Brait PLC (BAT) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Brait FY '24 Results Presentation. [Operator Instructions] Please note that this call is being recorded. I would now like to hand the conference over to Peter Hayward-Butt. Please go ahead, sir.

Thank you very much, and thanks very much to all of our stakeholders who are listening in today. Today, I'll spend a bit of time to give you an executive summary around the portfolio performance, but -- we're very grateful to Mark Field. He's the CFO from Virgin Active and Kobus Gertenbach who is the CEO of Premier, who joined us, and they'll give you an in-depth understanding and then go through of Virgin Active and Premier's performance over the last 12 months, which -- and again, this is all credit to the management team. Both of those assets, in particular, have performed very, very well. So I will give the introduction, and then we will hand over -- I'll hand over to Mark and Kobus, respectively. In terms of the first page of talking about the executive summary, let me just move to that slide. From an executive summary perspective, and we'll go into a bit more detail, Virgin Active has had a very strong performance over the last 12 months. I think all of the hard yards that Mark and his team together been have put in really are starting to pay dividends within that asset. There's been membership growth across the portfolio, very pleasing membership growth in our international business, which has significantly outperformed South Africa. South Africa performed well, but it's -- as you anyone who follows Virgin Active will know, from a yield perspective, obviously, for every member that we had internationally, they have 2.5x more valuable than the South African member just because of what they pay. And it's great to see how well the international business, in particular, has performed -- that's both from a membership growth perspective, but also from a Ethos perspective across the portfolio. All of the territories are now EBITDA positive. Mark will run through that, and that has led to a run rate EBITDA measurement as at March of around GBP 80 million of EBITDA, which is up from GBP 33 million as of September. So 6 months ago, it was at GBP 33 million. That has significantly increased, which shows the operating leverage in the business, which again, Mark will touch on later. As I mentioned, the international business, in particular, has performed well. Really, the Italian business has gone from strength to strength, but we're also starting to see the benefits of the changes made by the management team in the U.K. business and in the APAC business as well. The operational changes and the club investments in SA has also resulted in good member or better membership retention, which has been a target of the management team over some time. And again, this is a large ship to turn and all of the small and incremental changes that management have made are starting to see the benefits of that in terms of membership retention and yield has also increased in the South African business. So a very credible performance. We'll touch on exactly those numbers in a couple of pages' time. And in addition to that, the new Vitality contract was extended for 5 years. It's a key part of the South African business. And that's -- in addition to that, we have now agreed an extension of the debt facilities within the Virgin Active South Africa business out till December 2027, and that will be finalized over the coming months or so. So again, a credible performance on Virgin Active and even better performance from Premier. Kobus will run you through that. And again, massive credit to him and his team, operational outperformance and outperformance, not just relative to budget, but relative to peer group as well. In the financial year to March, EBITDA was up 19% to about ZAR 2.1 billion. And this was really driven by a strong operating performance across all of the business units. So not just the Millbake business, but across all of the business units. And again, credit to management for all the small things that they do in that business, which incrementally have added up to a very, very positive results. The results were published about a week ago. Kobus has been on the road with his team since then and has had very favorable feedback as we should from the investor set in that business. Kobus and the team have continued to spend on the asset base, which I think is the reason the business is better positioned than any of its competitors, very significant CapEx over the last 4 to 5 years. It has continued -- we continue to spend money in the Aeroton bakery. But having said all of that, the return on invested capital increasing from 19% to 22.5% is a fantastic result and again, shows the strength of this business. The cash flow in the year was ahead of expectation facilitated the repayment of debt of over -- just about ZAR 1 billion in that business, down to 0.9x net debt to EBITDA, and that facilitated the payment of the maiden dividend of ZAR 2.20 a share as of March. So again, Kobus and the team, he will go through that in a bit more detail. From inflow perspective, again, you look, it is not particularly big in the overall portfolio, call it 10% of the Brait's NAV. The business again produced a very credible performance. Anyone who follows the U.K. retail space will know just how difficult that is to play in at the moment. And in the year to the 30th of March '24, they managed to maintain profitability at a similar level to last year, and go again into a bit more detail on that. But there's been a much bigger focus this year on maintaining and actually increasing the gross margin, tight cost control, very significant cost reductions across the portfolio of businesses there and overall business optimization and efficiency. So again, good results from New Look as well. From a Brait perspective, we announced on the 3rd of June a large recapitalization of the business. This enabled Brait to extend the maturities of its convertible bonds and exchangeable bonds by 3 years. It was a key -- a key requirement of that was to raise capital to put into the business, a ZAR 1.5 billion rights issue was announced at that point in time to facilitate the extension and continue to invest in the portfolio. And with that, what it has helped is the optionality for Brait to find the right window to exit its assets. I think there've been a number of discussions around Brait's interest in Premier. I want to reiterate that we believe it is a fantastic business. There's very few businesses that are growing at that rate with that return on invested capital with that lower rating. And we genuinely believe that there is significant value upside to Premier. We are not looking to sell our stake in Premier. We believe in the business. We believe in Kobus and his team. And I think when he talks about it later on, you will see why we remain very excited about Premier. But what the extension has done is provide us the optionality to find the right window to exit these assets and continue to grow, particularly Virgin Active into a place where we can either list or sell that business in the foreseeable future. So again, no change in the Brait's strategy. It remains to monetize those assets, but we've now at least got window to do that in the optimal form. From a Brait NAV per share perspective, there was an 8% decrease year-on-year to ZAR 6.52 or 4% decrease since September, and we'll go again through at the back of the presentation around the valuation. I will spend a very short amount of time just talking about the recapitalization. I know many of you were on the call on the 3rd of June. So I'm not going to repeat it in detail. But again, if we talk about the objectives for the recapitalization at the time, when we sat with the Board in March, the first was from an operational perspective to give those assets time to continue their recovery trends. So you can see the recovery trends in Virgin Active. It's gone from being a loss-making business to making GBP 33 million EBITDA as at September to making GBP 80 million EBITDA as at March. It continues the trend on the way to making GBP 120-odd million, which is where we value the business. And included in that are some really good and exciting growth opportunities that have come the way of that business. We remain absolutely convinced in the merits of the business. Dean and Mark have done a great job together with management team, Luca et cetera, in repositioning it and we believe having bought a bit more time to see that business fully recover, will enhance value for all Brait shareholders. Again, from a Premier perspective, I want to reiterate, we believe the business is a great business. As I mentioned, anyone you can find a business that sustain return on invested capital, that growth rate year-on-year and at that multiple, I would like a call because we don't see many of them in this market. We are not interested in selling our shares. We are a long-term holder in this business. And again, we look forward to seeing Kobus and the team grow that business. From a New Look perspective, what do we need in that business, I think the business has stabilized again from being a loss-making business during COVID to stable something around GBP 40 million to GBP 50 million mark. What we do need to start seeing is some green shoots of recovery in the U.K. fashion retail space. We are seeing it from a New Look perspective, the second half of the year was very significantly better than the top of the financial year to March '24, and we're starting to see even in this-year those green shoots of recovery for consumers. I think if interest rates start to fall in the U.K. as they are forecast to do, we believe in the next 12 to 18 months, that will be a much better environment to sell that asset into. From a capital structure perspective, as I mentioned, the maturity extension is what we needed. We have a 3-year extension. On that, that has facilitated the ability to extend the maturity of the Virgin Active South Africa debt also up to December '27. So now if we look at all of the debt within Brait, whether those be at the operational companies or at the Brait level, all extended out to around about December 2027. We needed to minimize the cash impact. There was a very minimal increase in the coupon for the convertible bond from 6.5% to 7.25% in cash and at 0.75% -- 75 basis points in PIK. So all in 8%, which I think in the current environment is a credible outcome and again, a relatively small increase in the overall cost of the exchangeable bond from 5% to 6% and no incremental shares we issued to enable us to do that other than obviously the rights issue, which is pro-rata for shareholders. And getting to those extensions on debt didn't require us to dilute ordinary shareholders at all. In terms of the transaction itself, what does it do for the business, the ZAR 1.5 billion rights issue, which has been priced at ZAR 0.59 per share. That's around about 73% and I repeat that 73% discount to the current NAV per share on a fully diluted basis. We've seen relative -- well, very strong interest from most shareholders to participate in it, including Ethos Capital, as you all would have seen yesterday announced that they will unbundle the shares. And the reason for that is the Ethos Capital shares are very big supporters, shareholders are big supporters of Brait and wanted to be able to follow their right. So I think that's an overall a very strong statement around the rights issue from Ethos Capital. The rights issue is fully underwritten by Titan at the rights offer price that is obviously offered to all shareholders on a pro-rata basis. And if you look at the extensions on the convertible bonds, as I mentioned a 3-year extension, we will repay ZAR 150 million of those bonds, that money coming from the placing of the Premier shares, which we did back in March. And as I mentioned, the coupon will increase from 6.5% to 8%. In terms of the exchangeable bonds, we will repay ZAR 750 million of the principal of the exchangeable bonds. There will be no incremental shares underlying the bond, it will remain at the 686 million shares, but that effectively reduces the strike price on those exchangeable bonds pre the rights issue to ZAR 3.28 and to ZAR 2.21 on a post rights issue basis. From an extension of the RCF perspective, we've also extended that out to March 2028 and increase the size of it. We will only pay commitment fees on the existing ZAR 600 million facility to the extent we need it. And if we need to, we will go back to our provider of the RCF and request an extension, which we don't think we will necessarily need. So overall, it demonstrates the significant shareholder support we've seen that since the announcement. I think a very significant number of shareholders are looking to -- for excess allocations in the rights issue, which we think is a positive overall. It gives new capital to support the portfolio and reduce debt, particularly around Virgin Active South Africa which has facilitated the extension there. And I think most importantly, it provides us with time to find the optimal exit window for each of the assets. There will be around about ZAR 900 million reduction in the debt around the convertible bonds and exchangeable bonds. And obviously, on a net debt basis, it will be around about ZAR 2.4 billion of reduction overall in net debt. The steps are set out over the page, I'm not going to dwell on this in any great detail. Step 1 was completed in March. Steps 2 to 7 are all inter-conditional. Very pleasingly, we now have the requisite number of ordinary shareholders supporting the rights issue. So all of the EGMs, which are set out for the next couple of weeks, now have the requisite number of shareholder approvals. That's the exchangeable bonds, the convertible bonds and the ordinary shares, we now have the requisite number of approvals. So to all intents and purposes, the transaction will happen and the rights issue will kick off early in July. What does it mean from an NAV perspective in terms of -- well, from a balance sheet perspective, start with -- as I mentioned, there's around about a ZAR 2.4 billion reduction in the overall debt in the business whether you look at the debt on a cash settlement basis on the left-hand side or to the extent that Brait elected to equity settle of the exchangeable bond, in either of those -- very significant reduction in the debt for the business. You can look at the charts on the bottom in terms of the impact on the fully diluted NAV of the rights issue, then NAV per share going from ZAR 4.67, down to ZAR 2.23 after the raising of the ZAR 1.5 billion rights issue and the new shares issued. On the bottom right, what we show again, to the extent that the Brait share price remains at ZAR 0.79, which is effectively the TERP, theoretical ex-rights price. You can see what the NAV per share is ZAR 2.23. Obviously, to the extent that the share price increases to the strike price on the exchangeable bonds, which as I mentioned post the rights issue ZAR 2.21, you will see that the cash settlement amount goes from about ZAR 1.4 billion down to 0. And to that extent, at that price of ZAR 2.21 NAV per share today, is the equivalent of ZAR 2.53. So anyone deciding whether to follow their rights at ZAR 0.59, you need to look at this table and decide somewhere between ZAR 2.23 and ZAR 2.53 is the NAV, so the discount at ZAR 0.59 is obviously very reachable. In the last slide, just quickly on the restructuring itself. Again, from a value uplift perspective, you can see the implied market value today implies a valuation to date on Virgin Active around about ZAR 3 billion. That's a market implied value based on the current market cap and the debt. What does it mean on the -- if you look at the NAV per share going forward post the rights issue, you can see there's around about a 3.5x uplift in the valuation of Virgin Active based on the NAV today, which assumes an EBITDA of GBP 123 million, we'll talk about that just now and a multiple of 9x. What we show on the right-hand side though is if you assume that the multiple is not 9x, for example, in Virgin Active and you assume it's to pick a number out, perhaps 7x and Premier does not rerate at all, it already has rerated from these numbers. This is done at ZAR 61 a Premier share, not the ZAR 71 it is today. Then at 7x, then the NAV is ZAR 1.73, again, a very significant premium to the ZAR 0.59 where the rights issue is priced. So as a summary quickly on the recapitalization, what does it do? There is no change to the strategy. We continue to look to monetize those assets over time. But what we have bought ourselves or bought Brait is the flexibility or optionality to choose the right, we have to do it at the right time to maximize value for shareholders. From a debt perspective, we've removed the overhang for December '24, which is obviously impacting the share price as well, and the net debt reduction of around ZAR 2.4 billion is a very significant reduction from where we were. In terms of the incremental costs, very similar coupon on the debt that we have for the 5% going to 6% on the exchangeable bond, 6.5% to 8% on the convertible bonds, and there's no incremental dilution for new shareholders for the extension. Obviously, as I mentioned, pre the rights issue. In terms of the rights issue, it's been offered at ZAR 0.59 per share, a ZAR 0.72 discount to the fully diluted NAV per share and it's fully underwritten, although all shareholders can participate. And just to give some indication of the timetable, which will be set out in an announcement in a relatively short order once we have JSE approval for the rights of circular, but this gives you some idea where are we today on the 25th of June, the annual results. The EGMs are around about the 2nd and 3rd of July to approve the changes to the convertible bonds, exchangeable bonds and ordinary shareholder approval. And then we would look to launch the rights issue around about the 15th of July, which would mean that we would conclude sometime in early August as the full capital raise. As I mentioned, we have all the requisite shareholder approvals to do so. Just moving quickly on to the NAV to give shareholders an update. I won't go and dwell on this slide, you will have seen it many times. I will go into a bit more detail over the page around Virgin, Premier and New Look valuations. But overall, as you can see, a reduction in the NAV largely not driven necessarily by the valuations in the underlying businesses. But obviously, some changes to the capital structure. Sort of looking at the capital structure you will see that obviously, the borrowings, the convertible bonds and the exchangeable bonds in the RCF have moved from noncurrent liabilities, i.e., more than 12 months to their maturity. Obviously, now they have less than 12 months to their maturities. So they are on our current liabilities. That is why we needed to do the recapitalization. And I suppose the big changes, which we can talk around that are really in the accounting treatment of the convertible bonds and exchangeable bonds to maturity. On the right-hand side, what we're trying to show is what would be NAV per share be on a post recapitalization. So once we repay the debt in the convertible bonds and exchangeable bonds and do the rights issue, what is the NAV per share on a pro forma basis. And as you can see there, around about ZAR 2.88 or ZAR 2.64 on a fully diluted NAV per share basis. What were the underlying drivers of that from a Virgin Active perspective? The maintainable EBITDA remained at around GBP 123 million. I think it was GBP 121 million before. That is a December '25 forecast of the management team. It hasn't changed materially from the GBP 121 million despite the fact there's been a 10% reduction in the rand to pound exchange rate. From a multiple perspective, we have been consistent, maybe consistently wrong, but consistent at valuing the business at 9x EBITDA. The peer group has gone from -- gone up by about 15% year-on-year, but we've maintained the 9% on a forward-looking basis, which represents a 9% discount to the peer group. We will go through that in more detail. Third-party in the business remains at about GBP 447 million, so slightly down from GBP 476 million, but that is at least partly attributable to the recapitalization, as you can see at the top, GBP 33 million plus GBP 4 million of new capital going into the business. From Premier perspective, we value the business at the mark-to-market on the share price as of 31st of March was ZAR 61, I haven't looked today, but I think the current share price is around ZAR 71. But this is done at ZAR 61. The reason for the ZAR 849 million is not that the valuation has gone down. It's broadly similar year-on-year on a like-for-like basis. But you will remember, we placed ZAR 900 million of Premier shares on about the 28th of March, so just before the year-end. So that is really what's driven the ZAR 849 million decrease in Premier. From a New Look perspective, it's flat year-on-year, a slight decrease in the valuation of the business in pound. But obviously, with the depreciation in the rand to pound, it's a slight increase, ZAR 51 million in overall. What has it been driven by, broadly similar EBITDA year-on-year. But from -- as I mentioned, from an actual perspective, last year, we valued it on a 12-month forward basis. We used ZAR 55 million. This year, we are valuing it on an actual basis of ZAR 40 million. The business actually made ZAR 41.7 million, but it's valued on ZAR 40 million. And therefore, the multiple that we've used is 6.5 and not a forward multiple of 5, which we used a year ago. At 6.5, this represents a 41% discount to the peer group average. And I think the benefits of the last year where we've managed to extend the debt in the business and show that the business can be sustainably profitable and all resulted in an increase in the multiple. In terms of cash and receivables, the changes there really are twofold. One is the placement of the Brait -- sorry, Brait share in Premier, that's the ZAR 900 million I referred to. So that would have come in year-on-year. In addition to that, we invested in Virgin Active as you can see there. And the net of those 2 amounts overall resulted in the difference in the cash receivable. So that again is reflective of the fact that we've sold down the Premier shares. And in terms of borrowings, relatively similar story -- the opposite of that, we repaid call it, ZAR 2 billion of the RCF. And that's why that number has "gone up" from an NAV per share perspective. And from a convertible bond perspective, the only real change is this accounting treatment that I mentioned earlier, IAS 32, which measures your liability component in any bond. So anyone who follows this for themselves would know the closer you get to maturity, the less the equity component of your bond is. So you can see that in the convertible bonds, ZAR 379 million with the lower equity component and ZAR 238 million in the exchangeable bond. That is literally an accounting treatment throughout. It's madness but it is what the accountants require us to do. So call it ZAR 600 million is the accounting treatment adjustment on the convertible and exchangeable bonds. And therefore, overall, the balance sheet movement was broadly flat year-on-year other than that ZAR 700 million. And you can see that on this page. And the final page before I hand over to a much more interesting discussion around the assets. This page again just shows at a snap point in time with March 2024, what the closing cash balance was, the closing cash balance at that point in time was ZAR 1.048 billion that included the ZAR 900 million, which we raised from Premier on the 28th of March. And therefore, the available liquidity at that reporting date was ZAR 1.5 billion. Probably more interesting is on the right-hand side of the chart, you can see what the adjusted March '24 balance sheet will look like. There will be cash on hand of ZAR 1.8 billion, which is including the ZAR 1.5 billion rights issue plus the ZAR 300-odd million of cash in hand. There will be lower debt. The debt, as you can see, therefore, the convertible bond would be down from ZAR 3.5 billion to ZAR 2.6 billion. That's the accounting treatment of that on an accounting basis. And then from a BIH exchangeable bond perspective, it goes from ZAR 2.8 billion to ZAR 1.5 billion, again that correlates with that NAV chart 3 or 4 pages before. With that, I will hand over to Mark to go through the Virgin Active presentation. Thanks. Mark?

Thank you, Peter, and good morning to everybody on the call. Before I get into the slides, let me just give a high level overview of where the business is. Overall, the business has continued to see strong growth momentum across all territories. Health and wellness trends, in particular, continue to be supported and we see this as a structural rather than transitory. Importantly, what we are seeing is a greater awareness of the combination of different aspects of health and wellness exercise, nutrition, sleep recovery, which will play a part in wellness aligned with the direction in which we take in the business. Operational changes that we made to the business in 2023, authority to yield dividends in 2024. As a recap in 2023, we slimmed down our central management structures, not only does this yield operating cost savings to the business, but it has also made us better in terms of how we manage the business, how we drive collaboration and best practice across the group. As Peter mentioned, the business has seen EBITDA run rate increased from GBP 33 million per annum as at September '23 to a current GBP 80 million per annum. That increase has been driven by a combination of revenue growth, the aforementioned operating efficiencies in the business, and then, of course, our structural operating leverage that allow 80% to 90% of incremental revenue to flow through to EBITDA, and that's important when you're looking at the EBITDA run rate. Now coming out of COVID, the business was very much focused on getting our membership growth, getting members back into the clubs. And to do that, we ran attractive promotional campaigns, which were effective in driving membership growth. However, that came in at expense of you, and in the case of South Africa related poor quality sales, which ultimately drove higher terminations during the course of Q2 and Q3 of 2023. Towards the end of 2023, the business has moved its focus from being membership growth focus to revenue growth focus. And this is an important point to note, not all memberships are the same. And what we're looking out of the business is the right combination of volume growth, yield growth, be that club pricing or the membership options in a club that we sell, who we sell to in terms of quality of member, how we engage members in the club, how we engage them with our app and loyalty. All together, those optimize revenue growth, they optimize retention and ultimately drive customer lifetime value, which is what we're seeking to achieve. Again, moving on to the first slide covering our revenue growth, April year-to-date. Starting with South Africa, which makes up 34% of our group revenue. Revenue for the first 4 months was ZAR 63.1 million which is 1% above budget, importantly 16% up year-on-year. That 16% was driven by a combination of membership volume growth of 26,000 members, which is in line with budget and 4% up year-on-year and member yields while in line with budget of 10% up year-on-year. And that reflects the combination of CPI pricing, plus which clubs we've sold more at and the membership mix that we've been selling at those clubs. So there's been a focus on quality of sales in South Africa and member engagement through our app and our loyalty program that collectively have improved our yields, both in terms of what clubs is sold and product mix and improved our retention. Moving on to Italy, which makes up 28% of our group revenue. Revenue for the first 4 months was GBP 51.4 million which is 1% of that budget and 23% up year-on-year. That number is made up of 10,500 membership growth, which is well above budget and 14% up year-on-year. And then membership yields are up 7% year-on-year, which is about 1% ahead of budget. So overall, for Italy, a very strong start to 2024 with sales, retention, yield all contributing to the strong performance. Coming to the U.K., which makes up 24% of our group revenue. Group revenue for the first 4 months is GBP 43.1 million. So that's in line with budget and 13% up year-on-year. That's made up of 8,600 membership growth which is 1% above budget and 6% up year-on-year and our membership yield of 7% up year-on-year, reflecting CPI increases plus higher sales both in terms of higher yield in clubs, particularly London clubs and then an improved product mix within the estate. So the London CBD clubs continue to recover, and we're all seeing higher trends in terms of return to the office, a trend towards 3-day working weeks, some companies going to full. It's not at pre-COVID levels, but it's certainly an improvement from where we were this time last year. Remember those London clubs are higher-yielding clubs in the estate. And then lastly, APAC, which is 14% of our group revenue. Revenue for the first 4 months has been GBP 25.6 million. That's slightly below budget but importantly 22% up year-on-year. Membership growth was 9,000 members, which is up 17% year-on-year. Yields are mightily below budget, mainly because we are selling more into the corporate market which carry discounts, but importantly, higher retention rates leaving our yields up 4% year-on-year. All territories across APAC, Singapore, Thailand, Australia are delivering robust revenue growth. And we are seeing a steady recovery at -- in our CBD clubs across Singapore, Bangkok and Sydney and Melbourne. But all together, that -- what that means is that for the entire group, our revenue is up 18% year-on-year. As mentioned earlier, the restructuring process that we've taken -- that we've implemented has improved our operating efficiencies and delivered significant cost reductions. We continue to manage liquidity tightly and importantly, ahead of budget. Our capital allocation of the business remains focused on product premiumization that drives volume and yield growth. Moving on to the next slide. Here, we're just going to focus a bit more on our membership trends across the group. Overall, our group membership is up 7% year-on-year. Starting with South Africa on the top left. South Africa has had a good growth in Q1 up to April 2023. But then as a result of poor quality sales, it had a difficult Q2 and Q3 of 2023 as we saw higher terminations. And so we took steps in the second half of 2023 to improve the quality of sales. That's focused on the promotions, what promotions we pushed, we changed our sales commission structure to be move from being remunerated on units to being remunerated on revenue, net of any unpaid debit orders, and we've continued to push our app and our loyalty. We've got 67% of members, over 2/3 of our base now on our loyalty program. And what the fact is showing us through the loyalty program is that members engaged on our loyalty program of 60% less likely to terminate. And overall, we've been -- it has been a 5 percentage point improvement in our retention rate. So looking at South Africa ending April '24 on 630,000 members, all that growth since April '23 has effectively come in the first 4 months of this year as those in the aforementioned initiatives started to pay dividends. Moving on to Italy. Italy is seeing a 14% growth in membership. It continues to deliver a steady consistent performance and that's testament to the high-quality products we have in Italy and its unique position in that market. Then moving on to the U.K. top right. Consumers in the U.K. remain stretched with higher energy costs and higher interest rates, but we are seeing that pressure abate somewhat certain energy costs have come down. Interest rates look like to have peaked and hopefully, you'll see some consumer relief by reduction in interest rates going forward. But overall, for the U.K., a solid start to 2024 and you'll see the light green line that we've seen a good unwind of frozen memberships becoming active members again. The North APAC bottom right, we've seen an 18% increase in membership. That's the strongest performance that we've seen across our territories. Once again, all territories contributed to that result. And it's been a steady performance through -- over the past 5 quarters. Moving on to the KPI slides, if I may. So when we break down our 4 -- probably the 5 -- 6 KPIs that we look at across the business. Gross sales are down 5% year-on-year. Now that reflects the fact that, as I mentioned before, we were previously focused on driving sales through promotions in the first quarter of 2023. We shifted our focus to quality sales which need focusing on high retention and higher yield. So when we look at our attrition rates, our attrition rates have improved by 2 percentage points year-on-year. And while the gross sales are purely new members coming in, that 2 percentage points improvement in attrition applies to our entire member base. So we've seen that resulted in a 7% increase in active members. Our yield across the business is up 10%. And that would reflect CPI increases, repricing of certain clubs, particularly where we've made reinvestments and then selling a better mix of membership across those clubs. So all together, a 7% increase in members, a 10% increase in yield, combined with increasing ancillary revenues, delivered an 18% increase in revenue. Our net revenue is of GBP 181.5 million is a GBP 27.7 million year-on-year increase, and that translates into a GBP 22 million increase in EBITDA. So you could clearly see the operating leverage in the business where the revenue flows through to EBITDA. Moving on the slide, if you may. Lastly, focusing on our segmental performance across our territories. Our GBP 181.5 million of revenue is in line with EBITDA. And as mentioned before, 18% up year-on-year. We've looked at the revenue of South Africa, U.K. in previous slides. Australia revenue was GBP 12.4 million; Thailand revenue, GBP 6 million; Singapore revenue, GBP 7.2 million. Importantly, all those are consistently up year-on-year at 15% to 34%. And when we look at our -- both our revenue and EBITDA, one of the important points for us as management is to increase the share of our offshore hard currency revenue and EBITDA. And as of the end of April '24, our offshore revenue now makes up 66% of our overall revenue. Moving down to the bottom gray block on EBITDA. South Africa EBITDA year-to-date has been GBP 13.9 million. When we combine that with Kauai & Nu collectively that will be GBP 15 million of South Africa generated revenue, and that makes up 60% of the group EBITDA. And naturally, we'd expect a [ 60% ] drop in offshore territories [indiscernible] delivered a strong recovery performance. U.K. EBITDA was GBP 2.8 million; Italy, GBP 9 million. Australia year-to-date has a loss of GBP 400,000. However, it is now EBITDA positive from April onwards. So as Peter mentioned earlier, all our territories are now EBITDA positive. And Thailand, Singapore making a small contribution and Kauai & Nu business continues to perform very well, 22% up year-on-year. And then putting that all together into the graph on the bottom left, you will see in September '22, March '23, September '23, we've delivered a solid, steady recovery in our EBITDA run rate. However, our focus on driving revenue and our operating cost efficiencies, combined with that operating leverage in the business has actually allowed us to create a step change in our EBITDA run rate. So we've gone from an EBITDA run rate of GBP 30 million per annum at September '23 to GBP 77 million as of March '24. For Virgin Active Club business, if we add a run rate of GBP 3 million per annum for the Kauai & Nu business, that gets us to our GBP 80 million per annum of EBITDA run rate. And that is the end of the Virgin Active slides. Peter, I'll hand back to you.

Thanks very much, Mark. We really appreciate. It's not just you're presenting today, but obviously, your and Dean's performance and the team's performance. So thank you very much for that. And therefore, we will now move on to Premier. We've got Kobus online. And Kobus -- we will go to Kobus. And just before we start, Kobus, congratulations to you and your team for a fantastic performance year-on-year. And over to you.

Thank you very much, Pete. I appreciate the kind words. I'm going to start with the slide that has the results for the year on it. if you could just move to that. just in a nutshell for the year to end of March, Premier grew its revenue by 4% to ZAR 18.6 billion. And it's really a story of revenue growth in the first half and sort of flattish revenue in the second half as commodity prices came down quite a bit, which you will also see from the release in working capital later in the presentation. EBITDA increasing 19% to ZAR 2.1 billion and with a margin of 11%. I think we've stated for a while that we were looking to get our EBITDA solidly into the double-digit levels and very satisfying to see that happening this year. EBIT up 26% as our depreciation charges remained fairly flat at around ZAR 450 million per year, giving us that additional leverage. With the EBIT margin also climbing for the first time to above the 8% level, which is what we set ourselves as a target a number of years ago. Our return on invested capital, I think it surprised us a little bit on the upside at 22.4%. We've always stated that we were looking to keep that around the 20% level. I think with some of the factory build-outs that we are busy with, that will add some capital to us in the coming months. We might see a slight downtick in that just because we spend capital and those facilities are not online yet to produce profits and revenue for us. But as soon as that comes along, I'm happy that we will continue on this trend. Our net profit up 16% year-over-year. And really the big thing that we noted last year in the presentation was the -- a couple of abnormal gains that we took in the previous year as a result of having to prepare our balance sheet for the listed market which resulted in one-off gains, noncash flow gains in the prior year. that we highlighted to the market on a number of occasions, and I think that you will not see any normalization from Premier again going forward. Our net profit margin now climbing to the 5% level. And then as Peter alluded to, our leverage ratio coming down to 0.9x as we had the benefit of both the cash generation out of the profitability, but also a bit of a release out of the working capital after the big inflationary increase in the prior year. If we move to the next slide, please, Pete, that shows our Millbake divisional performance, just showing that this is the big engine in our business that drives our performance. It accounts for about 84% of our profitability. And I think a very satisfying performance for us driven by a big focus on efficiencies and margin management post the big inflationary prior year numbers that came through. For those that are interested in the commodity cycles in our previous financial year ended '23, we had about almost a 30% increase in grain prices, both maize and wheat. And during the past year, by the end of our financial year, we've seen almost a 20% decline in wheat and maize prices. And I think, a testament to the way that our team and the management runs the business where we're quite agnostic to underlying grain prices, and we continue to focus on the margins that we need to make. And so in our world, revenue really at times is not a fair reflection of the true growth within our business. If we also look then at just a couple of the capital projects, our big focus is on the Aeroton bakery. We shut it down end of July, busy rebuilding that, hopefully, have it fully commissioned by August next year. These projects truly are full 2-year projects to execute. And there's no way really to shortcut that. We had to do some refurbishment in the run-up to shutting down Aeroton prior to end of July. So in the beginning of the past financial year, we spent quite a bit of money just to keep old Pretoria up and running. We managed to bring on added capacity Eswatini wheat mill on stream. There's a fairly big industrial customer that are manufacturing instant noodles for the Southern African market and we're requiring quite a big increase in flour supply that we have managed to provide through this capacity expansion. And then we've also done a lot of work on Mthatha bakery. The last work on it's only been completed in the last month to really get it up and running and also provide for the type of quality product and a slightly higher capacity in that business. And then we continue to do work on our smallest bakery, which is one we acquired 3, 4 years ago in George. And then very small, but we also managed to acquire the Top Score brand in Eswatini. It's a maize brand. We trade under the Top Score brand in our Mozambican market, but the Top Score brand in Eswatini still remained with the original family that started that business, and so they decided to sell their brand to us in Eswatini. If we look at the next slide, our groceries and international performance. It's really a 2 sides of the coin here. On the one hand, you have quite exceptional performance from our HPC business under the Lil-Lets and Dove cotton wool brands, both in South Africa and in our international markets in the U.K., Ireland, the UAE, Cyprus and with our launch on Amazon into the U.S. We've also managed to bring a couple of routing machines from a contract manufacturer in Taiwan across to South Africa to increase our production capacity and onshore more of our manufacturing and also start to make some product for the U.K. market from our Durban facility. On the sugar confectionery side, we've really seen a strong performance from that business, especially as we have managed to service Woolworths, in particular, quite well and making more and more SKUs for Woolworths that is proving to be a good business for us. We're also at quite an advanced stage and hoping to bring our new [ Ligarish ] plant online by October this year. which would then enable us to continue to make further consolidations between our 2 factories that we have and create separate centers of excellence in each one of the factories to make a specific set of products. On our CIM business is the other side of the coin, we continue to face headwinds in Mozambique. Albeit, we've continued to invest in that business. We've continued to maintain our facilities. It's still the only food manufacturing in Mozambique that has got FSSC 22000 certification. And so it really is primed for a recovery in the economy. We've started to pivot the business towards supplying more product into the Southern African market from cake flour to biscuits to pasta. And we will continue on that path as we await better economic conditions within its core market in Mozambique. Then moving on to our -- just a recap of the income statement across the board, the 4% growth of revenue that translates into 19% EBITDA growth that goes to 26% in EBIT growth. And then as I say, the net income only at 16%, also influenced by the much higher finance costs as a result of global interest rates that have moved up. And we certainly expect in the current year to see that trend reverse where the down payment on our debt, and hopefully, a few interest rate cuts will start to lower our interest bill again for the next year. And then if we just move to the slide on cash flow. This is the last slide in my presentation. I think we -- I'm very pleased to see the release of the cash flow coming out after the previous year, we had quite a big investment in working capital. You'll see the ZAR 274 million investment in the prior year, swinging back to a release of ZAR 246 million. We've continued our capital expansion plans and then actually stepped it up a little bit. Our maintenance CapEx in the last 2 years have been a little bit higher than what we usually spend as we did quite a bit of work on replacing fleet in particular on the Brait side. as we made a major push to just take some older vehicles out and bring some fresh vehicles into that fleet. I think we've made quite a good investment and should see that subsiding a bit in the next year or 2 going forward. But obviously, the expansionary CapEx will continue to run high with the Aeroton project. We are guiding towards a continued spend for this current year and next year of ZAR 700 million, with the ZAR 700 million in the following year, anticipating another major bakery investment that might be required but we haven't finalized plans for that yet, but we're just providing some guidance. Overall, free cash flow conversion went up to 66% allowing the repayment of the facilities. We've also quite key have repaid all the debt in our Mozambican business. It's got no debt in it. Interest rates there are over 20% and we should also see the benefit now average interest rate in the current year from not having that debt within our group at all anymore. Pete, that is it as an overview on Premier slides. I'll put it back to you.

Thanks, Kobus. And again, absolute credit to you and the management team. So please thank them all on our behalf. So with that, let's just finish off very quickly on New Look, as I mentioned, not the biggest asset in our portfolio, but an asset in our portfolio nonetheless. From a revenue perspective, it was down around 9% year-on-year. But more pleasingly, on a gross profit perspective, it managed to increase its gross margin by about 4%, and therefore, a much lower increase at a gross profit level, decrease of about 2%. And then from an EBITDA perspective, broadly flat year-on-year, largely driven by costs and operating costs that came out of the business. Anyone who follows that space will know it's a very competitive space, particularly with Shein and Temu like in other markets, are aggressively on the online platform becoming an increasingly strong competitor, which has driven increased marketing costs from a New Look perspective. But New Look has maintained its second position in the womenswear market, and that's across all of the essential categories, which is a very pleasing performance. And if you look year on -- sort of half year on half year, the first half -- first 6 months of the year, volumes were down 4%. What we've seen is volumes turn around and being up by 1% in the second half of the year. So we are starting to see the green shoots of recovery. And a lot of the strategic initiatives that management have been focused on in the last 12 months really around the efficiency that the distribution centers, restructuring and downsizing the London office will all bear fruit going forward in the new financial year. Again, the next day delivery, in-store stuff does set New Look apart from some of its competitors. And again, the third-party partnerships that we've struck probably over the last 2 years with some partners really are starting to pay dividends for the group overall. Again, from a revenue perspective, it's -- the business is really into 2 parts. This is the bricks-and-mortar side, which is called retail and then online. Retail was down more significantly, obviously, than the online business. Retail down 12% year-on-year, whereas online was down 2% to GBP 263 million versus the GBP 553 million in the retail space. Overall, as I mentioned, the second half of the year was better than the first half of the year, and we have started to see -- we started to see a better start to this year than we experienced last year. One thing management has been very focused on is [ high ] stock management in particular, and we started this year with quite an appreciably higher stock level, and we also see this year progresses. The customers wanted -- obviously switching into the spring summer product wear. As I mentioned, EBITDA broadly flat year-on-year. So the profit -- the revenue miss of 8% or 9% translates into very small reduction, which does focus -- shows that the focus on the costs, which were down nearly GBP 10 million in full year '24 really are starting to pay off, and we will start to see some of the other benefits of some of the other costs that management to be focused on in the last part of this year, showing -- coming to fruition next year. Just moving quickly then on to the valuations. I think there's only 2 slides to go. From a valuation perspective, on Virgin, as I mentioned, the maintainable EBITDA, that is a December 2025 number. So call it 18-odd months out based on management forecast, we've maintained the multiple at 9x despite the fact that the peer group has gone from this time last year at around about 8x up to 9.9x. We've continued to keep the 9x multiple the same. As you can see, it translated to an enterprise value of GBP 1.1 billion. And once you take off the debt and the senior and the convertible preference shares, the equity value is broadly flat year-on-year in pounds. Obviously, that makes it slightly up in rand given that there's about a 10% depreciation in the rand versus the pound exchange rate. Again, on the top right, what we do show there is if you look at the market cap and this is adjusted for any new issuances of equity, the peer group has gone -- it was at 100 notional terms in January 2020 before COVID. The peer group is broadly where it was then back at 99, where if you look at the value of Virgin Active based on our valuation, it's at 42% of where it was at the time. So we would believe that somewhat conservative compared to the listed peer group ex, which is related all the way back and have had the same issues that Virgin Active has faced over the past 3 or 4 years. Again, the last slide, that's on New Look. From a maintainable EBITDA perspective, we used ZAR 40 million, it made ZAR 42 million as at March, we've used the multiple of 6.5x. As I mentioned before that [ 49 ] LTM number. Previously, the 5x multiple was a forward multiple, so they're not comparable. So we -- but the 6.5x is about a 41% discount to the forward look -- to the LTM multiple that the peer group trades at. So again, from an enterprise value, it values the business broadly the same as it was in September at GBP 260 million, subtracting the debt, which is obviously somewhat seasonal, gets you to a shareholder value of GBP 228 million. And again, given the adjustment between the rand/dollar, which is about 10% depreciated. That means that we have a slightly higher, a broadly similar valuation for New Look at ZAR 982 million. That concludes the presentation itself. Are there any questions from the lines first? Otherwise, I'll go to some of the questions that have been sent through.

[Operator Instructions] We have a question from David Eborall of SaltLight Capital Management.

Peter, can you hear me?

Yes, I can Dave, carry on.

Peter, just 2 questions. The New Look numbers, am I right that the full year '24 numbers, a 53-week number, and the prior year is a 52-week number? Or have you adjusted that in the presentation?

You are right. That is why we use a sustainable maintainable EBITDA of GBP 40 million, not GBP 41.7 million.

All right. So I mean, from just all looks, so obviously, the physical retail is going back quite a bit. You obviously managed to cut costs a bit in that business. But I mean, if you didn't have the extra week, the number would look quite different. How -- who's going to buy this? Who's going to look to take this on -- going in 2, 3 years, if you -- as you say, competition is intensifying, is it truly just the anticipation that interest rates would improve?

No. Look, I mean, in answer to your question, I mean, the consumer has been under pressure almost as bad as in SA in the U.K. anyone who follow that market will know that. There's been a lot of a clear out actually of retailers generally online and physical. Next has actually turned -- I mean New Look is actually turned itself around and is now profitable. And there's one if not that many who could claim to have done the same. So I think it is in a much better shape than its peers in many cases, but certainly than it was. Who would buy it. I think it would be a decent amount of people who look to buy. It has a provincial footprint that is unmatched to be honest, Dave. Like a lot of -- you take next business, New Look has a fantastically complementary, in my view, provincial footprint to someone like a next, right? It obviously has brands and has been around the market for a very long time. We've seen a lot of other retailers, international retailers looking to enter the U.K. market, some of them are South African. And I think this would give them a very good foothold into that space. So I think either someone who's already playing in that market, you could take out significant costs around distribution centers, central costs, et cetera, and those multiples are double what we're valuing the business at or alternatively, new entrants or entrants who are currently there, who are subscale, right? And there's a lot of those who are locally based, right? So I think -- and the last opportunity there is someone in the online space, right? If you take a Shein once they're listed, this gives them a massive footprint from a click-and-collect perspective, right, which is the online strategy that we have. So I think there's lots of potential people. It's a bite-sized business, not particularly big in the context of these retailers. So I'm not worried that there's no one who want to buy it. I think what we've got to see is the business plateauing to a place where you can see it sustainably profitable, and I would suggest we're pretty much there. And then some improvement in the macros in the U.K., which, again, I think we are starting to see.

Okay. Brilliant. The second question, Peter, just -- obviously, we've seen your resignation, well, I guess, you're stepping down from the CEO role at Ethos. Nothing mentioned in Brait. I presume you're going to stay on. And then maybe could you just talk us through the kind of new remuneration package? Just briefly, you didn't come in the presentation, but it was quite highlighted in the announcement.

Yes. So I mean you are correct, Dave. I mean I've been Ethos Capital CEO for 8 years. So yes, I informed the board some time get to be fair, but as we sound and having now done it for 8 years, it was time to step down and let someone else more capable and Anthonie take over that role. I will continue the role in Brait. I remain at TRG, to be honest. So it's not that I'm going anywhere. So I will continue to work with internally on the Ethos Capital staff. And as Anthonie works with me on the Brait staff. So yes, that unfortunately for investors, probably I will remain around for Brait. In terms of your second question around the rem, what we -- you will have seen we've reduced the management fee from ZAR 65 million a year to ZAR 50 million a year. So that's been done. We did away with any short-term incentives, became quite difficult to work out what the KPIs should be for that. And the remuneration committee, therefore, decided it was better to have a longer-term incentive, which was more aligned with shareholders in terms of share price performance. That is effectively the equivalent of 1 year's management fee. On a pre rights issue basis, it means that the share price needs to be above ZAR 1.80 compared to the ZAR 0.90 it is today. And anything above ZAR 1.80, it's about a 1%, 1.25%. I can't remember the exact number, percentage of the value created above ZAR 1.80 capped at 1 year's remuneration.

We have no further questions on the conference call. And I would now hand over to webcast questions.

Okay. We have a couple of questions on here. Let me go through them. Firstly, from [ Albie Celia ] question. Can any exchangeable bondholder refuse to accept the new terms proposed to them, both against them in demand to be paid out as per the original terms. Albie, no. There's a 67% threshold which needs to be hit. And once that is hit effectively, it's like a scheme to all intents and purposes, all the exchangeable bondholders will then be put -- accept the same terms as the others. So there's no ability for an individual exchangeable bondholder to say, I don't -- they can vote against it, but so long as the threshold is met, which it has been already when the proposed restructuring will happen. Second question also from [ Albie ] have you received any expressions of interest to acquire Virgin Active from anyone, including related parties during the last 12 months? How confident are you, you'll be able to realize anything close to the carrying value of the Virgin Active investment, backing any stated confidence how much of their own after-tax money is Brait management looking to invest in the Brait rights issue? Okay. So answer your first question first. We'll always be open to people coming and putting the proposals on the table. We did and at the worst point in the COVID cycle received an approach for one part of the business. Thankfully, and absolutely thankfully, we did not sell it. It ended up being at a higher multiple than what we value the business at but also lower EBITDA. And I said convincingly for some time that we believe that the GBP 121 million is a number that we will hit, and I think we're well on the way to achieving that. We could have sold it part of the business at a higher multiple, but we didn't think was a sustainably attractive EBITDA level for a part of the business, but we will continue to look at all options around that. I mean in terms of being how confident are we, we are confident, right? I mean the NAV is not just an NAV we put out there. We put our reputations on it. Yes, I know there are a lot of [ Twitter ] investors who maybe have a slightly different view on value, but it also gets audited. And we've seen third-party investors who are very capable investors who have made more money than many of the [ Twitter ] investors over many years, invest at high NAV, right? So I would suggest that not just us but other third-party investors believe that our NAV is in the ballpark, and we are confident that we will achieve that. Backing any stated confidence, how much is the Brait management is going to put in? As we announced, the Ethos Capital shares will be unbundled. We are, as partners in TRG and therefore, Brait shareholders, and we will receive our Brait shares. And whilst I haven't spoken to everybody, you can take it from me but I will be following my right. And I would presume, not having spoken to everyone that the Ethos management will do likewise [indiscernible] that they receive from Ethos Capital. Also, [ Albie ] the South Africa is a relatively poor country with low economic growth. Are you confident that the strategy of Virgin Active in SA to be an upmarket luxury premier gym chain is the right one, given the success of value chain and brands like Basic-Fit have done in Europe. Mark, are you there? Do you want to answer that?

Certainly, Peter. Look, Virgin Active in South Africa currently plays across the entire market spectrum, which is different to where we position ourselves globally. And we're not looking to change that. Wherever we think we can make money in health and fitness in South Africa, we will. The reality is the premium clubs make most of our money, and we are in the value budget segment similar to what the European budget operators playing with our RED concept. However, that end of the market has actually proven to be very difficult in South Africa. And that's a factor of what you'll see in the European markets is a much better or much smoother income distribution. Interest, I think South Africa's most of the money certainly in the health and fitness sector is in the top end of the market. And I think as most investable we were that the Vitality program itself, when you look at it, it effectively provides access to health and fitness at equivalent of what a budget operator would get in the European market. So I think our answer to that is we are in every segment. We will look to play in every segment of the South African market provided we can get the requisite return on capital.

Thanks, Mark. Next question also from [ Albie ] Do you require the recapitalization to give yourselves another 3 years post December '24 to realize value? What probability would you ascribe to the possibility of disposing one, more or all of the assets within the next 1, 2 or 3 years, are you not utilizing the 3-year extension? As I mentioned, Albie, it is not the intention to have -- to use the 3-year extension and sell the assets in 3 years' time. But we are under no pressure to do so. And it's very difficult to ascribe a possibility to be honest. But I would suggest that if take New Look, for example, this time next year, the environment is improving, like we think it is, and we're starting to see it is in terms of green shoots of recovery. I would suggest New Look is an asset that we would look then to probably take to market, again, under no pressure to sell it, but if we get the right demand for the asset and the environment is a better one to sell assets, we can look to do so. Premier, we're not looking to sell it. We believe that the asset is a great asset. Recently put why -- given that what would we use the money for if we were to sell down some Premier shares, we would use it. We have to use it to repay the exchangeable bond, which has got a coupon of 6%. So as long as you believe that the return from Premier shares is more than 6%, which we definitively do, whether that be through earnings growth, re-rating, then you shouldn't sell the shares, right? And we have no intention of selling the shares. So -- and then obviously, Virgin Active, I think is a slightly longer-term growth story, but we're seeing the benefits of all the restructuring changes that have happened. And again, we remain open to optimizing the exit of that business at the appropriate window. On to the next question from [ Abak ] Given the 3-year extension on the bonds and comments about being a long-term Premier shareholder, would it be reasonable to assume that you're looking at maintaining your Premier stake for around the next 2 years? And again, I think it's a similar answer, right? Unless you believe you're not going to get a better than a 6% return to pay back the exchangeable bond, why would you rush to sell any Premier shares in a business that's got a fantastic return on invested capital, the consensus growth out there of circa 10% and its de-gearing at the same time. And that's before you say it ranks or is rated at about half of where its peer group is. So on all fronts, I think there's upside to Premier shares, so we have no intention of selling them. Again, Albie, in your previous call, you said there was limited demand to place Premier Group shares in the market. I was told that the Premier in that call to investors said that there was lots of demand. Do you have an update on demand and the possibility of pricing shares? I think what the point I made in the previous call was when we ran the bookbuild process to raise ZAR 900 million, there was demand for ZAR 900 million. Thereafter, the demand at the right price fell off a clip. Now yes, maybe things have changed. But I keep coming back to the same point. We're not in a rush to sell our Premier shares. We believe in the business, and therefore, we have no intention of selling any Premier shares. Next question. Okay, I'll come back to that and it's -- Kobus will answer that one. Nick Kicker, can you give us more detail with respect to the contractual arrangement with the Virgin Group? What royalties are paid by Virgin Active to the Virgin Group? And how often is this contract renegotiated? Again, Mark, it might be one for you.

Certainly, Peter. So we paid 3% of revenue -- gross revenues in South Africa to Virgin Group. And across the rest of the world, it's 2% of gross revenues. That contract is a long-term contract. I cannot give you the exact date on which it matures, but it has a minimum of 10 years to run. So it's not a contract that we renegotiated from time to time. It's one that we set up approximately 15 years ago with the intention of it being a long-term contract.

Thanks, Mark. Then another question for you, Mark, is this thing to see back from other gym operators. Italy and Germany are referred to as tough markets. This does not seem to be your experience. Can you talk more about your experience in the Italian market? Are you planning to open new gyms in Italy? What do Italian gyms typically cost to open? And what EBITDA will these gyms generate?

Sure. So let me take a bit by bit. Look, Italian and the German markets are quite different. The German market is -- has a strong representation of budget operators. There's less so in the Italian market. The Italian market as you'll see, with probably a lot of consumer product is quite premium focused. We are uniquely positioned in the Italian market in terms of large format premium clubs. In fact, there is no other chain of substance in the Italian market. And that's very difficult to state for anybody to replicate just taken as a best part of 20 years to get to where we are today. In terms of constructing clubs in the Italian market, it's quite similar to the South African market where we get hot shells. So that is where the landlord would fund the fit out of the club and both build the shell and the internal fit-out. And then we typically put our equipment in and the landlord will rentalize the fit-up cost. And that creates a lower capital base for us to open clubs in the Italian market and gives us an enhanced return on capital. So typically, in Italy, we are looking at EUR 2 million to EUR 3 million a club to construct. And those will typically give us a 30% plus IRR. We're looking at something around -- we would aim to be somewhere around GBP 1 million to GBP 1.5 million -- EUR 1 million to EUR 1.5 million EBITDA per club in the Italian market. Did I miss anything in terms of questions, Peter?

No, I think that's all good, Mark. And then Kobus, so that you don't feel left out, also a question how long runway do you see into the future to be able to continue deploying -- start investing capital at a 22% rate of invested capital?

Peter, I think that we are fairly comfortable that we've got a 5-year runway ahead of us and that we haven't really tied to plan for longer than that. So we do a 5-year planning horizon. And within our horizon, we don't see it subsiding at this point in time.

Thanks, Kobus. And then last question that I have is from [ Frederick Busch ] You're providing an illustrative post recapitalization NAV on Slide 15. Can you explain why you are lowering the value of the convertible and exchangeable bonds by ZAR 706 million and ZAR 316 million, respectively? Yes, as you can see in Note 5, personally, I wouldn't even take that off, right? I'm telling you that's the accounting treatment on exchangeable and convertible bonds means that what you do between today and maturity, you start with an equity component and a debt component. As you get closer and closer and closer to maturity, the debt component gets bigger and the equity component gets smaller. So effectively, by extending the maturity by 3 years, you get this accounting treatment, call it an anomaly for want of a better word where effectively, illustratively the IAS 32 accounting treatment means that you take an equity component to the bond, which is the ZAR 706 million and the ZAR 316 million, okay, and the debt component. Personally, I don't do that right. Just go and look at the actual value of the bond. So if it's a ZAR 3 billion or ZAR 2.25 billion exchangeable bond valued on that basis, this is the accounting treatment, which -- [indiscernible] previous it's irrelevant whether I agree it or not, but it's what the accounting -- the accountants will force us to do. So it's an accounting treatment, right? That is the last of the questions I have. So unless there's any other questions on the call, we can call it a day.

So we have no further questions on the conference call. Do you have any closing comments?

Yes. Thanks very much. Look, once again, thanks very much for everyone for participating. We really do appreciate it. We remain open if there's any other questions, feel free to reach out to us. It doesn't have to happen twice a year. And again, thank you very much for your interest and participation today. And thanks very much to Mark and Kobus.

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