NZX Limited (NZX) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to NZX's 2026 Interim Results Call. I'm Graham Law, NZX's acting Chief Executive, and I'm here with Amy Trotman, NZX's acting CFO. Amy and I will take you through the interim results. I'll lead off with the key elements of the interim results and the comments on NZX's strategy. Then Amy will then step us through the financials. After which, we'll be happy to take any questions. [Operator Instructions]. Before we start, please note the important notice on Slide 2 of the investor presentation, as that statement applies to all content and comments made by us during this call. Moving to Slide 4, where we summarize the 2026 interim result. In the first 6 months of 2026, NZX maintained momentum in creating long-term value across its diversified financial markets infrastructure businesses, demonstrating NZX's resilience through diversity of product offering as a market operator, fund manager and fund administration platform provider. The period again tested market confidence. Geopolitical tensions added to investor uncertainty and contributed to periods of market volatility. At the same time, New Zealand continued to face the effects of a slower economic cycle, cautious business investment and subdued equity market issuance. Notwithstanding the macroeconomic environment impacts, NZX has delivered a solid half year result. Operating earnings, excluding project and restructuring costs, were $27.3 million, an increase of 8.8%, resulting in net profit after tax being $9.8 million, up 18%, which equates to an earnings per share of $0.03 per share, up 17% and has allowed us to declare an interim dividend fully imputed of $0.032 per share, an increase of 6.7%. Moving to Slide 5. NZX continues to implement the strategic priorities to deliver value to our shareholders. In the current period, we have made good progress in areas that will support stronger capital markets over time. These include improving market settings, launching the new S&P / NZX20 Futures product, supporting greater market participation, growing Smart and expanding NZX Wealth Technologies. I note that these key metrics are reported to the market on a monthly basis. Slide 6 summarizes NZX's strategy, which continues to focus on expanding the depth, reach and resilience of New Zealand Capital Markets while driving scale and operating leverage across our interconnected financial markets infrastructure and funds management businesses. Our strategy continues to be one of evolution and optimization. In the next few slides, I will go into more detail on the business unit strategies. NZX's role is to ensure New Zealand capital markets remain trusted, relevant and ready for the future. In 2026, the case for stronger capital markets is clear. New Zealand needs deeper pools of capital to support business growth, innovation, infrastructure investment and productivity. Public markets have an important role to play in that. Growth in the public markets provide an opportunity for future KiwiSaver growth to be invested in New Zealand rather than offshore. The capital market strategy we have been implementing over recent years remains the right one to deliver value to our shareholders in New Zealand, expanding capital markets product set, improving market liquidity and participation, supporting stronger public market settings, enhancing our data and information services, taking in international partnerships, and continuing to invest in a reliable, secure and resilient technology. Moving to capital markets listings activity on Slide 9. Despite global uncertainty, listed NZX issuers continue to use the market to raise capital. The capital listed and raised was $6 billion year-to-date, up 25.2% on the prior period, excluding the Fonterra Co-operative groups transferred to the NZX Main Board last year. New capital listed was $2.5 billion, up 69.1% on the first half of 2025 excluding FCG. This was a tale of 2 quarters. Quarter 1 continued the strong listing momentum from the latter part of 2025 with the listings of Rua Gold and Taiko Critical Minerals. The second quarter -- in the second quarter, primary equity issuance was subdued because of the War in Iran. Secondary capital raised was $3.6 billion, up 5.9% year-on-year. This highlights the ongoing value of NZX markets for existing issuers seeking capital to strengthen balance sheets, fund investments and support long-term growth. Our focus remains on ensuring companies understand the benefits of public markets access to capital, liquidity, public profile, governance discipline and long-term ownership options. NZX capital markets listings team continue to focus on building the future listings pipeline including having deeper engagement with private companies, investment banks, law firms, accounting firms, private equity, sponsors, brokers, advisers and founder-led businesses. We have also been facilitating investor direct access to senior leaders from companies at pivotal stages of development. Our headline event being the inaugural NZX Resource and Exploration Investor Day which brought together more than 200 investors and 7 minerals and exploration companies. In the second half of 2026, NZX will host the Technology Investor Day. We are also continuing to strengthen relationships across Australia with the objective of supporting future dual listing activity and improving the Trans-Tasman connection for issuers and investors. Overall, companies continue to recognize the long-term benefits of listing. We are seeing more early stage interest and several IPO candidates are waiting for less volatile market conditions before proceeding. That said, listings are an ecosystem outcome, not an NZX one alone. We continue to control -- we don't control the outcome. Our role is to shorten and derisk the path once the company engages. Moving to Slide 10 and capital markets liquidity. Trading activity was solid with cash market value traded at $21.2 billion, down marginally on the previous year due to lower volumes of index rebalancing. NZX also completed an important participant onboarding work to support the development of both the derivatives market and the cash market. There have been 3 new participants onboarded in the period, and 1 participant extended their status. This increase in the number of participants should result in deepening of cash market liquidity. We continue to develop market settings and invest in market infrastructure. For example, we have been considering ways in which market arrangements in New Zealand could be enhanced to create efficiencies for our participants and investors. As previously stated, we are interested in exploring the benefits of a single set of clearing settlement, and depository infrastructure in New Zealand. We consider this proposition to be highly beneficial, enabling more efficient and cost-effective outcomes for the New Zealand market. We look forward to progressing our discussions with the RBNZ. Moving to Slide 11. The successful delivery of the S&P / NZX20 Futures project in April was a key milestone for NZX and for the broader market. The launch was underpinned by industry demand and supported by Cornerstone group of institutional end users. NZX expects participation to broaden over time as additional brokers and trading platforms connect, opening access to a wider range of market participants, including retail investors and providing a foundation for future development of NZX and New Zealand's derivatives market. Over time, a well-functioning liquid equity derivatives market will support greater cash market trading and post-trade revenues, improved price discovery, retaining liquidity onshore and creating a scalable platform for future equity options and interest rate derivative products. The long-term potential for NZX's equity derivative products could be estimated by the relative size of the index future market to the equity market, i.e., a multiplier factor. The multiple for a few exchanges is shown on the graph on the right-hand side. For NZX, a multiplier of 0.25 in volumes is expected to equate to approximately $2.5 million of revenue. On Slide 12, we outline how dairy derivatives are an important part of NZX's growth strategy. Dairy derivative lots traded were 364,000, down 5.7% compared to the comparative period in 2025. Last year, we experienced 2 large structured option trades of 40,000 lots, excluding these, growth was 5.3%. The long-term potential for the dairy derivative product can be estimated by comparing the derivative lots or paper to the physical market ratio. As an example of how large the potential market could be the average of iron ore, wheat, rubber, paper to physical market ratios is approximately 4x. For NZX, this ratio was 0.46 in 2025, illustrating there is potential for further substantial growth as the dairy derivative market matures. And again, an estimate of this ratio at 0.25 equates to approximately $2.5 million of revenue. GlobalDairyTrade or GDT continues to invest in strategic initiatives while remaining profitable on an underlying basis due to its take-or-pay arrangements with Fonterra. In the first half of the year, the loss reflects the seasonal nature of the business, with the June quarter typically being the weakest for milk volumes and is not indicative of the underlying performance. Higher costs during the period were driven by the stabilization of the in-sourced auction platform, which will be modernized over the coming couple of years, an investment in GDT's planned expansion into Singapore and lifting sales capabilities in Asia, Europe and the U.S. markets. This expansion is intended to diversify GDT's participation base by building trust and neutrality, thus reducing their reliance on Fonterra over time. GDT's investments for growth are expected to mature in the coming years. Slide 13 notes how NZX continues to engage closely with government and other stakeholders and reforms designed to strengthen New Zealand capital markets. NZX has consulted with both the introduction of dual class share structures and a tiered compliance framework for SME issuers. These proposals are intended to support a broader range of listing options, reduce unnecessary compliance costs for smaller issuers and improve the attractiveness of New Zealand capital markets while maintaining appropriate investor protections and market integrity. Alongside this, we continue to support the government capital market reforms Phase II as well as the proposed KiwiSaver reforms, which will lead to an increase of the pool of long-term domestic capital available for investment. Alongside this, NZX is continuing to make the case for tax measures that reduce the cost of access to public markets, such as tax relief, for IPO-related costs as well as alignment between direct investors of shares and debt securities and PIE investors. NZX supports high-quality disclosure and strong governance. However, regulation that is too complex, uncertain or costly can discourage the very activity that New Zealand needs. More companies accessing public markets and more investors participating in them. Moving then to the Funds Management business, Smart, on Slide 14. Smart remains a key part of NZX's growth strategy and remains a significant long-term opportunity. KiwiSaver settings, increasing investor participation, contribution growth and demand for accessible cost-effective investment products all provide structural support for the business. At 30 June, Smart's total funds under management was $18 billion, up 20.5% year-on-year. Net cash flows for the 6 months exceeded expectations at $1.2 billion, which included wholesale fund from Lifetime Asset Management, which was part of the SuperLife U.K. pension scheme disposal in 2025. In March, we announced the investment management externalization of the active QuayStreet funds. Under the new structure, QuayStreet Asset Management manages the brand and holds responsibility for investment management, marketing and distribution. Smart remains the product owner of the QuayStreet funds and KiwiSaver scheme, and will also maintain and operate the infrastructure that supports the scales. The increased distribution capabilities have resulted in QuayStreet Asset Management FUM increasing to $2.8 billion up 34.4% year-on-year. The SuperLife diversified KiwiSaver funds are managed by the Smart team with the passive building blocks overlaid with active asset allocation. Investment performance has been strong with nearly all funds in the top 2 quartiles on clear comparison basis. NZX remains focused on maturing Smart operations, improving customer experience, simplifying the product set where appropriate and building a business that can deliver long-term value for investors and shareholders. Looking ahead to the second half of 2026 following the migration of the KiwiSaver registry to the Wealth Technologies platform, Smart will be delivering a refresh of the SuperLife KiwiSaver under the Smart brand, along with an improved digital experience with increased marketing to support future growth, the ambition being to grow our KiwiSaver share to 5%. Turning to Wealth Technologies on Slide 15. The platform continued to increase its market share, building on the strong momentum of recent years. At 30 June, funds under administration reached $21.1 billion, up 20.1% year-on-year. The annual recurring revenue or ARR was the equivalent of $13.7 million, up 15% year-on-year. For the avoidance of doubt, the annual recurring revenue metric indicates the annual equivalent revenue generated from the funds under administration at a specific year. The contracted future migrations include, amongst other clients, Craigs Investment Partners extending their technology services and the Smart KiwiSaver migration. On full migration, the annual recurring revenue equivalent would be $18.7 million, up 34.8% year-on-year. Strategically, there are 3 legs to the Wealth Technologies future growth. First, the progress continues in the core adviser addressable market. The future client pipeline remains strong, reflecting the confidence in the platform service quality, capability and reliability. Secondly, the Smart KiwiSaver migration will open up access to a new estimated addressable market at approximately $275 billion for fund registry services. Though like the adviser addressable market, not fully accessible. Finally, as Wealth Technologies scales, this will allow us to pivot more to the equivalent Australian platforms model. There is a real drive by New Zealand Wealth advisers for their customers to have a single viewing platform for all their customers' investment types and transactions. This provides an opportunity for innovation, to leverage scale and provide small and medium adviser groups with both transactional services as well as enhanced product offerings. Finally, I'd like to make 2 acknowledgments. First, to Mark Peterson for the significant contribution he made over 10 years to NZX on the development and delivery of our strategy. And secondly, yesterday's announcement by the NZX Board of Hishaam Mirza as NZX's next Chief Executive. Hishaam will join NZX on the 14th of September, and we look forward to working with him as we continue to execute our strategy. Importantly, today's results demonstrates the strength of NZX's diversified business model and the momentum we have built across markets, capital markets, Smart and Wealth Technologies. We are well positioned for a seamless transition and remain focused on delivering to our customers, New Zealand's Capital Markets and our shareholders. I'll now hand over to Amy to take you through the financials, after which, we will be happy to answer questions.

Okay. Thank you, Graham. Before I start, I would just like to draw your attention back to the disclaimer on Slide 2 which contains important caveats relating to the information I'm about to cover. So starting with the financial performance to the income statement for the 6-month period ended June '26, as summarized on Slide 17 and we provide further explanation on the operating revenue, operating expenses and nonoperating expenses in Slides 18 to 21. Additionally, we have detailed analysis of the operating results by segment in Appendix 1 to the presentation. Before I provide any -- or additional detail on these slides, I do just want to note the presentational change that has been made during the period, which has included a restatement of the 2025 numbers. The change is to present certain costs associated with managing and distributing the Smart funds within operating expenses. Previously, all fund-related costs were netted against funds management revenue. So the change increases revenue and increases expenses, but it has no change on operating earnings. Operating revenue increased year-on-year by $9 million and that's up 13.3% to $76.6 million. NZX has diverse revenue sources and these can be seen in Note 5 to the interim financial statements. The waterfall on Slide 18 highlights the drivers for the increased operating revenue. The largest increase is within Smart where fund-based revenue has grown in line with the 28.5% year-on-year increase in funds under management. In Wealth Technologies, the increase reflects the lift in annual recurring revenue from new clients added over the second half of 2025 and during 2026. And in the markets business, growth is driven by the increased information services recurring revenue lines as well as close to $1 million in one-off audit and backdated revenue, of which there was none in 2025. Operating expenses, excluding project and restructuring costs, increased year-on-year by $6.8 million to $49.3 million. And the waterfall on Slide 19 highlights that the year-on-year increase was across all business units. Overall, this results in the operating earnings before project and restructure costs increasing $2.2 million, that's up 8.8% to $27.3 million. I'll now break down the operating earnings before project and restructure costs by segment, and that's summarized on Slide 20 with the additional detailed segmental analysis provided in Appendix 1 to the presentation. Starting with the markets business, where operating earnings before restructuring costs have increased by $1.3 million. Markets business revenue increased $1.9 million, up 6.4%. And the main factors include in Capital Markets origination revenue has increased due to higher annual listing fees after internal allocations to NZ RegCo which reflects the growth in both the NZX equity and debt market capitalization over the second half of 2024 and first half of 2025. Remembering that it is the market capitalization on 31 May each year, which drives the annual listings fees for the year, July to June. And initial and subsequent listing fees are now recognized evenly, over 5- and 3-year periods, respectively. In H1 '26, we had higher levels of primary listings for both equity if we exclude the Fonterra listing in the first half of '25 and retail debt combined with growth in secondary issuance. Remembering that equity has a relatively higher fee rate than retail debt, then wholesale debt and FUM-related funds. Secondary markets revenue was slightly lower than the prior period and that was driven by lower consulting and development revenues from the electricity authority following the record activity levels in 2025. We have reduced dairy derivatives revenue, which reflects the lower lots traded compared with last year with 2025, including several large speculative trades that have not yet repeated in 2026. Trading and clearing value was at lower levels. So this was partially offset by lower levels of uncharged value traded, i.e., where trades value exceeded the fee cap. The relaunch of the equity derivatives market during the period contributed modest new revenue with further growth expected as market activity develops. For Information Services, revenue is up due to that close to $1 million of audit or backdated license revenue that I noted earlier and growth of recurring revenue lines of 7.4% in the first half of last year, and that's due to increased license and professional terminal numbers, higher indices revenue and some price increases. The market business expenses increased $5.6 million. Net personnel costs contributed about half of that growth, and that's due to the combination of additional investment in issuer relationship management and lower levels of work on capitalized projects. Information technology costs decreased $0.2 million, which largely reflects the absence of one-off costs included in the energy markets last year as well as efficiencies realized through IT service optimization initiatives. The savings have more than offset the trading and clearing system inflationary increase, which lift based on New Zealand and Indian CPI and other inflationary increases across other infrastructure running costs. Marketing costs increased $0.1 million, reflecting the work done to engage with the market to build the listing pipeline and support capital raising activities as well as liquidity provision schemes instituted in 2025 for the dairy derivative market. Moving to the Smart business. So the headline operating earnings, excluding project and restructuring costs have increased on the first half of '25 of 11% to $15.2 million. Before discussing these results, there are 2 important changes to note, first the presentational change I've already talked about. We now have certain costs associated with managing and distributing those funds previously have been netted against funds management revenue now recognize gross within funds expenses. The 2025 numbers have been restated to present consistently. The change increases revenue and expenses, but it has no impact on operating earnings. The second change in the period is the externalization of QuayStreet, which effectively outsources the investment management, distribution and client relationship activities that were previously done in-house. As a result, personnel, technology and research costs have reduced and they are replaced with higher fund expenses, which now include the investment management manager fees, which increase as FUM increases and relationship and distribution fees payable under the new partnership agreement. Turning to performance. FUM-based revenue continued to grow in line with the increased average FUM, which, as we show on Slide 14 is a combination of positive net cash flows and positive market returns, though the monthly phasing profile in the first half of '26 did have an impact. Fund expenses also increased in line with FUM with the step-up from the prior period, reflecting the new external investment manager and distribution costs payable to QuayStreet under the new partnership agreement. Average fee rate net of fund expenses is slightly down, and that reflects those increased fund costs associated with the QuayStreet externalization as well as the distribution channels that are driving cash flows rather than fee compression. Looking ahead, we do expect some improvement in H2 as one-off transition and establishment arrangements relating to QuayStreet fall away. Excluding fund expenses, the cost base has increased only 1.1%, and that largely reflects the removal of those in-house costs for QuayStreet, which have been replaced with those higher fund costs. Breaking that down further, gross personnel costs have increased 3.9%, which reflects additional roles added over the second half of last year and this year, largely to enhance distribution capability, improved customer experience and client growth. Offsetting that is a reduction in FTE as a result of the QuayStreet externalization. Additional resources that are focused on activities to mature Smart's operations are recognized in the project cost growth. The reduction in information technology costs reflects the removal of costs now outsourced to QuayStreet. Excluding this impact, IT costs are up due to inflation and higher usage-based costs. And marketing costs have increased in the first half of '26 due to increased targeted campaign activity and will increase further in the second half of '26 in connection with the planned KiwiSaver rebrand. Now moving to the Wealth Technologies business, where operating earnings have increased 30% to $3.2 million. Operating revenue increased 26.1%, and that's driven by Wealth Tech's FUA-based fees, which have increased in line with the average FUA, which we show on Slide 15. And that increase is a combination of new clients being migrated onto the platform over the second half of last year and the first half of this year, positive market returns and positive net cash flows. Though similar to Smart, the monthly phasing profile in the first half of '26 did have an impact. Development fees or deferred income reflects the levels of customization specific to client requirements. Some of that is paid in advance and for accounting purposes is recognized over the life of the client contract. And this has increased in the first half of '26 due to the recognition of deferred revenue relating to platform development completed for Smart in the second half of last year, and that is eliminated by the intersegment elimination at a group level. The operating cost base for Wealth Tech increased 23%. The main factors being gross personnel costs, which were higher as we have previously indicated, which reflects the increased headcount to accelerate development and migration velocity for the large SaaS client who we will onboard in '27. That development is largely client funded with the recognition of that contribution deferred until the project goes live next year. Capitalized labor and overhead reflects the continued development in client migration activities, but were at proportionately lower levels this half. We expect that as the business grows, the proportion of gross salaries capitalized does decrease to reflect more operational activity. Other costs are driven by nonrecoverable GST and platform transaction costs, which both increase as the business grows. As we indicated on Slide 15, the remaining migration of Wealth Tech's currently contracted clients will add further to the annual recurring revenue. The timing of that is dependent on client strategic prioritization and migration resource commitments as well as the client's current platform providers supplying data in a timely manner. Additionally, our prospect list remains very strong with a number of ongoing discussions near completion. Overall, the timing of migrations for currently contracted clients and future potential clients will drive the CapEx profile and the profile of the amortization level. Moving now to corporate. Operating expenses increased in that segment by 11.6%. For personnel costs, that growth reflects the additional resources added over the second half of last year to cover strategic HR and corporate roles that are supporting the Smart and Wealth Technologies growth. The increase in IT costs reflects increased cybersecurity, investment in AI productivity tools and support for the growth businesses that were added during -- largely during the second half of last year as well as normal inflationary increases. We did see a reduction in the second half of last year as a result of IT service optimization initiatives and the absence of one-off implementation costs in the second half that were incurred in the second half of last year. Professional fees increased with higher levels of legal advice and other consulting relating to strategic initiatives with 2025 also benefiting from one-off nonrecoverable GST savings. Finally, NZ RegCo. Operating earnings after internal revenue and expense allocations were a loss of $60,000, which was an improvement on the first half of last year, and that was driven by one-off accreditation fees associated with onboarding new participants and advisers as well as regulatory fee-generating activity levels being higher than the first half of '25. All right. Moving to nonoperating expenses on Slide 21. So the project and restructure costs relate to incremental one-off external costs, net of capitalized internal costs and primarily relate to the maturing of the Smart systems and operations, which has been ongoing for several years and will continue into 2027. Net finance costs reflect lower average interest rates. There's a net impact of interest income on cash and regulatory risk capital being negatively impacted and interest expenses on the acquisition facility being positively impacted. Interest costs were further reduced following the repayment of $7.5 million of acquisition debt in the first quarter of '26. Depreciation and amortization is higher, in line with our expectations as we outlined in previous investor presentations. This mainly reflects Wealth Tech's increased amortization relating to new client migrations in both the second half of last year and '26. And we expect -- we continue to expect further increases as migrations continue and new clients join the Wealth Tech platform. As we have detailed in prior year investor presentations, the amortization profile does lag the CapEx profile by a few years, and we refer to that as amortization bubble. The share of profit or loss of associates relates to our investment in GDT. And as Graham has already noted, the loss in '26 largely reflects the seasonality of the GDT business revenue streams and additional investment into auction platform stabilization, sales capability and expansion into Singapore. GDT does remain profitable on an underlying basis, and we expect their investments for growth to mature in the coming years. The increase in tax expense reflects the increased profitability. We have a slightly higher effective tax rate than the statutory rate, and that's due to a combination of nondeductible items and accounting versus taxation valuation differences. So overall, this has resulted in net profit after tax being $9.8 million. It's up 18% on June last year. The headline operating margin has reduced to 35.6% from 37% with the reduction relating to the QuayStreet externalization, which as we have already noted, we do expect to see improvement in H2 as transitional arrangements drop away and the additional investment to support Smart's KiwiSaver rebrand and future marketing push. As I noted earlier, there is further detailed analysis of the operating results by business unit in Appendix 1. If we move to Slide 23, so this summarizes the balance sheet. The key points to note here are firstly, the cash includes balances which are not available for general use. They include the clearinghouse $20 million of risk capital and approximately $2.9 million of working capital requirements under the FMI Act. And the funds management business has a similar smaller amount of working capital requirements under its FMA managed investment service license and the Asian Regional Funds Passport. Second point to note is the funds held on behalf of third parties, which are shown as an asset and a liability. They offset and hence, the assets are not available for general use. They relate to issuer bond deposits, participants collateral deposits and deposit funds. The third point is the interest-bearing liabilities, which include the sub note. The next election date for that is June 2028 and the acquisition loan facility, which has $15 million drawn down and is now presented as a current liability given those facilities expire in February '27 with negotiations to extend those facilities already underway. Moving to Slide 24. Slides 24 and 25 summarize the capital expenditure in 4 graphs, all with the same scale to show relativity. For trading, clearing and energy systems, the CapEx level depends on the specific systems lifestyle -- life cycle. At present, there are no large upgrade projects underway, and we have already enhanced our trading system for the S&P / NZX20 Index Futures and automation of the depository system. During 2026, we renewed our agreement for the current trading system. So looking out to the longer-term horizon, the trading system may come to end of life and require upgrading at that point. For property, plant and equipment, '26 CapEx relates to firewall upgrades, normal life cycle replacements for IT equipment and software and the fit-out of extended space for the Wealth Tech business. No major PPE projects are expected in the near term. For the growth businesses on the next slide, Wealth Tech is our largest area for CapEx and the business continues to migrate new clients and maintain its product offering with the elevated levels in the first half of '26, reflecting development and migration for that large SaaS client. We expect this level of CapEx to continue for a few years as the contracted new clients and further prospects are migrated to the platform. As we have noted already, that SaaS client is contributing to the migration costs with those contributions deferred until the migration is completed and then recognized in development revenue over the applicable contract period. Smart continues to enhance its systems with the first half of '26 spend relating to new data and digital capabilities as well as design and development of the Smart app, which we expect to launch in Q4. We expect the second half CapEx levels to remain high due to further data system enhancements and the ongoing development of that Smart app. And finally, cash flows. So Slide 26 summarizes our cash flows for the year. First half cash flow reflects our cash flow seasonality, specifically the annual listing and participant fee collection profile being in Q3 each year. Operating activity cash flow represents our net profit after tax adjusted for noncash items. And these have increased as expected in line with the increased operating earnings. Payments for PPE and intangible assets reflect the capital expenditure that I've just noted on the previous slide, with the increase largely relating to migration activity for Wealth Tech and development for Smart. Other finance activities relate to lease payments. Free cash flows of $1.4 million, which is up $2.7 million from the first half of last year, in line with our previously indicated expectations of cash flow growth. The free cash flows have been used for payment of dividends, and we have also reduced our acquisition debt by $7.5 million. As we noted in previous investor presentations, in future years after Wealth Tech completes its migration of new clients and CapEx settles at a normal level, we expect cash flows to rise faster than NPAT increases due to the Wealth Tech amortization bubble. Although noting that the exact timing of that amortization bubble impact is dependent on future new client migrations and specifically, if further new clients are won, then that amortization bubble is deferred until those client migrations are completed. Slide 28, interim dividend. So our fully imputed interim dividend is $0.032 per share. That's a $0.02 per share increase in the first half of last year. That will be paid on 30th of September to all shareholders at the record date of 16 September. And that leads us to our 2026 earnings guidance. So NZX is maintaining our full year 2026 operating earnings in the range of $53 million to $58.5 million. The half year financial result indicates that NZX is tracking towards the middle of that 2026 full year guidance range and progress towards achievement can be tracked within the shareholder metrics that are published monthly. And as always, we note that earnings guidance is, of course, subject to the usual market caveats that are listed on the slide. That concludes our presentation, and we'll now open it up for questions.

I have a couple of questions. Dave Storms, I'm going to ask you to unmute, please.

Perfect. Just maybe wanted to start with the future start-up phase. I know you mentioned the amount you win there. Just would love to hear any more discussion about what it will take it to a full gallop and maybe anything more concrete there?

That's the equity derivative, Dave, you're talking about?

Yes.

Yes, on Slide 10, Slide 11. Yes, we launched it in late April. The cornerstone group have been progressively coming on board through the July. When we look at the cutoff here at 30 June, we don't have all participants on board. We are bringing on international players and market makers. So we feel that -- we feel that we're still in the startup phase, even in the third quarter. What we've tried to do on the right-hand side of the slide here is show what a mature market looks like by comparing the size of the equity derivative market to the cash market of a couple of countries. And we have data for a lot of countries. But we selected just ASX to show a large end today, other large entities range from 1.7, 1.3, that type of range, so 1.5 seems like in the middle. We took Poland as one of the smaller first world countries that we felt could be compared to us and their ratio of 0.8 shows that it's actually lower than the cash market activity. What we're trying to articulate is that we're in start-up phase. It took Poland probably towards the 5-year mark to get to that level. It takes a while. It's not a 1- to 3-year type time horizon before these markets become mature. We'd expect to have to release other derivative products to get to maturity. And time will take us to build to that point. But really, what I wanted to articulate was the size and the price and say that if we get to a multiple of 0.25, it happens to be up by $2.5 million of revenue is an estimate. That will clearly depend on the mix of where that comes from and how much market maker activity is required to get to that point. But we just wanted to give an indicative size of price.

That's great. I appreciate that. Maybe my follow-up, just sticking with the derivatives, dairy derivatives. I know you mentioned that there were no speculative trades in the period. Is there any further clarity you could give us as to maybe what this might look like in the back half and your comfortability with the 2026 targets?

Yes, we remain comfortable with the 2026 targets. People are seeing the uptick in July's numbers that were actually positive on the lots and still have no speculative trades. We are aware of parties that are interested in performing speculative trades, but really need market conditions to turn to the way they want to see them before they would push them through. So certainly, that negative 5.7 has changed to, I think it was positive 0.6 at the end of July and August has continued that pattern of improvement. I would have said that the quarter 3 last year compared to 2024 wasn't a particularly great quarter, and so we are now seeing positive momentum ignoring the speculative trade. We feel comfortable with the targets. There is continued momentum in this field. We just -- we feel that this market will continue to mature. We're heading towards closer to the 20-year mark of having this product and offering, we're well beyond the point of no return, it will get -- it will continue to take off, we feel. And again, on the slide, we have tried to -- so Simon, if you could move to Slide 12. We have tried to articulate the sort of size and the price of other commodity markets whether they're the right comparison or not, that's always open for judgment and debate. But if you take an average of 4x and we're setting it just under last year 0.5x the physical market it shows you that there is scope to grow. And again, ironically, every 0.25 of a multiplier equals approximately $2.5 million of revenue to us, again, depending on market maker and mix of where it comes from in terms of the actual underlying source. So for example, speculative trades tend to be at a lower rate than regular -- and the regular trades because of the volume of them. So I hope that sort of helps. We've tried to articulate the size of the price on the graph on the bottom left. Ben Crozier, I've just enabled your mic, so feel free to ask your question.