Brait PLC (BAT) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Brait interim results presentation. [Operator Instructions] Please note that this event is being recorded. I'd now like to hand the conference over to Mr. Peter Hayward-Butt. Please go ahead, sir.

Thank you very much, and welcome to all our stakeholders and investors, and good afternoon. Welcome to the unaudited interim results for Brait in 2024. You'll be very happy to hear. I can hear the collective sigh of relief that you don't have to listen to me today. We've got -- we've got Kobus on from Premier, and he will run through the Premier results and Dean on from Virgin Active and he will run through the Virgin Active results. And myself and Sabelo will run through some of the more Brait-related stuff. On the introductory side, we can start there in terms of portfolio overview. I'll give an overview of that, and then we'll get into the detail. So in terms of Virgin Active, again, credit to Dean and his team. Dean and his team have been in situ there for probably about 18 months or so. We continue to see the growth in the business. We'll get into the detail of that during the presentation. But we've seen really good, strong growth, particularly in the international business over the last 9 months from obviously the 1st of January to September. The international business has added more than 60,000 members over that period, with sales of 180,000. So again, very strong interest from members across those territories, particularly in Italy and in the U.K. And even the South African business, sales have continued to be strong, 175,000 sales in that 9-month period, again, above 2019 levels. But what we have seen is a slightly higher termination rate in the South African business. Dean again will touch on the reasons for that and what the management team are doing, but it's pleasing to see in the last couple of months that, that has come back down to sort of more normalized levels and we see good net additions in the South African business as well. So from a membership perspective, pretty strong performance. We'll go into that in detail. Pleasingly, we talked about yield management on the last call, yields up around 9% across the portfolio. And that's a function of 2 things. Firstly, price increases, obviously, in territories of around about 4% to 5%, but obviously, the increased CBD or high-yielding clubs, particularly in the U.K. and to some extent in Australia coming through and the international growth, which is obviously a higher yielding subset of our membership base, have all added to the overall yield increasing by 9%. So strong membership growth, strong yield growth has led to decent revenue growth across the portfolio. From an EBITDA perspective, very pleasingly for the first month in October, all of the business units outside of Australia are now EBITDA positive. Again, it's a very long time. Well, we've never been able to said it since we sat in the chair here at TRG. And very pleasingly, if you look at the run rate EBITDA, and that's what we've talked about before, effectively, you take the monthly run rate and you annualize it this time last year in October, that run rate was minus GBP 4 million. That has increased to GBP 30 million as of September. And if you actually annualize the October run rate, it's close GBP 245 million. And again, Dean will touch on that. But again, credit to Dean and his team, it's around about a GBP 50 million swing or ZAR 1.4 billion swing in EBITDA over the -- run rate EBITDA over the last 12 months or so. Pretty importantly, over the last 12 months in the Virgin Active business, we've refinanced both the international debt and the Virgin Active South Africa debt, extended the maturity dates and got reset the covenant levels, which will give those businesses the breathing room that they need to go into that capital structure. And importantly, Dean and the team have finalized the renewal of the Vitality contract, the terms of that, which is very important for the South African business going forward. And then finally, I think I mentioned when we last had our results announcement there at that time, there have been a GBP 50 million capital contribution by shareholders into version. And I said that going forward, it was more likely to be funded by third-party capital or not by Brait specifically. We have reached the final agreements on the terms of a convertible preference share into Virgin Active for GBP 60 million. That will be based off the Brait NAV, i.e., the conversion -- when it converts into shares in Virgin Active, it will be done pretty much at the post new money valuation based off the valuation of Virgin Active today. And that capital will only be injected into the business where we find growth initiatives that beat our investment targets. There are many that Dean and his team are looking at. So this gives the business the ability to chase some of those growth initiatives, and Dean will refer to some of those during his presentation. From a Premier perspective, and again, massive credit to Kobus and the team very, very strong performance. And I've said this for a number of years, both on an absolute and a relative basis relative to the competition. The EBITDA growth of 24% was significantly above the market expectation at the time of the listing. That leaves the business with the last 12-month EBITDA of ZAR 1.9 billion. I think you need to remember 3 years ago, that number was ZAR 970 million, so a massive credit to the team for all that they've done. Very importantly, really was a broad contribution across most of the divisions, probably excluding the Mozambican business. And again, Kobus will touch on that during his presentation. Importantly, the return on invested capital remains above 20%, which again is a fantastic result. And the business continues to invest, particularly in this Millbake business in Tatte and Aeroton operations. And again, I think that will stand the business in good stead going forward. You need to continue to invest in this business to keep ahead of the curve. And when you've got return on invested capital of more than 20%, you can afford to do that as a Board. From a debt perspective, again, degearing, very significant degearing during the 6 months with some voluntary repayments to the banks, has got the debt down to 1.4x net debt to EBITDA, which is pretty much in line with where it has been historically. I think that will lend itself to dividends flowing from the business at the full year in March -- at the March year-end. And the business continues to look at complementary acquisition opportunities to deploy some of that capital as well. So again, a fantastic result from Kobus and his team, and I'll let Kobus touch on that. From a New Look perspective, obviously, a slightly smaller contributor to Brait overall. I think anybody who follows the U.K. retail -- in the fashion retail sector will know it's been an extremely tough 6 months for everybody probably other than Next. Volumes were down across the board, both in terms of retail and e-commerce. The weather has played a key role in that. It certainly has impacted the New Look business. And from a perspective of New Look like-for-like, sales were down around 8%, although we have seen some improvement in the last 2 months of trading. We continue to focus as a management team on the gross margin management, not seeing at all costs, and we've managed to increase the gross margin over the last 6 months, which has resulted obviously in some loss of market share. But I think from a value share, we've managed to claw some of that back. Very importantly, in this business, we completed the debt refinancing, which was a massive overhang in the business that has been extended out until 2026 with some new operating banks and has given working capital -- freed up a lot of working capital for the business to continue to invest we require. And then lastly, from a management perspective, there seems -- there continues to be a focus on efficiencies, both in terms of logistics and distribution, but also in terms of central costs. Already this year, we've seen about a GBP 10 million operating cost saving, and we should continue to see a bit more from some of the initiatives that have recently put in place in that business. From a Brait perspective, over the last few years, we've had about ZAR 7.8 billion of disposals of various businesses, which has enabled us to fully repay the revolving credit facility. As you know, that was fully repaid after the Brait -- after the Premier listing in March. And the Board remains absolutely focused on the unlocked strategy and finding optimal ways to achieve this. There are many different options to play with. The Board is considering all of them. And I think given the track record of the Board to ensure that they come up with optimal solutions over the last few years to the problems they've had, I think the Board is confident of being able to achieve a good outcome on this one as well. So moving quickly to the NAV per share. And I won't spend a huge amount of time on this. It's more for information purposes. But in the 30th of September blue box, you will see there the NAV. If you look at the bottom, the NAV per share reduced from ZAR 7.06 to ZAR 6.84 on an undiluted basis, probably more relevant on a fully diluted basis introduced by 1.5% from ZAR 5.93 to ZAR 5.84. The main guidance that if you look on the right-hand side and under the movement, the ZAR 852 million as you see for Virgin Active is not the fact that we've written up the valuation of Virgin Active. In fact, on the contrary, I think in pounds, it's slightly down. But during the course of the last 6 months, there was a capital injection. As you remember, the Brait share of that was ZAR 756 million. That and the slightly weaker rand exchange rate has resulted in a slightly higher valuation for Virgin Active. But on a valuation perspective, it's actually flat year-on-year. In terms of the cash equivalents, you need to put that together with the borrowings at the bottom. Obviously, we repaid about ZAR 2.1 billion, just under ZAR 2.1 billion of the RCF from the ZAR 3 billion that we were sitting in cash. We invested, as I mentioned, ZAR 756 million into Virgin Active, and there were obviously some operating costs during the course of the year. So that results in the movement from a cash perspective. We have hedged the coupons on the convertible bond all the way out until December '24, and that sits under the cash and cash equivalents line of ZAR 520 million. In terms of the exchangeable and convertible bond differences there, all that is the accounting treatment for the equity component of both the convertible bonds and the exchangeable bonds and so you get closer and closer to maturity in the case of the convertible bond, that equity component is now very small and it will get smaller and smaller again for the exchangeable bonds as we get closer to maturity. So overall, a 1.5% reduction in the diluted NAV per share. I'll let Sabelo touch on some of the key drivers of that going forward.

Thanks, Pete. Starting with Slide 8, which sets up the movement in the balance sheet position for the half year. To note at the outset that the peer groups or Virgin Active and New Look remain unchanged. Following its listing on the main board of the JSE on 24 March 2023, Premier's valued at its closing JSE price of ZAR 60.50 per share, which equates to an implied EBITDA multiple of 5.4x. Virgin Active's rand carrying value has increased by ZAR 852 million, mainly due to Brait's pro rata of GBP 33 million subscription into its GBP 50 million rights offer in May 2023. Virgin Active is valued on a 3 or 4 sustainable EBITDA estimate of GBP 121 million, which includes GBP 3 million EBITDA from the Real Foods acquisition in line with FY '23. The 3 or 4 valuation multiple of 9x remains unchanged. Net third-party debt of GBP 454 million includes GBP 20 million for costs deferred during lockdown period. New Look carrying value reflects over ZAR 124 million increase. Sustainable EBITDA of GBP 45 million is referenced to FY '23 LTM EBITDA of GBP 42 million. Following the successful refinancing and improved working capital management, the valuation multiple was increased from 5x to 6x. This maintained a similar level of discount to the peer average multiple that applied at FY '23. Net debt of GBP 14 million includes GBP 1 million normalization adjustment for deferred costs during lockdown period. The decrease in cash of ZAR 3.1 billion was mainly due to the ZAR 2.1 billion full repayment of the BML RCF and Brait's participation in Virgin Active's rights offer in May 2023. Turning to Page 9. Liability movements were driven by the full repayment of the BML RCF. ZAR 164 million IFRS accounting charges representing the tick up in value of the deemed liability component for the 2 bonds and ZAR 157 million translation impact on the rand carrying value of the 2024 convertible bonds. Slide 10 analyzes Brait's liquidity and debt and is set up on a consolidated basis. The ZAR 3.6 billion proceeds Brait received from Premier's listing were applied during HY '24 as follows. In April '23, settlement of the outstanding amount of ZAR 2.1 billion on the BML RCF and Brait's pro rata subscription into Virgin Active's rights offer in May. Following its repayment, the BML RCF amended to a facility commitment of ZAR 594 million and its term to 31 March 2025, interest at JIBAR plus 290 basis points and a 1% commitment fee. Cash of ZAR 520 million, which includes ZAR 326 million held in pounds for the remaining coupons of the 2024 convertible bonds together with the undrawn BML RCF results in available cash and facilities of ZAR 1.1 billion at the reporting day. Brait is in compliance with all covenants at the reporting date. Thank you, and back to you, Pete.

Thanks, Sabelo. And with that, I'll hand over to Kobus. But before I do, I just want to say, I think it's a tremendous effort Kobus and his team have put in not just over the last year, but certainly over the last 2 to 3 years and we started to see -- well, we started to see the benefits of that. So congratulations to Kobus and the team. And Kobus, over to you.

Thank you very much, Pete, and thanks for the kind words. I'm on Slide 12 now effectively showing the highlights of our performance for the 6 months summarized, where our revenue was up 7% to ZAR 9.4 billion. EBITDA, just over ZAR 1 billion for the year. We've seen a nice pickup in our EBITDA margin from 9.4% to 10.9%, and I'll touch on that in more detail in the rest of the slides. With a fixed depreciation charge across -- staying fairly stable across time periods, we've seen the gearing effect of EBIT then climbing by 33% to just over ZAR 800 million with EBIT margin at 8.6%. And then as Peter had mentioned, our return on invested capital has gone through the 20% mark. And then I just want to also pay attention to the net profit line, where even though the EBITDA performance and the EBIT performance was quite strong, the prior year included some abnormal gains that we have been highlighting in all our various communications to investors around the unwinding of some of the funding instruments that we had when we were still a private company. That caused some abnormal gains in the prior year. And therefore, our net profit is only up by about 6% versus the prior year. We've also made good progress with the cash generation that the business has had to reduce some of the debt, especially the additional term debt that we pulled last year in November, just before the listing to do a pre-listing dividend to the shareholders. We've managed to reduce the significant portion of debt and have now gotten to a leverage ratio of around about 1.4x. If we move to Slide 13, around the divisional performance, we can see that the main engines of Premier being our Millbake division really pulled strongly and pulled strongly now across multiple reporting periods. You guys will recall that last year, we saw a massive increase in soft commodity inflation that really drove our revenue growth to almost 30% as we try to push through some of the inflationary pressures to -- through our pricing to the consumers. And we've seen the reverse of that trend this year where commodity prices have really stabilized globally. We've seen a little bit of a deflationary side coming through, especially on the May side and that has resulted in us pushing some of those declines in pricing through to the market once again. And that has caused our revenue growth to sort of flatten within the Millbake business. But margins returning more to longer-term averages as we've managed to recapture some of the margin that we lost last year when the inflation was running very high. Just in terms of some specific operational items, our Pretoria bakery really assisted us in this last 6 months. Last year, we only managed to fully commission that bakery at the end of September, beginning of October. So we've had the full benefit of the 6 months contribution in the last half year and that has really pulled through and assisted us with efficiencies that have also improved our margins. Then we've also entered into the right category. We -- in month of May started to distribute a brand called Golden Delight that is owned by a company called Goldkeys International that have up until this point been pretty much a cuisine in the toll-based business. We have taken the brand national using our distribution sales and merchandising infrastructure. And we effectively benefit in that business as to the economies of scale of Premier by giving us a cost recovery of our distribution, merchandising and platform infrastructure costs. So we're quite in the early days of that brand going national, but we are confident that we think that this business will continue to make a meaningful contribution to the cost structures within Premier, where we will get some of the cost relief through the economies of scale that it adds. If we move on to the groceries in the international business, it's really, I guess, 2 different tales. On the one hand, we've got our Indian HPC business being the Lil-lets and Dove brands as well as the Mister Sweet and Manhattan brands with Champion, pulling really well. The business is performing well in South Africa. Also led in the U.K. having had a good 6 months performance, but the division being pulled down a bit by underperformance in our Mozambican business. The Mozambican operation at this point in time adds less than 2% of Premier's profitability. And so it really is effectively a very portion of our overall business and certainly not an element of concern for us. We continue to believe that we've got state-of-the-art facilities that have got big economies of scale located in the right geographical location with strong brands and good quality products. And that as we believe the Mozambican economy will continue to perform better in the coming years. We certainly think that there's good upside for that business to pull through. The manufacturing business ultimately is a very high cost base business. So you've got a lot of operational leverage. And as we see volumes and sales volumes going back to earlier years before all the economic meltdown occurred in Mozambique, I'm quite confident that we will see that profitability pulling through. From an overall Lil-lets' perspective, we've continued to invest a lot in our factory in Durban. We have relocated 3 rudely machines back from Taiwan. We've always [indiscernible] the machines, but they were located with a business partner of ours called KNH and we decided to bring that back into our factory to further increase our economies of scale and to start to manufacture more of the fem care products for our U.K. business. And as those investments together with the pads line that we put in 3 years ago with a whole bunch of other investments around warehousing and logistics, we continue to see the unit cost of production in that facility coming down and really feel that we will be able to compete quite strongly in that area. On the sugar confectionery side, we -- once we had bought Mister Sweet, which is now about 2-odd years ago, we initially integrated the sales merchandising, logistics and back-office functions. We have made huge inroads in terms of changing the way of working and the culture of the operation to become more in line with the Premier way. And we have started with the harmonization of the factory footprint, whereby we're creating centers of excellence where we manufacture the same product across the different brands in one location. And for the first step in that process was to manufacture marshmallows in our existing Manhattan factory, which is now making all the marshmallows in the group. We have ordered a new Legris plant that will go to our Manhattan facility around August of next year. We've also started to change the manufacturing place for sake of 8 range to manufacture all of that in the same location and a number of other projects that will follow on the back of that. And I really do think that within the next 2 to 3 years, we would be able to step change the unit cost of production and the efficiency of our manufacturing footprint within that industry or confectionary business as well. We've launched some of the – Lil-lets products on Amazon, the maternity and the teens ranges and the early indications are that the sales have started to pick up quite nicely. We've done some private label around Super C products into the U.S. market as well with a higher content vitamin C product that initial indications are also looking quite strong. So I think that we have made good investments in those businesses. And on the back of that, I've also decided to enter the scarring tissue lotion market. It's around Science of Skin, which is a product range that we had become aware of that have been developed by some medical specialists and plastic surgeons within the U.K. market. The product have got quite strong research support behind them in terms of scarring and skin scarring and so we have effectively provided the commercial side of launching that product commercially within the U.K. and Ireland markets. And down the line, we'll also look at opportunity to bring it into the South African market. To further improve our economies of scale within the Mozambican business, we've launched Sunblest pasta range into the South African initially only into the wholesale and independent trade. And on the back of the performance of that, we would look to eventually bring it into formal retail as well. But it certainly helps us in terms of economies of scale in our Mozambican business, especially after the work that we've put in over the last 2 to 3 years to completely refurbish and rebuild on all our pasta manufacturing capabilities. That is just a highlight of the various items within our grocery business. If I now move to Slide 15, around the income statement. I have given an overview previously of the highlights of the various numbers. And it's just from a divisional perspective continues to show that Millbake is the biggest division and really pulling strongly for us. And that I think that as I've alluded to, our groceries International business has performed well other than the Mozambican operation. From a cash flow perspective, on the next slide, you can see the cash flow generation coming through from the improved performance. I think it's worth noting that the month end in September -- the 30th of September fell over a weekend, and so a lot of our debtor cash flow only came in after month end. Otherwise, our investment in working capital would have been quite a bit smaller than shown here, ZAR 222 million, which means that our cash balances have been quite strong, and we've used the extra cash to make voluntary repayments on our RCF facilities, which always remains available to be redrawn should we need it in the future. From a CapEx perspective, we've continued to focus on our large CapEx projects. The biggest one of which is the shutdown of the Aeroton bakery that occurred at the end of July and which is a 2-year project that will cost approximately ZAR 700 million to rebuild. And so that project is in full steam underway. We've also continued to change the engines on our Tatte bakery, while we're flying the airplane. The new cooler has gone in, and we will have a new oven in place before the end of our financial year, end of March. That will then also increase the capacity of that bakery by approximately 2,500 plus per hour. Then I've covered all the repayments on the debt on that slide, but it is showing that our leverage ratio has then come down to the 1.4 level. We anticipate in the remainder of the financial year, the second half, to see continued strong cash flow. And I think that we will be able to continue to make further repayments and bring the leverage ratio further down in the coming months. Then from an outlook perspective, I think it was a pleasing set of results. I think the business has executed well in terms of our margin management in terms of driving the efficiencies across the business. We're going to see sort of low single-digit revenue growth in the second half of the year as the deflation on the bulk commodities gets pushed through into the market. But we anticipate being able to continue our current financial performance into the second half. We will continue to benefit from reduced debt levels. Our debt, which is priced at probably just a little bit under about 10% per year at the moment, it really does give us a lot of relief on the interest bill to the extent that we can continue to pay down the capital on the debt facilities. We'll continue to focus on our large bakery projects, the biggest of which, as I said, is Aeroton and make sure that we get this up and running as quick as we can and really start to get the efficiencies out of that facility. And then lastly, we have got quite an extensive sustainability projects, ranging all the way from environmental impact where we try to make investments that improve our environmental footprint to massive involvement in communities where our brands are very strong and where we continue to make differences in the everyday lives of our consumers. With that, thank you very much for the opportunity to take you through the Premier section, and I hand over to Dean to start the Virgin section.

Thanks very much, Kobus. Great results. Before I get into the specific Virgin Active performance and territory performance, I think it's important just to have a look at the overall wellness economy, the sector that Virgin Active and Kauai and Nü claim, just to see what is going on within the wellness economy. The Globus Wellness Institute puts out an annual report where they look at the various sectors within wellness and growth since 2020 and the overall wellness economy has been at around 12% annually, putting the current wellness economy at about $5.6 trillion. They expect that growth to continue. In fact, they're expected to accelerate with another 52% growth with the economy -- the wellness economy, hitting $8.5 trillion by 2027. Specifically, what we see post COVID is this continued megatrend towards fitness and overall wellness. It's no longer just a fad, it's no longer trendy or even a luxury. It's become an important part of people's lives and just a way of life. And one of the most important categories within the wellness sector is overall fitness and fitness has become social currency. It's what people talk about it, people form communities and tribes around it. Younger people are socializing around fitness. So really a strong movement to overall wellness. And on top of that, there was a strong move, obviously, through COVID towards the digital wellness offerings. That has largely reversed and there's a move towards what we call RL in real life experiences, so the move from URL to RL. The social aspect of exercise is incredibly important. It's difficult to stay motivated to achieve your goals when you're exercising alone by yourself at home. And the social element has become increasingly important, and people want to exercise together. They want to exercise these spaces with other people, and particularly as we see big loneliness pandemic and loneliness crisis. So the social element is becoming increasingly important. And we see our gym spaces being used not only for exercise, but a social spaces, people meeting at the spaces, people using the food and beverage offering, people using some of the workspaces. So really important as we see this move from digital to in real life. So overall, the sector, the economy -- the wellness economy growing exceptionally strongly. And then specifically, Virgin Active is incredibly well positioned, we believe, to take advantage of that. We've got an incredibly strong platform, what we call our hardware of assets. We've quite incredibly great locations in most of the major cities outside of America, I mean, incredible locations in new land in Florence, Rome, Singapore, Sydney, Melbourne, Cape Town, Johannesburg, London. So really a strong platform of assets and very difficult for competitors to replicate those specific locations in the city. So we believe a really good and strong moat bolts around the business and really a strong ownership of that premium segment outside of North America. We also have a really strong product innovation department, effectively our software of our business. We have 2 academies, one in Midland and one in London, where we deliver -- develop our own content and that's whether it's yoga, Reformer Pilates, boxing classes, group classes, strength and conditioning, which really gives us some unique IP in the marketplace compared to our competitors. And on top of that, Virgin Active is an incredibly well-recognized brand, global brand in the wellness space. So in addition to our existing locations, our ability at the right time to go into new locations with a recognized brand is enhanced because of the strength of the brand. If I look specifically at the slide of 20 that we own and have a look at overall performance, for the first time now, we had 90% of pre-COVID at the end of October, these are September numbers here. But as a group, we had 90% of our pre-COVID levels. In October, for the first time, total membership, not active membership, but total membership now exceeds 1 million. So a strong recovery from post COVID in October alone. And on top of the numbers that you see there, we added another net member growth of 11,000 members. Also important to note there on that slide, at 63% of our revenue is now earned outside of South Africa, though this earning way continues to remain robust and is the focus of us. We expect to see a continued increased share of our revenue and our EBITDA being earned outside of South Africa with the significant growth opportunities coming from South Africa. And from a valuation point of view, the removal of this perception that we're a South African focused business with touched South African risks as we start growing the revenue and the EBITDA outside of South Africa, we expect that to enhance valuations. If I look at South Africa specifically, one of the things that stands out on that slide is the terminations that remain elevated. It's important to unpack that in a little bit more granular detail to understand those terminations. South Africa has particular nuances that we don't see in other territories in that our terminations are split between what we call arrears of financial terminations. Those are as a result of members having insufficient funds. We run debit orders. Those come back unpaid. We don't see that in other territories. By and large, in other territories in the U.K. and Italy, across APAC, when someone joins the gym, they honor their contracts. And the vast majority of time have funds in their accounts when those direct debits or debit orders runs. As I said, South Africa has a particular unique environment where we do have these unpaid or financial arrears. The other portion of terminations are what we call member request terminations and that's not as a result of financial means. Those members get into the end of their contracts, requested terminations, which are the same type of terminations that we see in other territories. When I look at the South African member request terminations, and these are the terminations that we've been working hard as a management team to address 2 initiatives like the loyalty and app through personalization, through better product and customer service. We've seen a real improvement in those member requests terminations. And the member requests terminations sit at around 30%. I think you'll see later on when we look at group terms at 38% in South Africa, the member request, which is the equivalent of what we see in other territories, is at that low 38%. And in particular, as Peter mentioned in the introduction, the August, September, October terms are significantly better than what we saw in August, September, October of 2019 in the member request and that is as a result of those initiatives. And if we speak specifically around the app and the loyalty program, which we launched some 4 months ago, we are seeing really, really strong green shoots in terms of driving down the attrition percentage. If we look at the cohorts of members, are low usage members. Members that are at risk of termination, those members we classify as people trading less than 1x per week. We look at cohort of those members preregistering on the app and we've compared them to their usage purchase for 12 weeks post registration. And we've seen that usage go from 0.4x up to just over 1x per week usage. At 1x per week, that member is far less likely to terminate their membership. And as I mentioned, we've seen that coming through in the member request terms, which have significantly decreased. So really positive green shoots. One of the big focuses on management, not only in South Africa, but across the territories is how we reduce the attrition rate and good to see that in South Africa on the member request side, we're starting to see the benefits of that. The app will be rolled out in Q1 next year in the U.K. and we expect to see some of those benefits starting to come through in the second half of next year in the U.K. and will be rolled out in Italy in Q3 next year. We do still face challenges on the financial or the arrears terms in South Africa. We have taken a number of steps to address that. That includes the promotional activity that we offer. No longer offer in the upfront 3 months. We saw that led to the incorrect behaviors, not only from consumers, but from our sales teams as well, the free bags, et cetera, we've increased our joining fee. We believe that someone is more invested and pays a hiring joining fee upfront. They're less likely to terminate from a financial point of view. So various initiatives to address the arrears of the financial terms that we see in South Africa. From an Italy perspective, the business has performed even above expectations, an incredibly strong performance in all metrics in Italy. From a sales point of view, net membership growth, which brings into account terminations. It really is what we call a category killer. There is no one that can compete with the Italian business. There's some small independent operators in Italy, but it certainly has established itself as the strongest and absolute killer in the category. It's a very well-invested estate. So limited CapEx involved in investing in the existing state and very strong what we call group exercise offering, boutique-like offering. All of those things drive down churn and establish a moat around the business. So we still see continued opportunities, particularly on the existing stake in yield where we can yield, up that stake quite significantly. But there are also new clubs that we can open in Italy. We still significantly underpenetrated in the Italian market and opportunities to open new clubs in Italy. In the U.K., just really, really tough trading conditions. And here we're talking about the last 12 months, so end of Q4 '22 through to '23 this year. Tough conditions in the United Kingdom and real economic headwinds. Despite that, we've seen a decent membership growth. But as I mentioned, at end of Q4 last year and the beginning of Q1 '23, there was still a significant impact of work from home, which impacted our CBD clubs in the United Kingdom. We have seen that in the last quarter start to reverse, and we see strong signs of recovery in the London CBD. So that not only drives our volume, but I think, as Peter mentioned as well, those are higher-yielding clubs in the United Kingdom. So as those clubs get stronger, we expect to see yield enhancements in addition to the volume increases in the United Kingdom. If I look at APAC, Singapore is now above pre-COVID level, so a very strong performance there. Thailand, to some extent, has lagged. It was the slowest to come out of the COVID restrictions. And then Australia, really a tale of 2 businesses there. Our CBD clubs similar to London, but probably more pronounced there. So our CBD clubs in Melbourne, in Sydney have been slower to recover. We still see most of employees working from home maximum of 3 days a week in the Sydney CBD. Last month, we saw some sort of recovery, but it is still soft in the CBD. If I look at our residential clubs, which actually the majority of our clubs in Australia, they're all of -- the residential clubs are now significantly above pre-COVID level. So they performed exceptionally well, but a focus on management in terms of those Melbourne CBD clubs to ensure that as people come back to the clubs -- come back to the CBD, we capture a greater market share from that. If we can move to -- sorry, from a head office point of view, important to note, we've done a very, very significant restructure of our head office structures. The business was very decentralized before. We had duplication of head office structures across all the territories. So Australia, Singapore, Thailand, United Kingdom, Italy, South Africa, all had its own head office structures. By the end of this month, the head office restructure will have been completed. We've moved to a much more centralized structure. Not only does that obviously reduce costs significantly, we avoid the duplication of costs, but it also enables us to share best practices and knowledge and experience across our territories, enables faster decision-making and also facilitates future growth. In the past, if we wanted to go into a territory or a new territory or a city across Europe, we would generally have to go quite deep into that country because we would have to form a head office in that country, and therefore, we'd have to open multiple clubs. This new structure, which is -- which enables us to do single cities across Europe without needing to have a head office structure and utilizing that central structure. So as I said, that process completed by the end of this month, does deliver significant savings, but it also gives us for future growth. If we can move to Slide 21. Despite [Audio Gap] to September '23, we had some challenging first 3 months of this LTM period still coming out of COVID. But despite that, all of the territories experienced robust membership growth over the 12-month period. We expect that to continue. In fact, we expect the membership growth going forward to accelerate and more in line with what we see in the last 3 to 6 months of the LTM period. And that's as a result of various initiatives that have been undertaken across all our territories in terms of membership growth. There is a new incentive and sales commission structure that is focused less on units and more on revenue. So the sales teams are now incentivized in terms of selling high-yielding products. They're incentivized to manage net member growth, so they also look at terms. All of these initiatives, including the rollout of the app and the loyalty in the U.K. and Italy, should see us continuous strong net member growth. Also in the territories that we operate in, we believe we are still underpenetrated when it comes to the gym membership model, including in South Africa. So with the existing estate, we see that there is still volume upside with the current club portfolio. We have even been before like in Italy, where we look at potentially opening some new clubs. If we move to the next slide on to the key KPIs, I'm really positive now that group membership for the first time exceeds EBITDA breakeven mark. We also speak about the operating leverage in our business with 90% up to 95% of revenue now fall into the bottom line once you get past that EBITDA breakeven level, particularly encouraging to see is that all territories except Australia are now EBITDA positive. And we see this incredible ability of these territories once we get past EBITDA positive in terms of enhancing their revenue and their EBITDA. The attrition percent at 38 is in line with best practice across the industry. But as I mentioned before, there's a focus from management to improve that further. I mentioned earlier that as I said, member request terms in South Africa is 30%, and if we can start improving the overall group and get that in line with the app and loyalty with the rollout of our Group X program, the investment and the support from shareholders they provided in terms of the growth CapEx as we open different studios. All of that goes to improving the attrition percentage. We continue to focus, as I mentioned earlier, on the arrears terms as well. It's important for us in South Africa to look at that. Driving revenue as well or be the ancillary revenue, there's a new learn to swim program that was launched in South Africa. That's approximately 20 clubs now are offering their own learn to swim program. It's exceeded expectations. It's operating and generating margin and revenue below -- I mean, above our budget expectations. There's a new PT model, the Kauai business in terms of ancillary revenue and the rental Virgin Active received from Kauai has been incredibly strong with high double-digit growth. Virgin Active paddle club was launched, which brings in ancillary revenue, but it also works in terms of attrition and providing additional service to our members. They're not needing to go outside our clubs to participate in paddle and we see that as a benefit in our attrition bag. From a yield perspective as well, important to note that the increase in yields that we've seen, but especially what we expect to see going forward, doesn't only come from headline price increases. In other words, our selling price increases. There's a focus as well in terms of looking at the mix and what products we sell, premiumizing our products, moving away from some of the used products and increases some of the pricing on our young adult product, the removal of the once-a-week product in APAC, all products that reduce the yield. So the yield enhancement will come, as I said, not only from price increases, but also from the sales mix as well. If we move to the next slide. From a revenue point of view, including the Kauai sitting at year-to-date ZAR 387 million, if I just look at October's numbers and on annualized October's revenue on a 12-month basis, that revenue now on an annualized basis is around ZAR 560 million. The EBITDA that you see there at ZAR 13 million for the 12 months to September '23 obviously having October and really good visibility in terms of what November is trading. We expect the EBITDA for the 12 months ending December to be at ZAR 25 million. And here, I'm just demonstrating that impact of the operating leverage where EBITDA September '23 is at ZAR 13 million; at December, it's ZAR 25 million. It's all as a result of the territories being above breakeven, and you see that impact of the operating leverage where the revenue starts to fall to the bottom line. If we move to the next slide. Here we're starting to look at the run rate -- the annualized run rate EBITDA using the September number, as I mentioned, with the actual to December '23, we'll probably be in the vicinity of around ZAR 25 million EBITDA. The annualized September '23 number is ZAR 30 million. But as Peter mentioned, if I use my October EBITDA and annualize that, we're at ZAR 48 million. Once again, the impact of the operating leverage in our business. The table on the right is demonstrating -- we put in our numbers and the valuations of September '25 EBITDA of ZAR 118 million, and it seems a far stretch from where we are, call it, December at ZAR 25 million even an annualized, currently at 48%. How does the business get to ZAR 118 million? Is that believable? Is it something that is achievable? And what we try to demonstrate in that table is that it's realistic and in fact, you could even say it's slightly conservative. So what do you need to believe for us to get to ZAR 118 million at September '25. Well, one, you need to believe that we get back to pre-COVID levels. As I mentioned at the beginning, we are at 90%. We need to add another 10%. We need to get back to pre-COVID levels in 2 years' time, by September 2025. And I'll touch on the sales on the next slide. And then from a yield point of view, over the next 2 years, we need to add 5.5% growth on our September '23 numbers. Once again, that's over a 2-year period. If I look at the '24 headline price increases are low. Those are the price increases we were put through in January of '24. Those are all -- if I advertise across the region in around 6%, 7% is around CPI increases. What I mentioned earlier and it's important to understand is that 5.5% doesn't only come from headline price increases, that yield increase comes as a result of sales mixes, of change in our product mix, of selling higher-yielding products. And also as the revenue skews to more of our international businesses, that yield increases as well. And looking at that 5.5% and bringing that in perspective in terms of what we've actually achieved, growth of 22%. If you look at those numbers, the 2.5%. The 4% in South Africa, GBP 612 million, et cetera. It demonstrates that the 5.5% over the 2 years is achievable and management certainly expect to achieve that and would hope to outperform that over time. From a sales point of view, is how do we believe, how do we think we get back to pre-COVID levels in terms of our membership. If we start on the right-hand side of that graph, we look at the international business, current run rates of around 6,000, net member growth per month. If we achieved 1.9 -- 1,900 net member growth, we get back to those pre-COVID levels. And obviously, as I've said, that international business is what will drive significant portion of our EBITDA growth or high-yielding products. So we strongly believe that those sales numbers getting back to pre-COVID. That was in 2 years' time, September '23, certainly in the international business is very achievable. Within the South African business, the left-hand side graph there, slightly higher. We've got to do 3,700 sales a month compared to the current run rate. It is important to look and understand that the first part of this year was a challenging time. We're still -- the new management team hadn't fully got to grips with the business, and there's a lot of new initiatives, as I previously mentioned that we believe will accelerate our growth. We shouldn't underestimate, as Peter mentioned, upfront, the new discovery contract that significantly lowered the joining fee within South Africa that reduced joining fee, does result in membership growth. We changed the sales and operating structures in that the ops teams, the club managers have become more responsible for the sales teams. Previously, that were quite removed from the sales process and really just focused on the operation side. So we brought those teams together. New incentive structures, new ways we reward sales teams. So we believe in the South African context, the 3.7% growth per month is achievable. Just that's all from a slide point of view, just what's not in the slide, and I think important to mention is that to fund a management agreement for our -- in Qatar. That's -- I was going to say an asset-light business, but it's actually an asset 0, CapEx 0 business. We're not required to put any capital into that business. We purely earn a license fee on revenues earned and we also earn a share of profits there. We think it's important to prove out that model. This will give us a showcase, a showroom in the GCC region. And also, as I said, test that ability to roll out in new territories, where maybe we don't necessarily want to do that with our own capital. So starting that contract is signed. We expect to have that club opened at the end of the third quarter being on the first -- being on the fourth quarter in '24. So overall, if I can summarize is that despite geopolitical risks that we see in geopolitical uncertainty and certainly economic headwinds, inflationary environment, the fundamentals of the industry, but particularly the fundamentals of the Virgin Active business remain incredibly strong. Management continue to take defensive measures around cutting costs. We're conserving cash and we're extremely disciplined on where we invest our capital at the moment. But at the same time, we also believe we need to go on the front foot. We need to be offensive. We need to look at new opportunities. Things like the app and loyalty and innovation are important to our strategy going forward. And all of that is around increasing the frequency of engagement of our members, whether it's in -- through our app in a digital environment, more engagement in clubs and use the data that we're getting from that higher frequency of engagements to understand our members' needs, better to understand their goals and provide a much more personalized solution that enables them to meet their needs. Through using that data through personalization, we believe we can have an impact on churn. We can increase average spend per member, we can drive volume growth and ultimately drive customer lifetime value and for the business. And that's all from my side. Pete, if you look at valuations.

Thanks, Dean. And before I touch on New Look at the valuations, again, massive credit to you and the team. You guys have done a ton of work there that doesn't go unseen. We do see it, and we are extremely grateful for all the work that you guys have done, and we share your excitement about the business. Just quickly a couple of slides on New Look. So as I mentioned upfront, revenue down 11% for the -- year-on-year for the 6 months. Had really 2 or 3 months that were tough, we started to see the back end of that and things have started to look a bit better in the last 2 months. But I think the first half of the year and by that, I mean, the second quarter and third quarter of this year have been tough for all of retail, fashion retail in the U.K. But I think very pleasingly, the strategy of management hasn't been to sell at all costs. You can see there the gross profit margin actually up year-on-year. So whilst there's been a slight decrease in the market share, overall, they've managed to -- despite an 11% reduction in revenue, so a much smaller reduction in actually gross profit. From an EBITDA perspective, obviously, it's a fixed cost business as well, 28% reduction year-on-year. I think reflecting on the year before that, where the business made GBP 2 million to GBP 3 million, I think is still a decent result overall. We'll touch on a bit more detail on the environment itself. It has been a tough from weather, consumer confidence, cost of living perspective. There continue to be key factors. I don't think any of us are sitting here today saying there's going to be any massive sun in the horizon. I came back from London this morning, and believe me, there was no sun in London. But we do think and many of the market commentators think that probably a year out with hopefully, interest rates starting to peak and come down that the trading environment will be better. Sales volumes were down across the board, both across retail, what we call retail bricks and mortar, but also across the online business, down 6%. But I think very importantly, from this business' perspective, the refinancing of the debt that we had with HPC and extending that out to October 2026 has been a massive positive for the business. It's unlocked a whole lot of working capital, giving us a new working relationship within machine and I think set the business up for success. The credit to management as well, costs under control, GBP 10 million down year-on-year in a pretty tough inflationary environment, and we still expect some further cost reductions to come in time. Talking here quickly on the revenue and EBITDA. I think I've touched on most of these points. You can see revenue was 11%, EBITDA down 28%. As I said, mostly driven by lower volumes as opposed to gross margin. Gross margins were retained. Overall, like-for-like sales declined 7.5% in the first half of the year. And as you can see, whilst in July, for example, it was down nearly 20%, it was down to only 6% decline in September. So we've definitely seen a pickup and October continues to look slightly better. As we know in this business, the golden quarter, which is this quarter to December really makes or breaks this business. And we would hope that we continue to see some strong performance in the Christmas quarter. Just touching quickly on the overall performance. I think we've broken it down into 3 buckets. The general operating environment there, as I said, tough unseasonal weather, declining consumer confidence, cost of living, all of those things are massive impacts on the retailing business. I think anyone who follows the weather in the U.K. will know it's either been pouring with rain. so you couldn't get out your house or boiling hot so that you wouldn't go and buy the autumnal weather that we've got out there. But we actually are starting to see, as I mentioned, some really good full price demand for our autumn and winter products. From a market perspective, the overall market was down. We kept our gross margin relatively high. And therefore, from a business performance perspective, we were slightly down over the last 6 months in terms of market share, but retained our #2 spot in the -- for value, i.e., we kept our gross margin. From an output perspective, I think the focus of management remains on omnichannel customers, and we continue to invest and drive value out of our app and our website. From a margin perspective, we have seen margins improve. As I mentioned, some of that has come through renegotiating with certain suppliers and reducing seasonal markdowns. We obviously have to see how our Christmas quarter goes, but obviously, that sets up the business relatively well. From a cost perspective, management have taken a 0-based review of the entire business. As I mentioned, I think, GBP 10 million of costs we're seeing year-on-year sales this year, and we continue to see a focus on the whole logistics and distribution process, which we think will include some further cost cutting, particularly around automation. Just moving quickly on to the valuation, the last few slides. Again, we kept the format of this exactly the same, just touching on Virgin Active quickly. The September '23 valuation is based off a September '25 EBITDA. That number of GBP 121 million hasn't materially changed from March. Just to break that down to you. Obviously, you've seen the exchange rate go from just under 22% to 25% difference at around about a GBP 4 million impact on EBITDA, i.e., the South African EBITDA being translated into pounds gets -- got a GBP 4 million reduction. We've also lowered the forecast for South Africa for the next couple of years. That also reduced it by around about GBP 3 million. So overall, we've got a relatively similar number for September '25 of GBP 121 million. We kept the multiple the same as we have since we started. You will see the net debt actually came down slightly, more reflection of the fact that there was a GBP 50 million capital injection into the business. And therefore, overall, the actual value, if you took out the GBP 50 million capital injection was down about 4% in pounds and up slightly in rand terms given the depreciation in the currency. Just to touch on quickly the convertible preference share that we talked about within the Virgin Active stable at GBP 60 million. It will convert at the post new money valuation that you see on the page and take the equity value, pretty much the equity value today. You add the GBP 60 million to it, and that gives you the equity value that the GBP 60 million converts into. So it ends up with around about 8.5% of the company if it converts into shares, including the interest rate out, that number would probably be close to 10%. So relatively limited dilution from a Brait perspective from a -- on an NAV per share basis. Just moving then lastly on to New Look. We reduced the maintainable EBITDA just because of the first half of the year's strategic performance being down year-on-year. Clearly, it's going to be predicated on how December performs. Last year, it was at GBP 55 million. We've reduced that to GBP 45 million. As we mentioned, with the refinancing of the debt facility and the improvement in working capital, we believe the business is in a better shape than it was a year ago. And we've increased the multiple to 6x. We still had a 40-odd percent, 43% discount to the peer group average of 10.5 and, therefore, if you work that all way down to the bottom. There's a slight increase from a pound perspective in the valuation of New Look year-on-year. That gets to the end of the presentation. So we'd be very happy to answer any questions either online or on the call.

[Operator Instructions] . Our first question comes from Gregory Blank of GLB Trading.

Peter, once again, cheers to your team, well done. But just a little confusing, if you don't mind answering. What percentage do you own of the overseas operation for starting?

Are you talking about Virgin Active, Greg?

Virgin Active, Yes, yes.

Well, we don't split the 2. We own 67% of the holding company, which owns 100% of the South African business and the international business, yes, 67%.

Okay. Okay. So when I look at your valuation of GBP 9.9 million and you've explained it exactly with obviously the capital injection, I presume that's for the 67%. So technically, you're valuing the whole of Virgin at GBP 14.4 billion. Is that correct?

If you see on that page there, the equity value of GBP 588 million, right? That's the value for 100%. We own 67% of that. We have now share of the shareholder funding as well, obviously. And so if you gross, our number up by 67%, you'll get to that number, yes.

Okay. Then just -- and obviously, my account is not as good as yours. I'm just trying to work it out logic. I mean if in theory, you have to sell the gyms on an enterprise value, I mean, your total debt in that entity is plus/minus GBP 450 million. Is that correct?

Yes, including the debt adjustment, yes.

Okay. So effectively, if I did a deal, there's very little equity value for shareholders. That's really what I'm getting to. I mean what...

You can look at the enterprise value to start with, right? So the enterprise value before debt is about 1 -- call it, GBP 1.1 billion for the business, right? Then in addition to that, it's got GBP 450 million of debt, which leaves you with shareholder value of GBP 637 million.

Okay. So in other words, you're telling me GBP 637 million for 24 or can be close to GBP 3 billion. Is that correct?

GBP 637 million. What 34 you're talking about -- 24 you are talking about?

Just looking at -- I'm just looking at the currency is what we are talking about now.

To put into rand. Yes, yes. Yes we put up the rest at ZAR 23 per share, yes.

Yes. So ideally, all I'm looking at is that on sale because I mean, I think CEP came out of a very interesting statement that we're going to do further sort of investments and are looking to return value to shareholders as I get that echoed through you guys at Brait. So I come on to my delegate question, is how are shareholders going to get that return value because our Premier has done exceptionally well, which always defers me back to the question is when will the time be to actually do a book build with Premier, get rid of that bond? Or are you going to wait until the end of 2024 and then hopefully get some valuation for the gyms because clearly, once again, your metric for the gym is not flowing through to the share price. And I think he's obviously doing a great job, but the market is not realizing it or accepting it at this stage.

Yes. So Greg, as we said before, the way to get its value back to shareholders is either to sell the gyms, right, for cash and return that to shareholders or probably more likely unbundle the shares. So the shareholders to get a direct stake in Virgin Active post the end of Brait's life. So that's the way we intend to get value back to shareholders in which case the market will decide there shouldn't be a discount because you will be a direct holder into Virgin Active as a listed entity.

Yes, that's why I understand. That's always been my point is rather let the market decide then go based on your valuation, at least we'll get some sort of true realization what the shares really worth because even on a diluted basis, and sorry, Peter, I'm driving, so I'm a little bit distracted is that on a diluted basis, if you cash in that bond it gets to about ZAR 5.58 a share. So the share trading at currently ZAR 2.30 just sit at a massive discount to the NAV, whichever way you look at it. So I'm trying to work out in my mind, how do we get closer to that NAV or how do you maintain -- how do you get to GBP 121 million of sustainable EBITDA? Or are you talking to 2025?

Yes. So those numbers, as Dean mentioned, currently on a run rate basis, if that's the best way to look at it. As of October, the business makes us round these numbers up to GBP 50 million, right? So the GBP 50 million to get to GBP 120 million as the incentive requires 10% incremental members and a 5.5% increase in yields. So that might not take to September. It might take -- yes, it might take 2 years. We've assumed it takes 2 years and then put it on a multiple. So clearly, as the closer you get to that point, Greg, hopefully, the market will reflect a better valuation for Virgin than it does through Brait today. Until we repay the convertible bond, it is impossible contractually to unlock value for value back to shareholders, yes.

That I understand fully. And then one last question, if you don't mind, Peter. Can you disclose who your other shareholders are? Are you only putting 10% of equity into the Brait share raising the money? Can you disclose that? Or is it banks, is it private or what?

No. Well, I mean, I'll tell you that the shareholding currently that sits within Virgin Active, we own 67.4%, as you know. Virgin around 17% from recollection, Dean and Paul own about 7.5% and Titan own 7.5%. So the rest of the convertible bond has been largely taken up by the other shareholders, non-Brait shareholders.

The next question comes from [ Pierre Brosky ] of HBK.

Peter and team, congrats on a good set of results. Very nice to see positive news of all the businesses pretty much. Just one thing on the Virgin Active preference shares. Is that a mandatory convertible or is it at the option of either you guys or the investors? And then the 8.5% dilution, is that including your sort of GBP 6 million contribution? Or is that just the non-Brait shareholders?

So look -- we still look into the exact detail because there's many different ways. But the honest answer is it can be equity settled under many different options. It all depends on what outcome, for example, the business is listed. If it's equity settled, if it's sold equity settled. Obviously, there are some instances where it would front rank and, therefore, it wouldn't be a credit. But I think in the main, very similar to the exchangeable bond that rate, it can be equity settled at the election of the company. From the dilution perspective, the numbers I've run assuming we do put in the money and it does convert, that dilution would be minimal, as I said -- the number that you mentioned. So yes, does that answer your question?

Yes. So the 8.5% stake is basically for the full GBP 60 million.

Yes. But remember, you'll have interest rolled up. So that might be closer to 10%, round numbers. The GBP 60 million will convert -- if it's converted into around about, call it, 10% of the company, including interest roll up.

Thank you. At this stage, we have no further questions from the conference line. I will now hand over for questions from the webcast.

Okay. The first is from Dave. Dave Abril at SaltLight Capital Management. Thanks, Dave. On Virgin Active, could you clarify that you recently participated in a GBP 50 million rights issue and now there's a convertible pref of GBP 60 million. What kind of return are you expecting on this new capital? Can the Virgin business earn its weighted average cost of capital and when do you expect this? So, Dave yes, there was a GBP 50 million rights issue in -- I think it was completed in May, which we discussed at the last results. As I said at the last result, for any new growth capital going forward, where we find projects or where Dean and his team find projects that exceed not your weighted average cost of capital, but your cost of equity, we will look at those and we would decide whether to deploy the GBP 60 million as a new convertible money into those projects. So yes, this is a separate GBP 60 million. The GBP 50 million was completed in May. This is a new instrument. As I mentioned, it's based off today's current valuation on a post-money basis. In terms of what kind of capital are you expecting? Dean and his team had a Board meeting yesterday, and I'm not going to into detail of it. A whole lot of numbers on what returns to the businesses have made, and this is a South African focused discussion, but it's actually extraordinary what returns the South African business has made over the last 15 years. And as extraordinarily, very extraordinary, not to weighted average cost of capital, but returns of capital north of 30% on a gym by gym basis. So we are highly confident, highly confident that -- and we've seen it. Let me give you one example. I know Dean probably chomping at the bit also to answer on Wimbledon, we just spent money on refurbishing the Wimbledon site. We then said Monday morning to go the gym, it's looking absolutely fantastic. Now let's say it costs you somewhere in the region of GBP 3 million to do so. The yields on that business are going to go up from probably in the GBP 70 -- early GBP 70s up to probably in the region of GBP 125 to GBP 145 a month. The payback on a deal like that is probably just over 12 months. So these -- where you find the right opportunities and you've got the right estate and the right place in the market, there's absolutely money well above your weighted average cost of capital. If we're only going to earn our weighted average of capital, we won't put the money into a project. That's for sure. So I think we are highly confident that where the right opportunities exist, we will then draw down on the GBP 60 million and put it into opportunities like this. Next is from Dylan Griffith at Ford. Can you comment on the possible book build of the remaining Premier stake? No, we can't. Obviously, we can't. I mean it remains an option for us to, at some point, potentially sell that stake or bundle it to shareholders. But I'm obviously not going to comment on anything more formally than that. Wallace Barnes, what is your preferred option to raise liquidity to fund settlement of the convertibles or exchange? The market seems, I'm sure about your ability to do this without another capital injection. Can you alleviate the concerns? It's not for me to decide which it is. It's for the Board to decide. We had a Board Meeting 2 weeks ago in Mauritius. The board -- there's probably 5 or 6 or 7 different alternatives that the Board is considering, all have different implications. I would -- the only thing I would say to the market and it's not going to alleviate the concerns is every single time the Board is needed to come up with a solution for either funding in the portfolio companies, funding at a Brait level, they've done it in a way that has minimized dilution and maximized value for shareholders. I think the market should take comfort from the fact that the Board will continue to look after stakeholders, look at all options and we'll ensure that it does something that is in the best interest of all shareholders. Those are the only questions I have.

Ladies and gentlemen, it appears we have no further questions from the lines or the webcast. I will now hand back to Peter Hayward-Butt for closing remarks.

So thank you very much for that. And most grateful to all of the stakeholders who've taken the time today. I understand what is your point where the shares are trading, it's frustrating for all of us. I think the work that Dean and his team and Kobus and his team have done around the key assets within the portfolio. I should give people comfort that these assets are more than just heading in the right direction and more than haven't just turned the corner. There really are great assets with great potential. And that's what will take time to realize that potential. We accept the point, and I think we should also say that the Board continues to make sure that it's focused on as early as possible, expediting returns of capital to shareholders. And I hope that would give everybody cohort. But we really appreciate your time and your support, and thanks for taking the time. Thanks a lot.

Thank you, sir. Ladies and gentlemen, that concludes today's event. Thank you for joining us, and you may now disconnect your lines.