Thank you for standing by, and welcome to the Iress Limited 2023 half-year results, financial results conference call. All participants are in a listen-only mode. There will be a presentation, followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Marcus Price, Iress CEO. Please go ahead. Well, thanks very much. It's a pleasure to address investors again and to present our first half results for the 2023 financial year. It's also my pleasure to introduce our new group CFO, Cameron Williamson. Before going into the details of our performance, I'd like to talk about my observations of where I see Iress, how the market's positioned, in particular experience of our, of the markets at this point in time, and, and particular and, and crucially, how we're progressing against our transformation program. I'll be referring quite frequently to our April 20 Investor Day, just to bring you back to what our, what our program is all about. Moving on. First of all, there's very much a new, I guess, era of leadership in Iress at this point in time, with a new CEO, myself, a new CFO, Cameron, only weeks old, but also the new CEOs who've appointed to the divisional heads, and that has been a significant piece of work. We've got very significant new eyes looking at this business and very much thinking about what the future holds for this company. We're not encumbered by the past, and we are really taking this business as we see it and taking it forwards into the future. Our focus is on renewing and improving customer experience and a real commitment to transparency, and you're gonna see that come through today, I think, certainly in Cameron's presentation and in mine. You might recall back to the Investor Day, we have six big jobs to do, and we'll be going through those in some detail, and they are largely on track. If anything, I've been emboldened by what we've been able to achieve in the first few weeks of that, but we certainly have an ambitious program ahead. Our strategy, in, in a nutshell, is to focus on the core businesses of Iress and build a much simpler, more transparent Iress to a Rule of 40 performance. Our view is still that the core businesses are capable of that level of performance and, in fact, almost at that level of performance today, but that the group is encumbered by a lot of parts of the group that are not performing. The transformation program is well underway, and we're doing this in a, in a measured way. We're not just, you know, doing everything at breakneck speed, although I have to say a lot's been achieved in a short time. We've achieved, a AUD 47 million annualized cost reduction, and we have further efficiencies to come, certainly in the 2024 year. The MFA business has been sold for AUD 52 million to SS&C. The platforms business sale is well advanced, and there'll be many in the market who are aware of that. We're already in market with NDAs, and people are, are well engaged on that process. We, in fact, expect that business to be sold in this calendar year. The first half results represent a point in time and, in a market cycle and in, in a challenging year. They're not really reflective of where we see the business at today, even on a run rate basis or what it can actually produce. In many respects, we're obviously a little bit disappointed with the results. We don't think they're reflective of Iress's long-term earning potential. We'll go, go into them now, though, just quickly. The reported revenue is up 2% year-on-year, up to AUD 315.3 million, although we have underlying EBITDA margin decline, down to AUD 59.5 million. That is largely driven by cost pressures, and we'll, we'll talk a lot about cost pressure on this business in the course of this presentation. Underlying NPAT is down 31% to AUD 24.4 million, and of course, this has driven underlying earnings per share down 29% to AUD 13.4 million. Reported EBITDA and margin down 55% to AUD 29.4 million. The reported NPAT is obviously at a loss of AUD 139.8 million, largely driven by the revaluing of the assets and the impairments that we announced in the April 20 Investor Day. Cameron's gonna take you through those in a lot more detail and give you a much more flavor of what those cost pressures are that's driving that level of performance, and we'll, we'll take that into the next section. The half year OpEx is up 8% and is a very significant step-up in third-party technology, technology costs, up 15%. That's been driven by input costs, people charging us more for our software and our infrastructure. Our base staff costs in this first half are rising as an inflationary environment, we're up 3%. As you might have noted earlier, this cost-out has occurred, but of course, that cost-out hasn't really taken effect yet. That was from April 20 when that started happening, and it's only just concluded it's, at this point in time. What we're really saying is we haven't really seen the effect of transformation in these 2023 results. The price increases on the revenue side have been offset by a quite a subdued market. Our overall churn remains low, but customers are operating in a challenging environment and seeking to reduce costs. I think there's quite a lot of signposts to this. For example, our core Xplan licenses are actually up 4.2%, so that's the number of people with a core Xplan installation, but they've actually sort of rationalized their use of ancillary modules, and they're down 8.7%, and I think that's reflective of cost pressure, and I think it's cyclical and not structural. We are seeing cost pressures operating on all of our customers. They're reporting the same input cost pressures that we're reporting and are obviously responding accordingly. You can see the same thing again in the markets and trading business, where we have trading volumes down 38% year-on-year. Obviously, a consolidation in the broking sector, which is affecting that particular segment. That is driven by, you know, a shortage of IPOs, of course, and that's affecting, well, I'm sure it's no secret to anyone on this call, affecting the entire market. That, again, is cyclical, not structural, and we see those levels of performance, you know, ameliorating and getting better into 2024. In terms of the strategy update, we're, we're pretty pleased by what we've been able to achieve in transformation, even up until this point in August. We set up a transformation office, and obviously, when you're trying to change a company the size of ours, the complexity of ours, it's not a small task. Setting up a transformation office is quite critical. We're setting it up with execution rigor and discipline. We have third-party partner in there to actually keep, keep that on track, and execution is underway. That transformation program lasts until the end of 2024, and you'll see later on, we're very focused on the exit 2024 run rate as the end state of that transformation. But even now, in these early days, we've been able to achieve an awful lot, I think. In terms of structuring for accountability to performance, one of the things, one of our number one big jobs, we've been able to appoint an entirely new leadership team, and those leadership teams, you remember, are sitting on top of business units focused on customers and products. We're doing that in trading and market, in advice, superannuation, and in what we call the managed portfolio or the private equity portion of the portfolio. We've been able to transition 2,000 people to the new product-led structure, with that new leadership in place, and now each of those leaders will have P&L ownership. I think the 2023 priorities, the remaining half, is really about delivering those new company metrics and to start getting rubber on the road with that new structure and start to get some performance in the marketplace. It's obviously been a transitional time. It's structurally challenging to move that many people and to get performance to come through, but we're pretty confident with the green shoots we're seeing even now that that's gonna be very successful. In terms of the resets on costs and assets, obviously, the cost-out exercise, we've been able to achieve AUD 47 million in annualized cost reduction from the business. The full year effect of which will really only be felt in 2024, of course. These numbers don't have a very marginal impact on the first half of 2023 results, but that represents a 15% group headcount reduction. We don't think the cost story is done yet. There are further cost efficiency measures that we can put in place, and indeed, we've got ambitious targets on cost and efficiency. We are looking to produce a much leaner business, which is more efficient and can focus on delivering better results. We're also gonna be re-resetting the capital management plan, and Cameron will take you through that in a little while as to what we, what we intend there. That's the reset part. The refocusing is really about focusing on our, on our core markets, particularly the Australian markets. We've got 54 growth initiatives underway to improve technology and customer experience. We've got new client wins in superannuation. Indeed, that part of the business did grow quite considerably, by 20% in the first, in the first half of 2023. We also have further new client wins with Spirit Super and CareSuper as a merged entity. The Xplan Affinity project, we're still working on that one. It really, we just want to get the go-to-market sorted out for that because we think that actually is part of our pricing review, which was driving a lot of our value in the second half as well. That industry connectivity initiative, though, is ongoing. The business units are really going forwards, all about executing growth plans and delivering on new products and delivering customer experience. As I said, we're gonna get rubber on the road. I think we'll start to see that in the second half of 2023. In terms of managing our portfolio for, for value, that really is about trying to work out which parts of the business are performing well and which we wanna keep the core businesses and those which we wanna restructure or take a private equity lens to, if you will. The first part of that has already occurred with the MFA business being sold for AUD 52 million to SS&C. We're very delighted with that transaction for our customers and for ourselves. We think it's a, a great new home for that business. Platforms are also in active sales process. We've got a large number of parties already engaged in that process. Some of you will already know that. Yeah, we expect that business to be able to be realized in this half, the remaining of the calendar 2023. Work has commenced to separate out the U.K., South African, and Canadian businesses, and we're, in particular, working with the leadership teams there to focus on that. It's very much about taking a private equity lens and empowering the local teams in each of those markets to see what can be achieved. We have. That's quite a tough process. Some of these businesses have been in the group for quite a long time, and that disentanglement process takes a little bit of time. We've got to get that right. We want to understand the full potential of those businesses and think about what is the best future for them. You'll see, in the second half of 2023, a continuation of the separation of that portfolio. Obviously, the MFA divestment will be concluded, and we will be able to conclude the platforms business in the second half as well. In terms of our building programs, we want to finalize our technology uplift program, which is really about platform architecture and the cloud optimization programs that have been going for a number of years in here. That program will conclude by the first quarter of 2024, and we believe will deliver quite significant value to customers in the trading and advice businesses. In particular, I think some of our customers and some of the people on this call probably will have already experienced some of the IOS uplift. There's a lot more to come on that in the second half of this year. The Xplan uplift is going well as well. We will be people who have seen that and experienced it. You, you're probably just seeing what I would regard as the beginnings of that at this point in time. We are delivering the Iress FIX Hub in the second half of this year, which we think is quite a significant product as well. Again, that focus on core products, core markets, customer experience is, is really where we're at, and that is going well and is on track. In terms of the innovation and build programs, this is really building the next generation of growth vectors for Iress. Iress Ventures has been established. We're doing quite a bit of work in our in our markets in both Australia and overseas, in particular in Asia. We have 14 new product and market extensions to come in the second half of this year, and we're looking to embed really the innovation principles across the business units. In focusing on our core businesses, we're also focusing on innovation and working with customers to produce new value-adding services for them. And again, I think our customers may have already started to experience some of that, but you're gonna see a lot more in the second half and going forwards into 2024. Right, onto the next slide. I'd like to introduce Cameron Williamson, who's gonna take you through our financial results. Cameron, we're delighted to have Cameron join. He's a very experienced CFO. Some of you will know him from previous lives as well, with 25 years experience leading financial operations in Australia and around the world. He was the CFO, of course, at Pendal Group from 2009 to 2023. Prior to this, served as been in financial services for his entire career, I think, Cameron. I'm delighted to have Cameron here. His fresh eyes, fresh perspectives, it really is part of the new team at Iress. He has a commitment, as we all do, to transparency and clarity, and you'll see, I think, even in this presentation, a commitment to that. I'm delighted to introduce Cameron, and over to you for the results. Thank you, Marcus. Nice to be here today, presenting results with you. What is a, a transformational period for the business in terms of, what's, what's, what's being done. Notwithstanding, there are some challenging conditions out there that we're finding ourselves in today. Just take you through the results. Just in terms of the underlying result, we are looking at underlying EPS of 29%. That's down 29% on underlying EPS, rather, of AUD 0.134 per share, down 29% on the same period last year, and that's on the back of cost pressures that I'll take you through. At the revenue level, we are seeing below-trend revenue growth. Revenue for the first half of AUD 315 million, up 2%. That growth largely coming out of the APAC region, which was up 5%, and mortgages up 9%. That's been offset by some detraction in revenue with the U.K. business and also South Africa, which has been hit by some, some currency effects, with a detraction there, largely FX driven. From an OpEx perspective, we are looking at operating expenses up 8%. Notably impacted by higher input costs across the, across the chain. Increased tech infrastructure costs, market data and fees also up, and inflationary staff costs driving that part of our business, and cost pressures sort of flowing through to that. What that means is we've, overall underlying EBITDA, AUD 59.5 million for the half is 17% down on the same period of where we were 12 months ago, and a contraction in our overall margin. Underlying EBITDA margin, 4 percentage points, down to 19%. Now, this is all before the cost-out initiatives that have been recently enacted. They are really taking effect from June through to September, where AUD 47 million in, in annualized costs have been removed from the business. We have got, have got a small benefit in the first half of AUD 1.9 million flowing through to the bottom line, from the first half, and that's largely through the, through activity in June. An additional AUD 17.3 million that will come through in the second half of this year, with the full benefit of that cost-out program really coming through in 2024. That will be in the full year, full exit run rate for 2023. Just turning to the next slide on the transformation investment. This is a table that effectively takes, takes you through our underlying EBITDA, headline level down to our reported result. Our reported result, clearly, that goes through the financial report and the audit process. Underlying EBITDA, 59.5, as I said, is down 17%, you know, half- on- half. The big, the big area of focus is around those non-recurring items and very transparent around where that's being spent. These are significantly as a result of the transformation and technology uplift costs that we've incurred in the first half and a notable uplift on last year. The three main areas captured in this bucket, AUD 13.4 million was incurred as part of the technology uplift in core trading and advice software, which included the cloud migration. We still have further activity to go in this regard, much of which is targeted for completion in Q1 of next year. An additional AUD 7.6 million that was incurred as part of the broader transformation program, including the establishment of a transformation office and the engagement of some specialists to help with execution, and that is, that is taking place over the course of the back end of this year and into 2024, when that program will come to completion. AUD 5.3 million in redundancy costs and effectively a cost to achieve in getting the AUD 47 million cost-out, as Marcus has already alluded to. Other key areas, as part of the reported result include the write-down in intangible assets of AUD 142.9 million in terms of the impairment there. A touch over AUD 130 million of that was in relation to our U.K. assets, where we've taken a charge against the goodwill there, and that was flagged at the April Investor Day. AUD 12 million in software development write-downs as projects are discontinued. No longer considered core as part of the group's strategy and part of the transformation program underway, where we're just stopping doing things that we don't believe are gonna be core to the group going forward. I will just flag also, net financing costs have doubled. They're up to AUD 10.3 million. That's as, as a result of an increase in interest rates, which you'd all be aware of, and our overall net debt levels, which has also increased year-on-year. Just turning to the costs bridge. First half operating costs up 8% to AUD 245.6 million. We have had an AUD 8 million increase in our cost of sales, about half of which was due to an increase in the technology platform, including cloud architecture, also market and data fees, also, you know, significant pressures there in our supply chain, feeding into that. AUD 3.9 million in regards to platform interest charges, and that's on the back of higher interest rates. Now, we do pick up that in revenue as well, so, where we do take a clip along the way. Employee costs, AUD 7 million higher than they were same period last year. On an average basis, you can see headcount is 4% higher than the same period last year. That's AUD 3.6 million and AUD 3.4 million increase in contract staff, supporting product initiatives. Both of these remain an area of focus for the business as we look to provide further efficiencies going forward. It is before the cost-out program, as I said, AUD 47 million overall cost-out in the last, you know, the last period, only of which 1.9 fed into this first half result. That should all be completed by end of September. The non-wage OpEx, we have had an increase in costs associated with these costs. AUD 3.6 million of that is in regards to higher software and licensing charges, and another AUD 1 million increase in travel-related spend as things started to normalize in a post-COVID world, all of which has contributed to an overall increase in our, in our OpEx for the first half. Just turning to the cash flow and the balance sheet. You will see there that free cash flow in the business has seen a decline of about 50%, half- on- half. I'll take you through the, you know, the key areas of that. The big area where we have seen is around our transformation and technology uplift costs, where you can see AUD 7.3 million in first half of last year, up to AUD 30.6 million this year, notably up on the same period of last year. Largely due to the, the, the costs I've just alluded to in terms of all the work that's going on in terms of the replatforming of the business. On the balance sheet, you will see overall net debt, net debt levels, approximately AUD 50 million higher than where we were six months ago. The leverage ratio is up to 2.8x. That's the leverage ratio, you know, as defined in our banking covenants, and overall debt-to-equity ratio is also increased. All of this is obviously putting a some, a level of pressure on the balance sheet. We are taking steps to address this. As we look to reduce debt, we will be using the proceeds from the MFA sale to reduce our overall gearing, and there's more to come in that regard, particularly with the platform sale, towards the, the back end of this year as well. From a liquidity perspective, no real change. A lot of our debt is, is longer dated, so no, no issues there, but there is an element of conservatism that's being applied. As a result of all of that, we are pausing on the dividend at this point in time. Just turning to the capital management plan. As we see it, you will see there that the overall free cash flow has been declining the last three years, particularly this year on the back of transformation and technology uplift spend. At the same time, the dividend has remained static at AUD 0.46 per share. That costs approximately... Well, it doesn't cost, it, it actually is a distribution of AUD 84 million-AUD 88 million per year back to shareholders. Since FY 2021, effectively, we have been paying out more, more in dividends from free cash flow than free cash flow generates. That's clearly unsustainable going forward. You will, at the same time, have seen net debt increase steadily over this time, up to AUD 375. That will come, come down with the MFA proceeds. What that means at the moment is we are reviewing the capital management plan. I will be having a, a very, very much a closer look at this and redefining a capital management plan with the board and come back in six months' time with what that looks like. As part of that, we'll be looking to address the business's underlying earnings and methodology around disclosure, a revised dividend policy, the target debt levels and acceptable leverage in the business that we're, we're comfortable with, as part of our R&D investment capital as well, and what we put back into the business to provide for, for future growth and shareholder returns and what forms that may take. All of which will form part of a plan that we'll, we will share with you in, in six months' time. As a result of that, the, the interim dividend is being paused and suspended, pending finalization of this plan, with the overall debt levels of target to get down, in the short term with these asset sales. With that, I'll just hand it back to Marcus, who will take you through the rest of the, the presentation. Thanks, Cameron. In terms of the outlook, the 2023 guidance, we, we do think it's prudent to consider the, the revenue outlook will continue to be soft. The cost pressures do continue in the second half, of course, they'll be starting to be mitigated by the full year effect of those cost measures coming into, coming in, into the, into the results. The transformation initiatives that we're working on are yet to be realized. When you balance it all out, we end up with guidance, sort of lowering expectations with a, a broadly flat second half. In other words, we expect the second half to be very similar to the first half in terms of performance. We are suspending the interim dividend, pending a refresh of our capital management plan. We intend to present that later this year or into early next year. I would say, though, that we are focused. This is very much a point in time. We have very strong ambitions for this business and believe it can perform at a much higher level than is currently evidenced by the results. By the end of 2024, we believe the transformation program will be completed and our revenue and cost initiatives will have been well and truly done and dusted. We are being supported by specialist consultants in this. We do see an underlying EBITDA growth of 5%-10% and an FY 2024 underlying EBITDA exit rate of 20— which is 20%-30% higher than 2023's or, sorry, the FY 2023 result. The objective really, though, is to create a much leaner and more efficient Iress, and a much simpler Iress, which will also be transparent and easily, I guess, evaluated by everyone. We believe there are core Iress's businesses operating at the Rule of 40 at the moment. We believe we can certainly do it in a sustainable way going forwards. We believe there's a capital release, possibilities from the managed portfolio. You've seen that already. We're only at the beginning of that process. We see more of that. We do see a full rebasing of costs, a rethink of how costs operate in this business, and we think that's gonna be an ongoing process through 2023 and 2024. That will drive significant debt reductions. We see a leaner Iress with much less debt, more efficient, and, I guess, a much more transparent and accountable in terms of its structure. We've been emboldened by what we've been able to achieve so far, even at the early stages of this transformation projec— program. I guess it's, you know, we, we obviously are disappointed in the first half results, but we believe they're not reflective of our potential, and we believe they reflect just the point in time that we're in. We've got very ambitious customer-centric plans and execution, you know, I guess, mechanisms to drive that. We are very focused on our exit run rates in 2023 and 2024. We're emboldened by what we've achieved. Where we're headed, we're laser-focused on our 2023 and 2024 exit run rates. That's the metrics that we're using to drive this business. We've aligned our remuneration structures around that, and there'll be more on remuneration structures another time, but they're really around driving performances, which are directly aligned to the performance of the business and a Rule of 40 outcome. We also have customer metrics in our remuneration as well, to make sure that customer experience is front and center in what we do. We intend to provide, in that spirit of transparency, further updates. We'll provide an investor update in the second half of 2022, in and around November, when we have a little bit more visibility on how our progress is going. We intend to provide another Investor Day in 2024 as well, to keep you fully apprised. That will be a full, a full presentation on what we see going forwards in 2024 and 2025. In summary, thank you for your time. We are, as I said, it's a point in time, these results. We are emboldened by what we've achieved. We're very confident in this business going forwards and think there's a lot to come. Disappointed, obviously, in this round of results in the first half, but believe there's a lot more positives ahead of us in this business. Thank you. I think we're open for questions now. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Bob Chen with JP Morgan. Please go ahead. Morning, guys. Just a few questions from me. Just firstly on guidance, for 2024, I think you're looking at underlying EBITDA growth of 5%-10%. Does that include the AUD 47 million full run rate and cost savings? Yeah. Hi, Bob. Yeah, it's Cameron here. It, it does. Yeah, I mean, look, part of the AUD 47 million is, is offsetting... Significant part of it is offsetting the inflationary pressures that we've got in, in, in 2023. In many respects, also offsetting some of the growth that came into the cost base at the back end of 2022, that really wasn't reflected or hasn't been reflected in this year's numbers. Not all of it is, is straight off the, the, the bottom line. It's, yeah, it's all captured in, in that guidance. Okay. I mean, it just seems like, given you've pedalled really hard to take costs out of the business, it seems like all that hard work's being offset by those inflationary pressures. Like, how do you sort of think about those inflationary pressures more longer term? I think that's a fair point. I, I have to say, it feels like that too, sometimes. We are certainly taking out costs that are both above and below the line. That also has an effect on this, in that some of those costs are probably not affecting underlying EBITDA so much. I, I think the cost pressures are certainly gonna be... it has been a reset in cost pressures. I don't think they're gonna continue on at that trajectory, so I think they will moderate. I think there's a lot of work we can do on those costs as well, which we haven't really got to yet. In our second half, we certainly have a, a very clear focus on those. Also, I wouldn't underestimate the fact that there's, there's more cost to come out of the business yet. We see efficiency both for non-wage OpEx and, and, you know, even within our structures, to be able to deliver a much more efficient Iress going forwards. We're not done on our cost work yet. I think, yeah, we've got a bit of work to do on the supplier side, but we also have work to do on efficiency internally. Okay, just that additional cost-out, is that being captured by that exit run rate you're talking about, that +20%, +30% on FY 2023 run rate? Well, there is, there is some cost-out factored in there, yeah. You know, we, we believe there's got a lot more that can be achieved there, yeah. We're being conservative in what our view of that at this point in time. Yeah, it has been captured. Okay, great. Then just the final one. Yeah, obviously sold the MFA part of the OneVue business. Can, can you just break down what contribution is left from the platform business that, that will still be still retained? Contribution? What do you mean by that, sorry? I mean [crosstalk] Well, like, what is the revenue and? Obviously [crosstalk] e xpectations. We're in a sale process, so. No, just as in, in terms of sort of revenue or segment contribution of the platform business, just so we can sort of, you know, sort of ballpark estimate how, how much you could potentially sell that platform business for. Oh, yeah. No, I don't want to speculate on that at this stage, because we are literally in a sales process. We've got, I think, 14 interested parties or something on that. It really is, it would be commercially not something we should do. Look, we've got. We, we believe there's some good, there's certainly significant. That's about all I'd like to say about it. Okay. Thanks, guys. Your next question comes from Nick McGarrigle with Barrenjoey. Please go ahead. Good day. Just a question around revenue run rate. I guess you've had, I think some Xplan users maybe reduce modules in order to mitigate some of their costs within their practices. Should we think that part of the paring back of the FY 2023 guidance is both revenue run rate reduction and cost stepping up? Absolutely. That's exactly what it is. Yeah, it is exactly what it is. We've got essentially a, you know, we, we did have, and we often get, what I would call a cyclical uplift in revenue in the second half. We've seen it many, many years, all the reports from our commercial teams are they don't expect that this year. We've got a very flat expectation on revenue, in the second half baked into this guidance. Yeah, so we're actually, we actually are on track in terms of the expectations that we were expecting for FY 2023 revenue. As we said, we are expecting a softening in the second half, and that's what's driving that guidance. Yeah, I assume that some of the cost increases that you've experienced in the June half year will be annualizing. You know, that they occurred partway through, so you're annualizing that increase in costs again into the second half and y ou don't get the full annualized benefit of those, of the, the cost cuts that you've enacted until next year and into the following year. We get about AUD 17 million of the effect of that cost-out this half, but the full effect isn't until next half. You're absolutely right about the costs. Just, in terms of Super, I guess it looks like there was a reasonable step up there in the non-recurring. Is that just related to CSC? Is there, is there part of the direct cost, in, in the wealth or the wealth segment, as you reported as a whole, attached to the non-recurring costs related to Super? The cost? Yeah, no, the Super business is more than one contract in there. There's been quite a lot of client uplift there. It's not just one, but a numerous wins. The superannuation business continues to grow pretty strongly. There's, there's a decent pipeline there as well. Again, we're pretty pleased with the superannuation business. I didn't quite follow the bit about the Xplan bit there. If you want to just repeat that question, sorry. Oh, no, that was... It was more about Super, I guess. The, is part of that cost uplift related to engagement in, in project-specific work within super, or is it, you know, is that not a, an individually, you know, reasonable item to, if that's driven costs up? No, no, it, it hasn't driven... No, it, it's its own business. There's, it's a slightly different business in superannuation, where you do get increases in revenues, and they're, they're billable charges, unlike the rest of the business, which is driven by licenses. You do have a somewhat different characteristic in the superannuation business. You do see, you know, a margin on, you know, when we're doing installations, for example, we charge, you know, you have a margin on, on, on labor. When you're putting on a new fund, you do get an uplift in revenue, but of course, you get an uplift in cost. Now, we make a, we obviously make a margin on that, but our real focus on superannuation is building an annuity style business over time. You to kind of, particularly at the moment in superannuation, there's quite, there's a lot of lumpy stuff going on. There's a lot of fund mergers going on, which generates work for us, which is profitable. What we're really looking for is the annualized or the annuity rates, if you like, that we get from the license fees ongoing. You know, that can be a 10-year or longer, revenue stream. Yeah. Okay, thanks for clarifying that. Maybe just another last question on the MFA and platform sales. Should we expect the, the net impact of the sale of both of those businesses combined, which you hopefully you execute by December this year, that that's a, an increase in EBITDA net because those two businesses combined were losing EBITDA? Yeah, I, I, I wouldn't say you'll see a notable increase in the bottom line. Conversely, I don't think you'll see a notable decrease either. I think they're quite marginal. They're quite marginal businesses, so there's not going to be any. It'll be negligible EBITDA impact of those two businesses being, being disposed of. Yeah. I'm not sure if you've, you haven't disclosed it, I think, for a while, but I might as well ask. The current funds under administration within the platform business, you haven't, Can you give us a sense of what that stands at? Oh, sorry. Again, you want to know, what, what was the question? Could you repeat the question, please? Sorry. Funds under admin within the platform? Oh, that. Yeah, yeah, yeah. That, again, that's part of the sales process. It's in all the sales documentation, so we don't, we don't wanna, we don't wanna be drawn too much on that because we've got an active process. We've got a very large number of parties involved in that, so yeah. We'd expect the people who are operating platform businesses, well, they already are deeply engaged in that process. There's obviously, it's a fund-based business, and they will be bidding on that basis. Thank you. Your next question comes from Olivier Coulon with E&P Financial Group. Please go ahead. Oh, hi, guys. Just on MFA, just to clarify, that definitely didn't get reported as a discontinued operation, correct? No. It was only sold over the weekend. Yeah, literally concluded over the weekend. Yeah. Yeah. No, that's fine. I, I think I had understood it used to make about AUD 4 or so of segment profit and obviously quite a bit less of that, you know, the EBITDA once you factored in D&A. Is that kind of roughly ballpark, correct? Not really. It probably it may well have been at one point, but we. It ended up being break even or even loss-making at some points because of the additional resources that had to be applied to it. It's pretty neu- It's pretty neutral in terms of EBITDA [crosstalk] group level. Yeah. Then just on the guidance, I know that you've run through some of the factors. I'm still a little bit surprised at the extent of the, you know, guidance reduction in the second half, 'cause typically you have a reduction in your staff costs driven by annual leave timing. Then, you know, to your point, you've obviously, you know, usually get an uplift in your cyclical revenue. It sounds like you've excluded the uplift in your cyclical revenue. Have you assumed that, you know, that typical seasonality of annual leave kind of occurs again or haven't? It seems like a very large move, you know, considering that you updated in April. I would have thought most of the underlying cost increases were kind of understood at that point. Most of the underlying cost increases were understood. I think that's, that's a fair call. In fact, we're on track in guidance as at July. What we're hearing, and there's been quite a dramatic and significant, you know, I guess, headwind, if you like, coming from the market and coming from our commercial teams that are just reporting our customer base, particularly in advice, are, are really tightening up, and they have lower, much lower expectations than we've seen previously in regard to the second half of this year. A, a large part of that guidance has been just a flatlining, if you like, of revenue in the second half, as opposed to, as you've said, we often do get a cyclical uplift in the second half. We are basically not expecting to see that this year. Just on the cost, though, [crosstalk] with, with the annual leave, right? Which is baked into this guidance number. What you, what you're not seeing is some of these run rate headcount that came into the business back end of 2022, right? Quite material. It's probably somewhere between AUD 11 million-AUD 12 million in the, in the overall cost base that came in through that. That's part of the, part of the mix of the AUD 47 million coming out. We've also got some inflationary staff costs that are also baked into the second half that weren't in the first half. Thirdly, we are moving and shifting our remuneration framework to more of an STI based reward structure, which has got a cash element. There's an element of all of those that's baked into our guidance numbers, and all of it's moving at the same time as we're doing the cost-out. You put it all together, there is definitely a, a staff reduction in the second half and even a bigger one as we head into the run rate 2024. It's also being offset by these other moving factors, which I've just mentioned. Yeah. I, I suppose, I, I guess the question I have is: Weren't most of those factors, apart from over the STI, LTI, you know, change in remuneration structure, kind of understood in April? I think some were, but the full effect of it is, is sort of being felt now. There's a few things. I think the softening market was a big change between April and now, no doubt about it. That's the biggest single change. Cost-wise, I think there's been. We had, we had projected cost increases, even those were probably a little underdone, frankly. We didn't have full visibility of all of those things. There's a couple of things that have happened since then. We've responded, of course, by, as you, as you can see, taking a, a tougher line on the cost-out. We had initially anticipated AUD 32 million, and we've actually executed on AUD 47 million, which is giving you some reflection of that. Yeah, I think there's a couple of things that have shifted around since, since April. In particular, the market sentiment probably is the largest one, though. That's the largest single effect in the guidance. Yeah. Okay. So did you see, I might have missed it, apologies if I did, a guidance for non-recurring expenses in the second half? Is there a view on that? Yeah, on the transformation line, it's gonna be pretty similar to the first half. The big, the big lift in the transformation spend is this year, right? It started in the first half. We do have some technology uplift costs that were in, in the first half as well. They will start to decline as we head into. They will complete by first half 2024. In terms of non-recurring element of our, of our, of that line that we've disclosed in our EBITDA rec, it'll be a similar level to first half, second half, with the transformation ramp-up, that is. We've got 54 initiatives that are in play at the moment. A lot of things going on, both at the cost level and the revenue level. That will continue for the back end of this year. Okay, any, it sounds like your technology spend, you know, kind of tailing off as you complete that program in the first quarter of 2024. Is there a view that that transformation spend now on cost-out initiatives continues into 2024? Yeah, the transformation cost will You know, in terms of the, those charges, we see transformation costs going through to the end of 2024. And the program does conclude at December 2024, and the focus is on the exit run rate of 2024 as the key milestone of that transformation program. Yeah, probably not t he level that we've seen this year. Right? It is, it definitely moderates. There's big lift first half, second half, and then you'll see a drop off in the first half of next year and even bigger drop off second half. Okay, thanks. Appreciate it, guys. The next question comes from Brendan Carrig with Macquarie. Please go ahead. Good morning, Marcus and Cameron. Just on the additional cost-out, are you able to just provide a bit more color as to where that sort of AUD 15 million uplift versus April came from? I'm just trying to get a bit of a sense on, you know, are revenues sort of gonna be at risk a little bit in terms of the medium term? And is your hand being a little bit forced with the other sort of operating condition environments, sort of forcing you to go a bit more aggressively on the cost than maybe you would like? Not really. I think, first of all, it was, it was headcount. We think there's... When you look at the size of the cost this business carries, it's just high. We think there's a more efficient model and more efficiency available throughout the business. Frankly, we looked at it and thought it was, it, it doesn't have a revenue effect. We've got very high recurring revenues at 92%. The, the costs are not directly connected to revenue in this business. There's a quite a difference once a license-based revenue model. We're looking at better and smarter ways of actually delivering our services to customers. We are restructure-- We've spent a lot of money on cloud transformation as well, which is also driving some efficiency. You know, it's, it's more about just what the business is, what does an efficient and lean Iress look like? I think, there's a probably business, I guess, to be fair, to say, a process of successive approximation as we get closer to that. You know, you look at what we've restructured the business. We haven't really looked at each individual business unit yet and what's the most efficient model for each of those individual businesses. The CEOs have got a P&L accountability for that and will be remunerated to produce the most efficient outcome they can. Yeah, I think, it's a new lens and a new look at the business and what the, what the true cost base ought to be. Okay, that's, that's helpful. Then just I think putting together your commentary, just around the sale of MFA and pending sale of platforms. Based on the combined EBITDA contributions, it sounds like it's fair to say that this will reduce the leverage ratio, just given the limited EBITDA contribution from both of those businesses on a combined basis. Is that a, a fair comment to make? Yep, that's a fair comment to make. Just my final question, to make sure I'm reading it properly, it is just on that FY 2024 outlook comment. Is the way to read it that EBITDA is gonna be up, you know, 20%-30% in FY 2024 versus FY 2023, and then the growth in FY 2025 and beyond? At the end of FY 2024, the underlying EBITDA growth of 5%-10% is expected or am I misinterpreting that? Yeah, Brendan, the, yeah, the FY 2024 number is more 5%-10% on FY 2023. We're trying to get people to focus on the exit rate because there's a lot of activity going on transformation-wise, both cost and revenue, as we head through 2024. The exit rate of FY 2024 is actually quite important to going forward. What we're guiding on is 20%-30% uplift on that exit rate with FY 2025 numbers is gonna be considerably north of that as well. Right? We're just not trying to get too far ahead. [crosstalk] Is an important date for us as we execute through this, through this plan. Yeah. Okay. FY, I've flipped it around the wrong way then. That means the FY 2025 underlying EBITDA essentially is 20%-30% higher than FY 2023 based on that exit rate. No, exit rate. Exit rate. FY 2025 is gonna be higher again. Understood. Okay. Yeah. Yep, that's clear. I get that. Yeah. Okay. Thank you. Okay. The next question comes from Scott Hudson with MST. Please go ahead. Yeah, morning, gentlemen. Just one quick question. Can you just, is the guidance constant currency based? Can you give us a sense of what FX assumptions are baked into your second half 2023 and FY 2024 guidance? Yeah, they're, they're down on current currency levels where they sit today. There's no, there's no forecasting of where the Australian dollar is going based on these numbers. That's a, I guess, a currency headwind then to the second half of the financial year? Yeah. Yes. Appreciate it. Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Nick McGarrigle with Barrenjoey. Please go ahead. Hey, sorry, just a couple of follow-ups. You've obviously suspended the dividend for the half year. Is there an intention to reassess that at the full year, or is it you'd expect that you'll take a pause on dividends as you de-gear? We, we wanna get that... The dividend policy is gonna be informed by the capital management program, Nick. We want to understand the underlying earning potential of the business, after we've done our cost-outs and done all, looked, had a better look at revenue in the second half of this year. We have been, yeah, we're, the view, we need to make sure we're actually paying a maintainable dividend, which is coming out of cash flow. Cameron's, one of Cameron's big jobs is to actually sort that out, and we'll be, we'll be quite transparent about that policy. We'll tell you exactly what it is our intention is, how we intend to manage capital, what we intend to do with debt, as we go through 2024, and exactly what we expect dividend-wise. We don't wanna make any announcements about that, but we are obviously intending to have a maintainable dividend policy going forwards based on earnings. Yeah. Okay, I guess that'll obviously need more earnings base as opposed to divestment of the managed portfolio. It's more about just being prudentially, I think, conservative at this point in time, given the number of moving parts that are going, going around this business, including asset sales and other things, some of which we don't have entire control over, of course. You know, we actually need to just pause and, you know, regather, reappraise what is the earning potential of this business and how, how can it support a dividend and what level of dividend going forwards? That's, that's really all it's about. [crosstalk] We are going through an orderly divestment program, right? At the end of the day, we wanna make sure that the process that sits behind the deleveraging of the business is actually quite, laid out, very clear around where we're going and over what time period, so that you're all, you can price, I guess, the, the state of the balance sheet in, as it transitions over the coming years. Yeah. Okay. I guess the... I just had another question around the guidance, which obviously is a focus for everyone, for the next couple of years. In, in terms of the, you mentioned that you were on track for guidance in July, so it obviously implies a reasonably sharp revenue downturn, for the second half. What, what's your sort of revenue? Yeah, it's not a revenue downturn, Nick. It's actually a flatlining. We just, we normally see a, an uplift in the second half with licenses particularly, more activity in the second half of the year. It's just we're not getting that feedback from the commercial teams right now, so we're just, again, taking maybe it's a conservative view, but, you know, we're seeing a very negative sentiment coming from our customer segments and our commercial teams, and, it's hard to see, from a guidance perspective, being, being, again, conservative, making sure we don't factor in growth that we can't, that our sales teams aren't reporting at the moment. It's not so much about declining revenue, it's actually flatlining. We're just expecting a fairly flat second half. Flat revenue half-on-half and flat spend half-on-half. The, the revenue that we're seeing is still below our expectations. You know, it is trending at the moment below. We've got some cushioning on the cost side. There's some seasonality in that, so we're just working through that at this point in time. Certainly revenue trend is not, not where we were three or four months ago. Yeah. There's been quite a dramatic shift in sentiment in the market in three months, I can tell you. Obviously, it's the effect of interest rates biting and so other costs, other input costs affecting our customers, and the fact that their markets themselves are down. As a trading market, down 38%, I mean, that's a pretty significant downturn, I would think. Yeah. I mean, obviously, trading volumes have picked up into the first couple of months of this half year, but that, you haven't sort of seen early signs of that supporting any better, a stronger view? Yeah, not at this stage. We're just, we're just being, again, we're, we're staying flat for the second half. That's all. Yeah. Just as an extension to that, I guess the, in the guidance that you've got for 2024 and 2025, what's the implicit revenue, growth assumption embedded in that, in that 2024, in the exit rate 2024 assumptions? Again, what we've done there, we've got a fairly flattish view of the current market, but what we've got is a whole bunch of revenue initiatives, is what we call them. We talked about those 54 initiatives in the core business, which drive significant revenue growth over and above what, what would be, what would be trend. The revenue figures we've got going out are really based on those transformation initiatives starting to drive a better performance in the market, including being more customer-focused, bringing things to market, pricing, a real root and branch look at pricing and how it's actually done in Iress as well. I think we've got a real opportunity there. What we're trying to do is really, to give you just a flavor of it, just to diverge for a second, I suppose. We've got to make sure our revenues line up better with customer value propositions. We've got to think about how customers generate value from products and how we, we line up with that. At the moment, we're sort of per seat type billing. Now that we're in cloud, we can do things much differently, and we can actually think differently about how customers use our products and how they experience them. So we are looking at a full review of how we partner with our customers in terms of when they get value and when they, when we get, when we support that and get paid ourselves. So it's quite a significant program. I, I wouldn't like to say it's just a matter of, you know, so we're not talking about increasing prices per se, we're actually matching pricing to customer value, and that's the work of 2024. Okay. All right, thank you. The next question comes from Cameron Halkett with Wilsons Advisory. Please go ahead. Hi, Marcus. Cameron. One quick one from me. Just reflecting back to the April update versus the published guidance today, is the AUD 24 million net interest expense still expected? Just reflecting on the rate moves over the last six months and the degree of debt that's fixed in Iress today. Thanks. I haven't got those numbers in front of me, so I'm gonna, might have to circle back with you. Given we had AUD 10 million in the first half and the fact that our net debt is slightly higher, I'd expect a higher net interest for the second half, so it's probably not too far out, albeit the proceeds for MFA will delever some of that. We will be looking, that, that, that transaction is looking to complete towards the back end of the September quarter, probably early October. There might be a little bit of shaving off that AUD 24 million number, but it certainly feels from where I sit, it's, it's in that ballpark. That has been factored in, though. Yeah, it's absolutely factored in. Yeah. Yeah, no problem. Makes sense. Thanks, guys. Your next question comes from Bob Chen with JP Morgan. Please go ahead. Hey, guys, just a quick follow-up. I think, yeah, I think you mentioned, for Xplan, the core licenses were up 4%, but then ancillary modules fell off a fair bit. Can you talk a little bit about, you know, what sort of modules fell off, and was it due to competition, or was it just a reflection of the market environment? No, it's not competition. It's just sort of add-on modules, things that are, you know, we, in terms of expanding the license base. The core module, which is the CRM component of Xplan, is the core. You have to have that to, to run the, run Xplan. We just found the bells and whistles, reportings, modules, things that are, are not as essential, perhaps, to the advisory business, were just returned. Also, it was, the advisors, in some cases, had slightly fewer numbers of people not doing as many things. There's been quite a lot of, I guess, change in that advisor market. They've been under a lot of pressure, cost- what we're hearing from them, it's not about competitors, it's about their own cost pressures. They're experiencing the same license increases from other suppliers that we are. They are experiencing just day-to-day cost pressures, just in interest rates, utility charges, everything. It's not actually just a generalized cost pressure that's operating on those businesses, and they're doing what we're doing, which is trying to rationalize their costs and modules that they don't consider essential, they hand back. You know, ultimately, that comes down to us as well, getting better at matching our clients' product set, if you like, to our product offering, and we're actually looking to do quite a lot of work with our clients on that to make sure they've got the optimal configuration of Xplan. Thanks, Marcus. Your next question comes from Olivier Coulon with E&P Financial Group. Go ahead. Hi. Cameron, just on the change to the STI/LTI structure, is there any net additional cost in this calendar year versus, I guess, the previous expectations from that change? Nothing that hasn't been baked into the guidance. You know, it was part of the thinking around it, that there was a shift, and Marcus can probably expand on the thoughts around the REM structure because it's kind of predated my joining but certainly, from a full equity structure and share- based payments to an STI structure where there's a cash element, was all baked in as part of the thinking, and is in the guidance numbers that I've shared. We're looking to shift that a bove the line, whereas it was previously sitting below the line. We are trying to remove below-the-line charges unless they're absolutely true, one-off transformation type or redundancy type charges. That's part of trying to create more transparency in the accounts as well. Yeah. I mean, obviously, that's appreciated. Was it, just to clarify, was the change in both the April number and the current number, or has there been a change that's impacted the current number relative to the April number? We are, we are looking to move the STIs above the line in the future, in our future expectations, our future models. Yes, that's, that's happening now. The STI is in the guidance. The cash number is in the guidance number that we're providing. [crosstalk] I, I think this is new activity that has come about in the last three months since the April d ay. There's more work done around the remuneration framework and, I guess, targets and things like that in terms of new structures. Well, we did target. I mean, just to let you know, in terms of the REM structure, we're looking to have a much more transparent REM structure, a performance-linked REM structure, one where short-term payments, short-term incentives are linked to direct deliverables. You saw the exit run rates. Those are the sorts of things we're connected to. If we produce results, then we get rewarded. As a team, we get rewarded for them. There will still be a long-term incentive program, which will be equity-based, but the short-term program, we're looking to, as much as possible, pay that as a cash payment and come out of the run rate of the business, as it should. It's a more, it's a much more a REM structure, which will be more in keeping and more applicable to a business like Iress, I think. Okay. Now, I, I guess, you know, put it really simplistically, in April, you had AUD 22 million of share- based payments below the segment profit line in your guidance. Do you still have AUD 22 million of, you know, effectively STI share- based payments, whatever you wanna call it, that's impacting on the new, underlying guidance for EBITDA? Those share- based payments or awards all have already been made. Right? So a significant part of those awards that will roll off, this is the last year of those, those, those awards. They will be replaced or being part of a different REM structure going forward, and we will be working through what that looks like with a, with, with an STI lens. At the moment, the, the only changes that have been made at, have been more at the, more at the leadership level, and we're working through those. They're all part of our guidance and. Over time, some of those, those share- base payments, line items will move above the line into more of a run rate, salary plus bonus type, type line item that will, that will, that will be captured as part of our employee cost run rate. Yeah, they are. There is a bit of an unwinding that's necessary here. I mean, as I said, right at the very start, this is a point in time, these results, and a lot of the things we've done and have are working through are, you know, when we look at them today, they're quite different than what they were even in April. There is. I mean, I know it's difficult because we are in a transitionary moment, and as a listed company, we're forced to report at a point in time that may not be, you know, in line with what's going on in the transformation program. I think you're seeing that here, where you've got a REM structure that's still present in the accounts, but it's actually an unwinding of last year's awards. That's, There's gonna be a few of those sorts of things going on in the accounts over the next few months. Yeah. Okay, thanks. Appreciate it. I might take it offline and ask [crosstalk] help it. Yeah. Thanks. There are no further questions at this time. I'll now hand back to Mr. Price for closing remarks. Thanks very much. Look, I know it's a, it's a tough, first half, 2023, and we're expecting a flattish second half, but I would say that the transformation program that we're engaged in is designed to deliver a much simpler, more transparent, and efficient Iress. We think this business is capable of a lot better performance than it's currently evidenced on those results, and we've got very deliberate and well-articulated targets to deliver that. In particular, the exit run rates of 2023, but especially the exit run rates of 2024, we believe would make this company a well and truly a Rule of Forty business, and that's what we're really targeting. This is a point in time. We have a lot ahead of us, but we've been emboldened by what we've, what we've been able to achieve, and if anything, our horizons are expanding rather than diminishing as we go through this transformation. Thank you for your time today. We'll look forward to seeing many of you in roadshow. We'll speak then. That does conclude our conference for today. Thank you for participating. You may now disconnect.