Praemium Limited (PPS) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Praemium Limited FY '22 Results Briefing. [Operator Instructions] I would now like to hand the conference over to Mr. Anthony Wamsteker, CEO. Please go ahead.

Thank you. Welcome to all our shareholders on the call, and thank you for joining us today. Please, if I could just draw your attention to the usual disclaimer which is included in the presentation as uploaded to the ASX website this morning. Obviously, I won't go through that in any detail, but I do draw your attention to it. I'm delighted to be joined on the call today by David Coulter, who has been a very welcome addition to the Praemium executive team. I'm going to start by reviewing some of the business highlights for the past year, then hand over to David to discuss the financial results. And then we'll finish up with some of our plans and thinking for the coming year before opening up for questions. Praemium delivered a record underlying EBITDA result of $16.6 million and record annual Australian inflows of $2.9 billion in 2022. The strong inflow demonstrates Praemium's commitment to participating in the ongoing generational shift in the wealth management platform market share from historical incumbents to a new generation of challenges. The EBITDA result demonstrates that Praemium has sufficient scale at this point in time to convert revenue growth to profit. That scale now sees Praemium with over $40 billion under administration. Importantly, a little over half of the funds under administration are now VMAAS noncustodial administration service. This service is critical for serving the high net worth clients, and it's the market leader in that segment. This slide shows the virtuous circle that underpins our strategy. Strong net funds flow will drive growth in FUA. Obviously, FUA is also impacted by market movement, but the strong net funds flow ultimately converts to FUA. And that increase in FUA leads to increase in revenue which at the scale we've now achieved, we believe will convert into further profitability. Obviously, in the long run, we've announced previously an intention to have a long run dividend policy arising from that profitability. But this year, a special dividend has been enabled by the sale of the international business. The corporate objectives that we have in Praemium are shown on this slide. Our focus on clients is what drives our product development and our product and our relationship-based growth strategy. So in other words, we focus on clients that drives how we attempt to build relationships with those clients and how we develop products for those clients. The second key pillar of our corporate strategy is the need to attract and develop highly capable people and create an environment for those people to perform at their best. The third key pillar is our particular segment in the market that we target and that's the high net worth adviser and increasingly advisers to the emerging high net worth category who have always been the backbone of our business and continue to drive the growth in our business. And our final pillar is to support the evolution of the advice industry. We've all seen massive change in financial advice of recent years. And obviously, we are believers that in the long run, that is driving an ever-increasing level of professionalism and evolution in the financial advice industry, and we believe we're very well placed to support that because of the way we've supported the high net worth advisers for years. These 2 charts serve to show our growth trajectory over a pretty long period of time going back to financial year '16 in that pace of the top chart and it shows a strong buildup in net funds flow. The bottom chart, albeit at a slightly shorter time period, also shows the strong buildup in FUA. But it also illustrates the market-based challenges that we've had in the second half of the financial year. The international divestment was a major undertaking for our business this year. We are pleased with the process and, in particular, the way it was executed by our people, both those in Australia and our international team who are now with Morningstar. Attracting talent and creating an environment for people to perform at the best and within a team environment has always been critical to business success. This has never been more evident than in today's tight labor market. Our commitment to building a success-based culture is the cause of the achievements over the past year and the foundation for future growth. Given the blue-chip client base of high net worth advisers, some of the best advisers in Australia that we serve, that should be no surprise that we win awards in those platform categories, which those advisers find the most important. Winning 3 of the 6 categories in the Benchmark Investment Trend Survey is testament to our leadership position and the extent to which our developments are maintaining and, in some cases, even extending our leadership position for our particular target market of advisers. As the financial advice industry continues its rapid evolution, we remain committed to supporting the many modern and sophisticated practices who are delivering outstanding results for their clients in an environment where the demand for their service is growing much faster than usual and where the regulatory changes are being applied at an accelerating pace. I can't overestimate what a challenging environment it is for financial advisers. And that's why we remain committed to supporting the advice sector and particularly what we would regard as the modern and sophisticated advisers who are adapting extremely well in those challenging environment. With that, I think it's time to ask David to talk you through the highlights of our financial results. So thank you, David.

Well, thank you, Anthony. Thank you very much. It's been just on 5 months since I started with Praemium and delighted to be here to present the group financial results for the full year 2022. I might have been at Praemium only 5 months, but I've been in the industry or the sector for the best part of 15 years. And I can say that it is a very impressive organization in terms of the focus on clients, the focus on customer, the focus on the right sort of advice for the right sort of client and also the product set that best promotes that. And so only too pleased to be here working alongside Anthony. As you can see from the group financial results for the year, we've had a significant revenue growth, 22% due largely to the organic FUA growth that was generated on the back of the flagship SMA product and also significant growth in our VMAAS portfolio service. The revenue growth itself afforded the ability to invest more significantly in our people and IT capability, which is necessary when you want to stay at the vanguard of developments in this sector. But what is pleasing is that where we had lifted the rate of expenditure significantly in the first half, we've been very cognizant of the need to maintain that investment but not grow it significantly into the second half. The second half expenditures across the group have remained in line with the first and contributed to the uplift in EBITDA results. As Anthony mentioned, it's a record EBITDA of $16.6 million and within the guidance that we've issued earlier in the second half of the financial year. The divestment of the international operations has also meant that per accounting standards, but we're only pleased -- only too pleased to be able to do this as well because it does contribute to transparency. And I'll look at the organization going forward, and I will get on to that in further slides. But you have a continuing business, which is essentially the Australian segment and a discontinued operation. And that's split out on this chart here. So the $16.6 million actually splits $19.1 million to the Australian segment and $2.5 million EBITDA in the discontinued or international operations. Also prominent on this slide is the profit on divestment as part of the statutory profit, $45.7 million from $62 million proceeds. And that's a very significant contributor, obviously, to our significant statutory results. I'd point out that the underlying EBITDA and the segment EBITDA reconciled to our statutory NPAT in significant detail at Note 20 of the annual report, the financial statements in that annual report and encourage everyone to look at the detail that underpins the EBITDA. But that reconciles back to our statutory financials as audited by Grant Thornton. Turning now to the Australian segment, just on Slide 15 here. The Australian segment, of course, being the bulk of our undertaking is highly reflective of the achievements we've made in the group overall, particularly at the underlying EBITDA line. The $19.1 million from $17.7 million represents a 7% uplift in EBITDA. Revenue growth of 20%, again, based largely on the organic FUA growth and the flows generated by our SMA and VMAAS services. And again, affording us the opportunity to invest in our people and IT capability. As with the group overall, our cost line has remained stable into the second half of the financial year. And that, of course, has given rise to the opening of the jaws and the lifting of the EBITDA. Just on Slide #16 here, there's a little more detail on the EBITDA bridge. So starting from $17.7 million with a significant uplift on that organic growth of $7 million revenue net of cost of operations, we did operate Powerwrap acquired in September 2020 for an additional 2 months of the financial year. So you can see there that whilst it has contributed clearly to the uplift of $7 million, there's also a drag of $2 million of additional expenditure for those 2 months that we've owned it longer in the 2022 financial year. Notwithstanding so, there's a $1.4 million increment to EBITDA afforded us by the synergies, Powerwrap's been a very strong contributor to the group result overall having now achieved annualized synergies of $4.8 million, which is largely in line with the business case at the point of announcing the acquisition. And we expect to continue to extract synergies in line with greater efficiencies as we bring the groups closer and closer together. From that point, we were -- we capitalized less of our software R&D in the current year as opposed to 2021, and that's meant that there's been around $0.5 million impost on the P&L. And the other expenditure categories fall into the line of risk management, mostly evenly between a significant uplift in insurance premiums and also an additional cybersecurity overlay in IT services. I think people understand that the cost of these services has increased quite markedly in the post-COVID environment. And we've fallen not victim to that. We do embrace the fact that cybersecurity overlays are very necessary cost for a business such as ours and largely unavoidable as our business expands. And the other category, around $0.5 million, the bulk of which is an increased marketing spend, which we're happy to embrace again as we seek to grow our business and be more relevant to the advisers and the advisory groups that we seek to serve. Just turning now to Slide 17. This is a little more detail on our margins than we previously afforded. Over the course of the financial year, the premium SMA net revenue margin, which is revenue expressed as a numerator and a denominator of average FUA, has been at around 33 basis points as was advised at the half and Powerwrap at around 19 basis points as was advised at the half as well. So stable over the course of the financial year, but with a noticeable uptick towards the end of the year. Now that's largely based on the contribution of the risers in official cash rates and our ability on the cash balances held in both those products to extract an additional administration fee. And that's something that we and our competitor challenger platforms have been signaling towards very strongly, but it's actually very visually represented by what you're seeing here as far as an uptick in margins, an uptick in contribution to revenue growth that Nancy will touch on that very briefly towards the end of our presentation. Now on the cash flow side, Slide 18. What's instructive here for this business in particular, is that our underlying EBITDA is exactly mirrored by our operating cash flow, $16.6 million. So the cash pull-through of the business has been very strong in this particular financial year. There are, however, one-off costs associated largely with divesting the international business, and then conventional expenditures or cash flows out for intangibles as well as then a significant investing or net cash movement in from the divestment of the international business. Lastly for me before handing back to Anthony to wrap up remarks and give an outlook to the future, a very strong balance sheet from the business as afforded by the divestment of the international business. Now of course, this balance sheet is representative of our position exactly at the 30th of June, as would be expected, given end of financial year and accounting standards, we've moved very quickly to deploy those additional cash reserves, however, not just let them sit there, repaid debt of around $11 million, issued a special dividend of around $26 million, and we're looking to implement our buyback as of tomorrow with $14 million for the half signaled. But an additional expenditure in the months where we're out of trading blackout to be flagged. So that's something where we essentially have a $25 million aspiration given what we regard as our surplus proceeds from the international divestment. I'll now hand you back to Anthony for our outlook section of the presentation. Thank you.

Thanks, David. So we've put this slide up. It's a slide that we've been using internally for a little while now. And what we do is just use it to illustrate some of the convergence that's happening in the advice market. And that convergence is coming in at least 2 areas. Firstly, if you think of high net worth, now not every high net worth individual in Australia is advised but many of them are. And there's a loss of data in that -- in the high net worth investment trends report that we sponsor. And same with the retail market, the retail market of clients, many are advised and many are not advised. But the interesting thing is that there is some convergence and the gap between a high net worth client and an advised retail client is narrowing. And that's what the overlapping section in part represents as that convergence. And the second thing about it is the way wealth is managed is also converging somewhat and there's a narrowing of the distinction between on and off platform administration for custody and noncustody holdings. Now these trends -- it's a very busy slide, and that's why it's in a pack that you can read at your leisure. But those 2 trends provide a great opportunity for Praemium as the leading noncustody wealth administration provider and having a significant share of the fastest-growing part of the platform market, the more efficient and sophisticated managed accounts part of that market. So our strength in both the managed accounts and the noncustody area, we believe, gives us a very good position as that convergence continues to occur. This next slide shows a little bit more detail behind that and why we've got a competitive advantage. So on the left-hand side, as I said, we are the leader in the noncustodial segment of the market. We -- and there are other competitors increasingly building that or buying positions in that market. But you can see from our latest results, that the assets that we manage in that sector are the highest of anyone and still the fastest growing. So a very strong position in the noncustodial market based on the VMA technology that we have, which has got some unique advantages and is an extremely valuable asset of the Praemium Group. Then the thing that we've done as the platform markets developed is we developed some, again, market-leading technology that allows us to offer a better solution on managed accounts. And as I've said earlier, that's the fastest-growing part of the platform market that is widely acknowledged. And so the managed account functionality that we offer gives us a strong position in the overall platform market. And the combination of those has been behind what has given us a market-leading position in the high net worth segment. And increasingly, there are -- there is an emerging high net worth segment of people who are progressively building up their wealth. Technically might be at the low end of the high net worth, depending on how you define it or moving into that segment. And many advisers as we've gone through the evolution of advice that we've talked about are seeing the value of targeting people in that category. And that's why we're very well placed based on the changes that are happening in the financial advice area. So if I just go back to the 4 pillars that I mentioned at the start. And again, this slide, without going through it line by line, we have clear plans for building on our competitive advantage within our preferred market segment. And those plans revolve around building out our corporate objectives in those 4 areas. And some of the goals that we have for ourselves are highlighted on that slide. I'd like to conclude by saying that myself and David and the Board believe that if we can successfully execute on the program and the strategy that we've got, then it all goes well for future growth in net flows, future growth in funds under administration, revenue. And ultimately, that will drop to profitability, and that leads to the flagging that was -- the thing we flagged earlier, the potential to develop our long-term dividend policy to build on the special dividend from this year. So with that, I'll bring my comments to an end. And once again, thank you for your participation and attendance today. And I do know now that we've got the opportunity for a number of analysts to put forward some questions. So we'll hand over to questions at this point in time.

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

EBITDA outcome looked well ahead of expectations, so that's great. In terms of the restatements, I assume you've just consolidated the corporate and Australian segments together. And then the cost base was flat second half on first half. Can you talk through the reasons for that in the context of the signal reinvestment in the business that was going on over the first half?

Just in answer to the simple part for me, obviously, as a humble accountant, yes, the corporate segment is rolled up into the Australian segment and should be regarded as doing that from this point forward. As far as the expenditure profile goes, there was a significant uplift in the first half. And we're quite aware that, that caught the market by surprise to a degree, even though we had said that to an extent we needed to invest in the business to make sure that it remains relevant. It's a highly competitive space. Anthony,was here the whole 12 months and oversaw that, made his own remarks in February at the half year as to why it was necessary. But an uplift of that significance engineered in that half has done the good, we think, that it was meant to do in this short period of time. If you're looking -- and I know you didn't ask the question specifically, Nick, ahead to the future. We, like any other business in a labor-intense service industry that requires highly developed technical and specialist skills, we're looking at wage inflation very seriously. We know that's part of the future landscape. And we certainly don't have a plan at all to significantly downsize our workforce because we're expecting our volumes to increase and we're expecting our business to grow. We're not going to flag exactly what we think that means in terms of an expenditure uplift. But we're well aware that the first half was something of a surprise, but it did afford us the exact uplift in capability that we wanted for the financial year. I think Anthony, did you want to...

Yes, Nick, I suppose the other thing you might be getting at, if I've read your question right, is did we expect that the second half would see more cost growth, not at the same rate of growth as we had in the first half, but still some which didn't seem to come through? And I'll just make 2 comments about that. The first one, which it was hard to say too much about this in the first half because it would have run a bit hollow. But we are still actually a relatively frugal organization. And so -- and that leads to the other point that we put stuff on because we felt we needed to do that, both to serve the current market and also because this is a generational shift in market share, and you don't want to miss it. You'd be letting your shareholders down if you miss out on that and you don't invest in it at the time. But having said that, the second half was, as everyone knows, a tough time in the market and that did impact on the volume of flows. And so the sort of uplift that we got in the first half turned out to be enough to take us through the sort of volumes we were having to process in the second half. Now going forward, I would expect that like we've said for a while now, we expect that we can run this business in such a way that we should grow the revenue. But we also -- and we will have to grow the expense base partly from inflation and partly just from increasing the scale of our resource base. But we would hope that our growth in total expenses from those 2 factors should be less than the growth in revenue. So that's pretty much the assumption we make in the market that we'll grow revenue, but our expense base should be able to grow at a lower rate over the long run than the revenue.

Thanks for that explanation, that's helpful. The -- I guess, the other really interesting disclosure in the presentation was just the revenue margin. I guess there's 2 points to touch on. The first is the uplift in Feb '22, can you talk through the -- what drove that step change? And then also the step change in May and June, my understanding was you didn't have a lot of leverage to rising interest rates. But has there been some change in cash product fees that's driven that improvement?

Yes, sure. Thanks, Nick. Look, February is a really unusual month. You present yourself with a data set and you do a 2-point average on each month because you're trying to be transparent to the market about where your earnings are derived. I did notice February and had a look at the ASX 200 as a proxy for that particular month. And February was an unusual month in that it started low, tilt high very quickly and then dropped dramatically right towards the end of the month. So to some degree, there's an elevated FUA in the interim, but the 2-point average itself leads to a lower FUA than you actually earned from in the month itself. So you'll get some statistic on anomalies on very fine margins like that. And that's essentially what's happened there. So February was an unusual in and of itself, particularly. May, June, we were afforded the opportunity to lift because interest rates were rising as official cash rates. We -- and Anthony can certainly talk to this in more detail than I can, we are afforded the ability to charge up to the limit of our PDS as rates rise above a very low base rate. So May, June are reflective of that. The very particular uplift in Powerwrap, we do have some year-end even-ups in that business that are a bit lumpy. So it's not solely to do, say, with extracting a higher cash margin from cash balances. And then the Powerwrap client base itself is one where the cash balance is not as reliably predictable. So we had a higher cash balance than we might have expected around then from that business as well. So a confluence of factors in that particular product line for the June number, which we wouldn't expect to replicate quickly in future months. But the trend, we think, in May, June, and we think the trend, of course, in RBA rates more broadly and rates across the sector or across the economy, lend itself to a fairly favorable outlook on margins for the group overall.

Okay. That's interesting. So there's a true-up with the Powerwrap book where they might pay a bit extra in June. So that 28% group run rate margin may not be sustainable, but you should be looking at sort of a move in that direction from I think the average in '22 was 24 bps. So you'd be sort of thinking somewhere towards 28%, but maybe not annualizing 28% as it stands?

Yes, not using 28% as a platform to start and then growing it out, no.

Your next question comes from Lafitani Sotiriou with MST.

Congratulations on a good result. Just a few questions for me, if I may. I wouldn't mind diving back in just to the cost component. And look, it's a very good outcome, second half not increasing on first half. But to, I guess, avoid some element of surprise in financial year '23 with expectations around cost, and there's some comments that are made that you expect to get greater efficiencies out of Powerwrap. And just to reconcile that with the -- your expected increases in investment to capture the opportunity. How should we think about it from an EBITDA margin, I guess, over the medium to longer term? Because if you think back, I guess, a couple of years, the Australian business for Praemium, EBITDA margins around 40%, 45%, and that's adjusted for the corporate cost. And it's sitting around 30% now. So do you think it's realistic that you should be able to get the Australian business EBITDA margin over the medium term back towards 40%? Or how should we think about it, I guess, more near term and also over the medium term?

So thanks, Laf. We haven't -- as you know, we don't put guidance out on revenue and expenses exactly, but we have been on the record of saying look, we anticipate that we should grow revenue at double digits for the foreseeable future and that our expenses should grow less than revenue. And as we've shown, I think the takeaway from this last half year is that if you're having a half where, for whatever reason, you're not getting quite the same level of growth as you might expect longer term, which happened to us, we didn't quite get the level of growth that we had been getting in revenue and FUA, and we attribute that to the market conditions, then there's a degree of flexibility not to put the staff on quite as quick. So if revenue grows at 20% compared to 10%, which are all double-digit numbers, expenses will grow differently depending on what the revenue grows because there is that ability to respond to how quickly the business is coming on and, therefore, what you've got to invest in terms of the service. So rather than saying, here is the longer-term EBITDA that we target, I do think we expect a gap between revenue expenses or positive jaws, another way to say that. And as we grow over time, that obviously leads to increasing EBITDA margin. But we're not precisely forecasting what that might be. We do know, everyone -- yes, sorry, Laf, I'll let you go.

No, no. Got it. Got it. That makes sense. And so we don't really expect another step change in cost, but of course, you'll track higher with the revenue as -- and if it does increase, obviously, depending on where markets are and so forth, but there shouldn't be any other surprises where there's sort of like we saw at the first half on the cost base.

We don't think so, no. And we're not -- we've got no assumption of any big cost increases required to maintain the current level of growth and business service standards and investment in product and the like.

Got it. Got it. So why don't I move on? So just moving on to the pipeline. And can I break it up by for VMAAS versus the platform more broadly. Now VMAAS is by its nature, there is some big, I guess, client wins that can transpire in that space. And so can you just talk us through a little bit of the market dynamic at the moment? Are there many RFPs clients looking to move to an outsource arrangement from in-house to outsourcing or have most of the big moves occurred? And if you can just talk to VMAAS first. And then secondly, looking at the platform space more broadly, where are you starting to see greater traction from the investment that you've had over the years in your sales team? Like is there a particular cohort of the market that you're starting to win more with? So is it, say, as an example, with smaller adviser groups? Or is it more in the broking space? Can you just talk us through the type of traction you're getting on the platform side?

Yes. Okay. Good. Thank you. So VMAAS, the answer is it -- the bigger clients are lumpy in terms of pipeline. So you do get big client wins from time to time. Obviously, we've had a couple of big client wins over the years and got some -- a number of major clients using the VMAAS service, and there's more opportunities for that, that we have conversations with, and there would be what we call a pipeline, but obviously, it's commercially sensitive information. Then there is a range of smaller wins. And not -- and as you can imagine, not necessarily all the smaller advise go through the same RFP process that a larger client might have the resources to manage, but they -- but you're having those conversations all the time. And our sales team is structured so that there is an incentive and a motivation to sell the VMAAS service as well as the platform service. If I then go on to the platform, again, a similar sort of pipeline as what we've seen for a number of years in the sense that there are more and more advisers who are willing to look at their platform and take advantage of the potential to shift to the newer platforms. And that's why we have an underlying assumption in the way we run our business, that the platform shift is far from over, and that will -- that generational shift that we've been party to so far will continue for some time. As to are there different sort of opportunities? Certainly, we have done quite a bit of work to just fully understand why do we win some opportunities and not others? And whilst there's a degree of complexity to that, it does come back to this target market that we've got. We've always been more successful in the higher net worth adviser. We've always been more successful with people who have more complex needs or needs for a broader range of assets. And so we do make sure that most of our effort is focused on that particular opportunity. And fortuitously, it's the fastest-growing part of the overall platform opportunity anyway. As to the investment we make. The final point I'd just like to close with is that sales teams become more productive over time in the organization. And our team was built up more recently than some of the other platform businesses. So we've got, on average, a younger team. But a younger team, not necessarily in age, I mean, in tenure with us, and they do become more productive over time. Now obviously, that plateaus out. But we've been writing a good curve, and we're still in that curve. People put salespeople progressively becoming more productive as they have longer tenure with the organization, get to know the product better and are able to use their increased knowledge and building the relationship. And of course, their clients and their network gets more confident once they've been here longer. Somebody who's just joined Praemium and says to the network, "Look I'm with Praemium" probably doesn't have quite the same success as has been there for a year or 2 and talking to the network and they say, "Oh, yes, well, you've been there for a while now and you really like it, and you've got something good to say about the product." So we're still writing that curve. It's still got a bit to go, but that's given us a better return on investment, if you like, because investing in somebody who's been here 3 years, you get a better payback than somebody who's just joined.

Got it. Can I just move on to a couple of other questions? So Asgard, part of the Panorama sale, is probably -- they're still a client, right, of yours utilizing the tax reporting. Could you just remind us how much longer that contract has got to run and how much revenue is in it? And just moving on to the technology side. Both of you are relatively new into the role. And there's a few considerations around the technology road map that you would no doubt have reviewed. Can you just talk us through has there been much change in what you guys have put on the road map in terms of the integration of Powerwrap or have you canceled some of the spending that you think is -- was not necessarily going to give you bang for the buck in terms of the integration or I guess what's been on the road map?

So if I -- I'll take the second part of your question first, Laf. So look, yes, the road map has changed and there is an increasing commitment to the Powerwrap integration now on the road map than there was 6 months or 12 months ago. But it's not any dramatic change in direction. It was to do with the changes that we needed to make in the SMA product too. It's not as if Powerwrap was the only initiative. There were some very important initiatives in the SMA product that we needed to make, and we were working through those. But Powerwrap is now the highest priority on our road map, and there is good progress being made. And as part of that, people might ask quite rightly, why wasn't it yet #1 priority. There was a lot of research into why it wasn't the #1 priority. It was the #2 priority, if you like. But part of the reason it was #2 too was that there was a lot of prework to be done just planning through what changes needed to be made to the Powerwrap product to fully utilize the other technology that Praemium had. And as you know, I was with Powerwrap, not in an executive role -- nonexecutive role at Powerwrap. But the fundamental thing for us at Powerwrap and the reason we were happy to endorse the takeover by Praemium at the time was because we just knew that Praemium had done a tremendous job, had a tremendous technology team and the tools that they were building around the core engine, like Powerwrap, always use the premium core engine. But the user experience tools and the other tools that Praemium was building around that core engine were better than what Powerwrap could do. Nothing wrong with the Powerwrap people or anything like that, but Powerwrap had a bigger team, had more budget and had a more intimate knowledge of the core engine and how you would integrate with that. So when we moved into the Praemium world, there was a fair bit of planning that had to go on about which of the Powerwrap tools have got functionality that we haven't yet fully replicated and we would lose if we just migrated and how do we do that? So there was all that planning went on. And as I say, in the meantime, there were some fundamental developments we needed to make on the Praemium SMA, which have now been made. And so Powerwrap is now the highest priority on the road map. In terms of -- I think -- I'm sorry, I think your question was about the financial benefits and what we're seeing in the Powerwrap and Praemium integration, if I remember that rightly?

No, no. So just following up on -- because I know I've got obviously within the Panorama sale. And so it will drop off, I guess, at some point, I imagine from -- as a revenue. So I just can't remember the quantum and the nature of the contract that you have in place with those guys.

Yes. So look, the nature of the contract is it goes close to a fixed annual fee at the moment. It is based on a number of portfolios, but there's a fixed element to it. And depending on the number of portfolios and how much they're using the system, it can finish up with a fixed price. And so basically, a fixed revenue line for us at the moment. And we don't see a lot of volatility, and we don't anticipate a lot of volatility.

But is the quantum around $1 million, I can't remember. So is it $1 million revenues? Is it $2 million? I can't.