Vukile Property Fund Limited (VKE) Earnings Call Transcript & Summary

Good afternoon, and a very warm welcome. It's absolutely wonderful to see people back in person, not having to ask anyone to turn their screen on or turn their camera on. So we really appreciate you coming out to the JSE. And for our audience online, also a very warm welcome, and thanks for joining us for the Vukile FY '23 results. It really gives me tremendous pleasure to present our results today. We feel it's an excellent set of results delivered both in South Africa and in Spain, and really against a very trying operating environment. So I'm not going to go through the detail of what we've done, I'm going to leave that to Alfonso and Itu, but really just to say that every operating metric in the portfolio has shown improvement over the past period, and that is tremendously pleasing for us. As I said, very, very strong operating results. The team has done superbly. The assets are performing superbly, and we'll go through the detail in a few slides' time. The balance sheet remains strong. It's liquid. It's well hedged, and we have limited refinancing over the next 12 to 24 months. As always, we're looking around rotating assets to drive strategic consistency that's happened during the year. Also post year-end, you are aware that we exercised the Merev option, that has now taken our stake in Castellana up to 99.5%. And we believe that, that will be a very strong contributor in the year ahead. So overall, delighted to stand here today and present results that are again in line with guidance. We guided the market to growth of 5% to 7%. We've delivered 6.2% as an increase in our dividend for the year. I think it's worth pausing on this slide for a moment, and just to sort of have a look at the group structure and where it is. And this is really the result of a lot of very focused work that's taken place over the last number of years, to not only turn ourselves into a focused retail fund, but to turn ourselves into a fund that is a rand hedge and that has got great diversification across macroeconomic drivers. And I think you're seeing that coming through at the moment, where certainly a lot of the South Africa Inc. specific risks are maybe less impactful on our portfolio because you've got such a large portion of the portfolio exposed to a different market. So the idea of going into Spain, when we went in, was really to get that blend between developed market and emerging market exposure. And I think that is now coming through, and you're seeing the benefits of that in the presentation and the results overall. So today, some 60% of our assets are based in Spain, the balance in South Africa. If you look at it from a property net operating income point of view, around 45% of the earnings coming from Spain post year-end with the exercising of the Merve option, that figure is now around 50%. Now if you take that together with the fact that there are no cross-currency interest rate swaps on the balance sheet anymore, you find that the balance sheet and our earnings are very positively geared towards a weaker rand. And therefore, the rand hedge element of Vukile is coming through particularly strongly going forward. So we'll talk about that as a theme going forward. But I won't go to -- what I'm going to do now is hand over to Itu, let him take you through the detail of South Africa, and Alfonso will then follow on the Spanish side, Laurence will take you through the numbers, and I will then talk about the updated strategy and where we go from here. So Itu, over to you.

Hi, everyone. Yes, Laurence, firstly, thank you, and it gives me a great pleasure to present our results for the past year. I think to me, when I reflect on the performance of the portfolio over, let's say, the past 10 years, the results that I'll be putting forward are probably one of the best that we've delivered, which is very satisfying in a very trying macroeconomic context and environment. So without further ado, I think let me go into some of the detail. Yes. So with regards to our portfolio, we're currently at the -- portfolio valued at ZAR 14.4 billion with 34 assets. The portfolio over the year saw a 5.8% increase in valuations with a forward yield of 8.8%. And with regards to our performance overview, our like-for-like net income growth is at 5.4%. This is higher than where we were at this point in financial year '22. At that point, we were at 3.9%. I think key issues around the past year has been the strong movement in vacancies and letting of vacant space. Our vacancies have decreased from 2.6% to 2%, which has been a phenomenal outcome in the past year. On the reversionary front, we've seen a significant turn in the reversionary cycle. Our reversions are now positive 2.3% from negative 2.4%. With regards to our efficiency measures, our rent-to-sales ratio is still holding steady at 6.1%, which to me shows that there's still significant upside movement in our base rentals. Our trading densities have improved on where we were at this point last year. They're up 6.2%. And I guess an area for me in the past year that has been under pressure is our cost-to-income ratio. So we've seen our cost-to-income ratio increase from 16.2% to 16.8%, predominantly driven by some of the additional diesel generator that we've had to spend kind of money on. Electrical maintenance costs have also been an item in the portfolio that we've had to look at closely. And also, we've seen higher than inflationary increases in our municipals. But later on in the portfolio, I'll talk you through to how we've managed to contain the cost-to-income ratio to levels that are lower than our long-term average. Our long-term average cost-to-income ratio is at 17.6%. We're currently at 16.8% and a big part of that has been over-recovery on our solar strategy as well as increased recoveries on water. With regards to our tenant profile, we're still majority nationals at 85%. Our weighted average lease expiry profile is at 3.2 years. On renewals, we've seen over the past year that, that's increased to 3.8 years. On new deals, we are at 4 years, and that's been deliberate. We're trying to make sure that our weighted average lease expiry expands over the next 6 to 12 months. With regards to our tenant retention, we've retained a significant amount of deals that have expired. Retention is at a healthy 93%. On the fashion side, which is a significant part of our portfolio, the retention there has been 95%. We've retained 100% of all of our groceries. And later, when I speak to category movements in our groceries, you'll see that there's still significant tenant demand in that space. And then on the rent collection, we've collected 100% of all of our billings. And I think quite importantly, we've seen a decrease in our overall arrears over the period. So when I step back and I reflect on this performance, particularly in the current context, I think the portfolio has held up admirably. With regards to our tenant composition, I think key to our strong performance in the portfolio has been this defensive portfolio composition, where we've got 75% of our portfolio allocated to township, rural value and commuter. And I think if one focuses on this slide on our average trading densities as well as our rent-sales ratios, those, in our view, are market-leading, and that's led to the significant absorption of vacant space and therefore, decreasing our vacancies. And then what we think we'll probably see in the next 6 to 12 months is some price tension starting to form because you don't have a lot of space, and that should then translate into increased base rentals over the next kind of 6 to 12 months. All right. And then in terms of our portfolio metrics over time, another key measure that we look at within the portfolio just to see how the portfolio has performed over cycles. With regards to our vacancies, you can see from 2018 to 2023 over the past 6 years that our vacancies have almost halved. We continue to see strong growth in our base rentals over this period. Our reversions, you can see the significant turn coming out of '22 from negative 2.4% to positive 2.3%. And I think also a significant part around our reversions were renewed 565 leases over the period. And a majority of them have been representative. So most of the deals that we've done are with our top 2 tenants, which is Pepkor and TFG. So we think that the sample size really speaks to kind of the health of the portfolio and it's fairly representative. With regards to our contractual escalations, we're still very comfortable with our escalations. They range between 6% and 7%. We've had in the past year, a significant amount of tenants that have expired that escalations higher than 7%. So that's now reverted within that band. We're still very comfortable with where we've landed up with no key concerns around our escalations. With regards to the performance and the trading environment at the mall, we've seen an increase in both footfall and sales over the period. Our trading densities have increased by 6.2%. And I think quite importantly, we've seen an increase across all of the segments that we have within the portfolio. Our footfall has increased by 9% year-on-year. Again, with our footfall, you've seen an increase across all of the segments. The rural and township portfolio continues to be the best-performing segment within our portfolio. And to the last bullet point, our second half of the year has seen very challenging operating environments with regards to increased levels of load shedding. So if one looks at the graph on the right, you can actually see that you've had 3 months of more than 10% of load shedding during operating hours. The average is that the second half of the year saw 8.8% of interruptions during trading hours as a result of load shedding compared to the 4.9% that we saw in H1. And I think what we're starting to see, and this is perhaps just for the last 6 months, we're starting to see a correlation starting to form with the higher levels of load shedding and decreased sales and footfall. We'll continue tracking this into the next year and see how it eventuates. But I think one of the key issues, which I'll touch on later, is the solar PV and BESS strategy that we're now putting into place within the portfolio that should then turn some of these trends that we're starting to see. So I think how are we then trying to look to counter the impact of load shedding, so the potential decrease in footfall and spending. I think the key issue that we're focusing on is driving more intensive, more targeted promotional activity. Over the past year, we've done 20 -- I mean, 230 marketing campaigns in 34 malls. We're driving a more meaningful social media engagement campaign across all of our malls, and this has seen a 38% increase in social media followers. And all of this additional campaign has driven that we've exceeded our exhibition income by 11%. With regards to shopper behavior over the past year, we've seen that our most popular shopping days are now back to the weekends. And during COVID, you saw that it was midweek. So there's been a bit of a change in shopper behavior there. Most popular shopping period is back to month end and the first week of the month. And we're definitely now starting to see an environment of smaller basket sizes as well as more frequent visits to the mall. And this could be driven by behavioral changes coming out of COVID, but also some of the challenges around load shedding, people buying smaller baskets, which has been positive. So what we've done is to tailor our engagement strategies for this changing shopper behavior. In addition to that, meaningful customer engagement is important to us. And as part of this customer-centric strategy that -- and ethos that we're pursuing, communicating with our customers is important. So WiFi and app has been a key focus area for us. We've got 13.3 million registration across 18 malls with regards to WiFi. Our WiFi registrations over the past year have increased by 24%. And I think the key issue is we use our WiFi and app to promote tenant specials, to gain insights on shopper behavior. Some of the key things that we do, we run surveys collecting data around demographics, employment status, why are you visiting the mall, what type of tenants would you like to see, what type of entertainment would you like to see? And all of this digital enablement gives us more insights on to the shopper. And if you look at the last bullet, second last bullet point, all of this has driven an increase in our advertising agreements and revenue by 32% over the period. And then with regards to our trading densities, fashion and groceries that account for 45% of our GLA delivered an improved trading density of 4.6% and 9%, respectively. The high levels of load shedding have had an impact on turnover. So the turnover of our top 10 retailers with backup power has outperformed those that don't have. We're still seeing a very strong performance within the portfolio on trading densities and turnover. 12 of our 14 categories are showing growth, both in terms of turnover and trading density. I mean a clear observation that you can see from the graph, the durables at the bottom with negative density and turnover growth. And then you have your semis and nondurables. But I think also another significant point that I'd like to highlight on this slide is home furnishings came off a very high base coming out of COVID. But we're still seeing significant categories within the portfolio like sports and utilities, athleisure, restaurants, coffee shops all growing in excess of 10%. A key highlight of this set of results for us has been the strong leasing activity. We've seen strong support across all segments, strong support from our national tenants. In fact, when I reflect, I think in the past year, our tenant relationships, particularly with our top tenants, are probably the strongest that they've ever been. We've driven new deal generation as well as renewals with TFG, Mr Price, Pepkor and Woolworths. The township and rural portfolio has once again been where most of the support has come from -- has come to. Fashion contributed the most in terms of number of deals that we've done. A key point in this slide that I'd like to point out is if you look on the right-hand side, the quantum of the deals that we've done, significant amount of ZAR 1.4 billion, both in terms of renewals and new deals. And also, we've sought to increase our weighted average lease expiry. So on renewals, our WALE has increased to 3.8 years. And then on new contracts, it's at 4 years. With regards to vacant space, vacancies down to 2%. I mean, this is the lowest that we've ever had in the portfolio since we listed. We've got 12 malls that are now fully let, 17 malls with vacancies less than 1,000 squares. Those malls account for about 85% of the portfolio. So we're seeing some significant absorption of space within the portfolio. Fashion has been where most of the new lets have been. The township portfolio has seen most absorption. And we continue to see growth. I think quite interestingly, in the past year, significant demand coming through from grocery, supermarkets, fast foods in the portfolio. We've also done a deliberate strategy of trying to decrease our exposure to banking, not necessarily looking to take back space. But because generally your banks have -- are in the fashion court, subdivide the space, open it up for new fashion, but you still have the exposure in terms of giving that service to the community. A key other point, I think it's on the other categories. We're now starting to see an environment where professional services, medical, security and some of these categories that we haven't seen in the township and rural areas kind of move to those areas. So moving to our net cost-to-income ratio, and I'll refer you to kind of the graph on the right-hand side, starting in financial year '13 at the bottom, you'll see that our net cost-to-income ratio at that point was 25.7%. If you look at financial year '23, it's now sitting at 16.8%. Yes, a slight increase from last year where it was at 16.2%, but a significant move and a significant delta between '23 and 2013. And key to this has been our deliberate strategy around solar PV. So if you look at the orange graph from '17 all the way to '23, you'll see that we now over recover in electricity. And that's been driven mostly by the PV strategy that we pursued. And then if you move on to the rates and taxes, you'll see that we've managed those rates and taxes very, very tightly over the period. And I think the key issues that we've done there is object where necessary, but also we've changed some of the structures around our leasing from not only having increases in rates and taxes, but having pro rata rates and taxes and that's added value. A key point on this net expenses graph is the 20% that's been allocated to WiFi innovation and promotion. So over the past 10 years, that cost item, which represents 4% of our portfolio has grown by 20%. And we like to highlight that we think that is something that we should be doing. We should be promoting our shopping centers. We should be investing in innovation, should be trying to make sure that we market our centers appropriately. And this is in line with kind of this quest to become a customer-centric organization and understand the end user, which is a shopper. And then the last kind of graph that I'd like to bring your attention to is under Sundry in financial year '23, you'll see there's been a significant increase there, and that's been a resultant of the challenges that we've had with load shedding, with additional diesel generators. So coming to this issue of diesel backup power and the cost that, that's had on the portfolio. Our diesel cost for financial year '23 has been ZAR 11.2 million versus a budget of ZAR 2.2 million. Total unrecoverable common area costs, and this is for walkways, more areas, bathroom passages, that's been ZAR 3.4 million. And then ZAR 7.8 million of the ZAR 11.2 million has been for tenant diesel costs. So structurally, in the Vukile portfolio, about 30% of our malls have a centralized generator that then provides power to the mall and the other 70% has generators at a tenant level where they then maintain them and they also pay for the diesel generator power. So this refers to about 30% where we supply where we've charged -- we spent ZAR 7.8 million on diesel generators. And on that, we've recovered ZAR 4.2 million, which is 54% of the diesel cost. I mean a key point that I'd really like to make on this slide is the unrecoverable diesel expenses as a percentage of net operating income is 0.6%. So it's a significant overspend on the budget, but it's not a significant issue in terms of our net property income. We do, however, have a strategy that we've put in place, which I'll be discussing in the next slide to ensure that we try and minimize that more than what it is. So moving to energy sustainability in terms of our renewable power backup strategy. We currently have 14.9 MWp of solar PV installed in the portfolio, which accounts for about 9.6% of all of our energy needs. We've completed 16 solar projects. We're currently busy with an additional 12, which when complete, we'll see that 16.1% of all of our energy needs are generated through solar PV. And then on the solar and BESS project. So this is a project that we announced about a couple of months ago where we're investing ZAR 350 million on 17 projects across the portfolio and the significant assets. And I think to us, the key issue with the solution, there are lots of different solutions that people are trying to innovate around. The key to this solution is that it improves our tenant relationship. It's cost effective. So what you find now is tenants are paying 4x what you would pay to the grid or to municipality and diesel generator costs. We will charge tenants exactly what they would have paid to council. So it saves them on the diesel costs, and it gives -- and we give them energy between the hours of 9 and 4 in the day. And I think another key point is that it offers optionality to contract out of future increases in NERSA, and I think this will also be a benefit to our tenants. And one of the key issues that we found about 75% of our portfolio continues to trade during load shedding. But from a shopper experience perspective, when you walk inside the mall and 1 or 2 or 3 tenants are not trading, it impacts your shopping environment. So I think one of the key positives that this project will enable is that we'll give the opportunity to all tenants within the mall environment to trade. And I think quite importantly, it will be yield accretive yielding between 13% and 16%. So we think that the approach that we've taken on our solar and our BESS strategy will accrue very good returns, not only for ourselves, but for our tenants, our customers, as well as our communities. We've tendered and we've got 2 under construction at Maluti and Nonesi, which are 2 first ones, and we're getting a lot of learnings out of the first 2. We're looking to tender by July and then make sure that we've executed on this entire project by the start -- by the end of this current financial year. An update on our portfolio acquisition and disposals. We're still on schedule to complete our transaction with BT Ngebs. The due diligence is almost complete. We've submitted to the Competition Commission. The key issue that we're currently working through with the seller is the asset is an IRF with 3 different assets on it. So you've got the mall, you've got the casino, and you've also got a hotel. So we're going through a process of subdividing the -- and excluding the hotel and the casino from the transaction. It's taking a bit of time, but Sella, ourselves as well as the council are all on board, and we anticipate that transfer of this asset will happen in H2 of this current financial year. And then with regards to disposals, we've disposed just under ZAR 310 million worth of assets over the period, yielding 10.8% and at 2.7% above book value. With regards to our valuations, currently, our assets are valued -- 5.8% increase. I think the key point that I wanted to raise on this slide is organic growth has increased by 6.9% within the portfolio. We've pulled that back in 5 assets where we've adjusted income profile adjustments and growth rates, which have resulted in the net 5.8% growth. All of our segments within the portfolio showed growth except for commuter. We've got some challenges in the commuter segment. And I think to me, key reasonability checks that we look at when we consider valuations is our yield. So our forward yield is at 8.8%, which we think is credible for the portfolio which we have. We then look at our disposals versus book. And in the previous slide, I showed you that our disposals have been above book. We then also look at the correlation of valuation growth and net operating income growth. So our valuations are growing at 5.8% and our income is growing at 5.4%. And lastly, we'll look at our value density, which is currently at 18,895, and we'll compare this with a replacement value, which would be significantly higher, ranging between ZAR 20,000 to ZAR 25,000 a square meter. So we think that our portfolio is consistently conservatively valued. And those are the kind of the key highlights on our valuations. To conclude, the portfolio continues to outperform. We're seeing consistent growth in the top line. We're seeing strong support from retailers. We're seeing positive trading metrics across all of our segments. I think one key area where we will focus on aggressively over the short to medium term is around managed cost management. We'll continue to drive our desire to be the partner of choice with well-managed, well-positioned, well-tenanted malls. And I think all of this while being mindful of the current pressure that the consumer is under as well as profitability of the retailers, the 4 key areas that I think we'll focus on in the year ahead will be around tenant relationships, customer insights, operating excellence, and we'll continue being close to our communities where we have malls. And with that, I'd like to hand over to Alfonso, and thank you for your attention.

Okay. Thank you, Itu. Great results, and congratulations to you and the entire Vukile team. So glad to be here once again. Delighted to be back in South Africa, and especially here at the JSE since so long. So now we can say that we are back to normal. Can't we? So let me join my colleagues on thanking the JSE, but especially all of you for coming back to this format, which is the one we most like as firm and defendants of the real and the presential world. It is not only me saying, you will see that our results also reflect the story of people wanting to get back to enjoy the real experience and with all senses. So let me get straight to it and start with an executive flavor of what we see in the Spanish economy. That despite the gloom and doom of global markets, we see the Spanish economy quite resilient in comparative terms. GDP growth of 2022 was 5.5%, quite above the European average. And growth is still foreseen to grow for 2023 and 2024. All the main indicators point on this positive growth outlook. Tourism, one of the main drivers of our economy has improved substantially, 72 million visitors in 2022, which is 130% more than in 2021, although still some 14% below our record year-end 2019, which we think that it gives room to improve other metrics such as employment, retail sales and domestic consumption. Household spending has been surprisingly high during this period, given the hikes in interest rates, which should have contracted consumption as a result of lower spending capacities of families. However, the very high saving rates during the last 2 years due to the pandemic restrictions have buffered a possible construction in consumption. And looking at the current savings rates levels now, which is still at the decade average, indicate that although a bit more moderate, household consumption will still grow in the next 2 years. Also pointing in the right direction are employment rate sales and inflation, which has been moderating significantly in the last months. So all in all, from institutional consensus, we remain optimistic that the Spanish economy will navigate well despite the possible headwinds ahead. So moving on into our operations. Here are the main key metrics of our business. And as can be seen, all metrics are tremendously positive, indicating growth, great business performance and very healthy risk profile. I would highlight the growth in NOI of 9%, the high occupancy and collection rates beating records of the sector, driven mainly by the team's great management and action plans to add value. And I think it also stand outs the low-risk indicators of WALE income sources diversification and healthy OCRs. Now let me deep into the main business indicators for our portfolio, that's footfall and sales. While we've been talking about recovery for the last number of years as a point of comparison with pre-pandemic levels, from now on, we are to speak about growth again. As can be seen in the graph, our portfolio has recovered 100% during FY '23. True that in terms of footfall, it was not until September last year when our portfolio overpassed the index achieving levels pre-COVID and higher. But since then, our visits are above those of the same period pre-COVID, proving that shopping centers have not lost any relevance to customers. More on the contrary, customers' metrics are beating records in terms of dwelling time and conversion rates. On top, those assets in which we have conducted value-added repositioning projects are beating historic records of visits as they have now consolidated in the communities, such as the cases of El Faro and Vallsur, for example. In terms of portfolio sales, it shows a growth of more than 18% for the period compared to the pre-pandemic levels, and this trend is being kept in these first months of FY '24. Comparing our metrics to the industry benchmarks, one can clearly see that the dominance of the portfolio, the excellence work developed by our specialist team and our bottom-up customer-focused approach makes Castellana standout for differentiation and better results. So why we believe that we are different? And that would be because being a real estate company, we don't focus on the square meter and the rent collection only. We focus more on the customer to exceed expectations through the experience we create in our centers for them to become remarkable spaces -- and hence, the domino effect of better customer loyalty, repeated visits, longer dwelling times and hence, higher sales for our tenants come through, adding value to all stakeholders of the value chain. We invest and work very hard on the design and implementation of our most -- of the most powerful and exciting experiences in our centers to keep and reinforce the links with our communities. During 2022, we have launched more than 376 events that have driven substantial footfall growth in our centers and improved community dynamics through partnerships and collaborations. A very good example of this is our transversal campaign of the Legion of Excalibur inspired in legendary King Arthur. It transformed our shopping centers into medieval spaces with shows, parades, games and prices for the whole family. The results of these shows are outstanding. 77 live shows across 7 assets in the portfolio have driven an increase of almost 12% in footfall and direct incentive sales of more than EUR 112,000. And why we affirm that this is the right strategy? Well, apart from the increase in footfall and dwelling time already proved, the levels of loyalty and top-of-mind position of our centers increased with every campaign that we have driven, which also derives in happier tenants as they see higher traffic and the opportunity to impact customers more. In the annual survey to tenants, our results have notably improved from last year, outperforming benchmarks in most categories, which confirms the outstanding strategy carried out by Castellana team to support and stay close to our tenants that solidify very strong relationships with them. All this is proved when looking into sales I am breaking it down to categories. We see tremendous growth all over the chart. DIY still the category with highest growth in retail. However, worth to highlight the extreme improvement on Leisure with more than 30% growth and F&B with almost 24%. Fashion, groceries and health and beauty are nicely outperforming last year, very positive results given these are the key weight categories in terms of rental income in our portfolio. The other main driver of Castellana's good performance is our active asset management that is well proven in our leasing performance for the period. Very active leasing activity during the year, 85 renewals with a positive reversions of 3.26%. It's worth to note here that this is excluding CPI effects as indexations are not normally coincidental of expiries and 104 new leases agreements pushing rental level up by more than 6%. Adding both 189 leases signed in the year with a total of EUR 7.3 million refreshed into our cash flows and all that with an increase of 4.2% of our portfolio average rent expressed in terms of euros per square meter. We keep occupancy at market-leading levels, further reducing arrears and most importantly, maintaining collections at foot collection rates of 99% and above. Looking into indexation. Inflation has substantially moderated from last year when reached peaks of more than 10%. The average of 2022 in December was 5.7%. And three facts to have facilitated the passing on indexation to tenants during the period. First of all, its turnovers have kept in a very good shape during the year. [ Efo rates ] stayed at very healthy levels. And third, the rents in our portfolio are still in the low end, right? So all those have given tenants good room to afford full CPI increases in the period. As reported before, 99% of our lease agreements in place are indexed to CPI every anniversary. However, expiry and indexation do not coincide in time, as I said before. Indexation process during FY '23 resulted in a total annual average of 7.7% increase. However, the majority of this effect, in fact, 72% of this already secured indexation is to take place in next financial year FY 2024. Now moving to the GRI bridge. Castellana's portfolio's total gross rental income reached EUR 64.7 million figure, which implies a like-for-like growth of almost 11%. However, I find worth to explain that on that comparison, COVID concessions given during the last period are excluded from the calculation as a nonrecurring item. So the comparison with all elements in results in a real outstanding growth for the period of 17.7%. Translated that growth into net operating income, it gives a growth for the period of 9% compared to FY '22, also in net terms. Now still, there are levers already in place coming in the immediate future to bring this GRI further up. All things remaining equal, our GRI should get to the EUR 69 million figure already in this FY 2024. Talking about GAV, Castellana's total gross asset value at closing of the period is EUR 1.118 billion. That breaks down on direct portfolio valuations of EUR 1.012 billion, reflecting a net worth -- net growth of 1.1%, sorry, from last year and the 25.7% stake in LAR España with total value as of 31st March 2023 of EUR 106 million. Total GAV for the company grew by 2.5% in the year. As shown above, more than 90% of our GAV is on Castellana's direct portfolio. As a reminder, 100% of our portfolio is externally valued by Colliers, a well-recognized valuation professional using RICS methodologies. Colliers' house view during this year of headwinds has been that interest rate hikes should put pressure on yields as investors are requiring higher returns as financing is becoming more expensive. Hence, their valuation assumptions has been to increase cap rates on some 100 bps compared to last year. Some of the other forward assumptions such as CPI rental growth rates and exit yields have turned more conservative as well. So despite all these factors, Castellana's active asset management have performed to compensate a higher negative impact by increasing average stabilized NOI in the long run. We expect though that in a normalized yield market, values should be pushed up significantly in accordance with the quality and assurance of cash flows of the portfolio. The main and largest repositioning project for this year is going to be Vallsur. Given the proven trend and the opportunity to be the leisure and F&B leader in the catchment area, we are reenvisioning Vallsur's first floor to transform the space in a state-of-the-art food court and experience hub in the city. Licensing is already in place. Pre-leasing is going very good and works are already started for this phase to be ready by second half of 2024. Achieving an additional NOI of EUR 1 million and investing EUR 16.7 million in the transformation. The project should bring a great return on investment and for sure, will be reflected in the future valuations when completed. We keep our interest in LAR España following their year-end and quarterly results lately, we are very satisfied with their metrics, not as good as Castellana's portfolio, but with similar growth rates in footfall and sales, showing a good occupancy and income growth. At the beginning of the year, LAR España performed a successful bond buyback program for more than EUR 90 million at an 18% discount to par value. This improved their net loan-to-value down to 37%, increased NTA and produce a profit of CIRCA EUR 19.5 million that should improve 2023 P&L and dividends. Based on this good performance of our knowledge of the assets, we still believe there is opportunity to unlock value going forward. And so we remain long-term shareholders with 25.7% of the company at an average price that implies more than 55% discount to EPRA NTA. The dividend for 2022 period already paid has been EUR 15 million, which equates to EUR 0.60 per share, implying a CIRCA 12% dividend yield for Castellana. We have proven our investment case with further potential capital growth and strategic opportunity. Another important piece of our business, we are embedding more and more is innovation and digitalization and how it can be implemented to benefit our internal processes and portfolio. This FY 2023, apart from continuing with our internal innovation process through iCast, we have adopted also a more collaborative stand through our open innovation strategy. The examples we have materialized this year are two. On one side, the new retail challenge in collaboration with The retail Crew, a start-up incubator and accelerator of fresh retail business models, which are focused on projects for shopping centers. The challenge consisted on an open call for retail start-ups with proven fresh concepts to open in our shopping centers. On the other hand, we concluded the Phase 1 of the Open Innovation Challenge in collaboration with EAE Business School and Area 101, the corporate innovation community to prototype new business models that could operate and develop in our centers. Out of these challenges, very exciting new concepts and ideas are being tested in our centers to prove concepts in the next months. In ESG, I need to highlight and congratulate the team involved for a very successful job in this matter, obtaining top performance scores and awards at corporate level, such as the EPRA Sustainability Gold Award with a special mention on improvement, the three GRESB stars in our debut or the 91% confidence rate of the Great Place to Work certification. At asset level, all assets in our portfolio are BREEAM in EU certified with outstanding scores. We have registered our carbon footprint and we'll keep an eye on it to improve continuously and have issued several ISO certifications to monitor and improve on energy efficiency and environmental contributions. We will be issuing our second ESG report shortly by the end of June, in which all actions developed and improvements during the year will be detailed there. So to end up with what and where we'll be focusing on the next months. As always, we'll keep performing on our operational excellence by continuing to focus on growing income through active asset management, improving our service offering through customer centricity and improved decision-making by leveraging on our deep data insights, maintain a strong tenant relationship to keep driving a partnership mindset and be the partner of choice and keep focus on cost management and driving efficiencies. On the funding side, we have a very stable funding position with no refinancing needed until FY '26. So we'll dynamically evaluate the best strategy for the interest rate review in September 2023 for the West facility and continue to work on the diversification of sources to take advantage of market opportunities. We do believe that great investment opportunities are at reach now. So we'll keep focusing to secure and assess accretive deals on the direct asset and listed markets to take advantage of the dislocation in pricing. Direct opportunities are becoming interested, but unfortunately, limited by availability of capital at the right buying point in the cycle. Continue looking for ways to extract value from our large shareholding as well. On ESG and innovation, continue developing and implementing our strategy to achieve all our goals, develop our innovation strategy leveraged by technology, ensuring incremental business improvements and lead innovation within the sector. And in terms of people, we'll focus our efforts to keep the best-in-breed climate and company culture, already proved by the Great Place to Work ranking and the talent audit and implement Castellana Talent Program, including succession, training and career plans to keep evolving the team's skills. That will be all from my side. And now I pass it on to Laurence Cohen for the financial and treasury part. Thank you very much.

Thank you, Alfonso. Good afternoon, everyone. The exceptional results that we have achieved in the past year was driven by strong growth and an outstanding performance in our core property portfolios in both South Africa and Spain across all of our metrics, financial, trading and operational. Vukile remains a very cash-generative business, producing total FFO for the year of just over ZAR 1.4 billion, an increase of 6% on the prior year. 6% growth was achieved despite higher interest costs, a greater proportion of more expensive South African rand-denominated debt and a material reduction in net interest received from cross-currency interest rate swaps. In addition, we came off a higher base in the prior year since FFO in FY '22 included ZAR 57 million in capital profits from the sale of Castellana's office assets. The dividend per share was up 6.2% on the prior year. The total dividend for the year is ZAR 1.1 billion, with the final dividend being ZAR 675 million or ZAR 0.651 per share. After year-end, we issued 56 million new shares, raising ZAR 700 million. The final dividend, therefore, includes an antecedent dividend of ZAR 37 million since the new shares will participate in the final dividend for FY '23. The increase in the payout ratio from 77% last year to 81% this year is largely due to the inclusion of the antecedent dividend in the final dividend for FY '23. This slide is a new addition to our results presentation and reflects a buildup of FFO as most analysts and investors would analyze FFO, including only those income and expense items, which are included in FFO. So there is no need to strip out non-IFRS line items like fair value adjustments. The Castellana FFO was up from EUR 31 million last year to EUR 44 million this year. Castellana's FFO includes an accrual for income from LAR España of EUR 9.6 million, which was 0 in the prior year. The Merev top-up payment of ZAR 47 million represents Merev's guaranteed yield at 6% on the fixed option price pro rata to the date of the purchase of the Merev shares. Given that we have now purchased Merev shares in Castellana, there will not be a Merev top-up payment in FY '24. ZAR 58 million from FECs early terminated relates to the spreading of the gain from the early termination of FECs in FY '22 in terms of SA REIT best practice and is not recurring. The majority of the ZAR 41 million in income from other investments in South Africa relates to income from our remaining investment in Fairvest. Income from Fairvest reduced from ZAR 72 million last year to ZAR 39 million this year due to a further sale of Fairvest shares during the year. We were in a healthy cash position at year-end with just under ZAR 1.4 billion of cash on the balance sheet. There is -- this is consolidated group cash. So it combines cash in South Africa with cash in Castellana. Cash from operating activities for the year amounting to just less than ZAR 2.1 billion more than covered total dividends plus finance costs for the year. The NAV per share increased by 14.3% to ZAR 20.48. The increase came from organic growth, valuation uplift and due to a weakening of the rand against the euro. The closing rand-euro exchange rate at the end of March '22 was ZAR 16.16 compared to ZAR 19.29 at the end of March '23. Given that our NAV is positively exposed to a weakening rand over time, our NAV per share will continue to strengthen as the rand weakens. Following Castellana's initial investment in LAR España, we said that Castellana would accrue for income from LAR based on historical dividends declared by LAR, which significantly reduces any forecast risk in the LAR dividend accrual. The accrual is done by way of a non-IFRS adjustment in Castellana. LAR's dividend for the 12 months to December '21 was ZAR 0.36 per share, while the dividend for the LAR year ended December '22 was ZAR 0.60 per share. Castellana will therefore accrue ZAR 0.60 from February '23 to January '24. ZAR 0.10 of this amount was recognized in Castellana in FY '23 and ZAR 0.50 will be recognized in FY '24. In terms of IFRS and Spanish GAAP, the LAR dividend of ZAR 0.60 per share was recognized in Castellana in FY 2023 since LAR declared the dividend in March '23. The under accrual in FY '23 amounting to EUR 3.4 million will, in terms of SA REIT best practice, be recognized in Castellana's FFO in FY '24 by way of a non-IFRS adjustment. Income from LAR to be recognized in Castellana's FFO in FY '24 will therefore comprise ZAR 0.50 for the 10 months to January '24, plus a further accrual for the 2 months ending March '24, plus the under accrual from FY '23 of EUR 3.4 million. In terms of Spanish SOCIMI rules, the dividend received from LAR will need to be unpaid in full to Castellana shareholders to avoid any tax leakage in Spain. The quantum of debt maturing in FY '24 is low with only 5.9% or ZAR 1 billion of group debt maturing in FY '24. We had ZAR 2.5 billion in undrawn debt facilities at year-end. This reduced to approximately ZAR 1.6 billion after year-end as we terminated existing undrawn facilities that had been earmarked for the Merev transaction. 89% of group interest-bearing debt is hedged, while 96% of Castellana's interest-bearing debt is hedged. All interest rate caps in South Africa are providing protection with ZAR 1.5 billion of subsidized caps struck at 7.5%. At year-end, South African euro debt was EUR 40 million. This amount increased to approximately EUR 106 million after year-end since we funded the Merev shares by repaying approximately ZAR 1.2 billion in South African rand-denominated debt and raising an equivalent amount of South African euro debt. The rand debt was repaid with cash on hand at year-end and with the proceeds of the share issue after year-end. Forecast dividends from Castellana for FY '24 are fully hedged. We have included a slide at the back of the presentation, which reflects the FX rates at which Castellana dividends have been hedged over the next 5 years as well as a pro forma indication of how the hedging profile has changed following the purchase of the Merev shares. The interest cover ratio reduced slightly to 3.1x. This is mainly as a result of the setting of the last remaining cross-currency interest rate swaps as well as due to the increase in South African base rates. The aggregate group cost of funding increased to 5.3%, largely as a result of an increase in base rates in South Africa as well as a relative increase in the quantum of South African rand debt relative to euro debt following the repayment of South African euro debt in FY '21 and FY '22. Stress testing of the group interest cover ratio indicates that the portfolio would need to undergo a 36% reduction in group EBITDA before reaching the 2x bank interest cover covenant level. Stress testing of Castellana's valuations indicates that the Spanish portfolio has a 36% headroom or a EUR 400 million headroom in property valuations relative to Castellana's 65% LTV covenant. Stress testing of Castellana's interest cover ratio indicates that the Castellana portfolio would need to undergo a 74% reduction in Castellana's EBITDA before reaching Castellana's 1.1x bank interest cover covenant. During the year, GCR upgraded Vukile's corporate long-term credit rating to AA with a stable outlook. In the current environment, a corporate credit rating upgrade is fairly uncommon. The upgrade reflects Vukile's overall positive credit metrics and balance sheet strength. The group LTV ratio reduced to 42.6% at year-end. The reduction in LTV was mainly as a result of property valuation uplift in SA and Spain, asset sales in South Africa, and sale of Fairvest shares and cash retention. After year-end, the LTV is anticipated to increase marginally following the purchase of the Merev shares. All things being equal, the LTV will continue to reduce through increases in property valuations and cash retention. This graph depicts our bank debt facility and debt capital market funding expiry profile with very little debt expiring over the next 12 months. Apart from the Castellana maturity in FY '26, the profile is well spread and low risk. As regards to the Castellana expiry in FY '26, it is still 2 years out, and the bank has already offered us the option to refinance early. We maintain regular contact with the bank funder to build, enhance and nurture that relationship. Even in the current environment, the bank has indicated that they still have appetite for a greater quantum of Castellana debt. Therefore, although the Castellana expiry in FY '26 is a relatively large amount, we are comfortable that the refinance risk is low and can be proactively managed. In August last year, we raised ZAR 767 million in the South African bond market in an auction that was 4.6x oversubscribed and a reflection of ongoing and continued debt capital market support for Vukile. Only 12% of total group debt is in corporate bonds. So there is potentially scope to increase our exposure to the debt capital market should there be a need. In this slide, we have provided a detailed analysis of the historical rate hiking and cutting cycles, both in South Africa and in Europe over the last 25 years. The current hiking cycle has been steep and relatively short in duration, indicating the need for a dynamic and holistic approach to managing interest rate risk. We are cognizant of the fact that interest rates move in cycles. And just as low interest rate environment or a cutting cycle eventually turns, so too do hiking cycles. In broad terms, the analysis indicates that we are trending towards the end of the hiking cycle. It therefore makes sense to be cautious with hedging, and there may well be benefit in delaying entering into new interest rate hedges or fixes until the cycle has turned. Conventional wisdom may suggest that the higher the hedge ratio, the less risk there is of interest rate hikes negatively impacting earnings. However, locking in an expensive fixed rate can guarantee the negative impact to earnings of hikes that may not materialize without allowing for the opportunity to benefit from a cutting cycle. This slide reflects the group debt maturity profile overlaid with the hedge maturity profile. The yellow bar in FY '24 relates to the EUR 256 million fixed maturity in Castellana in September this year. Given where the European interest rate hiking cycle is currently, we believe it may be prudent to delay hedging this amount until closer to or perhaps even beyond the fixed maturity date. In order to obtain optimal benefit from a downward sloping curve as the cycle turns. We will continue to carefully monitor European rates and dynamically evaluate our interest rate exposure. We may also prefer to hedge interest rates over shorter tenors as analysis suggests that hiking and cutting cycles are becoming shorter in duration. We are grateful for the close relationships that we have with our bank funders and for their ongoing partnership in supporting us to proactively and effectively manage our debt and funding across the group. To manage refinance risk, we will continue to increase our debt maturity profile by refinancing debt into 3- to 5-year facilities. Vukile has adopted a layered approach to hedging Castellana dividends with FECs, targeting a minimum average hedge ratio of 60% across a 5-year period. Castellana's FFO is not hedged. Therefore, Vukile's FFO is positively exposed to a weaker Rand while still providing predictable dividend income over time. We remain committed to the debt capital markets with regular issuances depending on existing maturities and cash flow requirements. Given the significant spend during the coming year in our South African portfolio on solar and sustainable green energy, there may be opportunity to expand our portfolio of green or sustainability-linked funding. This concludes the financial section. I will now hand back to Laurence to take us through an ESG and strategy update. Thank you.

Laurence, thank you. So to turn to ESG. I think we've made fantastic progress during the past year in really embedding a culture of ESG in our business. So it's not something that we do as a tick a box exercise. It really is now embedded in all that we do. It too has already spoken about the progress and what we're doing in terms of solar in South Africa and the plans for the year. In Spain, we are now further rolling out our PV plans as well. A topic that hasn't got much airtime yet, but is going to be coming is that around water and water sustainability in South Africa. We've been proactively managing that. For example, all of our rural malls already have backup water supply. And then just to reiterate what Alfonso said, all of our assets in Spain have got BREEAM certification at a very good or excellent level. On the social front, very proud of what happens in the Vukile Academy, the ongoing bursaries we provide to people in their final year of property studies that really changes lives. If you want to know what really gets us excited at Vukile, it's getting those letters. It's seeing the difference that, that makes to families. A very pleasing 89% of the interns we hired last year have now got full-time employment in the industry. And again, that's a tremendous success for us. The Vukile Retail Academy is something you've heard us speak about. I'm going to do some free advertising and marketing. Zoeneli from Zanwabo Confectioneries, who's one of our tenants now, one of our graduates through the program at Daveyton Mall is outside. She has provided the desserts when you leave. So here she is. Zoeneli is at the back. Please get your cup cakes that she's made. I'm sure they are delicious. And if any corporate events that you may have, speak to Zoeneli, but we really are delighted to see people coming through our academy being able to be part of the Vukile family going forward. A big focus for us is obviously making sure that Vukile and Castellana are an employer of choice. I think whilst we have great physical assets, our even better assets are the people that run them. And I think we really got a great lens to make sure that we attract and retain the very best people. And just seeing our results in both the Deloitte and Great Place to Work certification, I think, bears testimony to that. We're very humbled by the awards we got in the Intellidex Investor Relations survey. I think we view ourselves as stewards and custodians of public money. So to get that recognition on the quality of our disclosure is always very gratifying. I know it means we keep you here for perhaps longer than other people, but we feel for once a year for us to actually report back in detail is actually our responsibility and therefore, important that we share the detail. If you'll permit me a moment, I think we're all aware of the relationship now between government and business on trying to tackle three key areas in the country, one of them being crime and corruption. Vukile has been a very regular participant in the GIBS Ethics Barometer. And if you allow me to use this platform as a request to all investors, get the companies on the JSE to subscribe to that, let us as business take the lead, test our own ethical fitness as a way of leading in the country and saying, we will test how fit we are in terms of our peer group and how we constantly look to improve. But I think it really is a commitment from Vukile to say we will always participate in the GIBS Ethics Barometer, and it gives us a chance to sort of really see how we are doing in that regard. Just moving on very briefly to some events post reporting period. I think a lot of this has got covered already. The capital raise. We raised ZAR 700 million end of March, beginning of April. That money will be used to fund various opportunities. I think one thing we're very fortunate is to have numerous opportunities to deploy capital on an accretive basis. So there's the Spanish redevelopment project, further solar investment, the purchase of the MEREV shares and then BT and GIBS. MEREV, just to discuss that briefly. We obviously had the option open until July 2024 to exercise that. We felt now was a good time to do so. You can see the benefit of the Lar dividend coming through in the Castellana earnings. We felt that's a great benefit for us to capture, and therefore, it made sense for us to exercise that early and bring that in. We now own 99.5% of Castellana. And then Pan Africa, unfortunately, we had to let that deal go. We just could not get the traction from City of Johannesburg in providing the approvals that were needed. As much as it was a good deal, we also have to be very disciplined in our deal approach. And I think that is testament to the way we were -- the risk profile we felt was increasing beyond where the return was, and we had to move away from that particular deal. So I'd now like to turn on to a topic that perhaps doesn't get as much airtime in REIT world as it should, but for us, it is really quite critical because this is what we do every single day, and that is to look at what our updated strategy is. And our strategy really is to become a consumer-focused retail real estate business. Now what does that mean? That means that for us, focusing on understanding our customer and our shopper is at the very heart of what we do day in and day out because that is where we see the source of value creation going forward. So if you look at it, our consumer-led model will create value for all stakeholders. Understanding our shoppers and communities' needs assists us to not only meet those needs, but to exceed those needs in our centers. And the more we are able to meet those needs, the greater customer loyalty we're able to engender. So the more visits people are going to have to the center, the longer they're going to stay, the more money they're going to spend. The more money they're going to spend, the better for our tenants because once they're in the centers, our tenants are performing well, their performance goes up, that boosts demand for space and position in our centers. And when that demand improves, and I think you've seen it in these numbers, rental growth improves and performance at the centers goes up. And when rental growth comes through, we have growing rental streams, growing income supports higher returns, more positive impact and greater value creation for our investors and our funders. So when you put it all together, exceeding our shoppers' needs leads to greater and stronger tenant performance, leads to increased value for investors and all of our stakeholders. And that is our strategy. We are a retail-focused fund to excel in that area, we need to understand and meet our shoppers' needs, and that is what drives us. And that's a strategy that is applicable in South Africa. It's applicable in Spain and any other jurisdiction because it's not about having to know the entire world, it's about having to know the community and the locations that you're operating in. So this is a strategy for us that is very transportable. It's very relevant and very applicable to all of our assets. So who are we? What is the purpose? Why do we exist? And really, it's to say that we exist to positively impact the lives of the communities of shoppers and tenants thereby creating value for all of our stakeholders. As we've just shown, the equation starts with the shopper and ends up with value for the investor. If we can understand our communities wherever they may be, that value will be created. Who do we aspire to be? Well, we want to be the most trusted and respected retail property business in the market. And in order to do that, what do we need to accomplish? Well, we need to make sure that we provide spaces and experiences that not only anticipate but fulfill and exceed our shoppers' needs and expectations to create that overall magic golden thread that runs through from understanding the shoppers' need to creating value for our investors. How do we do that? I think Vukile, as you know, is an organization with a very strong focus on culture and values. These are our values that we are going to be focusing on. It's delighting the shoppers with our excellence and expertise. It's driving positive change through innovation and inclusivity. It's working with partners and it's leading with passion and integrity. And our strategic objectives is really around driving constant operational excellence, making sure we're always at the leading edge of customer and market insights, running our business with a managed impact for sustainability, focusing on the people that make it happen and always driving long-term growth. So you've noticed as well that the brand has changed. This was my attempt. This is what happens when you let a banker/property guy design a logo, right? Fortunately, [indiscernible] has come along, and this is the new Vukile brand. I think what you can see is that it shows the energy, the passion, the focus on the consumerism, the focus on the customer, and you can just see the real difference of what it is. So out with the old, in with the new and our brand ethos really is encapsulated in our brand description, and that is Vukile the center of growth. That is something that applies to every one of our shopping centers, wherever it may be. It applies to what we offer you as investors. It applies to our employees. It applies to every one of our stakeholders. Engaging with Vukile must be a growth-related experience. That is what we are trying to drive. And our tagline summarizes our approach, building communities, growing value. It summarizes what I've been through in the last few slides. If we understand our communities of shoppers, we will grow value. That is what gets us up in the morning each and every day. So how does that then relate into our strategy overall? Well, at the top, you can see that the consumer-focused retail real estate business mantra, that's what we drive each and every day. That encapsulates the operational excellence in what we do. And it's something that is then applicable in South Africa and Spain to both our core portfolios. How do we get the best out of our existing assets, but as well to new opportunities. So in South Africa, it's currently BT and GIBS. It is currently doing some work on 2 or 3 assets to see how we can maybe expand them, get new tenants in, grow the demand at those centers. In Castellana, again, it's how we get the most out of each one of the assets. Alfonso has mentioned the Vallsur upgrade. There's a potential further expansion at El Faro. The initial one has already proven to be hugely successful. We think there is a Phase 2 that we can be done there. There's Lar Espana and there is evaluating deal flow. And I'm going to talk briefly on that for a moment. We think this is a very, very interesting point in the cycle. Laurence has made the point that we think we're in a cyclical environment, not a structural change. Interest rates are going up, they're going to come down. When interest rates are up, when negativity is at a peak, when you've got negativity towards retail, although that is waning, then that is a great time to buy assets. There are deals that we are seeing at the moment that are unbelievably exciting at very, very accretive yields that one can fund and make neutral to accretive without using debt. Okay, now before anybody panics and thinks we're about to do deals and there's a big capital raise coming, it's not happening, okay? We will engage with the investors over the course of the road show and understand the appetite. What we can do is say there is a very exciting opportunity to deploy cash at the moment where, in some cases, yields have moved out. We've seen it in our portfolio, yields moving out by 100 basis points, but there are also some sellers that need to sell. There are refinancings that are coming up. That is going to put pressure on it, and that is creating unbelievable opportunity. I would go so far as to say it's once in a decade, maybe once in 2 decades that you see these opportunities. You've got to ask yourself the question, why are some of the biggest names in the world raising record level property funds to deploy in the private equity space. Our challenge in the REIT environment is access to equity capital to take advantage of these opportunities that we think really are quite superb. Third-party asset management, we've spoken about that before. I think in the past 6 months, we made our entry into the South African market, taking a stake in ALT Capital and the fund they manage the REimagine fund, which is focusing on township and rural convenience retail. It's something that we are currently looking at in Spain, in pan-European environments as well as in the U.K., a very good way for us to get into these markets because it's capital light. We don't have to go and raise money. We're using other people's capital if we're able to access that, but we're using our expertise and our core competence. So that is something that is taking time for us to look into. And we believe that, that is a future growth area for us. And then other markets, again, we are doing desktop research at the moment. We're visiting countries. We're not ready to make any investments. But just remember, when we got into Spain, it took us a good 6 months of traveling up and down to that market to understand it, to see and understand the opportunity. We just feel that there is a golden opportunity now to understand other markets and other opportunities, but we look forward to engaging with our investors in a bit more detail to get your views on that over the next few days. What are we working on? Well, as always, it's a very tight focus of making sure we're delivering operational excellence. I think that's been a recurring theme over the last few years, and I think you've seen that coming through in the results that we are producing. And it's balancing that with also having a longer-term view of saying, well, how do you grow the business for sustainability? So yes, we are looking at opportunities, nothing on the table at this stage. But all in all, it's about delivering sustained earnings for investors. And with that, I'd like to turn on to prospects and guidance for the year ahead. So if we can change the slide, there we go. What can we say? We are very confident that we've got a strong operating platform, a very clear strategic direction and a solid balance sheet. And that means that we are very well positioned to manage the headwinds that are out there. And I think let's make no bones about it. There are headwinds and challenges ahead. You would have heard me make the comment during COVID, we are well positioned to navigate through the challenges of COVID. I think the proof is in the [indiscernible]. We came through that exceptionally well. We feel we're in the same position now. The business is in very, very strong shape to navigate through those challenges, not only at a macro level internationally, but South African-specific ones such as load shedding, sluggish economic growth. We have been anticipating a slowdown in the last 18 months, 12 to 18 months in the consumer. Pleasingly, that hasn't happened. We are starting to see that coming through now. Itu went through it in his presentation. We are seeing some level of pressure coming from the higher interest rates and load shedding as well. But I wanted to put this particular bullet point in because I think perhaps not necessarily for people in this room or on the webcast. But I believe there is a misperception that a business such as ours is very heavily geared to consumer spending on the short-term cycles. And what I want to highlight is that the vast majority of our income, in fact, 99% of our rental income is contractual rental income. So even if there is a slowdown in consumer spending, it doesn't mean that, that comes through with an immediacy into what happens at our rental level. We are earning our rent from some of the best covenants locally and internationally. In Spain, some 94% of our rent comes from international and national tenants. South Africa, that's about 84%. So really, when you look at our business, we think we are very well insulated in the short to medium term against a slowdown in consumer spending, especially if that is driven by a cyclical nature of where the interest rates are. So we've got a healthy WALE in both markets, very strong covenants, and we think our rental income is very solid going into this environment. We can't say exactly where we are in terms of interest rate cycle. I think all of us are looking at various research pieces. We're either at or close to the peak of the cycle, but we are well hedged. And I think we're also further insulated by the fact that we have a long loan expiry and a strong liquidity position. The main loan expiry we need to deal is going to be the Castellana one, and that's in FY '26. The ZAR 1 billion in South Africa over the next year is really almost as good as done. So we don't believe we have any refinancing risk in the short to medium term. Overall, you can see our strategy is that passion about the consumer-focused retail business. We use that to drive sustainable growth. And off the back of that, we are very pleased to again guide the market to growth in FFO per share for the year ahead of between 3% and 5% and growth in dividend is going to be between 7% and 9% for the year. Now 3 key assumptions that I just want to highlight as to what's included in that growth. Number one, interest rates of 3-month JIBAR in South Africa at 8.5%. European 3-month Euribor of 3.75%, and that's very important in the context of the interest rate reset in Castellana in September. So this figure that we are giving you of growth of 3% to 5%, already factors in a higher interest cost of a base of 3.75 plus a margin plus fixing. So that's already been taken into account in the guidance that we've given to you and then our ZAR/EUR exchange rate of ZAR 19.29 for the year. Putting that all together, we expect to deliver full year dividends for the year of between ZAR 0.10 and ZAR 1.23 per share. So with that, I'd like to thank you all for participating. I will apologize for going a little bit longer than usual, but there was a lot to share. We're very happy to take questions. I think what we'll do is first take questions from the audience and then go to the webcast thereafter. So Laurence, Itu, Alfonso, if you'll join me up here, and we'll go through any questions from the audience. Mweisho?

Just a quick one. So you're speaking to the expected increase in your cost of goods on the European side. What is that in terms of like basis points that you're expecting?

Debt is about 550 or so -- about 550, Mweisho.

Okay, cool. And then with regards to -- sorry, there was another question here.

Mweisho, sorry, just to clarify, that already is in our forecast.

And then have you also included your yield on solar PV in your forecast in your guidance?

No. So not to the full extent because it's going to take us the better part of the year to roll out the PV. You're only going to get the full benefit in the following year.

Ridwaan from Nedbank. Good set of numbers. A quick question on your payout ratio. So you're looking to get it to 80% for FY '24, similar to the current year. There is an ante-cedent dividend that's part of those numbers, so that's why your payout ratio is higher. Given that the deal flow that you are seeing and the potential for opportunities that could come through in FY '24, would it not have been better to maybe keep it at 77%? Just how are you thinking about your payout ratio?

Ridwaan, the large driver of that is the dividend coming through from Lar España to Castellana to us, which has to be paid out so that there's no tax leakage. Okay. So if we held that dividend back, there would be an element of tax leakage, Laurence, is that correct?

Ridwaan, we're unlikely to increase the payout ratio to a point beyond what we required to maintain a tax-neutral position, both in Spain and South Africa. So at 81% for FY '23, we were tax neutral in Spain and South Africa. And I would say it's reasonable to say that in FY '24, we will keep the payout ratio at a level that will keep us tax neutral in both businesses.

Any other questions in the audience? Luise, from the webcast?

Thank you, Laurence. We do have a related question from Steve Janson of Coronation Fund Managers. He says congratulations on the strong operational performance. He's asked whether the ZAR 37 million ante-cedent dividend will be included in the calculation of FY '24 FFO.

No, no. The ZAR 37 million relates to FY '23 only. And the nature of an ante-cedent dividend in dividends is that it's once-off. And it's purely to address the issue of dilution for shareholders who were already invested in the company prior to the issue of new shares.

We just have our cell phones up here because we're getting the questions through as well. That's what we're looking at here.

Thank you. The next question comes from Talya Ginsberg of Umthombo Wealth. Do you have any further plans to expand into the Spanish market? And irrespective of that, how do you see growth emanating from Castellana?

I think we are seeing very exciting opportunities at the moment. We obviously have a preeminent position in the market. We see the deal flow. We understand the assets particularly well. The question and the challenge for us is where does the capital come from to effect these acquisitions that we believe could be not only very accretive, but because we believe buying for cash at the moment, is the way to go. That will obviously bring down LTV as well. So yes, the answer is we do see further growth in the Spanish market. I think it's through 3 sources. It's further expansion of our existing portfolio through upgrades as well served potentially Alvaro. There are individual asset purchases. And there is, if anything can happen with La España, which remains sort of an open discussion. But that is sort of where the growth in Spain could come from.

So just a follow-on question from your comments from Lwando Ngubentombi from Anchor Stockbrokers. You say there are many exciting deals in SA and in Spain. Would you consider DRIP going forward to fund these deals?

Great question. I would firstly say that the exciting opportunities are more internationally than locally. The issue with the DRIP is that it is a potential source of funding. Obviously, once you are issuing shares through a DRIP, you're servicing those shares going forward. I suppose the question behind that, Lwando, is, is a DRIP a better option than a book build? I know we've had a discussion around that. I think it's something that one could always have the debate on. We'd be very happy to get views from our investors as we move forward. But there is most definitely opportunity to deploy capital at the moment. If we are unable to get capital through other means, the DRIP is always open as an option. And the equation becomes what cost of capital am I raising the money at -- via the DRIP versus what am I deploying that into the new opportunity. So yes, it is always something that's on the strategic option list for us.

Thank you, Laurence. We have 2 more questions from [ Nico Pepe ] of Absa. First one, is management worried about the impact of the tough economic environment, being the high interest rate inflation and load shedding, the impact of that on consumers and the pressure that puts on the tenant? Are there any plans to assist tenants who may struggle to afford rentals as a result of this?

Nico, let me first answer, then I'm going to hand over to Itu. So certainly, I think the bullet point that we've addressed in the prospect slide deals that particular issue that I think the contractual nature of our income provides a large degree of insulation against those challenges. I don't believe we're going to get into a situation of tenants not being able to pay rent. I think you may see some level of SMEs falling over that will be replaced either with nationals or other SMEs. It's nothing that we believe is going to be untoward or very different from what we saw during the July riots through COVID. And I think you can see how well we navigated through that. But Itu, maybe you want to add to that point.

Yes. Laurence, I mean, I think to me, I'd look at how the portfolio is trading as a point of departure. So to me, I think if you look at across segments and you look at all the categories, it's trading fairly well and it's holding up steadily. I think what I anticipate probably in the next year or so is that you may find some of these listed national retailers slow down. But I think if you look at the operating metrics of the portfolio, I don't necessarily think that you'll find them close down stores. So I -- and maybe another point that I'd like to make is, I mean, our approach during riots and COVID was sustainability of our portfolio as well as our tenants. So I think that's part of how, as Vukile, we do business, we'll always be looking at the rent to sales, whether the malls are profitable or not, and we'll try and navigate around that context. But as we look at our operating metrics at the moment, there's significant demand and the malls are holding up fairly well.

Thank you, Laurence, and Itu. The second question from Nico was what worst-case scenario is management gearing up for in terms of backup power investment considering the possibility of a Stage 8 to 10 load shedding?

I think we've answered that with the investment we're putting into solar and battery. Remember, without battery, solar doesn't help you during load shedding. So the investment in battery power together with solar is really what we need, and that's well set out in the slide. So hopefully, our top 17 malls will guarantee power to tenants from 9:00 to 4:00. And I think that makes for a great trading environment for them as well as our customers.

Thank you. A further question from Lwando. The Vukile ramp yield is cheap at around 11.5% to 12%. Are these pipeline exciting deals better than the Vukile ramp yield?

Just give me the number again, please.

11.5% to 12%.

Probably slightly below that, I would say, in the 9% to 10% in hard currency. So I'm not sure, Lwando, from your research point of view, if your ramp yield is in ZAR or Euro. But I think at this stage, we believe we can find deals in euro in the 9% to 10% ungeared level.

And then another question from Talya of Umthombo Wealth. Do you feel being a REIT is constricting as you are unable to retain cash reserves and therefore put that capital...

I promise you I didn't find the question. This is a very, very long discussion. I don't think we have time to go through it now. I think there are challenges in the REIT environment. I think the lack of capital, and I'm not talking about Vukile, I'm talking about the industry as a whole. And I think my comments would pertain to the REIT world in Europe. I think the lack of equity capital is very constraining and very damaging to the REIT environment. And again, it's a discussion, I think, that is really a roundtable discussion between REITs, investors, analysts and saying, how does the sector move forward from here. But when you've got the likes of a Blackstone raising $40 billion for a fund to be invested in property, private equity, you very clearly are saying, I've got big pension funds around the world, seeing opportunity in property at the moment, but I want to tap that through private non-listed real estate, that's a big thing for us to be looking at. And we're not seeing those flows coming to the listed space here or in Europe. So yes, I'd love to have that debate. Please reach out to me. It's a much longer discussion than we can have now, but it's a great question.

There are no further questions from the webcast.

Anything further in the audience? Great. Let me thank you once again for your attendance. We really enjoy being here in person. For those of you that have stayed, [ Zanella ] sweet treats are outside, enjoy, and we'll be available for further questions outside. Thanks very much.