Thank you for standing by, and welcome to the HUB24 Limited FY 2022 results. All participants are in a listen only mode. There will be a presentation followed by a question-and-answer session. If you have been provided with a question link and wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Andrew Alcock, Managing Director. Please go ahead.
Good morning, and welcome everyone to our 2022 results presentation. Absolutely pleased to be delivering another set of really strong results for HUB24 for the year. With some headlines of underlying EBITDA up 92%, underlying NPAT up 133%. Of course, our dividend year-on-year up 100%. On the customer front, I'd like to talk about a couple of awards we've got, one for value for money with Investment Trends, and once again retaining our Managing Portfolios award. But with me today is Kitrina Shanahan, our Chief Financial Officer. Kitrina will be presenting our results as I run through some of the earlier slides, and certainly be able to answer questions as we move that towards the end of the presentation.
Before we jump into the results, I'd like to put some context around the role we play in the market and just moving to the next slide. Our group has expanded in FY 2022. We've added, certainly added to our purpose of empowering better financial futures together with now over 300,000 customers accessing wealth related products from HUB24 and group members. So that's the HUB24 platform, the Xplore platform and the Class SMSF portfolio and Trust products. 300,000 Australians that we're helping actively to meet their investment and retirement goals together with others in the industry. By together, we mean with our customers, with advisors, professional advisors, accountants, financial planners, investment managers, technology providers. Bringing together the best capabilities and the best choices and creating opportunities using technology for a better future for our customers.
We have a large footprint now which is deliver and grow and moving forward with plenty of room to grow and lots of market share for us to hopefully capture as we move ahead. In terms of our purpose, we've certainly delivered on that year with the acquisition of Class, and delighted that we've got that footprint to move forward. Turning to the next page or moving to the next page and looking at our results highlights. We're very, very proud to have such strong growth in dollar terms and percentage terms for FY 2022. With our total group revenue up 76% to AUD 192.5 million. Underlying EBITDA at group level up 92% year-on-year, AUD 70.4 million.
Unpacking that a little bit, the platform segment contributed AUD 160 million of that revenue at AUD 62.3 million of the underlying EBITDA. A good result. Looking at the profit and earnings numbers, statutory NPAT up 50%, and that includes AUD 18 million of strategic transaction and project costs. Looking at an underlying level, it's up 133% at AUD 35.9 million. A fully franked dividend, adding the AUD 0.125 dividend we've determined for this half comes to AUD 0.20 per share, and that's up 100% on FY 2021. Earnings per share also up, and that's delivered at 37% to AUD 0.195.
We absolutely finished the year with a good FUA balance regardless of market movements at AUD 65.6 billion for combined FUA out of custody or platform level. We finished the year at AUD 49.7 billion, just shy of AUD 50 billion. As of August 18th, due to good positive flows for the first couple of months year to date and some market recovery, it's back at AUD 54.1 billion with the PS FUA at AUD 15.9 billion at June 30. Turning to the next slide, if I can put the group into context with our operating segments, just a bit of a footprint from which we intend to grow. The HUB24 group is there with the platform segment on the left-hand side.
With a bit more breakdown of some of the stats I've already mentioned, the number of advisors, and less than the non-custody PARS accounts. On the right-hand side, we've got HUBconnect now joined by Class in our Tech Solutions segment. Really building out that segment with a combined footprint, and a far more meaningful contribution to the business moving ahead, both strategically and financially. Noting that we've got 92 financial services clients buying tech and data services and products from HUBconnect, and we'll talk a bit more about that later on in the presentation. Class with 7,000 unique clients, 200,000 accounts across the wealth admin products and 170,000 document orders across the NowInfinity business as well.
A much broader footprint and two operating segments, alongside our corporate segment, moving forward, which we'll be reporting in that way. Turning to the next slide. A look at our track record, and it's absolutely continued. We've continued to build on a consistent track record of funds under administration growth, revenue and underlying EBITDA growth, and we'll certainly be working very hard to build on this moving forward. We aim to manage the business to deliver reliable growth, and as you can see, we've done that from FY 2018 to FY 2022 consistently. If you go back further, it has been consistent since earlier years. We do that while balancing investment for future growth, trying to put in place the right building blocks and foundations to support ongoing growth, but also deliver consistent and reliable returns to shareholders.
On the left-hand side, we've got the funds under administration graph there. At a group level, that's a full year compound annual growth rate of 68%. A really great growth statistics for our custodial and non-custodial FUA over that period of time. On the right-hand side, our revenue CAGR over the full year period is 41% and underlying EBITDA 56%. That includes on the right-hand side in the yellow, the contribution for Class, which we acquired in February for four months of this year. Also in FY 2022, there's a full year run rate of Xplore in that expansion area of revenue and aligning the dots for the group. If we head over to the next slide, move on to look at from a market share perspective.
The same chart is there on the left-hand side, but you've also got the net inflow line there, which is the yellow dotted line showing the net inflows into the business from a platform perspective. The CAGR there is slightly different. It's a four-year CAGR for the custody or platform growth of 56% over the four years. Interestingly, we're still ranked number two for annual net flows against a really, really large established set of institutional competitors. Our market share has grown from 3.9% up to 5.1% in the space of 12 months.
We've grown from eighth largest to seventh largest, but we are certainly the fastest-growing platform provider in percentage terms, in fact based on our current market share and the growth we achieved in the preceding 12 months. Great results for the platform part of the business. In the Class business as part of Tech Solutions, equally from June 2018 to June 2022, Class Super has grown its market share from 24% to 30%, albeit we've owned the business for less than six months. It did have the strongest quarter four since 2019 in FY 2022, with the strongest growth there. You can see the number of accounts there for Class, the total accounts and the Class Super accounts there on the slide.
Doing well in terms of market share, lots of opportunity to continue to grow, and great results, when you look at them beside our financial results. I'm not gonna spend much time. I'm gonna move on to the next slide. I won't spend too much time on that. If I put in summary, financial year 2022 overall, we've talked about the financial results. We've had record annual platform net inflows. In fact, the net inflows for our business as the specialist platforms are at levels that this industry hasn't seen for many, many years, if at all, for institutional providers and ours being AUD 11.7 billion. A great result and a great level of growth.
Our customer advocacy has grown substantially, and I'll be showing you some awards in the next few slides in terms of what customers are saying about HUB24, and it's absolutely in our DNA to make sure we continue to deliver and delight our customers with great opportunities. We completed the Class acquisition, increased our profitability. We've continued with the integration of Xplore, which we acquired in FY 2021, and those things together, all against the backdrop of a market that's been rattled with some uncertainty, changes in inflation, interest rates, concerns about health, pandemics, and international uncertainty. In the backdrop of that, we've actually delivered on strategy, delivered great growth, delivered great outcomes financially, and still working on innovating to enhance customer value.
I'll talk a bit more about those three innovations there, HUB24 Present, HUBconnect Licensee, and HUB24 SMSF Access later on in the slide. Of course, we're playing our role of working with the industry to build foundations for a strong and thriving wealth management industry in Australia. Turning to the customer advocacy, we're moving to the next slide. In terms of the awards this year, there's six there for Hub that we've called out and two for Class across both our key business units. Interestingly, the one I'd like to talk about most of all, we've recently been awarded in the last couple of weeks number one Value for Money from Investment Trends.
When you think about—we talk quite often about value versus price and the levers for that, and the market is shifting to a value driver. We haven't seen massive competitive pressure on price for the last couple of years. Advisers are understanding value and the sustainability of working with a great platform provider who's there for the future, who's building out for the future. Put it in the context of best interests duty for customers. Value is a key driver for why a decision should be there to recommend a particular platform. For the HUB24 platform, that's a great new award that speaks to us overall from adviser sentiment. Running through them, number one for managed portfolios for the sixth year running. Number one for price earnings from Investment Trends.
From Adviser Ratings, we have the best adviser experience, the best platform, and best investment options. Great awards to have. Looking at Class. Class has won the award for Best SMSF Software Administration Platform, as well, the two awards there for provider as a platform. Moving forward, you look at those awards and the market share we have, I think you'll agree we're very well-placed for more growth and more opportunity as we move ahead in FY 2023 and beyond.
To do this, of course, and moving to the next slide, talking about our people, we have an exceptional team, and we work very, very hard to build a great and talented team, build on the already high-performing culture that we have, and look at how we attract, develop, and retain talent in the business, and creating the right environment for our people to thrive. I think that's a secret to our success, is having a really capable team that are aligned and working very well together. In the group, we now have 700 employees, having had 200 employees join us from Class and HUB24 hitting up to 500 employees over the last 12 months as well. And obviously, we work very hard at that. We have a very, very strong and focused culture. We're prioritizing employee wellbeing.
We're continuing to support a diverse and inclusive workplace and investing in leadership. In fact, on the bottom half of the page, in terms of putting in place the foundations for future growth and operational certainty and scale, you can see we've recruited three new key executives for the business to support that growth. We're out in the market currently recruiting a chief people officer for the combined group. Employee engagement at 72%, which is a great outcome. I want to talk about our values. It really is in our DNA, the values that we have on the right-hand side of the slide, about how we operate, about our integrity. We see these things as precious.
Collaboration, acting as one team, really, really being focused on clients and easy to deal with, delivering excellent outcomes, going above and beyond. In fact, we often talk about being brave to do things and get things achieved that you know seem difficult in the context of how do you look after your customer and how do you progress the business. We have passion and energy to make a difference, and we certainly think big and outside the square. A little bit more about our people there. We are continuing to invest, and we're absolutely focused on maintaining the great culture we have as a foundation on which to build moving forward.
I'm now gonna hand over to Kitrina Shanahan to, if we move to the next slide, so everyone our financial results, and I'll be back a little bit later to talk more about the strategy and outlook.
Thank you, Andrew. Thanks for that. If we could just move to the next slide for the finance section. Here we've got a snapshot of the combined total group, a breakdown for revenue, underlying EBITDA and customer numbers. You can see here, the Class business is included in the Tech Solutions business for the consolidated group. On the right-hand side, however, you've got the revenue contribution from Class for the four and a half months of AUD 23.9 million and an underlying EBITDA contribution of AUD 9.5 million from Class and a customer base of over 7,000 customers.
On the HUB24 side, where we have the HUB24 platform, the HUBconnect and NowInfinity and the Xplore platform, we've got revenue of AUD 168.6 million, an underlying EBITDA of AUD 60.9 million, and a customer base of advisors of just over 3,400, taking the total group revenue to AUD 192.5 million and underlying EBITDA of AUD 70.4 million. The Platforms business contributes 83% of the revenue for the total group, and the Tech Solutions, including the Class business, contributes 15% of the total revenue for the group. Corporate includes the investment that we have in Diverger and our share of profits from the Diverger investment. Just moving to the next slide, we have the group financial results.
This is the combined financial results for the whole group, and you'll see the operating revenue is up 76% to AUD 192 million and operating expenses are up 69% to AUD 122 million, delivering positive jaws and an underlying EBITDA growth of 92% to AUD 70.4 million. This is combined with underlying EBITDA margin and cost-to-income ratio improvements for both of those metrics of 2.9%, delivering operating leverage across the whole group for the year. On the right-hand side, you can see the breakdown and the contribution of the different segments to the operating revenue and the underlying EBITDA. The Platform segment is still the highest contributor, delivering AUD 59 million uplift in revenue on full year 2021, and AUD 24.4 million uplift on underlying EBITDA to the group.
Tech Solutions grew AUD 22.4 million in revenue and grew AUD 9.7 million in underlying EBITDA. Both of those metrics largely being driven by the Class acquisition that we did. Moving to the next slide, we've got the Platform segment, again, delivering very strong results with a 20% growth in the custody platform FUA growing from AUD 41.4 billion in full year 2021 to AUD 49.7 billion, just shy of AUD 50 billion in full year 2022. The non-custody PARS FUA went backwards or declined 8%, which was largely driven by the negative market impact. So it's now just under AUD 16 billion and total FUA growing 12% to AUD 65.6 billion, up from AUD 58.6 billion in full year 2021.
Platform net inflows have grown 32% to AUD 11.7 billion, up from the AUD 8.9 billion in full year 2021. Full year 2021 also included AUD 1.4 billion for the large transition of the ClearView portfolio. If you did a normal net inflows excluding large transitions, the platform net inflows is actually up 56% year-on-year. You can also see in the Platform segment the underlying EBITDA margin improvement of 1.3%. Growing to 38.8% underlying EBITDA margin up from 37.5% in full year 2021. Underlying EBITDA itself in a dollar terms growing 64% to AUD 62.3 million. On the right-hand side, you can see the split and the growth in the funds under administration growing to the AUD 65.6 billion.
You've got the half on half split in this metric. Net inflows in the first half, the strongest half at AUD 6.7 billion, adding the second half AUD 5 billion, getting you to the AUD 11.7 billion for the year. The market movement on the custody portfolio was AUD 1.9 billion in the first half, positive, strong market movement. The negative market movement, aligned broadly in line with the ASX 200 movement, negative market movement of AUD 5.4 billion in the second half, netting to AUD 3.5 billion over the whole year. You can see the non-custody PARS.
The net impact of the net inflows and the market movement is AUD 1.2 billion over the year, with a positive market movement of AUD 1.1 billion in the first half and negative market movement of AUD 2.3 billion in the second half. Moving to the next slide, we continue on with the platform segment results. Here we've got the five-year growth trend in revenue, expenses, underlying EBITDA and underlying EBITDA margin. You can see each year delivering very strong growth in revenue and in underlying EBITDA with the full year 2018 revenue back at 40 million growing to 160 million in full year 2022, and expenses growing from AUD 28 million to AUD 98 million. Those metrics deliver a very strong AUD 62.3 million platform underlying EBITDA in full year 2022, with a full year CAGR growth.
Annual growth rate was 51% in the underlying EBITDA. The revenue margin for the platform segment remained stable over the year at 32 bps. I'll talk more about that as we get onto it. If we can just move to the next slide. On this slide, we have the composition of the platform FUA, and we break it out between retail, institutional, and Xplore Super admin. There hasn't been a significant shift year-on-year in the spot FUA contribution from the different segments, with the retail segment contributing 81% of the platform FUA, approximately AUD 40 billion. The institutional, including the private labels and the private clients that we have representing 16% of the total FUA or approximately AUD 8 billion. The Xplore super admin being a smaller portfolio contributing AUD 1.5 billion.
As we've announced in our quarterly results and the analyst and investor pack, we're expecting the Xplore uper admin part of the portfolio to transition out towards the end of full year 2023. The revenue margin you can see in the graph on the bottom right-hand side. The average for the custody revenue margin in full year 2021 was 36 basis points, and over full year 2022, [1H] it remained static at 32 basis points. The reduction in the Xplore Super admin revenue margin, there was a one-off service fee included in full year 2021. You can see the small drop there from 17 basis points to 13 basis points in full year 2022. On the institutional revenue margin, you can see an increase from 9 basis points to 14 basis points, which represents a full year contribution from the private labels being ClearView and Insignia.
Just moving on to the next slide. Here we have the 59% growth in the platform revenue up to AUD 160 million, with the admin fees delivering AUD 12.4 million uplift on full year 2021, and cash and trading delivering AUD 13.5 million uplift on full year 2021. You can see in the graph on the right-hand side, the split between the first half and second half 2022, the contribution from admin fees and cash and other income, which includes the trading. The first half benefited from the net inflows, a strong AUD 6 billion of net inflows in the first half. There was also the strong AUD 1.9 billion of markets in the first half, and there was an extra two months of Xplore. The Xplore acquisition completed in March 2021.
Move from second half 2021 to first half 2022, there's an extra two months for Xplore in there. When you move from first half 2022 to second half 2022, there's not an uplift from Xplore. It's all been accounted for in the previous periods. The second half admin fees and cash and other have been impacted by the negative market and the impact on the FUA growth. If you take the Xplore extra two months in the first half and you take the impact of the negative market, that's the reason for the difference in the growth half on half.
In the bottom right-hand side, you can see the platform revenue margin, with Xplore 36 average on the custody portfolio in full year 2021, and then normalizing for a full year impact of the Xplore portfolio, which has slightly lower margins, bringing it down to 32 basis points. The margin remained static half on half, with the benefits from the RBA increases and the cash management fee broadly offset with the admin fee clearing in the second half. Albeit that was lower than normal, it was still a small impact on the second half. Moving to the next slide, we have the group expenses. Total group expenses was AUD 171 million, which have included AUD 30.2 million for strategic transactions and acquisition amortization, which I'll talk more about on the next slide.
Excluding abnormal items or notable items, total operating expenses were AUD 141.1 million, which included the Class operating expenses for the four and a half months of AUD 14.4 million, which gets you to a core business operating expenses pre the Class acquisition of AUD 126.7 million, which is up 46% on full year 2021, as it included AUD 10 million for the full annual impact of the Xplore portfolio coming in. You can see in the graph on the bottom right-hand side that employee expenses is still the largest part of the expense base, being AUD 80.3 million of the expenses incurred.
FTE, as Andrew mentioned, grew to 700, with Class contributing about 211 extra FTE and the FTE growing for half 2024, up from 460 in the first half 2022 to about 490 in the second half of 2022. Just moving to the last finance slide. We have the increasing profitability across all the measures. We've got underlying EBITDA, which is up 92% on full year 2021 for the continuing operations.
After we take out the share-based payment, the normal run rate for the depreciation and amortization of AUD 7.5 million, and then the tax, we get to our underlying NPAT of AUD 35.9 million, which is up 133% on full year 2021. The share-based payments of 10.8 million is higher than last year as it included a recognition of the special PARS performance options and rights that were issued in full year 2021. Given the strong growth in the net inflows this year, we recognized a share-based payment for 18 months of those, of that issue of the PARS. Moving on from the underlying NPAT of AUD 35.9 million, we've got the notable items of AUD 17.9 million, which includes transaction costs for the Class acquisition.
It includes AUD 5 million for the Xplore implementation related costs and AUD 1.9 million for other projects, including regulatory change, the joint SMSF products that we've been working on and some small client transitions. We have the tax-free NPAT of AUD 14.7 million, which is up 50% on full year 2021. An excellent financial result across the board. Cool. With that, I'll turn back to Andrew.
Thank you, Kitrina. You look quite pleased, particularly with that expanding margin there, which was difficult earlier in the year. That's a great result. Well done. We'll now turn back to change the pace a bit. Look, we've spent some time this year. Onto our corporate sustainability slide. We spent some time this year enhancing or formalizing our approach to corporate sustainability. It is something that as a business, we're very, very keen to update the market on about how we view that and what we're doing in that space. If we go onto the slide, it's headed enhancing our approach to sustainability. During the year, we actually did a materiality assessment.
We took some external advice, advisors, and we worked with key stakeholders, being shareholders, customers, other service providers in the marketplace, business partners and so forth. We identified some key focus areas or materiality areas that we thought HUB24 should make a difference and would focus on. They're on the slide there as a result of that piece of work. It includes customer experience, climate risk, diversity and inclusion, our business ethics, data privacy and security, very important for technology business, and employee engagement and so forth. We're absolutely committed to managing the business considering the broader community customer environmental interests. We've been doing that for some time, and you'll see us release our first sustainability report early in FY 2023 or in the next couple of months before our AGM, certainly.
We'll formalize that and go to market with our approach. We get asked quite often about what we're doing, been doing. Important to note that, from our perspective with our customers and the offers we have on the platform, we have 150 industry appropriate options on the platform for advisors and customers to give them choice. We certainly lead the market in the capability of managed portfolios for advisors and clients to tailor or tweak, if you like, portfolios with their own preferences. They might actually be following a particular investment manager's approach, but they might actually wanna put some tilts in there and actually rule out some stocks or substitute some stocks or some sectors based on their own preferences.
From the platform perspective, we've long been thinking about how we provide choice and allow people to facilitate their own choices in thinking about their retirement, and we lead the market in that regard. We've also, from a platform perspective, had a digital-first approach. In fact, HUB24 platform from inception has not produced paper-based client materials, in terms of output for customers. We have a digital-first approach. When we move Xplore over, that will be overlaid with that. But we don't produce marketing materials, and reports in paper. It's all digital. Reducing our environmental impact is something we're committed to. The slide there is outlining our approach. You'll hear more from us in the next few months.
Also on the slide, there is some community support we've done across a number of areas, including the Pro Bono Financial Advice Network, where we help with advisors donating their time to those who need advice and can't afford it with some other charities there, like the Red Cross and other children's charities, as well. Cancer Council, Jeans for Genes. They're there on the slide as well. Looking forward to updating the market on that moving forward, and you'll see more about that as we approach our AGM time. Moving on to the next slide. In fact, we might click over two. I've got a quick update on Class.
The slide headed Class progress update, absolutely focused now on working on the foundations we've put in place and moving into a growth phase and consolidating the market leadership position of Class. Largely finished the transition phase, although we've just made some appointments in terms of CEO and an executive team in Class. The business is running under that executive team led by Tim Steele and putting in place the foundations for growth. We've certainly worked with the business to redesign the operating model around customer propositions and their core strengths around the Class offering and now Affinity offering and also the go-to-market, which is all about HUBconnect data products, all going through that business model in a Tech Solution segment led by Class.
We've got development underway on the joint SMSF initiative, which I'll talk about in a couple of moments. Heading into a growth phase with that focus on services, getting back to the basics in terms of delighting customers, market leadership, and Class certainly was, as its own entity, focused on pursuing other growth opportunities to increase its addressable market. Inside the Hub family and together with Hub, we believe there's significant upside for both businesses to work together and absolutely focus on the core business of businesses of Class being now Affinity and the Class Wealth administration capabilities. Absolutely going to deliver on our commitment to increase customer engagement, provide better service to customers, and deliver new opportunities by leveraging the benefits and capabilities of both Hub and Class. That's a bit of an update on Class.
It's going well. We're delighted with the team, and we're delighted with the focus and the reception we're getting from customers and the work that the team are doing, engaging with clients and talking about the future and thinking about how we address the market and of course, the opportunities to continue to deliver or to empower better financial futures across the HUB24 group and across the Class clients together. Moving on to strategy and outlook, we might flip over two slides, which is a slide titled HUB24 well positioned to grow market share.
We've included this slide just as a reminder of the size of the markets and we view the market has actually broadened this and there's opportunities to take technology and increase the size of the market because there's many more trillions of AUD of assets in the Australian investment community that aren't administered through any vehicle. I believe technology has a role to play to make that easier and better for customers. Certainly in the platform market as it's measured now, you saw the awards earlier, having 5.1% being the fastest growing in percentage terms. There's a lot of room to move for us to grow in that particular market. There's a lot of upside, which we certainly are aiming to capture.
The managed accounts market, we have 17% of that as of last Rainmaker research, I think it was December last year. Certainly that market is growing very, very rapidly and projected to grow as one of the fastest markets in terms of investment management within platforms. Portfolio lending market, 9.3%, Class has 30% there. There's lots of room and very well-positioned to grow our market share, given the awards, the accolades, and our focus on delivery for our customers and certainly working with our talented team. Moving on to the next slide. We shared this slide, and we share it quite often about strategic pillars for HUB24. We certainly shared it at our results on Investor Day back in June.
Our ambition to lead the wealth industry as the best provider of integrated platform technology and data solutions, and that's intentional. From that perspective, there are three strategic pillars. The first one is about customer value and growth, which enhancing our current proposition, extending our competitive advantage, extending our lead, and growing and protecting that core part of our business. The second one is about building the platform of the future, which is an aspirational. Certainly, it's a journey we're on, and we've got all the ingredients. I'll talk about that on the next slide. Positioning our business for growth and change and getting ahead of the curve and continuing to disrupt the market with even better integrated solutions.
The third one, about playing our role in the industry and collaborating with the industry to build a strong Australian wealth management industry, a strong advice industry, a strong technology-backed industry, a blueprint, if you like, for the future of this industry. Given the massive shifts and changes, we have a role to play, and we believe that's great for customers and shareholders alike, for us to play that role, and we're certainly committed to that as one of our strategies moving forward. If we turn to the next slide, we're building the platform of the future, and unpacking that a little bit more. It's about bringing together the ingredients we've got to meet a customer need, and we have those ingredients in our stable to deliver.
We have the HUB24 platform, the Xplore platform, non-custodial PaaS services, our tech solution segment with Class and HUBconnect and NowInfinity, all underpinned by what we call HUBconnect technology infrastructure. Our aim is to provide across those and across even broader integration with other financial services providers and software providers, a single view of wealth to meet that holy grail where customers and advisors can see a complete picture of their wealth. One way of doing business, making it easy to do business. There's friction in the system. There's a lot of effort to look at that, one way of doing business, a single view of wealth for customers. We're certainly heading in that direction, and I think it actually helps us grow our business, retain our customers and also deliver and delight our customers. Efficient access to investment under IP.
That's managed portfolios. That's through multiple platforms. Flexibility for advisers and of course, reporting and insights. There's a lot of work underway, and we'll keep doing that. There's an example on the next slide we might go to of the manifestation of that. If we move onto the next slide, Powering Adviser Futures Through Innovation. HUB24 Present is a reporting and a client review tool we launched to market over the last few months, which we're getting great feedback from. It's actually running off that HUBconnect technology infrastructure I pointed to on the previous slide, which can take data from multiple places. We're building out the data into that. An adviser can in real time dynamically show a client a review of their situation across more and more data moving forward. It's actually saving time for advisers.
It's currently inefficient and time-consuming for advisors to get all the up-to-date information they need for their clients. HUB24 Present is an example of a single view of wealth for assets on our HUBconnect infrastructure, which we're building out. Advisors are really giving us great feedback, and we're committed to enhance that even further. The case studies are showing advisors saving time. We've got feedback that's one of the best things we've done in recent times, really excited about how we're delivering on that goal to build that platform of the future. HUB24 SMSF Access, I talked about a bit earlier that HUB24 launching a combined product called SMSF Access that's targeted to clients that it might have been cost prohibitive before they might choose to have a simple self-managed superannuation solution.
In recent years, there's been views that you need to have half a million AUD of assets before it would make sense to have a self-managed super fund. We believe that's not the case, and there's certainly great use cases for it at younger ages and younger balances with the benefits you can get from portability and having your own fund. We're launching another choice for advisors called SMSF Access. It does leverage the Class technology and the Hub technology together in a bundled product offering that will offer a lower cost solution, and hopefully grow the market for SMSF and grow the platform as well.
It's a joint delivery from HUB24, powered by some of the Class tech that we're taking to market in the next couple of months. The third example of how we're delivering on our role and our vision through innovation, HUBconnect Licensee , absolutely in market. We've gone beyond round one, we're in the process of signing up our clients to the production live version. That's happening, we're extending the capability there. It's aimed at helping licensees manage their compliance objectives, helping them get ahead of the curve, detecting issues before they occur or preventing issues before they occur. Certainly allowing them to focus on their core business. We'll certainly be driving delivery of other versions of HUBconnect Licensee with data insights for individual advice practices.
It's using AI and machine learning to really gather multiple sources of data and revolutionize the way that licensees can manage and monitor their obligations and work with their advisors to really focus on customer outcomes aimed at making advice more affordable and accessible. Can HUB24 play that role in the industry and certainly good for customers and growth for the overall business. What does it all mean? If we move over to the next slide, the last slide we've got here in terms of an outlook, moving ahead. HUB24 is going to continue to invest for ongoing success. We will continue to invest and lead in product and service innovation and customer service excellence.
We're doing that from a great platform, from an expanded footprint with some great accolades of awards, with an absolutely available market for us to keep growing in. We'll continue doing that. We'll continue developing our platform of the future, completing the Xplore product integration. Want to work with the broader industry to find new opportunities and advocate for the industry and for building those foundations. We're gonna pursue growth. We're looking forward to working with our existing customers and relationships with financial professionals, to provide better outcomes for them and to grow the business and leverage those relationships to develop some new opportunities. That includes looking at expanded product features across segments so that the pieces we've picked up from Paragem and Xplore, and sort of the product functionality there, offer across the broader business.
We've talked about that for some time, and that's happening as we do that integration. For example, we introduced Chi-X, a sort of new name recently and some other investments on the menu. We'll keep doing that as we continue with that integration. Leveraging those and sort of democratizing high-net-worth features for other clients as we build out the platform. Developing new market opportunities looking at group capabilities in that course. We'll continue to evaluate growth opportunities in the wealth industry to lead change beyond just organic opportunity as and if they make sense. It all adds up to continuing strong financial results. We absolutely hope to and are aiming to leverage our brand scale further, as we did this year, to drive shareholder value.
We increased profitability and enhanced margins, and strong cash flows, and aim to deliver the synergy benefits and EPS growth from the strategic transactions, both Class and Xplore. We have updated our platform FUA target. We've revised it. Unusual for us to do this, but we did have an interesting year last year. The statement is AUD 80 billion-AUD 89 billion for FY 2024. Remembering that, in the second half, effectively at the end of the first half of FY 2022, we were up AUD 1.9 billion in terms of market cap. In the second half, AUD 5.4 billion of that went away. We finished the year down, but we've started to see some recovery.
We revised our target based on the market movement, not based on our view of the business, which is growing through its pipeline. In fact, the pipeline's incredibly strong and we're excited and investing in growth, have appointed a chief growth officer and looking at expanding our sales team as well. Revised the target to AUD 80 billion-AUD 89 billion for FY 2024. As always, we always aim to do the very best we can and take the best opportunities we can. Traditionally we've overshot, but there's the revised target there. We're working very hard towards that. Okay. Thank you very much. I'm happy to move to questions with Kitrina now. We've got about 17 or 18 minutes left, if you'd like to do that.
Thank you. May I remind participants if you have been provided with the question link and wish to ask a question, please press star then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the star key then two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question is from Bob Chen from JPMorgan. Go ahead. Thank you.
Hey, guys. Just a couple questions from me. Just looking at that update to August 18th of AUD 54 billion of FUA. Can you give a little bit of a breakdown on how much of that is driven by the markets versus sort of net inflows? Just given that the ASX is sort of up about 8% since June 30th. I'd just like to unpack how much is actually driven by inflows. Do you want to go with that, Kitrina?
Yeah. Broadly speaking, we're generally about 60%-70% correlated with the ASX 200. When you look at that and you can take the market growth that has occurred over the last six weeks, and broadly speaking, you'll end up at, you know, three-quarters of it coming from the markets and roughly about a quarter of it coming from the net inflows.
Great. Thanks for that.
Flows have been healthy, Bob, just to answer that. We're looking forward to seeing how that plays out. Obviously, everyone's interested in what the market sentiment is, but flows have been healthy in the first six weeks.
Great. Thanks for that. Just in terms of that pipeline for FY 2023, in terms of the mix of advisors coming on board, like is that starting to pick up? Only because it looked like it had slowed down a little bit in Q3 and Q4.
I think the interesting thing is you can always talk about the number of advisors, or we can talk about the productivity of advisors, and we're seeing the productivity of advisors or what you might call about, you know, penetration of their current books increasing year on year. So they're more and more valuable advisors. The numbers are going up, but that's in the context of other macro events. We do have access to the relationships with the licensees representing up to about 75% of the advice market, with lots of room to move there. While we're absolutely focused on leveraging the relationships we've got and the growth as well. Whilst that number, you know, is happening, it has shifted. We've had a large flurry of people join over the last couple of years with the shift towards online advice models.
It's now about leveraging that. The indicator would be the penetration and the throughput of that. As you've seen, we mentioned that on our investor day. We showed how the flows come over the last few years. That's how it will bear out.
Okay, perfect. Just the final one. I mean, in terms of the cash margin, obviously it's been a big beneficiary of recent interest rate increases. Any updates on how your discussions are going with your banking relationship for later this year?
Now Bob you said two questions, that's three, but that's okay. We are in the final stages of signing off on a particular direction there. We expect to do that in the next few weeks. We're pleased with the outcome and or the planned outcome, but we'll update the market as appropriate, probably in our quarterly if that's done in the next few weeks. We're pretty well settled on what we're gonna do. We're final stages, just got to push through that, and at the right time, we'll advise on that. The conditions are better than we thought a year ago, but we'll talk about that later.
No worries. Thanks, mate.
Thank you. Your next question is from Scott Murdoch from Morgans. Go ahead, thank you.
Hi, guys. Thanks for all the detail. Just ask two quick ones in the interest of time. Just on the headcount growth, there doesn't look to be a massive step up in the core business in the second half. Just interested in your thoughts, either Andrew or Kitrina, of where you actually sit with headcount. Have you now caught up to the investment you needed in the business, or you're now ahead around headcount growth? Thanks.
I'll certainly start there. In terms of the executive team, I've got one last recruit to do. Haven't filled yet in terms of Chief People Officer, but in terms of the fixed cost of an executive team, I think we've got a great set there. Most of the cost growth is likely to be variable costs in terms of sales or customer service based on growth or scale of the business. I think we've made a great investment. We did have a lesser increase, and Kitrina will unpack that because I think we talked about that a few months ago. I think we're pretty well set other than variable costs, Scott, or a change in strategy. It also depends on acceleration and pace of growth in the business. I think we're well positioned there. Kitrina.
Yeah. I think definitely we would have seen a higher growth in full year 2022, as we mentioned, than we would expect to see going forward, as we're still expecting to deliver, you know, with all market conditions being, you know, favorable or normal, we're still expecting to be able to deliver operating leverage and improvements to the margins. You'd expect to see, you know, there'll still be some headcount growth next year or this year, full year 2023, in line with the net inflows coming in, but it will be lower than you would have seen in 2022.
If we're, you know, in the core business, if you're at the, you know, close to the 500 in the core business, you can probably expect to see anywhere around the, you know, 15%-20% growth in headcount in 2023.
Okay. Thank you. Just a quick one on Class. I think you've given some early indications of what you want to do there, but just interested in that fourth quarter, obviously some initiatives that probably put in place before your ownership. Just interested in that account uptake and growth, system versus, you know, what is happening, bottom up in Class.
Look, there's certainly system growth. You know, I think, you know, I couldn't actually say because we acquired the business, we got it up, and there's system growth. I certainly think an acquisition of the business has been well received by customers alike, and there's an excitement out there about getting, you know, Class focusing on its core strength moving forward. That will hold some stability. There has been system growth in the SMSF space. There is talk of, I'm not sure whether assets have done that and, can't guarantee, but there were some statements about applicability of SMSFs that were restrictive, but actually, as looking at unwinding or have unwound. We're seeing in the media a lot more younger people opening up self-managed super funds.
If we talk about that side of Class, there's growth, there's an understanding of the applicability of those solutions, and certainly we intend to leverage that. You know, you're quite correct. It had a great quarter. I think that is impacted by acquisition, but it's really system growth and Class being well positioned to take that growth. That's what we intend to do moving forward.
Thanks, guys. Got lots of analysts, so I'll pass it on. Thanks.
Thank you very much.
Thank you. Your next question is from Siraj Ahmed from Citi. Go ahead, thank you.
Andrew, hi Kitrina. I'll ask two questions. Just first one in terms of the flows to date. So Kitrina, based on your disclosure, that sort of implies AUD 1.1-AUD 1.2 billion in net flows, which is, I think same time last year, you were at AUD 1.8 billion. Just looking to understand, are you still seeing? You said it's seasonality, but are you still seeing impact from this whole market movement?
Should we, sorry, say that last part of the question again, Siraj?
Yes. It's 1.1% this year versus 1.8%, I think it was, in turn last year. It's still down year-on-year. Just keen to understand whether you feel the flow is building impacted by advisor efficiencies, and things like that.
Yes. It's a little bit higher than what we've given you. I'll give you that, Siraj.
A bit more than a little bit higher, but yeah.
Yeah. The net inflows for the first six weeks is a bit higher than the count that I've just given you. Up around a couple of hundred mil. Once you've done that, we are seeing it's the run rate that we're expecting for this year. Clearly the second half of last year was slower than the first half. If we assume that the second half, once we normalize for that last quarter where there was the rush for the fee consent, we're expecting the second half of last year to be quite a normal run rate. When we look at that's on track for this year. That's the thing about it.
Good. Thank you. In terms of,
Yes, sorry. From a fee perspective and advisor activity, there was the slowing in June for fee consents. You know, at the end of the call, we'll have a much better picture of what's happening. It was a stellar first half last year that obviously was impacted. I think there's stability out there, and it's always difficult for advisors to have conversations with customers about moving platforms when there's volatility in the market. I think, I hope that's settling down. That's the signs we're seeing. We're comfortable with the start so far, Siraj.
Okay. Just confirming, clarification, that flow still includes the Xplore super admin, right? That's something that's come in? Yeah.
Correct. It does.
In terms of the full guidance, Andrew, it's interesting that you've actually lowered it. Clearly market movement is a negative last year, but the start of this year, you've sort of recouped that AUD 3 billion, right? Just keen to understand the underlying drivers. You'd previously mentioned AUD 11 billion-AUD 14 billion of flows. Is that still the expectation in terms of the guidance?
Well, we've just said how you can unpack and build up to bottom up build. You could use those assumptions in terms of guidance. It does depend on the flows you get from sales or any large transitions as well, Siraj. We do think about it several ways. Perhaps take a step back. The 3.5 negative market movement, if you think about FY 2022, normally we've had an assumption for 5% positive market growth. Add to the 3.5, the 5% you didn't get of, and that might help explain. We've just taken the range down by AUD 3 billion and looking at our pipeline.
If anything, it's not as much of a downgrade as you might think when you think about we were getting a positive 5% in that year as well. In everything, if you think about it, if I use the word real terms, then it's a better outlook. That's why we've done that. Consensus was at AUD 80 billion, and so it made sense to us to do that now. We'd like to overshoot and upgrade later on rather than anything else. We thought it was sensible to say, "Hey, the market's been choppy."
It's affected us by more than AUD 3.5 billion if we were to unpack it with the loss of the growth. You still could model it with flows of between AUD 10 billion-AUD 13 billion a year in terms of sales or AUD 14 billion if you like. You'll get to different ends of the spectrum. You could add on some one-offs, but we're comfortable that we can land within that range. Of course, we'll try and do the very best we can to get the top of that.
Yeah. Thank you.
Thank you. The next question is from Kieren Chidgey from Jarden. Go ahead. Thank you.
Morning, guys. Can I just start on the platform revenue margins, just pick up on some of your commentary, Kitrina, but focusing in on the retail margin, which I think was flat at 37 basis points half on half. Just wondering if you can explain with sort of a tailwind from RBA, albeit it was sort of later in the half, and would have thought sort of the tiering would have helped you given lower average balances in the period. Why sort of that hasn't ticked up a little bit more and whether or not, I don't know if you can give any commentary around sort of whether or not in the first half of 2023 you're now seeing that move higher with sort of more of that full RBA tailwind coming through.
Yeah. I'll just quick cover off the 22 question part of that first. The RBA rate increases came in sort of late in the half, so May and June when the RBA rate increases were announced. As we disclosed when we did the June 15th investor strategy update, where we reached the maximum of the fee that's disclosed in our product disclosure statement. We're just below what's disclosed in the PDS because of the different mix in the portfolio and the fee mix that people have selected. There was only like a, you know, month and a half impact or benefit from the RBA rate increase.
Then the fee tiering, it's absolutely less than it would normally be over the 12 months, and in particular over the six months. Absolutely that's because of the negative market impact. Because of the mix in the portfolio, there's still some fee tiering that's coming through, as different clients will have a different strategy and their balances will move around. It's definitely less than normal, but there is still an element of fee tiering in there. Then when we look out to full year 2023, so we're not giving guidance on where the revenue margin could look like in full year 2023.
Absolutely, I think we talked about the capital management that we have with our bank comes to an end on December 1st and in line with everybody's expectations, the rate that we agree will definitely be below where it was set for the current contract because it was set three years ago, and rates were significantly more favorable then. We're still very confident that we're gonna land in a good position when we do negotiate that contract, and we'll announce that sometime in the next couple of months. Absolutely. There'll be a headwind coming because of our ADI contract renewal. Again, there'll be the benefit of where cash balances are at, lower admin fee tiering that we see coming through.
I think we have seen higher in new business. The balance is coming, you know, generally higher than they have been. Whilst you've had some market movement maybe pushing people back through a tier, the mix of new business is being high quality with some of the customers, as you said, Kitrina.
Okay. Thanks. A second question, just on D&A. It sort of didn't step up, I think, as much as the market had anticipated in the second half with Class coming in. Can you give any guidance as to how we should think about that line in 2023?
Yeah. In the total depreciation and amortization for 2022 was just under AUD 20 million. It's AUD 19.8 million. AUD 12.3 million of that was acquisition amortization for the Xplore and the Class portfolios. The normal depreciation and amortization is AUD 7.5 million. There, we're expecting that to remain. That's a normal run rate that you'll see. There will be a bit of an uptick because we'll have Class in there for a full 12 months. Class's depreciation, if you look at their history, their capitalization policy was a little bit more aggressive than the HUB24 capitalization policy. We're expecting to align those. You won't see if you took the previous Class, you won't see our figure uplifted, you might expect for that.
Take the 7.5 that you saw for this year, add a little bit for Class, and that will be a normal depreciation and amort run rate. If there was a larger investment in something, i.e. our platform with the future strategy, then we'd absolutely be updating the market at that point. There's nothing to update the market on at the moment.
Okay, thanks. Can I just clarify the exact timing?
Yeah.
Of the Xplore discontinuance?
The Xplore sit in our asset portfolio of about AUD 1.5 billion. We're expecting that to be sometime towards the end of the second half of 2023.
There's three or four questions outstanding, but we are going to move on to one last question if that's all right. I'm sorry about that. I'm happy to see people on the road who are absolutely going to be available. Let's go for one more if that's all right.
Thank you. The final question is from Nick McGarrigle from Barrenjoey. Go ahead. Thank you.
Yeah. I was just hoping you could make some. I think people have asked this question in a way, but how are you finding advisor activity? You know, I think you've indicated size of, like, 1.5, which feels like a good bounce back from June. Are advisors talking less about fee consents , or is anything distracting them at the moment? Do we feel like given the market is more supportive, absent the last couple of days, that advisors are back and getting their houses in order?
I think you find there was fairly significant activity at all. Sentiment is quite positive. It's different, Nick. It seems to be settling down. I think it's what, the six weeks, seven weeks since you've been here. Looking forward to seeing how the quarter goes. It seems to be far more stable than it has been. There's market volatility there still, and that may affect consumer sentiment. Having said that, we're happy with the flow levels we've had for the first few weeks, very much. You know, all signs are good. You know, we're in a macro environment. I think the good thing about Hub is we're well placed regardless of that to weather those sort of issues. To us, it's just a timing difference. You've both seen retracted, but right now it looks good.
Thanks.
Thank you. I'm gonna hand back to Mr. Alcock for closing remarks.
Thank you very much. Thank you, everyone, for your time today. I'm sorry that we did cut it fine in terms of questions. As I said, we will be doing a roadshow over the next one or two days. Hopefully, we'll catch up with a lot of you one-on-one or in some group settings. It's certainly available if you need anything else. In summary, we think it's been a great year in a challenging or different market. We've executed on strategy. We've acquired a business at the same time as having record levels of growth and record organic growth and record levels of profitability and revenue and so forth, but also increasing the accolades we're getting from our customers. A fine balancing act, and we need to continue to do that moving forward.
We're absolutely focused on balancing those items in the business to get that consistent outcome for shareholders, but great results for customers and delivering on our purpose. Look forward to seeing people out and about in the next couple of weeks. Thank you very much, and thank you for your support as always. Good morning. Good afternoon. Cheers.
Thank you. That does conclude our conference for today. Thank you all for participating. You may now disconnect your lines.