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

Good afternoon, and welcome to Eleving Group's earnings call. We will start with 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 session and 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 very much, and good afternoon, everyone. Welcome, everyone, who has joined the earnings call for Eleving Group for 12 months of 2025. So today, myself, Modestas Sudnius and our CFO, Maris, will walk you through whole 2025 results. Obviously, we'll put a little bit bigger focus on the last quarter results and also share already our plans for 2026. Before we go into presentation, just let me quickly summarize the year. So First of all, we are going into the year with the expectation to grow as a business across multiple financial indications and operational indications, 15% to 20%. Now I can confidently say that we have achieved that successfully. Also, along the way, we have managed to reach quite a few highlights from operational point of view, we launched quite a few new products, so consumer loan products in our markets where we didn't have them. Also, we launched smartphone financing, opened one new market, Tanzania. Also along the way, we've managed to issue our milestone bond, $275 million, which is fuel for the future growth. So really a great year with a lot of great achievements and probably best year so far in our history. And yes, now let's jump into the presentation. Let's dive into details, and let's start with Slide #4, our group performance. So if we look at the net portfolio development at first, our portfolio has grown by 20% from EUR 371 million at the beginning of the year to EUR 446 million at the end of the year. And also, once we look at revenue, we see similar trends. Revenue has grown by more than 15% and reached EUR 250 million at the end of the year -- by the end of the year. So maybe a small disclaimer why portfolio growth was smaller to net portfolio. It's not because we're losing our yield. Actually, it's not the case. It's purely the fact that the biggest part of the growth happened in the second part of the year. So revenue just naturally didn't have time to catch up to the same level. Also here, a small disclaimer for the ones who've been tracking our reporting for quite some time. You can see that some of the colors in the graphs have changed. So we've slightly -- basically, we made it more detailed in terms of the categories which we show, and we believe that this is a more transparent view. So in short, what we've done and we've adjusted also for the past periods, all the consumer loan issuances, which were done on countries where previously we were having only vehicle finance products, we've moved them to consumer lending section. And on top of that, we've also implemented as a separate section in the reporting device financing, which is smartphone financing. And we'll have also one more slide just emphasizing that. If we look still on this split where the net portfolio growth came from, so what's very good and what's kind of according to our strategy that we maintain growth across the different segments. All of our segments have grown. So this is -- that means like we're able to add additional portfolio and kind of new customers across our segments, and they're still kind of maintaining good popularity. If we talk about profitability, so this would be the last bullet point of the slide. Last year, our net profit have reached EUR 29.1 million, which was quite flat compared to the previous year when it was EUR 28.8 million. Why was it the case? So firstly, we have especially in the last quarter, quite a few one-off spendings, which mostly are related to our biggest bond issuance and previous bond refinancing. So if that would be kind of disregarded, then profit would have been at above EUR 31 million. And also it was a very turbulent year when it comes to foreign exchange effects and movements. If we would just look at the net profit without this effect, we would have a yearly result at EUR 40.8 million. So a very robust growth of 25.5%. However, as probably many of you know, we do have exposure to foreign currencies, and then we try to hedge them as much as we can, and we actually were successful throughout the year to hedge even more and more. But nonetheless, even hedging is a cost. And overall, FX kind of movements were, I would say, they are very significant throughout the year. Just dollar versus euro has depreciated close to 12%, which is I would say rather unprecedented event and now it's almost at all-time low. And as a rule, developing currencies or developing markets where we mainly operate, they tend to follow more dollar currency plus their own movements. So therefore, these effects were felt across the board. But at the same time, we think it's a good year where we show that even despite these very widespread movements of currencies, like our hedging policy and in general, business profitability was kind of able to withstand it very well and still grow on a net profit basis at least a bit. Now we can move to the next slide, which would be explanatory slide about changes what were done. Just a second. So we changed our reporting from more kind of country level or product level to like a segment level. So -- and the reason is, I think, very well explained on the slide to the left. On the part of the slide on the left, where it shows our installment loan product acceleration throughout the year. So in 4 markets, we have launched or started scaling up installment loan products. So Latvia, Estonia, Romania, Riga, maybe a good example could be Estonia, where at the beginning of the year, we had 0 installment loan product portfolio. And by the year-end, we already had EUR 3.2 million. Romania had even bigger growth. Armenia has the slide as well, but also we've launched it only at the year-end. So -- going forward, now we are reporting this installment loan portfolio under consumer lending product and taking it away from the vehicle finance portfolio, which we believe is way way better and more transparent way. Also, you can see from this middle part of the slide that our device financing product, which is smartphone financing in Kenya and Uganda continues to scale up nicely. By the year-end, we've already had close to 7 million portfolios in each of the portfolio of smartphone financing in each of the markets. And as a result of this slightly adjusted, let's say, groupings at the year-end, 61% of vehicle and device financing portfolios as a share of overall net loan portfolio and 39% lies in consumer finance. So this is how we're going to be reporting and tracking the results going forward as well. Now we can turn to the next slide, our growth slide. A few words about sales. So on sales, it was a very memorable year because we've been beating our best sales results quarter-over-quarter. And for the year, we have issued close to EUR 0.5 billion worth of loans or EUR 468 million, which is a 24% growth versus previous year. So really a strong result, a testament to new product launch as well as growing demand for the existing products. Also worth to mention our new products, installment loan launch in Armenia. So as I mentioned before, so far, quite small issuances, but we believe it's very logical market to launch such product because we have a huge existing customer database and as well as competition on installment loan products in Armenia is quite low. So it's a market where we do see that this product should grow quite a lot in upcoming quarters. On expansions, so already reporting first issuances results in Tanzania, where we launched a few months ago. So I would say now we can conclude that probably the soft launch period is over, like we've issued already more than 200 motorcycle loans. We see that the loan systems work well with the demand for the product. So we continue opening new brands, strengthening the team, and we do expect kind of significant growth in sales in upcoming months. And speaking about new markets, our goal for 2026 is to launch 2 new markets. And actually for one of them, we're already in licensing process. But here again, we typically announce exact market once we have a license in our hands and then once we start issuing first loans. So we do expect some updates from us on that in upcoming quarters. Also, I want to share a few initiatives from business optimization side. One of them is artificial intelligence related. Actually, throughout the year, we've been running smaller size tests for different AI voice agents because call centers is one of our biggest cost and in general, one of the biggest part of our operations. And by the year-end, we've already reached the results which are satisfactory to us. We've done tens of thousands of AI calls using AI voice agents. And what we've seen from latest results that for certain -- let's say, for certain processes, AI is able to demonstrate better quality. That means better when it comes to debt collection, better collection results as well as it's way more cost-efficient solution. So we will be scaling this up in our -- some of our English-speaking markets as well as market as Romania and gradually in other markets as well. And we do believe that this will help us not only from kind of cost efficiency perspective, but also to deal with some more peak times when we have more incoming calls or when we -- it's most common payment days and so on. So this is a big focus for us in 2026. And also another optimization happened in Moldova. So Moldova is actually the only market where we have 2 fully independent businesses, vehicle finance business and consumer finance business and kind of Moldova being relatively small market, we do -- we were also looking for potential kind of cost optimizations here. And also for vehicle finance product, worth to mention that we do have certain discussions with the regulator on how certain aspects of this agreement should be treated. So that was also one of the reasons why we decided to do this kind of merger of the businesses already starting this year. So biggest part of portfolio was sold in December to consumer finance business. And then going forward, we see that in 2026, we do expect to have quite a bit of cost optimizations for the merged entity and as well as bigger focus will be on consumer lending products in this market. Now we can go to the next slide. So on global scope, you also see that we have changed slightly the grouping, but big picture has not changed. We remain very well diversified across different markets. Also pretty much all the markets have been growing quarter-on-quarter throughout the year. So this is a very welcoming view because for us, this diversification is one of our main priorities. But still, if I would need to mention -- we need to go [indiscernible] still, if I would need to mention the markets which in absolute terms grew the most, those would be Latvia business where maybe also worth reminding that there we have 2 types of business lines. So one is on balance sheet through like mobile brand and another one through Primero brand, which is off balance sheet, where we're sharing our profits with local bank. But combined, sales really skyrocketed in Latvia and at the end of the year, our net loan portfolio was close to EUR 63 million. The second market I'd like to mention is Romania, which has demonstrated another very solid year. It's a market with big potential, a lot of population. So it has grown nicely, and we still see that there's a lot of opportunities for Romania to continue scaling up further as well. And lastly, on the African side, market worth mentioning is Kenya. So it has also demonstrated very strong growth and biggest fuel for that was motorcycle financing products, where we have -- we're market leaders, and we're kind of enjoying this growing popularity of our product. Now let's go to the next slide. nonfinancial KPIs. So here as well, we've changed the grouping a little bit. And for now, we still don't have a dedicated section for smartphone financing because it's still at a very early stage. But if we look at the applications received, so kind of trajectory over last quarters, it's very positive that shows that our marketing efforts are successful and also our brand recognition is strong and demand for the products is strong, both vehicle and consumer finance kind of popularity grew quarter-over-quarter throughout the year. Similar trends are on loans issued. We're receiving more applications, we're issuing more loans. I guess worth looking more on the conversion rates. If we look on blended quarter-over-quarter rates, so kind of conversion rate has not changed much for vehicle finance and the consumer finance part. But if we look at a little bit longer time frame and look at the changes throughout the whole year, so on consumer finance side, actually, we see quite a drop in conversion rates and it's mainly because of the changed grouping because the new installment loans, what we're offering our customers in existing vehicle finance markets, we're still quite conservative there. Our conversion rates are lower. We're collecting data. We're learning. We're updating our scorecard. So I think there is still potential to improve and grow. And another product maybe worth also commenting is motorcycle financing, where actually throughout the year, conversion rate close to doubled. But it's not that -- it's not related to our underwriting policies. It's actually related to our sales channel strategy because throughout the year, we have moved away from -- not fully, but to a big extent, we have moved away from partnership models where most of the leads are coming through the dealers to our own branch model. So we've opened a significant amount of new branches where we're selling motorcycle and providing motorcycle financing. And that allowed us to have full control of customer onboarding and as well as just to get a better quality leads. So that has been the strategy throughout the year both in Kenya and Uganda. But overall and also what you're going to see in upcoming slides, financial slides that our net loan portfolio -- net portfolio quality remains stable, which is demonstrated by the stable conversion rates on blended levels. That means we are growing because there is way higher demand and not loosening up our kind of scoring models. With that, I'm handing over to you, Maris, to walk through the financial results.

Thank you, Modestas, and hello, everyone, on the call. It is my pleasure to be here today with you and walk through financials. So let's continue with Slide 9 and with financial highlights. Starting off with EBITDA and adjusted EBITDA figures. So our accounting EBITDA stood at EUR 110 million for the year 2025 and our adjusted EBITDA stood at EUR 101.9 million for the year 2025. Maybe a quick comment on the bridge between accounting EBITDA and adjusted EBITDA. So we are adjusting, as always, for the minority share of profits. And also for this year, we are also adjusting for the positive impact of so called Romanian VAT case, where we successfully appealed a VAT, let's say, amount that was -- that the tax -- local tax authorities concluded we had to pay. We appealed the case. We won the case and the money was returned back to the company. So to improve the like-for-like comparison of adjusted EBITDA and EBITDA figures as such, we are taking out this gain from the EBITDA calculation. So with all that being said, you can see how we have managed to grow consistently adjusted EBITDA figure on a year-over-year basis. So if you look back starting over the year 2023, we have been able to grow the EBITDA figure by approximately 15% per annum. And of course, a big contributing factor to this EBITDA growth is, first and foremost, net loan portfolio growth, which in turn contributes positively to the revenue, to the top line and then basically trickles down through the P&L through EBITDA and the profitability as such. Continuing with the profitability metrics, let's now look at the net profit and net profit before ForEx figures. So -- and let's start with the later one. The net profit before ForEx for the year 2025 stood at EUR 40.8 million, which is actually quite a remarkable improvement if you look at the year 2024 figures. And we have managed to grow this particular profit figure by more than 25% compared to the year before. And of course, that speaks for itself and also showcases the company's ability to, let's say, realize its capital -- access to the capital, access to the cheaper capital as we continue to scale up and grow. We'll speak about this very successful bond refinance activity in the later slides. But the key takeaway here is that our EBITDA is growing and through the efficient capital/funding management, we're also able to grow the net profit before ForEx figure as well. If we now look at the net profit figure, so this figure remained largely in line with the year 2024. Still, nevertheless, if we adjust for one-off expenses like Eurobond refinance expenses in the amount of EUR 1.2 million, our net profit figure would be approximately 5% higher than it was in year 2024. But that being said, we need to remember that, as Modestas already mentioned, year 2025 was quite unprecedented in terms of USD movements against euro. So our ForEx expenses were actually 3x higher than they were in year 2024. That might sound a lot, but here, the key item, which we would like to show is that even with 3x higher ForEx expenses, our profitability is still very nice, and we are nearing EUR 30 million net profit. Maybe one comment on the ForEx expenses is that one thing is that unprecedented USD movements, their depreciation is one factor, but it also impacts the cost of hedges. It also impacts the countries where we are not able to fully hedge them. So ForEx as such will always be present in our P&L. It is as any other expense that we can, to some extent, control. But we -- first and foremost, we need to make sure that the business case, the unit economics of our lending activities have sufficient enough buffer built in with them to be able to absorb these ForEx impacts and movements. And I would say that the year 2025 was a nice example of that, how we were able to sufficiently absorb 3x higher foreign currency expenses than they were in the year before. Speaking about the profitability buildup and equity cushion, so we can look at our equity development. So that's on the slide the upper right-hand side. Our equity as of end of last year stood at EUR 105.7 million which was largely same level as we started off the year. If we speak about the movement within the equity line item, we can see that undoubtedly the positive contributing factor was the net profit. At the same time, we have distributed dividends to our shareholders. And in that regard, year 2025 was a one-off year because we distributed half of full year 2024 profits, while going forward, our publicly available dividend policy prescribes us distributing semi-annual dividend payout ratio. So what happened in year 2025, we effectively distributed a proportion of dividends from 18 months of effective profitability, which going forward will be on a 12-month basis. I'll have more details also in the later slides on this one. One also quite, I would say, positive factor for our shareholders of the current entity, including public shareholders would be our selective and targeted to some extent, you can call them tactical minority share repurchases. So we are using the opportunities that are presented to us to acquire minority shareholders. And by doing that, we're actually making sure that there is more profits and more equity basically left for our current entity shareholders. Again, this includes also our public shareholders. So this is a net positive activity for our public shareholders in the longer term. Then speaking and continuing on the equity and the equity development as such. If you look at the equity to total assets ratio, as of end of last year, it stood at 18.3%, which was a bit lower than it was as of the end of year 2024. Here, I would like to kind of digest a bit more the ratio and how it's being calculated. So we have equity divided by total assets. So in denominator, we have total assets, which have actually in the case of year 2025 grown quite rapidly. So our net loan portfolio has grown, especially in the second part of year 2025. So the denominator has been increasing at a higher pace than we're able to, let's say, within the equity. This is quite normal as we would also expect our balance sheet to perform. And in the mid- to longer term, the revenue and the profitability from a larger net loan portfolio will be a positive contributing factor towards this ratio. And then again, also just to enhance the comparability between the years, we still need to remember the fact that in year 2024, the company executed a very successful IPO. We onboarded close to EUR 30 million of new capital in our equity in October, basically in Q4 of 2024. So we have this also this positive tailwind if you look at this particular ratio for the year 2024. So that being said, year 2024 was a bit of a one-off year and not a perfect year to compare the ratio that we have for year 2025. Continuing with the return on equity, we were able to achieve 27.2% of return on equity if we look at the year 2025. That, again, is a bit lower than it was in the years before. Nevertheless, quite high and actually higher than many other companies would be able to achieve. But here, the IPO effects are also important, and they need to be taken into account once we look at the year 2025 ratio because how the return on equity ratio is being calculated, that's our total profit divided by the average equity for the year. So in the year 2024, we started with a lower equity and due to successful IPO, the year ended with equity, which is close to EUR 100 million or actually exceeds EUR 100 million. So the beginning of the year, lower base definitely is a positive tailwind for this ratio if you look at the year 2024. So in that regard, year 2025 is a more stable year where we have no one-off equity infusions, and this is something to take into account. And then moving on to cost-income ratio. So we see quite positive developments here, especially if you look at the year 2025. So this ratio has been going down compared to year '24. And yes, this is something that is constantly on us, on the management's agenda, how we can improve the ratio. And as the company is going to be growing, we're not saying that the total expenses will decrease. It might -- they might also grow with the company's size, but the main goal of the management is to make sure that the revenue growth outpaces the growth of total expenses. Of course, in some certain lines, in some certain countries, subsidiaries, business lines, we'll be looking for cost optimization and the improvements will be visible comparing to years before. But all in all, let's say, our focus is to make sure that there is a positive dynamic in terms of revenue growth versus cost growth. Let's move on to the next slide, please. So Slide 10. So here, we have details on our liabilities. On the upper left hand of the slide, you can see our interest-bearing liabilities and the breakdown. As you can see in the slide, we have quite concentrated picture here as of end of last year. So by that, I mean 80% of funding being or coming from 2 issued Eurobonds, so EUR 90 million bonds maturing in year '28 and EUR 275 million bonds maturing in the year 2030. This is, say, also, if we speak about the movements between the quarters, you also noticed that the peer-to-peer or Mintos marketplace for loans portion has decreased dramatically. So in the previous quarters, we stood at EUR 60 million or even more than EUR 60 million. Now we're at less than EUR 10 million. And this dynamic is explained by the very successful Eurobond refinance activity where in October of last year, we refinanced EUR 150 million Eurobonds with a new bond in the size of EUR 275 million. The bond issuance was so successful that we actually took a bit more capital than we initially planned to onboard. But due to our flexible funding structure that we have built over the years, we were able to basically pay down or put the surplus capital, which we're not able to invest instantly in that loan portfolio, we actually addressed that capital towards paying down other portion of our liabilities and Mintos is being the main one. As of this moment, I can tell that as we keep growing the net loan portfolio and the business as such, we keep tapping into the Mintos platform once again. So our Mintos platforms position as of this moment now even exceeds EUR 15 million. And this is something how we expect to finance our business growth in the near term. Mintos platform and also speaking about the net loan book's growth and financing of it in, let's say, year 2026, we need to mention the local financing. So we have been very successful in doing that, especially in our mature markets, in our mature and profitable markets in African region, also outside of Africa. Just to name a few, those would be Kenya, Uganda, Armenia, Georgia to a bit lesser extent, but we are especially proud with our Kenyan business, which is already now has managed to onboard more than EUR 30 million of local bonds issued in local currencies, funded by local investors. And this is something that we definitely aim to continue doing so in the future because this is the most preferred way of how we manage the ForEx volatility in our P&L and balance sheet, namely financing local loan books with local sources of capital in local currencies. If we take a quick look at the lower part of the slide, you'll see 3 ratios. These are financial ratios that you'll find in both of our issued Eurobonds. If you look at the interest coverage ratio, so this ratio is basically EBITDA over interest expenses. So here, you'll see a stable picture. Basically, the ratio has been oscillating around 2.3, 2.4x over the last 3 years. The minimum level is 1.25. So there's plenty of headroom there. If we look at the net leverage, so net leverage would be net debt over EBITDA. So we are at 3.8x, while the maximum allowed level is 6x. So there's plenty of headroom there. Again, I think we can mention year 2024 as a bit of an outlier because we onboarded IPO proceeds, which we're able to, let's say, use to pay down net debt and the net debt in year 2024 is a bit lower than we would have it on a usual year basis. And lastly, on the capitalization ratio. So this ratio is a bit different than our equity ratio. because the numerator is a bit different. So here, we are having equity divided by net loan portfolio, while in the equity ratio, it will be equity over total assets. So as our net loan portfolio has been increasing, it is only customary to see also a lower capitalization ratio because this -- the lower part of the equation is actually growing while then the contribution into our equity is expected to happen in later quarters/years. I think we can move on to the next slide, please. So Slide 10 and our net loan portfolio quality. So on the left-hand side of the slide, we are, as always, showing our, let's say, asset-backed business separately from the consumer financing business. Here, there's a change in this quarter, which is actually in relation to something that was explained by Modestas at the beginning of the presentation. So here on the consumer finance side, we are now including consumer loans issued by our previously, let's say, vehicle finance markets, so markets such as Baltic markets, Romania, markets in Caucasus. So now we're showing rather than on geographical split, we're showing on a per product split. If we look at the vehicle and device finance portfolio composition, you'll see that the NPLs or nonperforming loans, i.e., also Stage 3 loans, we stood at 4.9% in -- as of end of last year. On the consumer finance side, our NPLs were 4.1%. If you look at the right-hand side and the development of gross NPLs, so these are NPLs before provisions and net NPLs post provisions, you'll see actually an improving trend line, actually decreasing NPLs over the years. And yes, so we are really happy with this development. Basically, one of the contributing factors to the decrease is definitely issuance of new loans. But at the same time, we're also happy to see the improving performance of the existing portfolios, especially showcasing our ability to issue new loans on the existing customer base while retaining the portfolio quality intact. And lastly, I can also -- I would like also to mention the fact that we have or we remain to have a sufficiently high impairment coverage ratio. So for the vehicle finance business or vehicle and device finance business, that would be at 96.3%. And for our consumer finance business, our impairment coverage ratio is at 130%. So continuing to the next slide, please. So Slide 12. And here, we have a bit more details on our share performance. Just a reminder, our share is being traded on the NASDAQ Baltic Stock Exchange as well as in the Frankfurt Stock Exchange. Maybe one important aspect is that actually 93% of the overall trading, if you look at the year 2025, does happen in NASDAQ Baltic Stock Exchange. So this is the most liquid venue for our shares and probably the share price traded there represents the public share price the best. So you'll be able to see that as of end of January, our share price stood at EUR 1.70. I believe as of this moment, that figure has even increased. Yes. But as you will notice, this EUR 1.70, that's the same figure that we had -- that we did the IPO for. And with this figure, we are able to see that the company is trading at a P/E ratio of 6.7%. Just looking at this ratio alone, you can definitely conclude that the share is not overbought. If anything, they are giving the very high return on equity, close to 30% and nice earnings per share figure of EUR 0.25. There is a nice potential for the company's share to develop on a positive side. And this assumption is also supported by the analysts covering the shares. So you can see those -- their target prices in the upper part of the slide. So in the -- as per their conclusions, they have issued either buy recommendations or targeted prices, which substantially increased their IPO price, which was EUR 1.70 per share. Let's move on to the next slide, please. So Slide 13. So just to conclude my part of the presentation, we also wanted to look back at the goals we have set for ourselves, for the company during the IPO process. So we actually published a 3-year -- 3 years goals for the company in terms of net portfolio revenue and net profit before ForEx. So for years 2024, '25 and '26. So now we're really happy to see that for year 2025, the actual result exceeded or overachieved our initial goal that we set for ourselves by 124%. So the net loan portfolio is one of the most important metrics, if not the most important metric if we think about company's long-term growth and long-term profitability because all the loans issued today is expected to positively contribute to the bottom line ultimately. If we look at the revenue and net profit before ForEx, so we're actually very close to achieving the targets that we set for ourselves. We're only a few percentage points behind the initial targets. So we're really happy to see also this development. And then again, I know I spoke about dividends before, but worth to remind that year 2025 was a special year. It was a bit of an outlier year in terms of dividend payouts because we paid half of full year 2024 profits in the first part of year '25 in the amount of close to EUR 15 million. And then during November of year '25, we also paid dividends based on the profits earned during the first half of year 2025. These 2 dividend payouts combined have actually provided our shareholders a dividend cash yield in the amount of 10%. So this is, I would say, quite a unique offering. So not many companies are able to offer that to their shareholders. We're happy that this happened during this year. And -- but then going forward, of course, we expect to comply with our publicly available dividend payout policy, which basically prescribes that we are paying out semi-annual dividends based on previous -- rolling previous 6 months basis. So this slide concludes my part of the presentation, basically handing over now to you, Modestas.

Thank you, Maris. So last slide of the presentation, business outlook for 2026. Maybe before I jump into that, just a quick summary about the results of 2025. So overall, what we already emphasized, we're -- we're happy with what the business have shown. We came into the year with expectations of double-digit growth, and that has been successfully achieved together with many other highlights. I would also say that in 2026, we've done -- in 2025, we've done a lot of investments into the future. We launched many new products, which we're going to be scaling up in upcoming year as well as refinanced our liabilities and borrowed additional money to sustain this growth as our expectations going forward are to maintain similar growth levels what we've been demonstrating in last year. So if we talk about 2026, on products and market side, I would say we are very consistent, very similar emphasis to the last year. First and foremost, still existing business growth has to be and is the core for us. So growing across the board, across our markets and across our different products. Of course, we will be scaling up consumer loan products, which we have launched lately in consumer finance markets, also device financing that we're going to be scaling further. We actually do plan to launch at least one or even few new consumer -- new smartphone financing markets throughout the year, but from the ones where we are already operating and also on consumer finance products, most likely our next market would be Lithuania, where we have long-term outstanding vehicle finance business. Speaking about new market launches, so one new market launch is planned in Europe and another one in African region. And as always, once we have more clarity and more news, we will share it with the investor community. Talking on capital management side, again, rather consistent growth compared to the last year. So obviously, maintaining strong financial ratios across the [indiscernible] is of key importance and key focus, also continuous local financing growth, which we demonstrated solid results this year. And then obviously, that's the cheapest way of kind of managing this FX risk. So that will definitely be the focus going forward. And also, I'd like to mention this improving the cost-to-income ratio. So we do believe that with additional automation, AI usage and also kind of stable growth ratios on revenue side, we'll be able to kind of put a nice downward development for this ratio as well. And lastly, a few words on governance and sustainability. So 2026 is a year when we launch new 5-year ESG cycle. Therefore, we will present very shortly updated strategy and also updated structure of how we track our results. That should increase the transparency and the sustainability of our business. So with that, I'm finishing today's presentation. Now we are ready to answer your questions. Handing over to you, operator.

Let's continue with the interactive part of the call. As Modestas mentioned, we'll now be taking your questions. [Operator Instructions]. Can you elaborate on your business plan in the new markets like market size, required CapEx, staff expansion, et cetera?

Sure. I'll try to be very brief because I know that we have limited time for this call. So first of all, on new markets, we've done a lot of preparation. Market size is maybe not that important for us, market opportunity is most important. So for our particular products, how much we could be issuing, what's our customer base and things like that. In terms of capital expenses and the market development, we always do expect in best case scenario that the market would become on a monthly basis, profitable within the end of second year. So that's pretty much our goal. And we also -- for different products, different markets, we have certain kind of burn rates set. They really depend on the market, but typically, it never goes above EUR 2 million. So on cumulative level, that should be enough to build a scalable business and then start earning profits on a monthly basis.

When you look at tech spend today, how do you internally distinguish between cost control, resilience investments and long-term value creation?

Very interesting question. I think when we look at tech spending, we need to probably split it in 2 parts. So one part is that we are developing a lot of tech in-house. So these are our own systems. And then we do it very much from day 1 of the company's establishment. We do see that this is a more efficient and more agile way of developing business because sometimes certain functionalities are better in third-party systems, but to be able to adjust and then kind of react to market tendencies, we do believe that this is the right strategy to have it in-house. So a big part of our tech spending, I would say these are just maintaining existing systems. And this is a must. This is not even an investment because the technology and having a certain level of automation, this is the expectations of our customers, and this is part of our sales strategy and competitive advantage. So this is -- yes, this is just costs which are necessary to be in place. But at the same time, we do invest quite a bit into new functionalities, new products, new markets. So this is the most efficient way to grow and actually the cheapest way to grow because these days with very high inflatory rates, investment in technology pays off faster than investment in labor. Yes, I hope I answered the question.

Thank you. We'll continue with the 3 pre-submitted questions, and then we'll take the audio question. I see there's one hand raised. So please hold on. Can you please explain the growth targets for the next 5 years on the African continent? Are you planning to expand to other countries?

So on African continent, as you've probably seen in the past, we've been growing and slightly even outpacing the growth elsewhere. Currently, it's approximately 1/3 of our overall business. We do see to sustaining definitely double-digit growth in this continent. And probably it has a potential to maybe reaching up to 40% of overall net loan portfolio. But as always mentioned, like this diversification is very important for us. And then we do also see a potential to launch new markets in African region. We actually just launched Tanzania. And of the 2 markets which we plan to launch in 2026 would be also an African continent. On the 5-year horizon, maybe I would not want to kind of speculate for such a long term just now because also we have not published our long-term projections. But Africa is one of our core growth regions, that's for sure.

And specifically on the Botswana, can management outline the medium term, meaning 3- to 5-year strategic role of the Botswana subsidiary within the group?

Sure. So actually, I did not call out Botswana when I was mentioning these bigger growth markets. But if we look at percentage-wise, probably this was one of the fastest-growing markets in 2025. So this is a market which may be small in population, but actually has a very big consumer financing market. And so far, we, as a relatively new player, we have just a very small fraction of the overall market, and we do see great potential to grow there. We also do believe that we have certain competitive advantages, especially when it comes to customer underwriting, access to financing to our competitors. So scaling up the business further, winning some of the market share from competitors, that is our midterm strategy in Botswanan market and demonstrating the double-digit growth.

What was the reason for the corporate tax that reduced the pretax profit by EUR 16.3 million?

Yes. So I'll take this question. So I would suggest to look at the corporate income tax together with the deferred corporate income tax. So current tax plus deferred tax combined because that would be the full and, let's say, through total corporate tax expense for the company. So if we take these 2 figures together, we'll see that our total corporate income tax was a bit less than EUR 30 million, which is -- which would lead effective to effective tax rate of close to 30% which would also be in line with the figures we have seen in the prior years, like years '21, '22. In year '23, '24, the effective corporate income tax rate was around 25%. Maybe quickly on the development of the corporate income tax and deferred tax, specifically, in some of the instances, it might be driven by the fact that, let's say, we have -- we are acquiring hedging instruments at some of our nonoperational/holding entities, which then accumulate. If there's an expense, they would accumulate the deferred tax, while the subsidiary would be accumulating corporate -- current corporate income tax. So there's a bit of a, let's say, structural mismatch. But for any reader of our financials, I would suggest to look at both of these tax line items together.

We'll now be taking the audio question.

Hopefully you can hear me okay. Just a question on the loan book evolution as well. You've spoken about the potential increase of the African share. But I just wondered on the -- if there was a target in mind for the proportion which would be asset-backed. Obviously, you've had higher loan growth in the consumer segment. But just assuming that the loan quality is higher in the asset-backed, if there is a floor in mind for where that might decrease to?

Sure. So do we have like a specific cap in mind? Probably no. But looking at our projections, at least internal projections, we see that asset-backed products should kind of maintain similar proportion, like around 60% of overall net loan portfolio and then kind of if we look at in upcoming few years, this should not change like maybe a few percentage points, but nothing of dramatic fashion because obviously, maybe in some jurisdictions, we will grow more in consumer finance, but then there's again in a lot of African markets, we have all fully asset-backed or secured financing where we also do expect quite significant growth. So it kind of really balances each other out. And on same Africa, like currently, it's around 1/3. If we talk about that, it could grow up to some 40%, but this is like really more long-term horizon than I'm talking like 3 to 5 years.

Yes. Okay. Yes, that's helpful. And then just lastly, is there any figures you can give in mind for 2026 for cost-to-income ratio, return on equity? Obviously, you've given a floor on capitalization. Just financing you can guide us on, obviously, assuming certain developments in FX markets.

Sure. So on specific ratios, we can't provide. Maybe we can just -- overall guidance is that it should stay at a similar level. Cost-to-income ratio, we do expect to keep going down, but also we as a company, we plan to do update some of our future projections and publish them in upcoming few months. So one can expect a little bit more clarity on these forward-looking projections in the future.

So we'll now be taking the online questions. There are a couple of questions about dividends going forward. I have combined those together, and I'll read it as one. Capitalization ratio has went down to 23.7%. Do you plan to maintain approximately a 50% dividend payout anyway? Is the leftover from undistributed profit enough for portfolio expansion? And then there's a comment that at a 20% cap ratio, the leftover of EUR 15 million gives a possibility for additional EUR 75 million portfolio per year.

Yes. So on the specific dividend payout ratio, it's a bit premature to comment in details. We do plan to announce the specific dividends to be distributed for the second part of the year 2025 profits and the exact ratio sometime in the month of April, May. Most likely, it might be done in the same fashion as it was done last year together with the Q1 earnings call. But that being said, I think an expectation in between -- somewhat between 40% to 50% payout ratio is substantiated. Whether or not it's going to be exactly 40% or 50%, we will need to assess that at point in time because the equity ratio and the dividend ratio policy, how they work together in sync is that we need to make sure that we hit certain equity ratio targets at the point of dividend distribution and actually immediately after dividends are paid. So once we can announce this specific payout ratio again sometime in April, May, we will assess as a management what is the expected equity ratio immediately post dividends paid out. So we need to assess -- make that assessment a bit later into the year. So basically, stay tuned on this information.

Are you planning to do something additional for solving constant losses on the FX side, like hedging FX more efficiently?

Yes. I can mention that we have been very, very proactive in terms of our foreign currency management in general. I would say that we are not managing necessarily to get rid of FX losses because this is virtually impossible. What we can do as a management, we can manage the volatility of those. So the way how we do that is, let's say, first and foremost, the business, the unit economics need to make sense in a sense that we are covering all the cost items, including any expected and unexpected foreign currency volatility. Secondly, we're also very proactive in local fundraising. So I spoke about that a bit earlier in the presentation. So we have successfully, let's say, borrowed against certain assets in certain markets, for instance, Kenya, almost fully in local currencies. So that also kind of controls away the volatility in our P&L and balance sheet. And lastly, we're also already doing a proactive hedging. So we have purchased numerous hedging contracts in place. But of course, hedging, again, a reminder, hedging does not mean that we get rid of the ForEx expenses. We just have -- we get rid of the volatility to some extent. So this needs to be taken into account. It's an important aspect that I think it makes sense to emphasize. So we are doing -- we are actually using all the tools at our disposal, but the most preferred one is always going to be the local fundraising in local currencies against local assets.

Congratulations on your record year. How do you plan financing further loan growth? Do you have a maximum net leverage target in mind that you are comfortable with?

Thank you for the question. So basically our fundraising -- near-term fundraising plans are following that we plan to finance the net loan portfolio growth with Mintos platform together with the local fundraising activities. These are kind of the immediately available sources and resources for us. Of course, always on the table, there is a capital -- possible capital markets transaction, but that needs to be taken into account, and we need to assess also beyond the company's performance. We need to take into account the capital markets health and at certain points in time. As of this moment, I cannot comment exactly on when or if any capital market transaction might follow this year. But basically, be assured that we have plenty of current flexible sources of capital, which we will tap into it to finance the immediate net loan portfolio growth. And there was also a second part of the question about the target net leverage ratio in mind. So net leverage ratio stood at 3.8x. The maximum, I would say, backstop is what we have in the financial covenants. So that 6x. Let's say, we, as a company, we would not like this ratio to go substantially more than 4x. Ideally, it would actually trend downwards towards 3.5x as we actually keep growing also partially from profit retention. So yes, this is a high-level comment I can provide there.

There are a couple of questions about minority share buybacks. Is Eleving Group considering using share buybacks to support market liquidity and enhance value returns to shareholders?

When it comes to share buybacks, I think we've also been answering this question quite often. Just having done an IPO less than 1.5 years ago, we don't see any need for that. Business continues growing, delivering results. So in very short, we do not anticipate such actions in mid and short term.

Continuing on, what currency pairs should be in focus to understand better your possible currency headwinds or tailwinds in 2026? Is it solely USD against Europe? And what is your base case view on currency impacts this year at prevailing exchange rates?

Yes. So I'll start with the second part. So let's say, our business model as it has proven also, I would say, in the year 2025, which was unprecedented if we think about USD euro movements. So it actually shows that our balance sheet and P&L is resilient enough to sustain more than 10% depreciation of USD currency against euro, which in turn also drags down some of the emerging market currencies. So our base case for this year is, let's say, in our models is not too much larger than we saw in year 2025 because as per our assessment, year '25 was already quite severe. But nevertheless, we're not here to, let's say, kind of speculate on the future, but I can only make a comment that our business model will be profitable even with another unprecedented depreciation if we speak about USD against euro. Then on the other first, maybe I can comment that maybe I'll give a few countries where we are not able to either purchase, let's say, cheap available hedges or kind of fully financed loan books with local sources of capital. So maybe you can keep an eye on, let's say, such currencies as currency in Uzbekistan, Georgian Lari and Armenia Dram. So -- but then that being said, these 2 currencies -- we're also kind of successfully building the local funding base for them. But nevertheless, if you would like to see any potential headwinds, tailwinds, these currency pairs are also interesting for that. And again, certain currencies in African region, but then those can be quite easily correlated with the USD or also South African rand. So USD versus euro, South African rand versus euro, these are also valid currency pairs to give a glimpse at what impacts our P&L and balance sheet.

How do you see gross yields developing this year given the mix changes in consumer loans and new product lines as well as new market launches? Should we expect year-over-year stability?

Yes. So on new development, our projections show that more or less year-over-year stability could be expected because obviously, the product mix is very diverse. But in the European side, yields are way lower in Africa, they are higher also for some consumer loan products, which we have recently launched where we're charging lower -- higher yield compared to vehicle finance, but the same time, vehicle finance business is also growing nicely. So overall, we see that the yield on the blended consolidated business should stay midterm rather similar to what we have now.

We have 2 more questions to go. What is the loan portfolio target size for 2026?

So here, I can maybe comment what we have currently available and published on the web page. So these are these 3-year targets, year '24 until year '26. So for year '26, net loan portfolio target was and I would say, was EUR 520 million. But however, please do take into account that we -- most likely, we might publish also an update to those targets in the near future once we'll have that information all available and summarized for us internally.

And then currently, the final question that we have received actually coming from several investors about capital market transactions in 2026. So do you envisage refinancing of the 2028 bonds or perhaps there's plans for new equity, new share issuance?

Yes. On the bond, I believe I also spoke about that a few questions ago. So it's a bit premature to tell if there's any capital markets transaction coming this year. We will assess that possibility depending on our net loan portfolio growth, depending on the state of capital markets as such at large and available capital sources for us. So for us, I would say the transaction mostly just to give you an idea, would not -- would be more about managing the cost of capital rather than the quantum of the capital because we believe that we do have current sources available for us to easily get us through this year with the current source of capital. However, we're also kind of always welcoming to explore any opportunities to optimize our cost of capital funding costs. So we might also make a decision based on that factor alone. On the equity capital markets transaction or equity raise [indiscernible].

Yes, also just repeating myself that as of now, we don't see a need. It's a profitable business. We -- our dividend policy is balanced in a way which could both kind of satisfy the dividend yield, but also keep comfortable cushion of equity within the business so that we could be able to sustain the growth. So as of now, we don't have such plans. If something will change, we will definitely inform way ahead of time.

Thank you. We have addressed all the questions received. Modestas, would you like to have some final closing words?

Just, very short. Thanks, everyone, for joining the call. Thanks for showing interest in the company and a lot of interesting challenging questions for us. So I wish you all a great evening and a productive rest of the week. Thank you.

Thank you.