Tatton Asset Management plc (2T7.SG) Earnings Call Transcript & Summary

We do have the presentation up on the screen. So yes, thank you for joining us, everyone, today. And we're here to hear from Tatton with their interim results, which were announced yesterday. In case you haven't seen it already, we did publish a note, which actually went out this morning with our latest views on the business. But for now, the management team will take us through the presentation, and then at the end, there'll be the opportunity for Q&A. So please hold your questions through as we walk you through the presentation, we'll take them at the end. Otherwise, over to you, Paul Hogarth.

Sure, Hannah. Just from a logistical point of view you're controlling the slides.

I am, yes.

As always.

You're very far down the end of the table, but we can sort of see.

You want me -- let's see if we can change the view.

We can certainly hear you, which is the important thing. Keep zooming.

Keep going?

There we go. I'd stop there.

Stop there? Right, good, okay, very good. Thank you, Hannah. If I could just move to Slide 5, please. Just a brief introduction to the team, obviously myself, Paul Hogarth, Chief Exec. On my left are Paul Edwards, our Chief Financial Officer. And on my right, Lothar Mentel, our Chief Investment Officer and CEO of the Tatton Investment Management business. And just a quick review on Slide 6 of our divisional structure, just for the new people. On the list, obviously, you've got 2 divisions, the investment management piece, which is the Tatton DFM, and the IFA service which is growing nicely. And that has grown, obviously, over the last 10 years, we've got our tenth anniversary in January 2023, competitively priced at 15 basis points and working in line with all of the IFAs within the U.K. IFA Wealth Management arena. On the right-hand side, you've got the IFA Support Services business, which is basically Paradigm Consulting, which is IFA support services based on Paradigm Mortgages, which is our mortgage club and all of the membership in there are directly authorized. So we have no responsibility for the [indiscernible], and we consult with them to keep them on the right side of the track with regards to regulation. More on that later. So if we can move over to Slide 7, which is the -- sorry, Slide 8, which is the key highlights. Obviously, really, really pleased with the last 6 months. It's amazing really what we've achieved in what are very difficult circumstances. Our flows are record-breaking. We've been actually growing at GBP 150 million a month, so GBP 907 million of new money, which is fantastic. And also, we've done really well on the mortgage side as well with record number of completions. So that reflects obviously an increase in revenue and profitability, which we're delighted with and the progressive interim dividend announcements of 4.5p payable in December 16, up 12.5%. But our key metric is very much about the AUM, and we've added in the AUI and the AUI is for the 50% purchase of the 8AM Asset Management business that we've concluded. So now as at the end of September we're GBP 12.3 billion, which we're obviously delighted with. And I'm happy to say that those flows -- positive flow rates have continued as well into October, November. So if we do look at the number, now we're actually sitting at GBP 12.9 billion. So an exemplary set of numbers. If we can move on to operational on Slide 9. We can see that not only have we got those great organic flows, but we're actually seeing flows coming from one of our new-ish strategic partnership arrangements with Fintel, which is just coming up to its first anniversary. Now we've got GBP 300 million from the Fintel firm from a standing start, which we're very, very pleased with. Further, we'll increase our engagement. I think that comes down to the fact that the MPS will, it's just growing it with maturity. If you look at any of the other asset management businesses, the only place that they're growing is MPS. And of course, with us being the market leader there, we're getting our fair share of the spoils. We've probably got about 13.9% of the DFM MPS market, and we obviously want to at least maintain that and grow that if we can. And so actually, we got over 806 IFA firms supporting us on a weekly, monthly basis. That's up 14.7% and reflected in the number of accounts, which now stand up over 100,000 accounts. So you can do the math to work out roughly where we sit, it's round about 130,000 per account that we have, sure we're bringing DFM to the masses really. So very much the quest that we set out to do in the years coming to pass. Happy to see, as they say it in the mortgage business. And Paradigm Consulting have done their share as well, maintaining their position and having those record completions, which gave us this stunning 6 months performance. And we'll have a good look -- outlook at the mortgage market because obviously, we don't expect that market to actually continue at that kind of level. It's likely to come up and we'll talk about that shortly so you can see what our thoughts are on that. But it's only sort of 10% of our total revenues. So we certainly don't expect any sort of real changes to our numbers, and it won't push us away from our numbers that we've been forecasting. So as I said, good quarter, if we move on to Slide 10, basically our little bragging slide. But what we're showing there that despite all the chaos from March 2020 and my goodness, there's been plenty of that, we've grown our AUM from GBP 7 billion to the GBP 12.9 billion in 2.5 years. So testament to the model, testament to the business, testament to the consistent investment returns that we have and also a testament to the way the MPS world has matured. I'll pass you over now to Paul who will take you through the numbers in greater detail.

Good morning, everybody. Yes, the last 6 months have been really tough market, I think for most businesses, more specifically in the wealth management sector. So everything in life is relative and so consequently, we're delighted to see our revenue grow by 15% and clearly supported by increasing AUM over that period. And specifically those record flows Paul referred to in the highlights of GBP 907 million in typical wealth management assets or fund management sector. You have seen businesses have been affected by both redemptions, but also negative markets as well. We can't escape negative markets, but our flows have been very strong. And then add to that the record mortgage completions as well, that's what's been driving that top line. And obviously we're really in an inflationary environment, but we're also delighted to see our adjusted operating profit increase in the same rate and maintain our margin at round about 50%, which is a number that we're looking to maintain as we look forward as well. I'm confident in that. We've got our normal standard adjusting items of share-based payments, amortization, sort of noncash amortization under the exceptional items, which relate to the acquisition at 8AM just before the interim period end. But what I'd probably sort of highlight there is the adjusted fully diluted valued earnings per share, so just under 13%. The first 50% of the acquisition cost of 8AM was us placing of 1.1 million shares. And so that's why the growth rate is slightly lower than the adjusted operating profit. And as Paul said earlier, we've just declared a dividend of 4.5p. When we go back over the last 5 years, we've consistently grown our dividend in the same rate as the growth of the company. We've been paying 70% of our earnings as dividend, and we split down 1/3, 2/3 basis, and we expect that to continue. So please go to the next slide, Hannah, please. And just talk about the balance sheet. We've got a really robust balance sheet. Our net assets increased just under 15%. The only real change on this balance sheet is related to the acquisition of 8AM. So we've always mentioned that we're capital light. We sit between the platform, the technologies and that's where the technology spend is with the platforms and also with the IFAs and that's where all the client relationships are and sits in between those 2 positions in that supply chain, providing this service. So like I said, the only real change is in tangible assets, a GBP 7 million acquisition price for 8AM and obviously, the deferred element of aging non-current liabilities. We've got GBP 21.6 million of cash on the balance sheet, which is a nice segue into the next slide. And you'll see that GBP 21.6 million is generated from cash from operations GBP 7.3 million, GBP 5 million of dividends paid, which relates to the final dividend on March '22. Clearly, that will be lower in the second half of the year, about GBP 2.7 million in relation to that 4.5p dividend. And then our normal tax payments on account. The acquisition-related costs, and that includes the underwriting for that share issue as well of GBP 0.5 million. Clearly, that's not going to be there in the second half of the year, and you'll see the relatively modest amounts of CapEx. So when you look to the second half of the year, you'll see a really strong cash performance from the group. Moving to the next slide and just take a little deeper dive on our divisional performance. Tatton's grown really strongly. As I said before, that GBP 907 million of flows is a record. It averages about GBP 115 million a month. So if you look at the prior year, it was GBP 652 million, where it's typically around GBP 100 million of both even in H2. Last year, it was at very similar level. So a significant increase in this first 6 months. The revenue growth of Tatton, obviously as you can see, 17% growth. We also got affected by the negative or the volatile markets and the negative market performance of GBP 905 million in that same period. It's probably just worth pointing out that the timing of that was very unfortunate because[indiscernible] is specifically very bad in April, May and June, slightly recovered in July and August and then also deteriorated again in September, and that's clearly within our, first half of our year. If that markets would have just been neutral, adding GBP 0.5 million to that top line of revenue, and it's clearly GBP 0.5 million to operating profit. And you've seen growth north of 20% on margins, north of 61% as well. Paradigm, there is clearly, the growth in revenue and operating profit not quite as strong as Tatton, but still 8 and 7, -- 7.8% is modest, but still very good. Clearly driven by those mortgage completions. And as Paul said, clearly in the second half of the year we're not anticipating it to be as strong. And when you look at the cost base in each of those groups, is broadly in line with what we anticipated as well. And then on the next slide, we have a bit of an outlook for you. So on the left-hand side of the last slide, it kind of reiterates the -- everything I've just talked about on -- in terms of the first half of the year. As we look at the second half, we remain cautiously optimistic. We're looking at GBP 100 million per month or slightly north of that, fantastic in terms of new flows. Obviously, the markets are baked in for half -- H1 book. To be honest, and since recovered a little, we probably got like about GBP 400 million of that market deterioration. And then from a Paradigm perspective, the mortgage bucket does remain uncertain. That said, there are significant opportunities out there. Historically, we've grown from new firm growth, there's lots of 5-year mortgages that are now coming back into the market. So there will be lots of new remortgages and product transfers as well. And our Consulting business, which is a compliance business is obviously robustly consistent, not particularly driven by markets. And then from an inflationary standpoint, of course, inflation is here to remain certainly for the second half of this year. We anticipate increasing our salary increases probably broadly in line with the prior year. We had a bit of structural cost increase in our ACD costs, but that's relatively modest at about GBP 200,000 per annum. So what we're actually giving guidance on is keeping our margin broadly to remain strong and just over that 15%, which is what you see this first half of the year.

Thank you, Paul. Hannah, if we could go to Slide 18, that would be great. Thank you. So looking at the road map to growth that we gave to the [ city ] round about 18 months ago now, we said we'd grow from GBP 9 billion to GBP 15 billion. So where we sit as at November 2022, we're now at GBP 12.9 billion or 65% of the target. So well on the way to the GBP 15 billion. I think for us, it sounds that we should get there with just pure organic growth that's expected to come through over that period. And we don't necessarily need the help of any M&A activity to get to the GBP 15 billion mark. That said, we'll continually look at the marketplace to see if there is any activity, which we can add on. But we'll only do that if we think it's complementary, takes us into a new group of IFAs and obviously is earnings enhancing as well. So I think it's a lovely position to be in that we don't necessarily need to have an M&A activity to get to the GBP 15 billion mark. So it's a good slide that we're happy to continue to update. . Next slide, sure takes us through the 4 fundamentals. And really now looking to have a look at the recent set of reports, which show the State of the Nation with regard to DFM MPS. The platform report, which was issued in August 2022 calls the DFM MPS, the fastest-growing segment of the wealth management arena. And it's continued to -- it's now sitting at GBP 81.4 billion, and we've got 13.9% of that, but is expected to continue to grow at a rate of 25% per annum to GBP 200 billion over the next 4 years. We generally can see that happening, and we would obviously look to maintain our market share and if at all possible, then look to extend it. But you know, if we were to maintain our market share then grow to GBP 200 million, then you're obviously looking at GBP 27 billion, GBP 28 billion of AUM and in 4 years' time, which would be fantastic. So we're really pleased with the growing maturity of the MPS world. We've got lots of new entrants and we're still competing against the usual cohorts and the usual people. We're very happy with our price at 15 basis points. We see no pressure whatsoever in order to changing that, to reducing that. We are very happy with that 15 bps. Most people are coming down towards the same price, some have got underneath us and offered at a lower price, but we're not seeing them actually moving forward and being competitive currently in the marketplace. But obviously, we'll keep a watchful brief on that. It isn't just about price, it's about long-term consistent investment returns. And we're heading to our 10th anniversary in January next year, and we have delivered consistent long-term investment performance over that period with our portfolio also performing nicely. We never want to shoot the lights out, but we're nice and consistent and steady, and we avoid any of the horror stories that might be out there. So added to the family we've got that wider spread of IFA partnerships that we've talked about and we'll come back to later. I think our landscape is pretty strong. And when it comes to service, servicing our existing IFAs, we have a very, very strong culture in service. It's what we're all about. And it's something that from the top we lead with as much service support as we can to the IFA sector. We understand then we champion the IFA sector on a daily basis. And I'm very pleased to say that the IFA sector continues to go from strength to strength despite, obviously, the headwinds sitting around that. So all good there, I will touch on retention shortly. On Slide 20, you can see how the assets have grown from GBP 25 billion DFM MPS to 2017 at the bottom to GBP 81.4 billion now and then obviously expected to go to GBP 200 billion over the next 4 years. We still believe that IFA is [indiscernible] platform, so platforms have grown from 450 to 680. It's going to be a higher number than that now with the market recovering to some degree. And we expect that to go to roughly GBP 1 trillion over the next 4 years, 4 or 5 years. So you can see that, that is growing. I think the interesting piece for me there is even with the growth of the DFM MPS, it's only going up by 1 single percentage digit per annum roughly, yearly gone from 8.5 to 9.7 to 10.1, now to 12. It's still a long, long way to go. And obviously, your next question will be, well, where is the rest of the asset sitting? And we believe it's in multi-asset, multi-manager, so still sitting in the IFAs own advisory models or their own funds of choice and some in their own discretionary models as well. So there's plenty to go out and we are hugely excited about the growth of the sector. So the next slide is really just to depict how over the period the flotation has worked for us. So when we floated in 2017, all of the support we had for the Tatton investment business resulted from Paradigm firms because, obviously, that's where we incubated the whole concept and built up the proposition. And then, of course, from 2017, we've been attracting or allowing, obviously, I'm sure non-Paradigm service to utilize the service, and we've been marketing hard to those firms. And as you can see, that's been very, very successful over the period where you can see the AUM now is in favor of the direct firms, which is incredible. And also, if you look at the number of firms supporting us, if you look to the far right there, the pac-man there is really squeezing the Paradigm firms further and further out which is exactly what we wanted to see will come on in terms of the next slide, which shows you the saturation or penetration levels that we've got to put both the Paradigm firms and the non-ones and this is an old slide which we continually update. We believe on average each firms got roughly GBP 40 million that's addressable on platform. We've got 3/4 of that from the Paradigm firms now because we were with them the longest. And we've got a quarter of that from the non-Paradigm firms at GBP 10 million or so. So a similar bit of arithmetic, besides a few, could reach the same penetration or saturation level with the non-Paradigm firms that you have with the Paradigm firms, you've got GBP 12.4 billion of AUM that is addressable or could come to us over a period of time if we were to be as successful on a penetration side. Of course, the plan is to continue to build the number of firms supporting us up from the 8 or 7 that is currently, but also with our relationship management team look to drive the non-Paradigm firms average higher than 10, and that's been going up gradually, if you look back at the chart. So that's a lovely position to be in. And then if we look to Slide 23, we're looking at the strategic partnerships and who we're partnering with. So we believe that 50% to 60% of the IFAs that partner with the -- within the top 10 U.K. distributors. We would -- as you can see in green, we're partnering with 6 of those now, which is pretty strong. The ones in red we just will never get to work with because they have their own version of testing within their operations. So they're fully integrated machines. And then the ambers ones are ones where you can over time, be able to build our relationship and getting to true partnering if it's at all possible. Somebody like True Potential, of course, obviously, offer their own services and so do others. But they allow us to at least have a chance to get some business from. So when you look at the strategic partnership arrangement, we got plenty to go at. We've seen the returns that we've had from both the Paradigm and the Tenet and now the Fintel one over the first 12 months. And of course, the sales teams are working to extend them out actively. We have 7 people in the sales team. Director -- 1 sales director with 6 direct reports. And I'm happy to say that they're not running up to capacity, they can still take all leads. But of course, if we were -- if we did want to extend, and we saw the right individual, and we wouldn't hesitate to add that in, bringing in, we are we're very happy with the 6, so we've got them, and then they've got relationship managers behind them. And also where then Lothar and the team in the city, we have investment specialists that can actually come on and help the [indiscernible] actually convert member firms across the networks really, really well. So on Slide 24, we're not resting on our laurels. This MPS world is definitely the place to be, but we've got to keep evolving it. And not every IFA wants to completely outsource the whole arrangement and then they just disappear completely out of the fund management proposition. So we have 3 different segments that are available to those firms. A firm can have a co-branded Tatton MPS, so we can be co-branded with that particular firm. We've got 9 arrangements there. We've got just short of GBP 600 million that's come in from that. And that's really good. We're happy to do that. Doesn't cost us anything. It's still at 15 basis points. Costs us very little if anything to co-brand but it gives the IFA a feeling of ownership, if you like, that glue, which means that retains the assets even more sticky. You can move on to that to go completely white label where the IFA has its own naming of the portfolios and we drop out to become the [indiscernible] side. We've got 6 arrangements like that, and we've obviously want more and that's totaling 612 AUM. And then we have 1 where we go stakes further where the IFA was considering having some discretionary fund management permissions with the regulator. We thought that was a step too far. But actually thought, actually it'd be really good if they could join the investment committee. So we offer a joint investment committee with us having control. Nothing can be purchased within the portfolios without our approval, needs to keep that watchful brief on that, but at least they feel part of the investment approach. And we can be fiscally attractive to some degree for them. So that's how we've evolved. Slide 24 shows you the sort of landscape, if you like, and where we are. Sorry, 25, beg your pardon, Slide 25 shows you the landscape of who we are competing against. I mentioned earlier that there are lots of new entrants, but we do think that we'd be still competing against the names. I'm happy to say the brands evolved and has grown. And we're getting our fair share, and we are invited to tender alongside some of these others on a regular basis and you get lots of phone calls coming into the office and with new leads to the IFAs. On Slide 26, we've shown our attrition rates because IFA consolidation is ongoing. And here, we've actually lose about 2% of our to FUM to IFA consolidation. It's not a big number. It's something we should keep an eye on what's your brief, if you like. But there is a little bit of attrition, but I think there's good things and bad things from IFA consolidation. I think consolidation actually sets for the IFA ability for valuable businesses for every person that wants to sell as a person, IFA wants to buy and extend. We'll continue to see how we can help them grow because that's our job as an IFA support services business and the champion of the IFA sector. So it's not something we're concerned about, but something we actually keep an eye on, as I said. Slide 27 shows our strategic direction, which is very much organic, organic and more organic. But obviously, we're working with more and more strategic partnerships as and when we can. And then a little bit of M&A if we could find one that suits, I have to say, with the sort of the growth of the MPS sector or the maturity of the MPS sector. Our people's aspirations are a little bit higher on valuation, so we need to keep an eye on that. So as I said, mostly organic and maybe potentially the odd bit of M&A moving forward. And then on Slide 28, just to cover off Paradigm Consulting and Paradigm Mortgages. Obviously, the last 6 months have been really strong. We expect Paradigm Consulting just to be steady away with work done on consumer duty. And if we look at the mortgage division, obviously, it is predicted that market will slow and we believe it could slow to the rate of 10% to 20%. As I said earlier, it's 10% of our revenues, so about 10% or 20% of the market. The market isn't going to push us away from our forecast. And we also believe that mortgage advisers are so resilient, and they're already turning their attention to product managers. And there's a huge fixed rate maturity amount that's coming over the hill, which we will be working with over the next 6 to 8 months. And obviously, then we'll continue to build a number of firms in there to try and counterbalance any downside on the mortgage market. But we can't sit here and say that we don't expect it to come off to something we already do, but as I said we'll push it off course. With that, I think, it takes me nicely over to Lothar to take you through the investment, please.

Thank you very much, Paul. Hello. Here's my first slide, just to reiterate or refresh our certain USPs. So we started out 10 years ago with a challenger proposition coming in at an unrivaled 0.15 DFM fee, as we've heard from Paul and there's some others moving down then. In a way, it's still important, but other things have become just as important sort of being on 20 platforms. Therefore, platform agnostic is really important. The noncompete position that we have with advisers is very important for them compared to some of our competitors. We are a pure investment manager. We will never be able to take on a client directly, even if they wanted to. And the breadth of our offering means that they won't have the problem of being accused of show warning clients into something that might not be suitable with the 45 model portfolios that we have an offer, we cover very, very wide base. So for example, I believe the ethical portfolio approach is not something that we've just started when it became fashionable 2, 3 years ago. We've been doing this for 7 years in the portfolio space and are therefore, probably the longest ones to have done that with the longest track record in the portfolio space. Client retention, well, we adopt the reliance on others approach, which means that it's not the IFA who's carrying the risk and signing up the clients as the agents and client approach has it. We have an individual investment management agreement with each and every underlying 100,000 accounts that we have, which obviously is comforting, more comforting for the IFA because it is that classic relationship as you have it in the private banking space. . And then last but not least, what isn't the key skill of an IFA business to produce, we call the mail mergers or sending out a lot of letters to all their clients if they don't want to continue managing the portfolios themselves, but they point us, then we help them with that bulk migration support. So next slide, a quick overview of our overall proposition. So on the right-hand side bottom, obviously very important that the 20 platforms we're on, of that, the risk profile is and being on there, which is so important for the IFAs in order to document the suitability of what they advise their clients on. And then the model portfolio is there on the left across 5 different styles, across 6 different risk profiles. So that's quite a comprehensive matrix there. And if that isn't enough, then we can also offer a sort of bespoke service, particularly for clients who have for historical reason cherished holdings or need a specific pension drawdown arrangement, we can do that through our MPS based bespoke service, so we call that the BPS service and for IHT purposes, the Tatton AIM portfolio. Next slide, please. So this is how our assets under management spread across all the different categories with the exception of [indiscernible] the BPS and AIM. But as you can see, whether it's negative percentages doesn't mean that, that area is shrinking, everything is growing, but it's just in the relative proportion of the overall 100 it may be going down. So we can see that the tracker and the hybrid of tracker and active are still the strongest growing which is interesting really because the actively stock selecting funds have had a major comeback this year in the market as we've seen that massive rotation out of growth, more towards core and value. And therefore, I think that's still a bit of remnant from the previous momentum driven on performance era. We're also seeing good growth still in ethical, but that's come back, come down, might be and may well be driven by there just being less of a performance advantage because, let's face it, ethical is a restricted investment universe, which very much is -- has got a growth tilt, even though we've diversified that as much as we can. But the performance, therefore, this year, they are, well it's been lagging when it was massively ahead in the years before. And then last but not least, our Tatton Global that we introduced in 2020 is also picking up IFA share now. So it was right to have launched that. It does have following in the U.K. with investors who want to be more globally focused rather than having the traditional sort of 30% of the equity exposure still in the U.K. Next slide. So on the performance side, on 5 years, the table and on the right-hand side, we're just depicted the Tatton Hybrid which shows exactly where we want to be performance-wise, i.e., there and thereabouts where our peer group is just sort of a smidgen better recovering more of the cost that retail investors obviously incur through the whole value chain. Where we've got that 1 outlier there at the top, which normally we wouldn't like so much to have such an outlier, that's simply because our global equity portfolio is driven by a global cap weighted allocation. So as I mentioned earlier, that only has 4% in the U.K., with the U.S. has been so strong over recent years. That obviously produces stronger performance than the average classic peer group in the U.K. So on the next slide, we have got the 3 years. And there, we're showing the whole range of the Tatton Ethical. And you can see that it's really carrying through in the year with the global asset allocation. But again, we are very happy with where we are relative to our peers, if you look at the table. And the same is also true. I haven't got it all on here, but somebody mentioned, yes they were but 1 year. The 1 year also looks really strong, the only 1 that we have slightly underperformed the arc here, there's the defensive area because we didn't hold quite as much cash as some of our competitors may have. So that's something to recover and we're in the process of. So on the next slide, we are showing the, communication is increasingly important and very much appreciated by advisers and clients alike. And so we're very much reacting to that and producing a video education of our market update video more or less every week. And that's really been a very strong addition to our communication, which otherwise centers around the Tatton Weekly that goes out every Friday. And of late, obviously the Ethical has been particularly important because there was so much debate and discussion in the press and therefore, it's very, very close to our heart to make sure that investors who come in on our ethical portfolio do understand what you can. But also what you cannot promise from this sort of exposure and doing that very much through the communication. Now on the next slide, we don't tend to talk very much about the IT that we have got internally, but increasingly, it is creating quite a strong additional proposition to our investment proposition in that. It makes it really a lot easier for the adviser to sign our clients that are on any of the 20 platforms. And then seeing them in a consolidated view through our portal, but also signing up new clients by generating very personalized investment proposals, which are usually only something that you would get in a bespoke or private client, private banking arrangement. So that's proven really, really valuable and also very safe. I mean, we have invested massive amounts of effort into making it as safe as possible from a cybersecurity point of view. So with 2 factor authentication being the must, I'm feeling quite comfortable that we've done what's the top end of IT ability. .

Thank you, Lothar. The final slide is just our summary slide, which we've been through. So I think, Hannah, we were probably running for questions.

Thank you. Let's have a look -- right. What was the reason for the drop in Paradigm firms from the peak of 182 in September 2020 to 168 now?

It's just a little bit of consolidation, I think. You've seen some firms retire, some have been consolidated. Nothing more than that.

What share of the overall platform market do you think MPS could reach? Is there a natural cap?

I don't think there's a natural cap as such. But you know, as they say, we expect -- I think we're happy with the forecast that they are saying we'll get to over the next 4 years of going to GBP 200 billion. So we'll probably be about 25% of the amount. But there's no reason why that couldn't continue from there. But obviously, it's hard to look further out than 4 years.

Thank you. Have you thought about offering your portfolios to fintech D2C companies, which service consumers directly, and if not might this be a future growth path to a younger client base?

It's a very good question. No, I mean, to refer, we're very happy with being distributing our products or our service operation from -- to the IFA sector. If you look at everything we do, we're very IFA centric. So we have no thoughts to go direct-to-consumer and it's -- so B2B for us.

And what about your efforts to attract a younger client base?

Yes. So really, that's a job for the IFAs. So the IFAs are the ones who've got to make sure that they attract the younger members of the family. If you look at the average age of the IFAs, roughly 56. And if you look at the average age of their clients, funnily enough, it's 56. So they know that they have to improve and get to know the children who are moving forward into that space. So it's something that's then they're doing. Lots of IFA businesses are bringing their own family and to work within the practice because of the consolidation valuations on that. So again, those will be working with the younger generation moving forward. And I think post-COVID, a lot of the IFAs are working pretty well digitally these days and have extended that footprint on the back of that. They're not just stuck and looking after people in their own area, they can go out of area now, but they will definitely looking to engage with the next-gen.

Thank you. Our research has forecast a drop in the second half revenues compared to last year. Is this what -- is your own thinking aligned with this?

I think that just reflects the markets effectively. I don't think -- what we're also saying, first of all, we're seeing a certain market recovery, and -- but we're cautiously optimistic with this thing, what we're making.

As ever, are you seeing any pressure on your pricing power, I see that nice graph you showed, but you're way ahead in terms of assets and the lowest on price, but are you seeing anything to stay ahead of the crowd?

We're not seeing any pressure on price whatsoever. We obviously ask ourselves all the time, is the price right. If we drop the price will we get more? We don't think we would. We think prices at 15 bps is the industry price that everybody will settle towards. Yes, there will always be an outlier either up or down, but it's not something we are concerned about, and we're very, very happy maintaining the 15 bps.

Can you give an update on the current growth trajectory of the Fintel and Tenet deals?

Yes, of course. On the Tenet deal, it's obviously going back a longer period. We're now in excess of GBP 1 billion. I think we guided the market that we do GBP 1.2 billion to GBP 1.5 billion. So we should easily do that and extend as we work with more and more of the Tenet firms. And with Fintel, I think we can be looking in time to get to GBP 1.5 billion, maybe over the next 3 to 4 years. We're already at 300. So again, lots and lots of firms to go out there. I think I'm happy with those numbers that we've given.

Acquisition prices, there's more competition out there to acquire assets, operational leverage. Given your attractive margins, is there an argument for increasing your land grab at this stage?

That's again a very, very good question. I think we are on a land grab. So we're pushing hard to get as much new business organically as we can. Everybody's incentivized and pushing and pulling in the same direction. When you look at the maturity of the MPS, obviously we said, that naturally pushes up people's expectations of valuations. And we did lose a potential M&A target to another party recently because they were prepared to pay more than we were. So unfortunately, you got to push and pull and all those things mature and the market goes as strong as it does and people's expectations go higher and therefore, pricing goes higher. So therefore, we -- as I said earlier, we don't need to do M&A. We'll only do it when we see that it fits and we can buy it at the right price.

Can you explain, and perhaps leading on, can you explain the rationale and potential of the 8AM acquisition?

Yes. The rationale first, so the rationale of the 8AM was one the routine that we knew, and so we've known that for some time. But it's a different way of managing the portfolio. Obviously, it's very quant or AI driven. So it takes us into whole new breed of different IFA sector. So it's complementary. It's the same price as us, so you can see that it's attractive from that point of view. So all in all, we quite like the structure of the deal. The fact that it was 50%, so it wasn't much of a risk proposition. We're not integrating it currently. We're just leaving it, sitting as an outlier. We'll look to integrate later, probably when we buy the second half, when we get to that level. It's got a earn-out proposition as well. So they've got to perform to reach the -- that proposition. We're very, very pleased with it to-date. We expected I think we guided to getting GBP 800 million or up to GBP 1 billion now. And we look to see and help them move that flows forward and utilizing sort of [indiscernible] stuff that we can get to them such as the cost of the [indiscernible] through and any support we can give them to help them grow faster.

What is the main glue in your IFA relationships?

I don't think there is 1 main glue. I think there's a number of things. So I'd call it 4 points really. I think, obviously, price, the consistency of the investment returns, that's so vital. And then how you service and how you communicate with those IFAs. I'll put the 4 together. We really don't understand what they want, and we have a tremendous culture within the business to support the IFA and service the IFA, which goes back to one of the previous questions, have you considered going direct to consumer. So we do understand where we sit. I don't think anybody serves the IFA community better than we do. I'd just say, the culture is from the top right the way down, that [indiscernible] and I think, comes on board, they want to see [indiscernible] we usually set how high would be the bigger concept there.

Good way to treat your clients. What keeps you awake at night?

Not a lot these days to be fair. I am always tired. No, I don't necessarily -- there's nothing that we're concerned about, it's obviously a solid question, is one that I would ask myself. But no, there's nothing that keeps us awake at night. I think for us, it's all about execution of the plan. It's about where we can take it. We can see that we are very fortunately in the right place in this super growing marketplace. And we just need to maintain that and move that forward. And we obviously enjoy doing what we're doing. And no, I have nothing that stops me sleeping at night.

Well, that's it from the questions. And I think your performance really has been super heroic. I'm sure that's what you're referencing with the picture behind you. But a few comments on that as well, so people appreciate that. But thank you all for that presentation, and we look forward to hearing from you in 6 months' time.

Thank you, Hannah. Thank you everybody. Best of luck. All the best.

Thank you. Thank you everybody. Yes. Bye-bye.

Thank you. Bye-bye.