EPE Capital Partners Ltd (EPE.JO) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Ethos Capital results presentation. [Operator Instructions] Please note 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 good afternoon to all our stakeholders who've dialed in. We appreciate you taking the time. I will try and run through the presentation today and then obviously give some -- an opportunity at the end to answer any questions that any of the investors have. Yes, so feel free to send any questions through or alternatively just ask on the telephone line at the end. Moving to the Executive Summary page, Page 5 of the presentation, from an NAV perspective -- NAV per share perspective, the NAV per share is down just under 15% from ZAR 8.56 to ZAR 7.31 since June, and that's for the 6 months to December. Predominantly, that was driven by the listed share prices with Brait being down [ 42% ], MTN Zakhele Futhi down 11%, and exchangeable down 6%. Also, there were some distributions during the period, which probably account for 80-odd percent of the ZAR 1.25 reduction in NAV per share. But broadly, it was a disappointing result, particularly around those share prices. We will touch on Brait at the end. The share price remains under pressure despite very significant improvements in the underlying portfolio. From a performance perspective, the unlisted EBITDA -- the unlisted company [ equivalent to EBITDA ] actually grew 26% across the board despite pretty difficult operating conditions in the South African macros, and the maintainable EBITDA grew by 9%. The real difference between the 26% and the 9% was the adjustment we made to Optasia, which is a post year-end adjustment, and we will touch on that during the presentation. But overall, a fantastic result actually in terms of EBITDA growth across the portfolio. And importantly, some of the assets that have been struggling for a while had a very significant turnaround in their performance. From a valuation multiples perspective, those were reduced in line with what we call the out of favor SA small cap index, which, over the period of time, has continued to deteriorate from an SA context perspective. I think anyone who follows the South African market will know that, that sector in particular remains what we believe is undervalued, but certainly at a significant discount to fair value, and the multiples overall have declined during the period. And Optasia -- from an Optasia perspective, the valuation was reduced slightly in line with the significant depreciation in the local currencies, but particularly the naira. And most of that was actually a post year-end adjustment. And as I mentioned, we will touch on that when we talk about the assets specifically later. From an investments perspective, since listing, as I mentioned, there's been around about ZAR 600 million of -- that's our share of realizations at a TMB of just under 2x and at an average premium of 36%. I'm pleased to say that's continued during the last 6 months, 3 assets in particular, Bevco and Neopak, and the non-core assets of Twinsaver, all sold at significant premiums to the NAV that we held them in the books. The Bevco and Neopak deals are very near to completion, and the Twinsaver non-core assets were disposed of during the 6-month period, again, at very significant premiums to where we held them. Whilst they are Fund VI assets and Ethos Capital's part of that is not significant, it does show that even in a relatively difficult environment, we have been able to sell assets at very significant premiums, particularly around the multiples actually to where we held them in our books. There had been -- there are no significant commitments outstanding. We focused on buybacks. The collective -- cumulative buyback has been just under ZAR 100 million over the period since listing. And as we mentioned over the last 2 or 3 months, with the refocus of the strategy, the focus really now from the Board is around asset realizations in the fund. From an outlook perspective, I'd love to sit today and say that things are remarkably better in an SA context. It's difficult to say that, to be honest. We are seeing the green shoots of recovery. Certainly, some of the consumer and producer sentiment seems to be slightly better than it was. I think we all believe it's going to be a difficult period of time from an investment perspective over the elections in May. But that said, the impact of load shedding, the CapEx spend that we've had to make, the outages and the impact that's had on the P&L really are now in the base, and we shouldn't see the ongoing impact of that. As I mentioned, despite that, there has been a very significant growth in the overall EBITDA of the portfolio. The Board's focus remains on expediting the return of capital, particularly around the revised strategy. As we mentioned, there will be no further new investments in Ethos Capital, and the focus will be on how does the Board optimize the -- and expedite the return of capital to shareholders over time. And we can again discuss [Audio Gap] At the end of the presentation. In terms of performance updates, you'll have seen some of these slides before. We were asked to show a 5-year view on a total basis. I hope this is sufficient for that investor. It really is, pretty much since inception. But if anyone wants any further [Audio Gap] Numbers, please ask. As you can see, we benchmark ourselves against the JSE Benchmark Index. And certainly, over a 1-year period, particularly with the Brait share price down nearly 38% despite the co-investment and funds business being up 3% compared to the market of 10%, overall, we were down 7.4%. Over a 3-year period, the funds and co-investments are up 15% compared to a market average of 10.6%. But again, Brait, even over that 3-year period, has been down 16% per annum. Looking at the bottom right-hand box, you will see the 2 new assets that I've added to the slides. Neopak exited at 2.3x money back and Bevco at 1.5x. As I mentioned, both are very significant premiums to where we held them previously and certainly very significant premiums to where we held them probably a year to 1.5 years ago. So that remains pleasing. As you can see on the left-hand side at the bottom, what that does show is liquidity. From a liquidity perspective, liquidity does remain relatively tight. We'll touch on that again later in the presentation. But the focus now remains on returning cash to investors post that green button that you see there that represents where we are today in 2024. Overall, from a portfolio perspective, the bridge from where we were in June to where we were in December, as I mentioned, a 15% decrease in NAV per share if we use the Brait share price. If we use the Brait NAV per share, it was a 5% decrease to ZAR 9.89. But using the Brait share price, it was a 15% decrease to ZAR 7.31. As I mentioned, the unlisted portfolio, broadly flat from a valuation perspective. The positive returns driven relatively broadly but by Synerlytic, Crossfin, Gammatek, TymeBank, and in particular, extremely strong recovery from Twinsaver, and all of those helped on the positive side. But there was a decrease in Optasia. We'll touch on that later. It was a post year-end adjustment based on the massive and very significant decrease in the naira compared to the dollar and also devaluations in Echo and Kevro. And again, we'll touch on those during the presentation. As I mentioned, the listed portfolio decreased very significantly, 11% for MTN Zakhele Futhi and 43% for the Brait ordinary shares. So if you look at the bridge, the FX movement of ZAR 114 million negative is predominantly due to Optasia and the adjustment we made to maintainable EBITDA. The earnings, very positively up, as I mentioned. 26%-odd growth in earnings led to about ZAR 141 million of uplift in value over the 6-month period. And as I mentioned, in line with sort of the small and mid-cap index being down over the last 6 months, we have reduced some of the multiples in the portfolio. Across the listed -- sorry, I don't know what went wrong there. I hope I'm back online. Across the listed portfolio, the listed portfolio was down 30%. That was predominantly the Brait ordinary shares, as I mentioned, and there were distributions of around ZAR 24 million over that period of time. So overall, that resulted in, as I mentioned, a 15% decrease, predominantly driven by the listed portfolio and the distributions, with the unlisted portfolio being broadly flat. In terms of the overall NAV constitution of the portfolio, the top 5 assets contributed about 60% of the NAV. As you can see there, that's Optasia, Synerlytic, Crossfin, Vertice and Gammatek. We will go into those assets in a bit more detail. The other 14 assets in the portfolio contributed 23%. So obviously, a relatively long tail of assets, and those contributed by ZAR 535 million of the total NAV. And then, you can see the Brait share price and the Brait EB, those 2 together are now only 17% of the portfolio. So it's obviously not great with the share price down, but the 2 of those assets together now constitute about 17% of the old Ethos Capital portfolio. Moving on to the more detailed slide on the NAV, and again, I won't go into this in detail. I'm sure many of you will take it as read. It's posted on our website. But again, you can see, from a perspective of the 30th of June to the 31st of December numbers, what really had a material impact was Brait. The ordinary share [indiscernible] ZAR 181 million, ZAR 10 million odd for the exchangeable bond, which was down 6% over the time. And obviously, distributions there of [ 8 ] [Audio Gap] That we received. And then, you will see Optasia there, down ZAR 75 million, and Echo down ZAR 49 million. And again, as I mentioned, we'll touch on those in more detail at the end of the slides. From an overall NAV per share perspective, if you use the Brait share price, the NAV is ZAR 7.31. And if you use the Brait NAV and on a look-through basis, the Ethos Capital NAV is ZAR 9.89. In terms of the performance of the unlisted portfolio, again, as shown on the top left, revenue growth across the portfolio, both by number of assets but also value contribution. And as you can see, by value, 80% of the portfolio grew their revenues by more than 12.5% during the course of the last 6 months. Sorry, this is over the course of the last 12 months. And EBITDA, 40% of the portfolio grew EBITDA over the last 12 months by more than 12.5%. Again, if you look at maintainable EBITDA -- I'm sorry, on that EBITDA growth -- that's maintainable EBITDA growth as opposed to actual. Actual would be higher than that. From a debt perspective, there's been very significant debt paydown across most of the portfolio companies. And as you can see, probably 65% of the portfolio by value now has an EBITDA -- has a multiple of less than 1.5x debt-to-EBITDA. And overall, in terms of the portfolio and [ hard splits ], again, a chart that I've shown before, really we look at it in 3 buckets. The first is the listed investments, which contributed, as I mentioned, about 19%, including MTN Zakhele Futhi. MTN Zakhele Futhi will convert into MTN shares in around September, October of this year, and those assets are obviously marked to market. Secondly, we have co-investments. So these are assets where we hold shares directly as Ethos Capital in Optasia, Vertice, Primedia and Kevro, and that contributes around about 13% of the portfolio. And then finally, you've got the assets that reside in the underlying funds, so you have indirect investments into these assets, and that's about 68% of the portfolio. And around 75% of the portfolio is subject to evaluations by us. The rest are either listed shares, which are marked to market, or in the case of some of our other assets, which have third-party offers on the table, those are valued based on those. So that's around 6% of the portfolio. We'll now go into a bit more detail on the portfolio itself, and I'll give you a heads-up on some of the key assets and how they have performed. From an Optasia perspective, Optasia is around 30-odd percent of the overall NAV. It was down 9% across the 6 months, predominantly driven by the adjustment we made to the maintainable EBITDA as a post year-end adjustment. This business, for those of you who don't know, does really 3 things. Firstly is micro lending, which is what we call the MFS business. And there are a number of different micro lending products that we offer, again, in conjunction with our MNO partners. Then we do airtime credit services within this business. That was the core part of the business before, which does airtime credit solutions, again, for MNOs, powered by the AI differentiated and real-time credit scoring that we provide. And then, finally, data monetization. So again, we use our database in different ways to monetize that, again, mostly in partnerships together with our MNOs and some of our banking partners. From an overall perspective, the ACS business continued to grow really well in local currency. Long term -- sorry, LTM, last 12 months revenues up 18% in local currency. And this obviously had -- the naira's impact in particular had a very significant impact on the overall U.S. dollar EBITDA, particularly in the ACS business. From an MFS business, as I mentioned, this is a business that's been ramping up and continues to grow fantastically, grew 73% in local currency over that period of time, really with new traction around new deployments and in new territories. So again, we're seeing very positive growth. We're now taking some of those initiatives and some of those products that we've created and rolling them out into new territories. So overall, despite very, very significant naira, Zambia kwacha, and obviously, the Pakistan currencies as well, over that period of 6 months, even despite that, the LTM revenues and EBITDA growth was up 7% and 4%, respectively, which I think was extremely credible result, given that we had over 40% depreciation across some of those key currencies. Post year-end, for those of you who follow the naira and anyone who is invested in MTN, we have seen a very significant decrease in the naira from around [ 850 ] -- so probably, a year ago, it was at [ 450 ]. In December -- in the lead up to December, at around [ 850 ]. Since then, the naira has continued to devalue to around about [indiscernible]. What we decided to do was, therefore, make an adjustment to the actual EBITDA and reduce that commensurately and which really impacted the EBITDA from the Nigerian business. That business now only contributes -- Nigeria to the overall portfolio, probably less than 20% now of Optasia's EBITDA going forward. However, it was a very significant impact. And that downward adjustment obviously had an impact on the overall EBITDA. Yes. So continuing with the story -- sorry, I was just checking that the overall reception is good enough. The new deployments continued to grow across the territories with a very strong run rate into full year 2024, which has given us a good start to the year. From a valuation perspective, the valuation was down 9% in rand due to the lower EBITDA multiple -- sorry, to the lower maintainable EBITDA. We didn't change the multiple despite the peer group being up about 15% over the period. We thought, given the slower growth, we weren't going to increase the multiple. But the real difference was reducing the maintainable EBITDA to reflect the difference in the Nigerian business. From a Synerlytic perspective, again, a great result. Synerlytic is now around about 9% of the overall portfolio. It was up 13% over the last 6 months. Just to remind people, there's really 2 businesses within Synerlytic. The first is the WearCheck business, which is a leading oil condition monitoring specialist in Africa. And the second is what we call The Particle Group, which is 2 businesses, AMIS and CND, which is a Canadian business. And it manufacturers and supplies a wide range of certified reference materials, largely to the mining and exploration companies. The business has performed very well over the last -- over the period. Last 12 months revenues up 10%, largely driven by operational improvements within the WearCheck business, which we had talked about last time. LTM EBITDA across the business up by 14%, which demonstrated very strong cost controls across this business and the operational leverage starting to kick in. And it's great to see that the WearCheck's sample volumes increase relatively well, with significant earnings growth in the reliability division as well. So relatively broad-based across the WearCheck business. From a TPG perspective, The Particle Group, they've had a more challenging environment. You remember, last year was a very, very strong year. They have continued to grow, but not to the same extent. And those factors are not just African issues. There were some Canadian weather issues that also kicked in. But I think overall, we're relatively pleased with how the business has performed. From a valuation perspective, valuation is up 13%, really reflecting the higher EBITDA and increase -- slight increase in the multiple, with the peer group being up nearly 25% over the last 6 months. We haven't increased the multiple by 25%. We ticked it up a little bit. And obviously, there's a bit lower gearing in the business. Overall, that contributed to a 13% increase. Now, moving to Crossfin, again, pretty credible performance across the Crossfin business, which has a multitude of different assets, as most of you will know. The firstly is Adumo, which is the payment gateway and rewards platform and point of sale software, which includes the iKhokha business. Then you've got the Akelo business, which really provides leading card, mobile and processing platforms in it, and then the Sybrin business, which provides payments and information processing solutions for the financial services industry. Again, if you look across the business, the group grew LTM revenue by 26%, a very credible performance. And LTM EBITDA was up 17% across the various businesses. The Akelo business, in particular, had a fantastic year, growing long term -- sorry, last 12-month EBITDA by more than 100% over the period, really due to the outperformance of the retail card business. iKhokha's last 12-month revenue grew by 31%, again, has continued that strong growth package. As we've seen and have talked about before, we continue to invest in marketing spend and merchant sign-ups across that business, which does impact EBITDA, but we continue to believe that a growth rate of 31% demonstrates that is capital well spent. From an Adumo excluding iKhokha perspective, very strong earnings growth of more than 15%, which was mainly driven by the Adumo Payouts and GAAP business, which does many of the restaurants in SA. Sybrin, you remember, was an underperformer when we talked about it last time. A new management team has been put in place, and the green shoots are being started to be seen in that business after the strategy reset. But over the last 12 months, EBITDA was down 7%, but a very strong second half of that year. Therefore, overall, valuations increased by 9%, which was reflective of a high maintainable EBITDA and the return of capital on the retail capital business. You will remember there was an earn-out of that business, the full earn-out -- just under 100% of the full earn-out has been paid by TymeBank, which is being distributed to LPs. Moving on to Vertice, Vertice is around 7% of the overall portfolio and ended up flat, pretty much flat year-on-year. If you take the financial performance, actually, it was a very credible performance. Revenue was up 13% and EBITDA up a very significant 29% over the last 12 months. And this really came from the orthopedics, surgical and mobile clinics divisions, which offset some underperformance in the cardiovascular module. From a PSSG perspective, which is that medical software business that we own, this has pivoted from being a provider of solutions to the sort of more DFI-type space into private sector solutions. They have won some decent contracts on that, and we would hope that, that business will now contribute positively to overall growth in the business. However, unfortunately, at the back end of last year, we lost a relatively large agency contract in the business [Audio Gap] Will impact full performance. And as a result of that, we reduced the overall multiple -- so the multiple was lower. So despite the increased EBITDA, the overall valuation was broadly flat. Moving to Gammatek, again, a business that has continued to perform relatively well. This is a business that is a leading distributor of mobile accessories. You will have seen it in many of the stores of our MNOs around the country. Overall, the valuation was up 8% over the course of the last 6 months, largely driven by revenue, which was up by 13%. LTM EBITDA only increased by 2%, which I think was reflective of 2 things: firstly, a pretty tough consumer environment; and then secondly, currency depreciation had a very significant impact, as you can imagine, on input costs, all of those are imported, which effectively overall reduced the operating margin in the business. That said, there are a number of growth strategies, which are starting to bear fruit, and many of those will be reflected in the next 12 months' numbers. From a valuation perspective, the peer comp group was actually up by nearly 40% over the period. We have not changed the multiple. We've kept the multiple the same. But the valuation was up really due to the higher EBITDA and some de-gearing in the business. I'll touch on some of the smaller portfolio companies, not all of which performed particularly well. Echo, which, as many of you know, is a corporate Internet service provider, which really provides aggregated services through third-party networks. Actually, South African business had a very good, decent revenue growth over the period. LTM revenue is up 14%. But LTM EBITDA was largely flat across the South African business, which I think reflects the increasingly competitive market dynamics in the business, which has had an impact on operating margins. The international business that we spent a lot of time trying to turn around continued to do so, has been turned around. The work is definitely behind us. Whilst it remains slightly loss making, LTM revenue was up 16% in that business. Overall, valuation was down by 31%. It was really due to -- we lost a contract, as I mentioned on the last call, again, in the South African business, nothing to do with the business itself. It was an M&A transaction, which this client of ours was taken over and forced to use a different provider. There's not something we could have done about it. But obviously, it will have an impact on our EBITDA. And then, there was also a court case, which has gone against us, and [Audio Gap] Taken a provision for which -- regarding the international business and some of the staff retrenchments at the time of taking over that business. So overall, a pretty [ poor ] result by Echo over the period. TymeBank, which is an exclusively digital retail bank, it's -- I'm sure many of you know. Valuation up 16%, which is really largely based on the U.S. dollar valuation of the most recent funding round, which again is up, I'm going to say, 20-odd percent. I think it was from the previous round. So we continue to see up rounds in this business very positively. Very strong customer growth, particularly in the South African business, has made that business a break-even business for the first time as of December 2023. So lots of international interest, lots of private equity interest in this asset as it continues to internationalize its business. Primedia, which is, as you know, a media and advertising company that does broadcasting and out-of-home solutions, a very impressive operational performance despite, as anyone would know, a very difficult macro environment, particularly in advertising. LTM revenue up 31% over that period of time, with LTM EBITDA up by 12%, as we continue to invest behind some new products and growth initiatives in that business. Broadcasting continues to perform really well, meaningful market share increases across the portfolio. And then, out-of-home continued its post-COVID recovery. Overall, the valuation was up 5% despite 12% EBITDA growth. We reduced the multiple in this business slightly, reflective of where the peer groups are over that period of time. E4, which is a leading provider to the banks and legal firms of solutions that effectively digitize bond origination and the conveyancing process. This business, broadly flat across. Revenue down by 4%, LTM revenue slightly lower at 7%, which I think was reflective of the fact that increased interest rates, particularly in SA, have had an impact on mortgage origination more broadly across the country. However, the U.K. business, which is relatively embryonic in the overall scheme of things, had its first pilot project with Nationwide. And again, I think if this business can demonstrate the growth across that new pilot project, there will be very significant growth to come out of the U.K. business. The valuation we let broadly flat with the slightly lower EBITDA adjusted for the debt that has come down over the period of time. Kevro, another business that has underperformed over time. It's a small contributor to overall portfolio, but we thought we would touch on it for continuity and consistency perspective. It's the largest supplier of corporate-branded clothing in SA. The operational recovery has continued, and the new warehouse, as we've mentioned, the ERP systems and the warehouse management really are starting to operate efficiently. The business is up multiple times on where it was last year. That said, the quarter 4 trading was impacted by the port disruptions, mainly in Durban, as you would imagine. And those did have an impact on overall profit margins. We've reduced the valuation down very significantly based on both the lower EBITDA and multiple, as we reflect the fact that it's probably going to take this business longer to go into its budget. So I think there's a very significant improvement in performance, but slightly behind, and we moved the overall valuation down to reflect that underperformance on budget. Just moving on to Brait, effectively, I'll deal with them as a portfolio, but in reality, there's 3 companies. Virgin Active, a really, really positive and very strong performance, particularly in January and February. And most pleasingly, actually, that it was actually our international business that continued to perform. You'll remember that the yields in our international business are probably 2.5x that of SA. So adding a member in the U.K. or in Italy is 2.5x more valuable than adding one in South Africa. A really credible performance across Italy and the U.K. I'll touch a bit on that just now. And very pleasingly, we're starting to see average yield kick up across the portfolio, so the overall revenue growth significantly ahead of where the membership recovery is. You will remember, we talked about the amend and extend of both the VASA, the South African business, and the international debt. Both of those were completed, and the Vitality contract was signed in the last couple of months, an extension of that for 5 years. The injection of the convertible preference shares happened at the back end of February -- I think it was March, or maybe it was January and February. And what we are starting to see is the operational improvements that Dean and his team have put through really are starting to have a very positive impact on membership growth, both across sales, but also on attrition and particularly in the higher-yielding international business. So again, I'll touch a bit more on Virgin, but very pleasing to see how the performance has picked up in that business. Premier put out a voluntary trading update last week. So anyone who follows that will see that the very strong performance from the first half of [ full year '24 ] to September has continued in the second half. Sales growth has been low-to-single digits, which is very positive. And we made -- the business has managed to maintain the overall operating margin. So anyone who can do the math will [Audio Gap] That there should be a very positive performance to the year March 31. And that's been driven across all divisions, probably outside of the Mozambican business, and particularly the [ HPC ] and the confectionery business starting to contribute very significantly despite relatively difficult operating conditions. Very pleasingly, ROIC continued to increase from where it was at September, which is very positive, and that's despite the continued CapEx spend, which we continue to do in this business. Very strong cash flow generation. The business has paid down nearly ZAR 1 billion over the last 12 months of its debt facility. We'll see that we are the [Audio Gap] 1.4x, probably close to 1x EBITDA come March, and that will enable the business in all likelihood to start some sort of dividend payment as it's set out at the time of the IPO. Pleasingly, the share price is up 30% since the IPO was priced, and we continue to see positive performance across that business. From a New Look perspective, pretty reasonable performance despite a really difficult environment and a relatively muted Christmas period. Overall, over the last 12 months, volumes are down 4%. The good thing is, we started to see a tick up of that, i.e., a positive market share growth over the Christmas period in both our retail and our e-commerce business. So not out of the woods yet. The team continues to do a good job, I think, in turning the business around. They refinanced the term debt during the course of the last 3 months, and that has given us -- or given the business the ability and the headroom to continue to grow. The business continues to review the operating cost base and particularly around the distribution center efficiencies, and we believe there's more costs to be extracted out of that. So overall, a pretty decent performance. I think it will be largely flat year-on-year despite the pretty difficult conditions. From a Brait perspective, the Board remains very fixated on a strategy to unlock value in the optimal way for shareholders. As I mentioned on our previous call, we have been engaging stakeholders around a potential extension of some of our debt. Those discussions are continuing very well. There is no deal to be announced yet, but we are very positive around the engagement we've had to date with all stakeholders. And the strategy really is to provide the requisite time and runway for the business to optimally exit these assets when they're ready to be done, so again, positive momentum on that front. Just talking briefly on the assets, again, Premier, I've touched on. These are the numbers through the 30th of September. [Audio Gap] Released any new numbers. So I can't put those out, but other than reflecting on the fact that as per the statement that went out from Premier last week, EBITDA growth continues to grow very, very strongly. I think a performance -- that 6-month performance of EBITDA there of just over ZAR 1 billion is something, if you read December's announcement, you will probably get to a similar number. So again, very positive continued growth in that business, and very pleasingly that the overall EBITDA margin has managed to be retained despite consumer -- sorry, the underlying commodity prices coming off slightly. So again, a very credible performance, as I mentioned [Audio Gap] Right there the third-party data show at September was 1.4x. I think over the course of the year, there's been almost ZAR 1 billion of de-gearing and repayment of that facility, and that number should be closer to 1x net debt to EBITDA by the 31st of March. Just touching again on Virgin Active, as I mentioned, January and February have started well across the portfolio, particularly in the international business. But even in the South African business as well, we've seen decent sales, particularly in January and February, lower attrition than we've seen historically, although it's still higher than we would want. Certainly, some of the management initiatives are starting to kick in. And so, when we put out an announcement on this, I think we'll be pleasantly surprised where the South African business has ended up. It continues to grow. And overall, its active members up relatively significantly from where they were in December -- or in September last year. From an Italian perspective, an extremely strong start to the year. This business continues to grow in leaps and bounds. It was at 113%. That number is significantly higher than that now of 2019 levels. And actually, I think this business has moved into a realm more of yield management, i.e., they are -- they've got a very significant membership base. They've got a well-invested real state, and now, it talks to how do we enhance the yield performance across this business? But again, it's been a standout business across the portfolio. That said, the U.K. has also had a very strong start to the year, very pleasingly. And again, that's continued across the London residential, the London corporate or the intercity clubs, and as well as the provincial clubs, so relatively broad-based. And again, the yield has kicked up across that portfolio, not because of price increases only, but obviously, because we have been able to manage our yield up in certain clubs where we have spent significant CapEx, but also because the London corporate clubs, intercity clubs, which are our higher-yielding clubs, have started to increase their membership contribution. So again, a very good result from the U.K. business. APAC, again, Singapore and Thailand, very strong performances and very credible performances from where they were, both up relatively significantly and now EBITDA breakeven, which all of the businesses are excluding the Australian business, which is seeing the green shoots of recovery, but probably is the laggard in the portfolio. It remains relatively small overall, but it's probably the laggard across the portfolio. Dean and his team continue to focus on central cost savings, very significant costs have come out of the business, but also on where can we spend capital to get the requisite return. As we mentioned, we raised GBP 60 million of operations share funding. And large component part of that is to go into growth initiatives to ensure that this business is set up to succeed. Again, from an EBITDA run rate perspective, very, very significant uptick since -- so September's numbers, not quite double, but not far from it. And again, I think that would show you that we're well on course to achieving the ZAR 120-odd million of EBITDA that we value this business off. So again, credit to Dean and his team, a very significant performance across the portfolio. And with that, I will hand over to any questions.

[Operator Instructions] At this stage, I don't have any questions from the telephone lines. I will now hand over for questions from the webcast.

We have 2 or 3 questions. I'll start with the first one from [ Rhian Smith ] at Momentum. A question -- with the devaluation of the naira and seemingly closing the gap between the official rate and the parallel rate, is it easier to repatriate profits out of Nigeria than it was previously? Rhian, the easy answer to that is, yes. The real answer is, we haven't had significant problems getting capital out of Nigeria, to be honest with you. We've obviously had to take the majority out at the unofficial, the parallel rate, as opposed to the official rate, although we did get a portion of our earnings out at the official rate historically. But for sure, I think that's what they're trying to do. And we are seeing the benefit of that from the access to dollars perspective. The only thing I would say is, we haven't really had -- previously had issues. And obviously, with the gap closing, I think if it remains there, I think we will continue to see the benefit of that through enhanced access to dollars, not necessarily only just for us, but certainly, some of our MNO partners would certainly benefit from that. The next question is from [ Tanashia at Laurium ]. And can you give some more detail on the actual valuation multiples applied to Optasia? You spoke about how the peers have rerated by 15%, but you did not discuss the base valuation multiplied to Optasia. Tanashia, as we said before, we purposely don't provide all of the valuation multiples because when you're trying to sell a business, putting it out there publicly, what you -- how you value the business is never a good idea, which is why I think we get a very significant premium to our NAVs when we sell assets. You've seen 36% over the last 6 or 7 years. That's at least the strategy behind that. So in terms of that multiple, you will remember that there was a transaction done just less than a year ago. That transaction applied a certain multiple. It was higher than our multiple at the time. We are forced by the auditors to use that multiple, and we continue to use that multiple. That multiple was then applied to a lower EBITDA number because, as I mentioned, we made a one-off adjustment. So yes, we didn't increase the overall rating. And the reason for that, despite the peer group being up 15%, is there is still uncertainty. As I mentioned, I think Nigeria is now probably 20% of that overall profitability in the group, but we felt it was the right thing to do to retain the previous multiple on the Optasia business. And Charles from Titanium Capital. Bevco, the return on investment on the sale to Warren, 1.5x, was relatively poor investment return as a function of valuation multiple compression since acquisition or weak earnings. If earnings under-delivered relative to the original expectations, can you give some insights as to why? Charles, look, I actually -- and I won't go into the detail of it, but at some point, this asset was valued at probably, I'm going to say, 0.6x book value, right? So we've seen a very significant uptick probably over the last 18 months to 2 years in this business. The multiple on which we sold this business was a very significant premium to where we had it. And I think you saw what happened to Warren when they announced the deal, their share price was up 12%, which I think reflects just how cheap the South African market is. To give you some idea, this multiple was at a significant premium to where Premier is valued by exit multiple. So yes, it was more reflection, to be honest, of the overall growth. The market conditions were tough. I think we managed to extract good synergies out of the 2 businesses. But I think, overall, it probably took us longer to deliver on the strategy. We probably got to the right -- to the same EBITDA that we had in our original model. It probably just took us 2 or 3 years longer. Partly that was COVID. Partly those were the operational issues we had in the business. But from an exit multiple perspective, this was at a very significant premium to where Premier trades, which, given that it's 1/3 of the size of the business, probably less, 25% size of the business, I think is a good outcome. So, there's another question. There is a large disconnect between EPE's perception of the recovery of Brait, especially VA, and the market perception. The key difference seems to be VA's funding. It is underfunded with Brait unable to fund and Brait's inability to sell the bond without selling off its assets. How do you solve this? It would seem unlikely that extending the maturity of the bonds will resolve this. I respectfully disagree. I think if you believe in the numbers and if -- I mentioned the run rate EBITDA doubling -- nearly doubling over the last 4 months, we are getting very close to a point where you will grow into the capital structure in VA, right? If we hit the [ ZAR 120 million ] that we put out there as a public target for this business, then I think you are in a place where the business is sufficiently capitalized to be able to extend the debt. We managed to extend the debt in the international business out till 2027 June. So that isn't the issue. So for me, I respectfully disagree. I think if you extend the maturity of the bonds by, let's say, 2 years, it will massively enhance your ability to sell that asset on the front foot. And to the extent you need capital at that point in time to put capital in, not that if you achieve those numbers in 2 years, you will need to do that. So yes, I think there is a disconnect between our perception of the recovery and the market. I can't comment on that. But the business continues to do what we say it's going to do, and that's all we can hope for. [ Graham Corner from Corner Perspective ]. Realizing assets in a weak market feels like an opportunity lost, has thought been given to an alternative vehicle to allow investors with appetite to remain invested in the current assets or to take advantage of depressed small market cap? Graham, absolutely. I think the Board -- we had a Board meeting last week -- is looking at all alternatives, to be honest. Some of our bigger investors decided that this was the strategy to implement for the group. I know and I've had feedback from lots of investors that not everybody believes that's the right answer, particularly given the timing. We will look to, in anything we do, ensure we offer alternatives to all investors to see if we can ensure that all of them are looked after, if I can put it like that. So, yes, the Board is looking at that, Graham. And I'd be very surprised if any solution comes that doesn't involve something like that. Niall Brown from Flagship Asset Management. Is there any possibility of Brait undertaking a rights issue at this very depressed share price? Niall, I can't answer that. I can't say no to that point. I think it's -- as I mentioned, I think there's a better strategy, which would be to buy ourselves time as Brait and do so. And I'm not going to sit on the call today and say it might be a rights issue. That said, I think there are other alternatives that would be much better for the group. And as I mentioned, the stakeholder engagement today across multiple groups has been very positive, and we continue to engage with them. And I think that would be a better outcome for all, and that's what we are aiming for. Mark Narramore from Excelsia Capital. What is the timeline around the Brait refinancing? Again, It'd be foolhardy of me to put a time frame to it. We recognize that our results for Brait come out early June. And in advance of that, we're going to need to ensure that we have come up with a solution to ensure that the auditors are happy. So again, working back from a results announcement in June, it would need to be before that. Mark, I'm not going to give you a date, but I keep saying, we are very positive about the engagements to date, and we continue to work for a solution, which I think would be mutually beneficial to all stakeholders. The last question that I have is, is there any update regarding Brait's plan for the debt falling due this year? Any outlook on -- any comments on the outlook here? Again, Matthew from Blue Quadrant. I think I've explained that. We are making very good progress. That's all I can say. We have very good relationships with our various stakeholders across the exchangeables, the convertibles and the ordinary shareholders. And I think [Audio Gap] Talking about comes to fruition, I think it will be a positive outcome for all. But as you know, with all of these things, they take a bit longer or you just never know. So I can't commit to a time frame. But yes, we are making progress. So another question from Mark Narramore at Excelsia. Are you happy with your Virgin Active September '25 targets? Any update on the member run rates that you can give? Mark, yes, I suppose so. And we're very positive. If you take the international business, we are more than 50% of the way to closing the gap in the memberships and the yield is on track. So a very good result. Without giving you the exact numbers, if we do the math right, we are more than 50%. We said it was going to take two years. We're 4 months later, and we are, as I said, broadly more than 50% of the way there. Again, even on the South African business, I think we're 20% of the way there after 4 months as opposed to 24 months. So the other -- the thing you need to consider is obviously the yields. The yields have picked up probably slightly ahead of where we had thought. So that's positive. So overall, from a revenue perspective, there's disproportionate upside to revenue over and above the membership growth because of the yield uptick. So yes, I think we are happy with our targets. I would -- I'm not going to commit to say that earlier, but the way things are going now, it might be, right? The read-through is particularly positive. And so, credit to Dean and the team. That's the only questions I have, but very happy to go back to the call and see if there's anyone else who would like to ask a question.

Thank you, sir, but we have no further questions from the telephone lines. I'm going to hand back for closing remarks.

Thanks very much. And again, thanks to all the stakeholders for taking the time. I suppose the executive summary being NAV down 15% is a disappointing result, I think we all accept that, I think largely driven, as I mentioned, by the Brait performance. We remain more confident than I had been. And I'm [Audio Gap] Around these things around Virgin Active, in particular. I think I've given you enough points today to understand why we're more confident. Will the market recognize that? I don't know. As I mentioned, I think we're well on track, hopefully, to some sort of solution around the bonds and the extensions around those. And if we can get that done, I think there's significant upside in Brait. But again, it is where the market is. The overall unlisted portfolio actually has performed relatively well. I think 26% EBITDA growth is not a bad result in the greater scheme of things. And the real difference between that and the maintainable EBITDA only growing by circa 10% was the fact that we've taken a post year-end adjustment to Optasia. But all things considered, we're hopeful that the portfolio, particularly around Brait, should start to show some positive performance from here. So again, thank you very much for taking the time.

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