Gerald Scott – President and Founder, The Wall Street Analyst Forum
Peter Stokes – CEO
Macquarie Infrastructure Co LLC (MIC) Wall Street Analyst Forum's 20th Annual Institutional Investor Conference Transcript March 26, 2009 8:29 AM ET
Okay, good morning, ladies and gentlemen. Good morning, my name is Gerry Scott. I am President of The Wall Street Analyst Forum, and I will be the host for today’s program taking place in the – for this industry group in this room.
Before I introduce the first presenting company today, I would just like to review a couple of administrative details associated with today's program. First is, I think most of the analysts and portfolio managers that are here know the format of the conference is such that there is a 40 minute presentation and Q&A session that takes place in the group meeting room, usually two-thirds presentation, one third question and answer session, and that’s immediately followed by a 40 minute breakout session, that takes place out the doorway to the right in a separate room, and that’s is entirely a Q&A session for that 40 minute window.
Investors attend today three different ways. They either attend in person to the group meeting, the breakout. The second way is they kind of attend via the web cast. The web cast is audio, PowerPoint, it’s live and it’s retrievable for 30 days. And so if you are physically here and you want to re-access a meeting that you missed, re-access a meeting that you attended, then that web cast is easily accessible. I would generally encourage you to go to our website because that is where all the links are for all the companies at analyst-conference.com.
The third way investors attend, and we think we are pretty cutting edge in this area, because the investment bank conferences are not doing this, because they don't want to give their content away to non- clients, hence the opportunity for us to do something that they're not doing, is that we hired seekingalpha.com. Most investors didn't know who Seeking Alpha was three years ago, most investors know exactly who they are today, because they are the firm that went out and started transcribing the conference calls for the 1,800 or so largest publicly traded companies in America or US listed companies, I should say, and making those web searchable on the financial portals like Yahoo Finance, and AOL Finance and MSN Money.
So, we have hired them and they transcribe these presentations and Q&As, and so you can go to Yahoo Finance, a couple of hours after this presentation, and find the presentation Q&A word for word. And sometimes that is, for some investors, that is more beneficial than the web cast because you can go get everything you want in 10 minutes as opposed to 40 minutes. So you should feel free to access that as well if you are physically here, you're attending the web cast, you can access – there's three different ways to get essentially the same content.
Without any – let me introduce the first company in this morning's program. Macquarie infrastructure Company is here is our first presenter. Peter Stokes is the Chief Executive Officer of that company. Prior to becoming CEO in 2004, he worked with various asset finance roles in both Australia and New York and has been 18 years with Macquarie. So without any further introduction…
Thank you very much. It’s obviously a pretty early start for you also, appreciate the attendance today. With remarks today, what I would like to focus on is, before getting into the formal part of it, we put our annual results out only a few weeks ago, late February, so we have a very fresh 10-K which obviously gives a fairly full picture of MIC, Macquarie Infrastructure Company.
But looking at today, and picking the highlights, what I really want to focus on was the disconnect that we see between how MIC is being valued and how it could or should be valued. Our share price is off significantly despite the fact we have consistently generated a considerable amount of free cash flow and we have taken very clear initiatives to improve the capital structure further.
So I think it has created very attractive opportunities for investors in looking in the infrastructure space. Comment today will be in three parts. First of all, I will give an overview of how it is structured and managed and what our businesses do. I will talk about cash flow because MIC is first, foremost and fundamentally a cash flow driven story. So we will look at the sources and the stability of cash generation, and then we will have a look at some of the steps that we have taken and may take in continuing to improve the capital structure and optimize the generation of cash flow.
So let’s have a look at some of the – look at infrastructure as an asset class and each of the businesses within our company. We should start with a conceptual framework of why infrastructure as an asset class as an area of investment. And the objective we have as an owner operator in this space, infrastructure is all about the consistency of the cash flow, the quality of the cash flow. It comes down to barriers to entry, very long-lived capital intensive assets that are very scalable. There is lot of the visibility into the revenue sources, the fundamental drivers of growth, but also the operating and capital expenditures that lends itself clearly to good, strong foundations of valuation, and we will talk a lot about this kind of cash flow valuation later.
We are actively managing this businesses, especially looking to improve the operations through the discipline of business planning and also the selective capital expenditure programs that you will see the benefits of. In the short term, we have made changes to our long standing strategy, looking to focus on the reduction of debt, the managing down of expenses, and also deploying the available resources most efficiently.
Looking a little bit more specifically at MIC, it is a passive holding company structure. You will see it on the basic five operating entities under the holding company. Each business has its own limited recourse debt facility and that is incredibly important in terms of valuation. Each debt facility is specific to the business, but also there are no cross defaults, no cross guarantees. Each business stands on its own. From those businesses, we dividend free cash flow. Let me be very clear on what is available to be dividended out, it is net of maintenance CapEx, the interest, relevant taxes, et cetera. So we are going to talk about what is free cash flow, making sure that it is sustainable.
And then you look at the five businesses. Starting with our largest, airport services, is the largest. That is the biggest network of fixed base operations in the US. This effectively FBOs, they are the gas stations for general aviation, trading under the brand name Atlantic Aviation. What you will have at an airport is limited amount of land, general aviation gets a small piece of that, so there is typically only one or maybe two FBOs at a particular airport, and they have long-term ground leases, and they therefore provide hangarage and fuel to the general aviation space.
We’ve seen short term softness in volumes looking at the current times, but at the same time, we have seen even in that same period, in 2008, a net increase in the jet fleet in the US. So there are more aircraft that are just not flying as actively. Clearly the aircraft is still there this year, they will be there next year. And the manufacturer backlogs for delivery still exist and so therefore it is good fundamental drivers in this space because the right number of aircraft is key to the amount of fuel sold. Even though we saw some declines, a high percent in same store gross profit last year, we also aggressively managed down cost to partially offset, and we will talk a little bit about that management process.
The second business is bulk liquid storage, which is really maritime based, so looking at terminals adjacent to deep water harbor frontage. We own 50% of this business, therefore we equity accounted, and I will talk a little bit in a later section about the implications of that, because unfortunately it does obscure the contribution from what is a very large and successful business. But looking at the business itself, bulk liquid storage is effectively being the landlord for storage. So you charge per barrel per day, long-term contracts, three to five years, and this is a very strong business. It has considerable barriers to entry. It dominates its two key markets, the New York Harbor, Boulevard in New Jersey, and also the Lower Mississippi around New Orleans.
We have seen very good growth in this space organically, historic traits which is a key driver, increased 15% year on year last year. On top of that, we saw continued completion of capital expenditure projects, which have contracted revenues. We don't start CapEx without these revenues, and so each project as it was completed started to contribute to the overall results. And that overall results, once you adjust for non-cash losses on derivatives, which I will talk about later, would have EBITDA increasing by 36% in this segment. Now those two segments comprise almost 90% of proportional gross profit. So obviously a fair amount of the company is represented in those two segments.
What you're looking in the smaller businesses, gas company, this is the regulated gas utility of Hawaii, has about 90% of the gas distribution market in that state. EBITDA increased 10% last year. Most importantly in the regulated side of the business, it has a pending rate case. The result is unknown, the process is ongoing, but the amount that has been submitted is about 50% of EBITDA. So whichever results, 50% trailing EBITDA, but what we are looking at is a prospect for material results for that segment.
The next businesses is district energy, which is providing cooling to high-rise buildings through long-term contracts, by actually pushing cold water through our pipe network to cool those buildings. EBITDA was down slightly due to colder weather, but there is a lot less seasonal factors weather factors than you expect, almost half of revenues were actually not volume driven. This business is connecting new buildings to the existing pipe network and through 2011, we are connecting the buildings, they will contribute on a annual run rate about a quarter of trailing EBITDA. So good step ups in the size of that business as well.
The fifth business, airport parking, is a different story. We made tough decisions last quarter through that – we concluded that we wouldn't be able to refinance the business as its facility matured in September of 2009, and so therefore we decided not to contribute additional equity. That’s a difficult decision to make, but it meant that we're talking to lenders about the appropriate way to go forward. Fairly early stages, but most importantly, we're looking at a situation where the debt in the business is limited recourse to the business. The MIC's exposures, financial exposures, to the subsidiary are limited to specific guarantees. And during – through September, the maturity of the facility, those guarantees will amortize down to about $4 million to $5 million, so relatively immaterial.
The reason we took these decisions is because we don't take it lightly was that in Q4 we saw considerable declines in commercial enplanements. You would have heard a lot about the news about the slow down in people traveling, and with fixed costs hurt that segment considerably. It was already cash negative and the prospects of significantly cash negative operations made it imperative to take the decisions that we did and not continue to support that business.
In terms of the actual structure, stepping out of the way from the businesses, MIC benefits from the experience and expertise of the Macquarie Group in owning and operating infrastructure businesses. You may be familiar with Macquarie. We will be looking at – Macquarie may operate in 27 countries but MIC itself is managed in the US, actually a couple of blocks away from here, but also all its assets are based in the US. Funds management is a core business. Managing entities like MIC is core for Macquarie Group that manages 34 similar vehicles around the world, 120 similar businesses underneath those entities. And Macquarie is the largest shareholder in MIC with a holding in excess of 7%.
And there's a lot of connection to the Macquarie Group, so I will take a minute or two to just give some background on it. We found that, particularly in these interconnected days, that we do trade on some of the news for Macquarie Group, and so it is worth just having some background. Macquarie is the largest full-service banking entity in Australia. That means that it is a holding company that is listed, two arms, commercial banking and also particularly investment banking side, and that side manages the vehicles such as MIC.
The group’s very well capitalized, the distributed excess capital it has represents 40% excess over the required capital amount. Because it’s a holding company for a commercial bank, the group has always been regulated by APRA, which is the Australian equivalent of the Fed. I think that gives a lot of reassurance to investors. And unlike maybe a lot of banks in these days, Macquarie remained profitable; in the first half of its fiscal 2009 year, it made a profit of close to $0.5 billion.
And fund management is the high-profile arm of Macquarie and so it gets a lot of press, but at the same time it is a relatively small portion of operating income. Macquarie is quite diversified. Typically the general level, a lot of the press coverage about infrastructure as an asset class centers around the availability of financing, and what we're looking is tougher conditions, but still business gets done. The ability to finance but also most importantly refinance is a focus for investors. Margins have clearly widened but at the same time base rates have come down. So what you're looking at is the net cost of borrowings have not moved too much, you are still looking at debt being available in the mid-6% range, so not considerably expensive. These are still very good assets, even in tough times from lenders to finance.
And lenders continue to put money to work. The maturities have come in a little bit, five years compared to seven years, but still quite good in the medium term. There is still considerable lending going on. Macquarie Capital, the banking arm of Macquarie raised in excess of $41 billion last year, in I think about ‘08 or through the year, $41 billion of debt raised for infrastructure assets. About half of that was for Macquarie managed entities, so a lot of volume going through.
So that is hopefully a useful overview, we should look more at MIC specifically. What I am going to look at in this section is the cash generating capacity of the business and our approach to evaluation. I mentioned we put out our fourth quarter and full-year results about a month ago. And what we have seen is that it was a very busy time, and I think a lot of things on, a few things were misunderstood, and some of the substance of the results was missed. And I think this is a good opportunity to see what people have misinterpreted, because it does leave some of the good valuation elements behind.
But I mentioned in the beginning that MIC is all about cash generation. Historically, that free cash flow was distributed to equity holders. We report a metric called cash available for distribution or CAD, and that is effectively starting from cash from ops, net of maintenance CapEx, debt service, taxes, holding company costs, all obligations. So when we say cash available for distribution all in, in the current times, debt reduction, we're looking at a very clear metric that we report every quarter.
And what we are seeing in this graph is that we continue to generate high levels of CAD. The yellow line is trailing 12 month, whereas the share price has deviated. And there is a very clear break between the share price and the continued production of strong levels of free cash flow, and I think that is one of the key elements of the message today.
In addition, the sentiment towards leverage is very important to understand. Infrastructure, because of his defensive nature, supports an above-average level of debt. The sentiment is clearly negative towards leverage. People are concerned about the ability to refinance, the amount of debt, the terms of it, what’s the implications if there is a downturn accentuating the decline. We recognize this puts pressure on the stock.
Even though we're comfortable with the amount of debt, we have taken steps to reflect investors concern. And basically we conducted a capital review and we have reduced our exposure to capital markets risks by taking a portion of that free cash and reducing debt levels. Specifically, we prepaid a portion of our airport services debt, our largest business, and at the same time, improved return. We also suspended distributions, which obviously contributed to the decline in share price to accelerate this reduction in leverage. Nonetheless, the cash flows aren’t lost to shareholders.
Now I mentioned before that some of the good news or some of the substance of our results was loss. This is perhaps the most boring slide I have ever done for a presentation, I apologize for that. But what we wanted to do was allow us to tie back the points that I make to the actual P&L. What we're looking at is limitations of that corporate structure via the equity accounting for our biggest segment or the nature of our businesses, which actually puts a lot of non-cash charges in our P&L and obscures the actual cash generation that we're seeing.
So quickly walk you through some of those key items. We saw considerable write-downs of goodwill and other intangibles in our full-year results. That is primarily driven by the decline in our market capitalization and the requirement to reconcile to that. So you see very large goodwill impairment, but that was also driven by the decision taken with regard to the parking business, so 190 million of goodwill impairment.
Secondly, we have got considerable amount of the depreciation and amortization, it is an ongoing thing given the very capital intensive nature of our assets. You can take an example. The airport services business has these very long-term leases at airports, and those have to be amortized over the term of the lease. So even though we are paying the rent, we are also amortizing the purchase value of the leases.
Looking at bulk liquid storage, I mentioned that earlier, this is important because with the specific results for the year, which was a very strong contribution. We saw our EBITDA up of 36% adjusting out for non-cash losses on derivatives. What we are only seeing is the contribution of $1.3 million in our P&L and our cash from operations, yet we received $28 million, so $1.3 million recorded in the books, but $28 million of cash received, because there is no direct connection between the cash received and the amount of cash recorded, cash from ops under equity accounting.
What happened was that, on the cash from ops, you only bring in the equity pickup, so it is a function of net income rather the cash. There were considerable non-cash losses on derivatives, basically rent moved down, the fixed floating swaps were worth less, and so we took a non-cash loss that reduces equity pick up, because your net income is down, but the cash is still $28 million.
So what that really boils down to is, our second biggest business, very strong results, is almost invisible to someone who is filtering stocks looking for metrics on consolidated results. That is frustrating but it is the nature of equity accounting, and we can't change the rules unfortunately. If we take out these non-cash charges, EBITDA would have increased 22% year on year.
Looking at the actual cash results, now that we got through GAAP, we produced this cash available for distribution of approximately $106 million. That is $2.48 per share, remembering that our share price is somewhere in the mid $1 range. Clearly the market is telling us that a $1 of free cash per year is worth less than $1 a share in share price. You know that is strong. There is a disconnect going on. The disconnect is with regard to valuation. We go back to discounted cash flow valuation, because fundamentally it is a simple consistent business, clear OpEx, CapEx, and the ability to project forward.
One of the things that’s heartening, one of the things I'm highlighting is, being able to project, you have got very clear contracted revenues in three of our businesses, being the district energy, the gas company and the bulk storage business. You have got management fees that are considerably reduced in terms of the alignment of interest, the management pays a percentage of market capitalization year on year, a very big decline. And finally the airport parking business, where we have taken the risk management decision to effectively cordon that business off, so it is $5 million cash negative last year, we don't see that recurring.
So looking at sum of the part and EPS, even if you take some of the debt that will be paid, some of the cash flow that is going to be paid down to and used to pay down debt, applying any reasonable discount rate, you're looking at sum of the parts valuation that is well in excess well, well in excess of our share price.
Now having covered the cash flow, the fundamental nature of the businesses, the stability of that cash flow, the GAAP results that have skewed the reporting of cash results and how we value, it makes sense to look at leverage in our capital structure. We made adjustments to our capital structure of our key businesses and we modified our short-term strategy. Basically it demonstratively reduces the risks to MIC and we feel it addresses specific investor concern. In the airport services space, we negotiated a relaxation of covenants, a more appropriate distribution restriction test, and we paid down debt and introduced a temporary suite of free cash flow until leverage is below a grade level.
All these things happened without increasing the margin and the pricing involved, so it preserved the good price of the debt, and we have specific plans to amortize our holding company facility. Basically we will take the cash produced and the various other businesses to reduce debt and we suspended our dividend to accelerate the rate of reduction. All in all, these are specific, and we feel temporary strategies, but they give us a high level of confidence that we wont need to raise any additional capital to reduce debt levels that investors might feel appropriate. So I think that is a very good result.
It is also important to recognize that we are managing the operational aspects of the business and we are not passive managers. We're quite aggressive and we seek to improve these cash results everyday. To take an example, we have reduced the SG&A of cost structure of our biggest business by approximately $24 million on an annualized run rate. That's like 15% to 18% of trailing EBITDA. That is a considerable reduction in expenses, that is not just recognizing lower activity levels, that is aggressively seeking the benefits of integration of acquisitions et cetera and we’ve been very successful.
And what that means, when you put together the changes in terms of the capital structure and also the push towards increasing cash generation further, we are working aggressively towards being able to resume distributions. To be able to resume distributions, we will need to reduce the debt at the airport services space down to six times leverage and also to see good visibility – have reasonable visibility into the functioning of the debt markets, but that provides a clear path forward. We don't expect that to happen this year, but we do expect that we would be able to resume once those – to resume distributions once those (inaudible).
And the functioning of the debt markets is important obviously. We have leverage, we need to understand the prospects for refinancing. We would take that seriously, but when you look at the graphic in terms of our maturity profile, excluding the airport parking business we mentioned earlier, we're looking at an average maturity in excess of five years. We are not just relying in terms of refinancing on things will get better, but that is a long time for things to get better. When we say that we feel comfortable that we can refinance the current amount of debt that we have, it reflects that experience, the expertise, that ongoing activity at Macquarie. I mentioned earlier the $41 billion of debt raise last year. That is an ongoing activity in the infrastructure space and very good insight into what is available in the current markets.
So I recognize that is a lot of data to take in at one-time, particularly for folks who are new to the story. But in summary we feel very comfortable that we have developed a clear path upon which to take MIC forward. It is a clear path to a very solid capital structure, the reduction of debt, maintaining the low cost of debt, and reducing refinancing risk. It is a clear path to the continued growth in the generation of cash, stable producing businesses, produced in excess of $100 million of free cash flow last year, and we are taking very clear steps towards improving that further, fundamental growth drivers, but also cost initiatives looking for savings in excess of those consistent with the level of activity. And there is a clear path to the resumption of equity distributions, and that’s obviously of fundamental importance to investors, given the amount of cash flow that we're generating. And we will do this by accessing excess cash flow and working through this deleveraging process.
So I think one of the key things I would emphasize today is there is a very story in terms of cash flow generation. There is divergence in the way we are valued and how we should be valued. I think the DCS [ph] model is very clear, and the businesses absolutely lend themselves to that methodology. Having said that, there is a lot of information to put across in one day. What I would encourage, certainly we will have questions from the floor now, but Jay Davis, our Investor Relations Officer is here in the corner, feel free to get in touch with either of us looking for more information. We are certainly available like we revised here, but in the meantime have us take any questions from the floor.
Fair enough. I'll just repeat the question for the web cast. Two parts, one was the steps to, needed to be able to resume the distribution, and then what would I do with the, what do we do with the cash flow at that stage in terms of alternatives? The two main elements of the reduction of debt at our biggest business, we have to get to a six times leverage. And we are – yes, it is six at the moment, so there is a clear path. Continued generation of cash flow in that business, we will pay down the debt through the swap. And so depending on the level of operations, we will see that reduction and then we'll be able to resume distributions for that business. Given the holding company structure, that then can be distributed to the holding companies, that’s a lot of – that is a big business to have locked up effectively in the short-term, and so we will work through that.
The other element is just to have the fundamental confidence about the business, the ability to refinance where the capital markets are at. We feel comfortable with the leverage at the moment, the markets are volatile, it is an ongoing watching brief. So those are really the two key elements, is good consistent cash flows being generated elsewhere. So if it comes together, we also will be deleveraging, we will be making sure we can deal with the holding company debt, which is only about 65 million or so. So there’s two elements of the delever.
Beyond that, when you look at the amount of cash flow, we would certainly look to resume the distribution, if that is the history of the company, and that we were at quite attractive levels of distributions before, the businesses remaining in good place. There is always competition for capital, but there is also a commitment to resuming distributions for our investors during the register in the first place. But what we have typically found in terms of acquisition and provide capital is that we’ve sought external fund through for our capital debt facilities, taken new equity, but there are opportunities in these markets projecting forward but looking hypothetically raising capital depends on the share price where we are setting ourselves up not to have to raise capital now, and I don't think that is a very important statement.
Beyond that when you're looking at opportunities for growth, would you raise capital, obviously a function of the price. About the cash flow available, if there are attractive opportunities and we have very rigorous methods for offsetting the cash generation of opportunities, its competition for capital, but there is a fundamental view towards getting towards that distribution. At the back, yes?
Yes. The question is regarding the derivatives, derivative is such a – and what that means going forward. Derivatives is an accounting term, these all have fixed floating interest rate swaps. Debt is typically floating rate, probably want clarity in terms of debt services, so we lock in swaps to get effectively a fixed rate of debt service. We like floating rate because if we were to refinance, because if there is any acquisition or opportunities, we don't have a big mike to hold that goes with fixed rate.
So as a result you have the swaps and then you look to – but the accounting for them each quarter, each year, and the swaps are mark to market. If interest rates fall like they did last quarter, that is what’s go down value. Therefore we take a considerable non-cash loss to your books. What is important is that these swaps are clearly finite term, typically facilities being five years or so, so they are average five year swaps. Over the course of the next five years, those losses were reversed. They will be offsetting gains and they will work their way back to a cumulative zero. But in the short-term, there's a lot of non-cash losses that put noise into our accounts and that was the key point there. Going forward, they don't mean anything in terms of I think the most important thing debt covenants and the like, a big expense speaking to EBITDA, none of those, none of that facility are affected, because they are non-cash items, and they have been defined away from any covenants definition. Yes?
No, nothing. The question was regarding cash collateral to lock up the swaps. No, there aren’t. the swaps are typically provided by the lenders to the facility and so they’ve taken an overall credit view. In the front?
The question is regards to business, in the airport services, and how we stand with covenants? No, we feel very comfortable with all of them, the business. The other businesses are performing to our projections, and they are very comfortably sized and most of them were refinanced in 2007, and are sticking to their business plans, so it is fine. And then the obvious exception in the past has been the parking business, but the key – one of the key announcements being, like February 4th that we would put more capital into that business. So we are still very concerned about the parking business and the ability to refinance it. We have taken that hard decision now, and so we're talking to lenders so that’s why I carved that out from the answer about concerns about that businesses, of any particular business.
That is a fair question. The question is with regard to any exposures to MIC by the parking business. As with all our businesses, the parking business is, it has its own facilities, limited recourse, so it looks only—that facility looks only to the cash flows of that particular business. There are a couple of guarantees and to put a number around them, through September they will amortize down to like $4 million, $5 million. So we consider them reasonably immaterial, but the main thing is they are specific and finite, and that is an exception. We typically don't have those guarantees; the other businesses don't. What we're looking at though is across all our businesses, they are project financed a bit and (inaudible) for cross guarantees between the subsidiaries.
In terms of the energy sector?
As far as that applies, energy goes through, in terms of the outlook for the energy sector, it goes across our businesses. The most obvious one is the bulk storage business where you would think, well, with you exposure, and given the volatility of commodity prices, practically they are contracted revenues business, three to five year contracts. So price goes up, goes down, we don't own the commodity. We've rent tanks to people who own the commodity. And these tanks are fundamental to logistics chain. There is very little trading element to it. It’s primarily about getting the product from the ship to the destination, manufacturing processing or end-user consumption. So we feel comfortable in that respect. And after that it comes down to the ability to pass through costs of energy, be it gas business, the airport services business, and there we have demonstrated the ability to pass through those costs, either through – and also the district energy businesses, to the consumer of electricity. There we either have pass throughs or effective pass throughs contract or just the ability to manage margins and if you look at the historical results, the margins have been preserved well. You need to be focused, the energy prices have fluctuated, but you saw those fluctuations last year and the year before, and yet the cash flow generation has been consistent throughout that time. Are there any other questions? Yes, in the front there?
The question is regarding using the free cash flow for share buyback. That is certainly a valid approach. The focus is emphasized in the frustration with regard to dealing with leverage in the first instance, getting to a very, very defensive position, but it – you are right. A small amount of money, the share price would move a lot, I understand that. It is also a case that investor concerns seem to be fundamentally focused on the level of debt. So obviously investors are concerned about the price as well. So I take the point.
It is a valid position, I will let go. I understand that and it is part of the watching brief (inaudible) locked ourselves into a process on the debt side. But we are extremely sensitive to the share price and we have emphasized in the presentation the break in valuation from the fundamentals. I will take one more, we have time for one more question. One more question, yes?
(inaudible) question because that has moved around in terms of the breakup of the register. Typically it has been no more than 30% retail. What we saw in the last through like Q4 and the beginning of the year, we saw it increasing, the first time I have seen that get towards 50%. Where it is now, I'm not so close to it. It may not have changed too much from there, but it’s obviously difficult to track, but it’s always been majority institutional, and I feel comfortable (inaudible) pretty much the same way.
I appreciate the questions today. I think we have run out of time. There is an opportunity to talk subsequently afterwards. Thank you very much both for the people on the web cast but particularly in the room as well for your interest. Thank you very much.
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