JSE Limited (JSE) Earnings Call Transcript

Good morning, ladies and gentlemen, and welcome to our JSE Limited 2021 Interim Results. I have with us our CEO, Leila Fourie; and our CFO, Aarti Takoordeen, and they'll be here with us today to present to you. Over to you, Leila.

Thank you very much, Romy. And good morning, everybody, and welcome. Thank you for attending our results presentation, our interim results presentation. It's my pleasure to join you for our first half. And our agenda is really as follows. I will start with key highlights before delving into specifics relating to our group business performance. And my CFO, Aarti Takoordeen, will then comment more specifically on the financials. I'll come back and wrap up the presentation to provide some comments and outlooks, and we'll take questions after that. Before we get into the detail, I wanted to take a moment just to reflect on recent events. Over the last months, in the midst of what for all of us has been a very devastating third wave of COVID-19 infections, we've also reckoned with a deeply unsettling and very painful outbreak in violence and looting. While the markets have been and still remain resilient, the health and safety of our employees and support for our clients and the operational resilience of our platforms and infrastructure remain a very key focus for the group. And as we recover from this period, it really does remind us that time and time again, South African people and very much so, our markets, have proven their resilience. The JSE has a really important role to play in building and growing the South African economy, and we remain committed to serving the markets as we have done for the past 133 years. Just now focusing specifically on our results. I'll start with a couple of key highlights on Slide 4. And the results for the first half of 2021 were not unexpected and largely shaped by the high base effect, which we've signaled quite clearly in the same period last year. Capital markets activity was unusually high in March and April of last year due to COVID volatility as well as the downgrade to sub-investment status and the subsequent exit from the WGBI. Our revenue has now reverted back to more familiar levels, which is expected. And in addition, our financial performance in the period was lower year-on-year due to lower interest rates, unfavorable currency movements. Lower interest rates impacted our net finance income, an error that is often overlooked. And the stronger rand impacted our USD-denominated revenue. And those impacts, combined, led to an overall revenue decline, which was only partially offset by the higher revenue in the commodity and equity derivatives markets. Now remember that the comparability of half year 1 2021, with half year 1 2020, is limited by the consolidation of the JIS, JSE Investor Services, which is our acquisition of Link from November last year. And this explains most of the OpEx growth year-on-year. Importantly, including JIS, we delivered OpEx, which was stable and limited -- that would have limited the impact of the decline in the revenue. So whilst earnings were low year-on-year, we managed to sustain high cash conversion, which remains a key facet and feature of the JSE business model, and this allowed the exchange in turn to maintain our liquidity levels. So in this context, I'm pleased with the progress made with the operational and strategic priorities, notably in the inorganic growth space with the acquisition of minority interests at JIS and the Investec Share Plan Services. Lastly, with no financial debt, good liquidity, a strong market positioning and robust business activities. The JSE remains a healthy business. And more importantly, it's positioned well for growth going forward. Moving on to Slide 5. I'm going to just reflect on our earnings, and this is really how it translated into numbers. So total revenue was down 6% year-on-year, mainly due to the high base effect I've described. Meanwhile, operating expenses increased 6% year-on-year, which resulted in the 19% drop in EBITDA and some margin erosion year-on-year as the positive operational leverage has been much lower so far this year. Also, adding a negative impact was the low interest rates on net finance income, and this resulted in earnings per share down 26% year-on-year. However, as you can see, the cash generation has remained very high and even higher than adjusted earnings, which resulted in a conversion rate in excess of 100%. And taking into account our CapEx and other cash outflows that we'll describe shortly, we still managed to remain liquidity in excess of ZAR 2 billion. Moving now to Slide 6 and covering the factors impacting business performance. If we take a step back, remember that our year-on-year performance was essentially driven by 3 headwinds. First, the most obvious was lower trading activity, with lower trading volumes and value traded across our secondary equity and bond markets. That naturally resulted in lower revenue in the post-trade services, which revenue is largely derived from the equity market. And a stronger local currency to the U.S. dollar also impacted our USD-denominated revenue in the information services as well as other income one-off from FX cash holdings. And lastly, a material adverse impact came from the lower interest rates, which are now 3.5% versus the 6.5% last year, and this reduced net finance income, which is essentially derived from client cash deposits for clearing purposes. When we look at Slide 7, we see this really actually shows the numerous decisions taken by the South African Reserve Bank, the red dots. As you can see, the SARB lowered the interest rate from 6.5% at the start of the year to 3.5% in July, 300 basis points decline in just 6 months, which is unprecedented. And this chart, which represents the offshore index performance since early January 2020, shows that South African equities recovered relatively strongly from a low point in March 2020 when the COVID crisis started. Our headline index ended the year in positive territory, and it's continued its upward trajectory this year. And to date, our headline financials industrials and resources sectors are all back in the black. Without spending too much time on this slide, which most of you are really aware of, it's important to note that despite the strong recovery in the offshore index, market activity has remained relatively muted year-on-year. And this is precisely what we're showing in Slide 8, which depicts average daily value traded and monthly volumes -- traded volumes on the equity market over the past 3 years. As you can see from the slide, value traded was down 8% in half year 1 of 2021 versus the prior year despite the strong recovery in the equity markets that I've just commented on. That was entirely due to lower trading activity as the chart on the right-hand side shows a 19% decline in traded volumes linked to lower market volatility. Interestingly, when we compare half year 1 2021, with half year 1 2019, it reveals that both volumes and value traded were approximately 15% higher than in 2019, which explains the 16% increase in revenue in the equity market between half year 1 2021 and half year 1 2019. So this is a really powerful comparison on a more normalized base. Moving on to our strategic and operational priorities. We provide an update on the execution of our operational and strategic priorities. And as you can see, a sizable number of initiatives have been implemented. I'll just highlight a couple of the most noteworthy achievements, and starting with our core capital markets. After introducing a sustainability segment last year, we've seen the listing of our first social bond and then 6 social bonds for SA Taxi, as well as the first self-labeled sustainability-linked bond, all of which confirm the significant interest that this segment is generating. In the meantime, we've launched a pilot for index options market making, while we're also progressing our application for the private placements market with the regulator. And that came after setting up JSE Private Placement, JPP, as a 100% JSE-owned company to develop and operate a private placement system technology in collaboration with Globacap in the U.K. In post-trade services now, as expected, JSE Clear has submitted the final license application, and we -- for an independent clearing house. And we also made good progress in expanding our information services offering. Importantly, after signing the agreement with the Shanghai subsidiary, CIIS, it's now operating at full speed and we're starting to distribute select JSE market data via Mainland China. Slide 10 gives you an indication of what's happening in JIS, the previously acquired Link Market Services. As you know, we completed the acquisition of 75% of the business in November of 2020. We completed in half year 1 2021, the acquisition of the remaining minority shareholdings, resulting in sole ownership since June of this year, and this acquisition has been, again, settled against our cash balances. Meanwhile, we also made further progress in our inorganic strategy with the acquisition of the Investec Share Plan Services for -- and the acquisition came alongside a broader business arrangement between JIS and Investec, which will broaden our addressable market even further. This is very promising news for the business. And similar to a number of other commercial achievements, which we've also mentioned on the slide, namely the launch of the ShareHub and a new collaboration with William Radcliffe, which is a company secretarial and statutory services provider. So you should note, however, that half year 1 period has been financially challenging for the JIS in terms of revenue because the variable component, which is corporate actions, have fallen short of our expectations, primarily due to lower corporate action activity. Some corporate actions were pushed out. And -- but we are very confident that the healthy business pipeline that we're seeing currently, including numerous growth opportunities mentioned on this slide, will result in sustainable revenue for the business in the future. And we'll speak more to that towards the end of the year. Finally, just included a summary of what we're doing in the sustainability space. And I wanted to just give you an update on what we're doing there. The pandemic has accelerated the drive by investors to invest in sustainable companies. And we deeply care about and we promote sustainability, both internally and externally. Externally speaking, sustainability has been an important area of focus from the perspective of advocacy, also ESG investment tools and regulatory frameworks that we provide. In terms of advocacy and engagement, we are part of a number of important international forums, and we've taken a very active role in driving the global standards that are starting to emerge. A number of investment tools that we offer are also ESG focused. And as you can see in the middle of this slide, the best and recent examples of a sustainability segment are naturally part of the social bonds and ESG-focused ETFs that we listed in the first half of this year. More recently, we are very pleased that we've been able to issue a transition bond framework for public consultation, and we're hoping to launch this in the second half of the year. And then finally, our regulatory responsibilities directly contribute to the maintaining of a trusted marketplace for investors and participants. So as such, we are really leading by example, in South Africa and globally to make the JSE a leader in a growing and very important dynamic and financial markets. I'm going to very briefly now touch on our group business performance. And moving on to the market activity drivers. We've had 2 more IPOs in the first half than -- the first half this year than we did last year. And on our cash equity market, volumes were down 19% and value traded was down 8%. But it's important to note that these were highly elevated prior year comparatives. And you'll remember that we were 15% on the normalized 2019. Bond secondary markets posted lower value traded year-on-year as well due to lower market activity. And then finally, our equity derivatives value traded was up 10% against a low base last year, and our commodity derivatives contracts were up 4%. It was, however, a sharp drop in our smaller markets, which is the FX and interest rate derivatives revenues due to a stronger rand and lower interest rates in South Africa. Switching now to our business performance on Slide 14. I put a very summarized view of our business performance per segment. And you'll find the usual slides discussing trends in the back of the pack. So in terms of primary markets, we posted a stable revenue despite much of the new sustainability-linked products in the listing of social bonds, and as I've said, the ESG-focused ETFs. Meanwhile, we had a higher number of IPOs and a sharp increase in bond listings, with 317 new bonds for a nominal value of ZAR 3.8 trillion. The latter being up 15% year-on-year. Those positives were offset by 15 company delistings on the primary equity market, slightly higher than the 13% in the prior year. But the market capitalization of all listed instruments on the JSE increased by 5% from the's years close to 30 June and by 11% if we compare half year 1 to -- this year to half year 1 last year. In secondary markets, that is equity and interest rates were down mid-single digits due to a high comparable base last year, and as I've just said, the sharp decline in volumes and value traded. On the derivatives front, revenue from FX and interest rate derivatives was down due to lower volumes and lower hedging activity, overall. And more positively, with greater value traded on the equity index futures, revenue for the equity index derivatives was up 3% higher year-on-year. And then lastly, revenue in the commodity derivatives market grew 13%, underpinned by volatile market trends and linked also to dry weather conditions in parts of the world. Volumes were up 4%. And as I've just said, while the value traded grew 28%, it wasn't in anticipation of inflation. Now post trade services largely reflects lower activity in the equity market. As such, the clearing segment revenue was down 14% on lower volumes and values. And our information services revenue was 6% down. So I'm going to leave the floor now to my colleague and my CFO, Aarti, and she will take us through the financials.

Thank you, Leila, and good morning to everyone. These results are really aligned to the trading statement issued in June.

Aarti, are you muted? I'm not sure if everyone else can hear you.

I mean, I'm muted?

We can hear, Leila.

As I was saying, the financial results are aligned to the trading statement that we issued in June. And really, they set the stage for what is reflective, as Leila mentioned, of the tough external headwinds as well as the base effect of March, April record-high trading values last year, that making growth from which is really -- growing from which is really, really hard to achieve in the current state where we continue to experience the scourge that is COVID-19. That said, we continue to have enviably strong margins in percentage terms on the back of a very diversified revenue suite, that in challenging years like this translates into resilient financial performance. So starting with our trading and profitability. Operating revenue, that is revenue that is generated by the segments, was down 3% year-on-year, as Leila has unpacked. The total revenue drop was higher at minus 6%, and that is because it's dragged down by the other income, which includes a ZAR 43 million decline mainly due to ForEx gains realized last year, to where we sold USD last year. The operating expenses are up 6% year-on-year, primarily driven by, as we mentioned, the JIS integration for the first time. And of course, I'll unpack that shortly. More importantly, we managed to keep the rest of the group's cost base broadly stable year-on-year. The 19% decline in EBITDA follows as well as related margin dilution as the EBIT margin dropped 31% in half 1. JIS had a dilutive impact on our margin in percentage terms due to some of that revenue underperformance that Leila mentioned due to the lull in the corporate actions activity, and so some underperformance on the group margins following, that negative operating leverage impact. Moving on to earnings after tax. That was down 28%, reflecting the lower operational profits at 35% decline in the net finance income year-on-year. And you'll have a look at that in absolute terms shortly. If we move on to a cash and capital lens, we continue to be really strong in cash and capital terms. This is an inherent feature and strength of the JSE's operating model. Cash from operations was naturally down 10%, but we continue to sustain cash conversions of adjusted earnings at over 100% -- 105%. Although adjusted earnings were, of course, lower [ 30% ] year-on-year. In total, we spent cash outflow just over ZAR 200 million in the growth of the business, much of that spend is long-term investment for growth. And that was unpacked in the financial statements, you'll see, ZAR 75 million for the remaining stake in the JIS business and an amount for the investment in Globacap, plus the CapEx that is mentioned on this slide. So we managed a slow and steady CapEx spend of ZAR 46 million in half 1. And all in all, our cash balance declined slightly as it does in a half 1 cycle to ZAR 2.1 billion. And as I said, it's perfectly normal for a half 1 cycle because we pay dividends and we'll unpack that shortly. If I move on to an income statement view in absolute terms, just some more comments on our performance by looking at the accounting view. Firstly, you can see the negative impact from the other income, which is largely driven by that USD-ZAR exchange rates that we sold and gained and realized the gains on last year. The point I made on strong margins, you can see EBITDA margin of 42%, EBIT margin of 31% and after-tax earnings margin, 28%, still really, really strong, given the challenging environment that we operate in. We also operate in an extremely low-yield environment, as Leila mentioned, and this is a global phenomenon. A call out on the net finance income, which we are working within the constraints we have in terms of regulatory capital requirements, ring-fencing cash as well as working capital requirements to optimize this. And all of this ended up at that decline in after-tax earnings of 9 points. If we move on to a closer look on OpEx in the next slide. The reported increase in total operating expenses was 6%. But if we strip out the JIS, the rest of the group cost base was broadly stable at ZAR 803 million. Before I move on to unpacking that, I just want to comment on JIS cost profile. So they've added about ZAR 50 million of operating expenses and above the same in revenue, meaning that the business was much less profitable than the margin percentage -- in margin percentage terms, as you saw in the previous slide. And of course, that weigh on our EBITDA and EBIT margins in percentage terms. But going forward, we look -- we're really quite positive and looking forward to the accretion in profit terms from this business. And the integration is going well as Leila commented on the slide. On the cost profile, it is largely a people's business. So about 36% of the cost base relates to personnel expenses and general expenses, which is predominantly administrative type expenses and, to a lesser extent, about 14% of the cost profile related to technology costs. If I unpack the rest of the group's largely fixed cost base, our revenue and personnel expenses, sorry -- I beg your pardon, our personnel expenses was driven largely by annual increases in gross remuneration. And of course, the head count is a large driving force for that cost base -- that cost element. So you will see that our exit headcount at half 1 was 417. And this is a record high for our actual headcount exit, still against the planned -- still under the planned full headcount complement. But it is also a pandemic-related phenomena to have really quite high headcount levels and low attrition rates. There is some base effect in the personnel expenses. If I just move on to the technology costs. There was -- included in the technology cost is, of course, spend on cyber security and the rest of the fixed cost base, which increases by inflation. But we also wanted to call out ZAR 12 million one-off spend due to the mainframe migration costs. The depreciation and amortization, we understand that number well. We've guided well, and it is well within our expectation. On general expenses, just a comment that, that was down ZAR 26 million year-on-year. And last year included some unusually high nonrecurring expenses that were linked to COVID. This was partially offset by timing differences at the JEF trust consolidation level. So this is the first time consolidation for JEF trust, and we see ZAR 11 million in half 1, worth of burst repayments that is categorized as general expenses. If I move on to the quality of our earnings, which in the next slide, remains incredibly strong. As I said, we sustained a high level of cash conversion against our adjusted earnings. Although adjusted earnings were down, the cash conversion would of course follow that, and the decline in operating cash generated was more limited due to noncash items being stripped out, so it was more limited to 10%. And more importantly, we were able to increase cash conversions to 105% above last year and certainly above our long-term average of the past, which is closer to 90% conversion. Now if we move to the CapEx on Slide 20. As I mentioned, it was stable at ZAR 46 million to reinvest in the existing business. But Importantly, to point out, we spent over ZAR 200 million in total that left the group in the form of long-term investments that is to support the JIS minority buyout as well as the Globacap long-term investment. I've unpacked the ZAR 46 million, and that is a balance between growth initiatives within the existing base, to call out more mainly driven by the colocation spend, some rejuvenation on IT infrastructure to keep and sustain that revenue base. And we've guided on an indicative spend for the rest of the year at between ZAR 100 million and ZAR 120 million in CapEx. If we move on to where we've landed in cash terms. So as I mentioned, we are really strong on the balance sheet. We continue to have a clean unleveraged balance sheet and started the year at just under ZAR 2.5 billion of cash and generated that 105% cash. But we also managed to invest in the Globacap business. So that is reflected on this slide under investing activities. And the financing activities captures the minority buyout for JIS's remaining portion. It also reflects the dividends that we paid in this half. And so to land on over ZAR 2 billion, or just under ZAR 2.1 billion cash base is really, really a great performance, and we're quite pleased on our balance sheet and the strength of our balance sheet, setting us -- which lands us as very well poised for growth going forward. So I think, Leila, that brings us to the last slide, anywhere in the points that I wanted to cover in terms of our financial performance. And I'll hand back to you. I look forward to the one-on-one engagements.

Thank you, Aarti. Thanks very much. And I'm going to wrap up just briefly really to remind you of our strategy and our priorities going forward. These remain intact. So I have already described our long-term strategic framework during our full year 2020 presentation in February this year. And this -- we really have 3 key priorities in the top blue section of the slide: we have a high dependency on equity market revenues, and we want to grow annuity and diversified revenue stream; secondly, investing in IT infrastructure, which is robust, is critical to maintaining strong operational resilience against a number of threats, including cyber threats. And this is consistent with our objective of running safe and trusted marketplaces. We are also focused on the national agenda and how we can contribute to making South Africa an attractive investment destination while further embedding sustainability within our business, as I described earlier today. In the near term, our focus for the rest of 2021 will be on 3 different aspects. First, we will continue to drive our inorganic growth strategy and integrate the JIS. That means growing the business by converting the commercial pipeline that I've mentioned earlier today. Secondly, following the investment in Globacap, we have started developing a private marketplace platform in South Africa, and we will focus on progressing this. In our core business, we will continue delivering new products and services in the capital markets and information services space as well as post-trade. And in Asia, we will focus on expanding our distribution to the CIIS, with other distributors to reach new markets. In Information Services, whilst we've launched the Phase 1 of the Trade Analytics platform and Market Data Connect platform, we'll focus on delivering those platforms from our clients as soon as possible. And lastly, whilst we've submitted JSE Clear's independent clearinghouse application in half year 1, we will collaborate with the regulator to focus on that application, and we hope for a successful completion as soon as possible. Moving on to Slide 24. I just have some key considerations for our business. I think we've jumped -- yes, that's it. Thanks, Romy. Key considerations for the remainder of 2021. So I'm not going to go into a huge amount of detail, but really, our global market environment will be largely influenced by the success of the global vaccine rollout. ESG remains a fast-growing influencer and our local political, social and economic environment remains extremely sensitive, particularly in the aftermath of the recent unrest. Lastly, in that context, we note consensus expectations are for a series of small incremental increases in the repo rate from quarter 4 '21, and strong commodity prices continue to support rand strength. Now moving on to Slide 25. I just wanted to wrap up some of the key takeaways of the interim results presentation. And in summary, the first half of 2020 reflects the impact of a higher base effect and a remarkably changed interest rate and foreign exchange environment. And despite this, the business has continued to generate several cash levels, which is a unique and distinctive feature of our business model, particularly during a period of downturn such as what we're experiencing now. Operationally, the business is well supported and flexible with a robust and modern technology underpinned by very effective regulation. Financially, a strong balance sheet and unencumbered -- which is unencumbered by debt allows us to explore growth opportunities. And we continue to ensure adequate levels of regulatory capital. And we are more than well capitalized, and this allows us to increase our ordinary dividend payout ratio over a period of time. Our focus in the second half remains on delivering long-term sustainable value. We will continue to invest in core business resilience and we'll also continue to focus on growth initiatives, both organic and inorganic. And I think with that this brings us to the end of our formal presentation, and we would like to now open the floor to questions. Romy will read those out for us. We'd ask you to pop those into the chat box, please or unmute.

Leila, at this stage, there isn't anything in the chat box. Matthew? Is there anyone with their hands up that want to chat?

Chris Logan has his hand up.

I realize you're dealing with a very tough South African environment, but when I look at the JSE, you've been going backwards now for over 5 years continuously. And I'll just give you some color. Your returns [ shot ] out in 2015, your return on equity. You've have net delistings every year since 2016. Your share price is the only listed exchange I know that's down over the last 5 years. You're the worst rated exchange, I mean, you're now on a 7% dividend yield, that's a tobacco stock rated. The strongest metric in your income statement is actually your average cost per employee, which is now ZAR 1.5 million per employee. So isn't a more robust approach needed to turn this business around with a greater sense of urgency? Because as you've dramatically underperformed the JSE all Share Index, which you compare yourself to. So on every metric, there's a cause for concern. And it doesn't look like it's appreciated within the organization. You can't say you've got good quality of earnings when they keep going south. And when you so call you rated -- I know this is harsh, but how do you respond? I think I agree with you, the JSE has a key role to play in building South Africa, and you do that by bringing new companies to market and by promoting good governance. But it's not happening.

Chris, thank you for that. And I think that we need to acknowledge that over the past 5 years, there has been negative jaws, and our revenues have not grown in line with the market sufficiently. And what I would point to, there are 2 dynamics at play here. The first is our pricing reductions. Now those pricing reductions translated into 99.2% market share retention against the competitor, where those -- where the competitor to have like in most other countries, grown to 15% to 20% of market share. And that would have had a very different impact. Those pricing reductions, we are now more or less in line. But the second factor of stress to the financial position, and it would be disingenuous for us not to acknowledge that, is the high amortization as a result of the ITaC project. Now this is a conference of 2 events, which have created a drag on the growth potential. But with respect to, I would have a different view on the actual returns of the business, a business that is generating consistently 18% to 19% ROE. When you compare that to the cost of capital and to many of the other financial companies, I would argue strongly that while we certainly do need a transformational growth strategy, our actual returns, our cash generation, our dividend yield are all very, very positive. Now we cannot divorce the exchange from the economy in which it's grounded. Neighborhood does matter, and notwithstanding the fact that the real economy has contracted severely, and the real economy has faced incredible headwinds. The JSE has continued to grow its dividend by 7% -- well, to give a 7% dividend yield. So I think we do -- we as South Africans are congenitally negative. And I don't -- I think that our financial markets are deep and liquid. The financial markets have continued to grow, notwithstanding the fact that there have been delistings, I acknowledge that. If we compare ourselves to the London Stock Exchange, and I'm using World Federation of Exchange's stats, the London Stock Exchange has contracted over the past 10 years, its number of listings by 21%, and the JSE has contracted by 17%. So there is a global phenomenon. And of course, it would be -- one could point to, or us, identify a number of hot growth spots like pharma or technology. The reality is that our neighborhood does matter, and South Africa is not the pharma capital. And we have, aside from next person process, a potential to grow technology, but that's a macroeconomic factor. So I do take your point, and thank you for your comments, your very strong comments. We do have a growth initiative. We do have a transformational mindset. We spent ZAR 200 million this year on growth initiatives, and those are aimed at diversifying the company. It's obviously transforming and turning around the financial position, is something that needs to be done with a steady and quite mindful hand with consideration of the context in which we're operating. With regard to our financial position going forward, as I've said, processing is now largely in line with our competitor and our amortization has peaked and that will start to drop off from next year. Any more questions, please?

So I just have 2 questions from my side. The first one is just related to JIS's costs. So maybe what proportion is normalized versus nonrecurring related to sort of some integration? And should you possibly be expecting margins to be more in line with [indiscernible], given the nonrecurring nature of some of the costs in this business? And secondly, we have previously mentioned at the full year that this ZAR 145 million 2021 CapEx envelope that you had envisioned, is this still on track for 2H? Or are you going to advise guidance?

Can I just go for it? Thanks very much, Keamo. So just on the first-time integration on JIS is very little. I mean, it's negligible, the cost that's associated with one-off consolidation for the first time. So you can take that as their cost base. Of course, there's a tiny -- there's a smaller element of the cost base that expands as the corporate actions expand, and they need to build out more people when that happens. There is a variable portion to their cost base. But in the main, you can take that as reflective of what they need to support the revenue in the business. And then your second question regarding the guidance of ZAR 145 million, yes. COVID has certainly slowed down and put a pause button on a number of our initiatives that we would have ordinarily liked to have spent in this year in CapEx, so -- and there's logistical issues, there's resourcing issues and there's time constraints as well associated that feed into that CapEx being lower this year. So we've given the guidance of ZAR 100 million to ZAR 120 million purely because those moving parts are also very difficult to call. Direction of travel, you should take away that it is definitely not in the ZAR 145 million space as we guided previously. We're adjusting the guidance as up to ZAR 120 million.