WineBusiness
Speaker: Avto Namicheishvili, Chairman of the Beverages Business
Georgia Capital Investor Day 27 June 2019 Georgian Wine at a Glance
Georgia - the “Cradle of Wine” One of the largest grape varieties 8,000 years of wine making 500+ unique grape varieties
Unique wine making technique Paired with popular Georgian cuisine Qvevri wine Ranked among top world cuisines
2 Georgian wine market overview Wine Consumption Per Capita (2017, litres) Georgia’s Wine Exports ($US Millions)
c.29% of the tourism revenues spent on food & beverages Our export market share (1Q19)- 7.3% 40.1 37.4 192 26.2 172 166 24.2 23.3 22.5 21.5 21.3 21.0 20.3 19.2 119 109 13.1 91 10.0 77 86 6.1 59 50 48 47 36 41 18 19
FRA ITA CRO GER AUS ESP GEO GRE ROM ARG UK CAN USA RUS 2013 2014 2015 2016 2017 2018 1Q18 1Q19
Wine exports (Bottles) Wine exports ($US millions) Source: International organization of vine and wine; National statistics office of Georgia Source: LEPL Georgian National wine agency; National statistics office of Georgia Our performance vs Georgian wine industry Georgian Wine Revenue, by export countries (2018, bottles) Average Selling Price per Bottle ($US)
62% c. 83% of the exported Georgian wine is sold in the former USSR countries 3.12 39% 2.82 2.54 2.92 2.69 2.52 2.42 2.39 2.44 2.19 2.16 2.23
17% 12% 11% 9% 9% 9% 8% 6% 7% 3% 4% 4%
Russia Ukraine Baltics Poland Kazakhstan China Other 2013 2014 2015 2016 2017 2018
Country share in Georgian Wine Export Country share in TV & KM export portfolio Teliani Selling Price per Bottle Market Average Price Source: LEPL Georgian National wine agency; Source: LEPL Georgian National wine agency; National statistics office of Georgia 3 Wine Business at a Glance
Key highlights
➢ Two wineries with total capacity of 9 million bottles production per annum;
➢ Substantial production facility upgrade in 2019-2020;
➢ In top five wine producers by vineyard base (increased vineyards from 86 hectares to 451 hectares);
➢ In 2018 exported wine to 17 countries (72% of total revenue);
➢ Holding 7.3% of Georgian wine export market in1Q19;
➢ Awarded the “Best in Show Award” by Decanter - first Georgian wine to receive this award in the history.
Key financial & operational metrics
Wine Revenue (GEL Millions) EBITDA (GEL Millions) Wine Sales (Million bottles)
+43.7% 29.4
20.4 +72.6% +31.8% +22.2% +48.8% 7.9 +100.6% 4.6 7.2 5.4 3.6 4.3 0.8 1.2 0.7 1.5
2017 2018 1Q'18 1Q'19 2017 2018 1Q'18 1Q'19 2017 2018 1Q'18 1Q'19
4 Five-year vision
Maintaining double digit growth
2018 CAGR 2023 GEL millions, unless otherwise noted
Revenue 29 27% 95 +
EBITDA 7.2 30% 27 +
EBITDA % 24% 28% +
Net Debt 20.7 21% 54 +
ROIC 12% 15% +
Bottles (millions) 4.3 21% 11 +
Vineyards (hectares) 436 18% 1,000 +
Key export markets 3 6
ROIC – Return on invested capital is calculated as EBITDA less depreciation, divided by aggregate amount of total equity and borrowed funds; EBITDA - Earnings before interest, taxes, non-recurring items, FX gain/losses and depreciation and amortization; The Group uses EBITDA as a tool to measure the Group’s operational performance and the profitability of its operations. 5 Strategic Goals
Cost optimization
▪ Cultivate & purchase vineyards ▪ Enhance own storage and production capacity ▪ Capitalize on scale
Increase premium wine segment portfolio Diversify exports & focus on key Maintain destinations double digit ▪ Improve vineyard quality ▪ Maintain positions on traditional markets growth ▪ Co-branding with small wineries ▪ Better focus on EU, US and Asian markets ▪ Opening Georgian wine shops to promote Georgian wine to sommeliers, wine resellers and ▪ Re-branding/optimizing wine portfolio HoReCa
6 Investing in vineyards
Future investments
Purchase Empty land plots Saperavi vineyards
ROIC1 33% 18%
Current investment: MOIC2 c.10x c.7x 350 hectares ROIC1 – 19% IRR 22% 21%
Payback period c.7 years c.5 years
(1) Project ROIC, calculated as first net harvest income divided to total capital injections up to the first harvest; (2) Project MOIC, calculated as total harvest income over 20 years divided to total capital injections. 7 Key Takeaways
Production Promoting Georgian wine
• Increase vineyard base to 1 000+ ha • Opening Georgian wine shops • Upgrade production facility • Partnership with artisan wine makers • Portfolio premiumization • Capitalizing on growing tourism
Export Creating value
• Maintain positions in traditional markets • Revenue growth to GEL 95M + (c.3.3x) • Entering untapped strategic markets • EBITDA growth to GEL 27M+ (c.3.8 x) • Become top trader of Georgian artisan • ROIC 15%+ wines
8 Questions?
9 Forward looking statements
Disclaimer
This presentation contains 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: currency fluctuations, including depreciation of the Georgian Lari, and macroeconomic risk; regional instability; regulatory risk across a wide range of industries; portfolio company strategic and execution risks; investment risk and liquidity risk and other key factors that indicated could adversely affect our business and financial performance, which are contained elsewhere in this document and in our past and future filings and reports and also the 'Principal Risks and Uncertainties' included in Georgia Capital PLC’s Annual Report and Accounts 2018. No part of this presentation 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 presentation should be construed as a profit forecast.
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