Good morning, welcome to the presentation of Kinnevik's results for the fourth quarter and full year 2016. I am Joakim Andersson, Acting CEO and CFO, with me today in Stockholm are Chris Bischoff, our Senior Investment Director, and Torun Litzén, our Director Corporate Communication. 2016 has been an active year at Kinnevik, in which we made investments into two new companies, Betterment and Babylon. We recapitalized Global Fashion Group, we distributed SEK 7.1 billion to our shareholders. We were also very focused on supporting all our portfolio companies, both public and private, in their strategy execution. We will start today by taking you through a presentation of the results, then we are happy to answer any questions you may have. Before we go more into details about the full year, let's turn to slide four and the highlights of the fourth quarter.
I think it's fair to say that the fourth quarter could be characterized by strong operational performance in our public portfolio companies, as you will have seen from their results announcements the last couple of weeks. Notably, our communication and entertainment assets continue to make strong progress on their strategic transformations, while our e-commerce assets are improving margins whilst maintaining healthy growth. We invested SEK 1 billion during the quarter, whereof the majority in Tele2's rights issue, we ended the year with a net asset value of SEK 72.4 billion, down by SEK 2 billion or 3% over the quarter. However, since year-end, our NAV is up by SEK 5.7 billion or 8% on the back of the reporting. Our financial position remains strong with a net debt of SEK 1.4 billion, which translates into a leverage of 2%.
The board of Kinnevik has recommended an ordinary dividend of SEK 8 per share for 2016, if approved by the AGM, this would correspond to an increase by 3% since last year and a 4% dividend yield. Turning to slide five. We'd like to remind you that over 90% of our portfolio constitutes six world-class companies reaching millions of customers in many markets around the world. We describe these companies as our first and second generation investments at our Capital Markets Day last November, with communication entertainment as the first generation and e-commerce and marketplaces as the second. What our companies have in common is that they are all strong digital brands addressing material everyday consumer needs in large markets. The value of our portfolio is driven by three components: operational development, general equity market conditions, and translation of foreign currencies.
I want to start by talking about the operational developments of our most important businesses, then talk about the market conditions and currencies before moving on to look at the valuations for the quarter. The six companies you are seeing here have all performed well in the fourth quarter. On the next slide is an operational and financial update on our largest asset, Zalando. Zalando continued to deliver high growth in the fourth quarter, breaking the EUR 1 billion revenue barrier for the first time in a single quarter, growing revenues by around 25% in the fourth quarter last year. We are very pleased to see that Zalando continues to invest in improving the customer experience through faster deliveries, platform development, and in closer partnerships with the brands. The margin for the quarter, according to the preliminary numbers, was stable at around 7.5%.
The final numbers will be reported by Zalando on the 1st of March. On the next page, slide seven, we have summarized the fourth quarter for Millicom, Tele2, Rocket Internet, and MTG. I will not go through this in detail since these are all public companies that have announced their results, but I would like to highlight the strong growth achieved by Tele2 and MTG in particular, and the significant profitability improvements seen in all companies. We are also very pleased to see that Millicom has made meaningful progress in the reshaping of its business, with strong growth in its mobile data and cable revenue in Latin America, as well as good progress with major initiatives to improve operational efficiency. MTG continues to reallocate capital as part of its strategic transformation from a traditional broadcaster into a digital entertainment company.
Overall, we are very pleased with the operational performance of our public companies. We'll now talk about our private companies, which represent our most recent third generation of digital businesses, including the new investments made in 2016. At this point, I would like to hand over to Chris Bischoff to update you on their performance.
Thank you, Joakim. Overall, this was a solid quarter for our private companies, with both increased growth and lower cash burn in the face of some macro headwinds in the emerging markets. I'll focus my comments on page eight of the deck, and there's supplemental detail on pages nine and 10. At GFG, the number of active customers grew by 20%, NMV grew by 22%, and net revenue grew by 16% in the third quarter. Operating momentum was strong with improved margins across the regions. Year-on-year, EBITDA margins have now improved by a material 15 percentage points. The margin improvements are largely driven by improved inventory management, as well as meaningful efficiency gains across fulfillment and marketing operations, in addition to fixed cost optimization.
Individually, as laid out on page nine, we saw strong top-line growth at Lamoda and Namshi, and significant margin improvement at Dafiti and Zalora and THE ICONIC. Moving on to Quikr. The company has sharply increased engagement and revenue in recent months while reducing marketing costs. Replies per listing grew 125% year-on-year, and monetization grew 100% year-on-year. Monetization growth, however, in the quarter was impacted by the broader economic slowdown in India, resulting from the government's move to demonetize the currency. The impact of this will continue to be felt for at least the current quarter. Quikr continues to make selective investments to expand its product range in key categories, including Grabhouse, a managed rental accommodation provider. As Joakim mentioned, we invested for the first time in Betterment this year, and this quarter marks our third quarter as shareholders.
We continue to be impressed by the strong performance of the business as it grows its market leadership over the pure digital advisors in the U.S. As of year-end, Betterment served 208,000 customers and managed SEK 6.8 billion of assets. As of the end of January, this AUM has increased to over SEK 7.3 billion. In early February, Betterment expanded its platform to a multi-plan advice offering that now includes human advice alongside automated advice through a team of licensed financial experts. In association with offering more advice to cater to a broader range of client needs, Betterment tiered its pricing to reflect different service offerings. Moving on to Bima. This is the world's leading mobile insurance provider, and Bima had 5.6 million active customers at the end of Q4, up from 4.6 million in Q3.
Revenue continued to grow steadily in the quarter, and three of Bima's markets have reached profitability on a full year or run rate basis. Bima's product offering continues to expand, exemplified by the growth in its Teledoctor consultation service, which served over 1,000 consultations per day in Bangladesh alone. At Westwing, active customers increased by 7% year-on-year, while GMV increased by 27% and net revenue grew by 23% in the third quarter. We saw significant improvement in the EBITDA margins as a result of an effort to further automate processes, reduce logistic costs, and focus on more efficient marketing. Over half of Westwing's revenue is now generated on mobile, a result of its focus on creating easy-to-use and inspiring customer experience. Our second acquisition in 2016 of a new stake in a new business was Babylon.
We continue to progress our strategy there of leveraging digital distribution, machine learning, and clinical expertise to transform the delivery of primary health. Babylon now has over 600,000 registered users, and the triage product is being used by thousands of people a day. Babylon continues to develop its partnership with the NHS in the U.K., and is now powering the urgent care line 111 in a test group of over one million people in London. Further, over 100 corporates in the U.K. are now offering Babylon as an employee benefit. Moving back to Joakim.
Thank you, Chris. As I mentioned earlier, the valuation of our businesses is driven by three components: operational development, general equity market conditions, and translation of foreign currencies. Now that we have covered the operational performance, I'd like to turn over to the market and currency developments. On slide 12, you can see on the left-hand side, a generally favorable performance in the key equity indexes over the quarter. On the right-hand side, we have shown a selection of currencies that all point to weakening of the SEK during the fourth quarter. Obviously, a context that should have a positive impact on the Kinnevik portfolio. Turning now to look at our sectors, I'll start with the e-commerce on slide 13.
This graph shows a tough quarter for e-commerce, and in particular, for the marketplace and classifieds models, as evidenced both by the share price performance to the left and the valuation multiples to the right. On slide 14, looking at the telecom sector, we see sideways to weak developments for the quarter. Millicom had a tough quarter, both looking at the share price performance on the left and valuation multiples on the right, driven by the migration from voice and SMS to data, the challenging macroeconomic environment in Latin America, and tough competition in their main markets. Tele2, on the other hand, developed favorably in the context of both Nordic and European peers, as shown on the slide. Let's now go on to talk about what these developments meant for the valuation of Kinnevik's assets in the fourth quarter.
On slide 16, we have outlined detailed information on the valuation of our largest private companies. On a consolidated basis, you can see on the bottom line that the fair value of these assets was overall stable during the fourth quarter, and as a result, the portfolio value remained at SEK 12.3 billion. At the top, we have our largest private asset, Global Fashion Group, and in absence of any material transactions, we continue to value our shares in Global Fashion Group on a revenue multiple. As you can see, there is only a small adjustment of the value from last quarter. Adding the value of the private investments to that of our public companies on page 17, we get to a total net asset value of SEK 72.4 billion at the end of the year, which corresponds to decline of 3% of the last quarter.
Our NAV per share consequently came down from SEK 271 to SEK 263 during the quarter, mainly as a consequence of the share price development for Millicom. As of yesterday, however, the NAV per share was SEK 282 or SEK 78.2 billion in total, an acknowledgement of the very strong Q4 performance of our large listed companies, and in particular by Millicom, with a share price rebound of 25% since year-end. Overall, our NAV is up by 8% so far this year. The final slide on this section is, as usual, the summary of our investment activities and the overview of our financial position. During the fourth quarter, we made net investments of SEK 872 million, including the SEK 900 million participation in Tele2's equity rights issue.
The accumulated net investments for the full year amounted to SEK 2.8 billion, which is within our net investment guidance of SEK 2 billion to SEK 3 billion for the full year. Including the investments during the quarter, we ended the year with a net debt position of SEK 1.4 billion. Let's now move on to look at the full year 2016 on slide 20. As mentioned earlier, 2016 was a year with a high level of activity. We invested in two new exciting companies, Betterment and Babylon, and we deployed a total amount of SEK 2.7 billion into our existing companies to support their growth and path to profitability. The most noteworthy transaction in the private portfolio was the recapitalization of Global Fashion Group, which, in combination with their exit from India, puts the company on a solid financial footing and allows them to focus on executing their strategy and improving operational efficiency.
We returned a substantial amount of cash to our shareholders in the form of ordinary dividends and through execution of a share redemption program. On top of that, we also executed a share buyback program, and all in all, our shareholder remuneration in 2016 totaled SEK 7.6 billion. We further continued to drive consolidation, demonstrated in particular during 2016 in Tele2 and Qliro Group, and we also supported and encouraged our companies to continue invest in innovation and forming strong partnerships to create a foundation for future success. Last but not least, we implemented governance risk management and compliance roadmaps for most of our private companies as part of our ambition to create businesses that deliver both shareholder and social value over the longer term. Slide 21 shows our NAV development for the year.
As you can see, like for like NAV adjusting for the shareholder distribution came down by 5% from SEK 83.5 billion to SEK 79.5 billion, driven in particular by weak macroeconomic conditions which had a negative impact on Millicom. The reported net asset value for the year was, as previously stated, SEK 72.4 billion, but again, as of yesterday, our NAV is up to SEK 78.2 billion or 8% since year-end. If we then move to slide 22, you can see that we are making some minor refinements to our return and leverage targets. Where we used to say that our aim is to deliver a TSR of 13% over a cycle, we have now changed to 12%-15% over the cycle, reflecting the current interest rate environment and our portfolio composition.
The leverage target has been refined from no to low leverage to the more specific, not exceeding 10% of the portfolio value. Our dividend policy is unchanged. The board has decided to recommend an ordinary cash dividend of SEK 8 per share, which translates into almost 4% dividend yield based on the closing share price for 2016 and 3% growth year-over-year. Our five-year total shareholder return, shown in blue on the graph, was 16% as of end of year 2016. To conclude, I'd like to turn to page 24 to talk briefly about our high-level priorities for 2017, which are very much in line with what we have communicated previously. As our large public companies are the main driver for value creation at Kinnevik, our top priority is to grow and protect their value.
Each company has a clear strategic agenda, and we will work hard in 2017 to ensure they all deliver on their respective priorities. Similarly, our investment team remains firmly focused on driving sustainable growth in our private portfolio. Furthermore, a key priority for 2017 is to ensure we find new, exciting companies that will complement our existing portfolio. Delivering on our targets would not be possible without top talent. Therefore, we continue to seek to attract, retain, and reward talent in line with Kinnevik's value creation, and we aim to support a strong culture, both through proactive and transparent communication with our stakeholders. In short, we are in a very strong position for 2017, and continued execution is in focus. Thank you very much, and let's now open it up for questions.
Ladies and gentlemen, if you have a question for the speakers, please press 01 on your telephone keypad. If you find your question has been answered before it's your turn to speak, please press 02 to cancel the question. Please hold until we have the first question registered. Our first question comes from the line of Elias Porse from Nordea. Please go ahead, sir. Your line is now open.
Thank you. Good morning. Could you update us on the search for a new CEO? Should we expect a lower level of activity until a new CEO is in place, i.e., how important is the CEO function for new investments, disposals, et cetera? Thank you.
Thank you, Elias. We have a search process that's been launched. It was launched in December. This is a process that is led by the board, obviously. The board and Kinnevik will, of course, announce when they have made progress and when we have a new candidate or a new CEO in place. On the second question, I think this is business as usual. We have a very dedicated team, and as I mentioned earlier, we continue on a high activity level on the investment side, continue to look for new exciting companies that we will invest in.
Okay. Thank you. You don't provide an investment guidance for 2017, but your revised gearing target allows for substantial investments. What kind of level should we expect? Is the SEK 2 billion-SEK 3 billion a reasonable level for this year as you see it now? Thank you.
As we noted, we have taken out the net investment guidance and the actual number. You're right, we have refined and clarified our leverage target by providing a number on what we mean with low leverage. I think you shouldn't read it as a target to be at 10%, rather, again, as a clarification of the no or low leverage, and we will remain below 10%. As I said, we will continue to have high activity, and we have a strong pipeline of new exciting investment possibilities. I think you should just expect more or less the same activity level as last year, we would prefer not to talk about numbers.
Great. Finally, the new investment in Babylon. Can you tell us anything about future capital needs? Thank you.
Sure. I'll pass that over to Chris.
Babylon remains a young company. We led the Series A financing last year, typically this sort of company is financed for a 12 to 18-month period. It will be coming up to a point at which new capital is required to take it forward. Obviously, Kinnevik's ambition when it invests in young companies is to continue to support them as they grow.
Thank you.
Our next question comes from the line of Magnus Råman from Handelsbanken. Please go ahead, sir. Your line is now open.
Thank you. I can start off with Lorenzo Grabau. Last spring, he stated that Kinnevik would not sell its stake in Rocket Internet in the coming 24 months. Could you update us on your view on this holding and if that statement is still valid?
No, I don't think we would like to give guidance on any specific portfolio company. We probably prefer to talk about them in general. As you know, we are evaluating all the companies in portfolio, and we might sell some, and we might add new, but we don't comment on specific companies.
All right. You mentioned in the start of the presentation that all six companies performed well in Q4 here. Of those, Global Fashion Group was one. What does that mean in terms of performance for GFG in Q4?
I think the numbers actually have been announced earlier. This is the Q3 numbers for GFG, and the Q4 numbers will be announced in March. It's one quarter lag in the reporting. These numbers are not new for you, I think.
All right. Okay. I see. A question to Chris Bischoff, maybe on Betterment. You mentioned here that assets under management grew by some 7% month-on-month in January. On an annual rate, that would imply almost a doubling of AUM. Is that what the company targets for 2017?
If you look at the historical performance of the company, it has been able to achieve a doubling of assets year-on-year over its recent history. That may give you a guidance of the ability of the platform to scale. Clearly, this is a negative churn business, when you look forward, the existing customer base, one would expect to allocate more capital to the platform over the year, obviously you have the addition of new investors. I think you can read what you want from historical record. Yes, clearly we're looking to continue to scale the business and differentiate ourselves from the digital competition.
Right. On Quikr, can you update us on the status of its path to profitability and its current cash position? Is it sufficiently funded to reach profitability or should we expect additional funding rounds in Quikr ahead?
The cash burn as we've highlighted, has reduced, and the revenue has increased. The requirements for funding the business have fallen. The business is well capitalized, and we do not currently expect a need for any significant further funding of the business before breakeven.
Excellent. I just have one final on Bayport. Do you define this holding as well-aligned with your overall focus investment themes? Thank you.
Financial services as a sector is a core vertical for us, and one where we spend a significant amount of time. Bayport is also a consumer finance business that lends to tens of thousands of customers in emerging markets. In that respect, it serves a core part of the Kinnevik strategy. It is less digital perhaps than a number of our other investments. Obviously like every business, it's moving forward on a digitalization strategy.
One could interpret that it's not only the asset management side, but also lending side of financial services is a focus area for you.
I think we will look at a number of areas, and we've said that previously, of financial services, including lending. I think we have some reservations around lending business as a whole, as we do not aim to build large balance sheet businesses ourselves. We think there are other parties that are better placed to build those sort of businesses. I think you should not expect us, in the short term at least, to build large balance sheet businesses in addition to our stake in Bayport.
Thank you. Thank you.
I remind you that if you want to ask a question, you will have to press zero one on your telephone keypad now. There will be a further pause whilst we register your questions. We have a question registered from the line of Hubert Chanot from UBS. Please go ahead, sir, your line is now open.
Hi. Well, thank you for taking my question. I had a question on your e-commerce assets. We've seen some examples of consolidation in this area, and I was wondering if you are seeing that potentially for your assets as well, and if you would be a willing partner if that were to happen as a shareholder. Thank you.
As Joakim stated, we evaluate each of our assets and opportunities for each of our assets on how we can deliver greater shareholder value. Our base case remains to build sustainable businesses. If at times, parties come to us and look to either partner, in such a way build a better business or indeed they see more value than we do in the asset, we'll of course look at those situations on a case-on-case basis and decide how to proceed in the best interest of shareholders.
Okay, thank you.
Our next question comes from the line of Matti Lindgren from Direkt. Please go ahead, sir. Your line is open.
Hello again, Joakim, thank you for taking my questions before. Sorry I was a bit late to the call now, I just saw that you had divestments of SEK 99 million in the fourth quarter. What was that? Is that something you could specify? Thanks.
That's smaller businesses that we don't disclose the details around.
Why not?
Because we've chosen to not do it. It's not material for the overall messaging.
Okay, thanks.
Maybe as a last reminder, if you do wish to ask a question, please press zero one on your telephone keypad now. As there are no further questions, I'll hand back the conference to the speakers.
Okay. Thank you very much for listening and for your questions. As a reminder, we would just like to inform you that we will report our Q1 results on the 27th of April. Thank you again.