Aj Bell Plc · LSE:AJB
Aj Bell — H1 2023 Earnings Presentation
29 slides from Aj Bell's earnings presentation, May 25, 2023
Slide 1: Interim results for the six months ended 31 March 2023
Interim results For the six months ended 31 March 2023 Issued on 25 May 2023
Slide 2: Agenda
Agenda Title Page Business update 3 Financial update 15 Outlook 20 Appendices 24 Glossary 27 AJ Bell | Interim results for the six months ended 31 March 2023 2
Slide 3: Business update
DAJBell Business update
Slide 4: HY23 key messages
HY23 key messages The investment platform market remains Our diversified revenue model has enabled very attractive, having grown 11.5% p.a. us to respond to inflationary cost pressures on average over the last decade, driven by and invest in our brand, whilst at the same long-term structural growth
Slide 5: Key investment highlights
Key investment highlights An update on the seven pillars of the AJ Bell investment case Key investment highlight HY23 update » Long-term structural growth drivers remain strong, boosted by recent changes to pensions Our market » Short-term headwinds for flows into the market, but still plenty of opp
Slide 6: Our market: long-term growth opportunity remains significant
Our market Long-term growth opportunity remains significant Growth significantly outpaces the broader wealth sector Both advised and D2C channels are beneficiaries Figure 1 Figure 2 Platform market vs wealth sector growth UK platform market AUA growth (2) 20.9% AJ Bell has grown faster than the UK 9
Slide 7: Current key themes in the UK platform market
Our market Current key themes in the UK platform market Macroeconomic environment Regulatory and legislative updates » Overall household finances have held up relatively well to-date The advice gap compared to to pre-COVID levels » Advice/guidance boundary review – we welcome the news that the (1) U
Slide 8: Our platform propositions
Our platform propositions An award-winning platform operating in both advised and D2C market segments, with in-house investment solutions Figure 5 Advised D2C Full-service Established platform propositions offering a wide range of investment choice and functionality Simplified Digital-only platform
Slide 9: An easy-to-use platform underpinned by great service
Our platform propositions An easy-to-use platform underpinned by great service Advised » New, improved reports added to the Investcentre reporting suite in response to adviser demand » We provide strong technical support to advisers – our recently launched Consumer Duty hub helps them to meet their
Slide 10: AJ Bell Investments
Our platform propositions – AJ Bell Investments Our investment solutions are an increasingly important part of AJ Bell’s platform offering £0.9 billion of net inflows in HY23 drove AUM up 39% to £3.9 billion Momentum across both advised and D2C channels Continued strong performance Figure 6 Figure 7
Slide 11: A growing base of loyal, high quality customers
Our customers A growing base of loyal, high quality customers Advised D2C Customers Customers Average customer profile +6% in HY23 to 153,400 Average customer profile +8% in HY23 to 301,608 56 years old (HY22: 55) 43 years old (HY22: 43) AUA AUA £308k of AUA (HY22: £339k) £71k of AUA (HY22: £77k) 1.
Slide 12: D2C customer insights
Our customers D2C customer insights Subdued dealing activity continued for most of HY23 We are focused on long-term investors Figure 8 Annualised deals per customer FY16-19 (pre-COVID) average 12x p.a. » Our platform attracts high quality D2C customers looking 25 to invest over the long-term: 20 - A
Slide 13: D2C customer insights
Our customers D2C customer insights Term cash deposits have spiked as rates have risen Impact on our net flows from cash products relatively small Figure 10 Figure 11 (1) UK household deposit balances (£ billion) % of transfers to/from banks and building societies (2) 350 2,500 300 10% 2,000 250 8%
Slide 14: Platform AUA – gross inflows from new and existing customers
Our customers Platform AUA – gross inflows from new and existing customers HY23 Commentary HY22 Figure 12 Gross inflows Gross inflows £2.6bn £3.2bn £0.9bn £1.0bn 35% 31% £1.7bn 65% £2.2bn 69% Average inflows per new customer £144k £160k Average inflows per existing customer £6k £8k Figure 13 Gross i
Slide 15: Financial update
DAJBell Financial update
Slide 16: HY23 financial highlights
HY23 financial highlights HY23 HY22 +/- Figure 14 Commentary Revenue £103.6m £75.5m 37% » Revenue up 37% due to a significant increase in revenue margin to 29.0bps (HY22: 20.3bps) Revenue margin 29.0bps 20.3bps 8.7bps » Key drivers of revenue margin improvement were an increased average interest rat
Slide 17: Revenue analysis
Revenue analysis Revenue by proposition, nature of revenue streams and revenue margins HY22 HY23 Figure 15 (£m) (£m) Commentary 50.1 A well diversified revenue model – mix of fixed fees and recurring 38.5 +30% 2.4 charges provides resilience across different market conditions 40.0 3.0 Advised 37.3 2
Slide 18: Cost and PBT Analysis
Cost and PBT Analysis HY22 HY23 Figure 16 (£m) (£m) Business as usual drivers Cost growth in line with expectations, up 26% as we delivered our Distribution planned increased investment in our people, technology and brand +63% 12.4 7.6 » Total staff costs increased by £5.0 million across the busines
Slide 19: Capital and dividend
Capital and dividend Our highly cash generative and capital light model supports a progressive dividend Regulatory capital position Dividend payments £ million HY23 FY22 Pence per share HY23 FY22 +/- Total shareholder funds 147.2 133.4 Interim 3.50 2.78 26% Less: unregulated business capital (3.3) (
Slide 20: Outlook
DAJBell Outlook
Slide 21: Financial outlook - guidance
Financial outlook - guidance FY23 previous guidance Updates to FY23 guidance Outlook beyond FY23 Advised D2C Non- Advised D2C Non- » Slight revenue margin compression Platform Platform platform Platform Platform platform anticipated, caused by: Revenue margin Revenue margin Revenue Platform revenue
Slide 22: Financial outlook – net interest income sensitivity
Financial outlook – net interest income sensitivity Limited impact of potential rate cuts in FY23 and FY24 Commentary Estimated revenue margin impact » A base rate below 2% would have a longer term impact on net interest income, however our revenue model is well diversified Base rate of: FY23 FY24 w
Slide 23: Outlook
Outlook » Short-term headwinds remain but a significant long-term opportunity - The macroeconomic environment remains challenging for retail investors, however the platform market continues to benefit from long-term structural growth drivers » We are set up to achieve long-term success - Dual-channe
Slide 24: Appendices
DAJBell Appendices
Slide 25: The seven pillars of AJ Bell's investment case
Appendix I The seven pillars of AJ Bell’s investment case Key investment highlight Description Our market A growing market within the UK retail savings and investment industry An award-winning platform operating in both advised and D2C market segments, with in-house Our proposition investment soluti
Slide 26: Platform Customers, AUA and AUM
Appendix II Platform Customers, AUA and AUM HY23 Commentary HY22 Advised D2C Total Advised D2C Total Customers platform Platform Platform platform Platform Platform Opening customers 145,371 280,281 425,652 126,920 241,045 367,965 Net new customers 8,029 21,327 29,356 10,281 25,137 35,418 Closing cu
Slide 27: Glossary
DAJBell Glossary
Slide 28: Glossary
Glossary AUA Assets Under Administration AUM Assets Under Management BPS Basis Points CAGR Compound Annual Growth Rate D2C Direct to Consumer FCA Financial Conduct Authority FX Foreign Exchange FY22/FY23/FY24 Year Ended/Ending 30 September 2022/2023/2024 HY22/HY23 Six Months Ended 31 March 2022/2023
Slide 29: Disclaimer
Disclaimer The information contained in this presentation has not been independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained in it.