I would now like to hand over the conference to Mr. Grant Hackett, Group Chief Executive Officer. Please go ahead.
Hello, and good morning to everyone. Firstly, thank you very much for joining us for Generation Development Group's FY 2026 results. Moving through the slide pack today, we are going to start on our vision on slide three. The vision for us in terms of GDG's outlook and the way that we view our business is that we want to be one of the most admired financial services companies recognized for performance, innovation, and customer outcomes. It has certainly been the underlying DNA of our business, and the values that really underpin that is around clarity, just being clear in terms of what we want to achieve, how we want to achieve it, and how we communicate with our customers.
Innovation, we very much innovated on the product side, whether it is through our managed account business or our tax optimized or with Lonsec Research, and certainly the integrity, the way in which we win is very important, and we want to make sure that these values guide us in terms of what we deliver for all our customers, shareholders, and our people. The way we win really matters. Turning on to slide four. For those of you who are new to the GDG story, the group holds market-leading positions across three very strong brands across financial services. The first being Generation Life with the investment bond and lifetime annuity business. Evidentia Group Managed Accounts, one of the fastest-growing partners of financial services with over a 20% CAGR for the past 10 years in terms of sector growth. Then, of course, Lonsec Research and Ratings.
Group funds under management increased to 37% or AUD 46.5 billion, supported by record net inflows of AUD 9.7 billion for the year for FY 2026. So a massive year for the group, and congratulations to all the team that produced such an outstanding result. That drove total revenue growth of 23% and underlying NPAT growth of 21% on a pro forma basis, as you can see. Andrew Mellor, our new Chief Financial Officer, will take you through the detailed financial analysis in the slides to come. Moving through to slide number 5. You can see here just in terms of the growth or slide number six, sorry.
You can see the growth and execution of our group has been extremely strong over the course of FY 2026, and we maintain very strong positions, the number one position, in fact, across our three key segments, and we have made a lot of progress in terms of our key strategic priorities. We have continued with disciplined investment in distribution, products, people, technology to support this scale. This is particularly important as we look to capitalize on the very structural tailwinds that we see in managed accounts, which are quite significant. I have already touched on the sector growth there. We have been taking significantly more than our natural market share. We, of course, got the legislative tailwinds of the investment bonds and the tax reforms that were announced in the May budget.
Prior to that, we saw the changes in superannuation around the Division 296 tax, which affects large super balances come into effect. Moving on to slide seven, looking at some of the key operating metrics across our business. You can see Generation Life, a significant uplift. In fact, over the past couple of years, we have gone from FY 2024 sales numbers of just over AUD 650 million of gross inflows to now over AUD 1.5 billion of total gross inflows. We have really expanded across our active advising client base to almost 3,000 active advisers for the year. That is based on a 12-month rolling average, and an investment maturity profile of over 15 years, you can see for the investment bonds. So it is a very high-margin product. We have got a very strong market position, and we have continued to grow at record rates.
Evidentia generated another incredible year of net inflows of AUD 8.4 billion. Continued to grow materially faster than its natural market share of 1.8 times. That has been over the past couple of years that we have been able to sustain that. We have grown the team materially and integrated the two businesses over the last 12 months with Lonsec Investment Solutions and Evidentia Managed Accounts. Lonsec also expanded both product coverage and subscribers in another record year, demonstrating continued demand for its research and ratings capability, and certainly has the strongest brand in the marketplace. Looking now on slide eight. Again, some of the earnings growth that we are seeing across the group and each of the businesses. Strong FUM growth and revenue growth of AUD 178 million or up 23%. EBITDA of AUD 59.2 million, up 18% on a pro forma basis.
Underlying NPAT increased 21% to almost AUD 41 million, reflecting earnings growth across each of the operating businesses. You can see slide nine really talks about the trajectory of the business over its three core areas in terms of fund growth, revenue growth, and underlying EBITDA growth. See 77% CAGR there in group fund to the AUD 46.5 billion that I have already touched on. 23% CAGR in revenue growth to close at AUD 178 million for FY 2026, and then underlying EBITDA growth from FY 2022 through to FY 2026 of 37%. Moving on to slide 10, just talking about the strategic priorities across Generation Development Group and each of the businesses. We have got some great assets.
We've done a lot of investment in these assets, and we continue to get more structural and legislative tailwinds. We believe we're really in a strong position to be able to benefit from those tailwinds, both in retirement advice and the platform adoption. Across the group, our priorities really are to, and we're going to talk in a little bit more detail around this as we get through the presentation today, but deepen client relationships, expand our distribution, and continue our product innovation. This will allow us to deepen our competitive moat, which we have a very good track record around execution and bringing new products to market that have been successful. We've got several other initiatives that we think is going to create a lot more value, both for our customers and for our shareholders.
What's really important to note around all of this, when we're looking at any sort of investment, we remain very disciplined and proportionate to the opportunity. That's a really important part. Anything that we're looking at, we know we've got a lot of long-term tailwinds that are on our side, but we're very focused on making sure that any investment is disciplined and proportionate to the opportunity with selective acquisitions assessed against the strategic fit and long-term value creation. Moving on to Slide 12 and deep diving a little bit more into the Generation Life business and the investment bond market. We can see here we're operating in probably what is one of the most attractive long-term growth environments that we've seen in financial services, and this is supported by retirement, this huge amount of wealth transfer that we're going to see over the next 30 or 40 years.
The legislative tailwinds, they continue to expand the demand for tax effective wealth solutions like investment bonds. The investment bond market, and we've done a lot of building around the model for this, is expected to exceed approximately AUD 60 billion in FUM by 2035. So some pretty exciting numbers there. That's of course, driven off three core factors. One is the change we've seen to superannuation and the large super balances with Division 296 tax. We're seeing this significant wealth transfer, and it can be structured as a non-estate asset. So that's the second part. Obviously, we saw in the May budget the significant tax reforms, particularly the removal of the CGT discount. Again, investors, particularly wealthy investors, looking for more tax effective homes to be able to grow and take care of their wealth.
Generation Life has been the market leader in this market for some time, capturing 59% of annual inflows to the end of March 26. Turning to Slide 13, talking about that, I guess, total addressable market opportunity. We really plan to extend this through a few key focuses, but really what we want to do is evolve from a product provider into a broader wealth solutions partner. So a lot of our investments will focus on outcomes to improve both advisor and clients' experience. This is through digital transformation, through scalability, and new products that we plan to bring to market that are, of course, tax optimized in the investment bond space. A lot of the automation and AI that we're investing in at the moment will support a lot of this efficiency and scale, and we're making sure that each of our investments are tied to measurable outcomes.
Moving on to Slide 14, to take a bit more of a closer look at Evidentia Managed Accounts. Again, it has been another incredible year for that business, delivering record FUM and net flows while maintaining its lead as the largest provider of managed accounts, significantly bigger than its nearest competitor and growing significantly faster. The business continues to have more advisers, more practices supporting it. It was a record year of new clients that adopted the Evidentia Managed Accounts, and we continue to deepen and strengthen those relationships. The scale, the product breadth, the partnership position, we think Evidentia is going to continue to benefit from not just the market growth and the sector growth that we are seeing in managed accounts, but also the ASIC industry-wide compliance review.
Given the scale of the investment, the technology, the risk management overlay that we have within the business, we think we are going to be a big beneficiary of any changes that we see moving forward as scale will play a more important front and center place as managed accounts continues to grow. Moving on to Slide 15, executing and the focus of us moving forward for our managed account business. We spoke about deepening those adviser relationships. It is not just for us being an outsourced CIO. That is not what our managed accounts just is. Of course, we are an asset consultant first and foremost, but it is more so that we are an integrated partner that helps drive and create value for the advice practices that we do business with. We look at their efficiency.
We want to be able to convert that fee ear to FUM as a business, and we want to help these practices grow out their businesses. We help them look at M&A. We did the acquisition of Encore Advisory Group last year, again, to be able to help offer more services to our clients. So the scale, the operational discipline are expected to support the operational leverage in that business over the medium term. We should really see that start to kick in probably more from FY 2028 onwards. The integration on Slide 16, talking about the integration of both of our managed account business, which was a huge piece of work that we took on, bringing together two very good assets. The number one and the number two, or equal number one, we will call it for the sake of it, managed account businesses out in the market.
We saw that integration completed on time and on budget in June 2026. The combined platform, broader distribution, adviser reach, the implementation capability that we have got there, and of course, I touched on Encore Advisory Group, that further extends the consulting and practice transformation capabilities and really starts to increase the competitive moat that we have around that business. On Slide 17, we are moving through to Lonsec Research and Ratings. Lonsec is a very well-known, very strong, and trusted brand out in the marketplace. It had an incredible year of growth. We saw Lonsec products researched up 9%, a big goal for. It was actually to get to that 2,000 mark, and we just got there with 2,001 products.
Research, and this is, of course, across various funds, ETFs, SMAs for the first time, given that we moved Lonsec Investment Solutions away from the research business and obviously moved that over to Evidentia, and of course, there's superannuation options that are research as part of that. Its core research and ratings business continues to generate strong cash flow and maintain high margins. In fact, looking at the business, and Andy will talk a bit in the financials, it's got close to 50% EBITDA margins and mid-teens in terms of EBITDA performance. So it's a very, very good business. Great asset for GDG. We also saw some innovations there with Lonsec Governance Solutions, which was launched just last week. It's a product we've been talking about for some time, and this extends the business into specialist governance and investment oversight.
In terms of the growth strategy, you can see there on slide 18 for Lonsec, it's very much a trusted provider in the marketplace. We're looking at new services to be able to diversify the revenue away from its core business, the research business, and looking at governance solutions and deepening these client relationships that we have and operating differentiated retirement and analytic capabilities. The technology and data will further deepen insights, and also faster product innovation and greater operating efficiency within that business. So Lonsec has been around close to four decades now, and it's got a lot of data and research and capability in there and things that we certainly plan to leverage from here on, moving forward. Moving to slides 19 and 20 that I'll cover off just around our AI adoption.
At the half year results in February, we did talk about our approach to AI, and we've certainly moved away from the sort of planning phase into a controlled deployment across the group. A board-endorsed governance framework, clear accountability, risk controls are now in place for the group and across each of our businesses, and targeted initiatives are progressing across both research, portfolio analytics, reporting, retirement modeling, compliance, and a lot of our workflows across the group. Our approach around AI remains capital light and partnership led. Partnerships like in Lonsec with AWS is an example of that, and we're focused on measurable productivity and scalability and obviously getting the operational benefits out of any AI that we continue to implement within the business or any of the businesses that we have. Turning to slide 21, this really talks about the value creation framework.
I said everything that we've said today and Andy will go through ultimately comes back to one objective: converting strong market positions and growing scale into sustainable earnings growth and long-term shareholder value. Our distribution reach, advisory relationships, and platform capabilities drive net inflows, fund growth, and most importantly, reoccurring revenue. Capital will be allocated between organic investment, balance sheet flexibility, and selective strategic acquisitions. The objective for us is obviously to have sustainable EPS growth, improving returns, and long-term shareholder value while maintaining financial discipline.
You can see, if I just highlight the bottom of Slide 21 there, when we are talking around potential acquisitions, because we do get a lot of questions around M&A, particularly with the success of Evidentia and Lonsec, we are looking at businesses that either fit within the existing assets and expand the economic moat that we have within those assets and further our competitive advantage. Or we are looking at new verticals where we see sustainable earnings of 15%-20% growth. They have got those regulatory and structural tailwinds that I have spoken a lot throughout the course of this presentation, or they are leaders or disruptors in the new vertical and have got some scale in there. Obviously, it needs to be earnings accretive, and the potential for synergies for any of our preexisting assets that we have. It has been a phenomenal year, FY 2026, for the group.
The staff have done a great job in adapting to a lot of change with the integration of our two large managed account assets, a new group operating model. I will now pass it over to Andy Mellor, who is the new Group Chief Financial Officer, to go through the group and each of our businesses. Thank you.
Thank you, Grant, and good morning to everyone. Just before I walk through the FY 2026 results, I would like to cover a few housekeeping matters regarding the basis of the FY 2026 full-year presentation. The results I will discuss today are presented on an underlying basis, and unless otherwise stated, prior year comparisons are against FY 2025 pro forma results, reflecting the corporate structure that became effective on the 1st July 2025. Our underlying result excludes the benefit funds, and a reconciliation between underlying NPAT and statutory profit is provided in the appendix. As a reminder, the restructure resulted in three key reporting changes. Generation Life and Corporate, previously reported as a single segment, are now reported separately. Lonsec Investment Solutions and Implemented Portfolios, previously reported as part of Lonsec Group, are now reported within the Evidentia Group segment as part of our managed account business.
Lastly, Lonsec Research and Ratings is reported as a standalone business. To provide meaningful period-on-period comparisons, we have included in the appendix pro forma segment reporting for FY 2025, as well as separate H1 and H2 segment disclosures for both FY 2025 and FY 2026. The H1 FY 2026 segment disclosures are unchanged from those presented at the interim results in February. We have also provided a reconciliation of the FY 2025 pro forma financial result to the reported FY 2025 financial result on Slide 33. The pro forma financials include the eight and a half months of Evidentia operations in FY 2025 prior to the acquisition. We have maintained consistency with prior reporting periods by presenting the Generation Life income tax rebate within segment revenue. For segment presentation purposes, this item also now appears within revenue rather than below EBIT as it did at the half, to be consistent across the reporting framework.
We've also completed a review of segment cost allocations. Given that 18 months ago, we didn't report any segments, and given the growth of the businesses, we now report three operating business segments in corporate, and I'll discuss the impact of those changes shortly. Turning to Slide 23 and the group financial results. As Grant highlighted earlier, FY 2026 was another year of strong performance for the group across key financial measures. Group total revenue increased 23% to AUD 178.7 million. EBITDA was up 18% to AUD 59.2 million. Profit before tax of AUD 54.2 million was ahead of market expectations. Underlying net profit after tax increased 21% to AUD 40.7 million, slightly below market expectations. Not due to the operating performance, though, rather due to a significantly higher income tax expense in the second half. I'll have more to say about tax later on. Total expenses increased 26% to AUD 119.5 million.
On this, there are two points worth highlighting. Firstly, group expense growth slightly exceeded group revenue growth during FY 2026, as we strategically increased investment in people and technology capability, particularly across Generation Life and Evidentia, to support future scale and growth. Please note, Lonsec expenses were flat versus the pro forma. Secondly, given the significant structural tailwinds and TAM opportunities in front of us, we remain confident that these investments will lead to future growth and deliver operating leverage over the medium term. It's also worth highlighting just here that we've given some guidance on Slide 29, which Grant will speak to in a moment, in relation to operating expense growth in FY 2027. We've said that FY 2027 group underlying operating expense growth rate expected to remain broadly in line with the growth rate in FY 2026, which was 26%.
Importantly, FY 2026 included a significant amount of organizational work associated with establishing our new segment structure, creating a standalone corporate segment, and integrating managed accounts within Evidentia. Much of that foundational work has now been completed. The group's effective tax rate for FY 2026 was 17%, compared with 18% on a pro forma basis in FY 2025. The second-half tax expense was materially higher than the first half, reflecting a number of items that were finalized at year-end. Over the medium term, Generation Development Group's effective tax rate, sorry. Over the medium term, Generation Life's effective tax rate is expected to be broadly consistent with FY 2026. Evidentia, Lonsec, and corporate effective tax rate are expected to be in line with the statutory corporate tax rate.
I would also like to note that we did have investment in corporate segment over 2026, and we believe that corporate is now broadly right-sized to support the operating businesses. Accordingly, while we expect some ongoing investment, future growth in corporate costs will be moderate. Underlying earnings per share was unchanged at AUD 0.102, as underlying profit growth was offset by the increase in the weighted average number of shares on issue, primarily reflecting acquisition-related share issuance in 2025. Finally, the board declared a fully franked dividend of AUD 0.01 per share, bringing the full-year dividend to AUD 0.02 per share. Turning to Generation Life on Slide 24. FY 2026 was an exceptional year for the business, characterized by record sales, net inflows, continued market share gains, and strong earnings growth. Total revenue increased 34% versus the FY 2025 pro forma results.
The income tax rebate included in total revenue was AUD 13.5 million, and we would expect this to increase broadly in line with Generation Life's expense growth going forward. Expenses increased 25%, reflecting continued investment in people and technology capability, together with FUM-related operating costs. Generation Life expense growth rate in FY 2027 is expected to be modestly higher than the group average FY 2027 expense growth rate, which I just referenced of 26%. In addition, Grant will detail Generation Life CapEx plans as part of the outlook section later in this presentation. Given the significant structural tailwinds and TAM opportunity in front of us, we remain confident that these investments will lead to future growth. EBITDA increased 57% to AUD 23.3 million, with the EBITDA margin increasing by 5 percentage points to 32%. Please note footnotes three and four on this slide.
When calculating the income tax rebate on a pro forma basis for FY 2025, that amount is lower than the actual rebate received, given corporate is no longer within Generation Life under the new operating structure. This does lead to a relatively higher EBITDA growth pro forma versus FY 2026 of 57%. Therefore, in the footnotes, we have calculated the EBITDA growth using the actual income tax rebate received to provide an alternative EBITDA growth perspective for you. We also completed a segment cost allocation review between the corporate segment and Generation Life in the second half as we finalized the new structure. This resulted in a reallocation of certain full-year expenses from corporate to Generation Life in H2, which results in H2 Generation Life expenses being higher than H1. For modeling purposes, I would suggest assuming a more balanced H1/H2 allocation on a go-forward basis.
Generation Life continues to expect improving operating leverage over the medium term. Now turning to Evidentia Group on slide 25. As Grant has spoken to, it was a stellar year from the Evidentia Group team, completing the integration of LAS and Implemented Portfolios, as well as delivering 37% fund growth and stable margins. Revenue increased 26% to AUD 58.8 million, noting the FY 2026 fund inflows were significantly Q4 weighted. These outcomes reflect the benefits following the merger, broader distribution capability, strong market positioning, and this bodes well for the future. Expenses increased 30% to AUD 33.7 million, driven mainly by investment in people during the year. FTEs increased from 87 to 109 across the year, and in FY 2027, we expect FTE growth to fall significantly. Expense growth rate in FY 2027 for Evidentia Group expected to be modestly higher than the group average FY 2027 expense growth rate, which I referenced earlier of 26%.
Given the significant structural tailwinds and TAM opportunities in front of us, we remain confident that these investments will lead to future growth. EBITDA increased 22% to AUD 25.1 million, while the EBITDA margin was 43% compared to 44% in the FY 2025 pro forma. Similar to Generation Life, Evidentia Group expects to see improving operating leverage over the medium term. Now turning to slide 26 for Lonsec Research and Ratings. Revenue increased 7% to AUD 45.8 million, reflecting continued demand across research SuperRatings and iRate product categories. Importantly, expenses held flat year on year, demonstrating disciplined cost management. As a result, EBITDA increased 15% to AUD 22.8 million, and the EBITDA margin increased by 3 percentage points to a record 50%. The operating result was supported by a 9% increase in products research and 13% growth in iRate subscribers.
Lonsec remains a high-quality franchise characterized by its market-leading position, high recurring revenues, substantial cash generation, and attractive operating leverage. As a result, it continues to make an important contribution to the Group's overall earnings profile. Turning to the balance sheet on Slide 27. The Group ended FY 2026 with cash and cash equivalents, excluding unallocated client application redemption funds held in trust of AUD 97.5 million and a net cash position of AUD 57.5 million. During the year, the Group entered into a AUD 50 million debt facility with NAB, of which AUD 40 million was drawn during the year to fund the majority of the Lonsec earn-out payment. The Group therefore retains a strong balance sheet and financial flexibility to support its strategic priorities. I will now hand back to Grant to discuss the outlook.
Fantastic. Thanks very much, Andy. Moving to the outlook before we throw it open to questions. We enter FY 2027 with strong momentum, pardon me, across each of our businesses. We see significant opportunities here, particularly in Generation Life, where the structural and demographic, and legislative tailwinds continue to expand the addressable market that we went through over the course of this presentation. Our investment in FY 2027 reflects that opportunity with capital being deployed in a disciplined manner and proportionate to the long-term growth opportunity we believe the business can deliver. This will be in the range of 5%-15% of Generation Life's revenue for FY 2027. To break that down a little bit in terms of some of those areas of CapEx is what we are looking at is partner integration and scalability.
Looking at modernizing our technology architecture and data layer to allow Generation Life to connect more easily with platforms and superannuation trustees and other institutional partners. Some adviser feedback in terms of our portal. We need a more contemporary and scalable experience with greater self-service functionality, including enhanced reporting, transactional capabilities, and visibility that advisers do not have today. It is certainly an area of investment that we are keen to commence and really start to improve that adviser experience and automate several pieces of functionality there. The operational efficiency internally within the business, including some STP across Generation Life. This is automating forms, connecting directly to each of our registry systems, and really eliminate a lot of the manual processing that we still have in the business today. This allows us to scale a lot easier without increasing operational resources.
Really important, and the last bit I will touch on around this is really future-proofing our technology architecture. Moving more towards modular architecture where products, partners, technology providers can be added and changed without significant redevelopment of the broader ecosystem. Allowing a lot more flexibility within the architecture. This also removes the concentration and dependency that we have with some of our partners today. Moving forward around the Evidentia business, we believe this is going to continue to grow beyond its natural market share with net inflows of between AUD 5 billion-AUD 7 billion excluding mandates and market movements over the course of FY 2027. It will continue to scale. Also with Lonsec Research and Ratings will increase its range of products, as we have already stated, the launch of Lonsec Governance Solutions last week and other products and services within the research business.
Supported by a strong balance sheet, we remain very focused on executing our strategy and converting all of these opportunities into sustainable earnings and growth and obviously ultimately driving long-term shareholder value. A big thank you to all of our boards, all of the executives across the group, and most importantly, all of the staff across each of our businesses that have executed FY 2026 as another very successful year for Generation Development Group in each of its businesses. We take a lot of pride in what we do and the customer relationships that we have, and we are looking forward to delivering yet another record result in FY 2027. I will now pass it back to the operator for questions.
Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Nick McGarrigle from Barrenjoey. Please go ahead.
Thanks for taking questions, guys. Just in terms of the outlook for investment bonds with the investments that you have made in the last year, can you talk through how that pipeline is looking? What kind of growth rates are you thinking you might be able to generate in those flows on investment bonds, given that pipeline? Then maybe how you think about the return on investment on that additional expense that you are putting in this year.
In terms of the CapEx then, Nick, based on the FY 2027 financial profile on the revenue side, we expect that between 5%-15%. We know that is quite a wide range. The reason it is wide is because we want to invest at the speed that we see the opportunity pick up. To be totally honest, in terms of the performance of the business coming into this new financial year, it has probably outperformed where we anticipated. So the changes to the tax reforms, obviously the super changes, has definitely corresponded in flows, probably a little bit quicker than what we anticipated, which has been a good surprise. We made the investments last year that you touched on. That was around sort of three core things. One was product, two was the registry system.
We found the registry system was becoming quite slow to do things like regular savings plans, which is a material amount of inflow each month and taking eight or nine hours to do. We've now done that where it takes one to two hours. Also in some of our other sort of back-office operational side in terms of STP. What we've seen in FY 2026 was a 71% uplift in applications. The corresponding growth to the investment was probably a little bit outside. We've commenced some of those investments that I've just touched on, around those areas and the portal, and we've scoped a lot of it out. Some of the STP we've commenced. Some of the new product stuff we're looking at, we've already commenced as well. Have you got anything probably to add to that?
Cool. Then maybe just a question on Evidentia. We've seen the platform results in the last couple of weeks, and they're reporting a slowdown in flows just driven by a bit of rethinking around tax structures and investment strategies. Can you talk through what you're seeing in Evidentia? Hopefully, those trends aren't the same in your business.
Yeah, we wish we were completely insulated from the pro impacts and the changes at the moment going on in the market. I think we're definitely feeling those changes. I don't think quite to the same extent as perhaps the platforms. Quarter on quarter relative to market conditions, we've been happy with the flows. I guess where our business is a little bit different is we've got diversified assets, Lonsec Research, I haven't touched on that yet, coming into this year has performed very well. Obviously, we've touched on the investment bond business. Again, that continues to outperform. We're seeing good performance in Evidentia. But yeah, again, it's going to be impacted, but I'm not sure to the same extent as the platforms.
All right. Thanks for that. I might let someone else ask a question and hop back in the queue.
No worries. Thanks, Nick.
Thank you. Your next question comes from Simon Fitzgerald from Jefferies. Please go ahead.
Hi there. Thanks for taking my questions. Just firstly, on Evidentia, the AUD 33.7 million you were talking about, an increase for FY 2027, that would be slightly higher than the group rate that you are talking about, which is 26%. Is that really just, excuse me, a full run rate of additional people and so forth that you have put into the expense base in FY 2026, or is there something else that I might be missing there?
Yeah. No, I think you pretty much hit that, Simon. The way we sort of talking to modest growth in Evidentia-
Yeah
and GenLife, just on that expense growth versus group, which I guess would make sense given that you do not have a lot of expense growth in our corporate and Lonsec. But the hiring of those staff, I said up to 109, will flow through that cost base in FY 2027. But also please take note of my comment that FTE growth through 2027-
Yeah
Will be lovely.
Yeah. Good. Then, again, just on Evidentia for a minute. We normally sort of think about from the existing client base at terms of or a level of inflows at around about sort of AUD 5 billion a year, and then mandate wins sort of on top of that. Do you still feel comfortable with that number, Grant? In terms of the AUD 5 billion for existing clients?
Look, I think existing clients, and I would include probably some new wins that we get at the start of this year of RFPs that we would be in terms of net flows, because as you know, in the first 12 months, you probably see a fifth of the total FUA-
in the first full 12 months. Look, I think that AUD 5 billion, and like I said, that sort of AUD 5 billion- AUD 7 billion range of net flows, we believe is realistic with mandates and market movements on top of that. There is nothing indicating otherwise at this point in time.
Yeah, that is fair. Just one final question on the tech spend related to Generation Life, but particularly around investment bonds. Is there an issue with sort of scaling the technology or in terms of the size of the technology? I would imagine it had been built a long time ago. Maybe what level of sales was it sort of structured to be able to cope with?
When I first joined, what we did in a full year in terms of applications, I think we do less than a week now. We have invested along the way, and we have been able to scale up. I think we have gotten to the point now where investment bonds was more of a fringe product. Now it is becoming more of a mainstream product. The expectation from advisers, given we have got close to 3,000 active users, is-
it is not quite like a platform, but it is expected to have a bit more functionality, a bit more transactional capability. Again, that will take the load off the back office as well, and these growth rates allow us to do that investment, to be able to get that all up to speed. Also, the other aspect of this is the ability to be able to integrate with platforms and other technology providers with a bit more ease. That is not something that we probably foresaw within the next three or four years until these tax reforms came through recently. That has probably just come forward a bit to what we originally anticipated.
Okay. Thank you.
No worries. Thanks, Simon.
Thank you. Your next question comes from James Bales from Morgan Stanley. Please go ahead.
Oh, hi, guys. A couple I want to make. Firstly, just some clarity on the CapEx guidance. Is the 5%-15% of Generation Life revenue you called out in addition to the AUD 7 million that you spent in FY 2026, or is that the total CapEx bill?
Yeah. Hi, James. The way to think about it is the FY 2026 spend wasn't seven. I think you've probably seen that in the cash flows. It was more on the range of five. It is in addition to that spend, and that we've basically decided that referencing it to revenue makes a lot of sense because it gives us a bit of a sense of how revenue's tracking and how we want to ensure that we're spending the money in the right areas, but also particularly at the right speed.
Okay. That's a good point in terms of how the revenue's tracking. I remember 12 months ago, you were talking about adding AUD 100 million per month in investment bonds. I think the color you gave to an earlier question was a 71% uplift in applications. Is that the right proxy to use in terms of year-on-year growth expectations, or how would you nuance that?
Okay. Obviously, up over 50% in terms of gross flows. Yeah, we ended up doing closer to AUD 120 million- AUD 150 million on average per month. I think, over the course of this year, we'll definitely see an uplift, all things being equal. It'll probably sit at the monthly range of probably AUD 150 million- AUD 200 million, is probably the way I would think of FY 2026.
Perfect.
FY 2027, sorry.
That is good. Forward-looking numbers are more helpful.
Yeah, they are.
The other sort of change here in how you have reported, which I was trying to reconcile, is revenue margin. Depending on whether you take the tax benefit above or below the line, I still sort of find hard to reconcile versus the PCP. How should we think about that revenue margin for investment bonds into 2027?
Yeah. Hi, James. I think the nuance with the PCP is the calculation of the income tax rebate. I mentioned in the comments that when you calculate the pro forma excluding corporate, and you look back into FY 2025, that income tax rebate of AUD 9.7 million was actually lower than the AUD 13.7 million we actually received. I think if you want to think about it on a go-forward basis, the margin that you would calculate off FY 2026 is the way to think about it on a go-forward basis.
Perfect. Thanks, guys. I appreciate the help.
No worries.
Thank you. Your next question comes from Tom Tweedie from MA Moelis Australia . Please go ahead.
Good morning, guys. Thanks for taking the questions. Just a couple of follow-ups there. Just when you are talking around revenue margins, and on the bond side, I mean, the outlook commentary is to remain broadly stable. I am just trying to get a feel for how we think about these revenue synergies into next year, but also, can we sustain these margins for longer than just one year from what you guys are doing there on the revenue synergy side?
In terms of the margins within the investment bond business, we have not changed our pricing since December 2017, and we have no intention of changing that. We actually think it is reasonably priced, and there is value in it for the advisor and the client. The reason that I say that is because it is a tiered pricing structure, so the more you put in, the less your administration fee is. Probably the biggest challenge for us as a business is what we are seeing is probably larger amounts come in that we did not anticipate back in 2018, when we first introduced that structure. We are getting huge amounts in, particularly for estate planning. Quantums in excess of AUD 10 million are not unfamiliar for us now in terms of inflows.
Yeah, we do not really see any compression around the actual margins in the business, just the tiered pricing structure probably taking a little bit effect. Revenue synergies, we will continue to see those, over the course of this year in the Evidentia business, if that is what you are referring to. Yeah, we have got to be spending a little bit of money there in terms of the true-up that you will see and a bit more CapEx there, but not as much as you saw in FY 2026. And we expect probably with Evidentia, more of the operating leverage to really start to come through in FY 2028. And I would expect, given the CapEx and the big opportunity that we have in Generation Life and the investment bonds, you will probably start to see that operational leverage really come through in FY 2029.
It is a good thing about having different businesses at various levels of maturity and opportunity. You are going to probably allocate that capital where we see the biggest options.
Appreciate it, and it kind of leads into my second question, which is also a follow-up. When we are thinking sort of 2028 cost growth, can you give us a sense sort of like on a percentage basis, what would you be delivering there? Or alternatively, what sort of margin profile or uplift could you get once these scale benefits come through?
Yeah, I think it is a good question and I guess the way that we are thinking about it is that, as we start to see more operating leverage come through the business, that you would expect to see the cost growth in 2028 less than the cost growth in 2027, if that helps.
That is helpful. Thank you.
All right. Thanks, Tom.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Jeff Cai from Citi. Please go ahead.
Good morning, and thanks for taking my questions. The first one in terms of Evidentia, just trying to get a feel in terms of next year. Are you expecting EBITDA margins to rise year-on-year in FY 2027? I mean, given your cost growth of, let's say, 27% and net flows of about AUD 7 billion, the math seems a bit hard to stack up. If you can, understand, are you assuming some sort of benefits or revenue synergies or mandate wins there?
I think just a general comment on EBITDA margins going through into 2027 Evidentia. I think they're probably going to remain broadly stable. That would be my expectation. Obviously, we've only just kicked that year off. I think that's probably the best way to think about it, broadly stable margins for 2027. If you reference my comment, as it relates to, and talking to Simon's question earlier, the employee growth in 2027 is going to reduce significantly. 2027 is going to see a flow and effect of the employee growth in 2026. Then you'd like to think that you'd see some improvements on EBITDA margins in 2028.
Got it. Okay. I guess thinking out further out in terms of operating leverage, I mean, which metrics are you looking more closely at in terms of Evidentia? I mean, and how good does it get in two or three years, I guess, if all goes well?
Well, I think if you think about the cost base in Evidentia, the vast majority of costs are employee costs. I think that really points to the fact that if all goes to plan and how we execute the business through 2027, then in the operating leverage metrics and the business continues to perform on the top line, you would naturally see that operating leverage fall through.
Okay. Thank you.
Thanks, Jeff.
Thank you. Your next question comes from Simon Fitzgerald from Jefferies. Please go ahead.
Actually, it was asked before. All good. Thank you.
No worries, Simon. That was an easy one.
Yeah.
Thank you. There are no further phone questions at this time. I will now hand back to Mr. Grant Hackett for closing remarks.
Thanks very much for everybody's support in FY 2026. We are very pleased with the year, the momentum, like I said, we have got across each of the businesses. At the moment, we will see at varying points in time, as we have discussed, operational leverage coming into the different assets. Lonsec being the more mature, with some really strong margins in that business, but great growth opportunities with some new products to be deployed. Evidentia with the integration complete, we can really focus on acquiring new clients and obviously growing FUM in that business. The opportunity has never been greater in Generation Life. Super excited about the future of GDG and each of the businesses there and appreciate the support that we have got out in the marketplace. Thank you.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.