HUB24 Limited (HUB) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the HUB24 Limited 1H FY '23 Results Call. [Operator Instructions] I would now like to hand the conference over to Mr. Andrew Alcock, Managing Director. Please go ahead.

Good morning, everyone, and welcome to our first half financial year '23 results presentation. Great to have you with us. I'm absolutely -- certainly pleased on behalf of our great team here at HUB24 to be able to present some really solid results to the market this morning. We absolutely work very hard and are very focused in HUB24 and committed to what we do. We really believe in the value we're creating for our customers and shareholders, and it drives us to absolutely try and challenge ourselves and deliver in the marketplace. And we do that, if we turn to the next slide again. And as you will all know, we're about empowering better financial futures, together. And now more than ever the together is important for us. Given we've made acquisitions over the last couple of years that bring into our stable a whole lot of capability that allows us to continue to lead in the marketplace, create change, disrupt the market, provide better solutions and opportunities to extend our lead from a market competitiveness point of view, but more importantly, to create opportunities for customers and unlock value for them real opportunity and real value based on us working together across our capability in the business, which is core to our overall strategy. But of course, working together with the broader marketplace, fund managers, financial advisers, licensees, other technology providers. We certainly believe in an integrated open architecture world. That's what we're about. And we think that's underpinning the great results we've got today, and we'll do so more and more in the future to build a longer-term sustainable growth pattern for the business. If I move to our financial highlights slide this morning, it is great to be able to talk about these numbers. From a revenue perspective, the total HUB24 Group had $138 million, up 69%. And our underlying EBITDA just shy of $50 million, but also up 68% on first half FY '23. Breaking that down to the Platform, it's $102.7 million for the Platform, up at 33% and the underlying EBITDA there of 38% of $41.4 million. And Tech Solutions, having had Class in our business for a full 6 months for this half. Our Tech Solutions revenue increase is obviously large from prior to that acquisition of $33.4 million and $10.5 million, underlying EBITDA. Leading to a statutory NPAT for the group of $15.5 million, and that's up 85% on the prior corresponding period. The underlying NPAT up $26.6 million. Again, a large increase, 87%. And underlying NPAT is taking out some transaction costs for -- or integration costs for the Xplore integration, which I'll talk about later and some investment in what we call -- sorry, HUB24 SMSF Access, which we're very excited about. And there's some acquisition and amortization out of that, which is the difference between statutory and underlying NPAT but great stats there. Our dividend, we're really, really pleased to be increasing the dividend. It was $0.125 last half, and I think $0.075 prior corresponding period, up 87% at $0.14 fully framed, with a diluted EPS of $0.189 per share. So great results overall and Kitrina Shanahan, our CFO, will talk through the detail of this a bit later on in the pack. Some of the other key metrics here, our total FUA was $73 billion. FUA having finished at 31/12 at $55.8 billion. Now up at $58.5 billion. Of course, there's some market movement there. We've tracked just below market movement in that first few weeks of the year. So that will help everyone think about the flow patterns to date and our PARS FUA pretty stable at $17.2 billion but all in all a very solid result. And it's great to be able to say that once again, that's consistent with our track record. If I move on to the next slide. We've got the 5-year picture there in terms of our funds under admin, being a core revenue and profit driver of the business. And that's a 5-year CAGR of 60%, which is, we're very, very proud about. And the chart there has the portfolio admin reporting service or non-Custody admin there as well as the core platform. On the right-hand side, we've broken down the revenue, so you can see it a bit differently to our normal presentation of the slide. You can see Tech Solutions and Platform revenue and Corporate and Licensee. And that's in the bars on that particular chart. So of course, licensee we sold Paragem to Diverger at the end of 1H '21. So you see that dropping off there. That's the blue that disappears. But you also see the yellow coming in at the end of the chart, which is the acquisition of Class. So giving a picture of the revenue change in the book mix or the footprint, but clearly, the -- you can see the continuity of the trend in Platform revenue being the dark blue and how that is driving results and coming through consistently in the business with about $138 million on revenue altogether and the EBITDA line, the group EBITDA lines there just shy of $50 million, as I said earlier, for first half FY '23, and you can see the trend back there 5 years. So great growth over 5 years. We hope to continue doing that. Certainly, our focus on our strategy, our execution, our client service is intending to keep delivering in that way. If we have a look at the actual market share, and growth in market share for the HUB24 platform business and also for Class. So the growth in the Platform Custody market, we've gone up from 4.6% market share 12 months ago or as at September, that's the latest data available, it does lag 3 months. So in the 12-month period to September '22, our data, which came out in early Jan. It's up 1.1% to 5.7%. So consistently increasing market share in that order every year. We are the seventh largest platform provider by market share. Certainly, we're delighted to be the fastest growing in percentage terms in our net inflows as a percentage of our FUA is the fastest growing in the market, punching above our weight. And range #1 now after 2 quarters in a row for the inflows into the business. Still ranked #2 on an annual basis. But for the last 2 quarters, we've had the highest inflows of any other platform in Australia at rank #1 for that. Again, the CAGR there is there, the Platform Custody FUA is 52% over 5 years. The earlier slide was that including PARS of 52% for the platform over 5 years. In the Class space, Class has a market share of 30%. That's been fairly stable. The business is ticking along and growing up, and there's been some growth since the start of the year as well, ranked #2 in market share. So a really strong market position. And since 1H '18, there's been 26% growth in Class. I'll talk a bit more about Class later on. But in terms of being a very welcome and complementary business in HUB24 very strategic for us, absolutely delighted with the business and what we're seeing happen there in our plans for the future. Okay. Turning on to the next slide. We're really, really pleased to have been able to announce this morning. I think we've got it in line with the release from Investment Trends that we are rated Australia's Best Platform overall, having achieved the #1 position that was announced this week from the recent survey from Investment Trends. So we are Australia's Best Platform as rated by them, and we certainly believe we're well positioned for future growth. As I said earlier, we've been first for quarterly net inflows for 2 quarters in a row. Interestingly, we're the first for net inflows into superannuation on platforms, i.e., we have the highest level of inflows of any platform in our superannuation product asset, which is a subset of the overall. And we've been first there on a quarterly and an annual basis. And that's been fairly consistent. We do have a large superannuation footprint, and we're growing very steadily. If I expanded that out, if you look at the whole superannuation industry beyond just platforms, you can see the industry funds and public sector. We are third in Australia for net inflows in superannuation behind Aussie Super and Australian Retirement Plus -- Australian Retirement Trust. So a great result for HUB24 there. With the other #1s there on the slide, as I said, the Best Overall Platform, Best Managed Accounts -- Managed Portfolio Product Offer. #1 for -- and that's from Investment Trends. Also from Investment Trends, #1 for Reporting and Online Business Management. They have the results out this week. And in that particular research from Investment Trends, we are first in '22 of 46 categories, and obviously, the platform we're the most #1s in that particular research. So #1 there for those. In terms of the Investment Trends tech report, still #1 value for money, that's a different report. And for Adviser Ratings, Best Investment Options and Adviser Experience and Best Investment -- SMSF Investment Platform [indiscernible] CoreData. So great accolades there are, well positioned for growth given that positioning. It means we're doing something right. We work very hard to do that. And we know we need to keep working to maintain those ratings. But certainly, in terms of thinking about the future, we are leveraging the combined capabilities together, HUB24, Class, NowInfinity are working together to expand the SMSF market with the launch of SMSF Access. We are actually launching it in a more broader launch this week at the SMSF conference. Our team are up there, launching it to a whole lot of SMS advocates being advisers and accountants. And so we're going full swing with that product now. And we really do hope to create another choice and expand the market, i.e., this will create opportunities for advisers to advise clients, they didn't have solutions for previously as well as provide a lower cost simpler solution to the marketplace. Again, talking about how we work together in our group to reduce friction, innovate and create new opportunities. We are obviously continuing to invest in the platform with enhancements sort of efficiency and choice and flexibility. You may be aware that in December, January, we launched our ESG ratings capability on the platform. So advisers can actually look at the investments for their clients and get rankings and ratings on how those rate in terms of ESG categories to help support choice for consumers who are looking at utilizing their preferences and their investment capability, Enhanced Model Portfolio capability, and we've got ongoing enhancements HUB24 present, which I'll talk about a little bit later in the pack. Of course, we continue to progress Xplore Wealth migrations, including the discontinuation of the Superannuation Administration business, which was noncore to us and we purchased Xplore. That's substantively complete. We've been doing SFT migrations on to HUB. And we've done quite a bit in the first half of '23, and we've got some more to do this half as well. So that's progressing really, really well, positioning us for the future. If we go to the next slide, what we'd like to do is talk about our pipeline and how our adviser base is working to help us harvest the opportunity for that future growth. So we presented here in the slide some analysis of our half yearly FUA net inflows from 1H '21 through to 1H '23 and to demonstrate that -- roughly, we're getting recurring flows from existing relationships in that bar chart each year. So HUB24 has reliable recurring flows from advisers who use the platform because of our great service and product features. It's reliable. In fact, advisers generally transition their clients over roughly a 6-year period to the platform. So you get ongoing growth for a long period of time with relationships you are in. But on top of that flows from existing relationships, we've highlighted the flows coming from existing licensees. We might have an agreement with a national licensee, but we may not have actually had flows coming from some of the advisers in that group. There might be 2, 3, 100 advisers in that group, and not all of them are using HUB. But you can see every year in that middle blue color, we are actually leveraging those relationships and getting a percentage of flows from advisers from which we have relationships with their licensee that have yet to use the platform. So we're reliably and consistently getting growth there from those relationships. And that's why we invest in our key accounts process. We work strategically with licensees. We're building license tools like HUBconnect licensee, which I'll touch on a bit later as well to help with advocacy in that space. And the dark blue is new licensee relationships. You would have noticed in our release, I think we had 57, if I'm wrong, I apologize, 57 new licensees in that order signed up with HUB24 in the first half of this year and over 200 advisers, which is our ongoing trend for half. So there is some analysis on our recurring flows from existing relationships and showing how well we're doing with growing new relationships from existing licensees and new ones. On the right-hand side of the slide, to color about in a bit further, we've got 15,500 licensed financial advisers currently in the Australian market. We have access to or relationships with 71% of that market when you consider that there's about 7,500 advisers. That's the bottom half of that donut, 7,500 advisers, who are covered by a license agreement that HUB24 has with their licensee who are not yet using our platform, which speaks to the chart on the left about our success in actually growing or building relationship with those advisers. So we've got access to those 7,500, but currently, we have 3,600 or 3,700 active advisers using the platform. That's about 23% of the market. So ranked #1 on many measures, but only accessing 23% of the advice market with the ability to access more than 71% in total of the overall advice market. A great opportunity for us to keep working hard on. Also, the average number of advisers is growing consistently. It does move around. But if you look at the long-term trend and it's in our analyst pack, we're still on track. We're getting about 200 advisers each half. That hasn't slowed, and that all goes well for actually getting new advisers on the platform and getting new flows on top of the recurring annual flows we get from existing relationships. As a testament to how well we're doing with those relationships, though, in the last 2 years, the average adviser funds under admin on the platform has grown from $10 million to $15 million in funds under administration. So not only are we adding new advisers and seeing that work for us, we're actually seeing the average FUA per adviser increasing. So we're doing better at working more strongly with those advisers and picking up more of their book of business over time. Having said that, there's a long way to go and a large opportunity because the industry average is roughly $50 million to $60 million per adviser, we put $50 million here on our analysis but actually I think it's potentially higher than that. The industry average FUA per adviser is in that order, and we've got $10 million -- we've got $15 million as a market leader. You can do the mathematics I'm sure to think about what would happen if you go up to 50% of that market or even higher, what is the latent opportunity there with the relationships we've got? So we're doing well, growing our share of wallet from existing advisers. We're doing well growing advisers. We've got these relationships. There's a great opportunity in pipeline for us. And of course, the demand for advice is continuing to grow, that's creating demand for advisers and demand for our products and solutions. And we operate very strongly in the superannuation segment, which is systematically mandated by the Australian government and underpinned by SGC increase which will go up as well. So really well positioned with our relationships and our strategy and the latent opportunity and the market environment for ongoing growth. Moving on to Class. I'll quickly touch on Class, which, as you know, we've had for the whole of we bought in February '22, and we've had it in these results for the whole half. Absolutely going through a process of consolidation and setting up for growth and looking at innovation. But on the consolidation front, we have a new experienced leadership team in Class. We have actually had more change than we expected when we purchased the business, but that's great. We've got a great experienced team in the business. Now we've got a CEO and a good stronger focused on different business lines in Class. We've strengthened our customer engagement greatly in terms of the way we engage with customers and service and education. We've enhanced that, and we've been delivering product enhancements to improve experience and drive efficiencies. Going through a period of time where we're consolidating the position and setting the foundations for growth. We have a whole new realigned sales team that went live in January as a result of actually putting in a new sales head or distribution head inside Class. That sales team is now coming online. So we have an enhanced focus on sales and growth than the previous ownership in the business with that realigned distribution team. We've seen some uptick in the first few weeks of this year as well in terms of accounts on Class. And we're certainly working on, as I said earlier, working together in the market. We're certainly enhancing strategic partnerships to 2 HUBs to 2 Classes. We're looking at strategic relationships with Class and how we can work better together to create better solutions for customers. I think that's really sensible to work with industry leaders and build the solutions for the future and grow business. And we're enabling innovation by leveraging the Class and NowInfinity capability. With HUB24 as one of our first group-wide initiatives to launch SMSF Access, which I mentioned earlier, has been publicly launched -- to a broader launch this week at the SMSF conference. And innovation would be the third phase there. We are continuing to leverage Class capabilities to build that platform in the future and a single view of wealth on HUB24, very, very key to our strategy in acquiring Class, given the amount of data the Class has to produce SMSF accounts and launched with the [ ATO ]. They're gold in that data in terms of thinking about providing whole of wealth solutions for consumers and making the world a far better place in terms of people being able to think about their retirement. And that's feeding into -- we're going to be feeding to more and more to HUB's single-view of wealth portal. And collaborating with industry participants, working across the industry to deliver education insights and best practice. Taking a leaf out of HUB's book with Class working that way more and more in the future as well. Delighted with how the business is going, more to do, and we're really excited about SMSF Access in the future of that. Of course, I'm going to turn to people for a second. And it's great to be able to talk about the wonderful team that I work with, and we work with here at HUB24. We couldn't be successful and be focused on customers if we didn't have great people. And we are certainly focused on attracting and retaining talented people. We do that through our flexible workplace practices and policies, prioritizing employee well-being and support and online tools. We've relaunched some online support tools and services for employees that really are cutting edge and save the market in terms of giving them access to third-party health and well-being and all sorts of other great resources in the community. We invest in leadership and so forth and working on talent and graduate programs. We actually have a STEM Returners program, which is seeking to look at returning people who might have left us in the past and want to come back to our great business in terms of that, and that's having some great success as well. We invest in our people and community very much so we want to create the right environment for people to thrive as we have, and it's really vital to move ahead, can't underestimate that. We've hired Amy Rixon, and publicly welcome Amy here to the business. Amy is our new Chief People Officer. Great to have Amy on board to help work with me, the team and the rest of the HUB business to build on our great foundations of culture and help us continue to grow. Over 700 employees, 736 now, 65% dedicated to innovation, product and customer service, which is key to us, and our employee engagement is 72%. Our values are there again, and we really do believe in that strongly doing the right thing, working together, having a great client focus, innovating certainly passionate and certainly wanting to deliver excellence and go above and beyond. And of course, we are supporting the community more actively. You would have seen in our results for the full year '22, our statement about ESG and the activities we've got there. We have a Sustainability Council up and running. We're certainly working through corporate giving partnerships, employee voluntary programs and so forth and making great strides there on a number of ESG fronts and focus areas, i.e., the example of us having launched ESG ratings on the platform to help advisers is a great example of us leading in that space and certainly working through cyber and other areas, diversity, inclusion and environmental areas, now ESG focus areas. So great to be able to talk to you about that today and how important that is to HUB today and our ongoing success. I would like to hand over to Kitrina Shanahan, our Chief Financial Officer, who is going to give us a run through our financial results. Good morning, Kitrina.

Thank you, Andrew. So I'm going to start off with a quick snapshot of the group revenue and underlying EBITDA mix, which is calling out the Platform and Tech Solutions segment contributions. You can see from the data in the middle that the Platform segment remains the main driver with 75% of the group revenue driven by the platform segment and 25% from the Tech Solutions segment, which now includes the acquisition of Class. Platform underlying EBITDA was $41.4 million and Tech Solutions was $10.5 million. The slight difference between the total for the group and the Platform and Tech Solutions is the Corporate segment, which includes interest income offset by group overheads and the underlying EBITDA for the group -- the corporate segment was negative $2 million. You can see in the donuts in the chart that the Platform segment, 97% of the revenue is driven by Custody and 3% is driven by non-Custody. And on the Tech Solutions side, you can see 80% is driven by the software subscriptions and 10% by document sales and 6% by HUBconnect, et cetera. So then moving on to the next slide. We have the group financial results. And you can see the strong growth metrics, the strong growth across all the metrics. Operating revenue and expenses are both up 69%, with group revenue being $138 million, operating expenses being $88 million. Underlying EBITDA has improved to $50 million, $49.9 million for the half, which is up 68% on the first half of last year. The underlying EBITDA margin and the cost-to-income ratios have remained relatively stable with the underlying EBITDA margin being 36.2%. You can see in the graph on the bottom right-hand side, that when you look at first half '22, the underlying EBITDA margin was 36.4%. And then the core businesses have delivered -- Platform has delivered $11.4 million of underlying EBITDA and Tech Solutions has delivered $12.7 million. And then the corporate area, a negative $900,000 for costs. That would take the underlying EBITDA margin for the group from 36.4% to 38.4% prior to the alignment of the Class capitalization policy, which is a $3 million on the right-hand side of that graph, which is at the upper end of the disclosures that we put in the Q2 market update is still in line with those disclosures. And so you can see the group underlying EBITDA of $49.9 million in that graph on the right. The fully franked dividend, as Andrew mentioned, was $0.14 for the half, which is up 87% on the prior period on the first half of last year. And then the earnings per share of $0.1889 per share is up 59% on the same period. And so then if we just move to the next slide, we've got the Platform segment results. And so you can see that the total FUA has grown to $73 billion with $55.8 billion at the 31st of December for the Custody FUA and $17.2 billion for the non-Custody FUA. The Platform revenue is up 33% to $103 million operating expenses in the Platform segment up slightly less than the revenue, which is up 30% delivering a strong growth in the underlying EBITDA of 38% to $41.4 million for the half. The underlying EBITDA margin in the Platform segment has improved 1.5% on pcp up to 40.3% this half. In the graph on the right-hand side, you can see the walk of the various movements for the FUA. You can see that we have the $5.8 billion for the underlying continuing business. We had the $1 billion -- circa $1 billion for the Xplore Super Admin business, which is largely discontinued now, and then there was some positive market movement of $1.3 billion in the platform and in the non-Custody segments. So then when we move to the next slide, we're continuing with the Platform segment results. And you can see the last 5 [ tabs ] the underlying EBITDA margin, the underlying EBITDA in dollars revenue and expenses. And so you can see at the bottom of the graph in the bullet points underneath the Platform underlying EBITDA from a dollar perspective has continued to grow every half over the last 5 halves, growing to $17.4 million in first half '21, growing to the $41.4 million this half, which is a 53% 5-year CAGR across that part of the business. And the underlying EBITDA margin is improving from 39.7% first half '21, growing to 40.3%. The drop in the second '21 reflects the low interest rate environment at that point in time. And then you can see the RBA rate increases since then has strengthened the underlying EBITDA margin and driven the revenues in that area. When we move on to the next slide, we're continuing in the Platform segment, and we've got the composition of the platform of Custody FUA. So you can see in the donut on the right-hand side, this is where the Xplore Super Admin business has largely been completed with -- on the Custody FUA side, 85% is now retail clients, 15% is institutional clients. You can see the revenue for the first half does still include 1% from the Xplore Super Admin business as some of the SFTs were in December. You'll see that reduce down to 0 in the second half of this year. When you look at the revenue margin composition in the bottom graph, you can see that the revenue margin has improved from 32 bps at full year '22 to 37 bps this half. I'll talk a bit more about that on the next slide. But you can basically see that the institutional margin is slightly lower. It's lower than the retail margin for institutional at 16 bps this half with retail at 41 bps. From a underlying EBITDA contribution, they broadly delivered the same underlying EBITDA contribution as the servicing levels for institutional clients and the average balances are different to the retail part. So then if we move on to the next slide. This is where we're talking about the Platform revenue. And you can see the bottom right graph, we've got the walk for the Platform revenue margin. Second half '21 was 34 bps coming down to 32 bps in -- across the whole of full year '22, which reflected the Xplore part of the portfolio coming in. And then this half, we've got the 5 bps increase from the higher RBA rate, which, as we've talked about before, mean that we're at the upper end of our cash management fee and driving 37 bps in the Platform revenue margin. And then we've had very little admin fee margin compression this half, which has also contributed to a strong revenue margin, and we've had very stable trading volumes and no movement in the revenue margin for trading or admin fees. Then when we move to the next slide, we have the Tech Solutions segment. We have a quick snapshot of the Tech Solutions. As Andrew mentioned earlier, Class was acquired in February '22. So when you look at first half '22, we've only got the HUBconnect part of the business there. And so most of the growth in this part of the business is driven by Class. In the chart on the right-hand side, you can see that the Class normal -- the normal part of the Class business contributed $12 million of underlying EBITDA. There was $2 million of cost synergies following the acquisition of Class, which included the removal of listed entity costs, and we did a restructure of the Class business in second half '22. And you'll see the $2 million incremental cost synergies there, you'll see a bit of an uptick in that as we head into the second half and get another 6 months' worth of cost synergies coming through. We've also got $1.3 million that we've called out for HUBconnect uplift. So this is an investment in the HUBconnect infrastructure and technology that's been booked through expenses, not capitalized on the balance sheet. Examples of these costs include the present feature that Andrew will talk about a bit more when we get to the later slides. But we've got the present feature, which is built on the HUBconnect data and technology stack, and it supports the advisers that are using the HUB24 platform, so very complementary services there. We've also scaled the HUB24 licensee reporting and dashboards for a licensee to use. Again, that's building on the HUBconnect data and [indiscernible] but again, is supporting the flows that we're seeing come through on the platform side of the business. And then just to round out the graph on the right-hand side, you can see again the $3 million of Class capitalization policy alignment there. So the -- pre the CapEx change, the underlying EBITDA margin in this segment was 46.6%, coming down to 31.4% after the $3 million of capitalized software change. Then if we move to the next slide. Here, we have the group expenses of $114.5 million, which is the total statutory group expenses included in the P&L. This includes $88 million of operating expenses that you would have seen in the group's underlying EBITDA presentation. The $88 million of operating expenses is up 69% on first half '22 that you would have seen in the earlier slides, and it's up 25% on second half '22. And the main driver of that is employment-related expenses with employee expenses growing $25 million up with -- as Andrew mentioned, FTE growing 36 -- FTE from second half last year growing to 736. Also included in the $114 million of expenses is $4.4 million of share-based payments related to the employee [ shifting ]. We've got the $3.3 million of impairment in Diverger and $15.8 million of notable items including strategic transaction costs of $4 million, acquisition amortization of $8.5 million, which includes both the Xplore and Class acquisition amortization. And so then, that's it on the expenses. I'm sure there'll be some questions on that when we move to Q&A. But moving to the final finance section of the slide, we've got the increased profitability where we have a walk of underlying EBITDA to underlying NPAT to the group's EBITDA of $49.4 million includes the $4.4 million share-based payments, which is slightly down on first half '22. It's about $1.5 million, $2 million down in the first half '22 because we have the catch-up of [ PARS ] in the prior period. We've got the normal depreciation and amortization of $5.6 million. And then we've got the underlying NPAT of $26.6 million after tax effect. Then we got a walk from underlying NPAT statutory impact, which includes the $4 million for strategic transaction and project costs, which is largely Xplore integration and the launch of the SMSF Access product that Andrew mentioned earlier. And then we've got $8.5 million of acquisition amortization relating to Xplore and Class., and the $3.3 million for the impairment of the Diverger carrying value. And that takes us to a $15.5 million statutory NPAT, which is up 85% on first half '22. So with that, I will hand to Andrew to run through strategy and outlook.

Thank you, Kitrina. Okay. So if we move on to the first slide here, we've sort of merged our footprint picture and our strategic pillars. I wanted to really give the market and shareholders a view of how our 3-pillar strategy is working together with our portfolio of businesses to create value for customers and shareholders today and moving forward. And so on the right-hand side of the slide, as you can see, the portfolio of businesses there with HUB24 the platform both custodial and noncustodial asset administration. And then you got HUBconnect, Class and NowInfinity, which are really technology and software businesses and product solutions and services in -- are stable altogether are all underpinned by HUBconnect technology infrastructure, which is an ongoing investment and growing and being built out in terms of building that platform in the future but also creating optionality for integrating those components together. It's key to leveraging those businesses together. It's key to building advocacy in the marketplace. And some of the initiatives we've got underway are being underpinned by the investment we've made over a few years now to build that technology infrastructure. And so in terms of that architecture diagram there, we're certainly working towards how we can integrate our businesses with other financial services and product providers across the industry to create great opportunities and utility for customers. And there's 300 integrations or data integrations across the HUB Group with Class and HUBconnect that we are progressively leveraging to provide further -- I suppose, great outcomes for clients in terms of single view of wealth and one way of doing business and so forth. So our goal there, if you look at this picture here and how it's wrapped together, we're looking at that portfolio of businesses and investment in infrastructure that will, hopefully, over time, really change the way the platform industry works. Our goal is to build a single view of wealth for advisers and their clients, covering assets, not just that we administer that are administered elsewhere in the marketplace. One way of doing business, I think, there's so much opportunity for technology to streamline and reduce costs in this industry, and it certainly drives us to deliver and innovate for our customers. Efficient access to IP, that's managed portfolios or investment access and doing that across a range of solutions in the future, flexibility and reporting and insights. So a diagram of the architecture of our business is how it fits together with some of the strategic goals, wrapping it up into about 3 pillars. And our first one is about our core products and services. We absolutely want to continue delivering customer value and growth and shareholder outcomes with market-leading functionality, innovative solutions and driving growth in our core products and services. So that's the HUB24 Platform, that's HUBconnect and that's the Class products as well. We're very focused on the core and delivering growth there because that's key to our foundations for further growth again. But if you add to that and you think about the other assets in our portfolio, there's more to do. There's things that we can use, components in our business to actually add value to that core business as well as grow those other business as well. So we've got a range of complementary offerings that are designed strategically to build growth, not just in the short term, but in the long term and underpin ongoing growth for HUB24. So for example, the acquisition of Class, Xplore, the investment making in HUBconnect. We believe those businesses in their own right will grow and provide solutions for customers that linked back to our overall strategy will also continue to grow and increase the growth in the HUB24 platform. It's about continuing to lead in this industry and have market-leading net flows not only today, but down the track in the future, continuing to disrupt, extend our lead and have long-term sustainable growth for the business and for shareholders. So we work very hard at that. There's a lot to do. We are building the platform of the future. That's our we're continuing to build we call platform of the future. We've been doing that for many, many years now. But taking the acquired capabilities, and that's our second pillar there on the left-hand side, the acquired capabilities in our core businesses and bringing them together and how we can integrate non-Custody with Custody, how we can integrate data to provide insights and so forth. So create value, unlock value for shareholders and build a better ecosystem. And the last strategy there about collaborating across the industry to change the shape of the industry. That's really working with licensees. It's working with regulators, it's working with software providers to build a future industry that's sustainable, that's got great foundations and delivers value to customers and even expands the marketplace. So we do that with HUBconnect, HUBconnect licensee. We're working in the digital space with a lot of other providers, integration across our business with others. We're working on what we call the data access portal, which is really to support open banking and permission-based sharing of client data to provide outcomes in a safe, robust secure way as the backbone of HUBconnect for that future vision as well. So a lot going on there. And as I said, expected to drive growth, not only in most businesses, but to fuel the growth of the platform and to provide more flows than we would get if we weren't investing in these complementary businesses. So really an integrated strategy to underpin growth lead change in the short and the long term and create strategic value across that portfolio of businesses and take the opportunity to grow that we have while we lead the market and continue to lead the market. To break that down a bit further looking at one example on the next slide to give an example of how HUBconnect is helping us do that. You may recall earlier in the presentation, we talked about the recurring flows from existing adviser relationships or how we get a large percentage of flows each year from advisers who had a relationship with for more than a year. And then we outlined the percentage of flows we get from new adviser relationships in licensees that we already have a relationship with. That's a key driver of us investing what we call HUBconnect licensee, which is one example of leveraging the HUBconnect infrastructure and the investment we make that Kitrina has talked about in our financials to continue to extend our market lead. So HUBconnect licensee is about providing licensees access to integrated quality data which is critical for their efficiency, critical for the role that they have to do to maintain and manage compliance, critical to ensuring that Australia has a sustainable advice business that provides outcomes for consumers. So we're providing solutions there by producing integrated data sets for licensees, gathering data from multiple sources, taking unstructured data, i.e., documents, categorizing it using machine learning to create data insights and databases for licensees to make them more efficient but also to help support us in our strategic relationship with group and hence, continue to achieve that growth in advisers from those licensees that use HUB24 today and in the future. That's the essence of the strategy there that we can actually change the industry and provide infraction that lowers the cost of advice and makes advice more accessible, but also grows our core business by building advocacy. So HUBconnect licensee on this slide, in the case of the licensees who are currently using the product, and we've done some surveys with them, they're reporting a reduction in manual tasks or 40% efficiency over 12 months on key compliance and practice management activities. Not only is that actually speeding up our processes and saving them time and money, it's actually detecting risk before and preventing risk before and afterwards and building a more sustainable industry moving forward from some of the issues we've had as an industry in the past. So this is the infrastructure that will support an ongoing -- rebuilding of foundations in the industry using data in the way that it can be. There's 2 more licensees in discussion with us now about implementing that. That will hopefully build bigger and stronger relationships with the HUB Platform overall, and so HUBconnect licensee is working. It's providing insights for licensees and efficiencies for advisers. The slide there talks about how we're taking data, we're extracting it, we're cleansing it, we're producing dashboards and alerts and reports. And letting licensees know where things are going outside parameters so they can take action rather than having to do a whole lot of manual work to do that. So we've only just started there. There's more to do in that space and how we can integrate that technology with the platform, but an example about how our strategy in the data and tech space, combined with our deep financial services expertise with the core platform are coming together to create opportunity and growth for shareholders and customers. The next example I've got there, and I know I have to move quickly because you want some Q&A is on HUBconnect or -- which is connect technology and the data also enabling the platform growth and advocacy with our market-leading reporting service. You'll notice that we achieved the first place for reporting in the Investment Trends report. HUB24 Present, we're continually updating that. We're working very rapidly towards adding our off-platform cash accounts and off-platform assets and non-Custody assets to it as a reporting tool. We've been updating it since we launched it around about June last year. And it really is helping advisers look after customers and reducing report preparation time for review meetings for those advisers who choose to use the tool by up to 95%. Quite simply, it's allowing advisers to talk to customers in their language. You might use certain strategies or languages in your statement of advice. You might call certain investment strategies. You might have different names and labels for them. We're allowing licensees and advisers to tailor this system so they can report to clients in the same language they use in the SOA rather than having to build reports ahead of them. So for example, you might have a what we call a bucketing strategy for those who are approaching retirement or in retirement, where they have a group of investments set aside to create income and a group investment set aside to create capital growth and the licensee may refer them in different names. We can report on those buckets and segments this tool, which is ultimately flexible and dynamic for advisers to change on the platform. Just 2 examples of how we're using the technology investment to grow the core platform and credit outcomes for customers. I'll move on to our outlook slide here. And once again, fairly consistent statements here about our belief in the future in maintaining our leadership position. We are going to continue to invest and leverage the investment we've made to build future scale. We're investing in ops and technology to build that scale of future customer service excellence and certainly want to keep taking advantage of the superannuation opportunity we have in the marketplace to create growth. We're certainly going to leverage the acquired capabilities of the group, not only to grow the businesses we purchased but also to grow the bigger pool and the platform itself and create new markets to innovate as well. We're going to continue, as always, to evaluate strategic opportunities that create value. We're very discerning in that space. But we certainly keep looking if there's a way of actually building out that ecosystem to a little more value. Ongoing innovation, single view of wealth, we talked about that as well and continuing growth and shareholder value, we absolutely expect to keep delivering that. Our Platform FUA target for FY '24 we're reaffirming that at $80 billion to $89 billion for the end of financial year '24. That's Platform custodial FUA excluding the PARS and non-Custody FUA. So once again, a great result from our perspective. We always work very hard. We'll continue to work hard. Pretty pleased to deliver that to the market and happy to open up for questions and answers in the time we have remaining.

[Operator Instructions] Your first question comes from James Bisinella from Shaw and Partners.

Congrats on the results firstly, Andrew and Kitrina. Just in terms of that FUA update at the 16th of Feb, just interested in a broad makeup of market movements versus net flows from that $2.7 billion uplift.

I think I said earlier, James, we tracked which is probably under market movement from the start of the year. So if you do the math, roughly, you'll do the math, you look at the market moving back to that, you'll get a number around about [ 9, 9 50 ] or something like that is how you'd probably analyze that. So let's give you a view of that. Interestingly, in that growth for the first 6 weeks or so of the year, certainly had a seasonally slower January. I think a lot of people were on leave and so forth. But what we're seeing is that our superannuation flows are very, very strong in that as well. And the mix of that is a bit different with the IDPS and nonsuper flows being a bit less than normal, but a great result so far. So that's to give you a bit of an outline there. But strong pipeline and great rationale for ongoing growth moving ahead.

Your next comes from Siraj Ahmed from Citigroup.

Just first, just a follow-up on that. Can I just confirm, do you say $900 million, $950 million in flows, Andrew, in the makeup?

Siraj, I actually predicted that you'd actually pin me down on the number. Look, right about that. It's in that order. If you take -- and we don't normally disclose that to the end of the quarter. But if you back out market movement since 1 January, we've tracked a bit behind market movement. Normally, we correlate a bit differently, but that's a good proxy. So it's a good result.

Perfect. So just, then just thinking of the FY '24 guidance that you've given -- reiterated, can you just help us break down that into market movement that you assumed and flows? Because low end of flows -- low end of the guidance to assume is around $14 billion in flows next year is pretty strong. So just going to understand the drivers there.

Do you want to take that, Kitrina, I'm happy to...

Yes, I'm happy to take that one. So there's obviously, there's a range. We've talked before about there's a range of net inflows and a range of market movements, and then there's the potential for large transitions. So the combination of those 3 things is what gives us the confidence that we're reiterating the market guidance of $80 billion to $89 billion. So you're spot on, Siraj, the net inflows when you do the sensitivity could be anywhere from $10 billion to $14 billion over the next sort of 8 months or so depending on how that net flow trajectory goes. The sensitivity that we put on the market is -- the standard is 5% market movement. Could be up to 7%, 8%, it could be down to 2%. And then there's an assumption around some large transitions. Andrew has talked before about the number of conversations and work in progress as and when any of those come to fruition, we'll absolutely update the market. Too early to say at the moment.

I just ask 2 more. Second one, just into the revenue margin, pretty strong outcome, Kitrina. Can you just give us the exit margin that was there out of the half because your cash margin would have gone down to the new deal? Just going to understand what the exit margin would have been?

Yes. So I won't give you the exact exit margin, but you're spot on the 37 bps for the average across the first half. So the cash management fee was at the upper end of the disclosures until the 1st of December when we changed our banking arrangements. And so just to give you some guidance, yes, it could come down anywhere between 1 to 2 bps following that change in the ADI provider.

And that's just using the standard percentage range of cash on the platform disclosure we made previously about the spread difference?

Yes, that's assuming all things remain equal.

Okay. So it sounds like you haven't seen a big difference in cash balances in that number?

Correct.

Last thing, just into the cost growth quickly. Just, I mean, Platform costs are up 30%. I know your capitalization has gone down, but it seems like you stepped up hiring in the core business. Is there any seasonality in the hiring? Should we think that number of hires comes down in the second half or cost slows? Any insights there would be great.

I might jump in with the, what's happened, what's been going on in the business in, Kitrina, might talk about the future. We certainly have invested for growth, Siraj, again in the half. We saw a spike in superannuation inflows in the business. We absolutely want to make sure we nail servicing. And so that's a great thing because superannuation for us is sticky. It's generally -- sometimes it's of a balance where there's more revenue growth as customers grow, it's there for the long term. But it is a more expensive operating model to superannuation in terms of the rules and compliance and so forth. So we certainly resourced up in our Superannuation Admin space in the half to support ongoing service leadership and the fact that we've been growing there very strongly. But at the same time, we're also investing in process automation and streamlining some of those processes and tech integration for some of the super stuff moving so we expect the ratio and cost to serve to drop down over time as well. So yes, there's been spend in tech and ops as usual because of the growth. Again, we expect that to be leveraged over future periods. And it's for us to make sure we're building a scalable business model as we always do just in time to support ongoing growth. So we're fairly bullish about growth. We've invested for that. That's the call out in the outlook slide at the back there saying we intend to leverage that in future periods. So a bit of a lift up there, but certainly, I think it will pay us back in the future. Kitrina, I don't know if you want to add to that?

No, just in the interest of time for Q&A. I'll leave it there.

Yes. There is also some investment in HUBconnect there in the expense base as well, Siraj.

Your next question comes from Simon Fitzgerald from Jefferies.

Just given the time, I'll ask me one question. Just with regard to the LTI scheme, I understand that the PC 1 hurdle, Andrew, is based on a stretched hurdle for the FUA reaching, I think, $100 billion to $114 billion by FY '24, I think that also includes a non-Custody, I believe. So maybe you can break that down in terms of what the FUA stretch target would be for the LTI scheme in FY '24, based on -- or compared to that $80 billion to $89 billion in the FUA guidance, please?

I can't go beyond what's disclosed in the market. I might take that offline because I need to check what's been disclosed. You're certainly correct in that particular tranche of LTI is a hybrid or a composite FUA target for Custody and non-Custody. And there is a [ weighting ] system in terms of value where the royalty revenue and profit value are in dollars plays that out. So certainly, custodial FUA has a higher weighting, but I don't know if I can break that down any further. Yes.

Okay. Maybe we would take it. I just got one more, if I could ask, please. Just on the PARS business. Wondering whether that's lived up to your expectations. I mean, $2.7 million in revenue, I get it that there's some other elements to it as well. But that's going to really require a serious increase in accounts to be a meaningful contributor to earnings.

Look, I absolutely agree with you that in terms of the looking at turning the dial absolute, but in terms of thinking about the strategy in the future, having a hybrid platform offer across both. And we're certainly not done yet with integrating those data feeds with others. So yes, we acquired Class a year after starting PARS and we're focused on another acquisition, but we have a lot in the can ready to go for that. So it wasn't about, and we've always said it isn't about growing our share of that market, but that market is very small. It's about creating the future operating model that will leverage and provide custodial flows that are far more valuable. So that's our view as you link non-Custody with managed funds and cash accounts and other products in hybrid solutions. And those relationships with PARS are very, very valuable. They're also using the custodial platform. So it's a strategic adjacency play rather than a business unit on its own in terms of turning the dial.

Your next question comes from Kieren Chidgey from Jarden.

Andrew, I just wanted to follow up on a few of your comments around the great success you're having on the super flows. Just keen to sort of get your thoughts on what's differentiating you there? Is it sort of the particular adviser groups sort of who are utilizing your platform? Or is it also a function of sort of the design and pricing of your product there?

It's certainly going to be a combination. And certainly, our business has had great super flows since 2012, 2013 when the product was initially launched into that part of the market. So our focus has been the core ground of the market, although we have -- we are moving up into high net wealth and we've also got some simpler products. So traditionally that's been our heartland in terms of the advisers we have worked with traditionally, although we are extending beyond that. It will be the product design. It's the number of investment options in super that's greater than others. The ability to make it simple and easy for managed portfolios to be used inside super. So it's a whole range of things; products, features, functionality and the adviser relationships, and something we're certainly focused on. Look, others in the market have had a different focus on more high net wealth. It's a different market segment. We're investing in super, as you know, with some core products as well in SMSF Access.

And just sort of the second part of the question was on SMSF Access. Can you just sort of give us a bit of an update on the progress there?

Yes. It's been launched broadly this week. It's been piloted with a few firms. It is something that does take time. There is an accreditation process, a different agreement, some training. It is about helping advisers find customers they wouldn't normally service. But we're really, really excited about. We've got interest from a number of large licensing groups across the country, and we're doing a targeted rollout and training piece. So the products life. We have got customers on it at this stage intended to grow. I think it's the type of solution that you look back in a couple of years' time ago, wow, that was amazing. But it will take time to educate the market and move through and it's about us leveraging our capabilities to build a bigger and stronger market moving ahead. So going well, we're actually enhancing it now and putting in the features to deal with pension and drawdown schemes and so forth. So it is fully featured for all the range of services and SMSF would need within the confines of our IDPS product.

Your next question comes from Nick McGarrigle from Barrenjoey.

Just in terms of, obviously, cash spreads were a big driver of revenue margin being up year-on-year. I think you mentioned 1 to 2 bps of compression next half on the new deal. Can you give us an update on where the Xplore cash sits in terms of the spread that it earns and what the potential is to renegotiate that deal?

Yes. So Nick, I'll take that one. So obviously, we're in the process doing the Xplore migrations onto the HUB24 platform. And there will be an element of grandfathering for the rate cards of the Xplore advisers and licensees there on. And so the -- obviously, the back book, therefore, won't be moving to HUB24 rates in most cases. And then on the go forward, there's clearly individual discussions and negotiations that occur. And so yes, there will be some alignment to the HUB24 arrangements. But no, when you come -- when you're looking at it, I wouldn't be looking at the Xplore platform and saying as soon as we finished the migrations that we'll be moving to the HUB arrangement. I think you should assume that it's taken us to grandfather rates and only upside that comes through once we finish the migrations, you'll see come through as and when.

So is it a matter of, eventually, the migration will happen but it's maybe almost 2- to 3-year view, but the spread difference there, my understanding is Xplore circa 70 bps HUB at the moment, maybe circa 150, so there's quite a gap there. Is it something that will close over time?

It may depending on the utility and the product. So in some cases, people are moving to more functional products, and the rate cards are different in other cases, the grandfather, Nick. So It's not an answer for the whole rump of the business. There is 9 different migrations in that 9 different product definitions. So it depends, and it depends on what's been disclosed in consumer contracts. However, I would think that the fully featured HUB products moving forward. It might be rational for some customers to migrate to them on their own. So there could be a shift towards it, but it is a mixed bag. It's not just a move it all over and all of a sudden, you get the other rate. There is disclosure in the contracts and obviously, regulations around this. So can't give you answer on what -- on how the consumer and the adviser behavior will play out. That depends on the particular client needs.

Maybe just I'll ask one more question. The, just the flow outlook, can you give us an update on transitions in the market or large books of business that might be internally managed or managed on IRS or similarly, not on platform, but potentially what the RFP pipeline looks like? And then in the same context of flows for the second half, are there any potential implications from some of the super cap changes that are coming in at 30 June, like this last time that happened, we saw some interesting adviser activity.

I think there are 3 questions but well done -- well, one subset [indiscernible] I presume. So people are doing reporting using IRS portfolio service. Look, I think technology, and that's our strategy is continuing to create new opportunities and value for customers. That means this is never a steady state. If you can innovate and create utility, then you expand the contestable market that's certainly what we're about. So over time, I expect that some of those non-Custody admin services and others that are using [ RSIPS ] , there will be opportunities to leverage managed portfolios and different things moving ahead. Certainly, there's an active marketplace with large opportunities. We're active in those. It does come in waves, but they do take a long time to gestate. But you do have market that's shifting in the best interest duty and a market-leading platform that can produce efficiency for advisers better outcomes for clients. So we're active in having those discussions. It's not -- there are real live opportunities out there to do that. And quite frankly, as we move ahead in terms of functionality, the gap between some of the other platforms that are yet to retool or innovate makes that value proposition more compelling. So it's the best I can say. It's active, but it's not done until it's done, but we're fairly confident there's some opportunities out there that we'd like to leverage.

And just on the super caps.

Super caps, I don't know that it's actually going to have that much of an impact for our core business. We are typically at a lower average balance than that level. So yes, it may have an impact on certain parts of the business, but I think generally not really. I think we've got a lot of potential growth where our average balances are on and so forth. I think if anything, it's going to create demand for advice, if people need to think about that definitely in demand for advice will create demand for the platform regardless of those rules. So yes, it might soften the amount of money invested in super in the bigger picture, but from our point of view, there's a huge opportunity set we're not up at that level.

Your next question comes from Olivier Coulon from E&P Financial.

Sorry to go over old ground a little bit here, but just on the cash margin, I mean, it seemed like the preponderance of the divergence between consensus numbers and the very strong result that you printed. Can you just comment on where the cash levels are for the half as a percentage of so where in -- where that is relative to kind of historical trends? And then I think you mentioned to Siraj that it hasn't changed much since the half. Is that right?

Yes. So we normally say that the range is between 8% and 12%, and generally, when interest rates are low, you tend to see low balance -- lower average balances, so towards the 8% of the range and the interest increase. People leave more of their cash in so it will trend up. And so since the RBA rate increases in May, June '22, it was, it has ticked up a bit. We were obviously down about -- more about 8% when it was lower and yes, we've seen it tick up. We don't give the absolute number out. We don't disclose that number, but it would be fair to say that, look, if it's ticked up from the 8%, then you can assume that it's been sitting sort of let's call it, anywhere between 8.5%, 9.5% over the, since those May-June RBA rate increases.

It's getting up to middle of the range, but the reason we don't -- we don't disclose for a number of reasons. But to be fair with market movement, it changes every day, it's based on equity market movements. So if equity markets go up, the cash balance goes down. And so it's not helpful to be publishing that because of how it works. And the beauty of our business model is that there's countercyclical protections for up and down markets in the different revenue streams that balance each other out.

Yes. No, that's handy. And just on the employee cost, so far in platforms, in particular, $7.9 million from second half '22 to first half '23. I appreciate it sounds like you did a lot of hiring for Super Admin presumably through the second half '22 and through first half '23, but the cadence of the increase half-on-half that we should be kind of expecting for the second half? Because I suppose that's quite a large uplift do you expect something similar or less in dollar terms in the second half '23?

Yes. So we -- we're absolutely, we've done the hiring in the first half. You would have seen it, and we sort of talked about our FTE rose from 700 to 736. And a large part of it goes into the Platform segment. Class didn't increase its head count because we did the restructuring, and we have the synergies coming through the Class piece. So absolutely, operations would have been the large part of that with sales and tech. They're behind them. In the second half, look, we don't give expense guidance, but we do sort of give a range when we're talking with people and the FTE increase in the second half could be anywhere between 20 and 40 FTE increase in the second half depending on vacancies, phasing, hiring needs, et cetera.

Yes. Okay. Sorry, that's not -- that's excluding Class. Class sounds like it's pretty flat. Is it?

Correct.

It's the whole of that growth would be...

Yes, correct. Yes.

Your next question comes from Dylan Jones from Ord Minett.

I think you just touched on it there at the back end of that question. But just looking around your strategy around Class the consolidating position for growth. What level of investment is required, I guess, to execute on this like -- are you expecting any meaningful investment in cost during the second half? And then, I guess, to what degree might this impact operating margins in the tech segment over the second half and beyond?

I will start. We've actually delivered synergies as per our acquisition rationale. In fact, probably doing better than that. And from that Class has a lot of investment in the business. So it is being getting back to focusing on its core, previously under the previous ownership and structure it was branching out into more of a fintech space and even looking at different geographies. So I don't expect a large CapEx or capital investment in Class at all, if anything, I think that we'd like to get more efficiency out of the business as we build some belts and braces for that foundation to consolidate and grow. So that's our goal. Of course, if there's a value proposition or a business case to invest, but I don't think there'll be anything affecting earnings in terms of extra investment in Class. We're adding back to basics and being really focused on knowing the core of that business. And so I don't think there's any surprises there.

Great. And then just lastly, on the HUBconnect uplift in expenses of about I think $1.3 million. Should we expect a similar amount to reoccur in the second half?

There is an ongoing investment. Some of it we will be some CapEx. I might hand over to Kitrina. We certainly are investing in that space for very deliberate reasons, and it is yielding results. We are winning new adviser relationships on the back of HUBconnect (sic) [ HUB24 ] Present which I talked about earlier and their valuable relationships get paid and that will play out in half 2.

Yes. So I think it's a good question. I -- we've called it out specifically in that area just to help with the unpicking of the Class, the CapEx change and the HUBconnect core part of the business that was in there previously. So we called it out that how specifically to help with that understanding. Given what Andrew said and the value that the HUBconnect data and the technology platforms provide into the Custody platform, absolutely, we would expect to continue that type of investment. And like Andrew said, there will be a mix of expenses and capitalization. So the mix of -- how much do you capitalize in that area and how much you expense? At the moment, I wouldn't expect to see a large -- a particularly large shift in that. So you assume that that's your run rate and that, that will continue given the benefits it drives.

Basically, some of it really is investment in the platform. That presents a single view whilst it's running HUBconnect data. it's an investment in platform reporting, which is winning awards and creating the sales.

Your next question comes from James Cordukes from Credit Suisse.

Just a question, looking at Slide 7, you talked about the 7,500 advisers who have access to the HUB but aren't using it. Can you just talk about what strategies you're employing to try and build relationships with those advisers? Do you get access to them? Are you doing teach-ins? That would be helpful.

Look, it would be the normal activity that you were seeing. I don't want to give too much away because we're very, very good at working with strategic relationships. But we have an investment in [indiscernible] accounts relationship team who work strategically at the licensee level to look for opportunities, to create value for the licensee and their advisers, whether it be looking opportunities to help them implement their portfolios or they've chosen portfolios filers with asset managers. So we do look across the group and work closely with licensee, for the -- and we might look at the different opportunities with different practices in the group and they help us work with those who are looking for a change. So we do -- all look a top-down strategic relationship approach and obviously, a on-the-ground approach with BDMs to do that. So we look at it, we target where we think we can add value for that particular adviser and their customers. And we focus in there, and we've been doing that for some time. And we do that through participating in their strategy days, through running education sessions, through generating leads in the business. And so there's a variety of strategies, but it's something we're very, very good at and focused on.

Your next question comes from Bob Chen from JPMorgan.

I think that will have to be our last one, folks. But thank you very much for staying over and asking questions. Off you go, Bob.

No. All good. Just a quick one on the cost base. Obviously, a fair bit of reinvestment this year. I mean in terms of the composition, like how much of that was for future growth versus sort of maintenance investment back into the business?

Yes, it's a good question. And it's hard to unpick as well because we invest in, obviously, the FUA and the net inflows that are coming in this half, but then we're constantly improving the processes, particularly in scalability, particularly in operations, technology and obviously, the sales team. And so Bob, I can't give you a split to say of that 36 FTE increase, how many of them if you didn't add any more for or how many would you related to that [indiscernible] in the future because we're basically just constantly investing in the growth that we can see coming.

There are no further questions at this time. I'll now hand back to Mr. Alcock for closing remarks.

Thank you, everyone, for dialing in today. We look forward to seeing as many of you as possible in the next week or 2. Thank you for a great set of questions and for your support and interest in HUB24. As I said earlier, it's always a delight to present this business. We work very, very hard for our shareholders and customers and very pleased with the results. Wish you all well, and hopefully, we'll catch up soon. Thank you very much.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.