Earnings Call: Q4 2018

Feb 14, 2019

Hello, and welcome to the Kinnevik Year End Release 2018. Throughout the call, all participants will be in a listen only mode. And afterwards, there will be a question and answer session. Today, I'm pleased to present Georgi Ganev, CEO and Joakim Anderson, CFO. Please go ahead with your meeting. Thank you. Good morning, everyone, and welcome to the presentation of Kinnevik's results for the Q4 of 2018. I'm Georgi Ganev, Kinnevik's CEO, and with me today is our CFO, Joakim Andersson and our Director of Corporate Communications, Toron Lisen. We will start by taking you through a presentation of the results released this morning. And after that, we're happy to answer any question you may have. Now please turn to Page 4, where we have provided you with a summary of the key highlights for the quarter. My first year as CEO of Kinnevik has been an active year of continued transformation for Kinnevik, where we have executed on strategically significant merger and made a number of new investments in our focus areas. In the second half of the year, against the backdrop of the volatile equity markets with particularly weak performance among fashion e commerce companies, we saw a significant drop in the share price of Zalando, impacting our net asset value and total shareholder return. Although very unfortunate, we remain confident in Zalando's strategy and long term growth story. In the Q4, we invested close to SEK400 1,000,000 adding one new company, Travel Perk, to our private portfolio as well as accreting our stake in Livongo. As the merger between Tele2 and Com Hem closed, Kinnevik received a cash payment of SEK1.2 billion and additional shares in Tele2 corresponding to a value of SEK3.6 billion. And today, we announced our first investment for this year as we acquire 38% of MatHem, Sweden's leading independent pure play online grocery retailer in a SEK0.9 billion investment. The investment is underpinned by our conviction that the food sector is about to go through more change in the next 10 years than it has in the past 100. I will go into our vision for the food sector and investment in MatHem in more detail later in the presentation. The net asset value was SEK70.5 billion or SEK256 per share at the end of the 4th quarter and with the decrease mainly driven by the weak performance of Zalando. Our TMT asset performed well throughout the year and in particular, Tele2 billion because of the cash consideration received from the Tele2 Com Hem merger and the second tranche of Millicom's annual dividend paid out in the quarter. And this also results in a leverage of 4% of portfolio value at the end of the year. The Board of Kinnevik recommends an ordinary dividend of SEK8.25 per share for 20.18, which corresponds to a dividend yield of 3.9 percent to be paid out after AGM, which will be held on the 6th May. Now please turn to Page 5 for an overview of the performance of our large listed companies. Zalando reported 3rd quarter figures in November and the full year numbers are due at the end of February. On the operational side, the fulfillment network ramped up continued in the Q4 with the Chechen site in Poland successfully operating at capacity. The site will serve Zalando deliveries to customers from all 17 European markets. And at the beginning of this year, the fulfillment center outside Stockholm was opened, equipped with the most advanced automation technology in Zalando's portfolio, cutting lead times in half for all Nordic customers. Millicom made good strategic progress in 2018 with several operations in Africa being divested. Cable Onda in Panama was acquired and service revenue growth in LatAm amounting to 4.3%. And in conjunction with our year end release, Millicom also communicated growth plans for the LatAm segment, with growth expected to be mid single digit in the midterm. Let us now move to Slide 6, where we have highlighted the progress in Tele2 during the year on year. As you all most probably know, Tele2 had an extremely busy year as it completed the merger with Com Hem in Sweden and with T Mobile in the Netherlands and also exercised a put option in Kazakhstan. When the company reported its full year results yesterday, it also updated its guidance for 2019 and for the midterm as well as the target for the synergies resulting from the Tele2 Com Hem merger. Through the integration process, Tele2 has identified additional cost savings and now aims for an annual run rate of SEK900 1,000,000, double the previous target. Management also aims to deliver this faster than previously expected, now within 3 years instead of 5 and have to be realized by the end of 2019 on a run rate basis. With a reduced geographical footprint, most of Tele2's revenues comes from Sweden with a mature market where growth does not come easy. The goal is to grow the top line slightly faster than the market and reduce cost through the future cost reduction programs to deliver higher adjusted EBITDA growth, while keeping CapEx at low levels to deliver attractive cash flow growth, which can be distributed to shareholders. And in the midterm, Tele2 expects growth to be in the low single digits in end user service revenues, coming mainly from innovative offerings. If we now move to our private companies, you will find an overview of the progress in the largest private companies on Page 7. Growth and product development remain a priority for our private companies, and we see good growth across the portfolio. I will address the largest company in our private portfolio, Global Fashion Group, separately on the next slide. So let us take a look now at some of the companies presented here on this slide. In Quikr, our Indian Classified business, revenue growth is picking up and as the strategy of verticalization is showing real results. Annualized revenues growing more than 80% in 2018 to a run rate of $50,000,000 and 3 out of 5 categories were at or around breakeven. Betterment grew its customer base by close to 30% and launched new smart savers products. It was good to note that inflows remained positive in the 4th quarter despite significant volatility on the equity markets and large outflows in the industry at large. In the valuation section, Joakim will go through in more detail and you will also see that Global Fashion Grooms has been negatively impacted following the de rating of fashion e commerce. However, if you move to Page 8, we have highlighted the operational performance of Global Fashion Group and that is developing in line with plan with healthy growth and a clear improvement in its path to profitability. And in the Q3, Global Fashion Group showed continued top line growth with net merchandise value increasing by 23% on a year on on a constant currency basis and improved also profitability by close to 5 percentage points. The company continued to execute on its growth strategy across its core markets and made further progress with brand partners and customers. Please now turn to Page 9, where I will present our exciting new investments, an investment that is underpinned by a larger vision of capturing the digitalization in the food sector. The Nordic countries have long been held as leaders in innovation, Digital transformation and technical adoption with some of the world's fastest broadband speeds, highest mobile penetration rates and a track record of having created the highest number of unicorns per capita in the last decade. Yet some of the areas in the same Nordic countries are distanced by the true innovators and food is one such sector. But we believe that that will change as the food sector is about to go through more transformation in the next 10 years than it has in the past 100. The strongest trend is that of a shift from offline to online. And with our deep understanding of e commerce and of the digital consumer, we want to be driving this shift. Innovative business models are emerging to capitalize on the trends impacting the food sector, business models that also have the power to contribute to us limiting the burden on the planet by reducing waste and optimizing transportation. Food, health and sustainability are therefore inextricably linked. We strongly believe in delivering both economic and social value, and correspondingly, we find that food fits squarely with our investment thesis. Now please turn to Page 10 for an overview of the key attractions associated with online food. Food is a sector with a huge potential, giving its significant share of the household spend, its noncyclical nature and attractive purchase patterns in terms of frequency, basket size and 0 returns. The high frequency aspect is worth spending some time thinking about as it enables 2 highly important things for any online retailer, being a native application and regular and recurring access to consumers' home. Over time, this will also allow the online grocers to leverage its platform beyond the scope of their own operation, delivering additional products on top of the grocery assortment. Taking MatHem as an example, the partnership with Klas Holsson is a first step towards efficiently leveraging its position, and we expect development to continue. And even if food is moving online, it will stay local. The way we grow, package, ship and eat food has changed dramatically and will continue to change at an accelerating pace. Innovation and awareness of what we eat and how that affects our health is increasing, and food is correspondingly becoming an integrated part of one's identity, beliefs and desires as well as a tool for managing wellness. And the demand for fresh, organic and locally produced food is also increasing, highlighting the importance of a local knowledge and local sourcing, something that will limit the threat of entry from large international players. If we now turn to Page 11, where we provide some information about the Nordic food market. Food is one of the largest categories of the average Nordic consumer's wallet, and the transition to online has only just begun. The Nordic online grocery market is worth some SEK 12,000,000,000 and is nascent in an international context. Online penetration is below 2% across all Nordic countries compared to 8% in the U. K. And 20% in South Korea. We believe with support from various external sources that the Nordic will catch up. And at a 20% online penetrations, levels already seen internationally, the Nordic online grocery markets would amount to about SEK150 1,000,000,000. For us, the question is not if we reach that level, but when we reach it. And if you now please turn to Page 12, you'll see an introduction to MatHem. As I said, we have now today announced that we will invest close to SEK1 1,000,000,000 in MatHem, Sweden's leading online independent grocery retailer. MatHem is the largest independent player at scale in Sweden and has been a clear pioneer of Nordic online groceries since inception some 10 years back. Entrepreneurship and innovation is at the core of the company, and the team continuously works to find new and innovative ways to provide customers with a seamless shopping experience. And we are very excited to be part of this journey, and we see MatHem as the perfect platform for which to build a service that offers consumers more and better choice. A platform that can save consumers more than 90 minutes of time every week is sustainable that helps them over time to understand what they're eating, it might even inspire them to improve their eating habits. And all of you on the call that are based in Sweden, please make sure that you use the promotion code on this slide. And we will, of course, promise you to follow-up that you really use this offer today. By that said, I would like to hand over to our CFO, Joakim Andersson, to comment on the financial position. Thank you, Georgi. On Slide 14, we present the key elements of the NAV development in the quarter. The weak share price performance of Zalando had a significant negative impact on our net asset value. Partly compensating for this development, our telecom companies performed strongly with Millicom and Tele2 contributing €2,200,000,000 and €1,100,000,000 respectively. The value of our private portfolio decreased during the quarter to €12,900,000,000 largely driven by Global Fashion Group being negatively impacted by the general derating of fashion e commerce. The value of GSG amounted to SEK3.3 billion in Q4 compared to SEK4.6 billion in the previous quarter, a result of the significant multiple contraction seen among listed peers as well as continued depreciation of both the Russian ruble and the Brazilian real. Since year end, there has been a rebound in both multiples and currencies, which altogether would have had a positive effect of around 15% on the value of GFG. In our total NAV in total, our NAV decreased in the 4th quarter by 10% to SEK70.5 billion or DKK256 per share. As per yesterday, our NAV was DKK74,700,000,000 equaling a 6% recovery from year end. Please turn to Page 15 for an overview of our balance sheet. As previously mentioned by Georgi, we invested SEK392,000,000 during the quarter and welcomed one new company to our portfolio. The finalization of the Tele2 and Com Hem merger, together with the 2nd tranche of Millicom's annual dividend, allowed us to delever during the quarter with our net debt position decreasing to CHF2.9 billion at the end of December, which corresponds to a leverage of 4% of the portfolio value. We remain confident that we have a strong financial position that will enable us to continue to execute on our strategy. Turning to Page 16. You can see that we have left the financial targets unchanged and that the Board of Directors has recommended a dividend for 20.18 of DKK8.25 per share, which would correspond to dividend yield of 3.9%. With that recommendation, Kinnevik would pay a total cash dividend of CHF2.3 billion for the year on top of the CHF4.2 billion distributed in kind during the summer. This would also mean that Kinnevik during the last 5 years has returned CHF10.9 billion in ordinary dividends and CHF9.2 billion in extraordinary distributions, making the total value distributed to shareholders to over €20,000,000,000 Georgi will now take you through the last slide of this presentation on Page 18. Thank you, Joakim. When I set up my priorities a year ago, focus was on active ownership, increased activity in the private portfolio and an increased focus on the Nordics. And in 2019, we will continue to drive this agenda, but expect a number of new investments to be lower than last year and focus slightly more on the larger investments as demonstrated by the investment in MatHem announced today. We will also remain focused on accelerating the key companies in our private portfolio, continuing to support and invest in them as they grow and require more capital as we are long term shareholders. I would also like to extend my thanks to you, our shareholders, for your continued support. We have an excellent set of growth companies in our portfolio and a long term vision for value creation, which we are committed to delivering on. Thank you very much for listening, and let's now open up for some questions. And we've got our first question from the line of Lena Osterberg from Carnegie. My first question is regarding Babylon. I read that they are planning a new financing round. So I was just wondering if you are participating or plan to participate and if there will be a pro rasa participation. And then also maybe on the online grocery market now that you made the investment both in Kolonial and MatHem, what's your view on the long term margins here? So far, it seems everyone's struggling to make a decent return. And then also maybe do you see or take into account any synergies between your different investments in online groceries and also maybe Budbee? Thank you. Thank you, Lena. I will answer these questions 1 by 1. If we start with Babylon, I can say that we are very supportive of the company's development. Lately, they have presented some really interesting strategic partnership with the Prudentials, for instance, showing that they can leverage their platform also in a licensing deal, so more a B2B2C opportunity than purely the B2C. And that is also some kind of proof point that Babylon has developed a platform that is very valuable for large multiline healthcare operators around the world. And as you said, there's been a lot of talk about a fundraise because the company is still developing its platform and expanding, And we will not disclose any details from that round. But what I can say is that Babylon is one of the companies in our portfolio that we are impressed of, and we will follow our money and participate in that round. When it comes to online groceries and the margins, I completely understand your question because those are struggling, the players that we see out there. But looking at this from a bigger perspective, we are certain that it's about scale and automation and scale, of course, growing so you can have more efficient warehouses, but also when it comes to density, so increase the density in the last mile logistics. With those two aspects and of course stronger purchasing power, you will create good margins in this business. If you look at today, the wholesalers that are public, so we can follow their margins such as ICA, they have around 4% on their holdco level, but then they also have the local stores that generates another 5%, 6%. So there is margin in this business and we are certain that if you do this right online and combine smart technologies in automation with good customer experience, you can be able to actually compete with other things than just price, but with convenience in higher purchasing average order values. When we look then at your third questions, the synergies, that is absolutely true. So I mean, you can say that we last year did the investment in Budbee to more understand the last mile logistics, especially in the Nordics. We did the investments in Kolonial in Norway that we believe is a very good example of someone that comes quite far when it comes to efficient warehousing and automation. We will use these experience. Even the investment that we made in Karma that is around food waste is something that we will learn from and actually use in creating what we think could be the 1st digital first digital online grocery payer. But as also said on this call, we think that this platform can expand beyond food. Because if you think about it, you have a relationship with a customer several times a month compared to a few times a year for other e commerce players. And you have a relatively high order value and basically zero returns. And of course, that platform, that Last Mile logistics and the relation with the customer can be expanded into other categories. And that will also drive the stickiness and also the margin over time. Okay. Thank you. Could I maybe just have one more question on Millicom and the bid that was on the company, if you could say something on that process? The bid from that was talked about in the press, you mean, recently? Yes. Yes. I mean, of course, a bid is not a bid until it is a bid. So at the end of the day, we will take all bids carefully consider them carefully. And we believe that Millicom has a very strong platform right now. As you've seen in the last report, they're growing above 4%. They changed their targets for the midterm in a more positive way. And of course, when you have a good asset, there are always parties that are interested in looking at these assets. So we're used to that. This time, it didn't happen for different reasons. But if someone comes again, we will always look at the opportunities. Okay. Thank you. The next question comes from the line of Victor Hoglund from SEB. Please go ahead. Your line is open. Yes. Good morning and thanks for taking my question. You said here, the acquisition of Marchemax, Kolonial, Karma, but also that the more obvious and if you put on the positive half here, you could think that you are seeing in the start of a new Comvix Tele2 emerging kind of the same kind of story, kind of the same kind of challenge here. And like you said, I mean, it's pretty simple to look at the drivers here with larger bucket size, no returns, etcetera. And of course, you could add products to consumers and widen the scope, but also suppliers over time. And I was just wondering if you could give a hint here of what type of complementary acquisitions we could see ahead in what kind of areas, what kind of services? Or is this an organic story you are now launching here or more tying together, so to say? And just your view here if it's going to be an organic run ahead here or if you are maybe have a bigger plan than that? And then one more question, if I may, is around dividends here. You keep the dividends and but given that you are now planning to roll up in this area, how should we think about the room for M and A and balance between that and dividends going forward? Thank you. Thank you, Victor. I will take the first question and hand over to Joakim for the second one. When it comes to future M and As, of course, there's nothing I can disclose at this call, but I can give you an overview of how we think. I mean, first of all, this is really a customer centric approach. As we say, it's about owning the household and we believe that food is the key to that ownership. That's why we do these investments. Over time, you can see this as we are building an infrastructure. It's an infrastructure play, more or less like a land grabbing. And in order to build that position in the Nordics or anywhere actually, I believe that you need to be relatively bold and long term. And these are two things that you see in Kinnevik and you've seen in the past. So your analogy with Tele2 and Convik is not actually bad at all. I think this is the kind of journey that we're entering right now. In this ecosystem, definitely, we have talked about last mile logistics that can be even further improved and more efficient over time. There are definitely a way of expanding the categories, but I also believe very much in handling the customer data in a good way. So analytics will be part of this play to understand the consumer and to be able to offering the right product at the right time. So those are the 3 main, I would say, areas that we will look at. So last mile logistics improvement, it's about the assortment as such, could be partnership, could be acquisition and also how to use the data in a smart way. And it will most probably be a combination of a good organic long term story, but also potential kind of roll ups, as you say, going forward. Yes. Hi, Victor. On the second question on dividend and funding, as you saw, the Board is recommending a flat dividend from last year, SEK8.25 billion. I think you should see that also in the context of 2 things. 1 is on the dividends received and the money that we get from Tele2 and Millicom this year. And secondly, also in the context of the dividend in kind that we made during summer amounting to SEK 15 per share, taking the total amount to a fair level and the dividend policy that we have. On the second one, on the funding side of things, we are operating within the leverage target, and you saw that leverage came down a bit based on the money we got from Com Hem when the merger closed. And we have plenty of headroom within that target for making new investments. And we also see potential, as Tele2 disclosed yesterday, we also see potential there in the form of extra money coming out from the Netherlands and Kazakhstan. So we feel very comfortable about the dividend of funding. Great. Can I maybe add one more question? Just I mean, this is probably taking it a bit too far in the call such as this, but it's worth a try. If you look on the strategy you have outlined for Tele2, you've said that you want to become the connectivity player longer term in a converged world, so to say. And now your move into Martin here and Kolonial and Karma also resembles around that line that you want to be the deliverer to the home. Could you see that these 2 down the line somewhere cooperate or boost each other as they seem to have kind of the same positioning approach to the home? I mean, as you said, it's a very interesting discussion to have, very difficult for me to comment in concrete terms. But I think the point here is that we believe very much understanding the consumer trends. So when we went into e commerce and fashion, we saw this low penetration of 2%, and we could increase that by actually going heavily into that area. That has happened now. And today, it's a part of our daily life. If we look to food, we see exactly the same trend over time, but with one difference is that it's closer to the household and the higher frequency. So here you can build an ecosystem where I believe will be very much customer centric and part of everyday life. That is something that connectivity is as well. If those can be brought together or not, I think that's more speculations. But the investment thesis is basically exactly the same. Last question, sorry. In very short terms, your view on what the converged telecom operator is doesn't necessarily have to be your ordinary telecom services. It could be other things. I mean, I think connectivity for me is part of the consumer's life, right? So you could always argue that there are other services related to the home that you could connect and add to that being at home alarm, home automation, etcetera, that I think is an open field. However, I also believe that there's so much things you can do with the ordinary connections and the connectivity from an operator. So get your basic done in a very efficient way and customer centric is extremely, I would say, interesting per se. But I agree with your kind of point that it can be much wider than so since it's part of the household, especially now with Com Hem and Tele2 integrated, where you own the household with a fixed network. The next question comes from the line of Joakim Goel from DNB Markets. A question here. I mean, your unlisted portfolio companies, they cover almost half of the household's consumption now. I just wanted to get an up to the view here that you say that you want to make new and more sizable investments in 2019 perhaps. Are Financial Services, Healthcare or and eCommerce market business still the target sectors? Or are you widening the scope there? No, these are our target sectors for sure. So we have, as you say, health care, financial services and e commerce now spanning into fashion mainly and I would say food. Then we have our TMT bucket as well with our investment there. We have also said earlier that in the Nordics, we have been more kind of open for other type of ventures since it's closer to our home market. We know the ecosystem here. We know the founders. We know partners, etcetera. So we have the ability to reengage those connections that we hadn't done for some years. But I would say that otherwise we stick to our sectors. What we mean by large investments is that, first of all, some of the companies in our private portfolio will take off now. We mentioned Babylon on the call, but there are others like Betterment, Livongo to mention a few and, of course, Global Fashion Group that are becoming sizable companies with strong underlying development. So that's part of kind of doubling down and follow our money. And when it comes to new investments, we have done a few kind of more of the invest and learn mindset. And we can take those learning and step into, let's say, categories like we've discussed right now, food, where we now invest almost SEK1 1,000,000,000, which is, of course, a larger investment. And actually, it's the largest new investment in a company since Zalando, to give it some perspective. Understood. Finally, a question just I mean, do you have any thoughts or message that you want to share here? There were some alleged media details on a potential listing of GSG late last year. So perhaps some comments on the timing there and any flavor on that topic would be helpful. I mean, as the company has announced, they did last year, that they're looking for different funding alternatives. There could be a private placement. There could be an IPO potentially. I've said it before that I believe this company could fit the public market. I mean, what we experienced at the end of last year could, of course, possibly say that this is the worst timing ever, but a good company is always a good company. So I believe that the door is open to see of different kind of different ways to move ahead with GFG. And we as the largest shareholder, we will of course be very much involved in such a process. Understood. That's clear. Thank you. The next question comes from the line of Johan Sjoberg from Danske Bank. Please go ahead. Your line is open. Thank you. I had a couple of questions also. Could you just repeat what you said a bit earlier, Georgi, about investment levels in 2019? Do you expect fewer investments in 2019? But do you also expect larger investments? That is correct. So I mean during 2018, as you know, we did 10, and that should be seen against a fairly muted pace in 2017 in the numbers of investments. We believe that 2019 will be fewer than we did last year and larger. MatHem, I think, is the first good example of that, but there might be some other larger tickets coming up for 2019 again, but nothing that we have anything to say about now. Okay. But when you invest SEK 900,000,000 in Malte and you also highlighted that this was the biggest investment in for Fujifik except for Zalando. And because the reason why I'm asking is that there's been media rumors about you investing into Northvolt and that would be a book there and they have been mentioning several 1000000000 of Swedish kronies. But do you would you care to comment on that, on those rumors at all? No, I wouldn't comment those because they are rumors, as you say. Okay. But it's but for us to when we should anticipate your future investment, I guess an investment in that sector would be kind of outside your own, so to speak, core sector where you really want to focus? That is correct. We have a strategy with our sectors, as we just talked about. But also we have a DNA as a company. So I understand that people look at these large big bets and they think that they would perhaps fit with Kinnevik, and that might be true. But to comment on your question, no, that will be outside our strategy. Wonderful. Also a couple of questions. I appreciate your delivering on the message when you met us being an early CEO of investing and going to the Nordics. Could you say something about your investment organization? I've seen a couple of names popping up in here that you have recruited. I also would like to hear a little bit about your London investment or team there. Are they still around or? Yes. I mean, good question. I think if we start with the Nordics, so we had in the Nordics basically no people on-site working with investments. And I hired a person called Andreas Bergstrom, which is now heading a very small team, one person coming from our London team and one new recruit. So Maxine, she's recruited here from Sweden and Tim is a guy that moved from our London team into this Nordic setup. And those people and some others that work, I would say, part of their time from the Nordic team also works with our Nordic investments such as Kolonial and MatHem and others. So that is basically more like a fresh start of Kinnevik. If we look at the U. K. Team, we've had some movements, so both moving, as we said, to Sweden, but also senior investment director moving from that team into Global Fashion Group. So I believe in rotation in general. I think it's very good for development of the individual talent and also for the company. And we have still very good people on-site in the U. K. Team led by Chris Bischoff in our U. K. Office. Okay. Good. And also, can you say something also about a little bit about this big change happening also within the group. I mean, Kristina has been leaving the Board of Directors. How that what kind of impact that has on your position? I mean, I read the article, which said that this was not should not be viewed as a big change for you guys. Kinnevik management basically runs the operations. And also but there has been, I mean, during the autumn, there's been change in terms of ownership in Kinnevik. I would like to hear how much is Cristina now owns of Kinnevik? I mean, regarding the ownership question, it's not really a question for Kinnevik, but it impacted our cap table. So we were basically obliged by the rules to send out the press release. That is more changes in the cap table among kind of the families and so forth rather than sell downs. But again, that's not a question for us. When it comes to Cristina stepping out of the Board or stepping down from the Board, that will happen in May. She is still in the Board as we speak. That is, of course, it can be seen from 2 perspectives. I mean, I think you cannot overestimate how important the family Stenbeck, including Kristina, is for Kinnevik as a strong owner. And she will remain to be our strongest owner controlling 75% of the votes in Kinnevik sorry, 25% of the votes in Kinnevik. And also today, she has 2 hats basically being a Board Director and being an owner. Going forward, I mean, what I the priority for me is to make sure that Kinnevik can still leverage on the DNA that we've always had to be this bold business builder. And I'm confident that Kinnevik has never been a 1 man band. We have a strong platforms in the companies that we have, and I'm very privileged to basically have a Board that is strong and will support me delivering that strategy. Good. My final question, when will you start to disclose a little bit more information on your holdings outside Global Fashion Group? That is basically a question for the companies in there. Some of the early stage companies have been quite reluctant to show data, mainly because of competition. But we understand the need for those targets and those KPIs to be disclosed. And I can only say that we will continue to work on that. And hopefully, already during 2019, we can start disclosing more from the companies that we believe really have a true potential. I think actually that would be extremely valuable for the valuation of the stock. I mean, if you look at some of the names, I mean, they look super interesting. But if you look at the reported value, I mean, it's peanuts. I don't think it is. So I think it will be very, very worthwhile for you to start to disclose this actually. I mean, I can only echo what you say. We think exactly the same way. I mean, the main focus for me and my team right now is basically to make sure that these companies come forward and show by disclosing KPIs, disclosing performance and at a clear path to profitability that they can become real businesses. And of course, the unpolished diamonds in the prior portfolio will make the true value creation of Kinnevik as a share. Great. Thanks a lot. Thank you. And the next question comes from the line of Liz Meliatis from Boer. Just one question on the dividend. How should we look at it going forward? Because obviously, the dividend was held flat this year. If we have a look at Bloomberg consensus estimates for your listed stocks, it would suggest that there's a dividend gap in 2019, which would perhaps suggest that you guys need to cut the dividend or perhaps keep it flat. Yes, so how would is the best way to have a look at the dividend? Should we perhaps move for that dividend gap or assume it potentially remains on hold? Thank you. Yes. Hi, Liz. It's Joakim picking up that question. So I guess, I mean, you heard what I said on the previous question on the dividends. So I think, again, looking at the DKK 8.25 together with the DKK 15 worth of MTG shares that we sent out during summer gives a total number, which is quite decent for this year. But yes, there is a dividend gap. And I said in previous years as well, we have been running with this dividend gap for a couple of years now. We are not worried at all. As we've said before, we look at this from an overall funding perspective, and we operate within this financial target of a leverage target that we have set. If you kind of extrapolate a look into the future, we believe there is potential in Millicom and Tele2 that should and could close that gap. But again, I mean, if we take a step back and think about how we fund ourselves and look back a couple of years, this is the model where we fund ourselves and accept that we go up in leverage for some time. And then if it's a 1,000,000,000 cost sense deal or if it's a V2 deal or if it's a Rocket Internet deal, then takes us back to cash or 0 or reduce the debt. So we use leverage as a buffer, as you know, and that's I mean, you could say that we are in such a period right now. Okay. Thank you. And I think to add on that, Liz, I think when you look at the flat dividend of SEK8.25, again, what Joakim has said earlier, we need to take the SEK0.15 per share in consideration as well from MTG. Yes. Okay. Thank you. Thank you. The next question comes from the line of Marie Scheier from Nordea. Please go ahead. Your line is open. Hi and thank you for taking my questions. I have you mentioned, Georgi, that the prerequisites in the Nordic market is are right for the grocery market and that but we still only have 2% online penetration versus UK of 8 percent. What will you say is the main explanation for that number being that low? And what do you think will drive change from now on? As always, when it come to innovation that has not been kind of moving that fast that you would expect, there are 2 factors: the lack of true challengers that are driving this shift and the other thing is the incumbents owning the market not moving as fast. I think those are the factors that have been different if we look at Sweden and Nordics compared to other countries like South Korea or U. K. I mean, U. K. They have 8% penetration, but various sources, depending on who you ask basically, say that the ranges within some city areas such as London is above 20%. So we think that the consumer is very clear here. We want to save time. We think it's convenient to order these things online. And we think that there is a big play to be part of in the Nordics. And being a relatively local market, but still with the kind of advantage of having a centralized platform and efficient last mile logistics, there's a window of opportunity here. And always when you compare challenges towards the incumbents, that has been the same thing in media, in telco, etcetera, you can always say that's difficult to be a small fish and to beat the large players. But actually, some of the large players, they have their legacy assets that is making it difficult to drive this change in a profitable way. And we believe that this is also true in this area. Okay. Thank you for that answer. And also a question regarding your definition of you say that you in 2019 will do fewer but larger investments. What is your definition of larger roughly? I think the MatHem investment is defined as a larger investment. Okay. Super. Thank you so much. Thank you. The next question comes from the line of Nizla Naizer from Deutsche Bank. I just have two final questions. The first one is on online groceries and MatHem. I guess there's a reason why you decided step in now when I know several years ago you've also looked at certain online grocery models like meal kits, etcetera. But when you look at the market now, have you seen both these companies like MatHem and Kolonial growing at certain rates that beyond the penetration that actually proved to you that, yes, it is at an inflection point. So if you could give us maybe how fast they were growing or how fast you expect them to grow, that would be an interesting sort of element for us to observe. The second is, is MatHem profitable already or is it on that path to profitability? Who are the current shareholders? And are they only in Sweden? Some color around the operations would be great. And my second question is on online fashion e commerce. You still got a large exposure with Zalando with Global Fashion Group. How do you view this particular vertical and, for example, Zalando's strategy to expand their fulfillment centers and capacity rather than go after pure profitability? Just give us some color on how you view these particular legacy investments as well. Thank you. Okay. Thank you. So three questions. We start with online groceries and why we think the timing is right now. Yes, you're right. There is some inflection point right now. Without going into the exact growth number of these companies, we've seen that Kolonial has been growing faster than MatHem lately. And we know that there is some particular reasons for that. And we think it's the potential of increasing the growth again in MatHem. We also see that consumer start to kind of understand the advantage and the significant time saving of going online, that is important. But it's more than the offline to online shift. It's also a matter of the importance of food, of food being part of our lifestyle. We think of how it can actually be used as a tool for well-being and also how it impacts our environment. So there are other factors right now that are becoming even more clear when you do customer service that to position a new kind of food online grocery retailer with these parameters would be very efficient and effective. When also it comes to maritime and Kolonial, I think it's we got this question early in the call, are there synergies in between? Yes, of course. I would argue that there are synergies also between these companies and Budbee because it's all linked together. So you need to master the last mile logistics in order to be efficient and you need to understand how you can drive these operations very efficient, which we know from our other investments within e commerce. The shareholder base of MatHem, basically the largest shareholder before we came in was the investment company Verdane, but we also have in the cap table Klas Olson, the retailer. And therefore, there's also a very promising partnership between Klas Olson and MatHem how to add and to widen the scope of the product that's being sold. And then, of course, the founders is still shareholders of company. If I then move to your third question regarding e commerce, I mean, looking at Zalando's position today, it's very strong. They have built up a platform that I think is unique within this field, but they still have below 2%, around 1 0.5% of the fashion market. And of course, we believe that there is room for growth. So going into growth phase or keeping the growth phase, I think, it's important. And with that said, also the investments in the fulfillment centers going from 3 to 11 needs to be considered when you look at the profitability of the company. I mean, going forward, if this company growth is growing, those fulfillment centers will increase the efficiency in the company. But now on the contrary, in the short term, you see higher CapEx, higher costs. And that will not be the same in a few years. That's our conviction. But having said that, I mean, the trend of e commerce that people are buying more often, they're using their mobiles and Zalando is capturing that consumer trend also makes the average order size going down. So of course, that is a sector challenge that you need to cope with. And I think that you can have good and strong customer offerings, value proposition out in the market that will basically enable the online retailers to e tailers to grow profitably without basically hamper growth if you do this the right way. As we all know or most of us now, Zalando is having their Capital Markets Day end of February. Of course, we are as eager as you to find out how they will cope with some of these challenges. Great. Thank you. The next question comes from the line of Magnus Ramus. Please go ahead. Your line is open. Magnus Raman, Handelsbanken here. I'm sorry, I came in late to the call, so perhaps this has already been talked about. But moving back to the food retail discussion, I have another question on penetration here. You mentioned U. K. Market penetration at 8 percent and perhaps this is mainly driven by the London area with much higher penetration. So when looking at the geography of the Nordics, you believe that the complexity and cost in the on the distribution side in this region could also be a reason to the much lower penetration seen so far in the Nordics? It's a fair comment. But I think the if you look at Sweden and you take the 3 biggest cities, it's also there you have the biggest purchasing power. So I think it's not really that different that that makes it. You could actually given that the food market and even groceries alone is so vast, we're talking about over SEK 700,000,000,000 in total addressable market in the Nordics, you could limit your geography and still make a very big company out of it. So and I think there might be differences, of course, but doesn't really change the case. Again, for these businesses, I mean, shared sourcing, central warehouses and so on? Of course. I mean, purchasing power is one big question. And that's why I think you need to be long term and bold to get into this game, because if you don't have the muscles to become a real player, you will have a big disadvantage on purchasing power. So that is, of course, but that can also be achieved with partnerships. As we know, Kolonial, they have strong owners that provide them with good agreements when it comes to purchasing and buying. Secondly, when it comes to the back end side, I definitely think that there is room for synergies and best practice sharing. I mean, just looking at the automation system that has been developed today in this field internationally and in the Nordics, we see that you can leverage and scale on the technology and the software that you develop. And Colonial, they have their own in house solution that is extremely promising that, of course, theoretically could be scaled. Great. Just a final one. I mean, looking at the leading incumbents, they all have nationwide coverage of their businesses supported by their store networks. You mentioned here that there is enough market potential in leading cities in the Nordics. But looking out a little in time, do you still see that there could be also consolidation between online and offline channel to be able for a leading online payer to actually become an omnichannel player with this nationwide coverage in the Nordic regions? I think definitely that we use the trend offline to online, right, because we described a shift. But for a consumer, there's not this distinction. You want to buy it from the most convenient channel depending where you are and what you're looking for. So I believe that the omni channel will be just the customer's choice that decides it. But what I've said before when it comes to e commerce in general is that to go into physical destinations and in stores from an online position is by far much easier than going the other way around. So if you're scrutinizing the companies all around the world globally, there are very few example, if actually any example of an offline retailer that has successfully become a true omnichannel model and done that transition completely. We see trends of it. We see people that do it quite well. But the other way around, we see quite many examples. So I would argue that building a strong centralized position first and then decide very concretely and specifically where to have physical outposts is a good way forward. Great, great. On this topic, I mean, could you share just in the food category or the food retail category, could you share any other examples in the Amazon Whole Foods that you were thinking specifically in this category? No. I think the Amazon Whole Foods is the best example of that type of big omnichannel bet. There are other very strong online players today that have not come into that position yet. They're still building up their online presence. Of course, you know Ocado, but they're also international players. You have Picnic in the Netherlands, Germany. You have other players in Asia, for instance. So there are very strong players on the online grocery side now building up this state of the art last mile logistics and in some impressive automation systems in order to be able to have a working, I would say, solid business model delivering good margins over time. Great. Thank you. As it appears that there are no further questions, I will hand back to the speakers for closing comments. Thank you very much. So thank you for listening and for all your questions. And just as a reminder before we end this call, I would like to inform you that we will release our annual report for 2018 on the 29th March and report the results for the Q1, Q1 of 2019 on the 26th April. So hope to see you and talk to you then. Thank you very much. Bye bye.