Earnings Call: Q1 2021

May 18, 2021

Hi, everybody. Welcome to Georgia Capital Q1 2021 Earnings Call. It's our pleasure to host you today. Let me give you a brief overview about today's topics. I'll talk about the COVID situation as always, macro. We will talk about operating performance of our portfolio companies and then Georgi will talk about our CFO will talk about the valuations of of our portfolio companies. And in the end, I will do the wrap up. So let me give you the statistics. You can go to slide 3, please. Statistics on our COVID situation. From our peak we are down now and it is good news is that the daily cases came down from high 6000 to around 1,000,000, 1,005. Also good news is that Carrefour what we had at starting at between 5 p. M. And 5 a. M. Was moved to 11 p. M. And also on the weekends government allowed restaurants to be open. This is obviously very helpful for the tourist inflows and we see some tourist pickups in April May and this easing of the carpool will help this pickup obviously. In terms of vaccination, vaccination is not going fast. Reason is that the very beginning of the vaccination program we had to our unfortunate one death and people got scared and didn't start taking up the vaccines. But now we have a demand has grown significantly from 1,000 vaccination per day we moved to 5,000 recently and now we have overwhelming demand for vaccines and we hope that the government will bring more to continue the vaccination. Actually, we are very pleased with take up, which was recently happened by the population. And we hope that vaccination program will go smoothly and around 4,000,000 doses will be administered by the end of Q3, Q4 basically. Let's talk about the macro. Let's move on to next slide or slide 4. Macro looks increasingly strong Looking at remittances, we had a big pickup in remittances, 145% increase in April, 50% increase in March. So we had a very strong nearly $200,000,000 monthly inflows of remittances which is record high in seasonally adjusted. It's record high for sure. In terms of the real GDP growth, real GDP picked up in March from negative January, February of minus 11, minus 5, we had a 4% increase. VAT turnover also went up sharply up at 22%. So we are seeing increased revenues and pickup in macro activity. Also you see the exports growing 70% year over year in April. March was around 30%. Imports are also picking up at 57% growth year over year. Tourist revenues were down nearly minus 95% plus in the recent months. March was -60 percent and we hope for better numbers April May as we see more tourists on the streets, which is a little bit surprising, but I guess that our neighbors are getting vaccinated and they are more willing to travel. To go next slide on slide 5, we have a very nice pickup in the official reserves. It's highest ever at $4,000,000,000 So the firepower of the national bank is very strong. It is up 20% year over year. And as you see that lari is really significantly oversold on the real effective exchange rate. You see that it's way below the trend line. And we expect this to be adjusted as tourists picks up before National Bank and government are actually before the tourists pick up, MBG and the government are pretty conservative on how they are managing the finances basically. Now let me talk about this kind of a brief overview macro. And now let me talk about GCAAP Q1 results and I'll start with our Eurobond cap, which we did recently. On slide 7, you see we issued a top of $65,000,000 of which basically $35,000,000 is to be allocated for portfolio companies, the $30,000,000 is for general corporate purposes. It's we are pleased that there is also quite good demand for the CAP and printed at par. So we have as a result, we have very strong liquidity, BRL470 million of liquidity, which is up 64% year over year in Q1. So we are very well geared toward to tap some opportunities especially in education and the energy sectors which we said that's the sectors where we will be allocating the capital going forward. In on slide 8, you see slide 8, you see the aggregate revenue of our portfolio private portfolio companies, which is up year over year, it's up 30% to R426,000,000 and last 12 months is up 4% at R1.6 billion. So we had a strong turnaround. As you know the Q1 last year mostly it was kind of free. It was not we didn't have a lockdown in Q1. So we are up 8% year over year in revenue in Q1. Actually, the April started very strong. So we expect a very strong Q2 and I'll talk about that later on. I'll give you some outlook. I will talk about that April, May numbers basically which are developing very nicely. On slide 9, you see a resilient performance of our healthcare sector, healthcare asset. It has grown revenue has grown around 20% year over year and 23% year over year. And even compared to Q1 2019, it has grown 20% plus. So we are very pleased with the performance. This is due to increased activity of our clinics as well as hospitals and largely the economies opened up for the healthcare business basically. In the last quarter of March, we had a 4% gross nearly 4% gross in revenue. On our pharmacy business, we had a slight decline in revenue year over year of minus 0.7% and this is due to the very high base in Q1 2020. As you know, the March started the outbreak. So people started to buy up a lot of drugs for the in lieu of the COVID outbreak. Year over year, we had nearly 20% growth. Actually, compared to Q1 2019, we had around 20% growth in revenue. And last 12 months, our growth in pharmacy business was 5% plus. Now moving on slide 10. The revenue of our water business has grown 22% year over year and compared to Q1 2019 grown 15%. As you know, we had a tariff revision and this is this growth is due to the tariff revision as well as pickups of energy sales has been picked up. The last 12 months, we still have a decline because of the last due to the fact of the previous quarters, we had less sale in water sorry, less sale in energy side of the business. In terms of the insurance, gross written premiums went up nearly 20% year over year compared to Q1 2019 to a down around 4% And we had nearly 11% increase year over year in gross premium returns for our P and C business and medical insurance is also performing so well around 20% up year over year in medical insurance premiums. Looking at the energy business stand alone. Last 12 months, we had an 86% growth year over year and it's largely flat in Q1. The revenues for Energy Business and Education last 12 months is around 35% growth year over year and in Q1 we had a slight decline. This is due to the number of days which were holidays, it was not greater in Q1 2021 basically. To move on the aggregate EBITDA for our operating companies, it's up 25% in Q1. Year over year, it's up nearly 46% compared to Q1 2019. And our EBITDA in last 12 months is up 6% plus for our aggregate for our portfolio companies. Operating cash was down in Q1 and result was mainly due to the increase in revenues and the working capital use of the cash. And we will last year, we had a cash preservation strategy. This year, actually, we are moving shifting away from that and we are moving more focusing on growth of the EBITDA and deploying the cash to secure the network to secure the work capital to grow our revenues and EBITDA. Aggregate operating cash flow is still up year over year around 12%. And our cash balance is around of our portfolio companies is at R350,000,000. Liquidity at GCAB level, as I mentioned previously, is around R4 70,000,000. It is so we are we sit on a nice pile of cash to tap the opportunities. On slide 15, we see the NAV development and NAV per share development and you see that NAV per share was down 2.7% in Q1 and this is due to it was 46.8 lari per share, NAV per share. This is mainly due to the fact that the Bank of Georgia share price declined in Q1. That's 1. And second one, we had some devalue of weakness of lari, which led to increase in net debt. And that caused these two factors mainly caused the decrease in NAV per share. Our controllable NAV was down at 1.6% and this is what we call controllable NAV is our private portfolio companies. Decline was mainly due to the interest expense, OpEx and the FX decline basically, which was more greater than the value creation on the private portfolio companies in Q1. On Slide 16, you see the NAV per share movement in Q1. And here is very clear, you can see what caused the NAV to decline around R58 or R0.58 was due to the BOG share price and R1.33 was due to the FX basically and the liquidity management. You see that large portfolio companies, investment stage portfolio companies and other portfolio companies were positive. There were some small buybacks, which we did. They also contributed positively to the NAV per share development. Let me stop here and ask Georgi to talk about the valuations in our portfolio and that will shed more light on NAV development basically. Jorgi? Thank you, Rekli, and hello, everyone. Over the next few slides, I will walk you through our Q1 valuations as reflected on our NAV statement. Just as a reminder, as you know, every 6 months semiannually, we use a third party, Townsend Phelps, who does the valuations that happens at year end and half year. For the Q1 and for the Q3, we performed these valuations internally within the Georgia capital team. So starting with the overall portfolio movement, you will see on the on Slide 18 that our portfolio movement in the Q1 was around R14 million. And then the major drivers were Bank of Georgia, where the reduction was about R26 million in our 19.9% shareholding. That was because the Bank of Georgia share price declined during the quarter by about 10%. We had a R12 1,000,000 value growth in our large portfolio companies, R7 1,000,000 in the investment stage companies and R21 1,000,000 in other portfolio companies. So overall, the portfolio value was over TRY 2,900,000,000. On the next slide, we see, the devaluation metrics for our portfolio companies as well as the portfolio breakdown in terms of the different types of the assets. So listed shares or Bank of Georgia continues to make about 17% of the overall portfolio, 64% is our large portfolio companies and in aggregate of large investment and other companies which are our private portfolio companies make up about 83% of the overall portfolio. In terms of the valuations, you can see here on this slide, the methods remain the same. The work that we did as a Georgia capital team was largely concentrated in the Q1 on looking at updating the DCF models that were deployed by the 3rd party at the end of the 2020. We performed similar work as what they did and we also concentrated on updating forecasts based on the actual performance in the Q1 by our large portfolio companies. No major changes were or no material changes in terms of the multiples besides healthcare services where the EBITDA multiple that was used in the evaluations declined actually from 13.2 to 12.5 in the Q1. Other multiples changed slightly, which we'll walk through on the following slides, but no material changes were observed. We will start with the healthcare services evaluation. So here you'll see that the enterprise value increased by R62 1,000,000 notwithstanding 2 things. 1, that the multiple declined to R12.5 million and the second that we continue to use the last 12 months earnings for the purposes of the valuation that have been impacted in the Q2 last year, as you know, due to the COVID related restrictions. So but the outstanding performance in the Q1 EBITDA, when the Q1 EBITDA grew by about 55%, we saw that the LTM EBITDA improved significantly from R64 1,000,000 at the end of last year to R72 1,000,000 in March. And that led to the R62 1,000,000 increase in the enterprise value. When we look at the net debt, net debt widened by about 12% or R27 1,000,000. Minority interest increased by R4 1,000,000. And as a result, we have 605,000,000 lari equity value attributable to Georgia Capital, which was up by about 6% versus last year. So healthcare services, as you saw on the previous slide, is currently in our private portfolio. It's the largest asset. Then when we if we move to the retail pharmacy business, so similar valuation was performed here in the retail pharmacy business. We have a decline in the enterprise value by 3,000,000 lari as you can see here, which was largely driven by the reduction in the LTM EBITDA during the Q1 that reduced by 5,000,000 lari on the LTM basis. We have a slight increase in the implied enterprise value multiple from 9.1 to 9.5. The net debt widened by 8% during the quarter and the minority interest increased slightly by 2.3% to 156. So in aggregate, the equity value attributable to Georgia Capital, as you know, we own 67% of this business decreased by 3% or CLAR17 1,000,000 during the quarter. Next we have the healthcare services business. So sorry, medical insurance business. So within the medical insurance business, the enterprise value increased by 3,000,000, largely driven by the increase in the LTM net income, which was up by 600,000 lari during the quarter on the LTM basis. And then the PE multiple declined from 10.1 to 9.8. So as a result of these developments, the equity value was up by almost 4,000,000 to 68. Then we have P and C insurance business. In the P and C insurance business, we have the growth in the LTM net income that was up by PL800,000 which was largely driven by the strong first quarter performance when the net income was up on a quarterly net income on a year over year basis was up by 27%. That led to the operating performance increase by CLAR10 1,000,000. We have decreased due to the multiple that reduced from CLAR11.6 million to CLAR11.4 million. And as a result, we ended the Q1 with the equity value of $205,000,000 Next, we have the water utility business. So on the water utility, as you know, the new tariffs kicked in from January 1, 2021. That led to about 22% revenue growth in the Q1. The LTM EBITDA that we use for the valuation here remains the same because this is the adjusted number as you may recall from the full year. So the adjusted EBITDA number didn't change. What happened was the multiple increased slightly from 9.4 to 9.6. So we have a 17,000,000 lari increase in enterprise value. And then we have a widening of the net debt by about 7% that was largely driven by the large depreciation against dollar because of the U. S. Denominated bonds that has been issued and is allocated to this business. So as a result, we have an equity value that reduced by BRL14 1,000,000 during the quarter. Next, we have the Renewable Energy business. So in renewable energy business, we deploy the some of the parts valuation where we value the existing operating assets separately and we value the new investments separately, most of which are actually carry that investment cost. So in this business, the increase in the enterprise value, R19 1,000,000 was largely driven by the operating performance where EBITDA was up by R700 1,000. And we had net debt widening due to the same reasons as in water utility where the FX and Larry's depreciation had an impact on net debt. So that was up by 8% and we ended up with the equity value of NOK207 million, which is broken out here, NOK 164 million relates to operational assets and NOK 43 million relates to the pipeline projects. Next, we have the education business. So in Education business, we continue to deploy the EBITDA approach for the valuation. The enterprise value had a small impact in increase here. It increased by R4 1,000,000, R223 1,000,000. During the quarter, we made about R7 1,000,000 investments, which was used to acquire a land and the building for the development of the new campus for the Green School, which is expected to be launched September this year. So that also increased our equity value in this business. And overall, if we look at the developments, net debt was up by 2.4%, minority interest changed by 3% and overall our equity value was 103,000,000. It was up by 10,000,000 lari during the quarter. So next, I'll talk about the leverage and the liquidity profile at Georgia Capital level. So we had a pretty strong liquidity at the end of the Q1. We hold $137,000,000 of liquid funds, where about $100,000,000 are pure cash and highly marketable liquid debt securities that trade on the international markets. And we have $38,000,000 of loans that are issued to our portfolio companies. Our market value leverage widened by about 2% during the quarter from close to 29% to about 31%. That was largely driven by the LARI's depreciation against U. S. Dollar. But we do expect that the market value leverage will come down within our targeted 30% over the coming quarters. Our dividend income outlook continues to be the same for the year. We still expect to receive SEK 60,000,000 to SEK 70,000,000 dividends from our private investments. And in the Q1, in fact, we received about SEK 5,000,000 worth of dividends from our renewable business. I think last, I mean, in terms of the valuations, as the 2nd quarter numbers kick in, when last year, the 2nd quarter was almost on full lockdown, we expect the positive impact on valuations as the 2nd quarter earnings get replaced from 2020 with the Q2 2021 earnings. With that, back to you, Yagli. Thank you, Georgi. Thanks. Let me summarize now what we talked about. Our main points basically is that we have very strong operating performance of our portfolio companies and we had a strong EBITDA growth Q over Q around 25% and revenues was up around 8%. Liquidity of GCAP is very strong up nearly 65%. And due to the top of the bond, it stands at 4 70,000,000. And decline of 2.7 percent decline in NAV in Q1 was due to the BOG share price decrease by nearly 10% and lari devaluation by 4%. In terms of the outlook, we continue to focus we will be focusing on revenue growth and EBITDA growth rather than the cash preservation strategy what we had last year as we see the growth opportunities in Georgia. April actually played out well when we had a considerably easy lockdown. We saw the 62% increase in revenue and 160% increase in EBITDA. I don't want to overly guide you for Q2, but in terms of probably we won't have 160% increase in EBITDA in Q2, but we may have a triple close to triple digit EBITDA growth in Q2 in in coming Q2. Now in terms of the vaccination, the government is very active and people have stepped up. Also the population stepped up and we hope that to see the progress on that front and opening up the economy played out will play out good role positive role in terms of the tourists coming into the country and opening the restaurants and other public places on the weekends and prolonging their opening till 11 pm will play a positive role. With this one, I would like to end our presentation and move on the Q and A session. I have Georgi and I, we are here and plus we have Nikam Elide, CEO of our Georgia Healthcare Group. So if you have questions on GAG, please ask Nik. He is deeply knowledgeable in this business, so he asked me to be here. I guess we would prefer you instead of typing the questions, just raising your hand and asking via the audio call. Thank you for listening and let's hear the questions. So we have one question. Do we plan to keep the PTI business or sell it? Actually, that's a kind of a question 2 years down the road. As you see, the most of our other businesses, we want to sell down next 2 to 3 years. However, auto business, which is auto service and PTI, which is part of our auto service business basically, are promising enough to grow at €500,000,000 equity value. That's our target recently that we set in our strategy to target the $500,000,000 asset value. And we think that auto services sector is well placed to be that big in terms of valuation. So we will observe next 2 to 3 years the performance of the management. And if we see that management is performing well, we may step up investment and grow the business or if we do are not happy with that, then we will probably sell it. So PTI business right now is not the top priority for us to sell for sure. We have another question from Tobi Dechandel. Tobi, you can unmute yourself and ask the question. So the question is that what we want to do with the float of our insurance business. Do we want to be more proactive or just buy bonds? At this stage, we want to be boring and we just want to buy bonds. Let's see how it's developed. The float itself is not very big, unfortunately. Hopefully, it will get bigger and we can be more creative with that. Thank you. We have another question coming from Netin. Netin, you can ask the question. I have a very quick question on healthcare side. Do you expect any kind of government support for your efforts against the fight against COVID going forward in the health care side? Thanks. I will let Nick to address that one. Nick, Filipe. Hi, Matti. So what we have currently, our hospitals and clinics, which are engaged in the COVID fight, They are paid on the kind of a we are kind of a probate per bed basis plus the case reimbursements. That's what we have an agreement with the government since the last year and this agreement is still ongoing. So the one thing which was there, the government has resumed also the plant treatments and that's pretty much it. We don't expect any significant changes this year at least from the government in this regard. Okay. What about the vaccination? Do you see any cross sell opportunity while you are doing these vaccinations? We that's what we are doing basically. The vaccination rollout was kind of a rocky as Irakli has mentioned at the beginning. But now it's picking up. Around 40% of vaccinations currently is ongoing in our sites, either at our clinics or our hospitals. Government is also considering to expand it to the big commercial centers where it will be outsourced to the companies like us. Obviously, when the client is coming in, so we are kind of upselling some other services pre vaccination and post vaccination. Sometimes this kind of analysis and lab tests are not very much needed, but people for the piece of their minds are buying it. So it's a good opportunity for us. Okay. Thank you. Thank you. Milosz, we have another question coming from thank you, Mehdi. We have another question coming from Milosz. Milosz, you can ask the question. Hi. Thank you for taking my questions. Firstly, I just wonder I mean, given the decline in COVID cases in comparison to Q4, what's do you have any visibility in terms of some of the bets you currently have earmarked for COVID patients being released for your regular business? And my second question would be, can you give us any update on the process of loan restructuring in your hospitality business? Thank you. Nick, please go ahead with the I mean, it's a kind of a business as usual process for us kind of initially what we had so government has kind of booked some bids for us. Then when the cases started to kind of decrease, we turned into the hybrid mode just to kind of bring the regular patients to the hospitals. That's where we are in now. If the cases will go down further, we are kind of giving a 1 month notice either from our side or from the government side that we don't need these bets in the next months. That's what we have. So we are gradually releasing the COVID bets. I mean, 6 months ago, we had almost 1,500 bets engaged. Now we have as we speak now, it's around 900 or so. So and we are gradually releasing as the cases are going down and basically gradually also filling up these beds with the regular patients. On hospitality, can you please repeat the question? Yes, sure. Because I understand that at least some time ago, you had some of the loans in the process of restructuring, right? So you're in negotiations with banks to restructure the loans to postpone the payments until the hotels are reopened, right? So I just wonder if you have any update on this. Thank you. Yes, I mean, we did successfully restructure all the loans and basically we are in standby mode on the opening the hotels. I want to exclude some of the hotels may open next months or 3 months depending on this on the development of the tourists. Yes, we are actually seeing the tourists in different cities of Georgia, which brings us a lot. So but the restructurings are done very successfully. So we are in a good place. Thank you. Thanks. Thank you. We have another question. You can ask your question, please. This is David Shapiro. Just a quick question or two quick questions. 1, on the liquidity from the capital raise. Are you keeping the available liquidity primarily in U. S. Dollars to match the debt? That's my first question. Yes, we are. Okay. And then next question, can you please talk about the large buckets of restructurings? You just referred to them a little bit vaguely. Can you talk about a bit more specifically on which business units are needed to undergo significant debt restructurings at this point? And how the negotiations are progressing? As I said, it's mainly hospitality. Again, I can go I don't have here like EUR 2,000,000 EUR 3,000,000 EUR which was restructured, but it's been successful restructures. The banks are waiting for the pickup of the tourists and it's been a very constructive work with banks to restructure it. And so I mean, we are not complaining to be honest. And at the same time, the rest of the businesses are doing well and cash flows are increasing, the business are increasing. So net leverage is actually decreasing on operating level companies. Okay. And then another follow-up, if you don't mind, regarding the I guess the overall firm level restructuring strategy. Obviously, you're still focused on your 2 core investment units, as you mentioned. Is it still management's opinion of wanting to try to narrow the portfolio scope at this point? And then especially is it still management's intent to test the market for 1 of the larger assets that may not meet your criteria of where of how you want to invest for the longer term? Sure. So let me reiterate the strategy which we have announced last year in November on our Investor Day that we'll be focusing on large opportunities, dollars 500,000,000 plus in equity value because we think that it attracts the international strategic buyers to these assets and we will be focusing on investing only on large opportunities. Right now, we have identified 2 renewable energy and education. The rest of the portfolio companies were classified basically other or basically for sale over the next 2 to 3 years. So nothing has changed there. We will be if you see the capital allocation, it will be happening on energy business and education business primarily and obviously our large portfolio companies. If we see opportunity to bolt ons, we will be funding those if need be. So no changes to our strategy of focusing on large opportunities in divesting for the subscale businesses. So that's And then you still plan on trying to test the market, meaning sell one of your existing larger assets or has that been sort of tabled now with the bond raise and increased liquidity? Or are you still very interested in testing the market assuming the values are robust? No. I mean, we were not planning to sell for liquidity. We're planning to put the value on our portfolio company. As you know, we are trading in a significant discount to our NAV and this exercise is still continuous. I mean, we are planning to realize the value of 1 large asset and we will do so in the time frame we have indicated in November last year. And hopefully, we will realize that attractive valuation so that investors will see the value of our portfolio companies more clearly, Chris. Thank you, Araki. Thanks, Dennis. Thank you. We have another question from Brett. Fred, you can ask me. So inferring from what you're saying, it seems like share buybacks wouldn't be a priority until after you make a large asset sale. Is that correct? Yes. Most likely, yes. But I won't exclude the other avenues, but most likely, yes. I mean, that's where we will be heading. And have you changed at all your CapEx plans for the year in terms of how much you want to spend on Energy and Education? No. I mean, it's same. I mean, we are we have the projects which we are doing, the new construction with new schools and development of our wind project on energy side. If we will have some opportunities in the schools to do a bolt ons, operating schools obviously is part of our strategy and we will be deploying the cash to tap these opportunities. So I think that market is opening up for more business as we see Di Giorgio opening up. Thanks. And how much what will your interest expense be now that you with the additional capital raise, your sort of yearly interest expense? Yes, it will be about $22,000,000 right? Yes. And what will the offsetting interest income be? It will depend how we place these accounts. As you know, in current environment, the yields are pretty low. So I think it will depend, but at least $100,000,000 that we have right now in cash and deposits, you can assume that we'll make between 2% to 3% on that. And you have interest income coming from your portfolio companies too? That's the loans, yes. So that's the $38,000,000 loans that we have issued to portfolio companies, yes. But the interest there is higher. [SPEAKER JEAN FRANCOIS XAVIER BOUVIGNIES:] Dividends are mainly offsetting that interest expense and plus some of the interest income from the loans and the liquid portfolio or what we have. Our target, Brett, is to have a 2x coverage, interest expense coverage. Okay. Thanks. Sure. Thank you. We don't have any other questions for now. Okay. Let's wait for a couple of seconds. Maybe we'll have more. Seems like no more questions. Thank you for your We've got 2 more, I think. Toby, you can ask your question. I'm from the United Kingdom and just a recent investor to your company. I don't know whether this general observation is of any help to you, but I'll give it to you anyway. For your pharmacy business, I would what we're seeing here is we're seeing here that post COVID, I detect that there will be an ongoing testing regime in place for flu, influenza and COVID certainly in the schools, if not in the workplaces. It seems to be that this is going to stick for the foreseeable future after COVID has gone from our shores. So I would have thought it might be an entrepreneurial opportunity if you feel Georgia might go the same way of making sure you're all equipped in your pharmacies and hospitals to do regular testing. It's just an observation. It's nothing to do with you. We are just launching 20 at one go, 20 small health hubs within the pharmacies just for purposes plus also some diagnostic tests. So I totally agree with you. That will be trendy for a while. I feel it is. And I also feel the tests to go for are the ones that can distinguish between COVID and influenza and common cold. Yes. We actually have those tests we are selling in the pharmacy. So we absolutely agree it could be a new opportunity. Testing will be the kind of new norm. Yes, new norm, yes. Thank you. Thanks, Tobey. Appreciate it. It. Florent, you can ask the question. Thank you. Just one quick follow-up on the noncore assets that you mentioned you look to sell over the next 2 to 3 years. What's the environment like in terms of being able to sell those assets? Are you having proper conversations around that? Or is that still some time away getting through first getting through COVID? Just trying to get a sense of how easy it will be to sell those non core assets? Thanks. Basically, we are having proper conversations on a number of assets actually. So I'm not saying it's going to be very easy, but it's not going to be nothing impossible. We obviously want to maximize the value and we are striving for the higher value creation. You see that actually the other portfolio companies have been performing well and they've been generating the good cash flows and good revenues, etcetera. So it's a very well rounded managed company. So we expect to get a good value out of that. So it's not a let's put it that way, it's not a slam dunk, it's not easy kind of a thing to realize the value of that, but it's not something unbelievable or something which is not happening as we speak. People are having a genuine interest. And actually when we announced that strategy, we had a number of investors from the region and within the country actually talking on our doors. Thanks. Thanks, Lars. Fred, you can ask the question. Thank you. We have another question in the Q and A. The question is what are your priorities in terms of capital deployment at this point, share buyback, bolt on bigger M and A, CapEx? If we look at the kind of a large scale, it's probably the share buybacks would be the most biggest priority. As soon as we would get a kind of a NAV discount fixed, Bolt ons will be the next priority for sure. Bigger M and As will not be a priority in other sectors other than where we are. Actually, big M and A probably will be less a priority even within our kind of portfolio companies, depending opportunity, but we do not want to venture the new sectors at this moment because our hands are full. And in terms of the CapEx, basically, we have for our large portfolio company, there's not a big CapEx programs we don't have there. Larger CapEx programs are within the energy sector and the education sector, and that will be kind of deploying as we go. So I hope that answers your question. Matt Seto asked the question. Okay. Any more questions? Sorry, Irakli, to take up the airwaves here. But do I understand then the in an ideal world, and I know, of course, nothing is certain, etcetera, you would do share buybacks, then bolt ons, then sell 1 of the core businesses? Or have I misunderstood what you've been saying? It was about capital deployment. In terms of the kind of divestment, the sale of our large portfolio business is probably the number one priority if you look at this kind of capital allocation. Okay. And then it follows raising the NAV, share buybacks and then bolt on acquisitions? Exactly, yes. So that the priorities would be that sell of 1 of the large businesses to fix the or try to fix the NAV discount, do some buybacks to help the NAV discount to be fixed and then basically do some bolt ons and grow the business as we go. That would be kind of ideal priority. Yes. And the time line, I mean, not that you can ever be very specific, but it's still within 18 months, is it? Or Sure. That's our kind of our target. 18, 24 months, we said in November 2020. So basically, it's not a moving target. So we are we want to play within that target basically. Yes. And just with regards to share buybacks, do you have the constitutional mechanisms to do that within your incorporation documents? Yes, we do, yes. Yes. And is it set to any specific limit? Because sometimes they say, can you buy up to 5%? It is, I think, the 10% you're giving. Yes, it is 15%. So it's 1.5% for the on market buybacks if you buy on the market. And then I mean, you can do the tender offers as well separately, but 15% applies to the on market purchases. I mean, you're trading at about 70% book value, is that correct, sent it to NAV? No, less than that. 65%. Yes, discount is 36%. Okay, right. Okay. So there's a lot to do. It is, yes. It's very boring. Yes. Okay. Thank you very much. Thanks, Tobin. I appreciate it. There's another question in the Q and A. In your opinion, why do you think there's a big discount to NAV? I mean, I don't know that I don't think that I'm a big expert in that, but I guess that I ask people to not believe in NAV what we have, right? So otherwise why would there be a discount. So I think that one of our job is to fix it by realizing the value at NAV Plus hopefully of our portfolio company and that's how it would give us probably more confidence to the investors. And that's kind of our very simple approach. Maybe there are a lot of complicated stuff, liquidity, I don't know, a lot of stuff could be. But I think that primary one is the value we need to demonstrate to our investors. And to be fair to our investors, we haven't had much of the exits, so in our short history. So we are still young. We need to go through the cycle, complete the cycle of buying, growing, developing and exiting basically. Thank you. There are no open questions for now. Thank you everybody for attending our Q1. I think we have another one, no? We have thank you. Okay, thanks. We appreciate your engagement, your time and please stay tuned. We are looking at the good activities in Q2 and we hope we're going to again come even with stronger numbers for our private operating companies in Q2 and beyond. So very much looking forward to our first half results announcements, which will be somewhere in August this year. Thank you and goodbye.