Aberdeen Group Plc

Thank you, and good morning, everyone. And thank you all for joining Siobhan and me for our Q4 call. Q4 last year already seemed some time ago, and we've had a very busy start to the new year. But let me just take a couple of minutes to reflect back on the last quarter, which was a good quarter for us, particularly in terms of strategic delivery. Aberdeen is in much better shape than it was a year ago, with each of our three businesses making progress as we deliver on our strategy to become the UK's leading wealth and investments group. Group AUMA now stands at £556 billion, which is the highest level since Covid, and it's up 9% year-on-year, supported, as you know, by positive markets. Interactive Investor continues to perform very strongly, ending the year with half a million customers and another record-breaking quarter for trading on the platform. This growth, along with a number of exciting new proposition launches, mean that the business is well set up to sustain this impressive performance. Turning to Advisor. On the positive side, 2025 as a whole saw a material improvement in net sales by over 40%, but we are still in outflow. Q4 saw the important launch of our new SIP, which is seamlessly integrated on the platform. We also saw higher outflows than expected, mainly from tax-free cash. We still have further to go to return to growth as we continue to invest heavily in our platform experience for IFAs and clients. In investments, AUM increased to over £390 billion, again aided by positive markets. Flows benefited from encouraging trends in a number of asset classes, as well as the Stagecoach pension scheme that we announced in early December. During 2025 as a whole, gross flows were the best for many years. So we are getting a lot right. However, our focus on continuing to improve flows and financial performance remains undiminished. Taken all together, with the positive momentum at the start of this year, I'm optimistic about the outlook for the group in 2026. With that, I'll hand over to Siobhan for a little more detail.

Thanks, Jason, and good morning, everyone. Starting with Interactive Investor, momentum remains strong across key metrics. As Jason mentioned, total customers reached half a million, up 14% year-on-year, with SIP customers rising 30% to 105,000. Daily average retail trades were at their highest level levels at 29.2 thousand, up 40% versus Q4 last year. Net inflows of 1.4 billion in the quarter brought full year flows to 7.3 billion, a 28% increase year on year and representing 9% of opening AUMA. It's been a very busy quarter in II, with the launch of our managed SIP, soft launch of II Advice and II360 now in advanced testing. The pricing changes we announced in December will become effective in the next two weeks, which will simplify our proposition and further enhance our competitive positioning. Finally, the sale of the financial planning business we announced in August is due to complete imminently. In advisor, AUMA increased to over £80 billion, driven by positive markets. Outflows in the fourth quarter of £0.8 billion were elevated compared to prior periods. This principally reflected the uncertainty in the market ahead of the UK budget, which resulted in an increase in tax-free cash withdrawals of around £250 million in the fourth quarter. Full-year net outflows improved by 44% to £2.2 billion. This reflected the repricing earlier in the year and our ongoing focus on service, the latter of which has been reflected in our strong average net promoter score for the year of plus 45 points. Turning to investments, assets increased by 6% during 2025 to end the year at £390 billion. Q4 net outflows of £3 billion included the previously flagged low-margin £4.5 billion quants withdrawal, reduced net outflows in equities and insurance partners' outflows of £1.2 billion. Positively, institutional and retail wealth saw gross inflows in Q4 increase by 26% year-on-year, with higher gross inflows in multi-asset, alternatives, fixed income and equities. Excluding liquidity flows, which are inherently volatile, and the Phoenix assets we include within this business line, net flows for INRW for the year were positive at around £5 billion. Multi-asset net inflows included the £1.2 billion from the Stagecoach pension scheme agreement announced in December. We also saw continued good momentum in alternatives, with commodity ETFs being the principal driver behind an 85% improvement in net flows. AUM, increased across our total commodity ETF range, now stands at £15.8 billion. Given the flow trend seen in the latter half of the year and the resultant change in asset mix, we now expect our full year 2025 revenue margin in investments to be around 19.2 basis points. Turning to the group as a whole, full year 2025 adjusted operating profit is expected to be in line with current market expectations and we are confident in the outlook for the business as reflected in our full year 2026 targets of at least £300 million of adjusted operating profit and circa £300 million of net capital generation. In addition, we are pleased to note that with effect from year end 2025, our capital requirement will be lower and is now based on the group's internal capital assessment. We will provide a fuller update on this at our full year results in March. I will now hand over to the operator and Jason and I will be happy to take your questions.

Thank you. If you'd like to ask a question, please press star one on your telephone keypad. If you change your mind and want to withdraw your question, please press star two and please ensure your lines are unmuted locally, as will be prompted when to ask your question. So again, to join the queue for questions, please press star one on your keypads. Our first question today comes from the line of Herbert Lam from Bank of America. Please go ahead.

Hi, thank you. Thanks for taking my questions, and good morning. Three of them for me. Firstly, in terms of the investment steam margin, you're now guiding for a lower 9.2 basis points for the year. It implies, I guess, a bigger drop in the second half of the year. I'm just wondering what the dynamics are behind it. I know you mentioned VIX, but is there any seasonality around that? And also, what is your outlook for 2026? Should we consider the H2 outlook? margin because of the starting point. That's the first question. Our second question is on the advisor. I don't think you mentioned it in the press release, but are you still guiding for a billion of inflows in 2026? And the last question is on the capital requirement. I know you'll give more detail on the four-year results, but I just guess what does it mean for excess capital and strategic flexibility? Thank you.

Okay, so if I take those questions, so the fee margin is 19.2 basis points. It is primarily driven by mix. You can see the equities in there, and there has been the mix coming through on that. In terms of if I look at the run rate for next year, I'd expect it to be around 19 basis points overall as we look into 2026. In terms of the advisor flows of a billion, you can see we've given you a bit more colour in terms of the outflows from the tax-free cash in the quarter, and we're still guiding to that billion pounds for 2026. And in terms of the capital requirements, it is, as I've said, we've moved to the ICARA basis, which is the internal capital model. We will update at the end in March. I'd expect us to give you a bit of guidance there in terms of, we gave you last year how we think about our capital allocation and we'll expand on that in March as appropriate.

Okay, thank you. The next question comes from a line of Enrico Boltoni from JP Morgan. Please go ahead.

Good morning. Thank you for taking my questions. So one on AI, I saw you had a nice uptick in the cash balances, which I guess is related to growth of the business and the seed penetration. Can you just please remind us what sort of margin you expect to make on these cash deposits and whether you think this will continue in 2026? And then I had a question on advisor. I appreciate that the budget created a lot of uncertainty. We saw additional redemptions. But can you please remind us of the dynamics? So if a client withdraws, let's say, money from his SIP, account within Aberdeen Advisor Vector. Can this money remain on the platform or are actually transferred, for example, to a bank account? Because otherwise, I would maybe expect to see slightly higher redemption, but also pair by also higher inflows, as we saw in some other players that have reported. Just the clarification would be helpful. Thank you.

Interesting. Hi, Enrico. Actually, the two questions are somewhat related. Part of the slightly different answer, part of the increased cash in I.I. was some of the SIP wrapper releasing tax-free cash and it remaining on the platform. So you can see some of that. Some of it is the backlog of SIPs that haven't yet fully invested. So the backdrop to the uptick in cash in I.I. I think in terms of I don't think for 26 we expect a materially difference to what we've seen in 25.

No, you will have the impact of the rate cut at the end of the year coming through, but it will be in the 210 to 220 basis points range.

So we're in that sort of range. We'll sharpen up guidance on that when we get to March. I think in Advisor, people tend to use the Advisor platform more as a product than as an account for their overall savings. So we do tend to see more cash when it's redeemed leaving that platform than staying on it. II is more of a household account. People use it for... trading, ISAs, whatever, cash investing, it tends to be taken off platform on Advisor. We do have a cash product. It's got a small balance in it that people can use. We can probably do better at getting more to stay in that product on platform. And then there's further functionality that we'll be adding in terms of some of the bonds and the other investment opportunities. So There is upside potential for us to retain more of that cash. But at the moment, we're seeing most of it leave platform from advisor.

Thank you.

As a reminder, if you'd like to join the queue for questions, please press star one on your telephone keypad. A question from Nicholas Herman from Citi. Please go ahead.

Yes, good morning. A couple of questions from my side, please, as well. Just on investments, and I guess particularly EM, we've obviously seen notably strong emerging markets last year. Could you just give us an update on the investment performance of your EM equities and fixed income funds, please? And I guess how the level of traction that you're having with your clients on a on improving demand for EM. And then the second question is on AI. In the spotlight on AI in the middle of last year, you disclosed the average fee per trade in a range of, I think, 2014, 12 to 15 pounds broadly. because that depends on various factors, including the proportion of international trades. But broadly speaking, where do you see that £12 to £15 going as a result of the recent pricing changes, please? Thank you.

Okay. So on investment performance, we've not given the full update. You know, we haven't got the full analysis of December data against benchmarks, but in a Broadly, investment performance as a group has improved sharply year to date. And we've done much better across all asset classes. This is an estimate, but at a... one-year basis we're 84 percent of funds uh outperforming three years 80 percent so that's ticked up nicely and peter and all the investments team um you know have really lent in to improve um and that's across as i just said all asset classes um with equities making a quite quite a significant improvement in particular we'll go through that in a bit more detail um Particularly, I'd call out, you know, within that emerging market income, you know, where we've done particularly well. We've continued to see real growth in that fund. U.S. small cap, Tecla, they've had really strong performance. On the fixed income side, you know, again, yeah. it's improved you know pretty much across the board so um that's you know performance is one part of the solution um to achieving sales but um you know signs are are better uh this year than they've been for for quite some time do the ii commission question

Yes, I think you quoted £15. I think that number we would expect to be around the same, and it will come down, but we'll see an offset with activity as it comes through during 2026.

I think we're pretty excited about the price reset that we've done through II. It's actually fueled some pretty significant growth already this year. We think in advance. Obviously, the prices take hold, but everyone is now trading off basically the new price. That's obviously the fees, the commissions, and the FX. That all goes live in February. um you know we we really are at the you know the vanguard of keeping i shouldn't use that word but we're at the leading edge of keeping um customer value absolutely at the heart of what we do service and value and that's why the platform is being so successful we'll tell you more about you know how the implementation of that has gone in in in march um But we do expect, and this is the opportunity for us, further activity based on a lower price point.

Thanks very much. Can I come back on the investment demand and fee margin, please? Just circling back there, are you expecting an uptick in demand for your EM offerings across equities and fixed income markets? And would you therefore expect that to provide some support to your fee margin this year, 26?

Yeah, if we look into the pipeline and where we see, you know, asset allocation, rotation and demand, we have seen that tick up. And clearly, you know, with the strong investment performance that will give you more colour on in March, those two things together will, you know, we can see some small benefits coming through there.

Helpful. Thank you. The next question comes from a line of Greg Simpson from BNP Paribas. Please go ahead.

Yeah, morning. Thanks for this call. Free on my end. Firstly, just a quick follow-up on the fee change again. Was it calibrated to be fairly neutral to the revenue base or positive or negative in simple terms? Subscription fees went up, FX fees went down, but just wanted to double check on the net outcome. Second question is on Advisor. I hear what you say about the budget, but even if you add the 250 million of tax-free cash withdrawals, you still would be negative in the quarter. So what do you think is still missing in terms of turning that around and getting back into inflows? And then thirdly, this stagecoach pension transaction seems quite interesting in terms of an asset manager doing that kind of transaction. Is there a pipeline for more transactions like that? Thank you.

Okay, I'll have a go at these. That's all right. So the fee changes, I just said, are NPV positive. And there's a whole heap of scenarios, but somewhat market condition related. But we want to attract more customers. We want to retain more customers. It's not been an issue, but it's a competitive world, and we want to be out there. We do expect... higher volume on the back of you know the changes that we've made that may or may not come through but the way that we set this up is to is to grow the business grow the customer numbers grow the revenues and grow the activity um and we look forward to you know reporting more on that and we're incredibly um you know focused on maintaining that service proposition but it has to be accompanied by you know by the best value in the market um You're right on advisor. I said that clearly. We've got further to do. Gross flows have been pretty consistent through the year. Q4 was about 1.8 billion, so we aren't quite yet where we need to be in terms of gross flows, but the The support is increasing in the platform. We have seen some challenges and outflows. We call out the specific. We don't want to over-focus on that, but it's in the numbers, so we need to mention it. There is further work to do to close the jaws, to get us back to that positive figure that we're aspiring to be at. And it is... As I said in my remarks, we continue to invest heavily in the platform. We've launched the new SIP now, which is a seamless experience. I think we've added approximately 1,000 SIP accounts since the beginning of December. So we're starting to see growth. on the platform that is necessary to get back to that. But the only thing I can say is we're laser-focused on this and there is work to do. Now, Stagecoach, that was an interesting transaction. They were looking for a solution. We'd been talking to them about a number of different things. We were pleased to do it. It made a lot of sense for us to offer that solution. They've got a very forward-thinking set of trustees and a corporate sponsor that did see real value in working with us, particularly for their members. At the heart of this, This is about offering the members of Stagecoach some opportunity to participate in the upside. There was an increment that was offered immediately, which is great. And then there's effectively a profit share between ourselves and the Stagecoach members as we go further forward. That is supported for us. with an asset management agreement, which is our core business, and we're delighted to do that. And then there's a block of capital in that fund that supports the investment mix and the opportunity for extra member benefits and for surplus to come to us. So in and of itself, we think it's a... a great transaction. We've got a limited appetite, but I'm not ruled in or ruled out more. We're not sitting on the edge of about to announce more of these. But if the circumstances are right, and there's a number of things have to be right, we would look openly at this, but it's about being an asset manager that is focused on delivering for its customers. I mean, that's at the heart of what we're about.

Thank you. Next in the queue is Ben Bathurst from RBC Capiton Markets. Please go ahead.

Good morning. I've got two questions on Interactive Investor, if I may. Starting with one on the cash balances, obviously you've referenced that step up quarter on quarter. In light of the factors that you've mentioned that have been driving that in Q4, how are you expecting the cash balances to move in the early part of 2026? And is it reasonable to expect potentially to fall away slightly in absolute pounds, billions terms in Q1? And then just on the SIP management portfolio, early days, I know, but have you managed to get any traction with that proposition in the first few months? And are there any views yet as to which companies which customers that proposition is appealing to most. Thank you.

Hi, Ben. So just to come back on the II cash. So we've given you it's about 8 billion. We had expected to stay at the same percentage of the overall AUA. So that's about 8% to 10%. And I wouldn't expect that to change as we look forward into the future. In terms of the managed SIP, it's early days. We have had about 1,000 customers come through that, so we're pleased with the traction, and we will continue to monitor and report progress on that.

The managed ice has been open for longer in the same – it's obviously a smaller product, but that's also – I think we do about 50 a day, and it's ticking over quite nicely. So we are seeing this pick up, and we expect further interest in it. I think by the time we get to March, we'll have enough data to be able to answer the second part of your question about the customers. But clearly, the whole thesis around the work that I have been doing is to widen the appeal of the platform to customers who aren't purely self-investing. And this is part of the puzzle in broadening the net there. Great, thank you.

My next question comes from a line of Jacques-Henri Gaulard from Kepler-Chevreux. Please go ahead.

Yes, good morning. I have one question left, which is about the capital. You already had quite a bit of excess capital. You'll have clearly even more excess capital on the basis of your capital requirement. Would you consider amending your distribution policy? Thank you.

Well, you're right, we've got a strong balance sheet. We've got lots of options. We're certainly not flagging any change to that. I talked, as Siobhan mentioned, about capital allocation. I think with the new CFOs now armed with a more, I would say, modern approach to capital management, which is to use economic capital modelling, we'll talk further about this. One of our objectives is to lower our gross debt. And so... So bear that in mind as we think about this. We will come back to that. It will be a bit more expansive on both the numbers and the outlook for capital in March. Thank you.

We'll now take the last question that comes from a line of Mike Verner from UBS. Please go ahead, Mike.

Thank you very much for the presentation, guys. Just two questions from me, please. One, just to dive a little bit deeper into kind of the fee margin, I think you got it on the investment side, 19.2 for the full year. You're at 19.9 in the first half, I believe. Should we think about this, you know, as kind of mid-18s, you know, mid-high 18s fee margin in the second half and ultimately... potentially lower run rate as we go into 2026 in terms of the exit rate from 25. So that's the first question. And the second question, if you could just better, you know, explain, this is something I've been quite confused about in terms of the stagecoach transaction. You know, if there's any balance sheet impact on Aberdeen, it's a really interesting transaction, but just wanted to better understand what the, if there is a balance sheet impact for Aberdeen. Thanks.

So on the fee margin, you're right, it was 19.9 and we are guiding to 19.2 for the year. As I look forward into 2026, I'd expect it to be around 19 for the full year. The second half has got some mixed effect, but as I look forward with the market movement improvement, that's what will support the revenue margin going forward as the mix changes back.

On the stagecoach, no significant impact, very, very marginal impact. We do think about the risks, but there was no cash consideration. So we assumed the… sponsorship onto the balance sheet. We thought very hard about what is the level of investment and other types of risk. I've got that sort of insurance background myself. And within our framework, it's certainly not zero risk, but the risk of us having to contribute extra cash is very remote indeed. But in a one in 200 approach, of course, that's not zero. Thank you both.

Thank you. There are no further questions. So handing back over to Jason Windsor for closing remarks.

Okay. Well, thank you all very much for hopping on the call this morning. We do like to get out and talk to you all about how we're doing. Duncan and I are available for any follow-ups that you wanted to pick up that you didn't get a chance to answer. But as I've said a couple of times, we are very much looking forward to the March presentation where we'll be able to expand on a number of these points and look forward to seeing you in the office for that. Have a good day.