Perpetual Limited

Welcome to Perpetual's Half Year 2026 Market Briefing. Following the formal presentation, there will be a Q&A session where participants can ask live audio questions. To ask a live audio question, press the Request to Speak button at the top of the broadcast window. The broadcast will be replaced by the audio question screen. Use the dial-in number and access pin provided to ask your question via the phone. Alternatively, for those on a home or personal network, you can ask your questions via the web by pressing Join Queue. If prompted, select Allow in the pop-up to grant access to your microphone. If you have any issues using the platform, dial-in details can also be found on the homepage under Asking Audio Questions. Press the Documents icon to see today's files. Select the document to open it. You can still listen to the meeting while you read. The audio queue is now open. I'll now hand over to Suzanne Evans, Chief Financial Officer.

Fantastic. Thanks, Michelle. Good morning, everyone, and good afternoon or evening to those who are joining us from other parts of the world. Welcome to Perpetual's half-year briefing for 2026. Before we begin today, I would like to acknowledge the traditional owners and custodians of the land on which we present from for today. Here in Sydney, that is the Gadigal people of the Eora nation. We recognise their continuing connection to land, waters and community. We pay our respects to Australia's First Peoples and to their elders, past and present. We would also like to extend our respect and welcome to any Aboriginal or Torres Strait Islander people who are listening to this briefing. We acknowledge the traditional custodians of the various lands on which all of you work today. Presenting our results today will be our Chief Executive Officer and Managing Director, Bernard Riley, and myself, the Chief Financial Officer, Suzanne Evans. There'll be an opportunity, as you've heard, to ask questions at the end of the presentation. Can we please ask that we start with just two questions per person to ensure that we have time for everybody who would like to participate today? And before I hand over to Ben, we'd just like to also draw your attention to the disclaimer that's contained on page two of the presentation. Ben, over to you.

Thank you, Suzanne. Good morning, everyone, and thanks for joining us today for Perpetual's first half 26 results briefing. Reflecting on the overall group performance this half, we delivered a solid result, achieving both revenue growth and underlying profit growth, as well as making good progress on our strategic objectives. As you'll see from the table below, our headline results showed total operating revenue of $697.9 million for the first half, up 2%. Underlying profit after tax of $112.7 million, up 12%. We reported statutory profit after tax of $53.9 million. The board has determined to pay an interim dividend of 59 cents per share, unfranked. and diluted EPS on UPAT with 97.1 cents per share, 9% higher than the first half of 2025. We maintain disciplined cost management, resulting in an improvement in our expense guidance for the full year. We continue to make strong progress on our simplification program To date, we have now delivered $60 million in annualised savings, and we remain on track to achieve the targeted $70 to $80 million by FY27. In asset management, earnings growth was supported by improved market conditions and cost management, partially offset by currency and net outflows, primarily in global, international and US equity strategies. Importantly, over the period, our Australian boutique performed well and Barrow Hanley's contribution improved. Corporate trusts continue to perform consistently. They're delivering strong growth across all three business segments and reinforcing its importance as a diversified earnings engine for the group. The business benefited from strong securitisation markets and client growth throughout the half. Wealth management showed resilience during the half by maintaining focus on delivering for clients as the sale has continued to progress. While we've made good progress with Bain Capital and our progressing documentation, there is no certainty that a binding agreement with Bain will be reached or that a transaction will proceed. Turning to the next slide. I want to now spend some time framing our asset management business in a broader industry environment. Quality asset managers come into their own during down markets and periods of heightened volatility. We continue to expect more flows between active managers. As you can see on the chart on the bottom right-hand side of the slide, flows between core active funds still dwarf flows from active to passive funds. The line between public and private markets is blurring, with private capital increasingly accessed through mainstream vehicles across wealth, retirement and insurance. McKinsey also noted a convergence of traditional and alternative assets. For Perpetual, this underscores a clear path to growth. High conviction, differentiated active capabilities and increasingly ETF-wrapped strategies align to new distribution channels. With that context, let me now turn to performance and flows across our boutiques. Our multi-boutique model provides earnings diversification across capabilities, client segments and importantly regions. As you can see in some of the points on this slide, we saw pockets of strong performance across a variety of our capabilities in the first half. with 54% of strategies delivering outperformance over the important three-year timeframe, reinforcing our relevance in an environment where active flows increasingly reward demonstrated performance. During the half, we saw $22 billion of gross inflows and $32 billion of gross outflows, resulting in a net $10 billion of outflows. While collectively we saw outflows in U2S global and international equity capabilities, emerging markets and Australian equity strategies saw areas of investor inflows. This was supported by a strong half of fixed income capabilities, highlighting the benefits of a diversified asset management platform. Net outflows in the half were offset by stronger equity markets and foreign exchange movements, supporting earnings growth and increased AUM over the half. We remain focused on active client retention and delivering strong investment performance, which together underpin improvements in our flow profile over time. Turning to the next slide for some more detail on our Australian asset management business. The integration of our Australian distribution capabilities has materially strengthened our local platform. We now have a large and diversified footprint across both the intermediary and retail channel, which I'll refer to as wholesale, and the institutional channel, with $71 billion of AUM across Australia. If we look more closely at the wholesale channel, we manage $32 billion of AUM. Of the over 15,000 ASIC-registered financial advisors, nearly 11,000 have holdings in perpetual group products. We also have key sales and distribution team members working closely with ASIC consultants and sub-channels, including high net worth researchers and brokers. Wholesale delivered $1.5 billion in net inflows for the half. In our institutional channel, we managed $25 billion of AUM across superannuation funds, government clients, insurers, endowments and foundations. We did see outflows for the institutional channel in the half. However, we saw an improvement on the second half of 2025 and we've secured several wins in the first half. These flows include a $250 million contribution from a super client into Australian Equities, $110 million contribution from a large institutional client into JL Hambro's emerging markets capability, and $100 million new multi-asset mandate from a large superannuation client. Important to note, we also manage $14 billion of AUM in the cash channel. Importantly, our Australian distribution is now a unified platform. with strong expertise in distributing across asset classes and boutique brands through a single coordinated team. Our team of 46 includes sales, marketing and client services, and is one of the largest local distribution teams in the industry. We're also seeing the benefits of strong product development, including the launch of contemporary investment solutions, and I'll touch on them in more detail on the next slide. A key priority for asset management is ensuring our product range is aligned to evolving distribution channels and strategies where we see sustained client appetite, particularly in fixed income. During the half, we launched the Perpetual Diversified Income Active ETF, which performed well relative to other ETF launches in the period and held over $215 million in AUM as at the 31st of December. We also successfully raised $268 million for the Perpetual Credit Income Trust, with assets now in excess of $800 million. In working with our client base globally, we were able to successfully launch Barrow Hanley's US Mid-Cap Value Fund into the UK market in June, with the fund reaching over $165 million in assets in Australian dollars, or $110 million in US dollars, by the end of December 2025. This represents a significant achievement, especially given Broadridge's global market intelligence data, which indicates that fewer than 1% of newly launched funds surpass the US $100 million of assets in AUM. Looking ahead, we have an active pipeline of strategies under development, and where appropriate, we will support them through seed investments to target attractive growth areas. Suzanne will talk further about our seed capital program shortly. We expect the continued convergence between traditional and alternative capabilities to remain a feature of the industry globally, driving a forecasted $6 to $10 trillion of capital reallocation over the next five years. To that end, our discussions with Partners Group have advanced and an early stage product design is now being introduced to the market to assess interest. We're also looking at the launching of a direct bond SMA in Australia to expand our suite of fixed income solutions for advisors and platforms. Turning to ETFs. The US active ETF market represents a significant opportunity. While active ETFs remain a relative small portion of overall AUM, they are becoming an increasingly important channel, capturing a high share of industry flows and revenues. We will continue to build on our established ETF platform here in Australia, and we're going to apply some of these learnings to the US market. We've decided to enter the US ETF market in a risk-managed basis by our third-party provider of multi-series trust structures. This structure is lower in cost and offers quicker speed to market, helping us to bring scale before we need to invest more heavily. If we now turn to the work we're doing with JR Hambroa, I've spoken previously about restoring JL Hambro to its heritage strength, and it remains a key priority for us. We've made progress on revitalising the business, and this will continue through the second half and beyond. In September last year, we announced the appointment of Bill Street as CEO. Building off the work we'd already started with J.R. Hambro, Bill has quickly commenced implementing a clear strategic direction, beginning with the simplification of J.R. Hambro's operating model to create J.R. Hambro International, an aligned platform that better positions the business for growth. The future success of J.R. Hambro is an important component of our global offering, and we look forward to updating you on its progress over time. Turning now to corporate trust. The business experience is another strong half and continues to deliver steady growth across all three of its business segments. The Australian securitisation market remains robust, supporting continued growth in debt market services. Importantly, we continue to see growth across the non-bank lenders, contributing to a more favourable mix of mandates for us. Managed fund services growth was driven by custody and our Singapore business, benefiting from both new and existing client growth. Digital and markets also delivered a 5% uplift in assets under administration compared to the second half of 2025, reflecting continued investment and expansion of our client offerings. Highlighting its strength in the market more broadly, for the 10th straight year, Corporate Trust was awarded the Kangaroo's Australian Trustee of the Year. Looking forward, the business remains focused on executing its five-year growth strategy, including investing in its core business and digital markets. Corporate Trust has proven time and again to be a highly resilient and growing business. UPBT has grown steadily at a CAGR of 11%, from around $22.4 million in the first half of 2019 to approximately $49 million in the first half of 2026. The cost-income ratio has remained broadly stable in the mid-50s range, underscoring our disciplined investment in the business as revenue has continued to grow. This slide also illustrates what is driving that growth across each of our business segments. Notably, Corporate Trust's service-led operating model is aligned both to the credit-linked and equity market growths. which provides a stable, diversified earnings base that is less exposed to equity market volatility. That diversification is particularly relevant in the context of asset management's market sensitivity, reinforcing corporate trust's role as a consistent and resilient earnings business within the group. Moving now to wealth management. In the half, the business remained focused on delivering for its clients while the sale process continued. Underlying profit before tax was lower, reflecting expense growth. However, wealth management was resilient. Funds under advice grew by 6% over the half, supported by institutional flows and strong equity markets. It was also pleasing to see the strength of this business recognised externally. Five of our advisors were recognised in the Barron's Top 150 Financial Advisor list, reinforcing our position as a trusted provider of high-quality, client-focused financial advice. And we were again recognised as a finalist in two categories of the 2025 IMAP Managed Account Awards, marking our third straight year of distinction. Wealth management is at the core of Petrel's 139-year history and has all the hallmarks of a successful business. strong funds under advice, 12.5 years of consecutive net inflows, as well as being one of Australia's largest managers of philanthropic funds with a very strong client advocacy measure, as you can see here. In relation to the sale process more specifically, I'd like to reiterate that while we have made good progress with Bain and are progressing documentation, there is no certainty that a binding agreement will be reached or that a transaction will proceed. In parallel, we're establishing a clear standalone operating perimeter for the business to support a potential sale and ensure continuity with minimal disruption for our clients and for our teams. Our wealth management business is a high-quality, profitable business with growing funds under advice, and the board and I are focused on ensuring that any transaction that Virtual may ultimately enter into is in the best interest of our shareholders. Turning to the next slide. Our simplification program remains on track to deliver our overall target of $70 to $80 million in annualized savings by June 2027. Importantly, the benefits are now flowing through inter-reported earnings alongside a simpler, more streamlined operating model. The chart on the right-hand side of the page highlights our planned program of work, which, as you can see, is well advanced. As at 31 December, we have delivered $60 million in annualised savings. Of that, $26.9 million of actual savings was reflected in the first half, 26 results. The majority of savings to date have come through workforce-related efficiencies, supported by ongoing rightsizing across the global business and the removal of duplication as we simplify structures and reinforce organisation or reduce organisational complexity. We incurred $4.4 million of additional cost savings, an additional cost to achieve these savings during the half, and they are recorded as significant items. Looking ahead, the areas of focus for the second half of FY26 remain finance systems transformation, back office simplification, and the ongoing rightsizing of functions across the group. Total costs to achieve the program are expected to remain at approximately $55 million. In summary, we are pleased with the progress we've made so far, acknowledging we still have more work to do. I'll now hand over to Suzanne to walk through the financials in more detail.

Fantastic. Thanks, Ben. It's great to be able to present a little bit more detail around Perpetual's half-year results for the period ended 31 December 2025. We'll start by moving just to the next slide, slide 15, that has a summary of our results. Operating revenue of $697.9 million was 2% higher than the six months ended 31 December 2024, or the prior corresponding period, driven by continued AUM and further growth across the group. As noted in our recent second quarter update, revenue included performance fees of $10 million, mainly generated by our Perpetual and J.R. Hambro boutiques. Total expenses of $547.8 million were within our guidance of 2% to 3% growth for the financial year 2026. I'll step through some of the drivers of our expense growth and also the basis for our improved expense guidance range shortly. Underlying profit after tax was $112.7 million, 12% higher than the prior corresponding period, supported by improved contributions from asset management, continued momentum in corporate trust and reduced funding costs following the refinancing of our debt facilities in the last financial year. The effective tax rate on UBBT was lower at 24.9% compared with the prior corresponding period. Now this was a combination across the halves due to a write-off of a deferred tax asset in the prior corresponding period and in the current half an unrelated prior period adjustments lowering the effective tax rate. If I look forward in the medium term, we would expect the effective tax rate to normalize around the 27 to 28% range. Significant items for the half year were predominantly non-cash in nature, and I'll cover those in more detail later. Earnings per share on UPAT was 9% higher. And finally, on the summary slide, the Board has declared an interim dividend of 59 cents per share, unfranked, and to be paid on the 7th of April, 2026. Now, if I move to the next slide, on here we've just got a high-level visual snapshot of performance across our divisions. I'll step through each division in slightly more detail, beginning with asset management. Asset management underlying profit before tax increased 4% to $106.9 million. demonstrating top-line growth, but also how our cost discipline is beginning to translate into an improved cost-to-income ratio when compared to the prior corresponding period. Higher average AUM drove higher management fees. However, performance fees were slightly lower than the prior corresponding period. Total expenses declined 2%, reflecting some of the early benefits from the simplification program that Bernard outlined. These were partly offset by foreign currency movements and continued investment in upgrades to our fund technology platforms. Now moving on to corporate trust. Corporate trust experienced steady UBBT growth in the half, up $5 million on the prior corresponding period across all three of its business lines. Increased volumes in debt market services, along with new client flows, further supported underlying fuller growth in the securitization portfolio. The result was 10% growth on the prior corresponding period revenue. Managed fund services revenue increase was driven by growth in custody services and continued momentum in our Singapore operations, both from new and existing clients. And digital market services experienced particularly strong growth, with revenue up 20%. Some of that reflected an elevated level of implementation fees for Perpetual's intelligent SaaS offerings, as well as continued growth in markets and the fixed income platform management solution. Operating expenses were higher, supporting growth and increased client volumes, as well as continued investment to enhance digital capabilities across the business lines. Moving now to wealth management. Wealth management's UBBT decreased by 5.5 million. Given the backdrop of the ongoing sale process, the business remained resilient. Revenue was broadly flat at 118.8 million. Market-related revenue increased modestly, supported by stronger equity markets, while non-market revenue declined slightly, mainly due to lower fiduciary and risk advisory income. Total expenses were up 6%, with increases across staff, technology and premises costs. Funds under advice were up 6% on the first half to $21.9 billion, with positive market movements and net inflows from new institutional clients. Moving now to the final division, our group support services. Underlying loss before tax decreased by $3.3 million, with higher revenue over the half compared to the prior corresponding period. Revenue was supported by higher income from seed investments, interest received on cash balances, and some foreign currency revaluations. Compared to the prior corresponding period, interest expense declined, reflecting the benefit of the refinanced debt facilities in May last year that I referenced earlier. Moving now to the next slide with a reconciliation between underlying profit after tax to net profit after tax. Significant items for the half were $58.8 million and were predominantly non-cash in nature. During the period, we undertook a review of significant items and began developing a clearer policy around classification, which resulted in some age projects being closed or, where appropriate, moved back above the line. If I step through our results from UPAT to MPAT, the main drivers were costs relating to the Pendle transaction, the proposed sale of the wealth management business, and our simplification program. I will call out on Pendle. These are the final costs associated with the transaction, and we're expecting no more to occur by the end of financial year 2026. The simplification program and any associated costs with wealth management are expected to continue into the financial year 2027. The remaining significant items are non-cash in nature and include revaluation adjustments. Reflecting the impact of these significant items, we reported a net profit after tax of $53.9 million. Now, if I move to a bit more detail around our expenses. Controllable cost growth was 1%, largely attributable to expenses in corporate trust and wealth management, as well as variable remuneration linked to improved contributions from Barra Hanley and also our Australian boutiques. Now, this was partially offset by simplification program benefits, which also helped to mitigate inflation-related cost pressures. Cost growth was also impacted by foreign exchange movements, albeit not as negatively as the prior six months. Looking ahead, we've improved our FY26 expense guidance, and it's now reduced to between 1% to 2%, down 100 to 200 basis points on the prior guidance provided. It is important to note, however, included in this guidance, is that expenses will continue to fluctuate depending on FX movements and interest rates. We've provided our currency assumptions in the footnotes to this slide. Moving now to cash flow. Free cash flow of $33.8 million for the half included $82.9 million in net cash receipts in the course of operations. There was a net increase in free cash flows in the half compared to the prior corresponding period. Borrowings did increase by $10 million over the period, but that was predominantly due to timing differences in drawings on our working capital facility relative to the upstreaming of dividends across our global operations. After paying dividends totaling $60.3 million and adjusting for timing on seed repayments and foreign currency movements, total cash at 31 December 2025 was $325.6 million. Moving now to the balance sheet. The balance sheet at 31 December 2025 remains robust and is supported by operating activities across our diverse sources of earnings. The majority of our cash is held for working capital, but also for regulatory capital purposes, predominantly in the United Kingdom. For greater clarity, we have also disaggregated the other financial assets in the balance sheet into three segments, seed capital, IIP balances, and a loan receivable. And by way of background, the IRP units is where Perpetual is hedging employee incentive obligations, and of course there is an offsetting item in the liability side of the balance sheet. And importantly, we have $150 million of surplus liquid funds available, of which the majority relates to undrawn lines of credit. Now moving on to one of these categories, seed capital. Our seed capital is deployed to support organic growth and product development. Capital is deployed selectively, recycled actively, and governed through a formal committee oversight process. The average holding period is approximately three years. We've included some case studies here to illustrate how seed capital can be used, whether it's to build early scale, launch strategies, develop track record and then recycle capital once external demand is established, or the sometimes difficult and more challenging part, to exit where scale is not achieved or commercialisation does not occur. Now finally, turning to dividends. The Board has declared an interim dividend of 59 cents per share for the half, which will be unfranked and paid on 7 April 2026. The interim dividend represents a UPAT payout ratio of 60% for the half, which is lower than the prior corresponding period where the payout ratio was set at 70%. Dividends are expected to remain unfranked in the second half of this financial year. We will, of course, continue to assess the appropriate payout levels within our stated range, taking into a number of factors into account, including our ability to frank. I'll now pass back to Bernd for some comments on the outlook.

Thanks, Suzanne. Before we move to questions, I want to spend some time talking about the progress that we've made on our strategy over the half. Thanks. Next slide. Great. Our strategy is aligned to three pillars, as you can see here on the page. Simplifying our business, delivering operational excellence, and investing for growth. We've made progress within each of these pillars over the half. Firstly, with Simplify. As I've already spoken to today, our simplification program has streamlined the group's operating model and delivered an additional $16 million in annualised savings for the half. Progress has also been made on our finance and transformation projects. Delivering on operational excellence. Our three businesses are now established as Focused, largely decentralized business lines with greater accountability for delivery and financial outcomes, supported by continued group oversight and governance. Additionally, we have delivered on our cost commitments, resulting in an improved expense guidance for 2026. Finally, as we discussed earlier today in Investing for Growth, we have supported the launch of new product innovation in asset management, with an example being the Perpetual Diversified Income Active ETF. A corporate trust business also completed the acquisition of IAM's term deposit broking business, increasing scale in markets, broking and fixed income areas. Corporate trusts will continue to look for additional capabilities that will help drive business growth. We have also progressed AI transformation initiatives, embedding AI into core workflows to enhance decision making, productivity and scalability across the business. These three pillars will remain the platform for execution for our business activity for the remainder of 2026. Now looking ahead, we have a clear and focused set of priorities. We'll continue to deliver on our cost reduction commitments. We'll retain our leadership position in corporate trust by investing in capability to drive further growth for that business. We'll continue to target investment in new products and capabilities across our asset management business. and will work to remove complexity to create a leaner, more efficient structure for the group. Thank you for listening this morning. Suzanne and I are now happy to take questions that you may have. I'll hand back over to Michelle, our operator, to manage these questions. Thanks, Michelle.

Thank you. If you have not yet joined the live audio queue, please do so now. by clicking on the Request to Speak button at the top of the broadcast window and following the instructions for your preferred connection method. I will introduce each caller by name and ask you to go ahead. You will then hear a beep indicating your microphone is live. Our first question comes from Elizabeth Milaitis from Macquarie. Please go ahead.

Good morning and thank you for taking my questions. The first one's just on the sale of the wealth division. If you could give a little more colour on, you know, why things are taking a little longer than perhaps we'd expected. There's also been press reports that the brand is potentially up for sale as part of that transaction. So, yeah, just a little more colour would be much appreciated. Thank you.

Sure, Liz. I'll start, maybe, Ms. M, Canadian. The... The sale, the process for the sale of Wobble has taken longer than I think the market would have liked. But I think to put it into context, I think it's important. Firstly, this is a business that we've owned, Perpetual's owned for 139 years, and it is intertwined in particular with the other businesses that we have, in particular Corporate Trust. And so if you think about the prior transaction that we contemplated, we were selling two businesses together to one buyer. And now we are selling one business to – the potential sort of progressing selling one business to one buyer. And we need to untangle – that business from the broader organisation to be able to do that. So there's an element here of negotiating a sale while also untangling the business to be able to do that. So it's actually quite a complex process to be able to do. And I think the one point that I'd like to reiterate that I have said in my formal remarks was that the board and I are very focused on delivering the best outcome for our shareholders, and so we're very focused on that. And so understanding the complexity that's in front of us, we're driving to get to an outcome of clarity for market, but also for our team and our clients as quickly as we can.

Yeah, and I think probably just the question of brand.

I'm sorry, your brand question. Sorry, I was focused, Liz, on the first bit. Really, we don't comment on media speculation, but when we thought about the sale process, brand was an important part of the consideration for us. Just probably leave it at that.

Okay, thank you. And then just the upgrade to the guidance for OPEX, so now 1% to 2% from 2% to 3%, it seems like most of that change is currency. Can I just confirm that? And then also secondly, I mean, just the rates in there look pretty conservative. So, you know, obviously we'll see how things progress over the next four months or so, but potential upside risk to that number as well just because of currency.

Yeah, Liz, you're spot on. And in fact, that was probably one of the big swing factors in the full year last year. Fair to say that probably has made me quite conservative as a CFO. So yes, I mean, FX is a big swing factor for us, and we've tried to capture that when we've provided the guidance. What I would say, though, is we're already two months into the second half, and there's a lot of things there which are still controllable costs. So I think That's given us the confidence to tighten the range and, you know, obviously the combination of us staying quite vigilant on the expense base and also some of the benefits coming through from the simplification program. You know, I'd like to think that, you know, we can comfortably deliver within the guidance we've given.

Our next question comes from Nigel Pitaway from Citi. Nigel, please go ahead.

Good morning. Just the first question on just on J.O. Hambro. And it seems as if, you know, sort of your aims there to restore it to its heritage strength is still being somewhat hampered by the net outflows from the international and global select strategies. So I was just wondering, do you feel you're any closer to being able to stem those outflows? Or, you know, is that something that we can expect, unfortunately, to go on for some time?

Hey Nigel, with JR Hambro, the select strategies, you're right, have still experienced outflows, so you're 100% correct there. What we're seeing is a real focus on client retention, in particular with a lot of the wholesale clients in the US, the team are very focused on that. I think what drives investment outflows or inflows is performance, right? And so performance there has still remained soft, and that makes that challenge a little bit harder. But what I would say on the other side of that, our other global strategies and our emerging market strategies in Joe Hambra have actually been receiving inflows as well. So you do see some of the offset there as well. But it remains a focus of ours. And then?

Okay, thank you for that. And then just, I mean, following up, those two strategies, the outflows from there seem to be sort of the main explanation as to why the revenue margin in asset management debt to performance fees sort of dipped quite a bit in the second half last year. There does seem to have been some partial recovery in that this half, despite those outflows continuing. So is there anything else going on within that revenue margin for asset management? I say stripping out performance fees. that sort of made it improve this half?

You're right. So the margin compression that we saw in the prior half was related to the outflows in select. But you're also seeing at the margin, you're seeing the asset mix is changing. And so we mentioned... You know, we touched on some of the strategies that we launched in the most recent half, and we've seen... we've seen those fixed income strategies, which are a lower basis point average relative to equities, where we've seen the inflow. So you do see some of it is in that, so it's not all in outflow. And we've also seen a pickup in some of the Barrow strategies as well. Yeah, and I think it's not just called out.

The way we report it includes performance fees, so if you're looking at kind of a regular life, yeah.

The next question is from Andre Stabnik from Morgan Stanley. Andre, please go ahead.

Good morning. Can I ask my first question around distribution efforts in U.S. and U.K.? Are you pleased with the progress there as you are in Australia, or what's the update on U.S. and U.K. European distribution efforts?

Sure. Andre, hi. And we highlighted the Australian distribution in this half because we've actually spoken about the global either in the prior half or the half before. I can't remember now. But I thought it was an opportunity given a lot of the work in the Australian – bringing the Australian teams together was really finalised. And so I wanted to highlight that. And, in fact, I think they've done a great job in delivery on coming together as a unified team and delivering – positive flows for the business. So I suppose that's the first point I suppose to explain why we put it in there for you to give you some context. And I also think the size of that team and our footprint is something that we don't always talk about and I think it's actually a great asset for the business. And so reflecting that I think is important. That team is far more advanced than our international distribution footprint. will be a fair assessment to make. So the work that we're doing with the team is continuing to drive that. So am I happy where it's at? I'm probably never going to be happy enough with where it's at from a distribution perspective. So I might say the Australian team, in case some of them are listening, have done a good job. There's still more that they can do. So I suppose we're focused on continuing to drive what we can on both on, I think, the market segment piece is important. So if I think about the US and the UK, I think a great example of some of the work that we've done was launching the Barrow-Hanley strategy in the UK, which was effectively a strategy we had in the US that there was a real appetite for that opportunity in the UK. And so the multi-boutique model allowed us to actually offer that in a different market that the Barrow team never would have been able to access had they not been part of the group. So I think a good fact point around that. the business strategy structure that we have. So an example of that. I think there's more we need to do in the intermediary space, wholesale space in the U.S., and it is a little bit hampered, to be honest, by some of the outflows we're seeing in the select strategy. But that's an area of focus that I can assure you the team are clearly focused on that. The other part to, I think, think about in the US, given you raised the US, is how that market is changing. And so active ETFs, you know, are clearly, while it's a small start, right, but active ETFs are garnering, you know, an outsized share of flow. And so us, and we've talked about it in the past, us having a footprint in the active ETF space in the US is going to be important for the future. And so, as I mentioned in my remarks earlier, We've made some steps there to go down the path of actually using a third-party provider. The reason we're doing that is a couple of folders. I think from a risk of execution perspective, we're taking some of the risk off the table by using a multi-series And so we're effectively using their scale to help us launch. It's quicker to market for us, so we don't have to spend all the time building and getting approvals. We can get to market more quickly. And then we can assess the success of that and the progress of that before we look to invest more heavily.

I hope that answers your question. Thank you. Thank you. Yeah, no, thanks so much. I can ask a second question. Just around the suit capital, 183 million of seed capital. Can you talk a little bit about how that's shaped the world over time, where you would like to see that number, and how many strategies might be behind that 183 million of seed capital?

Here you go. Yeah, to take that one. Thanks, Andre.

Yeah, look, it's... Suzanne is the chair of our seed committee, so you can take that.

Look, the thing is, to deal with one of your questions there, it is very diversified. We've got a lot of strategies that only required a relatively small amount of seed either to build the initial portfolio construction to build a track record. So, you know, we've got quite a few bets in there. There'd be more than sort of 20 capabilities that we've got seeded today. Also included in that number is investments in our CLO business via Barra Hanley. Now, those are obviously longer-term structures, so not liquid. So those ones have more duration to them. So I think the important thing there is we're quite focused on I think the size that we have deployed at the moment is appropriate, and obviously the discipline that we're very focused on is how do we recycle. It's quite easy putting money into funds. It's sometimes a lot harder at recycling. Or as I've sort of called out, if something isn't working, you know, and that may just be that, The market demand wasn't where you expected it to be. You have the discipline around closure and bringing that capital back. So I wouldn't see us looking to materially increase the pool that we have today. I think with what we've got and with some of the recycling we're starting to think about, we'll be able to continue to support some of the innovation and product development that Bern's spoken about.

The next question is from Lafatani Satoru from MST. Lafatani, please go ahead.

I appreciate the opportunity to ask some questions. Can I start off with the wealth management business and sale process? $14 million spent in the last half is quite a lot of money for a business you may not sell in addition to the $5 million you spent the half before. Can you talk us through exactly what that money is being spent on and have you got a better idea on potential stranded group costs and further separation costs if you are successful?

Sure, Olaf. Good morning. If you look at that $14 million pre-tax number, there's obviously legal and other costs in there, but I think the larger part of that is around actually the separation of the business. And which, to be honest, as part of our simplification strategy, we would do anyway. So there's a part there where we are... So bringing the team into a separate perimeter and systems and other sorts of things, the technology that we're implementing, it's in that number. But you're right, $14 million is not an insignificant number. It's one that we are keeping a very close eye on, in addition to the five you mentioned from the prior half.

Well, yeah, and I think it's a good point, Laf, because I think some of that is obviously cost that we may otherwise have incurred, but maybe in a slightly more accelerated timeframe with some of the work we're doing around putting more autonomy into each of our business lines. The stranded cost obviously is something I'm very focused on, and I would say we've already had a mind to that through the simplification program. So, you know, wherever we end up with, you know, the sale process, I'm pretty confident that those will be relatively immaterial. Now, that does require us to do some more work, just as we've done across the rest of the organisation. But, you know, that's not something that probably taxes my mind that much. The other part that... you know, around what will it cost if we are successful with the sale, I think we're going to have to progress a little bit further with that process to be able to articulate that in a way that I wouldn't be giving you a misleading number. But I guess it's fair to say we have had a reasonable amount of spend already. So, you know, that's a sunk cost, which we can leverage if there is a sale that proceeds.

I can't clarify, and I understand that there are costs that you sort of can move around, but, you know, one of the criticisms has been, you know, you had the strategic review and simplification cost program previously that was over $130 million. Now you've got a new simplification program, which is $60 million, and so this is even separate to that, right? This wealth management $20 million spend is another sort of one-off program that is being kept off and separated from the underlying cost. And so this seems to be a lack of consistency. So on the one hand, you've got one-off costs for your tax. You've reduced your tax cost in the underlying number this period, but it's from one-off capital gains losses that you would typically strip out, but you've then stripped out a lot of costs from your wealth business, which you still have, and you've also stripped out still $6 million from your Pendle business. So I'm just not sure how we should reconcile and think about one-off costs going forward.

Thanks, Laf. Just one point of clarity, and sorry if I wasn't clear before. Some of the impact that we've had in the prior period around the deferred tax asset wasn't actually a capital gain loss. We had a deferred tax asset that was sitting there, which was a timing part. We took a view around our Singapore business, and that was reversed. So it's just slightly different, and sorry if I didn't clarify it. Look, I think we've definitely heard from the market views around significant items, and I made a commitment at the last half that we would start to look at that. I can't change some of the history, but I think I have been very focused and working with both the executive team and the board around how we do have more discipline as to what gets classified and as a significant item. And I think, you know, there will be items from time to time and, you know, the potential sale of the wealth business is one of them, which I think if we don't break that out and provide some clarity around it, it is going to be very hard for people to think about the ongoing expense base. So I will say we've heard you. We've heard what the market has given us as feedback, and we're starting that process. And I think by the time we come back at 30 June, I think we can be much clearer as to what you should expect on a go forward in terms of the classifications for significant items.

Got it. But just to be clear, so the wealth management business, some of that is actually BAU. That's in that perimeter that's been separated. They're teams of people headcount that are part of the wealth business that are being excluded from the underlying number. And that tax piece, that Singaporean thing still, whether it's a CGT thing or not, that's one-off in nature.

Yes, you're correct on the one-off. That's right. It's not people in the wealth business. We do have a team at the moment that are assisting us with the separation process, and so that separate team makes up some of that cost. So I wouldn't categorise this as BAU spend. It is something that we're doing over and above. Obviously, if this was a BAU process, we would take a lot longer around some of these separation activities. So the fact is, as Bern said, we're trying to separate people two businesses that have operated together quite closely for close to 140 years. There's a lot of unwinding to do, and some of that's quite technical in nature around the co-sharing of licences and operations that have existed for a long time.

Got it. And just finally, so can you just clarify why the one-off tax gain is included in underlying, but the one-off BT Pendle-related expense is still being excluded from underlying?

So the Pendle one, I think, and you'll have to forgive me if I haven't got all of the history, but I understand at the time the Pendle transaction occurred, it was indicated that it would take approximately three years for those costs. In that program, as I'm aware, all of the integration work is completed, but there is still a bit of a tail around some of the incentive arrangements that is still coming through in that number. So... That won't be there from FY27, which is what I called out. As with the tax, I guess what we're trying to do is mirror both above and below the line. So in terms of the one-offs, those were highlighted previously in significant items. I guess it's an open call as to whether you think they're material enough to call out. But given the movement that also pushed us below what we would expect our effective tax rate to be on a medium-term basis, which, as I said, is around the sort of We want to just call it out.

Thank you. There are no further questions. I'll now hand back to Bernard Riley.

Thank you, Michelle, and thank you, everyone, for joining us on the call today for our update on our first half of 26 results. Thank you.