EQT Holdings Limited (EQT) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to EQT Holdings' Full Year Results to 30 June 2024. I'm Mick O'Brien. I'm the Managing Director of the company. I'm here with Johanna Platt, our new Chief Financial Officer. Welcome, [ Jo ]. Jo has been at EQT not 5 weeks yet. And as a reminder, Philip Gentry stepped down from that position in June, following, I think, 17 of these releases. So thanks for joining me, Jo. I've also got with me, Travis Goudie, who's been ably acting as our Chief Financial Officer for the last 3 months. So thanks, Travis, for helping us on this presentation. So today's agenda for this morning, I'm going to give you an overview of the '24 year. I'm then going to hand over to Jo to talk through the financials in some detail, then I'm going to come back and just give you a quick update on strategy and outlook. And then we're going to take questions at the end of the session. So let's jump into an overview of FY '24. So the headline results. First, I'd like to say it's been a big year for Equity Trustees. We've spent a lot of time integrating the AET acquisition that we acquired in November '22. We've got a range of technology developments well and truly advanced through the course of the year, and we've been onboarding a significant number of new clients, and there's been some market assistance in these results as well. We're just starting left-hand side there, the funds under management, administration and supervision, which we call FUMAS, is the key revenue driver of the business. And you can see it's up there at $202.8 billion. So a 26.7% increase, that's up $42 billion through the course of the financial year. Revenue is up 23.1% to $174 million. A great result. Net profit after tax, up 10%. And on an underlying basis, net profit after tax was $37.9 million, up 13.8%. So very solid increases. And Jo will cover in some detail the difference between the statutory result and what we're describing there as the underlying result. On the dividend front, the Board have chosen to increase the final dividend of $0.53. So bringing the full year dividend up to $1.04. So up $0.04 on the year, and that result -- that is a decision reflecting the underlying earnings of the company. Now in EQT, we always like to talk about all of our stakeholders and delivering to all of them because we believe that really makes for a healthy company. Just start on the client satisfaction side, we survey our clients each year. The first time we are including our AET clients in this client base. So very good results there. Net Promoter Score of 18, Net Loyalty Score of 33, and Satisfaction of 77%. So 2 of those measures have increased. So overall, we're really satisfied with those results, particularly given the client transitions that have been going on through the course of the year. On the employee engagement side, we're also including the AET employees in this set of results. You can see our engagement there as a key measure is at [ 72% ]. That's up 2 points. That's 2 points above the financial services median. And I think Equity Trustees is increasingly becoming an employer of choice in this market. [ The line we brought ] Jo on Board as our Chief Financial Officer, and a couple of days ago, we also made an announcement that we've appointed a new Chief Risk Officer, a very key role in this type of organization obviously, Nevein Versace. And she joins us in 4 weeks' time following Owen Brailsford, our current Chief Risk Officer's decision to return to his homeland in the U.K. Our growing shareholder value, I mentioned the dividends before. Total shareholder return has been 27.5% through the course of the year. Earnings per share was up 5.3% to $0.7784. Our underlying earnings per share is footnoted down the bottom there is $1.4237, and that's up $0.09. And deepening community impact, well, one key measure of that is the footprint that we have across the granting that we put into the charitable sector, the for-purpose sector, and also directly to First Nations communities around the country. You can see there $178 million. So making us one of these scale -- very large scale players in Charitable Giving. Now I think it's instructive to just look at the results over the course of the last 5 years. On the right -- the left-hand side there, you've got the funds under management, how it's grown, left-hand side, revenue. But just on the left-hand side, funds under management over the 4-year period here has grown from $101 billion to $202.8 billion. So a doubling in 4 years. The company, 131 years to reach $100 billion, and it's taken us 4 years to reach the next $100 billion milestone. It's 19% per annum compound growth of that period. Most of the organic growth investment markets have also played a part in as well. On the right-hand side, we've got revenue. You can see healthy growth rate over the course of the 4 years of 16% per annum. AET has been a major add to that, but organic growth has also been very solid at 35% of that growth over that time period. If I just look at the 2 business segments in a little bit of detail now. So firstly, Trustee Wealth Services, and you'll see on the left-hand side that AET has assisted greatly on both the left and the right-hand side, increasing the scale of this business, but importantly in key geographies and segments. So AET and leadership in South Australia and Western Australia. It's strengthened us in the other East Coast cities. And it's put us to being the leader in the Health and Personal Injury sector, and a really solid scalable business in Native Title Trusts. The market fundamentals are very positive for this business, the aging demographic and intergenerational wealth transition. We had an investor presentation in April of this year, where we spent quite a bit of time talking about the recurring nature of the revenue in this business, the longer-term recurring nature of it. FY '24 results and the funds under management, supervision has increased by 8.6%. Revenues up 30.3%. AET is a full year contribution in that number, whereas only 7-month contribution in the prior FY '23 year. Net profit before tax was $30 million, up 16.2%. So a really good year for Trustee Wealth Services. Now I'll just talk about asset management performance. Asset management is critical to our clients. Many of our clients are absolutely dependent on the investment results that we're delivering. And as a reminder, our internal investment capability is a specialist capability built for the full purpose or endowment sectors of the market. So it focuses on capital preservation in real terms while generating strong after tax income with many of our beneficiaries are living off. Multi-asset class capability with a combination of internal and external strategies. We've got a team of 14 investment professionals managing over $6 billion. And Australian Equities is the core component of about 2/3 of the owner portfolio. We added a couple of new strategies in the last 18 months. The first is a global equity strategy with a growth orientation, very complementary to Australian Equities and focusing in on sectors that aren't really available here in the Australian market and a short duration credit strategy called Spectrum, both performing well. So you can see these are the alpha generation numbers here. Over the course of 1 year, everything adding positive alpha. Australian Equities is a little down 50 basis points over the course of the year, which is expected given the growth in the market through the course of the year and our strategy. If I look at the 5-year numbers, the long-term numbers are very important. They're all very sound positive alpha generation. So delighted with those results. If I turn to Corporate and Superannuation Trustee Services, this is a part of the market where we're the clear leader in providing RE services to funds managers and asset owners, and Superannuation Trustee Services to Superannuation Fund Promoters. There's been a lot of growth in this business over the course of the year. We're seeing increasing demand from global fund managers to enter this market and having great success in securing those clients. We've been investing in technology in this area because the scale of the business is increasing at a rapid rate and the regulatory oversight requirements have been increasing as well. Through the course of the year, we integrated our Corporate and Superannuation Trustee operations. That integration is complete. It's now open to us to capitalize on that integration by using the best of breed of those 2 businesses across the whole single business, which requires a very similar operating in both cases. We're exiting the U.K. and Ireland. We are out of Ireland and the tailing of exiting the U.K. in another week's time, with our last client leaving in all. Funds under supervision here increased by 31.6%. So $41 billion, about half and half between Super and Corporate Trustee Services. Revenue was up 15.3%. Net profit before tax was $21.7 million. That declined 1.4%. And Jo will give you some of the background to that a little later in the presentation. Now I mentioned before the AET integration is progressing well. So we had a very good 7-month start in FY '23, and importantly, we repriced a number of the products at that point in time. We also implemented our investment program across the business. And that was important to get those done right at the start, so the synergies could flow through into FY '24 as they have, and into FY '25. If I just look at the highlights in FY '24, we moved to a new office in Adelaide. That's important. That's the place where we have the second largest number of our employees. On the platform side, we've transitioned the AET business across to our new iPhi system for our active philanthropists. We've transitioned across to Salesforce for Estate Planning and Estate Management. We have built the NavOne system with the HUB24 interface to it. That's been a great build with 2 very good vendors. And just reminding people, we are transferring all of our EQT business in TWS across to this new platform as well as all the AET business. So those transitions have been going very well. We've transferred about 2,800 accounts out of the 5,000. So making very good progress. We have exited the loss-making platform business that AET had. We've outsourced the administration of Small APRA Funds to SuperConcepts. So on 1st of June, that was very important, so that we didn't have to build that capability. And the revenue synergies are absolutely coming through as we'll show you in these numbers. Our plan for FY '25, given we've exited the platform business and outsourced the SAF administration, we're releasing about 50 roles, half of those in August next week and the other half in November. And that's where the expense synergies will flow through as we flagged in the past. On the products and platforms side, we need to do the final transition of our Health and Personal Injury book and our Native Title Trusts across to the new NavOne platform, and final transitions out of Insignia. We plan and confident to be exiting the Insignia Transitional Services Agreement in November as we flagged originally in the acquired business. When consolidating trustee licenses and custody licenses, we're well advanced on that, and I'll comment on that in the next slide. This slide here talks about the overall synergies, and we're on track to achieve these. So at the time of acquisition, we said that we would achieve $3.5 million in expense synergies, and we're forecasting to achieve that number primarily on the back of the roles that are being released over the course of the next [ 12 ] months. That'll be our run rate achievement at the end of FY '25. On the revenue front, we're looking at $5.9 million revenue synergy. We'd originally said $3.3 million. So I think we'll basically double that number by the time this is achieved. We've achieved a good amount in FY '24, $3.6 million, and we expect to achieve the $5.9 million or greater than that in FY '25. Implementation costs, we've spent so far $15 million of that $22 million. And we believe we will be able to complete this integration and the build of the NavOne platform within this $22 million envelope. And then final on the capital release, we originally weren't expecting a capital release, but we do have some dual licenses in place between the AET business and the original Equity Trustees business. And when we release those licenses, both a traditional trustee license and a custody license, each will release $5 million of capital. It's contingent on court approval on one instance and on the ASIC approval in the other instance. So effectively it brings the purchase price of this business from $135 million down to $125 million is another way of thinking about that release. So in summary, it's been a really strong performance through FY '24. The funds under management growth really has been driven primarily by new business with a little bit of assistance from markets. Earnings and dividends have continued to grow in a good way. The AET integration is on track and our technology builds are also on track. It's very pleasing, feel we're delivering for all of our stakeholders, and we're really well positioned to release the benefits of this scale and continue the strong position we've got in our market. So with that, I will hand over to Jo, who will take you through the financials.

Thanks, Mick. Good morning, everyone. And it's my pleasure to be with you this morning to give you an overview of the FY '24 financial results for Equity Trustees. Turning to a summary view of our P&L. As Mick mentioned, revenue grew by 23.1% to $174 million. This was driven by the annualized effect of AET, the synergies realized for revenue, a positive investment market effect and new business, particularly in CSTS. Expenses grew by 28.3% to $142 million. Growth was in part due to the annualization of AET, but there were also increases in nonoperating expenses relating to our restructure programs, which I'll cover shortly, as well as BAU cost increases. Turning to net profit after tax, it increased by 10.1% to $20.7 million, and on an underlying basis, $38 million, an increase of 13.8%. And we'll shortly walk you through the difference between those 2 measures. Mick mentioned EPS, $0.7784, an increase of 5.3%, and on an underlying basis, $1.4237, an increase of 9%. In recognition of the earnings growth and progressive delivery of the transformation program, we have declared a dividend of $0.53, a total of $1.04 for the year, a payout ratio of 133% on statutory measures or 73% on underlying. Providing an overview of the key financial measures over time, you can see this consistent growth in revenue, underlying EBITDA, underlying net profit after tax and dividends. You can see the impact of the transformation spend, particularly in FY '23 and '24, where we have a gap between underlying and statutory measures. Given our plans are in place to wind down this activity during FY '25, we see the gap between these 2 measures closing for the FY '26 year. Turning to the drivers of revenue growth and a call-out upfront, this is probably the last time we'll be able to segregate the performance of AET from the base business as it's becoming very integrated into our financial and operating performance. Revenue grew by 23.1% to -- sorry, annualized growth of AET drove $17.1 million of incremental revenue. The market impact overall on our revenue was $4.5 million. We had a loss of a Fund Services client that impacted revenue by $1.3 million. We achieved revenue synergies of $3.6 million, which was incremental $3.2 million year-over-year. And organic growth was $9 million, equivalent to a growth rate of 7.7%, 70% of that being achieved in the CSTS business. Expenses grew by $31.3 million, and we look at the expense movement across 3 buckets, nonrecurring, the annualization of AET, and BAU. There was a $4 million increase relating to the transformation projects, namely the AET integration, the exit and wind down of U.K. and Ireland and technology projects. The total nonoperating expenses for the year was $25.6 million. There was a $14.3 million increase in costs relating to the annualization of AET and that included the corporate overheads and depreciation charges. $13 million increase in BAU expenses, predominantly due to increased salaries and wages as we build the new operating model in CSTS and some salary inflation effects. We also had increased interest expense relating to our increased corporate debt. Walking you through the reconciliation from net profit after tax. The first graphic here shows the result on a statutory basis of $20.7 million through to the underlying reported result of $38 million. The key differences is the $7.9 million impact of the wind down and exit of U.K. and Ireland, $6.6 million relating to integration costs for AET, $800,000 relating to the exit of the AET platform and $1.9 million relating to the transformation projects in technology. If we turn to looking at the underlying NPAT result from FY '23 to FY '24, it increased by $4.6 million. There was a combined $4 million benefit from AET of the annualization as well as revenue synergies. The investment market effect was $2.9 million on an NPAT basis. Interest expense declined profit by $1.2 million, and the BAU business NPAT declined by $1.1 million. This is a combination of the loss of the client in CSTS and the increases in CSTS BAU costs, offsetting some of the new business revenue. Turning to the subsegment results for revenue and FUMAS. TWS achieved 30% growth and $99 million in revenue and to call out that 90% of the AET business revenue sits in this line of business. 80% of the growth achieved was relating to AET, $15.6 million of the annualization impact and $3.2 million of revenue synergies. The investment market impact was $1.7 million, and there was $2.6 million of new business. TWS benefited from [ $2.1 million ] of one-off style revenue relating to establishment fees and a significant estate management event. Also important to note that the platform business revenue of $1.5 million is in the FY '24 result. This line of business ceases in FY '25. Turning to CSTS, and this is the result including the U.K. and Ireland. Revenue grew by 15% to $75 million. There was a $1.5 million revenue contribution from the Small APRA Funds business of AET. $2.7 million revenue contribution from market impact. We mentioned the loss of the mandate client in Fund Services impacting revenue adversely by $1.3 million, and organic growth of $6.9 million or an organic growth rate of 10.5% driven by 66 new clients in Fund Services and continued growth in our super business. Drilling down into the subsegments of the CSTS business. For Fund Services, revenue grew by 11.2% to $40.8 million. As I mentioned before, this is where we had significant new business delivered of $3 million with 66 new clients delivered in Fund Services. We're seeing increasing demand from global fund managers, particularly for ETF products. New fund managers onboarded in FY '24 include Future Group, Adams Street Partners, Ares, Kapstream, Lombard Odier, Wilson Asset Management and Blackwattle. Turning to our custody debt and securitization services, they also generated revenue growth of $800,000 year-over-year. To call out the revenue of this business is around 80% based on account based fixed fees and 20% on asset growth. Therefore, you're seeing a strong correlation between revenue growth and the number of accounts. Key mandates in this business include AEMO, Westpac and Landesbanken, and we have a strong pipeline of new transactions across direct property, infrastructure, cash and feeder funds. And finally to Superannuation. Revenue increased by 21.3% to $30.7 million. You can see the impact of the Small APRA Fund revenue from the AET business of $1.5 million and organic growth of $3.6 million. Significant new business onboarded in FY '24 included Future Super Fund, Guild, Clearview, the SFT of encircle into Centric, and the strong funds under management growth or funds under supervision growth rather in HUB24 of $10 billion. Moving now to the group cash flow result. This analysis excludes cash relating to our ORFR facilities. We have a strong closing cash position of $113.2 million, an increase of $16.7 million year-over-year. Net cash flow from operations was $50 million, an increase of $20 million year-over-year, driven by the AET contribution. There was a $10 million increase in corporate borrowings, which was used to fund in part the AET integration. And closing on the balance sheet. Two significant movements to call out between FY '23 and '24. A increase in our ORFR facilities of $12.5 million, that impacts our cash reserves as well as on borrowings for those discrete facilities, as well as an increase in $10 million in corporate borrowings. We retain a strong borrowing capacity of $33 million, and we maintain a low debt to equity ratio of 11.9%. So as you can see, we have a strong balance sheet that is well positioned to take advantage of future growth opportunities. So in conclusion, FY '24 was a year of successful financial performance, driven by one, protection and enhancement of AET revenue and profit, 2, the growth and momentum in CSTS, and thirdly, the investment in technology in our operating model to enable scale and margin delivery in CSTS. On that note, I'll hand back to Mick to walk us through the strategy for EQT and our FY '25 priorities.

Thank you, Jo. Great grasp of those results in just 4 weeks. So thank you. I'm going to just give you a quick update on the strategy. I think the key thing to say there's no change. We are focusing on trusteeship first and foremost, and our purpose of helping the clients take care of their future remains the same. This is a company where you should expect consistency in our results. We seek to be a leader in the market sectors that we're operating in, and our reputation is absolutely key to enabling our clients to trust in the services that we provide. So really the 4 pillars of this business growth is first, we see increasing demand for our services, both on the private client side as well as the 2 corporate lines of business. We're subsequently dedicating significant business development resource to that. On the client service side, we've been investing in technology. We have many vulnerable clients very dependent on our services and the technology is going to help us in providing services to those clients. This is a people business and we rely on very technical -- strong technical expertise of our people, but also people that are able to be caring, skilled and resilient to look after this client base. So we've been really comfortable with the talent that we've been able to attract and increasingly we're now able to enable them with better technology to deliver to our clients. And finally, on the community front, we have a unique position because of the generosity of past clients as well as current clients in their efforts in philanthropy. And we want to capitalize on that footprint that we have, and certainly the capability that we have in the philanthropic area of our business as well as our First Nations business as well. Just in terms of market leadership in the market, we're well positioned in all the markets we're competing in. We're the clear leader in the provision of Responsibility Entity Services and Superannuation Trustee Services. Also in the Health and Personal Injury sector, given the AET acquisition, the Estate Planning, we are -- we've got an equal leadership position in many of the other areas of Trustee Wealth Services as well. And we've got building businesses in the Custody and Real Assets side and the DCM and Securitization part of the market. And importantly, geographically, AET gave us leadership in South Australia and Western Australia and strengthened our position in New South Wales and Queensland. We just focus on the business initiatives for FY '25, and Trustee Wealth Services, we're going to expand or add to the capability of our new iPhi system for active philanthropy to allow straight-through application processing and put more effort into the business development and marketing of active philanthropy through the course of FY '25. We're determined to complete the AET integration on time and the divestment of the platform which is all but complete and achieve the synergies that we set ourselves and finish this third year of the technology build to set the Trustee Wealth Services business up with a brand new platform able to service our clients well and a consolidated single operating model between our 2 main operating areas in Melbourne and in Adelaide. So we're in good position to do that. We want to continue to develop and leverage the responsible investing capability and realize the, as I said before, expense synergies through FY '25. On the asset management side, we want to capitalize on the top rating -- the ratings and the top performance that we have in a number of our funds, particularly in the new strategies that we introduced 12 months and 18 months ago in Global Equities and the Spectrum Strategic Income Fund. The Corporate and Superannuation Trustee Services, on the corporate side, our RE position is in good shape. We see increasing demand from global fund managers entering the Australian market, and we want to achieve a really high proportion of those as wins. We're increasingly picking up superannuation funds and larger scale opportunities for diversified financial services organizations and there's a big focus on that. The demand to list managed investment schemes either on the ASX or on Cboe continues to increase. We currently, I think, have 14 schemes listed and we see that as a key way of expanding funds managers distribution as managers see as well, and we're well set to be able to do that. Continue putting building our debt offers as well as our bespoke custody and MIT offers for real estate. I guess one key change here in this [ market ], we've embarked on a range of technology developments here to streamline workflows, so that we can handle the increasing scale of this whole business and also, I guess, more diverse nature of the fund services business. On the Superannuation side, we want to build the markets in the retail sector and the Small APRA Fund segment. So in the retail sector, opportunities really are larger scale opportunities that are longer term prospects in many cases, but the pipeline remains strong today. We took on the Small APRA Fund portfolio from AET just on 18 months ago. We see big opportunities for that market, particularly coming from the Self-Managed Super Fund market, as people transition at their later years to not wanting to have the responsibility of a Self-Managed Super Fund. The Small APRA Fund solution is an ideal solution in that market. We think it's been under-marketed in the past and see a great opportunity in partnering with our administrator, SuperConcepts in that area. There is a raft of APRA regulatory changes coming over the course of the last 18 months. We're well set to handle that. In some respects that put some pressure on the business and some -- there has been some increasing expense to manage that. But it is, on the equal side, an opportunity for us, because if these things are difficult for us to implement, they're more difficult for those providers that aren't specialists in this area. And finally, a focus on operational excellence and business transformation in respect to this business given the size and scale of the business. I just want to touch a little bit further on the technology modernization program. So we've got planned a $5 million technology spend for FY '25. $2 million of that is in the platform modernization and $3 million in completing the AET integration, which includes the delivery of the NavOne system for Trustee Wealth Services. So on the Corporate and Superannuation side, we're looking to automate many of our processes given the scale that we have, centralizing the client management operational platform. We're part way through that, but there's a lot more to do, and implementing a data warehouse that runs across the whole business that will enable us to interrogate and manage schemes and superannuation funds more efficiently. For Trustee Wealth Services, we need to finish the build of the NavOne system with the HUB24 interface. I mentioned there that build was being done by Quantios. They're previously called TrustQuay, and I would have referred to them as [ Trustee ] in the past, that changed their name to Quantios. We want to roll out more digital client solutions on the active philanthropy side, capitalize on some of the technology, we are shifting across from AET. So there's 2 particular payment systems that AET utilized to go to the Health and Personal Injury sector, as well as go to our Native Title clients. And we'll be able to increasingly utilize that across our TWS client base, where we haven't been [indiscernible] systems. In terms of the infrastructure and just generally across the business and technology, we'll continue to invest on the cyber side. We are also looking to shift our infrastructure to infrastructure-as-a-service capability. So we're well set in terms of managing the technology stack at the moment. And on the finance and people side, we implemented Workday just on 6 months ago. In finance, this is the first stage. We're going through a second stage relating to procurement and expense management. And we're also putting here in capital management and payroll onto the Workday platform. So we will have finance and the HR side combined and integrated for the first time, which will be great. So finally, the investment in technology and the AET business is paying off. We're determined to complete the AET integration as we planned and achieve the synergy benefits from that. The expanded scale provides us with the ability to achieve leverage in new service offerings in CSTS. The technology modernization program where 2 years into the 3-year build of that, and effectively, we'll complete that through the course of this year and then be able to utilize that technology more effectively for leverage and also delivering better to our clients. We have been investing in ensuring that we can meet the increasingly complex regulatory obligations, and I think we are well set for the future challenges in that area. We are seeking to achieve improvements in client experience through the use of these platforms and then unlock the benefits of this new technology and the scale of the business as we move forward. So on that note, I'm happy to stop and we will take questions. So there's a facility there. We have some questions already, so I will work these through.

So have there been any cost pressures in the TWS business seeing second half costs stepped up? Perhaps I'll take that. I guess I wouldn't highlight the cost pressures just to the TWS business. I mean, we've experienced some higher replacement costs as people have left. I'd also make the point that we have the lowest vacancy levels in the business we've ever had. I think our vacancy level is 1.8% at the moment and turnover has been 10% over the course of the 12 months. So normally the business wouldn't be operating as fully resourced as it is. But of course, TWS is the place where we're doing all the AET integration work and all the build on the NavOne platform. The next question is STS revenue margins were squeezed lower. Should we expect the second half run rate revenue margin to maintain or shift lower? Now, I might hand that to Jo. She can make a comment on that.

Yes. Travis, please join me [ if you think ]. We're seeing STS margins were squeezed during FY '24. We do see in FY '25 more of a maintenance posture as we annualize the effect of the various resources that have been added into that business, and then we're well placed to deliver a margin improvement [indiscernible].

[ I hope that's down the line. ]

Thank you, Jo. Thanks, Travis. Next question is what is the incremental revenue for full year for the new Super and CTS clients, and what have they contributed in FY '25? I don't think I really -- I'll make a couple of comments and then maybe Jo and Travis will add to it. Firstly, on the Superannuation front, the new clients primarily came in near the start of the year, most of them. So Future Group, start of the year, and Clearview, halfway through the year.

Clearview was closer to second half...

And the other one was Guild, which was midyear, midyear. So that puts some perspective on some of those new clients in Superannuation. On the CTS front, I think you could think about it as those schemes that the new schemes being established -- progressively being established through the course of the year. And I guess think about new schemes coming in generally with low levels of funds. So typically on a more -- close to our minimum fees of say about $50,000 per scheme to give some sort of quantum to that. So that's progressive. And we start FY '25 with that -- those -- that business in place from the level where it is. So that's a good start to the FY '25 year. The next question is there seems to have been some additional costs at the unallocated level, excluding explicit nonrecurring items, what were these investments? Not 100%...

Sure, and I'll come back -- we want to take that one and come back to you again.

Yes. Sure. We can perhaps come back to that. I mean, the majority of the unallocated costs in the financial report relate to those underlying, the adjustments made between statutory and underlying, which is set out in the Director's Report in the financial performance summary.

And was called out in the [ breach ] of underlying to report an impact.

Thank you, Travis, and thanks, Jo. Okay, when was it firmed up that an additional $5 million of tech spend would be required in FY '25 beyond the spend that has occurred in recent years? Well, perhaps I'll take that one. So a good component of that is in the AET integration. So that is in the envelope of the $22 million that we've always flagged. So there's nothing -- no change in our expectation on that. And the other component, the $3 million is the completion of all of the other technology projects listed there. And again, there's no change on that, with most of the spend of that coming in the first half FY '25 maybe leading on a little bit past that. Okay. Have we seen any margin benefit from tech spend to date? How can we think about the medium term margin benefit from all of this tech spend? Okay, well, perhaps I'll take that. The answer to the first question is no, we haven't seen margin benefit from this tech spend. So bear in mind, we haven't shifted the whole TWS client base across yet, but when we do get it across, then effectively day 1, I don't think there'll be any change, but we will be able to utilize that technology across the whole of the TWS client base. And I do expect that we will get leverage and margin benefit from that over the longer term, possibly in that being able to scale the business without putting on more resources more so than taking expense out straight away. How can we think about medium term margin benefit from all this tech spend? Well, I think I would think about it that we're expecting our margins to improve and return to some of the levels that they were at. I should make the point in the CSTS business, the one-off client loss of $1.3 million is effectively all margin, right? And so -- and was our largest client in that business. Actually, a part of their business [indiscernible]. So we don't expect that to be recurring on a regular basis. So just in terms of thinking about this tech spend, I would think about it this way. We're getting ourselves set up to handle a much more larger scale business in CTS and Superannuation. So the total is sitting at [ $180 billion ]. It's a very diverse business. The regulatory change has been fairly intense in the course of the last 12 months, and we can see it going out in super for the next 12 months as well, and we're well set up for that. And we may need to implement some pricing change to recognize some of that regulatory change that's going on in the future, because it's certainly not what could be anticipated when you think of some of the pricing that's been put in place in recent years. The next question is CSTS' profit before tax margins falling from 40% in the second half of '23 to 32% in the second half of '24. Can you talk through those pressures? I might stop talking for a second and see if Jo or Travis could add to that.

Of course. Again, the thematic of investing in the CSTS business for the new operating model, increasing resourcing behind regulatory oversight and design has been a key part of the cost there. There's also been some mixed movements in the product level and we are reviewing our pricing and segmentation to make sure that that's aligned.

Thank you, Jo. Is the cost of [ 50 ] redundancies in the platform business being provided for, and is $4 million to $5 million a fair assumption of the saving? So I might hand that over to you, Travis.

Sure, Mick. So in summary, yes, the -- our estimate of the cost of those redundancies for the year ahead has been provided for 30 June 2024. In terms of the $4 million to $5 million, I think that's a broadly reasonable assumption. On Page 11 of the investor presentation, we do talk about the net cost synergy. So that $3.5 million that we quote there is net of the platform revenue that offsets that has been lost in FY '25. So the $4 million to $5 million is about right.

I think that is a bit like -- thank you, Travis. Yes, thank you. So it is all provided for, and some half these people are leaving in another week's time and then the remainder in [indiscernible]. That brings us to the end of the questions. It brings us almost to the end of 45 minutes. So really appreciate everyone's attendance this morning. Looking forward to the next 4 days or 5 days getting out to see investors and brokers directly, and enjoy the rest of the day. And thank you, Jo, and thank you, Travis. So -- thank you.

Thank you.