WT Financial Group Limited (WTL) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to WT Financial Group's indicative results for the half year to December 2025. My name is Tim McGowen, and I'm the host for today's session. [Operator Instructions] We've already had several questions submitted, and we're going to ask questions as we go along, and there will also be additional time at the end of the presentation for questions. Now also remember that this live stream is being recorded and available for later playback. And I'm now joined by Keith Cullen, who is both the Founder and the CEO of WT Financial Group. Keith, thanks for your time.

Thanks, Tim. Yes. Thanks, ladies and gentlemen. I appreciate you joining us today. So today is all about running through our indicative results for the half year to 31 December 2025. We released these to the market late last week, and they're included in the deck that we've released to the market this morning as well. A quick update on where we're at with the audit reviewed results. We expect to get those out on or around the 27th. We'll get them out as soon as we can, but we certainly don't expect any material variances from what we've released last week and included in the deck today. So now I'm driving this machine here. There you go. I've done a good job right at the outset. Some important information there. Anything discussed today is for information only and should not be taken as taking into account your personal investment objectives and your personal situation. So it's general in nature. Please read that carefully once you've had a look at the deck. All right. A little bit of background on the company. Now I know most of you online today will know a fair bit about the company and may already be shareholders of ours. But for those of you that aren't, a quick overview. Forgive me if I'm looking down at the notes from time to time as I've got the presentation in front of me, but at my age, my eyes keep getting more and more tested at a distance. So look, WT Financial Group is the parent company. And if we look on the screen down here, I'll draw your eyes straight to the bottom there to Vesta Wealth Partners, which is our recently rebranded retail business. And retail is where it all began for us back in 2010-'11 is initially, we built quite a significant retail advice practice before making a decision in 2017-'18 to pivot into what was then known as the dealer group space or that we affectionately refer to as the advice network space now. And that space, running an advice network is all about providing licensing and services for independently owned financial advice practices. And we've built that business by exiting the retail space to a large extent. We sold off a lot of our retail assets, and we've invested that money over time into acquiring 4 networks of advice professionals. We started with Wealth Today back in 2018. Then in 2020, we acquired Sentry Group. In 2022, Synchron. And then the last acquisition we made was in December 2023, which was Millennium3. What we've done is we've brought all of these businesses together, whilst we've retained those business-to-business brand names because of the brand equity that sits in them with their advisers is we've brought them all together under one operational structure. So we're not running 4 separate networks. We're really running them all under our Wealth Adviser banner. So all of the services that we're delivering to the many practices in our group, which is some 530-odd personal advice financial advisers and about 40 or 50 general advice financial advisers. All of the services we're providing them is under the wealth adviser banner, and we're running that. We've got the operational efficiency out of running it really as one business. Our ASX code, WTL, the trading price range of the company's shares between $0.08 and $0.155 over the last 12 months. We've got 342 million shares on issue, market cap sitting around about $48 million to $50 million, depending upon where we're trading on the day. So that's a little bit about the business. Now 4 handsome looking people here, including myself, our Chairman, Guy Hedley; my Founding Director, Chris Kelesis; and Chelsea Pottenger, who is a Non-Executive Director along with Chris and Guy. You'll find our CVs on the website and obviously, in this presentation deck. I include this slide here today. We won't get hung up on it, but I included it here today to make the point that this company has very strong alignment with its shareholders, Board and management of the company owning around 30% of all the listed shares in the company. So really good alignment between the Board and also management and our shareholders. So let's get in and have a look at, how we've done for the half year just completed relative to the prior corresponding period. Now we're delighted to report that our net revenue is up around 16% to $15.58 million. That's an increase of $2.5 million on the $13 million of the prior corresponding period. Really importantly, this is a period where we had no impact of acquisitions in this period. So it really is a like-for-like on the fully integrated businesses and showing strong growth in net revenue. Now that growth was achieved on gross revenue growth of 12.8%. So the gross revenue for the 6 months, about $120 million, resulting in net revenue of $15.5 million. Now those new to the company will say, what does that mean? All of the revenue of the advisers through the network comes through our business and therefore, through our P&L. So when the advisers in our group that are running their independent businesses are earning fees from their clients directly or whether they're earning commissions related to risk insurance sales is all of that revenue is coming through our business, and that's creating our gross revenue. And then with all of our practices, we have a fee structure with them where they're paying us base fees, they're paying us some variable fees relative to the services they're accessing. And with most of our practices as we're sharing in their revenue as well. So those components collectively result in what we call our net revenue. And so when you're assessing the sort of EBIT ratio or the NPAT ratio of a business like ours, the gross revenue is an interesting number, particularly for a business like ours where we're sharing in that. But really, if you're looking at EBIT ratios and so on, the best number to look at is that net revenue number. That's the reality for us. So earnings before interest and tax, up nearly 13% to $3.43 million for the period. And then our statutory net profit after tax, where after our tax calculations, et cetera., is we're looking at that being up around 12.6% to $2.4 million. Importantly, from an operating cash flow perspective, net operating cash flow for the business was $2.63 million for the period, up 35% on the prior corresponding period. Cash and cash equivalents were up $1.7 million over the corresponding period. And Tim, all of this results in the Board anticipating declaring a fully franked dividend of about -- well over $0.0025. So a good result all around. Next slide there just gets into a little more granular detail and shows you line item by line item, what I've just mentioned in that previous slide, showing you the net revenue growth, the expenses growth, depreciation, amortization, et cetera., and then those statutory adjustments. Now in previous periods is we've had some significant one-off income and expenses as we've dealt with assets over the years, not so in this period or the prior corresponding period. So net profit before and of the underlying business and the statutory net profit very similar in this case. All right. So flick on to the next slide now. Now these are the 5 previous full financial years. And if you extrapolate out how we're going for the half year so far, you'll see the sort of growth that we've been experiencing is continuing. I put these numbers in here just to show that over the last 5 years, we've been experiencing consistent growth in both revenue and profitability. So -- and obviously, expecting to continue to do that in this the 6 year of that period. But it's been quite a remarkable sort of growth story. If you look at our gross revenue back in FY '21 when we had just moved into this advice network space was $13 million. Last full financial year, $217 million and for the half just gone, $120 million. So if you double that to $240 million is to give you an indication of how we're tracking for the full year, and that's $13 million to sort of heading towards $240 million plus for this year, very solid. From a net revenue perspective, $4 million to $14 million to $22 million to $23 million to $28 million and then just reporting $15.5 million for the half year. So very good, strong, consistent growth over those 5 years heading in obviously to the 6th year as well. Just flip through there, and that's represented on a graph and showing the sort of growth in not just the revenue, but also the profitability of the business, showing the EBITDA, EBIT and NPAT, the net profit before tax growth across that same period of time. So we're really pleased with having taken these sort of disparate businesses, brought them together under the one banner, consolidated the operating model for all of them, really pleased that we're delivering increased services and increased quality in the services we're delivering and the supports we're delivering to the advisers in the network. At the same time, we've been able to do that in a really efficient manner to drive not just revenue growth, but also growth in profitability. So full credit to the advisers in the group and full credit to the executive and management team and the entire team in our group for having, again, brought these disparate businesses together and really have them now functioning as a really cohesive unit, delivering services to well over 500 advisers.

Thanks, Keith. Time for some questions in regards to the financials, if you don't mind. These were submitted earlier. So the company reported 16% net revenue growth, but EBITDA and net profit before tax margins contracted slightly. What levers does kind of -- levers does management have to widen the gap between kind of revenue and the cost base?

Yes. It's a really good question, Tim, is the focus for us in the past sort of 5 years has been getting the operating base of the business right. Having brought these big teams of people together, big groups of advisers together, all operating on slightly different operating rhythms and slightly different models. We've put a lot of time and effort into getting the operational base and therefore, the operating cost structure right in the business. We're confident that we've done that. So in terms of margin expansion, we don't see too much opportunity on the cost side of the business. It's definitely there on the revenue side of the business. So if I look at a couple of the key drivers that are going to, we believe, enable us to improve margins over the next few years. The top line one would be growth in adviser revenue. Now most critically within our business with the vast majority of our practices is we're sharing in revenue with them. So we're really closely aligned. I talked about that alignment between management and our shareholders and the Board and shareholders before. We have that same level of alignment with the advice practices in our network because we're sharing in revenue with them. So our objective is to help them grow their revenue. And there's a number of ways that we can do that. Number one, it's giving them the confidence that they need to be able to take advantage of a real supply-demand imbalance in the market. There's increasing demand for advice. There's only a limited number of advisers. So we're helping them drive their top line, which will help us drive our bottom line, because as their revenue grows, the percentage that we share it with them, we don't have any additional costs associated with that. So that's money straight to the bottom line. So there's a great opportunity. We'll talk later about our joint venture with Merchant Partners, a very large U.S.-based firm that we've joint ventured with to invest in the underlying practices in our group to help them drive efficiencies. So there's a dual strategy of increased revenue and profitability for us in that model. That the first part of that is to help make those businesses more profitable themselves to make them more efficient, so the advisers spending more time with clients that helps them drive their revenue, that helps us. Second part of it is, obviously, we'll come to this later, but it's presenting fee opportunities for us to help originate those opportunities and bring those opportunities to bear, where we're getting the investment into the practices. So we're earning fees out of that. And then obviously, part of that Investco joint venture is ending up a shareholder with these underlying practices. So there's a dividend flow that comes from that. The final thing, and we'll touch on this later as well, is we've developed some incredible technology in this business. And you'll see we said in our announcement the other day, we're really pleased that we've been able to get the growth, pay dividends, but continue to invest in technology. And we think there's some incredible opportunity for us to commercialize some of that outside of our own networks.

A couple more, if you don't mind. In regards to -- it's kind of an investor, sent this in, or a shareholder, it's noted that the interest and financing expenses increased by around 30%, a higher rate than revenue growth. What's driving this? And is the kind of current debt profile sustainable?

Yes, it's a good pick up. And we'll probably -- this will have a note associated with it, I think, in the audit reviewed accounts when they come out is about $100,000 of that increase was financing costs associated with premises. So those of you that know the complexity of AASB, the Accounting Standard 16 around premises leases. We'll know it's a bit convoluted the way it all works. And it just happened that we entered into 2 lease renewals. We have new premises, not that we've expanded our cost of -- or our footprint in these markets, but we moved premises in both Melbourne and in Perth. And the way that the financing cost associated with leases that drops into that number as well works, as we ended up with quite a disparity between the 2 periods. So probably looks -- it's somewhat of an anomaly in that regard. In terms of the debt profile of the business, we're very comfortable with the level of gearing in the businesses. If you look at our balance sheet hasn't changed from the last reporting period, the full year, $6.8 million worth of total corporate facility drawn there with $5 million undrawn. So if you look at that $6.8 million, our EBITDA 3-point something for the half year. So we're sort of tracking at 1x full year EBITDA in terms of the current drawn facility. I always said that was very, very conservative, Tim. So we're more than comfortable with the level of gearing. It could be argued that there's room to sort of gear even further.

And just finally, just quickly, is the plan to kind of maintain that 5.9% fully franked dividend?

Well, look, I would hope the yield will be a bit less than that, Tim, because I'd hope the share price would respond and go up. But we think we're looking at a grossed up yield on the trailing 12 months sort of in excess of 8%, now pushing 9% with the with the share price where it is. And we think given the growth profile and the growth opportunity in the business to be paying dividends as well as it's a really sort of attractive proposition for investors. Again, good alignment between Board, management and the shareholders. So where I think this will be our fourth dividend the last sort of 4, 6-month periods as we've declared a fully franked dividend. So we think the business is going to be able to sustain that, if not improve upon it.

I'll let you continue.

Okay. All right. Terrific. So I think we'll move on now is what I wanted to talk about is the 4 compounding growth levers in the business is the last 5 or 6 years for us have been about building a platform that can really set about growing now. And full kudos to the management team and the team of the business to, again, have brought together these disparate businesses. Now they're all operating as one. But that's where the focus has been over the last 5 or 6 years, bringing together these acquisitions, proving that we can integrate them together, proving that we can get a single consistent operating model across them all. Now is the time for us to leverage that. And so let's have a look at what the 4 compounding growth levers are. I'll talk quickly on them here because I've got separate slides for each of them. But the 4 key things for us is we're an industry-leading consolidator, and we do see that there's opportunity for future M&A. We've done 4 of these key acquisitions since 2018. There's plenty more opportunity there for it. There's also the opportunity for M&A in the underlying practices. The structural tailwinds to support this are incredible in financial advice, and we'll dive a little more deeply into them as I work through these slides. Our joint venture with Merchant Wealth Partners, what we call our Investco joint venture is enabling us to partner with practices in our group and bring those in from outside as well. There's an opportunity to do that to facilitate the corporatization. Look, financial advice in Australia is pretty much a cottage industry still. Even the bigger businesses are relatively small. So we've done this joint venture with Merchant. It's enabling us to bring capital to the table to help drive M&A activity, so advisers can get more efficient and spend more time in front of clients, which is where the value is. And then, of course, we've developed some incredible technology. I'll touch on that a little later as we move through. So let's move on to the slide and just have a look at -- we say, we're a leading consolidator in the industry. We started in 2018 with the acquisition of Wealth Today. This was our first foray into the advice network space. And look, we knew a thing or 2 about providing advice on a retail basis to consumers. And we felt that we could bring that experience to bear for advisers running their own independent practices. And so we started small with Wealth Today back in 2018. When we acquired Wealth Today, it gave us just around 50 advisers in the network. As we build our confidence to make sure that we were managing risk properly and we could bring the right supports to the table for advisers, we decided to make a larger acquisition, and that was Sentry. And so we acquired Sentry in 2020, I think it was July 2020. Yes, it was because it was crazy COVID times. I remember not long after settling the Sentry transaction. Sentry was headquartered over in Perth and the Perth Premier at the time decided to shut the state for quite a period of time, made it a bit difficult for us. But nonetheless, we brought that business into the fold with us. We applied -- we took the best of breed from both of Wealth Today and from Sentry, and we applied a consistent operating model across the group. When we felt that was going well, we then acquired Synchron, which was in 2022. Again, that was quite an exercise. A lot of personnel we brought together. We had to rationalize the teams. We had to take the best of both of the operating models and again, roll it out consistently across all of the advisers in the network to make sure that we weren't running 3 separate businesses. Once we've done that, we're really happy to be invited to make an offer to buy Millennium3 from Insignia. We settled that acquisition in December 2023. And like we've done with all the others is we've applied that consistent operating model across the group, rationalized the operation. It's enabled us to really expand the level of services and support we're bringing to all of the advisers in the group. And this has seen us emerge as one of the largest networks in the country now and very pleased with what we've been able to achieve there. Each acquisition we've done, what we've done is we've employed our leading technology and processes in our risk management framework, which is really central to operating these networks. We'll talk some more about it later, but we adopt a forward-looking review to managing risk in our networks, and we support our advisers by managing the risk to their clients by here reviewing all of the advice and the files before advice is given to clients. And so on a hierarchy of risk, we're managing risk to the client, risk to the adviser to make sure they've got a robust file to support the advice that they're providing. And in doing that, that's really helping us manage risk to ourselves and risk to the broader group. Now it's quite amazing what we've been able to achieve with that, not only from a process and a people perspective, but also a technology perspective. But it's given us a unique position as we've made these acquisitions to be able to bring them on board and get them into our operating rhythm really quickly. So I'd say to you, look, we're not out -- it's been a deliberate path for us to build this network to the size and scale it's been to make sure that we have the right scale to be able to offer the right level of support to advisers and that we have the right scale to drive profitability in the group. So it was a very deliberate strategy to build that scale. Now that we've built it, we're all ears for opportunities that might be out there. They're not essential for us to continue to grow and continue to grow our profitability, but we're open to them, and we think we're best positioned in the market for them, given our experience and given the operating model that we've built. So I'd say, key driver #1, opportunity for further growth through consolidation. Structural tailwinds are only getting stronger in the profession. I hear people say often in the financial services, business or industry in Australia, Australia has a superannuation system that is the envy of the world. Well, I'll leave it for consumers to decide how they feel about that. But I'll tell you, it's certainly the envy of financial services operators all around the world. Australia's superannuation pool, which is a key driver to growth in both product side and also in the advice side of the industry or profession is now through $4 trillion and headed towards $7 trillion by the end of the decade, baked in statutory growth, and that's incredible. About 70% of the advised money in our network would be superannuation money, and they have it baked in statutory growth through statutory contributions through wages growth, 12% of everybody's pay going into superannuation. Now before you even think about the asset growth, that's an incredible growth pool that's baked in. Now couple that with the fact we've got an aging population and couple it with the fact that you've got governments that seem intent on continually changing the rules around super, around taxation and around social security. Now we could say, geez, I wish they'd stop meddling, and I know our clients would say, I wish they'd stop meddling. But the reality of it is for advisers, that increased level of complexity is meaning that consumers really need help in particularly when they get to retirement. And this is the other key driver from a demand perspective. We've now got around 0.25 million people every year hitting retirement. So wherever you put the measure, whether you call that hitting preservation age, hitting unrestricted access age, hitting retirement age, it's about 0.25 million people a year. So that's incredible. The biggest demand for advice is in and around retirement in the lead up to retirement and at retirement. And these numbers don't lie. At the same time, we've got supply side constraints. Adviser numbers are down 45% from 2019, thanks to, number one, the banks all exiting advice. So it used to be such that you could go into just about any bank branch and there'd be an adviser sitting in the corner. The banks have pretty much exited that space. And so it's professional, independently owned and operated financial advice businesses like those in our network that have really come to the fore. The other thing we've seen is a lot of older, more experienced advisers decided they didn't want to do the new education standards that came into play. And so we've had natural retirements happening with this incredible chokehold being put on supply through these new education standards and a very esoteric degree that new advisers need to do. So we've got supply side has dropped, demand side continues to grow at an incredible rate, and we've had a variable chokehold put on that supply because of the new standards around education. Now from a regulatory reform perspective, certainly, the government is talking about wanting to support more access to advice for consumers. They're aware of the supply-demand imbalance, and they're looking at ways that they can reform to enable superannuation funds, for example: to be able to provide simple advice to their members that they're not able to do currently. We think that will be a very positive thing. From the profession's perspective is the government and the opposition has said they'll support this is fixing the mess that they created when they reformed to the education standards a few years ago that has cut off that supply side. We just don't have enough people graduating with this very esoteric degree to backfill the numbers and enable the profession to grow. Now that's great at the moment, because it's creating that supply tension and it's enabling advisers to the ones that are getting really efficient from a technology perspective, it's enabling them to see more people because the demand is there and to build more profitable businesses. But we also look forward to a time when that relevant degree status gets changed, and we can get back to really growing the profession as well. So we'll have our cake and eat it too, I think. So really, the tailwinds are there for the profession. There's no question of that. So move on to the next one now, which is creating equity at scale. We have entered into a joint venture. Those that follow the company will know about a year ago, we did a joint venture with a U.S.-based firm by the name of Merchant Wealth Partners or -- well, we did with their local subsidiary, Merchant Wealth Partners Proprietary Limited. It's a subsidiary of New York-based Merchant Wealth Partners, LLC. And we've done that JV, a 50-50 joint venture to invest in practices through a business that we created here called Investco, we'll call it for short. And we're partnering with firms in our network to really drive the M&A to enable what is a college profession to be a lot more corporatized. And we've done the first 2 of these setups that we're running through what we call our Hubco strategy, which is to create a new hub entity and for us to put investment into that entity to roll up a number of practices within our group to back one strong CEO and to enable some of the advisers to either retire, take some capital off the table, pay down their debt, most importantly, come into a more corporatized structure that's going to enable them to spend more time with clients and not have to worry about trying to run a small business at the same time. So the opportunity for us is significant in this, and it's significant for our advisers as well. We're really helping them unlock real value, set themselves up to have intergenerational sort of wealth transfer within the asset of their advice practice rather than just sort of getting to 63, 64 years of age, putting up the white flag, and taking whatever price the market would give them at the time, they're coming into a much more corporatized structure. Then once we've created that corporatized structure, we're there helping that company with further M&A, both within our network and also external. So as far as WTL is concerned, we benefit out of being the JV partner of Merchant in this, so ending up with a significant minority stake in a number of these businesses. And we also are originating all of these opportunities. We're conducting the due diligence. We're organizing both the capital from Investco and also organizing debt capital when it's required and it's appropriate to use it. And so WTL is benefiting from the fees associated with that, that in addition to our holding through Investco in these entities is we're ending up with our own shareholding directly by converting those fees into equity. Now each of these hubs that we're putting together, each of the acquisitions that we're doing, we're doing so on the basis of them from day 1 before we get any synergies and any growth, yielding in that sort of 12% to 16% fully franked yield perspective. And so this is another income stream that we've got coming into the business is that income yield. Obviously, we've got the capital upside as well. So Tim, I'll just touch quickly. We've talked about these before, and those that are really interested in this can go and watch our presentations from last year. They're on our corporate website and we put them out to the ASX last year as well. The first 2 hubs we've created, Titan Advice Group and Select Advice Group, to give you an idea of what they look like, Titan Advice Group, we brought together Titan Financial Planning, Darwin Financial & Retirement Services, and Wealth Connect, 3 businesses. Now where does the efficiency come from? Well, the first thing I'll say to you, now you've got 4 principles there or 3 principles there and then the fourth in Rushby Financial, which was an acquisition that we made shortly after completing the setup of Titan Advice Group. Four principles there that aren't worried about the social media strategy, their website strategy, what technology they're using, et cetera., they're not worrying about hiring and hiring people. They're not worrying about what they're doing for external power planning, et cetera. All they've got to worry about is sitting in front of clients. So the key play out of this is you've really unlocked an incredible amount of value day 1 just by taking these guys and freeing up an enormous amount of time for them to spend sitting in front of clients, which is really important when the supply-demand equation is stacked so firmly in front of advisers. Same with Select Advice, us backing Eric Bohl as the CEO there to go out and start making acquisitions for the same reason. I'll just flick on to the next slide and people say, well, what's this all about? And how does it play out? So we say that we're creating equity at scale and looking to unlock it. And I just -- Tim, this is a repeat slide from something we did last year, but I thought it was important to put it in here. If you look, we've got around 400 practices in the group. And if I said, what are they worth of small businesses? Well, our estimation is, look, circa $0.5 billion. And you go, how do we get there? Well, if you've got a small business turning over $1 million or making $300,000 or $400,000 on the EBIT line, or $0.5 million on the EBIT line is. What you've got is you're either going to be valued at a revenue multiple, valued as a book, or if you're valued as a business, you're going to be averaging, we see this across the group, averaging about a 40% EBIT line on your revenue. And you're going to trade at somewhere of 5, 6x multiple, maybe 6.5x on the EBIT multiple if you're lucky. Now when you bring businesses together in the way that we have with those first couple of hubs, you instantly see that you're going to get a big uplift in the EBIT multiple because you're taking out a lot of repeated costs in the businesses. You're empowering the advisers to sit in front of clients more often. You're answering that supply-demand equation. You've now got some thinking time within the business to think about applying technology. And we're seeing people getting EBIT lines of 50% and better. And once you're in a scale where you're now getting $1 million, $1.5 million, $2 million plus worth of EBIT is that on the demand side from an acquisition perspective, you're not trading at that 5 or 6x multiple, you're trading at 8 or 9x multiple. So this is how we say, if we apply the same sort of measure across the group and helped advisers unlock that value, you've got uplift from $0.5 billion we say $800 million or $900 million. I think that's before you even get going. So that's what the exercise is all about for us with Investco.

Let's ask some questions on that, because we've got several, if you don't mind. In particular, you've got private equity coming into Australia all of a sudden, Oaktree, TA Associates [Audio Gap] equity positions in financial advice practices, large ones.

Well, I mean I think we've proven that, Tim, as we've joint ventured with Merchant Partners. Now look, if I go back a few slides, I'll talk about -- let's bring that one, the structural tailwinds there. That's what -- this is what's attracting people to the market here in Australia, Tim, is you've got this $4 trillion pool of capital, you've got baked in statutory growth. You've got supply/demand just headed in the right direction, 0.25 million people a year coming into retirement. And you've got asset values here trading at a significant discount to what they are, notwithstanding all those incredible tailwinds here that aren't necessarily present, say, in the U.S. or the U.K., you've got assets here trading at a significant discount to what they are in those markets. And so that's what's attracting that capital. It won't be lost on people that, that capital has found its way to our door, because we sit in a unique position. We live day-to-day with the practices in our network. If somebody is looking at deploying capital in financial advice in Australia, you want -- doing so with someone that has such strong relationships with their advisers like we do, that's got a team of regional managers out there in these businesses every day that's peer reviewing their advice every day that really knows and understands them and has a partnership relationship with them already. We've had a stream of people to our door saying, can you do one big roll-up? You can probably tick back to Tim and I now. Can you do one big roll-up? We didn't see that's where the best opportunity was, Tim. So when we met Merchant Partners who are a significant player in the U.S. market is we were instantly attracted to the model they had, because it met what we thought was the appropriate model in Australia at the moment. And that is we don't think you can go from -- number one, we don't think you can have one big roll-up, because if you look at the practices in a network like ours or practices across Australia, they've all got different things that they specialize in. They might be retirement specialists, they might be wealth creation specialists. They might be risk insurance -- personal risk insurance specialists. You can't necessarily roll them all up into one. They also have different personalities, different geographical locations, different client types they focus on. So we felt that it was much better to adopt a model where we came in with capital and built a series of hubs rather than just one big roll-up to give people the flexibility to join a model that suited them. And we also felt that it was important to be a significant minority partner in these practices, not a controlling partner. The reason for that is the biggest opportunity for capital is that supply-demand imbalance. The biggest risk to capital is the chokehold on the supply. And our view was if you turn all the advisers into employees, you've got a big risk there. We want them to be in the majority position. So look, to put Merchant in perspective, yes.

What is it? Bible, is it?

Yes. Well, look, I picked this up at their last partner conference. And every page in this book is a practice in the 40-something states in the U.S. and the 6 countries globally, including Australia, that they own between 20% and 40% of. They're a serious player. They've deployed hundreds of millions of dollars of capital. And -- so how do we compete? We make sure that we've got the right capital partner, and we believe we've done that.

And so the longer-term benefits of this sort of structure is you're getting a 6% equity position based on your due diligence with your partners.

Through renovating the opportunities.

And so the idea is to roll out more of these, and have you got more in the pipeline potentially?

Yes, definitely. So we've done the first 2. People ask me, how many hubs do you think you'll end up with? I think more than sort of 6 or 8 and less than 14 or 15, if that makes sense. I'm not exactly sure of the number. We'll keep building hubs while they make sense to build. The objective is to coalesce, bring together a group of advisers into a structure that can be properly leveraged to grow into a corporatized business. Look, I think there's room probably for at least 6 or 8 of those in our network. And then once they're running, when advisers are wanting to sell into that corporatized structure, just -- I mean, bear this in mind, we'll continue to support the smaller practices. We're not saying this is our way or the high way on this. We've got a profitable business supporting small businesses as it is. We just think for their own benefit, the best upside for them is to move into a more corporatized structure, but we will have advisers that want to stay in that smaller structure. A lot of them have got lifestyle businesses. People use that term critically sometimes. But for some advisers, it's really important. But once we've got enough of these hubs that can sort of absorb the right sort of personalities and the right sort of advice types is -- we'll just look then to keep growing those hubs.

And you've already got 2 hubs. So with these sort of margins, 50% EBIT margins, and you've shown the valuations there, is the potential -- or have you received any dividends yet from these new hubs? And obviously, that's a potential revenue line for WT.

Yes. Look, I think it ends up being a significant revenue line for us. The answer to that is yes, we have. So Titan Advice Group that completed in August or September last year has paid 2 dividends so far. So these will be paying quarterly dividends. So yes, dividend flow has started, and it's an absolute focus. Bear in mind is that the advisers in these businesses are taking most of their consideration in a lot of cases as equity themselves in the hub. So they're super motivated to -- their interests are aligned, if you like. And it's the Merchant mantra, it's our mantra. Therefore, it's the Investco mantra is we want our interest aligned by making sure that the adviser shareholders have the majority of these businesses, and they're the ones that are really motivated to grow the business and motivated to grow the profitability and motivated to distribute the dividends.

Makes sense from a yield perspective. And let's just talk about the share price of WTL and its implied valuation based on the recent CC Capital, Insignia bid. It looks like it's trading at a significant discount. Kind of what catalyst do you see that can help drive a rerating of the WTL share price?

Look, I think in fairness, Tim, that we've had this sort of market execution risk discount applied to the business across the period 2019 and onwards. And look, as an investor, I go, that's fair enough. As people have looked at the business and gone, well, look, Keith and his team have decided to pivot from retail into the advice network operating space, will they get it right? Fair enough. We think we got it right with Wealth Today, but then we made another acquisition and then another acquisition and another acquisition. And at each point in time, I think people have said, well, at each of those points is we've raised some capital, we've raised some debt. Therefore, we've restructured the balance sheet. We've sold assets. Will they get both the balance sheet structuring right and will they get the execution right from a P&L perspective? So we've had that sort of risk discount hanging over ahead from a multiple compared to our peers. I think it's time for that to disappear, frankly, Tim, look, I think we've proven we've got these 4 right. We've taken 2 businesses that we're making a bit of money and 2 that were barely breaking even. We've got great consistent growth out of them. We've set the operating model correctly. If you look back at our presentation deck from the full year, you'll see in there our adviser satisfaction ratings through the roof, pushing 90%. And so we've proven that we've got a really solid network of practices that like us, that value the relationship, and we're making money. From a balance sheet structuring perspective, look, we're yielding sort of 16% on assets or net assets and 17% on contributed equity. We're sitting there with debt, a modest debt line. We mentioned it before, basically sitting at 1x EBITDA. So I would have said from the capital management side, we're back to paying dividends fully franked from the capital management side, that execution risk is gone. From an operating model perspective, you've seen now consistent growth in revenue and profitability. We think the execution, multiple should be gone. So how do we go about changing it? We get out there and we tell the story better. And we've had great support from our existing shareholders as maybe we need to get out and do some marketing more, but that's certainly one way to do it. And obviously, continuing to expand that margin in the way that we've talked about earlier.

Let's talk technology next. I'm fascinated by this.

Yes. Okay. Terrific. Look, there we go. We've gone back to that other one. Look, we say this, I'd say, we've got the leading technology in industry-leading proprietary technology. We talked about this at the full year as well, but it's important to do so. We made a decision when we came into the advice network space that the traditional model in financial advice of a network operator managing risk, risk to the client, risk to the adviser, risk to itself by an annual in arrears spot audit of a handful of advice files and documents. We thought that was compliance. It wasn't proper risk management. And we made a decision that the best way to manage it for the client, for the consumer and for the adviser was to do in advance peer reviews of every piece of advice, new advice and every advice file before that advice went to the consumer. And people said, we were mad when we went down that path back in 2019. We proved we could do it efficiently. We brought technology to bear. We bought processes and people to bear in doing this. And most importantly, we've been able to do it in a manner that is commercially viable for the adviser, because people have tried this sort of forward reviewing of advice before and advisers have put a file or an advice document in for review, they'd be stuck there for weeks or months. And we just said, that's not commercially viable. You can't keep consumers waiting for it. You've got to do it not only thoroughly, you've got to do it efficiently as well, and with quick turnaround times. So initially, the technology that we brought to bear in this space was all about workflow and process management and the communications between the adviser, the admin, our central support team that was doing the peer reviews, et cetera, to enable the system to work really quickly. But a lot of manual work in there still. We really embraced the opportunity that we saw emerge out of AI, when ChatGPT first came to market a few years ago. We said, this is really going to transform the way, a lot of businesses, industries and professions operate and none less so than financial advice. So we've embraced it. We put a lot of time, a lot of money into building our own proprietary technology that has enabled us to really turbocharge the human capability within our business. We are forward reviewing 10,000, 11,000 pieces of advice every year. What we're doing is we're picking up file deficiencies and deficiencies in the advice that enabling us to perfect that. So to put that in perspective, some numbers on the board there, 10,500 file reviews in the past 12 months; 7,500 improvements. Now not to say there was detriment in those files, but they could have been better, both to manage the risk of the client and also manage the risk of the adviser. And most importantly, our turnaround time 38, 39 business hours, just unbelievable -- or hours, sorry. So turning them around inside 2 business days, Tim, which is really imperative. So we're really excited about the technology for our advisers, what it's -- the comfort it's giving them and for their clients. We're really comfortable with the way we're managing risk inside the network ourselves. But we're really excited to see where we can take this technology, perhaps even on a global stage. I know whenever I've shown it to people in our space, they've been really excited about it and want to know how they can get hold of it. So that's another opportunity for us.

Let's just ask a couple of questions about that. I'm astounded that the industry looks backwards and doesn't look forward in terms of reviewing the documents. So this is both a risk reduction exercise in terms of having this technology in place. Is it also a cost-out sort of exercise in terms of reducing compliance costs from a human level as well? Like compared to your peers?

Yes. Look, it's an interesting question, Tim, is I'd argue to you that the traditional annually in arrears spot check of a handful of files for each adviser ultimately ends up costing the operator and the practice more than what it costs to review every single advice document upfront. And that might sound -- doesn't make sense. How do you review 3 files versus the average adviser is producing about 20 pieces of new advice a year. So the typical model is you might go and look at 2 or 3 of those advice files. Well, the first thing I'd say to you is that when you do that, -- when you're looking at every advice document, any issues that you find can be addressed there and then, which is on that other slide, we saw we had 7,500 file improvements. It's a bit like to do something about it after the fact. And what you consistently find if you do -- if you're reliant upon annual in arrears audits and a handful of files is you end up with a whole bunch of remediation work. Something gets discovered where, for example, a mistake has been made by an adviser, and they've repeated that mistake 15 or 20 times. You've got to go back, you've got to contact the clients. You've got to go through this entire process. You end up grinding the practice to a halt. You end up needing to throw an enormous amount of resource to it. That's before you even think about if you found anything that needs financial remediation as well. So I think we are able to do it more efficiently than what others are. And we're certainly, in our view, managing risk a lot better than that sort of check box compliance approach that others are taking.

I mean, you mentioned commercializing. Is there a plan and a kind of time line to commercialize this AI-powered product?

Yes. Look, we've been in this -- our primary focus is in our own business, obviously. That's where it's key. But look, people are aware of what we've been doing with this technology. We've had a lot of people looking at it with us. And so is there a specific plan? We're in a number of discussions. We're trying to model out and see if there's actually something commercially viable there that we can take to market. Certainly not reliant upon it, but it's a potential opportunity, that's for sure.

I'll let you continue the last slide, and we've got some more Q&A after.

Yes. Look, I think we're getting pretty close there, Tim. As this last one here is just a snapshot that we took out of the annual report, because I like this one. Just looking at the investment case for those that are considering the business or already in the business, why should you be in the company? Why should you stay in the company? Look, strong financial performance. I talked about it before, as I think we've built now a track record of not just acquisitions, but proving that we can make the acquisition, structure the opportunity right from a balance sheet perspective, and then execute on it by bringing the business together under this one banner and to get it operating efficiently. So our strong financial performance is underpinned by these industry tailwinds that I talked about before. Balance sheet is in a good shape, scalable cost base were cheap versus our peers. So I mean, I think that wraps me up if we're ready for Q&A, if any have come in there, Tim, other than the ones that you've had.

Yes, I've got some questions here. In regards to adviser movement, it's a specific question here. Obviously, you've seen, I think, 55 advisers leave into prac. What's the opportunity in regards to picking up potential new advisers? And what's the industry looking like in terms of movement at the moment?

Yes. It's interesting. I was having a look at this earlier today. So our adviser numbers have been very stable, if I went back to, say, January last year, January 2025, is that we might be up by 3 or 4 or 5 advisers across the network. And there's always movements because those adviser numbers include people hiring and firing, people selling their businesses, buying their books, et cetera. So there's a fair bit of fluidity in the profession just -- and within our network on a normal sort of week-to-week basis. We're actually not looking for -- it's not a key driver of ours team is to go out and seek new practices. So our regional managers, that's -- it is one of their performance indicators. The key performance indicator for them is the revenue growth with the practices we're already serving. So we want to make our practices more efficient, more profitable. So because as we do that, we don't incur additional costs, as we're sharing more in their revenue and it goes straight to our bottom line. Every time we add a new practice, there's more costs that come with it. Now it is scalable, of course. You're only running one conference and one set of professional development days and so on. So they're scalable. But the more you bring in, you do have incremental costs that increase there. We've got lower-hanging fruit in helping our practices become more profitable. How the profession has gone generally across that same period of time I talked about, I think adviser numbers are down from about 15,500 at the start of last year to about 15,200 or something now. So that was these new education standards cutting for a hard date on the 31st of December. So a lot of advisers that both didn't do the new education and didn't meet the 10-year experience pathway, they decided not to do them. I think a lot in the professional were worried about us falling off a cliff at the 31st of December. It ended up being a total reduction for the year of about 300 or 400, I think. So against a slight sort of contraction, whatever that works out to be about 2.5% or 3% is we've sort of grown a little bit in adviser numbers across that point in time. But again, our main focus is growing the profitability of the businesses in the group.

So you've got the potential also for the Merchant JV, and I'm not sure whether we touched on this to bring outside practices in as part of that kind of equation, if you like.

Yes. I'd say to you, if you were privy to the opportunities that we were looking at, at the moment for both Titan Advice Group, Select Advice Group and also the other hubs we're forming up. There's several that we're in discussions with at the moment that are presenting roll-up and acquisition opportunities within that framework that are outside the network. But that's a good win for us because it brings adviser numbers, it brings additional revenue, not just the shareholding and the dividend revenue when we do that.

And let's finish we're almost out of time. You kind of -- you're on the Board of the Financial Services Council. So you've got a seat at the table, a bit of an industry leader. Where do you think the industry is headed in terms of direction?

Look, I think it's a good -- that's a really good question. I'd say to you, both my peers on the product side of it, the funds management side and the investment management and superannuation side of it and also on the advice side, the big thematic for all of us in the industry and the profession is this transition from, I'd say, accumulation, which is superannuation has been driven by people in accumulation to now decumulation. We've really hit that market now where people are retiring now. Lile, retirees in the 20 years prior to this were early entrants, if you like, into the superannuation system. So they had initially what were we 3% contributions and then they grew and grew at 12% now. What we're starting to see now is the people coming through to retirement now are ones that have been in the super system for quite a period of time. And those same people, these are the baby -- these are the Gen Xs like me are heading towards retirement, same people are benefiting from this intergenerational wealth transfer from the baby boomers who are passing away. Whenever you hear about the intergenerational wealth transfers, people start thinking about money going to millennials who not before it goes through the Gen Xs. So we've got this confluence of people -- a huge number of people getting retirement. We've got to get good at not only teaching them how to grow it, how to spend it now. And so we're seeing from a product development perspective, what they're calling innovative retirement income solutions coming to the market that are really encouraging people to have the confidence to spend in retirement. And from an advice perspective, we need to get -- continually get better at advisers of giving people the confidence to spend. So they traditionally come to an adviser with the question of, am I going to be okay? That question in the last 20 or 30 years has been, am I going to be okay when I hit retirement? In other words, am I going to be able to build enough wealth? Now that we're getting to the point, yes, you're going to be okay. We need to encourage them how to structure their investments that they can spend and spend confidently, plus do what they want to do with transfer some of their kids and so on. So I think that thematic is driving both product policy, which is the FSC is big on, obviously, and also advice. And so that's the long answer to that short question.

Thanks for your time. That's all we have time for. Thank you once again.

Thanks, everyone.