United Utilities Group PLC (UU) Earnings Call Transcript & Summary

Okay. Good morning, everyone. My name is Chris Laybutt, Investor Relations and Clean Energy Strategy Director here at United Utilities. And I'd like to welcome you all to our capital markets event today. As always, please note the cautionary statement at the start of the presentation on your screens now. And to get us started, I think as you all know, we've published our PR24 business plan this morning, which you can find on our website, alongside an RNS and a neat summary of the documents in terms of a summary document. The format of today's event will be a brief presentation by our CEO, Lou Beardmore; and CFO, Phil Aspin. And then we'll follow that with some Q&A at the end of the session. So about 20 minutes for a presentation followed by Q&A. The Q&A will be conducted live. So if you'd like to ask question, please use the Raise Hand function and turn your camera on so we can see you as well. Okay. Terrific. With that, I'll hand over to Lou and Phil.

Thanks, Chris, and good morning, everybody. And thank for joining us today to disclose our PR24 business submission that, as Chris said, we submitted for this morning. It's a really exciting plan. It's the biggest investment in our region's water and wastewater infrastructure in over 100 years. And we're delivering what matters for customers, for communities and for the environment. We're safeguarding supplies and protecting and enhancing our rivers, improving drinking water quality and reducing flooding. We've got really strong customer support and advocacy for the plan that will transform services for customers and provide significant growth opportunities, too. There's a long way to go before the final determination, but we've got the flexibility with the financial strength in our balance sheet to enable the growth that we're setting out today. And what's more, we're not waiting. We've already started with delivery, giving us the confidence that we can deliver on the ambitions that we're setting out. And we're backing ourselves to deliver the outperformance that everybody and we want to see. I spoke to you our results presentation back in May, and I set out how we were approaching and progressing our plans for PR24. We've been out and we've been listening to customers and communities right across our region. We've got 5 fantastic and very diverse counties in North West, and what is clear is that they all have very different challenges and needs. By taking this approach to our engagement, we've been able to build and adapt our plans to deliver targeted county-based plans that deliver what matters most to them. And this 5 counties engagement model has not just actively informed the development, engagement and support for our plan, it's also at the heart of how we intend to deliver the step change that we all want to see. We need to improve services for customers and the environment. And that's why we're proposing a hugely ambitious plan, GBP 13.7 billion worth of investment. And the plan is going to see us deliver the largest level of infrastructure investment into water services here in the North West for over 100 years and an environmental plan that is 7x greater than our AMP7 plan today. Our engagement has been really, really robust. We've spoken with 95,000 customers, and not just today's customers but future bill payers too, securing really strong advocacy with 74% of support for the plan. We've also conducted 79 research projects driving innovation and opportunity. And as well as delivering improved services, we're able to deliver real growth opportunities for the North West too, a chance to drive inward investment and ignite a regional economy as our plan will support 30,000 jobs with 7,000 of them being new ones. Now before we delve further into detail of our plan, I wanted to highlight how we're currently performing. We've got a really strong track record in delivering on our promises, which gives us real confidence that we can deliver what we've set out in our business plan. We believe in doing business the right way, behaving responsibly and focusing on the things that matter. Our fully funded pension scheme, low level of gearing and coupled with sector-leading credit ratings demonstrate our long-term thinking and our focus on financial resilience. We lead the way on affordability schemes for customers, and we always have done, ensuring a wide range of scheme and support for many customers right across the North West. We've got a strong track record of delivering service, performance commitments and ESG practices. And we've consistently achieved around 80% of our ODI so far during AMP7, with the last year being our best-ever performance delivering 83% of our performance commitments, the highest in the sector. And from an environmental perspective, we've got a strong track record, having been awarded the highest 4-star rating in EA's annual assessment in 5 of the last 8 years, and we continue to lead the sector on reducing pollution. But we're not waiting for AMP8 because we've already started. Our accelerated GBP 1.2 billion investment has allowed us to make an early start on tackling combined sewer overflows with the team at 500 strong by the end of the year, innovating and delivering already, enabling us to today propose the U.K.'s biggest CSO spill reduction program, reducing storm overflow activations by 60% by 2030 against the 2020, 2021 baseline. We've worked really hard to deliver all the elements that are needed to deliver an exceptional plan. We've worked closely with all our regulators to ensure we're delivering a comprehensive plan, a plan that delivers against all of our statutory obligations and, at the same time, a plan that delivers the things that customers want to see. So what are we proposing? Well, we'll be completing programs that will see us improve the quality of water that is provided to over 1.4 million homes and businesses here in the North West. We're going to be investing in our Victorian aqueducts to ensure we protect supplies in our key cities of Manchester and Liverpool, safeguarding supplies for 2 million homes and businesses all working here. And now more than ever, as we respond to the challenges of climate change and population growth, we need to focus on resilience, doubling our efforts on leakage. This plan sees us replace over 950 kilometers of water mains, install over 900,000 smart meters so that we can help domestic and business customers reduce consumption and drive lower bills. And at the same time, our combined programs on water supply and demand will see us halve the chances of future hosepipe bans. We are clear. We're clear that we need to respond quickly and effectively to reduce the level of storm overflow activations. And in the North West, we experienced greater levels of rain, coupled with one of the highest combined sewer infrastructure systems in the country, requiring us to go further and faster than most to make the step change that everyone, including us, will want to see. So that's why we're proposing the biggest CSO spill reduction program across the country and, at the same time, enhancing and protecting over 500 kilometers of rivers and bathing waters. We're also driving hard to reduce internal sewer flooding and our program is targeting a 32% reduction. And what's important is that we want to deliver our combined programs in a responsible and a sustainable way. Net zero remains a priority. We've produced an ambitious strategy striving for a science-based pathway to net zero in 2050. Our plan to manage and reduce greenhouse gases is our most advanced and comprehensive yet. We'll be working to reduce operational emissions by around 43% in AMP8, mitigating the growth pressure of an increased program. And we're committing to providing the best value for money for our customers, too. Our customers rightly want us to spend money wisely and efficiently so that we can make sure that we keep bills affordable. Bills are expected to increase by around GBP 22 on average every year of AMP8 before inflation. But we're also enhancing our affordability support, proposing a material increase during AMP8 with a support package totaling GBP 525 million as well as 30,000 jobs supported by the plan. Our GBP 13.7 billion proposed totex is expected to deliver more than GBP 35 billion worth of associated economic value for the North West, a huge and much-needed opportunity for this region. This is the largest plan that we will have ever delivered with the increase substantially all being on our environmental program driven by changes in legislation. And we're stretching ourselves to innovate and optimizing our plan, enabling 14% of efficiencies to be realized through the plan's delivery. And the step change in environmental investment means that we expect to see strong RCV growth, the strongest that United Utilities will have delivered with 52% nominal or 37% real across AMP8. I want to take a minute to unpack bills and the impact a little bit further. Bill affordability is a top priority for our customers and it's a priority for us, too. Our proposed business plan requires real-term bill increases, an increase of around GBP 22 real on average each year or 25% over the AMP. Our plan has not utilized any excess fast money to support financeability as this would add unnecessary cost pressure to customer bills at a time when they can least afford it. Now more than ever, it is critical that we're helping those that may be struggling, and we are determined that no one will be left behind. We will be doubling our affordability support with a comprehensive package worth GBP 525 million, and that is going to enable us to support 590,000 customers or more than 1 in 6, which, more importantly, we'll also see -- make sure that there is no increase in the levels of water poverty despite the increase in the water bill. We are clear that customers don't and won't pay twice. Investment is all linked to new statutory requirements and services. I'd like to hand you over to Phil so we can talk through some of the detail on totex, on growth and on financing of our plan.

Thanks, Lou, and good morning, everyone. First, let's start with totex. Back in May, we outlined a significant step change in the environmental enhancement in our WINEP submission, which has increased from around GBP 1 billion in each of AMP6 and AMP7 to around GBP 6 billion for AMP8. This slide shows how that combines other elements of the plan to build the overall totex picture. In addition to the WINEP expenditure, our totex plan of GBP 13.7 billion pulls together other enhancements in our base totex spend in the water, wastewater and retail operations. At the heart of our plan is ensuring statutory compliance with 93% of enhancement driven by statutory requirements. Our plan is both ambitious and stretching. In building our plan, we took a long-term adaptive planning approach, ensuring a low or no-regret solution pathway to requirements. And this was further supported by an independent scrutiny panel to challenge the need, scale and phasing. We've made use of innovation and optimized solutions such as value engineering, where we've challenged asset standards and driven lean designs to achieve targeted outcomes at an efficient cost. And we've robustly challenged internal costs and engaged with markets to drive further cost savings. All of this means our base totex proposals are within our assessment of efficient model costs, and the efficiency of our plan is supported by benchmarking analysis and third-party assurance. Submission of our plan today is an important milestone in the price review process. This will frame ongoing discussions as we continue to work with regulators and government on opportunities for long-term adaptive pathways to optimize and phase delivery. The aim here is to maximize environmental outcomes while minimizing abortive spend and community disruption. Now, as already mentioned, this is the largest plan we've ever submitted, driving a step change in environmental outcomes, which will see our RCV increase from GBP 14.8 billion at March '25 to GBP 22.4 billion at March '30 This results in record levels of growth with our PR24 submission seeing RCV growing at a rate of around 9% per annum and over 50% across the AMP. Turning next to investor returns. We know that Ofwat will be updating their WACC assumption for the draft determinations next summer. And given the potential for further changes in the market environment between now and then, we see little merit in taking an alternative approach to applying Ofwat's early view WACC in our base submission. However, to support Ofwat in their deliberations when updating the WACC, we have set out our view on why we think the early view WACC may not be high enough to attract the capital that is required for the industry in AMP8. You will also see from the table that we asked Frontier Economics to provide an independent assessment, which is available as part of our submission. In engaging with customers in relation to our plan, we achieved 74% acceptability. Recognizing with any increase in the WACC would lead to higher customer bills, we have also tested with customers the acceptability of a higher WACC based on the Frontier Economics' 3.9% set out above. This did not lower the level of support for the plan, which retains 74% customer acceptability. And importantly, we also retained further headroom in the level of customer affordability support that we can make available in a higher bill scenario. In addition to the WACC, there are incentives for high-quality and ambitious plans for quality and ambition assessment, with a standard plan benefiting from a 10 basis point uplift to the cost of equity while an outstanding plan is worth 30 basis points. Now Lou and I are really clear. Our plan is both high quality and ambitious and we believe is an outstanding plan. We also set out on this slide our P10 and P90 AMP8 RoRE range. As you can see, we're proposing incentives broadly in line with the Ofwat proposed range with notable differences being totex and financing. Totex reflects a negative skew due to the ambitious and stretching totex plan that we've submitted, while financing has a negative skew due to a combination of factors being the significant need for capital, the mismatch of new and embedded debt in the WACC and the potential recessionary outlook. Now having talked with the assumptions underpinning plan submission, we thought it would be helpful to walk the gearing bridge. We approach the plan from a robust position with one of the lowest gearing levels in the sector at just 58% today. This uniquely positions us to tackle the challenge of delivering and funding our investment program in AMP8 and beyond. And what is clear is that we have options and flexibility around funding this capital requirement. In order to align with the Ofwat methodology, our PR24 submission assumes that we -- the program is funded with equity and debt with equity sized so that we maintain our current A3/A- credit ratings. Recognizing that Ofwat will be updating our WACC assumption for the draft determinations next summer, we have adopted Ofwat's early view cost of capital in the business plan submission. On this regulatory basis, our PR24 submission assumes notional equity of GBP 1.35 billion out of a total capital requirement of around GBP 5.2 billion. This gives rise to an average gearing across the AMP of 63%. So now to build on that last slide, we thought it would be helpful to provide an alternative lens from which to view our business plan submission resulting in an alternative gearing bridge. If the investment program is funded entirely with cash and senior debt, we would expect gearing to average around 65% across the AMP. This is based on our full GBP 13.7 billion totex plan, coupled with Ofwat's early view of WACC. This also assumes a continuation of our current dividend policy and no outperformance or rewards. By way of illustration, if a WACC was circa 60 basis points higher, in line with the Frontier Economics' 3.9% WACC, we will see gearing levels average around 1.5% lower. If adaptive planning decisions led to GBP 1 billion deferral of totex into AMP9, then that would result in a further 1% reduction on average. The combination of both would see group gearing averaging 63% over the AMP and remaining within our target range of 55% to 65%. So to wrap up, I think it's really important to recognize that we're still at an early stage of what is a relatively long process. In what I've just shown you, what is clear is that we have options and flexibility around funding the capital requirement. So thank you, and I'll now pass back to Lou.

Thanks, Phil. Turning now to customer ODIs. We've got a strong track record of delivering on common ODIs and we're proposing to continue to push the frontier on key metrics such as pollution. And we have ambitious plans to drive improved services and, as I've already said, we're backing ourselves to deliver. There have been some changes to the ODI framework for PR24, the most notable shift being the move from common AMP to -- and bespoke ODIs. And you can see from in this slide that the waiting has very much shifted towards common ODIs for AMP8, and we're positioned really well. Last year, we delivered the highest percentage of ODI outcomes in the sector at 83%. We have active plans for all ODI measures with each measure being owned and driven by a member of the executive team, and we've been shadow reporting and optimizing our delivery for the last 12 months. We want to hit the ground running and feel that we're really well placed against the new common ODI framework. We're submitting a plan that is financeable, affordable and, most importantly, it's deliverable, 3 key lenses of which of what we use to assess our plan. As Phil has said, we've got a strong balance sheet today with 58% gearing and a credit rating of A3/A-, and looking forward, we have flexibility in financing with a 65% average gearing over the AMP based on Ofwat's early view WACC and the current scope without any recourse to equity. The plan is also affordable. We're maintaining our industry-leading approach to affordability with GBP 525 million worth of funding, allowing us to help 1 in 6 customers in the region to be supported. And based on the plan's initiatives and support, this would mean there is no increase to water poverty over the AMP. The affordability support is provided by a team who have just been rated as #1 WASC for customer service in the latest and independent Institute of Customer Service survey that assesses all brands across the U.K. Most importantly, this is a plan that's deliverable, and we've already started delivering. The GBP 1.2 billion worth of early investment has enabled us to start delivery against our storm overflow reduction program already. We've invested in and are up and running with that in-house CSO rainwater management and modeling team, and we've increased our delivery partners from 5 to over 50 to underpin our delivery as we move into AMP8. And hopefully, it's been useful to understand the key elements of the plan and the impact on financials. But I thought it would also be helpful to summarize the next steps in the process. This is obviously a submission as opposed to determination. And as in previous AMPs, there will be a continued discussion and dialogue with all regulators and stakeholders in the weeks and months ahead as plans are digested and evaluated ahead of the final determination being announced. We understand the importance of the dividend for investors. We know you value our progressive inflation-linked dividend, and we will announce our policy after the final determination in 2025. Recognizing there's a huge amount to absorb and a lot of detail that we've shared this morning, we've pulled together some of the key facts and the things that we think will be most relevant in your reassessment of the plan that we've put forward. We're also going to be adding an investor summary on to our website this afternoon and, hopefully, that will also help you to evaluate the plan that we've put forward. Before we move to questions, I want to take a minute to summarize why I believe that this is an outstanding plan. I'm not going to read everything off this slide, but the regional approach that we have taken to building our plan is unique. It delivers the services, customers and regulators want and, at the same time, brings real and tangible economic growth to jobs here in the North West. We've got strong customer support, real and significant solutions to help with affordability, and we've got the financing headroom that means that we have got options. This plan delivers strong year-on-year growth for investors in a way that AMP6 and AMP7 never, did with RCV growing at 52% nominal over AMP8 or an 8.7% CAGR. And at the same time as building the plan, I've been building capability. I have taken the best of the old team and recruited some fantastic new talent, building capability and capacity right through the business at all levels. And it doesn't stop there. We're organizing ourselves into our regional delivery squads so we're ready to deliver our county-based plans at pace and with purpose. What's important, and I've said it before, we've already started. We're not waiting until AMP8. The accelerated infrastructure delivery project we secured early in the year has enabled us to get to work on the U.K.'s biggest storm overflow reduction program, working at pace, innovating and driving to deliver the step change that we all want to see. And lastly and most importantly, we're committed. We're committed as a team to make a difference and we're backing ourselves to deliver this plan because it matters. It really matters to customers, to regulators, to shareholders. And it really matters to us and we're determined to deliver the step change that we all want to see. So thank you. Thank you for your time this morning, I know it's precious. But Phil and I would welcome your questions and the chance to discuss the elements of the plan that we've presented this morning. Thank you.

Terrific. Thank you very much, Lou. Thanks, Phil. So our first question comes from Martin Young at Investec. He's had his hand up for about an hour, so there's a lot of enthusiasm there. Over to you, Martin.

I guess we're going to be a little bit time limited so I will limit it to 2 questions. The first relates to equity. I appreciate what Phil was saying about it being somewhat sort of early in the process. But I did notice from one of the filings that you say that UUG is expected to be well placed to fulfill such equity calls from UUW and is likely to consider one or more of the following sources of capital: an injection of group cash, issuance of debt higher up the group capital structure or UUG equity issuance. And then it would be for the Board of the group company to determine the most appropriate way of making equity injections into the regulated business. Given that you've outlined those 3 potential routes, and you might tell me there are more. Can you throw us sort of a rank order of preference amongst those that we can have a think about at this stage? And then secondly on the WACC, you and at least the other business plans that I've seen have presented the plan on the basis of the early view of WACC from Ofwat. Severn Trent has done a mark-to-market, Pennon has done a mark-to-market albeit with a new view on the debt split in AMP8. You've presented a Frontier report. So different ways of looking at it, but everybody kind of suggesting that they should be perhaps a little bit more. How do you feel the industry comes together to present a common view here? And what, if any, new music have you picked up from Ofwat on the subject of WACC?

Okay. Martin, thank you for you questions. Phil, do you want to pick those?

Yes. Okay. Well, I guess, starting with your first question, Martin, on the equity. I think what you read out is pretty much a textbook answer as you might expect going into a business plan submission. I think what's important today is to recognize that it is a regulatory submission for water and not the overall group position, and what we've illustrated is the group position. And so it's very clear that there's no need to raise equity in terms of the group position. We've got a very, very robust balance sheet. We're 58% geared at the holdco level. And probably important to drive that our credit ratings are already one notch higher than many of our peer group companies. Within that position, we've retained outperformance at UUG from the sort of water business in the past. We have a cash buffer at that level of around GBP 600 million, so that's about 4% of RCV today. And we don't have any drag from holdco debt funding of other activities. And as you're all very aware, we also have a very, very robust pension scheme position. We're fully funded on that pension buyout basis. We've actually completed a sort of pension risk transfer with 2/3 of the pension risk fully insured now. So effectively, there's lots of sort of positives. It means there's no drag on the group position effectively. And as I illustrated in the 2 slides, I've given you the bookends of the scenarios from a group perspective with gearing. And you can see that we're looking at 63% on average across the AMP period. So that's the first question. I suppose the second question on WACC and the mark-to-market, we've included the Frontier WACC assessment. That was at a point in time in April. I think one of the clear dynamics at the moment is the market continues to evolve, and I think it's going to be another sort of 9 months or so before Ofwat is setting a WACC for the draft determination. And a lot can change in 9 months, as we've seen in the last year or so. So I think it's really important to see how that process plays through. Of course, what we have done is provide the Frontier Economics report, and we provided a lot of evidence to Ofwat and the sort of things we expect them to consider as part of that process.

Terrific. Thank you very much, Mr. Young. Over to Pavan Mahbubani at JPMorgan.

I'll stick to 2 as well, please. Can you provide some color around the adaptive planning scenario that you highlighted in your slides and some context around that? Are there some projects that you think Ofwat is going to remove from your plan or things that you don't see as necessarily being statutory obligations? I mean, just to get some color around what's in there and why you flagged it would be helpful, please. And my second question, around feedback from your customers and I guess, more widely, feedback in the North and North West. Have you spoken to any policymakers on your proposal ahead of publishing your plan? And can you share any feedback that they have on that as well, please?

Great. Pav, I'll pick up both of those questions. So in relation to scope deferral, the reason that we've highlighted that and perhaps just to give you some color as to some of the things that sit in there. So for example, there's GBP 200 million in the plan for HS2. None of us know as we sit here today, what's going to happen in relation to HS2. But it's a really great example of some of the things that we're including in the plan that actually, as a result of policy changes, more broadly may look slightly different. We've also got investment in there for neutrality, carbon and net zero ambitions. And there's also a really great case study on Davyhulme that I would really sort of encourage you to have a look at. Davyhulme is a real great example, if you like, of what we mean by adaptive planning. So essentially, we could do things in AMP8 and then move some of the scope to AMP9 when other environmental drivers come along. And the benefit of doing that, Pav, is twofold. One is it actually reduces any abortive spend that may be realized as a result of then having to do additional projects in AMP9, but it also limits customer disruption as well. So then we talk about adaptive planning, that's what we mean. We're trying to make sure that we invest once and we get the greatest level of return for customers. So hopefully, that's just provided a little bit of color as to some of those items around scope. Your question around support in relation to the plan. I think we've said we've got 74% customer advocacy for the plan and 95,000 customers we've engaged with. But what I think is really unique about this plan is the approach that we've taken to the 5 counties has allowed us to build a plan for Cumbria, plan for Merseyside, et cetera. And each of those plans contains very, very different elements because each of those communities and environments is different. The other real benefit is it allowed us to engage with MPs, local authorities and politicians. And alongside our plan, we've got great support that's gone into the plan itself from Andy Burnham and the combined authority in Manchester and Steve Rotheram over in Liverpool, who are real advocates of the plan and what we're proposing to do. Because they can see the benefit that, that's going to have in terms of regional infrastructure but also in terms of jobs. So that county-based approach that we think is unique is a real game changer in helping us really articulate the benefit and gain support for what we're putting forward this morning.

Next up, we have Mr. Nash from Barclays. Dom?

Can you hear me okay?

We can, Dominic.

We can, Dom. We can't see you. We'd love to see your face. Go ahead.

Okay. Two questions for me, please. Firstly, the difference between enhancement and baseline spend. There we go. Your day is complete now, Chris. Ofwat's basically saying that consumers shouldn't be paying for the sins of the past and your baseline expenditure historically should be sort of meeting the targets at the time with an underlying efficiency number. How do you think they're going to look at your business plan here? And is there a risk that they will shovel some of your enhancement totex into a baseline number, which means it's basically being paid for by shareholders rather than consumers? And how comfortable are you that catching up is within this plan? And secondly, just going back to the gearing levels. Can you just confirm again, when you quote gearing level, that will be a group debt to RAV? Or will that be at the water level to RAV? And I presume that you'll be running the water debt at the sort of statutory 55% going forward, but you might well be quoting a group there. Or will you be coming out with 2 sets of numbers?

Thanks, Dominic, and it's lovely to see you this morning. We will -- I'll probably take the first one and I'll ask Phil to lead on the second. In relation to the plan, we've been working really hard to make sure that the plan that we put in is an efficient plan and is very much within Ofwat's econometric models for where they are going to be running the models in relation to their view of efficiency. So I think that's the first really important point. And secondly, I think we said earlier in the presentation, we've assumed 13% efficiency. And that's coming through various different initiatives and activities that are already up and running, much greater focus on driving towards value engineering and making sure that we're delivering scope and doing that efficiently. We're also working really hard in relation to supply chain management and greater levels of automation. So we have a number of initiatives that are running through our plan to ensure that when Ofwat assess our cost base, they review it as being efficient. Your point about our customers paying twice I think is a really important one. And we're really clear that what we've put forward all links to the new environmental legislation that was passed. This is not customers being asked to pay twice. This is as a result of us needing to increase and invest in infrastructure to cope with that hydraulic incapacity that we see here in the North West and alignment against those new standards. So we're very clear and always have been that this isn't asking customers to pay twice. And I think that as we go out and we communicate the plan and communicate the bill impacts more broadly, it's a really important point for us all to focus on. Phil?

Dominic, on the gearing levels, firstly the slides should hopefully be clear, but it is a group debt to RCV. I know sometimes it's not always transparent but we're always very clear on what we're talking about. So it should clear that is group debt to RCV gearing for the slides. In the context of the statutory 55% at water, that's the notional company for the Ofwat assumptions. Obviously, our plan submits a notional and actual position for UU Water, and we're running gearing there more like 63% effectively. So that's the difference in terms of the numbers. And the sort of key point here is the point I made earlier, which is that there's GBP 600 million or so of cash at the group level outside the water company. So the group gearing is actually lower than the water company gearing in the position today.

Is that -- sorry, just to follow up on that. Does that not mean that it's a tax drag issue in that the regulator allows your cash tax pass through? If you've got higher leverage than the 55%, you'll end up paying less tax?

We'll be paying very little tax given the scale and size of our capital program in the next -- Dominic, in the context of all the capital allowances. So it's a bit more of a moot point, really.

Terrific. Thank you, Dom. James, I think you've had your hand up for an eon and you keep getting bumped out of the queue. So James Brand, over to you, sir.