Omni Bridgeway Limited (OBL) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. And welcome to the IMF Bentham Limited Half Year Results for 2020. [Operator Instructions] I'd now like to hand the conference over to your speaker today, Managing Director and CEO, Andrew Saker. Thank you. Please go ahead.

Thanks, Tara. Good morning, ladies and gentlemen. My name is Andrew Saker. I'm the Managing Director and CEO of IMF Bentham Limited. The purpose of today's call is to present our first half results for the period ended 31 December 2019. Joining me on today's call is Stuart Mitchell, our CFO; and Jeremy Sambrook, our Group GC and Company Secretary. As you'll be aware, at a meeting convened on 14th February, shareholders resolved to change the name of our company from IMF Bentham Limited to Omni Bridgeway Limited. We take this opportunity to thank shareholders for their support in this change. The new name will be registered with ASIC in the next couple of weeks and with ASX shortly thereafter. Once these registrations are completed, we'll notify shareholders of the date on which we will officially commence trading as Omni Bridgeway Limited. This is somewhat of an emotional milestone for our company and stakeholders who've known us in one of various permutations of IMF over the past 20 years. However, this is also reflective of the strategic journey we have traveled over the past 5 years as we sought to diversify our risk, and this milestone indicates the completion of that initial strategy. Turning to the presentation and Slide 2. As with last year, we'll start with what worked and what didn't. In this half, we are pleased to note the completion of a number of strategic initiatives, including the merger with Omni Bridgeway, the execution of the capital raise to finance the acquisition and to provide additional capital for investment and working capital and the recent change of name. In addition, we restructured our OTC debt, extending maturity to 2026 and reducing the cost from 7.4% to 5.65% and aligned the covenant package to those of our listed bonds. These were significant milestones in the evolution of our company. From an operational perspective, we were pleased to record the completion of a number of investments, which has resulted in some income being recognized in this half, close to $150 million, and some income that will be recognized in future periods. Some of those proceeds were used to extinguish some of our obligations to invest it in our first-generation funds, resulting in $38 million of NCI being extinguished. We also saw a material increase in our investment, including those we originated organically and those we acquired through the Omni Bridgeway transaction. We originated our single largest investment in Fund 4, which was financing for corporates in the U.S. Fortune 500, for an amount of USD 40 million. Finally, we note the receipts of a judgment in our client's favor in the Wivenhoe matter. This is an important step towards the completion of this investment and a return to our clients and shareholders. Having noted this milestone, we also had hoped that Wivenhoe would have completed in the first half of this year. The deferred completion is representative of the underlying nature of the asset class, which translates into uncorrelated returns we produce. We look forward to concluding this matter for the benefit of all stakeholders as soon as possible. In addition to this, we note that we achieved some modest returns from some of our completions during this half, some of which were claimed, and some of which were unplanned. Further, we had 2 losses from 12 completed matters, resulting in a negative P&L impact of $8.6 million. Other important issues of note to occur during this half include the High Court's decision on common fund orders and the imminent introduction of contingency fees in Victoria. I will touch upon these later in this presentation. Turning to Slide 3. As noted, in the last half, we enjoyed one of our most remunerative in our history and certainly in the context of recent periods. We completed a number of matters on our balance sheet and in our various fund structures, including contributions from completions on the book purchased as part of the Omni Bridgeway merger that generated total income of over $150 million that's been recognized during this period to 31 December. In addition, we entered into conditional binding settlement and obtained successful judgments in a number of matters prior to 31 December, which should allow us to recognize income in the future -- in future periods of approximately $170 million. This potential future income will, subject to the outcome of any appeals, be recognized in the second half of this year and in future periods when the income recognition standards are satisfied. We also expect there will be additional completions in the second half of this financial year. Turning now to Slide 4. As noted in my introduction, one of the key observations from completions this half was the lower average dollar-weighted ROIC that was achieved. As you'll be aware, we report ROIC on both before and after capitalized overhead basis so that stakeholders can utilize this information on the assessment of balance sheet and fund returns, which treat overheads differently. We also report ROIC after losses. These results were achieved in balance sheet investments and in the fund to matters that were commenced at various dates ranging from 2014 to 2019. These outcomes were a product of different issues, including shorter-duration investments, generally returning lower ROICs, given our pricing structure that increases in a graduated manner over time. As such, if an investment completes within a short duration, we do not reach the higher ROIC level. Having said that, our second-generation funds are focused on IRRs, and we do not focus exclusively on ROIC. Secondly, court intervention into settlement hearings that imposed lower returns on the funder. This is a reasonably recent development, commencing after many of our investments were made. It is becoming clearer that the opportunities to achieve very high ROICs, where court approval is required such as the shareholder class actions in Australia, will be limited. There were a couple of long-dated investments from 2014 and '15 where overhead have impacted on ROICs, where returns were considered salvaged or a loss. Notwithstanding the ROIC outcome, we note that the IRRs in relation to the completed matters are within a reasonable range of our expectations. We've not adjusted our selection criteria, and we continue to aim for a minimum 3x MOIC before overheads and losses. For the period from FY '15 to 31 December, our realized MOIC before losses and overheads was 2.3x. To assist with the analysis of commitment versus deployment, we've included data on our initial commitment amount. The derecognition of litigation funding contracts include capitalized overhead, and in such, a direct comparison to the initial budget is not possible. However, what is clear is that there is a high correlation between commitment and deployment. Turning to Slide 5. Since the merger with Omni Bridgeway closed in November 2019, there have been some completions of the book we acquired and additions to new investments, both on a conditional and unconditional basis. For matters that completed, there are several basis for measuring return. From Omni Bridgeway's perspective, which accounts for each investments at cost, those investments generated a return of $5.7 million, a 2x ROIC and an IRR of 118%, all of which are consistent with historical performance. However, due to the PPA requirement of IFRS, the IM and -- from IMF's perspective, the cost base was marked up to fair value, which is now IMF's cost base. As a consequence, the profit ROIC and IRR are commensurately lower. Having said this, the outcomes achieved to date are positive in that they have achieved a return higher than the assessed fair value at the time of acquisition. This, of course, will not always be the case. And we should anticipate that in the fullness of time, from an IFRS perspective, it is likely that some losses will be realized against the PPA value. Total cash recoveries to the 31st of December represent more than 10% of the cash purchase price for the acquisition of Omni Bridgeway. Turning to Slide 6. Given the complexities introduced by IFRS accounting for our company with the balance sheet and some funds being consolidated and some funds not being consolidated and now with the overlay of PPA treatment for the book acquired from Omni Bridgeway, we've sought to simplify some of our reporting to assist stakeholders' understanding of our business and financial performance. In this slide, we've set out our actual sources and applications of cash during the period, which shows that during this period, we generated a cash surplus of $123 million, which far exceeds cash generated in the last few periods. This is significant change in our operations and, in our view, the key measure for the business. The source of cash is obviously reflective of completions we achieved during this period. Whilst I cannot predict when matters will complete in the future, the objective of our strategy to diversify was to increase the volume of completions in the period with the goal of stabilizing income. The challenge will remain with us to continue sourcing investment opportunities that satisfy our investment criteria and complete matters in a timely matter. Following the recent capital raise and completions achieved in the first half, our cash and near-cash resources of over $320 million provide us with a solid platform to fund operations and future growth of our investment portfolio. Turning to Slide 7. Further, with the applications of our funds, we've set out on this slide a summary of our operating expenditure, reconciling it against the IFRS disclosure to a recurring cash expenditure. As you will note, we've added in capitalized costs so that our all-in costs are appropriately reflected but then eliminated certain one-off noncash or reimbursed expenses. The one-off costs include professional fees that were paid to advisers for the merger with Omni Bridgeway or the restructuring of our OTC notes. The noncash expenses include depreciation, net FX gains or losses and impairment charges. These are all reasonably obvious. However, perhaps less obvious are the expenses associated with the claims portfolio expansion that Omni Bridgeway caused. To the former, these are the costs associated with completed matters in the Omni Bridgeway book as there are some costs that are not cash costs associated with this period, much like the costs associated with the derecognition of intangibles and noncash costs from the current period to completions on IMF book. To the latter, Omni Bridgeway operating costs met by Fund 6. The expenses flow through our consolidated P&L and the costs reimbursed by our investor in the form of capital contribution. As such, 95% of these costs are reimbursed, and the inflows and the outflows largely net off against each other. As you will note, recurring normalized operating costs are continuing to increase, an increase by 3.6% from the second half of 2019. This reflects the increase in our platform investments under management and our growth in our EPV. As a percentage of total assets, these costs are, in fact, decreasing period-on-period from 6.8% in the first half 2019 to 4.5 -- sorry, second half of 2019 to 4.5% in the first half of 2020. As a percentage of EPV, costs have been stable at around 0.4% for the period from second half 2019 to the first half of 2020. As we have now established the platform, we are focused on completing and adequately resourcing the integration whilst looking to extract cost synergies and savings globally. Turning now to Slide 8. Set out in the next slide are our IFRS results. For the reasons previously mentioned, they are complicated by the treatment of certain of our funds and by the PPA treatment of the acquisition of the Omni Bridgeway book. As such, when reporting on an IFRS basis, NPAT will appear skewed to fund investors and not give a proper reflection of our performance. Our focus is on cash and cash generation. However, some salient points to note from the IFRS reporting include: the material increase in income from completions in the first half with a proportionate increase in litigation expenses; a material reduction in impairments during this half; a material increase in operating costs, some of which were associated with the one-off expenses, the reimbursed costs or the litigation expenses from the Omni Bridgeway completions that I previously discussed; a material increase in comprehensive income; and a material increase in assets and, consequently, net asset backing per share; and also, a material increase in investment carrying value in EPV. We also note that we have declared a dividend of $0.03 per share, which is the first dividend we've declared in the last couple of years. We expect dividends may be declared in the future when cash is received from future completions for Wivenhoe. Turning to Slide 9. Focusing on cash and near cash and net assets. As you'll note, cash and near cash in the form of receivables have increased by 44% since 30 June, which flows from the capital raise and the number of completions during the period. Concurrently, net assets have increased by 47% since 30 June, reflecting in part the merger with Omni Bridgeway and the PPA adjustments to assets. The cash and near cash and net asset position provide us with a solid base for our continued growth. Turning to Slide 10. Reflecting our expanded footprint and headcount, we've seen a 12.6% increase in funding applications period-on-period, which were recently evenly spread between Fund 4 and 5. During the period, the IC met on 30 occasions to consider 50 applications for new and existing investments. 14 new investments were made at a conversion rate of 2.4%. Excluding Omni Bridgeway, our budget for commitments for FY '20 is $276 million. The budget commitment this year was an increase of 25% over our actual commitments for FY '19. We have already committed, on an unconditional basis, approximately 50% of this with another 28% conditionally funded or IC-approved. At 31 December, we have almost 80% of this budget filled, which reflects a significant uptick in investments, translating into significant growth in EPV and potential future earnings. This has, to a large extent, proved our thesis to the investment in the platform. Of course, this investment is required ahead of the curve, and the income will follow in a few years as investment mature. Our actual deployments, measured as the capitalized intangible carrying value including capitalized overhead, is $622 million at 31 December, which includes a combination of balance sheet and fund investments and the PPA adjustment. This is an increase of 46% over the prior period. Our plan is to continue with net growth in our commitments, which will be a challenge in the short term when our large balance sheet investments in Wivenhoe and Westgem complete. As we continue our transition away from balance sheet investments and we harvest the investments in Funds 1, 2&3, we will see all committed and deployed capital directed towards Funds 4, 5, 6 and 7. We earn management fees of 1.86% on deployed capital in Funds 4 and 5 and a management fee equal to the agreed operating cost in Funds 6, 7. Our aim is to defray, to the extent possible, our recurring overheads by management fees. Turning to Slide 11. Whilst an investment is carried at cost, we note that as a consequence of the merger with Omni Bridgeway, the book that we've acquired is required to be restated at fair value, which is then treated as the cost of the investment. The carrying value increment from PPA does not flow through the profit and loss, and as such, we do not recognize unrealized gains. We will continue to report against both the cost and the PPA value so that stakeholders have a clear view on both of these metrics. As a consequence of the merger and the material growth in our portfolio during the period, our investment carrying value is now $622 million. Our balance sheet carrying value has had a net decrease during the period as the completions exceeded additional expenditure on ongoing investments and all new investments now being made into the funds' structures. During the period, we saw material growth in investments in Funds 4 and 5. Our EPV analysis does not include Fund 6 and 7 or investments made on the Omni Bridgeway balance sheet. As you'll note, we've had a significant increase in EPV, largely in Fund 5, as we brought on a number of larger investments. One of our key focuses in the coming period will be to improve our efficiency ratios measured in the cost per dollar of investment and cost per dollar of EPV. We will aim to improve our efficiency ratios by focusing on improving our conversion rates and commitments per IM. Turning to Slide 12. Our investment portfolio now comprises balance sheet investments and investments in 7 fund structures with 3 different waterfall treatments. To provide greater relevance, we've looked at the period from when we commenced operations in the U.S. as a start date for the balance sheet investments. We do not have EPV calculations for Omni Bridgeway book that was merged with the IMF in November. As you would expect, the portfolio is migrating away from the balance sheet, and now 82% by number of investments and 86% by EPV of our portfolio are held in funds' structures. With the completion of Wivenhoe and Westgem, we would expect to see significant increase given their respective contributions, balance sheet investments into those statistics. Funds 1, 2&3 are first-generation funds, which is structured on a European waterfall basis. As such, IRR is less relevant to these investments compared to ROIC. We note that in relation to Fund 1, we sold a number of balance sheet investments into that fund and received a reimbursement of costs incurred to that date, which was approximately AUD 74 million. As such, we have already received a substantial return from these investments. Funds 4 and 5 are second-generation funds, which is structured on an American waterfall. As such, IRR is more relevant. We note that at this stage, we continue to expect to recognize the Wivenhoe and Westgem matters as completing in FY '20. Turning to Slide 13. IMF's ROIC has decreased over the past 5 years, largely as a consequence of the contribution from U.S. investments. U.S. investments have produced a lower ROIC than non-U.S. investments as a consequence of the number of losses between FY '18 and the first half of '20. The early completion of a number of investments has also contributed to the lower ROIC. The ROIC in non-U.S. investments has remained relatively constant over the same period. We do not anticipate the ROIC for U.S. investments -- sorry, we do anticipate the ROIC for U.S. investments will improve, subject to minimizing losses and also completing some of the longer-tailed investments where the ROIC is higher. We note that we improved our U.S. investment selection process with a change in CIO and the U.S. IC process with the introductions of some external resources in FY '18. Turning to Slide 14. Funds 1, 2&3 are now fully committed, and the commitment period under these structures has now come to an end. As such, these funds are largely in harvest mode as no new investments will be made into those funds unless their conditional investment does not proceed. We've now commenced making distribution to investors in Fund 1 and have returned USD 50 million. The EPV of Fund 1 investment is approximately USD 1.85 billion and comprises 30 investments. We've made some small distributions in Fund 2, 3. But as the commitment period has now concluded, we no longer have an obligation to make mandatory draws and will draw capital only when needed. This will assist in managing the costs of the fund that accrue from the preferred return. It's important to recall the historical context of these first-generation funds. At the time of their creation, we were, to some extent, a deal-taker with no track record for fund management. Since then, as a consequence of a variety of factors, including the liquidity in the capital markets, we were able to improve the risk-adjusted economics in the second-generation funds, being Funds 4 and 5. Funds 4 and 5 commenced investing in April 2019 and September 2019, respectively, when the commitment periods for their corresponding Fund 1, 2&3 ended. There are primary -- they are the primary sources of the funding for prejudgment merit-based investments in U.S. and non-U.S. markets. Fund 6 is the primary source of funding for global enforcement and European-based -- merits-based investments, Roland and DARP. The fund is 75% committed and has a right to recycle capital through to the end of the investment period in December 2021. The waterfall for this fund is a hybrid structure that is driven by the nature of the underlying investments. Turning to Slide 15. One of the complexities that arises from our funds' structures is the accounting for noncontrolling interests. Funds 1, 2, 3, 4 and 6 are all consolidated into the accounts, whereas Fund 5 is effectively equity accounting. As a consequence of the consolidation of the funds, a large NCI figure arises into our accounts. At December 31, the NCI in the consolidated group stood at $423 million across the various funds' structures. A majority of the NCI from 30 June is associated with the acquisition of the Omni Bridgeway and the associated interest from the external investors in Funds 6 and 7. The balance of the change relates to the calls made from investors to fund strong deployment of capital in Fund 4 and the distributions made to the investors in Fund 1. Turning to Slide 16. Our primary focus for the next 6 to 12 months is to complete the integration with Omni Bridgeway team and ensure that we're maximizing the opportunities that arise from this merger. Now that shareholder approval has been obtained for the change of name, we will complete our rebranding in the next few months. We've now completed our first 5-year plan and have commenced work on our next 5-year plan. We will share some details of our plans with stakeholders once Board approval has been obtained, which we expect in the new financial year. Concurrently with our integration strategy, we propose to enhance our capital-deployment opportunities by focusing on cross-selling opportunities between the IMF and OB teams. This cross-selling enhances our services -- service offerings along the horizontal line. We'll also explore opportunities to enhance the deployment of capital by moving up the vertical line to capital deployment by becoming a principal and not just an agent for litigation funding opportunities. We've developed internally some tools to assist with mining data using AI. We have, through joint ventures with LegalTech, identified ways to use AI for book building. We see AI as a key tool for future growth in enhancing our current approaches for investment identification and participation. Historically, we've been focused on the impecunious plaintiff for funding. This is a small part of the total addressable market relative to those that have the capacity to fund their own litigation. We considered that the future of the industry and the potential for exponential growth comes from conversion of self-funders into users of litigation finance as a tool for risk mitigation and asset management. This is part of the evolution of the industry and our transition from fringe to mainstream. We will continue our risk-mitigation strategies by increasing our diversification and coupling this with prudent balance sheet risk management such as adverse cost insurance. Whilst we are not yet at the market for new funds, we have an option to extend our funds under management through the exercise of an option, both by the investors and the manager, to increase the fund size in Funds 4 and 5. In addition, given the number of investment opportunities that exceed our concentration cap limits, we may need to look at a new fund structure and, with that, an opportunity to test the market on new commercial arrangements that enhance managers' return. Turning to Slide 17. Two key developments that evolved in recent months relating to the way class actions in Australia are to be conducted. The first development relates to the High Court's decision in December 2019 relating to common fund orders. As anticipated, there has not been a wholesale change in the way class actions are conducted. Further, the federal court has signaled its intention to find solutions to allow CFOs by proxy. It is not yet clear that the solution proposed by the federal court, which is to allow CFOs at the settlement hearing, will be commercially attractive for funders or if they will also be challenged in the superior court. The second development relates to the intention of the Victorian Government to introduce legislation to allow contingency fees. If this legislation passes, we expect that other states may follow and introduce similar legislation. Contingency fees are likely to have a disruptive effect on class actions in Australia, and it is possible that we'll see some quite negative consequences, including the commencement of claims that are not well-founded and under-researched as law firms rush to court and, potentially, the compression of contingency fees to a level that is uncommercial. We've considered a number of options, including funding firms as law firm portfolios as we do in the U.S., continuing business as usual and being selective on matters that we can maintain our commission rates and we're planning to looking for a comprehensive service or, perhaps, even starting our own law firm and seeking to charge contingency fees commensurate with our returns as a funder. We've not yet landed on an appropriate response. Turning to Slide 18. As we've previously disclosed, the court handed down a decision in favor of our clients, which found that the defendant somewhat is headquartered in the state of Queensland liable in negligence to group members. The state has since advised that it will not appeal the decision and has encouraged the other defendants to act similarly. However, we do expect that Sunwater and Seqwater will appeal the decision. The issues to resolve from the initial decision include allocating proportions of liability between the defendants determining the quantum of damages suffered by group members and costs. At the time of the decision, we had estimated IMF's income to be between $100 million and $130 million based on a conservative view of the range of possible resolution outcomes. There is the potential for total damages to significantly exceed our conservative range that will have a corollary impact on increasing IMF's estimated return. At this stage, we've not revised our estimate. As you will recall, Wivenhoe's balance sheet investment and the estimated income in any potential uplift will flow 100% directly to our P&L. That concludes my presentation. Thank you for your time, and I'll hand back to Tara for questions.

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

Just a first question. Just on the industry structure at the moment. How do you see it given the sort of investment size sort of class you're in it now? How do you see competition and the amount of capital chasing or return versus the supply of matters that are out there for you to pursue at the moment?

Thanks, Michael. What we have experienced, at least in the last 6 months, is a significant uplift in the size of the individual investments we're undertaking due diligence in and also investing into. At that level, competition is not as intense as it has been at smaller investment sizes. And in fact, I would say it's a lot clearer air space. And that, I think, has translated into the significant growth in the capital that we're able to deploy. Being at 80% of our budget through to 31st of December and significantly ahead of where we expected to be measured in the pipeline, we would expect to be able to fill that budget and far exceed our budget for this year. So it's, I think, an opportunity for us to distinguish ourselves, and competition at that level is not as intense.

And just on Funds 4 and 5, you mentioned your -- you mentioned for the group, you sort of -- you have been focused on that MOIC of 3x. But given 4 and 5 is more IRR-based, is it -- could you just share with us what sort of target you're focusing on there for 4 and 5 on an IRR basis?

Well, look, our targets vary depending on the actual underlying investment and the risks that are involved, and we've got certain minimum criteria that we need to meet to achieve our returns. So there's, as you know, on Fund 4 and 5, a minimum hurdle of 8% and then performance fees that kick in once the IRRs hit 20% and 30% -- I'm sorry, and above 20%. So we are certainly targeting types of returns that we've achieved historically. As you can see from our completed individual cases in Slide 4, that range is -- overall, I think it's been reasonably consistent at that 55% to 60% level in both markets, U.S. and non-U.S.

And maybe just a bit more on the concentration limits in 4 and 5 and also this new fund with -- obviously, there's some larger opportunities out there, which is, obviously, you'd say, over a certain size, we're going to put this into this new fund. I'm just wondering if you could provide a bit more info on how that might look.

So under Funds 4 and 5, we have concentration cap limits that limit the individual investments at about 5% of fund size. And we do have a couple of exceptions we can note that we can make investments up to 10% of the fund size. So majority will be under USD 25 million, but there are some exceptions that allow us to invest up to USD 50 million into an individual investment. So we are now starting to see investments that range between USD 25 million and USD 100 million. And in those circumstances, we'll need to look at co-funding or we will explore the opportunity of -- if there's sufficient volume, of looking at another fund that may take those overages.

I guess to avoid any concentration limits there, I mean it must -- it would have to be a significantly larger fund, I imagine, than 4 and 5 are individually. And also just in that, would you be, therefore, looking also to take a lesser percentage as a co-investment?

In terms of IMF participation in that fund?

Yes.

Okay. Our objective in maximizing the returns to the manager involve deploying less capital, maximizing performance fees and management fees, all the usual levers that are available to a manager. That will largely depend upon market appetite, performance and interest, continuing interest in the sector. At this stage, it's too early to predict what they're going to look like. But certainly, aspirationally, we will be looking to reduce the capital committed and improve the economic.

Our next question comes from Nick Caley from Baillieu.

Sorry, I apologize if my phone dropped out for a bit, if you went through this. But just on Page 4, there's $13.7 million of NCI related to balance sheet investments. Does that mean you co-funded those?

Sorry. Yes. I think you're looking at Fund 1. That would be Fund 1.

Sorry. I'm looking at Fund 1. I know I didn't. So under balance -- okay. So it reads the other way down, does it?

Yes.

Okay. No, that's fair. I flipped that the wrong way. Sorry. But if you could just -- can you just like assume your accounting again, why the NCI is so high relative to your majority revenue share in most of your funds? I'm just a little bit lost.

Sure. It deals with the allocation of the returns. In Funds 1, 2&3, they are European waterfall funds, and as such, the NCI has returned or the external return come out in priority to the IMF returns. We would expect to see the NCI predominantly returned over the next 2 to 3 years. And after that, it flips and becomes returns to IMF, which reflects the funds' structures themselves. The build-up -- sorry, go ahead.

No. So what you're saying is it's basically going to follow the cash returns in terms of getting the capital out first to the investor. And as a result, that's reflected in a high NCI in the early part.

Yes, that's correct.

Our next question comes from Mark Southwell-Keely from Select Equities.

Guys, if I just start on Slide 7. I appreciate the commentary that you've made, both on the slide and verbally regarding claims portfolio expense. But if we strip that out, just wondering if you can give me a sense for your current run rate expenses, including net expenses for Omni Bridgeway plus the relevant capitalized odds. Just give me a run rate for your operating -- effective operating cost at the moment.

On a cash basis or on a cash and capitalized basis, Mark?

So just your running expenses plus your relevant effective capitalized costs that you need to spend to run the business. Are you...

Oh, okay. So our cash cost on a normalized type of basis would be $30-odd million, which has increased, as you would appreciate, from the last period. I think that's by about 3.6%. And...

Your current run rate. Your current -- so you were in -- you just finished January. So if we extrapolate over a 12-month period. I'm not looking at the half that's just passed where you've got part -- you partially got some increased costs. You partially don't. I'm talking about your current run rate as you extrapolate 12 months forward.

I think it's about $60 million, if you say you've doubled it.

My next question is just around impairments on Slide 8. You've broken down the impairments there over 4 separate parts. And I think first half last year, the impairment was relatively smaller, a similar number to kind of what it is this half. And then in the second half last year, it spiked. Just wondering why -- is there a kind of a reason that it spiked in the second half last year? Is that something that we could potentially expect in the second half this year?

No. They're individual investment and not correlated with anything. So we raise an impairment when it becomes clear to us that there's a potential, I think the word is probable, that we're not going to recover the investment. So we raise the impairment. And that'll happen depending on the unique circumstances of the individual case. So you might see the impairment charge go up or down in the next half. It's not possible at this stage to tell.

Okay. Just finally, in terms of the rebrand, what sort of costs do you anticipate that are related to rebranding?