Ninety One Group ($N91)

Ladies and gentlemen, and welcome to the Ninety One results presentation for the full year to 31 March 2026 -- and then explain the performance of our business over the reporting period. Kim McFarland, our Finance Director, who is in London today, while I'm in Cape Town, will then present the financial review. I will then conclude before we take questions. You can submit questions during the presentation via the chat function -- to GBP 171.8 billion. This was driven by portfolio growth, the take on of Sanlam Investment Management and the return to annual net inflows. Net inflows were GBP 2.8 billion for the year. The operating margin expanded from 31.2% to 32%. This led to growth of 12% in our adjusted earnings per share resulting in a 10% year-on-year dividend growth -- it is important to draw strength that the inspiration -- and inspiration from our long and full history of 35 years. This is a resilient business, which tends to recover after tough periods. Through many market cycles, Ninety One has managed to grow from startup into the global business it is today. We continue to serve investors, their advisers and save -- market. And in the rest of the world, we serve the largest and most sophisticated asset owners and asset platforms as well as a select group of financial advisers. We have ample opportunity to grow market share in the years to come -- and those who worked for Ninety One in the years before, who contributed to the growth of our company, especially the clients who supported us throughout. I'm delighted to report growth in revenue and earnings after 3 tough years. The long-awaited improvement in the relative attractiveness of emerging markets as both diversifier and credible investment opportunity has finally manifest itself over this period. This is important to a firm like ours, which is associated with the emerging market asset class. The investment management industry, of course, continues to become ever more competitive. The partnership with Sanlam, which we announced last year has been formally established at the beginning of February this year. The relationship is strong, and the partnership is starting to deliver. We are indeed optimistic about the potential for this partnership. We accelerated AI adoption and Ninety One is actively moving from experimentation to business model adaptation. AI is a huge opportunity for us. And if not comprehensively adopted and integrated into our business could become an existential threat. It was Lennon, who said that there were decades when nothing happens, and then there are weeks when decades happen. We operate in a world of change, geopolitically, technologically and climate-related. AI is changing everything. The value of the companies we invest in, the way we work and the pace at which we work. As a 35-year-old startup, yes, a 35-year-old startup, we simply must embrace this change. During the past year, conditions improved for Ninety One. For most of the period, markets broadened and emerging markets have regained legitimacy. Fee pressure persists and competition is as intense as ever. At our interim update, we told you that we are organizing our business efforts in 3 opportunity facing units. supported by the Ninety One foundry, which incubates new initiatives outside of those directly in the operating scope of the other 3 units. This structure is now fully operational with clearly identified and accountable leadership teams in charge of each of these units. The format is designed to create focus with an eye on long term -- to long-term succession. The international public markets unit comprising of all our regions outside Africa, delivered net inflows across the board besides the U.K. I have seen this for some time, but I remain confident that our U.K. business will turn around and resume growth in the years to come. We have a strong pipeline and we were a little unfortunate with unforeseen outflows towards the back end of the year as well as delayed inflows in this unit. Asia Pacific was the largest contributor to net inflows, mainly from global equities in the first half and gold, natural resources and local currency fixed income strategies in the second half. Global exchange traded fund assets under management for the entire industry have grown to almost $20 trillion with 1/3 listed outside the U.S. And over the reporting period, we worked hard to position Ninety One for a slice of the business that will flow via active ETFs. We announced the strategic partnership for active ETFs, we're the third largest ETF provider in the world, State Street Investment Management. This is off the back of our multi-decade outsourced relationship with the Stage Street group. These ETFs will be co-branded. In South Africa, we issued our first domestic active ETFs under the Ninety One brand. The Sanlam U.K. book has also now been fully absorbed into this business. In South Africa, the structural outflows from the SA institutional retirement funds were compounded by the unexpected loss of a long-standing mandate elsewhere in the region. The funds platform has once again delivered healthy growth while the unit trust and ETF business remained positive, driven by our income funds. The Sanlam integration has now moved to business as usual as the final systems conversion will take place shortly. I want to congratulate the team for the way in which they have dealt with us. The relationship with Sanlam is strong, and we look forward to exceeding expectations over the medium and long term. The private markets unit made progress over the past year. We substantially strengthened our EM private credit platform and secured seed capital for new funds. In the interest of focus, we decided to exit from developed market private credit, although we still have developed market public credit offerings in our portfolio. In the Ninety One foundry, we have identified a set of exciting initiatives. Firstly, the establishment and strengthening of our in-region emerging markets investment capabilities in the Middle East and Asia was driven from the foundry. Last year, we announced a joint venture with a Singapore-based alternative investment manager, Ark Avenue Asset Management, which has close links to IDG Capital and its partners in the venture and growth capital community of Asia. This transaction has now received all regulatory approvals and has been fully operational from the 18th of May this year. This substantially improves our ability to understand the IPO pipeline in the region and the rapidly evolving technology landscape and growth investment opportunity set in Asia. In the Middle East, we have secured seed capital for our first domestic credit vehicle run from the Kingdom of Saudi Arabia, and we have moved 1 of our senior investors to Riyadh to lead the build-out of the local team covering the region. The second project of the foundry is to establish and commercialize a digital finance capability, which helps us align with the inevitable change in the way in which financial services would -- evolution of client preference as well as about administrative efficiency. Digital finance can also play a substantial role in supporting financial inclusion and we will provide further and more concrete updates in due course. The third project of the foundry is to rethink our business for the AI era and encourage experimentation beyond what will happen in the major business units. We have been investing in and establishing relationships with partners to accelerate this as we are committed to transform ourselves into the active investment manager of the future. Although we have deployed machine learning for many years, the new tools and the improved organization and management of our data will create great opportunities for us to do things differently and better in the future. It is important to take the entire firm with us, which is easy in theory, but a great deal harder in practice. Let me give you an update on our progress on this front. Within our framework of advocate, equip and use, we can measure adoption rates by cloud licenses and token usage. and experimentation within the projects which we monitor. The firm-wide enthusiasm for the new tools is growing in leaps and bounds. We have allocated substantial managerial resource to data organization and a presentation of data within the firm. We hope to see a much improved data score by the time we report again. This will improve our ability to transform the business, which, of course, will drive productivity as well as client outcomes. All efforts on this front have been fully expensed to date. We have not changed our business priorities, including our commitment to sustainability. Our business model remains client-focused people-centric, capital-light and technology and AI enabled. Ninety One is a specialist in emerging market investing across the capital structure, including differentiated credit with in-region capabilities in Africa, Asia and the Middle East, augmented by a strong partnership in Latin America. We also have a well-established multi-style global equities platform and multi-asset offering. This must translate into best-in-class active investing and client engagement over time. Equity markets have been supportive, but gave away a substantial part of their gains in the final month of the year, affecting flows and revenue estimates. Since the year-end, there has been a recovery, but markets have narrowed again. and this puts pressure on systematic broad alpha strategies. This graph shows the drawdowns for the final month, in red and the orange numbers represent the result for the year. To bring this alive, the Johannesburg or share index was up by -- for the first 11 months but ended the financial year with a rise of 44%. You are all aware of the sharp rebound in markets subsequent to year-end. The same argument follows for fixed income. This chart also highlights the substantial positive performance differential between emerging market and developed market bonds. Although these are the most concentrated markets since we started Ninety One 35 years ago in 1991, active managers need to be aware that there have been similar periods of substantial concentration in the past, which, of course, then paved the way for long periods of deconcentration, which, in theory, are good for active investment management or stock picking. This is an update from a previously used slide to show evidence of a modest and renewed interest in active emerging markets investor. We are a long way from the enthusiastic pursuit of emerging markets after the great financial crisis of 2008. But it is clear that the momentum is improving. We believe that the emerging markets remain a structural growth opportunity. Assets under management grew by GBP 41 billion over the year to GBP 171.8 billion at year-end. This was driven by a GBP 19.9 billion growth in the portfolio, GBP 18.3 billion from Sanlam and GBP 2.8 billion of net inflows from other business. All asset classes except multi-asset have recorded positive net inflows. I have mentioned the flows by client group earlier when we discussed the opportunity facing unit, noteworthy here is the decline in net outflows from the U.K. client group over the last 3 years. We are seeing a good pipeline, and I would finally expect that to turn positive in the coming year. The U.K. and European teams are now working as 1 unit. We also expect South Africa to turn around in the coming year. In September last year, things looked very good and indeed improving on the performance front. Unfortunately, the quality equity style, which is a significant part of our equities book started to underperform the mainstream benchmarks. This is a style related issue and not surprising in these markets. We have full confidence in our team and their ability to continue to deliver for clients over time. Secondly, in South Africa, we continue to struggle in the multi-asset space. We are confident that the improvements we made in this area, including personnel changes, will bear fruit in the near future. Notwithstanding this, our emerging market investment performance remains strong across our capital structure. And the house is firmly focused on performance as we go into the new financial year. People and culture are central to the long-term success of Ninety One. And despite the long tenure of many leaders in the firm, we continue to remind you that we're building an intergenerational leadership. With the establishment of the opportunity facing units, we have substantially empowered the next generation of leaders. Active talent management is vital for our future. And we believe that competitive compensation and equity participation are essential tools for good talent management. Our people remain net investors in the business, and they now collectively own 29.4% of the firm after the dilution from the Sanlam transaction. Ninety One wants to be known as a talent-friendly, people-centric business with an owner culture. Thank you. I now hand over to Kim McFarland, our Finance Director, to take you through the numbers. Kim, over to you.

Thank you, Hendrik. I'm here to present a strong -- set of strong financial results for the year ended 31 March 2026. I would like to highlight that our core operating business has produced good results and we have completed the Sanlam transaction. And so to note, management fees increased by 9% and adjusted operating expenses increased by 8% with the core business, recurring results increasing by 11% to GBP 169.3 million. Management fees were at GBP 617.3 million. This is as a result of the increase in average AUM from GBP 129 billion to GBP 151.8 billion, alongside a decline in the average fee rate to 40.7 bps. The rate of decline in the fee rate has slowed since the interims. For the last 6 months, the average was 40 basis points. resulting in the average fee rate for the year of 40.7 basis points. The factors were once again the mix of a growth in lower fee rate portfolios, including the Sanlam assets, and the decline in the higher fee rate portfolios. Looking forward, we're anticipating an average fee rate between 38 to 40 basis points. This is aligned to our previously stated view of a decline of 1 to 2 basis points per annum. Adjusted operating expenses of GBP 448 million includes the interest expense on the lease liabilities for our office premises and the full bonus accrual, but excludes nonoperating expenses. The adjusted operating profit of GBP 211.3 million, is up 12% from the prior year. Other income is predominantly a combination of operating interest and a number of fair value market adjustments on seed investments. A similar portion of this is -- a similar portion of this the FX losses, driven by the stronger sterling to U.S. dollar. The adjusted operating profit margin increased from 31.2% back to 32%, largely where it was at the interim results. Ninety One's profit before tax after considering the nonoperating adjustments on which I will go into more detail, increased by 2% to GBP 207.5 million. On the nonoperating adjustments, adjusted net interest is the interest earned on the corporate bank balances. The large share scheme net expenses as a result of new awards to staff and accelerating investing of prior awards. So in effect, reversing the prior year credits recognized. Remember, we fully expensed the bonus accruals within adjusted operating expenses, irrespective of how it settles. IFRS then requires the amortization of these bonus-related share awards over 4 years, which is then reflected as a share scheme net credit. There are corporate-related charges not considered as operating expenses and the amortization of the intangible asset is as a result of the Sanlam transaction. The effective tax rate for the year was 26%, down slightly from the 26.5% in the prior year. The above factors resulted in a profit after tax of GBP 153.5 million, up 2% from last year. And our adjusted EPS shows a 12% increase to GBP 17.4p, in line with the increase in adjusted operating profit. This is the analysis of the absolute movement in adjusted operating profit from FY '25 to FY '26. It clearly shows that management fees increase but this increase was partially offset by the increase in employee remuneration. This is the analysis of the movement in adjusted operating expenses. Adjusted operating expenses increased by 8% to GBP 448 million. Employee remuneration represented 65% of the total expense base and in the prior year, it was 63%, an increased by 11% to GBP 289.9 million. This was driven by an increase in fixed remuneration consistent with the increase in head count and annual inflationary increases as well as an increase in variable remuneration in line with increased adjusted operating profit. Over 50% of employee remuneration remains variable and the resulting compensation ratio was 44%, up slightly from 43.4% in the prior year. Business expenses increased by 3% to GBP 158.1 million. We have again analyzed the cost changes and a high level we have broken down the movement as follows: inflation-linked increase of GBP 2.8 million and FX linked decrease of GBP 1.7 million, a small impact. However, there has been a pickup -- an AI spend of GBP 5.6 million, which will continue as we invest in our systems and other cost decreases of GBP 2 million. Many cost categories decreased in the year, but this was offset by the noted increase in technology spend. Looking ahead, we're expecting the business expenses to increase across the board. This will be driven by inflation, the impact of the additional staff, ongoing technology spend and the new Cape Town offices. This is showing the business expenses and total expenses as a percentage of average AUM basis points over a 6-year period. The adjusted operating profit margin over the period is also reflected here. Business expenses have increased over the period, largely driven by the investment in our IT systems. Total and business expenses as a percentage of average AUM have declined aided by the growth in average AUM. The adjusted operating profit margin has remained in the range of 31% to 35%. And this shows the scale benefit of the Sanlam transaction. And the capital position as at 31 March 2026, Ninety One's qualifying capital was GBP 253.4 million at the end of March 2026. In line with our dividend policy, the Board has recommended a final dividend of GBP 7.4p and taking the full year dividend to GBP 13.4p per share, an increase of 10%, in line with the increase in adjusted operating profit. After the dividend payment, there will be an estimated capital surplus of GBP 163.4 million. This will result in a capital coverage of 241%. During the reporting period, we continue with our share buyback program, and this resulted in return of capital of GBP 37.4 million and a reduction of 17.3 million shares. By taking this into account, this proposed dividend, the interim dividend and the buybacks in the year, we will have returned GBP 155.4 million of capital to our shareholders. In the same period, we issued in total 125.7 million of Plc and Limited shares for the Sanlam transaction, which completed at the beginning of February 2026. As of the close of last night, we had returned a further GBP 7.6 million of capital, resulting in a closing share count of 1.0016 billion. In line with our capital-light model, since listing 6 years ago, we have returned over 60% of our initial market capitalization to shareholders. A few updates regarding Sanlam transaction. the SA transaction completed at the beginning of February 2026 with a further GBP 16.5 billion of AUM on boarded. The take-on of the bulk of the Sanlam assets was near the end of the financial year. So there was limited earnings impact on the FY 2026 results. As previously mentioned, we will be waiting the shares issued to Sanlam for the determination of adjusted EPS for the March 2026 results. So for the finals, this looks as follows: simply put. To start with the number of shares issued at 31 March 2026 was 1.0051 billion. We issued 125.7 million shares for the Sanlam transaction. So at the end of the year, the shares in issue, excluding Sanlam was 879.4 million. Now weighting of shares issued for Sanlam U.K. is 13.7 million, multiplied by 289, which is the day since the transaction divided by 365 is 10.9 million shares. Weighting of shares issued for the Sanlam SA is 112 x59, which is the day since the transaction, divided by 365 is 18.1 million. So shares issued for adjusted EPS calculation will be 908.4 million. The intangible asset arising on the balance sheet of the Sanlam transaction will be amortized over 15 years. This is tax deductible in the U.K. but not in South Africa. On this final point, I will now hand back to Hendrik. Thank you.

Thank you, Kim. Ninety One Is a resilient and robust business with positive momentum. The demand recovery for emerging markets is visible and our offering is competitive. We are indeed in a stronger position than a year ago. We are investing through the cycle in talent and technology to be future set. The growth opportunity in Asia with Ark Avenue investment asset management, access to the ETF market State Street Investment Management and the distribution reach of the Sanlam transaction -- that the Sanlam transaction has added gives us 2 or 3 new compelling growth vectors. We are committed to cost and operating discipline and our focus remains on investment performance and client service. Over the past 35 years, we have built strong foundations for an exciting future. Thank you very much. We will now move on to Q&A. If you have a question and have not yet submitted it, please do so via the chat function at the bottom of your screen, stating your name and your organization. .

Varuni, over to you in London to handle the questions.

At the moment, we have no questions. [Operator Instructions] I have a first question from Murray Mao. Any thoughts on the Schroders comments that they needed more scale in active in order to succeed and hence, the merger with Navin.

Marie, thank you very much for your question. I think you should ask Schroders to give you the answer on Schroders issues. My simple point is that if you are good at what you do in active investing, and you don't have too wide, very importantly, too wide a offering or product set. It's all about competence and quality rather than quantity. If you note, our operating margin is significantly higher than where Schroders was most of the last few years, it would give something away of that focus. And at Ninety One, we're a focused specialist operating at a scale which helps us to reach the kind of clients we want to deal with across the world, but with clear areas of confidence. And we believe that is sustainable in the current world even in a given the current fee decline rate. So size by itself doesn't mean anything. Size that works for you for example, in passive where you can really outbid the competitors in terms of price, all where size gives you an ability to be at the table irrespective of how good you are, it sometimes of help, but not always. So -- size is not the focus and particularly not lateral expansion or lateral growth. In other words, if you grow in the areas where you're good at and you therefore increase your margin and your focus, it is a good thing. If you just grow laterally and add different new product lines, which don't reach scale by themselves, you will in the end generate not only lower returns for your shareholders but also over the cycle, worse results for your clients because your organizational focus has dissipated. In our case, we're very clear. We concentrate on emerging markets across the capital structure, but we are not in equity wide because we think there could be a conflict between private credit and equity from time to time. But that gives us knowledge of many countries -- capital structure. We also are a global equity investor in public markets. We have more than 1 style, which gives us some diversification but also a differentiated view on markets. But that's 1 business. That's essentially 1 line. And then we have -- we serve certain markets with multi-asset offerings with suit and which are tailored to those markets. That's what Ninety One does. And therefore, it will -- we think we can stick to those areas and grow our business within those areas substantially without any significant natural expansion. What we would do, though, is expand through partnerships. In other words, the fire through skills of other partners who can help when necessary without defocusing or deviating or letting Ninety One defocus from its core offerings.

A second question from Murray. What was the management fee in basis points if Sanlam were excluded? Pre-Sanlam, you said the floor for fees was approximately 40 basis points. Now what is it?

Thank you, Marnie. I will let Kim answer the fee question, but let me just add something to the previous. In South Africa, we obviously cover the domestic asset losses across the broad capital structure because here, we play a slightly different role than the specialist position we have in international markets. But these are very close adjacencies that 1 in any way has to understand if you operate in a small market like South Africa. Kim will talk about the fee trajectory.

Thank you, Hendrik. Obviously, the take on of the Sanlam assets has had a negative impact on our fee rate. It had a positive impact as I think you can reflect through on the operating margin. But again, it's difficult to say at this point because it's early days, having only taken on the assets at the beginning of February. The fee rate did decline over the period. As you saw, it was a slower decline. And as I reflected, it was larger as a result. . Yes, Sanlam had an impact because there was a number of fixed income -- a large majority of fixed income mandates that came on board. But it's not the main reason that the fee rate declined over the period. A lot of it was through the mix, particularly the mix of some of the large mandates we've taken on at lower fee rates. I don't know if we've ever mentioned the fact that we've had a floor of 40 bps as a fee rate. It's obviously challenging for us. And I think I've now guided on the fact that the fee rate is at 40%, we're now guiding between 38 and 40 bps but we've largely -- we've factored in the Sanlam impact, but I think we will still be challenged throughout the year. Should we be taking on large mandates at lower fee rates. I think it's always important to know that we don't reprice our back book over the period. So this hasn't actually had an impact on our -- thank you.

The next question is from James Labatt at SBGS...

We look at the profitability of business rather than the fee rate when we take it on. And as Kim said, there is indeed a difference, and you can see that in the operating margin. Our industry remains extremely competitive, and that is something we've factored into our planning. .

The next question is from James Labatt at SBGS. He comments congratulations on a strong result. When we think of the Asset Management business, we see that some players in the market are awarded for high margins despite outflows. How do you feel about the mix between flows and margins as an indicator of business help?

Thank you, Varuni. James, thank you for your comment. And over time, we like a mix of data and flows to be kind of net flows to sort of be half-half. Clearly, in recent years, that hasn't been the case. We've had a very strong market support, which helped our business and flows were hard to come by -- but net flows are an important indicator of healthy client relations and long-term growth potential. We still believe the core job is to invest your clients' money well according to their mandate because then they will reward you or stick with you and as long as they understand the style you apply and the objectives you set out to meet, 1 can't -- maybe narrow markets make active managers look as if they underperform, but not really underperforming their targets. So for us, first and foremost, it's about profitability of the business -- first and foremost serving clients well. Secondly, it's about doing it at a profitable way. And thirdly, it's about adding new business. So we are not driven by a need for net flow over all periods. But of course, it's desirous and particularly important in the long run that you add both net flow and benefits from market growth. And that's really the magic source of a good asset management business but it's all based on delivering for clients and being seen and being recognized as special -- capable specialists in your area, which then protects pricing power to the extent the industry allows. In a way, I think we're reaching a point it will happen, I mean already starting to see interest rate rises coming on the horizon. As interest rates rise, I think the pressure on active fees -- as active fees approach where passives and ETFs are, I, think we will reach a point where fee pressure will be commercial per mandate rather than structural per industry. It's not going to become a 0 fee industry. But the industry has to prove its worth, which has been hard in the last few years, in a broadening market, in a market where opportunities are wider spread and where portfolios are more diversified that will become much easier. that's why I'm confident.

The next question is from Jonas Dolan from Deutsche Bank. Could you provide any color on the asset class mix of the GBP 18.3 billion Sanlam take on? The reported AUM bridge gives flows by asset class, but the residual includes both Sanlam and market foreign exchange. From the reported mix, it looks potentially more fixed income multi-asset heavy than we had assumed. Is that fair? Or is it more of a function of market and FX movements by asset class?

Thank you, Varuni, Jonas. That is an astute observation, absolutely correct and intentional. One of the attractions for us of the Sanlam acquisition partnership was that would shift our portfolio towards fixed income at a time when equity beta had worked hard for the business. And we thought we had the capacity to run much larger fixed income portfolios predominantly in South Africa. And so even though the fee is lower, this is a margin enhancer and a portfolio stabilizer. We -- I don't -- no 1 can call markets and maybe Elon Musk can do it better than all of us. But what we do know is we're closer to markets being fully or overvalued equity markets than a year or 2 or 3 ago. And therefore, shifting -- adding weight on the fixed income end is probably not a bad thing to have in your portfolio. So this was intentional. And we think also we got some very good fixed income skills out of the Sanlam Investment management team to support and strengthen the Ninety One team. So we're very excited about this part of the business.

I have 2 questions from FC Debrat Avior. I'll ask them in turn. The first is it seems we had a slowdown in net flows in the second half 2026, especially from Asia Pacific, which you note includes the Middle East. Maybe some more color on that change in the trend.

Again, a correct observation, 2 real drivers behind that. Firstly, the last 2 months of the year, things got a bit nervous and then the war started, and people were holding back. But secondly, we had some equity downwards during the month -- during the final quarter. We also had -- which we talk about in the disclosed notes in the annual report as well, is the -- we had some pressure on South African multi-asset where we haven't performed as well as we should have. And we spoke about the changes we've made. And there, we had to endure some outflows along with the structural outflows of the SA pension business. Why? Because in South Africa, people aren't creating jobs and therefore, pension funds and retirement funds are in aggregate, the net outflow. So that's slowed it down. What we expected which didn't materialize is an acceleration in the allocations to international and emerging markets from the U.S. Why? When you -- that's probably over Christmas was a bit slower, and then you've got the uncertain first quarter. We think the -- that will actually reestablish itself after we've had the absorption of all these massive IPOs in the U.S. and the interest that they are creating. What's happening on the side though is this very interesting Asian explosion in equity, not only returns but in interest equity opportunities or office or the IPO boom in Hong Kong through the entrepreneurial businesses available in Japan and Korea, Taiwan, and of course, the semiconductible and the related hardware boom that backs up the AI boom driven from largely the U.S. and China. So we think that will attract capital internationally and therefore, some of it will come via our funds. So we think the environment will boom but we had a tough period since Christmas, largely structural or largely -- or sorry, largely cyclical, given market conditions, but also partly self-inflicted.

The second question from FC due to the fact that the bulk of the SIM assets came on board at the end of the year, how should we view the management fee basis points going forward?

So I think Kim will guide on that. But just to be clear, she guided on the existing book of business and fees, excluding the impact of Sanlam. So you should -- we should actually -- the direction of travel, which is still kind of 1 to 2 basis points per annum structurally excludes any impact from Sanlam and you've basically had the last 2 months of that. Is there anything more because I don't think we disclose or split the fees, we don't want to report fees by client. But Kim, if you would like to add to this, feel free.

Thank you, Hendrik. Now I will sit with what I'm saying. largely Sanlam was onboarded in the last 2 months. This -- we have looked at the averaging and the impact as far as the additional Sanlam assets are concerned. We are now guiding with the 1 to 2 basis points, which will take us between 48 and 50 basis points and that does include the Sanlam assets and the impact on those particular figures. So that's where we're guiding and we referred to earlier. Thank you. .

Thank you, Kim. You mean 38 and 40 basis points. Is that correct?

38 and 40 basis points. Correct. Sorry, my apologies 38 and 40 basis points.

Drives up the price of the share, which probably would be helpful, but not correct. Any other questions?

Yes, we have a few more. The next 1 is from Dean Clotting from Stain Capital Management. This question was asked before, but in case you want to add any more color. Net flows were 2.8 billion for the year, but with 2.4 billion of that in the first half, second half flows were essentially flat. Can you give more color on what drove the H2 slowdown? Was it timing with mandates won but not yet funded or did redemptions and rebalancing offset the gross wins.

I gave -- Varuni, thank you. I gave that answer previously to FCA. I want to stick to the answer except to say, yes, there were 1 or 2 things which are taking longer, which we expect in this year. But I would say it was probably not a fair reflection but would probably have been 1 billion net inflow in the second half. versus over 2 billion in the first half. That would have been a fair one. I thought a bit hard done by with a 0.4, but that life. We don't just live reporting period to reporting period. But it was a bit of a disappointment for us as well.

The next question is from Marco Vas at Optimum Investment Group. Can you unpack the quality and sustainability of the 2.8 billion net flows, especially given Asia Pacific was the largest contributor while Africa and the U.K. still saw outflows. How much of the flow improvement is broad-based and repeatable versus a few large mandates or product-specific wins.

Thank you. I think given the market we play in, very large accounts can always have an impact, whether they just address their own portfolio. Often, they adjust their portfolios. They're not -- they have nothing against you. They simply change what they want to do or they have capital needs for better opportunities than the classes you provide. So that's the first thing. We will always be subject to that. I would say that number is very well within our reach on an annual basis. We can't predict quarters in 6 monthly periods. but that's a very sustainable number, particularly given that I've guided a return to positive flows in the U.K., where we've suffered negative flows for a while. The final point is we can't predict demand for our specific offerings. For example, we've just come out of a 5-year period where until a year ago, emerging markets were very unfashionable. We continue to do what we have to do for our clients, and we're ready to take the flow as it comes, and we expect substantial flows. Quality investing was the range. The bond proxies that people bought after the financial crisis, stable companies that didn't need bank finance. Well, what performed last year very expensive growth stocks, energy and financial banks. Those are not in the agreement of those portfolios to buy. If clients take a pretty long-term view when they have diversified portfolios, they will stick and they'll measure us against other quality managers. If they are momentum investors, which unfortunately a big part of the market is they may actually at the bottom sellout. And we've seen that value managers, many of you on the call have experienced that over time where your performance is great over 20 years but you tend to have the flows at unfortunate periods. At Ninety One, we can't guide for that. We have a diversified enough portfolio. We serve enough clients across the world that we will continue to survive, prosper and do okay, but those are factors that can affect flows. But I'm very comfortable that the number for last year is within our -- within current conditions.

The next question is from Seldon at Matrix. Some of it you've actually covered in your previous answer on fee pressure, but I'll read it out anyway in full. Congratulations on a strong set of results. Could you provide some color on the fee pressure you're seeing in the market? In your interim results, you noted that certain large-scale mandates were secured at lower fee margins, albeit with greater persistency. How are you thinking about this trade-off between pricing and the quality or durability of assets under management going forward?

So thank you, Varuni. Sefil. I just want to correct your question. We don't think the large mandates are necessarily more persistent. The relationships are persistent. Once you get into 1 of these very large, whether it's a sovereign wealth fund, whether it's a very large pension scheme or insurance company, you have jumped a whole lot of hurdles that competitors who are not in that system cannot jump fast. It takes years to take on these mandates. So you have persistency in terms of the relationship with the institution, and that is exactly what Ninety One is doing. We are building long-term relationships with up to 400 asset owners and asset platforms worldwide. That's it. We think we have a fraction of the assets we can have out of those relationships. What we can't predict is how they move money and how they reallocate. Last year, we benefited from some of the -- particularly in the first half, big allocations. And then sometimes they don't wait so they're not necessarily more persistent. I think actually the most persistent business is direct retail, but we don't do that. Direct retail comes with all sorts of other things, compliance cost, expensive and many expensive administrative platforms, many people. We should have larger accounts, more assets under management per head, stable head count in the future and expanding profit margin, but probably slightly more volatile earnings stream. But for us, the important thing is the relationship with the asset owner and the approval. And even if they fire you for short-term performance, they must still believe that you are competent enough to serve them later when conditions are better or when you do better again or when another skill set in your firm is attractive to them. I think that's the business we try to build. It's persistency of relationship, not persistency of mandate, and it comes with -- you want to win the MIG mandates, you want to have a GBP 10 billion net year, well, sometimes you've got to suffer the outflow when something is reallocated. But at least you're engaging with the market with pane. And if I think about the Ninety One position having internationalized originally out of South Africa is we really wanted to go with the monies. And in that sense, we are very comfortable, and we have to live with the rough and the smooth in the second half of this year, we probably didn't have all the smooth in our favor. But I hope the model is clearly explained to you.

We have 3 questions from Rahim Karim at Cavendish. I will ask them in turn. And I think this first question, you partially covered in your answer just now. But his question is, can we push you on the current conversations you have had with allocators and what the pipeline looks like across the business.

Karim you asked that question every year. And every year, I tell you -- I can't tell you now that you in Cavendish you first of all was -- when you asked it, now you at Cavendish you still asked the question. I think that the hit has been the fact that large asset owners are discussing international diversification very actively. This has been slowed down by the massive capital requirements in the U.S., given the IPO opportunities coming their way, but nevertheless, we believe will come. So it's positive. Secondly, and remember, Ninety One offers international services to North American clients, not domestic and of course, the regional strategies across the world. In the South African case, I think we're comfortable about a better flow picture. We are very confident that our multi-asset business will turn around. And we have access to a deeper and different distribution channels through Sanlam where we expect some proper flows and then also in Asia, where there's a lot happening and we are -- numbers are really good, particularly the Greater China numbers or China numbers, we think money is going to start flowing that way. So we are quite optimistic, but not naively optimistic, and we're not signaling record years coming, but we can see many coming our way. The big -- important point is it's extremely competitive. You have to have your numbers, which currently good in emerging markets needs to be right up there, and we're moving from a top half or top quartile industry to an industry where the top decel is rewarded with flow. So that's more the challenge than whether there is business around. And we also believe that private markets, the rest of private markets is being -- private markets are being seen for what they are in liquid investments. And therefore, desire for liquidity is growing and therefore, public markets passive but also through appropriate active vehicles will become more attractive. And that's exactly what's happening now with the IPO boom. It's bringing people back to public markets. So in short, we are more positive than 2 years ago. We have to prove that we can get better than the first half of last year. but we have enough opportunity to chase and therefore, enough work to do, and we have enough interest from clients. The question is where.

Rahim Second question is, can you talk to how you expect the compensation ratio to evolve in the next year? You have historically suggested this might increase slightly if markets recover given the cost control, which has taken place historically.

Rahim, I think -- we are focused on making sure that our key people are shareholders and are therefore well aligned. So even though we compensate people well, we will make sure that our compensation ratio also remains competitive in a market -- in the market which prices our capital as well as the market for tenants. So I don't see much change in that ratio in the year to come. But if anything, there will be a great deal of discipline and questions asked about how compensation is dished out and probably emphasis -- we want to emphasize an owner culture rather than an employee culture in our business.

Rahim's final question is, given the capital coverage, the expansion of the buyback program makes sense. Can I ask why 55 million and not more?

Kim, what do you say. Kim is very tight.

Probably the right answer, actually. I mean we are very conservative on our allocations. You'll note in the announcement that went as there's a GBP 55 million program, which expires at the AGM point later this year, we will continue to revisit it. So it's really a point-in-time calculation and at the same time, being conservative of where we actually are from a capital perspective. .

And Rahim, if I keep smashing the stock price like today, then we'll probably out motivate for buying law, but I have to get past the Finance Director.

We have a related question from Jonas Dolan at Deutsche. Excluding compensation, how should we think about the business expense run rate into FY '27. The bridge points to the technology as the main driver of the increase is that recurring spend or more project platform investment with future efficiency benefits?

I think Kim will answer that Varuni.

I think we could probably both answer it, to be honest. I think it's -- you're spot on your last point. There is an uptick in technology. In many ways, you will see the uptick in head count as was picked up, which is caused by a number of factors, not least of 1 was the take on of Sanlam and the associated staff. Yes, there is an uptick you've seen in technology, and we are looking ahead, as I said earlier, of a continual increase in technology spend. However, yes, the plan is that this will reap the benefits of efficiency in the longer term. And it's something -- I mean, Hendrik referred to it in some of his spend on some of the projects that we are undertaking within the business. So at this point, we are investing largely for the future, but we would like and we plan to see the efficiency and cost benefits in the future. Okay.

Just Varuni to -- for Jones to comfort him. We have no large vanity projects to spend on, which will be either capitalized or have the -- this is really ongoing improvement spend staying with the program that we believe, as Kim says, that there will be eventual efficiencies and they should be. .

The last 2 questions are from Peers Brown at Investec. I think you've answered the first 1 sufficiently, but I'll read it anyway, and then I'll also read you the second at the same time. So the first question. You mentioned markets have narrowed since March, but also that the pipeline is strong. Can you expand on the geographies and asset classes you are currently seeing most interest? And then the second question is, can you please elaborate on the foundry initiative? Are there concrete AUM opportunities from these initiatives? Or is it more about building expertise.

Thank you, Barney. Peers, nice to hear from you. Let me just start with the last question first. The foundry is about pushing the boundaries. It's about doing things you wouldn't do in the normal course of your business as a disciplined financial -- regulated financial firm. It's about thinking out of the box. So I highlighted 3 things. One is building in-region investment capability in some parts of the emerging market universe. The first project was the -- establishing a capability inside Saudi Arabia. We've been -- we have raised the seed money for a credit fund in the Middle East region. And that we wouldn't have had if we weren't there. Now we have to build the business from that. But the notion is that you have a market there which is GDP-wise, multiples of South Africa. We've got a big business in South Africa with a young population, which we'll continue to save. And where government will keep some assets in the domestic economy as opposed to the history when government money was only -- was always sent abroad. So there's a story there that is a little out of the normal practice of big units, which run at certain -- with certain efficiency targets, et cetera. That's why we kept it there. The joint venture we have done in Asia with the growth and venture investor in order to get access and understand the pre-IPO pipeline is based on -- really on investing better rather than anything else, but also accessing the interesting technologies of a region which is less understood in the waste and applying that to our business. So we will come back. I mean digital finance is the way half of finance is consumed as opposed to -- so it's a bit coin and punting year on Donald Trump's latest cryptocurrency. This is actually about preparing Ninety One for a totally different way of financial services and investment consumption way beyond filling in a paper form for a mutual fund or trading ETF foreign exchange. So it's very early stage experimentation, but we think we'd apply that and there are some annual targets linked to that, but obviously modest compared to the size of the overall Ninety One business. Varuni, I think the first question has been answered, but just be could just nod if he's happy with that or send your message -- has been answered in the previous because I thought so.

Thank you, Hendrik. We've just had 1 last question that's come in again from James Labatt at SBGS. What are your thoughts on consolidation in the industry? Any view from your side on Ninety One as both an acquirer or potential target given share price decline would be appreciated.

James, thank you very much for the question. I think Ninety One is not a typical M&A or acquisition-driven business. The Sanlam one was an extraordinary opportunity, which we took which is really building a relationship with a major distributor, whereas I don't think we will be out there buying smaller boutiques or companies. What we want to use our shares for is to make sure people are going to drive this business into the long term, have adequate equity. And I think that's much more important for us. And the other part way we deal outside the normal organic channel is to build partnerships with people who have already spent the capital, the CapEx on the growth opportunity we want to pursue. For example, accessing the world's third largest ETF platform as a sub investment manager is far better than building your own platform and all the complexities that go with that. So that's how you should see it going forward. We are tight on equity. When we stand here a year or 2 in the future, I think you would see us and Kim points the number, what percentage was bought back since initial IPO, that number will be higher, not lower. So we are capital considerate and we are a capital conservative business, and we -- but we will venture in terms of partnerships or in terms of talent acquisitions, which matter, but we are not typical goodwill buyers. So that's how you should see it. People have come and made offers to us in the past. they may come again, but we are really committed to the fact that we as an employee group, a team here as the directional shareholder of this firm want to build it for the long term and we are driven by the income coming out of it, not about the capital gain. So we don't really care where the market prices or share in any given day as long as our business is operating well because I think that creates the intergenerational business where people can really commit and devote the time and that's why we have so many people who've been around for a long time and know what they're doing and who are appreciated by clients. And I think that's the model we are building. So slightly anti the AI world. We are building a business where people will enjoy to work and hopefully engage with their clients properly, but they have to be efficient. They have to be competent. They have to meet up to the standards of the industry. And that's our model. So as a third-party shareholder, you are therefore invited to participate in that well knowing we are not driven by either a bunch of deals or the fact that we will just trade the business if anybody comes and offers a small premium. But as fiduciaries of capital and as representatives of a wide group of shareholders, we obviously have to consider that what my offers are made. But for now, we are really driven to grow this business in a world which is changing fast, and we see significant benefit if we do our job well. Varuni, I think we are done.

Yes, no further questions.

Thank you very much, ladies and gentlemen. We really appreciate your time. Any further questions, please come to our IR team, and we look forward to talking to you later in the year again at the interims. Thank you.