.0
40.3
31.6
43.7
35.9
34.3
41.6
2019 2020 2021 2022 20242023
73.3
70.3
54.9
80.7
56.8
55.2
46.1
1
2
3
4
Hospitals business
Value: GEL 291 million
7.7% of the total portfolio value
Overview
Our hospitals business is the single
largest healthcare market participant in
Georgia accounting for around 14% of
the country’s total hospital bed capacity
as of 31 December 2024. The business
operates 34 healthcare facilities in Tbilisi
and regional cities and provides secondary
or tertiary-level outpatient and inpatient
diagnostic, surgical and treatment
services. In order to improve efficiency and
seize emerging opportunities stemming
from new Georgian Government
regulations introduced in 2023, as
detailed below, our healthcare business
underwent a strategic restructuring in
December 2023. The business is now
organised into two sub-segments: “Large
and Specialty Hospitals”, which includes
seven healthcare facilities, and “Regional
and Community Hospitals”, comprising 27
healthcare facilities. Large and Specialty
Hospitals and Regional and Community
Hospitals represent approximately 75%
and 25%, respectively, of the consolidated
hospitals business’ EBITDA.
Performance and strategy
Despite being impacted by a number
of regulatory changes in the healthcare
sector, the performance of our hospitals
businesses in 2024 was strong. The
business demonstrated a 6.0% and
19.6% y-o-y revenue and EBITDA
growth, respectively, indicating its
gradual return to normal operational levels
following the completion of mandatory
renovations across all hospitals, alongside
increased demand for high-margin
outpatient services.
To address the oversupply of beds and
enhance the quality of the healthcare
industry in Georgia, the Georgian
Government introduced a new facility
regulation, effective from September 2023.
This regulation established upgraded
standards for healthcare facilities and
imposed minimum requirements for space
allotted per hospital bed. In order to
adapt to the new standards, our hospitals
business initiated a number of renovation
projects in all of its facilities in 2023 and
2024. This resulted in certain sections of
our healthcare facilities being temporarily
closed and unable to accept patients.
The capex investment for the renovation
projects amounted to GEL 11.3 million
in2023 and GEL 10.2 million in 2024.
In 2024, the Georgian Government
introduced changes to the Diagnosis
Related Group (DRG) financing system by
incorporating a co-payment component
into the universal healthcare programme.
This adjustment allows patients to pay
out-of-pocket for additional services
not covered within the existing pricing
framework. These changes are expected
to enhance both profitability and the
quality of healthcare services beginning
in 2025.
From an operational performance
perspective, the business is focusing
on improving the capacity utilisation
of hospitals, increasing patient and
employee satisfaction across the chain,
and driving efficiency through digitalisation
of clinical processes.
These, together with the improved
cash flow generation, the introduction
of co-payments to the DRG system
and allocating resources to high ROIC-
generating investments, will help the
business to achieve its goal to generate
mid-teens CAGR in EBITDA over the
coming five years that is expected to
support a 13%+ ROIC in the medium to
long term.
From a clinical perspective, the business
continues to grow a new generation of
doctors and nurses, while building robust
clinical quality management processes.
The medium-term goals remain knowledge
and expertise advancement through
education and professional development
of our physicians and nurses.
Investment rationale
•
Very low base: healthcare services
spending per capita only c.US$ 300
(EU average is c.US$ 3,300).
•
Growing market: healthcare
spending growth estimated at 8%
CAGR 2018-2024.
•
In-depth knowledge of the
local market: strong business
management team with proven
track record.
Ownership
Georgia Capital owns 100% of the
hospitals business as at 31 December
2024 (31 December 2023: 100%).
Value creation potential
•
Increase in revenue from elective
care and outpatient services, which
have higher margins and faster cash
collection periods.
•
Extracting efficiencies and
enhancing operational flexibility
through a more concentrated
strategy post-restructuring.
Quality assurance through the introduction
and improvement of various activities
and processes at hospitals remains a top
priority for us so that the business delivers
better care to its patients.
Going forward, the business strategy
and key focus will be on increasing
revenues from elective care and outpatient
services, which are not subject to the
state funding. These services have higher
margins and considerably faster cash
collection periods. Considering that Large
and Specialty Hospitals are located in
Tbilisi and major regional cities, they are
strategically placed for and have positive
prospects of increasing the flow of
out-of-pocket as well as privately insured
patients. Elective care and outpatient
services tend to have a considerably
higher share of such patients.
Our Portfolio Overview continued
Private large portfolio companies continued
Performance track record
1
Key focus areas in medium and long term Five-year financial targets
•
Elective care services, outpatient services,
oncology centre, transplantology centre and
clinical trials
•
Nursing reform
•
Quality education programmes
•
Automation of clinical processes
•
Digitalisation of clinical KPIs
•
Use of statistical methods
•
Inpatient
•
Outpatient
•
Clinical
•
Employee and customer satisfaction
Adding new services
and strategic projects
EBITDA CAGR 10%+
EBITDA to operating cash c.85%+
ROIC c.13%+
Quality projects
Digitalisation of
clinical processes
Improve key
operational data
EBITDA (excl. IFRS 16) (GEL million)Net revenue
2
(GEL million)
Operating cash flow (excl. IFRS 16) (GEL million)
1 Numbers are derived from the business’ unaudited IFRS accounts.
2 Total revenue excludes eliminations between Large and Specialty Hospitals and Regional and Community Hospitals.
Large and Specialty Hospitals Regional and Community Hospitals
Large and Specialty Hospitals Regional and Community Hospitals
46 47
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
9,620
193
222
221
286
308
497
779
813
839
2,219
Other
Vivo Group
PSP
Ingorokva & Tbilisi Medical Institute
Ghudushauri-Chachava
Geo Hospitals
GCAP hospitals
Archimede
Gormedi
Aversi
State
14%
5%
5%
5%
3%
2%
2%
1%
1%
1%
60%
2017 2018 2019 2020 2021 2022 2023 2024 2025B
9%
9%
11%
9%
13%
8% 8% 8%
10%
305
329
349
841
1,680
917
747
684
804
710
760
829
964
800
946
980
1,346
1,220
(272)
(30)
592
291
Net debt inc.
lease liabilities
Minority
interest
Enterprise value
31-Dec-24
Equity value
31-Dec-24
31-Dec-23 31-Dec-24 Target
<2.5x
4.8x
5.3x
State healthcare spending dynamics (GEL million) State healthcare spending dynamics (GEL million)
Market opportunity
•
Georgian Government spending on healthcare
accounts to c.8% of total budget in 2025.
•
The largest healthcare service provider in Georgia: 14%
market share by number of hospital beds.
•
Covering three-quarters of Georgia’s population.
Source: Ministry of Finance Georgia Source: Ministry of Finance Georgia
State healthcare spending – Other
State healthcare spending – UHC
Healthcare spending as a % of total state spending
Financial metrics
1
Operating metrics
Regional and Community Hospitals
Large and Specialty Hospitals
Net revenue (GEL million)
332.7
+6.0% y-o-y
Number of facilities
7
Number of facilities
27
Revenue per bed (GEL)
194.5
Number of registered patients
370,528
+5.8% y-o-y
Operating cash flow excluding
IFRS 16 (GEL million)
48.8
NMF
EBITDA excluding IFRS 16
(GEL million)
55.2
+19.6% y-o-y
Number of beds
1,165
Number of beds
1,054
Occupancy rate
66.5%
+13.0 ppts y-o-y
Occupancy rate
58.1%
+13.8 ppts y-o-y
EBITDA to cash conversion
excluding IFRS 16
88.5%
+65.5 ppts y-o-y
EBITDA margin excluding
IFRS 16
16.3%
+1.8 ppts y-o-y
Free cash flow excluding
IFRS16 (GEL million)
25.5
NMF
Net debt excluding IFRS 16
(GEL million)
263.2
+13.4% y-o-y
1 Numbers are derived from the business’ unaudited IFRS accounts.
Value development overview at 31-Dec-24 (GEL million) Net debt to EBITDA (excl. IFRS 16)
Valuation highlights
1
1 The detailed valuation overview and related drivers are described on pages 100-117 of this report.
LTM EV/EBITDA
10.5x
-3.3x y-o-y
Peer companies
•
Medicover AB | Sweden
•
EMC Instytut Medyczny SAEMC SA |
Poland
•
Med Life S.A. | Romania
•
Netcare Limited | South Africa
•
MLP Saglik Hizmetleri A.S. | Türkiye
•
Life Healthcare Group Holdings Limited |
South Africa
Implied multiple highlights at 31-Dec-24
Our Portfolio Overview continued
Private large portfolio companies continued
49
Georgia Capital PLC Annual Report 2024
48
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
0
15
9.3
9.4
9.7
10.2
10.4
11.0
11.9
12.6
12.8
12.2
13.8
14.2
13.1
13.9
0
8.0
4.0
12.0
20.0
16.0
3.7% average consumption growth rate
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 20232022 2024
0.9
0.5 0.5 0.5
0.7
0.6
0.7
0.6
0.2 0.2
0.4
1.5 1.5
1. 0
(2.2)
(2.5)
(1.8)
(2.0)
(2. 4)
(2.2)
(2.2)
(2.1)
(2.8) (2.8) (2.4)
(3.4)
(3.4)
(2.8)
(0.5)
(0.6)
(0.5)
(0.8)
(0.7)
(0.5)
(1.5) (1.5)
(1.6 ) (1.6)
(2.0)
(1.5)
(0.8)
(1.2)
(1.8)
(2.6)
(1.8)
(2. 3)
(2.4)
(2.2)
(3.0) (3.0)
(4.2)
(4.3)
(4.0)
(3.9)
(2.8)
(3.0)
20242011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 20232022
Renewable energy
Value: GEL 253 million
6.7% of the total portfolio value
Overview
Our renewable energy business
represents a leading platform for
developing and operating HPPs and wind
power plants (WPPs) across the country.
The business operates commissioned
renewable assets with 71MW installed
capacity in aggregate and with average
capacity factors of more than 40%:
30MW Mestiachala HPP, 20MW Hydrolea
HPPs and 21MW Qartli WPP. 30MW
Mestiachala HPP was developed and
constructed by the renewable energy
business, while the latter two assets
represent successful acquisitions made
by the business at the end of 2019. 83%
of the installed capacity of our power
plants (all but 12.3MW of our Hydrolea
HPPs) benefit from long-term power
purchase agreements (PPAs) formed
with the Georgian Government-backed
entity, resulting in predictable dollar-linked
cash flows, as PPAs, as well as market
sales, are denominated in US Dollars. The
renewable energy business is wholly-
owned by Georgia Capital.
The renewable energy business aims
to capitalise on favourable electricity
market conditions in Georgia, on the
back of the ongoing reforms, leading to a
more liquid, competitive and transparent
market. Following the electricity market
deregulation in 2019, the Government of
Georgia adopted a new electricity market
model concept in 2020, creating the path
towards launching DAM and IDM trading
markets in the coming years. As a part
of reforms, the first stage of the IDM and
DAM was launched in July 2024. Overall,
the renewable energy business expects
planned reforms in the Georgian electricity
market to have a further positive impact
on electricity sales prices.
Performance and strategy
Revenue from electricity sales increased
(up 11.3% y-o-y) and stood at US$ 16.1
million, reflecting the combination of a) the
resumption of operations of two power-
generating units of Hydrolea HPPs, which
were taken offline between November
2022 to June 2023 due to previously
planned phased rehabilitation works and
b) a 0.3% y-o-y increase in the average
selling price of 57.0 US$/MWh. The
operating expenses were well-controlled,
down 1.5% y-o-y in FY24. Consequently,
EBITDA increased by 16.4% y-o-y to US$
12.1 million. During the year, the business
made US$ 4.5 million dividend distribution
to Georgia Capital.
The renewable energy business plans to
develop 194MW installed capacity power
plants in the medium term: Zoti HPP
(46MW), Tbilisi and Kaspi WPPs (130MW)
and Darchi HPP (18MW). The business
aims to establish a renewable energy
platform with growing dollar-linked cash
flows and solid profitability, expected to
enable it to sponsor steadily increasing
dividend payouts while progressing against
its medium-term strategic priorities:
•
Robust profitability with ~80%
EBITDA margin.
•
~100% EBITDA to cash-conversion rate.
Investment rationale
•
Favourable supply-demand dynamics
pushing the power prices up.
•
Ongoing gradual electricity
market reforms leading to a liquid,
competitive and transparent market.
•
Favourable mix of merchant sales
and Georgian Government PPAs,
providing high visibility and significant
upsides in cash flows.
•
Natural cash flow hedge with fully
dollarised revenues.
•
Inherently green projects aligned with
the international best practices of
environmental and social standards.
Ownership
The renewable energy business is 100%
owned by Georgia Capital.
Value creation potential
•
Opportunity to establish a renewable
energy platform with up to ~270MW
installed capacity over the medium
term and capitalise on favourable
electricity market conditions.
•
Diversified portfolio of HPPs and
WPPs with c.40%+ capacity factors,
benefiting from long-term fixed price
PPAs formed with the Georgian
Government-backed entity.
•
Availability of competitive green
funding from both international and
local financial markets.
•
High margins and dollar-linked cash
flows.
•
Stable dividend provider capacity in
the medium term.
Our Portfolio Overview continued
Private investment stage portfolio companies
Renewable energy projects overview
Commissioned/acquired projects
Installed
capacity, MW Capacity factor PPA expiration
PPA tariff,
US¢/kWh
Mestiachala HPP 30.0 40% 1H34 5.5
Hydrolea HPPs 20.4 70% 2H28 5.7
Qartli Wind Farm 20.7 47% 2H29 6.5
Total operating 71.1
Pipeline projects
Zoti HPP 46.0 43% TBD 5.1
Darchi HPP 18.0 60% TBD 5.7
Tbilisi Wind Farm 50.0 39% TBD TBD
Kaspi Wind Farm 80.0 38% TBD TBD
Total pipeline 194.0
Total 265.1
Note 1: Mestiachala HPP was commissioned in 1H19; Qartli Wind Farm and Hydrolea HPPs were acquired in 2H19 by GCAP.
Note 2: PPA terms for Tbilisi and Kaspi Wind Farms are under the discussion with the Government of Georgia.
Note 3: Only one out of three Hydrolea HPPs has an active PPA contract.
Market opportunity
Electricity consumption (TWh)
Electricity import and export dynamics (TWh)
Electricity exports Electricity imports Generation of TPPs Deficit
Electricity consumption
•
20.3% of total
consumption produced
by gas-fired thermal
power plants (TPPs),
8.9% imported.
•
In 2024 weighted average
ESCO balancing price
reached US$ 55.7/MWh,
up by 5.1% y-o-y.
•
2024 net electricity
deficit stood at 3.0TWh,
whereas in 2010,
electricity surplus was at
0.6TWh.
•
Renewable energy
business managed
to capitalise on the
opportunity and
directly exported 38GWh
of electricity to Türkiye.
50
Georgia Capital PLC Annual Report 2024
51
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
(68)
158
90
Net debtEnterprise value
31-Dec-24
Equity value
31-Dec-24
Total
value
US$ million
90
Operational assets US$ 71mln
Pipeline projects US$ 19mln
31-Dec-23 31-Dec-24 Target
<6.0x
5.6x
6.8x
Financial metrics
1
Operating metrics
Revenue
(US$ million)
16.1
+11.3% y-o-y
Electricity generation
(kWh million)
282.0
+11.0% y-o-y
EBITDA
(US$ million)
12.1
+16.4% y-o-y
EBITDA margin
75.1%
+3.3 ppts y-o-y
Average electricity sales
(price per US¢/MWh)
57.0
+0.3% y-o-y
Operating cash flow
(US$ million)
12.3
+24.7% y-o-y
Dividend paid to GCAP
(US$ million)
4.5
+2.3x y-o-y
1 Numbers are derived from the business’ unaudited IFRS accounts.
2 The detailed valuation overview and related drivers are described on pages 100-117 of this report.
3 Implied EV/EBITDA is calculated based on normalised LTM EBITDA.
4 Investments at cost include the pipeline projects.
5 Ratio is calculated in US$ terms.
Valuation highlights
2
Value development overview at 31-Dec-24 (US$ million) Equity fair value composition at 31-Dec-24
Net debt to EBITDA
5
US$ million, unless otherwise noted 31-Dec-24 31-Dec-23 Change
Enterprise value (EV) 158.2 169.6 (11.4)
LTM EBITDA 12.4 12.0 0.4
Implied EV/EBITDA
3
multiple 11.3x 12.6x (1.3x)
Investments at cost (EV)
4
18.1 19.5 (1.4)
Net debt (68.2) (70.5) 2.3
Equity fair value 90.0 99.1 (9.1)
Peer companies
•
BCPG Public Company Limited | Thailand
•
ERG S.p.A | Italy
•
Polenergia S.A. | Poland
•
Terna Energy Societe Anonyme | Greece
Education business
Value: GEL 182 million
4.8% of the total portfolio value
Our Portfolio Overview continued
Private investment stage portfolio companies continued
Overview
Georgia Capital’s education business
is the largest player in the private K-12
market in Georgia with 9.4% market
share. Our business is managed with a
partnership model and combines majority
stakes in four private school brands
operating across seven campuses,
acquired in 2019-2023: British-Georgian
Academy (the leading school in the
premium segment), British International
School of Tbilisi (the leading school in
the international segment), Buckswood
International School (well-positioned
in the mid-scale segment) and Green
School (the leading school brand in the
affordable segment). The schools have
a comprehensive offering of academic
programmes, including the Georgian
National Curriculum, the International
Baccalaureate and Cambridge
International programmes. The annual
tuition fees for these programmes range
from US$ 2,500 to US$ 19,900 across all
four segments and grades.
Our education business has expanded
from the capacity in 2019 of 2,810
learners to 8,095 learners in 2024 through
1) expansion of existing campuses
(1,660 learner capacity), 2) acquisition of
operating schools and real estate (3,000
learner capacity) and 3) greenfield projects
(625 learner capacity). Currently, there are
6,549 learners at all seven campuses.
The private education market’s revenues
across kindergarten to 12th grade in
Georgia have grown at 10% CAGR over
the decade. Currently, there are c.70,300
learners in private schools in Georgia,
representing 11% of the total general
education market. The private general
education market enjoys growth in
enrolments with a CAGR of 3% over the
last ten years and rising average tuition fees
with a CAGR of 7% over the same period.
Management expects that the private
general education market will continue to
increase in value in short to medium-term,
driven by factors such as the large gap
in quality in public schools as compared
to private schools, growing household
income and a decreasing unemployment
rate. Georgia has a relatively low average
annual spending per K-12 learner, creating
further room for growth together with
globally trending demand for private K-12
education. The private education sector,
previously impacted by reduced demand
during the COVID-19 pandemic, is now
experiencing a notable rebound, offering an
additional boost to market growth.
The private general education market in
Georgia is currently very fragmented with
an increasing average school size and
13% fewer schools over the last decade.
Currently, Georgia Capital is the largest
player on the market with a 9.4% market
share in terms of learners, while the second
largest player holds 2.3%. Only 5% of
private schools have 1,000+ learners, while
64% have less than 300 learners.
Our business, as the leading private K-12
education institution in Georgia, is ideally
positioned to leverage the expanding and
consolidating private education market.
Performance and strategy
The business has expanded in 2024
through 1) the increase in learner capacity
by 225 learners in the mid-scale segment
as a result of the expansion of the new
campus launched in 2023 and 2) the
capacity expansion of two campuses in
the affordable segment with 420 and 180
learners, respectively (600 learner capacity
in total).
All seven campuses have a combined
utilisation rate of 80.9% compared to
80.2% last year, taking into account the
new capacity addition of 825 learners in
mid-scale and affordable segments in 2024.
We expect the utilisation rate to stabilise at
85%+ in the following years.
1st grader enrolments in the 2024-2025
academic year have remained strong
at 887 learners with 2% growth y-o-y
from 873 learners translating into 96.5%
utilisation rate.
Investment rationale
•
Highly fragmented general
education market with
consolidation opportunity.
•
Market with strong growth potential.
•
Low dependency on the Georgian
Government.
•
High resilience to crisis.
•
Predictable and sticky revenue.
•
Strong profitability.
•
Capex efficient business.
•
High trading multiples.
•
Positive ESG impact.
Ownership
Majority stakes (70%-90%) across
different schools.
Value creation potential
•
Scaling up to the capacity of 22,000
learners through expansion plans in
existing schools, greenfield projects
and M&As in short to medium-term.
•
Strong organic growth at existing
schools is expected to drive solid
growth in run-rate EBITDA, on top
of expansion plans and M&As.
•
Stable dividend provider capacity in
the medium term.
52 53
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
53.9
55.4
56.1
57.6
60.8
63.2
61.9
60.3
63.5
66.5
70.3
10.0%
9.9%
10.1%
10.4%
10.7%
10.2%
9.7%
10.0%
10.5%
9.7%
11.0%
2014 20 15 2016 2017 2018 20 19 2020 2021 2022 2023 2024E
0.00
56.25
112.50
168.75
225.00
281.25
337.50
393.75
450.00
158
177
192
217
257
280
281
298
343
378
417
2.7
2.9
3.2
3.6
3.7
3.8
4.2
4.5
4.7
4.9
2.6
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024E
0.000000
23.333333
46.666667
70.000000
25
26
31
43
55
68
2020 2021 20222019 2023 2024
15% 16%12%10%9%9%
25822,582
2516
2,516
3148
3,148
4162
4,162
5287
5,287
6549
6,549
2021 2022 202320202019 2024
92%
90%
62%
73%
81%
80%
12
(21)
(4 4)
234
182
Investment
at cost
Net debt Minority
interest
3
Enterprise value
31-Dec-24
Equity value
31-Dec-24
31-Dec-23 31-Dec-24 Target
<2.5x
1.2x
1.4x
Strong intakes and ramp-up of utilisation
in existing campuses, facilitated 22.9%
growth in revenue. However, expansion of
the business in mid-scale and affordable
segments, that are in early ramp-up
period, translated in lower EBITDA margin.
On the other hand, EBITDA saw growth
by generating GEL 16.6 million in FY24.
Average cash collection rates remained
at last year’s levels and were in line with
the schools’ cash collection policies.
This combined with enhanced revenue
streams, resulted in operating cash flow
generation in the business being up by
29.6% y-o-y in FY24.
The business has a strong platform to
facilitate growth, strengthen its position
as the leading integrated education player
and scale up the capacity to 22,000
learners in short to medium-term. To
achieve this objective, GCAP plans to
make a new equity investment of
US$ 18 million over the next few years.
Short to medium-term
targets Currently
EBITDA (GEL million) 50 17
EBITDA margin 40%+ 24%
Equity value GEL 500 million GEL 182 million
ROIC 20%+ 13%+
Built learner capacity 22,000 8,095
Number of learners and utilisation rate
Number of learners in private K-12 market
Total revenue generated by GCAP’s education business
and market share by revenue
Turnover of private K-12 market
Performance track record
1
Market opportunity
Number of learners Utilisation rate
Number of private learners (thousands)
% of total number of learners
Revenue (GEL million) Market share by revenue
Total revenue (GEL million)
Revenue per learner (GEL thousands)
1 Numbers are derived from the business’ unaudited IFRS accounts.
Financial metrics
1
Revenue
(GEL million)
68.2
+22.9% y-o-y
Operating cash flow
(GEL million)
22.5
+29.6% y-o-y
EBITDA
(GEL million)
16.6
+15.1% y-o-y
EBITDA margin
24.4%
-1.6 ppts y-o-y
Our Portfolio Overview continued
Private investment stage portfolio companies continued
Operating metrics
Capacity utilisation
80.9%
+0.7 ppts y-o-y
Learner to teacher ratio
7.9x
NMF
Number of learners
6,549
+12.4% y-o-y
Valuation highlights
2
GEL million, unless otherwise noted 31-Dec-24 31-Dec-23 Change
Enterprise value (EV) 234.4 228.8 5.6
LTM EBITDA
4
18.4 13.7 4.7
Implied EV/EBITDA multiple 12.8x 16.7x (3.9x)
Net debt (20.7) (16.5) (4.2)
Investments at cost 12.3 30.5 (18.2)
Total equity value of GCAP’s share 181.6 189.2 (7.6)
Net debt to EBITDAValue development overview at 31-Dec-24 (GEL million)
Peer companies
•
SISB Public Company Limited | Thailand
•
Curro Holdings Limited | South Africa
•
Overseas Education Limited | Singapore
•
Cairo For Investment & Real Estate Development S.A.E | Egypt
•
Cogna Educação S.A. | Brazil
•
ADvTECH Limited | South Africa
1 Numbers are derived from the business’ unaudited IFRS accounts.
2 The detailed valuation overview and related drivers are described on pages 100-117 of this report.
3 GCAP has different ownership stakes across schools (70%-90%).
4 LTM EBITDA used for valuation purposes includes functional currency adjustment in schools where applicable.
55
Georgia Capital PLC Annual Report 2024
54
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
1
2
3
4
1
2
3
2018 2019 2020 2021 2022 20242023
2.6
4.2
5.2
7.6
4.9
8.8
11.0
17.5
23.4
24.9
37. 2
41.1
49.2
59.8
2018 2019 2020 20 21 2022 2023 2024
2.5
2.0
8.2
15.0
3.9
6.9
17.4
2019 2020 2021 2022 20242023
0.2
1.8
7.3
0.7
1.2
3.2
5.1
14.5
30.4
20.5
18.4
22.2
Clinics and diagnostics
Value: GEL 123 million
3.3% of the total portfolio value
Overview
Following the strategic restructuring of
our healthcare businesses, as detailed in
the hospitals business overview on page
44, our clinics and diagnostics business
currently comprises two segments: clinics
(16 polyclinics) and diagnostics (one
diagnostic centre). Polyclinics are located
in Tbilisi and major regional cities and
provide basic and full-scale outpatient
diagnostic and treatment services. The
business is the leader in the outpatient
market with a 13% market share by
number of registered patients.
The diagnostics business was launched
in 2018 by opening the largest laboratory
in the entire Caucasus region – “Mega
Lab”. The multi-disciplinary laboratory,
equipped with the latest infrastructure
and state-of-the-art technology, covers
7,500 square metres. In addition to basic
laboratory tests, Mega Lab offers complex
tests for oncology and molecular lab,
some of which have never been available
in Georgia and for which blood samples
used to be sent abroad. In July 2022,
Mega Lab received the Joint Commission
International (“JCI”) accreditation. JCI,
the highest healthcare accreditation
body in the US, ensures the correct
management of clinical processes. Its goal
is to continuously improve the quality and
safety of patient care. Mega Lab is the first
laboratory in the Caucasus region with JCI
accreditation and 38th worldwide.
Performance and strategy
The clinics business has been growing
rapidly with 23%+ revenue CAGR and
24%+ EBITDA CAGR over 2019-2024,
despite a growth slowdown during
the COVID-19 pandemic in 2020. The
business has a solid track record of
scaling its operations and gaining market
share through profitable growth and
margin increase.
Our diagnostics business has also been
growing rapidly, with 34%+ revenue
CAGR over 2019-2024. The business
added two new blood collection points
in 2024 and invested in marketing and
brand image to capitalise on significantly
increased brand awareness during the
COVID-19 pandemic.
The share of state-funded revenues in
clinics is c.25%. The business strategy
is centred on acquiring patients to
enhance the utilisation of existing facilities.
Additionally, considering ample space
for additional facilities, the business aims
to inaugurate new clinics annually and
targets a 15%+ EBITDA CAGR over the
next three to five years. Moving forward,
the clinics business will continue to
expand its base of registered customers,
extend the availability of medical and
personal care services, and develop
remote channels such as a call centre,
while refining the existing app to offer
greater customer convenience and an
improved user experience.
The diagnostics business will focus
on increasing its utilisation (currently at
c.60%) through expansion of its retail
chain, attracting more B2B contracts and
adding new services and technologies
such as next generation sequencing,
while from a clinical perspective, the
business will continue to provide the
highest standards of clinical processes,
and in the long term become a platform
for education through an accredited
training centre, residency programme and
scientific research and studies centre.
The business targets to deliver a
combined EBITDA of c.GEL 25-30 million
over the coming five years.
Investment rationale
•
Very low base: Georgia still lags
most of the developed countries
in terms of the number of
outpatients visits per capita – at
4.0 (c.6.0 in Europe).
•
Low healthcare expenditure
by the population on primary
healthcare: GDP growth will
result in higher expenditure on
primary healthcare.
Ownership
Georgia Capital owns 100% of the
clinics and diagnostics business as
of 31 December 2024 (100% as of
31 December 2023).
Value creation potential
•
The single largest participant with
13% by number of registered
patients (next competitor has
11% market share) with a cost
advantage due to the scale of
operations.
•
High-growth potential is driven by
an increase in patient awareness
of the importance of primary
healthcare.
•
High-growth potential is driven
by market consolidation through
chain expansion, adding new
services and increasing the
customer base.
Our Portfolio Overview continued
Private investment stage portfolio companies continued
Key focus areas in medium and long term Five-year financial targets
•
Expansion of medical and personal care
service presence
•
Adding new polyclinics and lab retail points
•
Best user experience
•
Increased convenience and quality,
increasing number of registered patients;
increasing provider insurance companies
and corporate client base
Adding new services
Double-digit revenue
CAGR
EBITDA
c.GEL 30+ million
Geographic expansion
ROIC c.13%+
Developing distance channels
Adding customer base
•
Number of retail branches: c.15 in Georgia;
tapping neighbouring countries
•
Total number of tests performed: c.5
million annually
Expansion of retail
Attract B2B contacts
Digitalisation
Double-digit revenue
and EBITDA CAGR
Double-digit revenue
CAGR
EBITDA
c.GEL 25+ million
ROIC c.20.0%+
Diagnostics Clinics
Net revenue and EBITDA (excl. IFRS 16) – clinics
2
(GEL million)
Performance track record
1
Net revenue and EBITDA (excl. IFRS 16) – diagnostics
(GEL million)
Operating cash flow (excl. IFRS 16) – clinics and
diagnostics (GEL million)
1 Numbers are derived from the business’ unaudited IFRS accounts.
2 2023 EBITDA excludes the gain of GEL 2.9 million from the sale of one of the polyclinics buildings in 2023.
Revenue EBITDA (excluding IFRS 16) Revenue EBITDA (excluding IFRS 16)
56
Georgia Capital PLC Annual Report 2024
57
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
(61)
(2)
187
123
Net debt incl.
lease liabilities
Minority
interest
Enterprise value
31-Dec-24
Equity value
31-Dec-24
31-Dec-23 31-Dec-24 Target
<2.5x
2.3x
3.6x
3
Peer companies
•
EMC Instytut Medyczny SA | Poland
•
Med Life S.A. | Romania
•
Medicover AB | Sweden
•
Fleury S.A. | Brazil
1 Numbers are derived from the business’ unaudited IFRS accounts.
2 The detailed valuation overview and related drivers are described on pages 100-117 of this report.
3 LTM EBITDA excludes the gain of GEL 2.9 million from the sale of one of the polyclinics buildings in 2023.
Financial metrics
1
Net revenue
(GEL million)
74.5
+20.7% y-o-y
Net debt excluding IFRS 16
(GEL million)
32.1
-10.2% y-o-y
EBITDA excluding IFRS 16
(GEL million)
14.2
+41.8% y-o-y
EBITDA margin excluding
IFRS 16
19.0%
+2.9 ppts y-o-y
Operating metrics – clinics
Number of facilities
16
NMF
Number of registered patients
394,294
-2.9% y-o-y
Operating metrics – diagnostics
Number of patients served
(thousands)
808
+3.7% y-o-y
Average number of tests per
patient
3.4
+5.4% y-o-y
Number of tests performed
(thousands)
2,712
+9.3% y-o-y
Average revenue per test
(GEL)
8.2
+10.3% y-o-y
Operating cash flow excluding
IFRS 16 (GEL million)
17.4
NMF
EBITDA to cash conversion
excluding IFRS 16
122.7%
+53.7 ppts y-o-y
Free cash flow excluding IFRS
16 (GEL million)
7.7
-26.5% y-o-y
Valuation highlights
2
Net debt to EBITDA (excl. IFRS 16)Value development overview at 31-Dec-24 (GEL million)
LTM EV/EBITDA
3
10.6x
-3.9x y-o-y
Other portfolio companies
Value: GEL 160 million
4.3% of the total portfolio value
Georgia Capital’s other portfolio companies consist of its auto service,
beverages, housing development, and hospitality businesses.
Auto service
The Group’s auto service business includes a car services
and parts business under the Amboli brand and a periodic
technical inspection (PTI) business. Georgia Capital acquired an
80% interest in Amboli at the end of June 2019, increasing its
shareholding to 90% in February 2020. Amboli is an importer,
distributor, wholesaler and retailer of car consumables and
spare parts with a c.9% share in the target market, making it
the second largest player in a highly fragmented market. The
PTI business commenced the construction of PTI centres in the
first half of 2018 and launched the PTI business in March 2019
under the name Greenway Georgia (“GWG”). As part of the
Georgia-EU Association Agreement, Georgia commenced the
implementation of a mandatory vehicle inspection programme in
several phases, starting from January 2018. In July 2018, GWG
won a state tender to launch and operate 51 PTI lines across
Georgia with a ten-year licence. GWG is the only player on the
market with support from an international partner, Applus+, a
Spanish headquartered worldwide leader in testing, inspection
and certification services with a market presence in more than 70
countries. GWG serviced 448,827 cars (of which, 393,580 were
primary checks) in 2024, giving it a market share of 40%.
Beverages
The beverages business combines three business lines: a beer
business, a distribution business and a wine business. The wine
business produces and sells wine locally and exports it to 29
countries. The wine business owns three top-class wineries
across Kakheti’s three wine-making regions and is in the top five
wine producers by vineyard base in Georgia. The vast majority of
the vineyards grow Georgia’s flagship red wine grape, Saperavi.
The wine business sold 11.2 million bottles of wine in 2024, with
approximately 84% of sales coming from exports. The business
has a market share of 7.6% in the Georgian wine export market.
The beer business produces beer and lemonade and holds
an exclusive ten-year license from Heineken to produce and
distribute Heineken beer brands in Georgia. In 2024, the beer
business achieved a market share of approximately 22.4%. The
portfolio includes globally recognised brands such as Heineken,
as well as a range of local and international favourites: Black
Lion, Georgia’s leading craft beer brand acquired by the Group in
2018; ICY, its flagship mainstream beer brand; Kazbegi, acquired
in 2019; and Amstel and Krusovice, both introduced under
licenses obtained in 2019. Additionally, the Group developed
its own light beer brand, Kayaki. In 2019, the business began
brewing Heineken beer locally, with commercial batches hitting
the shelves in August of that year. During the second half of
2019, the company relaunched its brand portfolio and optimised
its product mix, driving an increase in market share. These efforts
led to break-even EBITDA by the end of 2019 and consistent
positive EBITDA performance ever since. The business has also
expanded its horizons by exporting its beer and lemonade brands
to international markets, further establishing its presence beyond
Georgia. In 2024, GCAP completed the sale of an 80% interest
in the beer and distribution business for a total consideration of c.
US$ 63 million as set out on page 8 of this report.
Housing development
The Group’s housing development business is a leading real
estate developer in the Georgian real estate market, targeting
mainly mass-market customers by offering affordable, high-
quality and comfortable housing. The business is wholly owned
through Georgia Real Estate, previously known as m
2
. The
housing development business has five ongoing projects: m
3
Saburtalo, m
2
Mtatsminda Park, Nutsubidze, Mirtskhulava and
Chkondideli (Sveti projects). In connection with the m
3
Saburtalo
project, the business has sold 158,742 square metres with
US$ 194 million sales value as of 31 December 2024. For the
m
2
Mtatsminda Park, a total area of 9,131 square meters with
a sales value of US$ 17.6 million was sold as of 31 December
2024. Regarding the three other projects, the business took on
the responsibility to support the completion of three suspended
projects of the Sveti construction company, adding 178,993
square metres of the sellable area to its inventory. The projects
are ongoing in three locations in Tbilisi and the construction and
development will continue for approximately a year. The business
started construction and sales for the Sveti project in April 2020
and has sold 163,022 square metres with a US$ 135 million sales
value as of 31 December 2024.
Hospitality
The hospitality business has only one operational hotel, Gudauri
Lodge, with 121 rooms. The business is wholly-owned through
Georgia Real Estate.
Our Portfolio Overview continued
Private investment stage portfolio companies continued
58 59
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
S172 Statement
Statement by the Directors on their duties under Section
172 of the UK Companies Act 2006 (the “Act”)
In accordance with the requirements of section 172 of the Act,
the Directors consider that, during the financial year ended
31 December 2024, they have acted in good faith and in a
manner most likely to promote the success of the Company
for the benefit of its shareholders, having regard to the likely
consequences of any decision in the long term and the broader
interests of other stakeholders, as required by the Act. Some
examples of the Board’s engagement with stakeholders during
2024 are set out below.
Other steps the Board has taken to meet its Section 172 responsibilities can be seen in this report:
Section 172 factor Examples Page
The likely consequences of any decision in the long term Corporate Governance Framework 124
Interests of employees Corporate Governance Framework 124
Fostering the Group’s business relationships with
suppliers, customers and others
Corporate Governance Framework 124
Impact of operations on the community
and the environment
Resources and Responsibilities
Sustainability Report 2024
76
(see separate document)
Maintaining a reputation for high standards
of business conduct
Resources and Responsibilities
Sustainability Report 2024
76
(see separate document)
Acting fairly between members of the Company Georgia Capital Strategy 14
The Directors have identified the following key stakeholders as
essential to the success of the Company: investors; employees;
the wider community; government and regulators; and the
environment. The key stakeholders and the primary ways which
the Board engages with them are set out on pages 128 to 131.
Stakeholder issues are an integral part of the Board’s decision-
making process and, therefore, the Board embeds these as part
of overseeing the management of the Company and the portfolio
companies. The Company endeavours to balance any conflicting
shareholder needs to ensure all are treated consistently and fairly.
The framework detailing the authority for decision-making,
where the Board delegates to management, is discussed in the
Company’s Corporate Governance Framework on pages 124-
133. It mandates consideration of these stakeholder responsibility
factors as a critical part of delegated authorities.
The Board engages with the relevant stakeholders directly on
certain issues, and their feedback is considered when the Board
discusses and makes decisions relating to those reserved for it,
such as financial and operational performance, investment and
exit decisions and strategic matters. This information is usually
fed back through presentations and reports to the Board, within
Committee or Board meetings. This process is described in the
Directors’ Governance Statement on pages 120 and 121.
Principal decisions
There are processes in place to capture and consider
stakeholders’ views (including the matters contained in section
172 of the Act) and feed them into Board decision-making.
Material business decisions considered by the Board include an
analysis of stakeholder considerations, anticipated impact and the
risk controls. This is a rigorous process, which helps the Board to
perform the duties outlined in section 172 of the Act and provides
assurance to the Board that potential impacts on stakeholders
have been considered in the development of the proposal.
Set out below are some case studies of principal decisions that
have been taken by the Board:
Sale of 80% of the Group’s holding
in the beer and distribution business
In December 2024, the Group
completed the sale of 80% of its holding
in the beer and distribution business to
a high-quality international investor and
strategic purchaser, Royal Swinkels.
The sale created significant value for
shareholders, realising significant net
cash proceeds of c.US$ 63 million. For
more details on the transaction please
see page 8 of this report.
Key stakeholder interests considered:
• Equity investors: Georgia Capital
has continued to make significant
progress on its core strategic priority
of disposing of non-core businesses.
The sale is consistent with the Group’s
capital light investment strategy, and
represents a significant uplift to the
businesses’ investment value.
• Employees: the purchaser of
the business, Royal Swinkels, is
an international investor with an
established presence in Georgia’s
beer industry. Their commitment to
sustainable growth ensures that the
new management will uphold high-
quality employment standards and
job security for existing employees.
• Governments and regulators:
the Company devoted time and
resources to ensure regulatory
compliance and competition authority
approvals relating to the transaction.
The Board and its Committees monitor the effectiveness of
engagement with stakeholders through various methods.
The Board continues to believe that the operation of the designated
Non-Executive Director for workforce engagement has been, and
continues to be, an effective means of engaging with the workforce,
to help the Board understand the matters that concern the
workforce and their specific interests, whilst having regard to these
in the decisions that are made at Board level.
Similarly, the informal and formal channels in which the Group has
adopted to engage with its investors, the local communities and the
environment, through a variety of media platforms, have performed
well and flexibly. The Board’s Responsible Investment Policy
ensures the Group’s commitment to conducting business in
an environmentally, socially responsible and sustainable manner, in
order to reduce the environmental harm of the Group’s operations,
while improving social impact to enhance long-term returns
to shareholders.
The Board and Committees’ evaluation process gives Directors
the opportunity to comment on the engagement mechanisms in
place with our different stakeholder groups and invites them to
make recommendations for improvement. Through the adoption
of our Code of Conduct and Ethics we ensure high standards of
business conduct for all our stakeholders and seek to promote a
culture where transparency and fairness are the norm.
For the coming year, the Board will continue to ensure effective
stakeholder engagement, ensuring the frequency of interaction is
maintained and reviewed (where appropriate) over matters that
are considered material to the Group.
Georgia Capital share buyback and cancellation programme
In line with the Company’s capital allocation strategy, and
reflecting the Company’s robust liquidity levels and elevated
discount to NAV, during 2024, the Company launched a
number of share buyback and cancellation programmes under
which it bought back 3.7 million shares (US$ 48.1 million,
GEL 131.9 million value). Formore details on the share
buyback and cancellation programmes, please see page 9
of this report.
Key stakeholder interests considered:
• Investors: offering immediate returns to shareholders
seeking them and an increased share in the business to
shareholders who do not participate, all the while balancing
the Company’s need to preserve liquidity and ensure the
sustainability of the business.
Completion of the acquisition of
the “Ardi” brand and its portfolio of
medical insurance contracts
In April 2024, the Group completed the
acquisition of GEL 87 million portfolio
of insurance contracts and the brand
name from “Ardi”. Ardi was the third-
largest player in the Georgian health
insurance market, holding a 17% market
share based on 2023 net insurance
premiums. This acquisition positions
GCAP’s medical insurance business as
the largest health insurer in the country
and offers an opportunity to diversify our
portfolio and achieve significant financial
and strategic synergies. The total cash
outflow for this transaction amounted to
GEL 26.4 million and was fully financed
by funds already available in the medical
insurance business.
Key stakeholder interests considered:
• Investors: the acquisition provides a
significant value creation opportunity
for our investors.
• Customers: seek to maintain high
insurance standards to end users in
the supply chain.
• Governments and regulators:
the Company devoted time and
resources to ensure regulatory
compliance and competition authority
approvals relating to the transaction.
60 61
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Risk Management
We believe that effective risk management underpins
the successful delivery of our strategy. We identify,
evaluate, manage and monitor the risks that we face
through an integrated control framework supported
by formal policies and procedures, clearly delegated
authority levels and comprehensive reporting.
The Board confirms that our framework has been
in place throughout the year under review and to
the date of approval of this Annual Report and is
integrated into both our business planning and
viability assessment processes.
Overview
Our Board, supported by our Audit and Valuation Committee and
executive management, is ultimately responsible for the Group’s
risk management and internal controls with a view to maintaining
ongoing sustainability.
As an investor, Georgia Capital is in the business of taking risks in
order to achieve its targeted returns for investors and shareholders.
The Board approves the strategic objectives that determine the
level and types of risk that Georgia Capital is prepared to accept
and reviews the Group’s strategic objectives and risk appetite
at least annually. We believe that, in order to have an effective
risk management framework, there needs to be a strong risk
management culture within the Group. We have worked to ensure
that managing risk is ingrained in our everyday business activities.
We seek to create an environment where there is openness
and transparency in how we make decisions and manage risks
and where business managers are accountable for the risk
management and internal control processes associated with their
activities. Our culture also aims to ensure that risk management
is responsive, forward-looking and consistent. Georgia Capital’s
risk culture is built on rigorous and comprehensive investment
procedures and disciplined capital management.
Risk appetite
Our risk appetite is defined by our strategic objectives. We invest
capital and develop businesses that will have strong capital
returns. Georgia Capital applies the following investment criteria:
•
Geographic focus: investing in and developing businesses in
Georgia, the country we know – a diversified, resilient, fast-
growing economy across the last decade.
•
Focus on liquidity: the Group predominantly invests in capital-
light, larger-scale investment opportunities in Georgia, which
have the potential to reach at least GEL 300 million equity
value over the next three to five years. The Group believes
a larger size will provide improved liquidity and superior exit
opportunities, to support the Group’s desire to reduce the
current discount to reported NAV per share.
•
Sector focus: investing mostly in fragmented and
underdeveloped markets, particularly targeting high-multiple
service industries.
•
Return target: combination of the ROIC, MOIC, IRR and GCAP
share price value versus investments return is the key decision-
making matrix used in the investment decision-making process:
−
MOIC and IRR are determined at the Group level, as we
evaluate achievable money multiples with all acquisitions
and analyse them in combination with the expected IRR.
−
ROIC is evaluated for financing projects and reinvestment at
each portfolio company level. Different yields are appropriate
for different industries. ROIC is at the core of decision-
making when the portfolio companies are investing or
divesting assets or businesses. ROIC should be more than
WACC for new investments. As part of ROIC enhancement
initiatives across our portfolio, our businesses are aiming to
continue divestment of low ROIC and/or non-core assets
and businesses.
−
GCAP share price is at the core of decision-making
when it comes to new investments. The Group performs
360-degree analysis each time GCAP makes a capital
allocation decision and compares: a) the investment
opportunity versus buyback opportunity; and b) the sale
opportunity versus buyback opportunity. The Group intends
to buy assets/companies at a higher discount to their listed
peers than GCAP’s fair value discount. Georgia Capital is
targeting to invest in opportunities which produce greater
returns than returns offered by buying back GCAP shares.
Capital management
Georgia Capital adopts a highly disciplined approach to managing
its capital resources as follows:
•
360-degree analysis, when evaluating capital returns, new
investment opportunities or divestments.
•
Georgia Capital allocates capital such that it does not depend on
premature sales of listed portfolio investments. Georgia Capital
does not have capital commitments or a primary mandate to
deploy funds or divest assets within a specific time frame. As
such, it focuses on shareholder returns and on opportunities
which meet its investment return and growth criteria.
•
The Board regularly reviews any major investment and
divestment opportunities.
Our framework and approach to risk governance
The Board is responsible for setting the right tone and
encouraging characteristics and behaviours which support
a strong risk culture and effective risk management process
across the Group. The Board’s mandate includes determining
the Group’s risk appetite and risk tolerance as well as monitoring
risk exposures to ensure that the nature and extent of the main
risks we face are consistent with our overall goals and strategic
objectives. Non-executive oversight is also exercised through
the Audit and Valuation Committee which focuses on upholding
standards of integrity, financial reporting and valuation framework,
risk management systems, going concern, internal control and
assurance frameworks. The Audit and Valuation Committee’s
activities are discussed further on pages 134 to 141. The Board
ensures a centralised process-led approach to investment and
the overriding priority is to protect the Group’s long-term viability
and reputation and produce sustainable, medium to long-term
cash-to-cash returns. The Board’s activities are discussed further
on pages 124 to 128.
At the Board, Committee and executive management levels, we
develop formal policies and procedures which set out the way
in which risks are systematically identified, assessed, quantified,
managed and monitored. The Board, which has oversight of the
investment pipeline development and approves new investments,
significant portfolio changes and divestments, is integral to
embedding our institutional approach across the business.
It ensures consistency and compliance with Georgia Capital’s
financial and strategic requirements, cultural values and appropriate
investment behaviours. Each business participates in the risk
management process by identifying the key risks applicable to its
business. The principal risks and uncertainties faced by the Group
are identified through this process, as are the emerging risks.
On a day-to-day basis, management is responsible for the
implementation of the Group’s risk management and other
internal control policies and procedures. Based on our risk culture,
managers “own” the risks relevant to their respective function.
For each risk identified at any level of the business, the risk is
measured and mitigated (if possible) in accordance with our
policies and procedures. Middle level managers, both at each
portfolio company and Georgia Capital level, are required to report
on identified risks and responses to such risks on a consistent
and frequent basis. Executive and senior management regularly
review the output from the bottom-up process by providing
independent challenge and assessing the implementation of the
risk management and internal control policies and procedures.
Our reporting process enables key risks and emerging risks to
be escalated to the appropriate level of authority and provides
assurance to the Committees and the Board. Key developments
affecting our principal risks and associated mitigating actions
are reviewed quarterly (or more often if necessary, on an ad hoc
basis, outside of the regular reporting process) by the Audit and
Valuation Committee, as well as the Board.
A description of emerging and principal risks and uncertainties,
including recent trends and outlook, as well as mitigation efforts,
can be found on pages 65 to 74 of the Strategic Review.
Risk governance structure
BOARD
•
Determines the Group’s risk appetite as part of strategy setting.
•
Overall responsibility for maintaining a system of internal controls that ensures an effective risk management and oversight
process across the Group.
•
Assisted by the Board Committees with specific responsibility for key risk management areas.
•
Safeguards the Group’s long-term viability and reputation, and generates sustainable, medium to long-term cash-to-cash returns.
This includes evaluating risks in relation to the entire investment entity portfolio, reviewing each step of the investment lifecycle,
approving all investment and divestment decisions, monitoring investments against the original case, and ensuring alignment
with the Group’s investment policy and risk appetite. For the private portfolio companies, it oversees management of their most
material risks.
Audit and Valuation Committee Remuneration Committee Nomination Committee
•
Responsible for managing financial
reporting risk and internal control and the
relationship with the external auditor.
•
Reviews and challenges risk
management reports from Group
Finance and Internal Audit.
•
Specific and primary responsibility for
the Valuation Policy and valuation of the
investment entity subsidiaries.
•
Provides oversight and challenge
of underlying assumptions on the
valuation of the private portfolio
companies (57.2% of portfolio value at
31 December 2024). All private large and
investment stage portfolio companies
(52.9% of the total portfolio) are valued
externally by an independent valuation
company on asemi-annual basis.
•
Direct engagement with the external
auditors, who involve their specialist
valuations team.
•
Reviews and recommends to the
Board the Directors’ Remuneration
Policy to ensure that remuneration is
designed to promote the long-term
success of Georgia Capital (and see
that management is appropriately
rewarded for their contribution to the
Group’s performance in the context
of wider market conditions and
shareholder views).
•
Approves variable compensation
schemes for our investment
professionals that are in line with
market practice and enable the
Group to attract and retain the best
talent.
•
Ensures that remuneration is aligned
with shareholder returns.
•
Responsible for ensuring that the
Board has the necessary skills,
experience and knowledge to
enable the Group to deliver its
strategic objectives.
•
Leads the process for appointing
Directors and senior management
positions.
MANAGEMENT BOARD
The Management Board is led by the Chief Executive Officer and has:
•
Delegated responsibility for management of the Group.
•
Delegated responsibility for investment decisions.
•
Delegated responsibility for risk management.
62 63
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Bodies implementing the risk management system
As mentioned on page 61, our Board is responsible for reviewing
and approving the Group’s system of internal controls and its
adequacy and effectiveness. Controls are reviewed to ensure
effective management of strategic, financial, market and
operational risks, amongst others. Certain matters, including but
not limited to the approval of major capital expenditure, significant
acquisitions or disposals and major contracts, are reserved
exclusively for the Board. The full schedule of matters specifically
reserved for the Board can be found on our website at:
https://georgiacapital.ge/governance/cgf/schedule.
With respect to other matters, the Board is often assisted by
the Audit and Valuation Committee.
The Management Board has overall responsibility for the
Group’s assets, liabilities, risk management activities, respective
policies and procedures. In order to effectively implement the
risk management system, the Management Board delegates
individual risk management functions to each of the various
decision-making and execution bodies within the Group, as
described below.
Internal Audit department
The Group has an established Internal Audit department, which is
responsible for the regular review/audit of the Group’s operations,
activities, systems and processes, in order to evaluate and
provide reasonable, independent and objective assurance and
consulting services designed to add value and improve the
Group’s operations.
The Group’s Internal Audit department is independent of the
Management Board. The Head of the Group’s Internal Audit
department is appointed by, and has a direct reporting line
to the Chairman of the Audit and Valuation Committee. The
Group’s Internal Audit department discusses the results of all
assessments with the Group’s Management Board and reports
its findings and recommendations to the Group’s Audit and
Valuation Committee.
The purpose of the Internal Audit department is to determine
whether the Group’s risk management, internal controls and
corporate governance processes, which are designed and
implemented by the Management Board, are adequate such that:
•
material risks including strategic, market, liquidity and
operational risks, are appropriately identified, measured,
assessed and managed across the Group, including its
outsourced activities;
•
interaction with the various internal governance groups
occurs appropriately;
•
significant financial, managerial and operating information is
accurate, reliable and timely;
•
the Group and its employees act with integrity and their
actions are in compliance with the policies, standards,
procedures and applicable laws and regulations;
•
resources are acquired economically, used efficiently and
protected adequately;
•
programmes, plans and objectives are achieved; and
•
significant legislative or regulatory issues that impact the
organisation are recognised and addressed in a timely and
proper manner.
In order to fulfil its function, the Group’s Internal Audit department
has unrestricted access to all the Group’s functions, records,
property and personnel.
Investment team
The Group’s investment team has formalised procedures of risk
analysis. As part of the procedures, qualitative and quantitative
downside risks are identified and measured and risk adjusted
returns are assessed for the investment opportunity.
For each capital allocation decision an independent risk team is
formed and no member of the risk team is involved in developing
the investment thesis. The risk team identifies major risk areas of
the proposed investment, assesses potential impact if the risks
materialise and estimates returns based on stress test scenarios
and sensitivity analysis.
The team also evaluates the fit of the investment within the
Group’s investment policy and challenges the executability of the
proposed business plan.
The risk analysis process involves desktop research as well
as field work, including interviewing sector experts and senior
executives. ROIC and equity IRR are the most common return
metrics which are stressed in the risk analysis. For every
capital allocation decision, the risk team issues a written capital
allocation recommendation based on the risk reward profile of the
proposed investment.
Together with the investment thesis, the risk analysis is reviewed
by the Capital Allocation and Strategy committee, consisting of
members of the Group’s management team, which is responsible
for recommending investment decisions to the Board.
Legal department
The Legal department’s principal purpose is to ensure that
the Group’s activities conform to applicable legislation and to
minimise losses from the materialisation of legal risks. The Legal
department is responsible for the application and development
of mechanisms for identifying legal risks in the Group’s activities
in a timely manner, the monitoring and investigation of the
Group’s activities in order to identify any legal risks, the planning
and implementation of all necessary actions for the elimination
of identified legal risks, participation in legal proceedings on
behalf of the Group where necessary and the investigation of
possibilities for increasing the effectiveness of the Group’s legal
documentation and its implementation in the Group’s daily
activities. The Legal department is also responsible for providing
legal support to structural units of the Group.
Finance department
The Group’s risk management system is implemented primarily by
the Finance department, which is supervised by the Chief Financial
Officer and is responsible for the Financial Risks Management
function. It implements the Group’s financial and tax risks policies by
ensuring compliance with: liquidity management thresholds; limits
on possible losses from the foreign currency risks; tax legislation;
and all financial policies and procedures set by the Management
Board. The Finance department, which reports to the Management
Board, also focuses on the Group’s relationship with the tax
authorities, provides practical advice and tax optimisation plans for
the Group and assesses the entire Group’s tax risks and exposures.
Risk Management continued
The Finance department also manages foreign currency
exchange, money market and derivatives operations. The
Finance department is also responsible for the management of
the long-term and short-term liquidity and cash flow and monitors
the volumes of cash on the Group’s accounts for the purposes
of sufficiency. Further, the Finance department actively monitors
performance of portfolio companies on a regular basis and
delivers daily NAV development reports, weekly liquidity reports
and monthly management reports to the Management Board.
The Management Board reviews the performance of each
portfolio business company on a monthly basis and takes
actions, as necessary.
IFRS technical accounting group
The IFRS technical accounting group, part of the Finance
department, is responsible for monitoring the Group’s compliance
with relevant IFRS. The IFRS technical accounting group is
involved in the development process of the Group’s accounting
policies by leading new accounting standards implementation
projects, monitoring new IFRS developments, and preparing an
impact assessment on reporting, systems and processes across
the Group.
In order to increase the understanding of IFRS, the IFRS technical
accounting group delivers training on new IFRS standards, issues
Group accounting policies, produces general guidance memos
on the application of IFRS and memoranda on complex, one-off
transactions and also prepares quarterly reports to the Audit and
Valuation Committee summarising material transactions across
the Group, with respective financial impact.
Valuation workgroup
The Group has established a valuation workgroup, consisting
of members of the Finance department, which is responsible
for the development and oversight of fair value assessment
of the Group’s private portfolio companies at each reporting
date. The workgroup engages third-party professionals to
assist with the fair value determination of large and investment
stage investments (38.1% and 14.8% of total portfolio value
at 31 December 2024, respectively) in order to provide more
transparency of Georgia Capital’s portfolio valuations.
The oversight of the third-party professionals is within the scope
of the valuation workgroup. The valuation workgroup also
estimates fair values of other portfolio companies (4.3% of total
portfolio value at 31 December 2024) in-house by applying an
appropriate valuation technique in compliance with IFRS 13. The
workgroup reports to the Management Board. In order to ensure
compliance with IFRS 13 requirements, increase the transparency
of valuation and to ensure that a consistent approach is applied
in similar facts and circumstances, the workgroup developed a
Valuation Policy and monitors compliance across all investments.
The applied valuation methodology makes use of market-based
information, is consistent with models generally used by market
participants and is applied consistently from period to period,
except where a change would result in a better estimation of fair
value. The workgroup recommends fair values of private portfolio
investments at each reporting date and prepares quarterly
valuation reports for the Management Board and the Audit and
Valuation Committee, describing valuation techniques applied
and inputs used, with particular focus on the assumptions
supporting the unquoted investments, any valuation uncertainties
and the proposed disclosure in the financial statements. The
valuation workgroup applies care in exercising judgement and
making necessary estimates due to uncertainties inherent in
estimating fair value for private companies.
Internal control
Georgia Capital’s internal control over financial reporting is
focused primarily on ensuring efficient and reliable control of
valuation of private portfolio companies. With respect to internal
control over financial reporting, our financial procedures include
a range of system, transactional and management oversight
controls. The board and management of each private portfolio
company is responsible for ensuring the efficiency of the private
portfolio company’s internal control structures, risk management
and financial reporting. The private portfolio companies’ boards
ensure that Georgia Capital’s Board receives information on
any issues that could affect Georgia Capital’s business or
financial reporting. Our businesses prepare detailed monthly
management reports that include analyses of their results along
with comparisons, relevant strategic plans, budgets, forecasts
and prior results.
These are presented to and reviewed by executive management.
Each quarter, the CFO of the Group and other members of
the Finance department discuss financial reporting, valuations
and associated internal controls with the Audit and Valuation
Committee, which reports significant findings to the Board. The
Audit and Valuation Committee also reviews the quarterly, half-
year and full-year financial statements and corresponding press
releases and provides feedback to the Board. The external and
internal auditors attend each Audit and Valuation Committee
meeting and the Audit and Valuation Committee meets regularly
both with and without management present.
Going Concern Statement
The Group’s business activities, objectives and strategy,
principal risks and uncertainties in achieving its objectives and
performance are set out on pages 4 to 117. Comprehensive
going concern assessment analysis is disclosed in Note 2 within
the IFRS financial statements. The Directors have made an
assessment of the Group’s ability to continue as a going concern
and are satisfied that Georgia Capital has the resources to
continue as a going concern for a period of at least 12 months
from when the financial statements are authorised for issue, i.e.
the period ending 31 March 2026. After making enquiries, the
Directors confirm that they have a reasonable expectation that
the Group has adequate resources to continue in operational
existence and, therefore, the Directors consider it appropriate
to adopt the going concern basis of accounting in preparing the
financial statements.
Viability Statement
In accordance with the Corporate Governance Code, the
Directors are required to assess the prospects of the Company
to meet its liabilities by taking into account its current position and
principal risks. Georgia Capital runs an in-depth annual business
planning process, involving both the management of portfolio
companies and Group management with Board input and
oversight. In line with the UK Corporate Governance Code, the
64 65
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
process includes a viability assessment conducted by the Board
over a three-year period beginning 1 January 2025, being the first
day after the end of the financial year to which this report relates.
In determining the appropriate period over which to make their
assessment, the Directors considered: the duration of strategic
plans and financial forecasts; the diverse nature of the Group’s
activities; the evolving nature of the regulatory environment in
which the Group’s businesses operate; the inherent uncertainty
surrounding future capital allocation projections; and the Group’s
objective, in line with its updated strategy. A period of three years
beyond the balance sheet date was therefore considered the
most appropriate viability period for the Group.
In order to consider the Group’s viability, the Board considered
a number of key factors, including:
•
the Board’s risk appetite;
•
the Group’s business model and strategy as set out on pages
8 to 30;
•
the Group’s principal and emerging risks and uncertainties,
principally those related to regional instability, portfolio
company strategic and execution risk, investment risk,
adverse economic conditions, the depreciation of the Lari,
lack of liquidity, and climate change-related risk, and how
these risks and uncertainties are managed, as set out on
pages 65 to 74; and
•
the effectiveness of our risk management framework and
internal control processes; and stress testing, as described on
this page.
The key factors above have been reviewed in the context of
our current position and strategic plan. Since there are no legal
guarantees or constructive commitments in place for Georgia
Capital to fund losses or activities at portfolio companies’ level, a
stress test analysis was prepared on a holding company level.
The viability assessment involved a risk identification process
which included recognition of the principal risks to viability
(risks that could impair the Group’s business model, future
performance, solvency or liquidity), excluding risks not sufficiently
severe over the period of assessment for the Group. The principal
risks and uncertainties identified by the Group are regional
instability, regulatory, investment, liquidity, portfolio company
strategic and execution, and currency and macroeconomic
environment-related risks. Further, the Group has identified
climate change-related risk as an emerging risk.
We also identified other risks which, while not necessarily severe
in themselves, could escalate when combined with others.
For those risks considered sufficiently severe to affect our viability,
we performed stress testing for the assessment period, which
involved modelling the impact of a combination of severe and
plausible risks in separate and combined adverse scenarios.
The stress test scenario was then reviewed against the Group’s
current and projected liquidity position.
The Group prepared a reasonable worst case scenario
which assumes the inability of private portfolio companies
to pay dividends or meet any other obligations towards the
holding company, the reason for which could be economic
consequences of regional instability, GEL depreciation
against the US dollar, market competition and/or operational
underperformance. Supported by strong operating performance,
starting from 2021 Lion Finance Group restored payment of
dividends to shareholders and announced a dividend policy
providing for a 30%–50% payout ratio. In 2025, Lion Finance
Group announced that it intends to recommend a final dividend
of GEL 5.62 per share, which together with the interim dividend
of GEL 3.38 per share paid would make a total of GEL 9.0 per
share for 2024. On that basis, the stress case scenario includes
dividend payments from the listed asset.
Group also analysed stressed case scenario assuming no
buybacks were made and no dividends were received from
Lion Finance Group, to reflect the risk of changes in the Bank’s
strategic plans, including its capital distribution policy.
In 2023, the Group issued US$ 150 million SLB In Georgia, with
8.5% interest rate, payable in August 2028. The proceeds from
the transaction, together with the existing liquid funds were fully
used to redeem GCAP’s US$ 300 million Eurobonds. Following
these transactions, GCAP’s gross debt balance decreased from
US$ 300 million to US$ 150 million.
In 2024, GCAP announced the sale of 80% of its holding (an
effective 73.9% equity stake) in its beer and distribution business to
Royal Swinkels, a strategic and international purchaser, for net cash
proceeds of c.US$ 63 million. Completion of the transaction and the
receipt of full sales proceeds occurred on 23 December 2024.
The Directors have also satisfied themselves that existing cash
and highly liquid debt and equity investment securities will be
sufficient to cover the expected cash outflows of the holding
companies for the viability assessment period. They have also
collected necessary evidence to support the statement below
in terms of the effectiveness of the Group’s risk management
framework and internal control processes in place to mitigate risk.
As at 31 December 2024, Georgia Capital holds GEL 278 million
assets across cash and marketable debt securities. Additionally,
the Group also holds GEL 1,421 million equity securities of
London Stock Exchange listed Lion Finance Group PLC as at
31 December 2024. Therefore, in a worst-case scenario, with
risks modelled to materialise simultaneously and for a sustained
period of time, the likelihood of the Group having insufficient
resources to meet its financial obligations is very low. Based on
the analysis described above, the Directors confirm that they have
a reasonable expectation that the Group will be able to continue
operations and meet its liabilities as they fall due over the three-
year period from 1 January 2025 to 31 December 2027.
Risk Overview
Understanding our risks
We continuously monitor our internal and external environment
to ensure that any new principal or emerging risk is identified in
a timely manner and responded to appropriately. The Directors
have carried out a robust assessment of the principal and
emerging risks facing the Group, including those that would
threaten its business model, future performance, solvency
or liquidity. We define our principal risks as those that have
the potential to impact the delivery of our strategic objectives
materially. We also monitor risks which include new and emerging
risks which may have the potential to become principal risks but
are not yet considered to be so. Emerging risks usually have large
uncertain outcomes which may become certain in the longer
term (beyond one year) and which could have a material effect on
the business strategy ifthey were to occur.
Principal risks and uncertainties
The table below describes the principal risks and uncertainties
faced by the Group and their potential impact, as well as the
trends and outlook associated with these risks and the mitigating
actions we take to address these risks. If any of the following
risks were to occur, the Group’s business, financial condition,
results of operations or prospects could be materially affected.
The risks and uncertainties described below may not be the
only ones the Group faces. The order in which the principal risks
and uncertainties appear does not denote their order of priority.
Additional risks and uncertainties, including those that the Group
is currently not aware of or deems immaterial, may also result
in decreased revenues, incurred expenses or other events that
could result in a decline in the value of the Group’s securities.
REGIONAL INSTABILITY RISK
PRINCIPAL RISK /
UNCERTAINTY
The Georgian economy and our business may be adversely affected by regional tensions. Georgia shares
borders with Russia, Azerbaijan, Armenia and the Republic of Türkiye, and has two breakaway territories,
Abkhazia and the Tskhinvali/South Ossetia regions. Georgia is also located in close proximity to other
regional conflicts. In addition to strong political and geographic influences, regional countries are highly
linked to the Georgian economy, representing its significant historical trading partners.
Russian troops invaded Ukraine on 24 February 2022, escalating the situation into a full-scale war. The
ongoing conflict has caused severe humanitarian and economic costs for Ukraine, Russia and the global
economy. Casualties persist as the war’s duration and outcome remain uncertain. As time progresses,
the conflict’s adverse effects may intensify, further eroding market confidence and impacting the region.
Georgia itself has a fraught history with Russia, including a brief war in 2008, which resulted in Russia
taking control of two breakaway territories.
There has also been ongoing geopolitical tension, political and economic instability and military conflict
between other regional countries. For example, Armenia and Azerbaijan have been in on/off conflict
since 2020, with an escalation in late 2023 resulting in approximately 110,000 ethnic Armenians fleeing
Azerbaijan to Armenia. While negotiations regarding the peace treaty between Armenia and Azerbaijan
continue, tensions remain. These developments have implications for Georgia, which shares borders with
both Armenia and Azerbaijan.
On 7 October 2023, Hamas launched a surprise assault on Israeli territory, prompting Israel to declare a
state of war and initiate a large-scale ground invasion of the Gaza Strip. This conflict is ongoing with the
risk of the conflict spreading further into the Middle East remaining high, including potential escalations
with Iran (as have already been seen during 2024). This conflict and the ongoing peace negotiations
involving the United States have drawn widespread international condemnation. Given Georgia’s proximity
to the Middle East, any further escalations, and a continuing conflict in Gaza, have the potential to
adversely affect the Group.
The regional instability described above poses potential risks to Georgia’s economic and political
environment, potentially affecting trade routes, investment flows and overall regional security. Georgia’s
strategic location as a transit hub underscores the importance of stability in neighbouring countries for its
own economic and security interests.
On 14 May 2024, Georgia’s ruling party passed the contentious foreign agents law. The legislation has
been widely criticised in certain media. In the parliamentary elections on 26 October 2024, the ruling
Georgian Dream party secured 53.93% of the vote, winning 89 mandates. On 28 November 2024,
protests erupted in Georgia after Prime Minister Irakli Kobakhidze announced the suspension of EU
accession talks until 2028. In response, the EU suspended visa-free travel for Georgian officials, while the
US, UK, and Baltic states imposed sanctions on senior government figures.
Risk Management continued
66 67
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
REGIONAL INSTABILITY RISK CONTINUED
PRINCIPAL RISK /
UNCERTAINTY
CONTINUED
On 27 December 2024, the US sanctioned Bidzina Ivanishvili, the founder and honorary chairman of
Georgia’s ruling Georgian Dream party, accusing him of obstructing Georgia’s Euro-Atlantic aspirations.
Despite mounting diplomatic pressure, the Georgian Government introduced harsher penalties for
protesters, deepening fears of political repression.
Domestic political instability, social unrest or a further escalation of regional conflicts could undermine
Georgia’s economic stability. These challenges may have a negative impact on our business, putting
pressure on our operating model, revenue streams, financial position and the valuations of both our listed
and private portfolio companies.
KEY DRIVERS /
TRENDS
The Russian invasion of Ukraine has led to profound economic disruption, marked by a sharp decline in
market confidence, the imposition of unprecedented sanctions on the Russian economy, and heightened
spillover risks. As the situation remains uncertain, further economic repercussions are expected. Ongoing
peace negotiations involving the United Status and countries in Europe have not yet, as at the date of this
report, delivered lasting peace for Ukraine. These developments have introduced new uncertainties into
global markets, with potential implications for economic stability and international relations.
The September 2023 Azerbaijan offensive in the Nagorno-Karabakh region, and the subsequent dissolution
of the breakaway Nagorno-Karabakh republic, has significantly altered the geopolitical status quo in the
Caucasus. While Russian peacekeeping forces remain in the region, the Armenia and Azerbaijan conflict is
yet to result in mutually acceptable terms for a conclusive peace treaty, although negotiations are ongoing.
Long-term geopolitical implications of the Israel-Hamas war for the wider region remain highly uncertain.
While Georgia’s economic exposure to Israel on a macro level is not particularly large, Israel is an important
source of remittances and tourism revenues. In 2024, Georgia’s merchandise exports to Israel totalled US$
37 million (0.6% of the total), while remittances from Israel made up US$ 249 million (7.4% of the total) in
2024 and tourism receipts equalled US$ 436 million in 2024 (9.9% of the total).
Russia imposed economic sanctions on Georgia in 2006, and conflict between the countries escalated
in 2008 when Russian forces crossed Georgian borders and recognised the independence of Abkhazia
and the Tskhinvali/South Ossetia regions. Russian troops continue to occupy the regions, and tensions
between Russia and Georgia persist. There have been a series of events over the years which have further
strained the relationship between the two countries.
On 14 May 2024, Georgia’s ruling party passed the aforementioned foreign agents’ law. This occurred
amid widespread local protests and strong opposition from Western countries. Protests erupted across
Georgia, driven by a pro-EU populace and concerns over the law’s potential to curb civil liberties. Western
partners criticised the law for failing to align with EU standards. Despite a presidential veto, the parliament
overrode it on 28 May 2024, escalating political tensions. The law jeopardises Georgia’s relationships with
Western allies and poses a significant obstacle to its Euro-Atlantic integration ambitions. In response to
the Government’s actions, the European Union suspended visa-free travel for Georgian diplomats and
government officials. The United States and the United Kingdom imposed sanctions on several senior
officials for their roles in violent crackdowns against protesters and journalists. The US Treasury’s Office of
Foreign Assets Control also designated two officials from Georgia’s Ministry of Internal Affairs under the
Global Magnitsky Act for human rights abuses, while some countries, including the Baltic states, imposed
national sanctions on individuals responsible for suppressing the protests. On 27 December 2024, the
US further sanctioned Bidzina Ivanishvili, the founder and honorary chairman of Georgia’s ruling Georgian
Dream party, accusing him of undermining Georgia’s democratic and Euro-Atlantic aspirations for the
benefit of Russia.
Despite growing diplomatic pressure, the Georgian Government advanced legislation imposing stricter
penalties on protesters, including prolonged prison sentences for those involved in anti-government
activities. The volatility surrounding this event led to depreciation of the Georgian Lari (GEL) by 8.0%
from its 2024 low to its peak. The sovereign spread of Georgia widened as investors demanded higher
premiums for holding Georgian debt, reflecting increased perceived risks associated with the country’s
political environment.
Risk Overview continued
REGIONAL INSTABILITY RISK CONTINUED
MITIGATION
The Group actively monitors significant developments in the region and risks related to political instability and
the Georgian Government’s response thereto. It also develops responsive strategies and action plans of its
own. The Georgian export market shifted away from the Russian market after Russia’s 2006 embargo, and
the Group participated in that shift. In 2024, Russia accounted for 10.4% of Georgian exports, as opposed to
17.8% in 2005.
Since the beginning of the Russia-Ukraine war, the migration effect from Russia, Ukraine and Belarus has
altered the composition of foreign currency inflows from remittances and international visitors. The migration
effect has resulted in an 86% y-o-y increase in remittance inflows in 2022, including a fivefold increase of
up to US$ 2.1 billion from Russia. Remittances had started to decline from May 2023 and continued its
decreasing trend in 2024 falling by 19% y-o-y in 2024, reflecting a 65% y-o-y decline from Russia. Moreover,
while international travel receipts increased substantially from the three countries directly after the start of the
war, tourism revenues from those countries have been declining since 1H23 on the back of the fading impact
of war-related migration. In 2024, tourism revenues from the rest of the world were the driving factor behind
a 7.3% y-o-y growth in travel receipts. In contrast, receipts from Russia, Ukraine and Belarus fell by 9%,
19% and 6% y-o-y, respectively. Whilst elevated foreign currency inflows have effectively constituted rising
external demand in the short run, the medium to long-term effects remain highly uncertain, depending on
the timing and terms of the eventual conclusion of the war in Ukraine. Despite this surge in foreign currency
inflows predominantly from Russia, both remittance inflows and tourism receipts remain diversified. This
diversification has proved crucial in 2023, as inflows from the rest of the world have compensated for a
decline in inflows from Russia. As travel resumes globally, it is hoped that the rising trend of tourism revenues
from the EU will continue, as the EU share in travel receipts reached 13% in 2024.
Merchandise exports also remain diversified, although CIS share in export surged after Russia’s invasion of
Ukraine, as the “middle corridor” gained importance. Kyrgyzstan and Kazakhstan became the top destination
countries for Georgian exports in 2024, accounting for 20% and 13% of total exports respectively (1.7%
and 4.3% in 2022), followed by Azerbaijan with 11% and Russia with 10% (12.1% and 11.5% in 2022,
respectively). Russia was the largest destination country for domestically produced Georgian exports with a
22% share in 2024 (20% in 2023), followed by the Republic of Türkiye with 13% (12% in 2023).
While financial market turbulence and geopolitical tensions affect regional trading partners, Georgia’s
preferential trading regimes, including DCFTA with the EU and FTA with China, support the country’s
resilience against regional external shocks. In December 2023, the European Council granted Georgia the
status of a candidate country. Deepening integration with the EU promises enhanced economic security and
further development opportunities for the Georgian economy.
The 2024 European Commission Enlargement Report on Georgia highlights significant challenges in the
country’s progress toward EU membership, particularly regarding democratic reforms and rule of law. The
Report notes that the granting of candidate status to Georgia has not been followed by sufficient political
commitment of the authorities to implement the necessary reforms for the country’s progress on the EU path.
As a consequence, Georgia’s accession process has de facto been halted.
While Georgia has strengthened its ties with the EU over the past decade, the recent developments have
severely impacted its trajectory. The adoption of the controversial “transparency of foreign influence“ law,
strongly opposed by Western nations, and the decision to halt EU accession talks until 2028 have strained
Georgia’s relationship with the EU.
Despite elevated uncertainty, Georgia’s economy demonstrated robust growth. Preliminary data indicates
that the economy continued to expand, achieving a y-o-y growth rate of 9.5% in 2024. Foreign exchange
inflows maintained their positive trend, and loan growth remained robust, contributing to economic
stability. The GEL experienced fluctuations in 2024 due to domestic political tensions and election-related
uncertainties. The Georgian Lari depreciated as negative sentiment increased demand for hard currency.
In response, the NBG actively intervened in the foreign exchange market to manage expectations. While it
was a net buyer of US$ 287 million from January to April, it became a net seller, offloading US$ 874 million
between May and October. Overall, the GEL depreciated by 4.2% y-o-y in 2024, despite strong economic
fundamentals and solid FX inflows.
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Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
CURRENCY AND MACROECONOMIC ENVIRONMENT RISKS
PRINCIPAL RISK /
UNCERTAINTY
Unfavourable dynamics of major macroeconomic variables, including the depreciation of the Georgian Lari
against the US Dollar, may have a material impact on the Group’s performance.
On the macro level, the country’s free-floating exchange rate works well as a shock absorber, but on
the micro level, currency fluctuations have affected and may continue to adversely affect the Group’s
results. There is a risk that the Group incurs material losses or loses material amounts of revenue and,
consequently, deteriorates its solvency in a specific currency or group of currencies due to the fluctuation
of exchange rates. The risk is mainly caused by significant open foreign currency positions in the balance
sheets of the Group and the portfolio companies.
KEY DRIVERS /
TRENDS
The Group’s operations are primarily located in, and most of its revenue is sourced from Georgia. Factors
such as GDP, inflation, interest and currency exchange rates, as well as unemployment, personal income,
tourist numbers and the financial situation of companies, can have a material impact on customer demand
for its products and services.
The Lari floats freely against major currencies. GEL strengthened in the first quarter of 2024 on the back
of strong FX inflows as well as robust economic activity. Currency market has become volatile since May
2024, as introduction of the ‘transparency of foreign influence’ law increased uncertainty and led street
protests. GEL experienced another wave of sell-off during October (particularly around the parliamentary
election on 26 October), when NBG sold record high US$ 591 million in one month to curb negative
expectations. Overall, GEL depreciated by 4.2% y-o-y in 2024 on the back of increasing country risk
premium and surging negative expectations. Looking at the trading partners’ currencies and overall GEL
position, Real Effective Exchange Rate (REER) depreciated by 5.9% y-o-y in December 2024, while
nominal effective exchange rate (NEER) appreciated by 2.1% on the back of the weakening trading partner
currencies against the US Dollar after the US election.
NBG raised the monetary policy rate by 300 bps during March 2021-April 2022 to 11%, responding to
high inflation, subsequent rising inflationary expectations and increased uncertainty. Inflation has been
below the 3% target since April 2023, reaching 2.4% y-o-y in February 2025 and averaging 1.1% for
2024. Considering the strong disinflation, as well as favourable macro dynamics NBG has begun a gradual
exit from tight monetary policy, cutting the policy rate by a cumulative 150 bps in 2023 and another 150
bps in the first five months of 2024 to 8.0% as of January 2025. NBG remains committed to adjusting the
policy rate depending on the macroeconomic developments.
According to the latest projections from the Ministry of Finance, public debt is expected to decrease to 36%
of GDP in 2024, while the fiscal deficit will remain steady at 2.5% of GDP, in line with fiscal rule bounds.
Real GDP continued its strong performance in 2024, growing by 9.5% y-o-y, despite increased uncertainty.
Georgia has been among the top performers in the world according to the IMF and the World Bank. In the
first half of 2024, economic growth was primarily driven by strong domestic demand, supported by robust
investment, continued credit expansion, and favourable fiscal policies. By the third quarter, the growth rate
further accelerated due to rising external demand. The current account deficit remained low at 3.5% of GDP
in 9M24, down from 4.8% in 9M23, supported by a 3.5% y-o-y increase in current transfers and a 11.4%
rise in the service balance. Total FDI for 2024 stood at US$ 1.3 billion (4% of GDP), marking a 30% y-o-y
decline following record highs in 2022 and 2023 (US$ 2.3 billion and US$ 1.9 billion, respectively). This
decline was mainly due to reduced inflows in the manufacturing and trade sectors, where FDI fell by
US$ 131 million and US$ 234 million y-o-y, respectively.
Risk Overview continued
CURRENCY AND MACROECONOMIC ENVIRONMENT RISKS CONTINUED
KEY DRIVERS /
TRENDS
CONTINUED
Due to the recent political developments and the introduction of the “transparency of foreign influence” law,
Fitch downgraded the outlook to stable from positive in June 2024 and negative from previously updated
stable outlook in December 2024, citing increased political uncertainty and weakened public trust.
Although political risks and uncertainties remain high, Fitch expects 2025 real GDP growth to be at 5.3%,
while inflation to be 2.1% on average.
MITIGATION
The Georgian economy remains vulnerable to external shocks due to a mix of its historically high current
account deficit, low domestic savings rate and high level of dollarisation. The current account deficit
reached a 5.6% of GDP in 2023 and stood at 3.5% of GDP in 9M24, down from 4.8% of GDP in 9M23.
This positive shift in 9M24 was supported by a 3.5% y-o-y increase in current transfers and a 11.4% rise
in the service balance. NBG continued to increase buffers during the first four months of 2024, purchasing
a net total of US$ 287 million. However, it sold US$ 220 million between May and June 2024 to address
negative expectations arising from the introduction and approval of the “transparency of foreign influence”
law, followed by an additional US$ 698 million during the pre-election period. As a result, official reserve
assets fell to US$ 4.4 billion by the end of December 2024, marking a 11% year-over-year decline.
The Group continually monitors market conditions, reviews market changes and also performs
stress and scenario testing to test its position under adverse economic conditions, including adverse
currency movements.
The currency risk management process is an integral part of the Group’s activities; currency risk is
managed through regular and frequent monitoring of the Group’s currency positions and through the
timely and efficient elaboration of responsive actions and measures. Senior management reviews the
overall currency positions of the Group several times during the year and elaborates on respective overall
currency strategies; the Finance department monitors the daily currency position for Georgia Capital
HoldCo, weekly currency positions on a portfolio company level, manages short-term liquidity of the Group
across different currencies and engages in currency risk mitigation agreements, such as currency hedges,
forwards and swaps. Control procedures involve regular monitoring and control of the currency gap and
currency positions, running currency sensitivity tests and elaborating response actions/steps based on the
results of the tests.
REGULATORY AND LEGAL RISKS
PRINCIPAL RISK /
UNCERTAINTY
The Group owns businesses operating across a wide range of industries: banking, healthcare, retail
(pharmacy) and distribution, property and casualty insurance, medical insurance, real estate, water utility
and electric power generation, hydro and wind power, beverages, education and auto service. Many of
these industries are highly regulated. The regulatory environment continues to evolve, and we cannot
predict what additional regulatory changes will be introduced in the future or the impact they may have
on our operations.
Georgia Capital and its businesses may also be adversely affected by risks related to litigations arising from
time to time in the ordinary course of business.
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REGULATORY AND LEGAL RISKS CONTINUED
KEY DRIVERS /
TRENDS
Each of our businesses is subject to different regulators and regulations. Legislation in certain industries,
such as banking, healthcare, energy, insurance and utilities is continuously evolving. Different changes,
including but not limited to governmental funding, licensing and accreditation requirements and tariff
structures, may adversely affect our businesses.
Regulatory developments in recent years have been particularly hard to anticipate in the healthcare sphere,
where Georgia switched to a universal healthcare model in 2013 and a series of changes to the model since
it was introduced have negatively affected our hospitals and, more recently, our retail (pharmacy) business.
While we expect that the multi-year regulatory reset in healthcare is now coming to a close, there are
noassurance that further regulatory changes in healthcare or other sectors will not adversely affect us.
Except for the three cases listed below, there were no governmental, legal or arbitration proceedings
(including any such proceedings which are pending or threatened of which GCAP is aware) during
the 12months preceding the date of this document which may have, or have had in the recent past,
significant effects on either GCAP and/or its portfolio companies’ financial position or profitability.
Imedi L litigation
As at 31 December 2024, several portfolio companies (hospitals, clinics and P&C insurance, together the
“Defendants”) were engaged in litigation with the former shareholders of Insurance Company Imedi L who
allege that they sold their 66% shares in Imedi L to the Defendants under duress at a price below market
value in 2012. Since the outset, the Defendants have vigorously defended their position that the claims are
wholly without merit. The initial judgment of the First Instance Court which was in favour of the Defendants
was later overruled and, upon reconsideration, the First Instance Court partially satisfied the claim and
ruled that US$ 12.7 million principal amount plus an annual 5% interest charge as lost income (c.US$
21 million in total) should be paid by the Defendants. The Defendants appealed the decision of the First
Instance Court. Several hearings have taken place at the Appellate Court and as of 31 December 2024,
the case is still at the stage of consideration at the Appellate Court. No date for the next hearing date has
been set.
The Defendants are confident that they will prevail and accordingly no provision of potential liability in the
financial statements has been made. Management shares the Defendants’ assessment of the merits of the
case and considers that the probability of incurring losses on this claim is low, and accordingly, fair values
of portfolio companies do not take into account the potential liability in relation to this litigation.
BGA Litigation
As at 31 December 2024, Georgia Education Group, LLC (“GEG”) was involved in litigation with the
minority partner of the British Georgian Academy, LLC (“BGA”). The minority partner initially was claiming
the annulment of the memorandum of understanding (“MoU”) under which Georgia Capital acquired a
70% shareholding in BGA in 2019, alleging GEG’s failure to invest in the development of BGA. However,
the minority partner later withdrew the lawsuit and submitted a new claim to the court, seeking GEL 0.3
million in damages, once again alleging that GEG failed to invest in BGA’s development. On 6 February
2025, the minority partner filed an amended claim with the court, seeking damages in the amount of US$
15.5 million, termination of the MoU, and the consequent return of 70% of BGA’s stake in the minority
partner’s ownership.
GEG’s assessment of the claim is that the claimant’s allegations are based on false factual grounds and
are without any legal merit. In particular, GEG’s position is that it is the minority partner who failed to
honour investment commitments under the MoU. Management shares GEG’s assessment of the merits
of the case and considers that the probability of incurring losses on this claim is low. The case is currently
pending before the court of first instance, and the date of the preliminary hearing has not been set yet.
Risk Overview continued
REGULATORY AND LEGAL RISKS CONTINUED
KEY DRIVERS /
TRENDS
CONTINUED
Retail (pharmacy) litigation
In December 2023, the Georgian National Competition Agency (the “Agency”) imposed fines on four
companies in the Georgian pharmaceutical retailers’ sector, including GCAP’s retail (pharmacy) business,
for alleged anti-competitive actions related to price quotations on certain prescription medicines funded
under the state programme. The penalty amount assessed by the Agency on our retail (pharmacy)
business is GEL 20 million derived by utilising the single rate across all the alleged participants. The retail
(pharmacy) business has appealed the Agency’s decision in court and plans to vigorously defend its
position. No date of hearing has been set yet.
MITIGATION
Continued investment in our people and processes enables us to meet our current regulatory requirements
and means that we are well-placed to respond to any future changes in regulation. Further, our investment
portfolio is well diversified, limiting exposure to particular industry-specific regulatory risks.
In line with our integrated control framework, we carefully evaluate the impact of legislative and regulatory
changes as part of our formal risk identification and assessment processes and, to the extent possible,
proactively participate in the drafting of relevant legislation. As part of this process, we engage where
possible in constructive dialogue with regulatory bodies and seek external advice on potential changes
to legislation. We then develop appropriate policies, procedures and controls as required to fulfil our
compliance obligations. Our compliance framework, at all levels, is subject to regular review by Internal
Audit and external assurance providers.
Our integrated control framework also ensures the application and development of mechanisms for
identifying legal risks in the Group’s activities in a timely manner, the monitoring and investigation of the
Group’s activities in order to identify any legal risks, the planning and implementation of all necessary
actions for the elimination of identified legal risks, participation in legal proceedings on behalf of the Group
where necessary and the investigation of possibilities for increasing the effectiveness of the Group’s legal
documentation and its implementation in the Group’s daily activities. The framework also considers the
engagement of external legal advisors, when appropriate.
INVESTMENT RISK
PRINCIPAL RISK /
UNCERTAINTY
The Group may be adversely affected by risks in respect of specific investment decisions.
KEY DRIVERS /
TRENDS
An inappropriate investment decision might lead to poor performance. Investment risks may arise
from inadequate research and due diligence of new acquisitions and bad timing of the execution of
both acquisition and divestment decisions. The valuation of investments can be volatile in line with
market developments.
MITIGATION
The Group manages investment risk with established procedures and a thorough evaluation of target
acquisitions. Investment opportunities are subject to rigorous appraisal and a multi-stage approval
process. Target entry and exit event prices are monitored and updated regularly in relation to market
conditions and strategic aims. The Group performs due diligence on each target acquisition including on
financial and legal matters. Subject to an evaluation of the due diligence results an acceptable price and
funding structure is determined, and the pricing, funding and future integration plan is presented to the
Board for approval. The Board reviews and approves or rejects proposals for development, acquisition
and sale of investments and decides on all major new business initiatives, especially those requiring a
significant capital allocation. The Board focuses on both investment strategy and exit processes, while also
actively managing exit strategies in light of the prevailing market conditions.
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LIQUIDITY RISK
PRINCIPAL RISK /
UNCERTAINTY
Risk that liabilities cannot be met, or new investments made, due to a lack of liquidity. Such risk can arise
from not being able to sell an investment due to lack of demand from the market, from suspension of
dividends from portfolio companies, from not holding cash or being able to raise debt.
KEY DRIVERS /
TRENDS
The Group predominantly invests in private portfolio businesses, potentially making the investments difficult
to monetise at any given point in time. There is a risk that the Group will not be able to meet its financial
obligations and liabilities on time due to a lack of cash or liquid assets or the inability to generate sufficient
liquidity to meet payment obligations. This may be caused by numerous factors, such as: the inability
to refinance long-term liabilities; suspended dividend inflows from the investment entity subsidiaries;
excessive investments in long-term assets and a resulting mismatch in the availability of funding to meet
liabilities; or failure to comply with the creditor covenants causing a default.
MITIGATION
The liquidity management process is a regular process, where the framework is approved by the Board
and is monitored by senior management and the Chief Financial Officer. The framework models the ability
of the Group to fund under both normal conditions (Base Case) and during stressed situations. This
approach is designed to ensure that the funding framework is sufficiently flexible to ensure liquidity under
a wide range of market conditions. The Finance department monitors certain liquidity measures on a daily
basis and actively analyses and manages liquidity weekly. Senior management is involved at least once
a month and the Board on a quarterly basis. Such monitoring involves a review of the composition of the
cash buffer, potential cash outflows and management’s readiness to meet such commitments. It also
serves as a tool to revisit the portfolio composition and take necessary measures, if required.
Since the adoption of the capital management framework and introduction of the NCC navigation tool in
May 2022, the Group’s primary emphasis has centred around deleveraging. This strategic approach has
resulted in a significant reduction in the Group’s liquidity risk.
In August 2023, JSC Georgia Capital successfully issued a US$ 150 million sustainability-linked bond
(SLB). The proceeds from the transaction, together with existing liquid funds of GCAP, were utilised to
fully redeem the US$ 300 million Eurobond. Following the cancellation and repayment of the outstanding
Eurobond, GCAP’s gross debt balance has been reduced from US$ 300 million to US$ 150 million over
the last two years, significantly improving its leverage profile.
Overall, since the introduction of the NCC concept in 1Q22, the NCC ratio has decreased significantly,
from 28.2% at 31 March 2022 to 12.8% at 31 December 2024. The Group aims to maintain the NCC
ratio below 15%. The deleveraging strategy was also implemented across our private portfolio companies,
where individual leverage targets have been developed.
In October 2023, S&P updated GCAP’s issuer credit rating from “B+” to “BB-/Stable”.
In 2024, our portfolio companies made significant progress in enhancing their overall financial position.
Leverage profiles improved across the business due to the extension of debt maturities in most private
portfolio companies, demonstrating management’s effective liquidity management measures.
Risk Overview continued
PORTFOLIO COMPANY STRATEGIC AND EXECUTION RISKS
PRINCIPAL RISK /
UNCERTAINTY
Market conditions may adversely impact our strategy and all our businesses have their own risks specific
to their industry. Our businesses have growth and expansion strategies and we face execution risk in
implementing these strategies.
The Group will normally seek to monetise its investments, primarily through strategic sales, typically
within five to ten years from acquisition, and we face market and execution risk in connection with exits at
reasonable prices.
KEY DRIVERS /
TRENDS
Each of our portfolio companies face its own risks. These include risks inherent to their industry, or to their
industry particularly in Georgia, and each faces significant competition. They also face the principal risks
and uncertainties referred to in this table.
Macroeconomic conditions, the financial and economic environment and other market conditions in
international capital markets may limit the Group’s ability to achieve a partial or full exit from its existing or
future businesses at reasonable prices. It may not be possible or desirable to divest, including because
suitable buyers cannot be found at the appropriate times, or because of difficulties in obtaining favourable
terms or prices, or because the Group has failed to act at the appropriate time.
MITIGATION
For each business, we focus on building a strong management team and have successfully been able to
do so thus far. Management succession planning is regularly on the agenda for the Nomination Committee
which reports to the Board on this matter. The Board closely monitors the implementation of strategy,
financial and operational performance, risk management and internal control framework, and corporate
governance of our businesses. We hold management accountable for meeting targets.
For each industry in which we operate, we closely monitor industry trends, market conditions and the
regulatory environment. We have also sought, and continue to seek, advice from professionals with
global experience in relevant industries. We carry our private portfolio companies at fair value in our NAV
Statement. The valuations are audited, increasing the credibility of fair valuation and limiting the risk of
mispricing the asset. In addition, the valuation of private large and investment portfolio companies (52.9%
of total portfolio value) is performed by an independent valuation company on a semi-annual basis.
The Group has a strong track record of growth and has accessed the capital markets on multiple
occasions. Our acquisition history has also been successful, and we have been able to integrate
businesses due to our strong management with integration experience. In 2022, GCAP completed the
water utility business disposal, which represents our most significant monetisation event to date and marks
the completion of the full investment cycle as set out on page 12 of the Group’s 2022 Annual Report. In
2024, as part of our continued strategic execution, we divested from our beer and distribution business,
which was sold to a strategic international investor. Details of this transaction are provided on page 8 of
this report.
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Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Emerging risks
The Group’s risks are continually reassessed and reviewed through a horizon scanning process, with escalation and reporting to the
Board. The horizon scanning process fully considers all relevant internal and external factors, and is designed to consider and capture
the following risks: current risks which have not yet fully crystallised and which the Group do not have previous known experience of
against which they can be assessed, and risks which are expected to crystallise in future periods, typically beyond one year.
Since 2021, the Group has identified climate change as an emerging risk. Since the Group’s businesses are very much dependent on
such climate elements as precipitation, wind speed and air temperature, the Group’s development will be affected by climate change.
This is critical to protecting and enhancing the value of our assets and we monitor our governance and risk management framework
to ensure that sustainability-related risks in our portfolio remain an important part of our agenda and are treated as a priority by our
portfolio company management teams.
Risks and opportunities of our portfolio companies from climate change are discussed on pages 87 to 89 of this report. Our portfolio
companies’ approach and the mitigants to climate risk are discussed further in the Resources and Responsibilities section on pages 76
to 92 and pages 41 to 48 of the Sustainability Report.
Potential UK regulatory changes affecting UK listed companies and other UK public interest entities is identified as a possible emerging
risk. This may include changes in UK corporate governance requirements, adding additional responsibilities to our existing legal and
regulatory compliance risk.
The Group has also identified cyber security as an emerging risk, due to the increasing sophistication of hackers and in turn,
the likelihood of a data security breach occurring. A cyber security incident can result in unauthorised access to, or misuse of,
our information systems, technology or data. This could lead to leakage of sensitive information, disruption of operations and
reputational damage.
Risk Overview continued
Location: Poti, Georgia
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Resources and Responsibilities
ESG principles lie at the heart
of our business
In order to effectively manage the Group’s
direct and indirect impact on society and
the environment, the Board of Directors
have adopted a Code of Conduct and
Ethics, as well as policies that relate
to environmental and social matters,
responsible investing, employees, anti-
corruption and anti-bribery. We invite you
to read more about these initiatives in the
sections below and in conjunction with
our Sustainability Report and the rest
of the Annual Report. The non-financial
information and sustainability statement
as required by section 414CB of the
Companies Act 2006, which aims to
provide material and relevant information
on the commitment to, management of
and developments in Georgia Capital’s
ESG practices for the financial year
ending 31 December 2024, is also cross
referenced below.
With a portfolio valued at GEL 3.8 billion,
we recognise the significant impact our
decisions have on a broad range of
stakeholders, particularly within Georgia.
As the largest employer in the Georgian
private sector, with over 20,200 employees
as of December 2024, Georgia Capital is
committed to creating value not only for
investors but also for society. We invest in
the development of our employees and
contribute to the economic and social
well-being of local communities,
while managing our environmental
footprint responsibly.
To reinforce our commitment to
responsible corporate governance, we
adhere to our Environmental and Social
Policy. Georgia Capital is dedicated to
conducting business in a socially and
environmentally responsible manner,
reducing our environmental impact,
and enhancing social performance to
maximise long-term shareholder returns.
We remain committed to achieving our
strategic and investment objectives while
upholding our responsibilities as both an
employer and global corporate citizen.
Task Force on Climate-related
Financial Disclosures (“TCFD”)
The Group has complied with the
requirements of UKLR 22.2 and the
requirements under the Companies
(Strategic Report) (Climate-related
Financial Disclosure) Regulations
2022 by including climate-related
disclosures consistent with the
TCFD recommendations and
recommended disclosures.
TCFD disclosures on pages 85 to 92
present the Company’s perspective on
four core pillars of governance, strategy,
risk management, and metrics and targets
related to climate change mitigation.
Further detailed information can be
found in our Sustainability Report, a
supplement to our Annual Report which
enables the Group to provide more
detailed and comprehensive reporting
of our ESG operations in alignment
with the TCFD recommendations and
recommended disclosures.
Our Sustainability Report is available on
our website: https://georgiacapital.ge/
ir/sustainability-reports.
Non-Financial and Sustainability
Information Statement
The Company is required to disclose
certain information on the way we operate
and manage social and environmental
challenges. The following table
summarises where you can find further
information on each of the key areas of
disclosure. Information on our policies
can be found on our website at:
https://georgiacapital.ge/governance/
cgf/policies.
Reporting requirement Further details
Annual
Report page
reference
Sustainability
Report page
reference Relevant policies
Social matters Promoting local community Page 78 Page 15 Environmental and Social Policy
Sponsorship and charity Page 78 Page 14 Responsible Investment Policy
Promoting and enhancing a healthy lifestyle Page 78 Page 13
Sustainable procurement Page 78 Page 15
Employee matters Our employees Page 79 Page 11 Code of Conduct and Ethics
Talent attraction, training and development Page 79 Page 12 Responsible Investment Policy
Diversity Page 80 Page 10 Diversity Policy
Human Rights Policy Page 80 Page 14 Whistleblowing Policy
Code of Conduct and Ethics Page 80 Page 11 Human Rights Policy
Modern Slavery Page 81 Page 14 Anti-Bribery and Anti-Corruption
Policy
Environmental
matters
Emission disclosure and
calculation methodology
Page 82 Page 5 Environmental and Social Policy
Measures undertaken to improve
the energy efficiency
Page 84 Page 9 Responsible Investment Policy
Investing in socially and
environmentally oriented industries
As the largest employer in the Georgian
private sector, we believe that our
Group and portfolio companies have a
responsibility to improve the future of
our community by building sustainable
businesses for tomorrow.
We have a strong track record of investing
and managing our portfolio responsibly,
facilitated by operating according to our
clear and proven governance model
and an extensive network of top-quality
talent. Our approach to ESG matters is
reflected in the strategy and management
principles of our portfolio companies, all of
which adhere to sound ESG standards, as
well as local policies and regulations.
Our recent ESG developments
1. Participation in COP29 roundtable
discussion
In 2024, Azerbaijan hosted the United
Nations Climate Change Conference
(COP29), during which Georgia Capital
was invited by the Asian Development
Bank to join the soft launch of a transition
finance research paper in Baku. The event
was followed by a closed-door roundtable
discussion, where representatives from
leading financial sector players, including
GCAP, addressed the challenges and
opportunities surrounding transition
finance. The event provided GCAP with
an opportunity to share insights on the
key barriers the financial sector faces in
supporting the transition to a low-carbon
economy and to discuss strategies for
encouraging smaller firms to embrace
decarbonisation.
2. Strengthening ESG risk
assessment and management
processes
In 2024, Georgia Capital took significant
steps to enhance its internal ESG
risk assessment and management
framework. Key initiatives included the
development and formalisation of GCAP’s
ESG risk assessment and management
process across the investment cycle,
the introduction of sector-specific initial
investment appraisal procedures, and the
implementation of periodic information
checklists. These advancements were
supported by a Georgia-based external
ESG specialist, ensuring alignment with
best practices.
3. Formalising a stakeholder
engagement plan
In addition to enhancing its ESG risk
assessment and management, Georgia
Capital established a formal stakeholder
engagement plan to strengthen trust,
collaboration and alignment with its
stakeholders.
4. ADB impact award
In 2024, Georgia Capital was honoured
with an Impact Award by the ADB’s
Central and West Asia Department in
recognition of its issuance of the largest
corporate SLB listed on the Georgian
Stock Exchange.
Governance
Georgia Capital recognises the
importance of maintaining sound
corporate governance practices and
supports high standards of corporate
governance in delivering value to our
stakeholders. For full details of our
governance structure and processes,
please see the Corporate Governance
section of this Annual Report.
Our Responsible Investment Policy is
integrated into the investment and portfolio
management processes and procedures
and is supported by enhanced due
diligence questionnaires. The policy covers
Georgia Capital’s responsible investment
approach and ongoing monitoring of
ESG reassessments of the portfolio
companies. Georgia Capital monitors the
portfolio companies’ ESG performance
and uses its resources to encourage
the adoption of ESG best practices. It is
supplemented with an Environmental and
Social Policy. Through the Responsible
Investment Policy, ESG considerations
are embedded into the deal process,
from the initial investment stage to active
ownership. Details on how we implement
the Responsible Investment Policy can be
found in our Sustainability Report.
In 2023, the Board revised the schedule
of matters reserved for the Board,
including to explicitly cover any duties
previously reserved to the Investment
Committee, and further to make it clear
that the Board had primary responsibility
for overseeing environmental and social
risks and that the Company’s strategic
direction is regularly informed by material
environmental and social issues. Given
the small size of the Board and the
importance of these matters, including
climate change, the Board believes that it
is appropriate for the whole Board to be
responsible for these issues.
For the updated schedule of matters
reserved for the Board please refer to:
https://georgiacapital.ge/governance/
cgf/schedule.
To reinforce its commitment to continuous
improvement, Georgia Capital periodically
engages Amandla UK Limited (“Amandla”)
to evaluate the Board’s effectiveness.
In 2023, a comprehensive review was
conducted using a multi-faceted approach,
including online interviews with Directors,
individual feedback assessments, group
coaching sessions, and direct observation
of Board meetings. The evaluation
confirmed the Board’s effectiveness in
governance, supervision and oversight,
highlighting its capacity to drive sustainable
impact across operations.
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Social matters
Promoting local community
The Group considers the interests of
its main stakeholders, including local
communities and the broader Georgian
community, when developing strategies
and processes to enhance its operations.
We adhere to our Environmental and
Social Policy, striving to contribute to
society through our business activities.
This includes the development
and investment in socially-oriented
products and services, as well as the
implementation of responsible approaches
in our business operations, sponsorship
and charitable activities.
Georgia Capital and its portfolio
investments are committed to playing
a positive role in our local community,
as shown in the case studies in the
Sustainability Report.
Sponsorship and charity
In 2024, the Group and its portfolio
companies spent a total of GEL 1.6 million
in financing sponsorship and charitable
activities. As part of the sponsorship and
charitable activities, the Group continues
to focus on promoting and enhancing
access to education, conserving nature,
supporting people with disabilities and
special needs, and facilitating innovative
projects that focus on social good.
The sponsorship and charity activities
encourage partnerships with various
foundations and non-governmental
organisations to deliver sustainable results
and bring positive change. In doing so,
we follow our undertakings in respect of
social and community matters as set out
in our Environmental and Social Policy.
In 2024, Georgia Capital continued the
sponsorship programme to support the
Caucasus Nature Fund, whose purpose is
nature protection in the South Caucasus.
The fund helps to support the effective
long-term management of nature in the
biologically rich, protected territories of
Armenia, Azerbaijan and Georgia. In
2024, Georgia Capital also supported
the Fulbright programme and covered
the education and travel expenses of one
high-achieving student.
Total sponsorship and charitable
expenditure of the Group and portfolio
companies in 2024
1.6
GEL million
Charity: GEL 1.0mln
Sponsorship: GEL 0.6mln
Promoting and enhancing a healthy
lifestyle
Ensuring the safety of the workplace and
providing healthy working conditions
are amongst the Group’s fundamental
HR management principles. The Group
pays particular attention to preventative
measures, such as conducting regular
staff training and medical check-ups,
certifying workplaces and promoting a
healthy lifestyle. Consistent with these
principles, Georgia Capital has engaged
a safety consultancy company that
provides a dedicated safety inspector.
The inspector conducted a safety
audit, offered recommendations and
conducted staff training. Our safety
consultant ensures systematic monitoring
to guarantee compliance with globally
accepted standards.
Georgia Capital is aware of the damaging
impact of stress and anxiety on an
individual. It is Company practice to hold
workshops to check on employees’
mental health and to offer face-to-face
counselling. Employees are encouraged
to express their mental health concerns in
an open manner and seek assistance. We
provide the opportunity for a flexible work
schedule and remote and hybrid working
arrangements. Respective teams at GCAP
track the workload of the employees to
identify if hiring additional staff is required.
Sustainable procurement
Georgia Capital seeks to engage with
suppliers whose ESG practices align
with our commitment to sustainability
and responsible business conduct. A
large majority of GCAP’s suppliers are
professional advisors and consultants,
predominantly blue-chip, reputable
international organisations with sound
ESG policies and procedures, which,
therefore, have lower exposure to
ESG-related risks. However, our existing
policies and procedures ensure that
an appropriate level of due diligence
is conducted on prospective suppliers
before they are appointed, or any
expenditure is committed. The nature of
due diligence is determined on a case-
by-case basis, however, as a general rule,
the procedure safeguards the assessment
of risks associated with bribery and
corruption, information and data security,
human rights and employment practices,
and other material aspects as determined
during the assessment.
In 2024, significant items for Georgia
Capital procurement expenditures
were audit, valuation and compliance
services, as well as services sourced from
professional consultations and investor
relations services. The breakdown of
expenditures by type of suppliers is
provided in the graph.
Expenses by type of suppliers at
Georgia Capital level (FY24)
Audit, valuation and compliance
services: 38%
Professional consultations and
investor relations services: 27%
Insurance and other services: 21%
Legal advisors: 13%
Resources and Responsibilities continued
Employee matters
Our employees
Recruiting, developing and retaining
talent are among our most important
priorities. We work towards that objective
by communicating openly with our
employees, providing training and
opportunities for career advancement,
rewarding our employees fairly and
encouraging employees to give direct
feedback to senior management. We
recognise the importance of providing
a supportive working environment with
a healthy work-life balance for all our
employees, both at the holding company
level and across our portfolio companies.
A key factor in our success is a cohesive
and professional team, capable of
accomplishing the Group’s objectives.
We are committed to attracting and
identifying the best professionals, caring
and planning for their needs, investing
in their development and fostering their
commitment. The Group developed and
implemented HR policies and procedures
which promote the key principles, areas,
approaches and methods that are crucial
for building human capital management
systems at each business level and
at Georgia Capital level in line with the
above-mentioned policies.
We maintain a Group-wide Code of
Conduct and Ethics for our employees
and other effective HR policies and
procedures covering matters such as:
•
Staff administration, compensation and
benefits.
•
Recruitment, development and training.
•
Diversity and anti-nepotism.
•
Succession planning, departure and
dismissal.
•
Grievances and whistleblowing.
We are committed to employee
engagement and we believe that effective
communication is key. We strive to
provide our employees with a continuous
flow of information, which includes our
corporate culture, the Group’s strategy
and performance, risks relating to its
performance, such as financial and
economic factors, and our policies and
procedures. We provide information
in a number of ways, including via
managers, presentations, email, Group
intranet and regular off-site meetings.
There are feedback systems, such as
employee satisfaction surveys and a
designated Non-Executive Director for
workforce engagement at the Board level,
which ensures that the opinions of our
employees are taken into account when
making decisions that are likely to affect
their interests.
Employee satisfaction surveys are
regularly conducted at the holding
company level. These surveys allow
employees to provide anonymous
feedback regarding their overall
experience at Georgia Capital, their
perceptions of being valued for their
contributions, and their satisfaction with
work-life balance. Additionally, participants
offer recommendations for enhancing
the organisational environment. The
results of these surveys are compiled and
communicated to management for further
analysis and consideration.
Talent attraction, training
and development
Sustained development of the Group’s
businesses requires the strengthening
of the teams, both by using the Group’s
own significant internal resources through
staff development and rotation and
by attracting external candidates. Our
Recruitment Policy and relevant control
procedures ensure an unbiased hiring
process that provides equal employment
opportunities for all candidates. All
employees at Georgia Capital are
engaged under an employment contract
and we do not use zero hours contracts.
To attract young talent, we actively
partner with leading Georgian business
schools and universities, participate in
job fairs and run extensive internships
locally and internationally. Georgia Capital
continues its talent acquisition project for
its Investment Officer positions which was
launched in 2016.
To manage our employees in a way
that best supports our business strategy
and their professional growth, we seek
to help them contribute to business
performance through personal and
professional development.
In recent years we created a programme for
the Investment department which helped
participants to grasp new developments
in the field and refresh their knowledge.
To help the newcomers adapt to the new
working environment, respective teams
organise comprehensive introductory and
cross-department meetings.
In addition to specific training courses,
regular workshops are held in the
Company which are linked to more
complex matters, such as business
approaches and the best practices in
related fields. Besides in-house training,
Georgia Capital provides designated
training and certification programmes
for various departments through
third-party resources.
Georgia Capital values the exchange
of upward, downward and peer
feedback when it comes to performance
management. Through the performance
evaluation and talent management
process, several staff members were
identified and promoted in 2024.
For details on how our portfolio
companies train and enable the
continuous development of their
employees, please read our
Sustainability Report.
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Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
5,151
5,141
15,108
14,674
2024
2023
Fem ale Male
20
20
25
27
2024
2023
Fem ale Male
5
6
3
3
2024
2023
Fem ale Male
4
4
1
1
2024
2023
Fem ale Male
Diversity
Georgia Capital is fully committed to
providing equal opportunities as an
employer and prohibits unlawful and unfair
discrimination. We believe that there are
great benefits to be gained from having
a diverse workforce. We seek to ensure
that our corporate culture and policies,
particularly our HR policies, create an
inclusive work environment that helps to
bring out the best in our employees.
Georgia Capital’s Diversity Policy
establishes a commitment to eliminating
unlawful and unfair discrimination and
values the differences that a diverse
workforce brings to the organisation.
The Board embraces diversity in all its
forms. In line with Georgia Capital’s
Diversity Policy, diversity of gender,
social and ethnic backgrounds, age,
disability, race, religion or belief, sex
or sexual orientation, cognitive and
personal strengths and balance in terms
of skills, experience, independence and
knowledge, amongst other factors, will
be taken into consideration when seeking
to make any new appointment within the
business, whether an employee, client,
supplier or contractor. On 31 December
2024, Georgia Capital, had a total of 45
employees, of which 25 are female, and
20 are male.
We are supportive of the ambition shown
in recent reviews on diversity, including
the Parker Review regarding ethnic
diversity. The Board is in alignment with
recommendations for ethnic minorities
on UK boards. For details on the Board
diversity please refer to page 171 of the
Nomination Committee Report. Similarly,
we endorse the FTSE Women Leaders
Review, which primarily targets FTSE 350
companies.
We are committed to exploring ways to
increase female and ethnic representation
at both Board and senior management
levels. Moreover, the Board recognises the
significance of all forms of diversity and
remains steadfast in its commitment to
continuous progress in this domain.
Human Rights Policy
The Human Resources Policy is an
integral part of the employee on-boarding
package at each business level with
updates communicated electronically.
The Human Rights Policy is part of the
Human Resources Policy and covers the
following:
•
Equal opportunities and anti-
discrimination.
•
Work environment free of harassment.
•
Grievance Policy.
We recognise the importance of observing
human rights and are committed to
implementing socially responsible business
practices. Our Human Rights Policy
establishes priorities and puts control
procedures in place to provide equal
opportunities and prevent discrimination
or harassment on any grounds, including
disabilities. The policy applies to all
employees and includes procedures in
relation to employment processes, training
and development, recruitment and on the
continuity of employment of employees who
become disabled during their employment.
Code of Conduct and Ethics,
and Anti-Bribery and
Anti-Corruption Policy
The Group has a Code of Conduct and
Ethics, as well as an Anti-Bribery and Anti-
Corruption Policy, which are applicable to
the Group companies. As an organisation
that is fully committed to the prevention of
bribery and corruption, the Group ensures
that appropriate internal controls are in
place and operating effectively.
Gender diversity progress to date
1 The Chairman and CEO is included in both categories: “Board of Directors at Georgia Capital PLC” and “Management at Georgia Capital”.
2 Employee numbers are presented at JSC Georgia Capital and Georgia Capital PLC levels.
Board of Directors at Georgia Capital PLC
5
Management at Georgia Capital
1
8
All employees at the Group
and portfolio levels
20,259
All employees at Georgia Capital
2
45
Resources and Responsibilities continued
Anti-Bribery and Anti-Corruption Policy
enforcement processes include:
•
an anonymous whistleblowing hotline;
•
an internal whistleblowing process;
•
disclosure of gifts or other benefits,
including hospitality offered to, or
received by, the Group’s personnel;
•
voluntary disclosure of corrupt conduct;
•
third-party screening to identify the
level of risk third parties might pose;
•
informing the banks/partners/
counterparties about anti-corruption
and anti-bribery principles before
commencement of business relations;
•
ensuring that anti-bribery and anti-
corruption clauses are incorporated in
the agreements with customers and
third parties;
•
ensuring that anti-bribery and anti-
corruption matters are included in
contractual agreements with partners/
counterparties; and
•
online training programme aiming to
raise awareness of corruption and
bribery issues among employees.
As part of the Group’s third-party
screening to identify the level of risk
which third parties might pose, the Group
carries out due diligence such as indirect
investigations, which include general
research of the activities undertaken by
the proposed business partners, research
into their reputation and information on
whether the company is a related party.
The Compliance Officer (the General
Counsel) has the authority to conduct
periodic compliance checks of the
operations of the Group. We are pleased
to confirm that there have been no
instances of violation of the Anti-Bribery
and Anti-Corruption Policy in 2024.
Modern slavery
The Group has zero tolerance against
modern slavery and human trafficking.
We believe in doing business ethically,
transparently and in full compliance with
all applicable laws and regulations. Even
though we are an investment holding
company and the risk of modern slavery
and human trafficking within our own
business operations is low, we recognise
that our supply chain could potentially
pose such risks. A large majority of
GCAP’s suppliers are professional
advisors and consultants, predominantly
blue-chip, reputable international
organisations with sound ESG policies
and procedures, which therefore, have
lower exposure to ESG-related risks. Our
existing policies and procedures ensure
that an appropriate level of due diligence
is conducted on prospective suppliers
before they are appointed, or any
expenditure is committed.
We note that in accordance with our
Responsible Investment Policy, we
expressly do not invest in businesses
which have activities involving forced
or child labour. Evaluation of risk is
carried out at the pre-investment or pre-
engagement stage through due diligence
and controls, and with post-investment
implementation and management of
risk through monitoring and reporting
predominantly by the Legal and
Finance departments who report to the
Management Board and ultimately the
Board of Directors.
Environmental matters
Committing to the Principles
of the UN Global Compact
Since February 2022, we have been a
signatory of the UN Global Compact and
have officially expressed our commitment
to its ten Principles, which are then sub-
divided into 17 Sustainable Development
Goals (SDGs). Georgia Capital introduced
an initiative to align the portfolio companies’
performance with the UN SDGs, which
required our portfolio companies to
determine relevant SDGs and implement
respective procedures to track their
progress towards the identified goals.
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Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Emission disclosure and calculation
methodology
Reporting methodology
In preparing our emissions data,
we have used the World Resources
Institute/World Business Council for
Sustainable Development, Greenhouse
Gas Protocol: A Corporate Accounting
and Reporting Standard (revised edition
2016) as a reference source. We have
also used the most recent Georgian
electricity conversion factor taken from
the JRC Guidebook – “How to Develop
a Sustainable Energy and Climate
Action Plan in the Eastern Partnership
Countries”, European Commission,
Ispra, 2018, JRC113659. Further
conversion factors have been taken
from the UK Government’s “Greenhouse
Gas Conversion Factors for Company
Reporting 2024”. Energy consumption
is disclosed in line with the UK
Government’s Streamlined Energy and
Carbon Reporting (SECR) requirements.
The emissions disclosures are also
prepared in accordance with the TCFD
requirements and the requirements of
section 414 of the Companies Act.
Overview of organisation
The operations of Georgia Capital in
London and Tbilisi itself have relatively
low energy consumption. However, we
recognise the evolving significance of
emissions disclosures in the investment
community and in line with our
commitment to increasing transparency,
we voluntarily disclose emissions for JSC
Georgia Capital (intermediate Georgian
holding company) and its portfolio
investments. We have reported on all
the emission sources listed under the
Companies Act 2006 (Strategic Report
and Directors’ Report) Regulations 2013
and the Companies (Directors’ Report)
and Limited Liability Partnerships (Energy
and Carbon Report) Regulations 2018
(Scopes 1 and 2).
Additionally, we have reported on those
emissions under Scope 3 that are
applicable to our businesses’ direct
operations. All reported sources fall within
our financial statements. We do not have
responsibility for any emission sources that
are not included in our financial statements.
What we report:
The Group’s “central” operations
Our reported data is collected in respect
of the Group. Data on emissions resulting
from travel is reported for business-related
travel only but excludes commuting. As
we do not have any joint ventures, sub-
leased properties or offshore emissions,
these have not been included within the
reported figures.
The data has been obtained from the
Group’s locations using both invoices and
site meter readings. In April 2024, Georgia
Capital PLC relocated its registered
address to Leeds, UK. The company now
employs a single individual who works
remotely, resulting in no GHG emissions
from the UK office for the remaining eight
months of 2024. In 2024, the UK office’s
four-month electricity consumption was
1.4MWh, and 3.3MWh for the full year
2023, with no other recorded sources of
emissions. These costs were included
within the lease fees. The electricity
consumption of the UK office is included
in the Scope 2 emissions calculation.
As the UK office’s consumption was
immaterial, its emissions are not reported
separately for SECR disclosure purposes.
The Group’s portfolio
Data from our portfolio companies’
Scope 1, 2 and 3
1
emissions have been
aggregated and presented as a separate
line item under Scope 3 emissions
in accordance with the Greenhouse
Gas Protocol. GCAP adheres to the
control approach when determining
the greenhouse gas (GHG) inventory
boundaries. Under this approach, we
report the GHG emissions of all our private
investments where the Group holds a
controlling stake. Therefore, the GHG
emissions of Lion Finance Group (19.23%
shareholding as of 31 December 2024)
and the water utility business (20% interest
stake as of 31 December 2024) have
not been included in the calculations. As
Georgia Capital maintained operational
control of the beer and distribution business
until the end of 2024, despite its sale during
the year, the business’ GHG emissions
have been included in our calculations.
Lion Finance Group, as a UK listed
company discloses Scope 1, 2 and 3
emissions in its annual filings, available at:
https://lionfinancegroup.uk/annual-
reports/latest-annual-report/.
Resources and Responsibilities continued
Summary of GHG disclosure
The table below summarises the various elements of our disclosure and details the particular GHG emissions and whether they are
included or excluded.
Element Description Included/Excluded
Scope 1 – Static fossil fuel Combustion of fossil fuels, e.g. natural
gas, fuel oils, diesel and petrol in stationary
equipment at owned and controlled sites
Excluded – No such processes/equipment owned or
operated by the Group.
Scope 1 – Mobile fossil fuel Combustion of petrol, diesel and aviation fuel
in owned/operated vehicles
Business travel has been included.
Scope 1 – Other emissions Process emissions and refrigerant leakage Excluded – No such processes/equipment owned or
operated by the Group.
Scope 2 – Consumption of
electricity
Consumption of electricity Included – Used electricity at owned and controlled
sites using the most recent Georgia electricity
conversion factor taken from the JRC Guidebook –
How to Develop a Sustainable Energy and Climate
Action Plan in the Eastern Partnership Countries,
European Commission, Ispra, 2018, JRC113659.
Scope 2 – Consumption of
thermal energy
Direct consumption of heat, steam or cooling
generated by others
Excluded – No such thermal energy supplies are
consumed by the Group.
Scope 3 Combustion of petrol, diesel and aviation fuel
in vehicles owned and operated by others
Included – Air business travel (short-haul and long-
haul); information on the class of travel is unavailable,
hence, we used an “average passenger” conversion
factor, with radiative forcing.
Included – Ground transportation, including taxis,
coaches, trains, etc., owned and operated by others.
Excluded – Emissions from staff commuting at GCAP
HoldCo level.
Investments Included – Scope 1, 2 and 3
1
of our portfolio
companies where we have a majority stake.
Emissions
Total GHG emissions (tonnes CO
2
e)
Data for the period beginning 1 January 2022 and ending 31 December 2024 2022
2
2023 2024
Scope 1 66 73 70
Static fossil fuel (emissions fuel combustion and facility operations) – – –
Mobile fossil fuel 66 73 70
Scope 2 4 4 4
Emissions from electricity, heat, steam and cooling purchased for own use 4 4 4
Scope 3 29,057 26,723 27,659
Air travel and ground transportation provided by third parties plus electricity, heat/steam, cooling
provided within lease and service agreements 78 35 60
Investment portfolio emissions
3
28,979 26,688 27,600
of which, Scope 1 18,643 17,460 17,561
of which, Scope 2 5,064 4,993 5,434
of which, Scope 3 (voluntary disclosure) 5,272 4,234 4,605
Total GHG emissions 29,127 26,800 27,734
FTEs
4
at GCAP HoldCo level 48 47 45
Total GHG emissions per FTE (GCAP HoldCo) 606.8 570.2 616.3
FTEs at GCAP HoldCo and portfolio company levels 19,114 19,815 20,259
Total GHG emissions per FTE
(GCAP HoldCo and portfolio company levels) 1.52 1.35 1.37
1 Portfolio company Scope 3 emissions reported for business travel and employee commuting.
2 The 2022 GHG emissions have been retrospectively adjusted, incorporating the calculation methodology agreed upon with our external verification provider. The total GHG emissions for
2022 were assessed at 29,127 tCO
2
e, compared to the previously disclosed 28,179 tCO
2
e. Specifically, GHG emissions under the SLB Framework, following the retrospective application
of the relevant methodology, amount to 23,776 tCO
2
e, as opposed to the previously disclosed 22,829 tCO
2
e, representing an updated baseline for GHG emission reduction targets/SPTs.
3 Investment portfolio companies’ total Scope 1 and 2 emissions are: 23,706 tCO
2
e in 2022, 22,454 tCO
2
e in 2023 and 22,995 tCO
2
e in 2024.
4 FTE (“full time employee”) is stated excluding temporary employees.
1 Portfolio company Scope 3 emissions reported for
business travel and employee commuting.
84 85
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
SECR Report
This report has been produced in accordance with the UK Government’s policy on SECR. As determined by the Greenhouse Gas
Protocol, the scope and boundary of the GHG emissions herein relate to those where we have operational control, i.e. those relating to
our corporate offices in both London and Tbilisi. As stated on page 82, in 2024, GCAP reports the energy consumption of the London
office only for the first four months.
GHG emissions and energy data
The following table reports upon GHG and energy data for the period December 2023 to December 2024. The prior reporting year has
been included for comparative purposes.
Energy consumption (in kilowatt hours, kWh) Prior reporting year (2023) Current reporting year (2024)
Purchased electricity 41,053 40,769
Gas combustion – –
Transport fuel 237,031 228,850
Refrigerants – –
Total energy consumption (kWh)
1
278,084 269,619
Emissions (per metric tonne of CO
2
equivalent, tCO
2
e) Total Scope Total Scope
Purchased electricity 4.3 2 4.0 2
Gas combustion – 1 – 1
Transport
2
32.5 3 56.8 3
Refrigerant emissions – 2 – 2
Total gross emissions 36.7 – 60.9 –
Intensity ratio (tCO
2
e per FTE) Total Total
Intensity ratio 2.39 2.98
Quantification and reporting methodology
The GHG and energy data presented above has been collated, calculated and presented using methodology following the Greenhouse
Gas Reporting Protocol, and uses the 2024 Government Emission Conversion Factors for Company Reporting.
Intensity ratio
The intensity ratio used in the table above displays total gross emissions (tCO
2
e) per FTE.
Our environmental activities
Measures undertaken to improve energy efficiency
Over the last periods, Georgia Capital has introduced and implemented energy-efficient solutions to further reduce energy consumption
by conducting various activities across the Group and portfolio companies.
Our portfolio companies continue to implement energy-saving solutions, such as LED lights and other energy-efficient equipment,
such as boilers and heating ventilation and air conditioning systems. Our housing development business pioneered the introduction of
energy-efficient construction materials. In our education business, five of our school campuses successfully introduced solar panels
and our other educational infrastructures will follow in due course. Our beverages business reduced energy consumption and carbon
footprint through its CO
2
recovery plant, alongside the wastewater treatment plant. The company also introduced the Green Fridge
Policy which reduces the carbon footprint of cooling bottled and canned products. Additionally, our PTI business adheres to green
standards, exemplified by the planting of trees in every Tbilisi branch, contributing to a green space that encompasses 20% of the
total territory.
Details of environmental activities of our portfolio companies are reported in our Sustainability Report at
https://georgiacapital.ge/ir/sustainability-reports.
1 Scope 1 and Scope 2 consumption data is converted in kWh. For the distance (km) conversion into kWh, we used a conversion factor for an average size car.
2 Transport emissions represent 1) business travel in employee-owned vehicles where the firm is responsible for purchasing the fuel, and 2) business travel in company owned vehicles.
Resources and Responsibilities continued
Board oversight
The Board is entrusted with providing
oversight of climate-related risks and
opportunities, aided by the Audit and
Valuation Committee. The Audit and
Valuation Committee and the Board have
responsibility for assessing and managing
climate-related risks and opportunities in
relation to GCAP’s direct operations and
to our portfolio companies, as they affect
matters within their remit.
Current, future and emerging risks
are included within the standing item,
“Discussion of risks”, of the Audit and
Valuation Committee and Board agendas.
Risks, including those relating to climate
change, are discussed, and implications
for future strategy are considered, semi-
annually, in line with the annual and semi-
annual reports.
In 2022, the Board supported the initiative
of incorporating ESG as one of the core
pillars of GCAP’s strategy. The Board
also reviewed the alignment of GCAP’s
portfolio operations with the UN SDGs
and supported the enhancement of ESG
transparency. Georgia Capital submits the
climate change questionnaire to the CDP
annually for additional transparency.
The Board is responsible for the approval of
the climate-related metrics and targets that
have been established by GCAP in 2022.
It is also responsible for ensuring progress
against agreed metrics and targets.
In 2023, the Board revised the schedule of
matters reserved for the Board, including
explicitly stating that it now covered
any duties previously reserved to the
Investment Committee, and further to
make it clear that the Board had primary
responsibility for overseeing environmental
and social risks and that the Company’s
strategic direction is regularly informed by
material environmental and social issues.
Given the small size of the Board and the
importance of these matters, including
climate change, the Board believes that it
is appropriate for the whole Board to be
responsible for these issues.
Management oversight
Within the management team, the Chief
Financial Officer, supported by the finance
team, is responsible for identifying risks,
including climate change risks, in relation
to the investment portfolio and including
these in the valuation process. The
Director of Investments, supported by
the Investment Officers, is responsible for
identifying specific risks and opportunities
at the initial investment stage.
The Chief Financial Officer and Director
of Investments report on monitoring of
identified financial and climate-related
risks and significant changes through their
regular reports to the Management Board.
Risks are escalated to the Audit and
Valuation Committee.
The Board and management work
together to develop and review the GCAP
investment strategy and consider, among
other aspects, climate-related issues.
They are also responsible for setting a wide
range of corporate policies and objectives,
among them environmental and social
policies, and for monitoring performance
against objectives and targets.
Task Force on Climate-related
Financial Disclosures
Governance
The following section reflects Georgia Capital’s response to the TCFD recommendations and the
mandatory reporting requirements set out in the Companies Act 2006 related to Climate-related
Financial Disclosures. The disclosures have been prepared in line with the all-sector guidance
and, where applicable, reflect the supplementary recommendations for the asset managers. In
this section, we present the Company’s perspective on four core pillars of governance, strategy,
risk management, and metrics and targets related to climate change mitigation.
86 87
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
In support of the evaluation of climate-
related risks and opportunities that may
be present, a review of GCAP’s direct
operations and a macro-level review
of the portfolio companies’ operations
were completed. The process was
followed by a comprehensive quantitative
assessment, specifically on GHG
inventory management.
It is considered that indirect climate-related
risks within the portfolio companies will be
more significant than those present within
the Group’s operations. An early-stage
scenario analysis was completed as part
of the process towards understanding
how the climate impacts identified in the
qualitative assessment could present as
financial risks to GCAP under different
plausible future scenarios. The findings
and potential risk implications of such
findings are provided below in the section
“Scenario analysis of plausible futures”.
GCAP’s strategy incorporates strong
consideration of climate change aspects
(e.g. GCAP’s focus upon renewable
energy, 6.7% share of the portfolio at
31 December 2024, the issuance of the
SLB in 2023, and increased focus on
sustainability both at GCAP and portfolio
company levels).
Scenario analysis of plausible futures
Network for Greening the Financial
System (“NGFS”
1
) climate scenarios were
chosen for their relevance to the finance
sector and to allow for comparability.
Climate change scenarios for the Republic
of Georgia were explored as follows:
•
Current Policies (policy ambition of 3°C).
•
Delayed Transition (policy ambition of 1.7°C).
•
Net Zero 2050 (policy ambition of 1.4°C).
GCAP invests over a five-to-ten-year
horizon. With this in mind, scenario
outputs were considered by GCAP in the
short term (year 2027), medium term (year
2030) and long term (year 2050).
Each NGFS scenario explores a different
set of assumptions for how climate policy,
emissions and temperatures evolve. The
scenario descriptions using the REMIND-
MAgPIE 3.3-4.8 model are as follows:
•
Current Policies assumes that only
currently implemented policies are
preserved, leading to high physical
risks. Emissions grow until 2080
leading to about 3°C of warming. This
scenario is dominated by physical
risks due to the resulting climate and
weather pattern changes. Transition
risks are muted as regulators and
technology are not being driven to
change beyond current plans. Georgia
will experience a reduction in the overall
volume of precipitation across the
country, including a reduction in the
volume of snowfall. Gradual snow melt
will be replaced by more intense rainfall
run-off. This will result in landscape
instability and heightened flood risk
with the potential for infrastructure to
be overwhelmed. In addition, there
is an expectation of an increasing
frequency of heat waves.
•
Delayed Transition 1.7°C assumes
that global annual emissions do not
decrease until 2030, necessitating the
implementation of stringent policies
to limit warming to below 2°C. The
availability of negative emissions
technologies is restricted, further
complicating mitigation efforts.
Under this scenario, no new climate
policies are introduced before 2030,
and the scale of action varies across
countries and regions based on
existing policies. This trajectory results
in heightened transition and physical
risks compared to the Net Zero
2050 scenario.
•
Net Zero 2050 limits global
warming to 1.5°C through stringent
climate policies and technological
innovation, achieving global net-zero
emissions around mid-century. This
scenario assumes the immediate
implementation of ambitious climate
policies. Net CO
2
emissions reach zero
around 2050, ensuring at least a 50%
probability of keeping global warming
below 1.5°C by the end of the century,
with only a limited temporary overshoot
in earlier years. While physical risks
remain relatively low, transition risks are
significant due to the rapid policy and
economic shifts required.
Carbon prices (including taxation
measures) are a key policy instrument for
incentivising carbon emissions reduction.
There is a direct relationship between
the ambition (and stringency) of policies
and the cost of emissions. The cost of
emissions is also sensitive to the timing
and implementation of the policies, the
distribution of policies across all industrial
sectors and the available technology, for
example for CO
2
removal.
The carbon price in Georgia is a key
variable in determining the future climate-
related financial risk for GCAP. The
projected carbon price over the short,
medium and long term under the three
plausible scenarios is shown in Table
1. Under Current Policies, there is little
change in the carbon price. However,
there is a sharp increase in the carbon
price occurring in about 2030-2035 under
the Delayed Transition 1.7°C scenario.
Under the Net Zero 2050 scenario, a
global carbon price of 183.3 US$2010/
tonne CO
2
by 2030 is projected.
Strategy
Table 1: Shadow carbon price, global (US$2010/tonnes CO2)
Projected carbon price
NGFS modelled scenario Year 2025 Year 2027 Year 2030 Year 2035 Year 2050
Current Policies 10.7 10.5 10.3 10.2 11.1
Delayed Transition 1.7°C 10.7 10.5 10.3 98.9 320.4
Net Zero 2050 98.4 140.8 183.3 294.9 748.8
1 www.ngfs.net. Network for Greening the Financial System Climate Scenarios for Central Banks and Supervisors, November 2024.
Resources and Responsibilities continued
Based on the early-stage scenario
modelling initial tables of potential climate-
related financial risks and opportunities for
each scenario were prepared.
As an example, a summary table of a
Delayed Transition 1.7°C scenario is
presented at Table 2. In this example
scenario, the increasing carbon price is
likely to be relevant to each of the portfolio
companies either directly or through
their supply chains. In addition, potential
financial impacts under this scenario may
also arise associated with:
•
acute physical events, for example,
from increased flooding or land
instability due to intense rainfall on
operations or physical assets;
•
chronic physical changes to
climate, such as increased average
temperatures affecting the condition
or habitability of real estate assets,
the physical condition of distribution
networks, and/or community health;
and
•
adaptation of operations or assets
to mitigate the effect of physical
or transition risks. In this example,
transition risks and, in particular,
opportunities for the GCAP investment
strategy and portfolio may be driven
by the Georgian Nationally Determined
Contributions and the Georgian 2030
Climate Change Strategy and Action
Plan (CCSAP).
It is noted that under the plausible
scenario analysis, there will be little
difference in the physical outcomes
between Current Policies and Delayed
Transition 1.7°C before 2050. But under
the Delayed Transition 1.7°C scenario,
there is significant potential for variation
in near-term policy action which will
introduce great uncertainty for businesses.
A narrative summary of qualitatively identified
macro-level risks and opportunities under
the Delayed Transition 1.7°C scenario
and the potential impact of these risks
is provided in Table 2. For each portfolio
company, examples are given which are
considered to have a potential impact on the
portfolio company, if not to the portfolio as a
whole. The percentage value of the portfolio
company within the portfolio is provided as
a broad indicator of likely weighting.
Lion Finance Group
(37.8% of total portfolio)
•
Risks – Within the medium term, the
rapid implementation of climate policy
and regulation may result in sharply
increasing direct regulatory expenses
in relation to fixed assets such as the
Bank’s retail outlets.
•
Opportunities – In the short term,
and in mitigation, the Bank is already in
the advanced stages of implementing
energy efficiency programmes within
its real estate (retail, office and data
centres). By anticipating compliance
with regulations relating to fuel
efficiency standards, emissions-
reducing regulations and building
efficiency compliance, the Bank
will minimise costs in relation to
Table 2: Portfolio 2024: Qualitative presence of potential climate-related physical or transition risks under Delayed
Transition 1.7°C
Physical risks
1
Transition risks
2
Acute Chronic Legal/regulation Market Reputation Technology/digital
Portfolio company Risk Opp. Risk Opp. Risk Opp. Risk Opp. Risk Opp. Risk Opp.
Lion Finance Group
Water utility
Renewable energy
Healthcare businesses: hospitals and
clinics and diagnostics
Retail (pharmacy)
Medical insurance
P&C insurance
Education
Auto service
Beverages
Housing development
and hospitality
Key:
Potentially material risk areas
Potentially material opportunities for each of the portfolio companies
Blank areas indicate that neither material risks nor material opportunities are anticipated
1 Physical risks and opportunities are those that occur due to the physical manifestation of climate change – as chronic long-term climate changes or as acute episodic weather events.
2 Transition risks and opportunities are those related to the transition to a low-carbon economy including legal/regulatory risks such as carbon prices, market supply and demand,
reputation and technology (e.g. disrupters, improvements and replacement of technology that support the transition to a low-carbon economy).
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regulations. In addition, it will lower
energy expenditure and generate
a financial benefit, especially
where renewable energy is utilised.
Additionally, the Bank has adopted
digital technology to enable all forms
of digital banking, potentially further
reducing the need for fixed assets.
Since 2021, Lion Finance Group PLC
completes its own TCFD assessment.
The results are available publicly in
Lion Finance Group PLC’s Annual
Report and Accounts which can be
viewed or downloaded at: https://
lionfinancegroup.uk/annual-reports/
latest-annual-report/.
Water utility (5.0% of total portfolio)
•
Risks – Acute physical risks may
impact utility assets. For example, in
the short to medium term, extreme rain
events may overwhelm infrastructure,
causing damaged water treatment and
sewage treatment plants. Pipelines
are also at risk from such events, as
the overall integrity is placed under
pressure. These will require increased
maintenance and repair costs.
Landslides in more remote locations
could cause further damage and may
block access in some areas.
•
Opportunities – In the medium term,
decarbonisation of operations will
enable the water utility operations to
limit the cost consequences of carbon
pricing and provide an advantage over
more carbon-intensive competition.
Retail (pharmacy)
(19.0% of total portfolio)
•
Risks – The principal risks arise from
physical aspects of climate change
and may impact the physical assets.
Transition risks are considered to
mainly relate to carbon pricing and the
effect this will have on the supply chain,
for example, the purchase of drugs and
medicines. As the carbon price rapidly
increases post-2030 (medium term)
the prices of goods will increase. While
this will be felt across the market and
will not be unique to the portfolio, given
the leading market share, this could
result in reputational risk arising from
consumer perception.
•
Opportunities – There is a regulation
opportunity for the retail (pharmacy)
business. Being an early adopter of
fuel efficiency standards, emissions-
reducing regulations and building
efficiency compliance will reduce overall
running costs in the medium term.
Good energy management and the use
of renewable energy will not only lower
energy expenditure and generate a
financial benefit but will also reduce the
carbon footprint of the operations.
P&C insurance
(8.3% of total portfolio)
•
Risks – Carbon pricing is a
fundamental component of the EU’s
climate change agenda. Under the
Delayed Transition 1.7°C scenario,
carbon pricing is expected to rise
sharply after 2030 (medium term).
This will see a progressive rise in the
cost of carbon-intensive products and
services, logistics, distribution and any
other operations within the supply chain
associated with high-carbon emissions.
This will have implications for the cost of
insurance, which may be passed on to
the customer. Beginning with transition
risks, some lines of business may see
changes in claims patterns as Georgian
Government policy and regulation
relating to carbon emissions evolve. This
might result in fluctuating loss ratios and
profitability. The steep rise in carbon
prices can lead to reduced profitability,
obsolete assets and impairments in
sectors that are difficult to decarbonise
and where additional costs cannot
be passed on to customers. The
transition will shift demand toward
low-carbon technologies and create
new opportunities for companies that
provide innovative solutions and are able
to reduce their emissions more efficiently
than competitors. Failure to manage
potentially detrimental impacts will result
in damage to a company’s reputation.
•
Opportunities – Opportunities will
likely arise from energy efficiency
regulation which will force customers
to upgrade their homes and vehicles
and may require new product offerings.
Commercial opportunities are also likely
to arise by creating targeted products
that address climate change and
energy transition.
Medical insurance
(3.1% of total portfolio)
•
Risks – An increase in medical
insurance claims may arise from
both acute short-term weather
conditions (flooding and, in some
regions, landslides and heatwaves)
and long-term chronic changes in
weather such as increased average
temperatures, impacting health. Failure
of infrastructure may cause longer-term
ill health from waterborne diseases.
There is also a risk that the Georgian
Government introduces a policy for
insurers to maintain policy cover for
the “uninsurable”, the costs of which
may not be possible to pass on to the
insured.
•
Opportunities – Encouraging
customers to prepare to be resilient
with respect to climate risks, for
example through premium incentives to
have healthy lifestyles, may contribute
positively to the business reputation
and customer base.
Healthcare businesses – hospitals
and clinics and diagnostics (
11.0% oftotal portfolio)
•
Risks – under the delayed Transition,
itis anticipated that in the medium-
term carbon prices will remain low.
After 2030, carbon prices may rise
quickly y-o-y towards 2050. The
implications of this will be financially
more severe for carbon-intensive
products, services and operations.
This will result in increased costs
of purchases relating to medical
equipment and supplies, particularly
those originating out-of-country.
•
Opportunities – In the short to
medium term, commitment to a low-
carbon portfolio (for example, low-
carbon hospitals) could have certain
benefits. A reduction in the portfolio’s
carbon intensity will mitigate future
costs associated with increasing
carbon prices.
Renewable energy
(6.7% of total portfolio)
•
Risks – In the short to medium term,
the infrastructure and transmission lines
are clearly at risk from physical risks
such as landslides, or extreme heat
impacting the integrity of lines or pipes.
However, for each of the HPPs and
WPPs, the business has taken steps to
improve the resilience of infrastructure
to changes in climate.
•
Opportunities – The renewable
energy business generates electricity
using renewable sources, and there
are a number of policy and Georgian
Government incentives for solar wind
and hydropower generation in Georgia
as part of the Georgian 2030 CCSAP.
Renewable energy sources are
Resources and Responsibilities continued
considered to be the future of energy
and are valued higher than traditional
electricity generation companies.
Education (4.8% of total portfolio)
•
Risks – The potential risks relate to
transition type risks, in particular energy
and air quality regulations, that may be
introduced under this scenario at short
notice in the medium term. Schools
may be expected to retrofit heating
and cooling measures/equipment to
meet regulations. In addition, energy
requirements may arise in response to
air conditioner use during prolonged
heatwaves for example. These risks are
expected for all real estate.
Auto service
•
Risks – Currently, vehicles on the
market and in use in Georgia are
mainly diesel and petrol-fuelled. Initially,
in the short term, there will be a gradual
switch to electric vehicles. After 2030,
there will likely be a significant increase
in the use of electric vehicles, abruptly
reducing the need for emissions
checks. Additionally, the anticipated
rise of carbon pricing and adoption
of border adjustment mechanisms
after 2030 will affect Amboli’s (the
auto service business’ car services
and parts business) supply chain and
trade of car consumables and parts.
There will likely be an abrupt rise in
distribution and retail costs as a result
of increases in carbon pricing.
•
Opportunities – In the short to
medium term, it may be that there will
be stricter emissions requirements.
This may mean that more vehicles
will need to be emissions-checked
more regularly or be modified, causing
demand at PTI centres.
Beverages
•
Risks – In addition to physical risks
(reduced rain, high intensity events,
prolonged heatwaves) affecting hops
and grape production, the main
identified risk relates to regulatory
transition risk. In particular, carbon
prices and border taxes such as
the EU Carbon Border Adjustment
Mechanism will adversely affect the
prices of both incoming goods and
exported products in medium term
(post-2030).
Housing development and hospitality
•
Risks – Physical risks to property will
occur. These include deterioration
of asset integrity due to flooding or
extreme heat. In the medium term
(post-2030) assets that are not
energy efficient will be hit by energy
efficiency regulation for retrofitting
and increased energy costs due to
carbon pricing. Additionally, as green
building technologies advance, failing
to adopt sustainable or energy-efficient
solutions may render developments
less competitive and result in higher
operational costs.
•
Opportunities – Early adoption of fuel
efficiency standards, emissions-reducing
regulations and building efficiency
compliance will reduce longer-term
costs relating to regulations including
a reduction in potential declines.
The Group’s strategy is to focus
predominantly on capital-light, larger-
scale investment opportunities in Georgia
and it normally seeks to monetise its
investment through appropriate exit
options, typically within five to ten years
from initial investment. Considering this
strategic focus, the holding periods of
our investments fall in much shorter time
horizons (short to medium term) than the
timeframe in which the impacts of climate
change, especially of physical risks, may
manifest themselves in Georgia. The
exposure of GCAP’s portfolio on certain
industries (presented as a percentage of
the investment in the total portfolio value)
as well as the investment holding period
are essential when defining the different
time horizons for the analysis and when
assessing the materiality of climate-related
risks for different investments.
Management takes climate change risk
into consideration when determining its
investment strategy. This is described
further in the Risk management section on
page 90. Climate change is also reflected
in the valuation assessments of the
portfolio companies, as described in the
Risk management section on page 90. In
2024, we developed and formalised our
ESG risk assessment and management
process across the investment cycle,
introducing sector-specific initial
investment appraisal procedures,
alongside periodic information checklists.
Going forward we will be exploring how
to further incorporate climate change risk
into our portfolio valuations. This may
include an assessment of the influence of
the projected carbon price under different
scenarios on the valuation of the portfolio.
In addition, the use of shadow carbon
pricing might be reviewed.
Other identified potential risks and
opportunities are evaluated by the
investment and finance teams in
discussion with the portfolio companies
to determine their financial materiality
(impact on financial performance including
revenues and expenditures, and impact
on the financial position, assets and
liabilities, capital and financing).
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Climate change risk has been recognised
by GCAP as an emerging risk. The risk
management approaches for the initial
investment stage and the existing portfolio
companies are provided below.
Investment stage
The investment risk management process
includes consideration of climate-related
risks, in line with the implementation
of the Responsible Investment Policy.
Procedures for identifying, describing and
managing environmental and social risks
and impacts (including those associated
with climate change) have been
incorporated into the investment process
from the initial investment, through to the
holding period.
GCAP has a staged approach to
investment appraisal which becomes
progressively more detailed. At the
early stages of appraisal, the potential
investment is screened against the
GCAP Exclusion List. This list excludes
businesses that generate more than
10% of their revenues from fossil fuels.
Subsequent appraisal stages include
evaluation of the carbon and energy
emissions, as well as business strategy
and plan elements in relation to carbon
and energy management. These plan
elements will consider alignment with the
Georgian Government Climate Goals and
incorporate the shadow carbon price.
Current portfolio
Climate change, and the risks relating
to climate change, is reflected in the
valuation assessments of the portfolio
companies. Equity investments in
Georgia Capital’s portfolio companies are
measured at fair values at each reporting
date in accordance with IFRS 13, Fair
Value Measurement.
Private large and investment stage
portfolio companies are valued by
applying a combination of an income
approach (DCF) and a market approach
(listed peer multiples and, in some
cases, precedent transactions) in line
with International Private Equity Valuation
(IPEV) guidelines and methodology.
Under the DCF valuation method, fair
value is estimated by deriving the present
value of the business using reasonable
assumptions of expected future cash
flows and the terminal value, and the
appropriate risk-adjusted discount rate
that quantifies the risk inherent to the
business. The discount rate is estimated
with reference to the market risk-free rate,
a risk-adjusted premium and information
specific to the business or market sector,
which consequently reflects the climate
change-related considerations of the
business.
Market approach valuation methodology
involves the application of a listed peer
group earnings multiple to the earnings
of the business and is appropriate for
investments in established businesses and
for which the Company can determine
a group of listed companies with similar
characteristics. GCAP identifies the peer
group for each equity investment taking
into consideration points of similarity
with the investment such as industry,
business model, size of the company,
economic and regulatory factors, growth
prospects (higher growth rate) and risk
profiles (including the climate change risk).
Valuation assessments of the large and
investment stage portfolio companies are
performed by an independent valuation
firm on a semi-annual basis. Climate
change risk is factored in the valuation
assessments. Climate change risk is also
embedded in the valuation of the other
portfolio companies as set out in the
Valuation Methodology on page 98 of this
Annual Report.
Understanding the relationship and
potential impact of climate change and
its associated risks across different risk
categories was a priority for GCAP risk
management during 2024 as climate risk
continued to be integrated into the risk
management framework.
Evaluating macro-level risks
For each of the portfolio companies, a
macro-level review has been completed
within the scenarios and time horizons
(short, medium and long). The process
included among other activities:
•
review of the scenarios selection and
identified risks and opportunities with
the portfolio companies;
•
application of the carbon prices to
investee emission profiles to establish
the impact; and
•
further discussion with the portfolio
companies on how carbon price may
be used to influence their strategy
and impact on their business plans
going forward – including the cost
of supplied materials, ability to pass
through costs and potential capex
among other aspects.
The NGFS modelling scenarios will be
re-run annually to assess changes if any,
that may occur in response to global or
Republic of Georgia commitments and
policies towards climate change.
Monitoring and reporting
Environmental (including climate)
and social risks and opportunities
are managed through regular
semi-annual engagements with the
portfolio companies. Topics cover a
range of aspects under the headings
of Governance, Policies, Social,
Environment, Carbon and Energy
Management, and Suppliers.
Capacity building
Where appropriate, GCAP will support
portfolio companies in training and
upskilling Investment Managers with
respect to climate change terminology,
risks and opportunities during 2025
and beyond.
Risk management
Resources and Responsibilities continued
Georgia Capital has committed to the
Net-Zero Initiative and expressed its
willingness to reach Net-Zero across
Scope 1 and 2 emissions at both GCAP
HoldCo and portfolio company levels
by 2050.
In May 2022, GCAP commenced the
ESG target-setting initiative with the
goal of setting GHG emission reduction
targets. Over a four-month period, GCAP
conducted comprehensive research on
relevant ESG standards, frameworks and
guidelines, and engaged in discussions
with global experts on different
environmental platforms.
In September 2022, GCAP, with its
portfolio companies, engaged in
comprehensive individual and group
workshops where the ESG frameworks
were discussed and participants shared
their progress towards setting individual
environmental targets. Some of the
portfolio companies also engaged local
third-party experts in the target-setting
initiative to ensure the effectiveness of
the process.
In 2023, in parallel with the SLB issuance,
the targets were revisited.
The primary driver for GCAP’s
commitment to achieving Net-Zero
emissions by 2050 is the recognition that
the majority of its GHG emissions originate
from portfolio companies and through this
target, the Group can actively promote
climate change mitigation, natural
resource conservation, and pollution
prevention. This commitment reflects
GCAP’s dedication to fostering a transition
toward a more sustainable and lower-
carbon economy in Georgia. The progress
toward this target is rigorously monitored
on an annual basis. Furthermore, following
the successful issuance of the US$
150 million SLB, the verification of GHG
emissions will be conducted regularly at
least while the bond remains outstanding.
GHG inventory
Measuring GHGs is the initial step in
preventing global warming. GCAP has
collated Scope 1, 2 and limited Scope 3
GHG emissions over the past few years.
In 2020 we focused on emissions
derived from GCAP operations (Scope
1, 2 and limited 3). We reported on
the emission sources listed under the
Companies Act 2006 (Strategic Report
and Directors’ Report) Regulations 2013
and the Companies (Directors’ Report)
and Limited Liability Partnerships (Energy
and Carbon Report) Regulations 2018
(Scopes 1 and 2).
All sources reported in 2020 fell within
our consolidated financial statements.
Since 2021, in accordance with the
Greenhouse Gas Protocol and aligning
with TCFD recommendations, we have
taken the opportunity to present elements
of the emissions derived from our portfolio
companies (outside our consolidated
financial statements). We aggregate
and present portfolio companies’
Scope 1, 2 and 3 emissions under our
Scope 3 emissions.
GCAP considers that all material
categories of Scope 3 have been included
in our emissions calculation. For further
details, please refer to the emission
disclosure and calculation methodology
on page 82.
GHG reduction targets
Georgia Capital commits to reducing
total Scope 1 and Scope 2 emissions by
30% by 2030 compared to the base year,
2022, and by 95% by 2050, ultimately
becoming Net-Zero.
Metrics and targets
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Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Target
2
KPIs Base year 2022 Target by 2030 Target by 2050
Reach Net-Zero across
Scope 1 and 2 emissions
at both GCAP HoldCo
and portfolio companies’
level by 2050
GHG emissions reduction targets
Reduce GCAP HoldCo Scope 1 and 2 emissions
3
70 tCO
2
e 30% 95%
Reduce GCAP’s Scope 3 emissions:
* Reduce portfolio companies’ Scope 1 and 2 emissions
3
23,706 tCO
2
e 30% 95%
* Offset GCAP HoldCo’s direct Scope 3 emissions
4
that
cannot be avoided or reduced further, starting from 2030
78 tCO
2
e Yes Yes
Georgia Capital plans to reduce its direct GHG emissions by:
• implementing Net-Zero awareness campaigns across the Group and portfolio companies;
• organising annual ESG workshops with the portfolio companies;
• replacing the natural gas heating systems with efficient electric heating solutions;
• promoting electric vehicle deployment in order to reduce the consumption of petrol and diesel; and
• gradually transferring electricity consumption to 100% renewable energy, either by installing
renewable energy solutions at our facilities or purchasing electricity from renewable energy providers.
1 Represents GCAP’s absolute Scope 1, 2 and 3 emissions (the latter reflecting the aggregated Scope 1 and 2 emissions of the portfolio companies).
2 Since GCAP’s portfolio is subject to regular asset rotation, the targets may be recalibrated in the future.
3 The 2022 GHG emissions have been retrospectively adjusted, incorporating the calculation methodology agreed upon with our external verification provider. Specifically,
GHG emissions under the SLB Framework, following the retrospective application of the relevant methodology, amount to 23,776 tCO
2
e, as opposed to the previously disclosed
22,829 tCO
2
e, representing an updated baseline for GHG emission reduction targets/SPTs.
4 Emissions related to air travel and ground transportation provided by third parties and electricity, heat/steam, cooling provided within leased and service agreements.
In 2023, JSC GCAP issued a US$
150 million SLB and established an
SLB Framework, under which GCAP
committed to decrease its GHG
emissions
1
by 20% by 2027 compared
to a 2022 baseline. The SLB target is in
line with GCAP’s overarching commitment
to reaching Net-Zero across the Group
by 2050.
2022 has been chosen as a base year for
two major reasons:
•
In 2022, the disposal of the majority
equity stake in the water utility
business was completed, which
significantly changed the GHG
emission composition.
•
The 2022 year reflects the
normalisation of economic activities
compared to the abnormal
environment in 2020-2021 years due
to COVID-19-related implications.
In 2022, the full GHG inventory analysis
revealed that the portfolio companies’
GHG emissions accounted for 99.5%
of the Group and portfolio companies’
aggregated emissions, which were
derived from the following sources:
•
Combustion of natural gas (Scope 1) –
33% of the total GHG emissions.
•
Combustion of petrol and diesel
(Scope 1) – 25% of the total GHG
emissions.
•
Consumption of electricity (Scope 2) –
23% of the total GHG emissions.
•
Other emissions (Scope 3) – 19% of
the total GHG emissions.
GHG emissions reduction roadmaps were
developed at both the GCAP HoldCo and
portfolio businesses’ levels to support
GCAP in transferring to a low-carbon
economy, and consequently lowering its
environmental footprint.
The roadmap captures the fundamental
activities to minimise any adverse impact
on the environment, whilst simultaneously
highlighting benefits for the Group and its
portfolio companies:
•
c.80% of Georgian electricity is
sourced from renewable energy power,
having a relatively modest adverse
impact on the environment.
•
GCAP’s updated strategy of having
considerable exposure to capital-light
portfolio companies provides a chance
to progressively transition to a low-
carbon economy.
Resources and Responsibilities continued
Location: Vashlovani National Park, Georgia
Image Source: https://nationalparks.ge/
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APMs overview
Management assesses the Group’s performance using a variety
of measures that are not specifically defined under IFRS and
are, therefore, referred to as APMs internally and throughout this
document. Management monitors the Group’s performance on
a regular basis based on developments in the Income Statement
and NAV Statement prepared under the methodologies described
below. Management believes that such statements provide an
important view on Georgia Capital’s strategy and helpful insights
into management’s decision-making. Management dedicates
time to ensuring that the Group’s APMs are reported in a
consistent and transparent way in accordance with the European
Securities and Markets Authority (“ESMA”) published guidelines.
Under IFRS 10, Georgia Capital PLC meets the “investment
entity” definition and does not consolidate its portfolio companies,
instead the investments are measured at fair value.
Our Group level discussion is, therefore, based on the IFRS 10
investment entity accounts.
The NAV Statement, as included in the notes to the IFRS financial
statements, summarises the Group’s equity value and drivers of
related changes between the reporting periods. Georgia Capital
holds an investment – in JSC Georgia Capital (an investment
entity on its own) – which in turn owns a portfolio of investments,
each measured at fair value. Georgia Capital measures its
investment in JSC Georgia Capital at fair value through profit
and loss, estimated with reference to JSC Georgia Capital’s own
portfolio value as offset against its net debt.
The Income Statement presents the Group’s results of operations
for the reporting period. As we conduct most of our operations
through JSC Georgia Capital, through which we hold our
portfolio companies, the IFRS results provide little transparency
on the underlying trends. To enable a comprehensive view of the
combined operations of Georgia Capital PLC and JSC Georgia
Capital (together referred to herein as “GCAP”) as if it were one
holding company, we adjust the accounts (“adjusted IFRS 10
Income Statement”). A full reconciliation of the adjusted Income
Statement to the IFRS Income Statement is provided on page 97.
Additionally, for the majority of our portfolio companies the fair
value of our equity investment is determined by the application
of a market approach (listed peer multiples and precedent
transactions) and an income approach (DCF). Under the market
approach, listed peer group earnings multiples are applied to
the trailing 12-month (LTM) stand-alone IFRS earnings of the
relevant business. Under the DCF valuation method, fair value
is estimated by deriving the present value of the business using
reasonable assumptions of expected future cash flows and
the terminal value, and the appropriate risk-adjusted discount
rate that quantifies the risk inherent to the business. As such,
the stand-alone IFRS results and developments behind IFRS
earnings of our portfolio companies are key drivers in their
valuations. Following the Group discussion, we therefore also
present unaudited IFRS financial statements for each portfolio
company and a related brief results discussion.
Our adjusted IFRS 10 Income Statement and the stand-alone
IFRS results for our portfolio companies may be viewed as APMs.
NAV Statement
The Group mainly makes indirect investments in portfolio
companies, held through intermediate Georgian holding
company, JSC Georgia Capital, which is the principal subsidiary
of Georgia Capital PLC. The application of IFRS 10 requires us
to fair value the intermediate holding company JSC Georgia
Capital. This fair value approach, applied at the intermediate
holding company level, effectively obscures the performance
of our equity capital investments and associated transactions
occurring in the intermediate holding company. The financial
effect from the valuation of the underlying portfolio companies
are aggregated into a single value. The breakdown of the value
of JSC Georgia Capital is presented in Note 12 within the IFRS
financial statements. To maintain transparency in our report and
aid understanding we present a NAV Statement and respective
reconciliation to the IFRS Balance Sheet in Note 5 (Segment
information) of the IFRS financial statements. NAV disclosed
under the NAV Statement is the same as IFRS equity value
as at 31 December 2024. The NAV Statement is simply a
“look through” of the IFRS 10 Balance Sheet to present the
underlying performance.
The NAV Statement breaks down NAV into its components
and provides roll-forward of the related changes between the
reporting periods, including a snapshot of the Group’s financial
position at the opening and closing dates. The NAV Statement
provides a value of Georgia Capital that management uses as
a tool for measuring its investment performance. Management
closely monitors NAV in connection with capital allocation
decisions. The following methodology underlies the presentation
of the NAV for period-end dates:
•
NAV is calculated at stand-alone GCAP level, which represents
the aggregation of the stand-alone assets and liabilities of
Georgia Capital PLC and JSC Georgia Capital.
•
Holdings in listed, observable and private portfolio companies
are carried based on the following methodology:
−
Listed portfolio companies are carried at the period-end
market values based on closing share prices on respective
stock exchanges.
−
Observable portfolio companies are carried at valuation
using put and/or call options at pre-agreed multiples, where
there is a clear exit path from the business.
−
Private portfolio companies are carried at fair value based
on a valuation technique believed to be most appropriate to
that investment as described in the Valuation Methodology
on page 98.
−
NAV per share represents total NAV divided by the number
of outstanding shares at the end of the period, i.e. the
number of issued shares at the end of the period less
unawarded shares in GCAP’s management trust.
Management Income Statement
The Income Statement is an aggregation of GCAP’s
stand-alone Profit and Loss Statement and fair value change of
portfolio companies during the reporting period. The following
methodology underlies the preparation of the Income Statement:
•
The top part of the Income Statement (GCAP net operating
income) represents the aggregation of the two stand-alone
holding company accounts, which we call GCAP (i.e. the
UK holding company Georgia Capital PLC and the Georgian
holding company JSC Georgia Capital), the performance of
which reflects the net result of a) dividend income accrual
based on distributed or declared annual dividend proceeds
from portfolio companies during the reporting period, b)
interest income on liquid funds and loans issued, c) interest
expenses on debt incurred at GCAP level (which consists of
the bonds issued), d) realised/unrealised gains or losses on
liquid assets and e) expenses incurred at GCAP level.
•
Fair value change of portfolio companies (total investment
return) represents fair value changes in the value of portfolio
companies during the reporting period, as valued in the
period-end NAV Statement. A detailed Valuation Methodology
is described on page 98. We view fair value changes
of portfolio companies as a metric to measure the total
investment return of Georgia Capital’s holdings, which itself
reflects value creation for shareholders.
•
Following the aggregation of GCAP net operating income
and total investment return, we arrive at management income
before foreign exchange movements for the period.
•
Below the income before foreign exchange movements line,
to arrive at management net income, we present GCAP gains
or losses from foreign exchange movements and other costs
such as non-recurring or transactions costs if there are any in
a reportable period.
APM summary
In October 2015, ESMA published guidelines about the use of
APMs. These are financial measures such as key performance
indicators (KPIs) that are not defined under IFRS. In the Strategic
Review section of the Annual Report on pages 4 to 117, Georgia
Capital describes its financial performance under the adjusted
IFRS 10 Income Statement and also discloses the stand-alone
IFRS results for the portfolio companies, which themselves can be
viewed as APMs. A number of other measures are used which are
also APMs, since they are derived from the management accounts.
The applicable reconciliations to the IFRS equivalent where
appropriate, is provided below and should be read alongside the
adjusted IFRS 10 Income Statement to IFRS reconciliation.
The table below lists all the APMs used within the Annual Report.
Read more on financial performance in the
Strategic Review on pages 100 to 117.
Read more on about the use of APMs in the
Discussion of Results on pages 94 to 96.
Alternative Performance Measures
APM Purpose Calculation Reconciliation to IFRS
NAV per share The measure of per-share
value of Georgia Capital.
NAV per share is calculated as
NAV divided by the number of
outstanding shares at the end of
the period, i.e. issued shares at the
end of the period less unawarded
shares in management trust.
N/A
GCAP net operating income A measure to reflect
performance of the
stand-alone GCAP and
evaluate cash generating
capacity on a holding
company level.
GCAP net operating income reflects
the net result of: a) dividend income
accrual based on paid or declared
annual dividend proceeds from
portfolio companies to be collected
during the year; b) interest income
on liquid funds and senior loans
issued; c) interest expenses on debt
incurred at GCAP level; d) realised/
unrealised gains or losses on liquid
assets; and e) operating expenses
incurred at GCAP level.
The equivalent balance
under IFRS and respective
reconciliation are shown in
the reconciliation of the
Income Statement.
Total investment return A metric to measure the
value creation power of
Georgia Capital from its
investments.
Fair value change of portfolio
companies (total investment return)
represents fair value changes in the
value of portfolio companies during
the reporting period, as valued in
the period-end NAV Statement.
The equivalent balance
under IFRS and respective
reconciliation are shown in the
reconciliation of the Income
Statement.
Net income A performance metric
to measure the value
creation power of
Georgia Capital during
the period.
Aggregation of GCAP net operating
income and total investment return
less GCAP gains or losses from
foreign exchange movements and
other non-recurring gain or losses.
The equivalent balance
under IFRS and respective
reconciliation are shown in
the reconciliation of the
Income Statement.
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Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
APM Purpose Calculation Reconciliation to IFRS
EBITDA Management uses
EBITDA as a tool to
measure the portfolio
companies’ operational
performance and the
profitability of those
companies’ operations.
The Company considers
EBITDA to be an
important indicator of
representative recurring
operations.
Earnings before interest, taxes,
non-recurring items, FX gain
or losses, depreciation and
amortisation.
N/A
GCAP net debt A measure of the
available cash to invest
in the business and an
indicator of the financial
risk at GCAP level.
Net debt is calculated at GCAP
level as follows: cash and liquid
funds plus loans issued less gross
debt; loans issued does not include
investment type mezzanine loans
(if any).
N/A
Net capital commitment
(NCC) ratio
A metric to measure
Georgia Capital’s balance
sheet leverage.
NCC ratio is calculated at the
GCAP HoldCo level by dividing
NCC by total portfolio value. NCC
represents an aggregated view of
all confirmed, agreed, and expected
capital outflows at the GCAP
holding company level.
N/A
Internal rate of return (IRR) A metric to evaluate the
historical
track record of
investments.
IRR for investments is calculated
based on: a) historical contributions
to the investment; less b) dividends
received; and c) market value of
the investment.
N/A
Multiple of invested capital
(MOIC)
A measure to evaluate
Georgia
Capital’s efficiency in
allocating capital.
MOIC is calculated as follows:
the numerator is the cash and
non-cash inflows from dividends
and sell-downs plus fair value
of investment at reporting date;
and the denominator is the gross
investment amount.
N/A
Return on invested capital
(ROIC)
To evaluate a company’s
efficiency at allocating the
capital under its control
to profitable investments.
ROIC is calculated as EBITDA less
depreciation, divided by aggregate
amount of total equity and
borrowed funds.
N/A
Return on average total equity
(ROAE)
To measure the
performance of a
company based on its
average shareholders’
equity outstanding.
ROAE equals profit for the period
attributable to shareholders
divided by monthly average equity
attributable to shareholders for the
same period.
N/A
Value creation/investment
return
To measure the annual
shareholder return on
each portfolio company
for Georgia Capital.
Aggregation of: a) change in
beginning and ending fair values;
b) gains from realised sales
(if any); and c) dividend income
during period. The net result is
then adjusted to remove capital
injections (if any) to arrive at the total
value creation/investment return.
N/A
GCAP’s liquid funds A measure to evaluate
the Company’s liquidity.
Includes marketable debt securities
and issued loans.
N/A
Reconciliation of adjusted Income Statement to IFRS Income Statement
The table below reconciles the adjusted Income Statement to the IFRS Income Statement. Adjustments to reconcile adjusted
Income Statement with IFRS Income Statement mainly relate to eliminations of income, expense and certain equity movement items
recognised at JSC Georgia Capital, which are subsumed within gross investment income/(loss) in IFRS Income Statement of Georgia
Capital PLC.
GEL thousands, unless otherwise noted (Unaudited)
IFRS income
statement Adjustment
IFRS income
statement
Dividend income 201,752 (76,643) 125,109
Interest income 7,477 (7,477) –
Realised/unrealised loss on liquid funds (796) 796 –
Interest expense (35,589) 35,589 –
Gross operating income 172,844 (47,735) 125,109
Operating expenses (administrative, salaries and other employee benefits) (35,280) 35,280 –
GCAP net operating income 137,564 (12,455) 125,109
Total investment return/gain on investments at fair value 233,570 9,419 242,989
Administrative expenses, salaries and other employee benefits – (5,749) (5,749)
Income before foreign exchange movements and non-recurring expenses 371,134 (8,785) 362,349
Net foreign currency (loss)/gain (18,662) 18,699 37
Non-recurring expenses (2,148) 2,148 –
Net losses from investments measured at fair value through profit or loss – (112) (112)
Net income 350,324 11,950 362,274
Subtotals in the “Adjustment” columns may not add up as they provide a reconciliation to the statements with different structures and subtotals.
Alternative Performance Measures continued Reconciliation of Adjusted IFRS Measures to IFRS Figures
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Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Equity investments in Georgia Capital’s portfolio companies are measured at fair values at each reporting date in accordance with IFRS
13 Fair Value Measurement. Fair value, as defined in IFRS, is the price that would be received to sell an asset in an orderly transaction
between market participants at the measurement date.
Equity investments in listed and observable portfolio companies
Equity instruments listed on an active market are valued at the price within the bid/ask spread, that is most representative of fair value
at the reporting date, which usually represents the closing bid price. The instruments are included within Level 1 of the hierarchy in JSC
GCAP financial statements. Listed and observable portfolio also includes instruments for which there is a clear exit path from the business,
e.g. through a put and/or call options at pre-agreed multiples. In such cases, pre-agreed terms are used for valuing the company.
Equity investments in private portfolio companies
Large private portfolio companies – An independent third-party valuation firm is engaged to assess fair value ranges of large private
portfolio companies at the reporting date starting from 2020. The independent valuation company has extensive relevant industry and
emerging markets experience. Valuation is performed by applying several valuation methods including an income approach based
mainly on DCF and a market approach based mainly on listed peer multiples (the DCF and listed peer multiples approaches applied are
described below for the other portfolio companies). The different valuation approaches are weighted to derive a fair value range, with
the income approach being more heavily weighted than the market approach. Management selects the most appropriate point in the
provided fair value range at the reporting date.
Investment stage portfolio companies – An independent third-party valuation firm is engaged to assess fair value ranges of
investment stage private portfolio companies at the reporting date starting from 30 June 2022. The independent valuation company has
extensive relevant industry and emerging markets experience. Valuation is performed by applying several valuation methods including an
income approach based mainly on DCF and a market approach based mainly on listed peer multiples (the DCF and listed peer multiples
approaches applied are substantially identical to those described below for the other portfolio companies). The different valuation
approaches are weighted to derive a fair value range, with the income approach being more heavily weighted than the market approach.
Management selects what is considered to be the most appropriate point in the provided fair value range at the reporting date.
Other portfolio companies – Fair value assessment is performed internally using one of the valuation methods described below.
Equity investments in private portfolio companies are valued by applying an appropriate valuation method, which makes maximum
use of market-based public information, is consistent with valuation methods generally used by market participants and is applied
consistently from period to period, unless a change in valuation technique would result in a more reliable estimation of fair value. The
value of an unquoted equity investment is generally crystallised through the sale or flotation of the entire business. Therefore, the
estimation of fair value is based on the assumed realisation of the entire enterprise at the reporting date. Recognition is given to the
uncertainties inherent in estimating the fair value of unquoted companies and appropriate caution is applied in exercising judgements
and in making the necessary estimates.
Listed peer group multiples
This methodology involves the application of a listed peer group earnings multiple to the earnings of the business and is appropriate
for investments in established businesses and for which the Company can determine a group of listed companies with similar
characteristics. The earnings multiple used in valuation is determined by reference to listed peer group multiples appropriate for
the period of earnings calculation for the investment being valued. Peer group is identified for each equity investment taking into
consideration points of similarity with the investment such as industry, business model, size of the company, economic and regulatory
factors, growth prospects (higher growth rate) and risk profiles. Some peer-group companies’ multiples may be more heavily weighted
during valuation if their characteristics are closer to those of the company being valued than others. As a rule of thumb, LTM earnings will
be used for the purposes of valuation. Earnings are adjusted where appropriate for exceptional, one-off or non-recurring items.
a. Valuation based on enterprise value
Fair value of equity investments in private companies can be determined as their enterprise value less net financial debt (gross face
value of debt less cash) appearing in the most recent financial statements. Enterprise value is obtained by multiplying measures of a
company’s earnings by the listed peer group multiple (EV/EBITDA) for the appropriate period. The measures of earnings generally used
in the calculation is recurring/adjusted EBITDA for the last 12 months (LTM EBITDA). In exceptional cases, where EBITDA is negative,
peer EV/Sales (enterprise value to sales) multiple can be applied to last 12-month recurring/adjusted sales revenue of the business
(LTM sales) to estimate enterprise value.
Once the enterprise value is estimated, the following steps are taken:
•
Net financial debt appearing in the most recent financial statements is subtracted from the enterprise value. If net debt exceeds
enterprise value, the value of shareholders’ equity remains at zero (assuming the debt is without recourse to Georgia Capital).
•
The resulting fair value of equity is apportioned between Georgia Capital and other shareholders of the company being valued, if applicable.
•
Valuation based on enterprise value using peer multiples is used for businesses within non-financial industries.
b. Equity fair value valuation
Fair value of equity investment in companies can also be determined using the price to earnings (P/E) multiple of similar listed
companies. The measure of earnings used in the calculation is recurring/adjusted net income (net income adjusted for non-recurring
items and FX gains/losses) for the last 12 months (LTM net income). The resulting fair value of equity is allocated between Georgia
Capital and other shareholders of the portfolio company, if any. Fair valuation of equity using peer multiples can be used for businesses
within the financial sector (e.g. insurance companies).
Discounted cash flow
Under the DCF valuation method, fair value is estimated by deriving the present value of the business using reasonable assumptions
of expected future cash flows and the terminal value, and the appropriate risk-adjusted discount rate that quantifies the risk inherent
to the business. The discount rate is estimated with reference to the market risk-free rate, a risk adjusted premium and information
specific to the business or market sector. Under the DCF analysis unobservable inputs are used, such as estimates of probable future
cash flows and an internally-developed discounting rate of return.
Net asset value
The net assets (NAV) methodology involves estimating the fair value of equity investment in a private portfolio company based on
its book value at the reporting date. This method is appropriate for businesses (such as real estate) whose value derives mainly from
the underlying value of its assets and where such assets are already carried at their fair values (fair values determined by professional
third-party valuation companies) on the balance sheet.
Price of recent investment
The price of a recent investment resulting from an orderly transaction, generally represents fair value as of the transaction date.
At subsequent measurement dates, the price of a recent investment may be an appropriate starting point for estimating fair value.
However, adequate consideration is given to the current facts and circumstances to assess at each measurement date whether
changes or events subsequent to the relevant transaction imply a change in the investment’s fair value.
Exit price
Fair value of a private portfolio company in a sales process, where the price has been agreed but the transaction has not yet settled,
is measured at the best estimate of expected proceeds from the transaction, adjusted pro-rata to the proportion of shareholding sold.
Validation
Fair value of investments estimated using the valuation methods described above is cross-checked using several other valuation
methods as follows:
•
Listed peer group multiples – peer multiples such as P/E, P/B and dividend yield are applied to respective metrics of the investment
being valued depending on the industry of the company. The Company develops fair value range based on these techniques and
analyses whether the fair value estimated above falls within this range.
•
DCF – DCF valuation method is used to determine fair value of equity investment. Based on DCF, the Company might make the
upward or downward adjustment to the value of the valuation target as derived from the primary valuation method. If fair value
estimated using DCF analysis significantly differs from the fair value estimate derived using the primary valuation method, the
difference is examined thoroughly, and judgement is applied in estimating fair value at the measurement date.
•
In line with GCAP’s strategy, from time to time, we may receive offers from interested buyers for the private portfolio companies,
which would be considered in the overall valuation assessment, where appropriate.
Valuation of equity investments in private portfolio companies
The table below summarises fair valuation of equity investments in our private portfolio companies as at 31 December 2024.
GEL thousands
Valuation performed
externally or internally Valuation method Multiple applied Fair value
Large portfolio companies Externally 1,434,749
Retail (pharmacy) Externally DCF and EV/EBITDA 8.4x 716,130
Insurance Externally DCF and P/E 11.1x 427,945
Hospitals Externally DCF and EV/EBITDA 10.5x 290,674
Investment stage portfolio companies Externally 557,392
Renewable energy Externally DCF and EV/EBITDA 11.3x¹ 252,606
Education Externally DCF and EV/EBITDA 12.8x 181,584
Clinics and diagnostics Externally DCF and EV/EBITDA 10.6x
2
123,202
Other portfolio companies Internally EV/EBITDA, NAV, DCF and exit price 160,314
1 11.3x is the blended multiple for Hydrolea HPPs, Mestiachala HPP and Qartli WPP.
2 10.6x is the blended multiple for clinics and diagnostics businesses.
Valuation Methodology
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Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Financial Review
Financial Performance Highlights (IFRS)
1
GEL thousands, unless otherwise noted (Unaudited)
Georgia Capital NAV overview
Dec-24 Dec-23 Change
NAV per share, GEL 95.95 82.94 15.7%
NAV per share, GBP 27.14 24.23 12.0%
NAV
2
3,609,013 3,378,512 6.8%
Shares outstanding
3
37,612,488 40,736,528 -7.7%
Cash and liquid funds 278,237 107,910 NMF
NCC ratio
3
12.8% 15.6% -2.8 ppts
Georgia Capital performance
FY24 FY23 Change
Total portfolio value creation 435,322 680,515 -36.0%
of which, listed and observable portfolio 368,985 553,255 -33.3%
of which, private portfolio 66,337 127,260 -47.9%
Investments 16,933 22,588 -25.0%
Divestments (168,037) (4,168) NMF
Buybacks
4
136,523 76,477 78.5%
Dividend income 201,752 235,883 -14.5%
of which, recurring dividend income
5
179,156 179,822 -0.4%
of which, one-off dividend income 22,596 56,061 -59.7%
Net income 350,324 615,589 -43.1%
Private portfolio companies’ performance
1,6
FY24 FY23 Change
Large portfolio companies
Revenue 1,499,308 1,337,010 12.1%
EBITDA 180,733 153,868 17.5%
Net operating cash flow 196,045 96,671 NMF
Investment stage portfolio companies
Revenue 186,667 155,280 20.2%
EBITDA 64,419 51,995 23.9%
Net operating cash flow 74,321 50,609 46.9%
Total portfolio
7
Revenue 2,250,715 2,067,648 8.9%
EBITDA 310,903 248,647 25.0%
Net operating cash flow 298,519 139,391 NMF
Key points
•
NAV per share (GEL) increased 15.7% in FY24, reflecting the excellent operating performance of our portfolio companies.
•
Outstanding results across our private portfolio with a 8.9% and 25.0% y-o-y increase in aggregated revenues and EBITDA in FY24,
respectively, leading to a more than doubling of net operating cash flow.
•
NCC ratio improved by 2.8 ppts y-o-y to 12.8% as at 31-Dec-24, despite the launch of the US$ 25 million share buyback
programme in December 2024, reflecting the receipt of c.US$ 63 million net proceeds from the beer and distribution business
disposal and an 2.4% y-o-y increase in portfolio value.
•
GEL 179.2 million recurring dividend income from the portfolio companies in FY24.
•
3.7 million shares with a total value of US$ 48.1 million (GEL 131.9 million) repurchased under GCAP’s buyback and cancellation
programmes during FY24.
Discussion of Group results
The NAV Statement summarises the Group’s IFRS equity value (which we refer to as net asset value or NAV in the NAV Statement
below) at the opening and closing dates for the full year (31 December 2023 and 31 December 2024). The NAV Statement below
breaks down NAV into its components and provides a roll-forward of the related changes between the reporting periods.
GEL thousands, unless otherwise noted
(Unaudited) Dec–23
1. Value
creation
1
2a.
Investment
and
Divestments
2b.
Buyback
2c.
Dividend
3.Operating
expenses
4. Liquidity/
FX/Other Dec–24
Change
%
Listed and observable
portfolio companies
Lion Finance Group
1,225,847 339,985 – – (144,797) – – 1,421,035 15.9%
Water Utility 159,000 29,000 – – – – – 188,000 18.2%
Total listed and observable
portfolio value
1,384,847 368,985 – – (144,797) – – 1,609,035 16.2%
Listed and observable
portfolio value change %
26.6% 0.0% 0.0% -10.5% 0.0% 0.0% 16.2%
Private portfolio companies
Large companies
1,436,231 30,237 – – (35,408) – 3,689 1,434,749 -0.1%
Retail (pharmacy) 714,001 10,739 – – (10,048) – 1,438 716,130 0.3%
Insurance (P&C and medical) 377,874 74,617 – – (25,360) – 814 427,945 13.3%
of which, P&C insurance 285,566 44,746 – – (17,986) – 814 313,140 9.7%
of which, medical insurance 92,308 29,871 – – (7,374) – – 114,805 24.4%
Hospitals 344,356 (55,119) – – – – 1,437 290,674 -15.6%
Investment stage companies 566,614 (10,501) 11,933 – (12,258) – 1,604 557,392 -1.6%
Renewable energy 266,627 (13,770) 11,333 – (12,258) – 674 252,606 -5.3%
Education 189,226 (8,853) 600 – – – 611 181,584 -4.0%
Clinics and diagnostics 110,761 12,122 – – – – 319 123,202 11.2%
Other companies 284,253 46,601 (163,037) – (9,289) – 1,786 160,314 -43.6%
Total private portfolio value 2,287,098 66,337 (151,104) – (56,955) – 7,079 2,152,455 -5.9%
Private portfolio value
change %
2.9% -6.6% 0.0% -2.5% 0.0% 0.3% -5.9%
Total portfolio value (1) 3,671,945 435,322 (151,104) – (201,752) – 7,079 3,761,490 2.4%
Total portfolio value
change %
11.9% -4.1% 0.0% -5.5% 0.0% 0.2% 2.4%
Net debt (2) (296,808) – 148,504 (135,718) 201,752 (21,379) (50,776) (154,425) -48.0%
of which, cash and liquid funds 107,910 – 157,371 (135,718) 201,752 (21,379) (31,699) 278,237 NMF
of which, loans issued 9,212 – (8,867) – – – (345) – NMF
of which, accrued
dividend income
– – – – – – – – NMF
of which, gross debt (413,930) – – – – – (18,732) (432,662) 4.5%
Net other assets/(liabilities) (3) 3,375 – 2,600 (805) – (13,900) 10,678 1,948 -42.3%
of which, share-based comp. – – – – – (13,900) 13,900 – NMF
Net asset value (1)+(2)+(3) 3,378,512 435,322 – (136,523) – (35,279) (33,019) 3,609,013 6.8%
NAV change % 12.9% 0.0% -4.0% 0.0% -1.0% -1.0% 6.8%
Shares outstanding
1
40,736,528 – – (3,790,417) – – 666,377 37,612,488 -7.7%
Net asset value per share,
GEL
82.94 10.68 (0.00) 4.81 (0.00) (0.87) (1.60) 95.95 15.7%
NAV per share, GEL change % 12.9% 0.0% 5.8% 0.0% -1.0% -1.9% 15.7%
NAV per share (GEL) was up by 15.7% in FY24, reflecting a GEL 435.3 million value creation across our portfolio companies with a
positive 12.9 ppts impact and share buybacks (+5.8 ppts impact). The NAV per share growth was slightly offset by a) management
platform-related costs and net interest expense with a negative 1.9 ppts impact and b) GEL’s depreciation against US$, resulting in a
foreign currency loss of GEL 15.1 million on GCAP net debt (-0.5 ppts impact).
1 Please read more about APMs on pages 94-96. Private portfolio companies’ performance includes aggregated stand-alone IFRS results for our portfolio companies, which can be
viewed as APMs for Georgia Capital, since Georgia Capital does not consolidate its subsidiaries and instead measures them at fair value under IFRS.
2 See page 208 for the reconciliation of NAV to IFRS financial statements as at 31 December 2024.
3 Please see definition in glossary on page 227.
4 Includes both the buybacks under the share buyback and cancellation programme and for the management trust.
5 Includes regular cash and buyback dividends.
6 Private portfolio companies’ performance highlights are presented excluding the water utility business. Aggregated numbers are presented like-for-like basis.
7 The results of our four smaller businesses included in other portfolio companies (described on page 57) are not broken out separately. Performance totals, however, include the other
portfolio companies’ results (and are therefore not the sum of large and investment stage portfolio results). 1 Please see definition in glossary on page 227.
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Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Portfolio overview
Total portfolio value increased by GEL 89.5 million (up 2.4%) in FY24:
•
The value of GCAP’s holding in Lion Finance Group was up by GEL 195.2 million, reflecting the net impact of GEL 340.0 million
value creation and GEL 144.8 million cash and buyback dividend income from the Bank in FY24.
•
The value of the water utility business increased by GEL 29.0 million, reflecting its strong operating performance during the year.
•
The value of the private portfolio decreased by GEL 134.6 million in FY24, mainly reflecting the divestment of an 80% holding in the
beer and distribution business and the collection of GEL 57.0 million dividends from the private portfolio companies. The decrease
was partially offset by GEL 66.3 million value creation and GEL 16.9 million investments in the portfolio companies.
1) Value creation
Total portfolio value creation amounted to GEL 435.3 million in FY24.
•
An 18.5% increase in Lion Finance Group’s share price, supported by a 3.3% appreciation of GBP against GEL in FY24, led to a
GEL 340.0 million value creation.
•
GEL 29.0 million value was created in our water utility business.
•
The value creation in the private portfolio amounted to GEL 66.3 million in FY24, reflecting a net impact of:
−
GEL 671.5 million operating performance-related increase in the value of our private assets.
−
GEL 605.1 million value reduction from changes in valuation inputs, including the negative impact from the increased country
riskpremium in FY24.
The table below summarises value creation drivers in our businesses in FY24:
Portfolio Businesses
Operating
Performance
1
Multiple Change
and FX
2
Value Creation
GEL thousands, unless otherwise noted(Unaudited) (1) (2) (1)+(2)
Listed and observable 368,985
Lion Finance Group 339,985
Water Utility 29,000
Private 671,481 (605,144) 66,337
Large portfolio companies 434,148 (403,911) 30,237
Retail (pharmacy) 170,146 (159,407) 10,739
Insurance (P&C and medical) 129,373 (54,756) 74,617
of which, P&C insurance 111,728 (66,982) 44,746
of which, medical insurance 17,645 12,226 29,871
Hospitals 134,629 (189,748) (55,119)
Investment stage portfolio companies 152,279 (162,780) (10,501)
Renewable energy 37,205 (50,975) (13,770)
Education 49,255 (58,108) (8,853)
Clinics and diagnostics 65,819 (53,697) 12,122
Other 85,054 (38,453) 46,601
Total portfolio 671,481 (605,144) 435,322
The enterprise value and equity value development of our businesses in FY24 is summarised in the following table:
Enterprise Value (EV) Equity Value
GEL ‘000, unless otherwise noted
(Unaudited) 31-Dec-24 31-Dec-23 Change % 31-Dec-24 31-Dec-23 Change %
% share in total
portfolio
Listed and observable
portfolio 1,609,035 1,384,847 16.2% 42.8%
Lion Finance Group 1,421,035 1,225,847 15.9% 37.8%
Water Utility 188,000 159,000 18.2% 5.0%
Private portfolio 3,613,737 3,463,259 4.3% 2,152,455 2,287,098 -5.9% 57.2%
Large portfolio companies 2,076,069 2,021,278 2.7% 1,434,749 1,436,231 -0.1% 38.1%
Retail (pharmacy) 1,021,000 1,043,800 -2.2% 716,130 714,001 0.3% 19.0%
Insurance (P&C and medical) 463,144 358,566 29.2% 427,945 377,874 13.3% 11.4%
of which, P&C insurance 313,000 285,566 9.6% 313,140 285,566 9.7% 8.3%
of which, medical insurance 150,144 73,000 NMF 114,805 92,308 24.4% 3.1%
Hospitals 591,925 618,912 -4.4% 290,674 344,356 -15.6% 7.7%
Investment stage portfolio
companies 865,238 856,787 1.0% 557,392 566,614 -1.6% 14.8%
Renewable energy 444,158 456,236 -2.6% 252,606 266,627 -5.3% 6.7%
Education
1
234,405 228,799 2.5% 181,584 189,226 -4.0% 4.8%
Clinics and diagnostics 186,675 171,752 8.7% 123,202 110,761 11.2% 3.3%
Other 672,430 585,194 14.9% 160,314 284,253 -43.6% 4.3%
Total portfolio 3,761,490 3,671,945 2.4% 100.0%
Private large portfolio companies (38.1% of total portfolio value)
Retail (pharmacy) (19.0% of total portfolio value) – EV of retail (pharmacy) was down by 2.2% to GEL 1.0 billion in FY24, reflecting
the market movements in the valuation inputs. Substantial ramp-up of the pharmacy stores launched in late 2023 and enhanced sales
and profitability of higher-margin para-pharmacy products led to a 4.3% y-o-y revenue increase in FY24. Gross profit margin improved
by 2.0 ppts to 30.7%, further supported by successful renegotiations of trading terms with key suppliers across major product
categories. Operating expenses were up by 15.3% y-o-y in FY24, due to increased rent and salary costs related to the chain expansion
and the launch of a new warehouse in late 2023. Consequently, FY24 EBITDA increased by 4.6% y-o-y to GEL 80.9. See page 108
for details. LTM EBITDA (incl. IFRS16) was up by 12.4% y-o-y to GEL 121.0 million in FY24. Net debt (incl. IFRS 16) decreased by
7.5% to GEL 297.9 million as at 31 December 2024, resulting from robust cash flow generation during the year. As a result, the fair
value of GCAP’s 97.8% holding remained largely flat, up by 0.3% y-o-y. The implied LTM EV/EBITDA valuation multiple (incl. IFRS 16)
decreased to 8.4x as at 31 December 2024, down from 9.7x as at 31 December 2023.
Insurance (P&C and medical) (11.4% of total portfolio value) – The insurance business combines a) P&C insurance valued at
GEL 313.1 million and b) medical insurance valued at GEL 114.8 million.
P&C insurance revenues were up by 27.5% to GEL 149.0 million in FY24, driven by the growth in the motor, credit life and agricultural
insurance claims. The revenue of the medical insurance business increased by 83.4% y-o-y and amounted to GEL 167.5 million in
FY24, reflecting organic growth of the portfolio, c.10% increase in insurance policy prices and the positive impact of the acquisition of
Ardi insurance portfolio in April 2024, the latter contributing GEL 59.6 million to the FY24 y-o-y revenue growth. The combined ratio for
P&C insurance was improved by 2.0 ppts to 87.5% in FY24, mainly resulting from the improved expense ratio on the back of strong
revenue growth. The combined ratio for medical insurance improved by 1.7 ppts to 93.1% in FY24, reflecting consolidation of Ardi’s
portfolio and increased revenues, due to higher insurance tariffs. As a result, the pre-tax profit of the combined insurance business
increased by 41.1% y-o-y to GEL 42.9 million in FY24. See page 110 for details. The equity value of the combined insurance business
was up by 13.3% to GEL 427.9 million in FY24 (Ardi’s equity value is measured at the price of recent investment). This translated into
an implied LTM P/E valuation multiple of 11.1x at 31 December 2024 (down from 12.4x as at 31 December 2023).
Hospitals (7.7% of total portfolio value) – Hospitals’ EV decreased by 4.4% y-o-y to GEL 591.9 million in FY24, reflecting the
market movements in the valuation inputs. The total revenues increased by 6.0% to GEL 332.7 million in FY24, reflecting the business’
gradual return to its normal operational levels following mandatory regulatory renovations across all hospitals, most of which occurred
between the second half of 2023 and the first half of 2024. These renovations led to the phased closure of certain sections of our
healthcare facilities, resulting in reduced patient intake during that period. The gross profit margin also increased by 1.1 ppts y-o-y to
33.9% in FY24, further reflecting enhanced offerings of high-margin outpatient services and the improved cost efficiencies achieved by
the business. Operating expenses (ex. IFRS 16) were up by 1.7% y-o-y due to higher salary, material and utility costs in line with overall
business growth. This translated into a 19.6% y-o-y EBITDA (ex. IFRS 16) increase in FY24. See page 111 for details. Consequently,
LTM EBITDA (incl. IFRS 16) was up by 26.2% y-o-y to GEL 56.6 million in FY24. Net debt increased by 12.7% y-o-y to GEL 271.6
million as at 31 December 2024, due to increased borrowings to finance the capex investments. As a result, the equity value of
Financial Review continued
1 Change in the fair value attributable to the change in actual or expected earnings of the business, as well as the change in net debt.
2 Change in the fair value attributable to the change in valuation multiples and the effect of exchange rate movement on net debt. 1 Enterprise value is presented excluding the non-operational assets, added to the equity value of the education business at cost.
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Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Hospitals was assessed at GEL 290.7 million in FY24 (down 15.6% y-o-y), translating into an implied LTM EV/EBITDA multiple
(incl. IFRS 16) of 10.5x at 31 December 2024 (down from 13.8x as at 31 December 2023).
Private investment stage portfolio companies (14.8% of total portfolio value)
Renewable energy (6.7% of total portfolio value) – The EV of the business decreased by 6.7% to US$ 158.2 million in FY24,
due to the market movements in the valuation inputs. In US$ terms, the FY24 revenue increased by 11.3% y-o-y to US$ 16.1 million,
reflecting the resumption of operations of two power-generating units of Hydrolea HPPs, which were taken offline between November
2022 to June 2023 due to previously planned phased rehabilitation works. Operating expenses were well-controlled, down 1.5% y-o-y.
These developments translated into a 16.4% y-o-y increase in EBITDA in FY24. See page 113 for details. The pipeline renewable
energy projects continued to be measured at an equity investment cost and stood at US$ 19.3 million in aggregate as at 31 December
2024, down 7.7% y-o-y, reflecting the remeasurement of the costs to completion. Net debt decreased by 3.3% y-o-y to US$ 68.2
million, resulting from robust cash flow generation during the year. As a result, the equity value of the business was assessed at GEL
252.6 million in FY24 (down by 5.3% y-o-y), (down by 9.2% y-o-y to US$ 90.0 million in US$ terms). The blended EV/EBITDA implied
valuation multiple of the operational assets was 11.3x as at 31 December 2024 (down from 12.6x as at 31 December 2023).
Education (4.8% of total portfolio value) – The EV of education business was up by 2.5% y-o-y to GEL 234.4 million in FY24,
reflecting the strong operating performance of the business, while taking into account the first-time valuation of two campuses
launched in 2023, which were previously measured at an equity investment cost. The FY24 revenue increased by 22.9% y-o-y to
GEL 68.2 million, reflecting a) organic growth through strong intakes and a ramp-up of the utilisation, b) an expansion of the business
through the launch and acquisition of two new campuses in 2023. The expansion of the business also led to a 25.6% y-o-y increase in
operating expenses. Consequently, the FY24 EBITDA grew by 15.1% y-o-y. See page 114 for details. LTM EBITDA was up by 33.9%
y-o-y to GEL 18.4 million in FY24. Net debt was up by 25.6% y-o-y to GEL 20.7 million, mainly reflecting the investments related to
the expansion of existing campuses in the midscale and affordable segments, as well as the first-time valuation of the new campuses,
as outlined above. As a result, GCAP’s stake in the education business was valued at GEL 181.6 million at 31 December 2024 (down
4.0% y-o-y). The implied valuation multiple decreased to 12.8x as at 31 December 2024, down from 16.7x as at 31 December 2023.
Clinics and diagnostics business (3.3% of total portfolio value) – The EV of the business increased by 8.7% y-o-y to GEL 186.7
million in FY24, resulting from its strong operating performance. The revenue and EBITDA (ex. IFRS 16) of the combined clinics and
diagnostics business were up by 20.7% y-o-y and up by 41.8% y-o-y, respectively. This growth reflects a) the increased demand for
high revenue-generating services driven by the business’ proactive approach to customer acquisition and service enhancements, and
b) the ramp-up of the two new ambulatory centres launched in 2023. Operating expenses (ex. IFRS 16) were up by 22.9% y-o-y in
FY24, reflecting a) increased salary and rent expenses in line with the expansion of the business, b) the sale of one of the polyclinic
buildings in FY23 and its leaseback in FY24. See page 115 for details. The LTM EBITDA (incl. IFRS 16) of the business increased by
48.7% y-o-y to GEL 17.6 million in FY24. The net debt increased by 4.3% y-o-y to GEL 61.0 million, primarily due to the increased
lease liabilities in line with the expansion of the business. As a result, the equity value of clinics and diagnostics was assessed at GEL
123.2 million (up 11.2% y-o-y), translating into an implied LTM EV/EBITDA multiple (incl. IFRS 16) of 10.6x at 31 December 2024, down
from 14.5x as at 31 December 2023
1
.
Other businesses (4.3% of total portfolio value)
Of the “other” private portfolio businesses, auto service business is valued based on LTM EV/EBITDA. Wine and housing development
are valued based on DCF, hospitality business is valued based on NAV. Following its disposal, the beer and distribution business,
previously valued using the LTM EV/EBITDA multiple, is now assessed based on the recent transaction price. See performance
highlights of other businesses on page 117. The portfolio value of other businesses decreased by 43.6% y-o-y to GEL 160.3 million in
FY24, primarily due to the divestment of an 80% holding in the beer and distribution business in FY24.
Listed and observable portfolio companies (42.8% of total portfolio value)
Lion Finance Group (37.8% of total portfolio value) – In FY24, Lion Finance Group delivered an annualised ROAE of 30.0% and a
y-o-y loan book growth of 21.4%
1
on a constant currency basis. In FY24, Lion Finance Group’s share price was up by 18.5% y-o-y to
GBP 47.1 at 31 December 2024, which led to a 15.9% y-o-y increase in the value of GCAP’s stake in Lion Finance Group to 1.4 billion as
at 31 December 2024. The LTM P/E valuation multiple was at 4.0x as at 31 December 2024. On 25 February 2025, the Bank announced
its Board’s intention to recommend a final dividend for 2024 of GEL 5.62 per ordinary share at the Bank’s 2025 Annual General Meeting.
This will make a total dividend paid in respect of the Bank’s 2024 earnings of GEL 9.00 per share (a 12.5% increase compared to 2023).
Lion Finance Group’s Annual Report 2024 is available on Lion Finance Group’s website.
Water utility (5.0% of total portfolio value) – The equity value of the business increased by GEL 29.0 million to GEL 188.0 million in
FY24. This valuation assessment was performed by applying the put option valuation to GCAP’s 20% holding (where GCAP has a clear
exit path through a put and call structure at pre-agreed EBITDA multiples) and takes into account the strong operating performance of
the business in 2024.
2) Investments
2
In FY24, GCAP invested GEL 16.9 million in private portfolio companies.
•
GEL 11.3 million was invested in the renewable energy business for the development of the pipeline projects.
•
GEL 5.0 million was invested in the other businesses.
•
GEL 0.6 million was allocated to the education business.
3) Share buybacks
During FY24, 3,790,417 shares were bought back for a total consideration of GEL 136.5 million.
•
3,669,889 shares with a total value of US$ 48.1 million (GEL 131.9 million) were repurchased under GCAP’s buyback and
cancellation programmes during FY24.
•
120,528 shares (GEL 4.6 million in value) represent the tax-related statutory buybacks as part of the share exercises from the
management trust, where the average cost of unawarded shares is GBP 7.9 per share as of 31 December 2024.
In FY24, Georgia Capital recorded GEL 201.8 million dividend income from its portfolio companies:
Dividend income GEL million (Unaudited)
3
Recurring One-off Total
Lion Finance Group 122.2 22.6 144.8
of which, cash dividends 72.2 – 72.2
of which, buyback dividends 50.0 22.6 72.6
Insurance business 25.4 – 25.4
of which, P&C insurance 18.0 – 18.0
of which, medical insurance 7.4 – 7.4
Renewable energy 12.3 – 12.3
Retail (pharmacy) 10.0 – 10.0
Beer business 8.3 – 8.3
Auto service 1.0 – 1.0
Total 179.2 22.6 201.8
A one-off dividend of GEL 22.6 million from Lion Finance Group, represents the advanced participation in their share buyback
programme, which decreased our stake in Lion Finance Group to 19.23% as at 31 December 2024 (31 December 2023: 19.71%).
GCAP’s targeted holding level in the Group remains at 19.5%.
Financial Review continued
1 December 2024 y-o-y loan growth in constant currency is calculated using exchange rates as of 31 December 2023. Since CJSC Ameribank was consolidated in March 2024
following its acquisition, its constant currency loan growth was measured from March to December. For Bank of Georgia and other businesses, the standard December-to-December
approach applies.
2 Investments are made and dividends are received at JSC Georgia Capital level, the Georgian holding company.
3 Dividends are received at JSC Georgia Capital level, the Georgian holding company.
1 LTM EBITDA excludes the gain of GEL 2.9 million from the sale of one of the polyclinics buildings in 2023.
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Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Net Capital Commitment (NCC) overview
Below we describe the components of NCC as of 31 December 2024 and 31 December 2023. NCC represents an aggregated view of
all confirmed, agreed and expected capital outflows (including a buffer for contingencies) at Georgia Capital HoldCo level.
Components of NCC
GEL thousands, unless otherwise noted (Unaudited) 31-Dec-24 31-Dec-23 Change
Total cash and liquid funds 278,237 107,910 NMF
Loans issued – 9,212 NMF
Gross debt (432,662) (413,930) 4.5%
Net debt (1) (154,425) (296,808) -48.0%
Guarantees issued (2) – – NMF
Net debt and guarantees issued (3)=(1)+(2) (154,425) (296,808) -48.0%
Planned investments (4) (118,480) (125,143) -5.3%
of which, planned investments in Renewable Energy (69,518) (77,637) -10.5%
of which, planned investments in Education (48,962) (47,506) 3.1%
Announced buybacks (5) (67,421) (18,087) NMF
Contingency/liquidity buffer (6) (140,340) (134,470) 4.4%
Total planned investments, announced buybacks
and contingency/liquidity buffer (7)=(4)+(5)+(6) (326,241) (277,700) 17.5%
Net capital commitment (3)+(7) (480,666) (574,508) -16.3%
Portfolio value 3,761,490 3,671,945 2.4%
NCC ratio 12.8% 15.6% -2.8 ppts
Cash and liquid funds. Total cash and liquid funds’ balance increased 2.6x times y-o-y to GEL 278.2 million in FY24, primarily
reflecting the collection of net proceeds from the sale of an 80% holding in the beer and distribution business for c.US$ 63 million
(GEL 174 million).
Loans issued. Issued loans’ balance primarily refers to loans issued to our private portfolio companies and are lent at market terms.
The FY24 balance of loans issued was reduced to nil, reflecting the complete repayment of loans by the portfolio companies.
Gross debt. In US$ terms, the FY24 gross debt balance remained largely flat, up by 0.2%. In GEL terms, the FY24 balance was up by
4.5%, further reflecting the foreign exchange rate movements during the year.
Planned investments. Planned investments’ balance represents expected investments in renewable energy and education
businesses over the next two to three years. The balance in US$ terms decreased by 9.3% in FY24, due to investments made in these
businesses as described above (the balance in GEL terms was down 5.3% in FY24).
Announced buybacks. The balance of the announced buybacks at 31 December 2024 reflects the unutilised share buybacks under
GCAP’s US$ 25 million share buyback and cancellation programme.
Contingency/liquidity buffer. The balance reflects the provision for cash and liquid assets in the amount of US$ 50 million, for
contingency/liquidity purposes. The balance remained unchanged in US$ terms as at 31 December 2024.
As a result of the movements described above, NCC was down by 16.3% to GEL 480.7 million (US$ 171.3 million) which, together
with the 2.4% increase in the portfolio value translated into a 12.8% NCC ratio as at 31 December 2024 (improved by 2.8 ppts y-o-y).
Income Statement (Adjusted IFRS / APM)
Net income under IFRS was GEL 362.3 million in FY24 (GEL 608.6 million net income in FY23). The IFRS income statement is
prepared on the Georgia Capital PLC level and the results of all operations of the Georgian holding company JSC Georgia Capital are
presented as one line item. As we conduct almost all of our operations through JSC Georgia Capital, through which we hold all of our
portfolio companies, the IFRS results provide little transparency on the underlying trends.
Accordingly, to enable a more granular analysis of those trends, the following adjusted income statement presents the Group’s results
of operations for the period ending December 31 as an aggregation of (i) the results of GCAP (the two holding companies Georgia
Capital PLC and JSC Georgia Capital, taken together) and (ii) the fair value change in the value of portfolio companies during the
reporting period. For details on the methodology underlying the preparation of the adjusted Income Statement, please refer to pages
94-96 of this report. A full reconciliation of the adjusted Income Statement to the IFRS Income Statement is provided on page 97.
GEL thousands, unless otherwise noted (Unaudited) FY24 FY23 Change
Dividend income 201,752 235,883 -14.5%
of which, regular dividend income 129,201 162,527 -20.5%
of which, buyback dividend income 72,551 73,356 -1.1%
Interest income 7,477 16,642 -55.1%
Realised/unrealised loss on liquid funds/Loss on GCAP Eurobond buybacks (796) (1,574) -49.4%
Interest expense (35,589) (47,808) -25.6%
Gross operating income 172,844 203,143 -14.9%
Operating expenses (35,280) (36,779) -4.1%
GCAP net operating income 137,564 166,364 -17.3%
Fair value changes of portfolio companies
Listed and observable portfolio companies 224,188 399,384 -43.9%
of which, Lion Finance Group 195,188 395,384 -50.6%
of which, Water Utility 29,000 4,000 NMF
Private portfolio companies 9,382 45,248 -79.3%
Large portfolio companies (5,171) (2,039) NMF
of which, retail (pharmacy) 691 (11,507) NMF
of which, insurance (P&C and medical) 49,257 97,012 -49.2%
of which, hospitals (55,119) (87,544) -37.0%
Investment stage portfolio companies (22,759) 41,857 NMF
of which, renewable energy (26,028) 33,497 NMF
of which, education (8,853) 12,282 NMF
of which, clinics and diagnostics 12,122 (3,922) NMF
Other businesses 37,312 5,430 NMF
Total investment return 233,570 444,632 -47.5%
Income before foreign exchange movements and non-recurring expenses 371,134 610,996 -39.3%
Net foreign currency (loss)/gain/impairment (18,662) 6,491 NMF
Non-recurring expenses (2,148) (1,898) 13.2%
Net income 350,324 615,589 -43.1%
The gross operating income in FY24 was down by 14.9% to GEL 172.8 million, mainly reflecting the y-o-y decrease in dividend income.
The components of GCAP’s operating expenses are shown in the table below:
GCAP Operating Expenses Components
GEL thousands, unless otherwise noted (Unaudited) FY24 FY23 Change
Administrative expenses
1
(10,586) (10,909) -3.0%
Management expenses – cash-based
2
(10,794) (10,877) -0.8%
Management expenses – share-based
3
(13,900) (14,993) -7.3%
Total operating expenses (35,280) (36,779) -4.1%
of which, fund type expense
4
(9,258) (9,667) -4.2%
of which, management fee type expenses
5
(26,022) (27,112) -4.0%
GCAP management fee expenses starting from 2024 have a self-targeted cap of 0.75% of Georgia Capital’s NAV. The LTM
management fee expense ratio stood at 0.72% as at 31 December 2024 (0.80% as at 31 December 2023).
Total investment return represents the increase (decrease) in the fair value of our portfolio. Total investment return was GEL 233.6
million in FY24, mostly reflecting changes in the value of our portfolio companies. We discuss valuation drivers for our businesses
on pages 103-105. The performance of each of our private large and investment stage portfolio companies is discussed on pages
108-117.
GCAP’s net foreign currency liability balance amounted to US$ 60 million (GEL 170 million) at 31 December 2024. As a result of the
movements described above, GCAP’s adjusted IFRS net income was GEL 350.3 million in FY24.
Financial Review continued
1 Includes expenses such as external audit fees, legal counsel, corporate secretary and other similar administrative costs.
2 Cash-based management expenses are cash salary and cash bonuses paid/accrued for staff and management compensation.
3 Share-based management expenses are share salary and share bonus expenses of management and staff.
4 Fund type expenses include expenses such as audit and valuation fees, fees for legal advisors, Board compensation and corporate secretary costs.
5 Management fee is the sum of cash-based and share-based operating expenses (excluding fund-type costs).
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Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Discussion of the Statement of Cash Flows
The 2024 IFRS Statement of Cash Flows is prepared at the Georgia Capital PLC level and does not include JSC Georgia Capital’s cash
flows, since JSC Georgia Capital is measured at fair value under IFRS 10. Net cash flow used in operating activities was GEL 6.4 million
in 2024 (GEL 6.2 million in 2023), reflecting salaries and general and administrative expenses paid at the Georgia Capital PLC level.
Net cash flow from investing activities was GEL 128.5 million in 2024 (GEL 44.3 million in 2023), mainly reflecting dividends received.
Net cash flow used in financing activities was GEL 131.1 million in 2024 (GEL 48.0 million in 2023), mainly reflecting the purchases of
treasury shares. The IFRS Statement of Cash Flows is included on page 189 of this report.
Discussion of portfolio companies’ results (stand-alone IFRS)
The following sections present the IFRS results and business development extracted from the individual portfolio company’s IFRS
accounts for large and investment stage entities, where the 2024 portfolio company’s accounts and respective IFRS numbers are
unaudited. We present key IFRS financial highlights, operating metrics and ratios along with commentary explaining the developments
behind the numbers. For the majority of our portfolio companies, the fair value of our equity investment is determined by the application
of an income approach (DCF) and a market approach (listed peer multiples and precedent transactions). Under the discounted cash
flow (DCF) valuation method, fair value is estimated by deriving the present value of the business using reasonable assumptions of
expected future cash flows and the terminal value, and the appropriate risk-adjusted discount rate that quantifies the risk inherent to
the business. Under the market approach, listed peer group earnings multiples are applied to the trailing twelve months (LTM) stand-
alone IFRS earnings of the relevant business. As such, the stand-alone IFRS results and developments driving the IFRS earnings of our
portfolio companies are key drivers of their valuations within GCAP’s financial statements. See pages 94-99 for more background.
Large portfolio companies
Discussion of retail (pharmacy) business results
The retail (pharmacy) business, where GCAP owns a 97.8% equity interest, is the largest pharmaceuticals retailer and wholesaler in
Georgia, with a 35.8% market share in the organised retail market based on 2023 revenues. The business consists of a retail pharmacy
chain operating under two brands (GPC and Pharmadepot) and a wholesale business that sells pharmaceuticals and medical supplies
to hospitals and other pharmacies. The business operates a total of 410 pharmacies (of which 395 are in Georgia and 15 in Armenia)
and 19 franchise stores (of which, 12 are in Georgia, two in Armenia and five in Azerbaijan).
FY24 performance (GEL thousands), retail (pharmacy)
1
(Unaudited)
Income Statement highlights FY24 FY23 Change
Revenue, net 850,115 815,020 4.3%
of which, retail 681,213 646,402 5.4%
of which, wholesale 168,902 168,618 0.2%
Gross profit 261,266 233,796 11.7%
Gross profit margin 30.7% 28.7% 2.0 ppts
Operating expenses (ex. IFRS 16) (180,339) (156,453) 15.3%
EBITDA (ex. IFRS 16) 80,927 77,343 4.6%
EBITDA margin, (ex. IFRS 16) 9.5% 9.5% NMF
Net profit (ex. IFRS 16) 38,282 45,614 -16.1%
Cash flow highlights
Cash flow from operating activities (ex. IFRS 16) 78,249 52,361 49.4%
EBITDA to cash conversion 96.7% 67.7% 29.0 ppts
Cash flow used in investing activities
2
(41,278) (84,130) -50.9%
Free cash flow, (ex. IFRS 16)
3
54,751 (56,130) NMF
Cash flow (used in)/from financing activities (ex. IFRS 16) (77,722) 17,686 NMF
Balance sheet highlights 31-Dec-24 31-Dec-23 Change
Total assets 608,576 660,243 -7.8%
of which, cash and bank deposits 19,154 60,383 -68.3%
of which, securities and loans issued 19,087 2,623 NMF
Total liabilities 521,341 597,611 -12.8%
of which, borrowings 181,833 228,261 -20.3%
of which, lease liabilities 149,348 151,916 -1.7%
Total equity 87,235 62,632 39.3%
Income Statement highlights
•
A 4.3% increase in FY24 total revenue of retail (pharmacy) mainly reflects a 5.4% y-o-y increase in FY24 retail revenue, driven by a
substantial ramp-up in the performance of pharmacy stores launched in late 2023 and the business’ continued efforts to enhance
sales and profitability of para-pharmacy products. The total revenue growth was dampened by price regulations, which set a
maximum selling price for both prescription and non-prescription medicines. The negative impact of these regulations on the total
revenue growth amounted to GEL 14.5 million in FY24.
•
The business’ initiative to renegotiate trading terms with key suppliers across major product categories positively impacted gross
profit margins in FY24. This was particularly evident in the para-pharmacy retail segment, which saw y-o-y improvement of 6.4 ppts
in FY24.
•
The y-o-y increase in operating expenses (excl. IFRS 16) in FY24 was driven by higher rent and salary costs, reflecting the significant
expansion of the retail chain and the opening of the new warehouse at the end of 2023. The increase in salary expenses (up
13.9% y-o-y in FY24) further reflects higher staff compensation aligned with market trends and the implementation of new incentive
schemes aimed at improving the gross profit margin.
•
As a result, the business achieved y-o-y EBITDA (excl. IFRS 16) growth of 4.6% y-o-y in FY24.
•
Net interest expense (excl. IFRS 16) was up by 48.6% y-o-y to GEL 20.1 million in FY24, attributable to the higher average net debt
balance, utilised to finance the minority shareholder buyout transaction in June 2023.
•
The developments described above translated into a 16.1% y-o-y decrease in net profit (ex. IFRS 16) in FY24.
Cash flow and balance sheet highlights
•
The net debt balance was down by GEL 21.7 million y-o-y to GEL 143.6 million as at 31 December 2024, mostly reflecting robust
cash flow generation in FY24.
•
Strong cash flow from operating activities with a 96.7% EBITDA to cash conversion ratio in FY24, reflecting the sale of a significant
portion of the inventory stock and the low base effect resulting from significant working capital investments in 2023.
•
GEL 10.0 million dividends were paid to GCAP in FY24.
Other valuation drivers and operating highlights
•
In 2024, the business divested from its textile franchise brands “Carters” and “Triumph” with 6 operating stores in Georgia. The total
consideration (ex. VAT) amounted to GEL 3.7 million.
•
The number of pharmacies and franchise stores is provided below:
(Unaudited) Dec-24 Dec-23 Change (y-o-y)
Number of pharmacies 410 412 (2)
of which, Georgia 395 397 (2)
of which, Armenia 15 15 –
Number of franchise stores 19 23 (4)
of which, Georgia 12 17 (5)
of which, Armenia 2 2 –
of which, Azerbaijan 5 4 1
•
Retail (pharmacy)’s key operating performance highlights for FY24 are noted below:
Key metrics (Unaudited) FY24 FY23 Change
Same store revenue growth -1.7% -0.1% -1.6 ppts
Number of bills issued (million) 31.6 31.3 0.9%
Average bill size (GEL) 20.4 19.6 4.1%
Financial Review continued
1 The detailed IFRS financial statements are included in supplementary excel file, available at https://georgiacapital.ge/ir/financial-results. In 2024, certain transaction-related
expenses, such as POS-terminal charges, courier services, and other related expenses, have been reclassified from operating expenses to components of gross profit. The
comparative FY23 period has been adjusted retrospectively.
2 Of which – cash outflow on capex of GEL 24.7 million in FY24 (GEL 33.9 million in FY23); proceeds from sale of PPE of GEL 2.2 million in FY24 (GEL 14.6 million in FY23); cash
outflow on minority acquisition of GEL 1.0 million in FY24 (GEL 89.1 million in FY23).
3 Calculated by deducting capex and minority acquisition from operating cash flows and adding proceeds from the sale of PPE/IP.
110 111
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Discussion of insurance (P&C and medical) business results
The insurance business comprises a) property and casualty (P&C) insurance business, operating under the brand name “Aldagi”
and b) medical insurance business, operating under “Imedi L” and “Ardi” brands, the latter acquired in April 2024. The P&C
insurance business is a leading player with a 30% market share in property and casualty insurance based on gross premiums
as of 30 September 2023. P&C also offers a variety of non-property and casualty products, such as life insurance. The medical
insurance business is the country’s largest private health insurer, with a 35% market share based on gross insurance premiums as of
30 September 2024, offering a variety of health insurance products primarily to corporate and (selectively) to state entities and also to
retail clients in Georgia. GCAP owns a 100% equity stake in both insurance businesses.
FY24 performance (GEL thousands), insurance (P&C and medical)
1
(Unaudited)
Income Statement highlights FY24 FY23 Change
Insurance revenue 316,483 208,242 52.0%
of which, P&C insurance 149,021 116,911 27.5%
of which, medical insurance 167,462 91,331 83.4%
Net underwriting profit 79,823 53,828 48.3%
Net investment profit 16,178 14,272 13.4%
Pre-tax profit 42,895 30,393 41.1%
of which, P&C insurance 28,952 21,982 31.7%
of which, medical insurance 13,943 8,411 65.8%
Cash flow highlights
Net cash flows from operating activities 69,140 33,687 NMF
Free cash flow 64,917 29,358 NMF
Balance sheet highlights 31-Dec-24 31-Dec-23 Change
Total assets 300,510 248,902 20.7%
Total equity 128,614 130,684 -1.6%
Income Statement highlights
The y-o-y increase in FY24 insurance revenue reflects a combination of factors:
•
The revenue of the P&C insurance business was up by 27.5% y-o-y in FY24, resulting from:
−
A GEL 19.5 million y-o-y increase in Motor Insurance revenues in FY24, mainly attributable to the expansion of both retail and
corporate client portfolios.
−
A GEL 5.7 million y-o-y increase in Credit Life Insurance revenues in FY24, resulting from the growth of partner banks’ portfolios
in the mortgage, consumer loan and other sectors.
−
A GEL 4.0 million y-o-y increase in Agricultural Insurance revenues in FY24, driven by a growing client base as well as increased
tariffs on certain crops and regions.
−
A GEL 2.9 million y-o-y increase in the revenues from other insurance lines in FY24.
−
The revenue of the medical insurance business increased by 83.4% y-o-y in FY24, reflecting organic growth of the portfolio,
c.10% increase in insurance policy prices and the positive impact of the acquisition of Ardi insurance portfolio in April 2024, the
latter contributing GEL 59.6 million to the FY24 y-o-y revenue growth.
•
The insurance business’ key performance ratios for FY24 are noted below:
P&C Insurance Medical Insurance
Key ratios (Unaudited) FY24 FY23 Change FY24 FY23 Change
Combined ratio
87.5% 89.5% -2.0 ppts 93.1% 94.8% -1.7 ppts
Expense ratio
34.1% 35.8% -1.7 ppts 16.8% 16.6% 0.2 ppts
Loss ratio
53.3% 53.8% -0.5 ppts 76.3% 78.2% -1.9 ppts
FX ratio
0.1% -0.1% 0.2 ppts – – –
ROAE
2
33.2% 24.4% 8.8 ppts 35.6% 17.1% 18.5 ppts
•
The combined ratio of P&C Insurance improved by 2.0 ppts y-o-y to 87.5% in FY24, mainly resulting from the improved expense
ratio on the back of strong revenue growth.
•
A 1.7 ppts y-o-y improvement in the FY24 combined ratio reflects consolidation of Ardi’s portfolio and increased revenues, due to
higher insurance tariffs, as described above.
•
The net investment profit was up by 13.4% y-o-y in FY24, attributable to the higher average liquid funds balance as well as
theconsolidation of Ardi’s insurance portfolio.
•
The developments described above translated into a 41.1% y-o-y increase in combined insurance business’ FY24 pre-tax profit.
Cash flow and balance sheet highlights
•
The solvency ratio of P&C and medical insurance businesses stood at 173% and 157% respectively as at 31 December 2024,
well above the required threshold of 100%.
•
A y-o-y increase in the net cash flows from operating activities is mainly driven by higher underwriting cash flows of the business as
compared to 2023 coupled with the positive impact of the consolidation of Ardi’s portfolio.
•
GEL 25.4 million dividends were paid to GCAP in FY24.
Discussion of Hospitals Business Results
1
The hospitals business, where GCAP owns 100% equity, is the largest healthcare market participant in Georgia, comprised of
seven Large and Specialty Hospitals, providing secondary and tertiary level healthcare services across Georgia and 27 Regional and
Community Hospitals, providing outpatient and basic inpatient services.
FY24 performance (GEL thousands), hospitals
2
(Unaudited)
Income Statement highlights FY24 FY23 Change
Revenue, net
3
332,710 313,748 6.0%
Gross profit 114,627 104,616 9.6%
Gross profit margin 33.9% 32.8% 1.1 ppts
Operating expenses (ex. IFRS 16) (59,461) (58,487) 1.7%
EBITDA (ex. IFRS 16) 55,166 46,129 19.6%
EBITDA margin (ex. IFRS 16) 16.3% 14.5% 1.8 ppts
Net loss (ex. IFRS 16) (13,132) (36,615) -64.1%
Cash flow highlights
Cash flow from operating activities (ex. IFRS 16) 48,828 10,621 NMF
EBITDA to cash conversion (ex. IFRS 16) 88.5% 23.0% 65.5 ppts
Cash flow used in investing activities
4
(25,166) (44,746) -43.8%
Free cash flow (ex. IFRS 16)
5
25,462 (35,069) NMF
Cash flow (used in)/from financing activities (ex. IFRS 16) (5,307) 22,362 NMF
Balance sheet highlights 31-Dec-24 31-Dec-23 Change
Total assets 705,367 707,614 -0.3%
of which, cash balance and bank deposits 27,600 9,753 NMF
of which, securities and loans issued 5,995 9,557 -37.3%
Total liabilities 366,432 357,658 2.5%
of which, borrowings 296,770 281,352 5.5%
Total equity 338,935 349,956 -3.1%
Income Statement highlights
•
The Large and Specialty Hospitals and Regional and Community Hospitals represent approximately 70% and 30%, respectively, of
the consolidated hospitals business revenue.
Total revenue breakdown (Unaudited) FY24 FY23 Change
Total revenue, net 332,710 313,748 6.0%
of which, Large and Specialty Hospitals 226,648 204,690 10.7%
of which, Regional and Community Hospitals 106,962 110,551 -3.2%
•
The total revenue growth in FY24 was primarily driven by the rebound to normal operational levels following mandatory regulatory
renovations across all our hospitals, most of which occurred between the second half of 2023 and the first half of 2024. These
renovations led to the phased closure of certain sections of our healthcare facilities, resulting in reduced patient intake during that
period. As of 31 December 2024, all 34 hospitals have completed the required renovations and fully meet regulatory requirements.
The revenue growth was further supported by the Large and Specialty Hospitals’ effort to expand its range of high-margin outpatient
services. In FY24, these services accounted for 34.2% of the revenue of Large and Specialty Hospitals, marking a 3.0 ppts y-o-y
increase. As a result, the combined revenue of the hospitals business was up by 6.0% y-o-y in FY24. Adjusted for the sale of
“Batumi Hospital”, one of the regional hospitals divested in 2023, the combined revenue was up by 11.9% y-o-y in FY24.
Financial Review continued
1 The detailed IFRS financial statements are included in supplementary excel file, available at https://georgiacapital.ge/ir/financial-results.
2 Calculated based on average equity, adjusted for preferred shares.
1 The numbers were adjusted retrospectively to account for the strategic reorganisation in the healthcare businesses that occurred in December 2023.
2 The detailed IFRS financial statements are included in supplementary excel file, available at https://georgiacapital.ge/ir/financial-results.
3 Net revenue – Gross revenue less corrections and rebates. Margins are calculated from gross revenue.
4 Of which – capex of GEL 53.0 million in FY24 (GEL 48.5 million in FY23); proceeds from the sale of property of GEL 30.1 million in FY24 (GEL 2.9 million in FY23).
5 Operating cash flows less capex, plus net proceeds from the sale of Batumi Hospital.
112 113
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
•
The changes in the gross profit margin, apart from the revenue developments described above, reflect the following trends in direct
salary and materials rates
1
and utility costs:
−
Approximately 50% of direct salaries are fixed. This, coupled with significantly increased revenue, led to a 0.8 ppts y-o-y increase
in the direct salary rate to 40.4% in FY24.
−
The materials rate improved by 0.9 ppts y-o-y to 16.3% in FY24, reflecting significant optimisations achieved in tender
participation processes and overall improvement in inventory management across the hospitals network.
−
Utilities and other costs were down by 9.5% y-o-y in FY24.
•
Operating expenses (excl. IFRS 16) increased modestly, up by 1.7% y-o-y in FY24, mainly due to higher salary costs associated
with an increased headcount to support the expansion of the services and the development of the Regional and Community
hospitals’ head-office following the strategic reorganisation in late 2023.
•
Consequently, EBITDA (excluding IFRS 16) was up by 19.6% y-o-y in FY24. Adjusted for the sale of the “Batumi Hospital”, the
combined EBITDA (excluding IFRS 16) was up by 25.1% in FY24.
(Unaudited) FY24 FY23 Change
Total EBITDA (ex. IFRS 16), breakdown 55,166 46,129 19.6%
of which, Large and Specialty Hospitals 41,580 34,339 21.1%
of which, Regional and Community Hospitals 13,586 11,791 15.2%
Cash flow and balance sheet highlights
•
Capex investment amounted to GEL 53.0 million in FY24, comprising: a) development capex of GEL 14.8 million to expand service
offerings and upgrade medical equipment, b) capex related to the new regulations and obtaining required accreditations in the
amount of GEL 10.2 million, and c) maintenance capex of GEL 26.0 million.
•
The EBITDA to cash conversion ratio was at 88.5% in FY24, reflecting the receipt of the delayed receivables from the State.
Other valuation drivers and operating highlights
•
The business’ key operating highlights for FY24 are noted below:
Key metrics (Unaudited) FY24 FY23 Change
Number of admissions (thousands): 1,568.4 1,527.2 2.7%
of which, Large and Specialty Hospitals 729.0 599.9 21.5%
of which, Regional and Community Hospitals
2
839.4 927.3 -9.5%
Occupancy rates:
of which, Large and Specialty Hospitals 66.5% 53.5% 13.0 ppts
of which, Regional and Community Hospitals 58.1% 44.3% 13.8 ppts
•
The decrease in admissions at Regional and Community Hospitals reflects a favourable shift in the revenue mix, which resulted in a
significant improvement at the EBITDA level, as outlined above.
Investment stage portfolio companies
Discussion of renewable energy business results
The renewable energy business operates three wholly-owned commissioned renewable assets: 30MW Mestiachala HPP, 20MW
Hydrolea HPPs and 21MW Qartli wind farm. In addition, the business has a pipeline of renewable energy projects in varying stages of
development. The renewable energy business is 100% owned by Georgia Capital. As electricity sales in Georgia is a dollar business,
the financial data below is presented in US Dollars.
FY24 performance (US$ thousands), renewable energy
1
(Unaudited)
Income Statement highlights FY24 FY23 Change
Revenue 16,086 14,449 11.3%
of which, PPA
2
7,562 8,529 -11.3%
of which, Non-PPA 8,524 5,920 44.0%
Operating expenses (4,006) (4,068) -1.5%
EBITDA 12,080 10,381 16.4%
EBITDA margin 75.1% 71.8% 3.3 ppts
Net loss (1,185) (666) -77.9%
Cash flow highlights
Cash flow from operating activities 12,320 9,877 24.7%
Cash flow used in investing activities (3,570) (3,561) 0.3%
Cash flow used in financing activities (13,094) (5,170) NMF
Repayment of borrowings (7,440) (13) NMF
Dividends paid out (4,500) (2,000) NMF
Balance sheet highlights 31-Dec-24 31-Dec-23 Change
Total assets 116,620 122,579 -4.9%
of which, cash balance 5,880 10,525 -44.1%
Total liabilities 79,123 83,911 -5.7%
of which, borrowings 73,644 80,935 -9.0%
Total equity 37,497 38,667 -3.0%
Income Statement highlights (GEL) FY24 FY23 Change
Revenue 43,977 38,065 15.5%
EBITDA 33,001 27,357 20.6%
Income Statement highlights
The FY24 revenue was up by 11.3% y-o-y, reflecting the resumption of operations of two power-generating units of Hydrolea HPPs,
which were taken offline between November 2022 to June 2023 due to previously planned phased rehabilitation works. The average
electricity selling price stood at 57.0 US$/MWh in FY24 (up 0.3% y-o-y).
FY24
US$ thousands, unless otherwise noted (Unaudited)
Revenue from
electricity sales
Change
y-o-y
Electricity
generation
(MWh)
Change
y-o-y
30MW Mestiachala HPP 5,605 2.1% 100,885 1.2%
20MW Hydrolea HPPs 5,444 61.7% 103,655 51.7%
21MW Qartli wind farm 5,037 -9.9% 77,500 -9.9%
Total 16,086 11.3% 282,040 11.0%
•
The operating expenses were well-controlled, down 1.5% y-o-y in FY24.
•
The developments described above led to a 16.4% increase in EBITDA in FY24.
Cash flow and balance sheet highlights
•
In FY24, the business repurchased and cancelled US$ 7.0 million of its green bonds. As a result, the gross debt balance of the
business currently stands at US$ 73.0, leading to a 6.1% y-o-y decrease in net interest expense in FY24.
•
The business paid US$ 4.5 dividends to GCAP in FY24.
Financial Review continued
1 The respective costs divided by gross revenues.
2 Adjusted for the sale of Batumi Hospital, the number of admissions in Regional and Community Hospitals was 879.2 thousand in FY23 (down 4.5% y-o-y in FY24).
1 The detailed IFRS financial statements (in both US$ and GEL) are included in supplementary excel file, available at https://georgiacapital.ge/ir/financial-results.
2 Please see definition in glossary on page 227.
114 115
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Discussion of education business results
Our education business currently combines majority stakes in four private school brands operating across seven campuses acquired
over the period 2019-2023: British-Georgian Academy and British International School of Tbilisi (70% stake), the leading schools in
the premium and international segments; Buckswood International School (80% stake), well-positioned in the midscale segment and
Green School (80%-90% ownership), well-positioned in the affordable segment.
FY24 performance (GEL thousands), education
1
(Unaudited)
Income Statement highlights FY24 FY23 Change
Revenue 68,174 55,491 22.9%
Operating expenses (51,559) (41,053) 25.6%
EBITDA 16,615 14,438 15.1%
EBITDA margin 24.4% 26.0% -1.6 ppts
Net profit 12,708 13,263 -4.2%
Cash flow highlights
Net cash flows from operating activities 22,496 17,363 29.6%
Net cash flows used in investing activities (22,367) (31,254) -28.4%
Net cash flows from financing activities 4,366 15,897 -72.5%
Balance sheet highlights 31-Dec-24 31-Dec-23 Change
Total assets 217,380 191,723 13.4%
of which, cash 12,081 7,535 60.3%
Total liabilities 72,432 62,149 16.5%
of which, borrowings 32,757 27,750 18.0%
Total equity 144,948 129,574 11.9%
Income Statement highlights
•
The 22.9% y-o-y increase in FY24 revenues was driven by a) organic growth through strong intakes and a ramp-up of the utilisation
and b) expansion of the business through the launch of a new campus in the mid-scale segment and the acquisition of the new
campus in the affordable segment during 2023.
•
Operating expenses were up by 25.6% y-o-y in FY24, mainly reflecting increased salary, catering and utility expenses, in line with the
expansion of the business.
•
Consequently, EBITDA was up by 15.1% in FY24.
•
Net income was down 4.2% y-o-y in FY24, mainly reflecting the absence of a one-off gain recorded in FY23.
Cash flow and balance sheet highlights
•
Cash collection rate for 2024-2025 academic year stood at 77.1% as at 31 December 2024, in line with last year’s level.
•
Investing cash outflow of GEL 22.4 million in FY24, reflects the investments related to the expansion of the existing campuses in the
midscale and affordable segments.
Other valuation drivers and operating highlights
•
In 2024, the total learner capacity increased by 825 learners to 8,095 learners, of which the capacity of the midscale segment expanded
to 1,645 learners (up by 225 learners) and the capacity of the affordable segment increased to 5,300 learners (up by 600 learners).
•
The total number of learners increased by 722 learners y-o-y to 6,549 learners at 31 December 2024.
•
The utilisation rate for the total 8,095 learner capacity was up by 0.7 ppts y-o-y to 80.9% as at 31 December 2024.
−
The utilisation rate for the pre-expansion 2,810 learners capacity was 100%.
−
The utilisation rate for the newly added capacity of 5,285 learners was 70.7%.
•
The number of campuses across the different segments is noted below:
(Unaudited) Dec-24 Dec-23 Change (y-o-y)
Total number of campuses 7 7 –
Premium and International segment 1 1 –
Mid-scale segment 2 2 –
Affordable segment 4 4 –
Discussion of Clinics and Diagnostics Business Results
1
The clinics and diagnostics business, where GCAP owns a 100% equity interest, is the second largest healthcare market participant in Georgia
after our hospitals business. The business comprises two segments: 1) 16 polyclinics (providing outpatient diagnostic and treatment services)
and 14 lab retail points at GPC pharmacies; 2) Diagnostics, operating the largest laboratory in the entire Caucasus region – “Mega Lab”.
FY24 performance (GEL thousands), clinics and diagnostics
2
(Unaudited)
Income Statement highlights FY24 FY23 Change
Revenue, net
3
74,517 61,723 20.7%
of which, clinics 59,762 49,170 21.5%
of which, diagnostics 22,181 18,435 20.3%
of which, inter-business eliminations (7,426) (5,882) 26.2%
Gross profit 37,832 29,240 29.4%
Gross profit margin 50.7% 47.2% 3.5 ppts
Operating expenses (ex. IFRS 16) (23,661) (19,245) 22.9%
EBITDA (ex. IFRS 16) 14,171 9,995 41.8%
EBITDA margin (ex. IFRS 16) 19.0% 16.1% 2.9 ppts
Net profit/(loss) (ex. IFRS 16) 3,513 (593) NMF
Cash flow highlights
Cash flow from operating activities (ex. IFRS 16) 17,381 6,901 NMF
EBITDA to cash conversion (ex. IFRS 16) 122.7% 69.0% 53.7 ppts
Cash flow used in investing activities (9,820) (1,451) NMF
Free cash flow (ex. IFRS 16)
4
7,719 10,508 -26.5%
Cash flow used in financing activities (ex. IFRS 16) (7,786) (5,982) 30.2%
Balance sheet highlights 31-Dec-24 31-Dec-23 Change
Total assets 135,999 135,848 0.1%
of which, cash balance and bank deposits 4,294 4,500 -4.6%
of which, securities and loans issued 2,000 8,357 -76.1%
Total liabilities 82,450 83,901 -1.7%
of which, borrowings 38,416 48,630 -21.0%
Total equity 53,549 51,947 3.1%
Discussion of results, clinics (GEL thousands) (Unaudited)
Income Statement highlights FY24 FY23 Change
Revenue, net 59,762 49,170 21.5%
Gross profit 30,550 24,550 24.4%
Gross profit margin 51.0% 49.7% 1.3 ppts
Operating expenses (ex. IFRS 16) (19,571) (15,745) 24.3%
EBITDA (ex. IFRS 16) 10,979 8,805 24.7%
EBITDA margin (ex. IFRS 16) 18.3% 17.8% 0.5 ppts
Net profit (ex. IFRS 16) 2,165 127 NMF
Cash flow highlights
Cash flow from operating activities (ex. IFRS 16) 17,178 8,214 109.1%
EBITDA to cash conversion (ex. IFRS 16) 156.5% 93.3% 63.2 ppts
Cash flow used in investing activities
5
(10,682) (194) NMF
Free cash flow (ex. IFRS 16) 8,081 13,094 -38.3%
Cash flow used in financing activities (ex. IFRS 16) (6,683) (7,649) -12.6%
Balance sheet highlights 31-Dec-24 31-Dec-23 Change
Total assets 105,290 105,789 -0.5%
of which, cash balance and bank deposits 4,094 4,261 -3.9%
of which, securities and loans issued 3,465 8,357 -58.5%
Total liabilities 71,033 71,840 -1.1%
of which, borrowings 32,495 42,340 -23.3%
Total equity 34,257 33,949 0.9%
Financial Review continued
1 The numbers were adjusted retrospectively to account for the recent strategic reorganisation in the healthcare businesses. The FY23 amounts reflect the retrospective adjustment for
GEL 2.9 million gain recorded from the sale of one of the polyclinics buildings in 2023.
2 The detailed IFRS financial statements are included in supplementary excel file, available at https://georgiacapital.ge/ir/financial-results.
3 Net revenue – Gross revenue less corrections and rebates. Margins are calculated from Gross revenue.
4 Operating cash flows less capex.
5 Of which capex of GEL 8.7 million in FY24 (GEL 11.2 million in FY23).
1 The detailed IFRS financial statements are included in supplementary excel file, available at https://georgiacapital.ge/ir/financial-results.
116 117
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Income Statement highlights
•
The 21.5% y-o-y increase in FY24 revenue reflects:
−
The increased demand for high revenue-generating services as well as the growth in the number of registered patients, driven by
the business’ proactive approach to customer acquisition and service enhancements.
−
Ramp-up of two new ambulatory centres launched in 2023.
−
The acquisition of a portfolio of c.27,000 new customers in June 2024, further contributing to the overall top-line growth in FY24.
•
The gross profit margin improved by 1.3 ppts y-o-y in FY24, reflecting strong revenue growth, while a significant portion of costs
remained fixed.
•
Operating expenses (ex. IFRS 16) in FY24 were up by 24.3% y-o-y, reflecting increased salary and rent expenses in line with the
expansion of the business and the sale of one of the polyclinic buildings in FY23 and its leaseback in FY24.
•
The developments described above translated into a 24.7% y-o-y increase in FY24 EBITDA.
Cash flow and balance sheet highlights
•
The EBITDA to cash conversion ratio stood at 156.5% for FY24, reflecting the strong business performance as well as the collection
of delayed receivables from the State.
•
In FY24, the business spent GEL 8.7 million on capex, primarily related to the expansion of services and polyclinics chain.
Other valuation drivers and operating highlights
•
The business key operating performance highlights are noted below:
(Unaudited) FY24 FY23 Change (y-o-y)
Number of admissions (thousands) 1,763 1,583 11.4%
(Unaudited) Dec-24 Dec-23 Change (y-o-y)
Number of polyclinics
1
16 16 –
Number of registered patients in polyclinics in Tbilisi c.340,000 c.301,000 12.8%
Discussion of results, diagnostics (GEL thousands)
Income Statement highlights FY24 FY23 Change
Revenue, net
2
22,181 18,435 20.3%
Gross profit 7,282 4,690 55.3%
Gross profit margin 32.8% 25.4% 7.4 ppts
Operating expenses (ex. IFRS 16) (4,090) (3,500) 16.9%
EBITDA (ex. IFRS 16) 3,192 1,190 NMF
EBITDA margin (ex. IFRS 16) 14.4% 6.5% 7.9 ppts
Net profit/(loss) (ex. IFRS 16) 1,348 (1,172) NMF
Income Statement highlights
•
The 20.3% y-o-y increase in FY24 revenue reflects the increased revenues from both retail and business-to-business (B2B)
clients, up 27.4% and 11.0%, respectively. This is driven by the business’ enhanced efforts on customer acquisition and service
diversification, particularly in the high-margin category.
•
Materials and direct salary rates improved by 3.6 ppts and 3.1 ppts y-o-y in FY24, respectively, which along with increased
revenues, reflects significant inventory management optimisations.
•
As a result of the developments described above, the business recorded a 55.3% y-o-y increase in gross profit and a 2.7x y-o-y
increase in EBITDA in FY24.
Other valuation drivers and operating highlights
The key operating performance highlights for FY24 are noted below:
(Unaudited) FY24 FY23 Change (y-o-y)
Number of patients served (thousands) 808 779 3.7%
Number of tests performed (thousands) 2,712 2,481 9.3%
Average revenue per test GEL 8.2 7.4 10.3%
Average number of tests per patient 3.4 3.2 5.4%
Discussion of other portfolio results
The four businesses in our “other” private portfolio are auto service, beverages, hospitality and housing. They had a combined value of
GEL 160.3 million at 31 December 2024, which represents 4.3% of our total portfolio.
FY24 aggregated performance highlights (GEL thousands), other portfolio
(Unaudited) FY24 FY23 Change (y-o-y)
Revenue 564,740 575,358 -1.8%
EBITDA 65,751 42,785 53.7%
Net cash flows from operating activities 28,153 (7,890) NMF
•
Auto service – The auto service business includes a car services and parts business, and a periodic technical inspection (PTI)
business.
−
Periodic technical inspection (PTI) business – The PTI business’ revenue was up by 12.3% y-o-y to GEL 23.4 million in
FY24. Revenue growth was driven by an 11.7% y-o-y increase in the number of total cars serviced in FY24. EBITDA was up
by 18.8% y-o-y in FY24, reflecting enhancements in cost efficiency. In 2024 the business paid its first dividend to GCAP, since
inception in 2018, totalling GEL 1.0 million.
−
Car services and parts business – In FY24, revenue was up by 11.3% y-o-y to GEL 70.5 million in FY24, reflecting an
increase in the wholesale, retail and corporate segments. Similarly, the gross profit was up by 12.8% y-o-y to GEL 18.4 million
in FY24. In FY24, operating expenses increased by 19.5% y-o-y, attributable to the business growth. As a result, the business
posted a GEL 4.0 million EBITDA in FY24, down 6.1% y-o-y.
•
Beverages – The beverages business combines beer and distribution and wine business. At the end of 2024, GCAP sold 80% of
its holding in its beer and distribution business to Royal Swinkles, an international strategic investor, for net cash proceeds of c.US$
63 million. Completion of the transaction and the receipt of full sales proceeds occurred on 23 December 2024. Net revenue of the
wine business decreased by 2.5% y-o-y to GEL 56.7 million in FY24, reflecting a 3.5% y-o-y decrease in the number of bottles sold
in FY24, primarily driven by drop in exports in FY24 (share of exports in total sales was down by 1.1 ppts y-o-y). Operating expenses
decreased by 7.7% y-o-y in FY24, due to the business’ cost-saving initiatives. Consequently, EBITDA was up by 15.0% y-o-y to
GEL 5.0 million in FY24.
•
Real estate businesses – The FY24 EBITDA increased by GEL 20.7 million to GEL 13.5 million, mainly resulting from the
reassessment of the construction progress for ongoing residential projects at our housing development business and strong
operating performance of the hospitality business.
Financial Review continued
1 In 2024, two polyclinics located in rural areas of Georgia were reclassified under the Regional and Community Hospitals. The comparative 2023 data has been adjusted retrospectively.
2 Net revenue – Gross revenue less corrections and rebates. Margins are calculated from Gross revenue.
Georgia Capital PLC Annual Report 2024
119118
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Corporate
Governance
Location: Vashlovani National Park, Georgia
Image Source: https://nationalparks.ge/
120 Directors’ Governance Statement
122 Our Board of Directors
124 Corporate Governance Framework
134 Audit and Valuation Committee Report
142 Directors’ Remuneration Report
169 Nomination Committee Report
173 Statement of Directors’ Responsibilities
174 Directors’ Report
In this section
Georgia Capital PLC Annual Report 2024
121120
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Dear Shareholders
We are pleased to present this year’s
Governance Statement for the year ended
31 December 2024. The Board voluntarily
continues to apply the UK Corporate
Governance Code 2018 (“the Code”) in its
entirety, except for the combined roles of
Chairman and CEO. This has consistently
been approved by our shareholders over
the last six years, and the Nomination
Committee and the Board continue
to monitor the appropriateness of this
structure as discussed in the report of the
Nomination Committee on pages 169 to
172, which shareholders are encouraged
to read for further context.
In addition, the Company continues to
voluntarily comply with:
• the provisions of the Listing Rules
relating to pre-emption rights; and
• the requirements of Listing Rule 11
relating to related party transactions.
The provisions of the Takeover Code also
continue to apply to GCAP.
Combined Chairman and CEO role
We acknowledge that our decision for
the roles of Chairman and CEO to be
exercised by one individual is not compliant
with provision 9 of the Code. This matter
continues to be reviewed by the Nomination
Committee and the Board as part of
Board effectiveness evaluation exercises.
On page 172 you will find the results of
the Board evaluation conducted in 2023,
which inherently considers how the current
structure of the combined Chairman/CEO
role contributes to the effectiveness of the
operation of the Board and more widely
to the Company. The Board continues to
believe that, at present, this structure best
serves the Company and its stakeholders.
The basis for this conclusion is summarised
in this section.
• The Independent Non-Executive
Directors are experienced business
people of particular high quality for a
FTSE Small/MidCap company and we
would invite shareholders to consider
their biographies and note the degree
of real expertise and experience
they bring to the Board. They have
a diverse range of backgrounds and
nationalities, and each brings a fresh
view and particular expertise to Board
discussions. The Senior Independent
Non-Executive Director, a former
partner at a major US law firm, is highly
experienced in the region and is the
governance lead for the Board and the
Non-Executive Directors. He also chairs
the Audit and Valuation Committee.
Previous roles for the other Non-
Executive Directors (as detailed in the
biographies later in this section) include:
– investment officer at a major
investment fund;
– experienced non-executive director
of Georgian groups listed on the
LSE; and
– extensive management consulting
and private equity experience.
All the Non-Executive Directors engage
directly and regularly with the team
outside the boardroom.
• The Non-Executive Directors engage
directly with senior management and
the workforce in Georgia (central team),
ensuring unfiltered channels of access.
This typically occurs around the Board
meetings and often includes informal
contacts in various settings.
• While the Directors delegate
regular monitoring of our portfolio
companies and ongoing strategic
advice to the Group Chairman and
CEO and his central team, the entire
Board scrutinises, challenges and
ultimately approves or disapproves
investment and divestment proposals
and initiatives, including significant
add-on investment for existing
portfolio companies. It also considers
the commercial terms of major
transactions (i.e. over GBP 2.5 million).
As such, the Non-Executive Directors
exercise key secondary oversight of the
private portfolio businesses, engaging
with the private portfolio companies’
CEOs and top management on their
most important decisions. During
2024, two of the regular quarterly
meetings were held in Georgia,
providing the Non-Executive Directors
with opportunities to meet with a
number of the portfolio companies’
CEOs/executive management.
The Group’s NAV is set by the Audit and
Valuation Committee.
• The Group’s key financial and investor
communications metric is its NAV as
approved by the Audit and Valuation
Committee, a committee comprised of
Independent Non-Executive Directors
on which the Chairman and CEO does
not sit.
Given the structure of the Group and the
key role that Irakli Gilauri plays in it, the
Board continues to believe the current
combined Chairman/CEO structure
best suits the Group. As mentioned
in the introduction to this statement,
this structure has been supported by a
significant majority of shareholders at each
AGM since the formation of the Company
through their re-election of Irakli Gilauri.
Ongoing dialogue with our shareholders
confirms that they fully understand and
support this approach.
The Board continues to develop its
approach to ESG under the auspices
of the Responsible Investment Policy.
Further information is included in the
Resources and Responsibilities section
on page 76. Details of our ESG activities
are set out in our Sustainability Report.
The Board remains committed to the view
that the Company’s strong focus on good
ESG processes is fundamental to the
Company’s ongoing success.
Irakli Gilauri
Chairman and
Chief Executive Officer
David Morrison
Senior Independent
Non-Executive Director
Statement of Compliance with the UK Corporate Governance Code
The Board continues to commit to high standards of corporate governance that enhance performance, reduce risks and promote the protection of our shareholders’ interests.
The Board has overall responsibility for governance and is accountable to its shareholders. This Governance Report describes how the Board has applied the Main Principles
and complied with the relevant provisions of the Code during 2024. The Code is publicly available on the website of the Financial Reporting Council (“FRC”) at www.frc.org.uk.
We also continue to monitor our governance framework and underlying governance structures to ensure that they meet the needs of the business.
Throughout 2024, the Board considers that the Company has complied in full with the provisions of the Code with the exception of provision 9, which states that the roles of
Chair and Chief Executive should not be exercised by the same individual.
The Company’s Chairman, Irakli Gilauri, also serves as the Company’s Chief Executive Officer and is not considered by the Board to be independent. We set out above why we
regard the joint Chairman and Chief Executive Officer position to be appropriate for our Company and we also explain some of the measures we have put in place to ensure that
no one individual is able to dominate the Board’s decision-making. For more information on CEO succession planning, please see the Nomination Committee report on pages
169 to 172.
This statement, and the reports from the Board Committees, set out how we applied the Main Principles of the Code. The Directors’ Report also contains information required
to be disclosed under the Financial Conduct Authority (“FCA”) UK Listing Rules (UKLR) and Disclosure Guidance and Transparency Rules (DTR). Following the FCA’s reforms
to the UK listing regime, the Company is now listed on the FCA’s Equity Shares (Transition) Category and will voluntarily prepare to apply the revised UK Corporate Governance
Code 2024 in its entirety for accounting periods beginning on or after 1 January 2025. To the extent necessary, certain information is incorporated into this Governance Report
by reference.
Directors’ Governance Statement
Georgia Capital is a holding company
focused on investing in and developing
businesses, with the result that we hold
and operate a highly diversified group
of companies.
• Our central Group management
structure is quite small, with 45
employees in the head office. It is
principally at the level of the central
management team at which the Board
provides challenge, most importantly,
on investment/divestment decisions.
• The businesses of our portfolio
companies are highly diverse and
decentralised. Each has its own CEO
and management team and a strong
measure of operational independence.
• In these circumstances, at the small
central office an independent chair
would be a bureaucratic overlay; and
at the level of the portfolio companies
he or she would struggle to add value.
The position would also come with
an additional cost which, given these
circumstances and the additional
considerations below, the Board
considers to be unwarranted.
The Board is highly experienced and
almost entirely independent.
• All Board members other than the
Chairman and CEO are Independent
Non-Executive Directors. Each Non-
Executive Director approaches the
Company with true independence.
Our decisions at the Board level and
at the Nomination Committee (on
which the CEO sits) level are typically
reached through consensus – meaning
that ultimately all the independent
Directors and the Chairman and
CEO agree on a final position. They
are majority decisions: the Chairman
and CEO does not have a veto
and is outnumbered four to one by
Independent Non-Executive Directors.
Irakli Gilauri
Chairman and Chief Executive Officer
20 March 2025
David Morrison
Senior Independent Non-Executive Director
20 March 2025
122 123
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Our Board of Directors
Skills and experience:
Irakli Gilauri formerly served as the CEO of BGEO Group
from 2011 to May 2018. He joined as CFO of Bank of
Georgia in 2004 and was appointed as Chairman of
the Bank in September 2015, having previously served
as CEO of the Bank since May 2006. Prior, he was an
EBRD banker. Mr Gilauri has more than 20 years of
experience in banking, investment and finance. He also
served from 2015 as a Director of Georgia Healthcare
Group PLC (which delisted in 2020). Mr Gilauri is also
Non-Executive Director and Chairman of the Audit
Committee of Consilium Acquisition Corp I, LTD (SPAC).
Education:
Mr Gilauri received his undergraduate degree in Business
Studies, Economics and Finance from the University
of Limerick, Ireland, in 1998. He was later awarded the
Chevening Scholarship, granted by the British Council,
to study at the Cass Business School of City University,
London, where he obtained his MSc in Banking and
International Finance. Mr Gilauri holds a Certificate in
Winemaking from the University of California, Davis.
Reasons for appointment:
Irakli Gilauri brings significant insight of local and
international strategic and commercial issues to the
Board and has a distinguished career in corporate
banking. Over the last decade, Mr Gilauri’s leadership has
been instrumental in creating major players in a number
of Georgian industries, including banking, healthcare,
utilities and energy, real estate, insurance and beverages.
Mr Gilauri’s local expertise and business experience,
in working previously with both Georgia Healthcare
Group PLC and BGEO Group PLC, alongside his strong
understanding of the Georgian political, economic and
cultural context, is invaluable to the Board.
Skills and experience:
Mr Morrison spent most of his career (28 years) at Sullivan
& Cromwell LLP where he served as Managing Partner
of the firm’s Continental European offices. His practice
focused on advising public companies in a transactional
context, including capital raisings, IPOs, and mergers and
acquisitions. The author of several publications on securities
law-related topics, Mr Morrison was recognised as a leader
of his profession in Germany and France. Since withdrawing
from his law firm in 2008, Mr Morrison has focused on
his roles as a non-executive director on corporate boards
and his charitable work. Mr Morrison previously served as
the Senior Independent Non-Executive Director of both
BGEO Group PLC (from October 2011 until May 2018)
and Georgia Healthcare Group PLC (from September 2015
until their delisting in August 2020) and served as Chairman
of the Audit Committee (amongst other Committee roles)
for both companies. In his charitable work, Mr Morrison
has focused on conservation finance. In 2008, he became
the Founding CEO of the Caucasus Nature Fund (“CNF”),
a charitable trust dedicated to wilderness protection in
Georgia, Armenia, and Azerbaijan. Following the departure
of CNF’s Executive Director last year, Mr. Morrison stepped
into that role on an interim, voluntary basis and stepped
down from his role as Chair of CNF’s supervisory board. He
also serves on the board of, or as an advisor to, three other
conservation trusts he helped to create. A principal focus
of his role for all four of these charities is the investment of
a portfolio of over US$ 500 million in endowment capital.
Mr Morrison also served as Georgia’s first Environmental
Ombudsman in 2019 and 2020.
Education:
Mr Morrison received his undergraduate degree from Yale
College and his law degree from the University of California,
Los Angeles. He was also a Fulbright scholar at the
University of Frankfurt.
Reasons for appointment:
With his background as a corporate finance and securities
lawyer advising dozens of clients, including a large number
of publicly held companies, David Morrison brings to
the Board vast experience in corporate governance and
compliance as well as a strong understanding of legal
and regulatory issues. His work since 2008 has given him
extensive regional experience, which includes in-depth
knowledge of ESG matters in Georgia. As an experienced
chairman of audit committees of Premium-listed
companies, Mr Morrison has significant direct experience
of ensuring integrity in financial reporting and adequate
risk management and internal control procedures. This
has been enhanced by his primary responsibility as CEO
or CFO of the four conservation trusts with which he is
involved, where he was responsible for developing the
accounting and controlling systems and being the principal
management counterparty for the external auditors. With
its significant focus on financial disclosure and reporting,
his career has prepared him well for his Audit and Valuation
Committee duties.
Skills and experience:
Mr Janin has extensive experience as a non-executive
director of Georgian groups that are listed on the
Premium Listing segment of the LSE. He was Chair
and Non-Executive Director of BGEO Group PLC
from October 2011 until 21 May 2018 and of Bank of
Georgia Group PLC from February 2018 until March
2022, and he served as Non-Executive Director of
Georgia Capital PLC’s (then listed) subsidiary Georgia
Healthcare Group PLC from September 2015 until April
2018. He serves as counsel to CEOs of both for-profit
and non-profit organisations and continues to provide
consulting services to McKinsey & Company. Mr Janin
was a Director of McKinsey & Company, based in
its Paris office, for over 27 years, from 1982 until his
retirement. At McKinsey & Company, he conducted
engagements in the retail, asset management and
corporate banking sectors, and was actively involved in
every aspect of organisational practice, including design,
leadership, governance, performance enhancement and
transformation. Before joining McKinsey & Company,
Mr Janin worked for Chase Manhattan Bank (now JP
Morgan Chase) in New York and Paris, and Procter &
Gamble in Toronto. Mr Janin has practised in Europe,
Asia and North America. He is also a Director of Neil
Janin Limited, a company through which he provides
his ongoing consulting services.
Education:
Mr Janin holds an MBA from York University, Toronto,
and a joint honours degree in Economics and
Accounting from McGill University, Montreal.
Reasons for appointment:
Neil Janin has extensive experience of serving as a
non-executive director of Georgian groups that are also
listed on the LSE. His career spans Europe, Asia and
North America, across the retail, asset management
and corporate banking industries, and all areas of
organisational practice, including governance, culture,
design, leadership, performance enhancement, change
and transformation. Mr Janin brings his considerable
insight of international strategic and commercial
practices, in addition to significant experience of
governance and the Georgian investment climate,
to the Group’s future development.
Skills and experience:
Dr Gesua’ sive Salvadori is an analyst covering
banking and other financial stocks globally. He works
for Lancaster Asset Management, a London-based
hedge fund, which he joined in 2011. He is responsible
for generating investment ideas and understanding
broad trends. Dr Gesua’ sive Salvadori worked as
a management consultant at the London office of
McKinsey & Company, between 2002 and 2011,
specialising in financial services, and served clients
across different geographies in developed and emerging
markets as part of the banking strategy practice.
Education:
Dr Gesua’ sive Salvadori, a native of Venice, obtained
an M.Phil. and a Ph.D from Oxford University, where he
attended St. Antony’s College. He graduated with a B.Sc
in Economics from Warwick University. He attended
the United World College of the Adriatic in Duino. His
postgraduate studies were funded through scholarships
by the Foreign and Commonwealth Office, the Economic
Research council, the Fondazione Einaudi and the
Ente Einaudi.
Reasons for appointment:
Massimo Gesua’ sive Salvadori’s background in
investment and his experience as a professional
investor with financial markets, strategic issues and
valuation techniques brings a breadth of knowledge to
and makes him an important asset to the Board and
the Nomination and Audit and Valuation Committees,
of which he is a member. His extensive experience of
valuations and value drivers are particularly valuable to
the Audit and Valuation Committee since the private
portfolio companies’ valuation is the key area of focus in
Georgia Capital’s financial accounting and reporting. His
background as a management consultant is also valued
in Board discussions.
Skills and experience:
Ms Chatti-Gautier is a senior investment manager with
over 25 years of experience in private equity in prominent
financial institutions and has sat on the board of directors
of over 30 companies. She currently serves as Senior
Advisor of Trail Management, an independent private
equity investment firm that invests in European midcap
companies to develop them in China. Ms Chatti-Gautier
started her career at Chase Manhattan Bank in Paris
before joining BAII (Banque Arabe et Internationale
d’Investissement). She spent most of her career (15
years) at Natixis Private Equity, before moving to Oddo
Private Equity. Her activities included sourcing, analysing,
managing and monitoring a large number of investments
and exits. Through her own consulting firm, Ms Chatti-
Gautier has also advised various investment and
fundraising programmes in Europe, Lebanon and the
MENA region, including Drake Star Partners (previously
known as LDA Jupiter). Ms Chatti-Gautier currently
serves as a board member and member of the Audit
Committee of Groupe Pizzorno Environnement, a leading
French operator in the waste management business
listed on Euronext. She is also a Director of Buffet
Crampon Group, a major producer of wind musical
instruments and of Thés de La Pagode, producer and
distributor of high-end organic teas.
Education:
Ms Chatti-Gautier holds an MBA with major in Finance
from Ecole des Hautes Etudes Commerciales-HEC, with
joint MBA programmes from London Business School
and NYU Stern.
Reasons for appointment:
Maria Chatti-Gautier has extensive experience in all types
of private equity transactions with a hands-on approach
and leadership role in investment execution, build-up and
exit strategies. Ms Chatti-Gautier’s background in private
equity and understanding of investment strategies,
alongside her board experience, makes her well suited to
her role on the Board.
David Morrison
Senior Independent Non-Executive Director
David Morrison was appointed as the Senior Independent
Non-Executive Director of the Company on 24 February
2018. He also serves as the Chairman of the Company’s
Audit and Valuation Committee and as a member of the
Remuneration Committee. He sits on the Supervisory
Board of JSC Georgia Capital.
Neil Janin
Independent Non-Executive Director
Neil Janin was appointed as an Independent
Non-Executive Director of the Company on 17 October
2022. He also serves as the Chairman of the Company’s
Nomination and Remuneration Committees and sits on
the Supervisory Board of JSC Georgia Capital.
Massimo Gesua’ sive Salvadori
Independent Non-Executive Director
Massimo Gesua’ sive Salvadori was appointed as an
Independent Non-Executive Director of the Company
on 24 February 2018. He also serves as a member of
the Audit and Valuation and Nomination Committees
and is a member of the Supervisory Board of JSC
Georgia Capital.
Maria Chatti-Gautier
Independent Non-Executive Director
Maria Chatti-Gautier was appointed as an Independent
Non-Executive Director of the Company on 19 March
2020. She also serves as a member of the Remuneration
and Audit and Valuation Committees and is a member of
the Supervisory Board of JSC Georgia Capital.
Irakli Gilauri
Chairman and Chief Executive Officer
Irakli Gilauri was appointed as Chairman and CEO on
24 February 2018. He also serves as a member of the
Nomination Committee. He sits on the Supervisory
Board of JSC Georgia Capital.
Board of
Directors
124 125
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Board size, composition and independence
The Board is comprised of five Directors, four of whom are
Independent Non-Executive Directors, and one executive
Chairman – Irakli Gilauri, who also acts as the Company CEO.
The responsibilities of the Board are set out on page 125.
Director biographies can also be found here:
https://georgiacapital.ge/governance/board.
The Board of Directors considers the five-member Board well-
suited to carrying out its duties of overseeing the Company’s
continuing obligations and leading the Company’s success in an
optimal and cost-effective way. Both the Audit and Valuation and
Remuneration Committees continue to have three Independent
Non-Executive Directors who have the requisite level and
breadth of expertise. The Nomination Committee comprises
two Independent Non-Executive Directors (one of which is the
Committee Chair) and Mr Gilauri.
The Board continues to be of the view that a diversity of skills,
backgrounds, knowledge, experience, geographic location,
nationalities, age and gender is important to effectively govern
the business. The Board and its Nomination Committee work
to ensure that the Board continues to have the right balance
of skills, experience, independence and knowledge necessary
to discharge its responsibilities in accordance with the highest
standards of governance.
Board appointments are made based on recommendations
received from the Nomination Committee. In making these
appointments, the Nomination Committee ensures that
appointments and succession plans are made based on merit
as well as other objective criteria, whilst ensuring the Board
maintains the right balance of skills and knowledge needed to
address its specific needs. Due consideration is also given to
diversity in the wider sense, and the benefits that stem from
having a diverse Board.
Each of our Non-Executive Directors occupies, and/or has
previously occupied, senior positions in a broad range of relevant
associated industries, bringing valuable external perspective to
the Board’s deliberations through their experience and insight
from other sectors enabling them to contribute significantly to
decision-making.
Some of these skills include:
• Banking, investment and finance sector experience.
• Leadership knowledge.
• Understanding of local and international strategic and
commercial issues.
• Investor market knowledge.
• Experience of stakeholder engagement.
• Understanding of governance practices and
regulatory framework.
• Familiarity with Georgian political, economic and
cultural context.
• Experience of investment execution, exit strategies and
private equity.
The relationship between Directors ensures that no individual,
or group of individuals, is able to dominate the decision-making
process, independence of thought is maintained, and no undue
reliance is placed on any individual.
At the time of this report, we have assessed the independence of
each of the Non-Executive Directors and are of the opinion that
each act in an independent and objective manner. We consider
that, in line with the Code, all of our Non-Executive Directors are
independent and free from any relationship that could impair
their judgement.
Our governance structure
We understand our responsibility to shareholders and
stakeholders. We are dedicated to delivering shareholder value
over the long term and promoting the success of the Company
for the benefit of all shareholders through the management of the
Group’s business. The Board is focused on shareholder returns
and on opportunities which meet its investment return and
growth criteria.
The Georgia Capital Board is assisted in fulfilling its responsibilities
by three Committees: Audit and Valuation, Remuneration and
Nomination. The Terms of Reference are reviewed annually,
approved by each Committee and the Board, and can be found
at: https://georgiacapital.ge/governance/cgf/terms.
For further information about the Committees, including
membership, see the Audit and Valuation Committee report on
page 134, the Remuneration Committee report on page 142 and
the Nomination Committee report on page 169.
The Board has primary responsibility for overseeing environmental
and social risks and that the Company’s strategic direction is
regularly informed by material environmental and social issues.
Given the small size of the Board and the importance of these
matters, including climate change, the Board believes that it is
appropriate for the whole Board to be responsible for these issues.
Outside these matters, the Board delegates authority for the
day-to-day management of the business to the CEO. The CEO
delegates aspects of his own authority, as permitted under the
corporate governance framework, to the Management Board.
Operation of the Board
We maintain a corporate calendar, which sets out rolling
agenda items that must be considered during the year. This
annual schedule of items ensures that all matters are given due
consideration and are reviewed at the appropriate point in the
financial and regulatory cycle.
The Chairman receives regular input from the Non-Executive
Directors ahead of each Board meeting in order to ensure that
any matters they have raised are on the agenda to be discussed
at the meeting. The Senior Independent Non-Executive Director
supports the Chairman in his role, acts as an intermediary for other
Non-Executive Directors when necessary and liaises with the Non-
Executive Directors outside of the Board and Committee meetings.
The Senior Independent Non-Executive Director met with the Non-
Executive Directors without the Chairman present at least once
during the year to appraise the Chairman’s performance.
The Board is responsible to shareholders for creating and
delivering shareholder value over the long term through the
oversight of the Group’s operations. Our responsibilities include
setting and overseeing the execution of the Group’s strategy
within a framework of effective risk management and internal
controls, demonstrating ethical leadership and upholding best
practice corporate governance.
All decisions are made through Directors exercising independent
objective judgement, and following open and rigorous challenge.
While our ultimate focus is long-term growth, the Company also
needs to deliver on short-term objectives, and we seek to ensure
that management strikes the right balance between the two.
Each Director also recognises their statutory duty to consider and
represent the Company’s various stakeholders in its deliberations
and decision-making. You can read more about how Directors
had regard to their duties under section 172 (1) of the Companies
Act 2006 and how Directors performed these duties on page 58
of the Strategic Report.
Matters reserved for the Board
In order to ensure that we meet our responsibilities, specific key
decisions have been reserved for approval by the Board.
The key matters reserved for the Board are:
• The Group’s long-term objectives and strategy.
• Shareholder engagement and general meetings.
• Overall corporate governance arrangements including Board
and Committee composition, Committee Terms of Reference,
Directors’ independence and conflicts of interest.
• Internal controls, governance and risk management
frameworks.
• Changes to the corporate or capital structure of the Company.
• Annual Report and Accounts, and financial and regulatory
announcements.
• Significant changes in accounting policies or practices.
• Annual budgets and financial expenditure.
• Oversight of risk management and performance, and of
environmental and social risks.
• Allocation of capital, including dividends and buybacks,
significant investments and divestments, consideration of
material environmental and social issues in respect of
potential investments.
A full formal schedule of matters specifically reserved for the
Board can be found on our website at:
https://georgiacapital.ge/governance/cgf/schedule.
Corporate Governance Framework
Our governance structure
BOARD
CEO
Audit and Valuation
Committee
Read more
on page 134
Remuneration
Committee
Read more
on page 142
Nomination
Committee
Read more
on page 169
Executive
management
126 127
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Board activities during 2024
Details of the areas that the Board considered this year are set out below and comprise:
Strategy • Ongoing consideration and monitoring of the Company’s progress in meeting its strategic goals
including transitioning to a capital-light investment business.
• Approved capital allocations to and discussed the capital allocation outlook for
portfolio companies.
• Approved the sale of 80% of the Group’s beer and distribution business for c.US$ 63 million.
• Reviewed Group and portfolio company performance against strategy.
• Regularly reviewed the Georgian, regional and global political and economic climate,
particularly in light of the ongoing war between Russia and Ukraine, and the 2024
Georgian Parliamentary elections.
• Continued with share buyback and cancellation programmes totalling US$ 65 million,
announced in 2024.
• Reviewed a number of ESG matters, TCFD reporting and ESG target-setting
implementation processes.
Governance, assurance
and risk management
• Focused on high-level governance issues and developments that may affect the Company
strategy.
• Received reports from different Committees.
• Considered the proxy voting agency approaches and the impact on the Company.
• Reviewed and approved governance documents, including the schedule of matters reserved for
the Board, Terms of Reference for the Audit and Valuation Committee, Remuneration Committee
and Nomination Committee, and Group-level policies.
• Embedded ESG considerations into the governance framework.
Financial reporting • Received reports on the financial performance of the Group.
• On the recommendation of the Audit and Valuation Committee, reviewed and approved financial
reporting including approval of accounts, Notice of AGM, half-year and full-year announcements,
and trading updates to the market.
ESG • See separate Sustainability Report.
Succession • Board and Committee succession planning.
• CEO succession plan.
Stakeholders • Considered and implemented s172 duties:
– Re-confirmed identity of key stakeholder groups.
– Considered how Board decisions impact the interests and priorities of each group.
– Actively engaged with different stakeholders.
Investment matters • Reviewed investment and exit strategy.
Standing items Each quarter the following topics are usually discussed at the Board meeting:
• Financial update (with formal financial results announcements and trading updates to the market
typically being approved at separate phone meetings).
• Monitoring of financial performance against budget.
• Macroeconomic developments, including a focus on both the Georgian and regional markets.
• An assessment of current and potential future risks to the Company.
• Regulatory and legislative updates, including corporate governance as appropriate.
• Updates from the Committee meetings, typically including at least an Audit and Valuation
Committee report on accounting issues and valuations and Internal Audit.
• Business updates from selected portfolio companies. The Board reviews the capital allocation
pipeline and takes action as necessary on new investments or divestments.
Purpose, culture and values
The Board has responsibility for the overall purpose, culture and
values of the Company, and their pursuit and development are at
the core of each Board meeting.
The Board believes that there are three features in particular that
will allow the Company to capitalise on the fast-growing Georgian
economy: access to capital, access to management and strong
corporate governance. Our culture and values are designed to
strengthen all of these.
Purpose
Georgia Capital’s purpose is to provide investors with an
opportunity to invest in the historically fast-growing Georgian
economy by giving them access to attractive investments with
long-term growth potential. The Company then seeks to develop
these into viable independent businesses on which value can
be realised through sale or otherwise. By investing in Georgia
to create multiple strong private companies/institutions, we will
foster Georgia’s development and help it succeed.
Culture
The Board continued to focus on developing, monitoring and
assessing corporate culture and thinking about the ways in which
our culture might serve as a long-term differentiator, both in terms
of strategy and of recruitment and retention. We are proud of
the culture that we built at Georgia Capital and recognise it is
important to clearly articulate this culture, drive it and ensure that
it permeates the entire business.
Helping Georgia to succeed is at the heart of Georgia Capital.
During the year the Board looked closely at our mission, vision
and values and how we could reinforce through shaping the
Company’s long-term strategy. The Board is of the view that this
will benefit all of the Company’s stakeholders.
In order to create strong private business institutions, we will
continue with our plan to develop our leaders so that they
become future entrepreneurs of Georgia, through personal and
professional development. The Chairman and CEO met regularly
with key management personnel at Georgia Capital to share
this vision and coordinate the Group’s actions and priorities. The
Chairman and CEO and Georgia Capital’s key management
personnel monitored portfolio companies’ performance on at
least a monthly basis, also reinforcing key messages. These
messages are cascaded down from the management team to
the wider employees.
Values
Being entrepreneurial
Our current culture is entrepreneurial in nature, and this is
something that is grounded in our ability to see and seize
opportunities and to develop business strategies whilst remaining
disciplined and rational. All of our portfolio companies have been
founded or substantially developed by entrepreneurs, and this
is at the core of what we do. Our objective moving forward is to
empower our people, continue to develop this spirit and pursue
the excellence of execution within our businesses.
Having a learning mindset
We seek to develop a learning mindset as part of our wider
culture and we recognise the need to improve the ways in which
we communicate, provide feedback and help our people to
develop. We approach this by looking at ways we can mentor
and coach people throughout the organisation, and we aim to
create an environment where independent thinking and curiosity
are encouraged.
Maintaining the high standard of ethics
This has been an aspect of our culture that we have maintained
since our inception, and it is a priority of ours to ensure it stays
this way. In order to maintain high ethical standards, we will draw
on principles of transparency and accountability and seek to
sustain high standards of corporate governance.
Creating a culture relies on the participation and leadership of
our Board of Directors, as this vision can then be communicated
through executive management and onward to the wider
businesses. By setting the tone at the top, establishing the core
values of the Company and demonstrating our leadership, we
are creating a culture that clearly sets an expectation that every
employee acts ethically and transparently in all of their dealings.
This, in turn, fosters an environment where business and
compliance are interlinked.
Board and Committee meeting attendance
Details of Board and Committee meeting attendance in 2024 are as follows:
Members Board
Audit and Valuation
Committee
Nomination
Committee
Remuneration
Committee
Irakli Gilauri 4/4 Scheduled
8/8 Ad hoc
n/a 2/2 n/a
David Morrison 4/4 Scheduled
8/8 Ad hoc
5/5 Scheduled
7/7 Ad hoc
n/a 4/4
Massimo Gesua’ sive Salvadori 4/4 Scheduled
8/8 Ad hoc
5/5 Scheduled
7/7 Ad hoc
2/2 n/a
Neil Janin 4/4 Scheduled
6/8 Ad hoc
n/a 2/2 4/4
Maria Chatti-Gautier 4/4 Scheduled
8/8 Ad hoc
5/5 Scheduled
7/7 Ad hoc
n/a 4/4
For Board and Committee meetings, Directors’ attendance is expressed as the number of meetings attended out of the number that
each Director was eligible to attend.
Corporate Governance Framework continued
128 129
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
The process for evaluating the Chairman’s performance
In light of his role as Chairman and CEO, Irakli Gilauri’s
performance was evaluated. In addition, the full Board met to
consider the Remuneration Committee’s recommendations
and Mr Gilauri’s performance as Board Chairman. David
Morrison as the Senior Independent Non-Executive Director
led the overall review. The CEO was not present during the full
Board’s discussions around his own performance. The Board
also reached consensus on his performance as Chairman as
reflected in the favourable Board self-evaluation and the decision
to recommend the maintenance of the current combined role of
Chairman/CEO as discussed above.
The Board’s objectives for 2025 are:
• monitoring the implementation of the strategy and continuing
to adjust as necessary, with particular focus on capital
allocation and divestments;
• addressing the uncertainties created by Georgian and regional
political/geopolitical tensions;
• keeping ESG at the forefront of our decision-making, and
monitoring and enhancing KPIs relating to climate change
risks and opportunities;
• maintaining focus on succession planning;
• monitoring and assessing culture and how this aligns
with our purpose, values and strategy; and
• ensuring continued active shareholder and
stakeholder engagement.
Succession planning
Board appointments and senior management
We continue to believe that effective succession planning
mitigates the risks associated with the departure or absence of
well-qualified and experienced individuals. Our aim is to ensure
that the Board and management are always well resourced
with the right people in terms of skills and experience, in order
to effectively and successfully deliver our strategy. We also
recognise that continued tenure brings a depth of Company-
specific knowledge that is important to retain.
The Board’s Nomination Committee is responsible for both
Director and senior management succession planning. There is a
formal, rigorous and transparent procedure for the appointment
of new Directors to the Board, including a review of other
significant commitments Directors may have and, typically,
a period of service in a Board advisory role.
More details on the role and performance of the Nomination
Committee is on pages 169 to 172.
Non-Executive Directors’ terms of appointment
On appointment, our Non-Executive Directors are provided
with a letter, which sets out the terms and conditions of their
directorship, including the fees payable and the expected time
commitment. Each Non-Executive Director is expected to commit
approximately 25-35 days per year to the role. An additional time
commitment is required to fulfil their roles as Board Committee
members and/or Board Committee Chairs, as applicable.
Having reviewed all Directors’ current time commitments, we are
confident that all Non-Executive Directors are sufficiently able to
dedicate the amount of time necessary to contribute effectively to
the Board.
The letters of appointment for our Non-Executive Directors
are available for inspection at our Company’s registered office
address during normal business hours.
Prior to accepting any external appointments, Directors are
required to seek the Board’s approval. The Board believes
that the other external directorships/positions held provide the
Directors with valuable expertise, which enhances their ability to
act as a Non-Executive Director of the Company. Despite our
Non-Executive Directors holding external directorships and other
external positions, the Board believes they still have sufficient
time to devote to their duties as a Director of the Company. In
order to form a view of this, we conduct an annual review of
individual Director’s conflicts, which is recorded in the Conflicts
of Interest Register, and as part of the review we consider other
appointments held by each Director.
Stakeholder engagement
The Code reinforces and expands the requirements of the
UK Companies Act for directors to remain mindful of their
duties to consider the interests of key stakeholders. The Board
understands the importance of effective engagement with
stakeholders to gain an understanding of the issues that relate to
each stakeholder and those that impact the Company so that the
Board can appropriately consider these views and their concerns
when having Board discussions, and when considering the long-
term success of the Company.
The Board has structured its meeting agendas to take account of
each of the provisions in s172 of the Companies Act 2006, and
focuses on long-term value generation opportunities, considering
political and macroeconomic circumstances and stakeholder
considerations. Shareholders’ considerations are sought out and
incorporated into our discussions and decisions. For example,
members of the Board and management participated in more
than 500 virtual and/or physical investor meetings. The Company
participated in a number of investor conferences, and several
investor roadshows during the year.
The Company maintains a Stakeholder Engagement Plan which
describes, informs and guides the stakeholder engagement
process of the Group. The Plan seeks to define a technically and
culturally appropriate approach to consultation and disclosure. The
goals are to ensure that adequate and timely information is provided
to stakeholders, that these groups are given sufficient opportunity
to voice their opinions and concerns, and that these concerns
influence the Group and its various decision-making processes.
The table on pages 129 to 131 sets out our key relationships
with stakeholders and how we have engaged with them over the
financial year. The table also shows examples of how we have
considered our stakeholders when making key decisions and
how this has influenced certain decisions.
More information about how the Directors have discharged their
duty under s172 of the Companies Act 2006 is available in the
Strategic Report, on pages 58 to 59.
Key stakeholders Activities undertaken throughout year
How this stakeholder group influenced the
Committee/Board agenda and decision-making
Investors Types of engagement:
• Meetings with the Chairman and CEO
• Meetings and calls with the CFO and Advisor to the
CEO
• Investor relations team
• LSE announcements
• Investor conferences
• Investor roadshows
• Investor Days
• Corporate website with investor section
• AGM and General Meeting
• Quarterly results
• Senior Independent Non-Executive Director as an
intermediary
• Meeting with Committee Chairs and other Non-
Executive Directors
• Annual Report
• Sustainability Report
How the Board engages with investors:
We will engage with shareholders through the
Company’s forthcoming AGM to be held in May
2025 but will also continue to communicate with
shareholders on important developments throughout
the year. Our quarterly results are supported by a
combination of presentations and conference call
briefings, as was the preliminary announcement of our
annual results in February 2025.
The Company has established a comprehensive
shareholder engagement programme and encourages
an open and transparent dialogue with existing and
potential shareholders. For example, our Company
Secretary also has an ongoing dialogue with
shareholder advisory groups and proxy voting agencies.
The Company participated in several investor
conferences and roadshows during the year.
• The Board receives feedback from investors at
our Investor Days and during meetings about how they
view Georgia Capital within the wider market. Raised
matters of interest are then discussed at
Board meetings.
• The Board receives feedback from investors via the
Chairman and CEO and the CFO who are in regular
contact with the Company’s major shareholders.
This feedback informs the Board’s decision-making.
• The Chairman and CEO, the CFO, the Advisor to
the CEO and the Head of Investor Relations each
provide a standing invitation to shareholders to meet
and discuss any matters they wish to raise.
• The Senior Independent Non-Executive Director acts
as an intermediary for shareholders.
• Committee Chairs also make themselves available to
answer questions from investors. The Non-Executive
Directors attend regular Investor Days and are
available to answer questions.
• The Chairman has overall responsibility for ensuring
that the Board understands the views of major
shareholders. The Board is regularly kept informed
of these views by the Chairman as well as executive
management and the investor relations team and, to
the extent deemed appropriate, the Company has
taken active steps to adopt different ways of working
in response to feedback received from shareholders
and other stakeholders. Informal feedback from
analysts and the Company’s corporate advisors is
also shared with the Board.
• We hold regular meetings with JSC Georgia Capital’s
existing bondholders and actively engage with
potential lenders to discuss our funding strategy.
The Chairman and CEO, Senior Independent
Non-Executive Director and members of the Board
make themselves available to meet with institutional
investors when requested.
• Our comprehensive investor website
https://georgiacapital.ge is updated and reviewed
on a regular basis to ensure that information, including
matters relating to sustainability, is up to date. It provides
shareholders with access to the Company’s results,
press releases, investor presentations, analyst reports,
details on our corporate governance and corporate and
social responsibility framework and our leadership, as
well as other information relevant to our shareholders.
We also ensure that shareholders can access details of
the Company’s results and other news releases through
the LSE Regulatory News Service.
Corporate Governance Framework continued
130 131
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Key stakeholders Activities undertaken throughout year
How this stakeholder group influenced the
Committee/Board agenda and decision-making
Investors
continued
• Topics of discussion during 2024 reflected both the
external political and macroeconomic environment
in which Georgia Capital operates and how the
Company adapts to changes in this environment.
From a company-specific perspective, investors
have particularly focused on the Company’s plans
for capital repatriation to shareholders over the next
few years, the prioritisation given by the Board to
balance sheet deleveraging compared to capital
repatriation, and the specific methods used to return
excess cash to shareholders. In addition to direct
contact with our shareholders, the Company’s
corporate brokers and advisers also attended a
Board meeting to provide further specific feedback
from a wider range of shareholders. This feedback
and engagement were instrumental in supporting
the Board’s decisions regarding the evolution of the
capital repatriation programme announced during
the year, which reflected a mixture of capital returns
via share buybacks and further ongoing deleveraging
of the Company’s balance sheet.
• Please refer to the Resources and Responsibilities
section on page 76 of this report and the
Sustainability Report for further details on investor-
led engagement activities carried out throughout the
year and the output of that engagement.
Employees Types of engagement:
• Nominated Non-Executive Director
• Regular town halls
• Off-site and on-site meetings
• Feedback systems, e.g. employee satisfaction
surveys at our businesses
How the Board engages with employees:
The Board is encouraged to engage with employees
outside of formal channels. Workforce engagement
includes both formal and informal meetings, not only
with the central staff but also, when important strategic
or capital allocation questions arise in the portfolio
companies, with the management of those companies.
We believe that communicating with our employees is
vital and we provide information in a number of ways,
including via managers, presentations, email, intranet and
regular off-site meetings. We communicate information
about our corporate culture, the Company’s strategy
and performance, risks relating to its performance,
such as financial and economic factors, and our policies
and procedures.
The Board has oversight of whistleblowing and routinely
receives reports arising from its operation.
• Employee surveys are conducted at the holding
company level as well as across the portfolio
companies.
• Management has been instructed to ensure that
proposals to the Board are made in line with
stakeholders’ interests.
• The Nomination Committee continues to look at
succession planning and are conscious of ensuring
a diverse pipeline for the future.
• Please refer to the Resources and Responsibilities
section on page 76 of this report and the
Sustainability Report for further details on workforce
engagement activities carried out throughout the
year, and the output of that engagement.
Key stakeholders Activities undertaken throughout year
How this stakeholder group influenced the
Committee/Board agenda and decision-making
Suppliers,
customers,
the wider
community
and the
environment
Types of engagement:
• Investments to support diversified economy
• Engagement with suppliers, customers and the local
communities
• Education
• Corporate website
• Volunteering
How the Board engages with suppliers,
customers and the local communities:
The Group considers the interests of its main
stakeholders when developing the strategy and the
processes to improve its operations. Investing in
local businesses helps us to diversify and modernise
the Georgian economy, and this can be seen in the
development of our different portfolio companies.
Our hospitals and clinics and diagnostics businesses are
driving the modernisation and improvement of healthcare in
the country. Our renewable energy business is involved in
infrastructure programmes and ongoing structural market
reforms. Our auto service business contributes to overall
cleaner air and improved vehicle safety.
The Company believes that educating young people
is extremely important for the development of the
community as a whole. Georgia Capital is investing in
schools to give more learners access to high-quality
education and facilities.
As part of our sponsorship and charitable activities,
the Group acts to conserve nature, promote and
enhance access to education and supports people with
disabilities and special needs. Our Senior Independent
Non-Executive Director volunteers as Chairman of the
CNF, a charitable foundation providing financial and
technical support to Georgia’s national parks.
• Board agendas from time to time consider
governmental issues that influence the wider
Georgian market, which can influence key
investment decisions.
• Investments are made in local businesses that
will be beneficial to the Georgian economy.
This is evidenced in the Company’s Responsible
Investment Policy.
• Please refer to the Resources and Responsibilities
section on page 76 of this report and the
Sustainability Report for further details on community
engagement activities carried out throughout the
year, and the output of that engagement.
Corporate Governance Framework continued
132 133
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Directors’ responsibilities
Statements explaining the responsibilities of the Directors for
preparing the Annual Report and financial statements can be
found on page 173 of this Annual Report.
A further statement is provided confirming that the Board
considers the Annual Report, taken as a whole, is fair, balanced
and understandable and provides the information necessary for
shareholders to assess the Company’s position and performance,
business model and strategy.
Division of responsibilities
The Board has adopted written statements setting out the
respective responsibilities of the Chairman, Senior Independent
Non-Executive Director and Non-Executive Directors. Biographies
for the Board members are set out on pages 122 and 123. A
summary of the responsibilities of the Directors is set out below.
Chairman
• Guardian of the Board’s decision-making process.
• Ensures the Board as a whole plays a full and constructive
part in strategic decision-making.
• Sets the Board agenda.
• Ensures the Board receives accurate, timely and clear information.
• Shapes the boardroom culture and sets clear expectations.
• Ensures a formal and rigorous evaluation of the Board takes
place each year.
• Develops the Group’s strategy and commercial objectives.
• Leads communication with stakeholders.
• As CEO, is responsible for the operational and strategic
management of the Group and for running the Group’s business.
Senior Independent Non-Executive Director
• Provides a sounding board for the Chair and serves as a
trusted intermediary for the other Directors.
• Responsibility for an orderly succession process for the Chairman.
• Available to Non-Executive Directors and shareholders if they
have concerns which normal channels fail to resolve.
• Meets with other Non-Executive Directors for an annual
appraisal of the Chairman’s performance.
Non-Executive Directors
• Provide constructive challenge and specialist advice.
• Provide strategic guidance.
• Take into account the views of shareholders and other
stakeholders.
• Scrutinise the performance of management.
Internal controls and risk management
The Company has a comprehensive system of internal
controls in place, designed to ensure that risks are mitigated
and that the Company’s objectives are attained. The Board is
accountable for reviewing and approving the effectiveness of
internal controls operated by the Company, including financial,
operational and compliance controls, and risk management. The
Board recognises its responsibility in respect of the Company’s
risk management process and system of internal control and
oversees the activities of the Company’s external auditors and the
Group’s risk management function (supported by the Audit and
Valuation Committee), and accordingly the Board’s reviews its
internal controls and risk management framework on an annual
basis (including once in the current year of reporting).
A review of the Company’s risk management approach is further
discussed in the Strategic Report on pages 60 to 64.
For details on the management and mitigation of each principal
risk see pages 65 to 74.
The Group’s Viability Statement is detailed on pages 63 to 64.
Please refer to pages 134 to 141 for further detail in relation to
the role of the Audit and Valuation Committee.
The Group’s governance structure for risk management is
illustrated on pages 60 to 64.
Board induction, ongoing training, professional
development and independent advice
Board members are advised by the Company Secretary of
the legal and regulatory obligations of a Director of a company
listed on the LSE. All Directors have access to the advice of
the Company Secretary, as well as independent professional
advice at the Company’s expense, on any matter relating to
their responsibilities. Details on induction, ongoing training and
professional development for Board members are provided in the
report of the Nomination Committee, see pages 169 to 172.
Company Secretary
The Board has appointed Michael Oliver to act as Company
Secretary to Georgia Capital PLC. MUFG Corporate Governance
Limited, one of the UK’s largest professional services secretarial
teams, provides Company Secretarial Support.
Re-election of Directors
All Directors are required under the Code to be elected or re-elected
by shareholders at the Company’s AGM in May 2025. The Board
has set out in its Notice of Annual General Meeting the qualifications
of each Director and support for election as applicable.
Corporate Governance Framework continued
Workforce engagement
As Georgia Capital is a relatively small holding company with a
diverse number of portfolio companies, and given the relative
independence of these companies, the steps and tools used
to encourage employee engagement are developed within
the companies themselves, and shared with other portfolio
companies as deemed useful, rather than following a “top-down”
approach directed by Georgia Capital. While formal intragroup
exchanges occur (e.g. head office staff and staff from the
portfolio companies coming together to celebrate the Company’s
anniversary), it is the exception rather than the rule. Regular
monitoring of our portfolio companies and ongoing strategic
advice is the responsibility of the Group Chairman and CEO and
his central team. In light of the above, for workforce engagement
purposes, the Board has determined that the relevant workforce
is the central team.
The Board is mindful that attracting and retaining talent in a
highly competitive sector is crucial to the success of the Group.
As such, we are keen to understand the employee voice on an
ongoing basis. GCAP has a small number of employees, which
enables regular formal and informal access to Board Directors,
irrespective of seniority. Maria Chatti-Gautier, as the Non-
Executive Director responsible for leading employee engagement,
promotes informal discussions – such as over coffee, at
dinners and during walk-arounds of the office – and also hosts
more formal discussion groups. This creates channels of
communication between the Board and the workforce and allows
the team to offer their views, ensuring the Board understands
employee motivations and concerns. Constructive conversations
were held on workforce matters, morale, turnover and the
engagement of senior management with the rest of the team.
Ms Chatti-Gautier regularly reports back to the Board for
discussion, and this feedback forms an important part of our
consideration of the Group’s culture and operations.
Furthermore, site visits and management presentations that
occur in connection with important strategic or investment
decisions provide the Board access to the management teams of
the portfolio companies.
These meetings are occasions for the Board to test firsthand how
well the Group’s culture is being transmitted.
Please refer to the Resources and Responsibilities section on
page 76 of this report and the Sustainability Report for further
details on workforce engagement activities carried out throughout
the year, and the output of that engagement.
Georgia Capital: As our people are our main asset, we invest
significantly in engaging and motivating our staff. The Company
has a small head office (45 people) and we encourage an open-
door policy – staff can approach management at any time with
any concern.
In 2024, attendance at the office was voluntary. Distance and
hybrid working environments facilitated staff engagement through
online platforms. Regular meetings organised by the Chairman and
CEO were held with senior and middle management. Messages
from these meetings were cascaded down to all employees.
At our regular Board and Committee meetings, interaction with
a number of GCAP holding company personnel occurs naturally
as part of the meeting where they present to the Board and/
or participate in the discussion. The designated Non-Executive
Director for workforce engagement, the Senior Independent Non-
Executive Director and other Non-Executive Directors also “walk
the halls” during their visits and engage informally with the team.
Annual General Meeting
The Notice of Annual General Meeting is circulated to all
shareholders at least 20 working days prior to such meeting. All
shareholders are invited to attend the AGM, where there is an
opportunity for individual shareholders to question the Chairman
and the Chairs of the principal Board Committees.
After the AGM, shareholders can talk informally with the Directors.
As recommended by the Code, all resolutions proposed at the
2025 AGM will be voted on separately and the voting results will
be announced to the LSE and made available on the Company’s
website as soon as practicable after the meeting. These will
include all votes cast for and against and those withheld, together
with all proxies lodged prior to the meeting. In the event that 20%
or more of the votes are cast against a resolution, an explanation
will be provided in the announcement to the LSE of the actions
the Company will be taking to address shareholders’ concerns. A
follow up announcement would then be made within six months
of the AGM regarding feedback received from shareholders and
the subsequent actions taken by the Company.
See page 228 for further shareholder information and page 129
for further information on shareholder engagement.
Diversity Policy
The Board and senior leadership’s gender identity and ethnicity
data presented in accordance with UKLR 22.2 can be found on
pages 171 and 172.
For further information, please see the Company Diversity Policy,
which incorporates the Board’s Diversity Policy, at:
https://georgiacapital.ge/governance/cgf/policies.
For a breakdown of the gender diversity figures for the Company,
please refer to the Resources and Responsibilities section on
page 76 of this report.
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Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Committee Meeting
membership attendance
1
David Morrison (Chairman) 5/5 Scheduled
7/7 Ad hoc
Maria Chatti-Gautier 5/5 Scheduled
7/7 Ad hoc
Massimo Gesua’ sive Salvador 5/5 Scheduled
7/7 Ad hoc
David Morrison
Chairman of the Audit and Valuation Committee
Audit and Valuation Committee Report
Dear Shareholders
I am pleased to present the Audit and Valuation Committee’s
(“the Committee”) report for the year ended 31 December 2024.
During the year, the Committee has kept its focus on its
key responsibilities: oversight of financial reporting matters,
monitoring the effectiveness of risk management and internal
control systems, reviewing and providing constructive challenge
to the detailed investment valuation process, and overseeing the
relationship with the external auditors.
One of the Committee’s primary responsibilities is to assist the
Board in ensuring the robustness of the Group’s investment
and valuation processes including monitoring compliance with
the Valuation Policy and the fair value measurements under
IFRS 13. The Committee has spent considerable time providing
independent challenge to management when considering the
specific performance and valuations of individual investments and
of the portfolio. The Committee concluded that management’s
approach was appropriate and was satisfied with the fair value
recognised throughout the year and as at 31 December 2024.
The Committee continues to review the provision of external audit
and audit-related services provided by PricewaterhouseCoopers
LLP (“PwC”). The Committee reviewed the external auditors’
independence, and, through its evaluation of the external audit,
is satisfied that the external auditor continues to be independent
and provides an effective audit service, which is described later
in this report. We are pleased to recommend to shareholders
that PwC be re-appointed as the Company’s auditors at the
forthcoming AGM.
Through the Head of Internal Audit, the Committee, along
with management, oversees the Internal Audit functions of the
Group’s portfolio businesses. The Head of Internal Audit and
the Committee continue to work together to further develop the
Internal Audit function.
Other important areas of focus in 2024 included a review
of dividend income from portfolio companies, regulatory
changes and the continued progress in the management
of the Group’s share buyback programme and the strategic
priority of deleveraging the Company. The Georgian economy
demonstrated further significant growth throughout 2024,
although tensions in the region and following the Georgian
Parliamentary Elections continue to present challenges. In
addition, the Group completed the sale of 80% of its holding in
the beer and distribution business to an international buyer, as
detailed elsewhere in this Annual Report.
The Committee held a mixture of in-person and virtual meetings
throughout the year. Further details about our work are set out on
the following pages.
David Morrison
Chairman of the Audit and Valuation Committee
20 March 2025
1 The number of meetings of the Committee attended by each member during the year,
together with the number of meetings they were entitled to attend.
“ Commitment to
comprehensive
and transparent
reporting.”
Introduction and key purposes and responsibilities
This report outlines the functioning and activities of the
Committee during the reporting period, including an overview
of the key areas of activity and principal topics covered at each
Committee meeting.
The Committee’s role is to recommend the financial statements
to the Board and review the Group’s financial reporting
and accounting policies, including formal announcements
and trading statements relating to the Company’s financial
performance, ensuring the integrity of the Company’s published
financial information, and reviewing the judgements made
by management, along with the underlying assumptions and
estimates on which they were based. In addition, the Committee
oversees the role of the Internal Audit function (internal control
environment), risk management and the relationship with the
external auditor. The Committee also received reports and
held regular discussions regarding the ongoing viability of the
Company and its liquidity status. The Committee continued to
focus on the key issues relevant to the Group’s financial reporting,
and worked with management, and PwC, to review any changes
required in response to the introduction of new accounting or
regulatory guidance.
On behalf of the Board, the Committee monitors the integrity of
the valuation process. The Company is an investment entity as
defined in IFRS 10 and, as a result, measures its investments in
portfolio companies at fair value (through profit or loss) instead of
consolidating them.
The Chairman of the Committee reports to the Board on how
it has discharged its responsibilities at a subsequent Board
meeting and makes recommendations to the Board. Details
of the Committee’s roles and responsibilities are outlined in
the Committee’s Terms of Reference and can be found on the
Company’s website at:
https://georgiacapital.ge/governance/cgf/terms.
Composition and operations of the Committee
The Committee members – David Morrison (Chairman), Massimo
Gesua’ sive Salvadori, and Maria Chatti-Gautier – are all
Independent Non-Executive Directors.
For the purposes of the Code and of DTR 7.1, the Board is
satisfied that all members of the Committee have recent and
relevant financial experience and the Committee as a whole
has competence relevant to the sector in which the Company
operates. Please refer to the detailed biographies of the
Committee members on pages 122 and 123, which include their
financial experience and reasons for appointment to the Board
and the Committee.
The meeting attendance of the Audit and Valuation Committee
can be seen on page 127. The Company Secretary is Secretary
to the Committee and attends all meetings. Meetings are also
attended by the Chief Financial Officer, the Head of Technical
Accounting and Valuation, and the Head of Internal Audit.
In addition, representatives of PwC, the Company’s external
auditor, are invited to attend several meetings of the Committee
each year. On some occasions, invitations to attend are extended
to other members of the Board and management where
necessary, to provide a deeper level of insight into key issues
and developments. The Committee also met with the external
auditor, without management present, to allow discussion of
any issues or concerns in greater detail. The external auditor
confirmed it was satisfied with the communication between all
the stakeholders. In addition, the Chair of the Committee has
maintained regular dialogue with the lead partner of the external
auditor during the period.
Activities of the Committee in 2024
The table below summarises the Committee’s activity during 2024.
Area of focus Core activities
Financial
reporting and
sustainability
• Reviewed the appropriateness and disclosure of accounting policies and practices.
• Reviewed the Annual Report and Accounts content and advised the Board on whether the Annual Report
and Accounts was fair, balanced and understandable.
• Reviewed the Company’s annual and interim financial statements and quarterly accounts relating to the
Company’s financial performance, including the significant financial reporting policies and judgements
contained in them and, in particular, the valuation of portfolio companies (see below).
• Reviewed and recommended to the Board for its approval the Going Concern and Viability Statements.
• Reviewed overall presentation of APMs, evaluated clarity of reconciliations and challenged the nature of
adjusting items.
• Reviewed the Company’s Sustainability Report and TCFD disclosures and referred it to the Board for approval.
Valuation
• Ensured that the Valuation Policy is consistently applied and complies with IFRS 13, Fair Value
Measurement, and with the obligations within any agreements in place, legislation, regulations, guidance
and other policies of the Company.
• Reviewed quarterly valuations of the Company’s portfolio investments considering recent market
developments and the future business plans of portfolio companies prepared and presented to it by
management based in part on reports by an independent valuation firm.
• Received updates and reports from the Group’s IFRS technical accounting group and valuation workgroup.
• Considered the extent of valuation disclosure in the Company’s annual and interim reports.
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Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Area of focus Core activities
Risk and control
Environment
• Reviewed and assessed the effectiveness of the Company’s internal controls and risk
management processes.
• Reviewed IFRS 10 requirements and ensured that the Company continues to meet the definition of
investment entity.
• Reviewed the results of risk identification and assessment work performed by management.
• Reviewed the Board’s approach to assessing the Company’s long-term viability.
• Reviewed reports from the external auditor where they have looked at internal controls as part of the
annual audit process.
• Reviewed the Company’s principal risks and uncertainties statement included in the Annual Report and
Accounts and supporting stress test scenarios.
• Regularly monitored the internal and external environment to ensure that any new or emerging risk is
identified in a timely manner and responded to appropriately.
• Reviewed compliance with regulatory rules and monitored findings.
Internal audit
• Reviewed reports of internal audits, monitored action points and addressed actions arising from
audit visits.
• Reviewed, approved and oversaw the implementation of the 2024 Internal Audit Plan and budget. The
plan is designed using a risk-based approach aligned with the overall strategy of the Group.
• Monitored and reviewed (i) the effectiveness of the Company’s Internal Audit function via a quality assessment
report; and (ii) implementation of the enhanced Internal Audit function agreed with Internal Audit.
• Reviewed the Group Internal Audit Charter.
• Monitored the scope and effectiveness of the Group’s Internal Audit function.
External audit
• Monitored the effectiveness and performance of the external auditor.
• Oversaw the audit engagement, including the degree to which the external auditor was able to assess key
accounting and audit judgements.
• Reviewed the annual audit plan including the approach, scope, level of materiality and risk assessments
and significant audit risks.
• Reviewed the audit results report, including the results from testing key audit matters, judgements, level of
errors and underlying reasoning.
• Reviewed and confirmed the objectivity and independence of the external auditor and compliance with
ethical, professional and regulatory requirements.
• Reviewed the qualifications, expertise and resources of the external auditor.
• Agreed the terms of the external auditor’s engagement and fees.
• Approved the policy for non-audit fees.
• Recommended the re-appointment of the external auditor.
• Conducted an annual evaluation of external audit effectiveness.
• Monitored management’s responsiveness to the external auditor’s findings and recommendations.
Governance
• Reviewed governance processes in place to oversee the valuation of portfolio companies.
• Reviewed and approved the Committee’s Terms of Reference.
• Reviewed and recommended to the Board for approval: the Whistleblowing, Anti-Bribery and Anti-
Corruption and Non-Audit Services Policies.
• Evaluated the effectiveness of the Committee.
• Received information and regulatory updates that could impact the work of the Committee, including
briefing on IFRS S1 and IFRS S2.
Significant accounting
and financial judgement
matters considered How the Committee addressed the matter
Portfolio
company fair
value
estimation and
disclosure
Reviewed quarterly valuations of the Company’s portfolio investments presented to it by management.
Reviewed and challenged assumptions and judgements applied by management and third-party valuation
experts and the appropriateness of their scope of work.
The Committee considered and challenged whether management followed appropriate valuation standards
as reflected in the Valuation Policy and used appropriate judgement. The Committee considered in
discussions with the external auditor the methods used to account for valuations. The Committee also
challenged the implications relating to climate change and global and national macroeconomic trends in the
valuations of the Company’s portfolio investments.
Earnings and multiple assumptions: Earnings data, received from portfolio companies and closely monitored
by management, was presented at the Committee meetings. Subsequently, actual earnings might have been
adjusted in management’s proposed valuations. Any material adjustments were highlighted to the Committee
for review and approval. All multiples used by management, including those that have been adjusted, were
presented to the Committee quarterly.
Assets valued using a DCF basis: For assets valued using a DCF basis, material assumptions in the DCF
valuations and any changes to these assumptions are reviewed by the Committee. Sensitivity to assumptions
is also noted, and any material changes are reviewed by the Committee. The Committee reviewed and
challenged the cash flow projections, terminal values and discount rates selected by management with
reference to market transactions, WACC calculations and other public data. Any material changes are
reviewed by the Committee.
As a result, the Committee was satisfied with the appropriateness of valuation methods used and the
reasonableness of assumptions and judgements applied in valuation.
Going concern
and viability
On an annual basis the Committee reviews and approves the long-term viability report prepared by
management and satisfies itself that the going concern basis for the preparation of the Group’s results
remains appropriate. The long-term viability report was based on the Group’s three-year strategic plan,
including forecast investment, realisations, overheads, financing cash flows and dividends. The Committee
considered management’s assessment of the Company’s ability to continue as a going concern and its long-
term viability, taking into consideration the ongoing impact of global and national macroeconomic trends. The
result was the Committee’s recommendation of the Viability and Going Concern statements to the Board for
approval. You can read more about the Going Concern assessment and Viability Statement on pages 63 to
64.
Investment entity
status
The Committee continued assessing the Company’s compliance with IFRS 10 criteria for meeting investment
entity status. In making this assessment, the Committee considered each criteria and characteristic described
in IFRS 10, as well as developments during the year, and is satisfied that the Company continues to meet the
definition of an investment entity as of 31 December 2024.
Alternative
performance
measures
The Committee considers it important to take into account both the statutory measures and the APMs when
reviewing the financial statements. In particular, items excluded from adjusted profit before tax were reviewed
by the Committee. As part of that review, the Committee considered the prominence of APMs used by the
Company in the reporting and challenged management where appropriate. The Committee is satisfied that the
requirements of DTRs and the mandatory guidelines issued by the European Securities and Markets Authority
on APMs were met and the reconciliation between the APMs and the IFRS and presentation of these items is
clear, applied consistently across years and that the level of disclosure is appropriate. You can read more about
APMs, including the applicable IFRS reconciliations, on pages 94-97 of the Annual Report and Accounts.
Audit and Valuation Committee Report continued
138 139
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Fair, balanced
and
understandable
reporting
Under the UK Corporate Governance Code, the Board should establish arrangements to ensure the Annual
Report presents a fair, balanced and understandable assessment of the Group’s position and prospects. It
has asked the Committee to support it in coming to that conclusion.
In making this assessment, the Committee:
• satisfied itself that there was a robust process of review and challenge at different levels within the Group
to ensure balance and consistency;
• reviewed several drafts of the 2024 Annual Report and Accounts and directly reviewed the overall
messages and tone of the Annual Report and Accounts with the Chairman and CEO, and the CFO; and
• considered the reporting of the Group’s performance, business model and strategy, the competitive
landscape in which it operates, the significant risks it faces, the progress made against its strategic
objectives and the progress made by, and changes in fair value of, its portfolio companies during the
period, both from management and the external auditor.
After consideration of all this information, we are satisfied that, when taken as a whole, the Annual Report and
Accounts is fair, balanced and understandable, and provides the information necessary for shareholders to
assess the Group’s performance, business model and strategy.
Key activity highlights
Financial reporting and valuation
The principal responsibility of the Committee is to consider
significant areas of complexity, judgement and estimation that
have been applied in the preparation of the financial statements.
The valuation of investments remains the most material area
of judgement in the financial statements and is a key audit risk
for the Group. The Committee assists in the formalisation and
documentation of management’s valuation judgements in line
with the Group’s accounting policies and industry valuation
guidance from IPEV. This includes ensuring that the Annual
Report and Accounts and half-year reporting, taken as a whole,
are fair, balanced and understandable and comply with disclosure
requirements as discussed in greater detail below.
The Committee’s responsibilities include monitoring the integrity
of narrative and non-financial reporting, including sustainability
and reporting on related significant issues (a concept that has
gained greater emphasis in recent years due to additional ESG
reporting through disclosure frameworks such as TCFD).
During 2024, the Committee received detailed reports from the
external auditor in respect of the main areas of audit focus and
these were, in some instances, discussed without management
present. In addition, regular reports were received from the CFO
on the financials and internal controls.
As most of the investment portfolio is comprised of private
companies, the Committee and external auditors spent a significant
amount of time reviewing and challenging management’s valuations.
The assessment of fair value is subjective and requires the
consideration of significant and complex judgements to be made
by management. In 2024, the Committee oversaw the independent
valuations, performed by third-party valuation experts, establishing
fair value ranges for all large and investment stage private portfolio
companies. The appointment of third-party valuation experts
increases the integrity of the process which includes consideration
of how other market participants approach valuations for year-end
reporting. The valuation methodology applied by the independent
experts was reviewed in detail by the Committee, as well as
key assumptions used and the most appropriate point in the
established range was selected for each business.
The Committee is responsible for the review and approval of
the fair value of investments at the end of each reporting period
proposed by Georgia Capital’s Management Board. With the
external auditors, the Committee reviewed in detail both (i) the
auditors’ assessment of the methodologies applied by the
independent valuation company for the large and investment
stage private portfolio companies and by management for
“other” assets, and (ii) the basis for their independent assessment
of the valuations. The Group continued to apply its Valuation
Policy consistently across investments at the year end and the
Committee also ensured that the valuations reflected climate
change, global and regional economic trends, as well as the
future business plans of portfolio companies.
Full details on our valuation policies and procedures which are
overseen by the Committee can be found on page 63 (please
see valuation workgroup) and page 98 (please see valuation
methodology). For the value drivers within the Group’s portfolio in
the year, please see pages 103-105.
The Committee also considers whether the external valuation
expert provides meaningful additional scrutiny and challenge to
the valuation process. The Committee is satisfied with the current
level of scrutiny and challenge by the external valuation expert,
this Committee, management and the external auditors.
Management, under the supervision of the Committee, considers
the suitability of the accounting policies which have been
adopted, ensuring that key reporting estimates and judgements
were appropriate, including the assessment of appropriateness
of continuing the investment entity accounting, and ensuring
that the external auditors were afforded timely and full access to
relevant information. In this context, the Committee also consider
the suitability of the accounting for acquisitions and dispositions,
including, in 2024, the sale of 80% of holding in the Group’s beer
and distribution business to an international buyer, as detailed
elsewhere in this Annual Report.
Using the Committee’s own independent knowledge of the
Company and its portfolio investments, but also considering
the external auditor’s assessment of risk, the Committee has,
where necessary, challenged the actions, estimates and
judgements of management in relation to the preparation of
the financial statements. When considering financial reporting,
the Committee assesses compliance with relevant accounting
standards, regulations and governance codes. In particular, the
Committee continues its robust review of going concern and
viability assessments under a number of scenarios. In this regard,
the Committee closely followed the progress of the Group’s
deleveraging process and the positive developments in the NCC
ratio during the year.
Risk management and control environment
The Committee assists the Board in fulfilling its responsibility
to review the adequacy and effectiveness of the controls over
reporting and risk. It reviews the effectiveness of the policies,
procedures and systems in place related to operational risks,
compliance, information technology and information systems and
assesses the effectiveness of the risk management and internal
control framework. Where areas for improvement are identified,
the Committee ensures that there are the correct processes in
place to take effective action to address them. Key developments
affecting our principal risks and associated mitigating actions
are reviewed by the Committee. Further information on risk
management and internal controls can be found on pages 60 to
64. Principal risks the Group faces are set out on pages 65 to 74.
The Committee is supported by several sources of internal
assurance within the Group to discharge its responsibilities.
As part of the regular reporting from the Chief Financial Officer
and the finance team regarding the operating performance of
the portfolio companies, the strength of the internal control
environment is considered. Management also provides updates
on how risks, for example, bribery and information security, are
managed within business areas, and updates are presented to
the Board or the Committee as appropriate. Further, during the
year, the Internal Audit function continued to assist management
to perform certain risk identification and assessment activities
at the private portfolio companies, the results of which were
presented and discussed at the Committee meetings.
Internal Audit
The Head of Internal Audit has direct access to the Committee
and the opportunity to discuss matters with the Committee
without other members of management present. The Committee
also monitors the resources dedicated to Internal Audit as well as
the relevant qualifications and experience of the team.
Throughout the year, the Committee received regular reports from
Internal Audit on the progress against the approved Internal Audit
Plan and on the audits themselves, including significant findings as
well as the corrective measures recommended to management.
The Committee also reviewed and monitored management’s
responsiveness to the corrective measures and found that, in
general, management agreed to the recommendations where
control deficiencies were identified, and used them as a basis
to improve processes. Implementation of the remedial actions is
reviewed by Internal Audit and reported to the Committee. The
Committee was pleased to review reports from Internal Audit
outlining actions being taken by management in the portfolio
businesses to maintain and enhance the control environment within
the Group. The Committee also reviewed the Head of Internal
Audit’s proposals to enhance the effectiveness of the Internal Audit
function and to raise its profile across the Group.
The processes described above ensure that the effectiveness of
the controls is reviewed on an ongoing basis, and the Committee
are pleased to report that no significant weaknesses in our risk
management processes or internal controls were identified this year.
Internal Audit effectiveness
The Committee fulfils its responsibility to review the effectiveness
of the Internal Audit department by considering, challenging and
agreeing the proposed annual audit plan. In doing so, it ensures
that the plan takes appropriate account of the Committee’s
and management’s assessment of areas the present significant
risk or where business processes might be improved, updates
to Group strategy, and changes in the Group’s business and
the external environment, and findings of the previous year. At
is regular meetings, the Committee monitors progress against
the agreed plan, reviewing the outcomes of the Internal Audit
reports and recommendations, management’s implementation of
recommendations and closure of the audits. On the basis of this
process, the Committee believes that the Internal Audit function
is effective and respected by management, and that it conforms
to the standards set by the Institute of Internal Auditors (“IIA”), the
“International Standards for the Professional Practice of Internal
Auditing” (“Standards”) contained in the International Professional
Practices Framework (IPPF) issued by the IIA. Adherence to the
professional Standards is regularly assessed by the Group Head
of Internal Audit. The Head of Internal Audit is a Certified Internal
Auditor accredited by the IIA. The Committee has endorsed a
plan proposed by the Head of Internal Audit to conduct both
internal and external assessments of the Internal Audit function,
aiming to ensure the quality and professionalism of the Group’s
internal audit services.
External auditor
Oversight of the relationship between the Group and the external
auditor is one of the Committee’s key responsibilities. PwC
was appointed by the Board as the statutory auditor in 2022,
following a competitive tender process, and was re-appointed by
shareholders at the 2024 AGM.
Auditor effectiveness
The Committee has an established framework for assessing the
effectiveness of the external audit process. This includes:
• considering reports from the auditor on the process they have
adopted to identify financial statements risks and key areas of
audit focus;
• regular communications with the external auditor (without
management present) and management (without the external
auditor present);
• a review of the final audit report, noting key areas of auditor
judgement and the reasoning behind the conclusions reached;
• a review of the annual FRC Audit Quality Inspection Report of
the external auditor;
• use of a questionnaire completed by all the necessary
stakeholders; and
• review of the audit plan.
The Committee concurred with management’s view that there
had been appropriate focus and challenge of the primary areas of
audit risk and the Committee concluded that the substantive and
detailed approach taken by the auditor was entirely appropriate
and effective.
Audit and Valuation Committee Report continued
140 141
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
The Committee was able to see first-hand how the auditor
challenged management on their assumptions used when
determining valuations at the relevant half-year and year-end
Committee meetings, when PwC was in attendance. PwC
utilised in-house specialisms to support its audit work of the
Group and, overall, the auditors’ risk-based approach drew on
both their knowledge of the business and the wider economic
and business environment.
The Chairman engages directly with the relevant PwC audit Lead
Partner, Allan McGrath.
Auditor independence
The Committee has undertaken a formal assessment of PwC’s
independence, which included a review of a report from PwC
describing their arrangements to identify, report and manage
any conflicts of interest, and their policies and procedures for
maintaining independence and monitoring compliance with
relevant requirements; and the value of non-audit services
provided by PwC. PwC has reviewed its own independence
in line with the FRC’s Ethical Standards for auditors, other
professional standards, and its own ethical guideline standards.
PwC has confirmed that they believe they remained independent
throughout the year from the date of their re-appointment at
the May 2024 AGM, within the meaning of the regulations
on this matter and in accordance with their professional
standards. PwC has provided the Committee with details of the
safeguards in place which include a culture of regular training,
internal accountability, and independent review controls. Having
considered the safeguards, the level of non-audit services
provided in the year and a formal statement of independence, the
Committee is satisfied that the independence of the auditor has
been maintained.
Non-Audit Services Policy
The Group’s Non-Audit Services Policy safeguards the external
auditor’s independence and objectivity. The provision of non-
audit services by our external auditors aligns with the Revised
Ethical Standard. Any work other than for audit or review of
interim statements to be undertaken by the external auditor
now requires authorisation by the Committee except in very
narrow circumstances. The Group’s Non-Audit Services Policy is
available on our website at:
https://georgiacapital.ge/governance/cgf/policies.
The ratio of non-audit fees to audit fees for 2024 is 0:1. As
indicated in Note 9 to the financial statements, the total fees
paid to the external auditor for the year ended 31 December
2024 was GEL 1.6 million. The Committee is of the view that
there are occasions when engaging PwC for non-audit services
will be the most efficient method of having those particular
services delivered to the Company. In such cases, the Committee
considers whether the proposed work would compromise
the independence of the external auditor and makes the
determination that it would not. Where PwC has been chosen
in such cases in the past, they have demonstrated the relevant
skills and experience, making them an appropriate supplier to
undertake the work in a cost-effective and time-efficient manner,
with appropriate safeguards in place.
Governance
The Committee received regular updates from the Company
Secretary and PwC on the progress of UK audit and governance
reforms and specifically reviewed the Department for Business,
Energy and Industrial Strategy’s Response Statement following
its consultation on reforms aimed at restoring trust in audit
and corporate governance and a timetable on the key areas of
significance to the Group arising from the Response Statement.
Additionally, while the Group will not be required to comply with
the FRC’s Minimum Standard for Audit Committees which is
mandatory for FTSE 350 entities, the Committee has
considered the Standard (described elsewhere in this report),
accepting that it forms part of good governance principles.
Compliance
Ensuring regulatory compliance remains a priority from the
perspective of the Committee. The Committee conducts an
annual review of the Company’s Whistleblowing and Non-
Audit Services Policies and their impact in its remit, and it is the
responsibility of the Committee to ensure that there is a robust
governance framework and that effective procedures are in place.
PwC carried out fraud risk assessment and determined that there
was a low risk of fraud occurring undetected.
For the audit of the financial statements in this Annual Report,
the Company complied with the Code and mandatory audit
processes, including The Statutory Audit Services for Large
Companies Market Investigation (Mandatory Use of Competitive
Tender Processes and Audit Committee Responsibilities) Order
2014 (“CMA Order”), and the Committee complied with the
responsibility provisions set out in the CMA Order relating to: (a)
putting the audit services engagement on tender every ten years;
and (b) strengthening the accountability of the external auditors
to the Committee, including: requiring that only the Committee
is permitted to agree to the external auditors’ fees and scope
of services; influence the appointment of the audit engagement
partner; make recommendations regarding the appointment
of auditors; and authorise the auditors to carry out non-audit
services. Audit services were last tendered in 2022, resulting in
the appointment of PwC as the Group’s statutory auditor for a
three-year period spanning 2022, 2023 and 2024. As outlined
in the 2023 Annual Report and Accounts, the Company was
considering the possibility of re-tendering for external audit
services beginning with the review of financial statements for
six months ending 30 June 2025. Following the comprehensive
analysis in 2024, considering factors such as auditor knowledge
of controls and risks, audit quality, independence, objectivity, and
value for money, the Committee concluded to recommend that
PwC be re-appointed as the Company’s statutory auditor for the
2025 financial year.
Committee effectiveness review
An internal effectiveness review of the Committee was facilitated
by the Company Secretary. The effectiveness evaluation
concluded that the composition of the Committee was
appropriate, there was the right level of stakeholder engagement
and debate (acknowledging the technical and detailed nature
of the Committee’s discussions), it provided an effective and
appropriate level of challenge and oversight of the areas within
its remit, and its Chair continued to perform effectively with no
significant concerns, noting that sufficient time is allocated at
Board meetings for the Chair to report to the Board on the work
of the Committee.
Priorities for 2025
Our priorities for 2025 include continued focus on:
• working with management to position the Group prudently
in response to the changing macroeconomic conditions,
remaining cognisant of, and ready to respond to, any new
areas of emerging risk;
• monitoring compliance with the Group’s Valuation Policy,
individual portfolio company valuations and the effectiveness
of external valuations;
• monitoring the financial reporting implications of strategic
actions taken by the Group, including dispositions and
acquisitions;
• ensuring continued integrity and balance in the Group’s
financial reporting;
• monitoring the control environment and its appropriate roll-out
at the various portfolio companies;
• continued development of the Internal Audit function around
the Head of Internal Audit;
• compliance with TCFD requirements and referring these
matters to the Board and other sustainability-related reporting
requirements;
• following developments on the planned enactment of
legislation in the UK around audit and corporate governance
reform; and
• maintaining the already strong working relationship with PwC.
David Morrison
Chairman of the Audit and Valuation Committee
20 March 2025
Audit and Valuation Committee Report continued
142 143
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Committee Meeting
membership attendance
1
Neil Janin (Chairman) 4/4 Ad hoc
David Morrison 4/4 Ad hoc
Maria Chatti-Gautier 4/4 Ad hoc
Neil Janin
Chairman of the Remuneration Committee
Directors’ Remuneration Report
What’s in this report
This Directors’ Remuneration Report includes the Annual
Statement by the Chair of the Remuneration Committee,
the Annual Report on Remuneration and the new Directors
Remuneration Policy for approval at the 2025 AGM.
The report complies with the provisions of the Companies
Act 2006 and Schedule 8 of The Large and Medium-
sized Companies and Groups (Accounts and Reports)
Regulations 2008. The report has been prepared in line with
the recommendations of the UK Corporate Governance
Code and the requirements of the FCA Listing Rules.
Dear Shareholders,
I am pleased to present the Directors’ Remuneration Report for
the year ended 31 December 2024.
At the 2024 AGM, the Directors’ Remuneration Report received
98% approval. The Committee continues to be strongly
encouraged by this level of shareholder support, which has been
continued through the shareholder consultation ahead of our
submission of a largely similar proposed 2025 Remuneration
Policy to shareholders at the 2025 AGM.
Overview of remuneration structure
We believe that our Executive Director’s compensation is closely
aligned with both the short-term and long-term shareholder
experience and are pleased with the strength of support at
the 2024 AGM. This reinforces the Committee’s view that our
innovative shareholder-aligned approach to remuneration should
be retained.
Our Executive Director Irakli Gilauri’s salary, as well as his
performance-based remuneration, is currently comprised
entirely of deferred shares. There is no cash component to his
remuneration. Salary and the maximum opportunity for the
performance-based remuneration (discretionary deferred shares)
are set in a number of shares. By setting a fixed number of
shares (rather than a cash figure) our Executive Director’s salary
is aligned with the share price performance of the Company and
ensures that, throughout the duration of a contract, the Executive
Director will not receive a windfall gain by receiving a higher
number of shares when awarded at a lower share price.
When renewed in 2022, the Remuneration Policy (the “Policy”)
retained the same number of shares for the salary and for the
maximum opportunity of the Executive Director as presented to
shareholders for their approval three years previously. Indeed,
there has been no increase in salary or incentive since 2018 when
the Company listed. Our proposed 2025 Remuneration Policy is
consistent with this approach, and looking forward, we are not
proposing any increase in the number of shares for our Executive
Director – for either his salary or for the discretionary share bonus.
The Committee is cognisant that there is very strong shareholder
support for the entirely shares component of Mr Gilauri’s total
remuneration package and, on that basis, the Committee is
proposing that the 2025 Policy is structured to maintain
this approach.
“Innovative
alignment of
remuneration with
shareholders’
interests and
experience.”
Mr Gilauri’s current contract ends on 31 December 2025.
The Remuneration Committee plans to agree the terms of a
new contract with Mr Gilauri based on the current number of
contracted shares (i.e. 200,000 deferred salary shares, and a
maximum of 200,000 deferred discretionary shares awarded
based on Mr Gilauri’s performance) and the 2025 Policy provides
for Executive Director compensation based on these figures.
However, the Committee will have discretion to lower (or raise)
the number of shares in the event of a significant rise (or fall) in the
Group’s share price, when the new contract is signed, from its
levels in February/March 2025. This will enable the Remuneration
Committee, when considering the terms of the new contract, to
adjust the number of shares awarded, thus avoiding the potential
for significant windfall gains.
The number of shares in Mr Gilauri’s contract was fixed at its
current (200,000 shares) level in 2018 when the Group listed and
the share price was GBP 10.32. This level was not changed in
2022 when the Policy was last approved by shareholders and the
Group share price was GBP 6.00. Inflation in Georgia since 2018
has been in excess of 40%. The Group has funded the purchase
of shares to satisfy management share awards for the years
2025-2027 – including those to Mr Gilauri – at an average price
of GBP 7.90.
The structure of the new Policy follows and maintains relevant
guidance including:
• Executive pension contributed by the Company will be the
same as for employees (although our Executive Director Irakli
Gilauri has waived his pension entitlement entirely).
• Shareholding guidelines with an equivalent of 200% of salary
(as compensation vests in tranches, the shareholding is
built up organically). Shareholding requirements are to be
maintained for two years post-employment.
• Both fixed salary shares and variable share compensation
vest over several years and Irakli Gilauri currently has no cash
salary and no cash bonus.
• Malus and clawback provisions are significant, and consistent
with best practice. Unusually, malus may also be triggered in
certain circumstances over the salary shares.
Our Group’s purpose is to provide investors with an opportunity
to invest in the historically fast-growing Georgian economy by
giving them access to attractive investments with long-term
growth potential. Through our structure, our Executive Director
is also similarly invested in the Georgian economy and our
investment companies. Shareholder interests and experience
are strongly aligned with those of Mr Gilauri. The proposed 2025
Policy continues to have this 100% level of deferred shares
relating to both salary and discretionary remuneration, and the
Committee believes that the strong management/shareholder
alignment will continue going forward.
Our values are being entrepreneurial, having a learning mindset
and maintaining the highest standard of ethics, including by
setting the tone at the top. The structure encourages the
Executive Director to be entrepreneurial and to grow the Group
according to high standards (on the basis that a short-term view
negatively impacts share price in the medium to long term),
so that the value of his long-vesting remuneration increases or
decreases in line with that of the Company share price over time.
The Committee retains discretion under the Policy, including
to override formulaic outcomes in accordance with the UK
Corporate Governance Code. In response to stakeholder
feedback, however, we note that since 2020, we have disclosed
(i) threshold, target and outperformance targets alongside (ii)
the weighting, for each key performance indicator (KPI), and we
continue that practice this year.
In line with increasing market practice, we also disclose our
mechanisms for the enforcement of malus and clawback.
The malus and clawback triggers are set out in the Executive
Director’s contract. Furthermore, under the rules of the share
plan, the trustee may cause shares to lapse (malus) or to be
recovered (clawback) including in accordance with the provisions
of the Executive Director’s contract. Lastly, as part of each
grant process, the Executive Director signs a confirmation
that they agree to be bound by the terms and conditions set
out in the rules of the share plan, including its malus and
clawback provisions.
Similarly, the Committee also confirms that the 200%
shareholding requirement, to be built up and held for two years’
post-employment, is included as an express provision in Irakli
Gilauri’s contract, and further that all unvested shares (his
remuneration vests in tranches) are held in the employee benefit
trust (EBT).
At the most recent vote on the Directors’ Remuneration Report,
which was the 2024 AGM, 98% of shareholders supported
the Report.
2024 performance outcomes
The Committee considered the CEO’s performance during
2024, a period of significant political uncertainty in Georgia and
the surrounding region, which created substantial operational
challenges. Against this background, under Mr Gilauri’s
leadership, during 2024 Georgia Capital’s portfolio companies
delivered their best ever combined operating performance,
with the Group delivering value creation from the operating
performance of GEL 672 million – an excellent achievement
which is the highest performance from the operating businesses
that the Group has ever achieved. In addition, 80% of the Beer
and Distribution business was sold to a high quality international
investor at a significant premium to its independently verified
carrying value. This significantly reduced our net debt at the
Holding Company level. The Net Capital Commitment Ratio
reduced from 15.6% in 2023, to a record low level of 12.8%
in 2024.
We continued to make disciplined capital allocations in 2024,
supporting our strategy to focus on capital light investments
and businesses, and consolidated the Health Insurance market
by acquiring Ardi in May 2024. Further examples of Mr Gilauri’s
performance are highlighted throughout this report.
We noted the excellent performance of the Company over
2024, which was reflected in both the Group’s results and the
stakeholder experience. The share price increased from GBP
10.22 at 31 December 2023 to GBP 12.00 at 31 December
2024. Our ongoing share buyback and cancellation programme
1 The number of meetings of the Committee attended by each member during the year,
together with the number of meetings they were entitled to attend.
144 145
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
benefitted shareholders, under which the Group repurchased
shares for a total consideration of US$ 48.1 million during
the year.
In accordance with his performance in financial year 2024, taking
into account the overperformance against most of the KPIs and
the wider stakeholder experience, the Remuneration Committee
determined to award Irakli Gilauri 190,000 deferred shares (95%
of maximum opportunity) with vesting and holding periods of up
to six years from the beginning of the work year. The Committee
is satisfied that the overall number of deferred discretionary
shares awarded to Mr Gilauri for FY24 was fair and appropriate in
the circumstances.
You can read the KPI calculations and disclosures in the
section “Basis for determining Mr Gilauri’s discretionary share
compensation in respect of 2024” below.
Non-Executive Directors’ fees
There were no changes to the Board structure or Board members
during 2024. The Board continues to review the appropriate
level of fees, particularly following its reformulation of the Board
Committees in May 2023, which was fully discussed in the 2023
Annual Report. Under the Company’s Remuneration Policy, the
amount of remuneration for Board fees and Committee fees may
be reviewed from time to time, which may take into account time
commitment, responsibilities and technical skills. Given the recent
review of all Non-Executive Directors’ fees, however, no change
has taken place to the fee structure over the last twelve months.
For each Non-Executive Director, their overall fees paid in 2024
took into account their Board and Committee memberships
during the year as covered in the Governance section on page
154. Overall, in 2024 there was again a reduction in total Non-
Executive Directors’ fees.
Remuneration Committee activities and
workforce engagement
During 2024, the Committee received insights into topics which
were the most pertinent to our investors and an overall view of
remuneration practices and investor response for the FTSE Small
Cap market. The Committee continued to be updated with regard
the changes in the guidelines of proxy agencies, and on proxy
agency reports on the Company. The Committee noted the 98%
shareholder support of the 2024 Directors’ Remuneration Report.
The Committee considered benchmarking against the FTSE
Small Cap and peers, alongside possible bonus projections. It
was noted that Georgia Capital’s structure remained unusual,
with no cash salary or bonus for the Executive Director and long
deferral periods for salary shares and discretionary deferred
shares, and therefore comparison was made more difficult,
especially as Georgia Capital itself is an unusual company. The
most comparable peers were the other UK listed companies in
Georgia, Lion Finance Group PLC and TBC Bank Group PLC.
The Committee determined the bonus pool on aggregate
level and rewards on individual level for senior management.
The Committee considered each manager’s performance and
discussed the level of differentiation appropriate to distinguish
between individual performance.
While the portfolio companies do not form part of the workforce
of the holding companies, the Committee considered the wider
workforce policies in 2024 and employee compensation. This
covered salaries (cash, share and phantom shares), pension
contributions (which is set by Georgian legislation at 0%-2%),
benefits, leave and working hours, training and development, and
number of staff by salary band. This was covered at the holding
company level and the Committee considered the same for the
main portfolio businesses including real estate, renewables, beer,
wine, distribution, healthcare, insurance and the largest schools.
Maria Chatti-Gautier is the Company’s designated Non-
Executive Director for workforce engagement, and a member
of the Remuneration Committee. Employees were able to raise
matters relating to the workforce (including remuneration) through
Ms Chatti-Gautier. Further details on how the Board engages
with its workforce can be found on page 133 in the Corporate
Governance Framework section.
There are only 45 employees at the holding company level.
Adjusting for the departure of one senior executive, cash salaries
increased by 3.0% and share salaries increased by 10.4% y-o-y.
Employee average bonuses increased by 21.1% y-o-y.
An external evaluation of the effectiveness of the Board was
undertaken by Amandla UK Limited (“Amandla”) in 2023 which
encompassed the Remuneration Committee. The Board and its
members also underwent in-depth evaluations. The Board further
expects to undertake a similar external effectiveness review
during 2026.
Neil Janin
Chair of the Remuneration Committee
20 March 2025
How the Remuneration Committee addressed the factors in provision 40 of the Code
The Remuneration Committee considered the requirements of the Code in determining the remuneration structure and Policy, taking
each of the factors of provision 40 of the Code in turn:
Principle Approach
Clarity
Remuneration arrangements are transparent and competitive. The Remuneration Policy describes
the purpose, operation and maximum potential of each remuneration element and illustrates a range
of potential outcomes for the Executive Director. There are currently only two main components of
remuneration for Irakli Gilauri; the deferred share salary and the discretionary deferred share incentive
remuneration. There is no LTIP and salary is currently paid in a fixed number of shares.
Simplicity
The rationale is simple – this structure focuses the Executive Director and senior management on
sustainable, long-term performance of the Company by remunerating them in deferred shares.
Risk
Predictability
Proportionality
By its nature, setting the CEO’s remuneration in shares which are deferred for up to six years from the start
of the work year means the remuneration structure drives the CEO and senior management to mitigate
reputational, behavioural and undue strategic risks as the outcome of such would be likely to affect the
share price over the years. It also helps to avoid conflicts of interest. Further, the Executive Director’s salary
and bonus is calculated by reference to a fixed maximum number of shares.
By including a fixed number of shares in both the salary and performance based components, the
structure aligns our Executive Director’s compensation with the share price performance of the Company
and ensures that the Executive Director will not (unlike in other companies) receive a windfall gain by
receiving a higher number of shares when awarded at a lower share price.
The range of possible values is set out in the Policy voluntarily, including the impact of share price
appreciation and depreciation, to aid predictability. Further, by calculating the maximum opportunity to
a fixed number of shares, the Company and its shareholders have certainty regarding the Executive
Director’s and senior management’s remuneration.
Outcomes reward performance proportionately by reference to performance target ranges (threshold,
target and outperformance) and weightings. Further, to allow appropriate adjustment, the Committee
retains discretion over the bonus. For further considerations on proportionality, see section “Chief
Executive’s pay and comparators” on pages 154 to 155.
Alignment to
culture
The current Executive Director’s remuneration, is comprised of deferred shares rather than cash,
promoting alignment with the long-term success of the Company. Alignment with culture is supported
by the inclusion of mentorship and development, as well as personal development, within the CEO’s
performance KPIs. Further information on alignment with the Company’s purpose and values is set out in
the Annual Statement of the Chairman on page 142.
Shareholder context
The Directors’ Remuneration Policy applicable to this section of the Annual Report on Remuneration was approved by shareholders at
our AGM on 20 May 2022 (the “2022 Policy” or the “Policy”). The Policy received the following votes from shareholders.
Resolution Votes for % Votes against % Total votes cast Votes withheld
Approval of the Directors’ Remuneration Policy 26,599,621 93.68 1,795,458 6.32 28,395,079 590
Set out below are the shareholder voting figures for the Directors’ Remuneration Report (including the Annual Statement of the
Chairman of the Remuneration Committee) presented at our 20 May 2024 AGM.
Resolution Votes for % Votes against % Total votes cast Votes withheld
Approval of the Directors’ Remuneration Report 28,266,394 98.27 498,861 1.73 28,765,255 913
The Remuneration Committee and its advisers
The Remuneration Committee is principally responsible to the Board for establishing a remuneration policy for the Executive
Directors, the Chairman and designated members of the executive management team that rewards fairly and responsibly, and is
designed to support the Company’s strategy and promote its long-term sustainable success. The Remuneration Committee ensures
that performance-related elements of Executive Directors’ remuneration are transparent, stretching and rigorously applied. The
Remuneration Committee’s full Terms of Reference are available on our website: https://georgiacapital.ge/governance/cgf/terms.
Directors’ Remuneration Report continued
146 147
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
The Remuneration Committee is comprised of three Independent Non-Executive Directors: Neil Janin, who serves as Chairman, Maria
Chatti-Gautier (designated Non-Executive Director for workforce engagement) and David Morrison. Each member’s attendance during
2024 was 100%, as shown in the Board and Committee meetings attendance table on page 127. No changes to the composition of
the Remuneration Committee were made in 2024.
In addition to the formal meetings held during the year, the Remuneration Committee participated in various discussions by
videoconference outside of these meetings. Other attendees at the Remuneration Committee meetings who provided advice or
assistance to the Remuneration Committee on remuneration matters from time to time included the CEO, the other Board members
and the Company Secretary. Attendees at the Remuneration Committee meetings do not participate in discussions or decisions related
to their own remuneration, which ensures the avoidance of any conflicts of interest.
The Remuneration Committee did not use remuneration consultants in 2024 (or 2025 to date). The Remuneration Committee received
advice on compliance from Baker & McKenzie LLP, the Company’s legal advisers. The Remuneration Committee is of the view that the
advice received from Baker & McKenzie LLP is objective and independent.
Directors’ remuneration
Single total figure of remuneration for the Executive Director (audited)
The table below sets out the remuneration earned by Georgia Capital PLC’s sole Executive Director, Irakli Gilauri, in respect of his
employment for the years ended 31 December 2024 and 31 December 2023. Mr Gilauri’s compensation as set out in the table below
is in the form of deferred shares that vest in tranches with a vesting and holding period of up to six years from the beginning of the work
year. The values shown in the table are calculated at a fixed share price as described in footnotes 2 and 4 to the table. The actual value
of the compensation as it is received over time will fluctuate with increases and decreases in the value of the share price as illustrated in
the graph on page 154.
The decrease in US Dollar equivalent for the deferred share salary between 2023 and 2024 reflects the decrease in the share price
between the award date under Mr Gilauri’s original Service Agreement and his prolonged agreement signed in October 2022 (which
extended the contract beyond May 2023) as described in footnotes 2 to 3 to the table.
The increase in US Dollar equivalent for the discretionary deferred shares between 2023 and 2024 reflects both the higher percentage
of the maximum opportunity awarded for performance (80% in 2023 compared to 95% in 2024) but also the increase in share price
between 2023 and 2024 award decision dates as described in footnote 4 to the table, illustrating the rationale behind the Policy
of alignment between Mr Gilauri’s and the shareholders’ experiences. The maximum discretionary opportunity remains constant at
200,000 deferred shares.
Cash salary
1
(US$)
Deferred share
salary
2
(US$)
Taxable
benefits
3
(US$)
Pension
benefits
3
(US$)
Total fixed pay
(US$)
Deferred shares
4
(US$)
Total variable
pay (US$)
Single total
figure (US$)
2024 – 1,380,000 – – 1,380,000 2,741,700 2,741,700 4,121,700
2023 – 1,931,097 – – 1,931,097 2,038,400 2,038,400 3,969,497
Notes:
1. Mr Gilauri does not receive a cash salary.
2. Deferred share salary. The figures show the Georgia Capital PLC shares underlying nil-cost options granted in respect of the relevant year. 200,000 deferred salary shares were
awarded for the work year 2024 and for the work year 2023 for his role as CEO of Georgia Capital PLC (20,000 shares) and his role as CEO of JSC Georgia Capital and its subsidiaries
(180,000 shares). Deferred share salary in respect of a work year will vest over six years (from the beginning of the work year) with 20% vesting in each of the second, third, fourth, fifth
and sixth years following the end of the work year. Mr Gilauri does not receive any remuneration with respect to his role as Chairman of the Group. To discharge the UK income tax and
employee National Insurance contributions arising upon the grant of the salary shares, Georgia Capital PLC and the Executive Director agreed to waive his entitlement to such number
of the salary shares as needed for the payment of the Executive Director’s UK income tax and employee National Insurance contributions by the Company. Under this arrangement,
the Executive Director waived his entitlement to 8,610 deferred salary shares with respect to work year 2024 and 8,601 deferred salary shares with respect to work year 2023.
Calculation of dollar value: US$ 1,380,000 value of deferred share salary in 2024 consist of 200,000 shares granted under the prolonged Service Agreement signed in October 2022.
The value of 200,000 shares granted for the work year 2024 and 118,356 granted for 2023 is calculated under the prolonged employment agreement and is calculated by reference
to the share price on the effective date of prolongation of service agreement. The share price on 24 October 2022 was US$ 6.90 (the official share price of GBP 6.10 converted into
US Dollars using an exchange rate of 1.131, being the official exchange rate published by the Bank of England on the same date). The value of 81,644 shares granted for the work
year 2023 is calculated by reference to share price on 12 July 2018, being the date of the Committee meeting at which the deferred share salary was determined. The share price on
12 July 2018 was US$ 13.65 per share (the official share price of GBP 10.324 converted into US Dollars using an exchange rate of 1.322, being the official exchange rate published by
the Bank of England on the same date).
3. There are no taxable benefits or pension benefits for 2024 and 2023. Mr Gilauri has agreed for all pension contributions to be waived. Mr Gilauri was reimbursed for reasonable
business expenses, on the provision of valid receipts in line with the approved Policy. No money or other assets have been received or are receivable by Mr Gilauri in respect of a
period of more than one financial year.
4. Discretionary deferred share remuneration. The figures show the value of Georgia Capital PLC shares underlying nil-cost options granted in respect of the bonus award for the year.
For 2024, awards were granted over 190,000 shares. The value is calculated by reference to the share price on 19 December 2024, which is the date of the Remuneration Committee
meeting which determined the discretionary deferred share award, being US$ 14.43 per share (the official share price of GBP 11.50 converted into US Dollars using an exchange
rate of 1.2551 being the official exchange rate published by the Bank of England on the same date). For 2023, awards were granted over 160,000 shares. The value is calculated
by reference to the share price on 19 December 2023, which is the last working day prior to the date of the Remuneration Committee meeting which determined the discretionary
deferred share award on 20 December 2023, being US$ 12.74 per share (the official share price of GBP 10.00 converted into US Dollars using an exchange rate of 1.2739 being the
official exchange rate published by the Bank of England on the same date). Discretionary deferred shares vest 25% in each of the second, third, fourth and fifth years following the end
of the work year and are subject to a further holding period of a year. The basis for determining Mr Gilauri’s discretionary deferred share remuneration is set out below.
5. The number of shares awarded pursuant to the deferred share salary and discretionary deferred share remuneration is fixed at grant. No discretion has been exercised as a result of
share price appreciation or depreciation. Discretionary deferred shares are subject to one-year targets which are satisfied pre-grant and the Company does not operate an LTIP. No
amount of the remuneration in 2024 is attributable to share price remuneration. No amounts were recovered or withheld in 2024. No dividend equivalents have been received.
Directors’ Remuneration Report continued
Alternative remuneration table showing the Executive Director’s 2024 and 2023 remuneration discounted for time value
of money (unaudited)
For investor information, the alternative table below sets out the share remuneration earned by Irakli Gilauri in 2024 and 2023 as per the
previous table (single total figure of remuneration for the Executive Director) but taking into account the time value of money discounted
at 15%, given that both the salary shares and discretionary deferred shares vest over a number of years. Further, the Executive Director
may forfeit the shares on cessation of employment in certain circumstances.
Deferred
share salary
(US$)
Discretionary
deferred shares
(US$)
Total salary and
discretionary
deferred shares
remuneration
(US$)
2024 804,111 1,700,847 2,504,958
2023 1,125,303 1,264,643 2,389,946
The following table sets out details of total remuneration for the Chairman and Chief Executive Officer, Mr Gilauri, for the years ended
31 December 2018 to 31 December 2024 and his discretionary compensation as a percentage of maximum opportunity.
2018 2019 2020 2021 2022 2023 2024
Single total figure of remuneration (US$) 4,066,962 3,790,000 3,898,000 4,414,000 3,808,800 3,969,497 4,121,700
Discretionary compensation as a
percentage of maximum opportunity (%) 85% 50% 80% 100% 60% 80% 95%
Note: Maximum opportunity is 100% of total number of salary shares in accordance with the approved Policy.
Basis for determining Mr Gilauri’s discretionary deferred share compensation in respect of 2024 (audited)
Mr Gilauri’s KPIs included financial targets, strategic targets and non-quantifiable components. The financial and strategic elements
largely track the Group’s KPIs as he is expected to deliver the Group’s strategy. The non-quantifiable targets take into account factors
such as leadership and mentoring, corporate culture and personal development. The Committee’s practice is to set ambitious financial
targets and would normally expect to award 70% of the maximum available for meeting the target, depending on the circumstances,
including business and wider economic developments during the year. For strategic and development targets, measurement is more
difficult, but here again we have high expectations of Mr Gilauri and would typically plan to award 70% of the maximum available for
meeting these targets.
The individual KPI weightings are shown in the table below, which sets out the targets for Mr Gilauri’s 2024 KPIs as well as a summary
of the Committee’s assessment of his performance against them. In line with the Policy, the Committee retains the discretion to
increase or decrease the amount awarded. More details on performance are provided in the table on the following pages. The
maximum award of discretionary deferred share compensation is 200,000 deferred shares.
We specifically link each KPI to the relevant Group priority and disclose ranges of targets for each KPI (threshold, target and maximum).
We would typically expect to award 25% for threshold, 70% for target and 100% for outperformance for each KPI, with a sliding scale
between categories. In accordance with feedback from shareholders, we continue to provide full information to better explain how the
KPIs link to strategic targets and to explain the weightings. The Group is young and non-financial strategic targets are also key. The
Group priorities have been cross-referenced against each performance metric chosen in the below KPI table.
Group priorities:
1. NAV per share growth
2. Diversifying access to capital
3. Efficient management structure
4. The right people in management and strong corporate governance
5. Deleveraging
6. Progress towards ESG targets
7. Continued divestiture of subscale portfolio companies
8. Institutionalising portfolio companies and meeting portfolio targets
9. Returning GCAP’s excess cash inflows to our shareholders
148 149
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
KPI Weighting 2024 Target and range Performance and evaluation Weighted result
Financial targets Threshold Target Outperformance
NAV per
share growth
25% in total:
5% for overall
14.7% 16.7% 18.7%
Overall NAV per share growth: 15.7%.
Growth mostly affected by BOG share price in the last
quarter of 2024. NAV per share; growth was substantially
dampened by the increase in the discount rates/WACC
used for valuation.
2.5%
20% for
private
portfolio
11% 12% 13%
Private portfolio share growth: 15.4%.
Outperformance: private NAV per share growth was 15.4%:
2.4 ppts ahead of maximum.
20%
Achieving
budget of GCAP
(net income)
and portfolio
companies (total
revenue), including
cash flow
generation
We divided this overall KPI into five subcomponents:
15% in total:
2.5%
GEL mln GEL mln GEL mln
127 147 167
GCAP Gross operating income: GEL 173 million.
Outperformance: GCAP Gross operating income was 3.6%
above the maximum.
2.5%
2.5%
GEL mln GEL mln GEL mln
406 506 606
GCAP standalone net income: GEL 350 million.
GCAP’s standalone net income was 30.8% lower than
target, reflecting the increased discount rates/WACC used
for valuation as a result of the volatility in regional geopolitics
during 2024.
Adjusted GCAP standalone net income based on the previous
year’s WACC rates (WACC adjusted) was GEL 486 million.
The Committee awarded only 1% (40% of the maximum
available amount for this component).
1%
2.5%
GEL mln GEL mln GEL mln
(51) (31) (11)
GCAP standalone cash flow: GEL 170 million.
Outperformance: GCAP produced exceptionally strong net
cash flow in 2024, supported by the divestment of an 80%
equity stake in the beer and distribution business. Similarly,
cash inflow from operating activities, at GEL 153 million,
ahead of budget for the year.
2.5%
2.5%
GEL mln GEL mln GEL mln
2,175 2,275 2,375
Portfolio aggregate revenue: GEL 2,251 million.
Aggregate revenue in the portfolio companies was up 8.9%
y-o-y, but were 1% lower than budget, largely reflecting the
impact of ongoing political uncertainty on the real estate
business. Organic revenue growth elsewhere was very strong.
The Committee awarded 60% of the available amount.
1.5%
2.5%
GEL mln GEL mln GEL mln
276 292 308
Aggregate EBITDA: GEL 311 million.
Aggregated EBITDA increased 25.0% y-o-y in 2024, and
outperformed the maximum.
2.5%
2.5%
GEL mln GEL mln GEL mln
253 273 293
Aggregate net operating cash flow: GEL 299 million.
Aggregated net operating cash flow more than doubled in
2024, and outperformed the maximum.
2.5%
Expense Ratio 7.5%
0.78% 0.75% 0.72%
Expense ratio at 0.72%, was 8 basis points below the prior
year, hitting the maximum level.
7.5%
Directors’ Remuneration Report continued
KPI Weighting 2024 Target and range Performance and evaluation Weighted result
Non-financial targets Threshold Target Outperformance
Broaden access
to capital including
active seeking of
price discovery
of assets held
(including
strategic priority
of divestment of
subscale portfolio
companies)
20%
Non-financial targets
Overall substantial outperformance.
GCAP achieved the sale of 80% of the Beer & Distribution
business to an international strategic investor at a 40%
premium to our NAV valuation, while securing a clear exit
path through put/call option structure for the remaining
20% stake.
Additionally, the US$ 25 million housing business bonds
were refinanced for another 2 years, while also significantly
contributing to the US$ 300 million Eurobonds issued by
GGU in July 2024.
During the 1st half of 2024, management worked very
closely with local banks to significantly extend the debt
maturities of Pharmacy and Healthcare businesses’
borrowings (GEL 200+ million).
Disciplined pursuit
of investment
opportunities
and asset &
capital allocation,
including NCC
targets
20%
Largely, non-financial targets
Overall outperformance.
GCAP continued to make disciplined capital allocations
in 2024, supporting its strategy to focus on capital light
investments and businesses.
GCAP continued to consolidate the Health Insurance
market by acquiring Ardi in May 2024, while we divested
from the Beer & Distribution business, which significantly
reduced our net debt at the GCAP HoldCo level.
Successful buyback of US$ 48 million of equity on-market
contributes to a 5.8 ppts increase in NAV per share from
buybacks.
NCC ratio decreased from 15.6% in 2023 to a record low
level of 12.8% in 2024 reflecting strong cash flows and
successful deleveraging.
20%
Progress towards
achieving mid-
to-long term
strategic priorities
in portfolio
companies
7.5%
Non-financial targets
Overall outperformance.
Ahead or well on-track in insurance, renewables, education,
clinics and diagnostics, beverages, real estate and auto
services companies to achieve mid to long-term goals.
During 2024, GCAP undertook a number of major business
restructuring initiatives. We fully
replaced the Pharmacy and Hospitals management
teams, while we consolidated all of the Group’s insurance
businesses, including the newly acquired Ardi business,
under one structure. Notwithstanding these significant
changes, we are firmly on track in all our portfolio
companies to achieve our mid to long-term goals.
The Pharmacy Business is back on track and growing its
business again. The Insurance business has benefited from
having one management team and continues to dominate
both the P&C and Medical insurance markets (now #1
player in each of these markets).
7.5%
150 151
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
KPI Weighting 2024 Target and range Performance and evaluation Weighted result
Non-financial targets Threshold Target Outperformance
Professional
development
and mentoring
of management
including
successor(s)
Progress towards
ESG targets
5%
Non-financial targets
Non-financial but measurable targets
Fully met maximum expectations.
Considerable progress made at both the Portfolio
Companies level and at the GCAP HoldCo level. New
senior management appointments have been made in a
number of businesses, notably in the Pharmacy business,
where the new CEO has transitioned from the Beer
business and very successfully led a complete senior
management change in the Pharmacy business, and in the
restructuring and turnaround of GHG.
Fully met maximum expectations.
For the first time in Georgia, we have successfully
obtained a third-party assurance on our greenhouse gas
emissions. In recognition of our longstanding commitment
to responsible investment, GCAP was awarded the Impact
Award by the Asian Development Bank in April 2024.
GCAP also participated in COP29, joining a roundtable
discussion of leading international finance sector institutions
to help shape the region’s green agenda.
5%
Total KPI
Performance
Assessment 100% 95%
The Committee considered the CEO’s performance during 2024, during a period of significant political uncertainty in Georgia and the
surrounding region, which created substantial operational challenges. Against this background, under Mr Gilauri’s leadership, during
2024 Georgia Capital’s portfolio companies delivered their best ever combined operating performance.
The Committee noted the excellent performance of the Company over 2024, which was reflected in both the Group’s results and the
stakeholder experience. The share price increased from GBP 10.22 at 31 December 2023 to GBP 12.00 at 31 December 2024. Our
ongoing share buyback and cancellation programme benefitted shareholders, under which the Group repurchased shares for a total
consideration of US$ 48.1 million during the year. The Committee also noted that adjusting for the departure of one senior executive,
cash salaries increased by 3.0% and share salaries increased by 10.4% y-o-y. Employee average bonuses increased by 21.1% y-o-y.
In accordance with his performance in financial year 2024, taking into account the achievement of the maximum expectation or
outperformance against most KPIs and the wider stakeholder experience, the Remuneration Committee determined to award Irakli
Gilauri 190,000 deferred shares (95% of maximum opportunity) with vesting and holding periods of up to six years from the beginning
of the work year. The Committee is satisfied that the overall number of deferred discretionary shares awarded to Mr Gilauri for FY24
was fair and appropriate in the circumstances.
The Committee notes that there has not been an increase in Irakli Gilauri’s salary since the Group listed in 2018 (including when
the new Policy was approved in 2022) and that the 2018 salary reflected a decrease from the predecessor company. Similarly, the
maximum bonus opportunity remains at 200,000 deferred shares. The Committee did not change its implementation of the Policy
in 2024. The monetary value increases or decreases with the share price and significant alignment with shareholders is built into the
structure as described extensively in this report. The 2022 Policy reflects no annual cash bonus and no LTIP. The Committee made no
exercise of discretion with regard to the 2024 award of 190,000 deferred shares.
Percentage change in remuneration of Directors and employees
The following table sets out details of the percentage change in the remuneration awarded to the Directors, compared with the average
percentage change in the per capita remuneration awarded to the employees at the holding companies’ level only (45 employees) on
a full-time equivalent basis as a whole, in line with the requirements in the Companies (Directors’ Remuneration Policy and Directors’
Remuneration Report) Regulations 2019.
Given the small number of employees employed by the Georgia Capital PLC entity is less than five and the Company’s status as an
investment entity under IFRS 10, we considered comparison against the holding companies’ employees. See note 8 to the table below
for a comparison of the full-time UK employees in compliance with the requirements of the Companies (Directors’ Remuneration Policy
and Directors’ Remuneration Report) Regulations 2019. See the single total figure of remuneration table on pages 145 to 146 for an
explanation of deferred share salary, taxable benefits and discretionary deferred remuneration of Mr Gilauri.
From 1 April 2020 to 31 December 2020, the members of the Nomination Committee waived their fees (and only the additional fee
received by the Chair of the Committee (as Chair) on top of the normal Committee fees was retained by the Chairman), to show
solidarity with the impact of the COVID-19 pandemic. The normal fees were reinstated in January 2021. After a review of the workload
of the Nomination Committee, the fees were increased slightly for the Nomination Committee members and Chair from May 2023. The
Audit and Valuation Committee’s responsibilities were increased from 31 December 2019 when the Audit Committee became the Audit
and Valuation Committee. To show solidarity with the impact of the COVID-19 pandemic the Audit and Valuation Committee did not
receive an increase for financial year 2020, and instead the fees of the Chair and members were increased from January 2021.
Any further y-o-y movements in Non-Executive Director fees are attributable to a number of factors including the different Committee
roles undertaken by each Non-Executive Director over the period.
For Irakli Gilauri, the change in US Dollar equivalent for the discretionary deferred shares between 2023 and 2024 is reflective of both
the higher percentage of the maximum opportunity awarded for performance (80% in 2023 compared to 95% in 2024) but also
the increase in share price between 2023 and 2024 resulting in a higher monetary equivalent at the decision date. The maximum
discretionary opportunity remains constant at 200,000 deferred shares.
Similarly, Irakli Gilauri’s salary remained 200,000 deferred shares but the basis of calculation changed, as explained in the notes to and
in the paragraphs around the Single total figure of remuneration table earlier in this report.
Y-o-y change in pay for Directors compared to the employees
at the holding companies level as a whole
Executive
Director
Non-Executive Directors
2024
Average
employees Irakli Gilauri
David
Morrison Kim Bradley
Jyrki
Talvitie
Massimo
Gesua’ sive
Salvadori
Maria
Chatti-
Gautier Neil Janin
Total cash salary 1.1% – 0% -100% -100% 0% 2% 0%
Total deferred share salary -18.3% -28.5% – – – – – –
Taxable benefits 11.6% – – – – – – –
Total bonus 12.0% 34.5% – – – – – –
Y-o-y change in pay for Directors compared to the employees
at the holding companies level as a whole
Executive
Director
Non-Executive Directors
2023
Average
employees Irakli Gilauri
David
Morrison Kim Bradley
Jyrki
Talvitie
Massimo
Gesua’ sive
Salvadori
Maria
Chatti-
Gautier Neil Janin
Total cash salary 23.3% – 0% -64.2% -62.1% 0% 3% NMF
Total deferred share salary 19.7% -29.3% – – – – – –
Taxable benefits 16.6% – – – – – – –
Total bonus 33.2% 89.0% – – – – – –
Y-o-y change in pay for Directors compared to the employees
at the holding companies level as a whole
Executive
Director
Non-Executive Directors
2022
Average
employees Irakli Gilauri
David
Morrison Kim Bradley
Jyrki
Talvitie
Caroline
Brown
Massimo
Gesua’ sive
Salvadori
Maria
Chatti-
Gautier Neil Janin
Total cash salary 4.1% – – 9.7% – -61.3% – – 100%
Total deferred share salary 20.6% 0% – – – – – – –
Taxable benefits 3.5% – – – – – – – –
Total bonus -16.6% -35.9% – – – – – – –
Directors’ Remuneration Report continued
152 153
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Y-o-y change in pay for Directors compared to the employees
at the holding companies level as a whole
Executive
Director
Non-Executive Directors
2021
Average
employees Irakli Gilauri
David
Morrison Kim Bradley
Jyrki
Talvitie
Caroline
Brown
Massimo
Gesua’ sive
Salvadori
Maria
Chatti-
Gautier
Total cash salary
6.5% – 3.9% 3.9% 4.7% 5.0% 5.0% 36.2%
Total deferred share salary
-26.0% 0% – – – – – –
Taxable benefits
22.7% – – – – – – –
Total bonus 23.1% 44.2% – – – – – –
Y-o-y change in pay for Directors compared to the employees
at the holding companies level as a whole
Executive
Director
Non-Executive Directors
2020
Average
employees Irakli Gilauri
David
Morrison Kim Bradley
Jyrki
Talvitie
Caroline
Brown
Massimo
Gesua’ sive
Salvadori
Maria
Chatti-
Gautier
Total cash salary 11.0% – -3.7% 7.2% -3.6% -4.8% -4.8% N/A
Total deferred share salary 0% 0% – – – – – –
Taxable benefits 7.3% – – – – – – –
Total bonus 20.0% 10.2% – – – – – –
Notes:
1 The Investment Committee was dissolved on 17 May 2023 and its duties were absorbed by the Board. Kim Bradley and Jyrki Talvitie did not seek re-election at the 2023 AGM
and therefore ceased to be Directors on 17 May 2023. On 17 May 2023, David Morrison became a member of the Remuneration Committee, Maria Chatti-Gautier stepped down
as member of the Nomination Committee and become a member of the Audit and Valuation Committee, Massimo Gesua’ sive Salvadori became a member of the Nomination
Committee, and Neil Janin became Chair of the Remuneration Committee and Chair of the Nomination Committee. The Nomination Committee member and Chair fees were
increased after consideration of their comparative workload.
2 Kim Bradley was appointed as a member of the Audit and Valuation Committee from 20 May 2022, and stepped down as a member of the Nomination Committee and the
Remuneration Committee on 20 December 2022. Caroline Brown did not seek re-election at the 2022 AGM and therefore ceased to be a Director on 20 May 2022.
3 Neil Janin was appointed as a member of the Board of Directors of Georgia Capital PLC and to the Supervisory Board of JSC Georgia Capital, and the Nomination Committee and the
Remuneration Committee on 17 October 2022, and as a member of the Investment Committee on 20 December 2022.
4 Maria Chatti-Gautier was appointed to the Board of Directors of Georgia Capital PLC and to the Supervisory Board of JSC Georgia Capital, and the Remuneration Committee and
Nomination Committee on 19 March 2020.
5 On 19 March 2020, David Morrison, Caroline Brown and Massimo Gesua’ sive Salvadori stepped down as members of the Nomination Committee.
6 For the period of 1 April 2020 to 31 December 2020 the members of the Nomination Committee waived their fees, and for the Chairman of the Committee only the difference between
the level of fees for the Chair against the member’s fees was retained, to show solidarity with the impact of COVID-19.
7 The Audit and Valuation Committee’s responsibilities were increased from 31 December 2019; to show solidarity with the impact of the COVID-19 pandemic the Committee did not
receive an increased fee for their expanded role for year 2020, but the fees of the Chair and members were instead increased from 1 January 2021.
8 The Company has less than five UK employees and the percentage changes could be considered to be distortive. Y-o-y change on a full-time basis for UK employees from 2019
to 2020 for cash salary is 1.8%; deferred share salary is not applicable; taxable benefits is not applicable; and bonus is 30.1%. Y-o-y change on a full-time basis for UK employees
from 2020 to 2021 for cash salary is -2.7%; deferred share salary is not applicable; taxable benefits is not applicable; and bonus is -1.8%. Y-o-y change on a full-time basis for UK
employees from 2021 to 2022 for cash salary is 10.5%; deferred share salary is not applicable; taxable benefits is not applicable; and bonus is -5.3%. Y-o-y change on a full-time basis
for UK employees from 2022 to 2023 for cash salary is 3.7%; deferred share salary is not applicable; taxable benefits is not applicable; and bonus is 15.3%. Y-o-y change on a full-
time basis for UK employees from 2023 to 2024 for cash salary is -45.6%; deferred share salary is not applicable; taxable benefits is not applicable; and bonus is -43.1%.
Details of fixed and discretionary deferred share remuneration granted during 2024
The table below sets out details of the nil-cost options over GCAP shares which have been granted to Mr Gilauri in 2024 in respect of
the 2023 work year as reflected on a combined basis in the accounts of Georgia Capital PLC and JSC Georgia Capital. Please note
that the information presented in this section relates to Mr Gilauri’s performance in the 2023 financial year.
Deferred share salary Discretionary deferred share remuneration
Number of underlying shares and basis on
which award was made
200,000 granted pursuant to the Policy
available at https://georgiacapital.ge/
governance/cgf/policies
160,000 (with respect to his FY23 bonus)
granted pursuant to the Policy available at
https://georgiacapital.ge/governance/
cgf/policies
Type of interest Nil-cost option Nil-cost option
Cost to Group (as reflected in accounts) US$ 1,931,097
1
US$ 2,038,400
2
Face value US$ 1,931,097
1
Cash payments equal to the dividends paid
on the underlying shares will be made upon
vesting (if applicable).
US$ 2,038,400
2
Cash payments equal to the dividends paid
on the underlying shares will be made upon
vesting (if applicable).
Percentage of award achievable if minimum
performance achieved
100% of the award will be receivable,
since the award is part of the Executive
Director’s salary for 2023 and accordingly
is not subject to performance measures or
targets over the vesting period.
100% of the award will be receivable, since
the award is based on 2023 performance
(and is not an LTIP award) and accordingly
is not subject to performance measures
or targets over the vesting period.
Exercise price Nil. The options form part of the Executive
Director’s salary under the Policy and so
no payment is required upon exercise. The
exercise price has not changed.
Nil. The options make up the entirety of
the Executive Director’s performance-
based remuneration (with respect to his
performance in the previous financial year)
so no payment is required upon exercise.
The exercise price has not changed.
Vesting period 20% in each of 2025, 2026, 2027, 2028
and 2029.
25% in each of 2025, 2026, 2027 and
2028. Holding period of a further one year
on each tranche.
Performance measures None. See the 2022 Policy available at
https://georgiacapital.ge/governance/
cgf/policies
See the 2022 Policy available at
https://georgiacapital.ge/governance/
cgf/policies
1 Deferred share salary. The value is calculated as described in footnote 2 to the table of Single total figure of remuneration for the Executive Director.
2 Discretionary deferred share remuneration. The value is calculated as described in footnote 4 to the table of Single total figure of remuneration for the Executive Director.
CEO pay and comparators
The Group has less than 250 UK employees and therefore is not required to disclose ratios of the CEO pay against the UK employees’
pay (and indeed given it has less than five UK employees, to do so would be distortionary).
Our remuneration structure is very unusual with all salary and bonus being in deferred shares (no cash) to create very strong alignment
with shareholders. It is difficult to compare our overall remuneration to others in monetary value given the time value of money and
the delayed receipt of the Executive Director’s remuneration (as the salary and bonus shares are released across several years). It is
also difficult to quantify the risk of these salary and bonus shares lapsing (due to malus but also in the event of early termination under
certain circumstances). When formulating the Policy, we presented the overall package (without factoring in the time value of money or
risk of lapse) to investors.
The Committee also considered the fact that the CEO’s salary was less than the CEO salary in our predecessor company, BGEO
Group PLC and was also lower than the current salary of the CEO’s of the two most comparable peers; the two other UK listed
companies in Georgia, Lion Finance Group PLC and TBC Bank Group PLC.
Moreover, the renewed Policy in 2022 retained the same number of shares for salary and for the maximum opportunity as was
presented to shareholders for their approval in 2019; there was no increase in salary nor incentive.
Directors’ Remuneration Report continued
154 155
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Single total figure of remuneration for Non-Executive Directors (audited)
The table below sets out the remuneration received by each Non-Executive Director in 2024 and 2023.
The Non-Executive Directors do not receive any variable remuneration or pension contributions.
Georgia Capital PLC fees (US$) JSC Georgia Capital fees (US$) Total fees (US$)
2024 2023 2024 2023 2024 2023
David Morrison 67,890 67,890 133,736 133,736 201,626 201,626
Massimo Gesua’ sive Salvadori 61,107 57,784 95,849 99,169 156,956 156,953
Maria Chatti-Gautier 52,341 54,831 104,609 99,407 156,950 154,238
Neil Janin 64,611 62,451 86,213 87,984 150,824 150,435
Kim Bradley – 24,929 – 51,491 – 76,420
Jyrki Talvitie – 24,819 – 35,998 – 60,817
Total 245,949 292,704 420,407 507,785 666,356 800,489
Notes:
1 The Investment Committee was dissolved on 17 May 2023 and its responsibilities were absorbed by the Board.
2 Kim Bradley and Jyrki Talvitie did not seek re-election at the 2023 AGM and therefore ceased to be Directors on 17 May 2023.
3 On 17 May 2023, David Morrison became a member of the Remuneration Committee, Maria Chatti-Gautier stepped down as member of the Nomination Committee and became a
member of the Audit and Valuation Committee, Massimo Gesua’ sive Salvadori became a member of the Nomination Committee, and Neil Janin became Chair of the Remuneration
Committee and Chair of the Nomination Committee.
4 Neil Janin was appointed as a member of the Board of Directors of Georgia Capital PLC and the Supervisory Board of JSC Georgia Capital, and of the Nomination Committee and
Remuneration Committee, on 17 October 2022, and as a member of the Investment Committee on 20 December 2022.
5 Kim Bradley was appointed as a member of the Audit and Valuation Committee from 20 May 2022, and stepped down as a member of the Nomination Committee and the
Remuneration Committee on 20 December 2022.
6 The Non-Executive Directors do not receive any taxable benefits, pension benefits or variable remuneration.
Payments to former Directors and for loss of office (audited)
No payments were made to former Directors or for loss of office during the year ended 31 December 2024.
Total Shareholder Return
Georgia Capital PLC has been a member of the FTSE All Share Index since its listing on 29 May 2018. The following graph compares
the Total Shareholder Return (TSR) of Georgia Capital PLC with the companies comprising the FTSE All Share Index and FTSE Small
Cap Index for the period from 29 May 2018 until 31 December 2024.
Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun -21 Dec-21 Jun-22 Dec-22 Jun-23 Jun-24Dec-23 Dec-24 Mar-25
FTSE All Share Index (rebased) FTSE Small Cap Index (rebased)Georgia Capital PLC
20
40
60
80
100
120
160
140
Relative importance of spend on pay
The following table shows Georgia Capital’s actual spend on pay at the holding company’s level only (45 employees in total) between
2023 and 2024. We considered comparison against these employees to be the most appropriate given the Company’s status as an
investment entity under IFRS 10.
Remuneration
paid to all
employees of
the Group
Distribution to
shareholders by
way of buyback
Year ended 31 December 2023 (US$ thousands) 13,453 18,242
Year ended 31 December 2024 (US$ thousands) 13,697 48,070
Percentage change 1.8% 2.6x
Notes:
1 There were no dividends in 2023 or 2024. The US Dollar amount is calculated using an average GEL/US$ exchange rate for each of 2023 and 2024.
2 The buyback and cancellation programmes returned value to shareholders.
3 3,669,889 shares with a total value of US$ 48.1 million (GEL 131.9 million) were bought back under GCAP’s share buyback and cancellation programmes during 2024 (1,665,222
shares with a total value of US$ 18.3 million (GEL 47.9 million) during 2023).
Share ownership requirement (audited)
Executive Directors are required to build over five years and maintain a shareholding equivalent to 200% of base salary, which is
400,000 shares. Mr Gilauri already holds substantially above this requirement as at 31 December 2024 – see table and table note
2 below. In accordance with the Policy, beneficially owned shares as well as unvested (net of tax) and vested deferred share salary
and discretionary deferred shares count towards the requirement, noting that such unvested and vested shares are not subject to
performance conditions after their grant.
Directors’ interests in shares (audited)
The following table sets forth the respective holdings of GCAP shares of each Director as at 31 December 2023 and 2024.
As at 31 December 2023 As at 31 December 2024
Number of
GCAP shares
held directly
Number of
vested but
unexercised
GCAP shares
held under
option through
deferred share
salary and
discretionary
deferred share
compensation
(all nil-cost
options with
no
performance
conditions)
Number of
unvested and
unexercised
GCAP shares
held under
option through
deferred share
salary and
discretionary
deferred share
compensation
(all nil-cost
options with
no
performance
conditions)
Total number
of interests in
GCAP shares
Number of
GCAP shares
held directly
Number of
vested but
unexercised
GCAP shares
held under
option through
deferred share
salary and
discretionary
deferred share
compensation
(all nil-cost
options with
no
performance
conditions)
Number of
unvested and
unexercised
GCAP shares
held under
option through
deferred share
salary and
discretionary
deferred share
compensation
(all nil-cost
options with
no
performance
conditions)
Total number
of interests in
GCAP shares
Irakli Gilauri 1,589,028 – 934,766 2,523,794 1,848,105 – 965,008 2,813,112
David Morrison 101,368 N/A N/A 101,368 101,368 N/A N/A 101,368
Kim Bradley 35,383 N/A N/A 35,383 N/A N/A N/A N/A
Jyrki Talvitie 12,585 N/A N/A 12,585 N/A N/A N/A N/A
Massimo
Gesua’ sive Salvadori
13,739 N/A N/A 13,739 17,615 N/A N/A 17,615
Maria Chatti-Gautier 6,860 N/A N/A 6,860 10,443 N/A N/A 10,443
Neil Janin 7,000 N/A N/A 7,000 142,103 N/A N/A 142,773
Notes:
1 As at 31 December 2024, Mr Gilauri’s vested and unvested shareholding was 2,813,112 GCAP shares, representing approximately 7.1% of the Company’s share capital. In January
2025, Mr Gilauri received awards of 200,000 nil-cost options over ordinary shares in respect of deferred salary shares for the 2024 work year, out of which 8,610 were waived by
Mr Gilauri to discharge the UK income tax and employee National Insurance contributions. These will be reported in the 2025 Annual Report and Accounts and are not included in the
table above, which is at 31 December 2024.
2 In January 2024, Mr Gilauri received awards of 200,000 nil-cost options over ordinary shares in respect of deferred salary shares for the 2023 work year, out of which 8,601 were
waived by Mr Gilauri to discharge the UK income tax and employee National Insurance contributions. In January 2024 Mr Gilauri exercised 321,157 nil-cost options over ordinary
shares, out of which 62,080 shares were withheld to meet tax liabilities. In May 2024, Mr Gilauri received awards of 160,000 nil-cost options over ordinary shares in respect of
discretionary deferred shares for the 2023 work year. As of 31 December 2024, all vested nil-cost options of the CEO were exercised. None of Mr Gilauri’s connected persons have
any interest in the shares of the Company.
3 Kim Bradley and Jyrki Talvitie did not seek re-election at the 2023 AGM and therefore ceased to be Directors on 17 May 2023.
Directors’ Remuneration Report continued
156 157
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Directors’ interests in shares (audited) continued
The Remuneration Policy focuses on base salary in deferred salary shares and discretionary compensation in discretionary deferred
shares. The long vesting periods naturally result in the Executive Director, Irakli Gilauri, building up large holdings of unvested nil-cost
options. The Policy naturally results in Mr Gilauri and our executive management team holding a significant number of unvested shares
and achieves a delay between performance and vesting. We believe these results are consistent with the principles of the Investment
Association. As at 31 December 2024, Mr Gilauri met the shareholding requirement.
Under the Directors’ Remuneration Policy, the Group does not require Non-Executive Directors to hold a specified number of shares in
GCAP. Notwithstanding this, some Non-Executive Directors have chosen to become shareholders. The Non-Executive Directors are
not awarded incentive shares and are not remunerated in shares.
There have been no changes in the Directors’ interests in shares in the Company between the end of the financial year and the last
practicable date of 14 March 2025, with exception of Irakli Gilauri who as at 14 March 2025 holds total of 2,936,502 vested and
unvested shares, and Neil Janin who sold 136,402 shares on 7 March 2025, 2,000 shares on 10 March 2025, and 4,371 shares on
12 March 2025.
Details of Non-Executive Directors’ letters of appointment
Georgia Capital has entered into letters of appointment with each Non-Executive Director. The letters of appointment require Non-
Executive Directors to provide one month’s notice prior to termination. The letters of appointment for the majority of current Non-
Executive Directors are effective from 24 February 2018, with Maria Chatti-Gautier’s effective from her appointment on 19 March
2020 and Neil Janin’s from his appointment on 17 October 2022. Each Non-Executive Director is put forward for election at each
AGM following his or her appointment. Continuation of a Non-Executive Director’s employment is conditional on his or her continued
satisfactory performance and re-election by shareholders at each AGM.
A succession plan adopted by the Board provides for a tenure of six years on both the Georgia Capital PLC and JSC Georgia Capital
Boards. Upon the expiry of such six-year tenure, the appointment of the relevant Non-Executive Director may cease at the next
upcoming AGM.
Notwithstanding the foregoing, if the Board determines that, in order to maintain the balance of appropriate skills and experience
required for the Board, it is important to retain a Non-Executive Director on the Board beyond the relevant six-year period, the Board
may offer the Non-Executive Director a letter of appointment for an additional one-year term. Such a one-year “re-appointment” may
be renewed no more than two times, with the effect that the usual six-year tenure may be extended to a maximum of nine years if
circumstances were to warrant such extension.
Implementation of Remuneration Policy for 2025
Details of how the Policy will be implemented for the 2025 financial year are set out below. There will be no significant change in the way
that the 2022 Policy will be implemented in 2025 and no deviations from the procedure for the implementation of the Policy as set out in
the Policy. An updated Policy will be put to shareholders at the 2025 AGM, and shall take effect subject to the approval at the AGM.
For Irakli Gilauri
2025 fixed pay
Total deferred share salary 200,000 Georgia Capital deferred shares underlying nil-cost options per annum pro rata.
Pension benefits
Mr Gilauri has agreed for all pension contributions to be waived. Details of the benefits
received by Executive Directors are on page 154.
The circumstances in which unvested deferred shares may lapse, and the narrow circumstances in which such shares may vest
immediately, are set out in detail in the 2022 Policy.
2025 discretionary deferred share remuneration
Deferral terms The Committee will determine whether an award is merited based on an Executive Director’s
achievement of the KPIs set by the Committee for the work year and the performance of the Group
during the work year. If Mr Gilauri is awarded discretionary deferred shares with respect to the 2025
work year, the award will vest 25% in January of each of 2027, 2028, 2029 and 2030. Each tranche
will be subject to a further holding period of one year. This decision will be set out in the 2025 Directors’
Report. Upon vesting, Mr Gilauri will receive (in addition to the vested shares) cash payments equal
to the dividends paid (if any) on the underlying shares between the beginning of the year immediately
following the work year and the vesting date.
Performance measures For 2025, the Remuneration Committee has determined that the performance measures will be based on
KPIs (see below). The Remuneration Committee has considered the details of each KPI and ensured that
measurable targets are included. The KPIs will be reviewed by the Remuneration Committee throughout
the year and by the Board as appropriate. See notes to the Policy for malus and clawback provisions.
2025 CEO KPIs
The 2025 KPIs were selected based on our strategy and ongoing key metrics. Consequently, the 2025 KPIs are as follows:
• NAV per share;
• Achieving budget of GCAP and portfolio companies, including revenue generation, EBITDA performance, and cash flow generation;
• Expense ratio;
• Broaden access to capital including progress on the active seeking of price discovery of assets;
• Disciplined pursuit of investment opportunities and asset and capital allocation, including NCC targets;
• Progress towards achieving mid to long-term strategic priorities in portfolio companies;
• Professional development and mentoring of management; and
• Progress towards ESG targets.
Due to the potential impact on our commercial interests, annual bonus targets are considered commercially sensitive and appropriate
detail will therefore be disclosed in the 2025 Remuneration Report following the completion of the financial year. KPIs and targets will be
reviewed and may be revised by the Remuneration Committee and the Board as appropriate throughout the year, subject to the terms
of the Policy.
Non-Executive Director remuneration
The table below shows the fee structure for Non-Executive Directors for 2025. Non-Executive Directors’ fees are determined by the Board.
Component Purpose and link to strategy Operation Opportunity
Base cash fee The fee for the Board is
competitive enough to
attract and retain individuals.
The Chairman receives a fee
which reflects the extra time
committed and responsibility.
However, no Chairman’s fee is
received when Chairman and
CEO roles are combined.
The Senior Independent
Non-Executive Director receives
a higher base fee which reflects
the extra time and responsibility.
Cash payment on
quarterly basis.
The amount of remuneration
may be reviewed from time to
time by the Board. The fees may
be amended and varied if there
are genuinely unforeseen and
exceptional circumstances.
Any significant increase shall be
the minimum reasonably required.
The maximum aggregate for all
Non-Executive Directors which
may be paid by Georgia Capital
PLC for the PLC fees is GBP
750,000 which is consistent with
the current limit in the PLC’s Articles
of Association.
Cash fee for each
Committee membership
Additional fee to compensate
for additional time spent
discharging Committee duties.
Cash payment on
quarterly basis.
The amount of remuneration for
the membership may be reviewed
from time to time by the Board. The
Chairman of the PLC does
not receive any Committee fee.
Directors’ Remuneration Report continued
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Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Directors’ Remuneration Policy
This section sets out the Directors’ Remuneration Policy (Policy) proposed for shareholders’ approval at the 2025 AGM on 20 May
2025. Subject to receiving shareholder approval, the Policy will take effect from the date of the 2025 AGM and will apply until the earlier
of (a) three years following that date and (b) the approval by shareholders of a new Policy. The Remuneration Committee is satisfied that
the existing 2022 Policy is highly aligned with the shareholder experience and functions as intended, and is proposing to make very
limited changes to the 2025 Policy.
It is a provision of the Policy that the Group will honour all pre-existing obligations and commitments that were entered into prior to
the Policy taking effect. The terms of those pre-existing obligations and commitments may differ from the terms of the Policy and may
include (without limitation) obligations and commitments under service agreements, deferred share remuneration schemes and pension
and benefit plans.
The Remuneration Committee retains its discretion under the renewed Policy to make minor amendments to the Policy for regulatory,
exchange control, tax or administrative purposes or to take account of a change in legislation without obtaining prior shareholder approval.
Executive Directors Remuneration Policy
The Policy provides for an Executive Director’s remuneration package to be comprised of the elements set forth below. For the
avoidance of doubt, all references to Executive Directors refer to the Executive Directors of Georgia Capital PLC to cover the
present Executive Director, Irakli Gilauri, and any future Executive Directors of Georgia Capital PLC whilst the Policy is in force. The
compensation structure of executive management (who serve on the Management Board of JSC Georgia Capital, but who are not
Executive Directors of Georgia Capital PLC) is set by the Remuneration Committee and is modelled on the Policy (although they may
receive a part of their salary in cash), but the Remuneration Committee is not bound by the Policy when setting their remuneration
packages. The Remuneration Committee can set different vesting terms and conditions for the executive management team as the
Remuneration Committee thinks appropriate.
No Significant Changes to Previous Policy
The Policy carries on the existing Policy which took effect from 22 May 2022, maintaining the unique structure of paying the entire
salary and performance-based remuneration of Mr Gilauri only in shares. The Remuneration Committee is proposing that, for the new
Policy, the number of shares paid in the performance-based remuneration is not absolutely fixed but can be adjusted if the share price
moves significantly prior to the signing of a new contract. Subject to these changes and the ability to pay some parts of the salary
of any future Executive Directors in cash, the existing structure of remuneration and limits on remuneration for Mr Gilauri and other
Executive Directors under the existing Policy will continue to be applied.
The Policy of paying salary and performance-based remuneration only in shares creates a very high alignment with the shareholder
experience. The Remuneration Committee continues to consider that it is important that there is a high level of share-based
remuneration for Mr Gilauri and any future Executive Directors.
Mr Gilauri’s current contract ends on 31 December 2025. The Remuneration Committee plans to agree the terms of a new contract
with Mr Gilauri based on the current number of contracted shares (i.e. 200,000 deferred salary shares, and a maximum of 200,000
deferred discretionary shares awarded based on Mr Gilauri’s performance) and the 2025 Policy provides for Executive Director
compensation based on these figures. However, the Committee will have discretion to lower (or raise) the number of shares in the event
of a significant rise (or fall) in the Group’s share price, when the new contract is signed, from its levels in February/March 2025. This will
enable the Remuneration Committee, when considering the terms of the new contract, to adjust the number of shares awarded, thus
avoiding the potential for significant windfall gains.
The number of shares in Mr Gilauri’s contract was fixed at its current (200,000 shares) level in 2018 when the Group listed and the
share price was GBP 10.32. This level was not changed in 2022 when the Policy was last approved by shareholders and the Group
share price was GBP 6.00. Inflation in Georgia since 2018 has been in excess of 40%. The Group has funded the purchase of shares
to fund management share awards for the years 2025-2027 – including those to Mr Gilauri – at an average price of GBP 7.90.
Salary in the form of long-term deferred shares
Purpose and link to strategy
• To reflect the role and required
duties, skills, experience and
individual contribution to the Group
whilst promoting long-term value
creation and share price growth.
Opportunity
• The number of deferred share
salary shares is 200,000 per
annum for Irakli Gilauri, of which
10% are for his work as the CEO
of Georgia Capital PLC and 90%
are for his work as a CEO of JSC
Georgia Capital and its subsidiaries,
provided that the Remuneration
Committee has the discretion to
vary the number of shares awarded
in a new contract in the event of
a significant change in the Group
share price between February/
March 2025 and the time at which
the contract is entered into.
• The number of deferred share
salary shares is fixed for the
duration of the employment
contracts with Georgia Capital PLC
and JSC Georgia Capital.
• The maximum number of deferred
share salary set for an Executive
Director will be no more than
the Remuneration Committee
considers reasonable based on his/
her duties, skills and experience, at
the time when his/her salary is set,
which will normally be at the time at
which his/ her service agreement(s)
are entered into.
Operation
• The Remuneration Committee determines
the deferred salary share compensation to be
awarded to the Executive Director at the time the
employment contract is entered into.
There is no cash salary payable to Mr Gilauri. If
the Remuneration Committee so determines, up
to 50% of the salary of any other future Executive
Directors compensation may be paid in cash.
The base salary for an Executive Director is
fixed in his or her service agreement(s). The level
of the salary is reviewed by the Remuneration
Committee when a service agreement is up
for renewal.
• For Mr Gilauri, salary is comprised entirely of
long-term deferred shares (“deferred share
salary”) which take the form of nil-cost options
granted annually in respect of the work year, and
is usually expected to be awarded within one
month of the end of the work year, although the
Remuneration Committee retains the discretion
to determine the timing of the award and (for
future Executive Directors) that some cash salary
is payable.
• Deferred share salary in respect of a work year
will vest over five years with 20% vesting in each
of the second, third, fourth, fifth and sixth years
following the end of the work year. At vesting,
the Executive Director will receive (in addition to
the deferred share salary) cash payments equal
to the dividends paid on the underlying shares
between the beginning of the year immediately
following the work year and the vesting date.
• Lapse provisions (natural malus) are built into the
deferred share salary as set out in the “Service
agreements and policy on payments for loss of
office for our Directors” section below. Extended
malus and clawback provisions do not apply
to deferred share salary as the Remuneration
Committee considers that the discretionary
deferred shares provide a sufficiently large pool
from which to draw extended malus or clawback
repayments, if necessary in the circumstances to
do so.
Directors’ Remuneration Report continued
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Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Performance-based remuneration – discretionary deferred shares
Purpose and link to strategy
• To motivate and reward an
Executive Director who meets or
exceeds the KPIs set for him or her
by the Remuneration Committee for
the relevant period.
• Performance-based remuneration
in order to:
- Closely align the interests of
an Executive Director with
shareholders.
- Minimise risk taking for short-
term gain.
- Encourage long-term
commitment to the Group.
Opportunity
• For Mr Gilauri, performance based
remuneration will be awarded in
the form of discretionary deferred
shares, and the maximum number
of discretionary deferred shares
that may be awarded is currently
200,000 shares.
• For all Executive Directors, the
maximum performance-based
award is 100% of the base salary.
For Executive Directors other than
Mr. Gilauri, at least 50% of the
performance-based remuneration
will be awarded in the form of
discretionary deferred shares, with
any balance awarded in cash.
Operation
• The Remuneration Committee will determine
annually whether an award is merited based on
an Executive Director’s achievement of the KPIs
set for the work year and the performance of
the Group during the work year. If appropriate,
where a strategic change or change in business
circumstances has made one or more of the
KPIs an inaccurate gauge of an Executive
Director’s performance, the Remuneration
Committee may decide to base its assessment
on alternative measures. The outcome of an
Executive Director’s performance and the
Remuneration Committee’s determination will be
reported in the Directors’ Remuneration Report
for the work year in consideration.
• Any discretionary deferred shares are expected
to be granted following the end of the work year
and vest 25% in each of the second, third, fourth
and fifth years following the end of the work year,
although the Remuneration Committee retains
the discretion to determine the timing of the
award. Any cash will also be awarded following
the end of the work year.
• Each tranche of vested discretionary deferred
shares must then be held for a further one year.
• At vesting, an Executive Director receives cash
payments equal to the dividends paid on the
underlying shares between beginning of the year
immediately following the work year and the
vesting date.
• KPIs for an Executive Director are set towards
the beginning of each work year and reflect
each Executive Director’s targeted contribution
to the Group’s overall key strategic and financial
objectives for the coming work year. KPIs may
also include non-tangible factors such as self-
development, mentoring and social responsibility.
• There is no contractual right to performance-
based compensation and the Remuneration
Committee reserves the right to award no
discretionary remuneration if the Group’s
performance is unsatisfactory.
• Lapse provisions (natural malus) and extended
clawback and malus applies to discretionary
deferred shares under the circumstances as set
out in the notes to this Policy table.
Directors’ Remuneration Report continued
Pension
Purpose and link to strategy
• The Group is required to comply
with pension requirements set by
the Georgian Government.
• Pension provision is the same for all
employees in the Group in Georgia.
Opportunity
• Pension provision will be in line with
Georgian pension legislation, which
may change from time to time.
• There is no provision for the
recovery or withholding of
pension payments.
Operation
• The same arrangement applies to employees
across the Group in Georgia.
• In line with current Georgian legislation,
an Executive Director and the Group each
contribute 0-2% of total remuneration from JSC
Georgia Capital and the Georgian Government
contributes a further small amount currently
0-2% depending on income levels. However,
Irakli Gilauri has agreed for pension contributions
to be waived.
• Pension contributors will only increase above
the level if mandated by Georgian legislation or if
mandated by any other applicable legislation in
any jurisdiction.
Benefits
Purpose and link to strategy
• Non-cash benefits are in line with
Georgian market practice and are
designed to be sufficient to attract
and retain high-calibre talent.
Opportunity
• There is no prescribed maximum
amount payable. The maximum
amount payable depends on the
cost of providing such benefits
to an employee in the location
at which the Executive Director
is based.
• Shareholders should note that
the cost of providing comparable
benefits in different jurisdictions may
vary widely.
• Disclosure of amounts paid will
be provided in the implementation
report and will be explained where
the cost of benefit is significant.
Operation
• Benefits consist of: life insurance; health
insurance; incapacity/ disability insurance;
Directors’ and Officers’ liability insurance; physical
examinations; tax gross-ups and tax equalisation
payments, company car and driver; mobile
phone costs; personal security arrangements (if
requested by the Executive Director); assistance
with completing tax returns (where required);
relocation costs for Executive Director and close
family; and legal costs.
Other Executive Director policies – shareholding requirements
Purpose and link to strategy
• To further align Executive Directors’
interests with shareholders.
• To ensure Executive Directors build
and then maintain a significant
shareholding over the long term.
• To ensure departing Executive
Directors make long-term decisions
and maintain an interest in the
ongoing success of the Group
post-employment.
Opportunity
• Executive Directors are required to build and then maintain a shareholding equivalent to
200% of salary. Such amount to be built up within a five-year period from appointment as
an Executive Director (the “Required Shareholding”).
• For these purposes all beneficially owned shares as well as unvested (net of tax) and
vested deferred share salary and discretionary deferred shares will count towards the
Required Shareholding (as such awards are not subject to any performance conditions).
• Executive Directors are to retain the lower of (i) the Required Shareholding or (ii) the
shareholding at the time employment ceases, for a period of two years from the date on
which employment ceases unless the Remuneration Committee determines otherwise.
• In very exceptional circumstances, for example, in the event of a serious conflict of interest,
the Remuneration Committee has the discretion to vary or waive the Required Shareholding
but must explain any exercise of the discretion in the Group’s next Remuneration Report.
It should be emphasised that there is no present intention to use the discretion.
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Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to the Policy table – Executive Directors
Deferred share salary
At present there is no cash salary. The Remuneration Committee may determine that some cash salary is appropriate for a future
Executive Director (see “Approach to recruitment remuneration”).
The deferred share salary comprises the most important element of the Executive Director’s fixed annual remuneration and is
commensurate with the Executive Director’s role within the Group. Paying the salary as deferred share compensation rather than as
cash means that the Executive Director’s day-to-day actions are geared towards sustained Group performance over the long term. The
deferred share salary is neither a bonus nor an LTIP, it is salary fixed at the outset of each Executive Director’s service contract and is
therefore not subject to performance targets or measures. The salary increases or declines in value depending on Group performance,
aligning an Executive Director’s interests directly and naturally with those of the Group’s shareholders.
The opportunity for Mr. Gilauri’s salary will be fixed on the basis of the number of shares in his current employment contract (i.e.
200,000 shares). This amount has not increased since the previous Policy was approved by shareholders in May 2022. Nor has the
number of shares increased since the original contract approved by shareholders in 2018. Illustrations of the application of the Policy
are shown later in this Policy on page 164.
Performance-based remuneration
Performance is measured entirely through the discretionary compensation plan (see “Discretionary deferred remuneration”, below),
which measures performance over the financial year. A significant proportion of remuneration is inherently linked to performance and
shareholder value as all or a significant proportion of remuneration is in the form of deferred share salary and discretionary deferred
shares. The Group does not operate an LTIP because it believes that there is sufficient long-term incentive built into its deferred share
salary and discretionary deferred share remuneration.
Discretionary deferred remuneration
Performance is measured over the course of the financial year, and is paid at least 50% (100% in the case of Mr Gilauri) in nil-cost
options, which are granted following the financial year and vest 25% in each of the second, third, fourth and fifth years following the
end of the work year. A further one year holding period from the date of vesting applies to the vested discretionary deferred shares. For
example, any discretionary deferred remuneration in respect of 2025 will be granted in 2026 and the vesting schedule will be 25% in
each of January 2027, January 2028, January 2029 and January 2030, and are subject to a further holding period of one year on each
tranche. Therefore, the total maximum vesting and holding period is five years from the end of the work year.
Performance measures are chosen to reflect strategic priorities for the Group and are chosen by the Remuneration Committee annually
towards the start of the relevant performance year. The aggregate pool of shares and cash (where applicable) available for each year
for awards of discretionary deferred shares for the Executive Directors and the executive management team as a whole is determined
annually by the Remuneration Committee in its absolute discretion, based on a number of factors including:
• financial objectives;
• strategic objectives; and
• people and culture objectives.
The Remuneration Committee does not utilise strict weighting of performance measures to ensure that flexibility is encouraged if,
for example, strategic objectives evolve as the Group does or business circumstances change during the year. The Remuneration
Committee believes that this flexibility ensures that the Board can work with an Executive Director so that he/she does not take
excessive risk to achieve KPIs when, for example, markets have turned. The Remuneration Committee has the discretion to reduce
awards, including to zero, when performance outcomes do not align to the shareholder experience. The precise measures will be
determined by the Remuneration Committee and disclosed retrospectively in the Remuneration Report following the year of the
Remuneration Committee’s determination.
As mentioned in the Policy table, the maximum value of discretionary deferred shares that the current CEO, Mr Gilauri, may be awarded
in a given year for the remainder of his current service contract with the Group is capped at the same number of shares as his total
deferred share salary. In the event that it does introduce cash salary for a new Executive Director, the Remuneration Committee retains
the discretion to determine how total salary is measured for the purposes of the cap in the Policy table.
Directors’ Remuneration Report continued
The discretionary deferred shares are underpinned by the robust clawback and malus provisions described below, including in the
incidence of significant financial losses.
Clawback and malus
Discretionary deferred shares are subject to malus, and clawback for up to two years from vesting, in the following circumstances:
• misconduct in the performance or substantial failure to perform duties;
• significant financial losses, serious failure of risk management or serious damage to the reputation of Georgia Capital PLC or
JSC Georgia Capital, caused by misconduct or gross negligence (including inaction in performance of his/her duties by the
Executive Director);
• material misstatement or material errors in the Financial Statements that relates to the area of responsibility of the Executive Director
or can be attributed to their action (or inaction in performance of his/her duties);
• deliberately misleading Georgia Capital PLC or JSC Georgia Capital in relation to financial performance; and
• an award being made on the basis of erroneous or misleading data, provided that for payments based on erroneous or misleading
data (other than where such error has been caused by fraud, wilful misconduct, deliberate action/inaction and/or gross negligence
of the Executive Director), malus and clawback applies to discretionary deferred remuneration awarded for the year in question.
The above provisions form part of Mr Gilauri’s current service contract and are planned to be retained in his future contract. Further, the
Executive Equity Compensation Plan allows shares to lapse, including to zero, or be clawed back in accordance with the provisions in
the Executive Director’s contract.
Mr Gilauri’s current contract also has unusually strong malus provisions where all unvested shares (deferred share salary and
discretionary deferred shares) lapse when the service contract is terminated under certain circumstances, including for cause such as
gross misconduct, substantial and repeated failure to perform duties, fraud or conviction of a felony. This may be several years of salary
deferred shares and discretionary deferred shares. Please see the “Termination of the JSC Georgia Capital service agreement” in the
table below for more information. These provisions are planned to be retained in any new contract for an Executive Director, including
Mr Gilauri.
It is also planned that the above provisions will apply to any cash payments made to any incoming Executive Director in lieu of
discretionary deferred shares.
Discretion
The Remuneration Committee retains a substantial degree of discretion in relation to the Policy. This includes:
• the determination of discretionary deferred shares, if any;
• selection of KPIs that will determine the discretionary deferred remuneration, which may vary from year to year in order to align with
strategy and financial objectives;
• any adjustments required to an Executive Director’s KPIs during the work year when, for example, there has been a change in
strategy or business circumstances which results in one or more of KPIs becoming an inaccurate gauge of performance; and
• the discretion to override any formulaic outcomes when it considers it reasonable in the circumstances to do so.
Equity compensation trust and dilution limits
An equity compensation trust (“Trust”) was established by JSC Georgia Capital for the purposes of satisfying deferred share salary and
discretionary deferred share compensation in the form of nil-cost options awarded to Executive Directors and eligible members of the
executive management team. The Trust was established in 2018.
Business expenses
Executive Directors are reimbursed for reasonable business expenses incurred in the course of carrying out duties under their service
contract, on provision of valid receipts.
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Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Directors’ Remuneration Report continued
Illustration of application of Remuneration Policy
The chart below shows an estimate of the remuneration that could be received by Mr Gilauri, the Group’s sole Executive Director and
CEO, in respect of 2025 under the Policy at three different performance levels.
Minimum threshold Target threshold Maximum threshold
Fixed share salary Discretionary deferred share compensation Total
US$ 2,020,200
US$ 2,886,000
US$ 1,380,000 US$ 1,380,000 US$ 1,380,000
US$ 1,380,000
US$ 3,400,200
US$ 4,266,000
Notes:
1 Salary is comprised of deferred share salary and benefits. Mr Gilauri does not receive a cash salary and has waived all pension contributions. For illustration purposes, the value of
deferred share salary would be US$ 1,380,000 calculated by reference to the 200,000 shares granted under the prolonged Service Agreement signed in October 2022. The share
price on 24 October 2022 was US$ 6.90 (the official share price of GBP 6.10 converted into US Dollars using and exchange rate of 1.131, being the official exchange rate published
by the Bank of England on the same date), for illustration purposes.
2. For the purpose of calculating the value of discretionary deferred shares for illustration in this chart a share price of US$ 14.43 per share was used which was the share price on
19 December 2024 being the date of the Remuneration Committee which determined the discretionary deferred shares award (the official share price of GBP 11.50 converted into
US$ using an exchange rate of 1.255 being the official exchange rate published by the Bank of England on the same date). The actual value of the discretionary deferred share award
in respect of the performance of the 2025 work year will be reported in the 2025 Annual Report and Accounts as at the latest closing share price before the Remuneration Committee
meeting at which the award is decided.
3. Minimum opportunity reflects a scenario whereby Mr Gilauri receives only fixed remuneration which is deferred share salary and benefits. No share price growth assumptions have
been made.
4. On-target opportunity reflects a scenario whereby Mr Gilauri receives fixed remuneration (as described in 1 above) and 140,000 discretionary deferred shares, being 70% of the
maximum opportunity. No share price growth assumptions have been made.
5. Maximum opportunity reflects a scenario whereby Mr Gilauri receives fixed remuneration (as described in 1 above) and discretionary deferred shares compensation award of 100%
being the number of shares granted under the deferred share salary. No share price growth assumptions have been made.
6. For long-term incentive awards, disclosure of the value of the award in the event of a 50% share price appreciation is required by the Companies (Miscellaneous Reporting) Regulations
2018. Such disclosure is not required for short-term incentive awards, such as those made by the Group, where performance measures are limited to one year, nor is it required for
salary compensation in the form of shares. The reason for this is that an increase in the value of the deferred shares resulting from share price appreciation in the period through to the
vesting date is not considered to constitute remuneration for the purposes of the regulations.
Approach to recruitment remuneration
Any new Executive Director appointed to the Board would be paid no more than the Remuneration Committee considers reasonably
necessary to attract a candidate with the relevant skills and experience. His or her maximum remuneration package would comprise
the components described in the Policy table above. The Remuneration Committee may, at its sole discretion and taking into account
the role assumed by the new Executive Director, vary the amount of any component in the package up to the limits set out in the Policy
table above in relation to new Executive Directors. In particular, the Remuneration Committee may determine it is appropriate to pay a
cash salary to a newly-appointed Director. The remuneration of any new Executive Director will be subject to the maximums set out in
the Policy table above. In the event that it does introduce cash salary for a new Executive Director, the Remuneration Committee retains
the discretion to determine how total salary is measured for the purposes of the cap in the Policy table.
In addition to the components and outside the limits set out in the Policy table, the Remuneration Committee may also decide to
provide to an incoming Executive Director:
• Relocation support, tax support and legal fees depending on the individual’s circumstances, including, where relevant, to his or her
family. The Group has not set a maximum aggregate amount that may be paid in respect of any individual’s relocation support, but it
will aim to provide support of an appropriate level and quality on the best terms that can reasonably be obtained.
• Upon the recommendation of the Remuneration Committee, a “buyout” incentive award intended to compensate the incoming
Executive Director for any awards granted to an incoming Executive Director by a previous employer and which have been
foregone as a result of the individual’s employment with the Group. In these circumstances, the Group’s approach will be to match
the estimated current value of the foregone awards by granting awards of deferred share compensation which vest over a similar
period to the awards being bought out or longer. The application of performance conditions and/or clawback provisions may also
be considered, where appropriate. Such new awards may be granted in addition to any deferred share salary and discretionary
deferred share compensation.
Consideration of shareholder views shareholder consultation process was undertaken to gather key investor feedback on the
new 2025 Remuneration Policy, which also took into account the strong 93.7% investor support in 2022 of the current Policy and
support for the implementation of the Policy described in recent Remuneration Reports. At the 2024 AGM the Remuneration Report
was supported by 98.3% of voting shareholders. For the 2025 Policy (in which there are no substantial changes from the 2022
Policy), a shareholder consultation process was undertaken to gauge investor feedback on the proposed policy. Shareholders were
generally supportive of the proposals and their feedback was taken into account during the development of the proposed 2025 Policy.
Shareholders welcomed the absence of an increase in the expected contracted number of salary shares, and the Remuneration
Committee discretion to vary the specific number of shares upon contract renewal, in the event of a significant change in the share
price, to avoid the potential for windfall gains. Positive feedback was also received regarding recent increases in the disclosure of more
detail on KPIs and weightings.
Service agreements and policy on payments for loss of office for our Directors
The Group’s policy towards exit payments allows for a variety of circumstances whereby an Executive Director may leave the Group.
The Remuneration Committee reserves the right to determine exit payments other than those set out below where appropriate and
reasonable in the circumstances to do so, including where an Executive Director leaves by mutual agreement. The Remuneration
Committee may decide to pay some or all of the Executive Director’s legal fees in relation to the termination. In all circumstances,
the Remuneration Committee does not intend to reward failure and will make decisions based on individual circumstances. The
Remuneration Committee’s objective is that any such agreements are determined on an individual basis and are in the best interests of
the Group and shareholders at the time.
The following sections (1) and (2) summarise the termination and payments for loss of office provisions pursuant to Mr Gilauri’s service
agreement with Georgia Capital PLC and JSC Georgia Capital, respectively. The Remuneration Committee retains the discretion to
apply different notice, termination and payment for loss of office provisions to incoming Executive Directors. The termination provisions
of Non-Executive Director letters of appointment are described in section (3). The Executive Directors’ service agreements and letters of
appointment are kept for inspection by shareholders at the Group’s registered office.
Notice periods
At the date of this Annual Report, Mr Gilauri is the sole Executive Director of the Group. Mr Gilauri has a service contract effective
29 May 2018 with Georgia Capital PLC for an indefinite term which is terminable by either party on not less than four months’ notice
unless for cause where notice served by the Group shall have immediate effect.
Mr Gilauri also has a service agreement with JSC Georgia Capital effective from 29 May 2018 for an employment term of five years
from 29 May 2018, which was extended until 31 December 2025, which is terminable by the Executive Director on not less than three
months’ notice. Both documents with their amendments are available for inspection by shareholders at the Group’s registered office.
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Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Directors’ Remuneration Report continued
(1) Termination of Georgia Capital PLC service agreement
In the event that an Executive Director’s service agreement is terminated on notice, Georgia Capital PLC may put Mr Gilauri on garden
leave for some or all of the notice period during or after which period he will receive a pro-rata portion of the deferred salary.
Georgia Capital PLC may terminate Mr Gilauri’s employment early with immediate effect without notice or pay in lieu of notice in the
case of, among other circumstances, his dishonesty, gross misconduct, conviction of an offence (other than traffic-related where a non-
custodial penalty is imposed) or becoming of unsound mind.
The Company may also terminate the service agreement with immediate effect by payment in lieu of notice, in which case the payment
in lieu of notice shall be solely in respect of deferred share salary payable for the unworked portion of the notice period.
The vesting and lapse provisions of the deferred share salary under the service agreement with the Company follow the provisions in
the service agreement with JSC Georgia Capital mutatis mutandis (which are set out in the third column of the table below).
(2) Termination of JSC Georgia Capital (the “JSC”) service agreement
This table sets out the default vesting and lapse provisions, but the Remuneration Committee retains the discretion to determine
different treatment upon agreement with the Executive Director.
Termination reason Separation payments Vesting and lapse of awards
• Termination by the JSC for cause (e.g.
gross misconduct, substantial and
repeated failure to perform duties, fraud
or conviction of a felony).
• Vested deferred share salary (including
dividend equivalents) to termination
date and holiday pay, unpaid business
expenses and benefits.
• Any unvested awarded deferred share
salary and discretionary deferred share
compensation as at the date when
the Executive Director ceases to be an
Executive Director shall lapse.
• Termination by the JSC without cause. • Six month’s deferred share salary plus
deferred share salary to termination
date and any awarded but unpaid
discretionary deferred shares (all
awards including dividend equivalents),
holiday pay, unpaid business expenses
and benefits.
• Any unvested awarded deferred share
salary and discretionary deferred share
compensation shall vest immediately.
• Termination by the Chief Executive
Officer for Good Reason.
• As above for Termination by the JSC
without cause.
• As above for Termination by the JSC
without cause.
• Termination by the Chief Executive
Officer without Good Reason.
• Vested deferred share salary (including
dividend equivalents) to termination date
and any holiday pay, unpaid business
expenses and benefits.
• Any unvested awarded deferred share
salary and discretionary deferred share
compensation as at the date when
the Executive Director ceases to be an
Executive Director shall lapse.
In the event of termination for cause, in accordance with the Malus and Clawback section above the Group may also look to clawback
vested discretionary deferred shares.
In addition to the vesting and lapse provisions above, in certain other circumstances including if the Executive Director terminates by
reason of death, disability, redundancy or retirement, there is a change of control or, at the end of the term of the service agreement,
the Executive Director is not offered a new service contract upon substantially similar terms or continued Board membership, unvested
awarded deferred share salary and discretionary deferred shares will vest immediately.
The service contracts also permit the Group to put the Executive Director on garden leave for a period of up to four months from the
intended date of termination, and during such time the Executive Director will receive a pro-rata portion of deferred share salary. The
Executive Director is also subject to non-compete provisions for up to six months after the termination of his/her employment, which
might be extended to two years in certain circumstances.
(3) Termination of Non-Executive Directors’ appointments
Each Non-Executive Director is required to submit himself or herself for annual re-election at the AGM.
The letters of appointment for Non-Executive Directors provide for a one-month notice period although the Group may terminate the
appointment with immediate effect without notice or pay in lieu of notice if the Non-Executive Director has committed any material
breach or non-observance of his or her obligations to the Group is guilty of fraud or dishonesty, brings the Group or him/herself into
disrepute or is disqualified as acting as a Director, among other circumstances. Upon termination, the only remuneration a Non-
Executive Director is entitled to is accrued fees as at the date of termination together with reimbursement of properly incurred expenses
incurred prior to the termination date.
Consideration of employment conditions elsewhere in the Group
The Remuneration Committee does not formally consult employees when drawing up Directors’ Remuneration Policy but in
determining an Executive Director’s remuneration, the Remuneration Committee considers:
(i) the pay and employment conditions of senior management including executive management;
(ii) any changes in pay and employment conditions across the Group as a whole;
(iii) whether employees across the Group are personally satisfied with the way they are remunerated; and
(iv) any feedback received during the year from the Human Resources department, executive management and other employees on
the executive remuneration structure.
Differences in the remuneration policy for executives relative to the broader employee population
For a London Stock Exchange listed company of our size and depth making a meaningful impact on the Georgian economy, our
Executive Directors must have the skills, experience, work ethic and attitude required to successfully execute our strategy, manage
evolving public policy demands, meet our objectives and create value for shareholders over the long term. In order to recruit and retain
this talent, we assess the value of remuneration against other FTSE companies of similar size and sector listed in the UK.
The principles of remuneration for the Executive Directors and executive management are aligned; remuneration is designed to align
remuneration with the performance of the Group and shareholder experience. In particular, the remuneration structure of the highest
executive manager is close to that of the Executive Directors’ (although among other matters, the vesting pattern may vary and a
modest cash salary is included for some).
Further, the majority of compensation delivered to executive management is also in shares or phantom shares; however, most are also
entitled to a modest cash salary.
The compensation of employees in the Group, other than Executive Directors and executive management is benchmarked against
the Georgian labour market, as this is the most relevant comparator. Our employees are offered competitive remuneration packages,
which include benefits and the opportunity to participate in the pension scheme on the same terms as applicable to Executive Directors
and executive management. Bonuses are usually paid in cash. The Remuneration Committee are regularly updated by the Human
Resources department in respect to pay and conditions of the wider workforce.
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Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Directors’ Remuneration Report continued
Non-Executive Directors’ remuneration policy
The table below sets out our Policy for the operation of Non-Executive Directors’ fees and benefits of Georgia Capital PLC. Each
Non-Executive Director also serves as a member of the Supervisory Board of JSC Georgia Capital. The fees for Non-Executive
Directors are currently the same as those disclosed in the prospectus of the Group. The Non-Executive Director fees stated below
will apply in each year that the Policy operates from the date of approval of the Policy.
Component Purpose and link to strategy Operation Opportunity
Base cash fee • Attract and retain
high-performing Non-
Executive Directors
with the requisite
skills, knowledge,
experience,
independence and
other attributes to add
value to the Group.
• Cash payment on a quarterly basis.
• The fee for the Chairman will be
determined by the Remuneration
Committee. Fees for Non-Executive
Directors will be determined by
the Board.
• The amount of remuneration may be
reviewed from time to time by the
above, which may take into account
the time commitment, responsibilities
and the technical skills required
to make a valuable contribution
to the Board, and by reference
to comparators, benchmarking,
results of the annual review and
other guidance. The Board also
reserves the right, in their discretion,
to amend and vary the fees if there
are genuinely unforeseen and
exceptional circumstances which
necessitate such review and in such
circumstances any significant increase
shall be the minimum reasonably
required. The Board reserves the
right to structure the Non-Executive
Directors’ fee differently in its
absolute discretion.
• Non-Executive Directors are
reimbursed for reasonable business
expenses, including travel and
accommodation, which are incurred
in the course of carrying out duties.
• The maximum aggregate Georgia
Capital PLC fees for all Non-Executive
Directors which can be paid under
Georgia Capital PLC’s Articles of
Association is GBP 750,000.
• A specific maximum has not been set
for the individual base cash fee.
• The Senior Independent Non-
Executive Director receives a higher
base fee which reflects the extra time,
commitment and responsibility.
• The Chairman receives a fee which
reflects the extra time commitment
and responsibility. However, no
Chairman’s fee is received when
the Chairman and CEO roles
are combined.
• The fees paid to each Non-Executive
Director will be disclosed in the
relevant year’s Annual Report.
Committee fees • Compensate for
additional time
spent discharging
Committee duties.
• Cash payment on a quarterly basis.
• The amount of remuneration for
Committee membership is reviewed
as above.
• The Chairman does not receive
Committee fees.
The service agreements and letters of appointment are available for inspection at the Company’s registered office.
Signed on behalf of the Remuneration Committee and the Board of Directors.
Neil Janin
Chair of the Remuneration Committee
20 March 2025
“ Developing and
recruiting the
talent pipeline for
a unique group.”
Committee Meeting
membership attendance
1
Neil Janin (Chairman) 2/2
Massimo Gesua’ sive Salvadori 2/2
Irakli Gilauri 2/2
Neil Janin
Chairman of the Nomination
Committee
Nomination Committee Report
Dear Shareholders
I am delighted to present the Nomination Committee’s
(“the Committee”) report for the year ended 31 December 2024.
The Committee’s focus during the year was on ensuring that
following the reduction in the size of the Board, the three Board
Committees were properly and effectively constituted and that
a replacement designated Non-Executive Director for employee
engagement was identified.
The Committee’s principal responsibility is to lead the process
of appointing Directors to the Board and recruiting into other
senior management positions. The Committee is satisfied that
the composition of the Board and all Board Committees overall
remains appropriate with regard to the successful delivery of the
Company’s strategic and financial objectives.
The Committee continues to regularly monitor the ongoing
combination of the roles of Chairman and CEO and is satisfied
that this remains the best structure for the Company for the time
being. Mr Gilauri recuses himself from any discussion on this
subject. A key consideration of the Committee is ensuring that
significant attention is consistently given to succession planning
for the roles of Chairman and CEO, as well as for all the other
senior management positions throughout the Group.
Last year, the Board carried out an in-depth evaluation,
discussed further later in this report, and is satisfied that the
size and composition of the Board is appropriate for the Group
and that it comprises the right combination of skills, experience
and knowledge. The Committee considers that we continue to
be able to attract and retain strong leaders across our portfolio
companies. Succession planning, aligned to the Group’s strategy,
is an ongoing priority for the Committee at both Board and senior
management level.
More details on the matters above are set out later in this report.
Neil Janin
Chairman of the Nomination Committee
20 March 2025
1 The number of meetings of the Committee attended by each member during the year,
together with the number of meetings they were entitled to attend.
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Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
The role of the Nomination Committee
The role of the Nomination Committee is to ensure that the
Board is comprised of individuals best able to discharge
the responsibilities of Directors, having regard to the highest
standards of governance, the strategic direction of the Company
and the Board’s Diversity Policy.
The Committee also helps to ensure that the Company
appoints excellent executive managers within our portfolio of
companies, and who are capable of successfully executing our
strategic objectives.
In summary, the key responsibilities of the Nomination
Committee include:
• regular review of the composition of the Board and its
Committees to ensure they are appropriately constituted and
balanced in terms of diversity of gender, social and ethnic
backgrounds, cognitive and personal strengths, and balance
in terms of skills, experience, independence and knowledge;
• responsibility for identifying and nominating candidates for the
approval by the Board to fill Board vacancies as and when
they arise;
• giving full consideration to succession planning for
Directors, including the Chairman and CEO and other
senior management, taking into account the challenges and
opportunities facing the Company, and the skills and expertise
needed on the Board in the future;
• keeping under review the Group’s leadership needs, both
executive and non-executive, and ensuring plans are in place
for senior management succession, with a view to ensuring
the continued ability of the Company to compete effectively in
the marketplace; and
• making recommendations to the Board concerning the
re-election by shareholders of Directors under the annual
re-election provisions of the UK Corporate Governance
Code (“the Code”), having due regard to their performance
and ability to continue to contribute to the Board in light
of the knowledge, skills and experience required and their
independence, bearing in mind the need for progressive
refreshing of the Board.
The Committee regularly reviews its Terms of Reference, and the
Committee remains satisfied that these continue to be aligned to
the Code and best practice, and appropriate for the Company.
The full Terms of Reference of the Committee can be found on
our website here:
https://georgiacapital.ge/governance/cgf/terms.
Composition and meeting attendance
The composition of the Committee and the members’ meeting
attendance for the year 2024 are set out in the Board and
Committee meeting attendance table on page 127, and the
skills and experience each member contributes can be found
on pages 122 to 123. The Committee is comprised of Massimo
Gesua’ sive Salvadori, Irakli Gilauri and myself, as Committee
Chair. There have been no changes to the composition of
the Committee during the last 12 months. From time-to-time
members of management may be invited to meetings to provide
a fuller picture and deeper level of insight into key issues
and developments.
The Committee also reviewed the time commitment of the Non-
Executive Directors, and considered any external directorships,
length of service as well as independence of character and
integrity. Alongside these factors the Committee took into
account the Company’s strategic direction and the required
skills and competencies required of the Board as a whole. The
Committee concluded that it was happy to recommend that each
Non-Executive Director and the Executive Director be re-elected
at the 2025 AGM.
With the continuing service of David Morrison (Chair), Massimo
Gesua’ sive Salvadori and Maria Chatti-Gautier (see pages
122 to 123 for a description of their experience and reason
for appointment), the Committee continues to consider that
the financial expertise of the Audit and Valuation Committee’s
members is recent and relevant.
The tenure for David Morrison and Massimo Gesua’ sive
Salvadori is seven years as at the date of this report (appointed
in February 2018), Maria Chatti-Gautier’s tenure is five years
(appointed in March 2020) and my tenure is two years (appointed
in October 2022). As part of a wider assessment, the Committee
noted that David Morrison and I previously held roles as Directors
of BGEO Group PLC. The business of Georgia Capital demerged
from BGEO Group PLC, into a new group which listed in May
2018. Georgia Capital is a platform for buying, developing and
selling businesses in Georgia. Importantly therefore, the nature
of the business of Georgia Capital is substantially different to
that of BGEO Group PLC at the date of the demerger, which
primarily consisted of the regulated bank. I recused myself from
the Committee’s consideration of this matter but I can report that
the Committee concluded that from our previous long careers,
Mr Morrison and I have very strong experience, knowledge
and authority to demonstrate objective judgement and provide
constructive challenge among the Board members for this
Company’s business as an investment platform. The Committee
has also noted the continuing contribution of all Board members
in Board meetings and outside the meetings. Taking all the
foregoing into consideration, the Committee determines that all
Board members are independent in character and judgement.
You can read more on the balance of the Board in the section on
“Board size, composition, tenure and independence” on page 124.
Role of the Chairman of the Board
The Committee keeps the current practice of combining the roles
of Chairman and CEO and remains satisfied that, notwithstanding
this is not compliant with provision 9 of the Code, the continuing
combination of the two roles (i.e. the current structure) best
serves our Company and recommends that it should continue for
the time being. Mr Gilauri did not participate in these discussions.
The Committee and the Board will keep the structure under
review, and will ensure succession planning is always a key
consideration of ongoing reviews. Shareholders have, for the
last six years, been extremely supportive of this structure and
from our regular discussions with shareholders, we believe this
continues to be the case. The basis for this conclusion, and
our shareholder engagement on this matter, is set out in the
Directors’ Governance Statement on page 120.
We remain committed to having a Board that is diverse in all
respects and the Committee will continue to examine ways in
which we can build on its current diversity. We support the FTSE
Women Leaders Review regarding gender diversity, and the
Committee is working to improve the gender balance of those
in senior management positions and their direct reports, as
described in the Resources and Responsibilities section on page
76 and in the Sustainability Report.
Georgia Capital recognises that it does not currently satisfy the
UKLR 22.2 target, given that less than 40% of the individuals on
our Board are women and no woman occupies the position of
Chair, SID or CEO.
Over the last few years, we have made a concerted effort to
reduce the number of non-executive directors on our Board and
have succeeded in meaningfully reducing the cost of the Board
without compromising on its quality. Given these recent changes,
we believe it to be in our shareholders’ best interests to proceed
on further Board changes with caution. We strongly believe
that diversity targets are not just an end goal, but a continuous
journey. Our long-term ambition is to increase diversity on
our Board, in all its forms, to ensure a wider representation of
both gender and the society in which we operate. With David
Morrison’s and Massimo Gesua’ sive Salvadori’s tenures as
Independent Non-Executive Directors expiring in two years,
the Committee will continue to ensure that diversity is always
considered when drawing up candidate shortlists, with the aim
of increasing the representation of women on the Board, and in
senior Board positions, and achieving the targets under the UK
Listing Rules.
On 31 December 2024, Georgia Capital, as an investment
holding company, had a total of 45 employees, of which
25 are female, and 20 are male. You can view our detailed
gender diversity statistics on page 76 in the Resources and
Responsibilities section and in the Sustainability Report.
Inclusion and diversity
Our Board embraces diversity in all its forms and the Board
understands the importance of developing a diverse pipeline for
succession to senior management and the Board.
The Committee and the Board recognise the role that diversity
plays in promoting balanced decision-making, which aligns
with our values and strategy. Diversity of skills, background,
experience, knowledge, outlook, approach, gender, nationality
and ethnicity, amongst other factors, are taken into consideration
when seeking to appoint a new director to the Board. Above all,
any Board appointment will always be based on merit.
Equally, we are clear that diversity of outlook and approach, while
inevitably difficult to measure, is a key determinant in maintaining
an effective Board. We are supportive of the ambition shown in
recent reviews on diversity, including the Parker Review regarding
ethnic diversity, and the Board is aligned with recommendations
for ethnic minorities on UK boards, with the inclusion of Board
members Maria Chatti-Gautier, of Syrian (Middle Eastern) heritage
and Irakli Gilauri, an ethnic Georgian. The Committees and individual
members of the Board wish to note that, given that the Board also
consists of Massimo Gesua’ sive Salvadori, who is Jewish and
Italian, David Morrison, a US National, and Neil Janin, a Canadian,
the Board’s diversity extends substantially beyond ethnicity alone.
It is recognised that ethnic heritage draws upon a number of
factors in tandem, and that the Group is primarily based in
Georgia, where the Georgian majority ethnic group may not
always fit neatly into UK-centric diversity metrics. Georgian
(Kartuli) is the only prominent language of the Kartvelian language
family, and has its own script, and the majority religion in Georgia
is the Orthodox Church of Georgia. Georgia sits geographically
and culturally at the intersection of Europe, Asia and the Middle
East, and Georgians tend to identify themselves as a distinct
indigenous group of the Caucasus.
Diversity is a core feature of the Committee’s work and as such,
is an integral part of the Board recruitment process as described
in more detail elsewhere in this report, and is part of the search
specification agreed with external agents.
Our gender identity and ethnicity data in accordance with UKLR 22.2 at 31 December 2024 was as follows. The data was collected
through self-reporting by the Directors and management:
Number of
Board members
Percentage of
the Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)
Number in
executive
management
Percentage
of executive
management
Men 4 80% 3 6 66.66%
Women 1 20% – 3 33.33%
Non-binary – – – – –
Not specified/prefer not to say – – – – –
Notes:
• The CFO is a member of the management team but not a member of the Board.
• The role of the Chair and CEO is combined.
Nomination Committee Report continued
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Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Table for reporting on ethnic background:
Number
of Board
members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)
Number in
executive
management
Percentage
of executive
management
White British or other White (including minority-white groups) 3 60% 1 – –
Mixed/Multiple Ethnic Groups – – – – –
Asian/Asian British – – – – –
Black/African/Caribbean/Black British – – – – –
Other ethnic group, including Arab 2 40% 1 9 100%
Not specified/prefer not to say – – – – –
The Committee is responsible for maintaining and assessing the
effectiveness of the Company’s Diversity Policy and reviews this
on an ongoing basis. You can read more about the established
diverse culture and related activities during 2024 in the Resources
and Responsibilities section on pages 76 to 92 and in the
Sustainability Report.
Succession planning and talent development
Succession planning at both the Board and senior management
levels remained a key areas of focus for the Committee during the
year. We have previously reported on the creation of opportunities
to develop high-performing individuals and to build diversity in
senior roles across the business. We continue to build on this
initiative and have developed a talented pool of employees within
Georgia Capital that we believe is the best way to ensure a
healthy and diverse pipeline of future leaders of the Company in
line with the Group’s strategy.
In addition, the Company pursues initiatives aimed at developing
the entrepreneurial business leaders that Georgia Capital will
require as it grows.
Training and Director induction
We are committed to the continuing development of our Directors
in order that they may build on their expertise and maintain a
detailed understanding of the business and the markets in which
our investments operate. All of our Directors participated in
development sessions and presentations. The Group Corporate
Secretary provided briefings as appropriate on regulatory and
governance developments, including on changes in the UK
Listing Rules and on stakeholder views on diversity.
Each Director, upon appointment, receives a tailored induction
to the Company and its various investments over the first six
months of appointment, with the purpose of:
• building an understanding of the nature of the Company, its
business and its markets;
• building a link with the Company’s people;
• building an understanding of the Company’s main
relationships; and
• understanding the obligations and responsibilities of a Director
of a UK main market-listed company.
As part of the induction programme, each Director meets
members of executive management and receives information
about the role of the Board and individual Directors, each Board
Committee and the powers delegated to these Committees.
The new Director is also advised of the legal and other duties
and obligations of a Director of a listed company.
Board and Committee evaluation
In 2023, the Company engaged Amandla to conduct an in-depth
evaluation of Georgia Capital’s Board comprising a multi-faceted
approach. A further Board evaluation is planned during 2026.
Last year’s evaluation included online interviews with the entire
Board, feedback reports, individual assessments for each Board
member, in-person group coaching and observation of Board
meetings. Amandla considers that the Board is functioning
adeptly in terms of governance, supervision and oversight.
Amandla observed that the Board is intrinsically tied to the
commitment and longevity of its members, reflecting a profound
dedication to the Company’s mission. With the transformation
into a more streamlined Board, Amandla reported the focus on
maintenance of a rich diversity of experiences, a profound respect
among members, and a commitment to progressive, assertive
debate. Amandla concluded that the Board is currently operating
effectively. Its potential could be maximised by affording Board
members an uninterrupted period of collaboration and avoiding a
revolving door of further changes. The Board’s members respect
one another and are keen to steer the necessary transformations
essential for creating value in a challenging region.
The Chairmanship was described as commendable, and Amandla
commented that last year’s reduction in Board size augured well
for agile decision-making. The Board reflects diverse thoughts and
experiences in line with industry standards. In terms of oversight,
Amandla stated that the Board is fit for purpose. Amandla had
previously worked with the Chairman and other senior executives
within Georgia Capital. The assessment included a series of
qualitative diagnostic interviews designed to ascertain from each
of the Board members several different components:
1. The individual strengths of each member.
2. The areas which other Board members felt there could be a
greater contribution.
3. The dynamics in the team that allowed for healthy challenge
and debate.
4. The areas that might need attention.
Given his role as Chairman and CEO, Irakli Gilauri’s performance
was also reviewed by the Remuneration Committee and the
Senior Independent Director. In addition, the full Board considers
the Remuneration Committee’s recommendations.
Nomination Committee Report continued Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable laws
and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, the Directors
have prepared the financial statements in accordance with the
applicable UK-adopted international accounting standards.
Under company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or
loss of the company for that period.
In preparing the financial statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• state whether applicable UK-adopted international accounting
standards have been followed, subject to any material
departures disclosed and explained in the financial statements;
• make judgements and accounting estimates that are
reasonable and prudent; and
• prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for safeguarding the assets of
the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain the
company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Company and enable
them to ensure that the financial statements and the Directors’
Remuneration Report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity
of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
We confirm that to the best of our knowledge:
• the Company financial statements, which have been prepared
in accordance with UK-adopted international accounting
standards, give a true and fair view of the assets, liabilities,
financial position and loss of the Company; and
• the Annual Report, including the Strategic Report includes
a fair review of the development and performance of the
business and the position of the Company, together with a
description of the principal risks and uncertainties that it faces.
We consider the Annual Report and Accounts, taken as a whole,
to be fair, balanced and understandable, and provides the
information necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
By order of the Board
Irakli Gilauri
Chairman and CEO
20 March 2025
174 175
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
At the AGM of the Company on 20 May 2024, the Directors
were given the power a) to allot shares up to a maximum nominal
amount of GBP 142,246.66 (representing 14,224,666 ordinary
shares, approximately one-third of the Company’s issued share
capital as at 21 March 2024), and b) to allot equity securities up
to a further aggregate nominal amount of GBP 142,246.66 in
connection with an offer by way of a rights issue: (i) to holders
of shares in proportion (as nearly as may be practicable) to their
existing holdings; and (ii) to holders of other equity securities as
required by the rights of those securities or, if the Board consider
it necessary, as permitted by the rights of those securities,
such amount to be reduced by the aggregate nominal amount
of shares allotted or rights to subscribe for or to convert any
securities into shares granted under paragraph (a), and subject
to the Board having the right to make such exclusions or other
arrangements as they may deem necessary or expedient in
relation to treasury shares, fractional entitlements, record dates
or legal, regulatory or practical problems in, or under the laws of,
any territory. These authorities will expire at the conclusion of the
2025 AGM (or, if earlier, at the close of business on 20 August
2025) and approval will be sought at that meeting to renew a
similar authority for a further year.
The Directors did not allot any shares during 2024.
Under the US$ 15 million share buyback and cancellation
programme announced in October 2023, the Company
purchased 0.5 million shares, corresponding to US$ 6.7 million,
during the first quarter of 2024. In May 2024, GCAP launched
a US$ 25 million share buyback and cancellation programme,
which was subsequently increased by an additional US$ 15
million in August 2024. In December 2024, the Company
launched another US$ 25 million share buyback and cancellation
programme. Under the above programmes in total, the Company
repurchased 3.7 million of its own shares during the financial year
ended 31 December 2024, representing a nominal value of US$
48.1 million and an aggregate consideration paid by Georgia
Capital PLC of GBP 37.3 million on the UK trading market. The
shares cancelled represent 9.2% of the shares in issue and 9.3%
of the shares in issue, excluding treasury shares.
The purpose of both buyback programmes was to reduce
Georgia Capital PLC’s number of outstanding ordinary shares.
None of the ordinary shares carry any special rights with regard to
control of Georgia Capital. There are no restrictions on transfers
of shares other than:
• certain restrictions, which may from time to time be imposed
by laws or regulations such as those relating to insider dealing
or pursuant to the Group’s Inside Information Disclosure
Policy;
• pursuant to the Company’s Securities Dealing Policy and
Code, whereby the Directors and designated employees
require approval to deal in Georgia Capital’s shares or cannot
deal in certain periods; and
• where a person with an interest in the Company’s shares
has been served with a disclosure notice and has failed to
provide the Company with information concerning interests
in those shares.
Articles of Association
Georgia Capital PLC’s (the “Company”) Articles of Association
may only be amended by a special resolution at a general
meeting of the shareholders. The process for the appointment
and removal of Directors is included in the Company’s Articles
of Association. Georgia Capital PLC’s Articles of Association are
available on the Company’s website:
https://georgiacapital.ge/governance/cgf/articles.
Share capital and rights attaching to the shares
Details of the movements in share capital during the year are
provided in Note 8 to the financial statements on page 211 of
this Annual Report. As at the last practicable date of 14 March
2025, there was a single class of 37,980,419 ordinary shares
of 1 pence each in issue, each with one vote. The rights and
obligations attaching to the Company’s ordinary shares are set
out in its Articles of Association. Holders of ordinary shares are
entitled, subject to any applicable law and the Company’s Articles
of Association, to:
• have shareholder documents made available to them including
notice of any general meetings;
• attend, speak and exercise voting rights at general meetings,
either in person or by proxy; and
• participate in any distribution of income or capital.
The Company is permitted to make market purchases of its own
shares provided it is duly authorised by its members in a general
meeting and subject to and in accordance with section 701 of
the Companies Act 2006.
Authority was given at the AGM of the Company on 20 May
2024 for the Company to purchase up to 6,396,832 shares
(approximately 14.99% of Georgia Capital’s issued ordinary
share capital excluding treasury shares as at 21 March 2024)
on-market. This authority will expire at the conclusion of the
Company’s AGM in 2025 or, if earlier, the close of business on
20 June 2025.
A renewal of the authority to make market purchases will be
sought from shareholders at each AGM of the Company.
Purchases of ordinary shares will be made within guidelines
established from time to time by the Board. Any purchase of
ordinary shares would be made only out of the available cash
resources of the Company. Ordinary shares purchased by the
Company may be held in treasury or cancelled.
Authority was given at the AGM of the Company on 20 May
2024 for the Company to purchase up to 14,935,899 shares
(approximately one-third of Georgia Capital’s issued ordinary
share capital excluding treasury shares as at 21 March 2024)
off-market. This authority will expire at the conclusion of the
Company’s AGM in 2025 or, if earlier, the close of business on
20 June 2025.
A renewal of the authority to make off-market purchases may
be sought from shareholders at future AGMs of the Company.
Purchases of ordinary shares will be made within guidelines
established from time to time by the Board. Any purchase of
ordinary shares would be made only out of the available cash
resources of the Company. Ordinary shares purchased by the
Company may be held in treasury or cancelled.
The Directors present their Annual Report and the audited
financial statements for the year ended 31 December 2024.
Please refer to the Corporate Governance Statement for
further information on how we applied the UK Corporate
Governance Code.
Strategic Report
The Strategic Report on pages 4 to 117 was approved by the
Board of Directors on 20 March 2025 and signed on its behalf by
Irakli Gilauri, Chairman and Chief Executive Officer.
Management Report
This Directors’ Report together with the Strategic Report on
pages 4 to 117 form the Management Report for the basis of
DTR 4.1.8 R.
Directors
The names and biographies of the current Directors of the
Company are shown on pages 122 to 123 and include their
relevant experience. In accordance with the UK Corporate
Governance Code, all Directors will retire and stand for re-election
at the AGM.
The Directors’ beneficial interests in ordinary shares of Georgia
Capital as at 31 December 2024 are shown on page 154
together with any changes in those interests between the
financial year end and the date on which this Directors’ Report
was approved by the Board.
Powers of Directors
The Directors may exercise all powers of the Company subject
to applicable legislation and regulations and Georgia Capital’s
Articles of Association.
Information contained elsewhere in the Annual Report
Information required to be included in this Directors’ Report can
be found elsewhere in the Annual Report as indicated in the table
below and is incorporated into this report by reference:
Directors’ Report
Information Location in Annual Report
Future developments Pages 4-117
Going Concern Statement Page 63
Viability Statement Pages 63-64
Risk management Pages 60-64
Principal risks and uncertainties Pages 65-74
Directors’ Governance Statement Pages 120-121
The Board of Directors Pages 122-123
Audit and Valuation Committee report Pages 134-141
Remuneration Committee report Pages 142-168
Summary of Remuneration Policy Page 158
Nomination Committee report Pages 169-172
Related party disclosures Page 224
Greenhouse gas emissions Page 83
Employee matters Pages 79-81
Environmental matters Pages 81-84
Share capital Page 211
Engagement with suppliers, customers and others in a business
relationship with the Company
Page 128
Information on the Group’s financial risk management objectives
and policies, and its exposure to credit risk, foreign currency risk
and financial instruments
Pages 213-216
Research and development As an investment holding company, GCAP does not engage
in research and development activities comparable with, for
example, manufacturing companies. Instead, research and
development activities are carried out separately by each of our
portfolio companies. This sub-report is therefore omitted.
176 177
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Statement of disclosure of information to the auditor
We, the Directors confirm that, so far as we are aware, there is
no relevant audit information of which the Company’s auditors
are unaware and we have taken all steps that we reasonably
believe should be taken as Directors in order to make ourselves
aware of any relevant audit information and to establish that the
Company’s statutory auditors are aware of such information.
The Directors’ Report on pages 174 to 177 was approved by the
Board of Directors on 20 March 2025 and signed on its behalf by:
Michael Oliver
Company Secretary
20 March 2025
Code of Conduct and Ethics
The Board has adopted a Code of Conduct and Ethics relating
to the lawful and ethical conduct of the business, supported by
the Company’s core values. The Code of Conduct and Ethics
has been communicated to all Directors and employees, all of
whom are expected to observe high standards of integrity and
fair dealing in relation to customers, staff and regulators in the
communities in which the Company operates. Our Code of
Conduct and Ethics is available on our website:
https://georgiacapital.ge/governance/cgf/policies.
Independent auditors
A resolution to re-appoint PricewaterhouseCoopers LLP as
auditors of Georgia Capital will be put to shareholders at the
upcoming AGM.
Major interests in shares
The table below lists shareholders with voting rights of more than
3% as of 31 December 2024.
Shareholder
Number of
voting rights
% of
voting rights
JSC Georgia Capital Executive
Equity Compensation Trust 4,002,519 10.13%
Allan Gray Proprietary Ltd 3,237,056 8.19%
Gemsstock Ltd
1
3,195,075 8.08%
Lazard Asset Management LLC 2,825,749 7.15%
Eaton Vance Management 1,925,244 4.87%
Coeli Frontier Markets AB 1,875,345 4.75%
Irakli Gilauri 1,848,104 4.68%
Firebird Management LLC 1,190,178 3.01%
For the period 1 January 2025 up to and including 14 March
2025 (the latest practicable date for inclusion in this report),
the Company has received the following notifications pursuant
to Rule 5 of the DTRs:
• Allan Gray Proprietary Ltd held a total of 3,087,487 ordinary
shares in the Company, representing approximately 7.99%
of the Georgia Capital’s issued ordinary share capital.
• The JSC Georgia Capital Executive Equity Compensation
Trust holds 3,315,734 number of voting rights, representing
8.66% of the Company’s issued ordinary share capital.
Additionally, the Company had received notification, that
Mr Irakli Gilauri directly held a total of 2,131,709 ordinary
shares in the Company, representing approximately 5.60%
of Georgia Capital’s issued ordinary share capital.
It should be noted that these holdings are likely to have changed
since the Company was notified. However, notification of any
change is not required until the next notifiable threshold is
crossed. The respective regulatory filings by shareholders are
available on the Company’s website and the LSE website.
Post-balance sheet events
Please see Note 15 to the financial statements, for any
post-balance sheet activities.
Directors’ Report continued
There are no restrictions on exercising voting rights save in
situations where Georgia Capital is legally entitled to impose
such restriction (for example, under the Articles of Association
where amounts remain unpaid in the shares after request, or the
holder is otherwise in default of an obligation to Georgia Capital).
Georgia Capital is not aware of any arrangements between
shareholders that may result in restrictions on the transfer of
securities or voting rights.
Results and dividends
The Company made a profit before taxation of GEL 362.3 million.
The Company’s profit after taxation for the year was
GEL 362.3 million.
The Company may by ordinary resolution declare dividends
provided that no such dividend shall exceed the amount
recommended by the Company’s Directors. The Directors
may also pay such interim dividends as appear to be justified
by the profits of the Company available for distribution.
As the Company is a holding company, Georgia Capital
relies primarily on dividends and other statutorily (if any) and
contractually permissible payments from its subsidiaries to
generate the funds necessary to meet its obligations and pay
dividends to its shareholders.
The Company expects to be a cash-generative business with the
opportunity for attractive capital investment to enhance its growth
prospects, both through organic investments and acquisitions.
The Board intends to pursue a capital returns policy that reflects
this strategy whilst also delivering shareholders high-quality,
long-term dividend growth, through share buybacks or other
potential exits. However, the Board may periodically reassess
the Company’s dividend policy and the payment of dividends
(or quantum of the same) will depend on the Group’s existing
and future financial condition, results of operations, capital
requirements, investment and divestment cycles, liquidity needs
and other matters the Board considers relevant from time to time.
AGM
The arrangements for the Company’s next AGM and details of
the resolutions to be proposed, together with explanatory notes
will, be set out in the Notice of AGM to be published on the
Company’s website: https://georgiacapital.ge/.
Equity Settled Option Plan (ESOP)
The Company operates an EBT (the “ESOP”), which holds
ordinary shares in trust for the benefit of employees and former
employees of the Group, and their dependents, and which is used
in conjunction with the Group’s employee share schemes. Whilst
ordinary shares are held in the EBT, the voting rights in respect of
these ordinary shares are exercised by the trustees of the EBT.
In accordance with the ESOP documentation, Apex Group
Fiduciary Services Limited has waived its right to receive any
dividends. This waiver will remain in place indefinitely, unless
otherwise instructed by Georgia Capital. New shares issued in
satisfaction of deferred share compensation from the time of
the Company’s listing on the LSE will not exceed 10% of the
Company’s ordinary share capital over any ten-year period.
Conflicts of interest
In accordance with the Companies Act 2006, the Directors have
adopted a policy and procedure for disclosure and authorisation
(if appropriate) of conflicts of interest, and these have been
followed during 2024. The Company’s Articles of Association
also contain provisions to allow the Directors to authorise
potential conflicts of interest so that a Director is not in breach
of his or her duty under company law.
Directors’ remuneration
Directors’ fees are determined by the Remuneration Committee
from time to time. The remuneration of Directors must be
in accordance with the Directors’ Remuneration Policy. The
Remuneration Policy was put to the shareholders for approval
at the 2024 AGM and remuneration is determined in accordance
with that Policy.
The fees paid to the Non-Executive Directors in 2024 pursuant
to their letters of appointment are shown on page 154. The fees
paid to our sole Executive Director in 2024 pursuant to his service
agreements with Georgia Capital are shown on pages 145 to 146.
Indemnity
Subject to applicable legislation, every current and former
Director or other officer of the Company (other than any person
engaged by the Company as auditor) shall be indemnified by the
Company against (broadly) any liability in relation to the Company,
other than (broadly) any liability to the Company or a member
of the Company, or any criminal or regulatory fine. In addition,
the Company has put in place Directors’ and Officers’ liability
insurance. Such indemnities were in force throughout the financial
period and will remain in force as at the date of this Annual Report.
Related party disclosures
Details of related party disclosures are set out in Note 14 to the
financial statements on page 224 of this Annual Report.
Significant agreements
The Company is not party to any significant agreements that
take effect, alter or terminate upon a change of control of the
Company. The Company is not aware of any agreements between
holders of its ordinary shares that may result in restrictions on the
transfer of its ordinary shares or on voting rights.
Presence outside Georgia
The Company has a registered office in the United Kingdom:
see page 228.
Employee disclosures
Our disclosures relating to the number of women in senior
management, employee engagement and our policies on human
rights, including employees with a disability, are included in the
section “Employee matters” on pages 79 to 81.
Political donations
The Company did not make any political donations or
expenditure during 2024. Authority to make political donations
and incur political expenditure will be put to shareholder vote at
the 2025 AGM.
1 Omits holdings through certain financial instruments.
179178
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
In this section
180 Independent Auditors’ Report
186 Statement of Financial Position
187 Statement of Profit or Loss and Other
Comprehensive Income
188 Statement of Changes in Equity
189 Statement of Cash Flows
190 Notes to Financial Statements
Financial
Statements
Location: Kolkheti National Park, Georgia
Image Source: https://nationalparks.ge/
180 181
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Independent Auditors’ Report
to the members of Georgia Capital PLC
Report on the audit of the financial statements
Opinion
In our opinion, Georgia Capital PLC’s financial statements:
•
give a true and fair view of the state of the company’s affairs as at 31 December 2024 and of its profit and cash flows for the year
then ended;
•
have been properly prepared in accordance with UK-adopted international accounting standards; and
•
have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report, which comprise: Statement of Financial Position as at
31 December 2024; the Statement of Profit or Loss and Other Comprehensive Income, the Statement of Changes in Equity and the
Statement of Cash Flows for the year then ended; and the notes to the financial statements, comprising material accounting policy
information and other explanatory information.
Our opinion is consistent with our reporting to the Audit and Valuation Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of
our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in note 9 – Auditors’ remuneration, we have provided no non-audit services to the company or its controlled
undertakings in the period under audit.
Our audit approach
Context
Georgia Capital PLC is a company listed on the London Stock Exchange which invests in and develops businesses within Georgia.
It holds 100% of the share capital of JSC Georgia Capital. Its primary operations are in Georgia. In planning for our audit, we met with
the Audit and Valuation Committee and members of management to discuss and understand significant changes to the business
during the year, and to understand their perspectives on associated business risks. We used this insight when forming our views
regarding the business, as part of developing our audit plan and when scoping and performing our audit procedures.
Overview
Audit scope
•
The Annual Report and financial statements are prepared as an investment entity under IFRS 10. We have audited 100%
of the investment portfolio held by Georgia Capital PLC through JSC Georgia Capital and Georgia Beverage Holding Limited.
This represents 96% of the equity investments at fair value balance.
•
We instructed PwC Georgia to perform audit procedures on inputs to the valuation models of the investment portfolio.
We performed audit procedures over the assumptions and methodologies applied in developing the valuation of the
investment portfolio.
•
We instructed PwC Georgia to perform audit procedures over valuation model inputs and other balances pertaining to the equity
investments at fair value balance.
Key audit matters
•
Valuation of equity investments at fair value.
Materiality
•
Overall materiality: 36,090,130 (2023: 33,785,000) based on 1% of net assets.
•
Performance materiality: 27,067,598 (2023: 25,338,000).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures
thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit. The key audit matters below are consistent with last year.
Key audit matter How our audit addressed the key audit matter
Valuation of equity investments at fair value
The equity investments at fair value balance
presented in the Statement of Financial Position
is the Company’s investment in its subsidiaries,
predominantly comprised of the fair value
of the investment portfolio. The investment
portfolio includes unquoted investments. The
accounting policy for this balance is included
in note 3 to the financial statements. The
breakdown of the balance is disclosed in note
5 to the financial statements.
In valuing the investment portfolio, key
assumptions include discount rates, future
growth projections, control premia, illiquidity
discounts and the application of weighted
averages to different valuation approaches.
The inputs in the earnings multiples models
include observable data, such as the earnings
multiples of comparable companies to the
relevant investment, and unobservable data,
such as forecast earnings for the investments.
In discounted cash flow models, unobservable
inputs are the projected cash flows of the
relevant investments and the discount
rates applied.
The valuation of equity investments at fair
value was identified as a key audit matter given
the valuation is inherently subjective due to,
among other factors, the individual nature of
each investment and the expected future cash
flows. The significance of the estimates and
judgements involved, coupled with the fact that
only a small percentage difference in individual
investment valuations, when aggregated, could
result in a material misstatement, warranted
specific audit focus in this area.
We obtained an understanding of management’s processes and controls for determining
the fair value of equity investments, including understanding management’s interactions with
Kroll as management’s external experts. We performed the following procedures over the
valuation of equity investments at fair value as at 31 December 2024:
•
We assessed the competence and capabilities of management’s expertise and verified
their qualifications.
•
We also assessed their objectivity and independence by discussing the scope of their work
and reviewing the terms of their engagement for unusual terms or fee arrangements.
Based on this work, we are satisfied that Kroll were independent and competent, and the
scope of their work was appropriate.
•
In conjunction with our auditor’s valuation experts, the engagement team held discussions with
management and Kroll to challenge their assumptions and validate inputs used;
•
Validated the appropriateness of the fair valuation policies to assess whether they are in
accordance with applicable accounting requirements;
•
Tested the classification of Level 3 investments to assess whether they were classified
appropriately;
•
Reviewed valuation methodologies to confirm they are in line with Georgia Capital Valuation
Policies and applicable accounting requirements;
•
Recalculated the valuation models from their Excel formula to assess mathematical accuracy;
•
Supported by the PwC Georgia team, assessed the appropriateness of any unobservable
inputs or significant estimates used in valuations, including benchmarking against publicly
available information where available, and obtained corroborative evidence; and
•
Validated ownership and other interests held through regulatory data, sale and purchase
agreements or other third party reports.
In addition, given the inherent subjectivity involved in the valuation of the investments, and
therefore the need for specialised market knowledge to determine the most appropriate
assumptions and the technicalities of the valuation methodology, we engaged our internal
valuation experts to assist us in our audit of this area. The experts performed the following
procedures on a sample of investments:
•
Obtained and read the valuation report drafted by Kroll for each asset in the sample;
•
Discussed with Kroll and management their rationale for the valuations;
•
Reviewed and assessed the reasonableness of the valuation approaches and methodologies
for compliance with the relevant industry best practice and applicable accounting
requirements;
•
Reviewed certain key inputs and assumptions, including discount rates, future growth
projections, control premia, illiquidity discounts and the applicable of weighted averages as at
31 December 2024; and
•
Reported their findings to the audit team for overall considerations and conclusions.
We considered the appropriateness and adequacy of the disclosures around the estimation
uncertainty and sensitivities on the accounting estimates.
Our testing did not identify any evidence of material misstatement.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements
as a whole, taking into account the structure of the company, the accounting processes and controls, and the industry in which
it operates.
182 183
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Independent Auditors’ Report continued
Georgia Capital PLC is an investment entity as defined by IFRS 10. It recognises its 100% holding in JSC Georgia Capital and its
92.35% holding in Georgia Beverage Holding Limited under the Equity investments at fair value account. 96% of the balance is
comprised of equity investments held at fair value through JSC Georgia Capital and Georgia Beverage Holding Limited. The audit work
over this balance was performed by the UK and Georgia engagement teams in conjunction with PwC UK valuation experts.
The Senior Statutory Auditor is based in the UK, along with the PwC UK engagement team. As the Company’s management and
operations are located in Georgia, the PwC UK engagement team have instructed the PwC Georgia engagement team for JSC Georgia
Capital to report to PwC UK on special purpose financial information as it pertains to the equity investments at fair value balance.
The PwC Georgia engagement team have carried out audit procedures over certain balances included within equity investments at fair value
along with testing of inputs into the investment valuation models. The PwC UK engagement team, together with the PwC UK valuations
experts, performed audit procedures over the judgemental assumptions and methodologies employed in determining a fair value.
The PwC UK engagement team held regular calls with the PwC Georgia engagement team to understand the audit approach, findings
from the results of audit procedures and any issues arising from our work. The PwC UK engagement team performed a remote review
of working papers through use of our audit software and were responsible for the direction, review and oversight of the audit process.
The impact of climate risk on our audit
In planning and executing our audit, we have considered the potential impacts of climate change on the Company’s business and its
financial statements, based on our knowledge of the Company’s operations and its strategy in relation to climate change.
In 2024, the Company has continued to develop its assessment of the potential impacts of climate change as outlined in the TCFD
report. As part of our audit, we have obtained management’s and the Audit and Valuation Committee’s climate-related risk assessment
to understand the process of identifying climate-related risks, the determination of mitigating actions and the impact on the Company’s
financial statements.
We have performed our own qualitative risk assessment of the potential impact of climate change on the Company’s key account
balances and classes of transactions, namely the assumptions embedded in discounted cash flows models for growth rates, operating
expenses and capital expenditure, and have not identified any additional risks of material misstatement.
We also considered the consistency of the disclosures in relation to climate change in the financial statements with the disclosures
in the Task Force on Climate-related Financial Disclosures (TCFD) section and more broadly within the Responsibility section of the
Strategic Report.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our
audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall company materiality 36,090,130 (2023: 33,785,000).
How we determined it 1% of net assets
Rationale for benchmark applied Based on the benchmarks used in the Annual Report, net assets is the primary measure used
by shareholders in assessing the performance of the Company and is a generally accepted
auditing benchmark.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our
audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining
sample sizes. Our performance materiality was 75% (2023: 75%) of overall materiality, amounting to 27,067,598 (2023: 25,338,000) for
the company financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range
was appropriate.
We agreed with the Audit and Valuation Committee that we would report to them misstatements identified during our audit above
1,804,510 (2023: 1,689,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the company’s ability to continue to adopt the going concern basis of accounting included:
•
Reviewing management’s going concern assessment memorandum which included a base case cash flow and severe but plausible
scenario analysis covering the period to 31 March 2026.
•
Holding discussions with the CFO, Head of Finance and AVC to understand economic developments in Georgia in the face of
ongoing global instability and performing independent research on expected economic impacts of such scenarios along with
predicted future performance of the Georgian economy.
•
Assessing the liquidity of the portfolio and the Company’s ability to realise any holdings if needed.
•
Understanding and assessing the appropriateness of the key assumptions used in the cash flow forecasts, including assessing
whether we considered the downside sensitivities to be appropriately severe, the availability of committed finance and covenant
compliance during the forecast period.
•
Corroborating key assumptions in the cash flow forecasts to other evidence including external research and historical performance,
and ensuring this was consistent with our audit work in these and other areas.
•
Reviewing the disclosures in the financial statements relating to the going concern basis of preparation, and evaluating that these
provided an explanation of the Directors’ assessment that was consistent with the audit evidence we obtained;
•
Reviewing Board meeting minutes, and met with members of the Audit and Valuation Committee and those charged with
governance to understand their view on the future of the Company and its ability to continue as a going concern; and
•
Performing a stand back procedure in line with ISA 570 (Revised) to consider all of the evidence obtained, whether corroborative or
contradictory, and drawing conclusions on going concern.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the company’s ability to
continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report
thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any
form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are
required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic report and Directors’ Report, we also considered whether the disclosures required by the UK Companies
Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and
matters as described below.
Strategic report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors’
Report for the year ended 31 December 2024 is consistent with the financial statements and has been prepared in accordance with
applicable legal requirements.
In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we did not identify
any material misstatements in the Strategic report and Directors’ Report.
184 185
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Independent Auditors’ Report continued
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the
corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate Governance Code
specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are
described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have
nothing material to add or draw attention to in relation to:
•
The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
•
The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and
an explanation of how these are being managed or mitigated;
•
The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis
of accounting in preparing them, and their identification of any material uncertainties to the company’s ability to continue to do so
over a period of at least twelve months from the date of approval of the financial statements;
•
The directors’ explanation as to their assessment of the company’s prospects, the period this assessment covers and why the
period is appropriate; and
•
The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in operation
and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any
necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the company was substantially less in scope than an audit and
only consisted of making inquiries and considering the directors’ process supporting their statement; checking that the statement is in
alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with
the financial statements and our knowledge and understanding of the company and its environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:
•
The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides
the information necessary for the members to assess the company’s position, performance, business model and strategy;
•
The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
•
The section of the Annual Report describing the work of the Audit and Valuation Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s compliance
with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review
by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the financial
statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are
also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the company and industry, we identified that the principal risks of non- compliance with laws and
regulations related to breaches of the UK regulatory principles, such as the Listing Rules, and we considered the extent to which
non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a
direct impact on the financial statements such as Companies Act 2006. We evaluated management’s incentives and opportunities for
fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks
were related to potential management bias in accounting estimates, in particular in relation to the valuation of equity investments at fair
value and posting inappropriate journal entries. Audit procedures performed by the engagement team included:
•
Discussions with management, and review of relevant meeting minutes (including those of the Board of Directors and the Audit and
Valuation Committee), including consideration of known or suspected instances of non-compliance with laws and regulations and fraud;
•
Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing;
•
Challenging assumptions made by management in their significant accounting estimates, in particular in relation to the valuation of
equity investments at fair value; and
•
Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also,
the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud
may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We
will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling
to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility
for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly
agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
•
we have not obtained all the information and explanations we require for our audit; or
•
adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from
branches not visited by us; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
•
the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting
records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit and Valuation Committee, we were appointed by the members on 2 May 2022 to audit
the financial statements for the year ended 31 December 2022 and subsequent financial periods. The period of total uninterrupted
engagement is three years, covering the years ended 31 December 2022 to 31 December 2024.
Other matter
The company is required by the Financial Conduct Authority Disclosure Guidance and Transparency Rules to include these financial
statements in an annual financial report prepared under the structured digital format required by DTR 4.1.15R – 4.1.18R and filed on
the National Storage Mechanism of the Financial Conduct Authority. This auditors’ report provides no assurance over whether the
structured digital format annual financial report has been prepared in accordance with those requirements.
Allan McGrath (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
20 March 2025
186 187
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Statement of Financial Position
As at 31 December 2024 (Thousands of Georgian Lari)
Note
31 December
2024
31 December
2023
Assets
Cash and cash equivalents* 3,521 12,319
Investment in redeemable securities – 3,517
Prepayments 1,396 976
Equity investments at fair value 6 3,606,400 3,363,411
Total assets 3,611,317 3,380,223
Liabilities
Other liabilities 2,304 1,711
Total liabilities 2,304 1,711
Equity
Share capital 8 1,300 1,420
Additional paid-in capital and merger reserve 238,311 238,311
Treasury shares (2) (2)
Retained earnings 3,369,404 3,138,783
Total equity 3,609,013 3,378,512
Total liabilities and equity 3,611,317 3,380,223
* As at 31 December 2024 and 31 December 2023 cash and cash equivalents consist of current accounts with credit institutions.
The financial statements on page 186 to 189 were approved by the Board of Directors on 20 March 2025 and signed on its behalf by:
Irakli Gilauri
Chief Executive Officer
Georgia Capital PLC
Registered No. 10852406
The accompanying notes on pages 190 to 224 are an integral part of these financial statements.
Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 December 2024 (Thousands of Georgian Lari)
Note 2024 2023
Gains on investments at fair value 6 242,989 568,351
Dividend income 6 125,109 47,659
Gross investment profit 368,098 616,010
General and Administrative expenses 9 (3,958) (4,476)
Salaries and other employee benefits 9 (1,791) (2,087)
Profit before foreign exchange and non-recurring items 362,349 609,447
Net foreign currency gain/(loss) 37 (955)
Net (losses)/gains from investment securities measured at FVPL (112) 125
Profit before income taxes 362,274 608,617
Income tax 7 – –
Profit for the year 362,274 608,617
Other comprehensive income – –
Total comprehensive income for the year 362,274 608,617
Earnings per share (GEL): 8
– basic 9.7017 15.4102
– diluted 9.2987 14.9311
The accompanying notes on pages 190 to 224 are an integral part of these financial statements.
188 189
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Statement of Changes in Equity
For the year ended 31 December 2024 (Thousands of Georgian Lari)
Share
capital
Additional paid-
in capital and
merger reserve
Treasury
shares
Retained
earnings Total
1 January 2024 1,420 238,311 (2) 3,138,783 3,378,512
Profit for the year – – – 362,274 362,274
Total comprehensive income for the year – – – 362,274 362,274
Increase in equity arising from share-based payments
(Note 10) – – – 457 457
Cancellation of shares (Note 8) (120) – 120 – –
Purchase of treasury shares (Note 8) – – (120) (132,110) (132,230)
31 December 2024 1,300 238,311 (2) 3,369,404 3,609,013
Share
capital
Additional paid-
in capital and
merger reserve
Treasury
shares
Retained
earnings Total
1 January 2023 1,473 238,311 – 2,577,607 2,817,391
Profit for the year – – – 608,617 608,617
Total comprehensive income for the year – – – 608,617 608,617
Increase in equity arising from share-based payments
(Note 10) – – – 541 541
Cancellation of shares (Note 8) (53) – 53 – –
Purchase of treasury shares (Note 8) – – (55) (47,982) (48,037)
31 December 2023 1,420 238,311 (2) 3,138,783 3,378,512
The accompanying notes on pages 190 to 224 are an integral part of these financial statements.
Statement of Cash Flows
For the year ended 31 December 2024 (Thousands of Georgian Lari)
Note 2024 2023
Cash flows from operating activities
Salaries and other employee benefits paid (1,334) (1,546)
General, administrative and operating expenses paid (5,066) (4,685)
Net cash flows used in operating activities before income tax (6,400) (6,231)
Income tax paid – –
Net cash flow used in operating activities (6,400) (6,231)
Cash flows from investing activities
Purchase of redeemable securities – (3,382)
Proceeds from redemption of redeemable securities 3,379 –
Dividends received 6 125,109 47,659
Cash flows from investing activities 128,488 44,277
Cash flows from financing activities
Other purchases of treasury shares 8 (130,821) (47,834)
Acquisition of treasury shares under share-based payment plan 8 (304) (203)
Net cash used in financing activities (131,125) (48,037)
Effect of exchange rates changes on cash and cash equivalents 239 (1,051)
Net decrease in cash and cash equivalents (8,798) (11,042)
Cash and cash equivalents, beginning of the year 12,319 23,361
Cash and cash equivalents, end of the year 3,521 12,319
The accompanying notes on pages 190 to 224 are an integral part of these financial statements.
190 191
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements
Georgia Capital PLC (Thousands of Georgian Lari)
1. Principal Activities
Georgia Capital PLC (‘Georgia Capital’, ‘GCAP’ or the ‘Company’) is a public limited liability company incorporated and domiciled in
United Kingdom with registered number 10852406. Georgia Capital PLC holds 100% of the share capital of the JSC Georgia Capital
(‘JSC GCAP’) and 92.4% of the share capital of Georgian Beverages Holding Limited (‘GBH Limited’), which together form a group
of companies (the ‘Group’), focused on buying, building and developing businesses in Georgia and monetising investments as they
mature. The Group currently has the following portfolio businesses (i) a retail (pharmacy) business, (ii) a hospitals business (consisting of
a. Large and Specialty Hospitals and b. Regional and Community Hospitals), (iii) an insurance business (P&C and medical insurance);
(iv) a clinics and diagnostics business, (v) a renewable energy business (hydro and wind assets) and (vi) an education business; Georgia
Capital also holds other small private businesses across different industries in Georgia; a 20% equity stake in the water utility business
and a 19.2% (2023: 19.7%) equity stake in LSE premium-listed Lion Finance Group PLC (‘Lion Finance Group’, formerly Bank of
Georgia Group PLC or ‘BoG’), a leading universal bank in Georgia. The shares of Georgia Capital are admitted to trading on the
London Stock Exchange PLC’s Main Market for listed securities under the ticker CGEO, effective 29 May 2018.
Georgia Capital’s registered legal address is Central Square, 29 Wellington Street, Leeds, LS1 4DL, England and Wales, United Kingdom.
As at 31 December 2024 and 31 December 2023, the following shareholders owned more than 5% of the total outstanding shares* of
Georgia Capital. Other shareholders individually owned less than 5% of the outstanding shares.
Shareholder
31 December
2024
31 December
2023
Gemsstock Ltd** 8% 11%
Allan Gray Ltd 8% 7%
Lazard Asset Management LLC 7% 6%
Others 77% 76%
Total 100% 100%
* For the purposes of calculating percentage of shareholding, the denominator includes total number of issued shares which includes shares held in the trust for share-based
compensation purposes of the Group.
** Omits holdings through certain financial instruments.
References to the Group are applied in these financial statements in the context of going concern assessment, segment, fair valuation
and risk management disclosures.
2. Basis of Preparation
General
The financial statements have been prepared in accordance with UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies reporting under those standards.
These financial statements are prepared under the historical cost convention except for equity investments held at fair value through
profit or loss (FVPL).
The financial statements are presented in thousands of Georgian Lari (‘GEL’), except per-share amounts and unless otherwise indicated.
Investment entity status
On 31 December 2019 Georgia Capital concluded that it met the definition of investment entity as defined in IFRS 10 Consolidated
Financial Statements. As per IFRS 10 an investment entity is an entity that:
a) obtains funds from one or more investors for the purpose of providing those investor(s) with investment management services;
b) commits to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income,
or both; and
c) measures and evaluates the performance of substantially all of its investments on a fair value basis.
As of 31 December 2024, the Company continues to meet the definition of investment entity. Further details on the investment entity
status and the underlying significant judgements are provided in notes 3, 4, 6 and 12 respectively.
2. Basis of Preparation continued
Going concern
The Board of Directors of Georgia Capital has made an assessment of the Company’s ability to continue as a going concern and is
satisfied that it has the resources to continue in business for a period of at least 12 months from the date of approval of the financial
statements, i.e. the period ending 31 March 2026. Furthermore, management is not aware of any material uncertainties that may
cast significant doubt upon the Company’s ability to continue as a going concern for the foreseeable future. Therefore, the financial
statements continue to be prepared on a going concern basis.
The Directors have made an assessment of the appropriateness of the going concern basis of preparation and reviewed Georgia
Capital’s liquidity outlook for the period ending 31 March 2026.
The main source of cash inflow for GCAP PLC is capital redemption and dividend income from JSC GCAP, which holds the liquid assets
to support the liquidity needs of the Company as well. As at 31 December 2024, JSC GCAP holds cash in the amount of GEL 167,801,
amounts due from credit institutions in the amount of GEL 98,844 and marketable debt securities in the amount of GEL 7,869 (refer to
Note 12). Securities are considered to be highly liquid, as they are debt instruments listed on international and local markets.
The liquidity needs of the Group during the Going Concern review period mainly consist of the coupon payments on JSC GCAP
sustainability-linked bonds and the operating costs of running the holding companies and capital allocations to its portfolio companies.
The liquidity outlook also assumes dividend income from the private portfolio companies (retail (pharmacy), healthcare, renewable
energy, insurance businesses and auto service) and Lion Finance Group PLC. Capital allocations are assumed in relation to investment
stage companies (Renewable Energy and Education).
On 3 August, 2023, JSC GCAP issued US$ 150 million sustainability-linked local bonds in Georgia, with an 8.5% coupon rate, payable
in August 2028. The proceeds from the transaction, together with GCAP’s existing liquid funds, were fully used to redeem GCAP’s US$
300 million Eurobonds. Following these transactions, GCAP’s gross debt balance decreased from US$ 300 million to US$ 150 million.
The Directors remain confident that, given the strong liquidity and the Group’s track record of proven access to capital, GCAP will
successfully continue to service its existing bonds.
The Company has been increasingly assessing climate related risk and opportunities that may be present to the Group. During the
going concern period no significant risk has been identified to the Group and portfolio companies that would materially impact their
ability to generate sufficient cash and continue as a going concern.
Based on the considerations outlined above, management of Georgia Capital concluded that the going concern basis of preparation
remains appropriate for these financial statements.
The Group performed stress testing for the assessment period, which involved modelling the impact of a combination of severe and
plausible risks. Based on the results of the stress tests, the directors concluded that the Group remains solvent with solid financial
position and has sufficient cash and liquid investment securities to withstand the distressed scenario.
192 193
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements continued
Georgia Capital PLC (Thousands of Georgian Lari)
2. Basis of Preparation continued
Subsidiaries and associates
The total amount of investment in subsidiaries in the Company’s statement of financial position as at 31 December 2024 was GEL
3,606,400 (as at 31 December 2023: 3,363,411) represented by direct investments in JSC Georgia Capital and Georgian Beverages
Holding Limited (2023: investment in JSC Georgia Capital). As at 31 December 2024 investments in JSC Georgia Capital and Georgian
Beverages Holding Limited (as of 31 December 2023: investment in JSC Georgia Capital) (Note 12) is measured at fair value. As at
31 December 2024 and 31 December 2023, equity investments of JSC Georgia Capital and Georgian Beverages Holding Limited
include the following subsidiaries and associates:
Proportion of voting rights and
ordinary share capital held*
Subsidiaries Consolidated
31 December
2024
31 December
2023
Country of
incorporation Address Industry
Date of
incorporation
Date of
acquisition
GCMF, LLC 100.00% 100.00% Georgia 8a Petre Melikishvili
Ave, Tbilisi, 0179
Excess
liquidity
management
company
2/5/2019 –
Proportion of voting rights and
ordinary share capital held*
Subsidiaries at FV
31 December
2024
31 December
2023
Country of
incorporation Address Industry
Date of
incorporation
Date of
acquisition
JSC Georgia Capital 100.00% 100.00% Georgia 8a Petre Melikishvili
Ave, Tbilisi, 0179
Investment 6/8/2015 –
JSC Georgia Real Estate 100.00% 100.00% Georgia 10 G. Kartozia street,
Tbilisi, Georgia
Real estate 27/9/2006 –
m2 group, LLC 100.00% 100.00% Georgia 10 G. Kartozia street,
Tbilisi, Georgia
Real estate 17/8/2015 –
M Square Park, LLC 100.00% 100.00% Georgia 1 Marshal Gelovani
ave., Tbilisi
Real estate 15/9/2015 –
M square Park 3, LLC 100.00% 100.00% Georgia 1 Marshal Gelovani
ave., Tbilisi
Real estate 25/5/2022 –
M square Park 4, LLC 100.00% 100.00% Georgia 1 Marshal Gelovani
ave., Tbilisi
Real estate 25/5/2022 –
M square Park X, LLC 100.00% 100.00% Georgia 1 Marshal Gelovani
ave., Tbilisi
Real estate 23/06/2022 –
Optima Saburtalo, LLC 100.00% 100.00% Georgia 10 G. Kartozia street,
Tbilisi, Georgia
Real estate 15/9/2015 –
Land, LLC 100.00% 100.00% Georgia 10 G. Kartozia street,
Tbilisi, Georgia
Real estate 3/10/2014 –
m2 at Nutsubidze 2, LLC 100.00% 100.00% Georgia 10 G. Kartozia street,
Tbilisi, Georgia
Real estate 24/1/2020 –
m2 at Hippodrome, LLC 100.00% 100.00% Georgia 10 Givi Kartozia st.,
Tbilisi
Real estate 6/7/2015 –
Optima, LLC 100.00% 100.00% Georgia 10 Givi Kartozia st.,
Tbilisi
Real estate 3/8/2016 –
m2 Maintenance, LLC 100.00% 100.00% Georgia 10 Givi Kartozia st.,
Tbilisi
Real estate 20/7/2021 –
m2 at Mtatsminda Park,
LLC
100.00% 100.00% Georgia 10 Givi Kartozia st.,
Tbilisi
Real estate 31/12/2021 –
m2 Care Fund N(N)LE 100.00% 100.00% Georgia 10 Givi Kartozia st.,
Tbilisi
Real estate 16/01/2023 –
M square Park 5, LLC 100.00% 100.00% Georgia 10 Givi Kartozia st.,
Tbilisi
Real estate 11/10/2023 –
Georgia Real Estate
Management Group,
LLC
100.00% 100.00% Georgia 10 Givi Kartozia st.,
Tbilisi
Hospitality 17/8/2015 –
Gudauri Lodge, LLC
(1)
0.00% 100.00% Georgia 80 Aghmashenebeli
ave., Tbilisi, 0102
Hospitality 24/04/2018 –
Georgia Property
Management Group,
LLC
(1)
0.00% 100.00% Georgia 10 Givi Kartozia st.,
Tbilisi
Commercial
assets
4/10/2018 –
Proportion of voting rights and
ordinary share capital held*
Subsidiaries at FV
31 December
2024
31 December
2023
Country of
incorporation Address Industry
Date of
incorporation
Date of
acquisition
m2, LLC
(1)
0.00% 100.00% Georgia 29 Ilia chavchavadze
Ave., Tbilisi, 0105
Hospitality/
Real estate
12/2/2014 –
m2 Kutaisi, LLC
(1)
0.00% 100.00% Georgia 10 Melikishvili ave.,
Tbilisi
Hospitality 17/5/2017 –
Georgia Hospitality
Management Group, LLC
100.00% 100.00% Georgia Givi Kartozia street
10, Saburtalo, Tbilisi
Hospitality 22/8/2018 –
Georgia Hospitality
Management Group
Gudauri, LLC
100.00% 100.00% Georgia Georgia, Dusheti
region, village
Seturebi
Hospitality 5/12/2019 –
Melikishvili Hotel
Management, LLC
100.00% 100.00% Georgia 10 Melikishvili ave.,
Tbilisi
Hospitality 8/4/2022 –
JSC Georgian Renewable
Power Holding
100.00% 100.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
23/8/2022 –
JSC Georgian Renewable
Power Company
100.00% 100.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
15/9/2015 –
JSC Zoti Hydro 100.00% 100.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
20/8/2015 –
JSC Caucasus Wind
Company
100.00% 100.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
14/9/2016 –
LLC Caucasus Solar
Company
100.00% 100.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
27/10/2016 –
Hydro S, LLC 100.00% 100.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
18/1/2019 10/28/2019
Georgia Geothermal
Company, LLC
100.00% 100.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
16/12/2019 –
Qartli Solar Farm, LLC 100.00% 100.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
10/3/2023 –
Darchi, LLC 100.00% 100.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
18/11/2013 28/10/2019
Lukhi Hydro, LLC 100.00% 0.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
1/2/2024 –
JSC Georgian Renewable
Power Operations
100.00% 100.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
28/6/2022 –
Svaneti Hydro, LLC 100.00% 100.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
6/12/2013 –
Qartli Wind Farm, LLC 100.00% 100.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
10/9/2012 30/12/2019
Hydrolea, LLC 100.00% 100.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
6/7/2012 28/10/2019
2. Basis of Preparation continued
Subsidiaries and associates continued
194 195
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements continued
Georgia Capital PLC (Thousands of Georgian Lari)
Proportion of voting rights and
ordinary share capital held*
Subsidiaries at FV
31 December
2024
31 December
2023
Country of
incorporation Address Industry
Date of
incorporation
Date of
acquisition
Geoenergy, LLC 100.00% 100.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
26/1/2012 28/10/2019
Hydro Georgia, LLC 100.00% 100.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
8/5/2012 28/10/2019
Kasleti 2, LLC 100.00% 100.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
18/11/2013 28/10/2019
GRPC Trade, LLC 100.00% 100.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy
13/5/2022 –
JSC A Group
(2)
100.00% 100.00% Georgia 1, Berbuki str.,
Saburatlo, Tbilisi
Various 20/9/2018 –
JSC Insurance Company
Aldagi
100.00% 100.00% Georgia 66A, David
Aghmashenebeli Alley,
Tbilisi
Insurance 11/8/1998 –
JSC Insurance Company
Tao
100.00% 100.00% Georgia 66A, David
Aghmashenebeli Alley,
Tbilisi
Insurance 22/8/2007 1/5/2015
Aliance, LLC 100.00% 100.00% Georgia 20, Chavchavadze
ave., floor 2, Vake-
Saburtalo, Tbilisi
Various 1/8/1998 30/4/2012
Auto Way LLC 100.00% 100.00% Georgia 20, Chavchavadze
ave., Vake, Tbilisi
Various 27/12/2010 30/4/2012
JSC Carfest 75.00% 75.00% Georgia 20, Chavchavadze
ave., Vake, Tbilisi
Leasing 17/11/2017 –
JSC Insurance Company
Imedi L
100.00% 100.00% Georgia 9, Anna
Politkovskaias Str.
Vake-Saburtalo
District, Tbilisi
Insurance 22/6/2007 –
L Assistance LLC 100.00% 100.00% Georgia 44, Al. Kazbegi
Avenue, Vake, Tbilisi
Insurance 27/10/2022 –
Ardi Insurance JSC 95.00% 0.00% Georgia 3, Vazha-Pshavela
avenue, Saburtalo
district, Tbilisi
Insurance 3/12/2023 26/04/2024
JSC Greenway Georgia 100.00% 100.00% Georgia 6, University str.,
Vake, Tbilisi
Vehicle
Inspection
9/7/2010 1/5/2012
JSC GreenWash 75.00% 75.00% Georgia 6, University str.,
Vake, Tbilisi
Car Wash 31/8/2018 –
JSC Georgia Pharmacy
Group
(3)
100.00% 0.00% Georgia 24a, Sulkhan
Tsintsadze street,
Tbilisi
Pharmacy
and
Distribution
29/4/2015 –
JSC GEPHA 97.80% 97.56% Georgia 24a, Sulkhan
Tsintsadze street,
Tbilisi
Pharmacy
and
Distribution
19/10/1995 4/5/2016
JSC ABC Pharamcia
(Armenia)
100.00% 100.00% Armenia Kievyan Str. 2/8,
Erevan, Armenia
Pharmacy
and
Distribution
28/12/2013 6/1/2017
ABC Pharmalogistics,
LLC
100.00% 100.00% Georgia E. Tavadze str. 14a,
Tbilisi, Georgia
Pharmacy
and
Distribution
24/2/2004 6/1/2017
JSC Iverta 100.00% 100.00% Georgia E. Tavadze str. 14a,
Tbilisi, Georgia
Pharmacy
and
Distribution
17/2/2021 –
Proportion of voting rights and
ordinary share capital held*
Subsidiaries at FV
31 December
2024
31 December
2023
Country of
incorporation Address Industry
Date of
incorporation
Date of
acquisition
AKG AVELIN QAN
DEGHATUN, LLC
(Armenia)
100.00% 100.00% Armenia 26/1 Vazgen
Sargsyan Street,/
Office 412/ Yerevan
0010, Armenia
Pharmacy
and
Distribution
28/6/2019 –
JSC Georgian Logistics 100.00% 100.00% Georgia Peikrebi str. 14a,
Tbilisi, Georgia
Other 8/10/2021 –
AZPHA LLC (Azerbaijan) 100.00% 100.00% Azerbaijan Azerbaijan, Baku,
Sabunchu District,
Bakikhanovi area,
131, A. Ahgaievi
Street, Apartment 43
Pharmacy
and
Distribution
17/9/2021 –
Euroline LLC 100.00% 100.00% Georgia Stanislavski str. 5,
Tbilisi, Georgia
Other 14/12/2015 24/11/2021
JSC Georgia Healthcare
Group
(3)
100.00% 100.00% Georgia 24a, Sulkhan
Tsintsadze street,
Tbilisi
Healthcare 29/4/2015 –
Vian JSC 100.00% 100.00% Georgia 24a, Sulkhan
Tsintsadze street,
Tbilisi
Healthcare 30/11/2023 –
Vian-Logistics LLC 100.00% 100.00% Georgia 24a, Sulkhan
Tsintsadze street,
Tbilisi
Healthcare 13/2/2015 –
Caucasus Medical
Center, LLC
99.81% 99.81% Georgia 23, P. Kavtaradze Str.,
Tbilisi
Healthcare 12/1/2012 11/6/2015
JSC Kutaisi Regional
Mother and Infant
Treatment-Diagnostic
Centre
66.70% 66.70% Georgia Djavakhishvili str. 85,
Kutaisi, Georgia
Healthcare 5/5/2003 29/11/2011
West Georgia Medical
Center, LLC
66.70% 66.70% Georgia A Djavakhishvili str.
83A, Kutaisi, Georgia
Healthcare 9/12/2011 29/11/2011
N(NL)E Blood Center 100.00% 0.00% Georgia Javakhishvili str.
N85/ Javakhishvili
str. N83A, Kutaisi,
Georgia
Healthcare 31/05/2024 –
Personal Administration
and Organizational
Development Training
Center N(NL)E
100.00% 100.00% Georgia Javakhishvili str.
N85/ Javakhishvili
str. N83A, Kutaisi,
Georgia
Healthcare 23/12/2021 –
Vian LLC 100.00% 100.00% Georgia 142, A. Beliashvili str,
Tbilisi
Healthcare 05/09/2022 –
BONO Healthcare LLC 100.00% 100.00% Georgia 24a, Sulkhan
Tsintsadze street,
Tbilisi
Healthcare 15/06/2023 –
JSC Georgian Clinics 100.00% 100.00% Georgia 24a, Sulkhan
Tsintsadze street,
Tbilisi
Healthcare 1/8/2014 1/8/2014
New Clinic, LLC 0.00% 100.00% Georgia 142, A. Beliashvili str,
Tbilisi
Healthcare 3/1/2017 20/7/2017
JSC Pediatry 100.00% 100.00% Georgia U. Chkeidze str. 10,
Tbilisi, Georgia
Healthcare 5/9/2003 6/7/2016
NCLE Evex Learning
Centre
100.00% 100.00% Georgia 83A, Javakhishvili
street, Tbilisi
Other 20/12/2013 20/12/2013
JSC Emergency Service 85.00% 85.00% Georgia 6 Building, 13/6
Lubliana str. Tbilisi,
Georgia
Healthcare 18/6/2013 8/5/2015
2. Basis of Preparation continued
Subsidiaries and associates continued
2. Basis of Preparation continued
Subsidiaries and associates continued
196 197
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements continued
Georgia Capital PLC (Thousands of Georgian Lari)
Proportion of voting rights and
ordinary share capital held*
Subsidiaries at FV
31 December
2024
31 December
2023
Country of
incorporation Address Industry
Date of
incorporation
Date of
acquisition
Georgian Clinics LLC 100.00% 100.00% Georgia 142, A. Beliashvili str,
Tbilisi
Healthcare 29/09/2023 –
Tskaltubo Regional
Hospital, LLC
66.70% 66.70% Georgia 16 Eristavi street,
Tskhaltubo
Healthcare 29/9/1999 9/12/2011
JSC Evex Clinics
(4)
0.00% 100.00% Georgia 40, Vazha-Pshavela
Avenue, Tbilisi
Healthcare 1/4/2019 –
JSC Evex 100.00% 0.00% Georgia 24a, Sulkhan
Tsintsadze street,
Tbilisi
Healthcare 11/1/2024 –
LLC Aliance Med
(4)
0.00% 100.00% Georgia 40, Vazha-Pshavela
Avenue, Tbilisi
Healthcare 7/7/2015 20/7/2017
JSC Polyclinic Vere 98.35% 98.35% Georgia 24a, Sulkhan
Tsintsadze street,
Tbilisi
Healthcare 22/11/2015 25/12/2017
New Dent, LLC 75.00% 75.00% Georgia 24a, Sulkhan
Tsintsadze street,
Tbilisi
Healthcare 24/12/2018 –
Mkurnali 2002, LLC 100.00% 100.00% Georgia 24a, Sulkhan
Tsintsadze street,
Tbilisi
Healthcare 8/4/2004 1/12/2023
Ekimo App, LLC 100.00% 100.00% Georgia 40, Vazha-Pshavela
Avenue, Tbilisi
Other 5/12/2023 –
Krol Medical Corporation
Georgia, LLC
100.00% 0.00% Georgia 24a, Sulkhan
Tsintsadze street,
Tbilisi
Healthcare 29/02/2024 1/5/2024
JSC Mega-Lab 91.98% 91.98% Georgia Petre Kavtaradze str.
23, Tbilisi
Healthcare 6/6/2017 –
LLC Patgeo-Union of
Pathologists
100.00% 100.00% Georgia Mukhiani, II mcr.
District, Building 22,
1a, Tbilisi
Healthcare 13/1/2010 27/9/2016
Scientific-Research
Center-Mega-Lab
N(N)LE
100.00% 100.00% Georgia Petre Kavtaradze str.
23, Tbilisi
Healthcare 25/5/2021 –
JSC Vabaco 100.00% 67.00% Georgia Bochorishvili str. 37,
Tbilisi, Georgia
Software
Development
9/9/2013 28/9/2018
Vabaco International,
LLC
100.00% 100.00% Georgia A. Tsereteli ave. 123,
Tbilisi, Georgia
Software
Development
30/3/2022 –
JSC Ekimo 100.00% 67.00% Georgia A. Tsereteli ave. 123,
Tbilisi, Georgia
Other 14/12/2021 –
ITFY LLC 100.00% 100.00% Georgia A. Beliashvili str. 142,
Tbilisi, Georgia
Other 1/2/2023 –
Georgian Beverages LLC 100.00% 100.00% Georgia 8a Petre Melikishvili
Ave, Tbilisi, 0179
Beer
Production
and
Distribution
14/11/2016 7/2/2018
Georgian Beverages Holding
Limited
(5)
92.42% 0.00% United
Kingdom
Central Square, 29
Wellington Street,
Leeds, England, LS1
4DL
Investment 18/11/2024 –
Swinkels Georgia B.V. 20.00% 0.00% Netherlands Stater 1, 5737 RV
Lieshout, Netherlands
Beer
Production
and
Distribution
– 24/12/2024
Proportion of voting rights and
ordinary share capital held*
Subsidiaries at FV
31 December
2024
31 December
2023
Country of
incorporation Address Industry
Date of
incorporation
Date of
acquisition
Georgian Beer and
Beverages Holding LLC
100.00% 0.00% Georgia 71, Vazha-Pshavela
avenue, Tbilisi,
Georgia
Investment 14/11/2024 –
Global Beer Georgia,
LLC
100.00% 100.00% Georgia Tsilkani, Mtskheta
Region, Georgia
Beer
Production
30/6/2000 28/2/2007
Genuine Brewing
Company, LLC
100.00% 100.00% Georgia Tsilkani, Mtskheta
Region, Georgia
Beer
Production
and
Distribution
7/6/2011 7/2/2018
Craf and Draft, LLC 100.00% 100.00% Georgia Tsilkani, Mtskheta
Region, Georgia
Beer
Production
20/2/2019 –
Global Coffee Georgia,
LLC
100.00% 100.00% Georgia 29a Gagarini street,
Tbilisi
Coffee
Distribution
26/12/2016 –
New Coffee Company,
LLC
100.00% 100.00% Georgia Isakiani cul-de-sac 2,
Gldani-Nadzaladevi
District, Tbilisi
Coffee
Distribution
23/9/2009 15/2/2017
Georgia Logistics and
Distribution, LLC
100.00% 100.00% Georgia 2 Marshal Gelovani
St, Tbilisi
Distribution 10/1/2006 27/3/2007
JSC Georgian Beverages
Holding
91.74% 92.35% Georgia 8a Petre Melikishvili
Ave, Tbilisi, 0179
Investment 17/12/2019 –
JSC Teliani Valley 100.00% 100.00% Georgia 43 Tbilisi highway,
Telavi
Winery 30/6/2000 28/2/2007
Teliani Trading (Ukraine),
LLC
100.00% 100.00% Ukraine 18/14 Khvoiki St. Kiev Distribution 3/10/2006 31/12/2007
Teliani Europe GmbH 100.00% 100.00% Germany Kurfürstendamm 195
10707 Berlin
Distribution 15/6/2021 –
Le Caucase, LLC 100.00% 100.00% Georgia 2 Marshal Gelovani
St, Tbilisi
Cognac
Production
23/9/2006 20/3/2007
Kupa, LLC 70.00% 70.00% Georgia 3 Tbilisi highway,
Telavi
Oak Barrel
Production
12/10/2006 20/3/2007
Kindzmarauli Marani, LLC 100.00% 100.00% Georgia Gavazi, Kvareli
district, Georgia
Winery 18/12/2001 25/4/2018
Alcoholic Drinks Company
Alaverdi LLC
100.00% 100.00% Georgia Chumlaki, Gurjaani
Region, Georgia
Winery 8/4/2008 19/8/2019
Artisan Wine and Drinks
LLC
100.00% 100.00% Georgia 8a Petre Melikishvili
Ave, Tbilisi, 0179
Wine
distribution
26/8/2019 –
Amboli, LLC 90.00% 90.00% Georgia 142 Beliashvili str.,
Didube-Chugureti
District, Tbilisi
Car Services 13/8/2004 25/6/2019
N(NL)E Amboli, O2 100.00% 0.00% Georgia 14, Anna
Politkovskaias Str.
Vake-Saburtalo
District, Tbilisi
Other 13/5/2021 –
Georgia Education Group,
LLC
100.00% 100.00% Georgia 8a Petre Melikishvili
Ave, Tbilisi, 0179
Education 16/7/2019 –
Green School LLC 90.00% 90.00% Georgia N. Khudadovi str. 1b,
Tbilisi, Georgia
Education 18/8/2021 –
Green School-Didi
Dighomi, LLC
100.00% 100.00% Georgia D. Tavdadebuli str. 6,
Tbilisi, Georgia
Education 27/9/1995 20/8/2021
Green School-Forest
Campus LLC
100.00% 100.00% Georgia 8a Petre Melikishvili
Ave, Tbilisi, 0179
Education 21/10/2019 –
Green School Real
Estate LLC
100.00% 100.00% Georgia 8a Petre Melikishvili
Ave, Tbilisi, 0179
Education 5/1/2019 –
Green School-Saburtalo,
LLC
100.00% 100.00% Georgia 37 B. Zhgenti Str.,
Vake, Tbilisi
Education 29/06/2023 –
2. Basis of Preparation continued
Subsidiaries and associates continued
2. Basis of Preparation continued
Subsidiaries and associates continued
198 199
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements continued
Georgia Capital PLC (Thousands of Georgian Lari)
Proportion of voting rights and
ordinary share capital held*
Subsidiaries at FV
31 December
2024
31 December
2023
Country of
incorporation Address Industry
Date of
incorporation
Date of
acquisition
Green University, LLC 100.00% 0.00% Georgia N. Khudadovi str. 1b,
Tbilisi, Georgia
Education 20/11/2024 –
Green School Dighomi
LLC
80.00% 80.00% Georgia Didube-Chughureti/
Dighomi massive
IV, Building 5A,
Apartment 35
Education 7/6/2011 22/8/2019
Buckswood International
School-Tbilisi, LLC
80.00% 80.00% Georgia 156 Rustaveli Street,
Tskneti, Tbilisi
Education 24/8/2005 29/7/2019
Sakhli Tsknetshi, LLC 100.00% 100.00% Georgia 152 Rustaveli Street,
Tskneti, Tbilisi
Education 1/5/2005 –
Buckswood School at
Gelovani LLC
100.00% 0.00% Georgia 1 Marshal Gelovani
ave., Tbilisi
Education 17/06/2024 –
British Georgian Academy,
LLC
70.00% 70.00% Georgia 17, Leo Kvachadze
str, Tbilisi
Education 3/2/2006 23/7/2019
NNLE British International
School of Tbilisi
100.00% 100.00% Georgia 17, Leo Kvachadze
str, Tbilisi
Education 3/2/2015 –
British International
School of Tbilisi LLC
100.00% 100.00% Georgia 17, Leo Kvachadze
str, Tbilisi
Education 5/9/2019 –
British Georgian
Academy-Okrokana,
LLC
100.00% 100.00% Georgia 17, Leo Kvachadze
str, Tbilisi
Education 16/9/2021 –
Oncloud LLC 100.00% 100.00% Georgia 8a Petre Melikishvili
Ave, Tbilisi, 0179
Digital
Services
28/2/2020 –
2. Basis of Preparation continued
Subsidiaries and associates continued
Proportion of voting rights and
ordinary share capital held*
Associates
31 December
2024
31 December
2023
Country of
incorporation Address Industry
Date of
incorporation
Date of
acquisition
N(NL)E Georgian Medical
Tourism Council
28.57% 28.57% Georgia Gardens Street,
tskneti, Vake district,
Tbilisi
Healthcare 16/5/2019 –
JSC Diflex 40.00% 40.00% Georgia Shalikashvili str. 8,
Tbilisi, Geogia
Software
Development
29/12/2016 12/11/2021
Healthcare Association
N(N)LE
25.00% 25.00% Georgia Vazha-Pshavela Ave.
27b, Tbilisi, Georgia
Healthcare 25/3/2016 –
Complex-Med-Service, LLC 0.00% 20.00% Georgia Tsinandali sts. 9,
Tbilisi, Georgia
Healthcare 18/11/2008 30/7/2021
Insurance Informational
Bureau, LLC
22.50% 22.50% Georgia Baratashvili bridge
underground
crossing, Mtkvari
Left Bank, Old Tbilisi,
Tbilisi
Insurance 23/7/2008 –
JSC Georgian Global Utilities 20.00% 20.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Utilities 22/01/2020 31/12/2014
Georgian Water and Power,
LLC
20.00% 20.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Utilities 25/06/1997 31/12/2014
Gardabani Sewage
Treatment, LLC
20.00% 20.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Utilities 20/12/1999 31/12/2014
Georgian Engineering and
Management Company
(GEMC), LLC
20.00% 20.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Utilities 20/03/2011 31/12/2014
Saguramo Energy, LLC 20.00% 20.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Utilities 11/12/2008 31/12/2014
Georgian Energy Trading
Company (GETC), LLC
20.00% 20.00% Georgia 10 Medea (Mzia)
Jugheli st, Tbilisi,
0179
Renewable
Energy Sales
23/4/2019 –
1 In 2024, merged with Georgia Real Estate Management Group, LLC.
2 In 2024, GCAP consolidated all insurance businesses under one holding company, A Group. As a result, Aldagi, Imedi L and Ardi are all managed under a single umbrella company.
Previously, Medical Insurance and Ardi were managed by Georgia Healthcare Group, while Aldagi was under JSC A Group.
3 In 2024, JSC Georgia Pharmacy Group separated from JSC Georgia Healthcare Group.
4 In 2024, merged with JSC Georgia Clinics.
5 Georgia Capital PLC, previously the ultimate owner of a 92.4% equity stake in its beer and distribution business, has entered into an agreement with a subsidiary of Royal Swinkels
N.V. for the disposal of the business. Following the disposal, the business is now held through a new holding company domiciled in the Netherlands, with GCAP PLC holding a 20%
(through 92.4%-owned UK subsidiary of GCAP PLC) stake and Royal Swinkels 80%. The 20% stake held by GCAP PLC was transferred from JSC Georgia Capital. Companies
owned by Swinkels Georgia N.V. were, in the previous year, under the ownership of JSC Georgian Beverages Holding.
* The table displays effective percentages of holding in the companies.
2. Basis of Preparation continued
Subsidiaries and associates continued
200 201
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements continued
Georgia Capital PLC (Thousands of Georgian Lari)
3. Material Accounting Policies
The following are the material accounting policies applied by the Company in preparing its financial statements.
Fair value measurement
The Company measures investments in subsidiaries and associates and other financial instruments, such as debt securities owned,
equity investments and derivatives, if any, at fair value at each balance sheet date. Also, fair values of financial instruments measured at
amortised cost are disclosed in Note 12.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or
transfer the liability takes place either:
•
In the principal market for the asset or liability; or
•
In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured
using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act
in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant’s ability to
generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use
the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure
fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value
hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
•
Level 1 − Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
•
Level 2 − Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable;
•
Level 3 − Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers
have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the
fair value measurement as a whole) at the end of each reporting period.
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and amounts due from credit institutions that mature within ninety days of the date
of contract origination and are free from contractual encumbrances and readily convertible to known amount of cash.
Financial assets
Initial recognition
Financial assets in the scope of IFRS 9 are classified at initial recognition, as subsequently measured at amortised cost, fair value
through other comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and
the Company’s business model for managing them. With the exception of trade receivables that do not contain a significant financing
component or for which the Company has applied the practical expedient, the Company initially measures a financial asset at its fair
value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain
a significant financing component or for which the Company has applied the practical expedient are measured at the transaction price
determined under IFRS 15.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash
flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as
the SPPI test and is performed at an instrument level.
The Company’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash
flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets,
or both.
3. Material Accounting Policies continued
Financial assets continued
Date of recognition
All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Company commits to
purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets
within the period generally established by regulation or convention in the marketplace.
Subsequent measurement
For purposes of subsequent measurement, GCAP’s financial assets are classified in two categories under IFRS 9:
•
Financial assets at amortised cost (Cash and cash equivalents)
•
Financial assets at fair value through profit or loss (equity investments at fair value)
Financial assets at amortised cost
The Company measures financial assets at amortised cost if both of the following conditions are met:
•
The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash
flows; and
•
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment.
Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The Company’s financial assets at amortised cost includes cash and cash equivalents.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets designated upon initial recognition at fair value through profit
or loss, or financial assets mandatorily required to be measured at fair value. Equity investments are classified at fair value through
profit or loss. Derivatives and financial assets with cash flows that are not solely payments of principal and interest are classified and
measured at fair value through profit or loss, irrespective of the business model.
Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value through OCI, as described above,
debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly
reduces, an accounting mismatch.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair
value recognised in the statement of profit or loss. This category includes equity investments.
Derecognition of financial assets and liabilities
Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised
(i.e., removed from the Company’s statement of financial position) when:
•
The rights to receive cash flows from the asset have expired; or
•
The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash
flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred
substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks
and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement,
it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained
substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the
transferred asset to the extent of its continuing involvement. In that case, the Company also recognises an associated liability.
The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company
has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying
amount of the asset and the maximum amount of consideration that the Company could be required to repay.
202 203
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements continued
Georgia Capital PLC (Thousands of Georgian Lari)
3. Material Accounting Policies continued
Derecognition of financial assets and liabilities continued
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the
recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement. Modification
is substantial if present value of cash flows under new terms discounted at original effective interest rate is at least 10% different from
the liability’s carrying amount right before the modification, or there is a substantial modification to the terms identified through
a qualitative assessment.
Financial liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly
attributable transaction costs.
The Company’s financial liabilities comprise accounts payable.
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, and it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of
the amount of obligation can be made.
Contingencies
Contingent liabilities are not recognised in the statement of financial position but are disclosed unless the possibility of any outflow
in settlement is remote. A contingent asset is not recognised in the statement of financial position but disclosed when an inflow of
economic benefits is probable.
Share-based payment transactions
Equity-settled transactions
The cost of equity settled transactions with employees is measured by reference to the fair value of shares at the grant date.
The cost of equity settled transactions is recognised together with the corresponding increase in equity, over the period in which the
performance and/or service conditions are fulfilled, ending on the date when the relevant employee is fully entitled to the award (‘the
vesting date’). The cumulative expense recognised for equity settled transactions at each reporting date until the vesting date reflects
the extent to which the vesting period has expired and the Company’s best estimate of the number of equity instruments that will
ultimately vest. The income statement charge and credit entry to equity for the period represents the movement in cumulative expense
recognised as at the beginning and end of that period. No expense is recognised for the awards that do not ultimately vest.
Where the terms of an equity settled award are modified, the minimum expense is recognised as if the terms had not been modified.
An additional expense is recognised for any modification which increases the total fair value of the share-based payment arrangement,
or is otherwise beneficial to the employee as measured at the date of the modification.
Where an equity-settled award is cancelled, it is treated as if it has vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as
the replacement award on the date that it is granted, the cancelled and the new awards are treated as if they were a modification of the
original award, as described in the previous paragraph.
Share capital
Share capital
Ordinary shares are classified as equity. External costs directly attributable to the issue of new shares, other than on a business
combination, are shown as a deduction from the proceeds in equity. Any excess of the fair value of consideration received over the par
value of shares issued is recognised as additional paid-in capital.
Treasury shares
Where the Company purchases Georgia Capital’s shares, the consideration paid, including any attributable transaction costs,
net of income taxes, is deducted from total equity as treasury shares until they are cancelled or reissued. Where such shares are
subsequently sold or reissued, any consideration received is included in equity. Treasury shares are stated at par value, with adjustment
of premiums against retained earnings.
3. Material Accounting Policies continued
Dividends
Dividends are recognised as a liability and deducted from equity at the reporting date only if they are declared before or on the reporting
date. Dividends are disclosed when they are proposed before the reporting date or proposed or declared after the reporting date
but before the financial statements are authorised for issue. All expenses associated with dividend distribution are added to dividend
amount and recorded directly through equity.
Dividend income
Dividend revenue is recognised when the Company’s right to receive the payment is established. Dividend revenue is presented gross
of any non-recoverable withholding taxes, which are disclosed separately in the statement of comprehensive income.
Net gain or loss on financial assets and liabilities at fair value through profit or loss
Net gains or losses on financial assets and liabilities at FVPL represent changes in their fair value, including equity investments at fair
value, financial assets and liabilities held for trading, or those designated as FVPL upon initial recognition, and exclude interest and
dividend income and expenses, which are recognized separately in profit or loss when earned.
Taxation
The current income tax expense is calculated in accordance with the regulations in force in the respective territories in which the
Company operates.
According to UK tax legislation, UK companies pay corporation tax on all its profits. The UK corporate tax rate for 2024 is 25.0 %
(2023: blended tax rate 23.5%).
Functional, presentation currencies and foreign currency translation
The financial statements are presented in Georgian Lari, which is the presentation and functional currency of GCAP PLC and JSC
GCAP. Transactions in foreign currencies are initially recorded in the functional currency, converted at the rate of exchange ruling at
the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into functional currency
at functional currency rate of exchange ruling at the reporting date. Gains and losses resulting from the translation of foreign currency
transactions are recognised in the income statement as net foreign currency gain (loss). Non-monetary items that are measured in
terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair
value was determined. When a gain or loss on a non-monetary item is recognised in other comprehensive income, any exchange
component of that gain or loss is recognised in other comprehensive income. Conversely, when a gain or loss on a non-monetary
item is recognised in profit or loss, any exchange component of that gain or loss is recognised in profit or loss.
Differences between the contractual exchange rate of a certain transaction and the National Bank of Georgia (‘NBG’) exchange rate on
the date of the transaction are included in Net foreign currency gain (loss). The official NBG exchange rates at 31 December 2024 and
31 December 2023 were as follows:
Lari to GBP Lari to US$ Lari to EUR
31 December 2024 3.5349 2.8068 2.9306
31 December 2023 3.4228 2.6894 2.9753
Adoption of new or revised standards and interpretations
The following amendments became effective from 1 January 2024 and had no impact on the Company’s financial statements:
•
Amendments to IFRS 16 Leases-Lease Liability in a Sale and Leaseback
•
Amendments to IAS 1 Presentation of Financial Statements – Classification of Liabilities as Current or Non-current
•
Amendments to IAS 1 Presentation of Financial Statements – Classification of Debt with Covenants
•
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments – Disclosures: Supplier Finance Arrangements
The following standards that are issued but not yet effective are also expected to have no material impact on the Company’s financial
statements:
•
Amendments to IFRS 7 Financial Instruments – Disclosures: Classification and Measurement of Financial Instruments
•
Amendments to IFRS 9 Financial Instruments: Classification and Measurement of Financial Instruments
•
IFRS 19 Subsidiaries without Public Accountability: Disclosures
•
Amendments to IAS 21 Lack of Exchangeability-Exchangeable Currency and Determination of Exchange rate
204 205
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements continued
Georgia Capital PLC (Thousands of Georgian Lari)
3. Material Accounting Policies continued
Adoption of new or revised standards and interpretations continued
In April 2024, the IASB issued IFRS 18, which replaces IAS 1 Presentation of Financial Statements. The objective of IFRS 18 is to set
out requirements for the presentation and disclosure of information in the financial statements to help ensure they provide relevant
information that faithfully represents an entity’s assets, liabilities, equity, income and expenses. Retrospective application of the standard
is mandatory for annual reporting periods starting from 1 January 2027 onwards, but earlier application is permitted provided that this
fact is disclosed. The Company is currently working to identify all impacts the standard will have on the primary financial statements
and notes to the financial statements.
4. Critical Accounting Judgements and Estimates
In the process of applying the Company’s accounting policies, the management board use their judgment and make estimates in
determining the amounts recognised in the financial statements. The most significant judgements and estimates are as follows:
Assessment of investment entity status
Entities that meet the definition of an investment entity within IFRS 10 are required to measure their subsidiaries at FVPL rather than
consolidate them. The criteria which define an investment entity are, as follows:
•
An entity that obtains funds from one or more investors for the purpose of providing those investors with investment
management services;
•
An entity that commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation,
investment income, or both; and
•
An entity that measures and evaluates the performance of substantially all of its investments on a fair value basis.
The Group invests funds, originally obtained from its investors, in its private portfolio companies, obtains dividend inflows from its
mature investments and once the businesses are developed, exits the investment ideally at a higher multiple (vs entry multiple) to
monetise on capital appreciation gains. The Company reports to its investors on a fair value basis. All investments are reported at fair
value in the Company’s annual reports.
Georgia Capital PLC holds an investment in JSC Georgia Capital (an investment entity on its own), which is the most significant asset
of the Company. JSC Georgia Capital holds a portfolio of investments; although JSC Georgia Capital is wholly capitalised by Georgia
Capital PLC, Georgia Capital PLC is funded by many investors who are unrelated to the entity; and ownership in Georgia Capital PLC
is represented by units of equity interests acquired through a capital contribution. Thus, the judgement above refers to both entities
in aggregation. The Board has concluded that the Company meets the definition of an investment entity. These conclusions will be
reassessed on a continuous basis, if any of these criteria or characteristics change.
Georgia Capital met the investment entity definition on 31 December 2019. As of 31 December 2024, the Company continues to
meet the definition of investment entity. In making this assessment, the Company considered each criteria and characteristic described
above as well as developments during the year.
Fair valuation of the investment portfolio
The investment portfolio, a material asset of the Company held through 100%-owned subsidiary JSC Georgia Capital and 92% interest
in Georgian Beverages Holding Limited, is held at fair value. Details of valuation methodologies used and the associated sensitivities are
disclosed in Note 12. Given the importance of this area, the Board has formed a separate Audit and Valuations Committee to review
the valuations to be placed on portfolio companies, compliance with the valuation standards and usage of appropriate judgement.
The detailed valuation process is disclosed in Note 12.
5. Segment Information
For management purposes, the Group is organised into the following operating segments as follows: listed and observable portfolio
companies, private large portfolio companies, private investment stage portfolio companies, private other portfolio companies, and
corporate centre.
Listed and observable portfolio companies segment
Lion Finance Group – the Group has a significant investment in London Stock Exchange premium listed Lion Finance Group PLC.
GCAP does not hold voting rights in the company.
Water Utility – the Group has a 20% equity stake in the Water Utility business, following the disposal of 80% of its shares during 2021.
Water Utility is a regulated monopoly in Tbilisi and the surrounding area, where it provides water and wastewater services.
5. Segment Information continued
Private portfolio companies
Large portfolio companies segment:
The large portfolio companies are companies that are close to reaching more than a GEL 300 million equity value. This segment includes
investments in hospitals (Large and Specialty Hospitals, Regional and Community Hospitals), retail (pharmacy) and insurance businesses.
Retail (Pharmacy) business consists of a retail pharmacy chain and a wholesale business that sells pharmaceuticals and medical
supplies to hospitals and other pharmacies.
The hospital business comprises two segments: Large and Specialty Hospitals, the leading participant in Georgia’s healthcare market,
offering secondary and tertiary healthcare services; and Regional and Community Hospitals, encompassing regional hospitals and
community clinics that deliver outpatient and essential inpatient services.
Insurance business comprises a property and casualty insurance and medical insurance businesses, principally providing wide-scale
property and casualty and medical insurance services to corporate and retail clients.
Investment stage portfolio companies segment:
The investment stage portfolio companies have the potential to reach more than a GEL 300 million equity value. This segment includes
investments into clinics and diagnostics, renewable energy and education businesses.
Clinics & Diagnostics business consists of polyclinics providing outpatient diagnostic and treatment services, and diagnostics business,
operating the largest laboratory in the entire Caucasus region.
Renewable energy business principally operates three wholly owned commissioned renewable energy assets. In addition, a pipeline of
renewable energy projects is in an advanced stage of development.
Education business combines majority stakes in four leading private schools in Tbilisi. It provides education for preschool to
12th grade (K-12).
Other portfolio companies segment:
The other portfolio companies are companies which GCAP believes to have limited potential to reach a GEL 300 million equity value.
This segment includes Housing Development, Hospitality, Wine and Auto Service businesses.
Corporate Centre consists of Georgia Capital PLC and JSC Georgia Capital.
Management monitors the fair values of its segments separately for the purposes of making decisions about resource allocation and
performance assessment. Transactions between segments are accounted for at actual transaction prices.
Starting from 2023, The hospitals business is split into two distinct sub-segments: ‘Large and Specialty Hospitals’ and ‘Regional and
Community Hospitals’. The Regional and Community Hospitals also incorporates the community clinics that were previously managed
and presented as part of the clinics and diagnostics business. The clinics and diagnostics business, alongside the renewable energy
and education businesses, is presented under the investment stage portfolio.
Starting from the first half of 2024, the insurance business operates under three distinct brand names: Aldagi, specialising in P&C
insurance, and Imedi L and Ardi, both specialising in medical insurance. In April 2024, a GEL 87 million portfolio of insurance contracts
and the brand name from ‘Ardi’ was acquired. Ardi was the third-largest player in the Georgian health insurance market, holding a 17%
market share based on 2023 net insurance premiums. This acquisition positions GCAP’s medical insurance business as the largest
health insurer in the country and offers an opportunity to diversify the Company’s portfolio and achieve significant financial and strategic
synergies. The total cash outflow for this transaction amounts to GEL 26.4 million, fully financed by funds already available in the
medical insurance business.
In October 2024, Georgia Capital entered into an agreement with a subsidiary of Royal Swinkels N.V. (‘Royal Swinkels’) for the disposal
of the beer and distribution business. Following the disposal, the beer and distribution business is held through a new holding company
domiciled in the Netherlands (the ‘Dutch Holdco’). GCAP PLC obtained a 20% holding in the Dutch Holdco and Royal Swinkels 80%.
The parties have put in place a put/call structure relating to the remaining GCAP PLC 20% holding. The put option granted to GCAP
PLC can be exercised at a pre-agreed EV/EBITDA multiple, in each of the twelve-month periods following the approval of the audited
consolidated financial statements of the Dutch Holdco by shareholders for each of the financial years ended 31 December 2028,
2029 and 2030. The transaction has been completed and net proceeds of c.US$ 63.0 million has been received by 31 December
2024. The Transaction is in line with GCAP PLC’s capital-light investment strategy and represents another successful completion of
the full investment cycle of the Company’s private assets: to invest, to grow, and finally to monetise the investment via a cash exit.
This disposal also marks further progress toward GCAP PLC’s key strategic priority of divesting from subscale portfolio companies.
206 207
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements continued
Georgia Capital PLC (Thousands of Georgian Lari)
5. Segment Information continued
The following table presents the net asset value (NAV) of the Group’s operating segments at 31 December 2024 and the roll-forward
from 1 January 2024:
NAV Statement
1 January
2024
1.Value
Creation
2a.
Investments &
Divestments
2b.
Buybacks
2c.
Dividends
3.Operating
Expenses
4. Liquidity
Management/
FX/Other
31 December
2024
Listed and observable
portfolio companies 1,384,847 368,985 – – (144,797) – – 1,609,035
Lion Finance Group 1,225,847 339,985 – – (144,797)* – – 1,421,035
Water Utility 159,000 29,000 – – – – – 188,000
Private portfolio companies 2,287,098 66,337 (151,104) – (56,955) – 7,079 2,152,455
Large portfolio companies 1,436,231 30,237 – – (35,408) – 3,689 1,434,749
Retail (pharmacy) 714,001 10,739 – – (10,048) – 1,438 716,130
Insurance (P&C and medical) 377,874 74,617 – – (25,360) – 814 427,945
Of which, P&C insurance 285,566 44,746 – – (17,986) – 814 313,140
Of which, medical insurance 92,308 29,871 – – (7,374) – – 114,805
Hospitals 344,356 (55,119) – – – – 1,437 290,674
Investment stage portfolio
companies 566,614 (10,501) 11,933 – (12,258) – 1,604 557,392
Renewable energy 266,627 (13,770) 11,333 – (12,258) – 674 252,606
Education 189,226 (8,853) 600 – – – 611 181,584
Clinics and diagnostics 110,761 12,122 – – – – 319 123,202
Other portfolio companies 284,253 46,601 (163,037) – (9,289) – 1,786 160,314
Total portfolio value 3,671,945 435,322 (151,104) – (201,752) – 7,079 3,761,490
Net debt (296,808) – 148,504 (135,718) 201,752 (21,379) (50,776) (154,425)
of which, cash and liquid funds 107,910 – 157,371 (135,718) 201,752 (21,379) (31,699) 278,237
of which, loans issued 9,212 – (8,867) – – – (345) –
of which, gross debt (413,930) – – – – – (18,732) (432,662)
Net other assets/(liabilities) 3,375 – 2,600 (805) – (13,900) 10,678 1,948
Net asset value 3,378,512 435,322 – (136,523) – (35,279) (33,019) 3,609,013
5. Segment Information continued
The following table presents the net asset value (NAV) of the Group’s operating segments at 31 December 2023 and the roll-forward
from 1 January 2023:
NAV Statement
1 January
2023
1.Value
Creation
2a
Investments &
Divestments
2b.
Buybacks
2c.
Dividends
3.Operating
Expenses
4. Liquidity
Management/
FX/Other
31 December
2023
Listed and observable
portfolio companies 985,463 553,255 – – (153,871) – – 1,384,847
Lion Finance Group 830,463 549,255 – – (153,871)* – – 1,225,847
Water Utility 155,000 4,000 – – – – – 159,000
Private portfolio companies 2,213,164 127,260 18,420 – (82,012) – 10,266 2,287,098
Large portfolio companies 1,437,610 74,786 – – (76,825) – 660 1,436,231
Retail (pharmacy) 724,517 39,397 – – (50,904) – 991 714,001
Insurance (P&C and medical) 279,900 116,915 – – (19,903) – 962 377,874
Of which, P&C insurance 228,045 71,447 – – (14,888) – 962 285,566
Of which, medical insurance 51,855 45,468 – – (5,015) – – 92,308
Hospitals 433,193 (81,526) – – (6,018) – (1,293)** 344,356
Investment stage portfolio
companies 501,407 47,044 18,388 – (5,187) – 4,962 566,614
Renewable energy 224,987 38,684 6,218 – (5,187) – 1,925 266,627
Education 164,242 12,282 12,170 – – – 532 189,226
Clinics and diagnostics 112,178 (3,922) – – – – 2,505** 110,761
Other portfolio companies 274,147 5,430 32 – – – 4,644 284,253
Total portfolio value 3,198,627 680,515 18,420 – (235,883) – 10,266 3,671,945
Net debt (380,905) – (20,887) (76,190) 235,883 (21,786) (32,923) (296,808)
of which, cash and liquid funds 411,844 – (20,887) (76,190) 235,883 (21,786) (420,954) 107,910
of which, loans issued 26,830 – – – – – (17,618) 9,212
of which, gross debt (819,579) – – – – – 405,649 (413,930)
Net other (liabilities)/assets (331) – 2,467 (287) – (14,993) 16,519 3,375
Net asset value 2,817,391 680,515 – (76,477) – (36,779) (6,138) 3,378,512
1 Value Creation-measures the annual shareholder return on each portfolio company for Georgia Capital. It is the aggregation of a) the change in beginning and ending fair values,
b) dividend income during the year. The net result is then adjusted to remove capital injections (if any) to arrive at the total value creation/ investment return; 2a. Investments and
Divestments-represents capital injections and divestments in portfolio companies made by JSC GCAP; 2b. Buybacks-represent buybacks made by GCAP PLC and JSC GCAP
in order to satisfy share compensation of executives and purchases under buyback program announced by GCAP PLC; 2c. Dividends-represent dividends received from portfolio
companies by JSC GCAP; 3. Operating Expenses-holding company aggregated operating expenses of GCAP PLC and JSC GCAP; 4. Liquidity Management/FX/Other-holding
company aggregated movements of GCAP PLC and JSC GCAP related to liquidity management, foreign exchange movement, non-recurring and other.
2 Net debt and Net other assets/(liabilities) represent corporate centre.
* In segment information, dividend income includes consideration received as a result of participation in the Lion Finance Group buyback programme.
** Includes the transfer of community clinics from the Clinics and diagnostics sub-segment to Hospitals.
208 209
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements continued
Georgia Capital PLC (Thousands of Georgian Lari)
5. Segment Information continued
Reconciliation of IFRS financial statements to NAV:
31 December 2024
Georgia Capital
PLC
Aggregation
with JSC
Georgia Capital*
Elimination of
double effect on
investments
Aggregated
Holding
Company Reclassification** NAV Statement
Cash and cash equivalents 3,521 167,801 – 171,322 (171,322) –
Amounts due from credit institutions – 98,844 – 98,844 (98,844) –
Marketable securities – 7,869 – 7,869 (7,869) –
Prepayments 1,396 – – 1,396 (1,396) –
Other assets, net – 5,017 – 5,017 (5,017) –
Equity investments at fair value 3,606,400 3,720,071 (3,564,981) 3,761,490 – 3,761,490
Total assets 3,611,317 3,999,602 (3,564,981) 4,045,938 (284,448) 3,761,490
Debt securities issued – 432,460 – 432,460 (432,460) –
Other liabilities 2,304 2,161 – 4,465 (4,465) –
Total liabilities 2,304 434,621 – 436,925 (436,925) –
Net debt – – – – (154,425) (154,425)
of which, cash and liquid funds – – – – 278,237 278,237
of which, gross debt – – – – (432,662) (432,662)
Net other assets – – – – 1,948 1,948
Total equity/NAV 3,609,013 3,564,981 (3,564,981) 3,609,013 – 3,609,013
31 December 2023
Georgia Capital
PLC
Aggregation
with JSC
Georgia Capital*
Elimination of
double effect on
investments
Aggregated
Holding
Company Reclassification** NAV Statement
Cash and cash equivalents 12,319 51,138 – 63,457 (63,457) –
Amounts due from credit institutions – 8,678 – 8,678 (8,678) –
Marketable securities – 18,203 – 18,203 (18,203) –
Investment in redeemable securities 3,517 14,068 – 17,585 (17,585) –
Prepayments 976 – – 976 (976) –
Loans issued – 9,212 – 9,212 (9,212) –
Other assets, net – 5,060 – 5,060 (5,060) –
Equity investments at fair value 3,363,411 3,671,945 (3,363,411) 3,671,945 – 3,671,945
Total assets 3,380,223 3,778,304 (3,363,411) 3,795,116 (123,171) 3,671,945
Debt securities issued – 413,930 – 413,930 (413,930) –
Other liabilities 1,711 963 – 2,674 (2,674) –
Total liabilities 1,711 414,893 – 416,604 (416,604) –
Net debt – – – – (296,808) (296,808)
of which, cash and liquid funds – – – – 107,910 107,910
of which, loans issued – – – – 9,212 9,212
of which, gross debt – – – – (413,930) (413,930)
Net other assets – – – – 3,375 3,375
Total equity/NAV 3,378,512 3,363,411 (3,363,411) 3,378,512 – 3,378,512
* For detailed breakdown of JSC Georgia Capital refer to Note 12.
** Reclassification to aggregated balances to arrive at the NAV specific presentation, such as: aggregating cash, marketable securities, investment in redeemable shares, repurchased
GCAP bonds as cash and liquid funds, debt securities issued as gross debt and netting of other assets and liabilities.
5. Segment Information continued
The following table presents income statement information of the Group’s operating segments for the year ended 31 December 2024:
Private Portfolio Companies
Listed &
observable
Portfolio
Companies Large
Investment
Stage Other
Corporate
Center Total
Intragroup
Investment
Reversal and
Adjustments
Equity
Changes
in JSC
GCAP
Investment
Entity Total
Gains/(losses) on investments at fair
value 224,188 (5,171) (22,759) 37,312 – 233,570 122,578 (113,159) 242,989
Listed and observable Investments 224,188 – – – – 224,188 (224,188) – –
Private Investments – (5,171) (22,759) 37,312 – 9,382 346,766 (113,159) 242,989
Dividend income 144,797 35,408 12,258 9,289 – 201,752 (201,752) 125,109 125,109
Interest income – – – – 7,477 7,477 (7,477) – –
Loss on liquid funds – – – – (796) (796) 796 – –
Gross investment profit/(loss) 368,985 30,237 (10,501) 46,601 6,681 442,003 (85,855) 11,950 368,098
Administrative expenses – – – – (10,586) (10,586) 6,628 – (3,958)
Salaries and other employee benefits – – – – (24,694) (24,694) 22,903 – (1,791)
Interest expense – – – – (35,589) (35,589) 35,589 – –
Profit/(loss) before provisions,
foreign exchange and
non-recurring items 368,985 30,237 (10,501) 46,601 (64,188) 371,134 (20,735) 11,950 362,349
Expected credit loss charge – – – – (3,562) (3,562) 3,562 – –
Net foreign currency (loss)/gain – – – – (15,100) (15,100) 15,137 – 37
Non-recurring expense – – – – (2,148) (2,148) 2,148 – –
Net losses from investment securities
measured at FVPL – – – – – – (112) – (112)
Profit/(loss) before income taxes 368,985 30,237 (10,501) 46,601 (84,998) 350,324 – 11,950 362,274
Income tax – – – – – – – – –
Profit/(loss) for the year 368,985 30,237 (10,501) 46,601 (84,998) 350,324 – 11,950 362,274
The following table presents income statement information of the Group’s operating segments for the year ended 31 December 2023:
Private Portfolio Companies
Listed &
observable
Portfolio
Companies Large
Investment
Stage Other
Corporate
Center Total
Intragroup
Investment
Reversal and
Adjustments
Equity
Changes
in JSC
GCAP
Investment
Entity Total
Gains/(losses) on investments at fair
value 399,384 (2,039) 41,857 5,430 – 444,632 178,350 (54,631) 568,351
Listed and observable Investments 399,384 – – – – 399,384 (399,384) – –
Private Investments – (2,039) 41,857 5,430 – 45,248 577,734 (54,631) 568,351
Dividend income 153,871 76,825 5,187 – – 235,883 (235,883) 47,659 47,659
Interest income – – – – 16,642 16,642 (16,642) – –
Loss on liquid funds – – – – (1,574) (1,574) 1,574 – –
Gross investment profit/(loss) 553,255 74,786 47,044 5,430 15,068 695,583 (72,601) (6,972) 616,010
Administrative expenses – – – – (10,909) (10,909) 6,433 – (4,476)
Salaries and other employee benefits – – – – (25,870) (25,870) 23,783 – (2,087)
Interest expense – – – – (47,808) (47,808) 47,808 – –
Profit/(loss) before provisions,
foreign exchange and
non-recurring items 553,255 74,786 47,044 5,430 (69,519) 610,996 5,423 (6,972) 609,447
Expected credit loss charge – – – – (75) (75) 75 – –
Net foreign currency gain/ (loss) – – – – 6,566 6,566 (7,521) – (955)
Non-recurring expense – – – – (1,898) (1,898) 1,898 – –
Net gains from investment securities
measured at FVPL – – – – – – 125 – 125
Profit/(loss) before income taxes 553,255 74,786 47,044 5,430 (64,926) 615,589 – (6,972) 608,617
Income tax – – – – – – – – –
Profit/(loss) for the year 553,255 74,786 47,044 5,430 (64,926) 615,589 – (6,972) 608,617
210 211
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements continued
Georgia Capital PLC (Thousands of Georgian Lari)
6. Equity Investments at Fair Value
31 December
2024
31 December
2023
Subsidiaries (Note 12) 3,606,400 3,363,411
of which JSC GCAP 3,564,981 3,363,411
of which GBH Limited 41,419 –
Equity Investments at Fair Value 3,606,400 3,363,411
2024 2023
At 1 January 3,363,411 2,795,060
Fair Value gain and dividend income 368,098 616,010
Dividend income* (125,109) (47,659)
Capital redemption** (41,419) –
Capital injection*** 41,419 –
At 31 December 3,606,400 3,363,411
* In 2024 JSC Georgia Capital paid a dividend to its 100% shareholder in the amount of GEL 125,109 (2023: GEL 47,659).
** In 2024 JSC Georgia Capital made a non-cash capital reduction to its 100% shareholder with total consideration of GEL 41,419 (2023: GEL nil).
*** In 2024 Georgia Capital PLC established new holding company in UK, GBH Limited with total capital injection of GEL 41,419. GBH Limited holds 20% stake (together with minority
shareholders) in the beer and distribution business.
Georgia Capital PLC holds an investment in JSC Georgia Capital (an investment entity on its own), which holds a portfolio of
investments, both meet the definition of investment entity and Georgia Capital PLC measures its investment in JSC Georgia Capital at
fair value through profit or loss. Starting from December 2024, Georgia Capital PLC also holds an investment in Georgian Beverages
Holding Limited which is measured at fair value through profit or loss. Through this entity, Georgia Capital PLC holds its minority interest
in the beer and distribution business. For the breakdown and detailed information regarding the equity investments at fair value, refer to
Note 12.
7. Income Tax
As at 31 December 2024 GCAP PLC has unrecognised tax asset (tax loss carried forward) in the amount of GEL 9,317 (31 December
2023: GEL 8,145). The Company does not recognise the deferred tax asset since it is not expected to be utilised in the foreseeable
future, as the Company’s income sources, fair value gains on equity investments and dividend income, are not taxable in the UK, as fair
value gains are unrealised and dividend income from controlled company is exempt from taxation under UK tax law.
The aggregate amount of temporary differences associated with investments in subsidiaries is GEL 2,162,946 (2023: GEL 1,919,957).
The deferred tax liability has not been recognised as the Company controls the timing of reversal of these temporary differences and
considers it probable that the temporary differences will not be reversed in the foreseeable future.
Applicable taxes in Georgia include corporate income tax (profit tax), individuals’ withholding taxes, property tax and value added tax,
among others. Management believes that the Company is in compliance with the tax laws affecting its operations. However, the risk
remains that relevant authorities could take differing positions with regard to interpretative issues.
8. Equity
Share capital
As at 31 December 2024 issued share capital comprised of 39,559,135 authorised common shares (31 December 2023: 43,215,840),
of which 39,559,135 were fully paid (2023: 43,215,840). Each share has a nominal value of one British penny. Shares issued and
outstanding as at 31 December 2024 and 31 December 2023 are described below:
Number of
shares Ordinary Amount
1 January 2023 44,827,862 1,473
Cancellation of shares (1,612,022) (53)
31 December 2023 43,215,840 1,420
Cancellation of shares (3,656,705) (120)
31 December 2024 39,559,135 1,300
Treasury Shares
In 2024, the Company paid cash consideration of GEL 131,125 (2023: GEL 48,037) for acquisition of treasury shares, of which
GEL 304 (2023: GEL 203) was related to shares acquired for settlement of employee share-based payments and GEL 130,821
(2023: GEL 47,834) were other acquisitions made by the Company, including those under the share buyback programme.
During 2024 3,669,889 (2023: 1,665,222) treasury shares bought back under the Buyback Program. 3,656,705 shares were cancelled
in 2024 (2023: 1,612,022) and 66,384 (2023: 53,200) are held at treasury.
Earnings per share
2024 2023
Basic earnings per share
Profit for the year attributable to ordinary shareholders of the parent 362,274 608,617
Weighted average number of ordinary shares outstanding during the year 37,341,118 39,494,431
Earnings per share (GEL) 9.7017 15.4102
Diluted earnings per share*
Profit for the year attributable to ordinary shareholders of the parent 362,274 608,617
Weighted average number of diluted ordinary shares outstanding during the year 38,959,750 40,761,789
Diluted earnings per share (GEL) 9.2987 14.9311
* Dilution effect arises from the Group’s share-based compensation arrangements.
212 213
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements continued
Georgia Capital PLC (Thousands of Georgian Lari)
9. Salaries and Other Employee Benefits, and General and Administrative Expenses
2024 2023
Salaries and bonuses (1,243) (1,480)
Equity compensation plan costs (457) (541)
Pension costs (91) (66)
Salaries and other employee benefits (1,791) (2,087)
Refer also to the Resources and Responsibilities section on page 76-92 and the Directors’ Remuneration Report on page
142-168 in the Group’s Annual Report 2024. For total number of employees of Georgia Capital, refer to page 80 of the Resources
and Responsibilities section in the Group’s Annual Report 2024. For directors’ remuneration refer to page 154 of the Directors’
Remuneration Report in the Group’s Annual Report 2024. The Annual Report Figures comprise of both holding company entities:
Georgia Capital PLC and JSC Georgia Capital. The figures in the table above are for standalone Georgia Capital PLC.
General and administrative expenses
2024 2023
Legal and other professional services (3,770) (4,205)
Occupancy and rent (47) (114)
Communication (9) (14)
Other (132) (143)
General and administrative expenses (3,958) (4,476)
Auditors’ remuneration
Auditors’ remuneration is included within legal and other professional services expenses above and comprises:
2024 2023
Fees payable for the audit of the Company’s current year annual report 1,119 1,002
Fees payable for other services:
Audit of the Company’s subsidiaries 324 308
Total audit fees 1,443 1,310
Audit related assurance services
Other assurance services 108 103
Corporate finance services – 79
Total audit related fees 108 182
Non-audit services
Total other services fees – –
Total fees 1,551 1,492
The figures shown in the above table include audit fees of JSC GCAP and GCAP PLC and do not include other remuneration
paid by portfolio companies as it is not required by Companies Act 2006 Part 16. The presented amounts relate to fees paid to
PricewaterhouseCoopers LLP and its network firms.
10. Share-based Payments
Executives’ Equity Compensation Plan
In 2018, Georgia Capital introduced Group’s Executives’ Equity Compensation Plan (‘EECP’). Under the EECP, shares of the parent
are granted to senior executives of the Company. In July 2018, the executives signed new five-year fixed contingent share-based
compensation agreements with a total of 1,750,000 ordinary shares of Georgia Capital. The total amount of shares fixed to each
executive are being awarded in five equal instalments during the five consecutive years starting January 2019, of which each award is
subject to a six-year vesting period subject to continued employment within the Group during such vesting period. In October 2022
CEO contract maturity was extended until 31 December 2025 from May 2023, extending fixed contingent share-based compensation
with additional 518,357 ordinary shares of Georgia capital. The fair value of the shares is determined at the grant date using available
market quotations.
After Georgia Capital met the definition of investment entity on 31 December 2019, only the small portion of the CEO’s share-based
compensation which Georgia Capital PLC retains the obligation to settle is within scope of IFRS 2 in Georgia Capital’s financial statements.
10. Share-based Payments continued
Executives’ Equity Compensation Plan continued
The following table illustrates the number and weighted average prices of, and movements in, shares awards granted to the CEO of
Georgia Capital PLC during the year:
2024 2023
Shares outstanding at 1 January 118,368 132,735
Vested during the year (18,368) (14,367)
Granted during the year – –
Shares outstanding at 31 December 100,000 118,368
The weighted average remaining contractual life for the share awards outstanding as at 31 December 2024 was 2.20 years
(2023: 2.71 years).
The weighted average fair value of shares vested was GEL 33.4 per share (2023: GEL 33.4 per share). The weighted average fair value
of shares granted was GEL nil (2023: GEL nil).
Expense recognition
The share-based payment expense recognised for employee services received during 2024 and the respective increase in equity
arising from equity-settled share-based payments was GEL 457 (2023: GEL 541).
11. Risk Management
Introduction
Risk is inherent in the Group’s activities but it is managed through a process of on-going identification, measurement and monitoring,
subject to risk limits and other controls. This process of risk management is critical to the Group’s continuing profitability and each
individual within the Group is accountable for the risk exposures relating to his or her responsibilities. The Group is exposed to
investment risk, credit risk, liquidity risk and market risk. It is also subject to operational risks and insurance risk.
The independent risk control process does not include business risks such as changes in the environment, technology and industry.
They are monitored through the Group’s strategic planning process.
Risk management structure
Audit and Valuation Committee
The Audit and Valuation Committee of Georgia Capital PLC assists the Management Board of Georgia Capital in relation to the
oversight of the Group’s financial and reporting processes. It monitors the integrity of the financial statements and is responsible for
governance around both the internal audit function and external auditor, reporting back to the Board. It reviews the effectiveness of the
policies, procedures and systems in place related to, among other operational risks, compliance, IT and IS (including cyber-security)
and assesses the effectiveness of the risk management and internal control framework.
It is responsible for reviewing and approving half-yearly and annual valuations of the Group’s portfolio investments prepared and
presented to it by the Management Board. The Committee will ensure that the Valuation Policy complies with the obligations within any
agreements in place, legislation, regulations, guidance and other policies of the Company.
Management Board
The Management Board of Georgia Capital has overall responsibility for the Group’s asset, liability and risk management activities,
policies and procedures. The Management Board is comprised of senior managers of GCAP PLC and JSC GCAP. In order to
effectively implement the risk management system, the Board of Directors delegates individual risk management functions to the
Management Board, which in turn assigns specific functions to the various decision-making and execution bodies within the Group’s
portfolio entities.
Internal Audit
The Internal Audit Department of Georgia Capital PLC is responsible for the annual audit of the Group’s risk management, internal
control and corporate governance processes, with the aim of reducing the levels of operational and other risks, auditing the Group’s
internal control systems and detecting any infringements or errors on the part of the Group’s departments and divisions. It examines
both the adequacy of and the Group’s compliance with those procedures. The Group’s Internal Audit Department discusses the results
of all assessments with management, and reports its findings and recommendations to the Audit and Valuation Committee.
214 215
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements continued
Georgia Capital PLC (Thousands of Georgian Lari)
11. Risk Management continued
Introduction continued
Risk measurement and reporting systems
The Group’s risks are measured using a method which reflects both the expected loss likely to arise in normal circumstances and
unexpected losses, which are an estimate of the ultimate actual loss based on different forecasting models. The models make use of
probabilities derived from historical experience, adjusted to reflect the economic environment.
Monitoring and controlling risks is primarily performed based on limits established by the Group. These limits reflect the business
strategy and market environment of the Group as well as the level of risk that the Group is willing to accept, with additional emphasis
on selected industries and countries. In addition, the Group monitors and measures the overall risk bearing capacity in relation to the
aggregate risk exposure across all risks types and activities.
Information compiled from all the businesses is examined and processed in order to analyse, control and identify early risks.
This information is presented and explained to the Management Board.
Risk mitigation
As part of its overall risk management, GCAP PLC and JSC GCAP may use derivatives and other instruments to manage exposures
resulting from changes in interest rates, foreign currencies, equity risks, credit risks, and exposures arising from forecast transactions.
Risks at portfolio company level are mitigated by instruments applicable to specific industries they operate in.
Credit risk
Credit risk is the risk that the Company will incur a loss because its customers, clients or counterparties fail to discharge their
contractual obligations. The Group manages and controls credit risk by setting limits on the amount of risk it is willing to accept for
individual counterparties and by monitoring exposures in relation to such limits. Credit terms by debtors for various portfolio companies
are managed and monitored separately, given industry specifics in which respective entities operate.
Liquid financial instruments
Credit risk from balances with banks and financial institutions is managed by the treasury department of GCAP PLC and JSC GCAP
in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties and within credit
limits assigned to each counterparty. The limits are set to minimise the concentration of risks and therefore mitigate financial loss
through a counterparty’s potential failure to make payments.
The table below demonstrates the Company’s financial assets credit risk profile by external rating grades:
31 December 2024 31 December 2023
A+ to A- BB+ to BB- Not graded A+ to A- BB+ to BB- Not graded
Cash and cash equivalents 28 3,493 – 11,826 493 –
Investment in redeemable securities – – – – – 3,517
Total 28 3,493 – 11,826 493 3,517
Liquidity risk
Liquidity risk is the risk that the Company or any of its portfolio entities will be unable to meet its payment obligations when they fall
due under normal and stress circumstances. To limit this risk, management has arranged diversified funding sources in addition to its
capital, manages assets with liquidity in mind, and monitors future cash flows and liquidity on a regular basis. This incorporates daily
monitoring of expected cash flows and liquidity needs.
The Group manages the maturities of its assets and liabilities for better matching, which helps the Group additionally mitigate the
liquidity risk. Maturities of assets and liabilities of the Company and each portfolio entity are managed separately. The major liquidity risks
confronting the Group are the daily calls on its available cash resources in respect of supplier contracts and the maturity of borrowings.
The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted repayment
obligations. Repayments, which are subject to notice, are treated as if notice were to be given immediately.
Financial liabilities
31 December 2024
Less than 3
months 3 to 12 months 1 to 5 years Over 5 years Total
Other financial liabilities 2,304 – – – 2,304
Total undiscounted financial liabilities 2,304 – – – 2,304
11. Risk Management continued
Liquidity risk continued
Financial liabilities
31 December 2023
Less than 3
months 3 to 12 months 1 to 5 years Over 5 years Total
Other financial liabilities 1,711 – – – 1,711
Total undiscounted financial liabilities 1,711 – – – 1,711
Market risk
Market risk is the risk that the value of financial instruments will fluctuate due to changes in market variables. The Group has exposure
to market risks. GCAP PLC and JSC GCAP structure the levels of market risk it accepts through a market risk policy that determines
what constitutes market risk. Risks associated with changes in fair value of equity investment and its implied fair value components are
disclosed in Note 12.
Price risk
In GCAP PLC equity securities price risk arises from investment held through JSC GCAP and GBH limited for which price in the future
is uncertain. Where non-monetary financial instruments – for example, equity securities – are denominated in currencies other than
the Georgian Lari, the price initially expressed in foreign currency and then converted into Georgian Lari will also fluctuate because of
changes in foreign exchange rates. For details on currency risk management, refer to respective paragraph below.
If the price of the listed investment increased by 10% (2023: 10%) JSC GCAP’s profit for the year and NAV would have increased by
GEL 142,103 (2023: GEL 122,584). If the price of the listed investment decreased by 10% (2023: 10%) JSC GCAP’s profit for the year
and NAV would have decreased by GEL 142,104 (2023: GEL 122,585). As a result, JSC GCAP’s NAV would have increased by 4%
(2023: 4%) or decreased by 4% (2023: 4%).
Sensitivity analysis of private portfolio companies are presented in Note 12.
Currency risk
GCAP PLC and JSC GCAP are exposed to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial
position and cash flows. The Group’s principal transactions are carried out in Georgian Lari and its exposure to foreign exchange risk
arises primarily with respect to GBP and US$.
The currency risk management process is an integral part of the Group’s activities; currency risk is managed through regular and
frequent monitoring of the Group’s currency positions and through timely and efficient elaboration of responsive actions and measures.
Operating environment
Most of the Group’s portfolio investments are concentrated in Georgia. As an emerging market, Georgia’s business and regulatory
infrastructure is less well-developed than that which would generally exist in a more mature market economy. Operations in Georgia
may involve risks that are not typically associated with those in developed markets (including the risk that the Georgian Lari is not freely
convertible outside the country, and undeveloped debt and equity markets). However, over the last few years the Georgian government
has taken a number of steps that positively affect the overall investment climate of the country, specifically implementing the reforms
necessary to create banking, judicial, taxation and regulatory systems. This includes the adoption of a new body of legislation (including a
new Tax Code and procedural laws). In the view of the Board, these steps contribute to mitigate the risks of doing business in Georgia.
The existing tendency aimed at the overall improvement of the business environment is expected to persist. The future stability of the
Georgian economy is, however, largely dependent upon these reforms and developments and the effectiveness of economic, financial
and monetary measures undertaken by the Government. In addition, the Georgian economy is vulnerable to market downturns and
economic slowdowns elsewhere in the world.
Georgia has published climate change strategy. Georgia’s 2030 Climate Change Strategy and Action Plan (Climate Change Strategy
and Action Plan-CSAP, Climate Action Plan-CAP) are a planning and implementation mechanism for coordinated effort and planning
towards meeting the nationally determined targets for climate change mitigation.
216 217
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements continued
Georgia Capital PLC (Thousands of Georgian Lari)
11. Risk Management continued
Capital management
Management monitors the Group’s capital on a regular basis based on statement of Net Asset Value (NAV) prepared on fair value
bases, which corresponds to equity attributable to shareholders of Georgia Capital PLC as at 31 December 2024 in the amount of
GEL 3,609,013 (2023: GEL 3,378,512). The Net Asset Value (NAV) statement breaks down NAV into its components, including fair
values for the private businesses and follows changes therein, providing management with a snapshot of the Group’s financial position
at any given time. The NAV statement provides a value of Georgia Capital that management uses as a tool for measuring its investment
performance. Management closely monitors NAV in connection with capital allocation decisions. Refer to Note 5.
The capital management objectives are as follows:
•
To maintain the required level of stability of the Group thereby providing a degree of security to the shareholders;
•
To manage capital needs such that Group does not depend on potentially premature liquidation of its listed investments;
•
To allocate capital efficiently and support the development of business by ensuring that returns on capital employed meet the
requirements of its capital providers and of its shareholders; and
•
To maintain financial strength to support new business growth and to satisfy the shareholders’ requirements.
The Group manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of
the applicable financial covenants. To maintain or adjust the capital structure, the Group may adjust the amount of outstanding equity.
12. Fair Value Measurements
Fair value hierarchy
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature,
characteristics and risks of the asset or liability. The following tables show analysis of assets and liabilities measured at fair value or for
which fair values are disclosed by level of the fair value hierarchy:
31 December 2024 Level 1 Level 2 Level 3 Total
Assets measured at fair value
Equity investments at fair value – – 3,606,400 3,606,400
31 December 2023 Level 1 Level 2 Level 3 Total
Assets measured at fair value
Equity investments at fair value – – 3,363,411 3,363,411
Valuation techniques
The following is a description of the determination of fair value for financial instruments which are recorded at fair value using
valuation techniques. These incorporate the Company’s estimate of assumptions that a market participant would make when valuing
the instruments.
Assets for which fair value approximates carrying value
For financial assets and financial liabilities that are liquid or have a short-term maturity (less than three months), it is assumed that the
carrying amounts approximate to their fair value. This assumption is also applied to demand deposits, savings accounts without a
specific maturity and variable rate financial instruments.
Fixed rate financial instruments
The fair value of fixed rate financial assets and liabilities carried at amortised cost are estimated by comparing market interest rates
when they were first recognised with current market rates offered for similar financial instruments. The estimated fair value of fixed
interest-bearing deposits is based on discounted cash flows using prevailing money-market interest rates for debts with similar credit
risk and maturity.
Investment in subsidiaries
Equity investments at fair value include investments in subsidiaries at fair value through profit or loss representing 100% interest of JSC
Georgia Capital and 92% in Georgian Beverages Holding Limited. Georgia Capital PLC holds an investment in JSC Georgia Capital (an
investment entity on its own), which holds a portfolio of investments, both meet the definition of investment entity and Georgia Capital
PLC measures its investment in JSC Georgia Capital at fair value through profit or loss. Investments in investment entity subsidiaries
and loans issued are accounted for as financial instruments at fair value through profit and loss in accordance with IFRS 9. Debt
securities owned are measured at fair value. In the ordinary course of business, the net asset value of investment entity subsidiaries is
considered to be the most appropriate to determine fair value.
12. Fair Value Measurements continued
Valuation techniques continued
Investment in subsidiaries continued
Starting from December 2024, Georgia Capital PLC also holds an investment in Georgian Beverages Holding Limited which is
measured at fair value through profit or loss. Through this entity, Georgia Capital PLC holds its minority interest in the beer and
distribution business. JSC Georgia Capital’s net asset value as of 31 December 2024 and 31 December 2023 is determined as follows:
31 December
2024
31 December
2023
Assets
Cash and cash equivalents 167,801 51,138
Amounts due from credit institutions 98,844 8,678
Marketable securities 7,869 18,203
Investment in redeemable securities – 14,068
Equity investments at fair value 3,720,071 3,671,945
Of which listed and observable investments 1,609,035 1,384,847
Lion Finance Group 1,421,035 1,225,847
Water utility 188,000 159,000
Of which private investments: 2,111,036 2,287,098
Large portfolio companies 1,434,749 1,436,231
Retail (pharmacy) 716,130 714,001
P&C insurance 313,140 285,566
Medical insurance 114,805 92,308
Hospitals 290,674 344,356
Investment stage portfolio companies 557,392 566,614
Renewable energy 252,606 266,627
Education 181,584 189,226
Clinics and diagnostics 123,202 110,761
Other portfolio companies 118,895 284,253
Loans issued – 9,212
Other assets 5,017 5,060
Total assets 3,999,602 3,778,304
Liabilities
Debt securities issued 432,460 413,930
Other liabilities 2,161 963
Total liabilities 434,621 414,893
Net asset value 3,564,981 3,363,411
In measuring fair values of JSC Georgia Capital’s investments, following valuation methodology is applied:
Equity investments in listed and observable portfolio companies
Equity instruments listed on an active market are valued at the price within the bid/ask spread, that is most representative of fair value
at the reporting date, which usually represents the closing bid price. The instruments are included within Level 1 of the hierarchy in JSC
GCAP financial statements. Listed and observable portfolio also includes instruments for which there is a clear exit path from the business,
e.g. through a put and/or call options at pre-agreed multiples. In such cases, pre-agreed terms are used for valuing the company.
Equity investments in private portfolio companies
Large portfolio companies – An independent third-party valuation firm is engaged to assess fair value ranges of large private portfolio
companies at the reporting date starting from 31 December 2020. The independent valuation company has extensive relevant industry
and emerging markets experience. Valuation is performed by applying several valuation methods including an income approach based
mainly on discounted cash flow and a market approach based mainly on listed peer multiples (the DCF and listed peer multiples
approaches applied are described below for the other portfolio companies). The different valuation approaches are weighted to derive
a fair value range, with the income approach being more heavily weighted than the market approach. Management selects what is
considered to be the most appropriate point in the provided fair value range at the reporting date.
218 219
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements continued
Georgia Capital PLC (Thousands of Georgian Lari)
12. Fair Value Measurements continued
Valuation techniques continued
Equity investments in private portfolio companies continued
Investment stage portfolio companies – An independent third-party valuation firm is engaged to assess fair value ranges of investment
stage private portfolio companies at the reporting date starting from 30 June 2022. The independent valuation company has extensive
relevant industry and emerging markets experience. Valuation is performed by applying several valuation methods including an income
approach based mainly on discounted cash flow and a market approach based mainly on listed peer multiples (the DCF and listed peer
multiples approaches applied are substantially identical to those described below for the other portfolio companies). The different valuation
approaches are weighted to derive a fair value range, with the income approach being more heavily weighted than the market approach.
Management selects what is considered to be the most appropriate point in the provided fair value range at the reporting date.
Other portfolio companies – fair value assessment is performed internally as described below.
Equity investments in private portfolio companies are valued by applying an appropriate valuation method, which makes maximum
use of market-based public information, is consistent with valuation methods generally used by market participants and is applied
consistently from period to period, unless a change in valuation technique would result in a more reliable estimation of fair value.
The value of an unquoted equity investment is generally crystallised through the sale or flotation of the entire business. Therefore, the
estimation of fair value is based on the assumed realisation of the entire enterprise at the reporting date. Recognition is given to the
uncertainties inherent in estimating the fair value of unquoted companies and appropriate caution is applied in exercising judgments
and in making the necessary estimates.
The fair value of equity investments is determined using one of the valuation methods described below:
Listed peer group multiples
This methodology involves the application of a listed peer group earnings multiple to the earnings of the business and is
appropriate for investments in established businesses and for which the Company can determine a group of listed companies with
similar characteristics.
The earnings multiple used in valuation is determined by reference to listed peer group multiples appropriate for the period of earnings
calculation for the investment being valued.
The Company identifies a peer group for each equity investment taking into consideration points of similarity with the investment such
as industry, business model, size of the company, economic and regulatory factors, growth prospects (higher growth rate) and risk
profiles. Some peer-group companies’ multiples may be more heavily weighted during valuation if their characteristics are closer to
those of the company being valued than others.
As a rule of thumb, last 12-month earnings will be used for the purposes of valuation as a generally accepted method. Earnings are
adjusted where appropriate for exceptional, one-off or non-recurring items.
a. Valuation based on enterprise value
Fair value of equity investments in private companies can be determined as their enterprise value less net financial debt (gross face
value of debt less cash) appearing in the most recent Financial Statements.
Enterprise value is obtained by multiplying measures of a company’s earnings by listed peer group multiple (EV/EBITDA) for the
appropriate period. The measures of earnings generally used in the calculation is recurring EBITDA for the last 12 months (LTM
EBITDA). In exceptional cases, where EBITDA is negative, peer EV/Sales (enterprise value to sales) multiple can be applied to last
12-month recurring/adjusted sales revenue of the business (LTM sales) to estimate enterprise value.
12. Fair Value Measurements continued
Valuation techniques continued
Equity investments in private portfolio companies continued
Listed peer group multiples continued
Valuation based on enterprise value continued
Once the enterprise value is estimated, the following steps are taken:
•
Net financial debt appearing in the most recent financial statements is subtracted from the enterprise value. If net debt exceeds
enterprise value, the value of shareholders’ equity remains at zero (assuming the debt is without recourse to Georgia Capital).
•
The resulting fair value of equity is apportioned between Georgia Capital and other shareholders of the company being valued,
if applicable.
•
Valuation based on enterprise value using peer multiples is used for businesses within non-financial industries.
b. Equity fair value valuation
Fair value of equity investment in companies can also be determined as using price to earnings (P/E) multiple of similar listed companies.
The measure of earnings used in the calculation is recurring adjusted net income (net income adjusted for non-recurring items and
forex gains/ losses) for the last 12 months (LTM net income). The resulting fair value of equity is allocated between Georgia Capital
and other shareholders of the portfolio company, if any. Fair valuation of equity using peer multiples can be used for businesses within
financial sector (e.g. insurance companies).
Discounted cash flow
Under the discounted cash flow (DCF) valuation method, fair value is estimated by deriving the present value of the business using
reasonable assumptions of expected future cash flows and the terminal value, and the appropriate risk-adjusted discount rate that
quantifies the risk inherent to the business. The discount rate is estimated with reference to the market risk-free rate, a risk adjusted
premium and information specific to the business or market sector. Under the discounted cash flow analysis unobservable inputs are
used, such as estimates of probable future cash flows and an internally-developed discounting rate of return.
Net asset value
The net assets methodology involves estimating fair value of an equity investment in a private portfolio company based on its book
value at reporting date. This method is appropriate for businesses (such as real estate) whose value derives mainly from the underlying
value of its assets and where such assets are already carried at their fair values (fair values determined by professional third-party
valuation companies) on the balance sheet.
Price of recent investment
The price of a recent investment resulting from an orderly transaction, generally represents fair value as of the transaction date.
At subsequent measurement dates, the price of a recent investment may be an appropriate starting point for estimating fair value.
However, adequate consideration is given to the current facts and circumstances to assess at each measurement date whether
changes or events subsequent to the relevant transaction imply a change in the investment’s fair value.
Exit price
Fair value of a private portfolio company in a sales process, where the price has been agreed but the transaction has not yet settled,
is measured at the best estimate of expected proceeds from the transaction, adjusted pro-rata to the proportion of shareholding sold.
Validation
Fair value of investments estimated using one of the valuation methods described above is cross-checked using several other valuation
methods as follows:
•
Listed peer group multiples – peer multiples such as P/E, P/B (price to book) and dividend yield are applied to the respective metrics
of the investment being valued depending on the industry of the company. The Company develops fair value range based on these
techniques and analyses whether fair value estimated above falls within this range.
•
Discounted cash flow (DCF) – the discounted cash flow valuation method is used to determine fair value of equity investment.
Based on DCF, the Company might make upward or downward adjustment to the value of valuation target as derived from primary
valuation method. If fair value estimated using discounted cash flow analysis significantly differs from the fair value estimate derived
using primary valuation method, the difference is examined thoroughly, and judgement is applied in estimating fair value at the
measurement date.
•
In line with GCAP’s strategy, from time to time, we may receive offers from interested buyers for the private portfolio companies,
which would be considered in the overall valuation assessment, where appropriate.
220 221
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements continued
Georgia Capital PLC (Thousands of Georgian Lari)
12. Fair Value Measurements continued
Valuation process for level 3 valuations
Georgia Capital hired third-party valuation professionals to assess fair value of the large private portfolio companies as at 31 December
2021. Starting from 2022 third-party valuation professionals are hired to assess fair value of the investment stage private portfolio
companies as well. As of 31 December 2024, such businesses include Hospitals (Large and Specialty & Regional and Community
Hospitals), Insurance (consisting of a. P&C insurance and b. Medical insurance), Retail (Pharmacy), Clinics & Diagnostics, Renewable
energy and Education. The valuation is performed by applying several valuation methods that are weighted to derive fair value range,
with the income approach being more heavily weighted than market approach. Management selects most appropriate point in the
provided fair value range at the reporting date. Fair values of investments in other private portfolio companies are assessed internally
in accordance with Georgia Capital’s valuation methodology by the Valuation Workgroup.
Georgia Capital’s Management Board proposes fair value to be placed at each reporting date to the Audit and Valuation Committee.
The Audit and Valuation Committee is responsible for the review and approval of fair values of investments at the end of each
reporting period.
Description of significant unobservable inputs to level 3 valuations
The approach to valuations as of 31 December 2024 was consistent with the Company’s valuation process and policy.
Management analyses the impact of climate change on the valuations, such as by incorporation of known effects of climate risks to the
future cash flow forecasts or through adjusting peer multiples the known differences in the climate risk exposure as compared to the
investment being fair valued. As at 31 December 2024, the management concluded that the effects of the climate risks are reflected
in the peer multiples and discount rates used in the valuations and that no specific adjustments are required in relation of the Group’s
investment portfolio measurement and respective fair value sensitivity disclosures.
The following tables show descriptions of significant unobservable inputs to level 3 valuations of equity investments:
31 December 2024
Description Valuation technique Unobservable input
Range*
[implied multiple**] Fair value
Loans issued DCF Discount rate – –
Equity investments at fair value
Large portfolio 1,434,749
Retail (pharmacy) DCF, EV/EBITDA EV/EBITDA multiple 5.4x–15.6x 716,130
[8.4x]
P&C insurance DCF, P/E P/E multiple 5.6x–12.0x 313,140
[10.7x]
Medical insurance DCF, P/E P/E multiple 9.4x–14.1x 114,805
[12.3x]
Hospitals DCF, EV/EBITDA EV/EBITDA multiple 6.4x–12.9x 290,674
[10.5x]
Investment stage 557,392
Renewable energy DCF, EV/EBITDA EV/EBITDA multiple 4.3x–17.5x 252,606
[11.3x]
Education DCF, EV/EBITDA EV/EBITDA multiple 4.9x–25.4x 181,584
[12.8x]
Clinics and diagnostics DCF, EV/EBITDA EV/EBITDA multiple 4.8x–12.9x 123,202
[10.6x]
Other
Sum of the parts EV/EBITDA multiples 5.5x–24.9x 160,314
[8.0x–12.2x]
Cashflow probability [90%–100%]
NAV multiple [0.85x]
12. Fair Value Measurements continued
Description of significant unobservable inputs to level 3 valuations continued
31 December 2023
Description Valuation technique Unobservable input
Range*
[implied multiple**] Fair value
Loans issued DCF Discount rate 15.0%-16.5% 9,212
Equity investments at fair value
Large portfolio 1,436,231
Retail (pharmacy) DCF, EV/EBITDA EV/EBITDA multiple 6.3x–28.2x 714,001
[9.7x]
P&C insurance DCF, P/E P/E multiple 4.6x–12.6x 285,566
[13.0x]
Medical insurance DCF, P/E P/E multiple 5.7x–11.6x 92,308
[11.0x]
Hospitals DCF, EV/EBITDA EV/EBITDA multiple 7.2x–12.8x 344,356
[13.8x]
Investment stage 566,614
Renewable energy DCF, EV/EBITDA EV/EBITDA multiple 2.8x–17.0x 266,627
[12.6x]
Education DCF, EV/EBITDA EV/EBITDA multiple 6.1x–42.7x 189,226
[16.7x]
Clinics and diagnostics DCF, EV/EBITDA EV/EBITDA multiple 9.4x–12.8x 110,761
[11.7x]
Other
Sum of the parts EV/EBITDA multiples 2.1x–19.0x 284,253
[6.7x–14.6x]
Cashflow probability [90%–100%]
NAV multiple [1.0x]
* For equity investments at fair value the range refers to LTM multiples of listed peer group companies, prior to any adjustments.
** Implied multiples are derived by dividing selected value of the company by respective LTM earnings measure.
Georgia Capital hired third-party valuation professionals to assess fair value of the large and investment stage private portfolio
companies as at 31 December 2024 and 31 December 2023 including Insurance (consisting of a. P&C insurance and b. Medical
insurance), Hospitals (Large and Specialty & Regional and Community Hospitals), Retail (Pharmacy) and Clinics and Diagnostics.
Starting from 30 June 2022, fair value assessment for Renewable Energy and Education businesses are performed by third-party
valuation professionals as well. The valuation is performed by applying several valuation methods that are weighted to derive fair value
range, with the income approach being more heavily weighted than market approach. Management selects most appropriate point in
the provided fair value range at the reporting date.
On 31 December 2021, Georgia Capital signed SPA to dispose 80% interest in Water Utility business, which was previously included
within the large private portfolio companies. As at 31 December 2023 the remaining 20% interest in Water Utility business was valued
using the pre-agreed put option multiple in reference to the signed contract with the buyer as GCAP has a clear exit path from the
business through a put and call structure at pre-agreed EBITDA multiples.
In April 2024, Georgia Capital signed an agreement to acquire a portfolio of insurance contracts and the brand name from ‘Ardi’. The
acquisition was fully financed by borrowings within the medical insurance business. As at 31 December 2024, in the valuations of the
medical insurance business, Georgia Capital also included the recently acquired Ardi, which was previously valued at cost.
In October 2024, Georgia Capital entered into an agreement with a subsidiary of Royal Swinkels N.V. (‘Royal Swinkels’) for the disposal
of the beer and distribution business. Following the disposal, the beer and distribution business is held through a new holding company
domiciled in the Netherlands (the ‘Dutch Holdco’). GCAP PLC obtained a 20% holding in the Dutch Holdco and Royal Swinkels 80%.
The parties have put in place a put/call structure relating to the remaining GCAP PLC 20% holding. The put option granted to GCAP
PLC can be exercised at a pre-agreed EV/EBITDA multiple, in each of the twelve-month periods following the approval of the audited
consolidated financial statements of the Dutch Holdco by shareholders for each of the financial years ended 31 December 2028, 2029
and 2030. The transaction has been completed and net proceeds of c.US$ 63.0 million has been received by 31 December 2024.
222 223
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements continued
Georgia Capital PLC (Thousands of Georgian Lari)
12. Fair Value Measurements continued
Description of significant unobservable inputs to level 3 valuations continued
As at 31 December 2024, several portfolio companies (Hospitals, Clinics, P&C Insurance, together ‘Defendants’) were engaged in
litigation with the former shareholders of Insurance Company Imedi L who allege that the they sold their 66% shares in Imedi L to
Defendants under duress at a price below market value in 2012. Since the outset, Defendants have vigorously defended their position
that the claims are wholly without merit. The initial judgment of the First Instance Court which was in favour of the Defendants was
overruled and upon reconsideration the First Instance Court partially satisfied the claim and ruled that US$ 12.7 million principal
amount plus an annual 5% interest charge as lost income (c.US$ 21 million in total) should be paid by the Defendants. The Defendants
appealed the decision of the First Instance Court. Several hearings have taken place at the Appellate Court and as of 31 December
2024 the case is still at the stage of consideration at the Appellate Court. No date for the next hearing date has been set.
The Defendants are confident that they will prevail and there have not been made a provision for a potential liability in their financial
statements. Management shares Defendants’ assessment of the merits of the case and considers that the probability of incurring
losses on this claim is low, accordingly, fair values of portfolio companies do not take into account a potential liability in relation to
this litigation.
In December 2023, the Georgian National Competition Agency (the ‘Agency’) imposed fines on four companies in the Georgian
pharmaceutical retailers’ sector, including GCAP’s retail (pharmacy) business, for alleged anti-competitive actions related to price
quotations on certain prescription medicines funded under the state programme. The penalty amount assessed by the Agency on the
retail (pharmacy) business is GEL 20.0 million derived by utilising the single rate across all the alleged participants. The company has
appealed the Agency’s decision in court and plans to vigorously defend its position. No date of hearing has been set yet.
As at 31 December 2024, Georgia Education Group, LLC (‘GEG’) was involved in litigation with the minority partner of the British
Georgian Academy, LLC (‘BGA’). The minority partner initially was claiming the annulment of the memorandum of understanding
(‘MoU’) under which Georgia Capital acquired a 70% shareholding in BGA in 2019, alleging GEG’s failure to invest in the development
of BGA. However, the minority partner later withdrew the lawsuit and submitted a new claim to the court, seeking GEL 0.3 million in
damages, once again alleging that GEG failed to invest in BGA’s development.
On 6 February 2025, the minority partner filed an amended claim with the court, seeking damages in the amount of US$ 15.5 million,
termination of the MoU, and the consequent return of 70% of BGA’s stake in the minority partner’s ownership.
GEG’s assessment of the claim is that the claimant’s allegations are based on false factual grounds and are without any legal merit. In
particular, GEG’s position is that it is the minority partner who failed to honour investment commitments under the MoU. Management
shares GEG’s assessment of the merits of the case and considers that the probability of incurring losses on this claim is low.
The case is currently pending before the court of first instance, and the date of the preliminary hearing has not been set yet.
Sensitivity analysis to significant changes in unobservable inputs within level 3 hierarchy
In order to determine reasonably possible alternative assumptions the Company adjusted key unobservable model inputs. The
Company adjusted the inputs used in valuation by increasing and decreasing them within a range which is considered by the Company
to be reasonable.
If the listed peer multiples used in the market approach to value unquoted investments as at 31 December 2024 decreased by 10%
(2023: 10%), value of equity investments at fair value would decrease by GEL 58 million or 2% (2023: GEL 59 million or 2%). If the
multiple increased by 10% (2023: 10%) then the equity investments at fair value would increase by GEL 58 million or 2% (2023: GEL
59 million or 2%).
If the discount rates used in the income approach to value unquoted investments decreased by 50 basis points (2023: 50 basis points),
the value of equity investments at fair value would increase by GEL 74 million or 2% (2023: GEL 82 million or 2%). If the discount rates
increased by 50 basis points (2023: 50 basis points) then the equity investments at fair value would decrease by GEL 85 million or 2%
(2023: GEL 87 million or 2%). If the discount rate decreased by 100 basis points, the value of equity investments at fair value would
increase by GEL 162 million or 4% (31 December 2023: GEL 177 million or 5%). If the discount rate increased by 100 basis points,
then the equity investments at fair value would decrease by GEL 158 million or 4% (31 December 2023: GEL 164 million or 4%).
If the multiple used to value unquoted investments valued on NAV and recent transaction price basis as at 31 December 2024
decreased by 10% (2023: 10%), value of equity investments at fair value would decrease by GEL 8 million or 0.2% (2023: GEL 10 million
or 0.3%). If the multiple increased by 10% then the equity investments at fair value would increase by GEL 8 million or 0.2% (2023:
GEL 10 million or 0.3%).
12. Fair Value Measurements continued
Sensitivity analysis to significant changes in unobservable inputs within level 3 hierarchy continued
As set out in the description of significant unobservable inputs to level 3 valuations the valuations have been prepared on the basis that
climate change risks are reflected in the peer multiples and discount rates. Therefore, the sensitivities noted above in respect of peer
multiples and discount rates include the risk arising from climate change.
Movements in level 3 financial instruments measured at fair value
The following tables show a reconciliation of the opening and closing amounts of level 3 financial assets which are recorded at fair value:
At 1 January
2023
Fair Value
gain
Capital
redemption
Capital
increase
At
31 December
2023
Fair Value
gain
Capital
redemption/
injection
Dividend
Income
At
31 December
2024
Level 3 financial assets
Equity investments at fair
value (Note 6) 2,795,060 616,010 – (47,659) 3,363,411 368,098 – (125,109) 3,606,400
13. Maturity Analysis
The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or settled:
31 December 2024
Less than 1 Year
More than
1 Year Total
Cash and cash equivalents 3,521 – 3,521
Equity investments at fair value – 3,606,400 3,606,400
Prepayments 1,396 – 1,396
Total assets 4,917 3,606,400 3,611,317
Other liabilities 2,304 – 2,304
Total liabilities 2,304 – 2,304
Net 2,613 3,606,400 3,609,013
31 December 2023
Less than 1 Year
More than 1
Year Total
Cash and cash equivalents 12,319 – 12,319
Investment in redeemable securities 3,517 – 3,517
Equity investments at fair value – 3,363,411 3,363,411
Prepayments 976 – 976
Total assets 16,812 3,363,411 3,380,223
Other liabilities 1,711 – 1,711
Total liabilities 1,711 – 1,711
Net 15,101 3,363,411 3,378,512
224 225
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
Notes to Financial Statements continued
Georgia Capital PLC (Thousands of Georgian Lari)
14. Related Party Disclosures
In accordance with IAS 24 ‘Related Party Disclosures’, parties are considered to be related if one party has the ability to control the
other party or exercise significant influence over the other party in making financial or operational decisions. In considering each
possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form.
Related parties may enter into transactions which unrelated parties might not, and transactions between related parties may not be
effected on the same terms, conditions and amounts as transactions between unrelated parties. All transactions with related parties
disclosed below have been conducted on an arm’s length basis.
There were no related party transactions as of 31 December 2024 and as of 31 December 2023, other than dividend income of GEL
125,109 from JSC GCAP in 2024 (31 December 2023: 47,659) and compensation of key management personnel disclosed below.
The compensation of key management personnel for the Company and its 100%-owned subsidiary, JSC GCAP, comprised the following:
2024 2023
Salaries and other benefits (1,916) (2,097)
Share-based payments compensation (9,093) (9,165)
Total key management compensation (11,009) (11,262)
Key management personnel do not receive cash settled compensation, except for fixed salaries. The number of key management
personnel at 31 December 2024 was 5 (31 December 2023: 5).
For more information regarding Groups Directors’ remuneration refer to the Directors’ Remuneration Report on page 142-168 in the
Group’s Annual Report 2024.
For the details of related party balances comprising of equity investments at fair value please, refer to Note 6.
15. Events after the Reporting Period
Lion Finance Group PLC Share Price Growth
As of 14 March 2025, the share price of Lion Finance Group PLC has seen a significant increase, rising from GBP 47.10 to GBP 56.30
compared to the end of 2024. This translates to a total value increase by 22% in GEL.
US$ 25 million increase to the share buyback programme
On 11 March 2025, Georgia Capital PLC announced the increase of the current US$ 25 million share buyback and cancellation
programme by an additional US$ 25 million, which would be put in place immediately. The shares will be purchased in the open
market, and the cancellation of the treasury shares will be executed on a monthly basis.
AGM Annual General Meeting
APM Alternative performance measure
BoG JSC Bank of Georgia
CAGR Compounded annual growth rate
COVID-19 The novel coronavirus
DCF Discounted cash flow
DCFTA Deep and Comprehensive Free Trade
Agreement
EBITDA Earnings before interest, taxes, non-recurring
items, FX gain or losses and depreciation and
amortisation
EECP Executives’ Equity Compensation Plan
EFTA European Free Trade Association
EPS Earnings per share
ESMS Environmental and Social Risk Management
Procedures
EUR Euro
EV Enterprise value
FCF Free cash flow
FDI Foreign direct investment
FRC Financial Reporting Council
FTA Free Trade Agreement
GBP Great British Pound, national currency of the UK
GDP Gross domestic product
GEL Georgian Lari or Lari, national currency of
Georgia
GGU Georgia Global Utilities
GHG Georgia Healthcare Group
HPP Hydro power plant
IAS International Accounting Standards
IASB International Accounting Standards Board
IFC International Finance Corporation
IMF International Monetary Fund
IPO Initial Public Offering
LTIP Long-Term Incentive Plan
LTM Last 12 months
LTV Loan to value ratio
MDA Modified Dutch Auction
MOIC Multiple of invested capital
MoU Memorandum of Understanding
Additional Information
Abbreviations
MTPL Mandatory third-party liability insurance
MW Megawatt
NAV Net asset value
NBG National Bank of Georgia
NCC Net Capital Commitment
NGO Non-governmental organisation
NIM Net Interest Margin
NMF Not meaningful to present
NPLs Non-performing loans
NTM Next twelve months
OECD Organisation for Economic Co-operation
and Development
OPEX Operating expenses
P&C Property and Casualty
PLC Public limited company
PPA Power Purchase Agreement
PwC PricewaterhouseCoopers LLP
RAB Regulatory Asset Base
ROA Return on assets
ROAE Return on average equity
ROE Return on equity
ROIC Return on invested capital
SDGs United Nations’ Sustainable Development Goals
SMEs Small and medium-size enterprises
SOTP Sum-of-the-parts valuation
TBD To be determined
TPP Thermal power plant
TPL Third-party liability insurance
TSR Total Shareholder Return
UK United Kingdom
US$/USD United States dollar, national currency of the
United States
WACC Weighted average cost of capital
WPP Wind power plant
WSS Water supply and sanitation
WWTP Wastewater treatment plant
y-o-y Year-on-year
YTD Year to date
226 227
Georgia Capital PLC Annual Report 2024
Strategic Review
Overview
Strategic Review
Our Business
Strategic Review
Discussion of Results
Governance Financial Statements Additional Information
BGEO Group PLC Former parent company of
Georgia Capital PLC prior to demerger
The Board The Board of Directors of
Georgia Capital PLC
The Code The UK Corporate Governance Code
published in 2018
The Directors Members of Georgia Capital PLC Board
of Directors
We/Our/Us References to “we”, “our” or “us”
are primarily references to the Group
throughout this Report. However, the
Group is comprised of and operates
through its subsidiaries which are
legal entities with their own relevant
management and governance structure
(as set out in relevant parts of this Report).
Additional Information
References
Alternative
performance
measures
(APMs)
In this Annual Report management
uses various APMs, which they believe
provide additional useful information for
understanding the financial performance of
the Group. These APMs are not defined by
International Financial Reporting Standards,
and also may not be directly comparable
with other companies who use similar
measures. Management believes that these
APMs provide the best representation of our
financial performance as these measures
are used by management to evaluate our
operating performance and make day- to-day
operating decisions.
Combined ratio Equals sum of the loss ratio and the expense
ratio in the insurance business.
Demerger Georgia Capital PLC emerged as a separately
listed company after demerger from its former
Parent Company BGEO Group on 29 May
2018 (the demerger).
EBITDA Earnings before interest, taxes, non-recurring
items, FX gain/losses and depreciation and
amortisation; the Group has presented
these figures in this document because
management uses EBITDA as a tool to
measure the portfolio companies’ operational
performance and the profitability of these
companies’ operations. The Company
considers EBITDA to be an important indicator
of representative recurring operations.
Expense ratio Equals sum of acquisition costs and operating
expenses divided by net earned premiums in
the insurance business.
IRR IRR for investments is calculated based on:
a) historical contributions to the investment;
b) dividends received; and
c) fair value of the investment as at
31 December 2023.
LTV Loan to value ratio: net debt divided by the
portfolio value.
Liquid assets
and Loans
issued
Liquid asset and loans issued in Georgia
Capital include cash, marketable debt
securities and issued short-term loans.
Loss ratio Equals net insurance claims expense divided
by net earned premiums.
NAV Net asset value, represents the net value of
an entity and is calculated as the total value
of the entity’s assets minus the total value of
its liabilities.
NCC Net Capital Commitment represents an
aggregated view of all confirmed, agreed
and expected capital outflows at the GCAP
holding company level.
NCC ratio Equals Net Capital Commitment divided by
portfolio value.
Additional Information
Glossary
Net investment Gross investments less capital returns.
Number
of shares
outstanding
Number of shares in issue less total
unawarded shares in JSC GCAP’s
management trust.
MOIC Multiple of invested capital is calculated as
follows: i) the numerator is the cash and non-
cash inflows from dividends and sell-downs
plus fair value of investment at reporting
date, and ii) the denominator is the gross
investment amount.
P/B multiple The price-to-book multiple, determined
by dividing the current market price of a
company’s share by its book value per share.
P/E multiple The price-to-earnings multiple, calculated
by dividing the current market price of a
company’s share by its earnings per share.
Realised MOIC Realised multiple of invested capital is
calculated as follows: i) the numerator is the
cash and non- cash inflows from dividends
and sell-downs, ii) the denominator is the
gross investment amount.
ROAE Return on average total equity equals profit
for the period attributable to shareholders
divided by monthly average equity attributable
to shareholders for the same period.
ROIC Return on invested capital is calculated
as EBITDA less depreciation, divided by
aggregate amount of total equity and
borrowed funds.
Value creation Value creation of each portfolio investment is
calculated as follows: we aggregate a)
change in beginning and ending fair values,
b) gains from realised sales (if any); and c)
dividend income during period. We then
adjust the net result to remove capital
injections (if any) to arrive at the total value
creation/investment return.
228
Georgia Capital PLC Annual Report 2024
Our website
All shareholders and potential shareholders can gain access
to the Annual Report, presentations to investors, key financial
information, regulatory news, share and dividend data, AGM
documentation and other significant information about Georgia
Capital at: https://georgiacapital.ge/.
Our registered address
Georgia Capital PLC
Central Square
29 Wellington Street
Leeds, LS1 4DL
United Kingdom
Annual General Meeting
The Annual General Meeting of Georgia Capital PLC
(the AGM) will be held at the offices of Baker & McKenzie LLP,
280 Bishopsgate, London EC2M 4RB. Details of the date,
time and business to be conducted at the AGM is contained in
the Notice of AGM, which will be mailed to shareholders who
have elected to receive hard copies of shareholder information
and will be available on the Company’s website:
https://georgiacapital.ge/.
Shareholder enquiries
Georgia Capital PLC’s share register is maintained by
Computershare Investor Services PLC. Any queries about the
administration of holdings of ordinary shares, such as change
of address or change of ownership, should be directed to the
address or telephone number immediately below. Holders of
ordinary shares may also check details of their shareholding,
subject to passing an identity check, by visiting the Registrar’s
website: www.investorcentre.co.uk or by calling the
Shareholder Helpline on: +44 (0) 370 873 5866.
Computershare Investor Services PLC
The Pavilions, Bridgwater Road
Bristol BS13 8AE
United Kingdom
+44 (0) 370 873 5866
Contact information
Georgia Capital PLC Investor Relations
E-mail: ir@gcap.ge
Additional Information
Shareholder Information
Forward-looking statements
Certain statements in this Annual Report and Accounts contain
forward- looking statements, including, but not limited to,
statements concerning expectations, projections, objectives,
targets, goals, strategies, future events, future revenues or
performance, capital expenditures, financing needs, plans or
intentions relating to acquisitions, competitive strengths and
weaknesses, plans or goals relating to financial position and
future operations and development. Although Georgia Capital
PLC believes that the expectations and opinions reflected in
such forward-looking statements are reasonable, no assurance
can be given that such expectations and opinions will prove
to have been correct. By their nature, these forward-looking
statements are subject to a number of known and unknown risks,
uncertainties and contingencies, and actual results and events
could differ materially from those currently being anticipated as
reflected in such statements. Important factors that could cause
actual results to differ materially from those expressed or implied
in forward- looking statements, certain of which are beyond our
control, include, among other things, those described in “principal
risks and uncertainties” included in this Annual Report and
Accounts, see pages 65 to 74.
No part of this document constitutes, or shall be taken to
constitute, an invitation or inducement to invest in Georgia Capital
PLC or any other entity, and must not be relied upon in any way
in connection with any investment decision. Georgia Capital PLC
and other entities undertake no obligation to update any forward-
looking statements, whether as a result of new information, future
events or otherwise, except to the extent legally required. Nothing
in this document should be construed as a profit forecast.
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