Let me start with the today's agenda. I'll talk about the recent developments, then our Chief Economist, Nino Vakhvakhishvili, will talk about macroeconomic development in Georgia, which is pretty strong, and Nino will explain why. I'll talk about Q1 performance. Giorgi Alpaidze, our CFO, will talk about the valuation and our liquidity position, including dividend income outlook, current income, and also outlook going forward. In the end, I will do the wrap-up. Let me start with the recent developments. Five major points maybe you need to know about the Q1. That we had a very strong NAV growth. In lari terms, it was 3.3%. In pound terms, it was 6.4%.
The growth is even greater if you mark-to-market our Bank of Georgia holding, would grow more than 10%, in growth of NAV in terms of the sterling. Another key point which you need to know is that NCC continued to decline. Nearly 1.5 percentage point decline we had in Q1. And it's now first time below 20%. It's at, you know, 19.7%. We are delivering on this, on our deleveraging strategy. Good thing was not only the portfolio value growth was there, it was recorded, but also the guarantee what Georgia Capital had issued in favor of our grower, it has declined significantly. It's now little more than $1 million left there.
The beer business continues to show the very strong performance. Next quarter we expect this guarantee level to go to zero, which we are very pleased with that performance. Another four points what you need to know is that we have completed the move to the Standard Listing. I will talk about this in greater details later in slides, why we did that. The sale of hospitality business continued to deliver on its promise on divestment of these hotels. We already announced the divestment of two hotels and one land plot for the which was earmarked for the hotel business, of which for $28 million.
We actually signed in April, SPA for another hotel, which was under construction, for $8.4 million to be closing to happen towards the end of the Q2. With that, sales we had, we basically are left with a very small number of assets in the hospitality business, actually. We had a expansion of the education business. We grew in terms of the learner capacity. Also we have launched what we call the tactical buyback program, or share buyback program for $10 million. Let me talk about some of these points in a greater detail. On the move to Standard Listing is critical for our business model.
We have flexibility to dispose the assets to meaningful buybacks and obviously reduce the cost. Running costs are also reduced. We are very grateful with our shareholders. Very strong support. We had 99.99% support for this move. We are obviously keeping all the points about the corporate governance and transparency. Our biggest obstacle was a class test. This class test now in the Standard Listing will not apply. The sale of hospitality business, as I mentioned, in total $36 million. The leverage of that business has decreased significantly from $40 million - $11 million. Actually, one hotel which is left is in a ski resort in Gudauri, which is actually operational and is performing well. It is servicing its debt.
We are not in a rush to dispose that, but with that disposal of the operational hotel in Gudauri will be a completion of our exit from the hospitality business. Good thing also is that our overall debt to EBITDA decreased by from 3.3 times to three times EBITDA in the end of Q1, which is moving in the right direction. As you know, we are not only striving to delever at the GCAP level, but also we have a leverage targets for our portfolio companies, and we continue to delever at the portfolio company level as well. Now, expansion of education business. Basically, we grew the learner capacity by more than 20%, and we are now at nearly 7,000 learner capacity.
We are also added another land plot to our existing. Not only we bought the school, which is totally underutilized. We also bought the land plot next to our school, and we are doing the expansion there, which also helps us to increase our pipeline, let's put it that way, pipeline capacity, from 2,400 - 2,760, which is basically another kind of a measurement we are looking at. We are targeting to have a pipeline for existing school expansions. We are moving in the right direction in the education business, and you will see that education business has performed extremely well and continues to do well.
On the $10 million buyback program, $6.5 million have been already utilized, and the share count went to $44.2 million. After completion of the buyback program, the tactical buyback program will be somewhere 43.7, 43.8 million shares. We are surely but steadily moving towards the share count, which was during the demerger. That is would be very nice to hit that target sooner than later. On the macro, I will let Nino to update you and talk about the key growth drivers. Nino?
Yes. Hello everyone. As usual, I will do the quick macroeconomic update of the country. Sorry. I will share the key trends we think might be interesting for you, and of course, we are more than happy to answer your questions during the Q&A session. Despite the global slowdown of the economic activity, Georgia continues to increase robustly. After two consecutive year of double-digit growth, according to the preliminary estimate, real GDP growth was 7.2% in the first quarter. The driver for this growth were quite similar. Observing last year, like the surging FX inflows from the external side and the credit expansion on the domestic side and the moderating but still supportive fiscal policy.
We had remittances, which increased more than 130%, and then export increasing 25%, and tourism revenues, which doubled compared to the first quarter of last year and reached 138% of the pre-pandemic levels. Credit continues to expand, like we had a significant surge in our lending. We see activity both in retail and business sector, and we see activity in local currency and foreign currency. Last year we were happy to tell that the nominal GDP increased by GEL 20 billion in two years. Now we expect nominal GDP to continue growth, like, we expect nominal GDP to reach GEL 80 billion this year and to exceed $30 billion in USD terms.
This strong growth was reflected in Georgia to be top performer in the world. Like, looking at the various variables of growth indicators, we were top performing last year. I guess the most important one is that, looking at the countries which experienced recession into 2020, Georgia was third place among all those countries in terms of recovery. International Monetary Fund expects Georgia's growth to be robust and to outperform the most of the countries as they expect like the GDP growth in per capita terms, in terms of GDP growth in per capita terms to be in top 10-- Georgia to be in top 10 countries in 2028. Georgia and lari performed quite well, as you know.
GEL started to appreciate since 2021. At first it was related to the recovery, mostly recovery in our service sector. Last year, despite the strong dollar around the world, Georgian GEL continued to appreciate on the back of surging FX inflows from the external side, like we had record high remittances, the robust export growth and the tourism revenue recovery. On the domestic factors, we should highlight the tight monetary policy and FX liquidity, ample FX liquidity in the banking sector which supports the FX lending.
This year also, GEL continued to appreciate against the U.S. dollar appreciation is more than 8% year to date on the back of FX inflows as well as the factors we have mentioned, the FX liquidity tight policy and the rebounding economic activity. We had some multiple record highs last year. Last year was quite exceptional year for Georgia. One of the most important, I guess, was the current account deficit, which reduced to record low 4.1% on the back of 5.7% surplus in the third quarter. In nominal terms, the current account deficit was $1 billion. Last year it was almost half what we observed in 2021.
Despite the surging imports which imports surged significantly due to the economic activity and inflation around the world, this surging import was nicely partially covered by the export of goods and services as well as secondary income. What we see in the first quarter, we see that FX inflows to continue at the robust trend. Like we have remittances, which increasing by almost 130%, and we have export, which increased by 25%.
One important thing about export, I guess, is that after Russia's invasion of Ukraine and sanctions on Russia, we were expecting this Middle Corridor trade route corridor prospects for this route to enhance. We see some of this in the numbers, like looking at the re-export surged by 143% in the first quarter. Mostly the partners for the re-exports are our neighboring countries like Armenia and Azerbaijan, as well as Central Asian countries. We expect this route to enhance further and due to the strategic location of the country.
Also, it should be noted that despite the significant contribution of these Russian migrants and Russian flows, in to-total effects flows continue to increase, excluding Russia, like the inflows to sum up the, all the remittances export and tourism revenues increased by 28%. In remittances are only like, all despite the fact that Russia contributed the most, EU, the remittances from EU increased more than 20% in the first quarter, and remittances from United States increased more than 40%. On the next slide, we have inflation. As you know, inflation is decelerating globally, and our inflation printed at for 2.7%, which is below the 3% target.
On the global level, like the key driver for the decelerating prices is the lower energy prices as well as food prices and also base effect. For us, the inflation is mostly attributed to the imported inflation and appreciation of the currency. Domestic inflation is still high, more than 10%, at 10.6%, we see also core inflation, which is more sticky compared to headline number to reduce significantly to 4.7%. National Bank of Georgia started to hike the rate in March 2021 and increased the rate by 300 basis points, kept the rate almost one year unchanged.
Today, they started to exit from tightened monetary policy and reduced the rate by 50 basis points to 10.5% on the back of declining, still high but declining domestic inflation and below targets headline number. Despite this, NBG stated that they will be quite carefully and the exit path will be slow due to the still high uncertainties related to the geopolitical conditions as well as high domestic prices. Rather than rate hike, National Bank of Georgia used some macroprudential measures last year in order to slow down credit activity, and it was quite successful. Also they used this appropriately, appropriate timing to rebuild the buffers.
Due to this record high flows, fixing flows, they managed to build the reserves to record high level. They bought more than $1 billion since second quarter of last year, and like $461 billion was bought in the first quarter this year. This was quite appropriate timing for the National Bank of Georgia to rebuild the reserves. As for the fiscal policy, there are several words about the fiscal policy like this double-digit growth and exchange rate appreciation was nicely reflected in our debt level, which is expected to fall below pre-pandemic level according to the preliminary estimate for 2022. The debt level is expected, projected by the Ministry of Finance to reduce further.
Also fiscal deficit, which, like widened significantly during the COVID times, it was projected to reduce below 3% cap for 2023, but according to the preliminary estimate, they are already below this 3% cap, which is quite nice trends. We see fiscal policy to moderate as they are operating balance, and the fiscal balance was in surplus in the first quarter. They, despite the fact that they are under this 3% cap, they still project to reduce the fiscal deficit in the coming years. Just to sum up, like the key messages for you for today will be that after two year of double-digit growth, Georgia continued to increase robustly at more than 7% in the first quarter.
Our inflation is below 3% target, and we expect below target inflation throughout the year. We might see some deflation during the summer period. National Bank of Georgia started to exit from tightened monetary policy and they will be slow but continue to exit from the tightened policy. We have the debt level, which is below the pre-pandemic level, and fiscal deficit below the 3% cap. This is the key messages from me, from my side. I will be more than glad to answer your questions during the Q&A session. Now I will hand over to Irakli to continue the presentation. Thank you.
Thank you, Nino. Thanks. Let me continue with the revenue development. Aggregate revenue in Q1 reached GEL 479 million, which is up 10% year-over-year. Two years ago, that's that growth rate is around 26.5%. In terms of last 12 months, we are nearly GEL 2 billion in revenue, that's up by 2.3%. On the EBITDA level, growth was in the quarter was 0.9%, moderate growth rate. We expect this growth to rebound as the hospital and clinics business are rebounding in Q2, especially on the back of the lower base last year.
As you know, when the COVID program stopped, basically, we had to rebuild the utilization of the hospitals and clinics from zero, and that took some time. Q2 last year was a very low base. Now we are moving in the right direction, so we expect stronger rest of the year compared to last year in the hospitals and the polyclinics business. The last 12 months also is up by 0.2%, EBITDA GEL 244 million. On the cash generation, strong cash flow generation of GEL 33 million, up nearly 100% a year ago and 5.3% last year.
As with regards to the cash balance is also up to GEL 400 million. This is the cash balance of our private businesses in aggregate. It was significantly up by 26% and 29% compared to last year and the year before. Let's talk about NAV per share development. As I mentioned, it's in GEL terms, the NAV per share was up 3.3%. As you can see, in terms of the GBP, it's 6.4% up. NAV per share year quarter end was GEL 67.7. However, if you mark our Bank of Georgia holdings, this NAV per share is up significantly more. Sorry, not only NAV per share, but also exchange rate movement.
The NAV per share would be up to 70.6 GEL, which is basically further 4.3% growth in NAV. In pound terms, sterling terms also significant growth to 22.6 GBP per share. Even though share price has moved up a little bit, the discount actually widened. Discount to NAV. Now update on deleveraging. Our one of the most important ratio which we follow as an investment company is newly invented Net Capital Commitment ratio, which was down by 1.4 percentage point to 90.7%. As you see, this was net debt movements, especially in guarantees, which decreased by 76%.
That's kind of a positive development what we have in NCC. As you see, this NCC level is all-time low, and we are moving to our target of 15%, steadily, and surely we are gonna get there, I hope sooner than later. Now let me ask Giorgi to take over the presentation and talk about the portfolio valuation.
Thank you, Irakli. Hello, everyone. I will walk you through now the portfolio valuations and individual performance of each portfolio company, and then we'll talk about our liquidity and the outlook for the dividend income. Starting with the portfolio value decomposition as of the end of the first quarter, about our portfolio value was close to GEL 3.3 billion, where 30% was concentrated in the listed and observable portfolio. That's Bank of Georgia and our Water Utility business. About 45% was in our large and portfolio companies, being retail (pharmacy), hospitals, and the insurance businesses. 16% was in the investment stage portfolio companies, while the other businesses remained largely unchanged, less than 10%, and this time it was about 9%.
In terms of the individual portfolio companies and the valuations, this quarter we continued to apply consistently the approaches that we have told before. The Bank of Georgia was valued at the closing share price as of the end of March, which was twenty-seven and a half pounds. Since then, the share price has rallied by about 12%, and now it's around GBP 31. Our NAV only reflects this as of the end of March. Water Utility valuation was kept unchanged versus the year-end, there was no material change in its valuation.
The other businesses, we updated our projections based on their performance in the first quarter and based on the outlook for each individual businesses, which led to, you know, revisions to the implied multiples, and we will walk through each and every large portfolio company in the investment stage portfolio company on the later slides. Our largest private portfolio company continues to be retail pharmacy, which makes up about 23% of our overall portfolio, and the second largest is hospitals followed by insurance businesses. Now as we dive into the, you know, development in our portfolio. The portfolio value increased by GEL 68 million during the quarter. 21 of that came from the Bank of Georgia value growth despite our participation in the buybacks, Bank of Georgia buybacks. We'll talk about that later.
You can see here, the 21 reduction as well. Overall it was flat, but however, there was GEL 21 million that was created. Water Utility, as I said, it was flat. From the rest of the businesses from the private portfolio, GEL 30 million was the growth in the large portfolio companies, GEL 26 million in the investment stage, and the other portfolio companies delivered about GEL 13 million value creation. Now, in the individual businesses, starting from the retail (pharmacy). The retail (pharmacy), both the revenues and the EBITDA were flat during the quarter. This was a very positive result for this business, given that lari continued to appreciate during the quarter, as you heard from Nino earlier.
The business was able to offset that appreciation with the growth in the sales during the quarter. They have managed to balance the negative impact of the reference pricing model that the government introduced earlier this year, and that became effective from February, with again, with the business growth. Despite those two headwinds, they managed to have very strong performance and, you know, flat EBITDA and flat revenues in this quarter. They also had a very strong cash collection during the quarter, which led to the, you know, decrease in the net debt by GEL 11 million. That led to the overall valuation of this business increasing by GEL 26 million during the quarter to GEL 750 million.
Multiple was slightly up from 9.1- 9.3, which is the implied multiple. The adjusted net debt, because of the strong cash collection in this business, actually went down from 1.6- 1.4. On the next slide, we see the hospitals business where the operating performance, when we look at, you know, these charts, it is down. However, if we look at on a like-for-like basis, we have to normalize this for two reasons. One, that we sold one hospital, as you know, last year, the traumatology hospital. The second one is the Iashvili Clinic that was only reopened in March, and it was closed for renovations last year in the fourth quarter. We normalized for those two. Actually, the performance was good.
The revenues were up by 3%, and EBITDA was up by 13%. This is the last quarter, you know, where the effect of the termination of the COVID contracts that happened last year in March is reflected in the prior year numbers. From the next quarter, the rebasing will start, and you will see that the performance and the growth of this business will be strong both in the revenue and the EBITDA terms. The valuations here in this business were, you know, largely neutral. We had the slight growth in the enterprise value of this business by GEL 10 million, but it was offset by the growth in the net debt balance during to the later quarters.
The multiple was up here slightly from 12.2- 12.8 because we are not looking at the run rate EBITDA in this business. Net debt to EBITDA was slightly up during the quarter, again, because of the late collection of certain receivables that didn't fall in the first quarter. Insurance businesses. Both insurance businesses demonstrated very strong performance. The P&C insurance and the medical insurance. The growth in each business was double digits in the revenue terms and the similar thing in the net income. In fact, the medical insurance net income actually tripled in the first quarter as compared to the last year. The P&C net income increased by 20% in the first quarter on a year-over-year basis.
This had a very positive impact on the valuations as well. Here we present the P&C valuations, where the overall value was up by close to 2% during the quarter. The operating performance brought us about GEL 9 million uplift, which was slightly offset by the decrease in the multiple that went from 10.6-1 0.4. Overall, the equity value for us grew by GEL 4 million. Now we go into the investment stage businesses, starting from the renewable energy business, where we had a quarter where one hydropower plant was stopped due to the rehabilitation work that was previously planned. We expect these works will be completed in June, and this hydropower plant will restart operations from there onwards.
This actually affected the numbers here that we see in the revenues and the EBITDA, they were both down by 13% and 25%. However, I know other assets also actually had a very good performance. For example, the wind farm, where we had a good wind during the first quarter. On a like-for-like basis, its production electricity generation was up by 9%. This business paid us also, slightly more than GEL 5 million dividends in the first quarter. In terms of the valuations, we had an uplift in valuations in this business because Georgia is now switching to the open market trading of the electricity, effective from July 1, 2023. Our future cash flows now reflect the anticipated switch.
As we updated our future projections that has led to an increase in the enterprise value. When we take into account enterprise value changes and the net debt changes, the overall uplift was about $12 million. Which has also led to a slight increase in the multiple from 11.4 - 12.6. Leverage here was slightly up in terms of the ratio, again, because of the one hydropower plant being stopped during the quarter. In the education business, you know, we can see that the number of learners on a one-year basis has increased significantly. We have now 4,500 learners, which is 41% higher than last year, and that had a very positive impact on the revenues by 24%.
We expect this strong growth in this business to continue in the coming quarters as well. In terms of the valuation, there was not much change in terms of the actual valuation gains. However, as we bought one school and as we invested in the land, that has added to the investments at cost, and therefore the total value of the business was up by GEL 11 million, which was broken out by, you know, enterprise value increasing by GEL 3 million, net debt being negative by GEL 1.6 million, and the rest being attributable to our investments. Our multiple was down here from 16.9- 16.2. In fact, when we look at, you know, one year forward for forecasted EBITDA for this business, it's actually closer to 11 times.
Net debt to EBITDA continued to be flat in this business at 1.2. Lastly, we have the clinics and diagnostics business, which was again also affected by the termination of the COVID contracts last year. The business continued to recover. We had, you know, good performance within the polyclinics, which is part of the clinics business. In overall the revenues were down by 22%, while the EBITDA was down by 45%. From the next quarter, we expect that the rebasing effect here, similar to the hospitals, will have a positive impact on the growth. Valuation-wise here, valuation was, you know, negative GEL 2.7 million GEL impact on our NAV.
As the, you know, net debt was down by GEL 3.7 million, it actually increased by GEL 3.7 million. That had the negative impact. Now switching into the liquidity and the dividend income outlook. Here you will see that in the first quarter, our liquidity remained strong. It was $135 million. You know, During the quarter, we continued to buy back our bonds, and we managed to buy back around $28 million worth of Georgia Capital Eurobonds. Which means that we now hold around $80 million of Eurobonds out of $300 million Eurobonds. And we continue to work on the refinancing of our Eurobonds, which is expected to come in the following quarters.
In terms of the dividend income outlook, during the first quarter, we collected around 26 million GEL. Where 5 million GEL was from the renewable energy, and 21 million GEL was from the participation in the Bank of Georgia dividends. We continued the participations since the end of the quarter. Here we also show you where that number stands now. If we aggregate that first quarter and the second quarter participations, we now have about 53 million GEL worth of dividends that we collected, which is, you know, more than half of all dividends that we collected last year. We expect to receive dividends from Bank of Georgia and other portfolio companies during the second quarter, third and the fourth quarter.
Our estimate for the current year is that this number will be around GEL 150 million-GEL 160 million. With that, I will hand it back over to Irakli for the wrap-up.
Thanks, Giorgi. Thank you. Let me say a couple of words as we had a nice NAV per share growth in Q1, both in lari terms and the sterling terms. After the close of the quarter, it continued to grow. In pound terms, we are nearly up 11% year to date. On NCC ratio, it's down, and we continue to deliver. Dividends, as Giorgi mentioned, are flowing in, and it continues to flow, especially in Q2 and Q3. That's where kind of a dividend season is. Hospitality sale is gone. Has happened in Q1 and continued in Q2 with the sign of the new agreement to sell the one under construction hotel.
Importantly, we have moved to the Standard Listing, which is more appropriate to our business model of being an investment in being an investment company. We have commenced also the buyback program and cancellation, which further reduced the share count. We expect value creation to be much greater in Q2 than in Q1, on the back of the good portfolio company performance, as well as hospitals and clinics performance, which last year Q2 was very low base. Actually in Q1, if you look at our performance, except hospitals and clinics, EBITDA was up 12% in Q1. Actually in Q2, it is expected to contribute positively in EBITDA growth, which we expect to be pretty robust.
That's where we record the higher value creation and higher hopefully, and every per share growth. We are working on the refinancing of our Eurobond. As you know, we are significantly reducing the leverage. Originally, we had this Eurobond $365 million, and we expect to issue $150 million of debt in form of bond or the debt. It's not clear yet, which way we're going to go, but we are successfully working on that project. We are working on the project and hopefully we'll be successfully close that one soon. We expect the strong macro growth in the country. It has been delivering a good growth.
As Nino mentioned, the interest rate has come down significantly and National Bank started to ease the interest rates and is decreasing interest rates. We expect further lower interest rate to go down. And I think that the macro will be performing very strongly in 2023. Here, I will finish our presentation and we'll move to the Q&A session. Please raise your hand to ask the question.
Thank you, Irakli. Just a quick reminder before we start the Q&A panel. If you have any questions, you can press the Raise Hand button or you can type them in the Q&A panel, below.
It seems like we don't have questions.
Yes. There are no incoming questions as of now.
Shit. Which is unusual, but we hear you that you have no questions. Thank you everybody for your attendance. Is system working, Jagal?
Yes. Yes, it is working. I see Miloš has a question.
Oh, very good.
Yes, hi.
Miloš, please go ahead.
Can you hear me?
Yes.
Perfect. Thank you so much. I just wonder, maybe can you comment anyway on what's your view on the contribution of the Russian immigrants to the economic activity? I mean, beyond the remittances. Do we have any underlying data which would, you know, provide us with an indication of what's the degree of contribution to economic activity in Georgia?
Sorry, what, you mean the remittance contribution to economic growth?
No, I mean the contribution of Russian immigrants-
Ah.
to economic activity.
Nino, maybe you will address.
Sure. Sure. Thanks for your question. Last year, as you know, the like GDP growth was more than 10%. We did some analysis to kind of estimate what was the impact relation to this Russian flows. Like, what we estimate, like, the direct impact coming from the Russia was, like, 2% - 3%, and there was some indirect impact, like due to this strengthened corridor and stuff like that, which might end up kind of up to 2%. What we are looking, despite the fact that, for example, in the remittances, Russia's share is surging. We see the growth is exceptional from other countries also. Like for example, remittances from U.S. increased by more than 40%, and remittances from European Union increased by 20%.
In the first quarter, we see that European Union recovered in terms of tourism revenues, and we are expecting further growth from there. Also this growth was partially attributed to the Russian inflows. We still see that there are significant inflows coming from other countries. Yes, as for the last year, the direct impact, which we estimate was like 2%-3% and indirect impact up to 2%.
Okay, perfect. one more question, if I may.
Sure.
When I look at, well, at the performance of the other, I mean the sub-scale businesses, right? There seems to be an increase in net operating cash flow. I just wonder if you feel that at any stage in the coming quarters you'll have to provide any support to some of those sub-scale businesses, or do you feel that at this stage they operate like operational performances, you know, self-sustained, they can all service they can debts, et cetera?
Giorgi, you want.
We do provide the data, Miloš, already. If you look at the Excel file that we upload on our website together with the results. For each other portfolio company, we present their P&L, their balance sheet, and even their cash flows, so you should be able to assess their data. As you saw from the overall number, as we disposed of the two hotels and one land, our overall net debt to EBITDA leverage on the aggregated group level, so for all portfolio companies, actually came down from 3.3 to three . Across the board, we are seeing that improvement in the leverage, not just in the investment stage and the large portfolio companies, but in other portfolio companies. As Irakli mentioned earlier too, beer is other portfolio companies, and so is the auto service.
Perfect. Thank you.
Thanks, Miloš. We have a couple of questions in the Q&A. The first question is from, Gokul. It looks like, we will achieve our target of 50% NCC level within the next three-four quarters. What would be the incremental capital allocation for share buybacks?
I mean, as we mentioned that moving below 15% would allow us to more meaningful. Basically we would want to be in a cycle around 15% in a business cycle, in economy cycle to be around 15% in NCC. Basically where we are below 15 you can assume, you know, we can go above 15 probably. Let's say we are at 13%, we can go above for on NCC towards the 17% or 18% basically. You can assume we're, you know, five percentage points would be a buyback, more meaningful buyback, basically.
Thanks, Irakli. The next question is from Simon Jacobs. I think shareholders would like to see a further decrease in NAV to share price. What are you.
NAV discount basically, probably.
Yes, and what are you proposing? He's also asking the idea of starting regular or special dividend.
I mean, basically what we are targeting, we are as investment company, basically, we want to delever, to let the cash flow from the portfolio companies to reach our shareholders. The leverage at the GCAP level obviously prevents that flow to happen, and that's why we have this NCC target to decrease and to let this cash flow. We think that our preference would be to do a buyback because of the hefty discount that will allow us to further increase our NAV, and decrease hopefully by doing the buybacks, decrease the NAV discount. Basically that's kind of our declared strategy, what we've been doing, and that's why we've been reducing the NCC ratio to allow us to do more meaningful buybacks.
Thank you. There's a similar question from Harvey as well. Would not introducing a modest dividend, show confidence in the underlying businesses and help reduce the stock discount? The size of the discount suggests that the market is unsatisfied with something the company is doing.
I mean, I highly doubt the modest dividend would allow because we have a modest buyback, which is a dividend basically. If you want to collect the dividend, you can reduce, sell down proportionally to keep your percentage of the company, and you can collect your dividends that way modestly. We actually are doing the modest dividends by doing this buybacks, what we call tactical buybacks.
Thank you. There are no incoming questions. Just a reminder, you can type your questions in the Q&A, or you can press the raise hand button and ask a live question. There is a question from David Shapiro. Regarding Eurobonds refinancing, do you want to refi local or in euro dollar?
probably more likely we will do the Eurodollar again. We actually, if you look back, we actually made some money on that because we borrowed at the dollar rate, and exchange rate has not changed since when we borrowed in Eurobond five years ago and what we have now, or six years ago, and what we have now, the exchange rate. Most likely we'll do the same one in the foreign currency.
Thank you. There is another question. Is there any more asset divestments on the horizon like the deals in hospitality segment?
Sure. We did say that other businesses we would be divesting over time, and we have been divesting the other businesses successfully, and we will continue to do so. We don't want to be in a hurry of, for urgent divestment, as we think that significant value has been created in the other businesses, and we want to fully utilize it and tap it.
Thanks, Irakli. No questions for now.
Very good. Since there are no further questions or do you...
Sorry, Irakli. Brett wants to ask a question.
Okay.
Hi, Brett. Please go ahead.
Hi.
With respect to the potential refinancing, in foreign currency, would you consider hedging the lari rate? Like what's your view on the exchange rate, and how does that play into potential FX issuance?
I mean, basically, we have some dollar businesses which will hold our portfolio. The $150 million is no longer a big leverage, you know. We think that playing on the foreign currency is kind of our bet also as a United company, and we are happy to bet on Lari's strengths. That's why We take the view. On with that regards, and our view is Lari, too, has a further potential to strengthen.
Okay. Thank you.
Thanks, Brett.
Thank you. There are no incoming questions. Please press the Raise Hand button or type them in the Q&A if you have any questions. There is a question from Jeremy Stevens. If tourism is up, why exit the hotel industry?
I mean, we did say from very beginning that this was a subscale business, and it could not contribute to our NAV growth much. We do not want to spend our time and energy and management resources on this sector, which will not be contributing to NAV growth substantially. Tourism is up, the business itself, what we had was not scalable. We had to invest a lot of capital, and at the same time, we have a capital light strategy. We are investing in a capital light industries, the hotels are not particular capital light. That's why. With our updated strategy, which we did last year in May, that's where we declared capital light and exit from the subscale businesses.
That's kind of, in line with our, with our strategy, basically, the sale of the hotels.
Thanks, Irakli. There is a question from Marty Alonso. In your estimation of dividends for this year, what Bank of Georgia payout ratio do you assume for the $150 million-$160 million dividend income expected?
Giorgi, you want to talk?
Hi, Marty. We assume the similar payout that the bank had last year. That will be 25% of the net income in terms of the cash dividends and another 12%-13% in buybacks. Similar payout as before.
Thanks, Giorgi. The question from Harvey. Can you drill down in the post-COVID development of hospitals? Do you see more elective surgeries? Tourism, what is happening with the competing emergency hospitals that the government wanted to go away?
What has happened is actually, and we were late to realize that on the hospital side that as we decide to help our government to step up the hospital to step up the fight against the COVID, basically, our hospitals went off from this business, elective business, or we have reduced these hospitals reduced the activity of elective or in emergency, et cetera. In during this two years, people changed their kind of behavior. It took us some time to cover this revenue. Now if you the past we had also because of activity, we closed some of the hospitals for the renovations. That also reflected on the decrease of the revenue of the hospitals.
Uh, in Q, um, uh, uh, in Q2, actually in Q1 and, uh, in, in end of June Q1 and the beginning of Q2, we saw, uh, big growth again on the elective side. Uh, and so we are, uh, we are moving in the right direction in terms of the capacity utilization. So we had a low capacity utilization in the, uh, uh, hospitals which were, uh, in the COVID program. Uh, so that now that we are moving into this, uh, direction, basically, we are, uh, we are more confident that it will deliver nice growth.
Thanks, Irakli. There is a follow-up question for, from Harvey. Will you continue to grow polyclinics, reduce or keep the same? Do they perform according to expectations? Is getting doctors and nurses still a challenge?
Basically, the polyclinics business consists of the two parts. One is a small hospitals in the regions which were in the COVID program, and another one is a pure polyclinics, what you see in Tbilisi when you come, and they walk in outpatient clinics, basically. Outpatient clinics are performing extremely well, and we are expanding, and we will expand. What we don't like is that small hospitals, which are the subscale hospitals and where we are making very little of EBITDA. Basically, if you drill down into this kind of the business line, you would want to invest, and we are investing in polyclinics because it is a capital light and nice business.
On the other hand, this subscale hospitals which are like a 10 hospital beds to 20 hospital beds are not performing well, especially when you have. You need to deliver some services which is costly and you don't in the regions you don't really have a flow of people. Basically that's our preference would be to sell off the subscale hospitals one by one or in one go over time and basically invest money in expanding the outpatient clinics.
Okay. There is another question from Harvey. What about further international expansion of pharmacies? Is that going well?
We are looking at the international markets for sure. We have a structure in the pharmacy business which basically looks at it. We are engaged with couple of parties. This is kind of our strategic important point to expand internationally with the capital light businesses. And pharmacy is indeed a capital light for us and we want to be more present in the region than we are now. You may know that we are in Armenia with pharmacies and we are in Azerbaijan with Boots, sorry, with the Body Shop stores. We are looking at the different markets, expansion in Caucasus as well as the Central Asia.
Thank you. There's a question from David Shapiro. Any thoughts to selling small portions of Bank to accelerate buybacks given the huge net NAV discount gap and Bank finally selling at a little better valuation? If not, how do you judge Bank fair value?
Basically, I mean, I think that I'll move to the fair value of the bank and then probably you will answer the first part of your question. Basically, bank is trading below three times P in our opinion, right? I think, it's its discount to its fair value could be greater than the GCAP's discount to the NAV.
Thank you, Irakli. There are no open questions for now.
Very good. Thanks for participating in our Q1 results. Stay tuned. I think it will be Q2 we expect to be way stronger than the Q1.