Praemium Limited

Thank you Ranju and welcome everyone to our full year results presentation. Thanks for joining us. I'm joined today as presenter by Simon Moore the Interim CFO at Premium. At Premium we acknowledge the traditional custodians of country and pay our respects to their elders past and present. Whilst I won't read the disclaimer I draw your attention to it. It is available in the presentation as published on the ASX website. Our agenda for today is to go through the highlights for the past year, then talk in more detail about the financials, have a final session from us on the strategy and outlook and conclude with questions. And I note that there are a number of people on the line who have got questions prepared. So thank you and thanks again for your interest. This year has been a remarkable year for premium and the highlight has really been the strong revenue growth which flowed through to an even stronger uplift in EBITDA. The primary drivers of that, we have a market leading non-custody solution. Whilst the non-custody part of our business doesn't drive enormous amount of the revenue. It's still significant, of course, but it's not the biggest part of our revenue. But increasingly, in our preferred segment of the high net worth advisor, the ability to offer a fully integrated non-custody solution is critical to achieving success. Complementing that, and more importantly, from a long-term revenue perspective, is we built out our platform offering by launching Spectrum. which has grown to $2.4 billion since we launched it. It was a great effort by the team involved in developing and launching Spectrum. And we're very happy with the people who not only launched the product, but the ability to reposition the business and the way we position the business in the market. Some changes to colour schemes and branding. And importantly, the momentum that we generated from that launch has led to strong interest, which gives us great confidence in our sales pipeline. We carry good momentum going forward, thanks to some large client wins this year, and I'll talk a little bit more about that in a minute. And finally, I just want to draw attention to the fact that we continue to return capital to shareholders. During the year, we had a buyback, but also we have that we've paid this year and we've announced with this announcement a 1.25 cent fully franked dividend. When I have talked to shareholders in the past, I've talked about an aspiration to grow both revenue and EBITDA. In an ideal world, revenue would grow at double digits and EBITDA would grow even stronger as we get more scale into the business. And this slide shows the trajectory which allows us to see that we have delivered on that aspiration over the last three years and we're very happy with that level of growth. That doesn't mean that we're complacent. We obviously feel like we can not only sustain it but we would like to improve it as we move forward. have the opportunity to talk to shareholders, and as I've said before, there's really seven formal opportunities a year for me to talk to shareholders, being the four quarterly close results, the financial results, the half-year, and like we are today, the full-year results, and then the ATM. I'd like to talk about our progress on strategy, and I'd like to talk about what our strategy drivers are, product, operations, surplus, superannuation, and growth. And I think that gives clarity to people that this is what we're trying to achieve and gives our shareholders the opportunity when they talk to us in management and the board on the opportunities, they do have those opportunities to ask us whether they're the right areas or challenge us on whether they're the right areas to be focused on. But in each of those areas, we give a bit of an update each time we present to the market on where we're going. Obviously the big thing on the product was the launch of Spectrum over the last year, but now there's further opportunities to enhance that as the early adopters of that product have come on board and we now have good input on what we should do to refine that. So the product is largely focused around the Spectrum, continuing to up the Spectrum because that is now our primary platform product. And as always, continue to upgrade the user experience for our clients. Another one I just want to call out, I'm not going to talk to everything on this slide, but needless to say, it does take a lot of management focus during the year. This is what we do talk about as a management group, how we're going on these things. But one other thing I just want to talk about, everyone's aware and everyone talks about what's happening in AI and we took the opportunity this year to say we'll work with a supplier who can build a new superannuation administration system for us who is a leading provider of machine learning based programs and software and we've been very happy with that indeed we're now in the final stage of testing and giving feedback on how that superannuation system works to that supplier, but we see other opportunities to come out of that. Now AI is going to change the way business works. It's changing it for everything and we, over the last three years or so, we've been very aware that all of the good ideas in AI won't come from our team. A lot of good ideas will come from our team. We've got a very capable strong development team and they've been doing some tremendous work for us but a lot of the opportunities will come outside our business and so I'm very grateful to our tech leadership and people who work in our technology department that we've got a far more open architecture than we had and modular architecture than we had a number of years ago and I'm very confident that with the partnerships that we have in the market now we will deliver some leading-edge opportunities in the area, starting with superannuation, but expanding to the rest of the business. Finally, on this slide, I said I was going to talk a little bit more about the three big wins. People have heard me say before, the market for financial advisors is a bit over 15,000 on the ASIC database. There's about a third of them are in small firms, which were about up to 10 people, 10 advisors in the practice. They're about a third in middle size, which is from 10 up to 100. And they're about a third of the advice community working for large licensees where they've got over 100. In that large category, we are frequently in the mix when they run an RFP. Those RFPs for the larger providers tend to be more sophisticated than the smaller players. But we are delighted that in the three that we're aware of, we have been successful in winning those large advice groups onto our platform and to different parts of our offering. Our Spectrum offering, our Scope Plus offering and our managed account offering have all been successful with large advice groups. So I think that gives us confidence, it should give our shareholders confidence that the momentum we've had over the last three years can continue. When I talk about what our strategy is we do hold ourselves accountable and we talk a little bit about it and what we're showing in this slide is that in the 2024 presentation these three areas were what we said we had to achieve over the current year and we're very happy with the progress that we've made in each of those three areas. hold ourselves accountable not just to talk about the strategy but then to execute and again something people have heard me before is if you think there's something wrong with the strategy you can always talk to us if however you think the strategy is broadly right then it comes down to executing and we feel that we have delivered for shareholders over the last year when we come to the product obviously i talk a lot about product and product is very important and once again our performance in the investment trend survey shows that we are delivering a very good product into the market and certainly what we regard as the leading platform for high net worth advisors and so we're very happy with the external validation of what we've got to offer. The next thing I just want to talk about, this slide that we haven't talked about before, we've developed it this year because often we get asked, what is the strategy when you win a big client? How does that look? And we have a full product range, so we can offer a range of services and product depending on what the client really needs. And this is an example of why the broad product suite is important. If we were to win a client, what this slide is saying, and this is for broking in particular, but we've got a similar view of how we might tackle the high net worth advisor market, which is not based on brokers. Now, a lot of the high net worth advisors work for a broking business, but many of the high net worth advisors are not in broking, but the broking segment probably represents around about half of our total market. advisors who work for stockbrokers, and we service about 40% of the segment across our product range. But often, what we would... We always say to our SaaS people, we are happy for you to sit and listen to what the advisor wants and then talk to them about what we can offer them as a solution. And that solution might be as simple as our reporting service scope, software as a service. But then over time, the more... we demonstrate our capabilities to that advisor, we've got the opportunity to sell more and more into that client. And that might reflect in the superannuation offering or the model portfolio service, the SMA service. It could ultimately go to a full administration service of Scope Plus or indeed Spectrum. The numbers in that mean, obviously it's indicative, it's not a real thing, but our opportunity is as the broking firm grows their business, we can service more of their FUA. So the left-hand side FUA one, two, three and four times is reflective of the money that we might manage for a firm. And so part of that is they grow and part of it is we service more of what their clients need. But the revenue grows even faster than the FUA. And again, it's just indicative, but it's why when we talk to our salespeople and they say, I've got a stockbroking firm and they just need scope, they are rewarded for having built the relationship and selling scope because in the long run, it starts a journey with that advice group that can lead to more and more revenue over time and a closer and closer relationship. But as I say, Stockbroking is a very important segment for what we're doing, and in our target market, about half the advisors work for broking firms. And finally, to just talk about that high net worth segment in total again, not just the broker segment, but there are a number of themes. We do a lot of research in that market. Some of the research is available just to us and our team. Some of the research we share with our clients clients and our target clients but some of these themes I've got there are just what we're seeing in the market and definitely the top two of non-custody growth and the market demand for alternatives speak to the need for the high net worth advisor to talk to their client about a broad portfolio of assets. Everyone's aware, everyone on the call is aware, you know, we hear more and more about more and more of the investment opportunities and not just listed securities now and so the non-custody and the alternative segment are very important as part of diversifying the high net worth portfolios and what OVAs need to talk to their clients about. The bottom two are more about how you operate and the systems and technology which is more powerful now than it's ever been and so very important that we can play a role in that and The ratings that we get by the independent assessor of platforms in investment trends show that we're doing a pretty good job on those as well and position as well for the future. So that's it by way of introduction but important to move on to the financial results so I'll hand over to Simon. Thanks Simon.

Thanks Anthony. So if we just go to group results. Excellent, thank you. The key highlight for FY25 is the 31% EBITDA growth to 28.1 million, which is an improvement of 130 basis points in the EBITDA margin to 27.2%. The EBITDA growth is from the underlying SMA and IDPS businesses of premium and PowerApp, which I'll unpack for you during this presentation. Whilst there is M&A revenue growth contribution from OneView, at an EBITDA level, OneView is flat and not a contributor, so that the EBITDA growth that you see is from our non-OneView businesses. EBITDA growth flows through to NPAT and to EPS, providing growth of 55-56% and enabling a dividend uplift to 1.25 cents per share fully franked. This is a pattern that you would like to see with good platform businesses. Followed top line growth with operating leverage delivering improvement in profitability. So let's walk through our story for 25. We'll start with FUA growth. As previously announced, total FUA grew 12% in FY25 to 64.3 billion. Of that growth, 4.3 billion related to Scope Plus. This is non-custodial business where revenue is account-based, not FUA-based. So for this discussion, our focus will be on platform FUA as that drives 80% of our revenue. Platform FUA grew 2.6 billion or 9% in FY25. I presume we're still on. Sorry, there was a bit of noise coming through here. Platform forward growth is a mixture of new organic growth with the spectrum product, as Anthony mentioned, plus continuing growth in SMA and PowerApp, tempered by some fallout from PowerApp-departed advisers, and some losses from one view, which is not unexpected. On the next slide, we'll see how this is translated into revenue. In total, revenue grew by 20 million, or 25% in FY25. Most of this growth was in platform revenue, which is explained in the chart in the bottom left-hand corner. Platform revenue grew by 20 million, or 32%. Of the 20 million growth, 15.4 million relates to volume and 4.6 relates to a two basis point margin gain. Just over half of the volume growth, or 7.8 million, came from including a full year of one So just a half, 7.8 million volume growth came from including a full year of one view in 25. In FY24, there was only a couple of months of one view revenue in the numbers. So the picture is, excluding one view, premium got 9% fuller growth, platform fuller growth, and 20% platform revenue growth, a function of both volume and margin. Portfolio services is a more stable picture, as Anthony mentioned. I should note there has been some repricing in the portfolio services later in FY25, with some further uplifts yet to come. The Bell Potter client win has not come into the portfolio services numbers as yet, because it's being onboarded in the first half of FY26. There will be some client departures that are expected in FY26 with IPS and Asgard. Overall, we think the wins and losses in portfolio services in FY26 were largely offset. But coming back to SAS revenue and our picture of SAS revenue growth, we see that SAS revenue growth, excluding one view, of 15.9%, which in combination with the EBITDA margin of 27.2 is a rule of 40 score of 43.1. If I move to direct expenses, as with revenue, FY25 has a full year of OneView costs included. OneView contributed $2.3 million to direct cost uplift. Excluding OneView, direct costs increased by 22%, but a large element of that increase is actually a cost allocation matter. The cost allocation matter follows the business change we instituted in FY25. We closed an operations function in Armenia and replaced it with an outsourced provider. What was an overhead below the gross profit line is now a direct cost. If I remove that noise from the direct cost, direct cost excluding one view actually grew by 4%, less than the growth in revenue, less than the growth in platform FOA. Even with the new allocation, gross profit grew at 22%. or 15.3% X1 view. And I'll turn to how this translates into EBITDA. OPEX for FY25 was 65.7 million, almost a 19% increase on FY24. Once again, most of that increase is from the inclusion of one view for a full year in 25. X1 view, OPEX grew from 53.6 million to 58.1 million an increase of 8%. That 8% increase is less than the growth in platform floor and less than the growth in platform revenue. To complete the picture, OneView added 7.6 million of OPEX, contributing a negative 0.6 EBITDA. At this stage, no synergy benefits from OneView is in our numbers. The OneView integration is a straight lift and drop. When the transfers from IRIS to premium systems are complete, the old systems will be decommissioned and the cost savings will be realized. The combination of 25% revenue growth, improvement in gross margin, and OPEX growth lower than revenue is what has driven the EBITDA uplift of 6.5 million to 28.1 million, or 31%. which is the 130 basis point improvement in EBITDA margin. So if we move to the next slide. The EBITDA uplift is also carried through to profit before tax, which is up 44% to $16.7 million. Profit before tax is after non-cash items and one-off costs. Share-based payments and depreciation and advertising are the non-cash items. Share-based payments in FY25 are lower than FY24, which is really just a function of accounting methodology. Our methodology applies the service weighting to allow for the probability of participants not being there at the expiration of the program. FY25 has a lot of the share-based payment in the first year of a three-year cycle, so there has been a lower weighting applied this year. Assuming everyone is here at the end of the cycle, we'll reverse in the later years as higher weightings will then be applied. DNA is up in FY25 in part due to the DNA of the acquired OneView assets now being included in the numbers. DNA in the future will grow in line with CAPEX. In terms of CAPEX, in FY25 we had 10 million of CAPEX versus 8 million in FY24. As Anthony mentioned, we have made an investment to create improvements in our superannuation capabilities, and there has also been a significant investment to strengthen our technology infrastructure and security. The largest one-off cost item relates to the OneView integration. This integration is scheduled to complete in the first half of 26. I expect the first half results will be able to provide you with the final wash-up of the integration. integration costs and synergy realisation. The restructuring redundancies in the chart come mostly from the business change I mentioned earlier, switching operations from Armenia to an outsourced provider. Bottom line, we ended up with a net PAT of $13.6 million, up 55%. The income tax expense of $3.2 million is an effective rate of tax of 19%, which is lower than the prima facie rate of tax due to RIDIC credits, R&D tax credits and various timing differences. The NEDPAT result, supported by free cash flow, a liquid balance sheet, has supported a declaration by the board of a final dividend of 1.25 cents per share fully franked. Finally, the financial position. The balance sheet is a very straightforward picture. Premium has both strong liquidity and capital. Current assets are more than double total liabilities. Capital and liquid holdings are in part a function of the number of AFS cells we have in the group. We may look to rationalize these AFS cells over time and simplify our corporate structure and create greater capital efficiency. The major call out on the balance sheet is the increase in intangibles, which is a function of the R&D and reinvestment in the business mentioned earlier. particularly the development of the enhanced superannuation capability and strengthening our infrastructure. Anthony will speak more about those capabilities next. So in summary, from a financial perspective, it is a very straightforward picture of a platform technology company operating at an economic scale, generating cash, reinvesting in the business and delivering attractive returns to shareholders. Over to you, Anthony.

Thanks, Simon. So whenever we talk about the business, obviously, like all businesses, we serve a market. We're very clear in what market we serve, the high net worth market. And all of us who work in the business today have enjoyed the benefit of the business over many years having built some capabilities that are market leading capabilities and our duty as the current generation of management is to build on those capabilities for the current generation of requirements for the high net worth advisor. So we inherited Scope, that was the original product of the market of the business and then over the years the SMA was added and the Super SMA as well. Then we added an admin service and more recently we've added a full RAP service. So that gives us four key components to our suite and we think for the reasons outlined on this slide that we've pretty much got the market as it stands today well covered and we look forward to the opportunity of building on that further because as I say, there's never been a time where the technology opportunity is greater. It's a tremendous opportunity for us to build on that great foundation that we've got in place already. And so what is the focus and outlook? It's to capitalize on Spectrum's position as a leading solution for high net worth advice, as I say right at the start there. And as I said earlier, a lot of our product work now is the refinement of Spectrum as more and more clients come on board. It is to provide a significant uplift in superannuation capability. superannuation is the biggest vehicle or sector of the wealth market and we've been disappointed as we've talked earlier and in previous presentations about our superannuation capabilities so a significant uplift in that. Continue to drive to offer the largest range of investments and not only reporting but execution and in the earlier slide on some of the areas of focus we are building out our transactional and investment capabilities further. We should complete the integration of OneView, of course. And with the success that we've had, it gives us a priority on fine onboarding. So when you ask people in premium, hopefully if you asked anyone in premium, what's our number one priority? It's onboarding client wins. And as we've said before, we've got an aspiration to continue to deliver double-digit revenue growth and to grow EBITDA even faster than revenue, which requires that expenses will grow, but grow at a slower rate than revenue. And then it mathematically just works out that way. So that's what we aspire to do. We are excited about the opportunity in front of us. We think we're well positioned. We're happy with our team. And I would like to acknowledge all the people at Premium who have delivered these results for 25. who continue to work on building a good future for our business. With that, I'll stop and we'll open it up for those people who have waited patiently online.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you are on a speakerphone, please pick up your handset to ask your questions. The first question comes from the line of Cameron Halkett with the Wilson Advisory. Please go back.

Thank you. Morning, Anthony, and morning, Simon. If I can just start around the cost side of things, please. In the second half, your sales and marketing expense was particularly lower half to half. I suppose, can you just talk around that and whether that's just rolling off by efforts in the first half with the Spectrum launch and whether perhaps we should be considering

second half to be the more appropriate baseline expense base going forward please yeah thanks for that cam and as is often the case with these things i'm sorry that it's a bit of both like the the second half was lower because the first half had the launch uh and because we generated a strong pipeline arising from the launch we we were not in a position where we had to do a lot to keep generating new inquiry. But going forward, as the launch goes into the background a bit, we'll have to pick up a bit from what we did in the second half, but certainly we wouldn't expect to need to jump to the level that we were in the first half. So it's probably a bit between half one and half two. And the full year number is probably as good a guide as any.

Oh, super, Anthony. That's really helpful. If I can come to one of Simon's comments around portfolio services. So I think for the first half results call, it was pretty clear that IPS would be moving off with the Dash acquisition. But I think that's the first time you've just confirmed there that Asgard will be departing with Westpac's forced migration onto Panorama. Can I just confirm that?

Yes, we've been notified that they will be moving The final timeline is not yet locked in, but they continue to have a view that they will move off. They've had that view for a while, and they have told us that they will move off, and they've given us an indicative time, but not a locked-in time as far as I understand.

Okay, so I suppose pulling portfolio services altogether, you're going to have full year impact of price increases in FY26, Bells will come through as a contributor as well. But then you'll also have the churn impacts of IPS and sounds like at some point, some amount for Asgard. So pulling that all together, assuming no big growth in portfolios outside of the expected, do you think portfolio services can still show growth in the coming financial year?

Yeah, obviously it'll be driven now. There's a bit of the price increase rolling through, but now it'll be driven by the sales that we can generate. Bell is an example of a win. As I say, the large advice firms only make up a third of the market. They get a lot of attention, but they're a third of the market. Two-thirds of the market is in small and medium firms. We continue to be happy with our pipeline. We mention winning at Bell's because it shows you because it's visible you know when people say are you competitive in the markets you operate what is visible is where the big firms have gone and so we clearly show that we're competitive but it's not just big firms in the pipeline there's medium and small firms which make up two-thirds of the advisors so we are competitive when we pitch and we're very excited about the strength of our pipeline but

um but you're quite right that it will only be the growth that offsets those losses but we we remain confident that we can we can achieve the growth to offset those losses yeah i i mean your fy 19 report had asgard contributing a minimum of about 3 million per year so you know even 10 percent revenue growth from your price increases on the 20 mil this year that's It's only an incremental two. So you're up a bit of a headwind there. So let's hope for growth all up maybe this year. Maybe just one final question before handing over to someone else. I suppose with one view, you've got comments in the annual reports here as well around integration being done by the end of the first half or around about there. So just, I suppose, in painting the picture around Outlook with the synergy targets you've outlined before, can people expect around an incremental one, maybe one and a half million of EBITDA pickups through this year just as that integration concludes, as you extract those synergies?

If we achieve the synergies and achieve the finish of the migration, then there's a lag till we achieve the synergies, but not massive lag, but no more than a quarter, for example. If we achieve the synergies, and we've talked about 3 million in synergies, if we achieve exactly you know at 31st of December of course it's one and a half mil for the full year but in the second half but those are those are the swing factors now when do we finalize the last migration what's the gap between the last migration and the synergies and is the total three million yep all very clear thanks Anthony thanks Simon I'll hop back in the queue and great result today thanks Cam

Thank you. Next question comes from the line of Tom Tweedy with MMLS Australia. Please go ahead.

Good morning, guys. Thanks for taking my questions. Just firstly on your revenue guidance or your aspire to continue double-digit revenue growth, can you just give us a bit more of a sense of what you're factoring into that aspirational target? Is there more large client wins or is that just organic from the existing client base and furthering your penetration there?

So the existing wins that we've got, if we onboard properly, and as I say, that's the number one priority in our business now, would deliver double-digit growth for some time to come.

All right, that's helpful. And just on the OPEX investment into FY26, can you give us a bit of a sense – of how that would compare to 25 in terms of headcount? And where in the business would you be looking to deploy the extra headcount or investment across the different segments?

So, look, this is a very complex question in the current environment because of the power of technology. But what you'll notice when you look at the individual functions that we have split out for the total cost. Technology has been building for a while. It's had the fastest growth rate for some time now. And as we invest in technology, we automate more and more of our business. And obviously that's the aspiration. Everyone aspires now to automate more and more of their functions. And whenever you read about AI and the power of technology, you hear that automation is more and more available to those who deploy technology effectively. So I think we continue to grow our technology spend and less so our operations area. But all art, you know, we... We do think that the costs go up for both some expansion in numbers or capacity and some inflation. But it shouldn't rise as fast as revenue, which is the aspiration. I'm not sure if that's what you were asking, Tom.

Is that what you were trying to say? No, that's fine. Thank you. That's really clear. Yeah. Sorry, just one final one. I was just going to ask around the platform revenue margins. Obviously, within Spectrum, we've come up to sort of 28 basis points all-in margins. How do you think of that going forward? Is that sustainable for the next two or three years or should we either expect more improvements given pricing increases already through or is it something that a competitive market might look to sort of compress over the sort of medium term?

So the market is competitive. The structure of the market is that there's a lot of participants in the market, so it is a competitive market. But today we've seen a relatively positive market for margins indeed. There's been some margin expansion in recent years, particularly as the cash margin went from almost zero to gradually rising. and that's a decent chunk of the total revenue. We think that it's probably a relatively stable environment at the higher level, but in part it also, as I've said before, comes to your average account size because the bigger the accounts, the lower the basis points, although the dollars per account is higher. Brilliant.

Thanks. I'll jump back in the queue.

Thanks, guys. Thank you. Next question comes from the line of Nick McGarrigle with Ballenjoy. Please go ahead.

Just a couple of things to clarify. So the Asgard notice is expected to kick in from a revenue impact when? Sorry, just a double check, guys.

We don't have a specific date. So it's an expected date. But it's not, you know, there's not a date that's given. So it's, you know, but it is downside risk. The point I was making is that we expect the losses to be offset by the tailwinds that we've got.

yeah I guess that benefits because the year and you maybe get a half year of the impact from Asgard potentially and you've got full year run rates of the price rises and the new client wins kind of thing over on a two-year view is that the way to think about it yeah I think that's right cool um and then just in terms of um you know any kind of any other price changes I think have we seen the benefit of the price changes on the Scope side and the platform side wash through for a full period in that second half, or are there some of the price changes that you think continue to give a tailwind into 26?

I think the price changes are on the portfolio services, and there will be some tailwinds from the portfolio services coming through on 26.

Okay. And then just a comment around the average revenue yield on Spectrum now that you've kind of got a few more months with the book coming through. I think the first quarter you had big flows. It was a lot of high net worth, maybe less so in the kind of June quarter, but just a way to think about the margin there as we move forward.

So my think, Nick, is that I'm not sure I'll finish Pardon me. The marginal finish between SMA and PowerApp, and therefore probably close to our average margin that we disclose, but the biggest driver, like the pricing for each element of the service is very similar to SMA and PowerApp, and they're relatively close themselves. There's only minor differences in the components, you know, trading and cash and the base platform fee. The biggest driver has always been the average account size. And because we think the average account size will be higher than SMA but lower than PowerApps, that's what makes us think the average margin will finish up around what the company margin has averaged. And the early indications are that that's as good an estimate as any at this stage. But because we publish it regularly, you'll see over time whether we've got anything wrong in that. But the biggest difference will be average account size.

Okay, cool. And then just the timing of those new client wins. I mean, some of them are just organic. Some of them are product replacements. Is that right? Just the way to think about the revenue profiles from Euros, Bells and Morgans?

Yeah, exactly. Bells will be a migration and Euros will be a migration and Morgans is a growth, a new product for them.

All right, thank you. Thank you. Next question comes from the line of Hayden Nicholson. Bell Potter, please go ahead.

Yeah, hey guys, can you hear me? Yeah, hi, hey. Great. Just in terms of, you know, obviously good leverage coming through, and not to labour the point you've already given, you know, fourth quarter, but when can we actually expect to see some flows coming through? So I guess, you know, my question is, those elevated outflows. Do we have any guidance around that? I feel it's kind of been pushed out a little bit and hung around. I think a lot of people are looking for the flows to kick in. So any guidance or comments there?

Yeah, look, I think if you look over time, the gross inflows is the biggest lever. The outflows... absent the departing advisors, the outflows, we can see a baseline or a fundamental number that's not dissimilar from the market average. So once the outflows ameliorate, which they've largely done now in our view, then what we get on the gross flows will drive the net flows more. more consistently. In terms of the gross flows, that's a positive story in our view because the existing clients are doing very well and we're winning new clients. So we're very confident the gross flows will continue to increase over time. If we get to a more stable and normal sort of outflow number, then the net flows follow just as the difference between the two numbers. So we're encouraged by the opportunity for the net flows to be a good story going forward but obviously we'll publish another quarterly number in October and that will give a bit more guidance about whether we've got on top of the outflows.

Just another quick one maybe further to Cam's point. In terms of the indirect expense base I think you know previously x1 view we kind of had it line by line just interested in terms of you know the it spin because you know you're guiding and had higher capex as well in the second half like what's the run rate there because you know x1 view sort of looks like second half it was 17 i know you've called out you know somewhere spectrum but yeah just keen in particular for that line item you know what you're seeing there and and how we should expect it to grow

I'll let Simon just talk about what it has done, and then I'll wrap up with a little bit about what we expect going forward.

So heading in the deck, in the appendix, there's the reconciliation, which gives the group result breakdown that you were talking about. So cost ops, information technology, sales and marketing. So you can see the IT. in 25 is 19.8, but plays 14 million, which is picking up the OneView edition.

Yeah, and that was always saying 800k, so it's still the case.

So 800k on OneView. No, 800k was the The EBITDA contribution was a drag.

I've got the page now.

That's all good. When we look at it going forward, we do expect tech keeps growing a little bit more than the rest of the business. But what it delivers is the ability for the rest of the business to be more productive and efficient. And therefore, we can manage a bigger business with similar size staffing levels to what we've got now and capacity to what we've got now. So most of the growth is probably going to come in tech. But like everyone, we think that the power of technology now gives some huge opportunities for automation. improvements to functionality for clients and the like. So we'd be confident that whilst we'll keep investing in technology, part of the investment is always to improve the platform, but part of the investment is to make the rest of the business more efficient and keep the overall costs growing at a slower rate than the revenue growth.

Thank you. Next question comes from the line of Lafitani Sotirio with MSD Financial. Please go ahead.

Good morning. My first question is in relation to portfolio services revenue, and I know there are a lot of comparisons to PCP, but just looking at first half versus second half, it's actually deteriorated. It's gone from $10.5 odd million to $10.3 despite much higher floor over that period. Can you just talk to before any price changes? Why is there a drag in revenue in portfolio services from first half to second half? Has there been more discounting or are there special deals being done? Any colour you can provide would be great.

Well, portfolio services is up 0.3. No, half on half. Oh, half on half.

Yeah, so the key thing there is just that some, with the price increase, some portfolios, advice groups reviewed the portfolios that were using Scope and got rid of those accounts that were not using it anymore, so they didn't have to pay the price rise. So there's slightly lower number of services that we had on average in the second half compared to the first half, but the price increase itself had negligible impact. Over the long run, we would expect the price increase will more than offset the portfolio loss, but you need the full period of the price increase to achieve that result.

Can I just go then on a similar vein to platform revenue? I know looking at PCP when there wasn't one view in the whole period, you look at some big numbers. you had some pretty healthy markets during the period, much higher, fuller, and you've grown your revenue from first half to second half by 1%. So I notice this is also the first result where you've taken off the margin chart, which we could see for the respective underlying platform businesses. Why is there only 1% revenue growth from first half to second half for the platform business, given the massive So I increase.

I'm looking at the half on half. It'd be some of the attrition from one view. come through?

I'm going to have to get back to you on it and clearly obviously the mathematics of it is that given the FUA has grown so strongly the average revenue margin must be lower in half two than half one and we'll have to update the chart and hopefully that will help explain why the growth was one percent half two and half one There could have been some unusual factors too, but we'll have to dive into that and get back to you.

Okay, well, can I move to the cost side then? And so the capitalisation has stepped up. You've called out more spending. Can we expect at least $10 million in costs being capitalised in FY26? I mean, what's the outlook around capitalisation? And also, you know, there's over $4 million excluded in one-off costs. are we going to expect a similar number in FY26 as well?

So on the capitalisation, the biggest part of the increase from circa 8 mil or a bit under 8 to about 10, or the 2 million you're talking about, is third-party suppliers, which we haven't felt confident about using third-party suppliers in the past. for a range of reasons, but the biggest thing now is the move to more modular and open architecture allows us to take advantage of third-party suppliers where needed, and we did need on this occasion because of what we needed to do on superannuation. Our internal spend continues to be circa eight. Going forward, we think there are opportunities for those third-party suppliers in the coming year again. And so, yes, 10 would be what we would expect. But it's not going to be every year we say, yeah, let's invest in some third-party suppliers. It's case by case as the need arises. The first need was superannuation. As we've called out, we'll use the same supplier to build out some of the other things that we want to do over the coming year. But... Does that mean that we continue to spend $10 million or more every year? It depends on the need. It depends on the opportunity. But there's never been a better opportunity than right now to utilise some of the best of breed suppliers in the market, which is what we think we're doing here, to deliver stuff that produces a very good return on investment because you can make a million dollar investment now and get more than a million dollar a year in added value, either revenue or cost savings. So a payback of one year is fantastic. It hasn't always been like that and it won't always be like that. Indeed, I've read articles the other day that many are not getting that sort of payback. But we think because of the way we've gone about our business and using the right suppliers, we're getting a very good return on investment. First up in terms of what we did on separate annuation.

And on the one-off costs, you had a large chunk of the one-off costs related to OneView integration. And so obviously we're coming to the end of that program. Not going to see the same level of one-off costs.

There'll be a few one-off costs in the first half of this financial year. But, you know, assuming it rolls off, as we've talked about in terms of being done by the end of the first half, there wouldn't be any other one-off items arising from that.

Can I just follow up on Asgard? That's my last question. So typically there's a contract in place, so are they rolling it over on a monthly basis? Is there a current deadline that is in place? How much notice do they have to give you before it can be cut?

Yeah, it's not quite monthly, but they have... Signaled for quite some time that they were building out enough technology to be able to replace What is effectively a scope service? So for some time they've not been month a month, but they've negotiated short shortish Extensions to that contract sometimes a year and and with the most recent extension there giving us less, you know, they're trying to shorten it more and more because I think they're getting closer to being ready to roll off scope.

Thank you.

Thanks, Lach. Thank you. And we'll get back to you. Thank you. Next question comes from the line of Cameron Hulket with Wilson Advisory. Please go ahead.

Thank you. One follow-up, gents, I suppose, just around where we look at the gross margin side of things. So I'm still treating this where your COGS are your direct costs and your cost of operations the way David used to present it. I can see you've made comments before in the pack around sort of synergy realisation with one view around sort of trustee custody and super admin issues. what more can you do here I suppose at the group level I suppose perhaps on the trustee side I think Diversa hit you with a bit of a price increase recently and yeah you're starting to see that gross margin contract quite a bit despite seeing some good growth across the group so yeah just came for comments here please so all of our suppliers you know we don't just roll over when they tell us what they want to do Diversa I wouldn't say

I can't say we've seen any increases there that are out of the ordinary. All suppliers have got inflationary pressures. We can hardly complain when they say inflation's gone up and we're putting the price up. We've done it ourselves. But there's nothing untoward in it. There's nothing in the supplier costs that's making us say, look, The way we talk about our costs will grow a bit from capacity expansion, a bit from inflation. We're not seeing anything unusual or untoward from our suppliers in that regard.

Yeah, okay. So I guess maybe post one view, once that all wraps up, you've got spectrum and market, sharpened focus portfolio and a lot of these one awesome things done is that, you know, when perhaps premium starts looking at, I suppose just some of these things that can be tied up because I'd be quite hard to do right now, I suppose, in the middle of an integration.

Yeah, there is a, um, there is a, a program of work around consolidation of suppliers, not, you know, like, uh, there's scale advantages with some of the suppliers. So if we were to say, uh, you know, uh, service XYZ I'm not going to say on the call because I don't want to signal big problems for people you know the negotiations are going on and the like but supplier of a particular service that services power at premium in one view products if we consult and and say you've got three different suppliers three different suppliers for each if you consolidate to one supplier through an RFP process for all the platforms, you will almost certainly get an initial reduction and then inflationary adjustments up beyond that. So there is opportunities. We are aware of opportunities on that and that gives us confidence that we can keep costs growing slower than revenue for a while yet and that's why it remains an aspiration that we've got to keep costs growing slower than revenue and some of that confidence is because there are programs of tenders and RFPs in place to consolidate supplies and get the benefits of scale. Some of those we're running tenders now and some are planned.

Yeah, great. That's really good, Carlo. Last one very quickly, just following up on Lef's point there. You're making comments around the R&D CapEx being more on third-party suppliers. Can I just clarify, does that mean, as a result, you'll be expensing less because there's third-party suppliers taking away some of the necessary reinvestment that you would have to do yourselves, or it's incremental to what you're already doing?

This year, it was all CapEx, a third-party supply, to build out the superannuation offering. We were delighted with how that has gone. We are absolutely delighted. We feel we've worked with the suppliers, done stuff that we wouldn't have anticipated at the start how good that was. And so we will allow them to look at other opportunities in our business. But the reality of technology, and I use the word AI, but sometimes we talk about machine learning. Sometimes people use generative AI and AI There's a whole lot of different words, but what it is is technology is more powerful now than it's been before. Technology always gets more powerful, but you have these leaps, like when the World Wide Web came out, or the internet, and now with AI in its broadest forms, or process, RPA, robotic process automation. A few years ago, we wouldn't have been able to do anything other than what we could do ourselves. And I've said, in some forums before, the risk you've got is if you see a million dollar investment that you can make and you say, I think that's going to deliver me a good return on investment, you make the investment. But if you've only got the capacity to manage seven or eight million in CapEx and then you add a million or two on top of it, that's where your projects go wrong because the leadership's not there and the oversight's not there and you stretch yourself too thin And that's when you don't get the positive ROE. You hear about a write-off down the track. Whereas because of what we've done over the last few years, we've got a more open architecture than we've had before. We've got a more modular architecture than we've got before. And if we're good on supplier selection, which we feel we have been on this occasion, you can make investments to realise that positive. You can actually execute. So that's what we're doing here. I don't think there's a lot in... There's no more. It's not like I'm going to say, you know, we should go from 8 to 10 to 20. That would be stretching us and I'd be likely to be coming back with a write-off down the track. But this modest increment and delivering what they've delivered for us on superannuation tells us that we've got a great partnership with this supplier and it's going to deliver some very significant positive ROE What will that show up as if we're right about that? We will grow faster because we're providing a better product into the market and we'll get cost out because we're more automated. So that's what we're aiming to do. We're not going to go to every supplier in the market and say, oh, we're now open for business and we're going to take you all. We'll be very selective and still a lot of the tech is our own people delivering the tech as it has been for many years. But through the leadership of Richard Large in that area and his team, we've managed to create enough openness in our architecture to take on some limited third-party help in this era of, as long as it's done successfully, very positive outcomes from your technology spending.

Yeah, and just to clarify, that super work, is that being done for Spectrum to have a super offering rather than just IDPS, or that's referring to SMA's super offering?

Yeah, our super offering is still SMA, so it's still the premium super is still SMA's, but what it was is we always did the investment platform for the super and And we still have a supplier who does the administration, you know, making pension payments, taking contributions in, all the processes that go on to manage a super product as opposed to just a straight investment product and the particular regulatory environment around super. But what we've asked the supplier to do is build out more of that super administration capacity so that we could bring it in-house rather than use a third-party supplier. and therefore take complete control of our super product rather than have a large part of it in the hands of a third party.

Yeah. Okay. Thanks again, guys.

Thank you.

Thank you. There are no further questions at this time. I'll now hand back to Mr. Ramsteker for closing remarks.

Great. Thank you. Thanks, everyone, for your interest. As I say we've got some questions we need to get back to you on and we will do that but it's very good to have your interest and I would like to leave you with two thoughts. One is we're very well positioned in our market and that gives us confidence to have this aspiration of double digit revenue growth and we are very well placed on the technology side to take advantage of the developments that we're seeing there. We feel that if we can execute on the strategy which is articulated today, that it's a very positive story. It's a big if. Execution is always the challenge and the duty of management to do that and we feel that keenly on behalf of all shareholders to make sure we do execute as well as we can. Thanks again for your interest and I look forward to catching up with you all at future opportunities including the AGM coming along in November. Thanks again.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.