Earnings Call: Q4 2015

Feb 11, 2016

Good morning. This is Lorenzo Gerbaou and I'm here with Joachim Anderson. Welcome to our Q4 number 3 of our presentation, I'd like to begin by giving you a perspective on our quarter and put it into the context of the full year. There are 3 important messages that you should take away from this Q4. The first one is, it was a very solid quarter, during which we grew NAV by 2% despite some of the challenges that we experienced in the emerging markets. And we ended the quarter with $7,600,000,000 of net cash or nearly 9% of our net asset value. The second message is that we have progressed well in executing our strategy, which is, as you know, to create value, but even more importantly, to turn value into cash. And we're particularly pleased with the outcome of the Avito project, which was an 8 year project during which we turned $50,000,000 in $850,000,000 of cash or 16 times our money. In addition, we continue on our journey of focusing our portfolio such that we ended the year with about 34 companies and a set of divestitures of our peripheral assets at very attractive valuations. And this is allowing us to offer an attractive shareholder remuneration, which includes a dividend up 7% to 7.75 percent and more importantly, a buyback program which we are about to launch on Monday to repurchase up to DKK 500,000,000 of our own stock of what we believe is an attractive valuation. The underpinning of these three messages is described on Page 3 and it's coming from a solid operating performance in our various Investec companies, all of which are driving through this important transition that is taking place to a mobile world. A prudent set of investments that were made during the course of 2015 in our existing companies and the resolution of a number of other important matters such as the MSCO tax dispute on which we further progressed during the year. As a result, we're ending the year in a very strong position and well equipped for 2016. If you turn to Page 4, we have summarized here the reports from our 5 largest public companies, which many of you will be already familiar with and so I'm not planning to go through that in detail. But the summary of this Page 4 is really around 3 key themes. Each and every one of our companies is investing in driving the growth of their business and in driving innovation to capture the attention interest of customers and increase monetization. Where it is Zalando, we're accelerating growth, GFG building its business across 25 emerging markets, Tele2 launching its plant business or MTG pushing a very thoughtful digital investment strategy. Each and every one of our companies is investing in building long term franchises. The second important theme is one of transformation. The only constant in technology led businesses is change, and every one of our companies is transforming itself and its business model to adapt to a very different market environment. Where is Millicon transforming itself from a mobile company into a data driven broadband and cable distributor whether it is Rocket, which started as a business builder and incubator becoming a full integrated life cycle investment company or one of our smaller companies like Cliro building on top of its existing e commerce business, a very successful financial services company. Lastly, as I said, the 3rd theme, which is very important to us, is turning value into cash for our shareholders. And we've accomplished a number of very important transactions like Avito, Alacom and Romivik, which are allowing us to be incredibly well positioned to start 2016. If you look at Page 5, we summarize here the outcome of what has been a most exciting Swedish international project, which we have developed in partnership with 2 great Swedish entrepreneurs, Felipe Njona, to build one of the greatest companies in the world of global marketplaces. It started 8 years ago, and it went through a variety of key phases that included adding new investors, which is a theme that Kinnevik believes very much into the one of open architecture and bringing great partners. 2nd, consolidation, which is another very important theme to improve economics and extend the franchise. And then shifting in a very aggressive manner the business from desktop to mobile to capture the interest of consumers. And then when the bigger consolidation opportunity came and Naspers was keen to acquire a controlling position in the company, we worked in a very constructive manner with the founders and the management team and the other shareholders to complete a very successful transaction. The numbers on the right hand side show the returns that we achieved but also remind you of the very conservative approach that we take to valuing our companies, our NAV, a business that was valued in our Q2 at $2,900,000,000 was sold, as you can see, for $7,200,000,000 a few months later. And so we are particularly pleased with the journey. But I would also like to highlight that this is the type of journey that Kinnevik embarks upon. And what we would like all of our shareholders and our investors and our research analysts is to understand that an 8 year journey is a typical journey of a Kinnevik project. And as such, when you take a picture of our companies and you question some of the challenges that we experience and some of the investments that we're making, you have to always bear in mind that the average age of the project is 8 years. Orlando is on a 7, 8 year journey. Avito was an 8 year journey. And so many of our other companies are only 3 or 4 years old. And so they are just in the middle of this process of building a successful franchise. With that, I'll turn it over to Joakim to comment on our financial performance during the quarter. Thank you, Lorenzo. So on Slide 6, we have, as we used to set out, a couple of trends that had an impact on the valuation of our private assets. Starting with the graph on the left, you can see that the last quarter of 2015 showed a general rebound in both multiples and share price from the substantial drop that we saw during the Q3. As shown in the graph, the share prices of peer groups were up by 18% on average. As you all know, the high volatility has continued into this year. We have experienced around 15% price drop in January. If we look at the currency trends on the right hand side, we can see that the Swedish kroner traded in line with most of our important currencies for the private assets, with the exception from the Russian ruble. But once it continued its devaluation during the Q4, our exposure to it has obviously decreased substantially with the sale of Avito. Moving on to Slide 7 and the overview of the valuation of our unlisted assets. Excluding our divested assets, Avito and Volnevik, the portfolio value decreased by $2,000,000,000 during the quarter. And as you can see, the main driver was $1,200,000,000 devaluation of our shares in DFG, where the sales multiple applied in the valuation was taken down from 2.9x to 2.2x. And that's recognizing the public equity markets increased focus on profitability at the extent of loss and the general discounting of emerging markets companies vis a vis developed market companies. Zooming out to our full NAV on Page 8. There are a couple of points to make. Firstly, Zalando continued to perform strongly over the quarter and contributed with $4,200,000,000 to the increase in NAV. Secondly, we had an overall $1,400,000,000 increase in value and ended the year with a net asset value of DKK83.5 billion or DKK301 per share. However, as of yesterday, again based on a very volatile start of the year, this number has come down to DKK248 per share. And then thirdly and perhaps most noteworthy, following the sale of Avito, we now have $7,600,000,000 in cash on our balance sheet, as mentioned by Lorenzo as well in the way. On the next slide, Slide 9, we have specified the investment activities on the left hand side. During the Q4, we executed substantially more divestments than investments with the sale of our Vits and Mollevichsen. For the full year 2015, we made net investments of $430,000,000 excluding Avito. Our financial position on the right hand side shows the net cash position of $7,600,000,000 as per end of year. And as Lorenzo said in the beginning, based on the current pipeline of investment opportunities and the state of the capital markets, we expect to make net investments of SEK 2,000,000,000 to SEK 3,000,000,000 for 2016. If we then turn to Slide 10 and our dividend proposal. Based on our dividend policy and the current very well capitalized balance sheet, the Board is recommending a cash dividend of DKK7.75 per share, which, if approved by the shareholders at the AGM in May, would correspond to a yield of 3% based on the share price as of year end and close to 4% based on the current share price. Compared to last year, this recommendation would mean that we would increase our dividend by 7%. Finally, for this section on Slide 11, we have announced this morning to launch a buyback program of DKK 500,000,000. The execution, which will be done in line with the EU safe harbor rules, will start on Monday and end before Easter. Based on the current valuations and fulfillment of our 3 criteria, as shown on the slide, we think a buyback program is a very attractive investment for Schindler and its challenges. After you, Lorenzo, for further comments on last year's achievements and outlook for the year. Thank you, Joakim. If you now turn to Slide 13, you will see what Kinnevik had as its objectives for 2015. And what I'd like to then do is to comment on how we have done on each and every one of these objectives. Kinnevik is executing a simple strategy, which I will describe in one sentence as a prudent strategy of driving growth, innovation and where appropriate consolidation. This is what Kinnevik is all about and this is what we did in 20 15 and this is what we will continue doing in 2016. These standpoints were the ones presented to the Board in late 20 14 as our key objective for 2015, and we are pleased with the outcome of the year because on every one of these metrics, we have made significant progress. We have focused our portfolio on some of the best brands and businesses that we're building, and we've driven innovation, growth and attractive talent to make the business stronger. We have consolidated a number of our businesses, and we recalibrated our emerging market exposure to take into account some of the changes that have taken place in the world around us. We have continued to invest in building governance, risk management, compliance and corporate responsibility in every one of our businesses. And we have substantially strengthened our balance sheet to position ourselves for the opportunity that we see. And what we're doing today is we are announcing our delivery on the commitment that we have made to turn our results into cash and to be very thoughtful about translating the growth and the value of our assets into attractive returns for our shareholders. If you turn to Slide 14, you will see our 1st and most important theme, driving growth. At the end of the day, Kinnevik is only as good as the value of the individual businesses and brands that it's building and the customers it is attractive. And as you can see on the bottom hand side of the page, each and every one of our top companies grew customers into double digits and in some cases to some extraordinary levels like Lazada, which grew customers more than 210%. If we don't grow our businesses, we stop creating value. And so our first and foremost objective is to building customer franchises by investing in our brand. Our second priority, and if you now turn to Slide 15, is to translate the growth in customers into growth of revenue. And we're particularly pleased that our largest investment, Orlando, a company that was started only 8 years ago, was able to significantly reaccelerate growth in a profitable manner by achieving, as you can see, a move from the 21% to the 30% order on quarter growth in 2018. In addition, they were able to deliver a full year solid profitability, which shows that this company is building a very valuable franchise of growth and profitability in a very large market, a €400,000,000 market of and accessories in Europe. If you turn to Slide 16, you see the second part and second theme of our strategy, which is to guide innovation. Tele2 and MTG, 2 champion of Swedish consumer value have been able to reinvent themselves and build completely new franchises from within, which as you know is a continuous and constant theme in Kinnevik led businesses. We're particularly excited about some of the initiatives that Tele2 is conducting within the IoT machine to machine business by essentially extending what is an exceptional franchise in the consumer world to next generation businesses that thrive on its excellent connectivity infrastructure. Similarly, MTG has been prudently evaluating for a number of years a number of exciting digital opportunities and has identified the world of esports and multichannel networks as the areas in which they could build interesting sustainable franchises. And we're very excited about the international potential that MTG is exploring and executing upon across many of these new exciting businesses. As I said in the introduction and now turning to Slide 17, we're also very excited about the Cliro team's ability to invent and create a completely new company within and leveraging the very good franchise that the 5 e commerce businesses that Clio owns in its whole market of the Nordics. Presented on Slide 17 are the key statistics of what is ultimately a relatively small team, 120 people, who have been able to build a €500,000,000 loan book in 1 year by essentially creating an entirely new company focused on delivering an exciting and consumer friendly service, which the Nordic consumers look for when they shop online. The last comment I'd like to make around innovation is what Quikr one of our most recent investments has been able to achieve in India, in what is clearly a highly competitive market, where literally 1,000,000,000 of dollars of capital have flown in, in the last couple of years to capitalize on what is now the 2nd largest mobile Internet installed base there is in the world after China. As you can see on this slide, in the space of 18 months, Quaker has been able not only to reconfirm its presence across horizontal classifieds, which is clearly the most important market in which it is executing, but also to build 5 d verticals in homes, jobs, services, cars and C2C goods in a way that allows them to project themselves deeper into the various verticals and deliver an enhanced experience to consumers who are increasingly becoming sophisticated in the service that they search in general horizontal fastified. The 3rd theme, which is very important to our value creation strategy, is the one described on Slide 19. And we're particularly pleased to see that most, if not all of our companies have been focusing on growth, innovation and consolidation in order to enhance their position. In Kazakhstan, as you know, Tele2 and Kazakhtelecom have entered into a joint venture to create a much stronger number 3 player in the market. In Tanzania, Melenchon took the opportunity to acquire Zantel, a company based in Zanzibar, which not only had a strong franchise in the island, but also on the continent allowed us to build a much stronger digital presence. NTG chose to pursue a strategy of prudent retrenchment from Russia and as such has been able to finance its new digital investment through a prudent capital reallocation process. And then finally, Rocket's extensive investments in the food delivery sector have been pruned in the last few weeks in order to realize capital to invest in its core business. These 4 transactions and these 4 developments, in my opinion, highlight the single theme that comes through every one of our investing companies, which is one of pursuing growth, but also reallocating capital towards the segments of the business that offer the greatest opportunity. The outcome of this process is described on the following two pages, where as you can see, we have increased the value of our assets invested in Continental Europe and the Nordics, which allows us to have a very strong base given some of the uncertainties that we face in the emerging markets and to reallocate our presence across the emerging markets with a growing presence in the Asian region, which as you know is offering very exciting long term prospects both in India and in Southeast Asia. So if you look at Slide 21, we have delivered on our strategy of reducing the number of companies to focus on the ones that have the greatest potential. We have increased our share and we have concentrated capital, in fact, all our new capital in our existing companies because we felt that valuations throughout 2015 were running a little ahead of the performance of the business. And that has put us in a very strong position to explore new opportunities. And so if you turn to Slide 22, one of the key initiatives that we carried out in 2015 was to build deep expertise not only in our existing sectors, but in a number of new sectors within financial services, health care and education. And more importantly, to build an exciting pipeline of opportunities from which we can then pick the most interesting companies with the best founders to build the next generation businesses that will continue to drive the long term shareholder value of Kinetic. And we're pleased to note that we have already, in the 1st month of the year, announced a first investment in a next generation digital healthcare company called Avedon, which has developed a complete of solutions and services to provide patients in the U. K. And Rwanda, because this is a company that is operating both in developed and developing markets, an opportunity to engage and receive health services across the mobile phone and to manage digital medical records in a very efficient way. So we end the year having delivered on our promises and on our objectives and in a very strong position to capture the opportunities that we see in the years to come. If you turn to Slide 24, this is a chart that I'm sure many of you are familiar that highlights some of the challenges that we've experienced through the volatility of 2015 and more deterioration in the equity market that we have witnessed in the 1st 6 weeks of 2016. These statistics are not giving full credit to the significant correction that has taken place in the digital Internet companies, which have seen in the case of Amazon and LinkedIn, drops in the share prices of between 30% 60% in the last several months. And we are clearly a company that is focused on building digital brands. And as a result, these trends that are affecting all the companies in the world and in particular, the companies in the digital world are clearly affecting the value of the generic companies. But that to us is not a key priority and a key area of focus. We are not managing our business on a quarterly basis. We are building long term franchises. And that is why we are reconfirming to you today and obviously we will do so on a quarterly basis our strategy for the coming years and our priorities for 2016 has really 3 key initiatives across our three areas of business. 1st, on our operating companies, we will continue to do what we have done this year and in the past year, drive innovation, growth and where appropriate consolidation and bring stronger, more experienced, more diverse talent and establish new partnerships to strengthen our businesses. And we will continue to execute on our promise, which is to build sustainable business with very good governance, risk management compliance and companies that are good citizens in every country in which they operate. In our investing business, we will continue to contribute capital on a select basis to our priority companies to support their growth and increase our ownership. As you've seen from one of the statistics we presented earlier, we don't own enough of some of the businesses we're invested in and we might want to increase our ownership during the course of the year. We will pursue new opportunities, but only in the factors that we have told you we are focused on and in a very disciplined manner. We are all about focusing on delivering on our promises, and we will focus on the sectors we have identified as an exciting opportunities to build new companies. And on a probably more modest basis, given the fact that a more challenging equity market, both private and public make it more difficult to sell assets at attractive valuation, we will continue our efforts to prune our portfolio, although I suspect we will not be able to reduce it as much as we did during the course of 2015. At Genevievek, we will complete the build up of our team. We will maintain a very strong balance sheet with a significant net cash position, which we believe is essential to capture the opportunities to come and we'll continue on our path to deliver long term shareholder value to the people who believe in our story and who are interested to be our partners for the long term. With that, I open it up for questions both here in the room and of course over the telephone. Thank you. We will pass with any questions from the telephone We have a question from Mia Chilaeva. Please go ahead, madam. Good morning. Hi. Congratulations and thank you very much for taking my question. I guess any downbeat thing I could find in your morning press release was that 2016 could be challenging for the unquoted valuations. Lorenzo, could you just explain a bit more what you mean by that? So as you can imagine, our shareholders and our analysts are able to evaluate on a daily basis the value of our public companies because they are incredibly open and transparent. All you need to do is look at the ticker. The valuation of our private companies is a more challenging exercise because it requires taking all of the information that comes from the market, the business or the competitive environment, look at the current performance, look at the historical and future outlook for the business and determine what is the right approach to take on valuing these businesses. And what is our responsibility as a management team is to try to present the best picture encapsulated in a single number for our private will make the valuation of our private companies, will make the valuation of our private companies reflect what is the state of a deteriorated technology market valuation. That is why I think we want to be very clear with our investors upfront to highlight that we do not have a valuation methodology, which is fixed in time and disregards the stage of the market. And as a result, I think what you will see is we will look to very much consistent with our existing valuation methodology, ensure that we give you on a quarterly basis a clear read across from how the public market and the private market and the changes that are taking place in the private market are resulting in the valuations of our private assets. Thank you very much. Roughly 1% of your outstanding shares. However, the demand that you have from the AGM says that you can buy back 10 percent of outstanding shares. So the question is also in regards to the investment guidance that you provided for 2016 that shows that you will maintain a very big net cash position throughout this year. And if the discount stays at you perceive to be a significant level, could new buyback programs then be an option for you? So as you can imagine, our most important effort when we make investments is to pay as little as possible and to build great businesses. And so the decision to execute the buyback begins with the fact that we think Shinobi is a great company, but it's building great businesses and the value of the stock is very attractive to us. And so our most important objective is to buy as much of Kinnevik at the lowest price possible. And the more we try to buy, the more likely it is that the price will go up. And so we will defeat our objective, which is to buy shares at the lowest possible price. So that's an important parameter. The second parameter to bear in mind is that we believe that the right strategy is to execute transactions when we are in an open window. And that's why we have selected the next 6 weeks as an attractive window for us to purchase shares. And we have sized the size of the share price. So the mandate that you see described here is for us an investment decision. And investment decisions, you can only make it on the basis of information you have at the point in time until we have made this investment decision. In the future, we will always make investment decisions by taking into account all of the factors that we have. But I don't think you will be smart as an investor to tell the world what our investment strategy and execution will be over the next 5 years, because I think we need to be transparent, but we also need to protect our own shareholders and our own strategy in keeping that confidential. All right. Maybe just a follow-up then on investment activity. You mentioned here in the presentation that you want to support or build the space you have in your current assets and holdings. Does that mainly relate to the unlisted assets? Or could you also see those opportunities in listed assets? Sure. As you can imagine, we think a lot about that particular topic because when you see the value of our assets have such a large drop, which is mainly driven by equity market sentiment as opposed to the inherent performance of the businesses, you say to yourself, maybe this is a great buying opportunity. Having said all that, at heart, Kinnevik is an entrepreneur and business builder and our shareholders expect us to create and build great private companies, which we are then eventually put on the stock market for crystallization. And so while the temptation is always there to capture market dislocation, in particular, as we are going through it now. We feel that as a matter of a priority, it is probably more important that we dedicate our efforts to building new exciting private companies as a first matter. And as a second matter, we take advantage of the opportunity of acquiring more optionality by acquiring our own shares because we believe that most of our companies are deeply undervalued today as opposed to cherry picking whether on a relative value basis company XYZ is more or less valued by the market and leave our shareholders company. That's a good answer. And maybe just a specific question, and maybe that goes to Joakim, around your valuation of Conga that you cut sharply in this quarter. Maybe you could comment on the reasons for that and maybe if you see any need for providing new capital to Korea? Thank you. For the valuation, you're right that we cut it quite sharply. I think one of the explanation is that it has a equation preference structure. So actually kind of a double hit on our value on shares. So the write down of the equity value is not that material. So first thing. And the reason for doing it, we have previously had a transaction value as kind of the methodology. But we think that based on the market environment and Nigerian climate, anyway, we think that we did that calculation has been outdated. So we have moved to a multiple space valuation. So that's basically the background to it. And then on capital needs, I don't know, Laurence, if you want to? Yes. I think that I'll just make a first observation around Nigeria. I mean, I think we all know the state of the Nigerian economy, its reliance on oil, the need to access World Bank money and clearly the outlook for the currency being what it is. We feel that it is important to be particularly prudent in evaluating Nigerian assets. As it relates to the capital needs, clearly building a general merchandise e commerce company in a country the size of Nigeria will take quite a lot of capital. And that's why we are quite pleased that the burden, if you want to use a bad word or the opportunity, if you want to use a positive word, is shared between us further than ourselves, given the fact that this is a to build a large company in a market the size of Nigeria, we'll take quite a lot of capital. And as a result, we will be at least 2, if not more people sharing that burden. Yes, Borje, Nordea. Firstly, on the pruning of your number of companies, you're down to 34 now from roughly 50 or so year 2 back. How do you see this developing going forward? Do you expect what do you think is a reasonable level of number of companies in your portfolio given your current organization? So I think as you think about our portfolio, yes, we do have 34 companies. As you probably know, 6 or 7 of them account for 90% 95% of our value. So it is important to always differentiate the fact that there's an overarching theme of reducing the number of companies, but in reality, the number of the companies that really are making a difference in generics in terms of a value point of view is a much smaller one. I think that if you think about the fact that many of our projects are 8 to 10 year projects, Over a long period of time, we will probably end up having less than 20 companies in our portfolio, but it will take quite many years to get to that because at the same time, as we are continuing to prune the portfolio, we are also going to start adding back to the portfolio starting this year. As you know, we've gone essentially 18 months without making any new investments. But I would be surprised if by the end of the year, we hadn't made at least 3 or 4 new investments. So you might see a period of time during which we actually have a marginal until the companies mature and they become more ripe for consolidation. And a follow-up to that, you made an investment in Babylon this year. It's quite a small investment. Can you tell us anything about the financials in terms of valuation and what stake you have? And do you see this as a platform for your growth in the sector or you do expect to do other acquisitions with similar businesses? So our given our size, the scope of our business and you look at some of the significant investments we've made in the last few years, there is clearly a need for us to make investments of a meaningful size meaningful companies such that over the next 5 or 6 years, they make a meaningful impact on Kinnevik, right? So all of this to say that Kinnevik is naturally gravitating towards partnering up with entrepreneurs and business builders in slightly more mature businesses, more growth oriented businesses as opposed to venture capital type projects. That is the overarching theme that we are interested in. Having said that, you also have to appreciate that when you are entering new sectors, which are not very developed, there aren't such companies in existence. And so you have a choice. You can either not make the investment and just sit on the fence, not learn much about the opportunities and then catch up later on or go slightly earlier than you would like and then participate in the business building. In the case of Babylon, we evaluated the sector on a worldwide basis looking at the U. S, the Americas in general, Europe and Asia. And we concluded that this was a very interesting sector. And we wanted to make an investment really starting from Europe because we felt that, that it would be a more natural opportunity for us given that we understand the health care market better here than in other parts of the world. And Babylon really was the only exciting opportunity that we found in terms of the way they were thinking about addressing the full market opportunity as opposed to just a single sliver. There are a number of companies that have emerged around the world that do doctor bookings, a little bit like you want to book a restaurant, you want to book a doctor, right? But we were not interested in that. We were looking for much more of an end to end solution, a business that was able to take customers and have, if you wish, a health app that could resolve your basic needs in terms of having questions and queries around mild issues, all the way to having a doctor consultation or specialist referral to managing your medical records or tracking your health through a wearable device. That's what we were looking for. And Babadon was the only company that was actually building that type of fully integrated stack of services and in addition was ambitious enough to think about how artificial intelligence could be brought to bear. That's what made it exciting. But this is a very young company. This is a company that's been created in the last couple of years. And so by definition, it is still in its infancy. You could say similar to what Avedo was 10 years ago or 9 years ago. And so this is going to be an 8, 10 year journey. So the financials are really not meaningful. But what I would say, which is more important than the financials, is that they've been able to win already some absolutely blue chip customers such as major financial institutions based in London, where they're essentially offering to all of their employees as a special health care service, the Babylon Health app, which essentially is a great tool to enhance productivity because when people are feeling not so well as opposed to having to take 4 hours off the office travel to a doctor, they can have their own solution on their phone. And also, as a special benefit for the whole family of the employee who all of a sudden gets a very, very digitally supported health care service. And that is hopefully a reflection of our approach, which is this is a prudent entry into a very large sector, whereby we are looking to build a significant brand. Thank you. Sounds like an interesting future. Hi, Bruno Sande, Kepler Cheuvreux. Just a little bit more clarification around your geographic exposure and your new investments as well as the sectors, health care and education you are now looking at. In the investment field, that's the is in those 2 sectors and which geographies are you looking at? Is it India, as you said? And then also a follow-up question or another question regarding Global Fashion Group and their geographic exposure and the geographies there you might want to decrease or increase? Thank you. So we are very fortunate at Cinevig that the history of the group, the presence of the group, the mindset of our owner and of all of the Kinnevik people is absolutely internationally is not to narrow our focus on any particular geography and be unaware of or not engage with opportunities that might come because the world that we live in is a connected world where the digital platforms are global by design. Now as you know, our strategy is to look to invest in companies that have moats or predictability built around them and as such require local execution. But just like Facebook or Google are absolutely global, we need to think globally because our businesses eventually will exist everywhere around the world, just like there is a mobile company everywhere around the world. So I think one of the most important features that Kinnevik brings to its investors is that global mindset and awareness. And as such, when we look at any business model, like I've talked about in health care or education or financial services, we don't just say, okay, let's look at what's available in Europe because it's a 2 hour flight and I don't want to be away from my kids. Our mindset is we got to look at every company around the world, the best in class U. S, Indian, Chinese. Then we look to figure out which one is the one that has the greatest opportunity, the market dynamic, the business position, the founder, other potential shareholders, the momentum of the business. And then we look at risk adjusted returns or said differently, price to be paid for an opportunity. And then we distill the opportunity down to the ones that are most interesting, and we pursue many in parallel. Right now, obviously, without giving you too many details, we are pursuing 2 really exciting opportunities in the same sector at absolutely the same time. Why? Because that's the way we really understand the industry and also we figure out what's the best opportunity, and then we'll obviously not make both investments, we'll make only one. And so from our point of view, we believe that the best way for us to operate is to have a very global mindset and we will continue to look opportunities. So as we speak, we have people today in India, we have people in Africa, we have people in Germany and we have people in the U. S. And all of them are working on projects and opportunities. Then all of this comes back to the Investment Committee and to the Board who then decides what is the best opportunity for us to pursue. So I don't want to give you a natural geographic next step because until we've made the investment, I do not know where it will come. As it relates to Global Fashion Group, Global Fashion Group, as you know, is building 6 businesses in 6 very different regions that are exposed to 6 very different dynamics. Some of them are extremely challenging, some are very benign. And our job at the Board of GFG and at the shareholder level is to figure out how we modulate capital allocation, how do we think about growth and the amount of risk we take in every one of these geographies and work in partnership with Romain and Niels and each and every one of the founders and CEOs of the various businesses to determine, in light of the level of competition we found in every market, the best way to get good returns for our money in terms of customers, revenues, path to profitability over the next 12 to 18 months. And that is a continuously iterative process whereby there isn't from a top down decision to put more money in the Philippines and less money in Brazil because Brazil is less exciting based on what we read in the newspaper. That's not how we think. We think about it the other way around, which is we ask the founders and managers to say, tell us, what do you think is the opportunity that you see? How should we be in a world of scarce capital and more challenging market environment? What's the best way to create value for your business? Because every one of our shareholders of our founders and managers are shareholders and they also don't want to get diluted too much at the time when valuations might not be as exciting as they might be in 2 or 3 years. So we are all partners together to create great companies. And so the decisions that you see are made about emphasizing or deemphasizing certain businesses are made as a team that is seeking ultimately the same objective, which is to create a great company and a very valuable company. Okay. So what's your biggest concern in the portfolio, if I may ask? In the Kinnevik Private Portfolio or Yes, in the Kinnevik Private Portfolio. I think the concerns that I have are around companies that are exposed to global business model, companies that are facing competition from much larger players where we are unable to protect them. The good news is we have very few of those. There are less than a handful, and they are typically very small in our portfolio. But those are the ones that wire me the most because there, no matter how hard you work, you're up against giants that can plow literally 100 of 1,000,000 dollars of capital and that we've been very, very disciplined to not invest in those types of businesses, but we have a couple that are globally exposed and those I think are the ones I worry the most about. Questions from the telephone, please? We have a question from Anna Oldingo from Citibank. Please go ahead, madam. Yes. Hi. This is Anna from Citibank. I just wanted to ask about some of the Board changes with Rocket and kind of your influence or relationship with Rocket and their decisions around listing HelloFresh and the outcome of that and how you look at it going forward? Thanks. Sure. So as you know, Sinevig and Rocket have had a very beneficial relationship now for 6 or 7 years, we have been a significant enabler of ROCCAT, and ROCCAT has been a significant enabler for our e commerce strategy. And that has resulted in the sum of the parts delivering much greater results than we could have accomplished independently from each other. And I believe that Rocket is grateful to Kinnevik and Kinnevik is grateful to Rocket to that extent. And stronger and then sometimes they disappear because people take a different course. And what I'm very pleased with is the fact that we have been able to reinvent our partnership as we have both adopted our businesses. Kinnevik, as you know, was 5, 7, 10 years ago, very much of a mobile and media company, and now we've become a major international force in e commerce marketplaces and mobile. And ROCCAT used to be a incubator and business developer and has now become a fully integrated business developer, incubator and investor, most recently through the launch of their private equity co investment fund. So if you think about it, 2 companies that started 8 years ago, 9 years ago working together in a very, very different shape have been able to continue as partners across a fundamental change in the business model and with both of them being public. And I think this is, to me, a real sign of the open minded approach 2 companies have had over this period and a relationship that is continuing to deliver very good results for both partners. If you're referring to some of the changes, which is really only one major change as far as I'm concerned, in the Supervisory Board, that Supervisory Board together with the Management Board made in December. And you look at it today, knowing, of course, what you know today, which is that ROCCAT has now become a fully integrated business builder, incubator and investment company, you understand that Rocket and Kinnevik are pretty much in similar businesses today, which is something that wasn't the case a few years ago. And so because, as you know, Kinetic is a champion of governance and the governance principles, we took a view, all of us together, brands, was not the Chairman, on building digital consumer brands was not the Chairman of a company that is pursuing a similar strategy because it could create a perception of conflicts of interest, which you can excuse yourself if you're a Supervisory Board member if there is a particular situation that you feel is in conflict, but it is more difficult to handle if you are the Chairman, which really has to direct the work of the Supervisory Board. So it was a natural decision to make, and I'm very much excited about our upcoming supervisors board meeting and strategy sessions during which we can continue to contribute as a healthy and engaged shareholder. Okay, great. Thank you. There are no further questions at this time. Hi, Sibi. One question regarding your guidance regarding the investments net investments this year, dollars 2,000,000,000 to $3,000,000,000 Can you give any guidance regarding how you expect that to be split into existing and new ones? Yes. I think we expect it to be between half half, could be forty-sixty one way or the other between existing and new. I believe that our that a number of our existing companies will benefit and would benefit from greater commitment of capital. There might also be opportunities to acquire some small interest of attractive valuation given mark to market and downturn in the valuations. And we have a very healthy pipeline of opportunities, which we have built over the last 12 to 15 months, and we are likely to be able to execute on 2 or 3 of them. So we feel that is about the right investment strategy and amount in terms of capital allocation. Derek Laudatier, ABG. So alongside the health care, you've identified education as an interesting area for further investments. Could you just like you did with health care give some back into what kind of opportunities you're looking at within that sector? I know there are these companies like less than I would language learning tools have grown vastly in popularity, etcetera. Is it something like that you're looking for? So I guess the as you know, the world of education is a very diverse and very fragmented one. I would broadly characterize 3 categories that exist in the world. The first one is what I would describe as the free education content that is available from, you could say, Wikipedia all the way to Cannes or Cannes Academy and so forth, which are essentially providing content and tools to individuals and institutions in order to access knowledge and education on a very broad basis. Then you have a second group of companies, which are much closer to being publishers. And by publishers, I mean people actually producing the content, uploading it and obviously offering it either on a bite size, on a subscription basis. And then you have businesses that are essentially connecting content or individuals with people who are looking to acquire that content or that education. So you could call the latter group marketplaces for education. And that is the sector we are most interested in because it's a sector we know well from Avito to Quikr to Solside. It is a business model we understand, and that's where we're focusing our efforts. Could I also ask on your target or your that you expect to achieve a 13% annual total shareholder return. Can you give some background on how you arrive at that target, slightly lower than what you've achieved historically. Sure. So if you think about what Kinnevik is, it's a company that is creating great businesses and through the process of creating great businesses, delivering shareholder value. And at any point in time, the assets it owns can deliver and should deliver a certain return, which is ultimately a function of the type of business we're investing in, the stage of maturity of the company, the level of competitiveness, the country in which the business operates and so forth. And so if you take each and every one of our businesses and you do that work, really bottom up key business unit by key business unit, so taking even the mobile companies and looking through where is the capital of them allocated, and you think about how much the breakdown of the portfolio has changed over the last 5 years, if you think about Tele2 Russia, you think about Avito, you think about the amount of cash that we currently own and you think about the kind of reshaping and you could say reduced risk of the portfolio, you will see that and you do the analysis, which is what we have done, you will see that 13% is the return that we should be achieving in order to deliver on our cost of equity. And that's why we feel that, that is our target and we need to achieve it by using the 3 levers that we have: innovation that needs to translate into growth that needs to deliver attractive profitability, which is one part and then the other part is, of course, if we are unable to do that on our own through consolidation. And so we feel that it's important that our investors understand what it is that we're trying to achieve over the medium to long term because, of course, market sentiment will have our the value of our assets swing, but it's important that people understand what it is that we are shooting for. Thank you. Very clear. Just one final question on GFG. As you mentioned, you downgraded the value quite substantially here in the Q4. So just excuse me if I've overlooked something, but also is this just based on the valuations of peer groups, etcetera, year end? Because I think I find some inconsistency comes where Avicchio valued after the 30th September in the last report value. So I'm just wondering because I'm seeing that some of the peer companies stated in the report are down some 20% to 30% additionally in this year. So just wondering if the methodology is I think it's a very good question. And it's the answer is going to be a little complicated, but because it's a very precise answer, the question that you're asked. So the first important thing is to recognize is that what we are aiming to do is to have valuations always conservative, up to date and as much as possible, reflect the value of the asset at a point in time. And here, we're talking about not the valuation today, we're talking about the valuation on December 31. The second thing is to say is that in the case of a company like a young e commerce business, what you need to try to assess apart from is a judgment on is a judgment on whether growth is more important or profitability is more important. And as you know, because you are experts and professionals in the sector, investors' attitude favors growth sometimes and favors profitability at a time. And what we need to do is to have as much as possible a scientific approach to something which is qualitative, which is what is the weight you put on growth versus profitability. And for a period of time, when the technology and Internet and e commerce sector was on a very strong rise, the focus was very much on the growth side. And that is why we felt comfortable that given the exceptional growth that GFG was delivering in not only local currency, but also back into euros, we could feel comfortable to apply a multiple, which as Joakim said, was, say, 2.9x. Now what happened is in the last few weeks of the year past, the sentiment shifted from growth to profitability and the emerging market currencies began to suffer in a more significant manner. At the time, when in a couple of the countries in which we operate, notably in India, competition continued to become stronger. And so those three factors needed to be somehow reflected into a slight change of attitude. And so despite GFG has continued to deliver an excellent local currency performance through the investment which we expected to be, sentiment shift, currency and slightly stronger competition in a couple of countries have meant that we have to rebase multiple reuse to take it down as Joakim has described and it's in the report. Now someone else might have taken a different view, but we are very conservative people. And our job is to always give you our best estimate by looking at the situation and trying to frame it in a conservative manner. And that's why we made the decision to be thoughtful about it and do what we do. Do we have any questions on the There are no further questions at this time. Please go ahead, speakers. Thank you. Hello. Stefan Luszang, Nordea. I have a question relating to Millicom. The share price of Millicom has come down significantly over the last year. A lot of this is FX related. And I know management has been working hard on reducing corporate costs. And most recently, they also divested nonperforming asset in DRC. There has been still some concern relating to cash flow, probably that is yesterday. But do you see the need to speed up transformation of Millicom in the sense of continue to divest assets. For example, operations or also speed up cost reduction programs? Thank you. So my view is that Millicom is a company in transformation and is actually a company that is pursuing an exciting transformation. And as you know, we have the Chairman of the company in the room. And we're very fortunate to have an exceptionally talented team that is highly, highly focused on executing on the Agree transformation strategy. Mauricio, as you know, joined us in April. Tim joined us about 1.5 years or 2 years ago, and Cynthia joined us in September. And the 3 of them are really 100% committed to making Millicom a very successful company. And they have quite a lot of levers that they can pull to execute on that. The first and most important thing is they fully understand the strategy they need to execute to win in every single country in which they operate, which as you can imagine, are incredibly different. I mean, there is much difference between Colombia and Rwanda as there is probably between Sweden and Italy. And so you really need to think about these countries in a completely different manner. And we're very fortunate to have a very talented team that understands the industry, understands the difference and the opportunities between mobile and cable, between consumer businesses and B2B businesses, infrastructure businesses and over the top businesses, and we feel very comfortable that they have a real mastery of what needs to get done. The second thing, which makes Millicom incredibly well positioned, is that by building very strong market share positions in a number of its core countries, it has been able to create a very attractive integrated offering for the consumer, which because they were early, will be very, very difficult to replicate. And in fact, I don't think anybody would want to replicate to the same extent in terms of having a new entrant, which is not something you can say about many other countries, in particular, in the more developed market. The third thing is we have a team that is not only very strategic, but is also highly focused on capital allocation. And the decision that the team made and obviously the Board supported of releasing capital from a very vast country, which would offer huge opportunity to have a 25 year investment horizon and take that capital and put it into neighboring countries or other markets is clearly a sign of foresight and I would say a very, very stringent model of saying where am I going to get good return over the next 3, 5, 10 years and maybe something that pays off 15 or 20 years from now, maybe we can leave that to someone else and we just focus on the things that are more on our line on-site. To come to your question around other assets, as you can imagine, all of our companies are constantly evaluating whether they're getting good return on assets. But just to pick an asset that you've talked about, as you might have seen, the largest French insurance company, AXA, just agreed to put literally tens of 1,000,000 of capital into the the question like that. Well, in reality, this asset now is worth a lot more than it was. And so what Tim and Ania Ania and her team, what they're doing is they're evaluating all of these situations 1 by 1 and figuring out how much is the asset worth today, would it be worth more 3 years, 5 years from today, how much capital do I need, look at the capital structure. All of my bonds are essentially very long dated maturities. So even if I sell an asset, I'm going to sit on cash because I can't repay any bank debt, am I better off keeping the asset invested and getting another 15% or 20% over the next 12 months or selling it out and doing some transactions with my banks, right? So everything that I've just described, which is the tip of the iceberg, is a kind of highly sophisticated financial work that goes on in parallel to all of the brand building, exciting new products, OTT services that the GMs are building in the local country. We, obviously, as Board members, Chairman and large shareholders, support that type of engagement because that's what creates the successful investments, great performance in the market and very strong financial discipline. But as you know, the world is not as simple as, say, just sell 5 assets and pay down debt, because if you've been trued, as Tim has been for the last 12, 24 months to reconstruct the capital structure to prepare for a downturn in the emerging market debt, then you have a very well staggered set of maturities that when the company, which is now free cash flow positive, you can pay down and deduct the cash. You don't want to also sitting on a big cash position and a big debt position and just not have any returns. Looks like there are no more questions. Thank you so much for joining us here today.