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

Good day, everyone. Welcome to Eleving Group's 3 Months' 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 hosts, Eleving Group's CEO, Modestas Sudnius; and CFO, Maris Kreics.

Thank you very much. Good afternoon, everyone. And welcome you to our earnings call of Eleving Group, where we're going to be presenting the first 3 months of 2025. Today, together with me, CEO of Eleving Group, we also have our Chief Financial Officer, Maris Kreics on the call, who will help me to walk, first of all, financial and operational results of the company. Also, we're going to mention and talk a little bit more about future developments and also developments which have been accomplished within the first 3 months, and of course, mention and provide additional details about upcoming first-ever public shareholder meeting of Eleving Group. Before, maybe, jumping into the presentation, just overall, to summarize, first, what are -- so what we'll see from the financial numbers, we'll see very stable, efficient and profitable quarter. At the same time, not everything can be presented in numbers, and then we'll talk a lot about projects which we have done for the future development of the company. So one recently finished bond tap. We'll also mention about quite a few new products launched across different company groups -- company countries. So really quite a lot of ground to cover. So I just now jumping to the presentation. Let's start with Slide #4, which is our KPIs, group performance KPIs, which we're tracking net portfolio, revenue, adjusted EBITDA and then total net profit. So let's start with net portfolio development. Here, you can see that comparing first month's results for this year versus respective period 1 year ago, the portfolio have demonstrated a solid growth of 12.3% and landed at EUR 371, which is a good growth. Of course, if we look quarter-on-quarter and compare fourth quarter of last year with this quarter, we see that the results have been quite flat. And here, one thing, this has to do quite a bit with seasonality because fourth quarter traditionally is the best and most successful quarter for consumer lending companies, especially for unsecured products, but also even for the leasing car financing products. So we've really issued all-time record there. And naturally that January-February, special months, they are a little bit slower. And also worth to mention that since in some countries we operate and issue loans in non-euro currency, that kind of economic turbulence is what are happening in the world, partially which are related to new U.S. tariffs, they do weaken the U.S. dollar quite a bit versus euro. And even though we don't have almost any U.S. dollar exposure, but quite a few countries in emerging markets and in their currencies, they do follow U.S. dollar trajectory. So we had to reevaluate some portfolios as well, which we'll cover also in a bit more detail in the coming slides. But overall, still portfolio stood at a good level and ended up -- like we ended up 3 months with EUR 371 million of net loan portfolio. If we look at revenue, similar trends can be seen as in portfolio, so quite good growth, by 13% to EUR 58.6 million. On EBITDA, we also see a growth year-over-year over respective periods, however, growth was quite small by 1.4%. So in our EBITDA in 2025, first 3 months was EUR 22.3 million. Again here, biggest effect comes from a bit of seasonality. So on consumer lending, it works like that but once you have very high issuances, especially in the Christmas periods, in the holiday periods, then in upcoming months, portfolio tends to have a little bit more pressure on the performance side. And then we had a little bit higher provisioning ratios. However, this is something what we are used to and then which was also anticipated and budgeted. And lastly, if we look at the total net profit here, we see that development was again, solid and strong, actually beating the other growth figures, and we finished first quarter with almost EUR 7 million total net profit, which was EUR 6.8 million. And would just indicate that despite the factors mentioned above, still on the profitability and efficiency level, it was another strong quarter. So that, I think, summarizes our quarter quite well. Now let's go to Slide #5 to group highlights. Let's start with growth section and loan issuances. So in the first quarter, we've issued almost EUR 100 million worth of new loans, EUR 96 million. That represents 22% improvement versus respective period last year, so solid growth. What's even more encouraging that the interest and the demand for the product increased even more by 27%. So that just indicates that we can grow and still be selective in our underwriting policies. If we look at our highlights section, I'd like to emphasize a bit more about new products development. So firstly, in first quarter, we finally finished developing and fully launched our unsecured installment loan products in our European Union markets, so Latvia, Estonia and Romania. Here, first focus is to work fully digitally with existing customer database. So customers who have taken car loans, vehicle financing products. But in the longer term, we do anticipate that this product will be rolled out for the wider audiences as well. If we talk about new products development, another product which was actually launched in April, but still we've been developing it for the last 6 months, so that's smartphone financing. And we chose Uganda as the first market to test it. So this is -- we never add such product in any of our markets before. And if we talk specifically about Uganda, so in Uganda, our initial focus was on increasing mobility in the country while offering loans for motorcycle taxi drivers. This is next step when we focus also on connectivity in this country. And actually, we start, first of all, with our own customers because for taxi driver to use from -- to move from button phone to smartphone, actually, it allows them to increase their unit economics because we get access to ride-hailing apps. So this is a very natural segment to start with. But in the long run, if it kind of proves successful projects we do anticipate to roll it out in a way broader customer universe and potentially in other markets. But on that, we'll be updating you in upcoming quarters. And lastly, a bit more information on new market developments. So as already communicated, our plan for this year to open one to two new markets, and then we're actually progressing very nicely. We've already moved from market research phase to, I would say, market opening phase. So our legal team is working on opening legal entities, getting the necessary licenses. And we do believe that even in two markets at the second part of the -- second part of the year, we'll be issuing loans already, specific markets, maybe for now we'll still not mention, but one market should be in African region and one market should be in European region. Along with product development, our fundraising is following in the same footsteps. So first of all, once again, we'd like to rejoice regarding our successful bond tap of 2028 bond, where we added an additional EUR 40 million. That will help to grow the portfolio until year-end for this year and support all the initiatives which we just mentioned. And on top of that, we remain very active not only in the international markets, but also in local markets, fundraising locally. Probably here, I'd like to mention Kenya and Botswana as two most successful examples. So in both of these markets, more than half and even closer to 70% of portfolio is already financed locally, which is -- first of all, helps us to further diversify our funding structure, funding channels. But at the same time, of course, this is the most efficient and cheapest currency hedging instrument in those markets. So we continue putting a lot of focus across non-euro markets for local fundraising activities as well. And lastly, from our highlights section, I'd like to also rejoice regarding situation in North Macedonia, where we won, let's say, a case in Constitutional Court, and we got back the so-called solidarity tax, which we paid in 2023, it was slightly above EUR 1 million. We, let's say, did not agree with that decision. We challenged it. And after some time, we got a positive decision by the court and then that money will be returned to the company. So a very good example. And if you remember, in last quarter, we had similar, let's say, disagreement in Romania, where we also paid VAT tax and now we're going through a similar process and kind of trying to, let's say, challenge the decision for the tax payment. With that, let's move to the next slide, global scope. So here, again, you can see our geographical footprint per market, per product categories. If we would look at this pie chart on the left, product category, so portfolio very well split between three main product categories, consumer lending being 1/3, then traditional vehicle finance, half of the business, and remaining in flexible or subscription-based products. And same diversification is seen on market per market. Most of the markets have 5% to 10% of -- from overall net loan portfolio. Probably, if I would need to call out, so already second quarter in a row, our biggest market in the group in terms of net loan portfolio is Romania at 12.6% from overall net loan portfolio. And on the other side, Lesotho is the smallest one but -- at 1.3%, but the share of that -- in that market is also growing because we have relaunched operations there in last quarter, and we see that issuances are picking up. So overall, probably the exception of Moldova, where we believe that we already have our optimal size of portfolio and also due to some geopolitical reasons, in all the other markets, we see still potential to grow our share -- our market share, our portfolio, and we do expect to do so in upcoming quarters. I think we can move to the next slide, nonfinancial KPIs. So a lot of red color here, and then that red color explains the seasonality effect, which I already mentioned. So if we -- and here, worth to mention that we are comparing quarter-over-quarter results, not year-over-year. So if we look at the number of loans issued on consumer finance and on vehicle finance side, in both, we see quite a big drop, let's say, close to 10%. And it's a combination of slightly lower conversion rate and slightly lower number of applications received, which again indicates the seasonality effect. But first of all, if you look at the applications received for both vehicle finance and consumer finance products, both of them are below 5%, which I would say given the fact that really traditionally January and February are kind of shorter activity months, this is not a big drop. And then we do anticipate a bounce back, and March was already significantly better. So this is, again, statistics, which explains seasonality effect quite well. And on top of that, worth to mention that conversion rates, they maintained stable or actually, even on downward trend. On our side, we have not -- we didn't have any significant underwriting policies review. It just more explains that post holidays some of the new customers, they also come with maybe not so good credit history and some issues. So this is more of a natural shift. But we do see and expect that here ratios will stay at around current levels, consumer finance at around 30% -- 33% and vehicle finance 8% to 10%. So everything is intact here. With that, I'd like to hand over to our CFO, Maris Kreics, to walk you through financial figures.

Hello, everyone on the call. So let's continue with Slide 8 and go through financial highlights. If we start with the EBITDA and adjusted EBITDA, first on the upper left corner of the presentation, so we can see that we managed to achieve adjusted EBITDA EUR 22.3 million for the first quarter of this year, which was basically a stable level compared to the same period in the year before. So as explained before already by Modestas due to quite an intense portfolio growth during the fourth quarter of last year, we are now seeing, let's say, the impairment effects of it, which is natural because impairment expenses, us applying IFRS 9, for us as a company that applies IFRS 9, we would see a bit front-loaded. And of course, all the earnouts will happen over the time. And actually, we'll be able to see that quite quickly. If we continue and discuss net profit and net profit before ForEx. So for the later one, we managed to achieve EUR 8.7 million for the first quarter of this year, which was approximately 12% higher than the equal period last year. And here, with the stable EBITDA, the major contributing factor was what already Modestas mentioned before, the solidarity tax case which was won in North Macedonia. So the tax was applied back in 2023. We paid it. It was EUR 1.1 million. And now the positive decision by the Supreme Court of the country ruled that the tax application was unconstitutional, basically. So now we have recorded a receivable of EUR 1.1 million, and the actual cash receipt is expected sometime during this year. If we move on, on the equity development. So our equity remains to be high. So our total equity in absolute terms is about EUR 100 million. Comparing to the end of the year figure, it is pretty much stable. We are -- as of the end of March, we are at EUR 108.6 million. The major kind of movements during the quarter were, of course, the organic growth or profit retention of EUR 6.4 million. In addition to that, you can actually see the smaller fraction of the payment, of the dividend payouts. Here, I think it's important to explain that because as we are preparing in anticipation of our first ever larger full year dividend payout being as a public company now in the June, and we'll have more details in the later slides on that. So we have announced that we are planning to pay approximately EUR 15 million in total dividend. What we started doing already now is we started upstreaming the profits from our subsidiaries and basically preparing the cash accumulation for our holding entity at the Luxembourg level. And given our quite vast share employee schemes that we have in place, we had a minority -- and we still have minority share section in place or shareholders in place. And this is something that was paid to the minority shareholders. In addition to that, as we believe we made a smart capital allocation decision and we have repurchased the minority shares for some of our subsidiaries where we operate. So in total of EUR 1.2 million, what's important for the shareholders of the Luxembourg entity and specifically on the -- also for our public shareholders is the fact that this activity actually decreases overall dilution of the shareholdings. And with that, we can expect positive contribution of this activity going forward because more profits are basically going to be attributable to the shareholders of our holding entity. In addition to the quite nice equity in the absolute terms, in euro terms, we also see that our capitalization and equity ratios remain elevated and remain at the all-time historic highs. So our capitalization ratio, which is equity over net loan portfolio is at 29.4%. And our equity over total assets remains at 22.9%. All that is being achieved while operating with a quite high return on equity ratio. So we are operating with a 30-plus percent return on equity over the last several years, and this quarter is not being an exception. If you look at the cost-to-income ratio or on the lower right hand of the slide, here, basically, we managed to end the quarter with 39.1%. And here, we are looking at our admin and selling expenses over revenue. So it was -- let's say, that's the ratio where we are not necessarily where we would like to be or where we would like to see ourselves in longer term. We believe that our comfort zone is more towards 35%, 37%. However, I think it's important to mention the fact that this already shows an improvement compared to the figure we had for the last year, where for 2024, we were at 39.8%. So now we have managed to improve it by a fraction. But also, I wanted to emphasize the fact that as we keep growing our company and as we will be launching new countries -- new products, it is actually not unusual when -- during certain times, we might have an elevated cost-to-income ratio because we'll be investing quite a bit upfront, while we continue building the portfolios, and of course, the revenue will follow afterwards. All in all, we do expect that it will be nicely balanced out by our businesses in the already mature markets, while we also keep growing portfolios there. And that, while also realizing economies of scale. So I think all in all, that will be balanced out, but it's not unusual that we might see an uptick in the cost-to-income ratio on a quarter-to-quarter basis. If we move on now to the Slide 9. So on the liabilities breakdown on the upper left hand of the slide, you can see that we are largely financed by our issued Eurobonds. As of this moment, we have a EUR 150 million Eurobond, which is maturing in the year 2026. In addition to that, now we have a EUR 90 million Eurobond, which is maturing in year 2028. So -- and of course, we also had a capital markets event during March of this year, which was the tap of the existing EUR 50 million Eurobond. We managed to successfully place EUR 40 million tap on the bond. We, as a company, were especially happy with the time line of it because we managed to do that before the Liberation Day announcement. So we did avoid, let's say, turbulent times in the capital markets. And also, what's important is that we actually raised the bond at 10% yield to maturity. If you looked at the bond specifics, you'll notice that initially, the bond was issued back in 2023 with a 13% coupon. So now we managed to actually place the bond with a premium and with the already mentioned 10% yield to maturity, which actually shows the improvement in terms of how our debt holders look at our company, how they look at our credit story and how they actually positively assess what we have done so far. And pretty much the same story you can also observe in the Mintos platform. We're still active in the platform, and our average blended cost of financing rate has also decreased in the platform and now is at single digits. In addition to Eurobonds and Mintos platform, we are very actively working with the local lenders in local markets. We are especially successful in doing that in markets such as Kenya, Botswana, Albania, where we're raising funds in local currencies from local lenders such as banks, funds or even through local notes issuances. So this is our natural hedging activity where we're trying to finance the local currency portfolio with local borrowings to the extent it's possible, and we expect to continue doing that also in the future. On the lower part of the slide, you can see our three key financial covenants that you can find in both of our Eurobonds. So if we start with the interest coverage ratio, here with -- we are at a stable level as we have been for the last 2 years. So at 2.3x as of the end of March. On the net leverage, so we are -- the picture is almost identical, we are at 3.4x, which has been approximately the same level with which we have operated over the last several years now. And lastly, on the capitalization ratio, which I already mentioned before, we're at 29.4%, which is almost 2x higher level than the minimum level as prescribed in terms and conditions of the bonds. We now move on, on the portfolio quality slide. As always, we are showing our vehicle business segment and consumer business segment separately. If we start with the vehicle loan portfolio first, so here on the nonperforming loan portion, we can see that we operate with 6.1% of NPLs, while still maintaining a very conservative NPL definition of 35 days overdue. Now if we look at the consumer loan portion, we have 4.1% of NPLs with a more conventional 90-plus days overdue NPL definition. If we look at the gross and net NPL developments over the last 3 to 4 years, you can see pretty much that we have been able to maintain stable levels throughout different, I would say, challenging years. And -- but this quarter, I also -- and actually for this and previous quarter, I actually wanted to point you out one trend that we are seeing. So that is actually a decrease of gross NPLs for our vehicle business segment specifically. And this is largely attributable to our already established markets in our African regions, so Uganda and Kenya. So these markets have been operating now for 5 years. And now we see that we have reached a comfortable state where we actually really understand the customer behavior, we are able to control our underwriting and portfolio quality as a result of it. And now we have reached the stage where the countries are profit-making on a consistent basis. The portfolio quality is something that we are able to control nicely. And this is actually a perfect time for us to really consider and plan for potential new product launches in these markets because they have proven that we are -- or provided the comfort to us that we can build higher portfolios in these specific markets. And that's why our -- here comes our, let's say, new product initiatives that we have already discussed and we'll be discussing in the future as well. Now moving on, on the share performance. So our shares are listed in Nasdaq Baltic Stock Exchange as well as in Frankfurt Stock Exchange. If we look at the share price post IPO, it has largely remained the same at the IPO price, so at EUR 1.7 per share. However, it's important to notice that our share is being covered by four analysts, three banks and one independent commissioned research. And here, you actually see that our -- as per analyst estimates, their target price for our share is actually quite a bit higher than it is trading right now or even than the IPO price was. And moreover, two of these analysts have actually just recently revised their target prices, with LHV Pank reassessing the share of EUR 2.3 per share and Warburg Research at EUR 2.6 per share. And also given the already discussed return on equity, and I would say, quite a high return on equity of 30-plus percent and quite a low P/E ratio, if you just look on the market averages, we do believe that our share is not overbought. There is a potential for our share really to grow in the longer term. And we as a management, we still believe this is an attractive value proposition for our potential shareholders and current shareholders in the future. If we speak about, let's say, our continuing discussion on the shareholders, I think it's worth to also look at our financial KPIs because before the IPO and during the IPO process, we were actually quite proactive in communicating our financial targets for years 2024 and 2026. So now if you look at this year's targets and if we start with net portfolio, the target was EUR 432 million as of end of this year. We're at EUR 371 million as of the end of first quarter. So there is still quite a bit of work to be done. But given the new product initiatives, new market launches, we still believe the end-of-year target is close to be achieved. So that's why it remains unchanged as of this moment. The same story goes with revenue. We're at EUR 59 million as of the first quarter, and we believe the revenue will continue developing nicely together with the growth of our net loan portfolio. And lastly, on the net profit before ForEx, we're pretty much on the same time line. Currently, if we look at the Q1, and we believe that EUR 44 million target for this year is quite achievable and still also remains unchanged. If we speak about the next planned events for our shareholders. We are holding our first shareholder meeting as a public company to be held on 2nd of June, and it will be a physical meeting in our Luxembourg office. However, those investors, shareholders who are not able to participate in person, they'll have the opportunity to join and listen in a real-time broadcast, which will be basically presented by myself and Modestas, who will go through all the decisions that need to be taken during the shareholders' meeting. One important date for our shareholders, of course, is ex-dividend date. So that's set for the 3rd of June. And yes, that's something for our shareholders to keep in mind. And as communicated before, the management is proposing shareholders to distribute EUR 14.8 million in dividends, which would be 50% from the last year's profits. So with this dividend pool, we are looking at EUR 0.13 per share, which would actually provide our shareholders already a 7.5% of dividend yield, and that is only taking into account this one single dividend payout while we still plan to have a second dividend payout during the second part of this year sometime around November. And that would actually, we believe, will tip over the dividend yield into double digits or being close to that. So with this, I'll hand over back to you, Modestas.

Thank you, Maris. So last summarizing slide, the business outlook for the remainder of the year. So first of all, just a short summary about first 3 months of this year. So looking at financials, as already presented, we see that company has delivered another financially strong quarter with solid profitability, solid revenue. And despite the fact that portfolio was flat during the quarter, we still maintained same goals for the year so to have a double-digit growth in terms of net loan portfolio during the year. And for that, we have multiple products and markets initiatives. We still believe there's big potential in organic growth in our existing markets. It's not the same potential in every single market, but our goal is to grow in every single market. On top of that, we've already presented -- we've launched quite a few new products. So new products for vehicle finance market, but very known to us. So unsecured installment loans in the European Union countries and completely new product motorcycle -- not motorcycle, sorry, mobile phone -- actually, smartphone financing, which is still in early stages, but we'll provide more information. And definitely, this is a project which has a big growth potential. And lastly, we are progressing nicely also with launching new markets. But with that, also, capital management decisions have to follow, and then we've done that already. So we've already mentioned that we have successfully raised additional EUR 40 million in Eurobond, and also, we'll continue to successfully raise local financing across different regions and different markets. And of course, our biggest debt exercise, upcoming debt exercise will be related to EUR 150 million Eurobond maturing in 2026. So, we as communicated before, we are evaluating different options, and there might be even a refinancing exercise even this year. So on that, we'll keep markets updated. And lastly, as already mentioned by Maris, shareholder meeting is upcoming, and we do expect to pay out, let's say, healthy and generous dividend for the past results to all of our shareholders. So with that, I'd like to finish today's presentation. Now we're turning back to you, operator, and we're happy to answer all the questions.

[Operator Instructions] We will start with the questions submitted prior to the call, then prioritize the audio questions, and finally continue with those submitted in writing. The first question, have you evaluated the potential impact of U.S. tariffs on your markets in Africa?

Sure. And the answer is, of course, resounding yes and not only for the impacts in Africa, but also in all our markets. And what we can say with quite a bit of certainty is that luckily, let's say, our group is not exposed to direct, let's say, supply chains or direct trades with U.S.A. because as you might know, we operate in local markets with the issuing local loans in local currencies. However, of course, many of these markets do have, let's say, trade imbalances with the U.S. and there will be -- they might be exposed, their economies might be exposed towards any volatilities in relation to tariff discussions. So that's why we need to keep mindful of the general economic situation on a possible inflationary pressures in the markets where we operate. At the same time, we have this experience where we have been dealing with high inflationary environments in many of our developing markets already for the last several years. We have also dealt with quite a severe, let's say, customer or portfolio quality issues, especially in the COVID times. So we believe we are now well prepared to any possible turbulences. And yes, so I think that pretty much sums it up from our perspective.

As I don't see any hands raised, we'll continue with the submitted questions in writing. No, apologies, there is one. So [ Frank ], over to you.

Good afternoon, Modestas and Maris. Thank you for the presentation. And on a much higher level than going into the detailed numbers, two questions. The first one would apply to Africa, and I just added it up, roughly, it's now 1/3 of your portfolio overall, the different businesses. And on Page 13, you said you want to continue significantly scale the African business. Is there going to be a cap, what you do in Africa? I mean what's the share of Africa per se going to be there? Or how do we have to look at that? And I'm not saying so much about next 12 months, I'm more wondering what's going to company look like in the next 2, 3 years.

Sure. So thank you for the questions, Frank. Nice to hear from you. In terms of Africa, yes, you correctly noticed that in Africa, we have a bit more, let's say, new projects upcoming. And I think we should see the tendency that growth in Africa is slightly higher than in non-African markets. In terms of cap, we would be kind of careless maybe to put some cap, not necessarily taking into account performance of the market. But looking at one or few years horizon, we still see that non-African part will be bigger than the African part. So that's our internal thinking. That's our -- let's say, this is how -- if we look at budgets, Africa, most likely will grow to some 40%, maybe slightly bigger portion, but still, European part will be at least half of the business. So we don't anticipate somehow to become kind of only Africa-focused company. And also worth mentioning that the tickets are smaller in Africa and the maturities are shorter. So actually, even though issuances are quite high, these portfolios, they are not building as quickly as in Europe, let's say, for our new consumer loan product, which we're offering up to 3 or in some markets, even 4 years. So there, our portfolios are being built way faster.

And in times -- Modestas, in terms of businesses in Africa, is it the PDL, the payment deduction loans, which should have reasonably good paying characteristic? Or will it be more broader loans? And are you planning to enter another African market with maybe a less stable currency underlying? I must say you have picked a few very resilient FX markets. I'm sure that it's not something you might have had necessarily planned, but the Kenyan shilling, the Ugandan shilling and the Botswana currency, they seem to be quite resisting the general trend of African currencies, which sometimes massively devalue.

Yes, definitely. So you could say we've been lucky a little bit, but also we're looking at that, that's one of the main criteria also while selecting the market is foreign exchange stability. So we look at past performance. We also look at, first and foremost, what are the hedging costs and hedging instruments. There are markets which look very attractive, let's say, on paper, on the ground, but we just see that we would not be able to -- let's say, to have well-controlled operations, just this FX movements are just too significant. So that's for sure, while choosing the market that's very important for us. And we do plan to launch one new African market this year. I don't want to maybe go into details, which one. But as you probably know, first 2 years are typically not super quick in portfolio generation. But we believe that the mobile phone financing if successful in Uganda, we could roll it out also in Kenya, maybe even other market. So it would add portfolio. And again, population is still growing and it's quite big and just in motorcycle and car financing markets, we see quite a bit of potential. And on this deduction of source or this payroll loans here again since, let's say, we -- those markets have been under our control now still a bit less than 2 years. We have not done all of our initiatives yet. So there's still less ground to cover. And then that's -- again, that gets back to the strategy. We don't want to have one extremely big market in Africa region. So we hope that all these markets will grow, probably deduction of source markets will grow more proportionately to Kenya and Uganda, because already, base there is quite big. But growth is expected everywhere.

And my second group of questions or my second, yes, question group is the dividend payout which you have announced with EUR 14-plus million, is it driven off the -- let me just go to my line here, is it driven off the net profit from continued operations? Is it driven off the total profit for the period? Which line do we have to look at? Maybe, Maris, can help me on that?

Sure. It's driven by the total profits for the period.

Okay. And the payout you conducted in first quarter, that was effectively paying out dividends to the minority shareholders and buying that back. Is that included there? Or was it...

Yes, Yes. So actually buying back is next to it. So if we go back to the slide which we had here, Slide 8, so buying back was EUR 1.2 million. The dividend payout to minority was EUR 2.9 million. So basically, these are -- these dividends, as we are paying dividends, distributing at the country level then subsequently at the regional hub level and finally, the dividends arrive at the holding company. Once they travel throughout all these at least two layers of structure, the minority shareholders would receive their portion.

And this will not come back? We will not see that minority share dividends or repurchase because you cleaned that up, basically.

Not fully because these dividends relate to all the total minority shares. What we managed to clean out "is only a fraction of it." So not fully. We still have a minority shareholders in structure.

And which countries does it apply to or which businesses?

Pretty much across the group. So we have a wide employee stock-based scheme in place where our company's employees pretty much are also shareholders at the entities they work.

Okay. Okay. So that's one. Okay. Super. Good luck for the first half and speak soon again.

Our next question, minority share from total profits in Q1 2024 was 21%. While in Q1 2025, it's reached 31%. What drove such steep increase in minority share? And do you see any potential limitations to maintain 50% payout ratio from the total profit?

Yes. So answering the first part of the question. So it was mostly driven by the fact that, let's say, the largest profits actually during the first quarter of this year were attributable to the specific markets where the minority shares are -- happen to be the highest. So that's why you would see this, let's say, the 30% ratio. Altogether, I think this is not something which is very customary and more -- we will more look into this 20% profits attributable to the minority shareholders once we look on an annual basis. So I would say that the first quarter result is a bit of an anomaly in this regard. And with the dividend payout ratio, so I think here, it's worth to mention the fact that we have public dividend payout policy in place, where actually, we are limited by the capitalization of the company or equity over total assets. So 50% payout ratio is something that we, as a management, aspire to, and we plan to have it in the future. But of course, that is always controlled by the fact how strong is our equity in general, how strong is our equity in relation to total assets. So we will always before any dividend payout proposition to the shareholders, we'll always assess what's the equity over total assets ratio after the such dividend payout, and that will be appropriately communicated then to shareholders.

Impairment expense for consumer lending portfolio nearly doubled year-over-year, while consumer lending portfolio expanded by 19% year-over-year and NPL broadly remained stable. What drove the disproportionate impairment expense increase?

Yes. So let's say in the consumer business segment, we have really also scaled up the portfolios and a large contributing factor is especially our markets in the African region, where we actually have more than doubled net loan portfolios since we acquired these entities back in 2023. So there are certain markets, let's say, which had a bit higher impairments, such as, let's say, Albania in the European sector and then also Zambia in our African markets. But these are, let's say, ongoing developments. We always try to scale up the portfolios. We reassess the quality of it and then we adjust the underwriting policy as a result of it. There's no kind of substantial, let's say, long-term kind of effects that are really worth discussing here.

How much of the debt is with floating rates? Has cost of debt increased, decreased year-over-year?

Yes. So in general, we don't have any debt with floating rates, with really a small portion with certain bank loans. But that is definitely by far the most minor part of our debt structure. So 90% or even more than 90% of our total borrowing costs do come with a fixed rate. And that aligns nicely with our portfolio because we also offer our customers fixed rate loans. And -- yes and can you repeat the second part of the question, I think it was concerning the cost of debt as well?

Yes, indeed. Has the cost of debt decreased year-over-year?

Yes. So the answer to that is a resounding yes. So that can already be seen in the EUR 40 million euro tap that we did. So as I already mentioned, we managed to tap the bond with 10% yield to maturity while the bond before that was issued with 13% on Mintos. So already also mentioned before, the blended cost of borrowing has went down from double digits now into single-digit territory. So we see that across the board.

In Q4 2024 webinar, you mentioned that substantial part of Q4 loans were issued in December. Hence, the full impact on revenues is yet to be seen in the following quarters. While in Q1 revenues, they remained stable quarter-over-quarter.

Sure. So here, we still need to look at the overall portfolio during the quarter. So the fact that first quarter had the same revenues as fourth quarter when issuances in especially January and February, they were, let's say, significantly lower than December. So it kind of compensated itself, but if you would compare revenue in first quarter of this year with, let's say, third quarter of last year, of course, you would see a significant development and then that comes from overall, or I would say, even average net loan portfolio during that quarter.

Could you please comment on quarter-on-quarter net portfolio development on stable FX?

Yes. On the stable FX is -- and here, we need to look at the country per country. And obviously, we did that. So we actually see the growth in almost every single market where we operate, with the exception of one or two markets where the portfolio has remained stable in general. So this is an important aspect to note, while in euro terms, we're looking at the same or very close to end of the year portfolio levels in local currencies. We see the growth across the board.

Let's talk about the payroll growth. What do you expect for full year?

Yes. So in general, with the payroll and expenses as such, I think we can look at the first quarter results and also pretty much extrapolate those over the annual basis. But here again, we need to remember that we're in a growth -- trajectory of growth. We will be growing the existing businesses. We'll be launching new products and also entering new markets and especially, the latest two of these things. So new markets, new products, they usually come with an increase in headcount. And because we need to onboard a new set of specialists and team members. So it actually would not be -- it would be fair to expect, let's say, even a slight increase on what we are having here now on a quarterly basis. But that's, of course, what we've done on a controlled basis because we always look at the, let's say, return on the cost, return on investments. So all those employees' contributions as of that -- at some point at the end of the day need to be shown up in the net portfolio growth and revenue growth.

Why did trade receivable outflow and cash flow statement did not translate into net loan portfolio growth on the balance sheet?

Yes, that's actually a good question. And I think here, it is something related to the fact that we actually deployed the bond proceeds that we received as of the end of March. So I think here, it's a bit of a classification issue because it needs to be looked in total with all the working capital, also trade payables, trade receivables and cash together. So it's -- I believe there, the figure needs to be slightly revised. But altogether, we need to look at the total net working capital. So it might not be very visible from the first glance once you look at that figure.

What is the level of liquidity on the balance sheet that Eleving is comfortable with?

So here, I would say that we like where we are currently, when we have, let's say, more current assets than current liabilities. And usually, that is the case because we tend to borrow long term. We tend to -- if you look at our Eurobonds, we tend to borrow them at 4 to 5 years. While the average effective loan portfolio duration on the asset side is actually closer to 2, 3 years. And in some markets, it's actually less than 2 years. So we actually like this asset liability match, which is actually in the favor of the company and indirectly also to the shareholders where, let's say, refinance, let's say, short-term assets with the long-term capital. And this is something that we always need to have and probably will be the case also in the future.

What was the euro effect on the net loan portfolio quarter-on-quarter from weaker currencies?

We wouldn't be able to give you a figure right up front. But here, we need to revert to the previous question and previous answer we already provided, which is that on, let's say, stable currencies in local currencies, there's a net loan portfolio growth. And while in euro terms, we see the stability. And that's the comment we can make as of this moment.

We have three more questions to go. The next one refers to the presentation where Modestas referred to two new markets. Is it on the consumer or vehicle financing side?

Sure. So I think we had a bit of internet connection. So I'm not sure if I heard the question fully, but if it's about new markets in which segment, so it's a secured financing market. So that means on vehicle financing part.

Does someone from company management is going to buy shares led to improve confidence for other shareholders about company performance?

Yes, very interesting, good, I guess, and personal question. So, of course, we can't answer for the whole management. But I think a few things worth to mention that, first of all, I think confidence in company's performance should come not from management buying the shares but from actual figures from the performance of the company. And if we talk about the top management of the company, so a big part of top management is partially compensated by also share option scheme, which is pretty much same as kind of buying shares in the market. And obviously, people in our company is really motivated through different share motivation scheme, and we do see this continuing in the future as well.

And our last question, smartphone financing in Uganda, how do you see the competition in the market from the already established competitors like Watu and M-Kopa?

Sure. So correctly noticed that there is already a competition in the market. However, market is huge. Market is growing. We have our own strategy, how to enter the market, how to grow our market share. And we believe that there's still enough place for more players. Maybe I would not want to go into details for obvious reasons, how we will compete with those two companies. But overall, it's a huge market with tens of millions of people needing smartphones. So we see that there's a lot of potential for more companies and then to have further, let's say, strong established company in the market.

We have run out of the questions, and we will be closing the call. Participants, thank you for your active engagement today and have a good rest part of the day.

And from company, just thanks a lot everyone for joining. Thanks a lot for a lot of and a lot of interesting questions, and I wish you all a good day. Bye-bye.