Fiducian Group Ltd (FID.XA) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. My name is Indy Singh. I'm Executive Chair of Fiducian Group. With me is Mr. Rahul Guha, who is the Chairman, Executive Chair of Fiducian Services. I just want to present a few things, and then I'll hand over to Rahul to take you through some of the details. As I said in my report, there's been a fair bit of uncertainty over the last year, with the Ukraine war continuing, the problems in Gaza continuing. And then we had the elections as well in Australia. And generally, when that happens, investors tend to sit on the sidelines, and wait until there's a decision and then start to invest. Following that, we had the Trump tariffs, which caused the Australian stock market and the U.S. to fall by just over 17%. And that, obviously, when markets fall, our revenue reduces to what we were expecting. But it's all not bad news. As you would have noticed, we still had a net profit after tax up by about 23% on the previous year, and our dividends are up 19% on the previous year. And so, we'll be distributing $0.466 per share for the year. Business is continuing to grow. And we're working towards increasing the number of advisers that support our platforms, the number of supporters for Auxilium and also external IFAs who could join and support Auxilium's growth. So, in short, if the financial markets hold steady or even stay stable, we, at least as a team, are hopeful of achieving steady growth in 2026 and delivering what our Board requires us to do, which is to deliver double-digit earnings per share growth year-on-year. With that short opening, I pass on to Rahul, who can go through some of the details for you.

Thank you, Indy, and good afternoon, everyone, and thank you for giving us the time to share our results today. What we would like to do -- thank you, Indy, for the introduction. We would like to just give you a business overview over the next 15, 20 minutes odd, and also, we have got a Q&A session, which I'll try to answer towards the end of the presentation. If you have any questions, please pop on your question to the Q&A section, which you can see on the right side of the panel. So, starting off with the platform administration. Last financial year, we actually had quite a strong year. We were able to accumulate $343 million net inflows into our platform from our salaried and franchise advisers. And over the recent past years, this has been one of the strongest year, if not from our inception, but we have had very strong results from both support from the advisers as well as the clients. As we have shared with you before in earlier presentations, most of the money that comes through in our platform, most of them also goes to Fiducian funds as well. Funds under administration last year, and I've got that on the slide, but last year average was roughly about $3.785 billion. And when I take a step back and when I look at July numbers, the July platform numbers is about $4.181 million. So essentially, what we are seeing is that the way we are starting FY 2026 is roughly about 10% more compared to the average that we have had in FY 2025, which could translate for us to an increase on revenue of $1.6 million if the market holds at this level. And again, obviously, this doesn't include that could come in, in FY '26 or any market improvements. But just from a starting point of view, we are 10% ahead compared to the last financial year, which has the potential of $1.6 million additional revenue. In terms of our platform administration, we have developed everything in-house, talking to our advisers, talking to our clients, and it's very much focused to the adviser efficiencies and client efficiencies. What we believe we have got is a leading-edge technology, which is directly linked to the financial planning software. And we are one of the very few providers in Australia who provides an integrated software, all written on the same language and all talking to each other on a real-time basis, the financial planning, platform administration, as well as client reporting system. In our core platform, in addition to 14 or 15 odd Fiducian funds, we also offer roughly about 30 external managers, managed funds as well as shares, term deposits and so on and so forth. So with that, I just wanted to look at a couple of graphic visuals how we have done over the last 5-years. The first slide -- the first chart that I've got on the left side of the slide is the net funds inflow. And as you can see, over the each half, we have always delivered positive net inflows. In fact, taking a step back, if you were to look at all the other platforms in Australia, majority of the bigger names, well-established players every half year, every full year, at least for the last 5, 6-years, they have consistently had net outflows. Contrasting with that, because of the model that we have and the support that we get from our own franchise advisers and salaried advisers, we are very proud to be able to share the net inflow results quarter-on-quarter, half year and over each of the last 5 years and more. On the right side of the slide, we have put up a visual on how the funds have grown from roughly about $2.4 billion 5-years back to roughly about $3.8 billion, $3.9 billion average funds. And as a result, even the revenue and profit have also grown. I wanted to take a moment and just discuss and just share with you the progress that we have made in Auxilium and Badges. A couple of years back, we launched a low-cost proposition, which is Auxilium, which is really catered to more the IFA part of the market, and directly competing with more of the disruptors in the industry or the so-called disruptors of the industry. In terms of service, it's still the outstanding service we provide to all of our existing clients and existing franchise and salaried advisers. But with that, we also have a low-cost proposition and very tailored offering to the IFA market. The IFA market is actually quite huge. The opportunity that we look at is almost about 10,000 IFA's independent financial advisers that we hope to be able to tap on for this Auxilium platform. Although, it's initial days and initial months, but we have received quite a strong response from the market. And what we are finding is that, some of our peers as they are growing in size and quantum, some of the smaller advice networks, so they are sort of homeless or a vacuum has been created, and we are able to step in that vacuum and provide the services that more of the smaller financial advisers are desperately looking for, which they are not able to get from our peers. As a whole, we won some clients last financial year, and we were able to have $124 million net inflows that brings our total FUA to $136 million in last financial year. One thing I do want to get back is the third last bullet point, which is the SMA fund launch. Towards the end of last financial year, really in June, we were able to expand our SMA offering. So what that means is that, we have come up with a new structure of SMA offering, which we believe will be able to help the financial advisers cut down on a lot of the housekeeping and back office work with their clients, but also come do the offering on the individually managed accounts, as well as separately managed accounts, and give the tailored portfolio to their clients, from a wide variety and list of options, investment options that they can choose from. Just before moving on to platform -- from platform admin to funds management, I just wanted to check Indy, whether you wanted to add anything else on that front.

No, you carry on.

Thank you, Indy. Looking at the funds management, which is the second segment of our business, again, very similar story to what we saw in the platform administration. So last financial year, again, our average was $5.512 million funds under management, and we are starting the year end of July 2025, $5.918 million, which essentially means about 7%. We are starting the year about 7% ahead of what the average was last financial year. And again, if the market holds, this could potentially contribute to an increase in annualized revenue of almost about $2 million. As some of you might know and recall that our funds management offering is managed the manager offering, that is our fund managers, our internal investment team. We don't select stock, but we select fund managers. And we work with almost about close to about 50 different fund managers, both in Australia, as well as overseas. And our objective is not to shoot out the lights, but to produce an above-average returns by taking below average risk. And as we will see in the following slides, when we do over the time, we can definitely produce a return that's quite consistent with the adviser and client expectations. If I take a step back, looking at some of the funds, some of the diversified funds, balanced fund as an example, when we look at 1-year returns, last year, we were able to produce 8.7 percentage return -- sorry, these numbers are about July 2025.

30 June.

Our ranking, 27 out of 94 fund managers going to 3 years, 10 out of 86 going to 7 years, 4 out of 73, 10 years, 2 out of 62. And this year, Indy, what he shared in his Chairman's report is more of a statistics over the last 10 years, how we have performed. And it's not only this particular slide that I'm sharing, but any point that we go back, whether it's 1-year, 2-years back, 2023, 2000, when you look at the 5-year, 7-year, 10-year results, very consistent results, and we have been able to deliver double-digit -- deliver returns mostly on the top quartile.

So this year, Rahul, if I may, I presented for the first time our returns because our clients generally invest in superannuation, which is a long-term investment and also in our IDPS, they invest for the long-term. And I thought I'd be good to present what would have happened over 7-years and 10-years for an investor who has chosen Fiducian. And you'll see from the annual report that, whether you go back to 30th of June 2018, and you can look for 7-years, you'll see that we are ranked 4 out of 153 for the growth fund and 11 for the balance. And if you go to 10 years, you can see all the way back, if it was 10 years to 2015, clients would have been reasonably well off. And even up to 25th of June, if they had been with us for 10 years, the growth fund, they would have ranked 3 out of 131 funds in Australia and from overseas that are reported on surveys publicly available. So, returns are fairly consistent and steady. We don't advertise too much, and we don't try to promote our performance, but we just prefer to silently keep delivering so that clients would prefer us against our competitors. Thank you.

Thank you, Indy. Very good points. Funds management, again, a visual slide, very similar to the platform. And over the years, we can see that it has consistently grown over the last 5 years and beyond. And as the funds under management balances grows, so does our revenue as well as the profitability. But often, we get the question asked that, if Fiducian is not selecting the stocks, why can't the client go directly to the fund managers that actually select the stock. So essentially, what we offer is a multi-manager model, which means that a client can invest -- can get access to different fund managers. Taking the example of balanced fund manager, our balanced fund, a client where it's investing $1 million or $100,000 or even $100, that $100 gets access to roughly about 23 different fund managers, 27 different fund managers and roughly what about 200, 300 underlying stock or even more stocks.

All types of securities in the balanced fund would be fixed interest, cash, overseas fixed interest, inflation-linked bonds, Aussie shares and international shares and the top companies from overseas.

So as opposed to a client, an adviser's client going to one single manager and being able to invest his or her $1 million or $100 or even $100 into one fund manager through Fiducian, they're able to invest in 27 different managers, as an example, in balance fund.

Through one investment.

Through one investment. But what about the cost? If Fiducian is relying on 27 different fund managers, so is Fiducian adding a fee on top of what those 27 fund managers would charge. And as a result, is the client is paying -- having to pay more in Fiducian. The answer actually surprisingly or not surprisingly, no. We benchmark all of our funds. We benchmark as to what the Australian standards are. As an example, if it's a retail fund in Australian share, Fiducian Australian share fund, the client will be paying 90 basis points or 95 basis points or something like that, very similar to balanced fund. And balance fund average in Australian market is roughly about 95 basis points. Fiducian fee on balanced fund is about 93 basis points. So, from a client's perspective, one take, they got to invest many different fund managers. Second take, the fees that they are paying is no different to what they would pay, if they were to go to a single manager. So how does Fiducian make money then if they are charging the same fee if a client were to pay the same fees to the external manager. And that's the benefit of the model comes in, which definitely helps the shareholder and the organization. The way the fees are structured is that we have mandates with different fund managers. And as we give them, as an example, first $50 million, we'll be charged -- we'll be offering them a fee off, again, as an example, 50 basis points. But as the market grows and as a number of client grows, if that $50 million, in addition, if you were to give $20 million extra in mandates, we won't be paying them 50 basis points. We'll be paying them maybe 40 basis points or 45 basis points. So, we have got this inherent hedge on our business model, whereas the funds grow, our margin actually expands while the clients' costs remain the same, but the shareholders' returns also increases. So, we have seen the profit before tax margins of 54 percentage of gross revenue. And as I said, on an increasing market, we definitely are able to increase our margins as well. I wanted to take a step back and just look at all of the businesses that we have, and that's really brought together by the Fintech capabilities we have. We have got an in-house development team and all of the systems, Fastrack is the platform administration system, FORCe, the financial planning software, the Fiducian online, the holistic client reporting, all of them have been developed in-house, but also within the same platform and the same system. And as a result, we are able to give the client the integrated reporting and the advisers, the efficiencies that they are looking for. Our system is what we again believe is has got the right controls in terms of cybersecurity. We have got the right functionalities that the clients want. We have also launched a separate mobile app, which is becoming quite popular. We launched it about maybe about 6 months back or so, and we have seen quite a very positive feedback from the clients, and the takeout from the advisers as well. So, we -- again, what we believe is that, we compete very strongly with our peer platforms that operate in the Australian market. Let's look at the financial planning division of our business. The way we look at financial planning is more of an enabler of steady flows to funds on the platform. You might recall that, I gave the example on the platform side that most of the bigger players in the Australian industry is losing money. Each reporting period, they report a huge outflows, while we have been able to report consistent net inflows. And one of the reasons that we have been able to do is because of the aligned dealer group that we have, and that's where the Fiducian Financial Planning -- Financial Services, both salaried and franchise advisers come and able to contribute to the steady inflows that our platform and funds enjoy. In the last financial year, we were able to open a new office, which is in Dubbo. Overall, in Australia, we currently have about roughly 46 offices and about 77 financial advisers, split more or less half-half in terms of number of advisers, about half of them salaried and half of them franchisees. While in terms of 46 offices, about 12, 13 of them are salaried and the rest are more in country counts and non-metro locations from our financial advisers who are franchisees. In the last financial year FY 2025, as well as FY 2026, we have set a target of 6 million net inflow targets for each of the financial advisers. And we have also put a target of raising the revenue between 10% to 20% per annum for salaried advisers. Now it's an interesting point. Now how can an adviser raise revenue 20% each year when the inflation is only about 3% or maybe a little while back 6%. So how would the clients react? Now again, taking a step back, when we look at the Australian industry, there's roughly about 8 million advice clients and each of those 8 million clients on an average is paying an advice fee of $4,200. In Fiducian, our fees about maybe a year back was roughly about $2,800. Right now, we have increased it slightly $3,200. But still, there's a huge gap between what the industry average is versus what Fiducian clients are paying, about $3,200 versus $4,200 industry average. And what we believe is that if we are giving a proper service, and if the clients are satisfied with the service, if they can see value in the service that we are providing, our financial advisers will be able to raise their fees as well on the next annual review. Financial planning, overall, we have got roughly about $5 billion, give or take. About 2/3 of that is sitting in our internal platform and roughly about 1.4 million is sitting in external platform. One thing I do want to point out here is that, if you look at all of our funds metrics, whether it's a platform that's gone up over the last 1 year or 6 months, Funds management has gone up, but financial planning, it seems to be same last financial year -- sorry, last half, December 2024, about $5 billion. And today also we are $5 billion. Now that's slightly masked with the last bullet that I've got on the screen. Again, as you might recall, some of you who have attended the previous sessions that, we have quite a few clients in our books who have been marked against our financial advisers, but those are more like nonactive clients. They don't get any service from us, and we don't get any fees from them as well. That number used to be roughly about $700 million, $800 million. But over the years, especially last year, we have been able to either engage those clients into an active clients, or we have taken them off our books that is disengaged them formally. And in the last financial year, we disengaged roughly about $300 million. So, although the top line is still about $5 billion, but that's actually getting masked by the disengagement of those clients who were never our clients to start with. So essentially, if I take that noise out, we have seen a similar kind of increase in financial planning, roughly about $300 million, $400 million, very similar to what we have seen in the other segments of the business. Indy, anything you would like to add either on funds management or financial planning?

I think you pretty much covered it, Rahul. And these clients that we cut out from our total fund under advice were, as Rahul said, were clients that came along as grandfathered clients when we made acquisitions, but they never engaged with us or engaged with our advisers. And so, the advisers made every effort to engage with them, but they prefer to be without an adviser. And therefore, we thought, it's just unnecessary to show them as our clients when they really aren't. So, we lost no income. We lost really no clients because they weren't really clients.

Thank you, Indy. A quick update on staffing. Our June '25 headcount was 166. Staff is one of the key elements, one of the most key elements in our business, and we definitely seek to seek out the staff loyalty from our Fiducian, extended Fiducian family, and retention of staff is very key. So, our approach is very simple. That is if we have got a good staff, do everything that we can in order to be able to retain that staff. We go through the salary reviews. We do a benchmarking as well, and we make sure that we are able to offer competitive package to our staff. Now financials. I'm not going to go through all of the line items, but yes, I can really highlight is the -- on the last column, which is the triangles and very pleased to report that all of those triangles are pointing upwards. Whether it's funds under management that we saw growing roughly about 10 percentage last year financial year, or if you look at revenue, or operating revenue, total revenue or net revenue, again, double-digit returns, 11%, 13%, UEBITDA 19%, statutory NPAT that Indy touched upon earlier, 23%. Again, we have got very strong results in all of the metrics, all of the financial metrics in last financial year. Looking at the segment, again, very promising, all of our business segments have delivered quite strongly, funds management, financial planning platform, and we have been able to increase profitability on each of the segments. But what stands out for me is the financial planning. Again, last time, last half or even the previous half, we have discussed with you, we have shared with you that we want to make financial planning as a stand-alone entity as a profitable entity on its own rights, and we are very much on that journey. We have been able to achieve that through -- really through 2 mechanisms. One we talked about is the fee increases. We have been able to increase the fees the clients pay. We have been able to expand the services to the existing clients as well as we have been able to attract new clients in the fold and all of those have contributed to an increase in the revenue. On the same note, on the other side of the equation is the cost, and we have been able to also rationalize cost. We have been able to -- where there was extra capacity, we have been able to consolidate those capacities, and we have been able to bring in some expense reduction as well. So overall, in financial planning, we are very pleased to report that we have been able to improve the profitability of this particular segment by over $1 million. A quick slide on the performance of Fiducian shares versus the all odds. And as you can see, over the last 12-odd years, June 2012, when the share price was roughly about $1. Today, the share price is, or when we reported -- when we prepared this slide, $11.41. Today, it's slightly higher. But over this period, we have had roughly about $2.70 dividend as well, and we have had some outperformance during this period. In fact, some of our shareholders are very long-standing shareholders and some of them invested in Fiducian quite a long time back. As an example, if an investor had invested $1,000 back in 2012, they would have got 1,000 shares. And today, if they're still holding on to their parcel, they will be getting a dividend yield of roughly about 45%, and that's without franking credits. Once you add franking credits, it's, of course, higher, but the dividend yield for a long-term investor would be about 45%, which is a fundamental return on any given -- on any investments that you can think of. We have been able to produce double-digit EPS growth over the last 19 years -- sorry, over the last 25 years since listing, we have been able to produce double-digit returns in 19 out of those 25 years. Just a quick summary slide on how our FUMAA growth over the last 5-years. And again, over the -- you can see the total FUMAA funds under management, advice and administration has grown about 85% in the last 5-years.

And July is a little higher.

Absolutely, Indy. And July, 14.84% has become roughly about 15.15% or thereabouts. And that's -- and that brings me to my last slide indeed before I open up for questions. Now this slide, it's a caveat. It's not a projection. It's not a forecast. It's more of a conceptual representation. But what this conceptual representation helps us to understand is really the power of the business model that we have, and also, the scalability that we have in the business. So, all the lines and all the graphs here, if it's a solid line or solid graphs, those are the actuals till 2025. And these are -- and all the shades and the dotted lines are really the conceptual projections or representations rather. So, if I go back a few years, 2013, 2012, 2013, our FUMAA was roughly about $3 billion. And the red line, which is the expense line was roughly about $5.5 million, $6 million or so. And at that point of time, our revenue was -- the green line was about $10 million. So, we still make profit at a $3 billion FUMAA. Fast forward to 2025, that FUMAA has grown as of reporting date to about $14.8 billion. Indy as we touched upon earlier, as of 31st July, about $15.2 billion. And over this period, our red line, which is the expenses that has grown definitely to our number and even our red line. Red line has grown over this period, but the green line, which is the revenue line has grown at a much faster rate compared to the growth in the red line. So as a result, the gap that you see between the red line and the green line in 2013, that jaws of growth has very much expanded fast forward to 2025. And what we believe is that, if the trend were to continue, and if we were to get more FUMAA under our business, the potential for red line -- the gaps between the red line and the green line, the potential for that is to increase further and which would -- could lead to an increasing underlying EBITDA to the company's performances. Maybe just a quick pointer in here. So, we can see that 2012 -- sorry, 2022 is when we acquired PCCU. And as you can see at that point of time, roughly about this time, the expenses grew and revenue grew as well, but it took a little bit time before it caught up. But once it was factored in, then we are definitely getting a much accelerated rate of growth since the PCCU acquisition has come in, and performing within the business. So, Indy, any comments that you have.

No. Thanks Rahul. That was very well done. I think, we can open up to questions, if anyone has.

Yes. And while we open up to question - while we review some of the questions we have received before. But maybe I just wanted to go back to the conversation on PCCU. So, as you might recall, so we did the PCCU acquisition back in February 2022. And when we acquired, we had roughly had a revenue base of about $7 million or so. And we also had a purchase price of about $11 billion. Now profitability was, of course, not $7 million because we had to support that as well. Now after 2 years, the acquisition happened, within 2 years, we broke even the situation, and we were making money from the financial planning business as a stand-alone from the PCCU acquisitions. Having said that, a lot of the money is also transitioned across the Fiducian platform and Fiducian funds. So today, so although we acquired roughly about $800 million, $900 million or thereabouts from PCCU. So today, that particular part of the business is performing very strongly. So, a lot of the clients have transitioned across to Fiducian platform and Fiducian Funds, but we have also been able to win new clients from their referrals. So today, we have got roughly about $350 million that, that particular office has generated into our Fiducian platform and Fiducian funds. And again, very simple margins, 50 basis points on funds and 50 basis points on platform itself is giving a synergy benefit of $3.5 million. So normally, the business on a stand-alone basis is producing a profit, but the synergy itself is about $3.5 million on an annualized basis. That shows the strength of the model that we have got in the Fiducian overall offering. So with that, I might just start off with some of the questions that we have received before the presentation.

So, the first question that we had was from one of our long-standing shareholder. And the question was around the margins. And the observation was that in FY '25, the margin has picked up and whether there was a possibility of this margin staying where it is or whether there would be any anticipated changes on the margins. So, the best way to answer this question is probably to look at different business segments that we have. Let's start with the platform administration. As you might recall, we cut our fees back in June 2024, almost about $1 million to make it more attractive and compelling for the clients and the advisers. Now that impact has already been fully absorbed and baked in and experienced in FY 2025 results. So, at this stage, what we believe is that the industry has sort of come to the bottom of it. the races that we had before on fees, that race has very much reduced, and we are seeing more of a stabilization on the platform fees. So, we believe that the offering that we have got, especially in the Auxilium is one of the lowest offering in the industry. Now there's always be someone lower than you, and we definitely don't want to be the cheapest, but I did want to pick up one example. One of our peer platforms, which I don't want to name, but one of the peer platforms, their administration fee on the platform is 0. So, while we pride ourselves on whatever, 20 basis points cutting fees that we offering, our peer platform is offering a 0 fee. Now we know taking a step back that, it's impossible for anyone to operate with a 0 fee. So, when there's 0 fee, there's a lot of hidden fees also. Fortunately, or unfortunately, whichever way you look at, Fiducian is not on that business. We believe in transparency, but we believe to give the best outcome for our clients. So that's on the platform fee. Funds management fee, again, as I touched upon before, we benchmark our fees against the industry. So, if the overall industry fees go down, we have got very much capacity to alter our fees to make sure that we are staying somewhere in the middle and vice versa. So, we don't see any fee pressure on funds management. On the contrary, in the last financial year, we were able to renegotiate some of the fees with the fund managers, and also, what I touched upon before. As our funds grow because of the fee structure that we have on an increasing funds, the incremental fee that we have to pay is lower. So, what we believe is as our overall funds grow, there's only a possibility of our margins being expanding rather than us having a squeeze on the margins and also the capacity, if we have to do have to reduce fees, if the whole industry is reducing fees, we'll have that capacity as well. And I also touched upon the financial planning as well. Our current level of fees is well below the industry average. And right now, we are not seeing any pressures from the clients on the fees. The next question we had was you know that we have got some upcoming changes that the labor government is quite passionate about in terms of cap on superannuation. And the question was around whether we have seen any outflows because of the super cap of $3 million, or if there's any opportunity to prospects or growth opportunities that we could experience as a result of these changes? Indy, if I can request you to answer this, please.

Yes. Look, the treasurer keeps saying he's going to bring that -- the tax new Section 296, I think tax is going to bring it in. We don't know when because apparently, the Greens have a vote in the Senate, and they are asking for some changes. The labor party is insisting on the $3 million. I think the Greens want a lower level. However, if anything is to go out from superannuation for the larger clients, they can easily automatically be moved in specie to the Fiducian Investment Service, and go straight in there with the same assets. So, there's no crystallizing any loss or anything. There may be a capital gains payment, which is a capital gains payment of 10% on superannuation assets, but then the new cost base starts in Fiducian Investment Service. So, I don't think the money will fleet. It will probably just move across to FIS or investment service IDPS.

Thank you, Indy. I'll go to the next question, and I'll read out the question first. In the Platform segment earnings, the incremental revenue in the past few halves has not resulted in the same PBT growth. And the reasons behind it. So, I might have touched upon this slightly earlier in explaining the margins. So, when we look at the platform in June 2024, we rolled out a fee cut to make our PDS more attractive and compelling to our clients. And that reduction has been baked in. So, in spite of that reduction, as you rightly have observed that the platform profitability has still remained very much similar, but that is the main reason why we haven't seen a growth as we have seen in the other segments, which was because of the $1 million reduction in the fees we introduced in June 2024. Next question was, has the company considered acquisitions either salaried or on licensee businesses, which could bring addition synergies to platform and manage the manager segments, Indy.

Yes, we certainly have. Around in June or middle of June, there was an acquisition of about $70 million or between $70 million and $80 million. But what we had agreed with the adviser or the vendor who was selling out was that we would not pay any money until the clients actually transferred over to our financial adviser and were then invested in the compliant Fiducian process. So that has started. I think at last report I got there were about 79 clients who had already met our advisers in Melbourne and who are in the stages of being transitioned across to the Fiducian platform. Once the statement of advice is presented and the client is happy with it, well, then that's straight away done. That will be very good for our earnings as we don't have to wait for the money sitting on other platforms, but they can come straight through to our advisers getting a fee and the platform earning its fee and also the funds. Meanwhile, I think the good part is that, we haven't had to bring any new advisers on. So, it's our existing advisers who have the same salaries actually looking after these new clients coming across. So, it could be quite beneficial for us going in 2026.

Thank you, Indy. The next question, again, on acquisition. Has the company considered acquisitions of other salaried advisers -- sorry, wrong one. Why has the company not done a sizable acquisition since 2022? Has the PCCU experience changed your views on acquisition? I might just answer -- start off and then I'll ask Indy to help me out here also. But I'll start on the second part of the question, which, again, I touched upon on my earlier section of the presentation. PCCU has been a hard acquisition. There's a lot of hard yards that had to go through there. We acquired almost about 40, 50 people, about 20 advisers and a lot of effort has gone through. Now 3 years fast forward or 3.5 years fast forward, as I mentioned, our total acquisition price was roughly about $10 million, give or take. The synergies that we are getting from that business is roughly about 35%, 40%. The business on its own is already -- that particular acquisition on its own is already profit-making. But on top, the synergy benefit is 35%, 40%. So it's not very easy to get that sort of acquisition. It's not very easy to implement it. But once we do that, it still has been quite a positive for us. But Indy, your view on smaller acquisitions.

Yes. I think smaller acquisitions to me are preferable because generally, the vendor is either exiting, or may want to work a few years with us. It's easier to absorb and digest and bring them across. Larger acquisitions, as Rahul said earlier, took us about 2 years to break PCCU breakeven. Yes, of course, they are the biggest supporters for Fiducian now and they're very loyal and they work very well. But if there's a big one, which is going to be EPS accretive and which advisers can be assimilated into our process and not want to do their own thing by themselves, which could make it risky for us to acquire that business. Well, in that case, we'll take a bigger one. We have cash and we're ready to do that, but we have to find the right ones. We're not going to throw money away for the sake of acquiring someone as some of the larger acquisitions that you have heard in terms of billions of dollars being spent, but their share prices have generally halved or gone even lower. So if we're going to make an acquisition, we have to be very confident that it's going to be earnings per share accretive for the business and for our shareholders. Otherwise, we're just spending shareholders' money for very little gain for shareholders.

Thank you, Indy. The next question, staffing and adviser numbers have seen a trend downward. What's the group strategy for increasing inflows through distribution? And what are the roadblocks stopping as aspired adviser growth to 150 as stated previously, Indy?

Look, we've lost a couple of advisers, not exactly lost. One adviser, we had some compliance issues whereas foundation SOAs had to be done and things like that, which weren't being done. And so, the Financial Planning Chairman had to make a hard decision. The other was a lady who hadn't been keeping really well at all. And in spite of us sending a local, or one of our own rolling advisers to work for her clients and help them and look after them and do their reviews. And we got nothing out of it. We gave all the money to her. But in the end, her health and other things just felt that it would be better, if she retired. So those 2 are gone. But there's, I think, 4 or 5 in the pipeline. One new one has come on. 4 or 5 are in the pipeline with the distribution team. They've been talking to them. It takes a bit of time. We're not that easy to join. There is a proper survey. They have investigations on police checks, their recent records, their history, what money they've been writing, what business they've been writing with whom they've been working. Then the financial planning people go and check on a culture fit, whether they will fit into our style of quality financial adviser and not just want to be a cowboy who wants to do their own thing or cowgirl. And so, it's a rather difficult long drawn-out process that we go through before we select. But yes, certainly, we're looking for new advisers. If you know any you want to change, let us know. And also, we're looking for new people to support Auxilium. So that work is going on with the business development team.

Thank you, Indy. There was one element on the same question on staffing, which I'll try to answer quickly. The staffing numbers as of June 2025, it's slightly lower compared to June 2024, but that was more of a temporary vacancies rather than a staff reduction. Having said that, what we have shared a few times with you guys before is the scalability that we have got in the business. Again, going back about 10 years, 2012 or 2013 in our platform, we had roughly about $850 million. And we had about 20 people supporting the clients who had $850 million. Today, we have got roughly about $4 billion and the service level, service standards still higher than the industry average. But that set of clients is being serviced by roughly about 15, 16 people. So although, the funds balances, the funds that we service has quadrupled, the staff number has actually remained very stable and that should be…

…or reduce per client.

…or reduce -- and that's the scalability of the business that we have. So next question is an interesting one, and the observation was that ChatGPT and whether ChatGPT can produce a financial plan, a professional looking financial plan? And is it a threat or is robo-advice a threat to financial planners, Indy.

I think artificial intelligence is a long, long way to go. We are using AI. A lot of it comes through Microsoft, where we are using it for recordkeeping. When an adviser speaks with an adviser, it automatically gets transcribed into a written document with some checking and summarized and that saves a lot of time. We use AI to try and program our software, and it always doesn't come out right. But we try to save time with that. And there are a couple of other uses for cybersecurity and others that we are already using. But it's not a final solution. It's emerging, it's developing. And as we see more benefits coming from AI, our IT team is quite cognizant of that, and we'll adopt it when it comes.

Thank you, Indy. The only thing I may want to add on that question is that, there's a lot of talks on robo-advice and that talk has been going on for the last 10 years or 15 years. And some of our peers have also made quite a strong maybe announcement in media that they have come out with robo-advice and automated advice and AI advice. And when we look through those advice, and I urge you also, if you have got an example, maybe look through as well. But what we see is nothing more than our product recommendation. So, whether it's a financial -- whether it's a financial planning advice or whether it's a product selector, that area is still to be covered and AI, what I would think. Indeed, the next question is also an interesting one. So, does the company have a graduate program to build up advisers from the ground up, Indy?

Yes, we certainly do. I think there are 3 in the Sydney office. There's one in the Melbourne office. There's one in Perth. I think Adelaide also had one person who's just become actually a financial planner. And we certainly have. We welcome young people who have been properly qualified and who have been through university or have done their studies. They under study an adviser and they work with that adviser, either support or even helping with the financial plans and we're quite positive about these young people. They're very good. They're very smart and they're very caring for the clients, which is a good thing, even though they're young people. I think it's a good opportunity. There's about 5 or 6 coming through.

Now next question, interesting one also. So, Indy set this company up about 30 years back. And what Indy would tell me, this is well before my time. But from year 1, Indy is filling this question. So, Indy, in the long term, does Indy ever plan to sell the business to a like-minded acquirer, Indy?

Yes. Well, I've been asked this question over and over again. I remember when I started, and I said this at the last AGM, I had just one employee. And it was about 7:30 in the evening. So, I took leave of my adviser who was sitting in front of me to go and wash the cups and sauces for the next day. And when I came back, this gentleman asked me what's your succession plan? I said, I've only got one staff. We just started. Look, the company is a listed business. Everyone has a price and everyone has a market. And what we've done is that, each of the important areas like Rahul's area is services where it looks after marketing, finance, administration, IT, legal, all those services we offer. And then, there's Conrad, who's the Chairperson of Fiducian Investments. And he runs investments like a business as Rahul runs services as a business. And Robby Southall is Chairperson for Fiducian Financial Planning, and he runs that as a business. So, at the last trading day, we had a dinner with all the staff and advisers, and I made a comment to say I'm feeling a bit left out, because these people are basically handling everything themselves and doing an exceptional job with it. Look, we are a listed company. We are a publicly listed company, and our shares are quoted on the market. And so, the business will continue without me. I feel I'm just a passenger on earth, and someone up there looks after us. And eventually, no one is indispensable, except the person up in the sky. And then people may put their hand up if I'm not there, if someone comes and makes a fantastic offer for all shareholders. And as long as it's good for all my staff and there's continuity for my staff and people who have helped me grow the business, maybe the shareholders say, yes, we should take that offer. But there has to be a continuity of the business.

Thank you, Indy. Next question, do we have Auxilium inflows flowing into Fiducian funds? Just clarifying how we have our platform offering. We have got core platform offering, which is a full-service offering, but which also has Fiducian funds. And then we have got the low-price offering, which is Auxilium. And within Auxilium, we don't offer any Fiducian funds. Through this structure, we are able to make sure that there's no cannibalism between the products that is Fiducian Funds is only available through the Fiducian core platform and not through Auxilium.

There was one while ago. I think it was previous one.

Indy -- yes. What do you intend to do with your growing cash balance? Will acquisition be large enough to justify such a cash balance, Indy?

Well, look, we are always on the lookout for acquisitions. I think last year, we would have spent about $3.5 million, $2.4 million, we will eventually pay out as clients move across. There's another small one coming through in Queensland. And the -- we will continue to make acquisitions. But I'm sorry that people may feel that we're not going fast enough. But as I said before, I'm not going to waste shareholders' money. It will be there. It will be -- if interest comes through for the shareholders or cash, we will spend that money very carefully.

Thank you, Indy. There's a follow-up question on the platform margins, if the fee reduction was in June 2024, wouldn't the margins be consistent across H1 and H2? Now as we chatted before, 2 distinct offering, core platform as well as Auxilium platform. Auxilium is a low-margin product. And as we are able to bring in inflows from Auxilium, there will be some impact on the overall margins. But in terms of fees and in terms of where we stand compared to our peers, we believe that the margin at this stage at least should remain stable.

There was one question before, Rahul, on reduction and the fund manager's fee.

Yes. Sorry, Indy, I missed that. Thank you.

So yes, we -- you see one of the things Rahul mentioned is that our fees are scalable with our fund managers. For example, if we start with a fund manager and we give them $100 million, they may charge us, say, 50 or 60 basis points, whatever it is. And we give them another $50 million to invest as the assets grow, then we don't give them 60 basis points. We say for the next $30 million, $40 million, $50 million, we only pay you 40 basis points, and they generally agree. So as our funds grow and volumes grow, we can selectively have a fee reduction. The other thing was we reduced our fee in the platform and that cost us about $1 million last year. But with our negotiations with our advisers, we could get some further discounts from them as well to compensate for that reduction in our platform fee. And that's what you're seeing there.

Thank you, Indy. I'm just conscious of time. Maybe second last question. Indy, given management background and standing in the community, are you actively targeting Indian diaspora?

Well, before Rahul came on, there was just 1 Indian in the company, which was me. And then there are a few more. And as you can see, there's a lot growing Indian population. Someone told me the other day that there are so many that they have to renew almost 200 passports a day, and they don't have resources at the consulate. Look, people who are qualified, people who are good and who believe in the Fiducian concept of integrity and trust and ethics, it doesn't matter which nation they come from. We have people from about 27 different nationalities, men and women. And it's a fantastic combination that we have so many people from different nationalities. They have their own little entertainment, and we have special days where we can eat their food and stuff. It's great. It's wonderful. But it's for people, there is no special arrangement for a person from Indian diaspora or U.K. or New Zealand diaspora. It's the best person for the job.

Thank you, Indy. And time for the last question, Indy, large cash balance could mean a special dividend…

Well, you see one of the things is once you give the money away, you don't have it. And that's probably when that particular question before says, why aren't you making a big acquisition? So just when you need money for a big acquisition, it's all been distributed. So, we're going to keep making acquisitions. We're going to keep spending that money. But it's a good thing as the money -- as the profit grows, as the company grows and if the Board feels that we should give a larger distribution of dividends, well, we will because at the end, it's your money, it's shareholders' money.

Thank you, Indy. Any final comments and wrap up?

No, I just wanted to thank -- well, I do have one. It's a no. We do -- I just wanted to thank all those who have attended. I really do appreciate your support. I appreciate the fact that, you are a shareholder of Fiducian. And all I can promise you is that, we will work hard and everyone will look -- be here to look after your best interest. Thank you so much.

Thank you all.