PSC Insurance Group Limited (PSI) Earnings Call Transcript & Summary

I think it's now 9 o'clock which is the official start time for this call. So we'll launch straight into it. And I can't see who's on the call, but thank you all for joining in. At our end, we've got Josh Reid and John Dwyer and myself, Tony Robinson. And I'd like to, as I said, welcome you all to the call on the half year results, the results for our 6 months of trading to the 31st of December. We've released the presentation to the market. But I'll walk through the slides and we'll take questions at the end from anyone. So I would say that just going into the first page of this, the financial highlights. It's been a very good 6 months. And I think that the results sort of speak for themselves in a way, the underlying revenue up 28%; underlying EBITDA, up 42%; underlying net profit after tax, up 61%; the earnings per share up 46%. I've actually just come back from a trip to the U.K. I had 2 weeks in the U.K. And I can say that it's -- our goal was to build a really great broking business. And it's a broking business that I think we could all be proud of and certainly it's a business I'm really proud to be involved with. And it's full of great people. You go around Australia and you get the chance to meet people or they're passing through Melbourne and we've got a cracking group of people in the business in Australia, that's at the front of the business, doing the work servicing the clients, and you meet a lot of those people over the last couple of years. It's often by Zoom, but they're just a great group of people. Really blessed with a great executive team here from the front of the business right through to the base of the business, where Josh and I sit, sort of the Adam Burgess or the Tony Walkers, Pat Millers, Ben Goodalls, David Withers, all of the -- Kirsty, there's a wonderful group of people that have worked really hard to deliver these results, as John said to me before, this is my -- 1 of my 2 great days of the year because it looks like I'm actually doing something and driving the performance of the business. But it's not obviously. It's -- this performance is a product of this great group of people in the business. And I'm starting there because I've just been to the U.K. and it's a reminder of the caliber of the people that we've got there. No wonder it's doing really well. And you can see on this first slide, the growing contribution we get out of the U.K. and the growth that we've had there through the period. And again, a fabulous group of people, whether it's founding principles of Paragon and [indiscernible], but it's really the -- Angus is one of the key and one of the almost founders of that business through to Noel and to Sammy, but also some of the other people, Spenser in Paragon or Anne or the depth of the team that have come with those new retail acquisitions, Richard or Jeff and others? It's a really, again, a business full of really great people, really capable of what they're doing, and this result is a product of their efforts. And it's obviously always appropriate to give recognition to all of the work and effort that they've put into producing the end results. So -- and it is a great result. As I said, this first slide just really gives you that snapshot. We're continuing to grow, continuing to grow strongly. And we're continuing just to do what we do. We're an insurance brokering intermediary business, and we try to be better at that today than we were yesterday and aiming to be better at it tomorrow than we are today. We're Australia's only multinational broking business. We've got operations here and in the U.K. We're trying nibbling away at a presence in Hong Kong and Hong Kong is actually going quite well. So that's a really encouraging sign that attribute to the people up there. And we operate in New Zealand. Again, it's a really good, solid, growing business there. But the 2 principal parts are Australia and the U.K. And you can see here in this part, we're almost equally weighted in earnings out of Australia and the U.K. We won't end up that way just because Australia has a better second half than first half, where it's -- that's not true in the U.K. But you can also see the growth that we get out of each of the regions being highlighted here. The note we've put up at the top is a strong result shows growth in the highly diversified business model, both diversified by region and by parts of the business because we -- while we say we're a broking and insurance intermediary business, within broking, we're a wholesale broker, an international wholesale broker, a domestic wholesale broker in the U.K. plus a retail broker in the U.K., and we also operate some MGAs or underwriting agencies as well as having this wonderful broking business in Australia. So all very positive in terms of the things that you, as shareholders, should be thinking about as the depth and capability of this business continuing to grow. And the answer is yes, there's a real depth of capability and there's a growing capability in the business. And is it a good business? Yes. It's operating in a great market. Insurances are renewing essential part of each business' recurring revenue in that sense, essential part of every business' right to run. They need insurance to continue to operate. So it's -- and the value that we add to those clients and the approach we take to those clients means that we're going to be a successful growing business. So on that note sort of a long -- slightly long introduction, just to remind you of what we are and why we're able to produce these results and where these results come from, I'll hand over to Josh just to talk a little bit more detail about the financial results.

Yes. Thanks, Tony, and we'll just move slides forward, Carolina, please. Okay. Yes. As Tony said, very strong results. We're really pleased with them. Probably some of the key things to highlight here is a really good spread of organic and acquisition growth, roughly 50-50 each in terms of the $12 million of EBITDA growth. So some of the highlights, 28% revenue growth, as Tony said, to $120 million, 42% EBITDA growth to $40.7 million, and that's adjusted for AASB16. Underlying net profit after tax before amortization, up 61% to $27.6 million and statutory net profit after tax up 21% to $16.6 million. So in terms of the organic growth, $5.7 million of the $12 million was $12 million EBITDA increase, whilst from organic growth, it's a 20% increase. There was a strong performance across all segments. We'll talk a little bit more about the details shortly on that. The acquisitions contributed $6.3 million of the $12 million growth. All those -- all the main acquisitions are going well, which are the 3 retail U.K., insurance brokers, Abaco, Trust and Absolute. Now that large acquisition we did was PSC Alliance here in Melbourne, again, going very well. The other pleasing part of the acquisitions we've done more than a handful bolt-ons largely from the PSC network business, which just shows what a great business that is as well. So that's some of the highlights. Moving on to the next slide, probably talk a little bit more about that detail there. That's sort of showing the growth in revenue and EBITDA split between the organic and the acquisition. In terms of the acquisitions, I said there was $6.3 million growth there. About $4 million of that is from the -- what we're calling, the PSC UK Insurance Brokers business now. So that business is bringing together the 4 retail businesses that we have through which have been bought over the last 12 to 18 months. They're all going very well. PSC Alliance, we completed in September. As Tony said, we've got a great group of people and the acquisition of Alliance has certainly added to that and has added to the capability of the broking franchise here in Australia. We're 3 or 4 months in, we're delighted how that's going. And they're performing well and it's brought a new office to the distribution team or the broking team. In terms of the organic growth, called out $5.7 million of EBITDA growth, which is 20%. The revenue growth was 15%. That's pure organic growth. That doesn't include bolt-ons, that's pure organic growth. Some factors in that, clearly, in the period, there have been strong markets and by strong markets hardening or hard insurance prices, which certainly help. But equally importantly, the client count across virtually all businesses and groups has been good. And you'll sort of see the EBITDA margin has increased from 30% to 34% in that half. So again, really pleasing results there. As Tony alluded to on the first slide, a real call out is just the growth in the U.K. is well over $8 million for the half and approximately $4 million of that as a sort of surplus from acquisitions. The balance of $4.7-ish million was from a really strong organic growth in the U.K. In particular, Paragon has had a very strong first half, aided by really hard or hardening markets, particularly in the cyber and D&O space. And they've also had good client count growth, importantly, probably over 10%, 13% to being precise. So about a 50% contribution before we allocate sort of corporate overheads from the U.K. So very meaningful business for us now, a great team over there. We'll that contribution for the full year to moderate, as Tony said, into sort of 40%. So moving forward, Carolina, for the next slide. For those of you that follow us, you'll know that we like to put this slide in because it shows that we do have a very strong track record of growth and that growth is continuing in this half. So if you sort of look at -- if you look at the half year result and 5-year compound growth rates, it was 27% for revenue, 32% for EBITDA, 36% for NPATA, 18% for dividends and 26% for earnings per share. So I think we've called out before that our 4-year goal from FY '21 basis to double the business. And history supports us being able to do that and also the talent of the team and sort of the driver of the group continues to make us think that's a realistic position that we're shooting for. So I'll hand over to Tony for the next part of the presentation, Carolina.

So going back to where I sort of started from, which is just to make the point again that we are a diversified business model. While we -- it's nuance really in a way because we are an insurance broking and insurance intermediary business. So the diversification is modest in that sense. We're not venturing outside that general description of trying to build a great broking and insurance intermediary business. But we do benefit from operating in a number of areas, and we have a number of specialties, whether it's workers' compensation in Australia or cyber in the U.K., we've got lots of specialties within that broad umbrella of insurance broking and insurance intermediary business. So we've got a diversity of expertise. We've got a diversity of clients. We've got a diversity of geographies that we're operating in. And again just a note that the contribution that we're getting out of the U.K., we think that's got lots of room to continue to grow. Noel and Sammy do a fantastic job as does [indiscernible] and James. They've picked up these retail businesses there. So we're now spreading our wings a bit further. We have been up until now really international wholesale business and domestic wholesale business, Paragon and Carrolls, and now have a real presence in the retail marketplace and are looking for more opportunities there. Next slide, please, Carolina. So the -- we've talked about strategy at work for the next couple of slides. And Josh has already touched on that integration of the Alliance business into the group. We always talk about acquisitions to you guys, but we know we're acquiring the profit stream and we're merging the business and recruiting the people and it is that way we do acquire the profit stream. The rest is really about bringing people, businesses into the group to expand that sense of corporate partnership to make it a stronger and more capable business and certainly, the inclusion of Alliance and the people in Alliance into the group has made us a better business. They're a really capable group and have fitted in really well and brought with them that same client-first focus that PSC is proud of. So they've been good addition to the group. And the next slide is just talking a little bit about the success we're having in New Zealand. I talked about the fact that we're slowly, carefully building our presence in New Zealand. You can see that we're now getting over $2 million of profit for the period. It's -- expect to get $2 million of profit for the year out of New Zealand. So it's a meaningful part of the business now, getting great people over there, not surprising all these businesses are depending on the caliber of the people, but they're doing a great job there. Next slide, please, Carolina. The again, strategy at work. We're talking about constantly looking to think about how do we make it a better business for shareholders. Josh has done a magnificent job this year, organizing and refinancing of our debt. We extended the term. We've lowered the cost of it, and we've increased the capacity. So I don't think we could have had a better outcome in that. So -- and that explains in part to leverage between the EBITDA growth and the growth in underlying net profit after tax. So every part of the business is doing the role that they're expected to do, and we want them to do and all of them are contributing to the great outcome that we've seen for that in the half yearly results. So segment results. I'll hand back to Josh. Sorry, I've skipped one slide here. Josh just pointed out that. This is actually quite an important slide because it sort of talks to the people issue. We are a capability-based business. And we continue to focus on building that team right across the group. We're also focused on how do we ensure that they are in a spot where they're rewarded fairly that they're receiving the benefits of -- or participating in the benefits of the value that they're creating for shareholders and then doing that, locking them in, so that we come up with a structure that both shares in the value that they're craning that locks them in to benefit so that they know they're going to benefit that over an extended period. One of the instruments or the principal instrument we use for that is loan-funded shares, and we've issued a number of loan-funded shares this period. But that's the outcome. The goal of this is to, as I said, lock in a group of executives and people in the business that are important to the business and important to go on driving shareholder value. So a lot of that's occurred through this period. I think we're in a really good spot at that level, as I said, a great group of individuals in the business. Next slide, Carolina, I'll hand over to Josh.

Thanks, Tony. Yes. So a little bit more information here on the contributions from the various operating segments, as you recall, Distribution is our Australian Broking businesses, PSC Networks and the Workers Comp business. They're all performing very well. So the EBITDA for the Distribution segment was up 17% or up $2.8 million to over $19 million contribution. So that's 16% revenue growth and 17% EBITDA growth. So some factors in all of that, we've spoken about the Alliance acquisition, but also those bolt-on acquisitions from the PSC Network business. So what that practically means is some acquisitions of authorized representatives both in Australia and New Zealand. So Networks is a really strong contributor in its own right, but also there's the best part of 200 ARs in that group. So as they're looking for retirement or other sort of changes and we're a natural sort of acquirer. So that's gone well this year. In terms of the organic growth, strong GWP growth. Given the market has been certainly favorable for us, we think, probably in the mid-single digits, but there's been good client growth in that sector as well. From an organic growth point of view, just call out a small item that the Workers Comp business is some deferred revenue in the first half, which created a little bit of a drag on the organic growth for that segment, but that -- that's a timing issue that will unwind in the second for when people are considering organic growth. I thought we'd highlight that. On the agency businesses in Australia, really, really strong result this period. 20% revenue growth with very strong EBITDA conversion on that, largely driven by Chase Underwriting, which, as you'll recall, is a construction insurance specialist. The pricing or the market conditions have been favorable there, but the business has got great capacity and great underwriting support and is getting increasingly larger clients in that space. So that business is in a great spot. The medical insurance business under agency business has grown well. And we think, obviously, travel insurance business is still in hibernation but we're hopeful that, that will start coming out of hibernation in the second half. So on the U.K. side, I think we've touched on this a little bit, very, very high growth, well over $8 million for the period. The acquisitions contributed $4 million. So that's pretty much all in what we're calling PSC UK Insurance Brokers now. As of the 1st of January, those 4 businesses have functionally merged into 1 entity, still operating as 4 teams, but there is a sort of a central management of leadership group there now. So from the 1st of January, that change has come through. Really strong organic growth of approximately 40%. Touched on Paragon, had a really strong half, probably $3 million of the organic growth coming from Paragon, really strong as a lot of people on this call would know that cyber and D&O in particular, the rates have been very favorable or very hard. We see that's moderating in the second half, but certainly was a benefit in the first half. There's been good organic client growth in Paragon as I sort of called out before over 10%, 13% to be precise. And all other businesses in the U.K., as Tony sort of said, Carrolls, which were sort of called domestic wholesale, the MGAs being Breeze and Chase had good organic growth. And if you look at the organic growth portion of PSC UK Insurance Brokers, there's been good growth there as well, particularly out of the Absolute business that we've owned for over 12 months now. In terms of the center or the group, some higher costs in there in this period, largely because of D&O, we've also brought on some more people into the center or not many, but 1 or 2, which has increased the strength or ability to support the businesses. So moving on to the next slide, Carolina. These are just some numbers that talk to what I've just mentioned. So you'll sort of see notionally the U.K. contribution 50% -- well, it was 50% exactly for the period. That's excluding any group cost allocation. We think that will moderate into the sort of the 40%, mid-40% for the full year, given the Australian businesses still have a very strong last quarter. So moving forward to the reconciliation between the statutory position and the underlying position, as we've called out in prior periods, the revenue we exclude from that is any fair value changes from the investments on balance sheet, the main of which is BP Marsh, you all know. BP Marsh for the period was largely flat, largely a neutral result and then the market value of BP Marsh at the balance date was approximately AUD 45 million. Some of the main items that were expenses that include -- excluded from underlying earnings is the first one was a $2.2 million charge relating to the release of a prepaid debt fee from bearing. So as part of the refinance, we repaid the U.K. debt with bearings. There was an upfront cost with bearings that gets -- is deemed a prepayment. And so given we repaid that debt, that full amount got released to the P&L in the period. It's very much a one-off charge. $2 million of that was the revaluation of deferred considerations, which, as you know, we need to do every reporting period. So that charge was the result of higher expectation of -- higher amounts on those deferred considerations, which is essentially code for a strong performance of the acquisitions. So that's driven by Absolute, Abaco and Trust performed well, which means the deferred consideration is higher. So a good outcome. $600,000 charge relating to the implied option costs from the group long-term incentive plan that Tony touched on. And that increased amount was due to the increased issues during the year. We adjust these from the underlying result to ensure that we avoid a double count when we're talking about our underlying earnings per share, obviously, in the denominator of the shares. So we're just taking them or excluding them from the underlying to avoid that double count. That's the logic there. So the washup of all of that, the underlying net profit after tax up 61%, a very strong result. That's been higher than the EBITDA largely because the cost of debt coming down but also the average tax rate was lower in the period of 27%. Obviously, U.K. is a lower tax jurisdiction, and that's had an impact there. And importantly, sorry, calling out the earnings per share growth to $0.086 for the period per share, 46%. Moving forward, Carolina. Just highlighting the cash flow for the period, again, it has been very strong, up 44%, $50 million. Just to highlight and reiterate those of you that follow us closely would know this. But the first half is by far the strongest half for cash generation for us, and that's largely because the peak debtors are at a peak in June, particularly driven by the Australian peak renewal season. So obviously, they get collected in this half, but also the Paragon bonuses accrued across the year and paid in the second half. So from a cash flow point of view, those bonuses are paid in the second half as well. So they are 2 of the key drivers as to why the first half cash flow generation is always high for us, but good cash is the point. Moving forward to the next slide, Carolina. Thank you. Just talking about the balance sheet. Tony has touched on the debt side of things. So we probably don't need to go through that again. Just calling out and reiterating that the group net leverage target is 2 to 2.5x, we're comfortably sort of the middle sort of upper and/or probably middle end of that range, so still within the target there. I think some of that is pretty self-explanatory. The increase in the intangibles represents the acquisition activity that we've spoken about at some length already. So on to the next slide, Carolina, and over to Tony for that one.

So the summary of the results. I would keep saying it's a simple business. The complexity is in the execution. But we are a simple business. We're an insurance broking, insurance intermediary business, and we operate across a number of jurisdictions and across a number of specialties within that. And the complexity is in the execution. And our goal is to have brokers involved in the business that are servicing their clients well, adopt a client-first approach to those clients and are growing their client base. Organic growth is the most important part of our business. When we get an opportunity to acquire the profit streams of businesses and merge them in and recruit the people, it's a wonderful fill up for the earnings of the business. And each time we'd like to think it makes us a better business. But the core goal is to continue to be able to grow organically. And I think we're very confident that we can do that both here and in the U.K. and also in New Zealand and Hong Kong. So it's -- we're well placed. We know what we do. We know what we need to do to be successful. We are upgrading the guidance for the full year. Where we sit in that range is going to be a bit of product of the rate cycle in some classes in the U.K. We're seeing some of those turn a little bit. Cyber is a good example where if the rights are turning that math that's been written because that specialty is in Paragon. They're writing a lot of work out of the U.S. You're a bit dependent on the rate cycle in the U.S. because if the rates for cyber insurance in the U.S. for less work goes to the international markets that are sort of centered around -- centered in London. So a bit hard to call at this stage, where we'll sort of fall in that range. But we know it's important to give you a sense that we've done well and we expect to continue to do well and therefore, we've upgraded the guidance for the full year from $84 million to $89 million, $87 million to $92 million. I do think that as we keep saying, we're in a very good spot. We've lifted the dividend. We've got a $0.70 fully franked dividend, $0.045, a slightly lower payout ratio because we've got some great opportunities in the acquisition pipeline. We think that we're well placed to execute some of those over the next 12 months. I think that overall, we're in as good a spot as we've ever been, I think, in terms of strength of the business, the capability of the business and the spread of earnings. So a very positive outlook for us going forward, both in this 6 months. And as we keep saying each year is the foundation of a starting point for subsequent years, so not just for this year, but going into 2022, 2023, we think we're in a really good spot. So a nice spot to end. Any questions from anyone. Hopefully, those results sort of speak for themselves. But any questions on any of those or any other part of the business.

Naveen, you've unmuted.

Thanks, Tony and Josh for that overview. As you mentioned, normally, it's quite easy, we asked lots of questions when you have that companies that have a few issues, but results are pretty self-explanatory, so well done on expanding the results in the last half. I guess just 1 question I have was just in terms of seasonality in this business, historically, if you look at from earnings point of view, it's been roughly 38%, 39% first half sort of 60%, 61% second half. Is there any reason to think why that seasonality point [indiscernible]

Yes. A bit hard to hear, but I think the question is broad and simplistically is the historic slip between first half and second half changing. And the answer is yes. U.K. doesn't have that same weighting first half to second half. So as the contribution from the U.K. grows, the split between first half and second half will change and is changing. So if you definitely don't go for that the [ 39%, 61%]. It would be great result for the year, if we could do that. We're probably needing to upgrade it even more at where that expectation. But it's -- as that U.K. contribution grows, that split changes. And it has been a really significant contribution from the U.K. and some -- we have some other good organic growth opportunities and some good acquisition opportunities over there.

Okay. Great. My question was [indiscernible] you probably already called to. So yes, I mean I guess still Australia is more dominant division, but U.K. is growing very strongly. So I guess, seasonality is probably still going to be centered towards second half, remain on strong...

Yes. Yes, that's right. It's not going to be 50-50. It's nearly 50-50 in the first half, but we won't end up at 50-50 for the full year. It will still be a majority out of Australia.

And [indiscernible] sort of any decision [ ease up ] living arrangements here, I assume?

I don't think it's only Paul's decision. So I think there are other influences on that decision. He and I over last -- he had a couple of weeks in the U.K., and I had a couple of weeks in the U.K. and whenever I'm in a place where Paul is, you do realize the value that he adds to the business. We've got 3 great founders in Brian and John and Paul and each of them find incredibly important part in the business. And having U.K. -- Paul, in the U.K. while I was there, it provides leadership and a sense of aspiration that is an important part of what he contributes to the business and you're reminded of that. So having him there after a 2-year absence and having him there a bit more after a 2-year absence would be terrific. But as I said, at this stage, there's a couple of weeks there. I think he's going through a much longer period in the middle of the year. I don't want to spend too much time over there just because it also adds that same value here. Maybe what we need to be doing is getting one of the other founders into the U.K. from -- maybe we get Josh over for extended a real retail presence.

I don't mean warm weather time.

That's right. I think getting John there in winter is going to be hard. So no clear indication of that. Any other questions?

Andy, you've been unmuted?

Right. First question just around the EBITDA ratio. So you mentioned it was 50% lower usual to fund acquisition as we think about it going forward?

We've certainly wound the dividend payout ratio back a bit, and that's a reflection both of the desire to keep a bit more cash in the business and also recognizing that we're now not paying fully franked dividend. We haven't sort of settled on a long-term view of it, and maybe that's something we do need to do to give you guys a sense of what we'll be doing. But we're sort of playing it as performance sort of rolls through. We're sort of working it out what's an appropriate amount that maintains at least, say, 70% fully franked ratio. But in terms of coming out with guidance on dividend payout ratio, we just haven't focused on it.

Yes, Andy, we probably have been telegraphing softly for a year or 2 now that we expect dividend per share growth to be lower than earnings per share growth because 2 or 3 years ago, it was in the mid-70%. So we've sort of been softly telegraphing that. And in my mind, that's sort of what we're doing here a little bit because we -- in terms of our acquisition strategy, we're obviously consumer of capital. So the more it comes from equity markets and debt facilities but the more that we retain, the less we need to use that, which we think is better. But equally, our shareholders do expect us to be a good dividend payer. So it's just a matter of getting that balance right.

And it is a bit of a trade-off in the sense that, yes, U.K. has got a lower tax rate. So Australia has got a higher tax rate, but the franking credits have created out of it. So we like the U.K. earnings. We like the low U.K. tax rate on those earnings. And therefore, the return on shareholders' funds and deployed there is marginally better. But yes, sorry, we sort of haven't settled on it. We sort of think 70% fully franked is a good thing to be having us at least one of the pigs in the ground as we work through that issue. Any other questions?

Naveen, you've been unmuted.

I just had a 1 follow-up question. In terms of acquisition pipeline, are there -- how is that looking at the moment? Are there specific areas, types of businesses for your [indiscernible]?

Yes, Naveen, it's a great question. I mean, to some extent, give the same answer when we've spoken before. I'd love the acquisition pipeline to be fatter and fuller. But the acquisition pipeline is consistently at a level that sees us make a number of good acquisitions each period. It's about where it normally is, I guess, is what I'm saying. The acquisition pipeline is where it normally is, but I'd always like it to be fuller and fatter. Interestingly, we're sort of continuing to talk about, okay, if that's a goal, let's make it a proper goal and then solve for that goal. So how do we do that? How do we sort of increase our presence or how we get more in control of actively sort of searching for the acquisitions here in the U.K. So we've got a reasonable acquisition pipeline and a pipeline that's consistent with what it's been over the last sort of 3 to 5 years. And as we always say, when they come through, we can't determine. We're talking to people all the time. We're in good discussions. We're issuing term sheets all the time. But when we actually complete something is just a bit of an unknown. There's 1 acquisition we've been talking to for some time. And when we first started talking to them, we thought this could be one that's going to happen quickly, this will be a sort of 4- to 6-week turnaround. And I think 9 months later, we're still waiting for the start of that 4 to 6 weeks. So they're very hard to judge. I met with a number of people while I was in the U.K. We can pull off some of those, again, it will be terrific, great people and very consistent with how we run our businesses. So yes, a good opportunity both here in the U.K. We've actually got a really good opportunity in Hong Kong, which I think we do it. It will finish the amount of capital. One of the things we always talk about is we partly manage the risk by managing the amount at risk. John rightly says the best way to manage risk is to be able to manage the risk if it becomes a reality if the risk becomes a problem, can we manage it? And that's the ideal situation. So when we're buying a broking business, we're obviously in that spot. And we sort of built some capability in the U.K. in retail so that we could, if we bought something, we had a problem before we started to expand the amount of capital in retail in the U.K. Where we can't do that, like when we're entering into a new territory, we just -- we manage the risk by managing the amount at risk. So Hong Kong, we've got a reasonable presence there. We've got a good opportunity there. If we do that, that will be the amount, that will cap the amount that we're going to put at risk in there until we certainly can get good returns out of it. But I only mention that to give context to the comment that there's a good opportunity there. There's some good sort of tuck-ins in New Zealand. There's some good conversations happening in Australia and there's some good conversations happening in the U.K. I'm not sure I'm giving you much of an add for I'm giving you lots of color without any definitive answer there, Naveen, I'm sorry, but it is hard to sort of pick whether these things find their way right through that acquisition pipeline to complete that acquisition. Any other questions?

Andy, you are unmuted.