Generation Development Group Limited (GDG) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Generation Development Group Limited FY '27 Results Presentation. [Operator Instructions] I would now like to hand over the conference to Mr. Grant Hackett, Group Executive Officer. Please go ahead.

Hello, and good morning to everyone. Firstly, thank you very much for joining us for Generation Development Group's FY '26 results. Moving through the slide pack today. We're going to start on our vision on Slide 3. So the vision for us in terms of GDG's outlook and the way that we view our business is that we want to be one of the most admired financial services companies recognized for performance, innovation and customer outcomes has certainly been the underlying DNA of our business. And the values that really underpin that is around clarity, just being clear in terms of what we want to achieve, how we want to achieve and how we communicate with our customers, innovation. We very much innovated on the product side, whether it's through our managed account business or our tax optimized or with Lonsec Research. And certainly, the integrity of the way in which we win is very important and we want to make sure that these values guide us in terms of what we deliver for all our customers, shareholders and our people, the way we win really matters. Turning on to Slide 4. For those of you who are new to the GDD story, the group holds market-leading positions across 3 very strong brands across financial services. The first being Generation Life with the investment fund and lifetime annuity business. Evidentia Group managed accounts, one of the fastest-growing parts of financial services with over a 20% CAGR for the past 10 years in terms of sector growth. And then, of course, Lonsec Research and Ratings. Group funds under management increased to 37% or $46.5 billion, supported by record net inflows of $9.7 billion for the year, for FY '26. So a massive year for the group and congratulations to all the team that produced such an outstanding result. That drove total revenue growth of 23% and underlying NPAT growth of 21% on a pro forma basis, as you can see. And Andrew Mellor, our new Chief Financial Officer, will take you through the detailed financial analysis in the slides to come. Moving through to Slide #5. You can see here just in terms of the growth -- or Slide #6, sorry, you can see the growth and execution of our group has been extremely strong over the course of FY '26 and we maintained very strong positions, the #1 position in fact, across our 3 key segments and we've made a lot of progress in terms of our key strategic priorities. We've continued with disciplined investment in distribution, products, people, technology to support this scale. This is particularly important as we look to capitalize on the very structural tailwinds that we see in managed accounts, which are quite significant. And I've already touched on the sector growth there, and we've been taking significantly more than our natural market share. We've, of course, got the legislative tailwinds of the investment bonds and the tax reforms that were announced in the May budget. And also prior to that, we saw the changes in superannuation around the Division 296, which affects the large super balances come into effect. Moving on to Slide 7, looking at some of the key operating metrics across our business. You can see Generation Life a significant uplift. In fact, over the past couple of years, we've gone from FY '24 sales numbers of just over $650 million of gross inflows to now over $1.5 billion of total gross inflows and we've really expanded across our active advising client base to almost 3,000 active advisers for the year. That's based on a 12-month rolling average and an investment maturity profile of over 15 years, you can see for the investment bond. So it's a very high-margin products. We've got a very strong market position and we've continued to grow at record rates. Evidentia generated another incredible year of net inflows of $8.4 billion, continued to grow materially faster than its natural market share of 1.8x. And that's been over the past couple of years that we've been able to sustain that. And we've grown the team materially and integrated the 2 businesses over the last 12 months with Lonsec Investment Solution and Evidentia managed accounts. Lonsec also expanded both product coverage and subscribers in another record year, demonstrating continued demand for its research and ratings capability and certainly has the strongest brand in the marketplace. Looking now on Slide 8. Again, some of the earnings growth that we're seeing across the group and each of the businesses, strong FUM growth that we've -- and revenue growth of $178 million or up 23%. EBITDA of $59.2 million, up 18% on a pro forma basis. Underlying NPAT increased 21% to almost $41 million, reflecting earnings growth across each of the operating businesses. You can see Slide 9 really talks about the trajectory of the business over its 3 core areas in terms of FUM growth, revenue growth and underlying EBITDA growth. You see 77% CAGR there in group FUM to the $46.5 billion that I've already touched on. 23% CAGR revenue growth to close at $178 million for FY '26 and then underlying EBITDA growth from FY '22 through to FY '26 of 37%. Moving on to Slide 10, just talking about the strategic priorities across Generation Development Group and each of the businesses. We've got some great assets. We've done a lot of investment in these assets and we continue to get more structural and legislative tailwinds. And so we believe we're really in a strong position to be able to benefit from those tailwinds, both in retirement advice and the platform adoption. Across the group, our priorities really are to -- and we're going to talk in a little bit more detail around this as we get through the presentation today, but deepen client relationships and our distribution and continue our product innovation. This will allow us to deepen our competitive moat, which we have a very good track record around execution and bringing new products to market that have been successful. And we've got several other initiatives that we think is going to create a lot more value, both for our customers and for our shareholders. What's really important to note around all of this, when we're looking at any sort of investment, we remain very disciplined and proportionate to the opportunity. That's a really important part. Anything that we're looking at, we know we've got a lot of long-term tailwinds that are on our side, but we're very, very focused on making sure that any investment is disciplined and proportionate to the opportunity with selective acquisitions assessed against the strategic fit and long-term value creation. Moving on to Slide 12 and deep diving a little bit more into the Generation Life business and the investment bond market. We can see here we're operating in probably what is one of the most attractive long-term growth environments that we see in financial services. And this is supported by retirement, the huge amount of wealth transfer that we're going to see over the next 30 or 40 years and the legislative tailwinds that continue to expand the demand for tax-effective wealth solutions like investment bonds. The investment bond market, and we've done a lot of building around the model for this is expected to exceed approximately $60 billion in funds under management by 2035. So some pretty exciting numbers there. And that's, of course, driven off 3 core factors. One is the change we've seen to superannuation and the large super balances with Division 296, we're seeing this significant wealth transfer and it can be structured as a non-estate asset, the second part. And obviously, we saw in the May budget, the significant tax reforms, particularly the removal of the CGT discount. So again, investors, particularly wealth investors looking for more tax-effective homes to be able to grow and take care of their wealth. Generation Life has been the market leader in this market for some time, capturing 59% of annual inflows to the end of March '26. Turning to Slide 13, talking about that, I guess, total addressable market opportunity. We really plan to extend this through a few key focuses. But really, what we want to do is evolve from a product provider into a broader wealth solutions partner. So a lot of our investments will focus on outcomes to improve both adviser and clients' experience. This is through digital transformation, scalability and new products that we plan to bring to market that are, of course, tax-optimized in the investment bond space. A lot of the automation and AI that we're investing in at the moment will support a lot of this efficiency and scale and we're making sure that each of our investments are tied to measurable outcomes. Moving on to Slide 14 to take a bit more of a closer look at Evidentia managed accounts. Again, it's been another incredible year for that business, delivering record FUM and net flows as well maintaining its lead as the largest provider of managed accounts, significantly bigger than its nearest competitor and growing significantly faster. The business continues to have more advisers, more practices supporting it. It was a record year of new clients that adopted the Evidentia managed accounts and we continue to deepen and strengthen those relationships. The scale, the product breadth, the partnership position, we think Evidentia is going to continue to benefit from not just the market growth and the sector growth that we're seeing in managed accounts, but also the ASIC industry-wide compliance review, given the scale of the investment of the technology, the risk management overlay that we have within the business, we think we're going to be a big beneficiary of any changes that we see moving forward as scale will play a more important front and center place as managed accounts continues to grow. Moving on to Slide 15. Executing and the focus of us moving forward for our managed account business. We spoke about deepening those adviser relationships. It's not just for us being an outsourced CIO. That's not what our managed accounts just is. Of course, we are an asset consultant first and foremost, but it's more so that we're an integrated partner that helps drive and create value for the advice practices that we do business with. We look at their efficiency. We want to be able to convert that to FUM as a business and we want to help these practices grow out their businesses. We help them look at M&A. We did the acquisition of Encore consultancy last year, again, to be able to help offer more services to our clients. So the scale, the operational discipline are expected to support the operational leverage in that business over the medium term. And we should really see that start to kick in probably more from FY '28 onwards. The integration on Slide 16, talking about the integration of both of our managed account business, which was a huge piece of work that we took on, bringing together 2 very, very good assets, the #1 and the #2 or equal #1, we'll call it for the sake of it, managed account businesses out in the market. We saw that integration completed on time and on budget in June 2026. The combined platform, broader distribution, adviser reach, the implementation capability that we've got there. And of course, I touched on Encore Advisory that further extends the consulting and practice transformation capabilities and really starts to increase the competitive moat that we have around that business. On Slide 17, we're moving through to Lonsec Research and Ratings. Lonsec is a very well-known, very strong and trusted brand out in the marketplace. Had an incredible year of growth. We saw Lonsec products research up 9%. A big goal for us was actually to get to that 2,000 mark and we just got there with 2001 products research. And this is, of course, across various funds, ETFs, SMAs for the first time, given that we moved Lonsec Investment Solutions away from the research business and obviously moved that over to Evidentia. And of course, the superannuation options that are researched as part of that. Its core research and rating business continues to generate strong cash flow and maintain high margins. In fact, looking at the business and Andy will talk within the financials, it's got close to 50% EBITDA margins and mid-teens in terms of EBITDA performance. So it's a very, very good business, great asset for GDG. We also saw some innovations there with Lonsec Governance Solutions, which was launched just last week. It's a product we've been talking about for some time and this extends the business into specialist governance and investment oversight. In terms of the growth strategy, you can see there on Slide 18 for Lonsec, it's very much a trusted provider in the marketplace. We're looking at new services to be able to diversify the revenue away from its core business, the research business and looking at governance solutions and deepening these client relationships that we have and operating differentiated retirement and analytic capabilities. The technology and data will further deepen insights and also faster product innovation and greater operating efficiency within that business. So Lonsec has been around to close to 4 decades now and it's got a lot of data and research and capability in there and things that we certainly plan to leverage from here on moving forward. Moving to Slides 19 and 20 that I'll cover off just around our AI adoption. At the half year results in February, we did talk about our approach to AI. And we've certainly moved away from the sort of planning phase into a controlled deployment across the group, a Board endorsed governance framework, clear accountability, risk controls are now in place for the group and across each of our businesses and targeted initiatives are progressing across both research, portfolio analytics, reporting, retirement modeling, compliance and a lot of our workflows across the group. Our approach around AI remains capital-light and partnership-led. Partnerships like in Lonsec with AWS is an example of that. And we're focused on measurable productivity and scalability and obviously getting the operational benefits out of any AI that we continue to implement within the business or any of the businesses that we have. Turning to Slide 21. This really talks about the value creation framework. I said everything that we've said today and Andy will go through ultimately comes back to one objective, converting strong market positions and growing scale into sustainable earnings growth and long-term shareholder value. Our distribution reach, adviser relationships and platform capabilities drive net inflows, FUM growth and most importantly, reoccurring revenue. Capital will be allocated between organic investment, balance sheet flexibility and selective strategic acquisitions. The objective for us is obviously to have sustainable EPS growth, improving returns and long-term shareholder value while maintaining financial discipline. And you can see, if I just highlight the bottom of Slide 21 there, when we're talking around potential acquisitions because we do get a lot of questions around M&A, particularly with the success of Evidentia and Lonsec is we're looking at businesses that either fit within the existing assets and expand the economic moat that we have within those assets and further our competitive advantage or we're looking at new verticals where we see sustainable earnings of 15% to 20% growth. They've got those regulatory and structural tailwinds that I've spoken a lot throughout the course of this presentation or they're leaders or disruptors in the new vertical and have got some scale in there. Obviously, it needs to be earnings accretive and the potential for synergies for any of our pre-existing assets that we have. It's been a phenomenal year FY '26 for the group. The staff have done a great job in adapting to a lot of change with the integration of our 2 large managed account assets, a new group operating model. And I'll now pass it over to Andy Mellor, who's the new Group CFO, to go through the group and each of our businesses. Thank you.

Thank you, Grant, and good morning to everyone. Just before I walk through the FY '26 results, I'd like to cover a few housekeeping matters regarding the basis of the FY '26 full year presentation. The results I'll discuss today are presented on an underlying basis. And unless otherwise stated, prior year comparisons are against FY '25 pro forma results, reflecting the corporate structure that became effective on the 1st of July 2025. Our underlying result excludes the benefit funds and a reconciliation between underlying NPAT and statutory profit is provided in the appendix. As a reminder, the restructure resulted in 3 key reporting changes. Generation Life and Corporate previously reported as a single segment are now reported separately. Lonsec Investment Solutions and implemented portfolios previously reported as part of Lonsec Group are now reported within the Evidentia Group segment as part of our managed account business. And lastly, Lonsec Research and Ratings is reported as a stand-alone business. To provide meaningful period-on-period comparisons, we have included in the appendix pro forma segment reporting for FY '25 as well as separate H1 and H2 segment disclosures for both FY '25 and FY '26. The H1 FY '26 segment disclosures are unchanged from those presented at the interim results in February. We have also provided a reconciliation of the FY '25 pro forma financial result to the reported FY '25 financial result on Slide 33. The pro forma financials include the 8.5 months of Evidentia operations in FY '25 prior to the acquisition. We have maintained consistency with prior reporting periods by presenting the Generation Life income tax rebate within segment revenue. For segment presentation purposes, this item also now appears within revenue rather than below EBIT as it did at the half to be consistent across the reporting framework. We've also completed a review of segment cost allocations given that 18 months ago, we didn't report any segments. And given the growth of the businesses, we now report 3 operating business segments in corporate and I'll discuss the impact of those changes shortly. Now turning to Slide 23 and the group financial results. As Grant highlighted earlier, FY '26 was another year of strong performance for the group across key financial measures. Group total revenue increased 23% to $178.7 million. EBITDA was up 18% to $59.2 million. Profit before tax of $54.2 million was ahead of market expectations and underlying net profit after tax increased 21% to $40.7 million, slightly below market expectations, not due to the operating performance, though rather due to a significantly higher income tax expense in the second half and I'll have more to say about tax later on. Total expenses increased 26% to $119.5 million. On this, there are 2 points worth highlighting. Firstly, group expense growth slightly exceeded group revenue growth during FY '26 as we strategically invested in -- increased investment in people and technology capability, particularly across Generation Life and Evidentia to support future scale and growth. Please note, Lonsec expenses were flat versus the pro forma. Secondly, given the significant structural tailwinds and TAM opportunities in front of us, we remain confident that these investments will lead to future growth and deliver operating leverage over the medium term. It's also worth highlighting just here that we've given some guidance on Slide 29, which Grant will speak to in a moment in relation to operating expense growth in FY '27. We've said that FY '27 group underlying operating expense growth rate is expected to remain broadly in line with the growth rate in FY '26, which was 26%. Importantly, FY '26 included a significant amount of organizational work associated with establishing our new segment structure, creating a stand-alone corporate segment and integrating managed accounts within Evidentia. Much of that foundational work has now been completed. The group's effective tax rate for FY '26 was 17% compared with 18% on a pro forma basis in FY '25. The second half tax expense was materially higher than the first half, reflecting a number of items that were finalized at year-end. Over the medium term, Generation Development Group's effective tax rate -- sorry, over the medium term, Generation Life's effective tax rate is expected to be broadly consistent with FY '26. Evidentia, Lonsec and corporate effective tax rate are expected to be in line with the statutory corporate tax rate. I would also like to note that we did have investment in Corporate segment over '26, and we believe that corporate is now broadly rightsized to support the operating businesses. Accordingly, while we expect some ongoing investment, future growth in corporate costs will be moderate. Underlying earnings per share was unchanged at $0.102 as underlying profit growth was offset by the increase in the weighted average number of shares on issue, primarily reflecting acquisition-related share issuance in 2025. Finally, the Board declared a fully franked dividend of $0.01 per share, bringing the full year dividend to $0.02 per share. Now turning to Generation Life on Slide 24. FY '26 was an exceptional year for the business, characterized by record sales, net inflows, continued market share gains and strong earnings growth. Total revenue increased 34% versus the FY '25 pro forma results. The income tax rebate included in total revenue was $13.5 million and we would expect this to increase broadly in line with Generation Life's expense growth going forward. Expenses increased 25%, reflecting continued investment in people and technology capability, together with FUM-related operating costs. Generation Life expense growth rate in FY '27 is expected to be modestly higher than the group average FY '27 expense growth rate, which I just referenced of 26%. In addition, Grant will detail Generation Life CapEx plans as part of the outlook section later in this presentation. Given the significant structural tailwinds and TAM opportunities in front of us, we remain confident that these investments will lead to future growth. EBITDA increased 57% to $23.3 million, with the EBITDA margin increasing by 5 percentage points to 32%. Please note footnotes 3 and 4 on this slide. When calculating the income tax rebate on a pro forma basis for FY '25, that amount is lower than the actual rebate received given corporate is no longer within Generation Life under the new operating structure. This does lead to a relatively higher EBITDA growth pro forma versus FY '26 of 57%. Therefore, in the footnote, we have calculated the EBITDA growth using the actual income tax rebate received to provide an alternative EBITDA growth perspective for you. We also completed a segment cost allocation review between the Corporate segment and Generation Life in the second half as we finalize the new structure. This resulted in a reallocation of certain full year expenses from corporate to Generation Life in H2, which results in H2 Generation Life expenses being higher than H1. For modeling purposes, I would suggest assuming a more balanced H1, H2 allocation on a go-forward basis. Generation Life continues to expect improving operating leverage over the medium term. Now turning to Evidentia Group on Slide 25. As Grant has spoken to, it was a stellar year for the Evidentia Group team, completing the integration of LIS and Implemented Portfolios as well as delivering 37% FUM growth and stable margins. Revenue increased 26% to $58.8 million, noting the FY '26 FUM inflows were significantly Q4 weighted. These outcomes reflect the benefits following the merger, broader distribution capability, strong market positioning and this bodes well for the future. Expenses increased 30% to $33.7 million, driven mainly by investment in people during the year. FTEs increased from 87 to 109 across the year. And in FY '27, we expect FTE growth to fall significantly. Expense growth rate in FY '27 for Evidentia Group expected to be modestly higher than the group average FY '27 expense growth rate, which I referenced earlier of 26%. Given the significant structural tailwinds and TAM opportunities in front of us, we remain confident that these investments will lead to future growth. EBITDA increased 22% to $25.1 million, while the EBITDA margin was 43% compared to 44% in the FY '25 pro forma. Similar to Generation Life, Evidentia Group expects to see improving operating leverage over the medium term. Now turning to Slide 26 for Lonsec Research and Ratings. Revenue increased 7% to $45.8 million, reflecting continued demand across research, SuperRatings and iRate product categories. Importantly, expenses held flat year-on-year, demonstrating disciplined cost management. As a result, EBITDA increased 15% to $22.8 million and the EBITDA margin increased by 3 percentage points to a record 50%. The operating result was supported by a 9% increase in products research and 13% growth in iRate subscribers. Lonsec remains a high-quality franchise characterized by its market-leading position, high recurring revenues, substantial cash generation and attractive operating leverage. As a result, it continues to make an important contribution to the group's overall earnings profile. Now turning to the balance sheet on Slide 27. The group ended FY '26 with cash and cash equivalents, excluding unallocated client application and redemption funds held in trust of $97.5 million and a net cash position of $57.5 million. During the year, the group entered into a $50 million debt facility with NAB, of which $40 million was drawn during the year to fund the majority of the Lonsec earn-out payment. The group, therefore, retains a strong balance sheet and financial flexibility to support its strategic priorities. I'll now hand back to Grant to discuss the outlook.

Thanks very much, Andy. Moving to the outlook before we throw it open to questions. We enter FY '27 with strong momentum across each of our businesses. We see significant opportunities here, particularly in Generation Life, where the structural and demographic and legislative tailwinds continue to expand the addressable market that we went through over the course of this presentation. Our investment in FY '27 reflects that opportunity with capital being deployed in a disciplined manner and proportionate to the long-term growth opportunity we believe the business can deliver. This will be in the range of 5% to 15% of Generation Life's revenue for FY '27. To break that down a little bit in terms of some of those areas of CapEx is what we're looking at is partner integration and scalability. So looking at modernizing our technology architecture and data layer to allow Generation Life to connect more easily with platforms and superannuation trustees and other institutional partners. Some adviser feedback in terms of our portal. We need a more contemporary and scalable experience with greater self-service functionality, including enhanced reporting, transactional capabilities and visibility that advisers don't have today. So it's certainly an area of investment that we're keen to commence and really start to improve that adviser experience and automate several pieces of functionality there. The operational efficiency internally within the business, including some STP across Generation Life. This is automating forms, connecting directly to our registry systems and really eliminate a lot of the manual processing that we still have in the business today. So this allows us to scale a lot easier without increasing operational resources. And really important and the last bit I'll touch on around this is really future-proofing our technology architecture. So moving more towards modular architecture where products, partners, technology providers can be added and change with our significant redevelopment of the broader ecosystem. So allowing a lot more flexibility within the architecture. This also removes the concentration and dependency that we have with some of our partners today. Moving forward around the Evidentia business, we believe this is going to continue to grow beyond its natural market share with net inflows of between $5 billion to $7 billion, excluding mandates and market movements over the course of FY '27. It will continue to scale and also with Lonsec Research and Ratings, will increase its range of products, as we already stated, the launch of Lonsec Governance Solutions last week and other products and services within the Research business. Supported by a strong balance sheet, we remain very focused on executing our strategy and converting all of these opportunities into sustainable earnings and growth and obviously, ultimately driving long-term shareholder value. A big thank you to all of our Boards, all of the executives across the group and most importantly, all of the staff across each of our businesses that have executed FY '26 as another very, very successful year for Generation Development Group in each of its businesses. We take a lot of pride in what we do and the customer relationships that we have and we're looking forward to delivering yet another record result in FY '27. I'll now pass it back to the operator for questions.

[Operator Instructions] Your first question comes from Nick McGarrigle from Barrenjoey.

Just in terms of the outlook in terms for investment bonds with the investments that you've made in the last year, can you talk through how that pipeline is looking? What kind of growth rates you're thinking you might be able to generate in those flows on investment bonds given that pipeline? And then maybe how you think about the return on investment on that additional expense that you're putting in this year?

In terms of the CapEx there, Nick, based on the FY '27 financial profile on the revenue side, we expect that between 5% to 15%. We know that's quite a wide range. The reason it's wide is because we want to invest at the speed that we see the opportunity pick up. To be totally honest, in terms of the performance of the business coming into this new financial year, it's probably outperformed where we anticipated. So the changes to the tax reforms, obviously, the changes has definitely corresponded inflows, probably a little bit quicker than what we anticipated, which has been a good surprise. We've made the investments last year that you touched on. That was around sort of 3 core things. One was products, two was the registry system. We found the registry system was becoming quite slow to do things like regular savings plan, which is a material amount of inflow each month and taking 8 or 9 hours to do. We've now done that where it takes 1 to 2 hours. And also in some of our other sort of back office operational side in terms of STP. So -- but what we've seen in FY '26 was a 71% uplift in applications. So the corresponding growth to the investment was probably a little bit outsized. So look, we've commenced some of those investments that I've just touched on around those areas in the portal, we've scoped a lot of it out. Some of the STP we've commenced, some of the new product stuff we're looking at, we've already commenced as well. You got anything probably want to add to that?

No.

Cool. And then maybe just a question on Evidentia. We've seen the platform results in the last couple of weeks and they're reporting a slowdown in flows just driven by a bit of rethinking around tax structures and investment strategies. Can you talk through what you're seeing in Evidentia? Hopefully, those trends aren't the same in your business?

Yes. We wish we were completely insulated from the pro impacts and the changes at the moment going on in the market. So I think we're definitely feeling those changes. I don't think quite to the same extent as perhaps the platforms. Quarter-on-quarter relative to market conditions, we've been happy with the flows. I guess where our business is a little bit different is we've got diversified assets. Lonsec Research, I haven't touched on that yet coming into this year has performed very well. Obviously, we touched on the investment bond business. Again, that continues to outperform. So we're seeing good performance in Evidentia. But yes, again, it's going to be impacted, but I'm not sure to the same extent as platforms.

Your next question comes from Simon Fitzgerald from Jefferies.

Just firstly, on Evidentia, the $33.7 million you were talking about an increase for FY '27 will be slightly higher than the group rate that you're talking about, which is 26%. Is that really just a full run rate of additional people and so forth that you've put into the expense base in FY '26? Or is there something else that I might be missing there?

Yes. No, I think you pretty much hit that, Simon. The way we're sort of talking to modest growth in Evidentia just on that expense growth versus group, which I guess would make sense given that you don't have a lot of expense growth in corporate and Lonsec. But yes, the hiring will sort of, of those staff, I said up to 109 will flow through that cost base in FY '27. But yes, also please take note of my comment that, that FTE growth through '27...

Yes. Good. And then again, just on Evidentia for a minute. We normally sort of think about from the existing client base in terms of or a level of inflows around about sort of $5 billion a year and then mandate wins sort of on top of that. Do you still feel comfortable with that number, Grant, in terms of the $5 billion for existing clients?

Look, I think existing clients and I'd include probably some new wins that we get at the start of this year of RFPs that we'd be in, in terms of net flows because as you know, in the first 12 months, you don't really see -- you probably see 1/5 of the total FUA in the first full 12 months. So look, I think that $5 billion and like I said, that sort of $5 billion to $7 billion range of net flows, we believe, is realistic with mandates and market movements on top of that. So there's nothing indicating otherwise at this point in time.

That's fair. And then just one final question on the tech spend related to Gen Life, particularly around investment bonds. Is there an issue with sort of scaling technology or in terms of the size of the technology? I mean, I would have imagined it had been built a long time ago. So maybe what level of sales was it sort of structured to be able to cope with?

When I first joined, what we did in a full year in terms of applications, I think we do it less than a week now. So we certainly -- we have invested along the way and we've been able to scale up. I think we've gotten to the point now where investment bonds was more of a fringe product. Now it's becoming more of a mainstream product. So the expectation from advisers, given we've got close to 3,000 active users is it's not quite like a platform, but it's expected to have a bit more functionality, a bit more transactional capability. And again, that will take the load off the back office as well. And these growth rates allow us to do that investment to be able to get that all up to speed. Also, the other aspect of this is the ability to be able to integrate with platforms and other technology providers with a bit more ease. So that's not something that we probably foresaw within the next 3 or 4 years until these tax reforms came through recently. So that's probably just come forward a bit to what we originally anticipated.

Your next question comes from James Bales from Morgan Stanley.

A couple of ones for me. Firstly, just some clarity on the CapEx guidance. Is the 5% to 15% of Gen Life revenue you called out in addition to the $7 million that you spent in FY '26? Or is that the total CapEx build?

Yes. James, the way to think about it is the FY '26 spend wasn't $7 million. I think you've probably seen that in the cash flow. It was more in the range of $5 million. And it is in addition to that spend. And that we've basically decided that referencing it to revenue makes a lot of sense because it gives us a bit of a sense of how revenue is tracking and how we want to ensure that we're spending the money in the right areas, but also particularly at the right speed.