Earnings Call: Q4 2017

Feb 9, 2018

Good morning, everyone, and welcome to the presentation of Kinnevik's result for the Q4 and Full Year 2017. My name is Georgi Garev, and this is my first quarterly report as Kinnevik's CEO. With me today is our CFO, Joakim Andersson and our Director of Corporate Communications, Torun Ditzel. We will be taking you through a presentation of the results released this morning. And after that, we are happy to answer any questions you might have. I would, however, like to start by giving you some reflections on my 1st weeks here at Kinnevik. It's been a very busy month with 2 of the biggest transactions announced in our portfolio for many years. These are, of course, the announced merger of the Tele2 and Com Hem, as well as the combination of MTG's Nordics businesses with TDC Group, both of which I will come back to later in the presentation. With a high pace and exciting developments in our companies, being back at Kinnevik feels a lot like coming home. I started my career in the Kinnevik Group at Tele2 almost 16 years ago. Kinnevik has gone through significant changes since then, but the culture and the entrepreneurial spirit is unmistakable and as strong as ever. Now turning to Page 4, we have provided you with a summary of the key highlights for the quarter. Our companies finished the year with a strong Q4 reporting healthy growth and a solid profitability across the board. Their efforts to improve the customer experience is really paying off and coming through in their share prices, particularly in our e commerce and telecom assets as reflected in the 6% quarterly increase in our NAV. The most noteworthy development in the quarter on the investment management side was the investment in BIMA of SEK 106 1,000,000. Our NAV increased by SEK5 1,000,000,000 and in the quarter just north of SEK 90,000,000,000 and our balance sheet remains strong with a leverage of 1%. Our total shareholder return for the full year of 2017 is 31%, which is well over the guidance in our financial targets. And as of yesterday, our NAV was at SEK91,100,000,000 up 1% from quarter end as the overall positive share prices reactions following our listed companies' reports were offset by the recent corrections in the global financial markets. For the fiscal year of 2017, the Board of Directors is recommending an ordinary dividend of SEK8.25 per share, which corresponds to a yield of 3%. On Page 5, we have laid out the performance of our large public companies in more detail. Zalando had a strong finish to the year and delivered on its full year revenue and margin guidance despite somewhat challenging conditions in the beginning of Q4. As previously stated, Zalando's key focus is to gain market share through continued investments, a strategy that we fully support. The detailed financial results for the Q4 and full year will be released on 1st March. Millicom reported continued positive revenue growth in Latin America in the 4th quarter, driven by the accelerated transitions to high speed data services, both mobile and fixed. The company has made significant progress on its twofold business reconfiguration strategy in the last year and that has come through clearly in the share price, which is up 42% for the year. Millicom is entering 2018 with positive momentum and well positioned to continue delivering shareholder value and is recommending an ordinary dividend of USD 2.64 per share for the last year. Telesu yet again managed to meet or exceed the market's highly set expectations for the quarter and for the full year. The company's free cash flow of SEK2.5 billion for the year covers in the full proposed dividend of SEK4 per share for 20 17. MTG delivered record sales in the 4th quarter with contributions from Nordic and International Entertainment as well as MTG X. MTG X reported the 1st ever quarterly operating profit, marking an important milestone for the business. The proposed dividend of SEK12.50 per share for 20.17 represents 95% payout ratio of net income. Com Hem's continued focus on customer satisfaction resulted in yet another quarter of strong volume growth in the Com Hem segment. And as previously communicated, the Board proposed a 50% increase in dividend for 2017, that is SEK0.06 per share alongside the ongoing share buyback program. On Page 6 and 7, I would like you to give an overview of the 2 significant transactions that were announced in January of this year, starting now with the Tele2, Com Hem merger. On 10th January, Tele2 and Com Hem announced the intention to combine their operations to create a leading integrated connectivity player in Sweden. Kinenvik is excited and fully support Porteo of this transaction, and we are convinced that the 2 companies complement each other well and will be stronger and better equipped for the future together. And in a world where the consumer expects to have fast and reliable connectivity both at home and on the move and where data consumption continues to grow explosively, it will be crucial to be able to offer seamless high quality connectivity and digital services. As you can see on the slide, the new company will have a strong market shares in mobile and fixed broadband in Sweden and will be the leading digital TV provider in the Swedish market. Financially, we expect the combination to create added value for all shareholders, improved revenue growth and realization of Synagis, both on the cost and revenue side, will create significant capacity for attractive shareholder remuneration and strong cash conversion. In addition to becoming the largest shareholder in the combined company, Kinnevik will also receive approximately SEK1.3 billion in cash following completion of the transaction. Kinnevik has committed to vote in favor of the merger at respective companies general meeting and commit to participate in the European Commission's merger control procedure. Let's now flip to Page 7 for the 2nd large transaction announced this year. On 1st February, MTG announced the intention to combine their Nordic Entertainment and Studios businesses with TEC Group, Denmark's largest telecommunications company. Together, MTG Nordics and TDC will provide a fully converged connectivity and content offering in Denmark and Norway with a Pan Nordic footprint of fixed line and mobile telephony, broadband Internet access, TV distribution and streaming services. TDC will issue new shares to finance the combination of MTG will and the combination of MTG will distribute those shares to its shareholders upon closing of the transaction. As a result, Kinnevik is expected to become a 5.6 shareholder in the TDC Group. Kinnevik has committed to vote in favor of the combination and the distribution at the general meeting in MTG. And we are convinced that this is the right step for MTG. With TDC, MTG Nordics is creating Europe's 1st fully convergent media and communications provider with the ability to reach more than 10,000,000 Nordic households. At the same time, the remaining MTG can focus on the development of its global digital entertainment verticals with an esports, online gaming and digital video content. Now moving on to Page 8, where we have summarized the key developments in our private companies during the quarter. This was another quarter of growth across our private companies, all well positioned to leverage that development in the respective markets whilst making clear progress in their path to profitability. Global Fashion Group continued to show stable growth in both active customers and revenue in the Q3 of 2017 and further improved its margin compared to last year. And as announced previously, in January, GFG appointed new leadership in the form of Kinetic's former Investment Director, Christoph Barchewitz and Patrick Smith, CEO of the ICONIC, who became co CEOs on the 1st February. This appointment is a true testament to Kinnevik's commitment to active ownership and I also look forward to continuing to develop GFG as I will join the board and work together with Christoph and Patrick in this next chapter of the company. Quikr saw over 50% increase in traffic to its online platforms during 2017 and replies per listing is stabilizing at a high level following a period of continuous growth. The company also announced the acquisition of the 2 businesses from India's largest mortgage lender, one of them a real estate brokerage. The acquisition will enable Quikr to participate more deeply in transactions by acting as an agent for either the buyer or the seller in real estate transactions. Betterment continues to grow assets under management, which since our first investment in Q1 2016 has grown from 4 $1,000,000,000 to over $12,000,000,000 This year alone, Betterment has grown its assets under management by 83% and number of customers by 51%. The company launched a number of product innovations during the year and continued to develop its platform beyond a single digital product to a multi plan advice offering, which were the key drivers of the growth. BIMA attracted global insurance company Allianz as a new strategic partner in a financing round, which I will come back to later on the next page. Babylon's digital service GP at hand reached over 30,000 application since launch in November and it's already one of the largest GP practices in the U. K. At the end of December, Babylon had close to 1 point 3,000,000 registered users and is providing thousands of treasures and appointments per day, awarding the company sector leading user ratings. Livongo is rapidly growing its membership base with 2.5x more members at the end of December compared to the beginning of the year. The company made strong progress in sales to health insurance plans, signing or expanding contracts with 5 of the largest plans in the U. S. Now please turn to Page 9 for details on the financing in BIMA. First to recap, BIMA is the leading insurtech player in the emerging markets using mobile technology to provide insurances on health services to customers across Asia Pacific, Latin America and Africa. And in December, Bemah closed the fundraising of US107 million dollars and successfully attracted global insurance company Allianz as a new strategic partner core shareholder. 1 of the key transactions attractions of BIMA from Allianz perspective was the significant growth opportunities inherent in its business model as well as the company's strong partnerships with mobile operators who have a combined customer base of 1,300,000,000 people. For BIMA, the partnership with Allianz provides operational knowledge and capabilities as well as a long term source of capital. The transaction values BIMA to $260,000,000 which is a 7% to 8% uplift compared to Kinnevik's recorded fair value per Q3 in 2017. And for the next sections of the presentation, Kinnevik's financial position and the summer of 2017, I would like to hand over to our CFO, Joakim Andersson, who also was the acting CEO under 2017. Go ahead, Joakim. Thank you, Georgi. So on Page 11, we have outlined the 4th quarter changes in valuation of our largest private companies. The total value remained overall stable and amounted to 11,700,000,000 dollars The fair value of Kinnevik's shareholding in Global Fashion Group amounted to $5,200,000,000 implying an average multiple of 1.3x the company's last 12 months net revenues, which corresponded to a 45% discount to the peer group, which is comparable to the multiple and discount applied in the Q3. As mentioned by Georgi, the fair value of our shareholding in BIMA increased by $307,000,000 during the quarter as a result of the financing round led by Allianz, which was completed in December. In the valuation of Home24, we are applying a multiple of 1.1 times the company's last 12 months net revenues, which corresponds to a 40% discount to a group of listed e commerce peers. It is worth noting that the peer group for Home24 and Westwing has been updated during the quarter and the discounts applied have been updated to reflect the relative growth and profitability of Home24 and Westwing compared to those peers. In addition, as discussed in previous quarters, the changes in fair value of Kinnevik stake in Home24 are disproportionately affected by liquidation preferences. On Page 12, we have shown the key contributors to the strong NAV development in the quarter, which was mainly driven by strong performance in Zalando, Tele2 and MTG. As Georgi mentioned, our NAV increased by 6% from $85,700,000,000 to 90 point $6,000,000,000 and NAV per share increased from $311,000,000 to $329,000,000 in the 4th quarter. As per yesterday, our NAV is up by 1% to $91,100,000,000 or 3 $31 per share during the current year. Please turn to Page 13 for a look at our financial position. Our investment activity was low in the quarter and as such our net debt position increased only marginally from around $900,000,000 in the 3rd quarter to $1,100,000,000 at the end of December, which corresponds to leverage of 1%. I would particularly like to highlight on this page the total shareholder return, which amounted to 31% for the full year 2017 and 21% for the last 5 years, a development which I'm sure you can appreciate we are very proud of. Now turning to Page 15, we have summarized the highlights of our strategy execution in the past year. Our key priorities for 2017 was to grow and protect value in our large listed companies and to drive sustainable growth in our private assets. With our largest portfolio company, Zalando Millicom contributing to close to $7,000,000,000 each to our NAV development through share price increases of 22% 42%, respectively. This objective has clearly been achieved. We are very proud of how they have executed their respective strategies during the year and are pleased to see that their hard work is coming through creating shareholder value. Our Nordic TMT companies are all in great shape delivering on their plans. The transactions announced in January involving Tele2, Com Hem and MTG are strong indicators of our belief in TNT convergence and we see continued great opportunities for these companies. As already highlighted, our private companies are and were during 2017 focusing on growth whilst making clear progress on their path to profitability. Kinnevik's commitment to sustainability is an area which we are particularly proud of. And during 2017, we have spent significant time and resources on implementing tailored sustainability roadmaps for all large companies. We have worked closely with our companies to follow-up on sustainability performance and in setting priorities for 2018. 2017 was a year of many large transactions with total investments of $4,800,000,000 and total divestments of $5,300,000,000 We invested in 2 new companies, Com Hem and Livongo, and showed our continued commitment to businesses we believe in, Betterment, Babylon and Bema. We also made full exits from our ownership in Rocket Internet and Lazada. To summarize, 2017 was very good and active year for Kinnevik. Our aim is to deliver an annual total shareholder return of 12% to 15% over the business cycle to carry low leverage not exceeding 10% of the portfolio value and to pay a growing annual dividend. As you can see, we have achieved and exceeded all three financial targets this year. On Page 16, we have outlined the key contributors to our NAV development during 2017. Translating our company's progress over the year into asset value development, our NAV increased by $18,200,000,000 or 25 percent from $72,400,000,000 to $19,600,000,000 We paid out $2,200,000,000 in dividends and received $2,300,000,000 from our investee companies, including the proceeds from the sales of assets in Black Elk Farming. Turning to Page 17. You can then see that the Board of Directors has recommended a dividend for 20.17 of SEK8.25 per share, which would correspond to a dividend yield of 3%. That brings our total dividend paid to $2,300,000,000 for the year and a total of 10.6 $1,000,000,000 ordinary dividends paid during the last 5 years. Our financial targets remain unchanged. That concludes these sections, and I would like to hand it back to you Georgi for the 2018 key priorities on Page 19. Thank you, Joakim. And as Joakim has run through our financials and strategic development in 2017, it's quite clear that I'm taking over as CEO with Kinnevik in a very strong position. Active ownership is part of Kinnevik's unique DNA, and in my mind, central in building successful businesses for the long term. By active ownership, I mean our ongoing commitment and engagement with our companies to support their strategic direction. We can leverage our understanding of global macro trends and shift in consumer behavior as an investor across multiple digital sectors across the globe to support our companies in reaching their full potential. To continue to intensify this commitment and engagement with our companies is a key priority going forward. And to accelerate the development in our private portfolio, we need to identify the winners in which we want to invest to commit our time and resources. We also need to have the conviction to stick to our bets and continue to invest and support these companies to make sure that they have the ability to represent a significant growth driver and share of our overall asset Also, we will continue to make new investments in our target sectors in companies that we believe are the winners of tomorrow. Sweden and the Nordics represent Kinnevik's home markets where we have started and built some of our largest and most successful companies. With our legacy and our successful investment history, not least in the past 10 years, I am convinced we can do more to leverage our position in our home markets. The Nordics have strong fundamentals and is a very attractive market in the sectors we target and we will be intensifying our efforts to invest in A month in the job with 2 groundbreaking transactions having been announced in January, I could not be more excited to be at the helm of Kinnevik. Thank you very much for listening and let's now open up for questions. We also have Chris Bischoff, Senior Investment Director on the line for any detailed questions on our private portfolio. Operator, please go ahead. Thank The first question comes from Derek Lelbertis of ABG. Please go ahead. Your line is now open. Yes. Good morning and thank you for taking my questions. So we are seeing an increased risk now that the MTG and MTDC deal will not go through. So how does this affect the likelihood or does it in any way jeopardize the Tele2 and Com Hem deal because hasn't your strong control in the local TV market been an issue? Thank you. Okay. As we said, when the Tele2 and Com Hem merge was announced, we are very supportive to that deal. I mean, we see these strong consumer trends and we believe in convergence between fixed and mobile. We also said that we will be committed to have a dialogue with the companies and the commission in order how to solve the regulatory uncertainties. I mean, this deal with MTG and MTDC, our opinion is that will solve that regulatory uncertainty, but it's not depending on that deal. We stick to our commitment on the Tele2, Com Hem merge and we will make sure to do our utmost to make that deal happen. And could you sort of paint a picture what you are seeing with this convergency trends between fixed and the mobile and content, sort of how the future consumer product or whatever would look like? Or is this, to a large degree, mainly a churn reduction measure and synergies to be achieved? I mean, if we go back to the DNA of Kinnevik, we have always been in the forefront of, I would say, not only identify consumer trends, but actually to capitalize on them. And we've done that in the TMT sector before. We've done that within e commerce, for instance. We have new potential digital winners in our portfolio. When we look at the TMT sector as of today, we are we have a conviction and a vision that what we see now is basic consumers asking for the best connectivity, whether it's fast, fixed or mobile. They don't want to care about if it's the technology, but they want to be connected on the move and at home. They also want the access to great content, local content as well as global content. So we think that these two deals that were announced during January both represents value creation according to those trends. So let me just first answer that. We see that they can create value standalone. Now it happens to be that one deal basically can solve the regulatory uncertainty in another. But again, it's not really depending. It's not correlated in such a way that the Tele2 Com Hem deal is fully dependent on the MTG TDZ deal. When it comes to convergence, we see basically that this is consumer driven, but we also believe that to create value within this sector, we need also to support structural mergers and acquisitions in order for this to happen. Will this be a straight path to this, let's say, consolidation? No, I don't think so. We will, of course, be an active owner in driving this, and we will do what we can in order for this to happen. Okay. That's very clear. And finally, this increased focus on the Nordic region, where this mean any organizational changes that you would ramp up sort of investment organization locally in Stockholm or all you've won't Tas before? Thank you. I mean, as I said during the presentation, I just feel that with the strong legacy and heritage that Kinnevik has in terms of brand, connection and also the fact that Nordic represents a very interesting region in terms of innovation within the tech sector, we should be able to capitalize more on that position. Myself being more of a Nordic profile, I think that will help. What it means for the organization, what it means for the focus, I don't want to go into too much details today. We will definitely not focus less on, let's say, our global markets. We are a global investment company. We play across 6 continents as of today. We have a strong investment team based in London. So those opportunities will continue. But what I'm saying is that we maybe have not capitalized on our position and our legacy in the Nordic regions. So that is basically my focus going forward. But exactly how that would look like, I don't want to basically go into today. Great. Thanks. Thank you. The next question comes from Maril Cesar of Nordea. Please go ahead. Your line is now open. Hi and thank you. Yes, Mariel Cesar from Nordea. I have a question regarding the unlisted assets. You don't mention any divestments, but several holdings in the valuation table of unlisted financial assets have disappeared, such as Conga, which I assume is divested, but also Lineo and Mirtu. So could you please clarify if you have changed your reporting method or if anything else has happened? Yes. I'll hand over to you, Joakim. Hi. Thank you for the question. Yes, I mean, what we are highlighting, we acknowledge that we can't highlight details in all our companies on one page. So we are sometimes moving out up or down companies. So they are some companies are now in the other category on Page 11 on the presentation. And you rightly mentioned Conga, so that's one of them And then there are others as well. So the change in value as well on this quarter is spread over probably a handful of companies, so we see some write downs including Conga. But have you divested any either a linear or metro or is that fully transferred into the other post? Transferred into. I mean, there are companies we have divested over the quarter, but the ones you mentioned, no, they are just included in the other line. Thank you. The next question is from Magnus Rummann of Handelsbanken. Please go ahead. Your line is now open. And firstly, congratulations Georgi for your first quarterly presentation. I have a question on Zalando. You mentioned in the report here that Zalando's profitability is a strength in light of all the investment this is taking the company is taking. But I mean, looking at the prospect for the coming year, I think it's fair to assume that investments will continue to be high. And are you satisfied with a 4% or 5% margin even also long term? I mean, as we say thank you, Magnus. As we say, we fully support the strategy of, let's say, continuous growth and the capture of market share. So that is the main, let's say, strategy of Zalando, which we fully support. So that I think is extremely important to say that with that strong position that Zalando has, that will continue. Of course, we want to see profitable growth, right? So it will always be a balance between growth and profitability. But to prioritize growth in this phase of the company, we think, is completely right. Right. And then coming back to your Nordic focus that you mentioned, certainly, we've seen several divestments in of non Nordic assets in your listed holdings, telco holdings in recent years. But I mean, looking at this going forward, should it mainly be expectations of new investments in the Nordics? Or could there also be coming potential concentration to the Nordics? Could that also entail other measures than only new investments? I think these 2 deals that were announced after the period, they both represent, let's say, high activity in the Nordics for sure. But when I'm talking about increased focus in Nordic regions, I mainly refer to new potential investments. So I think that with our network, with our brand and with our long term interest, I'm sure that we can be a very strong and attractive growth investors for a lot of these companies that are, let's say, created in the Nordic region. All right. And then just a final one, perhaps this one is for you, Joakim, regarding the BIMA funding round. Can you help us understand how you could maintain your ownership level whilst you are not leading this funding round with the primary? Magnus, of course. I mean that's it was a mix of primary and secondary included in that €100,000,000 transaction. So some existing shareholders sold shares and we invested and picked that up to defend or maintain the number one position in the cap table. Okay, that's clear. Thank you. Thank you. Thank you. The next question is from Victor Hoglund of Assipare. Please go ahead, sir. Yes. Thanks very much. Just sorry for going back again here, but on MTG, Intodeci and then Tele2 Comphem, I understand it's hard to answer regulatory demands? Or is it how does your process work here? I mean, I think, first of all, let me just say that these two transactions, again, maybe I'm underlying or repeating myself here, but there were no any tactical plays from Kinetic's side. They are linked to a conviction where this business is going and this industry is going. But we also said that in the announcement of Tele2 Com Hem that we will be committed to have this dialogue with the commission and the companies. So to give you answer to you, yes, of course, we will see more alternatives than just the MTG TDC deal. What that is in terms of plan B, C, D is not something I'm going to, let's say, disclose today. Understand. And just taking that view on convergence into account, when you say you're going to focus on the Nordics, should we see that as maybe you will start to add more? Do you see potential for you to buy companies and enter into investments related to other areas of the home? Could it be that kind of growth legs you see in the Nordic source that is it other things to maybe MTGX related gaming companies? Or any comments on what areas you are seeing? I mean, we have our sector strategy, and we will be focused around these sectors. So that's a start for sure. Exactly what type of companies we will look at and what stages they should be in. I mean, I think it's again too early for me to be that detailed after 1 month in my new job. But for sure, again, I believe that we have more to contribute with as long term strategic investor with, let's say, conviction where this industry is going. So there could be, I think, many kinds of opportunities that we will look at. The next question is from Joakim Gunal of BNB Markets. One just follow-up question on the most recent one. You mentioned that key priorities going into 2018 is to accelerate the private portfolio and increase the Nordic focus. Are we here seeing that you should are these 2 combined? So to say, are you looking to grow the share of unlisted holdings? Or can you elaborate a bit more on that in the Nordic region? Or is yes, sure. Yes. I mean, of course, I think if we look at our private portfolio, we have many interesting companies there where we will continue to, let's say, doubling down on because we have a very, let's say, clear view where this digital business is going. So we will stick up with them and basically be committed long term shareholders, but it's also about sourcing new opportunities. And there we also will, let's say, look more, as I said, in the Nordics. We will continue to look opportunistically in all markets based on our sector strategy. But based on that work, the coming years, we will definitely select some new winners where we'll be long term shareholders of. So it's a combination. All right. But okay. Going forward, regarding the portfolio And when do you expect to have reduced the number of holdings to an extent where you feel satisfied? And also, if you can comment a bit on how many holdings as a whole do Shinawit now have in their portfolio? I mean, we don't have a, let's say, set target for that. It's definitely something we will look more case by case. I mean, our, let's say, strategy is to be long term investor and grow with these company over time if they are positioned in the right way and if they're basically having the management position and what it takes to deliver. And of course, that you can't do with too many companies. So it will be a selection over time. It doesn't mean that a company, let's say, is performing bad because we are divesting it, but it's a natural thing of our strategy to look at these companies and when we believe it's a good exit. I don't know if you want to add on that Joakim. No, no, I agree with you. As we've said before, we don't have any specific target number or targeted number for how many companies we should have in the portfolio. As you know, we have been on a journey where we have been cleaning up and reducing the number from the 50 ish that we had some years ago and down to where we are now. I mean, probably, yes, we don't have any numbers in mind. So But maybe we can just to be clear that we are in a position now where we feel that we have a manageable portfolio and we are in a very strong financial position to look at new investments and to increase the focus of some of the investment that we have in the portfolio. But and of course, during the coming years, there will be both new investments and divestments as a natural part of the business. All right. And one final question then. Regarding Global Fashion Group, now that Christoph will join as co CEO and with you, Georgi, on the Board, what will we have, of course, talked about the profitability trajectory here. And what will be the key strategic priorities for you? I mean, 1st of all, I have not joined the Board yet. So I'm starting to learn about the company. What I see is, of course, a huge potential. Otherwise, we wouldn't have been so clear with this company as we are. We're basically seeing the same trends as we saw with Zalando. So the huge shift from offline to online sales, which is very familiar to me given my, let's say, previous job. And this is something that we will continue to work on. GFG today is, as you know, a set of different companies. And in some markets, we see very good progress, the iconic in Australia being one of those. And we need to look further what we can do to improve as a group. But right now, the general, let's say, the big trends, they are very clear. It's the offline to online shift. And I think we have the knowledge as an investment company to basically capitalize on our previous, let's say, journeys and be able to drive this to become a very successful company. Thank you very much. Thank you. The next question comes from Johan Sjoberg of Danske Bank. Please go ahead, sir. Thank you. Could you tell us a little bit more about just considering on the GFG topic here, could you tell us a little bit about the management changes taking place in GFG, the reasons behind that? And also, what you if you look at the past or basically looking at your value of the company compared with what you have invested into it also, you are behind, so to speak. It's not been a great investment so far. Could you tell us a little bit about what you think has been gone, not grown maybe, but rather what you can do better in Global Fashion Group, please? Yes. I mean, maybe I will let Joakim talk a bit about the previous investments and the value of those. But before we go into those details, do you success. And again, that's where Xinyvi comes in with a long term strategy. So we are we have a vision that is very much aligned with the other shareholders of DFG and the management that this is a great company well positioned for future profitable growth. That's basically the first thing I would like to say. When it comes to management change, I mean, Christoph Barcewitz being with Kinnevik for many years and has been working closely with GFG. And we believe that the combination of Christoph with that experience and his background with Patrick Schmidt that has been the CEO of ICONIC in Australia, let's say, one of the most successful companies within the GFG Group. That combination is basically a great management team for this next chapter in the company's history. And of course, myself with my e commerce background and also being more of an operator, I look forward to be part of that journey and work actively together with Patrick and Christoph and the rest of the team. Joakim? Yes. And maybe to comment on the background and where we are with GFG now. I think as you know, we have said before as well that these companies were started 2010, 2011 with the call it the Zalando model in mind going after other regions or parts of the world, which were more emerging and fast growing perhaps than what Western Europe is. So what we have realized as we also know is that those regions where we are with DFG has been a bit probably a bit more difficult than we thought from the beginning. But it is a longer journey than the Zalando journey because of the complexity and because of the nature of those markets. So that's again, I mean, plays well into the strength of Kinnevik and then the long term view of Kinnevik. We are behind on invested capital compared to the fair value, but again, it's a long term bet and we think they are in a better and better shape. I appreciate your answers. Could you say something also about the prioritization priorities rather when it comes to growth versus profitability in Global Fashion Group. Where do you stand there now? Will you see a change here going forward? I think, as I said, with Zalando, we believe that these companies are definitely into a growth phase. That is important. We see a strong growth now in the Q3 of GFG, which of course makes us very confident that they have a strong position. So growth is very important. However, in GFG case, since we have, let's say, a negative EBITDA margin, we need to improve that margin over time, which is also going in the right directions. In the quarter, we see more than 2 point 3 basis points sorry, percentage points increase in the profitability. So it's going definitely in the right direction. So improvement of profitability is important, but not, let's say, not by slowing the growth. Got it. And also just a follow-up or a question on your forthcoming new investments here. There was a your previous CEO had a Kinvik 3.0 day almost, well, 1.5 years ago talking a lot about the new segments within Healthcare, also Financials. You have seen a number of investment here, which you continue to invest in this quarter as well. But now you're turning more towards the Nordics. Would you say that should we is this a big change now? Should we not expect these investment trends, new investments, to continue on a global scale but more focused towards the Nordic region? Is that how we should read it? No, I don't think we should read it that we will stop doing anything that we have done, let's say, during the last year. We have our sector strategy. We have businesses across continents. We are very committed to those that we have in the portfolio that we see as the next digital winners. What I'm saying is that we have not maybe capitalized as much as we could have in the Nordic region. So without basically going into more details why that was the case and so forth, that is not really my position to do right now as CEO of new CEO of Kinnevik. I just feel that we can do more in the Nordic regions, not because we have an office here, but because this region is proved to, let's say, have a good innovation within the tech sector. So more focus in the Nordic means that we should not lose opportunities here, but we will continue to execute according to our sector strategy across the other markets as well. I appreciate and I think that's a good strategy also because I mean, I don't think that it's so much really has happened since this presentation, the Cinevig 3.0. I think we have it's still a very low level of the total portfolio, which is has been invested into those regions. So I like that. But would you also say that, I mean, should we expect I understand you're still just a month into your work. There's been a lot of things happening in your listed portfolio. But should the unlisted portfolio come more in focus going forward here, would you say? That is something you can expect, yes. I believe that we can do much more in the private portfolio. I mean, on the other side, we have seen a great development in our public portfolio. So of course, the relation within between private and public does not only have to do with the increase of NAV in the private portfolio, but actually how the public portfolio is performing. And I don't think that we can only look at that relation. We need to see how we are able to develop our private portfolio. So compare that in, let's say, in absolute valuation is maybe more relevant going forward. Great. Thanks a lot for your answers. Thank you. The next question is from Elizabeth Miljaris of Bank of America. Please go ahead, madam. Thank you very much. Good morning and looking very much forward to meeting you in the next few weeks. A quick question for me on the TDC MTG deal. Are there any concerns that, that will any concerns or risks that, that might not go ahead given the more recent indicative bid from the consortium? I know it's been rejected, but is there any concerns that the deal won't go ahead? I mean, you always have concerns for these deals from a regulatory perspective or other perspective as well. I mean, so that of course is something that is not unusual or that we didn't expect this to be, as I said, a straight path to the to, let's say, the end goal. However, we believe so much in this, let's say, these trends that I've been talking about. And I feel confident that the shareholders of these companies also will understand the value creation opportunities that these deals stand alone can give. This is what the Board has said of TDC. I don't want to comment the, let's say, last days speculations and news that we have read. This is not a tactical play from Kinnevik. We have our conviction and we will stay focused to that. Okay, sure. Responses have sort of slowed this quarter. I think it was 10.4 relative to last year's Q4 of 10.3%. You look at the growth in Q3, on Q3 was quite high at around almost 30%, I believe. Is there anything that's driving that slowdown? What's happening there? And is there anything that Sinovelik can do to turn that around? I think that's a perfect question for Chris. Chris, can you come in, please? Absolutely. So thank you for the question. The I mean, I think when you look at this data, we obviously just give you responses and there's obviously a bigger picture behind that. So traffic was up. So obviously, response listings were actually down on the quarter, so responses were listing were up. We reduced marketing spend. But I think the key point to think of is the cash in was about 40% higher quarter on quarter, and month to December 100% up and 70% up quarter for 2016 versus quarter 4 2017. And cash burn was obviously the lowest level ever for the business. And so we're really driving this business both in terms of top line revenue and reduction in cash burn. So I'd attribute it to a reduction in marketing spend. We obviously adjust our valuation as well. You would have seen in the quarter, but that was primarily due to a review of the cost of equity of the business rather than a change in the view of the business plan. Right. Got it. That's very clear. Thank you very much. Thank you. At this time, there are no further questions. Please go ahead, speakers. Okay. Then thank you very much for calling in and listening to the presentation, and have a nice day.