Flutter Entertainment plc Q4 FY2022 Earnings Call

Good morning, and thank you for joining Jonathan and I for this call. Hopefully, you've all had a chance to watch our presentation this morning, which provides an overview of why the business is well positioned for future growth and details of our 2022 performance. Before we go to questions, I'd just like to touch on a couple of items. As announced in mid-February, we've commenced a consultation with our shareholders in relation to an additional U.S. listing. We outlined in the announcement the numerous long-term strategic as well as capital markets benefits this could yield. One point to emphasize is should we proceed with an additional listing, it would not change where we're headquartered, domiciled, or the taxes we pay. Early feedback from shareholders has been supportive and we'll be meeting many more of our shareholders over the coming weeks. At the end of our process, we'll announce the results of the shareholder consultation. And until that point there is very little extra we can say. Turning to our 2022 performance. We delivered another strong year. Our U.S. business is going from strength to strength and our advantages are compounding with each new state opening. The recent launches of Maryland and Ohio have been our best yet, providing even greater conviction and positive EBITDA for the full year 2023. Outside of the U.S., the business carries good momentum into 2023. In the U.K. and Ireland, the product improvements and efficiency initiatives delivered throughout the year resulted in a strong Q4. Our Australian player volumes remain high as the H2 COVID-related frequency benefit has unwound and we saw increased competitive intensity in Q4. The International consolidate-and-invest markets are delivering strong growth and now make up 76% of the division. The division is at a growth inflection point. And when combined with the U.S. profitability in 2023, we'll transform the earnings profile of the business. And with that I'd like to hand it over to Judith for questions.

The first question is coming from Ed Young of Morgan Stanley. Please go ahead.

Good morning. Both questions on the U.S., if that's okay. The first is you gave some detail in the presentation around the cadence of U.S. EBITDA. I wondered if you could do the same for revenue if that's okay. A, if I look at previous years Q4 sort of sets a baseline for the following year and then there's a step up in Q4 with the seasonality of the business. Is it reasonable to expect the seasonality and the cadence of this year's revenue will look similar to previous years, or are there any other extra considerations we should be thinking about? And then the second one is on paybacks. On Slide 26 you're talking to below 12-month paybacks, given what appears to be more improvement in the way you're doing your state launches and state openings. So I guess that's deeper additional investment quicker payback as you spoke back historically. You were flat below 18 months back at the CMD. So is that a change that we can think about for this year or ongoing? And how does the iGaming share increases play into your thought process around paybacks? Thanks.

Okay. Thanks, Ed. Jonathan will pick up the first question.

Yes sure. I mean it pretty much follows the same seasonality as EBITDA, which is driven by the sporting calendar. The only other thing to say is that EBITDA in Q3 has bigger spend in sales, marketing and promotions around reactivation as we come into the NFL season. It's the big acquisition point in the year for new people coming into sports betting. So revenue should follow because the cost base, particularly OpEx, is relatively flat, but it is seasonal based on that calendar.

I think the only thing I'd add is, of course, when there are specific state launches in different parts of the year, they will have an impact. The start of the football season is always a great way for us, and it's the reason we spend a lot of money in acquiring customers. Clearly, if a state has launched at a period of time where customers haven't been able to participate in football, we'd see in the next football season an inevitable step up. In terms of the payback, I think we were talking specifically on that slide about some of the new state launches and so on. But in general, we're very pleased with the trajectory of our acquisition costs. In fact, in 2022, there were improvements on 2021. If you look at it on a cost basis, the way we actually look and run the business is looking at the lifetime value dynamics, and in terms of those paybacks we're very pleased with the way in which the business is performing. We're continuing to improve our structural margins, and if we can continue to drive up structural margins and reduce our acquisition costs, it means that the paybacks go well within our target time frames.

Thank you. Just one technical follow-up. You mentioned in the release material NOLs. Have you given the number for U.S. NOLs in the statement somewhere, have I missed it, or could you give any color on that? Thanks.

No, Ed. We've obviously had operating losses over the last few years. You can look at the EBITDA and add something to that around estimates on depreciation. So there are significant brought-forward losses, which will obviously impact the amount of tax we have to pay over the next two to three years.

Okay. Thank you.

The next one is from Paul Ruddy of Davy. Please go ahead.

Hi, good morning, Peter and Jonathan. Just two questions, if I close. First one is maybe just on the diverging performances we're seeing between U.K., Ireland, Australia. It looks like the U.K. and Ireland performance is strong and you appear to be taking share there. Australia may be a little bit more challenging in Q4. Could you just talk to the competitive backdrop in both and how you think about growth rate through 2023, and potentially market share expectations? And the second one is it appears there are some regulatory developments in India, and in Brazil popping up on the screen this morning. In particular your competitive position in India and how that benefits you in the context of positive regulatory developments, and then also maybe just on the negative side any kind of impact on the U.K. White Paper. Any kind of speculation around how performance may trend for the consumer for revenues, etc.?

Paul, it's a very good way to try and get two questions in. I think you got seven in there. We'll try and deal with them as best we can. In terms of your question around the performance of the U.K. and Australia, let me give you some high-level thoughts and then Jonathan might follow up with a few more specifics. If I look at our Q4 performance in the U.K. and Ireland, AMPs were up 14% when the market was down. I'm very pleased with how the business is performing. We've delivered a lot of product enhancements and improvements over the course of the year. With the World Cup and the energy we put into that, I think we were really pleased with the way the business performed. I feel like we've got our mojo back. So we've got lots of momentum we're carrying into this year. In Australia, it's important to remember the dynamics that we're seeing in that market. The Australian market is somewhat behind the U.K. in terms of the time it's taken for them to come out of COVID. Q4, which is the summer, was the first summer period they've had without COVID for a number of years. We undoubtedly benefited as the biggest brand in Australia. We saw a disproportionate impact on our engagement with customers in terms of average player days. The main thing that happened in Q4 was a big step-up in competitive intensity as a new entrant launched and was spending a lot of money on very attractive odds and most players in the market were trying to bulk up in advance of the point-of-consumption tax changes, which we've seen happen before. So we deliberately leaned hard into generosity and spent a lot of money. You can see the growth we saw in AMPs in the quarter, which I think we were very pleased with. I'll let Jonathan provide a bit more follow-up on those, and then I'll turn to the regulatory developments.

I think there's a couple of points I'd make on each of these. There's a great slide in the deck — slide 30 — which looks at both the gaming performance and then talks about our sporting performance. For me, the overarching fact is that our pro forma AMPs are up 14% in Q4. Gaming revenue was up 12%. Sports revenue up 16% — really strong results in the fourth quarter. When you look at the progression during the year, slide 30 gives a good picture on gaming: a decline in the early part of the year as we lapped some safer gambling measures, then product improvements in the second half and the growth that resulted in Q4 and has continued into 2023. On the sports side, again, really strong performance. Sadly, we had about 300 basis points of negative luck in Q4, which we hope will unwind, but it didn't. We had roughly the same negative luck in Q4 as we did last year, so we're not getting a benefit from luck in that number. On Australia, we decided to invest some of the margin we had to make sure we were properly positioned to keep our customer base and fight back against the increased competitive intensity. Both Peter and I are very happy with where we ended the year and looking back we would not have done anything different.

In terms of the regulatory developments, what I would say about India is it's probably for us actually our fastest-growing market — up around 80%. We're really pleased with the performance we're seeing there. It's nearly our second-biggest market in international actually. The investment we made there and the trajectory of our business is very exciting. There are a number of regulatory moves happening on a state-by-state basis and indeed some federal discussions which we believe will position games like rummy to become accepted in more states in India. I haven't had a chance today to see what's coming on Brazil so I can't comment on that. With respect to the white paper, we've been keen for it to be published. We've made a number of changes. We've taken £150 million of revenues out of the U.K. business through safer gambling measures. We've made massive strides forward and are really focused on doing the right thing. I think the extent to which the white paper can be published and encourage other operators to join us would be very helpful for the sector.

Great. Thank you.

The next one is from Ryan Sigdahl of Craig-Hallum. Please go ahead.

Good morning guys. Appreciate taking the time for questions. Just one on the U.S., I want to talk at a higher level and then one follow-up. With many operators hoping to get positive EBITDA at some point this year, our thesis is some of those have structural challenges scaling to meaningful profits beyond that. We agree that you guys can do and will. But how do you think about the need to achieve positive EBITDA now versus making investments in the near term to build the business that can earn potentially billions in profits longer term?

Did you have a follow-up Ryan, or do you want me to pick up on your first?

Just on the follow-up, curious how Ohio and Maryland very strong starts. Just curious how your marketing strategies as they launch playbook have changed or if they're similar?

I think the point you make about the U.S. is very important. Whilst we're confident the business will be EBITDA profitable this year, people need to be careful not to just focus on getting across the line on that. If you look at slide 18 and that cohort analysis, it doesn't require a lot of imagination to see how, when you add in the businesses we've acquired this year to that chart and think about what the business looks like into 2024, the reason we're talking about this being a transformational year is you'll see a very significant change in the profile of our U.S. business. We've always focused on acquiring as much business as we can, as long as we have the right LTV dynamics, and that's something we're doing. You've seen us lean very heavily into customer acquisition this year, acquiring more business year-to-date than we did in the first quarter last year. The important thing is we're compounding advantages: higher levels of hold or handle, great parlay penetration in events like the Super Bowl, and a product offering we believe is best in the market that we're continuing to improve. We are more efficient than anyone else from a customer acquisition perspective. When you roll forward those cohorts, yes, we are going to be EBITDA-positive in 2023, but the exciting part is the trajectory the business delivers in 2024 and beyond. On launches in Ohio and Maryland, these states can be very complex from a rules and regulatory perspective. The team performed really well, getting to a point where we've got roughly 6% of the adult population as customers of FanDuel in such a short order in Ohio and to have 50% market share was remarkable. We leveraged our DFS base hard in the state — nearly 67% penetration of our DFS base in Ohio already. The team refines, enhances and improves the state launch playbook with each launch, and I'm really pleased with the results.

Congrats on the performance. Thanks Peter, Jonathan. Good luck, guys.

Thanks, Ryan.

The next one is from David Brohan of Goodbody. Please go ahead.

Good morning, guys. Just two questions for me, both on the U.S. Firstly on the iGaming side, very encouraging to see the share gains there. Where do you think your product sits now versus peers? I know in the past you had mentioned that the product needed some improvements. And also, is there any update you can give on the potential termination of FOX Bet in August of this year? Thank you.

Hi, David. On the iGaming side, we are the world's biggest online casino operator. If you look at the strength of our business in the U.K., which is a fiercely competitive market, those figures Jonathan quoted are clear in the presentation. We now have strong operations and we're very successful. We are our hardest critic, and when we look at the quality of our products in the States, we knew they were not good enough. We have made improvements and there's a lot more we're going to bring to the market. We're pleased with the share gains so far, but we're not standing still from a product perspective and will continue to make improvements that we expect will enhance our offering. With respect to FOX Bet, FOX is an important partner for us. One thing to acknowledge is they were transmitting the Super Bowl this year and actually FanDuel was promoted rather than FOX Bet. Subscale operators are very difficult to make money in and the long tail of operators are probably struggling as FOX Bet is. We'll review what we do with that business at the appropriate time.

Okay. Thanks, guys.

The next one is from Clark Lampen of BTIG. Please go ahead.

Hey. Thanks. Good morning, guys. I've got two follow-ups. First on the U.S., Peter you talked about parlay penetration and the product offering — I think two-thirds of U.K. customers used build-a-bet during the World Cup. Is there a stat you could share around usage rates for comparable products whether it's the World Cup or maybe NFL activity? Just curious what peak usage looks like to level set. And then for Australia the trading comments were clear around early year performance, but I'm curious if you could share thoughts around how strong player acquisition could begin to either accrue or offset some of the competitive headwinds you talked about as those cohorts season. Thanks a lot.

Thanks, Clark, and I appreciate you getting up early. In terms of the parlay product, a couple of things. In the Super Bowl around three quarters of our actives used same-game parlays. So penetration is pretty high and not dissimilar to the bet builder in the U.K. As Conor shared at our Capital Markets Day, in-house pricing is really important — around 90% of the handle of parlays is priced in-house. That means we keep the economic benefits associated with it. We believe we have one of the best products and we continue to evolve, improve and price more of it, which means we capture more of the economics. Our customers obviously love it and we see strong engagement. In Australia, it's important for us to focus on AMPs. We were pleased to continue to grow engagement in Australia particularly as people were able to live a normal life in the summer period. Back at the end of 2021 many states were just coming out of lockdown, so Q4 this year was the first summer period in some time. AMPs were up 13%. We have seen a moderation of engagement — average player days are trending back towards pre-COVID levels, a phenomenon across markets. We have point-of-consumption tax changes coming into the market. For a smaller operator that could push them into being unprofitable. Last time we saw a bunch of people reacting by changing margins and generosity to deal with that. We have the scale to cope with those tax changes and the important metric for us is to keep driving engagement with our customers.

We didn't behave in an aggressive fashion in Q4 solely because of the competitive intensity. It was also a run-up to the incremental point-of-consumption tax changes, and we felt the strategy employed previously was successful, so we followed that. The team executed well in Australia in the approach they've taken.

Thank you very much.

Thanks Clark.

The next one is from Joseph McNamara of Citi. Please go ahead.

Hi, there. Thanks for taking my question. First one is on the U.S. I wanted to ask about the Super Bowl. In prior years you offered extremely generous odds for new customers, and this obviously had an outsized impact on Q1 win margins. Am I correct in thinking you didn't pursue the same 50/71 odds, and if so can you explain the rationale? Any color on the impact for Q1 profitability this year and going forward? The second one is on Sisal, very strong numbers there. What should we expect for 2023 as retail comps normalize? Any ambition to bring product launches such as Geo and Tipster to other brands within the group?

Thanks Joseph. Maybe I can take the first one. You're correct that we didn't employ the extreme long-odds offer this year. We actually ran a strong campaign around the ground kick at halftime which caught the imagination of punters and ran through the playoff period as well. In the playoff stages we saw activity up two-thirds year-on-year. The offer we put in the market last year resulted in just short of half of those punters being effectively one-and-done, so we reevaluated the overall economics. This year we've seen really good value coming into the business. We think the offers we had were the right ones for driving medium- and long-term value. We're very happy with the Super Bowl campaigns and our engagement, and market share stats are strong through the start of this year in the U.S.

Joseph, building on that, acquiring customers in the period leading up to the Super Bowl rather than on the day produces customers with much higher average value and better engagement. We've already acquired more customers this year than we did in Q1 last year. Regarding Sisal, we talk a lot about the group-wide 'Edge' — the symbiotic relationship we have across parts of the group. Geo and Tipster are things we're interrogating to use in other parts of the group where it makes sense, and we're also bringing capabilities into Sisal. They're now using our risk and trading capability and when cash-out was made available from a regulatory perspective in Italy, we deployed it quickly because of group capabilities. We're very pleased with how Sisal exited 2022. Fantastic momentum in their core Italian business and the online business is reaching sensible levels of penetration with more to go. We were helped by a very large SuperEnalotto jackpot, and we need to see what happens this year with more normal lottery jackpots. The team have excellent capability — a million customers a week check their lottery tickets on the Sisal app, which we use as a vehicle for cross-selling into gaming. We're benefiting in Sisal from international elements in Morocco, Tunisia, and Turkey. It's been a great acquisition — we're really pleased and it's part of the conviction in the turnaround in the International division.

Thanks and really appreciated the color. Thanks a lot.

Thank you.

The next one is from Louise Wiseur of UBS. Please go ahead.

Hi. It's Louise from UBS. Thanks for taking my questions. Any indication you could give on where you are on EBITDA profitability and margin in more mature states, New Jersey and Pennsylvania? Have any of these states got closer to the long-term margin you expect from the U.S.? And second, on the consumer backdrop, has there been any change in consumer behavior in Q4? In the past you said you were not seeing any impact from macro; I just wonder whether that's still the case or if you've seen any change, and is there any difference between regions?

On EBITDA margins, we're not going to comment on a state-by-state basis. We did give a breakdown around the EBITDA trajectory in New Jersey. The important thing is to align slide 18 with the chart on slide 7 and 17 — you can see the improvement in EBITDA percentage as the top line drives operating leverage and the flywheel effect. Slide 18 shows the contributions from cohorts and the trajectory is clear, but we won't provide state-by-state detail as that leads to questions of allocation of national marketing and other items. From Slide 18 you can see the contribution is increasing in each state, which gives us confidence about getting to sensible levels of EBITDA going forward, as we discussed at the Equity Capital Markets Day.

With regards to consumer behavior, we're seeing no discernible impact across our business — in Sisal, Tombola, or any of the brands in the U.K. or other markets. We're not seeing an impact at this time.

Thank you.

The next one is from Joe Stauff with Susquehanna. Please go ahead.

Good morning, Peter. Good morning, Jon. I wanted to ask about Australian user growth. You had AMP growth of nearly 13%. What's the right way to think about that? Is that in the context of penetration of the adult population for online gaming? Do you read that as customers trying out your product, or new customers in terms of increased penetration in that market? And then on Sisal, with the reopening trade and retail normalized in Italy and elsewhere, is most of the growth from here more online within Italy?

On Australia — we have a very recreationally focused business there with Sportsbet. It's a mass-market product and the brand activates strongly with great creative. AMP growth is driven by reactivation of historical customers and new cohorts of customers who come on late in Australia. Sport is very important to Australians and betting is a recreational activity for many. We're the mainstream brand and continue to grow AMPs, supported by innovative products like our poker niche product which has been good for recreational bettors with more products and features to come. On Sisal, slide 36 shows strong online growth. As a brand with significant retail presence, we participate and drive that growth — customers check lottery tickets on the Sisal app and we cross-sell into gaming. With advertising restrictions it's difficult for pure-play digital brands to compete against us. Online penetration is growing and we're capturing significant share. We're pleased with the trajectory at Sisal.

The application of the group edge into Sisal is helping drive growth — Geo and Tipster opportunities are strong, cash-out was live quickly with group expertise in late 2022. We're very excited about helping drive online growth even faster for Sisal.

Makes sense. Thank you.

Thanks, Joe.

The next one is from Jordan Bender of JMP Securities. Please go ahead.

Great. Thanks. Can you talk about your penetration rates in your more mature sports betting markets in the U.S. and what those growth curves look like? And then a follow-up: to touch on the FOX Bet comments you made, breaking out the FanDuel business from the other investments in the U.S., the loss outside of FanDuel was around $75 million during the year which is a decent-size loss. Maybe can you talk about how that non-FanDuel loss might look in 2023?

In terms of penetration rates, states publish market share data and on a state-by-state basis we're continuing to perform very well even in early-launch states. We're up 24% in staking in states we launched in pre-2021 and revenues up 42% — so the strong U.S. performance isn't just driven by recently launched states. The benefits are compounding: improved revenue performance, more efficient marketing acquisition, reinvestment into products and generosity driving wallet share and volumes powering the flywheel. Regarding FOX Bet and PokerStars: the $75 million loss you referenced was a small part of revenue but a significant loss; if FOX Bet were no longer operational we would expect between half and two-thirds of that loss to go away. The question then is how much we invest in PokerStars to build liquidity and shared liquidity across states. That depends on CAC-to-LTV dynamics at the time and how aggressively we decide to invest in the PokerStars liquidity pool.

Great. Appreciate it.

Thanks, Jordan.

The next one is from Kiranjot Grewal of Bank of America. Please go ahead.

Hey, morning. Firstly on the U.S., could you give a bit more color on the cost breakdowns? Clearly marketing is being leveraged and we'll probably see more of that next year as you go towards positive EBITDA, but I wanted a better sense of other OpEx. It looks like it was up over 60% year-on-year. What's driving this increase and should we see significant leveraging as you move forward? Second, building on the AMP question, you've spoken a lot about focusing on the recreational customer. Some peers are targeting a similar cohort. Where are you winning customers from? Is it from competition or an increase in the proportion of the population betting overall? This relates to mature markets.

I'll take the cost question. The business is scaling up in the U.S. as we build out functions to reach sustainable levels. We have a range of cost drivers: some variable costs as we expand states (compliance, legal teams for state-specific rules), and areas of fixed costs like finance. The big year-on-year increase in the cost base is about two-thirds in staff costs as we scale up. Within that we had California lobbying costs, which are extra costs in the year and will drop out going forward. We're getting the business towards where we need it to be and will see scaling benefits in certain functions. My role as COO will focus on taking learnings across the group to drive efficiency. The U.S. is focused on building cost bases effectively to service customers at the right cost.

On AMPs: we've been focused on the recreational space for a long time. Our products are well suited to that cohort and we invest heavily. In the U.K., product innovations — like Wonder Wheel for Paddy Power and BetBuilder for SkyBet — have driven growth in AMPs as customers engage with exciting products. We took share in Q4 and I expect us to continue taking share in 2023 by growing the topline. Great products translate into AMP growth and we're seeing benefits from our safer gambling leadership as well.

Perfect. Thank you.

The next one is from Daniel Politzer of Wells Fargo. Please go ahead.

Hey. Good morning everyone. A couple on the U.S.: first, Maryland and Ohio you've quickly reached 60% plus share there. What do you attribute that early success to? Changes in the market, changes in your launch strategy, or competitive/promotional environment? Second, your whole benefit in the second half of the year — I think it was an 8.5% net revenue margin which compares to a significant change in prior years. I know there is a bit of favorable hold but also structural margin improvements. On a go-forward basis what's a good range to think about? How to break down the H2 improvement between luck and structural improvement?

On Maryland and Ohio, the team did a terrific job. We're getting better with each state launch. As discussed at Capital Markets Day, we are shifting spend towards national advertising that helps and we're getting more efficient in advertising effectiveness. We capitalized on our DFS base with high penetration in Ohio which supported offers, referrals and other components of strategy, plus having the best product. We're pleased with the performance in those two states.

Year-on-year, when you look at the mixture of luck and promotional spend those two things net out. Most of the uplift year-on-year was actually improvements in structural margin. We feel good about the 12% gross win number we discussed at Capital Markets Day and we're on a trajectory to move towards that. We expect further improvements in gross win margins as we get improved pricing accuracy and higher parlay penetration. We're confident in the medium-term target we put out there.

Got it. Thanks.

Thanks, Daniel.

The next one is from Richard Stuber from Numis. Please go ahead.

Hi. Good morning. Two questions please: one on Safer Gambling and one on Australia. In the presentation you said 40% of customers use that tool. Could you split out what percentage of customers use it in the U.K. and what percentage in the U.S.? On the U.S. side, are you starting to see opposition to marketing and advertising — comments from New York, is that more an outlier or a broader trend? Second, on Australia, I think you saw EBITDA margin fall nearly 300 basis points because of the COVID reversal and competition. Would you expect margins to return this year toward previous levels, or is this the new normal?

If I look at the two markets you referenced, I'm really pleased with what we've done in the U.K. We've directly invested £65 million across the U.K. to promote and educate safer play. We've implemented proactive measures as part of our Play Well strategy and we've effectively taken around £150 million of revenues out of the U.K. business through these measures. Measures include deposit limits and slot limits, and we've tied Safer Gambling targets into annual bonus schemes for colleagues. We're leading the race to the top in the U.K. As America — now our biggest division — grows, it will have to play its part and we expect the Americans to reach similar levels to hit our group targets. We're working carefully with leagues, teams and media partners to develop codes of conduct and advertising standards to take some heat out of potential problems. We have Safer Gambling ambassadors to amplify messaging and we've helped lead development of 12 common principles around Safer Gambling leveraging our UK experience. There's a lot going on and states will play a significant role.

On Australia and H2, we had around a 26% EBITDA margin. We'd expect that to improve by around 3 percentage points year-on-year. There was some non-recurring marketing of around £7 million in H2. We were aggressive on generosity which impacts cost of goods sold. We see areas to make efficiencies, so we'd expect to be in the high 20s percent EBITDA as a rough guide for this year.

That's great. Thanks very much.

Thanks, Richard.

The next one is from Andrew Tam of Redburn. Please go ahead.

Hi, there. Following up on Sisal and the online space: are you able to share anything in terms of the margin differential between the retail business and the online segment and the growth dynamic there?

We know that when customers move online, particularly if they migrate from retail, we see much higher levels of margin. Slide 37 shows the benefits: online operates at a higher online EBITDA margin — around 40% — versus the retail EBITDA margin. Our retail business is slightly unusual because many stores are commission-based rather than owned and operated, so the fall-through is different. The online business we're acquiring is much more EBITDA-positive and we're not simply migrating customers from retail to online; we're growing online penetration significantly.

With marketing restrictions in Italy we don't spend very much marketing, which helps the level of profitability in the online business.

Got it. And a second one: regarding the guide toward higher depreciation in 2023, there were comments about offsets in terms of U.S. tax losses. Can you clarify the size of those offsets?

You need to model the taxable profit to work out the offset. For the NOLs, calculate what you think the taxable profit is and then the tax benefit from carryforwards. Our carryforward losses are significant given prior years' losses. Some of the depreciation increase is from including Sisal pro forma — some of Sisal relates to concession accounting, so you get uplift from depreciation and amortization around that. I'd suggest working through models with the IR team to get specific numbers.

Got it. Appreciate it. Thank you.

Thanks, Andrew. I think that's the end of the questions this morning. Thank you very much to everybody who's dialed in. Particularly thanks to Jonathan — this is the last time he is sitting next to me. Happy with the results — looks like he's so happy for those of you who have dialed in and can't see. Jonathan, thank you. I really appreciate everything you've done over the years to help us. I look forward to continuing to work with you to help deliver the group edge.

Indeed, thanks.

Thank you all.