Integral Diagnostics Limited (IDX) Earnings Call Transcript

Thank you for standing by, and welcome to the Integral Diagnostics Limited H1 FY 2020 Results Presentation. [Operator Instructions] I would now like to hand the Ian Kadish, Managing Director and CEO. Please go ahead.

Thank you, operator, and thank you all for joining the call. My name is Ian Kadish, I'm the Managing Director and Chief Executive of Integral Diagnostics. I'm joined this morning by Anne Lockwood, our Chief Financial and Commercial Officer. We are pleased to be talking to you today to discuss our results for the first half of financial year '20. I'll start with reviewing the financial highlights. We delivered above-market organic growth as well as growth from acquisitions in the first half. We grew our operating revenue by 15.3%, and we grew both our operating EBITDA and our operating net profit after tax by about 10%. We also grew our statutory net profit after tax by 1.9%. We completed the acquisition of the Imaging Queensland Group effective from the one -- from the 1st of November 2019 and integration and operating performance of the group is on track and within expectations. We continued to deliver industry-leading margins, with an EBITDA operating margin of around 22.2%, which is slightly lower than last year and was impacted in the first half by the loss of a trading day compared to the PCP; the North Melbourne Specialist and Research Centre is still in ramp-up phase, breaking even at EBITDA; and major refurbishments at the John Flynn Private Hospital in Gold Coast and St. John of God Private Hospital in Ballarat necessitated some downtime while the refurbishment was happening at both facilities. The Australian acquisition of Imaging Queensland included 2 months in the financial year. And we call out the acquisition as an Australian acquisition because operating margins in Australia are generally slightly lower than New Zealand's so acquisitions in Australia tend to reduce our operating margins slightly. We declared a fully frank half year dividend of $0.055 for the first half, which is an increase of 10% over the prior comparable period. And we have implemented a dividend reinvestment plan, which is available for use with this dividend. We successfully completed our capital raise, which was oversubscribed in September 2019. We raised $72 million with issuance of 26.6 million new shares at $2.71 per share. Moving on to our operational highlights for the half. These included expanded operations at the John Flynn Hospital in the Gold Coast, with the first-to-market privately installed Digital PET in Queensland. We also completed the redevelopment of the St. John of God Private Hospital MRI facilities in Ballarat, including the colocation of 2 MRIs, a 3T and a 1.5T, creating an MRI supersite for the region. We installed 2 new Cardiac CTs, one at Pindara Hospital on the Gold Coast and the other at St. John of God Hospital in Geelong. And we completed the redevelopment and extension of the specialist center, the Peel Specialist Centre in Mandurah to support new oncology services in that region of Western Australia. We continue to invest in our radiologists through a FY '20 radiologists loan funded equity or option plan, which was oversubscribed. Radiologists invested $1.5 million in the plan, and they were provided with either a variety of shares or with options that will mature over time. 63 employed radiologists are now shareholders of Integral Diagnostics. We have announced today a further release of 3.1 million shares for the original vendor radiologists, and a further release of 3.1 million shares for these vendor radiologists will be released by September 2020. We continue to invest in our people and in the future of our community. We completed an entity-wide survey to identify strengths and to prioritize the areas of improvement so to ensure our team are equipped and developed to the best of their ability. We continue to focus on our social and governance program. And we commenced our environmental program to assess our carbon footprint and other sustainability improvement initiatives. We continue to leverage technology to improve clinical outcomes and the patient experience. We completed an integrated platform for remote reporting across the entire IDX Group, with the new acquisition, IQ, shortly to be integrated on to that same platform. And we're in the process of rolling out a patient app across the group. The patient app has been installed in Queensland, in Southeast Queensland, and is currently being rolled out across the rest of the group. We also implemented AI software, artificial intelligence software, to assist workflow and to prioritize patient care, saving lives and increasing quality, service and efficiency. We won't lose our focus on the importance of cybersecurity and the importance of patient privacy. I'm now going to hand over to Anne to take us through our financial report in a bit more detail.

Thank you, Ian, and good morning, everybody. I'm on Slide 5 and working through the results. Importantly, prior to the impact of AASB 16, our operating first half '20 results delivered growth, both organically and from acquisitions. The Imaging Queensland Group came on from the 1st of November, and these results include 2 months of operations, being November and December. I do draw to your attention that December, for radiology businesses has given the Christmas shutdown, can be one of the -- is one of the slowest months of the year. And as such, the IQ operations for November and December do not reflect what we expect that acquisition to do over the full year. Our operating revenue for the first half '20 of $131.8 million was up $17.5 million, or 15.3%, which was really strong growth. Our operating EBITDA of $29.3 million was up $2.6 million, a 9.7% change. As Ian pointed out, our EBITDA operating margin of 22.2% was slightly lower than prior year, but we had called that out. And the reason for that and Ian went through those in the highlights, and that has happened as we expected. Our operating EBITA is $22.6 million, up $1.3 million or 6.1%, delivering operating NPAT of $14.2 million, up 10%. Our free cash flow of $25.1 million was up by $1.2 million, and that also reflects an additional $1 million more of replacement CapEx with conversion remaining consistent net of replacement CapEx is 103.7%. Dividend declared per share of $0.055 is up by 10% from the prior half. And our net debt and our leverage has come down to 2, and that is importantly off the trailing EBITDA. So we expect that, that will continue to decline as we get the full 12 months of operations. I'll turn to Slide 6 and run you through the results with the impact of AASB 16, and we'll try to be as clear and transparent as we can to really step through what the changes in AASB 16 are because they are reasonably large given our portfolio of 70-plus leases within the group. So there are upward impacts to our EBITDA for the first half of $5.3 million. EBIT is an upward impact of $1.5 million and NPAT is up by $0.2 million. It's important that I point out because cause of our large lease portfolio and it's continuously changing, AASB 16 will continue to cause fluctuations in our results similar to a fair value accounting board, and we will need to continue to monitor and communicate what those impacts are as we continue to work through results periods into the future. Turning to Slide 7. We have a reconciliation of operating to statutory numbers for both NPAT and EBITDA. The biggest movement here are the transaction and integration costs that we incurred on Imaging Queensland. The capital raising costs have been offset in equity and do not go through the profit and loss. So they're not included in here, these are the transaction costs relating to Imaging Queensland. We also have the amortization of customer contracts. The bulk of that amount relates to the continued write-off of the New Zealand customer contracts we recognized are on the acquisition there, nearly 18 months ago. That is nearly completely amortized. It's about 130,000 left to go, but we now have ongoing amortization due to the customer contracts recognized under the Imaging Queensland transaction. We called them out as a one-off because they are -- those amounts are driven by purchase price accounting requirements under the accounting standards, and they are noncash movements, and they will not be ongoing in the business. Turning to Slide 8. We just have a slide on our dividend growth since we IPO-ed, which displays we have had strong, consistent growth in dividends. Our dividends are fully franked, and we have a very healthy franking credit account. And I'll also draw your attention to the newly developed dividend reinvestment plan, which is available for participation in the first half '20 dividend. Turning to Slide 9 and a focus on revenue. We had solid growth in revenue, which was driven by new sites, our investments in new equipment and 2 months' contribution from Imaging Queensland. Organic Australian revenue was $109 million, it was up $6.9 million or 6.8% compared to Medicare growth in the states that we operate of 6.5%. So again, we were above market, which was quite pleasing. Volume growth was at 4.3%, again, compared to Medicare of 2.9%. So we were very pleased with the growth we delivered from organic operations in Australia. New Zealand also grew at 7.5 -- 7.4% and delivered AUD 13.1 million of revenue. Growth was delivered across all business units. And pleasingly, our average fee per exam increased by 1.3% in first half '20, and that shows a continued move towards higher modality MRI CT within our volume mix. Turning to Slide 10, operating expenditure. We continue to focus on cost control while still investing to support our growth outlook. We continue to deliver industry-leading margins across Australia and New Zealand. Our employee costs did increase by 1.3% as a percentage of revenue, and this was driven by group-wide wage increases for all of our people and continued investments in radiologists and remuneration structures. However, consumables, equipment and occupancy all continued to decline as a percentage of revenue, which was driven by our ongoing extraction of savings from this negotiation and implementation of group-wide purchasing contracts, which leverage the increasing scale of IDX. We had other costs increased by about 0.5% of revenue. And this is due to our ongoing investments in our technology platforms around human resources, finance, governance and risk management to ensure the growth can be appropriately managed and supported as we move forward. Depreciation is increased, which you would expect, reflecting our growth capital investments made over the last 18 months plus 2 months of Imaging Queensland, and our refinanced debt facilities and declining interest rates delivered lower finance costs. Moving to Slide 11 and our capital management. We have a strong balance sheet, and it's continuing to reduce our leverage. As I pointed out earlier, at 2x EBITDA leverage is on a trailing EBITDA, and we do expect that to continue to decline and come under the 2x. Importantly, in the balance sheet, AASB 16 adds a right-of-use asset of $88.2 million and a liability for lease payment obligations of $94.7 million, and we've separated them out very clearly in the balance sheet. So it's very clear what the changes of AASB 16 are. We have the third consideration of $13.2 million on our acquisitions, $12 million of that relates to Imaging Queensland, which is what we expected when we announced the acquisition of Imaging Queensland. And our expectations and the performance of Imaging Queensland is in line with absolutely where we expect it to be and the deferred considerations being recognized in full. Another $1.2 million relates to the GMI acquisition, which is the Geelong acquisition we did 18 months ago. Turning to Page 12, Slide 12, and our cash flow and our cash conversion. Again, we have split up pre AASB 16 and post AASB 16. Importantly, cash remains cash. So the free cash flow pre AASB 16 or post 16 is exactly the same at $25.1 million. However, the free cash flow conversion to EBITDA will come down under AASB 16 because you've got a higher operating EBITDA that you're calculating the conversion of. So I just thought that was important to step out and be very clear to you on. Turning to Slide 13 and our capital expenditure. We have increased CapEx commensurate with the size of our business and investments for future growth, which is in line with our strategy. During the first half, we spent $16.5 million. $5.3 million of that was on replacement CapEx. The bulk of that was on the refurbishment and relocation of the MRI in Ballarat to develop the MRI supercenter. And the growth CapEx of $11.2 million, the bulk of that was on the John Flynn Hospital redevelopment and the new PET center up there, which is an absolutely amazing development. Ian and I were up there a couple of weeks ago, and we're very impressed with that, and it is operating strongly. That was $7 million of spend. And in the second half, we continue to expect to spend $25 million, estimated, on CapEx. So we have $3.3 million of replacement CapEx and $5.3 million of growth CapEx planned for the second half, which Ian will take you through the details of what that spend is when he touches on our second half priorities. And I will hand back to Ian.

Thank you very much, Anne. I'll provide a market update, starting on Page 15. Our industry growth rates remain stable. Benefits continue to increase versus relatively flat volumes due to the continued move towards the higher value, more expensive MRI and PET modalities. What you see on Page 15 are 2 lines. The top line represents the benefits paid in dollar terms, whereas the bottom line represents the volume or the amount of services provided. Think this widening gap between the lines represents the fact that we're doing relatively the same amount of basic X-rays and ultrasounds, but we're doing a lot more of MRI, CT and PET scans, which means that the average value of these scans continues to increase. So the dollar line goes up, but the volume of services line remains flat, which is right and appropriate and works well [ within a growth ] strategy of moving towards the higher value modalities over time. I'll move on to Page 16, the regulatory environment. 52 full MRI licenses were issued in financial year '19, of which Integral Diagnostics received an upgrade from a partial to full license at Pindara Private Hospital on the Gold Coast. Some competitors of ours in Geelong and in Mandurah were also issued full licenses, but their licenses have not materially impacted IDX's MRIs in those markets. No further licenses or plans for MRI licenses have been announced. On the 1st of November last year, the Medicare Benefits Schedule introduced 2 new important codes for breast MRI and for breast PET scans, and the addition of these MBS items provide patients and clinicians access to very useful tools for the early detection and staging of breast cancer. On the 1st of May this year, there will be additional changes brought on to the Medicare Benefits Schedule, but we don't expect these to be material. There are no significant changes expected on the -- until the 1st of July when indexation is going to be introduced. That will impact 80% of the benefits paid, 90% of the volume of work we do, but 80% in terms of value. IDX will continue to work with the ADIA to address key regulatory issues within the industry, including extension of this indexation across the remaining Medicare items; new funding settings that will promote efficient provision for outpatient services; the appropriate funding for radiology services provided to our veterans; and additional patient bill relief. We briefly have also reviewed for you the regulatory environment in New Zealand, but don't expect any -- but do not expect any material changes there. We received annual indexation across all of our contracts in New Zealand. And the Auckland diagnostic imaging market, which is the market that we operate in, is expected to continue to grow, driven by strong net migration to the region, aging demographics and adoption of new technologies that improve patient outcomes. The 2020 New Zealand general election has been set for 19th of September, but no material changes have been flagged to date that would impact diagnostic imaging. I'll review our strategy on Page 19. We now operate in 5 key markets: in Victoria and Queensland; in Western Australia and New Zealand; and with our latest acquisition on the Central Queensland Coast; and on the Sunshine Coast in Queensland. We have 64 sites now across the group, including 20 hospital sites. We have 25 MRI machines, of these 17 have licenses, 13 at full licenses, 4 have partial licenses, and obviously, our 3 MRIs in New Zealand do not require Medicare licenses. We have 105 employed radiologists across the group and an additional about 46 radiologists that we contract with. And we now have 1,326 caregivers all across IDX. Our strategy remains focused and consistent. Good medicine is still good business. We're going to continue to grow our existing market -- business and margin and we'll continue to grow the business through considered and disciplined acquisitions. We will drive organic growth through business integration and further efficiency gains by utilizing our hub-and-spoke model, clinic model, which works very well. We will continue to optimize our technology solutions. We will be driving our environmental, social and governance agenda. And we will do it all under IDX's unique medical leadership model. We will continue to make disciplined acquisitions, both bolt-on and strategic acquisitions. Our key priorities in the second half include the 5 key areas outlined on Page 21. In terms of driving organic growth, business integration and further efficiency gains, we will continue to integrate Imaging Queensland into the IDX Group, and we will select best-of-breed work practices to drive operating efficiencies across the whole group. We will shortly be opening a new Hope Island site on the Gold Coast. We're also installing a new CT at the Bacchus Marsh Hospital in Victoria. We will continue to ramp up our North Melbourne Specialist Centre, and we'll shortly be opening a new call core center in Victoria. We're going to continue to use digital technology to improve the patient and the referrer experience. We will continue to execute on the AI strategy through considered, sensible adoption of AI algorithms that increase patient care, service and efficiency. We will complete implementation of the patient app across the whole group to improve access, knowledge and flexibility for the patient and their referrer. We'll leverage our reporting platform to develop [ sub ] specialty workflows to develop best-in-class care and reports for referrers and patients and we will build our network and our core infrastructure to ensure a consistent, reliable ICT platform across the business. In terms of our ESG agenda, we will focus on IDX's ESG agenda technology areas in which we already do apply best practice and to identify additional areas where we can do better with a specific focus on ethical supply chains, responsible consumption and our carbon footprint, diversity and inclusion, community relationships, corporate governance and reporting of our ESG scorecard. We will continue to develop our culture and our leadership capabilities to leverage strength in the culture survey that we have run group-wide, and we will act on areas for improvement. And we will develop the leadership capabilities of our people across our group. We will continue to evaluate further strategic acquisitions that are a clinical fit, strategically aligned and earnings accretive. We will undertake analyses and due diligence on acquisitions that meet these criteria, and we are considering several growth opportunities in what is a very active health care sector. I would like to hand over now back to the operator for questions.

[Operator Instructions] Your first question comes from Matthew Nicholas from Crédit Suisse.

Just the first one, just on IQ. I think you priced, like, pretty consistently through the half that November, December -- or December, particularly, is a weak month. Can we get a sense on exactly what that contributed from an EBITDA sense in the first half? And also, I know there was 1 contract left to roll over as part of the change of ownership agreement that wasn't done at the back end of last year. Can we just get an update on that?

Sure. Thanks, Matt. We're not going to disclose specific margins for Imaging Queensland, but we have provided the information that you should be able to step it through. But it's safe to say that the margin for the 2 months for November, December was -- because of the December operations was well under the sort of the 20% as to where we would expect that business to operate as. In regards to the second contract, we're still working through that with the hospital owner. And I think as we pointed out, that it's not a significant contract in the group. But obviously, ideal for us to roll over and to come to an agreement, and we continue to work through that hospital contract.

Great. And just in terms of the second half, you haven't provided an explicit outlook. But I think intuitively, the expectations that margins in the second half will be better. I mean other than Imaging Queensland, which normalizes in the second half, where should we expect the driver of margin upside to come from?

Yes. Again, I think it's fairly clear in the details we've given. The refurbishments of John Flynn and St. John of God Ballarat are completed, and the business is continuing to extract savings from the national contracts that we've negotiated and we're leveraging off our size. So I think all the information is there to understand where that may come from.

Okay. And just the last one for me, just ahead of indexation into FY '21. As the business stands today, because there's clearly been a lot of change in the last few years, what proportion of your Australian revenues would you say now are either sourced from Medicare or Medicare linked? And further to that, of the benefit you get from indexation, would you expect it all to accrue straight to profit? Or would be there's some pay way there?

Yes. Thanks, Matt. That's a good question, and thank you for asking it. So where we see that now with our Australian Medicare numbers with the acquisition of IQ, our revenue is back to around 55% are directly attributed from Medicare. We then have our income that comes from our reporting contracts and also from Veterans' Affairs, PAC, the bulk of that, that makes up about another 15% to 20% of our revenue. The bulk of that is linked to CMBS pricing. So indexation will also flow through to that. Remembering in New Zealand, we also get indexation automatically into those contracts. So it leaves us with comfortably well over sort of around the 80% to 85% of our revenue will benefit from that indexation. In terms of that flowing through to EBITDA or through to the bottom line, we will obviously continue. The indexation gives us confidence to invest in the industry and in the future and in our sites and in our communities. A portion of that will pass-through to our staff. So we don't expect it all to flow through to the bottom line. And we will obviously use some of that money to invest in new technology and equipment in our [ path ].

Your next question comes from Davin Thillainathan from Evans & Partners.

Just a question for me with regards to your brownfield investments and the read-through to your top line. Clearly, FY '20 is high period of investment. And if I look at it on a half-on-half basis, a fair chunk of that has gone through into your first half CapEx. Is there read-through there that you've broken the back of it for the half? And do we sort of expect the second half top line step up from your first half on that basis?

Yes, we did invest more in the first half, Davin, than we're expecting to invest in CapEx in the second half. We made the appropriate call to invest in CapEx now to benefit from indexation when it comes in on the 1st of July. So we have invested in some exciting new facilities, and most of that investment have occurred and is complete.

Yes. Okay. And again, pretty strong growth from a volume perspective in the half. I think you had about 4.3% volume growth, significantly above the market. I know part of that is clearly from the new sites that have started to ramp. Have you started noticing changes, and perhaps, referral patterns of behaviors sort of opting for IDX site as opposed to your competitors in the sites that you operate in?

There is definitely a move towards the higher-value modalities, and that's clear across the industry and also clear in our own numbers. So we do see an increase in MRI and an increase in PET and an increase in the new Cardiac CTs, the high-speed CTs. And that's an industry-wide trend in Australia and overseas. It will continue, and we've geared ourselves to benefit from that because it makes a lot of sense. It makes good sense for our patients, it gives them access to world-class technologies, and it's the appropriate direction to go in. So I think that we're seeing a lot of that happening. That's also associated with a trend towards providing more comprehensive quality care, and diagnostic imaging is nicely positioned to be able to do that. We're largely preventative in the kind of care that we do deliver and the information that you get from diagnostic imaging is very hard to get from any other modality. So it is a very exciting place to be in terms of health care right now.

1 Yes. Just a final one for me. New Zealand. We've sort of been seeing reports that the public system in New Zealand has been stretched with regards to waiting times, particularly to CT and MRI scans. Is there any potential upside there in terms of winning work from the public system for your business in Auckland?

We don't have any specific information on that. If we do go with historical trends though, we have seen in the past where waiting lists do go up, and the public sector does look to the private sector to provide additional capacity, we do hope that they do this because it will be good for patients to provide them with access to CT and MRI, which is modalities that they really need and to be able to reduce the waiting list, the amount of time that they're having to wait for these modalities. There is an election coming up. Sometimes before elections, they do introduce waiting list initiatives to reduce the time that patients have to wait for these services, and we're ready to help if called on.

Your next question comes from Will Macdiarmid from Ord Minnett.

Well done on a very, very solid results. Just an additional to the question around the brownfield from a few moments ago. Can you give us just a bit of a sense on when that was actually completed specifically, when they started operating? And then maybe around the PET, what utilization has looked like at commencement and what ramp-up looks like?

Sure. Thanks, Will. So both of those refurbishments and developments were both only fully completed in December. The PET facility was up and running around mid-December on -- at John Flynn and the MRI up in Ballarat were around the start of December. So it was very much in the back half of the second half. The PETs up on the Gold Coast has -- at John Flynn, as Ian and -- I said Ian and I were up there a couple of weeks ago, and it has taken off strongly, and it is performing very well, and well within our expectations, and we're very, very pleased with how that facility is performing. And the referrers up on the Gold Coast are absolutely supporting that facility and rewarding us for that.

That sounds quite encouraging. I mean given the reception you've had from the installation of a PET, can we expect you to sort of look for other areas of investment, specifically around PET, in the next sort of 12 months?

Yes, we have to be -- there are rules around -- the department has around where you can put a PET facility, and they're very clear on that under the app. So you do need PET facilities with full oncology services as well as including surgical. So basically, that restricts you to being in a hospital or very, very, very close to a hospital. So we will always continue to look at opportunities. And there are some additional opportunities for our group to do that. But again, these investments, as you can see, there's a sort of $3 million investment. So we don't take them lightly. And we will always make sure that if we're going to spend that sort of money, we expect to get the appropriate returns.

Okay. I understand. And if I'm just comparing the presentation -- this result presentation to, say, FY '19 in terms of radiologist numbers specifically. It looks like the number of radiologists deployed directly to New Zealand is actually fallen and contrast that across the entire network have actually gone up. Am I reading that correctly? And if so, can you just talk through the dynamics there?

That's -- I mean I have to go back and look at the numbers, but that's not correct. All of our radiologists in New Zealand, the original vendor radiologists, absolutely remain with us. We haven't had any leave the business and -- or we've had very few numbers. We've had some doctors retire. We have had 1 or 2 leave the group, but we've also recruited strongly. So those -- in conclusion, I'd have to sit down and go through that with you because it's not consistent with what we would -- what's happened.

Okay. No worries. I just compared the presentations but maybe it's another allocation of staff. But fair to say that there hasn't been any loss of key people within the business?

No.

Your next question comes from David Stanton from Jefferies.

Look, now that you've owned or you've got the keys to IQ there. What surprised you on the upside and perhaps on the downside regarding Imaging Queensland, please?

Thanks, David. They are a quality group. The more that we've had interactions with them, the more impressed we've been with the quality and the service that they do deliver. They've been very busy. We knew that they are very busy. They provide an outstanding service along the Sunshine Coast, and they also provide an excellent service in places like Rockhampton and Gladstone. We've been to almost every practice across the group, and we've been very happy and satisfied with all the interactions we've had with the radiologists and the staff. I can't think of anything where we were surprised. Our due diligence was extensive. We spent a long time doing the due diligence. And it was comprehensive and always extensive. So we got to know them very well even before the transaction was completed.

Very good. And perhaps a question for Anne then. You've had fair first half depreciation of about $6.5 million. Given your ongoing, I guess, investment, what should we be thinking for depreciation for the second half, please?

Well, clearly, it's going to be slightly higher given the level of investment we have made in the first half, and that will -- those assets and spend will see a depreciation in the second half. So I've been adding a reasonable sort of amount to that. And you're also going to have a full 6 months of the IQ acquisition. So I'm not going to give specific guidance as to what the depreciation number would be other than it will be higher than clearly what we've had in the first half.

And then in terms of the longer-term CapEx sort of how should we be thinking about that? I note that replacement is pretty much in line with EBITDA, and that continues. But the growth CapEx has been strong over the past 1.5 years. Should we be -- will that continue? Should we be thinking of a growth CapEx number from over the medium-term at least of around a $10 million mark per annum, please?

Yes. Thanks, David. Let me focus on replacement CapEx first, because our view is that replacement CapEx will be in line with sort of depreciation. And over a 10-year period, it does fluctuate. We don't have more replacement CapEx completely straight-lined over the -- a 10-year period, which is the average life of our equipment. So we would expect that, based on the size of the business at the moment, to be around the $14 million to $15 million mark annually. And then as I said, it will go up and down. If you smooth it over a 10-year period, it would be $14 million to $15 million. The growth CapEx is an interesting one. I would say that as a floor, we would expect to spend at least $5 million on growth initiatives, being really careful to be clear that growth initiatives will add to our earnings. It is not a replacement cost, it will pay for itself and it will add to the bottom line earnings in the EPS accretion. So we go through a really thorough process. It's very hard for us to put a number on what we're going to spend on growth because we do have good access to capital. And we will back ourselves, and we will spend money where we think that it will add a return and where it's sensible, particularly for brownfields, which are really positive contributors to the business. We've made some big greenfield developments, and particularly in North Melbourne, and we need to make sure that we can absolutely make that work. And then if we can, we can get confidence from that, then we'll look at additional expansions as well. So really hard to put a number on it, but I'll give you a floor, and I would expect us to be spending at least $5 million a year on growth CapEx.

Very clear. And perhaps a final question from me for Ian. You mentioned you're looking at a number of different opportunities within Australia. I guess could you give us sort of a broad brush view of those opportunities and more particular, in terms of pricing for DI assets within Australia given it seems to be an increasing focus for some unlisted players in the market?