Aberdeen International Inc.

Good morning and thank you for joining Aberdeen's results presentation for the first half of 2025. I'm here today with Siobhan Boyle, 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 age one 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 pounds whilst maintaining a laser-like focus on efficiency. An advisor 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. And pleasingly, 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 SIP 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 Which'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, II Advice, 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 WRAP 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 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, growing 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 realize 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 program'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, in 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 a 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 million, 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 again 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 £14 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 of 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 AT1 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. you

Thank you. Thank you.

Good morning and welcome to our Q&A call for our first half results. This is Jason Windsor and I'm very pleased to be joined this morning by Siobhan Boylan, our new group CFO. Some of you will have had the opportunity to listen to our online presentation and I hope you've all had a chance to read the press release. But I'll just begin with a quick summary of the key messages. We're making progress against our strategic priorities that we set out in March. with delivering through a focus on execution, simplifying the business and strengthening our talent. Operating profit was broadly flat at £125 million in the half, and net capital generation was up 7%. Taking the headlines in turn, Interactive Investor had sustained organic growth with record net inflows. In Advisor, net inflows improved significantly with lower profitability, reflecting the strategic decision to reprice the book to improve competitiveness. And in Investments, greater efficiency has supported profitability with some encouraging gross flows, particularly in quants and fixed income. Our transformation programme is on track to deliver 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. As we head into the second half of 2025, we remain focused on realising the significant potential of this group. We have clear strategic priorities and a 2026 set of targets which will enable us to provide evidence of our progress as we build a business capable of long-term sustainable growth. And now, I hand over to the operator to take your questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up the handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Your first question today comes from Enrico Bolzani from J.P. Morgan. Please go ahead.

Thank you. Thanks for taking my questions. So one on advisor. There has been a pronounced improvement in the flow picture there. Perhaps can you give us some color on what has been the exit rate of the quarter in terms of redemptions? Redemption came down quite a lot. Do you see that improving further as we enter the third quarter? And with respect to that, how do you see your target of achieving at least a billion inflows by next year? Do you think you are maybe running a bit out of schedule there? And then my second question was on the investment vector. Good performance. Performance seems to be improving. The flow momentum seems to have improved as well. So can you give us maybe some color in terms of pipeline you have conversation with institutional clients perhaps or the possibility of you winning additional mandates over the coming quarters? Thanks.

Okay. Morning, Enrico. Thanks for the question. But in Advisor, we've seen steady progress this year, you know, month on month, actually. You know, we've seen lower outflows and slightly higher inflows, more in the outflows than the inflows side in terms of movement in the percentage sense. So you can see the little chart in the presentation, you know, it does show nicely the quarterly progression, you know, through, you know, pretty flat around $1 billion. out per quarter last year and then starting to improve this year. And we're not changing our target for 26. We still think that's actually quite ambitious to go from a business that was losing a billion a quarter into a net inflow position next year. There's still a lot of work to do, you know, and it takes time. And that's work with IFAs. It's to build the confidence. It's just to get out there and strike the relationships. And it's a lot of shoe liver, frankly, going out around the country, meeting people, building confidence, and getting them back onto the platform. On investments, we've had a good first half. There were some ups and downs, as you've seen through that. So the net figure in IRW, as we mentioned, mentioned was 0.4 billion. But close flows are up. Strong growth in fixed income and quants in particular. You can see that in the numbers. I think we've seen a better Q2 in equities than we had in Q1. I sat in front of you, but it's still in outflow. We're continuing to work on that. And as I talk about often, we're trying to change the shop front to get the product that people want to buy in front of them and deliver new things into the marketplace so we can create growth across the waterfront. And we see that the pipeline is good. I wouldn't say spectacular. We know we're continuing to... Again, I use the term shoe leather again. It's about getting out there, being proud about our performance, our products, building those long-term relationships and being really focused on growth over the next three to five years.

And just to add some colour on the advisor, clearly the focus on the NPS at being plus 43, getting that consistency will encourage the gross inflows. But as you see, it is a step change in the outflows that is driving this performance.

Thank you. Your next question comes from Hubert Lam from Bank of America. Please go ahead.

Hi, thanks for taking my questions. I've got three of them. Costs were better in the first half. Just wondering how should we think about the full year now in terms of costs. Can you analyze the first half? Just so that this is a look around costs. Second question is on fee margin. An advisor felt that 27.4 basis points, quite a bit lower than what we expected. How should we think about this for the full year and into 2026? And lastly, investment performance was a bit mixed. Equity is still pretty lackluster. Has that been a deterrent in terms of new flows going into equities? And I know it's a work in progress and is improving. Jason, what are your thoughts around performance and where do you think it can get? Thanks.

Well, I'll have a go at one and three. Siobhan, you can have a go at two, if that's all right. Siobhan's been with us 10 whole days, but it's already absolutely up to speed. So on the cost side, we've hit 137 run rate. So that's not all through into the P&L, just to be clear. So that's... of the 150 transformation target. That's a gross target, so it doesn't all flow through. And you can see there's a little chart in the presentation, because I've not given the presentation. I can't remember what slide it's on, but you can see the half-by-half progress on absolute cost reduction through that. So we've got momentum into the second half from the actions that we've already taken. So I think that the second half Broadly, it's going to be a repeat of the first in terms of trends. And you can see that in terms of profitability and trends through that with more costs out supporting the level of profitability. And we've got confidence. that we are investing you know to grow though in our select areas you know we're not pulling cost out everywhere we're making a decision to be more efficient we're reducing inefficiencies taking out waste being selective but you know in in II in advisor and in our growth areas in investments you know we are supporting and growing the business but I would expect the a similar trend in 2025, second half to the first, but I would then see cost efficiency being absolutely critical to our success in 26 and beyond. There's going to be no slacking off of our focus on being an efficient platform. Why? That's what I see, and I know Siobhan would agree with me and Richard Wilson would agree with me and the whole leadership team. That is our source of competitiveness. And as we look further forward and we continue to invest in the business by being absolutely focused on efficiency. I'll do the performance one. So an equity is your right. You know, clearly we're not sitting still. You know, our challenges are mainly in the Asian product, which is in the gem product by scale of AUM, that's what comes through. We've been faithful to our style. I know Peter Brann of the CIO has implemented numerous improvement initiatives working with the equity team, which are working. Quality has underperformed as a style, as a factor, the last 12 months or so, particularly in China and across parts of Asia. But we've got really good performance in our gem income product, in our smaller companies product, in our U.S. small, both U.K. and Europe, and some of our thematic products. So, you know, equity is still a broad church for us. And we've got things that are selling and are at the front of the queue in terms of the shop window. We've got other things that, you know, we're continuing to be faithful to our investment style and deliver to the client what they bought.

And just to touch on the revenue margin, so as we indicated at the beginning of the year, we did expect a season repricing to the back, but that was about three basis points. So you can see that coming through in the numbers. And if I look forward, I'd expect the 27 bits to be, and we've given guidance on that, that would be through into 2025 and onwards. So that gives you an indication of the impact on the revenue margin.

Thank you. Thank you. Your next question comes from Mandu Jadbal from RBC. Please go ahead.

Hey, good morning. Mandu Jadbal, RBC. Three questions from me as well, please. First one is, you stated today that you expect the business next to Phoenix to evolve over time. Could you remind us of what this evolution is and whether it will have a notable impact on the outlook for either flows or margins? I guess I'm thinking here in the context of their future capital JV they'll have with another asset manager, which will attract a large portion of the higher margin DC flows. And then on I and RW, kind of follow-up question, those flows are particularly strong. Are you able to provide any details on which client channels these flows are coming from? So can we tell both institutional and regionally? Trying to get a sense here of where the improvement in flow performance is coming from. And then just a kind of a modeling question, the £35 million benefit to capital generation in the DB scheme. How should we model this in terms of 1H, 2H fit in future years? And should we only expect half the amount in FY25? Thank you. Okay.

Thanks, Mandeep. Phoenix is continuing to implement its own strategy. We've seen an evolution of that over time. Big picture from equities, you know, they've largely moved from active to passive. I think we'll see that probably continue. So that's part of the evolution. They've also got no appetite at all to run policyholder assets themselves. So we will continue to support them and be their strategic partner on all the policyholder side. They've got some appetite on the shareholder assets, if I can use that term, which is the balance sheet fixed income assets from annuities. to manage that in-house. So that will be a feature as we look further forward. I've not got any specifics to guide you to, but I think we'll see directionally more on the policy holder side and slightly less on the shareholder side, just talking to you like an insurance guy, which of course I used to be. I don't think it's much to do with that other thing that you mentioned that I won't repeat. On the IRW flows, the large wins in fixed income were in Europe from big institutions. So there were major institutional wins. And in the UK, the quants were mainly in the UK and was mainly from large insurance companies. They were the biggest. We did have some nice little wins out of the US in equities and we had some nice wins out of Asia, but they were they were more in the hundreds rather than the billions, to give you a sense. I'm not going to name-check everything, but the big flows were those European and UK institutional flows.

And then finally, on the modelling of the DB pension scheme surplus, so it should be 35 million, that's the full year effect, so the second half, you'd expect to see half of that come through.

Thank you. Your next question comes from Nicholas Herman from Citi. Please go ahead.

Yes, morning. Hopefully you can hear me okay. Yep. Three questions from my side, please. So, on Advisor, I noted on the comment about the FY26 target, clearly the momentum is very strong. Can you talk about the competitive dynamics in that market and kind of where Has there been any evolution in the dynamics in that market? Is it still as strong as it has been in the past? Or are you seeing this thing as also getting progressively easier as you've implemented that self-help? That's the first one. On costs, you might see what areas you and Richard are working on to develop potential additional cost saves and when do you think you might be in a position to communicate the fruits of that work to the market? And then the final question I had is in interactive investment cash balances, what I can see are around 8%. Beyond rates, can you might as well those same factors that will, first of all, I guess, also on the margin, excuse me, drive the variance in your cash margin guidance, but then on the cash balance side, how are you thinking about the outlook on that descent of AUA evolving today, given tailwinds from growing SIP penetration versus potentially evolving customer client allocations? Thank you. Okay.

I'll start. I haven't got any great statement of insight, unfortunately, on the advisor competitive dynamics. There are some qualified competitors. People have got different strategies, whether they are offering more integrated propositions, which some do. Without getting into names, you can work out the baddies. We pride ourselves on our independence. We partner with IFAs as an independent partner, and that's our differentiation. We've got an NPS product that we will be seeking to expand through into that marketplace. We've We've undershot, I think, where we ought to be in that, so that's an opportunity for us to compete. But the sources of competition are clearly service, number one, and we've really got our act together in that regard. Invested in the platform, we've got a modern platform, and we've worked really hard the last 12 months to improve that, and we're going to go further. We want to go from meeting people's expectations to delighting them. That's going to take us some time. There's going to be effort required and skill required. But that's what we're aiming to do, to differentiate ourselves, to beat the competition. Because, frankly, they're quite good, some of these guys. I mean, I don't mind saying that. So to get out there and win, you've got to be really good. And we're absolutely up for that. On the cost side... It's a little bit everywhere. What we've been, you know, with Richard's new leadership and new vigour to the programme, we had a plan, the 150 plan, which we are pretty much through. We haven't finished. We always said it was at least 150. We've not been... The sharpest we could have been with third parties, and then that applies to some of our big outsource providers, to some IT arrangements, to some market data, and that's where some of the big bills are. Headcount is down a little bit in line with plans, but the big source of this is absolutely not headcount. We've been taking it out of... operations, IT and last year we largely took out the functional costs, there might be a little bit more to do on that and we'll continue to sort of ask ourselves questions of how do we do better? How do we automate wherever we can? How do we use data more intelligently to support the front office? So within transformation, it's not just about cost out, it is about better. And we think we can do both, particularly on the automation and use of data side.

And it's about cost culture as well. It's about being efficient across the platforms. Clearly, we need to invest, but it is in certain areas, but it is a focus of achieving those cost targets and beyond.

On the II cash balances, they popped up slightly at Q1. I think people haven't quite invested. I think the broad trend would be in line with customer and AUA growth. Across the piece, I think you're right. SIPs are slightly higher tilted to cash, probably more like 10 than just over 8 for the overall book. So, I mean, obviously SIPs are growing. It's sort of 3x the overall book. that will flow through slightly, but it's not going to be a huge factor. So I think on average, the cash will grow in that range that we've seen, maybe ticking up just slightly as a percentage of AUA. And as you say, the margin is what it is. We hit, I think, 2.2% in the first half. We're not going to be miles off of that. We're probably in the sort of 2.1 to 2.2 area for the second half. We would expect the base rates could jump around a bit, but that would be our expectations as we sit here today.

That's helpful. Thank you. I just want to go back on the cost point. When you announced your 150 plan, you cost at least 150 target. You were pretty insistent that you did deliver those with very limited revenue attrition, and it sounds like any incremental cost saves, you kind of retreating that message as well.

Absolutely. You know, we are, I might choose, we're re-engineering the business rather than, you know, swinging through it to take out capacity, you know, such that we can provide a business that's got a much more efficient, operational platform and it allows us to grow. So it's about taking out waste, automating, being faster and allowing the business to add value when we add new assets. Very helpful. Thank you.

Thank you. Your next question comes from Charles Bennett from Rothschild & Co. Redburn. Please go ahead.

Hello, good morning. Thank you for taking my questions. I had a follow-up, please, on the Phoenix relationship. So thank you for the color there. In addition to the active to passive shift, I think you mentioned that there was some appetite on Phoenix's part to manage some shareholder assets in-house, i.e. the assets underlying annuity business. Can you just remind us what the split here is? between policyholder and shareholder assets in terms of existing business that Aberdeen manages for Phoenix. And then the second question was on flows. Besides quant, it looks like the standout was a large gross inflow contribution from DM Credit. Just wondering if you could give us some color around this with a single mandate-driven broad-based demand. Is the strategy meaningfully outperforming fit payers or is the category just strongly in favor at the moment? Thank you.

I don't know exactly the answer to your first question. I think that, you know, they've got about 30 billion of annuities. We probably run half of that, give or take. So it's about 10 to 15%, I'm going to guess. It's in that range of assets that back annuities of what we run for them. It's more a question for them than for me. I think it's in that. That's not going to be far off. On the credit side, yeah, we had a couple of large mandates actually that came through there, which were significant, but there were a number of wins that were smaller. There was a There was a couple that were in the sort of, or was it just one, just over a billion, and then the rest were in the sort of hundreds of millions through that. Was your question just on DM credit, just to be clear? I think it was.

Yeah, my question was on DM credit, just because it looked like, unlike the other categories, it's sort of £5 billion growth in the period.

Yeah, there was one billion mandate in, and then a number in the half a billion or several hundred million category.

Thank you. Your next question comes from Gregory Simpson from BNP Paribas. Please go ahead.

Hi, good morning. So first question is II costs, which are at 4% year-on-year, the cost income now at 55%. Can you talk a bit more about the outlook for cost growth, given there's pipelines and new products, and some of your peers have talked about not wanting to over-earn too much on margins. So just any thoughts on whether II is doing the right amount of marketing, for instance. That's the first question. Second one on II, again, if I look at the account fee line, it's been this kind of £26 million per half level for the last three and a half years. That's about good customer growth. So can you maybe flesh out a bit more what's going on and when we expect that to converge better with customer growth? And then thirdly, on investments, you've got $13 billion of U.S. ETF AUM. I think a lot of that is in commodities, a big gold ETF. Can you maybe talk a bit about the competitive position and how Aberdeen is seeing the outlook in what's a very competitive marketplace? Thank you.

Okay. So I'll take the second question first, if that's all right. I would expect the easy part to answer is the outlook, I think, from the second half onwards will start to trend more toward customer growth. We've seen a little bit of change in product mix and the way that incentives have gone through as we've stepped up marketing. I think I said this in previous calls, there's a sort of kind of a one-off effect as we up the marketing that is offset to subscriptions. But from the second half and into 26, I expect that number to trend more in line with customer growth. I think we talked, Richard more precisely and his team talked about in Manchester about the brand and marketing investments that we've made. We stepped that up materially last year and then a little bit further this year. We're poorly comfortable with the level that we're at. We continue to see real upside in the brand awareness of I.I., across the whole marketplace in different areas. So, you know, we do see real return on that investment in brand, you know, from the base that we're at, and that will be a good fillet to the growth outlook of the business. I think on your specific question around the prop growth, that's already kind of in the numbers, so there's nothing new. We've been building them, you know, we don't capitalise a lot, so... That's actually already in the figures. So we will continue to spend money as they go from build to operate. But that's that's what you'd expect. So I'm not expecting a step up. In fact, I sort of touched on this without saying explicitly efficiency. We measure that in I.I. by. the cost to asset ratio is absolutely a core part of our success. The business is very, very good at managing its efficiency and will continue to do that. And then we think that places as well and that allows us to offer that very attractive price point for customers. On the US side, you're right, most of that is in the commodity products. I mean, it's been a remarkable success for us. We've the points during Q2 we were taking in $80 to $100 million a day it's been tracking up quite nicely I don't have a lot to say about it I mean it is clearly playing in a market with real tailwind and it's a well structured well managed product at a good price point Thank you Thank you

Again, if you have a question, please press star, then one, and point to your name to be announced. Your next question comes from Bruce Hamilton from Morgan Stanley. Please go ahead.

Hi there, morning, and thanks for taking my questions. Maybe firstly on sort of synergies, you know, revenue synergies within the business. You mentioned the managed SIP at II that's going to be sort of provided by Aberdeen. Have you identified other areas that you can drive sort of revenues through cross-sell across the three kind of divisions would be my first question. Secondly, on the pensions, obviously, we're going to get this nice sort of benefit running through from the second half onwards. But is there any scope for a more substantial sort of one-off capital return and just understanding where we are on the process in terms of getting or other approvals that might be necessary or is that not the way you want to move forward? And then finally on sort of active ETFs, can you just remind us which products you've rolled out and how you're thinking about pipeline for new products there? Thank you.

Yeah, sure. So synergies across – I know you ask this every call. The revenue side of the synergies across the business – You know, on the managed ISA side, we've seen good launch of the managed ISA through Interactive Investor, which is not solely provided by Aberdeen Investments, but they provide – ultimately, II is responsible for the product, but they provide the skill in the multi-asset structuring and provide some of the componentry. That will be a similar – product structure for the SIP, which will be launching in the second half. We've also launched the two ETFs that we listed in London yesterday onto II. I'm not going to expect the floodgates to open on that, but we continue to be able to get our products in the right way into the market because of the distribution asset that we have. Within Advisor, I touched on this a moment ago, we've got an NPS offering which is now I'm not quite sure why this was the case, but we had MPS within our advisory and investments. We've moved it all into investments. That is now sort of where the skill set sits, and we've definitely got plenty of runway to improve our MPS, and the team in our advisor are acutely aware of that. So there's much further that we can do. On pensions, I think we stay vigilant as to... Moves by the Chancellor to change the run-on regime. There's nothing specific out there, so that's an opportunity that we can't assess properly until it comes up. And I think, as I've said to you, that might lead to some capital being released from the surplus TBD, but I think that's part of the objective that the Chancellor is trying to achieve. On the more traditional buyout side, I think as I've said on at least two or three of these calls now, we don't have the tax clearance that we would need to pursue that. So it's not an option available to us currently. If that changed, that would then be thrown into the mix. But we're quite comfortable with the arrangement that we reached. We're not inclined to sort of chop and change. But there is value now coming through to shareholders from that significant surplus, which has built up over many years. The two active ETFs that we launched, is that what your question was for?

I mean, there's a number of them, but the ones that... Yeah, just remind me, the two products and the pipeline, how excited you are about further launches or whether you're going to be really quite selective in terms of what you do there.

Yeah, but so... You could differentiate. The U.S. is more of a transition to active ETFs where we're not huge in the U.S., but we've moved to active ETFs where it makes sense. The two that we launched a few months ago in Europe and then listed in London yesterday was a future supply chain ETF and a future raw materials product. So they're both run by the equity team here in the UK. We continue to be keen to provide that product to those that want to invest through an ETF. We still see a lot of demand for CCABs always in Europe, to be clear. Distribution is more teed up around that. So whilst it's important that we have that offering, we'll continue with the more classic products as well.

Nothing. Thanks very much. Thank you. Your next question comes from Michael Werther from UBS.

Please go ahead.

Thank you.

Thank you very much. Thanks for the opportunity to ask the question. Just one from me regarding interactive investor. Obviously, market volatility towards the end of Q1, beginning of Q2 led to very strong trading activity. And we saw that in the daily average trades. But as we kind of exit Q2 and enter Q3, has there been sign of or evidence of kind of an investor trading fatigue? Where do you see kind of the trading activity as we go through the second half of this year as a result? Thanks.

So you're right. We did see quite a pickup. In that period, I think we're up about Q2, Q3, around 23%, 24% on the daily average retail trade volumes. I think there's certainly no slowdown versus trend. If we take trend as being last year, I think we'd expect it to remain at least consistent with the growth in AUA and with customer numbers. So we do see, which is therefore 10-ish percent growth, depending on customers slightly below, assets slightly above that. But no, we've not seen, in July at least, a discernible step down. It's probably slightly elevated relative to the figures from last year.

Thank you. Thank you. This does conclude our question and answer session. I'll now open the conference over back to Jason for any closing remarks.

Well, thank you very much, everybody, for joining. Hope you found not dragging you over here to Bishop's Gate a bit more efficient and gave you a chance to do other things. We really do appreciate you joining, listening to the presentation and the Q&A. We think we've had a good first half. As I said, we're set up to continue into the second half. We're absolutely focused on delivering the growth ambition that we've set out into those targets. So expect to hear more from us on that topic. And I look forward to seeing you all in due course.