Thank you for standing by. Welcome to the Omni Bridgeway Limited FY 2021 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 one on your telephone keypad. I would now like to hand the conference over to Mr. Andrew Saker, Managing Director, CEO, and Chief Strategy Officer. Please go ahead. Thanks, Yan. Good morning. My name is Andrew Saker. I'm the Managing Director and CEO of Omni Bridgeway. Welcome to our results call for the year ending 30 June 2021. Joining me today is Stuart Mitchell, our group CFO, Jeremy Sambrook, our group GC and Company Secretary, and Mel Buffier, our Head of Investor Relations. Turning to slide four, highlights. I'm pleased to present the full year results which reflect the benefits of our diversification strategy. We've achieved a record income of AUD 286 million, derived from 44 full completions and 24 partial completions from a variety of pre- and post-judgment investments around the world. This reflects a significant second half skew due to strong case completions occurring in the fourth quarter, which has derived approximately 75% of the recognized investment income in FY 2021. A further AUD 135 million-AUD 270 million of income may be recognized in future periods and relate to substantially completed investments with conditional settlements or judgments on appeal. The result also reflects the AUD 120 million impairment expense in the first half. For the impairment of two material investments, Westgem, on the balance sheet since 2011, and one other, a Fund 4 investment where our direct exposure is somewhat mitigated, our IFRS results would much more closely match our cash outcome. During the year, we received a record of 1,727 funding applications, increased our funding commitments by 32%, and grew our estimated portfolio value, or EPV, to AUD 20.1 billion. The implied embedded value of that portfolio now stands at AUD 2.8 billion of potential income that may be realized in future years. At the end of the financial year, we have a significant pool of liquid assets in the form of cash and receivables of almost AUD 360 million available to meet our operational requirements, deployment into investment commitments, and to support our corporate initiatives. The ongoing impact of COVID-19 pandemic on economic, business, and social conditions has been particularly challenging. The demands of managing our business through the pandemic are significant, but despite these challenges, we've remained focused, adapted our approach, and where necessary, and executed on strategic priorities. Whilst our diversified model provides some resilience to the impact of COVID-19, which created court delays in our US market, we continue to closely monitor our operations and our teams. We are focused on the safety and wellbeing of our people, alongside delivering upon our priorities for portfolio growth and investment management. I would like to take this opportunity to thank the team for delivering an outstanding result that will create future value for both our private equity partners and our public equity holders. Turning to slide five. Achievements in the period relate to material growth in all key metrics. The investment carrying value, EPV, and annual commitments have each delivered a compound annual growth of more than 35% over the last five years. To grow our pool of investments as we continue to pursue diversification of risk, additions to EPV in our funds exceeded deductions, completions, and losses. Our EPV grew by 27% this financial year alone, with increased activity in the EMEA market, adding AUD 1.1 billion of EPV to our pipeline. This financial year, we invested a record AUD 413 million into investments as we pursue our diversification strategy, funded from private equity funds and our co-invested contribution from our balance sheet resources. We will continue to focus in a disciplined way on executing our strategy to drive future income generation. Turning to slide six. In FY 2016, we commenced a five-year business plan which set out our intentions for the future, pursuing a strategy to mitigate our risks through diversification. The nature of the underlying asset, litigation risk, exposes the balance sheet to binary outcomes from individual investments. The appropriate response to binary risk is diversification, achieved through a portfolio approach to investment. It is the central thesis in many of your portfolios as it is in ours. We've achieved every target of this business plan, culminating in the merger with Omni Bridgeway in November 2019. We have expanded our jurisdictional footprint with new resources, most recently in Spain and New Zealand, and established a diversified portfolio of more than 300 investments. Our EPV growth has grown through increased annual commitments, hitting 95% of our target for FY 2021. In FY 2022, we had a commitments target of approximately AUD 520 million, with around AUD 330 million in deployments, of which OBL contribution is approximately AUD 65 million. We've maintained a consistent team headcount in FY 2021 while expanding our asset base and improving our operating efficiencies. Our funding strategy has evolved over time to diversify investment risks from initially investing on our own balance sheet to now bringing in third-party capital while maintaining a meaningful minority stake in each of our funds. We currently have AUD 2.4 billion in fund under management and are on track to reach our AUD 5 billion FUM target by FY 2025. OBL has, year to date, invested capital of AUD 1.2 billion across balance sheet and fund-level investments, with most investments now sitting within our funds. We anticipate completing the harvest of our balance sheet investments by FY 2024, and thereafter continue to invest only via fund vehicles, both in existing and new structures. Turning to our financial results. Key financial outcomes for FY 2021 include that earnings before provisions for impairments was AUD 88.3 million, which was a significant increase over the half year result of a loss of AUD 37.3 million before provisions for impairments. This reflected numerous second half completions that generated income of AUD 228 million. This contrasts to the few number of completions in the first half that arose partially from the slowdown in U.S. court activity caused by COVID-19. The statutory loss for the period was AUD 19 million, arising primarily from two non-cash adjustments associated with the impairments from Westgem and the Fund 4 investment, FX movements, and two losses in our consolidated Fund 2, 3. Our operational cash expenses were relatively flat on a year-on-year basis as we had expected. Most significantly, we reached important milestones in relation to two material balance sheet investments that are over eight years in duration, both appeals for which are anticipated to be finalized in FY 2022. Wivenhoe is the most significant outcome of any case in our history, and whilst the duration is longer than we had initially contemplated, the result to date, plus what may be achieved in the future, will potentially result in a significant MOIC of between 5x and 9x. An impairment was provided for Westgem together with an impairment for Fund 4, which together with the provision for adverse costs, total approximately AUD 120 million. Both matters are being prepared for appeal, which are expected to be heard in FY 2022. Our legal advice on prospects on both appeals remain positive. Our European operations continue to make material contributions to our future income generation capacity, with new commitments exceeding budget by 80%, triggering the payment of the variable deferred equity consideration tranche. The thesis behind the merger of IMF Bentham and Omni Bridgeway, that the whole is greater than the sum of the parts, is borne out in the number of co-investments that have been generated between our various fund structures that would have otherwise been unlikely to proceed without the extension of our skills and experience. We have now committed to eight co-funded investments with an aggregate EPV of AUD 686 million. We continue to see changes or proposed changes to the regulatory landscape in our key markets, in particular in Australia, the U.S., and Europe. Regulation introduced in Australia has created a hurdle for foreign funders, which has increased the opportunities for domestic funders, including Omni Bridgeway. We now have six Australian class actions launched as managed investment schemes with another six in various stages of due diligence or approval. In Australia, we've now also seen amendments to continuous disclosure and misleading and deceptive conduct laws passed in the Senate. In our view, it will have no material effect on our business, as the typical shareholder class action that we fund require more than strict liability and involve a fault element. Further information relating to regulatory reforms can be found in the annexure to this presentation. Turning to slide nine, our IFRS results for FY 2021. As you will note, investment income generated during the year from funded matters and purchased claims was AUD 272 million, reflecting a degree of consistency of income generated from our activities between FY 2020 and FY 2021, which is the goal we've been seeking through diversification. Other items of note relevant to the profit and loss statement include an increase in management and performance fee income from the prior year. The recurring income generated from management fees will continue to grow as deployments continue to increase. Impairment charges, as we've previously discussed, these expenses are non-cash items that may be reversed in subsequent periods, the negative development associated with the investment reverses. Finally, fair value adjustments, which have reversed from the prior year as a function of the decrease in the share price. From a balance sheet perspective, items of note include a 7% increase in cash and receivables at 30 June on a year-on-year basis, and net assets which remain constant at around AUD 760 million, reflecting the growth in other assets offsetting the provision for impairment. If the impairments are reversed as a consequence of successful appeals, the net asset position will reflect a growth of AUD 120 million, which would result in a pro forma 15.6% increase year-on-year. Turning to slide 10. As we've noted in previous years, the IFRS accounts do not reflect the true performance of the company. While some of our peers may choose to account for assets on a fair value basis, we've avoided doing so unless required under the PPA standards. By adjusting our IFRS accounts for two key items, income that could not be brought to account and for impairments that were required to be brought to account, our results for this financial year would have shown a profit after tax of over AUD 160 million. In FY 2021, we achieved a normalized cash generation from operation of AUD 193 million, which continues the trend from FY 2020. Of significance in this analysis is the increase in contributions from the Fund 6 investor for operating costs. As explained last year, this is a timing difference between periods. The management fee associated with Fund 6 is equal to the agreed budget for overheads for running the European operations and largely offsets all operating costs. This year's receivables balance increased as a result of the recognition of the Wivenhoe settlement income, of which AUD 30 million of the AUD 95 million has already been received. Net operating cash expenditure, which I'll expand on further in this presentation, decreased 9.7% from 30 June 2020. Turning to slide 11. Overall, the normalized operational cash expenditures have remained relatively flat from FY 2020 to FY 2021, despite a 27% growth in EPV. Employee costs increased by 14%, but largely relate to non-cash costs associated with the LTIP plan. The ability to engage and retain our most valuable asset, our human capital, is critical to our overall performance. We prudently manage our employee costs with a focus on ensuring that sufficient resources are in place to deliver growth and achieve our long-term objectives. We anticipate efficiency benefits as our income base increases relative to costs, with gains achieved from greater leverage of our investment team. Our operational efficiencies continue to improve. Five years ago, net operational expenditure as a proportion of investments was 26% and has now improved to 12%. We are seeking to move to a more capital-light model and should be able to do so as our recurring management fee income increases to defray in part and eventually in whole our cash operating costs. Turning to slide 12. We have a strong capital position of AUD 360 million in cash and receivables, which support our corporate initiatives to finance our operating costs and to make anticipated contributions to funds to meet new and existing investment needs. Through prudent capital management, we also have the potential to repay debt, pay dividends, and buy back shares, subject to prevailing market conditions and appropriate financial metrics. In FY 2022, we will look to refinance our debt, for which there is a window from January to December 2022 to do so. We will look to establish a revolving credit facility to reduce our overall cost of capital. Turning to portfolio performance. Our portfolio EPV is balanced by region and diversified by investment type and funding source. The balanced geographic footprint enables us to respond to developments in external risks, such as competition or adverse regulatory intervention. Whilst we continue to be an opportunistic investor, whereby we will invest in legal risks that are sourced from third parties or identified internally, we do so with a focus on diversifying our portfolio, both geographically and by investment type. 68% of our investments are now located in the northern hemisphere. Given the size of the respective legal markets and our U.S. growth strategy, we anticipate this weighting will increase. Global class actions now represent only 25% of our book, including investments in Australian class actions, as well as multi-party matters in Canada and Europe, which are down from 40% at 30 June 2020. Over a third of our investments are in single-party matters, such as commercial arbitration and litigation. This has been the hallmark of our historical success. We intend to diversify this focus into other areas of legal risk, and we anticipate that enforcement investment will be a growth area over the next several years. No new balance sheet investments have been made since the commencement of our funds management business in 2017. As such, currently, only 4% of EPV is from investments made on our own balance sheet outside of the fund structures. Turning to slide 15. Our performance this year reflects solid growth and progress across the global portfolio, despite the COVID-19 related delays primarily in the U.S. In Fund 1, several completions occurred in the last quarter that we had anticipated for FY 2022, which enabled us to accelerate payment of the priority obligation to our investor. We are exploring other options to accelerate distributions, including secondary market trades and refinances. Funds 2, 3, and 4 have had early wins in the portfolio, and as such, we do not expect the IRRs that have been achieved to date to be sustained. As the portfolio matures, we anticipate the returns will normalize and revert to the mean. Duration is one of the risks over which we have no control. Given the timing of conclusions will be determined by the court and the desired defendants to settle. In Fund 5, our lower IRR reflects the matters are completed within a few months of investment, whilst generating a ROIC of 28%, it only has an IRR of 5%. In Fund 6, we've seen a reasonably consistent number of completions compared to last financial year with a stable IRR outcome. For Fund 7, our investments into this fund have been affected by COVID, which resulted in few investment opportunities presenting themselves for consideration. We do anticipate that the IFC relationship will generate some compelling short-term opportunities for consideration. In the last 12 months, on-balance-sheet investments have decreased to 13 investments with an EPV of approximately AUD 840 million as of 30 June 2021. This reduction demonstrates the balance sheet runoff as we continue our transition to the fund management model, whereby investments are funded through dedicated investment vehicles with global co-investing and joint venture structures. Following the developments on key investments, Wivenhoe and Westgem, our balance sheet is now less exposed to concentration risk. Slides 16, 17, and 18 contain several analyses to assist with your understanding of the anticipated future returns from our funds. Our 1st generation funds have considerable potential to return capital and distribute preferred returns to NCI investors, distribute capital and fees to OBL, and provide material profits to both OBL and NCI investors. For Fund 1, we anticipate a number of FY 2022 completions, which should enable OBL to receive a distribution of capital and potential profit distribution in FY 2023. Subject to underlying assumptions, OBL should commence receiving cash distributions for Funds 2, 3 in FY 2022. Our 2nd generation funds have significant additional capacity available to make new investments to generate substantial returns for both OBL and fund investors. Based on the example investment return, OBL contributes 20% of the invested capital and receives approximately 34% of the investment income, including the 2% management fee on the invested capital deployed. We acknowledge that the return profile of Fund 6 is difficult to model, given the varying waterfall arrangements of the underlying investments. We can advise that historically, around 25% of the proceeds from completed investments have been attributed to OBL. This is an overall average that does vary by investment type. Turning now to strategy on slide 20. You have heard today about the measurable progress we have made in executing our strategy to leverage our diversified model to improve our portfolio and to grow returns. Importantly, our transition to funds management model will support our progression to achieve a more balanced portfolio allocation over the next five years and to reach our aspirational goal to increase funds under management to AUD 5 billion, with AUD 1 billion of new annual commitments by FY 2025. We have achieved a number of key milestones in FY 2021, including we now have on-the-ground resources in Madrid and Auckland, and soon to establish offices in those markets. We've launched our LatAm strategy, initially on a fly-in, fly-out basis as we continue to explore opportunities, and we continue to explore opportunities for further expansion in Canada and the U.S. We have expanded our product offering to include our claims monetization strategy. We now have 14 purchased claims in our portfolio. We're looking to secondary market transactions to improve our liquidity in funds and possible M&A opportunities. We've identified the following key goals for FY 2022 to include the launch of our AG fund in the amount of EUR 300 million, focused on a global enforcement strategy. Over AUD 520 million for new commitments. Refinancing of our debt facilities, which should provide us with greater flexibility for our fund management business and to execute our U.S. strategic plans. Turning to slide 21. The U.S. represents the largest legal market in the world, as such, our greatest opportunity for further growth and penetration. This is the primary reason why I've relocated to New York in April of this year. Despite the challenges presented by COVID-19, we achieved 60% of our commitment target for FY 2021. We have doubled our FY 2022 commitment target in the U.S. to AUD 225 million. We will achieve this through a revised strategy that includes expanding our headcount of investment managers and our suite of investment products to include law firm funding, monetization of claims, and enforcement investments. Expanding our geographic footprint in the market, continuing to improve our efficiency ratios, including gains and due diligence and funds committed per investment manager. We'll employ risk management tools such as portfolio insurance products and explore secondary market opportunities to improve the liquidity of our investments. These changes will occur over the next 24 months will leave a longer imprint on our view of investing into legal risk in this region and potentially around the world. We're excited about what this market has to offer and how we can best leverage our extended range of opportunities and utilize our team of experts and specialists. We will continue to focus in a disciplined way on executing our strategy to underpin future growth, both in the U.S. and the rest of the globe. Fundamentally, what differentiates us is our experience, our track record of success, and unmatched reach and origination framework. We see great opportunities ahead for the business, and I would now like to open the call for questions. Thank you. Thank you. Your first question comes from Michael Peet from Goldman Sachs. Please go ahead. Hi, Andrew. Thanks for the detail there. First question, just on funding agreements and the outlook. I'm just interested in what you're seeing in terms of opportunities out there versus the competition that's out there. Are you seeing any change in your funding agreements, the quality of the cases and opportunities that you're looking at? It sounds like it's diversifying a bit. Is there any sort of significant changes that you're noticing in the industry? Nothing of great consequence, Michael, in that respect. We're certainly seeing a broader range of opportunities in different markets around the world. Because of that, we get to see, obviously, a variety of quality of those investments. Our selection standards haven't changed, and our conversion rate remains around that 2% level. As a consequence, the quality of our portfolios is being maintained. Could you just give us a bit of an update on, maybe by the larger jurisdictions, in terms of what sort of pickup you're seeing, if any, in terms of as economies are opening up, in terms of the mediation process and court dates? Are you being able to see court dates that are locked in or are they still sliding a bit in terms of the process that you're going through? In the U.S., we're seeing court dates are being locked in, for both this first half of this financial year as well as the second half of the financial year. That has accelerated our views about what might complete this year. That's largely as a consequence of the reopening of the jury system in the States, which has enabled the courts to set dates. There is still a backlog, so we're not going to see a mad rush. Criminal cases are being dealt with first here in the States, and then civil cases will be dealt with. Dates are starting to be locked in, and as a consequence, there has been a tangible shift in views about mediation and settlement. In Europe, things have continued pretty much as business as usual. We hadn't actually seen too much interruption as a consequence of COVID on court dates. What we had seen is some reluctance for people to negotiate settlements and commence mediation processes. That seems to have slightly changed, and we are starting to see an uptick in opportunities to settle. Australia and Asia weren't greatly affected. The court system largely continued to operate in Australia unaffected by COVID. New processes and procedures were put in place, but nothing really of great consequence. In Asia, the majority of our investments relate to arbitration investments, and arbitrations proceeded on a virtual platform, unabated by interruptions from COVID. Just a final one from me. The U.S. strategy there with the 20 to 50 people headcount increase, could you give us a sense of what the annualized cost of that might be? Obviously, that seems like it might annualize into 2023. Just also, if there was a loss of Westgem and the fund for impairment cases that you've taken, what would be the cash outflow from those two if you actually lost those cases? Sure. There were two questions in there. The first was dealing with the costs. We've estimated the additional costs for the new hires are going to be around AUD 10 million. What we have is reallocated resources from other regions, particularly from Australia, where we've saved about AUD 6 million or AUD 7 million in expenses this year. We're not going to see a material change in our overhead costs. The other thing I think that's important to remember in relation to investment managers is whilst there is a cost associated with them, they're profit centers. The average investment manager, at a cost of a few hundred thousand dollars a year, should, within a year, become a profit center and generate investments that have the potential to return profits of about AUD 8.4 million. Each investment in a human asset is actually creation of future revenue. In terms of the cash costs for Westgem and the Fund 4 investment. The Fund 4 investment, there's no additional cost. It's a U.S. matter, therefore there's no cash implications, the investment's been made. There's no additional outflow. With respect to Westgem, it has been fully provided for. There will be, obviously, a write-off for the investment, which is a non-cash item. There will be an insured portion that's contributed, for adverse costs, and there will be an uninsured portion, which will have a cash cost. I think the estimate currently is about AUD 7.5 million-AUD 9 million for that as a cash cost. Great. Thanks, Andrew. Thanks, Michael Peet. Your next question comes from Jason Palmer from Taylor Collison. Please go ahead. Yeah, thanks. Good morning, Andrew and Stuart. How are you? Yeah, very good. Thanks. No worries. Just by the way, well done on the presentation. It's a real improvement, in particular the fund's slides, which sort of go through the economic returns. That's really well done. Just had a question in respect of the cash on hand on the balance sheet and the receivables on hand on the balance sheet. I can see in the segment notes under corporate, there's about AUD 100 million of cash and cash equivalents. There's receivables of about AUD 110. I presume within those receivables of AUD 110, the lion's share of that is half of Wivenhoe. Are you able to sort of talk through what the expectations are around actual cash settlement of that half portion of Wivenhoe? Yeah, sure. Jason, we've already received AUD 13 million of that receivable. The other portion will flow once the distribution settlement, it's called a settlement distribution scheme, has been executed for distributions to clients. Now, that largely depends on the assessment process for losses. That can take anywhere from 6 months to 18 months, depending on how complex that is. There may be interim distributions and such, we'll get interim distributions along those lines. It's not going to be a short process. Okay, thanks for that. Is it at all dependent on the remaining contested portion of Wivenhoe? No. Right. Sometime over the next 6 to 18 months, that outstanding collection of somewhere between AUD 80 million-AUD 90 million will come through to the business. Plus, whenever there's a result on the other portion, there will be somewhere between 6 and 18 months after that for that other portion to come through to the business. Well, because the settlement distribution scheme and the assessment of damages will be done in the first process, I wouldn't expect that the second process will be as prolonged. You only need to assess the damages once, and then the distributions will occur as to how much cash gets distributed. If there was a subsequent settlement or an award, in relation to that other 50%, the Seqwater portion, that won't have to go through the same type of prolonged assessment process. That would be a much shorter period. Okay, thank you for that. In respect of the U.S., I can't help notice the underperformance of that region relative to the rest of the world. I appreciate you've moved over there and you're throwing more investment behind that. Could you maybe talk to what level of conviction you have around actually doubling the commitments in the next 12 months? Oh, very high conviction. That's for the purpose of ranking up the investment in the region. The opportunities were constrained largely because of COVID. There was a lack of appetite for new litigation being commenced. People figured without court dates, what was the point in spending money on litigation at this stage? Legal cases don't go to scale for a number of years due to limitations issues. What we anticipate is that there's probably a backlog of litigation claims that has been held over, waiting for a little ray of sunshine to poke through with the reopening of the court system. We've got very strong views about our ability to hit that target. Your next question comes from Alex Zhao from Kabouter Management. Please go ahead. Hey, Andrew. Thanks a lot for giving a great presentation and good job on the new information provided on the fund. I have a question regarding slide 10, the non-IFRS analysis. My question is, number one, on the net cash generation slide on the right, is the company's cash invested for cases included in the cash burn or somewhere in that line or not? The way I look at it is that although the reported earnings were negative in fiscal 2021, but for fiscal 2020 and 2021, the company has had two years in a row of very strong positive net cash generation. I wanted to make sure if the investments of new cases were included in the net cash generation number or not. No. That's before the investment into cases for the year. The AUD 231 and the AUD 192 is before investments have been made into the fund structures. Our average investment out of funds, for this year, for example, is anticipated to be about AUD 65 million. It was slightly lower last year, as a consequence of the lower commitment level. No, the calculation before the cash invested into new matters. Got it. Those numbers are before new case investments? Correct. One last question, which is more a broader picture. I understand the IFRS number may not do Omni Bridgeway justice because of, like you mentioned in the slides, the different requirements on recognizing income and also recognizing impairment. I guess, where should we draw the line in terms of assessing the real underlying cash earning power of Omni Bridgeway? It seems that if we're using the net cash generation number, that was before case invested. If we were using the reported earnings, obviously that were negative. Directionally, where should we draw the line to assess kind of the true cash earning power of Omni Bridgeway? Sure. The P&L doesn't include cash that's invested into new investments either, because they're capitalized into the balance sheet. They're not expensed through the P&L. There is a degree of relativity between both the IFRS and the non-IFRS in this sense. From a pure cash generation perspective, you would look towards the non-IFRS number and deduct off the amount that you've invested into new cases. Given that that's all on a consolidated basis, that would include all of those investments that we've made into the new matters that year. I see. For cash basis valuation, I should look at the AUD 193 million and minus the cash outlay that you will have every year for cases. Correct. Yes. I see. Just to confirm, I think you mentioned that before on Westgem. For some cases where even though you take a relatively big impairment cost because of the historical costs that you have invested, like for a lot of cases, for almost all the cases, you are the plaintiff, so even if you lost the case, the most you will lose would just be the attorney fees up to that point. It is not like if there's a case that you lost, you're gonna face a big cash outlay. Is that a right way to think about it? That's the correct way to look at it now because of the investments that we make in the U.S., where there's no cost shifting, you don't have an adverse cost exposure. For Fund 5, we have that ATE wrapper policy that protects us against a large portion to all intents and purposes, almost all of the adverse cost exposure. There is a risk that there will be some uninsured portion, but that will be met by the fund. If there is an uninsured portion, that would be met on the 80/20 basis of investors to balance sheet exposures. Your next question comes from Peter Meichelboeck from Select Equities. Please go ahead. Hi, Andrew. Thanks for your time. I've got three questions. My first question is in relation to operating costs. When I look at the total cash costs, including the capitalized expenses at the corporate level, they're now running at AUD 80 million or AUD 90 million per annum, of which AUD 60 million to AUD 70 million is employee-related, of which I assume the majority is for the team of investment managers, legal counsel, and other staff who are spending, I suppose, virtually their entire time managing specific cases. My question is, what proportion of the wages for this investment team is specifically allocated to individual cases and hence would appear in the litigation cost line for those individual cases, as opposed to the proportion of the total wages bill that's carried at the corporate level? It appears to me that virtually all of it's at the corporate level, which I suppose means that the company has got a large corporate cost center in that sense for a company of its size and also at the same time, arguably artificially boosting the net returns at the case level. I'm just hoping to understand how the costs are allocated. I'm not sure I quite follow the question, but if I understand it, I don't think the 80-90 number's right. I'm not sure about the split between front office and back office. The total expenses for wages is in slide 11, you'll see there's employee benefits expense of AUD 57. The capitalized portion is AUD 9.7, so the total, the addition of those two, is about AUD 68 million. I think the rough split between front office and back office is probably 50/50. I think if you got that split and looked at it'd be more weighted towards the front office generally because they're a higher per employee cost. I couldn't give you the precise figures. Right. Do any of those costs actually appear in the litigation cost lines for the cases themselves? No, they don't. The only costs that get capitalized are the costs associated with the relevant investment management team that are working on that specific investment. Okay. Can I also ask, given that you've already got plans in place over the next few years to effectively double FUM, how should we be thinking about the cost base? Should we be expecting that employee-related costs in particular to double over that time as well? No. I think as I explained, we had an increase in employee costs of about 14%, the majority of which related to LTIP. From a cash perspective, it was relatively flat. During that period, we saw a 27% increase in EPV. There's not a direct one-to-one relationship between expenses and increase in EPV. That's largely because of the operational efficiencies that you can get through gearing and leveraging of your staff. You increase the average investment per investment manager, so you don't necessarily have to keep adding investment managers to grow. There's no doubt, to get to a significantly higher FUM, we will probably need to add some additional people, but we're not expecting headcount to double or anything along those lines. Far from it. Just on my second question, I know that the company likes to focus now on EPV and IEV, but my second question is relating to return on capital. If we go back to the start of IMF in the early 2000s, the returns in the Australian cases were very high, averaging nearly 200% ROIC. Since then, the ROICs in Australia have been in a fairly consistent long-term decline, while we would believe that the returns in the U.S. have been consistently disappointing. I'm just wondering, firstly, do you expect ROICs in both the U.S. and the rest of the world to improve from where they've been averaging over the last, say, three years? If so, what specifically do you think is going to change to drive that improvement? Also, given the size of the cost base that you've got- Sorry, Pete. Yeah. Sorry, Pete, to jump in. There's a lot of other people on the call and lots of other questions to answer. Let me just deal with the ROIC question. As I said to you last year, the answer is, ROICs, we're not reporting on, so I can't comment on it. What we do report on is the EPV, from which you can calculate the embedded value. Thanks. Your next question comes from Kevin Ong from Amitell Capital. Please go ahead. Good morning, Andrew. This is Kevin. Two questions. First one, since having the launch of Fund 8, could you just speak to the opportunities that you're seeing within enforcement cases? Sorry, Kevin. The lines are a bit crackly at my end. Did you say Fund 8 and the opportunities? Yes. Correct. You're saying now that Fund 8 launch is imminent. Could you just speak to the opportunities that you're seeing within enforcement cases? Sure, no problem. Fund 8 is a dedicated strategy towards enforcement opportunities. It's really a follow-on fund to Fund 6. Fund 6 is near capacity, and as a consequence, we need to get a follow-on fund to create additional capacity for that strategy. The enforcement opportunities are global in nature. We see investment opportunities where, for example, a plaintiff has got a judgment or an award, say, here in the U.S. that is against a German defendant that's got assets in Singapore. We will apply our global network to identify the opportunities to enforce and recover those assets. What we have seen over the past 18 months since our merger with the Omni Bridgeway European team is an increase in those types of opportunities. That's for matters that have some merits risk, as well as some that have pure enforcement risk. It's a growing area. It's one we're looking to expand here into the U.S., and establish a team here to deal with those opportunities here. Got it. Okay, second question quickly. With the cash distributions coming through from the first-gen funds starting right around the corner, can I just get your plans around capital allocation? Well, as we identified in the presentation, I think there's a number of opportunities for us, which include dealing with debt, potential dividend distributions, as well as potential buybacks. We're also looking at financing our ongoing operations and growing commitments to the fund. There's plenty of ways to use it in productive ways, as well as rewarding shareholders for their support. All those plans are on the table, Kev. Got it. All right, thanks. Once again, if you wish to ask a question, please press star then one on your telephone keypad and wait for your name to be announced. Your next question comes from Gavin Allen from Euroz Hartleys. Please go ahead. Andrew, it's Stuart Mitchell. Hi, thanks for that. I thought that was good. Just a quick one from me. It seems to me that one of the challenges that we've seen over the last sort of 18 months or so, in relation to COVID and other associated challenges, we've seen outcomes not always match the previously articulated EPV timing. We've just seen the EPV push, right, and we understand that. You've essentially answered this, but in the interest of completion, do you see enough has opened up to start to expect that relationship to sort of tighten up, meaning outcomes, whatever they might be in 2022, might better match the EPV timings we've currently contemplated? Just wondering. Yes. No, Gavin, it's a good question. It's always our biggest challenge. Duration risk is the one area that we have the least control on. It's largely driven by the availability of courts and the desire of defendants to settle. We don't control it. We don't have a great deal of influence over it. The EPV estimates are the best that we get based on our expectations. Putting that aside, that's a negative way of responding. On a positive side, we do actually think that the estimates that we've now given are reasonably conservative. In fact, we were conservative in our last quarter to the point where we were actually wrong and we had to accelerate a couple of completions that occurred in FY 2021 that we'd actually expected to finish in FY 2022. Look, we continue to see slippage both forward and backwards and we update it on a quarterly basis to try to keep the market properly informed on those movements. Very good. Thanks, Andrew. I liked your slide 16 and 17 too, by the way. That's all from me. Thanks. Terrific. Thank you, Gavin. There is no further time for questions. I'll now hand back to Andrew for closing remarks. Thanks very much to everyone for your time and attention. Hopefully, we've answered all of the relevant questions. If you've got any follow-up questions, please don't hesitate to reach out. Thank you once again, and look forward to speaking with you again. That does conclude our conference for today. Thank you for participating. You may now disconnect.