Morning, ladies and gentlemen, and welcome to the Momentum Metropolitan third quarter 2024 update. All participants will be in listen-only mode. There will be an opportunity to ask questions later during the conference. If you should need assistance during the call, please signal an operator by pressing star then zero. Please note that this call is being recorded. I would now like to turn the conference over to CEO Jeanette Marais. Please go ahead, ma'am.
Good morning, everyone, and, yeah, just a warm welcome on a very cold day, I think, everywhere, to all our shareholders and our key stakeholders, to our operating update for quarter three of financial year 2024. I'm joined on this call by our Group Finance Director, Risto Ketola, and our investor relations team, Rowan Burger and Tshego Moloto. Yeah, I think maybe, you know, to start, we are in interesting times with the election results, and I think, you know, let's also not forget to mention the NHI bill and the Two-Pot Bill that has been signed very recently. Maybe a sound bite from us just on the elections.
I mean, I really believe that our country has a unique opportunity now to find the right political leaders to represent both our economic interests and our social responsibility to a large part of our population. We can only hope that sanity will prevail in the coalition negotiations that is taking place at the moment. And then I'll also just open, before I get to our results, to maybe just share with you our stance specifically on NHI.
I mean, we have published this, but I think it is important maybe just, you know, as a start, to say that while we agree that the intent to enable access to more health for more South Africans is positive and needed, we believe that the implementation of the NHI bill in its current format is not sustainable and nor is it constitutional. We are therefore fully participating and funding the legal cases to challenge the bill in its current format. Our belief remains that the current private and public system should collaborate better and to better utilize the experience and infrastructure of the private industry to augment the public offering and ensure that we don't lose critical experience, resources, and capabilities from our health economy. We are engaging at the right levels with our health partners to help influence and negotiate this.
Regarding NHI, our message remains to our clients that they should stay calm and not make any drastic decisions for a long time to come. To move over to our results, while we continue our transition to IFRS 17, this operating update provides only guidance and commentary on primary factors that influenced our earnings and operational performance against the key measures. With the exception of new business volumes, the operating update follows a more qualitative review of progress for this financial year to date. I'm happy that we continue to deliver pleasing operating results in the third quarter of this financial year. In general, for the group, I'll just make a few comments. In this challenging economic environment, our present value of new business premiums increased by 20% to ZAR 60.3 billion, which is a very pleasing result.
While not included in the operating update, it is worth noting that our VNB recovered slightly in quarter three, mainly aided by the strong annuity sales and a significant improvement in Metropolitan VNB. Although the earnings run rate was lower in the third quarter than in the first two quarters, most business units continued to deliver robust earnings. Direct expenses growth across the group was slightly above inflation, mainly driven by investments into capabilities and improvements to both clients and advisory services. In terms of business-specific info, I'm only gonna focus on Metropolitan and Momentum Insure. We've seen progress on Momentum Metropolitan's life five-point turnaround plan. The quality of new business improved, and they reduced their expense base. However, as expected, their protection and long-term savings new business volumes declined after their decision to reduce the number of field agents to focus on writing higher quality business.
We should start to see material improvements over the next few reporting cycles, according to their five-point plan. Then Momentum Insure, their turnaround is noteworthy. Despite the adverse weather-related events over the period, the claims ratio in Momentum Insure improved to 68% from 77.6%. This indicates the positive impact of the underwriting measures they implemented. Before I close off with our outlook, I will now hand over to Risto to provide insight on our financial performance.
Thanks, Jeanette. As Jeanette sort of alluded to, that because of the IFRS 17 works, we haven't done a full consolidated group financials. But I have been able to work out from the management reports a little bit of sort of guidance, roughly, of where we are. So first of all, in terms of earnings. Earnings were what I would consider decent earnings, a little bit lower than the run rate, maybe in the first half. So if you look at the first half run rate, it was about ZAR 1.2 billion per quarter. This quarter was probably a little bit closer to a billion, you know, so a decent result, but maybe a little bit slower than the first half. What happened during the quarter?
The yield curve shifted up 50-75 basis points across most of the curve, and obviously, that would have a small negative variance on the mixing variance. The 9-month variance is still positive. In other words, we maybe reversed about half of the investment variance in the first half during the third quarter. Also Momentum Corporate, you'll recall, they had a phenomenally strong risk result in the first six months. The last three months were still very positive, but not at the same run rate as the first six months. It also includes the reality that because we've done so well, you know, our sort of reinsurance profit share was also a little bit higher, so we had to sort of provide a bit more for the reinsurance profit share.
As I mentioned, Corporate had a little bit of a lower run rate than the first six months. And in Africa, we also had to impair some technology assets, which had a bit of an impact on the results. On the positive side, you know, our book of annuities continued to be a very positive story. You know, I was mentioning to Jeanette earlier, interesting that while mortality on our whole life book is back to long-term averages, our annuity mortality also remains quite strong. In other words, you know, the mortality improvements haven't happened quite as well as we expected. So all the annuity business we've written over the last few years is probably turning out to be a bit more profitable than we even expected at the time.
Also, we have secured some good assets recently, a couple of alternative image deals, a couple of corporate deals. So the long and short, our Annuity book is doing very well. Jeanette already spoke about volumes and they highlighted in the announcements. I'm not gonna go to detail. VNB. VNB run rate is better than the first half. Jeanette said slightly better. I would say better. I would say slightly up, and making improvements in particular. So you'll recall, they had a bit of a, I suppose, I always forget maybe the best word in terms of VNB for the first six months. Looks much better in the last quarter. So a lot of the actions they've taken, I mean, we talked about the quality of new business, so NPUs are better.
A lot of that really links to, you know, redesigning and stiffening up some of our commission rules, for example, not being overly generous on some of the commission payments and then structures in terms of when we pay and how we pay. Also costs. Because of our VNB pressure, we have negotiated some of our distribution agreements. We have also shuttered some of the new initiatives that were not paying off. And then we've also done a little bit of repricing at the margins of some of the benefit structures and terms and so on. So a lot of action in fact in the way of good pricing. So the VNB is improving there. And UB, I already mentioned, UB is looking very strong.
Corporate, maybe I need to explain, the volumes are very high, but VNB was actually pretty flat for the three months. So a lot of very big volumes, but mainly very low margin administrative type of business. So you probably don't wanna read a linear relationship between the volume growth and the VNB growth there. Solvency, it remains strong. It was, I think, two... particularly 2.2 at end of March. Now, since then, we did pay an interim dividend, but I would add that it will still be above the 2.11 we showed in December. So even after the interim dividend is adjusted to, our solvency improved in the first, in the last three months, first three months of the year. We should maybe do the same year end and lucky again. Okay.
Also, also quite important, we did complete the RMI Investment Managers transaction during the quarter, so that's all in the solvency numbers. So there were some questions about how big is it, you know. It was very manageable by so, so the solvency ratios are strong despite the completion of that deal. While I'm talking about deals and such, fourth quarter, we will see a little bit more capital injections than in into businesses than maybe the first nine months. There is an India capital injection for the year coming up, which is about ZAR 350 million. And then, progress should be completed, the acquisition of quite a large sale that they used to run.
As most of you will know, that part of the progress strategy is that when it works for both parties, because it's quite open towards acquiring some of their top clients, and there was a case like that in the last few months. But even with that, I think the solvency position, the liquidity position, or the outlook for year-end is very strong. So the balance sheet remains, I don't know, what's extremely strong?
Robust.
Robust is like... It's extremely robust. I'm running out of, uh, adjectives. Yeah. Okay. All right. Anyway, balance sheet is very strong. Yeah, and then obviously, that will play into the decision of year-end around dividend, some buybacks, and everything else. But what I'm basically trying to say here, maybe, is that I'm more optimistic about the outlook for year-end capital decisions than I was three months ago. So the last quarter's been positive today. Any other tidbits? I mean, Jeanette already mentioned, Insure had a decent quarter, positive. I mean, still not at the run rate we would like, but at least it's a profit. India had a slightly higher loss in the quarter. Guardrisk continues to do very well.
Yeah, so other than that, but, yeah, overall, I think a pleasing quarter, except maybe the yield curves just fucked us within the quarter. So happy overall. Jeanette, back to you.
Yeah, thank you. I mean, I think just to end, you know, we're definitely very pleased by the growth in new business volumes. We expect our operating environment to remain under pressure, given the weak economic growth and just all the uncertainty and everything that is going on, especially around political uncertainty. But we remain focused on driving our new business volumes to gain market share, to improve the sales mix and the margin, and to reduce the cost base. There's been quite a lot of focus now on the cost base across the business. As Risto mentioned, our VNB remains under pressure, and it will take time to turn it around. But I can assure you that in every single business unit, we know exactly what to do, and those processes have all kicked off.
Maybe just lastly, we are on track to deliver on the targets that we have set for business performance for our reinvent and growth strategy at the end of the year. But before then, I'm also very excited that we will invite you to attend the launch of our new strategy on the 23rd of July in Cape Town, and I really hope to see all of you there, face-to-face, hopefully, but you know, obviously, we will accommodate anyone who can't be there. That's it from us. I think we will now open the line for questions.
...Thank you very much, ma'am. Ladies and gentlemen, at this stage, if you would like to ask a question, please press star and then one now. If you decide to withdraw your question, please press star and then two. Again, if you would like to ask a question, please press star and then one now. The first question that we have comes from Warwick Bam of RMB Morgan Stanley. Please go ahead.
Good morning, Jeanette, Christo, and the team. Thanks for the opportunity, and thanks for the detailed update. Free to charge. In Momentum Retail, you mentioned a 21% increase in protection new business on present value of new business basis, yet VNB remains negative, based on your commentary. How much higher do you need sales volumes to be in Momentum Retail to comfortably achieve a positive VNB? That's question one. Question two, just on, you know, your momentum in single premium sales volumes is significant. Are you finding that the election uncertainty has changed the momentum in that regard in, I guess, the post-31 March 2024 period? And lastly, just on corporate new business volumes, you know, obviously, the magnitude of the volumes is significant. You're mentioning that they're low margin.
What levers do you have to improve the margin of that business over time? Thanks.
Warwick, I will answer the single premium, the single premium, question. We just actually have the numbers here in front of us. But I mean, again, you know, we, we've not seen, in terms of annuities and structures, I think I'm correct if I say it was again, the highest month we've ever seen in our history.
Mm-hmm.
It's in April. It is noteworthy that in terms of our structured products, the Lego product, which is a guaranteed product that is actually very, very popular, we've actually reached our capacity on it, and that product was actually stopped, or discontinued at the end of March. So, I mean, those very, very high numbers basically are purely annuity numbers. And again, like I said, it was a record month in our history in terms of single premium. So we've not seen it narrow down. In fact, what is probably true is that the more uncertainty, while we can maintain our annuity rates, I think that will continue rather than the other way around. But across our investment business, we again had a very, very strong month.
So even, you know, on our platform and so forth, you know, in the same order of all of the months that we've seen before. So not really any slowdown in that. So you want to answer the VNB question or...?
Yeah. I'll, I'll do Momentum Retail on yours. It's a, it's a tough question that we've been pondering in-house as well for the last year or two, but maybe just give you a little bit of a factual statement, first of all, that the VNB on Myriad is better than the VNB for Momentum Retail. So it's on a negative VNB, a lot of it's got to do with the recurring premium statements doesn't feel right-
Yes.
In Investo. And as we know, recurring premium statements price are very thin margin. And sometimes we really get down to thinking about sort of fixed cost coverage and, you know, is it worth spending at a marginal profitability versus, you know, all impossibility. At the same time, you're right. I mean, even Myriad on its own, even if it's positive, it's not exactly a fat margin. So there's definitely an improvement here, really. And the reality is that the volume growth realistically is not gonna be the only lever. I mean, we have to actually cut expenses there as well. As you know, we're doing a number of initiatives on the underwriting new business side to reduce that cost.
So obviously, as people migrate more and more into straight-through processing, using digital underwriting tools, as we streamline our own underwriting processes, that will help the margin to become a bit more comparable to others. So to answer your question is, volume is the number one bit. We have to cut the cost base there or increase premium rates, but, you know, I keep telling, I keep getting told it's a very competitive market. So I think increasing premium rate is not the answer, but they really list expenses as the—as a key lever, we have to combine with volumes.
And then, Warwick, on the corporate new business, there seems to be getting lumpy with big deals. I think that we remain cautious in terms of our current exposure on the protection business. On the front of the wealth business, we're not seeing much activity as people or trustees are preparing for the two-part system. So I think that they probably want that to bed down and to play out, and then we'll probably see activity in that part of the market again.
Also, Warwick, maybe the last thing, thanks, about the corporate line. Like, in this quarter, we got some really big business where there's basically no margin for corporate. So you might say, "Why we do it?" It's because our investment business works together with corporate. So, so we have this internal question of, okay, like, if we're making, let's say, 10% in building investments, you know, we're definitely gonna do it, even if corporate side deal with VNB. And so it's some of that business that if we, if we sort of captured the margin within asset management, VNB will look very different. But the rules are the rules, and, you know, effectively, the fee that corporate takes largely just covers the admin costs.
Mm-hmm.
The real economic margin sits in asset management. So it's not business that we regret taking, it's just business that optically has almost no margin for corporate, even though it works for the group.
Yeah.
In fact, we're really happy when the guys come together.
I mean, and we've been quite successful with that, you know, over a number of years. But then, of course, you don't see that VNB coming through because, you know, it sits in asset management.
Very useful. Thanks.
… Thank you. Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then one now. The next question we have comes from Michael Christelis of UBS. Please go ahead.
Good morning, guys. Thanks, thanks for the opportunity. Two questions, if I can, from my side. Sorry, I'm traveling. I don't have the H1 data in front of me, but can you maybe just talk a little bit about the net sales volumes and protection relative to just the quarter last year? In other words, you know, quarter one calendar this year versus quarter one calendar year last year. That's the first question. Second question, just around lapses. If you can give us some sense of what lapses are doing in each of the business units. And particularly, you know, obviously net again, you know, in the context of the under-risk contracts and the strong lapse assumptions you took last year, how are you trending against that?
And then the third one in India, did I hear you correct that you said Indian losses were reported for the quarter? I looked at the presentation, it looked like they had made a profit for quarter three, or their quarter four. Am I looking at the wrong quarter? Maybe it's just three-month lags. Maybe just clarify that for me, please.
Yeah, I'll. Yeah, okay. Maybe I'll understand, and then, Jeanette, you can add if you want. So India, now, Michael, you spoke of my surprise from the Indian end. Yeah, exactly that. Remember we reported a quarter in the red. So, the last quarter of the year for them, which is, which we then report in our year-end, that is traditionally stronger because at the end of the tax year, big volumes, little clients. I mean. So, you're right. I mean, I don't know exactly what it looks like under IFRS 17, because obviously we convert the numbers to IFRS 17. But you're right, they reported a profit in the last quarter, which will then, put it this way, the last run rate at least will be very low compared to the first nine months.
So yeah, okay, I need to find something else positive for you right now. Lapses, I'll talk about a little bit. So I actually forgot to mention it when I did my commentary, that we have focused so much on new business quality, that we're very happy about the NPU being lower and so on. But you're right, the lapses in the entry-level market remain higher than expected on the longer duration. So we're still showing a negative persistency variance for earnings in net. Less than last year, but yeah, persistency is not great in the entry-level market.
And then a funny one, which I sort of maybe mentioned on the buy and buy at the interim, but I looked at it now in the nine months a bit more. We also see a little bit higher lapses in Momentum Retail, particularly from the larger policies, like business policies, buy and sell policies. You know, so we think those are the businesses that are getting closed down, folks are emigrating. You know, when you get, like, ZAR 20,000 a month policies lapses, you know it, you know? So we're seeing a few of those big policies lapse. So I think we have an overall negative lapse variance in Momentum Retail. Obviously, there's alteration.
So, if you look at our persistency variance overall in retail, it's still positive, but it's only a sum of positive alterations offset by negative lapses, which is a bit of a new trend for us in the last few years. Next, risk net risk sales, I mean, I'm gonna look here, but the first quarter protection sales, I'm doing mental math here. Remember, the first quarter includes the dead lull from December, January. But the third quarter risk sales looks quite similar to the second quarter of the first quarter. Now, against last year, maybe down less than a little bit.
But very important, okay- considerably weaker than peers, right?
It's what?
Considerably weaker than peers, I mean, we're still showing 22% growth. That's-
Yeah. I'm not gonna disagree with that. But-
Yeah.
We've been focusing on quality. Now, the VNB is better, the stock volume is being recorded modest, okay?
Yeah.
So net, I think a lot of the missing volume is that quality business, which is a good trade-off. Yeah. I don't want to paint an overly positive picture, but I think the point is, the outcomes are what we thought they are, as we sort of manage the quality better.
I mean, in the five-point plan, the focus definitely was far more on quality and sales force management than it was on appointing and driving sales volume. It feels like we need to get the quality right, and we need to get it to a sustainable level where, you know, we don't get the kind of nasty surprises, and then we will go back into recruitment mode again. We've also just promoted a person that we've appointed actually a year or so ago, no, probably two years ago now in corporate, to actually take over and run our workforce, our sales force in Metropolitan.
And you know, already her input and her insight that she brings, I think is going to be very positive in terms of just better understanding of what went wrong in that business and making sure that we fix that, before we go into a fast recruiting mode again. But that place or Metropolitan, the volumes are very directly related to your ability to recruit and recruit fast. I just think we've burned ourselves, you know, over the last while by recruiting the wrong people.
Great. Thank you.
Thank you. The next question we have comes from Francois du Toit of Anchor Stockbrokers. Please go ahead.
Guys, just a few quick questions. First thing on Momentum Insure, the meaningful improvement in the- claims ratio there, if you could maybe give a sense of how much you ascribe to premium increases and, how much just to, maybe more variable claims experience being better than expected. I see overall growth with premium increased 6%. If you could maybe put that in context of the policy count change as well. So how much was premium inflation, and how much was policy count change there? It's a very meaningful increase in the claims ratio. Get a bit of color on that. That's the first question. Second question, around the group risk business that appears to continue to be very profitable, and that's not just the case for yourselves. Maybe if you can talk to the level of competitiveness in the market as well, or competition in the market.
Your volumes were quite low there, but I've seen some of the peers' volumes low there as well. It's promising to see if that market segment with a nice, high current levels of profitability is a little bit less competitive, not a bad thing. If you can chat about that a little bit as well. And then, another one on Metropolitan. I think Lesotho sells mostly funeral business, if I'm correct, but please correct me if I'm wrong. And it contributes quite meaningfully, I think, the dividend last year, like ZAR 170 million. So if you could just give us a sense of the experience there, and given also, I think the trends in funeral in South Africa, whether those sort of trends are coming to Lesotho as well.
And then the last one, just on, I think there's mention of a change in the product mix, and that more lower-margin good business is currently being sold and expected to be sold in future. If you can just talk, you expect from that in terms of return on capital for that business long term.
Yeah. Francois, you broke up a little bit, but I'll, I'll maybe give you Insurance, and then group business maybe Welling, and then group business being the long-term. I don't know the margin. I don't know. And then what was the question on funeral? You broke up there.
Yeah, just more to do with funeral in Lesotho. I know Lesotho is a small country, but you guys dominate that. I think just want to understand the sort of products that sold and whether the funeral market has the same sort of dynamics and risks that are playing out in South Africa.
Yeah. Okay, I'll take that one then. So, relating to insurer, I don't have the quarterly report in front of me, but I do know that the policy count is down 8%, 12 months on 12 months, okay? So, that will tell you that premium rate increases are probably in the mid-teens on average, okay? So, like, I mean, I'm not in head yet, but the number 16% in the bottom line somehow. Okay, so yeah. So we had quite large premium rate increases, you know, maybe a bit of a catch-up. Also, what you'll find interesting is our lapse rate has been averaging about 1.8, 1.9 a quarter, speaking about 2% per quarter. So the lapse rate has never shot through the roof despite these premium increases.
So it does feel like we are catching up to the right rate rather than sort of squeezing too hard into the premium increases. So that's been a reasonably good story. In terms of funeral, Lesotho, that doesn't actually a bit more diversified than you think. It's about sort of half savings, half funeral. In fact, we have the executive of Lesotho sitting in here, and he can't hear that. The margins are quite good on the funeral wing, less so on savings. So the savings business there has exactly the same problems as mixed savings. You have low premiums, sort of, we call it not the greatest of collections. Also, in Lesotho, we had paid upfront commission from savings, and that might be coming to an end, where you're gonna start paying as and when commission.
So that might improve the margin of profitability, but it might reduce the volumes and longer term. Also, in Lesotho, we're not just dominant on retail, we're also dominant on group. So some of the hard profitability in being able to do some good group deals were done. I think we're very confident about our market position. There is a few smaller competitors who largely focus on funeral, but they seem to sell much smaller policy sizes, don't have quite the same quality of business as BP. So I think Lesotho, in my books, remains a very solid dividend contributor. But you're right, I mean, Lesotho and Namibia, actually, despite the volatility, are not always in the, you know, best story in the world. They've been good dividend payers for the last five, 10 years.
I think that will continue. Good work, yeah.
Yeah, and Francois, on good books, I think, as I mentioned, we're pretty cautious just in terms of credit. I think if, if there isn't much sort of movement in the, the industry, I'm not that close to it. I think—I like to think that we learned our lesson from pre-COVID, when there was a race to the bottom on PHI. And so most of the players are being quite concerned with. What typically happens is, trustees will tender, for rates, and will normally go to the incumbent to match the lowest rate received. So you've actually got to be quite aggressive to the downside to, to create a rate that the incumbent is uncomfortable with, to actually win that business. So I think with that level of conservatism, you're probably not seeing aggressive quotes.
The current levels, where they are in terms of profitability, most insurers are quite comfortable meeting those lower rates when there isn't the lowest one provided. So they can be probably not sort of seeing the churn for the new business and really that's coming through more positively in terms of earnings.
... Excellent. Thank you. So just a last one on the Indian health business and mix change to group here.
Yeah. Okay. Yeah, well, you broke up. We thought it was-
I thought it was India.
Yeah, no. So, Jeannette was looking at me funny when I asked her to answer it. Okay. So, India, yeah. So the claims rates in India on the group business are very low 80s%. High teens, low 80s%. So it is high. I think on the retail, it's more like low 50s%. Okay? There's a massive difference in the claims ratio between two of them. Now, at the same time, we do do a, like, a burn rate analysis, where we look at things like claims, plus margin of costs. Is it over 100? And there's no business in India where we sort of burning through that on group side. So our group business is, I think, on a marginal basis, very profitable, fully costed, maybe closer to breakeven.
So it's not, it's not bad business, even though obviously we would like to do more retail over time. Also, what's important to keep on, so remember there is a new thing in India where expense and management rules, where we need to get our total expenses down to less than 35% of premiums. On group business, it is already well below 20, it's like 15% or something. So, so, so group business is also a way for us to meet the regulatory expense ratio limits. I think once we reach that ratio, we will also, we will then turn the dial back on the retail side, where the expense ratios are higher.
So, I actually think the management team has implemented it quite well in that we were more nervous when they turned the dial up on group business, but it actually behaved very close to expectation. It's not a money maker, but it doesn't cost us money either. It's a neat way of getting to the scale required for the expense ratio.
Oh, excellent. I did, I didn't know that ratio is across the business in total, so you can get the ratio up, I think. Okay, thank you.
Yeah, so it's actually a neat way to actually prevent having to reduce, you know, our charges on, on retail business by rather, you know, changing the mix in terms of, of, of what we, what we have on book. So it's, it's quite a kind of a focused effort to get that right, and then, you know, we can focus on retail business again.
Thanks, guys.
Thank you. Ladies and gentlemen, just a final reminder, if you would like to ask a question today, please press star and then one now. The next question we have comes from Jared Houston of All Weather Capital. Please go ahead.
Hi, Risto. Hi, Jeanette. Thanks for the call. Just another question on India. Risto, you mentioned it's usually Q4 looks like the strong quarter as with previous results, but obviously still encouraging to turn to profit. Do you think this is a broader trend or even too much interest, looking at the prospects for next year and getting towards profit?
Yeah. So, Jared, I think you are reading maybe too much to it. So we have had a fourth quarter profit in the past. So what happens in the fourth quarter, India's got a 31 March year, tax year-end. So we often get a lot of high volume of business in the last quarter. Now, we defer. Well, where we provision for the premiums, it means we actually end up with a little bit of revenue on the new business. But like, let's say there's huge volumes in the last week of the quarter. We will recognize some revenue, but generally we're gonna have claims. You know what I mean?
So there's a bit of a disconnect in the last quarter between volumes very high, but just claims been a bit lower. So it's not the first time we've seen a profit in India in the last quarter. I think this quarter was bigger than the previous profit in the last quarter. So rather view it as a confirmation of the trend, where we're trying to be profitable two years from now.
Thank you. Thank you.
Thank you. The final question we have comes from Matthew Pouncett of Laurium Capital. Please go ahead. Matthew, your line is live, sir.
Don't be shy, Matthew.
At this stage, there seems to be a problem with Matthew's line, and we cannot hear him. At this stage, there are no further questions on the conference call. I would now like to hand back to Jeanette for closing remarks. Please go ahead, ma'am.
Yeah. Matthew, if you get your line back, you're welcome to, you know, show your hand, and we'll give you an opportunity. I think I basically said, you know, everything I wanted to say. At the moment, you know, all of us very hard at work at the new strategy. We're presenting back to the board a week from now for their approval, or just over a week from now. I see Risto got a heart attack next to me. Maybe he realized that he's got less time than he thought he had. In two weeks, we're presenting it to the board, and then, you know, we'll be presenting it to you, as I said, in July. So we're working quite hard at that. There's some other very interesting kind of things we're working on.
I did mention, and you know, we will spend a bit of time on that, on when we launch our new strategy, but a very deep dive focus on cost basis. It's part of what we know we need to do in order to fix MDU. You know, and it's both in allocated costs from the center as well as what happens in the business. I think also, you know, maybe for the last five, six years, it was easy for businesses to blame allocated costs from the center for their cost base. This time around, we focus, you know, very deeply on the cost basis in the businesses as well. We have mentioned to you that we've had slight above inflation increases over the last while. So I mean, that's a very big focus area for us.
On top of that, the new strategy. And then maybe just lastly, one of the things that we've started, we started talking about collaborating better between businesses, and not only between corporate and investments, but over the last while, between health and corporate. We have actually started pitching together for business with very good results. Yeah, so things... I mean, you know, I am an optimist. It's hard to get me down, but to be honest, you know, things look good. We've been taking some really hard decisions about the continuation of certain businesses. I can't share that information with you yet, but we will, in a month, when we see each other, or a little over a month. But I think we're focusing on the right things, let me say that.
What's good is that it's a combination of making sure we clean house while we're building our new strategy. So interesting times, good energy in the business for sure. Okay, I'm waiting for applause, but that's obviously not coming. So maybe it means that the call is almost over.
Thank you very much, ma'am. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.