Thanks for joining our Q4 2023 results call. Let me give you some overview what we'll be discussing today. So I'll start with the key developments with Georgia Capital in 2023 and in Q4, you know, in particular. We have Nino Vakhvakhishvili, our Chief Economist, talking about macro developments, really exciting macro picture we have in Georgia, and it's been doing well. And then I will talk about performance in Q4 and 2023. And then, Giorgi, our CFO , will talk about the portfolio valuation and the liquidity and dividend income outlook. In the end, I'll do the wrap up, and we will have a Q&A session.
We are encouraged, obviously, with Q&A session to give us both messages as well as just raising your hand and asking the question. So let me give you some key highlights. So in Q4, our NAV grew nearly 80%, at 7.7% growth we had, and as a result, we had a second highest growth in the GCAP history of producing 26.5% NAV per share growth in 2023. Therefore, our NAV per share stood at nearly 83 GEL, which translates into the 24.23 GBP. Also, record high. NCC ratio improved our key metrics to watch when we are allocating the capital.
It has improved even though we had the buyback program in place in Q4, and we've been buying back shares pretty actively. Despite of that, we had an improvement due to the strong dividend inflows and NAV growth in Q4, and it stood at 15.6% as end of the year. We received a big chunk of dividends in Q4 from our portfolio companies at GEL 34.2 million lari we received in dividends. Full year, we had a GEL 236 million lari in dividends, which is also record high. What we call the recurring dividends was GEL 180 million lari. We did continue our buyback program in Q4.
We bought back $8.3 million worth of the GCAP shares. So in total, we bought 665,000 shares in Q4. One notable divestment which we had, even though it's small, but I think it's a important one, and we have sold low ROIC producing hospital in Batumi. This is in line with our capital allocation strategy, where we are selling the low ROIC businesses. We sold at 43% premium to our valuation. So pretty big premium to the valuation, which we are giving our hospital business. That also gives you idea, our conservative way of valuing the businesses in our portfolio companies.
We also did the acquisition in Q4. We acquired the health insurance company. This gave us the good momentum to grow our franchise. So we doubled our market share to nearly 35%, and we think that the private health insurance will pick up in lieu of the government not been increasing the prices on the healthcare services. I think the quality people will be demanding, and the people will be paying for the quality of the healthcare services. Therefore, we will think that the demand for health insurance will increase, and that was hence the acquisition we made. It is a GEL 23 million acquisition. It's not a big one, and we think that that's contributes positively.
If you look back on in 2023, six things I would like to highlight. One is that we completely transferred to the standard listing, which is critical for us to have a flexibility to conduct our investment business, and that's, that was a very important milestone, and we had an overwhelming support by our shareholders to do so. We also did a very big deleveraging in 2023. We brought down our $300 million gross debt to $150 million gross debt. We issued a local bond in Georgia, where we had the IFIs and local Georgian retail participating overwhelmingly.
To our surprise, more than 60% of the issued bond was subscribed by the local retail investors, and we had a remaining IFI subscribing to that. That gives us another kind of flexibility for our funding, but as you know, our appetite to borrow at the GCAP level is very low. We will be reducing our debt at holding company level in coming years. Share buyback program in 2023 was pretty significant. We did a $25 million buy in buybacks, and that was the kind of a big program, and as we saw $86 million buybacks we've done in our history, basically. So that was $25 million, was pretty significant.
We also bought out our pharmacy retail minority shareholder, which, when we brought our shareholders to 97.6%. Then we owned also on hospital business, sorry, on hospitality business, we did a divestment. So we sold our hotels and real estate worth $38.6 million. That was also significant milestone to achieve, as we are divesting from our small subscale businesses, what we call the other businesses, so that was pretty successful divestment. We also expanded in education business. We brought our learner capacity to 7,200 learners, and we are in a good trajectory of growing the franchise and education business.
I think the significant announcement, our portfolio company, our, Bank of Georgia, which is in our portfolio company, where we own the 20% equity interest. Recently, they made the announcement on acquisition of the Ameriabank. Ameriabank is a very strong banking franchise in Caucasus Republic. So if you measure it probably is a second strongest brand in the Caucasus Republic after the Bank of Georgia, and I think this is a significant milestone by the Bank of Georgia to acquire such a strong franchise. The valuation is at 0.65x book and 2.6x P/E, which we are glad to see such a attractive valuation of this attractive franchise to be bought.
We believe that the prospects of acquisition of the Ameriabank is even greater, as the Bank of Georgia has a superior digital experience for their retail customers, and putting the Ameriabank's franchise in Armenia and the Bank of Georgia's superior digital experience that will create a substantial shareholder value going forward. The even greater story in the acquisition is that the Bank of Georgia is not changing its capital return policy, and they don't need to issue the new shares or raise cash for the acquisition. So Bank of Georgia will be buying it from its excess capital.
So that's kind of a significant event, probably you have noticed that one as well in the share price of Bank of Georgia being reflected, as we speak. Now let me give the floor to Nino to talk about the macro.
Thank you, Irakli. Hello, everyone. So as usual, I will be giving very quick macroeconomic update of our country. So I will highlight the key fact, the key facts, and of course, I will be more than glad to answer your questions if any, during our Q&A session. I want to start with the revisions done by the Geostat. They Geostat revised Georgia's national account due to methodological updates classification changes and source improvements in line with the five-year international revision cycle. After this revision, our GDP revised upwards compared to the previous estimates, and adjustments done in the GDP deflator led real GDP growth also to revised upwards.
As a result, 2022 growth revised upward to 11%, and 2023 preliminary growth revised upward to 7.5% from an initial 7%. The key drivers for the growth, the drivers are quite close to the drivers we had in 2022. So in 2023, we had historic high FX inflows, despite the moderating remittances due to the fading out impact of the Russian immigration. So we had FX inflows was at historic high again, due to tourism revenues and surging exports. Also from the domestic side, the banks were quite active to promote growth, as loan growth was 17.1%, excluding the exchange rate effect.
If you look at the loan growth, so we saw that business loan growth exceeded household loan growth after the second half of 2023. Within the business loans, the trade, construction, real estate, and financial intermediation was the key sectors contributed positively. From the second half, even tourism-related sectors and manufacturing contributed positively to the business loan growth. Another factor from domestic side is fiscal policy. Despite the discipline to put the fiscal deficit under 3% cap mandated by the Liberty Act, government was able to increase their current and capital expenditure, which led our GDP growth, and which led our GDP growth to increase even further.
So as a result, looking at the previous three years, due to this very high growth rate and as well as exchange rate appreciation, our GDP in U.S. dollars almost double in the three years. So looking in the future, so we are expecting GDP growth to be up to 6% next year, and we expect this to continue growth, which will be higher than our previous ten-year average. On the inflation side, inflation peaked in January 2022, and then we had some gradual disinflation throughout 2022, and we had sharp disinflation in 2023. And as a result, National Bank of Georgia start to ease rates, reduce the refinancing rate to 9%.
So the disinflation factors was quite similar, so what you can see in another country, so the disinflation was the common story for almost worldwide. So it was mostly the correction in international prices. And then also we had this exchange rate stability, which impacted our imported inflation to be on a negative side. And mostly it was the good inflation, good inflation, which led our inflation to fall below 3%. And according to the latest number, January number, inflation it is at 0%. And despite the fact that National Bank of Georgia targets headline inflation rather than core, core inflation is also below the target. So we expect inflation to start picking up, to increase slightly.
We might see some overshooting in the second half of the next year, but overall, average inflation, for the average inflation, we, we think that average inflation will be below the target in 2024 also. On the next slide, we have more details about the FX flows. As I have mentioned, we are still getting historic high FX inflows. Remittance is moderated, mostly from Russia, so this immigration impact faded out, and we had significant reduction in remittances from Russia. But we had the increase in remittances from other remitting countries, like from, for example, from U.S., remittances increased by 40%, from Germany, 39%, from Italy by 20%.
Overall, from EU, we saw some 17% surge in remittances, and from other countries, excluding EU and CIS, we saw some 20% increase in remittances. For the tourism revenues, so our tourism revenues increased by 17% compared to last year, and it was 26% higher compared to pre-COVID levels. Tourism revenues, despite the fact that we have the historic high tourism revenues, number of international trips are still below pre-COVID level, and so there's a still significant room for growth. So we are 18% of the level we had before COVID in terms of international traveler trips, and so mostly it is our neighboring countries from where we see recovery to be lagging behind.
So, as for the exports, despite the fact that in 2023, global trade turnover was down, but despite the slowdown in global trade, we saw exports of Georgia to increase by 9%. And despite the fact that our domestic, like traditional domestic exports, slowed down in 2023, due to the surge in re-export, we had a significant growth in our exports. And this re-export surge was driven by Russia's invasion of Ukraine and sanctions on Russia. After that, the importance of Middle Corridor increased, and the importance of Middle Corridor led our exports to increase.
We are mostly re-exporting motor cars, and we see trade ties to be tightened with the Central Asian countries, which is a good opportunity for us to leverage further with our strategic location, from our strategic location. So as a result of historically higher FX inflows, our current account deficit continues to narrow. In nine months, we had 2.6% of GDP current account deficits, down from 3.2% from the nine months of last year. And due to the historically high FX inflows, economic activity, tightened monetary policy, as well as kind of weaker USD, compared to compared to, for example, 2022 highs.
So the weaker dollar compared to 2022 highs, we see exchange rates to be below pre-pandemic levels, and we see that exchange rate is kind of flattish without significant fluctuations. On the next slide, we have kind of summary slide for the monetary and fiscal policy. As I have mentioned, monetary policy started to ease, but at a gradual pace. There is still room for further ease, and we expect National Bank of Georgia to continue easing, but at a very gradual pace due to the fact that the rates in advanced economies are still at their peaks, and advanced economies have not really started to ease the rates. So these two years was favorable for our fiscal and monetary policy to build the buffers.
National Bank of Georgia was quite active during these two years to build the reserves, and as a result, reserves were at $5 billion at the end of 2023. As for the fiscal policy, the fiscal discipline led our fiscal deficit to fall below 3% cap, and our debt level reduced significantly, even below pre-COVID level, due to the fact that we had the very strong growth as well as exchange rate appreciation. So according to the Ministry of Finance projections, they don't project debt level to decrease sharply, but what they project, they project the structure to change significantly. So they want GEL-denominated debt share to be higher compared to USD-denominated debt share, which will even increase government balance sheet resilience toward the external shock.
So on the next slide, we have some new opportunities which we think emerges for Georgia. The first of all, again, it is the Middle Corridor, and as I have mentioned, after this, sanctions on Russia, the Middle Corridor gained its importance because it emerges as one of the important routes to connect Europe to Asia. And according to the recent studies by the EBRD and the World Bank, so they saw significant surge in trade turnover in the route after Russia's invasion of Ukraine. And if the right investment will be there, so World Bank, for example, expects the trade, the turnover to triple through these routes, which of course will be very beneficial for our country, not only economically but also geopolitically, Georgia's role will further strengthen.
And, so as you may know, in 2023, we European Council granted candidate status to Georgia, and we've done some a research what might be the benefit for the country. There is a significant differences among the countries, enlargement countries, in terms of economic benefits they are getting after the EU integration. But on average, we saw that GDP growth was higher, and government cost of debt was lower, and institutional strength was higher compared to non-EU integration scenario.
We do expect the same for Georgia, especially we think that our strategic location would be important for us to capitalize on this EU integration, because we will be positioning ourselves as a bridge between the European Union and Asia. So we think that this EU candidacy can bring significant economic benefits as well as a significant enhancement of our geopolitical role. To sum up, we have very strong GDP growth. We expect GDP growth to be higher compared to the previous ten-year averages in the medium term. Our inflation is below target, and we also think that there might be reversal in the trend.
We expect average inflation to be below target in the next year also. Our external balance sheet improves with $5 billion reserves, narrowed current account deficit and debt level, which is below the pre-pandemic levels. Exchange rate is quite stable and remains at below pre-pandemic level on the back of historic high FX inflows, prudent policies, as well as dollar stance. We have sound macroeconomic framework, and so we, we've seen new opportunities for the country due to the increasing importance of Middle Corridor as well as EU candidacy status. So, thanks a lot. I'm looking forward to your questions, and now I will hand over to Irakli to continue the presentation.
Sorry, I had a problem with this technology. So let me start with this, Q4 performance, and the full year performance of our portfolio companies. We see close to 10% revenue growth in the full year for all of our portfolio companies, and we had a nearly 8% growth in Q4. In terms of the EBITDA, we in full year, it grew by nearly 2%. However, we had a decline in Q4 by 6%. This decline was mainly driven by two factors. One is our hospital business did not perform well due to the regulatory issues.
One was that we had to close down some of our hospitals for renovations to meet the regulatory requirements on the new standards. So that contributed negatively. Secondly, the new DRG system has been changed and fine-tuned a couple of times. So basically, we've been struggling with this new pricing system, and now it seems like it is up and running. We think that we hit the low point in the Q4 in terms of the revenue and the EBITDA, and we hope that we're gonna turn the corner next year. So the similar in operating cash flow, the hospital business did not contribute well here.
However, our pharmacy business actually grew its retail footprint by 30 retail outlets, which contributed negatively for the EBITDA, as well as the cash flow generation. But however, our pharmacy business, as Giorgi will show you, the very good revenue growth. So we are investing in pharmacy business to grow our franchise even further... unlike in hospital business. So in terms of the NAV per share development in Q4, you see that listed portfolio, like Bank of Georgia's share price growth contributed positively, 5 percentage points. Private portfolio contributed positively, also nearly 2 percentage points. Buyback was 1% around positive contribution to our NAV per share growth.
Operating expense declined by 0.3 percentage points, contributed negatively in our NAV per share. And that's why, how we ended up to nearly 8% NAV per share growth in Q4. So if we look at the NAV per share growth over the life of GCAP, which dates back to 2018, we have a CAGR of 13.4% NAV per share growth. And in 2023, we had a more than 26% NAV per share growth. Similar growth rates are in USD terms. So we had a 13.2% growth in USD and pound sterling over the past six years, past five years. So pretty strong CAGR.
I wish we are targeting higher, obviously, not happy with this CAGR. And, as we grow, hopefully more faster going forward, we will improve overall, overall, our CAGR for the our NAV per share growth. In terms of the buyback and cancellations, as I mentioned, we had $86 million worth of buybacks in past six years or so. Nearly 8 million shares we bought back, which is 16.5% of of our issued share capital, whatever we had in peak. In peak, we had around 48 million shares. So I must say it's a, it's a very strong track record of returning capital to our shareholders, and we've been doing it consistently, including in 2023.
Going forward, we obviously will do more of the buybacks, and especially we are keen to see more buybacks where we are in such a big NAV discount. Share price is a NAV discount, as well as when our leverage has been decreasing, that's also encouraged us to do more buybacks. In terms of the net capital commitment, our key metrics, what we look at is, it's at 15.6% in end of 2023. So it's significant decrease from 21.1% a year ago, and that is a result of the NAV growth, strong dividend inflows, and that's kind of the, they gave us a good momentum.
As you see, our guarantees issued went to zero, and as our beer business performed well, we had the guarantees issued for our beer business , and this has been doing extremely well. And that has, as a result, we have, there is no guarantees issued by the GCAP. So that's deleveraging continues. Our net debt is $110 million. We will attack more to our net net debt going forward. So here is the development of our NCC ratio. You saw, you see that on the peak, we were at 42.5%, pretty aggressive. We should not do it again, for sure, and now we are at close to our 15% over the cycle target.
Free cash flow development, you see that, in terms of free cash flow development, which is, dividends received minus interest expense, minus OpEx, we recorded $31 million in 2023, which is a significant growth year before or any time, in our past, history of the GCAP. We are, we believe that this, this number will grow further in 2024. Here I will, let Giorgi Alpaidze, our CFO, to talk about the portfolio, valuation.
Thank you, Irakli. Hello, everyone. Let's start the review of fourth quarter valuations by getting through the slide that summarizes where we valued our portfolios during at the end of December last year. First of all, let me highlight that this the valuations were done externally by Kroll, our independent valuation company, that valued all the large and investment stage portfolio companies. This was then audited by our auditors as well. So, as you can see on this slide, about 38% of our portfolio was within the listed and observable companies. Bank of Georgia was about one-third of our portfolio, 33%, and 4% was water utility.
Bank of Georgia, this is the spot price that we use for valuations from the London Stock Exchange at the end of last year. For water utility, we apply the option valuation methodology, which assumes the put call option structure that we currently have to realize the value of our 20% stake within the water utility company. At the end of last year, we saw that the regulator of the water utility business revised the tariffs for the commercial customers in Georgia, and the tariffs increased by close to 40% for the commercial customers in Georgia. We have considered this in the valuation and the value of the water utility business is currently close to GEL 160 million or about $60 million.
As we see, the impact of the new times come through the EBITDA, which is the key metric used within the put and call valuations, we will continue to revise these valuations going forward every quarter. In the large portfolio companies, retail pharmacy continued to be our large business, largest business in the private portfolio, followed by insurance business and the hospitals, all of which were valued by Kroll at the end of last year. And similarly, investment stage portfolio companies that made up about 15% of the portfolio were also externally valued, and other portfolio was relatively unchanged at 8% of the overall portfolio.
On the next slide, you will see how the portfolio value developed during the quarter, and we saw that the amount reached about GEL 3.7 billion, which in dollar terms is about $1.4 billion. The most value creation came from the increase in the Bank of Georgia share price, which was about GEL 134 million on a net basis, so this is after they paid the dividends. And in the large portfolios contributed about GEL 33 million, while the investment stage was 39, and we had a value reduction of GEL 13 million in other businesses.
In terms of each portfolio, I would highlight that insurance business generated for us, both P&C and medical, about GEL 42 million valuation gains, followed by retail pharmacy of GEL 34 million, and education was GEL 16 million, while clinics was GEL 12 million. We had about GEL 35 million valuation losses within the hospital business, due to the reasons that we'll discuss later. Now, if we go through each and every portfolio company individually, you will see, starting from the retail pharmacy, that, as Irakli mentioned earlier, we continue to grow the pharmacy chain and the franchise within Georgia and Armenia. And in fact, we added close to 30 pharmacies in the franchise stores across the two countries in the fourth quarter.
which was the reason, largely because, one, we continued to see that small mom-and-pop pharmacies were closing down, and we took advantage to take over the spaces that were previously rented by them. That allowed us to open close to 30 pharmacies. On a full year basis, in fact, we opened about 51 pharmacies in the franchise stores across Georgia and Armenia. Additionally, because of this high growth, we had to invest in the OpEx. That included the rent and the salary costs of the new franchise stores that impacted the bottom line, in this case, the EBITDA, which was down by 21%.
But these are the investments in the, in the longer term, and we will see in the coming quarters that they will get reflected, in the numbers, and we will see the bottom right, bottom line improving. One thing I would highlight here is even though we had the, the strong, growth in the, pharmacy chain, we had also a very, stable gross profit margin that was about 30%, when we look at it on a full year basis. On the next slide, you will see the valuation changes. So because of the positive outlook that we have for this business and the continued growth, we are seeing, for example, in January and February, that the retail, sales growth in retail pharmacy business is in double digits.
You know, with the positive momentum and also with the growth of the channels, we had a increase in the enterprise value of about 3.7% or GEL 38 million. Last quarter was also very strong in the cash conversion. So therefore, we had a business net equity value increase by GEL 35 million. The implied LTM EV/EBITDA multiple is temporarily increased to 9.7 because the fourth quarter does not reflect the, you know, full scope application and the inclusion of the expected profits from the new franchise stores and the pharmacies. Next, we have the hospitals business.
So here you might recall we flagged during the previous call that we had certain hospitals that were closed down because of the renovations in October and early November, which meant that we had an impact on the bottom line. So here you will see that even though revenues were largely flat versus previous fourth quarter of 2022, we had an impact on the EBITDA, and it was down by 49%. We're starting to see in 2024 that this business is starting to improve, even though we have the headwinds from the regulatory changes. We will see that this reduction in the EBITDA in the upcoming quarters will decrease and it will fade away in the future. Valuation-wise here, we had...
We, we did the restructuring, as you know, in the fourth quarter. We now moved the community clinics, which was previously part of the clinics business, into the hospitals business, which now combines larger specialty and regional hospitals plus community clinics. Therefore, you don't see the changes from the previous quarter on this slide because of the comparability matters. But in general, this business was valued at 13.8x EV/EBITDA multiple, which is lower than the one hospital that we sold at the end of the year that was in excess of 15x EV/EBITDA. On the next slide, you will see the insurance business. In the insurance business, we continue to have a very strong double-digit revenue growth in both P&C and medical insurances. That has led to a very strong performance here.
But because of the increase in the combined ratio, largely driven by the loss ratio and the expense ratio, we had a relatively smaller increase in the net profit of about 4%. However, we see that these losses will normalize as we go into 2024, and we would expect this growth in the revenues will translate into a similar growth in the bottom line or the net profit. We had the gains in valuations in the insurance business because of the strong outlook. And as you can see on the next slide, the equity value creation we had was about GEL 18 million in the P&C insurance business.
Going forward, we will be presenting all the insurance businesses together now that we own and operate three different brands, which is Aldagi, Ardi, and Imedi L. Now into the investment stage businesses, starting with the renewable energy here, a straightforward story. We had all our HPPs and the wind power plants operating during the quarter, which was not the case in the fourth quarter of 2022. Therefore, the revenue and the generation grew by single digits, 5% and 8%, and that led to the higher revenues and higher EBITDA in the fourth quarter. And the value creation that we had in the renewable energy was driven purely by the net debt reduction, which was reduced by $1.2 million.
One key fact here is that this business has had a borrowing of $80 million from the local market. Because of the cash generation that they experienced over the last twelve months, in January of this year, they bought back and canceled about $5.1 million worth of bonds. Which means that even the gross debt has now reduced from $80 million to close to $75 million. And we continue to see that the net debt to EBITDA is also decreasing. Next, we have the education business, which has continued to grow here, as we had received a record number of new learners in the third quarter of 2023. We saw that the PNL impact come through in the fourth quarter, so revenues grew by 41%.
The EBITDA growth was at 27%, even though that we invested in the operating expenses for the enlarged group for us to finance the new campuses and the growth of the existing campuses. And all this positive momentum led to the capacity utilization, which is now at 80%, about 7% higher than where it was before. We had the impact of this growth come through in the valuations as well. And as you can see on this slide, the valuation of the education business was up by GEL 18 million. The multiple here was 16.7x. However, here we are looking on a backward-looking basis on the LTM EBITDA.
If you look in a forward-looking EBITDA, then the multiple comes down to 10.5x. The clinics business is the next, which is—so this business now excludes the community clinics from its performance, and it had a very strong performance in the fourth quarter. Both clinics and diagnostics delivered double-digit growth. EBITDA was also up significantly to GEL 3 million, and on a full year basis, you can see that the EBITDA more than doubled, which is then reflected in the next slide on the valuations. And the valuation-wise, we had about GEL 14 million growth in the clinics business. We have the net debt to EBITDA reducing significantly from 4.5x to 3.6.
That's because we paid down debt before when we sold the head office of this business in the third quarter, but also because of the growth in the EBITDA contributing to the decrease of this ratio. That's all about the valuations, and now we have an update about the liquidity. We continue to have strong liquidity. So given the smaller size of our bonds, our liquidity was about $14 million, up 7%, even though we did about $10 million buybacks in the fourth quarter. This was helped by the dividends that we received from Bank of Georgia and Aldagi in the fourth quarter. The next slide, you will see the dividend income track record and the outlook.
So in the last year, the total dividends increased by 2.5 x from where they were in 2022, of which about GEL 180 million is recurring, and these recurring dividends are about still two times what we collected in 2022. As we look forward into 2024, we currently estimate that we should be receiving dividends of at least GEL 180 million, between GEL 180 million-GEL 190 million, which is about $70 million-$75 million in dollar terms. With that, I will go back to Irakli for the wrap-up. Irakli?
Thanks, Georgie. So to wrap up, we see a strong NAV growth in 2023 in Q4. We see the NCC ratio decline, decreasing significantly by 5.5 percentage points in 2023. We see big dividend inflows of around GEL 236 million, of which 180 is regular dividend inflow. It's also the record high. You saw big buybacks done in past six years of the GCAP's life. We did $86 million, which represents 16.5% of the share capital, and we did a $25 million worth buybacks in 2023. We will continue the buybacks, obviously, with this attractive valuation what GCAP has.
We have, in Q4, we sold one of our hospitals, well, it's a pretty large hospital actually, at a significant premium to our mark. And that's also assurance to us that we are conservative in marking our portfolio companies. You saw also the small investment in the health insurance business, which enabled us to double our market share to nearly 35% in the health insurance. So that was also a significant move for us. In terms of the outlook, we expect the strong economic growth to continue in Georgia. We expect the further value creation within our portfolio companies, and we expect our leverage to decrease even further.
So, on this bright note, I'd like to move to the Q&A session. Please raise your hand, but before you do so, we have a couple of questions here in the chat.
Thank you, Irakli. Maybe I can read through the questions that came through the Q&A.
Mm-hmm.
So the first question is from Bram Buring : With regard to the 55% over the cycle target for NCC, could you please elaborate where we are in the cycle and the implications for the larger capital returns? Will the current phase in the cycle suggest we see larger returns when NCC hits a low teen, high single digit level?
Thanks, Bram, for the question. To be very short, probably that's a high single digit, that's where we should, we'll be able to see the bigger buyback in terms of the, you know, the auction type buyback. In terms of the tactical buybacks is what we've been doing, we will continue to do so. Mainly, we have not announced the tactical buyback, smaller ticket size, what we've been announcing, for a number of reasons, but one of we said, Bank of Georgia, which is a main dividend provider to GCAP, have not announced their dividend for 2023.
Due to the acquisition, they had to postpone, as I understand, their annual results announcement, and once we know it, we will be more better positioned to announce our tactical buyback program.
Thanks, Irakli. The next question, also from Bram: Any update on disposal of larger portfolio companies would be appreciated.
Unfortunately, we cannot talk about this publicly at this stage. We will give you update once we feel more comfortable doing so.
Thank you. The next question from, Bernard Grizzle: Will you look to extend beyond Georgia, like Bank of Georgia did, either through acquisition or via one of your current businesses expanding to additional markets?
On our last strategy update, we talked about that, and our position is that, Number one thing, we want to be in the capital light businesses, and our more mature capital light businesses will be expanding outside Georgia. The GCAP itself will not be making the new bets outside Georgia, but we will be, we might make the bets outside Georgia, basically through our portfolio companies. In fact, our pharmacy business has been investing in the expansion in Armenia for quite some time, and actually in Q4 expansion of the retail stores, Armenia is a big contributor to that. So we are expanding pretty aggressively, and we will continue to expand in Armenia through our pharmacy chain.
If you look at the other business, for instance, education business, which is also the capital light business, we are not expanding that because we have still ground to cover in Georgia. So once we feel that we have reached the maturity in terms of the footprint, we will, we'll also venture outside Georgia. Similarly, for instance, in our polyclinics business, we have a ground to cover in Georgia, so we won't be expanding. So in fact, the probably most mature company who can expand outside Georgia is our pharmacy business, which we are doing so pretty carefully, but if the expansion opportunity, acquisition opportunity arises, we may do so. It all depends to our capital return, or investment policy, which basically envisages the discount of the GCAP stock.
The higher the discount, the price-wise, it's more difficult for us to pay good price, let's put it that way. So as GCAP shares are very attractive, now we are not really investing anywhere. We had did this small investment in insurance because it was in line with our investment policy of buying—if investing cheaper in private companies than buying back GCAP stock. That's basically our thing. Very simple. Okay, Jacob, can you?
Yes, moving on to the next, next one. Are you expecting to continue your buyback program? Do you still see your share price as the most attractive investor investment out there? I think we touched on this one.
Yes, I think that we talked, yeah, yeah, we will continue buybacks for sure. The GCAP stock is very attractive for us to buy. So we will buy and please stop buying the GCAP stock so that it is cheap for us to buy.
Thank you. Another, the next question from Max. Hello, great results. After the deleveraging, are you planning to pay out dividends to us shareholders?
But, we've been paying the dividends. In terms of the buybacks, that's our kind of, dividend equivalent. We've been returning the capital. However, if you mean the regular capital return policy, we are considering that all the time. That's a part of our job, obviously. And as the leverage decreases, and as our private portfolio companies reach more maturity, we will be introducing the regular capital return policy. Right now, as you see, we are doing the... Opportunistically, we are announcing the capital returns, and this in total, we returned $85 million of capital to our shareholders in past five and a half years.
Thank you. The next one: Can we expect you to sell more of your hospitals and clinics in the near term?
It all depends on the price, you know, so basically, there is everything, as you know, our strategy is not to have a strategic asset. We are in investment business. We, in case we see opportunity to sell or buy, et cetera, we do accordingly. So we saw the opportunity to divest this hospital, and we divested at attractive valuation, so.
The next question is from Milosh. Do you see scope for an increase in the share of parapharmacy products in the retail pharmacy sales beyond the current 40%?
Absolutely. I think that we are. That's our model. We are basically we sell the RX drugs through our pharmacies with a lower margin and we sell parapharmacy products on non-med at the same time with the higher margin, and that's where we make money. We don't make money on the drugs. Basically, we make money on the parapharmacy. And that's one of the reason our working capital grew in Q4 and the cash flow declined, the operating cash declined because we've been aggressively pushing our non-med products. And we've been we see a healthy growth momentum.
Actually, in January and February, we saw a double-digit plus growth in revenue in retail pharmacies, and that's what we are geared for, to grow the footprint more, to grow the non-med share, and we think it can grow about 50%. Actually, in Armenia, our non-med share is nearly 55%. So-
Thank you.
So we like that market. Yeah.
The next question is from Tarang Patel. Can you please expand on what restructuring was needed in the clinics to meet new regulations? I think he's referring to the hospitals business.
Hospitals, yeah. So in hospitals, we had to redo our emergency rooms because there were new standards have been introduced, and there are a lot of small details, basically, which were needed. But mainly was the emergency rooms had to be redone, and that caused the closure of our hospitals and investment basically to renovate some of the hospitals to more modern standards. And that is the main one, but there are a lot of small things like some equipment had to be changed, et cetera, so but mainly it was renovations, basically.
Thank you. The next question from Milosh. How quickly do you expect bed occupancy in our hospitals business to recover after the completion of the renovations?
We hope that in the second half of the year, we will be on the right trajectory. We already see an improvement in occupancies in this year, but we have a long way to go. We think that our run rate occupancy rates and the EBITDA probably we will see towards the end of this year to recover them.
Thanks. The next question is from Brad. Do you have a target for how many pharmacies you plan to add this year? Also, you mentioned that forward valuation multiple for the education business. Could you share what are your forward EBITDA mult- valuation multiples for hospitals and pharmacies?
So on the pharmacy expansion, last year was pretty aggressive. We grew by 10% + the footprint. I don't think we're gonna do the similar this year. It will be way less. We want to make sure that the expansion which we have done is working well, that it is bringing the increased EBITDA, not only revenue, obviously, but increased EBITDA. So basically, we want to digest it. And we know there was an opportunity because of the regulation that small pharmacies were closing down, and we basically made the decision to go and grab that opportunity and, and, and basically convert some of our small pharmacies or merge the pharmacies which were side by side and-...
Basically, it was kind of a opportunity to grow a modern pharmacy chain as the more legacy pharmacies were closing down because of regulation. So it was kind of a one-time opportunity, and then we used that opportunity, basically. The next one was the forward-looking. Giorgi, maybe you talk about this.
Yes, I can take that one. So on the forward-looking valuations, Brad, think of it in retail pharmacy, it's about nine, and generally, that's where we would see that business valuing if it's operating at the run rate EBITDA. And for the hospitals, it's about 12. So 12 will be where on the run rate EBITDA, that business would be valued.
Thank you. I think we don't have any open questions as of now. Maybe a quick reminder, for questions, you can press the Raise Hand button or type them in the Q&A.
It seems like there are no further questions. Anyway, we are available. Here's another one.
Yes, from Brad: Would you give an update on your capital spending plans for renewables?
Yeah, I mean, basically, they have not changed much, whatever we had. Giorgi, maybe you talk about that a little bit.
Yeah, within our NCC, we continue to include about $35 million worth of capital that we expect to allocate to renewable energy when the construction of the hydropower plants and the wind power plants commences. But that has not been the case just yet, so the number has not changed, and we continue to show that as a committed capital within NCC, Brad.
Probably most likely, the half of that might be spent this year, basically.
Thank you. The next question is from Max. Are there any possibilities to do a deal with a big company like TAV Batumi Airport, Borjomi water, Efes bottling business in Georgia?
You may know that our capital allocation strategy includes the asset-light businesses. So, basically, we would, we don't see the TAV Airport as asset-light, basically. But anyway, the if there are opportunity which is cheaper than buying the GCAP stock, we'll entertain. Which is not—if we don't see that it's cheaper than GCAP stock, we will be buying the GCAP. We want to really be discipline on that. So we don't want to get carried away with potentially good deals when we have a GCAP deal in front of us.
Thank you. There are no open questions as of now. The one just came through. Congrats on the results. Do you plan to exercise put option for the water business? Can you give a breakdown of dividend income expectation for 2024?
I mean, we cannot comment on the exercise of put option, for sure. The breakdown of dividends, Giorgi, do you want to-
Yes, I mean, so if, if you looked at the slide that we had before, it would be a similar breakdown. We expect the dividends to grow from, insurance business, from Aldagi, for example, and from renewable energy, as well. However, we expect that, you know, in other businesses, for example, in hospitals, given the performance, that the, the dividends will be reduced. So they balance each other out, and therefore, we expect about GEL 180 million. And in fact, we, we expect that, our beer business, that had a very strong, year last year and continues to have a very strong performance, that they will be also, paying the dividends as well.
Thanks, um-
Seems like no further questions. Thanks, everybody, for joining the call. We are online anyway. If you have any questions, please, email to our IR, Giorgi and me, and we are very happy to address those. Thanks a lot, and stay tuned.