Earnings Call: Q2 2021

Aug 10, 2021

Hello, everybody. Welcome to TCAP First Half Results Presentation. Let me start the presentation with the introduction of what we're going to talk about. I will update you on COVID situation. MAPRO on recent developments, we talk about Q1 sorry, first half and Q2 results. We talk about NME development. And Georgi, our CFO, will join me to talk about evaluations. And then we do a wrap up. So let me start with the ongoing situation in Georgia. Vaccination has accelerated recently. So we have around 640,000 vaccinations done. We have a big Pfizer import, just imported and we have a big demand for the vaccination. Good news is that we have around 25,000 vaccinations daily done on average now and the outlook is even more encouraging. At the same time, we have cases increasing, number of infections COVID infections increasing and now we are averaging around 3,700 cases per day on average. So the health care facilities are pretty busy, and we think that we have another 1 month to go before we get our vaccination in order and we get to our desired 60% vaccination done by adults will be probably year end, but within a month, given the infection number of infected and plus vaccinated will be well over 50% in a month's time. So we hope that we will turn the corner within a month. In terms of the macro situation, we have a very strong GDP growth. We have Q2 growth was around 30% year over year. But what is most important that GDP growth in Q2 against the Q2 2019 was also very strong, around 13%, which is very encouraging and that's what we are really looking at growth over 2019 because the base of 2020 is very low. First half GDP growth was also very strong. We had nearly 13% growth and combined growth for first half versus 2019 was around 6%. So growth is strong comparing 2020 2019 as well. So what caused that growth? So we had a very high inflow of remittances. We have around if we look at 2019 numbers, growth in June, May was around 40% and even 145% in April. Remittance is also good against 2020 numbers. So overall, our business was very strong. Now, tourists is recovering. We have a good recovery in tourists. Tourism is recovering around 36% of 2019 numbers. In June, we have, and we think that this number is even higher in July August. May was around 27% of 2019 numbers. Overall, gross rate is pretty impressive, over 990%. But again, the base was low, but that's why we are ending up with 30% growth in Q2 basically in GDP. Also, trade is growing very strongly. Both import and exports are growing compared to 2019 2020. We have on if we look country by country, recovery of tourists essentially is doing pretty well. We have nearly 36% recovered on Ukrainian tourists and Israeli tourists. So in that regards, we are moving fast in terms of with this country, we are moving fast in terms of recovery. But I think that there is a lot to grow in terms of the neighboring countries where the recovery the penetration of tourists compared to 2019 is pretty low, around 13%. Now the LARI was also getting pretty strong. We had I mean, the Georgia LARI is 1st performing currency in the region by far. And the reason is again the strong tourists, strong exports, inflow of remittances. So overall, a rebound in the economy. Also, there are some smart policies by National Bank in terms of the reserve requirement for value deposits. So National Bank requires less reserves for minimum reserves basically to put aside if share of value deposits grows in the bank, which was a very good policy. We are extremely happy with that. We think that is one of the most sensible policies National Bank has done recently in terms of the liberalization. And that's how it should be done on the liability side, not on asset side. So that did reverse this lorry richness, which was due to the asset side policy on realization what National Bank had. So even though we had a big rebound in lari in the area from 3.5 lari to 3.1 There is still a lot to go because it is well below the long term trend. So we expect further large strengths in coming months. And as tourists recovers, I mean, now imagine the recovery is only 35% what was in 2019 on full recovery or even at 70% recovery, Larry would definitely go back to where it was on pre pandemic level and pre pandemic even maybe it will be stronger due to a reversal or right policy on liberalization of what National Bank is doing now. Now on recent developments, we did say that we will be selling some of our other assets, which are small in scale as are subscale, and I want to update you on that one. We sold the real estate assets, both office space and tail and actually land flows as well, non yielding land flows we sold, worth $35,000,000 This is of $58,000,000 of real estate paid assets we are selling. So $35,000,000 is sold and we sold it at 47% to net asset value. I mean, the amount wise is not very big in terms of net asset value, but still the number tells you that discount the 50% discount versus 47% premium is it says something where the market is marking GCAP versus the assets people are paying for. Now regarding the discount, since we are talking about this subject, as you know, we have a capital allocation policy, which basically is the GECOP share price is in the center of that. So since we have a 53% discount to our NAV, we basically we want to step up the buyback and we are starting with $10,000,000 ticket size. It starts as of today and we hope that the market will stay as low as it is right now for us to buy GECUP cheaply. So what we are doing now? We have ample liquidity, dividend income outlook is very strong for our portfolio companies. Loan to value is has improved to 26%. So all of these elements give us the green light to start buying. And plus, we think that the pandemic the way the government is managing the pandemic, we don't see a big risk of hard lockdown. We may have some restrictions, but we believe there will be no hard lockdown. And our portfolio companies' operating performance, as you see, is extremely good. So we our outlook is that our portfolio companies will be delivering the growth which we have in the first half. So what kind of growth we have in terms of operating performance for our portfolio companies? In Q2, we have a 42% growth over Q2 2019 in terms of the revenue and 45% against Q2 2020. And in terms of the first half, the revenue growth is around 26.5% against 2020 first half and 37% against first half twenty nineteen. What is most important is very we are happy with that, that our growth is very robust against 2019. So Q2, 42% revenue growth. We think it's outstanding performance by our portfolio company. It once again underlines that GECAP has a defensive portfolio of assets, which has a high growth prospects in this environment. And all of our portfolio companies are its own market leaders and they have extremely strong management teams and they have extremely strong prospects in terms of the market positioning and the outlook. So we think that the growth will continue in this high GDP growth environment. The EBITDA obviously grew faster than the revenue. We had nearly 90% growth in Q2 EBITDA over last year and we have 84% growth of against Q2 2019. In terms of the first half, the EBITDA grew 64% against 2019 and nearly 68% against last year. So very strong growth. If we go company by company, you will see that revenue in healthcare services in Q2 grew 82%, I guess 2020 and it grew 38% against 2019. EBITDA growth was also very strong, 253 percent to TRY 26,000,000 and 43% against Q2 2019. So I mean, again, I want to underline the strong performance in this 2019 numbers. And if we look at the first half EBITDA, it's also triple digit growth for our health care company. So in that also retail pharmacy, we see a Q2 number pretty strong, again 35% plus growth in terms of the revenue in Q2 and EBITDA growth in Q2 is around 34%, 30% against 2020 and 30% plus against 2019. And growth in first half is minimal at 7.5%. Last year, actually, it was very good year for pharmacy to tell us people were buying a lot of drugs during the when the pandemic kick started. So the EBITDA is flat in first half in pharmacies against 2020. Water Utility, another stellar performer in our portfolio, 82% growth against 202030% growth of revenue against 2019. First half growth, again, impressive 50% plus and 23% against 2019. EBITDA growth in Q2, 152 percent only and 55% in Q2 2019, at least Q2 2019. And first half growth around 90% in water utility and 39% growth in the guidance of 2019. Again, stellar performance for water utility. As you know, we had an increase in tariff, which was a driver as well as water inflows in general reservoir is pretty strong. So we had around 4x growth in revenue from the energy generation. And also the as economy reopened, we have a very strong inflow from our commercial customers revenue growth. Insurance, to be honest, not that as still outperformed the others because it had a good year in Q2 last year. But you see a gross premium return is still up 24% against Q2 2019. And basically, the profits are actually down a little bit. And this is due to the medical services as we are getting more claims in healthcare insurance. So we are doing pretty well on the P and C side, but we need to fix some medical insurance claims basically. On Renewable Energy, again, stable, strong performance. Last year was good for the Renewable Energy. It had a 13% and 0.5% growth in revenue in Q2 and 8.2% in first half. In EBITDA, we had 17% growth in Q2 and 5.5% growth in first half. Education, again, education is doing extremely well. We had a 40% growth in large terms. This is due to the increased number of students and utilization is going up as well as some increasing prices, which we have done for this education year basically. First half also 16% growth. We have a good EBITDA growth in Q2 around 74%, growth in EBITDA in Education, and we have a 26% in the first half growth in EBITDA in Education. So aggregate cash balance is what we have. It is up around 74% in our portfolio companies from SEK 183,000,000, but it's down against March last this year and beginning of the year. And the reason is that we are investing in growth, in working capital to grow our top line and we are investing more. So our cash preservation strategy, which we had last year, is absolutely reversed. It's all focused on revenue growth and EBITDA growth. And we are capturing the market shares and we are capturing the growth opportunities what we have across our portfolio companies. So aggregator so net operating cash flow is not as strong as it was during the pandemic time. Again, as I said at about the funding the working capital to grow our top line. We have ample of liquidity at Jigap, R442,000,000 and we are eager to grab the opportunities which may arise. So the in terms of the NAV development, we had a pretty good quarter. Our NAV per share is 16.4% up. If you adjust for last Friday, adjustment is Bank of Georgia share price and the FX is actually up 22% to NOK 57. So controllable NAV is up nearly 16%. In controllable NAV, we don't include the Bank of Georgia and that's also strong at 16% growth. Now how this growth is translated? The SEK 4.73 was attributable to portfolio valuation, which was externally valued. Bancor Georgia was 1.52 lari. Investment stage portfolio company was 0.81 lari. And then we had small different things, including small buybacks, operating expenses. Liquidity and FX was positive LARI.66 and that's how we arrived to LARI.54 NAV per share 16% up. And then we have further LARI up for Banco Global share price increase since the end of the quarter till the till last Friday basically. So 22% up our NAV per share in the quarter. Now, NAV per share in first half, you see same picture here. Biggest contribution is basically the externally valued large portfolio companies, NOK 5 per share was up here. Now I will let Georgi to talk about the valuation of our portfolio companies. Georgi, do you want to use my presentation or you have yours? Yes, I'll use mine, if that's okay. Yes, sure. Thank you, Rachli. Hello, everyone. I will now walk you through the portfolio valuations that we had adopted during the first half and then the second quarter reporting to start with. I will start with an overall overview of our portfolio and the evolution during the Q2. As you see on this slide, our portfolio grew by 11% in the second quarter and it is currently at 3 point PLN3.350 million in terms of the value as of the end of June. To remind everyone, we the valuation was performed by the external evaluator, which is a third party, DAF and Phelps, again this time. And the methodology and the framework adopted by the DAFs and Phelps was similar to the ones that has been previously used. So there was no change. DCF and the peer multiple or the market approaches were consistently used from the previous periods. On this slide, you see that the value growth, which was R325 1,000,000, lari was attributable across different portfolios of our entire portfolio. SEK70 million was attributable to Banc of Georgia, large portfolio companies contributed SEK 214 million. As you see, the investment stage portfolio companies, SEK35 million and other portfolio was SEK6 million. If we break this down by each individual businesses, the highest portfolio value growth in the Q2 came from water utility that was BRL91 1,000,000 and it was 28% of the entire value growth of BRL 325 1,000,000. Next, we had healthcare services with BRL 81 1,000,000. Bank of Georgia with SEK 70,000,000, which is the change in the listed prices during the quarter. And then we had retail pharmacy with SEK 45,000,000 Education, SEK 20,000,000 and Renewable Energy, SEK 15,000,000 followed by the other business at SEK 6,000,000. In the next few slides, I will walk you through the drivers of these valuation gains that we recorded in the second quarter. But first, let's talk about the first half. Within the first half, our portfolio growth was 300 nearly R340 1,000,000 and it was attributable. I know the largest growth in the first half was in fact in the healthcare services that made up 34% of the overall value growth and was BRL114 million followed by water utility at BRL 77, Bank of Georgia at BRL 44,000,000 Education at BRL 31,000,000 and etcetera. On the next few slides, you will see the drivers of these valuations. On this slide, we present how our portfolio is now broken down between the different parts. Our listed investment, Bank of Georgia, makes up about 18% of the overall portfolio. Then we have the large portfolio companies at 64% with slightly above BRL 2,000,000,000 value. Investment stage companies are 11% and other portfolio continues to be around 7%, which was the case again this quarter. In terms of the valuation multiples, this slide summarizes detailed valuations of all portfolio companies, including implied multiples and share of their values in our full and entire portfolio. Similar to the previous quarter, we are presenting these implied multiples. A few things that I will highlight that in terms of the changes, you will see that, for example, in the Healthcare Services, the EBITDA multiple that was used in the valuations that was implied in the valuations in the past has decreased from 12.5 times to 10.6 times. We also had multiple decreases in retail pharmacy and water utility, which are now both at 9.3 times EBITDA multiples. In terms of the insurance, we had an increase in the multiples there, which I will walk you through later on the slides. And in the renewable energy and the education, slight change in the renewable energy multiples that increased slightly. Education multiple remained the same. And in terms of the other portfolio, which remains consistent and flat at 7% of the total portfolio, its value increased by BRL 6,000,000 that was supported by valuation gains within beverage and auto services business during the Q2. Now in terms of the individual businesses in the healthcare services business, we continued to value this business together with DAFs and Phelps at EV EBITDA multiples. And on this slide, you will see that enterprise value increased by BRL 65,000,000 or about 7.3 percent to BRL 964,000,000 based on EBITDA multiple decreasing to 10.6 times versus 12.5 times 3 months ago. And also because of the replacement of the Q2 2020 earnings in the LTM EBITDA with the Q2 2021 earnings EBITDA, which removed significant negative impact from the 1st lockdown on the LTM numbers that are used within the devaluations. And you can see this also in this outstanding performance in the operating numbers. So LTM EBITDA was in fact up by 26% during a single quarter and then net debt also improved by BRL 17,000,000. The other impact was on the minority interest, so we increased by only 3%. So as a result of this, the equity value of the Healthcare Services business that is attributable to Georgia Capital during the quarter was up by BRL 81,000,000 to BRL 686,000,000. In the retail pharmacy, in terms of the valuation, in the Q2, the enterprise value increased due to the increase in the LTM earnings, which was up by 8% during the Q2. We also had the net debt that was largely flat during the quarter, while there was a small increase in the minority interest value, which was up by 1.5% and accordingly, the equity value that was attributable to Georgia Capital increased by BRL45 1,000,000 to BRL580 1,000,000 in the second quarter. In the water utility business, the implied multiple enterprise value multiple decreased slightly from 9.6x to 9.3x. However, enterprise value still increased to by BRL64 1,000,000 and it is now above BRL1 1,000,000,000. And on the back of strong top line and bottom line performance that you saw earlier in the slides, this stellar performance in the 2nd quarter also resulted in the LTM EBITDA increasing by 10% during the quarter. Net debt decreased by BRL28 1,000,000, which was a product of the lari's appreciation against U. S. Dollar and also the strong operating performance and the operating cash flow generation by the business. So as a result, the equity value of the water utility business increased by BRL91 1,000,000 during the quarter and was BRL548 1,000,000 in the Q2 2021. In the P and C business, equity value here had an immaterial change during the quarter. The LTM income remained largely flat. It was slightly down on an LTM basis. However, the multiple increased to 12 times PE, which translated into PLN2 million higher equity value during the quarter. However, we should highlight that this business paid PLN5 million to Georgia Capital in the second quarter. Medical insurance business equity value here decreased by almost 7% as a result of the decrease in the LTM net income due to the increased loss ratio during the quarter And then the increase of the PE multiple to 12.3 reversed some of the impact from the decrease. So overall, this business had a negative SEK4.5 million impact on the valuations and it was a decrease to the overall portfolio value. In the renewable energy, this business similar to the previous quarters was valued as the sum of the parts approach where individual assets were valued at EV EBITDA multiples or carried at investment costs. We carry the pipeline projects at the investment costs mostly. So the multiples used for valuation range from 9.2x to 11.5x and the average multiple was 10.3x. This business enterprise value is measured in U. S. Dollars. So as the LARI appreciated during the quarter, it had a negative impact. And in LARI terms, it decreased the enterprise value. However, because the performance the EBITDA performance was strong in dollar terms that reversed that some of the decrease. And as a result, the enterprise value was largely flattish, only down by BRL 1,000,000 in lari terms in the Q2. The net debt decreased as a result of the lari's appreciation versus dollar and the strong operating cash flow performance and it was down by BRL15 1,000,000. At the same time, this business paid us BRL5 1,000,000 dividends during the quarter. The total value of this business was BRL221 million, where about BRL180 million is operational assets and BRL41 million, as you see on the slide, is the pipeline projects. Next, we have the education business. No change in the multiple here, but the PLN21 million growth in the enterprise value was supported by the LTM EBITDA growth during the quarter that was almost 20%. So the LTM EBITDA in this business in the single quarter increased by 20%. Also there were small investments. We invested BRL 1,000,000 in this business and about BRL 2,000,000 was reinvested by the schools themselves for the development of the new campus. When we include the total cost of some of the lanes that are allocated to this business, which you see as investments carried at cost of SEK 28,000,000, the overall value of this business is SEK 124,000,000 and that is about PL21 1,000,000 increase from the valuations in the Q1. So at the end of my slides, let me quickly touch the Georgia Capital's leverage and the liquidity profile. You will see on the chart that our market value leverage continued to improve in 2021 and it is now well below the targeted level of less than 30% threshold. It was 27.4% at the end of June and following the Bank of Georgia share price increase since the end of June and Larry's appreciation since then, the current LTV ratio stands at 26.4 percent. We have about $140,000,000 of liquid funds as of June 30, of which about $90,000,000 is pure cash and liquid marketable securities. Lastly, our guidance for 2021 dividend inflows from private portfolio companies remains unchanged. We continue to expect between PLN 60,000,000 to PLN 70,000,000 during the 2021 dividend inflows and about PLN 15,000,000, PLN 14,500,000 was received already in the first half, with the rest coming into the second half. Again, this is the only this is only private portfolio company dividend outlook and excludes dividends from our publicly listed investments. With that, back to you, Irakli. Thank you, Yaroni. So to wrap up, we have a strong NME per share growth, 22%. We have a stellar performance by our portfolio companies, and our aggregate revenue for the quarter reached surpassed LARI 500,000,000 and was up 45% and EBITDA is up by 89% to PLN 114,000,000 for the quarter. We had a very strong very, very good news on divestment side. We sold SEK 35,000,000 worth of commercial real estate assets at 47% premium to our net asset value. And we also announced the renewed our buyback program as we see a stronger dividend outlook inflow for our portfolio companies due to the very strong operating performance. And we see outlook for the economy even stronger. So we are happy to renew our buyback program. So basically, we are we continue to our portfolio conduct members continue to perform well in July August, and we hope to stay that way. Now we are happy to answer your questions. It would be best if you ask the question and not write to us. So we have a question from Jonathan. What is the benefit of making strong changes to valuation multiples each quarter? Would it not be better and easier for comparatives to stick to the multiple until events require a substantial re rate? That is the question I think, Georgi can cover with. Yes, sure. So in terms of our valuations, 80% of the valuation is actually coming from the DCFs. So when the DCFs gets updated and as you saw in the Q2, the performance was very strong against the last year and the LTM numbers increased, but it was also stronger than management had expected. So that impacted the future cash flows that are being used in the DCFs that resulted in implied multiples being changing and sometimes being higher or lower depending on the businesses. So in our case, we don't keep the multiple same. We look at the cash flows and the projections in that business and that's how they get updated. I hope that answers your question. We just do a DC evaluation, so it just changes. It's what we see marks to market. Thank you. There is another question. Which business do you think would be most attractive to potential acquirers? Where might such an acquirer come from Europe or Asia and so on? So actually, since we said that we want to dispose our one of our large investment portfolio company, we had inquiries all over the world for different assets. We were surprised. So I think that it can come from anywhere from the world for the quality assets like we hold. I think that there is an interest for multiple different assets. And that's why we actually are not pinning down which assets we want to sell or we are selling because it could be the competition is not on for the asset competition is across the assets. There's another question, Yes, there is a question. What are the key risks to the fund? I mean, I think that first of all, it's not the fund, so it doesn't have a risk of liquidation of withdrawals basically as a fund would have. So it is Evergreen Investment Company, you can call it that way. So therefore, maybe the biggest risk would be the leverage what the G cap has at HoldCo level, and that's something we need to think about for the future. But I think it's a risk right now, but potentially if you are asking theoretical risk, that's what it could be. Because as funds have a risk of redemptions, we don't have that redemption risk, but we have a debt debt risk. Thank you. There is another one. Any update for the plant asset management business? And then we can answer the Milos question. Any updates for the trend Asset Management business, that was the question? Yes. So basically, on the Asset Management business, so far, as you saw as we have announced that we have put that on hold due to the COVID situation, but we hope to resume that things will stabilize. Right now, as we see the LPs are more focused on are not focused on the new business. So we will update you as soon as we have a news. We have a question from Yoloch. Yoloch, please go ahead. Yes. Thank you for taking my question. Can you hear me? Yes. Yes. Okay. Perfect. Yes, I just have a general question. If you could talk me through your view on the net debt levels across your large portfolio companies and whether you see any need for deleveraging and how you look at your maturity profile across those larger companies, that will be very helpful. Thank you. Jorgi, do you want to I think it's a big subject. Maybe you want to take it offline basically. We have 8 companies. But anyway. Yes, sure, of course. So maybe you can just comment on the Healthcare Services business, that would be helpful. Which business did you say? Healthcare Services. Healthcare Services business? Yes, I think I mean, if you look at Healthcare Services Business separately or together with, let's say, retail, pharmacy and the medical insurance, I think the leverage level there is quite low. I think it's less than 1.5 times. If you look at on LTM basis, the LTM EBITDA. And that business right now is generating free cash flow because the investments that have been made in CapEx in the future have decreased. And now this business is benefiting from the growth in the revenues. Nick, unless you want to add anything from your perspective? Nick, do you want to add something? Hi. I can add. So basically, if you look separately on these businesses, Healthcare Services business is levered a little bit more than 2x and Pharma is almost unlevered and the insurance is also in has a negative net debt. So I mean and these leverages will be decreasing further as we see it down. So leverage at the former GAG portfolio companies is pretty low right now. Okay. Thank you. That's very helpful. Thank you. There is another question. Do you have a target this out to and maybe pretend to start a fewer comebacks? Share buybacks, probably. We would not want to talk about it. I guess we don't have it right now, but I think that 52% discount is comfortable level to start the buyback. But no, that depends on the outlook as well. As we see so far, we think that our marks are pretty conservative. And as we are we'll see how the disposal of other assets will happen at what levels. And the real discount could be bigger than our what we are showing right now on our NAV discount. Thank you. We have a comment from Jonathan. Not a question, but I do think as a shareholder that management do deserve congratulations for what they are achieving, particularly in what has not been the easiest of circumstances. That's from Jonathan. Thank you, Jonathan. I appreciate your words very much. Here's the question from Prish. Currency benefited performance during the period. Do you expect this to continue? Basically, we don't think that currency performed well. It just went it's not even back to where it was at pre pandemic levels. So as we mentioned that with our outlook for the currency appreciation is even greater, especially taking in account the 2 factors. Factor number 1 is Turos has recovered just 36% of 2019 levels. And second one, which is most important one, National Bank did reverse, which we thought was very unwise lionization policy on the asset side and they reversed that policy. And now they are aiming for deposits, which creates a pressure for the value to appreciate. As it was creating the artificial pressure for lorry to depreciate during the asset side liberalization policy. Now it's actually the reverse. So we think it will go to this below well below 3 levels if that continues like we have we are seeing right now. So and you saw that on real effective exchange rate basis, lari is still undervalued. So we think there is a way to go there. Thank you, Rod. Rick has a comment that why we are so modest on buyback given the discount because we want to buy it cheaply. There is another question. Being a major shareholder in Bank of Georgia, how do you see the recent announcement from the bank regarding new financial targets and reinstatements of dividends? We like what the management is doing. We like this. As I said, the management quality of management in our portfolio companies and in Bank of Georgia is the best one. And we think that they have done a great job in managing the bank in turbulent times. I mean, one comment which I can make is that Tier 1 ratio of the Bank of Georgia is greater now than it was pre pandemic levels, which is which it fell through the quality of the portfolio of the Bank of Georgia as well as the management. And we are looking forward to hearing from them on the dividend levels they want to announce. And as I said, it's we have a top class assets in our portfolio. And the Bank of Georgia is obviously one of our star performing companies in our portfolio. Thank you. There is another question from Shahin. Could you talk about any political risks you see on the horizon? If political volatility continues, which of your businesses, if any, would be most affected? We don't see a political volatility, to be honest. I think that we're going to have local elections on 2nd October. And basically, I think that's pretty much it. I think until 2024, we won't have elections as we see right now. So there is a in Georgia, there is some political turbulence, but overall, I think that country is moving in the right direction. So and to be honest, if there is a political turbulence, I don't see any risk to our portfolio companies. Thank you. There is a question from Prem. Between now and the first divestment, what are the main factors that will drive additional buyback commitments? And how much could be available for buyback in the second half twenty twenty one? I think that let's leave one day at a time. So we are we will update you as we go. As I said that for us, it would be better to have a buybacks when share price was at GBP 3.5 or GBP 3 level. But back then, there was a lot of turbulence in terms of the COVID situation and operating companies were performing well, but not as well as we want to we wanted. Right now, we see a big rebound in performance. Our operating companies are performing extremely well and if they continue to perform well, the second half, first half next year, etcetera, we won't shy away. Our business is buying businesses cheaply, buying asset cheaply and GECAP is one of the assets we are it's in the center of our investment decisions making. So we are happy to be given opportunity to commence this buyback and we'll see how things will go. I think there was another question as well. No, I think that was it. That was the last question. Okay. There's another one coming. Could you give us an update on the megawatt performance fees? That is the question from Jonathan. I think that's a very short I think Nick will give you a more detailed one. But I'll give you just a bigger picture one. The return on invested capital is 47%. And Nick, maybe you talk about the Yes. So we are expanding further. So we accelerated our retail footprint growth for our lab business. So we are already operating with close to 20 branches and it's picking up very well, some of them from pharmacy branches, some of them not pharmacy, I mean separate stand alone branches. And as Irakli has mentioned, business is performing pretty well and but not only because of the COVID. So COVID is only one part of the business. On the back of the COVID growth and COVID test growth, pure retail is accelerating pretty fast. So we are very much looking forward for further expansion in this business. What works very well on the MegaLab side, the drive throughs, which management has introduced and there is a big use there and we are expanding the number of drive through points. We'll be expanding going forward as well as we are introducing the test in pharmacies, which is picking up pretty well. So I think that what Nick was mentioning that the COVID kind of COVID drove the more culture towards more testing, lab testing, etcetera, in the society. So it's basically we are seeing a big upside in mega lab in general. And we are seeing that small labs are decelerating in their performances. MegaLab is performing is offering the highest quality and the best price So we are very happy with the megalap performance. There is a follow-up question from Donutas. How much is COVID related business? COVID related business is around 40% of the Megalab's performance right now. The rest is B2B business, which Megalab is doing with hospitals and pure retail other than COVID business. Thank you. For now, there are no open questions. Let's wait for a couple of minutes. I think we are done here. Thanks, Jaco. We have another one. Yes. How many other opportunities are there to grow the retail pharmacy business such as is being done through Body Shop? Nick, do you want to So Bodyshop was a kind of door opener for us. We opened 1st shop in Armenia as well and our pharmacy chain in Armenia is expanding further. So another thing is that we are going as it was announced in our strategy back in 2019, we are going into the opticians business. So we got a franchise of Afenlou. It's the 2nd largest retailer in France. So we are we have opened our 1st shop now in Tbilisi in the capital in the largest shopping mall, and we will be expanding further there in the shop with shop in shop models of optics within our pharmacies. So that's a start and we are looking forward for other this kind of franchises mainly now in the perfume and that will be a next. That's what we are working on right now. Thank you. No open questions for now. I guess that's it. Thanks everybody for joining. We appreciate your time and commitment and stay tuned. We have a very good Q3 also coming up, that feels like and hope to see you soon in person. Bye bye.