Georgia Capital PLC ($CGEO)

[Audio Gap] I am pleased to give you the overview of our performance. Let me give you some content for today's call. So we'll start with -- I'll talk about the Q1 performance. Then our CEOs of our large portfolio companies will talk about their particular performance of their companies and how it's progressing. Giorgi, our CFO, will talk about portfolio valuation and liquidity and dividend income outlook. And in the end, we will have a Q&A session. And as always, we'll answer all of your questions. Now let me give you the key developments -- overview of the key developments. Our NAV per share was flat in Q1. In pound sterling terms, it went up 2.1%. This is due to the decline in share price of Lion Finance Group. It was in Q1. However, as share price recovered -- and year-to-date, we have NAV per share growth of more than 9%. So basically, our large portfolio companies performed well and then LFG share price performed well post Q1. And that was the result of the 9.2% year-to-date growth in Lari terms. So the performance of our large portfolio companies, as I said, was exceptional. It continued to grow top line at 13.7% and resulted in 27% year-over-year EBITDA growth. It's a phenomenal growth. I must say that our base for last year was pretty high. Our base was already grown quite -- Q1 2025 was already -- we had experienced a high growth. And on top of that doing another 27% growth is phenomenal. So basically, I think that the performance is exceptional. And NAV growth will reflect it. As you see that we are pretty conservative when we are valuing the multiples of our private portfolio companies. And then basically, this is -- this growth will result in the end, the higher NAV growth over the year. The one big development which we had that our portfolio -- one of our investment -- investee company, Lion Finance Group got into FTSE 100 Index, which is another big achievement of the management team and overall the company. So congratulations to them. And that is -- will increase the profile of the company as well as Georgia Capital. So the -- our buybacks continued. We bought back 475,000 shares. In total we bought, in value terms, $22 million. And in total, we bought back more than 1/3 of our issued share capital. So I'm really pleased with the buyback pace we have and the magnitude of buybacks we are doing. And we continue to do the buybacks, obviously, as in case of the weak share price, it's even more pleasant. So the -- to talk about the macro performance, we had a -- Georgian macro is firing on all cylinders. It's amazing performance of the macro. We have 7.5% real GDP growth in 2025. That continues with 7.9% in January, 8.8% in February. And please note that this is on top of the high growth which we had in Q1 '25. And it's just compounding, is amazing what's happening in Georgian economy. And we expect this growth to continue, especially with this conflict in Middle East. It brings a lot of inward investment from Middle East in Georgia, as well as export from Dubai coming to Georgia as well as trade and logistics being very strong in Georgia because of the conflicts in our neighboring countries. So that plays very well with Georgian economy, unfortunately or fortunately, I don't know. But you see -- I will jump into the reserve slide. You see the reserves continue to grow. 0.5 billion interventions, the National Bank made in Q1 and the reserves -- foreign exchange reserves are highest ever at $6.3 billion. That basically reflects the inflow of the foreign currencies through trade logistics, through export of goods, what we are doing. So this kind of -- was also reflected in 2025, in current account deficit. So on the back of the high GDP growth, we have recorded lowest ever current account deficit in Georgia's 35 years of history. So it's a negative 2.6% of current account deficit, which is unbelievable. It's very hard to believe that Georgia could have achieved such a low current account deficit, especially on the back of some of the years, we had a double-digit current account deficit. So that tells you the strength of the economy and the balance sheet. Even though the inflow of the foreign currency is very strong and there is a lot of interventions coming from the National Bank of Georgia, the inflation is still manageable at 4.3% level, which is on the back of this growth and on the back of this magnitude of intervention, it's still very good result. And on top of that, the interest rate is still flat at 8%. So a very good combination. And I think that the National Bank and the government is managing the economy superbly to see such a great balance of the growth interventions, foreign currency reserves growth and the growth of the -- and the inflation being flat at 8%. So if we move to the NAV per share chart, we see a breakdown. And the breakdown is -- the gross breakdown is such that you see Lion Finance Group contributed negative 0.6%. Nearly 3% contribution was the positive from the private large portfolio companies. But because we have decreased the value of the -- we decreased the value because of the lower multiples we applied to the valuation, we had a nearly 1% negative contribution from the multiple change. Emerging and other portfolio companies declined by 0.5%. Buybacks contributed a positive 0.3%. Operating expense was negative 0.3% and the other was 0.9%. So that link to do with a flat NAV per share growth. However, you have a 9% growth year-to-date because of reversal of the share price of the Lion Finance Group. Now on the next slide, on Slide 6, you see a strong NAV per share growth over time. So since the inception, we nearly have a 19% of CAGR in NAV per share growth, which is respectable, not at the level we want to be. We want to be at 25% plus over the longer period. In a shorter term, in 5-year period, we are at 27% in a 3-year period, we are at 32%. So 5- and 3-year NAV growth are in line with our ambition. Longer is -- we are still behind in -- since inception -- to our ambition of having a 25% plus NAV per share growth. So if you look at the next slide, you see a discount shrinking. We are at a historically lowest point at 16% NAV discount. This is on back of the high growth of NAV, what we have been achieving. Probably it's not very demanding NAV per share discount. On the next slide, we see our progress in capital return program of GEL 700 million. We have announced very recently and pretty much we have achieved it. So we are not much to complete this program. And once we complete, we will announce a new program, obviously. On the next slide, share buyback and cancellation program, you see more kind of granular information, how it has changed over time. And basically, the share buyback cancellation program has reached $268 million mark, so which it's a lot of buybacks we've done. Please, I would remind you that during the COVID or just right out of the COVID, our market cap probably was along that number of $250 million. So we managed to buy back -- unfortunately, share price went up, and we cannot buy back as aggressively as we were doing before. Net capital commitment, you see we are at 3.6% level, which is within our 10% limit. And as you know that we are -- we want to retire all of our holdco debt, which currently gross is $50 million, and probably we will be retiring that soon. And we will go our leverage to 0. So that's kind of our next target to have no leverage at GCAP level. So on next slide, net capital commitment overview. You see reasons of movement during this 1-year period. And you see that the cash -- net cash increase is the largest contributor to this decrease in the NCC ratio. On the next slide, you see the even further over the longer period of time, how it has changed. And you see that our -- once we were pretty over-levered at 42% of NAV. And right now, we are at 3.9%, as I say. Now just to give you the aggregate portfolio company performance. As I said, that magnificent performance cannot be done like touch a high growth rates on the back of the very high base. That's kind of which I was -- I am myself surprised. But I guess the economy doing well as well as our management performing exceptionally well, very efficiently and very effectively. They have achieved the 27% year-over-year EBITDA growth. It's unbelievable. And year-to-date -- last 12 months is 25%, is another high growth. And revenue went up at 13% plus. So it's way above the inflation. So we are really growing well and our CEOs will talk about same-store sales growth and other metrics, which they have been looking closely. The cash accumulation, same. It's a very strong cash accumulation in Q1, we are 30% up year-over-year. last 12 months is lower, but due to this seasonality effects, basically, we expect this cash operating cash to grow along with the EBITDA. So cash conversion is close to 100% for all of our portfolio companies. Now I will let the -- our pharmacy CEO, Tornike Nikolaishvili, to talk about the details of the performance of the company. And I'll come back when we have a Q&A session.

Thank you, Irakli. Hello, everyone. I am pleased to share a brief business overview and update on the performance of our retail pharmacy business. For the first quarter of 2026, business continued to deliver a very strong and solid results across all key metrics. We continue to be the largest player in the retail pharmacy market in Georgia, with around 34% market share in organized trade based on 2024 figures. Retail remains our core business, contributing around 85% of total revenue. We operate 2 well-positioned pharmacy brands: GPC, targeting the high-end segment, and Pharmadepot serving the mass market. In addition, we operate 2 franchise brands, The Body Shop and Alain Afflelou Optics. We are active in Armenia and Azerbaijan. During the first quarter, we expanded our network by 5 pharmacies, including 1 in Armenia, primarily in a cost-efficient format requiring limited capital investment. As of March 2026, our network includes 458 pharmacies, 14 Body Shop and 5 Optic stores. So in terms of performance in first quarter '26, our retail revenue grew by 8.6% year-over-year, supported by 4.5% same-store revenue growth and strong ramp-up of newly launched pharmacy stores. We added 42 new pharmacies in the last 12 months. Revenue growth was also supported by 11% year-over-year increase in average bill size. We are encouraged by this trend as it reflects healthy consumer demand and solid in-store execution. Our wholesale business achieved 6.7% revenue growth as we continue to deliver on our strategic focus. This growth is primarily driven by increased product availability across distribution channels. At the same time, we continue to deliver consistent gross profit margin improvement, reaching a record high 34% in first quarter '26, up by 1.7 percentage points year-over-year, supported by a shift in the sales mix towards high-margin products and improved supplier terms. So on the next slide, let me share how it's translated into financial performance. So improved profitability supported by disciplined cost management across the business resulted in record high quarterly EBITDA of GEL 29 million, up by 20.5% year-over-year. Importantly, this growth was accompanied by strong cash flow generation with EBITDA to cash conversion at 114%. It's well above our 90% target, highlighting the quality of earnings and operational discipline. The combination of EBITDA growth and strong cash generation translated into a solid leverage position with the adjusted net debt to LTM EBITDA at 1x, which is comfortably below our target level of 1.5x. On the final slide, to summarize, first, we are delivering sustained revenue growth, supported by same-store revenue growth and strong wholesale performance. Second, we are consistently improving profitability and achieving record earnings through margin expansion and disciplined execution. And third, we are maintaining a healthy level of leverage, supported by strong business performance and solid cash generation. It's giving us flexibility for future investment and potential shareholder returns. So thank you for your time. I'm happy to take your questions during Q&A session. Now let me hand over to Giorgi Alpaidze.

It's health care, I think, Tornike -- Irakli, and then I. Irakli?

Okay. So I'm very pleased to report another strong quarter for the health care business. We remain focused on higher-margin outpatient services. As a result, our outpatient revenue grew by 17% in first Q 2026, with its share in total revenue rising by 1.4 percentage points to 46.2%. We have significantly broadened our clinical capabilities across the network. So we introduced Neuronavigation in 2 large hospitals, expanding the service portfolio with a complex high equity capabilities that was not previously available within our network. We also introduced catheterization laboratory in 2 of our regional hospitals in Western Georgia, representing a significant milestone in the expansion of our cardiovascular service coverage in the areas. We introduced dozens of new services in the regions, including immunotherapy, neuromiography. We also opened Georgia's first human milk bank in Batumi. On the leadership front, we appointed a new CEO for our regional and community hospitals. We also continued to recruit star doctors and attracted more than 60 physicians in total in Q1, meaningfully strengthening our medical capacity and ability to deliver high-quality care across the network. Our lab retail network continued to grow, reaching 12 branches with further expansion planned ahead. In first Q 2026, EBITDA grew by 16% year-over-year to GEL 27 million. EBITDA margin also grew further to 20.4%, reflecting a 0.3 percentage point improvement compared to last year same period. On the Slide 2, turning to our hospital business. EBITDA grew 12% in the first quarter with operating cash flow of GEL 8 million and EBITDA to cash conversion ratio comprising 45%. Cash conversion in first Q reflects typical seasonality in state collections with the ratio expected to improve in the second half as payments will normalize. Occupancy rates declined by 4 percentage points from 75% to 71%, driven by a lighter flu season compared to the prior year. Flu-related admissions typically carry above-average margins. On the next slide, in our Polyclinics business, a favorable shift in revenue composition towards higher value services contributed to the overall revenue growth of 14%, which translated into a 28% growth in EBITDA. The Diagnostics segment maintained its focus on retail expansion, which is a key driver for profitability improvement. Retail revenue grew by a remarkable 54%, fueling strong overall segment performance with total revenue up 18% and EBITDA growing 26% year-over-year. To summarize, the first quarter was strong, both in terms of financial performance and the strategic steps we took. EBITDA grew significantly. Margins improved and our operating model continued to demonstrate its resilience. Alongside this strong performance, we continued to invest in our clinical capabilities and people, expanding infrastructure, onboarding new talent, and deepening medical expertise across the network. Quality remains at the core of our strategy as we consistently raise clinical standards and broaden access to specialized services, ensuring that our growth translates into tangible improvements in patient care. That's it for today. Thank you. I will hand over now to Giorgi.

Thank you, Irakli. Hello, ladies and gentlemen. I will overview the insurance business we run. Just a quick reminder that we divide our business in 2 main business lines, that's Property & Casualty, and Medical. So we had an amazing quarter. On the base of last year's high results, we recorded high revenues. Our insurance revenues grew by 27%, while the profits grew by 70%. Back on the high profits and revenue growth, our key operating metrics through both insurance lines still remain very strong. Our net premiums totally in both lines grew by 54%, while in Medical, we envisage 75% growth. And in P&C, we've seen a 77% growth. To have a dive in each business line, our property, we remain market leaders in P&C business line with a market share of 34%. Our revenues increased by 13% in P&C that were backed by life insurance portfolio and property portfolio that was supported by the tariff improvement increase plus the retail growth in both portfolios -- retail growth in motor insurance mainly, plus the adjustment of the rates in corporate and retail business. Our profits grew even more in P&C with a record high of 27% and -- 27% growth, and our ROEs still remained very strong at 32%. In total, we paid GEL 5.5 million dividends to GCAP in total. Proceeding from the above mentioned, I'm really proud that our key operating metrics remain really solid. Our net premiums grew by 7%. We had a significant improvement in combined ratios by 2 points that were mainly driven to lower loss ratio plus the improvement in motor and property insurance tariffs that we adjusted. As you remember, our main operating principles are health portfolios. So we adjust our insurance rates quarterly according to the actuarial opinions and the reports. So it is good that we had another round of improvement, and that was translated into combined ratio improvement in Q1. Even though we increased our rates and adjusted -- we had an increase in the number of insureds by 10%, the written policies grew by 15% and still our renewal rates in retail stood very strong at 78%. To have a look at the health insurance, I would say that the health insurance recorded historic high figures that we've never seen during the existence of the health insurance business that we run. Our insurance business in health insurance grew by 34%. Just to underline, we remain market leaders also in the medical insurance with a market share of 34%, really strong and high market share in line with the appetite -- of our appetite that is from -- in the range of 30% to 35%. Insurance revenues grew by 37%, while we had, I would say, 200% growth in our profits that we've never seen. Our management in health insurance lines did an amazing job. Mainly the growth was driven by newly added tenders with the new tariffications, in line with our healthy portfolio strategy and disciplined underwriting, plus the organic growth that we've seen in the corporate business in Q1 2026. And plus the tariff adjustments that was in mid-teens and about 15% in health insurance. The key operating metrics remain very solid. Net premiums grew by 75%. And I would like to remind you that during the last investor call, I underlined that we have secured about GEL 60 million. It was GEL 50 million, but it turned out to be GEL 60 million contracts already that they incepted in Q1, and it translated already in our revenues plus the profitability. And I'm very happy that the adjusted underwriting approach has been translated already in the profitability that we see right now with the translating ROEs of almost 50%. We had a significant growth of combined ratios of more than 7%. That was mainly driven because of the low seasonality of the flu in medical insurance in Q1, plus, as I said, the diversification of the portfolios in retail insurance plus the mix of the new added products of the newcomers for the foreigners starting from the Q1 2026, all foreigners that come to Georgia are obliged to buy travel insurance that added another GEL 1.5 million in our revenues, and we had a 77% growth in the retail. As I said, our retail remains core of our strategy in the coming years and the coming months. So we had a 77% increase in the retail. That translates into 35% increase in our medical insurance, where out of the 35%, we have added about 16,000 new retail in insureds to our portfolio. While we had an increase of mid-teens of the rates, where I'm really happy that our renewal rate still remains at record high in health insurance, above 80%, and that's according to the peers and according to the insurance business, 80-plus percent in term -- in renewal rates is considered as very high. To make a summary in this on the health insurance, the improvement mainly was -- we had a robust growth of the profits of 70%. That was translated into improved ROEs, 32% in P&C, while we had almost reached 48% in medical insurance. As I said earlier, retail remains in the core of our strategy, and we are really in line with our strategy to develop retail business. We had a Q-over-Q, we had a 77% increase translated to additional 16,000 insureds and driving to 2.8 million new insureds. The good news here is, as I said, we had a law passed in the parliament obliging every tourist that comes into Georgia to buy the travel insurance, and that added our total revenue, GEL 1.5 million, plus the distribution mix that we really, really pay attention. We think that together with the tariff improvements, sustainable profitability is done with the product mix, and that helped our product mix in terms of the optimization and support of sustainable profitability. And to end up, we paid GEL 5.5 million to GCAP in dividends in Q1 dividend in Q1 2026. Thank you. I will pass the floor to my colleagues. Thank you.

Thanks, Giorgi. Hello, everyone. I will quickly now take you through the impact of this remarkable first quarter results by our portfolio companies on our NAV valuation. So starting with the summary page. In the first quarter, as you know, in every first quarter and the third quarter, we do in-house valuation. So all these valuation updates were performed internally by the Georgia Capital's valuation team. Our portfolio value was around GEL 5 billion, which was spread -- roughly half was in Lion Finance Group shares and another half was the private portfolio companies, where 40% was attributable to the large portfolio companies with the retail pharmacy being the largest private portfolio company that we hold. On the following slide, you will see the impact on the multiples. So the multiples in Healthcare Services business continued to be flat versus previous periods. In the retail pharmacy and in insurance, we had the multiples decrease slightly. Part of the reason was that they had a very -- both very strong performance, which was ahead of the previous DCFs that we had. So we would expect that as these performances continue that these multiples will likely recover to the previous levels. On the next slide, you see the change in the portfolio value during the quarter. So we had about GEL 100 million decrease in the value of the Lion Finance Group. Roughly half of that was attributable to the dividend and the buyback dividends that we participated in and another half was attributable to the changes in the share price driven by the exchange rate impact and also us selling down a little bit of stake from 16.9% down to 16.6% during the quarter. The valuation gains in the large portfolio company were very strong, actually in excess of GEL 150 million. But when we take into account the decreases due to the multiples, it was around GEL 100 million, where the biggest contributors were retail pharmacy, about half of it, and insurance was also another half of that contribution. Other portfolio companies decreased by 24%, where roughly half of that was attributable to the 2 renewable energy pipeline projects that we discontinued during the quarter that had a negative impact on the valuations. Now like looking into more details in each portfolio company. You can see on the next slide that we have in the retail pharmacy, about GEL 40 million valuation growth because of the 20% growth in the EBITDA. And also this quarter was very strong in terms of the cash conversion. So net debt decreased even more by -- we had GEL 27 million positive cash inflow. So that decreased the net debt to EBITDA now down to 1x. So with that, we had the retail pharmacy business growing to above GEL 900 million in the quarter. In the Healthcare Services business, again as a strong quarter, it translated into about GEL 30 million EBITDA gains. However, the first quarter tends to be slow in terms of the cash conversion. So the net debt increased here by GEL 21 million, which largely offset the gains that we had from the EBITDA change, although in the coming quarters we do expect that the operating cash conversion will go back to the levels that we've seen in the past. It tends to be that the fourth quarter is the best in terms of the cash conversion in this business. In insurance, the 70% growth in the net income that Giorgi spoke about also translated into a similar increase in the value of this business, which was then I know partially offset because of the multiple change. But as I said, as we go through in the future periods, we should see that multiple converge again to the levels that we had here before. Now on the next slide, this largely concludes the valuation. In terms of the liquidity, we continue to have a very strong liquidity despite us spending about $22 million on the buybacks during the quarter and also paying the half year coupon on our bonds. We still continue to be in a net cash position. We have about $85 million worth of liquidity at the end of March and about $50 million gross debt. So our net cash was around $35 million, and we continue to have a very strong balance sheet. And we do expect that in the coming quarters, dividend inflows will accelerate. You can see on the next slide, the dividend inflows that we had in the first quarter, which tends to be slow in terms of the dividend collections. But from the second quarter, more portfolio companies start paying us dividends, which leads us to conclude again that for the year in 2025 -- 2026, sorry, we still expect that the dividend inflows will be in excess of GEL 200 million across our public and private portfolio companies in 2026. So far, we received GEL 40 million, which was from Lion Finance Group and from our insurance business. In the second quarter, the pharmacy business will also start paying 2026 dividends in addition to the insurance business. That summarizes the financial side and the valuations of our presentation, and I'll go back to you, Irakli for the wrap-up.

Thank you, Giorgi. Let me just summarize what we talked about before we move on to Q&A. Strong performance of our portfolio -- private portfolio companies, 26% EBITDA growth, 27% EBITDA growth year-over-year. NAV per share year-to-date, more than 9% growth. Share buyback continues, and we expect to continue to do more buybacks. Our capital return policy is firing on all cylinders, and we expect strong growth in 2026. So now let's have the questions. Arno, please, let's open the floor for Q&A.

[Operator Instructions]

I think we have 2 people.

Yes. So first, we have Dimitry.

Congrats on solid results. I have a few questions, please. So the first one is regarding the discount to NAV and future M&A strategy. Just wanted to understand like because discount to NAV narrowed quite significantly. Congratulations on that, by the way. Great job. And like my question is whether you're planning to become a bit more aggressive, specifically in Georgia and maybe whether you're also looking into investing more in neighboring countries via your subsidiaries? That's the first question. The second question is just a quick follow-up. You mentioned that you plan to become debt-free on the holdco level. And like if you could share a bit more color on the potential timing, when should we expect that since, I guess, buyback becomes a little bit more tricky.

Sure. Thanks, Dimitry. So basically, the -- in terms of our investment strategy, we are very actively looking in Georgia as always, but we have started to look at our neighboring country very closely. And through our portfolio companies, we want to tap in the opportunity to invest and grow in neighboring Armenia. So we have -- we are looking at the number of opportunities. But as you know, the M&A is very unpredictable. It's very difficult to predict. So we don't want to promise anything here that it will happen. But what I can assure you that we are -- we've been very active in Armenia and it is our strategic market in terms of the growth. The Georgia, obviously, remains and will be our core market. But we want to make the Armenia as core as Georgia is going forward. So we -- hopefully, we will grow there, and we make some investments opportunities, especially through our portfolio companies, bolt-ons, we like the bolt-ons in general, as you know. I hope this -- regarding deleveraging, so basically, we have only $50 million left on holdco level. So we can -- we may delever it in this year. It's not a big amount.

That's very clear. Maybe a very quick follow-up on the geographies. You said you wanted to make Armenia like as important as Georgia. But like maybe have you looked at Uzbekistan, for example, it's quite -- also quite an active market, quite promising.

We have looked at the Uzbekistan and it is indeed promising. But I think that we have a neighboring market, which is very close, both culturally, mentally, economically, there is a lot of synergies there. I think one step at a time. So I think we like Armenia very much. It has also a high growth like Georgia has. It was structural reforms, which we like a lot. So at this stage, as I said, one at a time, we don't want to spread ourselves thin, but I won't exclude Uzbekistan going forward.

Thanks. From what I see Milosz wants to ask a question. Milosz?

I have one question regarding the retail pharmacy business. Obviously, you highlighted the strong cash generation and the fact that leverage is below your targeted level of 1.5x. And this is despite the fact that the business has been contributing in terms of dividend income for GCAP. So I was wondering whether you would consider something like a dividend recapitalization, which means raising debt to facilitate maybe a larger distribution from the retail pharmacy business? Or do you prefer to keep some dry powder for inorganic growth or any other purposes?

Thanks much for the question. We like the dry powder, especially what we talked about. So we are looking at neighboring countries, bolt-on acquisitions. And I think that instead of doing the dividend rate cap and then investing back in growth, probably it's very good for the bankers, not for us.

Thanks. Ben Maher would like to ask a question.

I just got a couple. The first is on the large private portfolio. Obviously, as you mentioned, the EBITDA growth this quarter was very strong in the high 20s. I'm just interested how you see the sustainable growth in terms of earnings in those companies going forward, particularly in light of that greater than 25% NAV per share ambition you mentioned earlier in the call? That's my first question. Second one, again, is on capital deployment, how you're thinking about that. You mentioned Armenia. I'm also quite interested in your thoughts around, I guess, the accretiveness of buybacks going forward and also how you're thinking about potential divestments, if any, of existing portfolio companies. Obviously, your track record on divestments have been very good. So again, I think it's another positive point for the equity story that I think is something quite interested in.

Sure. Thanks for the questions. So EBITDA growth, 25% what we had -- we had 27%, but basically 25% plus EBITDA growth this year. Is it realistic for our large portfolio companies with the economy growing like that and also the conflict in the Middle East? Probably it is realistic. But I mean, the longer term, what we are looking at NAV growth, not only the operating performance growth, but also the buybacks, which are accretive for us, okay, as much as it used to be. It's now at 16% NAV discount we have, but it's still accretive. So we continue doing that. Also the divestments, what you mentioned, we like to sell above the NAV mark. And usually, we've been selling above the NAV mark per year. We sold 57% above the NAV mark. Water utility, we sold more than 30% our NAV mark. So basically, all of that buybacks selling above NAV, private portfolio growing, line finance groups delivering excellent results. And that became a dominant power in Georgia with the banking. So there was a 2-bank game. It seems like we are moving to one bank game. So all that -- I think that would result to our target of 25% NAV growth over time to continue. So in terms of the capital deployment question you had, we have a very clear vision where we want to deploy our capital, and this is clearly in Armenia. Structurally, neighboring-wise, everything, and all that things, it just gives us a very strategic geography. I will not exclude that we opened the office as a GCAP, we opened the office in Armenia. There are a lot of interesting underpenetrated sectors. to be consolidated, and that's what we've been doing in Georgia. And that's where the huge NAV growth and value creation we have delivered, and that's what we like about Armenian market. It's really behind in development of some of the sectors than in Georgia. We are really ahead. And I think that we have a strategic advantage of going in and reforming some of the sectors, which would give a benefit to Armenian people as well as shareholder of Georgia Capital. So the -- on divestments, we don't rush. We like to divest with a premium, as I mentioned before. And so we have ongoing discussions all the time for the portfolio companies, what we call it emerging and other, really on other portfolio companies, we have ongoing discussions, and we are very open to such transactions given that we are happy with the price. And we are very picky when it comes to the price. On buyback appetite, to address your question on our buyback appetite, we still like the 16% discount when we are growing 25% a year. So basically, it is -- in a way, it is in a 12-month period, it's a 40% plus discount we are buying the shares. So 40% discount, we used to -- we were buying nearly 100% discount before. But unfortunately, market was smart enough not to allow us to continue. But now I think that 40% plus discount is not a very bad discount. If you grow NAV per share by 25% and 16% or 15% plus, you have a kind of discount, 40% discount. That's what we are investing in. So it's not bad. So we like it. So we'll continue doing that -- doing the buybacks. I hope, Ben, this answers your questions. But if you have some more, please shoot.

No, that was very helpful. I think it's interesting in your comments on Armenia. I think you said it was going to -- at some point in the future, you expect it to be similar size to Georgia. I know Lion Finance when they changed their name a few years ago, that was to reflect the growing international expansion. I'm wondering if you guys are going to change your names in the future also in a similar way.

We may have a subsidiary, Armenia. We could be more local.

Exactly. I was joking.

No, no, no joke. It's a very important part.

Next up, we have [ Mark Samuelson ], who would like to ask the question.

Maybe a quick couple of questions. If we start on the health care, there was the lower occupancy primarily driven by regional and community. How much of that comes from the Gormed acquisition? And also what is the margin impact from the acquisition? And what you see as sort of a normalized level of profitability in this segment is the first question. Secondly, what do you see as the normalized level of combined ratio across both the P&C as well as the medical insurance?

Sorry, there's some background -- sorry, continue.

Yes. Yes. So normalized level of combined ratio across the 2 insurance segments. And finally, on your remarks just now about investments into Armenia, would you be looking at the same sectors that you are currently established? Or would you -- do you have any sectors in mind that you would evaluate to invest in Armenia on what you just explained?

Yes. So can I start with the investment because then I will have Irakli answering the health care and then Giorgi will address your combined ratio for the insurance business. So in Armenia, in the beginning, we will be fully occupied with the bolt-ons. So bolt-on of our asset-light businesses. So pharmacy is one of that. The outpatient health care is another one, not inpatient, obviously, it's an asset, but outpatient is very interesting. Insurance, we are present there with the reinsurance business. And we will continue to be present and expand our reinsurance activities in Armenia. And then we will look at the also consolidating the insurance market there. So there are a lot of opportunities within our bolt-ons. But we will look also outside the current portfolio companies. But next, I think the 2, 3 years will be very much occupied with our bolt-on opportunities in Armenia. Basically, the Armenia economy is not as big as Georgia, but it's like 80% of it. So we are looking at GCAP doubling its portfolio companies over time, the private portfolio companies basically, you can look at that way. Now does this answer your question on Armenia and sectors?

Yes, fully.

Okay. So let's have Irakli addressing the health care question about the occupancies and then combined ratio, we will have Giorgi.

Okay. So on the first question on the occupancy level dropping from 75% to 71%, it was primarily driven by not having a flu season, especially in January. So the Gormed has the acquisition that we made, they had a 70% occupancy rate in the first quarter. So it did not impact the overall occupancy levels. On the normalized profitability, we think that 2 years ago, we had an EBITDA margin of 15.8%. Now we are at 20.3%. We believe that in the medium to long term, 25% EBITDA margin is achievable, and we will do our best to get there and maybe even more. So that's I think it answers your questions.

Yes. Is that specifically for the regional community? Or is that health care overall?

Health care overall.

Regional and community, would it be lower or...?

It will be definitely lower because it is the most dependent on state revenues. So it will be most difficult there. But you never know, the state might introduce maybe some new financing or whatever. But as it stands now, it's most difficult to improve the margins in the regional and the community hospitals.

I think, Giorgi you are on the...

Sure. So in the P&C business, we are -- our medium-term combined ratios are in the range of like we're targeting 85% and that's where we want to stand in the medium term. And we have a track record of sticking to 80 -- in the range of 80% to 85%. So we think that it's quite achievable considering our diversification in the product mix in the P&C. For the health insurance, we are targeting something in the range of from 90% to 95%. As you know, health insurance is more -- the behavior of health insurance is higher in terms of the combined ratio. So we have a track record of operating in the range of 90% to 95%. So we think that adding some new health-related products will enable us to deliver combined ratios in the range of 90% to 95% in the health insurance. Anything else about insurance? Does that answer...

Thank you, Giorgi.

Yes. No, that's very clear.

Thank you, Mark.

So we have two incoming questions in the question-and-answer panel. Before we start answering the questions, I'd like to remind everyone that you can use the question-and-answer panel to ask questions. So the first question is from Varun Gosain. Appreciate your plans to go 0 debt. What are the risks to the upside? How much this take off appreciate your plans to go to 0 debt. What are the plans for the private businesses over time, go public or sell to strategic foreign buyers or keep them private?

All of the above. But I think that in terms of priority for us when we are considering the divestment, strategics are the best because they appreciate the transaction. They appreciate our companies way more. They see the strategic value. They see the management value, they see the synergies with their own businesses. So there is another higher -- let's put it, a higher valuation than going public. And so basically, we will -- our philosophy is very simple. If we can't sell expensively, we sell it, there is no strategic asset for us. Our strategic assets are that we don't have strategic assets. That's kind of the thing. So basically, if we get a good offer for any portfolio company, we are happy to entertain the structure of the compensation for the management of that companies are such that they are happy either way to stay and manage the company or to sell and cash out. So basically, we want to align all the interests when we talk about our strategy of having no strategic assets. So for us, going -- just to summarize that strategic buyer is most valuable because they are -- they appreciate the work we -- our management has done in institutionalizing the businesses and finding the Western style institution in Georgia is a big value in the market, which is a high growth is a big value. In the future, they will have an opportunity to buy assets, which will be in 2 high-growth markets in Georgia and Armenia, so a bigger footprint. So we are increasing the footprint for our presence. We will be hopefully increasing the footprint for our presence. So that's kind of a target for us. Divesting to strategic is kind of the best recipe we had. And I think that we are -- we will continue building the strong institutions, which will be appreciated even more by strategics.

Thanks, Irakli. So the final question that we currently have is from Harvey Sawkin. Goldman Sachs has raised the oil target by $10 for 2026, with risks to the upside. How much would this take off Georgian GDP? And how would that impact your business?

Basically, the -- over the time when I was managing the bank, the oil price sensitivity was the biggest thing. And every time the oil price increases, you see our profit is growing. And so even though we are not oil country, we have -- we are in the neighborhood of the oil producers. So Middle East, Azerbaijan, Russia, et cetera, you have a positive impact on the GDP. So oil price going up, that's the beauty of Georgian economy. Oil price going down, we don't suffer that much as the oil producers are suffering. Actually, we are -- economy is doing well even that. But when oil price is increasing, basically, we are having a big inward investment, trade continues to grow, logistics, et cetera. So it's -- I think that overall, the oil price increase plays well for the Georgian economy. So I don't know how many percentage points of GDP growth we should see, but I don't exclude that we go from 8.5% to 10.5% growth.

Thanks, Irakli and we have another question from [indiscernible]. The number of stores in Armenia is still small. Are you still studying the market? Or are you ready to speed up the development?

We are looking at both options. So basically, we have an option of expanding aggressively and building out the stores. We have that option. And we also have an option of the acquisition option. So we are looking at both options and whichever is better in terms of the value creation, we will pursue that.

There's one additional question. On the Georgia side, back of envelope calculation indicates of 3,000 people per store. How much growth room do you have in Georgia?

Let's go to Tornike with this. Tonrnike, please open your video.

I'm here. So as I understand to how much are we going to grow the number of stores, yes. So it's not -- we don't have a plan to continue aggressive growth of the number of pharmacies. We are evaluating and analyzing any urban development or some strategic places where we don't exist and only doing that. So to answer you more specifically, there won't be that kind of aggressive growth in the future, organic.

I think we have no further questions.

Yes.

Thanks, Arno. Thanks, everybody, for participating in our call. Special thanks to the people asking us the questions. We love engagement, and I hope that it continues. And stay tuned for -- to see the growth of our private portfolio companies. Thank you.