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

Good day, ladies and gentlemen, and welcome to the Ethos Capital Results Presentation. [Operator Instructions] Please note that this conference is being recorded. I'd now hand the conference over to Mr. Peter Hayward-Butt. Please go ahead, sir.

Thanks very much, and thanks very much to all our investors for taking the time. Good morning. Firstly, before we kick off, and if anyone has read the announcement that went out this morning, I started off by apologizing to all the investors for what's been, obviously, an extremely tough year on behalf of personally, but also on behalf of Ethos. It has been an extremely tough year. I think Ethos prides itself on its ability to create value out of its investments. I think this has been a terrible year. And I think, obviously, COVID has played a role in that, but I think it's important to recognize it's not just COVID, there are many things, I think we could have done differently. And so I would just like to start off the call on that basis. We'll talk a bit during the presentation on the impact of COVID. It has, obviously, been a significant detraction, both from a value perspective, but also from an outlook perspective. That said, I'm not saying we're through the worst, but we have certainly spent the last 3 or 4, 5 months, thinking about how do we take the businesses forward from a -- from the perspective where they sit today. And we are starting to see green shoots of recovery, and I'll touch a bit on that during the presentation. Now that said, despite COVID and all the implications that had -- it has had on the portfolio companies, there have been a number of achievements during the year. Ethos has resided over nearly ZAR 4 billion of disposals from various assets during a time when getting rid of assets or selling assets hasn't been easy. It's also made about ZAR 2.3 billion of investments during the last 12 months, which is also a significant achievement in a pretty tough environment. I think the COVID response, I think we had a call with our investor base probably 6 weeks or so ago going through that, was good, managed to avoid any corporate casualties in the portfolio, and I think in most cases, have significantly improved the business' ability to thrive in a post COVID world, and hopefully, that kicks in sooner rather than later. And then finally, we spent a huge amount of time into the Ethos management team, both restructuring the Brait portfolio and looking to realign those assets strategically around the theme of exiting those assets over a 3- to 5-year period. So a lot has happened during the last 12 months, which we'll touch on. And at the end, I'll also touch a bit on the outlook. And the executive summary of that is, we are starting to see the green shoots of recovery. And most of our portfolio companies are probably trading quite a significantly ahead of our in-the-eye-of-the-storm forecast during COVID, and that is a positive, long may it continue. And I think that will reflect in valuations going -- being higher in the coming months. What we did do at June was we still took a relatively conservative view as at the 30th of June, we still at that point, hadn't really seen whether the green shoots of recovery would take -- would continue and take off. And so I think the valuations as at June were at a relatively conservative valuation. I think we'll talk later about the discounts to the peer group being about 49% versus 31% at the back end of last year or at 30th of June 2019. And I think that is a reflection of, despite the fact that the multiples have come back across most of the portfolio companies, we took a relatively conservative view as at June to not increase any multiples of the portfolios from March. Just in terms of the presentation for today, I'll give you a very quick executive summary of the portfolio and then some of the key issues. But I think it's probably most important and most interesting for investors to get into the portfolio itself, and we'll spend a bit more time talking about the portfolio companies. We'll touch a bit on the liquidity analysis, and then I'll give you -- there's one slide on the outlook, which we can spend some time on. So quickly then turning to Page 3 on the operating highlights. The NAV per share as at the 30th of June was ZAR 9.12, assuming on that basis that NAV of Brait is incorporated at its NAV. If you incorporate Brait at its share price as at the 30th of June, which is ZAR 3.34 in the NAV per share on an accounting basis is ZAR 6.65. The Brait investments, as you will know, was completed as was the rights issue in about February this year. As I said in our annual results -- the annual report, the timing couldn't, to be honest, have been worse. COVID really kicked off in earnest at the back end of February, particularly with respect to Virgin Active, and it's been in an uphill battle in COVID terms since then. The carrying value of the invested capital as at the 30th of June was around ZAR 1.9 billion, and we're now about 100% invested. So we've spent the cash that we had raised at the IPO and through the rights issue, that has been fully invested. We do have a facility with RMB for any future commitments as well. The invested capital during the course of this year was about ZAR 1.3 billion. So ZAR 1.3 billion was Ethos Capital share of the circa ZAR 2.3 billion that Ethos Funds invested. And during the year, since -- well, since March, when we took over the management or the advisory contract for Brait, we managed to dispose of DGB and Iceland Foods at significant premiums to the valuations that we held them in the books. I think very pleasingly, with respect to the Brait assets, we've managed to reduce the operating cash costs within Brait by nearly ZAR 0.5 billion through actions taken since the 1st of March. And that has given us -- that and the disposals have given us significant runway and liquidity within Brait to get the strategic vision aligned around exiting the rest of the asset base. Relatively disappointingly or maybe very disappointingly, the discount currently is about 62%. Ethos Capital's discount to its NAV of ZAR 9.12 and its current share price is around 62%. And if you look at the valuation of the portfolio, it fell from about 7.5x to 7x EBITDA, last 12 months EBITDA as at June. Obviously, that's somewhat significantly altered by the fact that Channel VAS is at a valuation above that, and it constitutes 30% of the portfolio. Probably across the board, there was probably about a 20 -- 15% to 20% reduction in the EBITDA multiples from June 2019 to June 2020. Just moving on to -- quickly on to Slide 4, where we talk about the portfolio performance. And again, I won't dwell on all of this but there was around about a 20% reduction in net asset value per share from 2019 to 2020 from ZAR 11.34 as at June 2019, down to ZAR 9.12, which is around ZAR 2.24. Of that, a significant portion, about ZAR 1.55 of the ZAR 2.24, is actually a result of the capital raise that we did. We raised ZAR 750 million of capital, and we issued ZAR 100 million of shares, and that resulted in about ZAR 1.55 reduction in the NAV per share. That said, the multiple reduction, I think I referred to it earlier of about somewhere between 15% and 20% across the portfolio resulted in about ZAR 0.44 reduction in the NAV per share and the lower maintainable EBITDA levels that we used across the portfolio resulted in another ZAR 0.41 per share. So ZAR 1.55 from the rights issue, ZAR 0.44 due to the reduction in the multiple and about ZAR 0.41 due to the EBITDA, which constitutes most of the ZAR 2.24 reduction. The share price of both Brait and MTN, which are the 2 listed investments that we have in the portfolio, both were significantly affected, both fell by more than 50% during the last 3 to 4 months since COVID kicked in, and that's resulted in a very significant decrease of around another ZAR 2.49, which gets you to ZAR 6.65 if you assume the Brait share price in the NAV per share. Attributable maintainable EBITDA decreased by about 8%. We'll touch a bit on that later because it's a bit distorted by Channel VAS, which performed very, very strongly as did some of the other bigger assets. But if you had to take a straight average across the portfolio, there was a reduction in EBITDA of around about 8%, with the EBITDA multiple decreasing to 7x. In terms of liquidity, we get asked a lot of questions about our liquidity. We're currently fully invested, as I mentioned, with NAV of around about ZAR 1.9 billion invested. We currently have a base facility with RMB of ZAR 500 million, of which only ZAR 40 million of that is drawn as at the 30th of June. And we currently have net undrawn commitments of about ZAR 380 million across the various funds, which will be drawn somewhere over the next 3 to 4 years. But if you can do the maths above that, with the facilities we've got with RMB, plus dividends that we get out of the portfolio, we are -- we have sufficient liquidity to meet our commitments without any additional capital. With respect to COVID, obviously, it has a very significant impact on the portfolio. We can't shy away from that. 18 of the 24 portfolio companies were locked down during the government-enforced lockdown of COVID. It had an impact on maintainable EBITDA, as you would expect. We reduced multiples pretty much across the board. And what we did across net debt positions was we increased the net debt where we knew that a company for the next foreseeable future would have to either pay accrued expenses that it hadn't paid already or working capital requirements to get the business up and running again. So all 3 of those, EBITDA, the multiple and the sustainable net debt, had an impact on valuation. Importantly, the measures that management teams and obviously, with -- together with Ethos, put in place, during the eye of the storm, were very pleasing. We got through the storm with no corporate casualties yet, I touch wood. And I genuinely do say that many of our companies, particularly through operating costs, restructurings, to all restructurings of the way the businesses are run are genuinely in a good place if demand and in many cases, demand is coming back into those portfolio companies. So I didn't -- I think they didn't waste a good crisis. I would say just about all of our portfolio companies have significantly reduced costs throughout this. And as we'll touch on later, we're starting to see the green shoots of that recovery start to play out. Just moving on to Page 5. With respect to the Brait portfolio. We spent a huge amount of time over the last 6 months or so, repositioning the businesses with respect to getting an exit on those businesses over the next 3 to 5 years. And ensuring that we have management alignment around those strategies. And I'm very pleased to say across the entire Brait portfolio, we now have that. The strategies are in place. Where required, we've amended strategies in those portfolio companies to ensure that we can exit these businesses. And in many cases, the business are performing very strongly. We'll touch a bit on that later. Premier, in particular, had a strategic reset at the beginning of the year. Its growth plan around a 3- to 5-year exit really is starting to play out, and you'll see in the results that we talk about later, the business performed very strongly even throughout COVID. The asset in the Brait portfolio that was most impacted was, obviously, Virgin Active. We refinanced the U.K. and Asia Pacific business during the lockdown. We came up with a new liquidity plan, injected some equity, also changed the royalty stream within Virgin Active and got new debt from the existing bankers in the U.K. and APAC. And that was -- that enabled that business to continue to see through the COVID and open up, and we'll touch a bit on that later on. All the global business, including South Africa, have now launched their digital offerings, I think that was expedited to COVID, and we're starting to see early signs that, that can play a role in growing the business going forward. New Look, as you would have seen probably a week ago, we announced the results of the capital restructuring and the CVA. Again, very pleasing. Not many people gave us a chance to get that CVA through. It has now gone through. It's subject to a 28-day review, which would end at the end of -- in the middle of October. But very pleasingly, that business now is on a much more solid footing. It's reduced its net debt in that business from GBP 550 million to just over GBP 100 million. And we genuinely think that plus the CVA cost restructuring gives that business a really good chance to come back and thrive as a business going forward. In addition, on Consol, we restructured the debt there during the lockdown, and that business is now ramping up again closer to full capacity. If you talk about investments and disposals from -- with respect to the year, as I mentioned at the beginning, around about ZAR 2.3 billion was invested by Ethos Funds during the year, largely into Brait, which is just over ZAR 1 billion, but also into Gondwana and Vertice. And Ethos Capital's share of that was about ZAR 1.3 billion of the ZAR 2.3 billion. The sale of Eaton Towers was completed in January, which is an important exit for Fund VI. It achieved about 2.5x money back, a 22% return in rand. And again, it was a very pleasing asset. We held it for about 4 years, and we're very pleased to exit with those returns. Douglas Green Beverages, DGB was sold out of Brait. We received proceeds there of ZAR 470 million, which was effectively at the NAV that we held that asset as at September last year. With respect to Iceland Foods, we managed to sell that business for just under ZAR 2.5 billion during the course of the last 6 months. We sold the first tranche to management at -- for GBP 60 million. And then we had an early settlement on the next 2 tranches, which were due in July 2021 and July 2022. We got early settlement of that and GBP 48.5 million was paid into our bank account on the 15th of September. And that realized about an 84% premium to what we hold it in the book. So again, despite it being a very difficult year, and we do touch on COVID and the difficulties, there were many positive signs that came out of the performance for the year. Just moving quickly on to Brait's debt position. We've managed to reduce the debts within Brait, the Brait Mauritius facility from about ZAR 4.6 billion as at March, down to ZAR 2.7 billion, so nearly a ZAR 2 billion reduction, which has resulted in interest savings there of around about ZAR 310 million on an annualized basis. Importantly, that's increased the headroom and the covenants within Brait, both with respect to the convertible bonds, but also with respect to the Brait Mauritius facility with the banks, and that will give us enough time and flexibility to execute on the strategy, which we set out to shareholders. Importantly, the 2020 convertible bonds were repaid a week ago. And during the course of the last 6 months, we received about -- well, we achieved about ZAR 66 million of savings through early settlement offers and a tender process around those convertible bonds. With respect to the Brait operations, this -- the Brait and Ethos teams are now fully integrated. We're all in one building and working together. And as I mentioned at the beginning, probably one of the highlights of the year, certainly for me, is the fact that we managed to reduce the operating costs within Brait by nearly ZAR 0.5 billion, ZAR 493 million reduction in cash costs, of which ZAR 183 million is operating costs and about ZAR 310 million is interest savings. And as I mentioned, that will give us the opportunity, hopefully, to see the strategy through. From the strategic outlook perspective, the current focus on all of the funds really is around optimization of the portfolio, and a lot of that has gone into the last 6 months, whether it be around costs, whether it be around strategy, and also exits. I think a huge part of Funds VI and VII at the moment is focused on exits and how do we monetize the portfolio. And from an Ethos Capital Board perspective, we had the Board meeting last week and just about all of the discussion is around how do we maximize value and return capital to shareholders. And the third bullet point is probably the most important one to come out of that discussion is, there won't be any new fund commitments until we see fund realization strategies and shareholder distributions having been demonstrated. I think it's very important, given the discount that we trade at to get some of those realizations back and then to we have full optionality as to what you do with the cash. Clearly, buybacks would be a consideration, liquidity dependent. But we totally understand that the 60-odd percent discount to NAV we need to be looking at all options to maximize value for shareholders. Just in terms of giving a quick summary of the portfolio, and I'll go into much more detail later, but I'll give a sort of 2-second intro on that on Page 7. Channel VAS, which is around about 29% of the portfolio from an NAV perspective, continued its very strong operational performance. We're very pleased with the business, nearly 40% growth in the last 12 months EBITDA in rands. And this is across all territories and across new customers as well. I think one of the things that we undertook when we bought into the business was to diversify across new countries and new customers, and the business has done a fantastic job of doing that over the last 12 months. There've been 12 new deployments, which is a really good result despite COVID. And there's a whole lot of new products that have come through, but also our mobile financial service deployment has started to bear some fruit and have started to contribute to EBITDA. So a very pleasing performance from Channel VAS, which is nearly 1/3 of our portfolio. In terms of the other unlisted businesses, Echo continued with its very strong robust performance despite COVID, a very significant increase in the sales pipeline, nearly 40%. We'll talk in a bit about that later. The final integration of Gondwana is happening as we speak. Obviously, that was impacted a bit by COVID. That's Gondwana being the acquisition of the Sub-Saharan African countries that we bought. But that has now been -- or is being integrated, and we're starting to see the benefits of that, particularly with access to new customers across the continent. The strategy there continues to remain to look for infill acquisitions of complementary businesses, and there's a number of those in the pipeline as well. If you take Vertice, the medical technology business, again, very pleasing to see nearly a doubling of EBITDA over the course of the year. I can't claim all of the credit for that because, obviously, part of it is organic growth. Some of that is through infill acquisitions. And there were 3 new deals, 3 new companies brought into the portfolio mix, which has been very pleasing to see the integration of that and how seamlessly that has happened. The business was impacted a bit by COVID. We'll talk a bit about it when we talk in more detail on it, particularly around elective procedures, et cetera, which obviously are likely to reverse. We haven't seen that happening yet. But with COVID hospitalizations on the decrease, we believe that will happen. Synerlytic was impacted by the COVID. It was in lockdown and became operational only on level 3, but it's actually performing in line with budget, which is very pleasing, particularly from an EBITDA perspective, there were a number of costs that were taken out of the business. And again, importantly there, the acquisition of Anglo financials -- Anglo Field Services into that business really has boosted profitability, and is -- that business, in particular, is significantly ahead of what we had expected. The 2 businesses at the bottom Kevro and Primedia were both very difficult businesses, both went backwards significantly from an EBITDA perspective and also from a multiples perspective. From a Kevro perspective, the first half of the year was adversely impacted by supply chain issues. We'll touch a bit on that. That was -- and IT integration issues and also the consolidation of distribution centers. That said, demand has actually remained bust -- robust. And importantly, the first half issues have been resolved with the new management team. And that -- so that business is actually in a better shape than it was, but it's got some significant room to claw back from where it came at the back end of last year. Primedia, as everyone would expect, was significantly impacted by advertising spend in quarter 2 in particular. We'll touch a bit on how significant that was, both across broadcasting and outdoor that business took a significant reduction in advertising spend. We have actually started to see encouraging post lockdown increases in ad spend. It's certainly not back to where it was, but certainly from the midst of COVID, it's been a pretty significant decent bounce back from where we were, which is pleasing. So touching briefly on the Brait portfolio. As we mentioned, Virgin Active's -- all its clubs are now open, which is pleasing. South Africa was the last to open. It opened about 3 or 4 weeks ago. And again, when we talk a bit in detail later on, we'll give you some stats around usage levels and management's fees and termination expectations. But broadly, what we're seeing across most of the territories, probably with the exception of the U.K., is slightly higher than management had forecast, which is pleasing. And certainly, week-on-week, starting to see increases, particularly in the South African business, which only opened 3 weeks ago, with usage, I said at 37%, that was at week 3%. That number actually now is slightly above 40%. However, we do genuinely believe that it's going to take at least 18 months, and this is based on management's forecast, to get back to sort of membership levels similar to where we were in December 2029 -- 2019. If you take Premier, Premier has performed very strongly, which is very pleasing. It's about 8% of Ethos Capital's valuation, a massively positive, both operational and financial performance from that business. Quarter 1 revenue and EBITDA was 12% and 20% up, respectively. And that's continued into August and September, maybe even slightly above those levels, which, again, is very pleasing. Importantly, we're looking at a couple of infill acquisitions and complementary products for -- to bring on to the Premier platform, which will hopefully expedite the growth of that business. Iceland, we've touched on, we ended up selling at an 83% premium to where we held it in the books, which is pretty. We end up selling at about GBP 110 million of value. We had it in the books at just over GBP 60 million. New Look. The operational turnaround strategy there really was on track leading up to COVID. We saw a sort of probably around about ZAR 75 million of EBITDA, was the sort of LTM EBITDA in that business, which had ticked up pretty significantly. Obviously, COVID had a massive impact on that business. And we've done the CVA. We've reduced costs in that business, and we've restructured the capital structure there to reduce all of the senior secured notes to equity. And that really, we genuinely believe, has given us, in that business, a real chance to compete in a post-COVID fashion retail -- in the fashion retail space. Console was definitely impacted. It was impacted twice during lockdown, as you know, with the second -- the renewed alcohol ban in South Africa. But very pleasingly, that -- the demand is very strong for that business. It's ramping up. And certainly, we think by the back end of the year, it will be back to near full capacity. Just talking about Brait and its cash costs. As I mentioned before, the chart on Page 9 just gives you some indication of the cash cost reductions and the breakdown for that, whether it be through interest rate reductions, which we can't take much credit for, that was the base rate reduction; the advisory fees, which have been reduced, that's 26% of the reduction; other operating costs and the redomiciliation from Malta to Mauritius and reductions in the cost of the Board, the new Board that's been put in place; but also, obviously, the disposals that have kicked in and reduced the interest costs throughout the year; and then finally, through treasury management, the convertible bond repurchases really made a pretty significant dent on the cash savings for the year. And importantly, on the right-hand side, if you look at the 31st of March, the net debt within Brait, you can see the gold bar there of ZAR 4.6 billion as at the 31st of March was the Brait's Mauritius facility. That's been reduced to just under ZAR 2.7 billion. And the green bar, you see below that is the convertible bond, which matures at the back end of 2024. Turning to the next section just around the portfolio overview. Page 11 just gives a quick summary to try and give the impact on a pro forma basis of where we were at 30th of June. The dotted line around the -- I think that's a silver box gives you the impact of the rights issue and the Brait investment. So we raised equity of about ZAR 750 million or ZAR 735 million after costs. The Brait investments assets cost was ZAR 1,034 million, and you can see the impact that would have on the illustrative pro forma, 30th of June 2019. So if we had done the Brait deal literally on the 1st of July, the impact would have been to reduce the NAV per share from ZAR 11.34, down by 14% to ZAR 9.79 with the impact of the rights issue. Green bar right at the end shows the audited 30th of June 2020 numbers. That's with Brait held at its current NAV, and that reduces the NAV to ZAR 9.12 with the reductions in the valuations of the portfolio. Just moving on to the highlights quickly of sort of portfolio overview. And again, not to dwell too much on this, we'll get into more detail. We tried to show the impact that the sort of COVID pandemic has had. So the capital invested on a pro forma basis was around ZAR 2.7 billion as at December, adjusted for the rights issue and the Brait's investment as per the previous page, that has been reduced from ZAR 2.7 billion to ZAR 1.9 billion. So a ZAR 800 million reduction. The EV/EBITDA of the multiple of the unlisted portfolio reduced from 7.4 down to 7. It's significantly lower than that. As I mentioned, if you take out Channel VAS, which is 30% of the portfolio. And actually, overall, the reduction in the multiple is around about 10%. But as I said, pretty much skewed by most of the company, somewhere between 15% and 20% reduction in EV/EBITDA and then some of the portfolio companies -- some of the larger portfolio companies including channel VAS, which weren't changed year-on-year. The number of portfolio companies was 24. It's now 22, having got rid of DGB and Iceland. And if you look at the -- on a look-through basis, the current Brait portfolio is valued at around about 6.7x EBITDA. And the bottom right shows the current NAV per share of ZAR 9.12 or ZAR 6.65 if you put Brait at its current share price. Looking at the portfolio mix, just quickly to give you some idea on Page 13. 10 of the assets, the largest 10 assets contribute about 90% of the total value. Channel VAS, as you can see, is the significant outlier there at 29%. Virgin was around 13% based on its current share price. Echotel 9%, and you can read it from there. But -- so there's a relatively decent concentration of the portfolio value in the top 10 assets. And on the left-hand side, just looking at the jurisdictional NAV breakdown, about 53% of our NAV is based in SA. 40% of that is in Sub-Saharan Africa or non-SA Sub-Saharan Africa and about 7% of that is international. And to give you some breakdown from a sector perspective, about 29% of the portfolio is in FinTech, largely Channel VAS; 24% in consumer goods, the likes of the Premier, et cetera; 13% consumer services, largely Virgin; and 10% in telco services. So again, you -- companies such as Echo, and Vertice would sit there. So that gives you some idea of the portfolio, both from a geographic perspective and by assets. Moving on to the portfolio during the last 12 months. This is quite an interesting chart that we pulled out. And if you look on the left-hand side, what we've shown is last 12 months sales by the unlisted portfolio companies, so effectively the non-Brait assets. And then below that, the last 12 months EBITDA growth, I think what's interesting on the top chart, you can see 8 out of 15 companies grew sales over the last 12 months despite COVID, which I think is not a bad performance of more than 50%. But probably more importantly, from an Ethos Capital perspective, more than 80% by value increased sales. And that's just a function of some of our bigger companies performed very well throughout the last 12 months despite COVID. So I'll just repeat, nearly 80%. So if you add the ZAR 562 million and the ZAR 548 million, that's the value of the companies that we have. That's about 80% that grew in -- from a sales perspective. And if you apply the same to EBITDA, about 5 out of 15 of the portfolio companies grew EBITDA over the last 12 months. But importantly, 64% by value increased their EBITDA over the last 12 months. And more than 50% of the portfolio actually don't have any debt currently in those portfolio companies. So again, another important stat from a value perspective. But what isn't quite so pleasing is on the right-hand side. What we try to break up for you is the investment return over the last 12 months. As you can see, there are a couple of our bigger assets, Channel VAS, Vertice, Echo and Synerlytic are all 3 of our top 5 assets grew pretty well. So Channel VAS increased its valuation, about ZAR 147 million, including dividends, for the year, which is about 35% change year-on-year up. Vertice valuation increased by nearly ZAR 28 million during the year, which is a 22% increase. And you can read down. When you start getting to MTN and some of the red blocks, MTN had a very significant reduction in value throughout the year, nearly down 48%. That really is effectively the mark-to-market on that portfolio. But again, many of the portfolio companies from Eazi, Autozone, Twinsaver, Primedia and Kevro, had very, very significant reductions if you look at the right-hand side from a valuation perspective. So Eazi was down 64%, Autozone down 55%, Primedia and Kevro also down 49%. So very significant reductions. And those were largely across both EBITDA and maintainable EBITDA being lower year-on-year, but also multiple reductions. And then right at the bottom, you can see the impact that the share price in Brait has had reducing the NAV by nearly ZAR 600 million, with its share price dropping from ZAR 7.99 down to ZAR 3.34 as at June. The next slide, on Slide 15, just tries to give you that NAV analysis by valuation driver, whether that be capital raising, you can see the impact that has, as I mentioned, the ZAR 1.55 the impact that had of raising ZAR 750 million and issuing new 100 million shares. EBITDA, as we mentioned, fell by about 8% across the portfolio, that resulted in about a ZAR 0.41 decline. EV/EBITDA multiples reduced that resulted in a ZAR 0.44 decline. And whilst net debt also, in most cases, actually, there was lower net debt, but we added a number of adjustments back, as I mentioned, around sustainability of that net debt during the lockdown. The FX impact that we say there is really largely around Channel VAS. As you know, Channel VAS is in U.S. dollars. We obviously convert that based at the 30th of June, which was significantly weaker than it was in the previous year. But the significant reduction in the listed valuations resulted in about ZAR 2.49, almost ZAR 2.5 reduction in the NAV per share. Just quickly on Page 16. What this chart tries to show is what the current market-implied valuations are for the portfolio. How we get to these numbers effectively is take the current share price and work that out to what does it mean as effective multiples across the portfolio. So as you can see, Channel VAS, despite growing at 40% year-on-year, is valued at around just over 4x EBITDA or in the red box above that that's effectively your P/E ratio that the market is valuing Channel VAS at about 5.8 in terms of P/E. Echotel 3.3x EBITDA or 9x P/E ratio. And effectively, you can read it across the block. Effectively, what the market is valuing the portfolio, it is around about 4.5x EV/EBITDA or just under 8x from a P/E perspective. In terms of the composition of the Ethos Capital NAV, what we show on Page 17 is just the -- if we start from left to right, Channel VAS, the current valuation of Channel VAS in the portfolio is around about ZAR 548 million. Brait, at its current listed value, so they're not at its NAV, but at its share price as at June of ZAR 3.34 was -- is worth ZAR 431 million. And just those 2 assets together are significantly more than the current market cap of Ethos Capital. So if you take Channel VAS and 70-odd percent of Brait, you get effectively back to where the current market cap is of the business. Then you can show from there, ZAR 178 million, ZAR 153 million for Vertice; Kevro at ZAR 115 million and the buildup all the way to the NAV based on Brait's current share price. And then what we do right at the end is if you add Brait's NAV on top of its current share price, that gets you to the attributable NAV of the ZAR 9.12 that we talked about. So that's a 62% discount that I referred to earlier in the presentation. Now moving on to the specific assets themselves. As I mentioned, Channel VAS continued to perform very strongly during -- throughout the year. It currently constitutes 29% of our total assets. As I mentioned, the valuation of ZAR 548 million TMB, that's times money back. It's currently at a 50-odd percent premium throughout the cost of our in price, a significant part of that is actually from dividends received as opposed to valuation uplift. And our stake in that business is currently 20%. Channel VAS is a, as you -- I'm sure many of you know, the leading provider of airtime credit services across the continent and in some other countries outside of Sub-Saharan Africa as well. And it's also expanding into mobile financial services, which is effectively leveraging its credit scoring capability and AI capabilities across the continent. So if you look at its last 12-month performance, revenues were up 48% in ZAR or 20% in dollars. Advances, which is your key indicator of how well you're performing, were up 19% year-on-year in U.S. dollars. And just to give you some context to that, the August advances, the latest results we had, we advanced nearly ZAR 3 billion in that month of August compared to about ZAR 2.5 billion in 2019. So about a 20% pickup in August as well year-on-year. And very pleasingly from a ZAR -- in ZAR, the EBITDA growth of 40% or 15% in dollars, really was a pretty significant growth off of a much higher base. And very pleasingly, there were 12 new deployments throughout the year. And also importantly, increased penetration of existing deployments, so making better returns out of the existing deployments that we had. So very -- again, a very, very strong performance. The impact that COVID had, to be honest, the business was largely unaffected by COVID, although the impact on the Nigerian economy really is around the naira, and we'll talk a bit about that lower down when we talk about the valuation, really due to the FX conversion, the naira blew out, particularly at the beginning part of COVID, it's come back pretty significantly since then on a forward basis, but that had an impact on FX conversion. If you look at the constant adjustment of the scorecards really has ensured that the credit loss ratios have been significantly lowered year-on-year, which is again a very important stat that we focus on. And the company is focused on innovative ways to try and get around some of the currency risks in those particular countries. Again, pretty significant changes that have made there. Operationally, the business continues to experience very strong demand for its products, further efficiencies and new product deployments have happened during the year to increase diversification both away from single country and single company offtake risk, which has been important. And as I mentioned in the beginning, the mobile financial services, which could be a very significant part of this business, really has started to show in the 6-odd deployments that we have, some very solid progress and it's starting to contribute from an EBITDA perspective. From a valuation perspective, despite the EBITDA increasing 40% year-on-year, we took a view, and we've probably shown to be too conservative on that, that we thought the impact that the naira would have on the results would be more significant. We reduced the maintainable EBITDA down from ZAR 42.5 million, which is the LTM, down to about ZAR 36.5 million to take that into account. It was a forward-looking view on the impact of the naira. We haven't seen that impact happen, to be honest. So we will probably start to unwind some of that discount going forward. We didn't change the EV/EBITDA multiple, it's still held at the same multiple we bought into the business at. And there's no debt in that business. In fact, we received ZAR 22-odd million of dividends. So the results year-on-year is that the valuation went up from ZAR 423 million to ZAR 548 million, ZAR 22 million of that is obviously in dividends. As I mentioned before, we did take a decrease to the maintainable EBITDA of around about 15%. That's likely to unwind during the course of the next couple of months. So again, a very pleasing performance from that asset, which makes up nearly 1/3 of the portfolio. Moving on to Virgin Active. Virgin was significantly impacted, as we mentioned, by COVID. It's currently 13% of our total assets. The valuation of around about ZAR 243 million is based on its current share price. The TMB is not relevant. We -- at the moment. And we've -- our current stake, effectively Ethos Capital's stake on that business on a look-through basis is around about 10%. Just touching briefly on the various territories. Italy was the first to open up after COVID. Its current usage levels are around about 61% to 65%. It's the -- it's higher in the clubs that opened first and lower in the inner city gyms, which is playing out across the globe. Active members are about 14% below the previous year, and total memberships are around about 10% down year-on-year, which is probably slightly ahead of management's expectations in Italy. And particularly with the launch around the digital product, which is happening next week, we think that that's a business that can continue to get back on to a solid growth trajectory. Dealing with Australia, Thailand and Singapore together, those 3 territories constitute around about 13%, 1-3, of the revenue in 2019 to give you some context. Australia, usage levels are almost back to -- not too far away from pre-COVID levels, given the fact that we still have 3 gyms closed in Victoria or 2 in -- sorry, 2 in Melbourne are closed. So at 87% usage, that's very positive. And then particularly most of the suburban gyms, we're seeing usage at 100% of what we had last year. Usage being the number of people who come to the gym on the same-day as the previous year. From an active membership perspective, they're about 16% below prior year. And from a total membership numbers, they're only 8% down year-on-year. Again, with Thailand and Singapore, Thailand is about 13%, down from an active membership base. That's probably slightly lower. It's getting back to where it was pre COVID. In Singapore, that number is actually 29% despite the usage in Singapore being a relatively high 89% year-on-year. So again, across those territories, probably slightly ahead of where management's expectations were in the eye of the storm, and we start to literally say on a daily basis, those usage levels and membership levels start to tick up. The one problem area, I think, for us at the moment in the Virgin portfolio is actually in the U.K. I think everyone probably knows one day Boris is convincing you to go back to the office, the next day he is telling you to stay at home and not visit your granny. So I don't think any of the consumers really know what to do there. Usage levels remain at around somewhere between 55 and -- 53% and 55% of prior year. But if you look at the active members that you can see, they're 36% down year-on-year. It's really a reflection of the fact that we still have 7 of our clubs closed in inner city London. And usage levels, particularly in those inner city London gyms are significantly lower than the national average. So that is an area that we focused on, the management is focused on reducing costs in the business and really trying to find innovative ways to get the membership base back up. South Africa has been relatively pleasing, to be honest, since it started. It opened just over 3 weeks ago. Usage levels are now around 40-odd percent but probably the more important stat is what they call individual usage. We've had 1/3 of our members, just under 1/3. 30% of our members have come back to use the gym at least once since we opened. And I think that's the stat that we're focused on, on a daily basis. And you can continue to see it trend up week on week. Very pleasingly, the management team offered a fee freeze. By that, we mean, if you don't want to come back to the gym, you put your account on -- you can remain on freeze until the 1st of November. And if you actually look at the South African membership base, it's actually only down 6% year-on-year. That said, the active membership base, i.e., including the people on freeze is down around 30%. And to get a more accurate reflection of how things will pan out, I think we do need to wait to see what happens once that November freeze unwinds and see how many of those people currently on freeze terminate their membership. But broadly, probably slightly ahead of where we had expected the business to be at this point. Just on the right-hand side, just to give you some idea of the EBITDA change that we assumed in the business. 2019, the business made about GBP 140 million of EBITDA. The assumption that we've made is that in December 2021, not December '20, December 2021, on a run rate basis, that the EBITDA would be in the region of GBP 108 million. And that's the number that the valuation is based on. And if you look at the valuation on the bottom chart there, it reduced from GBP 897 million to GBP 422 million, which is about 53% reduction. And that was a reflection of a couple of things. Firstly, we reduced the EV/EBITDA multiple from 11x to 9x, which we thought more accurately reflected the business at this point in time. EBITDA, as I mentioned above, went from GBP 140 million to GBP 108 million and we also increased the net debt in that business. I think a number of accrued costs within that business that weren't paid during lockdown, which might need to be paid going forward. So all in all, a pretty significant reduction in NAV in Virgin. Moving quickly to Echo. Echo as a business has continued to perform strongly. Very pleasingly, its third-party sales increased nearly 20% year-on-year despite the lockdown. And that's the key metric that we look at. The other key metric is the weighted average, what we call the sales pipeline. So what's in the pipeline, you haven't yet converted into revenue. But again, that's up nearly 40%, 37% year-on-year, and we can see the business starting to benefit from the operational leverage of increased revenue over a relatively fixed cost base. The impact of COVID didn't really have a major impact. Echo is lucky, it's got a very broad range of customers. There wasn't an impact on the debtors book, which was pleasing, which was where we thought the pain could come through. I suppose the only point was the integration of Gondwana was less easy. We couldn't travel. The management team, they couldn't travel to those Sub-Saharan African countries, and that probably has impacted the integration of that business from a timing perspective, but it continues to go well. Strategically, demand for the product remains very strong, which is pleasing. I think the Gondwana acquisition is playing out as we thought, gives us access to more customers, bigger customers with a competitive pan Sub-Saharan African offering. And that's enabled us to compete for business and grow that pipeline, that 37% that I mentioned, at least part of that is due to the fact that we can now offer a pan Sub-Saharan African solution to customers. From a valuation perspective, the like-for-like revenue growth of 20% was a good lead indicator for how we could have increased the valuation. There's no long-term debts in this business. What we did in the business, we kept the Gondwana business at cost so we didn't change the value of that, but we increased the core Echo valuation by about 15%. So the valuation only went up by about 10% that's largely because we said, look, we don't want to increase the valuation of the Gondwana component yet, but we increased the core component by around about 15% in that business. Moving on to Premier. Premier constitutes about 8% of our NAV. Operationally, the business continued to perform very, very strongly. Revenue was up 12% in the first quarter. That's between April and June. Over the prior year, really driven pretty much across the board, but Milling had a very strong growth of 20%, baking at 12% and grocery and international business lagged. That's largely because some of those business were locked down in COVID. But very pleasingly, despite those growing 12% in revenue, EBITDA grew at 20%. And I think that's a function of the fact that for many years, the management team have been focused on operational efficiencies, and we're starting to see the benefit of that come through. As I mentioned, that performance has continued very strongly into August and September. And we would hope -- sorry, July, August and now, September, and we'd like to think that it's going to be a very strong first half of the year. I do want to count, since the first quarter of last year was a particularly weak quarter for Premier. So there's a bit of base effect in that. The growth, importantly, has come from market share growth literally across the board, which is pleasing. So volumes have been up. Operational efficiencies are up, and that really has driven the EBITDA up by the 20%, I referred to. The management team continued to focus on cost containment. There was a number of Section 189s that had to happen in the business, which is, I think, important. We can't lose sight of the fact that despite there is growth, we need to make sure we've got all of our businesses are operationally at 100%. The COVID-related costs of ZAR 43 million remain in the business. So this is despite the 20% increase and despite the ZAR 43 million of incremental cost for transport, screening and additional labor. Those obviously will start to taper off in a post-COVID world. And as I mentioned before, we continue to look at a number of infill acquisitions in that business, which I think will enable us to show both organic growth, which we're seeing, but some acquisition growth, which I think would be important for this business. The cash flow generation of the business has been particularly strong in this last quarter as the working capital is unwound, and we're obviously a big beneficiary in that business of the lower base rates. Moving over to Vertice. Vertice is around about 8% of our total asset base. Again, Vertice is a medical technology and supply business. And across a very wide range of applications, it really has diversified both by customer but also by product. It had a very strong performance over the last 12 months. Revenue was up 73%. EBITDA was up 86% year-on-year. There were 3 bolt-on acquisitions, Jumla, Paragmed and Stratmed. The contrition from Ethos Capital was around about ZAR 65 million in terms of those acquisitions. So if you take the EBITDA up almost double year-on-year, a significant portion of that obviously came through these infill acquisitions that we made. But the organic growth in the business was also very strong. So very pleased with the business, very significant progress made on, as I mentioned, supplier, customer and product diversification, which we genuinely think makes us a better business going forward. I mentioned that a number of elective procedures were delayed. I would suggest that probably had a 10-odd percent impact on our EBITDA year-on-year, so it would have been slightly further up. But we do think that's likely to pick up as hospitalizations with respect to COVID, they start to decrease. Operationally, new product development and increasing use of data and how we use data is -- and from a perspective of adding value to our customer base. Really is the focus on the business. And there are a number of bolt-on acquisitions, which are in a decent state of advancement, which we think will change it much more to a services rather than a product-only business. From a valuation perspective, the maintainable EBITDA more than doubled. We reduced it slightly because of the impact of COVID. As I mentioned, we kept the multiple largely flat despite it being a larger and more diversified business. And so if you look at the valuation increase of about 22%, obviously, significantly below the 86% of EBITDA growth, but that also reflects the fact that we had to put new capital into the business to fund some of those new acquisitions. So a very pleasing performance by Vertice, and we'd hope that, that business continues to grow going forward. Moving on to Kevro. This is a story that's not quite so positive. A very significant underperformance in the last 6 months. And to be honest, this -- you can put some of it down to COVID and the supply chain issues we had with respect to China, but the large majority of this is actually due, to be honest, some own goals in the company, particularly around the IT integration project and the consolidation of the distribution centers, which happened at the same time. Importantly, these have been resolved. The IT systems have now been fully resolved. The operational platform is now fully functional, which is positive. And the distribution centers have been consolidated, and I think, obviously, will significantly improve both operational and cost efficiencies. But the last 6 months were terrible 6 months for the business. The only positive to say is the demand side remains strong. We've seen a number of the independents fall over in this space, which leaves probably 1 or 2 of the larger players to eat up that market share. And demand remains strong. So hopefully, with the new IT systems and the distribution center efficiencies, we can get the business back on track. Operationally, significant cost reduction program, we've reduced costs over the last 6 months by nearly 14% of the cost base, which will increase the efficiencies I mentioned. And that, together with the IT system that we now do have in place and working, should help. From a valuation perspective, we reduced the maintainable EBITDA in that business. It was 11% down year-on-year, that's probably more than that on an LTM basis, but on a maintainable basis, it was down 11%. We reduced the multiple to reflect what we call a post-COVID reality for that business. And we increased the net debt as a result of some of the operational issues and the -- some of the costs that it still need to pick up. It had a very significant impact on the valuation. Valuation went from ZAR 227 million, down by 49% to ZAR 115 million during the quarter of the last 12 months. Synerlytic was a business that we bought out of Torre Industries. Synerlytic actually continued to perform well. Despite it being locked down for probably 2.5 months during COVID. It had a solid operational performance, both organically, but also importantly, acquisition-led growth. We bought -- with cash in the business, we bought Anglo Field Services and integrated that into Wearcheck and it really has resulted in very strong cross-selling and revenue growth across the Wearcheck business. AMIS business had very good growth during the course of the last 12 months. And the recent accreditation from SANAS has unlocked a number of new contract opportunities, which we weren't able to access before. So despite revenue on the LTM being slightly down, which despite COVID was a pretty decent result, actually, with the strong cost focus, EBITDA in that business was up 5% year-on-year. We've actually seen the business pick up pretty strongly since lockdown. So there was an element of catch-up, and we'll hopefully see that certainly in the first quarter or first half of the year in that business's performance. From an operational perspective, as I mentioned, we've taken significant costs out of that business since we acquired it over the last 12 months, which enabled us to grow the business from an EBITDA perspective. And the management team continue to look at the number of infill acquisitions, both across AMIS but also across the Wearcheck business as well. So with LTM up slightly in terms of EBITDA, up about 5% despite accounting for the impact of COVID, we increased the EBITDA multiple very slightly, and there was a slight increase in net debt, which resulted in about a 10% increase. So from ZAR 104 million, increasing to ZAR 114 million from a valuation perspective. Moving over to the last one of Primedia. Primedia, as I'm sure you can imagine, has had a very significant impact based on the ad spend. So if you look on the last 12 months, across radio, from a year-to-date perspective, ad spend are down 15% and 22% in outdoor, but probably more pertinently, during the second quarter, so during the lockdown, ad spend was down 40% in radio and 50% across the outdoor business. So it's obviously had a very significant impact. As I mentioned before, though, we actually have seen quite a significant turnaround of that, significantly improved post lockdown and one may that continue, but it's still well below prior years. From an impact of COVID, as I mentioned, particularly during the lockdown, the 40% decrease in radio spend and 50% in outdoor has had a very significant impact on the business. And we do think it's going to take some time for ad spend generally to get back to levels that we see pre COVID. We've continued to take cost out of the business. Again, on that business, there was significant Section 189 recently to drive operational efficiencies, given the top line pressures. We've made significant changes to the executive management team, both at our head office and divisional level. But very importantly, despite all of that, yet the business continued to be cash flow generative throughout lockdown, despite the decrease in ad spend, which was very pleasing. But from a value perspective, maintainable EBITDA was down about 21% year-on-year. We reduced the EV/EBITDA multiple about 15%. And whilst there was a slight reduction in net debt, that resulted in about a 49% decrease in the valuation from ZAR 165 million to ZAR 84 million. I'm not going to spend time on some of the other assets to give you an indication, but some of these assets were impacted very significantly from a value perspective. You can go back to that previous chart. Gammatek was down 26%, largely driven by a small reduction in EBITDA -- maintainable EBITDA, but we also reduced the multiples pretty significantly. TymeBank we still held at cost. The key LTM KPIs have been very strong in that business, significantly above the business case. But we kept it at cost, given that there's a current capital raise on the go for TymeBank to fund its continued growth. Eazi was very significantly impacted. EBITDA down around 25-odd percent, a 10% to 15% reduction in the multiple, resulting about a 64% reduction in the valuation there. And similarly, at the bottom there across Autozone, which was significantly impacted both from a multiple and EBITDA. So whilst most of our bigger businesses performed relatively well, bigger by value, in Ethos Capital's lives, some of the smaller contributors had a very significant negative impact of COVID. Just moving quickly then on to liquidity on Page -- this is Page 28. We've shown this chart before. I think the key chart -- the stacks to focus are the net commitments line. That's effectively our total commitments less the fee provisions that sit in the fund, which we pay for directly. So our net commitments ZAR 3.108 billion. We've currently got invested capital all being drawn down ZAR 2.728 billion. So if you take ZAR 3.108 billion and you minus ZAR 2.728 billion, you get to ZAR 380 million. That's our outstanding net commitments. So if we were asked today for all of our outstanding net commitments, we would need ZAR 380 million. We currently have undrawn facilities with RMB of ZAR 460 million. We've got ZAR 500 million facility less ZAR 40 million. We've got treasury shares, which we could use if we want. So actually, the commitment gap, and it's not a -- it's a commitment surplus, is around about ZAR 112 million. So from that perspective, what we show on the right-hand side is the likely flow of realizations in existing outflows from the existing commitments and an important line or blob to focus on those little blue ones, which are the available liquidity, which show that the -- even in full year 2022, which is the peak of our drawdowns, we will still have available liquidity facilities to draw on. And I'm just conscious of time, so I'll move very quickly on to the outlook. I suppose the key uncertainty remains around the impact of COVID. And I think it's in 2 ways. One, how quickly businesses come back. As I mentioned, we are starting to see the performance of most of our portfolio companies pretty significantly exceed what we had thought in the eye of the storm would happen, so a quicker recovery. I think the important part is, is there a second lockdown? What happens if there is a second lockdown and the longevity of the impact that COVID is having on consumer sentiment. But clearly, that's an impact that all businesses in South Africa and internationally have, and we will continue to monitor. I mentioned that most portfolio companies have rebounded strongly, and I think you'll see that reflected in the positive underlying valuations even as at the September quarter. And I mentioned Ethos Capital has got significant liquidity or sufficient liquidity to meet its commitments. But we continue to look at ways to unlock value in the portfolio. And by that, I mean, if we're trading at a big discount to NAV and we can crystallize some value in whatever form, potentially use that for buybacks, et cetera, we think that would be a positive use of capital. Very importantly, from our perspective, the performance of our larger assets by that, with the ones we went through today, Channel VAS, the Echos, Synerlytics, et cetera, really have been largely unaffected by the impact of COVID and have performed very, very strongly. What we've been impacted by more is the reduction in the share price of Brait. And hopefully, that can turn around. From a Board perspective, the continued focus is on NAV per share accretive strategies, and we believe that buybacks or the Board believes that buybacks are an important part of this, liquidity permitting and are continuing to look at that. And importantly, as I mentioned to you before, there'll be no new fund commitments until fund realization strategies and shareholder distributions have been demonstrated. And I think, again, that's an important commitment by the Board to focus on returning value to shareholders. With that, sorry, I took a bit longer than I thought. I'm very happy to open up to any Q&A.

[Operator Instructions]

So we've got a number of questions, which should I take those first?

You can go ahead, sir. We have no questions in the queue at this stage from the telephone lines.