AJ BellDec 1 2022

AJ Bell profits up 6% as CEO braces for slowdown

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AJ Bell profits up 6% as CEO braces for slowdown

AJ Bell has reported a 6 per cent uptick in profits before tax in the year to September 2022, but the investment platform’s new chief executive is bracing for a short-term slowdown in investing as cost of living pressures continue to bite.

The FTSE 250 firm recorded a pre-tax profit of £58.4mn, up from £55.1mn the previous year, according to full-year financial results published today (December 1).

Revenues also grew by 12 per cent over the year, from £145.8mn to £163.8mn.

AJ Bell shares were up more than 2 per cent today and shares in the company have been steadily recovering since mid-October. They are now down just 7 per cent over the past year.

The firm’s chief executive, Michael Summersgill, took up his post in October when shares began to trend back up.

The previous boss, Andy Bell, had been at the business’s helm for 27 years.

In the short-term, Summersgill said rising costs of living will likely lead to lower investable income across the economy, with the UK household savings ratio falling back towards pre-pandemic levels. 

“We see this having a bigger impact on the D2C [direct-to-consumer] market, as these customers typically have lower levels of accumulated wealth and investable income than advised customers,” he said.

In the final quarter of 2022, platform inflows fell 17 per cent across both AJ Bell’s advised and direct-to-consumer platforms. Over the full year, net inflows totalled £5.8bn - down from £7bn the previous year.

Summersgill said while no business was immune to inflationary pressures, the rise in UK base rates had provided the platform business with an opportunity to combat this, “by rebuilding our revenue margins that suffered in an exceptionally low interest rate environment”.

The company increased recurring ad valorem revenue by 31 per cent which Summersgill put down to a higher average of assets under management in the year and the base rate rise which kicked up interest income and eased inflationary pressures.

AJ Bell’s board has proposed a final dividend of 4.59 pence per share, increasing the total ordinary dividend for the year by 6 per cent to 7.37 pence per share.

From 2023, the board has also decided that for those outside of the senior management team, £2,000 worth of AJ Bell plc shares will be awarded every year.

“This will help to keep share ownership and the associated benefits at the heart of the business for years to come,” said Summersgill.

Around half of the workforce currently have shares in the company.

On AJ Bell’s plans for 2023, Summersgill said: "Looking ahead, whilst market volatility is likely to persist in the short-term, our focus is very much on the long-term.

“The structural growth drivers for the UK investment platform market remain strong, and with around two-thirds of our estimated £3trn target market still held off platform, we have a significant growth opportunity ahead of us. 

“To ensure we capitalise on this, we will be investing more in our brand to improve awareness of AJ Bell and support our long-term growth ambitions.”

ruby.hinchliffe@ft.com