Eleving Group S.A. (OT8) Earnings Call Transcript & Summary

Good day everyone. Welcome to Eleving's Group's 12 months 2024 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 this session, and a replay will be available shortly after the call. That being said, I'm turning the call over to our host, Eleving Group's CEO, Modestas Sudnius; and CFO, Maris Kreics.

Thank you, Eva, and good afternoon, everyone. It's my pleasure to welcome you to our earnings call of first 12 months of 2024. So I'm Modestas Sudnius, the CEO of Eleving Group. Along side me, we have our CFO, Maris Kreics and today, together we will cover our results of last 12 months and with a special focus on last quarter. This is our second earnings call as a public company. So we're sticking to a little bit more standard setup where we on top of operational and financial highlights, we will focus additionally on dividend policy, like what is the expectation for the year. Also we'll cover stock price movements and as well, of course, cover like where the company is heading like what I mean growth factors. But if we look at 2024, overall, it was a very memorable year for us with many highlights, with many goals achieved and achieved and overachieved in some instances. So that being said, let's jump right away to presentation into Slide #4, our group performance where we cover 4 main financial group's KPIs, net portfolio, revenue, EBITDA and the total net profit development. So let's start with net portfolio development. Here you can see that in 2024, we have added slightly more than EUR 50 million new portfolio and ended the year at EUR 371.6 million of portfolio, which indicates a growth of 16%. If we look at the segments where we grew, so actually a growth is rather equal split between our three main segments: flexible, lease and subscription products, traditional leasing, vehicle financing products and consumer lending products. And what's worth to mention that biggest part of this growth actually came in fourth quarter, around EUR 25 million of the portfolio were added, and that has demonstrated company's abilities and then growth plans in Baltic IPO era. If we move over to revenue developments, it grew at a very similar rate 14.6% to EUR 217 million. And here again, it just shows that company is able to grow and not lose its profitability. It's also worth to mention that since the biggest portfolio growth came in last quarter, revenues have not fully caught up, which will be seen in future quarters. EBITDA followed at a similar rate. We ended the year with EUR 90 million of adjusted EBITDA, which was also all-time high for our company. And most important figure is total net profit, where we finished the year at EUR 29.6 million. So quite a significant growth compared to the last year when we had EUR 24.5 million. And here, I guess additional explanation is needed since the year books have been even better and could stand at EUR 32.2 million -- EUR 32 million. However, in the last days of the year, we had to pay the Romanian tax authority and the IT claim for the years of 2017 and 2022 for when we're issuing a slightly different product where we're issuing leasing product and the remaining tax audit concluded that the issues have been applicable. So that was done. And then this number, even though it's not related to 2024, it's still booked in this year. So here worth to mention that we, as a company, same as our consultants, we do not agree with such judgment. And we will be disputing that because according to us and consultants, this is -- this is against EU impact law. But nonetheless even despite that, the overall year has been great and even EUR 30 million marks even stronger percentage-wise total net profit growth while compare it to net portfolio or revenue growth. Moving forward, of course, we cannot mention the biggest event in the fourth quarter. So I guess last time when we were covering it our IPO. So as of November last year, we are a public company listed in NASDAQ and Frankfurt Stock Exchanges, both main listings that marked biggest ever IPO in Latin history. And we raised to EUR 9 million, which we as promised in short term, neutralized very effectively and repaying most expensive liabilities, which were around EUR 10 million of subordinated bonds as well as selected [indiscernible] repayments of a total around EUR 21 million. And that, of course, allowed us to right away increase company's profitability. But that being said, of course, while we continue growing the portfolio, we tap back into debt markets and then we've been active in Mintos platform. And the plan for us, as a company doesn't change. We want to grow the business further, double the business in the next 3 year as well as maintain attractive dividend yield and having a 50% annual dividend rate to our shareholders. Moving forward, some few more group highlights here, the let's start with the growth. So our new loan issuances grew by 27% in 2024 compared to 2023. And here, of course, this was the main source for overall portfolio growth. And if you look at the markets, which on absolute numbers have added to the most portfolio during the year. So I'd like to call out Romania, Uganda, Albania and as well as the recently acquired subs current market. So these market grew the most in terms of absolute values. Also worth to mention that for quite some time, while acquiring Lesotho market, we were kind of matching the -- on frozen stage. But after careful analysis of the market, we decided that even though it's a small market, it has good potential and already last quarter of a year, we reestablished a more active marketing [ activities ], we review the product. And then we do see that in December sales picked up. So actually, we now see that market can become active and should contribute to our next year's growth. When it comes to fundraising, apart from -- I already mentioned IPO, which actually was named by NASDAQ Baltics as the event of the year, we also were successful in raising debt locally, just in last quarter of -- just in the fourth quarter, we added slightly above EUR 8 million in local currencies between Kenya and Botswana markets, which is a great achievement for us. Looking at other highlights, I'd like to mention our green initiatives. So throughout the year, we financed more than 2,000 electric motorcycles, which is well above our initial target. And in this way, we have contributed to the green mobility trend in East Africa region, and we plan to continue doing so. Now let's move to the next slide, our global scope. Here, to be honest, not many news. We're operating in the same 16 markets. Portfolio is, again, rather equal, diversified and an equal split in between the markets. Most markets having 5% to 10% of portfolio share from overall group's portfolio. And if we look at product split here again, we maintained a similar split around 2/3 of portfolios in vehicle financing, execute financing and 1/3 of portfolios unsecured consumer lending products. So such strategy is something what we kept for quite a long time, and we plan to maintain it going forward to have healthy diversification in between the products and in between the markets. Moving forward to nonfinancial KPIs, this slide explains very well where does Eleving Group growth coming from. So if we start from applications received between both our product categories in the last 12 months, during last year, we have received more than 1,800,000 of applications, which marks a very, very significant growth for each segment. So applications received on vehicle finance side grew by slightly above 80%. So really astonishing result. And then similar trends have been observed in consumer finance side where we grew close to 50%. There are multiple reasons and sources for this growth. But if I would need to call out the most major ones, on vehicles finance side, it was actually our digitalization strategy, working with a new digital sales channels, improving our sales portals and the similar activities. While on consumer finance side, it was almost opposite. We have strengthened our off-line presence, opening new branches, unlocked new populations. So as a combined, the group was really significant and allowed us to be selective when it comes to our customers, and that can be seen in conversion rates, which for both product lines have went down rather significantly during the year. Of course, that contributed to overall increase in portfolio quality, which we'll cover slightly later, but having a 8.3% conversion rates for the year on the vehicle finance side and 33.8% on consumer finance side that brings us to a spot where we already feel that there's probably a potential to slightly improve these ratios going forward while sacrificing portfolio quality. So that will be one of our focus for the year, just to tailor the products better and then focus on slightly maintaining same -- same level or slightly increasing the conversion rates. With that, handing over to you, Maris for our financial highlights.

Thank you, Modestas, and hello, everyone, on the call. So let's start with the financial highlights. First with Slide 9. And if we kick it off with our operational profitability review. So let's look at the EBITDA and adjusted EBITDA figures, both can be found on the upper left corner of the slide. So we managed to end the year with EUR 92.8 million of accounting EBITDA and adjusted EBITDA at a lower figure of EUR 90 million. Worth to mention that our adjusted EBITDA is actually lower than the accounting EBITDA and the adjustment relates to the -- negative adjustment related to minority shares of profits but then there was also a positive add-back in relation to already mentioned remaining VAT expenses that we incurred late 2024. Here, looking at the graphs also of EBITDA development over the years '23 and '22, we can see that we managed to increase EBITDA by approximately 16% to what it was in year 2023. A very similar pattern can we see also once we look at the net profit and net profit before ForEx metrics. So we managed to end the year with EUR 29.6 million of net profit and EUR 32.2 million of net profit before ForEx. And if we compare that to the figures 1 year before in year 2023, we actually see a 20% improvement if you look at the net profit figure. So that indicates that we are actually exceeding our profitability exceeds the growth of EBITDA and that was mainly achieved by our ability to control mainly in the borrowing costs, but of course, a substantial contributing factor. This was a successful IPO, which was concluded during the fourth quarter. So that in a sense meant that we onboarded essentially interest rate effect in the capital, which we're able to further optimize our capital stack. If we continue on and look at our equity development. So we started the year 2024 with EUR 82 million of total equity and ended the year with more than EUR 108 million of total equity. So of course, the major contributing factor to the equity growth was organic growth or in other words, profit retention. The second source of equity growth was, of course, our IPO. And here, you can see EUR 24.5 million of net IPO proceeds. So after the fees and transactions made during the stabilization period. With the IPO proceeds, as mentioned before, we already put them into use by repaying subordinate and the bonds. Here, you can see that we started the year with EUR 16.5 million of subordinated bonds. We actually started prepaying them gradually even before the IPO. And then once the IPO was concluded, we repaid the remainder of EUR 1 million of subordinated bonds that we had at that point in time. And of course, for the IPO, we already had distributed dividends. This is already an annual event for us. And of course, we have promised to our shareholders also a continuous dividend distribution on which we'll speak in later slides. Speaking of the capital, we're to also look at the capitalization ratio as well as equity to total assets ratio. So let's start with the capitalization ratio. So that's equity or net loan portfolio, we managed in the year with 29.3% of capitalization ratio and 22.7% of equity to total asset ratios. So both ratios are pretty much at the all-time historically highest levels that the company has ever seen. If we look at the return on equity ratio, here worth mention that usually, companies experienced a decrease in return on equity immediately post IPO because of the let's say, denominator in this equation because the actual amount of total equity is instantly higher than it was before the IPO. However, in our case, we can be quite proud in our ability to retain the return on equity at this -- at the 30% or 31% level, which was already present before the actual IPO. And this is the level that we believe will be able to sustain going forward with [indiscernible] . And finishing up with cost income ratio. Here, we can see that the cost-to-income ratio has slightly increased in year 2024 compared to the prior years. However, the important aspect here is to mention that many of the expenses that contributed to the increase of cost-to-income ratio were of a nonrecurring nature. So things like already previously mentioned, we had the expenses that covered in Romania that covered the period from 2017 to 2022. So these are one-off expenses, same in relation to IPO. We incurred marketing PR and professional services expenses that we had to also accrue in our P&L. So these expenses are again on a nonrecurring nature. So we believe that the cost-to-income ratio will gradually trend flow to a lower level more towards the 35% in the mid and longer term. If we move on now to next slide. Here, we have our liabilities breakdown. As before, the majority of our funding comes from issued euro bonds. As of this moment, we have 3-year bonds outstanding, EUR 150 million bonds, which are maturing in the year 2026 and EUR 50 million bonds, which are maturing in year 2028. And the second largest source of financing for us remains to be loans attracted through Mintos marketplace platform for loans. And in addition to that, we are actually gradually diversifying away from these 2 larger sources of capital by trying to borrow as much as possible at the local subsidiary levels. In many of those instances, we actually push for borrowing in local currencies. And that not only gives a benefit of diversified sources of capital, but also it helps to mitigate our foreign currency exposure because once we land in local currencies in the markets where we operate, we create an open foreign currency position for ourselves. And we can successfully manage that down by borrowing from local creditors in local currencies and hence, we're naturally hedging our position there. Speaking on the bonds, it's worth to look at the 3 financial covenants and their current state as of the end of the last year. So again, it should come as no surprise. They are at the highest levels they have been, from interest currency ratio of 2.4x with net leverage of 3.3x and capitalization ratio of close to 30%. So given this, the strengthening credit profile of the company, we are actually, as of this moment, deliberating a potential tap issue of around EUR 50 million bond. And we believe that given the stronger company's profile, a strong company's credit profile will be quite successful if we -- if and when we choose to come to the market with the offering. So for those interested, potential bond holders will have news pretty much during the course of February. Moving to the next slide on the portfolio quality. Here, if we start with the vehicle business segment, you can see that we have 6.1% of nonperforming loan portion in the total net loan portfolio. So NPLs for vehicle business segment are loans, which are overdue 35 days and more. If we look at the consumer business segment, here, we can see that we have 4.3% of NPLs. These are bonds that are 90 days and more overdue. If you look at the right-hand side here, you can see the growth NPL development over the last several years as well as the net NPL development. So the gross NPLs would be pre-provision NPLs and net NPLs will be post project NPLs. So both of these ratios for consumer business segment as well as for vehicle business segment have been -- have remained at a relatively stable levels throughout the last 4 years. And we have not seen major optics in any of them. From time to time, we engage in NPL sales activities and these one-off activities, they tend to bring mainly impact gross NPLs. And in those instances, they tend to go down once the sale is concluded. Moving on to the next slide. So coming back to the single most important event in company's history during the last year. So that's the IPO. So worth to mention that our share is currently being traded onto stock exchanges. So NASDAQ Baltics in the regulated market and Frankfurt Stock Exchange and the prime market segment. The current share price development has been a bit lower than it is than was the IPO price. So the average share price over the last 3 months -- 3 to 4 months has been at EUR 1.68, while the IPO was concluded at EUR 1.70. At the same time, we are being current by 4 analysts, 3 independent analysts from banks and 1 commissioned research firm. So all the analysts actually estimate the fair long-term target price of long shares to be quite substantially about the current trading volume or even above the IPO price as it was. And actually 3 out of these 4 analysts estimated our share price to be about 2. If we look at the, say, quarter-on-quarter fair market price for the company. Our market capitalization is approximately EUR 200 million with total number of shares outstanding being 117 million. And if we compare the number of shares outstanding with the total profit of year 2024, we arrived at EUR 0.25 of earnings per share. Comparing that to the average share price, we would arrive at the PD ratio 6.6x. So from management's perspective, given the quite low or, let's say, optimal PE ratio and the analyst estimates for share price in longer term, we believe that we have quite a nice upside potential for our share price in the near-term future. But of course, financial performance needs to support that. Speaking of which, it is worth to look at the financial targets that we communicated during the IPO process, especially for year 2024. So here, we have singled out 3 financial metrics. So net portfolio revenue and net profit before ForEx. So starting with the net portfolio, we have actually managed to exceed the target that we set for ourselves and as we communicated publicly by 2 basis points. So essentially, we ended the year with EUR 372 million of net loan portfolio. On the revenue side, we're slightly below the target. However, as I already mentioned before, the largest portfolio growth happened during the fourth quarter of last year and especially also in the month of December. So that means the revenue has not yet picked up. And we believe that revenue still needs to be earned from this newly shipped portfolio. And we have all the possibilities to pick up and cash the target also the revenue, as we have said for ourselves for the year 2025. And lastly, on the net profit before ForEx, here, we are pretty much spot on to our initial estimate, which was EUR 33 million for a year of 2024. On dividends. So our dividend policy estimates a dividend payout ratio of at least 50% on an annual basis. It is important to mention that we plan to pay dividends two times per year. So the next upcoming dividend payout is expected to happen in the month of May of 2025. So that will be essentially one month after annual audited statements are concluded and approved by the Board of Directors. So once that happens, we would be looking at expected total dividend pool of EUR 13 million to EUR 16 million, which will essentially be total profit divided by 2. Well, why there is a range because, let's say, still that what we are reporting currently, these are unaudited figures, we still needing to wait for audited financial statements to be concluded and signed off before we'll be able to communicate a very specific and exact amount of dividends. But even with this range, we'll be looking at expected dividend per share between EUR 0.11 and EUR 0.14. And again, this is a dividend that is being paid now in May. It will cover half of the profits for full last year, year 2024. And then we have second dividend payout ratio, which is -- a second dividend payout event, which is estimated to be in November of this year, and that will cover for 6 months of year 2025. And there, we also estimate to pay out 50% of those profits that are yet to be still earned. This will conclude my part of the presentation.

Thank you, Maris. So with that, before turning to the future plans, let's still look back at 2024. And at the beginning of the year of 2024, we have set ourselves as an organization multiple targets, I would say, ambitious targets. And here from the status bars, you can see that most of those targets have been accomplished, which is a great view to see. So when it comes to growth, what we've already covered, we are at right where we want it to be, it grew by 16%. Our overall net loan portfolio and as well as made a significant progress in the multiple product developments. The small achievement here is related to SME financing products, which we actually were exploring at during 2014. And the end of the day, we have concluded that we do not plan to launch any newest financing products in 2025. We posted this product and the main reason for that, we still see enough of opportunities in our existing product ranges and in consumer lending where we have most of our knowledge and then we would not have to go through a bit steeper learning curve, which would be with SME financing product. But we do not -- we might still come back to this product in the future years. When it comes to capital management, so here, we really achieved and I would say over achieved our initial goals. We managed to raise equity. We managed to raise a lot of global financing which, as Maris already mentioned, works as a natural hedge as well as secured hedging solutions for most of our markets, which has volatile fixed currencies. And on top of that, we've also entered -- exited the Belarus market at the beginning of 2024 and have no tax anymore in this country. Looking at governance and so forth. That side, a big focus for the year was on corporate governance. We published our dividend policy. We established our Supervisory Board. And probably in this segment, we slightly were behind in our environmental initiatives, but longer list with accomplish some goals, as I already mentioned. Electric motorcycle financing goals and on the goals, I'm pretty sure we're going to catch up within upcoming months. So now, let's look what are the plans for our company looking at the next 12 months. Here, we split everything in sections. So if we start with products and markets, here, we look at the better hub per region. So starting with Vehicle Finance Europe. Clear strategy doesn't change much. We plan to focus on existing products, existing databases in existing markets, tailoring our products even better to our customers, improving our upsell capabilities and similar initiatives. That being said, we're also almost inching our market research phase and we plan to launch one new market in European region, which one at this moment, we will not disclose, but that those news will follow in upcoming months. Similar trends and plans are in the vehicle part in Africa and Asia. Here, again, apart from financing on -- focus on existing products, we also plan to launch a new product, a new secured financing product on which we're already working and implementing and again, more news will follow already in the first quarter of the year. And secondly, similar to African region to European region Mid-African region, we'll plan to add new markets. We're also in final stages of our market analysis analyzing multiple markets at the same time. And first or second quarter will be the time when we make a decision and also communicate publicly. And lastly, when it comes to consumer financing segments where we do not plan to launch new markets in 2025, we rather focus on tailoring our products in existing markets. And at the same time, we still have a lot of potential to grow in South African region because where we're very, very far away from being at a mature market stage. So there's a lot of growth opportunities. And already mentioned, the Lesotho relaunch will add to overall strategy in this segment. When in terms of capital management, the main focus will be on debt capital management, what Maris already mentioned, we will explore a very near future potential to tap some of our existing bond instruments. And at the same time, we have been aware of our biggest EUR 150 million bond maturity at the end of 2026 where we want to address that ahead of time and already this year have a solid plan in place with maybe even an execution. So more news on that will come later. And of course, all of that we still want to accomplish while maintaining a 50% dividend payout ratio which with our levels of profitability, it's doable. And as Maris mentioned, the upcoming dividend will be in May. It will be like a special one because it will be for a full 2024 and afterwards, we're moving to semiannual dividend payment frequency. And lastly, we're actively working on our ESG strategy or next 5-year cycle. And during 2025, we're going to present it and publish it. So with that, I'm stopping here. Now turning back to the operator for your questions.

Thank you for the explicit presentation. We are now opening the floor for questions. [Operator Instructions] The second question, in which market do you feel the weakest or most uncertainty?

Thank you for the question. So here, I would not want to call some specific market. But overall, we, of course, acknowledge that we are working in multiple developing markets. We have in total 16 markets. So every market lives its own life. And there's many events happening in every single month in certain markets, I know we would call out market as Georgia, which had a lot of riots in recent months. However, we see that due to that, our business has not been affected. We're also going to have some our -- some more economic political events in certain markets, there's going to be elections in many African region. However, we believe that we already are used to these, let's say, events which are not necessarily dependent on us, and we're able to adjust to those events successfully. And on top of that, operationally, I would like to say that in none of 60 markets, now we have significant issues. We have good understanding of the product mix, which we are offering and then opportunities for those markets present. So overall, we do not see that one particular market is somehow especially problematic or that we would consider [indiscernible] or some other activities.

What are the strategic choices the Eleving Group management is facing today?

So strategic choices are a lot related to the development. I believe as a company, we've put ourselves in a very good position for growth in recent years. And we have capital for that, we have different debt available debt sources. And here, it's very important to do the growth in the right way to find the right mix of products to make sure that our teams are focusing on the best opportunities available in the market. So this is something what's been discussed among different management layers daily and to have a controlled, but at the same time, still significant growth. That's a challenge, but that's at the same time, opportunity and something that drives us further.

We'll now be taking the audio questions, Marius, please.

I have two of them. The first one would be on refinancing. If you would have to refinance today, how would the terms compare to your current refinancing vehicles? And second question, we just had the slide here with your business outlook for 2025, which is year more on the qualitative side. This is still translate to portfolio volume growth of around 20% in 2025 and respective revenue growth? Or what should we expect there?

Okay. Thank you for your question. I'll start with answering first one. So on the refinance, if we would do it right now. We believe that if we would counter the market today or in a very near future, the refinance terms would not be -- as a minimum, would not be worse as they have been with the previously issued bonds. Actually, I want to mention that where our currently 2-euro bonds are trading. So the largest EUR 50 million Eurobond, which provides 9.5% coupon is trading at or very, very close to par. And the other Eurobond, which has 13% coupon is trading with a premium, which is around 110%. So -- and that would translate into a yield which is close to or even slightly below 10%. So both of our bonds, where we're trading now in the secondary market, they indicate that the cost of debt for us as a company is at/or around 10% annually. As it relates to the actual structure, we believe that both Eurobonds have a very good structure already in place, which is a senior secured structure with guarantors and pleasures. And we believe we'll be able to continue that structure also going forward once we issue new debt or refinance existing one.

Okay. And then answering the second question, so maybe I'll start with a reminder that in our debt page Investors section, you can find that our growth plans for 2025 and 2026. And the question was like whether portfolio growth is projected to be around 20% and whether the revenue will follow? So the answer is yes, like revenue growth is also projected to be at around 20%. And profitability actually is projected to be even higher than 20% because we do see that there's still potential to tap into economies of scale.

We have our second audio question from [indiscernible].

Yes. A question on refinancing. You mentioned the EUR 50 million tap on the 28. Can you please tell us what will be the use of proceeds? And on the 2026 will you roll out the entire amount of debt? Or are you planning to pay down a bit of it vetted?

Thank you for the question or questions. So on the first -- on the potential tap of EUR 50 million Eurobond, the user proceeds will be mainly for the growth of the loan portfolio as well as for refinancing some of the existing liabilities that we have in place. And of course, we will start with the most expensive part of it. And in many of those instances, that would mean prepaying in advance some of the loans that we have attracted through Mintos marketplace for loans. And then on the 2026 bond, most likely since we're on this growth trajectory and also you can see that let's say, you can see the net loan portfolio, which we anticipate is going to be growing up to 20% per annum for the next 3 years. We would not prepay any of that amount partially or fully will be pretty much looking actually to replace that EUR 150 million with potentially even larger bond. So that would be our base case or base case approach, how we would approach this that refinance activity. Of course, we'll do everything that's possible from a management side to also offer any existing bondholder to be able to kind of roll over their existing bonds or investment into a new one, but the actual mechanics of that exercise, they remain to be seen, and most likely, there's going to be more information than that during the second part of this year.

Let's now continue with the questions submitted in writing. What would your 2025 target loan portfolio growth be excluding the plans to markets?

So I don't recall the exact figure, but it would be very close to 20% because we plan to launch markets, let's say, after first quarter. And typically, once you launch a market, we do it very carefully. And in the first year, it's quite small on growth. So most likely, it would be just a couple of percent lower, so something around [indiscernible].

Minority share in total net profits increased from 18% to 20% year-over-year. Do you see it limiting the dividend payout of 50% from total net profits, but instead choosing net profit to equity holders of the parent company as a base?

Yes. So as per our dividend policy, we expect to apply a total profit as a base figure for the dividend payout. So that's the current approach that we take as a company. If there's going to be any changes to that. We'll communicate that appropriately.

We have one audio question from Frank, please.

Yes. First of all, congratulations, a busy year behind you, and you have an ambitious plan looking to the future here. I have actually -- I had a few questions which were already asked and answered. Good presentation too. Can I go to Page 7, please, and I look at the portfolio balance. And Modestas, you said, you want to double the business in the next 3, 4 years. Now looking at your markets, it seems some of them are saturated and some of them you have only scratched the surface like in Africa. Now we do not want to end up having a completely African operation. I think we discussed that before. But can you point out how this breakdown with these 3 colors, yellow, blue and green additional financing, consumer and flexible how that's going to look like. Is that going to stay like that? Or is it going to have more dynamics on the consumer lending, that's what I feel, that would be helpful if you can point that out how that's going to change. Maybe you can also just point out a little bit on the regions where you see that doubling potential.

Okay. Thank you Frank, for your question. In terms of portfolio mix, so this is -- it moves every quarter slightly, but we see that, yes, maybe consumer financing will grow slightly faster than vehicle financing because we are actually launching the consumer financing products in some of the markets where we've been working only with vehicle financing products, and mainly focuses on existing customer base because naturally, people do not come to buy car that often but at the same time, the customers which you know. So we're gapping with additional products. And that will bring quite substantial growth here. The biggest part there is in European region. So European vehicle finance region. At the same time talking about African, I think you concluded also very correctly that potential were just looking at the share size of population, it is bigger than European part. So Africa will slightly our growth based in our projections where the European part, but we do not see that it will reach, let's say, next 3 years 15% or close to that. Most likely, it's going to be for the kind of 40% range. And lastly, while launching new markets, we plan to launch them not only in African region, but at the same time in European region. So they will start playing a more major role in the last year of this 3-year project in year end where we're already are confident with the underwriting and so on. And so a mix of that will bring us close to doubling that portfolio, what we had indicated.

And M&A is not on the agenda, right? I have not heard that in the last number of calls. So buying someone who might be there or -- in the past, you have also talked to your shareholders and found some operations that might be applicable to be added to the portfolio?

Yes. So we're not ruling out M&A as a growth route. We're -- as a company, we're open to listen to different offers and then we're often reviewing some. But it's not that easy to find this ideal acquisition targets because this specific segments where we operate, and we need to find businesses which are valued in attractive way and also where our presence would add -- would improve unit economics. So we are not disregarding but that's not our kind of course for growth.

Now on the consumer finance side, Modestas, you have basically 2 different products, you have the senior unsecured lending in Europe. But in Africa, if I understand it right, you do this PDL, the Payment Deduction Loans, right, where you go to government employees where the repayment of the loan gets deducted at source. Is that something that can grow significantly? Or are there limitations to this payment deduction loans? What's your thinking here?

Yes. Exactly, correct. But it's two different products and in all the markets in general still significantly because we need to look at the base where we stand. So once we acquired the markets, we were very small like having up to EUR 10 million of portfolio. So we've been growing successfully and just maintaining same level of issuance, but we have, let's say, what we have experienced in the last quarter, we see that in some of markets that portfolios will double in 1 or 2 years. So potential is there. This is, as you mentioned, quite secure product. Also worth to mention that here, growth has to come together with the debt instruments, either hedge those markets or local financing, which so far we've been successful in Botswana and Namibia in Zambia like behind, but we're working on that and Lesotho being tied to South Africa. Lesotho currency, we also see that once portfolio becomes sizable. There will not be any issues to either get local financing or ensure currencies hedged.

Okay. Okay. I understand that. And my only question to Maris, I usually have much more questions. Maris, the FX side in the past has sometimes been noticeable in your P&L and as usually given you every now and then a hard time and about you find hatches. Now you have been on a deal-making spray where you kind of looked for local sourced FX-based -- foreign FX-based funding, and you were successful. So looking at a much stronger dollar today than where it was 12 months ago, what would that typically show up in your P&L? Would that be as a total positive or negative because it's likely that with Donald Trump, we will see a much stronger dollar coming in the next couple of months.

Yes. Okay. Thanks for the question. So as a general rule of thumb, the stronger dollar actually is -- contributes positively to our bottom line, be it through FX line in the P&L or in the comparative income directly through equity. It's a net positive effect because, first of all, euro depreciates against the dollar and then foreign currencies, especially in these frontiers/development markets, they tend to follow dollar more than they do with the euro. So yes, that's kind of the overall trajectory, what we see in our P&L.

Thank you, Frank. Continuing with the audio questions. Let's take one more from [ Fawad ].

Just a follow-up question on local financing. You've been successful. Are there any limitations? I know it's not that easy, but like can you continue this trend of financing -- more financing from local in the local countries where you operate?

Yes. So generally, that is positive. So we can continue in financing and local countries because the portfolios, especially in these markets, especially in African region, they're still growing. So we are constantly in the need of new capital. So that kind of arise is positive momentum for us to be able to borrow locally. In addition to that, every subsidiary where we operate is actually improving its bottom line as of this moment, we have no single loss-making market in our loan portfolio even in the African market. So that means that we have the ability, willingness and appetite on board more local financing. Of course, the amounts here we're talking about would be not in terms of millions, but the gradual growth of several millions per quarter.

And maybe just to add to that, the fact is, this is the first step to get first financing facility in each market. And then with time, actually, you build a track record, we build transparent business, it becomes easier to raise additional funds in those markets.

Our next question is about the subsidiaries and due to subsidiaries where minority shareholding is the highest contribute most of the growth. Based on the growth in respective markets, could we expect minority share of profits to continue to increase?

So on that like worth to mention that we do have minority shareholders at different layers at country level, as well as regional hub players. And it does fluctuate every year dependent on the performance of certain markets, but I think in last year, it's correctly noted that markets were higher, minority shareholders were more successful. But overall, we do not see a trend of increasing -- but minority shareholding portion would increase. Actually, we do believe that there might be the opposite scenario, but it will be stable or actually even slightly decrease.

There is a question, when will there be actualized research reports available?

Apologies for that. So on the research reports, so as mentioned before, 3 of the 4 analysts are bank analysts. So more or less independent analyst teams. And we believe they are actualizing their research papers at least annually. So since the previous research reports were issued during the Q4. Last year, probably we should wait for some updates during the second part of this year. Having said that, we know that at least [ enough ] research is currently updating their research as of this moment. So there's going to be at least one research paper, a slide report that is going to be actualized already during this quarter.

Are there any additional share capital increases under discussion in 2025?

No, there is no such sessions at this moment.

Is extra credit profitable at this point? If not, then how much it should be scaled to reach desired profitability?

So as the, let's say, region, consumer financed Africa, it is profitable and two biggest markets are Botswana and Namibia. So both stand-alone profitable and growing. Zambia finished last year also with a very slight profit, but it still needs scale. And Lesotho is market, which has a very low portfolio, but at the same time, very low costs, and it is at around breakeven level. But as already mentioned, this is a market where scale is really, really needed and with the scale real profitability will come. So our expectation that for this year, for 2025, all of these markets will be profitable on a stand-alone basis.

We'll take two more questions. Can you please comment on the time line for 2026 bond? Is it a priority goal to refinance in 2025? Or are you willing to let it lapse into 2026?

All right. So the base case scenario would be to have already a tangible plan in place how we will approach the bond refi during the first half of this year. So let's say, by end of May, we expect to have already a lead manager on boarded and possibly already sales syndicate form. So that means that the team would be ready to actually go -- come to the market during the second part of the year already. This will be our base case scenario because we would -- we, as a company, and we believe also our rating agency and other stakeholders will feel more comfortable if we would have the bond the maturity addressed already during this year. However, even if that does not happen, we still have the time window or the first half of year 2026 as a backup option if for some reason and mainly the reason could be market conditions, we choose to come to the market, let's say, 6 months later.

Are there any intentions to introduce the check off loan product in Uganda? If so, could you please explain the reasoning behind this decision, whether affirmative or negative?

Because of [indiscernible], the check of loans being referred to a deduction of [indiscernible] homes. So currently, we do not have a plan to introduce in the upcoming future, except of loan in Uganda. And the reasoning why now? Because we still see a lot of potential in existing product mix and adding similar secured products and not going into this check-off product. That being said, I'm not saying that that's not a good opportunity, but where many opportunities in different markets, a lot of much different products, we just need to pick the right mix and then currently in Uganda, there's plenty of opportunities to still grow in existing setup -- in the existing product set up.

And finally, we are asked to clarify whether your target net profit is before or after minorities.

So I guess the question refers to our announced calls. So where we are highlighting net profit before ForEx. So that figure includes also minority shares of profit. So basically all inclusive in the total net loan portfolio, both majority and minority together.

All questions are now answered. So we will be closing the call shortly. Before we do that, over to you, Modestas Sudnius for closing remarks.

So just want to say thank you very much for everyone who joined the call. Thanks for your interest and insightful questions, and we wish you a nice day, a productive week and until the next earnings call. Goodbye.