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.