Magellan Financial Group Stock

Good morning, everyone. I'm Stu Kingham, Head of Investor Relations, and thank you for joining us today. We're delighted to present the results of Magellan Financial Group for the 2026 year. It's been a significant period for both MFG and Barrenjoey. Today, we've released financial information for MFG, Barrenjoey and provided a pro forma combined view.

Today, you'll hear from Brian Benari, MFG Chief Executive Officer; and Gavin Buchanan, Chief Financial Officer. This will be followed by a question-and-answer session. With that, let me hand over to Brian.

Thanks very much, Stuart, and good morning, and thank you all for joining us. I'm delighted to be the new CEO of MFG and to take you through our FY '26 results, our first results since the merger. I'm joined today by Gavin Buchanan, Chief Financial Officer. Gavin has a background in financial markets and brings extensive experience in funds management and financial control, making him the ideal CFO for the merged group.

Today's presentation will walk through the 30 June results for MFG in isolation, and it will also build a full picture of performance for the year for both MFG and Barrenjoey and show what the combined group looks like. Firstly, I'll provide an update on the business today before handing to Gavin to cover the financial performance. After that, I will share our plans for what's ahead, including our near-term priorities.

But before we get into the group update, I want to take a moment to recall the rationale for the merger. We have brought together 2 highly complementary Australian businesses. Combined, they will deliver an enhanced client proposition, a more diversified and resilient business, and a strong balance sheet, providing capacity for growth. We have also taken decisive actions to lay the groundwork for our next phase of growth. Integration is on track.

The restructure of the Heritage Global Equity Funds was completed in June, providing investors with a lower cost offering backed by a strong track record of performance. Consolidation and derisking of invested capital has been completed, which will reduce profit and loss volatility. And finally, growth opportunities have been identified for each business, and we will prioritize and execute these in a structured and disciplined way.

Let me turn now to what the group looks like today. From 1 July, we operate across 3 distinct business lines: Financial Markets, our fixed income and equity sales, trading and financing business and our market-leading research capability; Corporate Finance, M&A, strategic and debt advisory, and equity and debt capital markets; and Investment Management, our public and private markets investment capability.

The FY '26 revenue split shows a 3-way balanced business. No single pillar dominates. We've previously announced that subject to shareholder approval at our AGM in October, MFG will formally become Barrenjoey Group Limited. It's more than a name change. It reflects the scale and ambition of the combined business and the reality of what we've built, a staff-aligned, client-focused financial services group.

This slide tells the story of how we got here. Barrenjoey has scaled from a start-up into a key player across all of its businesses. Note the half-on-half trends for Corporate Finance and Financial Markets since establishment, 5 years of consistent compounding growth across differing market conditions. And importantly, that growth hasn't been lumpy. We see very little evidence of half-on-half seasonality, which speaks to the durability of the franchise we've built. Investment Management, which is now hitting 20 years in market, has in recent years had revenues impacted principally by the unwind of the Global Equity Fund. The core business remains resilient and cash generative with a strong distribution platform, which speaks to one of the key rationales for our merger.

Diversified revenues across complementary capabilities smooth the combined group's earnings profile through the cycle. On a pro forma basis, in the FY '26 year, the combined group generated $778 million of revenue and $215 million of operating earnings after tax.

Turning to where we are today, less than 2 months post completion. The majority of our people are now in the same building with the remaining team relocating within 2 weeks. We expect to have migrated on to common core systems by 31 December and complete integration by 30 June 2027. Synergies will be progressively realized across the year. We're already seeing identified merger benefits. Our expanded portfolio of alternative asset products is gaining traction. The newly established Barrenjoey Asset-Backed Income Fund has increased AUM by 42% in just 3 months and the first Ag credit fund by 15%. This underscores that combining Barrenjoey's origination capability with MFG's distribution reach works in practice. We're also making targeted hires across our platform to strengthen and diversify our client offering.

Now with that, let me hand over to Gavin, who will take you through how MFG and Barrenjoey each performed over the year and how the 2 come together in the combined group result. Gavin, over to you.

Thank you, Brian. Good morning, and welcome, everyone, joining on the call. From today's presentation, you'll clearly see the building blocks that make up the stand-alone performance of each of MFG and Barrenjoey and how these combine to form a pro forma merged result for the group. This pro forma shows what the year would have looked like had we merged on the 1st of July 2025 rather than the 1st of July 2026.

We then go a step further, showing the expected impact to future earnings of management actions taken late in the year, restructuring the Heritage Global Equity Funds and derisking the group's capital. This approach paints a clear picture of some of the expected financial outcomes as we head into our first year, a year of transition as we integrate both businesses. Now before turning to the results, I'd also like to note that we've published a detailed investor report on both MFG's and Barrenjoey's current and historical financial performance. The investor report and Barrenjoey's audited financial report for 2026 are available from our shareholder center.

Starting with MFG's stand-alone financial performance. Operating profit for the year was impacted by an 11% (sic) [ 12% ] reduction in revenue to $291 million. Investment Management revenue declined 21% or $53 million before tax, and I'll go through the drivers of this shortly. Partially offsetting this was strong growth in Partnerships income, up 70%, underpinned by Barrenjoey's growth. Operating expenses were tightly managed, down 2% despite the higher inflationary environment. Investment income, largely the return on fund investments, fell 14% to $45 million, reflecting lower capital gains being available to distribute.

With the lower revenue and continued cost control, operating profit after tax was $145 million, down 9%. Statutory earnings or net profit after tax was $88 million, down 47% with a number of nonrecurring and noncash items impacting the result, particularly in the second half. These included a $38 million negative fair value movement on fund investments as well as $11 million of merger-related costs, which were largely adviser, legal, and property transition costs. As Brian mentioned, we've recently changed how capital is invested to remove much of this volatility in the future, and I will go through this shortly.

Turning to the drivers of the lower investment management revenue. This starts with net flows and how they contributed to changes in the composition of AUM. Net outflows for the year were $3.3 billion, largely contained to Magellan Global Equities. Airlie and Vinva together delivered positive net inflows totaling $1.5 billion, more than offsetting the modest outflows in Global Listed Infrastructure. Of the $4.2 billion of Magellan Global Equities net outflows, close to 90% came from high-margin retail products, and this shift is clear in the retail mix at the bottom of the table. As announced previously, management has taken action to improve client outcomes by repricing and transitioning investment management of 2 Heritage Global Equity funds to Vinva. This resulted in the transition of $4.9 billion of AUM, which can be seen moving between the products in the table. Since the transition, we have seen outflows continue as advisers meet with their clients and assess the change of strategy.

Now looking at the composition of AUM and management fees in more detail. With outflows contained to the retail Global Equities products, the mix between strategies has shifted materially over the past 2 years. You can see this on the chart on the left-hand side. The dark blue is Magellan Global Equities, which represented 43% of AUM 2 years ago and the Global Opportunities strategy remains, which was 8% of AUM at 30 June. This shift in AUM contribution has had a significant impact on management fees. Average management fees fell from 61 to 52 basis points in 2026, a 15% reduction. Nearly all of the 9 basis point decline reflects the change in AUM composition away from higher-margin retail.

Repricing the Global Equity Funds and transitioning to Vinva occurred in May, only having a 1 basis point impact for the year. As a result, the 2026 average management fee of 52 basis points doesn't fully reflect the go-forward run rate. The exit rate of 42 basis points is a better starting point for both impacts as we move into FY '27.

With that, let's move to Barrenjoey. Barrenjoey is a fast-growing, high-returning business with significant operating leverage. Operating profit after tax increased 68% to $112 million, driven by strong growth across all 3 businesses, which I'll take you through on the next slide. ROE is now nearly 33%, up from 24% just 2 years ago, a clear sign of the improvement in earnings, which has also seen operating leverage emerge as the business scales. You can see this reflected in the cost-to-income ratio falling 12 percentage points over the same period, while the compensation ratio has remained consistent.

Turning now to Barrenjoey's revenue for the year. Total revenue of $573 million was up 34% with strong growth from all 3 businesses, reflecting increased client activity and the returns from earlier years investment in revenue-generating capability. Financial Markets revenue was up 40% year-on-year. A combination of more client activity, increased market share, and higher global market volatility all served to deliver a record year. Corporate Finance, our longest-running and most established business, was up 20%, with particularly strong growth in equity and debt capital markets. Advisory revenue also grew during the year coming off the back of advising on $25 billion of M&A transactions as well as from investment in our teams to expand sector coverage. Favorable market conditions lifted equity capital markets, although the conflict in the Middle East and other factors weighed on IPO activity, which has remained subdued. Debt capital markets activity was strong throughout the year with Barrenjoey appointed as lead manager on over 100 transactions for a range of issuers across government, semi-government, corporate, corporate hybrid, and asset-backed.

Private Capital, our newest business, saw substantial revenue growth. Its fee model is aligned to client outcomes, earning performance fees when superior investment outcomes are delivered. This was highlighted by a $22 million performance fee earned from the GYG investment in the first half. All 3 businesses have an exciting pipeline of growth opportunities aimed at expanding both clients and products, which Brian will touch on shortly.

Now we bring MFG and Barrenjoey together to build the 2026 pro forma profit for the combined group. The combination of the 2 organizations would have generated $778 million of revenue, with all 3 business lines contributing roughly 1/3 each. After deducting expenses and tax and eliminating Barrenjoey's profit from investment management revenue, operating profit was $215 million. There are a couple of items below operating profit that are worth highlighting. Fair value movements on fund investments have historically been volatile with a $38 million after-tax adverse impact on net profit for this period. Moving this capital to cash and high-quality liquid fixed income will reduce this volatility. Equity ownership has been central to Barrenjoey's philosophy. Everyone is an owner. We facilitated this by granting shares to employees when they started. The majority of these were granted when Barrenjoey was established and the bulk of the employees were hired. This cost amortizes over time and importantly, is noncash with all recurring cash employee and bonus expenses included in operating expenses.

This cost has gone up this year as a direct result of the merger with modifications made, including changes to the vesting structure and higher valuation. MFG's merger-related share of this expense is $4.9 million, which you can see being allocated to MFG and then eliminated on the right-hand side. We've also shown MFG's share of Barrenjoey's own merger-related costs which is also eliminated on the right-hand side. All of this results in a pro forma statutory net profit after tax for the combined group of $146 million.

And finally, we have not published a pro forma balance sheet for the combined group today as the standard acquisition accounting and valuation process is ongoing. With the merger only completing on the 1st of July, this process hasn't been finalized. When it has, we will publish a pro forma combined group balance sheet. The combined group holds high levels of cash and capital, providing financial flexibility and opportunities for disciplined investment. As part of coming together, MFG took the opportunity to review how its fund investments were invested. It made the decision to redeem $251 million from various Magellan funds, leaving $118 million as seed capital. From here, the treasury team will manage this capital and invest in cash products and high-quality liquid fixed income, resulting in reduced earnings volatility, but more importantly, reduced risk.

Now I want to address the management actions that will impact earnings into FY '27. Firstly, as we've been through, we've restructured and repriced the Magellan Global Equity Funds, appointing Vinva as investment manager. While a small impact from the repricing was felt this year, the full impact will land in FY '27. Fees were reduced by 55 basis points, resulting in an estimated revenue reduction of $21 million after tax. Partially offsetting this is $5 million of after-tax expense savings, largely from a smaller portfolio management team.

Secondly, as I've just mentioned, in order to reduce risk, we have made changes to how capital is managed. With less risk, there will be lower operating earnings contribution than in the past. We expect this to be about a $17 million after-tax impact relative to FY '26. It is important to note that while these decisions have a short-term financial impact, they have been taken to strengthen and make our company more resilient for the longer term.

Finally, the Board has resolved to pay a fully franked second half dividend of $0.255 per share. This is based on MFG's and Barrenjoey's combined second half operating profit after tax and represents a payout ratio of 80%, consistent with current MFG policy. As part of the merger, the Board has considered this dividend policy for the combined group and has settled on one which seeks to balance the capital needs of the group with shareholder dividends. From FY '27 and subject to Board discretion, the target payout ratio will be between 60% and 90% of the combined group's operating profit after tax. We expect to initially be towards the top end of this range.

So in summary, I want to leave you with 3 points. First, MFG took action to reposition the Global Equity Funds with clients and to derisk its capital. Second, Barrenjoey brings a demonstrated growth track record, one that has been executed efficiently and with discipline. And finally, together, these 2 businesses are powerful, delivering a scalable platform with diversified earnings from which to build into the future. I will now hand back to Brian.

Thanks very much, Gavin. I want to return to the diversification and resilience theme I opened with and be clear on the revenue drivers. It's helpful for how you should think about our earnings going forward. So starting with Corporate Finance. You will have noted the year-to-year growth achieved by the business through different market cycles. Our breadth of sector coverage, and client relationships provides diversification. That breadth is key to our earnings resilience. Deals ebb and flow by sector and by client and a broad base smooths that out over the cycle.

But implicit within the business is a range of repeatable revenues. An example of this is the debt and capital advisory side. We assist our clients with financing and refinancing year in, year out. Another good example is the debt capital markets, where we are averaging 2 deals a week, many of which are from repeat issuers. Now bringing this together, while Corporate Finance revenues may be transactional in nature, they are diversified across a breadth of sectors and relationships and can be repeatable. This continues to smooth the revenue and has provided growth since inception.

Turning to Financial Markets. The fixed income business is worth a special note of explanation. This is a client-led flow business. Clients come to us to trade in and out of bonds and interest rate swaps. Our role is as an intermediary, we make the market, and we capture a spread when matching our buyer and seller clients. Our in-house rate strategy and economics research sharpens our read on the rate cycle, credit conditions and issuer positioning. This intelligence and deep market understanding attracts client flow, broadening our client base. Finally, this business benefits from higher market volatility as it drives client portfolio repositioning.

Investment Management sits firmly at the annuity end of the revenue spectrum. AUM is driven by quality, relevant client offerings, and investment performance. The scale along the bottom of this slide shows the spectrum from more diversified transaction-based revenue through to durable and annuity-style income. What the merger gives us is exposure across that very spectrum simultaneously. Our annuity-style investment management revenue provides ballast with Financial Markets having delivered durable earnings across varying market conditions. The balance that we talk about sits at the heart of the investment case for the combined group.

This slide seeks to bring to life our approach and track record to building and growing Barrenjoey, evidence that when we say structured and disciplined growth, we mean something very specific. It's not just a tagline. Since commencement of each Barrenjoey business, we have incrementally expanded client offerings and our client base. We have done this in a very programmatic way to deliver sustainable business growth. From our first M&A mandate in December 2020 and first cash equities trade through to today, ranking #1 in M&A, equity sales and research and one of Australia's leading fixed income franchises.

Our research covers around 250 listed companies in addition to sectors and economics. It's not just breadth. It's quality. Barrenjoey has more #1 rated research channels than the entire rest of market. More recently, we've been expanding our client base through geographic reach. Building on our Barclays strategic alliance, we established a presence in Abu Dhabi Global Market in 2024 to support the Northern Hemisphere fixed income clients. In 2025, we opened our Hong Kong office to grow our equities franchise. The point of showing this is simple. We see a range of opportunities and are continuing to invest for the future, and we will take the same disciplined approach to executing on these new opportunities.

Our teams are aligned with shareholders and are here for the long term. This creates a continuing focus to invest with a long-term mindset. FY '27 will be a year of transition for Barrenjoey as we move through integration. Our priorities are clear. First, we are focused on completing and capturing the benefits of the merger. This is a top priority. We expect to start to extract the merger benefits that will arise over the integration. Second, we are extending our offerings and client reach. We have built a strong reputation for our deep continued focus on Australian and New Zealand products. The opportunity is to extend and strengthen client reach into international jurisdictions. A good example is the establishment of the U.S. swap dealer license, positioning ourselves with U.S. nexus clients as a preeminent global provider of Aussie and Kiwi dollar fixed income product. With the license now granted, we executed our first U.S. trades a few weeks ago. We are also adding to our Abu Dhabi Global Market team to continue the success we've had in servicing the European and Middle East markets and strengthening the New York presence for our equities business.

Third, investment management opportunities. We have a great platform for growth, including strong distribution, and it's critical that we seed and develop more investment opportunities to meet client demand. In recent years, there's been a material shift in investor appetite, particularly towards private market opportunities, and we're in a good position to capitalize on the changing landscape. To this end, we're in the process of adding new offerings in both our private capital and listed equities business. Importantly, we recognize that we invest and build today for the benefit of years to come.

Finally, Barrenjoey in New Zealand. Barrenjoey New Zealand is an investment for the future. We're excited about the opportunity set, and we've hired some exceptional talent into that business, which will be locally managed. We think of it in 3 phases. 2027 will be the year of build and establishment, 2028 is commencement and 2029 is where we start to see the benefits come through. So to bring it together, firstly, this has been a landmark year having completed a merger of 2 complementary companies. Secondly, our group today is genuinely diversified across revenue and clients with all the right foundations in place for our next phase of growth. Finally, we will continue to grow each business and deliver with the same structured and disciplined approach that has been a hallmark of Barrenjoey since inception.

I want to take this opportunity to thank our exceptional team and our shareholders for their continued support. And with that, Gavin and I are happy to take your questions.

Thank you, Brian. We'll now turn to the Q&A process. [Operator Instructions] Thank you. Operator?

[Operator Instructions] And today's first question will come from Elizabeth Miliatis with Macquarie.

Just the first one is just on the Financial Markets business. Particularly if we just look at the first half and second half revenue numbers in your presentation pack, obviously, adjusting for seasonality, it seems to sort of slowed a little bit in the first -- from the first to the second half. How should we think about the outlook over the next few years? And particularly, if you could make particular comments on what you're excited about from the fixed income business? And do you expect revenue to accelerate from here, noting you've had a very good period over the last 12 months or so there?

Yes, Liz. It's Brian Benari. Maybe I'll have a go at that one, and then Gavin can add as required. So the way we think about the Financial Markets business, it's broadly split, pretty broadly between equities and the fixed income business. Obviously, you're very okay with the equity side. Both of these businesses are activity driven. It's fair to say that the fixed income business certainly benefits from volatility.

And indeed, actually, that can act as quite a good buffer for us. So when you see that volatility, sometimes equity markets slow somewhat, but we can get the benefit of the fixed income business on the other side as people look to rebalance their bond portfolios. The interplay between the 2 of those has meant that we've seen what we would term pretty durable income. And if you actually look at that business over a series of cycles since commencing those businesses when they really were in earnest, both up and running from 2023, we've seen that growth half-to-half coming through.

Inevitably, different market conditions serve up different levels of activity. But as I said, there's somewhat of a buffer -- buffering impact that happens with the interplay between fixed income and equities. We'll continue to build those businesses out. What we see is the growth to date, and the continuing growth to date has all been about expanding our product offering and as well as broadening our client base. I've talked about our client base already. We see opportunities around more of the low-touch side on the equity side. We see opportunities in respect to building out our financing offering as well. So we're very confident in respect to the future for the business. But obviously, there's always market impacts.

Yes. And I'll just -- Liz, I'll just add to that what Brian is saying, just to deal with your question around the actual half-on-half split and just to give you some flavor there. And I think it speaks to the diversified nature of the business that we've got. I think you would probably acknowledge that it was a very active first half in equities, but a much quieter second half in equities as a result principally of the conflict in the Middle East.

Conversely, fixed income picked up in the second half, principally because of the conflict in the second half. And as Brian said, as a client-led flow business, as conditions warrant, clients were a little bit more active in the second half on the fixed income side, and you can see the balance of those 2 things coming through in the first half and the second half.

Okay. Got it. And maybe just a follow-up question. I think the fixed income business is a bit newer versus the equities business. Do you expect that there'll be continued sort of market share gains in that particular segment?

Yes. Liz, we would hope so. I think both of these -- both of the businesses demonstrated good growth over this last period or over each of the periods. So we're seeing growth across both of them, but we would hopefully continue to and expect to continue to grow out each of them.

Okay. Got it. And then just a second question, just on the private markets business. I mean you alluded to expanding your product offering there. But just would be curious to get a bit more color on what does that look like? I think at the moment, you're more single asset type funds. Are you looking to expand into multi-asset funds, particular asset classes? I presume, obviously, just still in Australia. But yes, any more color on what that actually looks like going forward?

Yes, certainly, Liz. So you're exactly right. When we started this business, and it's the newest of our businesses, we started off with single assets, typically around private equity positions and opportunities, single asset funds with clear exit strategies for each of those. The performance, and that was across all sorts of different underlyings. And they have -- the performance to date has been very, very good, and I think we've started to build a track record in that regard. And we've also seen exits like, for instance, the GYG one where investors have done very well.

The next stage is setting up open-ended funds, as you said, and there's 2 of those 2 new funds that have been established. One is the Barrenjoey Agricultural Fund, which is a credit fund. And the second one is the Asset-Backed Income Fund. Both of those are open ended. Both of those are the ones where we've turned the Magellan distribution firehose towards in order to start to build that out. It's early days, but we're certainly if you're starting -- if you can see the picture arising here that we're starting to develop the business, not necessarily that we won't still have single asset funds, but we're starting to open it up more to have open-ended funds as well. It's early days, though, these are my points, it's very much early days.

Yes. Got it. And maybe if I can sneak one third question in as well. Just on the investment management business, particularly with the transition to Vinva for Global Equities money. I think on our numbers, the business is probably not making a decent or much profit in maybe about 12 months' time. How are you thinking about the broader cost base not perhaps specifically in the investment teams but more broadly in Magellan, will there be more synergies to flow through as you work through that cost base from a sort of back-office perspective and distribution team?

Yes. Liz, good question. What I'd say is that we've moved the funds across to Vinva. The way I think about it is we had a fixed cost base of the people managing those funds. We've moved it across to Vinva. That means it's now a variable cost base. So if that -- whether it scales up or scales down from where we are today, the cost base in respect to managing those assets will follow that.

So I think what was really key, and I was -- it was great that Sophia and the team got that restructure completed in June is that what they've effectively done is moved what I would say is a very older structure and offering into a much more contemporary offering. I think the offering through Vinva, who's got a great track record there is really beneficial for the ultimate investor. And obviously, they've also seen that reduction in fees that they're paying.

So I think that means that, that product is now much more contemporary in nature. It's now for us to watch and see actions that any of the investors will take and monitor that. I note that -- and Gav mentioned this, if you were to look at all the offerings at Magellan, the one that had the sustained reduction was the global offering. It peaked at $88 billion. Today, it's in the 4s. We would hope that, that runoff abates, but that's not going to be up to us. That will be up to the investors.

And Liz, I might just address your question around synergies as well and what you can expect from there. We called out as part of the merger that we would deliver $6 million pretax of synergies. We're on track to do that. They are principally focused around technology and supplier harmonization between the 2 businesses. This merger wasn't about trying to harvest synergies. They're 2 complementary businesses rather than overlapping businesses. And as you can imagine, pulling the 2 teams together, we've only just done that. And so we're working through that with both businesses, but confident that we'll be able to deliver that synergies number.

Your next question comes from Siddharth Parameswaran with JPMorgan.

I had 2. One was just on thinking about FY '27. You give us a good slide there on Slide 17, just on -- to see the expected impact of the management actions you're taking. I'd just like to clarify what is and what isn't included in those numbers as we should think about forecasting our FY '27 numbers. So it appears -- can you just clarify firstly that the FY '26 number includes the pro forma numbers for Barrenjoey, including that step-up for the restructuring costs -- sorry, the restructured arrangement that you had with Barclays?

And then there's no synergies. I take it there's still to come and there's no impact of the -- in that reduction that you have there on the Global Equities repricing, the $21 million, there's nothing included there for the lower average FUM as well, right? So those are the things that if we're -- if you're on our side of the fence, those are the additional things we should be allowing for. Would that be right in terms of thinking about FY '27?

Yes. Thanks, Sid, for your question. Yes, let's run through the slide. And hopefully, we can tick off all of those items that you raised there. First and foremost, no, it doesn't take into consideration the AUM change. So that's something that you will need to think about as you work through it. Clearly, average AUM last year was $39.1 billion, and we exited FY '26 at $36.7 billion. So that definitely needs to be taken into consideration.

We called out as part of the merger that there would be some legacy arrangements that would fall away as a result of the merger. They are in the FY '26 results. So that is something that you need to take into consideration. And really, all we are trying to do in the slide is point out that there were 2 kind of key management actions that were taken in the year that do have an impact on the earnings. But there are a whole host of other things that you need to think about, not least of which is what are you going to do from a Financial Markets and Corporate Finance perspective as well because that will also obviously impact the earnings going forward.

Okay. I think that does address those questions. Okay. And maybe I'm going to ask a second one then, just relating to some of the actions you're taking in '27, '28. You said that you're investing in, I think in New Zealand -- to expand in New Zealand in particular. Maybe if you could just comment, we've had a lot of investment in the business. It's been matched by revenues. But just your expectation on this investment? Are we likely to see a drag on earnings into '27 from the pro forma numbers that we've seen from the investments that you're making? Or will the growth from the other divisions offset?

Sid, Brian Benari. So let me say in respect to new -- or first of all, in respect to investing, we continue to invest across all of our different businesses with a whole series of different initiatives in order to broaden our product and our base of clients. And I made reference to that today. Great example of that is the U.S. swap dealer. All the work that's been done on that over the last 1.5 years has already been expensed in our numbers as opposed to the revenues, we should start to get some of the benefits of that coming through this year. And it will be gradual because we've got to onboard the clients, et cetera.

When you go to New Zealand, as I said earlier, we sort of see it in 3 phases. FY '27 is establishment, '28 is up and running, '29 benefits arising. Once we get up and running, we'll obviously benefit from the arrangement with Craigs, whereby we'll provide them execution and research services, which we'll get revenue from. To try and size that maybe is really helpful. So the way to think about it is, in the next year, FY '27, maybe the way to think about it is that we expect the total costs in respect that will run through the P&L on that will be in the vicinity of 1% to 2% of the total cost base, $5 million to $10 million. That's sort of what you should expect to come through in the 2027 year, Sid.

That's super helpful. Okay. And the revenues come later. Okay, that's super helpful. And then just the last question, just on capital. So I mean, you gave us a very helpful slide there showing us the capital you have, the -- on Slide 16, I think $611 million. Is that -- I mean, can we take that as effectively your net tangible assets? And if I could just ask, do we -- how should we think about the capital requirements for the go-forward business? How much is surplus? What do you need for some of the initiatives you're taking?

Yes. Thanks, Sid. Dealing with your first question, is it the NTA of the business? No, it isn't. I think one of the things, which is a little bit difficult, obviously, not having a balance sheet to put in front of you today is to give you that sense, but I can give you a sense of where the net asset position is going to be for the organization. And if you look at either the MFG financial statements or the Barrenjoey financial statements and go to the subsequent event note, you can see some detail around this.

And there is a number of $872 million that you add to the existing net asset position of Barrenjoey, and you'll get yourself to about $1.1 billion of net assets. There is some work to be done, obviously, in the valuation process that will then determine how much of that will be goodwill but we're not expecting that to be a material number in the process. The second part of your question was capital requirements going forward. And also just to kind of speak to some of that $611 million that we see there.

The Barrenjoey number that you see on the slide is really working capital that's in circulation for our business on an ongoing basis. And that's a spot number, obviously, at 30 June, but that is used to support all of our businesses at varying points in time. And so it's important to think about that as well when you do your numbers. From a go-forward perspective, as Brian has mentioned, we're focused on predominantly organic growth in all of our businesses. We're not going to rule out looking at things, but I think we're very focused on adjacent opportunities in all of our businesses. Swap dealer is a good example. New Zealand is a good example. They're not material investments per se, at least initially, but we do expect them to deliver revenue into the future.

The next question comes from Julian Braganza with Goldman Sachs.

Just an initial clarification. In terms of the impact of the legacy arrangements coming to the FY '26 numbers, that still full circa $12 million? I just want to confirm that point.

Yes, that's correct, Julian. It's $12 million.

Okay. Great. And then just with the legacy employee share plan amortization, I can see that in the footnote that is expected to increase to $20 million in FY '27. Just want to understand what's driving that and also just the profile in terms of the reduction expected in outer years.

Sure. Thanks, Julian. What we did call out in the presentation and in the numbers is that it's a legacy share plan now. So going forward, this plan will not be used. And so there won't be new issuances into it or out of it. And so we can be relatively confident around what the numbers are going to look like going forward.

And what we have said in the presentation in the footnote is that it will go from about $18 million after tax this year. We expect that to be around about $20 million after tax next year before falling a round about $4 million per annum. The increase into next year really comes about as a result of the staggered vesting structure in the scheme, nothing more than that.

Okay. Got it. So and that line eventually goes down to 0. Is that the case over the 5 years?

Correct. Within about 5 years, you should see that to 0.

Okay. Awesome. And then just on the $250 million reallocation of fund investments to cash and fixed income, to be very clear how that $17 million is calculated because the footnote seems to suggest relative to FY '25, did I -- am I reading that correctly? So I just want to understand, one, how you calculate it? Two, what is the return differential that you're kind of assuming versus the 10% pretax hurdle for that portfolio historically? And what are you kind of expecting going forward as an average return?

Yes, sure. So what we've done there is it's really the difference between FY '26, which was in round numbers, $40 million. And then what we have done and said in the footnote is, assume an average cash balance of $350 million and that we would be generating circa 4.5% on current rates. Obviously, rates are going to move up and down. But on current rates, you're going to generate about 4.5% on that, which is round numbers, $16 million, $17 million, tax effect that and you'll get your $17 million difference.

Okay. Got it. So it's relative to FY '26 total FUM investment return. That's right?

That's correct.

Okay. Awesome. And then just a final question for me in terms of -- actually, maybe just in terms of the outlook on the Corporate Finance side of the business. Can you just talk at a high level in terms of the pipeline activities across both M&A and ECM and then how we should be thinking about that given where we sit today going into first half '27 and any visibility into the second half as well?

Yes. Thanks, Julian. It's Brian. I'll take that question. Look, we're seeing a good solid pipeline, very encouraging pipeline in respect to that. As I said, we have all sorts of different -- there's an amalgam of different types of things that we're providing. It could be IPOs, ECM, DCM, et cetera. So the pipeline is encouraging, but there's always subject to market conditions. You know that better than anyone coming out of GS. So yes, encouraging as it stands, but always subject to market conditions.

Okay. Got it. And sorry, just one last final question for me. The 60% to 90% dividend payout ratio, how is that calibrated in terms of your view in terms of what needs to be retained in the business for growth in terms of capital requirements for organic growth versus what you're paying out? I think the midpoint of the 60% to 90% is what's [indiscernible] versus funding kind of organic growth. And then also just your kind of medium-term view, in terms of the -- stick towards the top end over the short term before, imagine drifting lower to the midpoint. I just want to understand what's driving that.

Yes. Okay. So look, good question. So there's a few things that I think about. What do we take into account here? We take the support of shareholders. We think about the existing capital availability. We think about available franking credits. And we also -- behind that is obviously the scalable nature of the group, which you've seen our ROEs and what's been able to be generated out of the Barrenjoey business, particularly.

The dividend today is obviously in line with the MFG payout ratio that was proposed. Going forward the 60% to 90%, we expect it to be at the upper end of the range, I would say, over the short to medium term. We've only just -- candidly, that's a broad range, and that's why we're saying -- we're guiding to say it's at the upper end. We've only just brought these 2 companies together. We're looking at what are the opportunity sets for us.

As Gavin said, historically, what we've found is the best ROEs have been off the back of us building stuff ourselves, and we've got to build capability that's obviously well entrenched here at Barrenjoey. In saying that, no doubt, there will be from time to time, inorganic opportunities that come up, and we'll consider those in line with what all the other organic opportunities are. So I think what we're saying on this is, let's start off. Let's start it with a 60% to 90%. We respect the fact that it's a broad range. but then provide assistance to shareholders and analysts by being able to say that it's at the upper end of the range, and we will be able to reassess that as required as time moves on.

[Operator Instructions] And the next question is from Andrei Stadnik with RBC.

Can I ask my first question just around the growth opportunities you've seen outside of Australia and New Zealand. I think there's been some comments and some press around Asia and Middle East. So how are you thinking about growth away from Australia and New Zealand?

Okay. That's a great question. And I think I really want to anchor that too because the way we think about Barrenjoey and the broader MFG is that our business -- and let me particularly talk about Barrenjoey for just one moment. But the business is an Aussie dollar product business. So equities, fixed income, advising Australian clients around corporate finance, Aussie IPOs, et cetera.

Any actions that we've taken -- and this covers off as well on the investment management side that MFG has got. Any actions that we've taken where we have people in Abu Dhabi or we have people in Hong Kong, or we have people in New York, it's all about supporting distribution of those Aussie dollar products. So this is not about flag planting to start going into whole lots of different other currencies and other business lines. This is actually acting as a conduit for us to be able to access international clients and opportunities.

So that's the way we think about it. We have got -- as we said, we've got the team over in Abu Dhabi that was 2024, 2025 was Hong Kong. And now we'll have some people over in New York as well. But it's very much facilitation of the Aussie dollar business that we've got here. On the Magellan side, it's similar. You've got people in the U.K. and you've got people in the U.S. supporting the distribution of the Magellan products manufactured here into those offshore jurisdictions.

And for my second question, can I ask around the expanded investment management business? You're bringing some of the products that Magellan used to have, combining that with some products Barrenjoey has and ambition for more private capital products down the train. So how are you thinking about that in terms of like the build-out and just the expanded opportunity set you're going to be bringing to clients?

Yes. Yes, I'll take that one. Look, I think we're super excited. If I think about the opportunity set here, if I think about the -- first of all, the private capital business that we built, it's very -- it's quite nascent. We've been able to build out about $5 billion worth of assets under management, initially starting with closed-end funds now starting to move to open-ended funds. And we think there's more product opportunities, investment opportunities there. And if I was to take the Magellan side, I really do -- I can't emphasize enough that if you were to look at the offerings that they've got there, the global funds has been the one that has been in runoff. All the other funds have actually performed very well and continue with the same level of AUM.

Now combined distribution gives us the capacity to obviously deliver more product out through to clients. And we see growth opportunities on both sides, both on the equity-listed style products as well as private capital products. But the most important thing, the most underlying feature is that we are absolutely focused on whatever product that we elect or fund or offerings that we do have got to be really good for the ultimate investor. And fair to say that any -- if I was to look at what is being delivered in more recent times or what's being built on the Barrenjoey side, performance has been very, very good. And so we will continue to grow this out on the basis of offerings that we personally are more than happy to put money into as well. So we are all very much aligned to ensuring that we give investors good returns.

So we'll grow it out as the opportunities come around. We do see -- I mentioned that we do see something in the pipeline right at the moment on the listed side, and we also have an opportunity coming down the pipeline right at the moment on the private capital side, which I can't go into details today, but hopefully, we'll have those out in the next few months.

There are no further phone questions at this time. I will now hand the call back to Stu Kingham for any closing remarks.

Thank you, operator. There being no further questions, I will actually hand the call to Brian to close. Thank you.

Okay. Thanks, Stu, and thanks, operator. Look, if I was to wrap it up, it has been a transformational year 2026. We've completed the merger. We've restructured the Heritage Magellan Global Equity Funds, and we've materially derisked the balance sheet. Underlying momentum is strong with the group genuinely diversified across revenue and clients, and we'll continue to execute on our growth plans with structure and discipline. We really thank you for your interest, and thanks for joining us here today. Thank you.

Good morning, everyone, and thank you for joining us today for MFG's investment presentation on the proposed merger of MFG and Barrenjoey Capital Partners. Before we begin, I'd like to acknowledge the unfolding situation in the Middle East. Our thoughts are with all the innocent people impacted, and we hope this activity concludes swiftly and leads to better life and governance for the people in the region.

I am Andrew Formica, MFG's Chairman, and I'm joined today by Sophia Rahmani, MFG's CEO and Managing Director; Guy Fowler, Co-Executive Chairman of Barrenjoey Capital Partners; and Brian Benari, Barrenjoey Capital Partners' CEO. At the end of our presentation, we will open up to Q&A from the phones and online.

Today's presentation is being recorded, and a replay will be available on our website. It is an exciting day today as we today announced a proposed merger between Magellan Financial Group and Barrenjoey Capital Partners, a combination we believe is a compelling opportunity for shareholders and continues the transformation of Magellan Financial Group towards a diversified financial services firm.

MFG has been a founding investor and supportive strategic partner of Barrenjoey since its inception in 2020. As shareholders, we have participated in the early success and seen firsthand the quality of the franchise, the strength of its culture and the caliber of its people as well as the high regard they are held in by their clients. Since its establishment in 2020, Barrenjoey has scaled rapidly and built strong market-leading positions across core franchises, underpinned by a deeply experienced leadership team and a long-term partnership and entrepreneurial culture.

Today's proposed merger is a natural next step in our partnership and will enable MFG shareholders to participate more fully in the value creation we have seen at Barrenjoey over the past few years. The merger brings together 2 highly complementary businesses to create a diversified client-focused Australian financial services group with significant scale, strengthened earnings resilience and enhanced long-term growth capacity, not just from the existing businesses we collectively have, but the opportunity to expand and build upon them.

Whilst for an MFG shareholder, this represents a significant step forward in our evolution for our clients in both Magellan Investment Partners and Barrenjoey Capital Partners, they will see little day-to-day change with the same contacts and support that they have seen before, and the same priority focus on them as they have come to expect.

Finally, I speak on behalf of all the Board when I say we are truly excited by the opportunities this merger presents, and we are pleased to be able to bring this to shareholders to vote on in April.

I'll now hand over to Sophia to provide more information on today's announcement.

Thank you, Andrew. It's a pleasure to be here today with you, Guy and Brian. As you've just heard, this merger is about bringing together 2 quality businesses to create a compelling proposition for our shareholders, our clients and our team. MFG is an innovative financial group that has evolved from its beginnings nearly 20 years ago to become a focused financial services group spanning investment management and specialist financial services.

The investment solutions we offer our clients include global equities, global listed infrastructure, Australian equities and systematic equities, and our business is supported by an institutional-grade platform with distribution capabilities across 4 continents. MFG's strategic partnerships include Vinva and FinClear alongside Barrenjoey, where we were a founding investor in 2020.

As many of you heard at our half year results briefing in February, we've made good progress on our strategy, strengthening the diversity and quality of our earnings, and we see that today's proposed merger is the natural next step for our company. Barrenjoey operates across advisory, capital markets, equities, research, fixed income and private capital.

Since its foundation, Barrenjoey has rapidly grown to lead the market in many of the business lines in which it operates, demonstrating an ability to grow organically through its existing divisions. This is a testament to the quality and the caliber of its people and the relationships they have established with their clients. Bringing MFG and Barrenjoey together will create a diversified financial services group with meaningful scale with the opportunity to leverage the combined strengths, complementary capabilities of each business.

This is not a change in direction. It is an acceleration of the strategy we've been executing over the past several years. There are 4 key reasons why we believe bringing MFG and Barrenjoey together accelerates the execution of our strategy for our shareholders. First, improved business diversification and resilience. The combined group will have a broader and more balanced earnings base, spanning both annuity style and transaction-based revenues. The addition of countercyclical revenue streams such as fixed income trading and markets activity strengthens resilience through market cycles.

A stronger client proposition. Our commitment to clients will not change. We will continue to put clients at the center of everything we do, maintaining investment decision-making independence, governance standards and complex frameworks. Likewise, Barrenjoey has a strong client-centered culture, totally in step with our own. What will change is our ability to offer clients from both businesses access to greater market insights, a more diverse range of products and services and improvements driven by combined technology investment and greater scale.

Financial services is undoubtedly a people business. So thinking about our ability to attract and retain the best talent. Starting from a strong combined base, the group will be able to retain and attract the best talent and offer career pathways across the diversified group supported by a deeply experienced entrepreneurial leadership team.

And finally, a strong combined balance sheet providing opportunity for growth. The combined group will have balance sheet strength and resilience through market cycles, supporting dividends, investment in growth and strategic flexibility. We already saw significant opportunities for us to expand our partnerships. And as a combined business, we see this increasing.

This slide represents MFG today. Magellan Investment Partners, our outward-facing distribution brand, brings to the market investment solutions managed by MFG's teams, Magellan Global Equities, Magellan Global Listed Infrastructure and Airlie Funds Management, alongside that of our strategic partner, Vinva Investment Management. Our strategic partners, including Vinva and FinClear are complementary high-quality financial services businesses.

Barrenjoey today is the third of our strategic partnerships where we hold a 36% stake. Post-merger, MFG will move to own 100% of Barrenjoey. Our existing investment management business operations will remain stand-alone and unchanged. There is no change to our investment decision-making, philosophy and process as a result of the merger. There will also be no change to MFG's existing strategic partnerships with Vinva and FinClear.

These businesses will continue to operate independently, and we believe the partnerships will benefit from the increased scale and strength of the combined business. As a founding investor, MFG shareholders have participated in the strong growth of Barrenjoey over its first 5 years. This transaction brings full economic participation in a high-growth franchise as it extends its business further. We see it as a very exciting addition to our business.

Slide 9 provides an overview of the key transaction terms that you can find further details in the ASX release we published today. The merger will be implemented through the acquisition by MFG of all remaining shares in Barrenjoey that we do not currently own. The consideration payable to Barrenjoey shareholders will be in the form of newly issued MFG ordinary shares.

The transaction is therefore structured as a scrip-for-scrip combination, aligning Barrenjoey shareholders with MFG shareholders through long-term equity ownership. Barclays have agreed to limit their ownership to 4.9% of the merged company to simplify the impact of U.S. regulatory requirements. As a result, MFG has today acquired an incremental 10% economic interest in Barrenjoey from Barclays.

This acquisition is to be funded through an institutional placement and a share purchase plan offered to eligible shareholders. It is important to emphasize that existing MFG shareholders will remain majority ownership of the combined group. A defining feature of the transaction is the voluntary escrow arrangements entered into by Barrenjoey shareholders. These arrangements are significant and demonstrate a long-term commitment by Barrenjoey's leadership and all staff to the success of the combined entity and provide shareholders with confidence in the ongoing alignment.

I will now hand to Guy for an overview of Barrenjoey.

Well, thanks, Sophia. And before I run through Barrenjoey, it's appropriate today that I acknowledge a few groups. Firstly, our staff. We've got more than 460 incredibly talented and entrepreneurial people who have built this firm. We've got a great culture, and today's announcement is a credit to all of them. Secondly, it is impossible that Barrenjoey exists today were it not for Hamish Douglass. We were his idea, we were his vision, and we owe him an enormous debt.

And lastly, and most importantly, our clients who have supported the firm from day 1. So we started Barrenjoey with a bit over $200 million in capital from MFG and Barclays. And just 5 years later, our business generates more than $0.5 billion of revenue, earns more than $100 million in profit and has an ROE approaching 50%. In the last half, earnings were up almost 100%, and we have a long runway of growth ahead.

Now every banker will tell you they are #1, but we are very proud of the franchises we have built across all of our businesses, whether that is ECM, research and trading, bond trading, DCM or M&A. Importantly, we strive to build a very diversified business, one that is not beholden on any particular individual, any particular transaction or indeed any particular business. We've got more than 3,000 clients across the organization.

And if we look at -- look back over the last couple of years, no individual client or transaction has represented more than 2.5% of revenue. And this diversification continues to strengthen with time. As I said, we've got an incredible team of 460 people spread across Sydney, Melbourne, Perth, Hong Kong and Abu Dhabi. We think and hope that everyone remains very excited to come to work each day. This is perhaps reflected in the fact that our turnover is incredibly low.

We are pleased, of course, that our Abu Dhabi staff are all safe, and our thoughts are with them. We've got 75 partners with an average age of less than 50. They are all equity holders in the firm. And in fact, every staff member at Barrenjoey is an equity holder in the firm. It's important to emphasize that Barrenjoey is not a business built on a handful of people. We have an incredible team. Not one person on our leadership team is less than 15 years' experience, and many have experience stretching over 30 years.

Individuals such as Annette, Andrew, Louise, Duncan joined us having run either an entire APAC region or in some cases, global businesses for major investment banks. This page is just a snapshot highlighting both the experience and depth of our team. There are another 440 people not shown on this page who have all built this business, and we are equally -- they are equally as impressive and experienced.

So a quick around the grounds on Barrenjoey. As I said, over the last 12 months, we've delivered over $0.5 billion in revenue. This was roughly equally split between our markets businesses, equities and fixed income and our capital markets and advisory businesses. The markets businesses are predominantly flow businesses. They provide research, sales, execution, financing in the case of our equities businesses and research, trade ideas, market making when it comes to fixed income.

One aspect that has been very pleasing over the last little while has been the step change in our fixed income business since we opened our office in Abu Dhabi. This office provides us with the ability to engage with clients during the European Time Zone, and it has been highly successful. Our capital markets and advisory business is built on a foundation of more than 120 bankers, providing a range of advice, underwriting and financing services to all sorts of clients from corporates to governments.

It clearly covers traditional M&A, ECM and DCM, but also products such as debt and ratings advisory as well as advice on asset-backed financing. Currently, the smallest part of our business is our private capital business, which is nearing $5 billion in assets under management invested across private equity, debt products and real assets. We are clearly very excited about the opportunity that exists by bringing together our capabilities with arguably the best distribution platform in the market at MFG.

To build Barrenjoey took a heavy investment upfront, making sure that we have the right systems, infrastructure and, of course, the right people. Whilst it was reasonably hard work starting from scratch, it meant that we built a fit-for-purpose infrastructure, and we weren't burdened with any legacy issues. Our systems are all new, all in the cloud and most usually tailored specifically for us. People have joined us from a large number of market participants, and they consistently say that our tech is best-in-class.

All businesses are now contributing strongly and all had record results in the first half of '26. We've been very fortunate to earn the trust of our clients, and each half, we are getting stronger. That's led to operating leverage being delivered with incremental revenue scaling faster than pre-bonus CapEx -- OpEx. We hope and expect to see the chart on the right-hand side of this page continue to trend down over time.

Combination of our steady revenue growth and the ability to leverage our operating expenses has led to strong earnings growth you see on this page. In the most recent half, our profit after tax increased by almost 100% year-on-year to just under $70 million. We are not going to give a forecast, but we are pleased to say that the strong momentum we saw in the first half has continued into the first 2 months of the second half.

As I mentioned before, we wouldn't be here but for Hamish and Magellan. But equally, we wouldn't be here if it wasn't for Barclays. Barclays have been an extraordinary partner of ours. They remain so today and will remain so going forward. We work hand-in-hand with Barclays on servicing clients across borders in each of our businesses. Nothing will change in that regard. We look forward to Paul Compton, Barclays' Chairman of Investment Banking, joining the MFG Board on completion.

Andrew and Sophia mentioned earlier, and it's important to reiterate that Barrenjoey is predominantly a staff-owned business. We are very proud of that and believe that it has been a major driver in our success to date. Every staff member at Barrenjoey is an equity holder, and we're excited about the opportunity that is ahead of us. The weighted average escrow period for our staff is over 5 years.

In addition, Matthew, Brian and I have agreed to escrow arrangements extending out to 9 years. To ensure complete alignment with shareholders, Matthew, Brian and I will not be entitled to any variable compensation grants post-merger. We also look forward to joining the MFG staff equity schemes and expect that equity will be a part of our compensation structures going forward. This will be satisfied by way of on-market purchases, not issuance. And so we expect these schemes to be meaningful purchases of shares over time.

With that, I'll pass to Brian.

Thanks very much, Guy. Thank you, So and Andrew as well, and welcome, everyone, online to what is an incredibly exciting day for our clients, for our teams and for our shareholders. So let me focus on what the combined group will look like from a structure, business and financial perspective as we head into the future.

Firstly, on completion, we will be very lucky to have a highly credentialed Board chaired by David Gonski, with Andrew Formica as Deputy Chair. Barrenjoey's independent directors, including former Finance Minister, Kelly O'Dwyer, former Reserve Bank Governor, Dr. Philip Lowe and former Fortescue CEO, Fiona Hick, will move on to the Board.

They will join well-credentialed existing directors, Debbie Page, Peeyush Gupta, John Eales and Cathy Kovacs. Importantly, as Guy mentioned, Paul Compton, Barclays' Chairman of Investment Banking, also will be joining the Board, reflecting Barclays' ongoing support.

Now we'll operate 2 core businesses. On the funds management side, Sophia Rahmani, will continue as CEO; and on the Barrenjoey side, Guy Fowler and Matthew Grounds continue as Co-Executive Chairs. These complementary businesses will benefit from sharing capability and talent. The group will have well-diversified revenue streams across different businesses that thrive in differing market conditions.

Based on the last 12 months, approximately 2/3 of revenues or $550 million were annuity-like. This includes investment management revenues of $313 million generated from $45 billion of AUM and $233 million from the markets businesses. Now as Guy explained, the 2 core markets businesses are fixed income and equities. Both these flow businesses have material scale and market share. The equities business is an execution fee agency business, supported by top-rated research. It's driven by market share and has delivered growing revenues with step-ups experienced in more buoyant conditions.

Conversely, the fixed income business tends to run counter to equities, benefiting from subdued sentiment and volatile conditions. Advisory and capital markets together generated approximately 1/3 of total revenues or $259 million over the last 12 months. This is from transaction and advisory fees earned from a broad array of clients across a range of sectors. Now while you'll never have every sector firing at once, our experience has shown that over -- that through our broad coverage, it allows us to perform through differing cycles.

The merger will bring together MFG and Barrenjoey's complementary investment management divisions with $45 billion in AUM deployed across the full spectrum of asset classes from listed equities to private equity, credit and real assets. MFG has an excellent global distribution footprint. This powerful network has most recently been proven in the launch of the Vinva Systematic Equities product.

And we see the opportunity to grow the private asset side of the business, leveraging MFG's global distribution footprint together with Barrenjoey's private asset origination capability. This combination, we believe, will deliver a broader and more contemporary array of products for our clients. Most importantly, as mentioned, I'm excited that Sophia Rahmani will continue to lead this important division as Chief Executive Officer and build on her strategy for growth through new product offerings.

Now Guy has provided an overview of the Barrenjoey businesses, including each of their strong market positions and performance. I've talked about revenue resilience from differing forms of income earned by the businesses, which thrive in differing market conditions. From a growth perspective, each business has identified opportunities around broadening product offerings and growing the client base and market share to continue to propel earnings.

The combination of the 2 businesses delivers scale, diversification and growth opportunities. The financial strength underlying the merged group on a pro forma basis for the last 12 months reflects over $804 million worth of revenue, which translated into a post-tax NPATA of $239 million.

Focusing on the balance sheet. The combined group will have a balance sheet of circa $2 billion, which is more than comfortable to support all the businesses. The balance sheet will include net cash and liquid fund investments approaching $700 million. This will be further supplemented by the free cash flow generated by the businesses, supporting ongoing dividends and capacity to deploy capital into attractive growth opportunities.

In wrapping up, I'd like to leave you with a clear message about how we have approached this merger. In everything we do, the client has to be in exactly the same or a better position. The future is exciting for not only our clients, but also our combined team and shareholders. We see benefits arising from a product perspective. We see benefits arising from a distribution perspective. And we see benefits arising from our combined investments in technology and infrastructure. If we get this right, everyone will be a winner.

I'll now hand back to Andrew.

Thank you, Brian, and thank you, Sophia and Guy. The transaction is expected to proceed in accordance with the timetable that's set out in the presentation. Following today's announcement and completion of the institutional placement, the Notice of Meeting and share purchase plan booklet will be dispatched to shareholders in coming days, and we will hold an AGM to seek shareholder approval in April 2026.

I would like to take a moment to note that as part of the proposed Board transition, David Dixon will retire from the MFG Board following completion of the merger. On behalf of my fellow directors and all shareholders, I would like to sincerely thank David for his invaluable support and commitment to MFG. David joined the Board at a particularly challenging time for the company and has played an important role in helping to stabilize and strengthen the business. His experience, judgment and steady guidance have been instrumental in positioning MFG on a stronger footing, and we are deeply appreciative of his contribution.

To conclude, this merger creates a diversified Australian financial services group that leverages unique and complementary capabilities of each business. It improves the resilience and increases future growth potential. It brings together an exceptional talent pool and preserves balance sheet strength while enhancing long-term shareholder value. The Board believes this is a strategically significant and financially compelling transaction, and we look forward to MFG's next evolution, and we recommend shareholders vote in favor of the merger. That ends the formal part of the presentation.

I'd now like to hand over to Emma Pringle, Head of Investor Relations, who will open up to Q&A.

Thank you, Andrew. We will take questions from both the webcast and the teleconference line. We'll go first to the phone lines. Operator, over to you.

[Operator Instructions] Your first question comes from Shreyas Patel with UBS.

I've got 2. Maybe just starting with the attribution of value here for Magellan shareholders. Andrew, it does seem like it leans a bit more favorably towards Barrenjoey. If you strip out the value of the liquid assets and principal investments, it does suggest that you're effectively implying a very low multiple, let's call it, low single digit for the investment management business. Is that kind of how you're thinking about the value of that business as part of this transaction?

Look, I think the most important thing to remember in this is that there is no -- this is a share for share transfer here. I would say that the Barrenjoey business, given its growth and its -- its achieved growth and its future potential at 15x earnings is actually a very, very attractive multiple. I'd also say that one of the concerns that we at MFG have had is from shareholders is the difficulty of understanding the value of the whole business because of the associates and the significance that they've created for our -- the success that they've created as a business.

So I look at this as actually creating a -- improving that transparency in one of our large partnerships there. And I think it's very compelling multiple that we're combining the businesses at. But the most important thing is that the Barrenjoey shareholders are coming over into Magellan shareholders and that significant escrow holding for that is this is not about short-term change in the valuation of the business, but what we can create over the next decade or so.

So I do think there is a concern, and we've said this several times that the market hasn't fully appreciated the full value of the business, whether that's ascribing a lower multiple to our investment management business or a lack of value attributed to the strong partnership valuations. It's hard to say where that mismatch is, but we do think this improved transparency will lead to an improved understanding of the broader strength of the group.

All right. And then just a second question, just in terms of the capital allocation strategy. There's going to be a new CEO, a new Chair. You've called out that $700 million of cash and fund investments. How should we think about that going forward? Will that capital ultimately be recycled towards the investment bank? Or are you still looking at pursuing inorganic opportunities in the investment manager? Or should we expect capital management? Just curious on what the go-forward plan there would be.

I'll hand over to Brian in a second. But just what I would say in terms of we see opportunities in both sides of the business in terms of ability, not just in the existing business franchises where they can grow outright, but also opportunities to expand those. So I don't see this as redirecting capital available to the business towards Barrenjoey. Actually, I think both of us would see significant opportunities in the investment management space.

Sophia and her team have been looking at a number of opportunities there. And increasingly, Barrenjoey have seen areas to develop that side of their franchise, which led to some of the conversations we had. So I think you shouldn't see this as a shift away from where our focus has been. If anything, it sort of accelerates the opportunities that we look at.

But Brian, you have some further comments?

Yes, sure. Thanks, Andrew. What I would say is that ensuring that we've got really disciplined capital allocation, that has been a core component of Barrenjoey. And as Guy mentioned, that we've delivered circa 50% return on capital. That's where the business has got to now, and there's still growth opportunities for it. So for us, what's really, really important is making sure that any capital allocation is done on the basis of maximizing the return for shareholders.

And as has been mentioned, 32% of the equity will be held by the Barrenjoey staff in themselves. So we are all very much aligned in that regard. So there's no one bias towards one or the other. It will be around what is the most effective way to deploy that capital to maximize returns.

The next question comes from Siddharth Parameswaran with JPMorgan.

Just a couple of questions. Maybe just following on from the path that Shreyas was taking. It's not quite clear to me exactly what the strategic rationale of pursuing this approach of effectively taking over Barrenjoey versus trying to crystallize the value maybe by divesting it and having that business separately leased. Could you just help us understand what is the -- what are the synergies between the 2 businesses? It seems a fund manager and an investment bank, it doesn't seem like there's that much in the way of synergies. So hoping you could just help us understand that.

And just the second question, just around the earnings that we see for Barrenjoey. There have been very significant step-ups. Maybe you can just help us understand where those step-ups came from? And also, do you have any comfort that this isn't just effectively being dressed up for sale because obviously, the shareholders are getting 15x earnings on whatever they're printing at the moment? So just very keen to understand if you could help us understand what the due diligence you've done or help us feel comfortable about what we're actually seeing in the earnings.

Firstly, thanks, Sid. I think JPMorgan has probably shown the strength of a diversified business through different cycles. So I do think the -- when you're looking at what's the strategic rationale for this is markets continue to be -- they're always going to have cyclical nature to them, there's going to be underlying conditions. And the broader base just adds resilience to any -- to the shareholders in that sense.

I think the opportunity set is also increasing as we're finding the origination side that comes that Barrenjoey is seeing often sort of tailoring exactly to sort of some of the concepts and ideas that our clients are looking to gain access to. So we started the conversation of when this began about how can we work closer together. And through those conversations, it became clearer and clearer that actually being more aligned would generate greater opportunities for our joint clients here. There were definitely things we could do with keeping the businesses separate and the structure as we were. I think both would have been successful, and we would have found ways that we could work closer together.

But bringing the business together and just the exceptional talent pool across both organizations, these are both very entrepreneurial businesses. When Magellan was set up 15 years ago, it was hugely innovative and entrepreneurial what it did. Barrenjoey has shown in the last 5 years how entrepreneurial can be. That is so much of the success of what you can do in financial services. And we believe this sort of unleashes that in a way that would just accelerate both growth opportunities for it. There's a number of questions you had in there. Guy, you had some...

Just on earnings. I mean you asked the question as to where that's coming from. I think I mentioned in my remarks that every part of the business had a record half last half. We saw particular strength in fixed income, and that continues to grow very, very strongly. So it is broad-based across the business. It's a very diversified business. And so hopefully, that gives you comfort.

And Sid, Brian Benari here. I'd just add one other comment, and that is in respect to your comment about long term, as Guy mentioned, escrow out there from anywhere between 3.5 out to 9 years, where Guy's, Matthew's and my equity is escrowed to. So in our view, this is not about the transaction that's being done today. This is about what does this organization look like in the next 5 to 10 years. That's what's important to us.

Your next question comes from Andrei Stadnik with MS.

Can I ask my first question around the revenue side. So you mentioned fixed income was strong in the half. And it looks like markets overall was particularly strong. Can you talk a little bit about the capability sets that you have in equities and fixed income and whether you're expecting to see more? For example, do you -- are you happy with the current prime brokerage setup? Is there more you can do? And similarly in fixed income, how far along are you in the platform build-out?

Yes. Thanks, Andrei. I'll touch on that, and Brian might want to add. So in terms of the various product sets, I think we're largely built for what we would like to have at the moment, and it's now increasingly sort of expanding those and expanding the client coverage of those. One very near-term opportunity and the exciting opportunity we have in fixed income. I mentioned the step-up in the volumes and the client connectivity from opening up our Abu Dhabi office.

We hopefully are close to getting a U.S. swap dealer, which gives us easier access and an easier way to have sort of conversations with the U.S.-based client base than we have today. And we are hopeful that, that will have a similar sort of step change. And so that's one of the exciting near-term opportunities. But all of the other parts, all of the other businesses are scaling well, and I think I'll leave it at that.

That's right. We have very clear growth avenues for each one of these businesses. We've been very thoughtful, and I would say, pretty meticulous in the growing out of this -- the business. We continue to broaden our client base and our geographic reach. And as Guy said, that there is -- we've got a lot of product running. But at this stage, we see a lot of growth available to us on the prime brokerage. We see growth available to us in other areas in fixed income as well. So there's a lot of journey left in this year.

And for my second question, [ Benari outlined ] costs and the opportunity to scale the business further from a cost operating leverage point of view. And what I found particularly interesting in right is that when we look at the fully loaded cost to income with bonuses, that has fallen from 84% down to low 70s. And surprisingly, the comp ratio has been steady for the last 2.5 years in the low 50s, which is at the upper end of peers, which tend to be -- it's a broad range, but it's 30% to 50% range for peers. So you're at the upper end. So what is the opportunity to scale the business going forward?

Yes. Okay. It's Brian. I can kick that one off, first of all. When we built Barrenjoey, we were very fortunate because we were starting from a blank sheet of paper. I'm not so sure it felt so fortunate when we started, but that was the reality. And so we've been able to build infrastructure that can scale. What you're seeing is, if I take all the operating costs ex staff costs and bonuses, you're seeing that they're running pretty flat and have done for a number of years now.

So the businesses, as we continue to grow our revenue, then what you're seeing is outside of the additional bonus you might have to pay as a result of growing those revenues, you're seeing that drop to the bottom line and then the benefits flowing through. And we can see that the organization can still scale a lot further from where it is today. And that's a function of the technology. That's a function of the way we've set it up from day 1 and the result that we don't have legacy that most organizations will have to deal with.

There are no further phone questions at this time. I'll now hand back.

Thank you, operator. We'll now go to the web questions. The first question is, will the focus for the newly merged entity be increasingly tilted towards Barrenjoey given the high growth profile it has exhibited? Or are both businesses equally weighted from a focused resources allocated perspective?

I would answer that. I think we've pretty much covered that off. This is all about capital allocation, maximizing the returns on the deployment of capital. So for us, it's about where are the best returns for shareholders. And as I mentioned, staff alone will account for 32% of the shareholding of this organization. So they're very focused on that.

Thank you, Brian. The next question, given MFG's current balance sheet, which is $504 million in liquid capital as per the recent results, why are new shares being issued to raise money for the 10% stake being bought from Barclays?

Thanks for that. When this was -- the deal was originally envisaged, it was 100% share for share swap, including Barclays. Unfortunately, given Barclays U.S. regulatory position, if they were to increase their voting interest to over 4.99, that would create an impediment or a regulatory burden on the new organization. Barclays wish to maintain their exposure. They've been very supportive shareholders. However, they recognize that, that burden on the business was something that wasn't desired and would impact the running of the business. So they graciously stood back and said they would not take the remaining balance above 4.99% is cash.

Rather than fulfill that cash through our balance sheet, we knew there were a number of both existing shareholders and new shareholders who've been talking to us and were attracted to us because of the exposure we had to the Barrenjoey business through our 36% interest. Increasing that to 100% would only make those shareholders that were interested in us doing that. So therefore, we felt this was an opportunity to allow them to have that.

And in particular, we've got -- we've been very supported by our retail shareholder base over a number of years and the opportunity to offer them further increase in their holding through the share purchase plan was important to us. So you are right that we do have capacity on the balance sheet to do this, but we did feel, given this was all being set up as a 100% share for share merger when Barclays were unable to take up their full allocation, sharing this with our existing new and retail shareholders was important to us.

Thanks, Andrew. The next question online is the only quantified synergy disclosed is circa $4 million post-tax cost synergies. What is the pathway to meaningfully larger synergy capture, if any?

Yes. I think as we started, as I said at the beginning, whilst it's transformative for -- at the MFG shareholder level, the individual businesses are very much untouched in this. And as you'd expect, I think Brian stated, it's very important that from a client perspective that they're unaffected through this. So there is very little overlap in what the operations and what we do, and that should be expected in what we're trying to do here.

Of course, there's premises, technology, procurement, buying power, which is the predominant element that drives that synergy value. But this wasn't about -- this isn't like a traditional businesses coming together that have significant overlap in their operations. That wasn't the genesis or the driving strategic rationale of that.

Thank you. The next question is, what merged group PE have you worked on or anticipate?

It's not a question for us to look at that or we don't set a group PE target. Our job is to sit there and put forward a very compelling strategic direction for the organization and then to demonstrate that through strong execution. I firmly believe you'll see significant growth in the combined business and shareholders be rewarded from the successful execution of our very well-articulated and forward strategy around building a diversified financial services group.

The next question is, where specifically will revenue synergies come from; a, Barrenjoey distributing Magellan product; b, Magellan clients using Barrenjoey Advisory; c, private markets origination, et cetera?

Thank you. I'll start on that one. We definitely see opportunities. We've covered that around the private markets part of the business. I think the combination of the origination and the deal flow from the Barrenjoey side with Magellan's distribution footprint is really exciting. More broadly than that, we see revenue synergies through actually just us working together on new pipeline and new inorganic and organic opportunities right across the business, but we do see a lot of those on the investment management side. So I would definitely think that's an exciting step for us going forward.

Thank you, Sophia. Next question is, what would the contribution of the private markets business be to the group? And will deals be originated internally or through global partners?

Yes. I think we've just touched on most of that. We've disclosed in the deck today the private markets LTM revenue contribution was $31 million. Obviously, as a combined group, we look to just increase that over time. And particularly, again, coupling the origination strength with the distribution strength, we really see that as a place where we are focused on growing. In terms of origination, we look to continue how that's being done across the Barrenjoey business, but also we see a lot of private markets opportunities in our side of the business as well. So again, that shows the complementarity of what we've got ahead of us.

Thank you. Next question relates to the dividend policy and what is the dividend policy?

I think, obviously, we will await the shareholder vote in April. And when the businesses come together, it will be an important consideration by the Board. It's recognized that it's important for us to balance the shareholder returns through dividends versus the business growth opportunities. So as the businesses come together, that will be a key discussion for the new Board at that point, and it will be one of the areas we will clearly articulate to shareholders once we've done that.

Thank you, Andrew. The next question is, MFG current market cap is $1.42 billion. Adjust for $588 million Barrenjoey implied value of current share, $115 million cash, $403 million fund investments, $22 million FinClear, $142 million Vinva. Suggest you value the investment management business at around $150 million. How do you justify this?

I'm not sure it suggests that we value the investment management business at that. But one of the things we did say earlier was that the -- one of the -- at a Board level, we felt that the market was not giving the full value, whether it was implying that value to the investment management business or whether it was to the underlying partnership stakes that we have.

One of the things that this transaction clearly enables us to do is give a lot greater transparency around the Barrenjoey business, so people can get a good sense of that and will, therefore, make it much more informed for shareholders to understand the true value of the business. So we sit there and agree that the growth prospects of the business exceeded the way the market looked at the business. And hopefully, through this transaction, we'll be able to give greater transparency will allow market participants to put a better valuation on the overall group and its resilience.

Thank you, Andrew. Next question is, what is the weighted average escrow?

Yes. So I can take that one. The average escrow is about 5.5 years post announcement. And then obviously, for myself, Matthew and Guy, that's further out. So that's 9 years weighted average -- or out to 9 years weighted average term of approximately 6 years post announcement.

And I think it's important to add on the escrow points. It'd be nice for me to argue that this was a heavily negotiated point, and we managed to finally get them to secure such long escrows. But actually, this was voluntarily offered by the top team there at Barrenjoey as really demonstrating a very clear alignment to how they are looking at this transaction, not just over the next 12 or 18 months, but over the next decade or 2 and very much showing their commitment to focus on the long term.

I think that's really, really important to emphasize how important that is, just culturally that sends to the clients, to the business. And I'm very appreciative and thankful to Matthew, Guy and Brian, who have demonstrated throughout all these conversations, the commitment to the organization, to the shareholders and to the clients in every part of the discussions we've had.

Thank you, Andrew. That concludes all the web questions that have been submitted. Operator, are there any more questions on the phone lines?

You have another question on the phone line. This is from Siddharth Parameswaran with JPMorgan.

I've just one more question. Just -- it doesn't look like we're going to get any independent expert report on Barrenjoey. I'm just keen to understand why that decision is taken. And it seems extremely material. And to be honest, we don't have much visibility on the business at all. Independent experts reports at least might give a little bit more clarity. Just keen to understand why that isn't being pursued.

I think part of this is that we were -- we have had very long-term and significant exposure to Barrenjoey already. So from a shareholder perspective, Magellan is already a 36% shareholder in that. Clearly, we have had significant due diligence and through the financial numbers as we've had exposure to the business over its full 5 years. We are offering shareholders the opportunity to vote on the transaction.

As I said earlier, and I know Sophia has had in her conversations, a lot of our shareholders have been very supportive of our investment in Barrenjoey, have actually asked us, would we ever increase that because that was something they saw as a valuable part of the MFG story. So in terms of the advice and the work we've done, we're confident that shareholders have got the information they need.

I mean just -- I mean the thing is that you're changing from an asset manager to an investment bank basically. The shareholders of your business, you always have the opportunity of divesting the assets. It seems like a completely -- it's a complete change in what investors are investing in, shouldn't they be given more information than what we're getting today?

Look, I don't see us changing from an investment manager to an investment bank. The contribution to the last 12 months profit is 55% from investment management and 45% from the capital partner side of the business. So I think it's actually a balanced business. It is actually offering diversification and resilience, which I think in the way markets are, I think that's very important. And of course, we are giving shareholders the opportunity to vote for this. So they will have the opportunity to either agree or not in April. We see it as very compelling for them.

Thank you, Sid. That concludes all the questions for today, and it is the end of today's investor presentation. Thank you, everyone, for joining us.

Good morning, everyone, and thank you for joining us today for MFG's interim results briefing for the 6 months to 31 December 2025. My name is Emma Pringle, and I am MFG's Head of Investor Relations and Sustainability. Before we begin, I would like to acknowledge the traditional owners of the land on which we meet, the Gadigal people of the Eora Nation, and pay my respects to Elders past and present.

Turning to today's agenda. Speaking first will be CEO and Managing Director, Sophia Rahmani, who will provide an overview of MFG's first half performance, including the key achievements of the period. Dean McGuire, MFG's Chief Financial Officer, will then provide detail on the Group's interim financial results before Sophia returns to cover our investment management business and strategic partners, as well as second half priorities for the business. We will then open to Q&A from the phones and online. Today's presentation is being recorded, and a replay will be available on our website.

I will now hand over to Sophia.

Thank you, Emma, and thank you to everyone online for joining us this morning. The headline for MFG's interim result is straightforward. We have continued to execute our strategy, strengthen the diversity and quality of earnings, and maintained disciplined capital management.

The first half delivered solid financial results, with operating EPS of $0.486 per share, up 5% on the prior corresponding period. MFG has declared an interim dividend of $0.395 per share, fully franked, reflecting a payout ratio of 80% of Operating Profit, in line with our newly stated policy. The dividend is up 50% on the same time last year. Our balance sheet position remains strong, with over $500 million in liquid capital as at 31 December, providing strategic optionality for the Group.

MFG's earnings are becoming structurally more resilient and less dependent on a single line of business. As highlighted on this slide, over the first 6 months of the year, we have delivered increasing operating EPS. Strategic partnership income of $25.7 million, more than doubling year-on-year. And we closed the half with assets under management of $39.9 billion. This half, we returned $105 million to shareholders through dividends and our on-market buyback, with the repurchase of $38 million in shares contributing to growth in earnings per share.

During the half, we also made important progress in positioning the business for long-term value creation. We successfully completed our brand refresh, which sees MFG as our parent company and Magellan Investment Partners as our outward facing distribution brand. We have recently finalized the last step in this process, being the name change of our U.S. entity. And we are pleased to now have the full breadth of our distribution business unified under a single brand.

We held our next adviser -- national adviser roadshow, reaching more than 500 advisers across 5 cities and reinforcing the importance of active management in increasingly disrupted markets. We continued our product review, which has seen MFG simplify our offering where it has made sense and bring to the market contemporary products to meet evolving client needs. And we achieved strong product and client validation through ratings, mandate wins and renewals across each of our investment boutiques, with a robust institutional pipeline in play. We also continued to invest in systems and people, strengthening our leadership bench and embedding operating disciplines to support the growth of strategic partnerships.

On the governance front, which remains a key enabler of our business success, we are pleased to have Peeyush Gupta AM join the Board as an Independent Non-Executive Director in November, and we completed a governance review which enhanced Board processes, committee structures, and risk frameworks. These are foundational initiatives designed to support long-term growth. Overall, the half reflects steady strategy execution, operational progress, and improving earnings quality.

This slide encapsulates how we now think about MFG. I have spoken before about MFG's evolution to become a focused financial group spanning investment management and specialist financial services. Magellan investment partners is our outward facing distribution brand, bringing to the market investment solutions managed by MFG's teams: Magellan Global Equities, Magellan Global Listed Infrastructure, and Airlie Funds Management, and that of our Strategic Partner, Vinva Investment Management. Our other strategic partners, Barrenjoey and FinClear, round out the Group. This structure is deliberate. It reflects our belief that in today's environment, the strongest asset managers will be those that combine investment management capability with distribution strength, and diversify earnings across complementary, high quality financial services businesses.

Supporting our whole business is an institutional grade platform spanning client service, distribution, finance, HR, operations, product, risk, compliance, legal and technology. This platform is increasingly becoming a competitive advantage both for our own investment teams and for the partners we work with.

I will now hand over to Dean to cover MFG's interim financial results.

Thank you, Sophia, and good morning, everyone. I will turn to Slide 9, which shows the details on our financial results for the half.

Operating profit was flat for the period, primarily driven by strong growth from our strategic partners being offset by lower investment management revenue. Distributions from fund investments grew 14% over the period, with interest revenue falling as a result of capital deployment into the buyback. On a per share basis, operating profit is up 5%, inclusive of the accretive impact of the buyback throughout the year. Statutory profit is down 27% on the prior period, primarily reflecting mark to market movements on fund investments.

Moving now to Slide 10, our investment management result. Management fees were down 8% as a result of a 13% reduction in the average fee rate, partially offset by a 6% increase in average AUM. Base management fees averaged 55 basis points over the period, down 8 basis points on first half 2025. The reduction in the level of base management fees is primarily a consequence of compositional changes in our AUM, with outflows in higher margin products in Global Equities. Our average run rate management fee at 30 June is 54 basis points. Sub-advisory fees were $4.8 million for the half across the $2.2 billion in AUM within the Vinva funds on Magellan's platform.

Turning now to Slide 11 on our partnerships and fund investments result. Our strategic partnerships continued to deliver strong growth in the period, with MFG's share of profit up 109% to $25.7 million, comprising 31% of operating profit for the half.

Barrenjoey delivered growth across all business lines, with revenue up 45% on the prior corresponding period, driving significant profit growth. We received a fully franked dividend from Barrenjoey of $8 million during the half, double the level of the prior year.

The Vinva business continues to deliver, with excellent investment performance and business outcomes. MFG's share of income grew over the period, with increases in AUM over the last 12 months driving an increase in base management fees. Vinva paid a fully franked dividend of $9.8 million during the period.

Fund investment income grew 14% over the period, with cash distributions of taxable gains remaining at elevated levels within a number of underlying funds. This line will continue to be volatile.

Moving to Slide 12. This half represents the first period of operation of the revised dividend policy announced in August 2025. The Group has declared a fully franked interim dividend of $0.395 per share, representing a payout of 80% of operating profit.

The buyback continued to be active during the half, with $38.4 million of shares repurchased utilizing cash reserves. The buyback program remains on foot, with liquid capital of approximately $500 million providing strategic optionality for the Group. We continue to carefully assess uses of capital to grow and diversify the business, consistent with our strategy and the aim of creating long-term shareholder value.

Thank you. I will now hand back to Sophia.

Thank you, Dean. I will now turn to investment management and discuss AUM, flows, performance, and how we are positioning the business.

Starting with assets under management. As at 31 December 2025, our AUM was $39.9 billion, representing net growth of 3.4% year-on-year and roughly flat since 30 June 2025. The underlying drivers are important. We saw positive institutional flows into Airlie Australian Equities and Global Listed Infrastructure, as well as retail inflows into MFG's Vinva Systematic Equity funds. These inflows were partially offset by continued outflows in Global Equities, particularly from retail channels. Our clients remain diversified across region and channel, with the balanced mix supporting greater earnings stability over time.

This next slide shows indexed AUM growth by strategy over the last 2 years. Airlie Australian Equity and Vinva equity funds have experienced steady AUM growth due to positive net flows. Global Listed Infrastructure AUM has remained largely flat, as limited retail outflows were offset by offshore institutional wins during the first half of '26. Global Equities has remained in net outflow over the past 2 years. However, institutional outflows have materially reduced, averaging $100 million per quarter since the last quarter of FY '24, with retail outflows having stabilized at an average of $500 million per quarter since that period, excluding the MGF conversion in early FY '25. As you can see on the chart, inflows have increasingly been directed towards lower margin strategies, which has been a key contributor to the margin compression Dean spoke to earlier.

Across our investment teams, fund performance was mixed. Our newer solutions, which are increasingly aligned to current client demand and include the Magellan Global Opportunities Fund and the Vinva Systematic funds, have delivered strong performance and remain top quartile since their respective inception dates. That said, we recognize that performance is not where we would like it to be elsewhere across our product set, and this remains a key priority for our teams.

The Magellan Global Fund, which is designed to deliver 9% per annum net of fees through a cycle of 5 to 7 years while reducing the risk of permanent capital loss, has achieved these objectives since inception and across longer term time frames. However, over the last year, this low volatility, quality focused investment philosophy has seen the fund lag behind the MSCI World Index in a market that has been heavily driven by growth and momentum.

Importantly, many of our holdings have continued to demonstrate strong fundamentals and improving earnings expectations despite weaker share price performance, and we remain confident in the long-term evidence supporting quality investing. Our portfolio managers remain disciplined and continue to manage the fund in line with our investment philosophy, rather than chasing short-term market momentum.

In Global Listed Infrastructure, returns in the first half were supported by strong demand for high quality defensive assets amid ongoing policy uncertainty, geopolitical risk, and moderating real interest rates, which provided a tailwind for longer duration infrastructure assets. While 6-month performance was modestly behind the benchmark, both strategies remain ahead on a gross basis over 12 months and continue to align with our long-term objective of CPI plus 5%. Importantly, we retained a major sovereign wealth mandate during the half and expanded another large institutional relationship, with both strategies maintaining strong research house support.

In Australian Equities, where the market environment has been marked by elevated volatility, Airlie's performance has been impacted by an underweight allocation to lower quality, highly leveraged companies and resource stocks, particularly gold. This is to be expected given Airlie's long-term focus on quality and valuation discipline, which is well understood by clients. The experienced team led by Matt Williams and Emma Fisher has recently been strengthened with the addition of experienced investors in Ray David and David Meehan, and remains committed to its proven investment process.

This next slide captures a critical point: the quality and reach of our distribution capability is one of MFG's core strengths. Magellan investment partners provides the scale and expertise to meet client needs in a world of evolving market dynamics. We have deep global relationships and a trusted experienced distribution team. We believe this platform is a real differentiator, and it is increasingly valuable in supporting both organic growth and strategic partnerships. We have continued to invest in the platform over the half, with new appointments supporting clients and relationships in Australia and Asia Pacific, and have been rewarded with a strong client response. Momentum has been particularly pleasing in the U.S., where the team has secured new institutional wins for our Global Listed Infrastructure strategy.

I will now turn to our strategic partnerships, which have become an increasingly important driver of earnings diversification and long-term value creation.

Barrenjoey. Barrenjoey has maintained its strong momentum to cement its place as one of Australia's highest quality financial services franchises. It is now 5 years old, employs around 450 staff across 5 offices, including Abu Dhabi and Hong Kong, and has market leading franchises across corporate advisory, equities, fixed income, and private capital. For the half, Barrenjoey more than doubled its NPAT to $54 million, with revenue up 45% to $295.3 million and strong growth across every business line. We continue to view Barrenjoey as a high-quality strategic holding, with meaningful long-term optionality and strong operating leverage as the business continues to mature.

Our partnership with Vinva, a high performing systematic equities investor with a long heritage and a strong performance track record, is now 18 months old and gaining real traction in the market. The 4 Vinva funds offered by MFG are each now approved on at least one key ratings house, in place across all major platforms, and we are seeing increased support and adoption from asset consultants and dealer groups. We closed the half with $2.2 billion in AUM across these funds and strong momentum, now that key building blocks are in place.

We have been pleased to see the partnership's mutual value reinforced with additional institutional mandates jointly secured for Vinva, including a second CFS mandate and a new overseas client for a Global Equity mandate, won in December and funded last week. This is in addition to the strong growth we have seen in the first CFS mandate.

Importantly, this progress represents only one component of Vinva's broader growth trajectory, with total AUM having more than doubled since the strategic partnership was established, driven primarily by growth in Vinva's Global Equities strategy and strong traction across a diversified client base. This is an excellent example of our distribution strength combining with Vinva's unique investment capability to increase access to markets and clients, and an indicator of the partnership model we are looking to replicate over time.

FinClear continues to improve underlying financial performance as the business gathers momentum and market share across its core businesses. Revenue increased 20% year-on-year, supported by growth in trade execution, FX revenues, and the FCX platform. Its cash and FX platform is now fully operational, and FCX is ramping up following its launch, including its first major transaction during the half. FinClear remains a strategic investment for MFG, with improving fundamentals and meaningful long-term potential as private market transaction infrastructure evolves.

I will now conclude with a review of progress and our priorities for the second half. First, the review. In first half '26, we made progress across each of our strategic priorities. We strengthened our distribution platform with a unified global brand and senior hires and saw validation in the form of client wins and the strong pipeline that is building. We have continued to evolve and focus our product set in-line with client needs and maintained momentum in our newer funds, with investment performance, ratings, and platform approval supporting new client flows.

Our strategic partnerships contributed strongly to earnings during the half, more than doubling on the prior period, reflecting strong momentum at both Barrenjoey and Vinva. This is exactly the earnings diversification we outlined when articulating our strategy to evolve into a broader financial services group. The partnership model is delivering both capability expansion and more resilient earnings.

Our people are what sets us apart, and we have continued to focus on embedding a high performing culture. This quality of our teams was evident early this year with MFG's inaugural innovation month, an internal initiative that saw teams from across the business come together to ideate on ways to meaningfully improve how we serve clients, operate our business, and build for the future.

MFG has always been known for its innovation, and continued innovation is critical to our long-term success, especially in the face of ever evolving markets and an increasingly competitive landscape. We were delighted with the energy and innovative thinking at play and look forward to progressing several of the submissions to the next phase.

We have also continued to invest in systems and leadership capability to support a scalable operating model and maintain strength of governance during the period, including enhancements to our risk management framework, board processes, and committee structures. Importantly, these are not short-term initiatives. They are building blocks for long-term value creation which will support MFG in our next phase of growth.

Looking ahead to the second half of the year, our strategy and priorities remain clear and consistent. First, we will further utilize and strengthen our global distribution platform to win new clients and deepen existing relationships, while keeping long-term investment performance at the center of our focus.

Second, we will broaden our client offering through a combination of strategic partnerships and organic capability development, ensuring our solutions remain aligned with evolving market demand.

Third, we will continue to actively assess strategic partnership opportunities across investment management and complementary financial services.

Fourth, we will continue to cultivate a high-performance culture to attract and retain talent and align our people around delivering consistently strong outcomes for clients and shareholders.

And finally, we will remain focused on ensuring we have strong operating core to support efficiency and excellence across our business.

To close, the first half results reflect continued strategic progress and strengthening earnings quality. Despite ongoing headwinds across active management, we have delivered earnings growth per share, stable AUM, increased strategic partnership contributions, disciplined cost management, and a strong capital return to shareholders. We remain cash generative, capital disciplined and well positioned to continue executing our strategy and creating long-term value.

Dean and I will now be happy to take your questions. Thank you very much.

Thank you, Sophia and Dean. We will now move to questions. [Operator Instructions] But we might first move to any questions from the phone lines. Operator, over to you.

The first question comes from Julian Braganza at Goldman Sachs.

Just the first question on expense growth. Looks like first half '26 was quite positive, with only 1% growth over the half. Just maybe how you are thinking about expenses over the second half and into the medium-term just given some of the investments that you are flagging on the expense side, and in particular the second half.

Yes, thank you for the question. The expense growth in the first half reflects our ongoing focus on operational efficiency. And so I think that is a focus for the group that will continue both in the second half but also into the medium-term. In relation to the view on the full year, we had previously stated that expenses would grow at or about the level of inflation. I think we will do better than that across the full year. I do expect there to be growth in expenses in the second half as we look to invest in technology and other areas to improve the efficiency and the effectiveness of our business. But overall, we are looking to balance those investments with operational efficiency opportunities in the balance of the business. So overall, no change to the medium-term outlook.

Okay. Got it. And that is super clear. And then just in terms of fee margin for the business, just interested in expectations from here. Exit around 54 basis points, average over the period 55 basis points, suggests that a level of bottoming out given the deterioration we saw half -- over the half. Just be interested in how you are seeing that play out. Or alternatively, where are we bottoming out on that fee margin line?

The trend in the fee margin is largely a consequence of the increase in the institutional component of the AUM. We are now 60% institutional, 40% retail. And so depending upon the relative flows over the next 12 to 18 months, that will determine where that average fee rate ends. Clearly, we are still very focused on growing in the retail market, and that's a key strategic objective of the business, but in terms of where that fee rate goes, it will be primarily driven by the compositional elements.

Okay. But just to be clear, was it stabilizing towards the end of the period, just given the average and the exit are quite closely aligned? Is there a little bit of stabilization there, or?

So it was a fairly linear trend over the period. So 54 at period end, we did have the conversion of the high conviction fund to Global Ops during the period, which is the kind of the 2 bips drop we note in the in the pricing. That won't repeat going forward. But throughout the period, the run rate was fairly linear.

Okay. Got it. That is good. Just the last question for me in terms of Barrenjoey. Obviously very strong revenue growth, very strong NPAT growth. Just how should we be thinking about this from here? Any one-offs that sort of normalizing in the second half, or is this sort of a continued level of underlying trends that we should be expecting? Just some color around that.

Sure. Barrenjoey is now quite a diversified business both within its business lines and across them. So our view is that, even with a strong result in the first half, we think the outlook there is quite positive. So we're not seeing an outlook where we will get an enormous skew between different periods. Given the nature of that business though, there is always timing elements that are at play in relation to transactions. But overall, we think the outlook for that business is quite positive.

The next question is from Elizabeth Miliatis from Macquarie.

First one just on Barrenjoey, just to circle back on that. I think we at 100%, we generated $54 million profit for the half. Last full year was $59 million, so you have almost doubled the run rate of previous halves. I mean, how do we think about this going forward to sort of circling back on it, because it is really difficult to forecast this given the lack of disclosures?

One of the dynamics we see now at play in Barrenjoey is the increasing contribution of -- from the operating leverage of the business. So in the investments in that business over the last 5 years to get it to this point have now resulted in a revenue growth, we talked about 45% for this period, but driving over a doubling of net profit. And so we see that being a key enabler of profit growth for that business as we go forward. The different business lines are all contributing positively. So each of those have growth opportunities. That management team is very focused on growing that business, and we are a very supportive shareholder. But in particular, the growth in this period has been aided by that historical investment now really yielding returns from an operating leverage perspective.

Okay. And was there anything -- any sort of big one-offs supporting the result, or is this just more BAU strength?

Given the nature of the business there is always elements that are specific to a particular period. What I would call out is that we are seeing the diversity of that business, the maturation of each of those business lines, meaning that as we look between periods, there's more natural offsets and complementarity between those businesses. And so we are seeing a far more resilient earnings profile as we go forward.

Okay. Got it. And then just on Vinva, I am not sure that you have disclosed the FUM at the total business level anywhere. Are you able to give us that number at 31 December and then maybe where we're at the moment?

Sure, Liz, and thank you for your questions. Vinva closed the period with around $43 billion under management. They have had some subsequent inflows already this half and continue to have a strong pipeline. Definitely from an institutional perspective, which they look after as a business and they've done really well there, but we have also on the retail fund side had some wins and have a decent looking pipeline there as well.

Yes. Okay, got it. And maybe just final one, and then I will go back to the end of the queue. Just given the significance that the associates are now as a sort of part of the business, so 31% of earnings this half. Are you perhaps starting to rethink about the levels of disclosures there? Obviously you are -- they are just associates, but it is just challenging to forecast these without too much color and it seeming to have a big swing factor to the results going forward.

Yes, thank you for the question. It is something we're focused on, and we continue to work with our partners on how we can give more disclosure and more color to the market on the businesses. So we take that feedback and we appreciate it. It is a growth component of the business, and as we get to the full year, we will be reviewing what levels of disclosure we can give. Noting, of course, that these are private businesses, founder led, and that is part of the strategy, but we acknowledge the feedback and the perspective.

There are no further questions from the phone at this time.

Thank you, operator. We will move to questions submitted via the webcast. The first question is: Given the volatility in the performance of active managers in Australia, would you look to diversify your domestic product offering in areas such as fixed income, where there will be a growing need for yield focused products as hybrids roll off?

Thank you for the question. We, absolutely, are looking to continue to diversify our product offering, both for domestic clients as well as our offshore clients. A core plank to the strategy, and hopefully you can see that strategy in action with the early success and momentum we have built around our partnership with Vinva.

Would we look specifically at fixed income in Australia? Absolutely we have, and we continue to be open minded about how we diversify our business, definitely with a focus on client needs and how we can solution for our clients and be very relevant to them, in this evolving market and as things change, so we definitely are focused on all of that.

The next question is: How actively are you reviewing strategic partnership opportunities? Do you expect to announce any new strategic partnership opportunities in H2 '26?

Thank you for that question. I would say we are very actively reviewing strategic partnership opportunities. Again, consistent with our strategy, we are fortunate enough to have the capital on our balance sheet to have that optionality, so yes, we do dedicate time to that. We have initially certainly through calendar year last year, been very focused on doing a very good job of embedding the partnership with Vinva. But as the year ticked on, we did certainly progress a couple more discussions with strategic partnerships and have a couple of live discussions right now. I certainly can't make any commitments on when they will be announced, and certainly what gets to that point where we do announce a transaction and enter into a partnership, but I can say we continue to stick to our strategy, and again, this result shows the benefits of that for our shareholders.

The next question online is: There appears to be a high realization on profits in fund investments while the unrealized loss part is carried away. How should we think about this trend on realization of profits going forward as it appears at some point this would need to converge?

Thank you. In relation to the profits that sit within the operating profit line, they are not necessarily realized gains on sale; they are distributions from our fund investments. They are cash backed and they go to all investors, including MFG. What I would say though is, is that line continues to be elevated versus historical levels, and that is a consequence of the taxable gain position in the underlying portfolios. That element will be volatile period to period as we have called out.

In relation to the unrealized loss in the statutory result, we focus primarily on the long-term performance of those investments, and the total returns over time have been quite positive. In this period, the total return was about $6 million and net of the distributions, with the unrealized component being just unit price movement over the the half.

The next question is: Is there a medium-term plan with Barrenjoey to list or otherwise realize the value of the investment? At some point will the employees want a way to realize the value of their share of ownership?

Thank you for the question. Look, I mean, I think with the Barrenjoey success that we are seeing, I am sure that there is a lot of happy shareholders like ourselves in the success that we are seeing in that business. Probably much of this is a matter for the Barrenjoey management team, and they will be discussing that internally on employees, but we still do have a long time to run with those employee share plans, and certainly as a shareholder in the Barrenjoey business, like we are in the Vinva business, we are incredibly pleased with the performance of those underlying businesses.

The next question online is: How is the search for a new Global Head of Equities going?

Thank you for that question. I will say we don't actually have an open search for a new Head of Global Equities underway. As we have talked about in other forums with Arvid's departure, we were very pleased to have the strong bench strength with Al Pullen and Casey McLean there already co-PMs of the global fund and ready to step in as interim co-heads of that business. So for now, we are very pleased with how that has gone, and we continue to monitor overall resourcing of that team.

The next question online. Across the underlying businesses, performance fees have declined substantially over 1H '26 versus 1H '27. I think that should be 1H '25 versus 1H '26. Has this contributed to any loss of morale across analysts and portfolio managers behind these products?

Thank you. I am happy to answer that question. I would say if we look at the last the 12 months prior to this period, we had performance fees coming from our High Conviction Fund predominantly, and then the second period we had performance fees coming from our Infrastructure Funds. As part of the changes we made to High Conviction in August last year, we removed the performance fees as we converted that strategy to the Global Opportunities strategy; we completely changed the fee structure for that. I would say that is a great example which was very well received by the Global Equity team and the distribution team to have, a 75 basis point flat fee in the market which hopefully is well received by our clients as well, and again we are seeing some early attraction to that. So I would say from a -- any kind of loss of morale from a performance fee perspective, which I don't think we saw, has actually been offset by us seeing a contemporary product with a strong performance like Global Opportunities with some sharp pricing made available to our clients.

Can you explain what sort of investments in AI you are looking to make? How do you see this investment improving the overall MFG business? Is this expected to drive a material increase in expense growth?

Thank you for the question. Our investments in AI are in 2 primary areas. The first is in relation to our investment teams and putting into production tools which improve the effectiveness of the investment process and the capabilities of the research function. And that goal is primarily aimed at improving performance, also being able to expand the universe in which the team covers and to be able to be more efficient in the way in which they allocate their time and energy.

On the second element, we are looking at operational efficiency and productivity improvements across the entire business. And those will be ongoing over the remainder of this year and into next year as well. And those will be primarily in the areas of productivity, both in back of house but also in client reporting and client experience.

From an expense perspective, we are focused on funding that from our existing cost base. So as I have mentioned previously, I don't expect that to drive an increase in expense growth at the group. It is an -- a reallocation of our resources and our energy towards those areas.

There are no more questions online. Operator, can we check if there are any more questions on the phone, please?

[Operator Instructions] There are no questions from the phone at this time.

Thank you. Given there are no more questions, that will be the conclusion of today's interim results update. Thank you all for joining us.

Good morning, everyone, and thank you for joining us today for MFG's FY '25 results briefing. My name is Emma Pringle, and I'm Head of Investor Relations and Sustainability at MFG.

Before we begin, I'd like to acknowledge the traditional owners of the land on which we meet, the Gadigal people of the Eora Nation and pay my respects to elders past and present.

Turning to today's agenda. Presenting first will be our CEO and Managing Director, Sophia Rahmani, who will begin with a review of FY '25 performance and the key achievements that have shaped our year. Dean McGuire, MFG's Chief Financial Officer, will then provide detail on the group's financial results, including a capital management update before Sophia returns to cover our investment management business and strategic partners.

After that, Sophia will speak to MFG's strategic priorities for FY '26. We will then open to Q&A from the floor and online. Today's presentation is being recorded, and a replay will be available on our website. I'll now hand over to Sophia.

Thank you, Emma, and welcome, everyone, to MFG's 2025 Full Year Results Briefing. It's a privilege to present my first full year results to you as CEO and to share how we have built on our momentum over the past year, delivering on our strategy of providing diversified sources of revenue for our shareholders. With our refreshed corporate brand announced last week, I'm delighted that we're presenting to you today with updated MFG branding, honoring our history while better positioning ourselves for the future.

I'll expand more on this shortly. We finished FY '25 with growth across most of our key metrics. These results show a business that's more diversified and therefore, more resilient and well positioned for the future.

I'd like to emphasize a few key points. Operating profit rose 5.4% to $159.7 million, with earnings contribution from our Investment Management business and our strategic partners, underpinned by disciplined cost management.

FY '25 operating profit also benefited from an increase in distributions from our fund investments portfolio. In our Investment Management business, assets under management increased 8.2% to $39.6 billion, supported by strong double-digit investment returns across strategies.

However, revenue was down 12% year-on-year, a result primarily due to reduction in average management fees across our AUM.

Income from our strategic partners more than tripled to $31.1 million, representing 20% of total FY '25 operating profit. We're encouraged by our FY '25 performance and the strong position this creates as we continue executing our strategy. Dean will take you through the financial results in further detail shortly.

As you can see from the previous slide, FY '25 is a year of building on stability and strategic renewal. This result is a validation of our strategy to partner with high-quality complementary businesses such as Barrenjoey and Vinva, providing diversification and support to our strong investment management earnings base.

We saw improving investment performance for each of the 3 MFG investment teams, delivered absolute returns in excess of 10%, with particularly pleasing improvements in global listed infrastructure in the second half of the year.

For our strategic partners, there was a lot of focus on getting the building blocks in place to enable us in our role as distributor for Vinva since announcing our strategic partnership in August with funds launched for the retail market in Australia and focused institutional engagement through our global sales team.

We also made significant operational strides. Internally, we strengthened our executive team with experienced leaders who bring deep industry expertise and global perspectives, and we continue to embed a high-performance culture.

The engagement of our people is critical to our success, and it was pleasing to see our employee engagement lift by 12 points compared with FY '24.

This combination of financial strength, improved investment performance, extended capabilities, a high-quality team and organizational momentum provides a strong platform from which to build a trusted financial group, one that seeks to deliver consistently for clients, adapts to changing markets and pursues long-term value creation for shareholders. Today, MFG is an innovative financial services group, headquartered in Australia and operating across key select markets.

We are highly selective and focused, anchored by 2 core pillars: investment management and specialist financial services.

Last week, we announced the refresh of our brand to support that for MFG at the group level and introducing Magellan Investment Partners as our outward-facing distribution brand.

This brand evolution for MFG provides clarity for clients, partners and shareholders, and Magellan Investment Partners allows us to showcase the investment solutions we deliver to our clients under a distinct identity.

A big part of that delivery comes from the institutional grade platform that supports MFG and remains one of our competitive strengths. It's an asset we've been building over the past 18 years, unique in the market, critical to our business and a key foundation for our future growth.

We will continue to leverage and invest in it for the benefit of both our clients and shareholders. With MFG's investment teams, Magellan Global Equities, Magellan Global Listed Infrastructure and Airlie and our strategic partners, Vinva, Barrenjoey and FinClear, we have a stable of complementary capabilities and strengthened earnings diversity.

I will now hand over to Dean McGuire to walk us through the FY '25 financial results.

Thanks, Sophia, and good morning, everyone. Since commencing as CFO in March, I've focused primarily on an assessment of the financial outlook for the business and a review of the capital management strategy.

I'm encouraged by the opportunity set I see for the business and believe we have the right ingredients in place to deliver for our stakeholders. The MFG business is highly cash generative, operating at scale, has a strong balance sheet and a disciplined approach to expense management.

The growth in earnings from our strategic partnerships continues to be a driver of returns for the business and adds diversity and synergy to our core investment management capabilities.

Our approach to capital management is based around utilizing our capital and distributing our profits in a manner, which generates long-term value for shareholders.

I'll talk to our capital management and dividend approach later in the presentation. FY '25 delivered solid financial results with operating profit of $159.7 million, up 5.4% from the prior year.

MFG has declared a fully franked final ordinary dividend of $0.259 per share, inclusive of a performance fee dividend, reflecting a payout ratio of 95% of investment management operating profit.

MFG has also declared a fully franked special dividend of $0.21 per share, which reflects the increase in our non-investment management earnings alongside our strong capital position. The special dividend brings total dividends to $0.733 per share for the year, being 80% of operating profit.

Over the year, MFG has returned over $200 million to shareholders, including FY '25 dividends and the on-market buyback. Our balance sheet position remains strong with over $560 million in liquid capital at 30 June, providing strategic optionality for the group.

Turning now to Slide 9, which shows more detail on the financial result for the year. The 5.4% growth in operating profit was driven by strong growth from our strategic partners and an increase in distributions from our fund investments, partially offset by revenue reductions in our Investment Management business.

On a per share basis, operating profit is up 7.3%, inclusive of the accretive impact of the buyback throughout the year. Statutory profit is down 31% on the prior period, reflecting lower mark-to-market gains on investments and the one-off impact of the Magellan Global Fund options in the prior year.

Moving now to Slide 10, our Investment Management result. Management fees were down 8.6% as a result of a 13% reduction in the average fee rate, partially offset by a 4% increase in average AUM.

Base management fees averaged 61 basis points over the year, down 9 basis points on FY '24. The reduction in the level of base management fees is a consequence of compositional changes in our AUM with outflows in higher-margin products, including the impact of redemptions following the closed class conversion in Magellan Global Fund earlier in the period.

Our average run rate management fee at 30 June is 58 basis points. Crystallized performance fees were $11.1 million for the year, driven by the strong performance of our infrastructure strategy in the second half. As at 30 June, we now offer 4 funds managed by Vinva. Sub-advisory fees we pay to Vinva as part of our strategic partnership for managing those funds are now separately disclosed in the segment report and totaled $1.6 million for the period.

Turning now to Slide 11 on our partnerships and fund investments result. Our strategic partnerships delivered exceptional growth in FY '25 with invested capital doubling and profits tripling, contributing 20% of group operating profit.

This result follows the $139 million investment we made in Vinva in August 2024. Our partnerships produced an average return on capital of 10% over the year, up 4% on FY '24, driven by a strong Barrenjoey result, showing a 14% return on invested capital.

Barrenjoey paid a $4 million dividend in the first half, and we expect to receive dividends from both Barrenjoey and Vinva over the coming months in relation to their FY '25 profits.

Vinva contributed to our annual result for the first time with 11 months of earnings since investment with financial results materially ahead of our base case, reinforcing the strategic fit and earnings potential of the partnership.

Our fund investments portfolio is valued at $395 million at 30 June and produced a 15% return over the year. Compared to the prior period, cash distributions received from the investment portfolio grew substantially.

This is a result of higher taxable income in the underlying funds, which resulted in higher cash distributions to investors. This line will continue to be volatile as taxable income is driven by a number of factors, most notably realized capital gains on portfolio turnover.

Moving to Slide 12. During the second half, we concluded our capital management and dividend policy review. In relation to the dividend policy, for FY '26 onwards, we have broadened the earnings base on which we intend to pay dividends to include the operating profit of the entire group.

Our intention is to pay out at least 80% of group operating profit each year. This policy reflects the growth in earnings from our strategic partners and the current level of liquid capital available on the balance sheet.

In relation to our capital management position, we view the on-market buyback as the most efficient mechanism to return capital to shareholders where appropriate with 5.9 million shares remaining under our current buyback program.

Over FY '24, we returned $74 million of capital via the on-market buyback, and we have the financial capacity to continue to repurchase our shares, subject to factors, including the share price, market conditions and other investment opportunities. We continue to carefully assess other uses of capital via strategic partnership opportunities to grow and diversify the business, consistent with our strategy and with the aim of creating long-term shareholder value.

Thank you. I'll now hand back to Sophia.

Thank you, Dean. Turning now to our Investment Management business. Total assets under management grew 8.2% to $39.6 billion over the year with strong absolute performance across all strategies and inflows into Australian equity and systematic equity strategies.

In the case of funds managed by our strategic partner, Vinva, we launched 3 systematic equity funds in the first 3 months following the announcement of our partnership and transitioned a fourth fund to MFG in April.

These 4 funds amount to the $1.7 billion in global and Australian systematic equities shown on the slide. Net flows have continued to stabilize in our retail book, which accounted for 42% of total AUM at 30 June, and we remain well diversified by client type and client location.

While early in the period, AUM has continued to grow into FY '26, as I'll expand on in the following slide. Looking at our AUM trajectory by asset class in more detail. Airlie continues to attract strong support from advisers and institutions. Momentum remains strong through FY '25 with approximately $2 billion in net flows. The Airlie Australian Share Fund was ranked #1 by annual net flows for active Australian equity funds for the first 12 months to March 2025, according to NMG.

And Airlie secured the largest mandate win across all MFG strategies during the year, a $900 million allocation from a new institutional client. We are already seeing positive momentum in FY '26, including a $700 million top-up from an existing client in July.

In global listed infrastructure, there's been continued focus on investment performance. And pleasingly, we saw a meaningful turnaround in the second half.

We've also seen improved client sentiment with recognition of the asset class' resilience and income potential, particularly in more volatile times. The transition of the team's leadership in the second half of FY '25 was well received by clients with no institutional client loss as a result of the changes.

There were institutional flows in July with $200 million in top-ups from existing clients and momentum has continued in August with some small mandate wins in the U.S. and Japan. In global equities, we experienced net outflows over the year, including the $1.2 billion impact of redemptions following the Magellan Global Fund Closed Class conversion. This was partly offset by strong investment performance, which continues to meet or exceed our long-term objectives. Our focus in global equities remains on reducing outflows in the Magellan Global Fund and capturing new opportunities in the Magellan Global Opportunities Fund, where performance has been excellent.

With systematic equities, we are still at the start of our journey with Vinva. However, the early momentum, client engagement and investment team performance are very encouraging.

Net inflows have steadily grown since the fund transition and will continue into FY '26 with Vinva Global Alpha Extension ranked 10th in global equity funds, active and passive by annual net flows for the 12 months to March 2025 according to NMG.

With the strongest growth being generated in our lower-margin strategies, Australian equities and systematic equities, this naturally affected our average management fee rate over the year.

Investment performance remains a key focus for all of our MFG teams. Our focus remains on long-term performance. And in this respect, each key fund has continued to outperform its benchmark since inception.

That said, we know that over shorter time frames, our investment performance has not been where it needs to be. While too early to claim a turnaround, we've been encouraged by the improving investment performance, and we will seek to continue this throughout FY '26.

We've made senior hires in each of the Magellan Global Equities and Magellan Global Listed Infrastructure teams who commenced during the year and new hires for Airlie were announced earlier this month. We are committed to resourcing our investment teams to enable them to deliver the results for our clients, and we are delighted with the high caliber of individuals that have joined us, a testament to the strength of the business and our existing team.

I've said before that our distribution platform is a real competitive strength for MFG, and it's worth highlighting just how important that is in today's market. With the changes in the environment in which we operate, having great investment teams is only part of the equation.

You also need the reach, relationships and capability to bring those strategies to the right clients in the right way.

MFG's distribution team, which now operates in the market as Magellan Investment Partners, is deep and experienced with the majority of the team focused on the Australian retail and wholesale markets where we have long-standing adviser, research, consultant, broker and client relationships.

Over the past year, we've extended that capability globally in selective ways, focusing our business in North America and more recently, adding a senior hire in the U.K. to cover the U.K. and EMEA. We're also increasing our focus in Asia from our Australian-based team.

These markets are a longer-term opportunity for us, a 3- to 5-year play. That said, the combination of our global reach and our proven domestic expertise gives us a real edge. We are already seeing a momentum build given the stability of the business and expanded capability set. Evidence of this are the U.S. flows I mentioned earlier and the early but strong meetings we are having with prospects for Vinva and MFG's global and global infrastructure strategies.

We will continue to invest in this platform in pursuing our aim of delivering better outcomes for clients and shareholders.

I'll turn now to our strategic partnerships, whose combined earnings grew across the year to make up 20% of operating profit. Barrenjoey has grown from inception to a high-performing specialist financial services firm in just 5 years. In FY '25, Barrenjoey continued to achieve growth across each business line and NPAT rose 73% with revenue up 24%.

Fixed income was a standout in Barrenjoey's result, supported by its expanding international presence and in particular, the opening of the Abu Dhabi Global Market Office.

MFG received its maiden dividend during the year, and we are pleased to remain a supportive strategic partner to Barrenjoey. Vinva has also had a strong year with investment performance above benchmarks in each strategy they manage and growth across key business metrics.

With the strategic partnership now just 1 year old, it's still early days. However, we continue to see this as an outstanding business with plenty of opportunity, particularly given its scalability. There have been some early proof points for our distribution partnership, including the $985 million mandate, which was a result of both Vinva's exceptional reputation and investment returns and our distribution strength.

We've only just started on what will be a multiyear build, and we are pleased to report that the strategic partnership is already delivering mutual benefits.

Turning to FinClear. Revenue grew 8% this year, and the business continued to strengthen its offering. Two notable developments were the launch of the Multi-currency Cash Hub, allowing clients to hold and transact in multiple currencies and the introduction of FCX, a regulated marketplace for private company equity transactions, the first of its kind in Australia.

These initiatives reflect FinClear’'s focus on enhancing market infrastructure and broadening its service set, and we see real potential for these new business lines to contribute to FinClear’'s long-term growth.

As discussed in February, when we think about what makes MFG a good strategic partner, it comes down to a few core principles. We're deliberate about where and how we invest, targeting high-quality, scalable businesses with strong leadership, proven capabilities and both strategic and cultural alignment.

We focus on fewer, deeper partnerships, providing capital, access to other elements of our institutional grade platform as required, including distribution and importantly, on a long-term basis, always with a clear view of how both parties can benefit from the alignment.

It is critical that we also respect the autonomy of the business in which we invest. We preserve their ability to operate independently while finding ways to create mutual benefit. This model means we can support our partners to grow without diluting what makes them successful in the first place.

And in doing so, we strengthened our business. FY '25 has been a year of progress strategically and operationally. Our renewed strategy is built around 5 clear priorities. And as we've covered already in this presentation, in FY '25, we made meaningful progress on each of them.

One point I'd like to focus on is enabling a high-performance culture. We want an environment that people want to join and stay. And during the year, that's spent adopting performance-focused remuneration structures and having greater alignment with our clients and shareholders through those structures.

We're also continuing to invest in resources to support all our people, including access to AI tools to enhance productivity and innovation. We intend to do more on this in FY '26.

Our employee engagement score improved significantly, though we know there is more to do and embedding the right culture remains a key priority for me and the executive team. As we look to the coming year, delivering consistently against the same 5 strategic priorities remains the focus for the group. We will leverage our distribution strength to deepen client relationships and capture new opportunities. Maintaining our focus on improving long-term investment performance for our MFG strategies is critical, and this means maintaining discipline in our investment process and supporting our teams.

Expanding client solutions, both organically and through our strategic partners will provide a broader range of high-quality relevant strategies to meet evolving client needs.

During FY '25, we reviewed and rationalized our global equities product set to meet those evolving needs. And last week, we concluded this review and announced the transition of the high conviction strategy to the Global Opportunities strategy, seeking to broaden client access to this high-performing strategy and reducing fees for the relevant funds, providing what we believe to be a very compelling proposition for new and existing clients.

We will continue to pursue selective growth opportunities, staying true to our model of targeted high-quality partnerships. At the heart of everything we do are our people. And with the right culture, leadership and enablement, we're well positioned to continue delivering growth for our shareholders.

Before I hand over to Emma, I'd like to personally recognize the exceptional contribution from all of our team to delivering these results.

Thank you. I'm excited about what we can achieve together in FY '26 and beyond.

Thank you Sophia and Dean. We will now open the floor to questions. There have been no pre-submitted questions, so we'll turn first to the teleconference line. Operator, Chris, over to you.

[Operator Instructions]

And the first question comes from Elizabeth Miliatis with Macquarie.

Just the first one, just around the infrastructure fund. And I recognize that you guys have seen a decent improvement on a relative basis over the last 6 months. But if you could give us an update on how your institutional clients are feeling now that Gerard's officially left just last month.

And then also how you're feeling around upcoming fundraising reviews. I think there's a few coming in the next month or so. So just an update there would be great.

Thanks, Liz. I'm happy to answer that question. Look, as I said in the presentation, we've seen no institutional client outflows in our infrastructure business as a result of Gerald's departure. Again, as we said, our institutional clients were probably more prepared for this than the market was given, what we would call the textbook succession plan that was put into place with Gerald and the team.

So Ben and Ofer have well stepped into those shoes. Our clients have responded very positively to that. I think the discussions with our researchers is also supportive of that. And as you say, we'll see that hopefully come through in the research reports that will be issued later in this year.

So flows have been positive, particularly in the first few weeks of FY '26, which, again, I hope we can attribute to the stability in the team, the really exceptional leadership that Ben and Ofer have shown through this period as well as with people having weakening views on medium-term growth outlook, infrastructure, again, listed infrastructure, particularly becomes a strong asset class, and we're seeing increased client attention to the asset class. So we are optimistic about the future for that team.

And then just around Barrenjoey, I mean, I know that you guys don't provide guidance, but just obviously, we've seen year-on-year improvements for a number of years now.

Would you characterize that business as close to maturity or mature? Or do you still see the next 1, 2, 3 years still seeing some pretty strong growth from a profit perspective?

Thank you. Look, Barrenjoey has had a fantastic year. Profits up 70% year-on-year, a strong contribution to our result, as you've seen today. I think given they're 5 years into the journey, I would certainly not expect that they're in a mature state.

They're just building into that. They're seeing growth across multiple business lines. And again, we're delighted to continue to work with them and from an MFG perspective, look at more ways to work with them to support their future growth.

And if I could just sneak one more in just around net flows, what have you seen? I think you made a couple of comments through the presentation. But for the first 7 weeks, is it much of the same as what we saw in the final few months of full year '25? Or has there been material changes either positive or negative?

I would say no material changes, just what it feels like, and again, it's obviously very, very early in FY '26 is that we had some good momentum building through FY '25, and we're seeing that continue through FY '26.

But again, it's very early in the year. It's, as you know, volatile times in markets. So our team continues from an investment perspective and a distribution perspective to work on returns and relationships with our clients, yes.

[Operator Instructions]

At this time, there are no further audio questions, and I would like to turn the conference back over to Emma to address webcast questions.

Thank you, Chris. The first question that we have coming through the webcast relates to our margins. It's been noted that we had a 58 bps base fee exit rate.

And the question is, what is the impact to the base fee with the transition to High Conviction Trust and the impact from the 150 bps to 75 bps that we're seeing with the changes there.

Thank you for the question. The exit rate is 58 bps, that's correct. The transition of the fee rate on High Conviction will take effect from September, but the AUM is only about $600 million. So against the book of $40 billion, the impact will be relatively small, we expect.

Our next question online relates to our assets under management. And the question is Magellan's funds under management have been falling for several years. With FY '25 showing an uptick, do you see this as a start of sustained stabilization? Or is it further pressure, including from super fund internalization and geopolitical instability inevitable?

Thanks, Emma. Look, Magellan, as we know, have had some more challenging years, but it's been really pleasing to see growth for the last couple of years in our assets under management. FY '25 did show an uptick. As you can see through the numbers, we've got some of our investment teams in growth. Some of them continue to be in slight outflow, and it was well supported by investment performance overall.

So we definitely, I think, from a client perspective, can see the stabilization message coming through. It's really pleasing to actually hear the stabilization message being played back to us by clients. And frankly, some of our institutional clients wanting to spend less time on the corporate side and cut straight through into the investment teams and what our portfolio managers are doing and thinking of markets, which, in my experience, is always a really good sign that clients are wanting to talk to us about what we want to talk about as well.

So we are continuing to see that stability come through. There continues to be super fund internalization, as you say, and political instability. But what we do see is so long as we can continue to provide Alpha in a very good strong proposition for our clients, we'll continue to see client opportunities and partnerships where we can with key clients.

Operator, we might just jump back on to the teleconference line. I believe there's been another question come through on the phone lines.

Yes, that is correct. And the next audio question is from Siddharth Parameswaran with JPMorgan.

A couple of questions, if I can, please. One is just on the revenue margins, the fee margins on the funds management business. So I just wanted to check whether there had been any actual changes in any of the fees.

I know you mentioned that mix was a big contributor, but I just want to make sure or check if there have been any actual fee reductions made.

Thanks for the question. There's been no change in the advertise rates of the products. There has been a slight increase in rebates throughout the year. But predominantly, the reduction in fee rates are compositional as we mentioned, but there is a small move from rebates about 1 basis point.

Is the 1 basis point half-on-half over the year?

Over the year.

Just the second question that I have is just around Vinva. Just keen to just get an understanding of just the profit contribution and how much of it was actually made from base and performance fees?

And I suppose just to understand if there's any component of that contribution, which is perhaps not sustainable.

So the profit from Vinva specifically, we don't call out in our materials. What I will say is we are very pleased with the first year of financial performance against our expectations. Vinva's revenue does have a mix of both base and performance fees, which will have some volatility over time.

We're not in a position to disclose at this point the specific composition of that. But we do expect Vinva to continue to grow as a business. Its performance has been very strong. And so we're positive on the outlook there.

And just one final question. Just in terms of strategy, I think we've had different views from you on how you're going to use your surplus capital. I think maybe 6 months ago, there's an expectation that there'd be a lot more investment in new associates.

And it seems like there's been a focus perhaps shift towards capital management. I'm just keen to get a flavor on whether you've come to a view on exactly what you're going to do with the capital and why?

Sure. Strategically, the view hasn't changed in the sense that we are still looking at different opportunities for deployment of that capital into further strategic partnerships. What we do say, though, is we are conscious of the need to balance that with the return to shareholders.

And with the buyback still active, we'll continue to look at that as a viable avenue for utilization of that capital. But strategically and overall, the view hasn't changed, and we do continue to want to grow the strategic partnerships component of the business.

Is it just the opportunities are not there?

If I can jump in, we continue to consider a range of opportunities. I think it's balancing, yes, the strategic imperative that we do want to add new specialist financial services to our business with the strict and very precise criteria we have around the businesses that we're seeking and the partnerships we want to form. So at this point in time, we have not made further acquisitions post Vinva, but we definitely are having a number of live discussions.

And at this time, I would like to turn the floor back over to Emma.

Thank you, Chris. Staying on Vinva, we've had another question come through on the web questions, which is of the $1.7 billion in your AUM that is managed by Vinva, what is that as a percentage of Vinva's total AUM?

Rather than do the percentages, I guess I confirm that -- I can confirm that Vinva's AUM is currently around $29 billion. So that's obviously outside of our relationship with them through funds that we have issued to the market in this last year. Yes, our current AUM is $1.7 billion. But Vinva's stand-alone AUM as a business, as I said, is $29 billion.

Thank you. Another question on Vinva. Can you explain a bit more on how Vinva is accounted for in the fee stream? Does it contribute to gross-based fees of the $234.6.

Thank you. Yes, it does contribute to that gross fee stream. So we earn those fees at a gross level on those funds, and then we pay a sub-advisory fee to Vinva as part of the net result.

We've had another question through on the expected growth trajectory of the affiliates.

Sure. Thank you for the question. Look, Barrenjoey continues to perform strongly. As we said already, they're just 5 years into their business. Profits for this year were up 70% year-on-year. Its contribution to earnings this year has been very positive from an MFG perspective. We do expect continued growth over the next few years. From the Vinva team, they've had an exceptional year, delivering outstanding results, both performance and financially.

So as you can see in the uplift in the carrying value of our investment. And again, as we can -- we're early in our relationship with Vinva, just 1 year in. So we do see continued growth in that partnership.

The next question relates to our fund investments. You have $411 million invested in your funds, including $200 million in the global fund. What are the long-term plans for this investment?

Thank you. So that's correct. The liquid capital is primarily made up of our investments in those funds. In the medium term, we do expect to redeploy the majority of that capital into strategic partnerships, and that's our strategic goal.

We're very pleased over the year to have received return to 15% of that investment. So it continues to add value to the group in the short term. But over the long term, the plan will be to redeploy those investments.

Next question is, is the Barrenjoey investment considered core? Or would you consider divesting this if an appropriate offer was received?

Thank you for the question. Look, we do consider Barrenjoey a core part of our MFG diversified sources of growth. We're delighted to be a 36% investor and have them as a strategic partner today.

There's a question on the cost guidance from here and how we should think about growth from this point given that this year, there's no cost guidance being provided.

Thank you. So that's correct. We haven't provided specific dollar cost guidance this period. What I can say is we expect to continue to be very disciplined on the cost side.

And broadly, I would expect our costs to grow at or about the level of inflation.

And the final question that we have through at this point in time is on the cost outlook, which is, can you provide some more information on the cost outlook given some of the investments in distribution?

So we continue to look at ways to make our cost base more efficient to be able to open up those investment opportunities. So when I talk about the cost outlook, that's in totality. But in the component parts, we have advanced on ways to make savings in certain areas to open up our ability to invest in those growth areas.

So staying on the expense guidance, there's been another question through, which is asking similarly, why is there no expense guidance? With headcount up 11 heads half-on-half, should we be thinking about costs also going up?

The headcount going up is more of a timing issue. We had some vacancies at the end of the final period last year that have been filled now.

And as Sophia has mentioned, the executive team is now in place, and we have filled those vacancies with new hires in this half. So I wouldn't expect headcount to be increasing materially from here, but that is included in my prior comments on cost increases into the future.

Thank you. We have another question on Vinva, which is based on the $148.5 million carrying value -- sorry, $148.5 million carrying value for Vinva versus the $130 million investment. Does this imply $9.5 million of profit from them in 10.5 months of ownership?

Thank you for that. I think that's a very reasonable calculation you've made there. So that's the best way to look at the profit contribution from Vinva for the year.

Thank you, Dean. And there are no more questions coming through online. And I don't believe there are any more on the teleconference. So thank you for joining us all today. That's the end of our FY '25 market update.