Redefine Properties Limited (RDF) Earnings Call Transcript & Summary

Welcome to Redefine's pre-close update for the half year ending 28 February 2023. Today, we're going to follow the usual format in that I will talk about the strategy and give you some insights into our strategic thoughts and our priorities. Leon Kok, our COO, he will talk about the South African property asset platform. I will then return talk a little bit about Poland, EPP and ELI. And then we will close with Ntobeko Nyawo, our CFO, on some financial insights. Looking at our strategic overview, what is absolutely important for us at this juncture is that we need to pivot our emphasis on what matters most to rapidly shifting market dynamics. And that will be a theme throughout our presentation today on the pre-close for this reporting period. In terms of our operating context, rising costs and energy crisis as well as elevated interest rates are converging realities, all adding up to a polycrisis, a term that was named at Davos, as you know, at the beginning of this year. So for us, although we're optimistic that elevated inflation and the upward interest rate cycle will ease, we also have to be realistic about the factors beyond our control, and that's what we will be addressing in this presentation.  We know that the ongoing war in the Ukraine is causing huge disruption, especially to our business in Poland, which is a direct neighbor of Ukraine, as you know. But the ongoing tightening of monetary policy will weigh heavily on the global outlook. And similarly, it does translate into pressure on domestic interest rates in South Africa. In addition to that, we have the deepening electricity crisis as well as the slower global demand, which will hurt our domestic exports, consumer spend. But I think one point to really, really stress is that confidence levels are taking a knock on the back of the electricity crisis that we're currently confronted with. With that, I must stress that polycrisis create opportunities, and we will remain innovative, agile and resilient while placing our purpose and our stakeholder needs at the heart of what we do to build the future fit, Redefine of tomorrow. I just need to also add that we are very, very happy that Poland, it would seem, are going to be avoiding a recession, which we were anticipating at our last reporting period.  In terms of our risks, I'm not going to dwell on these points here other than to make the observation that you'll note that all our top risks are showing elevated levels. The energy crisis, although it seems in the middle there, has been identified as an emerging risk, but it is a growing risk. And I think as this year progresses, it should be well at the top of that list as well. And you'll see that with the risk come opportunities, we will be going through a lot of that in the coming slides. So I'll be moving on. In terms of shifting our emphasis on what matters most, this slide is here not to demonstrate that we're shifting away from our strategic priorities. It is more about moving our response to the shifting market dynamics to ensure that we deal decisively and as proactively with evolving market shifts. I won't go through all of them. It is a detailed slide. I'll just highlight a few, for example, undergrow reputation. The additional carbon emissions from diesel consumed during this heightened load-shedding period is coming out of cost and Ntobeko will be talking about that. But for us, it's -- our response is to look at how do we reduce consumption of energy. And that will be through energy efficiency interventions, green interventions and extremely importantly, collaboration with key stakeholders. Our sole expansion goes without saying to support that as well.  In terms of investing strategically, very, very importantly is the preservation of value that is being threatened by no growth in rising general interest rates. And there is a strong focus on organic growth and asset optimization. Leon will be talking a lot about what we're doing in South Africa. I'll be talking a bit about Poland and Ntobeko will be talking about our margins, which is absolutely critical to this endeavor. In terms of optimizing capital, in this environment of heightened financial market volatility, we are very proactive in terms of renewal maturing debt facilities as well as extending the debt maturity profile and a lot of good progress in this regard has already been made. In terms of operating efficiently, the elevated levels of inflation, administered price increases as well as the energy crisis has to be considered in the context of how we can preserve our net operating profit margin. And yes, the focus is on efficiency, tight cost control as well as looking at alternative energy producers and the like. In terms of engaging talent, this is an ongoing area of focus for us in terms of dealing with the rapid churn of key talent as well as the lack of property skills through reviewing our strategies to attract, develop key talent to provide us with that pipeline of scarce skills.  In terms of ESG, you'll see a lot of activity. I want to say this is work in progress at this early stage of the financial year. And you'll see that we have some challenges, especially around carbon emissions, which diesel consumption is unfortunately placing at a risk of not meeting our target. But we're working actively, as you can see from -- on all fronts from an environmental, social and governance point of view to deal with all our issues. I'm not going to go through each one of them here, but what I am going to stress is that we are extremely proud that we've been acknowledged by international ESG rating agencies in those badges below there. The ISS prime rating, for example, I believe we're the only South African REIT to have achieved. And in terms of the Sustainalytics one, similarly, we've got 2 badges there, as you can see. And similarly, ISS has given us a Level 1 governance quality score. In terms of some new developments, I'm very happy to share with you that we're looking to expand in Poland through self-storage. For us, this is very, very exciting. It is a market in its infancy, -- and if it is expected to grow similar to other markets in Europe, we can expect at least a compound annual growth of over 8% over the next 3 years. In this market, it is highly fragmented at the moment with a large number of operators. That gives us the opportunity that we see here. And you'll note that Redefine is partnered with Griffin in a 93%, 7% venture, where Griffin will be rendering on the ground services to the venture. And we have just acquired a 51% stake in Staccato. By the way, Staccato means storage in Poland. And this is the second largest operator in Poland, which will provide us with an instant foothold into the Polish market. Through development activity, we plan to take up our 51% stake to 75%. And we've already identified a number of projects, which over the next 5 years, we expect will result in an equity deployment of roughly EUR 50 million.  We've also very importantly identified 6 projects to occupy unutilized bulk within EPP's portfolio and 4 vacant sites in the logistics portfolio, which we're currently considering for development from a self-storage point of view. So just to touch on the strategic motivation. We are expanding into a complementary sector that is in its early stages of the establishment. And I must add, there are very attractive income and capital growth prospects there too, but also it enables Redefine to productively use vacant land and underutilized retail spaces within the airline EPP portfolios, respectively, which we believe will further support our presence in the Polish region. Just lastly from me, we accept that the operating environment will be dominated by uncertainty. And for that reason, it is crucial that we focus on what matters most. So in shooting for the moon and by placing purpose and people at the heart of what we do to say what we are or be who we are, we will be focusing on developing skills to embrace new ways of thinking and executing with agility, fostering inclusivity to cultivate a conducive environment for diversity of thought to stimulate innovation and creating maximum and sustainable impact for all our stakeholders. So this will necessitate us to rethink how we cost effectively source and responsibly allocate capital also to efficiently operate in an environment of higher operating costs, both in South Africa and in Poland and continuously adapt our value creation endeavors to evolving stakeholder needs. So with that, I'm going to now hand over to Leon, who's going to take you through the South Africa property as a platform.

Hi, everyone. As far as the African platform is concerned, as we note, the focus is on improving and protecting firstly what we've got. In the environment that we are chasing and focusing on organic growth, the key element is to retain and protect and improve the tenant and the tenant base that we currently have. Just an overall view and just to note the metrics that we -- all the numbers we're talking about here as at 31 January 2023, so that's for the first 5 months by financial year. We are quietly optimistic that the underlying activity levels, the operating metrics, is consistently improving. However, the big challenge is, as we mentioned, the margin pressure, which is driven by limited growth in revenue, averaging between 3% and 4%. And then obviously, all the factors that's driving costs.  A big element and obviously, a big focus point over the last while was the excessive use of diesel generators and the associated cost of that. So that for us is a key theme and a key element within our focus. The only blip on our operating metrics is that increase in vacancy at 7.5%, and we'll touch on it in the industrial portfolio. It's only in our industrial portfolio where we have a case of a warehouse of 20,000 square where the other 2 sectors performed very well. Our renewal success rate is still have a healthy 72%. The rent reversions up to January, a pleasing negative 1.4%. And I say pleasing because if you can see in the prior year, we've achieved a negative 12%. Just a word of caution, though. This has reflected a very small element of the portfolio. So as you can see, it's about 8.1% of the GMR for the first 5 months. So it's not necessarily reflective of what we anticipate for the full year. That number should worsen as we see towards the end of the year. But certainly, we are very hopeful that it will be better than that minus 12% that we posted last year.  Tenant retention is a key focus for us at 97%. We're very happy with that metric, and that continues to be a focus. As I mentioned, in an environment where you're chasing organic growth, maintaining your existing cash flow is absolutely critical. In terms of the weighted lease escalations also quite happy that it stabilized that 6.5%, 6.4%. You'll note particularly in our industrial area where we've managed to secure some better escalations than what we've had previously. The weighted average unexpired lease term at 3.6%, I think it's still nicely maintained. Again, the industrial sector is lengthening that for us. But even in office and in retail, we've managed to secure at a reasonable level. In terms of disposals and acquisitions and transferred during the last 5 months, fairly insignificant disposal front, typically what we're used to on the acquisitions front, the Hartford office park, where we acquired a third. Just a reminder, there was not a cash transaction. We stopped that for a vendor loan. And then we acquired the 49.9% we did not own in the Marceline DC and Brackengate and that answer took place in November, December of last year.  On our retail portfolio, as I indicated before, our vacancy has reduced nicely to 4.2%. Renewal success rate is at 78%. And our rental versions, which definitely for us is a focus and particularly in the retail portfolio is to get that to at least flat is for the first 5 months at minus 4%. And the reason why we say that is that certainly, we've seen in terms of tenant turnovers and footfall and such like -- and trading density is very positive for from our retailers. So that, in our mind, is certainly a lead indicator that we can look forward to better rent reversions in this space. Tenant retention by GMR is at 98% to 97.5%. Our escalations, we maintain at 6.5%. Obviously, a heightened inflation environment will assist us in those negotiations. And then our unexpired lease term sits at a healthy 3.1% 3.1 years. In terms of priorities, the reasons why we -- the reason why we mentioned tenant retention wells and vacancy reduction, particularly in the retail portfolio, it is equally important in the other 2. But in retail, in particular, in the environment with the operating cost of your underlying tenant basis under pressure, those elements is a key focus for us. We still believe there's opportunity for us in our tenant mix to increase our exposure to essential services and value-focused brands. We certainly have seen that the underlying performance has been very solid and recovered very strongly in the post-COVID environment.  As far as energy security is concerned, the key driver for us, apart from solar and suchlike is to reduce consumption. Now that is the firstly, the most responsible thing to do and secondly, the best bang for buck in terms of payback. So we continue with those efforts to see what we can do to be more efficient in terms of how we use electricity, particularly in the retail portfolio, where our retail assets are our biggest consumers of electricity and water, and we continue with focus areas on that. HVAC, which ticks the box in terms of the biggest electricity consumer as well as water, definitely is for us a key focus area when we talk about water consumption initiatives as well as on the electricity front. Andrew mentioned in his slide in terms of the Propeller toilets, which we roll out, which is the initiative we're quite proud of. And in particularly, in the retail front, it certainly presents some real cost savings, and that typically we pick up those to let water consumption cost in our common areas. We've got a solar PV pipeline there of 10.6 megawatts that will bring our total installed capacity. And I think Andrew glossed over that. Currently, our capacity is at 32megawatts. Once we complete the pipeline, the biggest focus, obviously, in retail will be in excess of 45 megawatts installed capacity. The reason why we say we identify further opportunities. We're typically in the past where we would have overlooked an opportunity given structural issues with roofs and such like with the increased cost of diesel uses and such like, some of those older projects, which we prefer not to do comes back to the table. So that's why we say we're aggressively looking for further opportunities to see where we can potentially now relook at a solar application. Diesel uses, particularly in the retail environment. Again, it's our biggest usage given that it operates 7 days, and we typically pick up the bulk of the common area cost. The efficiency of those usage and the recovery models is a critical focus point for us. And then lastly, we have seen and we've got real evidence of where we've got our national growths to upgrade stores that we see a big spike in turnover. So that for us is a big focus area -- focus area and definitely an opportunity for us from a performance point of view.  In terms of the office portfolio, again, the trend on the vacancy reduction has continued. So we're quite positive about that. However, we must note that rental levels continue to be under pressure. So even though our renewal success rate is at 50%, it is not great. We have managed to reduce the vacancy. So that's the indication of the new letting that we've taken place. That renewal growth rate at 4.6% is not a typo. It is great. But again, I must caution you that, that is certainly not the indication of what we expect for the full year. That number will definitely go to a negative as we progress to the full year. We anticipate that to be sub minus 10%. So certainly not those lofty levels were minus 17% or minus 20%, we may have seen in the past. But we are encouraged by that. And again, the point we make about a flight to quality, certainly exists in us, managed to be quite successful in the intended retention of 98% and at lease escalation at 6.9%. So it certainly hasn't fallen off a cliff, and that continues to be a focus area for us.  In office portfolio in a smart building strategy, the backbone of a smart building strategy is around data management. So for us to make sure that we've got sufficient access to all things data within a building, obviously, the key focus being around energy, and that will lead you to also identify all sorts of opportunities of things that you can do around energy efficiency, in terms of reducing operating costs and such like. Very excited about a wheeling offtake agreement. We're about to conclude for 36,000 megawatt hours per year. The benefit to us is obviously the immediate discount to the Eskom tariff, but more importantly, it gives us access to renewable energy, and that will be a 20-year offtake agreement, which we're quite excited about. And obviously, there, the other benefit is that we fix the escalation. We continue to look for opportunities from a leasing point of view on the office front to install some of those sustainability interventions. We often find that if you put that part of the package in terms of upgrading to energy-efficient lighting, optimizing HVAC and installing water-efficient toilets, it helps that leasing conversation. Diesel also a key focus area on the office front given that we've got also proliferation of generators in that space. That continues to be the focus.  So for us, from a capital allocation point of view, in the office portfolio is focusing on our A&P grade. We do believe some of our A-grade assets lend itself to being upgraded to a P-grade, and similarly, some of our P-grade assets certainly does require some TLC. And for us, for now, the focus will be in our Cape Town portfolio. In the office portfolio, the key focus is how we're going to increase revenue. So we're going to have to be creative. We're going to have to look at how we can offer value-add services. It's not the conventional thing that we're just thinking about, but also links into some of these sustainability interventions that we spoke about. And then lastly, on our industrial portfolio. The as big spike in vacancy has gone from 3.1% to 5.2%. That was vacated at Winnipeg, a 20,000 square meter warehouse, certainly not an indication of a concern around the portfolio. It's a single tenant. We're already in negotiations to fill that box. So it's not an indication of underlying performance. It was a single vacates that we are working hard on to make sure it was led before August.  And then in terms of our renewal growth rates there, you can also see a plus 2.2%, which is quite encouraging in the environment where market rentals and industrial has not necessary over the last number of years, showing any growth. Our tenant retention, very healthy at 95.6%, and our lease escalation, we managed to push up slightly to 6.6%, still a very healthy unexpired lease in the 5.5%, which also managed to increase since last time. So the question around batteries, obviously, it's quite an interesting solution. I'm not suggesting we go look at to replace all our digital generators with batteries, that financial feasibility does not make sense. However, with the increase in cost of diesel, it certainly does provide different opportunities around looking at batteries. So we're looking at different alternatives, as I mentioned there, to supplement your backup solution as well as taking advantage of the energy arbitrage and demand clipping, which is not as applicable in our industrial portfolio, but throughout.  In industrial, as I mentioned before, previously, we may have overlooked opportunities given that the real demand wasn't. But the increase in diesel costs as such like we've identified a pipeline of 6.5 megawatts that we're going to schedule for installation shortly. LED lighting, water security, and particularly in our industrial portfolio, I believe, is a low-hanging fruit and it's something that we would look to roll out. The 6.3-megawatt wheeling opportunity, I think we've announced it previously. We are at advanced stages of having -- concluding those conversations with the city of Cape Town. And that's certainly, in our view, hopefully, will give the template of how we can run out further of those opportunities. And then lastly, in the industrial space, security, social unrest and social is a key element. So we really see that, that increased security measures is a nonnegotiable in all our lease negotiations. Security for us, hopefully, will be a competitive advantage moving forward. And with that, I'll hand over to Andrew to cover Poland.

Thanks, Leon. Okay. So Poland remains a robust property investment destination, despite its challenges given the war in neighboring Ukraine as well as the resultant energy crisis, higher cost of doing business and interest rates. But just going specifically to Poland, I'm very happy to share with you that the progress we've made to stabilize the business is largely complete. And Ntobeko will share a little bit about the dividend prospects from Poland as a consequence, EPP in particular, will be addressed. But just in terms of the market overview and also to some extent, EPP, the higher energy cost resulting from the disruption of energy suppliers does pose a challenge, particularly in the retail market, but it also is creating a cost burden for our tenants. And what we are happy to share with you is that from the beginning of this year, EPP is benefiting from legislation that was introduced in Poland to cap the electricity prices for the duration of 2023, which will benefit managing that cost better, both from a cost recovery point of view for tenants, but similarly for EPP as well in terms of managing its cost base.  Retail sales remain robust. They continue to grow. Yes, inflation is definitely a large component of that driver. But where we are seeing some pressure points is that they are margin pressures on retailers. It does put pressure on operational costs. And I think this is an area where we have to always be diligent in terms of the recovery of our service charges as well as the application of indexation, which is great because now we're seeing rental growth, but there is some pushback that we need to manage from the tenants in this process. In terms of retail categories that have been performing very, very well over the last quarter or so, you'll see that value retailers are doing fantastically well, up 37-odd percent compared to pre-COVID levels. DIY shooting the lights out at 23%. And the area that remains interesting, which we need to work on is entertainment, where you'll see negative growth. Clearly, consumer behavior has changed as a consequence of the pandemic.  In terms of footfall, EPP shopping centers are basically in line with the market. We are up 7% on 2021. However, we are down on pre-COVID levels by about 50-odd percent. On the other hand, tenant turnovers in EPP shopping centers is showing great growth, up 13% on '21. And this is the first quarter, if you like, of 2023, which falls into the 2022 year, which is the comparison, yes. I don't think that we're going back 3 years to get to these comparatives. And you'll see that on pre-COVID levels, we are showing 11% growth, which means that the average spend per visit has clearly increased. Leases are being signed in Poland by the EBP team. You'll see that we renewed there just on 33,000 square meters. And business is still doing well despite the underlying challenges that we face there. The average unexpired lease term by GLA is steady at 4.6 years, hasn't moved much, if at all, since the prior period. And we are very happy that rental collections on both retail and offices are still very, very high at a rate of 99%.  During the period, we did transfer 2 Power Parks to the M1 JV from EPP that happened in October. And we still have one noncore asset, PowerPak Austin, which we have earmarked for disposal, but we'll only try and go-to-market when we sense that the conditions have improved for this type of assets out there. In terms of ESG, lots of hard work is going on to align ESG with Redefine at EPP's level. And you'll see that the moment energy efficiency audits are being carried out. There's also a pilot project to investigate the feasibility to convert 2 properties to NetZero. And then very importantly, significant progress on introducing solar PV is underway to reduce reliance on external energy sources and also to support decarbonization. In terms of developments in Zama, which by the way, is very close to the Ukraine border. We completed an extension there, and it is trading very, very well. It added about 4,200 square meters of GLA to the portfolio.  In terms of logistics, logistics still does very well. In terms of it is still the fastest-growing real estate sector in Poland despite the supply chain disruptions, et cetera, which has had positive rental increases, as you know. But some construction costs have risen. So despite these shifts, there's still buoyant demand for space, which comes predominantly from e-commerce as well as logistics operators. Reshoring is gaining momentum. There are more manufacturing companies relocating the operations to Poland, not only to reduce risk exposure to supply chain disruptions, but also given that Poland remains a lower-cost operator in the Western Germany area to -- from -- especially from a German perspective. In terms of investors, I'm talking about institutional investors, they are starting to return now that they understand the risks associated with the war, and they will continue to be attracted to the strong underlying tenant demand, and most of it is new demand. The rising rents and also the low availability space is causing a perfect storm for upward and continued asset value protection.  In terms of the total GLA of our ELR portfolio, it sits at just under 821,000 square meters. It's up 13-odd percent from last year, and that's mainly due to the completion of 3 developments. Vacancy has improved slightly to 6.4%. The reason why it hasn't dramatically reduced is mainly because of [indiscernible], which came on stream quite late in the period, which has some letup, and we're confident that, that vacancy level will improve as the year progresses. Lease renewals, we are very happy, are growing, as you can see, 5.1%, well into the EUR 4 per square meter range now. And as you know, previously, we were stuck at sub for year per square previously. New lettings, as you can see, it similarly breached the EUR 440 mark per square meter, which represents a pleasing rental increase of just under 10%. First-time lettings of just under 70,000 square meters for new developments, you'll see achieved an average initial rental of ZAR 4 -- sorry, EUR 450 per square meter. In terms of lease expiries, very low at 2.6% of GLA. So we've got a very stable income profile for the remainder of this year. And you'll note there that during the first quarter of this financial year, the weighted average lease escalation was just over 10% caused by the Eurozone inflation rate. In terms of ESG, 70% of the portfolio is recertified. We are in the process of certifying the balance of the portfolio, and 70% of those properties certified is either very good or excellent. And from a new development point of view, they will all be similarly certified to be either very good or excellent. 6 developments with a total GLA of 182,000 square meters, costing roughly EUR 164 million is currently underway and is to -- expected to be completed by the end of the year. I think that's a conservative projection given that a lot of the work is well advanced in that regard. We still hold 11 plots of land with a GLA of just under 244 square meters -- 44,000 square meters, which is available for further expansion. In terms of priorities for EPP, renewal of the debt facilities. As you can see, we've renewed most of the facilities already. The ones that are coming up for renewal in this period, Marceline at EUR 47 million and Galleria, ZAR 160 million. These facilities, we expect to mature well before the maturity date, and it will be with existing funders. So we don't have, at this point in time, any concern regarding those 2 renewals. The Metro claim is an ongoing process. It will take probably 18 months out to conclude, and we remain confident that we will be successful in defending the claim. Occupying management's mind at the moment is the preparation for the takeover of the M1 portfolio in April 2024, and we still continue to advance digitalization through the completion of loyalty apps and customer data systems across the entire portfolio.  Very importantly, managing the cost of electricity through power purchase agreements and reducing consumption, which, by the way, will over a 2-year period will amount to 20% through mainly building management adjustments is underway to manage that cost downwards in the face of higher tariff increases, as you know. In terms of priorities for ELI, we will continue to take advantage of positive market dynamics by letting available space and undertaking quality developments in key logistics hubs. But we've already spoken about completing and letting the developments currently under construction. And then a big focus for us is to convert the existing landholders into development opportunities through securing pre-lets. Reducing the current vacancies in the active portfolio. As I said, Lublin, big part of that focus to take the 6.4% vacancy level down to a more acceptable level. And then just constantly looking at retaining the yield spread between development and investment yields, mainly through development cost management as well as occurring good rental growth and trimming back what was previously very generous tenant installation allowances. We have earmarked certain properties for a potential disposal, but we're holding back on that until the market conditions improve. And as I said earlier in the overview of the market, we are already starting to see a return in terms of investor appetite. So with that, I'm going to hand you over now to Ntobeko, who's going to take you through financial highlights and also he'll close the presentation. Thanks. Ntobeko?

Thank you, Andrew. Hi, everyone. I think on the financial insights, it's very important for us that we focus on sustainable value creation through the cycle. On the back of our improving balance sheet strength as well as a very important focus on actually in the environment where we find ourselves in to really defend our margins. So what we've done in terms of focusing on efficiencies, is that in SA, you'll actually have had Leon touching on expanding and accelerating all our initiatives around focusing on renewables. And I think the big item tickets in our cost structure is around utilities and manage an efficient and effective management of those is really also our focus. We also, I think, do focus on revenue streams from an alternative just to diversify and have a bit of a mix in our -- in improving our revenue profile. In EPP, as Andrew alluded to, I think the big thing there from a power point of view is really just to mitigate the rising cost. So that's why using our pulp line power is quite important. But I think overall, if you put all of these things together for us, it does quite clearly that managing demand through our efforts and the progress we're making on ESG is really what will start taking if you look on the left here. We'll start taking those net operating profit margins, which is after admin cost and taking them and training them in the direction which is a recovery, as you can see, they up below the uptick.  It is, I think, topical just in terms of what is the impact of load sharing. I think from an earnings point of view, we do estimate, if we look, you can look at the graph we provided here. If you look at the December and the January repeat really skew a little bit of that with the high consumption. But we think that it will land somewhere between 1% and 1.5% from an impact point of view in our FY '23 earnings. But I think the real issue for us is the impact then on the confidence, which also then probably fills on into a very weak outlook from an economic activity point of view, which is really what we all need to get some economic recovery going. The downside risk in this, I think for us is really just managing and we can't predict this because the intensity and the frequency of load shedding is really what will eventually drive the impact. But what we've done is it's been very interesting because I think our sustainability for us is quite central to a strategic direction.  If we cast a bit back early into 2016, and you look at the significant investment that we've made into solar PV with the capacity that we've put further on to that is to increase that. So to take our current 9.3%, which is withdrawn from the SA portfolio, which means our energy demand from solar and increased that to about 13.1% with a further investment of ZAR 143 million that we're planning to roll out and increase our capacity by 129 megawatts in terms of taking our total installed capacity to 44%. And I think Leon touched on the fact that you can see on the graph on the right there, it's really suitable for retail just because of the rooftops there as well as the operating hours. That's why most of our -- the bulk of our rollout that is coming up is really just in retail. But I think the underlying and scoring point here is that over time, we have to also manage through demand -- on the demand side and reduce -- continue to reduce our demand and manage electricity efficiently. I think just touching on the balance sheet. Our focus really has always been just around putting more flexibility in the balance sheet so that we can really support the repositioning that we're seeing as we go forward. Some of the things that you'll probably see is that our liquidity profile at ZAR 6.2 billion, we're quite pleased that it's at healthy levels. It helps us to manage, especially in the environment that we find ourselves to have that watch us on our site, it's quite attractive in terms of resilience. There is an uptick. I think we know the cost of debt is rising from a group-weighted cost of debt point of view, there's an uptick of 40 basis points that we saw that then increase our cost of debt on an average across the group to 6.4%. We did break that down for each just on the right-hand block there in terms of the increase in South Africa to -- by 40 basis points as well to 91 on the SA debt and also the increase of 40 basis points in EPP, which also increased in Europe, our cost of debt to 3.5%.  The interest rate, especially in this elevated environment, I think our view remains quite steady in terms of just building a stable hedging profile. When we last spoke to you, it was -- we had a hedging profile, about 82.9% of our debt was hedged out for 1.5 years when we last spoke. But now we've also looked -- there was a bit of some opportunities that we saw in terms of the 3- and 4-year forward caps. So we did add a bit, and we now have 84.8% of our debt hedged out with a little bit increase on tenor from 1.5 to 1.8 years. So that will continue to do. It is something that we focus quite strongly on. But I think in this environment as well, it's quite important for us that cash generation is quite healthy. It continues to support our liquidity profile. And I think we would on the interesting and quite pleasing prospect. I mean, when we restructured EPP, one of the focused strategic priorities for us was to get that asset to yield. So we're quite pleased that in this period, we -- EPP is to commence some cash distribution to support the group distribution in terms of our overall distribution level. I'll try to nail that also a bit later.  And I think the last point on this slide, which is probably important is that the VAT in the balance sheet also continues to receive attention. We value our properties twice in the year. We are in that process. And I think our expectations at this point in time is really just a bit of a very stable and a flattish outcome, but we can touch on that because there is a bit of an offset that we expect between a little bit of pressure in the cap rates being absorbed, especially by the upticks in the income, especially where we're picking up the indexation levels in EPP. Andrew touched on how proactively we look at our debt maturities. I think you can see that especially for the FY '23 period, there's really -- the material maturity that we're telling win is the 2 facilities that Andrew mentioned in EPP at Aiken and Marceline. But for the rest of our profile, we're quite -- we've dealt with the FY '23. If you look there, there's just 11% that's coming up, which is really those 2 facilities. And then there is a bit of bonds of about ZAR 1.1 billion, which we will look -- I mean, we've got -- we will look into the debt capital market. And up to 2027, you can see that our maturity profile have been very active in terms of managing that, especially that's the flexibility in this environment. That is going to help us navigate some of the challenges that are lying ahead. But with that, I think the actual sheer ability if we look at where we were at the end of January, we had our ICR at 2.5x, which really also is quite healthy in terms of just of our ability just to save this debt.  Then to touch on the LTV. I think we're pleased that we've maintained within the range. At the half year, we're expecting our LTV to come at 40.8%. After the distribution, which is really also one of the good development is that we've now absorbed and gone back to the normal dividend paying cycle. We generate cash. You will see the first bar on the left being the 1.7 and then the distribution being the 1.5. We spoke of the disposals and also touch on the EPP disposals that the power parks that came through as well in that. And I think that if you project them this from 4.8%, we're expecting it to stabilize just around that period for the rest of the year. Some of the things that we are in that mix from a CapEx point of view, I think really is the point I mentioned earlier, the EUR 143 million that we have committed in terms of our solar rollout in the next 6 months. But our focus from a gearing on a see-through basis, that's really where we need to gradually make the improvements that we've -- since picking up at 54.2% in FY '20, we really through debt amortization, especially in EPP, that we expect to trend a little bit and help us to reduce that see-through gearing right through the debt period over the next.  Now I think it is a volatile environment. I think we -- if you look at the outlook from an economic activity, the elevated rates, we do, as usual, as we normally provide just a sense of the key variables in terms of downside risk so that you can have a feel of the sensitivities. Now, if you look at the bottom right, there is this continued volatility that we're really seeing in the capital markets, which is something that we're watching quite closely because that impacts Forex movements, it impacts interest rates, all of those combined. And I think also from an S.A point of view, one of the key issues that we're really focused in our minds as well is watching where actually the rating of the sovereign because we linked to that from a credit rating point of view, ways at Gotaland, and those are the sensitive and the impact that it has. But just from a numbers point of view, if a 1% movement on the S.A property values has got a 0.3% impact on our LTV. So -- and then we did provide the rest in terms of the Forex movement as well as the investments in our JVs. And I think when we started this year, you look at where the rand volatility has gone, it is something that we also quite watch, especially against the 2 hot currencies, which is where we operate in Europe as well as the reference that it makes in terms of the U.S. dollar. If you look what to the rest of FY '23, I think focusing on things that are within our control in this environment is probably a single most important thing, especially in terms of if we start to say, yes, we do accept and acknowledge that energy crisis will impact economic recovery and the outlook. But we also -- within our variables, we really have done quite significant work in reducing up to which will increase up to 13.1% of our energy demand from the solar rollout that we're doing. And I think also getting cash back in terms of EPP just to support and improve our group payout ratio levels, which we think will -- it will always range in terms of what we always get about between the 80% and 90% range level over a period of time. But I think also just from an interest rate risk point of view. There is all sorts of a commentary that are sitting out there, whether we are near the peak or we are at peak. I think if we watch closely the ton of the sentiment from the last NPC from the South African Reserve Bank, you can see that we're probably very closely at the peak and also the Fed in the U.S. Those are things that if the interest rates that are going to start coming down, it will also be something that will have a bit of an impact in terms of how soon does that come in terms of the next 6 months of our financial year.  From a liquidity profile point of view, I think we're quite happy that where we're sitting with ZAR 6.2 billion of liquidity, which is made up of committed undrawn facilities as well as cash. And also that being continued to be supported by very stable and strong cash collections. I think we spoke about our margin production plan, which really is our efforts to mitigate what we see as downside risk in terms of the FY '23 guidance that we had put in place when we last spoke with you. I think if you take a pause and look at then where we are and how we operate, really some of the key competencies from a future fit business, quite clearly, stakeholder centricity, we have pipes driving, agile and resilient, data driving, all of those competencies infuse our pathways. And to Andrew's point, a very focused execution around our strategic priorities with clear outcomes and hopefully and continue to deliver our strategy in a very consistent manner in line of supporting our investment proposition to the market. With that, that would be -- I'd like to take a close in terms of our presentation, and thank you very much for joining us today. For questions, may I request that you please e-mail your questions to our Investor Relations team. Therefore, we'll address them those there. And thank you very much.