IntegraFin Holdings plc

Thank you. Good morning and welcome to Integrafin Holdings' interim results presentation for the six months to the end of March 2023. I'm Alex Scott, Group Chief Executive, and this morning here I have with me Jonathan Gumby, our Platform Transacts Chief Executive and also our Group Chairman, Richard Cranfield. I'll kick off proceedings with a quick overview of the previous six months and then I'll hand over to Jonathan to do an overview of our investment platform and to provide you with a platform update and I'll cover off the financial update before moving into questions and answers. Performance over the period has been resilient in the context of difficult market and economic conditions. Our market opportunities remain strong and we continue to gain a greater share of UK advisor platform market, demonstrating the strength of the Transact platform. We now have a 10% share of funds under direction in the advisor platform market and a 19% share of the net inflows in that market. The macroeconomic outlook remains uncertain and markets continue to be volatile, but we're focused on our strategy of being number one provider of software and services for clients and UK financial advisors. The digitalization program for Transact is now well underway and is being positively received. This program will help us continue to build economies of scale. Our strategy remains clear and unchanged. Our focus is to enable the delivery of financial plans to clients by financial advisors. This is what drives advisors to use us, increasing advisor numbers, increasing our client base, supporting our inflows. We continue to believe that this is best achieved through the delivery of the highest quality customer service, delivered by highly skilled staff, underpinned by high quality in-house technology. And the best way to achieve that and maintain our position is through targeted investment in people and technology. By maintaining our proprietary systems, we can control that investment, setting the direction of development, helping control the volume of highly skilled employees we require to deliver the quality support advisors and clients seek. This delivers business growth, and then with our focus on efficiency and quality, we will continue to deliver on profits and dividends. The result is our business model has continued to deliver steady growth. The number of advisors registered on Transact has increased by 3% over the year to the end of March, helping to grow client numbers by 4% and drive net inflows of 1.6 billion. And the number of fee-paying license users on Kuro software at time for advice has also increased, up 41% over the year. Investment platform average daily funds under direction for the six-month period did fall slightly by 1% year-on-year due to negative market movements, coupled with transit fee reductions resulting in steady group revenue of £66.5 million. Allowing for exceptional items underlying profit before tax for the six months fell moderately as we continued to invest in the business. Cash generation continues to be robust and the balance sheet remains strong with no debt. This has allowed us to declare a dividend of 3.2 pence per share, in line with our full-year dividend policy of paying out 60-65% of profits after tax. The digitalisation programme for the Transat platform that we announced in half year 22 is progressing well. Just covering off some of what it will deliver. This will give us enhanced client administration straight through processing so that we can increase platform scalability and continue to deliver a premium platform service whereby client services staff are focused on value-added activities for clients and advisors. It will deliver improved online functionality for clients and for advisors, and it will enable the further development of time-to-advice escuro software and its interface with Transact Online. Our new London-based Chief Technology Officer joined in late January, and he is already helping to drive our digitalisation plan forward further and faster. We've recruited a net 25 software and IT professionals over the past year, and we expect the remaining additional IT staff that we have previously announced will arrive over the following 12 months, depending on the market for these professionals, which still remains highly competitive. Just to emphasize, there's no increase to the planned total additional headcount. Turning to slide six, this graph shows the strong and consistent track record that the Transact platform has of delivering positive net flows, which with our levels of persistence in turn increases FUD on the platform and drives our revenues. Annualised net flows were over 6% of opening funds under direction for the first half of 2023. These strong net flows have helped our market share of advisor platform funds under direction to grow over the last five years, and we are seeing solid growth in transact share of advisor platform net flows as well. Before I hand over to Jonathan, I'd like to give a quick update on some of the other developments that we've been undertaking over the last six months. As well as the previously mentioned recruitment of our Chief Technology Officer, we also completed the recruitment of a Group Chief Risk Officer. Both of these individuals joined us in January this year. And on the recruitment of a Group CFO, we have made an offer, but it is not yet finalised. Transact has already undertaken important work to ensure that we are ready for the FCA's new consumer duty regime. Our clients have always been at the core of what we do at Transact, and in preparation for the consumer duty rules, we have refined some of our processes and expanded our communications to advisors, clients, and discretionary investment managers. There is some housekeeping to do to be in accordance with the new rules. For example, we've undertaken an exercise to close some residual client portfolios where the clients have low value residual balances. This will better position us for consumer duty. It actually also helps us with our own internal efficiencies. And we have been improving the feedback loop between our staff and the board with emphasis on increased communication to employees to ensure they all feel part of an integral part of the group. We've brought in additional training for our employees to give them all the skills needed to deliver our award-winning service. And we've provided other training and facilities focused on improving their lives at work. In our efforts to become a more sustainable business, we've ensured that all new portfolios opened on the platform are paperless by default and have invested in the addition of solar panels to the roof of our Melbourne office. I'll now hand you over to Jonathan for a platform update. Thank you, Alex. Good morning.

So the marketplace we operate in remains extremely attractive. So there are significant growth opportunities for advisors and therefore for the Transact platform. The assets come into the platform from many sources, including cash ISAs, stocks and shares ISAs, workplace pensions personal pensions other assets and you can see there there's a whole array of attractive sources for money to find its way to platforms so the uk platform market at the moment for advisors is just under 600 billion which is of course big, but there's at least another two trillion that could find its way to platforms. So in short, our strategy is to be the best player in the advisor platform space to make the most of this very large market. And just to add a little bit of color to, excuse me, let's, there we are. To add a little bit of colour to this and to give you a feel for the scale, if we think of personal pensions, there's just over 30 million people with personal pensions in the UK and they can find their way to platforms. Workplace pensions. The auto-enrolment legislation was introduced and nowadays eight out of ten employees are enrolled into a workplace pension scheme. ISAs, there's just under 8 million stocks and shares ISAs in the UK, a further million junior ISAs, which we offer on the platform, and then there's 0.7 million lifetime ISAs. Again, we're one of the few platforms that offer lifetime ISAs. Now, the UK personal taxation environment is very complicated. So that's why advisors do exceptionally well in explaining pensions and explaining inheritance tax, explaining capital gains tax to their customers. Particularly in the pensions arena, we've had further changes in the spring budget. For the average man in the street, these are very confusing rules, and that's where advisors do exceptionally well. And we provide lots of tools and reports and functionality on Transact Online, which helps both the advisor and the client. So in terms of how the market may grow, the data on this chart is calculated by Fundscape, and you can see they've got projections through to 2027. The realistic scenario is 11% compound annual growth, but the optimistic is as high as 16%, and the pessimistic down at 8%. So you can see we've got a very large market. We've got forecast of strong growth, and we're the best player in this marketplace. Why do I say we're the best player? Well, we subscribe to many third-party surveys. We do our own customer surveys and our own advisor surveys, and we go through the detail to make sure we're performing in the areas where it really matters. So on the left-hand side, we can see from some platform research the areas that advisors are most sensitive to and the things that they're considering when selecting a platform. On the right-hand side, how we perform in these areas. So customer service levels, we consistently perform well in the research. The latest investment trends report, 23, we were the highest rated amongst large platforms. In terms of functionality, core data 22 research, we ranked first for functionality. Usability, we ranked second in the platform August issue. Financial stability, as part of the IHP group, we've got a very strong capital position, no debt on the balance sheet. And charges, now there's two elements to this. We've reduced our charges as we enjoy economies of scale over time, but we do it in a very cautious, responsible way. We wouldn't do it in a way that caused us to take any shortcuts in terms of delivering service. Now, the other important aspect is that we pay all cash interest to clients. Many players skim interest, so they may earn 4%, but only pay their client 2%. We don't do that. We pay every pound we earn, the client earns in interest, we pay on to them. We think it's the right thing to do. It's consistent with consumer duty, and it makes an enormous difference to the client financially. Thank you. We've developed lots of functionality over the last few years for both customers and for advisors. And we call this digital first, whereby we provide, certainly for all the straightforward things, we provide that online. But in order to help advisors, we use both live chat and co-browse. So at our head office, we have individuals that we've trained to help particularly advisors use our systems and new functionality. So you can see just how popular this is. Live chat usage has increased 18% from prior year. We have a very high resolution rate, 97%, where we actually managed to successfully deal with the question that's being asked. Co-browse, which is effectively screen share, is massively up. So that's up 64% over that period. And to give you a feel for the quantum, there was 22,000 co-browse sessions in calendar year 22. So it's big numbers. Live chat will be much higher than co-browse, by the way. And you can see how successful that's been. So of all the transactions, tasks that we're processing, 93% of those were placed by Transacts Online. So this is self-keyed by advisors, administrators, power planners, and it goes straight into our system. So no one actually touches it. So it creates efficiency for advisors and efficiencies for Transact. It also reduces risk because obviously we've built lots of self-checking functionality within the system. So all of this hard work has meant that we are recognized as digital process champions in the next wealth surveys and ranking. And we'll continue that. Where we can put things online, we will. but we won't leave users to flounder. We'll give them all the necessary support. Now I just want to return back to interest. Because it's been quite topical at the moment. So to give you a feel, the annualised amount that we paid in April was 3.8%. Now we, and this is instant access cash on the Transat platform, we placed that cash with a variety of banks that meet where we're happy with their credit rating. They all have UK banking licences and we pay all of that to the clients on the Transat platform. There's various industry analysis in the last one published in February, we paid the second highest rate of growth gross interest of any UK advice platforms. But we also had the one of the widest range of banks that we use for this pooled cash. So we have an award-winning proposition. We maintain the highest net promoter score in the industry amongst users of our platform, of any platform. We received a platinum rating by Advisor Asset. We are the most considered platform when advisors are looking to switch over the next 12 months. And we have a 91% satisfaction rating amongst our primary users. That's regular users. And that's the highest satisfaction rating amongst every platform. On the bottom left-hand side, you can see our ranking in the various surveys. We often split them between all users and large platforms because sometimes you get very small platforms that can do quite well. So in the latest investment trends, you can see we were second across all platforms, but first amongst anyone over 25 billion, actually above 15 billion. And then on the right hand side, you can see this was from Core Data, where one of their areas they research is platform functionality, which is absolutely key importance. And you can see there we rank number one. So it's an award winning service proposition. Alex mentioned where we sit in terms of our ranking by funds under direction. And there you see, we sit in third place with 10% market share behind Aberdeen and Quilter. But in terms of net sales, we perform very well. And you can see here, we have the second highest net inflows across all advisor platforms in the half year to 23. 1.6 billion ahead of Aviva and AJ Bell. True potential are higher than us. That is driven by an acquisition strategy. Transacts growth in FUD and flows is entirely organic. So over time, we grow our funds under direction and we grow our clients, as you can see from the left-hand side. Now, as that client base grows, then That's really good because it means that many, many of those clients top up their portfolios. They're happy with our service. They're happy with our advisor. And therefore, they put more money on the platform. So that was accounting for just over 40% of flows is happy existing clients bringing more money to the platform. The largest area, the 56%, is advisors that are Transat supporters that continue to bring new clients to us. So they're happy with our service and they want to bring more of their clients to us. And that's the largest area of growth. And that will continue to be the largest area of growth for our inflows. So in terms of new advisors and new platforms, we're not reliant upon that. And just because of our scale these days, you'll see that that accounts for just 2% of the inflows onto the platform. So our closing funds under direction for the period was 54 billion. But you can see during the period, the average daily, which drives our charges, was 52.6 billion across that period. And that was largely because of the volatility in the marketplace. Advisors registered and using Transact has gone up 7.6 thousand. That's a lot of advisors. And we don't because we've got a large number, we don't have concentration risk. The top 125 firms, for example, that have many advisors within those firms hold less than 50 percent of Transact FUD. In terms of clients, now 228,000 advised clients, and you can see there, whilst the average portfolio size is 237,000, when we look at the family groups or household, if you like, then that's £374,000. So we're in a nice place. The average client age is 59. We have a lot of pension customers. We also have a lot of their children as customers as well. So when we think about the universe of UK advisors on the FCA register, it's about 35,000. About 22,000 are working for banks, for discretionaries, retail banks, private banks, or restricted advisors like St. James Place. So we have 7,500 over to the right that are registered to use Transact and already have at least one client with us. And then we have another 5,500 that is contestable. And we continue to penetrate that 5,500 and sign those up to use the platform. But as I mentioned earlier, most of our growth will come from increasing our share of wallet amongst that 7,600 that are already users. That's the single biggest driver of our growth.

and at that I'll hand back to Alex to provide a financial update thank you Jonathan so moving on to the financials for the period group revenue remained resilient over the half year at 66.5 million as the effect of the geopolitical and macroeconomic environment caused average flood for the period to fall 1% year on year and the impact of transact price reductions flowing through As expected, half-year 23 produced moderately lower underlying reported profit before tax figures than half-year 22 due to the planned investment in additional IT staff for our enhancements to platform digitalisation as well as the impact of inflationary pressures. The underlying result is adjusted for non-underlying expenses of £1.5 million relating to time for advice post-combination remuneration. We expect to continue to see a gradual decrease in platform revenue yields as the effects of price reductions offset increased revenue from higher funds under direction. These price reductions help to enhance the overall transact proposition and simplify our fee structure, as well as position us well for the requirements of value for money under the new consumer duty regulations. Annual commission income has fallen slightly due to a combination of the average daily FUD for the period falling year-on-year, plus the price reductions implemented in July 2022 impacting the whole six-month period. Wrapper administration fee income increased 7% year-on-year, reflecting the increase in the number of open tax wrappers and highlighting underlying platform growth. These two recurring revenue streams, annual commission charges and wrapper administration charges, together contributed 99% of the total platform revenue. Other income fell slightly over the year as this includes buy commission. This is an amount charged to customers on the acquisition of assets in their portfolios. It only applies to smaller portfolios and is gradually being removed as a charge to clients. Time for advice revenue increased by 41% over the year, consistent with the 41% increase in licence paying QRO users. T4A also doubled its consultancy fee income year on year. Staff costs for the period increased 13% year on year. This was the main driver of the increase in total group costs. The increase in staff costs is due to a number of factors. The increase in total group headcount due to the additional IT and software professionals we've added. Pay rises for group employees to reflect the impact of inflation on the cost of living. and to a limited effect, the limited impact of a salary bonus reconfiguration effected in October 2022. Regulatory and professional fees increased as the financial ombudsman service element of regulatory fees levied on UK insurance companies went up, with ILAC, our UK insurance company, having its fees doubled over this period. There were also increases in other components, regulatory components of the fees levied. Over the past 12 months, we've added 25 new software development, IT infrastructure and IT security staff. Recruitment will continue into financial year 24, but with no increase in the previously announced planned additional headcount. And as shown on this slide, the group continues to maintain a healthy liquidity position. On time for advice, the Curo software continues to attract new users with a 41% increase in paying licence users year on year. This licence fee income is the main revenue stream for T4A and is recurring. Additionally, all live Curo licence fees were increased this year in line in response to the cost of inflation and this has now been effected into all Curo contracts such that they will continue to increase in line with inflation year on year. Moving on to guidance. During 2022, we provided greater insight into our cost guidance. We set this out again here for the benefit of clarity. There are no changes to the cost guidance previously announced in December of last year. We have added a line at the bottom with guidance on income tax relief due to shareholders, as I believe this is quite complex for modelling. And for purposes of modelling, this is expected to be around 1.1 million per year. But the final amount will always be dependent on market movements. And the guidance on slide 32 also remains unchanged. We will continue to erode the platform buy commission in future financial years to simplify our pricing structure, but there'll be no further price cuts in financial year 23. So finally, to recap, we've delivered resilient results in volatile markets amidst an uncertain macroeconomic environment. The opportunities in the UK advisor market remain compelling, and we're well positioned to take advantage of these opportunities in 2023 and beyond. Our award-winning proposition, the Transact platform, continues to win market share, delivering strong net inflows. Our platform digitalization program is well underway and being highly positively received, and we remain strongly focused on our aim to be the number one provider of software and services for clients and UK financial advisors. That concludes our presentation. We'll now move in and take questions.

Thank you. Thank you very much, sir. Ladies and gentlemen, if you would like to ask an audio question, please press star 1 on your telephone keypad. Please also ensure your mute function is not activated in order to let signals reach your equipment. So once again, ladies and gentlemen, please press star 1 at this time. Our very first question is coming from Alex Metters calling for Barclays. Please go ahead.

Yeah, morning all. Thanks for the presentation and thanks for taking my questions. Three for me, all fairly high level, to be honest. Firstly, can you comment on the sort of health of the smaller advisor firms you deal with in the context of consumer duty and other regulatory developments? Do you expect any material pressures on advisors' businesses over the coming months and years that might affect growth at all? Secondly, we saw Quilter's announcement yesterday, they retain a bit of interest on client cash and reinvest that in price. You're clearly a bit of an outlier in your approach, both within the UK context and globally among platforms. And clients are earning much more on cash with you than they would anywhere else on site deposits. Would there ever come a point where you'd retain any interest and use that additional revenue to support reinvestment on either pricing or costs? And finally, are you in a position yet to give a view on the medium term potential from a financial perspective or time for advice? Thank you.

Do you want to pick up the first up, Jonathan? Yeah, sure.

Hi, Jonathan here. In terms of the health in the advisor market, I mean, there is some consolidation taking place in the UK advisor space where some smaller firms – you know, sell out to large firms. There's probably even more MBO activity though. So where the younger advisors are finding ways to, to buy out the principals who wish to retire. So obviously we, we monitor this carefully. We've noticed a very slight movement from smaller firms to larger firms. I mean, some of our users have acquired companies, other smaller firms, for example. So I think the overall market is very healthy because the demand for advice is very big. And you always find when there's consolidation, it doesn't necessarily suit all advisors. So guess what? They leave and start up a small firm. So I think we'll see a little bit of movement towards medium-sized firms, but not so far. It's not a huge scale. So that's the first one. Yes, we noted Quilter's announcement. So our personal view is that we think our approach is very much in line with consumer duty. We think it's the right thing to do. It's the client's money. It's their investment return. It's no different to earning a dividend. And we wouldn't skim any dividends, so why would we skim interest? Advisors like and respect our approach, and it's certainly one of the things that's helped us achieve a 19% share of net flows. So our plan is to stick with the approach we have because we think it has integrity.

Thanks, Jonathan. And then moving on to your question on time for advice, Alex. I mean, just to sort of give this some context, the sort of addressable market for time for advice is the whole uk advisor market it's not limited to independent advisors in the same way that that transact is and the way the license fee structure works when we sell into a business there will be pretty much a license per user within that business so a firm with two or three advisors may end up adding 20 30 licenses to the user base of Curo. And the focus at the moment is very much to sort of be dealing in the first instance with those advisor firms that themselves are looking to consolidate. And that's helping to not just grow new firms on Curo, but also that continuing growth of those advisor firms is increasing the license revenue. Now, the speed that we can grow time for advice is highly dependent on the speed that we're able to implement the new product that's been through its core user testing phase that we've been running. And actually, that's come out very well. But what we're going through now is a process that we talked about where we want to make this easily implementable in each advisor's offices. And that's key because what we need to do is make sure we don't need to keep adding large numbers of implementation staff as we grow the business and that we don't need to be adding loads of developers because each implementation has its own unique specifications. So that's the piece of work that's just been sort of worked through now, just to finalize those bits through the, as I say, now we've come out of the base user testing, which has demonstrated that the underlying product is good and delivering as we expected in, say, 99%. There's always a few issues that need to be cleaned up. So we're sort of in that position now. And at this point in time, we haven't changed our guidance. We're continuing to expect to see more licensed users coming onto to Curo, but still very gradual for the short term until we've just finalized this piece of the implementation development.

Great. Very helpful. Thank you. Thank you very much, sir.

Our next question is coming from Rahim Karim of Investec. Please go ahead. Good morning, guys, and thanks for the chance to ask a couple of questions. both around market share, I guess. It'd be useful to think about whether you actually have a view on what the maximum share that you could achieve in the industry is. Obviously, 19% of the flows would suggest that you could get 20% longer term. Is that the right way to think about it? And then secondly, you talk about growth coming from your existing advisor base. Presumably, that means that you're going to take greater share of flows amongst those advisors. I understand that most advisors probably use two or three platforms. Could you give us a sense of kind of where you currently sit? Are you kind of second or third choice in your view is that you can move to first or second choice over the next few years? Or am I thinking about that in the wrong way?

Maybe I'll take this second question first. We actually segment all of the advice firms by our share of wallet. So there's some firms where we get more than 80% of their business. So obviously they're in the top category. Down at the bottom category is where we get less than 20%, which is typically new users. And obviously our aim is to grow. So we've got actually five segments, and our aim is to move people from where we have a low share of wallet to where we have a higher share of wallet. You never get 100% because most advisors like to have at least one other platform for... their own resilience and often perhaps for smaller portfolios are where they need, need certain things. So that's the plan is to grow the, the, the share of wallet amongst each, each firm. It's pretty hard for us to calculate how much we, haven't got. So what is our share of wallet across those 7,000 is almost impossible to calculate. But it's absolutely an enormous number that is there. So that's how we will grow our market share through a greater share of wallet of those existing advisors and through adding new advisors. When we add a new advisor, it would literally take as long as three, four, five years to penetrate their book. The advisors are very cautious. They'll open a portfolio. They'll test drive the platform before they transfer more customers to it. The first portfolio is often their own. So they test drive with their own money before they bring their clients. So it's a slow process. And I'm okay with that because if we bring firms on too quickly, we don't have time to train them properly in all the functionality. So it's better to be steady and thorough than rush it across. I think how far can we grow our market share today? you know, sort of impossible to predict. So we'll just keep doing our best and keep increasing our share of wallet.

Okay, great. Thank you. Can I maybe just push on that last answer in the sense that do you think there's a reason that Aberdeen and Corkshire are kind of topping out at, say, 15% or so, and there's nothing that would stop you from going beyond that?

So there's no sort of... There's no real reason why we – there's nothing inhibiting us from growing our market share further. Obviously, you've got to continue to deliver on all fronts to do that. So, yes, we will – obviously, it's a high priority to try and do that, but, you know, it's impossible to predict.

Okay. Thank you so much. Thank you, sir. We'll now move to Mr. Greg Simpson of BNP Paribas. Please go ahead, sir.

Hi, morning. Guys, thanks for the information again. Can I ask if you can share anything about the sentiment or forward-looking indicators from advisors around the flow backdrop and their clients' ability to invest, how much of things like mortgages an issue. We did see gross outflows pick up a bit in Q2. But yeah, just any kind of feedback you're hearing on the ground would be great. That would be the first question. The second one would be on the cost side. I know you've got the detailed cost guidance there, but once the investment in technology and hiring associated with that is complete, is there a way to think about what the steady state cost growth could be? What the staff numbers grow out once you've got all these enhanced digital capabilities? And then the third one, just a short one on cost of sales was 2.3 million. It was about a million a year ago, I think. What's in that line? And just a weather jump and an outlook. Thank you.

Morning, Greg. Thanks. I'll pick up your last two questions and then hand over to Jonathan to pick up on advisor sentiment on flows and clients' ability to keep putting more money with us in the current economic climate. On the cost guidance on staff points, once we've added these IT staff, we then expect to move to a position where So the growth in IT staff numbers year on year would be sort of single digit numbers. I mean, it will be a very steady growth from there. And what will offset against that is actually the number of staff that we then need to add in the operations area relative to the amount of clients and advisors that we add. So we're sort of trying to work on a metric of growing our sort of operations staff to a point that we manage a number of advisors and a number of clients with each client services member of staff and driving that number down. And we've sort of been... managing that and balancing that over the last few years, but sort of keeping our service levels up. We need to keep that in a clear place, but it will bring that number down. So in terms of sort of thinking about the future growth, we need to get ourselves back to being no faster growth in our client advisory numbers. services manager numbers than we were before and actually gradually managing to improve that number as those efficiencies of digitalisation come through with just a sort of a gradual four or five people per year sort of growth in our IT side to keep us on top of things and keep growing the systems forward and keeping our tech at the forefront as we have done for many years. And then just picking up on your cost of sales point, yeah, there's a few things feeding into that number there. There are a couple of things coming through. On the consumer duty side, we've had to buy in some more data feeds. that are required for us to be able to provide our full oversight of regulatory requirements across the whole distribution chain now. I'm not sure how much you're familiar with this, but with the change in consumer duty, we seem to have to take responsibility for what everyone in the chain is doing, not just what we're doing. And that's required us to bring in some more data feeds and services there. So they're included in the numbers. They won't go up in the same way again in the next half year. And also in there, there is a bit of additional compensation coming through. And there is also sort of an ongoing growth that comes from the T4A business. Because as T4A sells its licenses, each additional license, one of the costs associated with the business is the provision of a Microsoft license that goes out with that system to the clients. So that will continue to grow. But overall, the growth we've seen in this first half year, I wouldn't be expecting to see that continue in the second half. It will revert back to something much closer to the sort of levels that we've seen in previous previous half years.

And coming on to the flows, certainly investor sentiment in the UK has been more cautious because of market volatility, because of the economic backdrop and the geopolitical backdrop. So there's definitely more caution, which is why flows across the industry are lower, and our flows are lower than prior year. The space we're operating in, I mean, they're not immune from these economic knocks, but they're not quite as vulnerable as some other parts of the UK population because they're relatively wealthy households that advisors are dealing with. But advisors tell me that a lot of clients are sitting on their hands. You know, they don't want to invest at this time or they've been a bit more cautious in how much they're depositing. Some of the retired customers are actually withdrawing a bit more than previously for income purposes because of cost of living increases. One important thing to note is advisors, because advisors are... consolidating clients assets onto platforms there's a lot of transfers so well over half of all of our businesses transfers from these other areas and those transfer values are lower because of stock markets being lower so at one point when we looked at this in i don't know december time the average value coming in was about 15 percent lower than it was two two years prior and that's purely because of stock market um impact on the value of assets being being transferred in so there's not a lot anyone can do about that um so we just focus on increasing our advisor numbers, increasing our client numbers, increasing our market share, because then as everything comes back, we'll be best placed.

Got it. Thank you. Thank you very much, sir.

Ladies and gentlemen, once again, if you have any questions or follow-up questions, do press star 1 at this time. Our next question will be coming from Mr. James Allen of Liberum. Please go ahead, sir.

Hi. Morning, guys. Thanks for taking my questions. Three, if I can. Firstly, just a question on the cost guidance. Why has there been no change to the guidance FY23 if recruitment has been a bit slower than initially planned in the first half? Second question, forgive me if this was in the presentation somewhere, but what was the T4A profit or loss before tax in the first half? And then thirdly, the salary and bonus reconfiguration in October 2022. Can you give a bit more information on the weighting towards basic or variable pay as part of that reconfiguration, just to understand how the operating leverage in the business may change over time as a result of that change?

Yeah, sure, James. I'll pick those up. On the cost guidance piece, one of the reasons that we've sort of not changed the guidance is because whilst we've been a bit slow recruiting actual staff to come in and do the jobs, the IT roles and the people that we want... to keep permanently within the business. To keep things moving along, we have actually been using some external consultancy and the amount of that consultancy is actually reducing month on month as we go down. And we've also been running sort of some overtime programmes as well that we've got to a level now where we don't need to continue doing that and actually we've increased the numbers to a level where we're happy with where we are and we can keep bringing the new individuals in at the rate that we planned. I think it probably naturally then flows to pick up the third part of your question there. The The change that we made in October, this applies to all of our staff. The bonus structure was pretty much a 20% bonus structure on top of basic pay. And there were performance metrics around that. Most of them were focused primarily on business performance and then some on individual performance. What we've done... to actually give staff more certainty of pay in these uncertain times, we actually changed that structure. So we increased their pay by 10% into their pay, but reduced the bonus down to being a structure where we expect to be paying about 10% to 12.5% in total. Exceptional staff will be able to earn still up to the 20%, but only if there's exceptional company performance and exceptional individual performance. So as part of this process, we've also been going through quite a significant program internally on reshaping our performance management pieces of the actual staff. and this filtering through. And the staff have actually been really positive and bought into this. It's had quite a positive effect for them, actually seeing their take-home pay actually going up at this time, but accepting that they probably won't be getting as much in their bonus pot, but actually it's driving all the right characteristics and what we want to get the right attitudes and responses from staff. And as for T4A, T4A is still making a small loss in the half year to date. I haven't got the exact number in front of me because I haven't actually got a set of accounts in front of me at this moment. So we can come back to it. It is most definitely in there. But I just don't have the number in front of me at this very moment.

Thank you very much. Thank you, Mr. Allen. Ladies and gentlemen, as a final reminder, if you have any questions or follow-up questions, please do press star 1 at this time. We do not appear to have any further questions. Mr. Scott, I'd like to turn the call back over to you for an additional closing remarks. Thank you, sir.

Thank you. And thank you for everyone for attending this morning. And we wish you all a pleasant weekend.