Good morning and welcome to Generation Development Group's FY 2025 results presentation. From the company today, we have the CEO, Grant Hackett, and the company's Chief Financial Officer, Terence Wong. We want to apologize for the delayed start in terms of technical difficulties, but we're pleased to welcome you this morning. Before we get started, I'll just remind you that you can submit questions through the Q&A button at the bottom of your screen. For analysts, you can raise your hand and I'll allow you to ask questions audibly. With that, Grant, I'll allow you to go ahead. Thanks very much.
Great, thanks very much, Simon, and apologies on the late start. However, we can report that it's been a very successful year for Generation Development Group, and a big thank you to everyone that's obviously participated in that, all of our shareholders, all of the staff that we have across our three businesses within Generation Life, Lonsec, Evidentia, and of course all the other stakeholders and our customers and clients that obviously make a result like this possible. We'll start running through the deck. You know, let's look at the headline numbers there. We'll start on the left-hand side. In terms of some of the highlights over the course of FY 2025, you can see there, the investment bond business, up 33% at FUM. It's been the largest amount of growth that we've ever seen over a single period over a given financial year.
Phenomenal to see the team there produce over $1 billion in gross sales. Moving into the managed accounts, you can see that was up 48% to almost $30 billion for the year, where we lead the industry in that particular space. Post the Evidentia acquisition, we've obviously doubled our FOM in FY 2025 there. Of course, Lonsec Research, that's up 6% in terms of just research products, not all the ratings products that you see across super ratings, et cetera, to 1,836. That's resulted in a significant jump in revenue. You can see it's up $141 million for the year, up 191%. Driven off, I guess, three key factors. One being the fact that we own Lonsec for the full year. We only owned 49.2% of that in FY 2024. Obviously, the acquisition that was completed on the 18th of February with Evidentia Group.
Of course, the great result, sales result and FOM growth that we've seen in Generation Life. You can see there, just drilling down a little bit more into the subsidiary business, 29% up on Generation Life in terms of its revenue growth to $62.4 million. Lonsec's had an outstanding year, up 18% in FY 2025 to $72.1 million. That's resulted in a huge amount of growth in terms of underlying NPAT year on year, to $8.4 million in GenLife, $19.8 million, you can see in Lonsec, or 53% up. You can see the operational leverage coming through the businesses, even though we continue to invest in our products and services and distribution team. Evidentia, we've done that on a full-year basis, up on FY 2024 for that group at $5.3 million, which is a 97% uplift year- on- year.
There is a massive growth profile in the managed account space that's reflected in that business, and I'm sure it will over the course of this year. In terms of bringing that all together of the group, you can see the statutory NPAT's up $38.2 million, and underlying NPAT up a massive, you know, I think it's 170% for the year to $30.2 million. Our dividends have remained flat because we're reinvesting heavily back in our business to continue to get that sustained growth. Obviously, there's been a lot of change throughout the course of FY 2025, which, in terms of the next slide, if we can just shift across to that, we saw that we got indexed into the ASX 300. A month later, in April of this calendar year, we went into the ASX 200.
We've got a lot of new investors that sit on the Generation Development Group registry now. Just understanding a little bit about the strategic intent of our group and the way that we operate. Why Generation Development Group? When we started out in this business with a lot of the current executives back in 2017, we were a mono-line product line, just in terms of having our investment bonds inside Generation Life that we distributed. We've obviously diversified out quite a bit from there in terms of lifetime annuities. We've got Lonsec, which is research. We've got the super ratings business, the IRA business, and Lonsec Investment Solutions, which is the managed account business. We've continued to invest in managed accounts with the acquisition of Evidentia Group. You can see we're very much a diversified financial services business.
We look for two core aspects when it comes to our investments or where we want to play. Firstly, structural tailwinds. We can really see that in the investment bond space with the changes to superannuation in terms of Division 296, which is that double taxation for balances above $3 million. Under the proposed legislation, that's not going to be indexed, that threshold. There's going to be a lot of people over the next few decades that are going to be captured inside super with a balance over $3 million. We're also hearing a lot of commentary around a lot of other tax reform, whether that's the CGT discount going from 50% potentially down to 25%.
That all bodes well for the Life Company as a very, very strong alternative for a lot of investors, particularly people on high marginal tax rates that are trying to minimize their overall tax payments to utilize the investment bond for some form of their investment. In terms of the other areas we play around the managed accounts area, we saw a real structural change within the financial advice space because of the ease of operating with a managed account inside your business in terms of your practice management, your administration, your risk and compliance. We've got a lot of data points, obviously operating in this business around the improved efficiency, the scalability that then happens in a financial advice practice and the time it gives them back to either grow their business or spend more time with their customers or acquiring new customers. We saw that structural change.
That industry over the last six or seven years has grown around a 24%- 25% CAGR, and it's projected to grow around to a 15%- 20% CAGR until 2030. That change is still more in its infancy than really being anywhere near maturity at the moment. We wanted to make sure that we got on top of that tailwind and invested heavily in that space. That's resulted in very, very strong FOM growth for our group, but obviously a very strong financial profile that you can see in the update that we've provided the ASX today. In terms of the investment bond business, I'll just touch back on the slides for a second. You see 55% up year- on- year.
A couple of years ago, we strategically sat down, really looked at what do we need to do to get this business from around a half a billion dollars worth of sales to get up to a billion dollars worth of sales. I have to commend the Head of Sales at the time, Felipe, who's now the CEO of Generation Life, who, we did a pretty interesting way of doing it, an offsite where we called it the billion dollar bus, where we really sat down and worked out, well, what have we got to do from a marketing, a distribution, and a product point of view to really be able to ramp up our sales in that space and offer a stronger proposition not only to financial advisors, but of course the underlying client that sits there as the investor inside this product.
That's probably been brought forward in terms of where we thought we'd be by about 12 months. We thought we'd probably hit $1 billion in FY 2026, but that change within our business and that uplift and that achievement has happened a little bit earlier to our delight, which has been great to see. In terms of the broader business, talking about Lonsec Group, of course, it's the number one qualitative research house in Australia and continues to grow. We see more opportunity in terms of product innovation and the researchable universe, I'll call it, for that particular part of our business. We've got the investment-linked lifetime annuity, which is a really exciting part of our business.
It's been slow in terms of FOM growth there over the past two or three years, but we're really seeing a big opportunity moving forward with the federal government putting more pressure on trustees to be able to offer these longevity solutions to their members, particularly seeing 2.5 million Australians going into retirement over the next decade. That is actually going to be the biggest growth opportunity across the group, given how big that addressable market actually is. Obviously, we had a really big announcement with a strategic alliance with BlackRock in May of this year, which is really going to help us fast track, get to, I guess, the break-even point for that part of our business and obviously start seeing some real scale in that area. With the products that we operate today, including our lifetime annuity, it's very much a Capital Light product.
We only have about 40 basis points of operational risk capital that's required for both the investment bond and also our lifetime annuity. I know investors want to see Capital Light businesses. Just moving on to the next page, which really talks about the four pillars of Generation Development Group. You can see there on the left-hand side, the investment bond. I'll just touch on the areas that I haven't spoken about. We're number one market share of inflows, 57% market share until the end of March 2025. In terms of total market share, we're actually number one there as well. We were number two this time last year. It's been great to see us take that position of both number one market share in inflows and total market share.
You can see there in terms of profitability and operational leverage, that's starting to come through the business, even though we continue to invest quite heavily because of all the great opportunity that we see within the business. You can see $15 million of underlying NPAT there and a 34% three-year CAGR in terms of underlying profit in the investment bond business. The lifetime annuity is up in terms of sales, 50% year- on- year, albeit a very low base. In terms of how that product looks, it's an investment-linked lifetime annuity that you can actually choose your investment and you can change between those investments at any point in time. It offers you the ability to link your income to any asset class or a combination of multiple asset classes in a diversified fund.
As I touched on, we've got that strategic alliance between us and BlackRock, which I'll talk about in a little bit more detail throughout the course of this presentation. Our Lonsec Group had an absolutely phenomenal year. You can see their underlying EBITDA $33 million, 40% up on last year. Last year, we posted an EBITDA of $23.5 million. Mike Wright and the team there have done a phenomenal job in driving that business. You can see the product research. I've already touched on that to 1,836. One thing that's been, I think, a bit more of a highlight in the business this year is the fact that we've started to see more irate subscriptions over the past three years. That's contracted given the numbers in the financial advice industry have come down quite a bit since the Royal Commission, but that's actually started to grow again.
We're seeing some real green shoots in that space. In terms of the delta or the uplift that's really been driven in that business, it's really the out-of-cycle research. That has around a 50% premium compared to the normal research if you were just in the asset class cycles that Lonsec would do over the course of the financial year. You can see that's driven that premium and the amount of on-research demand has driven a big uplift in that business. Touching on the last stream there, Evidentia Group, Lonsec Investment Solutions, you can see $14.8 billion. That's up 39% year- on- year. That's not off a low baseline by any means. That's off a $10.6 billion baseline that we finished with in FY 2024.
To see those guys produce such an outstanding result and the net inflow result there has been great to see over the course of the year and just the consistency and performance there, which we really like. In terms of the Evidentia Group, they finished also at $14.8 billion for the year, which is of course a combined total of $29.6 billion, which is 60% up on PCP for them up on FY 2024. You can see the overall business was up 49% year- on-y ear. We continue to feel very positive in terms of the momentum that we've taken into the FY 2026 financial year in the first quarter. Of course, we're only a couple of months in, but all things being equal, we feel like FY 2026 is going to be another strong year for Generation Development Group.
I'll now turn to Terence, who'll go through the overall group financials and into the three subsidiary businesses.
Thanks, Grant. Hi everyone. It's with great pleasure to report our very strong underlying earnings results. As you can see, underlying profit up a great 170% from $11.2 million up to $13.2 million. That's through a combination of both organic growth as well as acquisitions that we've done. In terms of the acquisitions, you have noted the fact that we've gone from 49% ownership to full ownership of Lonsec. We no longer equity account for Lonsec in FY 2025. In addition to that, we've also benefited from the four and a half month contribution of Evidentia, which we completed the acquisition for back in February of this year. As a result of that, you'll see underlying earnings increasing to the 170% mark. We have retained dividends at $0.02 per share.
Underlying organic growth has primarily been driven by the investment bond fund growth, which has increased by 33% during that period, as well as the managed accounts growth, which has increased to 178%. That's through a combination of both Lonsec underlying growth as well as the Evidentia acquisition. In terms of cash and cash equivalents, Generation Development Group remains very, very well capitalized. The reason why the cash flow is, the cash balance is slightly lower than last year, you may recall we did the capital raising towards the end of last year's financials, and we had to pay out to Lonsec shareholders early in the financial year. It's a bit of a step there. Moving on, I'll talk through the earnings of the underlying businesses in a bit more detail. Very pleasingly, underlying life and admin earnings has gone up by 46%.
You can see operating leverage coming through that business now. Net of pass-through costs, you can see operating leverage coming through. Please do report that there has been no margin compression, notwithstanding the very, very strong growth on a net basis. We're still earning 85 bps on FOM. In terms of the annuity business, conscious that it hasn't grown as fast while it has doubled in terms of earning sales growth compared to last year, it hasn't grown as fast as we would like. As a result, we have managed to curtail costs and kept a very tight leash on cost growth there. You can see no increase in cost there. Underlying profit overall for the annuity on the line of business for both annuity and investment bonds is up 74%. Moving then across to Lonsec.
As Grant alluded to, a very strong result from Lonsec driven by the two areas. One is the LIS FOM growth and two on the research. The on-demand research cycle and all has really helped on that pace because we do earn materially higher margins on that. In terms of expenses, you can see very, very muted. You can definitely see operating leverage coming through that business, especially on the LIS side. Income tax expense has grown in line with that. We no longer equity account. That's why the change in FY 2025. Overall, underlying profit up 53% on a like-for-like basis. Finally, the next slide on Evidentia in terms of the underlying financials. Again, very, very strong growth on Evidentia Group. Underlying profit pretty much doubling from $2.7 million- $5.3 million, and that's predominantly driven by the incredible FOM growth in managed accounts. Thank you.
Just moving into a bit more detail around the KPIs for Generation Life. We'll go through each of the businesses now. Great to see that strong financial result. As you can see from each of the businesses, even though we've obviously completed the Lonsec acquisition at the start of last financial year and acquired Evidentia at the commencement of this calendar year, to see that each business is up 74% on Generation Life for underlying earnings. You can see 53% up there in Lonsec and 97% up for the real growth driver of our business with Evidentia. Lonsec Investment Solutions and Evidentia are now combined as our managed account business sitting under both Peter Smith and Mike Wright. In terms of Generation Life, we've already spoken about the FOM and the growth that we've seen there, the $1 billion, 55% uplift year on year in terms of total sales growth.
We expect more tailwinds to come into this business. Over the course of last year, there was a lot of commentary coming to the federal election around Division 296, that double taxation for large super balances. I don't think anyone anticipated it would get passed as a proposed legislation, but the election changed the view on that quite materially. The government seems to be hellbent or very, very focused on making sure that they pass that legislation as is. That means taxing on the unrealized component and not indexing that $3 million threshold that they've discussed. That puts this business in a strong position in terms of being part of the solution for a lot of financial advisors and clients to be able to diversify their investments and use different tax leaves. You've got things like your personal name, trust structure, or company structure.
Superannuation and investment bond is really starting to play into that overall structure that we're seeing accountants and financial advisors use. We've touched on the market share, 57% for the full year or to the end of the 31st of March, the full year data that we've got so far. Approved product list, we've got enough in terms of distribution access to continue to see the growth in our business with 700 APLs that we're currently on. You can see the product ratings that support that. One of the key metrics that we do look within the business is active financial advisors. Now this has grown about seven times over the last seven years, which says a lot given the Royal Commission has contracted financial advisor numbers close to 50%. We've now seen that stabilize and even start to grow a little bit, which is really encouraging for the industry.
Obviously, if we can see the Quality of Advice Review, the second set of proposed changes actually flow through into legislation, I think that's going to bring more people back into the financial advice industry, which is going to be great for our overall business, not just the Life Company. You'd see there are 2,640 advisors that have written one or more products on a 12-month rolling average inside the Life Company. We've changed the metric on new bond numbers. If you look at historical presentations that we've done for full year, you would see that number would actually include any add-ons of existing investment bonds and regular savings plan. The way that we've done this number so it's a little bit more true to label is we've actually got people that have never written an investment bond with us before, either directly or through the advice channel.
You can see that number is up materially on FY 2024, which has driven such a great financial profile for the business, up 47%. Regular savings plan, that continues to climb every six months. You can see that up over $100 million now to $111 million, or up 18% year- on- year. You can see the list of products that we have. We continue to grow that out all the time. Just to highlight our investment bond product, we've got 76 options there. We've got 35 that we call that are tax optimized. Now, an investment bond works on revenue account, which means you can do things like offset a capital loss against income, which not many people would be familiar with.
Therefore, your headline tax rate of 30% gets lowered quite a bit down to your effective tax rate, which for those 35 options sits at an average of about 10%- 15%. Highly tax effective for a lot of Australians, particularly people on high marginal tax rates. You can see if you've got an effective tax rate around 12% or 13%, even if you're not paying the highest tax rate, there still is a significant tax arbitrage if you were to house some of your investments through the investment bond structure. You can see the average investment term, very, very sticky money. Every dollar that comes onto the platform sits there for an average of 14.5 years. Very high barriers to entry because you need the life license to be able to distribute this product.
We've got very good margins in our product, and we don't see any margin contraction happening in the short to medium term and very long-term duration in terms of that money being very, very sticky. Moving through to the next slide, you can see here's a bit of a competitive analysis or a lay of the land. The bar chart will actually show the investment bond inflows. That's an annual inflow number. You can see there we've really dominated that with 56.6% of market share over the course of the year. There are four main competitors on the rest of the bar chart there. On the line chart, that is total market share. I've said it before, we were actually second this time last year, which is a position we really didn't like being in.
We were very much focused on making sure that we got to the number one position in that space. Obviously, we want to continue to grow upon that over the course of this year. We'll talk about some of the investment that we've got going on at the firm. I really wanted to look at the CAGR numbers on the next slide over the last four years for some of our key financial metrics and overall metrics within the business. You can see on the left-hand side there, we've got gross and net sales. That's at a 26% CAGR over the last four years. Of course, we saw that 55% uplift from FY 2024-FY 2025. You can see a number of applications there. It's got an 18% CAGR, FOM growth, 25% CAGR, number of active advisors. That's continued to grow. We're already seeing that growth into this financial year.
That's resulted in more operational leverage in our business with a 39% CAGR in underlying NPAT. Moving on to the next slide that we wanted to really touch on today because we believe this is a significant opportunity for our group over the short to medium term, but certainly in the next 12 months, was our life income product, our investment linked lifetime annuity. We've obviously gone into a strategic alliance with BlackRock. I think this is really complementary of what the team have done in Generation Life. As we've locked up that $25 million investment that BlackRock has made for the next five years, we've committed that money to the development, whether that's with being the trusted partnership with superannuation funds around designing their longevity solutions for their members, obviously going into retirement.
It's also the first time that BlackRock in Australia has made a strategic balance sheet investment into an Australian business. I think that speaks volumes of the deaccumulation opportunity that they see in the Australian market. I know I was fortunate enough, and as was our Executive Chair, Rob Kern, to catch up with Larry Fink just to talk about this opportunity with our business and the Australian market. You can see there on the right-hand side of this slide, what is it that the capability of both businesses actually bring together to be able to solve some of the, I guess, challenges that super funds or the wealth industries had in deaccumulation phase around longevity solutions. On the right-hand side, just to talk through that in a bit more detail. Obviously, BlackRock's got global expertise in this space.
They've also developed product solutions around the world, and we're able to access that IP to be able to bring it to the Australian market. They've obviously got the Aladdin software, so their technology is second to none around their portfolio risk management and some of the relationships that they have with major super funds to be able to provide that service to them. They're obviously the world's largest asset manager with $12.5 trillion worth of total assets. They're a very innovative group in terms of they know where they play and where their strengths are, but they also know where they need to partner to be able to design best-in-market solutions. In terms of our business, obviously, we've got the life license, we've got the reinsurance arrangement, we've got the administration, we've got a lot of the innovations that we've done in this particular product space.
We've got the features that we've built out over time, and we've got the scalabilities within the administration system that we've built to be able to fit in with the super funds to be able to design tailored solutions for their cohort. I really think this partnership and relationship or strategic alliance that we have between the two groups is going to certainly produce some great outcomes for us in the future. We're already very advanced in terms of some of our new product development, which some of them are, you know, the Australian market's never seen. I believe they're actually game changers in the annuity space in terms of what the team have been able to come up with and are currently putting together. We'll release those in the new calendar year. Obviously, some of the opportunities for us to be able to partner with the superannuation funds.
Now, why do we think that's actually quite important to partner with some of the super funds for their longevity solution? The federal government is putting quite a bit of pressure on them to come up with longevity solutions. Obviously, Australians are living for much longer. We're seeing that they're not spending their money in retirement because they don't know how long they're going to live for. Therefore, they've been quite frugal throughout the phase of retirement when they should actually be enjoying themselves. You can see here that Treasury and Jim Chalmers announced some of the initiatives back in November 2024 around updating MoneySmart to include data information on retirement incomes, delivering better retirement products, also establishing best practice principles, which I'll touch on in a second, on retirement income, and also establishing a retirement reporting framework to monitor outcomes for members.
You can see the government is very, very focused on this space. They want to make it work. In terms of some of those best practice principles for the super funds, the trustees need to develop at least three cohorts of members. They need to develop a trustee design of retirement income solutions for each cohort. Again, that retirement income is the consistent theme that the government's focused on. That hasn't been executed very well in our industry. In terms of the trustees providing access to a lifetime income product, that's not the age pension, an account-based pension and lump sums. The third principle here is the trustees will design guidance services to assist members to understand and select the components of retirement income solutions.
Very much educating them as they're coming into retirement in terms of the composition of products they should have to maximize their income and also to give them a guarantee that regardless of how long they live, they always know they've got a minimum amount of income that will come through. Trustees are to support all members to understand their retirement income needs by also providing forecasts and projections. There is a lot of work coming through government in this space. Those principles right now aren't mandatory, but you can see that the government is starting to put more pressure on that, and we're sure they will mandate elements of this moving forward.
In terms of switching now onto Lonsec to go into a bit more detail, we've already touched on that this is Australia's leading qualitative research group that's really dominated the industry over the past few years and has had a phenomenal result across the four areas of this business. The four areas of the business, obviously, the biggest being Lonsec Research. We've then got SuperRatings. We've also got iRate, which is the technology software that helps with the analytical tools and portfolio construction, also connects research with managed accounts, etc. We've also got Lonsec Investment Solutions. You can see there we've had a huge amount of momentum throughout the full year. Really, the back half surprised us a little bit in terms of the momentum that we had around out-of-cycle research. We thought that would die down a little bit in Q4, but that maintained.
We've also been able to maintain that into the first month of this year. In FY 2025, 18% revenue growth for the group has resulted in $72 million worth of revenue, $33 million EBITDA, which is 40% up on FY 2024, and a lot of operational leverage coming through there on the NPAT of $19.8 million, or 53% up on PCP. I've touched on the massive amount of growth that we saw in Lonsec Investment Solutions, or LIS, up 39% to $14.8 billion for the year. We're going to continue to invest heavily in both managed accounts and research to continue to get the strong growth numbers in FY 2026 and beyond. Breaking down into a little bit more detail across some of the revenue and gross profit within the group, just on the next slide, you can see the three-year CAGR numbers here, 22% on revenue, 25% on gross profit.
The operational leverage, which we've spoken about a lot throughout the course of the presentation, 44% CAGR and EBITDA, and a massive jump from 2024-20 25, resulted in a big NPAT jump from $12.9 million in FY 2024 to $19.8 million, and a significant CAGR of 47% over the past three years. In terms of the breakdown across the three businesses that relate to Lonsec Research, Super Ratings, and iRate, just on the next slide, we've already touched on the revenue uplift. You can see the composition from FY 2024- FY 2025 in terms of the breakdown across those three areas of Lonsec is 100% consistent, but also the gross profit, which is up 30% year- on- year. The gross profit split changing ever so slightly, where Super Ratings has lifted a little bit to be 20% of the gross profit split. A bit more leverage coming through there.
Also, the profit per customer, which is obviously the large super funds that we provide a lot of consultancy research and ratings to, has lifted a little bit. You can see that on the next slide in the top right-hand corner in terms of the average revenue per client that was growing quite steadily from FY 2021-FY 2024. You can see we've had a massive jump from 2024- 2025. Kirby, who's the CEO of Super Ratings, has done a magnificent job with his relationships there and obviously providing additional services to these super funds. You can see on the left-hand side there from FY 2021, we were just researching just over 1,350 products that's grown to nearly 1,900 products in FY 2025. I've touched on this before just around the iRate subscribers.
This is financial advisors, practice managers, obviously using iRate to be able to access research and Super Ratings, all the analytical tools that we have on there. It's great to see that we've seen a bit of a step change in that from 2024 to 2025 to almost 5,000 users now using that monthly subscription on iRate. The last bit that I'll touch on on Lonsec is the managed account business. The next slide, this is the growth that we've seen since we did our investment back in 2020. June 2022 there, where you can see it goes from $3.6 billion- $6.4 billion. We bought Implemented Portfolios, which is our managed discretionary accounts. You can see quarter and quarter, we've had very, very consistent growth. In February of this year, we did the acquisition of Evidentia Group, which was $12.7 billion at the time.
You can see there the combination of $13.5 and $13.3 billion was our total managed account business at the end of Q3. That's continued to grow in Q4 to $29.6 billion. Again, that momentum has really started to pick up even into FY 2026. Just moving into the last part of the presentation today, which is Evidentia Group. I'll just touch on the CAGR numbers for our managed account business. You can see there just on the revenue side from 2022- 2025, we've got a three-year CAGR of 60% and also the gross profit. Again, the operational leverage coming through that part of our business as well, a 94% CAGR or $14 million of gross profit in FY 2025. Now, just touching on our latest acquisition, which is of course Evidentia Group. Evidentia Group is now a combination of both Lonsec Investment Solutions and Evidentia.
Evidentia is very, very strong in terms of the tailored portfolio solutions or tailored managed accounts, which is the strongest growing part of the overall managed account up high. They're very, very good in terms of practice management, risk and compliance, helping that whole sort of financial advice model get some efficiency within their business, sitting on their investment committees, even helping them with M&A, et cetera. It's not just about being the asset consultant and providing investment solutions to the practices that we do business with. We want to be a true partner with that business. We want to be embedded in that business. We want to be a part of their growth. We want to help with their growth more than just being investments and generating returns for their clients. This business has been the market leader in that space.
I know talking to Pete and talking to Mike and going through the strategy for FY 2026 and our three-year strategy, we've got so many other things that we're going to continue to deploy over the course of this financial year to be able to drive that FOM growth, but also to be able to drive that value proposition for our financial advice practices and of course their underlying clients. You can see here on the right-hand side, FY 2025, we've had a step change in revenue from $10 million- $16 million. Underlying EBITDA has grown from $3.6 million up to $7.8 million, which was slightly more than our forecast just because the expense profile was down a little bit on that business compared to what we presented back in February of this year.
You can see on the left-hand side, we've already covered off the FOM growth, but you can see there's a step change in the significant amount of growth that that team has driven over the past four or five years. Moving on to the last slide, I think what we've got on the deck today before we get onto the outlook of Generation Development Group. You can see here we restructured the business over the last three or four months of FY 2025, which was a big piece of work that was taken on by all the executives across the group. The reason that we wanted to do that is because we really wanted to drive accountability and performance within each of our assets. We also don't want to have a model that's centralized.
We want people to have ownership over their P&L, and we want them to be able to drive their performance and be accountable for that performance. You can see here we've got very, very clean channels in terms of the way that we operate across the multiple products that we distribute from each of these subsidiary businesses. You can see on the Life Company side there, of course, that's the investment bond, the lifetime annuity driven by Felipe Aderuzio, who's the CEO of that business. We've got Lonsec Group there, which is the research, the ratings, the iRate business, of course, SuperRatings being a part of that as well.
We've got Evidentia Group, which is now a combination of Lonsec Investment Solutions and Evidentia coming together to form the biggest managed account business by about four, four and a half times the next bigger player in that particular sector, which is set to grow anywhere between 15%- 20% CAGR to 2030. That's got three or four product solutions there. We've got our tailored managed accounts. We've got the off-the-shelf managed account solutions, which is the prepackaged solutions through LIS. We've also got implemented portfolios there with our MDAs and our private market solutions, which we introduced in the first half of FY 2025. In terms of the outlook for GDG, we're really excited, as you can probably tell from the future of this group.
We see ourselves in a very, very strong position to be able to capitalize on a lot of the legislative and structural tailwinds to continue that sales momentum that has really picked up over the course of FY 2025. Not only the tax reform of Division 296 superannuation tax inside superannuation, but also the consistent discussion of tax reform that the Albanese and Chalmers government could actually impose as part of their tax reform agenda. I've already touched on CGT being a discussion point. Also, taxing trusts from the first dollar of distribution. Of course, income splitting and asset protection is the reason that a lot of wealthy individuals set up their own family trust. That could come into the spotlight given that there's over a trillion dollars now that sit in private trusts.
We also want to really leverage that relationship that we have with BlackRock now and that strategic alliance. I can report to the market that it's been a very, very positive experience in terms of the way that the two teams have come together. The advances that we've made on some of the product side, some of the super funds that we've already met with to help them solve for the retirement income covenant and be their longevity solution provider has been really, really positive. We will continue to scan the market, obviously, for high growth opportunities that really align to the GDG strategic agenda and the characteristics that we're looking for in any investment or fourth vertical that we might have in the group.
We want to make sure that we've got that growth profile as 20%- 30% for the next four or five years in terms of the underlying earnings number of a business. We want to see it as a disruptor in the space, or we want to see those structural legislative tailwinds. We're very disciplined around the way that we approached M&A. We don't want to do things for the sake of doing it. We don't want growth for the sake of growth. We want to make sure it aligns to our strategic objectives, and we want to make sure that it adds a lot of value to shareholders. We're very, very disciplined on that. 99% of the stuff that we get to see or look at, we reject.
In terms of the outlook moving forward, you can see there the massive amount of growth in the managed account sector to grow to $474 billion by 2030. We're around 10% or 11% of managed accounts. You can extrapolate pretty quickly what the FOM growth could be for GDG if we're able to execute well over the next four or five years. In terms of Lonsec Research, we've got a lot of new initiatives that we're going to be bringing out over the course of FY 2026 that will continue to see growth in that business as well.
Just to finish up, a big thank you from me to all of our key stakeholders, the board, the executives, all of the staff across three of our verticals within Lonsec, within Generation Life, and of course Evidentia Group, all of our shareholders, and of course all of our customers that we have that we continue to find new ways to add value to their portfolios or the product features that we develop across all of our products. I think, you know, I sit here today where we've probably got about two or three years' worth of development in the pipeline of a stronger value proposition that's going to set us apart from our competitors. You can hear I'm pretty bullish on the future of GDG, and we just want to make sure that we continue to execute well.
The one thing that we don't ever have in our business is any hubris. As much as we're reporting a very solid result today, we never want to get ahead of ourselves. We're always focused on the future, and we stay paranoid around the areas we need to execute. We know we've got a lot of good competitors out there trying to take our position as number one across those multiple areas that we currently hold. We want to make sure that we continue to evolve and move very, very quickly and not rest in terms of the way that we continue to bring new products to the market and obviously work with all of our clients. Thanks very much to Simon and the team for everything they've done for our business as well. I'll throw it back to you now for any questions.
Great, thanks Grant. I'll allow you to have some water after that presentation. Your first question is from Simon Fitzgerald from Jefferies. Simon, please go ahead.
Hi there, just hoping you can hear me. Thank you.
Great, thanks for taking my questions. Nice to see all of the divisions posting such strong results. Well done there. First question relates to Evidentia. Just understanding the FOM at 30 June of $14.8 million was below that original target of 8.5%. I'm just interested to know what your sort of key takeaways or main learnings are after having the business for almost six months in terms of how those conversions transpire.
Look, I think there's a few elements to that question. In terms of the learnings, we did put a real scratch metric out there that really was the full pipeline in terms of all the mandates, the client uplift that we see, the client wins that we would potentially be able to bring into the business over the course of that last four or five months of FY 2025. We were able to get all those client wins. Our goal of not losing a single customer as part of that transaction was also achieved. In terms of all the mandates falling that still sit within our pipeline, that didn't happen. We probably should not have made that promise or put that number out to the market, if I'm being completely frank. I think that put unnecessary pressure on the business.
I think we bought a phenomenal asset with a bunch of phenomenal individuals in there that are extremely bright and good at what they do and very, very driven and ambitious in terms of where they want to take that business, even with all the growth that they've sustained over the last five years. In terms of what we see moving forward, given the scale that we've got within that business, as much as probably the fund numbers were delayed three or four months, and that's what we're talking. We know in funds management, I know a lot of people on this call who are fund managers know that fund flows can be a little bit lumpy. That's certainly the case with our business.
In terms of the earnings profile that we put out there for FY 2026, we still believe we're in a really strong position to be able to achieve that. As an overall business, we never give guidance because we don't like these situations where we're still seeing really good growth across all of our businesses. You sort of put on a number that's as part of the forecast versus what the actuals was. In terms of some of the revenue synergies that we didn't put as part of the accretion calculations for that capital raise and acquisition back in February of this year, some of those will be brought forward, which will offset some of those FOM numbers that you discussed there, Simon. Anything else to add to that, Terence?
Just to highlight the big focus we've had the last three to six months in terms of the integration work, as well as what's upcoming. That's really to accelerate the synergy realization and bring forward some of those synergies that we had earlier planned but not articulated to the market. As we run through more and more of those, we're seeing more and more of those opportunities come through. The focus really is to bring those opportunities forward.
Probably, Simon, the last learning that I'll just touch on there that I didn't articulate was we were probably in defensive mode a little bit. We were trying to protect our market position. We know a lot of our competitors went and spoke to some of our clients when that transaction happened. You are more in that defensive play rather than playing offense. We're now fully restructured and focused and playing offense again. I think we probably underestimated the time that was going to be spent on that versus the time of probably growing the business. Now we're back to growing.
That's really helpful. Thank you. Just in terms of Lonsec Research and ratings, obviously a very exceptional result there. You talked about the out-of-cycle type of ratings. Just interested to ask whether there's any asset class that's popping up here or is there anything, any sort of trend that you're sort of seeing or has it just been a really strong launch season for new products?
Overall, it's been a really strong season. Private credit's kind of the flavor of the year, we'll call it, for Lonsec. There was a lot of demand in that space. I think product manufacturers, fund managers bringing out new strategies, et cetera, understand the value of that research rating and how critical it is for them to get onto APLs. Probably the other part that I'll really highlight with Lonsec as well, we don't go out there and rate every single product. We've all seen in the news over the past few months, just around First Guardian, around Shield, and some of the brands that have been impacted by that. They didn't come to us for a research rating and they didn't make first base with the business.
We've got a very clear sort of filtering process that we take on around track record, whether it's with the firm or the fund, any related party issues, governance issues, aggressive mandates with kind of max limits. Also, the portfolio has still been built out or not even put in place yet. We're very, very conscious of not growing for the sake of growth. The integrity of that business is absolutely critical. Both Michael Wright and Lorraine Robinson, Lorraine, of course, who is the new CEO of Lonsec Research and ratings, are absolutely front and center and making sure that always comes first. I think that's well reflected, Simon, in our managed account business. We're completely independent. Everything that goes into the portfolios that we do for our financial advice businesses or the dealer groups is done based on merit. It's not conflicted in any way.
I think that's an important aspect to highlight as part of this result too, and the way we will operate moving forward.
Yeah, that's really comforting. I think it read my mind there because I was just going to ask you about whether any sort of shield exposures came up, but that's obviously very good that it sounds like you're very clear there. Maybe just the last question, hoping you can offer some guidance, maybe Terence, just in terms of how we should be thinking about cost for FY 2026. I'm conscious of any sort of full-year impacts for Evidentia, investment spend that might have been flagged for Generation Life that you talked about, and then any sort of performance-based payments that we should be conscious of given a very strong season for sales of investment bonds and obviously, you know, for the research and ratings performance as well.
Thanks, Simon. Look, from my perspective, the top line growth opportunity is as strong as ever. If anything, it's stronger and I'm even higher conviction than before. Just looking at the momentum of the investment bond business as well as the managed accounts. On the front, I mean, Division 296 is a once-in-a-lifetime opportunity. I would expect that over the course of FY 2026, we'll be making a big investment into that space and really capitalize on that. We'll see some of the benefits flow through and hopefully increase even further increases in scale in sales in FY 2026. The real benefits will really come through FY 2027, 2028. The investments we will make in FY 2026 to capitalize on that. In terms of some of the other perspective, you will see Lonsec has smashed it absolutely out of the ballpark in terms of the earnings that they achieved in FY 2025.
When we spoke to Mark about six months ago, we were thinking that we knew there would be an earnout payment given the earnings trajectory. We were expecting an earnout payment around the middle of the range. Given the size of the big outperformance, we would expect payments in the top of the range. As a result of that, we arranged a $50 million debt facility with one of the Big Four banks that will be drawing down the debt to fund a good chunk of that earnout payment. There'll be some interest flowing through that. I guess in terms of the others, the final item, we have put in some LTIs in place to lock in some of the Evidentia staff, especially given the high performance, the high profile there. You may have seen about two, three months ago, we released an announcement.
We've been lucky enough to sort of lock in our Chair, Rob Coombe, who has been a big instigator and driver of a lot of the opportunities that we have crystallized and realized and continue to pursue. We've managed to lock him in for three years. Again, there'll be some cost to that as well.
Thanks, Grant. Really helpful. Thank you for taking my questions.
Thanks, Simon.
Thanks, Simon.
Thanks, Simon. Your next question's from Tom Tweedie at MA Financial. Tom, please go ahead.
Good morning, guys. Just checking you can hear me.
Yeah, good. You, Tom?
Awesome. Just a couple of questions, if I may, around Lonsec. Firstly, on the research and rating side, really strong second half. You've kind of bucked the seasonal trend and marginally grown it. Can you talk to FY 2026, given the visibility on the pipeline? Do you expect a seasonal or the same trend in FY 2026, and any pricing levers as well you can throw in there, given the demand you're seeing in the out-of-cycle research stuff?
Yeah, I mean, we could definitely pull the pricing lever. We're already conscious that we are the most expensive in the market, but there is a bit of pricing elasticity in there that where we see an opportunity to be able to do that, we'll certainly do it. In terms of the on-demand research, this year I can say it started off quite well with respect to that. However, you don't know exactly how that aspect of our business is going to play out because as per the label, it's on demand. In terms of the pipeline of new products that go within the normal research rating cycle, we can see consistent growth in that. We're definitely going to see Lonsec Research grow over the course of this year, which is probably the most mature asset and product that we have across our entire group.
Given the strong pipeline that we see, we'll certainly see growth. Whether we see it to the same extent with out-of-cycle research, that's yet to be seen. We're still very bullish on it.
One good thing about that business is that we're gaining increasing operating leverage there. In terms of the number of research product each analyst covers, we expect that to improve even further. We should get more even greater earnings dropping through bottom line.
That leads into my next question, was the gross margin expansion, which both LIS and the research business got. On research itself, Terence, to that point, are you utilizing technology and other things to get that up? Is there any other levers there for gross margin? On LIS, should we be expecting again revenue growth to outpace the cost growth in that business in FY 2026?
Look, in terms of the research, gross margin expansion is driven twofold. One is the sort of investment in IT that we've made over the last couple of years that has enabled some analysts to cover more research product. That as well as, I guess, the uptake in the on-demand research, because you do charge a higher premium, you get a higher margin on that. In terms of further operating leverage on the research side, we have kicked off additional work on the AI space. I think that's a big opportunity in terms of where we finally land on that. I think it's more of a medium-long-term roadmap that we're working through to explore the opportunities. We need to find the right balance between getting the right operating leverage, but at the same time making sure and protecting the quality of our work as well. That's on that piece.
In terms of LIS, it's just typical fund manager economics. You could grow your fund double, but your cost base might grow 20-25%. Your cost base is not going to double, so you definitely get a lot of jobs through that.
Yeah, and in terms of, I guess, the restructure of the group that we did this year, there is obviously a bit of additional cost with that. Just you're duplicating some of the resources when you split it apart, you know, Lonsec Research and obviously the managed accounts business. You might have two Head of Sales, two Heads of Marketing, et cetera, et cetera. All those shared services now sit within each of the verticals of the three businesses. There's a bit of duplication of cost there, but that really is a one-off. We will definitely see that offset with the performance and growth that we'll see over the next three years.
We think that'll be more than, you know, sort of optimized through the performance driven by that structure rather than the initial costs that we take on board by a little bit of duplication there too, which we discussed as part of the Q4 update.
Awesome. Thanks, guys. Well done on the result.
Thanks, Tom.
Appreciate it.
All right, thanks, Tom. Just a question submitted. What is the earnout for Lonsec and how will it be paid?
In terms of the earnout from Lonsec, it's going to be towards the upgrade. They've had an absolute stellar result. In terms of how it will be paid, I'm very well capitalized in terms of my cash and balance sheet. Separately, I've also recently added a debt facility with one of the Big Four banks that's undrawn at $50 million. I don't expect that to be drawn fully, but a good portion of that will be drawn to fund that earnout. From a capital perspective, I'm very, very comfortable that we've got more than enough funds to support all our growth aspirations, being organic and any bolt-ons, as well as to fund any earnout payments. It's probably important to note that the full earnout that could have been achieved for Lonsec was $90 million. However, on a fully diluted basis, we had 38.1% of that business.
Therefore, the maximum amount was $55.7 million, just in case anyone's looking through the decks when we did the capital raise.
Perfect. Just a question from Richard Coles at Morgan's. What's the current conversion rate of Evidentia FOM for running it?
We don't have recent data on that, but the conversion rate has been per expectation. That hasn't changed. When we did the capital raising pack, we had a conversion rate in terms of sort of in the lower 60% in the terms. After about two and a half years, that has not changed.
Some of the new client wins, we updated as part of the Q4 messages there that we won seven new clients. Some of those clients are starting to go live. We don't quite have the data points to look forward to FOM just as yet for some of the new clients since we've owned the business.
All right, thanks, Grant. Just a question from Nick McGarrigle at Barrenj oey. Are you looking to invest more in FY 2026 to take advantage of the regulatory backdrop in investment bonds?
Absolutely. That's a Division 296 opportunity. We'll be spending a couple of million additional there over and above our normal spend, and that will be over a few different parts of the business. One will have more BDMs, so greater footprint, more foot soldiers there trying to sell the bond. We'll have more product offerings. In terms of some of those investment options that we'll have, you get a new suite of options that will come out in the coming months. That's really to target those high net worth individuals affected by Division 296. On the third aspect, we will make further investments and enhancements in IT to facilitate greater operational efficiencies as we put on more and more of those Division 296 type funds onto a platform.
I think what's really important, this is a once-in-a-lifetime opportunity in terms of that legislative change that's happening with Division 296 and some of the other discussions around tax reform as well. Probably an investment that we'd do normally over a two or three-year period, we're probably doing over a 12-month period. If our sales continue to be strong, as we're seeing at the moment, we might even bring some more of that investment forward so we can continue to capitalize on it and really see that uplift in 2027, 2028.
The last thing is if you look at our marketing spend, year-on-year marketing spend has been relatively flat. We will spend a bit more on both the line marketing to make sure everyone knows about the opportunity as well and some of the benefits that investment bond brings.
That's the why if they're thinking of our Division 296 wide investment bond should be their next best alternative too.
I think one of the elements that we're competing against here is not obviously for those large balances in super. You can see we are more tax effective if that proposal legislation is passed as is for those, you know, balance above that $3 million threshold. However, it's people obviously looking for, you know, to invest through trusts or bucket companies. We're kind of competing more with that. We're really conscious of getting the education out more broadly than to just financial advisors, which has really been our focus over the past few years, just to get a bit more of a bottom-up push of actual clients understanding who's Generation Life, what's an investment bond, and how they can benefit from it.
Right, thanks, Grant. That pushes us up on the hour. We might finish up there. I might just hand it back to you for closing remarks, and we'll leave it there.
Great, thanks very much, Simon. It's been a fantastic year for Generation Development Group. It's been truly transformational in terms of some of the acquisitions that we've done, the growth that we've got across all of the different assets and products that we have within the group. From me, in terms of being CEO of this business over the past few years, it's been wonderful to see this step change. I really feel like we've built the foundations now to be able to springboard into some significant growth over the next three to five years. You can see that with the opportunities that we've just touched on around Generation Life and those tax reforms. You can see the structural change that we're seeing in managed accounts. You can see the strong cash flow and brand recognition that we have within and the integrity with Lonsec Group.
Of course, we'll continue to scan the market for any other businesses that we see that are disruptors that have got those structural legislative tailwinds, or we believe we could make a significant impact and really turbocharge the sales growth and P&L for those particular businesses. A big thank you to all of the investors, the key stakeholders that we have across our entire business, and mostly a big thank you to all our clients and staff. Without them, we wouldn't have the high-performing business that we have. Like I said, we're really, really conscious of making sure that we continue to drive the outperformance that we've done over the past year or two and really continue that all the way into, not just FY 2026, but really into 2030.
We've got clarity around the strategy that we want to execute on and some of the new initiatives that we'll be bringing to market, not just this year, but over the next few years. A big thank you from me, and thanks for joining us this morning. Thank you, Simon, and NWI for your help as well.
Great, thanks, Grant. Thanks, Terence. Thanks, everybody.
Thank you. Have a good day.
Thanks, bye-bye.