Craig Meller

AMP Limited has reported a net profit of A$382 million for the half year to 30 June 2014^[1], down  3 per cent on A$393 million reported for 1H 13.

Underlying profit^[2] was A$510 million compared with A$440 million for 1H 13, up 16 per cent half on half, with double digit growth in operating earnings for all contemporary businesses.

The Board has declared a 9 per cent increase to the interim dividend to 12.5 cents per share compared with 11.5 cents per share for the 2013 interim dividend.  This represents a payout ratio of 73 per cent of underlying profit and is within AMP’s target range of paying 70-80 per cent of underlying profit.

Chief Executive Craig Meller said: “This is a solid result with 16 per cent underlying profit growth. We have made good progress on our strategy to be a leaner, more efficient and increasingly customer-driven organisation.

“We are continuing to transform our core Australian business with a market leading mobile platform launched^[3] and a new operating model in place to focus on the customer and to drive sustained growth as the Australian wealth industry doubles in size^[4] by 2022.

“It is particularly pleasing to see AMP’s offshore strategy already delivering good cashflows while building strong growth potential in the long term from partnerships with national champions in China and Japan.

“The wealth protection business is stabilising, with the improvement plan delivering encouraging results however, we have more work to do,” Mr Meller said.

Key performance measures

• Underlying profit: A$510 million in 1H 14, up 16 per cent on 1H 13.
• Cost to income: Controllable costs have been managed tightly with the rise in income more than offsetting a A$4 million increase in costs from 1H 13 to A$650 million.  The cost to income ratio was 45.0 per cent for 1H 14, an improvement of 3.4 percentage points on 1H 13.

Cashflows:

• AMP Australian wealth management net cashflows were A$1.1 billion in 1H 14, down A$267 million on net cash flows of A$1.4 billion in 1H 13.  Total retail net cashflows on AMP platforms continue to perform strongly, growing 39 per cent to A$1.6 billion in 1H 14.  These flows were partially offset by higher net cash outflows on external platforms of A$615 million.
• AMP Capital external net cashflows were A$1.6 billion, a A$3.7 billion turnaround from net cash outflows of A$2.1 billion for 1H 13.  This was driven by the new inflows generated by the China Life AMP Asset Management joint venture and improved flows from the MUTB alliance.

Underlying return on equity:

• Increased 1.3 percentage points to 12.5 per cent in 1H 14, reflecting the 16 per cent increase in underlying profit, partially offset by higher average capital.

“These results demonstrate the real strength of AMP’s business franchise, scale and operating leverage, when both investment markets and investor confidence are more positive,” Mr Meller said.

In wealth management, operating earnings for 1H 14 were up 16 per cent compared with 1H 13, reflecting increased investment related income from higher customer account balances, a strong rebound in net cashflows and good cost control in a growing business.

In wealth protection, operating earnings were A$91 million compared with A$64 million half on half reflecting the impact of management actions.  The volatile environment, claims and lapse experience were broadly in line with best estimate assumptions.

The life insurance sector continues to face both structural and cyclical change and a range of initiatives are underway to address these factors.  These include improved customer retention campaigns and additional resources to handle customer claims more effectively and to help income protection customers get back to work more quickly.

“Improving the performance of the insurance business remains a key area of focus as we introduce a series of actions to improve the management of claims and customer retention in order to deliver benefits to both our customers and shareholders,” Mr Meller said.

Other key highlights

• AMP Capital performed well: Operating earnings increased 12 per cent reflecting good fee growth, and a A$3.7 billion turnaround in external net cashflows^[5] from strong offshore partnerships.  The cost to income ratio of 62.4 per cent was well within the target range of 60-65 per cent.
• Fifth quarter of more than A$1 billion net cashflows on North platform: With net cashflows improving 27 per cent to A$2.4 billion for 1H 14, compared with A$1.9 billion for 1H 13.  North AUM increased A$2.6 billion to A$12.2 billion, up 27 per cent since December 2013.  Almost 20,000 new customers as a result of more AMP advisers choosing to recommend the North platform to their customers.
• AMP a market leading provider in wealth management: Number one market share in retail superannuation and pensions with 20 per cent, individual risk insurance with 18 per cent and in financial advice with 22 per cent of the market.
• Robust AMP Bank performance: The bank delivered A$42 million operating earnings, up 11 per cent compared with 1H 13, reflecting an increase in residential mortgages with AMP aligned advisers contributing almost a quarter of new business in a period of intense competition.  Lending growth was supported by continued deposit inflows which were up 6 per cent on 1H 13.
• New Zealand achieved strong growth in profit margins: Operating earnings of A$55 million, up 20 per cent compared with 1H 13, reflects solid business growth, a currency benefit and good cost control.  Cashflows reflect the continued success of KiwiSaver, driving KiwiSaver AUM up 9 per cent to A$2.9 billion.
• Corporate Super wins: 16 new SME and large corporate mandates in 1H 14 to transition over the next 6-12 months
• Adviser numbers stable in a changing regulatory environment: AMP’s adviser network remains the largest adviser network in Australia with 3,860 financial advisers, up 2 per cent on FY 13.

Capital management

AMP continues to hold an appropriate capital surplus, with A$1.9 billion capital above minimum regulatory requirements at 30 June 2014, down from A$2.1 billion at 31 December 2013.  The decrease was largely driven by the redemption of AMP Notes.

AMP maintains a strong balance sheet, with little change to gearing and interest cover, and has access to significant liquidity.

AMP continues to offer a DRP to eligible shareholders, no discount will apply to the allocation price.  Shares will again be bought on market and the dividend will be 70 per cent franked with the unfranked amount being declared as conduit foreign income.

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Jim Minto

Australia’s largest life insurer TAL has finished the financial year maintaining profit levels amid record claims payouts.

Financial results released by TAL’s Japanese parent, Dai-ichi Life, show net profit after tax (NPAT) was down 1% to $90 million for the 12 months to 31 March 2014, compared to an NPAT of $91 million the year before.

There was an increase in underlying profit by 6% to $131 million while premium and other revenue rose 24% to $2.3 billion.

Total claims for the period paid rose 38% to $885 million.

TAL Group CEO Jim Minto said: “In each year of the three years of full ownership by Dai-ichi Life, TAL has grown its underlying profit in what has been a very successful growth period for the company in a market that is going through significant change.

“Our specialisation in life insurance with a team focussed on our core business including operational risk management and strong business partnerships are behind our good results again this year.”

Mr Minto said TAL was proud to have delivered record claims payments to help families and individuals in times of need as well as providing peace of mind in protecting what people have created in life and what they dream of for the future.

As a company with a 150-year history providing financial protection, TAL has grown to become Australia’s largest life insurer by market share over this past year

Mr Minto said: “We are paying more claims than ever delivering tremendous social purpose for the people of Australia. We have maintained our profit levels through effective risk management and long term planning as we look to the decades ahead.

“Long term sustainability is critical for the life insurance industry and that is why we work closely with our business partners to help ensure benefits are affordable and sustainable for our customers well into the future so we are there for them when they need us.”

New business for the year grew 128% to $728 million while TAL’s embedded value grew by $195 million to $1.957 billion in the period.

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Commenting further on the results, Alcock said, “This boosted FUA at the end of the quarter to $730.2m, and represents a growth rate of 120% over the past 12 months. This strong growth continued into April with FUA reaching $781m and Net Inflows of $47.6m for the month”.

“These increased flows are from HUB24’s existing client base, as well as initial new flows from the white label IDPS versions of the platform launched in December 2013 for Premium Wealth Management, Interprac and Total Financial Solutions.  Inflows are expected to accelerate for these groups as the superannuation white labels were launched during April and the full HUB24 product suite is now available for advisers to meet client needs”.

“Revenue associated with our increasing FUA has allowed HUB to achieve its maiden month of positive Gross Profit in March 2014. Gross Profit is defined as per the company’s statutory annual accounts and represents the profit from platform revenue after direct platform operating costs”.

Highlights of HUB24’s results for the March 2014 quarter were –

• Record Net Inflows[1] in the March quarter of $108.7m.
• FUA growth of 120% from $332.2m at 31 March 2013 to $730.2m at 31 March 2014.
• Momentum of Net Inflows continuing in April with FUA at $781m.
• Positive Gross Profit for March.
• HUB24 ranked 3^rd for Product Offering in the latest Investment Trends Platform Benchmarking  Report.
• R&D Tax Incentive refund of $414k received from the ATO.
• Cash and cash equivalents of $14.9m (as at 30 April 2014 unaudited). The company has no plans to raise any additional capital.

1.Net Inflows represents gross inflows during the period and does not include any market movement

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John de Zwart

Centrepoint Alliance Limited (Centrepoint) has reported pre-tax profit of $2.2m, up 229% on the prior corresponding period with overall revenues increasing by 2% to $27.4m.

The Premium Funding division had an excellent start to the year with strong growth in revenues, profits and market share. The Wealth Management division has made substantial progress in its transformation to become a highly respected customer and adviser centric business.

Centrepoint’s Managing Director John de Zwart says, ‘these great results reflect the continuous improvements we have made across the business and in particular, our adviser systems, standards and training, with further enhancements made to our practice development capabilities.

‘We have positioned Centrepoint for growth with management capabilities continuously being strengthened and the culture aligned with our vision of being a highly respected non-institutional service provider to financial advisers and licensees.’

The Premium Funding business has reported a strong underlying pre-tax result of $2.5m, up 32% on the prior corresponding period.

‘Recent industry consolidation has provided us with the perfect opportunity to grow our market share with a 25% increase in the number of brokers actively providing business to us. We invested in improvements to our IT systems which has enhanced the overall experience for our customers.

‘These improvements are greatly benefiting productivity and are resulting in repeat business,’ says de Zwart.

The Wealth Management business has reported an underlying pre-tax profit of $3.0m supported by stronger financial adviser engagement and cost management.

‘During this period, our financial adviser relationships have strengthened as a result of our change in culture and this being reflected in improved service and offerings to our networks.

‘The Group holds strong positions in segments of the financial services market which are fast growing and high margin. The business has an experienced team that is growing market share in each segment, building capabilities and delivering superb service to customers and clients.

‘A significant investment is being made in our people and technology to meet our customers’ needs, whilst assisting brokers, financial advisers and accountants to operate efficient and profitable businesses,’ says de Zwart.

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Craig Meller

AMP Limited has reported a net profit of A$672 million for the year to 31 December 2013, compared with A$689 million for FY 12.

Underlying profit for FY 13 was A$849 million compared with A$950 million for FY 12.

Underlying profit benefited from strong growth in Wealth Management, AMP Bank, Mature and New Zealand, offset by the challenging life insurance environment and a decline in investment income on shareholder funds.

The board has declared a final 2013 dividend of 11.5 cents per share, the same as the 2013 interim dividend. This represents a full year payout ratio of 80 per cent of underlying profit and is within AMP’s target payout range of 70 to 80 per cent of underlying profit.  The dividend will be 70 per cent franked with the unfranked amount being declared as conduit foreign income.

Shareholders will be invited to participate in AMP’s dividend reinvestment plan (DRP) however no discount will be applied to the DRP allocation price and the shares will be acquired on-market.

The board reviews its approach to the DRP every six months as part of its review of AMP’s capital position.

AMP remains strongly capitalised with capital resources of A$2.1 billion above minimum regulatory requirements at 31 December 2013, up from A$1.7 billion at 30 June 2013, reflecting retained profits and A$325 million raised through the AMP Notes 2 retail subordinated debt issue.  Subject to APRA approval, it is intended that the 2009 issued AMP Notes of A$266 million be redeemed for cash in May 2014.

AMP Chief Executive Craig Meller said that while AMP has delivered strong underlying earnings growth across the majority of its business units, the result has clearly been impacted by the ongoing challenges facing the life insurance sector.

Excluding Wealth Protection, AMP achieved an average 15 per cent earnings growth across the company compared with FY 12.  This reflects particularly strong sales momentum in Wealth Management, improved net interest margin in AMP Bank, improved investment returns in the closed Mature business and strong cost management across the group.

Performance against key measures

• Underlying profit: A$849 million for FY 13, down 11 per cent compared with FY 12.
• Cost to income ratio: 49.4 per cent for FY 13, up from 47.3 per cent for FY 12[2] reflecting improved cost control offset by lower income, particularly in the Wealth Protection business. Controllable costs fell 2.6 per cent on FY 12. 
• Growth measures:
  • AMP Financial Services (AFS) net cash flows were A$1.3 billion, up fromA$308 million for FY 12[3] reflecting strong flows from the Australian Wealth Management business.

• AMP Capital external net cash outflows were A$1,039 million compared with net cash outflows of A$1,784 million in FY 12.  This improvement was largely driven in 2H 13 by strong inflows into infrastructure assets and a slow-down in Japanese net outflows.
• AFS value of risk new business was A$116 million, compared with A$203 million for FY 12, reflecting the challenging life insurance environment.
• Underlying return on equity: 10.7 per cent, down from 12.7 per cent FY 12[4] reflecting higher capital held to meet new prudential requirements, lower Wealth Protection profits and lower investment income earned on shareholder capital as a result of lower short-term interest rates.

Wealth Management, AMP’s largest business unit, delivered an increase in operating earnings of 16 per cent, reflecting stronger net cashflows and improved investment markets leading to 14 per cent growth in average assets under management (AUM).  Margins in the wealth management business declined 4 basis points to 121 basis points which is within AMP’s market guidance.

The life insurance sector remains challenging with insurance claims and policy lapses remaining at higher levels than the long term average.

AMP has undertaken a comprehensive review across all aspects of its life insurance business and researched global best practice, and as a result launched a series of initiatives that are expected to improve claims and lapse experience over the medium term.

“We’re already seeing the benefit of working more closely with our customers to help them get back to work after illness or injury, improving the financial outcome for both our customers and AMP. We’re also investing in new systems and data analytics that will improve claims management performance over the medium and long term.

“As market leader, AMP has the scale, capacity and executional capability to continue to deliver quality life insurance products that provide Australians with much needed security in a market that is changing.  And, we play an important role in helping people understand the fundamental difference life insurance can make in the lives of Australians,” Mr Meller said.

The benefits of a stronger AMP with the advantages of scale and operational capacity are becoming evident as the company capitalises on improving investment markets and a rebound in the level of discretionary superannuation contributions.

Key highlights

• AMP Bank delivered record profit of A$83 million – up 34 per cent on FY 12 reflecting ongoing growth in home loan customers and lower funding costs.
• Strong AFS net cashflows of A$1.3 billion – net AFS cashflows up from A$308 million FY 12.  Cashflows into the Australian wealth management business unit almost tripled to $2.2 billion from A$821 million FY 12.
• North platform cashflows almost doubled to A$4.1 billion – now with A$10 billion AUM, a fivefold increase since AMP acquired North in 2011 as part of the AXA merger.  North’s success demonstrates this wrap platform’s appeal and quality, including fast online technology and access to a broad range of quality investments.
• AMP SMSF administration established as market leader – following both organic growth and a number of strategic acquisitions aimed at delivering scale and efficiency, AMP is now focused on broadening distribution reach, developing advice capabilities and developing quality investment products tailored for the SMSF market.
• 86 per cent and 67 per cent of AMP Capital funds met or exceeded client performance targets over one and three years respectively – representing improved investment performance.
• New Zealand operating profit up 19 per cent – buoyed by strong cost management, improved life insurance experience and a stronger New Zealand dollar.

Growth strategy

“With the AXA integration now complete, and most of the significant regulatory changes largely implemented, AMP’s strategy remains to focus on the attractive A$2.2 trillion Australian wealth management market; transform the core of the Australian business to a more customer-centric model; reduce costs to maintain market-leading efficiency and to continue to invest selectively internationally, with a focus on high growth Asian markets.

“We made considerable progress against our growth strategy in 2013.  The pathway to a more customer-centric organisation is clear and work is underway on improving multi-channel access, diversifying advice models and better using data to drive customer offers,” Mr Meller said.

As announced in August 2013, AMP expects to deliver A$200 million pre-tax recurring, run-rate cost savings by the end of 2016.  AMP expects to invest A$320 million (pre-tax) over the next three years to deliver these efficiencies.

Our commitment to investing in selective growth opportunities in Asia is providing returns through the successful launch of a A$2.2 billion mutual fund by our joint venture with China Life and the further development of our relationship with MUTB in Japan,” Mr Meller said.

AMP established its joint venture with China Life during the year and is now well-positioned to participate in China’s rapidly growing mutual fund investment market.  AMP Capital further deepened and broadened its relationship with MUTB  and now offers two institutional funds and three retail funds through MUTB’s extensive distribution network with AUM of more thanA$570 million.

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Positive profit expectations for 2014 within the financial planning community: Macquarie

The Macquarie Practice Consulting 2013 Financial Planning Best Practice Benchmarking Survey has revealed further optimism within the financial planning community, with respondents anticipating an increase in profit in 2014.

Eight in ten (83 per cent) advisers anticipate increased profits in the next 12 months, up from 74 per cent in 2012. Practices that offer financial planning only or financial planning and accounting are the most positive, with a larger proportion expecting at least a 20 per cent increase in profit in the next financial year (32 per cent and 39 per cent respectively). Younger practices are also confident, with half of firms under three years old believing they will do the same.

“This year’s survey has shown steady growth in revenue and gross profit in advice practices, which is great news for the financial planning industry,” said Fiona Mackenzie, Head of Macquarie Practice Consulting.

The results showed that since the last survey, there was a 15 per cent increase in average revenue and an increase in average operating profit of 45 per cent over the same period. In addition to these top line measurements showing improvement, direct expenses have remained fairly steady and the average revenue per adviser has increased.

“Expenses appear to have been well managed, which can contribute to driving profit improvements,” she said. “Practices are still controlling costs but the survey suggests that some practices are feeling confident enough to invest back into their businesses.”

While revenue and profits are up, there has been a reduction in client numbers per adviser (153 clients per adviser, compared to 185 in 2012). Additionally, advisers have a higher proportion of active clients, up at 77 per cent in comparison to 69 per cent in 2012. Macquarie Banking and Financial Services Group 2

“Advisers have told us they want to spend more time with clients who genuinely value their advice. From the survey, we can see that many appear to be making real efforts to refine their client base and increase the focus on active clients, and this tends to improve the profitability per client.” said Ms Mackenzie

“Looking at the evidence of profit and revenue growth, this could be a good sign that many are having success with this strategy.”

The full report will be available in early 2014.

About the Macquarie Practice Consulting 2013 Financial Planning Best Practice Benchmarking Survey:

Data was collected from 226 financial planning practices in October 2013 with the majority of respondents (82 per cent) being practice principals. The survey covers a wide range of topical areas for Australian financial planning firms, including business structure, financial management, general practice and confidence. Measures capturing profit and revenue were calculated based on the 2012/2013 financial year results for the participating firms. The previous survey was released in May 2012 and based on the 2010/2011 financial year.

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Results are up to and including August 28.

It was being billed as a horror. In the end there were a few scares but the profit reporting season failed to live up to some of the doom and gloom predictions. Perhaps that is because companies under promised and over delivered. Perhaps it reflects the depressive sentiment of the environment that isn’t lining up against the reality.

But overall companies are still reporting profits, although they are understandably lower than a year ago.

To read the report, click here.

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Dividends are on the rise with the average dividend across the equity market growing 6.4% over the last six months, according to recent data from Russell Investments, provider of the Russell Australia High Dividend Index (the index).

“This reporting season has shown companies are increasingly confident about their prospects and as a result are more inclined to return capital to shareholders, either via dividends or buy-backs,” said Scott Bennett, portfolio manager for Russell Investments.

The index, which forms the basis for Russell’s High Dividend Australian Shares ETF (RDV), comprises Australian blue-chip companies with a bias towards those that have a high expected dividend yield but also meet other characteristics including: a history of paying dividends; dividend growth and consistent earnings.

Russell has recently completed the semi-annual reconstitution of the index, which involves incorporating the latest reporting season data to rebalance the weightings of stocks within the index according to certain dividend and earnings factors.

Commenting on the outlook for dividends, Mr Bennett said: “The dash to dividends is likely to become an even stronger theme in the year ahead with more companies looking to return cash to shareholders, along the lines of BHP’s buy-back.”

According to Mr Bennett, dividend yields are now looking as attractive as term deposits. The average term deposit is now yielding 6.1% while the average dividend yield across the ASX is now 5.8% grossed up for franking credits, with the index yielding 7.3% grossed up for franking credits.

“The main advantage over term deposits is with Australian equities you get long term growth in dividends and also your capital,” Mr Bennett said. “The recent correction in equity markets has presented a good buying opportunity for longer term investors.”

Strong yielders

The index has seen a number of movements this half including Harvey Norman which has entered the index at a weight of 1.8%. This reflects its attractive 6.7% gross yield and solid dividend growth, although Mr Bennett says Russell index methodology has also taken into account the cyclical nature of its business.

Defensive companies such as Fosters and Coca Cola Amatil have also increased their weighting, as did the banking sector after three of the top four banks posted double digit dividend growth in the past 12 months. “The proprietary Russell index methodology does favour those companies with more defensive earnings characteristics,” Mr Bennett said.

“This half has really shown investors that dividends are on a steady growth path and as a result dividends are going to be a really competitive source of income compared to other investments,” Mr Bennett concluded.

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• The profit-reporting season has largely concluded, although there are a small number of ASX 200 companies to report. CommSec has assessed the results of the 120 companies that reported half year (HY) results (results for the six months to December) and 32 companies that reported for the full year (FY) to December. (Results are up to and including February 25). Aggregate half-year profits are up 25.2 per cent on a year ago while aggregate FY earnings are up 183 per cent.
• Overall 101 companies or 84 per cent of HY companies produced a profit for the half year while only two of the FY companies didn’t report a profit. And 59 per cent of the HY companies reported an improvement in profit while 83 per cent of FY companies reported a similar lift in earnings.
• As at June the 152 companies had cash balances of $102.5 billion, up 25 per cent on the previous reporting periods.
• The vast majority of ASX 200 companies paid dividends. Of the HY reporting companies, 83 per cent issued a dividend while 80 per cent of the FY reporting companies issued a dividend.
• Just like last reporting season, aggregate earnings results for Corporate Australia were solid, but analysts wanted more. Bloomberg reports that 29 per cent of companies beat market expectations for earnings per share (positive surprises) while 49 per cent disappointed.

Click here to download this document (pdf)

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• The general sense is that the profit-reporting season has so far proved very mixed. And the numbers back it up. Figures produced from Bloomberg show that there have been 19 positive EPS (earnings per share) surprises from the 61 ASX 200 companies that have reported so far with 25 negative surprises.
• CommSec has assessed the results of the 61 companies from the ASX 200 that have so far reported halfyear (HY) results and 10 companies that reported for the full year (FY) to December.
• Of the companies reporting half-year results, aggregate profits are up 41.4 per cent on a year ago with sales up 13.6 per cent, outpacing a 10.6 per cent lift in expenses. Of the small number of companies
  reporting profits for the 12 months to December, earnings are up 86.1 per cent on a year ago.

What do the figures show and what does it all mean?

• So far, the earnings season is almost a carbon copy of the last one. It has left analysts wanting more but the figures still show that Corporate Australia is in great shape.
• Focussing on the companies that have reported earnings for the six months to December, aggregate earnings are up a very healthy 41.4 per cent on a year ago. Sales have lifted almost 14 per cent, outpacing a near 11 per cent increase in cost of sales or expenses. Cash levels are up almost 51 per cent to $50 billion while earnings per share, on average, have risen by 17 per cent. And only 18 per cent of companies have reported lower earnings than a year ago.
• The other encouraging news for investors is that most companies have either increased or maintained dividends with only 16 per cent of companies reducing dividends compared with a year ago.
• So overall, there are good reasons to conclude that Corporate Australia is in solid shape. But figures from Bloomberg indicate that only 31 per cent of the ASX 200 companies that have reported results so far have beaten market expectations on EPS (that is, yielded positive “surprises”) with 41 percent of results under-shooting expectations (negative surprises) and 28 per cent of companies reporting earnings in line with expectations.
• Both basic materials and financials have been evenly divided with positive and negative surprises. Most disappointments have occurred in consumer goods, industrials and telecommunications with most positive surprises in the health care sector.
• The other concern for investors has been the generally cautious or downbeat profit outlook statements from listed companies. Clearly consumer-facing companies have expressed the greatest uncertainty about the next six months but even resources companies are worried about the potential for a hard landing in China as well as the ability to secure labour and resources to maintain production and progress with new projects.

Outlook:

• At the last profit-reporting season in late August 2010, we expressed caution about the year ahead. At that time we felt that the coming year would be more of the same – the economy getting back to “normal” growth with “normal” interest rates and “normal” profit growth. Clearly this is hardly the type of conditions that would prompt investors to take big bets on Australia. In August last year we forecast that the ASX 200/All Ordinaries would reach 5,400 by the end of 2011. We haven’t changed that call. Stocks are by no means cheap with the 16.07 historic price-earnings ratio above the long-term average of 15.5.

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