Bravura Solutions Limited (BVS) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Bravura Solutions Limited First Half FY '22 Results Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Nick Parsons, Chief Executive Officer and Managing Director. Thank you, and over to you, sir.

Thank you very much, Jacob, and good morning, everybody. My name is Nick Parsons. I'm the Chief Executive Officer of Bravura. And I'm joined here today by Martin Deda, our outgoing Chief Financial Officer; and Brent Henley, our incoming CFO. If we can go to Slide 2, please. Just a very quick note on the agenda. I'm going to talk for a few minutes about who we are, then hand over to Martin to present our group results, then I'm going to come back and go through our strategy and outlook and guidance. So in terms of who we are, moving to Slide 3, I think our purpose, primarily what we exist to do is make our clients successful. And I think we have a good track record of doing that. And our mission is to develop innovative technology solutions that power the world's financial institutions. Essentially, we provide software solutions which make the administrative burden of financial services products much, much lighter. In terms of our values, moving to Slide 4, we have really built the business around these values. We are people who strive to deliver excellence in everything that we do. We have a very strong emphasis on diversity, respecting and embracing it in our people, and we're also people who achieved through collaboration, not just internally, but with our clients, achieving trusted partner status with them. Moving to Slide 5. I want to talk a little bit about why we matter. So we're a business that develops mission-critical core record-keeping systems that power the world's leading financial companies. And in terms of scale, we have over $5 trillion worth of assets running on our solutions. And by running on them, I mean we are the core record-keeping systems for those assets. We're not doing a bit of modeling around the outside. We are absolutely the system of record that institutions build their businesses around. This gives us a very solid business, so our revenue -- so over 80% of our revenue is recurring and the majority of our revenue is underpinned by very long-term contracts of 7 to 13 years. We did about $260 million of revenue in the last 12 months, and we have a very strong balance sheet with a very strong net cash position. We move on to the next slide. A little bit more detail about what we do. So we provide core record keeping for a range of different types of financial services products. That can be simple investments. It can be full support for wrap platforms. Superannuation, obviously, in the Australian market is a big feature of what we do. But we also support pension products in the U.K., in New Zealand and South Africa as well. We have a very capable life insurance system. And with our Garradin product, we can supply solutions for private wealth and portfolio administration. On the fund administration side, we have a number of transfer agency systems, which underpin some of the biggest custodian banks in the world. So those systems are used by the likes of JPMorgan by services using our technology to over 250 of the world's leading fund companies, including the likes of BlackRock, Legg Mason and the others. We also have very strong financial planning software through our Midwinter acquisition as well as a powerful range of micro services through our FinoComp acquisition. In terms of process support around those core products, we've got very high levels of automation now with our own in-house automation system. We can create new products for our customers very easily, distribute those products, onboard new clients very rapidly with the full set of compliance and auditing controls you would expect around that. And the capabilities that we have for delivering these solutions, we can deliver them on-prem, we can deliver them in the cloud and also an emerging kind of hybrid cloud model as well. We provide a software in a fully managed service basis, and we're obviously providing solutions, which are compliant across multiple jurisdictions, all based on highly secure record keeping at the heart of what we do. We have scalable modern technology platforms and a set of enterprise solutions made up of an ecosystem of microservice products. If we can move to Slide 7, one of the things that's been said over the years is that we can be quite a complicated company to understand in terms of the breadth of coverage that we have. So this slide is an attempt to illustrate a simplified version of the value chain and where Bravura plays in it. So I would expect most of you listening qualified and invested in some form, and you may well work with a financial adviser. That financial adviser could well invest your assets on a wrap platform, perhaps or on -- in your superannuation funds. That platform will, in turn, trade financial assets, including funds with the transfer agent, transfer agents doing the core recordkeeping the unit registry, if you like, of those core funds. And then that transfer agent obviously is providing services to the actual end fund manager who's manufacturing the funds that you're investing in. So that's like a relatively simplified version of the value chain. And you can see from the diagram, hopefully, that with our Midwinter products, we play in the adviser space and with Sonata, Garradin and Delta we play in the platform and superannuation fund space and that with our funds administration products, Rufus, GFAS and GTAS , we play in the transfer agency space. So we have broad coverage of the value chain. As I say, it's a fairly simplified view. And one of the things that we're doing with our microservices initiative is using technology to allow us to sell our solutions across the value chain. So you'll have seen in -- historically, we've always reported a wealth division and a fund administration division. What we started doing now though is moving to a space where we can sell those products across the client base in a much more flexible manner. So that's how we cover the value chain. Hopefully, that gives you a little bit more insight into what we do as a business. And you can see that on that value chain, there are some areas where we've got incredibly solid long-term recurring revenue as well as areas which host a whole lot of exciting growth opportunities for us. So we move on to Slide 8. I just wanted to say that we do take our social responsibility very seriously at Bravura. We have a big diversity and inclusiveness program, which I'm very -- personally very supportive of. You can hire for diversity. But if you don't have an inclusive working environment, then people won't stay. So we put a lot of emphasis on both of those things and really creating our people can thrive, which our customers see and benefit from themselves. We're also then putting a lot of effort into sustainability. And we've established working groups, and we're looking for ISO 14001 certification in our environmental management systems, expecting to get that in this year. So thank you very much. I'd now like to hand over to Martin to take us through our financial results.

Thank you, Nick. Good morning, everybody. If we now turn to Slide 10, our -- which is a summary of our overall half year results. So revenue at $132.3 million was 14% growth against the prior corresponding period. And of that, 81% was recurring revenue, and we are very pleased also to see elements of that grew by 20%. Our first half revenue result does include $4.1 million of Delta revenue from the Delta acquisition being a full half's revenue compared to the prior corresponding period. EBITDA grew even more than revenue by 61% half-on-half compared to the prior corresponding period, up to $25.3 million and also with a material improvement in the EBITDA margin. NPAT also grew significantly to $15.3 million, and we have declared a dividend of $0.037 per share, being 60% of the NPAT at the half. Moving now to Slide 11. In terms of the segments, Wealth Management grew 10% in revenue; EBITDA, 7%. The EBITDA margin decreased slightly compared to the prior corresponding period, but still running at a strong 24%. We had a very strong half in funds administration. This was due on the one side to license associated with a renewal of a major fund administration contract for an additional 7-year period, bringing this client to -- will be coming to over 20 years on our platform. Associated with that renewal was also additional services that the client will be taking from us, and other fund administration clients have also increased project work. Those factors combined resulted in the 23% revenue growth and also the EBITDA growth of 49%, of which a portion was the licenses. We have invested significantly in sales resources around the business, and we've incorporated a full period of all Delta and the corporate cost of Delta. Notwithstanding these investments, we've maintained corporate costs at the same level as they were in the first half of the last corresponding period. Moving now to Slide 12. Here, we show our revenue and EBITDA projection -- or sorry, results of our history. And we can see here clearly that from a COVID-impacted low point in the first half of last fiscal year, we've returned to growth in both revenue and our underlying margins. Moving to Page 13. Recurring revenue continues to be a very strong part of our business. The recurring revenue is underpinned by long-term contracts. The majority of our revenue is underpinned by contracts that have terms of 7 to 13 years, and renewals tend to be of similar lead. So contracted recurring revenue was up 20% in the half, going -- moving from $60.3 million in the prior corresponding period to $72.4 million in the half. And overall recurring revenue, including the attached recurring revenue is now 81% of total revenue. Moving to Page 14. We continued to invest in our products. Total investment R&D spend of $29.7 million in the half, of which $18.4 million was client funded through the various projects that we were working on with our clients and $11.3 million was capitalized. This was functionality and features that we were building and we continue to build, aligned to our core strategy for future sales and future revenue. Moving to Page 15. Our balance sheet remains strong. The company has no debt. We do have access to facilities with a line of credit. However, apart from facilities, lease deposits, we have not utilized that facility at all. We have -- we ended the half at $50.6 million of cash. Cash conversion, so operating tax -- operating cash flow, excluding taxes paid, was $17.5 million in the half, which represents an EBITDA to operating cash flow conversion of 69%, which is up from the 61% in the first half and is consistent with the long-term trend. Moving to page -- Slide 16 outlines the detail of our cash flow. We've continued to receive payments in line with all of our contract arrangements. Our clients are large financial institutions, and payment terms and payment disciplines are very strong. With that, I'd like to hand back to Nick who will take us through the strategy and the outlook.

Thank you very much, Martin. So if we can move to Slide 18. It's always hard to try and capture corporate strategy on a single page, but we've tried to do that here. So we have a set of market dynamics, which have really driven our product and technology strategy, which in turn inform our commercial strategy. So if we look through some of those things. In the Australian market, you'll be aware there's a very large amount of superannuation fund consolidation with the government legislation and various directives about the healthiness of funds driving consolidation as well as a fair amount of private equity interest in the market. All of that means that the demand for new systems is growing, and we're very well placed to address that with our Sonata Alta solution. In all of our markets, we're seeing value chain disruption. So that's where different players in the value chain are choking position to see how much of the end investors charges they can take, and we're well positioned with our various products to address that. The whole industry is under margin pressure. There's increasing move towards full digitalization as well as the usual dynamics of regulatory change. So you put all of that together, and you'll see there's a lot happening in the market, and we think we're very well positioned to address that. So our microservices strategy allows us to provide our technology in bite-sized chunks for people who aren't yet willing to make a full scale core determining commitment to replatforming, and we've had great success with that, particularly in the funds administration space and in the U.K. Wealth Management space where both the existing and new customers are taking sets of microservices to solve problems. And we're then able to increase our footprint in those customers. We have been investing heavily in cloud, and we continue to do so. And we now have some very significant customers live and up and running in the cloud with all of the benefits that they hoped for from that. And our work on digital and automation continues. So the Sonata Alta product is essentially the Sonata product, but with very high levels of built-in automation. We're also seeing success now with our standard products at the machine learning-based system, which will read your unstructured incoming correspondence, derive meaning from it and then direct it automatically for processing into an automation system. Commercially, in terms of where we're going, we are able now to structure deals so that we can smooth client fees and implementation fees over the contract term and also implement some consumption-based pricing. It's important to note, though, that we're not moving to a model where people can send things off after 5 minutes. These are still contracts, which are very much based on long-term commitments. So all of this, in terms of client outcomes, gives the clients smoother cost profiles. It makes them a better place to serve their customers at lower costs through digitalization and automation, and it leads to easier, more manageable implementations by being able to deliver the software in bite-sized chunks. And from a shareholder perspective, I think you can see that we're expanding our total addressable market by being able to operate more broadly across the value chain. We are increasing our contracted recurring revenue, and that leads in turn to a more consistent revenue and margin profile. If we can move now to Slide 19. Slide 19 talks about the vectors for growth for the business. So there's really much, much more that we can do with the assets that we've been building over the last few years. And this isn't supposed to be a graph showing countries going up, it's supposed to be X, Y, Z axis showing that we've got different directions that we can build our revenue streams in. So on the -- if you like, the Y-axis, we're looking at expanding our distribution network by working more closely with third-party administrators, business processes and service providers and system integrators and starting to see some exciting stuff coming through there. Along the bottom axis, we have opportunities to increase our value chain coverage, both horizontally and if you like, kind of vertically into spaces more like private wealth and the boutique fund management space. And I guess the big one is along new geographies. So we currently support clients in the U.K., South Africa, Australia and New Zealand, but some of those clients are also running books of business in Luxembourg, Dublin and the U.S.A. using our technology. So we're looking to expand further into Continental Europe and also into North America, particularly the U.S.A. So that's really, I think, the key point on the vectors for growth plan. So I'd like now to take you to Slide 21 and run through our FY '22 guidance. We expect revenue growth to continue in the second half of '22, resulting in full year revenue growth in excess of 10% against FY '21. In order to support the further revenue growth over the next 3 to 5 years, Bravura has accelerated operational investment in key strategic initiatives during FY '22, including Sonata Alta. So we expect Sonata revenue in Australia to grow in FY '22. And in order to support continued growth within this market, we've invested significantly in our operational capability. Our cloud operational investment has accelerated globally to support the increasing number of clients looking to consume our solutions in the cloud, and that's driving future revenue growth. And people, so in order to retain key resources and attract and train the very best talent in a competitive, highly inflationary market, we've seen the average employment cost per FTE increase by over 10%. Our sales pipeline continues to build, but some opportunities are shifting into FY '23. We're also seeing operating costs increasing at a similar rate to revenue. FY '22 EBITDA will be in the range of $45 million to $50 million, and we're now revising our guidance for FY '22 NPAT to be in the range of $25 million to $30 million, which is below previous guidance provided at the November '21 AGM. So thank you very much. Let's start the Q&A now, and Martin, Brent and I will be very happy to take your questions.

[Operator Instructions] Your first question comes from Michael Peet with Goldman Sachs.

The first one, I just wanted to drill down a little bit more on the guidance. It looks as though the seasonality of the business has shifted pretty significantly versus the last couple of years. It's sort of going to be some more even half to half on EBITDA. I take that maybe it's the license fee in the first half and not much in the second. But just wanted to drill down a little bit more, given the color on the revenue growth. But is this sort of -- you mentioned margin pressure, Nick, I'm just trying to get a sense of how much of that is coming through, and we should be factoring in into sort of more medium-term margins across the 2 main divisions.

Okay. Let me pass that one to Martin.

Yes, Michael. Yes, so your observation is correct. We are seeing margin pressure and considering that 80% of our costs approximately are people cost. The market for IT resources of all forms is -- has become very competitive, and there's an excess of demand oversupply. We have been seeing those costs increasing in the half, and our guidance reflects a continuing increase of those costs through into the second half. We do anticipate some further licenses in the second half. However, as you know, licenses are related to either new sales wins and/or renewals, and the timing of those is not precise. So this is -- those items we've reflected in our guidance, which will result in FY '22 being roughly an evenly balanced year in terms of EBITDA and NPAT each half, essentially, so.

Maybe a follow-up to that, if I may. Just thinking about the comment there on commitment to replatforming of clients, and you mentioned the delays that you are seeing in some projects being sort of committed to. Could you just comment maybe, Nick, on whether you think this is a structural shift to people being able to avoid replatforming? I guess, I don't think they probably can, but the microservices business, obviously, which you've got leveraged to now as well. But how long can that delay the inevitable of a platform refit in your view?

Yes. Okay. So I guess the stuff in our pipeline, which has kind of shifted right is you expect those on a case-by-case basis, but they are ownership changes and they're all entirely explainable things rather than anything kind of structural in the market, I would say. And then from a microservices point of view, will that delay people's replatforming? I think it allows us to kind of enter those clients and employ a land-and-expand strategy. So I'm not kind of deeply troubled by the concept that by taking microservices, people might not end up showing out the same level of IT spend as they would otherwise. It's just easier to leverage it from them.

Your next question comes from Bob Chen with JPMorgan.

Just a question on that sort of sales pipeline. I think you guys mentioned that it continues to build, but it seems like the opportunities are being pushed into FY '23. I mean is that related at all to some of the R&D work that you guys are currently working on? Or what's really driving that to pushing out the time line?

No, it's not related to R&D. It's just the dynamics of what's happening in the customers and really a large -- particularly in the Australian market, there's a really large amount of corporate activity, corporate actions, which brings with it a level of instability while some of that's settled down. But the need for replatforming absolutely is not going away in the Australian superannuation space. We're really well positioned for it without -- but you will know how active the market is in terms of M&A at the moment. Yes. So I think the other thing we're seeing in the U.K. is that we are now certainly at the beginning of the end of COVID, if not the end because although you'll have seen that the government has kind of pretty much lifted all restrictions, I think it's fair to say that the big community remains a little bit more conservative in terms of kind of return to work and return to normality. But things are very definitely improving there as well.

Okay. Great. And just on the cost side of things, I see that comment there saying you've got inflationary pressures and you've got wage cost inflation around that sort of 10% level. It looks like you're also outlining some additional investment to drive growth over the next few years. I mean, can you give any color on what cost growth in this business will look like over the next few years?

I think -- so there are 2 parts to that, Bob. So one is we've given guidance previously on the R&D spend. So we anticipate the capitalized R&D spend this financial year will be approximately $20 million. That remains. So doing the math, that means we'll be capitalizing slightly less in the second half than we did in the first half. Going forward into FY '23, that the amount of capitalization will reduce because we're coming through the end of those programs, those items that we're building. Where that will land? We're still working on it. It will be less though than the $20 million that we've spent -- that we will spend this year. In terms of general operating costs, as Nick called out, if cost per FTE have been going up by about 10%, how that will continue to develop in which way is not really that clear. We've based our forecasting on the projections and the things that we can see. So...

Yes. I think there's a general resetting of costs in the IT labor market, and the question for us is whether that's an adjustment or whether it remains as a continued pressure over time. IT workers who've realized they can work from anywhere, sitting at home, clearly have realized how much more transferable they are and how much more easily they can get jobs elsewhere. And at the moment, if you are an IT professional, you're very much in a seller's market, and that's reflected in our cost.

Your next question comes from Matt Johnston with Jarden.

Guys, can you hear me okay?

Yes.

I might just touch back on revenue. Maybe just thinking about Europe and the U.K., could you maybe provide a bit more color in terms of what opportunities exist over there? Is it mainly existing clients? Or is there a strong pipeline where you can actually get new clients?

Yes. I'll take that one. So it's absolutely a mixture of both. So we have a very strong account management team who are working very closely with our existing clients who, for the most part, see us very much as trusted partners and will discuss new initiatives with us and build on those. But we are also absolutely building up -- been building up our sales team, and we do have a pipeline of new activity there as well. And I think one of the things that we've done in the last year is really set ourselves up to be much more of a multiproduct company. So if you've followed us for a long time, you'll have seen we spent about 10 years being essentially the Sonata company, and all of our growth focus and effort was pushed down the Sonata revenue. What we're doing now is recognizing that we now have a strong portfolio of products, and each of those has got opportunities for growth both in its existing customer base and beyond. And I think you've seen the impact of some of that focus on the fund administration space, whereby applying a little bit of attention to that area has really shown some very strong results. So it absolutely is a mixture of both in terms of existing clients and new names. And certainly, the microservices strategy has allowed us to add a new name in the fund administration space. You'll know those are very big sticky clients, and it's hard to get into them. But we've been able to sell a couple of microservices into another big household name global custodian bank, which is very welcome indeed. And we're in dialogue with them about more stuff already.

Okay. Great. And maybe just to follow on in the U.K., just on the fund, I mean, obviously, the license has been very strong in the first half. Could you maybe talk to that client around what sort of opportunities that might bring in terms of extra revenue over the medium term?

Yes, absolutely. So it's an interesting deal because we've restructured the shape of that deal. So with that client, we used to have an essentially flat fee. We now have a growth component in there, which is potentially significant. That's the client who has treated their transfer agency business as relatively static for a number of years, but they've now seen increased activity in that space. The new contract underpins a cloud solution. It underpins a series of technological developments that they are paying us to do. And it underpins a growth model as they more aggressively seek out increased market share. And they've already won some quite significant customers. We've migrated one of them on to that. I was about to say who it was, but then that will give away who the client is. We migrated one onto their platform last year very successfully, and there are 2 more large ones in the pipeline. It's also worth saying that we extended our product footprint in that client as well. So that's an example of the funds that have been client who has now got some of the wealth products as part of their footprint and supports the thesis that by having our products in smaller chunks, we can sell them more flexibly and realize the value of those assets there.

Okay. That's really good color, Nick. Maybe just a follow-on, do you have visibility that you'll get extra revenue in FY '23? Or is it still kind of up in the air about where some of this revenue wins?

Yes. So we -- I guess there's 2 kinds of growth that, that contract provides us with on a sort of recurring basis. So there's a big chunk of it that's locked in as a base fee. And then there's, if you like, the icing on the top, which is a growth component. That growth component is made up of organic growth as transaction volumes and fund volumes increased and account volumes increased on both platforms, and we see steady organic growth there. But then the big lumps come when they take on new clients. And we don't control the timing of that too much, but we do think that, I would say, it's likely that there would be at least one in FY '23. But as I say, that's a forward-looking statement and we can't control actually how that happens, although we obviously can influence it. And it's fair to say that as well as the ongoing uplift in recurring, we also see significant revenue streams as they bring new clients on. because, as you said, the bulk version work is contracted to us.

Okay. And then maybe last one for me. Coming back to Australia in terms of, I guess, the large superannuation Sonata Alta -- sorry, Alta client you have. Do you anticipate, I guess, revenue growth coming from that client going into the next couple of years from where it is now?

I think the market, in general, is looking very promising, and I'm probably not going to talk specifically about that client because that probably wouldn't be appropriate at this point.

[Operator Instructions] Your next question comes from Scott Hudson with MST.

Just a couple of questions for me. Firstly, just on the guidance. Can I get an understanding of what changed, I guess, from the AGM when you're calling for 15% NPAT growth or mid-teen NPAT growth to today when you're basically, I guess, calling for a reasonable contraction in NPAT year-over-year?

Yes. So essentially, the -- it's the move of the pipeline, the one side. So opportunities that at the time of the AGM and at the time of our full year results, we anticipated that more of the things that we had in the pipeline, the processes that we were involved in would run faster than they have. And so a number of those have moved out where -- although there is a very small chance that some of those may close in this year, the more reasonable position is that they will close in FY '23. So that's the revenue side. And on the cost side, it is the increase in people costs, which has been -- that has been developing as the years -- the financial year has progressed. And as Nick referred to earlier and I think I also said, it's not yet clear what that trajectory will look like. I think there's a little way to go before the IT people, market stabilizes or finds its level. So those 2 factors, it's the -- which has resulted in effectively the revenue growth being largely consumed by cost growth in the second half.

Okay. And then just in terms of, I guess, attached recurring revenues, it's obviously down quite substantially from sort of first half '20 levels or I guess pre-COVID levels and continues to slide. Can you give us a sense of how much of that attached revenue is, I guess, sitting on the bench, so to speak?

Are you referring to in terms of resources not utilized? Is that what you're referring to?

No. My understanding was that there was quite a lot of attached revenue that was, I guess, deferred through COVID. I guess I'm trying to get an understanding of how much of that revenue is still to come back, if any.

Yes. So some of that revenue from FY '20 has gone into contracted revenue to some of those items. As the various additional modules or so on of clients have been implemented, then they've gone into revenues there converted into contracted. The remaining attached recurring revenue is, as we've described and as we described on that slide, Slide 13, is project work with clients. So that does vary as clients going through different phases. There is no clear trajectory for the attached recurring revenue as there is for the contract. So if you see on -- again, on Slide 13, you can see that the contracted recurring revenues just gradually built over time, and then there have been variations in the attached recurring revenue because, to a degree, it is related to the flow and timing of project work with our existing client.

Okay. And you have no visibility on that, I guess, the attached recurring component.

We do have visibility based on -- the visibility, whereas the contracted recurring revenue, we have the visibility out to the end of the contracts. So that's many years of visibility. The attached recurring revenue is based on projects where the visibility of that range is from -- the bulk of that is in a 6- to 18-month time frame, which is where statements of work and particular project plans are set up for them. So we anticipate that section of the revenue to continue at roughly those sorts of levels through into the second half.

Okay. But we should not anticipate that they get back to sort of 2020 or second half of '19 kind of run rate.

I think the key point is that it's variable, right? And it might go up, but it depends on a number of factors. So as Martin says, it's hard to predict because it's not specifically contracted. One of the things that we have done is move towards contracts where we have committed days baked into the base fee, right? So you'll see the contracted revenue going up a little bit and the attached going down as we push people on to packages where the change budgets are essentially baked into the contracts moving forward.

Yes, which is one of the ways, as I described, that attached recurring revenue moves into the contracted.

Your next question comes from Andrew Perks with Accordius.

Just quickly, that's a big down right. I was trying to get a sense of why the impact on profit is so large. I was thinking to that, like is it license fees? And what license fees is pure profit so that would be a big chunk? And so you recorded $8.9 million in license fees in the first half. What are you assuming in the second half for license fees?

We don't give specific guidance for license fees. It can vary. It -- we'd anticipate it being in the range of $2 million to $6 million of license fees in the second half, but that depends on deal flow, renewal timing and so on.

Yes, because, I mean, that's a big profit driver. So that helps explain it. And then just also, when you talk about the cost of IT professionals going up 10%, how quickly and how fast can you push that increase through your clients?

Yes. So we have -- our revenue, as we've just been describing, is based on long-term contracts. Those long-term contracts have the pricing locked into those contracts. With many of our clients, the professional services fees, which is related to the attached recurring revenue is based on an annual rate card where we adjust the rate card annually. So there are 2 parts to that. We can apply price increases through the rate cards for professional services components of those fees. The underlying fees though are related to the contract terms. Some of them do have an inflation factor in them to the base fees, but that's related to CPI generally. In some cases, it's related to a IT sector index. However, there is a trail, a trailing -- there's a trailing impact. So the costs will increase before we're able to then flow those through, through these various indexation applications into the revenue.

Okay. So all right. So just as a rough guess, if costs are going up 10%, can you sort of -- if you average that out, you can sort of put up your rates sort of on average, I guess, 3% to 4%. Would that be roughly right?

No, no. I think that's a level of detail that we can't go into. There are a number of moving parts in that response. So all I can say is what I've said before, we are able to -- we have indexes that apply to the various rates in the contracts. What that averages out in particular numbers is not -- that's not possible to do.

And we also have a labor force across 6 different countries. So there's rebalancing that we can do there as well. So it's not as simple as just that.

There are no further questions at this time. I'll now hand back to Mr. Parsons for closing remarks.

Thank you, Jacob. And thank you, everybody, for listening today, and thank you very much for today's question. Bravura's first half '22 results are encouraging, and the return to both revenue and EBITDA growth is very welcome. We are beginning to see the positive effects of our strategic investments as we continue to sell and deploy our new solutions, which, together with increasing economic activity as our core markets emerge from COVID-19, makes us optimistic for both. So thank you again very much for joining us today.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.