Class Pty Limited (HUB) Earnings Call Transcript & Summary

Good morning, everyone. Welcome, and thank you for coming to our presentation at short notice and what I hope is a very positive and certainly a very important day for the shareholders of HUB24 and Class Limited. As you'd be aware, this morning, we've announced on the Australian Stock Exchange the proposed transaction to acquire 100% of the shares in Class Limited by HUB24 as part of the Scheme Implementation Deed, which will be a Scheme of Arrangement between Class and their shareholders. So that hopefully will be successful and be entered into and finalized around about February next year. But today, we'd like to outline some of the key details of the proposal. With me, I've got Jason Entwistle, our Director of Strategic Development; and Kitrina Shanahan, who are on hand for any questions at the end of the presentation. I will, of course, be walking through the published pack and we will be -- as we will be sticking to publicly information that's available in answering our questions as well. So if I move on to the first slide there. I've got to say at the outset -- at the transaction overview slide, I am sorry. At the outset, I'm really, really excited and want to comment on the strong alignment of purpose of both companies. At HUB24, we believe in empowering better financial futures together, and it certainly is a statement that resonates with how Class operates as a business. Class is a great business. It is an expert in establishing, managing and administering wealth management vehicles, self-managed super funds, trusts and so forth, documentation. The business is about simplification, automation and connectivity, which certainly resonates with the HUB24 purpose and vision about being open architecture and connected and really making life better and enabling an advice and an industry that really looks after clients through professional intermediaries and advisers. So the transaction will bring together 2 market-leading wealth technology businesses. But my overview, and I'll talk through the slide, we've entered into a binding Scheme Implementation Deed. Those documents were exchanged this morning, and it's proposed that HUB will acquire 100% of the shares in Class by way of a Scheme of Arrangement. The Board of Directors of Class have unanimously recommended that their shareholders accept the offer in the absence of any superior proposal and subject to an independent expert's report that the scheme is in the best interest of Class shareholders. The consideration for the scheme for 100% of Class' ordinary shares is 1 HUB24 ordinary share for 11 class ordinary shares plus $0.10 per Class ordinary share in cash. And the implied total consideration represents a premium of approximately 52.8% or 53% premium based on the 1-month VWAP share price for HUB24 and Class up to the 15th of October 2021. As I said, these are 2 highly complementary businesses. There is strong alignment with culture and values. And both companies are strategically focused on really delivering solutions that support professional advisers, that being financial advisers, accountants, lawyers, self-managed super fund administrators to implement investment, tax and strategic advice to help Australian secure their future. There are opportunities for growth, delivering increased efficiency for both assets of customers and increased capability for existing and new customers as we move forward. Class will operate within the HUB24 Group as a business unit on its own with its own leadership team and under the exceptional Class brands that currently exists with continued investment for Class and the team to deliver on its multiproduct software-as-a-service strategy. The acquisition materially accelerates our own strategy, our platform of the future strategy, which is about HUB24 disrupting itself and leading change in wealth management by being the leader of integrated wealth reporting and administration services moving forward. The deal does provide compelling shareholder value with 8% earnings per share accretive in financial year '23, and that excludes revenue synergies that would arise from the capabilities and us working together with Class on future strategies. And that also excludes one-off implementation costs. It also diversifies revenue streams for both businesses. In terms of timing, we expect to complete the arrangement in late February '22. The scheme is, of course, subject to Supreme Court approval and Class shareholder approvals. And the Scheme Implementation Deed does include the customary exclusivity and deal protections in favor of HUB24, including provisions for break fee and matching rights. Moving on to the next slide, a little bit about Class. And you can see on the right-hand side there we've got some grabs from their own published materials and some of the awards that Class has won. It is a market-leading SMSF administration business -- software provider with 29% market share -- addressable market for self-managed super fund administration. The team at Class have been embarking on a 3-year reimagination strategy and transformation that's underway to expand from their core history of SMSF administration into a multiproduct software-as-a-service provider. So on the right-hand side at the bottom, you can see that Class has the Class Super product; Class Portfolio for portfolio reporting; Class Trust for looking after trust, administering and reporting on trust; and NowInfinity, which is a document management and compliance service business that really is market-leading in straight-through processing. So all in all, Class is evolving as a multiproduct software-as-a-service provider to the wealth industry. And you can see the alignment there through different wealth professionals, accountants, SMSF admin, investment advisers and so forth about how those products are taken to market. Class, of course, is award winning. They have won the SMSF Adviser Awards as Software Provider of the Year for the last 5 years, and in 2021, Administration Platform of the Year. And from the Australian Digital Technology Awards, Established Business of the Year and Mid-Range Business of the Year in 2021. So great to be working together and planning to work with the Class team, which is an award-winning business as is HUB24, both market-leading technology businesses in the wealth management space and a great adjacency, where we have common customers working in the same value chain with slightly different purposes, where there's a great opportunity to work with each other, to share capability across our customer bases, but also make a better outcome and a better process for clients alike. There is ongoing investment in technology development to enhance customer propositions and Class' recent acquisitions, NowInfinity, Smartcorp, ReckonDocs and Topdocs have helped them actually move towards being that multiproduct software-as-a-service provider. Class has a growing customer base that's over 7,700 customers representing largely practices: accounting, financial, administrators and institutions. And they have a team of 235 people, including 88 IT staff. So combined with HUB, that will bring us to around about 630, 650 employees in the Class group should the scheme be approved. And Class, of course, has strong underlying financial performance with an opportunity for further growth. And we'll look at that on the next slide. Class has attractive fundamentals for the HUB24 Group for bringing the businesses together. And the reimagination strategy of Class under the leadership of their team and Andrew Russell has been delivering. Their revenue growth over the last 3 years is a compound annual growth rate of 18% with $54.9 million -- or just under $55 million revenue for FY '21 and year-on-year growth of 25%. And that's organic and acquisitory growth. Their EBITDA has also had a strong CAGR of 10% over the past 3 years. The $21 million for FY '21 does include writing back -- or adjustment for write-down of the Philo investment, but it's $21 million EBITDA when taken into account that adjustment. And they've had 4x customer growth over the last 4 years on the right-hand side, and that's a unique customers. Class, of course, offers multiple products to some of their customers, but this is the unique relationships they have in the marketplace. The pro forma number there for FY '22 is Class' FY '21 customer base plus the addition of the new customers with their acquisition of Topdocs that occurred in August this year. So it's a pro forma adding those together. Moving on to the strategic rationale. The combined businesses will benefit from increased scale capabilities, product offering, distribution reach and technology resources. As you know, HUB24 intends to and is leading the industry as the best provider of integrated platforms, technology and data solutions, and there's a real alignment here with this proposed acquisition. It is about delivering customer value and growth. It is about continuing to build the platform of the future and innovating. And it is about collaborating to shape the future of the wealth industry, and certainly aligns to our purpose. So in the chart there, it aligns to our purpose of a better financial future and does accelerate our strategies of market leadership. It delivers growth opportunities by combining the capabilities of both businesses and creates efficiency, and hopefully, new propositions for our customers. So really a great alignment there, I think, in terms of the opportunity to deliver and delight our customers jointly moving ahead. Shareholder value there as well through diversification of revenue and opportunities for growth and the development of a compelling and unique competitive advantage. And the combined businesses will lead the market with a track record of innovation, and of course, capacity and commitment for ongoing investment as well. A little bit of a snapshot of the 2 businesses side-by-side and how they're complementary on the next slide. And you can see the product suite there. For most people on the call, you'd be well aware of HUB's product suite being custodial administration platforms, HUB24 Xplore; and the noncustody platforms, our Portfolio Administration and Reporting Services and certainly our HUBconnect data and technology solutions business. Class have their SMSF administration, Class Super product set; Class Trust for administering trust; and their doc tech businesses are NowInfinity; and their portfolio reporting services, Class Portfolio. 3,200 advisers for HUB, 7,000 unique customers for Class. And the client segments are there as well with a lot of overlap. But Class also having great penetration with accountants and SMSF trustees and administrators as well. One of the neat things about this is HUB24 is absolutely about data connectivity and integration, data as a service. And we think that's the future of the platform industry, being able to integrate multiple solutions in the way we've conducted ourselves on our journey so far and to really be able to partner with Class that have 250 integrations when we have 96. They're a market leader in that space. It really creates a powerful combination for us moving ahead to execute on strategy. Of course, the industry recognition is there as well. I've already mentioned the Class awards, and most of you are aware of Hub's track record for 5 years running: its best platform managed accounts functionality, best platform overall this year and ranked #1 by advisers in Wealth Insights this year as well. So 2 market-leading, complementary businesses coming together with a tight adjacency and some real opportunities to make a difference in this industry. On the next slide, we've got an outline of some benefits for Class. For Class customers, we will continue to invest and support the Class business in investing in its own growth opportunities and looking after their clients. There's an opportunity to leverage our capabilities and increase efficiency, as I said. Class employees will join a growing our ASX 200 company being HUB24 that is committed to market leadership. Both of us, combined, have a track record of innovation led by technology and a capacity for continued investment. We plan for Class to operate as a business unit within HUB24 under its own leadership team and under the Class brands. They certainly have done a great job to date, and we certainly want to facilitate the growth of that business and work collaboratively on joint projects while letting the business run in its own way to continue chasing its opportunities and deliver value to HUB24 shareholders as a whole and to the Class customers. And hopefully -- and there certainly will be increased career opportunities within the group with over 600 employees for both Class and HUB employees, further opportunities for development and growth. For Class shareholders, there's a significant premium to recent trading. There's an opportunity for shareholders to benefit from the greater scale, earnings growth and liquidity of HUB24 being an ASX 200 company with our growth profile. And there's certainly the ability to leverage our capability as a group and our distribution footprint and relationships for Class to grow market share and for shareholders to benefit from that. Looking at the next slide, a post-acquisition snapshot and we've got on this slide the pre-acquisition revenue for HUB24 and Class, HUB having $108 million revenue FY '21, made up of platform fees at 94% of our revenue in general and Tech Solutions the other 6%. Looking at Class, about $55 million of revenue, 87% of it being software subscriptions, 9% being document sales and 4% other. When you bring those together on a pro forma basis, you can see the diversification there on the right-hand side with about $163 million of revenue based on FY '21, 62% of it being platform fees and 30% of it being software subscription and the other components are there as well on the slide. So in summary, before we move to some questions, it's a highly complementary business, Class with aligned expertise, culture and values. The proposed acquisition certainly will accelerate HUB24's current strategies and Class' current strategies for ongoing industry leadership. It does deliver compelling value for both sets of shareholders with an opportunity to leverage combined capability to increase value and efficiency and create propositions for new and existing customers and increase the scale and diversifies revenue for both businesses. As I said, it's 8% earnings per share accretive in FY '23 for HUB24 and that excludes the revenue opportunities that we believe will arise from joint growth strategies and collaboration. And that 8% is based on expected cost synergies of around about $2 million per annum, transaction costs of $4 million to $5 million in FY '22. And implementation costs of $6 million incurred over '22 and '23. Last slide, the indicative timetable is outlined on the next slide. Early to mid-December, we expect to have a first court hearing in the Supreme Court. Scheme booklet will be dispatched early to mid-December as well to Class shareholders. Mid to late Jan Class shareholder scheme meeting. Second court hearing early Feb. Effective date, if all goes well, in February and mid to late February with an implementation. So hopefully, that gives you a snapshot of what we think is a very exciting transaction and opportunity for Class and HUB24 to come together and continue to lead the market and create value for our customers and shareholders. Happy to hand over for questions. And as I said earlier, I do have our Chief Financial Officer, Kitrina Shanahan, here with me as well; and Jason Entwistle, our Director of Strategic Development, happy to take some questions.

[Operator Instructions] Your first question comes from Simon Fitzgerald with E&P.

I'll just ask 2 today. The first one I'm interested to know about. If you were to sort of build a business of this type, how much investment would it cost? And how long would it take you to get to market? I'm interested to know, is this a fast way to sort of get to market with this sort of customer service offering.

I'll jump in there first. Look, I think if you look at the time it's taken Class to get to where they are, it's absolutely been a dedicated journey to get there and a strong investment with great expertise. Certainly, from our perspective, we're working with a business that has an established footprint and that makes a lot of sense for us as shareholders to bring those together and accelerate the strategy. As for how much it would cost, I really couldn't comment, but I certainly don't think it would be easy in terms of time and capability and so it would take a lot of time to get an established presence and the market share that Class so admirably has gathered. I don't know, Jason, if you want to comment on.

Yes. Look, like us, this group has 10 to 15 years of some development of -- it's a very extensive, fully featured system, very targeted to its space and building that distribution over that period. So I couldn't even imagine us starting this and thinking that we could become a leader in that space in anything less than that sort of time frame. It's hard.

So we're absolutely -- we're not shy to build, but also at the same time collaborating and integrating is a very, very sensible and strategic approach. And I think bringing 2 market leaders together is a great opportunity.

Yes. That's very clear. And then the second question just relates to sort of SMSF offering. I wasn't sort of aware that it was such a growth area to begin with. But is there something more to this acquisition that I'm not thinking about properly like in terms of access to a bunch of new clients that you don't have current -- that aren't current customers that you could offer a lot of different services to? I mean is it a lot more than just having access to SMSFs and being able to offer those sort of administrative services?

Jason, do you want to jump in?

Yes. Simon, Class just doesn't do only SMSF. It's what it's known for. They're moving into adjacencies like the trust -- family trust and unit trust space, and they've got the documents business. So it's not the only thing they do. But that market, you're right, it hasn't been growing substantially of late, the SMSF market. But that doesn't mean it won't in the future, and in fact, the latest June quarter was probably the best quarter in tax data that you can see for the last 5 years. But what we really believe about this is the role they play is a part of the implementation of advice. And so Andrew mentioned that before: strategic device, tax advice and investment advice. And if you think about what we do, we are also implementers of advice at the end of the day. So we definitely see synergies along that process of implementing advice between the 2 firms, and we'd like to pursue that. We also actually share a number of customers. We believe around about 20% of our client base are Class users. So we will be working on making that process a whole lot more efficient.

Simon, if I might just add to that. Certainly, the trend in SMSF establishments and discontinuations changed as a result of the Royal Commission, but also as people mature. I think when you step back and look at that with the way the Australian regulatory framework is and the fact that young people today are going to be in the superannuation system for far longer periods than perhaps someone like me and the fact that their balances will grow over time, I do see clearly an opportunity for self-managed super to resonate with more and more people moving ahead. And I think that, that's an opportunity for growth when you think about the demographics and the way the framework is. So whilst you might have seen that change over the last few years, as Jason said, strong quarter in June. Establishments are up across the board for SMSF. But I think it will resonate more and more with people coming through the superannuation system who do have balances and do want choice and flexibility. Technology can deliver great outcomes for them. I think it's a very compelling alternative to retail, public and industry funds as those customers grow their balance.

Your next question comes from Nick McGarrigle with Barrenjoey.

Just one from me. I guess slide 6 talked about the data integration, 96 at HUB. That potentially expedites some of the developments that you've been pushing through on the noncustody and the HUBconnect side?

Sure. I'll hand over to Jason for that one, although I have to say we used to think 96 was a large number. We're very excited about bringing those together.

Nick, you'd know that we're quite passionate about the data strategy we have about how the platform of the future will be underpinned by really a data platform. And so our acquisition of Agility a few years ago was part of our journey along this path, and we absolutely see Class as a leader in the space in the breadth of interfaces they have, the number of clients they're serving the data to and what they do with that data. So we see that as a core asset of Class and a really interesting thing that we'd like to develop together.

And then maybe just a question on can you walk me through maybe a customer journey? In a perfect state of the world, it's probably still a couple of years away, but what does the business look like together? How could the customer journey be improved in that sort of the platform of the future vision? What does Class add to that workflow for HUB in terms of expediting that? So maybe just the customer journey, if you can walk through that.

If you think about it, I mentioned before we share some customers. At some point, those customers -- and I'm talking about advisers accountants, they are recommending to their clients strategic advice around tax structures, whether that's companies, trusts, SMSFs or individual accounts. They're giving them -- so there's that strategic advice, the tax advice that goes along with that and ultimately the investment advice about where to invest. Together, Class and us with the documents business, corporate compliance, the administration of vehicles like SMSFs and trust and then the platform that takes on the portfolio reporting of that whole of wealth plus the financial services components that sit within that, we think that's a really compelling offer to take to advisers in the future. We're not there today, but in the future, take that as an end-to-end implementation of advice, wealth advice. So that's certainly a vision that we have. That will take time to realize.

Part of it might be, Nick, when you think about an adviser who's talking to a customer and they're going to establish these vehicles, imagine being able to do that in one step. And so working with the accountant or the solicitor and the financial adviser and being able to collaborate and establish trust and deeds and companies and platform accounts all at once with an integrated solution, that's certainly part of the vision.

Now having said that, we will absolutely remain open architecture. And Class, we want it to get [indiscernible] the leader it is in its space exactly as it is and actually leverage the capability that HUB has to even extend the leadership in that space.

And I mean, how do you see that, the sort of bundled platform and administration offering coming together? Because obviously, Class is a dollars per account, you're usually at dollars per account value. How do you see that model evolving for common clients?

Nick, we haven't really thought that much about it. But obviously, this gives us optionality into the future when we are looking at how we implement, how we integrate and ultimately how we price and offer. We will have lots of options and I think that puts us in a really strong position.

We'll certainly be looking at that as we get nearer to approval. And certainly, if the scheme is approved, we'd be welcoming the opportunity to work with the Class team strategic on some of those opportunities. But they're on top of 2 great businesses already having a lot of organic opportunities and wanting to make sure our current strategies are implemented. So we absolutely don't want to distract those either.

Sure. One last one for me. Sorry, Andrew, you know I like to ask a lot of questions. Just in terms of synergies, the accretion that you flagged for '23, what sort of profit number is that based on? Is that a pro forma for the Class guidance for FY '22 and you're rolling that forward to '23 and assessing the accretion on that basis? And then the $2 million of synergies, is there anything additional to that, that you might be able to save on the CapEx side because, obviously, Class does take a fair bit of development through the cash flow statement.

Very tricky questions. Thank you very much, Nick. But Kitrina will pick those up for you.

Thanks, Nick. Yes. So it's based on the consensus for HUB and Class for full year '23 and then adding the cost synergies that we've flagged of about $2 million and the shares that we need to issue, which is about 11.5 million shares, that's how you get to the 8% EPS accretion.

Yes. And then maybe just how you see that. I mean if we look at it on a free cash flow basis, how should we think about the CapEx needs for what Class is spending at the moment? Is there synergy across the actual development CapEx on the cash flow side?

There's certainly some commonality in the data space and the integration space, which we get to explore that may yield that, but it's not certainly something we've factored in necessarily into the published data, and we'll stick to that data for today. But there's some commonality and there are some opportunities to either accelerate that, which would mean that we'd still have the same cash flow needs or to look at that differently. So something we'll be able to comment on down the track. But there are other possibilities, but it's not included in the numbers we've got here.

Yes. Correct. That's exactly right. And so the investment that Class would normally do and the Class have flagged to the market previously, we're supporting that and that's completely in the numbers.

Your next question comes from Bob Chen with JPMorgan.

Just is it possible to elaborate a little bit more on the combined sort of growth opportunities across the businesses? I mean I think you sort of touched on the sort of SMSF market, seeing more account creation in June. But like in terms of the ability to sort of cross-sell across the distribution channels, like what does that sort of look like between the combined business.

Yes. Look, we have -- look, the reality is we haven't delved really deeply into that and it's a bit early to be commenting on what that strategy may exactly look like. But we're just looking at the fact that we're both in the same space, but solving a different part of the problem. As I mentioned before, that's the implementation of advice that we're really looking at. So we're not a CRM like a Salesforce. We're not a modeling tool like an Xplan. We're not an accounting package like a Xero, but both of us deal with the implementation of wealth advice. And so we see a business with a similar heritage to HUB, very culturally aligned. And while we have different customer bases in the main, we do have some real crossover as well. So we'll be looking into that more deeply as time goes on. And obviously, assuming it's successful, to absolutely work out. What's -- how can we deliver a better solution to that customer base? So as Andrew sort of mentioned, a 1-button click to implement the whole thing and just make their lives easier. We've talked about these before, making advice more efficient, lowering the cost of advice, really supporting that advice channel. And that's not just financial advice. We're looking at tax advice, strategic advice, other professional advisers in that chain.

I think, Bob, to round it off, and I think you and I are catching up later this week. But to round it off, the way that HUB has developed and invested previously in terms of creating what I call utility and benefits for advisers has delivered flows to our platform. We are the market-leading platform. We continue to do that. So more of the same here if you like. The ability it brings to make a differentiator and to create value for customers will drive, hopefully, additional flows to the platform as well as having the opportunities to leverage multiple customer bases. So I think in itself, it actually increases our competitive position. And when we do what we usually do, which is create great outcomes and streamline and build that integration, I think it will be pleasantly taken up by the market and will increase the ease in which advisers can look after their customers. And quite frankly, that's what it's about. It's about helping advisers get back to business, helping advisers look after their clients and anything we can do to streamline that I hope will be welcomed by the market.

Okay. Great. And then just in terms of -- I mean it looks like historically Class or more recently has been pretty acquisitive as well and yourself as well in HUB. I mean what does that sort of acquisition pipeline now look like post this acquisition? And even with the Class business, is there further opportunities to add more capability through acquisitions to that Class business?

Look, we've both been busy and I think that we've got a track record of integration and delivering these type of transactions. Look, we're always open to looking for opportunities in terms of a pipeline sort of question that one can answer really other than we're very selective. If we are going to do an acquisition, it has to make sense for our customers and shareholders and it has to be done in a way that we don't drop the ball on our current business. We're very fortunate to have such strong organic growth. So we don't need to grow by acquisition. But we're really excited and interested in how you can take different components, product capability, technology capability, and bring them together. So when you look at the acquisitions that HUB's done in the past, it has been about monetizing or looking at capability that's good for us, our customers and shareholders. We still have that attitude, and we're still alive and kicking in terms of being a participant in the market, but not at any cost. So we'll knuckle down and we'll work on this and we'll continue to work on Xplore integration that's going really well and we'll keep our eyes open. But it has to make sense for us. So that's probably the best comment I can make. And I imagine Class will be in the same position, but that's something for them to comment on at this stage and not for us. We don't own the business at this stage. So maybe something we can talk about next year if the scheme is approved.

Your next question comes from Nic Burgess with Ord Minnett.

I think most of my questions have been answered. Just a little bit on the costs and the sort of back office infrastructure. So you've said that Class will be run as a separate business unit. Is the ultimate objective to integrate from a technology perspective or that's likely to be separate from here on in, forever?

Well, we have very different product sets, although they align and integrate. So we will certainly integrate, but there's not necessarily a need to rationalize in that sense. So they have a unique proposition or a new product set that they will continue to develop as do we. What we'll do is we'll try and hook those together in the best way. But there's not a plan to rationalize or smash it all together. We absolutely want them to run hard at their target marketplace and us as well. And then over the top of that, jointly collaborate. Jason, any comments from you on that?

Yes. No, that's right. I think there are some obvious things. We're both moving into cloud infrastructure and so some of those really deep infrastructural things. I assume that we will align -- it would make a lot of sense for us to align our path there. But the face to the market, if you like, will be separately branded. And while we want to integrate and make it seamless, we do, do different things. So we're not going to tinker with that too much.

Okay. And just maybe a question for Kitrina. So that $2 million of synergies is costing $6 million, which seems perhaps a little higher than normal. So what's the nature of the $2 million synergies and why perhaps they're costing a little bit more than you might otherwise expect?

Yes. Thanks, Nick. So the cost synergies, like Andrew and Jason said, it's -- we're not looking at integrating or simplifying too many of the business units. So it's all to do with the corporate. So there's insurance savings, it won't be ASX-listed company. So it will be listed company savings, Board savings, et cetera. There's an open CFO role at the moment that wouldn't necessarily need a pricing. So that's how the $2 million comes about. And then, yes, it's a good observation on the $6 million, probably just seem high if we're not doing too much integration. But included in that is things like runoff insurance, some retention, some property consolidation and fit-outs, et cetera, legal costs. So it's -- there's probably an element of -- we'll need to see over '22, '23, whether implementation costs do land. But at the moment, we've put those in just as a placeholder to give us room.

Yet in doing that we get the 8% accretive, excluding revenue synergies. So it's a good outcome on that basis with those numbers.

Correct.

Your next question comes from Scott Hudson with MST.

I was wondering, Jason, if you could just comment on Class' sort of portfolio reporting and admin capabilities relative to other offerings in the market?

Yes. Sure. So there's actually not many groups in the market that have a portfolio of tax engine, if you like, that covers the whole gamut of a client's portfolio. So obviously, every platform like us, we have a tax engine, but it only deals with what's contained within the custody platform in general. So Class is in a different league in that they have a tax engine that covers the entire wealth situation of the client. And so that's definitely something that we [ covet ]. And we will -- our view is we will be able to purpose that for our own purposes with the PARS type services that we run. And today, Class is a software-as-a-service provider. They don't do the administration. They support a lot of administrators. And we're an administrator. So I think there's a natural complement there in what we can do around that. And they are a leader in the space. So that type of technology underpins the SMSF product they have. They also have a [ PARS ] portfolio. Now it hasn't had a lot of market penetration and maybe platforms like us have been a bit of a stumbling block for them, but I think, together, we'll have a very compelling offer.

That's great. And then, Andrew, maybe are you able to comment around the trends you're seeing, I guess, in the different client segments and I guess how that potentially underpins your investment in Class?

Look, I certainly think if you think about clients think about the advisory segment, advisers are more and more dealing with, generally because of demand, high net worth advisers -- or clients or larger balance clients, which plays very nicely into SMSFs. They're also looking for simplicity. And so the trends are about efficiency, simplicity, choice and so forth and that's no different to other conversations. And I think if we deliver on this, we're actually playing to that. And hopefully, the solution resonates to a broader marketplace. So this is -- I just think it's consistent, Scott, in that regard. There is demand there. We believe, as I said, SMSFs should grow and certainly the services should grow given the way the Australian social and regulatory framework works for superannuation. There's certainly a lot of runway there for younger and younger people who are getting more articulate, who are thinking about these sort of things. So what we're seeing is in the marketplace, typically, clients or customers are getting advice in their late 40s in the run-up to retirement. That's changing. That demographic is changing. That shift is there, and I think this plays very nicely to that as well when you think about it holistically. In fact, Scott, if you look at the latest ATO data, the #1 demographic for the establishment of new SMSFs was for 35- to 40-year olds. And so we're of the view that SMSFs and other wealth vehicles like this have much more application to the market if you can make it easy.

Your next question comes from Kieren Chidgey with Jarden.

Most of my questions have been answered. I just had 2 follow-ups, firstly, just around the cost synergies you talked about. Kitrina, do you see potential to expand and go deeper over the medium term in terms of synergies? I mean they look fairly superficial in terms of the ones you mentioned at the moment in terms of sort of listed company fees and sort of the CFO role. Are there other benefits in terms of property and footprint sort of vendor consolidation as well?

Yes. I mean there very well could be, Kieren. So obviously, we haven't looked at all the different commonality across the vendors and absolutely being a bigger group, being a bigger company, would that give us some a leg up there in negotiating some of those? Very potentially, but we haven't baked over into the EPS synergies at the moment. And if the scheme is approved and then once the companies are sort of together and operating effectively, we may look at that in the future.

If we can, we will, but we won't do that at the cost of growing the business or executing strategy and growth. But absolutely, if there are further synergies there that makes sense, we'll certainly take those.

Great. And my second sort of question, again, sort of more of a follow-up. Andrew, when you think about sort of the medium-term revenue synergy opportunities and sort of you clearly said you want to remain open architecture, particularly from a class point of view. How do you balance sort of pursuing those opportunities between the 2 groups with sort of still maintaining that open architecture, particularly for the Class client? Is it a matter of sort of just leading, I guess, in terms of sort of the integration and therefore benefiting from a flow point of view ahead of peers? Or will there be functionality you think that sort of will be unique to HUB as a result of sort of the integration?

Look, I think it's no different to our approach currently with multiple providers and collaborators in different parts of the value chain in that we work with multiple desktop advice solutions, multiple SMSF providers now and the market dictates that and that needs to work and there's a base level of functionality that's required. And so that will be no different. And in actual fact, we're absolutely committed to supporting and enhancing the value proposition across all of those. There are opportunities to perhaps enhance that even further or differently with Class that I hope results in a different flow pattern for HUB24, but not at the cost of other clients and at the cost of other integration. And we've always been about that. We've always been open architecture even with previous ownership of Paragem and a licensee. We've demonstrated that quite clearly that this is about building best-of-breed solutions, but also working as an industry participant and providing choice and flexibility. We don't want to dictate to advisers or licensees how they work. They need to be free under best interest to choose the best solutions. The challenge for us is to maintain and build a best solution at the same time working across the industry. So there will be a balancing act there, but I don't think it will be difficult. We've got a track record of working that way. Jason, I don't have any further comment on that. But...

Yes. Look, it's a similar issue to what we've had with Agility over the years, where they do support a number of our competitors or groups who would like to be competitive and that's really been no issue for us, as Andrew highlighted.

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

Thank you, again, everyone, for coming along and for the great questions. We really are excited about what we've announced today. It will be a very busy day here at HUB. But hopefully, you can see the rationale and understand what we're doing from a strategy point of view. If you do have further inquiries or questions, get through to us in the usual way. Having said that, in summary, look, we think it's a highly complementary businesses, as I said. There's a really, really strong alignment in terms of what we do in different parts of a marketplace, but with a strong adjacency there. And so it really makes a lot of sense from our perspective and provides benefits for shareholders, customers and staff of both businesses. So hopefully, today, we've given you a great snapshot of what we intend to do. There's more to happen over the next few weeks, and we'll certainly keep the market informed as that occurs. But thank you again for tuning in and hope to see you shortly.