Steadfast Group Limited (SDF) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Steadfast Group Limited First Half 2024 Interim Results. [Operator Instructions] I would now like to hand the conference over to Mr. Robert Kelly, Managing Director and CEO. Please, go ahead.

Thanks very much, and welcome, everybody. Thanks for your time and spending a few minutes with us this morning. I'll refer you to Page 4 of the pack, if I know. I guess that's really just our reaffirmation that what we said we'd do in 2013, we have continued to do. We've executed what we set we would execute, and that's just really basically 9 graphs to show you our position statement. So, I won't bore you by really in detail. It's very clear. Although sometimes we like to read them [indiscernible] just investors is that we're on the right track of what we said we do for the market. So, going over to page 5. This reflects, I guess, the confidence that we've got in the way we execute everything we do in terms of acquisitions and running the businesses. And I think when you can get the broking EBITA up by 23.1% and the underwriting agency is up by 11.8%, it really is quite compounding on the business that we've done over the years. So I know it looks easy, but it's not easy doing that now. Our intricate work we do on both those sections of our revenue is testament to the incredible people at work in the network and also the interaction between our executives and the invested companies that we operate with our acquisition growth for our EPS accretion with net cost of $331.7 million that we did. So we're on target to get rid of our tracked capital, $280 million that we did. Future availability is just under $400 million in capacity plus our free cash. Remember, we convert profit to cash all the time. So -- and on the right-hand side, there is a little [indiscernible] EBITA up 21.4% to $229 million, NPAT up 17.5% to $104 million, NPATA, up 16.9% to $130 million. The diluted EPS NPAT is plus 12.2% to $0.0102 and then the interim dividend up 12.5% to $0.065. The statutory earnings reflected from a $84 million up to $100.4 million. So I mean we're quite proud of those numbers. And I always reflect on when we give guidance and then upgrade guidance and then we meet that how we sit around as an executive running this business and say we've been successful for the shareholders. And so, if you go to page 6, this is our trapped capital. We had a target of -- we have a target of $280 million for FY '24. And it's interesting we completed 28 acquisitions, including Sure. The Sure acquisitions we did, we stayed about I guess one month in these figures of turnover for Sure. And as you can see, the acquisition cost was the $331 million that I mentioned on the prior page and the EBITA grew $14.4 million and $18.5 million quite respectively. Just going through the second half of $2024, we've done 3 completed acquisitions, as you can see, $3 million EBITDA, 12 term sheets, and we're in due diligence for that for $6.3 million. We've got a further 6 term sheets, we're in negotiation, but not with the due diligence for $2.7 million, and another 28 opportunities, totaling about $22.4 million. So the runway is still strong and robust from that point of view. So on the right-hand side, $215 million of trapped capital completed year-to-date and $312 million trap capital pipeline in opportunities to come. So remember, our cash, as I said, I mean are just under $400 million, $378 million plus free cash as it comes through and we convert profit to cash d away. On page 7 if you think about -- that's quite -- this is quite a good analysis of where we've gone and when we've looked at. Even if you look at FY 2013, we did some acquisitions prior to the float, the float came, of course, in the FY 2014 year, and then you see we absorbed what we did there through 2016 and 2017, 2018 we started to move into an area of acquisition. And again, if you look at the line, we think that -- we always seem to be able to do between $90 million and $120 million worth of acquisitions. And in FY 2 021, it started to look like there was a lot coming. And in FY 2022 and 2023, as you can see, we had outstanding results, and that leads on to -- for the first half of FY 2024. So our strategy that we put into the market back to 2013 about, we will be an acquirer of businesses within the networks, will be an acquirer of businesses and underwriting agencies is certainly paying dividend for us. And the fact we're there -- we only work on accretive growth in acquisitions, and that growth then reflects an increased profitability, which we pay back to you by way of dividend. So if you go to page 8. This is a nice snapshot of where we were in 2013 and where we are in calendar year 2023. It's an exciting, I think, a couple of pie charts here. If you look at the one on the left, we purchased basically $1 billion worth of EBITDA in -- with those equity brokers. And we had -- I'm sorry, $1 billion with the sales and those equity brokers -- in FY 2013, would have been nice if that purchase $1 billion worth of EBITDA, not only being a little bit more than $334 million we spent. So I'll reflect a bit more on that statement. The network was worth $3.9 billion and [indiscernible] we control the $1 billion of it. If you then go to the one on the right side, okay, and you look at it now, it's $12.4 billion for calendar year 2023. And this is really interesting that we control now $6 billion in the 7%, slide from the pie down the bottom, our trap capital acquisitions bringing another 7%. But the one on the left-hand side shows that there's still $6.4 billion worth of sales that we do that are part of our network, rely upon us for all the services we give, mostly user software. And that there is still the runway that we've got in terms of the opportunity to buy further into the network. So, we're nowhere near the end of our runway, one could argue we're half way through our journey. And so the potential for further acquisitions still sits within that framework. Page 9 of the fact that this is the insurance broking and I think it's really important to just have a look at the sales and the first and second period for -- as you can see, each year, we get control of in the network, more GWP. And indeed, it's a factor, we get when we acquire potential of that complete control by our equity participation. The network GWP grew 14.3%, okay, and that's basically 10.6% organic growth. We got about 3% volume growth, which is good in a hard market. And still, we run at about 85% commercial and 15% retail. Interesting factor on those who followed us over the years will understand that when we first did our data and analysis back in June 1999 when we were building our data warehouse, that -- the -- it was 4% retail. And during the period of -- from 2013 to now, with all of the direct business coming into the Australian market and everybody is saying that people will buy a business from the Internet. The reality is we've gone from 4% to 15%. So, people still want to have somebody have talked to. So, equity brokers and underlying EBITDA of $18.9 billion, up 23.1%. And then on the right-hand side, gives a bit of an analysis, 10.6% organic growth, 2.5% of the growth comes out of the AR network. They are a very valuable addition over the past 2 decades to the Australian sales of general insurance in Australia and new brokers 1.2% total about, 14.3%. Operational highlights here, you can see the 330 Australian brokers, 66 brokers in New Zealand, 29 brokers in Singapore. And if you're going to then have a look at 18 new equity holdings, including bolt-on. Bolt-ons and step downs, we go off over that a little bit, but the reality is we're very willing if there are very operative people working in our underwriting agencies or our brokers. And we think that they could to be participants in equity, we're happy to sell down some equity to them because in some ways, it's a lock-in for the expertise to continue. And also, it's a unique way sometimes to allow people -- ordinary people that are in working positions to gain a position do all the work, get their wages, get their bonuses, but have the dividend flow pay off their equity. So, the client trading platform, just under the $700 million for the first half, it's on track. That's running a rolling 12 of $1.3 billion. It should crack $1.4 billion this year. So, I know it's been a long journey, but when you get 24% uplift in a series of period, that shows the actual efficiencies that's created by using it. The fact that when people start using, they do not stop using it. If you then let's go to page 10, which is the underwriting agencies.. First half, up 8.5% to $1.1 billion. That should project out to probably $2.75 billion at the moment, although with the increasing cost of insurance, I wouldn't be surprised to see that kick-up towards the $3 billion mark for the full 12 months. Plenty of opportunities for us. Most of our increase in GWPs is price, but also accelerated by volume as well. Property pricing still remains long, and our capacity constraints in certain lines that the insurers are still hesitant to write, and it means that our expertise in underwriting will attract people who come. So underlying EBITDA, just under $92 million, up 11.8%. The bar chart shows you our growth since FY 2014. And on the right-hand side, it's nice to have 6.2% organic growth, 2.3% acquisition growth, giving you 8.5% total growth. We've operationally still continued to roll out our robotics. It's a slow job because we're not just running out and doing it, but wherever we implement a robotic solution, it creates a huge efficiency within the underwriting agency and gets rid of the main-dome process. We also continue, and this is something that I think is overlooked by a lot, the relationship with CHU and QBE goes back a long time. CHU has been operating for 40 years, and we always want to align our desires for growth with the insurer's desire for profit. So we don't consider we are a sales conduit in our NGOs. We consider we have a partnership with a capital provider and then we have to provide service to attract people to come to us, but more importantly, a profitable line for the insurers to go. So my premium race of course have meant that -- we've gained market share. The interesting part of -- we participate the across 4 main lines with the client trading platform, they're ever growing of Commercial property, strata, liability, professional indemnity. And also, the other part that goes hand-in-hand with the loss ratio controls that we do to make sure we give a return to the insurers is our in-house data warehouse is becoming a bit of an envy of the market. In some sectors, we have the best data analytics that anybody's got over property, and we are continually asked, and we supply it to the insurers, information to give them guidance on what they're securing when they quote their pricing mechanisms, what the market's doing in that area, and also the risks that are being put to brokers to go for. Also, the 30 agencies that we've got with over 100 niche products means that our expert underwriters in that area are very well received by the broker network, and, of course, their expertise is demonstrated in continuing support by insurers because loss ratios are in line with what their expectations. In terms of that, the ability to uplift 4 or 5 of those MGA's into the US is on our radar and something that we will be working on to see the suitability of doing it. So let's go to page 11. Just a bit of an operating update. The reinsurance market rate still increased. There seems to be stability coming into the reinsurance market. And when I mean stability, I think the rapid increases that we saw over the past couple of years, they seem to have waned unless there's a real reason to have an increase or there's a section that needs rectification and that's still written by core loss ratio. So interestingly, we're still not seeing -- and there's plenty of money in the capital markets. We're not seeing people putting up their hand and bringing new fresh capital as we've seen in other times when premiums has been on the rise. So I guess the other thing is on the -- from a reinsurance side, the impact of the recent sidelines and the cyclone pool is yet to see reach fruition. I mean the initial thoughts on the first one was that maybe 10% of the wind times if you picked up by the cyclone, but very few of the water clients will be picked up. So, that's a watch and see. And I think the time delay of 48 hours or certainly come under pressure, the second pipeline that it did, the flood war has just come through from the first one. So I think that I wouldn't like to be a government that says we put in the cyclone pool, we didn't have to pay any claims out. And hey, look, we made a lot of money out of the pool. So I think this is a way we see. We still keep our customer ads really under check. And we've just done that recently over the last few months in terms of the remuneration that we take for householders insurance. In fact, we led the market going back about 2 years with the high end market by product that we've got with mentioned by saying, it can't sustain a large commission because it's a huge premium pool. So brokers initially were hesitant to adopt that, but I must say, last year was for this year mansions has ever had with a great increase in people going that way. So we work with the insurers to say there is commercial pressure. I'm sorry, there is consumer pressure on the pricing of -- when you're running a 103% loss ratio on householders, you've got to keep jacking the price up. If you think about the price differential, we were making perhaps 4 or 5 years ago out of the normal householders maybe $120. And last year, we probably made on average $210. So the amount of commission that was being made probably wasn't really reflecting the service that the consumer is expected to get to that price. We've come to a realization that by bringing back a bit of that commission, it will slow the consumers' price increases. And in reality, have very little effect on our revenue streams. Also, the new valuation to evaluate property has been a great free addition to our ability to be able to tell people, hey, get grocery underinsured at the time of flame you may -- if you follow our valuation protocols, we will not have problems with contribution. Okay. The kind of the conduct that we rolled out is slightly more aggressive than what neighbor rolled out. We're now seeing that being implemented. We're carrying out orders and it's totally in line with government, totally in line with the regulators and very much in line with what the consumer expects to get from the intermediary. So we're very happy with that. Just on the technology, the part of the IBA purchase insurance.com year. We've moved that business into a standalone business. We put one of the excellent fellows that within IBA running it. And I'm pleased to say that it's starting to have its own life and its own growth patterns and people are coming to us offering this product line. So what's that space in the next 2 or 3 years? It's a great asset, and it's growing. And we continue, of course, on the technology side to accelerate the product lines that we've got in the client trading platform. More and more digital transactions are gaining momentum. And the reality is there is such a broad amount of our business that we do that can be digitally transacted, much more efficient to our clients and much more efficient to the broker. In the international strategy that we've been talking about over the last couple of years, it's implemented. We did the acquisition. We we're fortunate to get a chain that we build up over the last 12 months, ready for that. So that was a Sam Hollman, used to be the COO and freeing itself up to do the international work because we were able to get Nigel and that shareholder come on board. And the difference he is making to the company at the moment has been quite outstanding and a realignment of what we're doing and the ability to look at this business as to where it is at the moment through fresh pay arises really making a nice stimulus confined within the executive team. So the international team set by Eimear Mckeever, who worked very closely are shadowing Stephen. And as is Stephen's way he does business, he will make sure the people that work under him are trained up to the performance that he expect and that would -- that allows us to come in to be CFO of the international, and we got Nick McKee on board who has vastly experience of 20-odd years working in the US market, Australia and Australian. So that been set, it doesn't impede any of our operating structures in Australia and they're free to do whatever they want to do and build the ISU agency in America. So our work on the ISU agency is constant. We're working with them almost every day, [indiscernible], not over the top of them. So the strategy that Sam Hollman set has been implemented and almost every day, that they're in contact. In fact, it's amazing how seamlessly that's worked since we did. First, the acquisition of our footprint in Americas is underway. It's been stimulus. What we've found has been terrific. The people have worked well with us. The network over the whole of the US that participate now, as you are really keen for what we can bring to the table. So it's pretty fun from that point of view. Acquisitions. We completed Sure, gave us a footprint in the North Queensland, but also an algorithmic views to risk that we can take around other parts of Australia. And this allowed us to have a small insurance company type operation with somebody else's capital and to finitely look at risk on an individual basis and know what we can and can't, right. So it's been very successful since we put it out there. And then of course, we've executed trap capital. It's what we do. It's not new. We do our own DD, we do our own legal. It's a fairly strict team who works very hard to do that. On the environmental side, we work very carefully on the ESG if we want to work towards net zero emissions, we're now building a system so that we can now flow what we're going to do through to the network. Interestingly, if I have said this to the network 18 months ago, they would have laughed at us, now we're actually getting people say we're being asked about our ESG, what are we doing for society, what are we helping on that. Amazingly, we were probably ahead of the game when we built that, but that's the way it goes. Just on the flex, report came out yesterday. It's interesting. I noticed that there was a 15% pay gap for us. In the insurance sector, we did very, very well from that point of view. Our IR along with the HR division, struggle with this because we don't advertise a job with the girl price and the boy price, we advertise a job with what we pay whoever gets the job. So we continue to work on that and our gender balance has been pretty good in this organization. So if we could go over to page 12, that's our insurTech page, as we said, just under $700 million through the client trading platform, 23.8% growth, and this year some are currently rolling $1.3 billion, we'll probably hit the $1.4 billion. There on the left-hand side, 216 brokers on INSIGHT, unbelievable that we built a system with 6,600 users, and a sustainable system and ask anybody in the network, ask anybody, how does INSIGHT work and the client trading platform works, you will not get a bad reply. You will only get this solves a problem. So we continue to develop the client trading platform. It's a very difficult job to do because of the back offices of the insurers, but we work with them. We understand their problems and more and more insurers are coming to us wanting a digital solution and realizing that the cost of bums on seats to speak, is much better if you can have a digitally transfer it. On the right, the graph there shows the growth of the client trading platform. We're very proud of that. I did have many, many times where we met with people who said, it's a bit slow. Well, it's nearly $1.4 billion now and flowing anymore. It's growing all the time. So, the sweet shot before I hand over to Stephen to go through the detail of financials, page 13. Interim dividend, up 12.5%. We aim to get 75% of our net cost back, and we aim to -- our aim is to continue making that accretive. So ex-dividend date is 4th March, dividend paid on 28th of March. Our job is to use the capital that the people invest in us to produce a good dividend flow and be reliable in the figures we put forward. So I'll keep quite now till we get back to the outlook, and hand you over to Stephen.

Thanks, Rob. So going to slide 15. We'll start with the headline underlying results here for the first half. It's another strong half, strong uplift in profits. You'll see the revenue there $790 million, up 19.3%. The underlying EBITDA, up 21.3% with a 50 basis point improvement in margins from 28.5% to 29%. Underlying NPAT, up 17.5%. Underlying earnings per share on NPAT basis up 12.2%. Cash earnings, the NPATA was up 16.9% and cash EPS up 11.7%. Some of the big picture takeaway from these results. The hard market has continued without abatement through this half, driving the revenue increases across the group. We've had the impacts of interest rate benefits dialing up our revenue and EBITDA and of course, a bit squared up in the NPAT when you dial up the increased cost of funding. Of course, the prior half actually had a full benefit of $150 million fixed interest rate hedge, which we don't have in this particular half of 2024. The equity raise, it increases our share count, of course, we took the extra monies on the SPP on the retail element in December, but actually have about a 1% dilutive impact on EPS until, of course, we put that additional cash to work. In November 2023, we upgraded our guidance to the market on the back of the good organic growth for the 4 months to October 2023 alongside the impact of the Sure acquisition and that capital raise. The results to December, which is really the November and December since then, is essentially trading in line with our upgraded guidance statement we gave you. Before we move along, just going to quickly comment about seasonality. We actually now expect to have a slightly higher SKU towards the second half. We're originally expecting about a 44%, 50s, what I mentioned 6 months ago. That's now really skewed to about 53%, 57% on the NPAT line. 2 main factors. First of all, being the acquisition of ISU in America, its earnings streams are all second half biased. So, you don't get any contribution to the first half. It all goes into the second half. And secondly, of course, is the fact that we have only one month of Sure results in the first half, but we get a full 6 months in the second half. So, we're actually not changing our upgraded guidance statement, we fully expect to be within that realm. We will, of course, review the third quarter and update if we need to at that point. Slide 16 takes you through the reconciliation of how we get from the statutory through the underlying type of numbers. As for the past, we removed any change in valuation on John's Link shares. In this case, we removed a $3.3 million profit in the first half. The bulk of the other reconciliation items really relate to the final settlement of the deferred earn-out and you see that we removed $11.6 million will be paid more for businesses because their profits. So, those businesses were higher and we had $2.4 million going the other way where we paid less than what we first anticipated. Other than that, there's just very, very minor changes. Slide 17 really seeks to then break down our growth, as we always do, between the 2 limbs of organic growth and acquisition growth. The organic growth has been generated through a combination of factors. Yes, we've got the continued hard market conditions. Rob's mentioned the price increase is circa 8%, volume increases, maybe 3% across the equity brokers, in line with our forecast assumptions. The stronger growth than anticipated actually in our agencies, their revenue growth was ahead of budget, which helped mitigate the cost increases. We knew we're coming and we advise were coming through into this first half.. And of course, we benefit from the interest rate increases in our trust accounts, our operating bank accounts. That gives you about $14 million worth of EBITDA growth just alone. So the acquisitions continued in first half 2024, $183 million for the first half. That's now up to $215 million as of today. Our target was $280 million. We continue to project that we will achieve that particular target. So we're not changing that assumption. The actual acquisition multiples that we paid averaged, if it's just excluded short for the moment, 9.85 times. If you actually exclude America, the ISU acquisition, which we mentioned was 11 times, the domestic acquisitions was actually about 8.8 times. So that shows you where the market is at for what's called the SME type segment. Slide 20. Sorry -- slide 18, I mean. This is where we show the broking results as if we owned 100% of them. We actually don't, we own 76% of the profits we show on this page which is 100% of the network assets and 72% of pure broking. For the period, there was 13.3% of organic growth in revenue, which is, of course, that strong result from the hard market conditions continuing. As you know, we're about 70% leveraged on commission, so the 8% GWP growth is really about 6% growth in our commission lines. You get another 3% or so from the volume and another 3%-ish or so that you get from the interest received with the higher rates on our deposit. The cost increases were in line with our budget, but I would say the trajectory, particularly on the price of labor, is starting to moderate. We mentioned it was probably peaking about a year ago, still relatively strong 6 months ago, just starting to moderate a bit further, I suspect, at the moment. And, of course, we have the additional growth coming from the acquisitions that you see there with that 7.2% on the bottom line coming through. The agencies go to slide 19. We own roughly 91% of the earnings you see on this page. Again, solid performances across the portfolio. The growth rate in the net revenue, that's our pull-through revenue, is actually 13.8%, which is actually continuing to exceed our forecast assumptions. Again, we keep saying it'll moderate a touch. It's still quite strong. We did mention additional re-sourcing across the portfolio, particularly our larger businesses where we're putting in additional people on the claims and systems, et cetera. So that's why we have the organic growth rate of 8.2%. And again, we're mindful of margins for the go forward across all our businesses as we think forward for 2025. Slide 20 on the cash flow, we have, apart from taxation, where we had a catch-up, you'll see that all the profits, again, continue to come through. So just to prove that point, I've just shown you how the post-tax numbers across the 12-month period flows through from the NPATA that we've got. It's just you'll see that there's a big increase in the taxes. We squared up our statutory tax obligations from FY '23 in this last half. If you go to the stat accounts, you'll see we do continue to break out the client trust account movement, the premium funding businesses that use our numbers. So I suggest this is probably the best way to analyze our particular cash flow and how we see the profits come through as cash. Our debtor days continue to be showing no deterioration. Premium funding arrears continue to be below the pre-COVID levels. So another strong sign for the SME sector that we operate largely within. And as you would know, our free cash flow continues to be invested into our ongoing acquisition activity. Going to our balance sheet. We got further strengthened by the FPP, that $68 million. So you'll see here -- we have not to be missed. We actually reset our debt facilities back in August. We might have mentioned that before $860 million of facilities, which was $660 million. These facilities extend all the way through to November 28, as you'll see on the right hand of the slide. As of today, we have $378 million. We'll have circa $75 million of that going on dividends at the end of March. And we, of course, need to keep some aside for the Sure earn-out because that will need more than our free cash flow. So let's say there's 100 million that we keep in reserve for that. So there's still beyond that plenty of money we have for acquisitions. In fact, with the strength of the balance sheet, we could actually borrow another $500 million on top of our facilities and still stay within our 30% ratio. So it's fair to say the next range of acquisitions will all be debt funded. But having said that, we're proud to be conservative on the gearing and given the economic environment with interest rates as they are. At which point, I'm going to hand back to Rob.

Thanks, Stephen. So it's always a fine at -- what I've said backed up by the fact of what you know I feel much better. Go to page 23. This is -- this is -- it's interesting from our point of view. I often wonder and I guess I'm just a commission salesman, so I can't struggle here. Why if we put out guidance and we make guidance or we exceed guidance that somebody says, you failed in some area. I just like people to reflect that we run the business. We understand the business explicitly. And what we put out, we believe is what we can do. We put a range in to say it could be, as you can see EBITA of $520 million to $530 million. The reason we put a range is there may be some things that could come in that are not solidified at the moment that may impact. If we say underlying NPAT is going to be between $240 million and $250 million and diluted EPS in that's going to be between 11% and 16% and underlying NPATA between $290 million and $300 million, if we didn't reach those figures, we would consider that we had failed. If we reach those figures, we would consider that we fully informed the market and achieve what we said and that people have been able to rely on what we are. So that's our guidance that goes forward. Just some people are going to ask about Sure, they're going to ask about ISU, probably 4% uplift in our '25 results from -- acquisitions we expect to do for the year. So that's what we baked into next year. So I mean, we're trying to be as clear and unequivocal thing now about what we're doing and where we're going. So that's what we're going to do the run rate. We're coming almost since over the last quarter. The first quarter is showing stability and it looks good from our point of view to lead up to see for June. So thank you for your time and your effort. I'll hand back and we'll get some questions, if you're in the move.

[Operator Instructions] Your first question today comes from Julian Braganza at Goldman Sachs.

Julian, if you can hear us, we can't hear you.

My apologies. Sorry, the first question actually is from Andrew Buncombe from Macquarie.

Just 2 from me, please. The first one is just on the US, at the AGM, you mentioned you're going to hold a number of Town Halls across the country to hear what the network wanted. Can you just give us an update on how far through the Town Halls you are? And what's the initial feedback on what you can help them with?

Yes. Look, I think that's a good question. How are you, Andrew. The -- it's a different -- I don't choose a different way of doing business the way we do in Australia. So the reality is as a master agency network about it is we need to be acutely aware of what the insurers under the expected their master raises. And then, we have to translate that into what we're doing for the agents that will operate under the issuer manner at the moment and what they're missing and what we could do to help them now. And we have expectation to do that, and we've got the team to do it. So when we did the first Town Halls, it was really interesting to see that, firstly, they were not suspicious offers. And secondly, they like exactly what we've done. So what the team has done quite efficiently is to interact with all the queries that they made from the last down all we did and to work on them from that point of view. And then what's happening in the middle of March is that the Sam Hollman and myself and their main executive that works with the carriers, we've got carrier meetings. So actually, they all understand what we've done in Australia to look at what our sales are through that conduct that insurer. And what our sales are in general and to pick up where we can add value to them and add value for the agents contained underneath it. Now we are working on that greatly. And what we then want to take after this meeting in March is to the conference that with the conference plan in the mainly in Colorado Springs, and they get a huge turnout at that conference. They actually come -- and we would probably want to at that side, Sam will probably pitch to them. This is what we discovered. This is what we found. This is how we can enhance it right away. Our mantra in Australia was none of us is as good as all of this. We feel that we now have to -- have a lot of you globally and what you're doing within the state. And if we do this and that, then we're going to get some value for the insurers and that will reflect the revenue uplift for you.

Yes, that makes sense. Maybe just as a follow-up on that topic. You didn't once mention the M&A or M&A pipeline in the US, if you needed to put a time frame on it, when do you think you'll start closing deals in the US network.

Sam, I mean you've got Nick working on a couple of things.

Yes, absolutely. We've actually already had interest from brokers from ISU network who have spoken to us. And we are working with them currently at the moment to have a look at a couple of those things. We haven't officially launched the concept. These were people that are already receiving terms from other people. We are, however, investigating -- we're doing member visits. We've started our first lot in a certain region of the US to educate them a little bit more and get some information back from them on what they might like out of the products and services we have. And of course, Trapped Capital then becomes an initial discussion with them that we'll be going into greater detail at the conference in 3 weeks.

And then just a final question from me, please. Can you give us an update on the CHU renegotiations?

So that's -- we've been learning a lot on that, Nigel. You've been working closely with them.

Yes. In 2025, I think in one of your earlier correspondences he was referenced is 2024. So we're well ahead of the renewal date in more than 12 months ahead, but we have engaged. Well with QBE, the interest and goodwill on both sides is paramount to move forward. These are very longstanding QBE businesses well over 40 years in partnership. And the partnership is going extremely well from both parties perspective at the moment. We hope to have more news on that in the coming quarters.

We're really aiming -- thanks, Nigel. We're really aiming to probably have this now by 31 March, Andrew, from that point of view. And just reiterating Nigel's position. It's been done in very good spirit, huge spirit. I mean I guess I use to make a comment, we probably wouldn't want to get rid of QBE, although we've got pretty lining up saying, if it doesn't work, talk to us and conversely, we put a big hole in the GWP. So we're a little joined at the hip here, and I think we're going to get a -- I mean, at the moment, we would say it's going to be a pretty good renewal and we should be very happy and I should be very happy. It is insurance Andrew, as you know, and a month can be a long time.

Your next question comes from Julian Braganza at Goldman Sachs.

Just a couple of questions from me. Firstly, just following on some initial discussion on the US market, can you maybe talk to just the acquisition multiples that you're seeing there in your view, just where they sit relative to Australia?

Just I think buying up a bit of a...

The question is acquisition multiple in US versus what we pay here.

What we pay here. Yes, that's what it is. Julian is it the same or similar acquisition multiples over there? Is that the question?

That's correct, Rob. That's it.

Yes. I mean we paid 11 times for ISU. And the couple that has been looking at, they're really around that figure at the moment. I can't speak with the parity on that because we haven't gotten any final negotiations. And I think it's probably really looking at -- they'll probably up around that at around 12 times, okay? It's marked for 15 and 16 and 18 times that the biggest stuff goes for. Remember, this is people that have only had an alternative to sell to private equity where it had to sell 100%. We present a different proposition to say, look, if you want to work in your businesses, we're happy to take a 50% and work with you along that line. So that's a paradigm that has never been offered to them in the past. I mean, when we offer that it's in pretty conducive on them to say, well, what can you pay on that percentage ownership. So we're not really -- we don't have a deal on the table. As Sam said, we're really investigating from that point of view. So I think what would you say, Sam, settle around 12 or not?

Yes. It's about 12 times for that at the moment for independent agents.

That's what we're getting interest at right at the moment, Julian.

Okay. Great. That's clear. And then secondly, just a more broader question in terms of the outlook. Can you just maybe talk to just lever within your business that can help support organic EBITDA growth, particularly in an environment where you're perhaps starting to see premium rate increases moderate -- trying to moderate and also maybe interest rate benefit you've had over the last 12 months, perhaps starting to come off. So just what levers do you have in your business to manage some of those net pressure?

I think that's something that Nigel's team working on quite clearly over his period of time. So I mean you might explain how we're just going about implementing a -- I guess, implementing is a bit strong. But we view there will be a tapo. I don't know when that will be. It might be 18 months away, 2 years away. But when that pass out hit, Joe, are you?

Yes. No, this is something that we work on almost as a BAU continually looking at how we can improve our organic growth. Obviously, we're a very entrepreneurial organization and inorganic growth is a huge part of our recognized D&A but we've been working consistently on looking at our existing businesses and our existing assets and how we mature those to reaching their full potential. So we're actively working with all of our businesses around organic customer and client growth and using that as a key indicator to our strategic direction and go-forward measures. And then we're also looking at all of our assets that we have such as SCTP, such as the risk group, such as Insight. And we still have a lot of available runway in all of those areas to improve our strategic penetration. So I think you could picture us as duly focused on both continuing to be good at disciplined inorganic growth and heavily focused on how we grow organically with our existing businesses and assets.

Yes. I mean, we know a lot about these businesses. And we know through our benchmarking, Julian, where there are gaps and where people need to consider their expense ratios. And we really have I guess the support and Nigel been working on this for a while, of them, the network brokers that we are to face they've had a pretty good run with the increased turnover that they've been able to do. They all recognize that that will come not to slamming into a brick wall, but that will start to lead and they're all keen to make sure that they're lean and that they are organic. I mean the number one thing we talk about with all our equity focus or our equity underwriting agencies is organic, okay? That's the whole number of what we do, whether we can get the -- maintain the same expense ratio and increased volume or indeed whether the current expense ratio is suitable for a different environment. And Nigel truly over that with his team from that point of view. So, we've got quite a few figures that we can pull. And then we've been working on them for some time.

Okay, great. And last final question for me, just on commission rates more broadly. Are you seeing any signs of pressure elsewhere beyond on household?

Well, I don't see -- no, to answer that question unfortunately no, no. But the householders is really been more by the reality that the consumer is paying a hell of a lot more for their house and their car. And we have to recognize that there's a need for the consumer to get advice in those areas. But those products are maybe a little simpler than what a complicated ISR is or a projected business interruption and analysis over products that are sold overseas, are manufactured or distribution. So, in terms of the amount of work that required on the commercial account, there may not be as much pressure on commission there because the market adjust its premium, the suit and the commercial business is absorbed by the consumer of commercial insurance. It's a different paradigm for the eye with the house -- I was going to say [indiscernible] other in Sydney. I think as I've got to go a little wider than Sydney. But it's struggling to pay a $1,200 or $1,500 or $800 or $900 premium and we have a -- as a successful company and a successful group, have been the -- we have a responsibility to say, are we making too much money out of this transaction, right? And if we are, we will carve a little bit on our commission structure in order to abate the price increases. Well, I think at the moment, we can answer that very, very correctly that there is no pressure on us in the foreseeable future or under discussion about reducing the REM structure for commercial insurance in Australia and New Zealand.

Your next question comes from Andrei Stadnik from Morgan Stanley.

Can I ask a couple of questions, please? Can I just firstly ask around SCTP, like what further enhancements or growth or ideas are you looking at with your platform there?

Look it's pretty simple to answer. There is one thing this hold act other business on the client trading platform is the inability for the insurers to take an auto banking system into their system to back-office system. Without boring you, the complications are quite strong. They are now, however, all starting to realize something we realized 15 years ago, but it's okay. The cost of having people doing things is becoming very difficult. And you have to look at their ways rather defining. So what we have to do is to continue to bought product line on that it's got an auto rate or attached to it, and I don't mean an auto radar that looks good, and one that actually fulfills direct access into their back office systems. So that's what we're working on. And what over the maturation of the client trading platform and indeed some -- there are some systems out there now that insurers can go through to facilitate their transaction if they want to. Now, however, that's not an easy thing to do because they all have massive IT divisions who are all -- how can I say it's protecting their own patch and are not keen to have somebody come in. So the reality is the product range -- about 80% of the products we sell could be on an auto radar going out to insurers, getting efficiency delivered, the client product trading platform is first to depth, everything, clients -- cancel, amend in a new certificate of the country, issue the policy document and save offline. That's an incredible amount of efficiency in the buying and placing of insurance. So it all revolves around auto rating and the ability to provide it. I mean, the client trading platform can deliver into an ISR underwriter, an ISR slip on an ordinary basis. But being practical that's got to be manually done. And it's just another power of digital data that's got to be worked on manually. We have solved that problem for a lot of the product lines we bought, and we believe the future is to solve that problem. The insurance has somewhat being slowed down on that. But now the emphasis is coming very strongly and we're getting great support on it. That's why you're seeing the client paying platform running towards the $1.4 billion following 12 as of 30th June this year.

My second question, can I ask around some of the costs and wage changes in your business. Are you seeing cost and wage pressure starts to slow down a bit?

Stephen. We've got Stephen.

Yes, that's exactly what I was alluding to in my comments there that I think the trajectory on that has definitely peaked probably 6 months ago, and I think it's starting to come back to what I might call more sustainable levels.

I mean, you've got to realize that payment, 2 years ago, started building quite substantial price increases into our wages, okay? And we put through 8% at one stage, didn't we? That's a big increase in use and we absorb that, and we've met our criteria, net of guidance. So we've been biting the bullet. We haven't been holding back on doing this. So we're in a very good position, because of the work that Stephen's doing over the last couple of years to make sure our wages go up, but the people working for -- I'm getting paid well.

Your next question comes from Kieren Chidgey at Jarden.

A couple of questions. Maybe just starting on a similar vein around cost growth. I think particularly in agencies, high-teen organic cost growth this half, which has been sort of a similar run rate through 2023. Just wondering, aside from sort of wage in I think your commentary indicates you put additional staff on you built out systems there. So just wondering how progressed you are in that journey? And should we expect sort of a significant step-down in cost growth into the second half 2024 and 2025.

I'd be saying we've been looking for that in 2025, there will be some continuation. It's still start to rise off a little bit this half, but it's more of a 2025 story. As I said, we have consciously invested into those areas. And yes, that rebasing, if you like, that we've been talking about is really a 2024 story.

And I mean part of the costs that we've put into C2 and they're still produced by organic price and profit for us is it's probably a little market sensitive, the ability for us to be able to digitally evaluate the size of the bill -- billing, okay? And then to take that digital, I guess, hologram of that building pack in and put it through a system that says that building should be ensured direct not wide. We've developed that, and we've built it, and that cost has gone [indiscernible] hasn't been capitalized on the balance sheet. What we're doing is -- it's a great business as a standalone insurer be one of the top in Australia. We think that we've invested in client systems, which are more efficient. We put people in to allow us the, I guess, the safety of when you get a huge amount of clients to run through that we're protected there. So if you've got a very successful business, you can't look at us from the point of view of how much can we at out of this business and make more profit. We look at how long can we sustain this business and what are we -- within that business to keep that profit margin going and the sales going. And so that's why we invest in them.

Okay. And just a second question following up on some of the earlier discussion around the organic growth outlook. Rob, take your point, sort of commercial rates aren't going to rate increases, I should say, I'm going to go to zero anytime soon with inflation. But just wondering, sorry if you can give us your current sort of broader outlook, maybe heading into 2025 just given all the different factors you've cited?

Look, I think if you want to look at the calendar year 2025, I wouldn't be surprised because if we get 7.5% base growth across the GWP. Okay. I think we can look at 2025 look at it by at the moment. Hard thing, of course, is if the attritional claims start to wane and they start to make more money -- that at the moment, I don't think -- I think we're going to never go below about 3% or 4% each year. And it's now decided that they need to keep inflation under control in terms of, and your point before is, you still haven't bought the correct sum insured on the assets and the buildings that are insured. So that's the next iteration of GWP growth. You may have a stable rating growth -- ratings may go up 2% or 3%. But in reality, that property, that $ 100 that you've got insured, you might have a 2% or 3% rate increase, but you may actually have a 20% or 25% increase in some insured. If you consider that most fire policies are first loss policies that you insure for full value then they will get a big uplift as the buildings and the assets get to be insured for the correct full value. So I think at best I can explain it.

Okay. Just a final question sort of related to that. Just wondering if you can sort of unpack some of the organic growth differentials you saw this period between broking sort of running at 10 and agency running at 6. I know you called our volume growth in broking around 3. Is it just that or sort of, you know, there are other factors in agency that have been, aside from class of business, mixed differences?

I think it's pretty simple. The majority of that easing back comes out of CHU. Okay? And it came back from the fact that as market leaders, we have to make a decision about our portfolio that we have to implement. And this sounds arrogant. I think our guys and our actuaries are pretty clever about pricing what the price should be. So we move in substantial price increases and we move excess increases up. So our renewal persistency probably fell 7% or 8%, okay, and our new business spike rate probably fell 6%, 7%. So to do the numbers we've done and get the organic growth we've done is contrary to what you would expect when you are a market leader and start to drive increased premiums down. Now, partly, the rest of the market probably follows our lead. I mean, we have no idea why, but if we need to put the price up and we're experts in that part of the world, then everybody should be putting the bloody price up because we're not writing any risks different to the rest of the market. I think that's why the organic growth seems to not be as good on -- well, 2-fold. For the extra money, we spent on it, I guess, as we've just articulated. And secondly, the fact that we put a couple of lines in the sand on pricing and excess, which meant that our competitors mocked off some of our business. By the way, it was deliberate. I mean, we were on track to do a big and bolder GWP through CHU. I mean, that was just insane. So we needed to get a billion dollars' worth of premium, but not on the same amount of risks that we were doing. So that's about it.

Your next question comes from Olivier Coulon from E&P Financial.

Can you hear me?

Yes.

Perfect. First one, just on Sure insurance. I mean, is it too early to get a good sense as to what the 2 cyclones might mean for out of year earnings, especially on the profit commission. And I guess if you can...

Just on the profit commission, what's baked into our income at the moment is part of the commissions that we've earned that are going to fall into pipe. So I won't be impacted by the cyclone. What the 2 cyclones could impact is the next payment we make for sure. That's why we put that projection in from that point of view. And really, we're not sure and ourselves recognize, but the trajectory could be impacted by weather events, okay. So if weather events didn't come, then we would pay it out. But at the moment, to be fair, the impact of the amount of money that came back from the tool, the impact of where we're at, that hasn't reached a maturation date at the moment. It will grow over the next months or 2.

Yes. No, that's perfect. And just on IFU network broker numbers, I mean, was there any material change versus the acquisition case and how you're feeling about, I guess, it sounds like you're going to be working quite constructively with the carriers and the brokers to optimize the work that they're doing. So everybody gets paid a bit more in the chain. But how are you feeling about raw numbers and I guess, stemming any attrition from PE activity.

So it's Sam here. I can answer that question. In the last year, we think we've had the acquisition, there's been 4 members that have left IFU all through acquisition. And we've replaced those 4 members with other members. So the numbers have stayed consistently the same.

Okay. No, that's terrific. And just on the Australian network. I mean, the numbers look still pretty good, but there was a bit of an uptick in levers this period. Is that just sheer luck? Or is that partly to do with your compliance kind of track down?

Sales, I think. There's a couple of slides that we in turn anticipating -- we didn't participate in the sale process. Okay. Yes. No, it's -- and there were some sales internally, the mergers internally as well okay? So the numbers -- if we merge a couple of businesses, then you drop off from that point of view. But yes, I mean we're anxious to look at any markers that want to sell in the network. But on time with banks to be successful in those acquisitions, we'll let others take some of those -- some of our print. So we'll let others take some of that part.

So I might have misheard, was the prognostication of weighted average GWP rate growth in '25 -- was that calendar year? Or was that fiscal year?

Sorry, I missed that question. Can you say that again?

So Rob had a stab at thinking as to what FY '25 would look like, but was that calendar year '25 or fiscal year '25?

Calendar year.

Yes. Sorry and it continue to FY 2026?

Yes. But I'd say calendar year is that most insurers run their financial years are calendar years. So there at the event we got really probably IAG and Suncorp that runs June to June. Yes, the international is all run January to December.

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

I just had a couple of questions. Firstly, Rob, did you say that your agency GWP is expected to be $2.75 billion by the end of this financial year?

Yes. It's on track to do that. Yes.

So that's 30% growth did issue?

Well, it doesn't issue. It issue, but the reality is a $1.1 billion for the first half and you can say that the second half is stronger.

Got it.

Versus the first half.

Sure.

We've only got one month offshore in that first half.

If you can annualize offshore and all that type of thing that we...

That's when you start to get the compound. But what I also said is that it's depending on the way the market moves, okay? It could be higher than that. But definitely, got 1.1 and you could say, well, it's going to be 2.2%, but that's not the way. It's higher towards the second half. So, the first half that $1.1 billion doesn't have the June period in it from last year and June is a big period so just a matter of 1.1 or 1.2.

Yes. And then just in relation to the agency, it seems to be a little bit of disconnect between your sort of organic revenue growth at 14% versus your organic GWP growth at close to 6%. Can I just understand what's driving it?

What you've got here on the 14% revenue growth is the net revenue. So it's net pull-through revenue that the agency actually achieves. So for instance, Rob mentioned and I mentions, they might forget their total gross commission on their absolute sales, but they had or the less pay away on the broking side coming through. So it's the net revenue that they've got that we report on that side, yes.

I am sorry. I'm not quite sure how does that the revenue growth is not purely linked to the GWP growth.

It is in sense that the $100 of GWP like up to 105. But if the agency is collecting 30 and paying out 20 and you're reporting 10, but all of a sudden, they pay out only 19 of the brokers that might have 11 percentage points other than the 10 percentage points net. So it's a combination of the whole lot that comes through in terms of those numbers.

Okay. And then lastly, I guess you're expecting to see some operational leverage in FY 2025 on the back of those cost investments through 2024 in the agencies business?

Yes. That's right. And I think we'll learn some lessons from how we've invested into some of those larger agencies and how we think through for the smaller portfolio that we've got and how we wisely work that through.

Okay. Sorry, just one more. In terms of the, I guess, approach to fees over the past sort of periods given the relatively strong rate increases have the brokers been sort of taking a lower share of fees to...

That hasn't happened. You've been in South Africa lately, I've visit Paul just a minute ago. I'm just wondering.

Hard to shake it, Rob, hard to shake it.

Okay. The -- no, no, that's a value of statement that we made a couple of years ago. We said probably -- I'll have to cut this 3 segment, but in reality, the fees went up. But people are getting used to paying fees for advance. I think they're not dropping off the enrollment.

Your next question comes from Siddharth Parameswaran from JPMorgan.

A couple of questions, if I can, please. The first one is just -- maybe one for Steven. Steven, your guidance on EBITDA growth for the second half. I think the midpoint implies about 22% growth on the PCP. I was just hoping you could break that out between the acquisition side and what you're expecting as organic growth?

Yes. The second half will definitely be a much more acquisition-heavy growth. So, you'll have probably even towards 12%, 13% sort of rate of growth that we're expecting to see coming through. Now, on the EBITDA side, can I just make this one point that the difficulty on trying to project the EBITDA number is when you buy a stake in a broker, you might be buying a 20% stake or a 60% stake, and depending on what you buy, you might be getting a share of the profit. Bottom-line, you might be showing the full gross EBITDA and then dialing it back in the non-controlling interest. Or indeed, you might go from 70% and step up to 80% and all you're doing is taking out the non-controlling interest because you've already got the EBITDA there. So, the way we tend to think of it is, even though we do try to give you a feel for the EBITDA, it's probably that bottom-line growth, that NPAT growth that we really do constrained on is because that's where you see the full economic impact coming through regardless of the accounting process that you've got. But it's fair to say, in general, that the acquisition growth is very much a catalyst for the growth in the second half. And at the moment, we've retained our original organic growth assumptions, which has a little bit less organic growth in the second half than we had in the first half because the momentum that we got from the interest rate increases start to increase, but less so in second half than it was in the first half. I bet gives enough color from what I'm trying to say there.

Yes. No, that's actually very helpful. Maybe just a follow-up question on some of the comments on the -- that you made, Robert, on the rate cycle. I think from memory, you had -- I think 6 months ago, you had said, I think you're seeing -- or you're assuming rate increases of around 8%. And I think when you upgraded in November, I think you said you're seeing more than that. We didn't see any comments on what you're actually getting now. So, just -- so my question is just what are you -- what have you actually seen since you made that update? And the 7.5% guidance that you're giving us to what you expect in calendar year 2025. Is that rate? Or is that GWP? Is that commission per policy? I just want you to clarify what that is?

That's right. That's 2025. I don't think it's -- I think that it's going to be made up of 2 factors: the attritional client and the impact of reinsurance will settle, but I think still be also be pushing reinsurance up marginally this year. And then on top of that, the biggest effect will be inflationary effect as well. I guess inflation show GWP growth and the uninsured will go up and you'll get that extra GWP that way. But in reality, the core business, I think that probably it will be 3% or 4% and then they'll have to maintain status quo and then they'll be looking for another 3% or 4%. So I think at the moment, if you had to throw a figure, 7.5% GWP growth rate will probably be -- probably achievable to FY -- to calendar year 2025.

Okay. So just to clarify, so 7.5% rate plus whatever we might think you get in terms of policy growth, that's...

I think -- yes.

In rate, what you had in the last few months on rate increases?

I think we had between 8% and 9%. The rate increases haven't abated at all. They haven't abated a bit. In fact, companies like QBE is trying to drive 5%, 10% still at the moment.

Okay. Okay. Just one more question just on when the cycle eventually turns. We've seen quite a bit of expense growth in the last couple of years. I mean you made the comment on having to reinvest in some of your businesses. But when the cycle turns, can we expect margins to stay flat in broking and in the Agency business, can we expect them to rise because you can -- there'll be efficiencies you can gain? How should we think about what you think you can do? Do you have targets maybe it's a question for Nigel because he seems to been working on this. It seems like most of your comments, I think, in response to Julian's questions around revenues, but maybe I'm particularly interested in costs and what you can do there?

Nigel here. As I mentioned, we've been looking at this consistently and constantly along the way. We have a number of levers. Stephen mentioned discretionary spending, so we can take a look at all of our discretionary spending. And we've got good runway there in terms of areas of improvement, whether that be out of efficiency or effectiveness. And in the broking businesses, specifically, we've got underutilized or available penetration through the utilization of the tools we've been building around SCTP and the Risk Group, which gives us the ability to look at the revenue level without increasing costs. Then we've also got all of the efficiencies we're looking at in terms of technology improvements around how we administer the business and how we run the business. So good available maturing strategies in the broker business to maintain margins. And then on the underwriting side, not dissimilar. We're looking at our operating model how we move forward from a tech and operational point of view on the expense line and then also on the growth line, we believe we've got further available penetration in front of us as we continue to push forward with our 30 brands.

I don't think better, but I think it's going to be a waterfall.

No, I don't think -- I think the increased regulation in the insurance industry from the carrier side, nominees to get to data, understand their portfolio performance, stay abreast of external factors like inflation, whether that be real inflation or social inflation, things like reinsurance costs. Robert and I both believe we're in a far more disciplined environment when working with our insurer carriers. So we'll see at times, ebb and flows in various pockets of the market as they go through competitive pressures. But overall, we see a pretty disciplined market moving forward with frequency of natural catastrophes only increasing. I mean, we have early advice waiting back into a wet season at the end of this calendar year. I think we're all growing that given it would be our fourth out of 5 years. But there's many factors still at play here that the insurers will adjust and adjust quickly for. So we're supporting their increased discipline moving forward.

I think we're fortunate that we understand the intricate way that the insurers got a report and how they've got account for themselves, because of our MGAs and because of APRA's footprint over the insurers to say, make sure your MGAs are in line with exactly what your risk is and what your risk appetite and your compliance is, and we're seeing how much pressure is on them, and we're seeing the pressure that's coming from consumers on them. But they've got to -- I think, I understand also, I guess the man in the street brokers hasn't got any appreciation for what's going on at the insurers, whereas,. I think we've got basically through Nigel's experience and my experience in this market, we're seeing a much more tighter insurance industry from the point of view of -- there is no let's stay fare underwriting coming like there used to be in the past. It's now discipline -- authorities are now extremely maintained. People are getting picked, if they've breached those authorities now, it's not a matter of a slap over, I think it's a very strong industry to be in the foreseeable future.

Sorry. So just to encapsulate that. In terms of margin outlook, and I do take that the margins will hold. I mean, I'm just asking the question because we've seen some peers see large uplift in margins in the strong cycle. We haven't really seen that at Steadfast. I'm just keen to understand if there is any buffers in there, which we might see some of that released or if it is actually just a go-forward position?

The comment I'd say is the agency margins have been the eye-watering gold price, I think we also is trying to achieve. So for us, it's how do you maintain that and you continue to invest into the proposition there. On the broking side, sometimes you just got to also analyze what's behind our broking numbers. We actually have quite a couple of large AR businesses that operate on a completely different margin basis to a standard brokerage. So to actually analyze what we truly have in our businesses, unfortunately, it links a little bit more intersection than what you see on the headline.

I think the point on what you're saying there, if you -- we have 2 businesses. We've probably got 4 businesses, but out of those 4 businesses, we've probably got $ 1.7 billion worth of sales. We only make the margin at the AR network charges, and the broker makes the other margins. I think that's the point you're making, isn't it?

Without trying to justify, I can tell you it is our complete focus to make sure that the margins we've got continue to improve on the go forward. We try to repeat several times on this call, be it on the revenue levers, the cost levers, efficiency drivers, we are all over making sure that the margins continue to improve on the go forward. But we have -- as we said, for 2024 and 2023, and now 2024, specifically invested in a couple of key areas that we thought it was appropriate to be able to maintain long-term sustainability, and that competitive advantage, but we are very focused on making sure that the costs are managed well for going forward.

We are showing no further questions, so I'd like to hand back to Robert Kelly for closing remarks.

Okay. Thanks very much. Thanks for all your attention and your interest. We'll just continue to be as transparent as we can with you on what we're doing, and if it continues the way it is, then I think it's going to be a strong year. We're very confident in the market right at the moment, so thanks for your time. We'll let you all get back to making money. Thank you.

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