Recording in progress. Q2 and first half. Then Nino, our economist, well, chief economist, will talk about macro update. Very strong macro we have. Then Giorgi, our CFO, will talk about the portfolio results and valuations, liquidity and dividend outlook. And then I will do a wrap-up, which will follow by the Q&A. And we'll do a Q&A section, session in the end. So let me start with the highlights. We have, in Q2 NAV, we have, our NAV is down by 12.8% in Q2. This is due to the multiple changes we had it. Mostly, we increased the cost of equity. However, we had a very strong performance of our portfolio companies operating-wise.
We had an EBITDA increased by 17.5%, revenue increased by 7.3%, and our operating cash flow of our portfolio companies more than doubled in first half. So very strong operating performance. Unfortunately, we had to mark down our NAV due to the cost of equity increase in view of the political volatility in Georgia. We also, because we have a very strong liquidity at GCAP level, we increased our buyback program by $50 million, and now total recently, which what we did, is stands at $40 million. And I'll talk about this later on in greater details our plans to achieve our $110 million buyback program.
As a result of this increase, the buybacks, we have, in total, we bought back 1.3 million shares in with recent buybacks. But total buybacks, we did more than $100 million, which represents more than 19% of the share capital issued. So we have a very strong track record of buybacks. Let's move to the next slide. Now, let's talk about the NAV developments in greater detail. So, basically, with NAV per share stood at GEL 9 in the beginning of Q2. So it decreased by 7.1% due to the Bank of Georgia share price decline. That was the main effect of the listed and observable portfolio decrease in value.
Operating performance of our portfolio companies contributed positively, plus 2.3%. However, due to the markdown of the, due to increase of the cost of equity, we applied to our valuations, multiple change, resulted into the 7.5% decline in NAV. Another positive contribution was the buyback, plus, one point three percent, which contributed positively. Negative was mainly the, FX, lari decline, which contributed into the negative 1.5%. So net, net, our NAV declined more than, less than, 13%, 12.8%.
However, we are very happy with the performance of our portfolio companies, which had a very strong operating performance, as well as we have a very strong macro, which Nino will talk about this later on. Let's move to the next slide. So here is our NAV development over the life of the Georgia Capital. It went from 44 GEL end of December 2018 to 178.55 at the peak we were at 90 GEL per share. So let's talk about the buyback program, which we extended to $40 million, basically.
So we in May this year, when we announced $110 million buyback, actually, it was GEL 300 million buyback program till the end of 2026. We announced $25 million, the first tranche. So within that program, we are increasing by $50 million. So now we have a $40 million ongoing buyback program, of which $16.6 million has been already repurchased and canceled. Basically, that's 1.3 million shares, and now we have a remaining of $23.4 million buyback program. And this is due to the fact that we are standing with a strong liquidity at GCAP level, as well as operating companies are printing the cash.
So we are very confident with that we can reach and maybe hopefully do more capital return than GEL 300 million, what we have earmarked till to end of 2026. One thing which I would like to flag, when we announced in May the GEL 300 million buyback program, we said only buybacks, but however, we may introduce the dividends in the future. So I would include future dividends as well in the GEL 300 million program, which is buyback and dividends, and it does depend on the discount level where whether the dividends will be introduced. Okay, so this is over the life of Georgia Capital.
We, the $100 million buyback that we have done, and our number of shares, as you see, when we're in GCAP was demerged 39.4 million shares we had. In the peak, we had nearly GEL 48 million shares. So as you remember, we did buy buy with the shares, the remaining minority, so for in Georgia Healthcare Group. Since then, we've been buying back shares pretty aggressively. We came down to 41.4 million shares. So hopefully we're gonna go back into the 39.4 million shares soon with the buyback program which we have in place. In terms of free cash flow generation, that's kind of a main reason why we are increasing our buyback program.
It's last year, we did $48 billion of free cash flow, compared to the previous years, which was pretty low free cash flows, what we had in 2022 was only $11 million, and in 2018, we had, like, $17 million , free cash flow generation. We expect in 2024, at least the same as 2023 free cash flow, maybe a little bit more than in 2023. So fairly good free cash flow generation we are generating. Now let's talk about the aggregate numbers for our portfolio companies. So in Q2, the revenue increased by 6%.
In first half, revenue increase was +7.3% to more than GEL 1 billion, nearly GEL 1.1 billion. So strong performance across the board from large portfolio companies to other portfolio companies and the investment stage portfolio companies. So we had a strong performance in revenue across the board. In terms of the EBITDA, we had a 17.7% increase in Q2 and 17.5% increase in first half. It was pretty strong growth underpinning the strong macro, as well as our trading performance in July was also very strong of our portfolio companies.
So we expect the second half to be as strong as the first half, maybe more in terms of the EBITDA growth. So the hopefully the macro will continue to be as strong as it is now. In terms of the operating cash flow, you see a pretty strong generation of cash. You see nearly 4x increase in Q2. In first half, increased by 2x to GEL 111 million, as well as the strong cash flow balances of our portfolio companies. So on the deleveraging, NCC has increased at the end of the first half to nearly 19%. However, we received the dividends after the first half, so this number has been significantly decreased, and hence it was decreased.
As of close of August, we have a 15.5% NCC, and hence the why we have are stepping up the buyback by $15 million. So if we move to the next slide, yeah, let, I will let Nino to talk about our strong macro.
Thank you, Irakli. Hello, everyone. So as usual, I will give you a brief macroeconomic update about our economy. In the first half, real GDP growth according to the preliminary estimates, real GDP growth came at 9%, so which is higher compared to the first half of 2023, when the real growth came at 8.2% and higher than the 2023 numbers. A nominal GDP in U.S. dollar, as well as GDP per capita in U.S. dollar, is expected to more than double this year compared to 2020 levels. According to the latest projection done by the International Monetary Fund, Georgia is expected to be one of the fastest growing economy in the short and medium term in our region.
So alongside with the high growth numbers, we see, inflation to be low. So inflation is below target since April 2023. And this high growth numbers and, low inflation together is, kind of suggesting increasing level of potential for our economy. In the next slide, we are showing, some factors driving the high economic growth. Like, one of them is the, the loan growth, which is, quite strong, and according to the June, it came out at 17.8%, excluding exchange rate impact. And both household and legal entities contributed positively to this growth, and we see, demand was high for GEL and USD, loans also.
So, another factors which drive the consumption, because we see consumption to be the major contributor to the GDP growth, like last year, so since the second half of the last year, we see domestic factors to be the key driver for the real GDP growth, while before in 2022 and the first half of 2023, mostly external demand drove the high numbers. Another important factor for the domestic consumption is fiscal spending. So government expenditure is increased compared to last year. And on the other hand, they saw some tax revenue collections to be significantly higher compared to their projected levels. And if you look at the labor market, so there is another very significant driver for the domestic consumption.
So despite the fact that the wage growth are flattening during the last quarters, we saw we see wage growth to be at double digits in both nominal and real terms, supporting domestic consumption. And number of employees are at historic high level, and unemployment is historic low level. A strong labor market, strong credit activity, and fiscal support supporting domestic consumption and drive the economic growth. As for the external sector, in the next slide, we are showing some developments in our external sector. We see external demands to be weak, and like the FDI inflows, which we are usually showing, like remittances, tourism revenues, and export of goods.
If you sum up all together, in the first half, we received $ 6.4 billion, compared to $ 7.2 billion in the first half of last year. So mainly the export of goods declined a bit, while money transfers declined significantly on the back of significant decline from Russia, and which was expected because the last year, a surge in remittances from Russia was mostly attributable to the capital reallocation. If we exclude Russia in our remittances, we see growth at 6.8%, mainly driven by US from United States, which improve from where remittances increased by 28% and increase from UK and EU from where remittances increased by 10%.
So despite the like the weak external demand, we see current account deficits to improve on the back of emerging new FDI inflow sources, like the... If you look at our export of services, we see significant diversification there. Like, before Russia's invasion of Ukraine, tourism revenues were the 70% of our service export. We see now, like, the IT sector and the transport services too starting to contribute positively. And in terms of tourism revenues, so, there is in the second quarter, we had more than 8% growth in the tourism revenues, and mostly, we see significant surge from the Middle East countries, while tourism revenues from Russia is declining.
Overall, the Russia share in our remittance inflows is returning to the prewar and pre-COVID level, which is resilient for our economy. On the next slide, we are showing some sovereign spread and exchange rate development. After this adoption and, or adoption of a so-called Russia Law and political uncertainty, we saw sovereign spread to surge significantly by 100 basis points, and it remained at an elevated level compared to the previous period. This is, of course, suggesting the increased uncertainty related to the domestic politics and upcoming elections, and this widening spread is also reflected in our work.
As for the exchange rate, so exchange rate depreciated sharply during this political uncertainty, and National Bank of Georgia intervened in the market, selling more than $200 million to curb the negative expectations. And after a short period of market turmoil, we saw exchange rate stabilizing and returning to the level suggested by the current FDI inflows, local FX liquidity, and dollar position in the international market. The overall macroeconomic framework, in the next slide, we are showing the monetary policy and some indicators of monetary policy and fiscal policy. National Bank of Georgia started to exit from tightened monetary policy with cumulative 300 basis point cuts, so they did 150 basis point cuts this year on the back of low inflation and lower pressure on inflation.
We expect monetary policy rate to remain at close to the level we see now. National Bank of Georgia intervened in the market during the turmoil, and so the reserve level remains at appropriately $ 4.6 billion. As for the fiscal policy, the fiscal policy is within the fiscal rule bounds, with less than 3% fiscal deficit and with debt level below the pre-COVID levels. We see significant surge in operating balance, mainly driven by more than expected tax collection.
Like, if you compare the first half planned versus actual performance, we can see that tax revenues, the actual collected tax revenues, was more than GEL 500 million more compared to the planned level, which caused the operating balance to surge significantly. To sum up, like, our very short macro presentation, GDP remains strong despite the uncertainties, and we expect more than 7% growth this year. Inflation is below the target, and this together low inflation and high GDP growth should suggest higher potential level for our economy. External balance sheet remain more robust, current account deficit narrows, and we see deleveraging in both government and private sector.
The GEL depreciation proved to be temporary, and current US, the GEL, performance is close to the level suggested by the FDI inflows and the loans and deposit performance in our economy, as well as the dollar, international position of US dollar. In general, macroeconomic policy framework remains appropriate, which is also supported by view from the IFIs and some rating agencies. This was very short macro presentation. I will hand over to Georgi to continue presentation, and we will be more than glad to answer your questions during our Q&A session. Thank you.
Thank you, Nino. Hello, everyone. I will quickly walk you through our valuations and the operating results of each individual portfolio company for the second quarter. So starting with the portfolio valuations, we had the independent valuation company Crowe, who did the valuations of all our portfolio companies within the core portfolio segment and the investment portfolio segment. As you can see from the slides, generally, all the multiples came down by about 10% versus what we were reporting in the previous quarter, besides the insurance, where the multiple remained the same. The reason for this decrease in the multiples is driven by the increased discount rates that we have applied within the DCF and the valuation company did the similar thing as well.
The reason behind that is obviously the volatility within the geopolitical situation, driving the yields of the local bonds higher during the quarter. For example, the Georgia sovereign bonds were trading the dollar bonds, which are listed in London. They were trading by roughly around 150 basis points higher during the second quarter, as compared to the beginning of the second quarter. What we're seeing at the moment, though, is if we look at the sovereign yields right now, they are reversing this trend. So the 150 basis points that we saw in the increase in the second quarter is now reversing. And at the moment, in August, we're seeing that the yields in the Georgia sovereign bond have now decreased by 75 basis points or so.
The reason behind that is obviously the volatility within the geopolitical situation, driving the yields of the local bonds higher during the quarter. For example, the Georgia sovereign bonds were trading the dollar bonds, which are listed in London. They were trading by roughly around 150 basis points higher during the second quarter, as compared to the beginning of the second quarter. What we're seeing at the moment, though, is if we look at the sovereign yields right now, they are reversing this trend. So the 150 basis points that we saw in the increase in the second quarter is now reversing. And at the moment, in August, we're seeing that the yields in the Georgia sovereign bond have now decreased by 75 basis points or so.
So as we will do another valuations in the third quarter and at year-end, we'll obviously look again where the sovereign yields are and take that into account when we update the valuations. At the moment, you know, in the second quarter, you see that we, as before, applied Bank of Georgia share price directly from the London Stock Exchange. That was around 40 GBP at the end of the quarter, and that we also, you know, applied the increased WACC within the DCF for the water utility business when we measured the value of the current value of the put option that we have within the water utility. So about 40% continues to be the share of the listed and observable portfolio within our overall portfolio.
36%, it's our large portfolio companies, and about 16% comes from the investment stage. Other portfolio continues to be around 8%. On the next slide, you see the contributors of the valuation, the biggest contributors of the valuation changes within the gross portfolio value. So here we have, you see, Bank of Georgia value decreased by GEL 273 million. Water utility had small GEL 7 million impact. And then across the board, within the private portfolio companies, we had, you know, hospitals, retail, pharmacy driving around GEL 150 million , GEL 130 million in decrease. And we had other portfolio companies with a smaller decrease.
That meant that the overall value of the portfolio went from close to GEL 4 billion to GEL 3.5 billion, so about, roughly about GEL 500 million decrease in the portfolio value. Now, if we go through individually each businesses, which, you know, you can see from here, they are doing extremely well. So if we start with the retail pharmacy business and we look at, you know, revenue growth of 3.5%, EBITDA was down by about 2%. These numbers are, you know, generally strong and positive when we take into account the new regulations that the government announced over last year and a half. So even the these regulations has, you know, kept the prices on certain certain drugs.
This has meant that the business has been able to absorb those decreases in prices and still manage to grow, increase their revenues, and at the same time, find the ways to balance out the decrease in the EBITDA, which we can say was roughly around GEL 8 million on an annualized basis. And find ways to balance out that decrease in the EBITDA. Key thing here is that the management has been able to consistently grow the gross profit margin, which now stands at about 30%. It's 30.5%, and that's up by close to 200 basis points when we look at year-over-year basis. And this trend continues to be, you know, tracking towards the right direction as well.
We have not added much, we haven't had much changes in terms of the pharmacy chains during the quarter. It continues to be the similar number that we had at the end of the last quarter. One thing that happened, which has no material financial impact, but helps a lot with the business efficiency, is we divested the franchise brand that we operated, which the Carter's brand. The key thing that that helps us with is the number of SKUs that we now have to process is decreasing by 25%. So it's easier now for the warehouse to process and for the operations business to process all the requests and deliver the right inventory materials within our pharmacy chains.
We're also seeing that this business continues to have a strong July month, and you know, we expect that in the third quarter, we should be reporting a positive EBITDA change in this business on a year-over-year basis. And in the fourth quarter, we should be reporting also very strong growth in the EBITDA as well. Now, in terms of the valuations, so largely driven by the increase in the WACC, we have a decrease in the enterprise value here, which meant about 7% decrease. Net debt was largely flattish, despite the business paying us about GEL 10 million in dividends, which was negative, obviously, for the net debt.
So overall, the value here is decreased by GEL 75 million, but also, as you can see, the multiple, which was 9.7x before, is now below nine at 8.8x. There is not much change in terms of the net debt to EBITDA. It is around 2.4x as of the end of the quarter. The next business, the next largest portfolio company that we have private in the private businesses is the insurance. This is the first quarter within the insurance business, when we started to consolidate the results of the Ardi medical insurance business that we acquired, with the effective date of first of May. We consolidated here the results for May and June. This medical Ardi insurance business is doing pretty well.
It's exceeding currently the expectations that we had for this business, and it has contributed already to the net income and net income growth in the second quarter. The PNL or the pre-tax income that we consolidated here from ID was GEL 1.8 million for the two months of May and June in the second quarter. We have not revalued the value of ID. As you know, within our methodology, we usually keep the acquired businesses first one year since following the acquisition. So we will come back and do the valuation, and revalue this business likely in the second quarter of the next year. In terms of the operations, we had overall, you know, 46.5% growth in the insurance business.
Both medical insurance and P&C Insurance did very strongly. We saw their top lines growing pretty well. We had, you know, a little bit of growth within the P&C Insurance loss ratio that has resulted in net income remaining largely, largely flat. However, we expect that, you know, third quarter and the P&C Insurance will be strong, absent the, you know, one-off losses that we had last year from the negative, large one-off loss events. In the medical insurance business, we also had a very strong quarter within the Imedi L, so outside of Ardi business. And as you can see here, overall, the net profit or the pre-tax profit for both businesses increased by 29%.
You know, gross premiums written is growing in both businesses pretty strongly. We are looking at, you know, controlling the combined ratio in both businesses, and we think that the outlook for this business remains pretty strong. This is one of the key reasons why the valuation company, the independent valuation company, Crowe, when they did the valuations, as you can see on the next slide, they actually kept the multiples same here in this business, 12.4x, compared to the previous quarter. And the valuation increase was largely driven by the increase in the operating performance. So what we had here is, the WACC increased slightly, but the increase in the operating performance outweighed the increase in the WACC.
So therefore, this business is now valued at close to GEL 400 million , GEL 391 million. We don't expect to carry leverage in this business, but as we acquired ID, we leveraged this business by up to 0.7x net debt to EBITDA at the end of second quarter. We do expect that going forward, the dividends that we will be generating from medical insurance business will be applied towards paying down these debts and bringing it down to zero and carrying no leverage again. But we think it will probably take another year or two as we, you know, as we move forward and consolidate ID. The next business we have is the hospitals business.
So here I will, you know, the numbers that I would use to present will be a little bit adjusted, because you can see here that we have a drop of 2% within the revenues. However, the last year numbers include the Batumi Hospital revenues, which is the hospital that we divested in the fourth quarter. So when we adjust and make it like for like, our revenues actually were up, excluding the Batumi Hospital. And when we look at the EBITDA, instead of the 11% drop, the EBITDA was actually down by only 7%.
We're seeing here that, you know, largely the market and our hospitals have digested, the impact of the regulations, the changes that were made last year, and, we have done all the refurbishments, within our hospitals. Only a very small part remains, and the hospitals are back to normal operations now. As a result, you know, our, occupancy rates are going up. Number of admissions are also trending in the right direction. And we expect that when we report the third quarter results in, within the hospitals business, we should be reporting a double-digit growth, within the EBITDA in the third quarter. And the fourth quarter, we also expect a very strong, operating performance, you know, should be more than 20% growth, in the EBITDA.
So here, the valuation was largely driven by the changes to WACC, which decreased the enterprise value by about 11%. Net debt was up here because of the delays to receive the payments from the government for the healthcare services. That were resolved, actually, subsequent to the end of June, and in July, we received most of the payables that we had from the government. So that evened out in July, but this is not reflected here, as this represents the June numbers. As a result, net debt to EBITDA was slightly up to above 6x, but the implied EV/EBITDA multiple has come down here significantly from close to 14x to 12.5x . This was the last large portfolio company.
Now jumping into the investment stage companies very briefly, starting with the renewable energy, which is an excellent business that was operating all its hydros and all the wind farms throughout the quarter, and increased the revenues by 18% and the EBITDA by 22%. This was largely driven by the fact that last year we had one small hydro that was not operational. They continued to generate cash and, you know, as we would expect them to, they deployed this cash to reduce debt. So they had $80 million worth of bonds last year, and this year they continued to buy back and cancel the bonds, and they have now decreased the size of these $80 million bonds to $73 million. Electricity generation was up, average sales price was largely flat.
This helped us increase EBITDA by 22%. And as you see on the next slide, the main reason for the decrease in the valuation here was also increase in the WACC, the discount rate, which resulted in the enterprise value being down now by close to 8%. So the total value of this business is $88 million, where $69 million is attributable to operating assets and $18 million to the pipeline. This business is continuing to generate cash. The third quarter is usually the highest revenue-generating quarter, and they are actually paying us the dividends. You will see in the later slide that they paid us dividends already in the third quarter. We expect them to make more dividend payments this year and the next year, as well as they continue to have the excellent results.
Leverage here has come down now, below the 6x target that we have, so it's now about 5.8x. And, you know, this cash generation being used in decreasing the debt has helped to decrease this ratio as well. So here, the equity value we saw was decreased by about GEL 11 million within our P&L in the second quarter. Next, we have the education business. We continue to have a strong quarter in the education business. 25% growth in revenues, 21% in the EBITDA.
Our capacity utilization is about 81%, and as we prepare for the school year, we have the next school year, which kicks in the next month, in September, in Georgia, we expect the growth in the capacity as well as in the number of learners. Right now, we have, you know, close to 6,000 learners, about 5,900, and we expect that about at least 10% growth in the number of learners when we report the third quarter results. We think the number of learners will be in excess of 6,500 learners in this business. One headwind that this business has faced is really the currency-related. We had some revenues that we, you know, recognized, started to recognize a year ago.
So the decrease in the revenues is, some of the revenues that we recognized, we started to recognize two years ago were at a higher exchange rate, and because we collect revenues in dollar terms, usually the lari appreciating against dollar is a headwind for this business. But generally, very strong quarter. We also had a strong performance in collecting cash, and as you can see on the next slide, net debt actually was in fact down by 29%, because of the cash collection that we pre-collect cash before the school year starts, so that helps us with our cash position.
The decrease of 8% in the education business enterprise value was purely driven by the increase in WACC, and therefore, the EBITDA multiple came down from 16.2x- 3x. But, you know, key metric that we actually look here, instead of looking at the last twelve months multiple, is the forward-looking multiple, and the forward-looking multiple in this business is 11x when we measure it on a next school year basis. So based on the EBITDA that we expect to generate within 2024-2025 school year in this business. Net debt to EBITDA also continues to be below the target.
It's about 0.9x , and we had about $9 million decrease within the value of this business as a result of the WACC changes in the second quarter. The next one is the clinics and diagnostics business, which is also trending in a positive direction. We had 22% plus growth in the revenues across both businesses, 45% growth in the EBITDA. So very strong numbers, both operationally and financially. We are seeing the number of admissions growing. This business is doing pretty well. It has a very high cash conversion ratio, is generating cash, and is using this cash to grow and also to decrease the leverage as well. So on the next slide, you see the impact on the valuation here.
We have, you know, 6% decrease in the enterprise value because of the growth in the discount rate, but about 5% increase in the net debt in this business. So therefore, we had about $13 million decrease in the equity value. But you can see that EV-EBITDA multiple came down to 9.3x, and net debt to EBITDA is also decreasing and trending towards the target of 2.5x. This was the last business now that I wanted to discuss about valuations and the performance. Now, briefly about liquidity, dividend income, and the maturity profile of the portfolio companies. So our liquidity was $25 million, as you saw within the financials that we published.
Since the quarter end, we have collected dividends, and that has resulted in a higher liquidity balance as of now. We now have about $56 million worth of liquid funds, which is, you know, one of the key reasons why we announced the increase in the buybacks of by $15 million. Next slide, you will see the dividend income. So we collected only GEL 50 million in the first half, but we still expect to generate GEL 180 million-GEL 190 million dividends. We received the Bank of Georgia dividends, full-year dividends in July, so that has been recorded in the third quarter. But for, you know, for your information, so far, we have collected around GEL 55 million dividends.
That also includes dividends from the P&C Insurance and the renewable energy that have been collected to date, from these businesses. So we think we're on track to deliver, again, GEL 180 million-GEL 190 million, the range of dividends for the current year. And this is also supported, as you see on the next slide, with, you know, us being proactively working with the local lenders in Georgia. We extended the maturity profile of our portfolio companies. We had about 43% of debt maturing within 2024, and we spent the second quarter working with the local lenders, and we have managed to extend the leverage profile such that only 11% now remains for maturing in 2024.
The rest has been spread out, and as you can see, the most has been pushed out, you know, more than two years away from the end of this year. Key things here were the extensions of the leverage profiles at the hospitals and at the retail pharmacy business, together with this, you know, five-year loan that we took on to acquire ID. We also recently expanded the maturity of the M square or the housing development bonds, where we issued $25 million bonds to roll over the existing $35 million bonds. So we decreased the size from 35 to 25. And, you know, those bonds were also very easily taken out by the market and by the existing bondholders, and that has been completed.
Also, our 20%, you know, portfolio company, Water Utility business, priced $300 million bonds, 5-year bonds, that are listed in Dublin, and they collect, you know, close to 9%, they pay close to 9% coupon. And these bonds were also very, strongly, taken by the market. The demand was in excess of $500 million when these bonds were, were printed. So we, we had, done, a number of work around extending the maturity profiles of our portfolio companies, which we think, as I said initially, will be very helpful to continue to receive the dividends, that we expect from these businesses. And with that, this is, my last slide, so I will hand it back, over to Irakli for the, the wrap-up.
Thank you, Giorgi. Yeah, to wrap up, basically, the NAV decline is counterintuitive, as basically, we had an excellent operating performance of our portfolio companies. But we did reflect the increased spreads in sovereign in our valuations. Therefore, we think that we are conservative, and we are prudent in doing so. Another key point we want to highlight that we continue our commitment to do the more buybacks. And here I want to highlight once again that we also consider dividends in the future, not only the buybacks. Right now, we are adding $50 million buyback to our program. And we have a very strong track record of doing the buybacks in general.
In outlook wise, we have a very strong economy. We expect 7%+ GDP growth this year. Last year, we had also 7%+ growth, and two years before that, we had 10% each year GDP growth. So very strong macro track record, current account deficit declining. We have a strong foreign currency inflows in the country. Our operating performance of our portfolio companies, we expect second half to be as strong as the first half. So we will continue our deleveraging and continue our capital return policy. So in general, we are in a good position vis-a-vis our portfolio companies' operating performance and macroeconomy. So now let's move on to Q&A session and...
Thank you, Irakli. We already have a number of questions in the Q&A. I'll take Anton Berg's question first. Firstly, on the Georgia's 100 million capital return program, except dividends from BGO, what would be the main contributors financing this? And how does this timing look like for the buybacks?
Giorgi, you want to talk about it?
Yeah, sure. So, in terms of the inflows, so the free cash flow that you saw on the slides earlier is about, you know, $40 million-$50 million that we generate every year, without assuming the growth in the dividends that, you know, we have been growing on average by about 10% every year. So if you look at 2024, 2025 and 2026, we should be generating roughly about $150 million of free cashflow. And what I call free cashflow is, dividends minus coupon that we pay on our bonds and minus the cash operating expenses that we pay out of GCAP. So that's about $50 million, roughly, on average per year in GCAP. So that gives you $150 million through the end of 2026.
The second component is the value of the Water Utility put option. You know, we have two dates. We have the first half of 2025 and first half of 2026 to cash out that put option within the Water Utility business, and we assume that we will do that over the next two years. And that is about $50-$55 million, which is where we carry that on our balance sheet right now. So in total, that gives us $200 million of free cashflow, and from that, we announced 110, at least, will be spent on the buybacks through the end of 2026.
The timing is as we go every year, we will be looking at, you know, cash available on our hands, and we'll be looking at the cash that we expect to collect, and we'll be increasing the buybacks. What you saw so far is, we have declared and announced $40 million out of $110 million. So over the next few quarters, we will be adding to reach $110 million at least. I can take the second. Yeah.
Yes, the second one is from Anton as well. Secondly, when do you expect the retail pharmacy and hospitals to be cash flow positive, post CapEx, leasing, and interest?
So pharma is cash flow positive right now, as well, and we're happy to walk you through, Anton, how we see that being cash flow positive. The pharma is so positive that they pay us the dividends at the moment already, even, you know, and they still manage to decrease their net debt to EBITDA ratio. In terms of the hospital, so the recovery will continue through the end of this year, and it is, you know, it is fair to expect that then next year, hospitals will also become cash flow positive, post maintenance CapEx and post the interest payments, so pre development CapEx.
Thank you. The next question is from Tarang Patel: What conditions would need to be met for GCAP to pay a dividend?
I, first of all, I think that it's NAV discount should decrease. But at the same time, we are considering more and more dividend policy because we are pretty consistent in doing the buybacks, and we don't see the NAV discount decreasing. So we may need to have both maybe. We have a dividends and have a buybacks because some investors like to have a dividend. So we are considering, we have not decided to do the dividends yet, but we are considering the introduction of introducing dividends as well as having a buyback program, so.
Thank you. The next question is from Niall O'Connor: What metrics do you think would indicate the fear of Russian laws over FX bond yields?
I think that, the bond yields [are] one of the keys which we are looking at, and we are looking [at] the spread. As Nino mentioned in her presentation, spreads went 150 basis points on the Georgian sovereign. It came down back to 70 basis points, but it's a 70 basis points increase in spreads pre, let's say, with the Russian law. So basically, that spread is probably one of the key drivers for us. FX, obviously. On FX side, what we are seeing [is] that fundamentally, the FX income in the country is very strong. Current account deficit is declining. So if we see some volatility in FX, it's mainly expectations. You know, what's gonna happen next year? So some fears maybe of the corporates and investors, basically.
But, I think that the spread over the sovereign bond yields are probably one we are watching very closely, especially for our valuations.
The next one is also from Niall. Can you confirm you are implying around 10% free cash flow yield on your equity, which means at least GBP 50 million on GBP 520 million market cap?
Yeah, I would guess. I would say so, yeah, yeah. Because basically we, in May, end of May, we introduced 25, we added 15, so we are at $40 million. Whether do we do another $10 million, probably by the end of the May next year? Yeah, it would be a kind of a 10% yield on the market capital.
Thanks, Irakli. The next two questions are from Milosz. The first one is: You highlight that you expect double-digit EBITDA growth in Q3 and more than 20% growth in Q4 for hospitals. Is this for the entire hospitals business or only the larger specialty hospitals? Maybe we can take this one, and I'll read out the next.
Yeah, I can take this one. So yes, Milosz, this is actually for both. So this is the growth for both large portfolio companies and the specialty and regional hospital chains as well. But even within the large portfolio chains, the growth will be higher than the overall growth because the large hospitals are growing at a higher speed than the other hospitals.
Have there been any major factors behind the decline in same-store sales in retail pharmacy in Q2 beyond the price caps?
No, it's primarily the price caps.
Yep. Thank you. The next one is from Tarang Patel. Any comments on what you are expecting from the upcoming elections?
I think that, as we don't know what to expect, that's why there is uncertainty, I guess, you know. There are multiple outcomes, but, to be honest, when the polling is done, proportion of undecided is so big, that you know, it's very difficult to predict. It's difficult to allocate undecided to any of the parties. So, it's a tough call, I guess. We will have some uncertainty next two months before the elections.
Thank you. We don't have any open questions as of now. Maybe we wait a couple of seconds, minutes. Oh, there you go. Education business seems the company has focused more on middle scale and affordable tires. Can you please comment on the plan for premium tire as well? This is the question from John Young.
On the premium, we are at, we don't have a big growth plans. Mainly our growth plans are for the, I mean, there is a growth is expected, obviously, and we, it will grow, but main growth driver will be for actually affordable, not even middle. Middle is not gonna grow as fast or nearly as fast as affordable one. Actually, middle and premium probably will grow in line with each other, and we will have a major growth will be in more in affordable segment.
Thank you. There are no open questions.
If there are no more questions, we will be closing down, and thanks a lot for the participation. Please stay tuned. Please ask questions if you have some. And I appreciate your focus and attendance. Thank you.