AF Legal Group Limited (AFL) Earnings Call Transcript & Summary

Welcome, everyone, to the FY '26 Full Year Results Presentation for AF Legal Group. I now hand over to Chris McFadden, David Kahn and Peter Johns. Thanks, Alex,

And good morning all, and thanks for joining us this morning for this presentation of our FY '26 results. Joining me today are Peter Johns, our Non-Executive Director, who will be familiar with from previous presentations. And I'd also like to introduce David Kahn, who is yesterday announced as our new CFO. Dave has been around for a little while now. He's been with us since late February as General Manager of Finance and Operations. And he's been on gold through the finalization and the go-live phase of Project Titan, which took the project to introduce our new practice management and document management system. So welcome, Dave. We'll move on to these. So starting -- I'd just like to start with our revenue numbers. Our revenue number, $35.5 million, obviously, a new high for us, up 29% on the prior year. And growth -- strong growth across all practice areas as we'll see shortly, and also giving a level of $693,000 per week across the year and even in quarter 4 at it 694, which was a new high from a quarterly point of view. The underlying profit, $1.82 million at a normalized net profit attributable level, which we'll, again, we'll talk about and define again on a subsequent slide. Again, that $1.2 million is up $440,000 or 32%. So relative to the 29% revenue growth, relatively close. And again, we'll discuss the reasons for that shortly. But important to note that our underlying profit number of $1.82 has grown every year now 4, 4 years. What else went well for us in FY '26, I guess, Project client Project Titan went well for us. So our new practice management and document management system implementation. It went live, I think it was 18th of May, so on time and within budget. So very pleasing. There will be some aspects that we'll talk about later on in the presentation. But all in all, it went well. And the other thing that we have up there as well is a Great Place to Work. So a Great Place to Work Certification back late November 25 now. So it's still within the current year, 85%. So we held the big improvement that we had seen in the previous year, where we had gone from 53 back in August 23 to 84% in October 24. So very positive there. So whilst they are all the positives, I guess there are a few headwinds there for us in the results as well, and that will be something that we talk about on this slide and also in subsequent slides. The detail probably comes on the subsequent slide. Second half revenue quite flat. So our revenue for first half was $17.8 million and revenue for second half, $17.7 million. So we'll discuss the reasons for that a little bit later. Our H2 profit and again, we'll get into the details on subsequent slides, and I'll start saying that now, around $700,000 of one-off costs, which reduced our second half profit, but which we didn't adjust out of our underlying results. So we do adjust certain amounts out in terms of our normalization, which again, we'll speak of. But these are amounts that we didn't adjust out. Our cash flow in -- across FY '26, it lagged a little. And I would say that some of the reasons were around Project Titan, and so the Project Titan costs themselves are part of it. The delayed billing and collections that happened with a go-live in mid-May that impacted things across the end of the year and also just some other one-off payments, which absorb some of our cash. I would say though, and we will talk about our deliberate investment in a number of things over FY '26, they are now behind us. And I think that FY '27 sees us with a real focus and a discipline around costs that will -- that we will benefit from in FY '27. Okay. This slide is just the full takeaways and some of these overlapped the previous slides. So the strong full year growth and the softer second half. They're up there for you to see. I feel that we've talked about those a little bit on the previous, and we will talk about them a little bit more on the following slides. Deliberate year of investment, I think that is an important thing for us to really explain that. We deliberately made the choice to invest in our business to position us for future growth. Part of that was obviously Project Titan and the practice and document management system, which you'll see costs in the order of $1 million in FY '26. But that hasn't set up well and has us a great growth platform and they are systems that are very scalable for us and it gives us a real competitive advantage as a national practice, and I think that we will reap the benefits of that for years to come. The other investment was in a restructured senior leadership team. So we've made some changes there, which date is a part of it and a few others that we might touch on a little bit later. And the other thing, and again, the detail will follow, but our level of legal expertise within our legal professionals has really gone to the next level in FY '26, a real skew towards very senior lawyers joining us, and that will serve us well going forward. Little call out on FY '27. So you'll recall that $683,000 was our average week revenue for the year, pretty short was $694,000 for quarter 4. But already in FY '27, it's been quite encouraging to see the growth. So we are averaging over $730,000 per week for the first 8 weeks. But I would even say that includes the school holidays. And post the school holiday period in July, we were averaging more like 770, as I say, a very encouraging start to the year. This one here, our underlying profit up 32% on revenue growth of 29%. And just to call it out here, I think, is really why we use normalized net profit before tax attributable. The definition is there for you to see, and I won't go through it, but it is actually a really important -- it's an important measure for us because it really reflects recurring mix. It's what is truly repeatable in our business. And I think that you can look at the numbers up there, 1.82 on the 1.38, up 32%. And you can see above our one-off items adjusted out to our normalization adjustments. They are in the order of $1.26 million in total, but $1.07 million on an attributable basis. So we'll move forward on to the next slide. Our revenue slide here. And obviously, this is a very positive growth we see, and it's called out on the top. So we grow at $35.5 million. We have grown over 88% over the last 3 years, grown 108% over the last 4 years. So a very solid growth profile there. And I would say that in April '24, so towards the end of FY '24, we added in the strong legal contested wells in the States business. And then in October of '24, which is in the FY '25 bar there, if you like. We added in the criminal law business. So that growth, which in the last couple of years is 27% and 29% benefits obviously from the non-comparable nature of the strong acquisitions. And before that, FY '25 grew at 15, FY '24 grew 11%. So you can see that we have ramped it up a little bit through that period. But important to notice as well that we haven't really had an acquisition since October '24. So we're now getting to a stage where our year-on-year growth is comparable. In terms of the practice areas in relation to that 29% growth, all very strong. So family law growing at 23% and contested bills in the states, 27% or $900,000. And we'll talk about that a little bit later in relation to the implications of the growth of contested wills and states a little bit for working capital as there is a timing delay on that, which we'll discuss. And criminal law, obviously, up a crazy percentage there in 151, but based on the fact that 4 months noncomparable. Since October '24, November '24, actually, probably the first month of comparability. So we're comfortable for the second half of FY '26 and going forward. Looking at it from a -- looking at it from an average weekly revenue point of view. And again, just talking out some of these numbers. So we talked about half 2 revenue of 17.7%. And as I said previously, that's relative to 17.8% for half 1. Half 1 grew at 40% because it had, relative to the prior corresponding period, it grew at 40% because it had the noncomparable advantage in relation to criminal law. Second half, we don't have that. So we grew at 19% in the second half where criminal law was comparable. And again, looking at the graph there, and you see that sort of -- apologies -- of the site on the bottom of the slide. But you see that we've held that around this $70 to $60 sort of level in FY '26, but the growth that you see before that we're at sort of probably 1, 2, 3, but about 6 periods of consistent growth. That really coincides with the Armstrong acquisition, not that they were all of that, but they obviously made a fair difference to it in a lot of ways. In terms of our lawyer numbers, we talk about our lawyer numbers there as well. So our average layer numbers in FY '26 were around about 66, and our average number of lawyers in FY '25 were about 56. So that drives some of the growth. But obviously, some of that average is related to the criminal law coming on board through the FY '25 period. Important to note from a half-on-half basis is that our lawyer numbers roughly went from a little bit over 65 to 66.7% in the second half. So not significant growth in layer numbers over the second half. So we were relatively far and probably a conscious decision from us as well to not bring on too many new people until we got the project tightened. Although as you'll see a little bit later, we still did bring on a number of people and we had ins and outs, which we'll discuss. And again, you see the little orange dot there, so $730, which is the first 8 weeks. So we're starting to see a lift again. And as I mentioned, since July, it's even better than that. So I think we do enter a period now July, August, September, October, November, and even the start of December, it's relatively clear period. It doesn't have the level of holidays that you see around Christmas, January, Easter, all of those things, although obviously, July school holidays and some school highlights around the end of September, early October for us to deal with as well. So the normalization adjustments that we had included in our results and they've been relatively well flagged. So project tightened implementation. These costs are as a nature of the accounting standards, they are expensed as they're incurred. And there's just a touch over $1 million in the period, legal defense costs, which delayed which dates back to 21, 22 to legal defense in relation to a regulatory matter in 1 of our locations, which has been discussed previously. That is an ongoing matter for us. We have in our FY '27 endeavor to take the costs or the estimated cost to finalize that. So we've taken an estimate on what that will be, and that is included in that number in the $400,000. Again, I will refer you on all of these to just back to the ASX announcement and/or the annual reports, which really give the detail, particularly in relation to the historic reconciliation amount. So a lot of those relate back to acquisitions for -- what's McCray and/or Kordos that were back in the '21, '22, '23 years varying amounts. And I think also the process of new system implementations has probably caused a level of scrutiny on some -- on a few balances that were included in there. And equally, there was an amount as well that probably dates back to a period where looking at the finance resourcing at that point in time, it was quite transitory in a way. So we didn't -- we will resource through that period. And I feel that there are a few errors made during that period. And this is correcting those. And we are really comfortable that our balance sheet is clean, and there are no further nasties to come out of the past. The last 1 there is a deferred consideration write-back. So that relates to the Armstrong Contested Wills & Estates acquisition back in April '24, which was a cash payment at that point of $3 million. It also included 2 earn-out payments for $375,000 each. The second of those -- the first of those was paid. The second of those has not been paid. The second of those has not been made. Basically, there were a number of obligations of the seller in terms of providing leads through websites and the like, which hadn't really been fulfilled and in fact, the seas gone into liquidation. So -- we have raised a claim against that, which far at seeds for 375. So in those circumstances, the likelihood of paying that deferred consideration or that earn-out payment is very, very remote. So we've taken the opportunity to write it back into these results. Looking at the results up there as well. I think it's important to note that -- you see the $1.26 million underlying profit for H1. And you see that second half of $560,000, so a drop of $700,000 across that period at a time when our revenue numbers, as I mentioned previously, went from 17.8% to 17.7%. So revenue really didn't change, but our profitability or our underlying profit dropped by $700 million. And really, again, this is a number of one-off type nonrecurring issues, which because they are a normal part of business, we haven't normalized them. But they're not expected to recur, and we have absorbed them into the second half results. So they do, in a large plant explain the $700,000 drop from $1.26 to $5.60. What they are -- and again, I will refer you back to the ASX announcement and/or the annual report, which goes into in quite a bit of detail. But in relation to Project Titan, just the disruption of Project Titan from the early stages where there's a lot of training activity but also the go-live itself just creates challenges for people to come to grips with it despite all the training that you do -- it's obviously they're not going to be as familiar with it as they were with the previous systems, and it takes a little bit of time. And we see a clear dip in our revenues across the weeks following go-live, and that's of a conservative sort of estimate of around $200,000 to $300,000. The cost in relation to our senior management restructure of $300,000 or thereabouts are also expense into the second half, and equally in relation to our debtors and with provisions. I think the process -- and this is a 2-file process in a way, I think that in terms of the new systems play a role in this, but also Dave coming in again with a new set of eyes on the way things are done. And I think we went to a bio-matter level like we've never done before on this in terms of both our debtors and our rep provision. So that's across all of our various divisions. So family law states and also criminal. And we are -- that was a very line-by-line process where the finance team worked closely with the practice leaders by matter. And I'm really comfortable that we are now appropriately provided for. And the expectation is that there will be no further impact on bad debt other than just the normal matter of course, as we grow but we don't have another word lease to come through. And I think that -- I think that the important thing to note is that, that adjustment to those provisions for debtors and we all took place in the second half. So it was all booked into the second half. So again, you could argue that 100 of it belonged in the first and 100, all in the second rather. And I think the last thing to call out there on that slide is that normalizing adjustments are expected in FY '27. So as we stand here at the moment, we're expecting it to be clean in FY '27. I talk about the fact that we have taken an estimate on the cost to file on the legal events or this estimate. So it may not be perfect, but I feel that we are relatively well covered there to wrap that up without any significant costs into FY '27. Moving on. So I think this is an important one. And again, a year of deliberate investments in a number of things that will serve us well into the future. I might start by -- I'll let Dave have his first discussion here. So Dave is closely involved in Project Titan. And Dave has a strong background in system implementations as well. So I'll get in to talk to the first of these in terms of the systems changes and then I'll rejoin on the others.

Thanks, Chris. Project Titan, the update of new practice management system and document management system is on the just systems undertaking a further can take. It's a business-wide impact. And as Chris alluded to, there's a lot of training and learning the systems and we've already started to see some efficiencies being realized through workflows. And 1 of the great things that gives us is also an ability to drive further insights into the business to help us manage things moving forward. So it was a significant firmwire -- for a number of years that Tim has done an extraordinary job I just came in at the last minute to help deliver it. And we went live, as Chris mentioned, on May 18, and we continue to build on that. And we have great aspirations that it will deliver also to insights to the business to assist us managing things forward. There was a slight delay in some of our bidding in May, whilst we can to speed up to speed on the workflows and that we will call it up now by the time where we are at this point in time. I think that's about it.

Thanks, Dave. Appreciate it. The other 1 -- the other investment for us is in people, and we call out there the -- Great Place to Work 85% just because it is top of mind in our organization. You talk about the average lawyers and legal support numbers up 15% on FY '25, perhaps sort of talking about it at a lower number earlier on. But I do think the thing that's really worth pointing out there is that the level of expertise and seniority in our people and our practitioners joining there -- since December '25, we've had 6 accredited specialists recruited into our organization. Prior to that in my time in the organization, we hadn't recruited any accredited specialists into our organization. So it's just showing that in a way, it is the benefit of the great place to work and what lies behind that is something that really helps us attract senior people into our organization. Across H2, just to give you some illustration across the second half, we had 11 new lawyers joined us, and we had 9 leaders -- of the 11 that joined us, 8 of those were at what we would say a very senior level, including 5 who were accredited specialists. And of the mine that left us Five of them would be relatively senior as well. But I think to illustrate the level of experience that has been added to our organization, out of the 8 additional seniors that have joined our organization in terms of what we call PAE, which is Post-admission Experience. So the years post mission experience on our new starters of the seniors is over 130 years. And of the 5 that left us, it's more like 50 to 60 years. So we are really ramping up the level of expertise and seniority across our practitioners and that will only serve us well going forward. In terms of our senior management team, also some changes. And obviously, Dave is part of that. Dave, as our CFO, is brought on to really play a role in business partnering. So we are really looking to ramp up our business partnering capability, whereby the support services work very closely with practice leaders and the practices themselves. And Dave is an important part of that. Another 1 that is also very important to us as well is we've actually increased our focus from a people and culture point of view, and we have appointed a General Manager of HR for the first time, which we haven't had previously. And that General Manager of HR actually comes from within our business. So it was a former Head of Family Law in Queensland, who has now taken on the GM HR role, and we have backfilled the leadership roles into the Brisbane team as well. So I think that, that will serve us extremely well, and it actually already has over the past 3 to 4 months where she has been in the role, both officially and unofficially and probably through that process of year-end reviews and pay increases and all sorts of things. So I think I already see the benefits of that as huge for us moving forward. Next slide, and I will throw to you, Dave, in terms of the balance sheet discussion.

On the balance sheet, the net assets increased by $1 million. A lot of that has been driven by growth -- general growth in the business. In particular, there was a fairly large upswing in trade and other receivables. The biggest single contributing factor, as I mentioned previously, there was a delay in our billing in May and June as people become more familiar with our new workflows and how to do things in new platforms. And this is supported by the fact if you look at the current component of your aged debtors, with the prior year and 25% of the current represented 26% of the ledger. And after this year, it was 41%. So we had a lot of billing go out in June, which subsequently would be converted to cash in the months of July and subsequent to that. So that was not unexpected. And the other major component is the increase in the growth and the contestable and the stack side of the business where conversion to cash is a lot longer. The cycle is around 15 months, sometimes a little bit short, but it also can be a lot longer. So that's an investment in that business. And we, again, fully expected to see that increase in the debtors on the side of it. With regards to the provision, as Chris just shared, we increased -- we added 20,000 to the provisions as a result of the operator review we had with the leaders. And we -- as you mentioned, we were right down in the weeds dealing with it on a matter by matter basis. And the other side it is payable is up by 2.2%. This is largely representative of distant growth, general growth in the business. And obviously, with the larger workforce, Q4 super, which is a payment goes out in July. So there was -- again, nothing on expected on that front.

I think the other 1 to talk about there is the debt funding. So our borrowings were unchanged at $6.5 million, which is our NAV facility. That facility runs through until January '27. So that necessitates a change in the classification of those borrowings from noncurrent to current. So we already have opened discussions on an extension or a renewal of that facility, and we anticipate that, that will be finalized before the end of calendar '26. And I would say that facility was reestablished, if you like. It did exist from late '22 in some shape or form, but was unused. It was reestablished back in early 2024. And the financial position of our organization from early '24 to where we are now, we are in a fast and strong position. So we don't anticipate any issues on -- in relation to that facility being renewed or whether it may be changed in some respects, possible, but I think that we look forward to having that finalized before the end of calendar '26. Cash flow, again, I might let you run through that one, Dave.

The cash flow, we saw the cash closed the year out about $1.2 million less than FY '25. Again, fully expected, with the delay in the billing cycle that would impact and that started to recover in July. Additionally, the over in excess of $1 million that we had to pay in relation to Project Titan than some of the other initiatives in the business as that will run off. Again, fully planned for, we expected that to hit our cash flow. The pleasing thing is, at the end of August, we can already see things starting to turn, and we expect our cash reserves start to build up again, particularly as we head through to Christmas, which will put us in a good position from that perspective. So at this stage, looking for other investments in the business, I suppose, looking forward, the biggest 1 will be the growth in the contested worlds that will require working capital, and that will probably be our single biggest investment in the FY '27.

Yes, I think that's the point there. So our cash flows in FY '27, we won't need to do all things like Titan. We won't need to absorb other one-off payments. So our cash will be available to strengthen our balance sheet. The only, as Dave says, the only issue is the further growth in Contested Wills & Estates. I think we saw the Contested Wills & Estates grew by 90,000 at 27%. I think it was in FY '26, and we are looking for a similar level of growth again in FY '26. So that will be the only thing that will be a drag on cash. The rest of it won't be there. So move on to the next one. And we'll read through these last couple relatively quickly. So this is our strategy slide on a page, if you like. And again, it might look a bit different from what it has previously, but it's essentially the same. It's basically saying that our strategy is across 5 different leaders. It calls out the fact that our short- to medium-term aspiration is $50 million of revenue and a $5 million net profit before tax attributable to normalize because we're hoping the days of normalization will be behind us. And obviously, the growth areas for us are family law in terms of organic growth. And you see a little bit of organic growth in practices that we opened in Kordos and WA morning to Peninsula and Colon. So we're always -- we always trialing these on a pretty gentle sort of introductory basis to see if there's a demand, and then we expand on them beyond that. And I think that Coburn's looking really promising July and morning to Peninsula earlier days family or acquisitions, again, has to be right. The acquisition has to be right. And I think it only makes sense in places where we have no presence, and we call it a couple out there. They're just examples, they're not do not things that were actually largely or actively targeting at the moment. But we just really need to be selective on those, and they need to be low risk because there are plenty of opportunities to buy businesses for people who want to retire, but you have to really understand is it a viable business when that person retires? And often, when you do a little bit of work with them, you got maybe not and maybe the risk is not worth it. So I think organic is probably going to be our focus on family will growth. Complementary areas, obviously, from an acquisition point of view, we've already done the Armstrong Legal, Contested Wills & Estates and Criminal Law. There may be others. Again, it will depend on a case-by-case basis as they come across. But equally, we have the opportunity to grow these complementary areas organically. And we've already started to do that across criminal law where we have grown from a Sydney-based business when we bought it to opening practices in Melbourne, Brisbane and Canberra. And it's early days on all of those, I would say, they've all had -- they've all had a few full starts in a way as we've had people come and go and come again. So I think that we're still working through that in terms of establishing the East Coast presence for criminal -- but I do think in terms of our Contested Wills & Estates business, we already have an East Coast presence. But equally, that East Coast presence expands across the nation because, for example, our Melbourne team look after as South Australia and WA and our Queensland team look after the top end, if you like, as well. So we don't need -- we don't feel the need to expand into those locations at this stage. And the last item there is the consultant model and really -- that's something that we moved into. I think our consultant that we brought on board, who is a high profile criminal lawyer in the Sydney market. He joined us in, I think, it was April of this year. And he is of the utmost quality is actually an Armstrong who's come back to us and team, very pleasing with the number of people who do come back to us. And I think that just speaks volumes for what people are feeling within our organization that their former colleagues are obviously hearing good things, and they're coming back to us and a number of those people in our organization. I don't know the number at the moment you ask, but it's going to be going to be around 10, I would say, that have come back to us and eating 1 of them has come back to us twice to be honest. Moving on and just have a quick look outlook on FY '27 really. And again, the revenue growth there, it's just calling out the fact that, okay, we're 683,000 for the FY '26 with 694,000 for the last quarter. We are already at 730 and rising is what we would say for the early stage of the encouraging start of FY '27. So we are looking forward to good revenue growth in FY '27. Our operating leverage, we again are looking to improve that. And I think that when you look back at the history, we grow our bottom line profit at our underlying profit at a rate far in excess of our revenue growth. Going back, revenue growth, I think FY '24 was 15%, the profit growth obviously, off a low base of 300 to 400, 3% to 400% growth. So it's an unusual number. FY '25, 27% revenue growth but bottom line growth of 77%. And in FY '26, that gap -- that gap between those percentages closes a lot because of the impact of the $700,000 that we discussed previously. So revenue growth of 29% and bottom line, underlying profit of 32%, remembering that we haven't adjusted that $700,000 out of that. If we did adjust the 700,000, it would be more like a 70% bottom line increase. And I do think that FY '27, we'll see a solid revenue growth, and we'll see a bottom line growth at more than double the rate of the revenue growth. So -- and the last thing to call out there is the fact that few if any one-off costs in FY '27, so I think that we don't expect any in FY '27 at the moment. I think that, that statement there at the bottom, and I'll read it out because it is really important. We are conscious that in the second half of our most recent year FY '26 fell short of expectations. The investments, however, made during the year in our systems, in our people and in our leadership that were deliberate. And then I may say that the growth that we deliver in FY '27 is both profitable and sustainable. And the rest of it, I think the appendices we won't go through. So I will throw it back to questions now.

Chris, I'll throw some questions at you got right. So the first 1 we had was in an e-mail from Brice Smith, which I think you've got there, but I'll read it out anyway. Page 57 of the Appendix 4E shows the subsidiaries not 100% owned by AF Legal. The dividends show 3 payments, at least with North and AF Legal Gold Coast. Am I correct that the 343,000 and 264,000 noncontrolling interest payments are both to within $37.50 payment is the Gold Coast of no payment towards McCrae or aware?

Yes, Chris here. That is right. So there's noncontrolling those first 2 are in relation to witness. So they go to the 49% shareholder of the wet mill entity. And in relation to Gold Coast, yes, the $37,500 is something that was a payment to a 25% shareholder in our Gold Coast Australian fine layers entity as well.

Thanks, Chris. Some questions from Stella Wang. And she notes that operationally, that the results seem to be matching your expectations, but the burning question is whether NAB need us to raise capital for a refinancing. Perhaps you can talk, Chris, in terms of your perspective around your interactions or Dave, your interactions with NAB so far, and then I'll talk from a Board perspective?

I think that all of our discussions with -- they are very comfortable with the relationship we have. They're very comfortable with our performance. They had a good visibility on our cash flows and also on our operational performance. I think that obviously, our results have got better each year over the 4 years. So the position that we were in, as I mentioned previously, at the time of the facility being put into place. We are in a far better position now. And so the likelihood that there will be any need for any capital raise or anything similar is extremely unlikely. I couldn't see that happening at all and Pete, I'm sure we'll touch on that. I do think that the 1 change in our organization, I guess, through that period is obviously contests in the states a Armstrong Contested Wills & Estates as we talk about it, and I'll give you an illustration here. When we bought Contested Wills & Estates, that was a business that turned over about $3.1 million. It had a we gained the working capital. So we gained the debtors and WIP of around $3.8 million on acquisitions. So from $3.8 million relative to 3.1, you could argue that, that's sort of a 15-month sort of cash cycle, if you like. And in the first year, which was FY '25, the revenue number was 3.3%. So it's not something that really impacted the working capital significantly in New one. However, in FY '26, we moved to we moved to $4.2 million. So we run up by $900,000, and that does start to have an impact on our working capital. And I think that we're forecasting something similar for the year ahead. So I think as part of our discussions with in relation to our facility, we just need to bear that aspect in mind because is different than what existed at the time this facility was put in place. So that's probably the only thing but in terms of having a very profitable division that is growing at 25% plus year-on-year. It's a nice problem to have.

Thanks, Chris. And from the perspective of Board, I suppose, bear in mind that are money 1 or 3 Board members and the questions around these type of things and dividends, which will come to later are a matter for the Board. But certainly, I'd reiterate what Chris says. Our initial facility with NAB was $9 million provided some time ago, you'll see that we've drawn $6.5 million. So look, I am not aware that they would require any such thing. I would personally be extremely against any capital raise, have a main philosophy as an investor and being on this board is not to unnecessarily dilute investors, including Manon, which is the largest investor. So that's very much a focus -- and I suppose it does time with some of the interstate we'll give subsequently around dividends and why dividends are on the table in the near term. But I'm just -- following on with Stena's questions, she also asked what went wrong with the provisioning? Are there more bad debts than expected? And how do we not have this recurrent future. Dave or Christian?

Yes. I think hopefully, I covered it reasonably well on the way through. I do think the transition in systems and also the new set of eyes that Dave brought in was really an important part of the process. The fact that we then went into this very detailed by matter approach with each of the practice leaders working with Dave and the rest of the finance team. I think that we see ourselves now with the appropriate level of provisioning across both our debtors and our WIP. And I think given the work that has gone into that we don't expect there will be any issues into the future because we feel that we have a level of visibility such that we've never probably had before.

Dave, can I just get you to expand? I mean it's a bit more than that side-- the Board commissioned a report this year to really bring this process up to the level of professionalism and expectations that we should have as an ASX company. You'll see, first of all, that this is the first year where we've properly divided our working capital between current and noncurrent. I mean that had not been done as well as it should have been in the past. But also, we engaged a third-party outfit to examine our approach. And can you just talk about their recommendations, which was implemented to put in place, in particular for where a general provisioning as well as specific provisioning that we were using.

Certainly. So we had -- what 1 of the top 2 accounting firms review what was done previously at the end of H1, and they come up with a number of recommendations, which we implemented -- and when we looked at the whole of use was aged to review, as you mentioned, we went right down to the grassroots -- so what we wanted to do is not only determine the collectability, but also the timing on that. So that permitted the appropriate splitting between the current and noncurrent assets and it also gave us additional insights just as what the potential risks and exposures are. So I think still you raised about decrease in bad debt. There actually wasn't an increase in bad debt. It's more just an increase in the provision to ensure that we inside it gets in potential bandits just through the additional insights that we're able to gain through the process and we'll send in the systems per minute. yes. So when we did that, I put together a report, we had the top tier recurring firm review it, and they reported independently through to the Board as to where they hate the outcome of our provision and the process. So I think Boroucanattest to what the information gap through to the world, but I think they were quite comfortable with regards to the outcome and the provisioning that we've applied. Yes, I think were the first time in the history of this company that's at a really high level now.

And I think Emma, my Co-Director, who has really helped to drive that level of oversight. And an example as to how that has affected us is that the percentage general provision going against all previous WIP in the past in FY '26 had to apply to our total WIP book -- the reason why we can be confident that won't have the same effect going forward is because, obviously, that general percentage provision will only apply to any incremental web and we can go even down potentially. But even if it goes up, it won't go up a massive amount that percentage is quite small and therefore, won't have a significant effect on future profits like it did in the year gone by, and it's not something we normalize because it's I suppose it was a one-off, but it's part of doing business, so we didn't normalize it per se.

Stella also asked about the management restructure, Chris, can you just talk a bit about that and why that wasn't something flagged at the half year.

Yes, I think that we just thought there was a need for a different approach of some of our support services to better suit our business partnering focus. And I think that Dave is a part of that. I also think that whilst it's not part of the restructure costs, we definitely are definitely our move to increase our people and culture focus as well by bringing on a General Manager of HR, which is an additional resource to us is also part of that restructure, if you like, even though it's not part of the cost. And as to -- there was no mention at the half I think it was underway at the half. But as with all of these things, hard to talk about things when they have done your best of sort of talking about them when they actually are in place rather than what you're trying to put in place at a point in time because things may have been at slightly differently. So whilst we was on our radar and what's underway at that point in time, we didn't feel that it was appropriate to discuss it at that point.

Sorry, Chris, can you talk a little bit about Amara family, Laura is a new brand that's been presented and touch on future plans with tools regarding the current 51% ownership. I'll talk a little bit about the line from a board perspective as well.