Thank you for standing by, and welcome to the PNI half-year FY 2024 financial results teleconference. All participants are in a listen-only mode. There'll 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 1 on your telephone keypad. I would now like to hand the conference over to Managing Director, Mr. Ian Macoun. Please go ahead. Thanks, Lexi, and welcome to everyone who's joined us on the call this morning. Thank you for your time. Thanks for your interest in PNI. As you've heard, this call is to discuss our results for the first half of the 2024 financial year. We posted on the ASX last night our formal results announcement, our interim financial report, including the audit-reviewed financial statements for the half year, the Appendix 4D, and our investor presentation. We'll be speaking to the key parts of the presentation this morning. The colleagues with me on the call are Alan Watson, our Chairman, Andrew Chambers, Executive Director, with particular responsibility for institutional distribution and international, and Dan Longan, our CFO. I'll call out the main themes and highlights of our results, and also briefly provide some further context and elaborate a few aspects that we feel are particularly important for analysts and shareholders to understand. We'll leave plenty of time for questions, which you are welcome to direct to any of the Pinnacle representatives on the call. There are topics where the relevant executive will be Alan or Andrew or Dan, rather than me. Slide two is a disclaimer that is important, and we would ask you to read this at your leisure. Slide three is an agenda. Slide five is a summary of our themes for the first half of the 2024 financial year. The aggregate funds under management of the affiliates stood at a record AUD 100 billion as we entered the second half of the 2024 financial year, with inflows building and our platform positioned for further growth. We achieved robust net inflows during the half year period, particularly across the retail and international channels, in still challenging fundraising conditions. Net inflows into private market and alternative strategies have continued to build, with a growing product set, offering these strategies to more end markets in both in Australia and overseas. International expansion, both in affiliates and in distribution, continues to gather momentum. We had record FUM levels, both in retail and in aggregate, as we entered the second half of the 2024 financial year. The net cost of current Horizon Two initiatives remained, as anticipated, at high levels during the first half, but this is expected to reduce in the second half and beyond as revenues generated by these initiatives continue to build. Many affiliates achieved pleasing alpha generation, resulting in performance fee contributions from a diverse set of strategies. Slides six, seven, and eight elaborate these six themes. Firstly, robust net inflows, particularly across retail and international channels, in still challenging fundraising conditions. Conditions for generating new business remained challenging during the half. Investor sentiment has been poor in essentially all relevant investment markets, both retail and institutional, and in Australia and overseas. We believe our distribution result for the half is creditable in these conditions. Our diverse platform of affiliates and strategies has enabled us to remain relevant to investors as risk appetites and market conditions have fluctuated. Our net inflows in the private market and alternative strategies have continued to build, with a growing product set offering these strategies to more end markets, both in Australia and overseas. We achieved over AUD 1.6 billion of drawn capital for private markets affiliates in the first half of FY 2024. AUD 950 million of this 1.6 billion was raised from wholesale and retail investors... and excluded from our reported first half flows is a further AUD 1.1 billion plus of legally binding fund commitments, which closed in late December 2023. So this includes AUD 770 million, which was the maximum targeted raise secured for Five V private equity Fund 5, and GBP 200 million, which was also the maximum targeted raise secured for the Palisade Real Assets bioenergy platform. So to slide seven. The third thing is that international expansion, both in affiliates and in distribution, continues to gather momentum. We now have AUD 14 billion of funds under management from more than 40 countries outside of Australia, having achieved over AUD 8 billion of net international flows over the past 3.5 years. Our internationally domiciled startup affiliates are experiencing early success. Aikya, which is based in London, has reached AUD 4.5 billion of FUM within 4 years of startup. Langdon, based in Toronto, has reached AUD 200 million of wholesale retail FUM in just 18 months. Palisade Real Assets, also based in London, secured its cornerstone commitment from a major European investor for its UK bioenergy platform, and Palisade Americas, based in New York, completed the acquisition of a digital infrastructure platform in Washington state, and has subsequently entered into an agreement to roll out a second local fiber platform. As mentioned, we ended the second half of FY 2024 with record FUM levels. Aggregate FUM exceeds AUD 100 billion for the first time. Markets remained volatile during the half, with average funds under management broadly equivalent to opening funds under management. We ended the second half with FUM 8% higher than this average, with much of the increase attributable to net inflows and market movements, both occurring late in the reporting period, and thus having little earnings impact during the half year. We point out that the skew in our results, which tends to see profitability higher in the second half of the financial year than the first, is likely to be quite pronounced again, this 2024 financial year. So to slide eight. The net cost of current Horizon Two initiatives remained, as anticipated, at high levels during the first half, but this is expected to reduce in the second half and beyond as revenues generated by these initiatives continue to build. Pinnacle and the affiliates have continued to invest in initiatives for future growth. This will drive strategic growth over the medium term. The short-term profit impact in the first half of FY 2024 was broadly the same as in the second half of FY 2023. Pinnacle's share after tax of this investment was estimated to be equivalent to approximately AUD 7 million of net profit after tax. These initiatives create additional capacity, provide medium-term growth opportunities, and have historically delivered a high returns on investment. Co-investment in affiliates... Well, sorry. Co-investment from affiliates in these initiatives reinforces the focus of our partners on growing their businesses and delivering superior growth through the cycle. Our core business remains in good shape, notwithstanding the challenging funds flow environment experienced during the year. In fact, this challenging environment has now persisted for just over two years. We continue to seek additional Horizon Two initiatives of compelling quality. Finally, as announced on the eleventh of January, many affiliates achieved pleasing alpha generation, resulting in performance fee contributions from a diverse set of strategies. Nine affiliates contributed performance fees this half across 13 strategies.... 25 strategies are now able to deliver meaningful performance fees, 18 of which had the potential to contribute in this first half. All 25 strategies are capable of contributing in the second half, with 16 strategies of those 25 strategies entering the second half at or above their high water marks. Turning to slide nine, the financial highlights. We have a diversified platform that has demonstrated resilience in challenging market conditions, and as mentioned earlier, we have made substantial investments to support earnings growth in the future. Aggregate affiliate funds under management at 100% was AUD 100.1 billion at 31st December 2023, up AUD 8.2 billion or 9% from AUD 91.9 billion at 30th June 2023. Details of the sum of each affiliate are provided in Slide 15. Aggregate retail fund was AUD 25.9 billion at 31st December 2023. Also, a record, up AUD 3.2 billion or 14% from AUD 22.7 billion at 30th June 2023. The aggregate affiliate fund capable of earning performance fees is AUD 36.9 billion at 31st of December, up 9% on AUD 34 billion at 30th of June. Total net inflows for the half were AUD 4.5 billion, comprising AUD 1.8 billion of net retail inflows, AUD 3.1 billion of net inflows from international clients, and AUD 400 million of net outflows from Australian institutional clients. The increase in fund attributable to market and investment performance combined was AUD 3.7 billion in aggregate, including AUD 1.4 billion from retail. The ASX 300 Index was up 5.3% over the half year. The MSCI World Index up 6.5%. The NASDAQ, which is particularly relevant to Hyperion Global, was up 8.9%, and the Nareit index, which is particularly relevant to ResCap, was up 5.6%. Aggregate affiliate revenue at 100% was up 32% to AUD 295 million, of which base fee revenues were up 15% to AUD 253 million, and performance fees were up from AUD 3.2 million- AUD 41.9 million at 100%, of which Pinnacle's share was up from AUD 0.9 million to AUD 12.3 million. We've reported net profit after tax of AUD 30.2 million for the half year, down 1% on AUD 30.5 million in the prior comparable period. Earnings per share of AUD 0.153 per share, down 2% on the PCP, and we declared a fully franked interim dividend of AUD 0.156 per share, the same as the 2023 interim dividend. The investment performance of most of our affiliates has been strong. The performance fees earned speak to this, and 81% of the affiliate strategies with a track record of five years or longer have outperformed their benchmarks over the five years to 31 December 2023. There's further performance detail on Slides 11, Slide 14, and Slide 46-Slide 49, and we had AUD 151 million of cash and principal investments at 31st December. Slide 10 shows our record of earnings growth over the 7.5 years that we have been listed Pinnacle. Slide 11 provides the specifics of the 5-year performance track records of the 33 affiliate funds or strategies. Slide 12 shows the detail of the affiliate platform and highlights of the first half of the 2024 financial year. Slide 13 elaborates our track record of strong earnings growth through periods which incorporate a range of stages of market cycles. Slide 14 shows some detail of our performance fee record and opportunities. As mentioned, we are growing the size and diversity of our performance fee potential.... Slide 15 is a reminder that performance fees are a deliberate and ongoing component of Pinnacle's earnings, and should be expected to deliver a meaningful contribution to our earnings each financial year. For a sizable portion of our fund, we have negotiated lower base fees in exchange for performance fee opportunity. Slide 16 shows our 17.5-year fund and net flow history. Our institutional pipeline remains strong, and our client base is increasingly diversified, including overseas, as we grow and evolve despite the pressures evident in the domestic institutional market. Again, in slide seven, slide 17 provides some detail on the increasing diversification of our business. Slide 18, updates on more recent industry awards. Slide 20 has detail on our revenue and margin performance, and Slide 21 has further detail on our financial results. The main items I would point out there are the change in NPAT, excluding the return on our principal investments and offsetting interest costs, which I think of as an important measure of our core earnings. That was up 2% on last year. Then for those who are prepared to accept the OpenInvest write-down as a non-recurring category of expense, the change in NPAT, excluding the net return on principal investments, the net interest costs, and excluding the OpenInvest write-down, that figure is AUD 33.5 million, up 16% on the PCP. Section three of the presentation provides an institutional and international market update, and Andrew Chambers will explain the factors at work in these markets during question time and in one-on-ones. Section four provides a wholesale and retail market update, and Kyle Macintyre will elaborate during one-on-ones. I will move now to section five, titled Growth Agenda, Slides 27-Slide 34. In Slide 28, we remind shareholders that we think in terms of three horizons of growth. Horizon one is the main game. It is continuing to pursue net inflows into existing strategies of existing affiliates. We remain very confident of our ability to continue to do that. We conservatively estimate the capacity of the affiliates' existing strategies at AUD 400 billion, so there is plenty of Horizon One runway left, with the strong attendant gains in operating leverage that will be accompanied by such growth. Horizon Two is the subject of an enormous amount of activity, both within Pinnacle itself and within all of the affiliates. We've stated we estimate this co-cost in the order of AUD 7 million to Pinnacle's bottom line NPAT in each of H1 FY 2024 and H2 FY 2023. This is a slow, patient process where we invest now for medium-term gain, but we have been doing this for a long time and have a very strong track record of very high returns on past Horizon Two investments, not even including unrealized capital gains on the value of the businesses and strategies we have built, and we are confident that will continue to be the case in the future. Slide 29 explains the future growth drivers in further detail. We have mentioned specific Horizon Two initiatives in Slides 30 and 31, and the existing international Horizon Two initiatives in Slide 33. Slides 30-Slide 33 also explain why we place so much importance on Horizon Two opportunities, and that we will continue to seek initiatives of compelling quality, particularly overseas, leveraging off the operational infrastructure that we have developed in the UK, the US, and Canada. Our standards are very high, but teams which we judge to be the real deal, though they are rare, they are out there. In relation to Horizon Three, which of course is where we use capital to buy new existing businesses, our most recent transaction was the acquisition of 25% of private equity and venture capital manager FiveV in December 2021, and Slide 34 sets out excellent progress made by FiveV since we entered into that partnership with them. In terms of potential new opportunities, Slide 34 explains, in summary, that we have done a lot of work on a large range of opportunities. But in the final analysis, we haven't so far progressed with anything since FiveV. This is because we have remained disciplined and patient, and we have not been convinced of the quality and valuations of the opportunities we have considered during that time were satisfactory. We will continue to work on additional Horizon Three opportunities, encouraged by our record of success with Horizon Three investments to date. The 35% interest in Metrics, the initial 25% and subsequent additional 10% of Coolabah, and the 25% interest in Five V. I'm out of time, but I really want to mention Section 6, Corporate Responsibility. We are proud of the progress we have made on so many fronts, but I will leave it to shareholders to read Slide 35-Slide 40 and ask any questions they may have. Then in conclusion, referring to Slide 42 and Slide 43, I would like to remind shareholders of the basis on which we remain so confident of our company's ability to grow and prosper, which is our distinctive business model that was designed specifically to ensure sustained investment excellence. This is embedded in our DNA. Call it our core ideology or fundamental beliefs, which are the basis on which our business was built and which will endure and guide us for many years, hopefully decades into the future. This is the source of our competitive advantage. The most talented and experienced investment professionals love it. More importantly, their clients love it. It delivers stability and sustainability, longevity, which traditional investment institutions are less able to facilitate. We execute on it better than others. We understand talented investment people and their needs, the subtle forces that sustain enduring excellence and those that are inimical to it. We ensure succession when others don't seem able or willing to. Importantly, these basic principles are applicable to a very broad range of asset classes, geographies, and markets. They will sustain our growth as we evolve and adapt and as the world changes. The need for investment excellence is massive, greater than ever, and more so as investing becomes more and more difficult and as market circumstances change. Let's now invite questions, noting that the appendix to the presentation has information that people are often interested in. 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 speakerphone, please pick up the handset to ask your question. Your first question comes from Tom Camilleri from Wilsons. Please go ahead. Oh, hi, team. Thanks for taking my questions and congrats on a pretty strong result. Just first one from me. The international and retail flow environment looks quite impressive, in that, like, seems to be predominantly driven by AQR and alternatives in the fourth quarter. Can you just give us an overview of the timing and other inflow dynamics in that quarter and the initial signs you're starting to see in the first half to help us think about our estimates? And just any other comments you can share also on the domestic institutional environment and your confidence levels for a recovery this calendar year. Thanks. Yeah. Thanks, Tom. So that question is essentially for Andrew Chambers. On the timing, we pointed out that we had, you know, strong inflows, right, quite close to the end of the half. Similarly, markets were up in December, so it feels like a lot came just at the end. It had the slightly unusual impact that we didn't get the revenue benefits of those factors during the half, but we've chosen to take the cost impact. We've chosen to provision full short-term incentives during the half. But the revenues, you're right, it means we're starting the second half in quite a strong position where we'll be earning the revenues from those extra flows. And there's more that we've called out that's coming early in the second half. But I think in terms of the outlook and so on, Andrew? Yeah. So, AQR were a very strong feature, as you mentioned, of inflows in the half. About $3 billion of that total number came into AQR, largely from the United States and the United Kingdom. They really dominated those flows. But it wasn't all AQR during that period, because obviously we tend to have a lot of churn, of ins and outs also during the course of the, the half. So other managers which were key contributors during this period of time from a positive standpoint were Antipodes, breaking new business in Canada, Langdon, of course, in the wholesale and retail market in Canada as well. Metrics has continued to expand internationally with raising more FUM in Japan, in Scandinavia, and New Zealand, and Coolabah across the United Kingdom and New Zealand itself. Important to recognize in that AUD 3.1 billion of net inflow, that does exclude a further AUD 826 million of committed capital, which is yet to be earning fees, which happens from this quarter. There was raised across Five V in fund number five, and also Palisade Real Assets, which is dominated by, a large European, pension plan. Five V, very interesting. Out of the AUD 770 million, more than half of that was raised from, non-Australian, investors. The interesting trend has been, with China now being really uninvestable for many international U.S., European investors, for the allocations that go into Asia now, people are contemplating more strongly Australia as a destination, along with Japan and also India as well. But obviously, in a world where you have a higher cost of capital, leveraged buyers are less favorable, but those that are in the mid-market space, where operating earnings are driving returns, are certainly very favorable. So that was a real feature of the result. So the inflows are close to AUD 4 billion, if you talk about committed capital plus flows in that half. We will obviously realize that committed capital during this half now. Is that sufficient coverage on the international side of things, or would you like me to elaborate first before moving to domestic, Tom? Oh, that's good on international. Please, yeah, touch on domestic for me. Thanks. Okay. So the domestic flows, while negative at AUD 365 million, certainly improved in the second quarter from the first, where we last reported AUD 1 billion of net outflows, which is dominated particularly by one reallocation. Resolution Capital weighed particularly on that net result. We had AUD 2 billion of outflows domestically in the half. But here's a really interesting fact about that. You know, we didn't lose a single REIT mandate to another competing firm during that period of time. So those flows or outflows are dominated by monies going from public markets to private markets, and also through merger activity, where a small fund gets rolled up into a larger fund, but the larger fund doesn't have a default allocation to REITs. So importantly, from a competitive landscape perspective, Resolution Capital is very strong today. Performance, consultant ratings, demand from investors, the people who are allocating the space, it's just a, an asset allocation perspective today between public and private, notwithstanding the recent discounts we've seen in the public side. Obviously, there continues to be structural demand for privates. On the more positive side, we had strong inflows into Coolabah and Longwave, which dominated the net inflows for the half. Coolabah was around AUD 1.1 billion, and Longwave is over AUD 500 million in the half, quadrupling their FUM today, bringing them above AUD 700 million. Rest of flows were mixed across the board. Groups like Metrics also produced positive flows in the half. But they're really the dominant ones within the domestic landscape. Just from a thematic perspective, fund consolidation continued on, so as small funds roll into larger funds, the typical trend is for the larger fund to terminate every single mandate that was sitting within that smaller fund's merger partner. So this consolidation won't continue on forever, but as it occurs, of course, you can lose mandates with those lower funds, assuming you are not prepositioned with a larger fund. I see this still an issue, but fading compared to what it has been in recent years, in the next 12-24 months, notwithstanding a few mergers, which are still yet to complete. But we do believe that our strategies are really relevant to the mega funds in this environment. We should be looking to partner with managers, which can provide more insight into their asset allocation decisions, beyond simply delivering an alpha to their clients. So we actually remain fairly optimistic about the domestic market, even though the mandates are fewer and the mandates are larger in nature. But obviously, the global flows are really the thing which is gonna drive this business exponentially in the future. And I'll pause there for any further questions. Tom, I think you mentioned retail as well, but we had net inflows of AUD 1.8 billion into retail in the half, which we think was a very respectable effort in difficult, still difficult conditions. The equity- retail equity flows are still very poor. So our retail inflows were due to factors specific to Pinnacle, and that was particularly strong flows into the less traditional asset classes, you know, which reflect the benefits of our diversified stable of affiliates and the quality of our distribution team, rather than positive investor sentiment in the industry. We can talk about when sentiment may turn and become positive again, which will give us a double whammy of our more alternative asset classes, as well as equities coming back. But, you know, that AUD 1.8 billion, it was stronger in the second quarter than the first quarter of the half, so we feel there is momentum building. So the largest inflows were Metrics and Coolabah into retail, but actually, 11 affiliates had meaningful net inflows during the half. Thanks, Ian. That's good color. And then just maybe a follow-up that's probably relevant for Dan. So retail FUM growth is strong, half on half, and now the FUM mix as a percentage of the group is above the PCP. Is it as simple as we need to be expecting a higher blended fee margin in second half 2024 when thinking about your group blended fees? It's a complicated issue, sort of overall fees, because there's a whole lot of stuff going on. We're also likely to win some fairly large low-fee business in the likes of a Plato, but then we've also got some very high fee business coming in. And you're right, Tom, that the more retail we get, retail is very helpful for average fees. They, they're higher, and also international tends to be higher than domestic, but it just depends on the blend of business, and we take... You know, we can take on, really good lower fee business in a Plato as well. But I don't know. Comment overall, we, we don't really want to speculate on the averages. We don't target average fee levels, but I know we watch the trend in them, which has been just closing up over time as we have more retail and more alternative asset classes where the fees are higher. Yeah. So obviously something to note within, for example, Five V's AUD 750 million capital raise is the institutional fee is the same as the retail fee. So which is a very good example of the pricing elasticity in a market which is alternative in nature and very high demand from investors because of the scarcity of the skills involved. As a factual statement, the blended fee rate is about three basis points higher at the end of this period than PCP. It has moved up a bit. Yeah. Thanks, guys. That's really good color. I'll jump back in the queue. Thanks. Thank you. Our next question comes from Tim Lawson from Macquarie. Please go ahead. Hi, guys. Thanks for taking my questions. Can I start maybe clarifying Dan's comment there, as that dropped away a little bit, that base fee margin comment you made at the end there, Dan? Yeah, the base fee for this half, Tim, was 3 basis points higher than the PCP on average. Yeah, and do you have a sort of comment on the sort of range, maybe of what the exit base fee is, given the average and closing are, you know, quite different, therefore going to, you know, impact our sort of simple calculations from that? The point I think to make on that is the one Ian made earlier, Tim, which is a significant portion of the FUM increase came in December. So the market increase was almost entirely attributable to the month of December, and a large portion of the flows came in the second half of the financial year, weighted towards December. So we've had little earnings impact of that. So in terms of exit momentum, that would suggest it should be strong this. Yeah. Yeah. You know, retail is there, et cetera. But, I think we've pretty much concluded, Tim, we created a bit of confusion when we started predicting sort of revenue rates and fee rates- Yeah. I think we might leave that alone for the moment. Yep, that's fine. Maybe a few more questions. Just on Metrics, just thinking about, I mean, the net flows into that affiliate sort of been, you know, I mean, maximum sort of around AUD 2.5 billion historically. Just thinking about the ability of the business now to, you know, originate. Obviously, you know, win the flows, but there's a... You know, what's the sort of capacity or capability within Metrics, maybe on a half year or full year, of what you think they can actually originate should the flows come in? If you talk to the top teams today, Tim, about their origination pipeline, it's well more than AUD 5 billion, up to as high as AUD 8 billion, which they could transact on. So their issue is not having enough capital rather than not enough transactions. And some of them, they need to slow down the pace of origination, to match the level of capital inflows. So that's certainly not the problem. And actually, the regulatory position for Metrics is going to get stronger in the next few years with the capital charges being applied to banks increasing. I think you'd note they're going to be increasing by about 4.5% by 2028. Well, I was gonna say twenty-eight, I'll correct myself if I have that wrong. But that essentially, that means that we continue shrinking of the balance sheets, which means capital will be more scarce. We get better pricing power as a lender, and therefore greater capacity to deploy and originate new assets as those balance sheets continue to shrink. Yeah. Okay, that's helpful. Just maybe expanding on your sort of first half, second half skew comment, there's obviously some structural element to that on the second half performance fee tends to, or effectively full year performance fee tends to be stronger. Not wanting to try and forecast the performance fee. But just, any sort of cyclicality of that? I mean, obviously, you're calling that Horizon Two, you know, revenue sort of coming through there and therefore reducing that impact. Some of those offshore affiliates look like they're now sort of through break even. And then obviously, you've changed some affiliate ownership levels in a couple of your affiliates. Just thinking, you know, how much of that sort of cyclical element starts to unwind and, and what you think the first half, second half sort of split looks sort of longer term? Well, I think one of the significant factors this year will be the fact that we had those flows and market withdrawal at the end, and that we've provisioned a higher cost. So that really did retard the first half and won't be the same factor in the second half. So, you know, I think that's very helpful. And, yeah, obviously, OpenInvest won't be there in the second half, thank goodness. Yeah. Yeah, and just on your provision comment, I mean, you've had to be taking that, incentives provision effectively at full freight for the first half, but you're also assuming performance continues through that in the second half. So does that actually create a skew in that sense? Well, well, well, in the sense that we didn't have the revenue. Like- Right. We're mainly, we're particularly paying for good work on inflows, which produces higher revenue, both in the affiliates and at Pinnacle Parent. But we didn't have that in the first half. We'll have that in the second half. That's the point. It's a revenue comment, not a cost comment. Yes. Yeah. Yeah. Okay. Just also on your sort of improving performance on the Horizon 2 investment in the sense of the revenue coming through. Is that specifically related to the late flows in the half, or are you also commenting on a good outlook for some of those strategies? Yeah, it's a bit of both, Tim. So Aikya had those large flows that's now out of Horizon 2. But really, it's just a general comment that we can see the things starting to come together, and we expect that gap to narrow into the second half of the build. It seems like Longwave and so on. It's all building. Right there in-house, I realize that's great momentum. Yeah, the revenues are coming now. Yep. Yep. Maybe a couple of questions on cost, and obviously there's, you know, significant cost growth in the business as well, largely on Horizon 2. But can you just talk about maybe sort of, sort of call out specific, more sort of one-off or structural changes, like maybe the impact of like a pay rise, the cost impact of performance fees, given they were sort of larger than historical averages would suggest, and any other sort of more one-off type costs in the, growth we've seen? Yeah. Well, as a general statement, the costs relative to revenues were consistent with the second half of last year. So when you adjust to things like performance fees, which do have an impact on cost and some affiliates, the cost relative to revenues were the same. So most of that growth came in the second half of last year. There are a couple of things that were specific in this half. You mentioned Payright. Metrics bought 50% of that business at the start of February 2023, and increased its ownership in March 2023. We had the higher ownership then for the full half, and then in Aikya, with that business becoming successful, they rebased their salaries. There are a few little things like that, but as a general statement, the level of cost relative to revenues was the same as in the second half of last year when we had that big step up. And you are correct, Tim, that there are some costs that come with higher performance fees, and some of our affiliates, bonuses are related to revenue. Yeah. Yeah. Okay, just two more questions for me. Yeah. Two more quick questions for me. So, you obviously talked to base, and sort of transaction fee and then sort of performance fee. Just looking forward, you know, your, your sort of thoughts on how Five V performance fee, you know, how you'll report that and, you know, that starts to maybe become a factor within that performance fee line, and how you, specifically going to address that? Should be, particularly from FY 2025, shouldn't it? Yeah, and we will call it out as part of that performance fee line. Yes. Yeah. Okay, and last question from me. If we just track the sort of service fee revenue to sort of basically that looked like it dropped to back below 8%, having, you know, been above 8% for some time. Just sort of maybe running through the sort of mechanics of that and what your expectations are. Yeah. So a couple of those revenue arrangements are on trailing three-year revenue share, so some of them tailed off, but then we've had the significant plum come in in the back end of this half, which will then see those revenues increase in the second half of the financial year. Okay, so that should somewhat normalize? Yeah. Okay, all right. I'm done. Thank you. Right. Yeah. Thank you. Your next question comes from Nicholas McGarrigle from Barrenjoey. Please go ahead. Good day, guys. Thanks for that. Can I ask a question around Five V, in terms of any updates you can give us on the initial portfolio divestments that they've made, in terms of where the IRRs are tracking thus far? So at the end of the half, they've realized three assets out of fund three at about 40% IRR. And we think, you know, they're on track. The IRR is probably slightly higher than we anticipated it would be. The multiple of money is probably about the same as we thought it would be, because some of those assets have probably been sold earlier than we might have expected. So we'd say that's pretty much proceeding as we'd expected, even in a very tough environment for exits. Yeah, and doing well. And I'd say a very large part of the successful fundraise was the fact that they delivered crystallizations to investors, handing money back to investors in an environment where nobody else around the world is doing that. It's not surprising that fundraising is at its lowest level in private markets since 2013. It's a decade low. ... So anyone who's raising capital has to be really delivering capital back to investors so they can reinvest. They've got a track record of delivering exactly that. And when you can return 2.5x money in a more challenging environment, on average, that's pretty impressive and a really good demonstration you can invest through the cycle and continue to deliver. Without making predictions, we feel good about the progress they keep making on their fund 3 investments towards realizations. One with our- I assume, I assume we shouldn't be kind of thinking 40% for the fund. Obviously, the first assets that are the most saleable probably get some of the better returns, so you'd expect some moderation in the overall fund, just in terms of if we punch 40% in over an 8% hurdle, it implies some pretty grand performances. But I assume the overall fund, you wouldn't be expecting an IRR, you know, of 40%. Well, well, we don't know, so I wouldn't be speculating on what they are at all. I'm not sure that it's necessarily right to say that the early ones should be higher than the later ones, but, With an IRR calculation, of course, there's a timing effect, so the faster you return money back to an investor, therefore, potentially the higher the IRR. Yes. We think more in terms of multiples of money we generate to investors anyway, so what, what can we hand back to investors on... in terms of the cash-on-cash return? Yeah. Okay, and maybe just to move on to Metrics. I think Tim asked a question around pay, right? But can you just give us an update on Metrics' business finance overall in terms of the progress? And maybe it's just a two-part question because it relates to Horizon Two, but AGL losing money included in the Horizon Two costs, now making money, you're not kind of netting off the profit of AGL when you're thinking about the Horizon Two, or will you include that in that calculation, you know, when they're actually printing profits? AGL is out now, isn't it? Yeah. Yeah. So the answer is no, we're not taking AGL revenue in doing our Horizon Two net cost calculation now. You know, the way we do that, we think of, well, the current Horizon Twos. The reason we do have revenue offsets is in something like Metrics, especially where, you know, it's all ramping up. You're ramping up both costs and revenues. It'd be misleading to only look at the costs. Yeah. So that's where the revenue comes in. Well, you asked about Metrics as a general question, I think, Nick. And, look, what I will say there is we are very happy with the energy and the direction of Metrics growth. It's kind of complicated our P&L, of course, but they have a very big vision for Metrics, and we're very supportive of it. We're very pleased with what they're doing. They're raising more funds, and you know, they've been deliberately investing to expand origination capability and the sort of range of verticals originating, but that's all with a plan to making them a bigger funds manager over time. You know, they need more origination- Could you- to feed that big... Yeah, to feed that big funds management business. Yeah. And could you quantify the of the AUD 14 million annualized? Would you quantify the Metrics business finances, maybe a third of that? So just to give us some context on success there, obviously, could bring down the Horizon Two investment materially. That's roughly right, isn't it, Dan? Yeah, that's, that's about right, Nick. Yeah. And then maybe just the last one for me. Yeah. The Metrics is in the paper today, talking about being up in international markets, raising what sounds like a very large fund. I'm not sure if you can give us some context around the news out today on Metrics. Yeah. That's sort of reporting of what I regard as their normal ongoing activities. But- Yeah ... they're out there raising funds constantly, including overseas. So they've been in Europe, the Middle East twice, and the Americas all in the last six months, raising capital. But that article doesn't pertain to them raising funds for their pool funds. That relates to providing term debt facilities for their funds. So replacing bank facilities with term debt in the markets in Asia. That said, they're very much in a growth phase. The responses we're getting from, you know, sovereign wealth funds around the world, the major occupational pension plans in continental Europe, big provincial plans in Canada, places like that, very strong response towards real estate debt and equity, and also into this new sort of real asset or asset-backed lending space in the business consumer end of the market as well, which is much well better-trod market in North America and Europe. So we think there's great potential for that strategy and time for them to acquire warehouse facilities from us in those sort of assets. All right, great. Thanks for that. Thank you. Your next question comes from Joseph Pagliaro from Ord Minnett. Please go ahead. Good day, Ian. Just a question on the performance fees that you entered the second half with, sorry, the fund that you entered the second half with capable of earning on their high water mark. I think it's Slide 15, says AUD 19.1 billion. And that's for 16 affiliates. The first half, you earned performance fees from 9 affiliates. Can you give me a flavor of the FUM that those 9 affiliates represented in the first half versus the AUD 19.1 billion that are on the high water mark going into the second half? You got it, definitely. Yeah. So the fees that we got in the first half, they were from, as you mentioned, nine affiliates, and that was about AUD 10 billion FUM, roughly. So the number going into the second half is about 19 affiliates, but remember that includes affiliates like Palisade, Metrics, and ResCap, where the significant FUM that only pays annually, and all of those affiliates are at their high water marks. Okay, thank you. And just sort of one other question, I don't know if you can answer this one, is the retail FUM that you've been winning, and particularly in the last half, do we think of... Is that generally all performance fee related? And can you comment on the maybe the average retail fee or those? I don't suppose you can, but if you can, that'd be, that'd be, that'd be good. Yes. As a general statement on performance fees, not all of that retail money has performance fees on it, but generally speaking, there are higher rates of performance fees on retail business than there is on institutional business. Yeah. So ResCap has had significant inflows. There's performance fees on all of the ResCap, or on quite a bit of the ResCap retail money. I guess Coolabah definitely has performance fees on all of that. That was quite a significant part of the retail. So it's a bit of a mixture, but certainly there's performance fees on a reasonable amount of those retail inflows. Probably say Metrics is about a 60/40 split, so 60% would be 9, with base fee only, 40% with performance fees. So those retail inflows are definitely helpful in building performance fee potential, but so are some of the mandates, so some of the insto mandates. Just one clarifying point, thank you for those answers. The 16 affiliates, you say a bunch of those obviously are only pay performance fees annually. And apologies, I probably should know the answer to this, but... Do you accrue any of- there's nothing being accrued in the first half for those that may be at their high water mark and, you know, in the black, so to speak? We don't accrue any performance fees until they crystallize. Okay, perfect. In our PNL. Okay. So basically then the, those that are at the High Water Mark, a bunch of those may not have crystallized yet, but may be sitting on an amount at the moment that you'd have to earn through to thirty June, and so essentially you might get two halves of performance fees from some of those. I don't know if... That's correct. Yeah. Yeah. Okay. Depending on how we go in the second half. Yeah. Yep. Okay. Thank you. But yeah, some that sort of build up, if you like. Yeah, yeah, yeah. Thank you then. Thank you. Your next question comes from Shaun Ler, from Morningstar. Please go ahead. Hi, good morning, everyone. Thanks for taking my questions. I just wanted to circle back on the flow outlook. I mean, if rates subside, and investor appetite comes back, like what every fund managers are saying, do you realistically see flows going back, uniformly into your funds, including those small vanilla equities funds, or they'll be more centered in your sort of newer, more exotic, real assets, alternative funds, et cetera? Because I ask this in the context of other asset classes being more attractive because rates are higher, than before, and some of your boutiques are already more mature than others in the market. Thank you. Yeah. I think it's particularly in the retail market that higher interest rates have affected sentiment. So we said that in, that about two years ago, central banks started tightening. That was, that was quite damaging to a retail investor sentiment. And, you know, we're all, we're all hoping that at some point when central banks stop tightening, when retail investors form the belief that maybe they'll be, even stimulating a little bit, but they... You probably don't even need stimulation. I think you need a widespread view that central banks have stopped tightening. That would be helpful in retail sentiment. I mentioned that retail sentiment's been very poor in equities. We've still got some decent flows, but particularly not in equities. If we got equity sentiment improving, that would be a double whammy if we get that as well. Maybe Andrew should comment on institutional in terms of higher interest rates. Yeah. So, what's very clear is investors on the institutional side remain really cautious on public market equities and have been for two years. Yet the consensus trade of being underweight equities, Australia, global and global emerging markets, has been wrong. If you look at the returns of public equities in the last four months. ... And we're getting that feedback from our consultants and asset owners we speak to. But really, the rationale behind that has been one where we've had obviously recent market rallies, higher discount rates, and obviously an uncertain earnings outlook for public equity, which has really been driving that underweight. So it's caught a lot of people by surprise that the markets were so buoyant last calendar year. So if you're winning business institution, it's because you're seizing market share from competitors rather than getting new tailwinds of inflows into the space. And I just think that the rally in the markets in the last few months of the calendar year are actually gonna be unhelpful for new flows because the average, you know, market level is much higher, so valuations will look more stressed again. So I don't think you'll see any short-term reallocations into public equities. In fact, I think they'll go elsewhere in the market for the time being until there's a correction or until the earnings outlook becomes much stronger for public equities, would be the bottom line. So really the market share, fighting market share question in equity land. All right, thanks. We're running out of... No, sorry, I was just gonna say we're running out of time. Sorry. Okay. Thank you. Thank you. Your next question comes from Charles Kiefel from Ransom Moment. Please go ahead. Oh, thank you. Well, Ian, congratulations on such a long, sustainable track record. It's very impressive indeed. You've been doing this for a long time, and, and your team, it's been absolutely impressive in a global context and a domestic context. I was just very interested in the Barrenjoey research reports. Probably an unfair question, but their dividends forecast for 2025, 2026, would you care to comment on your level of confidence on the increased DPS, dividends per share, in those future years? Well, thanks for those kind comments, Charles. That's very kind of you. We don't comment on projections and forecasts, unfortunately. We said we entered the new calendar year cautiously optimistic, and we sort of explained the grounds for that. We've also said that there are some factors that will be coming through that ought to lift FY 25 and so on. But, yeah, I'm afraid I can't comment on specific projections for that. No, fair enough. I understand. Thank you. That does conclude- Bye. The conference for today. Thank you for participating. You may now disconnect.