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

[Audio Gap] Tatton Asset Management, who reported their full year results yesterday. If you haven't seen it already, there is an up-to-date research note on our website, which you can find at Equity Development. But for today, we are going to hear from the management team, who'll take us through the presentation and then an opportunity for Q&A at the end. Please feel free to submit questions as we go through or at the end. But without further ado, I will hand over to Paul Hogarth.

Thank you, Hannah, and good afternoon, everyone. Great to be here with you today. And if I could just go to Slide 8, please, Hannah. And we'll go straight into the key financial and operational highlights. It's obviously, been a stellar year. Really, really pleased with this year's performance, particularly in the latter half. But our key metric, as always, is the funds under management. So now, at the end of the year, we were at GBP 17.6 billion, which obviously was a healthy increase. As I say, some good flows coming in the final quarter in particular. And that has continued, I'm happy to say that once we're now into Q1 of 2024, year-to-date, heading to 2025, we've had a tremendous April, May and June so far. So we can add another GBP 900 billion of flows and a little bit from the markets as well. So, now up to GBP 18.6 billion in total FUM and FUI. So very, very pleased with that number. We're kind of guiding the market to say that those flows have been really strong, as I've mentioned, but because it's over such a short period of time, it's very difficult for us to suggest that we should do that number consistently month in, month out. So we're guiding the flows, the net flows to being something between GBP 150 million and GBP 200 million per month. Also yesterday, we gave our next target milestone to [ the city ]. I'll come back to that shortly, but we're giving you our target for what we'd like to achieve for funds under management over the next 5 years. Couple of other stats just to pull out of that and one page is really the number of IFA firms and a lovely healthy increase of 12.2% there. So just short of 1,000 firms now actually giving business to Tatton Investment Management on a weekly basis. It's lovely to see. And a quick little bit of arithmetic which I think is worthy of a little highlight is the number of client accounts that we have divided by the AUM. When you get the average holder of each account, having around about 140,000 with us per account, which is definitely where we would like it to be. It takes us into the sweet spot of the IFA community, into the mass affluent market, where they play in particular and I think it really had held us in good stead that we allow each one of the IFAs to decide what they would like to put into the Tatton portfolios for their clients. We have no prescribed minimum, but 140,000 coming out as the average. And then the other bit really is the 15 basis points. So 140,000, 15 basis points, it means that each client or each end client is actually getting the full discretionary service for GBP 200 per annum, which definitely ticks lots of boxes in particular, the consumer duty box, which I'll come back to later. So all in all, very, very happy. The other divisions, paradigm consulting, paradigm mortgages did their bits as well, and we'll come back on later on to go through how that split looks and what we think is likely to happen over the next 12 months. But I think I'll do on that one. Hannah, I think we'll move on to the next one. Again, just nice CAGR, 18% on revenue, 22% on profitability. I mean my slide before I hand over to Paul to go into the financials is really our bragging slide, which is Slide 10, which shows you, Slide 10 Hannah, which shows you the lovely trend line of assets coming through under our management and under our influence over the period from inception in '13 right the way through to where we are today, with a few blips in the road, as you can see. But that obviously is the nature of the world that we live in and the markets, but I'm particularly proud of that bragging slide as you see it climb. And without further ado, I'll pass you over to Paul, and then I'll come back later on to talk about strategy.

Okay. Thanks, Paul. Yes, as Paul said revenue is really strong growth, and really good performances from both time and paradigm. We frame Paradigm's really resilient performance this year based on the back of the mortgage market. Administrative expenses, we haven't highlighted these, but they've increased by just over 14% year-on-year. Really strong year for discretionary variable pay linked to the flows and the strong flows that we've had. And plus, we've had some sort of first year costs such as compliance or auditing and TCFD for the first time as well. We maintained our margin at over 50%, I think, which is a strong statement. And then when you look below the margin line, we have some adjusting items. So every year, we've adjusted to share-based payment costs which year-on-year are comparable. The other adjusting item is the amortization of intangible assets, and there's a little bit of detail behind [indiscernible] that around fair value of adjustments on the intangibles, but also release of contingent consideration. The finance income of GBP 640,000 will be closer to GBP 1 million in the coming year and that's all related to income on our -- interest income on our own cash balances. So we're not taking any [ clip from plan ] income which you'll see in sort of the organizations, particularly in platform world. And then moving below the line, our corporation tax increased in line with the increase in corporation's tax rate of 25%. And this year, we paid a dividend of GBP 0.16, which is a 10% increase. And that split historically has been 1/3, 2/3, but this year is the first year where we split it 50-50, which is likely to continue as we go forward. So just moving on to the next slide, which is the divisional performance for Tatton. Clearly here, we've increased AUM, which is a big driver of the strong growth for GBP 3.7 billion. GBP 1.5 billion of that was strong markets in the second half of the year or investment performance and GBP 2.3 billion flows year-on-year. When we split that down to H1, we did GBP 910 million in H1 and GBP 1.4 billion in H2. But actually, the H2 then you can look at that and focus on Q4, where we did over GBP 850 million in Q4, and actually GBP 440 billion in March as well. So a really, really strong end to the year, and we continued that obviously into the first quarter, which Paul touched on earlier. Adjusted operating profit increased to GBP 19.4 million, and obviously, the margin increase, so you're seeing the operational gearing come through within time, which it has done year-on-year, and we'll touch on that later. Moving on to the next slide, the Paradigm. Really strong performance actually. Yes, thanks Hannah. It's really strong performance, with a 9.7% decrease. So you may question why don't consider that a strong performance because actually, the mortgage market actually decreased year-on-year by 29%. So effectively we won more market share by basically increasing the number of mortgage firms that we work with. For the first time on the revenue, the split out, you can see that GBP 2.4 million to the GBP 1.9 million. So relatively modest drop, GBP 0.5 million for the Group and actually is one of the key reasons why the mortgage -- sorry, the margin has actually been maintained at 50% rather than increase year-on-year. Adjusted operating profit slightly decreased to GBP 1.8 million, and our margin also decreased to 29%, just under 30%. Albeit, as we look forward, we anticipate recovery in the mortgage market this year. What we're seeing is an increased level of applications in the first 4 months of this calendar year. Applications are 35% ahead of this time in the prior year. So we expect to be back to that sort of 2022, 2023 level on. On the next page, we then move to the balance sheet, and we obviously have a very strong balance sheet. Net assets of GBP 43 million. We always frame us as being, we're a capital-light business with a high return model. And as you can see, return on capital employed there at 42%. In terms of year-on-year movements, the only really significant movement would be trading on the receivables, where that reflects a strong finish to the year and one month of accrued income, plus about GBP 800,000 of cash not received from platforms as they held money back to the beginning of April, rather than paying it towards the end of March. Other than that, obviously, cash, we can move on to the next slide shortly. But on the right-hand side. Yes. So, on the right hand side, we have capital resources GBP 17.1 million against the regulatory capital of GBP 4.3 million. So when you actually deduct the GBP 4.3 billion from the GBP 17.1 million, that would be our headroom. So, we'd always want to have somewhere between 50% and 100% of buffer. So let's just say GBP 2.8 million, that gives GBP 10 million of essentially free cash. And when you actually [ dump ] the interim dividend, which is highly likely that we will pay, you probably got about GBP 5 million free cash to closing as we look forward to this year. So, moving on to the next slide. Cash flow, very simple cash flow. The GBP 16.9 million, actually is 91% operating cash conversion. Typically, that would be closer to 100%. So when I talk about the increase in debtors, which relates to the strong finish to the year, that sums up about little bit of working capital there. Obviously, the dividend is GBP 10.8 million dividend and a GBP 0.16 dividend over the year that we paid, or actually the last year's final and this year's interim. And then obviously, we purchased GBP 3.3 million of our own shares. Our tax payments and some CapEx gives us GBP 24.8 million. And then finally, on this slide, we just wanted to give a sort of brief explanation of the margin and the trend as the business evolves over the sort of medium term. And historically, we've always given sort of guidance of 1% to 2% per annum. On the left hand side, you can see the graph with the both Tatton and Paradigm and also the Group and how the margin has actually trended over the last 7 years since IPO, actually. And the reasons for that is clearly, the mix, the yield, which is kind of like a price variance and obviously the increase in costs as well. So when you look at the volume, we're guiding at GBP 2 million per annum, you will also get some market return on that as well. And then when we look at the mix, Tatton and Paradigm are 2 divisions within the business. Tatton actually is delivering north of 60% margins. Paradigm is delivering sort of north of 30%. Tatton significantly outgrowing Paradigm. There is a double-digit growth, as you saw in previous slides, and that mix will change over time to effectively make Tatton even stronger and therefore, drive the margin up. From a yield perspective, if you look at the box above the graph, you can see how the revenue yield for Tatton has tracked down over the years. And that's simply because MPS has significantly outgrowing the other types of products that we have. So BPS and some of the funds. And MPS is at 15 bps and BPS is clearly somewhere between 30 bps to 50 bps including the funds. And the cost guidance we're giving is somewhere between 10% to 15% per annum. And ultimately, that will drive the margin as we look forward, 1% to 2%. And then just finally, on the next slide, we just give some brief guidance on the outlook. In the first 3 months, we've had net flows of GBP 900 million. We are giving guidance is that GBP 150 million to GBP 200 million off of GBP 900 million is a really, really strong start for the Group. There's reasons for that. There's a number of new assays where we've had some good market wins. And then, in addition, we will look at Paradigm and I've said earlier, the mortgage market remains uncertain. However, applications are improving. But I think overall, that's about it.

Thank you, Paul. If we can move to Slide 20 then, please. So, Slide 20 is our old chart, which we've updated. Obviously, you can see that the size and the gray shaded area of the assets that are sitting on U.K. advisory-led platforms is now GBP 722 billion. That GBP 722 billion is expected to go to GBP 1 trillion over the next few years. So, we're seeing good growth on platforms. Platforms remain as important as they've always been. So you will see further assets going there. And then, obviously, in the blue numbers, GBP 131 billion is the size of the DFM MPS world now. So that's had a significant increase from the GBP 103 billion last year to GBP 131 billion. And obviously, if you go back to 2017, it's come from GBP 25 billion to GBP 131 billion over that period. So the MPS world continues to mature, continues to gather pace. And again, we would expect that to continue. And you will see GBP 200 billion-plus over the next 3 to 4 years, I'm sure sitting in DFM MPS. There's no better place to be than that. So if you look at our top circle number, we're at GBP 17.6 billion or GBP 18.6 billion. So our market share at GBP 17.6 billion was 13.4%. And that's obviously a number that we'd at least like to maintain. And if we can even stretch it out a bit, then we'd look to do that. But this is still very much a land grab of getting a hold of as much assets as you can, as quickly as you can, and we are flat out to do that. The next slide is the important one, which is our next market target, if you like. And we're saying that we will do a 5-year roadmap to growth rather than a 3 that we did last time. We did GBP 9 billion to GBP 15 billion, if you remember, and came in handsomely above that at GBP 17.6 billion by the year-end in 2024. Now sitting at GBP 18.6 billion, but saying that we would expect to get to GBP 30 billion by FY '29 with our new 5-year target. And we genuinely feel excited about that. We think it's a good number. Can we get rid of that? So we've got this GBP 30 billion number, which we are very excited about. It's a number that we think we'll get to organically. And if we did have any M&A activity, that could represent potential upside as it says on the bullet point there. So the GBP 15 million to GBP 30 million we think we can achieve with our normal kind of run rate, and we like to, if you like, under promise and over deliver. So that's definitely a number that we would look to see by 2029. Moving on to Slide 22. Really like this slide because it shows the Tatton AUM by cohort. If we go back to the firms that joined us in 2013 and 2014, you can see that, that lightly graded or shaded green still has an uptick on it. So it shows how sticky the assets have been and are, and then obviously a sharper increase when you go to 2023 and '24. But I'm really pleased to see that that's actually growing in numbers, but also the value is coming through even from the early adopters, which is great. Slide 23, basically, again, shows the split between the direct firms and the Paradigm firms. You can see the Paradigm firms are now 16% and 84% direct. So the flotation and everything that we've done in the public markets has paid great dividends to see the number of non-Paradigm firms continue to thrive and move up the channel and actually take a bigger and bigger percentage of the overall cake. Interesting stuff on that is as well, you can see that the Paradigm number has dropped, but actually, the actual amount of assets has actually increased per Paradigm firm, which again, I think, is another strong metric for us. We've got our saturation slide on Slide 24. Look further and deeper into that. We've got roundabout GBP 40 million from the Paradigm firms now. And from the non-Paradigm firms, the ones that have joined us post flotation we've had, on average, about GBP 12.6 million. And I'll love a little bit of simple arithmetic says if these are cohorts, which we believe they are, and we can get as close to them as we have done with the Paradigm firms over a period of time, we could unlock GBP 22.9 billion of FUM, which would be sensational obviously. And that number is there regardless of us putting any more new firms onto our books, which obviously we'll look to continue to do. We will definitely want to drive the number of firms up as we have done over previous years. But if we can get more of the share of the non-Paradigm firms, that would be fantastic. And we have a team of individuals who are working away to try and get as much of that as we can as quickly as we can, going back to that land grab point that I mentioned earlier. Slide 25, I think, is really a good one as well. I'm quite excited about this slide. It basically depicts how we've evolved the offering because not everybody wants just our bundle proposition, some want a little bit more privatization or personalization. We can start off just by co-branding our literature with the IFA firm or we can go further and effectively white label and let them have their own named model portfolios that would sit on their platforms of choice. And then at the real top end, if an IFA wants to say to his clients who's involved in the investment committee and the decision-making process, he can join us in that investment committee. Important point to bear here in mind is that we have 15 bps across all 3, and we're not sharing any of those 15 bps. That's all effectively going into the center. But I think the very big thing for me is how much growth we put on over the last 12 months in these offerings. So if you take the co-branded, we've gone from 11 to 23 arrangements and have added GBP 300 million of FUM. On the white labeling, we've gone from 8 to 11, and we've added GBP 300 million of AUM. And then on the AIA, we've gone from 1 to 3, and we've added GBP 200 million. So, this GBP 800 million of flows of that GBP 2.5 billion that we talk about that's come from these arrangements. So we're bearing fruit here and I'm really pleased to see that. It means that the business is even more sticky because those clients -- those IFA clients have put their name above the frame. So it's very much harder for them to not be involved and this would take us out of the equation. But more importantly, we get the asset very, very quickly because if an IFA is going down this route, they tend to want to move their existing assets to us in a block or bulk migration kind of way, as you can see from those numbers. And we incentivize our team to get these arrangements. They effectively get twice the amount of commission or revenue on the back of getting these arrangements, as I say, because we get the assets faster. Obviously, a touch on consumer duty. You won't hear a presentation from anybody in financial services without consumer duty piece. Happy to say that we are in a really good place on this. We have had the right proposition with the right price and we've given good value through the consistent investment returns that we've had from our investment team over the last 11 years. So, I think we have led with client outcomes. We can tick the box for price and value. And therefore, we can rest easy about consumer duty. It's being worked, obviously, to get set up for that. It's been worked for the IFA sector to get us set up for that, but I do think we're in a great place, and we could have a little bit of a tailwind from the potential shift from the classic BPS to MPS as consumer duty bites, as it says on the right-hand side. But I'm pretty relaxed on where we are about consumer duty. We've seen the focus of the regulator being on some very large organizations, as I'm sure you're aware and the same too, obviously, with regards to platforms and other areas. So consumer duty, I think we can rest easy. And then my sort of final slide is on Paradigm. Obviously, as Paul said, it becomes a smaller and smaller percentage of our overall income, but we still love both those businesses. We think Paradigm Mortgages and Paradigm Consulting are vital to the whole Group. Paradigm Consulting is obviously the DNA and where we got the Tatton Investment idea from. And we certainly wouldn't want to see the Paradigm membership being owned by anybody else in IFA land. So we still get an awful lot of intel from them. On the mortgage side, we've got to look at this 12 months and say, yes, not a great time for the mortgage market. But look how well we've done compared to the drop in the marketplace. And the stat that I really love is if you look at Paradigm, and we have now -- we're now responsible for nearly 6% of total U.K. lending and it doesn't poses much challenge. So, it's an easy business for us to manage or administer and as I say, it becomes a smaller percentage of the overall. Our investment case is on Slide 28, which is my final slide before I hand over to Lothar. And yes, just putting some consumer duty ticks in the boxes, if you like, leading market position. It's nice to see that we're still leading the way. We're getting super support from the IFA community single channel, which I think is important. We champion the IFA sector at every single potential opportunity that we have. Paul has, obviously, evidenced the high return on capital and the financial profile and the balance sheet. And I'll let you make your own mind up about the excellent management here at the bottom. So I'll pass over to Lothar.

Thank you very much, Paul. So I'm just going to give you a few more details on the investment business. So in terms of proposition, we just launched a complementary set of funds, multi-manager, multi-asset funds through our Tracker range. That came on the back of demand from the IFAs for a repped version of our Tracker MPS and that's really what it is on the back of the forever falling CGT allowance, which is starting to give problems to large clients' tax-sheltered portfolios. I mean, the bulk of very largest part of our assets under management are either in SIPs or iSIPs. So it is a smaller part overall, but this was very much demand from the marketplace, which we have therefore satisfied and it now sits very nicely next to our blended range, which we launched a couple of years ago for a similar purpose, but back then, it was more for smaller clients, sons and daughters in relationships and for inclusion in legacy products like investment bonds, where portfolios, MPS portfolios just don't work so well. So early days yet, but there was quite a bit of demand for this, and we've been able to launch it at the same OCF as we run the MPS on platform. So quite excited about that. It doesn't mean that we are all of a sudden going into fund management. It's just the heart of what we do with MPS, but where fund wrap makes sense we will do that as we've done here. On the next slide, just a quick follow-up on -- no, we have gone 2 slides forwards. I think, yes, this one. Yes, that is the update, which was on the money market portfolio. So we launched that last year in the summer, I spoke about it in the interim update, and it's doing exactly what we said it would do i.e., it is tracking the U.K. base rate. We haven't got quite the 12 months yet. That's why we're at 4.4%. But if we track the portfolio back a year, it is producing exactly the U.K. base rate even after the cost that we've got in there. So very happy with that. Otherwise, obviously, it's been a fortuitous market for investors since we launched them. Portfolios are up, not just in this time period, but also obviously over 12 months and year-to-date. Moving on then, just a few charts on our longer-term performance, we compare ourselves against the industry peer group as in the ARC indices, this is the very long term, 10 years. The green dots there on the right-hand side show you our risk-adjusted returns, if you like, just showing that we're not in any way cheating, if you like, I'm just taking higher risks. The slightly more off the scale performance of the Global Equity simply comes from the fact that, that portfolio runs with a global cap weighted asset allocation, i.e., it has got, therefore, over 60% in the U.S., and we all know what's happened in the U.S. and in that market. The next slide gives you the same picture, but for the 5 years, looks similar, except obviously, with the whole Mag7 phenomenon really kicking off over the last 5 years, even more outperformance there from the global equity proposition. And then on the next slide, just the last year, which again shows outperformance, although also slight underperformance on our defensive and our very lowest risk profile, where we've got about 1.7% of our total assets under management, where we've stuck a bit more tightly with the 25% equity allocation that we should really be following as a whole peer group for the risk profilers. But that seems to be changing. So we've negotiated and we will be raising that to a 30% equity allocation as well which should put that to history, to have that underperformance there for that little portfolio. at the lowest risk end. The next slide is our Ethical portfolio strategy, and the reason why that has outperformed more is; A, because it is a growth-orientated portfolio being focused on things that will only pay off in the future. It is a growth portfolio, so a slightly constrained universe. But it's also this one is following because of how the funds that are available are managed. This is a globally cap-weighted exposure, therefore, again, more exposure to the U.S. and it continues to do very, very well for us and the [ clouds ]. On the next slide then, we are seeing the split of our assets across our matrix of portfolio types there, and then across the top of the different risk profiles where you can then also see that 1.7% that I just mentioned that we have in the defensive sector and how this is all distributed across the piece. Two observations here. On the one hand side, we are seeing a creeping up of the relative weight of the tracker and the hybrid, which are now making up about 50% of our total assets under management is a tracker based. So it's same active asset allocation that we do on top for all the portfolios, but then populated with a lower cost tracker exposure, which, as we know, over the last years and saw from the earlier slides, has performed very, very similarly to the active managed as there was just so much money to be made just in the pure momentum trade. The other interesting observation is at the bottom, the 12-month change across the risk profiles where we can see a relative reduction of the lower risk portfolios and an increase in the higher risk portfolios. Overall, I would see that as a positive in that the long-term investment case, obviously as we know from the previous slides, produces higher long-term returns. Perhaps a little bit dismayed about observing the typical retail investor behavior, again, looking back rather than forwards. So we've had the bond market correction. We can work with bonds again with the yield that we have in that part of the portfolio, but obviously, people have been burned with a very bad performance that bonds gave them after so many years of being almost up there with equities. Moving on then, just in terms of our investment backdrop, last year was very much characterized by; A, first the resilience of the demand both from businesses and households despite everything that was thrown at them from inflation to high yields to the cost of living prices. And then really at the end of the year, the Central Bank pivot finally not raising rates anymore, which first led to the revaluation of risk assets and all the way into the [ Santarelli ]. But that continued into 2024, really more on the backdrop of then also sentiment shift across the economy with the exception of China, where with the prospect of lower yields, generally earnings projections and expectations have gone up and retail investors have really returned to the investment scene that cash being king was perhaps not quite as true. We saw that on the earlier slide as well. All diversified portfolios outperformed cash over that time period, and therefore, we've seen quite a bit of a shift in retail investor sentiment as well. So where we are at the moment, which is the next slide, is a good balance, if you like, between on the one hand side or positive growth perspective and on the other hand, still fairly high yields with the bond markets really doing the job for the central banks at the moment, keeping money supply relatively tight. Yes. the risk of a recession has gone away. We seem to have that soft landing, but there is still, at the moment, and particularly over the summer, a risk that until we actually get any rate cuts and they may well be less than was perhaps expected and priced in. We get markets a little bit over the top compared to what we are currently seeing in a relatively slow economic development, even if that means we're back to mid-cycle and not really with end of cycle fears anymore. So then my last slide is just a quick outlook on the next one, which is this cycle rewind, which doesn't happen very often. So we've gone from very late cycle. We didn't get the recession. We're back in mid-cycle, which is actually quite stable. But the psyche in the market is still very much characterized by what we've learned from -- during that period, last 15 years, from global financial crisis to the COVID pandemic constantly expecting the next disaster behind the next corner, which increases volatility. And that may be the case when finally, it becomes clear that interest rates won't fall as much as perhaps had been anticipated just because inflation has gone down. The economy is going quite well, and with the jobs market being very tight, there is not really much room for the Central Banks to lower rates by more than 1%, perhaps 2%, unless we do get a recession, which we are not really seeing on the horizon at the moment. So, looking forward, it's probably not reasonable to expect that we get a similar recovery rally in the stock market as we had over the last 12 months. But nevertheless, it should be a positive 12 months ahead, maybe less strong than what we have because so much is already priced in, and it's therefore, certain portfolio rotation strategies will probably add more to overall performance than risk on, risk off, where we are, for the time being, quite happy to stay fully invested, but otherwise neutral until we know a little bit more how the market is going to react to the news that's going to come down from the Central Banks. Thank you very much.

Thank you, Lothar. Our summary slide really just talks about 2 main things. Obviously, the road map to growth, which we've highlighted earlier, very much an organic growth play, as we've said, and as we have been throughout most of our time. And we haven't really touched on M&A activity really because we haven't got anything of any importance to talk to you about. It's difficult to deploy capital in buying more FUM because of the value that people believe the MPS sector has got. So MPS providers who are in the market have now got enhanced values or thoughts on pricing. And we've always promised the market that if we did during the M&A activity would be earnings enhancing. So it is difficult to buy. We've been gazumped a couple of times with a couple of opportunities. That's not to say we will continue to have a look and have discussions as and where we see fit. But it's very difficult at the moment to do that. Yes, and I think people are -- because it's quite a drop-off and long tail of MPS providers where they've got maybe GBP 500 million or GBP 1 billion or GBP 1.5 billion trying to get to GBP 2 billion or GBP 3 billion, their idea is that they'll get up to those GBP 2 billion or GBP 3 billion or GBP 4 billion before they'll start to talk about potentially selling to somebody like us. So, yes, very quiet on that side. And I think, Hannah, I'll probably at this stage pass it back to you to go to questions.

Lovely. Thank you, and we have a number. Could you please outline the change in AUM at 8:00 a.m. since acquisition? And how does this contrast versus verbatim funds and how might this be explained?

Okay. Yes, so, [indiscernible]. I mean, when we acquired [ ATM ] we anticipated about GBP 800 million of AUM. And I think we actually landed on just over GBP 1 billion. We still have that billion. The team ATM have done a good job hanging on to that. They put a lot of effort into the change from the historic manager, investment management become clever advisor. We've also invested in a little bit of cost over the last sort of 18 months as well to help drive future growth. That said, they haven't necessarily reached the target EBITDA that we set them originally, and hence why earlier I talked about the impacts in terms of the contingent consideration and also the intangible asset. In terms of [ abating ], the funds themselves performed well. That said, they have seen some outflows over probably the last 12 months, which is broadly in line with other asset managers, actually. So this is relatively small part of the business now. But yes, that's about the, the summary of the situation there.

Okay, thank you. And you alluded yourself that FY '24 was particularly good in terms of flows. Were there any standout big contributors to that number, which makes -- that reinforces your view that it might be an outlier?

It was a few reasons. I think. One, because of the sort of maturity of the MPS space. Two, I think also is a little bit more confidence in the markets and IFA's clients are wanting to get back in. So there's a little -- and we had a couple of really good decent sized mandates that we won, which kind of pushed up that level of flows. But we just think if you extrapolate out where we have been over the last few months, you'd be looking at GBP 4 billion of FUM, and that's a huge target. So we'd rather guide everybody to the sort of the GBP 150 million to GBP 200 million per month.

Okay. Well, if you did do that, obviously you would hit that new target extremely quickly. We do have a couple of questions on that new target. Let's -- in terms of route to market, obviously, IFAs are well established. Is there an opportunity to move up in terms of -- you've got a sweet spot that would seem in terms of the size and scale of the IFAs that you're dealing with, can you move into bigger ISAs? And also, is there an opportunity to go direct to market?

Yes. I mean, the difficulty going up to the bigger IFA is a lot of them, because of their size and scale, would have their own discretionary fund management capability. So they might have gone for their own [ DEFM ] permissions with the regulator and have their own team. So, we know where our sweet spot is and where we should concentrate our efforts. But there may be a position in time where we could go and help those firms by making -- saving them some cost of having their own investment team and utilize us as their intel inside. That's a possibility. But, yes, I think we're very happy fishing in the pool that we're in currently. It seems to make sense to do that. Going direct-to-consumer, it would be a massive move for us. You would never say never because that's obviously not a very sensible thing to do or to say. But we love the IFA sector, we champion the sector. I think it's really strong that we are single channel and only get our business from IFAs. It would be a huge decision to move off that.

All right, thank you. Again, obviously, when you outline that GBP 30 billion, there's no mention of anything outside of the U.K. Is there an opportunity for international expansion?

I think at some stage, yes, Hannah, I think you could see us look at that, and we've got so much to do here in the U.K. We'll continue to do that. But we are aware that the growth of MPS is not just a U.K. phenomenon, it's worldwide, and the numbers are coming in from all sorts of different territories. I think the number under MPS is expected to grow to GBP 10 trillion over the next few years. So that's a huge number. So I think we got to keep an eye on that. We've got to have a look at other territories. We've made a few preliminary inquiries into others, and -- but it is, again, preliminary are we're just looking to have a chat about what markets exist, what they look like, whether it's IFA-led or banking-led or whatever. So, early days, but I wouldn't rule it out.

You clearly have your eyes on the big opportunities. But there are a couple of questions here. I guess, I'm asking for a reminder of exactly what your ownership in the business is, I think, particularly Paul Hogarth and what your future plans and investment, I guess, and appetite to continue in the business are.

Well, that's a very nice question. Yes. So, still, obviously, the largest shareholder within the business. So 16.5%, 16.6%, plus, obviously, LTIP as well to add on top of that. I love doing what I do. It's fantastic. I really, really enjoy it. I'm super proud of everything that we've achieved and to be in such an exciting business at my ripe old age is incredible. I'm hugely energized. I mean, yes, I just want to keep driving the business forward. I think as long as everybody's happy for me to be here and I'm doing -- I think I'm adding -- I'm contributing to it, then, yes, I'd love to be here.

Thank you. Of course I note your market share. I'm just wondering what your direct competitor share is and who are they?

Yes. I mean, our direct competitors haven't really altered, to be honest. There are a few that we come across regularly. I'd say people like Bruins, Brooks, [ Vastra ]. Timeline is a new one that's increased in size. So, yes, we've got 4 or 5. I think when you look at where we are in growth terms, you've got us at the top of the tree, and then you've got people like Quilter and Parmenion who I don't think you are comparing like with like. I mean Parmenion is a rap that has -- or a platform that has its own MPS sat around as an investment solution. Quilter is a fully integrated business, which has platform and MPS and advisors. So I don't think we're really comparing like with like there. If you put us in the same bracket as Quilter and Parmenion. If you take us out of that bracket, then you drop to sort of GBP 4.5 billion GBP 5 billion of FUM. And then the tail as I say, extends out from there drops down to 3s and 2s and 1s. I think there is probably in excess of 100 MPS providers out there now. So there are lots and lots of competition.

Okay. A helpful understanding of the scale question. In terms of, again, the move to GBP 30 billion, what OpEx investments are going to be necessary to get you there?

Yes. So, we gave guidance earlier, didn't we, of sort of that 10% to 15%. And the real drivers for that really are just people. So if you think back to IPO time when we employed 75 people, we employ about 104 today. So we've added 30 people over 7 years. Yet, our AUMs increased from GBP 3.9 billion to GBP 17.6 billion over that time. So you can use that stat and get sort of an idea of the scalability of the model that we're running at the moment and that still is true. So where we will invest in people is typically where we touch the IFA. So as the number of IFAs continues to grow, and customer service and servicing those IFAs is really important. So that's BDMs, that telephone account managers, investment specialists. So the net nature of role within the organization. So that's all built into our plans, and that's how we will execute the GBP 30 billion target.

Well, that's it for the questions today. So thank you, some helpful responses there, some ambitious new targets. And we look forward to updates as and when in the next 6 months.

Really hard and thank you. And thank you everybody, for their time. Thank you. Cheers.