Aberdeen Group Plc

Good morning and thank you for joining Aberdeen's results presentation for the first half of 2025. I'm here today with Siobhan Boylan, our very new Group CFO who only joined us last week. Siobhan brings us over 30 years of experience in financial services and I'm delighted to welcome her to Aberdeen. Okay, let me get into the results presentation. I'm going to kick us off with an overview of the group's strategic and operational progress in the first half. I will then hand over to Siobhan who will get us into more detail on financial performance and comment on the outlook. And we'll follow up with Q&A. Let me start with a reminder of the group's ambition. As I set out in March, our ambition is to be the UK's leading wealth and investments group. We're starting from a strong base. Both of our wealth businesses, Interactive Investor and Aberdeen Advisor, offer long-term savings and investments to UK customers. This market has excellent long-term growth potential, driven by the UK population's clear need for great value savings, retirement and investment propositions. II was the number one by flows in the UK direct-to-consumer market last year. And after another strong performance in H1, II now serves over 460,000 customers. II's excellent service and exceptional value for customers is at the heart of its continued success. Advisor is the second largest platform and serves around half of the UK's advice firms. and around 400,000 end customers. We have taken the necessary decision to reprice to ensure Advisor is competitive. And with service levels now restored and getting better, and with the platform working well, we've set the conditions for Advisor to return to growth. Our investments business operates worldwide with AUM of £368 billion and has many talented individuals. We believe there are significant opportunities for specialist active asset managers in the transitioning industry, driven by clients' continued need for high-quality and distinctive investment solutions. We have been repositioning our business to focus on our strengths where we see market growth whilst we further improve efficiency. All of this is underpinned by a continued focus on client service, technology and talent, with more to come on this in a moment. So, turning to our progress in the first half. We're making good progress against the strategic priorities that we set out in March. Under a new executive leadership team, we are delivering through a focus on execution, simplifying the business and strengthening our talent. I see 2025 very much as a year of transition for Aberdeen, building a business capable of long-term, sustainable growth. The strong performance of Interactive Investor in particular, combined with cost discipline across the group, saw total adjusted operating profit remain broadly flat on H1 last year. We're a long-term player with a long-term focus. Despite the period of significant macro and geopolitical volatility we saw in the last six months, our business has not only proven resilient from a profitability perspective, but also laid the foundations for the future. And I'd like to take a moment now just to thank my colleagues for their skill in navigating this challenging backdrop on behalf of their clients. Let me now provide a quick overview of our performance, which Siobhan will cover later in a bit more detail. Taking the three businesses in turn. Interactive investor continues to go from strength to strength, with operating profit of 25% year on year at £69 million, whilst maintaining a laser-like focus on efficiency. An advisor is The repricing we implemented to enhance our market competitiveness had the expected impact on adjusted operating profit, which reset down by 35% to £42 million in the half. This was a necessary step to set the conditions for future growth and to support advisors' return to net inflows. In investments, we delivered on our transformation programme, which mitigated the impact of lower revenues in the half and improved the efficiency of our platform. Adjusted operating profit remained resilient at £35 million, which is £1 million higher than the same period last year. Taken together, we saw adjusted operating profit in the first half of £125 million, which compares to £128 million in the same period last year. Completingly, net capital generation was up 7% in the half to £111 million. This supports the dividend, which has been maintained at 7.3 pence per share for the interim. Now, let me take you through the operational highlights from each of the businesses, starting with Interactive Investor. As a reminder, in March, we set out the strategic priority for II, which was to sustain efficient growth by building on our differentiated proposition and investing in the II brand. We also set out the 2026 targets shown on the left-hand side of the slide. I was pleased to welcome many of you to Manchester last month to the II Spotlight event. Richard and his team provided a very insightful deep dive into the business and our exciting new propositions. I'm pleased to say that we made good progress on all fronts in the first half. Total customer numbers were up 9% year-on-year to 461,000, with high-value slip customers up 27% to 92,000. Earlier this month, we completed the integration of Jarvis' retail book, and we expect an additional 20,000 customers by the end of the second half. Market volatility, particularly in early April, contributed to an increase in customers' trading, This activity, taken in combination with our ongoing customer growth, meant daily average retail trades were up 23% compared to the first half of last year. This sustained growth in customers has been supported by higher customer awareness, reflecting greater and more targeted marketing spend, and of course, customer recommendations. Brand awareness of ii is now up to 30% from 25% a year ago. So better, but with more to do. Increased customer numbers have helped ii achieve record net inflows of £4 billion, up nearly 30% versus the same period last year. I'm delighted that II continues to earn strong market and consumer recognition. We have now won Witcher's Recommended SIP award for four years in a row, alongside many other accolades. In terms of proposition development, II Community, our new social trading platform, now has 22,000 members. We're all excited about the second half. Not only do we expect continued growth in customers, but also our new innovative propositions to serve more customer needs. These include II360, a new platform to support more sophisticated investors, IIAdvice, a simple digital advice service which brings something different and better to the financial guidance market, and following the success of our managed ISA last year, we'll be launching a managed SIP, again designed with Aberdeen Investments, to provide more support and guidance for investors who want the convenience of a ready-made package. These enhancements, combined with the exceptional service and value that the platform offers, means we're well-placed to sustain efficient growth and to enjoy the compound effects of gaining a growing share of a growing market. Turning now to Advisor. Our strategy for Advisor is to return to net inflows by enhancing our proposition and delivering leading customer service, and we set clear targets shown on the slide. 2025 is about completing the foundational work to return to growth. Three key areas. First, a strengthened advisor leadership team, which is now in place. Second, a necessary decision to enhance our competitiveness with lower pricing, which is obviously painful from a P&L perspective. This has been rolled out to all RAP clients by Q1 this year. And finally, service. As I highlighted in our Q1 call, service levels have been restored, and indeed they improved further in Q2. Net promoter score was plus 43 in the first half, up from plus 34 last year. Other processes, including average speed to answer, have also improved as we continue to invest in the client experience. During the first half, we continued to refine our partnership strategy with IFAs, to capture growth and drive a healthier pipeline. Our approach is based around a personalised service and support model and continuous improvement in the integration between our platform and our clients. In the first half, Advisor had net outflows of £0.9 billion, compared to net outflows of £2 billion in the first half of 2024 and £1.9 billion in the second half of last year. In Q2 2025, outflows were 0.3 billion, which compares to 1.1 billion in Q2 last year. So while I would never celebrate outflows, the flow trend is showing some encouraging signs. We remain focused on returning the business to positive inflows as soon as possible and to get back to winning. Moving on to investments. Our strategy for investments is to deliver a step change in profitability by repositioning to areas of strength and opportunity and driving improved efficiency. Consistent with this focus, the business showed steady progress in the first half. Three-year investment performance versus benchmark has improved 71%, up from 60% at the full year 24, which is slightly ahead of our 2026 target. Of course, we should not forget there is still more work to do to improve equity performance, in particular in Asia. Under Xavier Meyer, we have further strengthened the investments leadership team with the appointment of John McCarrans as the new Chief Client Officer. With the right leadership team in place, we are executing against our investment strategy and targets and positioning the business to succeed in a rapidly changing market. The ongoing trend toward passive strategies continues to put pressure on revenues and margins. We're responding with a market-leading quant proposition and by always focusing on improving efficiency, including renegotiating third-party contracts, simplifying processes, and leveraging technology and AI. In terms of flows, we're seeing some encouraging trends in institutional and retail wealth, which represents almost 60% of our investment business, measured by AUM. Excluding liquidity, gross inflows in INRW were £9.3 billion higher than last year at £21.9 billion, driven mainly by our success in quants and fixed income. This is the highest level of gross inflow for well over two years. Insurance partners saw a net outflow of £4.5 billion and a half. And looking forward, we expect our mix of business with Phoenix to evolve. We continue to accelerate in wholesale and private markets, which are areas of specific opportunity, which we flagged to you in March. During H1, we launched two active ETFs, which actually listed on the LSE yesterday. And we won a long-term asset fund mandate with Scottish Widows. You may also have seen our fund finance launch, a strategy which has raised over £500 million year to date. Turning now to progress on our transformation programme. The programme has continued to deliver very well against the targets we outlined at the start of 2024, earning significant savings and bringing benefits to our clients and colleagues and setting up Aberdeen for the future. We're on track to hit our target of at least £150 million of annualised savings by the end of this year. As at the end of H1, we've achieved £137 million of that. Under the leadership of Richard Wilson, our Group COO, we are beginning to realise tangible improvements in operational efficiency, driven by the streamlined processes, enhanced operating models, increased automation, and more strategic deployment of technology and AI. These improvements in efficiency are, in turn, creating additional capacity for us to invest in the business, to drive long-term, profitable growth, while still delivering a significant reduction in overall expenses. Continued focus here, beyond meeting the programme's target, is critical to meeting our profitability ambitions. And lastly, let me cover my strategic priorities and the group targets. This final slide shows the three priorities I set out one year ago, which are all about execution and delivery. And we've made good progress across all three. I've already talked about how we're transforming performance, including focusing on where we have competitive advantage, going fast in interactive investor, turning around flows in advisor, and targeting a step change in profitability in investments. In terms of improving the client experience, my overriding objective will always be to support our clients to achieve their investing goals, be it through improving investment performance or winning in UK wealth by differentiating through client experience. We will continue to invest wisely in our platforms to maintain our competitive edge. And third, strengthening our talent and culture. This has been and will remain very important to me. The leadership teams at Group and Advisor and in Investments have been overhauled, adding some key people into critical roles. We need our people to have belief and confidence in Aberdeen and a culture that is always looking at ways of being better for our clients. We are heading in the right direction. So before I close, a quick reminder of our group targets. We're targeting at least £300 million of adjusted operating profit in 2026. And together with the much lower expected restructuring costs and the new pension arrangement we outlined in March, we're targeting net capital generation of around £300 million in 2026, which of course will support the ongoing dividend. These targets are ambitious, but whilst my team and I have our feet on the ground, We do have real ambition for this group. I'll now hand over to Siobhan who will provide us more details on financial performance.

Thanks, Jason, and good morning, everyone. I'm delighted to be here. It's an exciting time to be joining with lots to do, and I look forward to meeting many of you in the coming weeks and months. So let me provide a summary of key financial highlights from the first half. We're seeing good progress across the group. In Interactive Investor, we have sustained the strong performance reported in recent periods. In Advisor, we have seen a significant improvement in flows. And in Investments, our institutional and retail wealth business has seen an encouraging growth flows. We are also focused on improving efficiency, with adjusted operating expenses down 7%, benefiting from the ongoing transformation savings Jason has already covered. Adjusted operating profit at £125 million has been broadly steady, with strong growth in I.I. and continued cost discipline investments offsetting the impact of the strategic repricing in Advisor. Net capital generation is up 7% to £111 million. This does not yet take into account the action taken to unlock the value from our DB pension surplus, which we announced at full year results and will deliver circa £35 billion of annual benefit from the second half onwards. And finally, we have maintained our dividend of 7.3 pence per share. Turning to the group's financial performance in a bit more detail. Adjusted operating profit of £125 million was 2% lower than the prior year. This is a resilient performance, given heightened market volatility in the first half and the previously announced repricing and the end of the outsourcing discount in Advisor. Adjusted net operating revenue is 6% lower at £628 billion, with strong growth in II being offset by Advisor and a continued change in the asset mix in investments. Progress in the transformation programme has helped deliver a 7% reduction in adjusted operating expenses to £503 million after taking into account increased investment in II to support long-term growth. IFRS profit before tax of £271 million is 45% higher than in half one last year. This significant improvement principally reflects a gain in the market value of our Phoenix stake. Adjusted capital generation is up 1% to £145 million, with net capital generation up 7% to £111 million, benefiting from lower restructuring expenses. Turning now to performance in our three core businesses in a bit more detail and starting with II. The strong organic growth seen in previous periods has continued, with total customers increasing by 9% year on year. This includes a notable 27% increase in customers with a SIP, which we know tend to be higher value on average. Net flows are up 29% to £4 billion, with net flows £2.4 billion in the second quarter, benefiting from a strong tax year-end. This, along with the benefit of positive markets, means AUMA is up 9% compared to the end of 2024. Revenue is up 12% to £154 million. Within this, trading revenue was up 36% to £45 million, reflecting customers' increasing engagement with the platform's trading capabilities, as well as elevated activity levels during the period of heightened market volatility. Treasury income is up 10% to £75 million, with the average cash margin of 221 basis points at the upper end of guidance. Subscription revenue is flat, despite the increase in customers, reflecting continued investment in acquisition, such as the use of promotional offers and greater uptake of our essentials pricing package. Revenue from advice in the financial planning business was 8% lower at £12 million. Higher expenses reflect investment in brand awareness, technology developments and the business's capacity to support future growth. Operation Profit has increased by £40 million or 25% compared to the first half last year, with the scalability of the business reflected in an improved cost-to-asset ratio of 21 basis points compared to 24 in half-one 2024. Now switching to Advisor. Restored service levels, enhanced platform functionality and our competitive repricing have led to a significant improvement in net outflows, which are lower by £1.1 billion compared to the first half last year. As a result of the actions taken, revenue was 14% lower at £102 million. The actions were necessary to return the business to sustainable growth, including the rolling out of repricing to the back book earlier this year, as well as additional strategic pricing initiatives for large cases. Revenue was also impacted by the sale of 360 last year. As a result of these factors, the revenue margin in the business was four basis points lower at 27.4%. Treasury margin was 257 basis points, compared with 263 for the first half of 2024. We previously communicated that Advisor would see and enter a temporary third-party outsourcing discount. This has now ended, and together with investment in the client proposition, this has led to higher expenses overall. This was partly offset by the sale of 360. Taken together, these factors resulted in a reduced operating profit of £42 million. On to our investments business. In our institutional and retail wealth business, net flows excluding liquidity were up £3.8 billion versus the first half of last year at £1.8 billion. For investments overall, AUM was broadly flat, with positive markets largely offsetting net outflows from the heritage insurance partners business, which is in structural runoff. Changes to the asset mix have resulted in a reduction in the revenue margin. At £371 million, revenue in investments was 9% lower than half on 2024. The impact of lower revenues was offset by positive markets and cost savings as the business continues to focus on improving efficiency. Adjusted operating profit was £1 million higher at £35 million. Turning now to capital. Net capital generation is up 7% at £111 million. Breaking that down, adjusted capital generation is up 1% at £145 million, while net restructuring and corporate transaction expenses were down 15% to £34 million compared to £40 million in the first half of last year. While not yet reflected in the results we are reporting today, we are now able to unlock value from our DB pension surplus to fund our DC pension contributions. This will result in a circa £35 million annual increase in net capital generation starting in the second half of this year. And now if we turn to look at our capital base. We continue to benefit from strong capital position with a CET1 of £1.5 billion, covering 139% of our regulatory requirement. This is further enhanced by £0.8 billion of gross 81 and tier 2 debt, £0.5 billion of which contributes to that regulatory capital. In addition, we have £1.5 billion of net assets not included in capital. This comprises a £0.8 billion IAS 19 surplus, as well as our £0.7 billion stake in Phoenix, from which we received £56 million in dividends last year. And finally, I would now like to provide some guidance regarding our expectations for full year 2025. In Interactive Investor, investment has created capacity for sustained growth in customers, net flows, revenue and profit. The cash margin for full year 2025 is now expected to be between 210 and 220 basis points. As already highlighted, the revenue margin in Advisor has been impacted by the rolling out of the platform repricing to the back book earlier this year. This and other strategic pricing initiatives are expected to be reflected in a revenue margin of circa 27 basis points for the full year. In investments, we now expect the revenue margin for full year 2025 to be circa 20 basis points due to ongoing changes to AssetMix. We have clear plans to grow in our focus areas in institutional and retail wealth and expect our business mix with Phoenix to evolve over time. Expenses and investments will continue to benefit from transformation savings, and we are on track to deliver at least £150 million of annualised cost savings by the end of this year. Thank you, and I'll now pass you back to Jason.

Thank you, Siobhan, and thanks everyone for joining us. That brings us to the end of the presentation. As I mentioned at the start of the call, we will be hosting a conference call with analysts starting at 8.15 this morning. You can stay tuned to this feed to listen along to the Q&A, or you can listen later. Thank you. Thank you.