Iress Limited (IRE) Earnings Call Transcript & Summary

Well, welcome, everyone. Good morning. Thanks for joining us today. My name is Kelly Fisk, and I'm Iress' Chief Communications and Marketing Officer. It's my great pleasure to welcome you all here today for our Iress investor briefing. Before I begin, I'd like to pay my respects to the traditional custodians of the land upon which we're meeting today, the Gadigal people of the Eora Nation. I'd also like to pay my respects to elders past, present and emerging. We're very pleased to welcome you here to Iress' Sydney offices for those who are joining us in person and those who are joining us online. Today, we're going to spend the next couple of hours talking you through our strategic plans for the business. In a moment, I'll invite our Chair, Roger Sharp, up to the stage to provide some opening remarks before we hear from our CEO, Marcus Price, who will present a detailed briefing. We're also going to hear from our CFO, John Harris, as well as other members of the Iress management team. As I said, we expect the proceedings to go for around 2 hours. After which, those of you who are here in person are welcome to join us for some lunch. Bathrooms are located just down the end of the corridor. We've got some Iress team members in black T-shirts who can assist you with anything you may need today. We will be opening for questions in the second half of today's presentation. So if you'd like to ask a question in the room, please raise your hand and we will get a mic to you. That's all I have for the housekeeping for this morning. I'd like to now hand over to Roger Sharp to officially open today's session. Thank you, Roger.

Kelly, can we give some health and safety supplement for today?

Of course. In the unlikely event of an emergency, please listen to the instructions of the Iress team members who will guide you through anything that we need to do. Thank you, Roger. Good reminder there.

Well, good morning. I'd like to reiterate Kelly's welcome today. I see we've got a teleprompter. I also see that Marcus and I are going to do this the old-school way which might tell you something about us. As you can imagine, in recent months, there have been many hours and hours, just understating it, of debate and discussion about the future of Iress with our Board, with our leadership team and with some external advisers. This Investor Day process has provided me as Chair with the opportunity to reflect on what I've learned about this company in the past nearly 2 years and as well from my accumulated experience with technology companies over a fairly long career. The key question on my mind has been what is the right thing to do for Iress, for its shareholders, for its customers and for its employees? And how can we do this with a much faster cadence? A little bit of a history for you. In 2021, when I was appointed to this position, we immediately sought feedback from shareholders. And I see a number of people in the audience, I know there are a number of people online, that I did consult with and have had many, many discussions with then. There was a chorus, a resounding chorus, of feedback that said our return on invested capital is too low. Our EPS had flatlined. This is a potentially great company, but it somehow lost its way. We listened to you. But little did we realize that over the next 23 months, we would face a takeover offer, we would change CEOs, we would hold 2 Investor Days to articulate 2 slightly different strategies, make an earnings downgrade and hold an EGM. But here we are. The elephant in the room is that in response to takeover negotiations in 2021, we announced the build of a new cloud platform to enable the business to scale better, and we adopted new, aggressive 2025 performance targets that were designed to kick in as the business scaled. The platform is on schedule and should be operationalized by early next year. However, we are not delivering the growth we set out in that strategy, and we need to improve our trajectory. A change in leadership always brings a fresh perspective, and it's been pivotal to us in developing the new strategy that Marcus will lay out for you shortly. At this point, I want to express the Board's support for what Marcus and the team are going to articulate today. You'll hear about a refreshed vision for Iress. You'll also hear about aspirations for the group to achieve a Rule of 40 status, bringing it in line with other leading technology companies. What Marcus will unveil is a simpler Iress with clearer lines of accountability and performance metrics, new business leaders who are in the audience today and we're looking forward to introducing to you, a renewed focus on customers and a reduced cost base. From here, it is all about execution. We are placing a lot of emphasis on change management and detailed execution plans. I invite you to listen to Marcus and the team and then to interrogate us, as I know you will, on our implementation plans. So thanks for coming today. And Marcus, over to you. Don't break a leg.

Thanks, Roger. Thanks, everyone, for coming in today. Thank you to those people online. I'm delighted to be here in my first Investor Day for Iress. So I guess I'm going to ask for a little bit of indulgence. Those people who know me know I like a bit of a little tour of history at various times. I love history. And I'd like to just go through my sort of thinking about Iress, where it comes from, where it sits as a company, right? And I think what we've got to go back to is what is Iress in the business of. We're in the business of actually connecting people to their assets fundamentally and connecting people to their assets and their wealth. And if you think about that in a sort of broader sense, the greatest engines of prosperity that human kind have ever invented are capital markets, and we connect people to them. And we actually -- and you are all in those businesses as well, by the way, of creating wealth, retaining wealth. And that's actually integral to our society. In human history, the accumulation and exchange of value tokens has been a constant feature of our society. It's actually essential, I think, to civilization that we can actually do that as human beings. It's what we do. Tokens of value have changed continuously, right? So if you go back in time, accumulating sheaves of grain or amphora of olive oils or ingots of bronze or silver. It was all the same. There were bankers back in Rome. There were bankers in Egypt. They just had different vaults, right? And when they exchange stuff, they did it differently, right? But at the end of the day, what was happening still was value exchange or tokens of exchange. And that's what we do. Iress, like many other digital financial services companies, evolved in the late 20th century when there was a particular thing going on, which is the digitization of financial markets. A lot of the businesses that are in the market today are of that type. But as you'll hear -- you might think, "Oh, this is just Marcus having a little flight of fancy." You'll hear the echoes of this through the presentation today as I point out where those things are actually rubbing up against companies like Iress. What is constant through history, though, and it's absolutely an absolute -- without any shadow of doubt, is that as tokens of value have evolved, so also have the means of exchange. The way in which things are exchanged has changed. And so for any company in that business like us, we also have to evolve and change. If you want to stay relevant, relevance demands continuous evolution and change. We cannot stay still. No company can, even more so in this industry, which is fast changing. And I do want to just dwell on one more thing, which is truly great companies, the really good ones, make change. They drive change. They make markets. They build TAM, if you want, if you want to use that objective. If you think about the companies that have always created the great franchises of the world, they have created markets. And I think Iress was no exception back in the day. It did exactly that. It's particularly relevant today, though, for Iress because we are facing into significant and confronting change. We do not have a do-nothing option. We don't take change lightly, and we appreciate that it's absolutely necessary. What you're going to hear today is the accumulation of a lot of work. When I came into this business, I think I didn't actually go out into the market as much as people would have liked probably. That was because we needed to do the work, get the data, get the information. And it wasn't readily to hand necessarily. So there was a bit of work done to get to where we are today. I stand on the shoulders of a lot of people, including some consulting teams, external consulting teams, that have worked extensively with us, and a management team and an internal team that have done an awful lot of work. I also pay tribute to Roger Sharp and the Board because what they had to face into was some fairly confronting data, some cold, hard facts, if you will. It's confronting looking at change. And it takes courage. But the one thing I would say is that through all of this, the lens of what's best for our customers, what's best for our shareholders, has been the overriding concern. And I think you should take a great deal of solace from that because that has been the true driving objective behind everything we do. Our objective is to remain at the forefront of our chosen industries in our chosen markets, and the prize is large. I think opportunity abounds actually. It's never been a better time to be in financial advice and trading. We've got unprecedented access to global markets and products, in a way, that were just not even possible a few decades ago. Just think about the proliferation of product that you see yourselves, that's available to you. 25 years ago, it was unimaginable, the range of investment options that we have and the range of markets you can even access, even though Xpansiv is starting yesterday the first carbon trading, $1.4 million in turnover, but that's okay, everyone's got to start somewhere. Remember, the first ever PEXA transaction was $10, which was a lot less than the cost of the party, but anyway. But seriously, the markets -- our markets are evolving all the time, and new assets are coming on to be traded. New technologies are in front of us. At the same time as we're having these new products and new markets and new means of value exchange, there's been an explosion in the volume and accessibility of data and the tools of data, including AI. And you have to be living under a rock not to know the impact that ChatGPT has had on industries everywhere. We'll talk a little bit about that later today. But one thing is certain, and that is we are on the cusp of a new generation of digital advice and trading propositions. We're on the cusp of a new era. And you can feel it, and you can see it. You can see the technologies. You can see markets. You can see the data. It's our job to step into that and to remain and -- drive that industry, remain relevant to it and drive its change. What we aspire to be is a company with the attributes of higher growth in EBITDA margins, those sort of things that drive Rule of 40 performance, because that's the sort of company we aspire to be. We believe if we can execute on that here today, or it won't be today, over the next few years, execute on what we talk about today, Iress will be able to credibly represent itself as a tech business. And it ought to be rated alongside the great peers, the great technology peers, that we have in the ASX today. That's really our ambition, in short. I'm going to move on to now the details of the strategy and what we'll hear today. We'll wait on -- I don't like the lectern. So essentially, we have a three-pronged sort of focus. The first is to reset Iress, reset our cost base, reset our assets, reset even our structure. We need to refocus our business and build. I'll go into each of these in detail. The first is we're looking to reset our structure in a way that's going to drive accountability and performance. We will have a new P&L and business unit-driven structure, which is quite transparent and focused on some product verticals that you'll see; a new performance remuneration framework; a transparent reporting framework that actually follows the business unit, so you can see the business units and you can see what's performing and what is not in the group. It's very, very important, that disaggregation as well. By the way, you'll see later the impact of it when we actually think about Iress. I think there's a new path to enterprise improvement. And so for the reasons Roger outlined earlier, the 2025 targets just don't fit with what our new pathway to value actually is. We'll talk a bit more about that later. In terms of resetting the costs and assets, we're looking at obviously a total reset in many respects. We're looking at a $32 million cost reduction by June 30, and that's in head count. We are going to be looking at an immediate process, if you will, to divest the MFA and Platform businesses. They're just not central to what we need anymore for the strategy of this business. And the carrying value of some of our assets, including, in particular, the U.K., we've written down by $123 million, and that's really as a result of our reevaluation of its carrying value against the revenue that is coming from it. Our focus, though -- our refocus would be back on our core markets. And you'll see today just how strong those core markets are: wealth, trading and market data and superannuation. We'll be taking a different management mindset to the remainder of the portfolio. And I won't talk about it now, but it's essentially a private equity mindset around the remaining part of the portfolio. We'll talk about what that means and how we see that being executed over a period of time. That impacts the U.K., Canada, South Africa and, of course, we mentioned already MFA and Platform above. Finally, we get to build. And this is the exciting part for me, why we're -- really where we see our future, building out the remainder of the technology uplift, including doing some remediation of our core platforms that are desperately in need of some updating as well as some innovation in wealth, data, AI and trading. And we'll go through all of those in detail. I'm going to go through each of them, but I just wanted to give you a preview of what's to come, what you're going to hear today. Let's get into each of them in some detail. First, quickly, Iress. Iress is an incredibly strong franchise. It's been around for 20 years, been listed since 2000. It's easy to forget just how strong the core businesses are, right? The actual core business is in Australia. Nearly 28,000 (sic) [ 38,000 ] Xplan users, an enormous amount of digital advice produced, 203 data integrations, 120 million records processed daily in wealth. In trading and market data, $3.2 billion (sic) [ 3.2 billion ] in trade orders annually. In superannuation, 3 million member accounts sit on our platform, $630 billion in superannuation managed through our software. About 27% of the entire superannuation funds under management is sitting on Iress infrastructure. We are core to those 3 industries in this country and the clear market leader in the first two. But there's been an issue with performance. And I think you all know this, and we've -- in my meetings with investors and shareholders, I've certainly had this exact conversation. What we didn't have, I guess, was the data. And today, I'd like to share some of it with you. Iress' performance has actually declined despite acquisitions and top line growth. And I'm sorry, this is a bit of a messy slide. It's coming directly from some of our analysis, but just quickly taking you through it because this, to me, actually tells the story of Iress. It also tells the story of what not to do with capital. You'll see the yellow line there on the top chart is actually our invested capital. And you'll see a very significant spike that happened in around 2011-2012, in that second -- in the middle of the second era of Iress, if you like. And it was a very significant ramp-up in investment. That was the U.K. acquisitions and, in fact, from that time to today, around $750 million of acquisitions, mainly offshore markets, principally the U.K. Prior to that, by the way, in the early years of Iress, you can see the growth attributes, profitability and the returns, have been more extraordinary, extraordinary strong technology story up until sort of mid-2000s. Just moving on though, you'll see the total revenue line continued to grow, 12% through Era 2, 7% even in recent years, looks good on the top line. What doesn't look so good is when you start looking at profitability and performance. If you look at that second chart, you can see what we call NOPLAT, effectively profitability, from 8% in Era 2 declining to minus 8% over the last 5 years, a decline in profitability. And economic profit, you can see really declines. So that's when you actually bring in the effect of the cost of the assets that we've bought, the cost of capital, if you like, into that. What you can see is a major decline in performance to do essentially with acquiring assets that had lower margins, lower profitability, which diluted the core growth -- core engines of Iress' performance that you were used to seeing in the earlier eras. And of course, unsurprisingly, the return to shareholders declined over time as well. It's a story that you all probably have lived through and have seen. But having the data is actually important to be able to back it up. It also, I think, tells you, if you look at that chart in maybe '13 or '14, you'd say, "Okay, well, we bought this stuff offshore. We need to do a bit more work. It needs to improve." But now we are 7 or 8 years later, and actually, to turn around and say, "Trust us. We're going to try harder this year, and it will be different," it's not open to us as a strategy, right? We've had a good swing at this overseas, and it hasn't worked. What we are doing has not worked. We need to do something radically different which, for me, is good because as an incoming CEO, I've got the opportunity to do the reset and to call it out and to make the changes. We talked about the challenge has changed. This is it. There's a call to arms, a need to do things differently. Even, I think, to think differently about the company, what are the metrics that are important? How do you go about your business? And the one we are looking at, one which is used commonly by technology businesses, which many of you will know well, is a Rule of 40 benchmark which leading software companies certainly use and report. I'm using a somewhat -- our bastardized version, if you will, EBITDA margin percentage on the left axis and revenue growth on the bottom, Y axis and X, sorry. Rule of 40 line, companies that perform above Rule of 40 get rated pretty well; below Rule of 40, not so well. And let's plot them. If you look at us compared to some of the great tech businesses that are in our market today, Xero, WiseTech, of course, the star, Atlassian, they are all well above Rule of 40 performance; Iress significantly below and well under the line, right? You can imagine what would have happened if we plotted that back in 2000, 2002, we would have been the star. We would have been up there nudging -- giving a nudge a bit of -- sorry, giving WiseTech a bit of a nudge, right? What is interesting, though, and what we've been able to do is to pull Iress apart. And this was hard to do, hard to get the data, but we need to pull apart to see which parts of the group are actually performing. And what you find is that we actually got some incredibly strong franchises, some very strong Rule of 40 businesses. If you plot the ANZ Wealth Management and APAC Trading & Global Market Data businesses, they are well above Rule of 40. If they were listed in their own right, they would have those sort of ratings. As you can imagine, it doesn't take much organic growth to push us to the right and well into the company of some absolutely outstanding technology businesses. Our Superannuation business, and plotted down here and disaggregated, it doesn't have the margins yet, but it's got a lot of growth. And that is just a factor of its maturity. As these businesses mature, operating leverage emerges as platforms get installed and actually start performing over time. We are very much in the industry consolidation phase of superannuation at the moment, but our platforms are actually at the forefront of that change. So we're going through a lot of customization, low-margin work, which impacts the margins. But ultimately, we see Superannuation as being a Rule of 40 business as organic growth kicks in and as operating leverage starts to emerge. Which leaves you to the rest of Iress, the portfolio which we will refer to today as our managed portfolio or a portfolio of all the rest of the business, which is right down in the bottom left-hand quadrant. If you look deeper into that, you will see some businesses that actually are performing well. In the U.K. in particular, which are largely noncore to us, so if you look at mortgages and sourcing, for example, very high-quality businesses, very high-quality attributes, the rest of the businesses tend to be quite negative and, in fact, value destroying in a lot of cases. Nevertheless, you can see why, if you add all those together, you get an Iress dot below the Rule of 40 line, disaggregated, you get a very different picture. That sort of analysis was the tip of an iceberg, okay? We did a lot of work to get there. And it gives me unless -- leaves me and the team with some jobs to do. The reset, which involves the structure and the cost base and the asset base; the refocusing, which talks about focusing on the core businesses where we are strong, we're managing portfolio for value, which will go through a technology uplift. Let's go through one. The first thing we think we need to work on is restructuring ourselves around those products, the core strengths of Iress. So what you're going to see is a new structure based on business units with P&L accountability. And I don't just mean P&L accountability, I mean functional ownership of the things that drive those businesses, including their technology and their product and their sales. They will have the tools necessary to drive those businesses. It will be true P&L capability. We have a number of new appointees into those roles who will be introduced to you later: Harry Mitchell who's joining the group from Mine Super; Jason Hoang who's been with us for a very long time, he's taking charge of the Trading & Market Data business; Paul Giles who's taking over in Super. And also today, you'll notice John Harris, who's our CFO today, is moving roles and he's actually going to be taking up responsibility for the Managed Portfolio. Anita Chow will be taking over as our acting CFO while we go through a search for -- external search for CFO, also a candidate. When you look at these businesses in isolation, each of them are large enough and big enough to be able to be listed in their own right. $129 million in revenue in Wealth Management; Trading & Market Data, Super; and the Managed Portfolio has $261 million in revenue and not a lot of profitability, as John will show you later. What we want to do is get these businesses closer to our clients, closer to customers; have performance metrics which drive performance for those businesses; tighter spans of control. We will also have functional overlays because we are still a group, some shared services in marketing and other areas, finance and so forth. We are looking to make this structure effective on 1 July. So we've got quite an implementation ahead of us and quite a transformation ahead of us. We still have some corporate functions, of course. The one I want to note there is #1 on the list, which is innovation. We are building a particular center for innovation, which is going to be central to our build, and we'll go through that a little bit later. That's going to be headed up by David Hentschke. Right. Second reset, the performance framework, and performance-based remuneration specifically. The existing remuneration framework, including equity rights and performance rights, will be replaced. We've already stopped issuing them. The remuneration framework will be refreshed in line with, I think, what are market norms and expectations, certainly what I'm used to seeing, a structure which you'll be familiar with. It will be aligned to the business unit performance, to the P&Ls of those individual businesses. It will have cash-based, short-term incentives. It will have a balanced scorecard, which includes the financial metrics but, importantly, also includes customer metrics, NPS. We'll talk a bit about that. We are not liked by our customers at the moment. We've got a negative NPS. I want that to be a key focus of each of those CEOs to improve our performance and improve our reputation with our customers. We also have, of course, our behaviors. We'll have an equity base. The long-term incentives will be aligned with shareholder returns. Just importantly, and as Roger, I think, has foreshadowed, we will be taking this 2 shareholders for approval, of course, but we are in the process of constructing an entirely new performance framework. It is important, though, we want to encourage all the right behaviors. We want full alignment with what our people are doing, what our customers are experiencing and shareholder returns. We want that true alignment. That's what the intention is. Resetting the cost base and the asset base. We have a program of cost savings through head count reduction, $32 million in annualized savings, which is about 10% of the group head count, by June 30. That is particularly painful. There's a human cost to this, right, and we are not immune to what. It hurts. But it's something we know we have to do. It's part of the renewal process of the structure as well as the need to drive greater efficiency. Our costs have been growing faster than our revenues. We actually need to act, and this is part of the reset. We also have some elevated levels of technology project work which are going on below the line, which also need to be reduced and, in fact, removed from the organization as those programs complete. We have got line of sight of all of those programs. We'll talk about them. We've ring-fenced the ones we know how -- where they are, what they're up to, when they conclude. And we'll talk about that a bit later on when we get to our build section. But there is another further cost out to come below the line. There are, I believe, further above the line efficiencies to be gained through the organizational structure. But what we're wanting to do is set out the CEOs with clear accountability for performance and efficiency and allow them to do that over time throughout 2024. So this is not the end of the efficiency program, but the start. We also had to go through the process of looking at which assets we need in the group and which ones are performing, which ones are not performing, and what's their carrying value. We made it -- we've already commenced the process to divest the MFA business that was bought through OneVue and the Platform business also bought through OneVue. That process is underway. There's going to be an ongoing process of management and capital repatriation from the nonstrategic assets, and that's that private equity mindset I spoke about. We're going to apply to the residual part of the business, the noncore parts of the business. We do, in crystallizing all of that, have identified an asset write-down of about $123 million, which is going to affect us this year. That is almost entirely the U.K., almost entirely the carrying goodwill, the acquired goodwill, of the U.K. In fact, we'll talk about metrics later, return on invested capital is not a great metric for a software company, I think. At the end of the day, almost all of our capital is acquired goodwill. Moving on to the next, refocusing. Refocusing is important because this is what's going to drive our business forward. There's incredibly positive outlook for the Australian wealth management industry. And anyone who's read the Levy report must conclude the same things. There's a bunch of metrics that come out of Levy, including, 61% of consumers have got unmet wealth needs. 27% of them have taken advice from a finfluencer. 18% have acted on it. That's not to say it wasn't good advice. I'm just saying it's a lot, right, so -- when only 6% of the population are getting good financial advice. 1% of the population have used digital tools, digital advice tools, but up to 20% are quite interested in doing so, would do so if they could. Pretty interesting on the eve of ChatGPT. By the way, ChatGPT, if you ask it to give you advice, it was smart enough to know not to. It says, "No, no, no, I don't give financial advice." So I think it's already smarter than some of the finfluencers at least because they probably shouldn't be giving advice. I should be careful what I say. Anyway, when you read the Levy report, they say trust is the biggest issue, right? Trust is the biggest issue with advisers. And that's unsurprising when you think about the Royal Commission and conflicted rem and all the things that have gone on. But the next biggest issue is cost, and they're pretty close. Cost, 70% of people surveyed would access financial advice if it cost $1,000. Only 6% are prepared to when it's $3,500. What's the answer? Read Levy. It's technology. Michelle Levy has done a great job in surfacing a whole bunch of issues for this industry. There is a huge job ahead for advice in this country, and there's a huge job ahead in other markets as well. But there is enough in Australia, let me tell you. We've got a massive opportunity. We are the incumbent. It's our responsibility. Advisers need us to step into that space and build the next generation of wealth tools. We can't -- they can't do it themselves. They need our help. And it's on us. And I really strongly believe one of the reasons we're focusing this way is to actually meet our obligations as the incumbent in the industry to drive it forward and to make advisers more efficient, give them the opportunity to bring on more customers, to provide better and more effective and accessible advice to Australian consumers. One -- #1 tailwind, we've got the entire federal government push towards exactly that. They recognize the value and need for financial advice. I don't know how you can get a market that's kind of more attractive and more interesting than that, particularly when you're the incumbent. I think what's also interesting about us in wealth, we've got incredibly strong market position and a loyal client base, much to my -- I'm quite sometimes a bit embarrassed about it, actually, a loyal client base where 90% of the top 20 clients have got 10 years tenure and 98% recurring revenue. Again, pretty enviable stuff. Ask them what they think about us, not such a good story. They don't -- we've got negative NPS. Why? Because we haven't done enough for them. We've been spending our time and money in other markets. We need to get back to basics here and get back to looking after our core constituents. Advisers are trying to adapt and change the world, and so do we. We've got investments that we need to make in improving Xplan experience and functionality and, I think, just service and help provided to improve the experience of advisers. We are going to innovate to grow. We've got advice firms seeking greater scale. We'll talk about our thoughts about the next generation of advice tools later on. Xplan Affinity is one of our major projects, which actually is an important thing for the industry. It doesn't mean anything to you as a name. What that does, it connects advisers with traders. It means you can automatically go from providing advice to trading without double-keying, reentering, creating customers and all the rest of the stuff. It's the #1 pain point listed for financial advisers, #1 efficiency gain. We're actually well into that. We're in beta test mode with a whole bunch of customers. So we're delighted that's going on. Of course, digital advice. We heard Levy, 1% of people using it, 20% who want it, something we need to work on and we're working on. That's something we can work on over the next few years. At the end of the day, the notion is there's a lot more growth ahead of us in wealth management in this country, and we need to step into it. In the Trading & Market Data, it's a similar story in that we are central -- almost the central infrastructure in Australia for trading. We are the Bloomberg of Australia to where -- which is we're lucky to be in that situation, I think, very fortunate. But users, again, are telling us we're not keeping up to speed and we need to do more. And we'll talk about that later. But we are seeing industry trends in global trading infrastructures that are all requiring modernization. I know we all feel our trading infrastructure is creaking at the seams. Go overseas, ask anyone, it's the same everywhere. What's really interesting about this industry when you look at it is that all of those exchanges that were built electronically in the '80s and '90s, a whole bunch of companies emerged to actually start providing gateways and means of trading on those platforms. All those incumbents are almost all still in place, very hard businesses to dislodge, and they're all operating on heritage architecture, just like us. But we've got work to do. We've got to catch that up. And we've got to make sure our Iress platforms are actually fit for purpose, strong and actually are continuing to push the industry forward. Users want single desktops. They want more data sources. And again, if you think this industry is standing still, think again. There's any number of new data feeds required. Again, we saw Xpansiv starting their trading today -- no, yesterday, sorry. But that's just one small example of a whole bunch of new data sources and products wanting to be traded. We are the leader. Once again, same sort of attributes, incredible -- incredibly strong client base, 90% of our top 20 customers is 10 years tenure, 98% recurring revenue. So just think about that for a minute. The 2 big strong businesses all above Rule of 40, very strong recurring revenues, not happy, we need to do more work to keep them happy. It should be a no-loose-brick strategy, right? Iress is investing to improve our core IOS stability, to get it back up to market speed and get it to the point we actually start to lead again. But we've got a bit of catch-up there. Clients are seeking differentiation through access and connectivity to data (sic) [ access to connectivity and data ], through different data sources, on us to provide it. And Iress is expanding our FIX connectivity and other things. We've got projects underway to do just that. Our third core, Superannuation. I think a lot more people know this story, so I probably won't dwell on this as much, but superannuation assets are forecast to meet -- reach $8.6 trillion within a few years. We're going to have $1 trillion super funds pretty soon, $1 trillion in net assets. I think we're going to look at industry consolidation where we're going to end up with quite a lot fewer funds. As you know, the regulators are forcing amalgamations and mergers. We're going to be one of -- where acuity is going to be one of the platforms, I think. We're going to end up running 35% to 40% of the superannuation industry on our acuity platform for the super funds for whom we are a good fit. So I think the future is terrific here. We've got a lot of growth. We've got a great growth pipeline. Our third core business is Superannuation. We also need to focus on moving the industry forward, though, with digital tools, advice tools, the things that they are going to need in the future, the things that customers are going to want. Right. Now we talked about managing portfolio businesses for value. We've just spoken about our reset and focus for the core, doubling down on our great businesses. Here, we're talking about what do we do with businesses that are not in the core, business where we can empower management to do things differently. And our thinking is, as we've talked about, strengthen the core, be the market leader, do what's necessary to grow that business and keep faith with our customers. We're going to do some market building in superannuation and innovations, a different mindset there. The third mindset, and the one we want to focus on, is what do we do with these other businesses, the U.K., South Africa, Canada, MFA and Platform? What we want to do, and you'll hear from us quite a lot today, is take what we call a private equity mindset to this portfolio. Ultimately, our objective is to repatriate capital, but we're going to do so in a very careful and measured way. And the way to do that is to empower management, empower the local management. We've got very strong local teams in these businesses who have been frustrated for many years because they've not been able to get things done and pursue opportunities in their markets because it's all come back to the center. When you talk to them, there's an awful lot of domestic opportunity for these businesses, but they're not able to pursue it. They have been constrained in their capacity to pursue it. So we want to use the tools of private equity to empower that management team, to have dedicated business plans for their markets, which focus on creating value for them and their customers, and we want to basically manage them for value. We're going to have a patient approach to release of capital, but release of capital is what we intend to achieve. Tools of private equity include joint ventures, carve-outs, capitalization, other investment, other investors in those businesses, joint ventures, if you like, partnering. We'll be applying that, and John Harris will be leading it over the next 18 months to 2 years. It's also the case, as you know, with private equity, there's a time and a place for everything. Timing of entry and timing of when you leave is actually very important to how much value you actually create from any investment. We want to make sure we optimize that. We're not in any rush. We have to do this well, do it effectively, but ultimately, achieve this within a couple of years. We're not actually setting a time frame for it, and don't ask us for one because you won't get one. In terms of building, we've got a little bit of work to do still to transition to our platform architecture and our cloud optimization program. It will be complete by quarter 1 2024. This was announced as a strategic direction previously and still is an important platform of what we're doing. We've moved all of our advice and investment infrastructure onto the cloud that was -- that we can. We had a couple -- or 12 legacy products that we've decommissioned. What we have done -- this project was quite a hard beast to get our hands around because it was fairly hard to actually pin down exactly which elements of the project were necessary. What we have done is ring-fence the last pieces of functionality. We know exactly what they are, exactly what's going to be delivered and when it's going to be delivered. That's going to happen by the end of 2024. We've got a couple of items to finish, and we've actually been able to really crystallize those. So this is a program that will have an end. We have, however, in the course of evaluating this platform project, extended it in a couple of important ways. Number one was to work on the IOS platforms because, as we said earlier, we are not quite up to speed at the moment. We needed to do some catch-up work on our platforms, and we've invested in doing that as part of this exercise. It's particularly IOS and trading platforms, 32 to 64 bit, sort of capacity type things that are needed to keep that platform at the center of our trading business, right? We also need to build out some Xplan Affinity as well, and we're going to do a refresh of the software of Xplan. Xplan is 6 million lines of code, 15,000 screens. Some of them are pretty old. We actually need to refresh the ones that are being used and try to improve users' experience and -- before we even start thinking about new functionality. So there's a bit of a catch-up there. Those are one-off investments that are expected to be complete by 2024, at which time, the below-the-line investments in technology should cease, and it should become BAU. Building to innovate, growth in the future. Iress needs to innovate and build new organic businesses. We need to get back to what we did, back to being a technology business, back to being able to build new markets. We think there are additional growth opportunities beyond just the organic, continuing growth of Xplan in advice. It's time to think about the next generation of advice platforms. We need to do so in a disciplined manner. We talked about the innovation area and the structure. We've done that deliberately so we can contain our R&D spend and make sure it's very transparent. We don't want to let it get out of control. And furthermore, we think we can, by refocusing, not actually expand our R&D spend but actually just focus it on a couple of key areas. So it doesn't get dissipated, it actually gets focused on the areas where it's going to have leverage. The sort of things worth talking about are the next generation of wealth capabilities. The wealth platforms, our Xplan will still be used and some advices offer it somewhere in 20 years' time probably, hopefully, with screens from recent screens, not the ones from 2005, but you never know. Anyway, Xplan will still be out there. But what is clear to us is that advice is changing. The Levy report spills it writ large. People's journeys into financial advice are now different. Their first experience of advice and trading is coming from a phone app, right? Back -- 25 years ago, it was the Yellow Pages and finding an adviser on High Street. We need to be moving with that. We need to make sure that the next generation of Xplan, or whatever it will be called, comes from us. Furthermore, if we're going to build something, we build it digital native, in a way that's actually going to be applicable in international markets with a mindset of international wealth markets. And we think -- one of the things people ask me about Iress is, "What do you think about the place?" So one thing that's very clear to me is the capabilities of our people are really there. There's not many teams in the world that have got the knowledge about wealth and advice that we've got. Look around the world, in a concentrated space, and we really do have a great team of young people who know this business backwards. But they've been, again, trying to rebuild Xplan as opposed to actually think about the future, think about what's next. And you know what, we're going to face competitors, and we're doing just that. So it's on us to actually be the best of breed in the next generation of advice software. We're going to explore opportunities in data and AI. We have got a ton of data that we have never really used. I don't think -- I think there's 1 data scientist in Iress at the moment. We'll be readdressing that. We've got petabytes of data and 1 data scientist, so that's -- he's busy. We are doing -- going to explore some opportunities there. And AI, of course, is the buzzword at the moment. It's actually -- I've been in data and AI all my life. So to me, it's sort of -- I'm glad it's finally getting prominence. The mathematics of AI are not changing, the tools are. And if you think that -- ChatGPT is just the very first of a very long range of things that we're going to see. I think you can imagine a world where that sort of technology is going to be everywhere. There's going to be as many chat advisers as there are ETFs. How do you choose? How do you choose what advice tool to use? How do we keep advisers relevant when those tools are out there? It's going to be quite -- look, it's going to be an incredibly interesting time to be in this business as AI allows us to consume and process more information more quickly and more easily. As I said, ChatGPT does not give financial advice, go and ask it. Who's asked it, by the way? Anyone, who's -- who used ChatGPT? Anyone? No? No. Yes, please do. It's a lot of fun. Ask it for some financial advice, it'll say, "I don't do financial advice." One day, that chatbot will say, "Yes, I do give you financial advice, and here it is," okay? What will then happen is you'll say, "Well, hang on, what were you trained on, who built you," et cetera, et cetera, et cetera. There's going to be a lot more of this go on. I saw Atlassian today announcing the release of their AI that they're attaching to Jira and to Confluence. So this is -- it's on us. We have to step into that space, right? That is one of our future drivers. We also need to enhance our connectivity capabilities. Iress, as you know, has been part of the infrastructure of financial services in this country, the plumbing. We need to keep our credentials there. Connecting things like connecting our advisers to traders is actually really important. So 6 big jobs, 6 big jobs for me and the team over the next 18 months to 2 years. The idea, of course, is to create an innovative technology company which connects people to their wealth, as we said at the start. Our objective is to be above Rule of 40 in returns for shareholders and to build new businesses that can achieve Rule of 40. In many cases, we think of Iress as -- well, I think of it as a technology company hiding in plain sight. We probably prefer not to be hiding. We'd like to be well recognized through our credentials. At the end of the day, it's going to be our data that does the talking, not our words. So thank you for that. I think I'll introduce Ana who's going to take us through our transformation program. I should just say our transformation is crucial, of course. Execution is going to be what's going to -- you can see there's a lot of change. Having a proper program for execution is absolutely critical to us and the team. And that's why we've asked Ana to share with you some of the high-level parts of what she's doing. Thank you.

Thank you, Marcus, and good morning. So Marcus has just outlined the strategic direction for the Iress Group. And my role as Chief Transformation Officer is to translate that strategy into a program of work that will execute with the discipline and the rigor that is necessary to achieve all the outcomes that we've set in front of you today. There's a few points that I'd like you to take away from today. The first is we are very clear on the work that we need to do. The second is we've already put in place the disciplines, the governance and the accountability to get the job done. And third, we've already made a strong start. Let me focus now on discipline. As I said, we've already established the governance framework with the Board and the leadership team. And we've put in place a transformation office team to drive the execution through what is the formative period of this program over 2023 and 2024. Execution has kicked off, and we are engaging an execution partner to help us accelerate that road map. Finally, and critically, the Group CEO and leadership team are accountable for the transformation outcomes, and we intend for incentives to be on this basis. So now it is our job as a management team and as an Iress team to do the job and demonstrate progress. Turning now to the road map. By the end of this quarter, we'll have completed a number of pieces of work. There's a few key call-outs. The first is that the new leadership team will be in place and refining their new structure. Second, we'll have executed our cost-out exercise, which is in flight. And finally, we will have commenced the separation of our portfolio of managed assets. So looking towards the end of '23, the transformation work will be well underway. Let me outline the key milestones that we'll have met by that time. So in July, all of Iress will transition, all the people in Iress will transition to the new structure. Following this, everybody will be operating against a new set of balanced scorecards. And once we're in that new structure, we will further optimize our cost base. We'll also be in the process of divesting MFA and Platform. And finally, to improve our client experience, we'll be modernizing our core technology, and we will finish our technology cloud uplift. We have an exciting and major transformation ahead of us, and I'm confident that we have the right resources, experts and governance to successfully execute against this plan, and we look forward to reporting on our progress as we go. Now we'd like to share with you a short video package showcasing innovation at Iress. [Presentation]

Innovation's a real sight. It requires a really disciplined and data-driven approach and really market-driven, too. And that's the way we're going to change Iress. We're going to be lean and agile, and we're looking for that next-generation, second and third horizon that really shifts the needle on growth for the company. Well, the immediate at Iress innovations is around 3 things: wealth, data and connectivity.

So we created the Connectivity Network and Xplan Affinity to help thousands of our advice clients and licensee clients that are suffering from a real, big problem. It takes days and days and days to give personal advice to clients, and it takes hours and hours and hours to give ongoing advice. It's inefficient. And it's absolutely the case that here at Iress, we can step up and make this a lot easier for our clients by simply forming a Connectivity Network and expanding at Xplan to Xplan Affinity. So the Connectivity Network with Xplan Affinity will allow us to really help these clients. The Connectivity Network is made up of investment platforms and insurers that want to build integrations with Iress to help licensees and advisers. Xplan Affinity is an extension of Xplan that takes those integrations, brings it into a package that will allow advisers to give advice far more easily and release so much more capacity in their businesses. Up to 30%, we estimate, could be savings of time for advisers. This helps their licensees, knowing that data is more accurate and clients are getting looked after. This will help our investment platforms and insurers that are in the Connectivity Network, make it easier for them. And clearly, for Iress, with licensees benefiting, and advisers benefiting, and their clients benefiting, and our platform insurance clients benefiting, that's a very compelling proposition to bring together a Connectivity Network with Xplan Affinity. So far, the Connectivity Network is made up of Premium and CFS on the platform side and MetLife and MLC Life on the insurance side, 4 organizations that are real thought leaders that wanted to step up quickly and work with us in the network. But we're in discussion with all the major platforms and insurers in this country, and that network will grow. We also have a number of large licensees, which have also joined. And we're now working together, looking forward to bringing the Connectivity Network and Xplan Affinity to the market in late '23.

MetLife is focused on helping our advisers deliver for their clients and build strong successful advisory businesses. We know that technology can create end-to-end frictionless experiences and are dedicated to exploring how those technologies might reimagine their interactions in the digital environment.

At Premium, we have a strong focus on using technology to simplify complex and time-consuming processes. Our aim is to help advisers operate more efficiently and deliver an enhanced experience to their clients. We're delighted to be collaborating on the Connectivity Network with Iress and other industry leaders, which we believe will solve a critical pain point for advisers and enable them to be more efficiently managing the wealth of Australians.

Our clients are excited about the Connectivity Network and Xplan Affinity and what it means for unleashing capacity in their businesses. The capability builds on Xplan being a foundation in an advice office and takes it to the next level by simplifying the entire advice execution process. The Connectivity Network and Xplan Affinity will further entrench Xplan in our advice businesses and service, support our clients to grow their practices.

In their simplest terms, in today's era, across age and demographics, access to information is certainly by mobile. And it's nowhere evident more than Asia where it's a demand of our clients for software delivery via mobile applications. We've taken the opportunity to harness our capabilities through our -- of our APIs. And together with our strategic development partner here in region, we've adopted a rapid, agile, client-centric approach. And by doing that, we've been able to deliver our latest wealth app in just under 3 months.

Iress trading app is a purpose-built, ready-for-retail mobile trading app that is designed for today's most sophisticated active retail traders. With this app, it allows us the ability to deliver full functionality, high-performance trading platform to our clients at a fraction of the cost of building and maintaining our app from scratch. With our wealth app, it enables us to provide our wealth clients the ability to completely reimagine the entire advice journey, from assessing the portfolio to building marketing sites and curated research content all in a single glance.

The new Iress trading app is now available for broker and private bank who use Iress OMS to enable them to provide a full mobile trading experience to their client. This can be provided as a complement to their existing Iress software that they currently use, such as ViewPoint, or as a stand-alone, mobile-first experience. The new Iress wealth app will soon be available to Xplan clients free of charge, and it aims to empower our clients to design a tailored digital wealth journey and improve adviser engagement via curated content. We'll be piloting the app with the [ Life ] from May onwards.

Our digital advice offering focuses right now on our large superannuation fund clients by creating journeys where their members can find out about how to invest and how to prepare for retirement and how to -- to have a good insurance if they need it. And then anyone, much -- more than 20,000 clients go through these journeys. That's what we're focusing on now. But what we want to do is broaden the spectrum to cover education through super funds right out to licensees and advisers that might want to provide general advice or personal advice through digital advice capability. Digital advice is very important in today's environment for 4 reasons. Clients are far more willing and interested in using digital means to understand advice for them. We have a huge amount of Australians that are under-advised in this country, and we know digital advice can help. We have 16,000 advisers in this industry which is still not enough to get advice to all the Australians that need it. And we have regulation now that is suggesting that digital advice could be far more important. Those 4 reasons are the reasons why we are looking at expanding our capability from education through superannuation right out to helping licensees and advisers with digital advice.

Our new education-led digital advice platform is about bringing together the power of digital advice with highly personalized, targeted financial education to help drive better retirement outcomes, be it in the context of a super fund or an adviser wanting to get out there to many, many more people. We know from research that there's 12 million Australians today who have unmet advice needs. They have unmet advice needs because today, it's typically too expensive or not accessible for the average person to get to advice. We want to help fill that advice gap. And so we've created this new offering to help solve the challenge of both affordability and accessibility. This tool is quite different from everything else in the market for a few reasons. The first of those is that we have a laser focus on driving engagement. That's such a crucial aspect of bringing more people to advice. There's a saying that there's no point putting a beautiful billboard in the desert, and the same exists with digital advice. All of our content is created to be rest-of-life relevant to consumers, and that's incredibly important in us bringing more people to advice. That's the first area. The second area is how we go about supporting people building financial capability. We know from experience with the digital advice that we've had in market for years that people fall off digital advice at key points, and we know that, that is driven by a lack of financial capability and knowledge. And so we have a focus on helping support that through nudging and structured education to bring people to the skills that they need to successfully navigate an advice journey. And the objective there is to get more people successfully to completion of advice. That's what makes this an incredibly different offering from everything else that's in the market. The Super SMART platform has been taken up by IFS and Hostplus. We're in the last stages of testing, and that should be in market with those clients by July of this year.

At Iress, we know how important responsiveness and reliability are for our trading clients. We're innovating our trading solution by introduced a brand-new infrastructure that provides frictionless onboarding, low-touch workflow, interoperability and resilience. We've been able to use the foundation of our expertise in providing FIX solution around the globe for a number of years and reimagined a cloud-native FIX hub to launch, starting with the APAC region this year. Our cloud-native FIX hub is an industry first that enables seamless workflow, resilience and data insights. We're providing a next-generation experience for both buy-side and sell-side clients, which includes no waiting time for FIX onboarding and a frictionless journey for customers around the world, with global connectivity delivered via scalable solution. Our solutions also delivers interoperability. This means we can enable our clients to access third-party charts to bring the best of the breed together to their workflow and front-end experience. In the next 12 to 18 months, our global FIX hub and trading capabilities will continue to evolve and focus is on enhancing the client and user experience while delivering value-add data insights. Some of the R&D exploration includes machine learning-based insights for smarter trading and investing decisions using historical trade analysis, analysis and prediction by combining our trading data and market data as well as transaction monitoring through anomaly detection and identity verification.

We expect that by Q3 of this year quite a flexible operation. From day 1, core domestic and international onboarding will be managed by our new global FIX hub. Our objective is to deliver 3 client benefits: improved speed to market, frictionless [ access ] management, lower operational risks and overheads, and lastly, increased resilience and transparency.

There's some really wonderful things going on in this company, things that are going to really change the financial services industries that we operate in. And that's what I find really exciting about being part of Iress. The reality is that great technology companies build markets, build TAMs, create new enterprises. And that's what innovation is really about at its heart. If you think back to the very start of Iress, before there was advice platforms or anything else, the original founders created new platforms, created markets. There was no such as a TAM for an advice platform in the '90s. So I think what's really exciting is the fact that we can continue on with that great proud heritage of building markets, building products, building TAMs, creating value for the financial services industry. And that's what's so much fun here. That's what makes it so exciting to be part of this industry. That's what makes it such an exciting time to be part of this company. We see a terrific future ahead. We're very excited by it. We've got lots of products and services to come. I think you'll see a lot more from Iress in the next few years.

I would like to now -- oh, a bit of an echo there. Can we sort that one out? Thank you. I'd like to now welcome our new business leaders up to the stage, Harry Mitchell, Jason Hoang, Paul Giles and John Harris. Please come join me up here, gentlemen. All right. So just to reaffirm what's on there, our new leaders are Harry Mitchell, down in the end there, CEO of Wealth; Jason Hoang, here in the middle, CEO of Trading & Market Data. We've got Paul, he's our CEO of Super; and John Harris, next to me, who should be familiar to you all, he's taking on the new role of CEO of Managed Portfolio. So John, I am going to pick on you first because you're probably the most familiar face to this audience. You're making the move from CFO to head up Managed Portfolio. What are you most looking forward to?

Yes. Thanks, Kelly. Look, what I'm most looking forward to, I'll come to it in a minute, but I've got lots of things I'm looking forward to. I'm looking forward to working very closely with the teams and businesses across this international portfolio. I know those teams and businesses really well for my time in Iress, and there's a great bunch of people there that I'm looking forward to spending more time with. There's also some really excellent businesses in that portfolio. I'll get on to some of the financial data later in the presentation here today, but if you unpick that and look at the individual businesses, some of our top performers financially are actually sitting within that managed portfolio. But it's also very clear that there's a number of businesses in there that are pursuing significant potential in their market but haven't delivered on that yet. So the direct answer to your question, and what I'm most looking forward to, is working with the local teams to chase down that opportunity.

And so what's your immediate focus going to be?

My immediate focus on delivering the finance slides in a couple of minutes of this presentation, Kelly, I must say.

Straight after this.

Straight after that. I'm really focused on -- and Marcus used the word empowering local management and private equity toolkit in his earlier presentation. So my immediate focus is actually getting on a plane and starting to work with local management to understand how we turn that into practice and how we execute on that opportunity.

Okay. Great. Obviously, one of the key announcements today was the divestment of the MFA and Platform businesses. How long do you expect this process to take?

Good question. M&A follows its own life cycle, as you know. These are not enormous businesses, and they're going to be very attractive to the right owner. So I wouldn't expect that these processes are going to take an enormous amount of time. I would hope we could have those deals away by the end of the year, but we'll see how that plays out.

Okay. Thanks, John. Harry, going down to the end now, you're the newest member of the leadership team. So firstly, welcome. And I believe it's actually day 2, so thank you so much for agreeing to front up to this. Can you please share with everyone a little bit about your experience?

Yes. Certainly, Kelly, and thank you for the welcome. My name is Harry Mitchell. I'm from Scotland, Edinburgh, so read into that, fiscally prudent. My background is relevant -- relatively more colorful than I suppose most in financial services. I commenced working life in training management programs with McDonald's, not British Trust Hotels, ended up running as family operated hotel just outside Edinburgh. Really important phase of my career and about customer, the voice of the customer and understanding customer value. I then move swiftly into plating, cover operations, where I was under cover for around 10 years running around the world, buying drugs and guns. And I learned a lot about risk management, health and safety, strategy, execution. And those skills believe it or not do transcend customer risk execution strategy transcended very well into financial services. So in 2007 nothing to do with the GFC, I joined Halifax Bank of Scotland Investment service. They had a financial planning business made up of a part of St James's place. The private bank really dealing with financial advice into high net worth, ultra high net worth individuals. As we merged them with Lloyds TSB, my wife Elaine and two daughters, and I got on an airplane and came to Australia without a job. Landed in Brisbane and took up a position with Business Wealth Management in Queensland, part of the Colonial First State business again it was a financial planning investment advisory into institutional corporate clients and business owners. After about 2 years in Brisbane, I was brought down to Sydney to take over Commonwealth Financial Planning and led the initial transformation through not only the first wave of regulation at that time, but also some of the cultural issues that were within commonwealth financial planning at the time, let that business through an unforceful undertaking change the culture of profitability. And we've got to about 2015 and I left CBA and took up the position as CEO of an industry Superfund. The old [ icicle ] fund currently known as minimum Super. five years there, again, it was a soft transformation turnaround corporatizing the entity, and we picked up a technology company called Retro, which is initially was a self-managed superannuation and investment platform. We transformed that into a institutional grade, superannuation registry and administration platform and led the development go live and then subsequent commercialization of that entity.

Thank you, Harry, incredibly broad experience there, and we're looking forward to taking advantage of that. What is it about the role at Iress that attracted you?

Well There's a number of things. But firstly, if we start with Iress, it's such an iconic company and financial services on a global basis. It's critical infrastructure that connects technology, connecting people with their wealth and their wealth creation and management. That was a very big attraction the sheer stature of the organization. Conversations with Marcus and Roger were aspirational and motivational, to make me want to join. Two parts to that the desire and the drive to deliver better customer outcomes. Customer at the Iress level, but also beyond that into the communities we serve and making wealth management easier and better and driving better outcomes for the end customers, what was attractive. And the other part was to be able to -- the ability and the driver that they both had and the broader board around driving shareholder value and returns. And that's attractive to me as an individual and an executive at this stage of my career.

Right. Final question. We heard Marcus talk about the levy report, the quality of advice review someone who's been in the industry for some time and ran financial advice businesses. What do you think are the big opportunities? And how does technology solve for that?

Yes. Well, obviously, it's well known that the levy report is without doubt created the case for getting more affordable and accessible advice out to Australians, and technology is critical. You'll have to glance at the report to pick that up, I'd say two. But I see three broad buckets for me where Iress can have a real lead and play in that area. And the first one would be efficiency, just making it more efficient for advisers and for Australians and global participants and wealth to do better through technology and more efficient, freeing up more time for adviser practices and licensees. The second one would be a compliance aspect. The regulatory environment is forever fluid. It's constantly changing and to help advisers and support people in there, either those that are self-directed making sure they're staying compliant on the right side of the rules as well as the advisers. So compliance would be another one. And the last one, which is probably just as critical as engagement. Helping participants engage better through technology with their wealth and the advisers to engage their ultimate customers through technology.

Right, plenty to do there then. Jason, you're actually -- people may not be -- may not be aware of this, but you're actually one of the co-founders of Xplan.

Yes.

And you've held executive roles here at Iress for around 20 years? What are you most excited about in stepping into this new role of CEO of trading and market data?

Normally, I'm quite comfortable with the microphone because I used to be in a boy band today. Today is a bit different. Really two things. One is to really simplify a complex business. That's what excites me. And the second thing is, as Marcus mentioned, and Roger was the accountability aspect, and I'll expand on both of those. The ability to simplify the business units for me allows us to really bring our best people with appropriate domain knowledge and what that allows us then for us then to really provide that service and solutions that's required or expected from clients. The second part of that, which I'd say I love is the accountability aspect, the end-to-end accountability. What that basically means is that all of us now have all the levers to create success for investors, for our clients, for us as a company and for us as individuals. What it also means that we don't have any chance to, I guess, dig into our war chest of excuses. So I love that aspect of accountability.

Nowhere to hide. We heard Harry talk about some of the opportunities he sees in wealth, just on the back of the Levy report. What about you? What do you see as the big ticket items for trading in Australia?

Two things. I probably want to touch on I wouldn't say big ticket items and its addressed quite at length this morning was really to our call. That's one. And the second thing is really looking at the innovation. And if I look at the core there, we're going to put a lot of effort and time in it. My role in that is to really put my fingers over and make sure it's delivered. I will be unapologetic about the relentless and intense culture that will drive to get there. I'll expand bit more on that as that also I'm lucky enough to live in Singapore for the last 10 years and the culture there is extremely fast. And I love that fast pace. And coming back here, even the revolving doors is so damn slow to get through. So it sets a wrong tone already. So I always like to quote the late Lee Kuan Yew, and he says, you can empower -- or equalize opportunity, but the moment you equalize outcomes for people, you're done for as a business or as a country. So I will reiterate again, I will take a relentless approach to getting things done. I think I'll finish off and you're just seeing then the innovation part is the mobile app. Typically, what we face with, it will take 12 months, it can't be done, we'll analyze this, et cetera. But two analysts in Singapore and our strategic partner in region built that in 12 weeks. So Xplan clients are going to receive that in pilot in actually next -- in a few weeks' time. So it shows that we should not ever adopt a defeatist attitude.

Final question for you, Jason. You also have responsibility for global market data. What are the big opportunities there?

I think, probably the biggest opportunity really is our clients right now are growing and need a platform to grow, particularly especially outside of Australia. So we want to build a global or an efficient, cost-efficient global connected platform. And we've been working on that over the last 6 months already. And you can expect tangible results with this being released out to Q4 this year.

Fantastic. Okay. And finally, Paul. Paul, you joined Iress just over a year ago to head up the commercial division of our super team. During that time, we have seen extraordinary growth in demand for our software. What do you think is behind this?

Yes. Unfortunately, timing is everything, and I joined at the right time. We already had a very strong pipeline. But what we have done recently is in the last 12 months. We've really refined with our go-to-market strategy. So we've been working with the industry. We've identified what they're after. The traditional way of doing administration and superannuation is over. Clearly, the incumbents haven't been investing the way that they want to. The funds actually want to be able to control the member experience and the employer experience and then looking for technology companies that can actually help them on their digital journey. And I think because we have got the benefit of incumbency equity in the market, it's proven technology. We've invested in it. We'll continue to -- we have identified a number of areas of we need to basically hygiene factors to bring it up to scale as we move it into the full cloud model by Q1 2024. So that's attractive to the market. We will get competitors. There's no doubt about that. But I think for the time being, it's almost our race to lose in that digital first approach that the trustees are looking for.

Great. And you obviously spent a lot of time talking to super funds. What are the big they're talking to you? What about are the problems they're trying to solve?

Clearly, super, regulatory issues continue. We also breathe a big guess sigh of relief when labor got in. We think we're now not going to read the big sigh of relief. It looks as though there could be some stuff coming down at us in the budget in a couple of weeks' time. So clearly, the regulatory change. What the reason that is for funds is distracting for them. They really need to get back to their core business, which is focusing on members and how to deliver member outcomes. The retirement income covenant is putting additional pressure on the trustees. that's really where they want to focus. they don't want to worry about the back office and the nuts and bolts of running a superannuation fund. They want the value add, which is employer and is also a member. So that was -- this is really the key thing for them. The other attractive thing for funds is why our technology solution is probably very important and attractive in the market is that we fit in with our ecosystems. So a lot of these funds have already developed a huge technology ecosystem that invested millions and millions of dollars on it. They all think they've got the best in breed who were to say if they have what they have but important for us. Acuity allows that connectivity that they can continue to deliver in an environment they're used to and more importantly, their members that used to as well.

Yes. Great. Final question. What will you and your team be focused on over the next 12 to 24 months?

Yes, picking up a point that Marcus made cultural change is a big thing for me in the superannuation team. I think we've, obviously, technology company. We've allowed the technology to lead our interaction to the superannuation industry. We need to step back. We need to listen to the clients, and we also need to elevate our offerings into the market. So we've got a risk and compliance culture and that applies a cost to it. The trustees already delegated an awful lot of fiduciary duties to us as an administrator but also as a tech provider, and I want to lift it up and almost shadow the way that we run our superannuation business. So we're almost complying with the APRA standards even though we don't have to. But I think that's an expectation that the industry would expect so they know that their data is safe, and they know that we're serving their members.

Okay. Great. Well, that's all the questions I have. Thank you very much, gentlemen. I'm now going to hand over to John to put his old hat on and talk you through the financial metrics.

Okay. Thank you, Kelly. So Now Get to where the rubber hits the road. So I'm going to talk you through today some of the financial analysis that flows out from the strategy and the structural change that Marcus has talked about earlier today. So on this slide, we have split the group's 2022 financial performance into the two portfolios of core and the managed businesses. So this is the result of the work that we've been doing over the last few months. To allocate the large pools of cost, particularly the functional costs associated with product and technology into a separate stand-alone end-to-end P&Ls. I use the word indicative or use ranges a couple of times on these slides. And inevitably, the split between the core and the managed portfolio at this stage and in this structure for our business is based on allocations, which are inherently estimates. But the first stage of executing the structural change that Marcus talked about earlier is to split the business up into the component parts and so that we will run our business along these financial lines. We'll move away from an allocation approach to one where the product and tech and operational teams are aligned under the CEOs that you've heard from today. So if I dive now into what the numbers are actually telling us. The first thing you will note is that the bulk of the group's revenue growth and earnings are coming from the core businesses. In fact, if you look at the second line on this chart, you'll see that all of the group's revenue growth in 2022 was driven by the core businesses and none of it came from the managed portfolio. The other thing that I'd call out on this slide is that the underlying EBITDA margin of the managed code businesses is significantly less than those at the core, and the underlying EBITDA as a result of all of that. Despite that being very significant revenues out of these businesses is a small contribution to the group. There are some good businesses, as I said in the previous section sitting within that managed core business. But on average, the return profile for the managed business is, as you see on this slide here. If I take that through to the next slide, what you'll see here on the first line is an allocation of the noncurrent assets from the 2022 P&L -- balance sheet rather between core and managed businesses. You'll also see on the second line here and in our ASX release earlier today that we're telegraphing a write-down in noncurrent assets and impairment largely of the goodwill figure in the U.K. For those of you who read the 2022 financial statements, you would have seen a disclosure in there that said that the revenue CAGR for the U.K. businesses need to be above 5.3% in order to underpin the carrying value at the end of last year. And based on the Q1 revenue performance and our outlook for the rest of the year, we think it's going to fall below that 5.3% threshold. So we're writing down the value of that asset. Clearly, we need to take that through an audit process, and we'll confirm that when we release the half year results, but we expect that to be in combination with some other things in the order of $123 million, as you can see on this slide. So if I use that in noncurrent asset line as a proxy for invested capital and take you to the bottom of this slide, you'll see that all of the investors -- all of the return profile of the group is coming from the core business. and that the managed portfolio of businesses is dilutive to group returns. I've also split out on this slide the underlying NPAT for the two portfolios. And again, you'll see that the managed portfolio of business is dilutive to group returns and is breakeven to marginally profitable. Again, I feel like the third time I've said this today, but I want to reiterate that there are some in that managed portfolio, and I don't want to take away from those. In fact, if you unpick them, some of our top formers financially are sitting within that group of businesses. But clearly, in combination, they're dilutive to group returns. That's not to say that there's not opportunity in those businesses. And each of the businesses that is not yet performing at the level that we would like, has the potential to do so and is pursuing very significant opportunities in their markets. And so the intent and the underlying objective of looking at the business in this way, the group is in this way and structuring it in the way that Marcus has talked about today is to make sure that we're focused on unlocking the potential sitting in the managed portfolio initially through understanding how we can empower local teams and drive better performance. But ultimately using the full toolkit of private equity, the private equity lens that Marcus was talking about earlier, considering third-party investors who might come into the business, JV partners and other things. So nothing is off the table in that space. I'll move on to the next slide now, which is a before-and-after view of reporting segments, the way in which we'll report to you going forward. You'll see on the top, and you'll recognize this from our current reporting structures that we have a very significant part of our cost base, $246 million, in fact, sitting in unallocated functional costs. The second, the bottom layer on this chart in front of you shows the new report structure. And the key point that I want to draw out is that the functional costs will largely be distributed and managed through the product and the client verticals. In other words, in the go-forward reporting structures will have very little sitting in corporate and unallocated costs, and most of that will be aligned to customer segments. On this next slide, I want to outline some of the principles that we're applying to the way we manage the balance sheet. Firstly, on the topic of leverage, I would expect our leverage to increase in the short term due to the technology investments and the restructuring and redundancy costs that I'm going to outline in the 2023 guidance slides. But over time and in the medium term, we would expect net debt to be in the range of 1.5 to 2x. And deleveraging to those sort of levels from the current 2.2x at December last year will be driven by divestments in earnings growth. The second point I'd make is that we have a very low level of CapEx in our business. If you exclude M&A, which is not a current priority for the management team, this business will continue to be capital light. And thirdly, earnings growth, debt reduction and asset sales are expected to drive increases in the return on invested capital and EPS. I gave you the building blocks for the potential for this unlocking of returns on the previous slide. Now finally, I'll turn to a couple of slides where I cover guidance for 2023. As a result, the significant cost-reduction program that Marcus outlined earlier this morning, we're expecting to deliver double-digit segment profit growth in '23 on a pro forma basis. Although the cost-reduction program is delivering $16 million of benefit in 2023, we have seen a decline in the expected BAU performance of some parts of the business, particularly in the U.K.. The guidance shown on this slide assumes no revenue growth in the U.K. Wealth business in 2023, which is disappointing. We see enormous potential for growth in the U.K. market, but clearly, we have not been successful in delivering on that to date. One of the critical pieces of work, which is already underway, is making the organizational changes needed to deliver on that potential. This includes closer alignment of product and customers under a single accountable business head and an end-to-end accountability for commercial products, technology and operations to support that market. In this way, we intend to align the business more closely to the needs of customers and align the business more closely to the needs of the U.K. market, so we can pursue that opportunity. This may also involve some partnerships or bringing third-party investors as we said earlier, again, reiterating the full toolkit of private equity is available to us, to unlock value in this portfolio. You'll also see on this slide that we're bridging segment profit down to underlying EBITDA and we use EBITDA on the next slide also. And you won't hear us talk about segment profit going forward, and EBITDA will be our go-forward metric in our financial operating financial sense. On the next slide, you'll see that the projected level of nonoperating items for 2023 will remain high. There are four drivers of this. Firstly, the write-down in U.K. goodwill, which I discussed earlier, which is the result of the revised revenue outlook for 2023. And as I said, this is below the 5.3% CAGR needed to support the current carrying value. Secondly, the $28 million of costs associated with redundancy and transformation. As we said, the cost-out program will generate $32 million of annualized savings on a recurring basis. So the payback of this investment is very near term. The transformation costs we will be incurring in 2023 will ensure that we have the people and the tools to make sure we execute the plan that Marcus and Ana talked to us about earlier and that we delivered the results that we're expecting from that. We see enormous financial upside potential from this transformation, but it's absolutely critical that we execute well. The costs outlined in this guidance statement are directly aligned to execution confidence. We would expect the intense transformation period to be largely complete by the end of 2024 with progressive delivery of earnings improvement so that this is not just a cost line but represents a material real and near-term delivery of returns to shareholders. And thirdly, the costs required to finish the technology uplift that was commenced in 2022 will be a further $28 million in this year. As Marcus outlined earlier, the original intent of the project that we outlined a couple of years ago will be complete and the spend to finish that part of work off will be below the previously telegraphed $30 million. However, we have extended that original program to ensure we're making the necessary investments to uplift the customer experience in core trading and wealth applications. So the end results of all of that is a statutory NPAT line that you can see on the bottom of this slide, which is a loss of between $102 million and $107 million, but that's largely driven, as I said earlier, by the noncash write-down of the U.K. goodwill. At that point, I will hand back to Marcus, who's going to make some closing and summary remarks.

Thank you. Thank you, everybody. getting towards the end of a lot of information. So I'm sure you're probably, I won't -- I'll keep it pretty brief. A few things we want to talk about is just what the success look like and how do we measure it. The Metrics that you're going to see from us are the following really, the sort of things. And this is not just what you're going to see from us but what we're going to use internally, how we're going to actually measure our performance, what's going to drive rem and all the other things that are associated with that, we'll look at total alignment. So we'll look for the returns, which is going to be EBITDA percentage and revenue growth, of course. Free cash flow, EPS growth, ROIC is an interesting one, return on invested capital. I don't think that's a long-term metric for us. But in view of the program we've got with our assets going forward, I think it's something we should be monitoring over the next couple of years. It will probably drop off once we get to a stable asset base. But whilst we're in that process, I think probably worth monitoring it and make part of our scorecards. I also want to make sure we introduce a bunch of client metrics and team metrics into the performance framework, including client retention, but most notably, Net Promoter Score, some measure of client satisfaction with us as part of our performance framework and, of course, employee engagement. So what you're going to see is a fairly, a more standard, I guess, set of metrics, metrics that we will report on, metrics we hold ourselves accountable for. At the end of the day, we've got, as you can appreciate, a lot of work ahead. We've got a decent work slate, and it's 12, 18 months of hard slog to make these changes. It will affect us culturally as well in terms of how we go about, how we measure performance, how we reward people. We've got to reset this business, refocus it around some core segments where we're really, really strong and start building future platforms and future growth. There's no magic solution to this. It's not rocket science. It's diligence, good execution, it's great execution. We're really focused on that. This company has had a history of not been able to execute to its conclusion. We won't be taking those risks with this program of work. And the reasons why we asked that up here actually to demonstrate to you the depth of thinking that's gone into this. And let me assure you, the depth of resources have been allocated, including external resources as needed. So we're not taking it lightly. It's absolutely clear. We have to execute on this plan, and we've got to do it well and quickly. What does success look like? #1, customers who like us, want to get our NPS, we want our customers do like us. In fact, we have our customers to love us, we've got a long way to go. We'll get to like first and get the love later. A Rule of 40 business as a combined group. That's what we're looking for genuine growth, organic growth and EBITDA margins above Rule of 40 level. I'd like you to be able to see in years to come, growth vectors, things you're pretty excited by in wealth data, AI and trading, a leaner balance sheet that's really one of our objectives as well. This should not be a capital-intensive business. We want to go from being a tech company hiding in plain sight to a tech company that actually everyone can see. And what I mean by that is we want to be acknowledged ultimately as an Australian technology business. We have got global markets, but we want a rating and a set of performance outcomes that actually put us right up there with the best tech in this country, put us into the same categories as the ones we saw on that top Rule of 40 business. That's the peer group we aspire to. That's what this is about. That's what this transformation is heading towards, and that's what myself and the team are looking to deliver in the next few years. So thank you for your time. Appreciate it today. I think we've got Q&A don't we? Yes. We got Michael to do Q&A. Okay. Good. It's time to ask questions now. We've been talking enough.

Absolutely. Thank you, Marcus. John, why don't you join us on the stage with Marcus? Or should we call it the interrogation session? [Operator Instructions]

Hi guys, It's Bob here from JPMorgan. Just a quick one on the slowdown. I think you mentioned earlier that U.K. was obviously [Audio Gap] some of the other businesses, especially what's still in that core segment as well Xplan or how the Aussie business has traveled?

Yes, sure, Bob. So as we said earlier in the year when we released our '22 results, we have put through some price increases in those businesses, which largely reflect the input costs that we saw coming into our business in the latter part of last year, but clearly, that's also part of the revenue growth that we'll see being driven out of those businesses. We have, I think as we've outlined today, a whole lot of opportunity in those businesses and we continue to see in the near term even absent the grander conversations we're having about those markets today. We see lots of opportunity for near term and regular organic revenue growth in trading and financial advice, which we've delivered consistently over a number of years. And you saw on one of the slides that I presented that the primary driver of growth in the group was, in fact, those core businesses. And if you reflect on 2022 momentum, organic growth momentum that was in that sort of mid- to high single-digit level. And so we would hope that we can continue that momentum.

I think about 3/4 of that adjustment has come out of the U.K. and offshore markets to let you know.

Olivier, a question for you.

Olivier from Evans & Partners. One for you, John. You mentioned that you've got some really good businesses actually in that managed portfolio. So I guess a two-part question. One, can you give us a bit more kind of a top of breakdown of the spread of profitability between those or at least identify the laggards versus the high performers because obviously, the greater disparity, the greater the opportunity potentially for value creation from partnering, disposal, et cetera? And then secondly, discuss what the REM and incentivization structures look like for those business leaders, please?

Sure. So I'll start with the answer and feel free to chime in, Marcus. But look, if I look at that portfolio of businesses, if I look at the sourcing business, which doesn't get a lot of attention when we talk about our group results, but is -- it's a marketplace for distributed life insurance and mortgages in the U.K., which has a very, very high market share and is an excellent business with very high margins and probably underinvested in over the last couple of years but is operating at outstanding return profile. And in fact, that top performers in the group. If I look at mortgages, which we have talked about in more detail, we obviously put that business up for sale a couple of years ago and the market turned on us. But you will have seen the performance of that business has been excellent and continues to be so. And the other business I'd call out is the trading business in South Africa. So again, that's a business that has a very high market share. In many ways, it mirrors the position we have in Australian trading in South Africa. So there's a lot to like about those businesses financially. They probably don't align, so why are they in that group then is the question. They don't align with this broader focus that we're talking about on the core trading and financial advice businesses in Australia, but those businesses are excellent. If I think about the return on invested capital profile, which was very stark on that slide, the biggest chunk of capital we've deployed and the piece that is driving the performance of that group down is the U.K. wealth business. And that's clearly a significant acquisition we made in 2013, significant deployment of capital, and that's where we need to lift performance. So yes, some more water to go into the bridge on REM. What we're very, very clear on is that we want to empower and incentivize local management to deliver in their businesses. Perhaps the best example I can give that, Olivier, is the way we dealt with the mortgages business through that sale process where the local management team was given very strong incentive to deliver the projected earnings profile for mortgages, and we've seen that have a positive result on performance, and we'd like to replicate that elsewhere.

When you talk about private equity toolkit, it's about empowering and aligning management. So you can rest assured that we're going to be making sure the management teams are engaged in the future of those businesses. You can expect to see that.

Yes. Okay. Terrific. And just on the one-off costs, I think you highlighted 5 in addition to the 28 for the redundancy package. What's the 5 kind of include? Does that include McKenzie and the like? Or where are those costs kind of sitting?

I think there was a 5 for other. Is that what you mean?

Yes.

So the consultancy costs and everything associated with transformation and redundancy are in the 28. You'll recall that over the years, we've had an ongoing series of stand-alone projects that have appeared in nonoperating items, and that 5 represents those kind of items and isn't directly linked to the transformation, Olivier.

Okay. And sorry, just on the external consultants, when do they kind of finish and Iress kind of actually ends up owning all of those decision-making steps, I suppose?

We've always owned the decision-making steps just to let you know. We engaged consultants to help us dig out data and do the cost allocation work that was necessary to get to the -- to bring to light the information necessary to make decisions. McKinsey have concluded the first part of their assignment. We're in discussion with number of parties about assistance in the second part, which is the execution phase. It's not beyond the bounds of possibility that we'll have, and we have budgeted for some external assistance, whether it be McKinsey or other in the second phase, purely because we need this to be an intervention that is separate effective and held to account. It's as much a discipline and getting rubber on the road in the transformation project as anything else. So we haven't finalized, I guess an answer to question what the stat -- what the ongoing and time frame for that program will be. You can see that it's short. We are trying to -- we are trying to hit this pretty hard with resources early. So you can expect to see that through 2023, probably into 2024. We would taper off because ultimately, we Iress take responsibility for it, right? So more start than the end.

Yes. Just a final question for me, I suppose, if you look at core, excluding Super, which is obviously on a glide path to hitting kind of Rule of 40, you're kind of already there. And I presume after your cost out, which some of that would probably be in core, you definitely get closer. So is there a view that at some point, if you've moved on from a lot of those managed businesses, you might reset what the aspirational kind of threshold is?

today is that those businesses are currently excellent and have more in the tank. And I think the Rule of 40 slide that increases. Well, I'm talking about the one that said to the right. I mean I think there's -- they're operating at very high margins at the moment and whether those margins can move a little bit or not is to be determined. But what we're absolutely certain of and what we're up [ spacing down ] is the organic growth opportunities in those businesses. And that is just a significant driver of earnings and opportunity in the core as any further accretion to margin.

Who's next?

Nick McGarrigle from Barrenjoey. You mentioned Affinity obviously, is a project that's ongoing, and it has a lot of tangible benefits to advisers and platforms and all the intermediaries. Can you talk through the decision to divest MFA and platform in the context of Affinity and its relevance, I guess, at the outset to delivery of that project?

Well, certainly, it was all, affinity was part of the original DII exercise, as you know, Nick. I guess what comes about is do we want to be participating in the business of our clients and customers or do we Switzerland in providing the interconnectivity and be the network. Our desire is to be the network. I think in order to make DII work, we probably needed to own [ points ] so people could actually see what we meant in many respects. And that's kind of been achieved. You can already see we've got customers wanting to be on this affinity network. We've got [ premium ] there who are a leader who want to progress that. So when you've got those sort of participating with you on affinity, we don't need to own another plug. And in fact, I think it's a barrier to us. I've had a number of the other business leaders in those other businesses, the hubs and nets and so forth, say to us, we're confused about what you were doing there? Are you trying to be infrastructure or are you a competitor? I think we've clarified that today. We're providing the infrastructure for the industry. We're Switzerland. We want the network to work and for a network to work. You can't be a participant in it and tilting it your way, right? It just doesn't work. So we want to be the network player, not necessarily the product owner.

Yes. And so in terms of, I mean, we've walked away, or you've walked away from the 25 targets, but there was some investment infrastructure growth in revenue expected from, I guess, predominantly affinity, but presumably there was a bit of expectation for growth in platform. But the materiality of affinity the commercial model. Can you just talk through that as it grows?

Still a work in progress is the answer to that. It is a network business. Obviously, the value of it increases as network participants are added as I think Geoff mentioned in the video, it's a huge value proposition for the industry, what we have to work out is what is our pricing model for that, and we are still working through that. One thing I would say that we haven't mentioned today in general is pricing models is something we have under review across the board because we've got to get to more value-based usage, SaaS-based pricing, not sort of per seat type of pricing that we've traditionally done. Our markets are growing, but we don't. So what you will see with Affinity is some sort of SaaS-based model, which links to volume of transactions and something that grows with the market. And I think you'll probably see that in a lot of our other businesses over time as we evolve into a SaaS-based pricing models through the rest of the business as well. So we haven't said, I get what I'm trying to say is we know the model, haven't set the metrics yet.

I guess if we look at the sourcing business in the U.K. is circa AUD 40 million of revenue in Aussie dollars terms and my understanding is very high margin, sort of above even the core businesses in Australia, but is that almost what the business is replicating in Australia, but maybe with a broader investment set?

It is a different, it's a similar style and it's a network business, but a very different proposition, one sourcing insurance product affinity is actually connecting trades and execution. So it's a different, yes, a network. But what you are describing, though interestingly, is network economics that network economics do have those characteristics. So you're quite right. Now we haven't set the pricing, we haven't set the levels yet, but we are looking to generate those sort of network economics from this business. I should even say just as a final segue. We actually just want to start thinking about the advisers in this industry as part of a network as well. You heard a little bit there about how we're providing advice and stories and everything else on our websites and so forth their education. That's part of driving traffic to advisers, treating them as a bunch as a network, not a point-to-point customer relationship. We want to treat them as partners. That's what Affinity is about. That's what we're about. That's what drives sourcing sort of margins as well. So it's not a bad, in that respect as a financial model, it's not a bad model.

Last question for me. So the MFA and Platform businesses, I think the investment infrastructure as it was reported, was about a $35 million revenue line item. And my understanding is it's that entirety of revenue is consist of MFA and Platform. Is that right? And maybe if you can give us an indication of what the direct contribution or EBITDA of those businesses that are set for divestment [idle ], as in specifically MFA platform?

Yes, that's right, Nick. The vast majority of that revenue is MFA platform, and the earnings contribution is very, very small.

We've got plenty of time for questions. Scott, over to you.

Scott from MST. Just give an understanding of what the tech spend in '24 is going to be like in terms of the catch-up on Xplan and iOS.

Yes. So what we've said is that, that will come to by the first quarter of 2024. What I envisage that will look like in a financial profile is that we're largely done at the end of the year, and we're rolling down that spend and wrapping up that work. So -- and Marcus made a very clear statement that we're not going to be continuing with that lower line spend in tech in 2024 beyond the completion of what we've outlined today.

So there'll be some follow-up of the $28 million, but not a material.

Some follow-up with the run rate reducing significantly over the first few months of next year and finishing by the end of the first quarter.

Okay. And then I guess just in general R&D, or product and technology spend has always sort of averaged about 25% of revenue, is there any sort of material change to how you think about that going forward?

We've got a business planning exercise with each of those businesses to determine their needs. I think they'll have print needs. We don't have -- I don't have a financial metric in mind at this point in time. I want to see what the businesses actually need, but it will be a BAU, it will be an R&D budget. We'll actually be able to identify it, and you'll see it clearly. But we haven't got to that stage of planning yet with those businesses.

And then lastly, just in terms of the managed companies, what sort of level of investment are you willing to make to sort of see those businesses to adequate returns?

Yes. Well, as we said, the rules of the processes of private equity, if we do need significant capital, we'll probably look to partner to get it, right? It may -- it won't be ours. There's a lot of opportunity in those markets for partnering and joint venturing that we haven't really explored as a business. It's not been part of our narrative previously. So I think we'll be able to -- if we're doing significant capital, and frankly, some of them probably could benefit from it, we'll probably look to do it a different way, rather than necessarily the same old back to the mothership checkbook.

Okay. Just following on from that question around partnerships, how fully formed are some of those thoughts and discussions have you identified potential people that you'd be willing to work with? Or are they sort of more so thought bubbles at this stage?

Look, we have done market scanning and we've discussed it with participants in the market who would facilitate that sort of conversation. So it's more than thought bubble. We've investigated the do ability of it. Is this conceptually something a market is going to accept. So we have socialize that in a way that gives us confidence that it's achievable. We have also -- we do know from a JV perspective or partnering, which parties are likely to be interested in this as well. And there's some good technical reasons why some of those parties would want to be involved. They might have for example, one part of a trading world, and we've got the other part, for example. So we can -- they're not even -- they're not hiding. They are in plain sight. So we've got a pretty clear view of where we're going with that. Now by the way, it does differ quite markedly in different markets. It is a country-to-country approach, right?

And in super, just talking about scaling of that business and capacity to grow from here, do you need, how much more capital do you need for that business? And I guess, what are the gates you need to pass through from here?

I wouldn't say, look, Acuity is pretty fully formed. It's a mature product. So we've got that transition to cloud that we spoke about earlier. I think it's not -- there is some CapEx, but it's not, it's not like a major capital refresh program. And I think it's a pretty well run piece of software. It's mature. So it doesn't have sort of functional gaps. It's really more about its performance and keeping it up to speed with its digital sort of conduits. We call it an evergreen platform, and you'll hear that term a little bit, what do you do? Do you have an evergreen platform? Or do you run a platform down and junk it at the end and replace it. We see acuity as an evergreen platform. It needs to be continually maintained. And so does our iOS platform it's in the same category.

And just one last one, maybe for John, that relentless approach that he talked about. And I did like the analogies that he sort of he ran through. How much of it do you think is culture and mindset versus potentially some capability there from your perspective? Having been there for a while.

Capability already exists within the group. So that's -- it's a mindset. It just need strong leadership to drive it.

Okay. We have a question over here, please.

Stewart Oldfield here just Jonathan's country references. You've talked about some of the great businesses, but some of the less great businesses where financial metrics are more challenging. You've got legal obligations to support customers there. Is a runoff scenario still possibility despite the private equity to keep for some of these businesses?

The man drag on performance of Managed Co, as I said, is the capital we have deployed in the U.K. Wealth. I don't think a run-off scenario is a way to extract the most value for shareholders in that business. It's a great market. There's lots of opportunity there. We haven't cracked it yet. But certainly, a run-off scenario, I don't think it's good for anyone.

Canada and South Africa nontrading?

Well, South Africa, as I said, is a great business. The position we hold in trading in South Africa is equivalent to what we hold here in Australia. So there's lots of value in that business. And similarly, in Canada, we hold a very significant market share in retail trading in Canada, and that's an important part of the network and the marketplace. We need to look at why we haven't delivered the returns out of that, that we think we need to.

Got it. And Marcus, as you referred to Switzerland, no longer a platform operator, the Holy Grail of combining platform and financial planning software is at dream -- is that scenario now over and you want to remain independent or are you a natural partner to one platform provider?

I think we are. First of all, I don't think if you, I worry about how that would play out, frankly, strategically. To have one party that owns that end-to-end, it's a lovely objective. But particularly, is it actually achievable in a strategic sense? And if you do achieve that, what does it mean for other parties in the industry to come and compete you in your segments? I think what we're talking about is sticking to our knitting of doing what we do well, which is connectivity and providing service to multiple customers. I think the digital end-to-end is going to happen, but it's on us to provide the connectivity and links for that to happen and partnering with companies that have got the capacity. I mean, do you really think we should be going out there doing wrap platforms and so forth, when you've got companies out there that are really good at doing that have been doing it for 20 years. And do we have a competency to genuinely displace them? I don't think we do. I think what our competency is in advice and connectivity, things we do really well. We do that. We provide that service to others. Digital advice happens for a combination of parties. It requires us to be the glue, us to be the connectivity, which we're happy to do, others to provide the end product houses and services of that network. It Gets down to what Nick was asking before. If we can create a network around that and the driver, if you will, or the connectivity, the glue that holds it together, that's an incredibly strong position to be in. I'd rather that position and be struggling out there for FUM actually.

Got it. And finally, from you referred to wanting to be loved, not liked. Can you keep pushing through annual price increases in high single digits? Or is it the SaaS model, the way that.

Yes. Look, pricing, we actually had to absorb cost this year. We had a whole bunch of input costs were put on to ask every other business. So we had an issue with that. We don't, I don't like price increases as a way of generating growth in revenue. I think ultimately, we want to get to a SaaS-based model, which is more using business succeeds and we succeed if they decline, we decline, which actually gives you, I think, a much better partnering. We're a long way from that, by the way. You need even just metering that's actually quite tricky and the transition in our contracts and everything else will be challenging. But I think it's something we want to aspire to a different form of pricing, which is, as I said, linked to customer success linked to their success, it's not like your client, but your prices have gone up type situation. I really do feel that we genuinely feel the pain in the industry, and we hear it. We suffer it too, so we get it. I don't want that to be a feature of our business going forward if we can avoid it.

Okay. The question back left.

It's Stephen Wood. So is it fair to say that when we get to C24 and it's BAU, that if we scan the documents in a year's time, the words pro forma underlying will have disappeared.

That's a yes. That I'd like it to be the case, John.

Our pro forma is trying to show you the annualization, The cost-out benefit. So if you look at that through a shareholder lens, clearly, there's an emotional element to that as well, but that's a positive, right? That's trying to show you what the cost reduction is on is positive. You don't look at pro forma as a positive?

No. We can get to the bottom. So what we're saying is C24 pro forma and underlying is gone.

So underlying, as I said, will continue because we expect the transformation activity to come to an end largely at the end of 2024. So there will be costs associated with that. We'll show you the cost before transformation costs and the -- and we'll show you the four transformation costs and the earnings after transformation costs. Clearly, you're going to be focused on the NPAT and the EBITDA line, but we will still have the word underlying in there somewhere to show what the run rate business, run rate performance of the business.

Those costs will only relate to the businesses today, you described as manage, it will not relate?

No, The transformation costs relate to the group, and they will be nonoperating items in 2024 to the extent that they continue.

But haven't you just put $180 million of them through [ here ] .

We have put $28 million of...

I'm just talking about the total.

Yes. So...

We're not expecting any more of this next year, Are we? Apart from maybe a few things that relate to the managed businesses, the core businesses, we would not expect to have things like underlying and pro forma adjustments applying to them next year?

I think what you're asking about is a nonoperating item. So let's run through those. So we've written down the value of U.K. goodwill. We're happy with the written-down value of the U.K. It assumes little to no growth in that business. So I'd be surprised if there's any more changes to the carrying value of that goodwill. The second component of nonoperating items is $28 million for restructuring and transformation costs. Some of those are one-off, and they relate to the redundancies that we're paying in the next couple of months because as 10% of our workforce leaving the business. Some of those relate to the execution of the transformation program that Ana outlined, they will continue into 2024. The technology projects is the other component of nonoperating items, and we said they will come to an end at the Q1 2024.

Okay. So in other words, there could be redundancies, for example, in the core businesses next year and they will be described as underlying adjustments.

Yes.

And that would sort of be the only thing we should expect because CapEx, I mean, R&D looks like it's BAU, calendar '24. So really, mind the transformation costs and/or redundancies is all we should expect as underlying adjustments in calendar '24 apart from whatever goes on in manage?

So we're not guiding to 2024. What I am saying just to be really clear, what I think I've said is that the transformation costs will continue in into 2024. The technology uplift costs will end in the first quarter of 2024, and the restructuring costs relate to the current redundancies that are happening at the moment. Is that clear?

So to summarize it, we would expect transformation costs getting pretty close to BAU in calendar '24 as they relate to the core business?

We would expect transformation costs to come to an end, largely by the end of 2024. There will be transformation costs in 2024. I'm not guiding you to a number, but they will be in there in 2024.

Because we just don't want any more excuses on this stuff anymore.

I understand. And we're being very transparent about what the above and below the line costs are and what we're spending it on, and we'll continue with that transparency.

Thank you. Jonathan.

Just on the -- on your comment, Marcus, around not having done enough for existing clients. Is there any consistent message you're getting from them around what's required? And where do you find the right balance between satisfying every whim versus what's sort of where the right level of commitment is at?

There's a couple of areas in trade I think it's a genuine performance as in performance of the system latency, its capacity to handle the orders they need. There's just sheer capacity of the network, I think, in iOS. And a lot of the work that's going on is about volume actually the fact that it needs to be scaled up to be able to deal with the traffic we've got. You know that trades went up from $1.1 billion in 2017, $1.1 billion trades to $2.4 billion in 2022. So volumes keep increasing. So -- and that means you get to a certain point where you actually need to have a textual shift to be able to handle the volume, going from 32 to 64 bit, for example. Also, I think the performance of our order pads and other things needs to be uplifted to, I think, just meet industry standard. And all of our customers actually are global as we actually see, they've got other examples of tools and other Martin. That's kind of what's driving their expectations. So I think it's -- I don't think it's nice to have. I think this is getting to par, to be honest, in iOS. In Xplan, I think there's a lot of usability issues Xplan. Things are just a bit chunky and slow, and we're trying to improve the efficiency of practices so they can do more for their customers. But ultimately, we probably need to extend that so that they can actually start lowering the cost of advice. Now we're away from that yet. But I think one of the things we did talk about and as asked the question about price rises, we kind of want to add value. We want to add value to our product set, and that means doing things that actually create value for customers. That's kind of what I mean, not just leaving it and keeping prices rising on the same functionality set you've currently got.

Just on the 2 mill cost out, can you give us some color on the breakout between core and manage, like where exactly it's coming from and feathers out to come, it sounds like? What could that?

It's fairly pro rata, to be honest, across. It's not -- we didn't target any. It was a general efficiency sort of program. So it's across all of it. In terms of future efficiencies, the managed portfolio will have a very different set of objectives, and for example, if we had extra investment, you could even see headcount go up there, but it will be off other investment, not necessarily ours. So you could envisage that happening. In our core, though, with those core businesses, I expect those businesses to operate increasingly efficiently. So they may well have more cost out to come. But that will be off the basis. And they may by the way, have more people to come in. So there's going to be a churn of competency and capabilities. So it will be a net effect, I think, net down as we get closer and closer to customer and get more efficient and delivering service. So we do have an expectation of a bit more efficiency to come in the core.

And do you think the cost out sort of impacts any of the sales teams in particular, that could impact revenue growth for the business near term?

Yes. I mean, one of the things about this business is it's a very resilient business. You've seen the recurring revenue metrics there. You can never say never, but this is a very robust business, very robust business model. And I think also we are trying to define even how what you call salespeople are actually in the market? What are they actually doing when you've got an installed base like we have, is it management? Is it sales? Is it support? Some of those, that sounds like nothing, but those things become a bit blurred in here. And what we are trying to do is get more disciplined in what exactly our facing teams are doing and who they're doing it for. So I think there's a bit to come in terms of crystallizing how we support customers, how much we spend doing it, how we do it more efficiently and actually more effectively. So a bit of work to be done there. But I guess, part of that whole getting that focus on end-to-end accountability going in those businesses and making things like NPS and customer satisfaction and including employee engagement, part of our metrics.

Are there any more questions? Scott?

Sorry, just a quick follow-up. Global Data QuantHouse where does that sort of sits and how you're thinking about that?

Still part of the core as part of the managed, I'm sorry, part of the core business that Jason is running. Market data is an essential input to our business. I think it's fair to say when we looked at it. It's got some good attributes and some not good attributes. We've got work to do in that space. And we'll be having a dedicated, we at one point had market data as its own business unit, to let you know, but we've decided to keep it under Jason for now to see, we've got a bit of work to do to actually decide how to best use that service. It's very complicated in Iress because a lot of our market data, the way we supply data comes as part of other products. And so disentangling it right now, even though it's largely a commodity business, in terms of what you're using. It's entanglement with the rest of the business, made it difficult to uncouple, so we're keeping that business in there. It's in the trading businesses. We'll think through a more evolved strategy in due course. We've only been going a few months on this. So there's a bit more work to be done on market data. At this stage, QuantHouse is in there, and we're going to keep progressing with it.

I guess it's also entangled in the managed portfolio at the moment?

As a service provider, yes, that's right. But it's not, in Australia, our market data business is crucial, right, to what we do. So it is absolutely, we didn't want to we didn't want to actually entangle ourselves with that one at that point in time. It may be that in due course, you actually don't need to own a market data if you get the right supply arrangements and everything else. But at this stage, I don't believe that's the case at this stage, I think it's important. And we also see opportunities in there as well, by the way, in some other markets. So it's actually a market that we actually think has got legs and something we want to do a bit more work on.

Nick, a question from you.

Yes. I'll make it quick. I don't want to stand between everyone at lunch. Just in terms of the managed portfolio, if we look at sourcing and we look at MSO, and we assume the margins in sourcing are good, you get to kind of $70 million of revenue at a good margin. Is that almost the entirety of the profitability in that matched portfolio in aggregate?

Not quite, but in the U.K., it is sourcing plus the mortgage business is actually almost all the profitability of the U.K.

And I mean, they're good businesses, good market positions, good margins, good profitability, presumably the most salable. So selling those businesses. Is that on the cards, off the cards?

It's part of the managed portfolio. And we've had big thoughts about how you do that is the U.K. better is it's a decision tools of private equity, it's exactly the question you ask yourself. At this stage, our view is it's better as a whole because each of them are relatively small. But also there's a certain resilience in owning all those businesses in the U.K. So again, subject to market testing, we'll see what it is. Just to note, though, those two businesses don't use any what we would call core infrastructure of Iress, they got their own platform, their own software. They've got -- they haven't really been looked after. They haven't really got road maps. There's a lot to real if you were just -- if that was the only business you owned, you'd think about them differently, put it that way. So we think there's a lot of potential businesses and I think as part of the group, the better way to be at the moment, but that's a decision that John and the team will get over the next 12 to 18 months and think about what's best?

Question from Stewart.

Can I -- apologies, one question from text message from an investor. Given elevated debt levels and ongoing below the line dividend policy, you've got any update there?

Yes. So clearly, we generate a whole lot of cash. We're a very cash-generative business. We -- and have been for a long time. Our cash position -- the amount of cash we're generating has been reduced by the nonoperating items by the investments we've made in 2022 and into 2023. But as we said, we expect leverage to reduce as a result of earnings growth. And as a result of asset sales. and that ongoing capacity of the business to grow earnings and generate cash is what creates sustainable dividend capacity over time. Clearly, we need to make the assessment on dividend in each period as we go through the normal cycle of events. And I don't think anyone guides to dividend in the long term, but we would be very confident that over time, we can generate significant earnings growth and cash flow.

Okay. We might hand back to Marcus to close the session. Thank you.

Not me.

That we have all the time for today. So that concludes today's investor briefing. For anyone who did want to get a recording of today's session, we're going to make it available on our Investor Center of the website within the next 24 hours. I'd like to thank you all for joining us today, whether it's here in person or online. If you are here in the room, we're going to be serving lunch just behind the curtain here, so please stick around and join us. For everyone else, thank you, and have a great day.