Good afternoon. Yes, just a very quick counter through our sort of financial and operational highlights. A really, really good set of numbers. We've been obviously very excited about actually coming forward with these numbers. Yeah, very pleased to see a number of different things. Firstly, obviously a record year in flows. We are on slide eight, a record year on flows, seeing GBP 3.7 billion of FUM coming in and broadening that church of IFA supporting firms up to 1,110. Happy to say as well that post the year end, we've continued to perform on the flows as well. We've had GBP 600 million of flows come in as well since then. The flows are showing good strength as the MPS proposition just becomes bigger and bigger within the U.K. financial services arena.
There's not an awful lot more to highlight there apart from obviously the increase in revenue and profitability. We are just very, very happy with our position in the market. You are seeing MPS continue to thrive. I think the asset numbers in total MPS now are over GBP 183 billion. You are seeing more and more assets go onto platforms, which again is very pleasing. Of course, a very important thing for us is the strength of the IFA community, which continues to go from strength to strength. I do not think IFAs have actually ever been in a better position. Increased demand for their services, increased assets going onto platform, and an increased percentage going into the MPS world.
On the analyst meeting last week, we were asked, what percentage do you think you could actually get to total of all of the advised platform assets that are sitting there? We expect that platform advised piece to go to GBP 1 trillion over the next year. We think we could probably get 50%, maybe 45%-50% of total assets on there will find its way into MPS over time. In a great, great position. The next slide just shows you the strong financial performance since IPO. A CAGR of 18% on group revenue and 23% on profitability. The next slide is our lovely bragging chart, which shows obviously the assets coming through from nothing in 2013 to where we are today, despite all the bumps in the road.
I'll pass you over without further ado to Paul to run you through the financial performance. I will come back later on to talk about the strategy and development of the business moving forward.
Yeah, thanks, Paul. Yeah, as Paul was saying, it's been an exceptional year this year, actually really strong growth. In many ways, very normal, sort of vanilla year. What I mean by that is that we are very clean P&L, so there's no exceptional items. It's all organic growth, no impairments of assets or anything like that. Just from a headline perspective, obviously really strong revenue and adjusted operating growth, 23% and 24%, with our margin ticking up just to 50.6%. When we have our little bonus from the finance income from all our cash that's actually on the balance sheet, it increases adjusted PBT to 27% or just under GBP 24 million.
Obviously, it comes down to adjusted fully diluted earnings per share, which enables us to pay out 70% of that broadly as dividend, where our dividend for the year was GBP 0.19 and a final GBP 0.095 because we now have a policy of splitting our dividend 50/50 between the interim and the final. Just to move on to the next slide and just talk about the divisional profitability. Tatton obviously is the mainstay of the business. It is 86% of revenue now. AUM obviously is the driving force behind the growth there, with revenue growing at 26% and the adjusted operating growing at 28%. Obviously, that growth is really driven by two things, which is the underlying flows, so the GBP 3.7 billion of net flows and obviously markets this year as well.
Touching on the flows, on average, we did GBP 307 million per month, and that was about GBP 309 million in H1 and GBP 305 million, so a very consistent performance throughout the year in flows. As you can see there in the table, it's actually MPS is 95% of our flows, and that's no surprise as we're a predominantly MPS player. That said, the funds and BPS also grew quite reasonably, double-digit growth, GBP 167 million of new net flows in our funds and BPS, which is very pleasing. It's probably worth just pointing out within the AUM number and the flow number there. At the interim last year, we talked about Perspective and potentially leaving the group and obviously canceling the contract. We're now planning for that. Perspective actually is GBP 2.9 billion of that AUM and just over GBP 700 million of those flows.
If you recall from six months ago, we then talked about the fact that that was about GBP 1 million in terms of revenue, so 2.4% of our total revenue. Relatively small impacts on revenue, albeit the headline numbers are a little higher. From a net flows excluding Perspective, as you'll see there, we're just under GBP 3 billion, which is just GBP 247 million per month. Just on the markets, at the end of February, actually, the markets were about added GBP 1.5 billion to AUM. Obviously, we have GBP 600 million there. The US tariffs in March took care of that, where we lost about GBP 900 million of AUM, but since recovered a little since then. Those strong markets that we've had throughout the year and the average AUM that we have obviously helped drive that revenue.
Obviously, that operating profit gave us average basis points on our revenue of 20.6. Moving on to the next slide on Paradigm. It is a decent performance from Paradigm this year. As we have always said, this is a single-digit growth business. We grew revenue at 6% and adjusted operating profit at 3%. New firms increased by 124, but with a little bit of rationalization or good housekeeping on some of the dormant firms. That stayed broadly flat, as did the consulting members, again, remained pretty solid at 425. The actual gross lending increased 8% year on year to GBP 14.2 billion. That is actually pretty much back on the pace of our highest ever, which was GBP 14.5 billion a couple of years ago. As we look forward, it is probably just worth pointing out that there are some good indicators there.
As you can see from that final bullet, recent applications improved by 17% year on year. We are seeing good applications come through, partly driven by the five-year renewals coming up to renewal. Five years ago, obviously, COVID and the increase in the volume, all those renewals now coming up to renewal. In addition to that, when we look forward, you can see interest rates falling, real rates rising, so affordability is improving. We are also seeing buyers with the same amount of income can borrow more as the lenders are taking a greater level of risk. All those leading to the fact that as we look forward to the new year, it is looking at a relatively rosy picture. Moving on to the overhead analysis, we typically put this slide in for the analysts to give them a little bit more granular detail.
Overall, our operating expenses increased just under 18%, but actually the underlying cost increase was around 10% split between inflation and investment in growth. As we see going forward, we're expecting that to also increase between 10%-12%. I think the key elements on this slide really is the employee costs will remain around 60% of total costs. The key for us there really is the GBP 3.5 million of variable cost or 25% of total employee cost is actually variable pay. That actually enables us to manage the cost base pretty accurately over since IPO and make sure we can deliver our earnings forecasts. On the next slide on the balance sheet, nothing's really fundamentally changed. We remain a capital-light business. Cash is the key asset on the balance sheet, GBP 32 million. We have no debt.
We've got to that milestone of GBP 50.5 million of net assets, so just peaks above that. That gives us a really strong return on capital employed of 48%. In terms of reg cap, we're just over GBP 4.5 million of reg cap required, and we have 414% headroom in our reg cap, so plenty of capital on hand there. Moving to the cash flow, I mean, the business model of the group is very efficient. 100% of operating profit turns to operating cash. When we look at the allocation of that, obviously, we have our interest received. Key would be our dividend policy, as we talked earlier. It cost us GBP 10.4 million this year, probably increased closer to GBP 12 million next year. Just obviously, death and taxes, we can't avoid our corporation tax.
We have a little bit of seeding in the passive fund range, which we'll get back later in the year as they reach critical mass. That CapEx and continued consideration is broadly split 50/50. That is a simple warp between the two numbers. Just from the outlook and guidance, we talk about flows being around GBP 200 million-GBP 250 million a month, partly because of the Perspective issue we talked about earlier, but I think we're also just taking a prudent view there. For the first 10 weeks, it's been about GBP 265 million. We also anticipate AUM to be broadly the similar level as new flows, and the loss of Perspective will broadly compensate each other.
As you can see there, 20-21 basis points would be our Tatton margin, single-digit growth of Paradigm, and a cost increase, as I said earlier, somewhere between 10% and 12%, with the adjusted operating margin remaining above 50%.
Thank you, Paul. If we move on to slide 20, this really depicts the sort of the size of the marketplace. There are three key drivers for our success. One is the health and wealth of the IFA community, which, as I say, continues to prosper. We are seeing really good traction from those IFAs that we work with. You have the growing advice platform market, which, as you can see, has now reached the dizzy heights of GBP 872 billion. We did forecast that we would get to a trillion of AUM sitting on these platforms by 2027.
We're going to get that actually sooner than 2027 in our eyes. Look at the stellar growth of the MPS world from GBP 25 billion in 2017 up to GBP 183 billion now. As I say, expected to go beyond GBP 200 billion very, very quickly. You look at the current share of the MPS wallet, there's about 21% of total assets that are on these platforms. We were asked by an analyst last week, what do you think the ultimate percentage could be for MPS? We actually think it could be 40%-50% of the total of assets sitting on platforms. A healthy increase to come. We've got lots of competition, 220-odd MPS providers out there. We're winning more than or just about our market share, which has been consistent. We'd like to continue to do that.
It's best execution of our plan. If we could squeeze our sort of our 12% up a wee bit higher of market share, that would be great. Really stunning set of numbers coming out of there. The next slide really takes you on to our roadmap for growth. We gave that GBP 30 billion target. We expect to do that GBP 30 billion just purely with organic flows coming in. We're not taking account of any M&A activity. That would give upside if we did have any M&A activity to take that higher. As we sit here today, we haven't got any activity to talk about on the M&A side. This is a pure organic play at this particular point in structure. As you can see, we're well on the way there.
Despite losing the Perspective contract from January next year, we're still confident we'll get to the GBP 30 billion. To be honest, when we gave that target of GBP 30 billion, we knew that we might be in for a battle with the Perspective contract because we knew it was going to be competitive as it came up for its end stop date. It has been agreed at a price that we're not prepared to play at. Once we're through December and into January next year, we're free to compete. We'll have no restrictive covenants, so we will be able to go to Perspective firms and offer our services to them. I would expect we will get some of those assets to stay with us. Very confident about the GBP 30 billion mark.
We move on to the next slide, just as our lovely cohort slide, which we were asked by one of our shareholders to create. I am glad we did. I am glad we spent the time pulling this together because it shows that the assets that we have from those original firms that started to work with us way back in 2013 are still continuing to give us more and more business. Of course, as we go steeper up the curve, you can see we are now up to 1,110 supporting IFAs. A lovely broad church of support, more and more firms giving us more than GBP 1 million every single week. That is very, very pleasing to see. Further evidence of that on the next slide, showing that we have 87% of the number of firms are now non-Paradigm firms and 13% are Paradigm.
Just look at that split of AUM as well. Still GBP 6.7 billion coming from that 13% and the rest coming from direct. A long, long way to go with these other firms to get them up to the same sort of level of saturation or penetration that we have had with the Paradigm firms who we have worked with the longest. Again, very pleasing. On the next slide, really, I think the standout slide of the deck, showing how we have evolved the MPS offering, as we showed previously, the co-brand, the white labeling, and the AIA are all where IFA businesses want to have a little bit more presence rather than just take our straightforward bundle proposition. There is no change on price. This is all done at 15 basis points with no share away to any of these firms.
As you can see, we have increased the number of these arrangements by 13. We have now got 50 arrangements. Just look at the FUM that has come in from those 50 arrangements over the last 12 months, another GBP 1.55 billion. Really, really good stuff. We are very attracted to this type of business. We get the assets faster. It is super, super sticky. Our BDMs are all incentivized around getting more and more of these operations. There is no reason why we cannot go from 50 to 100. There is very little cost involved in us creating them. As I say, they are at the full 15 basis points. Fifteen basis points, we believe, is the right price. The market, as I said, is more competitive. The average price is still around 18. Some people have come in to price lower than us.
Just because you price lower does not necessarily mean that you do well. We are very, very happy with our 15 basis points. We do not get asked to change that. Actually, there was a lovely report that was issued last week from NextWealth, which says that the compression down towards this level seems to have basically abated. It looks like we are set to keep and maintain the pricing that we have got for the next two to three years. I think we then go on to look at the Defaqto slide, which is the next one. Lovely to see that if you look at the Defaqto MPS top 10 recommendations in the last 12 months, we actually had five of the top 10 slots, which is nothing short of incredible, really.
Tatton Core Active, Tatton Core Balanced, Tatton Core Aggressive, one, two, and four, and then seven and ten as well. All core, if you can see. Actually, that's probably worth just spending a little bit of time on. Our most popular, and obviously, you can see from this by the way it's recommended, are our core portfolios, where neatly you have 50% of the assets invested in passive strategies and 50% invested in active strategies. A lovely way to bring the cost of investing down without committing to one or the other and taking the benefit of both along the way. I think that's a lovely slide as well. My final slide before we look at Paradigm, it's just the top 10 MPS providers. Three really growing ourselves, Quilter and Timeline.
I'm not sure you really can compare Tatton directly to Quilter and Parmenion because they are very different businesses. Quilter and Parmenion have their own RAP platforms, and Quilter have their own integrated sales force of over 3,000 IFAs. I think our closest true competitor would be LGT Vestra there at number four, and then going down from there. Of course, we are and remain IFA only, receiving business only from the IFA channel. On Paradigm and Paradigm Mortgages, nice and resilient, nice and steady. Paul's alluded to the success we've had a little bit more on applications and mortgages, but 84% of our revenue comes from the Tatton business now, 16% from Paradigm. Paradigm Consulting and Paradigm Mortgages do a lovely, lovely job producing great profitability to the group. They work very, very well together with us.
We're very happy across the three different divisions, really, with Paradigm Consulting, Paradigm Mortgages, and Tatton. I think, Lothar, that passes me over to you on the investment piece.
Yes, thank you very much, Paul. Yeah, on the investment side, the 12 months to 31st of March were, well, never gets boring. Last year was all about interest rates and will they, will not they cut, and can the economy hold up? This year it's all about tariffs, obviously, and not losing your head over it. That's very much what we've, well, how we've benefited from that market environment in a relative sense. Not losing our head, thinking things through, but not overthinking them, keeping the portfolios steady and invested as we have, not jumping too quickly to emotional conclusions, and sometimes taking the opportunities that arise.
We have at times last year through overlay funds traded the overshooting of yields before they then fell back and added a bit of extra value to that. In terms of the performance that resulted from that, we can see it on the next slide. It has been quite volatile, obviously. This was to the end of March. Since then, markets have recovered. The dollar has not quite yet recovered. Even though markets are pretty much back to where they were, global portfolios are not quite. We are plodding along as markets at the moment are looking more positively into the future. If we look at the slightly longer-term returns, next slide, we can see here in the comparison against the ARC benchmarks that this is to the end of May, we have fared pretty well in terms of our returns compared to that peer group.
Also in the shorter term, which was particularly unnerving, obviously, do you or do you not go underweight risk assets? Do you or do you not follow the trend to underweight U.S. equities? Things are still a bit in a balance, but we have got various tactical positions that have positively contributed to our performance. Now, if we're looking at the risk-return picture on the next slide, this is for the shortest period. It's still dominated by the strong returns that really the US had generated, although that outlier there at the end, the global equity portfolio, obviously did a little bit less well being regionally allocated along the lines of global cap weighting. On the three-year picture on the next slide, it looks a little bit more as you would expect it from a risk-return perspective.
I think it also has to be said that at the moment, the traditional ARC PCI peer group is somewhat weighted in gear towards the U.K., just simply because there are so many of the Paul, could you go on mute? There's an echo coming through. And ARC are addressing that. In future, there will be a distinction between the MPS cohorts and those traditional wealth managers who traditionally have a bit more of a home bias to the U.K. We've also added a five-year picture of the same. That's on the next slide. Because we can, because we started this all pretty early, we also have a 10-year slide, which we quite like to show just to show that it's about the consistency of returns that we generate. We are not in the business of blowing the lights out one year just to lag the next year.
What our advisors really like about the way we perform is the consistency of the return generation, which sometimes means that you might be lagging for a quarter or so. Overall, we get to where we want to, which is the strong long-term return picture. On the last risk-return slide, which is the next one, we can see that the ethical portfolios and their outperformance has moderated somewhat, probably not surprisingly, given that growth, which is very much dominating that investment universe, has come back somewhat. Our ethical portfolios are still holding up pretty well over the longer term against the unrestricted ARC peer group. That peer group is obviously not an ethical one, which would be another interesting thing for somebody in the industry to produce and generate.
I think what is most important is on the next slide, which is the Defaqto quartile rankings comparison, which is really focused on the direct MPS provider. This is really a like-for-like. There are no traditional wealth managers with a U.K. overweight in there. This is just the MPS sector. That is something that we can work with very well. That makes me extremely proud and happy that we have been able to generate that consistency of returns over such a long period of time. There is also another little direct comparison here versus key competitors. If you compare that to the slide we had last November, it looks pretty similar. The two at the front, one of them might have changed, but otherwise, we were very happy to remain there in the top with those other competitors of ours with that annualized return over 10 years.
Now, the next chart has not, or table really on the next page, has not got anything to do with performance. This is the matrix that distributes our total assets under management across the different risk profiles and the different management styles. We do manage 45 multi-asset portfolios in total. The one that is not shown on here is actually our money market portfolio, which has grown in at close to GBP 200 million over time. It is just there not as an investment portfolio, but as an alternative to clients pulling their money out when they need to go into drawdown, for example, for what is in the foreseeable future, they can keep that on platform and get better rates than they would get from their bank.
The takeaways for me on this are firstly, in the bottom line, when you look at the 12-month change of the distribution there, it seems that clients are shifting slightly higher risk, even though I've stopped saying bad things about bonds because we can work with bonds again. Nevertheless, that bad experience of a high inflation period has educated people that bonds aren't always safe and aren't always going to lower the volatility. They seem to be coming to the conclusion that if you are invested for the longer term, i.e., 5+ years , you might as well stomach the ongoing volatility and have better risk premiums coming with it.
The other takeaway is in the column on the right-hand side where we can see that it's still the tracker portfolios that are growing most. That might have a little bit to do with the momentum-driven past performance dominance. Just as we have seen a tailing off of the ethical after the performance normalized somewhat, I wouldn't be surprised if in the next two or three years we see the same phenomenon around the tracker portfolios, given active managers might well have more potential to outperform in what lies ahead. That brings me to the last investment-related slide, sort of talking about what we see as the key market variables this year.
I probably don't need to go with this audience through the different risks and opportunities, but we altogether there at the right-hand corner are seeing a balance really at the moment in the market with the global economy slowing but muddling through as before, perhaps with some regional shifts as the U.S. supremacy is starting to wane, or at least be questioned, although one doesn't and shouldn't underestimate the earnings power of the U.S. mega techs, which are also relatively less affected by the tariffs. Now, on the last slide, just flagging that there is the MPS consumer duty review from the FCA coming up this year. We are very much welcoming that focus of the regulator on a sector that is now close to GBP 200 billion in assets under management. So it was probably about time that the regulator took a closer look at this.
We feel very well prepared, having been in this industry for 12 years and built our systems and controls all around the thought that it's still our back-office systems, but there are 20 different outsourced back-office systems that we work with and that we need to stay on top of, can't just publish our models there and then wash our hands of it. Looking forward to seeing what that will generate, certainly not afraid or worried about that coming our way. That's my takeaway.
Thank you, Lothar. I think we can pass back to Hannah now, please, maybe for questions, Hannah.
Absolutely. Right. Thank you very much for that. Okay. Paul, you mentioned that market share could potentially be squeezed above 12%. What do you think the business needs to do to enable that?
Yeah, I mean, it would be lovely, wouldn't it?
I mean, we've obviously got a growing market and would like to maintain the market share. If we can squeeze it up a little bit, that would be all the better. We're constantly looking at our BDM team. We're always looking to see how we can drive more assets. Yeah, looking to strengthen and keep moving forward. I think it's going to be really on the marketing side of the business. We `x`have a brand new marketing director who starts with our head of marketing, starts with us in the beginning of July. We'll be pushing more to get in front of as many IFAs as we possibly can.
Okay. You also mentioned that you didn't think price was a big factor going forward. Yet, you also obviously mentioned that you lost Perspective on the basis of price.
How do you marry those two comments?
Yeah. Price for our underlying service of 15 basis points, I think we're crystal clear on. That is a very, very competitive price. We're happy at that 15 basis points. As I said, I think it will become the industry norm. The Perspective arrangement was a one-off arrangement. Perspective have their own discretionary fund management capabilities called Cambridge. We provided signals to Cambridge. That is why we did that at that reduced price of four basis points going to five when the FUM increased. We have not got any other arrangements like Perspective. It was a one-off. That is why it is completely different, really. We were providing services to somebody else's DFM. When I am referring to price and saying we're not under any pressure, that would be the 15 basis points that everybody else gets.
This was a one-off arrangement. They have managed to get somebody else to give them signals for a cheaper price, and we would do it.
Thank you. M&A, there has been no mention or no real push on that at this time. Obviously, in a competitive environment, can we assume that there is just no sensible prices out there for things, for deals to be done?
Yeah, I think we can, Hannah. I think it is when we have talked to a number of MPS providers who have subsequently sold. We have always said to the city that anything that we would be doing on the M&A side would have to be earnings enhancing and would have to take us into a whole new group of IFA businesses. Those negotiations that we have had over the last couple of years, we have failed every time.
We fail because we get to a price level that we're happy with, maybe 10x-11x EBITDA. These arrangements that we've been in discussions with have gone for higher amounts. I think that's testament to the value of MPS in the world today, or certainly in the U.K. today, of where people see it. Lots and lots of MPS providers, a long tail of MPS providers with lots of smaller amounts under management, but they're all building and have different ideas about how valuable their business is. I think you struggle therefore on the M&A side if you're going to buy at the right price, and we're not going to buy at the wrong price. Sorry, we're not going to buy at the wrong price. We're going to stay and remain disciplined. Yeah.
Great. Thank you.
That is it for the questions today, unless anyone else would like to jump in. In which case, it just leads me to thank you all for joining us today. Well done on a great set of results. Thank you to our audience. We will hear from you again in six months' time.
Thank you, Hannah.
Thank you, Hannah. Thank you. Bye-bye.