Hello, welcome to this Man Group Q3 call. Throughout this call, all participants will be in listen-only mode, and afterwards there will be a question and answer session. Just to remind you, this session is being recorded. I'll now hand you over to the CEO, Luke Ellis. Please begin.
Good morning, ladies and gentlemen, and thank you for joining us. With me today are Jonathan Sorrell, the President and CFO of Man, and Mark Jones, the CFO Designate, who will be taking over from Jonathan as CFO at the end of the year once the appropriate regulatory approvals have been received. This morning, we're very pleased to announce that we've entered into an agreement to acquire Aalto, along with the launch of the Man Global Private Markets business, and also our intention to return up to $100 million of capital to shareholders through a buyback. We have released our Q3 trading statement. We'll briefly run you through each of these in turn, and then we're happy to take questions. I'll start by discussing Aalto.
Jonathan, Mark, and I thought it'd be helpful to take you through the strategic rationale for the transaction, the launch of the Man Global Private Markets business, and the detail of the structure of the transaction. The private markets space and the launch of the Man Global Private Markets business is an exciting opportunity for Man. It allows us to offer a broader range of investment strategies to our clients to complement our existing capability in public markets and to do so in longer duration funds with more stable revenue streams. It builds upon our strategy of diversifying our offering to clients and adds to our options for growth. The Man Global Private Markets will specialize in private market asset classes such as real estate, private credit, and infrastructure.
Once the acquisition of Aalto is complete, this business will form a central part of our private markets business as it's focused on real assets. The Man Global Private Markets business will fall under Jonathan's responsibility in his new role as President. The Aalto founders, Petri Barman and Mikko Tirunen, will continue to manage Aalto and will also become Co-Heads of Real Assets within Man Global Private Markets, and they'll both report into Jonathan. Mikko and Petri have a strong track record of building successful strategies and growing assets in this space, particularly in sectors where market dislocations have created investment opportunities. Their expertise and entrepreneurial mindset will help develop Man's real assets offering, and they are an excellent cultural fit for the firm. We believe our institutional clients have a material need for strategies that deliver solid long-term returns supported by real underlying assets.
Aalto manages a range of such strategies and has delivered strong performance compared to the underlying asset classes. Importantly, they have done this without relying on leverage to augment returns. Particularly in our low interest rate world, we believe this sort of investment offering is becoming ever more important for our clients. Ultimately, this is why we believe launching Man Global Private Markets is an important development for Man Group and acquiring Aalto is an important, although initial, step in that development. The Aalto business was founded in 2010 by Mikko and Petri and is a U.S. and Europe-based real asset-focused investment manager with $1.7 billion of funds under management as at 30th of September, mainly from institutional clients in the U.S., the U.K., and Europe. Aalto currently has 33 employees with headquarters in London and offices in Charlotte, North Carolina in the U.S., and Saas-Fee, in Switzerland.
Mikko and Petri have built the business to serve an institutional client base and have invested significantly in the infrastructure in order that it's capable of scaling materially from here. Aalto manages strategies which invest in direct real estate with a focus on single-family homes in the U.S. and real estate debt, focusing on commercial real estate debt and residential construction financing in the U.S. and Europe. They have a consistent track record across their different strategies and are currently generating net rental income of 4%-5% per annum across their direct U.S. real estate strategies, LIBOR plus 4.1% per annum across the U.S. residential debt strategies, and 3.5%-10% per annum for European real estate debt strategies, depending on the sub-strategy. The acquisition is expected to complete in January 2017 once the required regulatory conditions have been met. Turning now to the acquisition structure.
As you know, we aim to structure acquisitions to align the interests over the long term. The consideration here is structured through a combination of an initial payment due on completion of the transaction and earn-out payments due over up to eight years from completion of the transaction. The initial consideration of $25 million will be settled two-thirds in cash and one-third in new Man shares on completion. Following the first anniversary, Man will pay up to a further $27 million, again settled two-thirds in cash and one-third in shares, on a sliding scale dependent on the run rate management fees at the time. Man will then pay three further earn-out payments of up to $180 million in total, payable on the fourth, sixth, and eighth anniversaries on a sliding scale calculated as 3.6 times the increase in the run rate management fee profit before tax at the time.
That means the maximum amount payable by Man for the future earn-out payments is capped at $207 million. The structure of the transaction means that there is a strong alignment of interests over the long term. As I said, the earn-out payments go out up to eight years in the future and are performance driven. If we deliver on our collective growth plan, then we believe we are buying the business at an attractive multiple. However, we believe we also have limited downside risk for Man shareholders, given that only approximately 11% of the total maximum consideration is payable upfront. There is a small share component within the consideration, and this is to align the team's interests both in the growth of Aalto but also the broader success of Man Group over time.
The regulatory capital requirements associated with the acquisition will be approximately $75 million, comprising the upfront consideration, the present value consideration payable under the earn-out, the net assets acquired, and any deal costs. The acquisition is expected to be accretive in 2017, and this is expected to increase as we launch new strategies and deliver on our growth plans over time. As this is the launch of a new growth area, we do not anticipate net cost savings from the transactions, as we intend to reinvest any savings to accelerate the growth of the business. Moving on to our announcement that we intend to carry out a share buyback program to return up to an additional $100 million to shareholders over the next 12 months, which we are now able to do following the announcement of the Aalto transaction.
After the acquisition of Aalto and the intended share buyback program, Man is expected to have pro forma surplus capital of approximately $300 million. As many of you will have heard us say before, we continually assess the relative value we can deliver for our shareholders through acquisition opportunities or through the return of capital whilst maintaining a prudent balance sheet. We continue to search for potential acquisitions that we believe have a strong investment process, a clear fit within our business, and that we could transact on sensible terms. Finally, before opening up to questions, we have announced our third quarter trading update this morning with funds under management growing by 6% during the quarter to $80.7 billion at the 30th of September.
We saw net inflows of $1.3 billion during the quarter into our quant alternative, fund of fund alternatives, and quant long only strategies against the background of net industry outflows for active management and hedge funds. Numeric attracted $1 billion of net inflows, mainly into their emerging market strategies, which are now nearing capacity. AHL had $0.7 billion of net inflows, mainly into Alpha and Dimension. While 2016 has been a volatile year to date, institutional clients have continued to recognize the benefit of quant strategies that they can add to their portfolios. A further $0.7 billion of this quarter's net inflow is from a new mandate within our infrastructure managed accounts business. Given the nature of the overall business, we continue to expect flows to be lumpy but are pleased to see the service proving attractive to a range of large, sophisticated clients.
Net outflows continued within our discretionary strategies with $0.8 billion of net outflows, although performance in the quarter improved significantly within both discretionary alternatives and discretionary long only. As ever, we would remind shareholders that given the institutional focus of our business, flows can vary significantly from quarter to quarter. Most importantly, we are pleased that investment performance has improved with $2.5 billion of gains for clients over the quarter, with good performance from GLG and Numeric, partially offset by weaker performance for AHL. Jonathan, Mark, and I would be happy to take any questions.
Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press 01 on your telephone keypads. You may press 02 at any time to cancel your question. There will now be a brief pause while questions are being registered. Our first question comes from the line of Philip Middleton of Merrill Lynch. Please go ahead. Your line is now open.
Yeah. Thank you. Thanks for your time. I just wondered if you could talk a little bit about how you see the ability to cross-sell the global private markets products with your more liquid alternatives. I understand the argument for this, but equally historically, people haven't always found it easy to cross-sell those two buckets. I wonder if you could tell me what proof points you would have that that's something that you will be able to do.
Sure. Thank you, Philip. I guess I'm not really a believer in cross-selling, which sounds a bit of a radical statement, but I'm an enormous believer in cross-buying. What do I mean by that? We have a single sales force. We will carry on with a single sales force, and the individual salespeople are responsible for building relationships with clients, where they can talk to the clients about the different things the clients are trying to do. As they understand what the client's trying to do, they can bring in the appropriate specialist from Man who can talk about a particular product. Through that process, what we've found is that clients, once you've done the first thing with a client, they're very happy to talk about other issues they've got, other areas they're looking to invest in.
Normally the private assets, with the possible exception of private equity, but private credit certainly, and the real asset stuff tends to be bought by people who are in the same area as the people that we're already talking to about some of the public credit or some of the other things we're talking to. Particularly once you've got a dialogue with the CIO, it's really not that hard to spread the dialogue into other areas. So far we haven't found it difficult to generate conversations. Obviously, what you have to have is interesting products and capabilities which can deliver something to the client that they can't get elsewhere. That's really what Aalto is about.
Okay. Thank you.
Thank you. Our next question comes from the line of Haley Tam of Citi. Please go ahead. Your line is now open.
Morning, gentlemen. Can I ask a couple of questions, please? First of all, rather boringly, just can I ask about the FX impact on your cost base? I know you've told us in the past it's 60% sterling and that you hedge quarterly a year in advance. I just wondered, given the recent changes in the cable rate, whether we should now be factoring maybe a different forward hedge rate for 2017 now that you've hedged perhaps the fourth quarter. If you can remind us what the average hedge rate was for 2016 as well, that would be very useful. Then the second question actually was very boringly about fund flows at AHL. Very pleased to see that the institutional flows there continued in Q3 despite some more negative short-term performance in AHL.
I just wonder if you can give us some more color there, perhaps on future fund launches such as Evolution Frontier, any capacity constraints there are in existing AHL strategies, and just how important the relative three-year performance track record is for investors rather than the shorter term. Thank you.
Sure. I'll let Mark talk about FX, then I'll talk about AHL.
On FX for 2016, the average sterling rate was 151. As you know, we hedge forward on a rolling 12-month basis quarter by quarter. We're expecting a rate of approximately 136, 137 for next year. We'll confirm the exact number for you at the full year. As you say, the sterling cost base is approximately 60% of our fixed costs and approximately 10% of our revenue. There are full details again in our normal disclosure, you can work that through for the FX impact for next year.
When it comes to AHL, I would say we've been very pleased by the number of different conversations and the breadth of the conversations that we've been having over the course of this year with clients about AHL. I think that you have a couple of secular things going on, which mean that in some of the areas that while relative returns within the space matter, the absolute return of CTAs is not a significant driver at the moment of flows. That is basically the realization of investors, particularly in the U.S., that they're very underweight momentum. Historically, U.S. investors have tended to be very value-focused, very equity market beta-focused, in a world where none of us know when the current market environment is going to end, but everybody can see that equity valuations are pretty steep and fixed income yields don't look very attractive.
Clients are worrying about what happens in a significant change in environment, we're seeing a significant increase in the interest in adding momentum in as a best way of trying to manage the future asset allocation changes that people have. Combined with that, we continue to work on the innovation in AHL, and we see very strong demand from clients for the more innovative products. For instance, you mentioned Evolution Frontier. We have now got to a point where we've had to pause flows into Evolution Frontier for a while in order to be able to absorb the flows because the demand has been very strong. We continue to develop new and interesting things that can go into client combination portfolios.
Okay. Thank you very much.
Thank you. Our next question comes from the line of Peter Lenardos of RBC. Please go ahead. Your line is open.
Good morning, gentlemen. I have a few questions. They all relate to the acquisition. My first question would be, since Aalto generated zero in PBT in 2015, I was curious if the firm has ever been profitable in its six-year history. The second question I would have is, I know it only has GBP 10 million in 2015 revenues. Is that all recurring management fees, or is there a performance fee component? The third question I would have is on the shares that you're issuing, is there a lock-up component to those? The fourth would be more conceptually, how did you determine it's an attractive multiple when the business is not profitable? Thank you.
Why don't I do a high-level comment and then I'll let John give or Mark give the detailed answers. I think when you've had people building a platform, you can have two sorts of approaches to that. You can have people who are trying to dress it up from day one to sell it, and they'll be focused all about trying to minimize the cost for the income they've got. You can have people like Petri and Mikko, who really focused on delivering a very high-class institutional platform despite their size. Which means that they haven't really been focused on profitability or what money they take out of the business at all. They've been focused on trying to get it into as good a shape as possible for future growth.
What they realized is that despite having a great platform, they just can't get the reach into the type of clients that buy these products broadly because what they're looking for is, to Philip's original question, people tend to buy these sorts of products from existing relationships. The way that I look at this is we're getting a great platform to grow from for a relatively small upfront payment. If we deliver on the growth, the valuation ends up being very attractive. Jonathan, I don't know if you're going to take the specific ones.
Yeah, a few points. Obviously, the profitability on a run-rate basis is much higher than it was in 2015. I think the way we thought about the upfront proceeds was similar to how we thought about Silvermine, which was a question of what proportion of the upfront proceeds is covered by the present value of the management fee profits off the current book of business. We felt actually in terms of the longevity of the assets that Aalto currently run, that that was a reasonable risk position to take. Clearly, the earn-out payments are aligned with the growth of the business. Paying 3.6x the incremental management fee profitability generated, putting aside any performance fee profitability that might be generated over time as you alluded to earlier, we felt was a reasonable balance in terms of a risk-adjusted deal structure.
With respect to the ongoing profitability of the business, I put that on a run-rate basis as a few million GBP.
Great. Are there lock-ups on the shares that you intend to issue?
Yes, there are lock-ups. For the upfront component, there's a lock-up through till 2018. For any shares issued at the one year earn-out, there's a further lock-up for those through to 2019.
Thank you, gentlemen. Thank you very much.
Thank you, Peter.
Thank you.
Our next question comes from the line of Anil Sharma of Morgan Stanley. Please go ahead. Your line is now open.
Morning, guys. Just had a couple of questions really. Just in terms of the surplus capital, I'm just wondering how we should read the messaging today and the buyback. Is management trying to signal a pause in M&A activity because there's not many sort of attractive assets out there? Is it more of a case that the gaps that you see in your business, those assets are just too expensive at the moment. I just want to get your sense as to what you think is going on. Within the AHL Institutional Securities business, just wondering if you could give us an update on that, because the fund flow is obviously pretty good in the first half. I just wanted to check how that business is building out, and is the fee rate still around 90-100 basis points, or is it still coming down further?
Any help you can give us on that would be helpful. Thank you.
Sure. On the AHL Institutional business, the flows continue to be good there. The story continues to play extremely well, especially in the U.S. The fees, there's no material change in the fees I would say. I've now managed to completely forget the first question. I apologize.
No, no worries. If I can be cheeky, I just wanted to add another one.
It was the M&A question.
Yeah.
Yeah. Sorry. Maybe I've blocked it out. No, look, the answer is, as we've said all along, we look constantly at the question of whether we should use the surplus capital that we generate to either make acquisitions or to buy back shares. We look at those on the basis of what we think generates the best long-term value for shareholders. We've just done one transaction, there's been a busy process getting to here to close that transaction. Now there's the hard work, which is the integration process with that transaction. Combined with the fact that the shares got to a much lower level than they were six months ago. The trade-off between deals and share prices becomes tilted one way or another, depending on the level. We thought it was appropriate to do a buyback now.
We still have excess capital, we continue to look at deals. If we find a deal that we really like the people, and that it's a good fit in the business, and we can make the terms work, we'd be very happy to do another deal. It doesn't really change the process of looking for deals. It doesn't change the interest in doing them. It does reflect that our share price is lower, therefore the balance of buyback relative to acquisition tilts a bit. I think it's important to note the organic growth this year, particularly within the context of what's going on in the industry. We are absolutely continuing to look for interesting acquisitions, but we are very focused on the organic growth at the same time. I don't think we need to do acquisitions to be able to grow the business.
Okay. That's very clear. Just can I just ask quickly one more. In terms of the Aalto acquisition, are there any U.S.-based institutional clients that this deal gives you access to which you kind of didn't have before? I know the U.S. is an area you've been trying to go into for a number of years now.
Yes. The Aalto team have a concentrated but very high-class client base. I think almost all of them are additive in terms of client relationships for the firm. We've already had phone calls from other people this morning who are interested in the story from our existing clients.
The client base is largely outside the U.S.
Okay. It's just the assets.
Yeah, the assets are a blend as well. It's a balanced business between the U.S. and Europe, this one.
Got it. Okay. That's helpful. Thank you.
Thank you. Our next question comes from the line of Gurjit Kambo of J.P. Morgan. Please go ahead, your line is now open.
Hi. Good morning, everybody. Just in terms of the strategy or the way Aalto works, is this more of a sort of third-party private manager, or is this more balance sheet investing?
It's a direct investor, so this is not a fund to fund. If I just quickly, if you take the example of their U.S. residential real estate business, the answer is they take in institutional client money, then they deploy that by going around and buying individual single-family homes in the growing cities in the southern half of the States at sort of $200,000 a go on the houses. It might be amazing to you in London, but in somewhere like Charlotte, you can buy a nice four-bedroom house with a garden for $200,000 in one of the more outskirt area, suburb areas. They deploy the assets. They manage the process. I'm not sure quite what that means between the two choices you gave, but this is not a fund-to-fund type of business. This is a direct investing business.
Yeah. Fine. I guess.
It's not on our balance sheet. It's on client money.
It's on client money. Okay, fine. That's all right. That's what I just wanted to check. In terms of the fees, do you know if the fees are on an invested basis or if they're on a committed capital basis?
They would tend to be on an invested basis.
Okay, fine. That is clear. Thank you very much. Thanks.
Thank you. Our next question comes from the line of Arnaud Giblat of Exane. Please go ahead. Your line is now open.
Yeah, good morning. A couple of questions, please. First, on Aalto, I estimate using your capital cost for Aalto of $75 million. Given the disclosure you have given around the mechanism that basically your base case assumption seems to be reaching AUM of about $6 billion in eight years' time from $1.7 billion today. Does that estimate sound fair to you? Could you maybe also give a bit more details in terms of new product launches or anything that you are doing specifically in the near medium term that could come out of Aalto to grow that asset at that sorts of rates? Secondly, you mentioned that the performance was strong, and you gave the numbers. Could you maybe give us a bit of a sense as to how that compares relative to that broader asset class?
Secondly, I was wondering as well, it seems like a good capability to be adding right now with real assets. Are there any other asset managers you could be looking to buy to add to that capability? Or does Aalto give you the capacity to serve in all sorts of real assets? Thank you.
There are a few bits and pieces there in your questions. Broadly speaking, in terms of the base case, you're there and thereabouts. Of course, the fees on the different types of products, they might do vary quite a lot. The headline AUM number is somewhat relevant. Obviously the way we look at this deal is the incremental profitability added on the management fee side, and that's the key driver of the earn-out payments, as we mentioned. You're not a million miles away, just at a high level. With respect to the performance track records, a few things, I suppose, to anchor the way you're thinking.
On the U.S. residential real estate side, where Aalto runs about $350 million, they have been producing LIBOR plus 425 basis points, which would compare fairly favorably to investment-grade corporate debt, where you'd have a weighted coupon of about 4%, but without any capital impairments and hopefully better security as well. With respect to European real estate debt, where you have 500 or so between different strategies, a couple of examples. The IRRs that they've achieved on the Irish debt fund would be in the low teens, about 13%, versus an original target of 9%-10%, again, with zero capital impairments. With respect to European commercial real estate loans, which actually is largely based in the U.K., again, they're about 200 basis points above the LIBOR plus 2.5% target which they set out for the fund.
In terms of the U.S. residential real estate equity business, there you have a running yield in terms of the rental yield of 4%-5% with capital appreciation on top. If you looked at the weighted average returns of the portfolios that they've run, again, they've been ahead of target at around 7% net. We think that the combination of the yield that you get from the underlying assets, the houses, plus the potential for capital appreciation, gives investors, certainly in this return environment, a pretty compelling return opportunity. It's not a heavily benchmarked space, which I think is what your question is getting at. That hopefully provides some context for the strength of the track record. I'm sorry. With all of that, I've forgotten your third question.
Any potential add-ons
We'll see more. The answer is, as we said before, we continue to look at things. I think that what Mikko and Petri have done a very good job so far is with each new idea that they have, they get it going themselves and then bring in a team to run the individual strategy so they can move on to incubating the next strategy. They're very creative, entrepreneurial people, which is why we like them so much. We hope that this gives us a platform to build out from. No, this isn't us finished on the private markets business. This is the beginning of a growing opportunity in our mind.
Great. Thank you very much.
Thank you. Our next question comes from the line of Haley Tam of Citi. Please go ahead. Your line is now open.
Morning, gents. Sorry, two follow-up questions just quickly. On Aalto, I apologize if I've missed it, have you given us some indication of what the management fee margins and performance fee metrics are there? Secondly, just in terms of the alternatives discretionary business, you obviously mentioned that continues to struggle for fund flows but has had a big pickup in performance in recent months. I just wondered, given hedge funds are out of favor, shall we say, with institutional investors right now, can you give us some comment on your thoughts on the potential recovery rate for that business? How long it might take, whether we might expect you to revisit perhaps some of the cost structures in that division in light of some of the changing industry dynamics in terms of fee levels there. Thank you.
Just to answer firstly on the management fee margins and performance fees within Aalto. As of now, it's running at approximately 65 basis points on the management fee side. Performance fees within this space are clearly typically back-ended, so they're crystallizing at the end of the structures. We don't have exposure to the performance fees on the current business as part of this deal, but we do on the future business. It's back-ended from the point of view of the group shareholders, and they're typically performance fees over performance targets that are set at the start of each fund's life and clearly calibrated by the individual asset classes.
I think the question at GLG that I'm not sure the right way of answering this. What we see is that while hedge funds in newspaper terms are not favor of the month, as you said, the reality is that as soon as you see an improvement in performance, one sees a noticeable tick up in client interest that clients out there are struggling to find places to put their money. That TINA or acronym as an argument for buying U.S. stocks at very high levels means that as soon as you get reasonable performance, there is a pickup in interest. Yes, of course, we are making sure that we manage the cost base within GLG appropriately given what's happening on flows and so on.
Thank you. I'm going to be very cheeky, just one more question quickly. On the GPM platform, could you just clarify for us what you already have in terms of credit and infrastructure funds that go onto that platform or are that's incremental for the future? Thanks.
Sure.
Sorry. Recently we hired Stuart Webster to run Core and Core Plus Real Estate in Europe. Stuart started at the end of April, we also recently brought on board a small firm in the U.S. called Bridge Lane, which ran about $75 million of assets in small cap direct lending in the U.S.
Thank you very much.
Thank you. Our next question comes from the line of Daniel Garrod of Barclays. Please go ahead, your line is now open.
Good morning. Daniel Garrod, Barclays here. A couple of quick ones from me. I just was interested, the initial $27 million earn-out payment. Can you provide any more color how much it's referenced against management fee? How much they have to increase to trigger that maximum payment? Is that referenced against the runway of management fees at completion, or is it referenced against what you detail the revenue base in 2015? That's the first question. Second, looks like you detail here very good inflows into the Numeric EM strategies, I think $1.1 billion you were saying this quarter. Can you provide any color how much that is year-to-date? What the existing capacity is on that?
I think you said sort of running out. Does that mean your sort of expectations on current run rate, do you expect to utilize that all say within the next quarter? Thank you.
On the first point, often when you do these deals, people have a pipeline of business that they attach some probability to bringing in within a reasonable timeframe. You want to create some flexibility to take that into account, but obviously don't want to pay for it upfront if it hasn't happened yet. Very broadly speaking, they need to more than double the run rate profitability of a business flow through taking in that additional business. That's the reason why you get that year one payment.
On the Numeric EM question. The strategies continue to produce outstanding returns. There's a bit over $1 billion of capacity left. One can never tell with institutional tickets as to exactly when that will get taken up, but we're extremely confident of it getting taken up. We are at the same time doing a number of things in the research area there to find other ways of delivering emerging market capacity out of Numeric without impacting on the core strategy. Numeric has been very disciplined about capacity management. That means clients get extremely good returns. We think that's a very long-term sensible strategy. We're not changing that. There are some nuances that we can do in the larger cap areas of emerging market, which will hopefully create some future capacity.
Thank you.
Thank you. Just to remind participants, if you would like to ask a question, please press zero one on your telephone keypads. You can withdraw your question at any time by pressing zero two to cancel. We will now have a further pause while questions are being registered. Our next question comes from the line of Michael Sanderson of Société Générale. Please go ahead. Your line is now open.
Good morning. It's just a couple of quick follow-ups. The first one, please, in relation to Numeric. The capacity concerns on EM. What impact does that have on capacity in the global product? You say obviously you're looking to expand there, but I'm just interested if there is any sort of meaningful knock-on on the limitations for your global product as that EM capacity gets taken up. Then secondly, just on the buyback quickly. You say you intend to effect it over the course of the next 12 months. Does that sort of limit your thinking about doing any more buyback announcements for the course of the next 12 months, or is that just sort of standard wording you've put in there?
As far as the first one is concerned, no, the EM capacity doesn't affect the global capacity. We have a very sophisticated model at Numeric for understanding the different impacts across capacity. We have several billion GBP of global capacity remaining, even after the EM one has been fully utilized. On the other, yes, it's standard wording, but no, that isn't a leading answer. We will continue to make sensible decisions about what to do with surplus capital over time, looking at the trade-off between making acquisitions, retaining it for future acquisitions and doing buybacks over time. One thing at a time. Today, three things at a time. That's probably enough for today.
Yeah. Thank you.
Thank you. Just to remind everyone, if you would like to ask a question, please press zero one on your telephone keypads now.
Unless anybody's got a last quick question, that probably sounds like we've worn you out. Thank you very much, everybody, for listening and have a good day.
This now concludes our call. Thank you for attending. Participants, you may disconnect your lines.