## Capturing Sustainable ## Investment Opportunities ## to Create Value ### Georgia Capital PLC | Annual Report 2024 | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | | | | | Governance Financial Statements Additional Information | 1 | | Overview | Our Business | Discussion of Results | | | 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 ## A platform for investing in, and 15 Our Portfolio Companies Read about our portfolio companies on ## upscaling and monetising ## In this report pages 32 and 57 Strategic Review Governance ## large opportunity Overview 120 Directors’ Governance Statement 122 Our Board of Directors 4 Performance Highlights 124 Corporate Governance Framework 8 2024 in Brief 134 Audit and Valuation Committee Report ## businesses in Georgia 10 Chairman and CEO Statement 142 Directors’ Remuneration Report 169 Nomination Committee Report Our Business 173 Statement of Directors’ Responsibilities 14 Georgia Capital Strategy 174 Directors’ Report 16 Market and Industry Overview 26 Capital Allocation and Financial Statements Georgia Capital PLC (“Georgia Capital” or The Group’s focus is typically on larger-scale Managing Portfolio Companies | | investment opportunities in Georgia, which have the | | 180 Independent Auditors’ Report | | --- | --- | --- | --- | | “GCAP” or “the Company” – LSE: CGEO | | 30 Our Management Team | | | | potential to reach at least GEL 300 million equity value | | 186 Statement of Financial Position | | LN) is a platform for buying, building and | | 32 Our Portfolio Overview | | | | over three to five years from the initial investment. As | | 187 Statement of Profit or Loss and Other | | developing businesses in Georgia and | | 58 S172 Statement | | | | investments mature, the focus shifts to monetising | | Comprehensive Income | | monetising investments, as they mature. | | 60 Risk Management | | | | them through exits. Georgia Capital manages its | | 188 Statement of Changes in Equity | | | portfolio companies individually and does not focus | 65 Risk Overview | | | Georgia Capital PLC holds 100% of the | | | 189 Statement of Cash Flows | | | on achieving intergroup synergies. The Group does | 76 Resources and Responsibilities | | | share capital of JSC Georgia Capital | | | 190 Notes to Financial Statements | not have capital commitments or a primary mandate (“JSC GCAP”), which together are referred to deploy funds or divest assets within a specific Discussion of Results to as the “Group” or “GCAP HoldCo”. Additional Information time frame. As such, it focuses on shareholder returns 94 Alternative Performance Measures 225 Abbreviations and on opportunities which meet its investment The Group’s primary business is to develop or buy 97 Reconciliation of Adjusted IFRS 226 References return and growth criteria. businesses, help them develop their management Measures to IFRS Figures 227 Glossary and institutionalise their businesses so they can 98 Valuation Methodology 228 Shareholder Information further develop mainly on their own, either with For more information on Georgia Capital, 100 Financial Review continued oversight or independently. visit georgiacapital.ge Location: Shaori Reservoir, Georgia | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 32 | | | Overview | Our Business | Discussion of Results | | | ## In this section 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 Location: Utsera, Ratcha, Georgia ## Strategic Review | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 4 5 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Performance Highlights ## Georgia Capital NAV overview Performance overview (GEL million) NAV per share (GEL) NAV per share (GBP) Net Asset Value (NAV) (GEL million) 1 Value creation ## 95.95 +15.7% y-o-y 27.14 +12.0% y-o-y 3,609 +6.8% y-o-y Multiple of Value creation invested capital 1 in 2024 (MOIC) unrealised Valuation methodology highlights 1 Total portfolio value (GEL million) Cash and liquid funds (GEL million) NCC ratio 340 15.8 London Stock Exchange (“LSE”) Listed and Lion Finance Group observable ## 3,761 +2.4% y-o-y 278 NMF 12.8% -2.8 ppts y-o-y 2 portfolio 29 3.8 Pre-agreed put option multiple Water utility 30 4.7 Valued externally (combination of DCF and Large portfolio companies market approaches) Private Investment stage (11) 1.8 Valued externally (combination of DCF and portfolio portfolio companies market approaches) 47 Other portfolio companies ## Portfolio breakdown (GEL million) 435 ### Total portfolio | | Value as at | % of the total | | | | | | --- | --- | --- | --- | --- | --- | --- | | Our portfolio | 31-Dec-24 | portfolio value | | | | 3 | | | | | Investments in 2024 | Divestments | Buybacks | | 160 Listed and observable portfolio 1,609 42.8% 557 | | 2 | | 17 -25.0% y-o-y | 168 NMF | 137+78.5% y-o-y | | --- | --- | --- | --- | --- | --- | | Lion Finance Group | | 1,421 37.8% | | | | | Water utility | | 188 5.0% | | | | Total portfolio value 4 1,609 Private portfolio 2,152 57.2% Dividend income Large portfolio companies 1,435 38.1% ## 3,761 ## 202 -14.5% y-o-y Retail (pharmacy) 716 19.0% GEL million | Insurance (P&C and medical) | 428 11.4% | | 5 | | | --- | --- | --- | --- | --- | | | | Of which, recurring dividend income | | Of which, one-off dividend income | | Hospitals | 291 7.7% | | | | 1,435 ## 179 -0.4% y-o-y 23 -59.7% y-o-y Investment stage portfolio companies 557 14.8% | Renewable energy | 253 6.7% | | | --- | --- | --- | | Education | 182 4.8% | | | Clinics and diagnostics | 123 3.3% | Our strategy | Listed and observable portfolio Read about our strategy on page 14 Large portfolio companies Other portfolio companies 160 4.3% Investment stage portfolio companies Total portfolio 3,761 100% Other portfolio companies 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. 1 Net Capital Commitment – please see definition in glossary on page 227. Certain financial measures presented in the Strategic Review are taken from unaudited management accounts. The figures from the management accounts are Alternative Performance 2 “Lion Finance Group PLC” or the “Bank”, formerly known as “Bank of Georgia Group PLC”. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 6 7 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Performance Highlights continued Read more about our portfolio companies on pages 32-57 ## Private portfolio Listed and observable portfolio companies Private large portfolio companies ## companies’ ### Lion Finance Retail ## performance ### Group Water utility (pharmacy) Insurance highlights Lion Finance Group PLC (“Lion Finance Group”), formerly known as The water utility business is a regulated The retail (pharmacy) business is the largest The insurance business comprises of the a) Bank of Georgia Group PLC (LSE: BGEO LN), is a FTSE 250 holding monopoly in Tbilisi and the surrounding area, pharmaceuticals retailer and wholesaler property and casualty (P&C) insurance business, company whose subsidiaries provide banking and financial services where it provides water and wastewater services in Georgia, with a 35.8% market share in operating under the brand name “Aldagi” and ## 1 focused on the high growth Georgian and Armenian markets through to 1.4 million residents representing more than the organised retail market based on 2023 b) medical insurance business, operating under ## (unaudited) | | leading, customer-centric, universal banks – Bank of Georgia (“BoG”) | one-third of Georgia’s population and c.43,000 | revenues. The business consists of a retail | “Imedi L” and “Ardi” brands, the latter acquired | | | --- | --- | --- | --- | --- | --- | | | in Georgia and Ameriabank in Armenia. The business comprises | legal entities. The water utility business also | pharmacy chain operating under two brands | in April 2024. GCAP owns a 100% stake in | | | | a) retail banking and payment services (Retail Banking), b) banking | operates hydro power plants (HPPs) with a | (GPC and Pharmadepot) and a wholesale | insurance business as of 31 December 2024 | | | Georgia Capital’s 2024 results demonstrate very | services for small and medium-sized businesses (SME Banking) and | total installed capacity of 149MW. In 2022, | business that sells pharmaceuticals and | (31 December 2023: 100%). | | | | c) corporate and investment banking operations (Corporate and | Georgia Capital completed the sale of an 80% | medical supplies to hospitals and other | • | P&C insurance business is a leading | strong operational and financial performances and Investment Banking). Lion Finance Group expects to benefit from equity interest in the business to FCC Aqualia pharmacies. The business operates a total of player with a 30% market share in property reflect significant achievements in delivering on our superior growth of the Georgian and Armenian economy through (“Aqualia”) for a cash consideration of US$ 180 410 pharmacies (of which, 395 are in Georgia and casualty insurance based on gross strategic priorities. both its retail banking and corporate and investment banking services million. As a consequence, GCAP owns a 20% and 15 in Armenia) and 19 franchise stores premiums as of 30 September 2024. and aims to deliver on its strategy and key medium-term objectives interest in the business as of 31 December (of which, 12 are in Georgia, two in Armenia P&C insurance also offers a variety of – 20%+ return on average equity (ROAE) and c.15% growth of its 2024, which remains subject to the ongoing put/ and five in Azerbaijan). As of 31 December non-property and casualty products, loan book. It targets to maintain a 30%-50% dividend/share buyback call option structure. 2024, GCAP owns a 97.8% equity stake in the such as life insurance. payout ratio through regular and progressive semi-annual capital business (31 December 2023: 97.6%). • Our medical insurance business is the distributions. Lion Finance Group’s Annual Report 2024, when country’s largest private health insurer, published, will be available at https://lionfinancegroup.uk. As with a 35% market share based on gross of 31 December 2024, Georgia Capital owns a 19.23% non-voting insurance premiums as of 30 September equity stake in Lion Finance Group (31 December 2023: 19.71%). 2024, offering a variety of health insurance products primarily to corporate and (selectively) to state entities and also to retail clients in Georgia. ### Hospitals Aggregated revenue (GEL million) Aggregated EBITDA (GEL million) The hospitals business, where GCAP owns 100% equity, is the largest healthcare market participant in Georgia, comprised of seven ## +8.9% +25.0% Large and Specialty Hospitals, providing secondary and tertiary level healthcare 24 1,499 187 565 2,251 24 181 64 66 311 services across Georgia and 27 Regional and Community Hospitals, providing outpatient and 23 1,337 155 575 2,068 23 154 52 43 249 basic inpatient services. Large portfolio companies Private investment stage portfolio companies Investment stage portfolio companies Other portfolio companies | | | | 2 | | | 2 | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Aggregated net operating cash flow | | | (GEL million) | | Aggregated cash balances of private businesses | (GEL million) | | Renewable | | Clinics and | | | | | | | | | | energy Education | | diagnostic | | +2.1x | | | | | +8.1% | | | | | | | | | | | | | | | The renewable energy business operates three | Our education business currently combines | The clinics and diagnostics business, where | | | | | | | | | | wholly-owned commissioned renewable assets: | majority stakes in four private school brands | GCAP owns a 100% equity interest, is the | | | 24 | | | 299 | 24 | | 281 | | | | | | | | | | | | | 30MW Mestiachala HPP, 20MW Hydrolea | operating across seven campuses, acquired | second largest healthcare market participant | | | | | | | | | | HPPs and 21MW Qartli wind farm. In addition, | in 2019-2023: British-Georgian Academy | in Georgia after our hospitals business. The | | | 23 | 139 | | | 23 | 260 | | | | | | | | | | | | | | the business has a pipeline of renewable energy | and British International School of Tbilisi (70% | business comprises of two segments: 1) 16 | | | | | | | | | | projects in varying stages of development. The | stake), the leading schools in the premium | polyclinics (providing outpatient diagnostic | | | | | | | | | | renewable energy business is 100% owned | and international segments; Buckswood | and treatment services); and 2) diagnostics, | | 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 | | | | | | | | by Georgia Capital as of 31 December 2024 | International School (80% stake), well- | operating the largest laboratory in the entire | | | 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 | | | | | | | (31 December 2023: 100%). | positioned in the mid-scale segment and Green | Caucasus region – “Mega Lab”. As of | | | 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 | | | | | | | | School (80%-90% ownership), well-positioned | 31 December 2024, the clinics and diagnostics | IFRS accounts. Private portfolio companies’ performance highlights are presented excluding the water utility business, while the beer and distribution business is included. in the affordable segment. business is 100% owned by Georgia Capital 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 (31 December 2023: 100%). to exclude the business’ cash balance, in alignment with the completion of the sales transaction in December 2024. 20 20 20 20 20 20 20 20 | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 98 | | | Overview | Our Business | Discussion of Results | | | ## 2024 in Brief ## Key developments in 2024 ### Sale of an 80% holding in the beer and distribution business Announcement of the GEL 300 million capital return package ## 1 2 Transaction overview Operating performance development In May 2024, GCAP announced its Board’s intention to make Development of GCAP’s share buybacks available at least GEL 300 million for share buybacks and dividends Number of issued shares (million) In 2024, GCAP announced the sale of 80% of its holding through to the end of 2026. Significantly improved leverage (an effective 73.9% equity stake) in its beer and distribution EBITDA margin profile, strong progress in free cash flow generation capabilities (7.4)% 7.9%5.9% 13.7% 15.8% 152 business to Royal Swinkels, a strategic and international and confidence in high-quality portfolio were the key drivers of 128 12.6 purchaser, for net cash proceeds of c.US$ 63 million. this strategic move. As part of the GEL 300 million capital return 11.1 Completion of the transaction and the receipt of full sales 197.7 package, GCAP launched a US$ 25 million share buyback and proceeds occurred on 23 December 2024. cancellation programme in May 2024, which was subsequently 175.3 80 increased by an additional US$ 15 million in August 2024. In Following the sale, the business is now held through 61 December 2024, the Company launched another US$ 25 million 7.4 a new holding company domiciled in the Netherlands, share buyback and cancellation programme, which was increased 43 5.8 where GCAP and its minority co-investor retains a 20% by an additional US$ 25 million in March 2025. 3636 31.2 | holding which is subject to an ongoing put/call option | 114.3 | | 18 | 2.72.7 | | | --- | --- | --- | --- | --- | --- | | | | | 1.3 | | 3.5 | | structure. GCAP’s put option will be exercisable during | | 24.1 | | | | Under the buyback programmes in total, the Company repurchased 89.5 92.4 2019 2020 20212018 202420232022 2025 each 12-month period following the end of the 2028, 2029 3.7 million of its own shares in 2024, representing a nominal value Since to date and 2030 financial years. Royal Swinkels’ call option will be of US$ 48.1 million. In 2025 to date, an additional 1.5 million shares 9.0 exercisable during each 12-month period following the end 5.5 (US$ 24.2 million value) have been repurchased. In total, as part of Value of shares repurchased (cumulative, US$ million) of the 2031, 2032 and 2033 financial years. the GEL 300 million capital return package, GEL 251 million has Number of shares repurchased (cumulative, million) (6.7) already been allocated to share buybacks. Under GCAP’s management, the business has demonstrated strong revenue and EBITDA growth, with a 29% and 79% CAGR, respectively, over the 12.6 million shares (US$ 151.7 million in value) The gross number of issued shares, including past three years. Revenue (GEL million) repurchased and cancelled since the demerger in 2018, those held by the management trust, now stands EBITDA (GEL million) representing 26.2% of the issued share capital at at 38.0 million, below the 39.4 million shares in 1 its peak issue at the time of the demerger ### Transaction rationale The sale is in line with GCAP’s capital light investment strategy and represents another successful exit from our ### Strong NAV per share growth ## private assets. The disposal: 3 • Realised material cash proceeds, translating into apremium to the business’ investment value as NAV per share (GEL) increased by 15.7% in 2024, reflecting a NAV per share (GEL) development overview at30 June 2024. GEL 435.3 million value creation across our portfolio companies • Led to a 1.8% uplift to GCAP’s NAV per share as with a positive 12.9 ppts impact and share buybacks (+5.8 ppts). at 30 June 2024. The NAV per share growth was partially offset by a) management +15.7% • Enabled and facilitated an important international platform-related costs and net interest expense with a negative investor into Georgia, with significant industry expertise, 96.0 1.9 ppts impact and b) GEL’s depreciation against US$, resulting that will strengthen the beer and distribution business in a foreign currency loss of GEL 15.1 million on GCAP net debt 82.9 to the benefit of its customers, employees and (-0.5 ppts). | | other stakeholders. | | | 63.0 | 65.6 | | --- | --- | --- | --- | --- | --- | | • | Formed a strategic partnership between GCAP and | | | | | | | | 46.8 | 48.1 | | | 44.3 Royal Swinkels that will support the business at least Since December 2018, NAV per share (GEL) grew at 2 until such time as either the put option or call option 40. 2 47.9 47.139.4 38 .039.543.244.8 13.7% CAGR. In US$ and GBP terms, NAV per share isexercised. CAGR stands at 12.8% and 13.0%, respectively +13.7% CAGR 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. demerger Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Dec-24 2020 2021 20222019 2023 | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 10 11 10 | Georgia Capital PLC Annual Report 2024 Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Chairman and CEO Statement | Dear Fellow Shareholders, | portfolio businesses, we have completed | investing mainly in capital-efficient/ | Delivering on our strategic priorities | | | --- | --- | --- | --- | --- | | | a number of senior management | capital-light sectors and opportunities, | This Annual Report will go into greater | | | In this, my seventh annual letter to Georgia | changes, and delivered a very successful | in association with the regular return of | detail later, but let me highlight here | | | Capital shareholders, I want to highlight | restructuring of our healthcare businesses, | capital to shareholders. | how we continued to deliver on our key | | | the remarkable quality of our management | whilst also ensuring the businesses | | strategic priorities in 2024. | | | team and portfolio businesses during a | weathered the significant storm of | Our macroeconomic environment | | | | year characterised by a very challenging | external political uncertainty. They have | From a macroeconomic perspective, | 2024 was an outstanding year for | | | political and geopolitical environment, | successfully absorbed all these pressures | Georgia sustained strong economic | the Group. | | | both in Georgia and neighbouring | and delivered outstanding operational | momentum in 2024, demonstrating | • | In December 2024, we completed | | countries. Despite the significant external | success. In short, I am delighted with | resilience and flexibility despite external | | another milestone transaction, | | challenges and ongoing uncertainties, | the resilience of Georgia Capital and our | shocks and domestic political uncertainty. | | selling an 80% holding in our beer | | our portfolio companies have delivered | businesses – conservative businesses in | Real GDP expanded by an estimated | | and distribution business to Royal | | very strong performances, culminating | relatively defensive sectors. | 9.5%, following 7.8% growth in 2023, | | Swinkels, a high-quality international | | in a 15.7% growth in Net Asset Value | | driven by robust domestic demand and | | investor and strategic buyer. The net | | per share in 2024, to GEL 95.95. This, | Our aim has always been: to invest in | recovering foreign exchange inflows. | | sale proceeds of c.US$ 63 million, | | together with the combination of the sale | high-quality businesses with great market | Credit expansion remained strong, with | | represented a substantial premium to | | of the beer and distribution business and | positions, high returns and the ability | the commercial bank loan portfolio | | the independently valued Net Asset | | our ongoing share buyback programme, | to deliver sustainable earnings growth | growing 17% y-o-y, while fiscal policy | | Value of the business, and significantly | | is an exceptional performance, again | through the cycle. This focus continued | remained expansionary, with current | | strengthened GCAP’s liquidity position | | underpinned by our three fundamental | to guide us in 2024 and will continue to | and capital expenditures rising 16% | | and reduced net debt at the GCAP | | drivers – strong corporate governance; | do so in the future, whilst at the same | and 12% y-o-y, respectively. This | | Holding Company level. Our remaining | | access to management; and access | time the Board always seeks to ensure | sustained economic growth supported | | 20% holding in the business remains | | to capital. My firm belief is that the | the sound, prudential management of | significant deleveraging, leading to | | subject to a put/call structure. | | best companies and management | our balance sheet. This conservatism | notable improvements in the external | • | We continued to make disciplined | | teams distinguish themselves in | has ensured that, as Georgia Capital | balance sheet. The IMF modified fiscal | | capital allocations. In May 2024, | | challenging times – reflecting on that, | has developed over the last few years | deficit narrowed to 2.5% of GDP, while | | we increased the consolidation of | ## “Our investments in our management and employees truly throughout a prolonged period of government debt declined to 36% of GDP. Georgia’s Health Insurance market, distinguished themselves during 2024. significant geopolitical challenge, the by acquiring the Ardi medical ## high-quality Georgian | | | Board has maintained a conservative | Georgia’s external position improved | | insurance business. | | --- | --- | --- | --- | --- | --- | | | I am particularly pleased that we | approach in the management of our | significantly, with the current account | • | We almost doubled the level of share | | businesses with great | achieved a very consistent level of NAV | portfolio companies, and a very strong | deficit narrowing to -3.5% of GDP in | | buybacks in 2024, compared to | | | growth across both our private portfolio | balance sheet, characterised by further | 9M24, primarily due to strong growth in | | 2023, via our ongoing share buyback | | market positions, | businesses and in our listed investment. | deleveraging during 2024. We are | the services sectors, particularly tourism | | and cancellation programmes, under | | | Our listed investment, Lion Finance Group | maintaining this conservative posture as | and transport. Tourism revenues reached | | which US$ 48.1 million was allocated | | | PLC (formerly known as Bank of Georgia | we move into 2025. | US$ 4.4 billion, exceeding pre-pandemic | | to share buybacks. In May 2024, we | ## high returns and Group PLC) had an exceptional year, both levels by 35%, although visitor numbers announced the Board’s intention to in Georgia and in Armenia following the The discount of our share price to our remained below 2019 levels, indicating make available at least GEL 300 million ## the ability to deliver March 2024 acquisition of Ameriabank. I’ll NAV per share has remained too wide, further growth potential. for share buybacks and dividends comment on this in more detail later. In our despite our share price increasing by through the end of 2026, with the ## sustainable earnings | | 17.4% during 2024, and we responded | Inflation remained below the 3% target | | programmes to be funded from | | --- | --- | --- | --- | --- | | | to this by buying back more of our shares, | since April 2023, averaging 1.1% in | | expected cash flows. | | growth through the | through our ongoing share buyback and | 2024, allowing the NBG to further ease | • | | We significantly delevered the business | | cancellation programmes, while at the | its monetary policy by reducing the | and, notwithstanding allocating US$ | | --- | --- | --- | --- | | cycle, have continued | same time reducing leverage at both the | refinancing rate to 8%. However, the | 48.1 million to share buybacks, the | | | HoldCo and individual portfolio business | Georgian Lari depreciated as negative | Net Capital Commitment ratio reduced | | to deliver very strong | levels. I will talk more about this later. | sentiment increased demand for hard | to 12.8%, from 15.6% a year earlier. | PERFORMANCE SNAPSHOT currency. In response, the NBG actively This is a significant achievement, In last year’s annual letter, I highlighted that intervened in the foreign exchange market comfortably ahead of out initially ## performances” our strategy during 2024 was to reduce to manage expectations. While it was a net targeted 15% by December 2025. leverage faster than our originally planned buyer of US$ 287 million from January to • We completed two significant ## GEL 435m NCC ratio target of 15% by December April, it became a net seller, offloading US$ business restructurings – in the retail Irakli Gilauri Value creation in 2024 2025, deliver our targeted reduction in 874 million between May and October. (pharmacy) and hospitals businesses Chairman and Chief Executive Officer | the management expense ratio, ensure | As a result, international reserve assets | – including the enhancement of the | | --- | --- | --- | | we focus on the opportunities to sell | declined by 11.2% year-on-year, reaching | senior management teams in both | | businesses in our “other” portfolio, and | US$ 4.4 billion by December 2024. | businesses. Both businesses are now | ## US$ 152m maintain our policy of opportunistic share delivering significant performance Returned to our investors through share buybacks. In each of these aspirations Looking ahead, growth in 2025 is improvements moving into 2025. buybacks since demerger | for 2024 we delivered. I will address each | expected to moderate from the high levels | | --- | --- | | aspect of our 2024 aspirations in this | of real GDP growth delivered over the last | | letter. Over time, we aim to develop into | few years, partly due to the heightened | | a sustainable permanent capital vehicle, | levels of geopolitical uncertainty. | Read more on page 9 | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 12 13 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Chairman and CEO Statement continued | Capital allocation, share buybacks | Portfolio valuation | | | performance, Lion Finance Group’s | private portfolio businesses, prior to | | Outlook | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | and dividends | Our total portfolio value increased | | | share price increased by 18.5% in 2024, | the negative impact from, in particular, | | I am delighted with how Georgia Capital | | | During 2024, we allocated capital in a | by GEL 89.5 million, or 2.4%, to | | | strongly supporting our NAV growth | the increased country risk premium. | | rose to the challenges of 2024. The | | | number of key areas, with an investment | GEL 3.8 billion during the year. | | | with GEL 340.0 million value creation. In | | | excellent performance of our portfolio | | | of GEL 16.9 million in our private | • | The value of GCAP’s holding in Lion | | addition, the Bank has a robust capital | The individual performances of our private | | companies, coupled with our unwavering | | | portfolio companies. This included: | | Finance Group was up by GEL 195.2 | | distribution policy, including share | businesses are described in greater detail | | focus on delivering on our strategic | | | GEL 11.3 million allocated to the | | million, reflecting the net impact of | | buybacks and regular dividends and, on | later in this report. | | priorities with the sale of our beer and | | | renewable energy business for the | | GEL 340.0 million value creation and | | 25 February 2025, the Bank announced | | | distribution business, were instrumental | | | ongoing development of pipeline projects; | | GEL 144.8 million cash and buyback | | its board’s intention to recommend a | Environmental, social and | | to our outstanding 2024 results. I | | | and GEL 5.6 million allocated to the | | dividend income from the Bank | | final dividend for 2024 of GEL 5.62 per | governance | | am particularly pleased that we have | | | education and other businesses. | | during 2024. | | ordinary share at the Bank’s 2025 Annual | We have continued to focus on reducing | | delivered very strong levels of cash | | | | • | The value of the water utility | | General Meeting. This will make a total | our impact on the environment, with | | generation; made substantial further | | | In addition to these investments in our | | business increased by GEL 29.0 | | dividend paid in respect of the Bank’s | environmental, social and governance | | progress in reducing our Net Capital | | | private portfolio companies, we also | | million, reflecting its strong operating | | 2024 earnings of GEL 9.00 per share | (ESG) issues remaining at the forefront | | Commitment ratio; and continued to | | | continued to invest in Georgia Capital | | performance during the year. | | (a 12.5% increase y-o-y). In addition, in | of our thinking and business operations. | | focus on significant capital repatriation to | | | shares to take advantage of the discount | • | The value of the private portfolio | | February 2025, the Bank announced an | Our progress in this regard during | | our shareholders via the ongoing share | | | to NAV at which the shares currently trade. | | decreased by GEL 134.6 million in | | extension of the buyback and cancellation | 2024 was excellent and, while there is | | buyback and cancellation programme. | | | During 2024, 3,669,889 shares with a total | | 2024, mainly reflecting the divestment | | programme by an additional GEL 107.7 | significantly more detail in this report and | | This performance was underpinned in | | | value of GEL 131.9 million were bought | | of an 80% holding in the beer and | | million. Overall, the Bank’s dividend and | in our Sustainability Report, I want to draw | | 2024 by the resilience of the Georgian | | | back under our buyback and cancellation | | distribution business and the collection | | share buyback payout ratio for 2024 was | out a few particularly noteworthy aspects | | economy, which has demonstrated | | | programmes. In addition, we continued | | of GEL 57.0 million dividends from | | 31% of total earnings. | of our ESG commitment. | | consistent and substantial growth over | | | our buyback and cancellation programme | | the private portfolio companies. | | | | | the past few years, despite ongoing | | | into 2025 and, in the first quarter of 2025 | | The decrease was partially offset by | | In March 2024, Lion Finance Group | • | Georgia Capital was awarded | political and geopolitical tensions and | | | to date, an additional 1,512,332 shares, | | GEL 66.3 million value creation and | | completed its acquisition of 100% of | | the Impact Award by the Asian | uncertainties. In 2025, we aim to further | | | at a cost of GEL 68.5 million, have been | | GEL 16.9 million investments in the | | Ameriabank CJSC, a leading universal | | Development Bank (“ADB”), in | optimise our portfolio by pursuing | | | repurchased for cancellation. | | portfolio companies. | | bank in Armenia with an attractive | | recognition of our longstanding | selective divestments, executing | | | | | | | franchise. The transaction has already | | commitment to responsible investment. | buybacks, strengthening our balance | | | Consequently, the capital returned to | Value creation | | | started to deliver significant earnings | • | For the first time in Georgia, we | sheet, and seizing new investment | | | shareholders since our demerger in 2018 | The total portfolio value creation | | | enhancement for Lion Finance Group, | | successfully obtained third-party | opportunities aligned with our long-term | | | totalled US$ 151.7 million, or 12.6 million | amounted to GEL 435.3 million in 2024. | | | with Ameriabank delivering high levels | | assurance on our greenhouse | vision. While macroeconomic and political | | | Georgia Capital shares, representing | • | An 18.5% increase in Lion Finance | | of growth and profitability. We expect | | gas emissions. | uncertainties persist, we are confident in | | | 26.2% of GCAP’s share capital at its | | Group’s share price, supported by a | | this acquisition to continue to enhance | • | We continued to invest in capital-light | our ability to create long-term value for | | | peak. As a result, the gross number of | | 3.3% appreciation of GBP against | | earnings for Lion Finance Group over | | businesses and industries that have | our shareholders through our resilient | | | issued shares, including those held by | | GEL in FY24, led to GEL 340.0 million | | the next few years, supporting significant | | a positive impact on people and | investment platform, and to progress | | | the management trust, now stands at | | value creation. | | value creation. | | our planet. | further towards achieving our key | | | 38.0 million, below the 39.4 million shares | • | GEL 29.0 million value was created in | | | | | strategic priorities. | | | in issue at the time of the demerger. In | | our water utility business. | | The value creation of the water utility | Our people are our business | | | | | essence, this reflects the repurchase of | • | The value creation in the private | | business amounted to GEL 29.0 million | We never lose sight of the fact that our | | | | | more shares than we issued in 2019-2020 | | portfolio amounted to GEL 66.3 million, | | in 2024 and the equity value increased | people are our business. They remain | | | The Strategic Report as set out on | | to purchase the then outstanding minority | | reflecting a net impact of: | | to GEL 188.0. This reflects the strong | critical to our ongoing success and we | | | pages 4 to 117 was approved by | | stake in Georgia Healthcare Group. | | − | a GEL 671.5 million operating | operating performance of the business | have excellent people throughout the | | | the Board of Directors on 20 March | | | | | performance-related increase in the | on the back of the increased tariffs for | business, at both the holding company | | | 2025 and signed on behalf by | | During 2024, Georgia Capital collected | | | value of our private assets. | corporates effective from 1 January 2024, | level and in all of our portfolio businesses. | | | Irakli Gilauri, Chairman and Chief | | GEL 201.8 million in dividends, including | | − | a GEL 605.1 million value reduction | and the application of the put option | During 2024, we continued to enhance | | | Executive Officer. | | one-off dividends of GEL 22.6 million | | | from changes in valuation inputs, | valuation to GCAP’s 20% holding, where | the quality of our management teams, | | | | | (2023: GEL 235.9 million, which included | | | largely reflecting the negative impact | GCAP has a clear exit path through | through a combination of internal | | | | | GEL 56.1 million of one-off dividends). | | | from the increased country risk | a put and call structure at pre-agreed | development, combined with some high | | Irakli Gilauri | | | Excluding the one-off dividends, GEL | | | premium during the year. | EBITDA multiples. GCAP’s put option is | quality external hires. | | Chairman and CEO | | | 122.2 million was received from Lion | | | | exercisable in 2025 or 2026. | | | 20 March 2025 | | | Finance Group, reflecting a combination | Our listed investment – Lion Finance | | | | Over the last 12 months, I have | | | | | of regular cash dividends and our | Group – continued to deliver strong | | | As mentioned above, the operating | continued to dedicate much of my time | | | | | participation in their share buybacks, | balance sheet growth in both customer | | | performance of our various private | to supporting and developing our people. | | | | | GEL 25.4 million from our insurance | lending and deposits, and high profitability, | | | portfolio investments was extremely | As always, I deeply appreciate the | | | | | businesses, GEL 10.0 million from retail | with an annualised ROAE of 30.0%, | | | strong against the backdrop of significant | considerable efforts of our management | | | | | (pharmacy), and GEL 21.5 million from | underpinned by its continued focus on | | | regulatory changes reflecting the impact, | teams and employees in driving the | | | | | renewable energy and other businesses. | digital transformation, and delivering | | | in particular, of management changes | continued success of Georgia Capital. | | | | | Looking forward to 2025, we currently | strong growth in the payments business. | | | and restructuring programmes in the retail | | | | | | anticipate receiving in excess of GEL | The Bank is clearly making significant | | | (pharmacy) and healthcare businesses. | | | | | | 180 million in regular dividends from our | progress, which has led to sustainable | | | I was particularly pleased with the | | | | | | portfolio companies. | customer franchise and revenue | | | exceptional GEL 671.5 million operating | | | | | | | generation growth. Reflecting the strong | | | performance related value creation in our | | | | | | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 1514 | | | Overview | Our Business | Discussion of Results | | | ## 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. ## Georgia Capital strategy is based on Our strategic priorities Our long-term aspiration ## three fundamentalenablers: 1 ### Superior access to capital Commitment to maintaining Deleveraging GCAP HoldCo by Achievement of our strategic ## 1 3 | • | Only Group of its size and scale focused | exemplary corporate governance | | bringing down and maintaining the | priorities will enable GCAP | | --- | --- | --- | --- | --- | --- | | | on investing in and developing businesses | | | NCC ratio below 15%. | to gradually transform into | | | | • | Strong Board comprised mainly of | | | in Georgia. ### independent Directors with extensive a Sustainable Permanent • Uniquely positioned given access to capital international experience. ### Reduce and maintain portfolio Capital Vehicle. in a small frontier economy: | | • | Outstanding track record in institutionalising | | | | | --- | --- | --- | --- | --- | --- | | − c.US$ 500 million raised in equity at LSE. | | | companies’ leverage to respective | | | | | | businesses and creating independently run/ | | • | Significantly reduced leverage at the | | − Issued seven Eurobonds totalling | | | | | | | | | managed institutions. | targeted levels. | | GCAP HoldCo level. | | c.US$ 2.1 billion. | | | | • | | | | • | Highly experienced management team in | | | Capacity to redeploy our existing capital without | | − US$ 3+ billion raised from IFIs (EBRD, IFC, | | | | | | | | | each portfolio company with a strong measure | | | the need for new equity share issuance/raise. | | ADB, AIIB, etc.). | | | Return at least GEL 300 million to GCAP | | | | | | of independence. | | • | Consistent NAV per share growth on the back | | | • | Aligned shareholders’ and management’s | investors through share buybacks and | | of resilient, capital-light investments. | ### Access to good management ## 2 interests by share compensation: • Opportunity to return a significant portion of ### dividends through the end of 2026. • Highly experienced senior management − The Executive Director is solely remunerated GCAP’s cash inflows to our shareholders. team, which grew BGEO Group (predecessor by way of long-term deferred shares ### Achieve ESG targets at both GCAP | | company) by c.33 times in asset size between | (six-year vesting) and receives no | | | --- | --- | --- | --- | | | 2005 and 2017. | cash compensation. | HoldCo and portfolio company levels. | | • | Reputation among talented managers as the | − Salaries of the Company’s senior managers | | | | “best group to work for”. | are heavily weighted towards deferred | | ### Continued progress on the divestment • Attracted talents have demonstrated a solid share remuneration, and bonuses for senior ### track record of successful delivery. managers are paid in deferred shares rather of “other” portfolio companies. • Proven track record in turning around than cash. “Other” portfolio companies comprise 4.3% of the companies and growing them efficiently. • High level of transparent reporting. total portfolio value and include four subscale private • Proven track record in monetising investments • Strong ESG practices. businesses, being the auto service, beverages, housing through cash exits. development and hospitality businesses. • A platform for entrepreneurs to build institutions (entrepreneurship culture): While a number of these businesses have interesting − If we do not have the right people, then we potential, the Group currently believes that most will not do not invest, no matter the attractiveness offer the scalable growth potential we seek. Absent a of the opportunity. 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). 1 Figures and statements in this section include the track record of our predecessor company BGEO, prior to the 2018 demerger. Location: Javakheti National Park, Georgia. Image source: https://nationalparks.ge/ | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 16 17 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Market and Industry Overview Real GDP growth a robust 16.3% increase, driven by strong 92 tax performance. Strengthened aggregate ## Georgia’s economy maintains strong 80 81 18 demand led to a 8.6% y-o-y increase in 70 73 16 imports during 2024, driven by consumer 60 14 61 and investment goods. The trade deficit 10.6% 11.0% ## momentum with 9.5% growth in 2024 50 12 9.5% | widened by 9.1% y-o-y to US$ 10.4 | | | | | | | | | | | 5050 | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | 7.8% | 10 | | | 40 | 7.9% | | | | | | | 45 | | | | | | billion. Re-exports reached a record US$ | | | 6.6% | | | | | 41 | | | | | | | | | | | 5.1% | | | 37 | | 6.1% | | | | | | | 30 | | | | | 35 | | | | 5.4% | | | | | | | | | | 32 | | | 5.2% | | | | | | 3.6 billion in 2024, growing 10% y-o-y Preliminary estimates indicate that Georgia’s real economy expanded by 9.5% y-o-y in 2024, 26 3.4% 3.4% | | | 20 | 28 | | | | --- | --- | --- | --- | --- | --- | | | and accounting for 54% of total exports, | | | 29 | | | sustaining impressive momentum following three years of rapid growth. This performance has | | | | | 4.1% | | | exceeding domestic exports for the first | 10 | | | | | been driven by strong domestic activity and solid external inflows. Domestic demand has been | | 0 | | | | time since April 2023. bolstered by rising real wages, strong credit growth, and increased public investments. -2 The current account deficit narrowed to 3.5% of GDP in 9M24, down from 4.8% -6 .3% -8 in 9M23, supported by a 3.5% y-o-y 1 increase in current transfers and a Georgia sustained strong momentum Recent data highlights the normalisation 11.4% rise in the service balance. Total in 2024, demonstrating resilience and of remittance inflows, with a decline in Nominal GDP (GEL billion) Real GDP growth rate (y-o-y %) FDI for 2024 stood at US$ 1.3 billion flexibility despite external shocks and remittances from Russia as the money 1 Preliminary estimate. ### Georgia is favourably (4% of GDP), marking a 30% y-o-y | | domestic political uncertainty. Strong | transfers returned to pre-war levels. | | | | --- | --- | --- | --- | --- | | placed among peers | | | decline following record highs in 2022 and | | | | growth supported significant deleveraging, | Conversely, remittances from the EU and | | | | | | | 2023 (US$ 2.3 billion and US$ 1.9 billion, | Current account balance (% of nominal GDP) | | | leading to a notable improvement in the | the US have shown significant growth, | | | respectively). This decline was mainly due country’s external balance sheet. increasing by 10% and 24% y-o-y, Czech Republic to reduced inflows in the manufacturing respectively, in 2024. Country rating Fitch rating outlook and trade sectors, where FDI fell by Macroeconomic overview US$ 131 million and US$ 234 million 20 ### AA- Stable and outlook In foreign trade, exports grew moderately y-o-y, respectively. In 2024, Georgia’s economy continued by 7.8% y-o-y in 2024, led by a 12.1% 11.4% 10.7% 10.2% | | its robust expansion, once again | substantial rise in motor car exports/ | | | | | | | | | | | 9.0% | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | 10 | 7.0% | 7.3% | | | 7.5% | 7.8% | | | | | 7.2% | | | | | | NBG focused on rebuilding reserves early | | | | 6.2% | 5.9% | | | | 6. 6% | | 6.2% | | | | Kazakhstan | demonstrating the flexibility and resilience | re-exports, which reached US$ 2.4 | | | | | | | | | 3. 6% | | | | | 3.9% | in 2024, purchasing a net US$ 287 million | | | of its macroeconomic environment in the | billion with 14% growth. Ferro-alloys | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Country rating | Fitch rating outlook | | | | | | | | | | | | | | | | | | | | | | | | | in the first four months. However, US$ 220 | 0 | | | | | | | | | | | | | | | | | | | face of various shocks. The growth was | rebounded positively with a 78% increase, | | | | | | | | | | | | | | | | | | | BBB | Stable | | | million was sold between May and June to | | | | | | | | | | | | | | | | | | | | primarily driven by strong domestic activity | reversing their negative contribution in | | | | | | | | | | | | | | | | | -3.5% | | | | | | counteract negative market sentiment tied | | | | | | | | | | | | | -4.4% | | -4. 8% | | | | | | | | | | | -5.5% | | | | | | -6.0% | | | | -5.6% | | | | | | and solid FX inflows. On the production | 2023. Precious metal ores also surged by | | | | | | | | | | -6.7% | | | | | | | | | | | | | | -10 | | | | | | | -8.0% | | | | | | | | | | | | | | to the “Transparency of Foreign Influence” | -9.6% | | | | | | | | | | | | | | | | | | | | | | | | | | -10.0% | | | | | | | -10.3% | | | | | | | | side, the major sectors contributing | 263% y-o-y. However, copper ore exports | | | | -11.2% | | | -11.6% | | | | | | | | | | | | | | | | | | -11.9% | | | | | -12.2% | | | | -12.4% | | | | | | law, followed by an additional US$ 698 | Azerbaijan | | positively included trade, information | declined sharply by 80%, driven by | | | | --- | --- | --- | --- | --- | --- | | | | | | million during the pre-election period. As | -20 | | Country rating | Fitch rating outlook | and communication (ICT), education, | shrinking global demand for copper due | | | a result, official reserves declined to US$ construction, public administration and to reduced industrial activity, acting as the ### BBB- Stable 4.4 billion by the end of December 2024, finance. Preliminary estimates indicate that primary drag on overall export growth. -30 marking a 11% y-o-y decrease. annual GDP growth reached 9.5% | | | in 2024, up from 7.8% in 2023, supported | Tourism recovery remains strong, with | | | | --- | --- | --- | --- | --- | --- | | Georgia | | | | The unemployment rate fell to 13.9% | | | | | by favourable developments across both | international travel revenues reaching US$ | | | | Country rating | Fitch rating outlook | | | in 2024, while Labor force participation | | | | | domestic and external sectors. | 4.4 billion in 2024, 135% of 2019 levels, | | Goods, net Investment income, net Current account | | | | | | exceeded pre-pandemic levels, reaching | Services, net Current transfers, net FDI, inflows | | BB | Negative | | reflecting a robust global travel rebound. | | | 54.8% in 2024. Additionally, average However, international visitor numbers monthly nominal earnings grew by 12% have recovered to only 84% of 2019 Public finances (% of GDP) y-o-y in 9M24, reaching GEL 2,002. The Armenia levels, indicating room for further growth. highest wages were recorded in the ICT Country rating Fitch rating outlook 0% and financial sectors, at GEL 3,965 and | | | Domestically, growth was supported by | | 60% | | --- | --- | --- | --- | --- | | BB- | Stable | | GEL 3,783, respectively. | | | | | continued credit expansion across both | | 55% | -2% | | Strong economic growth of | local and foreign currencies in retail and | | | | | | | -2 .1% | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 30 | | | | | -2.4% | | | -2.2% | | | | | | | -2.4% | -2.3% | -2.2% | | | | | | | | | | | | | | | -2.4% | -2.5% | -2.5% | | | | 50% | | | | | The consolidated budget deficit stood at | -2.6% | | -2.7% | -2.7% | | | | | | | | | | | | | | | business sectors. The commercial bank | | | | | | | | 47.1% | -3.0% | | | | | | | | 22 GEL 1.8 billion in 2024, with the annual -4% 45% ## Türkiye 9.5% 20 loan portfolio grew by 17.0% y-o-y as at IMF-modified deficit projected at 2.5% Country rating Fitch rating outlook December 2024 (on a constant currency 36.1% 40% in 2024, following a 7.8% | | | | | | of GDP. The operating balance improved | | | 34.4% | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 59.5% | | | | -6% | | | | | | | | growth in 2023. | basis), despite tight monetary conditions | | | -6.0% | | 35% | | BB- | Stable | | | | | | | | | significantly, increasing by 19% y-o-y from and elevated global interest rates. | | | | | | GEL 3.6 billion in 2023 to GEL 4.2 billion | | | | | 30% | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | -8% | | 25.2% | | | | | | | | | in 2024. Consolidated budget revenues | | | | | 25% | | | | Solid rebound in tourism revenues | | Fiscal policy remained expansionary, | | | | | 21.1% | | | Uzbekistan | | | 8 | | grew by 16% y-o-y, driven by a 18% | | -9.2% | | | | | | | in 2024 | | with current expenditures rising by 15.8% | | -10% | | | | 20% | | | | | 6 | | increase in tax revenues. | | | | | | | Country rating | Fitch rating outlook | | | | | | | | | | y-o-y and capital expenditures increasing 4 | BB- | Stable | | | by 12% in 2024. Fiscal revenues also saw | | --- | --- | --- | --- | --- | | | | 135% | 2 | | | | | compared to 2019. | 0 | | Overall balance (% of GDP) General Government debt, total (% of GDP) General Government debt, external (% of GDP) -4 -6 2014 2015 2016 2017 2018 2019 2020 2021 2022 2024E 2023 2025F 2028F 2026F 20 27F 2010 2011 2012 2013 2014 2015 2016 2017 20 18 2019 2020 2021 2022 2023 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 9M23 9M24 | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 1918 | | | Overview | Our Business | Discussion of Results | | | ## Market and Industry Overview continued Inflation vs. inflation target | | The medium-term growth forecast (2025- | debt have since returned within the fiscal | Below target inflation since | | --- | --- | --- | --- | | 15% | | | April 2023, standing at | | | 2029) stands at 5.2%, positioning Georgia | rules–public debt as of 2021 and the fiscal | | 14% 13% among the fastest-growing economies. deficit as of 2022. The Act also mandates 12% ## 11% According to the latest IMF Article IV staff a nationwide referendum for any new 2.4% 10% report, growth is expected to align with taxes or increases in existing taxes, with in February 2025 9% 8% its potential rate of 5% over the medium some exceptions. 7% 6% term, with inflation stabilising around the 5% | 4% | 3% target and the current account deficit | Additionally, Georgia introduced a | Medium-term (2025-2029) economic | | --- | --- | --- | --- | | 3% | | | growth rate | | | at 5.5% of GDP. | groundbreaking corporate income tax | | 2% 1% reform in January 2017, making tax 0% -1% Reform-driven success applicable only to distributed profits, ## 5.2% Over the past two decades, Georgia has while reinvested or retained profits one of the highest in the region implemented significant economic and remain exempt. This move is part of a (IMF, October 2024) | 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 | | Jul-20 | Apr-21 | Jul-21 | | Jul-22 | | Jul-23 | Apr-24 | Jul-24 | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | Apr-20 | | | | Apr-22 | | Apr-23 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | structural reforms, leading to notable | broader effort to create a favourable tax | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | improvements in governance and | environment; Georgia has reduced the | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | productivity. As a result, corruption has | number of taxes from 21 in 2004 to just | Headline inflation Core inflation Target | | | | declined, productivity has risen, and the | | six in 2020, earning recognition as having | | | --- | --- | --- | --- | --- | --- | --- | | | | | economy has become more diversified, | | one of the friendliest tax regimes in the | | | | | | bolstering the country’s resilience to | | World Bank’s Doing Business report. | | | | | | external shocks. | | Recent structural reforms, including | | | General Government gross debt reduced | In response, the NBG actively intervened | imported prices. Acknowledging these | | | the VAT reform (July 2020) and a new | | | to 36% of GDP by the end of 2024, lowest | in the foreign exchange market to manage | risks, the NBG has kept the policy rate | | | | NBG took macroprudential measures | | | | | Georgia consistently ranks highly in global | | insolvency framework (adopted in | | | since 2014, supported by four consecutive | expectations. While it was a net buyer of | steady at 8.0% during its last Monetary | | | | to decrease household indebtedness, | | | | | governance and business indicators. | | September 2020 and implemented | | | years of high economic growth. These | US$ 287 million from January to April, it | Policy Committee meetings. The NBG is | | | | enhance financial stability and strengthen | | | | | According to the latest World Bank | | in April 2021), further demonstrate | | | improvements have bolstered significant | became a net seller, offloading US$ 874 | prepared to adjust policy rate in line with | | | | regulation, supporting the financial | | | | | Ease of Doing Business report (2020), | | Georgia’s commitment to improving | | | deleveraging of external balance sheet and | million between May and October. Overall, | the macroeconomic developments. | | th | | system’s resilience to currency fluctuations | | | | | Georgia ranks 7 | , making it one of the | the business environment. | | | reduced vulnerabilities. | the GEL depreciated by 4.2% in 2024 | | | | | and FX-induced credit risks. A new | top economies in the region for starting | | despite strong economic fundamentals | Reflecting heightened political risks | | | | | important reform adopting the framework | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | a business. The country also leads in | | | Despite challenges arising from the global | | | Tourism remains a vital sector for | and solid FX inflows. The nominal effective | and uncertainty, Fitch Ratings revised | | | | | for issuing mortgage covered bonds | | | | | transparency and fiscal management, | | | disruptions, structural reforms and large | | | the Georgian economy, contributing | exchange rate (NEER) rose by 0.7% y-o-y | Georgia’s sovereign credit rating outlook | | st | | | was adopted by the parliament in 2022, | | | | | ranking 1 | out of 125 countries in the | | infrastructure projects to promote Georgia | | | significantly to FX inflows and the current | in January 2025, while the real effective | from “positive” to “stable” in June 2024 | | | | | aiming to provide an additional source for | | | | | International Budget Partnership’s 2023 | | | as a transit and tourism hub and enhance | | | account balance. In 2024, the number of | exchange rate (REER) decreased by 7.1% | and later from “stable” to “negative” | | | th | | a relatively cheap and stable source of | | | | | Open Budget Index, and 34 | | out of 184 | long-term growth are still underway. | | | international visitors grew by 4.6% y-o-y | y-o-y in January 2025. | in December 2024. The agency cited | | | | | financing for credit institutions. | | | | | countries in the 2025 Index of Economic | | | A new pension law was adopted in 2018, | | | to 6.5 million, recovering to 84% of 2019 | | concerns that “a protracted political | Freedom by the Heritage Foundation. | | | enhancing long-term fiscal sustainability, | | | levels. Tourism revenues reached US$ 4.4 | Inflation, like in much of the world, surged | crisis could undermine the institutional | | | th | | A business-friendly environment, well- | | | | | Inaddition, Georgia ranks 44 | | out of 194 | supporting capital market development, | | | billion, up 7.3% y-o-y, and accounted for | during 2021-2022 but declined sharply in | framework and affect investor and | | | | | developed infrastructure, stable energy | | | | | countries in the 2024 Trace International | | | increasing the replacement rate, | | | 135% of 2019 levels. Income from Türkiye, | 2023, falling below the 3% target from April | domestic confidence, exerting pressure | | | | | supply, flexible labour legislation, a stable | | | | | Business Bribery Risk Matrix. Notably, | | | narrowing the current account deficit | | | Iran, Russia, Israel, Saudi Arabia and the | 2023 onward. In 2024, headline inflation | on external liquidity and the exchange | | | | | and profitable banking sector, strategic | | | | | itis on par with EU member states in the | | | and boosting potential output. A new | | | EU exceeded 2019 levels. Particularly | averaged to 1.1% supported by broad | rate”. Although uncertainties remain high, | | | | | geography connecting European, | | | | | 2024 Corruption Perception Index by | | | bill on investment funds was adopted in | | | strong growth was observed in revenues | based disinflation across the consumer | Fitch expects 2025 real GDP growth to | | | | | landlocked Central Asian and Middle | | | | | Transparency International, ranking at the | | | 2020, in line with international practice | | | from Israel, with 42% y-o-y growth in | basket. Headline inflation started to pick up | be at 5.3%, while inflation to be 2.1% | | | | | East countries, and preferential trading | | | | | top in the Eastern Europe and Central | | | and harmonisation obligations with EU | | | 2024. Visitor numbers from Central Asian | slightly since November 2024 and reached | on average. | | | | | agreements, support Georgia to become | | | | | Asia region. | | | law, providing an up-to-date regulatory | | | countries also surged significantly. | 2.4% y-o-y in February 2025. | | | | | | a regional hub economy. | framework for investment activity. The | | | On the economic side, IMF revised its | The Economic Liberty Act, effective since | Georgian Government focuses on | | | --- | --- | --- | --- | --- | --- | | The Georgian Lari (GEL) experienced | In response to slowing inflation, NBG | GDP growth forecast for Georgia upwards | | | The Georgian Government’s ongoing | | | | | January 2014, has been instrumental in | addressing the shortcomings in employee | | | fluctuations in 2024 due to domestic | reduced its policy rate by 150 basis | from 5.7% (World Economic Outlook | | | infrastructure investments and increased | | | | | maintaining a credible fiscal framework | benefit schemes, further cutting non- | | | political tensions and election-related | points in early 2024, from 9.5% to 8.0% | – April 2024) to 7.6% for 2024 (World | | | spending on roads, energy, tourism | | | | | by limiting the fiscal deficit to 3% of GDP | essential expenditures, consolidating | | | uncertainties. The Georgian Lari | by May 2024. However, both global and | Economic Outlook – October 2024), | | | and municipal infrastructure will also | | | | | and public debt to 60% of GDP. Although | public sector institutions, making social | | | depreciated as negative sentiment | domestic uncertainties continue to pose | projecting 6.0% growth for 2025, the | | | reinforce the potential. To enhance | | | | | the Georgian Government temporarily | and healthcare spending more targeted, | | | increased demand for hard currency. | inflationary risks, including volatility in | highest in the region. | | | Georgia’s competitiveness, the Georgian | | | | | exceeded these thresholds during the | privatisation schemes and increasing | | | | oil and food prices in the international | | | | Government continues to strengthen | | | | | pandemic under an emergency escape | capital expenditure efficiency. Within | | | | market, as well as weaker GEL pressuring | | | | integration in existing international systems | | | | | clause, both fiscal deficit and public | the responsible lending framework, | | Jan-20 Oct-20 Jan-21 Oct-21 Jan-22 Oct-22 Jan-23 Oct-23 Jan-24 Oct-24 Jan-25 Feb-25 | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 2120 | | | Overview | Our Business | Discussion of Results | | | ## Market and Industry Overview continued Public debt down to | 36% | of Central Asia to Europe through Georgia | Georgia’s growth model and the success | EFTA, Türkiye, China and Hong Kong) and | and called on Georgia to demonstrate a | In December 2022, the parliament | | --- | --- | --- | --- | --- | --- | | of GDP by the end of 2024, | and Azerbaijan. The port is expected to | of the profit tax reform introduced in 2017. | the prospective FTA with India, as well as | clear commitment to EU values, continue | adopted changes in the corporate | | lowest since 2014 | be built with the co-participation of the | Planned investment and infrastructure | an agreement with Israel and successfully | progress on its reform agenda and fulfil the | tax model for banks (as well as credit | | | state and international investors. Recent | programmes, a rising number of free | concluded economic partnership | conditions specified in the Commission’s | unions and microfinance organisations), | | | developments indicate that a consortium | trade agreements (FTAs) and a business- | negotiations with South Korea, offer | report meaningfully and irreversibly. | setting the corporate tax rate at 20%, | | | led by Chinese and Singaporean | supportive environment will support further | significant upside potential for Georgia’s | Granting candidate status to Georgia is | combining the previous 15% rate with | | as well as new transit routes. Georgia is | companies has been selected as the | FDI inflows in the medium term. | exports. Furthermore, the Comprehensive | a significant acknowledgment by the EU | the 5% dividend tax rate and abolishing | | a regional energy corridor. In November | private partner for the Anaklia Deep Sea | | Economic Partnership Agreement (CEPA) | of the progress made in recent years. | the latter. Moreover, commercial banks | | 2019, the Georgian PM, alongside the | Port project. On 29 May 2024, Georgian | Free trade agreements | was signed on 10 October 2023, between | | adopted International Financial Reporting | | Turkish and Azerbaijani presidents, | Minister of Economy and Sustainable | There have been significant changes in | Georgia and United Arab Emirates. The | However, the reintroduction of | Standards (IFRS) from January 2023, as | | opened the Trans-Anatolian Pipeline, | Development, Levan Davitashvili, | Georgia’s export structure and destination | CEPA will strengthen trade, economic | controversial “transparency of foreign | laid out in NBG’s 2020-2022 supervisory | | allowing natural gas from Azerbaijan to | announced that the consortium, including | markets in recent years; however, Georgia | and investment cooperation between | influence” law and a perceived lack of | strategy, aiming to increase harmonisation | | be exported to Europe through Georgia. | China Communications Construction | has not yet fully tapped into international | the countries. | commitment to key EU demands have | with developed countries. | | In December 2022, leaders of Azerbaijan, | Company and China Harbor Investment, | markets. One of the biggest changes | | heightened tensions with the West and | | | Georgia, Hungary and Romania signed | was the sole bidder and would be officially | in destination markets has been a | The EU-Georgia Association Agreement, | put Georgia’s EU integration process | In 2022, NBG began implementing | | an agreement to build an underwater | declared the winner. Additionally, an | reorientation from the Russian market after | which came into force in July 2016, | on hold. Even more, after the elections, | a new bank recovery and resolution | | electric cable in the Black Sea, further | agreement for constructing the port’s | the 2005 embargo, as the embargo forced | and the related DCFTA, effective since | the Georgian Government announced a | framework, with assistance from IMF | | positioning Georgia as an important | marine infrastructure was signed with | Georgian producers to redirect exports | September 2014, have laid the solid | postponement of its EU accession talks | technical missions. The IMF mission noted | | player in the EU energy policy. The Black | the Belgian company “Jan De Nul”, a | to other Commonwealth of Independent | groundwork to improve governance, | until 2028. This decision has intensified | Georgia’s “considerable progress” in | | Sea Submarine Cable project is one of | leading firm in marine construction. These | States (CIS) countries, the EU and the | strengthen the rule of law and provide | protests, as approximately 85% of the | establishing the necessary infrastructure | | the largest energy infrastructure projects | partnerships support the Anaklia Deep | Middle East. Exports to Russia picked | more economic opportunities by | population supports EU membership. | for an effective bank recovery and | | currently under preparation. Also, a fiber- | Sea Port project, aiming to enhance | up again in 2013 as Russia reopened its | expanding the EU market to Georgian | | resolution regime, and identified key | | optic submarine cable interconnection | Georgia’s role as a strategic transit hub | borders to Georgian products. Another | goods and services. Closer economic | Individual sector overview | priorities for further collaboration. | | across the Black Sea is considered, | between Europe and Asia. | significant change concerns the growing | ties with the EU and trust in prudent | Banking | Additionally, NBG applied for membership | | which would be laid alongside the electric | | importance of China as a Georgian export | policymaking are also expected to attract | The banking sector has been one of the | in the Single Euro Payments Area (SEPA), | | cable, to strengthen internet connectivity | Georgia’s business-friendly environment, | market, as the FTA effective from January | foreign investments to Georgia. Visa-free | most developed and fastest-growing | emphasising that SEPA membership | | between the Caucasus and the EU. | coupled with its sustainable growth | 2018 has brought a major acceleration | travel to the EU, granted to Georgian | sectors of the Georgian economy. | would enhance the credibility of the | | Strengthening of Georgia’s domestic | prospects, attracted FDI on average 7.9% | of exports to China. China was the single | passport holders in March 2017, is | The banking sector’s asset growth | financial sector and simplify financial | | power transmission system as well as its | of GDP over the past decade. These | largest destination country for Georgian | another major success of the Georgian | rate of 16.6% (ten-year CAGR) has far | services for Georgian citizens. | | digital connectivity should result from the | capital flows boosted productivity and | exports for 2020-2022 years. Since | foreign policy. | outstripped the nominal GDP growth rate | | | Black Sea Submarine Cable project, and | accelerated growth. Public infrastructure | 2013, Georgia’s developed logistics | | for the same period. However, despite | In January 2023, NBG introduced a new | | the World Bank, one of the contributors | projects were also instrumental in driving | and transport infrastructure has helped | Following Ukraine’s plea to join the EU as | robust progress, there are plenty of | methodology for defining systemically | | of this project approved a US$ 35 million | growth, as well as better realising the | shore up opportunities for new re-export | it battles Russia’s invasion, Georgia and | opportunities to further tap into growth | important commercial banks and | | loan in May 2024 for the first preparatory | country’s potential in logistics, transport | commodities, including copper and | Moldova on 3 March 2022 submitted | potential, as the financial market remains | establishing a systemic buffer for them, | | phase. In 2025, the first phase of the | and tourism. Faced with low domestic | pharmaceuticals. Georgia’s potential to | their applications to join the EU. Georgia | at an early stage of development. The | with the aim of further strengthening | | Black Sea Submarine Cable project is | savings, FDI is an important source of | become a logistic hub has strengthened | previously planned to apply to join the EU | sector has remained resilient in the face | financial system resilience. This updated | | planned to be implemented. This phase | financing growth in Georgia, as well as a | since sanctions on Russia, with robust | in 2024. The European Council granted | of challenges such as COVID-19 and | methodology classified three banks— | | includes studies of the Black Sea seabed | reliable source of current account deficit | demand observed from Kyrgyzstan, | a conditional European perspective to | the war in Ukraine, underscoring the | Bank of Georgia, TBC Bank and Liberty | | and related consultancy services (financial | funding. Total FDI amounted to US$ 1.3 | Kazakhstan, Azerbaijan and Armenia | all three countries, with Ukraine and | robustness of the banking system. | Bank—as systemically important, | | and technical assistance). The project is | billion, down 30% y-o-y in 2024, following | in 2023-2024. Importantly, re-exports | Moldova receiving the candidate status | | assigning a 2.5% buffer for the first | | crucial for Europe and Georgia in several | record high FDI numbers in 2022-2023 | reached a record high of US$ 3.6 billion | pre-emptively. For Georgia, however, | In December 2024, Fitch Rating | two and a 1% buffer for Liberty Bank. | | aspects: energy security, economy, green | (US$ 2.3 billion and US$ 1.9 billion, | in 2024, accounting for 54% of total | candidate status was made subject to | downgraded the outlook of Georgian | The decree also included provisions to | | policy, and interregional connectivity. | respectively). Major sectors attracting | exports and growing by 10% y-o-y, first | meeting a list of 12 conditions. | banks to “stable” from “positive” on the | increase these buffers if any individual | | | FDI in 2024 were: financial and insurance | time ever exceeding domestic exports | | back of increased political risks and | bank’s deposit concentration exceeds | | Following the Russia-Ukraine conflict, | activities (39% of the total), manufacturing | since April 2023. | On 8 November 2023, the European | elevated uncertainty. Despite the revision, | specified thresholds. | | and the subsequent Western sanctions | (13% of the total) and real estate | | Commission adopted the 2023 | rating agency highlighted that the risk | | | imposed on Russia, the Georgian | activities (12% of the total). The share | Together with established destinations, | Enlargement Package – a set of | of liquidity and local-currency stability | As part of the 2021 joint Financial | | Government has revived plans to build a | of reinvestment by foreign companies in | improved access to large new markets, | documents explaining its policy on EU | are balanced by the banks’ asset | Sector Assessment Program by the | | deep-sea port at Anaklia, which would be | total FDI was 88% in 2024, more than | such as the EU, China and Hong Kong, | enlargement. The final decision was made | quality and capitalisation, exceeding | IMF and World Bank, NBG received | | located in the so-called Middle Corridor, | 2019’s 47%. The increasing share of | could increase market penetration. | on 14 December 2023 and the European | historical averages. | recommendations to establish a Minimum | | which connects China and the countries | reinvestment indicates investors trust in | Georgia’s existing FTAs (with the EU, CIS, | Council granted the status to Georgia | | Requirement for Own Funds and Eligible | | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 2322 | | | Overview | Our Business | Discussion of Results | | | ## Market and Industry Overview continued | Liabilities (MREL) for domestic systemically | increased deposit dollarisation caused by | Retail (pharmacy) | directions: Generic and Original drugs. | for all vehicles registered in Georgia is | since Georgia has one of the lowest per | | --- | --- | --- | --- | --- | --- | | important banks within its resolution | domestic uncertainty, the FSC increased | The pharmaceutical market in Georgia | The price caps are set based on the | expected to kick in and significantly boost | capita expenditures on healthcare among | | framework. Based on the European Bank | the upper limit of the minimum reserve | is highly concentrated, with three major | average of such medicine prices in the | retail market penetration. | the benchmark countries. Healthcare | | Recovery and Resolution Directive, this | requirements for funds attracted in foreign | players holding approximately 95% of the | following countries: Bulgaria, Latvia, | | spending per capita is currently at a | | regulation sets a progressively increasing | currency by 5 percentage points to | organised retail (pharmacy) market share | Macedonia and Montenegro. | Medical insurance | very low base of only c.US$ 300, with | | MREL for systemic commercial banks: | curb excess liquidity risks. Additionally, | in 2023. The Georgian pharmaceutical | | Over the past decade, the private medical | annual outpatient encounters of 3.7 per | | 10% from January 2024, 15% by | the maximum maturity for unsecured | market is highly dependent on imports. | Currently, approximately 297 Generic | insurance market expanded significantly | capita, significantly lower than many | | December 2025, and 20% by December | consumer loans was extended from | There are over 100 importers of | drugs are subject to the new regulation. | compared with the 2006 figure, when | comparable countries. On average, | | 2027. Starting in 2024, these banks | three years to four years starting | pharmaceutical products in Georgia, | | only 40,000 Georgian citizens (or c.1% | c.65% of healthcare spending is funded | | are required to submit monthly reports | November 2023. | but approximately 57% of all imports are | Property and casualty (P&C) | of the total population) had a voluntary | by the private sector. Notwithstanding | | to NBG. | | performed by three companies: GEPHA | insurance | medical insurance package, mostly | a significant improvement in the bed | | | The banking sector ended 2024 with | (approximately 16%), PSP (approximately | From 2010 to 2023, the Georgian | provided as part of a corporate benefits | occupancy rate, from c.30% in 2003 to | | In November 2023, the NBG’s Financial | record net profits of GEL 3.1 billion, | 21%) and Aversi (approximately 20%). | property and casualty insurance sector | programme. There were 735,000 private | c.50% currently, there is still potential | | Stability Committee (FSC) decided to | 14% increase compared to the 2023 | Pharmaceuticals market reforms have | grew by 425%, with insurance revenue | health insurance (PHI) policies in force | for even higher efficiency in order to | | gradually accumulate the countercyclical | profits. Interest income rose by 17.8% | made it possible to create a competitive | increasing to GEL 557 million. According | at the end of June 2024. The corporate | align Georgia with best practices. The | | capital buffer over the next few years: | y-o-y, reaching GEL 8.4 billion, while | marketplace in Georgia. These have | to the Insurance State Supervision Service | segment accounts for the major portion | occupancy rate in Georgia is far below | | 0.25% by March 2024, 0.5% by March | interest expenses climbed by 25% to | included the introduction of parallel | of Georgia (“ISSSG”), the total value of | of the PHI market – 91.7% of all policies | EU (77%) and CIS average (83.4%) | | 2025, 0.75% by March 2026, and 1% by | GEL 4.1 billion. Non-performing loans | imports and automatic registration of | gross written premiums increased from | are acquired by employers, and the rest | indicators. The Georgian healthcare | | March 2027. This buffer, introduced under | (NPLs) were 1.47% of total loans by the | medicines recognised by international | GEL 113 million in 2010 to GEL 588 | (61,000) are purchased by self-paying | market has shown solid growth in recent | | Basel III, is a key macroprudential policy | end of 2024, slightly lower than the 1.48% | control bodies, such as the US Food and | million in 2023; an increase of 418%. | individuals. In Georgia, PHI is primarily | years. According to management’s | | tool to curb excessive credit growth and | recorded at the end of 2023. Return on | Drug Administration and the European | The largest six insurance providers in | intended to provide value-added services | estimates based on third-party data, the | | mitigate systemic risks. | assets (ROA) stood at 4.3% and return | Medicines Agency, as well as favourable | Georgia account for approximately 78% | in the form of more extensive coverage or | total healthcare market grew by a CAGR | | | on equity (ROE) at 25.2%, though slightly | regimes for setting up pharmacies (0% | of the market. The level of insurance | more convenience for the patient. | of 9% over 2011-2023 years. Outlook | | In December 2023, the Georgian | lower than 2023 level. By the end of | VAT on medicines, absence of customs | market penetration in Georgia amounts | | for the healthcare sector is positive as | | parliament approved amendments to | 2024, the average capital adequacy ratio | duties and no price controls). | to 1.3% (of which 0.8% is attributable | Hospitals and clinics and diagnostics | increasing GDP and disposable income | | the resolution fund legislation, requiring | increased to 22.7% from 22.1% in 2023, | | to the property and casualty insurance | The Georgian healthcare industry | help domestic consumption to increase, | | commercial banks to make ex-ante | while the liquid asset ratio declined to | Imports of medicines were the third | market) as at 31 December 2023. This | experienced important transformations | especially in elective care, diagnostics and | | contributions to a resolution fund, which | 18.3% from 20.9% in 2023. | largest commodity group, amounting to | was lower than insurance penetration in | during the last decade. The key | outpatient services. | | will accumulate to a target amount | | US$ 623 million (3.7% of total imports), | more developed countries such as the | components of the national healthcare | | | of 3% of insured deposits. This fund | Despite tightened monetary conditions | while export of medicines was the | UK, France, Switzerland and Belgium, | reform were massive privatisation, | To streamline the state funding | | is intended to support the resolution | and elevated foreign currency rates, the | eighth largest export commodity group, | which had penetration rates of 9.7%, | infrastructure upgrade, sector liberalisation, | financing in healthcare and improve the | | process in case of emergency, ensuring | loan portfolio demonstrated resilience. | amounting to US$ 129.5 million (1.97% | 8.7%, 6.9% and 5.5%, respectively, | introduction of Universal Health Care | reimbursement process, the Georgian | | the early identification of banks’ financial | Credit to the economy grew by 17.0% | of total exports) in twelve months of 2024, | and was also lower than penetration in | (UHC) and wider accessibility to healthcare | Government introduced an initiative to | | vulnerabilities. Contributions to the fund | y-o-y (excluding exchange rate effects) by | including US$ 104.1 million of re-exports | neighbouring countries such as Czech | services as the major outcome. | implement a Diagnosis Related Group | | will begin in 2025 and continue through | the end of 2024, with a 22.3% increase | (2.9% of total re-exports). | Republic, Poland, Hungary and Türkiye, | | (DRG) financing system. The DRG system | | 2033. The NBG will manage the fund, | in GEL loans and a 10.6% rise in foreign | | which had penetration rates of 2.90%, | To address high private healthcare costs | categorises inpatient case types that are | | with the option to transfer it to the Deposit | currency loans. Mortgage loans grew by | Also, effective from 15 January 2023, | 2.90%, 2.00% and 1.70%, respectively. | and basic healthcare coverage for the | clinically similar and expected to use the | | Insurance Agency. | 12.4% by December 2024, while business | the Ministry of Health, Labour and | The Georgian retail insurance market | entire population, UHC was introduced in | same or similar resources into groups | | | loans increased by 16.8%. Commercial | Social Affairs of Georgia (the “Ministry”) | offers ample room for growth, as most of | 2013 and replaced previous state-funded | by applying various criteria (age, sex, | | De-dollarisation remains a priority for both | bank deposits rose by 13.0%, with | implemented an External Reference | its potential is yet to be unlocked. Motor | medical insurance plans. New initiatives | intervention needed, comorbidity, etc.). | | NBG and the Georgian Government. | GEL deposits up 9.5% and foreign | Pricing model on the pharmaceuticals | insurance accounts for 55% of the total | regarding the reimbursement and | The new system became effective from | | Restrictions on foreign currency loans | currency deposits growing 16.4% | market, related to both prescription and | retail insurance market in Georgia, of | differentiating coverage of Universal Health | the beginning of 2023. The way the DRG | | have been in place since January 2017, | (excluding government deposits). | non-prescription medicine. Reference | which 13% represents border Mandatory | Insurance were adopted in 2017. | system was initially implemented had a | | with the initial limit at GEL 100,000. As | | Pricing is an approach where prices are | Third Party Liability (MTPL) insurance, | In terms of health expenditure as a | positive impact on the business EBITDA, | | part of the long-term de-dollarisation plan, | Deposit dollarisation increased to 52.8% | set according to the benchmark prices | effective from March 2018. | percentage of GDP, Georgia achieved | however the system was modified | | the FSC has gradually risen this limit, with | by the end of 2024, up from 50.7% at the | for the same or similar medicines in | | a level consistent with that of major | several months into its implementation, | | the most recent update, starting from | end of 2023. Loan dollarisation following | comparable countries. According to the | Moreover, the motor insurance segment | developed economies, at approximately | decreasing tariffs on a number of services, | | January 1, 2025, the cap on unhedged | a decreasing trend, falling below 50% for | new initiative, the Ministry introduced | has great potential to increase, as only 7% | 8%, which is above most of its peer | and making the changes profit neutral. | | foreign currency loans increased to GEL | the first time in 2022, reaching 43.3% by | the maximum retail price on targeted | of registered cars are insured on the local | emerging economies. However, there still | | | 500,000. In December 2024, due to the | the end of 2024. | pharmaceutical products, in two | market. The new law requiring local MTPL | remains vast potential for further increase | | | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 2524 | | | Overview | Our Business | Discussion of Results | | | ## Market and Industry Overview continued | In 2024, the Georgian Government | the new regulation enforced since 1 May | gradually. The reforms affect many | Capital is the largest player on the market | | | --- | --- | --- | --- | --- | | announced changes to the DRG system, | 2019, consumers with at least 5GWh of | sectors, including electricity and natural | with a 9.4% market share in terms of | | | introducing a co-payment component | consumption per month were obliged | gas, renewable energy, energy efficiency, | learners, while the second largest player | | | to the universal healthcare programme. | to register as direct customers. Direct | construction, environmental legislation, etc. | holds 2.3%. Management believes that the | | | Patients will now have the option to pay | customers secure electricity directly | | key growth drivers will be the large gap in | | | out-of-pocket for additional services | from generating companies or traders, | The Law on Energy was adopted by | the quality of public schools as compared | | | that fall outside the established pricing | which enables the development of a | the parliament of Georgia in December | to private schools as well as increasing | | | framework. These services include VIP | stable deregulated electricity market. | 2019. The Law on Energy defines general | household income and decreasing | | | wards, premium-quality prosthetics | Deregulation continued in 2021 – all | principles of market organisation, main | unemployment rates. | | | or specific doctors, all available at an | entities with monthly consumption of more | participants and role sharing. According | | | | additional cost. It remains uncertain | than 0.4GWh and with 35-110kV access | to the Law on Energy, market reform | Data provided in this section was collated | | | whether participants in the universal | lines were registered as direct consumers. | envisages the reform of both wholesale | from the following sources unless stated | | | healthcare programme will be able to | This process will continue in the following | and retail markets. As a result, new | otherwise: | | | utilise private insurance packages to | years as well, further increasing the share | players will emerge in both markets | • | Geostat | | cover these extra services. The changes | of the deregulated market. | to intensify competition and weaken | • | National Bank of Georgia | | are anticipated to have a positive impact | | industry regulation. | • | Ministry of Finance of Georgia | | on both profitability and the quality of | Active energy sector reform started | | • | Georgian National Tourism | | healthcare services. | when Georgia became a member of the | The Electricity Market Model Concept | | Administration | | | Energy Community. Georgia has signed | adopted by the Georgian Government | • | Insurance State Supervision Service | | Renewable energy | a protocol concerning the accession | in April 2020 clarified the organisational | | of Georgia | | Georgia is on track to develop a stable, | of Georgia to the treaty establishing | details regarding the wholesale market of | • | World Bank | | EU-aligned and competitively priced | the Energy Community of EU and its | electricity. Based on the latest changes in | • | International Monetary Fund | | energy sector. The country has overcome | neighbours in October 2016, ratified by | regulations, the first stage of the intraday | • | Fitch Ratings | | the frequent energy shortages of electricity | the parliament of Georgia in spring 2017. | market (IDM) and day-ahead market | | | | and gas supply interruptions by renovating | With this agreement, Georgia undertook | (DAM) was launched in July 2024. | | | | and updating energy infrastructure, | an obligation to synchronise Georgian | Full market opening is scheduled for | | | | improving transmission infrastructure | legislation with EU standards in the energy | July 2025 (including DAM, IDM, and | | | | and increasingly diversifying its natural | sector and to do so in a short period of | balancing market). | | | | gas and electricity importing markets. | time. As Georgia is not directly connected | | | | | Economic growth paired with transparent | to the Energy Community member | Education | | | | and investor-friendly environment attracts | countries via transmission line, it is exempt | The private K-12 education industry in | | | | foreign investments in the sector. | from several directives. However, significant | Georgia has been growing at a 10% | | | | | changes apply to the market structure | CAGR over the last decade. Based on | | | | In 2008, the power generation market | in the electricity and natural gas sectors, | the business’ estimation, the market size | | | | witnessed significant changes to facilitate | energy efficiency, and environmental | reached GEL 417 million in 2024, driven | | | | market liberalisation. All HPPs constructed | law. Energy Community regulations will | by both increasing enrolments and rising | | | | after August 2008 have been deregulated, | bring to Georgia a more competitive and | tuition fees. Currently, there are c.70,300 | | | | which served as a first step towards | transparent market model. | learners in private schools in Georgia, | | | | the establishment of the free electricity | | representing 11% of the total general | | | | market. In 2014, the EU and Georgia | The first step in the reform process | education market. There is a consolidation | | | | signed an Association Agreement and | was the adoption of new laws by the | trend that represents an opportunity in a | | | | Georgia became a full contracting party | Parliament of Georgia, framing general | fragmented market. Over the last decade, | | | | member of the Energy Community in | principles of the market organisation. | average private school size has increased | | | | 2017. Further, the electricity law was | Later some decrees of the Georgian | by 51% and the number of private schools | | | | amended, deregulating all HPPs below | Government and the Georgian National | has decreased by 13%. Private learners | | | | 75MW. | Energy and Water Supply Regulatory | are consolidating in the four largest cities | | | | | Commission followed, specifying the | with populations over 100,000, namely | | | | In order to increase market liquidity, the | details of the market organisation | Tbilisi, Batumi, Kutaisi and Rustavi. Tbilisi | | | | first step was to increase the number | and transition period. Although some | is the largest city in Georgia with the | | | | of direct customers at the wholesale | uncertainties remain to be cleared by | majority share of private learners (64% of | | | | electricity market. In accordance with | by-laws, the total framework is developing | the Georgian private market) and Georgia | | | | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 26 27 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Capital Allocation and Managing Portfolio Companies Georgia Capital does not have capital commitments or a primary The Group believes that in the long run Georgia will become In 2022, the Group introduced an NCC Navigation Tool, which is • In 2023, GCAP launched two buyback programmes: a mandate to deploy funds or divest assets within a specific time a service hub of the region. Since the Group is under no time an integral part of GCAP’s existing 360-degree framework and US$ 10 million programme in April 2023, under which it frame. It focuses on shareholder returns and on opportunities pressure to invest, it takes a selective and opportunistic approach drives the Group’s share buyback and investment decisions. repurchased and cancelled 1,000,000 shares with a total that meet its investment return and growth criteria. In line with its to new investments. The Group’s key principle is to buy assets NCC represents an aggregated view of all confirmed, agreed and value of GEL 25.4 million (US$ 10.0 million), and a US$ 15 capital allocation strategy, the Group emphasises capital-light, at affordable prices and to remain very disciplined in this regard. expected capital outflows at the GCAP holding company level. An million buyback programme launched in October 2023, during larger-scale investment opportunities in Georgia, which have To evaluate new acquisition opportunities Georgia Capital has NCC ratio (NCC as a percentage of the total portfolio value) between which 665,222 shares with a total value of GEL 22.5 million the potential to reach at least GEL 300 million equity value over developed a 360-degree analysis framework. 15%-40% guides us to tactical share buybacks/investments, (US$ 8.3 million) were repurchased in 2023. three to five years and to be monetised through exits as they an NCC ratio below 15% would be expected to lead to more • In May 2024, GCAP initiated a US$ 25 million share buyback mature. The Group believes that the superior exit opportunities 360-degree analysis – a strong foundation meaningful share buybacks/investments, whilst a ratio above 40% and cancellation programme, which was subsequently and improved liquidity associated with larger sized investments for value creation would lead us to implement a cash preservation strategy as we did extended by an additional US$ 15 million in August. In will support the Group’s desire to reduce the current discount to Georgia Capital’s share price is at the core of decision-making during the active phases of the COVID-19 pandemic. December 2024, the Company launched another US$ reported NAV per share. when it comes to new investments. The Group performs a 25 million share buyback and cancellation programme, 360-degree analysis each time it makes a capital allocation Since its inception, GCAP has bought back 12.6 million shares which was increased by an additional US$ 25 million in Monetise decision and compares: a) the investment opportunity versus with the total value of US$ 151.7 million under its buyback March 2025. Under the buyback programmes in total, the buyback opportunity; and b) the sale opportunity versus buyback programmes to date. Company repurchased 3,669,889 of its own shares in 2024, opportunity. The Group intends to buy assets/companies at • The US$ 45 million share buyback programme, which representing a nominal value of US$ 48.1 million. In 2025 to a higher discount to their listed peers than GCAP’s fair value commenced in June 2018, was completed in August 2019. date, additional 1,512,332 shares (US$ 24.2 million in value) Invest in discount. Georgia Capital is targeting to invest in opportunities Under the programme we bought back 3,336,843 shares, have been repurchased. capital-light which produce greater returns than returns created by buying of which 2,650,375 shares were cancelled and 686,468 large opportunities in Georgia back Georgia Capital’s shares. shares were transferred to the management trust. The table below summarises GCAP’s share buybacks in 2024. • In August 2019, Georgia Capital initiated a US$ 20 million Value of share purchase programme for the management trust. shares Number of repurchased shares The management trust programme has repurchased (US$ million) repurchased 1,550,084 shares. Grow businesses to equity • There was no buyback programme in 2020 in light of the cash Georgia Capital share buybacks 49.8 3,790,417 ## value of GEL 300 million+ 360-degree framework – of which, programme 48.1 3,669,889 preservation strategy due to COVID-19. • of which, management trust 1.7 120,528 ## a strong foundation for In August 2021, Georgia Capital commenced a US$ 10 million • Number of Georgia Capital shares cancelled 47.8 3,656,705 Georgia Capital invests in Georgia in sectors not requiring share buyback and cancellation programme, which was ## intensive capital commitments. value creation extended by an additional US$ 15 million in 2022. Under the • GCAP enables its large and capital-light portfolio companies to US$ 25 million share buyback programme, 3,075,923 shares Entering a new industry with a small ticket size explore regional growth opportunities, such as the expansion have been repurchased and cancelled, corresponding to GEL Another core principle of the Group’s investment philosophy ### GCAP share price is at the core of our of the retail (pharmacy) business into Armenia and Azerbaijan. 76.2 million (US$ 25.0 million) in value. is to be mindful about the size of potential investments in new ### • In capital heavy industries, Georgia Capital seeks to manage investment decision-making industries. Georgia Capital typically starts with a small ticket third-party money and/or establish partnerships. size and tests and develops a management track record before stepping up the investment. We perform 360-degree Businesses operating in a frontier economy such as Georgia analysis each time | have limited access to capital and management personnel. | | | | I n | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | k | y | o v | | | | | | | 1 | | | | | c | i t | p | e | we make acapital | | NCC and NCC ratio development overview | | | | | | Consequently, those with access to these limited resources can | a | n | | p | s | | | | | | | | | | b | u | | o | t | | | | | | | | | | y | t | | r | m | allocation decision | | | | | | | | | | r | | t | | | | | | | | | | make investments in companies which then provide an attractive | u | o | | | u e | | | | | | | | | | B | p | | | n n | and compare: | | | | | | | | | | | | | i | | | | | | | Over the past few years, the NCC | | risk return profile. The Group seeks to generate value for its | | p | | | t t | | | | | | | | | | | o | 360° | | y | | | | | | | | | | | | | | | • | Investment opportunity | | | | | ratio has improved significantly | | shareholders by: investing in opportunities in Georgia that are | | | analysis | | | | | | | 365.9 | | | | | | | | | | | vs. buyback opportunity | | 345.7 | | | | currently not directly accessible to its shareholders; changing • Sale opportunity vs. management and governance structures; institutionalising | | | S a | l e | | buyback opportunity | | | --- | --- | --- | --- | --- | --- | --- | | and scaling up the Company operations, often to benefit from | o p | | | y | | 42.5% | | | | p o | u n | i t | | | | | | | r t | | | | 39.8% consolidating fragmented and underdeveloped markets; and unlocking value by exiting these companies over time. The 213.6 31.9% 250.1 2 201.0 Group’s approach to investing and managing companies entails 171.3 the following principles: 385. 8 21.1% | Highly disciplined entry approach | NCC Ratio Navigation Tool | | | | | --- | --- | --- | --- | --- | | The Georgian economy entered into a period of significant | | 15.6% | | 15.0% | | | 15% 40% | | 12.8% | | development and growth approximately 15 years ago and different sectors and businesses are therefore at early stages Meaningful Tactical Cash buybacks and buybacks and preservation of formation. investments investments strategy 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24 Over the cycle target Access to capital and management personnel is limited and as a result, Georgia Capital can pursue attractive investment NCC ratio Net Capital Commitment (US$ million) opportunities and acquire assets on relatively attractive terms with a view to consolidating fragmented and underdeveloped Capital sectors of the economy, particularly targeting high-multiple allocations 1 Reflects the retrospective conversion of the loans issued to our real estate and beverages businesses into equity. service industries, not requiring significant capital commitments. 2 Assuming the application of the 15% NCC ratio target to the total portfolio value as at 31 December 2024. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 28 29 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | Capital Allocation and Managing Portfolio Companies continued Strong balance sheet and cash management at Georgia Capital Liquidity is important Focus on cash generation Total cash and liquid funds (US$ million) In order for the strategy to succeed, GCAP must be disciplined Cash generation at both Georgia Capital and portfolio company Cash and liquid funds in unlocking the value of companies in which it invests and that level is a key success factor for Georgia Capital. ### balance increased 2.5x it manages. In particular, it is crucial to set an exit strategy prior ### to making an investment. A low investment entry point becomes Focus on management development y-o-y to US$ 99 million Dec-23 40 even more important in a small frontier economy, with limited By developing top talent in Georgia Capital, the Group can add at 31 December 2024, exit opportunities. The Group aims to have two potential liquidity value for the Company’s shareholders. Investing time in growing ### primarily reflecting the events for each of its assets: and developing management continues to be critical for the +2.5x ### collection of the beer | • | The first exit: when entering a new industry Georgia Capital | success of the Group’s strategy. | | | | | --- | --- | --- | --- | --- | --- | | | intends to develop and grow portfolio companies. GCAP’s | | and distribution business | | | | | | | | Dec-24 | 99 | | | key focus areas at portfolio company level are the ability to | Good corporate governance | | | | ### sale proceeds. grow operating cash and to make efficient capital expenditure The Company believes that robust corporate governance is investments by targeting an appropriate level of return on a source of value creation for its shareholders. The Company invested capital (ROIC). Once the business reaches its late believes that alignment of the interests of shareholders and stage of development, GCAP expects to pursue its first exit management by awarding long-term deferred shares to the route, which envisages dividend flows for the Group; and Group’s senior executives enhances value creation. • The second exit: as businesses mature, Georgia Capital ## normally seeks to monetise its investment through Strong dividend income from portfolio companies ### appropriate exit options, typically within five to ten years GCAP role – vis-à-vis portfolio companies from initial investment. • Approval of all capital allocation decisions: equity, Recurring dividend income from portfolio companies GEL 179.2 million recurring dividend income in 2024 debt, profit reinvestment, divestment, etc. The Chief Strategy Officer is responsible for overseeing the • Strategy setting, business plan approval and monitoring. establishment of structured exit processes for the portfolio • Human capital (CEO and CFO) allocation and 4.1 4.3 2 1 companies, as Georgia Capital is actively engaged in the price (GEL million) 2024 2023 KPIsetting. discovery of portfolio assets held. -0.4% Lion Finance Group 122.2 124.5 • Approval and monitoring of the ESG strategy. of which, cash dividends 72.2 80.5 1 2 180 179 of which, buyback dividends 50.0 44.0 55 57 Insurance 25.4 19.9 | Capital allocation outlook | Planned investments from GCAP in portfolio companies | | | | | --- | --- | --- | --- | --- | | Georgia Capital expects to allocate US$ 42.2 million net equity | | | | Renewable energy 12.3 5.2 | | capital in the renewable energy and education businesses over | Total net investment identified from GCAP over the next | | | Retail (pharmacy) 10.0 24.2 | | | | 44 | 50 | | | the next three to five years. | 3-5 years | | | | Beer business 8.3 – | Other than already identified greenfield projects in the renewable | | | Total | | Auto service 1.0 – | | --- | --- | --- | --- | --- | --- | | | Renewable energy | Education | | 81 | | | energy and education businesses, the Group expects to focus | | | | | Hospitals – 6.0 | 72 ### on acquisitions. By driving the development of these two 24.8 17.4 Total 179.2 179.8 | businesses, the Group expects to realise at least 2.0x MOIC at | | | 42.2 | | --- | --- | --- | --- | | | US$ million | US$ million | | | each investment level. | | | US$ million | as at No investments are expected in the clinics and diagnostics 31-Dec-24 2023 2024 business from GCAP. Dividend income from private companies Buyback dividend Detailed information on the investments in these businesses are Dividend income per share (GEL) set out on pages 32-57 of this report. IRR and MOIC are the key drivers for GCAP to invest in ROIC is at the core of decision-making when our ### GCAP management fee expenses starting from 2024 have newopportunities portfolio companies are investing or divesting assets/ ### a self-targeted cap of 0.75% of Georgia Capital’s NAV. businesses The LTM management fee expense ratio was 0.72% at 31 December 2024 (0.80% as of 31 December 2023). Key money Key metric for reinvestment multiples at decision-making at portfolio IRR MOIC ROIC GCAP level: companies’ level: • ROIC should exceed weighted average cost of capital GEL million (WACC) for new investments. 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 • Portfolio companies to continue divestment of low ROIC Finance Group’s 2022 share buybacks; and GEL 26.7 from the retail (pharmacy) business, following the minority buyout. and/or non-core assets and businesses to enhance ROIC. 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%). Dividend income from listed companies | | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | --- | | 30 | Georgia Capital PLC Annual Report 2024 Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 3130 | | | | Overview | Our Business | Discussion of Results | | | ## Our Management Team 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 Georgia Capital previously served as CEO of the Bank since May 2006. Prior, he was an EBRD banker. Mr Gilauri has almost 20 years of experience inbanking, 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 acertificate 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/ | | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | --- | | 32 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 33 | | | | Overview | Our Business | Discussion of Results | | | ## Our Portfolio Overview ## Listed and observable portfolio retail. This is expected to be achieved by 1 ## Performance track record combining Ameriabank’s existing franchise ## Banking strengths with the Lion Finance Group’s expertise, stemming from their proven Capital distribution (GEL million) track record and leading digital products Value: GEL 1,421 million and payments capabilities. 37.8% of the total portfolio value Payout ratio Ameriabank is also one of the leading 35% 37% 31%37% payments acquirers in Armenia, with 582 further potential upside on the back of the 535 522 181 group’s strong expertise in this area, as 188 162 well as supported by favourable market An estimate based on a final dividend | fundamentals, as the Armenian economy | | | | | of GEL 5.62 per share that Lion Finance | | | --- | --- | --- | --- | --- | --- | --- | | | | | | 254 | Group’s Board intends to recommend | | | is predicted to become increasingly | | | 360 | | | at the 2025 AGM | | | 257 | 347 | | | | | cashless over the next few years. 73 Overview which BoG develops value propositions Ameriabank is the market leader in 184 Performance and strategy 146 Lion Finance Group PLC (“Lion Finance for small and medium-sized enterprises, Armenia by total loan portfolio (20.9% Lion Finance Group delivered strong Group” or the “Bank”), formerly known has shown remarkable growth in recent market share as at 31 December 2024) results in FY24. Excellent top and bottom- as Bank of Georgia Group PLC is a FTSE years. In Corporate and Investment and the second largest bank by total line growth and outstanding ROAE were 250 holding company whose subsidiaries Banking, given the scale, the rich portfolio deposits (18.5% market share as at Total dividend paid for the year Share buyback supported by the strong macroeconomic provide banking and financial services of banking products and services, and December 2024), with a strong loan and environment in both Georgia and Armenia. focused on the high-growth Georgian the industry and product expertise that deposit portfolio growth. Over the last All sectors including Retail Banking, SME Profit and ROAE (GEL million) and Armenian markets through leading, it possesses, BoG is a universal bank few years Ameriabank has significantly Banking and Corporate and Investment customer-centric, universal banks – JSC of choice and top-of-mind advisor for expanded its loan portfolio, especially in ROAE Banking exhibited excellent performance. | Bank of Georgia (“BoG”) in Georgia and | Georgian corporates. In the brokerage | retail, with its mortgages and consumer | | | | --- | --- | --- | --- | --- | | | | | Lending activity was robust, loan book | 25.8% 32.4% 29.9% 30.0%26.1% 13.0% | | CJSC Ameriabank (“Ameriabank”) in | business, under the Corporate and | loan portfolio exhibiting high growth rates | | | quality remained strong and operating Armenia, the latter acquired in March Investment Banking business, BoG is (combined CAGR of 24.1% in 2020- income increased in FY24, the latter 2024. focused on profitable growth, through 2022). Ameriabank also has a particularly 1,813 driven by strong income generation unlocking retail brokerage potential and strong foothold in the corporate segment, across key revenue lines. Lion Finance | Bank of Georgia overview | fully digitalising brokerage services. | being a market leader with a market | | | | --- | --- | --- | --- | --- | | | | | Group continued its focus on customer | 1,375 | | BoG, a systemically important and leading | | position in loans to legal entities as at | | | satisfaction, employee empowerment universal Georgian bank, offers a) retail Ameriabank overview 31 December 2024. Ameriabank is 1,132 and improving its digital banking and banking and payment services (Retail Ameriabank is a highly attractive franchise considered to have significant growth payments business franchise, while | Banking), b) banking services for small | displaying many complementary | potential and further scope to improve | | | | | --- | --- | --- | --- | --- | --- | | | | | maintaining a healthy cost to income | | 727 | | and medium-sized businesses (SME | characteristics to Lion Finance Group. | commercial performance, particularly in | | | | | | | | structure. As a result, Lion Finance Group | 514 | | Banking) and c) corporate and investment delivered a ROAE of 30.0% (adjusted for banking operations (Corporate and 295 one-offs) in FY24, while maintaining robust Investment Banking) in Georgia. BoG liquidity and capital positions. | is well-positioned to benefit from the | Investment rationale | | Ownership | | | | --- | --- | --- | --- | --- | --- | | growth of the Georgian economy through | • | The first entity from Georgia to be | Georgia Capital owns 19.23% of Lion | | | | | | | | On 25 February 2025, the Bank | Loan book growth (BoG) | | its business segments and aims to | | listed on the premium segment of the | Finance Group PLC, as of 31 December | | | announced its Board’s intention to deliver on its growth strategy with strong Main Market of the LSE (LSE: BGEO) 2024. As long as Georgia Capital’s stake recommend a final dividend for 2024 of capital and liquidity positions. In Retail since February 2012. in Lion Finance Group is greater than GEL 5.62 per ordinary share at the Bank’s | Banking, a prominent component of the | • | High standards of transparency and | 9.9%, it will exercise its voting rights in | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | 2025 Annual General Meeting. This will | 22.0% | | | | | | banking business, BoG runs a client- | | | | | | | | | 20.5% | | | | governance. | accordance with the votes cast by all | | | | | 20.0% | | | | | | | make a total dividend paid in respect of | | | 19.8 % | | | | centric digital multi-brand offering with | • | Leading market position in Georgia | other shareholders on all shareholder | | | | | | | | | | | | the Bank’s 2024 earnings of GEL 9.00 | | | | 19.6% | | | | | | | | | 18.9% | | | 19.3% | | the aim of reaching the entire spectrum | | by loans (37.6%) and deposits | votes at any general meeting. | | | | | | | per share (a 12.5% increase compared 13.9% of retail customers, encompassing both (41.4%) as at 31 December 2024. to 2023). In addition, in February 2025, | the mass retail segment (Mass Retail) | • | Leading market position in Armenia | Value creation potential | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | the Bank announced an extension of the | | 12.9% | | and affluent high-net-worth individuals | | by loans (20.9%) and deposits | • | Annual loan book growth c.15%. | | | | | | | | | | buyback and cancellation programme by | 10.2% | | | (Premium Banking). Bank of Georgia is | | (18.5%) as at 31 December 2024. | • | Regular progressive semi-annual | | | | an additional GEL 107.7 million. Overall, | | a digital banking and payments leader, | • | Digital leader in banking sector with a | capital distribution with 30%-50% | | | | --- | --- | --- | --- | --- | --- | --- | | 27.0% | | | | | the Bank’s dividend and share buyback | | | | with a strong retail and corporate banking | | | | | 4.3% | | | | | strong retail banking franchise. | dividend/share buyback payout ratio. | | | payout ratio for 2024 was 31% of franchise in Georgia. • Growing market: The banking • 20%+ ROAE. total earnings. sector’s y-o-y lending growth rate at • Significant additional growth potential Focusing on customer satisfaction and 17.0% and 25.0% in Georgia and of Ameriabank within Lion Finance Loan book growth (nominal) Loan book growth (constant currency basis) | enhancing its digital and advanced | | Armenia, respectively. | Group by using its experience | | --- | --- | --- | --- | | analytics capabilities, BoG aims to | • | Sustainable growth combined with | and know-how in retail products, | | increase customer engagement and | | strong capital, liquidity and robust | digitalisation and payment business. | | maintain its relevance in customers’ daily | | profitability, with ROAE above 20%. | | 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 lives. The SME Banking segment, through Group’s disclosures at https://lionfinancegroup.uk/. 2019 2020 2021 2022 2023 2024 2021 2022 2023 2024 20242019 2020 2021 2022 2023 | | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | --- | | 34 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 35 | | | | Overview | Our Business | Discussion of Results | | | ## Our Portfolio Overview continued ## Listed and observable portfolio continued 1 ## Financial metrics ## Water utility Profit (Lion Finance Group) ROAE Cost/Income Cost of credit risk ratio (GEL million) (Lion Finance Group) (Lion Finance Group) (Lion Finance Group) Value: GEL 188 million 5.0% of the total portfolio value ## 1,813 30.0% 34.3% 0.5% +31.9% y-o-y +0.1 ppts y-o-y +4.5 ppts y-o-y -0.2 ppts y-o-y | Tier 1 capital adequacy ratio | Liquidity coverage ratio | Tier 1 capital adequacy ratio | Liquidity coverage ratio | | | | | --- | --- | --- | --- | --- | --- | --- | | (BoG) | (BoG) | (Ameriabank) | (Ameriabank) | | | | | 20.5% | 138.6% | 14.4% | 195.7% | | | | | +0.5 ppts y-o-y | +13.4 ppts y-o-y | +0.3 ppts y-o-y | +78.3 ppts y-o-y | | | | | | | | | The water utility business is a regulated | consumption at regulated electricity tariffs | In 2022, GCAP completed the sale | | | | | | natural monopoly in Tbilisi and the | to power its water distribution network, | of an 80% interest in the water utility | | | | | | surrounding area, providing water | while the remaining electricity is sold on | business for a total consideration of US$ | | | | | | and wastewater supply services to | the market. Revenues come from two | 180 million. In 2024, the remaining 20% | ## Operating metrics | | | | | approximately 1.4 million residents and | main streams (water and electricity sales), | equity interest in business was valued by | | --- | --- | --- | --- | --- | --- | --- | | | | | | approximately 43,000 legal entities. The | where the business benefits from both | the application of pre-agreed put option | | | | | | business also operates HPPs with a total | earning fair regulatory returns on invested | multiple to the normalised LTM EBITDA of | | Number of monthly | Monthly active digital retail | Number of monthly active | Monthly active digital retail | | | | | | | | | installed capacity of 149MW. The water | capital made in upgrading the water utility | the business, leading to GEL 29.0 million | | active retail customers – BoG | users – BoG | retail customers – Ameriabank | users – Ameriabank | | | | | | | | | utility business uses a portion of the | network and average electricity sales | value creation. As of 31 December 2024, | | (million) | (million) | (million) | (million) | | | | | | | | | power generated by its HPPs associated | price growth due to electricity market | the fair value of GCAP’s 20% holding in | | | | | | with the water infrastructure for internal | deregulation in 2019. | the water utility business was assessed at | | 2.0 | 1.6 | 0.4 | 0.2 | | | | GEL 188.0 million. +10.7% y-o-y +17.5% y-o-y +22.4% y-o-y +54.4% y-o-y In 2024, the water utility business 1 Value development overview (GEL million) successfully issued US$ 300 million in green bonds on the Irish Stock Exchange, 697 representing its second issuance of green ## Valuation highlights bonds, following its initial transaction in 2020. Stock price performance (GBP) 29 188 20 159 GCAP and the majority (558) shareholder have put and call options for the minority vitality Equity value Sale of 80% Put option Equity value Put option Equity value 31-Dec-21 equity interest valuation 31-Dec-23 valuation 31-Dec-24 business GBP 47.10 2022-2023 2024 as at 31-Dec-24 1 The detailed valuation overview and related drivers are described on pages 100-117 of this report. GCAP’s put option 15 | 10 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8.25x | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | EV/EBITDA | | | Jun-19 | Jul-19 | Oct-19 | | | Apr-20 | Jul-20 | | | | Apr-21 | Jul-21 | | | | Apr-22 | Jul-22 | | | | Apr-23 | Jul-23 | | | | Apr-24 | Jul-24 | | | Exercisable in 2025-2026. | | | May-19 | Aug-19 | Sep-19 | Nov-19 Dec-19 | Jan-20 Feb-20 | Mar-20 May-20 | Jun-20 | Aug-20 Sep-20 | Oct-20 Nov-20 | Dec-20 Jan-21 Feb-21 | Mar-21 May-21 | Jun-21 Aug-21 | Sep-21 Oct-21 | Nov-21 | Dec-21 Jan-22 Feb-22 | Mar-22 May-22 | Jun-22 Aug-22 | Sep-22 Oct-22 | Nov-22 | Dec-22 Jan-23 Feb-23 | Mar-23 May-23 | Jun-23 | Aug-23 Sep-23 Oct-23 | Nov-23 Dec-23 | Jan-24 Feb- 24 | Mar-24 May-24 | Jun-24 | Aug-24 Sep-24 Oct-24 | Nov-24 De c-24 | | Majority shareholder’s call option 55 Implied multiple highlights at 31-Dec-24 50 ## LTM P/E Price to book (P/B) 8.90x 45 40 EV/EBITDA ## 4.0 1.02 35 Exercisable on the date of expiry of | | -0.3 YTD | -0.2 y-o-y | | | --- | --- | --- | --- | | 30 | | | the put option in 2026 and expiring | | 25 | | | six months thereafter. | 20 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/. | | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | --- | | 36 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 37 | | | | Overview | Our Business | Discussion of Results | | | ## Our Portfolio Overview continued ## Private large portfolio companies Key focus areas in medium and long term Five-year financial targets ## Retail (pharmacy) Expanding retail • Strengthening and differentiating the retail brands, ### 1 footprint in Georgia GPC and Pharmadepot, to cultivate a loyal Value: GEL 716 million customer base, elevate brand recognition, and 19.0% of the total portfolio value maximise their market potential • Double-digit EBITDA CAGR Revenue • Focusing on the strategic growth of high-margin ### 2 enhancement priority product sales and expanding the para- pharmacy segment’s contribution to revenue, • 9%+ EBITDA margin leveraging its exemption from state regulations International • Exploring international investment opportunities ### 3 | | | | expansion | within the region | | --- | --- | --- | --- | --- | | Overview | The retail (pharmacy) business | The business strategy aims to achieve | | | | The retail (pharmacy) business is the | performance was partially affected by | a double-digit CAGR in EBITDA over | | | | largest pharmaceuticals retailer and | price regulations, which set a maximum | the next five years while maintaining an | | | | wholesaler in the country, with a 35.8% | selling retail price for both prescription | EBITDA margin above 9%. This will be | | | 1 | market share in the organised retail | and non-prescription medicines. The list | achieved by focusing on several key | Performance track record | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | market based on 2023 revenues. The | of regulated products, initially identified | areas: optimising the retail chain, which | | | | | | | | business consists of a retail pharmacy | in 2023, was expanded further in 2024. | has added over 100 pharmacies in | | | | 2 | | | | | | | Revenue and EBITDA | | | (GEL million) Operating cash flow (excl. IFRS 16) (GEL million) | | | | chain and a wholesale business that sells | The negative impact of these regulations | the past five years; enhancing revenue | | | | | | | | pharmaceuticals and medical supplies | on the total revenue in FY24 amounted to | by prioritising the sales of high-margin | | | | | | | | to hospitals and other pharmacies. The | GEL 14.5 million. | products and increasing the share of | | | | | | | | business operates two brands, GPC | | para-pharmacy products, which are not | | | | | | | | | | | | 255 | 271 302 | | 316 | 355 384 435 429 | | and Pharmadepot, with a total of 410 | In 2024, the business divested from its | subject to state regulations; boosting | | | | | | | 850.1 | | textile franchise brands “Carters” and | sales through e-commerce channels; | | | | 815.0 | | --- | --- | --- | --- | --- | --- | --- | | pharmacies (of which 395 are in Georgia, | | | | 782.4 | 783 .6 | | | and 15 in Armenia) and 19 franchise | “Triumph” with six operating stores | and pursuing international expansion. | 679.4 | | | | 614.7 80.0 78.2 stores (of which, two are in Armenia in Georgia. Aspart of its international growth strategy, 77.1 518.6 | and five in Azerbaijan). The business’ | the business continues to expand in | 450.3 | | 66.1 | | | --- | --- | --- | --- | --- | --- | | franchises include brands like The Body | Armenia and Azerbaijan and is exploring | | 53.1 | | 52.4 | | Shop, a British company specialising in | investment opportunities in other countries | | | | | 32.8 | cosmetics, skincare and perfumes, and | across the region. | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | 65.3 | 70.4 | 76.2 | 76.9 | 77.3 | 80.9 | | | | | | | | 38.9 | 52.2 | | | | | | | | | | | Alain Afflelou SA, a top optical retailer | | | | | | | | | | | 16.2 | | | | inFrance. | | | | | | | | | | | | 2018 | 20232022202120202019 20242017 | | Performance and strategy | | Revenue EBITDA (excluding IFRS 16) | | | | | | | | | | | | The retail (pharmacy) business Investment rationale Ownership successfully continued the growth of its • Largest retailer in the country with Georgia Capital owns 97.8% of the retail segment. The significant expansion 1 Numbers are derived from the business’ unaudited IFRS accounts. more than 400 pharmacies and retail (pharmacy) business as at 2 In 2024, certain transaction-related expenses, such as POS-terminal charges, courier services, and other related expenses, have been reclassified from operating expenses of the retail chain over the last few years, to components of gross profit. The comparative 2022 and 2023 periods have been adjusted retrospectively. franchise stores and over 2.5 million 31 December 2024 (31 December coupled with the business’ proactive customer interactions permonth. 2023: 97.6%). approach aimed at enhancing the sales • Retail business with 95% out-of- and profitability margins of para-pharmacy pocket payment. Value creation potential products, significantly contributed to the • Supported by the country’s growing • The largest player and purchaser of business’ robust performance in 2024. macroeconomic environment. pharmacy products on the Georgian The business’ initiative to renegotiate market with a cost advantage due trading terms with key suppliers across to the scale of operations: higher major product categories positively discounts from manufacturers and impacted gross profit margins in FY24. elimination of distributor margins. This was particularly evident in the para- • High-growth potential driven pharmacy retail segment, where gross Number of pharmacies and franchise stores by growing macroeconomic profit margin increased by 6.4 ppts y-o-y. environment, expansion of the local and international chains, and adding highly synergetic products and services. 20232022202120202019 20242017 2018 | | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | --- | | 38 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 39 | | | | Overview | Our Business | Discussion of Results | | | ## Our Portfolio Overview continued ## Private large portfolio companies continued ## 1 Insurance ## Financial metrics Value: GEL 428 million the Georgian insurance sector adopted is applied to earnings distributed to Revenue (GEL million) EBITDA excluding IFRS 16 Operating cash flow excluding Free cash flow excluding the Estonian Taxation Model. Prior to individuals or non-resident legal entities. 11.4% of the total portfolio value | (GEL million) | IFRS 16 (GEL million) | IFRS16 (GEL million) | | | | --- | --- | --- | --- | --- | | | | | this change, the pre-tax profit of the | Consequently, GCAP’s insurance | | | | | insurance businesses was levied by a | businesses is no longer subject to the | The insurance business comprises a) ## 850.1 80.9 78.2 54.8 15% corporate income tax. Following corporate income tax payment, freeing property and casualty (P&C) insurance +4.3% y-o-y +4.6% y-o-y +49.4% y-o-y NMF the enforcement of the Estonian Taxation up the resources for both business business and b) medical insurance Model, a 15% corporate income tax development and enhanced dividend business. As of the beginning of 2024, payments to GCAP. | Gross profit margin | EBITDA margin excluding | EBITDA to cash conversion | Dividend paid to GCAP | | --- | --- | --- | --- | | | IFRS 16 | excluding IFRS 16 | (GEL million) | | 30.7% | 9.5% | 96.7% | 10.0 | | +2.0 ppts y-o-y | NMF | +29.0 ppts y-o-y | -80.3% y-o-y | ## P&C insurance ## Operating metrics | | | | | Overview | insurance and 0.5% to medical insurance) | | be passed in the next few years which | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Over nearly three decades in the Georgian | provides enormous potential for growth | | will significantly boost retail market | | Number of pharmacies and | Number of bills issued | Average bill size | Same store | | | | | | | | | | property and casualty insurance market, | and Aldagi is well-equipped to capture | | penetration. Overall, Aldagi’s market | | franchise stores | (million) | (GEL) | revenue growth | | | | | | | | | | Aldagi has achieved almost universal | these opportunities. The company plans | | share in voluntary retail insurance | | | | | | brand awareness, leading positions in | to increase the P&C insurance business | | stands at 36% and Aldagi expects to | | 429 | 31.6 | 20.4 | (1.7)% | | | | | | | | | | retail insurance services, with the largest | profitability by strategically focusing on | | grow its retail segment concentration | | -6 over 2023 | +0.9% y-o-y | +4.1% y-o-y | -1.6 ppts y-o-y | | | | | | | | | | product portfolio and exceptional financial | each of its four main business lines set out | | by developing simple products for | | | | | | strength. The company has almost | below: | | mass retail as well as developing a | | | | | | doubled its retail portfolio over the last | • | Retail customers. The Georgian retail | unique customer experience through | | | | | | four years, outperformed market growth, | | insurance market offers ample room | exclusive premium line services. Aldagi | | | | | | delivered an average annual ROAE of | | for growth, as most of its potential is | aims to further strengthen customer | | | | | | c.31% in 2014-2024 and consistently | | yet to be unlocked. Motor insurance | retention and its market leadership | | | | | | distributed dividends within a 50%-80% | | accounts for 56% of the total retail | position by continued development of | 2 | Valuation highlights | payout ratio each year since 2014. Based | insurance market in Georgia, of which | | its digital insurance platform. | | --- | --- | --- | --- | --- | | | on the latest available market data, as at | 13.5% third party liability insurance | • | SME segment. Georgia’s insurance | | | 30 September 2024, Aldagi continues to | (TPL) purchased at the border by | | market for SMEs is currently in its | 3 | Value development overview at 31-Dec-24 (GEL million) Adjusted net debt to EBITDA (excl. IFRS 16) | be one of the most profitable insurance | foreign-registered vehicles entering | infancy. Aldagi sees significant potential | | --- | --- | --- | --- | | | companies in the local market with a 19% | Georgia, which became mandatory | to grow this segment of the portfolio | | | share of the insurance industry profit and | from March 2018. Moreover, the | by developing tailor-made products | 1,021 a market share of 30% based on gross motor insurance segment has great and providing them with established 1 2.2x premiums written . potential to increase, as only 7% of multi-channel distribution networks 716 registered cars are insured on the and digital portals, created especially 1.9x The current low level of insurance market local market. A new law making TPL for SME clients. A separate SME sales (298) (7) <1.5x penetration in Georgia (1.3%, of which insurance mandatory for all vehicles division was established at the end of 0.8% relates to property and casualty registered in Georgia is expected to 2019 as a part of this strategy. As a result, Aldagi’s SME gross revenues have grown by 42% in 2024 (from GEL | | | | | | Investment rationale | | Value creation potential | | | 5.6 million to GEL 8.0 million). | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Enterprise value | Net debt incl. | Minority | Equity value | 31-Dec-23 31-Dec-24 Target | | | | | • | | | | | | | | • | Significantly underpenetrated | • | Compulsory border MTPL effective | | Large corporates. Although the level | | | | | | | | insurance market in Georgia (0.8% | | from 1 March 2018. | | of insurance penetration within the | | | | | | | | penetration in property and casualty | • | Local MTPL is expected to kick in | | corporate segment is relatively high | | | | | | | | insurance market). | | and provide access to untapped | | compared to retail and SME segments, | | | | | | | • | Market leader with a powerful | | retail casualty and collision insurance | | a combination of favourable Georgian | Implied multiple highlights at 31-Dec-24 | | | | | | | distribution network of point of sale | | market with only 5% existing | macroeconomic conditions, a good | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | LTM EV/EBITDA | Peer companies | | | | | and sales agents. | | penetration. | investment climate, stable economic | | | • | NEUCA S.A. \| Poland | • | Great Tree Pharmacy Co., Ltd. \| Taiwan | | | • | Increasing footprint in untapped | growth and an increase in infrastructure | | 8.4x | • | Sopharma Trading AD \| Bulgaria | • | Dis-Chem Pharmacies Limited \| South Africa | Ownership | | | MSME sector, where Aldagi’s gross | projects will further increase customer | | | • | S.C. Ropharma S.A. \| Romania | • | Clicks Group Limited \| South Africa | The P&C insurance business is 100% | | | revenues have grown by 42% in | demand for insurance products. | -1.3x y-o-y • SALUS, Ljubljana, d. d. | Slovenia owned by Georgia Capital. 2024 (from GEL 5.6 million to GEL 8.0 million). 1 Numbers are derived from the business’ unaudited IFRS accounts. • Digitalisation. 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. • Undisputed leader in providing insurance solutions to corporate clients. 1 Source: ISSSG. 31-Dec-24 lease liabilities interest 31-Dec-24 | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 40 41 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Our Portfolio Overview continued ## Private large portfolio companies continued • International reinsurance. The P&C ppts and 2.0 ppts, respectively, mainly retention; 2. Introducing new digital ## Market opportunity | insurance business entered regional | resulting from an improved loss ratio | insurance products; 3. Improving | | --- | --- | --- | | reinsurance markets of Armenia and | following a high base in 2023, which saw | customer experience; Advancing | | Azerbaijan. Aldagi became the first | several abnormal events, including an | employee recognition; and 5. Getting | 1 | | | | Market share, YTD Sep-24 gross premiums written | | Insurance penetration and density | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | insurance company on the local market | unprecedented landslide, an unusually | ready for local MTPL insurance launch. | | | | | | | | to obtain an international credit rating | high number of hailstorms, and a large | | | | | | | | | of bb+ from AM Best. In 2024, AM | property insurance claim. These events | As part of the strategy, Aldagi has the | | | | 9.7% | | | | | | | | 30% | | | 8.7% | 6,830 | | Best upgraded the outlook of the credit | together translated into an 31.7% y-o-y | following financial targets through | | | | | | | Georgia P&C 6.9% | | rating from bb+ stable to bb+ positive. | increase in the pre-tax profit of the | 2025-2028: | | | | | | | | | | | | Penetration – 0.8% | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | 4,759 | | | | | | | Density – US$ 62 | | | | business in 2024. | • | Market share of 25%-30%. | | | 21% | | | 5.5% | 5.5% | | | | | | | | | | | 19% | | | | 3,867 | | | | | | | | Performance and strategy | | | • | ROAE of 25%-30%. | | | | | | | | | | | | | | | | | | | | | | | 2,978 | 2,910 | | | | | | | | | | | | | | | | | | 2.9% | 2.9% | | | | 2024 was a robust year in terms of | | Aldagi’s medium-term strategic focus | • | Dividend payout of 50%-80%. | | | | | | | | | | | | | | | | | | | 12% | | | | | | | | 2.0% | | 1.7% | revenue growth for the P&C insurance | remains unchanged. The business | • | Combined ratio of 80%-85%. | | | | | | | | | | | | | | | | 1.1% | 1.3% | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | 3% | | | | | | | | | | 881 | | | | | | | | | • | | | | | 6%6% | | | | | | | | | 464 | 437 | | | | | business, up by 27.5%, mainly reflecting | targets to gain a strategic edge by | | Solvency ratio of 170%+. | | | 4% | | | | | | | | | | | | 224 | 155 | 110 | | the growth in the motor, agricultural and | focusing on underwriting excellence | • | Retail concentration of 60%+. | | | Hualing | | GPIHUnison IraoNew | TBC | AldagiOther | | France | | GermanyBelgiumSwitzer | | PolandCzech | Hungary Türkiye Russia GeorgiaUK | | | | | | | | | | | | | | | | | | -land | | Republic | | | | | | | credit insurance lines. Likewise, loss | and portfolio profitability backed by five | | | | | | | | | | | | | | | | | | | | | and combined ratios were down by 0.5 | key pillars: 1. Strengthening customer | | | | | | | | | | Insurance density (US$) Insurance penetration | | | | | | | | | | | | | | | Source: ISSSG | | | | | | | Source: Swiss Re Institute | | | | | | | | | | | | 1 | | | | 2 | | --- | --- | --- | --- | --- | --- | | Performance track record | | Market and Aldagi gross written premiums | | | (GEL million) | | | | | 38% | 39% | | 36% Earned premiums, gross (GEL million) 29% 30% 30% 29% 29% 28% 27% 201 CAGR +15% 588 535 YTD Sep-24 502 market gross premiums 160 442 GEL 535 million Aldagi share 30% 370 380 134 | | | | | | | 123 | | | | 308 | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | 102 | | | | 228 | | | | | | | | CAGR 2015-2023 | | | | | | 98 | | | 195 | 202 | | | | | | | | | | | | | | 90 | | | | | | | | | | | | 176 | | Market – 15% | | | | 86 | | | | | | | | | | | | | | 159 | | | | | | | | | | | | | | | | 127 | 138 | | | Aldagi – 12% | | | 71 | | | | | | | | | | 105 | 110 | | | | | | | 68 | | | | | | | | 77 | 88 | 90 | | | | | | | | 70 51 2016 2021 2022 20232020201920182017 9M242015 Market Aldagi Market share Source: ISSSG 3 ## Financial metrics Operating metrics 2 | Pre-tax profit and dividend payout ratio | | (GEL million) | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 28% 37% 37% 38% 34% 30% 25% 25% 30% 24% 33% | | | | Earned premium, gross | Pre-tax profit | Number of policies written | Number of policies written | | | | | | | (GEL million) | (GEL million) | (corporate) | (retail) | | | | | CAGR +13% | 29 | | | | | | | | | | | 200.9 | 29.0 | 114,620 | 248,563 | 26 22 +25.2% y-o-y +31.7% y-o-y +0.2% y-o-y +17.8% y-o-y 2121 21 20 19 17 13 94% Combined ratio Dividend paid to GCAP Number of claims 88% | 9 | | | | | | 81% | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | (GEL million) | reported | | | | | | 68% | | | 70% | | | | | | 64% | | 61% | | | | | | | | | | | 51% | | | 55% | | | | | | | | | | | | | | | 87.5% | 18.0 | 24,892 | | | | | | | | | | -2.0 ppts y-o-y | +20.8% y-o-y | -4.0% y-o-y | 3 Pre-tax profit Dividend payout ROAE 4 ROAE 1 Penetration and density are stated including healthcare insurance (as of latest available data). ## 1 Numbers are derived from the business’ unaudited IFRS accounts. 33.3% 2 Calculated in line with the market approach. 2 Calculated based on net income, adjusted for non-recurring items and average equity, adjusted for preferred shares where applicable. 3 Numbers are derived from the business’ unaudited IFRS accounts. +8.9 ppts y-o-y 3 Adjusted for non-recurring items. 4 Calculated based on average equity, adjusted for preferred shares. 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Vision Insurance | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 42 43 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Our Portfolio Overview continued ## Private large portfolio companies continued 1 ## Performance track record ## Medical insurance ## Financial metrics Operating metrics | Overview | Performance and strategy | Imedi L’s primary focus will be on | | | | | | --- | --- | --- | --- | --- | --- | --- | | Our medical insurance business is the | The significant growth achieved in 2024 | increasing brand awareness and | | | | | | largest private health insurer in Georgia, | reflects a combination of increased | introducing new products, strengthening | | | | | | | | | Net premiums earned | Combined ratio | Dividend paid to GCAP | Number of insured | | holding a 35% market share based | insurance policy prices and the positive | customer relationship management to | | | | | | | | | (GEL million) | | (GEL million) | | | on gross premiums as of September | impact of acquiring the Ardi insurance | establish a robust market presence and | | | | | | 2024. With a comprehensive distribution | portfolio in April 2024. | enhance service quality. A key medium | | | | | | | | | 167.5 | 93.1% | 7.4 | 366,446 | | network, we offer a diverse range of | | and long-term priority will be the launch | | | | | | | | | +83.4% y-o-y | -1.7 ppts y-o-y | +47.0% y-o-y | +2.2x y-o-y | | medical insurance products tailored to | Looking ahead, Ardi will continue to | of new retail health insurance products | | | | | | Georgian corporates, state entities and | prioritise retail health insurance, with | to expand the retail portfolio. Additionally, | | | | | | retail clients. The business operates under | growth driven by higher policy issuance | developing multiple distribution channels | | | | | | | | | Loss ratio | Pre-tax profit | | Renewal rate | | two distinct brands: Imedi L and Ardi. | and stable premium adjustments. | in health insurance remains a strategic | | | | | (GEL million) | Imedi L serves as a mass-market health | Enhanced underwriting practices, | priority for Imedi L. | | | | | | --- | --- | --- | --- | --- | --- | --- | | insurance provider, while Ardi focuses on | operational efficiency, and disciplined | | | | | | | | | | 76.3% | 13.9 | | 83.5% | | the upscale segment, enabling further | expense management will further support | Strategic investments in technology | | | | | | | | | -1.9 ppts y-o-y | +65.8% y-o-y | | +1.7 ppts y-o-y | | diversification of our insurance portfolio | this momentum. | and branding will play a pivotal role in | | | | | | and unlocking significant financial and | | sustaining growth and enhancing the | | | | | | strategic synergies. | | customer experience across our medical | | | | | | | | insurance business. | | | Combined ratio (%)Revenue and pre-tax profit (GEL million) | | The Georgian health insurance market 167.5 remains underpenetrated, with a | | | | | | | 97.4 | 99.5 | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | 94.1 | 96.1 | | | | 94.8 | | | penetration rate of just 0.5% and insurance | | | | | 90.6 | | | | 93.1 | | | Investment rationale | Ownership | | 14.7 | | 18.1 | 18.5 | | | | density at US$ 48 – substantially lower | | | 16.8 | | | | | 16.6 | 16.8 | 17.6 | | • | Being present in whole healthcare | The medical insurance business is | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | than in neighbouring countries. Currently, | | | | | | | | | | | 81.4 | | 79.3 | 81.0 | | | | | | | | | | | | | 91.3 | 77.3 | | | | | 78.2 | 76.3 | | | | ecosystem for any further potential | 100% owned by Georgia Capital. | | | | | | | | | 73.0 | | | | | | | | | | | 75.4 | | 72.4 | 74.9 | | | | | | | | | | only 20% of the Georgian population holds | | | | | | 69.5 | | | | | | | | | | | | | | market structural changes. | | 55.1 | | | | | | | | | | | | | private medical insurance, highlighting • High ROAE-generating business Value creation potential significant growth opportunities and | | with ample room for the market | • | The potential to leverage the | | | | | | | 13.9 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | 5.3 | 7.8 | 4.6 | 4.1 | 8.4 | | | untapped market potential. | | | | 3.5 | | | | | | | | | share growth. | | significantly increased scale to deliver | | | | | | | | growth and extract synergies. Revenue Pre-tax profit Loss ratio Expense ratio 2 ## Valuation highlights Competitive landscape, market share by Key focus areas in medium and long term 1 gross premium (GEL million) Value development overview at 31-Dec-24 (GEL million) Net debt to EBITDA 35% 32% 9% 8% 6% 3% 7% 0.5x 129 | 140 | | | | | | | | | 428 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 130 | | | | | 378 | | | | | | | Raising awareness | | Portfolio | | | | | | | | | | | | | | (54) | (25) | 115 | | | | of the brand and | diversification | | Maintaining | 92 | | | | | | | improving quality | and entering new | | stable loss ratio | | | | 313 | 286 and NPS markets No No Leverage Leverage 38 | | | | 31 | | | | Equity value | Operating | Multiple change, | Dividends | Equity value | | | 31-Dec-23 31-Dec-24 Target | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | 24 | | 24 | | | | | | | | | | | | | | | 14 | | 31-Dec-23 | performance | FX and other | paid | 31-Dec-24 | | | | | | Vienna | | | | UnisonPSPGlobalTBC | OtherGCAP | | | | | | | | | | medical | Insurance | Insurance | | | | | P&C Insurance Medical Insurance | | | | | | | | | insurance | Group | | | | | | | | | | | | | | | | | | | | | | P&C business peer companies | | | | | Medical insurance business peer companies | | | | | | | | | | | • Dhipaya Insurance \| Thailand | | | | | • | Powszechny Zaklad Ubezpieczen SA \| Poland | | | | | | | | | | • Zavarovalnica Triglav \| Slovenia | | | | | • | Allianz SE \| Germany | | | | | | | | | | • Pozavarovalnica Sava \| Slovenia | | | | | • | UNIQA Insurance Group AG \| Austria | | | | | | | | | | • Aksigorta \| Türkiye | | | | | • | Ageas SA/NV \| Belgium | | | | | | | | | | • Anadolu Sigorta \| Türkiye | | | | | | | | | | | | | | | | • Bao Minh Insurance \| Vietnam | | | | | | | | | | | | | | | | • Turkiye Sigorta \| Türkiye | | | | | | | | 1 ISSSG as of 30 September 2024. 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. 2018 2019 2020 2021 2022 20242023 2018 2019 2020 2021 2022 20242023 | | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | --- | | 44 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 45 | | | | Overview | Our Business | Discussion of Results | | | ## Our Portfolio Overview continued ## Private large portfolio companies continued Quality assurance through the introduction services, which are not subject to the patients. Elective care and outpatient and improvement of various activities state funding. These services have higher services tend to have a considerably ## Hospitals business and processes at hospitals remains a top margins and considerably faster cash higher share of such patients. priority for us so that the business delivers collection periods. Considering that Large better care to its patients. and Specialty Hospitals are located in Value: GEL 291 million Tbilisi and major regional cities, they are 7.7% of the total portfolio value Going forward, the business strategy strategically placed for and have positive and key focus will be on increasing prospects of increasing the flow of revenues from elective care and outpatient out-of-pocket as well as privately insured Key focus areas in medium and long term Five-year financial targets Adding new services • Elective care services, outpatient services, ### 1 and strategic projects oncology centre, transplantology centre and Overview This regulation established upgraded From an operational performance clinical trials | Our hospitals business is the single | standards for healthcare facilities and | perspective, the business is focusing | | | | EBITDA CAGR 10%+ | | --- | --- | --- | --- | --- | --- | --- | | largest healthcare market participant in | imposed minimum requirements for space | on improving the capacity utilisation | | | | | | Georgia accounting for around 14% of | allotted per hospital bed. In order to | of hospitals, increasing patient and | Quality projects | • | Nursing reform | | ### 2 | the country’s total hospital bed capacity | adapt to the new standards, our hospitals | employee satisfaction across the chain, | | • | Quality education programmes | | | --- | --- | --- | --- | --- | --- | --- | | as of 31 December 2024. The business | business initiated a number of renovation | and driving efficiency through digitalisation | | | | | | operates 34 healthcare facilities in Tbilisi | projects in all of its facilities in 2023 and | of clinical processes. | | | | EBITDA to operating cash c.85%+ | | and regional cities and provides secondary | 2024. This resulted in certain sections of | | | • | | | | | | | Digitalisation of | | Automation of clinical processes | | ### 3 or tertiary-level outpatient and inpatient our healthcare facilities being temporarily These, together with the improved • clinical processes Digitalisation of clinical KPIs diagnostic, surgical and treatment closed and unable to accept patients. cash flow generation, the introduction • Use of statistical methods services. In order to improve efficiency and The capex investment for the renovation of co-payments to the DRG system projects amounted to GEL 11.3 million and allocating resources to high ROIC- ROIC c.13%+ seize emerging opportunities stemming from new Georgian Government in2023 and GEL 10.2 million in 2024. generating investments, will help the Improve key • Inpatient ### 4 | regulations introduced in 2023, as | | business to achieve its goal to generate | | | | | --- | --- | --- | --- | --- | --- | | | | | operational data | • | Outpatient | | detailed below, our healthcare business | In 2024, the Georgian Government | mid-teens CAGR in EBITDA over the | | | | | | | | | • | Clinical | | underwent a strategic restructuring in | introduced changes to the Diagnosis | coming five years that is expected to | | | | | | | | | • | Employee and customer satisfaction | | December 2023. The business is now | Related Group (DRG) financing system by | support a 13%+ ROIC in the medium to | | | | | organised into two sub-segments: “Large | incorporating a co-payment component | long term. | | | | | and Specialty Hospitals”, which includes | into the universal healthcare programme. | | | | | 1 | seven healthcare facilities, and “Regional | This adjustment allows patients to pay | From a clinical perspective, the business | Performance track record | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | and Community Hospitals”, comprising 27 | out-of-pocket for additional services | continues to grow a new generation of | | | | | | | healthcare facilities. Large and Specialty | not covered within the existing pricing | doctors and nurses, while building robust | | | | | | | Hospitals and Regional and Community | framework. These changes are expected | clinical quality management processes. | | 2 | | | | | | | | | (GEL million) | | EBITDA (excl. IFRS 16) (GEL million)Net revenue | | | Hospitals represent approximately 75% | to enhance both profitability and the | The medium-term goals remain knowledge | | | | | | | and 25%, respectively, of the consolidated | quality of healthcare services beginning | and expertise advancement through | | | 351.6 | | 80.7 | 333.6 | | | | | | | | 314.7 | 315.2 | | 73.3 | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | hospitals business’ EBITDA. | in 2025. | education and professional development | | | | 150.0 | | | | | 70.3 | | | | | | | | | 285.5 | | | | | | 107.0 | | | | 37.0 | | | | | | | | 267.3 | | | 115.8 | 110.6 | | | | | | | | | | | of our physicians and nurses. | | | 251.6 | | | | | 31.3 | | | | | | | | | | | | | | | | | | 30.0 | | | 56.8 | 55.2 | | | | | 112.4 | | | | | | | | | 54.9 | | | | 117.8 Performance and strategy 108.7 46.1 23.3 20.8 13.6 226.6 | Despite being impacted by a number | | | | 201.6 | 198.9 | 204.7 | | | | | 11.8 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | 42.0 | | 43.7 | | | 41.6 | | | 173.1 | | | | | | | 40.3 | | | | | | of regulatory changes in the healthcare | | 149.5 | | | | | | | | 35.9 | | | | | | | 142.9 | | | | | | | | 34.3 | | 31.6 | sector, the performance of our hospitals | Investment rationale | | Ownership | | | | --- | --- | --- | --- | --- | --- | | businesses in 2024 was strong. The | • | Very low base: healthcare services | Georgia Capital owns 100% of the | | | | business demonstrated a 6.0% and | | spending per capita only c.US$ 300 | hospitals business as at 31 December | | | | 19.6% y-o-y revenue and EBITDA | | (EU average is c.US$ 3,300). | 2024 (31 December 2023: 100%). | | | | | | | | Large and Specialty Hospitals Regional and Community Hospitals | Large and Specialty Hospitals Regional and Community Hospitals | | growth, respectively, indicating its | • | Growing market: healthcare | | | | | gradual return to normal operational levels | | spending growth estimated at 8% | Value creation potential | | | Operating cash flow (excl. IFRS 16) (GEL million) following the completion of mandatory CAGR 2018-2024. • Increase in revenue from elective renovations across all hospitals, alongside • In-depth knowledge of the care and outpatient services, which 72.8 increased demand for high-margin local market: strong business have higher margins and faster cash 62.3 63.4 57.6 outpatient services. management team with proven collection periods. 48.8 | | track record. | • | Extracting efficiencies and | | | | --- | --- | --- | --- | --- | --- | | To address the oversupply of beds and | | | enhancing operational flexibility | 31.7 | | | enhance the quality of the healthcare | | | through a more concentrated | | | | industry in Georgia, the Georgian | | | strategy post-restructuring. | | 10.6 | Government introduced a new facility regulation, effective from September 2023. 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. 2018 2019 2020 20 21 2022 2023 2024 2018 2018 2019 2020 2021 2022 20242023 2019 2020 2021 2022 20242023 | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 46 47 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Our Portfolio Overview continued ## Private large portfolio companies continued 1 ## Market opportunity Valuation highlights State healthcare spending dynamics (GEL million) State healthcare spending dynamics (GEL million) Value development overview at 31-Dec-24 (GEL million) Net debt to EBITDA (excl. IFRS 16) 592 GCAP hospitals 2,219 14% 11% 10% 839 5% 5.3x State | 9% | 9% | 9% | | | | | | | 4.8x | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | 8% 8% 8% | | 813 | 5% | | | | | | | 1,680 | | Aversi | | | | | | | | | | | | 779 | 5% | 291 | | Geo Hospitals | | | | 684 | 804 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | 841 | 917 | | | | | | 3% | | | | 747 | | | Ghudushauri-Chachava | 497 | | (272) | | | | | | (30) | <2.5x | | --- | --- | --- | --- | --- | --- | --- | | | 1,346 | | 308 | 2% | | | | 349 | | 1,220 | | | | | 329 | 305 | | | 964 | | 946 | 980 | | 286 | 2% | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 829 | | | | | Gormedi | | | | | 760 | | | 800 | | | | | | 710 | Archimede | 221 | 1% | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | Enterprise value | Net debt inc. | Minority | Equity value | 31-Dec-23 31-Dec-24 Target | | | 222 | 1% | | | | | | PSP 193 1% Vivo Group State healthcare spending – Other 9,620 60% Other State healthcare spending – UHC | | Healthcare spending as a % of total state spending | | | Implied multiple highlights at 31-Dec-24 | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Source: Ministry of Finance Georgia Source: Ministry of Finance Georgia | | | | LTM EV/EBITDA | Peer companies | | | | | | | | | | • | Medicover AB \| Sweden | • | MLP Saglik Hizmetleri A.S. \| Türkiye | | • | Georgian Government spending on healthcare | • | The largest healthcare service provider in Georgia: 14% | 10.5x | • | EMC Instytut Medyczny SAEMC SA \| | • | Life Healthcare Group Holdings Limited \| | | | accounts to c.8% of total budget in 2025. | | market share by number of hospital beds. | -3.3x y-o-y | | Poland | | South Africa | | | | • | Covering three-quarters of Georgia’s population. | | • | Med Life S.A. \| Romania | | | | | | | | | • | Netcare Limited \| South Africa | | | 1 ## Financial metrics | Net revenue (GEL million) | EBITDA excluding IFRS 16 | EBITDA margin excluding | Net debt excluding IFRS 16 | 1 The detailed valuation overview and related drivers are described on pages 100-117 of this report. | | --- | --- | --- | --- | --- | | | (GEL million) | IFRS 16 | (GEL million) | | | 332.7 | 55.2 | 16.3% | 263.2 | | | +6.0% y-o-y | +19.6% y-o-y | +1.8 ppts y-o-y | +13.4% y-o-y | | | Operating cash flow excluding | EBITDA to cash conversion | Free cash flow excluding | | --- | --- | --- | | IFRS 16 (GEL million) | excluding IFRS 16 | IFRS16 (GEL million) | | 48.8 | 88.5% | 25.5 | | NMF | +65.5 ppts y-o-y | NMF | ## Operating metrics Large and Specialty Hospitals Number of facilities Number of beds Revenue per bed (GEL) Occupancy rate ## 7 1,165 194.5 66.5% +13.0 ppts y-o-y Regional and Community Hospitals 13% Number of facilities Number of beds Number of registered patients Occupancy rate ## 27 1,054 370,528 58.1% Ingorokva & Tbilisi Medical Institute +5.8% y-o-y +13.8 ppts y-o-y 1 Numbers are derived from the business’ unaudited IFRS accounts. 2017 2018 2019 2020 2021 2022 2023 2024 2025B 31-Dec-24 lease liabilities interest 31-Dec-24 | | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | --- | | 48 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 49 | | | | Overview | Our Business | Discussion of Results | | | ## Our Portfolio Overview continued ## Private investment stage portfolio companies ## Renewable energy projects overview ## Renewable energy Installed PPA tariff, Commissioned/acquired projects capacity, MW Capacity factor PPA expiration US¢/kWh Mestiachala HPP 30.0 40% 1H34 5.5 Value: GEL 253 million 6.7% of the total portfolio value 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 Overview Performance and strategy The renewable energy business plans to Total pipeline 194.0 | Our renewable energy business | Revenue from electricity sales increased | develop 194MW installed capacity power | | | --- | --- | --- | --- | | represents a leading platform for | (up 11.3% y-o-y) and stood at US$ 16.1 | plants in the medium term: Zoti HPP | Total 265.1 | | developing and operating HPPs and wind | million, reflecting the combination of a) the | (46MW), Tbilisi and Kaspi WPPs (130MW) | | | | | and Darchi HPP (18MW). The business | Note 1: Mestiachala HPP was commissioned in 1H19; Qartli Wind Farm and Hydrolea HPPs were acquired in 2H19 by GCAP. | | power plants (WPPs) across the country. | resumption of operations of two power- | | | Note 2: PPA terms for Tbilisi and Kaspi Wind Farms are under the discussion with the Government of Georgia. The business operates commissioned generating units of Hydrolea HPPs, which aims to establish a renewable energy Note 3: Only one out of three Hydrolea HPPs has an active PPA contract. | renewable assets with 71MW installed | were taken offline between November | platform with growing dollar-linked cash | | | --- | --- | --- | --- | | capacity in aggregate and with average | 2022 to June 2023 due to previously | flows and solid profitability, expected to | | | | | enable it to sponsor steadily increasing | Market opportunity | | capacity factors of more than 40%: | planned phased rehabilitation works and | | | | 30MW Mestiachala HPP, 20MW Hydrolea | b) a 0.3% y-o-y increase in the average | dividend payouts while progressing against | | Electricity consumption (TWh) | HPPs and 21MW Qartli WPP. 30MW | selling price of 57.0 US$/MWh. The | its medium-term strategic priorities: | | | --- | --- | --- | --- | | Mestiachala HPP was developed and | operating expenses were well-controlled, | • | Robust profitability with ~80% | | constructed by the renewable energy | down 1.5% y-o-y in FY24. Consequently, | | EBITDA margin. | 3.7% average consumption growth rate 14.2 business, while the latter two assets EBITDA increased by 16.4% y-o-y to US$ • ~100% EBITDA to cash-conversion rate. 13.8 13.9 • 20.3% of total 13.1 | | | | | | | | | | 12.6 | 12.8 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | represent successful acquisitions made | 12.1 million. During the year, the business | | | | | | | | | | 12.2 | | | | | | | | | | | | 11.9 | | | | | consumption produced | | by the business at the end of 2019. 83% | made US$ 4.5 million dividend distribution | | | | | | 11.0 | | | | | | by gas-fired thermal | | | | | | | 10.2 | 10.4 | | | | | | | | | of the installed capacity of our power | to Georgia Capital. | | | 9.7 | | | | | | | | | power plants (TPPs), | | | | 9.3 | 9.4 | | | | | | | | | | | | plants (all but 12.3MW of our Hydrolea | | | | | | | | | | | | | 8.9% imported. | | HPPs) benefit from long-term power | | | | | | | | | | | | • | In 2024 weighted average | ESCO balancing price purchase agreements (PPAs) formed reached US$ 55.7/MWh, with the Georgian Government-backed up by 5.1% y-o-y. entity, resulting in predictable dollar-linked cash flows, as PPAs, as well as market | | Investment rationale | | Value creation potential | | | | --- | --- | --- | --- | --- | --- | | sales, are denominated in US Dollars. The | | | | | 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 20232022 2024 | | | • | Favourable supply-demand dynamics | • | Opportunity to establish a renewable | | renewable energy business is wholly- pushing the power prices up. energy platform with up to ~270MW Electricity consumption owned by Georgia Capital. • Ongoing gradual electricity installed capacity over the medium market reforms leading to a liquid, term and capitalise on favourable The renewable energy business aims competitive and transparent market. electricity market conditions. Electricity import and export dynamics (TWh) to capitalise on favourable electricity • Favourable mix of merchant sales • Diversified portfolio of HPPs and market conditions in Georgia, on the and Georgian Government PPAs, WPPs with c.40%+ capacity factors, back of the ongoing reforms, leading to a providing high visibility and significant benefiting from long-term fixed price • 2024 net electricity more liquid, competitive and transparent upsides in cash flows. PPAs formed with the Georgian deficit stood at 3.0TWh, market. Following the electricity market • Natural cash flow hedge with fully Government-backed entity. whereas in 2010, deregulation in 2019, the Government of 1.5 1.5 dollarised revenues. 1. 0 • Availability of competitive green electricity surplus was at 0.9 Georgia adopted a new electricity market 0.7 0.7 0.6 0.6 • Inherently green projects aligned with funding from both international and 0.6TWh. 0.5 0.5 0.5 model concept in 2020, creating the path 0.4 0.2 0.2 the international best practices of local financial markets. • Renewable energy towards launching DAM and IDM trading | | | | | | | | | | environmental and social standards. | | | | | • | High margins and dollar-linked cash | business managed | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | markets in the coming years. As a part | | | | | | | | | | | | | | to capitalise on the | | 15 | | | | | | | | | | | | | | | flows. | | | 20.0 | (0.5) | of reforms, the first stage of the IDM and | (0.5) | | | (0.5) | | | | | | | | | | | | | | (0.6) | | | | | | | | | | | | | | opportunity and | | | | | | | (0.7) | | | Ownership | | | | | | • | Stable dividend provider capacity in | | | | | | | (0.8) | | | | | | | | (0.8) | | | | | | | | DAM was launched in July 2024. Overall, | | | | | | | | | | | | | | directly exported 38GWh | | | | | | | | | | The renewable energy business is 100% | | | | | (1.2) | | the medium term. | | | 16.0 | (1.8) | the renewable energy business expects | (1.8) | | | | (1.5) (1.5) | | | | (1.5) | | | | | of electricity to Türkiye. | | | | | | | | | | (1.6 ) (1.6) owned by Georgia Capital. | | | | | | | | | | | | planned reforms in the Georgian electricity | | | | (2.2) | | | | (2.0) | | | | | | | (2. 3) (2.4) (2.6) (1.8) market to have a further positive impact (2.8) 12.0 (2.2) (2.2) (3.0) (3.0) (3.0) (2.0) on electricity sales prices. | | (2.5) | (2. 4) | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 8.0 | | | | (2.1) | | | (3.9) | | | | | | (2.2) | | | (4.0) | | | | | | | | | (4.2) | | | (2.8) | (4.3) (3.4) (2.8) (2.8) (2.4) Electricity exports Electricity imports Generation of TPPs Deficit 4.0 (3.4) 0 0 20242011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 20232022 | | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | --- | | 50 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 51 | | | | Overview | Our Business | Discussion of Results | | | ## Our Portfolio Overview continued ## Private investment stage portfolio companies continued 1 ## Financial metrics Operating metrics ## Education business Revenue EBITDA margin Dividend paid to GCAP Electricity generation (US$ million) (US$ million) (kWh million) Value: GEL 182 million 4.8% of the total portfolio value ## 16.1 75.1% 4.5 282.0 +11.3% y-o-y +3.3 ppts y-o-y +2.3x y-o-y +11.0% y-o-y | EBITDA | Operating cash flow | Average electricity sales | | | | | --- | --- | --- | --- | --- | --- | | (US$ million) | (US$ million) | (price per US¢/MWh) | | | | | 12.1 | 12.3 | 57.0 | | | | | +16.4% y-o-y | +24.7% y-o-y | +0.3% y-o-y | | | | | | | | Overview | Management expects that the private | Our business, as the leading private K-12 | | | | | Georgia Capital’s education business | general education market will continue to | education institution in Georgia, is ideally | | | | | is the largest player in the private K-12 | increase in value in short to medium-term, | positioned to leverage the expanding and | | | | | market in Georgia with 9.4% market | driven by factors such as the large gap | consolidating private education market. | | | | | share. Our business is managed with a | in quality in public schools as compared | | | | | | partnership model and combines majority | to private schools, growing household | Performance and strategy | | | | | stakes in four private school brands | income and a decreasing unemployment | The business has expanded in 2024 | | | | | operating across seven campuses, | rate. Georgia has a relatively low average | through 1) the increase in learner capacity | 2 ## Valuation highlights annual spending per K-12 learner, creating by 225 learners in the mid-scale segment acquired in 2019-2023: British-Georgian Academy (the leading school in the further room for growth together with as a result of the expansion of the new Value development overview at 31-Dec-24 (US$ million) Equity fair value composition at 31-Dec-24 | | | | | | premium segment), British International | globally trending demand for private K-12 | campus launched in 2023 and 2) the | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | School of Tbilisi (the leading school in | education. The private education sector, | capacity expansion of two campuses in | | | | | | Operational assets US$ 71mln | the international segment), Buckswood | previously impacted by reduced demand | the affordable segment with 420 and 180 | | 158 | | | | Pipeline projects US$ 19mln | International School (well-positioned | during the COVID-19 pandemic, is now | learners, respectively (600 learner capacity | | | | | | | in the mid-scale segment) and Green | experiencing a notable rebound, offering an | in total). | | | | | Total | | School (the leading school brand in the | additional boost to market growth. | | | | | 90 | value | | | | | | | | | | | affordable segment). The schools have | The private general education market in | All seven campuses have a combined | | | (68) | | | | a comprehensive offering of academic | Georgia is currently very fragmented with | utilisation rate of 80.9% compared to | ## 90 programmes, including the Georgian an increasing average school size and 80.2% last year, taking into account the US$ million | | | | National Curriculum, the International | 13% fewer schools over the last decade. | new capacity addition of 825 learners in | | --- | --- | --- | --- | --- | --- | | | | | Baccalaureate and Cambridge | Currently, Georgia Capital is the largest | mid-scale and affordable segments in 2024. | | Net debtEnterprise value | Equity value | | International programmes. The annual | player on the market with a 9.4% market | We expect the utilisation rate to stabilise at | | | | | tuition fees for these programmes range | share in terms of learners, while the second | 85%+ in the following years. | | | | | from US$ 2,500 to US$ 19,900 across all | largest player holds 2.3%. Only 5% of | | | | | | four segments and grades. | private schools have 1,000+ learners, while | 1st grader enrolments in the 2024-2025 | | | | 5 | | 64% have less than 300 learners. | academic year have remained strong | Net debt to EBITDA US$ million, unless otherwise noted 31-Dec-24 31-Dec-23 Change Our education business has expanded at 887 learners with 2% growth y-o-y Enterprise value (EV) 158.2 169.6 (11.4) from the capacity in 2019 of 2,810 from 873 learners translating into 96.5% 6.8x | | | | learners to 8,095 learners in 2024 through | utilisation rate. | | --- | --- | --- | --- | --- | | LTM EBITDA 12.4 12.0 0.4 | | <6.0x | | | | | 5.6x | | 1) expansion of existing campuses | | 3 Implied EV/EBITDA multiple 11.3x 12.6x (1.3x) (1,660 learner capacity), 2) acquisition of 4 Investments at cost (EV) 18.1 19.5 (1.4) operating schools and real estate (3,000 learner capacity) and 3) greenfield projects Investment rationale Ownership Net debt (68.2) (70.5) 2.3 (625 learner capacity). Currently, there are • Highly fragmented general Majority stakes (70%-90%) across Equity fair value 90.0 99.1 (9.1) | | | | 6,549 learners at all seven campuses. | | education market with | different schools. | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | 31-Dec-23 31-Dec-24 Target | | | consolidation opportunity. | | | | Peer companies | | | The private education market’s revenues | • | Market with strong growth potential. | Value creation potential | | | • | BCPG Public Company Limited \| Thailand | | across kindergarten to 12th grade in | • | Low dependency on the Georgian | • | Scaling up to the capacity of 22,000 | | • | ERG S.p.A \| Italy | | Georgia have grown at 10% CAGR over | | Government. | | learners through expansion plans in | | • | Polenergia S.A. \| Poland | | the decade. Currently, there are c.70,300 | • | High resilience to crisis. | | existing schools, greenfield projects | | • | Terna Energy Societe Anonyme \| Greece | | learners in private schools in Georgia, | • | Predictable and sticky revenue. | | and M&As in short to medium-term. | | | | | representing 11% of the total general | • | Strong profitability. | • | Strong organic growth at existing | | | | | education market. The private general | • | Capex efficient business. | | schools is expected to drive solid | 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. | education market enjoys growth in | • | High trading multiples. | growth in run-rate EBITDA, on top | | --- | --- | --- | --- | --- | | 3 Implied EV/EBITDA is calculated based on normalised LTM EBITDA. | | • | | | | | enrolments with a CAGR of 3% over the | | Positive ESG impact. | of expansion plans and M&As. | 4 Investments at cost include the pipeline projects. last ten years and rising average tuition fees • Stable dividend provider capacity in 5 Ratio is calculated in US$ terms. with a CAGR of 7% over the same period. the medium term. 31-Dec-24 31-Dec-24 | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 52 53 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Our Portfolio Overview continued ## Private investment stage portfolio companies continued Strong intakes and ramp-up of utilisation Average cash collection rates remained The business has a strong platform to 1 ## Financial metrics | in existing campuses, facilitated 22.9% | at last year’s levels and were in line with | facilitate growth, strengthen its position | | | | | | --- | --- | --- | --- | --- | --- | --- | | growth in revenue. However, expansion of | the schools’ cash collection policies. | as the leading integrated education player | | | | | | the business in mid-scale and affordable | This combined with enhanced revenue | and scale up the capacity to 22,000 | | | | | | | | | Revenue | EBITDA | EBITDA margin | Operating cash flow | | segments, that are in early ramp-up | streams, resulted in operating cash flow | learners in short to medium-term. To | | | | | | | | | (GEL million) | (GEL million) | | (GEL million) | | period, translated in lower EBITDA margin. | generation in the business being up by | achieve this objective, GCAP plans to | | | | | | On the other hand, EBITDA saw growth | 29.6% y-o-y in FY24. | make a new equity investment of | | | | | | | | | 68.2 | 16.6 | 24.4% | 22.5 | | by generating GEL 16.6 million in FY24. | | US$ 18 million over the next few years. | | | | | | | | | +22.9% y-o-y | +15.1% y-o-y | -1.6 ppts y-o-y | +29.6% y-o-y | Short to medium-term targets Currently ## Operating metrics EBITDA (GEL million) 50 17 EBITDA margin 40%+ 24% Equity value GEL 500 million GEL 182 million Capacity utilisation Number of learners Learner to teacher ratio ROIC 20%+ 13%+ ## 80.9% 6,549 7.9x Built learner capacity 22,000 8,095 +0.7 ppts y-o-y +12.4% y-o-y NMF 1 ## Performance track record Number of learners and utilisation rate Total revenue generated by GCAP’s education business and market share by revenue 2 ## Valuation highlights 90% 80% 81% 15% 16%12%10%9%9% 73% 6,549 6549 Net debt to EBITDAValue development overview at 31-Dec-24 (GEL million) 62% 68 5,287 5287 55 234 4162 4,162 43 12 | | | 3,148 3148 | | | | | 182 | <2.5x | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 25822,582 | | | | | 31 | | | | | | 2,516 2516 | | | | | | | | | | | | 25 | 26 | | (21) | | | (4 4) 1.4x 1.2x | | 2021 2022 202320202019 2024 | | 2020 2021 20222019 2023 2024 | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Number of learners Utilisation rate | | Revenue (GEL million) Market share by revenue | | | | | | | | | | | | Enterprise value | Investment | Net debt Minority | Equity value | 31-Dec-23 31-Dec-24 Target | 3 ## Market opportunity GEL million, unless otherwise noted 31-Dec-24 31-Dec-23 Change Peer companies | Number of learners in private K-12 market | | | | | | | | Turnover of private K-12 market | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | Enterprise value (EV) 234.4 228.8 5.6 | | | • | SISB Public Company Limited \| Thailand | | | | | | | | | | | | 4 | | • | Curro Holdings Limited \| South Africa | | | | | | 10.4% | 10.2% | | | | | | | | | | | 10.0% | 9.9% | 10.1% | | | 9.7% | 10.0% | | LTM EBITDA | | 18.4 13.7 4.7 | | | 9.7% • Overseas Education Limited | Singapore 4.9 4.7 4.5 Implied EV/EBITDA multiple 12.8x 16.7x (3.9x) • Cairo For Investment & Real Estate Development S.A.E | Egypt 4.2 70.3 | | | | | | | | | | 66.5 | | | | | 3.7 | 3.8 | | | | Net debt (20.7) (16.5) (4.2) | • | Cogna Educação S.A. \| Brazil | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | 63.5 | | | | | 3.6 | | | | | 417 | | | | | | | | | | 63.2 | 61.9 | | | | | | | | | | | | | | | | | | | | | 60.8 | | | 60.3 | | | | | 3.2 | | | | | | | | | | | | | | 57.6 | | | | | | | | | | | | | | 378 | | | • | ADvTECH Limited \| South Africa | | | 55.4 | 56.1 | | | | | | | | | 2.9 | | | | | | | | Investments at cost 12.3 30.5 (18.2) | | | | 53.9 | | | | | | | | | | 2.7 | | | | | | 343 | | | | | | 2.6 298 280 281 Total equity value of GCAP’s share 181.6 189.2 (7.6) 257 217 192 92% 177 158 10.7% 10.5% 11.0% ### 70.000000 450.00 2014 20 15 2016 2017 2018 20 19 2020 2021 2022 2023 2024E 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024E 393.75 | | 337.50 | Number of private learners (thousands) | Total revenue (GEL million) | | | --- | --- | --- | --- | --- | | 46.666667 | 281.25 | | | 1 Numbers are derived from the business’ unaudited IFRS accounts. | | | | % of total number of learners | Revenue per learner (GEL thousands) | | 2 The detailed valuation overview and related drivers are described on pages 100-117 of this report. 225.00 3 GCAP has different ownership stakes across schools (70%-90%). 168.75 1 Numbers are derived from the business’ unaudited IFRS accounts. 4 LTM EBITDA used for valuation purposes includes functional currency adjustment in schools where applicable. ### 23.333333 112.50 56.25 0.00 ### 0.000000 31-Dec-24 at cost interest 31-Dec-24 | | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | --- | | 54 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 55 | | | | Overview | Our Business | Discussion of Results | | | ## Our Portfolio Overview continued ## Private investment stage portfolio companies continued Key focus areas in medium and long term Five-year financial targets ## Clinics and diagnostics Adding new services ### 1 • Expansion of medical and personal care service presence Value: GEL 123 million Double-digit revenue Geographic expansion CAGR 3.3% of the total portfolio value ### 2 • Adding new polyclinics and lab retail points EBITDA Developing distance channels ### 3 c.GEL 30+ million • Best user experience Adding customer base | 4 | | | ROIC c.13%+ | | | --- | --- | --- | --- | --- | | | • | Increased convenience and quality, | | Double-digit revenue | | | | increasing number of registered patients; | | CAGR | increasing provider insurance companies and corporate client base EBITDA Overview scaling its operations and gaining market The business targets to deliver a c.GEL 25+ million Expansion of retail | Following the strategic restructuring of | share through profitable growth and | combined EBITDA of c.GEL 25-30 million | 1 | | | | --- | --- | --- | --- | --- | --- | | | | | | • | Number of retail branches: c.15 in Georgia; | | our healthcare businesses, as detailed in | margin increase. | over the coming five years. | | | | Double-digit revenue tapping neighbouring countries the hospitals business overview on page and EBITDA CAGR 44, our clinics and diagnostics business Our diagnostics business has also been Attract B2B contacts | currently comprises two segments: clinics | growing rapidly, with 34%+ revenue | 2 | | | | | --- | --- | --- | --- | --- | --- | | | | | • | Total number of tests performed: c.5 | ROIC c.20.0%+ | | (16 polyclinics) and diagnostics (one | CAGR over 2019-2024. The business | | | | | million annually Diagnostics Clinics diagnostic centre). Polyclinics are located added two new blood collection points Investment rationale Digitalisation | in Tbilisi and major regional cities and | in 2024 and invested in marketing and | • | | | | --- | --- | --- | --- | --- | | | | | Very low base: Georgia still lags | 3 | | provide basic and full-scale outpatient | brand image to capitalise on significantly | | | | most of the developed countries diagnostic and treatment services. The increased brand awareness during the in terms of the number of | business is the leader in the outpatient | COVID-19 pandemic. | | | | | --- | --- | --- | --- | --- | | | | outpatients visits per capita – at | | 1 | | market with a 13% market share by | | | Performance track record | | 4.0 (c.6.0 in Europe). number of registered patients. The share of state-funded revenues in • Low healthcare expenditure clinics is c.25%. The business strategy | | | by the population on primary | | 2 | | | --- | --- | --- | --- | --- | --- | | | | | Net revenue and EBITDA (excl. IFRS 16) – clinics | | Net revenue and EBITDA (excl. IFRS 16) – diagnostics | | The diagnostics business was launched | is centred on acquiring patients to | | | | | healthcare: GDP growth will (GEL million) (GEL million) in 2018 by opening the largest laboratory enhance the utilisation of existing facilities. result in higher expenditure on in the entire Caucasus region – “Mega Additionally, considering ample space primary healthcare. Lab”. The multi-disciplinary laboratory, for additional facilities, the business aims 30.4 equipped with the latest infrastructure to inaugurate new clinics annually and Ownership 49.2 | and state-of-the-art technology, covers | targets a 15%+ EBITDA CAGR over the | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Georgia Capital owns 100% of the | | | | | | | | 22.2 | | | | | | | | 41.1 | | 20.5 | | | | 7,500 square metres. In addition to basic | next three to five years. Moving forward, | | | | 37. 2 | | | | | | | | | clinics and diagnostics business as | | | | | | | 18.4 | | | laboratory tests, Mega Lab offers complex | the clinics business will continue to | | | | | | | | | | | | | of 31 December 2024 (100% as of | | | | | 14.5 | | | | | | | | 23.4 | 24.9 | | | | | | | | tests for oncology and molecular lab, | expand its base of registered customers, | | | | | | | | | | 31 December 2023). 17.5 | some of which have never been available | extend the availability of medical and | | | | | | | | | | | 7.3 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | 11.0 | 5.1 | | | | | | | | | | | | | 7.6 | | 8.8 | | | | | | | | | in Georgia and for which blood samples | personal care services, and develop | | | | 5.2 | | | | | | | | | | 3.2 | | | | Value creation potential | | 4.2 | | | 4.9 | | | | 1.8 | | | | | | | | | 2.6 | | | | | | | | | | 0.7 | 1.2 | | 0.2 used to be sent abroad. In July 2022, remote channels such as a call centre, • The single largest participant with Mega Lab received the Joint Commission while refining the existing app to offer 13% by number of registered International (“JCI”) accreditation. JCI, greater customer convenience and an patients (next competitor has Revenue EBITDA (excluding IFRS 16) Revenue EBITDA (excluding IFRS 16) the highest healthcare accreditation improved user experience. 11% market share) with a cost body in the US, ensures the correct advantage due to the scale of management of clinical processes. Its goal The diagnostics business will focus Operating cash flow (excl. IFRS 16) – clinics and operations. is to continuously improve the quality and on increasing its utilisation (currently at • diagnostics (GEL million) High-growth potential is driven by safety of patient care. Mega Lab is the first c.60%) through expansion of its retail an increase in patient awareness laboratory in the Caucasus region with JCI chain, attracting more B2B contracts and of the importance of primary 17.4 accreditation and 38th worldwide. adding new services and technologies healthcare. 15.0 such as next generation sequencing, • High-growth potential is driven Performance and strategy while from a clinical perspective, the by market consolidation through The clinics business has been growing business will continue to provide the chain expansion, adding new rapidly with 23%+ revenue CAGR and highest standards of clinical processes, 8.2 services and increasing the 6.9 24%+ EBITDA CAGR over 2019-2024, and in the long term become a platform customer base. 59.8 | despite a growth slowdown during | for education through an accredited | | | 3.9 | | --- | --- | --- | --- | --- | | | | 2.5 | 2.0 | | | the COVID-19 pandemic in 2020. The | training centre, residency programme and | | | | | business has a solid track record of | scientific research and studies centre. | | | | 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. 2018 2019 2020 2021 2022 20242023 2018 2019 2020 20 21 2022 2023 2024 2019 2020 2021 2022 20242023 | | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | --- | | 56 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 57 | | | | Overview | Our Business | Discussion of Results | | | ## Our Portfolio Overview continued ## Private investment stage portfolio companies continued 1 ## Financial metrics ## Other portfolio companies Net revenue EBITDA excluding IFRS 16 EBITDA margin excluding Net debt excluding IFRS 16 (GEL million) (GEL million) IFRS 16 (GEL million) Value: GEL 160 million 4.3% of the total portfolio value ## 74.5 14.2 19.0% 32.1 +20.7% y-o-y +41.8% y-o-y +2.9 ppts y-o-y -10.2% y-o-y Georgia Capital’s other portfolio companies consist of its auto service, beverages, housing development, and hospitality businesses. | Operating cash flow excluding | EBITDA to cash conversion | Free cash flow excluding IFRS | | | | --- | --- | --- | --- | --- | | IFRS 16 (GEL million) | excluding IFRS 16 | 16 (GEL million) | | | | 17.4 | 122.7% | 7.7 | | | | NMF | +53.7 ppts y-o-y | -26.5% y-o-y | | | | | | | Auto service | licenses obtained in 2019. Additionally, the Group developed | its own light beer brand, Kayaki. In 2019, the business began ## Operating metrics – clinics The Group’s auto service business includes a car services brewing Heineken beer locally, with commercial batches hitting and parts business under the Amboli brand and a periodic the shelves in August of that year. During the second half of technical inspection (PTI) business. Georgia Capital acquired an 2019, the company relaunched its brand portfolio and optimised Number of facilities Number of registered patients 80% interest in Amboli at the end of June 2019, increasing its its product mix, driving an increase in market share. These efforts shareholding to 90% in February 2020. Amboli is an importer, led to break-even EBITDA by the end of 2019 and consistent ## 16 394,294 distributor, wholesaler and retailer of car consumables and positive EBITDA performance ever since. The business has also NMF -2.9% y-o-y spare parts with a c.9% share in the target market, making it expanded its horizons by exporting its beer and lemonade brands the second largest player in a highly fragmented market. The to international markets, further establishing its presence beyond PTI business commenced the construction of PTI centres in the Georgia. In 2024, GCAP completed the sale of an 80% interest ## Operating metrics – diagnostics first half of 2018 and launched the PTI business in March 2019 in the beer and distribution business for a total consideration of c. under the name Greenway Georgia (“GWG”). As part of the US$ 63 million as set out on page 8 of this report. Georgia-EU Association Agreement, Georgia commenced the Number of patients served Number of tests performed Average revenue per test Average number of tests per implementation of a mandatory vehicle inspection programme in ### Housing development (thousands) (thousands) (GEL) patient several phases, starting from January 2018. In July 2018, GWG won a state tender to launch and operate 51 PTI lines across The Group’s housing development business is a leading real 808 2,712 8.2 3.4 Georgia with a ten-year licence. GWG is the only player on the estate developer in the Georgian real estate market, targeting +3.7% y-o-y +9.3% y-o-y +10.3% y-o-y +5.4% y-o-y market with support from an international partner, Applus+, a mainly mass-market customers by offering affordable, high- Spanish headquartered worldwide leader in testing, inspection quality and comfortable housing. The business is wholly owned | | and certification services with a market presence in more than 70 | | 2 | | | --- | --- | --- | --- | --- | | | | through Georgia Real Estate, previously known as m | . The | | | 2 | countries. GWG serviced 448,827 cars (of which, 393,580 were | | | 3 | housing development business has five ongoing projects: m ## Valuation highlights primary checks) in 2024, giving it a market share of 40%. 2 Saburtalo, m Mtatsminda Park, Nutsubidze, Mirtskhulava and 3 Chkondideli (Sveti projects). In connection with the m Saburtalo ### Beverages project, the business has sold 158,742 square metres with Net debt to EBITDA (excl. IFRS 16)Value development overview at 31-Dec-24 (GEL million) US$ 194 million sales value as of 31 December 2024. For the The beverages business combines three business lines: a beer 2 m Mtatsminda Park, a total area of 9,131 square meters with business, a distribution business and a wine business. The wine 3 a sales value of US$ 17.6 million was sold as of 31 December 3.6x business produces and sells wine locally and exports it to 29 187 2024. Regarding the three other projects, the business took on countries. The wine business owns three top-class wineries the responsibility to support the completion of three suspended across Kakheti’s three wine-making regions and is in the top five 123 <2.5x projects of the Sveti construction company, adding 178,993 2.3x wine producers by vineyard base in Georgia. The vast majority of (61) (2) square metres of the sellable area to its inventory. The projects the vineyards grow Georgia’s flagship red wine grape, Saperavi. are ongoing in three locations in Tbilisi and the construction and The wine business sold 11.2 million bottles of wine in 2024, with development will continue for approximately a year. The business approximately 84% of sales coming from exports. The business started construction and sales for the Sveti project in April 2020 has a market share of 7.6% in the Georgian wine export market. and has sold 163,022 square metres with a US$ 135 million sales Enterprise value Net debt incl. Minority Equity value 31-Dec-23 31-Dec-24 Target The beer business produces beer and lemonade and holds value as of 31 December 2024. an exclusive ten-year license from Heineken to produce and distribute Heineken beer brands in Georgia. In 2024, the beer 3 ### LTM EV/EBITDA Peer companies Hospitality business achieved a market share of approximately 22.4%. The • EMC Instytut Medyczny SA | Poland portfolio includes globally recognised brands such as Heineken, The hospitality business has only one operational hotel, Gudauri | 10.6x | • | Med Life S.A. \| Romania | | | | --- | --- | --- | --- | --- | | | | | as well as a range of local and international favourites: Black | Lodge, with 121 rooms. The business is wholly-owned through | | -3.9x y-o-y | • | Medicover AB \| Sweden | | | | | | | Lion, Georgia’s leading craft beer brand acquired by the Group in | Georgia Real Estate. | | | • | Fleury S.A. \| Brazil | | | 2018; ICY, its flagship mainstream beer brand; Kazbegi, acquired in 2019; and Amstel and Krusovice, both introduced under 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. 31-Dec-24 lease liabilities interest 31-Dec-24 | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 58 59 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## S172 Statement Statement by the Directors on their duties under Section The Directors have identified the following key stakeholders as 172 of the UK Companies Act 2006 (the “Act”) essential to the success of the Company: investors; employees; Georgia Capital share buyback and cancellation programme In accordance with the requirements of section 172 of the Act, the wider community; government and regulators; and the the Directors consider that, during the financial year ended environment. The key stakeholders and the primary ways which In line with the Company’s capital allocation strategy, and Key stakeholder interests considered: 31 December 2024, they have acted in good faith and in a the Board engages with them are set out on pages 128 to 131. reflecting the Company’s robust liquidity levels and elevated • Investors: offering immediate returns to shareholders manner most likely to promote the success of the Company Stakeholder issues are an integral part of the Board’s decision- discount to NAV, during 2024, the Company launched a seeking them and an increased share in the business to for the benefit of its shareholders, having regard to the likely making process and, therefore, the Board embeds these as part number of share buyback and cancellation programmes under shareholders who do not participate, all the while balancing consequences of any decision in the long term and the broader of overseeing the management of the Company and the portfolio which it bought back 3.7 million shares (US$ 48.1 million, the Company’s need to preserve liquidity and ensure the interests of other stakeholders, as required by the Act. Some companies. The Company endeavours to balance any conflicting GEL 131.9 million value). Formore details on the share sustainability of the business. examples of the Board’s engagement with stakeholders during shareholder needs to ensure all are treated consistently and fairly. buyback and cancellation programmes, please see page 9 2024 are set out below. of this report. Other steps the Board has taken to meet its Section 172 responsibilities can be seen in this report: Section 172 factor Examples Page Completion of the acquisition of outflow for this transaction amounted to the “Ardi” brand and its portfolio of GEL 26.4 million and was fully financed The likely consequences of any decision in the long term Corporate Governance Framework 124 medical insurance contracts by funds already available in the medical Interests of employees Corporate Governance Framework 124 insurance business. | Fostering the Group’s business relationships with | Corporate Governance Framework 124 | | | In April 2024, the Group completed the | | | | --- | --- | --- | --- | --- | --- | --- | | suppliers, customers and others | | | | acquisition of GEL 87 million portfolio | Key stakeholder interests considered: | | | | | | | of insurance contracts and the brand | • Investors: the acquisition provides a | | | Impact of operations on the community | Resources and Responsibilities | | 76 | | | | | | | | | name from “Ardi”. Ardi was the third- | | significant value creation opportunity | | and the environment | Sustainability Report 2024 | | (see separate document) | | | | | | | | | largest player in the Georgian health | | for our investors. | | Maintaining a reputation for high standards | Resources and Responsibilities | | 76 | | | | | | | | | insurance market, holding a 17% market | • Customers: seek to maintain high | | | of business conduct | Sustainability Report 2024 | | (see separate document) | | | | | | | | | share based on 2023 net insurance | | insurance standards to end users in | | Acting fairly between members of the Company Georgia Capital Strategy 14 | | | | premiums. This acquisition positions | | the supply chain. | | | | | | GCAP’s medical insurance business as | • Governments and regulators: | | | | | | | the largest health insurer in the country | | the Company devoted time and | | The framework detailing the authority for decision-making, | | Principal decisions | | and offers an opportunity to diversify our | | resources to ensure regulatory | | where the Board delegates to management, is discussed in the | | There are processes in place to capture and consider | | portfolio and achieve significant financial | | compliance and competition authority | | Company’s Corporate Governance Framework on pages 124- | | stakeholders’ views (including the matters contained in section | | and strategic synergies. The total cash | | approvals relating to the transaction. | | 133. It mandates consideration of these stakeholder responsibility | | 172 of the Act) and feed them into Board decision-making. | | | | | factors as a critical part of delegated authorities. Material business decisions considered by the Board include an The Board engages with the relevant stakeholders directly on analysis of stakeholder considerations, anticipated impact and the The Board and its Committees monitor the effectiveness of an environmentally, socially responsible and sustainable manner, in certain issues, and their feedback is considered when the Board risk controls. This is a rigorous process, which helps the Board to engagement with stakeholders through various methods. order to reduce the environmental harm of the Group’s operations, discusses and makes decisions relating to those reserved for it, perform the duties outlined in section 172 of the Act and provides while improving social impact to enhance long-term returns such as financial and operational performance, investment and assurance to the Board that potential impacts on stakeholders The Board continues to believe that the operation of the designated to shareholders. exit decisions and strategic matters. This information is usually have been considered in the development of the proposal. Non-Executive Director for workforce engagement has been, and fed back through presentations and reports to the Board, within continues to be, an effective means of engaging with the workforce, The Board and Committees’ evaluation process gives Directors Committee or Board meetings. This process is described in the Set out below are some case studies of principal decisions that to help the Board understand the matters that concern the the opportunity to comment on the engagement mechanisms in Directors’ Governance Statement on pages 120 and 121. have been taken by the Board: workforce and their specific interests, whilst having regard to these place with our different stakeholder groups and invites them to in the decisions that are made at Board level. make recommendations for improvement. Through the adoption of our Code of Conduct and Ethics we ensure high standards of | Sale of 80% of the Group’s holding | Key stakeholder interests considered: | | | beer industry. Their commitment to | Similarly, the informal and formal channels in which the Group has | business conduct for all our stakeholders and seek to promote a | | --- | --- | --- | --- | --- | --- | --- | | in the beer and distribution business | • Equity investors: Georgia Capital | | | sustainable growth ensures that the | adopted to engage with its investors, the local communities and the | culture where transparency and fairness are the norm. | | | | has continued to make significant | | new management will uphold high- | environment, through a variety of media platforms, have performed | | | In December 2024, the Group | | progress on its core strategic priority | | quality employment standards and | well and flexibly. The Board’s Responsible Investment Policy | For the coming year, the Board will continue to ensure effective | | completed the sale of 80% of its holding | | of disposing of non-core businesses. | | job security for existing employees. | ensures the Group’s commitment to conducting business in | stakeholder engagement, ensuring the frequency of interaction is | | in the beer and distribution business to | | The sale is consistent with the Group’s | • Governments and regulators: | | | maintained and reviewed (where appropriate) over matters that | | a high-quality international investor and | | capital light investment strategy, and | | the Company devoted time and | | are considered material to the Group. | | strategic purchaser, Royal Swinkels. | | represents a significant uplift to the | | resources to ensure regulatory | | | | The sale created significant value for | | businesses’ investment value. | | compliance and competition authority | | | | shareholders, realising significant net | • Employees: the purchaser of | | | approvals relating to the transaction. | | | | cash proceeds of c.US$ 63 million. For | | the business, Royal Swinkels, is | | | | | | more details on the transaction please | | an international investor with an | | | | | | see page 8 of this report. | | established presence in Georgia’s | | | | | | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 60 61 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Risk Management We believe that effective risk management underpins − ROIC is evaluated for financing projects and reinvestment at It ensures consistency and compliance with Georgia Capital’s and frequent basis. Executive and senior management regularly each portfolio company level. Different yields are appropriate financial and strategic requirements, cultural values and appropriate review the output from the bottom-up process by providing the successful delivery of our strategy. We identify, for different industries. ROIC is at the core of decision- investment behaviours. Each business participates in the risk independent challenge and assessing the implementation of the evaluate, manage and monitor the risks that we face making when the portfolio companies are investing or management process by identifying the key risks applicable to its risk management and internal control policies and procedures. through an integrated control framework supported divesting assets or businesses. ROIC should be more than business. The principal risks and uncertainties faced by the Group by formal policies and procedures, clearly delegated WACC for new investments. As part of ROIC enhancement are identified through this process, as are the emerging risks. Our reporting process enables key risks and emerging risks to authority levels and comprehensive reporting. initiatives across our portfolio, our businesses are aiming to be escalated to the appropriate level of authority and provides continue divestment of low ROIC and/or non-core assets On a day-to-day basis, management is responsible for the assurance to the Committees and the Board. Key developments The Board confirms that our framework has been and businesses. implementation of the Group’s risk management and other affecting our principal risks and associated mitigating actions in place throughout the year under review and to − GCAP share price is at the core of decision-making internal control policies and procedures. Based on our risk culture, are reviewed quarterly (or more often if necessary, on an ad hoc the date of approval of this Annual Report and is when it comes to new investments. The Group performs managers “own” the risks relevant to their respective function. basis, outside of the regular reporting process) by the Audit and integrated into both our business planning and 360-degree analysis each time GCAP makes a capital For each risk identified at any level of the business, the risk is Valuation Committee, as well as the Board. viability assessment processes. allocation decision and compares: a) the investment measured and mitigated (if possible) in accordance with our opportunity versus buyback opportunity; and b) the sale policies and procedures. Middle level managers, both at each A description of emerging and principal risks and uncertainties, Overview opportunity versus buyback opportunity. The Group intends portfolio company and Georgia Capital level, are required to report including recent trends and outlook, as well as mitigation efforts, Our Board, supported by our Audit and Valuation Committee and to buy assets/companies at a higher discount to their listed on identified risks and responses to such risks on a consistent can be found on pages 65 to 74 of the Strategic Review. executive management, is ultimately responsible for the Group’s peers than GCAP’s fair value discount. Georgia Capital is risk management and internal controls with a view to maintaining targeting to invest in opportunities which produce greater Risk governance structure ongoing sustainability. returns than returns offered by buying back GCAP shares. BOARD As an investor, Georgia Capital is in the business of taking risks in Capital management order to achieve its targeted returns for investors and shareholders. Georgia Capital adopts a highly disciplined approach to managing • Determines the Group’s risk appetite as part of strategy setting. The Board approves the strategic objectives that determine the its capital resources as follows: • Overall responsibility for maintaining a system of internal controls that ensures an effective risk management and oversight level and types of risk that Georgia Capital is prepared to accept • 360-degree analysis, when evaluating capital returns, new process across the Group. and reviews the Group’s strategic objectives and risk appetite investment opportunities or divestments. • Assisted by the Board Committees with specific responsibility for key risk management areas. at least annually. We believe that, in order to have an effective • Georgia Capital allocates capital such that it does not depend on • Safeguards the Group’s long-term viability and reputation, and generates sustainable, medium to long-term cash-to-cash returns. risk management framework, there needs to be a strong risk premature sales of listed portfolio investments. Georgia Capital This includes evaluating risks in relation to the entire investment entity portfolio, reviewing each step of the investment lifecycle, management culture within the Group. We have worked to ensure does not have capital commitments or a primary mandate to approving all investment and divestment decisions, monitoring investments against the original case, and ensuring alignment that managing risk is ingrained in our everyday business activities. deploy funds or divest assets within a specific time frame. As with the Group’s investment policy and risk appetite. For the private portfolio companies, it oversees management of their most We seek to create an environment where there is openness such, it focuses on shareholder returns and on opportunities material risks. and transparency in how we make decisions and manage risks which meet its investment return and growth criteria. and where business managers are accountable for the risk • The Board regularly reviews any major investment and Audit and Valuation Committee Remuneration Committee Nomination Committee management and internal control processes associated with their divestment opportunities. activities. Our culture also aims to ensure that risk management • Responsible for managing financial • Reviews and recommends to the • Responsible for ensuring that the is responsive, forward-looking and consistent. Georgia Capital’s Our framework and approach to risk governance reporting risk and internal control and the Board the Directors’ Remuneration Board has the necessary skills, risk culture is built on rigorous and comprehensive investment The Board is responsible for setting the right tone and relationship with the external auditor. Policy to ensure that remuneration is experience and knowledge to procedures and disciplined capital management. encouraging characteristics and behaviours which support • Reviews and challenges risk designed to promote the long-term enable the Group to deliver its a strong risk culture and effective risk management process | | | | | management reports from Group | | success of Georgia Capital (and see | | strategic objectives. | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Risk appetite | | across the Group. The Board’s mandate includes determining | | | | | | | | | | | | Finance and Internal Audit. | | that management is appropriately | • | Leads the process for appointing | | Our risk appetite is defined by our strategic objectives. We invest | | the Group’s risk appetite and risk tolerance as well as monitoring | | | | | | | | | | | • | Specific and primary responsibility for | | rewarded for their contribution to the | | Directors and senior management | | capital and develop businesses that will have strong capital | | risk exposures to ensure that the nature and extent of the main | | | | | | | | | | | | the Valuation Policy and valuation of the | | Group’s performance in the context | | positions. | | returns. Georgia Capital applies the following investment criteria: | | risks we face are consistent with our overall goals and strategic | | | | | | | | | | | | investment entity subsidiaries. | | of wider market conditions and | | | | • | Geographic focus: investing in and developing businesses in | objectives. Non-executive oversight is also exercised through | | | | | | | | | | | • | Provides oversight and challenge | | shareholder views). | | | | | Georgia, the country we know – a diversified, resilient, fast- | the Audit and Valuation Committee which focuses on upholding | | | | | | | | | | | | of underlying assumptions on the | • | Approves variable compensation | | | | | growing economy across the last decade. | standards of integrity, financial reporting and valuation framework, | | | | | | | | | | | | valuation of the private portfolio | | schemes for our investment | | | | • | Focus on liquidity: the Group predominantly invests in capital- | risk management systems, going concern, internal control and | | | | | | | | | | | | companies (57.2% of portfolio value at | | professionals that are in line with | | | | | light, larger-scale investment opportunities in Georgia, which | assurance frameworks. The Audit and Valuation Committee’s | | | | | | | | | | | | 31 December 2024). All private large and | | market practice and enable the | | | | | have the potential to reach at least GEL 300 million equity | activities are discussed further on pages 134 to 141. The Board | | | | | | | | | | | | investment stage portfolio companies | | Group to attract and retain the best | | | | | value over the next three to five years. The Group believes | ensures a centralised process-led approach to investment and | | | | | | | | | | | | (52.9% of the total portfolio) are valued | | talent. | | | | | a larger size will provide improved liquidity and superior exit | the overriding priority is to protect the Group’s long-term viability | | | | | | | | | | | | externally by an independent valuation | • | Ensures that remuneration is aligned | | | | | opportunities, to support the Group’s desire to reduce the | and reputation and produce sustainable, medium to long-term | | | | | | | | | | | | company on asemi-annual basis. | | with shareholder returns. | | | | | current discount to reported NAV per share. | cash-to-cash returns. The Board’s activities are discussed further | | | | | | | | | | | • | Direct engagement with the external | | | | | | • | Sector focus: investing mostly in fragmented and | on pages 124 to 128. | | | | | | | auditors, who involve their specialist underdeveloped markets, particularly targeting high-multiple valuations team. service industries. At the Board, Committee and executive management levels, we • Return target: combination of the ROIC, MOIC, IRR and GCAP develop formal policies and procedures which set out the way MANAGEMENT BOARD share price value versus investments return is the key decision- in which risks are systematically identified, assessed, quantified, making matrix used in the investment decision-making process: managed and monitored. The Board, which has oversight of the The Management Board is led by the Chief Executive Officer and has: − MOIC and IRR are determined at the Group level, as we investment pipeline development and approves new investments, • Delegated responsibility for management of the Group. evaluate achievable money multiples with all acquisitions significant portfolio changes and divestments, is integral to • Delegated responsibility for investment decisions. and analyse them in combination with the expected IRR. embedding our institutional approach across the business. • Delegated responsibility for risk management. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 62 63 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Risk Management continued Bodies implementing the risk management system In order to fulfil its function, the Group’s Internal Audit department The Finance department also manages foreign currency and inputs used, with particular focus on the assumptions As mentioned on page 61, our Board is responsible for reviewing has unrestricted access to all the Group’s functions, records, exchange, money market and derivatives operations. The supporting the unquoted investments, any valuation uncertainties and approving the Group’s system of internal controls and its property and personnel. Finance department is also responsible for the management of and the proposed disclosure in the financial statements. The adequacy and effectiveness. Controls are reviewed to ensure the long-term and short-term liquidity and cash flow and monitors valuation workgroup applies care in exercising judgement and effective management of strategic, financial, market and Investment team the volumes of cash on the Group’s accounts for the purposes making necessary estimates due to uncertainties inherent in operational risks, amongst others. Certain matters, including but The Group’s investment team has formalised procedures of risk of sufficiency. Further, the Finance department actively monitors estimating fair value for private companies. not limited to the approval of major capital expenditure, significant analysis. As part of the procedures, qualitative and quantitative performance of portfolio companies on a regular basis and acquisitions or disposals and major contracts, are reserved downside risks are identified and measured and risk adjusted delivers daily NAV development reports, weekly liquidity reports Internal control exclusively for the Board. The full schedule of matters specifically returns are assessed for the investment opportunity. and monthly management reports to the Management Board. Georgia Capital’s internal control over financial reporting is reserved for the Board can be found on our website at: focused primarily on ensuring efficient and reliable control of https://georgiacapital.ge/governance/cgf/schedule. For each capital allocation decision an independent risk team is The Management Board reviews the performance of each valuation of private portfolio companies. With respect to internal With respect to other matters, the Board is often assisted by formed and no member of the risk team is involved in developing portfolio business company on a monthly basis and takes control over financial reporting, our financial procedures include the Audit and Valuation Committee. the investment thesis. The risk team identifies major risk areas of actions, as necessary. a range of system, transactional and management oversight the proposed investment, assesses potential impact if the risks controls. The board and management of each private portfolio The Management Board has overall responsibility for the materialise and estimates returns based on stress test scenarios IFRS technical accounting group company is responsible for ensuring the efficiency of the private Group’s assets, liabilities, risk management activities, respective and sensitivity analysis. The IFRS technical accounting group, part of the Finance portfolio company’s internal control structures, risk management policies and procedures. In order to effectively implement the department, is responsible for monitoring the Group’s compliance and financial reporting. The private portfolio companies’ boards risk management system, the Management Board delegates The team also evaluates the fit of the investment within the with relevant IFRS. The IFRS technical accounting group is ensure that Georgia Capital’s Board receives information on individual risk management functions to each of the various Group’s investment policy and challenges the executability of the involved in the development process of the Group’s accounting any issues that could affect Georgia Capital’s business or decision-making and execution bodies within the Group, as proposed business plan. policies by leading new accounting standards implementation financial reporting. Our businesses prepare detailed monthly described below. projects, monitoring new IFRS developments, and preparing an management reports that include analyses of their results along The risk analysis process involves desktop research as well impact assessment on reporting, systems and processes across with comparisons, relevant strategic plans, budgets, forecasts Internal Audit department as field work, including interviewing sector experts and senior the Group. and prior results. The Group has an established Internal Audit department, which is executives. ROIC and equity IRR are the most common return responsible for the regular review/audit of the Group’s operations, metrics which are stressed in the risk analysis. For every In order to increase the understanding of IFRS, the IFRS technical These are presented to and reviewed by executive management. activities, systems and processes, in order to evaluate and capital allocation decision, the risk team issues a written capital accounting group delivers training on new IFRS standards, issues Each quarter, the CFO of the Group and other members of provide reasonable, independent and objective assurance and allocation recommendation based on the risk reward profile of the Group accounting policies, produces general guidance memos the Finance department discuss financial reporting, valuations consulting services designed to add value and improve the proposed investment. on the application of IFRS and memoranda on complex, one-off and associated internal controls with the Audit and Valuation Group’s operations. transactions and also prepares quarterly reports to the Audit and Committee, which reports significant findings to the Board. The Together with the investment thesis, the risk analysis is reviewed Valuation Committee summarising material transactions across Audit and Valuation Committee also reviews the quarterly, half- The Group’s Internal Audit department is independent of the by the Capital Allocation and Strategy committee, consisting of the Group, with respective financial impact. year and full-year financial statements and corresponding press Management Board. The Head of the Group’s Internal Audit members of the Group’s management team, which is responsible releases and provides feedback to the Board. The external and department is appointed by, and has a direct reporting line for recommending investment decisions to the Board. Valuation workgroup internal auditors attend each Audit and Valuation Committee to the Chairman of the Audit and Valuation Committee. The The Group has established a valuation workgroup, consisting meeting and the Audit and Valuation Committee meets regularly Group’s Internal Audit department discusses the results of all Legal department of members of the Finance department, which is responsible both with and without management present. assessments with the Group’s Management Board and reports The Legal department’s principal purpose is to ensure that for the development and oversight of fair value assessment its findings and recommendations to the Group’s Audit and the Group’s activities conform to applicable legislation and to of the Group’s private portfolio companies at each reporting Going Concern Statement Valuation Committee. minimise losses from the materialisation of legal risks. The Legal date. The workgroup engages third-party professionals to The Group’s business activities, objectives and strategy, department is responsible for the application and development assist with the fair value determination of large and investment principal risks and uncertainties in achieving its objectives and The purpose of the Internal Audit department is to determine of mechanisms for identifying legal risks in the Group’s activities stage investments (38.1% and 14.8% of total portfolio value performance are set out on pages 4 to 117. Comprehensive whether the Group’s risk management, internal controls and in a timely manner, the monitoring and investigation of the at 31 December 2024, respectively) in order to provide more going concern assessment analysis is disclosed in Note 2 within corporate governance processes, which are designed and Group’s activities in order to identify any legal risks, the planning transparency of Georgia Capital’s portfolio valuations. the IFRS financial statements. The Directors have made an implemented by the Management Board, are adequate such that: and implementation of all necessary actions for the elimination assessment of the Group’s ability to continue as a going concern • material risks including strategic, market, liquidity and of identified legal risks, participation in legal proceedings on The oversight of the third-party professionals is within the scope and are satisfied that Georgia Capital has the resources to operational risks, are appropriately identified, measured, behalf of the Group where necessary and the investigation of of the valuation workgroup. The valuation workgroup also continue as a going concern for a period of at least 12 months assessed and managed across the Group, including its possibilities for increasing the effectiveness of the Group’s legal estimates fair values of other portfolio companies (4.3% of total from when the financial statements are authorised for issue, i.e. outsourced activities; documentation and its implementation in the Group’s daily portfolio value at 31 December 2024) in-house by applying an the period ending 31 March 2026. After making enquiries, the • interaction with the various internal governance groups activities. The Legal department is also responsible for providing appropriate valuation technique in compliance with IFRS 13. The Directors confirm that they have a reasonable expectation that occurs appropriately; legal support to structural units of the Group. workgroup reports to the Management Board. In order to ensure the Group has adequate resources to continue in operational • significant financial, managerial and operating information is compliance with IFRS 13 requirements, increase the transparency existence and, therefore, the Directors consider it appropriate accurate, reliable and timely; Finance department of valuation and to ensure that a consistent approach is applied to adopt the going concern basis of accounting in preparing the • the Group and its employees act with integrity and their The Group’s risk management system is implemented primarily by in similar facts and circumstances, the workgroup developed a financial statements. actions are in compliance with the policies, standards, the Finance department, which is supervised by the Chief Financial Valuation Policy and monitors compliance across all investments. procedures and applicable laws and regulations; Officer and is responsible for the Financial Risks Management The applied valuation methodology makes use of market-based Viability Statement • resources are acquired economically, used efficiently and function. It implements the Group’s financial and tax risks policies by information, is consistent with models generally used by market In accordance with the Corporate Governance Code, the protected adequately; ensuring compliance with: liquidity management thresholds; limits participants and is applied consistently from period to period, Directors are required to assess the prospects of the Company • programmes, plans and objectives are achieved; and on possible losses from the foreign currency risks; tax legislation; except where a change would result in a better estimation of fair to meet its liabilities by taking into account its current position and • significant legislative or regulatory issues that impact the and all financial policies and procedures set by the Management value. The workgroup recommends fair values of private portfolio principal risks. Georgia Capital runs an in-depth annual business organisation are recognised and addressed in a timely and Board. The Finance department, which reports to the Management investments at each reporting date and prepares quarterly planning process, involving both the management of portfolio proper manner. Board, also focuses on the Group’s relationship with the tax valuation reports for the Management Board and the Audit and companies and Group management with Board input and authorities, provides practical advice and tax optimisation plans for Valuation Committee, describing valuation techniques applied oversight. In line with the UK Corporate Governance Code, the the Group and assesses the entire Group’s tax risks and exposures. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 64 65 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Risk Management continued Risk Overview process includes a viability assessment conducted by the Board The Group prepared a reasonable worst case scenario Understanding our risks Principal risks and uncertainties over a three-year period beginning 1 January 2025, being the first which assumes the inability of private portfolio companies We continuously monitor our internal and external environment The table below describes the principal risks and uncertainties day after the end of the financial year to which this report relates. to pay dividends or meet any other obligations towards the to ensure that any new principal or emerging risk is identified in faced by the Group and their potential impact, as well as the In determining the appropriate period over which to make their holding company, the reason for which could be economic a timely manner and responded to appropriately. The Directors trends and outlook associated with these risks and the mitigating assessment, the Directors considered: the duration of strategic consequences of regional instability, GEL depreciation have carried out a robust assessment of the principal and actions we take to address these risks. If any of the following plans and financial forecasts; the diverse nature of the Group’s against the US dollar, market competition and/or operational emerging risks facing the Group, including those that would risks were to occur, the Group’s business, financial condition, activities; the evolving nature of the regulatory environment in underperformance. Supported by strong operating performance, threaten its business model, future performance, solvency results of operations or prospects could be materially affected. which the Group’s businesses operate; the inherent uncertainty starting from 2021 Lion Finance Group restored payment of or liquidity. We define our principal risks as those that have The risks and uncertainties described below may not be the surrounding future capital allocation projections; and the Group’s dividends to shareholders and announced a dividend policy the potential to impact the delivery of our strategic objectives only ones the Group faces. The order in which the principal risks objective, in line with its updated strategy. A period of three years providing for a 30%–50% payout ratio. In 2025, Lion Finance materially. We also monitor risks which include new and emerging and uncertainties appear does not denote their order of priority. beyond the balance sheet date was therefore considered the Group announced that it intends to recommend a final dividend risks which may have the potential to become principal risks but Additional risks and uncertainties, including those that the Group most appropriate viability period for the Group. of GEL 5.62 per share, which together with the interim dividend are not yet considered to be so. Emerging risks usually have large is currently not aware of or deems immaterial, may also result of GEL 3.38 per share paid would make a total of GEL 9.0 per uncertain outcomes which may become certain in the longer in decreased revenues, incurred expenses or other events that In order to consider the Group’s viability, the Board considered share for 2024. On that basis, the stress case scenario includes term (beyond one year) and which could have a material effect on could result in a decline in the value of the Group’s securities. | a number of key factors, including: | | dividend payments from the listed asset. | the business strategy ifthey were to occur. | | | --- | --- | --- | --- | --- | | • | the Board’s risk appetite; | | | | | • | the Group’s business model and strategy as set out on pages | Group also analysed stressed case scenario assuming no | | | | | 8 to 30; | buybacks were made and no dividends were received from | | REGIONAL INSTABILITY RISK | | • | the Group’s principal and emerging risks and uncertainties, | Lion Finance Group, to reflect the risk of changes in the Bank’s | | | PRINCIPAL RISK / principally those related to regional instability, portfolio strategic plans, including its capital distribution policy. The Georgian economy and our business may be adversely affected by regional tensions. Georgia shares UNCERTAINTY company strategic and execution risk, investment risk, borders with Russia, Azerbaijan, Armenia and the Republic of Türkiye, and has two breakaway territories, adverse economic conditions, the depreciation of the Lari, In 2023, the Group issued US$ 150 million SLB In Georgia, with Abkhazia and the Tskhinvali/South Ossetia regions. Georgia is also located in close proximity to other lack of liquidity, and climate change-related risk, and how 8.5% interest rate, payable in August 2028. The proceeds from regional conflicts. In addition to strong political and geographic influences, regional countries are highly these risks and uncertainties are managed, as set out on the transaction, together with the existing liquid funds were fully linked to the Georgian economy, representing its significant historical trading partners. pages 65 to 74; and used to redeem GCAP’s US$ 300 million Eurobonds. Following • the effectiveness of our risk management framework and these transactions, GCAP’s gross debt balance decreased from Russian troops invaded Ukraine on 24 February 2022, escalating the situation into a full-scale war. The internal control processes; and stress testing, as described on US$ 300 million to US$ 150 million. ongoing conflict has caused severe humanitarian and economic costs for Ukraine, Russia and the global this page. economy. Casualties persist as the war’s duration and outcome remain uncertain. As time progresses, In 2024, GCAP announced the sale of 80% of its holding (an the conflict’s adverse effects may intensify, further eroding market confidence and impacting the region. The key factors above have been reviewed in the context of effective 73.9% equity stake) in its beer and distribution business to Georgia itself has a fraught history with Russia, including a brief war in 2008, which resulted in Russia our current position and strategic plan. Since there are no legal Royal Swinkels, a strategic and international purchaser, for net cash taking control of two breakaway territories. guarantees or constructive commitments in place for Georgia proceeds of c.US$ 63 million. Completion of the transaction and the Capital to fund losses or activities at portfolio companies’ level, a receipt of full sales proceeds occurred on 23 December 2024. There has also been ongoing geopolitical tension, political and economic instability and military conflict stress test analysis was prepared on a holding company level. between other regional countries. For example, Armenia and Azerbaijan have been in on/off conflict The Directors have also satisfied themselves that existing cash since 2020, with an escalation in late 2023 resulting in approximately 110,000 ethnic Armenians fleeing The viability assessment involved a risk identification process and highly liquid debt and equity investment securities will be Azerbaijan to Armenia. While negotiations regarding the peace treaty between Armenia and Azerbaijan which included recognition of the principal risks to viability sufficient to cover the expected cash outflows of the holding continue, tensions remain. These developments have implications for Georgia, which shares borders with (risks that could impair the Group’s business model, future companies for the viability assessment period. They have also both Armenia and Azerbaijan. performance, solvency or liquidity), excluding risks not sufficiently collected necessary evidence to support the statement below severe over the period of assessment for the Group. The principal in terms of the effectiveness of the Group’s risk management On 7 October 2023, Hamas launched a surprise assault on Israeli territory, prompting Israel to declare a risks and uncertainties identified by the Group are regional framework and internal control processes in place to mitigate risk. state of war and initiate a large-scale ground invasion of the Gaza Strip. This conflict is ongoing with the instability, regulatory, investment, liquidity, portfolio company As at 31 December 2024, Georgia Capital holds GEL 278 million risk of the conflict spreading further into the Middle East remaining high, including potential escalations strategic and execution, and currency and macroeconomic assets across cash and marketable debt securities. Additionally, with Iran (as have already been seen during 2024). This conflict and the ongoing peace negotiations environment-related risks. Further, the Group has identified the Group also holds GEL 1,421 million equity securities of involving the United States have drawn widespread international condemnation. Given Georgia’s proximity climate change-related risk as an emerging risk. London Stock Exchange listed Lion Finance Group PLC as at to the Middle East, any further escalations, and a continuing conflict in Gaza, have the potential to 31 December 2024. Therefore, in a worst-case scenario, with adversely affect the Group. We also identified other risks which, while not necessarily severe risks modelled to materialise simultaneously and for a sustained in themselves, could escalate when combined with others. period of time, the likelihood of the Group having insufficient The regional instability described above poses potential risks to Georgia’s economic and political resources to meet its financial obligations is very low. Based on environment, potentially affecting trade routes, investment flows and overall regional security. Georgia’s For those risks considered sufficiently severe to affect our viability, the analysis described above, the Directors confirm that they have strategic location as a transit hub underscores the importance of stability in neighbouring countries for its we performed stress testing for the assessment period, which a reasonable expectation that the Group will be able to continue own economic and security interests. involved modelling the impact of a combination of severe and operations and meet its liabilities as they fall due over the three- plausible risks in separate and combined adverse scenarios. year period from 1 January 2025 to 31 December 2027. On 14 May 2024, Georgia’s ruling party passed the contentious foreign agents law. The legislation has The stress test scenario was then reviewed against the Group’s been widely criticised in certain media. In the parliamentary elections on 26 October 2024, the ruling current and projected liquidity position. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 66 67 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Risk Overview continued REGIONAL INSTABILITY RISK CONTINUED REGIONAL INSTABILITY RISK CONTINUED PRINCIPAL RISK / MITIGATION On 27 December 2024, the US sanctioned Bidzina Ivanishvili, the founder and honorary chairman of The Group actively monitors significant developments in the region and risks related to political instability and UNCERTAINTY Georgia’s ruling Georgian Dream party, accusing him of obstructing Georgia’s Euro-Atlantic aspirations. the Georgian Government’s response thereto. It also develops responsive strategies and action plans of its CONTINUED Despite mounting diplomatic pressure, the Georgian Government introduced harsher penalties for own. The Georgian export market shifted away from the Russian market after Russia’s 2006 embargo, and protesters, deepening fears of political repression. the Group participated in that shift. In 2024, Russia accounted for 10.4% of Georgian exports, as opposed to 17.8% in 2005. 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 Since the beginning of the Russia-Ukraine war, the migration effect from Russia, Ukraine and Belarus has pressure on our operating model, revenue streams, financial position and the valuations of both our listed altered the composition of foreign currency inflows from remittances and international visitors. The migration and private portfolio companies. 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, KEY DRIVERS / The Russian invasion of Ukraine has led to profound economic disruption, marked by a sharp decline in TRENDS while international travel receipts increased substantially from the three countries directly after the start of the market confidence, the imposition of unprecedented sanctions on the Russian economy, and heightened war, tourism revenues from those countries have been declining since 1H23 on the back of the fading impact spillover risks. As the situation remains uncertain, further economic repercussions are expected. Ongoing of war-related migration. In 2024, tourism revenues from the rest of the world were the driving factor behind peace negotiations involving the United Status and countries in Europe have not yet, as at the date of this a 7.3% y-o-y growth in travel receipts. In contrast, receipts from Russia, Ukraine and Belarus fell by 9%, report, delivered lasting peace for Ukraine. These developments have introduced new uncertainties into 19% and 6% y-o-y, respectively. Whilst elevated foreign currency inflows have effectively constituted rising global markets, with potential implications for economic stability and international relations. 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 The September 2023 Azerbaijan offensive in the Nagorno-Karabakh region, and the subsequent dissolution inflows predominantly from Russia, both remittance inflows and tourism receipts remain diversified. This of the breakaway Nagorno-Karabakh republic, has significantly altered the geopolitical status quo in the diversification has proved crucial in 2023, as inflows from the rest of the world have compensated for a Caucasus. While Russian peacekeeping forces remain in the region, the Armenia and Azerbaijan conflict is decline in inflows from Russia. As travel resumes globally, it is hoped that the rising trend of tourism revenues yet to result in mutually acceptable terms for a conclusive peace treaty, although negotiations are ongoing. from the EU will continue, as the EU share in travel receipts reached 13% in 2024. Long-term geopolitical implications of the Israel-Hamas war for the wider region remain highly uncertain. Merchandise exports also remain diversified, although CIS share in export surged after Russia’s invasion of While Georgia’s economic exposure to Israel on a macro level is not particularly large, Israel is an important Ukraine, as the “middle corridor” gained importance. Kyrgyzstan and Kazakhstan became the top destination source of remittances and tourism revenues. In 2024, Georgia’s merchandise exports to Israel totalled US$ countries for Georgian exports in 2024, accounting for 20% and 13% of total exports respectively (1.7% 37 million (0.6% of the total), while remittances from Israel made up US$ 249 million (7.4% of the total) in and 4.3% in 2022), followed by Azerbaijan with 11% and Russia with 10% (12.1% and 11.5% in 2022, 2024 and tourism receipts equalled US$ 436 million in 2024 (9.9% of the total). 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). 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 While financial market turbulence and geopolitical tensions affect regional trading partners, Georgia’s and the Tskhinvali/South Ossetia regions. Russian troops continue to occupy the regions, and tensions preferential trading regimes, including DCFTA with the EU and FTA with China, support the country’s between Russia and Georgia persist. There have been a series of events over the years which have further resilience against regional external shocks. In December 2023, the European Council granted Georgia the strained the relationship between the two countries. status of a candidate country. Deepening integration with the EU promises enhanced economic security and further development opportunities for the Georgian economy. 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 The 2024 European Commission Enlargement Report on Georgia highlights significant challenges in the Georgia, driven by a pro-EU populace and concerns over the law’s potential to curb civil liberties. Western country’s progress toward EU membership, particularly regarding democratic reforms and rule of law. The partners criticised the law for failing to align with EU standards. Despite a presidential veto, the parliament Report notes that the granting of candidate status to Georgia has not been followed by sufficient political overrode it on 28 May 2024, escalating political tensions. The law jeopardises Georgia’s relationships with commitment of the authorities to implement the necessary reforms for the country’s progress on the EU path. Western allies and poses a significant obstacle to its Euro-Atlantic integration ambitions. In response to As a consequence, Georgia’s accession process has de facto been halted. 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 While Georgia has strengthened its ties with the EU over the past decade, the recent developments have officials for their roles in violent crackdowns against protesters and journalists. The US Treasury’s Office of severely impacted its trajectory. The adoption of the controversial “transparency of foreign influence“ law, Foreign Assets Control also designated two officials from Georgia’s Ministry of Internal Affairs under the strongly opposed by Western nations, and the decision to halt EU accession talks until 2028 have strained Global Magnitsky Act for human rights abuses, while some countries, including the Baltic states, imposed Georgia’s relationship with the EU. 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 Despite elevated uncertainty, Georgia’s economy demonstrated robust growth. Preliminary data indicates Dream party, accusing him of undermining Georgia’s democratic and Euro-Atlantic aspirations for the that the economy continued to expand, achieving a y-o-y growth rate of 9.5% in 2024. Foreign exchange benefit of Russia. 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 Despite growing diplomatic pressure, the Georgian Government advanced legislation imposing stricter uncertainties. The Georgian Lari depreciated as negative sentiment increased demand for hard currency. penalties on protesters, including prolonged prison sentences for those involved in anti-government In response, the NBG actively intervened in the foreign exchange market to manage expectations. While it activities. The volatility surrounding this event led to depreciation of the Georgian Lari (GEL) by 8.0% was a net buyer of US$ 287 million from January to April, it became a net seller, offloading US$ 874 million from its 2024 low to its peak. The sovereign spread of Georgia widened as investors demanded higher between May and October. Overall, the GEL depreciated by 4.2% y-o-y in 2024, despite strong economic premiums for holding Georgian debt, reflecting increased perceived risks associated with the country’s fundamentals and solid FX inflows. political environment. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 68 69 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Risk Overview continued CURRENCY AND MACROECONOMIC ENVIRONMENT RISKS CURRENCY AND MACROECONOMIC ENVIRONMENT RISKS CONTINUED PRINCIPAL RISK / KEY DRIVERS / Unfavourable dynamics of major macroeconomic variables, including the depreciation of the Georgian Lari Due to the recent political developments and the introduction of the “transparency of foreign influence” law, UNCERTAINTY TRENDS against the US Dollar, may have a material impact on the Group’s performance. Fitch downgraded the outlook to stable from positive in June 2024 and negative from previously updated CONTINUED stable outlook in December 2024, citing increased political uncertainty and weakened public trust. On the macro level, the country’s free-floating exchange rate works well as a shock absorber, but on Although political risks and uncertainties remain high, Fitch expects 2025 real GDP growth to be at 5.3%, the micro level, currency fluctuations have affected and may continue to adversely affect the Group’s while inflation to be 2.1% on average. 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 MITIGATION The Georgian economy remains vulnerable to external shocks due to a mix of its historically high current of exchange rates. The risk is mainly caused by significant open foreign currency positions in the balance account deficit, low domestic savings rate and high level of dollarisation. The current account deficit sheets of the Group and the portfolio companies. 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 KEY DRIVERS / The Group’s operations are primarily located in, and most of its revenue is sourced from Georgia. Factors in the service balance. NBG continued to increase buffers during the first four months of 2024, purchasing TRENDS such as GDP, inflation, interest and currency exchange rates, as well as unemployment, personal income, a net total of US$ 287 million. However, it sold US$ 220 million between May and June 2024 to address tourist numbers and the financial situation of companies, can have a material impact on customer demand negative expectations arising from the introduction and approval of the “transparency of foreign influence” for its products and services. 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 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 The Group continually monitors market conditions, reviews market changes and also performs 2024, as introduction of the ‘transparency of foreign influence’ law increased uncertainty and led street stress and scenario testing to test its position under adverse economic conditions, including adverse protests. GEL experienced another wave of sell-off during October (particularly around the parliamentary currency movements. 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 The currency risk management process is an integral part of the Group’s activities; currency risk is premium and surging negative expectations. Looking at the trading partners’ currencies and overall GEL managed through regular and frequent monitoring of the Group’s currency positions and through the position, Real Effective Exchange Rate (REER) depreciated by 5.9% y-o-y in December 2024, while timely and efficient elaboration of responsive actions and measures. Senior management reviews the nominal effective exchange rate (NEER) appreciated by 2.1% on the back of the weakening trading partner overall currency positions of the Group several times during the year and elaborates on respective overall currencies against the US Dollar after the US election. 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 NBG raised the monetary policy rate by 300 bps during March 2021-April 2022 to 11%, responding to across different currencies and engages in currency risk mitigation agreements, such as currency hedges, high inflation, subsequent rising inflationary expectations and increased uncertainty. Inflation has been forwards and swaps. Control procedures involve regular monitoring and control of the currency gap and below the 3% target since April 2023, reaching 2.4% y-o-y in February 2025 and averaging 1.1% for currency positions, running currency sensitivity tests and elaborating response actions/steps based on the 2024. Considering the strong disinflation, as well as favourable macro dynamics NBG has begun a gradual results of the tests. 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 REGULATORY AND LEGAL RISKS policy rate depending on the macroeconomic developments. PRINCIPAL RISK / The Group owns businesses operating across a wide range of industries: banking, healthcare, retail UNCERTAINTY According to the latest projections from the Ministry of Finance, public debt is expected to decrease to 36% (pharmacy) and distribution, property and casualty insurance, medical insurance, real estate, water utility of GDP in 2024, while the fiscal deficit will remain steady at 2.5% of GDP, in line with fiscal rule bounds. 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 Real GDP continued its strong performance in 2024, growing by 9.5% y-o-y, despite increased uncertainty. predict what additional regulatory changes will be introduced in the future or the impact they may have Georgia has been among the top performers in the world according to the IMF and the World Bank. In the on our operations. 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 Georgia Capital and its businesses may also be adversely affected by risks related to litigations arising from further accelerated due to rising external demand. The current account deficit remained low at 3.5% of GDP time to time in the ordinary course of business. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 70 71 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Risk Overview continued REGULATORY AND LEGAL RISKS CONTINUED REGULATORY AND LEGAL RISKS CONTINUED KEY DRIVERS / KEY DRIVERS / Each of our businesses is subject to different regulators and regulations. Legislation in certain industries, Retail (pharmacy) litigation TRENDS TRENDS such as banking, healthcare, energy, insurance and utilities is continuously evolving. Different changes, In December 2023, the Georgian National Competition Agency (the “Agency”) imposed fines on four CONTINUED including but not limited to governmental funding, licensing and accreditation requirements and tariff companies in the Georgian pharmaceutical retailers’ sector, including GCAP’s retail (pharmacy) business, structures, may adversely affect our businesses. 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) Regulatory developments in recent years have been particularly hard to anticipate in the healthcare sphere, business is GEL 20 million derived by utilising the single rate across all the alleged participants. The retail where Georgia switched to a universal healthcare model in 2013 and a series of changes to the model since (pharmacy) business has appealed the Agency’s decision in court and plans to vigorously defend its it was introduced have negatively affected our hospitals and, more recently, our retail (pharmacy) business. position. No date of hearing has been set yet. While we expect that the multi-year regulatory reset in healthcare is now coming to a close, there are noassurance that further regulatory changes in healthcare or other sectors will not adversely affect us. 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 Except for the three cases listed below, there were no governmental, legal or arbitration proceedings portfolio is well diversified, limiting exposure to particular industry-specific regulatory risks. (including any such proceedings which are pending or threatened of which GCAP is aware) during the 12months preceding the date of this document which may have, or have had in the recent past, In line with our integrated control framework, we carefully evaluate the impact of legislative and regulatory significant effects on either GCAP and/or its portfolio companies’ financial position or profitability. 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 Imedi L litigation possible in constructive dialogue with regulatory bodies and seek external advice on potential changes As at 31 December 2024, several portfolio companies (hospitals, clinics and P&C insurance, together the to legislation. We then develop appropriate policies, procedures and controls as required to fulfil our “Defendants”) were engaged in litigation with the former shareholders of Insurance Company Imedi L who compliance obligations. Our compliance framework, at all levels, is subject to regular review by Internal allege that they sold their 66% shares in Imedi L to the Defendants under duress at a price below market Audit and external assurance providers. 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 Our integrated control framework also ensures the application and development of mechanisms for was later overruled and, upon reconsideration, the First Instance Court partially satisfied the claim and identifying legal risks in the Group’s activities in a timely manner, the monitoring and investigation of the ruled that US$ 12.7 million principal amount plus an annual 5% interest charge as lost income (c.US$ Group’s activities in order to identify any legal risks, the planning and implementation of all necessary 21 million in total) should be paid by the Defendants. The Defendants appealed the decision of the First actions for the elimination of identified legal risks, participation in legal proceedings on behalf of the Group Instance Court. Several hearings have taken place at the Appellate Court and as of 31 December 2024, where necessary and the investigation of possibilities for increasing the effectiveness of the Group’s legal the case is still at the stage of consideration at the Appellate Court. No date for the next hearing date has documentation and its implementation in the Group’s daily activities. The framework also considers the been set. engagement of external legal advisors, when appropriate. The Defendants are confident that they will prevail and accordingly no provision of potential liability in the INVESTMENT RISK financial statements has been made. Management shares the Defendants’ assessment of the merits of the PRINCIPAL RISK / case and considers that the probability of incurring losses on this claim is low, and accordingly, fair values The Group may be adversely affected by risks in respect of specific investment decisions. UNCERTAINTY of portfolio companies do not take into account the potential liability in relation to this litigation. KEY DRIVERS / An inappropriate investment decision might lead to poor performance. Investment risks may arise BGA Litigation TRENDS from inadequate research and due diligence of new acquisitions and bad timing of the execution of As at 31 December 2024, Georgia Education Group, LLC (“GEG”) was involved in litigation with the both acquisition and divestment decisions. The valuation of investments can be volatile in line with minority partner of the British Georgian Academy, LLC (“BGA”). The minority partner initially was claiming market developments. 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, MITIGATION The Group manages investment risk with established procedures and a thorough evaluation of target the minority partner later withdrew the lawsuit and submitted a new claim to the court, seeking GEL 0.3 acquisitions. Investment opportunities are subject to rigorous appraisal and a multi-stage approval million in damages, once again alleging that GEG failed to invest in BGA’s development. On 6 February process. Target entry and exit event prices are monitored and updated regularly in relation to market 2025, the minority partner filed an amended claim with the court, seeking damages in the amount of US$ conditions and strategic aims. The Group performs due diligence on each target acquisition including on 15.5 million, termination of the MoU, and the consequent return of 70% of BGA’s stake in the minority financial and legal matters. Subject to an evaluation of the due diligence results an acceptable price and partner’s ownership. 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 GEG’s assessment of the claim is that the claimant’s allegations are based on false factual grounds and and sale of investments and decides on all major new business initiatives, especially those requiring a are without any legal merit. In particular, GEG’s position is that it is the minority partner who failed to significant capital allocation. The Board focuses on both investment strategy and exit processes, while also honour investment commitments under the MoU. Management shares GEG’s assessment of the merits actively managing exit strategies in light of the prevailing market conditions. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 72 73 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Risk Overview continued LIQUIDITY RISK PORTFOLIO COMPANY STRATEGIC AND EXECUTION RISKS PRINCIPAL RISK / PRINCIPAL RISK / Risk that liabilities cannot be met, or new investments made, due to a lack of liquidity. Such risk can arise Market conditions may adversely impact our strategy and all our businesses have their own risks specific UNCERTAINTY UNCERTAINTY from not being able to sell an investment due to lack of demand from the market, from suspension of to their industry. Our businesses have growth and expansion strategies and we face execution risk in dividends from portfolio companies, from not holding cash or being able to raise debt. implementing these strategies. KEY DRIVERS / The Group will normally seek to monetise its investments, primarily through strategic sales, typically The Group predominantly invests in private portfolio businesses, potentially making the investments difficult TRENDS to monetise at any given point in time. There is a risk that the Group will not be able to meet its financial within five to ten years from acquisition, and we face market and execution risk in connection with exits at obligations and liabilities on time due to a lack of cash or liquid assets or the inability to generate sufficient reasonable prices. liquidity to meet payment obligations. This may be caused by numerous factors, such as: the inability KEY DRIVERS / to refinance long-term liabilities; suspended dividend inflows from the investment entity subsidiaries; Each of our portfolio companies face its own risks. These include risks inherent to their industry, or to their TRENDS excessive investments in long-term assets and a resulting mismatch in the availability of funding to meet industry particularly in Georgia, and each faces significant competition. They also face the principal risks liabilities; or failure to comply with the creditor covenants causing a default. and uncertainties referred to in this table. MITIGATION Macroeconomic conditions, the financial and economic environment and other market conditions in 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 international capital markets may limit the Group’s ability to achieve a partial or full exit from its existing or of the Group to fund under both normal conditions (Base Case) and during stressed situations. This future businesses at reasonable prices. It may not be possible or desirable to divest, including because approach is designed to ensure that the funding framework is sufficiently flexible to ensure liquidity under suitable buyers cannot be found at the appropriate times, or because of difficulties in obtaining favourable a wide range of market conditions. The Finance department monitors certain liquidity measures on a daily terms or prices, or because the Group has failed to act at the appropriate time. basis and actively analyses and manages liquidity weekly. Senior management is involved at least once MITIGATION a month and the Board on a quarterly basis. Such monitoring involves a review of the composition of the For each business, we focus on building a strong management team and have successfully been able to cash buffer, potential cash outflows and management’s readiness to meet such commitments. It also do so thus far. Management succession planning is regularly on the agenda for the Nomination Committee serves as a tool to revisit the portfolio composition and take necessary measures, if required. 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 Since the adoption of the capital management framework and introduction of the NCC navigation tool in governance of our businesses. We hold management accountable for meeting targets. 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. 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 In August 2023, JSC Georgia Capital successfully issued a US$ 150 million sustainability-linked bond global experience in relevant industries. We carry our private portfolio companies at fair value in our NAV (SLB). The proceeds from the transaction, together with existing liquid funds of GCAP, were utilised to Statement. The valuations are audited, increasing the credibility of fair valuation and limiting the risk of fully redeem the US$ 300 million Eurobond. Following the cancellation and repayment of the outstanding mispricing the asset. In addition, the valuation of private large and investment portfolio companies (52.9% Eurobond, GCAP’s gross debt balance has been reduced from US$ 300 million to US$ 150 million over of total portfolio value) is performed by an independent valuation company on a semi-annual basis. the last two years, significantly improving its leverage profile. The Group has a strong track record of growth and has accessed the capital markets on multiple Overall, since the introduction of the NCC concept in 1Q22, the NCC ratio has decreased significantly, occasions. Our acquisition history has also been successful, and we have been able to integrate from 28.2% at 31 March 2022 to 12.8% at 31 December 2024. The Group aims to maintain the NCC businesses due to our strong management with integration experience. In 2022, GCAP completed the ratio below 15%. The deleveraging strategy was also implemented across our private portfolio companies, water utility business disposal, which represents our most significant monetisation event to date and marks where individual leverage targets have been developed. 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, In October 2023, S&P updated GCAP’s issuer credit rating from “B+” to “BB-/Stable”. which was sold to a strategic international investor. Details of this transaction are provided on page 8 of this report. 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. | | | Strategic Review Strategic Review | Strategic Review Strategic Review | Strategic Review Strategic Review | | | | --- | --- | --- | --- | --- | --- | --- | | 74 75 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information Governance Financial Statements Additional Information | 75 | | | | Overview Overview | Our Business Our Business | Discussion of Results Discussion of Results | | | ## Risk Overview continued 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. Location: Poti, Georgia | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 76 77 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Resources and Responsibilities Investing in socially and 2. Strengthening ESG risk companies. Georgia Capital monitors the environmentally oriented industries assessment and management portfolio companies’ ESG performance ## ESG principles lie at the heart | As the largest employer in the Georgian | processes | and uses its resources to encourage | | --- | --- | --- | | private sector, we believe that our | In 2024, Georgia Capital took significant | the adoption of ESG best practices. It is | | Group and portfolio companies have a | steps to enhance its internal ESG | supplemented with an Environmental and | ## of our business | | | | responsibility to improve the future of | risk assessment and management | Social Policy. Through the Responsible | | --- | --- | --- | --- | --- | --- | | | | | our community by building sustainable | framework. Key initiatives included the | Investment Policy, ESG considerations | | | | | businesses for tomorrow. | development and formalisation of GCAP’s | are embedded into the deal process, | | | | | | ESG risk assessment and management | from the initial investment stage to active | | In order to effectively manage the Group’s | well-being of local communities, | risk management, and metrics and targets | | | | | | | | We have a strong track record of investing | process across the investment cycle, | ownership. Details on how we implement | | direct and indirect impact on society and | while managing our environmental | related to climate change mitigation. | | | | | | | | and managing our portfolio responsibly, | the introduction of sector-specific initial | the Responsible Investment Policy can be | | the environment, the Board of Directors | footprint responsibly. | | | | | | | | | facilitated by operating according to our | investment appraisal procedures, and the | found in our Sustainability Report. | | have adopted a Code of Conduct and | | Further detailed information can be | | | | | | To reinforce our commitment to | | clear and proven governance model | implementation of periodic information | | | Ethics, as well as policies that relate | | found in our Sustainability Report, a | | | | | | | | and an extensive network of top-quality | checklists. These advancements were | In 2023, the Board revised the schedule | | to environmental and social matters, | responsible corporate governance, we | supplement to our Annual Report which | | | | | | | | talent. Our approach to ESG matters is | supported by a Georgia-based external | of matters reserved for the Board, | | responsible investing, employees, anti- | adhere to our Environmental and Social | enables the Group to provide more | | | | | | | | reflected in the strategy and management | ESG specialist, ensuring alignment with | including to explicitly cover any duties | | corruption and anti-bribery. We invite you | Policy. Georgia Capital is dedicated to | detailed and comprehensive reporting | | | | | | | | principles of our portfolio companies, all of | best practices. | previously reserved to the Investment | | to read more about these initiatives in the | conducting business in a socially and | of our ESG operations in alignment | | | | | | | | which adhere to sound ESG standards, as | | Committee, and further to make it clear | | sections below and in conjunction with | environmentally responsible manner, | with the TCFD recommendations and | | | | | | | | well as local policies and regulations. | 3. Formalising a stakeholder | that the Board had primary responsibility | | our Sustainability Report and the rest | reducing our environmental impact, | recommended disclosures. | | | | | | | | | engagement plan | for overseeing environmental and social | | of the Annual Report. The non-financial | and enhancing social performance to | | | | | | | | | Our recent ESG developments | In addition to enhancing its ESG risk | risks and that the Company’s strategic | | information and sustainability statement | maximise long-term shareholder returns. | Our Sustainability Report is available on | | | | | | | | 1. Participation in COP29 roundtable | assessment and management, Georgia | direction is regularly informed by material | | as required by section 414CB of the | We remain committed to achieving our | our website: https://georgiacapital.ge/ | | | | | | | | discussion | Capital established a formal stakeholder | environmental and social issues. Given | | Companies Act 2006, which aims to | strategic and investment objectives while | ir/sustainability-reports. | | | | | | | | In 2024, Azerbaijan hosted the United | engagement plan to strengthen trust, | the small size of the Board and the | | provide material and relevant information | upholding our responsibilities as both an | | | | | | | | | Nations Climate Change Conference | collaboration and alignment with its | importance of these matters, including | | on the commitment to, management of | employer and global corporate citizen. | Non-Financial and Sustainability | | | | | | | | (COP29), during which Georgia Capital | stakeholders. | climate change, the Board believes that it | | and developments in Georgia Capital’s | | Information Statement | | | | | | | | was invited by the Asian Development | | is appropriate for the whole Board to be | | ESG practices for the financial year | Task Force on Climate-related | The Company is required to disclose | | | | | | | | Bank to join the soft launch of a transition | 4. ADB impact award | responsible for these issues. | | ending 31 December 2024, is also cross | Financial Disclosures (“TCFD”) | certain information on the way we operate | | | | | | | | finance research paper in Baku. The event | In 2024, Georgia Capital was honoured | | | referenced below. | The Group has complied with the | and manage social and environmental | | | | | | | | was followed by a closed-door roundtable | with an Impact Award by the ADB’s | For the updated schedule of matters | | | requirements of UKLR 22.2 and the | challenges. The following table | | | | | | | | discussion, where representatives from | Central and West Asia Department in | reserved for the Board please refer to: | | With a portfolio valued at GEL 3.8 billion, | requirements under the Companies | summarises where you can find further | | | | | | | | leading financial sector players, including | recognition of its issuance of the largest | https://georgiacapital.ge/governance/ | | we recognise the significant impact our | (Strategic Report) (Climate-related | information on each of the key areas of | | | | | | | | GCAP, addressed the challenges and | corporate SLB listed on the Georgian | cgf/schedule. | | decisions have on a broad range of | Financial Disclosure) Regulations | disclosure. Information on our policies | | | | | | | | opportunities surrounding transition | Stock Exchange. | | | stakeholders, particularly within Georgia. | 2022 by including climate-related | can be found on our website at: | | | | | | | | finance. The event provided GCAP with | | To reinforce its commitment to continuous | | As the largest employer in the Georgian | disclosures consistent with the | https://georgiacapital.ge/governance/ | | | | | | | | an opportunity to share insights on the | Governance | improvement, Georgia Capital periodically | | private sector, with over 20,200 employees | TCFD recommendations and | cgf/policies. | | | | | | | | key barriers the financial sector faces in | Georgia Capital recognises the | engages Amandla UK Limited (“Amandla”) | | as of December 2024, Georgia Capital is | recommended disclosures. | | | | | | | | | supporting the transition to a low-carbon | importance of maintaining sound | to evaluate the Board’s effectiveness. | committed to creating value not only for | | | | | economy and to discuss strategies for | corporate governance practices and | In 2023, a comprehensive review was | | --- | --- | --- | --- | --- | --- | --- | | investors but also for society. We invest in | TCFD disclosures on pages 85 to 92 | | | | | | | | | | | encouraging smaller firms to embrace | supports high standards of corporate | conducted using a multi-faceted approach, | | the development of our employees and | present the Company’s perspective on | | | | | | | | | | | decarbonisation. | governance in delivering value to our | including online interviews with Directors, | | contribute to the economic and social | four core pillars of governance, strategy, | | | | | | | | | | | | stakeholders. For full details of our | individual feedback assessments, group | | | | Annual | Sustainability | | governance structure and processes, | coaching sessions, and direct observation | | | | Report page | Report page | | | of Board meetings. The evaluation | please see the Corporate Governance Reporting requirement Further details reference reference Relevant policies section of this Annual Report. confirmed the Board’s effectiveness in Social matters Promoting local community Page 78 Page 15 Environmental and Social Policy governance, supervision and oversight, Sponsorship and charity Page 78 Page 14 Responsible Investment Policy Our Responsible Investment Policy is highlighting its capacity to drive sustainable Promoting and enhancing a healthy lifestyle Page 78 Page 13 integrated into the investment and portfolio impact across operations. Sustainable procurement Page 78 Page 15 management processes and procedures Employee matters Our employees Page 79 Page 11 Code of Conduct and Ethics and is supported by enhanced due Talent attraction, training and development Page 79 Page 12 Responsible Investment Policy diligence questionnaires. The policy covers | Diversity Page 80 Page 10 Diversity Policy | Georgia Capital’s responsible investment | | --- | --- | | Human Rights Policy Page 80 Page 14 Whistleblowing Policy | approach and ongoing monitoring of | | Code of Conduct and Ethics Page 80 Page 11 Human Rights Policy | ESG reassessments of the portfolio | Modern Slavery Page 81 Page 14 Anti-Bribery and Anti-Corruption Policy | Environmental | Emission disclosure and | Page 82 Page 5 Environmental and Social Policy | | --- | --- | --- | | matters | calculation methodology | | | | Measures undertaken to improve | Page 84 Page 9 Responsible Investment Policy | the energy efficiency | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 78 79 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Resources and Responsibilities continued Social matters Sustainable procurement Employee matters Total sponsorship and charitable Promoting local community Georgia Capital seeks to engage with Our employees expenditure of the Group and portfolio The Group considers the interests of suppliers whose ESG practices align Recruiting, developing and retaining companies in 2024 its main stakeholders, including local with our commitment to sustainability talent are among our most important communities and the broader Georgian and responsible business conduct. A priorities. We work towards that objective ## 1.6 community, when developing strategies large majority of GCAP’s suppliers are by communicating openly with our GEL million and processes to enhance its operations. professional advisors and consultants, employees, providing training and We adhere to our Environmental and predominantly blue-chip, reputable opportunities for career advancement, Social Policy, striving to contribute to international organisations with sound rewarding our employees fairly and society through our business activities. ESG policies and procedures, which, encouraging employees to give direct This includes the development therefore, have lower exposure to feedback to senior management. We and investment in socially-oriented ESG-related risks. However, our existing recognise the importance of providing products and services, as well as the policies and procedures ensure that a supportive working environment with implementation of responsible approaches an appropriate level of due diligence a healthy work-life balance for all our in our business operations, sponsorship is conducted on prospective suppliers employees, both at the holding company and charitable activities. before they are appointed, or any level and across our portfolio companies. Charity: GEL 1.0mln expenditure is committed. The nature of A key factor in our success is a cohesive Sponsorship: GEL 0.6mln Georgia Capital and its portfolio due diligence is determined on a case- and professional team, capable of which ensures that the opinions of our To manage our employees in a way investments are committed to playing by-case basis, however, as a general rule, accomplishing the Group’s objectives. employees are taken into account when that best supports our business strategy a positive role in our local community, Promoting and enhancing a healthy the procedure safeguards the assessment We are committed to attracting and making decisions that are likely to affect and their professional growth, we seek as shown in the case studies in the lifestyle of risks associated with bribery and identifying the best professionals, caring their interests. to help them contribute to business Sustainability Report. Ensuring the safety of the workplace and corruption, information and data security, and planning for their needs, investing performance through personal and providing healthy working conditions human rights and employment practices, in their development and fostering their Employee satisfaction surveys are professional development. Sponsorship and charity are amongst the Group’s fundamental and other material aspects as determined commitment. The Group developed and regularly conducted at the holding | In 2024, the Group and its portfolio | HR management principles. The Group | during the assessment. | implemented HR policies and procedures | | | | --- | --- | --- | --- | --- | --- | | | | | | company level. These surveys allow | In recent years we created a programme for | | companies spent a total of GEL 1.6 million | pays particular attention to preventative | | which promote the key principles, areas, | | | | | | | | employees to provide anonymous | the Investment department which helped | | in financing sponsorship and charitable | measures, such as conducting regular | In 2024, significant items for Georgia | approaches and methods that are crucial | | | | | | | | feedback regarding their overall | participants to grasp new developments | | activities. As part of the sponsorship and | staff training and medical check-ups, | Capital procurement expenditures | for building human capital management | | | | | | | | experience at Georgia Capital, their | in the field and refresh their knowledge. | | charitable activities, the Group continues | certifying workplaces and promoting a | were audit, valuation and compliance | systems at each business level and | | | | | | | | perceptions of being valued for their | To help the newcomers adapt to the new | | to focus on promoting and enhancing | healthy lifestyle. Consistent with these | services, as well as services sourced from | at Georgia Capital level in line with the | | | | | | | | contributions, and their satisfaction with | working environment, respective teams | | access to education, conserving nature, | principles, Georgia Capital has engaged | professional consultations and investor | above-mentioned policies. | | | | | | | | work-life balance. Additionally, participants | organise comprehensive introductory and | | supporting people with disabilities and | a safety consultancy company that | relations services. The breakdown of | | | | | | | | | offer recommendations for enhancing | cross-department meetings. | | special needs, and facilitating innovative | provides a dedicated safety inspector. | expenditures by type of suppliers is | We maintain a Group-wide Code of | | | the organisational environment. The | projects that focus on social good. | The inspector conducted a safety | provided in the graph. | Conduct and Ethics for our employees | | | | | --- | --- | --- | --- | --- | --- | --- | | | | | | | results of these surveys are compiled and | In addition to specific training courses, | | The sponsorship and charity activities | audit, offered recommendations and | | and other effective HR policies and | | | | | | | | | | communicated to management for further | regular workshops are held in the | | encourage partnerships with various | conducted staff training. Our safety | Expenses by type of suppliers at | procedures covering matters such as: | | | | | | | | | | analysis and consideration. | Company which are linked to more | | foundations and non-governmental | consultant ensures systematic monitoring | Georgia Capital level (FY24) | • | Staff administration, compensation and | | | complex matters, such as business | organisations to deliver sustainable results | to guarantee compliance with globally | | benefits. | | | | --- | --- | --- | --- | --- | --- | | | | | | Talent attraction, training | approaches and the best practices in | | and bring positive change. In doing so, | accepted standards. | • | Recruitment, development and training. | | | | | | | | and development | related fields. Besides in-house training, | | we follow our undertakings in respect of | | • | Diversity and anti-nepotism. | | | | | | | | Sustained development of the Group’s | Georgia Capital provides designated | | social and community matters as set out | Georgia Capital is aware of the damaging | • | Succession planning, departure and | | | | | | | | businesses requires the strengthening | training and certification programmes | | in our Environmental and Social Policy. | impact of stress and anxiety on an | | dismissal. | | | | | | | | of the teams, both by using the Group’s | for various departments through | | | individual. It is Company practice to hold | • | Grievances and whistleblowing. | | | | | | | | own significant internal resources through | third-party resources. | | In 2024, Georgia Capital continued the | workshops to check on employees’ | | | | | staff development and rotation and | sponsorship programme to support the | mental health and to offer face-to-face | | We are committed to employee | | | | --- | --- | --- | --- | --- | --- | | | | | | by attracting external candidates. Our | Georgia Capital values the exchange | | Caucasus Nature Fund, whose purpose is | counselling. Employees are encouraged | | engagement and we believe that effective | | | | | | | | Recruitment Policy and relevant control | of upward, downward and peer | | nature protection in the South Caucasus. | to express their mental health concerns in | | communication is key. We strive to | | | | | | Audit, valuation and compliance | | procedures ensure an unbiased hiring | feedback when it comes to performance | | The fund helps to support the effective | an open manner and seek assistance. We | | provide our employees with a continuous | | | | | | services: 38% | | process that provides equal employment | management. Through the performance | | long-term management of nature in the | provide the opportunity for a flexible work | | flow of information, which includes our | | | | | | Professional consultations and | | opportunities for all candidates. All | evaluation and talent management | | biologically rich, protected territories of | schedule and remote and hybrid working | | corporate culture, the Group’s strategy | | | | | | investor relations services: 27% | | employees at Georgia Capital are | process, several staff members were | | Armenia, Azerbaijan and Georgia. In | arrangements. Respective teams at GCAP | | and performance, risks relating to its | | | | | | Insurance and other services: 21% | | engaged under an employment contract | identified and promoted in 2024. | | 2024, Georgia Capital also supported | track the workload of the employees to | | performance, such as financial and | | | and we do not use zero hours contracts. the Fulbright programme and covered identify if hiring additional staff is required. Legal advisors: 13% economic factors, and our policies and For details on how our portfolio the education and travel expenses of one procedures. We provide information To attract young talent, we actively companies train and enable the high-achieving student. in a number of ways, including via partner with leading Georgian business continuous development of their managers, presentations, email, Group schools and universities, participate in employees, please read our intranet and regular off-site meetings. job fairs and run extensive internships Sustainability Report. There are feedback systems, such as locally and internationally. Georgia Capital employee satisfaction surveys and a continues its talent acquisition project for designated Non-Executive Director for its Investment Officer positions which was workforce engagement at the Board level, launched in 2016. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 80 81 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Resources and Responsibilities continued | Diversity | We are supportive of the ambition shown | | We recognise the importance of observing | Anti-Bribery and Anti-Corruption Policy | | into their reputation and information on | We note that in accordance with our | | --- | --- | --- | --- | --- | --- | --- | --- | | Georgia Capital is fully committed to | in recent reviews on diversity, including | | human rights and are committed to | enforcement processes include: | | whether the company is a related party. | Responsible Investment Policy, we | | providing equal opportunities as an | the Parker Review regarding ethnic | | implementing socially responsible business | • | an anonymous whistleblowing hotline; | The Compliance Officer (the General | expressly do not invest in businesses | | employer and prohibits unlawful and unfair | diversity. The Board is in alignment with | | practices. Our Human Rights Policy | • | an internal whistleblowing process; | Counsel) has the authority to conduct | which have activities involving forced | | discrimination. We believe that there are | recommendations for ethnic minorities | | establishes priorities and puts control | • | disclosure of gifts or other benefits, | periodic compliance checks of the | or child labour. Evaluation of risk is | | great benefits to be gained from having | on UK boards. For details on the Board | | procedures in place to provide equal | | including hospitality offered to, or | operations of the Group. We are pleased | carried out at the pre-investment or pre- | | a diverse workforce. We seek to ensure | diversity please refer to page 171 of the | | opportunities and prevent discrimination | | received by, the Group’s personnel; | to confirm that there have been no | engagement stage through due diligence | | that our corporate culture and policies, | Nomination Committee Report. Similarly, | | or harassment on any grounds, including | • | voluntary disclosure of corrupt conduct; | instances of violation of the Anti-Bribery | and controls, and with post-investment | | particularly our HR policies, create an | we endorse the FTSE Women Leaders | | disabilities. The policy applies to all | • | third-party screening to identify the | and Anti-Corruption Policy in 2024. | implementation and management of | | inclusive work environment that helps to | Review, which primarily targets FTSE 350 | | employees and includes procedures in | | level of risk third parties might pose; | | risk through monitoring and reporting | | bring out the best in our employees. | companies. | | relation to employment processes, training | • | informing the banks/partners/ | Modern slavery | predominantly by the Legal and | | | | | and development, recruitment and on the | | counterparties about anti-corruption | The Group has zero tolerance against | Finance departments who report to the | | Georgia Capital’s Diversity Policy | We are committed to exploring ways to | | continuity of employment of employees who | | and anti-bribery principles before | modern slavery and human trafficking. | Management Board and ultimately the | | establishes a commitment to eliminating | increase female and ethnic representation | | become disabled during their employment. | | commencement of business relations; | We believe in doing business ethically, | Board of Directors. | | unlawful and unfair discrimination and | at both Board and senior management | | | • | ensuring that anti-bribery and anti- | transparently and in full compliance with | | | values the differences that a diverse | levels. Moreover, the Board recognises the | | Code of Conduct and Ethics, | | corruption clauses are incorporated in | all applicable laws and regulations. Even | Environmental matters | | workforce brings to the organisation. | significance of all forms of diversity and | | and Anti-Bribery and | | the agreements with customers and | though we are an investment holding | Committing to the Principles | | | remains steadfast in its commitment to | | Anti-Corruption Policy | | third parties; | company and the risk of modern slavery | of the UN Global Compact | | The Board embraces diversity in all its | continuous progress in this domain. | | The Group has a Code of Conduct and | • | ensuring that anti-bribery and anti- | and human trafficking within our own | Since February 2022, we have been a | | forms. In line with Georgia Capital’s | | | Ethics, as well as an Anti-Bribery and Anti- | | corruption matters are included in | business operations is low, we recognise | signatory of the UN Global Compact and | | Diversity Policy, diversity of gender, | Human Rights Policy | | Corruption Policy, which are applicable to | | contractual agreements with partners/ | that our supply chain could potentially | have officially expressed our commitment | | social and ethnic backgrounds, age, | The Human Resources Policy is an | | the Group companies. As an organisation | | counterparties; and | pose such risks. A large majority of | to its ten Principles, which are then sub- | | disability, race, religion or belief, sex | integral part of the employee on-boarding | | that is fully committed to the prevention of | • | online training programme aiming to | GCAP’s suppliers are professional | divided into 17 Sustainable Development | | or sexual orientation, cognitive and | package at each business level with | | bribery and corruption, the Group ensures | | raise awareness of corruption and | advisors and consultants, predominantly | Goals (SDGs). Georgia Capital introduced | | personal strengths and balance in terms | updates communicated electronically. | | that appropriate internal controls are in | | bribery issues among employees. | blue-chip, reputable international | an initiative to align the portfolio companies’ | | of skills, experience, independence and | | | place and operating effectively. | | | organisations with sound ESG policies | performance with the UN SDGs, which | | knowledge, amongst other factors, will | The Human Rights Policy is part of the | | | As part of the Group’s third-party | | and procedures, which therefore, have | required our portfolio companies to | | be taken into consideration when seeking | Human Resources Policy and covers the | | | screening to identify the level of risk | | lower exposure to ESG-related risks. Our | determine relevant SDGs and implement | | to make any new appointment within the | following: | | | which third parties might pose, the Group | | existing policies and procedures ensure | respective procedures to track their | | business, whether an employee, client, | • | Equal opportunities and anti- | | carries out due diligence such as indirect | | that an appropriate level of due diligence | progress towards the identified goals. | | supplier or contractor. On 31 December | | discrimination. | | investigations, which include general | | is conducted on prospective suppliers | | | 2024, Georgia Capital, had a total of 45 | • | Work environment free of harassment. | | research of the activities undertaken by | | before they are appointed, or any | | | employees, of which 25 are female, and | • | Grievance Policy. | | the proposed business partners, research | | expenditure is committed. | | 20 are male. Gender diversity progress to date 1 | Board of Directors at Georgia Capital PLC | | | | Management at Georgia Capital | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | 5 | | | | | 8 | | 2024 | | 1 | 4 | 2024 | | 3 | 5 | | | 2023 | | 1 | 4 | 2023 | | 3 | | 6 | | | Fem ale Male | | | | Fem ale Male | | | | 2 All employees at Georgia Capital All employees at the Group and portfolio levels | | | | | 45 | | | | 20,259 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2024 | | 25 | | 20 | 2024 | | 15,108 | | 5,151 | | 2023 | | | 27 | 20 | 2023 | | 14,674 | | 5,141 | | | Fem ale Male | | | | | Fem ale Male | | | | 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 82 83 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Resources and Responsibilities continued | Emission disclosure and calculation | Overview of organisation | What we report: | Summary of GHG disclosure | | | | --- | --- | --- | --- | --- | --- | | methodology | The operations of Georgia Capital in | The Group’s “central” operations | The table below summarises the various elements of our disclosure and details the particular GHG emissions and whether they are | | | | Reporting methodology | London and Tbilisi itself have relatively | Our reported data is collected in respect | included or excluded. | | | | In preparing our emissions data, | low energy consumption. However, we | of the Group. Data on emissions resulting | Element Description Included/Excluded | | | | we have used the World Resources | recognise the evolving significance of | from travel is reported for business-related | | | | | | | | Scope 1 – Static fossil fuel Combustion of fossil fuels, e.g. natural | | Excluded – No such processes/equipment owned or | | Institute/World Business Council for | emissions disclosures in the investment | travel only but excludes commuting. As | | | | | | | | | gas, fuel oils, diesel and petrol in stationary | operated by the Group. | | Sustainable Development, Greenhouse | community and in line with our | we do not have any joint ventures, sub- | | | | equipment at owned and controlled sites | Gas Protocol: A Corporate Accounting | commitment to increasing transparency, | leased properties or offshore emissions, | | | | --- | --- | --- | --- | --- | | | | | Scope 1 – Mobile fossil fuel Combustion of petrol, diesel and aviation fuel | Business travel has been included. | | and Reporting Standard (revised edition | we voluntarily disclose emissions for JSC | these have not been included within the | | | in owned/operated vehicles | 2016) as a reference source. We have | Georgia Capital (intermediate Georgian | reported figures. | | | | | --- | --- | --- | --- | --- | --- | | also used the most recent Georgian | holding company) and its portfolio | | Scope 1 – Other emissions Process emissions and refrigerant leakage Excluded – No such processes/equipment owned or | | | | electricity conversion factor taken from | investments. We have reported on all | The data has been obtained from the | | | operated by the Group. | | the JRC Guidebook – “How to Develop | the emission sources listed under the | Group’s locations using both invoices and | Scope 2 – Consumption of | Consumption of electricity Included – Used electricity at owned and controlled | | | a Sustainable Energy and Climate | Companies Act 2006 (Strategic Report | site meter readings. In April 2024, Georgia | electricity | | sites using the most recent Georgia electricity | | Action Plan in the Eastern Partnership | and Directors’ Report) Regulations 2013 | Capital PLC relocated its registered | | | conversion factor taken from the JRC Guidebook – | | Countries”, European Commission, | and the Companies (Directors’ Report) | address to Leeds, UK. The company now | | | How to Develop a Sustainable Energy and Climate | | Ispra, 2018, JRC113659. Further | and Limited Liability Partnerships (Energy | employs a single individual who works | | | Action Plan in the Eastern Partnership Countries, | | conversion factors have been taken | and Carbon Report) Regulations 2018 | remotely, resulting in no GHG emissions | | | European Commission, Ispra, 2018, JRC113659. | | from the UK Government’s “Greenhouse | (Scopes 1 and 2). | from the UK office for the remaining eight | | | | | | | | Scope 2 – Consumption of | Direct consumption of heat, steam or cooling | Excluded – No such thermal energy supplies are | | Gas Conversion Factors for Company | | months of 2024. In 2024, the UK office’s | | | | | | | | thermal energy | generated by others | consumed by the Group. | | Reporting 2024”. Energy consumption | Additionally, we have reported on those | four-month electricity consumption was | | | | | | | | Scope 3 Combustion of petrol, diesel and aviation fuel | | Included – Air business travel (short-haul and long- | | is disclosed in line with the UK | emissions under Scope 3 that are | 1.4MWh, and 3.3MWh for the full year | | | | | | | | | in vehicles owned and operated by others | haul); information on the class of travel is unavailable, | | Government’s Streamlined Energy and | applicable to our businesses’ direct | 2023, with no other recorded sources of | | | | hence, we used an “average passenger” conversion Carbon Reporting (SECR) requirements. operations. All reported sources fall within emissions. These costs were included factor, with radiative forcing. The emissions disclosures are also our financial statements. We do not have within the lease fees. The electricity Included – Ground transportation, including taxis, prepared in accordance with the TCFD responsibility for any emission sources that consumption of the UK office is included coaches, trains, etc., owned and operated by others. requirements and the requirements of are not included in our financial statements. in the Scope 2 emissions calculation. Excluded – Emissions from staff commuting at GCAP section 414 of the Companies Act. As the UK office’s consumption was HoldCo level. immaterial, its emissions are not reported 1 Investments Included – Scope 1, 2 and 3 of our portfolio separately for SECR disclosure purposes. companies where we have a majority stake. The Group’s portfolio Emissions Data from our portfolio companies’ | | 1 | Total GHG emissions (tonnes CO | e) | | | | --- | --- | --- | --- | --- | --- | | Scope 1, 2 and 3 | emissions have been | | 2 | | | | aggregated and presented as a separate | | Data for the period beginning 1 January 2022 and ending 31 December 2024 2022 | | 2 | 2023 2024 | line item under Scope 3 emissions Scope 1 66 73 70 in accordance with the Greenhouse Static fossil fuel (emissions fuel combustion and facility operations) – – – Gas Protocol. GCAP adheres to the Mobile fossil fuel 66 73 70 control approach when determining Scope 2 4 4 4 the greenhouse gas (GHG) inventory Emissions from electricity, heat, steam and cooling purchased for own use 4 4 4 boundaries. Under this approach, we Scope 3 29,057 26,723 27,659 report the GHG emissions of all our private Air travel and ground transportation provided by third parties plus electricity, heat/steam, cooling investments where the Group holds a provided within lease and service agreements 78 35 60 | controlling stake. Therefore, the GHG | | | 3 | | | --- | --- | --- | --- | --- | | | Investment portfolio emissions | | | 28,979 26,688 27,600 | | emissions of Lion Finance Group (19.23% | of which, Scope 1 18,643 17,460 17,561 | | | | | shareholding as of 31 December 2024) | of which, Scope 2 5,064 4,993 5,434 | | | | | and the water utility business (20% interest | of which, Scope 3 (voluntary disclosure) 5,272 4,234 4,605 | | | | | stake as of 31 December 2024) have | Total GHG emissions 29,127 26,800 27,734 | | | | | not been included in the calculations. As | | 4 | | | | | FTEs | at GCAP HoldCo level 48 47 45 | | | Georgia Capital maintained operational Total GHG emissions per FTE (GCAP HoldCo) 606.8 570.2 616.3 control of the beer and distribution business FTEs at GCAP HoldCo and portfolio company levels 19,114 19,815 20,259 until the end of 2024, despite its sale during the year, the business’ GHG emissions Total GHG emissions per FTE have been included in our calculations. (GCAP HoldCo and portfolio company levels) 1.52 1.35 1.37 Lion Finance Group, as a UK listed company discloses Scope 1, 2 and 3 emissions in its annual filings, available at: 1 Portfolio company Scope 3 emissions reported for business travel and employee commuting. https://lionfinancegroup.uk/annual- 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 reports/latest-annual-report/. | | | | 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. | | | --- | --- | --- | --- | --- | --- | --- | --- | | 1 Portfolio company Scope 3 emissions reported for | | 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. | | | business travel and employee commuting. | 4 FTE (“full time employee”) is stated excluding temporary employees. | | | | | | | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 84 85 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Resources and Responsibilities continued SECR Report This report has been produced in accordance with the UK Government’s policy on SECR. As determined by the Greenhouse Gas ## Task Force on Climate-related 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. ## Financial Disclosures 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 The following section reflects Georgia Capital’s response to the TCFD recommendations and the been included for comparative purposes. mandatory reporting requirements set out in the Companies Act 2006 related to Climate-related Energy consumption (in kilowatt hours, kWh) Prior reporting year (2023) Current reporting year (2024) Financial Disclosures. The disclosures have been prepared in line with the all-sector guidance Purchased electricity 41,053 40,769 and, where applicable, reflect the supplementary recommendations for the asset managers. In Gas combustion – – this section, we present the Company’s perspective on four core pillars of governance, strategy, Transport fuel 237,031 228,850 risk management, and metrics and targets related to climate change mitigation. Refrigerants – – 1 Total energy consumption (kWh) 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 ## Governance Gas combustion – 1 – 1 2 | Transport | 32.5 3 56.8 3 | | | | | --- | --- | --- | --- | --- | | Refrigerant emissions – 2 – 2 | | Board oversight | In 2022, the Board supported the initiative | responsibility for overseeing environmental | | | | The Board is entrusted with providing | of incorporating ESG as one of the core | and social risks and that the Company’s | Total gross emissions 36.7 – 60.9 – | | | oversight of climate-related risks and | pillars of GCAP’s strategy. The Board | strategic direction is regularly informed by | | --- | --- | --- | --- | --- | | Intensity ratio (tCO | 2 e per FTE) Total Total | | | | | | | opportunities, aided by the Audit and | also reviewed the alignment of GCAP’s | material environmental and social issues. | | Intensity ratio 2.39 2.98 | | | portfolio operations with the UN SDGs | Given the small size of the Board and the | Valuation Committee. The Audit and | | Valuation Committee and the Board have | and supported the enhancement of ESG | importance of these matters, including | | --- | --- | --- | --- | | Quantification and reporting methodology | responsibility for assessing and managing | transparency. Georgia Capital submits the | climate change, the Board believes that it | | The GHG and energy data presented above has been collated, calculated and presented using methodology following the Greenhouse | climate-related risks and opportunities in | climate change questionnaire to the CDP | is appropriate for the whole Board to be | | Gas Reporting Protocol, and uses the 2024 Government Emission Conversion Factors for Company Reporting. | relation to GCAP’s direct operations and | annually for additional transparency. | responsible for these issues. | to our portfolio companies, as they affect Intensity ratio matters within their remit. The Board is responsible for the approval of Management oversight The intensity ratio used in the table above displays total gross emissions (tCO e) per FTE. the climate-related metrics and targets that Within the management team, the Chief 2 | | | Current, future and emerging risks | have been established by GCAP in 2022. | Financial Officer, supported by the finance | | --- | --- | --- | --- | --- | | Our environmental activities | | are included within the standing item, | It is also responsible for ensuring progress | team, is responsible for identifying risks, | | Measures undertaken to improve energy efficiency | | “Discussion of risks”, of the Audit and | against agreed metrics and targets. | including climate change risks, in relation | | Over the last periods, Georgia Capital has introduced and implemented energy-efficient solutions to further reduce energy consumption | | Valuation Committee and Board agendas. | | to the investment portfolio and including | | by conducting various activities across the Group and portfolio companies. | | Risks, including those relating to climate | In 2023, the Board revised the schedule of | these in the valuation process. The | | | | change, are discussed, and implications | matters reserved for the Board, including | Director of Investments, supported by | | Our portfolio companies continue to implement energy-saving solutions, such as LED lights and other energy-efficient equipment, | | for future strategy are considered, semi- | explicitly stating that it now covered | the Investment Officers, is responsible for | | such as boilers and heating ventilation and air conditioning systems. Our housing development business pioneered the introduction of | | annually, in line with the annual and semi- | any duties previously reserved to the | identifying specific risks and opportunities | | energy-efficient construction materials. In our education business, five of our school campuses successfully introduced solar panels | | annual reports. | Investment Committee, and further to | at the initial investment stage. | | and our other educational infrastructures will follow in due course. Our beverages business reduced energy consumption and carbon | | | make it clear that the Board had primary | | | footprint through its CO | recovery plant, alongside the wastewater treatment plant. The company also introduced the Green Fridge | | | The Chief Financial Officer and Director | 2 Policy which reduces the carbon footprint of cooling bottled and canned products. Additionally, our PTI business adheres to green of Investments report on monitoring of standards, exemplified by the planting of trees in every Tbilisi branch, contributing to a green space that encompasses 20% of the identified financial and climate-related total territory. risks and significant changes through their regular reports to the Management Board. Details of environmental activities of our portfolio companies are reported in our Sustainability Report at Risks are escalated to the Audit and https://georgiacapital.ge/ir/sustainability-reports. 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. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 86 87 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Resources and Responsibilities continued Based on the early-stage scenario • adaptation of operations or assets company, examples are given which are ## Strategy | | | modelling initial tables of potential climate- | to mitigate the effect of physical | considered to have a potential impact on the | | --- | --- | --- | --- | --- | | | | related financial risks and opportunities for | or transition risks. In this example, | portfolio company, if not to the portfolio as a | | In support of the evaluation of climate- | Table 1: Shadow carbon price, global (US$2010/tonnes CO2) | each scenario were prepared. | transition risks and, in particular, | whole. The percentage value of the portfolio | | related risks and opportunities that may | | | opportunities for the GCAP investment | company within the portfolio is provided as | Projected carbon price be present, a review of GCAP’s direct As an example, a summary table of a strategy and portfolio may be driven a broad indicator of likely weighting. NGFS modelled scenario Year 2025 Year 2027 Year 2030 Year 2035 Year 2050 operations and a macro-level review Delayed Transition 1.7°C scenario is by the Georgian Nationally Determined Current Policies 10.7 10.5 10.3 10.2 11.1 presented at Table 2. In this example Contributions and the Georgian 2030 Lion Finance Group of the portfolio companies’ operations were completed. The process was Delayed Transition 1.7°C 10.7 10.5 10.3 98.9 320.4 scenario, the increasing carbon price is Climate Change Strategy and Action (37.8% of total portfolio) followed by a comprehensive quantitative likely to be relevant to each of the portfolio Plan (CCSAP). • Risks – Within the medium term, the Net Zero 2050 98.4 140.8 183.3 294.9 748.8 | assessment, specifically on GHG | | | | | | companies either directly or through | | | | rapid implementation of climate policy | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | inventory management. | | | | | | their supply chains. In addition, potential | | It is noted that under the plausible | | and regulation may result in sharply | | | | | | | | financial impacts under this scenario may | | scenario analysis, there will be little | | increasing direct regulatory expenses | | | Each NGFS scenario explores a different | | • | Net Zero 2050 limits global | | | | | | | | It is considered that indirect climate-related | | | | | | also arise associated with: | | difference in the physical outcomes | | in relation to fixed assets such as the | | | set of assumptions for how climate policy, | | | warming to 1.5°C through stringent | | | | | | | | risks within the portfolio companies will be | | | | | | • | acute physical events, for example, | between Current Policies and Delayed | | Bank’s retail outlets. | | | emissions and temperatures evolve. The | | | climate policies and technological | | | | | | | | more significant than those present within | | | | | | | from increased flooding or land | Transition 1.7°C before 2050. But under | • | Opportunities – In the short term, | | | scenario descriptions using the REMIND- | | | innovation, achieving global net-zero | | | | | | | | the Group’s operations. An early-stage | | | | | | | instability due to intense rainfall on | the Delayed Transition 1.7°C scenario, | | and in mitigation, the Bank is already in | | | MAgPIE 3.3-4.8 model are as follows: | | | emissions around mid-century. This | | | | | | | | scenario analysis was completed as part | | | | | | | operations or physical assets; | there is significant potential for variation | | the advanced stages of implementing | | | • | Current Policies assumes that only | | scenario assumes the immediate | | | | | | | | of the process towards understanding | | | | | | • | chronic physical changes to | in near-term policy action which will | | energy efficiency programmes within | | | | currently implemented policies are | | implementation of ambitious climate | | | | | | | | how the climate impacts identified in the | | | | | | | climate, such as increased average | introduce great uncertainty for businesses. | | its real estate (retail, office and data | | | | preserved, leading to high physical | | policies. Net CO | emissions reach zero | | | | | | 2 | qualitative assessment could present as | | | temperatures affecting the condition | | centres). By anticipating compliance | | --- | --- | --- | --- | --- | --- | | | risks. Emissions grow until 2080 | around 2050, ensuring at least a 50% | | | | | financial risks to GCAP under different | | | or habitability of real estate assets, | A narrative summary of qualitatively identified | with regulations relating to fuel | | | leading to about 3°C of warming. This | probability of keeping global warming | | | | | plausible future scenarios. The findings | | | the physical condition of distribution | macro-level risks and opportunities under | efficiency standards, emissions- | | | scenario is dominated by physical | below 1.5°C by the end of the century, | | | | | and potential risk implications of such | | | networks, and/or community health; | the Delayed Transition 1.7°C scenario | reducing regulations and building | | | risks due to the resulting climate and | with only a limited temporary overshoot | | | | | findings are provided below in the section | | | and | and the potential impact of these risks | efficiency compliance, the Bank | | | weather pattern changes. Transition | in earlier years. While physical risks | | | | | “Scenario analysis of plausible futures”. | | | | is provided in Table 2. For each portfolio | will minimise costs in relation to | | | risks are muted as regulators and | remain relatively low, transition risks are | | | | | | technology are not being driven to | significant due to the rapid policy and | | | | Table 2: Portfolio 2024: Qualitative presence of potential climate-related physical or transition risks under Delayed GCAP’s strategy incorporates strong change beyond current plans. Georgia economic shifts required. Transition 1.7°C consideration of climate change aspects will experience a reduction in the overall (e.g. GCAP’s focus upon renewable 1 2 volume of precipitation across the Carbon prices (including taxation Physical risks Transition risks energy, 6.7% share of the portfolio at country, including a reduction in the measures) are a key policy instrument for Acute Chronic Legal/regulation Market Reputation Technology/digital 31 December 2024, the issuance of the volume of snowfall. Gradual snow melt incentivising carbon emissions reduction. Portfolio company Risk Opp. Risk Opp. Risk Opp. Risk Opp. Risk Opp. Risk Opp. SLB in 2023, and increased focus on will be replaced by more intense rainfall There is a direct relationship between Lion Finance Group sustainability both at GCAP and portfolio run-off. This will result in landscape the ambition (and stringency) of policies company levels). Water utility instability and heightened flood risk and the cost of emissions. The cost of with the potential for infrastructure to emissions is also sensitive to the timing Renewable energy Scenario analysis of plausible futures be overwhelmed. In addition, there and implementation of the policies, the Healthcare businesses: hospitals and Network for Greening the Financial | | | | is an expectation of an increasing | distribution of policies across all industrial | | | | --- | --- | --- | --- | --- | --- | --- | | | 1 | | | | | clinics and diagnostics | | System (“NGFS” | ) climate scenarios were | | | | | | | | | | frequency of heat waves. | sectors and the available technology, for | | | | chosen for their relevance to the finance | | | | | | Retail (pharmacy) | | | | • | Delayed Transition 1.7°C assumes | example for CO | removal. | | 2 sector and to allow for comparability. | | that global annual emissions do not | | Medical insurance | | --- | --- | --- | --- | | | decrease until 2030, necessitating the | The carbon price in Georgia is a key | | | Climate change scenarios for the Republic | | | P&C insurance | | | implementation of stringent policies | variable in determining the future climate- | | of Georgia were explored as follows: | | | to limit warming to below 2°C. The | related financial risk for GCAP. The | Education | | --- | --- | --- | --- | --- | | • | Current Policies (policy ambition of 3°C). | | | | | | | availability of negative emissions | projected carbon price over the short, | | | • | | | | Auto service | Delayed Transition (policy ambition of 1.7°C). | | | technologies is restricted, further | medium and long term under the three | | | --- | --- | --- | --- | --- | | • | Net Zero 2050 (policy ambition of 1.4°C). | | | | | | | complicating mitigation efforts. | plausible scenarios is shown in Table | Beverages | | | | Under this scenario, no new climate | 1. Under Current Policies, there is little | Housing development | GCAP invests over a five-to-ten-year policies are introduced before 2030, change in the carbon price. However, and hospitality horizon. With this in mind, scenario and the scale of action varies across there is a sharp increase in the carbon outputs were considered by GCAP in the countries and regions based on price occurring in about 2030-2035 under Key: short term (year 2027), medium term (year existing policies. This trajectory results the Delayed Transition 1.7°C scenario. Potentially material risk areas 2030) and long term (year 2050). in heightened transition and physical Under the Net Zero 2050 scenario, a Potentially material opportunities for each of the portfolio companies risks compared to the Net Zero global carbon price of 183.3 US$2010/ Blank areas indicate that neither material risks nor material opportunities are anticipated 2050 scenario. tonne CO by 2030 is projected. 2 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). 1 www.ngfs.net. Network for Greening the Financial System Climate Scenarios for Central Banks and Supervisors, November 2024. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 88 89 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Resources and Responsibilities continued | | regulations. In addition, it will lower | | efficiency compliance will reduce overall | | weather such as increased average | | considered to be the future of energy | Beverages | | horizons (short to medium term) than the | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | energy expenditure and generate | | running costs in the medium term. | | temperatures, impacting health. Failure | | and are valued higher than traditional | • | Risks – In addition to physical risks | timeframe in which the impacts of climate | | | a financial benefit, especially | | Good energy management and the use | | of infrastructure may cause longer-term | | electricity generation companies. | | (reduced rain, high intensity events, | change, especially of physical risks, may | | | where renewable energy is utilised. | | of renewable energy will not only lower | | ill health from waterborne diseases. | | | | prolonged heatwaves) affecting hops | manifest themselves in Georgia. The | | | Additionally, the Bank has adopted | | energy expenditure and generate a | | There is also a risk that the Georgian | Education (4.8% of total portfolio) | | | and grape production, the main | exposure of GCAP’s portfolio on certain | | | digital technology to enable all forms | | financial benefit but will also reduce the | | Government introduces a policy for | • | Risks – The potential risks relate to | | identified risk relates to regulatory | industries (presented as a percentage of | | | of digital banking, potentially further | | carbon footprint of the operations. | | insurers to maintain policy cover for | | transition type risks, in particular energy | | transition risk. In particular, carbon | the investment in the total portfolio value) | | | reducing the need for fixed assets. | | | | the “uninsurable”, the costs of which | | and air quality regulations, that may be | | prices and border taxes such as | as well as the investment holding period | | | | P&C insurance | | | may not be possible to pass on to the | | introduced under this scenario at short | | the EU Carbon Border Adjustment | are essential when defining the different | | Since 2021, Lion Finance Group PLC | | (8.3% of total portfolio) | | | insured. | | notice in the medium term. Schools | | Mechanism will adversely affect the | time horizons for the analysis and when | | completes its own TCFD assessment. | | • | Risks – Carbon pricing is a | • | Opportunities – Encouraging | | may be expected to retrofit heating | | prices of both incoming goods and | assessing the materiality of climate-related | | The results are available publicly in | | | fundamental component of the EU’s | | customers to prepare to be resilient | | and cooling measures/equipment to | | exported products in medium term | risks for different investments. | | Lion Finance Group PLC’s Annual | | | climate change agenda. Under the | | with respect to climate risks, for | | meet regulations. In addition, energy | | (post-2030). | | | Report and Accounts which can be | | | Delayed Transition 1.7°C scenario, | | example through premium incentives to | | requirements may arise in response to | | | Management takes climate change risk | | viewed or downloaded at: https:// | | | carbon pricing is expected to rise | | have healthy lifestyles, may contribute | | air conditioner use during prolonged | Housing development and hospitality | | into consideration when determining its | | lionfinancegroup.uk/annual-reports/ | | | sharply after 2030 (medium term). | | positively to the business reputation | | heatwaves for example. These risks are | • | Risks – Physical risks to property will | investment strategy. This is described | | latest-annual-report/. | | | This will see a progressive rise in the | | and customer base. | | expected for all real estate. | | occur. These include deterioration | further in the Risk management section on | | | | | cost of carbon-intensive products and | | | | | | of asset integrity due to flooding or | page 90. Climate change is also reflected | | Water utility (5.0% of total portfolio) | | | services, logistics, distribution and any | Healthcare businesses – hospitals | | Auto service | | | extreme heat. In the medium term | in the valuation assessments of the | | • | Risks – Acute physical risks may | | other operations within the supply chain | and clinics and diagnostics ( | | • | Risks – Currently, vehicles on the | | (post-2030) assets that are not | portfolio companies, as described in the | | | impact utility assets. For example, in | | associated with high-carbon emissions. | 11.0% oftotal portfolio) | | | market and in use in Georgia are | | energy efficient will be hit by energy | Risk management section on page 90. In | | | the short to medium term, extreme rain | | This will have implications for the cost of | • | Risks – under the delayed Transition, | | mainly diesel and petrol-fuelled. Initially, | | efficiency regulation for retrofitting | 2024, we developed and formalised our | | | events may overwhelm infrastructure, | | insurance, which may be passed on to | | itis anticipated that in the medium- | | in the short term, there will be a gradual | | and increased energy costs due to | ESG risk assessment and management | | | causing damaged water treatment and | | the customer. Beginning with transition | | term carbon prices will remain low. | | switch to electric vehicles. After 2030, | | carbon pricing. Additionally, as green | process across the investment cycle, | | | sewage treatment plants. Pipelines | | risks, some lines of business may see | | After 2030, carbon prices may rise | | there will likely be a significant increase | | building technologies advance, failing | introducing sector-specific initial | | | are also at risk from such events, as | | changes in claims patterns as Georgian | | quickly y-o-y towards 2050. The | | in the use of electric vehicles, abruptly | | to adopt sustainable or energy-efficient | investment appraisal procedures, | | | the overall integrity is placed under | | Government policy and regulation | | implications of this will be financially | | reducing the need for emissions | | solutions may render developments | alongside periodic information checklists. | | | pressure. These will require increased | | relating to carbon emissions evolve. This | | more severe for carbon-intensive | | checks. Additionally, the anticipated | | less competitive and result in higher | Going forward we will be exploring how | | | maintenance and repair costs. | | might result in fluctuating loss ratios and | | products, services and operations. | | rise of carbon pricing and adoption | | operational costs. | to further incorporate climate change risk | | | Landslides in more remote locations | | profitability. The steep rise in carbon | | This will result in increased costs | | of border adjustment mechanisms | • | Opportunities – Early adoption of fuel | into our portfolio valuations. This may | | | could cause further damage and may | | prices can lead to reduced profitability, | | of purchases relating to medical | | after 2030 will affect Amboli’s (the | | efficiency standards, emissions-reducing | include an assessment of the influence of | | | block access in some areas. | | obsolete assets and impairments in | | equipment and supplies, particularly | | auto service business’ car services | | regulations and building efficiency | the projected carbon price under different | | • | Opportunities – In the medium term, | | sectors that are difficult to decarbonise | | those originating out-of-country. | | and parts business) supply chain and | | compliance will reduce longer-term | scenarios on the valuation of the portfolio. | | | decarbonisation of operations will | | and where additional costs cannot | • | Opportunities – In the short to | | trade of car consumables and parts. | | costs relating to regulations including | In addition, the use of shadow carbon | | | enable the water utility operations to | | be passed on to customers. The | | medium term, commitment to a low- | | There will likely be an abrupt rise in | | a reduction in potential declines. | pricing might be reviewed. | | | limit the cost consequences of carbon | | transition will shift demand toward | | carbon portfolio (for example, low- | | distribution and retail costs as a result | | | | | | pricing and provide an advantage over | | low-carbon technologies and create | | carbon hospitals) could have certain | | of increases in carbon pricing. | The Group’s strategy is to focus | | Other identified potential risks and | | | more carbon-intensive competition. | | new opportunities for companies that | | benefits. A reduction in the portfolio’s | • | Opportunities – In the short to | predominantly on capital-light, larger- | | opportunities are evaluated by the | | | | | provide innovative solutions and are able | | carbon intensity will mitigate future | | medium term, it may be that there will | scale investment opportunities in Georgia | | investment and finance teams in | | Retail (pharmacy) | | | to reduce their emissions more efficiently | | costs associated with increasing | | be stricter emissions requirements. | and it normally seeks to monetise its | | discussion with the portfolio companies | | (19.0% of total portfolio) | | | than competitors. Failure to manage | | carbon prices. | | This may mean that more vehicles | investment through appropriate exit | | to determine their financial materiality | | • | Risks – The principal risks arise from | | potentially detrimental impacts will result | | | | will need to be emissions-checked | options, typically within five to ten years | | (impact on financial performance including | | | physical aspects of climate change | | in damage to a company’s reputation. | Renewable energy | | | more regularly or be modified, causing | from initial investment. Considering this | | revenues and expenditures, and impact | | | and may impact the physical assets. | • | Opportunities – Opportunities will | (6.7% of total portfolio) | | | demand at PTI centres. | strategic focus, the holding periods of | | on the financial position, assets and | | | Transition risks are considered to | | likely arise from energy efficiency | • | Risks – In the short to medium term, | | | our investments fall in much shorter time | | liabilities, capital and financing). | | | mainly relate to carbon pricing and the | | regulation which will force customers | | the infrastructure and transmission lines | | | | | | | | effect this will have on the supply chain, | | to upgrade their homes and vehicles | | are clearly at risk from physical risks | | | | | | | | for example, the purchase of drugs and | | and may require new product offerings. | | such as landslides, or extreme heat | | | | | | | | medicines. As the carbon price rapidly | | Commercial opportunities are also likely | | impacting the integrity of lines or pipes. | | | | | | | | increases post-2030 (medium term) | | to arise by creating targeted products | | However, for each of the HPPs and | | | | | | | | the prices of goods will increase. While | | that address climate change and | | WPPs, the business has taken steps to | | | | | | | | this will be felt across the market and | | energy transition. | | improve the resilience of infrastructure | | | | | | | | will not be unique to the portfolio, given | | | | to changes in climate. | | | | | | | | the leading market share, this could | Medical insurance | | • | Opportunities – The renewable | | | | | | | | result in reputational risk arising from | (3.1% of total portfolio) | | | energy business generates electricity | | | | | | | | consumer perception. | • | Risks – An increase in medical | | using renewable sources, and there | | | | | | | • | Opportunities – There is a regulation | | insurance claims may arise from | | are a number of policy and Georgian | | | | | | | | opportunity for the retail (pharmacy) | | both acute short-term weather | | Government incentives for solar wind | | | | | | | | business. Being an early adopter of | | conditions (flooding and, in some | | and hydropower generation in Georgia | | | | | | | | fuel efficiency standards, emissions- | | regions, landslides and heatwaves) | | as part of the Georgian 2030 CCSAP. | | | | | | | | reducing regulations and building | | and long-term chronic changes in | | Renewable energy sources are | | | | | | | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 90 91 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Resources and Responsibilities continued ## Risk management Metrics and targets | Climate change risk has been recognised | flows and the terminal value, and the | | | Georgia Capital has committed to the | The primary driver for GCAP’s | and Limited Liability Partnerships (Energy | | --- | --- | --- | --- | --- | --- | --- | | by GCAP as an emerging risk. The risk | appropriate risk-adjusted discount rate | | | Net-Zero Initiative and expressed its | commitment to achieving Net-Zero | and Carbon Report) Regulations 2018 | | management approaches for the initial | that quantifies the risk inherent to the | | | willingness to reach Net-Zero across | emissions by 2050 is the recognition that | (Scopes 1 and 2). | | investment stage and the existing portfolio | business. The discount rate is estimated | | | Scope 1 and 2 emissions at both GCAP | the majority of its GHG emissions originate | | | companies are provided below. | with reference to the market risk-free rate, | | | HoldCo and portfolio company levels | from portfolio companies and through this | All sources reported in 2020 fell within | | | a risk-adjusted premium and information | | | by 2050. | target, the Group can actively promote | our consolidated financial statements. | | Investment stage | specific to the business or market sector, | | | | climate change mitigation, natural | | | The investment risk management process | which consequently reflects the climate | | | In May 2022, GCAP commenced the | resource conservation, and pollution | Since 2021, in accordance with the | | includes consideration of climate-related | change-related considerations of the | | | ESG target-setting initiative with the | prevention. This commitment reflects | Greenhouse Gas Protocol and aligning | | risks, in line with the implementation | business. | | | goal of setting GHG emission reduction | GCAP’s dedication to fostering a transition | with TCFD recommendations, we have | | of the Responsible Investment Policy. | | | | targets. Over a four-month period, GCAP | toward a more sustainable and lower- | taken the opportunity to present elements | | Procedures for identifying, describing and | Market approach valuation methodology | | | conducted comprehensive research on | carbon economy in Georgia. The progress | of the emissions derived from our portfolio | | managing environmental and social risks | involves the application of a listed peer | | | relevant ESG standards, frameworks and | toward this target is rigorously monitored | companies (outside our consolidated | | and impacts (including those associated | group earnings multiple to the earnings | | | guidelines, and engaged in discussions | on an annual basis. Furthermore, following | financial statements). We aggregate | | with climate change) have been | of the business and is appropriate for | | | with global experts on different | the successful issuance of the US$ | and present portfolio companies’ | | incorporated into the investment process | investments in established businesses and | | | environmental platforms. | 150 million SLB, the verification of GHG | Scope 1, 2 and 3 emissions under our | | from the initial investment, through to the | for which the Company can determine | | | | emissions will be conducted regularly at | Scope 3 emissions. | | holding period. | a group of listed companies with similar | | | In September 2022, GCAP, with its | least while the bond remains outstanding. | | | | characteristics. GCAP identifies the peer | | | portfolio companies, engaged in | | GCAP considers that all material | | GCAP has a staged approach to | group for each equity investment taking | | | comprehensive individual and group | GHG inventory | categories of Scope 3 have been included | | investment appraisal which becomes | into consideration points of similarity | | | workshops where the ESG frameworks | Measuring GHGs is the initial step in | in our emissions calculation. For further | | progressively more detailed. At the | with the investment such as industry, | | | were discussed and participants shared | preventing global warming. GCAP has | details, please refer to the emission | | early stages of appraisal, the potential | business model, size of the company, | | | their progress towards setting individual | collated Scope 1, 2 and limited Scope 3 | disclosure and calculation methodology | | investment is screened against the | economic and regulatory factors, growth | | | environmental targets. Some of the | GHG emissions over the past few years. | on page 82. | | GCAP Exclusion List. This list excludes | prospects (higher growth rate) and risk | | | portfolio companies also engaged local | In 2020 we focused on emissions | | | businesses that generate more than | profiles (including the climate change risk). | | | third-party experts in the target-setting | derived from GCAP operations (Scope | GHG reduction targets | | | | • | further discussion with the portfolio | | | | | 10% of their revenues from fossil fuels. | Valuation assessments of the large and | | | initiative to ensure the effectiveness of | 1, 2 and limited 3). We reported on | Georgia Capital commits to reducing | companies on how carbon price may Subsequent appraisal stages include investment stage portfolio companies are the process. the emission sources listed under the total Scope 1 and Scope 2 emissions by be used to influence their strategy evaluation of the carbon and energy performed by an independent valuation Companies Act 2006 (Strategic Report 30% by 2030 compared to the base year, and impact on their business plans emissions, as well as business strategy firm on a semi-annual basis. Climate In 2023, in parallel with the SLB issuance, and Directors’ Report) Regulations 2013 2022, and by 95% by 2050, ultimately going forward – including the cost and plan elements in relation to carbon change risk is factored in the valuation the targets were revisited. and the Companies (Directors’ Report) becoming Net-Zero. of supplied materials, ability to pass and energy management. These plan assessments. Climate change risk is also through costs and potential capex elements will consider alignment with the embedded in the valuation of the other among other aspects. Georgian Government Climate Goals and portfolio companies as set out in the incorporate the shadow carbon price. Valuation Methodology on page 98 of this The NGFS modelling scenarios will be Annual Report. re-run annually to assess changes if any, Current portfolio that may occur in response to global or Climate change, and the risks relating Understanding the relationship and Republic of Georgia commitments and to climate change, is reflected in the potential impact of climate change and policies towards climate change. valuation assessments of the portfolio its associated risks across different risk companies. Equity investments in categories was a priority for GCAP risk Monitoring and reporting Georgia Capital’s portfolio companies are management during 2024 as climate risk Environmental (including climate) measured at fair values at each reporting continued to be integrated into the risk and social risks and opportunities date in accordance with IFRS 13, Fair management framework. are managed through regular Value Measurement. semi-annual engagements with the Evaluating macro-level risks portfolio companies. Topics cover a Private large and investment stage For each of the portfolio companies, a range of aspects under the headings portfolio companies are valued by macro-level review has been completed of Governance, Policies, Social, applying a combination of an income within the scenarios and time horizons Environment, Carbon and Energy approach (DCF) and a market approach (short, medium and long). The process Management, and Suppliers. (listed peer multiples and, in some included among other activities: cases, precedent transactions) in line • review of the scenarios selection and Capacity building with International Private Equity Valuation identified risks and opportunities with Where appropriate, GCAP will support (IPEV) guidelines and methodology. the portfolio companies; • portfolio companies in training and Under the DCF valuation method, fair application of the carbon prices to upskilling Investment Managers with value is estimated by deriving the present investee emission profiles to establish respect to climate change terminology, value of the business using reasonable the impact; and risks and opportunities during 2025 assumptions of expected future cash and beyond. | | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | --- | | 92 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 93 | | | | Overview | Our Business | Discussion of Results | | | ## Resources and Responsibilities continued | In 2023, JSC GCAP issued a US$ | In 2022, the full GHG inventory analysis | The roadmap captures the fundamental | | --- | --- | --- | | 150 million SLB and established an | revealed that the portfolio companies’ | activities to minimise any adverse impact | | SLB Framework, under which GCAP | GHG emissions accounted for 99.5% | on the environment, whilst simultaneously | | committed to decrease its GHG | of the Group and portfolio companies’ | highlighting benefits for the Group and its | 1 | emissions | | by 20% by 2027 compared | aggregated emissions, which were | | portfolio companies: | | | --- | --- | --- | --- | --- | --- | --- | | to a 2022 baseline. The SLB target is in | | | derived from the following sources: | | • | c.80% of Georgian electricity is | | line with GCAP’s overarching commitment | | | • | Combustion of natural gas (Scope 1) – | | sourced from renewable energy power, | | to reaching Net-Zero across the Group | | | | 33% of the total GHG emissions. | | having a relatively modest adverse | | by 2050. | | | • | Combustion of petrol and diesel | | impact on the environment. | | | | | | (Scope 1) – 25% of the total GHG | • | GCAP’s updated strategy of having | | 2022 has been chosen as a base year for | | | | emissions. | | considerable exposure to capital-light | | two major reasons: | | | • | Consumption of electricity (Scope 2) – | | portfolio companies provides a chance | | • | In 2022, the disposal of the majority | | | 23% of the total GHG emissions. | | to progressively transition to a low- | | | equity stake in the water utility | | • | Other emissions (Scope 3) – 19% of | | carbon economy. | | | business was completed, which | | | the total GHG emissions. | | | significantly changed the GHG | | emission composition. | GHG emissions reduction roadmaps were | | --- | --- | --- | | • | The 2022 year reflects the | developed at both the GCAP HoldCo and | | | normalisation of economic activities | portfolio businesses’ levels to support | | | compared to the abnormal | GCAP in transferring to a low-carbon | | | environment in 2020-2021 years due | economy, and consequently lowering its | | | to COVID-19-related implications. | environmental footprint. | Target 2 KPIs Base year 2022 Target by 2030 Target by 2050 GHG emissions reduction targets 3 Reduce GCAP HoldCo Scope 1 and 2 emissions 70 tCO e 30% 95% 2 Reduce GCAP’s Scope 3 emissions: 3 * Reduce portfolio companies’ Scope 1 and 2 emissions 23,706 tCO e 30% 95% 2 Reach Net-Zero across 4 * Offset GCAP HoldCo’s direct Scope 3 emissions that 78 tCO e Yes Yes Scope 1 and 2 emissions 2 cannot be avoided or reduced further, starting from 2030 at both GCAP HoldCo and portfolio companies’ Georgia Capital plans to reduce its direct GHG emissions by: level by 2050 • 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. Location: Vashlovani National Park, Georgia 3 The 2022 GHG emissions have been retrospectively adjusted, incorporating the calculation methodology agreed upon with our external verification provider. Specifically, Image Source: https://nationalparks.ge/ 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 94 95 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Alternative Performance Measures APMs overview NAV Statement which reflects the net result of a) dividend income accrual APM summary Management assesses the Group’s performance using a variety The Group mainly makes indirect investments in portfolio based on distributed or declared annual dividend proceeds In October 2015, ESMA published guidelines about the use of of measures that are not specifically defined under IFRS and companies, held through intermediate Georgian holding from portfolio companies during the reporting period, b) APMs. These are financial measures such as key performance are, therefore, referred to as APMs internally and throughout this company, JSC Georgia Capital, which is the principal subsidiary interest income on liquid funds and loans issued, c) interest indicators (KPIs) that are not defined under IFRS. In the Strategic document. Management monitors the Group’s performance on of Georgia Capital PLC. The application of IFRS 10 requires us expenses on debt incurred at GCAP level (which consists of Review section of the Annual Report on pages 4 to 117, Georgia a regular basis based on developments in the Income Statement to fair value the intermediate holding company JSC Georgia the bonds issued), d) realised/unrealised gains or losses on Capital describes its financial performance under the adjusted and NAV Statement prepared under the methodologies described Capital. This fair value approach, applied at the intermediate liquid assets and e) expenses incurred at GCAP level. IFRS 10 Income Statement and also discloses the stand-alone below. Management believes that such statements provide an holding company level, effectively obscures the performance • Fair value change of portfolio companies (total investment IFRS results for the portfolio companies, which themselves can be important view on Georgia Capital’s strategy and helpful insights of our equity capital investments and associated transactions return) represents fair value changes in the value of portfolio viewed as APMs. A number of other measures are used which are into management’s decision-making. Management dedicates occurring in the intermediate holding company. The financial companies during the reporting period, as valued in the also APMs, since they are derived from the management accounts. time to ensuring that the Group’s APMs are reported in a effect from the valuation of the underlying portfolio companies period-end NAV Statement. A detailed Valuation Methodology The applicable reconciliations to the IFRS equivalent where consistent and transparent way in accordance with the European are aggregated into a single value. The breakdown of the value is described on page 98. We view fair value changes appropriate, is provided below and should be read alongside the Securities and Markets Authority (“ESMA”) published guidelines. of JSC Georgia Capital is presented in Note 12 within the IFRS of portfolio companies as a metric to measure the total adjusted IFRS 10 Income Statement to IFRS reconciliation. financial statements. To maintain transparency in our report and investment return of Georgia Capital’s holdings, which itself Under IFRS 10, Georgia Capital PLC meets the “investment aid understanding we present a NAV Statement and respective reflects value creation for shareholders. The table below lists all the APMs used within the Annual Report. entity” definition and does not consolidate its portfolio companies, reconciliation to the IFRS Balance Sheet in Note 5 (Segment • Following the aggregation of GCAP net operating income instead the investments are measured at fair value. information) of the IFRS financial statements. NAV disclosed and total investment return, we arrive at management income Read more on financial performance in the under the NAV Statement is the same as IFRS equity value before foreign exchange movements for the period. Strategic Review on pages 100 to 117. Our Group level discussion is, therefore, based on the IFRS 10 as at 31 December 2024. The NAV Statement is simply a • Below the income before foreign exchange movements line, investment entity accounts. “look through” of the IFRS 10 Balance Sheet to present the to arrive at management net income, we present GCAP gains Read more on about the use of APMs in the underlying performance. or losses from foreign exchange movements and other costs Discussion of Results on pages 94 to 96. The NAV Statement, as included in the notes to the IFRS financial such as non-recurring or transactions costs if there are any in statements, summarises the Group’s equity value and drivers of The NAV Statement breaks down NAV into its components a reportable period. related changes between the reporting periods. Georgia Capital and provides roll-forward of the related changes between the holds an investment – in JSC Georgia Capital (an investment reporting periods, including a snapshot of the Group’s financial APM Purpose Calculation Reconciliation to IFRS entity on its own) – which in turn owns a portfolio of investments, position at the opening and closing dates. The NAV Statement NAV per share The measure of per-share NAV per share is calculated as N/A each measured at fair value. Georgia Capital measures its provides a value of Georgia Capital that management uses as value of Georgia Capital. NAV divided by the number of investment in JSC Georgia Capital at fair value through profit a tool for measuring its investment performance. Management outstanding shares at the end of and loss, estimated with reference to JSC Georgia Capital’s own closely monitors NAV in connection with capital allocation the period, i.e. issued shares at the portfolio value as offset against its net debt. decisions. The following methodology underlies the presentation end of the period less unawarded of the NAV for period-end dates: shares in management trust. | The Income Statement presents the Group’s results of operations | • | NAV is calculated at stand-alone GCAP level, which represents | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | for the reporting period. As we conduct most of our operations | | the aggregation of the stand-alone assets and liabilities of | | GCAP net operating income A measure to reflect | | GCAP net operating income reflects | The equivalent balance | | through JSC Georgia Capital, through which we hold our | | Georgia Capital PLC and JSC Georgia Capital. | | | performance of the | the net result of: a) dividend income | under IFRS and respective | | portfolio companies, the IFRS results provide little transparency | • | Holdings in listed, observable and private portfolio companies | | | stand-alone GCAP and | accrual based on paid or declared | reconciliation are shown in | | on the underlying trends. To enable a comprehensive view of the | | are carried based on the following methodology: | | | evaluate cash generating | annual dividend proceeds from | the reconciliation of the | | combined operations of Georgia Capital PLC and JSC Georgia | | − | Listed portfolio companies are carried at the period-end | | capacity on a holding | portfolio companies to be collected | Income Statement. | | Capital (together referred to herein as “GCAP”) as if it were one | | | market values based on closing share prices on respective | | company level. | during the year; b) interest income | | | holding company, we adjust the accounts (“adjusted IFRS 10 | | | stock exchanges. | | | on liquid funds and senior loans | | | Income Statement”). A full reconciliation of the adjusted Income | | − | Observable portfolio companies are carried at valuation | | | issued; c) interest expenses on debt | | | Statement to the IFRS Income Statement is provided on page 97. | | | using put and/or call options at pre-agreed multiples, where | | | incurred at GCAP level; d) realised/ | | | | | | there is a clear exit path from the business. | | | unrealised gains or losses on liquid | | | Additionally, for the majority of our portfolio companies the fair | | − | Private portfolio companies are carried at fair value based | | | assets; and e) operating expenses | | | value of our equity investment is determined by the application | | | on a valuation technique believed to be most appropriate to | | | incurred at GCAP level. | | | of a market approach (listed peer multiples and precedent | | | that investment as described in the Valuation Methodology | | | | | | | | | | Total investment return A metric to measure the | | Fair value change of portfolio | The equivalent balance | | transactions) and an income approach (DCF). Under the market | | | on page 98. | | | | | | | | | | | value creation power of | companies (total investment return) | under IFRS and respective | | approach, listed peer group earnings multiples are applied to | | − | NAV per share represents total NAV divided by the number | | | | | | | | | | | Georgia Capital from its | represents fair value changes in the | reconciliation are shown in the | | the trailing 12-month (LTM) stand-alone IFRS earnings of the | | | of outstanding shares at the end of the period, i.e. the | | | | | | | | | | | investments. | value of portfolio companies during | reconciliation of the Income | | relevant business. Under the DCF valuation method, fair value | | | number of issued shares at the end of the period less | | | | | | | | | | | | the reporting period, as valued in | Statement. | | is estimated by deriving the present value of the business using | | | unawarded shares in GCAP’s management trust. | | | | | the period-end NAV Statement. reasonable assumptions of expected future cash flows and Net income A performance metric Aggregation of GCAP net operating The equivalent balance the terminal value, and the appropriate risk-adjusted discount Management Income Statement to measure the value income and total investment return under IFRS and respective rate that quantifies the risk inherent to the business. As such, The Income Statement is an aggregation of GCAP’s creation power of less GCAP gains or losses from reconciliation are shown in the stand-alone IFRS results and developments behind IFRS stand-alone Profit and Loss Statement and fair value change of Georgia Capital during foreign exchange movements and the reconciliation of the earnings of our portfolio companies are key drivers in their portfolio companies during the reporting period. The following the period. other non-recurring gain or losses. Income Statement. valuations. Following the Group discussion, we therefore also methodology underlies the preparation of the Income Statement: present unaudited IFRS financial statements for each portfolio • The top part of the Income Statement (GCAP net operating company and a related brief results discussion. income) represents the aggregation of the two stand-alone holding company accounts, which we call GCAP (i.e. the Our adjusted IFRS 10 Income Statement and the stand-alone UK holding company Georgia Capital PLC and the Georgian IFRS results for our portfolio companies may be viewed as APMs. holding company JSC Georgia Capital), the performance of | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 96 97 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Alternative Performance Measures continued Reconciliation of Adjusted IFRS Measures to IFRS Figures APM Purpose Calculation Reconciliation to IFRS Reconciliation of adjusted Income Statement to IFRS Income Statement EBITDA Management uses Earnings before interest, taxes, N/A The table below reconciles the adjusted Income Statement to the IFRS Income Statement. Adjustments to reconcile adjusted EBITDA as a tool to non-recurring items, FX gain Income Statement with IFRS Income Statement mainly relate to eliminations of income, expense and certain equity movement items measure the portfolio or losses, depreciation and recognised at JSC Georgia Capital, which are subsumed within gross investment income/(loss) in IFRS Income Statement of Georgia companies’ operational amortisation. Capital PLC. performance and the IFRS income IFRS income profitability of those GEL thousands, unless otherwise noted (Unaudited) statement Adjustment statement companies’ operations. Dividend income 201,752 (76,643) 125,109 The Company considers EBITDA to be an Interest income 7,477 (7,477) – important indicator of Realised/unrealised loss on liquid funds (796) 796 – representative recurring Interest expense (35,589) 35,589 – operations. Gross operating income 172,844 (47,735) 125,109 | GCAP net debt A measure of the | | Net debt is calculated at GCAP | N/A | | | --- | --- | --- | --- | --- | | | available cash to invest | level as follows: cash and liquid | | Operating expenses (administrative, salaries and other employee benefits) (35,280) 35,280 – | | | in the business and an | funds plus loans issued less gross | | | GCAP net operating income 137,564 (12,455) 125,109 indicator of the financial debt; loans issued does not include Total investment return/gain on investments at fair value 233,570 9,419 242,989 | | risk at GCAP level. | investment type mezzanine loans | | | | --- | --- | --- | --- | --- | | | | (if any). | | Administrative expenses, salaries and other employee benefits – (5,749) (5,749) | | Net capital commitment | A metric to measure | NCC ratio is calculated at the | N/A | Income before foreign exchange movements and non-recurring expenses 371,134 (8,785) 362,349 | | (NCC) ratio | Georgia Capital’s balance | GCAP HoldCo level by dividing | | | Net foreign currency (loss)/gain (18,662) 18,699 37 sheet leverage. NCC by total portfolio value. NCC Non-recurring expenses (2,148) 2,148 – represents an aggregated view of all confirmed, agreed, and expected Net losses from investments measured at fair value through profit or loss – (112) (112) capital outflows at the GCAP Net income 350,324 11,950 362,274 holding company level. Internal rate of return (IRR) A metric to evaluate the IRR for investments is calculated N/A Subtotals in the “Adjustment” columns may not add up as they provide a reconciliation to the statements with different structures and subtotals. historical based on: a) historical contributions track record of to the investment; less b) dividends investments. received; and c) market value of the investment. Multiple of invested capital A measure to evaluate MOIC is calculated as follows: N/A (MOIC) Georgia the numerator is the cash and Capital’s efficiency in non-cash inflows from dividends allocating capital. and sell-downs plus fair value of investment at reporting date; and the denominator is the gross investment amount. Return on invested capital To evaluate a company’s ROIC is calculated as EBITDA less N/A (ROIC) efficiency at allocating the depreciation, divided by aggregate capital under its control amount of total equity and to profitable investments. borrowed funds. Return on average total equity To measure the ROAE equals profit for the period N/A (ROAE) performance of a attributable to shareholders company based on its divided by monthly average equity average shareholders’ attributable to shareholders for the equity outstanding. same period. Value creation/investment To measure the annual Aggregation of: a) change in N/A return shareholder return on beginning and ending fair values; each portfolio company b) gains from realised sales for Georgia Capital. (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. GCAP’s liquid funds A measure to evaluate Includes marketable debt securities N/A the Company’s liquidity. and issued loans. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 98 99 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Valuation Methodology Equity investments in Georgia Capital’s portfolio companies are measured at fair values at each reporting date in accordance with IFRS b. Equity fair value valuation 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 Fair value of equity investment in companies can also be determined using the price to earnings (P/E) multiple of similar listed between market participants at the measurement date. 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 Equity investments in listed and observable portfolio companies Capital and other shareholders of the portfolio company, if any. Fair valuation of equity using peer multiples can be used for businesses Equity instruments listed on an active market are valued at the price within the bid/ask spread, that is most representative of fair value within the financial sector (e.g. insurance companies). 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, Discounted cash flow 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. 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 Equity investments in private portfolio companies to the business. The discount rate is estimated with reference to the market risk-free rate, a risk adjusted premium and information Large private portfolio companies – An independent third-party valuation firm is engaged to assess fair value ranges of large private specific to the business or market sector. Under the DCF analysis unobservable inputs are used, such as estimates of probable future portfolio companies at the reporting date starting from 2020. The independent valuation company has extensive relevant industry and cash flows and an internally-developed discounting rate of return. 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 Net asset value described below for the other portfolio companies). The different valuation approaches are weighted to derive a fair value range, with The net assets (NAV) methodology involves estimating the fair value of equity investment in a private portfolio company based on the income approach being more heavily weighted than the market approach. Management selects the most appropriate point in the its book value at the reporting date. This method is appropriate for businesses (such as real estate) whose value derives mainly from provided fair value range at the reporting date. 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. 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 Price of recent investment extensive relevant industry and emerging markets experience. Valuation is performed by applying several valuation methods including an The price of a recent investment resulting from an orderly transaction, generally represents fair value as of the transaction date. income approach based mainly on DCF and a market approach based mainly on listed peer multiples (the DCF and listed peer multiples At subsequent measurement dates, the price of a recent investment may be an appropriate starting point for estimating fair value. approaches applied are substantially identical to those described below for the other portfolio companies). The different valuation However, adequate consideration is given to the current facts and circumstances to assess at each measurement date whether approaches are weighted to derive a fair value range, with the income approach being more heavily weighted than the market approach. changes or events subsequent to the relevant transaction imply a change in the investment’s fair value. Management selects what is considered to be the most appropriate point in the provided fair value range at the reporting date. Exit price Other portfolio companies – Fair value assessment is performed internally using one of the valuation methods described below. 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. 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 Validation consistently from period to period, unless a change in valuation technique would result in a more reliable estimation of fair value. The Fair value of investments estimated using the valuation methods described above is cross-checked using several other valuation value of an unquoted equity investment is generally crystallised through the sale or flotation of the entire business. Therefore, the methods as follows: estimation of fair value is based on the assumed realisation of the entire enterprise at the reporting date. Recognition is given to the • Listed peer group multiples – peer multiples such as P/E, P/B and dividend yield are applied to respective metrics of the investment uncertainties inherent in estimating the fair value of unquoted companies and appropriate caution is applied in exercising judgements being valued depending on the industry of the company. The Company develops fair value range based on these techniques and and in making the necessary estimates. 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 Listed peer group multiples upward or downward adjustment to the value of the valuation target as derived from the primary valuation method. If fair value This methodology involves the application of a listed peer group earnings multiple to the earnings of the business and is appropriate estimated using DCF analysis significantly differs from the fair value estimate derived using the primary valuation method, the for investments in established businesses and for which the Company can determine a group of listed companies with similar difference is examined thoroughly, and judgement is applied in estimating fair value at the measurement date. characteristics. The earnings multiple used in valuation is determined by reference to listed peer group multiples appropriate for • In line with GCAP’s strategy, from time to time, we may receive offers from interested buyers for the private portfolio companies, the period of earnings calculation for the investment being valued. Peer group is identified for each equity investment taking into which would be considered in the overall valuation assessment, where appropriate. 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 Valuation of equity investments in private portfolio companies during valuation if their characteristics are closer to those of the company being valued than others. As a rule of thumb, LTM earnings will The table below summarises fair valuation of equity investments in our private portfolio companies as at 31 December 2024. be used for the purposes of valuation. Earnings are adjusted where appropriate for exceptional, one-off or non-recurring items. Valuation performed GEL thousands externally or internally Valuation method Multiple applied Fair value a. Valuation based on enterprise value Large portfolio companies Externally 1,434,749 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 Retail (pharmacy) Externally DCF and EV/EBITDA 8.4x 716,130 company’s earnings by the listed peer group multiple (EV/EBITDA) for the appropriate period. The measures of earnings generally used Insurance Externally DCF and P/E 11.1x 427,945 in the calculation is recurring/adjusted EBITDA for the last 12 months (LTM EBITDA). In exceptional cases, where EBITDA is negative, Hospitals Externally DCF and EV/EBITDA 10.5x 290,674 peer EV/Sales (enterprise value to sales) multiple can be applied to last 12-month recurring/adjusted sales revenue of the business Investment stage portfolio companies Externally 557,392 (LTM sales) to estimate enterprise value. Renewable energy Externally DCF and EV/EBITDA 11.3x¹ 252,606 Education Externally DCF and EV/EBITDA 12.8x 181,584 Once the enterprise value is estimated, the following steps are taken: 2 Clinics and diagnostics Externally DCF and EV/EBITDA 10.6x 123,202 • 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). Other portfolio companies Internally EV/EBITDA, NAV, DCF and exit price 160,314 • 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. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 100 101 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Financial Review 1 Financial Performance Highlights (IFRS) 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 GEL thousands, unless otherwise noted (Unaudited) below) at the opening and closing dates for the full year (31 December 2023 and 31 December 2024). The NAV Statement below Georgia Capital NAV overview Dec-24 Dec-23 Change breaks down NAV into its components and provides a roll-forward of the related changes between the reporting periods. NAV per share, GEL 95.95 82.94 15.7% 2a. Investment NAV per share, GBP 27.14 24.23 12.0% | | | | GEL thousands, unless otherwise noted | 1. Value | | and | | 2b. | | 2c. | 3.Operating | 4. Liquidity/ | Change | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2 | | | | 1 | | | | | | | | | | | NAV | | 3,609,013 3,378,512 6.8% | (Unaudited) Dec–23 | creation | Divestments | | Buyback | | Dividend | | expenses | FX/Other Dec–24 | | % | 3 Shares outstanding 37,612,488 40,736,528 -7.7% Listed and observable Cash and liquid funds 278,237 107,910 NMF portfolio companies 3 | NCC ratio | 12.8% 15.6% -2.8 ppts | | | | | --- | --- | --- | --- | --- | | | | | Lion Finance Group | 1,225,847 339,985 – – (144,797) – – 1,421,035 15.9% | | Georgia Capital performance | | FY24 FY23 Change | Water Utility 159,000 29,000 – – – – – 188,000 18.2% | | | Total portfolio value creation 435,322 680,515 -36.0% | | | Total listed and observable | | | of which, listed and observable portfolio 368,985 553,255 -33.3% | | | portfolio value | 1,384,847 368,985 – – (144,797) – – 1,609,035 16.2% | of which, private portfolio 66,337 127,260 -47.9% Listed and observable Investments 16,933 22,588 -25.0% portfolio value change % 26.6% 0.0% 0.0% -10.5% 0.0% 0.0% 16.2% Divestments (168,037) (4,168) NMF | | 4 | | Private portfolio companies | | | --- | --- | --- | --- | --- | | Buybacks | | 136,523 76,477 78.5% | | | | | | | Large companies | 1,436,231 30,237 – – (35,408) – 3,689 1,434,749 -0.1% | Dividend income 201,752 235,883 -14.5% 5 Retail (pharmacy) 714,001 10,739 – – (10,048) – 1,438 716,130 0.3% of which, recurring dividend income 179,156 179,822 -0.4% Insurance (P&C and medical) 377,874 74,617 – – (25,360) – 814 427,945 13.3% of which, one-off dividend income 22,596 56,061 -59.7% of which, P&C insurance 285,566 44,746 – – (17,986) – 814 313,140 9.7% Net income 350,324 615,589 -43.1% of which, medical insurance 92,308 29,871 – – (7,374) – – 114,805 24.4% 1,6 Private portfolio companies’ performance FY24 FY23 Change Hospitals 344,356 (55,119) – – – – 1,437 290,674 -15.6% Large portfolio companies 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% Revenue 1,499,308 1,337,010 12.1% Education 189,226 (8,853) 600 – – – 611 181,584 -4.0% EBITDA 180,733 153,868 17.5% Clinics and diagnostics 110,761 12,122 – – – – 319 123,202 11.2% Net operating cash flow 196,045 96,671 NMF Other companies 284,253 46,601 (163,037) – (9,289) – 1,786 160,314 -43.6% Investment stage portfolio companies Total private portfolio value 2,287,098 66,337 (151,104) – (56,955) – 7,079 2,152,455 -5.9% Revenue 186,667 155,280 20.2% Private portfolio value EBITDA 64,419 51,995 23.9% change % 2.9% -6.6% 0.0% -2.5% 0.0% 0.3% -5.9% Net operating cash flow 74,321 50,609 46.9% 7 Total portfolio value (1) 3,671,945 435,322 (151,104) – (201,752) – 7,079 3,761,490 2.4% Total portfolio Total portfolio value Revenue 2,250,715 2,067,648 8.9% change % 11.9% -4.1% 0.0% -5.5% 0.0% 0.2% 2.4% EBITDA 310,903 248,647 25.0% Net operating cash flow 298,519 139,391 NMF 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 Key points of which, accrued • NAV per share (GEL) increased 15.7% in FY24, reflecting the excellent operating performance of our portfolio companies. dividend income – – – – – – – – NMF • Outstanding results across our private portfolio with a 8.9% and 25.0% y-o-y increase in aggregated revenues and EBITDA in FY24, of which, gross debt (413,930) – – – – – (18,732) (432,662) 4.5% 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 Net other assets/(liabilities) (3) 3,375 – 2,600 (805) – (13,900) 10,678 1,948 -42.3% programme in December 2024, reflecting the receipt of c.US$ 63 million net proceeds from the beer and distribution business of which, share-based comp. – – – – – (13,900) 13,900 – NMF disposal and an 2.4% y-o-y increase in portfolio value. Net asset value (1)+(2)+(3) 3,378,512 435,322 – (136,523) – (35,279) (33,019) 3,609,013 6.8% • 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 | NAV change % 12.9% 0.0% -4.0% 0.0% -1.0% -1.0% 6.8% | | | | --- | --- | --- | --- | --- | | | programmes during FY24. | | 1 | | | | | Shares outstanding | | 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 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 positive 12.9 ppts impact and share buybacks (+5.8 ppts impact). The NAV per share growth was slightly offset by a) management 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. platform-related costs and net interest expense with a negative 1.9 ppts impact and b) GEL’s depreciation against US$, resulting in a 3 Please see definition in glossary on page 227. foreign currency loss of GEL 15.1 million on GCAP net debt (-0.5 ppts impact). 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 102 103 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Financial Review continued Portfolio overview The enterprise value and equity value development of our businesses in FY24 is summarised in the following table: Total portfolio value increased by GEL 89.5 million (up 2.4%) in FY24: Enterprise Value (EV) Equity Value • 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 GEL ‘000, unless otherwise noted % share in total value creation and GEL 144.8 million cash and buyback dividend income from the Bank in FY24. (Unaudited) 31-Dec-24 31-Dec-23 Change % 31-Dec-24 31-Dec-23 Change % portfolio • The value of the water utility business increased by GEL 29.0 million, reflecting its strong operating performance during the year. Listed and observable • The value of the private portfolio decreased by GEL 134.6 million in FY24, mainly reflecting the divestment of an 80% holding in the portfolio 1,609,035 1,384,847 16.2% 42.8% beer and distribution business and the collection of GEL 57.0 million dividends from the private portfolio companies. The decrease Lion Finance Group 1,421,035 1,225,847 15.9% 37.8% was partially offset by GEL 66.3 million value creation and GEL 16.9 million investments in the portfolio companies. 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% 1) Value creation Large portfolio companies 2,076,069 2,021,278 2.7% 1,434,749 1,436,231 -0.1% 38.1% Total portfolio value creation amounted to GEL 435.3 million in FY24. Retail (pharmacy) 1,021,000 1,043,800 -2.2% 716,130 714,001 0.3% 19.0% • 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 Insurance (P&C and medical) 463,144 358,566 29.2% 427,945 377,874 13.3% 11.4% GEL 340.0 million value creation. of which, P&C insurance 313,000 285,566 9.6% 313,140 285,566 9.7% 8.3% • GEL 29.0 million value was created in our water utility business. of which, medical insurance 150,144 73,000 NMF 114,805 92,308 24.4% 3.1% • The value creation in the private portfolio amounted to GEL 66.3 million in FY24, reflecting a net impact of: Hospitals 591,925 618,912 -4.4% 290,674 344,356 -15.6% 7.7% − GEL 671.5 million operating performance-related increase in the value of our private assets. Investment stage portfolio − GEL 605.1 million value reduction from changes in valuation inputs, including the negative impact from the increased country companies 865,238 856,787 1.0% 557,392 566,614 -1.6% 14.8% riskpremium in FY24. Renewable energy 444,158 456,236 -2.6% 252,606 266,627 -5.3% 6.7% 1 Education 234,405 228,799 2.5% 181,584 189,226 -4.0% 4.8% The table below summarises value creation drivers in our businesses in FY24: 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% Operating Multiple Change Portfolio Businesses Performance 1 and FX 2 Value Creation Total portfolio 3,761,490 3,671,945 2.4% 100.0% GEL thousands, unless otherwise noted(Unaudited) (1) (2) (1)+(2) Listed and observable  368,985 Private large portfolio companies (38.1% of total portfolio value) Lion Finance Group  339,985 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 Water Utility  29,000 the market movements in the valuation inputs. Substantial ramp-up of the pharmacy stores launched in late 2023 and enhanced sales Private 671,481 (605,144) 66,337 and profitability of higher-margin para-pharmacy products led to a 4.3% y-o-y revenue increase in FY24. Gross profit margin improved Large portfolio companies 434,148 (403,911) 30,237 by 2.0 ppts to 30.7%, further supported by successful renegotiations of trading terms with key suppliers across major product Retail (pharmacy) 170,146 (159,407) 10,739 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 Insurance (P&C and medical) 129,373 (54,756) 74,617 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 of which, P&C insurance 111,728 (66,982) 44,746 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 of which, medical insurance 17,645 12,226 29,871 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 Hospitals 134,629 (189,748) (55,119) 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) Investment stage portfolio companies 152,279 (162,780) (10,501) decreased to 8.4x as at 31 December 2024, down from 9.7x as at 31 December 2023. Renewable energy 37,205 (50,975) (13,770) Education 49,255 (58,108) (8,853) Insurance (P&C and medical) (11.4% of total portfolio value) – The insurance business combines a) P&C insurance valued at Clinics and diagnostics 65,819 (53,697) 12,122 GEL 313.1 million and b) medical insurance valued at GEL 114.8 million. Other 85,054 (38,453) 46,601 Total portfolio 671,481 (605,144) 435,322 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 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 104 105 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Financial Review continued Hospitals was assessed at GEL 290.7 million in FY24 (down 15.6% y-o-y), translating into an implied LTM EV/EBITDA multiple Listed and observable portfolio companies (42.8% of total portfolio value) (incl. IFRS 16) of 10.5x at 31 December 2024 (down from 13.8x as at 31 December 2023). Lion Finance Group (37.8% of total portfolio value) – In FY24, Lion Finance Group delivered an annualised ROAE of 30.0% and a 1 y-o-y loan book growth of 21.4% on a constant currency basis. In FY24, Lion Finance Group’s share price was up by 18.5% y-o-y to Private investment stage portfolio companies (14.8% of total portfolio value) 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 Renewable energy (6.7% of total portfolio value) – The EV of the business decreased by 6.7% to US$ 158.2 million in FY24, 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 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, 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. reflecting the resumption of operations of two power-generating units of Hydrolea HPPs, which were taken offline between November 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). 2022 to June 2023 due to previously planned phased rehabilitation works. Operating expenses were well-controlled, down 1.5% y-o-y. Lion Finance Group’s Annual Report 2024 is available on Lion Finance Group’s website. 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 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 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 FY24. This valuation assessment was performed by applying the put option valuation to GCAP’s 20% holding (where GCAP has a clear million, resulting from robust cash flow generation during the year. As a result, the equity value of the business was assessed at GEL exit path through a put and call structure at pre-agreed EBITDA multiples) and takes into account the strong operating performance of 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 the business in 2024. valuation multiple of the operational assets was 11.3x as at 31 December 2024 (down from 12.6x as at 31 December 2023). 2 2) Investments 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, In FY24, GCAP invested GEL 16.9 million in private portfolio companies. reflecting the strong operating performance of the business, while taking into account the first-time valuation of two campuses • GEL 11.3 million was invested in the renewable energy business for the development of the pipeline projects. launched in 2023, which were previously measured at an equity investment cost. The FY24 revenue increased by 22.9% y-o-y to • GEL 5.0 million was invested in the other businesses. GEL 68.2 million, reflecting a) organic growth through strong intakes and a ramp-up of the utilisation, b) an expansion of the business • GEL 0.6 million was allocated to the education 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% 3) Share buybacks 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 During FY24, 3,790,417 shares were bought back for a total consideration of GEL 136.5 million. the expansion of existing campuses in the midscale and affordable segments, as well as the first-time valuation of the new campuses, • 3,669,889 shares with a total value of US$ 48.1 million (GEL 131.9 million) were repurchased under GCAP’s buyback and 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 cancellation programmes during FY24. 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. • 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. 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 In FY24, Georgia Capital recorded GEL 201.8 million dividend income from its portfolio companies: 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 Dividend income GEL million (Unaudited) 3 Recurring One-off Total high revenue-generating services driven by the business’ proactive approach to customer acquisition and service enhancements, and Lion Finance Group 122.2 22.6 144.8 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 of which, cash dividends 72.2 – 72.2 FY24, reflecting a) increased salary and rent expenses in line with the expansion of the business, b) the sale of one of the polyclinic of which, buyback dividends 50.0 22.6 72.6 buildings in FY23 and its leaseback in FY24. See page 115 for details. The LTM EBITDA (incl. IFRS 16) of the business increased by Insurance business 25.4 – 25.4 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 of which, P&C insurance 18.0 – 18.0 lease liabilities in line with the expansion of the business. As a result, the equity value of clinics and diagnostics was assessed at GEL of which, medical insurance 7.4 – 7.4 123.2 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 1 Renewable energy 12.3 – 12.3 from 14.5x as at 31 December 2023 . Retail (pharmacy) 10.0 – 10.0 Beer business 8.3 – 8.3 Other businesses (4.3% of total portfolio value) Auto service 1.0 – 1.0 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, Total 179.2 22.6 201.8 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 A one-off dividend of GEL 22.6 million from Lion Finance Group, represents the advanced participation in their share buyback FY24, primarily due to the divestment of an 80% holding in the beer and distribution business in FY24. 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%. 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. 1 LTM EBITDA excludes the gain of GEL 2.9 million from the sale of one of the polyclinics buildings in 2023. 3 Dividends are received at JSC Georgia Capital level, the Georgian holding company. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 106 107 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Financial Review continued Net Capital Commitment (NCC) overview GEL thousands, unless otherwise noted (Unaudited) FY24 FY23 Change Below we describe the components of NCC as of 31 December 2024 and 31 December 2023. NCC represents an aggregated view of Dividend income 201,752 235,883 -14.5% all confirmed, agreed and expected capital outflows (including a buffer for contingencies) at Georgia Capital HoldCo level. of which, regular dividend income 129,201 162,527 -20.5% of which, buyback dividend income 72,551 73,356 -1.1% Components of NCC Interest income 7,477 16,642 -55.1% Realised/unrealised loss on liquid funds/Loss on GCAP Eurobond buybacks (796) (1,574) -49.4% GEL thousands, unless otherwise noted (Unaudited) 31-Dec-24 31-Dec-23 Change Interest expense (35,589) (47,808) -25.6% Total cash and liquid funds 278,237 107,910 NMF Gross operating income 172,844 203,143 -14.9% Loans issued – 9,212 NMF Operating expenses (35,280) (36,779) -4.1% Gross debt (432,662) (413,930) 4.5% GCAP net operating income 137,564 166,364 -17.3% Net debt (1) (154,425) (296,808) -48.0% Fair value changes of portfolio companies    Guarantees issued (2) – – NMF Listed and observable portfolio companies 224,188 399,384 -43.9% Net debt and guarantees issued (3)=(1)+(2) (154,425) (296,808) -48.0% of which, Lion Finance Group 195,188 395,384 -50.6% Planned investments (4) (118,480) (125,143) -5.3% of which, Water Utility 29,000 4,000 NMF of which, planned investments in Renewable Energy (69,518) (77,637) -10.5% Private portfolio companies 9,382 45,248 -79.3% of which, planned investments in Education (48,962) (47,506) 3.1% Large portfolio companies (5,171) (2,039) NMF Announced buybacks (5) (67,421) (18,087) NMF of which, retail (pharmacy) 691 (11,507) NMF Contingency/liquidity buffer (6) (140,340) (134,470) 4.4% of which, insurance (P&C and medical) 49,257 97,012 -49.2% of which, hospitals (55,119) (87,544) -37.0% Total planned investments, announced buybacks Investment stage portfolio companies (22,759) 41,857 NMF and contingency/liquidity buffer (7)=(4)+(5)+(6) (326,241) (277,700) 17.5% of which, renewable energy (26,028) 33,497 NMF | Net capital commitment (3)+(7) (480,666) (574,508) -16.3% | of which, education (8,853) 12,282 NMF | | --- | --- | | Portfolio value 3,761,490 3,671,945 2.4% | of which, clinics and diagnostics 12,122 (3,922) NMF | | NCC ratio 12.8% 15.6% -2.8 ppts | Other businesses 37,312 5,430 NMF | Total investment return 233,570 444,632 -47.5% 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 Income before foreign exchange movements and non-recurring expenses 371,134 610,996 -39.3% (GEL 174 million). Net foreign currency (loss)/gain/impairment (18,662) 6,491 NMF Non-recurring expenses (2,148) (1,898) 13.2% Loans issued. Issued loans’ balance primarily refers to loans issued to our private portfolio companies and are lent at market terms. Net income 350,324 615,589 -43.1% The FY24 balance of loans issued was reduced to nil, reflecting the complete repayment of loans by the portfolio companies. 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. 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. The components of GCAP’s operating expenses are shown in the table below: Planned investments. Planned investments’ balance represents expected investments in renewable energy and education GCAP Operating Expenses Components 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). GEL thousands, unless otherwise noted (Unaudited) FY24 FY23 Change 1 | | Administrative expenses | | (10,586) (10,909) -3.0% | | --- | --- | --- | --- | | Announced buybacks. The balance of the announced buybacks at 31 December 2024 reflects the unutilised share buybacks under | | 2 | | | | Management expenses – cash-based | | (10,794) (10,877) -0.8% | | GCAP’s US$ 25 million share buyback and cancellation programme. | | 3 | | | | Management expenses – share-based | | (13,900) (14,993) -7.3% | Total operating expenses (35,280) (36,779) -4.1% Contingency/liquidity buffer. The balance reflects the provision for cash and liquid assets in the amount of US$ 50 million, for 4 of which, fund type expense (9,258) (9,667) -4.2% contingency/liquidity purposes. The balance remained unchanged in US$ terms as at 31 December 2024. 5 of which, management fee type expenses (26,022) (27,112) -4.0% 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). 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). 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 Total investment return represents the increase (decrease) in the fair value of our portfolio. Total investment return was GEL 233.6 prepared on the Georgia Capital PLC level and the results of all operations of the Georgian holding company JSC Georgia Capital are million in FY24, mostly reflecting changes in the value of our portfolio companies. We discuss valuation drivers for our businesses presented as one line item. As we conduct almost all of our operations through JSC Georgia Capital, through which we hold all of our on pages 103-105. The performance of each of our private large and investment stage portfolio companies is discussed on pages portfolio companies, the IFRS results provide little transparency on the underlying trends. 108-117. Accordingly, to enable a more granular analysis of those trends, the following adjusted income statement presents the Group’s results GCAP’s net foreign currency liability balance amounted to US$ 60 million (GEL 170 million) at 31 December 2024. As a result of the of operations for the period ending December 31 as an aggregation of (i) the results of GCAP (the two holding companies Georgia movements described above, GCAP’s adjusted IFRS net income was GEL 350.3 million in FY24. Capital PLC and JSC Georgia Capital, taken together) and (ii) the fair value change in the value of portfolio companies during the 1 Includes expenses such as external audit fees, legal counsel, corporate secretary and other similar administrative costs. reporting period. For details on the methodology underlying the preparation of the adjusted Income Statement, please refer to pages 2 Cash-based management expenses are cash salary and cash bonuses paid/accrued for staff and management compensation. 94-96 of this report. A full reconciliation of the adjusted Income Statement to the IFRS Income Statement is provided on page 97. 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). | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 108 109 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Financial Review continued Discussion of the Statement of Cash Flows Income Statement highlights The 2024 IFRS Statement of Cash Flows is prepared at the Georgia Capital PLC level and does not include JSC Georgia Capital’s cash • 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 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 substantial ramp-up in the performance of pharmacy stores launched in late 2023 and the business’ continued efforts to enhance in 2024 (GEL 6.2 million in 2023), reflecting salaries and general and administrative expenses paid at the Georgia Capital PLC level. sales and profitability of para-pharmacy products. The total revenue growth was dampened by price regulations, which set a Net cash flow from investing activities was GEL 128.5 million in 2024 (GEL 44.3 million in 2023), mainly reflecting dividends received. maximum selling price for both prescription and non-prescription medicines. The negative impact of these regulations on the total 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 revenue growth amounted to GEL 14.5 million in FY24. treasury shares. The IFRS Statement of Cash Flows is included on page 189 of this report. • 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 Discussion of portfolio companies’ results (stand-alone IFRS) in FY24. The following sections present the IFRS results and business development extracted from the individual portfolio company’s IFRS • The y-o-y increase in operating expenses (excl. IFRS 16) in FY24 was driven by higher rent and salary costs, reflecting the significant accounts for large and investment stage entities, where the 2024 portfolio company’s accounts and respective IFRS numbers are expansion of the retail chain and the opening of the new warehouse at the end of 2023. The increase in salary expenses (up unaudited. We present key IFRS financial highlights, operating metrics and ratios along with commentary explaining the developments 13.9% y-o-y in FY24) further reflects higher staff compensation aligned with market trends and the implementation of new incentive behind the numbers. For the majority of our portfolio companies, the fair value of our equity investment is determined by the application schemes aimed at improving the gross profit margin. of an income approach (DCF) and a market approach (listed peer multiples and precedent transactions). Under the discounted cash • As a result, the business achieved y-o-y EBITDA (excl. IFRS 16) growth of 4.6% y-o-y in FY24. flow (DCF) valuation method, fair value is estimated by deriving the present value of the business using reasonable assumptions of • 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 expected future cash flows and the terminal value, and the appropriate risk-adjusted discount rate that quantifies the risk inherent to balance, utilised to finance the minority shareholder buyout transaction in June 2023. the business. Under the market approach, listed peer group earnings multiples are applied to the trailing twelve months (LTM) stand- • The developments described above translated into a 16.1% y-o-y decrease in net profit (ex. IFRS 16) in FY24. 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. 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 Large portfolio companies cash flow generation in FY24. Discussion of retail (pharmacy) business results • Strong cash flow from operating activities with a 96.7% EBITDA to cash conversion ratio in FY24, reflecting the sale of a significant The retail (pharmacy) business, where GCAP owns a 97.8% equity interest, is the largest pharmaceuticals retailer and wholesaler in portion of the inventory stock and the low base effect resulting from significant working capital investments in 2023. Georgia, with a 35.8% market share in the organised retail market based on 2023 revenues. The business consists of a retail pharmacy • GEL 10.0 million dividends were paid to GCAP in FY24. 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) Other valuation drivers and operating highlights and 19 franchise stores (of which, 12 are in Georgia, two in Armenia and five in Azerbaijan). • 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. 1 FY24 performance (GEL thousands), retail (pharmacy) • The number of pharmacies and franchise stores is provided below: (Unaudited) (Unaudited) Dec-24 Dec-23 Change (y-o-y) Income Statement highlights FY24 FY23 Change Number of pharmacies 410 412 (2) | Revenue, net 850,115 815,020 4.3% | of which, Georgia 395 397 (2) | | --- | --- | | of which, retail 681,213 646,402 5.4% | of which, Armenia 15 15 – | | of which, wholesale 168,902 168,618 0.2% | Number of franchise stores 19 23 (4) | | Gross profit 261,266 233,796 11.7% | of which, Georgia 12 17 (5) | | Gross profit margin 30.7% 28.7% 2.0 ppts | of which, Armenia 2 2 – | | Operating expenses (ex. IFRS 16) (180,339) (156,453) 15.3% | of which, Azerbaijan 5 4 1 | EBITDA (ex. IFRS 16) 80,927 77,343 4.6% EBITDA margin, (ex. IFRS 16) 9.5% 9.5% NMF • Retail (pharmacy)’s key operating performance highlights for FY24 are noted below: Net profit (ex. IFRS 16) 38,282 45,614 -16.1% Key metrics (Unaudited) FY24 FY23 Change Cash flow highlights Same store revenue growth -1.7% -0.1% -1.6 ppts Cash flow from operating activities (ex. IFRS 16) 78,249 52,361 49.4% Number of bills issued (million) 31.6 31.3 0.9% EBITDA to cash conversion 96.7% 67.7% 29.0 ppts 2 Average bill size (GEL) 20.4 19.6 4.1% Cash flow used in investing activities (41,278) (84,130) -50.9% 3 Free cash flow, (ex. IFRS 16) 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% 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 110 111 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Financial Review continued Discussion of insurance (P&C and medical) business results Cash flow and balance sheet highlights The insurance business comprises a) property and casualty (P&C) insurance business, operating under the brand name “Aldagi” • The solvency ratio of P&C and medical insurance businesses stood at 173% and 157% respectively as at 31 December 2024, and b) medical insurance business, operating under “Imedi L” and “Ardi” brands, the latter acquired in April 2024. The P&C well above the required threshold of 100%. insurance business is a leading player with a 30% market share in property and casualty insurance based on gross premiums • 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 as of 30 September 2023. P&C also offers a variety of non-property and casualty products, such as life insurance. The medical compared to 2023 coupled with the positive impact of the consolidation of Ardi’s portfolio. insurance business is the country’s largest private health insurer, with a 35% market share based on gross insurance premiums as of • GEL 25.4 million dividends were paid to GCAP in FY24. 30 September 2024, offering a variety of health insurance products primarily to corporate and (selectively) to state entities and also to 1 retail clients in Georgia. GCAP owns a 100% equity stake in both insurance businesses. Discussion of Hospitals Business Results The hospitals business, where GCAP owns 100% equity, is the largest healthcare market participant in Georgia, comprised of 1 FY24 performance (GEL thousands), insurance (P&C and medical) seven Large and Specialty Hospitals, providing secondary and tertiary level healthcare services across Georgia and 27 Regional and (Unaudited) Community Hospitals, providing outpatient and basic inpatient services. Income Statement highlights FY24 FY23 Change 2 FY24 performance (GEL thousands), hospitals Insurance revenue 316,483 208,242 52.0% (Unaudited) of which, P&C insurance 149,021 116,911 27.5% Income Statement highlights FY24 FY23 Change of which, medical insurance 167,462 91,331 83.4% 3 | Net underwriting profit 79,823 53,828 48.3% | Revenue, net | 332,710 313,748 6.0% | | --- | --- | --- | | Net investment profit 16,178 14,272 13.4% | Gross profit 114,627 104,616 9.6% | | | Pre-tax profit 42,895 30,393 41.1% | Gross profit margin 33.9% 32.8% 1.1 ppts | | | of which, P&C insurance 28,952 21,982 31.7% | Operating expenses (ex. IFRS 16) (59,461) (58,487) 1.7% | | | of which, medical insurance 13,943 8,411 65.8% | EBITDA (ex. IFRS 16) 55,166 46,129 19.6% | | | Cash flow highlights | EBITDA margin (ex. IFRS 16) 16.3% 14.5% 1.8 ppts | | Net loss (ex. IFRS 16) (13,132) (36,615) -64.1% Net cash flows from operating activities 69,140 33,687 NMF Cash flow highlights Free cash flow 64,917 29,358 NMF Balance sheet highlights 31-Dec-24 31-Dec-23 Change 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 Total assets 300,510 248,902 20.7% 4 Cash flow used in investing activities (25,166) (44,746) -43.8% Total equity 128,614 130,684 -1.6% 5 Free cash flow (ex. IFRS 16) 25,462 (35,069) NMF Cash flow (used in)/from financing activities (ex. IFRS 16) (5,307) 22,362 NMF Income Statement highlights Balance sheet highlights 31-Dec-24 31-Dec-23 Change The y-o-y increase in FY24 insurance revenue reflects a combination of factors: Total assets 705,367 707,614 -0.3% • The revenue of the P&C insurance business was up by 27.5% y-o-y in FY24, resulting from: of which, cash balance and bank deposits 27,600 9,753 NMF − A GEL 19.5 million y-o-y increase in Motor Insurance revenues in FY24, mainly attributable to the expansion of both retail and of which, securities and loans issued 5,995 9,557 -37.3% corporate client portfolios. Total liabilities 366,432 357,658 2.5% − A GEL 5.7 million y-o-y increase in Credit Life Insurance revenues in FY24, resulting from the growth of partner banks’ portfolios of which, borrowings 296,770 281,352 5.5% in the mortgage, consumer loan and other sectors. Total equity 338,935 349,956 -3.1% − 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. Income Statement highlights − The revenue of the medical insurance business increased by 83.4% y-o-y in FY24, reflecting organic growth of the portfolio, • The Large and Specialty Hospitals and Regional and Community Hospitals represent approximately 70% and 30%, respectively, of c.10% increase in insurance policy prices and the positive impact of the acquisition of Ardi insurance portfolio in April 2024, the the consolidated hospitals business revenue. latter contributing GEL 59.6 million to the FY24 y-o-y revenue growth. Total revenue breakdown (Unaudited) FY24 FY23 Change • The insurance business’ key performance ratios for FY24 are noted below: Total revenue, net 332,710 313,748 6.0% P&C Insurance Medical Insurance of which, Large and Specialty Hospitals 226,648 204,690 10.7% Key ratios (Unaudited) FY24 FY23 Change FY24 FY23 Change of which, Regional and Community Hospitals 106,962 110,551 -3.2% | 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 | | | | | | • | The total revenue growth in FY24 was primarily driven by the rebound to normal operational levels following mandatory regulatory | | Loss ratio | 53.3% 53.8% -0.5 ppts 76.3% 78.2% -1.9 ppts | | | renovations across all our hospitals, most of which occurred between the second half of 2023 and the first half of 2024. These FX ratio 0.1% -0.1% 0.2 ppts – – – renovations led to the phased closure of certain sections of our healthcare facilities, resulting in reduced patient intake during that 2 ROAE 33.2% 24.4% 8.8 ppts 35.6% 17.1% 18.5 ppts 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 • 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 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 ratio on the back of strong revenue growth. 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 • A 1.7 ppts y-o-y improvement in the FY24 combined ratio reflects consolidation of Ardi’s portfolio and increased revenues, due to “Batumi Hospital”, one of the regional hospitals divested in 2023, the combined revenue was up by 11.9% y-o-y in FY24. 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 theconsolidation 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. 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. 1 The detailed IFRS financial statements are included in supplementary excel file, available at https://georgiacapital.ge/ir/financial-results. 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). 2 Calculated based on average equity, adjusted for preferred shares. 5 Operating cash flows less capex, plus net proceeds from the sale of Batumi Hospital. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 112 113 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Financial Review continued • The changes in the gross profit margin, apart from the revenue developments described above, reflect the following trends in direct Investment stage portfolio companies 1 salary and materials rates and utility costs: Discussion of renewable energy business results − Approximately 50% of direct salaries are fixed. This, coupled with significantly increased revenue, led to a 0.8 ppts y-o-y increase The renewable energy business operates three wholly-owned commissioned renewable assets: 30MW Mestiachala HPP, 20MW in the direct salary rate to 40.4% in FY24. Hydrolea HPPs and 21MW Qartli wind farm. In addition, the business has a pipeline of renewable energy projects in varying stages of − The materials rate improved by 0.9 ppts y-o-y to 16.3% in FY24, reflecting significant optimisations achieved in tender development. The renewable energy business is 100% owned by Georgia Capital. As electricity sales in Georgia is a dollar business, participation processes and overall improvement in inventory management across the hospitals network. the financial data below is presented in US Dollars. − Utilities and other costs were down by 9.5% y-o-y in FY24. • 1 Operating expenses (excl. IFRS 16) increased modestly, up by 1.7% y-o-y in FY24, mainly due to higher salary costs associated FY24 performance (US$ thousands), renewable energy with an increased headcount to support the expansion of the services and the development of the Regional and Community (Unaudited) hospitals’ head-office following the strategic reorganisation in late 2023. Income Statement highlights FY24 FY23 Change • Consequently, EBITDA (excluding IFRS 16) was up by 19.6% y-o-y in FY24. Adjusted for the sale of the “Batumi Hospital”, the Revenue 16,086 14,449 11.3% combined EBITDA (excluding IFRS 16) was up by 25.1% in FY24. 2 of which, PPA 7,562 8,529 -11.3% (Unaudited) FY24 FY23 Change of which, Non-PPA 8,524 5,920 44.0% Total EBITDA (ex. IFRS 16), breakdown 55,166 46,129 19.6% Operating expenses (4,006) (4,068) -1.5% of which, Large and Specialty Hospitals 41,580 34,339 21.1% EBITDA 12,080 10,381 16.4% of which, Regional and Community Hospitals 13,586 11,791 15.2% EBITDA margin 75.1% 71.8% 3.3 ppts Net loss (1,185) (666) -77.9% Cash flow highlights 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 Cash flow from operating activities 12,320 9,877 24.7% offerings and upgrade medical equipment, b) capex related to the new regulations and obtaining required accreditations in the Cash flow used in investing activities (3,570) (3,561) 0.3% amount of GEL 10.2 million, and c) maintenance capex of GEL 26.0 million. Cash flow used in financing activities (13,094) (5,170) NMF • The EBITDA to cash conversion ratio was at 88.5% in FY24, reflecting the receipt of the delayed receivables from the State. Repayment of borrowings (7,440) (13) NMF Dividends paid out (4,500) (2,000) NMF Other valuation drivers and operating highlights Balance sheet highlights 31-Dec-24 31-Dec-23 Change • The business’ key operating highlights for FY24 are noted below: Total assets 116,620 122,579 -4.9% Key metrics (Unaudited) FY24 FY23 Change of which, cash balance 5,880 10,525 -44.1% Total liabilities 79,123 83,911 -5.7% Number of admissions (thousands): 1,568.4 1,527.2 2.7% of which, borrowings 73,644 80,935 -9.0% of which, Large and Specialty Hospitals 729.0 599.9 21.5% Total equity 37,497 38,667 -3.0% 2 of which, Regional and Community Hospitals 839.4 927.3 -9.5% Occupancy rates: Income Statement highlights (GEL) FY24 FY23 Change of which, Large and Specialty Hospitals 66.5% 53.5% 13.0 ppts Revenue 43,977 38,065 15.5% of which, Regional and Community Hospitals 58.1% 44.3% 13.8 ppts EBITDA 33,001 27,357 20.6% • The decrease in admissions at Regional and Community Hospitals reflects a favourable shift in the revenue mix, which resulted in a Income Statement highlights significant improvement at the EBITDA level, as outlined above. 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$/MWh in FY24 (up 0.3% y-o-y). FY24 Electricity Revenue from Change generation Change US$ thousands, unless otherwise noted (Unaudited) electricity sales y-o-y (MWh) 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. 1 The respective costs divided by gross revenues. 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 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). 2 Please see definition in glossary on page 227. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 114 115 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Financial Review continued 1 Discussion of education business results Discussion of Clinics and Diagnostics Business Results Our education business currently combines majority stakes in four private school brands operating across seven campuses acquired The clinics and diagnostics business, where GCAP owns a 100% equity interest, is the second largest healthcare market participant in Georgia over the period 2019-2023: British-Georgian Academy and British International School of Tbilisi (70% stake), the leading schools in after our hospitals business. The business comprises two segments: 1) 16 polyclinics (providing outpatient diagnostic and treatment services) the premium and international segments; Buckswood International School (80% stake), well-positioned in the midscale segment and and 14 lab retail points at GPC pharmacies; 2) Diagnostics, operating the largest laboratory in the entire Caucasus region – “Mega Lab”. Green School (80%-90% ownership), well-positioned in the affordable segment. 2 FY24 performance (GEL thousands), clinics and diagnostics 1 FY24 performance (GEL thousands), education (Unaudited) (Unaudited) Income Statement highlights FY24 FY23 Change | Income Statement highlights FY24 FY23 Change | | 3 | | | --- | --- | --- | --- | | | Revenue, net | | 74,517 61,723 20.7% | | Revenue 68,174 55,491 22.9% | of which, clinics 59,762 49,170 21.5% | | | | Operating expenses (51,559) (41,053) 25.6% | of which, diagnostics 22,181 18,435 20.3% | | | | EBITDA 16,615 14,438 15.1% | of which, inter-business eliminations (7,426) (5,882) 26.2% | | | | EBITDA margin 24.4% 26.0% -1.6 ppts | Gross profit 37,832 29,240 29.4% | | | | Net profit 12,708 13,263 -4.2% | Gross profit margin 50.7% 47.2% 3.5 ppts | | | | Cash flow highlights | Operating expenses (ex. IFRS 16) (23,661) (19,245) 22.9% | | | EBITDA (ex. IFRS 16) 14,171 9,995 41.8% Net cash flows from operating activities 22,496 17,363 29.6% EBITDA margin (ex. IFRS 16) 19.0% 16.1% 2.9 ppts Net cash flows used in investing activities (22,367) (31,254) -28.4% Net profit/(loss) (ex. IFRS 16) 3,513 (593) NMF Net cash flows from financing activities 4,366 15,897 -72.5% Cash flow highlights Balance sheet highlights 31-Dec-24 31-Dec-23 Change Cash flow from operating activities (ex. IFRS 16) 17,381 6,901 NMF Total assets 217,380 191,723 13.4% EBITDA to cash conversion (ex. IFRS 16) 122.7% 69.0% 53.7 ppts of which, cash 12,081 7,535 60.3% Cash flow used in investing activities (9,820) (1,451) NMF Total liabilities 72,432 62,149 16.5% 4 Free cash flow (ex. IFRS 16) 7,719 10,508 -26.5% of which, borrowings 32,757 27,750 18.0% Cash flow used in financing activities (ex. IFRS 16) (7,786) (5,982) 30.2% Total equity 144,948 129,574 11.9% Balance sheet highlights 31-Dec-24 31-Dec-23 Change Total assets 135,999 135,848 0.1% Income Statement highlights of which, cash balance and bank deposits 4,294 4,500 -4.6% • 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 of which, securities and loans issued 2,000 8,357 -76.1% and b) expansion of the business through the launch of a new campus in the mid-scale segment and the acquisition of the new Total liabilities 82,450 83,901 -1.7% campus in the affordable segment during 2023. of which, borrowings 38,416 48,630 -21.0% • Operating expenses were up by 25.6% y-o-y in FY24, mainly reflecting increased salary, catering and utility expenses, in line with the Total equity 53,549 51,947 3.1% 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. Discussion of results, clinics (GEL thousands) (Unaudited) Income Statement highlights FY24 FY23 Change Cash flow and balance sheet highlights Revenue, net 59,762 49,170 21.5% • Cash collection rate for 2024-2025 academic year stood at 77.1% as at 31 December 2024, in line with last year’s level. Gross profit 30,550 24,550 24.4% • Investing cash outflow of GEL 22.4 million in FY24, reflects the investments related to the expansion of the existing campuses in the Gross profit margin 51.0% 49.7% 1.3 ppts midscale and affordable segments. Operating expenses (ex. IFRS 16) (19,571) (15,745) 24.3% EBITDA (ex. IFRS 16) 10,979 8,805 24.7% Other valuation drivers and operating highlights EBITDA margin (ex. IFRS 16) 18.3% 17.8% 0.5 ppts • In 2024, the total learner capacity increased by 825 learners to 8,095 learners, of which the capacity of the midscale segment expanded Net profit (ex. IFRS 16) 2,165 127 NMF to 1,645 learners (up by 225 learners) and the capacity of the affordable segment increased to 5,300 learners (up by 600 learners). Cash flow highlights • 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. Cash flow from operating activities (ex. IFRS 16) 17,178 8,214 109.1% − The utilisation rate for the pre-expansion 2,810 learners capacity was 100%. EBITDA to cash conversion (ex. IFRS 16) 156.5% 93.3% 63.2 ppts 5 − The utilisation rate for the newly added capacity of 5,285 learners was 70.7%. Cash flow used in investing activities (10,682) (194) NMF • The number of campuses across the different segments is noted below: 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% (Unaudited) Dec-24 Dec-23 Change (y-o-y) Balance sheet highlights 31-Dec-24 31-Dec-23 Change Total number of campuses 7 7 – Total assets 105,290 105,789 -0.5% Premium and International segment 1 1 – of which, cash balance and bank deposits 4,094 4,261 -3.9% Mid-scale segment 2 2 – of which, securities and loans issued 3,465 8,357 -58.5% Affordable segment 4 4 – 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% 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. 1 The detailed IFRS financial statements are included in supplementary excel file, available at https://georgiacapital.ge/ir/financial-results. 5 Of which capex of GEL 8.7 million in FY24 (GEL 11.2 million in FY23). | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 116 117 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Financial Review continued Income Statement highlights Discussion of other portfolio results • The 21.5% y-o-y increase in FY24 revenue reflects: The four businesses in our “other” private portfolio are auto service, beverages, hospitality and housing. They had a combined value of − The increased demand for high revenue-generating services as well as the growth in the number of registered patients, driven by GEL 160.3 million at 31 December 2024, which represents 4.3% of our total portfolio. the business’ proactive approach to customer acquisition and service enhancements. − Ramp-up of two new ambulatory centres launched in 2023. FY24 aggregated performance highlights (GEL thousands), other portfolio − The acquisition of a portfolio of c.27,000 new customers in June 2024, further contributing to the overall top-line growth in FY24. (Unaudited) FY24 FY23 Change (y-o-y) • The gross profit margin improved by 1.3 ppts y-o-y in FY24, reflecting strong revenue growth, while a significant portion of costs Revenue 564,740 575,358 -1.8% remained fixed. EBITDA 65,751 42,785 53.7% • 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 Net cash flows from operating activities 28,153 (7,890) NMF 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. • Auto service – The auto service business includes a car services and parts business, and a periodic technical inspection (PTI) Cash flow and balance sheet highlights business. • The EBITDA to cash conversion ratio stood at 156.5% for FY24, reflecting the strong business performance as well as the collection − Periodic technical inspection (PTI) business – The PTI business’ revenue was up by 12.3% y-o-y to GEL 23.4 million in of delayed receivables from the State. 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 • In FY24, the business spent GEL 8.7 million on capex, primarily related to the expansion of services and polyclinics chain. 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. Other valuation drivers and operating highlights − 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 • The business key operating performance highlights are noted below: 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 (Unaudited) FY24 FY23 Change (y-o-y) posted a GEL 4.0 million EBITDA in FY24, down 6.1% y-o-y. Number of admissions (thousands) 1,763 1,583 11.4% • 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$ (Unaudited) Dec-24 Dec-23 Change (y-o-y) 63 million. Completion of the transaction and the receipt of full sales proceeds occurred on 23 December 2024. Net revenue of the 1 Number of polyclinics 16 16 – 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 Number of registered patients in polyclinics in Tbilisi c.340,000 c.301,000 12.8% 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 Discussion of results, diagnostics (GEL thousands) 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 Income Statement highlights FY24 FY23 Change reassessment of the construction progress for ongoing residential projects at our housing development business and strong 2 Revenue, net 22,181 18,435 20.3% operating performance of the hospitality business. 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% 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. | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 119118 | | | Overview | Our Business | Discussion of Results | | | ## In this section 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 Location: Vashlovani National Park, Georgia Image Source: https://nationalparks.ge/ ## Corporate Governance | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 121120 | | | Overview | Our Business | Discussion of Results | | | ## Directors’ Governance Statement | Dear Shareholders | Georgia Capital is a holding company | | • The Independent Non-Executive | | All the Non-Executive Directors engage | | The Group’s NAV is set by the Audit and | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | We are pleased to present this year’s | focused on investing in and developing | | | Directors are experienced business | directly and regularly with the team | | Valuation Committee. | | | Governance Statement for the year ended | businesses, with the result that we hold | | | people of particular high quality for a | outside the boardroom. | | • The Group’s key financial and investor | | | 31 December 2024. The Board voluntarily | and operate a highly diversified group | | | FTSE Small/MidCap company and we | • The Non-Executive Directors engage | | | communications metric is its NAV as | | continues to apply the UK Corporate | of companies. | | | would invite shareholders to consider | | directly with senior management and | | approved by the Audit and Valuation | | Governance Code 2018 (“the Code”) in its | • Our central Group management | | | their biographies and note the degree | | the workforce in Georgia (central team), | | Committee, a committee comprised of | | entirety, except for the combined roles of | | structure is quite small, with 45 | | of real expertise and experience | | ensuring unfiltered channels of access. | | Independent Non-Executive Directors | | Chairman and CEO. This has consistently | | employees in the head office. It is | | they bring to the Board. They have | | This typically occurs around the Board | | on which the Chairman and CEO does | | been approved by our shareholders over | | principally at the level of the central | | a diverse range of backgrounds and | | meetings and often includes informal | | not sit. | | the last six years, and the Nomination | | management team at which the Board | | nationalities, and each brings a fresh | | contacts in various settings. | | | | Committee and the Board continue | | provides challenge, most importantly, | | view and particular expertise to Board | • While the Directors delegate | | Given the structure of the Group and the | | | to monitor the appropriateness of this | | on investment/divestment decisions. | | discussions. The Senior Independent | | regular monitoring of our portfolio | key role that Irakli Gilauri plays in it, the | | | structure as discussed in the report of the | • The businesses of our portfolio | | | Non-Executive Director, a former | | companies and ongoing strategic | Board continues to believe the current | | | Nomination Committee on pages 169 to | | companies are highly diverse and | | partner at a major US law firm, is highly | | advice to the Group Chairman and | combined Chairman/CEO structure | | | 172, which shareholders are encouraged | | decentralised. Each has its own CEO | | experienced in the region and is the | | CEO and his central team, the entire | best suits the Group. As mentioned | | | to read for further context. | | and management team and a strong | | governance lead for the Board and the | | Board scrutinises, challenges and | in the introduction to this statement, | | | | | measure of operational independence. | | Non-Executive Directors. He also chairs | | ultimately approves or disapproves | this structure has been supported by a | | | In addition, the Company continues to | • In these circumstances, at the small | | | the Audit and Valuation Committee. | | investment and divestment proposals | significant majority of shareholders at each | | | voluntarily comply with: | | central office an independent chair | | Previous roles for the other Non- | | and initiatives, including significant | AGM since the formation of the Company | | Irakli Gilauri • the provisions of the Listing Rules would be a bureaucratic overlay; and Executive Directors (as detailed in the add-on investment for existing through their re-election of Irakli Gilauri. Chairman and relating to pre-emption rights; and at the level of the portfolio companies biographies later in this section) include: portfolio companies. It also considers Ongoing dialogue with our shareholders Chief Executive Officer | • the requirements of Listing Rule 11 | | | he or she would struggle to add value. | | – investment officer at a major | | the commercial terms of major | | confirms that they fully understand and | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | relating to related party transactions. | | The position would also come with | | | investment fund; | transactions (i.e. over GBP 2.5 million). | | support this approach. | | | | | an additional cost which, given these | | – experienced non-executive director | | As such, the Non-Executive Directors | | | | The provisions of the Takeover Code also | | | circumstances and the additional | | | of Georgian groups listed on the | exercise key secondary oversight of the | | The Board continues to develop its | | continue to apply to GCAP. | | | considerations below, the Board | | | LSE; and | private portfolio businesses, engaging | | approach to ESG under the auspices | | | | | considers to be unwarranted. | | – extensive management consulting | | with the private portfolio companies’ | | of the Responsible Investment Policy. | | Combined Chairman and CEO role | | | | | | and private equity experience. | CEOs and top management on their | | Further information is included in the | | We acknowledge that our decision for | | The Board is highly experienced and | | | | | most important decisions. During | | Resources and Responsibilities section | | the roles of Chairman and CEO to be | | almost entirely independent. | | | | | 2024, two of the regular quarterly | | on page 76. Details of our ESG activities | | exercised by one individual is not compliant | | • All Board members other than the | | | | | meetings were held in Georgia, | | are set out in our Sustainability Report. | | with provision 9 of the Code. This matter | | | Chairman and CEO are Independent | | | | providing the Non-Executive Directors | | The Board remains committed to the view | | continues to be reviewed by the Nomination | | | Non-Executive Directors. Each Non- | | | | with opportunities to meet with a | | that the Company’s strong focus on good | | Committee and the Board as part of | | | Executive Director approaches the | | | | number of the portfolio companies’ | | ESG processes is fundamental to the | | Board effectiveness evaluation exercises. | | | Company with true independence. | | | | CEOs/executive management. | | Company’s ongoing success. | | On page 172 you will find the results of | | | Our decisions at the Board level and | | | | | | | | the Board evaluation conducted in 2023, | | | at the Nomination Committee (on | | | | | | | | which inherently considers how the current | | | which the CEO sits) level are typically | | | | | | | | structure of the combined Chairman/CEO | | | reached through consensus – meaning | | | | | | | | | | | | Irakli Gilauri | | | | David Morrison | | | role contributes to the effectiveness of the | | | that ultimately all the independent | | | | | | | | | | | | Chairman and Chief Executive Officer | | | | Senior Independent Non-Executive Director | | | operation of the Board and more widely | | | Directors and the Chairman and | | | | | | | | | | | | 20 March 2025 | | | | 20 March 2025 | | | to the Company. The Board continues to | | | CEO agree on a final position. They | | | | | | | | believe that, at present, this structure best | | | are majority decisions: the Chairman | | | | | | | | serves the Company and its stakeholders. | | | and CEO does not have a veto | | | | | | | | The basis for this conclusion is summarised | | | and is outnumbered four to one by | | | | | | | Statement of Compliance with the UK Corporate Governance Code in this section. Independent Non-Executive Directors. The Board continues to commit to high standards of corporate governance that enhance performance, reduce risks and promote the protection of our shareholders’ interests. David Morrison 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 Senior Independent 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. Non-Executive Director 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 122 123 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Our Board of Directors ## Board of ## Directors Irakli Gilauri David Morrison Neil Janin Massimo Gesua’ sive Salvadori Maria Chatti-Gautier Chairman and Chief Executive Officer Senior Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Irakli Gilauri was appointed as Chairman and CEO on David Morrison was appointed as the Senior Independent Neil Janin was appointed as an Independent Massimo Gesua’ sive Salvadori was appointed as an Maria Chatti-Gautier was appointed as an Independent 24 February 2018. He also serves as a member of the Non-Executive Director of the Company on 24 February Non-Executive Director of the Company on 17 October Independent Non-Executive Director of the Company Non-Executive Director of the Company on 19 March Nomination Committee. He sits on the Supervisory 2018. He also serves as the Chairman of the Company’s 2022. He also serves as the Chairman of the Company’s on 24 February 2018. He also serves as a member of 2020. She also serves as a member of the Remuneration Board of JSC Georgia Capital. Audit and Valuation Committee and as a member of the Nomination and Remuneration Committees and sits on the Audit and Valuation and Nomination Committees and Audit and Valuation Committees and is a member of Remuneration Committee. He sits on the Supervisory the Supervisory Board of JSC Georgia Capital. and is a member of the Supervisory Board of JSC the Supervisory Board of JSC Georgia Capital. Board of JSC Georgia Capital. Georgia Capital. Skills and experience: Skills and experience: Skills and experience: Skills and experience: Skills and experience: Irakli Gilauri formerly served as the CEO of BGEO Group Mr Morrison spent most of his career (28 years) at Sullivan Mr Janin has extensive experience as a non-executive Dr Gesua’ sive Salvadori is an analyst covering Ms Chatti-Gautier is a senior investment manager with from 2011 to May 2018. He joined as CFO of Bank of & Cromwell LLP where he served as Managing Partner director of Georgian groups that are listed on the banking and other financial stocks globally. He works over 25 years of experience in private equity in prominent Georgia in 2004 and was appointed as Chairman of of the firm’s Continental European offices. His practice Premium Listing segment of the LSE. He was Chair for Lancaster Asset Management, a London-based financial institutions and has sat on the board of directors the Bank in September 2015, having previously served focused on advising public companies in a transactional and Non-Executive Director of BGEO Group PLC hedge fund, which he joined in 2011. He is responsible of over 30 companies. She currently serves as Senior as CEO of the Bank since May 2006. Prior, he was an context, including capital raisings, IPOs, and mergers and from October 2011 until 21 May 2018 and of Bank of for generating investment ideas and understanding Advisor of Trail Management, an independent private EBRD banker. Mr Gilauri has more than 20 years of acquisitions. The author of several publications on securities Georgia Group PLC from February 2018 until March broad trends. Dr Gesua’ sive Salvadori worked as equity investment firm that invests in European midcap experience in banking, investment and finance. He also law-related topics, Mr Morrison was recognised as a leader 2022, and he served as Non-Executive Director of a management consultant at the London office of companies to develop them in China. Ms Chatti-Gautier served from 2015 as a Director of Georgia Healthcare of his profession in Germany and France. Since withdrawing Georgia Capital PLC’s (then listed) subsidiary Georgia McKinsey & Company, between 2002 and 2011, started her career at Chase Manhattan Bank in Paris Group PLC (which delisted in 2020). Mr Gilauri is also from his law firm in 2008, Mr Morrison has focused on Healthcare Group PLC from September 2015 until April specialising in financial services, and served clients before joining BAII (Banque Arabe et Internationale Non-Executive Director and Chairman of the Audit his roles as a non-executive director on corporate boards 2018. He serves as counsel to CEOs of both for-profit across different geographies in developed and emerging d’Investissement). She spent most of her career (15 Committee of Consilium Acquisition Corp I, LTD (SPAC). and his charitable work. Mr Morrison previously served as and non-profit organisations and continues to provide markets as part of the banking strategy practice. years) at Natixis Private Equity, before moving to Oddo the Senior Independent Non-Executive Director of both consulting services to McKinsey & Company. Mr Janin Private Equity. Her activities included sourcing, analysing, BGEO Group PLC (from October 2011 until May 2018) was a Director of McKinsey & Company, based in managing and monitoring a large number of investments Education: and Georgia Healthcare Group PLC (from September 2015 its Paris office, for over 27 years, from 1982 until his Education: and exits. Through her own consulting firm, Ms Chatti- Mr Gilauri received his undergraduate degree in Business until their delisting in August 2020) and served as Chairman retirement. At McKinsey & Company, he conducted Dr Gesua’ sive Salvadori, a native of Venice, obtained Gautier has also advised various investment and Studies, Economics and Finance from the University of the Audit Committee (amongst other Committee roles) engagements in the retail, asset management and an M.Phil. and a Ph.D from Oxford University, where he fundraising programmes in Europe, Lebanon and the of Limerick, Ireland, in 1998. He was later awarded the for both companies. In his charitable work, Mr Morrison corporate banking sectors, and was actively involved in attended St. Antony’s College. He graduated with a B.Sc MENA region, including Drake Star Partners (previously Chevening Scholarship, granted by the British Council, has focused on conservation finance. In 2008, he became every aspect of organisational practice, including design, in Economics from Warwick University. He attended known as LDA Jupiter). Ms Chatti-Gautier currently to study at the Cass Business School of City University, the Founding CEO of the Caucasus Nature Fund (“CNF”), leadership, governance, performance enhancement and the United World College of the Adriatic in Duino. His serves as a board member and member of the Audit London, where he obtained his MSc in Banking and a charitable trust dedicated to wilderness protection in transformation. Before joining McKinsey & Company, postgraduate studies were funded through scholarships Committee of Groupe Pizzorno Environnement, a leading International Finance. Mr Gilauri holds a Certificate in Georgia, Armenia, and Azerbaijan. Following the departure Mr Janin worked for Chase Manhattan Bank (now JP by the Foreign and Commonwealth Office, the Economic French operator in the waste management business Winemaking from the University of California, Davis. of CNF’s Executive Director last year, Mr. Morrison stepped Morgan Chase) in New York and Paris, and Procter & Research council, the Fondazione Einaudi and the listed on Euronext. She is also a Director of Buffet into that role on an interim, voluntary basis and stepped Gamble in Toronto. Mr Janin has practised in Europe, Ente Einaudi. Crampon Group, a major producer of wind musical down from his role as Chair of CNF’s supervisory board. He Asia and North America. He is also a Director of Neil instruments and of Thés de La Pagode, producer and Reasons for appointment: also serves on the board of, or as an advisor to, three other Janin Limited, a company through which he provides distributor of high-end organic teas. Irakli Gilauri brings significant insight of local and Reasons for appointment: conservation trusts he helped to create. A principal focus his ongoing consulting services. international strategic and commercial issues to the Massimo Gesua’ sive Salvadori’s background in of his role for all four of these charities is the investment of Board and has a distinguished career in corporate investment and his experience as a professional Education: a portfolio of over US$ 500 million in endowment capital. banking. Over the last decade, Mr Gilauri’s leadership has Education: investor with financial markets, strategic issues and Ms Chatti-Gautier holds an MBA with major in Finance Mr Morrison also served as Georgia’s first Environmental been instrumental in creating major players in a number Mr Janin holds an MBA from York University, Toronto, valuation techniques brings a breadth of knowledge to from Ecole des Hautes Etudes Commerciales-HEC, with Ombudsman in 2019 and 2020. of Georgian industries, including banking, healthcare, and a joint honours degree in Economics and and makes him an important asset to the Board and joint MBA programmes from London Business School utilities and energy, real estate, insurance and beverages. Accounting from McGill University, Montreal. the Nomination and Audit and Valuation Committees, and NYU Stern. Mr Gilauri’s local expertise and business experience, Education: of which he is a member. His extensive experience of in working previously with both Georgia Healthcare Mr Morrison received his undergraduate degree from Yale valuations and value drivers are particularly valuable to Group PLC and BGEO Group PLC, alongside his strong College and his law degree from the University of California, Reasons for appointment: the Audit and Valuation Committee since the private Reasons for appointment: understanding of the Georgian political, economic and Los Angeles. He was also a Fulbright scholar at the Neil Janin has extensive experience of serving as a portfolio companies’ valuation is the key area of focus in Maria Chatti-Gautier has extensive experience in all types cultural context, is invaluable to the Board. University of Frankfurt. non-executive director of Georgian groups that are also Georgia Capital’s financial accounting and reporting. His of private equity transactions with a hands-on approach listed on the LSE. His career spans Europe, Asia and background as a management consultant is also valued and leadership role in investment execution, build-up and North America, across the retail, asset management in Board discussions. exit strategies. Ms Chatti-Gautier’s background in private Reasons for appointment: and corporate banking industries, and all areas of equity and understanding of investment strategies, With his background as a corporate finance and securities organisational practice, including governance, culture, alongside her board experience, makes her well suited to lawyer advising dozens of clients, including a large number design, leadership, performance enhancement, change her role on the Board. of publicly held companies, David Morrison brings to and transformation. Mr Janin brings his considerable the Board vast experience in corporate governance and insight of international strategic and commercial compliance as well as a strong understanding of legal practices, in addition to significant experience of and regulatory issues. His work since 2008 has given him governance and the Georgian investment climate, extensive regional experience, which includes in-depth to the Group’s future development. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 124 125 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Corporate Governance Framework Our governance structure The Board is responsible to shareholders for creating and The Board has primary responsibility for overseeing environmental delivering shareholder value over the long term through the and social risks and that the Company’s strategic direction is oversight of the Group’s operations. Our responsibilities include regularly informed by material environmental and social issues. BOARD setting and overseeing the execution of the Group’s strategy Given the small size of the Board and the importance of these within a framework of effective risk management and internal matters, including climate change, the Board believes that it is controls, demonstrating ethical leadership and upholding best appropriate for the whole Board to be responsible for these issues. practice corporate governance. Outside these matters, the Board delegates authority for the ### CEO Audit and Valuation Remuneration Nomination All decisions are made through Directors exercising independent day-to-day management of the business to the CEO. The CEO objective judgement, and following open and rigorous challenge. delegates aspects of his own authority, as permitted under the ### Committee Committee Committee While our ultimate focus is long-term growth, the Company also corporate governance framework, to the Management Board. needs to deliver on short-term objectives, and we seek to ensure Read more Read more Read more ### Executive that management strikes the right balance between the two. Operation of the Board on page 134 on page 142 on page 169 ### management We maintain a corporate calendar, which sets out rolling Each Director also recognises their statutory duty to consider and agenda items that must be considered during the year. This represent the Company’s various stakeholders in its deliberations annual schedule of items ensures that all matters are given due and decision-making. You can read more about how Directors consideration and are reviewed at the appropriate point in the Board size, composition and independence Some of these skills include: had regard to their duties under section 172 (1) of the Companies financial and regulatory cycle. The Board is comprised of five Directors, four of whom are • Banking, investment and finance sector experience. Act 2006 and how Directors performed these duties on page 58 Independent Non-Executive Directors, and one executive • Leadership knowledge. of the Strategic Report. The Chairman receives regular input from the Non-Executive Chairman – Irakli Gilauri, who also acts as the Company CEO. • Understanding of local and international strategic and Directors ahead of each Board meeting in order to ensure that The responsibilities of the Board are set out on page 125. commercial issues. Matters reserved for the Board any matters they have raised are on the agenda to be discussed • Investor market knowledge. In order to ensure that we meet our responsibilities, specific key at the meeting. The Senior Independent Non-Executive Director Director biographies can also be found here: • Experience of stakeholder engagement. decisions have been reserved for approval by the Board. supports the Chairman in his role, acts as an intermediary for other https://georgiacapital.ge/governance/board. • Understanding of governance practices and Non-Executive Directors when necessary and liaises with the Non- regulatory framework. The key matters reserved for the Board are: Executive Directors outside of the Board and Committee meetings. The Board of Directors considers the five-member Board well- • Familiarity with Georgian political, economic and • The Group’s long-term objectives and strategy. The Senior Independent Non-Executive Director met with the Non- suited to carrying out its duties of overseeing the Company’s cultural context. • Shareholder engagement and general meetings. Executive Directors without the Chairman present at least once continuing obligations and leading the Company’s success in an • Experience of investment execution, exit strategies and • Overall corporate governance arrangements including Board during the year to appraise the Chairman’s performance. optimal and cost-effective way. Both the Audit and Valuation and private equity. and Committee composition, Committee Terms of Reference, Remuneration Committees continue to have three Independent Directors’ independence and conflicts of interest. Non-Executive Directors who have the requisite level and The relationship between Directors ensures that no individual, • Internal controls, governance and risk management breadth of expertise. The Nomination Committee comprises or group of individuals, is able to dominate the decision-making frameworks. two Independent Non-Executive Directors (one of which is the process, independence of thought is maintained, and no undue • Changes to the corporate or capital structure of the Company. Committee Chair) and Mr Gilauri. reliance is placed on any individual. • Annual Report and Accounts, and financial and regulatory announcements. The Board continues to be of the view that a diversity of skills, At the time of this report, we have assessed the independence of • Significant changes in accounting policies or practices. backgrounds, knowledge, experience, geographic location, each of the Non-Executive Directors and are of the opinion that • Annual budgets and financial expenditure. nationalities, age and gender is important to effectively govern each act in an independent and objective manner. We consider • Oversight of risk management and performance, and of the business. The Board and its Nomination Committee work that, in line with the Code, all of our Non-Executive Directors are environmental and social risks. to ensure that the Board continues to have the right balance independent and free from any relationship that could impair • Allocation of capital, including dividends and buybacks, of skills, experience, independence and knowledge necessary their judgement. significant investments and divestments, consideration of to discharge its responsibilities in accordance with the highest material environmental and social issues in respect of standards of governance. Our governance structure potential investments. We understand our responsibility to shareholders and Board appointments are made based on recommendations stakeholders. We are dedicated to delivering shareholder value A full formal schedule of matters specifically reserved for the received from the Nomination Committee. In making these over the long term and promoting the success of the Company Board can be found on our website at: appointments, the Nomination Committee ensures that for the benefit of all shareholders through the management of the https://georgiacapital.ge/governance/cgf/schedule. appointments and succession plans are made based on merit Group’s business. The Board is focused on shareholder returns as well as other objective criteria, whilst ensuring the Board and on opportunities which meet its investment return and maintains the right balance of skills and knowledge needed to growth criteria. address its specific needs. Due consideration is also given to diversity in the wider sense, and the benefits that stem from The Georgia Capital Board is assisted in fulfilling its responsibilities having a diverse Board. by three Committees: Audit and Valuation, Remuneration and Nomination. The Terms of Reference are reviewed annually, Each of our Non-Executive Directors occupies, and/or has approved by each Committee and the Board, and can be found previously occupied, senior positions in a broad range of relevant at: https://georgiacapital.ge/governance/cgf/terms. associated industries, bringing valuable external perspective to the Board’s deliberations through their experience and insight For further information about the Committees, including from other sectors enabling them to contribute significantly to membership, see the Audit and Valuation Committee report on decision-making. page 134, the Remuneration Committee report on page 142 and the Nomination Committee report on page 169. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 126 127 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Corporate Governance Framework continued Board activities during 2024 Board and Committee meeting attendance Details of the areas that the Board considered this year are set out below and comprise: Details of Board and Committee meeting attendance in 2024 are as follows: Audit and Valuation Nomination Remuneration Strategy • Ongoing consideration and monitoring of the Company’s progress in meeting its strategic goals Members Board Committee Committee Committee including transitioning to a capital-light investment business. Irakli Gilauri 4/4 Scheduled n/a 2/2 n/a • Approved capital allocations to and discussed the capital allocation outlook for 8/8 Ad hoc portfolio companies. David Morrison 4/4 Scheduled 5/5 Scheduled n/a 4/4 • Approved the sale of 80% of the Group’s beer and distribution business for c.US$ 63 million. 8/8 Ad hoc 7/7 Ad hoc • Reviewed Group and portfolio company performance against strategy. • Regularly reviewed the Georgian, regional and global political and economic climate, Massimo Gesua’ sive Salvadori 4/4 Scheduled 5/5 Scheduled 2/2 n/a particularly in light of the ongoing war between Russia and Ukraine, and the 2024 8/8 Ad hoc 7/7 Ad hoc Georgian Parliamentary elections. Neil Janin 4/4 Scheduled n/a 2/2 4/4 • Continued with share buyback and cancellation programmes totalling US$ 65 million, 6/8 Ad hoc announced in 2024. Maria Chatti-Gautier 4/4 Scheduled 5/5 Scheduled n/a 4/4 • Reviewed a number of ESG matters, TCFD reporting and ESG target-setting 8/8 Ad hoc 7/7 Ad hoc implementation processes. For Board and Committee meetings, Directors’ attendance is expressed as the number of meetings attended out of the number that Governance, assurance • Focused on high-level governance issues and developments that may affect the Company each Director was eligible to attend. and risk management strategy. • Received reports from different Committees. Purpose, culture and values personnel monitored portfolio companies’ performance on at • Considered the proxy voting agency approaches and the impact on the Company. The Board has responsibility for the overall purpose, culture and least a monthly basis, also reinforcing key messages. These • Reviewed and approved governance documents, including the schedule of matters reserved for values of the Company, and their pursuit and development are at messages are cascaded down from the management team to the Board, Terms of Reference for the Audit and Valuation Committee, Remuneration Committee the core of each Board meeting. the wider employees. and Nomination Committee, and Group-level policies. • Embedded ESG considerations into the governance framework. The Board believes that there are three features in particular that Values will allow the Company to capitalise on the fast-growing Georgian Being entrepreneurial Financial reporting • Received reports on the financial performance of the Group. economy: access to capital, access to management and strong Our current culture is entrepreneurial in nature, and this is • On the recommendation of the Audit and Valuation Committee, reviewed and approved financial corporate governance. Our culture and values are designed to something that is grounded in our ability to see and seize reporting including approval of accounts, Notice of AGM, half-year and full-year announcements, strengthen all of these. opportunities and to develop business strategies whilst remaining and trading updates to the market. disciplined and rational. All of our portfolio companies have been ESG • See separate Sustainability Report. Purpose founded or substantially developed by entrepreneurs, and this Georgia Capital’s purpose is to provide investors with an is at the core of what we do. Our objective moving forward is to Succession • Board and Committee succession planning. opportunity to invest in the historically fast-growing Georgian empower our people, continue to develop this spirit and pursue • CEO succession plan. economy by giving them access to attractive investments with the excellence of execution within our businesses. Stakeholders • Considered and implemented s172 duties: long-term growth potential. The Company then seeks to develop – Re-confirmed identity of key stakeholder groups. these into viable independent businesses on which value can Having a learning mindset – Considered how Board decisions impact the interests and priorities of each group. be realised through sale or otherwise. By investing in Georgia We seek to develop a learning mindset as part of our wider – Actively engaged with different stakeholders. to create multiple strong private companies/institutions, we will culture and we recognise the need to improve the ways in which foster Georgia’s development and help it succeed. we communicate, provide feedback and help our people to Investment matters • Reviewed investment and exit strategy. develop. We approach this by looking at ways we can mentor Culture and coach people throughout the organisation, and we aim to Standing items Each quarter the following topics are usually discussed at the Board meeting: The Board continued to focus on developing, monitoring and create an environment where independent thinking and curiosity • Financial update (with formal financial results announcements and trading updates to the market assessing corporate culture and thinking about the ways in which are encouraged. typically being approved at separate phone meetings). our culture might serve as a long-term differentiator, both in terms • Monitoring of financial performance against budget. of strategy and of recruitment and retention. We are proud of Maintaining the high standard of ethics • Macroeconomic developments, including a focus on both the Georgian and regional markets. the culture that we built at Georgia Capital and recognise it is This has been an aspect of our culture that we have maintained • An assessment of current and potential future risks to the Company. important to clearly articulate this culture, drive it and ensure that since our inception, and it is a priority of ours to ensure it stays • Regulatory and legislative updates, including corporate governance as appropriate. it permeates the entire business. this way. In order to maintain high ethical standards, we will draw • Updates from the Committee meetings, typically including at least an Audit and Valuation on principles of transparency and accountability and seek to Committee report on accounting issues and valuations and Internal Audit. Helping Georgia to succeed is at the heart of Georgia Capital. sustain high standards of corporate governance. • Business updates from selected portfolio companies. The Board reviews the capital allocation During the year the Board looked closely at our mission, vision pipeline and takes action as necessary on new investments or divestments. and values and how we could reinforce through shaping the Creating a culture relies on the participation and leadership of Company’s long-term strategy. The Board is of the view that this our Board of Directors, as this vision can then be communicated will benefit all of the Company’s stakeholders. through executive management and onward to the wider businesses. By setting the tone at the top, establishing the core In order to create strong private business institutions, we will values of the Company and demonstrating our leadership, we continue with our plan to develop our leaders so that they are creating a culture that clearly sets an expectation that every become future entrepreneurs of Georgia, through personal and employee acts ethically and transparently in all of their dealings. professional development. The Chairman and CEO met regularly This, in turn, fosters an environment where business and with key management personnel at Georgia Capital to share compliance are interlinked. this vision and coordinate the Group’s actions and priorities. The Chairman and CEO and Georgia Capital’s key management | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 128 129 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Corporate Governance Framework continued The process for evaluating the Chairman’s performance The letters of appointment for our Non-Executive Directors How this stakeholder group influenced the Key stakeholders Activities undertaken throughout year Committee/Board agenda and decision-making In light of his role as Chairman and CEO, Irakli Gilauri’s are available for inspection at our Company’s registered office • The Board receives feedback from investors at performance was evaluated. In addition, the full Board met to address during normal business hours. Investors Types of engagement: our Investor Days and during meetings about how they consider the Remuneration Committee’s recommendations • Meetings with the Chairman and CEO view Georgia Capital within the wider market. Raised and Mr Gilauri’s performance as Board Chairman. David Prior to accepting any external appointments, Directors are • Meetings and calls with the CFO and Advisor to the matters of interest are then discussed at Morrison as the Senior Independent Non-Executive Director required to seek the Board’s approval. The Board believes CEO Board meetings. led the overall review. The CEO was not present during the full that the other external directorships/positions held provide the • Investor relations team • The Board receives feedback from investors via the Board’s discussions around his own performance. The Board Directors with valuable expertise, which enhances their ability to • LSE announcements Chairman and CEO and the CFO who are in regular also reached consensus on his performance as Chairman as act as a Non-Executive Director of the Company. Despite our • Investor conferences contact with the Company’s major shareholders. reflected in the favourable Board self-evaluation and the decision Non-Executive Directors holding external directorships and other • Investor roadshows This feedback informs the Board’s decision-making. to recommend the maintenance of the current combined role of external positions, the Board believes they still have sufficient • Investor Days • The Chairman and CEO, the CFO, the Advisor to Chairman/CEO as discussed above. time to devote to their duties as a Director of the Company. In • Corporate website with investor section the CEO and the Head of Investor Relations each order to form a view of this, we conduct an annual review of • AGM and General Meeting provide a standing invitation to shareholders to meet The Board’s objectives for 2025 are: individual Director’s conflicts, which is recorded in the Conflicts • Quarterly results and discuss any matters they wish to raise. • monitoring the implementation of the strategy and continuing of Interest Register, and as part of the review we consider other • Senior Independent Non-Executive Director as an • The Senior Independent Non-Executive Director acts to adjust as necessary, with particular focus on capital appointments held by each Director. intermediary as an intermediary for shareholders. allocation and divestments; • Meeting with Committee Chairs and other Non- • Committee Chairs also make themselves available to • addressing the uncertainties created by Georgian and regional Stakeholder engagement Executive Directors answer questions from investors. The Non-Executive political/geopolitical tensions; The Code reinforces and expands the requirements of the • Annual Report Directors attend regular Investor Days and are • keeping ESG at the forefront of our decision-making, and UK Companies Act for directors to remain mindful of their • Sustainability Report available to answer questions. monitoring and enhancing KPIs relating to climate change duties to consider the interests of key stakeholders. The Board • The Chairman has overall responsibility for ensuring risks and opportunities; understands the importance of effective engagement with How the Board engages with investors: that the Board understands the views of major • maintaining focus on succession planning; stakeholders to gain an understanding of the issues that relate to We will engage with shareholders through the shareholders. The Board is regularly kept informed • monitoring and assessing culture and how this aligns each stakeholder and those that impact the Company so that the Company’s forthcoming AGM to be held in May of these views by the Chairman as well as executive with our purpose, values and strategy; and Board can appropriately consider these views and their concerns 2025 but will also continue to communicate with management and the investor relations team and, to • ensuring continued active shareholder and when having Board discussions, and when considering the long- shareholders on important developments throughout the extent deemed appropriate, the Company has stakeholder engagement. term success of the Company. the year. Our quarterly results are supported by a taken active steps to adopt different ways of working combination of presentations and conference call in response to feedback received from shareholders Succession planning The Board has structured its meeting agendas to take account of briefings, as was the preliminary announcement of our and other stakeholders. Informal feedback from Board appointments and senior management each of the provisions in s172 of the Companies Act 2006, and annual results in February 2025. analysts and the Company’s corporate advisors is We continue to believe that effective succession planning focuses on long-term value generation opportunities, considering also shared with the Board. mitigates the risks associated with the departure or absence of political and macroeconomic circumstances and stakeholder The Company has established a comprehensive • We hold regular meetings with JSC Georgia Capital’s well-qualified and experienced individuals. Our aim is to ensure considerations. Shareholders’ considerations are sought out and shareholder engagement programme and encourages existing bondholders and actively engage with that the Board and management are always well resourced incorporated into our discussions and decisions. For example, an open and transparent dialogue with existing and potential lenders to discuss our funding strategy. with the right people in terms of skills and experience, in order members of the Board and management participated in more potential shareholders. For example, our Company The Chairman and CEO, Senior Independent to effectively and successfully deliver our strategy. We also than 500 virtual and/or physical investor meetings. The Company Secretary also has an ongoing dialogue with Non-Executive Director and members of the Board recognise that continued tenure brings a depth of Company- participated in a number of investor conferences, and several shareholder advisory groups and proxy voting agencies. make themselves available to meet with institutional specific knowledge that is important to retain. investor roadshows during the year. investors when requested. The Company participated in several investor • Our comprehensive investor website The Board’s Nomination Committee is responsible for both The Company maintains a Stakeholder Engagement Plan which conferences and roadshows during the year. https://georgiacapital.ge is updated and reviewed Director and senior management succession planning. There is a describes, informs and guides the stakeholder engagement on a regular basis to ensure that information, including formal, rigorous and transparent procedure for the appointment process of the Group. The Plan seeks to define a technically and matters relating to sustainability, is up to date. It provides of new Directors to the Board, including a review of other culturally appropriate approach to consultation and disclosure. The shareholders with access to the Company’s results, significant commitments Directors may have and, typically, goals are to ensure that adequate and timely information is provided press releases, investor presentations, analyst reports, a period of service in a Board advisory role. to stakeholders, that these groups are given sufficient opportunity details on our corporate governance and corporate and to voice their opinions and concerns, and that these concerns social responsibility framework and our leadership, as More details on the role and performance of the Nomination influence the Group and its various decision-making processes. well as other information relevant to our shareholders. Committee is on pages 169 to 172. We also ensure that shareholders can access details of The table on pages 129 to 131 sets out our key relationships the Company’s results and other news releases through Non-Executive Directors’ terms of appointment with stakeholders and how we have engaged with them over the the LSE Regulatory News Service. On appointment, our Non-Executive Directors are provided financial year. The table also shows examples of how we have with a letter, which sets out the terms and conditions of their considered our stakeholders when making key decisions and directorship, including the fees payable and the expected time how this has influenced certain decisions. commitment. Each Non-Executive Director is expected to commit approximately 25-35 days per year to the role. An additional time More information about how the Directors have discharged their commitment is required to fulfil their roles as Board Committee duty under s172 of the Companies Act 2006 is available in the members and/or Board Committee Chairs, as applicable. Strategic Report, on pages 58 to 59. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 130 131 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Corporate Governance Framework continued | | How this stakeholder group influenced the | | | | | How this stakeholder group influenced the | | | --- | --- | --- | --- | --- | --- | --- | --- | | Key stakeholders Activities undertaken throughout year | Committee/Board agenda and decision-making | | Key stakeholders Activities undertaken throughout year | | | Committee/Board agenda and decision-making | | | Investors | • Topics of discussion during 2024 reflected both the | | Suppliers, | Types of engagement: | | • Board agendas from time to time consider | | | continued | | external political and macroeconomic environment | customers, | • Investments to support diversified economy | | | governmental issues that influence the wider | | | | in which Georgia Capital operates and how the | the wider | • Engagement with suppliers, customers and the local | | | Georgian market, which can influence key | | | | Company adapts to changes in this environment. | community | | communities | | investment decisions. | | | | From a company-specific perspective, investors | and the | • Education | | • Investments are made in local businesses that | | | | | have particularly focused on the Company’s plans | environment | • Corporate website | | | will be beneficial to the Georgian economy. | | | | for capital repatriation to shareholders over the next | | • Volunteering | | | This is evidenced in the Company’s Responsible | | | | few years, the prioritisation given by the Board to | | | | | Investment Policy. | | | | balance sheet deleveraging compared to capital | | How the Board engages with suppliers, | | • Please refer to the Resources and Responsibilities | | | | | repatriation, and the specific methods used to return | | customers and the local communities: | | | section on page 76 of this report and the | | | | excess cash to shareholders. In addition to direct | | The Group considers the interests of its main | | | Sustainability Report for further details on community | | | | contact with our shareholders, the Company’s | | stakeholders when developing the strategy and the | | | engagement activities carried out throughout the | | | | corporate brokers and advisers also attended a | | processes to improve its operations. Investing in | | | year, and the output of that engagement. | | | | Board meeting to provide further specific feedback | | local businesses helps us to diversify and modernise | | | | | | | from a wider range of shareholders. This feedback | | the Georgian economy, and this can be seen in the | | | | | | | and engagement were instrumental in supporting | | development of our different portfolio companies. | | | | the Board’s decisions regarding the evolution of the capital repatriation programme announced during Our hospitals and clinics and diagnostics businesses are the year, which reflected a mixture of capital returns driving the modernisation and improvement of healthcare in via share buybacks and further ongoing deleveraging the country. Our renewable energy business is involved in of the Company’s balance sheet. infrastructure programmes and ongoing structural market • Please refer to the Resources and Responsibilities reforms. Our auto service business contributes to overall section on page 76 of this report and the cleaner air and improved vehicle safety. Sustainability Report for further details on investor- led engagement activities carried out throughout the The Company believes that educating young people year and the output of that engagement. is extremely important for the development of the community as a whole. Georgia Capital is investing in Employees Types of engagement: • Employee surveys are conducted at the holding schools to give more learners access to high-quality • Nominated Non-Executive Director company level as well as across the portfolio education and facilities. • Regular town halls companies. • Off-site and on-site meetings • Management has been instructed to ensure that As part of our sponsorship and charitable activities, • Feedback systems, e.g. employee satisfaction proposals to the Board are made in line with the Group acts to conserve nature, promote and surveys at our businesses stakeholders’ interests. enhance access to education and supports people with • The Nomination Committee continues to look at disabilities and special needs. Our Senior Independent How the Board engages with employees: succession planning and are conscious of ensuring Non-Executive Director volunteers as Chairman of the The Board is encouraged to engage with employees a diverse pipeline for the future. CNF, a charitable foundation providing financial and outside of formal channels. Workforce engagement • Please refer to the Resources and Responsibilities technical support to Georgia’s national parks. includes both formal and informal meetings, not only section on page 76 of this report and the with the central staff but also, when important strategic Sustainability Report for further details on workforce or capital allocation questions arise in the portfolio engagement activities carried out throughout the companies, with the management of those companies. year, and the output of that engagement. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 132 133 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Corporate Governance Framework continued Directors’ responsibilities Internal controls and risk management Workforce engagement In 2024, attendance at the office was voluntary. Distance and Statements explaining the responsibilities of the Directors for The Company has a comprehensive system of internal As Georgia Capital is a relatively small holding company with a hybrid working environments facilitated staff engagement through preparing the Annual Report and financial statements can be controls in place, designed to ensure that risks are mitigated diverse number of portfolio companies, and given the relative online platforms. Regular meetings organised by the Chairman and found on page 173 of this Annual Report. and that the Company’s objectives are attained. The Board is independence of these companies, the steps and tools used CEO were held with senior and middle management. Messages accountable for reviewing and approving the effectiveness of to encourage employee engagement are developed within from these meetings were cascaded down to all employees. A further statement is provided confirming that the Board internal controls operated by the Company, including financial, the companies themselves, and shared with other portfolio considers the Annual Report, taken as a whole, is fair, balanced operational and compliance controls, and risk management. The companies as deemed useful, rather than following a “top-down” At our regular Board and Committee meetings, interaction with and understandable and provides the information necessary for Board recognises its responsibility in respect of the Company’s approach directed by Georgia Capital. While formal intragroup a number of GCAP holding company personnel occurs naturally shareholders to assess the Company’s position and performance, risk management process and system of internal control and exchanges occur (e.g. head office staff and staff from the as part of the meeting where they present to the Board and/ business model and strategy. oversees the activities of the Company’s external auditors and the portfolio companies coming together to celebrate the Company’s or participate in the discussion. The designated Non-Executive Group’s risk management function (supported by the Audit and anniversary), it is the exception rather than the rule. Regular Director for workforce engagement, the Senior Independent Non- Division of responsibilities Valuation Committee), and accordingly the Board’s reviews its monitoring of our portfolio companies and ongoing strategic Executive Director and other Non-Executive Directors also “walk The Board has adopted written statements setting out the internal controls and risk management framework on an annual advice is the responsibility of the Group Chairman and CEO and the halls” during their visits and engage informally with the team. respective responsibilities of the Chairman, Senior Independent basis (including once in the current year of reporting). his central team. In light of the above, for workforce engagement Non-Executive Director and Non-Executive Directors. Biographies A review of the Company’s risk management approach is further purposes, the Board has determined that the relevant workforce Annual General Meeting for the Board members are set out on pages 122 and 123. A discussed in the Strategic Report on pages 60 to 64. is the central team. The Notice of Annual General Meeting is circulated to all summary of the responsibilities of the Directors is set out below. shareholders at least 20 working days prior to such meeting. All For details on the management and mitigation of each principal The Board is mindful that attracting and retaining talent in a shareholders are invited to attend the AGM, where there is an Chairman risk see pages 65 to 74. highly competitive sector is crucial to the success of the Group. opportunity for individual shareholders to question the Chairman • Guardian of the Board’s decision-making process. As such, we are keen to understand the employee voice on an and the Chairs of the principal Board Committees. • Ensures the Board as a whole plays a full and constructive The Group’s Viability Statement is detailed on pages 63 to 64. ongoing basis. GCAP has a small number of employees, which part in strategic decision-making. enables regular formal and informal access to Board Directors, After the AGM, shareholders can talk informally with the Directors. • Sets the Board agenda. Please refer to pages 134 to 141 for further detail in relation to irrespective of seniority. Maria Chatti-Gautier, as the Non- • Ensures the Board receives accurate, timely and clear information. the role of the Audit and Valuation Committee. Executive Director responsible for leading employee engagement, As recommended by the Code, all resolutions proposed at the • Shapes the boardroom culture and sets clear expectations. promotes informal discussions – such as over coffee, at 2025 AGM will be voted on separately and the voting results will • Ensures a formal and rigorous evaluation of the Board takes The Group’s governance structure for risk management is dinners and during walk-arounds of the office – and also hosts be announced to the LSE and made available on the Company’s place each year. illustrated on pages 60 to 64. more formal discussion groups. This creates channels of website as soon as practicable after the meeting. These will • Develops the Group’s strategy and commercial objectives. communication between the Board and the workforce and allows include all votes cast for and against and those withheld, together • Leads communication with stakeholders. Board induction, ongoing training, professional the team to offer their views, ensuring the Board understands with all proxies lodged prior to the meeting. In the event that 20% • As CEO, is responsible for the operational and strategic development and independent advice employee motivations and concerns. Constructive conversations or more of the votes are cast against a resolution, an explanation management of the Group and for running the Group’s business. Board members are advised by the Company Secretary of were held on workforce matters, morale, turnover and the will be provided in the announcement to the LSE of the actions the legal and regulatory obligations of a Director of a company engagement of senior management with the rest of the team. the Company will be taking to address shareholders’ concerns. A Senior Independent Non-Executive Director listed on the LSE. All Directors have access to the advice of follow up announcement would then be made within six months • Provides a sounding board for the Chair and serves as a the Company Secretary, as well as independent professional Ms Chatti-Gautier regularly reports back to the Board for of the AGM regarding feedback received from shareholders and trusted intermediary for the other Directors. advice at the Company’s expense, on any matter relating to discussion, and this feedback forms an important part of our the subsequent actions taken by the Company. • Responsibility for an orderly succession process for the Chairman. their responsibilities. Details on induction, ongoing training and consideration of the Group’s culture and operations. • Available to Non-Executive Directors and shareholders if they professional development for Board members are provided in the See page 228 for further shareholder information and page 129 have concerns which normal channels fail to resolve. report of the Nomination Committee, see pages 169 to 172. Furthermore, site visits and management presentations that for further information on shareholder engagement. • Meets with other Non-Executive Directors for an annual occur in connection with important strategic or investment appraisal of the Chairman’s performance. Company Secretary decisions provide the Board access to the management teams of Diversity Policy The Board has appointed Michael Oliver to act as Company the portfolio companies. The Board and senior leadership’s gender identity and ethnicity Non-Executive Directors Secretary to Georgia Capital PLC. MUFG Corporate Governance data presented in accordance with UKLR 22.2 can be found on • Provide constructive challenge and specialist advice. Limited, one of the UK’s largest professional services secretarial These meetings are occasions for the Board to test firsthand how pages 171 and 172. • Provide strategic guidance. teams, provides Company Secretarial Support. well the Group’s culture is being transmitted. • Take into account the views of shareholders and other For further information, please see the Company Diversity Policy, stakeholders. Re-election of Directors Please refer to the Resources and Responsibilities section on which incorporates the Board’s Diversity Policy, at: • Scrutinise the performance of management. All Directors are required under the Code to be elected or re-elected page 76 of this report and the Sustainability Report for further https://georgiacapital.ge/governance/cgf/policies. by shareholders at the Company’s AGM in May 2025. The Board details on workforce engagement activities carried out throughout has set out in its Notice of Annual General Meeting the qualifications the year, and the output of that engagement. For a breakdown of the gender diversity figures for the Company, of each Director and support for election as applicable. please refer to the Resources and Responsibilities section on Georgia Capital: As our people are our main asset, we invest page 76 of this report. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 134 135 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Audit and Valuation Committee Report Dear Shareholders Introduction and key purposes and responsibilities Composition and operations of the Committee I am pleased to present the Audit and Valuation Committee’s This report outlines the functioning and activities of the The Committee members – David Morrison (Chairman), Massimo (“the Committee”) report for the year ended 31 December 2024. Committee during the reporting period, including an overview Gesua’ sive Salvadori, and Maria Chatti-Gautier – are all of the key areas of activity and principal topics covered at each Independent Non-Executive Directors. During the year, the Committee has kept its focus on its Committee meeting. key responsibilities: oversight of financial reporting matters, For the purposes of the Code and of DTR 7.1, the Board is monitoring the effectiveness of risk management and internal The Committee’s role is to recommend the financial statements satisfied that all members of the Committee have recent and control systems, reviewing and providing constructive challenge to the Board and review the Group’s financial reporting relevant financial experience and the Committee as a whole to the detailed investment valuation process, and overseeing the and accounting policies, including formal announcements has competence relevant to the sector in which the Company relationship with the external auditors. and trading statements relating to the Company’s financial operates. Please refer to the detailed biographies of the performance, ensuring the integrity of the Company’s published Committee members on pages 122 and 123, which include their One of the Committee’s primary responsibilities is to assist the financial information, and reviewing the judgements made financial experience and reasons for appointment to the Board Board in ensuring the robustness of the Group’s investment by management, along with the underlying assumptions and and the Committee. and valuation processes including monitoring compliance with estimates on which they were based. In addition, the Committee the Valuation Policy and the fair value measurements under oversees the role of the Internal Audit function (internal control The meeting attendance of the Audit and Valuation Committee David Morrison IFRS 13. The Committee has spent considerable time providing environment), risk management and the relationship with the can be seen on page 127. The Company Secretary is Secretary Chairman of the Audit and Valuation Committee independent challenge to management when considering the external auditor. The Committee also received reports and to the Committee and attends all meetings. Meetings are also specific performance and valuations of individual investments and held regular discussions regarding the ongoing viability of the attended by the Chief Financial Officer, the Head of Technical of the portfolio. The Committee concluded that management’s Company and its liquidity status. The Committee continued to Accounting and Valuation, and the Head of Internal Audit. approach was appropriate and was satisfied with the fair value focus on the key issues relevant to the Group’s financial reporting, recognised throughout the year and as at 31 December 2024. and worked with management, and PwC, to review any changes In addition, representatives of PwC, the Company’s external ## “ Commitment to required in response to the introduction of new accounting or auditor, are invited to attend several meetings of the Committee The Committee continues to review the provision of external audit regulatory guidance. each year. On some occasions, invitations to attend are extended comprehensive and audit-related services provided by PricewaterhouseCoopers to other members of the Board and management where LLP (“PwC”). The Committee reviewed the external auditors’ On behalf of the Board, the Committee monitors the integrity of necessary, to provide a deeper level of insight into key issues independence, and, through its evaluation of the external audit, the valuation process. The Company is an investment entity as and developments. The Committee also met with the external ## and transparent is satisfied that the external auditor continues to be independent defined in IFRS 10 and, as a result, measures its investments in auditor, without management present, to allow discussion of and provides an effective audit service, which is described later portfolio companies at fair value (through profit or loss) instead of any issues or concerns in greater detail. The external auditor in this report. We are pleased to recommend to shareholders consolidating them. confirmed it was satisfied with the communication between all ## reporting.” that PwC be re-appointed as the Company’s auditors at the the stakeholders. In addition, the Chair of the Committee has forthcoming AGM. The Chairman of the Committee reports to the Board on how maintained regular dialogue with the lead partner of the external it has discharged its responsibilities at a subsequent Board auditor during the period. Through the Head of Internal Audit, the Committee, along meeting and makes recommendations to the Board. Details Committee Meeting with management, oversees the Internal Audit functions of the of the Committee’s roles and responsibilities are outlined in 1 membership attendance Group’s portfolio businesses. The Head of Internal Audit and the Committee’s Terms of Reference and can be found on the the Committee continue to work together to further develop the Company’s website at: David Morrison (Chairman) 5/5 Scheduled Internal Audit function. https://georgiacapital.ge/governance/cgf/terms. 7/7 Ad hoc Maria Chatti-Gautier 5/5 Scheduled Other important areas of focus in 2024 included a review 7/7 Ad hoc of dividend income from portfolio companies, regulatory Activities of the Committee in 2024 changes and the continued progress in the management The table below summarises the Committee’s activity during 2024. Massimo Gesua’ sive Salvador 5/5 Scheduled 7/7 Ad hoc of the Group’s share buyback programme and the strategic Area of focus Core activities priority of deleveraging the Company. The Georgian economy demonstrated further significant growth throughout 2024, Financial • Reviewed the appropriateness and disclosure of accounting policies and practices. although tensions in the region and following the Georgian reporting and • Reviewed the Annual Report and Accounts content and advised the Board on whether the Annual Report Parliamentary Elections continue to present challenges. In sustainability and Accounts was fair, balanced and understandable. addition, the Group completed the sale of 80% of its holding in • Reviewed the Company’s annual and interim financial statements and quarterly accounts relating to the the beer and distribution business to an international buyer, as Company’s financial performance, including the significant financial reporting policies and judgements detailed elsewhere in this Annual Report. 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. The Committee held a mixture of in-person and virtual meetings • Reviewed overall presentation of APMs, evaluated clarity of reconciliations and challenged the nature of throughout the year. Further details about our work are set out on adjusting items. the following pages. • 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 David Morrison and other policies of the Company. Chairman of the Audit and Valuation Committee • Reviewed quarterly valuations of the Company’s portfolio investments considering recent market 20 March 2025 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. 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. • Considered the extent of valuation disclosure in the Company’s annual and interim reports. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 136 137 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Audit and Valuation Committee Report continued Significant accounting and financial judgement Area of focus Core activities matters considered How the Committee addressed the matter Risk and control • Reviewed and assessed the effectiveness of the Company’s internal controls and risk Portfolio Reviewed quarterly valuations of the Company’s portfolio investments presented to it by management. Environment management processes. company fair Reviewed and challenged assumptions and judgements applied by management and third-party valuation • Reviewed IFRS 10 requirements and ensured that the Company continues to meet the definition of value experts and the appropriateness of their scope of work. investment entity. estimation and • Reviewed the results of risk identification and assessment work performed by management. disclosure The Committee considered and challenged whether management followed appropriate valuation standards • Reviewed the Board’s approach to assessing the Company’s long-term viability. as reflected in the Valuation Policy and used appropriate judgement. The Committee considered in • Reviewed reports from the external auditor where they have looked at internal controls as part of the discussions with the external auditor the methods used to account for valuations. The Committee also annual audit process. challenged the implications relating to climate change and global and national macroeconomic trends in the • Reviewed the Company’s principal risks and uncertainties statement included in the Annual Report and valuations of the Company’s portfolio investments. Accounts and supporting stress test scenarios. • Regularly monitored the internal and external environment to ensure that any new or emerging risk is Earnings and multiple assumptions: Earnings data, received from portfolio companies and closely monitored identified in a timely manner and responded to appropriately. by management, was presented at the Committee meetings. Subsequently, actual earnings might have been • Reviewed compliance with regulatory rules and monitored findings. 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 Internal audit • Reviewed reports of internal audits, monitored action points and addressed actions arising from presented to the Committee quarterly. audit visits. • Reviewed, approved and oversaw the implementation of the 2024 Internal Audit Plan and budget. The Assets valued using a DCF basis: For assets valued using a DCF basis, material assumptions in the DCF plan is designed using a risk-based approach aligned with the overall strategy of the Group. valuations and any changes to these assumptions are reviewed by the Committee. Sensitivity to assumptions • Monitored and reviewed (i) the effectiveness of the Company’s Internal Audit function via a quality assessment is also noted, and any material changes are reviewed by the Committee. The Committee reviewed and report; and (ii) implementation of the enhanced Internal Audit function agreed with Internal Audit. challenged the cash flow projections, terminal values and discount rates selected by management with • Reviewed the Group Internal Audit Charter. reference to market transactions, WACC calculations and other public data. Any material changes are • Monitored the scope and effectiveness of the Group’s Internal Audit function. reviewed by the Committee. External audit • Monitored the effectiveness and performance of the external auditor. As a result, the Committee was satisfied with the appropriateness of valuation methods used and the • Oversaw the audit engagement, including the degree to which the external auditor was able to assess key reasonableness of assumptions and judgements applied in valuation. accounting and audit judgements. • Reviewed the annual audit plan including the approach, scope, level of materiality and risk assessments Going concern On an annual basis the Committee reviews and approves the long-term viability report prepared by and significant audit risks. and viability management and satisfies itself that the going concern basis for the preparation of the Group’s results • Reviewed the audit results report, including the results from testing key audit matters, judgements, level of remains appropriate. The long-term viability report was based on the Group’s three-year strategic plan, errors and underlying reasoning. including forecast investment, realisations, overheads, financing cash flows and dividends. The Committee • Reviewed and confirmed the objectivity and independence of the external auditor and compliance with considered management’s assessment of the Company’s ability to continue as a going concern and its long- ethical, professional and regulatory requirements. term viability, taking into consideration the ongoing impact of global and national macroeconomic trends. The • Reviewed the qualifications, expertise and resources of the external auditor. result was the Committee’s recommendation of the Viability and Going Concern statements to the Board for • Agreed the terms of the external auditor’s engagement and fees. approval. You can read more about the Going Concern assessment and Viability Statement on pages 63 to • Approved the policy for non-audit fees. 64. • Recommended the re-appointment of the external auditor. • Conducted an annual evaluation of external audit effectiveness. Investment entity The Committee continued assessing the Company’s compliance with IFRS 10 criteria for meeting investment • Monitored management’s responsiveness to the external auditor’s findings and recommendations. status 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 Governance • Reviewed governance processes in place to oversee the valuation of portfolio companies. definition of an investment entity as of 31 December 2024. • Reviewed and approved the Committee’s Terms of Reference. • Reviewed and recommended to the Board for approval: the Whistleblowing, Anti-Bribery and Anti- Alternative The Committee considers it important to take into account both the statutory measures and the APMs when Corruption and Non-Audit Services Policies. performance reviewing the financial statements. In particular, items excluded from adjusted profit before tax were reviewed • Evaluated the effectiveness of the Committee. measures by the Committee. As part of that review, the Committee considered the prominence of APMs used by the • Received information and regulatory updates that could impact the work of the Committee, including Company in the reporting and challenged management where appropriate. The Committee is satisfied that the briefing on IFRS S1 and IFRS S2. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 138 139 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Audit and Valuation Committee Report continued judgements of management in relation to the preparation of The processes described above ensure that the effectiveness of Fair, balanced Under the UK Corporate Governance Code, the Board should establish arrangements to ensure the Annual the financial statements. When considering financial reporting, the controls is reviewed on an ongoing basis, and the Committee and Report presents a fair, balanced and understandable assessment of the Group’s position and prospects. It the Committee assesses compliance with relevant accounting are pleased to report that no significant weaknesses in our risk understandable has asked the Committee to support it in coming to that conclusion. standards, regulations and governance codes. In particular, the management processes or internal controls were identified this year. reporting Committee continues its robust review of going concern and In making this assessment, the Committee: viability assessments under a number of scenarios. In this regard, Internal Audit effectiveness • satisfied itself that there was a robust process of review and challenge at different levels within the Group the Committee closely followed the progress of the Group’s The Committee fulfils its responsibility to review the effectiveness to ensure balance and consistency; deleveraging process and the positive developments in the NCC of the Internal Audit department by considering, challenging and • reviewed several drafts of the 2024 Annual Report and Accounts and directly reviewed the overall ratio during the year. agreeing the proposed annual audit plan. In doing so, it ensures messages and tone of the Annual Report and Accounts with the Chairman and CEO, and the CFO; and that the plan takes appropriate account of the Committee’s • considered the reporting of the Group’s performance, business model and strategy, the competitive Risk management and control environment and management’s assessment of areas the present significant landscape in which it operates, the significant risks it faces, the progress made against its strategic The Committee assists the Board in fulfilling its responsibility risk or where business processes might be improved, updates objectives and the progress made by, and changes in fair value of, its portfolio companies during the to review the adequacy and effectiveness of the controls over to Group strategy, and changes in the Group’s business and period, both from management and the external auditor. reporting and risk. It reviews the effectiveness of the policies, the external environment, and findings of the previous year. At procedures and systems in place related to operational risks, is regular meetings, the Committee monitors progress against After consideration of all this information, we are satisfied that, when taken as a whole, the Annual Report and compliance, information technology and information systems and the agreed plan, reviewing the outcomes of the Internal Audit Accounts is fair, balanced and understandable, and provides the information necessary for shareholders to assesses the effectiveness of the risk management and internal reports and recommendations, management’s implementation of assess the Group’s performance, business model and strategy. control framework. Where areas for improvement are identified, recommendations and closure of the audits. On the basis of this the Committee ensures that there are the correct processes in process, the Committee believes that the Internal Audit function Key activity highlights The Committee is responsible for the review and approval of place to take effective action to address them. Key developments is effective and respected by management, and that it conforms Financial reporting and valuation the fair value of investments at the end of each reporting period affecting our principal risks and associated mitigating actions to the standards set by the Institute of Internal Auditors (“IIA”), the The principal responsibility of the Committee is to consider proposed by Georgia Capital’s Management Board. With the are reviewed by the Committee. Further information on risk “International Standards for the Professional Practice of Internal significant areas of complexity, judgement and estimation that external auditors, the Committee reviewed in detail both (i) the management and internal controls can be found on pages 60 to Auditing” (“Standards”) contained in the International Professional have been applied in the preparation of the financial statements. auditors’ assessment of the methodologies applied by the 64. Principal risks the Group faces are set out on pages 65 to 74. Practices Framework (IPPF) issued by the IIA. Adherence to the The valuation of investments remains the most material area independent valuation company for the large and investment professional Standards is regularly assessed by the Group Head of judgement in the financial statements and is a key audit risk stage private portfolio companies and by management for The Committee is supported by several sources of internal of Internal Audit. The Head of Internal Audit is a Certified Internal for the Group. The Committee assists in the formalisation and “other” assets, and (ii) the basis for their independent assessment assurance within the Group to discharge its responsibilities. Auditor accredited by the IIA. The Committee has endorsed a documentation of management’s valuation judgements in line of the valuations. The Group continued to apply its Valuation As part of the regular reporting from the Chief Financial Officer plan proposed by the Head of Internal Audit to conduct both with the Group’s accounting policies and industry valuation Policy consistently across investments at the year end and the and the finance team regarding the operating performance of internal and external assessments of the Internal Audit function, guidance from IPEV. This includes ensuring that the Annual Committee also ensured that the valuations reflected climate the portfolio companies, the strength of the internal control aiming to ensure the quality and professionalism of the Group’s Report and Accounts and half-year reporting, taken as a whole, change, global and regional economic trends, as well as the environment is considered. Management also provides updates internal audit services. are fair, balanced and understandable and comply with disclosure future business plans of portfolio companies. on how risks, for example, bribery and information security, are requirements as discussed in greater detail below. managed within business areas, and updates are presented to External auditor Full details on our valuation policies and procedures which are the Board or the Committee as appropriate. Further, during the Oversight of the relationship between the Group and the external The Committee’s responsibilities include monitoring the integrity overseen by the Committee can be found on page 63 (please year, the Internal Audit function continued to assist management auditor is one of the Committee’s key responsibilities. PwC of narrative and non-financial reporting, including sustainability see valuation workgroup) and page 98 (please see valuation to perform certain risk identification and assessment activities was appointed by the Board as the statutory auditor in 2022, and reporting on related significant issues (a concept that has methodology). For the value drivers within the Group’s portfolio in at the private portfolio companies, the results of which were following a competitive tender process, and was re-appointed by gained greater emphasis in recent years due to additional ESG the year, please see pages 103-105. presented and discussed at the Committee meetings. shareholders at the 2024 AGM. reporting through disclosure frameworks such as TCFD). The Committee also considers whether the external valuation Internal Audit Auditor effectiveness During 2024, the Committee received detailed reports from the expert provides meaningful additional scrutiny and challenge to The Head of Internal Audit has direct access to the Committee The Committee has an established framework for assessing the external auditor in respect of the main areas of audit focus and the valuation process. The Committee is satisfied with the current and the opportunity to discuss matters with the Committee effectiveness of the external audit process. This includes: these were, in some instances, discussed without management level of scrutiny and challenge by the external valuation expert, without other members of management present. The Committee • considering reports from the auditor on the process they have present. In addition, regular reports were received from the CFO this Committee, management and the external auditors. also monitors the resources dedicated to Internal Audit as well as adopted to identify financial statements risks and key areas of on the financials and internal controls. the relevant qualifications and experience of the team. audit focus; Management, under the supervision of the Committee, considers • regular communications with the external auditor (without As most of the investment portfolio is comprised of private the suitability of the accounting policies which have been Throughout the year, the Committee received regular reports from management present) and management (without the external companies, the Committee and external auditors spent a significant adopted, ensuring that key reporting estimates and judgements Internal Audit on the progress against the approved Internal Audit auditor present); amount of time reviewing and challenging management’s valuations. were appropriate, including the assessment of appropriateness Plan and on the audits themselves, including significant findings as • a review of the final audit report, noting key areas of auditor The assessment of fair value is subjective and requires the of continuing the investment entity accounting, and ensuring well as the corrective measures recommended to management. judgement and the reasoning behind the conclusions reached; consideration of significant and complex judgements to be made that the external auditors were afforded timely and full access to The Committee also reviewed and monitored management’s • a review of the annual FRC Audit Quality Inspection Report of by management. In 2024, the Committee oversaw the independent relevant information. In this context, the Committee also consider responsiveness to the corrective measures and found that, in the external auditor; valuations, performed by third-party valuation experts, establishing the suitability of the accounting for acquisitions and dispositions, general, management agreed to the recommendations where • use of a questionnaire completed by all the necessary fair value ranges for all large and investment stage private portfolio including, in 2024, the sale of 80% of holding in the Group’s beer control deficiencies were identified, and used them as a basis stakeholders; and companies. The appointment of third-party valuation experts and distribution business to an international buyer, as detailed to improve processes. Implementation of the remedial actions is • review of the audit plan. increases the integrity of the process which includes consideration elsewhere in this Annual Report. reviewed by Internal Audit and reported to the Committee. The of how other market participants approach valuations for year-end Committee was pleased to review reports from Internal Audit The Committee concurred with management’s view that there reporting. The valuation methodology applied by the independent Using the Committee’s own independent knowledge of the outlining actions being taken by management in the portfolio had been appropriate focus and challenge of the primary areas of experts was reviewed in detail by the Committee, as well as Company and its portfolio investments, but also considering businesses to maintain and enhance the control environment within audit risk and the Committee concluded that the substantive and key assumptions used and the most appropriate point in the the external auditor’s assessment of risk, the Committee has, the Group. The Committee also reviewed the Head of Internal detailed approach taken by the auditor was entirely appropriate established range was selected for each business. where necessary, challenged the actions, estimates and Audit’s proposals to enhance the effectiveness of the Internal Audit and effective. function and to raise its profile across the Group. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 140 141 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Audit and Valuation Committee Report continued The Committee was able to see first-hand how the auditor Governance Committee effectiveness review challenged management on their assumptions used when The Committee received regular updates from the Company An internal effectiveness review of the Committee was facilitated determining valuations at the relevant half-year and year-end Secretary and PwC on the progress of UK audit and governance by the Company Secretary. The effectiveness evaluation Committee meetings, when PwC was in attendance. PwC reforms and specifically reviewed the Department for Business, concluded that the composition of the Committee was utilised in-house specialisms to support its audit work of the Energy and Industrial Strategy’s Response Statement following appropriate, there was the right level of stakeholder engagement Group and, overall, the auditors’ risk-based approach drew on its consultation on reforms aimed at restoring trust in audit and debate (acknowledging the technical and detailed nature both their knowledge of the business and the wider economic and corporate governance and a timetable on the key areas of of the Committee’s discussions), it provided an effective and and business environment. significance to the Group arising from the Response Statement. appropriate level of challenge and oversight of the areas within Additionally, while the Group will not be required to comply with its remit, and its Chair continued to perform effectively with no The Chairman engages directly with the relevant PwC audit Lead the FRC’s Minimum Standard for Audit Committees which is significant concerns, noting that sufficient time is allocated at Partner, Allan McGrath. mandatory for FTSE 350 entities, the Committee has Board meetings for the Chair to report to the Board on the work considered the Standard (described elsewhere in this report), of the Committee. Auditor independence accepting that it forms part of good governance principles. The Committee has undertaken a formal assessment of PwC’s Priorities for 2025 independence, which included a review of a report from PwC Compliance Our priorities for 2025 include continued focus on: describing their arrangements to identify, report and manage Ensuring regulatory compliance remains a priority from the • working with management to position the Group prudently any conflicts of interest, and their policies and procedures for perspective of the Committee. The Committee conducts an in response to the changing macroeconomic conditions, maintaining independence and monitoring compliance with annual review of the Company’s Whistleblowing and Non- remaining cognisant of, and ready to respond to, any new relevant requirements; and the value of non-audit services Audit Services Policies and their impact in its remit, and it is the areas of emerging risk; provided by PwC. PwC has reviewed its own independence responsibility of the Committee to ensure that there is a robust • monitoring compliance with the Group’s Valuation Policy, in line with the FRC’s Ethical Standards for auditors, other governance framework and that effective procedures are in place. individual portfolio company valuations and the effectiveness professional standards, and its own ethical guideline standards. of external valuations; PwC has confirmed that they believe they remained independent PwC carried out fraud risk assessment and determined that there • monitoring the financial reporting implications of strategic throughout the year from the date of their re-appointment at was a low risk of fraud occurring undetected. actions taken by the Group, including dispositions and the May 2024 AGM, within the meaning of the regulations acquisitions; on this matter and in accordance with their professional For the audit of the financial statements in this Annual Report, • ensuring continued integrity and balance in the Group’s standards. PwC has provided the Committee with details of the the Company complied with the Code and mandatory audit financial reporting; safeguards in place which include a culture of regular training, processes, including The Statutory Audit Services for Large • monitoring the control environment and its appropriate roll-out internal accountability, and independent review controls. Having Companies Market Investigation (Mandatory Use of Competitive at the various portfolio companies; considered the safeguards, the level of non-audit services Tender Processes and Audit Committee Responsibilities) Order • continued development of the Internal Audit function around provided in the year and a formal statement of independence, the 2014 (“CMA Order”), and the Committee complied with the the Head of Internal Audit; Committee is satisfied that the independence of the auditor has responsibility provisions set out in the CMA Order relating to: (a) • compliance with TCFD requirements and referring these been maintained. putting the audit services engagement on tender every ten years; matters to the Board and other sustainability-related reporting and (b) strengthening the accountability of the external auditors requirements; Non-Audit Services Policy to the Committee, including: requiring that only the Committee • following developments on the planned enactment of The Group’s Non-Audit Services Policy safeguards the external is permitted to agree to the external auditors’ fees and scope legislation in the UK around audit and corporate governance auditor’s independence and objectivity. The provision of non- of services; influence the appointment of the audit engagement reform; and audit services by our external auditors aligns with the Revised partner; make recommendations regarding the appointment • maintaining the already strong working relationship with PwC. Ethical Standard. Any work other than for audit or review of of auditors; and authorise the auditors to carry out non-audit interim statements to be undertaken by the external auditor services. Audit services were last tendered in 2022, resulting in now requires authorisation by the Committee except in very the appointment of PwC as the Group’s statutory auditor for a David Morrison narrow circumstances. The Group’s Non-Audit Services Policy is three-year period spanning 2022, 2023 and 2024. As outlined Chairman of the Audit and Valuation Committee available on our website at: in the 2023 Annual Report and Accounts, the Company was 20 March 2025 https://georgiacapital.ge/governance/cgf/policies. considering the possibility of re-tendering for external audit services beginning with the review of financial statements for The ratio of non-audit fees to audit fees for 2024 is 0:1. As six months ending 30 June 2025. Following the comprehensive indicated in Note 9 to the financial statements, the total fees analysis in 2024, considering factors such as auditor knowledge paid to the external auditor for the year ended 31 December of controls and risks, audit quality, independence, objectivity, and 2024 was GEL 1.6 million. The Committee is of the view that value for money, the Committee concluded to recommend that there are occasions when engaging PwC for non-audit services PwC be re-appointed as the Company’s statutory auditor for the will be the most efficient method of having those particular 2025 financial year. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 142 143 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Directors’ Remuneration Report Mr Gilauri’s current contract ends on 31 December 2025. The Committee retains discretion under the Policy, including What’s in this report The Remuneration Committee plans to agree the terms of a to override formulaic outcomes in accordance with the UK This Directors’ Remuneration Report includes the Annual new contract with Mr Gilauri based on the current number of Corporate Governance Code. In response to stakeholder Statement by the Chair of the Remuneration Committee, contracted shares (i.e. 200,000 deferred salary shares, and a feedback, however, we note that since 2020, we have disclosed the Annual Report on Remuneration and the new Directors maximum of 200,000 deferred discretionary shares awarded (i) threshold, target and outperformance targets alongside (ii) Remuneration Policy for approval at the 2025 AGM. based on Mr Gilauri’s performance) and the 2025 Policy provides the weighting, for each key performance indicator (KPI), and we for Executive Director compensation based on these figures. continue that practice this year. The report complies with the provisions of the Companies However, the Committee will have discretion to lower (or raise) Act 2006 and Schedule 8 of The Large and Medium- the number of shares in the event of a significant rise (or fall) in the In line with increasing market practice, we also disclose our sized Companies and Groups (Accounts and Reports) Group’s share price, when the new contract is signed, from its mechanisms for the enforcement of malus and clawback. Regulations 2008. The report has been prepared in line with levels in February/March 2025. This will enable the Remuneration The malus and clawback triggers are set out in the Executive the recommendations of the UK Corporate Governance Committee, when considering the terms of the new contract, to Director’s contract. Furthermore, under the rules of the share Code and the requirements of the FCA Listing Rules. adjust the number of shares awarded, thus avoiding the potential plan, the trustee may cause shares to lapse (malus) or to be for significant windfall gains. recovered (clawback) including in accordance with the provisions of the Executive Director’s contract. Lastly, as part of each Neil Janin Dear Shareholders, The number of shares in Mr Gilauri’s contract was fixed at its grant process, the Executive Director signs a confirmation Chairman of the Remuneration Committee I am pleased to present the Directors’ Remuneration Report for current (200,000 shares) level in 2018 when the Group listed and that they agree to be bound by the terms and conditions set the year ended 31 December 2024. the share price was GBP 10.32. This level was not changed in out in the rules of the share plan, including its malus and 2022 when the Policy was last approved by shareholders and the clawback provisions. At the 2024 AGM, the Directors’ Remuneration Report received Group share price was GBP 6.00. Inflation in Georgia since 2018 98% approval. The Committee continues to be strongly has been in excess of 40%. The Group has funded the purchase Similarly, the Committee also confirms that the 200% ## “Innovative encouraged by this level of shareholder support, which has been of shares to satisfy management share awards for the years shareholding requirement, to be built up and held for two years’ continued through the shareholder consultation ahead of our 2025-2027 – including those to Mr Gilauri – at an average price post-employment, is included as an express provision in Irakli alignment of submission of a largely similar proposed 2025 Remuneration of GBP 7.90. Gilauri’s contract, and further that all unvested shares (his Policy to shareholders at the 2025 AGM. remuneration vests in tranches) are held in the employee benefit The structure of the new Policy follows and maintains relevant trust (EBT). ## remuneration with Overview of remuneration structure guidance including: We believe that our Executive Director’s compensation is closely • Executive pension contributed by the Company will be the At the most recent vote on the Directors’ Remuneration Report, aligned with both the short-term and long-term shareholder same as for employees (although our Executive Director Irakli which was the 2024 AGM, 98% of shareholders supported ## shareholders’ experience and are pleased with the strength of support at Gilauri has waived his pension entitlement entirely). the Report. the 2024 AGM. This reinforces the Committee’s view that our • Shareholding guidelines with an equivalent of 200% of salary ## interests and (as compensation vests in tranches, the shareholding is 2024 performance outcomes innovative shareholder-aligned approach to remuneration should be retained. built up organically). Shareholding requirements are to be The Committee considered the CEO’s performance during maintained for two years post-employment. 2024, a period of significant political uncertainty in Georgia and ## experience.” Our Executive Director Irakli Gilauri’s salary, as well as his • Both fixed salary shares and variable share compensation the surrounding region, which created substantial operational performance-based remuneration, is currently comprised vest over several years and Irakli Gilauri currently has no cash challenges. Against this background, under Mr Gilauri’s entirely of deferred shares. There is no cash component to his salary and no cash bonus. leadership, during 2024 Georgia Capital’s portfolio companies Committee Meeting remuneration. Salary and the maximum opportunity for the • Malus and clawback provisions are significant, and consistent delivered their best ever combined operating performance, 1 with best practice. Unusually, malus may also be triggered in with the Group delivering value creation from the operating membership attendance performance-based remuneration (discretionary deferred shares) are set in a number of shares. By setting a fixed number of certain circumstances over the salary shares. performance of GEL 672 million – an excellent achievement Neil Janin (Chairman) 4/4 Ad hoc shares (rather than a cash figure) our Executive Director’s salary which is the highest performance from the operating businesses is aligned with the share price performance of the Company and Our Group’s purpose is to provide investors with an opportunity that the Group has ever achieved. In addition, 80% of the Beer David Morrison 4/4 Ad hoc ensures that, throughout the duration of a contract, the Executive to invest in the historically fast-growing Georgian economy by and Distribution business was sold to a high quality international Maria Chatti-Gautier 4/4 Ad hoc Director will not receive a windfall gain by receiving a higher giving them access to attractive investments with long-term investor at a significant premium to its independently verified number of shares when awarded at a lower share price. growth potential. Through our structure, our Executive Director carrying value. This significantly reduced our net debt at the is also similarly invested in the Georgian economy and our Holding Company level. The Net Capital Commitment Ratio When renewed in 2022, the Remuneration Policy (the “Policy”) investment companies. Shareholder interests and experience reduced from 15.6% in 2023, to a record low level of 12.8% retained the same number of shares for the salary and for the are strongly aligned with those of Mr Gilauri. The proposed 2025 in 2024. maximum opportunity of the Executive Director as presented to Policy continues to have this 100% level of deferred shares shareholders for their approval three years previously. Indeed, relating to both salary and discretionary remuneration, and the We continued to make disciplined capital allocations in 2024, there has been no increase in salary or incentive since 2018 when Committee believes that the strong management/shareholder supporting our strategy to focus on capital light investments the Company listed. Our proposed 2025 Remuneration Policy is alignment will continue going forward. and businesses, and consolidated the Health Insurance market consistent with this approach, and looking forward, we are not by acquiring Ardi in May 2024. Further examples of Mr Gilauri’s proposing any increase in the number of shares for our Executive Our values are being entrepreneurial, having a learning mindset performance are highlighted throughout this report. Director – for either his salary or for the discretionary share bonus. and maintaining the highest standard of ethics, including by The Committee is cognisant that there is very strong shareholder setting the tone at the top. The structure encourages the We noted the excellent performance of the Company over support for the entirely shares component of Mr Gilauri’s total Executive Director to be entrepreneurial and to grow the Group 2024, which was reflected in both the Group’s results and the remuneration package and, on that basis, the Committee is according to high standards (on the basis that a short-term view stakeholder experience. The share price increased from GBP proposing that the 2025 Policy is structured to maintain negatively impacts share price in the medium to long term), 10.22 at 31 December 2023 to GBP 12.00 at 31 December this approach. so that the value of his long-vesting remuneration increases or 2024. Our ongoing share buyback and cancellation programme decreases in line with that of the Company share price over time. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 144 145 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Directors’ Remuneration Report continued benefitted shareholders, under which the Group repurchased While the portfolio companies do not form part of the workforce How the Remuneration Committee addressed the factors in provision 40 of the Code shares for a total consideration of US$ 48.1 million during of the holding companies, the Committee considered the wider The Remuneration Committee considered the requirements of the Code in determining the remuneration structure and Policy, taking the year. workforce policies in 2024 and employee compensation. This each of the factors of provision 40 of the Code in turn: covered salaries (cash, share and phantom shares), pension Principle Approach In accordance with his performance in financial year 2024, taking contributions (which is set by Georgian legislation at 0%-2%), into account the overperformance against most of the KPIs and benefits, leave and working hours, training and development, and Clarity Remuneration arrangements are transparent and competitive. The Remuneration Policy describes the wider stakeholder experience, the Remuneration Committee number of staff by salary band. This was covered at the holding the purpose, operation and maximum potential of each remuneration element and illustrates a range determined to award Irakli Gilauri 190,000 deferred shares (95% company level and the Committee considered the same for the of potential outcomes for the Executive Director. There are currently only two main components of of maximum opportunity) with vesting and holding periods of up main portfolio businesses including real estate, renewables, beer, remuneration for Irakli Gilauri; the deferred share salary and the discretionary deferred share incentive to six years from the beginning of the work year. The Committee wine, distribution, healthcare, insurance and the largest schools. remuneration. There is no LTIP and salary is currently paid in a fixed number of shares. is satisfied that the overall number of deferred discretionary Simplicity The rationale is simple – this structure focuses the Executive Director and senior management on shares awarded to Mr Gilauri for FY24 was fair and appropriate in Maria Chatti-Gautier is the Company’s designated Non- sustainable, long-term performance of the Company by remunerating them in deferred shares. the circumstances. Executive Director for workforce engagement, and a member of the Remuneration Committee. Employees were able to raise Risk By its nature, setting the CEO’s remuneration in shares which are deferred for up to six years from the start You can read the KPI calculations and disclosures in the matters relating to the workforce (including remuneration) through Predictability of the work year means the remuneration structure drives the CEO and senior management to mitigate section “Basis for determining Mr Gilauri’s discretionary share Ms Chatti-Gautier. Further details on how the Board engages Proportionality reputational, behavioural and undue strategic risks as the outcome of such would be likely to affect the compensation in respect of 2024” below. with its workforce can be found on page 133 in the Corporate share price over the years. It also helps to avoid conflicts of interest. Further, the Executive Director’s salary Governance Framework section. and bonus is calculated by reference to a fixed maximum number of shares. Non-Executive Directors’ fees There were no changes to the Board structure or Board members There are only 45 employees at the holding company level. By including a fixed number of shares in both the salary and performance based components, the during 2024. The Board continues to review the appropriate Adjusting for the departure of one senior executive, cash salaries structure aligns our Executive Director’s compensation with the share price performance of the Company level of fees, particularly following its reformulation of the Board increased by 3.0% and share salaries increased by 10.4% y-o-y. and ensures that the Executive Director will not (unlike in other companies) receive a windfall gain by Committees in May 2023, which was fully discussed in the 2023 Employee average bonuses increased by 21.1% y-o-y. receiving a higher number of shares when awarded at a lower share price. Annual Report. Under the Company’s Remuneration Policy, the The range of possible values is set out in the Policy voluntarily, including the impact of share price amount of remuneration for Board fees and Committee fees may An external evaluation of the effectiveness of the Board was appreciation and depreciation, to aid predictability. Further, by calculating the maximum opportunity to be reviewed from time to time, which may take into account time undertaken by Amandla UK Limited (“Amandla”) in 2023 which a fixed number of shares, the Company and its shareholders have certainty regarding the Executive commitment, responsibilities and technical skills. Given the recent encompassed the Remuneration Committee. The Board and its Director’s and senior management’s remuneration. review of all Non-Executive Directors’ fees, however, no change members also underwent in-depth evaluations. The Board further has taken place to the fee structure over the last twelve months. expects to undertake a similar external effectiveness review Outcomes reward performance proportionately by reference to performance target ranges (threshold, during 2026. target and outperformance) and weightings. Further, to allow appropriate adjustment, the Committee For each Non-Executive Director, their overall fees paid in 2024 retains discretion over the bonus. For further considerations on proportionality, see section “Chief took into account their Board and Committee memberships Neil Janin Executive’s pay and comparators” on pages 154 to 155. during the year as covered in the Governance section on page Chair of the Remuneration Committee 154. Overall, in 2024 there was again a reduction in total Non- 20 March 2025 Alignment to The current Executive Director’s remuneration, is comprised of deferred shares rather than cash, Executive Directors’ fees. culture 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 Remuneration Committee activities and performance KPIs. Further information on alignment with the Company’s purpose and values is set out in workforce engagement the Annual Statement of the Chairman on page 142. During 2024, the Committee received insights into topics which were the most pertinent to our investors and an overall view of Shareholder context remuneration practices and investor response for the FTSE Small The Directors’ Remuneration Policy applicable to this section of the Annual Report on Remuneration was approved by shareholders at Cap market. The Committee continued to be updated with regard our AGM on 20 May 2022 (the “2022 Policy” or the “Policy”). The Policy received the following votes from shareholders. the changes in the guidelines of proxy agencies, and on proxy agency reports on the Company. The Committee noted the 98% Resolution Votes for % Votes against % Total votes cast Votes withheld shareholder support of the 2024 Directors’ Remuneration Report. Approval of the Directors’ Remuneration Policy 26,599,621 93.68 1,795,458 6.32 28,395,079 590 The Committee considered benchmarking against the FTSE Set out below are the shareholder voting figures for the Directors’ Remuneration Report (including the Annual Statement of the Small Cap and peers, alongside possible bonus projections. It Chairman of the Remuneration Committee) presented at our 20 May 2024 AGM. was noted that Georgia Capital’s structure remained unusual, with no cash salary or bonus for the Executive Director and long Resolution Votes for % Votes against % Total votes cast Votes withheld deferral periods for salary shares and discretionary deferred Approval of the Directors’ Remuneration Report 28,266,394 98.27 498,861 1.73 28,765,255 913 shares, and therefore comparison was made more difficult, especially as Georgia Capital itself is an unusual company. The The Remuneration Committee and its advisers most comparable peers were the other UK listed companies in The Remuneration Committee is principally responsible to the Board for establishing a remuneration policy for the Executive Georgia, Lion Finance Group PLC and TBC Bank Group PLC. 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 The Committee determined the bonus pool on aggregate that performance-related elements of Executive Directors’ remuneration are transparent, stretching and rigorously applied. The level and rewards on individual level for senior management. Remuneration Committee’s full Terms of Reference are available on our website: https://georgiacapital.ge/governance/cgf/terms. The Committee considered each manager’s performance and discussed the level of differentiation appropriate to distinguish between individual performance. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 146 147 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Directors’ Remuneration Report continued The Remuneration Committee is comprised of three Independent Non-Executive Directors: Neil Janin, who serves as Chairman, Maria Alternative remuneration table showing the Executive Director’s 2024 and 2023 remuneration discounted for time value Chatti-Gautier (designated Non-Executive Director for workforce engagement) and David Morrison. Each member’s attendance during of money (unaudited) 2024 was 100%, as shown in the Board and Committee meetings attendance table on page 127. No changes to the composition of For investor information, the alternative table below sets out the share remuneration earned by Irakli Gilauri in 2024 and 2023 as per the the Remuneration Committee were made in 2024. 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 In addition to the formal meetings held during the year, the Remuneration Committee participated in various discussions by may forfeit the shares on cessation of employment in certain circumstances. videoconference outside of these meetings. Other attendees at the Remuneration Committee meetings who provided advice or Total salary and assistance to the Remuneration Committee on remuneration matters from time to time included the CEO, the other Board members discretionary and the Company Secretary. Attendees at the Remuneration Committee meetings do not participate in discussions or decisions related Deferred Discretionary deferred shares share salary deferred shares remuneration to their own remuneration, which ensures the avoidance of any conflicts of interest. (US$) (US$) (US$) 2024 804,111 1,700,847 2,504,958 The Remuneration Committee did not use remuneration consultants in 2024 (or 2025 to date). The Remuneration Committee received advice on compliance from Baker & McKenzie LLP, the Company’s legal advisers. The Remuneration Committee is of the view that the 2023 1,125,303 1,264,643 2,389,946 advice received from Baker & McKenzie LLP is objective and independent. The following table sets out details of total remuneration for the Chairman and Chief Executive Officer, Mr Gilauri, for the years ended Directors’ remuneration 31 December 2018 to 31 December 2024 and his discretionary compensation as a percentage of maximum opportunity. Single total figure of remuneration for the Executive Director (audited) The table below sets out the remuneration earned by Georgia Capital PLC’s sole Executive Director, Irakli Gilauri, in respect of his 2018 2019 2020 2021 2022 2023 2024 employment for the years ended 31 December 2024 and 31 December 2023. Mr Gilauri’s compensation as set out in the table below is in the form of deferred shares that vest in tranches with a vesting and holding period of up to six years from the beginning of the work Single total figure of remuneration (US$) 4,066,962 3,790,000 3,898,000 4,414,000 3,808,800 3,969,497 4,121,700 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 Discretionary compensation as a 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 percentage of maximum opportunity (%) 85% 50% 80% 100% 60% 80% 95% the graph on page 154. Note: Maximum opportunity is 100% of total number of salary shares in accordance with the approved Policy. 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 Basis for determining Mr Gilauri’s discretionary deferred share compensation in respect of 2024 (audited) extended the contract beyond May 2023) as described in footnotes 2 to 3 to the table. 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 The increase in US Dollar equivalent for the discretionary deferred shares between 2023 and 2024 reflects both the higher percentage such as leadership and mentoring, corporate culture and personal development. The Committee’s practice is to set ambitious financial of the maximum opportunity awarded for performance (80% in 2023 compared to 95% in 2024) but also the increase in share price targets and would normally expect to award 70% of the maximum available for meeting the target, depending on the circumstances, between 2023 and 2024 award decision dates as described in footnote 4 to the table, illustrating the rationale behind the Policy including business and wider economic developments during the year. For strategic and development targets, measurement is more of alignment between Mr Gilauri’s and the shareholders’ experiences. The maximum discretionary opportunity remains constant at difficult, but here again we have high expectations of Mr Gilauri and would typically plan to award 70% of the maximum available for 200,000 deferred shares. meeting these targets. Cash salary 1 Deferred share Taxable Pension Total fixed pay Deferred shares 4 Total variable Single total (US$) salary 2 (US$) benefits 3 (US$) benefits 3 (US$) (US$) (US$) pay (US$) figure (US$) 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 2024 – 1,380,000 – – 1,380,000 2,741,700 2,741,700 4,121,700 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 2023 – 1,931,097 – – 1,931,097 2,038,400 2,038,400 3,969,497 maximum award of discretionary deferred share compensation is 200,000 deferred shares. Notes: We specifically link each KPI to the relevant Group priority and disclose ranges of targets for each KPI (threshold, target and maximum). 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 We would typically expect to award 25% for threshold, 70% for target and 100% for outperformance for each KPI, with a sliding scale 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 between categories. In accordance with feedback from shareholders, we continue to provide full information to better explain how the (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 KPIs link to strategic targets and to explain the weightings. The Group is young and non-financial strategic targets are also key. The 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 Group priorities have been cross-referenced against each performance metric chosen in the below KPI table. 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. Group priorities: 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 1. NAV per share growth 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 2. Diversifying access to capital 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 3. Efficient management structure 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 4. The right people in management and strong corporate governance 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). 5. Deleveraging 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 6. Progress towards ESG targets 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 7. Continued divestiture of subscale portfolio companies 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. 8. Institutionalising portfolio companies and meeting portfolio targets 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 9. Returning GCAP’s excess cash inflows to our shareholders 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 148 149 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Directors’ Remuneration Report continued | KPI Weighting 2024 Target and range Performance and evaluation Weighted result | | | | | KPI Weighting 2024 Target and range Performance and evaluation Weighted result | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Financial targets Threshold Target Outperformance | | | | | Non-financial targets Threshold Target Outperformance | | | | | NAV per | 25% in total: | 14.7% 16.7% 18.7% | Overall NAV per share growth: 15.7%. | 2.5% | Broaden access | 20% | Non-financial targets | Overall substantial outperformance. | | share growth | 5% for overall | | | | to capital including | | | | | | | | Growth mostly affected by BOG share price in the last | | active seeking of | | | GCAP achieved the sale of 80% of the Beer & Distribution | | | | | quarter of 2024. NAV per share; growth was substantially | | price discovery | | | business to an international strategic investor at a 40% | | | | | dampened by the increase in the discount rates/WACC | | of assets held | | | premium to our NAV valuation, while securing a clear exit | | | | | used for valuation. | | (including | | | path through put/call option structure for the remaining | | | | | | | strategic priority | | | 20% stake. | | | 20% for | 11% 12% 13% | Private portfolio share growth: 15.4%. | 20% | of divestment of | | | | | | private | | | | subscale portfolio | | | Additionally, the US$ 25 million housing business bonds | | | portfolio | | Outperformance: private NAV per share growth was 15.4%: | | companies) | | | were refinanced for another 2 years, while also significantly | | | | | 2.4 ppts ahead of maximum. | | | | | contributing to the US$ 300 million Eurobonds issued by | GGU in July 2024. Achieving We divided this overall KPI into five subcomponents: budget of GCAP 15% in total: GEL mln GEL mln GEL mln GCAP Gross operating income: GEL 173 million. 2.5% During the 1st half of 2024, management worked very (net income) 127 147 167 2.5% closely with local banks to significantly extend the debt and portfolio Outperformance: GCAP Gross operating income was 3.6% maturities of Pharmacy and Healthcare businesses’ companies (total above the maximum. borrowings (GEL 200+ million). revenue), including | cash flow | | | | | Disciplined pursuit | 20% | Largely, non-financial targets | Overall outperformance. | 20% | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2.5% | GEL mln GEL mln GEL mln | GCAP standalone net income: GEL 350 million. | 1% | | | | | | | generation | | | | | of investment | | | | | 406 506 606 opportunities GCAP continued to make disciplined capital allocations GCAP’s standalone net income was 30.8% lower than and asset & in 2024, supporting its strategy to focus on capital light target, reflecting the increased discount rates/WACC used capital allocation, investments and businesses. for valuation as a result of the volatility in regional geopolitics including NCC during 2024. targets GCAP continued to consolidate the Health Insurance market by acquiring Ardi in May 2024, while we divested Adjusted GCAP standalone net income based on the previous from the Beer & Distribution business, which significantly year’s WACC rates (WACC adjusted) was GEL 486 million. reduced our net debt at the GCAP HoldCo level. The Committee awarded only 1% (40% of the maximum available amount for this component). Successful buyback of US$ 48 million of equity on-market contributes to a 5.8 ppts increase in NAV per share from 2.5% GEL mln GEL mln GEL mln GCAP standalone cash flow: GEL 170 million. 2.5% buybacks. (51) (31) (11) Outperformance: GCAP produced exceptionally strong net NCC ratio decreased from 15.6% in 2023 to a record low cash flow in 2024, supported by the divestment of an 80% level of 12.8% in 2024 reflecting strong cash flows and equity stake in the beer and distribution business. Similarly, successful deleveraging. cash inflow from operating activities, at GEL 153 million, Progress towards 7.5% Non-financial targets Overall outperformance. 7.5% ahead of budget for the year. achieving mid- | | GEL mln GEL mln GEL mln | | | to-long term | Ahead or well on-track in insurance, renewables, education, | | --- | --- | --- | --- | --- | --- | | 2.5% | | Portfolio aggregate revenue: GEL 2,251 million. | 1.5% | | | | | 2,175 2,275 2,375 | | | strategic priorities | clinics and diagnostics, beverages, real estate and auto | | | | | | in portfolio | services companies to achieve mid to long-term goals. | Aggregate revenue in the portfolio companies was up 8.9% companies y-o-y, but were 1% lower than budget, largely reflecting the During 2024, GCAP undertook a number of major business impact of ongoing political uncertainty on the real estate restructuring initiatives. We fully business. Organic revenue growth elsewhere was very strong. replaced the Pharmacy and Hospitals management The Committee awarded 60% of the available amount. teams, while we consolidated all of the Group’s insurance | | GEL mln GEL mln GEL mln | | | businesses, including the newly acquired Ardi business, | | --- | --- | --- | --- | --- | | 2.5% | | Aggregate EBITDA: GEL 311 million. | 2.5% | | | | 276 292 308 | | | under one structure. Notwithstanding these significant | changes, we are firmly on track in all our portfolio Aggregated EBITDA increased 25.0% y-o-y in 2024, and companies to achieve our mid to long-term goals. outperformed the maximum. | | GEL mln GEL mln GEL mln | | | The Pharmacy Business is back on track and growing its | | --- | --- | --- | --- | --- | | 2.5% | | Aggregate net operating cash flow: GEL 299 million. | 2.5% | | | | 253 273 293 | | | business again. The Insurance business has benefited from | having one management team and continues to dominate Aggregated net operating cash flow more than doubled in both the P&C and Medical insurance markets (now #1 2024, and outperformed the maximum. player in each of these markets). Expense Ratio 7.5% 0.78% 0.75% 0.72% Expense ratio at 0.72%, was 8 basis points below the prior 7.5% year, hitting the maximum level. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 150 151 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Directors’ Remuneration Report continued KPI Weighting 2024 Target and range Performance and evaluation Weighted result Given the small number of employees employed by the Georgia Capital PLC entity is less than five and the Company’s status as an Non-financial targets Threshold Target Outperformance investment entity under IFRS 10, we considered comparison against the holding companies’ employees. See note 8 to the table below 5% Non-financial targets 5% for a comparison of the full-time UK employees in compliance with the requirements of the Companies (Directors’ Remuneration Policy Professional Fully met maximum expectations. and Directors’ Remuneration Report) Regulations 2019. See the single total figure of remuneration table on pages 145 to 146 for an development explanation of deferred share salary, taxable benefits and discretionary deferred remuneration of Mr Gilauri. and mentoring Considerable progress made at both the Portfolio of management Companies level and at the GCAP HoldCo level. New From 1 April 2020 to 31 December 2020, the members of the Nomination Committee waived their fees (and only the additional fee including senior management appointments have been made in a received by the Chair of the Committee (as Chair) on top of the normal Committee fees was retained by the Chairman), to show successor(s) number of businesses, notably in the Pharmacy business, solidarity with the impact of the COVID-19 pandemic. The normal fees were reinstated in January 2021. After a review of the workload where the new CEO has transitioned from the Beer of the Nomination Committee, the fees were increased slightly for the Nomination Committee members and Chair from May 2023. The business and very successfully led a complete senior Audit and Valuation Committee’s responsibilities were increased from 31 December 2019 when the Audit Committee became the Audit management change in the Pharmacy business, and in the and Valuation Committee. To show solidarity with the impact of the COVID-19 pandemic the Audit and Valuation Committee did not restructuring and turnaround of GHG. receive an increase for financial year 2020, and instead the fees of the Chair and members were increased from January 2021. Non-financial but measurable targets Progress towards Fully met maximum expectations. Any further y-o-y movements in Non-Executive Director fees are attributable to a number of factors including the different Committee ESG targets roles undertaken by each Non-Executive Director over the period. For the first time in Georgia, we have successfully obtained a third-party assurance on our greenhouse gas For Irakli Gilauri, the change in US Dollar equivalent for the discretionary deferred shares between 2023 and 2024 is reflective of both emissions. In recognition of our longstanding commitment the higher percentage of the maximum opportunity awarded for performance (80% in 2023 compared to 95% in 2024) but also to responsible investment, GCAP was awarded the Impact the increase in share price between 2023 and 2024 resulting in a higher monetary equivalent at the decision date. The maximum Award by the Asian Development Bank in April 2024. discretionary opportunity remains constant at 200,000 deferred shares. GCAP also participated in COP29, joining a roundtable discussion of leading international finance sector institutions Similarly, Irakli Gilauri’s salary remained 200,000 deferred shares but the basis of calculation changed, as explained in the notes to and to help shape the region’s green agenda. in the paragraphs around the Single total figure of remuneration table earlier in this report. Total KPI Performance Assessment 100% 95% 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 The Committee considered the CEO’s performance during 2024, during a period of significant political uncertainty in Georgia and the Massimo Maria surrounding region, which created substantial operational challenges. Against this background, under Mr Gilauri’s leadership, during Average David Jyrki Gesua’ sive Chatti- 2024 Georgia Capital’s portfolio companies delivered their best ever combined operating performance. 2024 employees Irakli Gilauri Morrison Kim Bradley Talvitie Salvadori Gautier Neil Janin Total cash salary 1.1% – 0% -100% -100% 0% 2% 0% The Committee noted the excellent performance of the Company over 2024, which was reflected in both the Group’s results and the Total deferred share salary -18.3% -28.5% – – – – – – 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 Taxable benefits 11.6% – – – – – – – consideration of US$ 48.1 million during the year. The Committee also noted that adjusting for the departure of one senior executive, Total bonus 12.0% 34.5% – – – – – – 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. Y-o-y change in pay for Directors compared to the employees In accordance with his performance in financial year 2024, taking into account the achievement of the maximum expectation or at the holding companies level as a whole outperformance against most KPIs and the wider stakeholder experience, the Remuneration Committee determined to award Irakli Executive Director Non-Executive Directors Gilauri 190,000 deferred shares (95% of maximum opportunity) with vesting and holding periods of up to six years from the beginning | | | | | | | Massimo | Maria | | --- | --- | --- | --- | --- | --- | --- | --- | | of the work year. The Committee is satisfied that the overall number of deferred discretionary shares awarded to Mr Gilauri for FY24 | | Average | | David | Jyrki | Gesua’ sive | Chatti- | | was fair and appropriate in the circumstances. | 2023 | employees Irakli Gilauri | Morrison Kim Bradley | | Talvitie | Salvadori | Gautier Neil Janin | Total cash salary 23.3% – 0% -64.2% -62.1% 0% 3% NMF The Committee notes that there has not been an increase in Irakli Gilauri’s salary since the Group listed in 2018 (including when Total deferred share salary 19.7% -29.3% – – – – – – 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 Taxable benefits 16.6% – – – – – – – in 2024. The monetary value increases or decreases with the share price and significant alignment with shareholders is built into the Total bonus 33.2% 89.0% – – – – – – 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. Y-o-y change in pay for Directors compared to the employees at the holding companies level as a whole Executive | Percentage change in remuneration of Directors and employees | | | Director | | | | Non-Executive Directors | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | The following table sets out details of the percentage change in the remuneration awarded to the Directors, compared with the average | | | | | | | | | Massimo | Maria | | percentage change in the per capita remuneration awarded to the employees at the holding companies’ level only (45 employees) on | | Average | | | David | | Jyrki | Caroline | Gesua’ sive | Chatti- | | | 2022 | employees Irakli Gilauri | | Morrison Kim Bradley | | Talvitie | | Brown | Salvadori | Gautier Neil Janin | 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. 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% – – – – – – – | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 152 153 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Directors’ Remuneration Report continued Y-o-y change in pay for Directors compared to the employees Details of fixed and discretionary deferred share remuneration granted during 2024 at the holding companies level as a whole 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 Executive | | | Director | | | Non-Executive Directors | | | | | the 2023 work year as reflected on a combined basis in the accounts of Georgia Capital PLC and JSC Georgia Capital. Please note | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | Massimo | Maria | that the information presented in this section relates to Mr Gilauri’s performance in the 2023 financial year. | | | | | Average | | | David | | Jyrki | Caroline | Gesua’ sive | Chatti- | | | | | 2021 | employees Irakli Gilauri | | Morrison Kim Bradley | | | Talvitie | Brown | Salvadori | Gautier | | Deferred share salary Discretionary deferred share remuneration | | | Total cash salary | 6.5% – 3.9% 3.9% 4.7% 5.0% 5.0% 36.2% | | | | | | | | | Number of underlying shares and basis on | 200,000 granted pursuant to the Policy | 160,000 (with respect to his FY23 bonus) | | | | | | | | | | | | which award was made | available at https://georgiacapital.ge/ | granted pursuant to the Policy available at | | Total deferred share salary | -26.0% 0% – – – – – – | | | | | | | | | | | | | | | | | | | | | | | | governance/cgf/policies | https://georgiacapital.ge/governance/ | | Taxable benefits | 22.7% – – – – – – – | | | | | | | | | | | | cgf/policies Total bonus 23.1% 44.2% – – – – – – Type of interest Nil-cost option Nil-cost option 1 2 Y-o-y change in pay for Directors compared to the employees Cost to Group (as reflected in accounts) US$ 1,931,097 US$ 2,038,400 at the holding companies level as a whole 1 2 Face value US$ 1,931,097 US$ 2,038,400 Executive | | | Director | | | Non-Executive Directors | | | | | | Cash payments equal to the dividends paid | Cash payments equal to the dividends paid | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | Massimo | Maria | | on the underlying shares will be made upon | on the underlying shares will be made upon | | | Average | | | David | | Jyrki | Caroline | Gesua’ sive | Chatti- | | | | | | | | | | | | | | | | vesting (if applicable). | vesting (if applicable). | | 2020 | employees Irakli Gilauri | | Morrison Kim Bradley | | | Talvitie | Brown | Salvadori | Gautier | | | | | | | | | | | | | | | Percentage of award achievable if minimum | 100% of the award will be receivable, | 100% of the award will be receivable, since | Total cash salary 11.0% – -3.7% 7.2% -3.6% -4.8% -4.8% N/A performance achieved since the award is part of the Executive the award is based on 2023 performance Total deferred share salary 0% 0% – – – – – – | | Director’s salary for 2023 and accordingly | (and is not an LTIP award) and accordingly | | --- | --- | --- | | Taxable benefits 7.3% – – – – – – – | is not subject to performance measures or | is not subject to performance measures | | | targets over the vesting period. | or targets over the vesting period. | Total bonus 20.0% 10.2% – – – – – – Exercise price Nil. The options form part of the Executive Nil. The options make up the entirety of Notes: Director’s salary under the Policy and so the Executive Director’s performance- 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 no payment is required upon exercise. The based remuneration (with respect to his 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 exercise price has not changed. performance in the previous financial year) 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 so no payment is required upon exercise. increased after consideration of their comparative workload. The exercise price has not changed. 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. Vesting period 20% in each of 2025, 2026, 2027, 2028 25% in each of 2025, 2026, 2027 and 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 and 2029. 2028. Holding period of a further one year Remuneration Committee on 17 October 2022, and as a member of the Investment Committee on 20 December 2022. on each tranche. 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. Performance measures None. See the 2022 Policy available at See the 2022 Policy available at 5 On 19 March 2020, David Morrison, Caroline Brown and Massimo Gesua’ sive Salvadori stepped down as members of the Nomination Committee. https://georgiacapital.ge/governance/ https://georgiacapital.ge/governance/ 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. cgf/policies cgf/policies 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. 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. 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 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. 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 CEO pay and comparators 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- The Group has less than 250 UK employees and therefore is not required to disclose ratios of the CEO pay against the UK employees’ 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%. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 154 155 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Directors’ Remuneration Report continued Single total figure of remuneration for Non-Executive Directors (audited) Relative importance of spend on pay The table below sets out the remuneration received by each Non-Executive Director in 2024 and 2023. 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 The Non-Executive Directors do not receive any variable remuneration or pension contributions. investment entity under IFRS 10. Remuneration Georgia Capital PLC fees (US$) JSC Georgia Capital fees (US$) Total fees (US$) | | | paid to all | Distribution to | | --- | --- | --- | --- | | 2024 2023 2024 2023 2024 2023 | employees of | | shareholders by | | | | the Group | way of buyback | David Morrison 67,890 67,890 133,736 133,736 201,626 201,626 Year ended 31 December 2023 (US$ thousands) 13,453 18,242 Massimo Gesua’ sive Salvadori 61,107 57,784 95,849 99,169 156,956 156,953 Year ended 31 December 2024 (US$ thousands) 13,697 48,070 Maria Chatti-Gautier 52,341 54,831 104,609 99,407 156,950 154,238 Percentage change 1.8% 2.6x Neil Janin 64,611 62,451 86,213 87,984 150,824 150,435 Kim Bradley – 24,929 – 51,491 – 76,420 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. Jyrki Talvitie – 24,819 – 35,998 – 60,817 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 Total 245,949 292,704 420,407 507,785 666,356 800,489 shares with a total value of US$ 18.3 million (GEL 47.9 million) during 2023). Notes: Share ownership requirement (audited) 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. Executive Directors are required to build over five years and maintain a shareholding equivalent to 200% of base salary, which is 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 400,000 shares. Mr Gilauri already holds substantially above this requirement as at 31 December 2024 – see table and table note 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 2 below. In accordance with the Policy, beneficially owned shares as well as unvested (net of tax) and vested deferred share salary 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 and discretionary deferred shares count towards the requirement, noting that such unvested and vested shares are not subject to Remuneration Committee, on 17 October 2022, and as a member of the Investment Committee on 20 December 2022. performance conditions after their grant. 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. Directors’ interests in shares (audited) 6 The Non-Executive Directors do not receive any taxable benefits, pension benefits or variable remuneration. The following table sets forth the respective holdings of GCAP shares of each Director as at 31 December 2023 and 2024. | Payments to former Directors and for loss of office (audited) | | As at 31 December 2023 As at 31 December 2024 | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | No payments were made to former Directors or for loss of office during the year ended 31 December 2024. | | Number of | | Number of | | Number of | | Number of | | | | vested but | unvested and | | | vested but | unvested and | | | | | unexercised | | unexercised | | unexercised | | unexercised | | Total Shareholder Return | GCAP shares | | GCAP shares | | GCAP shares | | GCAP shares | | | Georgia Capital PLC has been a member of the FTSE All Share Index since its listing on 29 May 2018. The following graph compares | | held under | | held under | | held under | | held under | | | option through | | option through | | option through | | option through | | | the Total Shareholder Return (TSR) of Georgia Capital PLC with the companies comprising the FTSE All Share Index and FTSE Small | deferred share | | deferred share | | deferred share | | deferred share | | | Cap Index for the period from 29 May 2018 until 31 December 2024. | | salary and | | salary and | | salary and | | salary and | | | discretionary | | discretionary | | discretionary | | discretionary | | | | deferred share | | deferred share | | deferred share | | deferred share | | | | compensation | | compensation | | compensation | | compensation | | | | | (all nil-cost | | (all nil-cost | | (all nil-cost | | (all nil-cost | 160 options with options with options with options with Number of no no Total number Number of no no Total number GCAP shares performance performance of interests in GCAP shares performance performance of interests in 140 held directly conditions) conditions) GCAP shares held directly conditions) conditions) GCAP shares 120 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 101,368 100 Kim Bradley 35,383 N/A N/A 35,383 N/A N/A N/A N/A 80 Jyrki Talvitie 12,585 N/A N/A 12,585 N/A N/A N/A N/A Massimo 13,739 N/A N/A 13,739 17,615 N/A N/A 17,615 60 Gesua’ sive Salvadori 40 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 20 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 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. FTSE All Share Index (rebased) FTSE Small Cap Index (rebased)Georgia Capital PLC | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 156 157 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Directors’ Remuneration Report continued Directors’ interests in shares (audited) continued 2025 discretionary deferred share remuneration 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 Deferral terms The Committee will determine whether an award is merited based on an Executive Director’s options. The Policy naturally results in Mr Gilauri and our executive management team holding a significant number of unvested shares achievement of the KPIs set by the Committee for the work year and the performance of the Group and achieves a delay between performance and vesting. We believe these results are consistent with the principles of the Investment during the work year. If Mr Gilauri is awarded discretionary deferred shares with respect to the 2025 Association. As at 31 December 2024, Mr Gilauri met the shareholding requirement. 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’ Under the Directors’ Remuneration Policy, the Group does not require Non-Executive Directors to hold a specified number of shares in Report. Upon vesting, Mr Gilauri will receive (in addition to the vested shares) cash payments equal GCAP. Notwithstanding this, some Non-Executive Directors have chosen to become shareholders. The Non-Executive Directors are to the dividends paid (if any) on the underlying shares between the beginning of the year immediately not awarded incentive shares and are not remunerated in shares. 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 There have been no changes in the Directors’ interests in shares in the Company between the end of the financial year and the last KPIs (see below). The Remuneration Committee has considered the details of each KPI and ensured that 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 measurable targets are included. The KPIs will be reviewed by the Remuneration Committee throughout 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 the year and by the Board as appropriate. See notes to the Policy for malus and clawback provisions. 12 March 2025. 2025 CEO KPIs Details of Non-Executive Directors’ letters of appointment The 2025 KPIs were selected based on our strategy and ongoing key metrics. Consequently, the 2025 KPIs are as follows: Georgia Capital has entered into letters of appointment with each Non-Executive Director. The letters of appointment require Non- • NAV per share; Executive Directors to provide one month’s notice prior to termination. The letters of appointment for the majority of current Non- • Achieving budget of GCAP and portfolio companies, including revenue generation, EBITDA performance, and cash flow generation; Executive Directors are effective from 24 February 2018, with Maria Chatti-Gautier’s effective from her appointment on 19 March • Expense ratio; 2020 and Neil Janin’s from his appointment on 17 October 2022. Each Non-Executive Director is put forward for election at each • Broaden access to capital including progress on the active seeking of price discovery of assets; AGM following his or her appointment. Continuation of a Non-Executive Director’s employment is conditional on his or her continued • Disciplined pursuit of investment opportunities and asset and capital allocation, including NCC targets; satisfactory performance and re-election by shareholders at each AGM. • Progress towards achieving mid to long-term strategic priorities in portfolio companies; • Professional development and mentoring of management; and A succession plan adopted by the Board provides for a tenure of six years on both the Georgia Capital PLC and JSC Georgia Capital • Progress towards ESG targets. Boards. Upon the expiry of such six-year tenure, the appointment of the relevant Non-Executive Director may cease at the next upcoming AGM. 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 Notwithstanding the foregoing, if the Board determines that, in order to maintain the balance of appropriate skills and experience reviewed and may be revised by the Remuneration Committee and the Board as appropriate throughout the year, subject to the terms required for the Board, it is important to retain a Non-Executive Director on the Board beyond the relevant six-year period, the Board of the Policy. 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 Non-Executive Director remuneration circumstances were to warrant such extension. The table below shows the fee structure for Non-Executive Directors for 2025. Non-Executive Directors’ fees are determined by the Board. Implementation of Remuneration Policy for 2025 Component Purpose and link to strategy Operation Opportunity 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 Base cash fee The fee for the Board is Cash payment on The amount of remuneration 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 competitive enough to quarterly basis. may be reviewed from time to 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. attract and retain individuals. time by the Board. The fees may The Chairman receives a fee be amended and varied if there For Irakli Gilauri | | which reflects the extra time | are genuinely unforeseen and | | --- | --- | --- | | 2025 fixed pay | committed and responsibility. | exceptional circumstances. | | | However, no Chairman’s fee is | Any significant increase shall be | Total deferred share salary 200,000 Georgia Capital deferred shares underlying nil-cost options per annum pro rata. received when Chairman and the minimum reasonably required. Mr Gilauri has agreed for all pension contributions to be waived. Details of the benefits CEO roles are combined. | Pension benefits | received by Executive Directors are on page 154. | | | | --- | --- | --- | --- | | | | The Senior Independent | The maximum aggregate for all | | | | Non-Executive Director receives | Non-Executive Directors which | | The circumstances in which unvested deferred shares may lapse, and the narrow circumstances in which such shares may vest | | a higher base fee which reflects | may be paid by Georgia Capital | | immediately, are set out in detail in the 2022 Policy. | | the extra time and responsibility. | 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 Additional fee to compensate Cash payment on The amount of remuneration for Committee membership for additional time spent quarterly basis. the membership may be reviewed discharging Committee duties. from time to time by the Board. The Chairman of the PLC does not receive any Committee fee. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 158 159 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Directors’ Remuneration Report continued Directors’ Remuneration Policy Salary in the form of long-term deferred shares This section sets out the Directors’ Remuneration Policy (Policy) proposed for shareholders’ approval at the 2025 AGM on 20 May Purpose and link to strategy Opportunity Operation 2025. Subject to receiving shareholder approval, the Policy will take effect from the date of the 2025 AGM and will apply until the earlier • To reflect the role and required • The number of deferred share • The Remuneration Committee determines of (a) three years following that date and (b) the approval by shareholders of a new Policy. The Remuneration Committee is satisfied that duties, skills, experience and salary shares is 200,000 per the deferred salary share compensation to be the existing 2022 Policy is highly aligned with the shareholder experience and functions as intended, and is proposing to make very individual contribution to the Group annum for Irakli Gilauri, of which awarded to the Executive Director at the time the limited changes to the 2025 Policy. whilst promoting long-term value 10% are for his work as the CEO employment contract is entered into. creation and share price growth. of Georgia Capital PLC and 90% It is a provision of the Policy that the Group will honour all pre-existing obligations and commitments that were entered into prior to are for his work as a CEO of JSC There is no cash salary payable to Mr Gilauri. If the Policy taking effect. The terms of those pre-existing obligations and commitments may differ from the terms of the Policy and may Georgia Capital and its subsidiaries, the Remuneration Committee so determines, up include (without limitation) obligations and commitments under service agreements, deferred share remuneration schemes and pension provided that the Remuneration to 50% of the salary of any other future Executive and benefit plans. Committee has the discretion to Directors compensation may be paid in cash. vary the number of shares awarded The base salary for an Executive Director is The Remuneration Committee retains its discretion under the renewed Policy to make minor amendments to the Policy for regulatory, in a new contract in the event of fixed in his or her service agreement(s). The level exchange control, tax or administrative purposes or to take account of a change in legislation without obtaining prior shareholder approval. a significant change in the Group of the salary is reviewed by the Remuneration share price between February/ Committee when a service agreement is up Executive Directors Remuneration Policy March 2025 and the time at which for renewal. The Policy provides for an Executive Director’s remuneration package to be comprised of the elements set forth below. For the the contract is entered into. avoidance of doubt, all references to Executive Directors refer to the Executive Directors of Georgia Capital PLC to cover the • For Mr Gilauri, salary is comprised entirely of present Executive Director, Irakli Gilauri, and any future Executive Directors of Georgia Capital PLC whilst the Policy is in force. The • The number of deferred share long-term deferred shares (“deferred share compensation structure of executive management (who serve on the Management Board of JSC Georgia Capital, but who are not salary shares is fixed for the salary”) which take the form of nil-cost options Executive Directors of Georgia Capital PLC) is set by the Remuneration Committee and is modelled on the Policy (although they may duration of the employment granted annually in respect of the work year, and receive a part of their salary in cash), but the Remuneration Committee is not bound by the Policy when setting their remuneration contracts with Georgia Capital PLC is usually expected to be awarded within one packages. The Remuneration Committee can set different vesting terms and conditions for the executive management team as the and JSC Georgia Capital. month of the end of the work year, although the Remuneration Committee thinks appropriate. Remuneration Committee retains the discretion • The maximum number of deferred to determine the timing of the award and (for No Significant Changes to Previous Policy share salary set for an Executive future Executive Directors) that some cash salary The Policy carries on the existing Policy which took effect from 22 May 2022, maintaining the unique structure of paying the entire Director will be no more than is payable. salary and performance-based remuneration of Mr Gilauri only in shares. The Remuneration Committee is proposing that, for the new the Remuneration Committee Policy, the number of shares paid in the performance-based remuneration is not absolutely fixed but can be adjusted if the share price considers reasonable based on his/ • Deferred share salary in respect of a work year moves significantly prior to the signing of a new contract. Subject to these changes and the ability to pay some parts of the salary her duties, skills and experience, at will vest over five years with 20% vesting in each of any future Executive Directors in cash, the existing structure of remuneration and limits on remuneration for Mr Gilauri and other the time when his/her salary is set, of the second, third, fourth, fifth and sixth years Executive Directors under the existing Policy will continue to be applied. which will normally be at the time at following the end of the work year. At vesting, which his/ her service agreement(s) the Executive Director will receive (in addition to The Policy of paying salary and performance-based remuneration only in shares creates a very high alignment with the shareholder are entered into. the deferred share salary) cash payments equal experience. The Remuneration Committee continues to consider that it is important that there is a high level of share-based to the dividends paid on the underlying shares remuneration for Mr Gilauri and any future Executive Directors. between the beginning of the year immediately following the work year and the vesting date. 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 • Lapse provisions (natural malus) are built into the deferred discretionary shares awarded based on Mr Gilauri’s performance) and the 2025 Policy provides for Executive Director deferred share salary as set out in the “Service compensation based on these figures. However, the Committee will have discretion to lower (or raise) the number of shares in the event agreements and policy on payments for loss of 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 office for our Directors” section below. Extended enable the Remuneration Committee, when considering the terms of the new contract, to adjust the number of shares awarded, thus malus and clawback provisions do not apply avoiding the potential for significant windfall gains. to deferred share salary as the Remuneration Committee considers that the discretionary 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 deferred shares provide a sufficiently large pool share price was GBP 10.32. This level was not changed in 2022 when the Policy was last approved by shareholders and the Group from which to draw extended malus or clawback 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 repayments, if necessary in the circumstances to to fund management share awards for the years 2025-2027 – including those to Mr Gilauri – at an average price of GBP 7.90. do so. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 160 161 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Directors’ Remuneration Report continued | Performance-based remuneration – discretionary deferred shares | | | | | | | Pension | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Purpose and link to strategy | | | Opportunity | | Operation | | Purpose and link to strategy | | Opportunity | | Operation | | | • To motivate and reward an | | | • For Mr Gilauri, performance based | | • The Remuneration Committee will determine | | • The Group is required to comply | | • Pension provision will be in line with | | • The same arrangement applies to employees | | | | Executive Director who meets or | | | remuneration will be awarded in | | annually whether an award is merited based on | | with pension requirements set by | | Georgian pension legislation, which | | across the Group in Georgia. | | | exceeds the KPIs set for him or her | | | the form of discretionary deferred | | an Executive Director’s achievement of the KPIs | | the Georgian Government. | | may change from time to time. | | | | | by the Remuneration Committee for | | | shares, and the maximum number | | set for the work year and the performance of | | | | | • In line with current Georgian legislation, | | | | the relevant period. | | | of discretionary deferred shares | | the Group during the work year. If appropriate, | • Pension provision is the same for all | | • There is no provision for the | | | an Executive Director and the Group each | | | | | | that may be awarded is currently | | where a strategic change or change in business | | employees in the Group in Georgia. | | recovery or withholding of | | contribute 0-2% of total remuneration from JSC | | • Performance-based remuneration | | | | 200,000 shares. | | circumstances has made one or more of the | | | | pension payments. | | Georgia Capital and the Georgian Government | | | in order to: | | | | | KPIs an inaccurate gauge of an Executive | | | | | | contributes a further small amount currently | | | - Closely align the interests of | | • For all Executive Directors, the | | | Director’s performance, the Remuneration | | | | | | 0-2% depending on income levels. However, | | | | an Executive Director with | | maximum performance-based | | Committee may decide to base its assessment | | | | | | Irakli Gilauri has agreed for pension contributions | | | | shareholders. | | award is 100% of the base salary. | | on alternative measures. The outcome of an | | | | | | to be waived. | | | - Minimise risk taking for short- | | | For Executive Directors other than | | Executive Director’s performance and the | | | | | | | | | | term gain. | | Mr. Gilauri, at least 50% of the | | Remuneration Committee’s determination will be | | | | | • Pension contributors will only increase above | | | | - Encourage long-term | | | performance-based remuneration | | reported in the Directors’ Remuneration Report | | | | | | the level if mandated by Georgian legislation or if | | | | commitment to the Group. | | will be awarded in the form of | | for the work year in consideration. | | | | | | mandated by any other applicable legislation in | | | | | | discretionary deferred shares, with | | | | | | | | any jurisdiction. | | | | | | any balance awarded in cash. | • 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 Benefits and fifth years following the end of the work year, Purpose and link to strategy Opportunity Operation although the Remuneration Committee retains • Non-cash benefits are in line with • There is no prescribed maximum • Benefits consist of: life insurance; health the discretion to determine the timing of the Georgian market practice and are amount payable. The maximum insurance; incapacity/ disability insurance; award. Any cash will also be awarded following designed to be sufficient to attract amount payable depends on the Directors’ and Officers’ liability insurance; physical the end of the work year. and retain high-calibre talent. cost of providing such benefits examinations; tax gross-ups and tax equalisation to an employee in the location payments, company car and driver; mobile • Each tranche of vested discretionary deferred at which the Executive Director phone costs; personal security arrangements (if shares must then be held for a further one year. is based. requested by the Executive Director); assistance with completing tax returns (where required); • At vesting, an Executive Director receives cash • Shareholders should note that relocation costs for Executive Director and close payments equal to the dividends paid on the the cost of providing comparable family; and legal costs. underlying shares between beginning of the year benefits in different jurisdictions may immediately following the work year and the vary widely. vesting date. • Disclosure of amounts paid will • KPIs for an Executive Director are set towards be provided in the implementation the beginning of each work year and reflect report and will be explained where each Executive Director’s targeted contribution the cost of benefit is significant. 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- Other Executive Director policies – shareholding requirements development, mentoring and social responsibility. Purpose and link to strategy Opportunity • To further align Executive Directors’ • Executive Directors are required to build and then maintain a shareholding equivalent to • There is no contractual right to performance- interests with shareholders. 200% of salary. Such amount to be built up within a five-year period from appointment as based compensation and the Remuneration an Executive Director (the “Required Shareholding”). Committee reserves the right to award no • To ensure Executive Directors build discretionary remuneration if the Group’s and then maintain a significant • For these purposes all beneficially owned shares as well as unvested (net of tax) and performance is unsatisfactory. shareholding over the long term. vested deferred share salary and discretionary deferred shares will count towards the Required Shareholding (as such awards are not subject to any performance conditions). • Lapse provisions (natural malus) and extended • To ensure departing Executive clawback and malus applies to discretionary Directors make long-term decisions • Executive Directors are to retain the lower of (i) the Required Shareholding or (ii) the deferred shares under the circumstances as set and maintain an interest in the shareholding at the time employment ceases, for a period of two years from the date on out in the notes to this Policy table. ongoing success of the Group which employment ceases unless the Remuneration Committee determines otherwise. post-employment. • 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 162 163 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Directors’ Remuneration Report continued Notes to the Policy table – Executive Directors The discretionary deferred shares are underpinned by the robust clawback and malus provisions described below, including in the Deferred share salary incidence of significant financial losses. 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”). Clawback and malus Discretionary deferred shares are subject to malus, and clawback for up to two years from vesting, in the following circumstances: The deferred share salary comprises the most important element of the Executive Director’s fixed annual remuneration and is • misconduct in the performance or substantial failure to perform duties; commensurate with the Executive Director’s role within the Group. Paying the salary as deferred share compensation rather than as • significant financial losses, serious failure of risk management or serious damage to the reputation of Georgia Capital PLC or cash means that the Executive Director’s day-to-day actions are geared towards sustained Group performance over the long term. The JSC Georgia Capital, caused by misconduct or gross negligence (including inaction in performance of his/her duties by 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 Executive Director); therefore not subject to performance targets or measures. The salary increases or declines in value depending on Group performance, • material misstatement or material errors in the Financial Statements that relates to the area of responsibility of the Executive Director aligning an Executive Director’s interests directly and naturally with those of the Group’s shareholders. 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 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. • an award being made on the basis of erroneous or misleading data, provided that for payments based on erroneous or misleading 200,000 shares). This amount has not increased since the previous Policy was approved by shareholders in May 2022. Nor has the data (other than where such error has been caused by fraud, wilful misconduct, deliberate action/inaction and/or gross negligence number of shares increased since the original contract approved by shareholders in 2018. Illustrations of the application of the Policy of the Executive Director), malus and clawback applies to discretionary deferred remuneration awarded for the year in question. are shown later in this Policy on page 164. The above provisions form part of Mr Gilauri’s current service contract and are planned to be retained in his future contract. Further, the Performance-based remuneration Executive Equity Compensation Plan allows shares to lapse, including to zero, or be clawed back in accordance with the provisions in Performance is measured entirely through the discretionary compensation plan (see “Discretionary deferred remuneration”, below), the Executive Director’s contract. 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 Mr Gilauri’s current contract also has unusually strong malus provisions where all unvested shares (deferred share salary and shares. The Group does not operate an LTIP because it believes that there is sufficient long-term incentive built into its deferred share discretionary deferred shares) lapse when the service contract is terminated under certain circumstances, including for cause such as salary and discretionary deferred share remuneration. 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 Discretionary deferred remuneration table below for more information. These provisions are planned to be retained in any new contract for an Executive Director, including 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 Mr Gilauri. 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 It is also planned that the above provisions will apply to any cash payments made to any incoming Executive Director in lieu of example, any discretionary deferred remuneration in respect of 2025 will be granted in 2026 and the vesting schedule will be 25% in discretionary deferred shares. 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. Discretion The Remuneration Committee retains a substantial degree of discretion in relation to the Policy. This includes: Performance measures are chosen to reflect strategic priorities for the Group and are chosen by the Remuneration Committee annually • the determination of discretionary deferred shares, if any; towards the start of the relevant performance year. The aggregate pool of shares and cash (where applicable) available for each year • selection of KPIs that will determine the discretionary deferred remuneration, which may vary from year to year in order to align with for awards of discretionary deferred shares for the Executive Directors and the executive management team as a whole is determined strategy and financial objectives; annually by the Remuneration Committee in its absolute discretion, based on a number of factors including: • any adjustments required to an Executive Director’s KPIs during the work year when, for example, there has been a change in • financial objectives; strategy or business circumstances which results in one or more of KPIs becoming an inaccurate gauge of performance; and • strategic objectives; and • the discretion to override any formulaic outcomes when it considers it reasonable in the circumstances to do so. • people and culture objectives. Equity compensation trust and dilution limits The Remuneration Committee does not utilise strict weighting of performance measures to ensure that flexibility is encouraged if, An equity compensation trust (“Trust”) was established by JSC Georgia Capital for the purposes of satisfying deferred share salary and for example, strategic objectives evolve as the Group does or business circumstances change during the year. The Remuneration discretionary deferred share compensation in the form of nil-cost options awarded to Executive Directors and eligible members of the Committee believes that this flexibility ensures that the Board can work with an Executive Director so that he/she does not take executive management team. The Trust was established in 2018. 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 Business expenses determined by the Remuneration Committee and disclosed retrospectively in the Remuneration Report following the year of the Executive Directors are reimbursed for reasonable business expenses incurred in the course of carrying out duties under their service Remuneration Committee’s determination. contract, on provision of valid receipts. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 164 165 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Directors’ Remuneration Report continued Illustration of application of Remuneration Policy Consideration of shareholder views shareholder consultation process was undertaken to gather key investor feedback on the The chart below shows an estimate of the remuneration that could be received by Mr Gilauri, the Group’s sole Executive Director and new 2025 Remuneration Policy, which also took into account the strong 93.7% investor support in 2022 of the current Policy and CEO, in respect of 2025 under the Policy at three different performance levels. 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 US$ 2,886,000 generally supportive of the proposals and their feedback was taken into account during the development of the proposed 2025 Policy. US$ 3,400,200 Shareholders welcomed the absence of an increase in the expected contracted number of salary shares, and the Remuneration US$ 2,020,200 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. US$ 1,380,000 Service agreements and policy on payments for loss of office for our Directors US$ 1,380,000 US$ 1,380,000 US$ 1,380,000 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 Minimum threshold Target threshold Maximum threshold 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. 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 The following sections (1) and (2) summarise the termination and payments for loss of office provisions pursuant to Mr Gilauri’s service 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 agreement with Georgia Capital PLC and JSC Georgia Capital, respectively. The Remuneration Committee retains the discretion to 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 apply different notice, termination and payment for loss of office provisions to incoming Executive Directors. The termination provisions 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 of Non-Executive Director letters of appointment are described in section (3). The Executive Directors’ service agreements and letters of 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 appointment are kept for inspection by shareholders at the Group’s registered office. 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 Notice periods been made. At the date of this Annual Report, Mr Gilauri is the sole Executive Director of the Group. Mr Gilauri has a service contract effective 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 29 May 2018 with Georgia Capital PLC for an indefinite term which is terminable by either party on not less than four months’ notice 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% unless for cause where notice served by the Group shall have immediate effect. 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 Mr Gilauri also has a service agreement with JSC Georgia Capital effective from 29 May 2018 for an employment term of five years 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 from 29 May 2018, which was extended until 31 December 2025, which is terminable by the Executive Director on not less than three vesting date is not considered to constitute remuneration for the purposes of the regulations. months’ notice. Both documents with their amendments are available for inspection by shareholders at the Group’s registered office. 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 US$ 4,266,000 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. Fixed share salary Discretionary deferred share compensation Total | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 166 167 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Directors’ Remuneration Report continued (1) Termination of Georgia Capital PLC service agreement (3) Termination of Non-Executive Directors’ appointments In the event that an Executive Director’s service agreement is terminated on notice, Georgia Capital PLC may put Mr Gilauri on garden Each Non-Executive Director is required to submit himself or herself for annual re-election at the AGM. 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. The letters of appointment for Non-Executive Directors provide for a one-month notice period although the Group may terminate the Georgia Capital PLC may terminate Mr Gilauri’s employment early with immediate effect without notice or pay in lieu of notice in the appointment with immediate effect without notice or pay in lieu of notice if the Non-Executive Director has committed any material case of, among other circumstances, his dishonesty, gross misconduct, conviction of an offence (other than traffic-related where a non- 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 custodial penalty is imposed) or becoming of unsound mind. 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 The Company may also terminate the service agreement with immediate effect by payment in lieu of notice, in which case the payment incurred prior to the termination date. in lieu of notice shall be solely in respect of deferred share salary payable for the unworked portion of the notice period. Consideration of employment conditions elsewhere in the Group The vesting and lapse provisions of the deferred share salary under the service agreement with the Company follow the provisions in The Remuneration Committee does not formally consult employees when drawing up Directors’ Remuneration Policy but in the service agreement with JSC Georgia Capital mutatis mutandis (which are set out in the third column of the table below). determining an Executive Director’s remuneration, the Remuneration Committee considers: (i) the pay and employment conditions of senior management including executive management; (2) Termination of JSC Georgia Capital (the “JSC”) service agreement (ii) any changes in pay and employment conditions across the Group as a whole; This table sets out the default vesting and lapse provisions, but the Remuneration Committee retains the discretion to determine (iii) whether employees across the Group are personally satisfied with the way they are remunerated; and different treatment upon agreement with the Executive Director. (iv) any feedback received during the year from the Human Resources department, executive management and other employees on the executive remuneration structure. Termination reason Separation payments Vesting and lapse of awards Differences in the remuneration policy for executives relative to the broader employee population • Termination by the JSC for cause (e.g. • Vested deferred share salary (including • Any unvested awarded deferred share For a London Stock Exchange listed company of our size and depth making a meaningful impact on the Georgian economy, our gross misconduct, substantial and dividend equivalents) to termination salary and discretionary deferred share Executive Directors must have the skills, experience, work ethic and attitude required to successfully execute our strategy, manage repeated failure to perform duties, fraud date and holiday pay, unpaid business compensation as at the date when evolving public policy demands, meet our objectives and create value for shareholders over the long term. In order to recruit and retain or conviction of a felony). expenses and benefits. the Executive Director ceases to be an this talent, we assess the value of remuneration against other FTSE companies of similar size and sector listed in the UK. Executive Director shall lapse. • Termination by the JSC without cause. • Six month’s deferred share salary plus • Any unvested awarded deferred share The principles of remuneration for the Executive Directors and executive management are aligned; remuneration is designed to align deferred share salary to termination salary and discretionary deferred share remuneration with the performance of the Group and shareholder experience. In particular, the remuneration structure of the highest date and any awarded but unpaid compensation shall vest immediately. executive manager is close to that of the Executive Directors’ (although among other matters, the vesting pattern may vary and a discretionary deferred shares (all modest cash salary is included for some). awards including dividend equivalents), holiday pay, unpaid business expenses Further, the majority of compensation delivered to executive management is also in shares or phantom shares; however, most are also and benefits. entitled to a modest cash salary. • Termination by the Chief Executive • As above for Termination by the JSC • As above for Termination by the JSC Officer for Good Reason. without cause. without cause. 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, • Termination by the Chief Executive • Vested deferred share salary (including • Any unvested awarded deferred share which include benefits and the opportunity to participate in the pension scheme on the same terms as applicable to Executive Directors Officer without Good Reason. dividend equivalents) to termination date salary and discretionary deferred share and executive management. Bonuses are usually paid in cash. The Remuneration Committee are regularly updated by the Human and any holiday pay, unpaid business compensation as at the date when Resources department in respect to pay and conditions of the wider workforce. expenses and benefits. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 168 169 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Directors’ Remuneration Report continued Nomination Committee Report Non-Executive Directors’ remuneration policy Dear Shareholders The table below sets out our Policy for the operation of Non-Executive Directors’ fees and benefits of Georgia Capital PLC. Each I am delighted to present the Nomination Committee’s Non-Executive Director also serves as a member of the Supervisory Board of JSC Georgia Capital. The fees for Non-Executive (“the Committee”) report for the year ended 31 December 2024. Directors are currently the same as those disclosed in the prospectus of the Group. The Non-Executive Director fees stated below The Committee’s focus during the year was on ensuring that will apply in each year that the Policy operates from the date of approval of the Policy. following the reduction in the size of the Board, the three Board Committees were properly and effectively constituted and that | Component Purpose and link to strategy Operation Opportunity | | | | | | a replacement designated Non-Executive Director for employee | | --- | --- | --- | --- | --- | --- | --- | | | | | | • The maximum aggregate Georgia | | engagement was identified. | | Base cash fee • Attract and retain | | • Cash payment on a quarterly basis. | | | | | | | high-performing Non- | | | | Capital PLC fees for all Non-Executive | | | | | | | | Directors which can be paid under | The Committee’s principal responsibility is to lead the process | | | Executive Directors | • The fee for the Chairman will be | | | | | | | | | | | Georgia Capital PLC’s Articles of | of appointing Directors to the Board and recruiting into other | | | with the requisite | | determined by the Remuneration | | | | | | | | | | Association is GBP 750,000. | senior management positions. The Committee is satisfied that | | | skills, knowledge, | | Committee. Fees for Non-Executive | | | | the composition of the Board and all Board Committees overall experience, Directors will be determined by • A specific maximum has not been set remains appropriate with regard to the successful delivery of the independence and the Board. for the individual base cash fee. Company’s strategic and financial objectives. other attributes to add Neil Janin value to the Group. • The amount of remuneration may be Chairman of the Nomination • The Senior Independent Non- The Committee continues to regularly monitor the ongoing reviewed from time to time by the Committee Executive Director receives a higher combination of the roles of Chairman and CEO and is satisfied above, which may take into account base fee which reflects the extra time, that this remains the best structure for the Company for the time the time commitment, responsibilities commitment and responsibility. being. Mr Gilauri recuses himself from any discussion on this and the technical skills required subject. A key consideration of the Committee is ensuring that to make a valuable contribution ## “ Developing and • The Chairman receives a fee which significant attention is consistently given to succession planning to the Board, and by reference reflects the extra time commitment for the roles of Chairman and CEO, as well as for all the other to comparators, benchmarking, ## and responsibility. However, no senior management positions throughout the Group. recruiting the results of the annual review and other guidance. The Board also Chairman’s fee is received when the Chairman and CEO roles Last year, the Board carried out an in-depth evaluation, reserves the right, in their discretion, ## talent pipeline for are combined. discussed further later in this report, and is satisfied that the to amend and vary the fees if there size and composition of the Board is appropriate for the Group are genuinely unforeseen and • The fees paid to each Non-Executive and that it comprises the right combination of skills, experience ## exceptional circumstances which a unique group.” Director will be disclosed in the and knowledge. The Committee considers that we continue to necessitate such review and in such relevant year’s Annual Report. be able to attract and retain strong leaders across our portfolio circumstances any significant increase companies. Succession planning, aligned to the Group’s strategy, shall be the minimum reasonably is an ongoing priority for the Committee at both Board and senior | required. The Board reserves the | | Committee Meeting | | | --- | --- | --- | --- | | | management level. | | 1 | | right to structure the Non-Executive | | membership attendance | | Directors’ fee differently in its More details on the matters above are set out later in this report. Neil Janin (Chairman) 2/2 absolute discretion. Massimo Gesua’ sive Salvadori 2/2 • Non-Executive Directors are Irakli Gilauri 2/2 Neil Janin reimbursed for reasonable business Chairman of the Nomination Committee expenses, including travel and 20 March 2025 accommodation, which are incurred in the course of carrying out duties. Committee fees • Compensate for • Cash payment on a quarterly basis. • The Chairman does not receive additional time Committee fees. spent discharging • The amount of remuneration for Committee duties. Committee membership is reviewed as above. 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 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 170 171 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Nomination Committee Report continued The role of the Nomination Committee The Committee also reviewed the time commitment of the Non- Inclusion and diversity We remain committed to having a Board that is diverse in all The role of the Nomination Committee is to ensure that the Executive Directors, and considered any external directorships, Our Board embraces diversity in all its forms and the Board respects and the Committee will continue to examine ways in Board is comprised of individuals best able to discharge length of service as well as independence of character and understands the importance of developing a diverse pipeline for which we can build on its current diversity. We support the FTSE the responsibilities of Directors, having regard to the highest integrity. Alongside these factors the Committee took into succession to senior management and the Board. Women Leaders Review regarding gender diversity, and the standards of governance, the strategic direction of the Company account the Company’s strategic direction and the required Committee is working to improve the gender balance of those and the Board’s Diversity Policy. skills and competencies required of the Board as a whole. The The Committee and the Board recognise the role that diversity in senior management positions and their direct reports, as Committee concluded that it was happy to recommend that each plays in promoting balanced decision-making, which aligns described in the Resources and Responsibilities section on page The Committee also helps to ensure that the Company Non-Executive Director and the Executive Director be re-elected with our values and strategy. Diversity of skills, background, 76 and in the Sustainability Report. appoints excellent executive managers within our portfolio of at the 2025 AGM. experience, knowledge, outlook, approach, gender, nationality companies, and who are capable of successfully executing our and ethnicity, amongst other factors, are taken into consideration Georgia Capital recognises that it does not currently satisfy the strategic objectives. With the continuing service of David Morrison (Chair), Massimo when seeking to appoint a new director to the Board. Above all, UKLR 22.2 target, given that less than 40% of the individuals on Gesua’ sive Salvadori and Maria Chatti-Gautier (see pages any Board appointment will always be based on merit. our Board are women and no woman occupies the position of In summary, the key responsibilities of the Nomination 122 to 123 for a description of their experience and reason Chair, SID or CEO. Committee include: for appointment), the Committee continues to consider that Equally, we are clear that diversity of outlook and approach, while • regular review of the composition of the Board and its the financial expertise of the Audit and Valuation Committee’s inevitably difficult to measure, is a key determinant in maintaining Over the last few years, we have made a concerted effort to Committees to ensure they are appropriately constituted and members is recent and relevant. an effective Board. We are supportive of the ambition shown in reduce the number of non-executive directors on our Board and balanced in terms of diversity of gender, social and ethnic recent reviews on diversity, including the Parker Review regarding have succeeded in meaningfully reducing the cost of the Board backgrounds, cognitive and personal strengths, and balance The tenure for David Morrison and Massimo Gesua’ sive ethnic diversity, and the Board is aligned with recommendations without compromising on its quality. Given these recent changes, in terms of skills, experience, independence and knowledge; Salvadori is seven years as at the date of this report (appointed for ethnic minorities on UK boards, with the inclusion of Board we believe it to be in our shareholders’ best interests to proceed • responsibility for identifying and nominating candidates for the in February 2018), Maria Chatti-Gautier’s tenure is five years members Maria Chatti-Gautier, of Syrian (Middle Eastern) heritage on further Board changes with caution. We strongly believe approval by the Board to fill Board vacancies as and when (appointed in March 2020) and my tenure is two years (appointed and Irakli Gilauri, an ethnic Georgian. The Committees and individual that diversity targets are not just an end goal, but a continuous they arise; in October 2022). As part of a wider assessment, the Committee members of the Board wish to note that, given that the Board also journey. Our long-term ambition is to increase diversity on • giving full consideration to succession planning for noted that David Morrison and I previously held roles as Directors consists of Massimo Gesua’ sive Salvadori, who is Jewish and our Board, in all its forms, to ensure a wider representation of Directors, including the Chairman and CEO and other of BGEO Group PLC. The business of Georgia Capital demerged Italian, David Morrison, a US National, and Neil Janin, a Canadian, both gender and the society in which we operate. With David senior management, taking into account the challenges and from BGEO Group PLC, into a new group which listed in May the Board’s diversity extends substantially beyond ethnicity alone. Morrison’s and Massimo Gesua’ sive Salvadori’s tenures as opportunities facing the Company, and the skills and expertise 2018. Georgia Capital is a platform for buying, developing and Independent Non-Executive Directors expiring in two years, needed on the Board in the future; selling businesses in Georgia. Importantly therefore, the nature It is recognised that ethnic heritage draws upon a number of the Committee will continue to ensure that diversity is always • keeping under review the Group’s leadership needs, both of the business of Georgia Capital is substantially different to factors in tandem, and that the Group is primarily based in considered when drawing up candidate shortlists, with the aim executive and non-executive, and ensuring plans are in place that of BGEO Group PLC at the date of the demerger, which Georgia, where the Georgian majority ethnic group may not of increasing the representation of women on the Board, and in for senior management succession, with a view to ensuring primarily consisted of the regulated bank. I recused myself from always fit neatly into UK-centric diversity metrics. Georgian senior Board positions, and achieving the targets under the UK the continued ability of the Company to compete effectively in the Committee’s consideration of this matter but I can report that (Kartuli) is the only prominent language of the Kartvelian language Listing Rules. the marketplace; and the Committee concluded that from our previous long careers, family, and has its own script, and the majority religion in Georgia • making recommendations to the Board concerning the Mr Morrison and I have very strong experience, knowledge is the Orthodox Church of Georgia. Georgia sits geographically On 31 December 2024, Georgia Capital, as an investment re-election by shareholders of Directors under the annual and authority to demonstrate objective judgement and provide and culturally at the intersection of Europe, Asia and the Middle holding company, had a total of 45 employees, of which re-election provisions of the UK Corporate Governance constructive challenge among the Board members for this East, and Georgians tend to identify themselves as a distinct 25 are female, and 20 are male. You can view our detailed Code (“the Code”), having due regard to their performance Company’s business as an investment platform. The Committee indigenous group of the Caucasus. gender diversity statistics on page 76 in the Resources and and ability to continue to contribute to the Board in light has also noted the continuing contribution of all Board members Responsibilities section and in the Sustainability Report. of the knowledge, skills and experience required and their in Board meetings and outside the meetings. Taking all the Diversity is a core feature of the Committee’s work and as such, independence, bearing in mind the need for progressive foregoing into consideration, the Committee determines that all is an integral part of the Board recruitment process as described refreshing of the Board. Board members are independent in character and judgement. in more detail elsewhere in this report, and is part of the search specification agreed with external agents. The Committee regularly reviews its Terms of Reference, and the You can read more on the balance of the Board in the section on Committee remains satisfied that these continue to be aligned to “Board size, composition, tenure and independence” on page 124. the Code and best practice, and appropriate for the Company. The full Terms of Reference of the Committee can be found on Role of the Chairman of the Board Our gender identity and ethnicity data in accordance with UKLR 22.2 at 31 December 2024 was as follows. The data was collected our website here: The Committee keeps the current practice of combining the roles through self-reporting by the Directors and management: | https://georgiacapital.ge/governance/cgf/terms. | of Chairman and CEO and remains satisfied that, notwithstanding | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | this is not compliant with provision 9 of the Code, the continuing | | | | | | Number of | | | | Composition and meeting attendance | combination of the two roles (i.e. the current structure) best | | | | | senior positions | | | | | | | | | | | | on the Board | Number in | Percentage | | The composition of the Committee and the members’ meeting | serves our Company and recommends that it should continue for | | Number of | Percentage of | | (CEO, CFO, SID | | executive | of executive | | attendance for the year 2024 are set out in the Board and | the time being. Mr Gilauri did not participate in these discussions. | Board members | | | the Board | | and Chair) | management | management | | Committee meeting attendance table on page 127, and the | The Committee and the Board will keep the structure under | | | | | | | | | Men 4 80% 3 6 66.66% skills and experience each member contributes can be found review, and will ensure succession planning is always a key Women 1 20% – 3 33.33% on pages 122 to 123. The Committee is comprised of Massimo consideration of ongoing reviews. Shareholders have, for the Gesua’ sive Salvadori, Irakli Gilauri and myself, as Committee last six years, been extremely supportive of this structure and Non-binary – – – – – Chair. There have been no changes to the composition of from our regular discussions with shareholders, we believe this Not specified/prefer not to say – – – – – the Committee during the last 12 months. From time-to-time continues to be the case. The basis for this conclusion, and members of management may be invited to meetings to provide our shareholder engagement on this matter, is set out in the Notes: a fuller picture and deeper level of insight into key issues Directors’ Governance Statement on page 120. • 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. and developments. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 172 173 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Nomination Committee Report continued Statement of Directors’ Responsibilities Table for reporting on ethnic background: The Directors are responsible for preparing the Annual Report We confirm that to the best of our knowledge: and the financial statements in accordance with applicable laws • the Company financial statements, which have been prepared Number of senior positions and regulations. in accordance with UK-adopted international accounting Number on the Board Number in Percentage standards, give a true and fair view of the assets, liabilities, of Board Percentage (CEO, CFO, SID executive of executive members of the Board and Chair) management management Company law requires the Directors to prepare financial financial position and loss of the Company; and statements for each financial year. Under that law, the Directors • the Annual Report, including the Strategic Report includes White British or other White (including minority-white groups) 3 60% 1 – – have prepared the financial statements in accordance with the a fair review of the development and performance of the Mixed/Multiple Ethnic Groups – – – – – applicable UK-adopted international accounting standards. business and the position of the Company, together with a Asian/Asian British – – – – – description of the principal risks and uncertainties that it faces. Under company law, the Directors must not approve the financial Black/African/Caribbean/Black British – – – – – statements unless they are satisfied that they give a true and fair We consider the Annual Report and Accounts, taken as a whole, Other ethnic group, including Arab 2 40% 1 9 100% view of the state of affairs of the Company and of the profit or to be fair, balanced and understandable, and provides the loss of the company for that period. information necessary for shareholders to assess the Company’s Not specified/prefer not to say – – – – – position and performance, business model and strategy. In preparing the financial statements, the Directors are required to: The Committee is responsible for maintaining and assessing the Committee and the powers delegated to these Committees. • select suitable accounting policies and then apply them By order of the Board effectiveness of the Company’s Diversity Policy and reviews this The new Director is also advised of the legal and other duties consistently; on an ongoing basis. You can read more about the established and obligations of a Director of a listed company. • state whether applicable UK-adopted international accounting diverse culture and related activities during 2024 in the Resources standards have been followed, subject to any material Irakli Gilauri and Responsibilities section on pages 76 to 92 and in the Board and Committee evaluation departures disclosed and explained in the financial statements; Chairman and CEO Sustainability Report. In 2023, the Company engaged Amandla to conduct an in-depth • make judgements and accounting estimates that are 20 March 2025 evaluation of Georgia Capital’s Board comprising a multi-faceted reasonable and prudent; and Succession planning and talent development approach. A further Board evaluation is planned during 2026. • prepare the financial statements on a going concern basis Succession planning at both the Board and senior management Last year’s evaluation included online interviews with the entire unless it is inappropriate to presume that the Company will levels remained a key areas of focus for the Committee during the Board, feedback reports, individual assessments for each Board continue in business. year. We have previously reported on the creation of opportunities member, in-person group coaching and observation of Board to develop high-performing individuals and to build diversity in meetings. Amandla considers that the Board is functioning The Directors are responsible for safeguarding the assets of senior roles across the business. We continue to build on this adeptly in terms of governance, supervision and oversight. the Company and hence for taking reasonable steps for the initiative and have developed a talented pool of employees within Amandla observed that the Board is intrinsically tied to the prevention and detection of fraud and other irregularities. Georgia Capital that we believe is the best way to ensure a commitment and longevity of its members, reflecting a profound healthy and diverse pipeline of future leaders of the Company in dedication to the Company’s mission. With the transformation The Directors are also responsible for keeping adequate line with the Group’s strategy. into a more streamlined Board, Amandla reported the focus on accounting records that are sufficient to show and explain the maintenance of a rich diversity of experiences, a profound respect company’s transactions and disclose with reasonable accuracy In addition, the Company pursues initiatives aimed at developing among members, and a commitment to progressive, assertive at any time the financial position of the Company and enable the entrepreneurial business leaders that Georgia Capital will debate. Amandla concluded that the Board is currently operating them to ensure that the financial statements and the Directors’ require as it grows. effectively. Its potential could be maximised by affording Board Remuneration Report comply with the Companies Act 2006. members an uninterrupted period of collaboration and avoiding a Training and Director induction revolving door of further changes. The Board’s members respect The Directors are responsible for the maintenance and integrity We are committed to the continuing development of our Directors one another and are keen to steer the necessary transformations of the Company’s website. Legislation in the United Kingdom in order that they may build on their expertise and maintain a essential for creating value in a challenging region. governing the preparation and dissemination of financial detailed understanding of the business and the markets in which statements may differ from legislation in other jurisdictions. our investments operate. All of our Directors participated in The Chairmanship was described as commendable, and Amandla development sessions and presentations. The Group Corporate commented that last year’s reduction in Board size augured well Secretary provided briefings as appropriate on regulatory and for agile decision-making. The Board reflects diverse thoughts and governance developments, including on changes in the UK experiences in line with industry standards. In terms of oversight, Listing Rules and on stakeholder views on diversity. Amandla stated that the Board is fit for purpose. Amandla had previously worked with the Chairman and other senior executives Each Director, upon appointment, receives a tailored induction within Georgia Capital. The assessment included a series of to the Company and its various investments over the first six qualitative diagnostic interviews designed to ascertain from each months of appointment, with the purpose of: of the Board members several different components: • building an understanding of the nature of the Company, its 1. The individual strengths of each member. | | business and its markets; | 2. The areas which other Board members felt there could be a | | | --- | --- | --- | --- | | • building a link with the Company’s people; | | | greater contribution. | | • building an understanding of the Company’s main | | 3. The dynamics in the team that allowed for healthy challenge | | | | relationships; and | | and debate. | | • understanding the obligations and responsibilities of a Director | | 4. The areas that might need attention. | | of a UK main market-listed company. Given his role as Chairman and CEO, Irakli Gilauri’s performance As part of the induction programme, each Director meets was also reviewed by the Remuneration Committee and the members of executive management and receives information Senior Independent Director. In addition, the full Board considers about the role of the Board and individual Directors, each Board the Remuneration Committee’s recommendations. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 174 175 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Directors’ Report The Directors present their Annual Report and the audited The Directors’ beneficial interests in ordinary shares of Georgia Articles of Association At the AGM of the Company on 20 May 2024, the Directors financial statements for the year ended 31 December 2024. Capital as at 31 December 2024 are shown on page 154 Georgia Capital PLC’s (the “Company”) Articles of Association were given the power a) to allot shares up to a maximum nominal together with any changes in those interests between the may only be amended by a special resolution at a general amount of GBP 142,246.66 (representing 14,224,666 ordinary Please refer to the Corporate Governance Statement for financial year end and the date on which this Directors’ Report meeting of the shareholders. The process for the appointment shares, approximately one-third of the Company’s issued share further information on how we applied the UK Corporate was approved by the Board. and removal of Directors is included in the Company’s Articles capital as at 21 March 2024), and b) to allot equity securities up Governance Code. of Association. Georgia Capital PLC’s Articles of Association are to a further aggregate nominal amount of GBP 142,246.66 in Powers of Directors available on the Company’s website: connection with an offer by way of a rights issue: (i) to holders Strategic Report The Directors may exercise all powers of the Company subject https://georgiacapital.ge/governance/cgf/articles. of shares in proportion (as nearly as may be practicable) to their The Strategic Report on pages 4 to 117 was approved by the to applicable legislation and regulations and Georgia Capital’s existing holdings; and (ii) to holders of other equity securities as Board of Directors on 20 March 2025 and signed on its behalf by Articles of Association. Share capital and rights attaching to the shares required by the rights of those securities or, if the Board consider Irakli Gilauri, Chairman and Chief Executive Officer. Details of the movements in share capital during the year are it necessary, as permitted by the rights of those securities, Information contained elsewhere in the Annual Report provided in Note 8 to the financial statements on page 211 of such amount to be reduced by the aggregate nominal amount Management Report Information required to be included in this Directors’ Report can this Annual Report. As at the last practicable date of 14 March of shares allotted or rights to subscribe for or to convert any This Directors’ Report together with the Strategic Report on be found elsewhere in the Annual Report as indicated in the table 2025, there was a single class of 37,980,419 ordinary shares securities into shares granted under paragraph (a), and subject pages 4 to 117 form the Management Report for the basis of below and is incorporated into this report by reference: of 1 pence each in issue, each with one vote. The rights and to the Board having the right to make such exclusions or other DTR 4.1.8 R. obligations attaching to the Company’s ordinary shares are set arrangements as they may deem necessary or expedient in out in its Articles of Association. Holders of ordinary shares are relation to treasury shares, fractional entitlements, record dates Directors entitled, subject to any applicable law and the Company’s Articles or legal, regulatory or practical problems in, or under the laws of, The names and biographies of the current Directors of the of Association, to: any territory. These authorities will expire at the conclusion of the Company are shown on pages 122 to 123 and include their • have shareholder documents made available to them including 2025 AGM (or, if earlier, at the close of business on 20 August relevant experience. In accordance with the UK Corporate notice of any general meetings; 2025) and approval will be sought at that meeting to renew a Governance Code, all Directors will retire and stand for re-election • attend, speak and exercise voting rights at general meetings, similar authority for a further year. at the AGM. either in person or by proxy; and • participate in any distribution of income or capital. The Directors did not allot any shares during 2024. Information Location in Annual Report The Company is permitted to make market purchases of its own Under the US$ 15 million share buyback and cancellation Future developments Pages 4-117 shares provided it is duly authorised by its members in a general programme announced in October 2023, the Company meeting and subject to and in accordance with section 701 of purchased 0.5 million shares, corresponding to US$ 6.7 million, Going Concern Statement Page 63 the Companies Act 2006. during the first quarter of 2024. In May 2024, GCAP launched Viability Statement Pages 63-64 a US$ 25 million share buyback and cancellation programme, Risk management Pages 60-64 Authority was given at the AGM of the Company on 20 May which was subsequently increased by an additional US$ 15 2024 for the Company to purchase up to 6,396,832 shares million in August 2024. In December 2024, the Company Principal risks and uncertainties Pages 65-74 (approximately 14.99% of Georgia Capital’s issued ordinary launched another US$ 25 million share buyback and cancellation Directors’ Governance Statement Pages 120-121 share capital excluding treasury shares as at 21 March 2024) programme. Under the above programmes in total, the Company The Board of Directors Pages 122-123 on-market. This authority will expire at the conclusion of the repurchased 3.7 million of its own shares during the financial year Company’s AGM in 2025 or, if earlier, the close of business on ended 31 December 2024, representing a nominal value of US$ Audit and Valuation Committee report Pages 134-141 20 June 2025. 48.1 million and an aggregate consideration paid by Georgia Remuneration Committee report Pages 142-168 Capital PLC of GBP 37.3 million on the UK trading market. The Summary of Remuneration Policy Page 158 A renewal of the authority to make market purchases will be shares cancelled represent 9.2% of the shares in issue and 9.3% sought from shareholders at each AGM of the Company. of the shares in issue, excluding treasury shares. Nomination Committee report Pages 169-172 Purchases of ordinary shares will be made within guidelines Related party disclosures Page 224 established from time to time by the Board. Any purchase of The purpose of both buyback programmes was to reduce Greenhouse gas emissions Page 83 ordinary shares would be made only out of the available cash Georgia Capital PLC’s number of outstanding ordinary shares. resources of the Company. Ordinary shares purchased by the Employee matters Pages 79-81 Company may be held in treasury or cancelled. None of the ordinary shares carry any special rights with regard to Environmental matters Pages 81-84 control of Georgia Capital. There are no restrictions on transfers Share capital Page 211 Authority was given at the AGM of the Company on 20 May of shares other than: 2024 for the Company to purchase up to 14,935,899 shares • certain restrictions, which may from time to time be imposed Engagement with suppliers, customers and others in a business Page 128 (approximately one-third of Georgia Capital’s issued ordinary by laws or regulations such as those relating to insider dealing relationship with the Company share capital excluding treasury shares as at 21 March 2024) or pursuant to the Group’s Inside Information Disclosure Information on the Group’s financial risk management objectives Pages 213-216 off-market. This authority will expire at the conclusion of the Policy; and policies, and its exposure to credit risk, foreign currency risk Company’s AGM in 2025 or, if earlier, the close of business on • pursuant to the Company’s Securities Dealing Policy and and financial instruments 20 June 2025. Code, whereby the Directors and designated employees Research and development As an investment holding company, GCAP does not engage require approval to deal in Georgia Capital’s shares or cannot in research and development activities comparable with, for A renewal of the authority to make off-market purchases may deal in certain periods; and example, manufacturing companies. Instead, research and be sought from shareholders at future AGMs of the Company. • where a person with an interest in the Company’s shares development activities are carried out separately by each of our Purchases of ordinary shares will be made within guidelines has been served with a disclosure notice and has failed to portfolio companies. This sub-report is therefore omitted. established from time to time by the Board. Any purchase of provide the Company with information concerning interests ordinary shares would be made only out of the available cash in those shares. resources of the Company. Ordinary shares purchased by the Company may be held in treasury or cancelled. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 176 177 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Directors’ Report continued There are no restrictions on exercising voting rights save in Conflicts of interest Code of Conduct and Ethics Statement of disclosure of information to the auditor situations where Georgia Capital is legally entitled to impose In accordance with the Companies Act 2006, the Directors have The Board has adopted a Code of Conduct and Ethics relating We, the Directors confirm that, so far as we are aware, there is such restriction (for example, under the Articles of Association adopted a policy and procedure for disclosure and authorisation to the lawful and ethical conduct of the business, supported by no relevant audit information of which the Company’s auditors where amounts remain unpaid in the shares after request, or the (if appropriate) of conflicts of interest, and these have been the Company’s core values. The Code of Conduct and Ethics are unaware and we have taken all steps that we reasonably holder is otherwise in default of an obligation to Georgia Capital). followed during 2024. The Company’s Articles of Association has been communicated to all Directors and employees, all of believe should be taken as Directors in order to make ourselves Georgia Capital is not aware of any arrangements between also contain provisions to allow the Directors to authorise whom are expected to observe high standards of integrity and aware of any relevant audit information and to establish that the shareholders that may result in restrictions on the transfer of potential conflicts of interest so that a Director is not in breach fair dealing in relation to customers, staff and regulators in the Company’s statutory auditors are aware of such information. securities or voting rights. of his or her duty under company law. communities in which the Company operates. Our Code of Conduct and Ethics is available on our website: The Directors’ Report on pages 174 to 177 was approved by the Results and dividends Directors’ remuneration https://georgiacapital.ge/governance/cgf/policies. Board of Directors on 20 March 2025 and signed on its behalf by: The Company made a profit before taxation of GEL 362.3 million. Directors’ fees are determined by the Remuneration Committee The Company’s profit after taxation for the year was from time to time. The remuneration of Directors must be Independent auditors GEL 362.3 million. in accordance with the Directors’ Remuneration Policy. The A resolution to re-appoint PricewaterhouseCoopers LLP as Michael Oliver Remuneration Policy was put to the shareholders for approval auditors of Georgia Capital will be put to shareholders at the Company Secretary The Company may by ordinary resolution declare dividends at the 2024 AGM and remuneration is determined in accordance upcoming AGM. 20 March 2025 provided that no such dividend shall exceed the amount with that Policy. recommended by the Company’s Directors. The Directors Major interests in shares may also pay such interim dividends as appear to be justified The fees paid to the Non-Executive Directors in 2024 pursuant The table below lists shareholders with voting rights of more than by the profits of the Company available for distribution. to their letters of appointment are shown on page 154. The fees 3% as of 31 December 2024. paid to our sole Executive Director in 2024 pursuant to his service Number of % of As the Company is a holding company, Georgia Capital agreements with Georgia Capital are shown on pages 145 to 146. Shareholder voting rights voting rights relies primarily on dividends and other statutorily (if any) and JSC Georgia Capital Executive contractually permissible payments from its subsidiaries to Indemnity Equity Compensation Trust 4,002,519 10.13% generate the funds necessary to meet its obligations and pay Subject to applicable legislation, every current and former Allan Gray Proprietary Ltd 3,237,056 8.19% dividends to its shareholders. Director or other officer of the Company (other than any person engaged by the Company as auditor) shall be indemnified by the 1 Gemsstock Ltd 3,195,075 8.08% The Company expects to be a cash-generative business with the Company against (broadly) any liability in relation to the Company, Lazard Asset Management LLC 2,825,749 7.15% opportunity for attractive capital investment to enhance its growth other than (broadly) any liability to the Company or a member prospects, both through organic investments and acquisitions. Eaton Vance Management 1,925,244 4.87% of the Company, or any criminal or regulatory fine. In addition, The Board intends to pursue a capital returns policy that reflects the Company has put in place Directors’ and Officers’ liability Coeli Frontier Markets AB 1,875,345 4.75% this strategy whilst also delivering shareholders high-quality, insurance. Such indemnities were in force throughout the financial Irakli Gilauri 1,848,104 4.68% long-term dividend growth, through share buybacks or other period and will remain in force as at the date of this Annual Report. potential exits. However, the Board may periodically reassess Firebird Management LLC 1,190,178 3.01% the Company’s dividend policy and the payment of dividends Related party disclosures (or quantum of the same) will depend on the Group’s existing Details of related party disclosures are set out in Note 14 to the For the period 1 January 2025 up to and including 14 March and future financial condition, results of operations, capital financial statements on page 224 of this Annual Report. 2025 (the latest practicable date for inclusion in this report), requirements, investment and divestment cycles, liquidity needs the Company has received the following notifications pursuant and other matters the Board considers relevant from time to time. Significant agreements to Rule 5 of the DTRs: The Company is not party to any significant agreements that AGM take effect, alter or terminate upon a change of control of the • Allan Gray Proprietary Ltd held a total of 3,087,487 ordinary The arrangements for the Company’s next AGM and details of Company. The Company is not aware of any agreements between shares in the Company, representing approximately 7.99% the resolutions to be proposed, together with explanatory notes holders of its ordinary shares that may result in restrictions on the of the Georgia Capital’s issued ordinary share capital. will, be set out in the Notice of AGM to be published on the transfer of its ordinary shares or on voting rights. • The JSC Georgia Capital Executive Equity Compensation Company’s website: https://georgiacapital.ge/. Trust holds 3,315,734 number of voting rights, representing Presence outside Georgia 8.66% of the Company’s issued ordinary share capital. Equity Settled Option Plan (ESOP) The Company has a registered office in the United Kingdom: Additionally, the Company had received notification, that The Company operates an EBT (the “ESOP”), which holds see page 228. Mr Irakli Gilauri directly held a total of 2,131,709 ordinary ordinary shares in trust for the benefit of employees and former shares in the Company, representing approximately 5.60% employees of the Group, and their dependents, and which is used Employee disclosures of Georgia Capital’s issued ordinary share capital. in conjunction with the Group’s employee share schemes. Whilst Our disclosures relating to the number of women in senior ordinary shares are held in the EBT, the voting rights in respect of management, employee engagement and our policies on human It should be noted that these holdings are likely to have changed these ordinary shares are exercised by the trustees of the EBT. rights, including employees with a disability, are included in the since the Company was notified. However, notification of any section “Employee matters” on pages 79 to 81. change is not required until the next notifiable threshold is In accordance with the ESOP documentation, Apex Group crossed. The respective regulatory filings by shareholders are Fiduciary Services Limited has waived its right to receive any Political donations available on the Company’s website and the LSE website. dividends. This waiver will remain in place indefinitely, unless The Company did not make any political donations or otherwise instructed by Georgia Capital. New shares issued in expenditure during 2024. Authority to make political donations Post-balance sheet events satisfaction of deferred share compensation from the time of and incur political expenditure will be put to shareholder vote at Please see Note 15 to the financial statements, for any the Company’s listing on the LSE will not exceed 10% of the the 2025 AGM. post-balance sheet activities. Company’s ordinary share capital over any ten-year period. 1 Omits holdings through certain financial instruments. | | Strategic Review | Strategic Review | Strategic Review | | | | --- | --- | --- | --- | --- | --- | | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | 179178 | | | Overview | Our Business | Discussion of Results | | | ## 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 Location: Kolkheti National Park, Georgia Image Source: https://nationalparks.ge/ ## Financial Statements | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 180 181 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Independent Auditors’ Report ## to the members of Georgia Capital PLC Report on the audit of the financial statements Key audit matters Opinion Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial In our opinion, Georgia Capital PLC’s financial statements: statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) • 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 identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the then ended; audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures • have been properly prepared in accordance with UK-adopted international accounting standards; and thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we • have been prepared in accordance with the requirements of the Companies Act 2006. do not provide a separate opinion on these matters. We have audited the financial statements, included within the Annual Report, which comprise: Statement of Financial Position as at This is not a complete list of all risks identified by our audit. The key audit matters below are consistent with last year. 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 Key audit matter How our audit addressed the key audit matter information and other explanatory information. Valuation of equity investments at fair value We obtained an understanding of management’s processes and controls for determining The equity investments at fair value balance the fair value of equity investments, including understanding management’s interactions with Our opinion is consistent with our reporting to the Audit and Valuation Committee. presented in the Statement of Financial Position Kroll as management’s external experts. We performed the following procedures over the is the Company’s investment in its subsidiaries, valuation of equity investments at fair value as at 31 December 2024: Basis for opinion predominantly comprised of the fair value of the investment portfolio. The investment • We assessed the competence and capabilities of management’s expertise and verified We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our portfolio includes unquoted investments. The their qualifications. responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of accounting policy for this balance is included • We also assessed their objectivity and independence by discussing the scope of their work our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. in note 3 to the financial statements. The and reviewing the terms of their engagement for unusual terms or fee arrangements. breakdown of the balance is disclosed in note Independence 5 to the financial statements. Based on this work, we are satisfied that Kroll were independent and competent, and the We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial scope of their work was appropriate. statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our In valuing the investment portfolio, key other ethical responsibilities in accordance with these requirements. assumptions include discount rates, future • In conjunction with our auditor’s valuation experts, the engagement team held discussions with growth projections, control premia, illiquidity management and Kroll to challenge their assumptions and validate inputs used; discounts and the application of weighted • Validated the appropriateness of the fair valuation policies to assess whether they are in To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided. averages to different valuation approaches. accordance with applicable accounting requirements; • Tested the classification of Level 3 investments to assess whether they were classified Other than those disclosed in note 9 – Auditors’ remuneration, we have provided no non-audit services to the company or its controlled The inputs in the earnings multiples models appropriately; undertakings in the period under audit. include observable data, such as the earnings • Reviewed valuation methodologies to confirm they are in line with Georgia Capital Valuation multiples of comparable companies to the Policies and applicable accounting requirements; Our audit approach relevant investment, and unobservable data, • Recalculated the valuation models from their Excel formula to assess mathematical accuracy; Context such as forecast earnings for the investments. • Supported by the PwC Georgia team, assessed the appropriateness of any unobservable Georgia Capital PLC is a company listed on the London Stock Exchange which invests in and develops businesses within Georgia. In discounted cash flow models, unobservable inputs or significant estimates used in valuations, including benchmarking against publicly 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 inputs are the projected cash flows of the available information where available, and obtained corroborative evidence; and the Audit and Valuation Committee and members of management to discuss and understand significant changes to the business relevant investments and the discount • Validated ownership and other interests held through regulatory data, sale and purchase during the year, and to understand their perspectives on associated business risks. We used this insight when forming our views rates applied. agreements or other third party reports. regarding the business, as part of developing our audit plan and when scoping and performing our audit procedures. The valuation of equity investments at fair In addition, given the inherent subjectivity involved in the valuation of the investments, and value was identified as a key audit matter given therefore the need for specialised market knowledge to determine the most appropriate Overview the valuation is inherently subjective due to, assumptions and the technicalities of the valuation methodology, we engaged our internal Audit scope among other factors, the individual nature of valuation experts to assist us in our audit of this area. The experts performed the following • The Annual Report and financial statements are prepared as an investment entity under IFRS 10. We have audited 100% each investment and the expected future cash procedures on a sample of investments: of the investment portfolio held by Georgia Capital PLC through JSC Georgia Capital and Georgia Beverage Holding Limited. flows. The significance of the estimates and This represents 96% of the equity investments at fair value balance. judgements involved, coupled with the fact that • Obtained and read the valuation report drafted by Kroll for each asset in the sample; • We instructed PwC Georgia to perform audit procedures on inputs to the valuation models of the investment portfolio. only a small percentage difference in individual • Discussed with Kroll and management their rationale for the valuations; We performed audit procedures over the assumptions and methodologies applied in developing the valuation of the investment valuations, when aggregated, could • Reviewed and assessed the reasonableness of the valuation approaches and methodologies investment portfolio. result in a material misstatement, warranted for compliance with the relevant industry best practice and applicable accounting specific audit focus in this area. requirements; • We instructed PwC Georgia to perform audit procedures over valuation model inputs and other balances pertaining to the equity • Reviewed certain key inputs and assumptions, including discount rates, future growth investments at fair value balance. projections, control premia, illiquidity discounts and the applicable of weighted averages as at 31 December 2024; and Key audit matters • Reported their findings to the audit team for overall considerations and conclusions. • Valuation of equity investments at fair value. We considered the appropriateness and adequacy of the disclosures around the estimation Materiality uncertainty and sensitivities on the accounting estimates. • Overall materiality: 36,090,130 (2023: 33,785,000) based on 1% of net assets. • Performance materiality: 27,067,598 (2023: 25,338,000). Our testing did not identify any evidence of material misstatement. How we tailored the audit scope The scope of our audit 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 part of designing our audit, we determined materiality and assessed the risks of material misstatement in 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 182 183 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## 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 Conclusions relating to going concern 92.35% holding in Georgia Beverage Holding Limited under the Equity investments at fair value account. 96% of the balance is Our evaluation of the directors’ assessment of the company’s ability to continue to adopt the going concern basis of accounting included: comprised of equity investments held at fair value through JSC Georgia Capital and Georgia Beverage Holding Limited. The audit work • Reviewing management’s going concern assessment memorandum which included a base case cash flow and severe but plausible over this balance was performed by the UK and Georgia engagement teams in conjunction with PwC UK valuation experts. 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 The Senior Statutory Auditor is based in the UK, along with the PwC UK engagement team. As the Company’s management and ongoing global instability and performing independent research on expected economic impacts of such scenarios along with operations are located in Georgia, the PwC UK engagement team have instructed the PwC Georgia engagement team for JSC Georgia predicted future performance of the Georgian economy. Capital to report to PwC UK on special purpose financial information as it pertains to the equity investments at fair value balance. • 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 The PwC Georgia engagement team have carried out audit procedures over certain balances included within equity investments at fair value whether we considered the downside sensitivities to be appropriately severe, the availability of committed finance and covenant along with testing of inputs into the investment valuation models. The PwC UK engagement team, together with the PwC UK valuations compliance during the forecast period. experts, performed audit procedures over the judgemental assumptions and methodologies employed in determining a fair value. • 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. The PwC UK engagement team held regular calls with the PwC Georgia engagement team to understand the audit approach, findings • Reviewing the disclosures in the financial statements relating to the going concern basis of preparation, and evaluating that these from the results of audit procedures and any issues arising from our work. The PwC UK engagement team performed a remote review provided an explanation of the Directors’ assessment that was consistent with the audit evidence we obtained; of working papers through use of our audit software and were responsible for the direction, review and oversight of the audit process. • 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 The impact of climate risk on our audit • Performing a stand back procedure in line with ISA 570 (Revised) to consider all of the evidence obtained, whether corroborative or In planning and executing our audit, we have considered the potential impacts of climate change on the Company’s business and its contradictory, and drawing conclusions on going concern. financial statements, based on our knowledge of the Company’s operations and its strategy in relation to climate change. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, In 2024, the Company has continued to develop its assessment of the potential impacts of climate change as outlined in the TCFD individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a period of at least report. As part of our audit, we have obtained management’s and the Audit and Valuation Committee’s climate-related risk assessment twelve months from when the financial statements are authorised for issue. to understand the process of identifying climate-related risks, the determination of mitigating actions and the impact on the Company’s financial statements. 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. 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 However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the company’s ability to expenses and capital expenditure, and have not identified any additional risks of material misstatement. continue as a going concern. We also considered the consistency of the disclosures in relation to climate change in the financial statements with the disclosures In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to in the Task Force on Climate-related Financial Disclosures (TCFD) section and more broadly within the Responsibility section of the add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it Strategic Report. appropriate to adopt the going concern basis of accounting. Materiality Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. 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 Reporting on other information audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report individually and in aggregate on the financial statements as a whole. 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 Based on our professional judgement, we determined materiality for the financial statements as a whole as follows: form of assurance thereon. Overall company materiality 36,090,130 (2023: 33,785,000). In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider How we determined it 1% of net assets whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or Rationale for benchmark applied Based on the benchmarks used in the Annual Report, net assets is the primary measure used otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are by shareholders in assessing the performance of the Company and is a generally accepted required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material auditing benchmark. 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. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and With respect to the Strategic report and Directors’ Report, we also considered whether the disclosures required by the UK Companies undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our Act 2006 have been included. 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 Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and the company financial statements. matters as described below. In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment Strategic report and Directors’ Report and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors’ was appropriate. Report for the year ended 31 December 2024 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. 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. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 184 185 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Independent Auditors’ Report continued Directors’ Remuneration Based on our understanding of the company and industry, we identified that the principal risks of non- compliance with laws and In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the regulations related to breaches of the UK regulatory principles, such as the Listing Rules, and we considered the extent to which Companies Act 2006. 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 Corporate governance statement fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the were related to potential management bias in accounting estimates, in particular in relation to the valuation of equity investments at fair corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate Governance Code value and posting inappropriate journal entries. Audit procedures performed by the engagement team included: specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are • Discussions with management, and review of relevant meeting minutes (including those of the Board of Directors and the Audit and described in the Reporting on other information section of this report. 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; Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate • Challenging assumptions made by management in their significant accounting estimates, in particular in relation to the valuation of governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have equity investments at fair value; and nothing material to add or draw attention to in relation to: • Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations. • 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 There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non- an explanation of how these are being managed or mitigated; compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, • The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis 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 of accounting in preparing them, and their identification of any material uncertainties to the company’s ability to continue to do so may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. 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 Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing period is appropriate; and techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We • The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in operation will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any to enable us to draw a conclusion about the population from which the sample is selected. necessary qualifications or assumptions. A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: Our review of the directors’ statement regarding the longer-term viability of the company was substantially less in scope than an audit and www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report. only consisted of making inquiries and considering the directors’ process supporting their statement; checking that the statement is in Use of this report alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter the financial statements and our knowledge and understanding of the company and its environment obtained in the course of the audit. 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 In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate 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 governance statement is materially consistent with the financial statements and our knowledge obtained during the audit: agreed by our prior consent in writing. • The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides Other required reporting the information necessary for the members to assess the company’s position, performance, business model and strategy; • Companies Act 2006 exception reporting The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and • Under the Companies Act 2006 we are required to report to you if, in our opinion: The section of the Annual Report describing the work of the Audit and Valuation Committee. • we have not obtained all the information and explanations we require for our audit; or We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s compliance • adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review branches not visited by us; or by the auditors. • 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 Responsibilities for the financial statements and the audit records and returns. 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 We have no exceptions to report arising from this responsibility. 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 Appointment from material misstatement, whether due to fraud or error. 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 In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, engagement is three years, covering the years ended 31 December 2022 to 31 December 2024. 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. Other matter The company is required by the Financial Conduct Authority Disclosure Guidance and Transparency Rules to include these financial Auditors’ responsibilities for the audit of the financial statements statements in an annual financial report prepared under the structured digital format required by DTR 4.1.15R – 4.1.18R and filed on Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material the National Storage Mechanism of the Financial Conduct Authority. This auditors’ report provides no assurance over whether the misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a structured digital format annual financial report has been prepared in accordance with those requirements. 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. Allan McGrath (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our Chartered Accountants and Statutory Auditors responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our London procedures are capable of detecting irregularities, including fraud, is detailed below. 20 March 2025 | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 186 187 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | | Statement of Financial Position | | | | | | Statement of Profit or Loss and Other Comprehensive Income | | | --- | --- | --- | --- | --- | --- | --- | --- | | As at 31 December 2024 (Thousands of Georgian Lari) | | | | | | For the year ended 31 December 2024 (Thousands of Georgian Lari) | | | | | 31 December | | 31 December | | | | | | Note | | 2024 | | 2023 | | Note 2024 2023 | | Assets | | | | | | Gains on investments at fair value 6 242,989 568,351 | | | Cash and cash equivalents* 3,521 12,319 | | | | | | Dividend income 6 125,109 47,659 | | Investment in redeemable securities – 3,517 Gross investment profit 368,098 616,010 Prepayments 1,396 976 General and Administrative expenses 9 (3,958) (4,476) Equity investments at fair value 6 3,606,400 3,363,411 Salaries and other employee benefits 9 (1,791) (2,087) Total assets 3,611,317 3,380,223 Profit before foreign exchange and non-recurring items 362,349 609,447 Liabilities Other liabilities 2,304 1,711 Net foreign currency gain/(loss) 37 (955) Net (losses)/gains from investment securities measured at FVPL (112) 125 Total liabilities 2,304 1,711 Profit before income taxes 362,274 608,617 Equity Share capital 8 1,300 1,420 Income tax 7 – – Additional paid-in capital and merger reserve 238,311 238,311 Profit for the year 362,274 608,617 Treasury shares (2) (2) Other comprehensive income – – Retained earnings 3,369,404 3,138,783 Total comprehensive income for the year 362,274 608,617 Total equity 3,609,013 3,378,512 Earnings per share (GEL): 8 Total liabilities and equity 3,611,317 3,380,223 – basic 9.7017 15.4102 – diluted 9.2987 14.9311 * 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: The accompanying notes on pages 190 to 224 are an integral part of these financial statements. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 188 189 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Statement of Changes in Equity Statement of Cash Flows For the year ended 31 December 2024 (Thousands of Georgian Lari) For the year ended 31 December 2024 (Thousands of Georgian Lari) Additional paid- | | Share | in capital and | Treasury | Retained | | | | --- | --- | --- | --- | --- | --- | --- | | | capital | merger reserve | shares | earnings Total | | Note 2024 2023 | | 1 January 2024 1,420 238,311 (2) 3,138,783 3,378,512 | | | | | Cash flows from operating activities | | Salaries and other employee benefits paid (1,334) (1,546) Profit for the year – – – 362,274 362,274 General, administrative and operating expenses paid (5,066) (4,685) Total comprehensive income for the year – – – 362,274 362,274 Increase in equity arising from share-based payments Net cash flows used in operating activities before income tax (6,400) (6,231) (Note 10) – – – 457 457 Income tax paid – – Cancellation of shares (Note 8) (120) – 120 – – Net cash flow used in operating activities (6,400) (6,231) Purchase of treasury shares (Note 8) – – (120) (132,110) (132,230) Cash flows from investing activities 31 December 2024 1,300 238,311 (2) 3,369,404 3,609,013 Purchase of redeemable securities – (3,382) Proceeds from redemption of redeemable securities 3,379 – Additional paid- Share in capital and Treasury Retained Dividends received 6 125,109 47,659 capital merger reserve shares earnings Total Cash flows from investing activities 128,488 44,277 1 January 2023 1,473 238,311 – 2,577,607 2,817,391 Cash flows from financing activities Profit for the year – – – 608,617 608,617 Other purchases of treasury shares 8 (130,821) (47,834) Total comprehensive income for the year – – – 608,617 608,617 Acquisition of treasury shares under share-based payment plan 8 (304) (203) Increase in equity arising from share-based payments Net cash used in financing activities (131,125) (48,037) (Note 10) – – – 541 541 Cancellation of shares (Note 8) (53) – 53 – – Effect of exchange rates changes on cash and cash equivalents 239 (1,051) Purchase of treasury shares (Note 8) – – (55) (47,982) (48,037) Net decrease in cash and cash equivalents (8,798) (11,042) 31 December 2023 1,420 238,311 (2) 3,138,783 3,378,512 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. The accompanying notes on pages 190 to 224 are an integral part of these financial statements. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 190 191 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements ## Georgia Capital PLC (Thousands of Georgian Lari) 1. Principal Activities 2. Basis of Preparation continued Georgia Capital PLC (‘Georgia Capital’, ‘GCAP’ or the ‘Company’) is a public limited liability company incorporated and domiciled in Going concern United Kingdom with registered number 10852406. Georgia Capital PLC holds 100% of the share capital of the JSC Georgia Capital The Board of Directors of Georgia Capital has made an assessment of the Company’s ability to continue as a going concern and is (‘JSC GCAP’) and 92.4% of the share capital of Georgian Beverages Holding Limited (‘GBH Limited’), which together form a group 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 of companies (the ‘Group’), focused on buying, building and developing businesses in Georgia and monetising investments as they statements, i.e. the period ending 31 March 2026. Furthermore, management is not aware of any material uncertainties that may mature. The Group currently has the following portfolio businesses (i) a retail (pharmacy) business, (ii) a hospitals business (consisting of cast significant doubt upon the Company’s ability to continue as a going concern for the foreseeable future. Therefore, the financial a. Large and Specialty Hospitals and b. Regional and Community Hospitals), (iii) an insurance business (P&C and medical insurance); statements continue to be prepared on a going concern basis. (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 The Directors have made an assessment of the appropriateness of the going concern basis of preparation and reviewed Georgia and a 19.2% (2023: 19.7%) equity stake in LSE premium-listed Lion Finance Group PLC (‘Lion Finance Group’, formerly Bank of Capital’s liquidity outlook for the period ending 31 March 2026. 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. 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, Georgia Capital’s registered legal address is Central Square, 29 Wellington Street, Leeds, LS1 4DL, England and Wales, United Kingdom. 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. 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. 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. 31 December 31 December Shareholder 2024 2023 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 Gemsstock Ltd** 8% 11% stage companies (Renewable Energy and Education). Allan Gray Ltd 8% 7% Lazard Asset Management LLC 7% 6% On 3 August, 2023, JSC GCAP issued US$ 150 million sustainability-linked local bonds in Georgia, with an 8.5% coupon rate, payable Others 77% 76% in August 2028. The proceeds from the transaction, together with GCAP’s existing liquid funds, were fully used to redeem GCAP’s US$ Total 100% 100% 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 * 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 successfully continue to service its existing bonds. compensation purposes of the Group. ** Omits holdings through certain financial instruments. 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 References to the Group are applied in these financial statements in the context of going concern assessment, segment, fair valuation ability to generate sufficient cash and continue as a going concern. and risk management disclosures. Based on the considerations outlined above, management of Georgia Capital concluded that the going concern basis of preparation 2. Basis of Preparation remains appropriate for these financial statements. General The financial statements have been prepared in accordance with UK-adopted International Accounting Standards and with the The Group performed stress testing for the assessment period, which involved modelling the impact of a combination of severe and requirements of the Companies Act 2006 as applicable to companies reporting under those standards. 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. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 192 193 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements continued ## Georgia Capital PLC (Thousands of Georgian Lari) 2. Basis of Preparation continued 2. Basis of Preparation continued Subsidiaries and associates Subsidiaries and associates continued 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 Proportion of voting rights and ordinary share capital held* Holding Limited (2023: investment in JSC Georgia Capital). As at 31 December 2024 investments in JSC Georgia Capital and Georgian 31 December 31 December Country of Date of Date of Beverages Holding Limited (as of 31 December 2023: investment in JSC Georgia Capital) (Note 12) is measured at fair value. As at Subsidiaries at FV 2024 2023 incorporation Address Industry incorporation acquisition 31 December 2024 and 31 December 2023, equity investments of JSC Georgia Capital and Georgian Beverages Holding Limited (1) m2, LLC 0.00% 100.00% Georgia 29 Ilia chavchavadze Hospitality/ 12/2/2014 – include the following subsidiaries and associates: | | | | | Ave., Tbilisi, 0105 | Real estate | | --- | --- | --- | --- | --- | --- | | Proportion of voting rights and | | (1) | | | | | | m2 Kutaisi, LLC | | 0.00% 100.00% Georgia 10 Melikishvili ave., | | Hospitality 17/5/2017 – | ordinary share capital held* Tbilisi | | 31 December | | 31 December | | Country of | | | | Date of | | Date of | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Subsidiaries Consolidated | | 2024 | | 2023 | incorporation Address Industry | | | incorporation | | acquisition | | Georgia Hospitality | | 100.00% 100.00% Georgia Givi Kartozia street | | | Hospitality 22/8/2018 – | | | | | | | | | | | | | | Management Group, LLC | | | 10, Saburtalo, Tbilisi | | | | GCMF, LLC 100.00% 100.00% Georgia 8a Petre Melikishvili | | | | | | | Excess | 2/5/2019 – | | | | | | | | | | | | | | | | | | | | | | | Georgia Hospitality | | 100.00% 100.00% Georgia Georgia, Dusheti | | | Hospitality 5/12/2019 – | | | | | | | | Ave, Tbilisi, 0179 | liquidity | | | | | | | | | | | | | | | | | | | | | | | | | Management Group | | | region, village | | management Gudauri, LLC Seturebi company Melikishvili Hotel 100.00% 100.00% Georgia 10 Melikishvili ave., Hospitality 8/4/2022 – Management, LLC Tbilisi Proportion of voting rights and JSC Georgian Renewable 100.00% 100.00% Georgia 10 Medea (Mzia) Renewable 23/8/2022 – ordinary share capital held* | | | | | | | | | | | | Power Holding | | Jugheli st, Tbilisi, | | | Energy | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 31 December | | 31 December | | Country of | | | Date of | | Date of | | | | | | | | | Subsidiaries at FV | | 2024 | | 2023 | incorporation Address Industry | | incorporation | | acquisition | | | | | 0179 | | | | | | | | | | | | | | | | JSC Georgian Renewable | 100.00% 100.00% Georgia 10 Medea (Mzia) | | | Renewable | | 15/9/2015 – | | JSC Georgia Capital 100.00% 100.00% Georgia 8a Petre Melikishvili | | | | | | Investment 6/8/2015 – | | | | | | | | | | | | | | | | | | | | | | | | Power Company | | Jugheli st, Tbilisi, | | | Energy | | Ave, Tbilisi, 0179 0179 JSC Georgia Real Estate 100.00% 100.00% Georgia 10 G. Kartozia street, Real estate 27/9/2006 – JSC Zoti Hydro 100.00% 100.00% Georgia 10 Medea (Mzia) Renewable 20/8/2015 – Tbilisi, Georgia Jugheli st, Tbilisi, Energy m2 group, LLC 100.00% 100.00% Georgia 10 G. Kartozia street, Real estate 17/8/2015 – 0179 Tbilisi, Georgia | | | JSC Caucasus Wind | 100.00% 100.00% Georgia 10 Medea (Mzia) | | Renewable | | 14/9/2016 – | | --- | --- | --- | --- | --- | --- | --- | --- | | M Square Park, LLC 100.00% 100.00% Georgia 1 Marshal Gelovani | Real estate 15/9/2015 – | | | | | | | | | | Company | | Jugheli st, Tbilisi, | | Energy | | ave., Tbilisi 0179 M square Park 3, LLC 100.00% 100.00% Georgia 1 Marshal Gelovani Real estate 25/5/2022 – LLC Caucasus Solar 100.00% 100.00% Georgia 10 Medea (Mzia) Renewable 27/10/2016 – ave., Tbilisi Company Jugheli st, Tbilisi, Energy M square Park 4, LLC 100.00% 100.00% Georgia 1 Marshal Gelovani Real estate 25/5/2022 – 0179 ave., Tbilisi | | | Hydro S, LLC 100.00% 100.00% Georgia 10 Medea (Mzia) | | Renewable | | 18/1/2019 10/28/2019 | | --- | --- | --- | --- | --- | --- | --- | | M square Park X, LLC 100.00% 100.00% Georgia 1 Marshal Gelovani | Real estate 23/06/2022 – | | | | | | | | | | Jugheli st, Tbilisi, | | Energy | | ave., Tbilisi 0179 Optima Saburtalo, LLC 100.00% 100.00% Georgia 10 G. Kartozia street, Real estate 15/9/2015 – Georgia Geothermal 100.00% 100.00% Georgia 10 Medea (Mzia) Renewable 16/12/2019 – Tbilisi, Georgia Company, LLC Jugheli st, Tbilisi, Energy Land, LLC 100.00% 100.00% Georgia 10 G. Kartozia street, Real estate 3/10/2014 – 0179 Tbilisi, Georgia Qartli Solar Farm, LLC 100.00% 100.00% Georgia 10 Medea (Mzia) Renewable 10/3/2023 – m2 at Nutsubidze 2, LLC 100.00% 100.00% Georgia 10 G. Kartozia street, Real estate 24/1/2020 – Jugheli st, Tbilisi, Energy Tbilisi, Georgia 0179 m2 at Hippodrome, LLC 100.00% 100.00% Georgia 10 Givi Kartozia st., Real estate 6/7/2015 – Darchi, LLC 100.00% 100.00% Georgia 10 Medea (Mzia) Renewable 18/11/2013 28/10/2019 Tbilisi Jugheli st, Tbilisi, Energy Optima, LLC 100.00% 100.00% Georgia 10 Givi Kartozia st., Real estate 3/8/2016 – 0179 Tbilisi | | | Lukhi Hydro, LLC 100.00% 0.00% Georgia 10 Medea (Mzia) | | Renewable | | 1/2/2024 – | | --- | --- | --- | --- | --- | --- | --- | | m2 Maintenance, LLC 100.00% 100.00% Georgia 10 Givi Kartozia st., | Real estate 20/7/2021 – | | | | | | | | | | Jugheli st, Tbilisi, | | Energy | | Tbilisi 0179 | m2 at Mtatsminda Park, | 100.00% 100.00% Georgia 10 Givi Kartozia st., | | Real estate 31/12/2021 – | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | JSC Georgian Renewable | 100.00% 100.00% Georgia 10 Medea (Mzia) | | Renewable | | 28/6/2022 – | | LLC | | Tbilisi | | | | | | | | | | | | | Power Operations | | Jugheli st, Tbilisi, | | Energy | | | m2 Care Fund N(N)LE 100.00% 100.00% Georgia 10 Givi Kartozia st., | | | Real estate 16/01/2023 – | | | | | | | 0179 Tbilisi | | | Svaneti Hydro, LLC 100.00% 100.00% Georgia 10 Medea (Mzia) | | Renewable | | 6/12/2013 – | | --- | --- | --- | --- | --- | --- | --- | | M square Park 5, LLC 100.00% 100.00% Georgia 10 Givi Kartozia st., | Real estate 11/10/2023 – | | | | | | | | | | Jugheli st, Tbilisi, | | Energy | | Tbilisi | Georgia Real Estate | 100.00% 100.00% Georgia 10 Givi Kartozia st., | | Hospitality 17/8/2015 – | | | 0179 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Qartli Wind Farm, LLC 100.00% 100.00% Georgia 10 Medea (Mzia) | | | Renewable | | 10/9/2012 30/12/2019 | | Management Group, | | Tbilisi | | | | | | | | | | | | | | Jugheli st, Tbilisi, | | | Energy | | LLC | | (1) | | | | 0179 | | | | --- | --- | --- | --- | --- | --- | --- | --- | | Gudauri Lodge, LLC | | 0.00% 100.00% Georgia 80 Aghmashenebeli | Hospitality 24/04/2018 – | | | | | | | | | | Hydrolea, LLC 100.00% 100.00% Georgia 10 Medea (Mzia) | | Renewable | 6/7/2012 28/10/2019 | ave., Tbilisi, 0102 Georgia Property 0.00% 100.00% Georgia 10 Givi Kartozia st., Commercial 4/10/2018 – Jugheli st, Tbilisi, Energy Management Group, Tbilisi assets 0179 (1) LLC | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 194 195 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements continued ## Georgia Capital PLC (Thousands of Georgian Lari) | 2. Basis of Preparation continued | | | | | | | | | | | | | | | 2. Basis of Preparation continued | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Subsidiaries and associates continued | | | | | | | | | | | | | | | Subsidiaries and associates continued | | | | | | | | | | | | | | | | | | | Proportion of voting rights and | | | | | | | | | | | | | | | Proportion of voting rights and | | | | | | | | | | | | | | | | | ordinary share capital held* | | | | | | | | | | | | | | | ordinary share capital held* | | | | | | | | | | | | | | | | | 31 December | | 31 December | | Country of | | | | | | Date of | | Date of | | | 31 December | | 31 December | | Country of | | | | | | | Date of | | Date of | | Subsidiaries at FV | | | 2024 | | 2023 | incorporation Address Industry | | | | | incorporation | | acquisition | | Subsidiaries at FV | | | 2024 | | 2023 | incorporation Address Industry | | | | | | incorporation | | acquisition | | | | Geoenergy, LLC 100.00% 100.00% Georgia 10 Medea (Mzia) | | | | | | | | Renewable | | 26/1/2012 28/10/2019 | | | | | AKG AVELIN QAN | 100.00% 100.00% Armenia 26/1 Vazgen | | | | | | | | Pharmacy | | 28/6/2019 – | | | | | | | | | | | | Jugheli st, Tbilisi, | | | Energy | | | | | | DEGHATUN, LLC | | | | | | | Sargsyan Street,/ | | | and | | | | | | | | | | | | | | 0179 | | | | | | | | (Armenia) | | | | | | Office 412/ Yerevan | | | Distribution | | | | | | | | Hydro Georgia, LLC 100.00% 100.00% Georgia 10 Medea (Mzia) | | | | | | | | Renewable | | 8/5/2012 28/10/2019 | | | | | | | | | | | | | 0010, Armenia | | | | | | | | | | | | | | | Jugheli st, Tbilisi, | | | Energy | | | | | | JSC Georgian Logistics 100.00% 100.00% Georgia Peikrebi str. 14a, | | | | | | | | | | Other 8/10/2021 – | | | | | | | | | | | | | | 0179 | | | | | | | | | | | | | | | | Tbilisi, Georgia | | | | | | | | | Kasleti 2, LLC 100.00% 100.00% Georgia 10 Medea (Mzia) | | | | | | | | Renewable | | 18/11/2013 28/10/2019 | | | | | AZPHA LLC (Azerbaijan) 100.00% 100.00% Azerbaijan Azerbaijan, Baku, | | | | | | | | | Pharmacy | | 17/9/2021 – | | | | | | | | | | | | Jugheli st, Tbilisi, | | | Energy | | | | | | | | | | | | | Sabunchu District, | | | and | | | | | | | | | | | | | | 0179 | | | | | | | | | | | | | | | Bakikhanovi area, | | Distribution | | | | | | | | GRPC Trade, LLC 100.00% 100.00% Georgia 10 Medea (Mzia) | | | | | | | | Renewable | | 13/5/2022 – | | | | | | | | | | | | 131, A. Ahgaievi | | | | | | | | | | | | | | | | Jugheli st, Tbilisi, | | | Energy | | | | | | | | | | | | Street, Apartment 43 | | | | | | | | | | | | | | | | | | 0179 | | | | | | | | Euroline LLC 100.00% 100.00% Georgia Stanislavski str. 5, | | | | | | | | | | Other 14/12/2015 24/11/2021 | | | | | (2) JSC A Group 100.00% 100.00% Georgia 1, Berbuki str., Various 20/9/2018 – Tbilisi, Georgia Saburatlo, Tbilisi JSC Georgia Healthcare 100.00% 100.00% Georgia 24a, Sulkhan Healthcare 29/4/2015 – (3) | JSC Insurance Company | | 100.00% 100.00% Georgia 66A, David | | | | | | Insurance 11/8/1998 – | | | Group | | | | Tsintsadze street, | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Aldagi | | | Aghmashenebeli Alley, | | | | | | | | | | | | | Tbilisi | | | | | | | | | | Tbilisi | | | | Vian JSC 100.00% 100.00% Georgia 24a, Sulkhan | | | | | | Healthcare 30/11/2023 – | | JSC Insurance Company | | 100.00% 100.00% Georgia 66A, David | | | | | | Insurance 22/8/2007 1/5/2015 | | | | | | | Tsintsadze street, | | | | | Tao | | Aghmashenebeli Alley, | | | | | | | | | | | | | Tbilisi | | | | | | | | | | Tbilisi | | | | | Vian-Logistics LLC 100.00% 100.00% Georgia 24a, Sulkhan | | | | | Healthcare 13/2/2015 – | | Aliance, LLC 100.00% 100.00% Georgia 20, Chavchavadze | | | | | | | | | Various 1/8/1998 30/4/2012 | | | | | | Tsintsadze street, | | | | | | | | ave., floor 2, Vake- | | | | | | | | | | | | Tbilisi | | | | | | | | Saburtalo, Tbilisi | | | | | | | Caucasus Medical | 99.81% 99.81% Georgia 23, P. Kavtaradze Str., | | | | Healthcare 12/1/2012 11/6/2015 | | Auto Way LLC 100.00% 100.00% Georgia 20, Chavchavadze | | | | | | | | | Various 27/12/2010 30/4/2012 | | | Center, LLC | | | | Tbilisi | | | | | | | ave., Vake, Tbilisi | | | | | | | | JSC Kutaisi Regional | 66.70% 66.70% Georgia Djavakhishvili str. 85, | | | | Healthcare 5/5/2003 29/11/2011 | | JSC Carfest 75.00% 75.00% Georgia 20, Chavchavadze | | | | | | | | | Leasing 17/11/2017 – | | | Mother and Infant | | | Kutaisi, Georgia | | | | | | | | ave., Vake, Tbilisi | | | | | | | | Treatment-Diagnostic | | | | | | | JSC Insurance Company | | 100.00% 100.00% Georgia 9, Anna | | | | | | Insurance 22/6/2007 – | | | | Centre | | | | | | | Imedi L | | | | Politkovskaias Str. | | | | | | | | West Georgia Medical | 66.70% 66.70% Georgia A Djavakhishvili str. | | | | Healthcare 9/12/2011 29/11/2011 | | | | | | | Vake-Saburtalo | | | | | | | Center, LLC | | 83A, Kutaisi, Georgia | | | | | | | | | | District, Tbilisi | | | | | | | N(NL)E Blood Center 100.00% 0.00% Georgia Javakhishvili str. | | | | | Healthcare 31/05/2024 – | | L Assistance LLC 100.00% 100.00% Georgia 44, Al. Kazbegi | | | | | | | | Insurance 27/10/2022 – | | | | | | | N85/ Javakhishvili | | | | | | | | Avenue, Vake, Tbilisi | | | | | | | | | | | str. N83A, Kutaisi, | | | | Ardi Insurance JSC 95.00% 0.00% Georgia 3, Vazha-Pshavela | | | | | | | | Insurance 3/12/2023 26/04/2024 | | | | | | | | Georgia | | | | | | | avenue, Saburtalo | | | | | | | | Personal Administration | 100.00% 100.00% Georgia Javakhishvili str. | | | | Healthcare 23/12/2021 – | | | | | | | | district, Tbilisi | | | | | | and Organizational | | | N85/ Javakhishvili | | | | JSC Greenway Georgia 100.00% 100.00% Georgia 6, University str., | | | | | | | | | Vehicle | 9/7/2010 1/5/2012 | | Development Training | | | str. N83A, Kutaisi, | | | | | | | | | | Vake, Tbilisi | | Inspection | | | | Center N(NL)E | | | | Georgia | | | JSC GreenWash 75.00% 75.00% Georgia 6, University str., | | | | | | | | Car Wash 31/8/2018 – | | | | Vian LLC 100.00% 100.00% Georgia 142, A. Beliashvili str, | | | | | Healthcare 05/09/2022 – | | | | | | | | Vake, Tbilisi | | | | | | | | | | Tbilisi | | | JSC Georgia Pharmacy | | 100.00% 0.00% Georgia 24a, Sulkhan | | | | | | Pharmacy | | 29/4/2015 – | | BONO Healthcare LLC 100.00% 100.00% Georgia 24a, Sulkhan | | | | | Healthcare 15/06/2023 – | (3) | Group | | | Tsintsadze street, | | | | and | | | | | Tsintsadze street, | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Tbilisi | Distribution | | | | | | | | Tbilisi | | | | JSC GEPHA 97.80% 97.56% Georgia 24a, Sulkhan | | | | | | Pharmacy | | 19/10/1995 4/5/2016 | JSC Georgian Clinics 100.00% 100.00% Georgia 24a, Sulkhan | | | | | | Healthcare 1/8/2014 1/8/2014 | | | | | | Tsintsadze street, | | | | and | | | | | Tsintsadze street, | | | | | | | | | | | Tbilisi | Distribution | | | | | | | | Tbilisi | | | | JSC ABC Pharamcia | | 100.00% 100.00% Armenia Kievyan Str. 2/8, | | | | Pharmacy | | 28/12/2013 6/1/2017 | | New Clinic, LLC 0.00% 100.00% Georgia 142, A. Beliashvili str, | | | | | Healthcare 3/1/2017 20/7/2017 | | | | (Armenia) | | Erevan, Armenia | | | | and | | | | | | | Tbilisi | | | | | | | | | | Distribution | | | | JSC Pediatry 100.00% 100.00% Georgia U. Chkeidze str. 10, | | | | | Healthcare 5/9/2003 6/7/2016 | | | ABC Pharmalogistics, | | 100.00% 100.00% Georgia E. Tavadze str. 14a, | | | | Pharmacy | | 24/2/2004 6/1/2017 | | | | | Tbilisi, Georgia | | | | | | LLC | | | Tbilisi, Georgia | | | and | | | NCLE Evex Learning | 100.00% 100.00% Georgia 83A, Javakhishvili | | | | | Other 20/12/2013 20/12/2013 | | | | | | | | Distribution | | | | Centre | | | street, Tbilisi | | | | | JSC Iverta 100.00% 100.00% Georgia E. Tavadze str. 14a, | | | | | | Pharmacy | | 17/2/2021 – | | JSC Emergency Service 85.00% 85.00% Georgia 6 Building, 13/6 | | | | | Healthcare 18/6/2013 8/5/2015 | | | | | | | Tbilisi, Georgia | | | and | | | | | Lubliana str. Tbilisi, | | | | | | | | | | | | Distribution | | | | | | | | Georgia | | | | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 196 197 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements continued ## Georgia Capital PLC (Thousands of Georgian Lari) | 2. Basis of Preparation continued | | | | | | | | | | | | | | | 2. Basis of Preparation continued | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Subsidiaries and associates continued | | | | | | | | | | | | | | | Subsidiaries and associates continued | | | | | | | | | | | | | | | | | | Proportion of voting rights and | | | | | | | | | | | | | | | Proportion of voting rights and | | | | | | | | | | | | | | | | ordinary share capital held* | | | | | | | | | | | | | | | ordinary share capital held* | | | | | | | | | | | | | | | | 31 December | | | 31 December | | Country of | | | | | Date of | | Date of | | | 31 December | | 31 December | | Country of | | | | | | Date of | | Date of | | Subsidiaries at FV | | | | 2024 | | 2023 | incorporation Address Industry | | | | incorporation | | acquisition | | Subsidiaries at FV | | | 2024 | | 2023 | incorporation Address Industry | | | | | incorporation | | acquisition | | | | Georgian Clinics LLC 100.00% 100.00% Georgia 142, A. Beliashvili str, | | | | | | | | | Healthcare 29/09/2023 – | | | | | | Georgian Beer and | 100.00% 0.00% Georgia 71, Vazha-Pshavela | | | | | | | Investment 14/11/2024 – | | | | | | | | | | | | | | | | Tbilisi | | | | | | | Beverages Holding LLC | | | | | | avenue, Tbilisi, | | | | | | | | | | Tskaltubo Regional | | 66.70% 66.70% Georgia 16 Eristavi street, | | | | | | | Healthcare 29/9/1999 9/12/2011 | | | | | | | | | | | | | Georgia | | | | | | | | | Hospital, LLC | | | | | | | Tskhaltubo | | | | | | | | Global Beer Georgia, | 100.00% 100.00% Georgia Tsilkani, Mtskheta | | | | | | | | Beer | 30/6/2000 28/2/2007 | | | | (4) | JSC Evex Clinics | 0.00% 100.00% Georgia 40, Vazha-Pshavela | | | | Healthcare 1/4/2019 – | LLC | | Region, Georgia | Production | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | Avenue, Tbilisi | | | Genuine Brewing | 100.00% 100.00% Georgia Tsilkani, Mtskheta | | | Beer | 7/6/2011 7/2/2018 | | JSC Evex 100.00% 0.00% Georgia 24a, Sulkhan | | | | | Healthcare 11/1/2024 – | Company, LLC | | Region, Georgia | Production | | | | | | Tsintsadze street, | | | | | | | | and | | | | | | | Tbilisi | | | | | Distribution | | | (4) | | LLC Aliance Med | | 0.00% 100.00% Georgia 40, Vazha-Pshavela | | | | | | Healthcare 7/7/2015 20/7/2017 | | | | | Craf and Draft, LLC 100.00% 100.00% Georgia Tsilkani, Mtskheta | | | | | | | | | Beer | 20/2/2019 – | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | Avenue, Tbilisi | | | | | | | | | | | Region, Georgia | | | | Production | | | | | | JSC Polyclinic Vere 98.35% 98.35% Georgia 24a, Sulkhan | | | | | | | | Healthcare 22/11/2015 25/12/2017 | | | | | Global Coffee Georgia, | 100.00% 100.00% Georgia 29a Gagarini street, | | | | | | | Coffee | | 26/12/2016 – | | | | | | | Tsintsadze street, | | | | | | | | | LLC | | | | | | Tbilisi | Distribution | | | | | | | | | | | | | Tbilisi | | | | | | New Coffee Company, | 100.00% 100.00% Georgia Isakiani cul-de-sac 2, | | | | | | | Coffee | | 23/9/2009 15/2/2017 | | | New Dent, LLC 75.00% 75.00% Georgia 24a, Sulkhan | | | | | | | | Healthcare 24/12/2018 – | | | | | LLC | | Gldani-Nadzaladevi | | | | | Distribution | | | | | | | | | | Tsintsadze street, | | | | | | | | | | | | | District, Tbilisi | | | | | | | | | | | | | | | | Tbilisi | | | | | | Georgia Logistics and | 100.00% 100.00% Georgia 2 Marshal Gelovani | | | | | | Distribution 10/1/2006 27/3/2007 | | | | | | Mkurnali 2002, LLC 100.00% 100.00% Georgia 24a, Sulkhan | | | | | | | | Healthcare 8/4/2004 1/12/2023 | | | | | Distribution, LLC | | | | | St, Tbilisi | | | | | | | | | | | | Tsintsadze street, | | | | | | | | JSC Georgian Beverages | | 91.74% 92.35% Georgia 8a Petre Melikishvili | | | | | | Investment 17/12/2019 – | | | | | | | | | | | | | Tbilisi | | | | | Holding | | | | Ave, Tbilisi, 0179 | | | | | | | | | | Ekimo App, LLC 100.00% 100.00% Georgia 40, Vazha-Pshavela | | | | | | | | | Other 5/12/2023 – | | | JSC Teliani Valley 100.00% 100.00% Georgia 43 Tbilisi highway, | | | | | | | | | Winery 30/6/2000 28/2/2007 | | | | | | | | | | Avenue, Tbilisi | | | | | | | | | | | | | | Telavi | | | | | | | Krol Medical Corporation | 100.00% 0.00% Georgia 24a, Sulkhan | | | | | | | Healthcare 29/02/2024 1/5/2024 | | | | | Teliani Trading (Ukraine), | 100.00% 100.00% Ukraine 18/14 Khvoiki St. Kiev Distribution 3/10/2006 31/12/2007 | | | | | | | | | | | | Georgia, LLC | | | | Tsintsadze street, | | | | | | | | | LLC | | | | | | | | | | | | | | | | | | | | Tbilisi | | | | | | Teliani Europe GmbH 100.00% 100.00% Germany Kurfürstendamm 195 | | | | | | | Distribution 15/6/2021 – | | | | | | JSC Mega-Lab 91.98% 91.98% Georgia Petre Kavtaradze str. | | | | | | | | Healthcare 6/6/2017 – | | | | | | | | | 10707 Berlin | | | | | | | | | | | | | | | 23, Tbilisi | | | | | | Le Caucase, LLC 100.00% 100.00% Georgia 2 Marshal Gelovani | | | | | | | | | Cognac | | 23/9/2006 20/3/2007 | | | LLC Patgeo-Union of | 100.00% 100.00% Georgia Mukhiani, II mcr. | | | | | | | Healthcare 13/1/2010 27/9/2016 | | | | | | | | | | St, Tbilisi | | Production | | | | | | Pathologists | | | District, Building 22, | | | | | | | | | Kupa, LLC 70.00% 70.00% Georgia 3 Tbilisi highway, | | | | | | | | Oak Barrel | | | 12/10/2006 20/3/2007 | | | | | | | | | 1a, Tbilisi | | | | | | | | | | | | | Telavi | Production | | | | | | Scientific-Research | 100.00% 100.00% Georgia Petre Kavtaradze str. | | | | | | | Healthcare 25/5/2021 – | | | | Kindzmarauli Marani, LLC 100.00% 100.00% Georgia Gavazi, Kvareli | | | | | | | | | Winery 18/12/2001 25/4/2018 | | | | | Center-Mega-Lab | | | | | | 23, Tbilisi | | | | | | | | | | district, Georgia | | | | | | | | | | N(N)LE | | | | | | | | | | | | Alcoholic Drinks Company | | 100.00% 100.00% Georgia Chumlaki, Gurjaani | | | | | | | Winery 8/4/2008 19/8/2019 | | | | | JSC Vabaco 100.00% 67.00% Georgia Bochorishvili str. 37, | | | | | | | | Software | | | 9/9/2013 28/9/2018 | | Alaverdi LLC | | | Region, Georgia | | | | | | | | | | | | | | | Tbilisi, Georgia | | | Development | | | | Artisan Wine and Drinks | | 100.00% 100.00% Georgia 8a Petre Melikishvili | | | | | | | | Wine | 26/8/2019 – | | | Vabaco International, | 100.00% 100.00% Georgia A. Tsereteli ave. 123, | | | | | | | Software | | 30/3/2022 – | | LLC | | | | Ave, Tbilisi, 0179 | | | | distribution | | | | | | LLC | | | | | Tbilisi, Georgia | | | Development | | | | Amboli, LLC 90.00% 90.00% Georgia 142 Beliashvili str., | | | | | | | | Car Services 13/8/2004 25/6/2019 | | | | | | JSC Ekimo 100.00% 67.00% Georgia A. Tsereteli ave. 123, | | | | | | | | | Other 14/12/2021 – | | | | | | Didube-Chugureti | | | | | | | | | | | | | | | | Tbilisi, Georgia | | | | | | | | | | | | District, Tbilisi | | | | | | | | | ITFY LLC 100.00% 100.00% Georgia A. Beliashvili str. 142, | | | | | | | | | Other 1/2/2023 – | | | N(NL)E Amboli, O2 100.00% 0.00% Georgia 14, Anna | | | | | | | | | | Other 13/5/2021 – | | | | | | | | | Tbilisi, Georgia | | | | | | | | | | Politkovskaias Str. | | | | | | | | | | Georgian Beverages LLC 100.00% 100.00% Georgia 8a Petre Melikishvili | | | | | | | | | | Beer | 14/11/2016 7/2/2018 | | | | | | Vake-Saburtalo | | | | | | | | | | | | | | Ave, Tbilisi, 0179 | | | | Production | | | | | | | | | District, Tbilisi | | | | | | | | | | | | | | | | | | and | | | Georgia Education Group, | | 100.00% 100.00% Georgia 8a Petre Melikishvili | | | | | | Education 16/7/2019 – | | | | | | | | | | | | | | Distribution | | | | LLC | | | | Ave, Tbilisi, 0179 | | | | | | | | | Georgian Beverages Holding | | | 92.42% 0.00% United | Central Square, 29 | | | | | Investment 18/11/2024 – | | | | Green School LLC 90.00% 90.00% Georgia N. Khudadovi str. 1b, | | | | | | | | Education 18/8/2021 – | | | | (5) | Limited | Kingdom | | Wellington Street, | | | | | | | | Tbilisi, Georgia | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Leeds, England, LS1 | | | | | | Green School-Didi | | 100.00% 100.00% Georgia D. Tavdadebuli str. 6, | | | Education 27/9/1995 20/8/2021 | | | | | | 4DL | | | | Dighomi, LLC | | | Tbilisi, Georgia | | | | Swinkels Georgia B.V. 20.00% 0.00% Netherlands Stater 1, 5737 RV | | | | | | Beer | – 24/12/2024 | Green School-Forest | | 100.00% 100.00% Georgia 8a Petre Melikishvili | | | Education 21/10/2019 – | | | | Lieshout, Netherlands | | | Production | | | Campus LLC | | | Ave, Tbilisi, 0179 | | | | | | | | | | and | | Green School Real | | 100.00% 100.00% Georgia 8a Petre Melikishvili | | | Education 5/1/2019 – | | | | | | | Distribution | | | | Estate LLC | | Ave, Tbilisi, 0179 | | | | | | | | | | | | Green School-Saburtalo, | | 100.00% 100.00% Georgia 37 B. Zhgenti Str., | | | Education 29/06/2023 – | | | | | | | | | | LLC | | | | Vake, Tbilisi | | | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 198 199 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements continued ## Georgia Capital PLC (Thousands of Georgian Lari) | 2. Basis of Preparation continued | | | | | | | | | | | | | | | | | | 2. Basis of Preparation continued | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Subsidiaries and associates continued | | | | | | | | | | | | | | | | | | Subsidiaries and associates continued | | | | | | | | | | | | | | | | | | | | | | Proportion of voting rights and | | | | | | | | | | | | | | | | Proportion of voting rights and | | | | | | | | | | | | | | | | | | | | | ordinary share capital held* | | | | | | | | | | | | | | | | | ordinary share capital held* | | | | | | | | | | | | | | | | | | | | 31 December | | | 31 December | | Country of | | | | | | | Date of | | Date of | | 31 December | | | 31 December | | Country of | | | | | | | | | Date of | | Date of | | Subsidiaries at FV | | | | | 2024 | | 2023 | incorporation Address Industry | | | | | | incorporation | | acquisition | | Associates | | | 2024 | | 2023 | incorporation Address Industry | | | | | | | | incorporation | | acquisition | | | | Green University, LLC 100.00% 0.00% Georgia N. Khudadovi str. 1b, | | | | | | | | | | | Education 20/11/2024 – | | | | | | N(NL)E Georgian Medical | | 28.57% 28.57% Georgia Gardens Street, | | | | | | | | | | Healthcare 16/5/2019 – | | | | | | | | | | | | | | | | | Tbilisi, Georgia | | | | | | | | Tourism Council | | | | | | | tskneti, Vake district, | | | | | | | | | | | | | Green School Dighomi | | | 80.00% 80.00% Georgia Didube-Chughureti/ | | | | | | | | Education 7/6/2011 22/8/2019 | | | | | | | | | | | | | | | | Tbilisi | | | | | | | | | | LLC | | | | | | | | Dighomi massive | | | | | | | | | JSC Diflex 40.00% 40.00% Georgia Shalikashvili str. 8, | | | | | | | | | | | | Software | | 29/12/2016 12/11/2021 | | | | | | | | | | | | | | | IV, Building 5A, | | | | | | | | | | | | | | | | | Tbilisi, Geogia | | Development | | | | | | | | | | | | | | | | | | Apartment 35 | | | | | | | | Healthcare Association | | 25.00% 25.00% Georgia Vazha-Pshavela Ave. | | | | | | | | | | Healthcare 25/3/2016 – | | | | | | | | Buckswood International | | | 80.00% 80.00% Georgia 156 Rustaveli Street, | | | | | | | | Education 24/8/2005 29/7/2019 | | | | | | N(N)LE | | | | | | | 27b, Tbilisi, Georgia | | | | | | | | | | | | | School-Tbilisi, LLC | | | | | | | | | Tskneti, Tbilisi | | | | | | | | Complex-Med-Service, LLC 0.00% 20.00% Georgia Tsinandali sts. 9, | | | | | | | | | | | | Healthcare 18/11/2008 30/7/2021 | | | | | | | | | Sakhli Tsknetshi, LLC 100.00% 100.00% Georgia 152 Rustaveli Street, | | | | | | | | | | Education 1/5/2005 – | | | | | | | | | | | | | | | Tbilisi, Georgia | | | | | | | | | | | | | | | | | | | | Tskneti, Tbilisi | | | | | | | | Insurance Informational | | 22.50% 22.50% Georgia Baratashvili bridge | | | | | | | | | | Insurance 23/7/2008 – | | | | | | | | | Buckswood School at | 100.00% 0.00% Georgia 1 Marshal Gelovani | | | | | | | | | Education 17/06/2024 – | | | | | | Bureau, LLC | | | | | | | | | underground | | | | | | | | | | | | Gelovani LLC | | | | | | | | | ave., Tbilisi | | | | | | | | | | | | | | | crossing, Mtkvari | | | | | | | | | | | | British Georgian Academy, | | | 70.00% 70.00% Georgia 17, Leo Kvachadze | | | | | | | | Education 3/2/2006 23/7/2019 | | | | | | | | | | | | | Left Bank, Old Tbilisi, | | | | | | | | | | | | | LLC | | | | | | | | | | str, Tbilisi | | | | | | | | | | | | | | | | | Tbilisi | | | | | | | | | | NNLE British International | | 100.00% 100.00% Georgia 17, Leo Kvachadze | | | | | | | | | Education 3/2/2015 – | | | | | | JSC Georgian Global Utilities 20.00% 20.00% Georgia 10 Medea (Mzia) | | | | | | | | | | | | | Utilities 22/01/2020 31/12/2014 | | | | | | | | School of Tbilisi | | | | | | | | | str, Tbilisi | | | | | | | | | | | | | | | Jugheli st, Tbilisi, | | | | | | | | | | | | British International | | 100.00% 100.00% Georgia 17, Leo Kvachadze | | | | | | | | | Education 5/9/2019 – | | | | | | | | | | | | | | | | 0179 | | | | | | | | | | | School of Tbilisi LLC | | | | | | | | | str, Tbilisi | | | | | | | Georgian Water and Power, | | 20.00% 20.00% Georgia 10 Medea (Mzia) | | | | | | | | | | | Utilities 25/06/1997 31/12/2014 | | | | | | | British Georgian | | 100.00% 100.00% Georgia 17, Leo Kvachadze | | | | | | | | | Education 16/9/2021 – | | | | | | LLC | | | | | | | | Jugheli st, Tbilisi, | | | | | | | | | | | | | Academy-Okrokana, | | | | | | | | | str, Tbilisi | | | | | | | | | | | | | | | | | 0179 | | | | | | | | | | | LLC | | | | | | | | | | | | | | | | Gardabani Sewage | | 20.00% 20.00% Georgia 10 Medea (Mzia) | | | | | | | | | | | Utilities 20/12/1999 31/12/2014 | | | | | | Oncloud LLC 100.00% 100.00% Georgia 8a Petre Melikishvili | | | | | | | | | | | | | Digital | 28/2/2020 – | | | | Treatment, LLC | | | | | | | | Jugheli st, Tbilisi, | | | | | | | | | | | | | | | | | | | | Ave, Tbilisi, 0179 | | | Services | | | | | | | | | | | | | | | | 0179 | | | | | | | | | | | | | | | | | | | | | | | | | | | Georgian Engineering and | | 20.00% 20.00% Georgia 10 Medea (Mzia) | | | | | | | | | | | Utilities 20/03/2011 31/12/2014 | | | | | | | | | | | | | | | | | | | | | | | | Management Company | | | | | | | | Jugheli st, Tbilisi, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (GEMC), LLC | | | | | | | | | | 0179 | | | | | | | | | | | | | | | | | | | | | | | | | | | Saguramo Energy, LLC 20.00% 20.00% Georgia 10 Medea (Mzia) | | | | | | | | | | | | | Utilities 11/12/2008 31/12/2014 | | | | | Jugheli st, Tbilisi, 0179 Georgian Energy Trading 20.00% 20.00% Georgia 10 Medea (Mzia) Renewable 23/4/2019 – Company (GETC), LLC Jugheli st, Tbilisi, Energy Sales 0179 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 200 201 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements continued ## Georgia Capital PLC (Thousands of Georgian Lari) 3. Material Accounting Policies 3. Material Accounting Policies continued The following are the material accounting policies applied by the Company in preparing its financial statements. Financial assets continued Date of recognition Fair value measurement All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Company commits to The Company measures investments in subsidiaries and associates and other financial instruments, such as debt securities owned, purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets equity investments and derivatives, if any, at fair value at each balance sheet date. Also, fair values of financial instruments measured at within the period generally established by regulation or convention in the marketplace. amortised cost are disclosed in Note 12. Subsequent measurement 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 For purposes of subsequent measurement, GCAP’s financial assets are classified in two categories under IFRS 9: participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or • Financial assets at amortised cost (Cash and cash equivalents) transfer the liability takes place either: • Financial assets at fair value through profit or loss (equity investments at fair value) • 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. Financial assets at amortised cost The Company measures financial assets at amortised cost if both of the following conditions are met: The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured • The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act flows; and in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant’s ability to • The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use interest on the principal amount outstanding. the asset in its highest and best use. Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. The Company’s financial assets at amortised cost includes cash and cash equivalents. 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: Financial assets at fair value through profit or loss • Level 1 − Quoted (unadjusted) market prices in active markets for identical assets or liabilities; Financial assets at fair value through profit or loss include financial assets designated upon initial recognition at fair value through profit • Level 2 − Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or or loss, or financial assets mandatorily required to be measured at fair value. Equity investments are classified at fair value through indirectly observable; profit or loss. Derivatives and financial assets with cash flows that are not solely payments of principal and interest are classified and • Level 3 − Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. measured at fair value through profit or loss, irrespective of the business model. For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value through OCI, as described above, have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly fair value measurement as a whole) at the end of each reporting period. reduces, an accounting mismatch. Cash and cash equivalents 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 Cash and cash equivalents consist of cash on hand and amounts due from credit institutions that mature within ninety days of the date value recognised in the statement of profit or loss. This category includes equity investments. of contract origination and are free from contractual encumbrances and readily convertible to known amount of cash. Derecognition of financial assets and liabilities Financial assets Financial assets Initial recognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised Financial assets in the scope of IFRS 9 are classified at initial recognition, as subsequently measured at amortised cost, fair value (i.e., removed from the Company’s statement of financial position) when: through other comprehensive income (OCI), and fair value through profit or loss. • 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 The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred the Company’s business model for managing them. With the exception of trade receivables that do not contain a significant financing substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks component or for which the Company has applied the practical expedient, the Company initially measures a financial asset at its fair and rewards of the asset, but has transferred control of the asset. 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 When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, determined under IFRS 15. 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 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 transferred asset to the extent of its continuing involvement. In that case, the Company also recognises an associated liability. flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company the SPPI test and is performed at an instrument level. has retained. The Company’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, amount of the asset and the maximum amount of consideration that the Company could be required to repay. or both. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 202 203 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements continued ## Georgia Capital PLC (Thousands of Georgian Lari) 3. Material Accounting Policies continued 3. Material Accounting Policies continued Derecognition of financial assets and liabilities continued Dividends Financial liabilities Dividends are recognised as a liability and deducted from equity at the reporting date only if they are declared before or on the reporting A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. 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 Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an amount and recorded directly through equity. 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 Dividend income is substantial if present value of cash flows under new terms discounted at original effective interest rate is at least 10% different from Dividend revenue is recognised when the Company’s right to receive the payment is established. Dividend revenue is presented gross the liability’s carrying amount right before the modification, or there is a substantial modification to the terms identified through of any non-recoverable withholding taxes, which are disclosed separately in the statement of comprehensive income. a qualitative assessment. Net gain or loss on financial assets and liabilities at fair value through profit or loss Financial liabilities Net gains or losses on financial assets and liabilities at FVPL represent changes in their fair value, including equity investments at fair Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, value, financial assets and liabilities held for trading, or those designated as FVPL upon initial recognition, and exclude interest and payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. dividend income and expenses, which are recognized separately in profit or loss when earned. 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. Taxation The current income tax expense is calculated in accordance with the regulations in force in the respective territories in which the The Company’s financial liabilities comprise accounts payable. Company operates. Provisions According to UK tax legislation, UK companies pay corporation tax on all its profits. The UK corporate tax rate for 2024 is 25.0 % Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, and it is (2023: blended tax rate 23.5%). 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. 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 Contingencies GCAP. Transactions in foreign currencies are initially recorded in the functional currency, converted at the rate of exchange ruling at Contingent liabilities are not recognised in the statement of financial position but are disclosed unless the possibility of any outflow the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into functional currency in settlement is remote. A contingent asset is not recognised in the statement of financial position but disclosed when an inflow of at functional currency rate of exchange ruling at the reporting date. Gains and losses resulting from the translation of foreign currency economic benefits is probable. 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. Share-based payment transactions Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair Equity-settled transactions value was determined. When a gain or loss on a non-monetary item is recognised in other comprehensive income, any exchange The cost of equity settled transactions with employees is measured by reference to the fair value of shares at the grant date. 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. 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 Differences between the contractual exchange rate of a certain transaction and the National Bank of Georgia (‘NBG’) exchange rate on vesting date’). The cumulative expense recognised for equity settled transactions at each reporting date until the vesting date reflects the date of the transaction are included in Net foreign currency gain (loss). The official NBG exchange rates at 31 December 2024 and the extent to which the vesting period has expired and the Company’s best estimate of the number of equity instruments that will 31 December 2023 were as follows: ultimately vest. The income statement charge and credit entry to equity for the period represents the movement in cumulative expense Lari to GBP Lari to US$ Lari to EUR recognised as at the beginning and end of that period. No expense is recognised for the awards that do not ultimately vest. 31 December 2024 3.5349 2.8068 2.9306 31 December 2023 3.4228 2.6894 2.9753 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. 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: 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 • Amendments to IFRS 16 Leases-Lease Liability in a Sale and Leaseback recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as • Amendments to IAS 1 Presentation of Financial Statements – Classification of Liabilities as Current or Non-current 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 • Amendments to IAS 1 Presentation of Financial Statements – Classification of Debt with Covenants original award, as described in the previous paragraph. • Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments – Disclosures: Supplier Finance Arrangements Share capital The following standards that are issued but not yet effective are also expected to have no material impact on the Company’s financial Share capital statements: Ordinary shares are classified as equity. External costs directly attributable to the issue of new shares, other than on a business • Amendments to IFRS 7 Financial Instruments – Disclosures: Classification and Measurement of Financial Instruments combination, are shown as a deduction from the proceeds in equity. Any excess of the fair value of consideration received over the par • Amendments to IFRS 9 Financial Instruments: Classification and Measurement of Financial Instruments value of shares issued is recognised as additional paid-in capital. • IFRS 19 Subsidiaries without Public Accountability: Disclosures • Amendments to IAS 21 Lack of Exchangeability-Exchangeable Currency and Determination of Exchange rate 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 204 205 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements continued ## Georgia Capital PLC (Thousands of Georgian Lari) 3. Material Accounting Policies continued 5. Segment Information continued Adoption of new or revised standards and interpretations continued Private portfolio companies In April 2024, the IASB issued IFRS 18, which replaces IAS 1 Presentation of Financial Statements. The objective of IFRS 18 is to set Large portfolio companies segment: out requirements for the presentation and disclosure of information in the financial statements to help ensure they provide relevant The large portfolio companies are companies that are close to reaching more than a GEL 300 million equity value. This segment includes information that faithfully represents an entity’s assets, liabilities, equity, income and expenses. Retrospective application of the standard investments in hospitals (Large and Specialty Hospitals, Regional and Community Hospitals), retail (pharmacy) and insurance businesses. 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 Retail (Pharmacy) business consists of a retail pharmacy chain and a wholesale business that sells pharmaceuticals and medical and notes to the financial statements. supplies to hospitals and other pharmacies. 4. Critical Accounting Judgements and Estimates The hospital business comprises two segments: Large and Specialty Hospitals, the leading participant in Georgia’s healthcare market, In the process of applying the Company’s accounting policies, the management board use their judgment and make estimates in offering secondary and tertiary healthcare services; and Regional and Community Hospitals, encompassing regional hospitals and determining the amounts recognised in the financial statements. The most significant judgements and estimates are as follows: community clinics that deliver outpatient and essential inpatient services. Assessment of investment entity status Insurance business comprises a property and casualty insurance and medical insurance businesses, principally providing wide-scale Entities that meet the definition of an investment entity within IFRS 10 are required to measure their subsidiaries at FVPL rather than property and casualty and medical insurance services to corporate and retail clients. 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 Investment stage portfolio companies segment: management services; The investment stage portfolio companies have the potential to reach more than a GEL 300 million equity value. This segment includes • An entity that commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investments into clinics and diagnostics, renewable energy and education businesses. investment income, or both; and • An entity that measures and evaluates the performance of substantially all of its investments on a fair value basis. Clinics & Diagnostics business consists of polyclinics providing outpatient diagnostic and treatment services, and diagnostics business, operating the largest laboratory in the entire Caucasus region. 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 Renewable energy business principally operates three wholly owned commissioned renewable energy assets. In addition, a pipeline of monetise on capital appreciation gains. The Company reports to its investors on a fair value basis. All investments are reported at fair renewable energy projects is in an advanced stage of development. value in the Company’s annual reports. Education business combines majority stakes in four leading private schools in Tbilisi. It provides education for preschool to Georgia Capital PLC holds an investment in JSC Georgia Capital (an investment entity on its own), which is the most significant asset 12th grade (K-12). 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 Other portfolio companies segment: is represented by units of equity interests acquired through a capital contribution. Thus, the judgement above refers to both entities The other portfolio companies are companies which GCAP believes to have limited potential to reach a GEL 300 million equity value. in aggregation. The Board has concluded that the Company meets the definition of an investment entity. These conclusions will be This segment includes Housing Development, Hospitality, Wine and Auto Service businesses. reassessed on a continuous basis, if any of these criteria or characteristics change. Corporate Centre consists of Georgia Capital PLC and JSC Georgia Capital. 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 Management monitors the fair values of its segments separately for the purposes of making decisions about resource allocation and above as well as developments during the year. performance assessment. Transactions between segments are accounted for at actual transaction prices. Fair valuation of the investment portfolio Starting from 2023, The hospitals business is split into two distinct sub-segments: ‘Large and Specialty Hospitals’ and ‘Regional and The investment portfolio, a material asset of the Company held through 100%-owned subsidiary JSC Georgia Capital and 92% interest Community Hospitals’. The Regional and Community Hospitals also incorporates the community clinics that were previously managed in Georgian Beverages Holding Limited, is held at fair value. Details of valuation methodologies used and the associated sensitivities are and presented as part of the clinics and diagnostics business. The clinics and diagnostics business, alongside the renewable energy disclosed in Note 12. Given the importance of this area, the Board has formed a separate Audit and Valuations Committee to review and education businesses, is presented under the investment stage portfolio. 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. 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 5. Segment Information and the brand name from ‘Ardi’ was acquired. Ardi was the third-largest player in the Georgian health insurance market, holding a 17% For management purposes, the Group is organised into the following operating segments as follows: listed and observable portfolio market share based on 2023 net insurance premiums. This acquisition positions GCAP’s medical insurance business as the largest companies, private large portfolio companies, private investment stage portfolio companies, private other portfolio companies, and health insurer in the country and offers an opportunity to diversify the Company’s portfolio and achieve significant financial and strategic corporate centre. 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. 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. In October 2024, Georgia Capital entered into an agreement with a subsidiary of Royal Swinkels N.V. (‘Royal Swinkels’) for the disposal GCAP does not hold voting rights in the company. 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%. Water Utility – the Group has a 20% equity stake in the Water Utility business, following the disposal of 80% of its shares during 2021. The parties have put in place a put/call structure relating to the remaining GCAP PLC 20% holding. The put option granted to GCAP Water Utility is a regulated monopoly in Tbilisi and the surrounding area, where it provides water and wastewater services. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 206 207 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements continued ## Georgia Capital PLC (Thousands of Georgian Lari) 5. Segment Information continued 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 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 2024: from 1 January 2023: 2a. 4. Liquidity 2a 4. Liquidity 1 January 1.Value Investments & 2b. 2c. 3.Operating Management/ 31 December 1 January 1.Value Investments & 2b. 2c. 3.Operating Management/ 31 December NAV Statement 2024 Creation Divestments Buybacks Dividends Expenses FX/Other 2024 NAV Statement 2023 Creation Divestments Buybacks Dividends Expenses FX/Other 2023 Listed and observable Listed and observable portfolio companies 1,384,847 368,985 – – (144,797) – – 1,609,035 portfolio companies 985,463 553,255 – – (153,871) – – 1,384,847 Lion Finance Group 1,225,847 339,985 – – (144,797)* – – 1,421,035 Lion Finance Group 830,463 549,255 – – (153,871)* – – 1,225,847 Water Utility 159,000 29,000 – – – – – 188,000 Water Utility 155,000 4,000 – – – – – 159,000 Private portfolio companies 2,287,098 66,337 (151,104) – (56,955) – 7,079 2,152,455 Private portfolio companies 2,213,164 127,260 18,420 – (82,012) – 10,266 2,287,098 Large portfolio companies 1,436,231 30,237 – – (35,408) – 3,689 1,434,749 Large portfolio companies 1,437,610 74,786 – – (76,825) – 660 1,436,231 Retail (pharmacy) 714,001 10,739 – – (10,048) – 1,438 716,130 Retail (pharmacy) 724,517 39,397 – – (50,904) – 991 714,001 Insurance (P&C and medical) 377,874 74,617 – – (25,360) – 814 427,945 Insurance (P&C and medical) 279,900 116,915 – – (19,903) – 962 377,874 Of which, P&C insurance 285,566 44,746 – – (17,986) – 814 313,140 Of which, P&C insurance 228,045 71,447 – – (14,888) – 962 285,566 Of which, medical insurance 92,308 29,871 – – (7,374) – – 114,805 Of which, medical insurance 51,855 45,468 – – (5,015) – – 92,308 Hospitals 344,356 (55,119) – – – – 1,437 290,674 Hospitals 433,193 (81,526) – – (6,018) – (1,293)** 344,356 Investment stage portfolio Investment stage portfolio companies 566,614 (10,501) 11,933 – (12,258) – 1,604 557,392 companies 501,407 47,044 18,388 – (5,187) – 4,962 566,614 Renewable energy 266,627 (13,770) 11,333 – (12,258) – 674 252,606 Renewable energy 224,987 38,684 6,218 – (5,187) – 1,925 266,627 Education 189,226 (8,853) 600 – – – 611 181,584 Education 164,242 12,282 12,170 – – – 532 189,226 Clinics and diagnostics 110,761 12,122 – – – – 319 123,202 Clinics and diagnostics 112,178 (3,922) – – – – 2,505** 110,761 Other portfolio companies 284,253 46,601 (163,037) – (9,289) – 1,786 160,314 Other portfolio companies 274,147 5,430 32 – – – 4,644 284,253 Total portfolio value 3,671,945 435,322 (151,104) – (201,752) – 7,079 3,761,490 Total portfolio value 3,198,627 680,515 18,420 – (235,883) – 10,266 3,671,945 Net debt (296,808) – 148,504 (135,718) 201,752 (21,379) (50,776) (154,425) Net debt (380,905) – (20,887) (76,190) 235,883 (21,786) (32,923) (296,808) of which, cash and liquid funds 107,910 – 157,371 (135,718) 201,752 (21,379) (31,699) 278,237 of which, cash and liquid funds 411,844 – (20,887) (76,190) 235,883 (21,786) (420,954) 107,910 of which, loans issued 9,212 – (8,867) – – – (345) – of which, loans issued 26,830 – – – – – (17,618) 9,212 of which, gross debt (413,930) – – – – – (18,732) (432,662) of which, gross debt (819,579) – – – – – 405,649 (413,930) Net other assets/(liabilities) 3,375 – 2,600 (805) – (13,900) 10,678 1,948 Net other (liabilities)/assets (331) – 2,467 (287) – (14,993) 16,519 3,375 Net asset value 3,378,512 435,322 – (136,523) – (35,279) (33,019) 3,609,013 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 208 209 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements continued ## Georgia Capital PLC (Thousands of Georgian Lari) 5. Segment Information continued 5. Segment Information continued Reconciliation of IFRS financial statements to NAV: The following table presents income statement information of the Group’s operating segments for the year ended 31 December 2024: 31 December 2024 Aggregation Elimination of Aggregated Private Portfolio Companies Georgia Capital with JSC double effect on Holding Listed & Intragroup Equity PLC Georgia Capital* investments Company Reclassification** NAV Statement observable Investment Changes Portfolio Investment Corporate Reversal and in JSC Investment Cash and cash equivalents 3,521 167,801 – 171,322 (171,322) – Companies Large Stage Other Center Total Adjustments GCAP Entity Total Amounts due from credit institutions – 98,844 – 98,844 (98,844) – Gains/(losses) on investments at fair Marketable securities – 7,869 – 7,869 (7,869) – value 224,188 (5,171) (22,759) 37,312 – 233,570 122,578 (113,159) 242,989 Prepayments 1,396 – – 1,396 (1,396) – Listed and observable Investments 224,188 – – – – 224,188 (224,188) – – Other assets, net – 5,017 – 5,017 (5,017) – Private Investments – (5,171) (22,759) 37,312 – 9,382 346,766 (113,159) 242,989 Equity investments at fair value 3,606,400 3,720,071 (3,564,981) 3,761,490 – 3,761,490 Dividend income 144,797 35,408 12,258 9,289 – 201,752 (201,752) 125,109 125,109 Total assets 3,611,317 3,999,602 (3,564,981) 4,045,938 (284,448) 3,761,490 Interest income – – – – 7,477 7,477 (7,477) – – Debt securities issued – 432,460 – 432,460 (432,460) – Loss on liquid funds – – – – (796) (796) 796 – – Other liabilities 2,304 2,161 – 4,465 (4,465) – Gross investment profit/(loss) 368,985 30,237 (10,501) 46,601 6,681 442,003 (85,855) 11,950 368,098 Total liabilities 2,304 434,621 – 436,925 (436,925) – Administrative expenses – – – – (10,586) (10,586) 6,628 – (3,958) Salaries and other employee benefits – – – – (24,694) (24,694) 22,903 – (1,791) Net debt – – – – (154,425) (154,425) Interest expense – – – – (35,589) (35,589) 35,589 – – of which, cash and liquid funds – – – – 278,237 278,237 Profit/(loss) before provisions, of which, gross debt – – – – (432,662) (432,662) foreign exchange and Net other assets – – – – 1,948 1,948 non-recurring items 368,985 30,237 (10,501) 46,601 (64,188) 371,134 (20,735) 11,950 362,349 Total equity/NAV 3,609,013 3,564,981 (3,564,981) 3,609,013 – 3,609,013 Expected credit loss charge – – – – (3,562) (3,562) 3,562 – – Net foreign currency (loss)/gain – – – – (15,100) (15,100) 15,137 – 37 31 December 2023 | | | | Aggregation | | Elimination of | Aggregated | | Non-recurring expense – – – – (2,148) (2,148) 2,148 – – | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Georgia Capital | | | | with JSC | double effect on | | Holding | Net losses from investment securities | | | PLC | Georgia Capital* | | | investments | | Company Reclassification** NAV Statement | | measured at FVPL – – – – – – (112) – (112) Cash and cash equivalents 12,319 51,138 – 63,457 (63,457) – Profit/(loss) before income taxes 368,985 30,237 (10,501) 46,601 (84,998) 350,324 – 11,950 362,274 Amounts due from credit institutions – 8,678 – 8,678 (8,678) – Income tax – – – – – – – – – Marketable securities – 18,203 – 18,203 (18,203) – Profit/(loss) for the year 368,985 30,237 (10,501) 46,601 (84,998) 350,324 – 11,950 362,274 Investment in redeemable securities 3,517 14,068 – 17,585 (17,585) – Prepayments 976 – – 976 (976) – Loans issued – 9,212 – 9,212 (9,212) – The following table presents income statement information of the Group’s operating segments for the year ended 31 December 2023: Other assets, net – 5,060 – 5,060 (5,060) – Private Portfolio Companies Equity investments at fair value 3,363,411 3,671,945 (3,363,411) 3,671,945 – 3,671,945 Listed & Intragroup Equity observable Investment Changes Total assets 3,380,223 3,778,304 (3,363,411) 3,795,116 (123,171) 3,671,945 Portfolio Investment Corporate Reversal and in JSC Investment Companies Large Stage Other Center Total Adjustments GCAP Entity Total Debt securities issued – 413,930 – 413,930 (413,930) – Other liabilities 1,711 963 – 2,674 (2,674) – Gains/(losses) on investments at fair value 399,384 (2,039) 41,857 5,430 – 444,632 178,350 (54,631) 568,351 Total liabilities 1,711 414,893 – 416,604 (416,604) – Listed and observable Investments 399,384 – – – – 399,384 (399,384) – – Net debt – – – – (296,808) (296,808) Private Investments – (2,039) 41,857 5,430 – 45,248 577,734 (54,631) 568,351 of which, cash and liquid funds – – – – 107,910 107,910 Dividend income 153,871 76,825 5,187 – – 235,883 (235,883) 47,659 47,659 of which, loans issued – – – – 9,212 9,212 Interest income – – – – 16,642 16,642 (16,642) – – of which, gross debt – – – – (413,930) (413,930) Loss on liquid funds – – – – (1,574) (1,574) 1,574 – – Net other assets – – – – 3,375 3,375 Gross investment profit/(loss) 553,255 74,786 47,044 5,430 15,068 695,583 (72,601) (6,972) 616,010 Total equity/NAV 3,378,512 3,363,411 (3,363,411) 3,378,512 – 3,378,512 Administrative expenses – – – – (10,909) (10,909) 6,433 – (4,476) Salaries and other employee benefits – – – – (25,870) (25,870) 23,783 – (2,087) * For detailed breakdown of JSC Georgia Capital refer to Note 12. Interest expense – – – – (47,808) (47,808) 47,808 – – ** Reclassification to aggregated balances to arrive at the NAV specific presentation, such as: aggregating cash, marketable securities, investment in redeemable shares, repurchased Profit/(loss) before provisions, GCAP bonds as cash and liquid funds, debt securities issued as gross debt and netting of other assets and liabilities. 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 | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 210 211 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements continued ## Georgia Capital PLC (Thousands of Georgian Lari) | 6. Equity Investments at Fair Value | | | | | 8. Equity | | --- | --- | --- | --- | --- | --- | | | 31 December | | 31 December | | | | | | 2024 | | 2023 | Share capital | As at 31 December 2024 issued share capital comprised of 39,559,135 authorised common shares (31 December 2023: 43,215,840), Subsidiaries (Note 12) 3,606,400 3,363,411 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 of which JSC GCAP 3,564,981 3,363,411 outstanding as at 31 December 2024 and 31 December 2023 are described below: of which GBH Limited 41,419 – Number of Equity Investments at Fair Value 3,606,400 3,363,411 shares Ordinary Amount 2024 2023 1 January 2023 44,827,862 1,473 At 1 January 3,363,411 2,795,060 Cancellation of shares (1,612,022) (53) Fair Value gain and dividend income 368,098 616,010 31 December 2023 43,215,840 1,420 Dividend income* (125,109) (47,659) Cancellation of shares (3,656,705) (120) Capital redemption** (41,419) – Capital injection*** 41,419 – 31 December 2024 39,559,135 1,300 At 31 December 3,606,400 3,363,411 Treasury Shares * 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, the Company paid cash consideration of GEL 131,125 (2023: GEL 48,037) for acquisition of treasury shares, of which ** 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). GEL 304 (2023: GEL 203) was related to shares acquired for settlement of employee share-based payments and GEL 130,821 *** 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 (2023: GEL 47,834) were other acquisitions made by the Company, including those under the share buyback programme. shareholders) in the beer and distribution business. During 2024 3,669,889 (2023: 1,665,222) treasury shares bought back under the Buyback Program. 3,656,705 shares were cancelled Georgia Capital PLC holds an investment in JSC Georgia Capital (an investment entity on its own), which holds a portfolio of in 2024 (2023: 1,612,022) and 66,384 (2023: 53,200) are held at treasury. 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 Earnings per share 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 2024 2023 Note 12. Basic earnings per share Profit for the year attributable to ordinary shareholders of the parent 362,274 608,617 7. Income Tax Weighted average number of ordinary shares outstanding during the year 37,341,118 39,494,431 As at 31 December 2024 GCAP PLC has unrecognised tax asset (tax loss carried forward) in the amount of GEL 9,317 (31 December Earnings per share (GEL) 9.7017 15.4102 2023: GEL 8,145). The Company does not recognise the deferred tax asset since it is not expected to be utilised in the foreseeable Diluted earnings per share* future, as the Company’s income sources, fair value gains on equity investments and dividend income, are not taxable in the UK, as fair Profit for the year attributable to ordinary shareholders of the parent 362,274 608,617 value gains are unrealised and dividend income from controlled company is exempt from taxation under UK tax law. 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 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 * Dilution effect arises from the Group’s share-based compensation arrangements. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 212 213 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements continued ## Georgia Capital PLC (Thousands of Georgian Lari) 9. Salaries and Other Employee Benefits, and General and Administrative Expenses 10. Share-based Payments continued Executives’ Equity Compensation Plan continued 2024 2023 The following table illustrates the number and weighted average prices of, and movements in, shares awards granted to the CEO of Salaries and bonuses (1,243) (1,480) Georgia Capital PLC during the year: Equity compensation plan costs (457) (541) 2024 2023 Pension costs (91) (66) Shares outstanding at 1 January 118,368 132,735 Salaries and other employee benefits (1,791) (2,087) Vested during the year (18,368) (14,367) Granted during the year – – Refer also to the Resources and Responsibilities section on page 76-92 and the Directors’ Remuneration Report on page Shares outstanding at 31 December 100,000 118,368 142-168 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: The weighted average remaining contractual life for the share awards outstanding as at 31 December 2024 was 2.20 years Georgia Capital PLC and JSC Georgia Capital. The figures in the table above are for standalone Georgia Capital PLC. (2023: 2.71 years). General and administrative expenses 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). 2024 2023 Legal and other professional services (3,770) (4,205) Expense recognition Occupancy and rent (47) (114) The share-based payment expense recognised for employee services received during 2024 and the respective increase in equity Communication (9) (14) arising from equity-settled share-based payments was GEL 457 (2023: GEL 541). Other (132) (143) General and administrative expenses (3,958) (4,476) 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, Auditors’ remuneration subject to risk limits and other controls. This process of risk management is critical to the Group’s continuing profitability and each Auditors’ remuneration is included within legal and other professional services expenses above and comprises: individual within the Group is accountable for the risk exposures relating to his or her responsibilities. The Group is exposed to 2024 2023 investment risk, credit risk, liquidity risk and market risk. It is also subject to operational risks and insurance risk. Fees payable for the audit of the Company’s current year annual report 1,119 1,002 Fees payable for other services: The independent risk control process does not include business risks such as changes in the environment, technology and industry. Audit of the Company’s subsidiaries 324 308 They are monitored through the Group’s strategic planning process. Total audit fees 1,443 1,310 Risk management structure Audit related assurance services Audit and Valuation Committee Other assurance services 108 103 The Audit and Valuation Committee of Georgia Capital PLC assists the Management Board of Georgia Capital in relation to the Corporate finance services – 79 oversight of the Group’s financial and reporting processes. It monitors the integrity of the financial statements and is responsible for Total audit related fees 108 182 governance around both the internal audit function and external auditor, reporting back to the Board. It reviews the effectiveness of the Non-audit services 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. Total other services fees – – Total fees 1,551 1,492 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 The figures shown in the above table include audit fees of JSC GCAP and GCAP PLC and do not include other remuneration agreements in place, legislation, regulations, guidance and other policies of the Company. 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. Management Board The Management Board of Georgia Capital has overall responsibility for the Group’s asset, liability and risk management activities, 10. Share-based Payments policies and procedures. The Management Board is comprised of senior managers of GCAP PLC and JSC GCAP. In order to Executives’ Equity Compensation Plan effectively implement the risk management system, the Board of Directors delegates individual risk management functions to the In 2018, Georgia Capital introduced Group’s Executives’ Equity Compensation Plan (‘EECP’). Under the EECP, shares of the parent Management Board, which in turn assigns specific functions to the various decision-making and execution bodies within the Group’s are granted to senior executives of the Company. In July 2018, the executives signed new five-year fixed contingent share-based portfolio entities. 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 Internal Audit subject to a six-year vesting period subject to continued employment within the Group during such vesting period. In October 2022 The Internal Audit Department of Georgia Capital PLC is responsible for the annual audit of the Group’s risk management, internal CEO contract maturity was extended until 31 December 2025 from May 2023, extending fixed contingent share-based compensation control and corporate governance processes, with the aim of reducing the levels of operational and other risks, auditing the Group’s with additional 518,357 ordinary shares of Georgia capital. The fair value of the shares is determined at the grant date using available internal control systems and detecting any infringements or errors on the part of the Group’s departments and divisions. It examines market quotations. 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. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 214 215 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements continued ## Georgia Capital PLC (Thousands of Georgian Lari) 11. Risk Management continued 11. Risk Management continued Introduction continued Liquidity risk 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 Financial liabilities unexpected losses, which are an estimate of the ultimate actual loss based on different forecasting models. The models make use of Less than 3 probabilities derived from historical experience, adjusted to reflect the economic environment. 31 December 2023 months 3 to 12 months 1 to 5 years Over 5 years Total Other financial liabilities 1,711 – – – 1,711 Monitoring and controlling risks is primarily performed based on limits established by the Group. These limits reflect the business Total undiscounted financial liabilities 1,711 – – – 1,711 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. 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 Information compiled from all the businesses is examined and processed in order to analyse, control and identify early risks. to market risks. GCAP PLC and JSC GCAP structure the levels of market risk it accepts through a market risk policy that determines This information is presented and explained to the Management Board. 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. Risk mitigation As part of its overall risk management, GCAP PLC and JSC GCAP may use derivatives and other instruments to manage exposures Price risk resulting from changes in interest rates, foreign currencies, equity risks, credit risks, and exposures arising from forecast transactions. In GCAP PLC equity securities price risk arises from investment held through JSC GCAP and GBH limited for which price in the future Risks at portfolio company level are mitigated by instruments applicable to specific industries they operate in. 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 Credit risk changes in foreign exchange rates. For details on currency risk management, refer to respective paragraph below. 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 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 individual counterparties and by monitoring exposures in relation to such limits. Credit terms by debtors for various portfolio companies 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 are managed and monitored separately, given industry specifics in which respective entities operate. 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%). Liquid financial instruments Credit risk from balances with banks and financial institutions is managed by the treasury department of GCAP PLC and JSC GCAP Sensitivity analysis of private portfolio companies are presented in Note 12. 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 Currency risk through a counterparty’s potential failure to make payments. 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 The table below demonstrates the Company’s financial assets credit risk profile by external rating grades: arises primarily with respect to GBP and US$. 31 December 2024 31 December 2023 A+ to A- BB+ to BB- Not graded A+ to A- BB+ to BB- Not graded 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. Cash and cash equivalents 28 3,493 – 11,826 493 – Investment in redeemable securities – – – – – 3,517 Operating environment Total 28 3,493 – 11,826 493 3,517 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 Liquidity risk convertible outside the country, and undeveloped debt and equity markets). However, over the last few years the Georgian government 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 has taken a number of steps that positively affect the overall investment climate of the country, specifically implementing the reforms due under normal and stress circumstances. To limit this risk, management has arranged diversified funding sources in addition to its necessary to create banking, judicial, taxation and regulatory systems. This includes the adoption of a new body of legislation (including a capital, manages assets with liquidity in mind, and monitors future cash flows and liquidity on a regular basis. This incorporates daily new Tax Code and procedural laws). In the view of the Board, these steps contribute to mitigate the risks of doing business in Georgia. monitoring of expected cash flows and liquidity needs. The existing tendency aimed at the overall improvement of the business environment is expected to persist. The future stability of the The Group manages the maturities of its assets and liabilities for better matching, which helps the Group additionally mitigate the Georgian economy is, however, largely dependent upon these reforms and developments and the effectiveness of economic, financial liquidity risk. Maturities of assets and liabilities of the Company and each portfolio entity are managed separately. The major liquidity risks and monetary measures undertaken by the Government. In addition, the Georgian economy is vulnerable to market downturns and confronting the Group are the daily calls on its available cash resources in respect of supplier contracts and the maturity of borrowings. economic slowdowns elsewhere in the world. The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted repayment Georgia has published climate change strategy. Georgia’s 2030 Climate Change Strategy and Action Plan (Climate Change Strategy obligations. Repayments, which are subject to notice, are treated as if notice were to be given immediately. 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. Financial liabilities Less than 3 31 December 2024 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 | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 216 217 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements continued ## Georgia Capital PLC (Thousands of Georgian Lari) 11. Risk Management continued 12. Fair Value Measurements continued Capital management Valuation techniques continued Management monitors the Group’s capital on a regular basis based on statement of Net Asset Value (NAV) prepared on fair value Investment in subsidiaries continued bases, which corresponds to equity attributable to shareholders of Georgia Capital PLC as at 31 December 2024 in the amount of Starting from December 2024, Georgia Capital PLC also holds an investment in Georgian Beverages Holding Limited which is GEL 3,609,013 (2023: GEL 3,378,512). The Net Asset Value (NAV) statement breaks down NAV into its components, including fair measured at fair value through profit or loss. Through this entity, Georgia Capital PLC holds its minority interest in the beer and values for the private businesses and follows changes therein, providing management with a snapshot of the Group’s financial position distribution business. JSC Georgia Capital’s net asset value as of 31 December 2024 and 31 December 2023 is determined as follows: at any given time. The NAV statement provides a value of Georgia Capital that management uses as a tool for measuring its investment 31 December 31 December performance. Management closely monitors NAV in connection with capital allocation decisions. Refer to Note 5. 2024 2023 Assets The capital management objectives are as follows: Cash and cash equivalents 167,801 51,138 Amounts due from credit institutions 98,844 8,678 • To maintain the required level of stability of the Group thereby providing a degree of security to the shareholders; Marketable securities 7,869 18,203 • To manage capital needs such that Group does not depend on potentially premature liquidation of its listed investments; Investment in redeemable securities – 14,068 • To allocate capital efficiently and support the development of business by ensuring that returns on capital employed meet the Equity investments at fair value 3,720,071 3,671,945 requirements of its capital providers and of its shareholders; and Of which listed and observable investments 1,609,035 1,384,847 • To maintain financial strength to support new business growth and to satisfy the shareholders’ requirements. Lion Finance Group 1,421,035 1,225,847 Water utility 188,000 159,000 The Group manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of Of which private investments: 2,111,036 2,287,098 the applicable financial covenants. To maintain or adjust the capital structure, the Group may adjust the amount of outstanding equity. Large portfolio companies 1,434,749 1,436,231 12. Fair Value Measurements Retail (pharmacy) 716,130 714,001 Fair value hierarchy P&C insurance 313,140 285,566 For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, Medical insurance 114,805 92,308 characteristics and risks of the asset or liability. The following tables show analysis of assets and liabilities measured at fair value or for Hospitals 290,674 344,356 which fair values are disclosed by level of the fair value hierarchy: Investment stage portfolio companies 557,392 566,614 Renewable energy 252,606 266,627 31 December 2024 Level 1 Level 2 Level 3 Total Education 181,584 189,226 Assets measured at fair value Clinics and diagnostics 123,202 110,761 Equity investments at fair value – – 3,606,400 3,606,400 Other portfolio companies 118,895 284,253 Loans issued – 9,212 31 December 2023 Level 1 Level 2 Level 3 Total Other assets 5,017 5,060 Assets measured at fair value Total assets 3,999,602 3,778,304 Equity investments at fair value – – 3,363,411 3,363,411 Liabilities Debt securities issued 432,460 413,930 Valuation techniques Other liabilities 2,161 963 The following is a description of the determination of fair value for financial instruments which are recorded at fair value using Total liabilities 434,621 414,893 valuation techniques. These incorporate the Company’s estimate of assumptions that a market participant would make when valuing the instruments. Net asset value 3,564,981 3,363,411 Assets for which fair value approximates carrying value In measuring fair values of JSC Georgia Capital’s investments, following valuation methodology is applied: 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 Equity investments in listed and observable portfolio companies specific maturity and variable rate financial instruments. 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 Fixed rate financial instruments GCAP financial statements. Listed and observable portfolio also includes instruments for which there is a clear exit path from the business, The fair value of fixed rate financial assets and liabilities carried at amortised cost are estimated by comparing market interest rates 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. 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 Equity investments in private portfolio companies risk and maturity. 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 Investment in subsidiaries and emerging markets experience. Valuation is performed by applying several valuation methods including an income approach based Equity investments at fair value include investments in subsidiaries at fair value through profit or loss representing 100% interest of JSC mainly on discounted cash flow and a market approach based mainly on listed peer multiples (the DCF and listed peer multiples Georgia Capital and 92% in Georgian Beverages Holding Limited. Georgia Capital PLC holds an investment in JSC Georgia Capital (an approaches applied are described below for the other portfolio companies). The different valuation approaches are weighted to derive investment entity on its own), which holds a portfolio of investments, both meet the definition of investment entity and Georgia Capital a fair value range, with the income approach being more heavily weighted than the market approach. Management selects what is PLC measures its investment in JSC Georgia Capital at fair value through profit or loss. Investments in investment entity subsidiaries considered to be the most appropriate point in the provided fair value range at the reporting date. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 218 219 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements continued ## Georgia Capital PLC (Thousands of Georgian Lari) 12. Fair Value Measurements continued 12. Fair Value Measurements continued Valuation techniques continued Valuation techniques continued Equity investments in private portfolio companies 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 Listed peer group multiples continued stage private portfolio companies at the reporting date starting from 30 June 2022. The independent valuation company has extensive Valuation based on enterprise value continued relevant industry and emerging markets experience. Valuation is performed by applying several valuation methods including an income Once the enterprise value is estimated, the following steps are taken: approach based mainly on discounted cash flow and a market approach based mainly on listed peer multiples (the DCF and listed peer • Net financial debt appearing in the most recent financial statements is subtracted from the enterprise value. If net debt exceeds multiples approaches applied are substantially identical to those described below for the other portfolio companies). The different valuation enterprise value, the value of shareholders’ equity remains at zero (assuming the debt is without recourse to Georgia Capital). approaches are weighted to derive a fair value range, with the income approach being more heavily weighted than the market approach. • The resulting fair value of equity is apportioned between Georgia Capital and other shareholders of the company being valued, Management selects what is considered to be the most appropriate point in the provided fair value range at the reporting date. if applicable. • Valuation based on enterprise value using peer multiples is used for businesses within non-financial industries. Other portfolio companies – fair value assessment is performed internally as described below. b. Equity fair value valuation Equity investments in private portfolio companies are valued by applying an appropriate valuation method, which makes maximum Fair value of equity investment in companies can also be determined as using price to earnings (P/E) multiple of similar listed companies. 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 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 The value of an unquoted equity investment is generally crystallised through the sale or flotation of the entire business. Therefore, the and other shareholders of the portfolio company, if any. Fair valuation of equity using peer multiples can be used for businesses within estimation of fair value is based on the assumed realisation of the entire enterprise at the reporting date. Recognition is given to the financial sector (e.g. insurance companies). uncertainties inherent in estimating the fair value of unquoted companies and appropriate caution is applied in exercising judgments and in making the necessary estimates. Discounted cash flow Under the discounted cash flow (DCF) valuation method, fair value is estimated by deriving the present value of the business using The fair value of equity investments is determined using one of the valuation methods described below: 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 Listed peer group multiples premium and information specific to the business or market sector. Under the discounted cash flow analysis unobservable inputs are This methodology involves the application of a listed peer group earnings multiple to the earnings of the business and is used, such as estimates of probable future cash flows and an internally-developed discounting rate of return. appropriate for investments in established businesses and for which the Company can determine a group of listed companies with similar characteristics. Net asset value The net assets methodology involves estimating fair value of an equity investment in a private portfolio company based on its book The earnings multiple used in valuation is determined by reference to listed peer group multiples appropriate for the period of earnings value at reporting date. This method is appropriate for businesses (such as real estate) whose value derives mainly from the underlying calculation for the investment being valued. 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. 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 Price of recent investment profiles. Some peer-group companies’ multiples may be more heavily weighted during valuation if their characteristics are closer to The price of a recent investment resulting from an orderly transaction, generally represents fair value as of the transaction date. those of the company being valued than others. 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 As a rule of thumb, last 12-month earnings will be used for the purposes of valuation as a generally accepted method. Earnings are changes or events subsequent to the relevant transaction imply a change in the investment’s fair value. adjusted where appropriate for exceptional, one-off or non-recurring items. Exit price a. Valuation based on enterprise value Fair value of a private portfolio company in a sales process, where the price has been agreed but the transaction has not yet settled, Fair value of equity investments in private companies can be determined as their enterprise value less net financial debt (gross face is measured at the best estimate of expected proceeds from the transaction, adjusted pro-rata to the proportion of shareholding sold. value of debt less cash) appearing in the most recent Financial Statements. Validation Enterprise value is obtained by multiplying measures of a company’s earnings by listed peer group multiple (EV/EBITDA) for the Fair value of investments estimated using one of the valuation methods described above is cross-checked using several other valuation appropriate period. The measures of earnings generally used in the calculation is recurring EBITDA for the last 12 months (LTM methods as follows: EBITDA). In exceptional cases, where EBITDA is negative, peer EV/Sales (enterprise value to sales) multiple can be applied to last • Listed peer group multiples – peer multiples such as P/E, P/B (price to book) and dividend yield are applied to the respective metrics 12-month recurring/adjusted sales revenue of the business (LTM sales) to estimate enterprise value. 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 220 221 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements continued ## Georgia Capital PLC (Thousands of Georgian Lari) 12. Fair Value Measurements continued 12. Fair Value Measurements continued Valuation process for level 3 valuations Description of significant unobservable inputs to level 3 valuations continued 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 31 December 2023 companies as well. As of 31 December 2024, such businesses include Hospitals (Large and Specialty & Regional and Community Range* Hospitals), Insurance (consisting of a. P&C insurance and b. Medical insurance), Retail (Pharmacy), Clinics & Diagnostics, Renewable Description Valuation technique Unobservable input [implied multiple**] Fair value energy and Education. The valuation is performed by applying several valuation methods that are weighted to derive fair value range, Loans issued DCF Discount rate 15.0%-16.5% 9,212 with the income approach being more heavily weighted than market approach. Management selects most appropriate point in the Equity investments at fair value provided fair value range at the reporting date. Fair values of investments in other private portfolio companies are assessed internally Large portfolio 1,436,231 in accordance with Georgia Capital’s valuation methodology by the Valuation Workgroup. Retail (pharmacy) DCF, EV/EBITDA EV/EBITDA multiple 6.3x–28.2x 714,001 [9.7x] Georgia Capital’s Management Board proposes fair value to be placed at each reporting date to the Audit and Valuation Committee. P&C insurance DCF, P/E P/E multiple 4.6x–12.6x 285,566 The Audit and Valuation Committee is responsible for the review and approval of fair values of investments at the end of each [13.0x] reporting period. Medical insurance DCF, P/E P/E multiple 5.7x–11.6x 92,308 [11.0x] Description of significant unobservable inputs to level 3 valuations Hospitals DCF, EV/EBITDA EV/EBITDA multiple 7.2x–12.8x 344,356 The approach to valuations as of 31 December 2024 was consistent with the Company’s valuation process and policy. [13.8x] Management analyses the impact of climate change on the valuations, such as by incorporation of known effects of climate risks to the Investment stage 566,614 future cash flow forecasts or through adjusting peer multiples the known differences in the climate risk exposure as compared to the Renewable energy DCF, EV/EBITDA EV/EBITDA multiple 2.8x–17.0x 266,627 investment being fair valued. As at 31 December 2024, the management concluded that the effects of the climate risks are reflected [12.6x] in the peer multiples and discount rates used in the valuations and that no specific adjustments are required in relation of the Group’s Education DCF, EV/EBITDA EV/EBITDA multiple 6.1x–42.7x 189,226 investment portfolio measurement and respective fair value sensitivity disclosures. [16.7x] Clinics and diagnostics DCF, EV/EBITDA EV/EBITDA multiple 9.4x–12.8x 110,761 The following tables show descriptions of significant unobservable inputs to level 3 valuations of equity investments: [11.7x] Sum of the parts EV/EBITDA multiples 2.1x–19.0x 284,253 31 December 2024 [6.7x–14.6x] Other Cashflow probability [90%–100%] Range* Description Valuation technique Unobservable input [implied multiple**] Fair value NAV multiple [1.0x] Loans issued DCF Discount rate – – Equity investments at fair value * 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. Large portfolio 1,434,749 Retail (pharmacy) DCF, EV/EBITDA EV/EBITDA multiple 5.4x–15.6x 716,130 Georgia Capital hired third-party valuation professionals to assess fair value of the large and investment stage private portfolio [8.4x] companies as at 31 December 2024 and 31 December 2023 including Insurance (consisting of a. P&C insurance and b. Medical P&C insurance DCF, P/E P/E multiple 5.6x–12.0x 313,140 insurance), Hospitals (Large and Specialty & Regional and Community Hospitals), Retail (Pharmacy) and Clinics and Diagnostics. [10.7x] Starting from 30 June 2022, fair value assessment for Renewable Energy and Education businesses are performed by third-party Medical insurance DCF, P/E P/E multiple 9.4x–14.1x 114,805 valuation professionals as well. The valuation is performed by applying several valuation methods that are weighted to derive fair value [12.3x] range, with the income approach being more heavily weighted than market approach. Management selects most appropriate point in Hospitals DCF, EV/EBITDA EV/EBITDA multiple 6.4x–12.9x 290,674 the provided fair value range at the reporting date. [10.5x] Investment stage 557,392 On 31 December 2021, Georgia Capital signed SPA to dispose 80% interest in Water Utility business, which was previously included Renewable energy DCF, EV/EBITDA EV/EBITDA multiple 4.3x–17.5x 252,606 within the large private portfolio companies. As at 31 December 2023 the remaining 20% interest in Water Utility business was valued [11.3x] 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 Education DCF, EV/EBITDA EV/EBITDA multiple 4.9x–25.4x 181,584 business through a put and call structure at pre-agreed EBITDA multiples. [12.8x] Clinics and diagnostics DCF, EV/EBITDA EV/EBITDA multiple 4.8x–12.9x 123,202 In April 2024, Georgia Capital signed an agreement to acquire a portfolio of insurance contracts and the brand name from ‘Ardi’. The [10.6x] acquisition was fully financed by borrowings within the medical insurance business. As at 31 December 2024, in the valuations of the Sum of the parts EV/EBITDA multiples 5.5x–24.9x 160,314 medical insurance business, Georgia Capital also included the recently acquired Ardi, which was previously valued at cost. [8.0x–12.2x] Other Cashflow probability [90%–100%] 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 NAV multiple [0.85x] 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. | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 222 223 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements continued ## Georgia Capital PLC (Thousands of Georgian Lari) 12. Fair Value Measurements continued 12. Fair Value Measurements continued Description of significant unobservable inputs to level 3 valuations continued Sensitivity analysis to significant changes in unobservable inputs within level 3 hierarchy continued As at 31 December 2024, several portfolio companies (Hospitals, Clinics, P&C Insurance, together ‘Defendants’) were engaged in As set out in the description of significant unobservable inputs to level 3 valuations the valuations have been prepared on the basis that litigation with the former shareholders of Insurance Company Imedi L who allege that the they sold their 66% shares in Imedi L to climate change risks are reflected in the peer multiples and discount rates. Therefore, the sensitivities noted above in respect of peer Defendants under duress at a price below market value in 2012. Since the outset, Defendants have vigorously defended their position multiples and discount rates include the risk arising from climate change. 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 Movements in level 3 financial instruments measured at fair value amount plus an annual 5% interest charge as lost income (c.US$ 21 million in total) should be paid by the Defendants. The Defendants The following tables show a reconciliation of the opening and closing amounts of level 3 financial assets which are recorded at fair value: appealed the decision of the First Instance Court. Several hearings have taken place at the Appellate Court and as of 31 December | | | | | | | | | | | At | | | | Capital | | | At | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2024 the case is still at the stage of consideration at the Appellate Court. No date for the next hearing date has been set. | | At 1 January | | Fair Value | | | Capital | Capital | 31 December | | Fair Value | | redemption/ | | Dividend | 31 December | | | | | | 2023 | | gain | redemption | | increase | | 2023 | | gain | | injection | Income | | 2024 | | The Defendants are confident that they will prevail and there have not been made a provision for a potential liability in their financial | Level 3 financial assets | | | | | | | | | | | | | | | | | | statements. Management shares Defendants’ assessment of the merits of the case and considers that the probability of incurring | Equity investments at fair | | | | | | | | | | | | | | | | | | losses on this claim is low, accordingly, fair values of portfolio companies do not take into account a potential liability in relation to | value (Note 6) 2,795,060 616,010 – (47,659) 3,363,411 368,098 – (125,109) 3,606,400 | | | | | | | | | | | | | | | | | this litigation. 13. Maturity Analysis In December 2023, the Georgian National Competition Agency (the ‘Agency’) imposed fines on four companies in the Georgian The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or settled: 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 31 December 2024 retail (pharmacy) business is GEL 20.0 million derived by utilising the single rate across all the alleged participants. The company has More than Less than 1 Year 1 Year Total appealed the Agency’s decision in court and plans to vigorously defend its position. No date of hearing has been set yet. Cash and cash equivalents 3,521 – 3,521 As at 31 December 2024, Georgia Education Group, LLC (‘GEG’) was involved in litigation with the minority partner of the British Equity investments at fair value – 3,606,400 3,606,400 Georgian Academy, LLC (‘BGA’). The minority partner initially was claiming the annulment of the memorandum of understanding Prepayments 1,396 – 1,396 (‘MoU’) under which Georgia Capital acquired a 70% shareholding in BGA in 2019, alleging GEG’s failure to invest in the development Total assets 4,917 3,606,400 3,611,317 of BGA. However, the minority partner later withdrew the lawsuit and submitted a new claim to the court, seeking GEL 0.3 million in Other liabilities 2,304 – 2,304 damages, once again alleging that GEG failed to invest in BGA’s development. Total liabilities 2,304 – 2,304 On 6 February 2025, the minority partner filed an amended claim with the court, seeking damages in the amount of US$ 15.5 million, Net 2,613 3,606,400 3,609,013 termination of the MoU, and the consequent return of 70% of BGA’s stake in the minority partner’s ownership. 31 December 2023 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 More than 1 Less than 1 Year Year Total 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. Cash and cash equivalents 12,319 – 12,319 Investment in redeemable securities 3,517 – 3,517 The case is currently pending before the court of first instance, and the date of the preliminary hearing has not been set yet. Equity investments at fair value – 3,363,411 3,363,411 Prepayments 976 – 976 Sensitivity analysis to significant changes in unobservable inputs within level 3 hierarchy Total assets 16,812 3,363,411 3,380,223 In order to determine reasonably possible alternative assumptions the Company adjusted key unobservable model inputs. The Other liabilities 1,711 – 1,711 Company adjusted the inputs used in valuation by increasing and decreasing them within a range which is considered by the Company to be reasonable. Total liabilities 1,711 – 1,711 Net 15,101 3,363,411 3,378,512 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%). | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 224 225 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Notes to Financial Statements continued Additional Information ## Georgia Capital PLC (Thousands of Georgian Lari) Abbreviations 14. Related Party Disclosures AGM Annual General Meeting MTPL Mandatory third-party liability insurance 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 APM Alternative performance measure MW Megawatt possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form. BoG JSC Bank of Georgia NAV Net asset value Related parties may enter into transactions which unrelated parties might not, and transactions between related parties may not be CAGR Compounded annual growth rate NBG National Bank of Georgia effected on the same terms, conditions and amounts as transactions between unrelated parties. All transactions with related parties COVID-19 The novel coronavirus NCC Net Capital Commitment disclosed below have been conducted on an arm’s length basis. DCF Discounted cash flow NGO Non-governmental organisation There were no related party transactions as of 31 December 2024 and as of 31 December 2023, other than dividend income of GEL DCFTA Deep and Comprehensive Free Trade NIM Net Interest Margin 125,109 from JSC GCAP in 2024 (31 December 2023: 47,659) and compensation of key management personnel disclosed below. Agreement NMF Not meaningful to present The compensation of key management personnel for the Company and its 100%-owned subsidiary, JSC GCAP, comprised the following: EBITDA Earnings before interest, taxes, non-recurring NPLs Non-performing loans items, FX gain or losses and depreciation and 2024 2023 amortisation NTM Next twelve months Salaries and other benefits (1,916) (2,097) EECP Executives’ Equity Compensation Plan OECD Organisation for Economic Co-operation Share-based payments compensation (9,093) (9,165) and Development Total key management compensation (11,009) (11,262) EFTA European Free Trade Association OPEX Operating expenses EPS Earnings per share Key management personnel do not receive cash settled compensation, except for fixed salaries. The number of key management P&C Property and Casualty ESMS Environmental and Social Risk Management personnel at 31 December 2024 was 5 (31 December 2023: 5). Procedures PLC Public limited company For more information regarding Groups Directors’ remuneration refer to the Directors’ Remuneration Report on page 142-168 in the PPA Power Purchase Agreement EUR Euro Group’s Annual Report 2024. | | EV Enterprise value | PwC PricewaterhouseCoopers LLP | | --- | --- | --- | | For the details of related party balances comprising of equity investments at fair value please, refer to Note 6. | FCF Free cash flow | RAB Regulatory Asset Base | | | FDI Foreign direct investment | ROA Return on assets | 15. Events after the Reporting Period Lion Finance Group PLC Share Price Growth FRC Financial Reporting Council ROAE Return on average equity 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 FTA Free Trade Agreement ROE Return on equity compared to the end of 2024. This translates to a total value increase by 22% in GEL. GBP Great British Pound, national currency of the UK ROIC Return on invested capital US$ 25 million increase to the share buyback programme GDP Gross domestic product SDGs United Nations’ Sustainable Development Goals 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 GEL Georgian Lari or Lari, national currency of SMEs Small and medium-size enterprises market, and the cancellation of the treasury shares will be executed on a monthly basis. Georgia SOTP Sum-of-the-parts valuation GGU Georgia Global Utilities TBD To be determined GHG Georgia Healthcare Group TPP Thermal power plant HPP Hydro power plant TPL Third-party liability insurance IAS International Accounting Standards TSR Total Shareholder Return IASB International Accounting Standards Board UK United Kingdom IFC International Finance Corporation US$/USD United States dollar, national currency of the | IMF International Monetary Fund | | United States | | --- | --- | --- | | IPO Initial Public Offering | WACC Weighted average cost of capital | | | LTIP Long-Term Incentive Plan | WPP Wind power plant | | | LTM Last 12 months | WSS Water supply and sanitation | | | LTV Loan to value ratio | WWTP Wastewater treatment plant | | | MDA Modified Dutch Auction | y-o-y Year-on-year | | | MOIC Multiple of invested capital | YTD Year to date | | MoU Memorandum of Understanding | | | Strategic Review | Strategic Review | Strategic Review | | | --- | --- | --- | --- | --- | --- | | 226 227 | Georgia Capital PLC Annual Report 2024 | | | | Governance Financial Statements Additional Information | | | | Overview | Our Business | Discussion of Results | | ## Additional Information Additional Information ## References Glossary BGEO Group PLC Former parent company of Alternative In this Annual Report management Net investment Gross investments less capital returns. Georgia Capital PLC prior to demerger performance uses various APMs, which they believe Number Number of shares in issue less total measures provide additional useful information for The Board The Board of Directors of of shares unawarded shares in JSC GCAP’s (APMs) understanding the financial performance of Georgia Capital PLC outstanding management trust. the Group. These APMs are not defined by | The Code The UK Corporate Governance Code | | International Financial Reporting Standards, | MOIC Multiple of invested capital is calculated as | | | --- | --- | --- | --- | --- | | | published in 2018 | and also may not be directly comparable | | follows: i) the numerator is the cash and non- | | | | with other companies who use similar | | cash inflows from dividends and sell-downs | The Directors Members of Georgia Capital PLC Board measures. Management believes that these plus fair value of investment at reporting of Directors APMs provide the best representation of our date, and ii) the denominator is the gross We/Our/Us References to “we”, “our” or “us” financial performance as these measures investment amount. are primarily references to the Group are used by management to evaluate our P/B multiple The price-to-book multiple, determined throughout this Report. However, the operating performance and make day- to-day by dividing the current market price of a Group is comprised of and operates operating decisions. company’s share by its book value per share. through its subsidiaries which are Combined ratio Equals sum of the loss ratio and the expense legal entities with their own relevant P/E multiple The price-to-earnings multiple, calculated ratio in the insurance business. management and governance structure by dividing the current market price of a (as set out in relevant parts of this Report). Demerger Georgia Capital PLC emerged as a separately company’s share by its earnings per share. listed company after demerger from its former Realised MOIC Realised multiple of invested capital is Parent Company BGEO Group on 29 May calculated as follows: i) the numerator is the 2018 (the demerger). cash and non- cash inflows from dividends EBITDA Earnings before interest, taxes, non-recurring and sell-downs, ii) the denominator is the items, FX gain/losses and depreciation and gross investment amount. amortisation; the Group has presented ROAE Return on average total equity equals profit these figures in this document because for the period attributable to shareholders management uses EBITDA as a tool to divided by monthly average equity attributable measure the portfolio companies’ operational to shareholders for the same period. performance and the profitability of these companies’ operations. The Company ROIC Return on invested capital is calculated considers EBITDA to be an important indicator as EBITDA less depreciation, divided by of representative recurring operations. aggregate amount of total equity and borrowed funds. Expense ratio Equals sum of acquisition costs and operating expenses divided by net earned premiums in Value creation Value creation of each portfolio investment is the insurance business. calculated as follows: we aggregate a) change in beginning and ending fair values, IRR IRR for investments is calculated based on: b) gains from realised sales (if any); and c) a) historical contributions to the investment; dividend income during period. We then b) dividends received; and adjust the net result to remove capital c) fair value of the investment as at injections (if any) to arrive at the total value 31 December 2023. creation/investment return. LTV Loan to value ratio: net debt divided by the portfolio value. Liquid assets Liquid asset and loans issued in Georgia and Loans Capital include cash, marketable debt issued 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. 228 Georgia Capital PLC Annual Report 2024 ## Additional Information ### Shareholder Information #### 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, Bridgester Road Bristol BS13 8AE United Kingdom +44 (0) 370 873 5866 #### Contact information Georgia Capital PLC Investor Relations E-mail: ir@gcap.ge #### 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. www.georgiacapital.ge