Thank you for standing by, and welcome to the Praemium Limited FY 2021 half-year results briefing conference call. 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 one on your telephone keypad. I would now like to hand the conference over to your first speaker today, Mr. Michael Ohanessian, CEO. Please go ahead. Good morning and welcome. Thank you everybody for joining us today on Praemium's first half F 2021 results. I will go through a very, very quick business highlights overview very quickly before I hand over to Paul to take us through the numbers. I'll then do a bit of a deeper dive looking at the two business segments that we have, Australia and international, before we take questions at the end. Without further ado, Paul, can we go to Slide 5, please? Obviously, the major highlight for the half was the acquisition of Powerwrap. Praemium's been around for 20 years. We've done three small strategic bolt-ons overseas, but this is our first Australian and by far our biggest transaction. I'll spend a bit more time on this a little bit later on. Suffice to say, we chose to do an off-market takeover process. It was friendly on both sides and the support of the board, the management staff, the key shareholders and of course our clients as well. That transaction went pretty well at a pretty tough time, particularly as the mail was very slow during COVID, but we got there in the end and we're very pleased with that outcome. Thank you, Paul. From that acquisition, you can see the dramatic impact it's had on our business. We now have AUD 34 billion in FUA, which is a massive increase from where we were this time last year. If you look at the inflows on the left-hand side, you can see the big impact that Powerwrap had on our business, and we're delighted to have them on board. We believe stronger together. Praemium today has got the kind of scale that we need, we think, to really succeed in this fast-evolving wealth market. Whilst all that was going on, we continued to do a lot of development, particularly through COVID. We're very proud of our product and technology people for the ongoing development that they do. We are global, we are agile, our velocity is high. Through all of that, we continue to evolve our capability and our product. What you don't see on this slide, which I think is just as important, is the effort that we've put in to strengthen our resilience. One thing we've learned from this pandemic is that everybody had to change, everybody had to adjust. We believe we already had a very strong infrastructure, but we believe that coming out of 2020, we're much stronger than we have ever been. With that, I'll turn to Paul. Great. Thank you, Michael. Good morning, everybody. I'll start on Slide 9, which gives the financial highlights for the half. You can see from the graphs and from some of the metrics that we've seen an improvement in all major categories across this half, with a 21% increase in net revenue, which is represented with the graph in the top left-hand side. A 9% increase in gross margin in dollar terms, a 5% increase in underlying EBITDA, and a 130% increase in net profit. The execution of our strategy continues to deliver results. Despite challenging conditions, we are reporting, as you can see in the graph at the bottom, our 14 consecutive half of profit growth. If I turn to Slide 10, you'll see, this is showing our complete results. This half includes the trading results from the acquisition of Powerwrap, with four months of results included from September 2020. These results are reported within the Australian segment, which I'll touch on in the next slide. Overall, in terms of the numbers, as I said, net revenue was AUD 31.6 million, an increase of 21%. Underlying EBITDA was AUD 7.3 million, an increase of 5%. This profitable growth was achieved while we continued our investment in sales and marketing. You can see at the sales and marketing line, that was up 24% to AUD 6.9 million. Despite market volatility during the half and the impact of, on margins from the integration of Powerwrap, which I'll touch on in the next slide. If we look at EBITDA to NPAT, you'll see there's a number of call-outs in relation to the Powerwrap transaction. Obviously acquisition and restructure costs of AUD 1.6 million. AUD 1.2 million of that was related to the Powerwrap transaction. You'll see in the FX and other line relates to a AUD 4.5 million revaluation of Powerwrap shares that we owned prior to announcing the takeover. You'll also see our depreciation and amortization increases this half. There's three components included within that. Software intangibles of AUD 2.4 million, and obviously the lease incentive, which is a newer standard from last year of AUD 800,000. Overall, you can see NPAT of AUD 3 million being a 113% increase for the half. If I turn to Slide 11, you'll see we are reporting our Australian segment results. As I mentioned, there's four months of Powerwrap results, and that is included in platform revenue. It should be noted that Powerwrap customer used to be in our portfolio services line. There is some commentary at the bottom just because we're moving revenue from pre-acquisition to post-acquisition. Overall, our revenue growth was 28% for the half. Platform revenue, you can see, was up 52%. That's including Powerwrap platform revenue of AUD 6.9 million. Portfolio services is reported to be flat. However, again, that included the Powerwrap revenue as a customer in last year's numbers. If you look at the underlying results, portfolio services revenue is up 9%, and that's off continued VMA portfolio onboarding and obviously some positive growth in VMAS, which has been a strong contributor for us. The integration of Powerwrap has impacted margins due to its high net worth client base and the inherited cost structure. Remember, Powerwrap was a loss-making business reported for FY 2020. Obviously, we've been able to report a positive contribution for Powerwrap, which I'll touch on in a second. If you look at Praemium's underlying business margins, however, they are consistent with prior periods. Our average platform basis points was 26 for the half, that is broken down between Praemium of 34 and Powerwrap of 21. Gross margins, again, average was 75%, Praemium's was 79%, which has been consistent with prior years. Powerwrap's was 54%. Our EBITDA margins were 33%, Praemium's of 36%, which is below the last reported half, predominantly due to obviously declining platform revenue during the COVID period, but also continued investment in sales and marketing, while Powerwrap's EBITDA margins were 26%. Overall, a good result, but I suppose more importantly, it positions the business for growth in the second half and beyond. The investment in sales are now starting to generate results. As I mentioned, we're very pleased to report a positive contribution from Powerwrap of AUD 1.8 million, and that's obviously from the implementation of synergies, which are flowing through into cost savings. If I turn now to Slide 12, we'll go through the international results. You can see, again, revenue's been weathering global volatility. Overall net revenue is down 2%, but similar to the last half, if you break up the core components, our platform revenue is increasing, is up 20%, and that's off the back of increasing inflows and increasing FUA, which is up 24%. At the same time, our fund revenue, which relates to the outflows from the Smartfund protected product, is down 55%, which is why the overall platform revenue is down 8%. Our planning software continues to grow from new WealthCraft clients and from the conversion of Plan clients to WealthCraft. Despite the decline in revenue, we've been able to deliver improved operating leverage. Expenses, you can see, are down by 7% from operational efficiencies. The overall result is a loss of AUD 600,000, which is a 41% decrease. I think more importantly, if you break it out between the U.K. segment, it was a loss of AUD 200,000, which does include the first half R&D incentive, but it is a 72% improvement in the loss compared to this time last year. Asia segment, which is our WealthCraft product center, an AUD 400,000 loss, which is a slight increase on the prior year. If I turn to slide, let me just move to it, Slide 13, we'll talk through quickly our cash flow. I suppose we're pleased to report continuing cash flow positive generation, despite incurring a number of costs relating to the acquisition. You'll see that net operating cash flow was AUD 2.2 million. That is net of one-off costs of acquisition costs of AUD 1.6 million. You'll see in the investing cash flow line that acquisition was a positive AUD 1.2 million in cash flow because we did acquire AUD 14.6 million from Powerwrap as part of the takeover. Our R&D CapEx was AUD 3.4 million for the half, which is a combination of Australian and U.K. projects, but also Powerwrap projects. Obviously, they've been capitalizing R&D for a number of their projects as well. You can see at the financing cash flow line, we've drawn down our AUD 15 million loan, which we'll be paying down over a three-year term. Final slide for me on Slide 14 is just a quick overview of our balance sheet. You'll see that we still have a strong balance sheet. Cash reserves with the inclusion of Powerwrap is now AUD 28.9 million. Our regulatory cash, given Powerwrap is also a regulated scheme, is now AUD 12 million. You'll see, obviously, a sizable increase in intangibles related to the goodwill associated with the Powerwrap takeover. Our franking credits continue to build, AUD 13 million, and there are some tax losses that we are now reviewing. There's around AUD 10 million -AUD 12 million of tax losses with Powerwrap. Still to be determined how much of that can transition across as part of the acquisition. With that, I will hand to Michael. Thank you, Paul. We're on Slide 16 now. In terms of the key drivers for Australia, it's been a pretty interesting half for us. 116% increase in net inflows for the business. Our FUA, platform FUA is up 132%, obviously helped by Powerwrap. Just in terms of portfolio numbers, and we're showing here for the first time the custody and non-custody numbers. This excludes some of our institutional clients. You can see again, a 13% increase in portfolio numbers. Thank you, Paul. The next slide is really talk a little bit about the industry. I guess this is probably not news to any of you, but I think it was just worthwhile showing some of the key numbers here. The Hayne Royal Commission is really changing the advice space. Margin squeeze because they've got more overhead, more compliance, more due diligence to do. Product commissions, the grandfathered product commissions are now pretty much gone, and the whole idea of conflicted advice is yesterday's story. Of course, we're having now Brexit. You can see down the bottom there, the continued loss of advisors from institutions. Not only have we seen a 25% decline in the number of advisors in the industry since Hayne, but we're also seeing a continued march of advisors from the institutions. Now, what does that mean for platforms? Well, it means that we're now going to have a smaller cohort of advisors. Those advisors are progressively looking for alternatives to the institutional platforms that are tech-savvy and independent and capable and agile. I think firms like Praemium and some of our peers are very well-placed. Just to give you a sense of how things have changed so dramatically, if you just take the 12 months to September 2020, the challenger platforms, which we mention down the bottom here, are up 34%. In that same period, the institutions are down 10%. Now remember, that 10% is on a much bigger number than what we're talking about for the platforms. As you can see, Praemium obviously had a very big year, if you like, with 100% increase in our FUA, thanks largely to Powerwrap. Thank you, Paul. Let me come back to Powerwrap. I'll spend a bit more time on Powerwrap. It really has, I think, given us a seat at the table as a scale player. We're targeting AUD 6 million of cost synergies in the new financial year 2022, which we're still very confident on. Although, as I said before, we think that better technology and better engagement with our clients, we think will generate good revenue synergies as well. Overall, one of the great things about bringing Powerwrap into our world is that we really are, we think, the platform of everything. We can handle platform assets that are off platform. That's always been our core skill. That's how we started as a company 20 years ago. Our platform itself is very strong. We have a large addressable market, as you know. Adding in Powerwrap, which is arguably the only independent open architecture platform designed specifically for the private wealth market, I think really rounds out the Praemium proposition. We're very excited about it. We've had great support, great feedback from the clients of Powerwrap as well. I think everyone's looking forward to how we now evolve the product, over this year. By the way, there are new regulations coming in later this calendar year called the DDO or the Design, Diligence, sorry- Distribution. Design and Distribution Obligation. Thank you, Paul. We will, in one step, define the integrated solution of Powerwrap and Praemium at the same time as preparing for the new set of regulations that are coming in later this year. Thank you, Paul. I want to talk a little bit about VMA. As you can see here, I want to talk specifically about VMAS. We've been doing VMAS now for three years. What's really interesting is we've done some research, with third-party firm. What we've discovered is that about 22% of wealth is off platform. Now, on platform is the most efficient place for wealth to be because all the assets are in one place. A serious chunk of wealth sits off platforms, and it is a huge pain point for advisors. Think about how it is for yourselves when you've got money, a stockbroking system, money in a bank, money in a term deposit, money with a fund. It's very, very hard to manage and monitor your investments. This is a great strength of Praemium, by taking our software, which is very, very good at non-custody, with all the data feeds we've got, with all the analytics we've got, with corporate action capability we've got, our time machine and so on. We are very, very good at delivering accuracy, be that on tax or performance or whatever it might be, we're now adding the administration because there's not a lot of choices for advisors when they're trying to find an efficient and highly accurate, with a strong analytical capability for assets that are off platform. You can see the dramatic growth we've seen in VMAS. We think that there's a lot more to come. Our growth over the last 12 months has been 20% up in portfolios and 85% up in revenue. We think the opportunity in this space is big, we think we are now at scale, we think that we can really back ourselves. Thank you, Paul. I want to talk a little bit about the international business. Again, in terms of dashboards, excuse me, our FUA is up 31%. Our pension schemes are up 52% for the year, which is fantastic. Portfolio numbers are up 28%. If I go to the next slide. Let me spend a bit of time on this. I think this is probably of great interest to many of you. We've shown this slide before. This is the update for the half. What you can see here is a tale of two stories. On the one hand, you see the Praemium Smartfund range in decline, and they're almost gone now. You can see that on the bottom right-hand corner graph. The amount of money we now have in the Smartfunds is down to GBP 31 million. We expect that to ease away over time. It'll stop being a headwind if you like, for us, with a negative revenue. Meanwhile, the platform is growing very, very strongly. You've seen it in the inflow numbers. You're seeing it in the growth of our FUA. We believe that as that headwind fades, as the growth of platform revenue outpaces that fund decline from GBP 31 million, it'll go to zero at some point in the near future. We believe that we are on track to get this business not only profitable, but hopefully strongly profitable with very good operating leverage going forward. Thank you, Paul. We continue to win awards internationally. I think we said we were going to put some effort into raising our profile, raising our awareness, showing people what we're good at, and you can see more and more wins. Again, the International Adviser guys have appointed us International Platform of the year again. I think it's the third year in a row. We're winning awards for innovation. I think most importantly, though, is The Lang Cat. They do independent research on all the 21 platforms in the U.K. We consistently rank in the top three. Overall, we are ranked second. We are ranked number one, though, in overarching features, number two in proposition, and three in service. We're very proud of that, and it is having an effect on what advisors think. Remember, this is actually based on what advisors say. It's not necessarily what The Lang Cat says. Thank you, Paul. The last one for international, I think the momentum speaks for itself. If you just take the last two years. Remember, it's been the last two years where we've really had this strategy of trying to grow our business, telling our story. You can see there's been a step change over the last two years. Again, in 2020. I'm very proud to say that we continue to have great support from the Discretionary Fund Managers coming out of the U.K. We have an increase of 29% of them over the year. I'm also pretty happy with what's going on with WealthCraft. The cross-sale with WealthCraft and the platform was very strong with the 58% compared to 52% last year, whilst WealthCraft itself is growing, and it grew 14% in terms of client firms in this half. With that, let's go on to the summary on page 26. Thank you, Paul. We are two years into our growth strategy, and I think it's important to remind ourselves of the journey that we've been. Our narrative has been that we wanted to go from being a niche SMA platform into a full platform. We did that exactly two years ago, and from there, we've been measuring our march forward in terms of gaining market share. The Powerwrap acquisition was a very, very important acquisition for us. It's uniquely accretive. Remember, they use the same core technology as Praemium, and so we believe that when we put this together, we're going to have this is one of the once-in-a-generation great transformations and great acquisitions. Our SaaS leadership continues. We continue to invest in SaaS. Other firms are likewise seeing the opportunity here, given just how much money sits off-platform. We believe we continue to sustain our advantage in non-custodial reporting. The opportunity now for our clients, particularly our existing SaaS clients, as well as new ones, to outsource the administration to us, we think is a really exciting opportunity. I think over the last three years, particularly with VMAS, we've demonstrated that we can do this and we've got the scalability now. Also on international. It's been a long road. It's been frustrating for many people that we haven't made it profitable, but I don't believe we are that far away. What you're seeing now is four consecutive halves of a much higher level of inflows, and we believe, based on particularly the sales that we've had over the last six months, that we could have another step up in terms of our growth rate. We're very excited about that. We believe that as the U.K. platform market continues to change and evolve, that we will stand out as one of those few firms that have their own technology and has the best technology. Thank you, Paul. Finally, let me just talk a little bit about how we see the future. For the international platform, we see further expansion of the DFM platform. To give you a sense of it, there's over 100 DFMs in the U.K. We continue to bring more of them on board, and we've got some exciting new ones coming on board. They are a very important channel for bringing business to our U.K. platform. In the offshore platform, offshore market, because of regulation changes, advisors can't make the same kind of money by flogging insurance products and portfolio bonds like they used to. All of the offshore advisors, we're seeing it in Asia, we're seeing it in Dubai, in places like that, they are now having to make the switch from the old world of product flogging to the new world of strategic advice fee-based on a platform. Praemium, as the best platform internationally, we are winning a lot of new business. A lot of the time, we're also getting the WealthCraft account as well, because to the extent they've got legacy assets with insurance companies, the WealthCraft system gives you that data feed and gives that visibility to the advisors. In terms of things that we think will also improve our efficiency, we are going to do some changes around our pension book. We're also now adding a bit more admin support from our Yerevan office, which has always been traditionally more of a technology center, but progressively now, and it started with VMAS, we're doing some of the admin support there as well. For the Australia platform, obviously Powerwrap is a major driver of growth. We believe that the proposition itself, we think is the best in class for the private market in the independent space. We think as we bring our technology, our front end, our sales capability, our client service capability and so on, we believe we can really power up the Powerwrap proposition. As I said, we've been working on growing our business for the last two years, but we're still relatively new, if you like, as having a full service platform. I just want to say, just remind people, we are still early in our journey, and the progress we are making is very encouraging. As I said, we see great opportunity. If you think about the amount of money that we report on, if you like, from a SaaS perspective, that is well over AUD 100 billion, it's in the hundreds of billions. The market potential there for us on VMAS, we think is massive. In terms of drivers, we plan to do most of the integration work this calendar year. Obviously, we've got the DDO obligations to do as well, but our plan is to get a lot of that integration work between the Powerwrap and Praemium done in this calendar year to realize the synergies and to deliver a better product to the market. We think that for our non-custodial agent or VMAS, we believe there are more efficiency gains to be had as we scale this up and as we get better and better at it. So far, after three years, I'm really encouraged by the way that is going. With that, I think we then turn to questions. 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 your handset to ask your question. Your first question comes from Danny Younis from Shaw and Partners. Please go ahead. Hi, Michael. Hi, Paul. I've got three questions and maybe a clarification at the end too, please. My first question is around the impact of margins from the integration of Powerwrap. With gross margins 54%, EBITDA of 26%, and your revenue yield of 21 basis points, should we view that as a bottom? Clearly there's likely to be some sales and marketing investment going forward and more cost out synergies to come. How should we view those metrics going forward? Is that a bottom for you guys? Danny, Paul here. I think, as you said, we've inherited a business that last year was loss-making. Obviously we've called out synergies, which we're well progressed on. Obviously we still have significant synergies to come. In terms of gross margin and EBITDA margin, yes, we would think we're at the bottom range, as you say, and we would expect that to improve as the synergies flow through. Similarly with the revenue yield at 21 bps, because I think previously they've done about 22, 23 bps. Yeah, I'll just jump in there, Danny. I think one thing that's changed over the year, of course, is the interest cash margins have declined. I think for everyone who collects that kind of fund. I think that's probably a permanent change unless interest rates suddenly change, which nobody foresees. Okay. Going to the international business, this is a perennial question that seems to come up. You've talked about it's been a long road. You're stepping up the growth rate. You're clearly making inroads there, particularly in the U.K. with the losses coming down. Now you're talking about an inflection point. The 7% expense reductions you've put through, are they permanently locked down or are they likely to change going forward? Given the Smartfund exit happening, it seems like you're approaching break even probably closer rather than later at this stage. One of the obvious cost savings has been travel. We've had a bit of a disadvantage on travel because if you think about where our people are, we have people in Hong Kong, Dubai, Jersey, and U.K., but our clients are in Singapore and now Japan and South Africa and so on as well. In the past, to win that business, we've had to have some people do some pretty unproductive travel. All of that's stopped now, and yet we've still found a way to sell and support our clients. I suspect that we will, when all this is over, that we'll have a little bit more on the travel cost, but I think it'll be more productive. In other words, if someone's going to fly from Dubai to Hong Kong, they'll have 10 clients to see instead of five. I think that that's a big part of it. The thing is, clearly the platform itself has a lot of operating leverage, and the area where we're spending money is on client support, implementation, and sales, basically. We've done that progressively through 2020 for the international business. In fact, we added probably six or seven or eight people in Dubai alone, just because of the demand that we're getting all over the world. Where we are adding costs, it's usually to drive growth. Excellent. Thanks. Just on the R&D CapEx of AUD 3.4 million, can you split that across the Praemium business? Platform upgrades, new product development. I know previously you've talked about ESG, the advisor portal in the U.K. Where's that spend gone, and how much of it was Powerwrap? Yeah, Danny, Paul here. In terms of Powerwrap, it was just under AUD 400,000 for the half. If you go back to Slide 13, sorry, Slide 7, obviously we've got a long list of ongoing development. As you said, we've launched a number of either products or functionality, ESG you've touched on. We're obviously continuing our platform enhancement. In terms of overall R&D CapEx, Praemium, if you look at last year, capitalized around AUD 5 million and Powerwrap was around AUD 2 million. AUD 3.4 million for this half is kind of in the range. We would expect that for the more reasonable number going forward. Okay, thanks. Just a clarification, I think Powerwrap I originally had consolidated from the 2nd of October, but it looks like you've included another month in there from September. What's the actual date that you integrated Powerwrap in? Yeah. There's actual control and there's accounting control. Under the accounting rules, they've deemed it as when we took 50% of the acceptances, which is the 4th of September. In terms of practical control, Danny, you're absolutely right, it was October. We didn't pay cash and shares until the end of October. There is an accounting quirk for one month, but it has allowed us to take an extra month. Great. Thanks, guys. Thanks, Danny. Thank you. Your next question comes from Nick Burgess from Ord Minnett. Please go ahead. Morning, Michael. Morning, Paul. A couple questions. That 24% increase in sales and marketing you mentioned, a little bit more color on that. Is that all based in Australia? Nick, Paul here. No. No, it's not. Predominantly in Australia, yes. As Michael said, we've been adding some support people in Dubai to support the international business, and we've added a couple of people in Hong Kong, Dubai, and U.K. from the sales perspective. Obviously most of it relates to the full impact of bringing on the sales team in Australia that we've done over the last six to nine months. Obviously that's been flowing through. There has been an incremental increase in the international business as well. Okay. Thanks. Just on the synergies of the Powerwrap business, so the AUD 6 million, where are you at at the end of the half or is that today in terms of what you've achieved versus what needs to be achieved? Yeah, look, in terms of on an annualized basis of the AUD 6 million, we're probably about halfway there. Obviously that's relating to more back office, corporate related costs, management duplication. I suppose the next half is, as we've called out, more supplier integration, and then some of the more IT architecture heavy lifting projects, I suppose. Yeah. Halfway through, but obviously we're earmarking the remainder in the next, as we said, towards the end of it, 2022. Yeah. Okay. Thank you. Michael, just on the U.K. Can we potentially get a little bit more of a timeline from your perspective on the international business and profitability? Is it reasonable as we sit here today that it hits breakeven in the second half, do you think? You mean second half of it? This year? Yes. Okay. Well, we've got to remember, there's the U.K. and there's Asia, which is, I think as Paul said, is the -400, but that's largely development people. See, all our wealth platforms. If you're talking specifically about the U.K. and not the Asian part, I can't give you a forecast because I honestly don't know. What I do know is this, and that is that the momentum that we have with the business today is chalk and cheese from two years ago, much better than a year ago. Remember, COVID really was a challenge, particularly for our U.K. advisers, who obviously had a pretty tough time of it. As they went through a tough time through the middle of 2020, our offshore advisers didn't seem to be as affected, actually. When they came back in December, you saw December was just this roaring quarter for us. Whilst all that was going on, we've been adding a lot of new clients to the platform. One of the reasons that I'm nervous about making projections is simply this: when you get to a certain size in terms of number of clients and inflows and so on, you get a certain size. The variance in terms of what you expect from quarter to quarter doesn't change much. We're still too early for me to say, "Okay, I've got a pretty stable, knowable, bankable new business introduction." We're just focusing on continuing to build this up. All the evidence is that this is not a one-off quarter, half, year, whatever it might be. It's demonstrably a different momentum. As I said, our sales efforts are proving to be quite successful because you get this hysteresis, right? You get this sort of, "Oh, you're doing well. Why are you doing well? I should have a look." They have a look and they like it. I think 2021 will be the year, I think where Give me six, give me another, give me two or three more quarters, Nick, and if it looks like the momentum can really accelerate from here, which I believe it can, then I'll be much more comfortable saying, "Nick, that's the date. Yeah, okay. I understand that. Can I just finally just ask that same question a slightly different way? Let's assume that the fourth quarter momentum that you saw in the U.K. business in particular is sustainable or sustained. Outside of business as usual, are there any costs or any investment that you want to put in that business, let's say, over the next 12 months, to take it to that or to see that momentum improve? Yeah- Are you happy with the shape of the cost base now? No, no, we're happy with the cost base. Cost base is fine. In fact, if you exclude all the increase in client support, sales, implementation, and so on, our cost base really hasn't changed much. We've reduced some travel costs. That said, I've highlighted one or two options here, but there's a few initiatives that we've got in mind that will restructure certain parts of our business that we think will give us further efficiencies through this year. There's a few elements. You got to understand, in the Praemium world in the U.K., we've got quite a lot of regulated entities, if we can put it that way. We've got some opportunities, I think, to reconfigure some of those through the year, which will give us some cost efficiencies. It's the revenue uptick, I think, all things being equal, if we held the line on cost and we can go to the next level of growth, then I think we're a different business. Profitability is just inevitable. I think profitability is inevitable in any event. We're not looking to just crawl across the line. We want this to become a highly accretive, highly profitable business in its own right. Thanks very much. Thank you. Thank you. Once again If you wish to ask question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Lafitani Sotiriou from Bell Potter. Please go ahead. Good morning, everyone. Michael, I particularly liked your tagline that you'd like to power up the Powerwrap acquisition. More specifically, there are comments around being a platform of everything. Now, are you able to go into a little bit more detail? Now that you've got control of Powerwrap, are you looking to have one interface for all the underlying platforms, or do you want to add a little bit of color? No, absolutely. It will be one interface. When we talk about our interfaces, we talk about our adviser portal and our investor portal. They don't really work for the Powerwrap guys yet. Part of the heavy lifting IT architecture that Paul referred to needs to be done before we can make that work. Once we make that work, it'll just work. Meanwhile, Powerwrap have built their own interfaces. One, I think, is reasonably well-known. It's called Hive. Fortunately, that's being built off APIs, largely from Praemium. We think we can refactor that reasonably easily, and we hope to get that done this calendar year as well. Once those things are in place, then some of the great capability we've got, like artificial intelligence, will then work for all the Powerwrap clients. Our ESG capability, which really works in an SMA model, clearly will work for the Powerwrap clients because we're going to move them into our SMA. A lot of the innovations that we have, we absolutely will bring to the fore, and everything that clients have now in the Praemium world, the Powerwrap world will have as well. Our plan is that we're going to deeply integrate it because it doesn't make sense for us to think about it as two platforms. In effect, it has always been one platform. It's just been architected differently, and people have added on things in different ways. No, we're very excited. It's a very unique opportunity, particularly now with DDO coming, for us to stand back from it, which is actually what we're doing now. To stand back from it and try and imagine how far we can take this and make it awesome. When we talk about the platform of everything, whether you're a high-net-wealth client or a retail client on platform, or you want non-custody or want to do non-custody with admin, whatever it might be, the Praemium system works, and it does it in a way that's smooth, if you like, and ubiquitous. No, we're very excited. Is there a rough timing to this? Sorry, what? Is there a rough timing as to when you expect that to be in place? It's not a rough timing. It's October this year when the DDO comes into effect. Platforms, as I understand it, will become both distributors and issuers of product. We have to work through that. Actually, the timing for us is very fortunate because we want to do this deep integration with Powerwrap, but we have to, like all the platforms and fund managers, we have to do this DDO where you've got target markets and so on. We have to do that at the same time. We're very fortunate that we're actually getting to do both those things at the same time. Otherwise, you end up doing one thing and then having to do something else. We think 2021 will be a year where we get all this in place, and then I think we've got the best platform around. Okay, that makes sense. Just moving on to grandfathered commissions. Obviously, the big change came through at the start of this calendar year. Can you just provide some discussion as to whether you're seeing any difference on the back of that change? Yeah. I'm sure it's different through our peers, but I can tell you what our experience is. The days of going around and signing up big dealer groups, that's like yesterday now. I think a lot of us are on those dealer groups in terms of an APL perspective. The focus is very different, and what we're seeing, of course, is that advisers are moving around, and your data shows that, Lafitani. We're getting a lot now of small boutique adviser firms wanting to start up, looking for new ways of operating and using new technology. Our focus from a sales perspective is firms, and there's an awful lot of new boutique firms, be they self-licensed or licensed by somebody else. In a sense, it's a much more traditional kind of sales environment now. You have a firm, you try and sell to that firm. We're getting a lot of engagement. Right now, if you think of the big end of town, they probably still hold a lot of the private wealth, but even that seems to be changing. We're getting a lot of these tenders coming through now. A lot of it is private wealth, actually. We're seeing a lot of private wealth interests. There's obviously quite a lot of private wealth out there, and we're a natural firm to talk to, particularly now that we've got Powerwrap. In summary, that is a yes. You're seeing a change in people coming through looking to move post that grandfathered commission change. Absolutely. Absolutely. Yeah. It's really that boutique end now. Gone are the days of big, big, big groups. There's still some of them, obviously, but no, it's very much becoming a boutique, very client-centric, independent, tech-savvy, modern approach, if you like. I think that's a healthy change for the industry. Sure. That makes sense. Moving on to the next question. This is for you, Paul. You mentioned something about some tax losses that may be able to come from Powerwrap. Can you elaborate on that. I missed what the figure is. While we're at it, now that U.K. may tick over to profitability sooner than expected, do you want to just talk through the tax losses in that jurisdiction? Thanks, Lafitani. Obviously, Powerwrap have tax losses. I suppose the work that we need to do now is, there's a number of tests that we need to obviously adhere to be able to transfer those losses to the Praemium group. That work is underway now. We'll just kick that off. There is potentially up to 10 million- 12 million of tax losses that may be able to come across, but obviously I don't have a view of what percentage of that is allowed going forward. We'll report on that in the next half. In terms of the U.K. tax loss position, obviously, that has been a sizable number for a number of years. It's still in the AUD 35 million range. Once, as you said, the U.K. business turns to profitability, we'll obviously be able to utilize those losses across the U.K. group. Obviously, any positive cash flows we would be looking to send back to the Australian parent. Okay. Thanks for that. With the U.K. business, could you give us a rough, to what's split as to what's in the U.K. versus what's in the international markets? You caught me off guard there, Lafitani. Lafitani, Michael's jumping in. Lafitani, it's normally around 1/3, 2/3. 1/3 U.K. domestic, 1/3 offshore. Yeah, that's more clearer. I'll come back to you on that number. Okay. Just finally, just wanted to clarify the timing of the synergy. Half of it, you mentioned that you've worked your way through, but I imagine not much of that's actually captured in the last result or the result you're presenting today. Obviously that was at the very end of the period a lot of the changes you would've made. Really the benefits, the full AUD 6 million are primarily flowing through this half and into financial year 2022. Lafitani, that's right. That's correct. Yeah, some impact in this half, but obviously the next half and beyond is where we get full impact. Your number was correct, about 2/3, 1/3. All right, nice. Thanks, guys. Thanks, Lafitani. Thank you. 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. We will pause as we wait for participants to join the queue. There are no further questions at this time. I will now hand back to, pardon me. We do have a question. Your next question comes from Siraj Ahmed from Citi. Please go ahead. Hi there. Just a couple of questions. Mike, just firstly, what's the size of your sales and marketing team here in Australia right now? What's the size of the sales and marketing team in Australia? Yes. Well, we define sales, marketing, product, and relationship management, and that group would be 40-50 people. Especially given you're saying now it's more fragmented and it's more boutique groups that's coming up, do you think that 40- 50 people is enough or do you need more investment in that area? Well, it's a good question. If BDMs were free, then you'd have 1 million of them, wouldn't you? Yeah, it's a good question. Look, we're comfortable with the size. I'll put it that way. I think that we'll continue to tinker with the model and make adjustments here and there. We don't feel uncomfortable with where we are right now. Can you just expand on the Design and Distribution Obligations? You're saying it's quite a big undertaking. What sort of investment? Is it just the current team focusing on that, or would you need to expand the development team, to do that bit of work? All through my time serving the company is we've made step changes in our development resource, but rarely for one given project. It's just more about prioritizing the work. It's still a little bit unclear exactly how this is all going to work, particularly as, oddly enough, in the regulation, the advisors are carved out. We have to have a target market, and we have to have a product that works for that market. But when there's an advisor between us as a platform and the investor, it's not real clear yet exactly how we're going to manage that if the advisors are not involved somehow since they're the ones who know the investors. Look, I think a lot more water to run under the bridge. Look, the way it's always worked in our world is that we prioritize our work. Obviously, DDO is a priority because it's legislation. Integrating Powerwrap is a big priority. The other third priority that we've got that we want to continue to develop is our client experience. We want to really make the product more intuitive, more user-friendly and so on. We don't see ourselves having to do a dramatic increase in technology. Yeah. To summarize, not a big step up in OpEx for this. It's one of the focus areas for this year. OpEx we have increased. We put a lot more effort into, or resource into client service in particular. Fortunately, we've started to learn how to get administration done in our Armenia office. That's been very successful. It's really giving us operating leverage. That actually has been surprisingly positive for us. I think our OpEx going forward and our leverage will be quite strong. I think it just shows the benefits of investing in a location and really spending the time, because it's not outsourcing, right? These are our staff. Already they are now doing administration for both Melbourne and the U.K. I think there's a lot of leverage to come from that as well. Just lastly, you spoke of the pipeline, grandfathered commissions, etc, helping. What are you seeing on the pricing environment in this competition overall? We're not seeing much of it in terms of our traditional business, quite frankly, because we've always been at the reasonably cost-effective end of the scale, if I can put it that way. The interesting one will be the private wealth space, I think. It is invariably lower margin, right? It's bigger accounts and there's caps and stuff like that. That's the area where I don't think of it as a margin squeeze, I just think of it as a reality. The best way to respond to that reality is to improve our efficiencies. Got it. Just on the pricing front, maybe one for Paul. One question that's come up is just cash margins and whether the supplier to you reduces pricing. Have you any discussions on that or can you just add some color? Yeah. No real comment on the supplier side. Obviously, I think we've discussed this before, but our internal view is with current interest rates, being able to maintain cash margins at the level they're at will be challenging, I think, certainly for the bank. Nothing to report at this stage, Siraj, but we'll obviously watch this space, see how we go. Thanks, Michael. Thanks, Paul. Thanks, Siraj. Thank you. There are no further questions at this time. I will now hand back to Michael for closing remarks. Thank you, everybody, for joining us today. We hope you found it interesting, and we look forward to talking to you again in six months' time. Thank you all. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.