I would now like to hand the conference over to Mr. Anthony Wamsteker, Chief Executive Officer. Please go ahead.
Thank you very much. Thank you everyone for joining us and for your interest in Praemium. It's good to see so many people on the call, and I'm delighted to be presenting our half year results with the CFO, Emma Stepcic. I'd like to begin by acknowledging the traditional custodians of country and pay my respect to their elders, past and present. I draw your attention to the disclaimer. I won't go through it all, but it's on the slides on the ASX release. Today, we're going to go through the business highlights. I'm gonna hand over to Emma to talk about the financial performance. I'll conclude with some comments about our strategy and the outlook, and of course, we have time for some questions for those who have registered. Turning now to the business highlights.
In our business, we focus very much on growing the business. I think most of our shareholders understand and expect us to grow the business strongly, and most of the conversations I have with shareholders around, is it possible for this business to, both continue to grow and, and if anything, even grow faster? Growth is always our priority, but then we also focus, in addition to the growth, on obtaining some financial leverage in the business. Finally, we always have one eye on the future opportunities. When I think about the business highlights, we regard it as a pleasing set of results on those metrics, and we'll talk a bit more about that as we go through.
We are also confident that with these results, we've built up some good momentum, which carries us forward into this half year that we're in at the moment, H 2 of FY26. When I think about the business highlights in our business, the, the three areas that we talk about there are the things that we regard as the highlights in our business. We've got some areas of market leadership, even though in the platform world, we're-- in market share terms, we're about number eight or nine. We actually have some strong areas of market leadership, including, we believe, the Spectrum product that we launched at the, a bit over a year ago. Also, our Scope+ is clearly the market-leading non-custodial solution, and then, our alternative assets is a, is a highlight for us.
In terms of efficiency gains, that's where we start to look at opportunities to open up the financial leverage that I mentioned earlier. Again, what we've talked about there is, is some of the areas that we've attempted to get productivity gains and efficiency gains over the last year. One of the things you've heard me say before is that we feel with the power of technology the way it is today, and I'll say more about that, but I think people know that's something I talk about every time we present, how powerful technology is and where it's gone. One of the things we're trying to do is earn the right to invest further in the technology opportunity by making sure that we deliver productivity and efficiency improvements first.
It's that earning the right that is very important to our business, and not only earning the right, but earning the investment capital by getting some of that financial leverage to kick into play. One of the other things that we've focused a lot on in the last six months is the onboarding process, and make sure that we minimize the time between winning clients and seeing those clients, the revenue drop to our bottom line. That's something we're focusing a lot on now as we've become very successful in growing the business through wins from our sales pipeline.
Finally, in terms of the future, positioning, we've recently announced the acquisition of Technotia Labs, more recently, we've taken the decision, after 18 months of working closely with Technotia, to fully integrate that business into our existing technology function. Whilst this has been a bold move, it's been a carefully considered and risk-mitigated approach. The power of technology change means doing nothing and trying to manage incremental change in the current technology environment is a far greater risk than being willing to take bold moves where the opportunity presents itself. One of the things we sometimes say, and we learned this from the team at Technotia Labs, is they talk a lot about Computing Machinery and Intelligence, which is the title of the original paper by Alan Turing back in 1950.
He identified in many sense, that machines learn, and that artificial intelligence or the intelligence of machines is something that's just going to become more and more powerful over time. We're certainly living in an environment where technology opportunities are greater than they've ever been, and you cannot afford to stand still. We're delighted to have been able to acquire that business and work closely with Technotia Labs. In terms of the business, what Technotia brings us is the opportunity to expand our product offering, and by that I mean we supply certain elements of the technology stack or the architecture of our clients' businesses. With Technotia, there's opportunity to develop that even further, and we anticipate that we will offer more to our clients as time goes by and we work more closely with Technotia.
The other thing, in addition to being tremendous developers, they, they employ a number of UX experts in their business including architects who think a lot about the technology that's being developed and how that should work in the client's environment, and we call that a design-led approach. User experience is at the core of everything we're doing with them. The other areas we've talked about as part of the acquisition, there is a strong focus on automation and straight-through processing. Opportunities are now greater than they've ever been as well, and it gives us the opportunity for a leaner and more agile organization that we are confident will be more responsive to our clients' needs.
All that gives us a clear value proposition and a competitive advantage, and is part of the momentum that we talk about. The real thing that you want to hear about is our financial results and what we've achieved, and so I'm going to hand over to Emma Stepcic to talk through the financial performance. Thanks, Emma.
Thank you, Anthony. I'm very pleased to report Praemium's 2026 half year results today. My headline description would be: This is a solid first half with some very clear tailwinds for future earnings and cash flow. Turning first to the income statement for the underlying results. Our underlying performance has significantly improved. Total revenue from customers was AUD 56 million, compared to AUD 53.2 million in the first half of FY25, an increase of over 5%. Later, I'll take you through the impact of OneVue Advisor exits on revenue, which, when adjusted, show the underlying business revenue growth of just under 8% from the first half of FY25. Underlying EBITDA for the half year was AUD 15.2 million, up from AUD 12.9 million in the first half of FY25.
The underlying EBITDA margin improvement reflects disciplined cost management and initial OneVue synergies. This marks a shift to higher operating leverage, where revenue growth is increasingly flowing through to earnings, which will be further enhanced by our recent announcement on the technology division restructure. Turning first to the main driver of our revenue, funds under administration. Platform FUA is growing, supported by the continued adoption of Spectrum and strong Powerwrap inflows. At the end of the half year, platform FUA increased 8% from the first half of FY25 to AUD 32.5 billion, supported by the growth in Spectrum. Platform net inflows are just over AUD 1 billion for the half, have accelerated nearly 100% on flows in H1 2025 and over 200% on H2 2025.
This acceleration was tempered with gross outflows of AUD 827 million related to exiting advisors, the level of which we expect to see diminish as time goes on. Spectrum FUA was AUD 3.6 billion. We are pleased that Spectrum has achieved over AUD 1.4 billion of new business growth inflows since its launch just over a year ago. The strong FUA growth demonstrates the strength of the solution and its increasing traction amongst high net worth advisors. The pipeline for Spectrum is encouraging, and we will monitor trends over the financial year to inform a long view, a long-term view on performance expectations. Moving to non-custody, Praemium is the market leader with its Scope and Scope+ offerings, which is an important onboarding step to the conversion of FUA onto the platform.
In the half year, we grew with 16 new client firms signed across the two, onboarding efficiency remains the key priority. Scope+ FUA was up 19% at AUD 37.9 billion from the first half of FY25. Positively, FUA growth is outpacing our next largest competitor. Portfolios increased to around 10,700, with a significant customer partially onboarded and further increases expected in the second half. Scope portfolio numbers were down nearly 6% from the prior first half, due to managed client exit, which was partially offset by new portfolios onboarded in the second quarter. Pleasingly, we are seeing a mix shift towards Scope+, which improves the quality of portfolio revenue. Revenue for the half year builds on strong momentum, with a five-year CAGR at 17%, excluding discontinued operations.
Strong growth in the platform business has been driven by organic and inorganic growth through the acquisition of OneVue. Portfolio services revenue, representing just under 20% of revenue, was AUD 10.2 million, down from AUD 10.5 million in the last half. This is reflective of the reduction in Scope accounts, which, as I mentioned earlier, was due to the managed client exit. Offsetting this, Scope+ revenue was up 6% from the prior half year, against the increase in portfolios of over 13%. The lower revenue growth is a result of portfolios onboarding late in the half, so we are yet to see the full run rate of the revenue connected to those portfolios. Turning to the platform business, this is the main contributor to our revenue and growth, with over 82% of revenue coming from the platform business.
Platform revenue was AUD 45.7 million, up over 10% from the first year of FY25, after we adjust for OneVue of exiting advisors. Whilst we saw revenue reductions for OneVue, in a later slide, I will take you through the positive outcomes of the OneVue acquisition and how this will provide a AUD 3 million EBITDA uplift in the future, which is in line with the original business case. On the bottom left of the side, we set out the total platform revenue margin. Over time, the average margin has grown to around 28 basis points. Generally, margin movement is reflecting the revenue mix of individual revenue components and the pricing structure, not competitive pressure. The recent movement is due to the impact of administration tiered pricing model against the rising average FUA balances and growth in our large customers falling under favorable enterprise pricing arrangements.
Spectrum's margin has been initially lower than average. This is because of the higher account balances, balances of early adopters to the platform. As more Spectrum accounts are coming on board, the average account balance is falling. We are monitoring the trends for Spectrum, but it would expect the margin to align more closely to the total platform margin over time. Turning to underlying EBITDA and operating expenses, we have continued with a disciplined approach to costs while supporting growth. Underlying EBITDA for the half year was AUD 15.2 million, up from AUD 12.9 million in the first half of FY25. The underlying EBITDA margin, at 27.1%, improved by 12% against the H1 2025, whilst up 3% against the full FY25.
Operating expenses were broadly flat at AUD 40.8 million, supported by the OneVue cost synergies of AUD 1.6 million from reduced headcount, platform costs, and administrative support costs. Some of these synergies were realized midway through the half, we expect to see the full run rate of those synergies in the second half. Employment costs were higher in comparison to the prior period, reflecting wage inflation and STI outcomes for the 2025 financial year that were not provided for in the prior period. I will take you through the OneVue acquisition outcomes. As a reminder, we have on the left-hand side, the total acquisition and integration costs. These cover the purchase price, one-off acquisition costs, and then the ongoing costs for transition and integration.
These include the transition service agreement with Iress and the internal costs capitalized to hence, enhance the Praemium platform, supporting the long-term goal of platform consolidation, further cost reduction and enhanced client outcomes. Moving to the impact of OneVue on underlying EBITDA, you may recall from H1 2025, that OneVue had an EBITDA loss of around AUD 500,000. Pleasingly, in this half, we have captured cost synergies of AUD 1.6 million. At the EBITDA level, this has been offset by the revenue reduction for exiting advisors, which has resulted in net synergies of AUD 0.2 million in the half and a reduction in the EBITDA loss to around AUD 0.3 million. With the transition of OneVue successfully completed, we have now exited the TSA with to Iress and crystallized the full headcount reductions.
Once all the synergies have been captured, we are on track for an EBITDA uplift of above AUD 3 million in the 2027 financial year. In addition to the expected EBITDA uplift, positive FUA growth, driven by the strong relationship with OneVue retained advisors, provides tailwinds for revenue. OneVue is no longer an integration story, it is now a performance and growth contributor. This next slide outlines the actions we have taken to reshape the cost base and position the business for scalable growth. As announced last week, we are undertaking a targeted restructure focused on simplifying our technology division and embedding Technotia's capabilities within Praemium. This has resulted in an approximate 28% reduction in headcount, delivering net salary savings of around AUD 9 million.
These actions have largely been completed in Australia, with the Armenian office expected to close by the end of the financial year. In the current financial year, we do not expect major changes to underlying EBITDA, with a large portion of the reduction instead impacting CapEx. Moving into the 2027 financial year, we expect to see operational costs stabilize and greater operating re-leverage, resulting in growth in the underlying EBITDA margin and a lower CapEx cost base. The reduction to internal technology roles has been possible due to Technotia's specialist engineering capability, which brings advanced automation and computing machinery and intelligence directly into our core development model. Importantly, this is not just a cost exercise. The objective is to improve operational efficiency, accelerate onboarding of new advisors, shorten time to market for product enhancements, and support stronger, more scalable growth.
Looking forward, these changes also enable further benefits, including the internalization of the superannuation administration function in FY27, faster product development cycles, and the ability to support a broader advisor base without linear increasing costs. Finally, I would like to now take you through our cash flow. Unadjusted operating cash flow for the half year grew to AUD 6.5 million, from AUD 5.2 million in the prior corresponding period. However, free cash flow for the half year was an outflow of AUD 4.1 million due to the elevated level of one-off investing cash flows. To reconcile underlying free cash flow, first, to operating cash flow, we add back the OneVue transition and redundancy costs of AUD 2 million.
To investing cash flows, we add back the investment in technology projects with Technotia of AUD 5.2 million and the acquisition costs, to come to an underlying positive free cash flow of AUD 3.3 million. The underlying free cash flow comprises operational cash flows and investing cash flow related to internal R&D of AUD 5.2 million. With the recent technology division restructure discussed earlier, we expect a high proportion of the net savings to fall to CapEx and the annual internal R&D cost to fall below the historical run rate going forward. Looking forward, there are tailwinds that we expect to positively impact free cash flow. The OneVue acquisition and integration is successfully completed, with identified synergies on track to be fully captured and early benefits already emerging.
Spectrum continuing to win new business and Technotia's incorporation into the business expected to deliver meaningful efficiency gains alongside the step change in technology capability and scalability. The combined impact of these tailwinds is expected to drive strong earnings and free cash flow growth. Overall, the business is strongly positioned going into the second half of the year. Back to you, Anthony.
Thanks, Emma. Turning to the strategy and outlook, the first thing that I wanna reiterate is what a wonderful opportunity we have. We have an opportunity of a population and an economy that really needs good financial advice. It's an aging population, a population of more and more people retiring. When we do our research and try to identify the gap between the number of advisors that are needed to serve that growing need, it's a gap of 8,000 advisors short on what is really required. Obviously, financial advice is not the only area of the economy that's got shortages in supply, but it's a very important area.
The opportunity for those of us who participate in the market is to make advice more efficient and to do what we can from an efficiency perspective, to close that gap. Of course, you've all heard me say before, the time is right for technology to partly meet that gap and to step in, and so we're delighted to be able to invest in our technology stack and make sure that we help our advisors to meet more and more clients as part of their model. We also have a unique positioning because we've built up over many years, the market's leading reporting and tax capability, which is essential to meet the needs of the high net worth clients and the advisors who serve them.
We have the market's leading non-custodial offering, and we have the market's leading positioning in alternative assets. All of those things go to a wonderful positioning that we have to meet that gap and that opportunity that's in front of us. Just to reiterate the change in high net worth portfolios, they are becoming increasingly complex, and that puts increased demands on the platforms. Our share in alternatives, you can see there the growth, 29% over the H1 2025 and 69% over the last two years. Very substantial growth in alternatives. Indeed, if our alternatives capability was a standalone business unit or function, a standalone business, it would be the market leader.
We've got a tremendous positioning in serving the needs of advisors who have got alternatives as part of their portfolio construction mix. In terms of technology, given how often we talk about how powerful technology is, it's important to say, where do we see our opportunity going forward? As I said at the start, you know, we have three areas of priority. We, we wanna grow the business, we want to expand our financial leverage and operating leverage, and we wanna invest in the future and take advantage of how rapidly technology is developing. This slide picks up on some of those aspects, some of the things that we're focused on.
The, the, the essence of it is that we want to be an employer of choice for highly capable technology experts, and the steps we're taking are about getting our position right as an employer of choice for talent. We've always been known as a fintech. I think our financial service capability has stood us in good stead, and now we're investing further in, in making ourselves a market leader in technology, the tech part of what a fintech is, and we're very excited about where we've got to on that front and what opportunities that gives us going forward. All of that leads us to having a platform that we are confident is currently aligned with the evolving high net worth requirements.
The fact that they're evolving means you can never be complacent about this. We will continue to challenge ourselves on whether we're meeting the needs of our advisors, and we'll continue to stay close to our advice, advice community and, and the clients who are with us. You can see there that we've got a view that our platform uniquely meets the needs of and builds the bridge between the high net worth advisors and the high net worth clients. The important part about that is when... Again, when we do the research, many high net worth clients or investors in our terminology, don't, either don't use an advisor or are not using advisors to the extent that they really want to.
So we feel we can help advisors to meet more of the needs of the high-net-worth investors. As we said earlier, it's a, it's a huge and growing opportunity. In terms of executing on our strategy, we've talked before about those five areas that are mentioned at the top: growth, product, superannuation, service, and operations. They're our five areas, but to the things I mentioned earlier, growth is, is a continued part of our focus, and we've got we, we think we've both got some good runs on the board in the last 12-18 months, but we also have a clear strategy to continue to grow our business strongly.
We've started to open up the financial leverage that we aim to do, and that all positions us well to continue to execute on what we think is the right strategy at the right time. Finally, I'd just like to talk about how we're viewing the business. We certainly think there's good operating and financial momentum in the business. We're focused on realizing the synergies from our two most recent acquisitions, having earlier realized synergies from Powerwrap. We are pleased with the acquisitions that we've made, but also we're pleased that they all run on the one technology stack now, and it's all part of the one technology team.
Some acquisitions in the platform space haven't always been able to consolidate to one platform, we've done it on a couple of occasions now, and with Technotia coming into our business, we've consolidated the technology team into one function. We continue to have good momentum in our sales pipeline, which gives us confidence going forward, and we think there's sustainable earnings growth going forward. With that, I think we've kept it pretty brief, to a half an hour and left plenty of time for questions. There's always lots of interest after we do these presentations. We're now gonna go to questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Nick McGarrigle from Barrenjoey . Please go ahead.
Hi, team. Thanks for that comprehensive rundown. Maybe just to clarify on, some of the things to think about into FY27. The OneVue business or the contribution from that, is that expected to be positive in the second half, then the incremental is not necessarily AUD 3 million for the full year of 2027? Or are you thinking it's a full year of AUD 3 million in 2027 on the increment? The second question is on the Technotia side, the, the AUD 9 million of savings, what's the split between OpEx and CapEx?
Thanks, Nick. On the OneVue, we have got the synergies now. You know, with some of those synergies have only been realized in February. The TSA was exited in February, so we haven't quite got a full half year, which was a little bit later than we originally envisaged. Which, you know, I don't wanna go into too much, but we were held up by a third party who, in our view, was overly cautious about the need to migrate from the old legacy OneVue tech onto the Praemium stack. Nevertheless, it's there. In terms of FY27, there's no reason why we won't have a full year of synergy in FY27.
Nick, on, on Technotia, the way to think about it is, our tech spend in total, CapEx and OpEx, based on the last full year report, was about AUD 28 million. And that was internal, and in addition, we had invested in Technotia as a supplier, and so all that was part of an elevated CapEx in H1 2025, sorry, H1 2026 and H2 2025. And what we— And, and our engagement of Technotia has moved through what I would consider three phases. The first phase, when we met them, and as I say, we started working with them 18 months ago, was to say, "We've got a problem, which is superannuation. We're not happy with our super offering.
We're very happy with the investment delivery, and the investment administration and the SMA, which is the core service and scheme used by the super product. The super admin bit, we weren't happy with. Now, we're not the lone ranger. Others, you know, there's speculation all the time about how much others are investing in tech and growth. Technology is one I read about in the newspaper that's spent the best part of AUD 200 million getting their super admin up. We asked Technotia to help us with that initially.
The second phase was having done the heavy lifting on that and started working with our trustee to say, "When can we insource admin, now that we've got an appropriate system on which to do it?" We started working with Technotia to integrate that super admin with our investment capability, our investment administration. The third phase was when we started talking about acquiring the business and fully integrating Technotia and Praemium technology. All of that means where we land now is the AUD 28 million that we spent before, less than AUD 9 million in salary costs, and there'll be other swings and roundabouts around the incentives and so forth, but essentially, AUD 9 million comes out of our AUD 28 million. The way that goes to CapEx and OpEx is they both probably go down.
Like, we don't have to-- Some of the AUD 9 million will come out of CapEx, and some of the AUD 9 million will come out of OpEx. We just need to. Obviously, you know, the, the accounting, for CapEx versus OpEx curves based on time sheets and what people are doing. We'd just like to run the business as one integrated technology, division till the end of this financial year, and then we'll have a clearer line of sight of where our CapEx go, goes, and where our OpEx goes forward. The reality is that, AUD 28 million less AUD 9 million gives you a bit of a guide to what we think our total spend is with the allocation to emerge over time. Nick, you don't have to jump the line.
If, if I've missed part of your question, feel free to jump in again.
No, I think that's reasonably clear, but, I guess I'm trying to work out what the underlying EBITDA benefit from the Technotia changes might be versus what we'd expect to think about in terms of ex-divi, if that's important, as everyone goes through the process of resetting their expectations on profit for next year.
Look, I, I don't want this to be guidance. I just want this to be spur of the moment thinking, if you don't mind. One way to look at it is, say, nine on 28, you know, it's about a third of your cost has come out. If it emerges that it's a third out of OpEx and a third out of CapEx, when they were running something like, you know, 20 and eight, you, you know, that, that would be one way to think about it. I suspect that's as good an initial estimate as we were able to give you at this stage.
Yeah. Okay. That's helpful. Then maybe just a question around Spectrum. How does that product continue to go into this new year? The margin there you've given us at 25%. You've mentioned as well that there's a fair number of large accounts skewing that, so just the way you think that might. Is that kind of a steady state, or you feel like you've added more large accounts than you might expect to normally, and that revenue margin may tick up over time?
Yeah, that, that latter, I would think. You know, we're seeing, when, when you, you know, you write AUD 300 million in a very short time, some of that is really large accounts. You don't write 300 AUD 1 million accounts in the first few months. But over time, you're, you're starting to get the more typical growth profile of lots of, you know, I'm not going to say small accounts, these are still very significant accounts, but lots of accounts that are more normal for the size of business that we run, rather than a few really large accounts. I, I do expect it to ameliorate over time. I think, you know, one of the slides, that, that we've put in is, again, just the volatility, such as it is of margin.
You know, when you see margin, can go from, you know, the total platform margin, more and more, we'll talk about the total platform margin, but when you see our total margin, from FY22 to H1 2026, you know, 22%, 27%, 28%, 28%, 30%, and then 28%. In the past, you know, we've, we've had the experience of, even that 2 basis points, it's quite volatile, you know, two on 30, 6% of your revenue up or down based on a range of factors, which Emma's outlined for this quarter. We've had impacts before.
I think we're starting to get the sort of scale and the leverage, where a bit of up and down on that over time, we absorb it without quite the dramatic swings that we used to have in the past.
Thanks.
The next question. The next question comes from Tom Tweedie in MA Moelis Australia. Please go ahead.
Good morning, team. Thanks for taking my questions. Just a couple of follow-up questions from what Nick was saying. In terms of Spectrum, where are we at in the timeline of, of large client wins that you've previously announced, coming onto platform and seeing those flows? Additionally, what's the pipeline look like at the moment for, for sort of large material clients that we could see in terms of what discussions are and, and how's that going?
Thanks, Tom. The, the time from winning the clients to seeing them hit, you know, hit FUA and revenue, I think, you know, I'm, I'm well aware that some people have thought that's longer than they initially thought, and it's certainly longer than we would have liked, and that's why we've made a big investment in onboarding. They're all continuing to progress at a satisfactory rate. From the, you know, point of view of the business and client satisfaction, where we want to be, we do need to shorten the time from winning a client to their fully onboarding and all the FUAs on board. We can't control that completely.
A lot of that's in the hands of the clients and how quickly they work with their own clients to move money on to Spectrum or indeed, the other platform products. But we've got to do everything we can at our end to make that go as quickly as possible. Hence, the reason that's been a, the, the number one priority for the business for a while, and we're happy with the progress that we're making. We're also happy that with the access to the talent that we've got in the Technotia Labs team, we can make further investments in that. One of the things, though, that we often talk about is the integrations and high net worth advice businesses are highly individual businesses. They're not cookie-cutter type businesses where all the clients are the same.
So each time we win a major client, there is the need to integrate into their quite unique and bespoke tech stack. So, there'll always be a bit of work, but once you integrate with some of the more common modules that advisers use in their tech stack, then you've done it, and so it can get faster over time. In terms of the current ones, they're continuing to onboard, and we still anticipate some significant flows from the clients that we've announced in the past, and, and we're confident of the outlook on that. On the sales pipeline and winning new clients, again, we, we are, we're as happy as we can be with our sales pipeline.
I wouldn't like anyone to think that we've won a whole lot of clients and then we don't win any new clients. We continue to have a healthy sales pipeline. We continue to see prospects moving through the pipeline in the way that we would expect. We, we remain very optimistic about some, some of the other opportunities in our sales pipeline coming to fruition.
Thanks. That's helpful. Just a follow-up question regarding cost base now going forward and how we think about that. I think the release the other day around the restructure mentioned the cost savings, but they were pre-incentives for Technotia. Can you just talk us through what incentives there are there and how we think about just either inflationary costs or full-time employee costs now we rebase the group cost base?
Yeah. The in terms of the incentives, what we've said about the incentives is that part of acquiring that business was a three-year incentive structure, which, we regard, even though they're incentives, we regard as part of the cost of acquiring the business, and we were very happy with the way that that was likely to work. The basic way they work out is that based on cost savings that we derive from what we do with Technotia and revenue increases that we get with Technotia, they will earn a proportion of that. It, as we've said before, if they earn any incentive, our shareholders will be extremely happy. They'll be very happy with the growth in our earnings as a result of the incentives.
So it's, it's, it's just a total alignment, if you like, between the earn-out from originally buying the business, which was AUD 7.5 million in shares upfront, plus this earn-out, and the growth in earnings that Praemium would get from owning that business. Whilst we only talk about the salary cost of AUD 9 million, the reality is there's lower incentives in the Praemium technology business as a result of that cost out going forward, but there is this earn-out from acquiring the tech. It's too early to say exactly where all that lands, but AUD 9 million salaries. Salaries are still, salaries are the biggest part of your cost base, so the AUD 9 million gives you a pretty good idea of the savings that we've achieved so far by acquiring that business.
We think, as we've always said, we feel that business, business case was a compelling business case, even on the cost reduction opportunities, and that's by far the smallest part of the total opportunity for us. The opportunity to advance our technology offering and grow our revenue is the bigger part of the opportunity, but it's nice to, you know, to, to do a business case on, on just the cost out and say it stacks up on that alone. Sorry, what was the other? Yeah.
No, no, that covers everything I was asking. Thanks, thanks for taking my questions.
Yeah. Thanks, Tom.
Your next question comes from Laf Sotiriou at MST Financial. Please go ahead.
Good morning, thank you for the opportunity to ask some questions. Can I kick off with Technotia Laboratories? A little surprised we're not getting a little bit more color, more than just a couple slides on, effectively for a tech company, swapping out the tech teams. You know, it's a pretty big, pretty big deal. Could you just talk us through what industry experience Technotia Laboratories had going into this? Have they done any other wealth projects? How many of your existing tech team stays? How many people came across? There's no mention of execution risk in any of this. Any more additional color you could add, that would be great.
Yeah, thanks, Laf. Yes, there was extensive due diligence done. There was a lot more due diligence done with Technotia than any of the tech hires that we've ever done. You know, when you hire tech people, you, you do it based on CVs and interviews. Now, we've had an 18-month journey with the team at Technotia and watching closely what they do. As I say, it was basically a three-phase process that we did with them. Part of why we engaged them in the first place is because they do have extensive financial services experience. They worked for many years at Brookfield, and, you know, Brookfield's one of the biggest asset managers in the world and bought and sold many financial services business, and the Technotia team was often asked to get involved.
We're very confident, that, you know, even before we engaged them to build a superannuation platform, we were very confident in their financial service capability, and then we watched the way they went about it. We read the reports they sent us on a daily basis. We attend the meetings, the stand-up meetings they have on a daily basis, and all of that gave us a very high level of confidence. It's not a riskless exercise, but it's a low-risk exercise given the amount of work that we did. The other thing is that there is significant number of the existing tech team going forward as part of a combined tech team that's well, well over 20 people.
As part of the work we did to look at how to integrate the businesses, we took a lot of time to work through the people from the Praemium tech team who would be part of the merged tech environment. It's not dissimilar from any time two businesses merge, and you say, "Right, we've now got more people in tech or any other business function, but in this case, tech, than we need. How do you do it?" We're very confident of the process we went through, and there was good alignment of the people that the leaders in the Technotia business thought were needed to go forward, and the people who had been the most highly regarded in the Praemium tech world before.
You know, the mid-twenties sort of number of people going forward out of the Praemium tech team, there's very strong alignment with the people who were seen as the key individuals in the future.
J ust, just to clarify, sorry, so the key individuals are, did the CTO come across? Did all the key senior executives come across? Because there's a lot of, you know, working in asset management is very different for one company to do asset management projects. Technology is very different to working in superannuation and investment platforms. So even with a thorough due diligence process, there's a substantial amount of tech know-how, knowledge base that is leaving. How are you capturing all of that, knowledge base with, with 20 people from, from how many versus how many are actually leaving?
When you talk about there being some incentive caps or, or, or do they get some of the revenue share or so can you just talk us through what those incentive payments may look like, or for the, the new tech team that's coming?
The in terms of the due diligence, like, you know, I once read a book, which the guy was a very successful tech entrepreneur, and he said, one of the things. The book was called The Hard Thing About Hard Things, and one of the things is it's not as simple as people think to identify good talent.
It's, you know, he said he interviewed somebody once, and he said: "How do you identify good talent?" He said, "I could see that the guy was in agony because I asked that question," because he said, "It's not as easy as people think." It's just not as easy as you think to say, "Oh, look, you know, just get somebody who's got years of platform experience, and that's your number one criteria." The real thing about technology at the moment is getting the talent, you know, getting people who are highly talent, who can write the code that we need, going to need to go forward, particularly in an environment where 80% of the code that's being written today is vibe coding. It's code where you tell the, the machine what code you want written.
What we've done is the people that we've retained are the people that we've seen a consistent ability to understand the problem and to resolve the problem. Some of these people that have been retained have got over 15 years experience in the Praemium tech team. The most experienced people have been retained, but we don't need two CTOs. We don't need two leaders. Yes, some of the cost out is some of the leadership team, and they go with our best wishes, and they, they are very good people. With all of the, the senior team and with Technotia, we've been working with our tech team for a long time. We've been working with Technotia for 18 months, and so we're in a position where, based on the work that we've done, we're able to make the judgment.
We don't think it's without risk, but we think it's a low risk, and we think the risk is mitigated. We're very confident that we've got the team we want to go forward with. In terms of the incentives, as I said, when we bought the business, we bought it for AUD 7.5 million of shares and an earn-out based on the expense reduction and the revenue increase that we get going forward. It's a very small proportion of the total that will accrue to the shareholders from the work that they're doing for us.
Got it. Just one final question in relation to the non-custody revenue. A little bit surprised that there's not any uplift, like, Scope+ has been growing quite aggressively in the last few years, and granted, you've lost some Scope clients or number of accounts in, in the last year. You know, is the margin really tight on the new business you're winning versus in, in Scope+? Like, it's, it's been flat for the revenue for, you know, five, six halves in a row.
Yeah, look, the portfolio services business, we are, we are very excited about that, and we're very confident about the revenue and the margins that we get out of that going forward. In order to get where we wanted to be, we did make some changes which had an impact of reducing revenue in the short term. All of those changes were important because we're winning clients for the long term. We're not winning clients through any particular aggressive discounting of the price that we charge. We, we do give lower pricing or scaled pricing for enterprise clients. If some of what we win is enterprise clients, then they get a lower margin than we get for individual clients.
Those enterprise clients are a very important part of our strategy going forward. The non-custody not only is a good revenue opportunity in the short term, but it's a very important part of our positioning in the high-net-worth segment and expanding the opportunity for our clients to meet more of the needs of the high-net-worth segment. There is only a quarter of the high-net-worth money on platform in total, that understates the story because of the AUD 1.2 trillion on platform, some of it is retail money. High-net-worth have a lot more money held non-custodially than on-platform. In order to serve the advisor, we wanna offer them a full offering, non-custodial as well as as well as platform. I don't think we're the lone ranger.
I think we were the first, but obviously, some of our competitors are now seeing non-custodial as an important part of their development, and we're happy to continue to lead the market in that segment because, it is a, a crucial part of servicing the high-net-worth advisor and the high-net-worth investor.
Thank you.
Thanks, Laf.
Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. There are no other questions at this time. Oh, go ahead.
Very good. I'll let you wrap it up, and then I'll say a final word.
Yes, I'll now hand back to Mr. Wamsteker for closing remarks.
Thanks, everyone, for joining in. Appreciate your interest in the business. As I say, we remain very confident about where we are at the moment. We think the first half of 2026 demonstrates that we have made some good progress, but we're certainly excited about the future and the changes that we have made recently and where they position us going forward. I look forward to the opportunity to talk to all of our shareholders over the coming few days, and I look forward to continuing to work at your service to deliver a good result in the second half. Thanks.