AUB Group Limited (AUB) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the AUB Group FY '22 Full Year Results Conference Call. [Operator Instructions] I would now like to hand the conference call over to Mr. Mike Emmett, CEO and Managing Director. Sir, please go ahead.

Good morning, and thank you for joining Mark and I as we share the AUB Group FY '22 results. I'm pleased to report another good year of performance from businesses across our diverse group. It would be remiss of me not to recognize the continued challenges our clients and our teams are experiencing, having moved very rapidly from a period of COVID lockdown to a period of rising inflation, supply chain challenges and significant climate-related loss events. Despite this, during this period, we've delivered strong results, continuing the disciplined execution of our strategy to drive revenue growth and expand margin. We've delivered earnings at the top end of the guidance range and have plans underway to improve performance in New Zealand which, coupled with the proposed strategic and highly accretive acquisition of Tysers in the U.K., lays the foundation for further future success. At the beginning of financial year '20, we set out a plan to transform AUB Group and to deliver sustained profit growth to shareholders. Fundamental to this plan was our ability to grow revenue and expand margins by focusing on our core insurance broking capabilities and directly related businesses such as underwriting agencies. Over the past 3 years, we have refocused the business by exiting our health and rehabilitation services investments. We've demonstrated our ability to grow broking organically and through selective and sensible acquisition, including by broadening the spectrum of clients we serve, expanding in the mid-market corporate as well as micro SME segments. Our deployment of technology to support our brokers and service our clients is continually expanding, although candidly, the take-up in some of these areas is slower than we'd like. With a few exceptions, our broking businesses in Australia and New Zealand are performing outstandingly, consistently growing premium, revenue and margin above market rates. Our expansion of underwriting agencies to support brokers and clients has delivered robust scale and profit improvement over the past 18 months. The utilization of these agencies and products by AUB Group brokers continues to increase. The group is now more balanced and efficient. It is, however, a challenging environment for our clients. Significant insurance rate rises and other cost pressures faced by them mean that brokers are working harder than ever to assist clients to manage the cost of insurable risks in their businesses. This, combined with increased insurer risk aversion, means placing specific risk categories is becoming far more complex. Whilst we understand and sympathize with the challenge faced by insurers in the light of the significant increases in frequency and severity of climate-related losses, our priority remains to assist our clients. We are, therefore, seeing an unprecedented rise in the need to place risks on behalf of our clients in the international market. Our recent announcement of the proposed acquisition of Tysers is firmly in line with this strategy. It will step change our capability to place global risks, together with collecting a significant financial benefit for shareholders from the income that will arise. I'd like to turn to the slide deck to discuss the results for FY '22. And Slide 2 summarizes the past year. The continued momentum in Australian Broking underpinned the overall performance of AUB Group. Good revenue and EBIT growth in BizCover was primarily the result of strong performance in BizCover's Australian direct business, and this was partially offset by slower growth through intermediary channels as well as the investment cost for early stage growth in foreign markets. AUB Agencies enjoyed an exceptional year. We made good progress towards our goal to achieve significant scale in this area. New Zealand Broking has also performed well. However, this has been counterbalanced by the considerable investment in Project Lola, the project to implement a market-leading broking and insurance platform, as well as reduced profit in BWRS, our largest broker. Further progress has been made with the transformation of BWRS with a new leadership team in place, including a new group of branch managers. In addition, we have many new brokers and team members who are now on board and are focused on business growth. Profit momentum across the AUB Group, together with interest savings arising from the deployment of proceeds from the capital raise in May, give us the confidence to provide a forecast for FY '23 underlying net profit after tax of $86 million to $91 million, representing growth of 16.2% to 23% versus FY '22. These forecasts do not include the consequences and contribution of the proposed Tysers acquisition announced in May, which is subject to regulatory approval and targeted for completion in late 2022. This acquisition will enhance the ability of brokers and agencies across the group to access capabilities and facilities in the Lloyd's and international markets to better serve our clients. It will also deliver EPS accretion of approximately 30%, including synergies calculated on a calendar year '22 pro forma basis to AUB shareholders. And we affirm the financial returns for shareholders that we outlined when we presented the acquisition in May. Slide 3 depicts our growth and performance since financial year '19. I won't dwell on these charts apart from saying that they highlight our track record of delivering a sustained revenue growth that converts into profit and EPS growth for shareholders, which is exactly what we will continue to do and overarches all of the strategies and results in this report today. As summarized on Slide 5, during financial year '22, we continued to grow revenue and profits, revenue increasing by 12.2% on the prior year to $689.5 million. Underlying margin expanded by 240 basis points to 34%. On a continuing operations basis, the underlying net profit after tax of $74 million grew by 22.2% on the prior year, this being at the very top of the outlook range we provided earlier in the year. This represents an underlying earnings per share of $0.967, an increase of 21.1% on FY '22 on a continuing operations basis. The Board is proposing a final dividend of $0.38 per share, giving a full year dividend of $0.55 per share, flat on the prior year and representing a dividend payout ratio of 64.5%. The decision to hold the FY '22 dividend flat was made in anticipation of the proposed acquisition of Tysers whilst maintaining our policy of paying dividends in the range of 50% to 70% of underlying NPAT and ideally at the midpoint of this range. I'd now like to hand over to Mark.

Thank you, Mike, and good morning all. Slide 6 shows a waterfall chart of the critical movements in underlying net profit after tax from FY '21 to FY '22. The FY '21 comparison year is adjusted to remove one-off JobKeeper receipts in the first half of FY '21 and profits from Altius, the last of the Health and Rehabilitation Services businesses we sold in early FY '21. AUB Group continued to deliver strong organic profit growth of $11.6 million, representing 19.1% growth on FY '21, while bolt-on acquisitions and the net effect of buy-ups and sell-downs contributed $3.5 million or 5.8% to the growth in profits. We have also shown the impact of increasing spending on Project Lola, the broking platform project in New Zealand. On Slide 7, we reflect the growth in premium and our ability to translate this into growth in underlying NPAT. We also reflect the seasonality in the business. The 48% to 52% split in premium between the first and second halves is consistent with our historic split. The disproportionate profit split of 41% to 59% reflects our continued growth momentum in the second half and a largely fixed cost base, which means increased revenue in the second half flows disproportionately to our bottom line. Historic shareholder returns from earnings per share and dividend per share are shown on Slide 8. We understand that comparisons are made complex by the impact of our exit from Health and Rehabilitation Services and adjustments to remove the timing impact of prior year JobKeeper receipts. We therefore include 2 sets of underlying EPS charts on this slide. The top chart reflects earnings per share growth since FY '17 using underlying historic EPS that is not adjusted to remove JobKeeper receipts or profits from the now exited Health and Rehabilitation Services division. Below to the left, we show the underlying EPS growth from continuing operations where these items are removed from comparative periods. This is designed to enable investors to understand the actual underlying rate of growth of the continuing businesses. These graphs show growth over the past year for historic EPS of 12.3% and growth in EPS from continuing operations of 21.1%. We also include the dividend per share, which, as Mike stated earlier, is flat on the prior year to account for the as yet incomplete Tysers acquisition. Following the half year presentation in February, several shareholders requested the inclusion of the information depicted on Slide 9, in preference to the corporate entity cash flow information we've previously provided. As you'll note, this slide shows that the conversion of profits to cash was greater than 100% in FY '21 and FY '22. You will also note that we have not provided details about debt as all previous debt was extinguished using the proceeds of the equity raise. AUB Group now has excess cash reserves on deposit in anticipation of the Tysers acquisition, at which point our new debt facilities will be utilized. Each year, we define and describe execution priorities for the year ahead. Slide 10 reflects the highlights of achievements against these priorities for FY '22. Whilst I won't go through each of these, I would like to highlight the progress we've made in not only continuing to optimize and consolidate our existing network, but also expanding through acquisitions that enhance not only scale but, more importantly, our capabilities. In particular, I'd like to recognize our agency teams for a spectacular year. Our technology investments and deployments also continue at pace with our recent acquisition of the iaAnyware core broking system significantly enhancing our ability to strengthen broker technologies. While there is much to be pleased about, I will call out 2 areas where we're disappointed with progress. Project Lola in New Zealand is running behind schedule, while ExpressCover take-up has been slower than planned. I'll now pass back to Mike for the rest of the presentation.

Thanks, Mark. Slide 12 reflects pleasing divisional performance with revenue growth and margin expansion, leading to profit improvement across the group. In Australian Broking, revenue growth of 7.6% and the excellent margin expansion of 250 basis points resulted in profit growth attributable to AUB shareholders of 23.4%. BizCover continued to sustain high revenue growth and solid margins achieving 24.7% growth in profit before tax attributable to AUB. As highlighted earlier, Agencies delivered excellent revenue growth of 41% with margin expansion of 510 basis points, both better than we had anticipated at the start of FY '22. New Zealand Broking primarily delivered a solid margin and profit outcome, although as indicated, this was counterbalanced by Project Lola investment and reduced profit in BWRS. I'll now speak to the main elements of each division. Slide 13, Australian Broking. We continue to expand and optimize our organic performance and to supplement this by acquiring and consolidating complementary broking businesses. As reflected on the slide, this strategy has been a critical component of our ability to expand margin and widen the EBIT margin jaws. During FY '22, we completed several bolt-on acquisitions, including Vaughan & Monaghan as well as consolidating WRI and Nexus into existing Austbrokers. In addition, the Insurance Alliance has gradually expanded and now supports 7 independent broking members all part of the broker co-op. Our income from the broking portfolio comprises insurer commissions, which increased by 10.5% during the year, and broker fees, which increased by 4.5% during the year. And for our renewing portfolio of clients, this being retained clients who maintain the same risk coverage and renew with the same insurer, we noted a premium rate increase on average of 9% while for the balance of our portfolio, they experienced a lower rate of premium increase. As a result, we are confident that our 10.5% growth in commissions is growing well in excess of the rate of premium rate rises. Slide 14 describes BizCover operations. And you'll note, revenue growth through the direct channel continued strongly at 26.9% for the year and that the Australian business operated at an excellent EBIT margin of 40.9% for FY '22. We have noted a slowdown in revenue growth through the intermediated channels including white label partners such as comparison sites. There is also investment being made in BizCover's international markets to build future growth momentum in these jurisdictions, although the take-up has been somewhat slow. Moving now to Agencies on Slide 15. Our strategy for Agencies is clear: to build scale, to broaden the product range, and to focus the Agencies into 1 of 3 key groupings: general commercial, specialty or strata. During FY '22, we made significant progress with this, launching 3 new agencies, acquiring an additional 2 external agencies, consolidating 3 existing businesses and exiting a further 3. As a result of these actions, together with the benefit of the acquisition of 360 Underwriting in FY '21, we grew agency gross written premium by 32% to $679 million, $75 million of the additional $163 million of premium was placed by AUB brokers. The net result of these changes was an increase in EBIT for Agencies of 63.8% over the prior year. On Slide 16, we show New Zealand as a tale of 3 parts, and the waterfall shows the impact on profits of the Project Lola investment, reduced BWRS profit and the strong performance of the remaining brokerages in New Zealand. We're optimistic about our positioning and potential and the actions we have in place to accelerate our growth in the New Zealand market. It's useful to note that the New Zealand Broking business achieved a robust 34.9% EBIT margin if you exclude the costs of Project Lola. And as I've said previously, New Zealand is a key focus in FY '23, and we have a clear path to delivering better results with a number of improvements already in place. Slide 17 covers aspects of the proposed Tysers acquisition. Let me say upfront, we are delighted with the proposed acquisition, both at a strategic and a financial level. We are buying a high-quality business that accelerates our strategy and on good financial terms. I want to emphasize that the acquisition is subject to regulatory approval, and AUB Group does not yet have operational oversight of the business. In the 6 months to June 2022, Tysers experienced revenue growth of 8% versus the prior year, with most areas of the company enjoying strong trading conditions. There are some exceptions, most notably due to Tysers' decision to cease support for certain jurisdictions such as Ecuador and Colombia, as well as the result of international sanctions on Russia. Our continued engagement with management and the broking teams of Tysers is very constructive and there is strong support for the partnership from teams, both at Tysers and in AUB. We remain confident about the financial outlook for Tysers and the synergy opportunities we presented in May. And in fact, AUB Group's international placement volumes have continued to increase as predicted, reinforcing the synergy benefits. Turning now to the year ahead. Slide 19 lists execution priorities for FY '23. As in the prior year, we will continue to optimize our network, drive organic growth, make stand-alone and bolt-on acquisitions and enhance our proposition to partners. However, for FY '23, we have 2 new priorities. Firstly, to deliver improvements to the New Zealand business and to benefit from the resultant financial results of these; and secondly, to integrate and optimize Tysers to ensure that we deliver the benefits of this attractive acquisition. Finally, I'd like to draw your attention to Slide 20, the FY '23 outlook. I want to point out, we do not yet own Tysers and therefore, have not included any profits nor financing costs that will arise following completion. We, however, recognize that the receipt of proceeds from the equity raise was related to the Tysers acquisition and have therefore prepared a waterfall chart showing the outlook based on the current AUB Group economic reality, i.e., no debt and no Tysers income. To illustrate this, the waterfall chart includes 3 income or expense reduction items, namely: one, the organic growth we anticipate AUB Group will deliver of 8.1% to 10.8%; two, the profit growth of 2% to 3.4% that we anticipate from new acquisitions unrelated to Tysers, noting that there is still a very good and healthy pipeline of bolt-on acquisition opportunities in Australia and in New Zealand; and three, the benefits of interest savings from the early repayment of AUB Group debt as well as additional income from the investment of surplus cash both arising from the proceeds of the equity raise. And this will result in a growth in underlying net profit after tax of 6.1% to 8.8%. You'll also note the comment on the slide that our financial year '23 underlying earnings per share is anticipated to be broadly in line with the FY '22 earnings per share, taking into account the near-term dilution of the recent capital raising. This is a function of the timing of the raise, remembering that we are not including a profit contribution from Tysers as it is a still incomplete transaction. We will obviously update guidance when the transaction closes and once we own the business. In summary, we are forecasting growth in underlying net profit after tax of 16.2% to 23% or 10.1% to 14.2% if you choose to exclude the benefits from deployment of the capital raise proceeds. Thank you. I'd now like to hand back to the moderator for questions.

[Operator Instructions] The first question today comes from Tim Lawson from Macquarie.

You've provided in the past margin targets across the various segments. Can you just comment on those in respect to the sort of recent results and when they need to be updated and the sort of timing you've got on achieving those targets?

Tim, thank you. So I actually anticipated someone will ask the question. So look, those margin targets remain our medium-term margin targets. Clearly, we've made very good progress on moving towards those targets this year. And so interestingly, a couple of years ago, I think the feedback was that they were ambitious. I think after today's result, I suspect the script will change to challenge me on whether they're ambitious enough, that's a nice problem to have. So we stand by those targets. We clearly have a very visible path to achieving them, and we see a lot more opportunity in the agencies to improve margin. But obviously, our key focus on the year ahead is improving margin across the board. There's still headroom. And I'd like to say that we clearly think that there is upside on those margin targets.

And just another question. Just in terms of -- you commented, it might have been Mark, about the New Zealand, Lola and ExpressCover being sort of behind plan. Can you just expand as to why, what's the issue there, what do you expect to do? This year, you said that New Zealand obviously is a focus. Do you expect it to change?

Yes. So 2 things. I think the first one is Lola is a typical technology lag. So we'd hope to have the technology ready for pilot by now. But in fact, it's going to be later in the calendar year. So that's a pure technology piece of work that's running slightly behind schedule. On the ExpressCover, this is about take-up. And partly, the takeup is linked to adding insurers and products onto the platform. And of course, that again links to ensuring that the timing aligns with the insurers' priorities, et cetera, and our own technology, capacity and capability. But the comment about ExpressCover was really about the take-up and the volumes being placed on the platform, and Lola was about the timing and the delay -- or not quite delay, just we're running behind schedule on the technology build with Lola. It's months, not years, to be clear.

Yes. Okay. And just a final question for me. Just on Tysers, you comment on the planning there. Obviously, you don't own it, the transaction hasn't closed, but the planning there, is that including inside the business or is this all sort of external planning? I mean how much access you've got at the moment of the business?

Yes. So we've got good access. Clearly, we're very respectful of the fact that we don't own the business and the current owners will want to ensure that there's not too much distraction on the teams. There's a lot of activity preparing the business on their side to meet the commitments under the share purchase agreement. Their pieces around -- as a reminder, we are not acquiring the full business. The perimeter excludes certain entities in the U.S., et cetera. I'd say extraneous entities that implies that they don't have value, but they are for a different purpose. And so there's a lot of work going on to prepare the business for the point of completion. And obviously, a lot of work with the regulators. But I think in terms of just regular interaction between various teams in AUB and both at the broking level as well as at the management level on both sides in anticipation of completion. But obviously, respecting the situation that we're in where we are 2 separate companies, we need to respect the -- all of the requirements around competition, et cetera.

And just for clarity on that, how much work is being done on the retail JV? You would have noticed that PSC has included a contribution from Tysers in their guidance, which obviously you haven't?

Yes. So I think we've continued the discussions with PSC and have participated in discussions between PSC and Tysers Retail. But I think in terms of substantive agreements, from our point of view, we don't own the company yet, so we can't enter into an agreement to sell part of the company until we do. And so at this stage, it is exactly the status that it had in May, but with the added pieces that there have been discussions and meetings held between the 3 parties in the U.K.

Our next question comes from Elizabeth Miliatis from Jarden.

The first one is just on the FY '23 guidance that you've put out. The organic growth bucket of 8% to 10% looks perhaps a little conservative in the context of continued strong premium rate growth, a little bit of volume growth and also continued margin expansion as you get closer to those medium-term targets. How should we think about that bucket relative to those points I've just made?

Yes, Elizabeth, that's a good question. Obviously, the challenge for these things is predicting the future. And so what we provide is a range based on our budgets, et cetera. Now obviously, last year, in the same position, you look backwards and you'd say, well, Mike, for 2 years in a row, you've exceeded the organic outlook that you provided at the beginning of the financial year. Yes, but that doesn't change how we forecast. The fact is we forecast for the things we know and reasonable assumptions around the 12 months ahead. And obviously, if everything goes better than planned, then we'll beat those forecasts. But at this stage, this is our best estimate of what the forecast is for the year ahead.

Okay. And those forecasts, what are you assuming for premium rates for the Australian business and then also the tech spend for Lola?

Well, so the tech spend for Lola is roughly the same as this year. It's slightly more. But -- so if you look at the New Zealand piece, we've explicitly called out 5.1%, and I think our assumption is 5.5%. Secondly, in terms of the premium rate increases. So the first point I'd make, I don't want to overcomplicate the answer. So the short answer is it's in the range of 6% to 8%. Having said that, I think it's probably worth emphasizing that when we spoke to the -- when I mentioned the 9%, and I did try without overcomplicating it. I don't want to turn it into a Nobel Prize-winning thesis. But effectively, a portion of our revenue is a result of premium rate increase and a portion is from the fees. Of the premium rate increases, by definition, part of what our clients are wanting brokers to help them with, particularly in the inflationary environment, is to manage cost increases. And so in fact, one of the key focuses of a broker is how to find that right balance between the risk coverage, the insurer and the premium cost. And so by definition, if we've been successful, then our clients will achieve a lower premium rate increase than the market, if that makes sense. What we can -- the only piece we can categorically arithmetically validate is that for the same client, who's placing business with the same insurer for the same risks, we can tell you that categorically, they had a 9% average premium rate increase. But we do know that for the same clients, different insurers, normally, they're moving because they are changing at least the premium, so they're moving insurers and/or the risk coverage. And so by definition, it's very hard to correlate premium rate increases that insurers would like to put through with the effective rate increase. I think the other thing I'd say as well is that one of the value propositions of BizCover is that the premium rate increases that they are able to deliver to their clients is at a much lower level than the market rate increases. And so you've got these different components that are affecting how you would look at our -- the translation of what we get as a sort of a premium rate flowing through. But we're actually pleased with that, because that's part of our value proposition to clients and why we're confident that we're able to grow not only new client numbers, but also expand -- retain our clients for a long periods of time.

Okay. Got it. And then a second question just on Tysers. Obviously, you've given us revenue growth on PCP. But in terms of margins, obviously, it's challenging at the minute because you've not got your handle on the business and there's a lot of ramp-up cost going through the business, but margins relative to what you're expecting, would you say that they're in line or perhaps tracking ahead or behind?

Yes. So Elizabeth, I think there are 3 components to the information that we're able to share. The first is obviously respect for the existing owners. The fact is we don't own the company, we can't just disclose information. So the information we're sharing has been approved for in a full release by the existing owners. Second point is that the perimeter, the transaction perimeters I mentioned earlier to Tim's question, is different to how they currently report. And so that piece requires a fair amount of work to reconcile the 2. And thirdly, certainly, everything we're seeing supports the confidence we have in the information we provided in May, which was fairly extensive and thorough disclosures. And so we remain very confident about our ability to -- as I mentioned, over an 18-month time frame, we see strong -- we have strong conviction about the synergy improvements and we have great confidence in the EBIT and EBIT margin-related adjustments and numbers that we provided in the May presentation. So from our point of view, nothing has changed. Our degree of conviction about those numbers, particularly synergies, has increased rather than decreased. And -- but as you rightly say, we just have a view that until we operation -- we've completed the transaction we can't provide further detail than we have provided. One bit of color I'd like to add to the revenue numbers. As you may recall, in May, we mentioned that there've been a 6% revenue growth in the first 3 months of the calendar year. And obviously, now it's 8% for the first 6 months, which means that revenue growth has obviously accelerated in the second quarter of the calendar year, which obviously is a pleasing development as well.

Our next question comes from Siddharth Parameswaran from JPMorgan.

Just a few questions if I can. Firstly, just on your guidance for '23. I wonder if you could just elaborate on what expense pressures you're seeing in the business and what assumptions you're making? I mean, I think that one of your peers did flag elevated expense growth, particularly amongst staff. I was wondering if you could just give us an idea about what you're assuming.

Yes. So the effective expense inflation in our FY '22 numbers are about 3.6%, and we have assumed approximately 5% for FY '23.

So was that 2.6%? I missed that. 2.6% or 3.6%?

3.6%. So it's a 3.6% effective inflationary impact in the FY '22 numbers and a 5% assumption for FY '23.

Okay. That's helpful. Can I just ask also just about the -- you mentioned the upgrade and the revenue growth guidance or -- well, not the guidance, but the actual numbers for the 6 months to June '22 on Tysers versus what we saw for the 4 months, 6% to 8%. And that's just quite a strong uplift just in the last 2 months.

It was actually 3 months.

I can't remember any -- in your guidance when you did the acquisition, I can't remember any adjustments being made for a pick up in revenues. Is this all upside for what you're seeing and your original business case on Tysers?

Three quick comments, if I may. The first is the 6% was for the first 3 months of the year. We provided in May, but it was January to March. Secondly, part of the uptick, there is a currency piece because about 50% of their income is denominated in U.S. dollars. And so the U.S. dollar has strengthened against the pound and so there is a piece of that, which is currency. Third is, the short answer to your question is, yes, it is all upside with one caveat, which is obviously it is strengthening the probability that the earnout payment, which is linked to revenue. You may recall that there's an earnout payment of GBP 100 million due after -- well, just beyond 2 years after completion in the event that the second year income is more than GBP 39 million above the pre-acquisition income. So the uptick is all upside, apart from the fact that it increases the probability of the earn-out payment, which, frankly, we're comfortable with because certainly, we felt that the GBP 100 million for the revenue uptick on an existing business base, because there are adjustments in the share purchase agreement where you're changing the number of staff, et cetera. So this is effectively the current cost base, delivering GBP 39 million more of income. Obviously, a significant chunk of that flows to the bottom line.

Yes. Okay. And just maybe a final question for me, just on -- with the rising interest rates that we're seeing at the moment, I was wondering if you could just comment on, once you finish the acquisition of Tysers, assuming it's all okayed by the regulators. If you could just give us some idea of what the rate on the debt is likely to be and whether there's likely to be any offsets from higher interest rates with some of the client balances that you hold on client fund?

Yes. So I think -- exactly. Two parts to that. So firstly is BBSY plus 4.5% is the facility. I think in terms of interest rate movements and effectively our hedged currency position -- or sorry, our interest rate position. So effectively, post completion, we will have roughly the same amount. In fact, we'll have more in client funds and trust funds and regulatory capital invested across our networks and businesses than we will have in debt. And so effectively, subject to timing, because in some cases, we put some of those investments into term deposits. But subject to timing, effectively, we'll be more than hedged across the debt from a currency -- sorry, on an interest rate point of view.

Our next question comes from Jason Palmer from Taylor Collison.

I just wanted to go on the Tysers question around the currency in particular. You called out one half of the book exposed to U.S. dollars, so probably implies around GBP 100 million exposed to U.S. dollars. So the currencies moved materially like it has. There's something like GBP 10 million of revenue benefit to Tysers on my quick calculations. How much of that actually falls through to the EBITDA line?

Jason, I think 2 comments to it. The first is, so going forward, clearly, there's a different hedging approach that they have in place. But going forward, clearly, what we're doing is we're looking to match debt costs with an element of it denominated in USD, income flows and the way in which -- and the asset, the sort of underlying asset denominated currencies. And so we'll be balancing those off to create natural hedges. But at a basic level, the -- because in fact, it comes to the perimeter point. Because Tysers is the ultimate reporting entity at the moment that aggregates all of those foreign currencies, they converted into sterling. However, what we will have is we will have a U.S. business, a U.K. business and an Australian business and a New Zealand business. And then obviously, their flows of the cost of debt will be, in some cases, matched to the income flow from those jurisdictions. So I guess, again, without going into too much complexity on this, the mix of currency exposure, both positive and negative, will shift based on the way in which we'll be reporting and managing the business. But having said that, I think the heart of your point, roughly 90% of their expenses are denominated in sterling and 50% of their income is denominated is in dollars, U.S. dollars, about 30% in sterling and 10% in euro.

Sure. So I think we're getting to the point though that there's a relatively material earnings benefit to the group, though where the current translation from the U.S. to the pound sterling is though irrespective of the currency used for the hedging.