AMA Group Limited (AMA) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the AMA Group 1H '23 results webinar. [Operator Instructions] I would now like to hand the conference over to Carl Bizon, Chief Executive Officer and Managing Director. Please go ahead.

Good morning, everyone. On behalf of AMA Group, I would first like to acknowledge the traditional custodians of country throughout Australia and their connections to land, sea and community. We pay our respects to their elders past, present and emerging, and I extend that respect to all aboriginal and Torres Strait Islander peoples today. I would like to acknowledge the Bunurong people as the traditional owners of the country, where I'm joining you from today. Thank you for joining us as I present the AMA Group results for the 6 months ending 31 December 2022, which I'll refer to as first half '23. For those of you joining us via webcast, we should be able to view the presentation on the screen. If you are joining us via teleconference, you should have access to our investor presentation via the ASX platform or our company website. I will begin by providing a summary of the first half '23 results and operational highlights. Our CFO, Geoff Trumbull, will then take you through the financial results of the business in greater detail, and I will finish off with a review of the outlook for the business before we open for questions. If you could turn to Slide 6, please, I will start by recapping the business environment in FY '22. In contrast to last year, we are seeing strong demand for repair volume across most geographic markets and repair types. Severity has continued to increase, and our increased focus on margins in this capacity-constrained environment has seen some repair volumes being declined by the group. It is well known that there is a labor scarcity issue across multiple industries and the collision repair industry is no different. This has an impact on the repair volume throughput that is achievable, and the increased pressure on lateral hiring has had an inflationary impact on people costs. While international labor markets are open, and we have been actively engaged in hiring through these markets, there is a backlog of migration applications, although we hope to see this improve in the second half of the financial year. The result of all of this is increasing lead times across the industry for consumers to get their vehicles in for repair as cost is prioritized creating a repair log jam in the lower-priced industry segment. The group delivered a normalized post-AASB 16 EBITDA of $25.3 million and ended the period with cash on hand of $33 million. Importantly, the group's focus on safety saw a 28% reduction in LTIFR. The group's focus for the half was on the near-term strategic areas to reset the base business and minimize disruption as we prepare for growth. We undertook substantial pricing activity with strong insurer engagement and achieved interim pricing for the Capital S.M.A.R.T contract. We focused on network optimization to ensure our scarce labor resources were aligned to profitable work. Divestment of Fluid Drive completed the ACAD business exit, which started in 2020, and we closed the Bundall, Queensland corporate office, the staff redeployed to existing facilities within our network. We also took several steps which clearly align with our strategy for growth. We continue to expand the ACM Parts range, and that business delivered record parallel import sales in November. We recently confirmed a lease on a new warehouse in Hemmant, which will support the expansion of the Queensland business and provide a significant logistical benefits over the existing warehouse. We renewed the 10-year paint supply partnership with BASF, which will improve the recurring operating cash flow profile of the group by better aligning the paint supply costs to the operating cash flows of the associated repairs. We also introduced private work in the Capital Smart network; and finally, completed the rollout of, Take the LEAD, our unique health, safety and environmental program across the network. Now to Slide 8. Following network optimization activities, the Drive and Non-Drive businesses are now referred to as Capital S.M.A.R.T and AMA Collision, respectively. As previously mentioned, we saw a reduction in LTIFR as we continue to focus on safety. Repair quality was relatively stable overall, while average repair days increased in both Capital S.M.A.R.T and AMA Collision due to continued supply chain disruption, labor constraints and the impact of increasing severity. We continue to demonstrate high levels of customer satisfaction, although there is the evidence of customer satisfaction impacted by extended lead times. Now to Slide 9. I won't cover the financials in further detail as Geoff will talk to these later. However, I will highlight that both revenue and EBITDA increased on the prior corresponding period, and the Board is committed to delivering shareholder value while maintaining the ability to invest in the growth of the business. As such, the Board has not declared a dividend for the first half 2023. Now to Slide 10. We have said for a long time that people are the key to our success. This is even more relevant in this time of a highly constrained labor force. Our Take the LEAD health, safety and environment rollout was completed during the half and have seen exceptional engagement by our team reflected in the record low LTIFR of 2.87 in December 2022. Our employee value proposition has been structured around building better, which saw a range of initiatives and ongoing engagement. It was incredibly rewarding to see that 72% of our people participated in the engagement survey conducted late last year, with improvement across all areas and an improved satisfaction rating of 9%. This is an outstanding achievement for everyone in our business. As we have said before, we take our position as the largest multisite operator in the industry seriously, which means we are committed to building the workforce for the future. We are committed to our apprenticeship program with almost 350 on the books at the end of the year. Regardless of the processes backlog, the improvement in visa processing in recent times is encouraging. We have engaged in targeted overseas recruitment activities with over 100 in the pipeline at the close of the calendar year. We are also focused inwards on growing our own. We recognize the exceptional skill and talent within our business and are committed to providing opportunities to upskill or train in new technologies, which is supported by our commitment to ICAR Gold certification as well as recent reengagement with several industry bodies. We also provide tailored leadership and skills training to ensure our people are supported to perform at the highest level possible. With this background and context, I will now hand you over to Geoff to take you through the key financial information.

Thanks, Carl, and good morning, everyone. I'll now take you to Slide 12 for a summary of the first half's financial performance. First half '23 financial performance improved compared to first half '22. In fact, we've now seen improving financial results for the past 3 quarters, reflecting both cost management initiatives, including network optimization and the commercial activities around pricing and exiting unprofitable work. Normalized post AASB 16 EBITDA was $25.3 million for the half compared with $4.2 million in the comparative period despite lower repair volumes. Importantly, the second quarter saw an improvement of both revenue and EBITDA as the impact of commercial pricing changes and the site optimization program kicked in. Site level impairments of $4.6 million were recorded in the current period as additional sites were closed or hibernated on top of those provided for at 30 June 2022. The group has largely contained interest costs through its hedging activities. Despite a portion of our fixed rate hedging arrangements maturing in October 2022, approximately 65% of the debt portfolio remains subject to fixed interest costs well below current market rates. Turning now to Slide 13 and the summary financial position. There has been no change to the drawn debt position in first half '23. Net debt has increased during the period due to cash utilization, including ongoing investment in inventory at ACM Parts. We ended the period with $33 million in cash, which provides us with sufficient liquidity to manage through the balance of the FY '23 transition period. Turning to Slide 14. As mentioned, net debt has increased from prior period due to the current period cash utilization. At 31 December 2022, there was one remaining earn-out, which was subsequently paid in January 2023. The group financial result exceeds the minimum EBITDA covenant for 31 December 2022, which was based on an annualized first half '23 EBITDA under the facility agreement. Management are forecasting to continue to meet covenant requirements moving forward. Please turn now to Slide 15. The group had net operating cash outflows of $4.1 million for first half '23, including $8.9 million investment in inventory. This compared to $22.8 million in the prior corresponding period, reflecting the improved performance from prior year. The group expects to see further transition in operating cash flows across the year as there is a lag in receiving some of the benefits of the site optimization program as rents roll off later than site exits, commercial pricing, given lead times on repairs and collections and the revised BASF paint arrangements. $15.3 million of cash was collected from the ATO under income tax carryback rules for the FY '22 tax return. AMA Group has also recorded a receivable of $2.7 million, a further carryback expected to be received upon lodgment of the FY '23 income tax return. Interest paid was largely unaffected by recent interest rate rises due to hedging and the fixed rate on the convertible bonds. I'll now hand back to Carl for further detail regarding the segment performance.

Thank you, Geoff. As I've already spoken to the key drivers of the results, I'll focus now on the operational business units. Now to Slide 18. From May 2022, we saw strong engagement with many of our insurer partners, which saw a range of pricing increases, which came into effect throughout the half. These contracts will be under continued review to ensure that we address the impacts of the high inflationary environment. The group also ceased repairs with a small number of customers, where mutually agreeable terms could not be reached. Although 2 of those customers have now returned at pricing previously contemplated. During the half, we also achieved interim pricing for Capital S.M.A.R.T, which applies for the period from October 2022 to June 2023. With the tight labor market, which we continue to address through activities to combat absenteeism, investment in apprentices and international recruitment, we also undertook network optimization activities to ensure we maximize the productivity of available capacity. With a smaller network and a constrained labor force, combined with the impact on volumes during the negotiation process, repair volumes were down 4% on PCP. However, our focus has moved from repair volume for volume's sake to looking instead for growth through profitable and sustainable repair volumes into the future. Now to Slide 19. Heavy Motor business unit saw a strong revenue result with an increase of 14% on the prior corresponding period, although general and occupancy cost increases adversely impacted the results with the post AASB 16 EBITDA growing by 3.6% over the same period. While this business is largely protected from parts price inflation as the actual costs are recovered, labor scarcity is impacting throughput. Engagement with our insurance partners is ongoing, especially during this continuing high inflationary environment and labor rates with our major insurance partners were increased late in the prior financial year. The forward workbook for Heavy Motor remains strong, and we are seeking to expand capacity through targeted site transitions. Now to Slide 20. With the business reset and the sale of Fluid Drive completed, we have continued to pursue the supply part of our strategy. In the half year '23, we saw the Somerton facility fully operational with the improved customer experience from the new delivery solution. We also executed a lease for Hemmant Brisbane as we complete our eastern seaboard warehousing network. The team have seen great success with the continued expansion of the direct import aftermarket range with supplier selection completed and product samples landed. Improved margins are being driven by strict pricing discipline and the team achieved record parallel import sales in November. Now to Slide 21. The rationalization of shared services, combined with increased corporate rebates partly offset by the centralization of support functions saw a net decrease in Corporate costs over the first half 2023. Further, we completed the exit of the former head office at Bundall on the Gold Coast with team members moving into alternative locations within the existing network. Now to Slide 23. I won't cover this slide in depth as we presented our FY '27 strategic targets in May, and this is just an affirmation that those targets still hold. So too, do our objectives, strategic pillars and broad focus areas, which are included on Slide 24 and our short- to medium-term focus areas on Slide 25. Now to Slide 26. We have previously covered contract pricing, so we'll now address our network optimization activities. Through the period, we closed, converted and merged a number of sites as listed [indiscernible] Capital S.M.A.R.T, we also reopened one site and opened a new site as we seek to expand our service delivery across the Capital S.M.A.R.T network. 5 sites in our network remain hibernated at the end of the year. These activities represent the outcome of significant careful consideration of the sites within our network, from the availability of labor, the concentration of local sites to ensure a partner demand through to the physical quality of each of the sites. With this optimization completed, we move now to focus on network expansion opportunities. Whilst investment capital is constrained in the immediate term, we have the opportunity to increase capacity through additional workforce deployment and when available through relocation of existing facilities. Into the future, we will seek acquisitions in line with our strategic plan. Now to Slide 27. As you can see, we have made significant headway into our optimization activities. While there are still a number of unprofitable sites across the network in the second quarter, each has a pathway to improvement, and we see the value of retaining them within the network for strategic or operational reasons. Whatever we remain in its current high inflation environment, ongoing price management is required to ensure that payment for the work we complete keeps pace with inflation, and we continue to actively engage with our insurer partners on a regular basis. Now to Slide 28. Here, you can see that in line with our network optimization strategy, we have reduced the unutilized capacity across the network as we concentrate our labor into fewer sites with increased utilization, labor and process productivity. Now to Slide 29. Procurement and parts disintermediation remained a key focus and growth opportunity for the business. In procurement, we have increased our parallel imports range by adding over 1,000 targeted SKUs, improved margins and made record sales in November 2022. We continue to progress opportunities in both aftermarket parts and consumables and will always maintain an eye on our indirect expense saving opportunities. In parts disintermediation, the Victorian warehouse is now well established and is an outstanding facility, and we are well underway with a new warehouse in Hemmant, Brisbane due to be operational in the coming months. The team has focused on improving customer service and satisfaction. And a key element of this has been the in-source delivery program with improvement evident in the Net Promoter Scores and anecdotal feedback across the network. Within the reclaim space, higher wreck values at auction have challenged margins. However, the team continued to increase the range and broaden the product offer. Now to Slide 30. As previously disclosed, in December 2022, we reviewed a 10-year partnership with BASF for the supply of paint across the AMA Group network. While the overall value of the arrangements are unchanged, we expect to see an improvement in the recurring operating cash flows of $10 million per annum over the period of the contract. Now to Slide 31. In pursuit of revenue diversification, the General Manager of Direct Sales commenced in June 2022 and has since identified key segments and customer targets. Creation of a centralized customer service function will facilitate the one-stop shop desired by many customers and have partnered with an online booking platform for vehicle repairs. We have seen early success with rental car, rideshare and the vehicle subscription market and maintain strong relationships with major rental vehicle companies, recently receiving a contract extension with a major global provider. Now to Slide 32. While we have spent time resetting the base business and minimizing disruption per our stated short- to medium-term focus areas, we have not ceased our pursuit of a preparation for growth. We continue to redeploy surplus equipment to extend the capacity of the existing Collision repair network and continued priority recruitment into facilities with underutilized capacity. With ACM Parts moving out of the Gold Coast Bundall warehouse and into Hemmant. We are converting the space into a repair center to consolidate some local existing [ opportunities ] into the larger and more productive site. In Heavy Motor, we will be transitioning our South Australian site to a new facility with increased capacity. And of course, we have already discussed the ACM Parts move to Hemmant, Brisbane. I'm also pleased to share that trials continue with 2 international vendors for the supply of ADAS technology into the network with updates to come. Now to Slide 34 and the outlook. We always said that financial year '23 would be one of transition, but I'm pleased to see the green shoots of our efforts. We have seen positive and ongoing engagement with our insurer partners in the face of this ongoing high inflation environment. Capital S.M.A.R.T repricing discussions are soon to commence for the FY '24 period, and we have seen improvements in site productivity as we optimize our network and labor force. We will maintain our conservative approach to cash management and also maintain an eye on the future as we can pay for growth and to invest in inventory for the progress of the [indiscernible]. We affirm our FY '23 and FY '24 normalized post-AASB 16 EBITDA guidance of $70 million to $90 million and $120 million to $140 million, respectively. Extensive work completed to date is showing strong positive impact despite substantial ongoing inflationary headwinds and historical legacies. Resetting Capital S.M.A.R.T FY '24 pricing and confirming an appropriate capital structure will enable the group to embark on acquisitions and profitable growth in line with the company's strategic objectives. With that, I will hand over to Geoff to cover off on our funding and liquidity now.

Thanks, Carl. As previously disclosed, our senior debt facilities are in place until October 2024, with the majority of our debt remaining on fixed rate interest arrangements. I'm pleased to say the relationship with our banking syndicate remains strong, and we have submitted our covenant test at 31 December 2022, with the minimum EBITDA thresholds being met. Management forecasts to meet covenants moving forward, which provides sufficient runway for us to deliver the earnings recovery. We have sufficient cash to see us through the recovery with the projected positive operating cash flow for the remainder of FY 2023 as the benefits of the revised commercial pricing and site optimization are fully realized. Although our existing senior debt matures in October 2024, the group intends to investigate options for an early refinance through second half FY 2023 based on our second half '23 and projected FY '24 earnings profile, inclusive of the expected repricing of Capital S.M.A.R.T. A focus of any refinancing would be to provide flexibility to pursue acquisition growth where it makes sense to do so and invest further in our part supply strategy. I will now hand back to Carl to close the formal part of the presentation.

Thanks, Geoff. I'll end this presentation with our aspirations. We have the right team to execute our strategy as we deliver market-leading repair capacity as we work towards our aspirational targets. To be the industry benchmark for safety. To be a preferred employer within the industry, train more than our share, to expand our network to over 250 sites generating $1.5 billion in revenue with 12% or greater post-AASB 16 margins, and with a business that supports environmental sustainability through collision repair and parts sourcing. As we reach the end of our formal presentation, I would like to take this opportunity to thank management and all our employees for their ongoing dedication and commitment to our business. I will now address questions. Please note that you may submit your questions through the webcast facility.

[Operator Instructions] The first question today comes from Tim Plumbe from UBS.

A couple of questions from me, if that's all right, please, Carl. Just when we're thinking about headcount and the number of sites that you guys have got, can you just walk us through, and apologies if you've gone through this; I joined a little bit late. But can you walk us through where your headcount is now versus what it needs to be in order to kind of get sufficient volumes to reach that midpoint, $80 million of EBITDA in FY '23 and then midpoint $130 million of EBITDA in FY '24, please?

Thanks, Tim. The headcount is reasonably stable at the moment [indiscernible] and I think we still continue to face challenges with recruitment domestically. Although our overseas recruitment pipeline is strong, and we've called out already that we have several 100 inbound overseas skilled workers on the way to the company in the new term. I think there is always going to be challenges in resourcing the capacity that's available in the market right now. So we continue to make headwinds -- make headway, sorry, into that challenging environment. But I don't think that's going to go away anytime soon. So I think to answer your question, I think there's no magic number. I think we continue to assess our physical site capacity, our labor utilization and labor productivity and the degree that those sites can be funded with profitable work given today's economic and inflationary environment will all decide ultimately on where the labor goes and to what contract or what work we apply that labor to.

Maybe if I ask it a slightly different way, in order to get to that FY '23 kind of midpoint number, do you need to take on materially more heads outside of the 100 that are already in the pipeline?

There is no material change to our existing [indiscernible]. So to answer your question, there is no heroic uplift required to meet that guidance.

And just the second one, kind of a follow-on from that. Labor inflation, can you kind of talk to us for a mid-level panel beta role? What are you having? Or how much more are you having to pay now versus kind of 6 months ago and 12 months ago? And has that inflation been factored into the most recent price increases that you've renegotiated? Or will you need to go out and negotiate again to kind of get that uplift covered off?

Tim, I think we're all expecting around 4% direct wage inflation over the period. The approaches we've made to our insurance customers contemplate the need for regular pricing reviews, not only on labor, but also in parts, depending on the nature of the contract. The war for labor continues. Some markets are hotter than others. And there will always be an element of the workforce that is motivated solely by hourly rate. And there is, as we've mentioned in the presentation, there is some pressure on lateral hiring in some markets, particularly as competitors set up close to existing facilities that we have or other participants in the industry have and then seek to set up by just lateral hiring entire crews or selectively poaching people, which can lead to labor cost increases in certain local markets, but it's not widespread. So I think for the purposes of your question, circa 4%, 3% to 4%, and we are certainly approaching our insurance work providers for compensation for that. Obviously, we need the labor to be able to address the capacity needs.

And just very last one for me. Vehicle revenue up 15%, volume is down 4%. Can you kind of help us work through that 19% uplift that excluding volume mix difference between pricing and mix, please?

Yes. There is a degree of pricing and mix, obviously, severity has gone up. I don't think we're in a position to bifurcate between those 2. But we're certainly seeing increases in severity across the board, both in our Drive and Non-Drive divisions. That increase in severity has seen, obviously, the cost of a repair increase accordingly. But it is split between severity and parts price inflation as well as labor price inflation of course, labor cost inflation.

[Operator Instructions] The next phone question comes from Chris Savage from Bell Potter Securities.

Carl, the guidance released this year, obviously, implies an uplift in EBITDA in the second half. What are the factors you need to achieve to get that? Or is it just a case of the trend continuing around network optimization for 6 months from the Capital S.M.A.R.T deal and things like that.

It's a couple of those things, Chris. It is a full year run rate of the various activities we've taken through the business, whether it's site rationalizations, the impact of pricing adjustments in the Non-Drive business, the impact of the interim pricing we received from Suncorp and the Capital S.M.A.R.T business as well as other productivity initiatives that we've made through quarter 2 and annualizing those through into quarter 3 and quarter 4. So there is no expectation of any other windfall event that would underpin the achievement of that forecast or the guidance for the second half. So really, there's a combination in the full run rating of the various initiatives we've made across the business, both in pricing, indirect cost and direct cost.

And Geoff indicated that you've had 3 quarters of improving results. Can you give us an idea what the EBITDA split was Q1 and Q2 just to get an idea of the trend in that metric?

Chris, it's Geoff here. I'll comment, when [indiscernible] talked to specific numbers. But certainly, Q2 was a lot stronger, given that sort of the revised network structure, the revised pricing on our Collision part of the business and the interim pricing on S.M.A.R.T. So to Carl's point, the run rate in Q2 gives us more confidence for that second half guidance. But yes, certainly an improving trend first half -- sorry, first quarter to second quarter.

And last question, in the outlook slide, it suggested that you haven't started negotiation with Suncorp yet on the new Capital S.M.A.R.T deal post 30 June. So how long do you expect that to take? And like, I'm guessing, even when you achieve that, it will be announceable to the market? And what sort of details can we expect like -- would you expect or hope to get something better than the interim pricing bill you've got now?

Chris, a couple of things. I mean I think the interim arc that we were successful in negotiating with Suncorp had the effect of obviously compensating Capital S.M.A.R.T for the substantial cost increases, it has faced over that 3-year standstill agreement that you're aware was executed by prior management. So strong inflation has obviously resulted in Capital S.M.A.R.T getting to the point where it's obviously losing money and obviously not generating free cash. The strong partnership we have with Suncorp allowed us to negotiate with them an agreed interim part that preserved that precious capacity for Suncorp. Ultimately, as an interim step prior to the renegotiation of the new part, post 1 July when this standstill agreement ends. It's my expectation and in discussions with senior leadership at Suncorp that we will enter into that process early in -- sorry, in the next couple of months, but certainly, we have a reasonable expectation to have that closed out in Q4, so by June 30. And that will certainly give Suncorp the ability to price for the impact of that contract change, but also gives us certainty in terms of our ability to achieve the results that we need for the business for the coming financial year. So we're aware of our obligations in terms of disclosure. And consistent with the disclosures we've made around the [indiscernible] interim mark, we will make those appropriate disclosures as and when that contract is settled. And from here on in, we then get into the annual cadence of annual price reviews in accordance with the base 15-year mode of repair services agreement that Capital S.M.A.R.T has with Suncorp that we acquired with the business in 2019. So we expect that the substantial impact that the sort of standstill agreement has had on the business in the last 3 years, we'll return to a more natural cadence from '23, '24 onwards that allows Capital S.M.A.R.T and Suncorp to partner in a very much preferred value-based high-volume repair capacity, that rewards Suncorp for the volumes they give us and also allows Capital S.M.A.R.T to focus on providing high-volume, high-quality repairs to Suncorp for that Drive business unit. So I think we're looking forward to the normalization of that agreement prior to June 30, and that will allow both Suncorp to price for that in future periods, but also allow AMA to normalize its earnings, which obviously is a key element underpinning the guidance for next financial year.

Thank you. At this time, we're showing no further questions from the telephone lines.

We have got a question on the webinar. So the question is from Alex Mclean at Lennox Capital. What volume assumption have you applied to the Vehicle Collision Repair division to reach the midpoint of guidance?

Alex. So I won't talk to specific numbers, but we are sort of assuming that we carry forward some of the run rates we've seen in Q2. And we've made some assumptions around mix progression in the second half. I would say a moderate uplift in volumes really is everything the workforce we have now and ensuring we've got the right allocation of prepared across the network. To Carl's point, we haven't assumed any heroic uplift in headcount and enhanced volume. So really, it's a carryforward of run rate as of baseline.

The next phone question is from Warren Jeffries from Canaccord Genuity.

Just on the Suncorp relationship and with regards to Capital S.M.A.R.T going forward, will there be a greater regularity with engagement where you both parties will understand that if things are moving on inflation or labor, there will be a propensity to both huddle again and discuss those with regards to potentially moving price more regularly?

Thanks, Warren. In the Capital S.M.A.R.T agreement, the 15-year supply agreement with the 2 5-year options we often refer to in relation to the Capital S.M.A.R.T agreement with Suncorp that we acquired when we acquired the business, it naturally allows for annual price reviews. That annual price review has embedded terminology in the agreement that allows for and contemplates the impacts of inflation in the setting of the new price. Obviously, the negotiation that sets that price will effectively be pinned at a number that makes sense halfway through the year because obviously, the expectation is that through the 12 months that will ensue post negotiation that there will be continuing wage and material inflation through that period. So I think that will be part of the inevitably robust discussion with Suncorp as we strike a price. But the benefit is that the 3-year standstill agreement that had previously been executed has now finally come to an end, and we revert to the normalized standard 12-month annual price reviews with Capital S.M.A.R.T and Suncorp that was contemplated when the deal was originally struck in 2019. So I think both Suncorp and AMA, look forward to the normalization of the commercial arrangements. And we continue to provide Suncorp substantial reliable, cost-effective repair capacity. In return, they get market-leading costs and market-leading service in response to solving their policyholders' claims when they arise. So I think it is a very strong partnership that provides deep value for both parties. It was originally contemplated when the original acquisition was done.

And just on the guidance. Again, the $70 million to $90 million this year on a post basis post-AASB 16 basis, there was -- in the deck last year, when we did a -- we did a day with you guys. There was, I think, a $20 million to $40 million pre-AASB 16 number for this year as well. Is that still -- that feels it's still quite relevant, if not probably a little easier to achieve with some of the benefits at the occupancy line.

Yes, I think that's a fair call, Warren. So yes, we're obviously sort of leading with the post AASB 16 guidance, but yes, we're confident we can hit those pre numbers as well.

[indiscernible] benefit, there is a permanent gain there at the moment on the current network, which you've called out…

Yes, that's right.

At this time, we're showing no further questions. I'll hand the conference back to Carl for any closing remarks.

Thank you, everyone, for joining this half's earnings release from AMA. I look forward to making contact with you in the future, and particularly at our full year results upon release in August. Thanks for joining the call. Have a good day.