Premier Miton Group (LSE:PMI) — Investor Presentation

0:01 Good afternoon, ladies and gentlemen, and welcome to the PREMIER MITON GROUP PLC investor presentation. Situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it's appropriate to do so on the investor meet company platform.

0:32 Before we begin, I would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from PREMIER MITON. Mike, good afternoon, sir. Good afternoon. Good afternoon, and welcome. Thank you for joining us today and for attending our presentation. I'm Mike O'Shea. I'm the chief executive of PREMIER MITON, and I'm joined today by Piers Harrison, our chief financial officer, and right next to me, Joffe Wilcox, who's our global head of distribution. Together, we're going to run you through the results for FY twenty three, highlighting the key issues that we are seeing in the market. We'll also discuss the outlook for the current year and beyond. We have had a number of questions submitted already and we will cover these off after the main presentation or as many of them as we can.

1:23 But please feel free to post any questions that you would like us to address and we'll do our best to get through them all at the end of the session. I will actually kick off proceedings with a summary of where we are, how the last year has played out and where we see the opportunities. There is no doubt that the last couple of years have been a difficult period for the asset management sector in The UK. The rapid increases in inflation and interest rates coupled with a difficult geopolitical backdrop have created an environment where sales of mutual funds have been depressed. We've also seen as an industry an increase in redemptions as investors have looked to reduce debt or retreat to the haven of cash now that interest rates have risen.

2:15 Weak flows and depressed equity markets have been particularly challenging, and it has been difficult for us against this backdrop to demonstrate the strategic benefits of the merger that we completed back in 2019 as assets initially rose and then fell back again. Above all, the environment for attracting new flow into our fund range has been as difficult as I have known it in over thirty years. However, we should not lose sight of the fact that we remain a cash generative and profitable business. We've been able to demonstrate good cost control in the more difficult environment of the last two years and our balance sheet remains robust with some 38,000,000 of cash and no debt as at the end of September last year.

3:07 Our investment performance remains strong over the long term and we have seen a significant improvement across several of our equity strategies in the very short term. Performance across our fixed income and multi asset strategies remains impressive over both the short and long term timeframes. I think it is worth highlighting that the market cycle and the timing of any market recovery has really been out of management's control. So we have very much focused on those value drivers that we can control. And this has led us to build a diversified portfolio of investment strategies so that we have relevant funds that can attract assets when markets recover.

3:57 For example, adding fixed income, global small cap, and global emerging markets to our fund management lineup. We have also invested in strengthening our distribution and marketing capabilities under Joffe, who joined us from M and G a little over a year ago and from whom you will hear in a few moments. We have spent considerable time building and improving relationships with fund buyers by targeting our marketing strategy and focusing our distribution efforts effectively so that we are on the buy lists for when demand improves. We have begun the journey of developing our presence in the institutional market with the hire of a head of institutional distribution and are making headway in this area which will help diversify our client base over the coming years.

4:54 We have also started to develop our presence outside of our core UK market and hope shortly to be able to announce a new initiative that will enable us to build offshore fund capability allowing us to access an even wider client base as and when demand improves. We have also continued to review opportunities to broaden our fund range, access new markets or develop new investment capabilities through inorganic initiatives of which the recent acquisition of Telworth is a good example and I will speak more on this shortly. I think it is fair to say that our business is potentially more highly geared into any upturn than many of our peers given the significant work that has taken place in building our product range and our distribution reach over the last couple of years.

5:52 I would argue that the key drivers of this gearing are our diversification and our strength in distribution and marketing. A good example of diversification and distribution in action has been our move into the fixed income area with the hire of a top performing team from Merion just over three years ago. Clearly it takes time to develop a team like this and to establish credibility in the market. However, we are very pleased with progress to date and we have now established a strong three year performance track record and attracted around £1,800,000,000 of assets under management for this team to manage. I believe we are now very well placed to attract further assets over the coming years and to really accelerate growth in this key area.

6:42 As a business, we will therefore continue to invest in diversification and in distribution. We will also keep an open mind about inorganic opportunities that will allow us to support either of these objectives. I believe that the more difficult market conditions of the last two years are going to make such opportunities for M and A more rather than less likely. Now turning to our results for the year, we closed the period with 9,800,000,000 of assets under management. We note that although markets fell further during October, they have been on an improving trend since November and we will be updating the market with our current level of assets under management on Friday this week.

7:31 In general, it is fair to say that the improvement in markets we have seen in the last couple of months has definitely improved sentiment and our distribution team are reporting an increase in interest for several of our several of our equity strategies. However, from data we have seen across the industry, we think it is probably too early for this improving sentiment to have had a noticeable effect on fund flows just yet. But the improvement in sentiment is welcome nonetheless, and Joffe will be updating you on trends in the market when he speaks in a moment. Investment performance remains good over the long term. As mentioned, our fixed income and multi asset funds performed well over the year, although our equity funds found it more challenging as market returns were concentrated at the very top of the market capitalization range.

8:24 As noted previously, the broadening out across equity markets that has occurred since the end of October has been very helpful for our funds, which tend to run with high active shares and which have greater exposure to large, mid, and small cap stocks rather than the global mega caps that have been responsible for so much of the equity returns in the last eighteen months or so. A good example of this is our mid cap focused European opportunities fund, which underperformed the main European equity index by just over 6% during the first nine months of twenty twenty three, but which outperformed the same index by almost 7% in the last quarter, and the index itself was up by seven.

9:12 So things can change very quickly. In terms of adjusted profit before tax, these stood at 15,700,000 for the year. And as mentioned, balance sheet cash stood at almost 38,000,000, and peers will provide further detail on these numbers shortly. The board is proposing a final dividend of 3p, bringing the total for the year to 6p. Moving on. And as mentioned, the general market backdrop over the year remained challenging driven by higher rates, higher inflation and a risk off approach from fund buyers. In common with other fund groups we have regular withdrawals from our funds as regular as well as regular inflows.

9:59 The net flow position is actually the difference between these two often quite large numbers. If the net flow number is negative that can be because redemptions have increased I. More people than normal are taking money out or it can be because inflows have fallen, I e, less people are buying than normal. And for us, f y twenty three was very much categorized by the latter. Our withdrawal number was marginally down year on year and has remained at a similar level for each of the last three financial years. The main issue for us has been a marked fall in the level of inflows which fell from around $420,000,000 per month in FY twenty one to around $240,000,000 per month in FY twenty three.

10:51 So our net outflow position has been driven by less buyers rather than more sellers and that is consistent with the general environment for fund flows that we have seen. On this slide, we highlight the scale of the turnaround we have seen in fund flows here in The UK. In the past two years to September 23, we have seen 35 as an industry, 35,000,000,000 of net redemptions from equity funds. There has only been one net positive month for equity sales. We've seen 25,000,000,000 of net outflow from UK equity funds, 2,000,000,000 of net outflow from multi asset funds, a billion of net outflow from fixed income funds, and it's really only been money market or cash funds that have seen net positive inflow during the last two years. So that backs up our contention that the general market environment has been very difficult.

11:53 But these things go in cycles, and we'll touch in a minute on our views on the outlook, but we do believe that we're past the worst of this recent trend and that'll be driven by interest rates coming off the top. As we've already discussed investment performance remains strong over the longer timeframes and is respectable over the shorter periods and I believe that this leaves us very well placed for when buying demand improves.

12:24 Just turning to the recently announced Telworth acquisition which was announced after the period end. The transaction currently remains subject to regulatory approval as at the date of this presentation and we expect that to come through during the first quarter this year all being well. Telworth is a very highly regarded UK equities boutique that has a particular strength in liquid alternative strategies being their long short equity hedge funds. They also have an attractive track record in UK small and mid cap long only equities. It is our view that the long short strategies in particular will be attractive to investors in the period ahead as we believe that concentration within markets will broaden and the opportunity to produce attractive returns for these strategies will be enhanced.

13:18 It is also fair to say that Telworth brings us access to a wider client set than we currently cover with exposure to family offices and more institutional investors both in The UK and offshore. This is attractive to us as we believe it will help accelerate our progress in these areas. During the first half of twenty twenty four subject to regulatory approval, we will be migrating the Telworth team onto the PREMIER MITON platform to ensure that we deliver financial efficiency and enhanced distribution capability. Bringing Telworth onto our platform and focusing our distribution efforts will we believe allow us to scale Telworth's assets under management so that it makes a valuable contribution to our overall business.

14:16 Overall, I believe that the investment case for PREMIER MITON remains attractive, notwithstanding the more difficult couple of years we have been through. There is little doubt that the dislocation we have seen in markets is creating good investment opportunities for our investment teams. As markets recover and as the incredible levels of concentration risk inherent in them unwinds, our funds will perform well. Our distribution capabilities are well placed to capitalize on this opportunity and our plans to expand our reach into new markets both beyond The UK and institutionally will be helpful in accessing new sources of fund flows. Our investment performance record is strong and we have a well diversified product set covering both UK and non UK equities, fixed income, multi asset and now with the inclusion of Telworth long short absolute return strategies.

15:16 We have a robust balance sheet that will allow us to weather the current turbulence. We see PREMIER MITON as being extremely well positioned to take advantage of the many M and A opportunities that are emerging given our track record of successful execution of previous acquisitions, our strong management team and our adaptable and scalable operating platform. I strongly believe that we as a business are highly geared into the recovery when it comes and we are well placed to return to growth as sentiment improves. I would now like to hand over Joffe to talk you through the various initiatives we are working on in marketing and in distribution. Joffe? Many thanks indeed, Mike. And I wanted really to begin by picking up on a chart that Mike showed earlier, which shows the impact of flows into and out of mutual funds in response to those interest rate moves.

16:15 Now when rates dropped from 5% in the aftermath of the global financial crisis to less than 1%, the industry benefited from vast inflows of SABRS capital, as you can see, but not just risk capital. So when SABRS saw an 80 to 90% collapse on the blue line in their income from deposits, they move from fixed interest to fixed interest funds to replace that income stream, and over time, some of that money also find its way into multi asset funds. It should therefore come really as no surprise that with deposit rates soaring back above 5%, savers' capitals returned home to cash or indeed been used to pay down debts such as mortgages, etcetera. Thus, last year was undoubtedly the year of cash and not just cash deposits.

17:01 National Savings also took 7,500,000,000 in just five weeks in August of September last year, their recent six point two percent one year term bond. So this fight of savers capital and of risk capital also seeking lower risk risk behaviors has provided that challenging backdrop that I mentioned for asset managers looking to generate inflow across their range of funds. So the question is, how have we responded to this environment? So whilst equity risk appetite has been rather muted, we have been focusing on establishing our credibility in fixed income funds, as Mike's already mentioned, where we saw net inflows of over £550,000,000 across our range of fixed income capabilities. In response to that flight to cash, we also pivoted our sales and marketing campaign to promoting our UK money market fund, yielding well over 5%, which has also now started to see steady inflows over the last few months. We continue to be known for multi asset funds, especially in our directly invested diversified multi asset range, where we also saw inflows around 220,000,000.

18:06 However, I also want to talk about other other growth levers that we are now putting on. Firstly, let's talk about NPS. The managed portfolio service market continues to grow unabated with advisers continue to move away from funder funds and into other multi asset and same strategy funds into NPS. And this trend has accelerated over the past year following introduction of consumer GT with adviser preferring to outsource their clients investments to a third party rather than expecting the funds themselves. So consequently, with our brand heritage and legacy of offering multi manager and multi asset solutions to the adviser market, we believe we are very well placed to provide an NPS solution ourselves, which is a project we hope to launch during 2024 to capture market share in what is a strong growth market.

18:56 Secondly, as Mike also mentioned, we continue to build out the core foundations for generating success in the institutional market. And during the year, we've been very active in institutional conferences, sponsoring and speaking at various events. We're leading with our emerging market sustainable fund capability, whilst also raising our our profile and credentials with increasing media activity. And we're now also looking to extend our institutional awareness campaign internationally, which kind of brings me on to my third point on the screen, our fourth point, international. So if I look at international, so I've just dropped my screen. So when we continue to build out our international reach, we've already done so with nine funds registered in Ireland.

19:42 We've done we've already got a third party marketing partial in Latin America to service pension funds in Chile and Peru, and we already have some assets from Israeli pension funds, and we're concurrently exploring registration of our funds in South Africa as well. And fourthly, you know, like Mike, I'm very excited about the Telworth acquisition, which not only brings additional UK small and mid cap capabilities, as Mike mentioned, but also that new long short liquid alternatives capability and that's access to a new cadre of potential investors such as other institutional hedge fund clients, not just in The UK, but also internationally. And last on the screen, I also think the retirement income market presents a huge opportunity for PREMIER MITON, which I'll come back to on the next slide. So one of the things I've definitely seen over the past year is that whilst many advisers and wealth managers are aware of our individual fund capability and credibility, the adviser market, in my view, soon has yet to fully appreciate the true potential of PREMIER MITON's offering, bearing in mind our broad depth and strength across all the

20:49 asset classes and our growing distribution and brand reach. And so we feel we are very well placed to grasp these growth opportunities that lie ahead. Now, over 83% of the invested assets in The UK is owned by those aged 50 or more. So as an industry, across asset and wealth management, we've been focused on that accumulation phase as these generations of investors have grown older. But today, though, the vast part of the addressable market is now getting closer to retirement or is retiring or, in fact, has already retired. Thus, there is now a huge swathe of investors who need income, not just growth. And with higher inflation rates and income that can grow over time to keep pace with the higher cost of living, especially as many consumers expect to live for over twenty years in retirement.

21:46 Currently, many advisers in The UK continue to use unit encashment to raise cash, to provide income in retirement. That kind of work when capital gains tax allowance was much higher, but with capital gains tax allowances falling and with volatile markets and the associated impact and sequencing risk, the risk of causing foreseeable harm to investors is growing as we await the outcome of that FCA thematic review of retirement income advice. So as a consequence, we believe that we'll see increased focus on those funds and strategies that can generate a growing natural income over time. And with our track record across a number of funds that have grown their income streams over time, we are well placed to benefit from that trend over the next few years. Now in a world where we cannot control markets and we cannot control client sentiment, what we have to do is focus on what we can control. In distribution, we have to focus on providing the best possible service to our intermediary and institutional clients.

22:49 So when investor sentiment turns more positive, those advisers and wealth managers and institutional clients will pick up the phone to PREMIER MITON first. Now this slide is drawn from a survey from recent research and finance, which shows how well our intermediaries know our distribution teams across both the discretionary fund manager and the adviser investment adviser channels, which is testimony to the high levels of service and ongoing contact we have with our intermediaries. And to that end, I can also share that our forthcoming annual investment conference at the end of February, which we aim at wealth managers and investment advisers, we now have over 270 registered attendees, which is dramatically up from the number of a 140 attendees who came last year.

23:36 So which goes just to show that we're continuing to gain traction in the intermediary and that our client base is genuinely interested in our investment products and solutions. And from that same survey, we also asked the discretionary fund managers and investment advisers what they thought or what they think of PREMIER MITON now, q three twenty twenty three, compared to a

23:59 year ago. And you can see just how much we have moved the needle in just one year in terms of clients now recognizing us for our fixed income capability on the left hand side, where going back to the previous year, there is no mention of this. Furthermore, going back to my other remarks, can see how consistently investment advice on the right hand side say we are well known for our multi asset and multi manager capabilities, which also augurs well for our plans in the NPS market going forward. So to conclude, as asset managers, we have to adapt to changing world around us. Being the short term as investment sentiment changes across different asset classes, whilst also ensuring that we are strategically well placed to benefit from long term structural changes, not just in The UK, but also over time internationally.

24:46 We have a broad suite of products, importantly, to cater for different clients' needs, and we will continue to evolve this slide now as you can see from the Telworth acquisition and the launch of our new emerging market

24:58 sustainable fund during the year. In other words, from my perspective and from all of our perspective, the most important aspect is to remain relevant to our intermediaries and investors in helping them to achieve the outcome that they seek and to remain a trusted partner to all. So bringing all of that together, we feel there are significant growth potential for our fund rates across the different asset classes, be it fixed income, which is now an investable asset class again with attractive yield profiles via multi asset and NPS with our multi manager and multi asset team. And of course, as Mike has already said, as risk appetite returns in due course, we have a broad and well recognized equity fundraiser to take advantage of that renewed investor flows into equities.

25:44 And with that, I'll stop now and I'll hand over the baton to Piers.

25:49 Perfect. Thanks, Joffe. So if we turn to Slide 15, we've got a summary of the financials the key financial metrics for the group. Now the group generates management fees or or our income, which is which is based on the levels of assets being managed. So for FY '23, the average assets under management or or AUM as we like to refer to it for the year was 10,800,000,000. So this was down some 14% on the comparative period.

26:18 Now the average AUM is the key driver of our revenue and the decline resulted in lower net revenues for the business and an adjusted profit before taxes, Mike mentioned earlier, of 15,700,000 for the year. Now if we turn to the profit and loss account, the group's opening AUM was 10,600,000,000 and at the year end, this had decreased 7% to 9,800,000,000. If we look at the sort of the flow position for the year despite ending the first half of the financial year broadly flat in terms of flows, we saw a slowing of the sales as Mike mentioned earlier and an acceleration of redemptions in the second half much of it in The UK and European equity space. We saw continued inflows into our fixed income and diversified multi asset funds.

27:06 However, the financial year to September 30, we saw net outflows of 1,100,000,000 across our product range.

27:13 So the net revenues decreased by 14,300,000 to 66,900,000 for the year, which reflects the lower level of average AUM I mentioned earlier. The net management fee margin for the period was 61.7 basis points, so a reduction on 2022 mainly due to the change in the group's product mix. And we saw administration expenses decreased by 5,400,000 to 51,400,000 for the year.

27:43 Now, people continue to be our largest asset, but also the largest portion of our cost base and that comprises both of fixed and variable costs. If we look at the fixed staff costs, these totaled 22,800,000 for the year as that was an increase of 2,400,000 on last year and that does include 1,000,000 of staff related restructuring costs which we completed during the year. At year end, again, September 30, the group had a 159 full time staff and this was actually down by seven on on the same period last year. Now variable staff costs they totaled 9,700,000 which was a decrease of 7,600,000 over the comparative period and these costs move with the net revenues of the group and the adjusted profit before tax.

28:33 As already noted, the adjusted profit before tax was 15,700,000 being a decline of 35% on comparative period with the amortization charge and the share based payment expense remaining broadly consistent with the prior year at 4,800,000 and 4,700,000 respectively. During the year, we incurred exceptional costs of a 250,000 which was following strategic review to cease the development of the group's online portal Connect and the resulting profit before tax

29:07 for the year was 5,900,000. We are continuing to be focused on aligning our costs with revenue and good progress was made during last year in that regard and it's something which we keep under watch as we move through 2024 and the outer years. As Mike mentioned earlier, the group had 37,900,000 in cash at the year end and no debt. And if we look at the next slide, that was the regulatory capital surplus position at the year end after the proposed dividend. Now the board is proposing a final dividend 3p per share which will be payable on the 02/16/2024 and that brings the total dividend for $20.23 to 6p per share and a payout ratio of 68%.

30:00 The group has a stated dividend policy which is to target an approximate payout ratio roughly between 5065% of the profit after tax which is adjusted

30:12 for exceptional costs, share based payments and amortization. And the group continues to distribute twice yearly in line with our reporting calendar. So I think that's a quick summary of the financials and I'll hand back to Mike now for a summary. Many thanks, Piers. To summarize the outlook, I think market conditions are definitely improving for our sector and we are amongst the most highly geared plays into this recovery. There is no doubt that volatile markets are creating opportunities for our high performing investment teams, and the changes that we have made to our marketing and distribution capabilities mean we are well placed to take advantage of these. We do remain, as Piers has said, a highly cash generative and profitable business, and we do provide a very attractive home for fund management talent with a strong and collaborative culture focused on client delivery.

31:11 Finally, there are significant opportunities I think for inorganic growth at the current time. These opportunities tend to come in phases in our sector and I strongly believe the next couple of years will be interesting for firms that can identify and execute successful M and A strategies. Our whole industry is building duplicate capabilities across

31:34 risk, compliance, distribution, ESG, and operations. And for smaller specialist boutiques, these demands can become overly onerous. At PREMIER MITON, we have an extremely robust and scalable operating platform that can run a significant multiple of the current assets under management. It also has a powerful and well regarded marketing and distribution team and a management team that's experienced in successful integration of asset management businesses. In short, I think PREMIER MITON has the potential to build an agile modern asset management business offering active solutions to clients both in The UK and overseas. These are attributes that I believe will be attractive and which will allow us to take advantage of the inorganic growth opportunities I expect to see over the next couple of years.

32:30 I would like to thank you for your attention today and for your interest in PREMIER MITON. I'm going to hand you back to IMC who will introduce the Q and A session. Thank you. Perfect. Mike, Pearce, Joffe, thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Piers, Mike, Joffe, we did receive a number of pre submitted questions ahead of today's event. And as you can see there in the q and a tab, we've received a number of questions throughout your presentation this afternoon as well. So firstly, thank you to all of those on the call for taking the time to submit their questions. And Joffe, perhaps if I may hand over to you, sir, just to chair the q and a session with the team, and then I'll pick up from you at the end. Thank you.

33:30 Great. No. Thank you very much indeed, Jake. And I'd just like to echo Mike's comments as well that thank you so much for sharing your time to to be with us today. And there's quite a few of you who found the question tabs already, so thank you so much for engaging with and asking some of the questions. I think one or two of them we've probably answered as we've gone through the presentation. But what I'll try and do is a few questions that are kind of similar in vain, so I'll try and group some of the questions into overall into overall sort of theme. So let me begin first to maybe, Mike. You know, we we talked about that rally coming up at the back end of q four, and a couple of people are now asking

34:01 the question, you know, how positive do you feel now about the outlook for equity markets? I I think, you know, one of the well, actually, quite positive. I think I'll that with the fact that as the chief executive of an asset management business, you always have to be quite positive. But the last couple of years have been obviously quite difficult, and I think, you know, that's mainly been driven by the the the sort of dynamic change in interest rates and inflation. And I think we are probably, peaking in terms of interest rates, and I think that will be good news in terms of demand.

34:34 I think, you know, a a lot of the returns from equity markets over the last year or two have been very concentrated. You know, we're seeing statistics such as, you know, Apple has the same market capitalization now as The entire UK equity market. It produces about 97,000,000,000 of of revenues, and and The UK market produces about 205,000,000,000. So, you know, we wonder whether these things are getting out of whack. You know, the magnificent seven now have the same market cap as The UK,

35:05 French, German, and Japanese stock market. So it, you know, it it just feels like the pendulum swung a long way in one direction. We'll start to swing back. So I think, you know, overall, we have a a a slightly more positive outlook on equity markets, in terms of market breadth, I e, investors moving out from those very big global mega caps down into the sort of large cap and mid cap area, which is really where where, you know, business like ours is incredibly well placed. So yes, much more positive than we were perhaps a year ago, Joffe. Thank you, Mike. We've also got a questions on our M and A philosophy and also about the product line that we've got.

35:44 So maybe let's deal with the M and A bit first, and then you can come on about the product length and strength, etcetera. So maybe, Mike, so just expand a bit more about sort of the areas of M and A that you've continued sort of looking at. Yeah, think you know M and A is interesting for us because you know there is an opportunity now where people are you know wondering about their business after a couple of very difficult years. I mean Telworth's a good example of that, you know, a very strong team with a great track record who who are on their own in an environment that's been quite hostile, who feel that coming into a a larger organization makes sense.

36:17 And I think when we look at M and A, we're really looking at three or four things in terms of do they tick boxes for us? Do they bring scale to existing capability? Because clearly scale is beneficial for us in terms of our business. Do they bring us into new markets perhaps allowing us to access a client cadre that we don't currently

36:39 focus on? Do they strengthen our investment capabilities? Either they give us more product that we will be able to take out to clients. So those are the sort of key areas that we look for in M and A. And I think I'm slightly skeptical about large scale M and A in the asset management sector. I think it's actually quite difficult to do well. But I I think, you know, adding in additional capabilities into a business such as ours does make sense.

37:09 And, you know, clearly, we don't want to end up as a sort of home for every waifen stray in the market, but what where it makes sense to add capability, to add scale, or to add access to clients, that's very much the areas that we will be looking for, Joffe. Thank you. And then, Mike, another two or three questions have come through on the same theme, talk about product lineup. You know, we've got a nice deep breadth of product, 40 plus products. And one of you were saying, you know, how do we effectively monitor that? How do we look after that product set? And would you rather have more products or less products with more AMs and fewer I think I think it's, you know, it's really important that as a business, we're relevant to our clients. I think, know, if all we did was, say, UK small cap equities, which, you know, as we've seen from from the flowcharts have been very much out of favor with investors, you know, that that puts you in a very difficult position. So I think it makes sense to have a spread of investments.

38:03 From my perspective, having a blend of equity, multi asset, and fixed income makes sense because, clearly, the risk profiles of those three areas are are very different. You know, clearly, equities are more volatile than fixed income, and therefore, the revenue streams that you generate from those three different groups of investment are different. And therefore, that's good for us as a business. I think, you know, clearly, you know, where would we like that balance to be? Well, in an ideal world, you know, we we'd have 30,000,000,000 of AUM with 10,000,000,000 in fixed, 10,000,000,000 in multi asset, and 10,000,000,000 in equities, because, you know, that would be a a perfect balance for us. But I think the

38:49 you know, I think one of the questions that's on the screen is if you got too many products, I think it's fair to say, Pearce, that we continually look at our product range. We continually assess, the profitability, of the products that we run. We continually assess the potential of the products that we run against the sectors that they operate within. So, you know, if we're running a fund, say, with, I don't know, £25,000,000 in, the average size of, you know, the fund, the the the average size of a fund in that sector is, say, 200,000,000.

39:20 What do we have to do to move our fund from 25 to 200,000,000? What is the impact on profitability if we do that? What is the performance, like? You know, are we able to attract assets? And where we reach the conclusion that we're unable to do that, then we have to make changes. Now those changes can be, replacing an existing manager with a new manager, and we've done a number of of those, changes, over the last three years or so. Or, you know, as in the case of, say, our European equity income strategy last year, we make the difficult decision to to close the fund and return the assets to to investors. So I think, you know, we're very focused

39:58 on delivery for the end clients here. So as long as we feel we can deliver for the client and deliver good investment outcomes, then clearly having that, broader product set makes sense. If we don't feel we can deliver for investors, if we think that something changes that means our product is not going to reach critical mass, then clearly, we have to review it and take steps. Yeah. And I think starting from a distribution perspective, I would also add that when you go and talk to the intermediates, institution investors, to to advisers, you want to make sure you're relevant. You know, the world's evolved. We're not in a position where we kind of put up pushes anymore. What we have to do as a business is listen to what our clients are looking for and provide solutions to them so they can meet their end customer objectives and and outcome they're looking to try and generate. So having that broad suite means that whatever meetings that myself and my teams go into to talk to clients will have something that's of relevance. If you're relevant, you can always talk about, engage with, and talk about different products. If you have a narrow product set, then you can lock yourself out of a number of relevant meetings.

41:05 Now I've got some other questions coming from on IT and we've got the guy responsible for Let the IT me let me bring that up now. So, Piers, you know, of the questions said, now what shape is your IST stack in? Do you have to do anything to rest any more significant improvement over the coming years? You know, what have we been doing? Great question. I think obviously we had the merger back in 2019. I think fortuitously when we looked at both sides of the business, a core area for us is our order management system where both sides of the group use the same system. So that's deployed across all of our our fund managers and operations. I think if you look at our internal IT, yes, we've we've now harmonized that under one operating sort of platform. I think we continually invest CapEx into that as you would expect where we replace end of life systems or or or processes.

41:53 And that is just a cycle that we go through. I think an area where we are obviously investing in and continually watching it is cybersecurity, making sure, you know, if there are new solutions that we can early adopt, whether that may be AI solutions or whatever, to to help us make our our infrastructure more robust. And that is an area where we would be deploying sort of sort of more more investment. But from a from a financial point of view, we're not anticipating any significant material spend in this area over and above what we would normally normally do on an annual basis. Okay. Great. And thank you, Clears. I think perhaps another question that we we can pick up, and I think there's one important. Know? How do how do we retain fund managers, Mike? You know? In a kind of rock star world that we talk about sometimes, you know? Yeah.

42:38 Yeah. What are kind of the KPIs, and how do you sort of retain fund managers? Yeah. It's a it's a good question. Obviously, you know, we saw the news yesterday of, you know, one of our one of our peers. I I think, you know, we're not big fans of the sort of rock star fund manager. We don't really run a, what sometimes we call a sort of rock star and roadie type, organization where the, you know, the fund managers are the rock stars and everybody else in the organization are the roadies. Mean, we tend to work in a very collaborative way across our business. Is a very collegiate culture here for our fund management teams. They spend a lot of time sharing ideas, talking to each other. And I think that's one of the benefits of having, you know, fixed income equities and multi asset all within one all within one organization and and, you know, all sitting in one room basically. There is a a real sense of sharing ideas to produce, you know, better investor outcomes.

43:35 I've never really been a fan of sort of siloed fund management businesses where, you know, each individual team kind of keeps everything to themselves and and and doesn't share. I think you produce better outcomes for your investors where you are sharing ideas across and between teams, and that's very much the culture that we have here. So I think, you know, one of the things that you do to to help retain your your talented, FMs is you have a good culture within your organization, and I think we do tick that box. I think the other things that we look at, you know, many of the levers that that I think others use is the remuneration for fund managers involves them having retained earnings within the funds that they they run. We we are big fans of fund managers who eat their own cooking.

44:25 And so, you know, two thirds of of any bonuses that our fund managers generate get deferred and and and reinvested into the funds that they run. And that over time obviously builds up into a substantial asset base for them, but it also means they're very focused on the funds that they manage. And we also use our equity as a firm. We have a number of EBT and LTIP schemes that we use to ensure that our fund managers are aligned with the long term success of the business as well. So I think it's, you know, the the the sort of short answer to that question, it's it's a combination of having a strong culture where people enjoy working with like minded people, ensuring that the people are invested fully in their funds so that they are aligned and that they are aligned with the long term success of the organization.

45:16 Thank you, Mike. In fact, I've got another question that's come through as well, sort of asking, you know, how do you think the market will will view us if we launch our own NPS, whether it's an adviser or discretionary market? And I think it's an interesting question to ask, and the way I would answer is this, is that we've seen over the last two years increasing numbers of advisers simply no longer willing to be seen to be selecting funds themselves. They'd rather outsource that investment solution to someone else, and today, those are the NPS, the model portfolio solutions providers. And we're seeing a huge number of these being launched by wealth managers across something down the country and a couple you know, a few of the asset managers as well. And how would we be held in regard? Well, most advisers that I talk have been asking us for quite a while now to launch an MPS because they already access our investment capability through a multi manager or fund to fund structure, but they simply now want to be able to access our investment capability through an NPS structure. So we will be effectively meeting existing inherent demand.

46:17 And I certainly know if I look at some other more complex wealth asset managers in the marketplace, so both NPS who have asset management businesses and a wealth management businesses, they can all sit quite complementary with each other. So from the perspective of our side, I think it's it's an additional additive to our overall business going forward. And perhaps on the Sorry, Joffe. I was gonna say we've got one on sort of regulatory headwinds, Pierce. Is that something you want to sort of touch on? Anything specific that we're up against? I mean, I I I think as an industry, though, you know, it's an area which is not gonna go away, and I think you have to embrace that. And that is why, you know, we sit here with the headcount that we do in that, you know, you have to undertake and have a business that can deal with the the regulatory requirements. And, you know, we can't suddenly reduce our our workforce because, you know, we have to have all of these areas covered off. And I think, you know, systems controls and processes are are fundamental.

47:11 And it is really a barrier to entry to the to the smaller firms to make sure that, you know, this is not going away. It's an area of of continual focus, and you need to make sure that we're resourced to be able to deal with it. You know, is it gonna get easier? I I I doubt it. But, you know, as a as a group, we're evolving and and as an industry, we'll just we we get on and deal with it. And Yeah. Consumer duty is, you know, evolving from assessment and value is the next step. And and as these come on, we'll we'll just we'll we'll we'll grow and and deal with it as it comes along. And I think that's you know, it it sort of goes back to what we were saying earlier about the the sort of m and a opportunity is that, you know, for a lot of firms who you know, particularly where people have sort of branched out on their own, you know, the the increasing regulatory burden, does effectively steer people to having a larger scale operation. And and that I think is is something that we, as a business with a with a flexible platform that can grow assets under management but with a strong you know risk and compliance and legal structure behind it is able to provide a sensible home I think from an M and A perspective. Thank you, Mike. And I'm conscious time's on, so probably got time for another two or three questions.

48:17 I think perhaps one that might be worthwhile just tapping into again, Mike. You know, maybe a bit too early to tell, but can you provide any further updates on Telworth? Yeah. It's a little bit early to tell. I mean, we're in that sort of limbo between having announced the deal and waiting for regulatory approval. The business actually has been performing well in terms of investment performance. We're keeping in regular contact with the team. Obviously, we have to keep the two investment teams separate at this stage because we we don't have regulator approval for the deal. But our CIO has been, you know, having lots of conversation with with their investment team. We've been having conversations with their operational team to sort of plan for the integration of those two businesses as soon as we get our regulatory approval. So it's a little bit early to give an update. We'll obviously be doing updates through our regular reporting cycle and you know we really hope that something like this is helpful You know, we're we're sort of enjoying doing it. So, you know, we we will continue to do these, I think, on a regular basis as well, and we'll be able to give updates through this format as well.

49:27 So, yeah, probably a bit early, Joffe. Okay. No. Thank you, Mike. Maybe time for two more quick questions. You talked about the fixed income team earlier anyway. Maybe another question has come through. Now how how do you think the growth has been developing? Maybe expand a little bit on the I I think the we're sort of quite pleased with the way that the fixed income team have developed. I mean, you know, they joined us a little over three years ago. We ran virtually no money in fixed income. We had a very small corporate bond fund that's maybe 30,000,000 or so, and we had a small money market fund. And the guys have come in. It's been a big investment for us as a business. The fixed income team is is a reasonable sized team. They had a really strong track record at Merion. We like them a lot culturally.

50:13 They were a good fit for us, and they've slotted in really well. And, you know, we're pleased with investment performance since they joined. You know, they've done a a really good job in what has been a really difficult period for fixed income investors. I think, you know, it's been very it's been quite easy to lose a lot of money in fixed income over the last couple of years, and the guys have done very well avoiding that. Their performance numbers are amongst the the best in the in the relevant sectors. They've they've got top quartile performance over the period since they've joined. And we've been successful in getting those, messages out to investors through the distribution team. So I think in total across the funds and and some segregated mandates that the guys run, we're about 1,800,000,000 there. We think this is a strategy that can grow to 5,000,000,000 and possibly, further.

51:04 So it is a you know, I think it's it's good progress in what's been quite a difficult market. As you saw earlier, you know, over the last two years, there's been something like 3,000,000,000 of outflow from fixed income funds, across the IA sectors. We've seen inflow, $5.50 mil last year, and I think we're starting to build some momentum. I mean, Joffe, from a from a distribution perspective, how are you seeing it? And and and and in fact, where are you seeing, you know, demand now for from our clients? No. Thank you, Mike. That is a really good question to ask. You know, what we've tried to do is making sure that, you know, you listen to the market, listen to what the clients want at any one moment in time. Last year was very much fixed income, fixed income back in vogue, having been sort of spent years in the wilderness. So as Mike said, we've benefited from that. I think, you know, one other question I got related to the same question, which is being what we do with advertising.

51:52 Now, the most important thing is is to if you're gonna do stuff in advertising and whatever activity you do, you've got to lean into an opportune moment where you can see natural demand coming through. So, you know, during the course of year, we start off with fixed income and advertising, then we pivoted towards money market in the second half of the year as demand for cash rates went up, and we've seen flows into our money market funds. As a consequence, we've supported our multi asset funds as well from an advertising campaign. And, actually, what's interesting now, Mike alluded to this, you know, appetite risk appetite seems to be returning. Sentiments improving. And, you know, we're starting to see interest in our European opportunities fund that Mike referred to earlier, which tends to do well in kind of rising markets. We've seen an increasing number of clients asking more about our small cap capability, whether it's UK or US small caps or global small caps.

52:39 In fact, in China, if we've got a couple of lunches and dinners going around the country in events with with adviser and wealth managers taking our financial team out there, and we've had such strong demand that we've had to open up you know, book a couple more venues just to meet demand. So it just feel like momentum's building around the small cap Iran Arena again, which is quite nice to see. And, actually, you know, Mike also referred to Matt Tillett. You know, we've a strong manager came into the team, our investment team just over a year or so ago, runs our UK value opportunities fund. I'm I'm starting to see quite a lot of incoming inquiries onto that. So it feels now that we've got this stable of multi asset. We've been we we have participated in that fixed income piece. We are participating in money market. And actually, as Mike says, we wanted to be in a position where when the at risk appetite returns, we'd be in a position to benefit from that. And from what I can see from the teams on the ground, we're definitely seeing that. And I think it's fair to say from our perspective as a business, a return to net positive flow would be very good news.

53:38 But I think what we've tried to do during the last couple of years, it has you know, been difficult. But what we try to do is to make sure that that we are match fit for when demand improves. And a lot of the work that we've done since the merger back in 2019 in terms of, you know, building a scalable operating platform, in terms of diversifying our product set so that we have relevant products, for our clients to invest in. And then, you know, with Joffe joining a little over a year ago, restructuring our distribution and marketing capabilities to ensure that we're getting the messages out there to those key fund buyers. You know, we've done a lot of the groundwork. I think, you know, if markets are a little bit better over the next year, eighteen months, then I think we're very well placed and quite highly geared into that recovery.

54:25 So, yes, we're a lot more optimistic on the outlook than we've been for a while. So fingers crossed that we do see that follow through during the course of this year and next. I I think that's probably we've been on it for almost an hour. You've very gracious with your time. Thank you for staying with us. I hope you found that a useful session and I'll hand back to the guys at IMC to to to wrap us up. Perfect. Mike, Pierce, Joffe, thank you very much indeed for addressing all of those questions that that came in from investors. And, of course, if there are any further questions that do come through, we'll be able to give you these back immediately after the presentation has ended just for you to review to then add any additional responses, of course, where it's appropriate to do so, and we'll publish all those responses out on the platform.

55:12 But, Mike, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, If I could please just ask you for a few closing comments just to wrap up with, that'd be great. Yeah. I mean, thank you very much for attending. Sorry it's been a tough ride on the shares over the last couple of years. We're all shareholders in this business as well. We've got significant proportions of our own wealth in the equity in this business. We really care about what happens. I think our fund managers really care about what happens. They are very, very focused on ensuring, that they're doing the best for our clients, and our distribution team, care about the business. They're out there, every day, treading the boards and and getting out in front of of clients and and explaining what we're doing and why. And it's important that you do that in the bad times as well as the good times.

56:07 And I think, you know, we've been good at that over the last couple of years, and and hopefully that will be reflected, in improving fund flow as market conditions improve. Thanks, Piers and Joffe, for coming along today and and sharing your time. Thanks to everybody for for joining us, and we look forward to doing another one of these soon. Thanks for coming. Thank you. Perfect. Mike, that's great. And thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations? This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of PREMIER MITON GROUP PLC, we would like to thank you for attending today's presentation.

56:56 That now concludes today's session. So good afternoon to you all.