Aj Bell Plc · LSE:AJB
Aj Bell — H1 2019 Earnings Presentation
30 slides from Aj Bell's earnings presentation, May 2019
Slide 1: Interim Results
Interim Results For the six months ended 31 March 2019
Slide 2: Agenda
Agenda Section Title Page 1 Business Update 3 2 Financial Update 11 3 Outlook 19 4 Q&A 21 5 Glossary 22 6 Appendices 25 2
Slide 3: Business Update
DAJBell © Business Update
Slide 4: HY19 Highlights
HY19 Highlights • Strong financial performance - significant increase in revenue and profit • Financial performance driven by platform business which continued to attract high levels of new customers and assets • Successful IPO on Main Market of London Stock Exchange • Key industry awards for both p
Slide 5: Key Investment Highlights
Key Investment Highlights 1 Our market An attractive retail market within the UK savings and investment industry Award-winning platform operating in both advised and direct-to- 2 Our proposition consumer market segments 3 Our customers A loyal base of high quality customers 4 Our team Entrepreneuria
Slide 6: HY19 Update
HY19 Update Key Investment Highlight Commentary • Investment Platform Market Study – no material impact on AJ Bell • AJ Bell-sponsored lang cat report on barriers to transfer business 1 Our market • Continued decline in DB transfers • Campaigning in a number of areas to improve customer outcomes • R
Slide 7: Our Market
Our Market Investment Platform Market Study Defined benefit pension transfers • Concluded that the platform market generally works well • DB transfers in HY19 were £0.5bn, down from £1.1bn in HY18 • We welcome the focus on making switches between providers easier • DB inflows expected to continue at
Slide 8: Our Proposition
Our Proposition AJ Bell Investcentre AJ Bell Investments • Execution-only dealing option extended to ISA and • A number of new investment solutions introduced; general investment accounts ‘Pactive’ MPS for advisers and ready made portfolios for D2C customers • New website with improved layout and de
Slide 9: Our Customers
Our Customers Our loyal, high quality customers across both our advised and D2C platforms are attracted to our award winning propositions Advised Direct-to-consumer 93,496 customers £195 107,426 customers £330 56 years old(1) 95% AUA average 45 years old(1) 96% AUA average Customer annual fee Custom
Slide 10: Our Customers
Our Customers Platform AUA and Customers HY19 HY18 Advised D2C Total Advised D2C Total Commentary AUA (£ billion) Platform Platform Platform Platform Platform Platform Opening AUA 29.9 8.7 38.6 24.3 6.6 30.9 • Robust underlying inflows Underlying inflows 1.6 0.9 2.5 1.6 0.8 2.4 across the platform d
Slide 11: Financial Update
DAJBell S) Financial Update
Slide 12: HY19 Update
HY19 Update Key Investment Highlight Commentary • Strong growth in earnings – revenue up 17%, PBT up 27% 5 Quality of earnings • Mix of recurring and transactional revenue streams yields a balanced overall revenue model – proportion of recurring revenue increased to 84% 6 Our business model • Operat
Slide 13: HY19 Financial Highlights
HY19 Financial Highlights HY19 HY18 +/- Commentary Revenue (£m) 50.1 42.9 17% • Revenue and profit growth driven by growth in platform business Revenue margin (bps) 22.0 20.7 1.3bps • Improved PBT margin resulting Profit before tax (£m) 17.7 13.9 27% from revenue margin improvement and positive effe
Slide 14: Revenue Analysis
Revenue Analysis Revenue breakdown by proposition and nature Commentary of revenue streams HY18 HY19 +17% £50.1m £42.9m £7.9m • Increase in revenue driven by growth of platform business £8.4m Total £29.4m £21.9m 80% 84% • Total transactional revenue fell due to non-platform £12.6m £12.8m migration a
Slide 15: Revenue Margin
Revenue Margin Revenue margin(1) by Commentary proposition HY18 HY19 • Total revenue margin increase was a result of: 22.0bps Total 20.7bps (i) increasing revenue margins for the platform business (ii) faster growth of the higher margin D2C platform business • Increased platform revenue margins were
Slide 16: Cost Analysis and Profit Before Tax
Cost Analysis and Profit Before Tax Costs by category Commentary HY18 HY19 • Continued investment in PR and branding, with an additional £5.2m £0.5m invested in digital marketing ahead of tax year end £4.0m +30% Distribution • Continual investment required. Not seen as source of margin improvement o
Slide 17: PBT Margin Improvement
PBT Margin Improvement PBT Margin Commentary HY18 32.4% • Caused by scalability of the platform and operational efficiency improvements Growth & 3.9% • Relocation of stockbroking operation in FY18 and modest increase in technology costs Operational Gearing in HY19 slightly exaggerates margin improve
Slide 18: Capital and Dividend
Capital and Dividend Progressive dividend policy The Board has adopted a dividend policy based on a 65% payout ratio Interim dividend payments will equate to approximately 40% of the total ordinary dividend payment for the previous financial year Any surplus capital accrued (over and above regulator
Slide 19: Outlook
DAJBell ‘S) Outlook
Slide 20: Outlook
Outlook A strong position in a growing market • There is a significant market opportunity due to the structural growth drivers in the platform market and our significant pricing advantage versus peers • Investor sentiment likely to remain low until Brexit outcome is certain but our balanced revenue
Slide 21: Q&A
DAJBell Q&A
Slide 22: Glossary
DAJBell © Glossary
Slide 23: Glossary
Glossary AUA Assets Under Administration BPS Basis Points D2C Direct to Consumer DB transfers Pension Transfers from Defined Benefit Schemes FCA Financial Conduct Authority HY18/HY19 Six Months Ended 31 March 2018/2019 IPO Initial Public Offer MPS Managed Portfolio Service OCF Ongoing Charges Figure
Slide 24: Our Products
Our Products Platform Advised Direct-to-consumer • Propositions - Adviser-led investment platform with in-house • Proposition - Direct-to-consumer investment platform, with in- investment solutions, investment content and fully integrated house investment solutions and investment content investment
Slide 25: Appendices
DAJBell © Appendices
Slide 26: FY19 Sensitivities
FY19 Sensitivities Commentary • Stable macro-economic environment assumed with no significant market movements or changes in current Bank of England base rate • Below sensitivities modelled assuming the relevant macro factor changes on 1 October 2018 and remains at adjusted level for full financial
Slide 27: AJ Bell Reporting Framework
AJ Bell Reporting Framework Proposition KPI Group Non-financial data Advised D2C Non-Platform • Customers • AJ Bell’s key propositions serve different market segments with different growth drivers Customer growth is the key contributor to AUA inflows a a a a a • AUA • AUA is the principal driver of
Slide 28: The Board
The Board Les Platts Chairman • Joined AJ Bell in September 2008 • Previously Audit Partner and practice Senior Partner for the north-east at Deloitte and was also Vice Chairman of a major Building Society • Over 33 years experience in UK and international companies ranging from FTSE 100 to smaller
Slide 29: AJ Bell Timeline
AJ Bell Timeline An ISA and Dealing Account are Sippdeal and Sippcentre added to the Sippcentre and AJ Bell launches its range of AJ rebranded as AJ Bell Youinvest Sippdeal propositions as they Bell Passive funds and AJ Bell Investcentre become full platform offerings Seneca Investment Naming rights
Slide 30: 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.