Thank you for standing by, and welcome to the AUB Group FY 2022 full year results conference call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference call over to Mr. Mike Emmett, CEO and Managing Director. Sir, please go ahead. Good morning. Good morning, and thank you for joining Mark and I as we share the AUB Group FY 2022 results. I'm pleased to report another good year of performance from businesses across our diverse group. It would be remiss of me not to recognize the continued challenges our clients and our teams are experiencing, having moved very rapidly from a period of COVID lockdown to a period of rising inflation, supply chain challenges, and significant climate related loss events. Despite this, during this period, we've delivered strong results, continuing the disciplined execution of our strategy to drive revenue growth and expand margin. We've delivered earnings at the top end of the guidance range and have plans underway to improve performance in New Zealand, which, coupled with the proposed strategic and highly accretive acquisition of Tysers in the U.K., lays the foundation for further future success. At the beginning of financial year 2020, we set out a plan to transform AUB Group and to deliver sustained profit growth to shareholders. Fundamental to this plan was our ability to grow revenue and expand margins by focusing on our core insurance broking capabilities and directly related businesses such as underwriting agencies. Over the past three years, we have refocused the business by exiting our health and rehabilitation services investments. We've demonstrated our ability to grow broking organically and through selective and sensible acquisition, including by broadening the spectrum of clients we serve, expanding in the mid-market corporate as well as micro SME segments. Our deployment of technology to support our brokers and service our clients is continually expanding, although candidly, the take-up in some of these areas is slower than we'd like. With a few exceptions, our broking businesses in Australia and New Zealand are performing outstandingly, consistently growing premium, revenue, and margin above market rates. Our expansion of underwriting agencies to support brokers and clients has delivered robust scale and profit improvement over the past 18 months. The utilization of these agencies and products by AUB Group brokers continues to increase. The group is now more balanced and efficient. It is, however, a challenging environment for our clients. Significant insurance rate rises and other cost pressures faced by them mean that brokers are working harder than ever to assist clients to manage the cost of insurable risks in their businesses. This, combined with increased insurer risk aversion, means placing specific risk categories is becoming far more complex. While we understand and sympathize with the challenge faced by insurers in the light of the significant increases in frequency and severity of climate-related losses, our priority remains to assist our clients. We are therefore seeing an unprecedented rise in the need to place risks on behalf of our clients in the international market. Our recent announcement of the proposed acquisition of Tysers is firmly in line with this strategy. It will step change our capability to place global risks together with collecting a significant financial benefit for shareholders from the income that will arise. I'd like to turn to the slide deck to discuss the results for FY 2022. Slide two summarizes the past year. The continued momentum in Australian broking underpinned the overall performance of AUB Group. Good revenue and EBIT growth in BizCover was primarily the result of strong performance in BizCover's Australian direct business. This was partially offset by slower growth through intermediary channels, as well as the investment cost for early stage growth in foreign markets. AUB Agencies enjoyed an exceptional year. We made good progress towards our goal to achieve significant scale in this area. New Zealand broking has also performed well. However, this has been counterbalanced by the considerable investment in Project Lola, the project to implement a market-leading broking and insurance platform, as well as reduced profit in BWRS, our largest broker. Further progress has been made with the transformation of BWRS with a new leadership team in place, including a new group of branch managers. In addition, we have many new brokers and team members who are now on board and are focused on business growth. Profit momentum across the AUB Group, together with interest savings arising from the deployment of proceeds from the capital raise in May, give us the confidence to provide a forecast for FY 2023 underlying net profit after tax of AUD 86 million-AUD 91 million, representing growth of 16.2%-23% versus FY 2022. These forecasts do not include the consequences and contribution of the proposed Tysers acquisition announced in May, which is subject to regulatory approval and targeted for completion in late 2022. This acquisition will enhance the ability of brokers and agencies across the group to access capabilities and facilities in the Lloyd's and international markets to better serve our clients. It will also deliver EPS accretion of approximately 30%, including synergies, calculated on a calendar year 2022 pro forma basis to AUB shareholders. We affirm the financial returns for shareholders that we outlined when we presented the acquisition in May. Slide three depicts our growth and performance since financial year 2019. I won't dwell on these charts, apart from saying that they highlight our track record of delivering a sustained revenue growth that converts into profit and EPS growth for shareholders, which is exactly what we will continue to do and overarches all of the strategies and results in this report today. As summarized on slide five, during financial year 2022, we continued to grow revenue and profits. Revenue increasing by 12.2% on the prior year to AUD 689.5 million. Underlying margin expanded by 240 basis points to 34%. On a continuing operations basis, the underlying net profit after tax of AUD 74 million grew by 22.2% on the prior year. This being at the very top of the outlook range we provided earlier in the year. This represents an underlying earnings per share of AUD 0.967, an increase of 21.1% on FY 2022 on a continuing operations basis. The board is proposing a final dividend of AUD 0.38 per share, giving a full year dividend of AUD 0.55 per share, flat on the prior year, and representing a dividend payout ratio of 64.5%. The decision to hold the FY 2022 dividend flat was made in anticipation of the proposed acquisition of Tysers, while maintaining our policy of paying dividends in the range of 50%-70% of underlying NPAT, and ideally, at the midpoint of this range. I'd now like to hand over to Mark. Thank you, Mike, and good morning all. Slide six shows a waterfall chart of the critical movements in underlying net profit after tax from FY 2021- FY 2022. The FY 2021 comparison year is adjusted to remove one-off JobKeeper receipts in the first half of FY 2021 and profits from Altius, the last of the health and rehabilitation services businesses we sold in early FY 2021. AUB Group continued to deliver strong organic profit growth of AUD 11.6 million, representing 19.1% growth on FY 2021, while bolt-on acquisitions and the net effect of buy-ups and sell downs contributed AUD 3.5 million or 5.8% to the growth in profits. We have also shown the impact of increasing spending on Project Lola, the broking platform project in New Zealand. On slide seven, we reflect the growth in premium and our ability to translate this into growth in underlying NPAT. We also reflect the seasonality in the business. The 48%-52% split in premium between the first and second halves is consistent with our historic split. The disproportionate profit split of 41%-59% reflects our continued growth momentum in the second half and a largely fixed cost base, which means increased revenue in the second half flows disproportionately to our bottom line. Historic shareholder returns from earnings per share and dividend per share are shown on slide 8. We understand that comparisons are made complex by the impact of our exit from health and rehabilitation services and adjustments to remove the timing impact of prior year JobKeeper receipts. We therefore include two sets of underlying EPS charts on this slide. The top chart reflects earnings per share growth since FY 2017 using underlying historic EPS that is not adjusted to remove JobKeeper receipts or profits from the now exited health and rehabilitation services division. Below to the left, we show the underlying EPS growth from continuing operations where these items are removed from comparative periods. This is designed to enable investors to understand the actual underlying rate of growth of the continuing businesses. These graphs show growth over the past year for historic EPS of 12.3% and growth in EPS from continuing operations of 21.1%. We also include the dividend per share, which as Mike stated earlier, is flat on the prior year to account for the as yet incomplete Tysers acquisition. Following the half year presentation in February, several shareholders requested the inclusion of the information depicted on slide nine in preference to the corporate entity cash flow information we've previously provided. As you'll note, this slide shows that the conversion of profits to cash was greater than 100% in FY 2021 and FY 2022. You'll also note that we have not provided details about debt, as all previous debt was extinguished using the proceeds of the equity raise. AUB Group now has excess cash reserves on deposit in anticipation of the Tysers acquisition, at which point our new debt facilities will be utilized. Each year, we define and describe execution priorities for the year ahead. Slide 10 reflects the highlights of achievements against these priorities for FY 2022. While I won't go through each of these, I would like to highlight the progress we've made in not only continuing to optimize and consolidate our existing network, but also expanding through acquisitions that enhance not only scale, but more importantly, our capabilities. In particular, I'd like to recognize our agency teams for a spectacular year. Our technology investments and deployments also continue at pace with our recent acquisition of the iaAnyware core broking system, significantly enhancing our ability to strengthen broker technologies. While there is much to be pleased about, I will call out two areas where we're disappointed with progress. Project Lola in New Zealand is running behind schedule while Express Cover take up has been slower than planned. I'll now pass back to Mike for the rest of the presentation. Thanks, Mark. Slide 12 reflects pleasing divisional performance, with revenue growth and margin expansion leading to profit improvement across the group. In Australian Broking, revenue growth of 7.6% and the excellent margin expansion of 250 basis points resulted in profit growth attributable to AUB shareholders of 23.4%. BizCover continued to sustain high revenue growth and solid margins, achieving 24.7% growth in profit before tax attributable to AUB. As highlighted earlier, Agencies delivered excellent revenue growth of 41%, with margin expansion of 510 basis points, both better than we'd anticipated at the start of FY 2022. New Zealand Broking primarily delivered a solid margin and profit outcome, although, as indicated, this was counterbalanced by our Project Lola investment and reduced profit in BWRS. I'll now speak to the main elements of each division. Slide 13, Australian Broking. We continue to expand and optimize our organic performance and to supplement this by acquiring and consolidating complementary broking businesses. As reflected on the slide, this strategy has been a critical component of our ability to expand margin and widen the EBIT margin jaws. During FY 2022, we completed several bolt-on acquisitions, including Vaughan & Monaghan, as well as consolidating WRI and Nexus into existing Austbrokers. In addition, the Insurance Alliance has gradually expanded and now supports seven independent broking members, all part of the Broker Co-op. Our income from the broking portfolio comprises insurer commissions, which increased by 10.5% during the year, and broker fees, which increased by 4.5% during the year. For our renewing portfolio of clients, this being retained clients who maintain the same risk coverage and renew with the same insurer, we noted a premium rate increase on average of 9%, while for the balance of our portfolio, they experienced a lower rate of premium increase. As a result, we are confident that our 10.5% growth in commissions is growing well in excess of the rate of premium rate rises. Slide 14 describes BizCover operations. You'll note revenue growth through the direct channel continued strongly at 26.9% for the year, and that the Australian business operated at an excellent EBIT margin of 40.9% for FY 2022. We have noted a slowdown in revenue growth through the intermediated channels, including white label partners such as comparison sites. There is also investment being made in BizCover's international markets to build future growth momentum in these jurisdictions, although the take-up has been somewhat slow. Moving now to Agencies on slide 15. Our strategy for Agencies is clear. To build scale, to broaden the product range, and to focus the agencies into one of three key groupings, general commercial, specialty, or strata. During FY 2022, we made significant progress with this, launching three new agencies, acquiring an additional 2 external agencies, consolidating three existing businesses, and exiting a further three. As a result of these actions, together with the benefit of the acquisition of 360 Underwriting in FY 2021, we grew Agency gross written premium by 32% to AUD 679 million. AUD 75 million of the additional AUD 163 million of premium was placed by AUB brokers. The net result of these changes was an increase in EBIT for Agencies of 63.8% over the prior year. On slide 16, we show New Zealand as a tale of three parts, and the waterfall shows the impact on profits of the Project Lola investment, reduced BWRS profit, and the strong performance of the remaining brokerages in New Zealand. We're optimistic about our positioning and potential and the actions we have in place to accelerate our growth in the New Zealand market. It's useful to note that the New Zealand broking business achieved a robust 34.9% EBIT margin if you exclude the costs of Project Lola. As I've said previously, New Zealand is a key focus in FY 2023, and we have a clear path to delivering better results with a number of improvements already in place. Slide 17 covers aspects of the proposed Tysers' acquisition. Let me say upfront, we are delighted with the proposed acquisition, both at a strategic and a financial level. We are buying a high quality business that accelerates our strategy and on good financial terms. I want to emphasize that the acquisition is subject to regulatory approval and AUB Group does not yet have operational oversight of the business. In the six months to June 2022, Tysers experienced revenue growth of 8% versus the prior year, with most areas of the company enjoying strong trading conditions. There are some exceptions, most notably due to Tysers' decision to cease support for certain jurisdictions such as Ecuador and Colombia, as well as the result of international sanctions on Russia. Our continued engagement with management and the broking teams at Tysers is very constructive and there is strong support for the partnership from teams both at Tysers and in AUB. We remain confident about the financial outlook for Tysers and the synergy opportunities we presented in May. In fact, AUB Group's international placement volumes have continued to increase as predicted, reinforcing the synergy benefits. Turning now to the year ahead. Slide 19 lists execution priorities for FY 2023. As in the prior year, we will continue to optimize our network, drive organic growth, make standalone and bolt-on acquisitions, and enhance our proposition to partners. However, for FY 2023, we have two new priorities. Firstly, to deliver improvements to the New Zealand business and to benefit from the resultant financial results of these. Secondly, to integrate and optimize Tysers to ensure that we deliver the benefits of this attractive acquisition. Finally, I'd like to draw your attention to slide 20, the FY 2023 outlook. I want to point out we do not yet own Tysers and therefore have not included any profits nor financing costs that will arise following completion. We, however, recognize that the receipt of proceeds from the equity raise was related to the Tysers acquisition and have therefore prepared a waterfall chart showing the outlook based on the current AUB Group economic reality, i.e., no debt and no Tysers income. To illustrate this, the waterfall chart includes three income or expense reduction items, namely, one, the organic growth we anticipate AUB Group will deliver of 8.1%-10.8%. Two, the profit growth of 2%- 3.4% that we anticipate from new acquisitions unrelated to Tysers. Noting that there is still a very good and healthy pipeline of bolt-on acquisition opportunities in Australia and in New Zealand. Three, the benefits of interest savings from the early repayment of AUB Group debt, as well as additional income from the investment of surplus cash, both arising from the proceeds of the equity raise. This will result in a growth in underlying net profit after tax of 6.1%- 8.8%. You'll also note the comment on the slide that our financial year 2023 underlying earnings per share is anticipated to be broadly in line with the FY 2022 earnings per share, taking into account the near-term dilution of the recent capital raising. This is a function of the timing of the raise. Remembering that we are not including a profit contribution from Tysers as it is a still incomplete transaction. We will obviously update guidance when the transaction closes and once we own the business. In summary, we are forecasting growth in underlying net profit after tax of 16.2%-23% or 10.1%-14.2% if you choose to exclude the benefits from deployment of the capital raise proceeds. Thank you. I'd now like to hand back to the moderator for questions. Ladies and gentlemen, at this time, if you wish to ask a question, please press star and one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star and two. If you are on a speakerphone, we do ask that you please pick up the handset prior to asking your question. The first question today comes from Tim Lawson from Macquarie. Please go ahead with your question. Hi, gentlemen. Thanks for taking my questions. Just you've provided in the past margin targets across the various segments. Can you just comment on those in respect to the sort of recent results and whether they need to be updated and the sort of timing you've got on achieving those targets? Yeah. Hi, Tim. Thank you. I actually anticipated someone would ask the question. Look, those margin targets remain our medium-term margin targets. Clearly, you know, we've made very good progress on moving towards those targets this year. Interestingly, a couple of years ago, I think the feedback was that they were ambitious. I think, you know, after today's result, I suspect that the script will change to challenging me on whether they're ambitious enough. That's a nice problem to have. We stand by those targets. We clearly have, you know, a very visible path to achieving them, and we see a lot more opportunity in the agencies to improve margin. Obviously, our key focus on the year ahead is improving margin across the board. There's still headroom. you know, I'd like to say that, you know, we clearly think that there is upside on those margin targets. Yeah. Just another question. Just in terms of your comment, it might be Mark, about the New Zealand Lola and Express Cover being sort of, you know, behind plan. Can you just expand as to why? You know, what's the issue there? What are you expected to do this year? You said that, you know, New Zealand obviously is a focus. Just what are you expecting to change? Yeah. Two things. I think the first one is Lola is a typical technology lag, so we'd hope to have the technology ready for pilot by now. In fact, it's going to be later in the calendar year. That's a pure technology piece of work that's running slightly behind schedule. On the Express Cover, this is about take-up. Partly the take-up is, you know, linked to adding insurers and products onto the platform. Of course, that again links to ensuring that, you know, the timing aligns with the insurers' priorities, et cetera, and our own technology capacity and capability. The comment about Express Cover was really about the take-up and the volumes being placed on the platform, and Lola was about the timing and the delay. Not quite delay, just, you know, we're running behind schedule on the technology build with Lola. Yeah. It's months, not years, to be clear. Yeah. Okay. Just a final question for me. Just on Tysers, you comment on the planning there. Obviously, you don't own it, the transaction hasn't closed, but the planning there, is that including inside the business or is this all sort of external planning? I mean, how much access you've got at the moment to the business? Yeah. We've got good access. Clearly, we're very respectful of the fact that we don't own the business and the current owners, you know, will want to ensure that there's not too much distraction on the teams. There's a lot of activity preparing the business on their side to meet the commitments under the share purchase agreement. There are pieces around. You know, as a reminder, we are not acquiring the full business. The perimeter excludes certain entities in the U.S., et cetera. I'd say extraneous entities that implies that they don't have value, but they are for a different purpose. There's a lot of work going on to prepare the business for the point of completion, and obviously a lot of work with regulators. I think in terms of there's regular interaction between various teams in AUB and, you know, both at the broking level as well as at the management level on both sides, in anticipation of completion. But obviously respecting, you know, the situation that we're in, where we are two separate companies. We need to respect the, you know, all of the requirements around competition, et cetera. Just for clarity on that, how much work's being done on the retail JV? You will have noticed that PSC has included a contribution from Tysers in their guidance, which obviously you haven't. Yep. So I think we've continued the discussions with PSC and have participated in discussions between PSC and Tysers Retail. I think in terms of substantive agreements, you know, from our point of view, we don't own the company yet, so we can't enter into an agreement to, you know, sell part of the company until we do. At this stage, it is exactly the status that it had in May, but with the added pieces that there have been discussions and meetings held between the three parties in the U.K. Yeah. Okay. Thank you. That's all for me. Our next question comes from Elizabeth Flatley from Jarden. Please go ahead with your question. Good morning, gentlemen, and thanks for taking my questions. The first one's just on the FY 2023 guidance that you've put out. The organic growth bucket of 8%-10% looks perhaps a little conservative in the context of, you know, continued strong premium rate growth, a little bit of volume growth and also continued margin expansion as you get closer to those medium-term targets. How should we think about that bucket and, you know, relative to those points I've just made? Yeah. Elizabeth, that's a you know good question. Obviously, the challenge for these things is, you know, predicting the future. You know, what we provide is a range based on our budgets, et cetera. Now, obviously last year in the same position, you'd look backwards and you'd say, "Well, Mike, for two years in a row, you've exceeded the organic outlook that you provided at the beginning of the financial year." Yes, but that, you know, that doesn't change how we forecast. The fact is we forecast for the things we know and reasonable assumptions around the twelve months ahead. Obviously, if everything goes, you know, better than planned, then we'll beat those forecasts. At this stage, this is our best estimate of what the forecast is for the year ahead. Those forecasts, what are you assuming for premium rates for the Australian business and then also the tech spend for Lola? Well, the tech spend for Lola is roughly the same as this year. It's slightly more. But it, you know, if you look at the New Zealand piece, we've explicitly called out AUD 5.1, and I think our assumption is AUD 5.5. Secondly, in terms of the premium rate increases, first point I'd make, I don't want to overcomplicate the answer. The short answer, it's in the range of 6%-8%. Having said that, I think it's probably worth emphasizing that, you know, when I mentioned the 9%, and I did try without overcomplicating it, I don't want to turn it into a Nobel Prize-winning thesis, but effectively, a portion of our revenue is a result of premium rate increase, and a portion is from the fees. Of the premium rate increases, by definition, part of what our clients are wanting brokers to help them with, particularly in an inflationary environment, is to manage cost increases. In fact, one of the key focuses of a broker is how to find that right balance between the risk coverage, the insurer, and the premium cost. By definition, if we've been successful, then our clients will, you know, achieve a lower premium rate increase than the market, if that makes sense. The only piece we can categorically, you know, arithmetically validate is that for the same client who's placing business with the same insurer for the same risks, we can tell you that categorically they had a 9% average premium rate increase. We do know that for the same clients, different insurers, normally they're moving because they are changing at least the premium, so they're moving insurers and/or the risk coverage. By definition, it's very hard to correlate premium rate increases that insurers would like to put through with the effective rate increase. I think the other thing I'd say as well is that, you know, one of the value propositions of BizCover is that the premium rate increases that they are able to deliver to their clients is at a much lower level than the market rate increases. You've got these different components that are affecting how you would look at the translation of what we get as a, you know, a sort of a premium rate flowing through. We're actually pleased with that because that's part of our value proposition to clients and why we're confident that we're able to grow not only new client numbers, but also expand, you know, retain our clients for, you know, for long periods of time. Okay, got it. Thanks for the color. Then a second question just on Tysers. Obviously, you've given us, you know, revenue growth on PCP, but in terms of margins, you know, obviously it's challenging at the minute because you've not got your handle on the business and there's a lot of random costs going through the business. But margins relative to what you're expecting, would you say that they're in line or perhaps tracking ahead or behind? Yeah. Elizabeth, I think there are three components to the information that we're able to share. The first is obviously respect for the existing owners. The fact is we don't own the company, we can't just disclose information. The information we're sharing has been approved for, you know, for release by the existing owners. Second point is that the parameters, the transaction parameters I mentioned earlier when to Tim's question, is different to how they currently report. You know, that piece requires, you know, a fair amount of work to reconcile the two. Thirdly, you know, certainly everything we're seeing supports the confidence we have in the information we provided in May, which was fairly extensive and thorough disclosures. We remain very confident about our ability to, you know, as I mentioned, over an 18-month timeframe, you know, we have strong conviction about the synergy improvements, and we have great confidence in the EBIT and EBIT margin-related adjustments and numbers that we provided in the May presentation. From our point of view, nothing has changed. Our degree of conviction about those numbers, particularly synergies, has increased rather than decreased. Yeah, but as you rightly say, you know, we just have a view that until we've completed the transaction, we can't provide further detail than we have provided. One bit of color I'd like to add to the revenue numbers is, you may recall in May we mentioned that there'd been a 6% revenue growth in the first three months of the calendar year. Obviously now it's 8% for the first six months, which means that, you know, revenue growth has obviously accelerated in the second quarter of the calendar year, which obviously is a pleasing development as well. Okay. Thank you so much for the color. Pleasure. Our next question comes from Siddharth Parameswaran from J.P. Morgan. Please go ahead with your question. Good morning, gentlemen. Just a few questions if I can. Firstly, just on your guidance for 2023, wondering if you could just elaborate on what expense pressures you're seeing in the business and what assumptions you're making. I mean, noting that one of your peers did flag elevated expense growth and particularly among staff. I was wondering if you could just give us an idea about what you're assuming. The effective expense inflation in our FY 2022 numbers are about 3.6%, and we have assumed approximately 5% for FY 2023. Sorry, was that 2.6%? I missed that. 3.6% or 3.6%? 3.6%. It's a 3.6%. Three point- Effective inflationary impact on the FY 2022 numbers and a 5% assumption for FY 2023. Okay, thank you. That's helpful. Can I just ask also just about the upgrade in the revenue growth you mentioned, guidance or well, not the guidance, but the actual numbers for the 6 months to June 2022 on Tysers versus what we saw for the four months. 6%-8%. I mean, that's just quite a strong uplift just in the last two months. I Well, it's actually three months, sorry. I can't remember any in your guidance when you did the acquisition. I can't remember any adjustments being made for a tick up in revenue. Is this all upside for you know for what you're seeing and your original business case on Tysers? Three quick comments, if I may. The first is, the 6% was for the first three months of the year. You know, we provided May, but it was January to March. Secondly- Right. Part of the uptick, there is a currency piece because about 50% of their income is denominated in U.S. dollars. The U.S. dollar has strengthened against the pound, and so there is a piece of that which is currency. Third, the short answer to your question is yes, it is all upside with one caveat, which is obviously it is strengthening the probability that the earn out payment, which is linked to revenue. You may recall that there's an earn out payment of GBP 100 million due after, you know, just beyond 2 years after completion in the event that the second year income is more than GBP 39 million above the pre-acquisition income. Okay. The uptick is, you know, all upside, apart from the fact that it increases the probability of the earn out payment. Which frankly, we're comfortable with because, you know, certainly we felt that the GBP 100 million for, you know, the revenue uptick on an existing business base because there are adjustments in the share purchase agreement where you're changing the number of staff, et cetera. This is effectively the current cost base delivering GBP 39 million more of income. Obviously, you know, a significant chunk of that flows to the bottom line. Yep. Okay. Thank you for that. Just maybe a final question from me. Just on, with the rising interest rates that we're seeing at the moment, I was wondering if you could just comment on, you know, once you finish the acquisition of Tysers, assuming it's all okay by the regulators, if you could just give us some idea of what the rate on the debt is likely to be and whether there's likely to be any offsets, from higher interest rates, with just some of the client balances you hold on client funds. I think exactly two parts to that. Firstly, it's BBSY plus 4.5% is the facility. I think in terms of interest rate movements and effectively our current interest rate position, effectively post-completion, we will have roughly the same amount. In fact, we'll have more in client funds and trust funds and regulatory capital invested across our networks and businesses than we will have in debt. Effectively, subject to timing, because in some cases we put some of those investments into term deposits, but subject to timing, effectively we'll be more than hedged across the debt from an interest rate point of view. Okay. Thank you. Our next question comes from Jason Palmer from Taylor Collison. Please go ahead with your question. Yeah, thanks for your time, Mark and Mike. I really appreciate it. I just wanted to go on the Tysers question around the currency in particular. You called out half the book exposed to U.S. dollars, so probably implies around GBP 100 million exposed to U.S. dollars. If the currency's moved materially like it has, there's something like GBP 10 million of revenue benefit to Tysers in my quick calculations. How much of that actually falls through to the EBITDA line? Jason, I think two comments to it. The first is, going forward, clearly there's a different hedging approach that they have in place. But going forward, clearly what we're doing is we're looking to match debt costs, you know, with an element of it denominated in USD income flows and the way in which, you know, and the asset, you know, the sort of underlying asset denominated currencies. And so we'll be balancing those off to create natural hedges. But you know, at a basic level, because in fact, you know, it comes to the perimeter point, because Tysers is the ultimate reporting entity at the moment that aggregates all of those foreign currencies, they're converted into sterling. However, what we will have is we will have a U.S. business, a U.K. business and an Australian business and a New Zealand business. Then obviously their flows of the cost of debt will be, in some cases, matched to the income flow from those jurisdictions. I guess, you know, again, without going into too much complexity on this, the mix of currency exposure, both positive and negative, will shift based on the way in which, you know, we'll be reporting and managing the business. But having said that, you know, I think the heart of your point, roughly 90% of their expenses are denominated in sterling, and 50% of their income is in dollars, U.S. dollars, about 30% in sterling and 10% in euro. Sure. I think we're getting to the point, though, that there's a relatively material earnings benefit to the group, though, where the current translation from the U.S. to the pound sterling is, though, irrespective of the currency position or the hedging. Correct. Right. Okay. My second question is around how you cover that going forward. I mean, you've talked, it's a bit of a double-edged sword. You've sort of spoken about how it's, you know, it's beneficial in the short term, but it increases the likelihood, should I say, of paying the earn out, 'cause it's a revenue-based earn out. Are you able to sort of talk us through sort of early stage thoughts around hedging? Because this is gonna be an ongoing issue for the business now. Yeah. Jason, Mark here. We'll use a combination of a few things using natural offsets in the same currency within the group where they're available to limit our overall FX exposure and hedging requirements. As Mike alluded to, foreign currency debt where possible, U.S. dollar denominated debt as part of our syndicated facility, forward FX contracts and then, you know, whatever other derivatives are necessary. Okay. Thank you for that. I had one more question, actually. It's around the investment you've been making across the group in IT, and I know you've called out some numbers for Lola of 5 or 5.5, and maybe that continues on a bit longer than FY 2023, who knows? Are you able to sort of talk to Mike sort of the total investment you're making in some of these IT projects across the group and whether any of those spends actually roll off any point in time or are just replaced with other initiatives to drive margin further? Yeah, Jason, that's why we've only called out Lola, Eva, because we actually work to effectively, you know, sort of a fixed envelope of cost that we expense. We regard that as normal operating cost even though it relates to projects. We see that continuing, you know, in the medium term. We've not called it out simply because we think that, you know, the costs will be replaced by other similar costs for other projects, et cetera. Apart from Lola, we see, you know, that as just our normal part of our normal operating cost envelope that will continue in the medium term. Okay, thanks for that. Is there a time frame of when Lola, the sort of switch gets flicked on that in terms of, I know you pushed out a few months, but in terms of, you know, moving from equity brokers to, you know, non-equity brokers where you might actually offset some of those tech spends with, I don't know, whether you call it, you know, fees for service? Well, the key, you know, flip the switch as you describe it, is when effectively we have new insurer agreements, and we have new user agreements that will kick in, and obviously those will come through as income to the group, as it gets rolled out and as, you know, business gets placed on the platform. That's the real, you know, key upside opportunity. You know, just to be explicit about the timing, we'd anticipated and hoped that we'd have the first pilot site live for us to then learn from by the end of June, and that is now currently slated for November. If you wanted to, you could say, well, the project slipped by, say, six months. Effectively, where we'd hoped to, you know, finish the project spend to where it was cost neutral was by the end of FY 2023. Effectively, I'd suggest that slips into the, you know, the end of the first half of 2024. Thank you. Yeah. I think that's probably the best visibility I can give. Obviously, there are a couple of scenarios. One is the pilot goes spectacularly well, and we can accelerate some of the rollout pieces or, you know, the pilot is a, you know, dare I say it, a dog and we ditch the whole project, right? You know, I don't want to be melodramatic about it, but those are both scenarios that are plausible. Yeah. Just to be clear, you're expensing the whole thing, right? Correct. Worst case scenario, you've torched AUD 4 or 5 million for a few years and that rolls off. Best case scenario, you've made that spend still, and you get some other revenue upside as well, with higher commissions or efficiency benefits. That actual AUD 5 million you're talking about rolling off could actually be much higher than that if you actually if the project kicks on and performs with margin improvement. Is that right? Correct. That's exactly right. Let's ignore when everything's live. Let's say we're talking an FY 2025 year, then at the very least we'll have AUD five and a half million less of cost up to, you know, AUD multimillions of increased, you know, net profit in addition to that. Wonderful. Thank you so much for your time, and well done. Thank you. Thank you very much. Our next question comes from Doron Kur from Credit Suisse. Please go ahead with your question. Thank you. Congrats on another good result. Just to clarify on that last question there, and I think it's on the IT cost, is that related to the comment in the pack around renegotiated insurer contracts in broking and are you referring to higher fees from the insurers for using the IT platform or are there other benefits there? Doron, the comment in the pack actually doesn't relate to that specific piece, but it's the same principle. So across the board and in fact, this predates you a little bit, but in FY 2020, the back end of FY 2020, we ran a process that flowed into FY 2021, where we renegotiated our commercial arrangements with a number of our, you know, key insurance partners. As a consequence, you know, because of the annual renewing nature of our policies or the annual nature of our policies, obviously there's quite a long lag before some of those income arrangements flow through. What we're referring to in the pack is just the natural impetus and momentum in the business that we're earning more per dollar of premium that's placed under those new arrangements than we used to under. Now, that will flow through over several years. It's not, you know, it doesn't suddenly, you know, come right in one year. The comment I was making about Lola is in the same vein. Very recently, and currently, we've worked with our insurance partners to explore ways in which we can optimize the commercial agreements for both parties' benefit, right? To be clear, similar to Express Cover, we've negotiated with insurers because they and we are benefiting from the removal of frictional costs as a result of improving the processes, and we increasing the amount of data that we have access to and the insight we're able to share with them about their portfolios. As a consequence, we're looking at, you know, the negotiations or, you know, how do we commercialize that to both parties' benefit, which for us increases, you know, how much we make out of, you know, business that's placed through a platform. Both of those things, but the comment in the pack was specifically related to agreements and arrangements that have already been renegotiated in, you know, almost prior to FY 2022. Great. Thank you. Very clear. Then maybe if I can just move back to the organic growth forecast. I know we've chatted on this already on the call today, but even looking at the guidance versus what you guided to a year ago, it does look like organic growth is expected to be still strong, but not as strong as previously. Is that a fair assessment if you ignore, you know, the big Tysers acquisition? Doron, the challenge is, you know, it's predicting the future, right? I'm hoping obviously that we're sitting here in a year's time and you're saying, "Mike, again, you undercooked the organic growth that you could drive out of the business." We just don't know. This is based on our best estimates and forecasts from what we know, you know, today. I think that's the, you know, that's really the challenge of it all is, you know, as a consequence, you know, that's really, you know, where we sit. I mean, as a reminder, you know, I think last year, the organic growth was sort of in the same range, our outlook. I think you know from memory, our outlook was sort of in the same range. You know, I'd love to say, you know, secretly I'm massively confident we'll beat this and this is, you know, understating the number. The fact is we take our forecast seriously, we take our outlook seriously. We've followed the same process. We think we're pretty good at forecasting, and I have confidence in what we've put forward. But I don't think I have a reason to simply say that because we've beaten the outlook at, you know, each year for the last few years, that therefore we'll beat it this year. I just don't think that would be a responsible thing for me to say at this point. Thank you for that. If we look specifically at agencies and Tysers, both areas where we've mentioned, there's the benefit of the hardening market and insurers being very selective on the risks they take. That has been commented on by peers as well. Some lines are starting to get more competitive, like financial lines, et cetera. You know, it feels like maybe the market is starting to ease a bit. What gives you confidence that there's still a long trajectory there for increased need for agencies and Tysers, you know, through Lloyd's as well? Well, I think a few things. One is a large part of our portfolio is actually property and casualty related risks. You know, our view is that risks that correlate or are linked to climate change related events are going to get worse rather than better. As a consequence, they're gonna get more expensive rather than cheaper. On the financial lines piece, we've always said that, you know, cyber is insurers trying to price the unknown, whereas historically, they've priced based on loss experience. With cyber, they've priced it based, you know, dare I say, you know, uncertainty, the unknowns and mass hysteria. On the financial lines pieces, it's really D&O that has massively, you know, increased the pricing of those lines. Again, we've always felt that that's based again on broad brush assumptions around risk, et cetera. What we see is what we think of as our core portfolio of clients, which are predominantly midsize commercial businesses with classic property and casualty risks that you have in a midsize business. We see those risks and the cost of, you know, remediating losses in those areas and the frequency increasing because of climate change related events rather than decreasing, which means rates have to go up, otherwise insurers can't make money out of it. That's really the type of risk that we are focused on. Yes, you know, we do have 30% of our portfolio that relates to financial lines and specialty, et cetera, but that's. It's that bedrock that we anticipate is where, you know, increasingly. You know, it's the risks of certain types of building materials. It's, you know, it's the risk related to certain geographic areas of Australia and cyclone risk. It's all of those types of risks that are driving our portfolio premium rates and the complexity of placing local placement into insurers. That's really what our primary reference point is. Thank you. If we look at agencies in particular, that was a net business that was hurt during COVID and presumably you got some good rebound this year from those parts recovering. Could that make a harder comparable to grow against in 2023? It looks like things have normalized by now. I think, I suppose the flip side of the coin is we didn't really see significant negative impact from COVID on our client base. You know, you'll recall at the time me commenting on, you know, just the fact that our business seemed to be unaffected, apart from our teams not being able to work and interact with clients face-to-face. In the same way, we haven't seen a rebound because we didn't see whatever the opposite is of a rebound, an unbound. Anyway. No, I think this is all, you know, just our core business together with, you know, good quality acquisitions and some of the, you know, the organic positive elements of the business going through. Great. Thanks. Just last one from me, if I can. Just the confidence around increasing margins, you know, given that, you know, rates still going up, but not as much as before. Is it all on further top-line growth? Looks like it could be harder from after such strong margin growth to keep expanding margins at a similar clip going forward. That's obviously a high. We still do see a path to margin growth improvement. But yes, you're correct. I think in absolute terms, I think there's a piece which is around clearly the rate at which we can expand margins logically will slow. We do see a lot of... Particularly in New Zealand and agencies we've called out, we do see opportunities to scale those. I think the big question for us is, do you scale them first and then, you know. Do you almost stop trying to drive margin improvement for the, you know, for a period when you scale them up, and then you start, you know, as a secondary stage, driving margin? Or do you try and do both? You know, there are different schools of thought on that. I think in the rest of the business, we do still see ways in which we can improve the margin. I guess that's code for me saying, Mike, do you think that your midterm margin targets have a bit of ambition beyond those? Clearly, we do. Great. Thank you. Yeah. I suppose the 2023 is a bit of a harder one to call. You think you could get expansion still in 2023, just that kind of gradual process to midterm, or is the answer gonna be based on the decision you make per your last response? Yeah. Well, I think we can definitely get further margin expansion in Australian broking and New Zealand broking, and clearly there'll be an opportunity in the second half. You know, Tysers obviously gives us a new margin improvement target as well, or opportunity. At a macro level, we certainly believe that the group can improve its margin. Thank you very much. Our next question comes from Olivier Coulon from E&P Financial Group. Please go ahead with your question. Hi, guys. Congrats on the result, and thanks for taking my question. Just on New Zealand, in terms of the confidence that, you know, that turnaround is gaining traction, I suppose if you look at the second half, you know, particularly the revenue trajectory, you know, turned down relative to the first half. Olivier, I think the way we've characterized it, a tale of, you know, sort of a story of three tales. I think the reality is that, you know, the BWRS business has taken longer and has been a more significant piece of work than we'd anticipated 18 months ago. You know, I'm always nervous to call out early signs of optimism, but the fact is, you know, we are seeing a path to improving that rather than it continuing to deteriorate. I think the Lola one is a very known obvious piece, and I think, you know, Jason Palmer summarized it earlier. You know, the worst case scenario for us is we write off what we've spent, we stop spending, and, you know, profits in New Zealand go up AUD 5.5 million. That's not a bad backstop option. Or sorry, when I say option, you know what I mean, backstop scenario. The rest of the businesses are absolutely flying. You know, hence why I made. Yeah. At a point, you know, earlier, which is, you know, the EBIT margin with our largest business, you know, having gone through a few years of profit challenge, is still running, including that business, at 34.9% margin. You know, it's a good quality portfolio of businesses with, you know, good upside, and we have a path to it because it really is about BWRS and about Lola. The rest of the business, frankly, you know, I don't wanna even distract them by phoning them to say hi because they're doing so well. Yeah. Okay. Just on BizCover also, you know, the investments that you're making in the international expansion, when do you expect those to become, I guess, margin, you know, neutral or accretive, or at least EBIT accretive? That's a tough one. I think a year ago, I'd have said FY end of FY 2023, but we haven't made the progress in FY 2022 that I'd hoped we'd made. Now again, I think, you know, the benefit is what you can do is you can simply then dial down the investment you're making, right? I think that's a call we'll probably make at the end of FY 2023. I think we have a plan, we have a focus, and, you know, as a board, I'm on the board of BizCover, we have a joint, you know, agreed strategy for FY 2023. I think it'll really be a, you know, an interesting year from that point of view. I think what I do want to emphasize is, if you look at the aggregated numbers, you'd get a picture that actually BizCover revenue growth is slowing down. That's not actually the case. You know, the core business, which is where the line, you know, the lion's share of the business is a direct business, direct to SME, and it's, you know, a high margin business. A 40% business that's growing at just under 27% per year from a revenue point of view is an extraordinary thing, and we're delighted to have that as an investment. I think the question then is about what is the right way to expand that and, you know, you know, deliver that in other markets. Yeah. Okay. I appreciate that color. Sorry, just to clarify, I know there's been a lot of questions asked about it, but the second half of FY 2022 Tysers revenue, was that higher than the acquisition case, you know, I guess, adjusted for and not adjusted for FX kind of movements? Yeah. From a revenue point of view, yes, it was higher than, yeah, our expectations. Yeah. Okay. All right. Appreciate it. Thanks. Pleasure. Ladies and gentlemen, with that, we'll conclude today's question and answer session. I'd like to turn the floor back over to Mr. Emmett for any closing remarks. Thanks, moderator. Obviously, we're delighted with the results of the past year. I'd like to thank our teams across Australia and New Zealand for all they do to support our clients and each other. I think we continue to demonstrate our ability to grow revenue and profits organically, as well as through selective acquisitions. I'm also pleased that we have, you know, strong momentum into the new year. FY 2023 is clearly an exciting and big year for AUB Group. We anticipate continued double-digit growth forecast from our businesses in Australia and New Zealand, and then we obviously have the anticipated completion of Tysers. Look forward to catching up with many of you over the next few days, and I hope you have a great day. Thank you for joining us, and goodbye. That does conclude our conference for today. Thank you for participating. You may now disconnect.