Generation Development Group (ASX:GDG) detailed a strong first-half performance for FY26, citing broad-based growth across its Generation Life, Evidentia managed accounts, and Lonsec research businesses, alongside continued investment in staff, technology, and product development. Management also highlighted legislative and regulatory tailwinds, progress on its BlackRock alliance, and a measured rollout of artificial intelligence initiatives aimed at boosting productivity and operating leverage.
Half-year headline results and segment performance
Management reported group revenue of AUD 88.4 million, up 35% year-on-year, with underlying NPAT of AUD 20.1 million, up 63%. Statutory NPAT was AUD 6.9 million, which management attributed to the “crystallization of the Lonsec asset” following GDG’s purchase of the remaining half of Lonsec in June 2024.
- Lonsec underlying EBIT up 29% to AUD 10.0 million
- Generation Life underlying EBIT described as AUD 11.8 million on a like-for-like basis (management noted reporting impacts from consolidated tax treatment)
- Evidentia managed accounts EBIT up 21% to AUD 10.1 million
Terrence (CFO) said operating leverage was evident at the group level, with revenue up 34% and expenses up 29% over the period. GDG kept its dividend flat at AUD 0.01 and emphasized a strong cash position and balance sheet flexibility to support growth initiatives, bolt-on acquisitions, and AI investment.
Funds growth: investment bonds, managed accounts, and research coverage
In Generation Life, GDG reported investment bond funds under management of AUD 5.2 billion, up 34% year-on-year. Management said annual net flows over the last 12 months increased by AUD 1.3 billion (up 57%) and described its investment bond inflow market share as a record 60%, up from roughly 50% historically. Management also emphasized the long duration of the funds on platform, stating that “every dollar that comes on the platform sits for over 14 years.”
For Evidentia managed accounts, GDG reported combined FUM of AUD 34.5 billion. Management attributed the scale to the February 2025 Evidentia acquisition combined with Lonsec Investment Solutions, plus organic growth, and said FUM rose AUD 9.1 billion in the 12 months to December 31, 2025 (a 36% increase). GDG cited 11.6% market share based on industry data through June 30, 2025.
GDG also highlighted growth in “tailored managed account” clients since the acquisition. Management said Evidentia had 41 tailored clients at acquisition completion (February 18, 2025), Lonsec Investment Solutions had 12, and the combined group expects to have “close to over 70 clients” by the end of the quarter and “close to 80-plus clients” by year end.
At Lonsec, management described the research business as more mature but growing, with product coverage rising to 1,880 products (up 5% over six months). CFO commentary emphasized that more than 90% of Lonsec’s revenue is recurring, and management reported recurring revenue growth of 7.6% and EBIT growth of 29%.
Investment, integration work, and tax reporting changes
Executives described significant change over the last year, including a group restructure and integration initiatives following the Evidentia acquisition and internal segment reporting changes. Management said Lonsec was restructured to focus on research and ratings (including iRate), while Lonsec Investment Solutions and an RPI business were moved into Evidentia. The company also described IT separation and consolidation work that it said was completed without disrupting “business as usual,” as the subsidiaries continued to deliver record outcomes.
Within Generation Life, CFO commentary pointed to three primary investment areas driving expense growth:
- Sales capability, including hiring a new head of sales and plans for additional hires
- IT investment, particularly in the registry system to support scaling without significant headcount increases
- Cybersecurity and product development to support new offerings (including liquid and leveraged products)
Management also discussed a shift to consolidated tax reporting, noting that tax offsets that previously appeared at the life company level now flow through at the corporate entity level. The CFO described the net impact as neutral at the group level.
Strategic priorities: AI, BlackRock alliance, and new products
GDG reiterated priorities including platform integration, efficiency improvements, and the deployment of AI across the group. Management stressed a “considered, measured approach,” particularly for customer-facing AI tools, emphasizing accuracy, governance, and return on invested capital. Over a two-to-three-year horizon, management said the aim is increased productivity, improved operating leverage and scalability, and later a more “transformational” use of AI as capabilities evolve. The company described an “AI spine” at the GDG level that would be tailored to each subsidiary.
On product and partnership initiatives, management said it remains focused on leveraging the strategic alliance with BlackRock and developing new annuity-style products, subject to regulatory approvals. In Q&A, management said one product is expected to launch in the second half of FY26 and another product—intended to address a “gap in the market”—is targeted for the first half of FY27, pending regulatory approval. Management also said it is engaged in RFP processes with super funds related to Retirement Income Covenant and longevity solutions, and that discussions are down to “a couple” of life insurers, though it did not provide specific counterparties due to NDAs.
Outlook and Q&A: mandates, flows, regulation, and tax reform tailwinds
Management said it expects a stronger second half of FY26 than the first half, supported by continued momentum in managed accounts and investment bonds. On mandates in Evidentia, management said a “few hundred million” mandate had already transitioned in Q3 and that a larger mandate—described later in Q&A as about AUD 1.8 billion—is expected to transition next month, with “zero reason” cited for delay. Management also noted the possibility of another mandate transition in Q4.
On managed account flows, management addressed a question about GDG’s previously discussed AUD 12 billion FY26 managed account flows number, stating that it includes mandates, net growth, and investment performance, and that the company still views it as realistic given mandate progress.
Executives also addressed regulatory scrutiny in managed accounts, suggesting GDG may be positioned to benefit due to its independence and lack of vertical integration, noting it does not own distribution or operate as a licensee with aligned practices. On pricing, management said the group does not compete on price, emphasizing service breadth and capabilities, and said it has not seen fee margin compression in managed accounts.
Finally, management discussed tax reform as a potential tailwind for investment bonds. On the public debate around changes to the capital gains tax discount, management argued that while investment bonds operate on revenue account (and therefore do not receive CGT discounts), the structure can provide advantages such as the ability to offset capital losses against income, contributing to an effective tax rate management said is typically in the 10%–15% range across the current investment menu. Management said any reduction in CGT discount could increase the “tax arbitrage” benefit of the investment bond structure versus other ownership structures, depending on investor circumstances.
About Generation Development Group (ASX:GDG)
Generation Development Group Limited engages in the marketing and management of life insurance and life investment products and services in Australia. The company operates in two segments, Benefit Funds Management and Funds Administration, and Other Business. It also provides administration and management services to the Benefit Funds of Generation Life Limited, as well as administration services to institutional clients. The company was formerly known as Austock Group Limited and changed its name to Generation Development Group Limited in March 2018.
