Eleving Group S.A. (ELEVR.RG) Earnings Call Transcript & Summary

Good afternoon, and welcome to Eleving Group's earnings call. We will start with the company's presentation followed by a live Q&A session. We are looking forward to receiving your questions. [Operator Instructions] For your convenience, we are recording the call, and a replay will be available shortly afterwards. That being said, I'm turning the call over to our host, Eleving Group CEO, Modestas Sudnius; and CFO, Maris Kreics.

Thank you very much, and good afternoon, everyone. Welcome to Eleving earnings call, the call for the first 9 months results of 2025. So today, together with myself, we also have Maris Kreics, our CFO, and we'll walk you through key highlights of first 9 months, key accomplishments, operational updates and then similar developments. Before jumping in, still to shortly summarize this first 9 months and actually the biggest emphasis we will put on the third quarter which was actually very good for our company and which shows that we are on the right direction. Many financial indicators have improved significantly. So we'll walk you through those figures. And also the initiatives which we have launched in the first half of the year allowed us to achieve those results. So we'll provide some specific updates on that. So yes, so now without further ado, let's start with the group performance. I believe this is Slide #4. Here, as always, we show two core figures, net portfolio and revenue. We will start with the net portfolio development. So during the first 9 months of this year, like our portfolio have grown to EUR 409 million, which is comparing to the same period -- which is the same period last year, which is 10.3% growth. But worth to mention that more than EUR 30 million of this growth came in the third quarter alone. So we really picked up the growth pace at the second part of the year. If we look at the split, so we remain very well diversified between our three key product categories that you can see on net portfolio split same as on revenue split. Still, if to call out one group which grew most in a proportionate terms, this would be flexible and subscription-based products. And here, there are two main reasons. So one, our motorcycle financing product, especially in Kenya, the so-called boda loans, they are developing very nicely. We see very good traction in the market. And secondly is the new product, which we have launched by now already in two markets, Kenya and Uganda. So these would be smartphone financing. So these two factors were the key drivers for the growth in this category. But overall, if we look at the revenue part, we see that the revenue actually grew even at a higher percentage compared to net loan portfolio, which is always a good sign. And over the first 9 months of this year, we have generated EUR 178.8 million of revenue. Of course, also, I cannot mention probably the biggest highlight, which happened just recently a few weeks ago, we have raised EUR 275 million of bond. So this is by far the biggest in company's history. So this is a 5-year instrument with a 9.5% fixed coupon. And as already communicated, a big part of that coupon of that bond will be used to refinance existing liabilities, EUR 150 million bond, which had already actually been done. But EUR 125 million in the long run, all of this amount will be used to support our growth and further investing in our growth of net loan portfolio. So we have very strong demand. I guess best indication of that is post trading, where we see that actually already this new instrument is trading with a healthy premium. So very happy with good support from the capital markets. Now let's turn to the growth slide, Slide #5, to go a little bit deeper in some of the initiatives what we're doing. Starting with overall sales numbers. So in the first 3 quarters of the year, our sales were EUR 325 million. Just as a comparison, in the first 6 months, it was EUR 200 million. So there's a healthy growth period-over-period, this is 23%. But what's also important that it comes on an expense of receiving more applications. That means we're not sacrificing our -- underwriting policies are becoming more loose when it comes to customer evaluation. That's not the case. Actually, we just see an overall growing demand for our products across different product categories, different sales channels and similar. We'll cover that in a little bit further slides. But probably most important things when it comes to development are still new product launches. So a bit more flavor on smartphone financing product, which we launched 5 months ago in Uganda and 3 months ago in Kenya. So by now, we've already built slightly above EUR 6 million net loan portfolio. So strong first half year for this product and having close to 150,000 of unique applications allows us to still be selective. But at the same time, maintain healthy growth ratios. And then just to maybe a reminder for the listeners that we start with focusing on financing self-employed people in these markets. And a big part of them are our own former customers like so-called boda drivers, so taxi, cargo, food delivery drivers. And also the other very important direction is, I would say, customer retention activities, which are done in -- while implementing the new products in our European markets -- in EU markets, these would be installment loan products where we are approaching our existing database of car financing, especially in these mature markets where we've been operating for 10-plus years and offering for people to take additional loan product that had showed very good potential. And already in third quarter, on average, EUR 4 million of sales per month was generated just through these retention activities. And we don't plan to stop here. We still see that we have quite a lot of potential to grow further. Lastly, on the expansion side, on geographical expansion side, we launched our 17th market, which is Tanzania. So we received a license from Bank of Tanzania, and we launched our first branch in capital City. So far, we are starting with motorcycle loans. We believe that this is the best product to start, and then we actually see very lively market there and lots of growth potential. And in upcoming months, core focus will be, of course, testing business model and slowly expanding our branch network going into different cities, opening new branches. But in short to -- in midterm, we also don't disregard to add one more product there, let's say, same mobile phone financing. But again, still at first, we need to test the market hypothesis for the secure product for the motorcycle financing. So we'll be obviously providing more and more updates on this development. And lastly, even though we have plans to launch 1 to 2 new markets this year, we ended up launching only one, but we have in quite a few markets, a good progress and we do believe that at least one more new market will be launched in the first half of next year. And then probably for next year, we target two new markets being launched. So on that, we'll also be updating you on a quarterly basis. Now we can go to the next slide. So our geographical footprint. Here to be honest, no significant changes. If we look to the left in terms of product split. So in blue, you can see our consumer lending products, which is 1/3 of the business and 2/3 of the business are in secured financing products split between traditional vehicle financing and flexible products. So really no changes here. If we look market, per market developments on vehicle finance side, worth to call out and mention three biggest markets. So this would be Latvia, if we include this off-balance sheet product for us for [indiscernible] Romania and Kenya. So all of these markets have around EUR 50 million net loan portfolio and then continue to develop nicely. On consumer finance side, as always, biggest market for quite some time already been Albania with close to EUR 40 million and growing market, Botswana, which is already at EUR 27.5 million. But if you look at all the rest markets, all of them are in category of having between EUR 10 million to EUR 30 million net loan portfolio. So really, the best word to describe this slide is diversification. We maintain very well diversified per product categories and per geographical split, and that has been our strategy over past years and will remain going forward. Now let's turn to the next slide, our nonfinancial KPIs. Let's start with vehicle finance. So here, we really see a lot of green color. And just as a reminder here, we show the change quarter-on-quarter. So both on applications received and vehicles finance, the growth is above 20%. And as a result of that, we managed to increase our issuances while not affecting our conversion rate, which stayed pretty much flat. On consumer finance side, we see a slightly different view. Here, the growth, I would say, is pretty much flat. Applications received were 2.5% more, but this was mainly driven by our African markets. In Balkans, we were really flat and number of loans issued were also flat. But here, we have a little bit different strategy, like in quite a few of these markets, our focus is returning customers and then actually offering them bigger tickets, longer maturity loans. So this is how the net loan portfolio growth is fueled. And this will be the kind of strategy for the remaining period as well. On the conversion side, we see that it slightly went up by 3.8 percentage points. But here, again, it's more like a seasonal effect depending on some sales channels, like we have not been changing our underwriting policies much, just as always calibrating to be more accurate. So overall demand for our product is strong, and we're able to maintain our preferred underwriting policies in place to fuel the growth. Now handing over to you Maris for the financial part.

Thank you, and hello, everyone on the call. So moving on to Slide 8 with the financial highlights. And let's start with EBITDA and adjusted EBITDA first. So as a very kind of quick intro, I wanted to still highlight the difference between the two metrics. So you'll notice that adjusted EBITDA in our instance is actually lower than the accounting EBITDA and the difference accounts for -- in our instance during the first 9 months of the positive Romanian VAT case, which we successfully won in the appeal. And also, we always adjust for minority share of profits. So that's why our adjusted EBITDA is always lower than the accounting EBITDA. But if we look at the -- speak about these two metrics, so starting off with the accounting EBITDA first -- so if you look for the first 9 months of this year compared to the same period last year, we actually see quite nice more than 15% improvement in the EBITDA figures. And if you look at the adjusted EBITDA figure, the improvement is also still double digits, close to 13% growth. So of course, EBITDA does correlate with the key business driver of our company, which is essentially net loan portfolio and revenue as a result of it. So as we keep growing net loan portfolio, we do expect our EBITDA to follow. Same developments or similar developments, you can also see on the next profitability metric here. So net profit and net profit before ForEx. Net profit has actually increased also in double-digit percentage territory, close to 12% increase. If we look at the net profit for first 9 months and compared to the same period a year before. And even more so, our net profit before ForEx has actually increased by more than 27% during the first 9 months of this year if we compare to the first 9 months of year 2024. And here, the difference between these two growth of net profit before ForEx and net profit after ForEx attributes to the really, I would say, extraordinary developments in the currency markets, which was, let's say, dollar depreciation throughout the year, so which actually dragged quite a lot of emerging currencies with it if we compare with euro currency. So as a result of it, you'll notice bigger FX expenses in our P&L as our cost of hedging as well as generally revaluation of our businesses in euro currency happens. Nevertheless, if we look at the equity development, we see that with the organic equity growth, meaning profits, we were able to support dividend payout during the first 9 months of this year. So here, I refer to the first dividend payout, which happened in the month of June, where we distributed half of year 2024 profits. At the same time, we have continued to gradually and smartly repurchase minority shares. As a result of that, we are keeping or transferring more profits to the parent entities holders -- shareholders. And lastly, we're able also to absorb same already previously mentioned FX movements. And in this case, these are changes in the foreign currency translation reserve directly in equity. All taken together, our equity remains above EUR 100 million. And even more so, our equity to total assets ratio remains to be substantially high, which is about 20% if you look at the figure on the ratio as of end of September of this year. And all in all, the profits and equity, you can also see that resulting in a return on equity ratio, which is above 30% level, which we have set as our, let's say, internal target, which we already have communicated also numerous times during our earnings calls. So we're happy with this development. That means that our shareholders are realizing a nice return on equity from their investment. And lastly, on the cost-to-income ratio, here, we can also bridge with the developments of net loan portfolio and revenue. As we keep growing net loan portfolio, we keep increasing revenue base, all our expense base also increases, but the revenue increases at a faster pace. And here, we see this nice gradual improvement in the cost-to-income ratio, which is trending downwards quarter-to-quarter. Now moving on to next slide, please. So here in this slide, on the upper left part of the slide, we have our liabilities breakdown as of end of September of this year. Here, you can see still "the old picture". So before the new bond was issued. As of this moment -- as of end of September, we still had EUR 150 million bonds and also EUR 90 million bonds. We were using quite a lot of Mintos marketplace for loans as our more like revolving credit line type of facility. And there, we had EUR 64.1 million as a balance. At the same time, we are really happy with the developments of local bonds and notes, and this position has been increasing gradually. So as of end of September, we stood at EUR 42.8 million, largely thanks to local notes in Kenya, Botswana as well as in Albania. And on top of that, we have also unlocked new bank loan facilities in such markets as Kenya and Uganda. And you can see that also loans from banks portion increasing gradually. And even more so, we have quite a nice pipeline of new local debt facilities that we are expecting to unlock during this quarter, specifically in the markets as Georgia and in our medium. But now also touching upon on the new bond issuance. So during the month of October, we issued EUR 275 million worth of Eurobond. Part of that Eurobond was supported by existing bondholders of EUR 150 million Eurobond, and that quiet happened in the amount of EUR 61 million. The remainder of EUR 150 million Eurobond have already been repaid as of end of October. And we have also started the gradual repurchases of Mintos loans. And as of this moment, we have already addressed half of Mintos' portion and meaning that we have already repaid more than EUR 30 million from the platform loans, and we will expect -- and we expect to continue to do that also in the upcoming month. And by end of this year, the Mintos facility will be temporarily repaid. But of course, we remain -- we expect to remain active in the Mintos platform as we keep growing our loan portfolio. On the lower part of the slide, you can see our financial covenants. Here, the story is quite simple. We operate with quite nice and high headroom over the minimum allowed levels. And that you can see in the interest coverage ratio, the net leverage as well as in capitalization ratio, substantially increasing or being above minimum required levels. Now moving on to the next slide, please. So here in this slide, we have our loan portfolio quality breakdown. As always, we're showing the vehicle loan portfolio and consumer loan portfolio separately. If we start with the vehicle loan portfolio first, so you'll see that our NPLs in net loan portfolio as of end of September were at 4.7%. And in consumer business segment, we had 4.3% of NPLs. Worth mention the gross NPL development on the right-hand side of the slide. You can see that they have been trending downwards for both business segments, both vehicle and consumer business segments. And this happened largely thanks to quite successful bad debt sales in -- especially in the markets such as Romania, Estonia, Moldova as well as in Latvia during this year. And on top of that, we're really happy with the loan portfolio quality in our African markets, especially in the vehicle business segment in Kenya and Uganda. The new loans that are being issued, we're issuing with very high quality and very high repayment discipline. And of course, that impacts positively the gross and net NPL ratios. Continuing on now to the Slide 11. So on our share performance, our share price has been trending around the IPO price, which was EUR 1.7 per share. Having said that, although the share price has been stable, we believe that the share is quite a bit undervalued that you can see also from the analyst estimates. So all four analysts that are tracking our company expect that calculated the target price being substantially higher than it is right now. And also, you can see that in the P/E ratio, which is at 6.3x, which, let's say, you could say, is quite a bit on the lower side, and there's quite substantial upside potential there, and that is already evidenced also with the return on equity and the company that operates with 30-plus return on equity or as a company like that, there is a good potential also for the share price to improve in the future. Now if we continue to the next slide, -- so here on this slide, we're looking back at the financial targets for this year that were set at the beginning of this year and actually during our IPO process. So we proactively and publicly communicated our financial KPIs for next 3 years. So these are KPIs for year 2025. So three major KPIs being net portfolio, revenue and net profit before ForEx. We will start with net portfolio first. So we have added more than EUR 30 million of net loan portfolio just in the third quarter of this year. And given the fact that fourth quarter usually is the high sales season in our business, we do expect that we should be able to actually not only meet but even slightly exceed the target for net loan portfolio as of end of this year. Then on the revenue side, similarly to net loan portfolio developments, we do see that we have all the conditions in place, net loan portfolio growth being the primary one for us to reach the target that we have set for this year or be very close to it. And lastly, on the net profit before ForEx. So again, for the last -- over the last 2 quarters, we have been consistently adding EUR 11 million to EUR 12 million per quarter to our net profit before ForEx line. And we believe the target being EUR 44 million for the full year is quite achievable, especially given our recent developments. And then on the upcoming dividend payment, -- so we are starting our first, let's say, post-IPO semiannual dividend payout cycle. Still a reminder, we did make a dividend payout during the month of June of this year, but that dividend payout was special in the sense that we paid half of full year profits -- full year 2024 profits. And now we are starting this semiannual dividend payout cycles, and we kick off with a proposed dividend payment that would happen during the month of November, where we would distribute a portion of first half of this year profits. So with management, we propose to distribute EUR 4.86 million in dividends for this period. That, together with the dividend payout that was done during month of June, will make the total figure of dividends paid during this year close to EUR 20 million, which from shareholders' perspective, from a realized cash dividend yield would mean that the shareholder would have made a 10% return on their investment. And the actual dividend payment is expected to be approved during the Management Board meeting on 14th of November, with the ex-dividend date being 20th of November and dividend and potential dividend payout date being 28th of November of this year. However, I would say these are estimated dates, so there might be slight changes in these. So therefore, please do follow the announcements we as a company will be making in the stock exchange during the upcoming few weeks, specifically on the dividend payout mechanics and time line. Right? I think that's it from my side. Turning back to Modestas now.

Thank you, Maris. So now the last slide of today's presentation, business outlook. And since we finished 3 quarters already, so we thought that we'll put the statuses of -- for particular goals, what we had set for a year. And if we start with products and markets, I guess most achievements we have managed to succeed in, is related to our products. So we have on vehicle Europe, we have successfully launched consumer loan products and continues to scale them up. We have not launched a new market, which we were considering, but that is postponed for the upcoming year. On the African side, one of the biggest projects is smartphone financing was what we already covered. And as already mentioned, like we have launched a new market, which is Tanzania. And on consumer finance side, we continue our strategy of working a lot on retention, on better utilization of our databases, not only in this, obviously, part of the business, but across. But here, this is the highest emphasis. But that being said, we also plan to launch a few new products, consumer loan type of products, but more targeted for more specific needs. So far, quite a bit of focus, let's say, in our boda markets was, loans to finance some consumer electronic purchases or some other smaller expenses. We plan to launch slightly bigger ticket loans to finance things as home renewal expenses and similar. So all of that is planned to be done in the fourth quarter of this year. When it comes to capital management, I guess, obviously, the biggest highlight is already covered EUR 275 million Eurobond raised. Also what Maris has mentioned, like we're very happy with our local fundraising activities and diversifying our currency hedging tools through that. So that's on a very good track. And lastly, if we look at governance and sustainability, I do believe that we are on the right track, and we are finalizing our ESG strategy, carbon neutral -- neutrality kind of plans. So by the end of the year, we're going to be quite confident that we're going to achieve most of these goals. So summing up today's presentation, 9 -- first 9 months of the year were really good for the company, but definitely third quarter stands out the most, where we bridged some of the gap, which we built partially due to currency exchanges, partially just due to a slightly slower start of the year. And we do believe that we're on the very right track. We have launched a lot of successful initiatives, which fuel our growth, fuel the development of the business. And we're very positive that we'll be able to maintain this dual track growth, but at the same time, maintaining or actually improving our profitability going forward. So with that, we're finishing today's presentation through slides. And now we are ready for your questions. So turning back to you, operator.

[Operator Instructions] Since there are a couple of questions about dividend payouts. Do you mind reminding what dividend amounts and when will be paid out? And why is the 30% distribution?

Yes. So we are proposing to distribute EUR 4.86 million. And that is expected to be done during the month of November. On the exact date, so our initial time line is 28th of November with ex dividend date being 20th of November. However, since this is still an ongoing process, please do follow the stock exchange announcements on the amount. On the ratio itself. So let's say, here in the amount which we are proposing, we took basically two things into account. First, our dividend payout policy which is publicly available. So here, it talks about the fact about the ratio of the profits that we can distribute and how it correlates with the equity ratio post dividend payoff. So we took that into account. So where our equity ratio would stand immediately after the dividend payout. And secondly, we also did take into account the fact that we had quite a sizable dividend payout already during the first 6 months of this year which again brings the total dividends paid for the year a cost of EUR 20 million with a realized cash yield of 10%. So all these things were taken together once we announced and once we are proposing the dividend payout payment to be made during the month of November.

I don't see any raised hands. So I'll continue with the questions submitted through Q&A. Same topic about dividends. In the report, business outlook for 2025, you mark that you maintain a 50% dividend payout ratio with semiannual payments. But in fact, for this half, you plan to pay only 40%. Can you please explain the difference?

Yes. So let's say, in the business outlook. So these are goals. These are goals which we would like to achieve and which we set for ourselves for the company. At the same time, once we made the dividend payment ratio proposal for the dividends, which we already talked about on top of the things which I've already spoken about, we did also take into account the fact of how the company develops, how the company is growing and the company's net loan portfolio has been growing quite nicely and rapidly, especially over the last several months. So to support the growth and to have the sustainable profitable growth in the long term, that decision was made for the specific dividend payout ratio. During this half of the year, but nevertheless, I think our mid- and long-term dividend payoff, ratio target remains to be -- remains the same. And it will always be tested and calibrated depending on how the business develops and we really see, as of this moment, business developing really nicely and the business growth exceeding the pace that we have set for ourselves, which at the end of the day, will be net positive or economically positive to our shareholders. What do you think?

Yes, I think there's nothing to add from my side.

Let's talk about the recently issued bond. Why do you consider the new bonds a success when it immediately trades at EUR 104 million? Isn't this a sign of mispriced issue and where this EUR 10 million transferred from you to bondholders?

Good provocative question. And I guess -- so first of all, it's worth to mention that we have ended up pricing the bond at the lowest range, which we have initially said. And it's always -- I guess open question, how to best come to this initial levels, initial ranges. And in our case, we have to look where our existing instruments are trading at, and they were trading at 9.5% or slightly above that. So that was one indication. Also, we have to take into account that there was an exchange offer element and actually EUR 60 million or even a little bit more than that have rolled over from 9.5% coupon instrument to the new one. So kind of for them to also make sure that they have this comfort and they know that they would be getting at least the same coupon was what one of our goals. And in terms of instrument or bond trading above par, actually, first of all, it's a very good sign and a healthy sign for the bondholders. It shows that there's a strong demand in the market. And I think company -- especially a company which has aspiration to get back into capital markets and then continue raising, I think it's a good sign when this happens. In terms of level, could it have been slightly lower? We, as management always have aspiration to get there, and we believe that we will get there. But in upcoming bond raises, -- and also, we need to look who are our -- kind of who were the main investors. So this was a little bit more institutional demand-driven transaction. So we really had a lot of discussions and negotiations with our, let's say, main supporters. And we do believe that 9.5% coupon range and kind of fixed coupon, it's a good compromise for the company as well as for the investors. So we're actually very happy with the amount, and we're very happy that it is trading up.

I can only add to that, there was also a last question, was there any some EUR 10 million moved from the company. So there was no trades involving the company itself. So there was nothing which came from us as a company in the secondary market trading, if that's where the question was leading to.

Our next question consists of three parts. What has driven the significant increase in motorcycle taxi loan product applications in Africa? What type of risks do you see for this loan product from credit risk perspective? And do you see the underwriting percentage increasing in coming quarters?

Sure. Thank you for your questions. So I guess the answer is not so straightforward because we've been kind of growing our number of applications gradually. It didn't happen over a few months. And we actually have changed slightly our business model over last few years. If someone remembers and was tracking the company, we started it a lot based on partnerships with motorcycle dealers. But actually, we moved into the model where we ourselves became, I would say, one of the bigger motorcycle sellers and dealers. So we don't deal with stock that much. So we're still buying it from the distributors, but we have expanded our number of offshore rooms. So in this case, we do not fight over some commissions with competitors, how much we pay to our partners. So that helped a lot to control that. And -- but of course, as a result of this strategy, our branch network has expanded significantly, and we've moved also into a little bit more mobile branches. But this way, we do really control the customer flow, the customer experience, and we believe that for special for Kenyan market, that was the right strategy. In terms of risks, in terms of credit risks, we have, I don't know, which iteration of our underwriting model already running. It's fully automated. So I do believe that we're getting better and better in our kind of ability to underwrite the customers and the recent vintage shows that we're definitely on the right track. So we're not so much worried that customers would change. I guess the biggest would still be some macroeconomic effects, which might affect certain country as a whole and then would have certain turbulences. And it's not a secret that it does happen every now and then in Africa. But at the same time, we've been through already quite a few turbulences. And we do take that into account while providing kind of -- while trading our underwriting models, while also asking further down payments from customers. So actually, we do have even higher and better results in terms of repayments to what we expected. So we have -- we still have quite some room to maneuver there. Yes. I think probably I answered all three parts of the question.

Let's talk about the targets and your loan portfolio. Last time, you mentioned that due to FX impact, it slightly, you will not meet the EUR 432 million loan portfolio target for the year. Do you see achieving it now after Q3 growth acceleration? And should we expect the growth to accelerate even more next year on new product and market launches backdrop?

So definitely, when it comes to this year targets, when we talk after 3 quarters, we're way more confident, as Maris mentioned, but we will reach the goal and probably maybe even slightly meet the test December, end of November is the high season for -- especially for consumer finance products. So yes, the answer to the first part would be, yes. We're confident in achieving the goal. And in terms of growth for upcoming year, do we see it more accelerated? If someone has checked our targets, what we have set for the company for 2026. We were already quite ambitious. So far, we believe that this level where we are at, this will definitely help to achieve that. If it will be -- I think a little bit made too early to tell. We also need to see how new initiatives really scale up further because still same Tanzania has just launched, say, smartphone financing or our installment loan products, they definitely have potential to grow forever, but we don't want to be too quick in that. And so far, we want to maintain probably the similar growth rates to -- what we have at Eleving. But again, every quarter, we are reevaluating our strategy, our risk metrics and we might change some of the predictions as well based on the performance of these products.

Continuing from global to local, what has driven the loan portfolio growth in Latvia in recent quarters?

Yes. So two main reasons. One is more effective work with our customer database, current and former customers and obviously, having an opportunity to offer them different products, not only vehicle financing, but also just installment loan helped a lot because people don't buy cars that often. So that was the reason number one. And the reason number two is our effective partnership with a local bank joint venture, it's been already I guess, 4 or 3.5 years when we started this partnership. So now it's really working as a well-oiled machine, and we're able to compete not only with nonbank lenders, but also with some of our, let's say, more technology driven banks in the region and successfully grow this part of the business. So these two elements were the main factors why Latvia market is again on quite fast growth base.

What noncontrolling interest share in net profits we should expect over mid to long term?

I think it's fair to expect the same level or similar level as you would see it right now, so approximately in the range of 15% to 20%. So this is something that has been there over the last several years and there are no fundamental changes expected in that regard.

Is the noncontrolling cash out the same as a management incentive plan?

I guess it is -- I'm not sure the catch-up part, but in a way, our share option scheme is a management incentive plan, which we have implemented historically across multiple layers of the organization. And I would probably say for many of our top managers, this is the main part of motivation package. So they are shareholders, and they do share part of the profits, what company is earning.

A broader question now. How do you choose new markets?

With a lot of market research, it's probably 1 to 2 months process, which starts at looking at multiple markets, first of all, from desktop researches, legal memos to afterwards actually physically sending the team in most of cases, multiple times to evaluate competitive landscape, meeting key stakeholders, evaluating economical situation, understanding the process of getting the license and many, many factors. And at the end of the day, we always like to choose from 2 to 3 markets, which we analyze in very much detail. So by now, having operating in 17 markets and probably historically, we have opened close to 25 markets. Some of them, we have to close eventually, like we have a pretty much kind of well-functioning footprint, how to do it and what needs to be checked.

Thank you. The long period forecasting is hard, but let's try to look into the future. Where do you see your company after 5 years at the end of 2030? What portfolio do you imagine, what net profit and what dividends?

Okay. I'll try to start on more general terms and maybe Maris would be brave enough to talk about net profit and dividends. But when we're doing the IPO, we always are saying that we have an ambition to close to double the business in the next 3 years. So 1 year has almost passed. I think we got to an acceleration level where we're now it doesn't look doable. So here, if maybe not 2030, but maybe more like 2028. Horizon would be doubling portfolio or we think about 2030, so probably getting closer to EUR 1 billion assets under management. Assets of company and then similar net loan portfolio. So we believe that, that could be a good aspiration for the company. And actually, what we're seeing in majority of our markets that consumer lending is kind of going through good times with a lot of demand with also other companies doing well. So this is really doable. And I guess, yes, I think it's always hard to predict net profit levels, but we do operate in still quite dynamic market where strategy needs to be adjusted every now and then. There's also global factors, especially if you look last 5 years, like no one could have projected COVID, different geopolitical situation. So I think these long-term special profitability projections are very speculative. That's why we try to stick to more 3-year end-of-term projection, which I guess it's more in our own control. So from my side, that's it.

Nothing to add from my side.

Very well. What's the reason for postponing the second new markets expansion into 2026? Do you have the market already picked and its regulatory setbacks? Or are you still deciding on the suitable market?

It's a mix of reasons. We are on a very developed stage for at least two markets and like we were not resting like we had the goal to open 1 to 2 new markets, one when we have launched then most likely next year, our target will be two markets. But one of the reasons also very successful performance of existing markets and a very successful launch of new products in the existing markets because we still need to manage our management capacity, our AP capacity, risk capacity in between the markets and our regions.

Currently, we have three more questions to go. How do you maintain the balance of loan growth ambitions and discipline and low underwriting? What is your macro view for the next 12 months?

In terms of maintaining balance in growth and underwriting, it all goes down to data and the risk department. The biggest growth, what we demonstrate is in markets and in products where we have long track record. So we've scored the thousands -- in many cases hundred thousands of customers, and we are able to predict their performance quite accurately. And then afterwards, it's really based on your risk appetite, growth appetite, but we've been, I think quite consistent in our risk management over the last 3 years. I would say we -- at this stage there is a possibility to grow through increasing, let's say, risk, which could also be a kind of profitable decision, but we like the level where we are at. We think that's a good level to be at it's kind of sustainable and long-term strategy. And everything else afterwards is done by our risk teams, which really control how many defaults we can absorb and how is underwriting tools are built. And in terms of macro, again, not very good with predictions of things, which are a little bit out of our control. At least in our markets, we do see that was not maybe talking overall that there's no kind of big turbulences are expected at least looking from today's perspective.

Thank you. You have nonperforming loans declining in the vehicle rent portfolio, while you are keeping relatively high coverage rates compared to historical levels. Could one expect some provisions reversal here? Or what do your cost recovery rates in this segment suggest?

Yes, I would say that probably the reasonable expectation is that we will remain to be prudent in our environment provisioning policy. So now, especially since we're growing the loan portfolios, both in the vehicle business segment as well as in the Consumer business segment, we're adding quite a bit of new loans which -- whose performance is still to be observed as they work through the full life cycle. So we don't necessarily plan to rush in releasing some provisions ahead of the time or at least ahead of the time where we can reasonably expect this loan performance to be long-term, sticky, so to say. So yes, we probably will remain to be prudent in the midterm.

On motorcycle loans. You mentioned that you became some sort of seller instead of only depending on other dealerships. Does it mean that the company earns extra from selling services and being the dealer itself?

Very slight margin. It's -- in general, it's very competitive and at the same time, a transparent market. All the dealers are buying motorcycles from the same distributor. So I will probably maybe put it differently, like we're able to package our financing product more nicely having slightly lower motorcycle margins as well. So that just helps to sell motorcycles through financing because we are not selling motorcycles -- new motorcycles through nonfinancing activities, so through cash only through financing.

You mentioned you want to expand into home repair loans and higher ticket loans. Would you consider entering into SME and specifically agro SME financing in Africa?

So in terms of maybe a short comment on these bigger tickets, I think that has been a gradual strategy in some of our markets already for quite a few months. And this home repair loans, this is -- I would say, it's more reaching a more targeted audience rather than introducing something completely new. And when it comes to SME, we were looking into this segment. First of all, in Europe, for quite some time. And I guess some 6 months ago, we've communicated that for now, we will not do that. We also -- we are looking at potential acquisition targets in Baltics and in markets as Romania, but we couldn't find medical companies which would meet our requirement. And secondly, we are not experts in that at this moment. So that would be something completely different for us because we are experts in financing kind of B2C segment. And when it comes to SME agro loans in Africa, sounds very interesting just for general understanding. To be honest, we have not checked it. We just know that agro is quite strong, let's say, economy in general in Africa, and we have quite a few investors in our local notes from agricultural segment. But as of exploring SME, actually Africa is probably the region where we have the most potential to grow the B2C segment as of now. So definitely not upcoming months, years plan, but maybe in long term, who knows.

As we're running out of time, I will now take the audio question and then finalize with the final question that we have received in Q&A. Frank, please?

So first of all, a complement, company looks massively different to the day when we first invested about 6, 7 years ago, whenever there was. And you have built something that's quite resilient. Resiliency seems to be a word that comes up all the time now in the language. So in terms of acquisitions, if you want to achieve your growth target, every now and then, some of your competitors just don't make it. They don't get their refinancing, they sell their portfolios and so on. You're fully plugged in into that flow, and you look at that and you haven't really ever found anything you can pick up with a -- well, it's called accounting wise, it's called the badwill, maybe buying something below what the book value would be. Has there never been anything coming up that weighted your appetite?

Thank you for the question, and thank you for greetings. It's always nice to hear from you. No, either we are not looking carefully enough or really, we have not seen such acquisition in the regions where we are operating it. In Africa, it's fair to say we every now get different certain offers. But I would say these are mostly distressed assets and quite small businesses, and then it's always a question whether it's worth the time to do the due diligence. But definitely, acquisition would be possible, especially below book -- below equity value in the markets where we know how to operate, that would be very interesting. Probably something like that would be in some Latin America type of markets, I'm not sure if it would be really interesting because it's still where some learning curve to go through entering different continent and so on. So we're always kind of -- we always think that we're open for these type of acquisitions, but kind of not right, they just haven't come up yet.

Okay. I appreciate that conservative approach to M&A. A lot of things can go wrong with M&A and sometimes the best deals in M&A are those who don't do. Thank you very much for the transparency of the Board and good luck on Q4.

So we'll finalize with the last question that we have received. Have you set some sort of ceiling on the desired number of markets you want to operate in? Or what's the optimal amount of -- for scale benefits?

I guess it's all a question about the time frame. So we, as a company, we definitely are capable of launching two or even three markets per year because we have three separate regions, which are quite independent from each other when it comes to resources. But at the same time, our job is to also look how the group as an overall is developing whatever growth projections and similar. So I'd probably say that we are limiting ourselves the appetite for some of our maybe management team members to scale up, but this 1 to 2 new markets per year so far, it's I think very comfortable level, and then we can launch new market without a rush and there is no optimal level, we can -- of optimal level of market. We would be okay in 10 years to operate in 25 markets or even sooner, it's more all dependent on our own operational capacity. And we do believe that with every market launch and with every new let's say, euro issued, we are becoming more and more efficient organization because still we do have certain operational capacity having this regional structure to add more and especially for the markets where we've been operating 10-plus years, they don't need such much -- so much kind of attention and more and then we can dedicate a little bit more time to the new markets. So it all depends on the time frame.

All questions have been addressed before closing the call, I turn back to Eleving Group's management for the final words.

Thank you very much. So let me once again thanks -- thank you, everyone, who has joined the call. Thank you for a lot and insightful questions. And we look forward to the future calls and interactions. Have a good week.