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

Good morning, and thank you to those of you who are joining us today to hear from Tatton Asset Management who are today going to walk you through their interim results, which they announced last week. If you haven't seen it already, you can find an updated research on our website. But for today, we're going to go through the presentation and then take Q&A at the end. Please feel free to submit questions as we proceed through the presentation. But for now, I will hand over to Paul Hogarth, CEO.

Thank you, Hannah, and good morning. Yes, if I could just run you through Slide 8, if we could start off there. I'll take you through the sort of the operational highlights and some of the financial highlights as well. Absolutely tremendous 6 months, could not be happier with what we've achieved over that period. In particular, obviously, you're seeing the funds under management increase, and we had GBP 1.7 billion of new flows over that 6-month period. I'm happy to say that, that flow rate has continued post that half year-end. So October has been good. November has been good so far, and we're at GBP 27.1 billion in total, so GBP 2.1 billion year-to-date on flows. What we put that down to is the growing momentum in MPS. MPS is absolutely only present in the IFA world. You cannot pick up any press from Citywire or FT Adviser or whatever, not see MPS being front and central and also too on the website as well on all websites, wherever you go, MPS is everywhere. So growing momentum. We're doing incredibly well, I think, in our share of that, I'll come back to that later, but really good solid flows, good pipeline moving forward, all organic and beautifully adding to the FUM. Actually, when we look at it, those sort of positions on flows, we think would have been even better if we didn't have the kind of macro position that we've got on in the world today. So obviously, there's a lot of waiting for Wednesday, with the budget. There are discussions around, obviously, the choppiness of the markets as well. And we're seeing IFA has been very, very busy and a lot of it has been moving tax-free cash out of the pension scheme just in case that was played within the budget. And pleasingly, that money has not been spent. It's just sitting there, probably waiting in the wings to see what happens with ISAs on Wednesday, and we would expect that if there's nothing -- if that kind of decision-making on ISAs is benign that those assets will obviously can't make their way back into the pension scheme again, but we'll find its way into the ISA world. And then a couple of just sort of standout numbers really. The number of supporting IFA firms up to 1,170, and again, post the interim 6-month point, we've again done well in recruiting more and more firms. Just a quick bit of arithmetic. If you look at our average account size with 167,000 plus account holders. We've now got an average of GBP 154,000 per account holder. And that is up probably over the last few years, it was GBP 130,000 to GBP 140,000, now GBP 154,000 which again is a good sign, but it also sort of franks the point that we said that we brought discretionary fund management to the mass affluent market via the IFA community. And just on that, the IFA community remains very, very strong, and they're very, very busy dealing with existing clients and struggling to cope with all of the new ones that have got coming through, so the IFA community in rude health. And just on financials, I won't pick on everything in there, but obviously, the improvement in the profit margin, and that's the group margin rather than Tatton margin, but we'll come back to that later. And the interim dividend going up to 12p for the first half. And obviously, you know that we're 50-50, so that 12p should reflect and a further 12p later on. So that's it for Slide 8. And if we move to Slide 9, just our bragging slide really showing where we've gone with the funds under management and AUI. So despite all of the events, we've climbed nicely. Just a point of note that, that AUI at GBP 27.1 billion includes perspective, which as we all know, we lose in January. So we will track back on the back of that loss. Interestingly, the next Slide 10 shows us -- I think, this is of interest more than anything else as to how our share price has performed compared to our Tatton Core Global Equity portfolio and compare that against our ARC Equity and the FTSE AIM as well. So being a really good strong performance of -- the share performance over that period. And more of the same again on Slide 11, which shows you how we've maximized shareholder value over the period, both with the improvements in the market cap and the EPS side and also the dividend payments that we've made over that period. So strong proposition. And without further ado, I'll pass you over to Paul, who will take you through the financials.

Thanks, Paul. Yes. So yes, overall, a really positive start to the year. We've kind of touched on some of these numbers in the highlights, but revenue and operating profit both increased by 19% and 20%, respectively, with the margins increasing to 51%. There are no exceptional items in this period, albeit we do adjust for share-based payments and amortization of intangibles. And the finance income that we've seen there, the GBP 0.5 million, is all related to cash that's on the group balance sheet. So overall, adjusted fully diluted earnings per share increased 17%, pretty much in line with the key KPIs within the growth. And as Paul said, that interim dividend, our policy remains to pay 17% of adjusted earnings on a 50-50 basis. And you'll see that in the first half, it is 16.02p to barely 17%, and we'll balance out as we pay the other 50% in the second half of the year. So overall, super positive start to the year. And just delving into the detail on the next page. Another standout performance from Tatton, both revenue and operating profit increased by 21% and 22%, respectively, with an increase in the margin, again, 64%. So as Paul has mentioned earlier, they group revenue around 51% and Tatton at 64%. Clearly, that's been driven by the increase in AUM/AUI, that's GBP 4 billion over the period. And the key components of that are strong organic net flows of GBP 1.7 billion. And obviously, we've had very good investment performance in the first 6 months at GBP 2.1 billion from investment performance alone. And that plays out that on average, our net flows of GBP 281 million. I think last year, they averaged around GBP 307 million. And when we exclude Perspective, that nets down to GBP 225 million, which is pretty much in the middle of the guidance that we gave at the end of last year. And just to sort of highlight the perspective that we've been talking about now for sort of the last 12, 18 months, Perspective will leave us in January of '26. The AUM currently sits at GBP 3.5 billion. The flows in this period were GBP 333 million, and it contributed revenue of GBP 800,000. And then moving on to Paradigm. It just remained pretty steady and consistent, actually. Paradigm revenue increased 6% and the operating profit also increased 6% with the margin staying stable at around 29%. The Mortgage numbers, number of firms increased to 1,960, and that's been a consistent metric that we've been posting now for a few years. Overall, that drove actually quite a material increase in the overall lending to GBP 8.6 billion year-on-year, albeit that's been driven by record applications and obviously, the increase in members have helped contribute to that. But overall, very positive contribution from Paradigm. And then it's nice to segue into the next slide, really, when we just looked at the evolution of the two business. So we're kind of highlighting this really to show how effectively Tatton had scaled over the last 8 years since IPO. And then Paradigm has gone from sort of 32% of the income to just 13%. And I think it's more pronounced on the operating profit actually where Paradigm only accounts for 7% of overall profitability. And we're going to continue to separate these two businesses out, but it's just a sort of to highlight the fact that at some point, Paradigm is becoming a little subscale, and there may be a need to either divest of, perhaps part of the business. But more importantly, actually, just potentially consolidate the reporting into just the group performance. Jumping back into the detail. We've had this slide on overheads now for the last few years. It really just gives you the progress that we're making here. And overall, when we annualize the 6 months to September '25, you see that total increase in overheads has been 12%, but the underlying increase has been 8%. And the employee cost remains 60%, and that's again been a very consistent KPI. And the point I would like to make is that of that 60% or GBP 15.5 million, GBP 4.3 million of that is actually variable cost and is related to targets and performance so it helps us to manage the business and underpin the earnings. Overall, we're still giving that guidance of 10% to 12% going forward. And one question we always get, is there any sort of one-off significant costs that Tatton will need to invest in at some point in the future? And the answer to that is no, as long as we continue to do exactly what we've been doing since IPO, and we keep the same operating model. The trajectory of the cost increases over that period has been very, very smooth. And then last couple of slides on the obligatory balance sheet and cash flow. We're in exclusive shape. We've got net assets now of GBP 55.9 million, and total qualifying capital resources of GBP 27.9 million, when you excluded the foreseeable dividend on qualifying assets. And that gives us circa GBP 22 million of headroom above our GBP 5.5 million capital adequacy requirement. So we've got GBP 34 million cash on the balance sheet. We're net debt free. And I think we're in an excellent position and that strong balance sheet give us flexibility going forward. And then on the cash flow, the walk between -- to GBP 34 million, there's nothing on this cash flow, which is unusual. Interest received, dividends paid, corporation tax and a relatively small amount of CapEx, gives a walk between GBP 32 million and GBP 34 million. And then finally, on the final slide on Page 19. We'll just give you a little bit of a guidance here from an outlook perspective for H2. So the Board is making the statement we're on track to deliver our forecast in line with the Board's expectations, but obviously, analysts as well. The margin -- the revenue margin will be between 20 to 21 bps and Paradigm revenue will continue on that sort of mid-single-digit level. And then net flows, GBP 200 million to GBP 250 million, excluding Paradigm -- sorry, Perspective. And then the annual cost increase, as I said earlier, 12%. The only thing that's a little unusual we'll start the moving of our ACD from Waystone and Valu-Trac to APEX in the second -- in the final quarter, should I say, and that may ship into the first quarter of next year. There will be annual cost savings of GBP 0.5 million, and the projected cost of doing that will be about GBP 0.5 million as well.

Thank you, Paul. I'm moving forward to the strategic update. Going back to our usual slide, Slide 21. You can see where we are currently. Just I think we're a little bit flattered from the percentage or our market percentage, which is the top number of 14% because we're working off historic data there. The data from the platforms and from the amount that's actually in MPS, we think that is a fair bit behind. It's fairly historic. Unfortunately, it's the only current one we can quote, but I think it's making our market share look a little bit higher than it really is. I would expect us to be around about the 12% level rather than the 14% that's highlighted in that. But you've got, as I said before, a really strong IFA community. The IFA still of platforms, so assets are still going on to platforms. We must be there or thereabouts for GBP 1 trillion being in these adviser platforms now. And the GBP 183 billion that's shown in MPS, i.e., 21% of that, it's obviously, historically, it will be a higher number. It must be more than GBP 200 billion now. But the question that we've been asked many, many times is what do you think is the true percentage ultimately of what will be in MPS for the total amount that's sitting on platforms. And we think it will be double where it is currently heading to 40% and then 50% in due course. So plenty of demand for MPS. Moving on to Slide 22. That's our road map for growth and obviously making great inroads at GBP 27.1 billion rather than the GBP 25.8 billion. But obviously, that's before the Perspective relationship finishing in January. But we're very confident that we will hit that GBP 30 billion mark without -- or with or without Perspective, we will get there. And we've got plenty of really good stuff in the pipeline. So we're sure that we'll get to that GBP 30 billion with just pure organic growth, not with any M&A activity. We're very quiet on M&A. We haven't got anything that we can discuss of note this morning. But we literally -- we would do M&A activity if there was anything that we thought was good. But this GBP 30 billion, as I say, is just organic targets. If we did have any M&A stuff in between now and 2029, that would only enhance that GBP 30 billion to a higher number. On Slide 23, we'll give you an update on how we've evolved our MPS offering. We really like this slide. It shows how we've improved the number of arrangements we have from 50 to 61 and the assets over that period, up GBP 840 million, although some of that obviously is down to the market movement. But we really like these co-branded and white labeled and AIA propositions. We get the asset much quicker. It's all done at 15 bps with no pay away. So we've got full margin. There's very little cost involved in topping them up. As you can see, we haven't even moved the number of AIAs up from 4, when we start off the conversation with the firms who are looking to join the AIA and have at least a part of the decision-making process on the portfolio. And 9 times out of 10, the firm comes back and says, you know what, you know exactly what you're doing. I'm not really going to help in any shape or form, why don't we go white-labeling or co-branded instead. So really good proposition. I'd love to see 100 of these in time and our BDMs are incentivized to get as many of these as possible, and they have doubled the rate of their commission terms for that. Just moving on to Slide 24, mentioned that MPS has got huge momentum. It's everywhere when you look at all of the different market papers that IFAs read, not so much papers now obviously more on website and digital, but we've done incredibly well from that of late. De facto, they do a table of the 10 most recommended MPS portfolios. Last time we reported, we had 5 in the top 10. Now we've got 6. And as you can see on the left-hand side, Tatton Core Balanced and Tatton Core Active taking 1 and 2 slots. And we're seeing lots of momentum towards these core portfolios, which are 50% active and 50% passive and it's really what IFAs want to see for their clients. And Slide 25 further enhances the position on performance. The Slide 25. So yes, on Slide 25, you can see that basically Citywire have delved into all of the performance from all of the top MPS providers and have looked at the average outperformance against the peers. And it's lovely to see that as Tatton over 1 year came up top. Over 3 years, we were top. Over 5, we were second and over 10, we were 3rd, seeing a really, really good consistent performance. And consistency is the watchword of everything we do there. We don't sell-in performance, we sell on consistency, and it's nice to see us write up on that one. And then a final one on Slide 26. Again, on performance, just looking at the classic core portfolio against its benchmarks, as you can see over 1, 3 and 5, it's done well, both against the sector average and the actual benchmark but is utilized. And that just follows through from that, that sort of headline really in Citywire, which is, Tatton's MPS assets are surging, does it deliver performance to match? And now on Paradigm Consulting on Slide 27, really just showing you the fact that actually the mortgage side has done rather well, and protection has increased in number of member firms as well and consulting nice and steady. We've had a couple of really big wins in mortgage adviser groupings that have decided to join Paradigm Mortgages. And hopefully, that's the beginning of a few more coming on the back of this as well. And this is where firms are deciding not to be appointed representatives, but actually to go directly authorized in their own right. So yes, really good momentum and happy with both Consulting and Mortgages. But as Paul said, it obviously becomes a smaller part of the overall group in terms of revenue and profitability. And now I'll hand you over to Lothar to take you through the investment piece.

Thank you. Thank you very much, Paul. So yes, it's been a year, again, where it was more about avoiding potholes than making any major big calls. And it's also been the year where the myth was dispelled that you could only lead the peer group if you had an overweight position on the U.S. and the Mag7 stocks, clearly not. We wouldn't have been leading had we had an overweight there. We have had a few smaller positions, but they're never particularly big. So our overweight to Japan has been there for a while, but our fund selection, particularly in Europe, and Japan really, really added. We had a small underweight to the U.S. and then underweight to equity going into Liberation Day and immediately thereafter. But we closed that relatively quickly once it became clear that Trump was going to go back somewhat on his most outrageous tariff policy. At the moment, the outlook is relatively positive. It's quite interesting how the scene has changed since the beginning of the year. At the beginning of the year, the institutional investor world was a bit more skeptical about this year with everything that was going to happen under Trump, whereas the retail investors were very happy to pile in. Now it seems to be exactly the other way around. And the massive decline in cryptocurrencies, over $1 trillion loss there in value over the last couple of weeks tells us that it's the retail investors, particularly in the U.S., are getting slightly cold feet. It is a liquidity-driven decline in the markets, whereas institutional investors are looking more -- slightly more relaxed into the future because we've got significant investments pledged by all the big companies around the world. If you count them all up, they can goes into the trillions, which has got to be a good thing for the broader economy. Fiscally, it's still relatively loose, particularly in the U.S. where they even have got the discussion now of another addition of the consumer checks here, Trump's idea of perhaps a tariff dividend check. And the monetary policy is fairly easy as well with rate cuts still on the horizon. The Federal Reserve just having paused or stopped QT. So all these things are actually looking fairly constructive for the next year, for the next 12 months, although it also almost goes to fears of an overheating and perhaps the central banks then having to rein in growth again in order to not let inflation, let RIP once again, and therefore -- so it's going to be an interesting time going forward with volatility quite clearly on the horizon, but hopefully, and at the moment, expect it to be a pretty good underpinning from earnings. So if we turn to the next slide then, that's what our portfolios look like or looked like year-to-date, they've come back a little bit, obviously, over November. So far, market performance has not been particularly positive. But as we can see, they are doing what they are meant to do. So this is just representative for the portfolio range that we have, our Tatton Core Portfolio 50% tracker based and 50% active based. On the next slide, we can see how that looks relative to the ARC PCI Wealth Management peer group in the U.K., all very nicely green there, the numbers that represent the outperformance over our peers. Now you could obviously argue, well, maybe we just took more risk than the competition. And that's the whole reason for that outperformance. So if we go to the next slide 32, we've got the 1-year horizon against our PCI competitors together with the risk, our dots are the green ones, we can see that we've outperformed there with a strong risk-adjusted performance. That's also true for the 3 years. If you go to next Slide 33, that's the 3-year picture, very similar. And so is the 5 year on the next page. And then even the 10-year, which we have because we're one of the pioneers in this sector. Now one of the MPS categories that has been going up and down in popularity is the ethical MPS, which we have on Slide 36, where we can see it's a slightly steeper curve. But nevertheless, we are doing well. And this is against a peer group that is obviously not investment restricted by the ethical parameters if we -- and where we have it against other ethical MPS in funds it looks even stronger. With the -- our own sales force are there, the next slide seems to be the most popular one, which shows us our performance in quarter. So Slide 37, our quartile ranking as de facto compared against MPS peers. The only area we seemingly be lagging a bit is defensive that's in the process of being remedied. We were instructed almost by the risk profiles that we weren't allowed to go over 25% equity content in those portfolios. We turn out that our -- most of our competitors were at 30% to 35%. We've now been able to persuade the risk profile is that we should equally have 30%. And therefore, I expect that to become more broadly green in the future as well. Slide 38 compares our 10-year annualized returns against the competition. And this goes back to the consistency of returns that we want to produce. We have been consistently there or thereabouts with our performance. Those who are closest on our heels that seems to change from a report to report, if you compare this slide to where we were after the half year, you will see that, that has changed our position, hasn't really. On the next Slide 39 is the usual metrics of how our assets under management are spread across the 45 multi-asset portfolio choices that we have. So the passive-based portfolios are still growing. That probably has quite a bit to do with just the very strong performance that momentum-based investment universe has enjoyed over the last couple of years, but that might well change over the forthcoming period when perhaps the momentum trade isn't going to be quite as strong anymore. The slight shift upward seemingly towards higher risk portfolios is not really what it seems. That's not because of flows. That's because of drift. Obviously, the higher equity portfolios have performed, have generated higher returns, and therefore, those assets have grown faster, whereas the inflows have been fairly much the same compared to previous periods. Now my last slide is 40. The regulatory environment that we are in. The FCA have announced an MPS review, which we very much welcome. We feel very well prepared for that against their headline of the scope, which is to provide confidence that investors are receiving good outcomes from MPS and share good practice on how firms are doing this. We've got over 12 years of experience and all the systems, processes and controls that come with it, we can say with hand on heart. We know what our investors are receiving in end outcomes, and therefore, we very much look forward to contributing there to whatever they come to ask us. That's my last slide. And with that, back to Hannah.

Back to me, actually, Lothar, if you don't mind. Yes, just before we go to Hannah for questions. Obviously, Lothar was talking about the MPS review there. I failed to mention about competition and pricing in my first part. So I just wanted to complete that. So the -- it is a very competitive landscape. There are over 220 MPS providers out there. Probably the question is who isn't an MPS provider these days rather than who is. And we're seeing very little change to who we're competing against. It's the same sort of cohort, same sort of faces. And we're very, very happy with the 15 basis points. And as we said before, has become the industry norm, if it isn't already. There are one or two who've got lower, but you, in my mind, get what you pay for, and we're not seeing any real change and who we're competing with. So yes, in really good shape, both from where we are from our market stance, the consistency of the investment returns and happy with the price. So without further ado, I'd now pass back to Hannah.

Thank you all. Okay. Well, since you just touched on the consumer duty, let's pick up there. Could you discuss the challenges of integrating other MPS providers onto your platform? And can you elaborate on what additional aspects the duty review might cover?

I think that might be a question actually to me and a bit of a misunderstanding there. We are not a platform. We are a pure DFM MPS provider and therefore, we wouldn't be having to incorporate anybody else because we have -- it's not a platform. We operate on 19 different platforms. As to other things, well, it's very unknown at the moment what else they might. But usually, in the recent past, the regulator is very much focused on just fairness of pricing or discrepancies of pricing for what essentially might be exactly the same service that firms provide. But since we've got the same pricing for everything that we provide, it's not really something that we are particularly concerned about.

And perhaps another reiteration of the underlying model, but someone asking here, why you're not on Hargreaves Lansdown and AJ Bell?

Yes. I mean we're IFA only. So we are a single channel. If we sat on AJ Bell for their direct-to-consumer point or Hargreaves, we would be taking consumer money in, and we don't want to do that. We can only receive business directly from the IFA community. We are, however, on AJ Bell's platform for B2B, so we can receive assets from AJ Bell if it's coming from an IFA, but not the consumer side.

Okay. Let's move on to Perspective. Can you provide more detail regarding the -- I beg your pardon, I picked up the wrong question there. Here we go. And you reached the AUM, you mentioned you could reach the AUM target with or without Perspective. Does that mean that there is still a chance to renew the contract with them?

No, sorry, I probably should put it just like that. The contract is definitely coming to an end. We've heard nothing from them to say that it's not. So what I meant to say really was that we will hit the GBP 30 billion with them gone. But because what will happen is that we'll lose that number to start off with. But I feel confident that we might get some of those assets back in time as well, but we'll have to see. And we know we're losing it because of effectively price, we've got a good idea of the price at the new incumbent is going to do with that, and we weren't in a position to compete on that price. Yes, and we were very happy to get to the GBP 30 billion on organic growth.

Well, in terms of achieving that run rate then, given the declining number of smaller IFA firms in the U.K., as indicated by recent FCA data, do you anticipate the Tatton will need to focus on targeting larger IFA firms to achieve growth? And if so, how does this influence your service offering and overall economics?

Yes. I mean I actually don't think there is that big a demise and also from some of the later data we've had from some of the consulting firms showing that there are a lot of new firms that have started. I think from 2019 to 2023, there were 470 brand-new firms that were started with actually an average age, which is obviously younger than those people that are leaving. So no, I don't think we should necessarily focus with the higher firms. I'm very happy with our focus on the small and medium-sized. There is a little bit of consolidation going on, but we fight like that. We think consolidation is good for the community and for the industry. So now we are happy with our position and where we're focusing our attention.

And I guess a different way of phrasing a similar-ish question, but you played obviously a significant role in directing assets towards the MPS space. Do you see momentum continuing at the same pace and maintaining your market share? And what are the factors, if any, that might slow this progress?

Good question. Yes. No, we're happy with the momentum. We're happy with our market share. We think we will maintain our market share. As I said on the slide, it's slightly inflating what our real number is. I think it was still around about 12%. And we are winning what we should be winning. Obviously, we're always trying to drive more and increase that number if we could. We have a Strategy Day coming up next week where we'll be looking to see how we could optimize the actual model, if you like, to get as much as we can because it's still a very much a land grab, but we're happy with where we are, but always looking to extend. MPS will continue to thrive because we are in there from the start. And as Lothar says one of the pioneers, I think we're very well placed to be the recipient of further flows, both because we believe we've got the price right and the consistency of the investment returns.

Okay. And perhaps a question for our analyst, Paul Bryant, as much as for yourself. But in our report, we mentioned that DFM has grown at 28% and that your market share is 12% to 14%. Are the Board concerned that Tatton's market share will fall?

No, no, we're not. No, we think we're in a good fight. We know from the number of tenders that we get and the fact that we are seen as the leader, we're getting in front of us many IFAs as possible. We're always very welcome. If you look back at when we first started this, this was a crusade and an educational process. Now MPS, everybody knows if you want to run a very scalable IFA practice you need to embrace MPS and not do it yourself. And it's just a question of who you choose, and we're always on people's minds and lists for doing that. That's not to say that we are getting complacent or arrogant. We've always got to find a way to extend what we do, but we're very cognizant of the performance of the business to date, and we've seen no reason whatsoever why it won't continue in the same vein.

Okay. Can you provide more detail regarding the benefits of the Carlos investment? How will the Board decide how much of up to the GBP 10 million is invested? And when? And will the AUM from Absolute be expected to replace the loss from -- the supplementary question on Perspective?

The supplementary question is spot on. So Absolute will be a help to replace the Perspective piece. So I would imagine that when Absolute is making purchases, some of them will be from Tatton firms and some of them will be -- it won't be mandated for them to utilize Tatton, but obviously, we'll make them aware that it's available. Looking at the equity investment of GBP 10 million, we think that's the real good use of deploying capital off our balance sheet. We, as I say, will have a really good investment in the equity position alongside inflection there. Anyway, we will be the beneficiary of the coupon, which is 12%, and we'll obviously have the equity uptake too. And we have the rights to follow on as and when further cash or capital as required by Absolute. Absolute gets -- often gets up and running from next Monday with the completion of the first purchase of Absolute Financial Management, and there will be others in the pipeline to come through. I think there's a really strong pipeline of which looks roughly 50-50 between Tatton utilizers of firms and non-Tatton firms. And really, it's there because in consolidation, we have a number of firms, and this happens every single week who come on to us to say that we're thinking about selling, but we don't want to be going to somebody who's going to encourage us to leave Tatton or move to their platform. We want somewhere it's independent and this will fulfill that requirement.

I was going to say in terms of drawdown as well, I think part of the question was how did the Board control that investment in GBP 10 million. So GBP 4 million of that GBP 10 million will be drawn down actually at the end of this month. So by the end of this week, actually. And then it's in the plan to drawdown over a 3-year period, so the remaining GBP 6 million.

Different take them for now. What are Tatton's plans for management succession when Paul and Lothar retire? Could say Paul, Paul and Lothar.

I'm glad you included Paul on that as well. No, we're obviously very happy to do what we're doing. We're all enjoying such a tremendous journey. So there are no thoughts of any of us leaving. We're very -- as I say, we've got a lot of work to do. And we have got some really good individuals coming through within the business. So we're strong, have a nice management team running through. And we are obviously got an eye to succession at some point in time, but it's not in the distant future.

Or is it in the distant future?

Yes, sorry. It is in the distant future, yes.

Good. That's what I thought. AIM versus full list, there's plenty of others who are making a journey, plenty who are sharing. What are your thoughts?

Yes. I mean it's our ambition would be to go to the main market. We feel that at the moment in time, we're a little bit too small. Maybe in 18 months, 2 years' time when our market cap is circa 700 or whether, then that would be the perfect time to do that. And we're already building -- and with regards to governance, et cetera, we run this like a main listing business anyway, but we are strengthening that in readiness for it. But I think, as I say, it would be 18 months to 2 years away.

Okay. You've mentioned acquisitions, but we know it's competitive out there. Have you considered other uses of capital like share buybacks?

Yes, yes. I mean share buybacks, special dividends and deployment of the capital is on our mind. In 2027, we'll be coming up for 10 years of age. So it might be nice to do something around that time. But for the meantime, we're happy with where the cash is. We're deploying that into Absolute as we said. We obviously got that lovely strong dividend. But as a business, obviously, you always want to make sure that you deploy your capital correctly. And at this moment in time, we're happy. But as and when if it continues to grow as it's growing, which we'd expect it to, then that sort of buy share back or special dividend is one of the very strong options.

Perhaps one for you, Lothar. Someone here is concerned about...

[indiscernible]

It's good to rephrase that. USA private credit lending leading to another crisis. Do you have any views on how are you prepared to respond?

Well, what concerns us at the moment is that it has already led to a tightening of the credit markets tightening of liquidity, which is part of what we're currently experiencing in the terms of market downturn. This is probably though alluding to the global financial crisis when there was a lot of not very clever lending done and had a quite structural threat to our financial world. With private credit, we have to remember this is not geared, this is not leveraged. It's quite limited who hold these things. And it was also well known that the lowest end of the credit spectrum had migrated more and more into the private credit world. So we're not totally surprised. The impact would be more in credit tightness, which doesn't help when the economy is over wanting to expand, but we are seeing enough counteraction from the Central Bank to loosen liquidity again and the banks still have the ability to lend because it's not the banks who are holding it here. It is the private credit side.

And then I think as a sort of nice round off, so you've already mentioned the budget. What's possible policy or tax changes concern you most?

I'm not sure there are, to be honest, I think, obviously, it affect us all individually, but I think when we look at the IFA community and what's going on, then I don't think there's anything that would knock us away from what we're doing, both from an IFA world or from Tatton world. As I mentioned earlier, there's some movements in tax free cash, people just taking that just in case, but it's not being spend, and it will find its way back into an ISA, I would imagine once we know what's happening there. But it's more the uncertainty of all that's may be holding things back. And we can't wait to get once out Wednesday of the way and see what it holds. But no, nothing that we expect would derail what we're doing or what the IFA community is doing.

Lovely. Well, that is it today. So thank you to the three of you. Thank you to our audience for attending and for the many questions, and we'll look forward to an update in another 6 months and the continued AUM fantastic growth.

Thank you very much...

Thank, Hannah.

Thanks everybody.