Investors, vis-à-vis our results as well as the Standard Listing announcement we have recently made. Let me introduce you to our agenda. We have seven topics, quite a lot to discuss today. I will do the 2022 look back. We'll talk about key milestones we achieved last year. I will talk about proposed transaction to Standard Listing. Nino Vakhvakhishvili, our Chief Economist, will talk about macroeconomic update. Very impressive numbers. I think it's a big strategic shift the country is making, and it will be interesting to hear Nino's take on that. We will talk about the Q4 overview. Georgie will talk about the Q4 overview, Q4's overview. The valuation of our portfolio companies.
Georgie will also talk about the liquidity and dividend income outlook, and I will do the wrap. Let me start with the look back. five key milestone I think we have hit in 2022. One was the updating the strategy. I'll talk a little bit on that later on. To more capital light investment strategy with the new framework of NCC and 360-degree kind of analysis, what you call. Next slide I will talk about that in greater detail. Second one, we've completed the divestment of water utility, and we received the funds in 2022, in February actually. It's been one year since this transaction was closed.
The third one, third milestone, I would say that the issuance of the bonds at the local market, both our renewable energy and our real estate companies issued the pretty large size bonds in local market, $80 million and $35 million. We are very happy to develop the local capital markets, and that could be an option for Georgia Capital as well to do a refinancing of our bond in local market, basically. Buyback of GCAP bonds, we have bought quite substantial amount. In total, I think we have more than $100 million of bonds bought back. We are buying here and there as well. Fifth, importantly, we did our buyback program last year.
We bought 3.1 million shares, which is around 7% of our issued share capital. In total, since the inception of Georgia Capital five years ago, we bought nearly 6 million shares, which is in line with our strategy of tapping to buying GCAP shares chiefly. As NAV is widening, this opportunity is even greater, which we like on the other side, right? Just to recap our strategy. There's two pointers. You know, we said that we want to focus on capital light in those base opportunities in Georgia, to grow in equity value of at least GEL 300 million and monetize it.
As we are buying locally at local multiples, we are institutionalizing our portfolio companies so that they are attractive for strategic investor. The size of GEL 300 million, where we think that mid-size, small or mid-size strategic investors would be interested to tap in to acquire high quality assets. As you know, our number one priority is to institutionalize with the great management teams what we have across our portfolio companies. In a way, the strategic investors are looking to buy the local management team. That's what Georgia Capital is all about, is consolidating, growing, putting the greatest teams, local management teams, which are Western kind of standard managed companies. These are obviously attractive for the strategic investors.
That's how we can achieve the international multiples on exits. On capital management work framework which we introduced is the Net Capital Commitment ratio, where we said that we want to be at 15%. This Net Capital Commitment ratio consists of three pillars. One is net, another is net investment commitment, which we are committing to invest. This in a way is our liability. Then we have the liquidity buffer for our portfolio companies as well as for GCAP. These are the three kind of pillars on which the which this ratio is based, we are dividing that one by the portfolio one. We want to be at 15%. Right now, we are at 21%.
As the ratio decreases or goes below 15%, we will be able to do meaningful buybacks and investments. If basically this ratio is between 15%-40%, it's a more kind of tactical buybacks and tactical investments, what we are doing. That's territory where we are okay now, closer to 15% at around 20% level. Around two years ago, we were at 40%. The big de-leveraging we have done. Another important kind of measurement into this, our investment activity is the discount to NAV of Georgia Capital shares.
Right now it's, we cannot do any meaningful investments, not because we are at an NCC ratio of 15+, but also because discount is so wide that the only option we have is buybacks basically. That's what we are looking in a medium to longer term to step up the buybacks. That's another reason of the Standard list, which I will talk later on. This is kind of our aspiration, longer-term aspiration to become a permanent capital vehicle. Meaning that we would recycle, we will not raise the new money from the shareholders. We will recycle our the money which Georgia Capital generates, and hopefully we will get into the permanent, capital return policy territory. Here we have a list of assets where we have a capital light or they are capital light or not.
The capital light or not, which indicates basically whether we have appetite to invest more in our own portfolio companies. Where is capital heavy, our appetite is obviously very low. Where is capital light, our appetite to invest like retail pharmacies, in education, in clinics, it's higher. Now let's talk about the Standard Listing proposition, why we are doing it, why we want to do it. First of all, we are not touching the corporate governance. We will adhere to whatever corporate governance standards are under the Premium Listing. Only thing we say that chairman and CEO will stay. We will keep that institution alive. The main reason for us to move to Standard Listing is the class tests.
Due to the class tests, we don't have a flexibility to execute on our strategy of divestment and the meaning to buybacks, and this prevents us from making these moves. For instance, because of the class tests, we need to test four different things, whether they are large enough, whether they're more than 25%, or not when we are transacting. For instance, if the value of asset is more than 25% of our market cap, we need shareholder approval. If the profit of that company when we are buying or selling is more than 25% of our net profit, we need the shareholder approval. Same on asset size and equity size.
Basically, there is, with this, hefty discount of 70%, even 5% NAV contributor companies have to go through this process. We may end up only working for our advisors to come up with the, you know, proposals to the shareholders to bring for the approvals when we start executing this strategy. It makes no sense for us to execute the strategy under the Premium Listing. It's almost unexecutable. It's very difficult to execute. It's obviously costly because each time we come to you, we are paying one point...
$1 million-$1.2 million goes to the accountants, legal, and all the checks and all the approvals we need to get from our advisors in terms of the making this transaction to happen. It's very difficult blocking the potential buyers when we have this, you know, walk-away clause in a way. Because of these factors, we think the Standard Listing is the most appropriate, fit for purpose, basically, listing for us to execute on our strategy of deleveraging and basic divesting and bring the meaningful buybacks. I will turn to-- Sorry, here's our timeline. To flag the grassroots, just recently, coming EGM, we have these four milestones. On 17th of February, we have announced the solicitation to Standard Listing. Giorgi, you are better with.
Yes. On March 10th is when you can submit your proxy, proxies. That's the latest date. On 14th of March, there will be a formal general meeting where this, you know, issue will be voted for, and the final results will be announced, which we will announce to our shareholders as well. There is a period of about four weeks for the transition to the Standard Listing. Effective April 13th, we will become the Standard Listing, standard listed company when this is completed. These are the key dates. For the voting purposes, it's March 10th. Please vote before March 10th. Very good. Now we have Nino covering our macro story.
Hello everyone. Let, I will do quick macroeconomic update as usual, and we will cover the trends which we think might be interesting for you. Of course, we will be more than glad to answer your questions during our Q&A session. Let me start with the global growth, which slowed down from 6.2% in 2021 to preliminary 3.4% in 2022.
This 3.4% is below the historic average of 3.8%. Global growth is expected to slow down further in the coming years in 2023 to 2.9%, mainly on the back of one of the fastest rate hike cycles from the leading central banks, as well as ongoing Russia's invasion of Ukraine, which continue to weigh on the global economic activity. On the contrary, we had quite exceptional year in Georgia. Now we had the second consecutive year of double-digit growth with preliminary estimates of 10.1% from 10.5% last year. The key drivers for this growth were mostly from the external side, but domestic factors also contributed positively to the growth.
From the external side, we had surging remittances, like which surged by 86% compared to last year. Export, which is growing 32% compared to last year, and tourism revenues, which recovered quite nicely and exceed 2019 levels by 8%, including 168% recovery in December 2022 compared to 2019. From the domestic side, we have continued credit expansion despite the tight monetary policy and increasing cost of funds in all of the currencies, like in local and foreign currencies. We see credit growth to be quite active, and we see both retail and business lending to be active. We also saw the trends that both local currency and foreign currency lendings are quite active.
In total, loan book increased by 12.1%, excluding exchange rate effect, as of December 2022. Another factor from the domestic side was fiscal policy, which has moderated on the back of their commitment to return fiscal activity to under the fiscal rule bounds. Still, it was positive as current expenditure increased by 9% and capital expenditure by 22% compared to last year on the back of surging fiscal revenues standing at 28%. Overall, the consumer and business sentiment was quite strong in the sectoral level. Like to see the sectoral breakdowns in nominal terms, all of the sectors expanded in 3 quarters, including healthcare sector.
In terms of components, we are quite glad to see that investment component will be contributed positively to the growth, and it will be first year since 2018 when investment component will contribute positively. Like overall in nominal terms, in two years nominal GDP expanded by $20 billion. In dollar terms, it expanded by $9 billion. The strong macro, as well as significant improvement on our external balance sheets were very nicely reflected in Fitch Rating, which revised our outlook from stable to positive just recently. On the next slide, we have the exchange rate dynamic. So, next slide, please. Yes. Thank you.
The exchange rate appreciated significantly by 15% against the U.S. dollar and real effective exchange rate also appreciated by 15% despite the strong dollar, which was as you know, last year, dollar appreciated against its peer counter currencies. The appreciation of U.S. dollar was mainly driven by hawkish Fed, as well as lower appetite for the risky assets and relative performance of U.S. Economy. Despite the strong dollar, GEL appreciated on the back of surging flows partially related to Russia's Russian immigrants. Excluding Russia from our fixed inflows, we saw significant growth in all of our flows, like remittances excluding Russia increased by 19%, including 12% growth from EU and 15% growth from the United States.
Export was also very robust and tourism revenues, which recovered quite nicely. From the domestic factors, we should mention tight monetary policy. National Bank of Georgia was quite quick to start the hike the rate in March 2021. In cumulative terms, it increased the rate by 300 basis points. As you know, this tight monetary policy serves well for a stronger GEL and curbs negative expectations. In addition, we have significant FX liquidity in our banking sector, partially attributable to the surging non-residents deposits in foreign currency. This FX liquidity is also quite helpful for FX lending, which is supporting for the local currency. On the next slide, we are showing current accounts, which, you know, posted like the significant period.
In the third quarter, we had a historic high surplus at 6% of gross domestic product. Despite the fact that our imports surged significantly on the back of global inflation, as well as the significant domestic economic activity, the surging imports was quite nicely covered by remittances and exports of goods and services. As a result, we had 6% of GDP surplus in third quarter, and we expect 2022 number, the full year number to be historic low. Which is reflects the surging FX flows and improving external balance sheets. We have here the chart to show the FX flows excluding Russia, as there are lots of questions related to the Russian migrants.
In this chart you can see that FX inflows like tourism revenues, export and remittances increased by 48% if we exclude Russian flows, which means that recovery was significant even excluding this war-related flows. On the next slide, I want to tell you about monetary policy and inflation. As you know, inflation is kind of a headache for the policymakers around the globe. Headline inflation reached peak 13.9% in January 2022, and we saw, like, gradual deceleration of inflation throughout the year. The core inflation is the resistance, so it printed at 7.7% as of January. The drivers for the inflation was quite similar what you are observing in another countries, like the food and energy prices.
This later this year, we saw the prices destabilize and which positively affected inflation in Georgia and in other countries. Despite the GEL strengthening, import deflation was the most significant driver for our headline number. National Bank of Georgia appropriately tightened the monetary policy, again increased the rate by 300 basis points, and NBG is committed to maintain tight monetary policy unless they see inflation is firmly coming down. Rather than rate hike, they used some macroprudential tools to slow down the credit activity. As a result, credit growth, excluding the exchange rate effect declined from 18.6% peak in June to 12.1% as of December 2022.
On the other hand, these favorable trends were appropriately used by National Bank of Georgia and to directly gross international reserves increased to historic high GEL 4.9 billion as of December 2022. For the last slide, we have, we want to share several words about the fiscal policy. As I have mentioned, fiscal policy stance moderated on the back of their commitment to return the fiscal deficit below 3%. The overall, they had 28% growth in fiscal revenues, but expenditure side was quite moderated. As a result, fiscal deficits in nominal terms fell by 53% compared to last year. If you look at the operating balance, it improved from -GEL 227 million- +GEL 2.6 billion surplus in 2022.
Two year of double-digit growth, as well as significant appreciation was quite supportive for for our public debt, which reduced slightly below to the pre-pandemic level. The trend is quite favorable, and they are committed to improve this trend. Especially they want to improve the structure. It's currently 75% of the debt is denominated in foreign currency. Structure is favorable with most of the debt coming from the multilateral agreements with concessional debt. In terms of interest rate, more than half of the debt is denominated in fixed rate, which is quite favorable, especially in this time when we're seeing one of the fastest rate hike cycles in our recent history. Just to sum up, like we have second year of double-digit growth.
Inflation is still high, we see the deceleration trend. We have a significant break in our current account with third quarter current accounts posted surplus 6% of gross domestic product. Monetary policy is appropriately tightened, and we see moderation in our fiscal policy. They significantly reduced the deficit, and they are committed to reduce the deficit further below 3%. Lastly, we see the depth level to return to the pre-pandemic level. This was quick update from my side. Now I will hand the presentation over to Giorgi to present Q4 and full year performance. Would be glad to answer your questions too, if any, during our Q&A session. Thank you.
Thank you, Nino, very much. Hello, everyone. I will now walk you through our fourth quarter performance. We'll start with the aggregated portfolio company results. We'll talk about our leverage ratio, the NCC, and then we will go through some of the valuations that we have done at the end of the fourth quarter. Starting with the aggregated performances, and as a background here, you know, all our portfolio companies continue to have a strong performance in the fourth quarter, with the exception of the healthcare businesses, where, as we have previously highlighted, the transition from, you know, COVID services to non-COVID services has continued. This has impacted our hospitals, clinics, and the diagnostics businesses.
However, we are now seeing the trends where the return to the normal continues, you know, the numbers that we saw in 2021, we should be looking similar numbers in 2023 as the 2023 goes. Now, about overall numbers. In the fourth quarter, the aggregated revenue growth of our portfolio companies was 2%. When we strip out the healthcare businesses, the three that I mentioned, this growth is actually in fact, 8%. On a full year basis, the growth was 7.6%, and when we strip out again here, the growth is double digit, 13 point. This growth actually came from all businesses across investment stage, large portfolio companies, and the other businesses.
In terms of the bottom line, this meant that on a quarterly basis in the fourth quarter, while the EBITDA was flat on an overall level, when we strip out the businesses that were impacted with the COVID transition, in fact, the growth was very strong at 22.2% in the fourth quarter. For the full year, while we had about 5% decrease in the full year EBITDA in 2022, when we strip out the, we in fact had an increase of almost 12%. In terms of the operating cash, you know, the EBITDA performance, it also had an impact on the operating cash generation.
However, when we look at the ending balance of aggregated cash of all portfolio companies, they still continue to have a very strong balance of more than GEL 300 million. When we look at versus 2021, for example, it's down 2%. However, in dollar terms, given that the exchange rate for the reasons being highlighted has been very strong. In dollar terms, it's about 20% higher than where it was in 2021. With that, let's talk a little bit about our NAV per share development. In the fourth quarter, given the strong, you know, results, including the strong performance of the Bank of Georgia share price, we had a 15%, 14.9% NAV per share growth in lari terms.
We reached a record high NAV per share in excess of 65 GEL. In pound terms, for the first time ever, our NAV per share was above GBP 20, and it was 20.12 in fact at the end of December. When we do the attribution analysis, about 10% came from listed and observable investments, which is largely Bank of Georgia share price rally during the fourth quarter. Private portfolio companies, you know, delivered about 2% overall growth, where because of the operating results, the numbers that we looked at, there was a decrease of about 4%. However, given the strong cash generation, the net, you know, debt decreases and also multiple expansions and the strong outlook, the growth there was about 7%.
We continued to do the buybacks mostly for the management trust. That was about 0.8%. Growth in NAV per share, OpEx was usual, 0.4%. Because of the strong currency, as you know, we have a net debt in dollar terms. We continued to have gains in that terms, and therefore, NAV per share increased by 1.3% because of that. Overall, here the message is that our NAV per share grew by 15% in the fourth quarter. For the full year, the growth was 4%, and that's on the back of, you know, in the first quarter, as the Russia-Ukraine war started, as the interest rates went up, you recall we were proactive in decreasing the valuations of our private portfolio companies.
Back then, the drop in NAV per share was about 16%. In the second half of the year, with the fourth quarter performance, our NAV per share actually grew by 4% notwithstanding the decrease in the first quarter. In terms of the deleveraging, strong cash flow generation continued in the fourth quarter. We collected dividends from our portfolio companies, including Bank of Georgia, Renewable Energy, Dani. That meant that our cash and liquid funds balance increased by 14%, to, you know, more than $152 million. We also, in the fourth quarter, you know, the Renewable Energy business issued $80 million worth of green bonds on the local market, which they fully used to finance the debt they had from us. Loans issued balance decreased respectively.
In the fourth quarter, we completed the modified Dutch auction, whereby we bought back around $30 million worth of Georgia Capital bonds at $0.88 per dollar. We canceled $65 million worth of debt in the fourth quarter, and our gross debt is now down to $300 million. In aggregate, this meant that the net debt and the guarantees issued stood at, you know, $148 million at the end of December. Not much change in terms of the planned investments. They continue to be similar as what they were before. Because of the growth in the portfolio value, the one that we saw in because of Bank of Georgia and the private portfolio companies, our NCC ratio decreased substantially from over 24% close to 21%.
When we're counting the rally in Bank of Georgia's share price post the end of last year, you know, we come down close to, you know, inside 20% as of now in terms of the NCC. As we look back, you know, at the peak time, which was towards the, you know, end of December 2019, we had about 40% NCC ratio. Since then, we have managed to half the ratio, and we have now come down to 21%. On an annual basis, the NCC decreased by more than 10% from, you know, close to 22% down to 10%. We are going in the right direction in terms of our target, which is, as you correctly mentioned earlier, 15% over the cycle for this ratio.
Now, a little bit about the valuations. This is the breakdown of our portfolio. Our portfolio continued to be diversified across different businesses. Actually, at the end of December, about 31% was across listed and observable businesses, 45% in large portfolio companies, 16% in investment stage, the rest, as it has always been for the last few quarters, 8% in the other assets. Our largest portfolio investment at the end of December was Bank of Georgia. Given its share price rally, it was 26% of our overall portfolio. While the retail pharmacy was around 23% and was the second largest investment, we completed the valuations at the end of the year. We engaged Kroll again, who did the independent valuations of all large and investment-stage portfolio businesses.
They were reviewed as part of and audited as part of the fourth quarter review by our independent accountants as well. The valuations that you see on this slide are the final outcomes for the fourth quarter. We had, you know, minor movements in the multiples, mostly where we saw that the run rate EBITDA, for example, in hospitals and the healthcare businesses, were not reflected in the 2022 numbers. The multiples there are a little bit higher than what they were before, but elsewhere across the board, they remained, you know, similar. The portfolio value grew to almost GEL 3.2 billion, where about GEL 232 million came from the Bank of Georgia valuations.
About GEL 74 million came from large portfolio companies. We'll look at this later. It's mostly retail pharmacy and the P&C insurance business. GEL 47 million from the investment-stage portfolio companies, which are primarily in the education and the renewable energy space. The other portfolio companies has a minor decrease of GEL 13 million. Over the next few slides, I will walk through the performances of the large portfolio companies only in the interest of time for the questions. I will not be discussing the other businesses. If you have any questions, we can follow up later. In the retail pharmacy business, we, you know, the business continues to recalibrate the prices given the strong lari.
You know, in 2020, lari had a strong appreciation, which has impacted, you know, on a beneficial side, the business was paying less to buy the drugs that they sell, and at the same time, the prices in lari also were lower. However, the margin remained the same. They continue to grow, especially, you know, across the board in Georgia, but also outside of Georgia. We finished the year with 10 pharmacies in Armenia. In addition, we had also, you know, franchise stores in Armenia as well. We have 2 franchise stores now in Azerbaijan, which are, you know, our franchise, brand Body Shop that we opened in Armenia. Sorry, in Azerbaijan.
The business, you know, revenue performance was down by 3% in lari terms. The EBITDA was down by 9%. On a full year basis, in terms of the valuation, the enterprise value was largely similar to where it was at the end of 2021, although during the quarter it increased by GEL 34 million. Similarly, the equity value, that's attributable to GCAP was up by GEL 47 million. On a full year basis, the growth was largely, you know, similar valuation to what we had in 2021. What happened was the fourth quarter was very strong in terms of the cash generation.
The net debt balance in the fourth quarter was in fact down by 8% because we had a very strong operating cash generation in this business. The multiple was slightly higher to 9.1x. You know, historically, we have always valued this business, or it has always been valued at around 9x EBITDA multiple. In terms of the hospitals, you know, despite of the COVID transition, we also had, you know, two other events that I would highlight, which explains the 15% drop in the revenues. One was the renovation of the Iashvili Pediatric Hospital, where this hospital was closed since the end of October, you know, through now, for the renovations.
That has impacted, you know, like-to-like revenues, plus the traumatology hospital, which we sold earlier in the year. The revenues are counted in the fourth quarter and that impacts the comparison. When we strip out these two revenues and make it, you know, like-for-like comparison, the drop is actually much smaller. It's about 7.7%. When we look at the EBITDA, instead of the 17% drop, it's actually up by 3.5%. As I mentioned earlier, we continue to see this business starting to go, you know, back to where it was in 2021. We have this new DRG system that was introduced in the hospitals business.
You know, we are seeing the impact of DRG as we go and, you know, looking at the ways the DRG is impacting or in some cases benefiting our business. In terms of the valuations, enterprise value was largely flat, no material change. Net debt was, you know, slightly impacted because the cash flow generation was not as similar in the fourth quarter than it was before. On a, you know, on an equity value basis, the valuation was similar to where it was at the end of the third quarter. In the insurance business, we had a strong performance in the P&C insurance, and the medical insurance business also had a good performance.
It was the first time that the P&C insurance business delivered record high net income in excess of GEL 21 million. That was on the back of very, you know, strong and sustainable combined ratio inside 80%, both in the fourth quarter and in the full year. The growth came in from, you know, diversified revenue sources across the year, and the business paid us overall about GEL 15 million in 2022. The valuation-wise, because of this strong performance, the value of our insurance business increased during the quarter, you know, by about GEL 16 million to close to GEL 230 million, and the valuation multiple remained the same.
A little bit about our liquidity and dividend income and then I'll hand it over back to Irakli for the wrap-up. In the terms of the liquidity, we have a very strong liquidity. At the end of the year, we had more than $100 million, of which 90% is in dollar terms. In fact, while the liquidity was lower than, let's say, at the end of June, that's because we canceled $65 million worth of, you know, debt. We came from 365 down to $300 million in the gross debt, and our, you know, cash balance liquidity was still $152 million.
In terms of the dividend income and what we collected in 2022 and we expect going forward, in 2022 we collected GEL 94 million dividends. Here you can see the breakdown across the different portfolio companies. This was, you know, another-- the second year in a row when we continued to have a higher dividends than the year before. Here you see on this chart, you know, how the dividend inflows compared to pre-COVID times. Back then we had GEL 73 million, now we looked at GEL 94 million.
When we look at the next year, we project around 120- 130 regular dividends that we expect from portfolio companies, and about GEL 30 million dividends, which is what we call buyback dividends for our portion of the Bank of Georgia buybacks, where, you know, they announced about $55 million worth of buybacks, and we look at 20% of that at GEL 30 million. In that case, when we sum these two, we expect between GEL 150 million and GEL 160 million dividends in 2023.
When we look at the lower end of the range, this brings estimated CAGR of around 20% since 2019, notwithstanding the fact that we sold the water utility business, which used to pay us the dividends back in 2019. The message here is that even though the water utility is not part of the portfolio or the dividend inflows here, the dividend income still has continued to grow quite substantially. With that, over to you, Irakli.
Thanks, Giorgi. Impressive numbers, especially on the dividend inflows. What we have is, just to recap, NAV per share is record high. In pound terms, it's set GBP 22, close to GBP 22 now. The growth was in Q4 nearly 15% growth. We have bought back. We continue to buy back our debt, our bonds, and this is in line with our strategy of deleveraging. Ideally, probably, GCAP should not have any debt on the holdco level to make sure that the capital flow from our portfolio company to shareholders is seamless. That's what we will be working in next two to three years to basically, bring it down to a closer to zero.
NCC ratio is coming down, which means that we are approaching the meaningful buyback, meaningful investment territory. With this discount, there is no investment. There is kind of only one option. Regular dividends are growing and will continue to grow. The inflows, the Bank of Georgia is doing the outstanding job. Its management is doing outstanding job growing the earnings and showing extraordinary good performance. We are very happy with Bank of Georgia holding and performance. In terms of the outlook, I mean, for us, important is to shift to the Standard Listing to execute on our strategy of divestments and buybacks, and that is kind of a significant portion for us to enable us to deliver on the promise. Economy, as you see, is growing fast.
You know, as Nino showed you, this, the high growth what we have. I think the important part is structural change what the economy is undergoing. Labor market is shifting. Current account deficit is going closer to zero. In run rate, maybe we are even at the positive territory of current account deficit. Current account is not in a. It's balanced, basically. While the FDI is record high at the same time, and that combination gives you that lari appreciation pressures. Where the lari is a fair price to be, who knows? You know, if the, if Georgia continues to deliver on this corridor on energy exports, on bringing in the labor force, exporting the IT services, shifting.
exporting the education as we are starting to shift in medical education that we are exporting because the people from India would go to the Russia and Ukraine to study medical in medical universities. Now they are coming to us. Tons of opportunity what Georgia is tapping, our shift of the economy is changing. Our structure of the economy is changing. Potential growth rate, which IMF estimated was 5%, God knows where it is. Maybe it's 8, maybe it's 10, I don't know, in this new environment. We are very bullish about the Georgian economy, and investments continue. With this one, I will wrap up and move to the Q&A session. If we have questions, please raise your hand. We have some number of questions on the in our chat. Probably maybe there are some questions, live questions. Shako.
Well, thanks, Irakli, for the presentation. Before we start the Q&A, just a quick reminder. If you have any questions, please press the raise hand button, or we also have the Q&A, and you can type them there. We have a couple of questions from Priyesh. Maybe I will read them out. The first one is, would you seek to adjust the capital structure of non-capital light businesses, such as selling the real estate of the hospitals business?
We have considered many times. It's little bit difficult in Georgia to do that. You know, if it's doable, why not? We would. So far, we could not find the appropriate structure which would allow in Georgia to do this sale-leaseback of the hospitals basically.
Thanks. The next question is, can you elaborate on the effect of the Diagnosis-Related Group financing system is expected to have on the P&L of the hospitals business?
Yeah. Now, DRG is pretty new. We would expect some tweaks and changes. We are in close to talks with the Ministry of Health. Overall, what we have like for like, we have a growth of the revenue for our hospitals. We think that some of the hospitals will need a less growth, some of them need more growth. Basically, overall, as we speak, we are collecting more revenue on consolidated basis than we would have collected under the old system. That's where we are. DRG has one very big leap for us. It has a inflation built in with that.
In old system, inflation was not built into that, into this pricing model, which basically with the high inflation, we had a huge cost growth while the revenue, the prices of the services were not increasing, and we were getting the margins with there. Now with DRG system, we see that the inflation will be affected when-- will be reflected in the pricing. We are happy with the new system, and we are working to make it even better with the Ministry of Health.
Thanks. The next question is, how are you minimizing the impact of the external reference pricing on pharmacies? Is there a risk prices could come down further?
Actually the government introduced on the drugs which they finance, which is very limited. It's very small number. It won't be impacted on a consolidated basis. It will have a very limited impact, if any. We still need to see it, but what we are calculating, it's not gonna be a big shift, especially this is small portfolio of our drugs, what we have in our portfolio. That's kinda impact will be minimal.
Thanks, Irakli. Another question from Priyesh. Given the sizable market share in insurance and pharmacy, what are the threats of competition?
In the insurance and pharmacies, I mean, there's a competition there. We are large players and there are other players, but we don't see the new competition coming in because structure of the market is pretty consolidated. We don't see a threat of new competition emerging or some, I don't know, some irrational competition. It's business as usual, I would say.
Thanks. The next one is from Robert Godfrey. Over the short to medium term, Georgia seems to be very undercapitalized. Over the long term, investment and competition are likely to eventually push down to ROE in most industries. To what extent does potential for future competition and the possibility or lack of barriers to entry for potential competitors affect your pre-preference and strategy for investing in different industries?
Basically now our appetite now in investing in new industries is very limited because of the discount that we have. In general, wherever we are present, you see that we have a large market shares. We have a top of the mind brands. Actually, we need to show kind of our strengths of our franchises and our brands, what we have. If somebody wants to come into the market and start competition with us, it will be, you know, cheaper or better for them to buy. You know, that's where kind of where we are in general. We have a top class management teams. We have a high quality assets, very high quality assets. In the private world, these kind of assets, people are dreaming of.
It's not very often you get a 25% of the hospital bed of the country. It's not that often you get a 35% market share of the insurance company. It's not that often you're gonna get a 30% plus of the pharmacy. These are the high quality, well-run, Western-governed, with proper checks and balances, risk management, proper decision-making. These are the-- You buy a big market share which actually bad thing about the small market is that it's too small. Good thing about the small market, if you wherever you have a strong market share, you are pretty protected.
That's kind of, our philosophy being always, to take, closer to 1/3 market share. Build a impeccable franchise with a great management team, and that's your barriers to entry. You know, we cannot have better barriers to entry than what we have.
Thanks, Irakli. Question from Priyesh. Can you explain why there is a material difference in the margins of the P&C and medical insurance businesses? Is this COVID-related?
That is COVID-related, of course, but fundamentally, they are two very different business lines. There will be always the medical insurance is a very, you know, it's more administrative business rather than insurance, to be honest. Basically, you administer and you take the action, where the P&C insurance is a real insurance basically.
Thank you. The next comment is from Jonathan Perry. Not a question, but as a long-term shareholder, I just wanted to say congratulations to the management team. Clearly not everything has gone as well as might be hoped, and there are still ongoing challenges. I think over time, management have done an excellent job, and eventually their market will wake up to this. Either that or we got to the point through buybacks where the shareholder base is as positive on the company as I am. The price rises on no willing sellers.
Thank you, Jonathan. I mean, we are big believers that in the end, the performance gonna get us through, and we just keep delivering what we are happy. You know, I mean, happy is a very loud word, but we are pleased that our NAV per share CAG growth last five years is shy of 20%, it's around 18%. Obviously are targeting higher, 25% plus. That's our target. Hopefully we'll move to that target. I appreciate it.
Thanks. The next question is from Milos. Do you have any other low ROIC assets within your large businesses, hospitals in particular, which you consider divesting?
I mean, I don't want to name a divestment what we consider divestment, but basically, usually we like high ROIC businesses. We are not very, you know, the low, low ROIC businesses. I don't want to go into the details of divesting what we do or divesting or not, but basically, our strategy is very clear. We believe that we can sell some of the businesses way above the NAV. NAV is not a question for us, and we hope that this discount stays where it is, so we can buy cheaper our shares.
The next question is from Steven Gorelik. Thank you for the presentation. It seems that the calculations take into account capital commitments over the next two to three years. Does it take into account expected capital inflows from the dividends and non-recurring events, such as the sale of the remaining 20% of the oil field business?
No, it doesn't take. We need to be conservative, so we don't take the inflows, but it also doesn't take into account in case we make some strategic decision on the buybacks or investments. It also doesn't take, so it's both ways. It's not one way.
Thanks. Another question from Steven. The trend in net operating cash flows has been negative over the last two years. What is the outlook for this metric over the next couple of years, and what are the biggest risks to this outlook?
I think the cash flow's been negative because from the, when we are coming out from the COVID, the base was low working capital. Actually, during the COVID time, you saw a lot of operating cash accumulation because the working capital needs was coming down and sales were not strong. As sales are strong, you know, it's a good thing to have to this kind of operating cash flow. We are funding more of the working capital, and we are growing the revenue. That's the main reason basically. Outlook, you know, if we continue to grow our revenue, operating cash flow will not be as strong as the revenue growth because of the funding the working capital. If we stop growing, then it will be positive operating cash flow, which I don't think is a good idea.
Thanks. The next question from Taran Patel. Is there a change in the view in regards to the property development business?
No. Our view is very much the similar what we had before. We have this, we are developing, we're gonna develop, but it's not a scalable business for us. Eventually we'll see it fall. At this moment we are mainly delivering on these results.
The next question is from Jonathan Perry. Can you give us some clarity on the timetable for the move to the Standard Listing?
Yeah. Basically we will, what Georgi was talking about, we have called the EGM, before 10th of March. You need to submit your vote, and on 14th of March we'll know the results of the EGM. We are.
April.
April thirteenth we are Standard Listing, basically.
Thanks. Another question from Steven Gorelick. Current OPEX of approximately GEL 40 million as a percentage of NAV seems to be around 1.4% versus the goal of 0.75%. Aside from the proposed move to the Standard Listing, what other cost saving measures are you envisioning?
I mean, along the standard, we're growing the NAV is also an option, not only the cost savings, but basically that's our target growth. We hope we're gonna get this done.
Thanks. Next question from Jonathan Perry. once you have completed the move for a Standard Listing, do you have any projected timescales for a potential acquisition?
I mean, basically No, we don't. It's more of like a divestment-driven exercise at this stage, but also obviously it's for acquisition, very well, including the buybacks.
Thanks. The next question from Milos. Can you comment on the progress in ramping up sales in the pharmacies and franchise stores in Armenia and Azerbaijan? How this compare with average sales per store in Georgia.
I mean, we are increasing the footprint right now, but right now for Armenia we have around 20 stores, if I'm not mistaking. And basically our average sales is around 40% more than in Georgia. However, it may be unfair because we are taking the best locations in Armenia in the beginning, so basically as we expand the footprint, it may not be the similar similar result in terms of the sale per per store. And what was the another question, Charles?
Sorry.
Azerbaijan is similar, you know. Basically Azerbaijan is actually even more. Azerbaijan is 2.5 times more we sell Azerbaijan than we sell in Georgia because its size, it's more expensive, rent is more expensive, product is more expensive, margin is greater. It's basically. In Azerbaijan it is sustainable. We have a way bigger sales per store than in Georgia, basically. In Armenia, probably not. It could be. Because basically in Armenia, our, what we call the Boots-type stores, what we have in Georgia, is in Armenia is not that common. Competition is limited. We are attracting a lot of foot traffic because of this innovative format what we have.
Thanks, Irakli. The next question is from Alex Holroyd-Jones. Why there is such a big gap between the intrinsic value and the market value, how to make this gap smaller?
I mean, I think that the gap, why it's there is, for me, it's difficult to comment. I guess the market in one voice can comment on that better, but or they are commenting. What we are trying to do to execute on the just divestments and the large buybacks, and hopefully that will take-- Deleveraging, first of all, the Georgia Capital, which we see, and providing regular capital returns in longer term, and that would be, hopefully would decrease the discount.
Thanks. The next question is from Paul Sinnott. Is there any plan to divest the stake in BGEO?
No. BGEO is basically trades at 4x PE. It's laughable. It's basically a very high quality asset, and we don't plan to launch.
Thanks, Irakli. The next question, the final one for now is from Taras Gado. Is there any plan to resume any buybacks before the NCC ratio, which is 15%?
As I say, we, in our, in our guidebook, basically, we are, we would be willing to engage in tactical buybacks. Because the refinancing of our bond is approaching, it's maturing in the next 12 months, we are more geared towards that. As we take care of the refinancing, you should expect tactical buybacks or smaller buybacks to come in. We are basically, our Georgian team are working very hard to issue the new bond way smaller size. Probably will end up issuing at local market because the small bond size of $150 million-$200 million is too small for the international, for international market.
Thank you. I think we do not have any more standing.
Do you wanna remind how they can ask live questions?
Yes. We have the Raise Hand button. You can press that and you can also type your questions in the Q&A panel.
Yeah, Raise Hand button, right?
Yes.
It seems like there are no further questions. Thanks for attending our call. Please stay tuned. We'll give you an update on the results of the AGM as well. So far we've been meeting shareholders and we saw the advisory groups like Glass Lewis, who've been positive on this move. The Standard Listing fits our purpose that we execute on our strategy basically. Thanks again, and hopefully to see you soon.