G8 Education Limited (GEM) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the G8 Education Limited CY '21 Half Year Investor Call. [Operator Instructions] I would now like to hand the conference over to Mr. Gary Carroll, CEO. Please go ahead.

Thanks, Harmony, and good morning, everyone, and welcome to the 2021 half year results presentation for G8 Education Limited. My name's Gary Carroll, and I'm the CEO and Managing Director of G8 Education. I'm joined today by the group's CFO, Sharyn Williams. We'll walk through the investor presentation that was posted on the ASX earlier this morning and then provide time for any questions. But before I start the formal part of the presentation, I want to do 2 things. Firstly, I wanted to acknowledge the traditional owners of the land upon which we're meeting today. Sharyn and I are based at the Gold Coast today. So I wanted to acknowledge the Yugambeh people and pay our respects to their elders, past, present, and emerging. And also, I'd like to acknowledge any Aboriginal or Torres Strait Islander person that's on the call today. I'd also like to acknowledge the entire G8 Education team for their outstanding efforts during what continues to be a very challenging period. So kicking into the presentation, Slides 5, 6, and 7 provide a summary of key events and achievements during the half covering the key operating and financial results, and progress in relation to delivery of the group's strategic programs and outcomes. Slide 5 provides an overall framing for assessing the current position of the group. The momentum and strong results following from execution of the group's key strategic programs has G8 well positioned to deliver good earnings growth over the medium term. In addition, I've been really pleased with our ability to manage the operating levers of the business to mitigate the impacts of the very uncertain operating environment. And this, when combined with the group's balance sheet strength, provides the confidence to keep investing in our teams and families through the current short-term challenges posed by COVID-19 to further enable a sustainable growth trajectory for the group. Slide 6 sets out some of the key highlights in the first half, both from an operating and a strategic perspective. The occupancy momentum that was highlighted at the group's AGM in May continued for the balance of the half, with the gap to 2019 occupancy continuing to narrow in line with our expectations. Operating EBIT after lease interest was $38.9 million, in line with the first half 2019, while the group finished the half with a net cash balance of $6.5 million. 98% of our centers assessed during the first 6 months of 2021 achieved a meeting or exceeding standard, which is a record result for G8 and reflects the investment we've been making in quality. Performance in relation to the key strategic programs is very good in half 1, with all of our key programs delivering in line with or ahead of our expectations. Our rostering and wage optimization program delivered wage efficiency outcomes that enabled the group to absorb any ongoing cost impacts of the group's wage remediation and compliance program. Our improvement program delivered outcomes that were slightly ahead of expectations, including an EBIT outcome for our 2019 and 2020 center cohort that was $1.5 million higher than 2019, while our greenfield portfolio is performing well. The group's divestment program remains on track, and we've also delivered a number of initiatives to drive team experience and engagement throughout the network. The group's half 1 achievements in relation to quality, community, and sustainability is set out in Slide 7. For G8, these are fundamental to our future success. Maintaining high-quality early education centers that are safe and provide best practice early learning and development for children produces great outcomes for all stakeholders, children, team members families, communities and shareholders. Investing in our educators to build their capability, including via study pathway programs reinforces such quality and also helps retain our educators in what is a really competitive employment market. Having diverse leadership teams ensures we make better decisions. Finally, we have a societal opportunity and responsibility to educate our future generations on how to live sustainably. Now we've developed targets across each of those areas and, as set out on Slide 7, we've made really good progress in each area in the first half of 2021. We also executed a sustainability-linked loan, the first of its kind in our sector, which focused on the achievement of safety and quality targets. The financial summary for half 1 is set out on Slide 8. For the purposes of this summary, I'll focus on the comparison of the first half of 2021 with the corresponding pre-COVID period of 2019. Revenue in half 1 of 2021 was 2% lower than 2019, with a number of factors driving this result. Occupancy has continued its recovery in 2021 with average occupancy during half 1 of '21 at 68% being 2.4 percentage points lower than 2019 levels. Other factors influencing revenue was a February fee review in 2021; Victorian government COVID-19 payments of $5.3 million; growth in greenfield center revenues, offset by revenue reductions as a result of the group's impaired center divestment program. Operating EBITDA of $102.4 million was 6.1% below 2019, underpinned by good wage performance while operating EBIT after lease interest of $38.8 million was flat on 2019, driven by impairment-related reductions in lease depreciation. As Sharyn will outline later in the presentation, the group's cash conversion remains strong and we finished the half with a net cash position of $6.5 million. The story of the group's occupancy performance during the first half is contained on Slide 9. Occupancy in the first half continued to narrow the gap on CY '19 and have performed in line with our expectations. This growth was driven by our strategic change programs as well as the reestablishment of the seasonal trend that had been disrupted by COVID-19 in CY '20. Now we have seen a disruption to the seasonal trends since June as a result of COVID-19 related movement restrictions and we'll provide further detail on these later in the presentation. G8 teams have done a great job to support families during lockdown disruptions, successfully retaining enrollments and positioning centers to rebuild attendance post lockdown. Slide 10 provides a further breakdown of occupancy covering perspectives by region, being metro, regional and CBD as well as state by state. The group's geographic diversification with limited CBD exposure provides insulation against specific location or state-based lockdowns. Our regional centers were the standout performers in half 1 with average occupancy 1.9 percentage points higher than the corresponding period in CY '19. The state-by-state view highlights the cumulative effect of movement restrictions in Victoria with the gap to CY '19 being greater than other states. While the ACT result is more specific to G8 and driven by center manager turnover. An improvement plan is in place through our 9 centers in the ACT with occupancy expected to recover over time. Finally, the divestment program that was undertaken in late 2019 in WA has delivered good occupancy benefits in the first half of CY '21. Wage performance for half 1 is illustrated on Slide 11. The continued investment in wage systems, training, and processes has resulted in wage efficiencies being achieved relative to CY '19 despite lower occupancy levels. This has, in turn, enabled the group to effectively mitigate the impact of wage remediation and compliance costs in the first half. The impacts of the recent lockdowns are very clear to see in fortnights 14 and 15. And from a wage rate perspective, the award increase of 2.5% was implemented across the G8 workforce in July. Turning to Slide 12, which sets out what has been a really pleasing performance for the group's greenfield portfolio. The portfolio covering 15 centers had an average occupancy of 71% in half 1, with most centers being above the ramp-up trend line. The good occupancy growth enabled the portfolio to grow net profit before tax by $3 million from a $2.3 million loss in 2020 to a $700,000 profit in CY '21. Six of the current greenfield centers are expected to mature to the core portfolio at the end of 2021 with no centers being added to the greenfield portfolio in half 1. We do expect 2 greenfield centers to open by December 2021. Our impaired center divestment program remains on track, as set out on Slide 13. Half of the 52 impaired centers have either been divested, had leases surrendered, or have conditional indicative agreements in place. 15 divestments have been completed to date with 12 recurring in half 1. The relevant CY '19 EBIT attached to the 15 completed centers is $2.4 million, and the group incurred cash outflows of $1.3 million related to divestments and surrenders during the half. We'll continue to employ our commercial approach guided by return on capital when assessing our exit alternatives, taking into account the lease sale and trading performance. I'll now hand over to Sharyn to talk through the group's financial performance for the half in more detail.

Thanks, Gary. The key financial drivers of the results are outlined on Slide 15, and include recovering operating performance driven by improving occupancy and strong wage performance and compliance, supported by the $5.3 million Victorian government COVID-19 subsidy; reduced borrowing costs and lower depreciation following the impairment in 2020, combined to produce a relatively stronger net profit result than comparative CY '20 and CY '19 periods. Before I get into the details of the first half results, I would like to walk through certain changes made to some of the expense lines in the income statement. The transition to the AASB 16 leases standard, means that the historical occupancy category is now less relevant with rental expenses largely relocated to depreciation and interest in line with the new accounting standards. As a result, we reviewed our categorization to ensure they appropriately reflect our largest cost drivers and consequently made the following reclassifications. Employment costs now also includes team training and development costs; portfolio costs such as repairs, maintenance rates, cleaning, and utilities are reflected in the new line items, property, utilities and maintenance. This also includes some minimal variable rents. However, the bulk of the rent is represented in depreciation and interest. Direct costs now largely reflect variable items such as [ nappies ], food and consumables used in centers. And other expenses captures the remainder of expenses, including IT, compliance costs and marketing-related activities. This change in classification has no effect on the total expenses recorded, or the profit or loss before income tax in odd period. We have provided in the appendix the reclassified CY '20 and CY '19 comparative financial information for full year modeling purposes. Turning now to the financial overview on Slide 16. Given the degree to which COVID-19 impacted operating performance of the prior year, we have provided comparisons against both COVID-19 impacted CY '20 and pre-COVID-19 CY '19. I note that the variances I will detail are relative to the first half of CY '19 pre-COVID, as we believe this comparison better reflects the operational exponential performance of the business. Revenue of $421 million was 2% lower, driven by a number of revenue movements, including core average occupancy levels being 2.4 percentage points lower and lower revenues relating to the 40 centers that have been divested. Offsetting this was the growth in greenfield revenues, receipt of the $5.3 million Victorian government COVID-19 subsidy, and higher revenues from the February fee increase. I would like to spend some time on the fee increase element. The mid-4% fee increase was disclosed at the time of our CY '20 full year results and took our average fee from $113 set in May 2019, to approximately $118 in February 2021. As a result of the government COVID-19 release packages, there was no March 2020 fee increase. Given the average fee increase has only increased by mid-4% since May 2019 to the current year, it will only partially cover the cost inflation experienced over that same 2-year period. There will be no further fee increase in CY '21. Therefore, the majority of this margin pressure will be felt in the second half as the 2021 annual award wage increase was effective on 1 July, representing the third annual wage increase since May 2019. Turning now to EBITDA. Whilst revenues were 2% lower than the comparative period, EBITDA was 6% lower, reflecting the lower revenue predominantly flowing through to the EBITDA line. This was due to total costs remaining flat at broadly $319 million, with reductions from wage optimization and a lower number of centers being offset by 2 years of cost inflation and investment in network support. Savings and direct costs were reallocated to maintaining the physical environment of the centers. During the half, there was an increase in other expenses, reflecting higher activity levels relating to the customer engagement team. This was driven by higher inquiries of families, which helps close the gap further to 2019 levels and also an expanded scope aimed at providing a consistent experience to new families and relieving further administrative burden from our center managers. We also saw the insurance market harden, resulting in higher premiums. And we have continued to invest in IT across areas such as cybersecurity, website, and internet capacity for centers. Costs related to software, transitioning to Software-as-a-Service systems have moved over time from the depreciation line to other costs. Turning now to EBIT, which on a statutory basis excludes the portion of the rental costs allocated to lease interest. To announce for the total cost of rental expenses, the key metric to focus on is operating EBIT after lease interest, given it is effectively a proxy for pre-AASB 16 EBIT. EBIT after lease interest of $38.9 million was flat on the CY '19 half of $38.8 million. This is driven predominantly by the EBITDA reduction of $6.5 million being offset by lower lease expenses of 5.4%, partly from a reduced number of centers and as outlined on Slide 13 from CY '20 impairment. From an overall group view, it is this reduction in depreciation that allows the group net profit from a pre and post-AASB 16 perspective to be broadly similar in CY '21. Pleasingly, the nonlease component of finance cost has reduced substantially following the refinance earlier this year and the repayment of borrowings using funds from the CY '20 equity rate. This resulted in an overall net profit before tax, 35% above CY '19 H1. The operational numbers exclude net gains on sales, surrenders and lease modifications, and these items are outlined in Note 2 of the interim financial statements. When these gains are included from a statutory result perspective, the group produced a net profit after tax of $25.1 million. Turning to a more detailed overview of operating performance on Slide 17. The new reporting format of core and greenfield center performance outlined to the market in June have now been adopted. Firstly, the core performance. Revenues from the core portfolio reduced by circa 4%, driven by occupancy being 2.4 percentage points lower and the absence of the revenues from the 40 divested centers. Expenses over the same period reduced by almost 6%, resulting in an increased core net profit and margin. This improvement in earnings and margins from the core portfolio is driven by several items. From a wage perspective, an expanded team to support centers to manage rosters and made compliance have yielded positive results in both optimization and compliance activities. These improvements were achieved through a combination of improved systems, training and processes, and when coupled with reduced wages from lower bookings and domestic centers, resulted in a reduction in absolute wage dollars that was broadly similar to the drop in revenue. These activities mitigated the potential circa $6 million that may have been realized from the remediation findings and also 2 years of wage inflation since the CY '19 first half. The other driver of the improved profit margin is the timing of the fee increase in February instead of midyear. As flagged earlier, this partially mitigated margin compression in the first half with the fuller extent of margin compression to be felt in the second half, particularly from 1 July when the annual wage increase was implemented. In terms of rent, we have used the proxy, which is comprised of lease depreciation and interest plus outgoing. Since the first half of CY '19, this quantum has reduced by circa $9 million. Half of this reduction relates to the 40 divested centers and the remaining half is the lower depreciation. Other costs were managed well with a 5% increase, largely reflective of inflation over a 2-year period. Greenfield portfolio has been covered by Gary earlier in the presentation. It's pleasing to see both occupancy and earnings maturing with the expectation in the second half that newly opened centers will absorb some of these earnings. After incorporating network support and corporate costs, operating EBIT after lease interest was broadly flat from an earnings and margin perspective. Turning now to the final point on this slide regarding wages. Wages as a percentage of revenue in the first half of CY '21 and CY '19 was flat at 62% using the group's total employment costs divided by operating revenue on the prior slide. Historically, in the second half of the year, as seasonal occupancy increases, wage efficiency improves, resulting in wages as a percentage of revenue decreasing as can be seen on Slide 11. This is due to the midyear wage rate increase being typically offset by a corresponding midyear fee increase. Given there will not be a corresponding fee increase midyear to fund this increase, any efficiency created by occupancy increases will be absorbed by wage rate increases, particularly the recent increase in 1 July. Therefore, for those areas not impacted by lockdown, wages as a percentage of revenue is expected to be flat as the seasonally higher occupancy is absorbed by this wage rate increase. Turning now to Slide 18, which outlines network support costs. This captures compliance costs, the programs of work that are coordinated centrally to support centers and what is termed the [above] center support, which refers to the network of team members based in the field and our support office. The headline increase includes a number of items from the prior year that related to COVID-19, such as JobKeeper; cash conservation activity, including reduced wages for support office roles; and COVID-19 subsidies in Singapore, which increased earnings. When these items are taken into account, the increase on the prior year is $5.6 million, 75% of which is related to programs such as the study pathway, and team service recognition programs and the above-center roles referenced earlier. These team members work closely with the centers such as the practice partners, operations and people coaches in the improvement program, our quality assurance partner, wage optimization and compliance team and HR business partners, working directly with centers. Pleasingly, the benefits of these programs and teams flowing through, an improved EBIT, improved wage compliance, and efficiency levels despite lower occupancy, a growing trainee base to grow our loans and maximize training subsidies and an excellent achievement of 98% exceeding the meeting ratings for centers assessed in the first half. The remaining 25% of increased costs related to corporate costs such as insurance cost escalation and investment in IT systems and cyber defense. As outlined on Slide 19 and 20, the group is well positioned from a balance sheet perspective with the recent debt refinance, providing the group with strong liquidity, greater flexibility and lower funding costs. During the period, CapEx was $20 million with a broadly even split between center improvements, equipment and resources and technology, including IT resources for centers, rostering and HR systems and finance management system. The full year CY '20 CapEx is estimated to be around $65 million, focused on continued investment in center quality in both the physical environment and resources center. Both of these items contribute to team engagement and family retention, noting also that circa $10 million in center CapEx was carried over from CY '20. As announced at the AGM, dividend payments are expected to recommence with the full year CY '21 dividend intended to be paid in early 2022 based on a proportional payout ratio of between 50% and 70% of net profit after tax. The recent wage remediation payment of circa $17 million in July put the group in a circa $10 million net debt position. However, the group retains significant liquidity and cash reserves to buffer a sustained period of COVID-19 impacts, with $300 million of debt facilities undrawn. Slide 21 outlines the cash flow statement of the group. Operating cash flows decreased by 23%. However, we're taking into account the 2020 accruals, reflecting the quarter 4, $10 million investment of the Victorian government subsidy and excluding the $9 million benefit of low interest, the reduction was 6%. This reduction aligns to the operating EBITDA reduction of 6%. COVID-19-related rent deferrals impacts both the principal payments in 2021 and 2020, with the prior year cash flows lower by $3.1 million, reflecting the rent relief from landlords and the current period higher by $1.5 million as repayments of deferrals are made. From a rental perspective, the rental cash flows were $55 million for the half, broadly aligned to the lease expenses of $53 million. This reinforces that the CY '21 numbers after the impact of the impairment, are better reflective of the pre-AASB 16 rental profile. Cash flows before tax and interest, non-leases were a positive $10 million. Cash generated and after tax and interest payments are incorporated. $9 million was funded from cash reserves. Turning to Slide 22, the cash conversion of the business, which is measured on a lease-adjusted basis. Cash flows were managed well, however, a few weaker than historical levels, largely reflecting timing differences relating to a prepayment of insurance and the timing reversal of the exceptionally strong second half CY '20, which was driven by timing of quarter 4 expenses and cash preservations. In the first half, we have seen that late quarter 4 activity within the cash outflows that those accruals are settled. I'll now hand back to Gary for strategy update.

Thanks, Sharyn. So I will now turn to an update on the progress of the group's key strategic programs, starting with the improvement program on Slide 24. As a reminder, the goals of this program are to build best practice learning environments and educational practices, consistent and efficient center operating routines and high-caliber center leaders. This increased capability and support will, in turn, drive higher engagement in our center-based teams which will flow into more engaged children and families. And ultimately, that leads to improved occupancy and financial outcomes. The program seeks to achieve these goals through investing OpEx in additional field support teams covering education, operations, quality and people as well as CapEx in the form of enhanced in-center resources. Total investment in the program to date has been $3.9 million in OpEx and $5.6 million in CapEx, with 224 centers being covered to date through our improvement program, including 118 in the first half of 2021. Results have exceeded expectations with EBIT in half 1 of CY '21 for the 2019 and 2020 center cohorts, 106 centers in total, being $1.5 million ahead of CY '19 levels, while other key quality and occupancy metrics are ahead of target. Turning to Slide 25. The improvement program is on track to be completed by early 2023, with the program being designed to ensure that the improvements become embedded into ongoing operations. The increased support for center teams that has been provided through the group's improvement program is part of our overall strategic focus to use the group's scale to improve the support provided to center teams. The employment market in the early childhood education sector is very challenging. We've reduced supply due to numerous factors, such as reduced migration and dwindling university graduate pools, coupled with increased demand from new center openings. Because of this challenge, the group has undertaken numerous initiatives in half 1 to enhance team member experience and engagement such as center manager remuneration changes and enhanced study and induction programs. Further initiatives are planned for half 2, including external cleaning and enhanced service recognition programs. Turning to network growth and optimization. 2 greenfield centers are planned to be opened during the second half of CY '21, while lease agreements for 10 greenfield centers have been executed, and these centers are expected to be operational in 2022. As outlined previously, progress on the group's divestment program remains on track. The build of the new HRIS and rostering system is substantially complete with the testing program being well advanced. Implementation of the system across our support office, and in 1 or 2 states is expected to occur by the end of CY '21. Our new finance management system is now in the build stage with rollout of the system on track to be achieved by the end of CY '21. Slide 26 contains an update in relation to the employee payments remediation program. The group's focus has been ensuring prompt payment to impacted team members and enhancing our systems and processes to ensure this does not occur again. The program, which was announced on the 8th of December 2020 is well progressed with an initial payment of approximately $17 million made in mid-July to 8,388 current impacted team members. A second payment will be made to current team members in coming months. Those payments include amounts for back paid wages, superannuation, payroll tax, and interest. Communication with former impacted team members has commenced to obtain current bank and tax details, which will allow payments to be made to these former team members. As announced in December 2020, total program costs were estimated at between $50 million to $80 million. While certain payments have been made, validation work in respect of some matters continues and engagement with the Fair Work Ombudsman following G8 self-reporting is ongoing. The group maintains this provision of $80 million pretax; $57 million after tax, less costs incurred to date. The overall remediation program, covering training, reporting and system enhancements to achieve the targeted controls is well advanced with the measures taken to date, producing high confidence in the group's go-forward wage compliance. Turning to the second half trading environment, starting with COVID impacts on Slide 28. COVID-19 related movement restrictions continue to impact revenue, with $1.9 million of fees waived in half 1 to support families and retain enrollments. Currently, the provider funds these fee waivers. Sector level discussions continue with the federal government relating to subsidies being paid to providers where movement restrictions are in place. The impact on earnings in half 1 was not material. And the net earnings impact was also not material in July with downside risk to earnings from August onwards in light of tightening restrictions. Looking after our team and families remains our priority, including keeping our doors open to support families in line with government requirements; ensuring a safe and trusted environment for children and teams; providing employment surety and well-being support; waiving the gap or discounting parent fees to centers impacted by lockdowns; and additional external cleaning for centers from August 2021, including increasing half 2 cleaning costs by circa $3 million. The current trading and outlook is summarized on Slide 29. Occupancy recovery was on an encouraging trajectory in half 1. Recent lockdowns have impacted the seasonal trend in half 2, with the progressively stricter lockdowns expected to weigh on attendances in several states. The gap on CY '19 occupancy narrowed to 1 percentage point in early July, but widened again to be 2.6 percentage points lower at 72.6% as at 15 August, driven by the lockdown states. And attendance levels in recent lockdowns have ranged from 15% to 80%. Net earnings impact was not material in July with downside risk to earnings from August onwards in light of tightening restrictions. The earnings impact for the remainder of half 2 is dependent on multiple variables, including attendance levels in response to evolving lockdown scenarios, any further government support and how we adapt their operations. As Sharyn stated, the states unaffected by lockdown, wages as a percentage of revenue and margins are forecast to be flat on half 1. Despite the short-term challenges presented by government-mandated movement restrictions, the group remained committed to investing in teams, family, and quality. The group's focus is on retaining and attracting families to maximize the anticipated uplift in occupancy that was experienced following cessation of prior lockdowns. Strategic programs, including our improvement program, network growth at exiting impaired centers are expected to support and drive this recovery. Attracting and retaining talent remains the greatest challenge facing the sector, and the group has formulated a coordinated response plan addressing remuneration benefits, work environment, and engagement activities. The group has demonstrated an ability to effectively respond and adapt operations to the impact of the prevailing environment. Our strong balance sheet and conservative leverage provides increased resilience to such short-term challenges. That concludes the formal part of the presentation. I'll now hand back to Harmony to start the Q&A session.

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

Just one question from me, maybe for Sharyn. Lots of moving parts, obviously, in the first and second half and, I guess, to a certain extent, it doesn't matter because of what's happening with the COVID lockdowns. But when we're talking about typical seasonality, how should we think about what the seasonality would have looked like given that relationship between the pricing increases and the wage increases going through compared to the usual seasonality?

Sure, Tim. So 2 things. The COVID subsidy of $5 million fee increase was certainly bringing more earnings into the first half. So we've soften that [indiscernible]. In terms of the margin compression being felt more in the second half, that really relates to, as you suggested, the fee increase not coming through to offset that wage increase. So that usual seasonality during this year is expected to soften materially. Now it is a bit hard to comment in the [ absence ] of what's going on. But that comment around the second half wages and operating EBITDA of the lease margins staying fairly flat on the first half should help you there in terms of that softening.

And just one other question in relation to lease costs. Is there any opportunity to go back and have discussions with providers similar to what happened during the first lockdown to renegotiate some of those leases in the short term?

We're not expecting to be able to do that at this point, Tim. I mean, as you know, a number of states have introduced a framework around how landlords and tenants deal with each other during COVID. Large providers like ourselves are not included in that framework. And we're not expecting them to make a material change to that over the coming months.

Your next question comes from Marni Lysaght from Macquarie Capital.

I just wanted to kind of, I guess, in terms of some of the early trading comments. Can you talk to, I guess, in more detail, those areas unaffected by lockdowns and changing [indiscernible]. of what are you seeing?

Yes. Thanks, Marni. So it's a really mixed bag out in our network at the moment. States unaffected by lockdowns are feeling pretty normal from a seasonal occupancy growth perspective. WA, Queensland for the most parts. South Australia for the most part. I'd contrast that with states sort of lockdown where even they are mixed, where the lockdown conditions are very strict, like HCT. They're at the top end of the nonattendance range that we called out. Other states like New South Wales to date, where it hasn't been as strict haven't suffered as big a drop in attendance.

That's clear. And are there any kind of, I guess, subsets of Sydney that you would say that the population has reacted more strongly to the changes because the infection rate could be higher in that given LGA? Or just more clarity around Sydney?

There are probably 2 ways to answer that, Marni. First is it is reasonably center-specific. We've got a full range of outcomes in New South Wales, where we've got nonattendance rate. And I would say, as a general rule, the 3 LGAs that have been materially impacted from the get-go would have the lowest level of attendance, and they've been consistently lower than the rest of Greater Sydney. As more LGA is of concern, I think we're up to now 12%. We're expecting that they may start to follow that trend. Even within those LGAs, so we've got a center that might still have reasonably good attendance. So it's really hard. We've been clearly looking at the numbers in detail, and it's still a struggle to draw a complete trend line through on a greater Sydney basis.