Macmahon Holdings Limited (MAH) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Macmahon Holdings Limited Fiscal Year 2022 Results Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Mick Finnegan, Managing Director, Chief Executive Officer. Please go ahead.

Hi, everyone, and welcome to the Macmahon's 2022 Results Presentation, and thank you for joining us today. I'm Mick Finnegan, the CEO and MD of Macmahon and I'm joined by our CFO, Ursula Lummis; and Donald James, our Chief Commercial Officer. We do appreciate your time and the opportunity to run through today's presentation at what is no doubt a very busy time of year and there will be an opportunity for questions following the presentation. Let's begin with the financial highlights on Slide 2 of the presentation. Macmahon delivered expected revenue and record underlying EBITDA, slightly above the midpoint of the guidance range in FY '22, another great result for the company. This was the fifth consecutive year of meeting guidance and we believe a careful and consistent execution of our growth strategy has been a key driver in being able to build this track record. As you'll be aware from our first half results discussion and the results of our peers, the industry as a whole has been faced with very challenging economic conditions in Australia and globally, including the ongoing impacts of COVID-19. These have included continued supply chain disruptions, rapidly rising global inflationary pressures, skilled labor shortages and in particular, escalating labor costs. These industry-wide issues have been magnified by the COVID-19 pandemic, causing significant absenteeism and requiring careful workforce and cost management. We have applied significant focus to manage these challenges and their ongoing careful management will remain a key focus for the coming year to not only ensure Macmahon's performance, but also to ensure that critically important relationships with key clients are maintained. Revenue was up 26% to $1.7 billion, primarily driven by new contracts that either continued to ramp up or commenced over the last 12 months, including Gwalia, King of the Hills, Warrawoona, Dawson South and Foxleigh. I'll talk more about some of our projects later. It is important to highlight that many of our contracts have rise and fall provisions around costs. So some cost recoveries and pass-throughs have contributed to the revenue number. While some of these recoveries don't contribute margin, they do protect our earnings base to some extent from the rising labor and other costs we have seen across the industry. EBITDA growth rate was 17% to $291 million, a new record for the company and margins remained resilient at 17.2%, even after the cost escalation pass-throughs. Underlying EBITDA was also at a record level of $100.8 million, up 5%. Statutory NPAT was $27.4 million due to the inclusion of the GBF earn-out finalized during the first half, Software-as-a-Service customization costs and amortization of customer contract assets recognized on acquisitions. NPAT in the second half period was $24.1 million. The reconciliation on Slide 27 in the appendix outlines the one-off costs in further detail and shows how we get to our underlying numbers. Underlying cash flow generation remained steady at $269.8 million, which equated to a healthy EBITDA cash conversion of 92.6%. Net debt reduced over 10% from our first half position to $215.5 million and was 0.74x EBITDA, reflecting lower capital expenditure demands in the second half period following some key investments in new contract startups. The final dividend for 2022 financial year was $0.035 per share, bringing the full year payout to $0.065 per share. This is in line with the full year FY '21 dividend and represents a payout ratio of approximately 22%, consistent with the target payout ratio of between 10% to 25% of underlying earnings per share. The final dividend is unfranked. Return on average capital employed was 13.9%, an improvement on our first half results, but lower than the FY '21 results due to the impact of growth CapEx, where operational earnings generation lags the upfront investment. We expect this to trend up towards our target of 15% and beyond with the lower growth CapEx requirements over the coming year and earnings to come through on the recent new contract startups. The order book remains at $5 billion with $1.45 billion secured for FY '23 already. Finally, our current expectations for FY '23 are for revenue guidance in the range of $1.6 billion to $1.7 billion and underlying EBITDA guidance of between $105 million to $125 million, reflecting our focus on delivering improved returns. A widening of the guidance range reflects the challenging industry cost environment we find ourselves in. However, we continue to manage this carefully to minimize its impact. Slide 3 shows some highlights across our broader business. In surface, project commencements occurred at Warrawoona, Dawson and King of the Hills. Regarding Batu Hijau, we are well progressed in discussions with AMNT. This scope is expected to extend our in-pit mining activities by another 6 years. We expect to finalize the phase 8 contract very soon, which will include communications to our investors in terms of the process we are following. The Underground Mining division continued its ramp up at Gwalia during the year and commenced at King of the Hills in April. To round out other achievements, we have outlined on this slide some of the activity in Mining Support Services, which included the ramp-up of Foxleigh and now makes up around 11% of our group revenue. Mine Support Services contributes to our earnings diversity and broad service offerings to our clients. This 11% group revenue mix in FY '22 compares to 3% last year and a solid progress against our strategic target to increase it as a proportion of business revenue. I've already outlined our FY '23 guidance. But to recap, we expect similar levels in revenue and improved earnings in FY '23 due to the removal of pass-through costs at Batu Hijau being replaced with revenue from mining projects ramped up and commenced during the year and improved margins. This is supported by an order book of $5 billion, which includes $1.45 billion of work already secured for FY '23. This secured work excludes civil and underground churn work, which is historically between $100 million to $150 million per annum. The addressable pipeline has continued to grow year-on-year and currently stands at around $8.4 billion. This strong forward demand profile allows us to selectively grow the business and manage our costs and returns in the current environment. We also have cash and available facilities of just under $300 million, positioning us well to capitalize on these opportunities. Slide 4 outlines our all-important safety metrics and activities over the year. While safety is of critical importance to us at all times, it requires additional management when onboarding large numbers of new people. Our workforce grew by 10% with the addition of nearly 800 people during the year and I'm extremely pleased that we improved our safety performance during this rapid growth period. Macmahon's total recordable injury frequency rate for FY '22 decreased to 4.8 from 6.4 in the previous year. Our team continues to strive to minimize this number, and we expect further improvement in FY '23. Some of the initiatives to achieve this are listed on this slide and include training our frontline leaders in our integrated management system, recognizing sexual harassment as a material risk within the company with a reinforced commitment and tangible actions to ensure people feel safe and comfortable at work and in our continuing psychological safety program to address culture and make sure our people are empowered to speak up to create a safer work environment. I can't talk about safety without also addressing mental health and well-being, which continues to be an important part of our safety efforts. We have been extending our leading Strong Minds, Strong Mines program to our wider community and we are also now piloting a Strong Mines, Strong Schools program. As I mentioned earlier, a key challenge facing the industry at large has been an acute shortage of skilled labor at a time when demand has been high. This has been magnified by high levels of absenteeism and other business disruptions as a result of COVID-19. Grow Our Own program has, therefore, been central to managing these challenges, and it has resulted in the training of 929 people to support our growth. Through our registered training organization, we are also supporting industry and trained another 101 people external to Macmahon. Our overall diversity measures are shown at the bottom of the slide with around 15% of our workforce female and around 5% indigenous. We continue to work to increase the diversity of our workforce. Around 32% of all our trainees are female and 9% are indigenous with a 75% retention rate. Our female participation is even higher in our new to industry trainees at 41% with a 90% retention rate. Our consistent challenge across our sector is dealing with this skill shortage. Given our diverse business, the impact has been different in the different regions. In Southeast Asia, the challenges around attraction and retention have pleasingly been minimal and we are seeing that improve further post the lifting of COVID protocols at Batu Hijau. In WA, we have seen pressure in this area ease slightly in the last 6 months with exceptions in a few highly skilled roles. However, we have seen increased pressure in this area in recent times on the East Coast of Australia. This has required us to adjust our processes, procedures and support network in this area to minimize the impact and ensure we can deliver for our clients and maintain those important relationships. I mentioned during the financial highlights that cost recoveries contributed to our revenue growth and were an important part in maintaining our level of earnings during the significant cost pressures we are seeing across the mining industry. Importantly, our contract structures provide some protection against input costs, including labor. Approximately 43% of our revenue is from Alliance-style contracts with budget adjustment mechanisms. The remainder of our revenue is scheduler rates contracts containing rise and fall provisions, which are adjusted periodically, such as monthly, quarterly and biannually, so we can respond to market rates. Our new contract rates reflect current market conditions. Slide 6 is a recap of our key projects, the cost profile and related commodity exposure. Further details of our projects are provided in the appendix at the back of the presentation. However, I would like to take the time to touch on some key contract progress. We commenced Warrawoona surface project and the King of the Hills surface and underground projects during the second half of FY '22. Pleasingly, despite the acute labor skill shortage we have seen, we have been able to make significant inroads to workforce establishment. Our Telfer project is delivering improved performance following renegotiations that concluded in FY '21 and following the closure of the Mt. Morgan's project in late FY '22, we successfully redeployed the workforce to other Macmahon projects in the region. The ability to retain our workforce demonstrates the benefit of Macmahon's business scale that has been built up over the past 5 years. Now before I hand over to Ursula for the financials, I'd like to finish with some comments on our sustainability reporting on Slide 7. This is clearly an important area for our broader stakeholders as well as our shareholders and we continue to strive to improve our performance and our disclosure here. We have today released the stand-alone sustainability report that provides more detail around our approach. To recap, our ESG priorities have been guided by a materiality assessment we conducted with our investors and stakeholders in 2020, which identified the key issues of material importance to our stakeholders and also having a material impact on Macmahon. These unsurprisingly included health and safety, well-being, the environment and governance amongst other key reporting issues. The slide shows some reporting and disclosure highlights on some of these issues, including our emission summary, diversity in our business and the focus we have on eliminating sexual harassment. Our sustainability report, which I'd encourage you to take a look at, provides much more detail on these and other sustainability disclosures and measures. I'd now like to hand over to Ursula to talk about our financials, and we'll return to conclude with some comments on our strategy and outlook.

Thanks, Mick. Good morning, everyone, and thank you again for taking the time to join us today. Further to Mick's earlier overview of our financial performance, Slide 9 provides some additional context, illustrating the company's trend of growth in revenue and underlying operating earnings. Our revenue growth this year reflects both increased and new project activity and also includes some cost recoveries and pass-throughs, which protected our earnings in a rising cost environment, but also did not always contribute towards the margins. This is the primary reason revenue growth outpaced underlying EBITDA growth, but EBITDA still increased by 17% as new projects progressed beyond the startup phase. I think this is a key takeaway on the slide and shows that new projects have been brought online successfully given the market challenges Mick outlined. You can see on the chart that EBITA growth was lower than EBITDA, primarily due to increased depreciation levels following the investments in new contracts with earnings generation lagged the initial project start-up and the capital investment, but it was still a solid 5%. I'll talk a bit more to revenue when I discuss the profit and loss. Slide 10 shows our track record of performance against our market guidance, which we have now met for 5 consecutive years. I know there are challenges that businesses face every year, but I'm sure you'll agree that the challenges over the last couple of years have been most unusual, maintaining a track record of reliable guidance that has been consistently met has been an important achievement. Our guidance ranges for FY '23 reflects growth in earnings. We believe the business is well-positioned given the solid tender pipeline and order book with $5 billion of work in hand. Around $1.5 billion of this is already locked in for FY '23. Notably, it is expected the positive cost from the Batu Hijau project comprising approximately $180 million of FY '22 revenue will be replaced with a recent project startups and ramp up revenues, which attracted to margins. This, of course, is subject to COVID-19 not significantly disrupting our business. Slide 11 again illustrates a strong cash flow generation of the business with underlying operating cash flow of $270 million. This is in line with the strong cash flow achieved in FY '21 and represented a healthy conversion rate of EBITDA. Of particular note, if EBITDA cash flow risen during the second half of FY '22, which was 114%, up from 71% delivered in the first half of FY '22. The chart on the right-hand side shows our returns on average capital employed in the business. We achieved a return of 13.9% to FY '22. This reflects growth capital investments in new projects in the first half of the year and a lag in earnings during the ramp-up phase and full steady states. Importantly, you can see that the business has consistently generated return on average capital employed returns of around 14% to 17% over the last few years. We are focused on the return on average capital employed as a key measure and seeing this increase going forward. Turning to the profit and loss in a bit more detail on Slide 12. Revenue increased by 26%. This was underpinned by organic growth along with the ramp-up of existing projects, Gwalia, Julius and Foxleigh and commencement of the new projects, Dawson South, Fimiston, King of the Hills and Warrawoona. The EBITDA growth was 17% and was driven by greater activity across the business with contributions from the new projects and cost recoveries from clients. The cost recoveries preserved our earnings, but does not always contribute towards the margins. EBITDA growth was positive, but lower at 5%, reflecting the increased depreciation from the investments in the new projects. Effective borrowing costs increased to 4.8% as of the 30 June, 2022, up from 4.6% in the prior year. This reflects increases in the cash rate during the year. The EBITA interest coverage remained healthy at 5x despite the higher borrowing costs. Reported NPAT includes the GBF earn-out payment of $22.3 million reported in the first half with underlying NPAT, excluding this and other one-off adjustments was $63 million. The difference between our statutory and underlying earnings is detailed in the previous result's Slide 27. An important point to note on the tax is the effective tax rate of 41% was impacted by the GBF earn-out costs that are not deductible. Excluding this one-off item, the tax rate would have been approximately 27.5%. Finally, on dividends. The full year dividend has been maintained at $0.065 per share, consistent with the last year and a 22% payout ratio. It is in line with the policy payout range of 10% to 25% of underlying earnings per share. The final dividend of $0.035 per share is unfranked. Slide 13 is another review feature in our presentation and it outlines the portfolio diversity in the business. As you can see, we have good diversity across our major clients, which includes a broader cross-section of clients compared to last year. And pleasingly, gold and copper/gold accounts for around 3/4 of our FY '22 revenue. Just under 80% of our work is generated in Australia, with the remainder in Southeast Asia, mainly Indonesia, which is principally our work at Batu Hijau. Surface mining remains our largest area of activity, but underground has now increased to 1/4 of the group's revenue and compared to FY '21 of 22%. Importantly, Mining Support Services has increased to 11% compared to the 3% for FY '21. Cash flow and net debt waterfall on Slide 14 provides an overview of the major cash movements during the year that have contributed to the closing net debt position at 30 June, 2022. EBITDA of $291.4 million was again the main driver of cash inflows. Underlying operating cash flow was $269.8 million and was consistent with FY '21. EBITDA cash conversion of 92.6% and movements in working capital, interest costs and the Software-as-a-Service payments was the primary difference between the EBITDA and the operating cash flow. Higher working capital was required for new project startups and inventory buildup to proactively manage COVID-related supply shortage risks. CapEx was $279 million and included $131 million in growth CapEx on recent contract awards, Gwalia, Dawson South, King of the Hills and Warrawoona. Sustaining CapEx was $148 million and includes extension CapEx. We expect more moderate levels of CapEx in FY '23 at around $194 million, primarily relating to sustaining and extension CapEx, which includes the Batu Hijau 8 expected CapEx amount. Our past investments in growth positions us well to deliver on our return on average capital employed [indiscernible] of sustainably above 15% in future years. Our balance sheet position at the end of the financial year is summarized on Slide 15. Our gearing and debt ratios have increased compared to the end of the last financial year while we have seen positive movements since the half, which we think is important in the current environment. The key takeaway remains that the balance sheet and liquidity position of the business remains solid, whilst we managed through a high-growth phase. This is an output of our disciplined approach to capital allocation and management. Net debt-to-EBITDA of 0.74x remains below the target range of 1x, which is an improvement on our half year of 0.87x. Gearing was 27.8% and is higher than FY '21 due to the new project capital and additional inventory spend, but it is down from around 31% as of the first half of '22. In July, we refinanced our existing $170 million syndicated finance facility into a new $200 million facility with improved terms, including a lower margin over the swap rate and the maturity date extended by just over 3 years to September 2026. We have a robust available liquidity position post the refinancing of SFA of $297 million to support the business. The other key ratio on this slide is the return on average capital employed, which, as you can see, was 13.9%. As I mentioned earlier, this was primarily impacted by growth CapEx related to the startup of the new contracts. Thank you for your attention. And I will now hand back over to Mick before we open to questions.

Thanks, Ursula. Slide 17 reiterates our strategy, which has remained consistent and provided a foundation for growing our business as we have faced changing market cycles and conditions. Our core strategy is focused on delivering long-term outcomes, and we are focused on improving our execution and delivery to increase underlying profit. This has included preserving operating profits in periods of escalating costs, investing in equipment, people and technology to maintain and enhance our competitive advantage. People have been a primary area of investment in FY '22 and we expect this to continue into FY '23. Diversifying into target growth areas of the business, including underground and mining support services and expanding our service offering to clients. King of the Hills is a very good example of this where we have an integrated project providing services across both surface and underground mining. Macmahon was in a major investment phase in FY '21 and '22 to support new contract wins. The focus in FY '23 will be to fully realize the benefits from this investment as we look to maximize contract performance and improve operating margins. We remain very focused on disciplined capital management as we continue to progress towards our target returns. Our focus is pivoted to capital allocation, cash back earnings, free cash flow generation and return on capital employed as key measures. We believe this focus will build a more resilient business that has balance sheet capacity to capitalize on opportunities as they arise. Longer term, we continue to look to diversify and expand our service offering across the mining value chain with a specific focus on lower capital-intensive complementary services such as civil construction and underground and smart investments in operational technology to enhance our operational efficiency and effectiveness. We include Slide 18 in the presentation to illustrate how we have diversified and expanded our business towards the achievement of our long-term targets. Looking back to FY '18, nearly 90% of our revenue came from surface mining. It was around 3/4 last year and is currently under 65%, with underground now representing 1/4 of our group revenue. There is significant scope to continue growing the underground business as well as Mining Support Services, and we will continue to look for a progressed growth opportunities, both organic and external. It is important to note the changing proportion of the business markup we seek is not going to be at the expense of the size of the surface business. It will be through going underground and mining support services. Having the surface business as the foundation of our company provides security and long-term earnings visibility from which we can generate cash flow through the cycles and insulate it in challenging periods. While margins have been lower in the business, as we've discussed, we have also protected our earnings in a rising cost environment and expect our increased investment on new projects in FY '21 and '22 to deliver higher returns in FY '23 and beyond. As we achieve a more even spread of the business mix, this will create a more scalable and sustainable business and support us in delivering on our financial targets. However, as we progress on our journey to reduce capital intensity, as I mentioned earlier, the key metric we will be focusing on is improving return on average capital employed, which will lower EBITDA as capital intensity in the business declines. Now before I talk about the outlook for FY '23, I want to walk you through our order book and tender pipeline on Slide 19. The total order book has remained resilient at $5 billion. The column chart showed the order book runoff with a healthy $1.45 billion of contracted revenue already in FY '23 and nearly $1.2 billion of contracted work for FY '24 already secured. This excludes any short-term churn work, which is usually between $100 million to $150 million per annum, putting us in a very strong position for the current year and beyond. Importantly, the order book includes high-quality clients and long-term alliance-style contract and is evolving consistent with our strategic focus areas. This provides us with confidence in achieving strategic alignment and revenue visibility over the medium term. The tender pipeline of highly filtered, aligned and credible project opportunities has grown by around 18% over the last 12 months to around $8.4 billion and supports a positive longer-term outlook for the business. The majority of these opportunities are in Australian gold and copper projects, but we've also seen new opportunities in other critical emerging commodities. Underground opportunities represent 20% of the pipeline whilst Mining Support Services represent 19% of the pipeline. That brings me to Slide 20, our priorities and outlook for FY '23. Our order book and robust tender pipeline continues to support a positive demand outlook for the business, offering potential for continued growth. However, this is in a macro environment of a tight skilled labor market across Australia, increasing global inflationary pressures and ongoing risks and impacts from COVID-19 variants. We have demonstrated our ability to effectively manage these challenges through investment in developing and growing our workforce internally as well as our alliance approach to contracting. This positions us well to manage increasing costs. We will also remain consistent in our areas of focus for the coming year, including continue to improve our safety performance, effectively manage COVID-19, finalizing the Batu Hijau phase 8 extension, improving scalability through diversifying earnings in the underground and other mining support services, maintain disciplined management of capital and improving return on average capital employed and investing in mining technology and digital transformation. Our guidance for FY '23 is for revenue in the range of $1.6 billion to $1.7 billion and underlying EBITDA in the range of $105 million to $125 million. This is supported by a strong order book of $5 billion and around $1.4 billion of work already secured for FY '23. Our established track record of growth and delivering on market guidance has been built on the back of a clear long-term strategy, careful investment in the business and the dedication and commitment of our incredible talented workforce. With that, I'd like to hand back to the operator to open for questions.

[Operator Instructions] Your first question comes from James Wilson at Jarden Australia.

You spoke to sort of flat revenue guidance, but EBITA margin guidance being slightly up. Does this imply cost pass-throughs falling into FY '23? Perhaps you could just speak to the dynamics between cost inflation and cost pass-throughs given what's implied by the guidance.

So what we've allowed for in the guidance is the pass-through costs of Batu Hijau coming out. So that equates to, if you compare it to FY '22, about $180 million and that's being replaced by ramp-ups and startups in existing work. In terms of inflation, what was allowed for in the revenue is we've budgeted it at today's dollars. So that carried through the year and obviously we've applied appropriate risk allocation in the [ EBITA ] guidance. As you can see, that range is now wider than what it's previously been, which is because of that allowance we've taken into account because of the risks that we see with the uncertainty and the volatility. So it really is a case of the pass-through across the Batu Hijau coming out in FY '23 and being replaced by ramp-ups, startups and then some new work.

Great. And then also just on your CapEx guidance. I think it fell a little bit below what the market had for FY '23 CapEx, especially given the new project stuff that you guys have spoken to. So would you mind just running us through what's driving that lower guidance than what was expected?

So that really is our sustaining and extension CapEx. And consistent, I guess, with the focus internally in the business, it's going to be this year's priority #1, about eking out all the earnings and delivering performance on all these existing jobs that, as you said, we've invested in, in FY '21 and '22. So at the moment, what we've got in the budget is very little win and do work, which is reflected in the CapEx. And the CapEx is probably pointed to point out or important to point out that the CapEx guidance that's in that presentation includes an allowance for Batu Hijau 8.

[Operator Instructions] Next question is from Cameron Bell at Canaccord Genuity.

So just sticking with the CapEx stuff, look, it's pretty interesting that. So firstly, can you tell us how much CapEx you've assumed for Batu Hijau in that?

Well, it's between $40 million and $45 million, Cameron. So, I mean, if I can extend on that, obviously that's taken some time to conclude that negotiation. Obviously, initially, it was due to the COVID challenges and making sure the people -- we wanted to make sure our people were as safe as they could be. Obviously, since that time, we've been trying to negotiate with AMNT a contract extension that worked within our means because obviously balance sheet strength was a priority for us. So we've now in the final stages of concluding that negotiation and we expect it to be about $44 million for Batu Hijau 8. Obviously, the rest is pretty consistent with the depreciation in the rest of the business, and that's what we'd expect to see moving forward.

Yes. Okay. So then -- so you've given us a very specific number, that $194 million, which includes Batu Hijau, but presumably -- is that the number you think you'll do this year or is that a number that you've got visibility on? And then later on, when there's contract wins that will be on top of this? Like how are you expecting more growth CapEx on top of that number?

No, now, look, that CapEx matches the guidance that we've put out, Cameron. So if there was additional growth, I think we've said it in the past, actually, we're just trying to make sure we work within our means. So we don't want to take too much on right now until we've got existing work performing at elite levels. So I would expect growth would really tip into the following year or the year after that. If anything changed, we'd announce that to the market. But in short, the CapEx matches the guidance we've provided.

Yes. Okay. And then just on the -- I suppose like a similar semantic, but you've got skewed revenue of $1.45 billion and you've guided revenue there. So, there's a suggestion that you've got between $150 million and $250 million of revenue from work that hasn't been secured yet. Can you give us maybe an idea of how much work typically just rolls through the door like short-term civil work that isn't necessarily CapEx, but et cetera, like how much work just rolls through the door out of that $150 million to $250 million versus how much do you think you're generating for like...

Yes. No. Sorry, mate, I spoke over you. Look, historically, for the civil underground and civil churn it's been between $100 million and $150 million a year now for about 4 or 5 years. Cameron, so you can see it closes that gap and puts us pretty close to the bottom end of guidance for revenue.

Next question comes from Stuart McKinnon of The West Australian.

First question probably for Mick. Just in terms of the labor shortages, mate, are you seeing an easing of that, like, are things sort of starting to cool down or are things as tight as ever?

So we obviously have 3 fairly different discrete parts of the business, Stuart. In Indonesia, we've seen it cool off quite a bit in the last 12 months. Obviously, that region was hit pretty hard with COVID early on and now they're stepping out of it. So that's helped us. WA 6 months ago was the hardest part of our business. But we've seen that ease slightly. It's still a challenge. That could be because we had the workforce from Mt. Morgan's come available. So that's maybe why we might be feeling something a little bit inconsistent with others, but it's still challenging. But the hotspot for us really is at the moment, it's moved to the East Coast. So that's where we're pivoting our support network and adjusting policies, processes to make sure we can be as nimble as we have to, to address that challenge and obviously perform for ourselves, but also our clients.

Okay. And in terms of -- there's been a lot of talk lately about easing the skilled migration program to allow employers to import skilled labor more easily. Is that something that would help you guys or it's not really something that you're looking to do to import like from overseas?

Look, it would run 100%. We would endorse and support that fully, yes, Stuart. We use that, the [ 4 A ] visa program to import fitters and mechanical personnel. If we could expand that, that would certainly help the challenges that we're all dealing with in terms of skilled shortages, both in terms of increased costs and the vacancies we're seeing. So we would support that fully. And I think it makes sense for the broader sector and industry rather than fighting between each other for a finite pool, if we could expand the pool that would help. I know everyone is investing in training and development, but that can be a bit of a long burn in terms of really addressing the problem. So, if we could support it with bringing more people in from international, that would certainly help ease the pressure I think.

Next question comes from [indiscernible].