Ladies and gentlemen, thank you for standing by, and welcome to the Pinnacle Investment Management Group Full Year twenty nineteen Results Conference Call. At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session. I'd now like to hand the conference over to your speaker today, to Ian. Please go ahead.
Thanks, Myles, thank you to everyone on the line for taking the time to join us this morning. Also with me here are our Chairman, Alan Watson and Adrian Whittingham, an Executive Director. So I'd like to spend the limited amount of time that I have this morning by quickly covering off the financial and business highlights, elaborating a few of the significant points to assist shareholders in interpreting the financial summary, explaining how we use our strong balance sheet to assist with further growth and making some concluding remarks about our performance and our fund flows and how well we are positioned for growth going forward. So the agenda on Slide one is straightforward. We begin on Slide two with the financial highlights.
Net profit after tax was $30,500,000 up 32 from $23,100,000 in the prior year. Basic earnings per share was $0.01 $83 up 28% from $0.01 $43 in the prior year. And our share of affiliates after tax net profit was $33,100,000 up 33% from $24,900,000 We've declared a Citibank final dividend of $0.93 per share payable on the October 4, bringing the total dividend for the financial year to $0.01 $54 a share. Now this represents a 3.5% per annum fully franked yield, which is equal to 5% per annum grossed up for franking. Dollars $0.01 $5.04 is 90% of diluted EPS or 84% of basic EPS.
And we'd like to remind shareholders that this business produces substantial cash earnings and that we can pay this level of dividend whilst retaining a strong balance sheet. We had cash and principal investments of $51,200,000 at the 06/30/2019. Slide three shows a little more detail on the full year results. On the top block, that is the top onethree of the slide, shows aggregate affiliate numbers. So total revenue was $236,800,000 up 40.6%.
Total net profit after tax was $89,100,000 up 44.6. Now our share of that $89,100,000 aggregate affiliate impact was $33,100,000 which you can see in the upper part of the bottom block. That is the bottom twothree of the slide, which shows the numbers for the overall clinical group. Slide four sets out the 2019 business highlights. Funds under management were $54,300,000,000 at the June 30, which includes $6,800,000,000 acquired in July 2018.
This was up $7600000000.0.16.3 percent from the December 31 and $9,500,000,000 excluding acquired sum for the full year. And that was up 25% on FY 'eighteen. Retail funds under management are now $11,600,000,000 37.9% up excluding acquired funds. Net inflows were $6,500,000,000 for the year, including $2,900,000,000 retail, of which $1,000,000,000 was in listed investment companies or listed investment trusts. We had large institutional flows into Firetrial, which is now close to its institutional capacity.
That was in the first half of the year. Significant progress has been made in metrics following our acquisition of a 35% interest, including $1,100,000,000 of net inflows, of which $845,000,000 was new closed end capital. So we're very pleased with our Metrix acquisition. It is proceeding very much as we had hoped when we made that acquisition about a year ago. We've established two new affiliates during the year, Longwave and Riparian.
And PNI was added to the S and P ASX two hundred Index in March 2019. That was about five months ago. Slide five has some further detail on our funds under management growth, including in graphical form. Slide six has the funds under management by affiliates. You can see there, so along the top line is the affiliates' fund individually at the 06/30/2019.
All of our affiliates' fund has grown during the year with the help of equities market. People
would be
aware that the ASX three hundred is up 6.8%, and the Miski World was up 3.6% overall for the year. The only additional information on Slide seven really is the amount of performance fees. These were very modest other than IntelliSlide, as I think was well signaled through the year. Slide nine sets out some of the significant points to assist in interpreting the financial summary. The main one that I would call out is the second point, and I want to reiterate this.
As we've consistently stated, we will continue to invest in activities which we believe will bring substantial benefits over the medium term whilst recognizing that such investment may restrain our profits to some degree in the short term. So not only have we added to the resourcing within Pinnacle Carerent as we've grown the number of strategies offered by our affiliates and enhanced the overall quality and strength of our services, but we've invested in additional resourcing ahead of planned further growth. These costs are all expensed outright on the Pinnacle P and L, and they're what we call Horizon two costs. Now this includes, firstly, servicing new affiliates without charging them for the services prior to the mid teen profitability. So this includes Firetrial through the first half and Two Trees, Longwave and Riparian, which are still in Horizon two state.
Now secondly, launching active ETFs and other initiatives towards direct to retail consumer capability, including expanding our marketing capabilities very substantially. And thirdly, offshore distribution. So all of which has added to pimple clearance costs and not added yet to our revenues. There's further detail on Horizon two investments on Slides fifteen, sixteen and seventeen. And look, I'd like to emphasize that this is a very conscious and deliberate strategy.
We make extremely high returns on our Horizon two investments over the medium term, but it can take up to three to five years from incurring the cost for the benefits to come fully true. I mentioned these costs or expense straight out as they're incurred in the current P and L. We are comfortable doing this. I believe that Pinto shareholders are readily able to understand the impact and make adjustments to broadly assess what our true profits are. And clearly, profits are effectively higher and substantially higher than what we report.
And although, as I said, Horizon two investments are lucrative over the medium term, we discipline ourselves to not exceed what we consider to be a reasonable level of Horizon two P and L drag each year. Slides ten and eleven demonstrate what we call a strong and flexible balance sheet, including cash and principal investments of $51,200,000 at the June 30. This surplus capital is valuable to us. We deploy it very effectively by investing in the funds and strategies of affiliates, particularly in seeding new strategies where it is very valuable and helpful. Then we usually rotate out once the strategies have gained traction and deploy it again in new strategies.
At the June 30, we had an unusually high level of
cash
and low level of principal investment. We've since deployed $5,000,000 into the Plato Market Mutual Fund, which is Dave Allen's new strategy, And we've got $8,000,000 cash ready to deploy into our new Hyperion global fund offshore, actually, in The U. S. The U. S.
Forty Act mutual fund. Don't really have time to go through how we've deployed the rest of that PI money and what we're going to do with the cash. But I do want to emphasize that the cash and principal investments also play a very important second role, which is as dry powder that we can use in the event that we find attractive Horizon three opportunities. Now most of the rest of this slide deck, Slide 14 to 45, provide a lot more supporting detail about our results and our strategy. I'll skip over most of these and leave it to shareholders to review for themselves.
And Slide 40 shows that our medium term performance remains strong. Slides forty one and forty two show that many of our affiliates have continued to perform strongly. But over the past year or so, a few have underperformed their benchmark. This is mainly style related or just related to particular short term circumstances, we believe. We're happy to discuss this further in individual meetings.
Suffice to say, we are not concerned about the short term performance of our affiliates. Our affiliates are very high quality. The leaders are very experienced, and there is an excellent long term track record in all of them. Slide forty three and forty four talk about the Pindle Charitable Foundation. We're very proud of the foundation and its work.
I won't have time to go into that in more detail. So finally, to Slide 36. In concluding, I'd like to remind shareholders that Pinnacle remains a high growth company with substantial initiatives underway and plans to continue to grow strongly by way of each of Horizons one and two and possibly Horizon three as well, as we promised three years ago when we became a pure play fund management company. Now Alan, in his Chairman's letter, has elaborated on this a little. There's quite a lot in Alan's Chairman Theodore that I would refer shareholders to give great background on our recent performance and so on and prospects.
I haven't got time to go into all of that. But as I mentioned, we will continue to invest significantly as part of our initiatives to achieve this growth. We are very focused on sustaining growth over the medium term. We think we're one of very few ASX 200 listed companies that is forecast by analysts to continue to grow at well in excess of 20% per annum, and we're delivering a yield of 3.5% per annum fully franked. It's equivalent to 5% per annum grossed up for franking credits, and especially if you exclude resources companies that are very different than us.
Not many companies have grown at more than 20% with a yield of more than 3.5% fully franked. The overall level of institutional net inflows this year, other than the extraordinary fire trial inflows in the first half, reflects a particular set of circumstances prevailing during the twelve month period under review. We have a strong institutional sales pipeline going into the 2020 financial year, and we expect our institutional inflows to be substantial again this year. Although we can't predict what equities markets or investment markets generally will do over the coming year and beyond, we believe our company will continue to prosper through all market conditions and is increasingly diversified, diversified
in asset classes,
in sources of funds under management, in the greater range of high quality investment teams, and therefore, it is strong, robust and resilient. And we have a business model that is extremely well regarded and designed to prosper in the evolving market environment that we address both in Australia and overseas. So that's all I wanted to say initially. I'd like to invite questions now. So Myles, the operator, we're ready for questions.
Thank you.
Thank you, Ian. Ladies and gentlemen, we'll now begin the question and answer session. And our first question is from Scott Murdock from Morgan.
Just wondering if you can just give us a few more thoughts around the net flow environment looking out into the year ahead. Just any commentary would be appreciated on the areas of strength that you see. And also, if you can just touch on what sort of outflows you've seen in the year just gone, including sort of any risk of any large mandates there that are out with super funds given the environment we're in?
Yes. Okay. Thanks, Scott. So I'll probably just summarize this briefly by saying that well, as I mentioned, that in institutional, we have a strong pipeline, and we're confident that we'll have good institutional flows in the year ahead. We've had a much poorer than expected institutional flow environment for the year.
We think it was just some particular circumstances in this year. You know that institutional can be very lumpy. We actually had some very large inflows indicated to us that just didn't drop during the year. It's one of the challenges of measuring over point to point. We did have some quite large outflows in two or three of our major affiliates.
I'd probably call out I'm sure Andrew Parsons wouldn't mind me saying this that in Resolution Capital, we had some quite large institutional outflows. And as everyone knows, ResCap is a fantastic fund manager, Global REITs especially, performed extremely well, and the asset classes performed very well. And what happened during that period, quite a few of large clients took the top off their allocation. And it was actually roughly $1,000,000,000 of net outflows in institutional and ResCap. Now do I think that's a fundamental problem?
No. ResCap has quite a large pipeline, but it was just one of those things in the circumstances. Now retail retail is a different story. We're pleased with our overall level of flows. They are market leading flows, 2,900,000,000.0, dollars 1,000,000,000 of that was mix and mix.
1,900,000,000.0 normal, but that was roughly $1,200,000,000 in the first half and only $600,000,000 or so in the second half. It was a weird period, the second half, in the retail market. As you know, the market was down in the December. Then we had an election in May with all of the threats of losing banking credits and so on. We've had the Royal Commission.
There have been some outflows from major platforms. I think it's way too early to say how that's all going to settle in the retail market. And obviously, the performance relative to benchmark of Firetrial and Antipity has been lower, and that's probably impacted retail flows as well. So I mean we don't like to make forecasts. But going forward, I would say nothing fundamentally has changed for us.
We're confident about Insto. I might ask Adrian to comment briefly about retail, but my overall comment on retail is it's way too soon in this kind of changed environment post Royal Commission to start predicting any major trends.
Thanks. And thanks for the question, Scott. If I can just name out a few other points to elaborate on earnings reply. If you look at Slide 23, particularly as it relates to the institutional market, what we wanted to provide is greater clarity as we've seen this financial year just gone, we've seen more than 15 industry funds that have been mentioned as potentially merging. So we've had a very clear and complete analysis of our institutional client base.
And you can see from that slide, we have 78 institutional separate enterprise. Now what that means is that we are very well diversified as a business, and we are less reliant on one or two large institutions for support for our affiliates and ultimately for support for for Pinnacle. Now now, clearly, we wanna stay on top of that with, The rebalancing that occurred with resolution capital and equity managing perhaps maybe is now behind us with where markets may end up. But from an institutional domestic perspective, we're very comfortable. And as Ian mentioned, the pipeline is looking very strong for this FY.
As it relates to retail, if I can point you through to Slide 25, and what I want to focus on here is really looking at FY 'eighteen versus FY 'nineteen flows. And yes, we've seen a pickup in the last financial year, although it's been weaker towards the second half. The key point I want to make, and it relates to really Horizon two and Pinnacle investing ahead of growth. In FY 'eighteen, 70% of our net flows are related to antiquities, while the financial year just gone, it's about 30 odd percent. Now the key thing to notice with this is that with our Horizon two ambitions around listed, by building out a listed capability and a listed team, by doing the metrics acquisition, we are always thinking ahead of where the market may shift to protect ourselves should we go through a cyclical period of underperformance for our managers and to also make sure we're accessing new distribution channels like the direct to to consumer part of the market.
And with retail, clearly, intermediated channel has faced its challenges with the Royal Commission, etcetera. We are seeing even greater disintermediation, and we are seeing growth in our direct to consumer part of our business. You can see on Slide the slide actually covers all the Horizon two initiatives, which is on Slide 18. Direct to Retail is that third row. Now the important thing to mention here is that it actually excludes the direct to consumer allocations out of LITs, LITs and what will be EPS because it's very hard to get that information from the register.
So overall, as Ian mentioned, intermediate has been challenging, but we've invested ahead for direct to consumer. Institutional wasn't the best year, but there were some reasons for that, and we're comfortable looking forward. So that's a very long answer to your question, Scott, but I wanted to make sure I covered
as many bases as possible. Yes. And just to cover off on your last question there, Scott, you said, can I comment on the risk of large outflows?
Look, this has been pretty topical,
and there's been some kind of rumors floating around and so Adrian mentioned so I don't think we are at risk of these kind of large outflows that we've seen from some managers from a few big industry firms that have got particular things going on. Adrian mentioned we have an extremely diversified institutional client base that is deliberate. We have been at great pains to make sure that we don't have any of our affiliates exposed to just a small number of very big clients. And those particular industry funds that have gotten a lot of press about insourcing and, terminating management and so on, we do not have substantial exposure there. So I think we can feel comfortable.
I mean, look, there was a rumor went around a little while ago that we're about to lose substantial mandate. It was total rot, and we know we started it. It was total rot. So if people want to talk about outflows from Fivetrail stay in very close contact with their institutional clients, who they've known for a long time. Fivetrails, that team has a fifteen year track record, including with many of those clients.
And they've got a large waiting list of people who'd like to become fire trial clients, but they're closed. So I do get, if you can hear, a little bit annoyed at these kind of rumors that people start. So no, we are not at risk of kind of large outflows. And if we do get I mean, there's always some reason in the institutional market as people reposition and rebalance and so on. If we ever get a significant outflow in most of our strategies, that can be replaced very quickly.
We have a waiting list on quite a few of our strategies. Sorry to go on, but it's a very important point. And I do wonder whether some of our shareholders haven't taken some notice of these rumors, which do annoy me.
Okay. That's pretty clear. Just another couple of questions, if I can. I think your message around the cost growth in P and I parent is pretty consistent and well heard. I'm just wondering sort of, I guess, forward looking.
Know you're not going to give cost guidance per se, but this year was a big step up in costs. You've explained that just incremental sort of acceleration in that cost base that we should see going forward. Obviously, it's going
to grow a bit. But I mean, is
there a large part of that cost in now that are going to drop the revenue, for example, the EPS strategy and etcetera that you've embedded down now?
Yes. So thanks. We tried to signal fairly clearly that this year would be a very big step up. We said we were adding substantially to our resourcing, including in the areas like EQS to marketing and direct to consumer, etcetera. So what has come through is exactly what we have planned.
You're right, Scott. There will be some further flow through kind of full year effect. But I also said earlier that we discipline ourselves, and we're not going to let that Horizon two net cost balloon out. It's going to be ongoing, so you will see the cost of Pinnacle Parent continue to grow and our revenues continue to grow. But no, not the rate of growth that we experienced in FY 'nineteen.
That was a big step up.
Okay. And I'll just take one last one while I've got the line. Just any commentary and outlook that you can give us on the pipeline of new affiliates that you might be talking to?
Yes. So we've always said we'll probably add a couple each year in what we call builds or Horizon two. I don't see anything to change that. I'd have to say, I reckon the rate of good people approaching us is as strong as it's ever been. I think as we just continue to move forward and demonstrate success, we are more and more in demand in that regard.
We've always said that we are extremely selective, and we're going to continue in that regard. But yes, that's all part of Horizon two. We will keep adding probably a couple a year.
Of years.
And our next question is from Tim Lawson from Macquarie.
Just trying to link your general comments on the pipeline to Slide 18. Can you just talk a little bit about where you think those opportunities are specific to the lines you highlighted on Slide 18? Yeah. So slide 18 is horizon two, and I should keep reminding everyone, horizon one is still the main game. And, you know, our really big inflows will come from existing affiliates filling out towards capacity in a whole range of strategy.
And so when I when we talk about our pipeline and so on, it's more Horizon one than anything. But to to to look at Slide 18, certainly, you know, we have significant confidence in Hyperion Global, long wave, serial ongoing.
And I think that's that, Tim, is True. Is global distribution. So I think we haven't really elaborated on much is that the pipeline for offshore clients has grown significantly as well. So that is a key pillar. When we talk about incubating new affiliates and even and, of course, for Horizon one for our existing, we're we're generally looking to have them accessible in direct to consumer, accessible in intermediated, accessible in domestic institutional and global distribution.
So those four channels we talk about, not every affiliate can actually tap those because of it depends on their strategy. But in regards to global distribution, clearly, it's our most underrepresented. We've only been going for a short period of time and fully committed. Further to Ian's comments, we would see global distribution potentially being a significant opportunity for us.
So that $3,000,000,000 that we've got from offshore at this stage, we expect that to grow quite substantially. Part of our Horizon two costs that I called out is our London office. We have two very experienced and capable distribution people over there and office accommodation and so on. But that's all there for sales offshore, which we are confident we're gonna get. That is the yeah.
Sorry.
Next question is from Glen Cummins from Lawson. Look, firstly, just picking up a comment you made around the institutional inflows for FY 'twenty. You're saying that there are a few things that didn't drop in FY 'nineteen. Can you give us sort of maybe a feel for how much of FY 2020 is just sort of delayed from FY 2019 versus sort of new interest?
Yes. So look, it's always hard to say, Liam. The Insta market, I talked about it being lumpy. And it sort of moves around. I mean, maybe I'm showing my age, but I remember when in the days where you want some institutional visitors, and it's gonna arrive.
And it didn't quite arrive. These days, they win it, and time goes by and things change. And Yeah. Sometimes it comes. And then all of a sudden,
you'll get very large mandate pop. And and, Glenn, probably in prior years, you know, basically, if we had a forecast, you know, either obviously, we haven't really forecasted number out there. In the prior year, we probably we probably received all the more cases. But the lumpy nature of institutional flow, it probably wouldn't be appropriate for the day if you want to dial up.
Okay. It
did say that seven point nine billion last year was extraordinary, and we shouldn't expect that rate to continue. But, yes, look, I know twelve months seems like a fair period of time, but really, in one twelve month period or another, it can be particularly large or it can be particularly small, and we just don't know. But we wouldn't be making these statements if we didn't have significant pipeline. So we've got visibility back. But, you know, that that sort of a few months out, who knows beyond
that? Yeah. Got
we've certainly got a range of very good capabilities that we're still still available. But some of the things that brought us big sales last time, like Solaris, is largely closed to Insynet.
Got you. And maybe on Slide 25, on the retail flows page. So I'm interested in Hyperion, obviously, that was shot for most retail strategies. Obviously, there's a negative number there. This year, it's switched to sort of a plus 2% of your inflows for 'nineteen.
Can we sort of get a feel for how much sort of marketing efforts gone into Hyperion Global to date? And what do you sort of expect that number, if you can I mean, Rob is not going to get a number, but if you can sort of give us a feel for where that number could potentially go to maybe what capacity the fund could run at?
So I would say a lot of effort and not a lot of sales so far for Hyperion Global in retail. But, you know, things are looking good. They've got good ratings. All the work's going on to get them on all the slots and so on. So that's looking good.
I mean, the capacity of the strategy is, like, 10,000,000,000 or more. But so getting traction in strategy is hard work. And so I don't think we'd like to put numbers on it. It's too hard to forecast. There's a lot of things going on out there that will impact it.
Yeah. I I would say what I would say is if we execute well and we're getting momentum, we can see that in the fly numbers. If we execute well, you know, that strategy should be in the, like, let's say, five of net five for global equity.
Got it.
We're well we're well positioned to do that. Obviously, this year, we actually have to get significant results.
So I think it's a
focus for us. But that being said, you know, it's it's just one of the global equity strategies we have in the marketplace. We have antiquities. As you're aware, it hasn't been a fair market. They're very well positioned.
Lower beta clients understand their positioning in the marketplace. So they naturally have a responsibility as it relates to Hyperion.
And look, Antipodes, people should be aware, it's underperformed its benchmark for the last year or two. But first of all, since inception, it's still significantly ahead. But over this period, they are still one of the top performing value style managers in the world. Their style has been out of favor, but they've performed well, very well relative to their peers. People need to have diversified portfolio, including by manager and style.
So people ought to be putting antipathy into their portfolio.
Great. Maybe as a half a follow on to that question, where the sort of, I guess, the tone of conversation is because sort of the main retail clients around TCP? Because as you said, I would have thought in an environment where things are starting to get tippy, would have expected flows to be sort of reasonable into that strategy. Just wondering maybe sort of how direct the correlation is between sort of outperformance numbers on a short term versus flows you'd expect to see rather than people looking a bit further ahead.
Yes. I'll let Adrian answer that. There's no doubt that Five Trial retail flows are lower than they were. They were extremely high. But as I said before, there's so much been going on in this retail market.
I mean, we are still one of the largest net sales success organizations out there. It's just that the retail market in the last half overall has had low net inflows. So look, it is hard to say. Look, Liam, there's no doubt that there are quite a few retail investors who are impacted by short term performance. But you couldn't be?
That's that's, you know,
it's easy for us
to say. But Yeah.
Yeah. We've been very focused on you know, even when we've taken new managers to the marketplace, you know, clearly, we're not focused on selling just purely off performance or historic performance. For Antipodes, you know, when we, you know, through that very rapid adoption of their strategy by clients, we were very clear in talking, particularly for long and short. It has a role to play in portfolios, know, for portfolio construction relative to higher quality of growth managers. But just overall, in periods when markets fell off, you should expect to get some protection from antiquity.
So we've just been very focused on making sure our clients understand that. I'm sure at the edges, there will be some that perhaps maybe more performance centric. Yep. However, when ultimately, the market does move from the biggest, you know, divergence from growth and value in more than fifty years, they're not positioned in a value strategy. And they are clearly, as you would know, are going to be impacted by that.
Yes. Got you. Maybe one last month for me before I jump back in
the queue. Can you just give
a quick update on how you see the LSC market at the moment? It's obviously felt like it's pretty well shut sort of slight last calendar year, but there's obviously a few more things happening at the moment. So maybe you sort of you've used them where the appetite might be in that channel.
So, we will keep keep watching it. Clearly, it moved sort of in favor of income, and we've had great success with Metrix, which has just done a fabulous job for us to invest as ever since the first day that NXP was launched. We think demand for income is extremely strong. We have a range of candidates within our stable for weeks and weeks. We like the market.
We think it serves a particular investor group, and we want to keep servicing that. But as to what we bring to the market at any point in time depends on market circumstances. So there's a few big ones out there at the moment. We'll see how they go. But we intend to remain a participant.
But with everything we do, we want to be good for investors.
I think the key thing is, yes, there's the IPO. The definition of success is getting a significant IPO away. But ultimately, it's about the client journey and it's about ensuring you can do the best possible to make sure that a strategy doesn't trade at a big discount or significant discount to NPA. So that's very much in our in our focus and our planning when we look at new strategies, the managers to bring to the market in place because
we want
to make sure that all of our clients have a good experience, not just the initial benefit of getting a new strategy away.
Our next question is from Nick from OID Minute. I
wanted to provide a bit of commentary around performance fees, maybe even on some sort of guidance around by manager that that looks like. And then I guess sort of a foray into asking about Palisade, given some of the ructions that happened there over the last twelve or eighteen months. The result was sort of been pretty strong in terms of revenue margin and everything. So just some comments on those two things. Yeah.
What was the first one? Performance fees. The largest part of performance fees was Palisade, as expected. And, you know, overall, Nick, this is a very low performance fee outcome. I think people are generally aware of why.
We do have large performance fee potential now. Something like 30% of our total sum attracts performance fees, with large increases in the Antipodes and Fire Trail sum attracting performance fees. And Palisade was just slightly down on last year's performance fees. But looking forward, Palisade is absolutely fine. Palisade keeps continuing to do the job for its investors that they expect of it and produces very good returns and, therefore, healthy performance fees.
Their challenge is getting their thumb to grow and finding the assets, but they are working very hard on continuing to do that. But Nick, to your question about the composition, besides Palisade, there were performance fees from ResCap. And remember, it's mainly ResCap funds, retail funds. Metrix had some performance fees. Hyperion Global had some.
Solaris had some, and there was some inferior. So that's more or less the sort of FY '19 breakdown. Know you're having a slide, Gerald, but I'll ask you I thought there might be some one off expenses in relation to the Yeah. So so we have had So, yeah, look, we have had quite a few one off costs during this year. Yes, a little bit related to our acquisitions, but quite a lot of them really were relating to Horizon two growth.
Mean, we expanded our office accommodation in Sydney and and Brisbane. We we had quite a few search fees. We had some legals related to new affiliates and and so on. So, yeah, it was a fairly big year. So I would I would say those costs relate to our growth, you know, our horizon to growth in particular.
But there's nothing that you'd call out as one off being attached to that acquisition because I just begin most of the year. So there's nothing to sort of normalize for in that market. That's right. Look, I I'd like people to get used to the idea that it's the net cost of Horizon two in parent. You know, get used to to spend, you know, $5,000,000 or so each year.
That's not a growing amount, but it's a consistent amount each year. And just in terms of the profitability of the B2B, you obviously give us our premium vessel, Palisades, adding them up, they did really well. Are there any in terms of the materiality of the profit maybe at FireTrail, is that still sort of in the early stages of the money here and that won for a full year, just in terms of thinking about the profitability of the boutiques at Firebirds Mentor? Yes. So every year, along with our auditors, we look at each affiliate, and they have criteria as to what is material.
I think it's likely that one or two extra affiliates will pop into that material into the into the criteria, and you'll see some more that are sort of shown separately in that table that you're calling out there, Nick. But yes, obviously, Fire Trail turned from being loss making last year to profitable this year. Anticipate's profitability keeps growing. We've got metrics now that is quite substantial and so on. But none of those met the criteria in the year just gone, but they're getting towards it.
And maybe just one last one for me. The retail players in the second half there is 1.5 there, which is a nice number. Can you let me say, you look at the interest rates if you do the work. And so if you back that out and the metrics phase, what what is where where do you think the sort of the growth in that retail business is gonna come coming to next year? And as you said, you're pulling for which management potentially is going look at doing some lower fees or lower fees?
So I'll answer that. It's Adrian. Look, clearly, I think flows for this year or for the year that's going to work more diversified. I would say we should expect to see continued good growth around metrics, not only in the listed environment, but they will be releasing a wholesale trust, which a number of clients have expressed interest in. So we can see demand there in the retail channel.
There's also been a number of high net worth groups who have invested in some of their sub trusts, some of the specialized sub trusts for their significant clients. So we'll see growth with metrics in that channel as well. And furthermore, you know, we will see Solaris continue to grow. So we just upgraded yesterday by Yeah. In retail by by long sector, highly recommended across all strategies.
We've got fantastic momentum around that for long short, but also in regards to their performance fee only strategy that's in the marketplace. Hypuri touched on and also Resolution Capital continues to be the dominant player, and we still think there's growth for Global REIT in the client portfolio. And finally, I think you will see Plato, clearly, leading up to the election, there were headwinds around franking credit, Very pleased with, certainly, the support they're getting post the election. So we we will see you will see further demand and support for PLAYFO. Income is obviously the theme or one of the biggest themes in the marketplace.
And finally, there are some other affiliates such as Two Tree. While we haven't really made much progress on the retail perspective. If you look at their performance versus their hedge fund peers over the last twelve months, they're in a really strong position. So I would say we actually have quite a lot of options for flows from a retail perspective, but it will be a matter of making sure we get momentum. As you know, retail flows are very much about momentum.
It's one thing that I'm very proud and pleased about as a business and and the team that we've been very focused in getting momentum and supporting our clients strongly. This year is no different. Yeah. It's just different managers more so compared to what we've had in the past.
And, Nick, in terms of your liquid question, all I can say there is what's this space? Obviously, we can't announce a new leak until it's ready. But I think we've indicated we want to continue to be a player in that space.
There's no further questions at this time. I would like to hand the call back to the speakers for any closing remarks. Please go ahead.
Well, I think if there are no more questions, we look forward to one on one meetings over the next several days. We've covered most things pretty well. I could go on and talk about the fact that our industry continues to have strong tailwinds with super funds growing and so on. And the need for high quality active fund managers is as great as ever. And everyone can form their own views, but I think in the kind of environment going forward, just the beater of markets will struggle to produce the kind of returns that investors need.
And so high quality active managers, we think they're going to be in demand as much as ever. We are continuing to grow strongly, and we're working hard to continue the sort of rates of growth that we've experienced and what people are forecasting for us. So I'd say thanks very much to everybody. We're happy to take questions and have discussions one on one.
And gentlemen, I do believe that's the end of the call today. Thank you to all participating. You may all disconnect. Thank you, and goodbye.