HUB24 Limited (HUB) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the HUB24 Limited FY '22 results. [Operator Instructions] I would now like to hand the conference over to Mr. Andrew Alcock, Managing Director. Please go ahead.

Good morning, and welcome, everyone, to our financial year '22 results presentation. Absolutely pleased to be delivering another set of really strong results for HUB24 for the year, with some headlines with underlying EBITDA [ up ] 92%; underlying net profit after tax up 133%; and of course, our dividend year-on-year up 100%. In the customer front, I'd like to talk about a couple of awards we've got, #1 for Value for Money with Investment Trends, and once again, retaining our Managed Portfolio's award. But with me today is Kitrina Shanahan, our Chief Financial Officer. Kitrina will be presenting our results as I move through some of the earlier slides, and certainly will be able to answer questions as we move to that towards the end of the presentation. Before we jump into the results, I'd like to put some context around the role we play in the market. And just moving to the next slide. Our group has expanded in FY '22. We've added -- certainly added to our purpose of empowering better financial futures together with now over 300,000 customers accessing wealth-related products from HUB24 and group members. So that's the HUB24 platform, the Xplore platform and the Class SMSF portfolio and trust products. 300,000 Australians that we're helping actively to meet their investment and retirement goals together with others in the industry. And by together, we mean with our customers, with advisers, professional advisers, accountants, financial planners, investment managers, technology providers, bringing together the best capabilities and the best choices and creating opportunities using technology for a better future for our customers. We have a large footprint now, which is delivering growth and moving forward with plenty of room to grow and lots of market share for us to hopefully capture as we move ahead. So in terms of our purpose, we've certainly delivered on the year with the acquisition of Class, and delighted that we've got that footprint to move forward. Turning to the next page or moving to the next page and looking at our results highlights. We're very, very proud to deliver such strong growth in dollar terms and percent terms for FY '22, with our total group revenue up 76% to $192.5 million, and underlying EBITDA at a group level up 92%, year-on-year $70.4 million. Unpacking that a little bit. The Platform segment contributed $160 million of that revenue at $62.3 million of the underlying EBITDA. A good result. And looking at the profit and earnings numbers. Statutory NPAT up 50%, and that includes $18 million of strategic transaction and project costs. So looking at an underlying level, it's up 133% at $35.9 million. Our full year dividend, adding the $0.125 dividend we determined for this half, comes to $0.20 per share, and that's up 100% on FY '21, with earnings per share also up, and that's diluted, at 37% to $0.195. We absolutely finished the year with a good pool of balance regardless of market movements at $65.6 billion for combined FUA. At a custody or Platform, we finished the year at $49.7 billion, just shy of $50 billion. But as at the 18th of August, due to good positive flows for the first couple of months year-to-date and some market recovery, it's back at $54.1 billion with the PARS at $15.9 billion at 30 June. Turning to the next slide. If I can put the group into context with our operating segments, just a bit of a footprint from which we intend to grow. The HUB24 group is there with the Platform segment on the left-hand side, with a bit more break down of some of the stats I've already mentioned, the number of advisers and the non-custody PARS accounts. And on the right-hand side, we've got HUBconnect now joined by Class in our Tech Solutions segment, really building out that segment with a combined footprint and some more meaningful contribution to business moving ahead, both strategically and financially. Noting that we've got 92 financial services clients buying tech and data services products from HUBconnect. And we'll talk a bit more about that later on in the presentation. And Class with 7,000 unique clients, 200,000 accounts across the wealth admin products and 170,000 document orders across NowInfinity business as well. So a much broader footprint and 2 operating segments alongside our corporate segment moving forward, which we're reporting in that way. Turning to the next slide. A look at our track record, and it's absolutely continued. We're continuing to build on a consistent track record of funds under administration growth, revenue and underlying EBITDA growth, and we'll certainly be working very hard to build on this moving forward. We aim to manage the business to deliver reliable growth. And as you can see, we've done that from FY '18 to FY '22 consistently. And if you go back further, it's been consistent since earlier years. And we do that whilst balancing investment for future growth, trying to put in place the right building blocks and foundations to support ongoing growth, but also deliver consistent and reliable returns to shareholders. On the left-hand side, we've got the funds under administration graph there. And at the group level, that's a full year compound annual growth rate of 68%, a really great growth statistics for our custodial and non-custodial FUA over that period of time. And on the right-hand side, our revenue CAGR over the 4-year period is 41% and underlying EBITDA of 56%. And that includes, on the right-hand side in the yellow, the contribution for Class, which we acquired in February, for 4 months of this year. And also in FY '22, there's a full year run rate of Xplore in that expansion of revenue and underlying EBITDA for the group. As we head over to the next slide, moving on to look at from a market share perspective. And the same FUA is there on the left-hand side, but you've also got the net inflow line there, which is the yellow dotted line showing the net inflows into the business from a Platform perspective. The CAGR there is slightly different. It's a 4-year CAGR for the custodial or Platform organic growth of 56 -- a platform growth of 56% over the 4 years. Interestingly, we're still ranked #2 for annual net flows against a really, really large established set of institutional competitors. We have -- our market share has grown from 3.9% up to 5.1% in the space of 12 months. We've gone from eighth largest to seventh largest. But we are certainly the fastest-growing platform provider in percentage terms, in fact, based on our current market share and the growth we achieved in the preceding 12 months. Great results for the Platform part of the business, in the Class business as part of Tech Solutions equally from June '18 to June '22. Class Super has grown its market share from 24% to 30%, albeit we've owned the business for less than 6 months. But it did have the strongest quarter 4 since 2019 in FY '22 with the strongest growth there. And you can see the number of accounts there for Class, the total accounts and the Class Super accounts there on the slide. So doing well in terms of market share, lots of opportunity to continue to grow and great results when you look at them, besides our financial results. I'm not going to spend much time. I'm going to move on to the next slide. I won't spend too much time on that. But if I put in summary financial year '22 overall, we've talked about the financial results. We've had record annual platform net inflows. In fact, the net inflows for our business and for specialist platforms are at levels that this industry hasn't seen for many, many years, if at all, for institutional providers. And ours being $11.7 billion. So a great result and a great level of growth. Our customer advocacy has grown substantially, and I'll be showing you some awards on the next few slides in terms of what customers are saying about HUB24. And it's absolutely in our DNA to make sure we continue to deliver and delight our customers with great opportunities. We completed the Class acquisition, increased our profitability. We've continued with the integration of Xplore, which we acquired in FY '21. And those things together all against the backdrop of a market that's been rattled with some uncertainty, changes in inflation, interest rates, concerns about health, pandemics, international uncertainty, in the backdrop of that, we've actually delivered on strategy, delivered great growth and delivered great outcomes financially and still are working on innovating to enhance customer value. I'll talk a bit more about those 3 innovations here: HUB24 Present, HUBconnect Licensee and HUBconnect (sic) [ HUB24 ] SMSF Access later on in the slide. And of course, we are playing our role working with the industry to build foundations for strong and thriving wealth management industry in Australia. Turning on to the customer advocacy or moving to the next slide. In terms of the awards this year, and there's 6 there for HUB that we've called out and 2 for Class across both of our key business units. Interestingly -- and the one I'd like to talk -- so we recently have been awarded in the last couple of weeks #1 Value for Money from Investment Trends. And when you think about -- we talk quite often about value versus price and the levers for that. And the market is shifting to a value driver. We haven't seen massive competitive pressure on price for the last couple of years. Advisers are understanding value and the sustainability of working with a great platform provider who's there for the future, who's building out for the future. Put it in the context of best interest, duty for customers, value is a key driver for why a decision should be there to recommend a particular platform. So for the HUB platform, that's a great new award that speaks to us overall from adviser's sentiment. Running through them, #1 for Managed Portfolios for the sixth year running. #1 for Product Offer from Investment Trends. And from Adviser Ratings, we have the Best Adviser Experience, the Best Platform and Best Investment Options. Great awards to have. And looking at Class. Class has won the award for Best SMSF software administration platform as well. The 2 awards there for provider as a platform. And moving forward, if you look at those awards and the market share we have, I think you'll agree we're very well placed for more growth and more opportunity as we move ahead in FY '23 and beyond. To do this, of course, and moving to the next slide, talking about our people. We have an exceptional team, and we worked very, very hard to build a great and talented team, build on the already high-performing culture that we have. And look at how we attract, develop and retain talent in the business and creating the right environment for our people to thrive. I think that's a secret to our success, is having a really capable team that are aligned and working very well together. In the group, we now have 700 employees, having had 200 employees join us from Class. And HUB24 hitting up to 500 employees over the last 12 months as well. And obviously, we work very hard at that. So we have a very, very strong and focused culture. We're prioritizing of well-being. We're continuing to support a diverse and inclusive workplace and investing in leadership. In fact, on the bottom half of the page, we're putting in place the foundations for future growth and operational certainty and scale. You can see we've recruited 3 new key executives for the business to support that growth, and we're out in the market currently recruiting a Chief People Officer for the combined group. Employee engagement at 72%, which is a great outcome. But I'd like to talk about our values. And it really is in our DNA -- the values you've got there on the right-hand side of the slide -- about how we operate, about our integrity. And we see these things as precious: collaboration, acting as one team, really, really being focused on clients and easy to deal with, delivering excellent outcomes, going above and beyond. In fact, we often talk about being brave to do things and get things achieved that seem difficult in the context of how do you look after your customer and how you progress the business. So we have passion and energy to make a difference, and we certainly think big and outside the square. So a little bit more about our people there. We are continuing to invest, mostly focused on maintaining the great culture we have as a foundation on which to build moving forward. Now I'm going to hand over to Kitrina Shanahan to, if we move to the next slide, to deliver on our financial results. And I'll be back a little bit later to talk more about strategy and outlook.

Thank you, Andrew. Thanks for that. So if we could just move to the next slide for the finance section. Here, we've got a snapshot of the combined total group, a breakdown for revenue, underlying EBITDA and customer numbers. So you can see here Class business is included in the Tech Solutions business for the consolidated group. On the right-hand side, however, you've got the revenue contribution from Class for the 4.5 months of $23.9 million and an underlying EBITDA contribution of $9.5 million from Class and a customer base of over 7,000 customers. On the HUB24 side, where we have the HUB24 Platform, the HUBconnect and Agility and the Xplore platform, we've got revenue of $168.6 million, an underlying EBITDA of $60.9 million and a customer base of advisers of just over 3,400, taking the total group revenue to $192.5 million, an underlying EBITDA of $70.4 million. The Platforms business contributes 83% of the revenue for the total group and the Tech Solutions, including the Class business, contributes 15% of the total revenues for the group. Corporate includes the investment that we have in Diversa and our share of profits from the Diversa investment. So just going into the next slide. We have the group financial results. So this is the combined financial results for the whole group. And you'll see the operating revenue is up 76% to $192 million and operating expenses are up 69% to $122 million, delivering positive jaws and an underlying EBITDA growth of 92% to $70.4 million. This is combined with underlying EBITDA margin and cost-to-income ratio improvements for both of those metrics of 2.9%. So delivering operating leverage across the whole group for the year. On the right-hand side, you can see the breakup in the contribution of the different segments to the operating revenue and the underlying EBITDA. So the Platform segment is still the highest contributor, delivering $59 million uplift in revenue on full year '21 and $24.4 million uplift on underlying EBITDA to the group. Tech Solutions grew $22.4 million in revenue and grew $9.7 million in underlying EBITDA, both of those metrics largely being driven by the Class acquisition that we did. Moving to the next slide. We've got the Platform segment, again, delivering very strong results with a 20% growth in the custody platform FUA growing from $41.4 billion in full year '21 to $49.7 billion, so just shy of $50 billion in full year '22. The non-custody PARS FUA went backwards or declined 8%, which was largely driven by the negative market impact. So it's now just under $16 billion. And total FUA growing 12% to $65.6 billion, up from $58.6 billion in full year '21. Platform net inflows have grown 32% to $11.7 billion, up $8.9 billion in full year '21. Full year '21 also included $1.4 billion for the large transition of the ClearView portfolio. So if you did a normal net inflows excluding large transitions, the Platform net inflows is actually up 56% year-on-year. You can also see in the Platform segment the underlying EBITDA margin improvement of 1.3%, so growing to 38.8% underlying EBITDA margin, up from 37.5% in full year '21. And underlying EBITDA itself in a dollar term is growing 64% to $62.3 million. On the right-hand side, you can see the split and the growth in the funds under administration growing to the $65.6 billion. You've got the half-on-half split in this metric. Net inflows in the first half, the strongest half, at $6.7 billion. Adding the second half $5 billion, getting you to the $11.7 billion for the year. The market movement on the custody portfolio was $1.9 billion in the first half, positive strong market movement. And then the negative market movement aligned broadly in line with the ASX 200 movement, a negative market movement of $5.4 billion in the second half, netting to $3.5 billion over the whole year. And then you can see the non-custody PARS. The net impact of the -- net inflows and the market movement is the $1.2 billion over the year with a positive market movement of $1.1 billion in the first half and negative market movement of $2.3 billion in the second half. So moving to the next slide. We continue on with the Platform segment results. Here, we've got the 5-year growth trend in revenue expenses, underlying EBITDA and underlying EBITDA margin. So you can see each year delivering very strong growth in revenue and in underlying EBITDA, with the full year '18 revenue back at $40 million, growing to $160 million in full year '22. And expenses growing from $28 million to $98 million. Those metrics deliver a very strong $62.3 million Platform underlying EBITDA in full year '22 with a full year CAGR growth. So an annual growth rate of 51% in the underlying EBITDA. The revenue margin for the Platform segment remained stable over the year at 32 bps. I'll talk more about that as we get on to the -- if we can just move to the next slide. So on this slide, we have the composition of the Platform FUA, and we break it out between retail, institutional and Xplore super admin. So there hasn't been a significant shift year-on-year in the spot FUA contribution from the different segments, with the retail segment contributing 81% of the Platform FUA, approximately $40 billion; and the institutional, including the private labels and the private clients that we have representing 16% of the total FUA or approximately $8 billion. And the Xplore super admin, being a smaller portfolio, contributing $1.5 billion. As we've announced in our quarterly results and the analyst and investor pack, we're expecting the Xplore super admin part of the portfolio to transition out towards the end of full year '23. So the revenue margin, you can see in the graph on the bottom right-hand side. So the average for the custody revenue margin in full year '21 was 36 bps, and over full year '22, each half it has remained static at 32 bps. The reduction in the Xplore super admin revenue margin, there was a one-off service fee included in full year '21. So you can see the small drop there from 17 bps to 13 bps in full year '22. And then on the institutional revenue margin, you can see an increase from 9 bps to 14 bps, which represents a full year contribution from the private labels, being ClearView and Insignia. Just moving on to the next slide. So here, we have the 59% growth in the Platform revenue up to $160 million with the admin fees delivering $12.4 million uplift on full year '21 and cash and trading delivering $13.5 million uplift on full year '21. So you can see in the graph on the right-hand side, the split between the first half and second half '22, the contribution from admin fees and cash and other, which includes the trading. So the first half benefited from the net inflows, a strong $6 billion of net inflows in the first half. There was also the strong $1.9 billion of markets in the first half and there was an extra 2 months of Xplore, the Xplore acquisition completed in March '21. And so moving from second half '21 to first half '22, there's an extra 2 months for Xplore in there. When you move from first half '22 to second half '22, there's not an uplift from Xplore. It's all been accounted for in the previous periods. The second half admin fees and cash and other have been impacted by the negative market and the impact on the FUA growth. So if you take the Xplore extra 2 months in the first half and you take the impact of the negative market, that's the reason for the difference in the growth half-on-half. Then in the bottom right-hand side, you can see the Platform revenue margin. With Xplore, 36 average on the custody portfolio in full year '21 and then normalizing for a full year impact of the Xplore portfolio, which has slightly lower margins, to bring it down to 32 bps. The margin remained static half-on-half with the benefit from the RBA increases and the cash management fee, broadly offset with the admin fee clearing in the second half. Albeit that was lower than normal, it was still a small impact on the second half. Moving to the next slide, we have the group expenses. So total group expenses was $171 million, which had included $30.2 million for strategic transactions and acquisition amortization, which I'll talk more about on the next slide. Excluding abnormal items or notable items, total operating expenses were $141.1 million, which included the Class operating expenses for the 4.5 months of $14.4 million, which gets you to a core business operating expenses pre the Class acquisition of $126.7 million, which is up 46% on full year '21 as it included $10 million for the full annual impact of the Xplore portfolio coming in. You can see in the graph on the bottom right-hand side that employee expenses is still the largest part of the expense base, being $80.3 million of the expenses incurred. FTE, as Andrew mentioned, grew to 700, with Class contributing about 211 extra FTE. And the FTE growing for HUB24, up from 460 in the first half '22 to about 490 in the second half of '22. And then just moving to the last finance slide. We have the increasing profitability across all the measures. We've got underlying EBITDA, which is up 92% on full year '21 for the continuing operations. And then after we take out the share-based payments, the normal run rate for the depreciation and amortization of $7.5 million. And then the tax -- or we get to an underlying NPAT of $35.9 million, which is up 133% on full year '21. The share-based payments of $10.8 million is higher than last year as it included a recognition of the special PARS, special performance options and rights that were issued in full year '21. Given the strong growth in the net inflows this year, we recognized a share-based payment for 18 months of those -- of that issue of the PARS. And then moving on from the underlying NPAT of $35.9 million, we've got the notable items of $17.9 million, which includes transaction costs for the Class acquisition. It includes $5 million for the Xplore implementation-related costs and $1.9 million for other projects, including regulatory change, the joint SMSF product that we've been working on and some small client transitions. And then we have the statutory NPAT of $14.7 million, which is up 50% on full year '21. So an excellent financial result across the board. And with that, I'll hand back to Andrew.

Thank you, Kitrina. You look quite pleased, particularly with that expanding margin there, which was difficult earlier in the year. So that's a great result. Well done. We'll now turn to -- change the pace back a bit. Look, we've spent some time this year -- so under that corporate sustainability slide, we've spent some time this year enhancing or formalizing our approach to corporate sustainability. It's something that as a business we're very, very keen to update the market on about how we view that and what we're doing in that space. So if we go on to the slide headed enhancing our approach to sustainability. During the ESG materiality assessment, we took some external advisers and we worked with key stakeholders, being shareholders, customers, the service providers in the marketplace, business partners and so forth, and we identified some key focus areas on materiality areas that we thought HUB should make a difference and we would focus on. And they're on the slide there as a result of that piece of work. It includes customer experience; climate risk; diversity inclusion; our business ethics; data privacy and security, very important for Technology Business; and employee engagement and so forth. So we're absolutely committed to managing the business considering the broader community, customer environmental interest. We've been doing that for some time. And you'll see us release our first sustainability report early in FY '23 or in the next couple of months before our AGM certainly. And so we'll formalize that and go to market with our approach. We get asked quite often about what we've been doing. But important to note that from our perspective with our customers and the offers we have on the Platform, we have 150 ESG appropriate options on the Platform for advisers and customers to give them choice, and we certainly lead the market in the capability of managed portfolios for advisers and clients to tailor or tweak, if you like, portfolios with their own preferences. So they might actually be following a particular investor manager's approach, but they might actually want to put some chips and actually roll out some stocks or substitute some stocks or some sectors based on their own preferences. So from the platform perspective, we've long been thinking about how we provide choice and allow people to facilitate their own choices in thinking about their retirement, and we lead the market in that regard. And we've also, from a Platform perspective, had a digital-first approach. In fact, HUB24 platform from inception has not produced paper-based client materials in terms of output for customers. We have a digital-first approach. When we have Xplore over that, we'll be overlaid with that. But we don't produce marketing materials and reports in paper. It's all digital. Reducing our environmental impact is something we're committed to. So the sight there is outlining our approach. You'll hear more from us in the next few months. And also on the slide there, we see community support we've done across a number of areas, including the Pro Bono Financial Advice Network, where we help with advisers donating their time to those who need advice and can't afford it, with some other charities there like the Red Cross and other children charities as well. Cancer Council, Jawun Cape York on the slide as well. So looking forward to updating the market on that moving forward, and you'll see more about that as we approach our AGM time. Moving on to the next slide. In fact, I might click over 2. I've got a quick update on Class. So the slide headed Class progress update. Absolutely focused now on working on the foundations we've put in place and moving into a growth phase and consolidating the market leadership position of Class. So largely finished the transition phase, although we just made some appointments in terms of CEO and an executive team in Class. The business is running under that executive team led by Tim Steele, and putting in place the foundations for growth. We've certainly worked with the business to redesign the operating model around customer propositions and their core strengths around the Class offering and our NowInfinity offering, and also the take to market for some of our HUBconnect data products, all going through that business model in the Tech Solutions segment led by Class. So we've put development underway on a joint SMSF initiative, which I'll talk about in a couple of moments. But heading into a growth phase with that focus on services, getting back to the basics in terms of delighting customers, market leadership. And Class certainly was, as its own entity, focused on pursuing other growth opportunities to increase its addressable market. Inside the HUB family and together with HUB, there's significant upside for both businesses to work together and absolutely focus on the core business of Class being NowInfinity and the Class wealth administration capabilities. Absolutely going to deliver on our commitment to increase customer engagement, provide better service to customers and deliver new opportunities by leveraging the benefits and the capabilities of both HUB and Class. So that's a bit of an update on Class. It's going well. We're delighted with the team and we're delighted with the focus and the reception we're getting from customers and the work that the team are doing engaging with clients and talking about the future and thinking about how we address the market. And of course, the opportunities to continue to deliver or to empower better financial futures across the HUB group and across the Class clients together. Moving on to strategy and outlook. I might flip over 2 slides to show that slide titled HUB24 is well positioned to grow market share. And we've included this slide just as a reminder of the size of the market. And we view the market as actually broader than this and there's opportunities to take technology and increase the size of the market because there's many, many or trillions of dollars of assets in the Australian investment community that aren't administered through any vehicle. Notably, technology has a role to play to make that easier and better for customers. So certainly, in the platform market, as it's measured now -- you saw the awards earlier -- having 5.1%, being the fastest growing in percentage terms, there's a lot of room to move for us to grow in that particular market there. And a lot of upside, which we certainly are aiming to capture. The managed accounts market, we have 17% of that, as we've last done research. I think it was December last year. And certainly, that market is growing very, very rapidly and it is projected to grow as one of the fastest markets in terms of investment management within platforms. FUA [ overall ] market, 9.3% in Class with 30% there. But lots of room and very well positioned to grow market share given the awards, the accolades and our focus on delivering for our customers and certainly working with our talented team. Moving on to the next slide. We shared this slide and we shared quite often about strategic pillars for HUB24. We certainly shared at our inaugural Investor Day back in June. And our ambition to lead the wealth industry as the best provider of integrated and -- intentionally integrated platform, technology and data solutions. And so from that perspective, there's 3 strategic pillars. The first one is about customer value and growth, which is enhancing our current proposition, extending our competitive advantage, extending our lead and growing and protecting that core part of our business. The second one is about building the platform of the future, which is an aspiration, certainly, it's a journey we're on and we've got all the ingredients. I'll talk about that on the next slide. But positioning our business for growth and change and getting ahead of the curve and continuing to disrupt the market with even better integrated solutions. And the third one about playing our role in the industry and collaborating with the industry to build a strong Australian wealth management industry, a strong advice industry, a strong technology background -- backed industry, a blueprint, if you like, for the future of this industry. Given the massive shifts and changes, we have a role to play and we believe that's great for customers and shareholders alike for us to play that role, and we're certainly committed to that as one of our strategies moving forward. If we turn to the next slide. We're building the platform of the future. And unpacking that a little bit more. It's about bringing together the ingredients we've got to meet the customer needs, and we have those ingredients in our stable delivery. We have the HUB platform, the Xplore platform, the non-custodian PARS services, our Tech Solutions segment with Class and HUBconnect and NowInfinity all underpinned by what we call HUBconnect technology infrastructure. Our aim is to provide across those and across even broader integration with other financial services providers and software providers a single view of wealth to meet that holy grail where customers and advisers can see a complete picture of their wealth. One way of doing business, making it easy to do business. There's friction in the system. There's a lot of effort to look at that. When we're doing business, a super deal for one of our customers, we're certainly heading in that direction. And I think it actually helps us grow our business and retain our customers and also deliver and delight our customers. Efficient access to investment manager IP. That's manage portfolios. That's for modern platform. And flexibility for advisers, of course, reporting, and insight. So there's a lot of work underway. We'll keep doing that. As an example, on the next slide, we might go to of the manifestation of that. If we move on to the next slide, empowering better financial through innovation. power HUB24 Present is a reporting and a client review tool that we launched to market over the last few months, which we're getting great feedback from. It's actually running off that HUBconnect technology infrastructure I pointed to on the previous slide, which can take data from multiple places. We're building out the data into that. So an adviser in real time dynamically show a client a review of their situation across more and more data moving forward. And it's actually saving time for advisers. It's currently inefficient and time-consuming for advisers to get all the up-to-date information they need for their clients. HUB24 Present is an example of a single view of wealth for assets on the HUBconnect infrastructure which we're building out, and advisers are really, really giving us great feedback and we're committed to enhance that even further. The case studies are showing advisers saving time. And we've got feedback that it's one of the best things we've done in recent times. So really excited about how we're delivering on that goal to build that platform of the future. HUB24 SMSF Access, I talked about it a bit earlier. That's HUB24 launching a combined product called SMSF Access that's targeted to clients. It might have been cost prohibitive before. They might choose to have a simple self-managed superannuation solution. In recent years, there's been views that you need to have $0.5 million of assets before it even makes sense to have a self-managed super fund. We believe that's not the case, and there's certainly great use cases for younger ages and younger balances with the benefits you can get from portability in having their own funds. So we're launching another choice for the above called SMSF Access. It does leverage cloud technology and the HUB technology together in a bundled product offering that will offer a lower cost solution and hopefully grow the market for SMSFs and grow the platform as well. So it's a joint delivery from the HUB people powered by some of the Class tech that we're taking to market in the next couple of months. And the third example of how we're delivering on our role and our vision through innovation, HUBconnect Licensee, absolutely in market, we've gone beyond round 1. We're in the process of signing up our clients to the production live version that's happening, and we're extending the capability there. It's aimed at helping licensees manage their compliance objectives, helping them get ahead of the curve, detecting issues before they occur or preventing issues before they occur, but certainly allowing them to focus on their core business. And we'll certainly be driving -- delivering out other versions of HUBconnect Licensee with data insights for individual advice practices. But it's using AI and machine learning to really gather multiple sources of data and revolutionize the way that licensees can manage and monitor their obligations and work with their advisers to really focus on customer outcomes, aimed at making advice more affordable and accessible and aimed at helping HUB24 play that role in the industry, and certainly, good for customers and great for the overall business. So what does it all mean? If we move over to the next slide, the last slide we've got here in terms of an outlook moving ahead. HUB24 is going to continue to invest for ongoing success. We will continue to invest and lead in product and service innovation and customer service excellence. We're doing that from a great platform, from an expanded footprint. We've some great accolades and award with an absolutely available market for us to keep growing in. And so we'll continue doing that. We'll continue developing our platform of the future, completing the Xplore product integration whilst we work with the broader industry to find new opportunities and advocate for the industry and for building those foundations. We're going to pursue growth. We're looking forward to working with our existing customers and relationships to finance professionals to provide better outcomes for them, to grow the business and leverage those relationships to develop some new opportunities. That includes looking at expanded product features across segments. So the pieces we picked up from PARS and Xplore and sort of the product functionality there, obviously, across the border business. We've talked about that for some time, and that's happening as we do that integration. For example, we introduced Chi-X recently and some other investments are on the menu. We'll keep doing that as we continue with that integration, leveraging -- democratizing high -net-wealth features for other clients as we build out the platform. Developing new market opportunities, looking at group capabilities. And of course, we'll continue to evaluate growth opportunities in the wealth industry to lead change beyond just organic opportunities as and if they make sense. It all adds up to continuing strong financial results. We absolutely hope to and are aiming to leverage our operating scale further as we did this year to drive shareholder value. We increased profitability and enhanced margins and strong cash flows and deliver the synergy benefits and EPS growth from the strategic transactions, both Class and Xplore. So we have updated our platform to -- our target, we've revised it. Unusual for us to do this, but we did have an interesting year last year. So the statement is $80 billion to $89 billion for FY '24. And remembering that in the second half -- well, effectively, end of the first half of FY '22, we are up $1.9 billion in terms of market movement for the second half, 5.4% of that right away. And so we finished the year down, but we've started to see some recovery. So we revised our target based on the market movement, not based on our view of the business, what's growth or what's pipeline. In fact, the pipeline is incredibly strong. And we're excited and investing in growth, have appointed a Chief Growth Officer and looking at expanding our sales team as well. So revised the target to $80 billion to $89 million for FY '24. And as always, we always aim to do the very best we can and take the best opportunities we can. And traditionally, we've overshot. But there's the revised target there. We're working very hard towards that. Okay. So thank you very much. I'm happy to move to questions with Kitrina and I. We've got about 17 or 18 minutes left, if we'd like to do that.

[Operator Instructions] Your first question is from Bob Chen from JPMorgan.

Just a couple of questions for me. Just looking at that update to the 18th of August of $54 billion of FUA, can you give a little bit of a breakdown on how much of that is driven by the markets versus sort of net inflows? Just given that ASX is about 8% since the 30th of June, I just wanted to unpack how much is actually driven by inflows.

Do you want to go with that, Kitrina?

Yes. So broadly speaking, so we're generally about 60% to 70% correlated with the ASX 200. And so when you look at that, you can take the market growth that has occurred over the last 6 weeks. And broadly speaking, you'll end up 3/4 of it coming from the markets and roughly about 1/4 of it coming from net inflows.

The flows have been healthy, Bob, just to answer that. And so -- and we've got -- we're looking forward to seeing how that plays out. Obviously, everyone is interested in what the market sentiment is. But flows have been healthy in the first 6 weeks.

Great. And then just in terms of that pipeline for FY '23 in terms of the mix of advisers coming on board. Like is that a sign to pick up -- only because it looked like they have slowed down a little bit in Q3 and Q4?

I think the interesting thing is -- you can always talk about the number of advisers or we can talk about the productivity of advisers. And we're seeing the productivity of advisers or what you might call about -- the penetration of their accounts increasing year-on-year. So there are more and more valuable advisers. The numbers are going up, but that's in the context of other macro events. We do have access to relationships with the licensees, representing -- I think it's about 75% of the advice market, with lots of room to move there. So Bob, we are absolutely focused on leveraging the relationships we've got and the growth as well. So whilst that number is happening -- has shifted, we've had a large flurry of people joining over the last couple of years with the shift towards unaligned advice models. It now about leveraging that. So the indicator would be the penetration and the throughput of that. And as you see -- we mentioned that on our Investor Day. We showed how the flows have come over the last few years. So that's how it will bear out.

Okay. Perfect. And then just a final one, I mean, in terms of the cash margin. Obviously, you've been a big beneficiary of the recent interest rate increases. Any updates on how your discussions are going with your banking relationship for later this year?

Now Bob, you said 2 questions. That's 3. But that's okay. Look, we are in the final stages of signing off on a particular direction there. And so we expect that in the next few weeks. We are pleased with the outcome and all the planned outcome. But we'll update the market as appropriate, probably in our quarterly if that's done in the next few weeks. So we're pretty well settled on what we're going to do. We're in final stages. We've just got to push through that. And at the right time, we will advise on that. So the conditions are better than we thought a year ago, but we'll talk about that later.

Your next question is from Scott Murdoch from Morgans.

I'll just ask 2 quick ones in the interest of time. Just on the head count growth, there doesn't look to be a massive step-up in the core business in the second half. Just interested in your thoughts, Andrew or Kitrina, of where you actually sit with head count. Have you now caught up to the investment you needed in the business? Or you're now ahead around head count growth?

I'll certainly start there. In terms of the executive table, I've got one last recruit to do. Haven't done that in terms of Chief People Officer. But in terms of the fixed cost of an executive team, I think we've got a great set there. And so most of the cost growth is likely to be variable cost in terms of sales or customer service based on growth or scale of the business. So I think we've made a great investment. We did have a lesser increase, and Kitrina will unpack that, because I think we talked about that a few months ago. So I think we're pretty well set other than variable cost, Scott, or a change in strategy. But it also depends on acceleration and pace of growth in the business. But I think we're well positioned now. Kit?

Yes. So I think, yes, definitely, we would have seen a higher growth in full year '22, as we mentioned, than we would expect to see going forward as we're still expecting to deliver -- with all market conditions being favorable or normal, we're still expecting to be able to deliver operating leverage and improvements to the margin. So you'd expect to see -- there still will be some head count growth next year or this year, full year '23, in line with the net inflows coming in, but it will be lower than you would have seen in '22. So if we're -- in the core business, if you're at the -- close to the 500 in the core business, you can probably expect to see anywhere around the 15% to 20% growth in head count in '23.

Okay. And just a quick one on Class. I think you've given some early indications of what you want to do there. But just interested in that fourth quarter. Obviously, some initiatives probably put in place before your ownership. Just interested in that account uptake and growth system versus -- what is happening bottom up in Class?

We certainly see some growth. So I think -- I couldn't actually say because we acquired the business, we got to [ unpack ] their system growth. I certainly think our acquisition of the business has been well received by customers alike and there's an excitement out there about getting -- Class focusing on its core strength moving forward. And so that will help. But there has been system growth in the SMSF space. There is talk of -- I'm not sure whether assets have done that and can't guarantee. But there was some statements about applicability of SMSFs that were restrictive assets -- I think looking at unwinding or have unwound. And we're seeing in the media a lot more younger people opening up self-managed super funds. So if we talk about that side of Class, there is growth. There's an understanding of the applicability of those solutions, and certainly we intend to leverage that. So you're quite correct. It had a great quarter. I think that is impacted by our acquisition. But it's really system growth, and Class being well positioned to take that growth as we intend to move -- do move forward.

Your next question is from Siraj Ahmed from Citi.

I'll ask 2 questions, just first one in terms of the flows to date. So Kitrina based on your disclosure that sort of implies with $1.1 billion, $1.2 billion net flows, which is -- I think same time last year you were at $1.8 billion. Just keen to understand, are you still seeing -- you said it was healthy. But are you still seeing an impact from this whole market movement?

Sorry. Say that last part of the question again, Siraj?

So it's $1.1 billion this year, which was $1.8 billion, I think, the same time last year. So it's still down year-on-year. So just keen to under whether you're still -- further still being impacted by adviser efficiency and things like that?

Yes. First, it's a little bit higher than we've given you, I'll answer you there, Siraj.

A bit more than -- a little bit higher, but yes.