Magellan Financial Group Limited (MFG) Earnings Call Transcript & Summary

Good morning, everyone. I'm Stu Kingham, Head of Investor Relations, and thank you for joining us today. We're delighted to present the results of Magellan Financial Group for the 2026 year. It's been a significant period for both MFG and Barrenjoey. Today, we've released financial information for MFG, Barrenjoey and provided a pro forma combined view. Today, you'll hear from Brian Benari, MFG Chief Executive Officer; and Gavin Buchanan, Chief Financial Officer. This will be followed by a question-and-answer session. With that, let me hand over to Brian.

Thanks very much, Stuart, and good morning, and thank you all for joining us. I'm delighted to be the new CEO of MFG and to take you through our FY '26 results, our first results since the merger. I'm joined today by Gavin Buchanan, Chief Financial Officer. Gavin has a background in financial markets and brings extensive experience in funds management and financial control, making him the ideal CFO for the merged group. Today's presentation will walk through the 30 June results for MFG in isolation, and it will also build a full picture of performance for the year for both MFG and Barrenjoey and show what the combined group looks like. Firstly, I'll provide an update on the business today before handing to Gavin to cover the financial performance. After that, I will share our plans for what's ahead, including our near-term priorities. But before we get into the group update, I want to take a moment to recall the rationale for the merger. We have brought together 2 highly complementary Australian businesses. Combined, they will deliver an enhanced client proposition, a more diversified and resilient business, and a strong balance sheet, providing capacity for growth. We have also taken decisive actions to lay the groundwork for our next phase of growth. Integration is on track. The restructure of the Heritage Global Equity Funds was completed in June, providing investors with a lower cost offering backed by a strong track record of performance. Consolidation and derisking of invested capital has been completed, which will reduce profit and loss volatility. And finally, growth opportunities have been identified for each business, and we will prioritize and execute these in a structured and disciplined way. Let me turn now to what the group looks like today. From 1 July, we operate across 3 distinct business lines: Financial Markets, our fixed income and equity sales, trading and financing business and our market-leading research capability; Corporate Finance, M&A, strategic and debt advisory, and equity and debt capital markets; and Investment Management, our public and private markets investment capability. The FY '26 revenue split shows a 3-way balanced business. No single pillar dominates. We've previously announced that subject to shareholder approval at our AGM in October, MFG will formally become Barrenjoey Group Limited. It's more than a name change. It reflects the scale and ambition of the combined business and the reality of what we've built, a staff-aligned, client-focused financial services group. This slide tells the story of how we got here. Barrenjoey has scaled from a start-up into a key player across all of its businesses. Note the half-on-half trends for Corporate Finance and Financial Markets since establishment, 5 years of consistent compounding growth across differing market conditions. And importantly, that growth hasn't been lumpy. We see very little evidence of half-on-half seasonality, which speaks to the durability of the franchise we've built. Investment Management, which is now hitting 20 years in market, has in recent years had revenues impacted principally by the unwind of the Global Equity Fund. The core business remains resilient and cash generative with a strong distribution platform, which speaks to one of the key rationales for our merger. Diversified revenues across complementary capabilities smooth the combined group's earnings profile through the cycle. On a pro forma basis, in the FY '26 year, the combined group generated $778 million of revenue and $215 million of operating earnings after tax. Turning to where we are today, less than 2 months post completion. The majority of our people are now in the same building with the remaining team relocating within 2 weeks. We expect to have migrated on to common core systems by 31 December and complete integration by 30 June 2027. Synergies will be progressively realized across the year. We're already seeing identified merger benefits. Our expanded portfolio of alternative asset products is gaining traction. The newly established Barrenjoey Asset-Backed Income Fund has increased AUM by 42% in just 3 months and the first Ag credit fund by 15%. This underscores that combining Barrenjoey's origination capability with MFG's distribution reach works in practice. We're also making targeted hires across our platform to strengthen and diversify our client offering. Now with that, let me hand over to Gavin, who will take you through how MFG and Barrenjoey each performed over the year and how the 2 come together in the combined group result. Gavin, over to you.

Thank you, Brian. Good morning, and welcome, everyone, joining on the call. From today's presentation, you'll clearly see the building blocks that make up the stand-alone performance of each of MFG and Barrenjoey and how these combine to form a pro forma merged result for the group. This pro forma shows what the year would have looked like had we merged on the 1st of July 2025 rather than the 1st of July 2026. We then go a step further, showing the expected impact to future earnings of management actions taken late in the year, restructuring the Heritage Global Equity Funds and derisking the group's capital. This approach paints a clear picture of some of the expected financial outcomes as we head into our first year, a year of transition as we integrate both businesses. Now before turning to the results, I'd also like to note that we've published a detailed investor report on both MFG's and Barrenjoey's current and historical financial performance. The investor report and Barrenjoey's audited financial report for 2026 are available from our shareholder center. Starting with MFG's stand-alone financial performance. Operating profit for the year was impacted by an 11% (sic) [ 12% ] reduction in revenue to $291 million. Investment Management revenue declined 21% or $53 million before tax, and I'll go through the drivers of this shortly. Partially offsetting this was strong growth in Partnerships income, up 70%, underpinned by Barrenjoey's growth. Operating expenses were tightly managed, down 2% despite the higher inflationary environment. Investment income, largely the return on fund investments, fell 14% to $45 million, reflecting lower capital gains being available to distribute. With the lower revenue and continued cost control, operating profit after tax was $145 million, down 9%. Statutory earnings or net profit after tax was $88 million, down 47% with a number of nonrecurring and noncash items impacting the result, particularly in the second half. These included a $38 million negative fair value movement on fund investments as well as $11 million of merger-related costs, which were largely adviser, legal, and property transition costs. As Brian mentioned, we've recently changed how capital is invested to remove much of this volatility in the future, and I will go through this shortly. Turning to the drivers of the lower investment management revenue. This starts with net flows and how they contributed to changes in the composition of AUM. Net outflows for the year were $3.3 billion, largely contained to Magellan Global Equities. Airlie and Vinva together delivered positive net inflows totaling $1.5 billion, more than offsetting the modest outflows in Global Listed Infrastructure. Of the $4.2 billion of Magellan Global Equities net outflows, close to 90% came from high-margin retail products, and this shift is clear in the retail mix at the bottom of the table. As announced previously, management has taken action to improve client outcomes by repricing and transitioning investment management of 2 Heritage Global Equity funds to Vinva. This resulted in the transition of $4.9 billion of AUM, which can be seen moving between the products in the table. Since the transition, we have seen outflows continue as advisers meet with their clients and assess the change of strategy. Now looking at the composition of AUM and management fees in more detail. With outflows contained to the retail Global Equities products, the mix between strategies has shifted materially over the past 2 years. You can see this on the chart on the left-hand side. The dark blue is Magellan Global Equities, which represented 43% of AUM 2 years ago and the Global Opportunities strategy remains, which was 8% of AUM at 30 June. This shift in AUM contribution has had a significant impact on management fees. Average management fees fell from 61 to 52 basis points in 2026, a 15% reduction. Nearly all of the 9 basis point decline reflects the change in AUM composition away from higher-margin retail. Repricing the Global Equity Funds and transitioning to Vinva occurred in May, only having a 1 basis point impact for the year. As a result, the 2026 average management fee of 52 basis points doesn't fully reflect the go-forward run rate. The exit rate of 42 basis points is a better starting point for both impacts as we move into FY '27. With that, let's move to Barrenjoey. Barrenjoey is a fast-growing, high-returning business with significant operating leverage. Operating profit after tax increased 68% to $112 million, driven by strong growth across all 3 businesses, which I'll take you through on the next slide. ROE is now nearly 33%, up from 24% just 2 years ago, a clear sign of the improvement in earnings, which has also seen operating leverage emerge as the business scales. You can see this reflected in the cost-to-income ratio falling 12 percentage points over the same period, while the compensation ratio has remained consistent. Turning now to Barrenjoey's revenue for the year. Total revenue of $573 million was up 34% with strong growth from all 3 businesses, reflecting increased client activity and the returns from earlier years investment in revenue-generating capability. Financial Markets revenue was up 40% year-on-year. A combination of more client activity, increased market share, and higher global market volatility all served to deliver a record year. Corporate Finance, our longest-running and most established business, was up 20%, with particularly strong growth in equity and debt capital markets. Advisory revenue also grew during the year coming off the back of advising on $25 billion of M&A transactions as well as from investment in our teams to expand sector coverage. Favorable market conditions lifted equity capital markets, although the conflict in the Middle East and other factors weighed on IPO activity, which has remained subdued. Debt capital markets activity was strong throughout the year with Barrenjoey appointed as lead manager on over 100 transactions for a range of issuers across government, semi-government, corporate, corporate hybrid, and asset-backed. Private Capital, our newest business, saw substantial revenue growth. Its fee model is aligned to client outcomes, earning performance fees when superior investment outcomes are delivered. This was highlighted by a $22 million performance fee earned from the GYG investment in the first half. All 3 businesses have an exciting pipeline of growth opportunities aimed at expanding both clients and products, which Brian will touch on shortly. Now we bring MFG and Barrenjoey together to build the 2026 pro forma profit for the combined group. The combination of the 2 organizations would have generated $778 million of revenue, with all 3 business lines contributing roughly 1/3 each. After deducting expenses and tax and eliminating Barrenjoey's profit from investment management revenue, operating profit was $215 million. There are a couple of items below operating profit that are worth highlighting. Fair value movements on fund investments have historically been volatile with a $38 million after-tax adverse impact on net profit for this period. Moving this capital to cash and high-quality liquid fixed income will reduce this volatility. Equity ownership has been central to Barrenjoey's philosophy. Everyone is an owner. We facilitated this by granting shares to employees when they started. The majority of these were granted when Barrenjoey was established and the bulk of the employees were hired. This cost amortizes over time and importantly, is noncash with all recurring cash employee and bonus expenses included in operating expenses. This cost has gone up this year as a direct result of the merger with modifications made, including changes to the vesting structure and higher valuation. MFG's merger-related share of this expense is $4.9 million, which you can see being allocated to MFG and then eliminated on the right-hand side. We've also shown MFG's share of Barrenjoey's own merger-related costs which is also eliminated on the right-hand side. All of this results in a pro forma statutory net profit after tax for the combined group of $146 million. And finally, we have not published a pro forma balance sheet for the combined group today as the standard acquisition accounting and valuation process is ongoing. With the merger only completing on the 1st of July, this process hasn't been finalized. When it has, we will publish a pro forma combined group balance sheet. The combined group holds high levels of cash and capital, providing financial flexibility and opportunities for disciplined investment. As part of coming together, MFG took the opportunity to review how its fund investments were invested. It made the decision to redeem $251 million from various Magellan funds, leaving $118 million as seed capital. From here, the treasury team will manage this capital and invest in cash products and high-quality liquid fixed income, resulting in reduced earnings volatility, but more importantly, reduced risk. Now I want to address the management actions that will impact earnings into FY '27. Firstly, as we've been through, we've restructured and repriced the Magellan Global Equity Funds, appointing Vinva as investment manager. While a small impact from the repricing was felt this year, the full impact will land in FY '27. Fees were reduced by 55 basis points, resulting in an estimated revenue reduction of $21 million after tax. Partially offsetting this is $5 million of after-tax expense savings, largely from a smaller portfolio management team. Secondly, as I've just mentioned, in order to reduce risk, we have made changes to how capital is managed. With less risk, there will be lower operating earnings contribution than in the past. We expect this to be about a $17 million after-tax impact relative to FY '26. It is important to note that while these decisions have a short-term financial impact, they have been taken to strengthen and make our company more resilient for the longer term. Finally, the Board has resolved to pay a fully franked second half dividend of $0.255 per share. This is based on MFG's and Barrenjoey's combined second half operating profit after tax and represents a payout ratio of 80%, consistent with current MFG policy. As part of the merger, the Board has considered this dividend policy for the combined group and has settled on one which seeks to balance the capital needs of the group with shareholder dividends. From FY '27 and subject to Board discretion, the target payout ratio will be between 60% and 90% of the combined group's operating profit after tax. We expect to initially be towards the top end of this range. So in summary, I want to leave you with 3 points. First, MFG took action to reposition the Global Equity Funds with clients and to derisk its capital. Second, Barrenjoey brings a demonstrated growth track record, one that has been executed efficiently and with discipline. And finally, together, these 2 businesses are powerful, delivering a scalable platform with diversified earnings from which to build into the future. I will now hand back to Brian.

Thanks very much, Gavin. I want to return to the diversification and resilience theme I opened with and be clear on the revenue drivers. It's helpful for how you should think about our earnings going forward. So starting with Corporate Finance. You will have noted the year-to-year growth achieved by the business through different market cycles. Our breadth of sector coverage, and client relationships provides diversification. That breadth is key to our earnings resilience. Deals ebb and flow by sector and by client and a broad base smooths that out over the cycle. But implicit within the business is a range of repeatable revenues. An example of this is the debt and capital advisory side. We assist our clients with financing and refinancing year in, year out. Another good example is the debt capital markets, where we are averaging 2 deals a week, many of which are from repeat issuers. Now bringing this together, while Corporate Finance revenues may be transactional in nature, they are diversified across a breadth of sectors and relationships and can be repeatable. This continues to smooth the revenue and has provided growth since inception. Turning to Financial Markets. The fixed income business is worth a special note of explanation. This is a client-led flow business. Clients come to us to trade in and out of bonds and interest rate swaps. Our role is as an intermediary, we make the market, and we capture a spread when matching our buyer and seller clients. Our in-house rate strategy and economics research sharpens our read on the rate cycle, credit conditions and issuer positioning. This intelligence and deep market understanding attracts client flow, broadening our client base. Finally, this business benefits from higher market volatility as it drives client portfolio repositioning. Investment Management sits firmly at the annuity end of the revenue spectrum. AUM is driven by quality, relevant client offerings, and investment performance. The scale along the bottom of this slide shows the spectrum from more diversified transaction-based revenue through to durable and annuity-style income. What the merger gives us is exposure across that very spectrum simultaneously. Our annuity-style investment management revenue provides ballast with Financial Markets having delivered durable earnings across varying market conditions. The balance that we talk about sits at the heart of the investment case for the combined group. This slide seeks to bring to life our approach and track record to building and growing Barrenjoey, evidence that when we say structured and disciplined growth, we mean something very specific. It's not just a tagline. Since commencement of each Barrenjoey business, we have incrementally expanded client offerings and our client base. We have done this in a very programmatic way to deliver sustainable business growth. From our first M&A mandate in December 2020 and first cash equities trade through to today, ranking #1 in M&A, equity sales and research and one of Australia's leading fixed income franchises. Our research covers around 250 listed companies in addition to sectors and economics. It's not just breadth. It's quality. Barrenjoey has more #1 rated research channels than the entire rest of market. More recently, we've been expanding our client base through geographic reach. Building on our Barclays strategic alliance, we established a presence in Abu Dhabi Global Market in 2024 to support the Northern Hemisphere fixed income clients. In 2025, we opened our Hong Kong office to grow our equities franchise. The point of showing this is simple. We see a range of opportunities and are continuing to invest for the future, and we will take the same disciplined approach to executing on these new opportunities. Our teams are aligned with shareholders and are here for the long term. This creates a continuing focus to invest with a long-term mindset. FY '27 will be a year of transition for Barrenjoey as we move through integration. Our priorities are clear. First, we are focused on completing and capturing the benefits of the merger. This is a top priority. We expect to start to extract the merger benefits that will arise over the integration. Second, we are extending our offerings and client reach. We have built a strong reputation for our deep continued focus on Australian and New Zealand products. The opportunity is to extend and strengthen client reach into international jurisdictions. A good example is the establishment of the U.S. swap dealer license, positioning ourselves with U.S. nexus clients as a preeminent global provider of Aussie and Kiwi dollar fixed income product. With the license now granted, we executed our first U.S. trades a few weeks ago. We are also adding to our Abu Dhabi Global Market team to continue the success we've had in servicing the European and Middle East markets and strengthening the New York presence for our equities business. Third, investment management opportunities. We have a great platform for growth, including strong distribution, and it's critical that we seed and develop more investment opportunities to meet client demand. In recent years, there's been a material shift in investor appetite, particularly towards private market opportunities, and we're in a good position to capitalize on the changing landscape. To this end, we're in the process of adding new offerings in both our private capital and listed equities business. Importantly, we recognize that we invest and build today for the benefit of years to come. Finally, Barrenjoey in New Zealand. Barrenjoey New Zealand is an investment for the future. We're excited about the opportunity set, and we've hired some exceptional talent into that business, which will be locally managed. We think of it in 3 phases. 2027 will be the year of build and establishment, 2028 is commencement and 2029 is where we start to see the benefits come through. So to bring it together, firstly, this has been a landmark year having completed a merger of 2 complementary companies. Secondly, our group today is genuinely diversified across revenue and clients with all the right foundations in place for our next phase of growth. Finally, we will continue to grow each business and deliver with the same structured and disciplined approach that has been a hallmark of Barrenjoey since inception. I want to take this opportunity to thank our exceptional team and our shareholders for their continued support. And with that, Gavin and I are happy to take your questions.

Thank you, Brian. We'll now turn to the Q&A process. [Operator Instructions] Thank you. Operator?

[Operator Instructions] And today's first question will come from Elizabeth Miliatis with Macquarie.

Just the first one is just on the Financial Markets business. Particularly if we just look at the first half and second half revenue numbers in your presentation pack, obviously, adjusting for seasonality, it seems to sort of slowed a little bit in the first -- from the first to the second half. How should we think about the outlook over the next few years? And particularly, if you could make particular comments on what you're excited about from the fixed income business? And do you expect revenue to accelerate from here, noting you've had a very good period over the last 12 months or so there?

Yes, Liz. It's Brian Benari. Maybe I'll have a go at that one, and then Gavin can add as required. So the way we think about the Financial Markets business, it's broadly split, pretty broadly between equities and the fixed income business. Obviously, you're very okay with the equity side. Both of these businesses are activity driven. It's fair to say that the fixed income business certainly benefits from volatility. And indeed, actually, that can act as quite a good buffer for us. So when you see that volatility, sometimes equity markets slow somewhat, but we can get the benefit of the fixed income business on the other side as people look to rebalance their bond portfolios. The interplay between the 2 of those has meant that we've seen what we would term pretty durable income. And if you actually look at that business over a series of cycles since commencing those businesses when they really were in earnest, both up and running from 2023, we've seen that growth half-to-half coming through. Inevitably, different market conditions serve up different levels of activity. But as I said, there's somewhat of a buffer -- buffering impact that happens with the interplay between fixed income and equities. We'll continue to build those businesses out. What we see is the growth to date, and the continuing growth to date has all been about expanding our product offering and as well as broadening our client base. I've talked about our client base already. We see opportunities around more of the low-touch side on the equity side. We see opportunities in respect to building out our financing offering as well. So we're very confident in respect to the future for the business. But obviously, there's always market impacts.

Yes. And I'll just -- Liz, I'll just add to that what Brian is saying, just to deal with your question around the actual half-on-half split and just to give you some flavor there. And I think it speaks to the diversified nature of the business that we've got. I think you would probably acknowledge that it was a very active first half in equities, but a much quieter second half in equities as a result principally of the conflict in the Middle East. Conversely, fixed income picked up in the second half, principally because of the conflict in the second half. And as Brian said, as a client-led flow business, as conditions warrant, clients were a little bit more active in the second half on the fixed income side, and you can see the balance of those 2 things coming through in the first half and the second half.

Okay. Got it. And maybe just a follow-up question. I think the fixed income business is a bit newer versus the equities business. Do you expect that there'll be continued sort of market share gains in that particular segment?

Yes. Liz, we would hope so. I think both of these -- both of the businesses demonstrated good growth over this last period or over each of the periods. So we're seeing growth across both of them, but we would hopefully continue to and expect to continue to grow out each of them.

Okay. Got it. And then just a second question, just on the private markets business. I mean you alluded to expanding your product offering there. But just would be curious to get a bit more color on what does that look like? I think at the moment, you're more single asset type funds. Are you looking to expand into multi-asset funds, particular asset classes? I presume, obviously, just still in Australia. But yes, any more color on what that actually looks like going forward?

Yes, certainly, Liz. So you're exactly right. When we started this business, and it's the newest of our businesses, we started off with single assets, typically around private equity positions and opportunities, single asset funds with clear exit strategies for each of those. The performance, and that was across all sorts of different underlyings. And they have -- the performance to date has been very, very good, and I think we've started to build a track record in that regard. And we've also seen exits like, for instance, the GYG one where investors have done very well. The next stage is setting up open-ended funds, as you said, and there's 2 of those 2 new funds that have been established. One is the Barrenjoey Agricultural Fund, which is a credit fund. And the second one is the Asset-Backed Income Fund. Both of those are open ended. Both of those are the ones where we've turned the Magellan distribution firehose towards in order to start to build that out. It's early days, but we're certainly if you're starting -- if you can see the picture arising here that we're starting to develop the business, not necessarily that we won't still have single asset funds, but we're starting to open it up more to have open-ended funds as well. It's early days, though, these are my points, it's very much early days.

Yes. Got it. And maybe if I can sneak one third question in as well. Just on the investment management business, particularly with the transition to Vinva for Global Equities money. I think on our numbers, the business is probably not making a decent or much profit in maybe about 12 months' time. How are you thinking about the broader cost base not perhaps specifically in the investment teams but more broadly in Magellan, will there be more synergies to flow through as you work through that cost base from a sort of back-office perspective and distribution team?

Yes. Liz, good question. What I'd say is that we've moved the funds across to Vinva. The way I think about it is we had a fixed cost base of the people managing those funds. We've moved it across to Vinva. That means it's now a variable cost base. So if that -- whether it scales up or scales down from where we are today, the cost base in respect to managing those assets will follow that. So I think what was really key, and I was -- it was great that Sophia and the team got that restructure completed in June is that what they've effectively done is moved what I would say is a very older structure and offering into a much more contemporary offering. I think the offering through Vinva, who's got a great track record there is really beneficial for the ultimate investor. And obviously, they've also seen that reduction in fees that they're paying. So I think that means that, that product is now much more contemporary in nature. It's now for us to watch and see actions that any of the investors will take and monitor that. I note that -- and Gav mentioned this, if you were to look at all the offerings at Magellan, the one that had the sustained reduction was the global offering. It peaked at $88 billion. Today, it's in the 4s. We would hope that, that runoff abates, but that's not going to be up to us. That will be up to the investors.

And Liz, I might just address your question around synergies as well and what you can expect from there. We called out as part of the merger that we would deliver $6 million pretax of synergies. We're on track to do that. They are principally focused around technology and supplier harmonization between the 2 businesses. This merger wasn't about trying to harvest synergies. They're 2 complementary businesses rather than overlapping businesses. And as you can imagine, pulling the 2 teams together, we've only just done that. And so we're working through that with both businesses, but confident that we'll be able to deliver that synergies number.

Your next question comes from Siddharth Parameswaran with JPMorgan.

I had 2. One was just on thinking about FY '27. You give us a good slide there on Slide 17, just on -- to see the expected impact of the management actions you're taking. I'd just like to clarify what is and what isn't included in those numbers as we should think about forecasting our FY '27 numbers. So it appears -- can you just clarify firstly that the FY '26 number includes the pro forma numbers for Barrenjoey, including that step-up for the restructuring costs -- sorry, the restructured arrangement that you had with Barclays? And then there's no synergies. I take it there's still to come and there's no impact of the -- in that reduction that you have there on the Global Equities repricing, the $21 million, there's nothing included there for the lower average FUM as well, right? So those are the things that if we're -- if you're on our side of the fence, those are the additional things we should be allowing for. Would that be right in terms of thinking about FY '27?

Yes. Thanks, Sid, for your question. Yes, let's run through the slide. And hopefully, we can tick off all of those items that you raised there. First and foremost, no, it doesn't take into consideration the AUM change. So that's something that you will need to think about as you work through it. Clearly, average AUM last year was $39.1 billion, and we exited FY '26 at $36.7 billion. So that definitely needs to be taken into consideration. We called out as part of the merger that there would be some legacy arrangements that would fall away as a result of the merger. They are in the FY '26 results. So that is something that you need to take into consideration. And really, all we are trying to do in the slide is point out that there were 2 kind of key management actions that were taken in the year that do have an impact on the earnings. But there are a whole host of other things that you need to think about, not least of which is what are you going to do from a Financial Markets and Corporate Finance perspective as well because that will also obviously impact the earnings going forward.

Okay. I think that does address those questions. Okay. And maybe I'm going to ask a second one then, just relating to some of the actions you're taking in '27, '28. You said that you're investing in, I think in New Zealand -- to expand in New Zealand in particular. Maybe if you could just comment, we've had a lot of investment in the business. It's been matched by revenues. But just your expectation on this investment? Are we likely to see a drag on earnings into '27 from the pro forma numbers that we've seen from the investments that you're making? Or will the growth from the other divisions offset?

Sid, Brian Benari. So let me say in respect to new -- or first of all, in respect to investing, we continue to invest across all of our different businesses with a whole series of different initiatives in order to broaden our product and our base of clients. And I made reference to that today. Great example of that is the U.S. swap dealer. All the work that's been done on that over the last 1.5 years has already been expensed in our numbers as opposed to the revenues, we should start to get some of the benefits of that coming through this year. And it will be gradual because we've got to onboard the clients, et cetera. When you go to New Zealand, as I said earlier, we sort of see it in 3 phases. FY '27 is establishment, '28 is up and running, '29 benefits arising. Once we get up and running, we'll obviously benefit from the arrangement with Craigs, whereby we'll provide them execution and research services, which we'll get revenue from. To try and size that maybe is really helpful. So the way to think about it is, in the next year, FY '27, maybe the way to think about it is that we expect the total costs in respect that will run through the P&L on that will be in the vicinity of 1% to 2% of the total cost base, $5 million to $10 million. That's sort of what you should expect to come through in the 2027 year, Sid.

That's super helpful. Okay. And the revenues come later. Okay, that's super helpful. And then just the last question, just on capital. So I mean, you gave us a very helpful slide there showing us the capital you have, the -- on Slide 16, I think $611 million. Is that -- I mean, can we take that as effectively your net tangible assets? And if I could just ask, do we -- how should we think about the capital requirements for the go-forward business? How much is surplus? What do you need for some of the initiatives you're taking?

Yes. Thanks, Sid. Dealing with your first question, is it the NTA of the business? No, it isn't. I think one of the things, which is a little bit difficult, obviously, not having a balance sheet to put in front of you today is to give you that sense, but I can give you a sense of where the net asset position is going to be for the organization. And if you look at either the MFG financial statements or the Barrenjoey financial statements and go to the subsequent event note, you can see some detail around this. And there is a number of $872 million that you add to the existing net asset position of Barrenjoey, and you'll get yourself to about $1.1 billion of net assets. There is some work to be done, obviously, in the valuation process that will then determine how much of that will be goodwill but we're not expecting that to be a material number in the process. The second part of your question was capital requirements going forward. And also just to kind of speak to some of that $611 million that we see there. The Barrenjoey number that you see on the slide is really working capital that's in circulation for our business on an ongoing basis. And that's a spot number, obviously, at 30 June, but that is used to support all of our businesses at varying points in time. And so it's important to think about that as well when you do your numbers. From a go-forward perspective, as Brian has mentioned, we're focused on predominantly organic growth in all of our businesses. We're not going to rule out looking at things, but I think we're very focused on adjacent opportunities in all of our businesses. Swap dealer is a good example. New Zealand is a good example. They're not material investments per se, at least initially, but we do expect them to deliver revenue into the future.