Good day, ladies and gentlemen, and Welcome to the Brait FY24 Results Presentation. All participants will be in listen-only mode. There will be an opportunity to ask questions later during the conference. If you should need assistance during the call, please signal an operator by pressing star and then zero. Please note that this call is being recorded. I would now like to hand the conference over to Peter Hayward-Butt. Please go ahead, sir.
Thank you very much, and thanks very much to all of our stakeholders who are listening in today. Today, I'll spend a bit of time to give you an executive summary around the portfolio performance, but we're very grateful to Mark Field, who's the CFO from Virgin Active, and Kobus Gertenbach, who's the CEO of Premier, who's joined us. They'll give you an in-depth understanding and go through Virgin Active and Premier's performance over the last 12 months, which, and again, this is all credit to the management team. Both of those assets in particular have performed very, very well. I'll give the intro section, and then I'll hand over to Mark and Kobus, respectively. In terms of the first page of talking about the executive summary, we can just move to that slide. Let's move to the next slide.
From an executive summary perspective, and we'll go into a bit more detail, Virgin Active has had a very strong performance over the last 12 months. I think all of the hard yards that Mark and his team together, Dean, have put in really are starting to pay dividends within that asset. There's been membership growth across the portfolio, very pleasing membership growth, particularly in our international business, which has significantly outperformed South Africa. South Africa performed well, but as anyone who follows Virgin Active will know, from a yield perspective, obviously, for every member that we add internationally, they are 2.5x more valuable than a South African member just because of what they pay. And it's great to see how well the international business in particular has performed. And that's both from a membership growth perspective, but also from a yield perspective across the portfolio.
All of the territories are now EBITDA positive. Mark will run through that. That has led to a run rate EBITDA measurement as of March of around GBP 80 million of EBITDA, which is up from GBP 33 million as of September. Six months ago, it was at GBP 33 million. That has significantly increased, which shows the operating leverage in the business, which, again, Mark will touch on later. As I mentioned, the international business in particular has performed well. Really, the Italian business has gone from strength to strength, but we're also starting to see the benefits of the changes made by the management team in the U.K. business and in the APAC business as well. The operational changes and the club investment in SA have also resulted in better membership retention, which has been a target of the management team over some time.
Again, this is a large shift to turn, and all of the small and incremental changes that management have made are starting to see the benefits of that in terms of membership retention. And yield has also increased in the South African business. So very credible performance. We'll touch on exactly those numbers in a couple of pages' time. And in addition to that, the new Vitality contract was extended for five years. It's a key part of the South African business. And in addition to that, we have now agreed an extension of the debt facilities within the Virgin Active South Africa business out till December 2027, and that will be finalized over the coming months or so. So again, incredible performance on Virgin Active and even better performance from Premier. Kobus will run you through that. And again, massive credit to him and his team.
Operational outperformance and outperformance, not just relative to budget, but relative to peer group as well. In the financial year to March, EBITDA was up 19% to about ZAR 2.1 billion. This was really driven by a strong operating performance across all of the business units, so not just the milling business, but across all of the business units. Again, credit to management for all the small things that they do in that business, which incrementally have added up to a very, very, very positive result. Their results were published about a week ago. Kobus has been on the road with his team since then and has had very favorable feedback, as he should, from the investor set in that business. Kobus and the team have continued to spend on the asset base, which I think has positioned the business better than any of its competitors.
Very significant CapEx over the last four or five years. It has continued. We continue to spend money in the Aeroton Bakery near Soweto. But having said all of that, the return on invested capital increasing from 19%-22.5% is a fantastic result and again, shows the strength of this business. The cash flow in the year was ahead of expectation, facilitated the repayment of debt of just about GBP 1 billion in that business down to 0.nine times net debt to EBITDA, and that facilitated the payment of the maiden dividend of ZAR 2.20 a share as of March. So again, credit to Kobus and the team. He will go through that in a bit more detail. From a New Look perspective, again, New Look is not particularly big in the overall portfolio, called at 10% of the Brait NAV. The business, again, produced a very credible performance.
Anyone who follows the U.K. fashion retail space will know just how difficult that is to play in at the moment. In the year to the 30 March 2024, they managed to maintain profitability at a similar level to last year. We'll go again into a bit more detail on that, but there's been a much bigger focus this year on maintaining and actually increasing the gross margin, tight cost control, very significant cost reductions across the portfolio of businesses there, and overall business optimization and efficiency. So again, a good result from New Look as well. From a Brait perspective, we announced on the 3 June 2024 a large recapitalization of the business. This enabled Brait to extend the maturities of its convertible bond and exchangeable bond by three years. It was a key requirement of that was to raise capital to put into the business.
1.5 billion rights issue was announced at that point in time to facilitate the extension and continue to invest in the portfolio. With that, what it has brought is the optionality for Brait to find the right window to exit its assets. I think there have been a number of discussions around Brait's interest in Premier. I want to reiterate that we believe it is a fantastic business. There's very few businesses that are growing at that rate with that return on invested capital, with that lower rating. We genuinely believe that there's significant value upside to Premier. We are not looking to sell our stake in Premier. We believe in the business. We believe in Kobus and his team. I think when he talks about it later on, you will see why we remain very excited about Premier.
But what the extension has done is provided the optionality to find the right window to exit these assets and continue to grow, particularly Virgin Active, into a place where we can either list or sell that business in the foreseeable future. So again, no change in the Brait strategy. It remains to monetize those assets, but we've now at least got a window to do that in the optimal form. From a Brait NAV per share perspective, there was an 8% decrease year-over-year to ZAR 652, or a 4% decrease in September. And we'll go again through at the back of the presentation around the valuations. I will spend a very short amount of time just talking about the recapitalization. I know many of you were on the call on the 3 June 2024, so I'm not going to repeat it in detail.
But again, if we talk about the objectives for the recapitalization at the time when we sat with the board in March, the first was from an operational perspective to give those assets time to continue their recovery trend. So you can see the recovery trends in Virgin Active. It's gone from being a loss-making business to making ZAR 32 million EBITDA as of September to making ZAR 18 million EBITDA as of March. It continues the trend on the way to making ZAR 120 million, which is where we value the business. And included in that are some really good and exciting growth opportunities that have come the way of that business. We remain absolutely convinced in the merits of the business. Dean and Mark have done a great job together with the management team, Luca, etc., in repositioning it.
We believe having bought a bit more time to see that business fully recover will enhance value for all Brait shareholders. Again, from a Premier perspective, I want to reiterate we believe the business is a great business. As I mentioned, anyone who can find a business that has that return on invested capital, that growth rate year-on-year, and that multiple, I would like a call because we don't see many of them in this market. We are not interested in selling our shares. We are a long-term holder in this business. And again, we look forward to seeing Kobus and the team grow that business. From a New Look perspective, what do we need in that business? I think the business has stabilized, again, from being a loss-making business during COVID to stabilizing around the GBP 40 million-GBP 50 million mark.
But what we do need to start seeing is some green shoots of recovery in the U.K. fashion retail space. We are seeing it. From a New Look perspective, the second half of the year was very significantly better than the top of the financial year to March 2024. And we're starting to see even in this year those green shoots of recovery for consumers. I think if interest rates start to fall in the U.K., as they are forecast to do, we believe in the next 12-18 months that will be a much better environment to sell that asset into. From a capital structure perspective, as I mentioned, the maturity extension is what we needed. We have a two-year extension on that. That has facilitated the ability to extend the maturity of the Virgin Active South Africa debt also up to December 2027.
So now, if we look at it, all of the debt within Brait, whether those be at the operational companies or at the Brait level, all extended out to around about December 2027. We needed to minimize the cash impact. There was a very minimal increase in the coupon for the convertible bond from 6.5%-7.25% in cash and a 0.75 basis point in PIK, so all in 8%, which I think in the current environment is a credible outcome. And again, a relatively small increase in the overall cost of the exchangeable bond from 5%-6%. And no incremental shares were issued to enable us to do that, other than obviously the rights issue, which is pro rata for shareholders. And getting through those extensions on debt didn't require us to dilute ordinary shareholders at all.
In terms of the transaction itself, what does it do for the business? The ZAR 1.5 billion rights issue, which has been priced at ZAR 0.59 per share, is around about a 73%, can you repeat that, 73% discount to the current NAV per share on a fully diluted basis. We've seen relatively, well, very strong interest from most shareholders to participate in it, including Ethos Capital, who, as you will have seen yesterday, announced that they will unbundle the shares. And the reason for that is the Ethos Capital shares are very big supporters. Shareholders are big supporters of Brait and wanted to be able to follow their rights. So I think that's an overall very strong statement around the rights issue from Ethos Capital.
The rights issue is fully underwritten by Titan at the rights offer price, but is obviously offered to all shareholders on a pro rata basis.
If you look at the extensions on the convertible bonds, as I mentioned, a three-year extension, we will repay ZAR 150 million of those bonds. That money coming from the placing of the Premier shares, which we did back in March. As I mentioned, the coupon will increase from 6.5%-8%. In terms of the exchangeable bond, we will repay ZAR 750 million of the principal of the exchangeable bonds. There will be no incremental shares underlying the bond. It will remain at the 686 million shares. But that effectively reduces the strike price on those exchangeable bonds pre the rights issue to ZAR 3.28 and to ZAR 2.21 on a post rights issue basis. From an extension of the RCF perspective, we've also extended that out to March 2028 and increased the size of it.
We will only pay commitment fees on the existing ZAR 600 million for so to the extent we need it. And if we need to, we will go back to our provider of the RCF and request an extension, which we don't think we will necessarily need. So overall, it demonstrates very significant shareholder support. We've seen that since the announcement. I think a very significant number of shareholders are looking for excess allocations in the rights issue, which we think is a positive. Overall, it gives new capital to support the portfolio and reduce debt, particularly around Virgin Active South Africa, which has facilitated the extension there. And I think most importantly, it provides us with time to find the optimal exit window for each of the assets. There will be around about a ZAR 900 million reduction in the debt around the convertible bonds and exchangeable bonds.
And obviously, on a net debt basis, there will be around about ZAR 2.4 billion of reduction overall in net debt. The steps are set out over the page. I'm not going to dwell on this in any great detail. Step one was completed in March. Steps two to seven are all interconditional. Very pleasingly, we now have the requisite number of ordinary shareholders supporting the rights issue. So all of the EGMs, which are set out for the next couple of weeks, now have the requisite number of shareholder approvals. That's the exchangeable bonds, the convertible bonds, and the ordinary shares. We now have the requisite number of approvals. So to all intents and purposes, the transaction will happen, and the rights issue will kick off early in July. What does it mean from an NAV perspective in terms of, well, from a balance sheet perspective to start with?
As I mentioned, there's around about a ZAR 2.4 billion reduction in the overall debt in the business. Whether you look at the debt on a cash settlement basis on the left-hand side or to the extent that Brait elected to equity settle the exchangeable bond, in either of those, there's a very significant reduction in the debt for the business. You can look at the charts on the bottom in terms of the impact on the fully diluted NAV of the rights issue, the NAV per share going from ZAR 4.67 down to ZAR 2.23 after the raising of the ZAR 1.5 billion rights issue and the new shares issued. On the bottom right, what we show again is the extent that the Brait share price remains at 79p, which is effectively the TERP, theoretical ex-rights price. You can see what the NAV per share is, ZAR 2.23.
Obviously, to the extent that the share price increases to the strike price on the exchangeable bonds, which, as I mentioned, post the rights issue at ZAR 2.21, you will see that the cash settlement amount goes from about ZAR 1.4 billion down to zero. To that extent, at that price of ZAR 2.21, the NAV per share today is the equivalent of ZAR 2.53. So anyone deciding whether to follow their rights at ZAR 0.59 needs to look at this table and decide. Somewhere between ZAR 2.23 and ZAR 2.53 is the NAV. So the discount at ZAR 0.59 is obviously very appreciable. In the last slide, just quickly on the restructuring itself.
Again, from a value uplift perspective, you can see the implied market value today implies a valuation to date on Virgin Active of around about ZAR 3 billion. That's the market implied value based on the current market cap and the debt.
What does it mean if you look at the NAV per share going forward post the rights issue? You can see there's around about a 3.5x uplift in the valuation of Virgin Active based on the NAV today, which assumes an EBITDA of ZAR 123 million. We'll talk about that just now and a multiple of nine times. What we show on the right-hand side, though, is if you assume that the multiple is not nine times, for example, on Virgin Active, and you assume that's to pick a number out, perhaps seven times, and Premier does not re-rate at all, it already has re-rated from these numbers. This is done at ZAR 61 a Premier share, not the ZAR 71 it is today. Then at seven times, then the NAV is ZAR 1.73. Again, a very significant premium to the ZAR 0.59 where the rights issue is priced.
As a summary, quickly on the recapitalization, what does it do? There is no change to the strategy. We continue to look to monetize those assets over time. But what we have bought ourselves or bought Brait is the flexibility or the optionality to choose the right window to do it at the right time to maximize value for shareholders. From a debt perspective, we've removed the overhang for December 2024, which is obviously impacting the share price as well. And the net debt reduction of around ZAR 2.4 billion is a very significant reduction from where we were. In terms of the incremental costs, very similar coupon on the debt that we have, 5%-6% on the exchangeable bond, 6.5%-8% on the convertible bonds. And there's no incremental dilution for ordinary shareholders for the extension. Obviously, as I mentioned, pre the rights issue.
In terms of the rights issue, it's been offered at ZAR 0.59 per share at 73% discount to the fully diluted NAV per share. It's fully underwritten, although all shareholders can participate. Just to give some indication of the timetable, which will be set out in an announcement in a relatively short order once we have JSE approval for the rights offer circular. But this gives you some idea. Where are we today? We're on the 25 June 2024, the annual results. The EGMs are around about the second and 3 July 2024 to approve the changes to the convertible bonds, exchangeable bonds, and ordinary shareholder approval. Then we would look to launch the rights issue around about the 15 July 2024, which would mean that we would conclude sometime in early August the full capital raise.
As I mentioned, we have all the requisite shareholder approvals to do so. Just moving quickly on to the NAV to give shareholders an update. I won't again dwell on the slides. You will have seen it many times. I will go into a bit more detail over the page around Virgin Premier and New Look valuations. Overall, as you can see, a reduction in the NAV, largely not driven necessarily by the valuations in the underlying businesses, but obviously some changes to the capital structure. Looking at the capital structure, you will see that obviously the borrowings, the convertible bonds, and the exchangeable bonds and the RCF have moved from non-current liabilities, i.e., more than 12 months to their maturity. Obviously, now they have less than 12 months to their maturity, so they are now current liabilities. That is why we needed to do the recapitalization.
I suppose the big changes which we can talk around that are really in the accounting treatment of the convertible bonds and exchangeable bonds to maturity. On the right-hand side, what we try and show is what would the NAV per share be on a post recapitalization. So once we repay the debt with the convertible bonds and exchangeable bonds and do the rights issue, what is the NAV per share on a pro forma basis? And as you can see there, around about ZAR 2.88 or ZAR 2.64 on a fully diluted NAV per share basis. What were the underlying drivers of that? From a Virgin Active perspective, the maintainable EBITDA remained at around ZAR 123 million. I think it was ZAR 121 before. That is a December 2025 forecast of the management team.
It hasn't changed materially from the ZAR 121 million, despite the fact that there's been a 10% reduction in the rand to pound exchange rate. From a multiple perspective, we have been consistent, maybe consistently wrong, but consistent at valuing the business at nine times EBITDA. The peer group has gone up by about 15% year-on-year, but we've maintained the nine times on a forward-looking basis, which represents a 9% discount to the peer group. We will go through that in more detail. Third-party in the business remains at about ZAR 447, so slightly down from ZAR 476. But that is at least partly attributable to the recapitalization, as you can see at the top, ZAR 33 million plus ZAR 4 million of new capital going into the business. From a peer perspective, we value the business at a mark-to-market on the share price as of 31 March 2025 was ZAR 61.
I haven't looked today, but I think the current share price is around ZAR 71. But this is done at ZAR 61. The reason for the ZAR 8.49 is not that the valuation has gone down. It's broadly similar year-on-year on a large basis. But you will remember we placed ZAR 900 million of Premier shares on about the 28 March 2024, so just before the year-end. So that is really what's driven the ZAR 8.49 decrease in Premier. From a New Look perspective, it's flat year-on-year. A slight decrease in the valuation of the business in pounds. But obviously, with the depreciation in the rand to pounds, it's a slight increase,ZAR 51 million overall. What has it been driven by? Broadly similar EBITDA year-on-year. But as I mentioned, from an actual perspective, last year we valued it on a 12-month forward basis. We used ZAR 55 million.
This year we are valuing it on an actual basis of ZAR 40 million. The business actually made ZAR 41.7 million, but it's valued on ZAR 40 million. Therefore, the multiple that we've used is 6.5 and not a forward multiple of five, which we used a year ago. At 6.5, this represents a 41% discount to the peer group average. I think the benefits of the last year where we've managed to extend the debt in the business and show that the business can be sustainably profitable all resulted in an increase in the multiple. In terms of cash and receivables, the changes there really are twofold. One is the placement of the Brait share in Premier. That's the ZAR 900 million I referred to. So that would have come in year-on-year. In addition to that, we invested in Virgin Active, as you can see there.
The net of those two amounts overall resulted in the difference in the cash receivables. So that, again, is reflected on the fact that we've sold down the Premier shares. In terms of borrowings, relatively similar story, the opposite of that. We repaid, call it ZAR 2 billion of the RCF. And that's why that number has gone up in inverted commas from an NAV per share perspective. And from a convertible bond perspective, the only real change is this accounting treatment that I mentioned earlier, IAS 32, which measures your liability components in any bond. So anyone who follows this for their ISINs would know the closer you get to maturity, the less the equity component of your bond is. So you can see that in the convertible bonds, ZAR 379 with the lower equity component and ZAR 238 in the exchangeable bonds. That is literally an accounting treatment.
It's madness, but it is what the accountants require us to do. So call it ZAR 600 million is the accounting treatment adjustment on the convertible and the exchangeable bonds. And therefore, overall, the balance sheet movement was broadly flat year-on-year other than that ZAR 700 million. And you can see that on this page. And the final page before I hand over to a much more interesting discussion around the assets. This page again just shows at a snap point in time of March 2024 what the closing cash balance was. The closing cash balance at that point in time was ZAR 104.8 million. That included the ZAR 900 million which we raised from Premier on the 28 March 2024 . And therefore, the available liquidity as of that reporting date was ZAR 1.5 billion.
Probably more interesting is on the right-hand side of the chart, you can see what the adjusted March 2024 balance sheet will look like. There will be cash on hand of ZAR 1.8 billion, which is including the ZAR 1.5 billion rand rights issue plus the ZAR 300 million of cash in hand. There will be lower debt. The debt, as you can see there for the convertible bonds, would be down from ZAR 3.5 billion to ZAR 2.6 billion. That's the accounting treatment of that account on an accounting basis. And then from a BIH exchangeable bond perspective, it goes from ZAR 2.8 billion to ZAR 1.5 billion. Again, that correlates with that NAV chart three or four pages before. With that, I will hand over to Mark to go through the Virgin Active presentation. Thanks, Mark.
Thank you, Peter, and good morning to everybody on the call. Before I get into the slides, let me just give a sort of high-level overview of where the business is. Overall, business has continued to see strong growth momentum across all territories. Health and wellness trends, in particular, continue to be supported. We see this as structural rather than transitory. Importantly, what we are seeing is greater awareness of the combination of different aspects of health and wellness, so exercise, nutrition, sleep, recovery, which all play a part in wellness and align with the direction in which we're taking the business. Operational changes that we made to the business in 2023 are starting to yield dividends in 2024. As a recap in 2023, we slimmed down our central management structures.
Not only did this yield operating cost savings to the business, but it's also made us better in terms of how we manage the business, how we drive collaboration and best practice across the group. As Peter mentioned, the business has seen EBITDA run rate increase from GBP 33 million per annum as at September 2023 to a current GBP 80 million per annum. That increase has been driven by a combination of revenue growth, the aforementioned operating efficiencies in the business, and then, of course, our structural operating leverage that allows 80%-90% of incremental revenue to flow through to EBITDA. And that's important when we're looking at the EBITDA run rate. Now, coming out of COVID, the business was very much focused on membership growth, getting members back into the club. And to do that, we ran attractive promotional campaigns, which were effective in driving membership growth.
However, that came at the expense of yield. In the case of South Africa, it led to poorer quality sales, which ultimately drove higher terminations during the course of Q2 and Q3 of 2023. Towards the end of 2023, the business has moved its focus from being membership growth focused to revenue growth focused. This is an important point to note. Not all memberships are the same. What we're looking at as a business is the right combination of volume growth, yield growth, be that club pricing or the membership options in a club that we sell, who we sell to in terms of quality of member, how we engage those members in the club, how we engage them with our app and loyalty. Altogether, those optimize revenue growth. They optimize retention and ultimately drive customer lifetime value, which is what we're seeking to achieve.
Okay, moving on to the first slide covering our revenue growth, April year-to-date. Starting with South Africa, which makes up 34% of our group revenue. Revenue for the first four months was ZAR 63.1 million, which is by 1% above budget, importantly 16% up year-on-year. That 16% was driven by a combination of membership volume growth of 26,000 members, which is in line with budget and 4% up year-on-year. And the membership yields, while in line with budget, are 10% up year-on-year. And that reflects a combination of CPI pricing plus which clubs we've sold more at and the membership mix that we've been selling at those clubs.
It's been a focus on quality of sales in South Africa and member engagement through our app and our loyalty program that collectively have improved our yields, both in terms of what clubs we sold, the product mix, and improved our retention. Moving on to Italy, which makes up 28% of our group revenue. Revenue for the first four months was GBP 51.4 million, which is 1% above budget and 23% up year-on-year. That number is made up of 10,500 membership growth, which is well above budget and 14% up year-on-year. And then membership yields are up 7% year-on-year, which is about 1% ahead of budget. Overall, for Italy, a very strong start to 2024 with sales, retention, yield, all contributing to the strong performance. Coming on to the U.K., which makes up 24% of our group revenue.
Group revenue for the first four months is GBP 43.1 million. So that's in line with budget and 13% up year-on-year. That's made up of 8,600 membership growth, which is by 1% above budget and 6% up year-on-year. And our membership yields are 7% up year-on-year, reflecting CPI increases plus higher sales, both in terms of higher yield in clubs, particularly London clubs, and then an improved product mix within the estate. So the London CBD clubs continue to recover, and we are seeing higher trends in terms of return to the office, a trend towards three-day working weeks. Some companies going to four. It's not at pre-COVID levels, but it's certainly an improvement from where we were this time last year. And remember, those London clubs are higher-yielding clubs in the estate. And then lastly, APAC, which is 14% of our group revenue.
Revenue for the first four months has been GBP 25.6 million. That's slightly below budget, but importantly, 22% up year-over-year. Membership growth was 9,000 members, which is up 17% year-over-year. Yields are marginally below budget, mainly because we are selling more into the corporate market, which carried discounts, but importantly, higher retention rates, leaving our yields up 4% year-over-year. All territories across APAC, Singapore, Thailand, Australia are delivering robust revenue growth. We are seeing a steady recovery in our CBD clubs across Singapore, Bangkok, and Sydney and Melbourne. Altogether, what that means is that for the entire group, our revenue is up 18% year-over-year. As mentioned earlier, the restructuring process that we've taken, that we've implemented, has improved our operating efficiencies and delivered significant cost reductions. We continue to manage liquidity tightly and importantly ahead of budget.
Our capital allocation in the business remains focused on product premiumization that drives volume and yield growth. Moving on to the next slide. Here, we're just going to focus a bit more on our membership trends across the group. Overall, our group membership is up 7% year-on-year. Starting with South Africa in the top left. South Africa has had a good growth in Q1 up to April 2023. But then, as a result of poorer quality sales, it had a difficult Q2 and Q3 of 2023, where we saw higher terminations. And so we took steps in the second half of 2023 to improve the quality of sales. That focused on the promotions, what promotions we pushed. We changed our sales commission structures to be moved from being remunerated on units to being remunerated on revenue, net of any unpaid debit orders.
We've continued to push our app and our loyalty. We've got up 67% of members, over two-thirds of our base now on our loyalty program. What our stats are showing us through the loyalty program is that members engaged on our loyalty program are 60% less likely to terminate. Overall, what we've seen has been a 5 percentage point improvement in our retention rate. Looking at South Africa ending April 2024 and 630,000 members, all that growth since April 2023 has effectively come in the first few four months of this year as those aforementioned initiatives started to pay dividends. Moving on to Italy. Italy has seen a 14% growth in membership. It continues to deliver a steady, consistent performance. That's testament to the high-quality product we have in Italy and its unique position in that market.
Then moving on to the U.K., top right. Consumers in the U.K. remain stretched with high energy costs and high interest rates, but we are seeing that pressure abate somewhat. Certainly, energy costs have come down. Interest rates look like to have peaked, and hopefully, we'll see some consumer relief by a reduction in interest rates going forward. But overall, for the U.K., a solid start to 2024. And you'll see with the light green lines that we've seen a good unwind of frozen members just becoming active members again. Then lastly, APAC, bottom right. We've seen an 18% increase in membership. That's the strongest performance that we've seen across our territories. Once again, all territories have contributed to that result, and it's been a steady performance over the past five quarters. Moving on to our KPI slides, if I may.
When we break down our four, or probably just our five, six KPIs that we look at across the business, gross sales are down 5% year-on-year. Now, that reflects the fact that, as I mentioned before, we were previously focused on driving sales through promotions in the Q1 of 2023. We shifted our focus to quality of sales, which are focusing on higher retention and higher yield. When we look at our attrition rates, our attrition rates have improved by two percentage points year-on-year. And while the gross sales are purely new members coming in, that two percentage points improvement in attrition applies to our entire member base. We've seen that's resulted in a 7% increase in active members. Our yield across the business is up 10%.
That would reflect CPI increases, repricing of certain clubs, particularly where we've made reinvestments, and then selling a better mix of membership across those clubs. So altogether, our 7% increase in members, our 10% increase in yields, combined with increasing ancillary revenues, delivers an 18% increase in revenue. That revenue of GBP 181.5 million is a GBP 27.7 million year-on-year increase. That translates into a GBP 22 million increase in EBITDA. So you can clearly see the operating leverage in the business where the revenue flows through to EBITDA. Okay, moving on a slide, if you may. Lastly, focusing on our segmental performance across our territories. Our GBP 181.5 million of revenue is in line with EBITDA, and as mentioned before, 18% up year-on-year. We've looked at the revenue of South Africa and the U.K. in previous slides. Australia revenue is GBP 12.4 million. Thailand revenue is GBP 6 million.
Singapore revenue is GBP 7.2 million. Importantly, all those are consistently up year-over-year, 15%-34%. When we look at both our revenue and EBITDA, one of the important points for us as management is to increase the share of our offshore hard currency revenue in EBITDA. As of the end of April 2024, our offshore revenue now makes up 66% of our overall revenue. Moving down to the bottom gray block on EBITDA. South Africa EBITDA year-to-date has been GBP 13.9 million. When we combine that with Kauai collectively, that would be GBP 15 million of South African-generated revenue. That makes up 60% of the group EBITDA. Naturally, we'd expect the 60% to drop as the offshore territories continue to deliver their strong recovery performance. U.K. EBITDA was GBP 2.8 million. Italy, GBP 9 million. Australia year-to-date has a loss of GBP 400,000.
However, it is now EBITDA positive from April onwards. So as Peter mentioned earlier, all our territories are now EBITDA positive. Then Thailand, Singapore making a small contribution. And Kauai business continues to perform very well, 22% up year-on-year. And then pulling that all together into the graph on the bottom left, you'll see from September 2022, March 2023, September 2023, we've delivered a solid, steady recovery in our EBITDA run rate. However, our focus on driving revenue and our operating cost efficiencies, combined with that operating leverage in the business, has actually allowed us to create a step change in our EBITDA run rate. So we've gone from our EBITDA run rate of GBP 30 million per annum in September 2023 to GBP 77 million as of March 2024 for Virgin Active club business.
If we add a run rate of GBP 3 million per annum for the Kauai business, that gets us to our GBP 18 million per annum of EBITDA run rate. And that is the end of the Virgin Active slides. Peter, I'll hand back to you.
Thanks very much, Mark. We really appreciate not just your presenting today, but obviously your and Dean's performance and the team's performance. So thank you very much for that. And therefore, we will now move on to Premier. We've got Kobus online. Kobus, we'll go to the call. And just before we start, again, Kobus, congratulations to you and your team for a fantastic performance year-over-year. And over to you.
Thank you very much, Peter. Appreciate the kind words. I'm going to start with the slide that has the results for the year on it, Peter. If you could just move to that.
Just in a nutshell, for the year to end of March, Premier grew its revenue by 4% to ZAR 18.6 billion. It's really a story of revenue growth in the first half and sort of flat-ish revenue in the second half as commodity prices came down quite a bit, which you will also see from the release in working capital later in the presentation. EBITDA increasing 19% to ZAR 2.1 billion and with a margin of 11%. I think we've stated for a while that we were looking to get our EBITDA solidly into the double-digit levels, and very satisfying to see that happening this year. EBIT up 26% as our depreciation charges remain fairly flat at around ZAR 450 million per year, giving us that additional leverage.
With the EBIT margin also climbing for the first time to above the 8% level, which is what we set ourselves as a target a number of years ago. Our return on invested capital, I think it surprised us a little bit on the upside at 22.4%. We've always stated that we were looking to keep that around the 20% level. I think with some of the factory build-outs that we are busy with that will add some capital to us in the coming months, we might see a slight downtick in that just because we spend capital and those facilities are not online yet to produce profits and revenue for us. But as soon as that comes along, I'm happy that we will continue on this trend. Our net profit up 16% year-over-year.
Really, the big thing that we noted last year in the presentation was a couple of abnormal gains that we took in the previous year as a result of having to prepare our balance sheet for the listed market, which resulted in one-off gains, non-cash flow gains in the prior year that we highlighted to the market on a number of occasions. I think that you will not see any normalization from Premier again going forward. Our net profit margin now climbing to the 5% level. Then, as Peter alluded to, our leverage ratio coming down to 0.9 as we had the benefit of both the cash generation out of the profitability, but also a bit of a release out of the working capital after the big inflationary increase in the prior year.
If we move to the next slide, please, Peter. That shows our Millbake divisional performance, just showing that this is the big engine in our business that drives our performance. It accounts for about 84% of our profitability. I think a very satisfying performance for us, driven by a big focus on efficiencies and margin management post the big inflationary prior year numbers that came through. For those that are interested in the commodity cycles, in our previous financial year ended 2023, we had about almost a 30% increase in grain prices, both maize and wheat. During the past year, by the end of our financial year, we'd seen almost a 20% decline in wheat and maize prices.
I think a testament to the way that our team and the management runs the business, where we're quite agnostic to underlying grain prices, and we continue to focus on the margins that we need to make. So in our world, revenue really at times is not a fair reflection of the true growth within our business. If we also look then at just a couple of the capital projects, our big focus is on the Aeroton Bakery. We shut it down end of July, busy rebuilding that. Hopefully, have it fully commissioned by August next year. These projects truly are full two-year projects to execute. And there's no way really to shortcut that. We had to do some refurbishment in the run-up to shutting down Aeroton prior to end of July.
So in the beginning of the past financial year, we spent quite a bit of money just to keep Pretoria up and running. We managed to bring our added capacity in our Eswatini wheat mill on stream. There's a fairly big industrial customer that are manufacturing instant noodles for the Southern African market and were requiring quite a big increase in flour supply that we have managed to provide through this capacity expansion. And then we've also done a lot of work on our Mthatha Bakery. Their last work on it's only been completed in the last month to really get it up and running and also provide for the type of quality product and the slightly higher capacity in that business. And then we continue to do work on our smallest bakery, which is one we acquired three, four years ago in George.
Then very small, but we also managed to acquire the Top Score brand in Eswatini. It's a maize brand. We trade under the Top Score brand in our Mozambican market, but the Top Score brand in Eswatini still remained with the original family that started that business. And so they decided to sell their brand to us in Eswatini. If we look at the next slide, our groceries and international performance, it's really two sides of the coin here. On the one hand, you have quite exceptional performance from our HPC business under the Lil-Lets and Dove cotton wool brands, both in South Africa and in our international markets in the U.K., Ireland, the UAE, Cyprus, and with our launch on Amazon into the US.
We've also managed to bring a couple of robotic machines from a contract manufacturer in Taiwan across to South Africa to increase our production capacity and onshore more of our manufacturing and also start to make some product for the U.K. market from our Durban facility. On the sugar confectionery side, we've really seen a strong performance from that business, especially as we have managed to service Woolworths in particular quite well and making more and more SKUs for Woolworths. That is proving to be good business for us. We're also at quite an advanced stage and hoping to bring our new licorice plant online by October this year, which would then enable us to continue to make further consolidations between our two factories that we have and create separate centers of excellence in each one of the factories to make a specific set of products.
On our CIM business, as the other side of the coin, we continue to face headwinds in Mozambique. We've continued to invest in that business. We've continued to maintain our facilities. It's still the only food manufacturer in Mozambique that has got FSSC 22000 certification. And so it really is primed for a recovery in the economy. We've started to pivot the business towards supplying more product into the Southern African market from cake flour to biscuits to pasta. And we will continue on that path as we await better economic conditions within its core market in Mozambique. Then moving on to our just recap of the income statement. Across the board, the 4% growth at revenue that translates into 19% EBITDA growth that goes to 26% at EBIT growth.
Then, as I say, the net income only at 16% also influenced by the much higher finance costs as a result of global interest rates that have moved up. We certainly expect in the current year to see that trend reverse where the down payment on our debt and hopefully a few interest rate cuts will start to lower our interest bill again for the next year. Then if we just move to the slide on cash flow, this is the last slide in my presentation. I think we're very pleased to see the release of that cash flow coming out after the previous year; we had quite a big investment in working capital. You'll see the ZAR 274 million investment in the prior year swinging back to a release of ZAR 246 million. We've continued our capital expansion plans and then actually stepped it up a little bit.
Our maintenance CapEx in the last two years has been a little bit higher than what we usually spend as we did quite a bit of work on replacing fleet in particular on the bread side as we made a major push to just take some older vehicles out and bring some fresh vehicles into that fleet. I think we've made quite a good investment and should see that subsiding a bit in the next year or two going forward. But obviously, the expansionary CapEx will continue to run high with the Aeroton project. We are guiding towards a continued spend for this current year and next year of ZAR 700 million, with the ZAR 700 million in the following year anticipating another major bakery investment that might be required. But we haven't finalized plans for that yet, but we're just providing some guidance.
Overall, free cash flow generation conversion then up to 66%, allowing the repayment of the facilities. We've also, quite key, repaid all the debt in our Mozambican business. It's got no debt in it. Interest rates there are over 20%. And we should also see the benefit in our average interest rate in the current year from not having that debt within our group at all anymore. Peter, that is it as an overview on the Premier slides. I'll put it back to you.
Thanks, Kobus. And again, absolute credit to you and the management team. So please thank them all on our behalf. So with that, let's just finish off very quickly on New Look. As I mentioned, not the biggest asset in our portfolio, but an asset in our portfolio nonetheless. From a revenue perspective, it was down around 9% year-on-year.
But more pleasingly, on a gross profit perspective, it managed to increase its gross margin by about 4%. And therefore, a much lower increase at a gross profit level, decrease of about 2%. And then from an EBITDA perspective, broadly flat year-on-year, largely driven by costs and operating costs that came out of the business. Anyone who follows that space will know it's a very competitive space, particularly with SHEIN and Temu, who like in other markets are aggressively on the online platform, becoming an increasingly strong competitor, which has driven increased marketing costs from a New Look perspective. But New Look has maintained its second position in the women's wear market, and that's across all of the essential categories, which is a very pleasing performance.
If you look year on, sort of half year on half year, the first half, first six months of the year, volumes were down 4%. What we've seen is volumes turn around and be up by 1% in the second half of the year. We are starting to see the green shoots of recovery. A lot of the strategic initiatives that management have been focused on over the last 12 months, really around the efficiencies at the distribution centers, restructuring and downsizing the London office, will all bear fruit going forward in the new financial year. Again, the next day delivery, in-store stuff does set New Look apart from some of its competitors. Again, the third-party partnerships that we've struck probably over the last two years with some partners really are starting to pay dividends for the group overall.
Again, from a revenue perspective, the business is really into two parts, the sort of bricks and mortar side, which is called retail and then online. Retail was down more significantly, obviously, than the online business. Retail down 12% year-on-year, whereas online was down 2% to GBP 263 million versus the GBP 553 million in the retail space. Overall, as I mentioned, the second half of the year was better than the first half of the year. And we have started to see a better start to this year than we experienced last year. One thing management has been very focused on is inventory stock management in particular. And we are starting to see as this year progresses, the customer's mindset is obviously switching into this spring summer product wear.
As I mentioned, EBITDA broadly flat year-on-year. So the revenue miss of 8%-9% translates into a very small reduction, which does show the focus on the costs, which were down nearly GBP 10 million in full year 2024, really are starting to pay off. And we will start to see some of the other benefits of some of the other costs that management have been focused on in the last part of this year coming to fruition next year. Just moving quickly then on to the valuations. I think there's only two slides to go. From a valuation perspective on Virgin, as I mentioned, the maintainable EBITDA, that is a December 2025 number. So call it 18-odd months up based on management forecasts.
We've maintained the multiple at nine times despite the fact that the peer group has gone from this time last year to around eight times to 9.9x. We've continued to keep the nine times multiple the same. As you can see, that translates into an enterprise value of GBP 1.1 billion. And once you take off the debt, and that's the senior and the convertible preference shares, the equity value is broadly flat year-on-year in pounds. Obviously, that makes it slightly up in rand, given that there's about a 10% depreciation in the rand versus the pound exchange rate.
Again, on the top right, what we do show there is if you look at the market cap, and this is adjusted for any new issuances of equity, the peer group has gone, if it was at 100 in notional terms in January 2020 before COVID, the peer group is broadly where it was then, back at 99. Whereas if you look at the value of Virgin Active based on our valuation, it's at 42% of where it was at the time. So we would believe that's somewhat conservative compared to the listed peer group debt, which has re-rated all the way back and has had the same issues that Virgin Active has faced over the past three or four years. Again, the last slide just on New Look. From a Maintainable EBITDA perspective, we've used GBP 40 million. It made GBP 42 million as of March.
We've used a multiple of 6.5x. As I mentioned before, that 49 LTM number, previously the five times multiple was a forward multiple. So they're not comparable. But the 6.5x is about a 41% discount to the forward to the LTM multiple that the peer group trades at. So again, from an enterprise value, it values the business broadly the same as it was in September at GBP 260 million. Subtracting the debt, which is obviously somewhat seasonal, gets you to a shareholder value of GBP 228 million. And again, given the adjustment between the rand dollar, which is about 10% depreciated, that means that we have a slightly higher, broadly similar valuation for New Look at ZAR 982 million. That concludes the presentation itself. Are there any questions from the lines? First, otherwise, I'll go to some of the questions that have been sent through.
Thank you. For those on the conference call, if you wish to ask a question, please press star and then one on your telephone keypad or on the keypad on your screen. You will hear a confirmation tone that you have joined the queue. If you wish to withdraw your question, you may press star and then two to remove yourself from the question queue. For those on the webcast, if you wish to submit a question, you may use the text box at the bottom of your screen. Once again, if you would like to ask a question, please press star and then one. We have a question from David Eborall of SaltLight Capital Management. Please go ahead.
Hi, Peter. Can you hear me?
Yeah, I can, Dave.
Fantastic. Thank you. Thanks for the call. Peter, just two questions. The New Look numbers, am I right that the full year 2024 numbers are 53-week number and the prior year is a 52-week number, or have you adjusted that in the presentation?
Yeah, you are right. That is why we use a sustainable maintainable EBITDA of GBP 40 million and not GBP 41.7 million.
All right. So I mean, from just all looks, so obviously the physical retail is going back quite a bit. You obviously managed to cut costs a bit in that business. But I mean, if you didn't have the extra week, the number would look quite different. Who's going to buy this? Who's going to look to take this on going in two, three years? As you said, competition is intensifying. Is it truly just the anticipation that interest rates would improve?
No, Dave, look, I mean, in answer to your question, I mean, the consumer has been under pressure almost as bad as an S.A. in the U.K. Anyone who follows that market will know that. There's been a lot of a clear out, actually, of retailers generally, online and physical. Next, it's actually turned I mean, New Look has actually turned itself around and is now profitable. And there's one of not that many who could claim to have done the same. So I think it is in a much better shape than its peers in many cases, but certainly than it was. Who would buy it? I think there would be a decent amount of people who'd look to buy it. It has a provincial footprint that is unmatched, to be honest, Dave.
Like a lot of, you take Next business, New Look has a fantastically complementary, in my view, provincial footprint to someone like a Next, right? It obviously has brands and has been around the market for a very long time. We've seen a lot of other retailers, international retailers looking to enter the U.K. market, some of whom are South African. And I think this would give them a very good foothold into that space. So I think either someone who's already playing in that market, who could take up significant costs around distribution centers, central costs, etc., and whose multiples are double what we value in the business at, or alternatively, new entrants who are currently there who are subscale, right? And there's a lot of those who are locally based, right? So I think in the last opportunity there is someone in the online space, right?
You take a SHEIN, once they're listed, this gives them a massive footprint from a pick and collect perspective, right, which is the online strategy that we have. So I think there's lots of potential people. It's a bite-sized business. It's not particularly big in the context of these retailers. So I'm not worried that there's no one who wants to buy it. I think what we've got to see is the business plateauing to a place where you can see it's sustainably profitable. And I would suggest we're pretty much there. And then some improvement in the macros in the U.K., which again, I think we are starting to see.
Okay. Okay. Brilliant. Thank you. The second question, Peter, just obviously you've seen your resignation, well, I guess you're stepping down from the CEO role at Ethos. Nothing mentioned in Brait. I presume you're going to stay on. Then maybe could you just talk us through the kind of new remuneration package? Just briefly, you didn't come in the presentation, but it was quite highlighted in the announcement.
Yeah. So I mean, you are correct, Dave. I mean, I've been Ethos Capital CEO for eight years. So yeah, I informed the board some time ago, to be fair, but as we stand, and having now done it for eight years, it was time to step down and let someone else more capable in the form of an attorney take over that role. I will continue the role in Brait. I remain at TRG, to be honest. So it's not like I'm going anywhere. So I will continue to work with Anthonie on the Ethos Capital stuff, and as Anthonie works with me on the Brait stuff.
So yeah, unfortunately, for investors, probably I will remain around for Brait. In terms of your second question around the REM, what you will have seen, we've reduced the management fee from ZAR 65 million a year to ZAR 50 million a year. So that's been done. We did away with any short-term incentives. It became quite difficult to work out what the KPIs should be for that. And the remuneration committee therefore decided it was better to have a longer-term incentive, which was more aligned with shareholders in terms of share price performance. That is effectively the equivalent of one year's management fee. On a pre-rights issue basis, it means that the share price needs to be above ZAR 1.80 compared to the ZAR 0.90 it is today.
And anything above ZAR 1.80, it's about a 1.25%, I can't remember the exact number, percentage of the value created above ZAR 1.80 capped at one year's remuneration.
Okay. Great. Thank you so much.
Thank you. We have no further questions on the conference call. And I would now hand over to Webcast questions.
Okay. We have a couple of questions on here. Let me go through them. Firstly, from Albie Cilliers . Question, can any exchangeable bondholder refuse to accept the new terms proposed to them, vote against them, and then demand to be paid out as per the original terms? Albie, no. There's a 67% threshold which needs to be hit. And once that is hit, effectively, it's like a scheme to all intents and purposes. All exchangeable bondholders will then be put accept the same terms as the others.
So there's no ability for an individual exchangeable bondholder to say, "I don't." They can vote against it. But so long as the threshold is met, which it has been already, then the proposed restructuring will happen. Second question, also from Albie. Have you received any expressions of interest to acquire Virgin Active from anyone, including related parties during the last 12 months? How confident are you you'll be able to realize anything close to the carrying value of the Virgin Active investment? Backing any stated confidence, how much of their own after-tax money is Brait management looking to invest in the Brait rights issue? Okay. So answering your first question first, we will always be open to people coming and putting proposals on the table. We did, at the worst point in the COVID cycle, receive an approach for one part of the business.
Thankfully, and absolutely thankfully, we did not sell it. It ended up being at a higher multiple than what we valued the business at, but also lower EBITDA. I've said convincingly for some time that we believe that the 121 is a number that we will hit. I think we're well on the way to achieving that. We could have sold a part of the business at a higher multiple, but we didn't think was a sustainably attractive EBITDA level for a part of the business. But we will continue to look at all options around that. In terms of being how confident are we? We are confident, right? I mean, the NAV is not just an NAV we put out there. We put our reputations on it.
Yes, I know there are a lot of Twitter investors who maybe have a slightly different view on value, but it also gets audited. And we've seen third-party investors who are very capable investors who've made more money than many of the Twitter investors over many years invest at our NAV, right? So I would suggest that not just us, but other third-party investors believe that our NAV is in the ballpark. And we are confident that we will achieve that. Backing any stated confidence, how much is the Brait management going to put in? As we announced, the Ethos Capital shares will be unbundled. We are, as partners in TRG and therefore Brait shareholders, and we will receive our Brait shares. And while I haven't spoken to everybody, you can take it from me that I will be following my rights.
I would presume, not having spoken to everyone, that the Ethos management will do likewise on what they receive from Ethos Capital. Also, Albie, South Africa is a relatively poor country with low economic growth. Are you confident that the strategy of Virgin Active and SA to be an upmarket luxury premier gym chain is the right one, given the success of value chains and brands like Basic-Fit have done in Europe? Mark, are you there? Do you want to answer that?
Certainly, Peter. Look, Virgin Active South Africa currently plays across the entire market spectrum, which is different to where we position ourselves globally. And we're not looking to change that. Wherever we think we can make money in the health and fitness sector in South Africa, we will. The reality is the premium clubs make most of our money.
We are in a value budget segment similar to what the European budget operators are playing with our red concept. However, that end of the market has actually proven to be very difficult in South Africa. That's a factor of what you'll see in the European markets is a much better, much smoother income distribution. The reality in South Africa is most of the money, certainly in the health and fitness sector, is in the top end of the market. I think as most investors will be aware, the Vitality program itself, when you look at it, it effectively provides access to health and fitness at equivalent of what a budget operator would get in the European market. I think our answer to that is we are in every segment.
We will look to play in every segment of the South African market, provided we can get the requisite return on capital.
Thanks, Mark. Next question, also from Albie. You're busy today, Albie. You required the recapitalization to give yourselves another three years post-December 2024 to realize value. What probability would you ascribe to the possibility of disposing one more or all of the assets within the next one, two, or three years, i.e., not utilizing the three-year extension? As I mentioned, Albie, it is not the intention to use the three-year extension and sell the assets in three years' time, but we are under no pressure to do so. And it's very difficult to ascribe a possibility, to be honest.
But I would suggest that if we take New Look, for example, if this time next year the environment is improving like we think it is, and we're starting to see it is in terms of green shoots of recovery, I would suggest New Look is an asset that we would look then to probably take to market. Again, under no pressure to sell it, but if we get the right demand for the asset and the environment is a better one to sell the asset, we can look to do so. Premier, we're not looking to sell it. We believe that the asset is a great asset. Very simply put, why given that what would we use the money for if we were to sell down some Premier shares?
We would use it, and we have to use it to repay the exchangeable bond, which has got a coupon of 6%. So, so long as you believe that the return from Premier shares is more than 6%, which we definitively do, whether that be through earnings growth, re-rating, then you shouldn't sell the shares, right? And we have no intention of selling the shares. And then obviously, Virgin Active, I think, is a slightly longer-term growth story, but we're seeing the benefits of all the restructuring changes that have happened. And again, we remain open to optimizing the exit of that business at the appropriate window. Onto the next question from Abax. Hi, Peter. Thanks for the presentation.
Given the three-year extension on the bonds and comments about being a long-term Premier share, would it be reasonable to assume that you're looking at maintaining your Premier stake for around the next three years? Again, I think it's a similar answer, right? Unless you believe you're not going to get a better than a 6% return to pay back the exchangeable bond, why would you rush to sell any Premier shares in a business that's got a fantastic return on invested capital, a consensus growth out there of circa 10%, and is degearing at the same time? And that's before you say it ranks or it is rated at about half of where its peer group is. So on all fronts, I think there's upside to Premier shares. So we have no intention of selling them.
Again, Albie, in your previous call, you said there was limited demand to place Premier Group shares in the market. I was told that the Premier next call to investors said that there was lots of demand. Do you have an update on demand and the possibility of placing shares? I think the point I made in the previous call was when we ran the book build process to raise the ZAR 900 million. There was demand for ZAR 900 million. Thereafter, the demand at the right price fell off the cliff. Now, yes, maybe things have changed, but I keep coming back to the same point. We're not in a rush to sell our Premier shares. We believe in the business, and therefore we have no intention of selling any Premier shares. Next question. Okay, I'll come back to that and let's Kobus answer that one.
Nico Prakke , can you give us more detail with respect to the contractual arrangement with the Virgin Group? What royalties are paid by Virgin Active to the Virgin Group, and how often is this contract renegotiated? Again, Mark, it might be one for you.
Certainly, Peter. So we pay 3% of revenue, gross revenues in South Africa to Virgin Group, and across the rest of the world, it's 2% of gross revenues. That contract is a long-term contract. I cannot give you the exact date in which it matures, but it has a minimum of 10 years to run. So it's not a contract that we renegotiate from time to time. It's one that we set up approximately 15 years ago with the intention of it being a long-term contract.
Thanks, Mark. Then another question for you, Mark, is listening to feedback from other gym operators. Italy and Germany are referred to as tough markets. This does not seem to be your experience. Can you talk more about your experience in the Italian market? Are you planning to open new gyms in Italy? What do Italian gyms typically cost to open, and what EBITDA will these gyms generate?
Sure. Certainly, take it bit by bit. Look, the Italian and the German markets are quite different. The German market has a strong representation of budget operators. There's less so in the Italian market. The Italian market, as you'll see with probably a lot of consumer products, is quite premium-focused. We are uniquely positioned in the Italian market in terms of large-format premium clubs. In fact, there is no other chain of substance in the Italian market. That's a very difficult state for anybody to replicate.
It's taken us, best part, 20 years to get to where we are today. In terms of constructing clubs in the Italian market, it's quite similar to the South African market where we get hot shells. So that is where the landlord would fund the fit-out of the club, both the shell and the internal fit-out. And then we typically put our equipment in, and the landlord would rentalize the fit-out costs. And that creates a lower capital base for us to open clubs in the Italian market and gives us an enhanced return on capital. So typically, in Italy, we're looking at EUR 2 million-EUR 3 million a club to construct. And those will typically give us a 30%+ IRR. We're looking at something around we would aim to be somewhere around GBP 1 million-GBP 1.5 million or EUR 1.5 million EBITDA per club in the Italian market.
Did I miss anything in terms of those questions, Peter?
No, I think that's all good, Mark. And then, Kobus said that you don't feel left out. Also, a question: how long runway do you see into the future to be able to continue deploying strike investing capital at a 22% rate of invested capital?
Peter, I think that we are fairly comfortable that we've got a five-year runway ahead of us and that we haven't really tried to plan for longer than that. So we do a five-year planning horizon, and within our horizon, we don't see it subsiding at this point in time.
Thanks, Kobus. And then last question that I have is from Frederique Bouchard. You're providing an illustrative post-recapitalization NAV on Slide 15. Can you explain why you are lowering the value of the convertible and exchangeable bonds by ZAR 706 million and ZAR 316 million, respectively?
Yes, as you can see in Note 5, right? Personally, I wouldn't even take that off, right? I'm telling you that's the accounting treatment on exchangeable and convertible bonds means that what you do between today and maturity, you start with an equity component and a debt component. As you get closer and closer and closer to maturity, the debt component gets bigger and the equity component gets smaller. So effectively, by extending the maturity by three years, you get this accounting treatment, call it an anomaly for want of a better word, where effectively, illustratively, the IAS 32 accounting treatment means that you take an equity component to the bond, which is the ZAR 706 million and the ZAR 316 million, okay, and the debt component. Personally, I don't do that, right? Just go and look at the actual value of the bond.
So if it's a ZAR 3 billion or ZAR 2.25 billion exchangeable bond, value it on that basis. This is an accounting treatment which I can say I don't agree with. It's irrelevant whether I agree with it or not, but it's what the accountants will force us to do. So it's an accounting treatment, right? And that is the last of the questions I have. So unless there's any other questions on the call, we can call it a day.
Thank you. So we have no further questions on the conference call. Do you have any closing comments?
Yeah, thanks very much. Look, firstly, again, thanks very much for everyone for participating. We really do appreciate it. We remain open. If there's any other questions, feel free to reach out to us. It doesn't have to happen twice a year. Again, thank you very much for your interest and participation today. Thanks very much to Mark and Kobus.
Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.