abrdn H1 2025 Earnings Report

abrdn EPS Results

• Actual EPS: GBX 7.60
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

abrdn Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

abrdn Announcement Details

• Quarter: H1 2025
• Date: 7/30/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, July 30, 2025
• Conference Call Time: 2:45AM ET

abrdn (LON:ABDN) is a Uk-based global asset manager that’s roots go back to the early 1800s. The company traded today first came to life in 1983 after a buyout of an investment trust. It was launched on the London Stock Exchange as Aberdeen Asset Management and it existed under that name for several decades. In 2017 Standard Life agreed to be merged with Aberdeen Asset Management resulting in a new company called Standard Life Aberdeen.

Standard Life Aberdeen had more than 36.4 billion pounds under management at the end of its 1st year and that figure has only grown. Ironically, by 2018 the new company had the Standard Life segment of the business up for sale in an effort to focus more fully on asset management. Then, in 2021, the company rebranded to abrdn which is a stylized and vowelless form of Aberdeen. As of 2022, the company listed more than 500 billion pounds under management.

abrdn provides an assortment of asset management services globally. The company claimed more than 5,000 employees, 800 investment professionals and 30 locations as of November 2022. abdrn is the UK's largest asset management firm.

The company offers its solutions through 3 channels that are Investments, Adviser and Personal. The Investments segment connects retail and institutional clients with equity, debt and derivative markets around the world. The Adviser solutions are a suite of tools to aid financial professionals to interface with and serving their clients in a productive manner. The Personal segment provides a full range of advisory and financial services to individuals, families, businesses, and institutions. The company’s website and service quality earned it a 5-star rating from the independent rating agency Defaqto.

abrdn provides its products and services through a variety of channels. The firm serves institutional, wholesale, and retail clients. The firm's self-directed brokerage platform is called Interactive Investor, it is well-known as the lowest-fee brokerage in the UK. Clients can open all forms of accounts approved for their jurisdiction including retirement and pension accounts. Investors can purchase shares, mutual funds, ETFs, and bonds. The platform had nearly 60,000 million pounds in deposits in 2022 and more than 400,000 active users.

Among the many products available to clients is a range of managed funds. Funds vary in scope and strategy but include currency, equity, and commodity-based investments. The website also includes several tools and calculators for investors to plan their savings and retirement income needs. The company brought in more than $1.69 billion in revenue in 2022.

abrdn H1 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Interactive Investor delivered a 25% year-on-year rise in operating profit to £69 m, grew customers 9% to 461 000 and achieved record net inflows of £4 bn.
• Neutral Sentiment: Advisor’s strategic repricing weighed on adjusted operating profit, which fell 35% to £42 m, but net outflows narrowed to £900 m from £2 bn in H1 2024, setting up a return to growth.
• Positive Sentiment: The Investments business remained resilient with adjusted operating profit up £1 m to £35 m and delivered its highest Institutional & Retail Wealth gross inflows in over two years (£21.9 bn).
• Positive Sentiment: The group’s transformation programme has achieved £137 m of the £150 m annualised cost-saving target, driven by process simplification, automation and AI.
• Positive Sentiment: Net capital generation rose 7% to £111 m and the interim dividend was maintained at 7.3 p per share, underpinning the group’s ambition to reach £300 m of operating profit and capital generation in 2026.

Presentation

[Jason Windsor, CEO at Aberdeen]

Good morning, and Thank you for joining Aberdeen results presentation for the first half of 2025. I'm here today with Siobhan Boylan, 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. 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 U.K.'s leading wealth and investments group. We're starting from a strong base.

[Jason Windsor, CEO at Aberdeen]

Both of our wealth businesses, Interactive Investor and Aberdeen Adviser, offer long-term savings and investments to U.K. customers. This market has excellent long-term growth potential, driven by the U.K. population's clear need for great value savings, retirement, and investment propositions. II was the number one by flows in the U.K. direct-to-consumer market last year, and after another strong performance in H1, ii now serves over 460,000 customers. II's excellent service and exceptional value for customers are at the heart of its continued success. Adviser is the second-largest platform and serves around half of the U.K.'s advice firms and around 400,000 end customers. We have taken the necessary decision to reprice to ensure Adviser is competitive, and with service levels now restored and getting better, and with the platform working well, we've set the conditions for Adviser to return to growth.

[Jason Windsor, CEO at Aberdeen]

Our investments business operates worldwide with AUM of GBP 368 billion and has many talented individuals. We believe there are significant opportunities for specialist active asset managers in a 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. 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.

[Jason Windsor, CEO at Aberdeen]

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. I would 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 up 25% year-on-year at GBP 69 million, whilst maintaining a laser-like focus on efficiency.

[Jason Windsor, CEO at Aberdeen]

In Adviser, the repricing we implemented to enhance our market competitiveness had the expected impact on adjusted operating profit, which reset down by 35% to GBP 42 million in the half. This was a necessary step to set the conditions for future growth and to support Adviser's return to net inflows. In Investments, we delivered on our transformation program, which mitigated the impact of lower revenues in the half and improved the efficiency of our platform. Adjusted operating profit remained resilient at GBP 35 million, which is GBP 1 million higher than the same period last year. Taken together, we saw adjusted operating profit in the first half of GBP 125 million, which compares to GBP 128 million in the same period last year. Pleasingly, net capital generation was up 7% in the half to GBP 111 million. This supports the dividend, which has been maintained at 7.3 pence per share for the interim.

[Jason Windsor, CEO at Aberdeen]

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 SIPP customers up 27% to 92,000.

[Jason Windsor, CEO at Aberdeen]

Earlier this month, we completed the integration of Jarvis's 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 high 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 GBP 4 billion, up nearly 30% versus the same period last year. I'm delighted that ii continues to earn strong market and consumer recognition.

[Jason Windsor, CEO at Aberdeen]

We have now won Which's? Recommended SIPP 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 ii 360, 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 SIPP, again designed with Aberdeen Investments to provide more support and guidance for investors who want the convenience of a ready-made package.

[Jason Windsor, CEO at Aberdeen]

These enhancements, combined with the exceptional service and value that the platform offers, mean 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 Adviser. Our strategy for Adviser 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 Adviser leadership team, which is now in place. Second, the 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. Finally, service. As I highlighted in our Q1 call, service levels have been restored, and indeed they improved further in Q2.

[Jason Windsor, CEO at Aberdeen]

Net Promoter Score was +43 in the first half, up from +34 last year. Other processes, including average speed to answer, have also improved as we continue to invest in the client's experience. During the first half, we continued to refine our partnership strategy with IFS to capture growth and drive a healthier pipeline. Our approach is based around a personalized service and support model and continuous improvement in the integration between our platform and our clients. In the first half, Adviser had net outflows of GBP 0.9 billion compared to net outflows of GBP 2 billion in the first half of 2024 and GBP 1.9 billion in the second half of last year. In Q2 2025, outflows were GBP 0.3 billion, which compares to GBP 1.1 billion in Q2 last year. While I would never celebrate outflows, the flow trend is showing some encouraging signs.

[Jason Windsor, CEO at Aberdeen]

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 to 71%, up from 60% at the full year 2024, 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 Mayer, we have further strengthened the Investments leadership team with the appointment of John McCareins as the new Chief Client Officer.

[Jason Windsor, CEO at Aberdeen]

With the right leadership team in place, we're 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 GBP 9.3 billion higher than last year at GBP 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.

[Jason Windsor, CEO at Aberdeen]

Insurance partners saw a net outflow of GBP 4.5 billion in the 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 GBP 500 million year to date. Turning now to progress on our transformation program. The program has continued to deliver very well against the targets we outlined at the start of 2024, driving significant savings and bringing benefits to our clients and colleagues and setting up Aberdeen for the future.

[Jason Windsor, CEO at Aberdeen]

We're on track to hit our target of at least GBP 150 million of annualized savings by the end of this year, as at the end of H1, we've achieved GBP 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. Lastly, let me cover my strategic priorities and the group targets.

[Jason Windsor, CEO at Aberdeen]

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 a competitive advantage, growing fast in Interactive Investor, turning around flows in Adviser, and targeting a step change in profitability and 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 U.K. wealth by differentiating through client experience. We will continue to invest wisely in our platforms to maintain our competitive edge. Third, strengthening our talent and culture. This has been and will remain very important to me.

[Jason Windsor, CEO at Aberdeen]

The leadership teams at Group in Adviser 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. Before I close, a quick reminder of our group targets. We're targeting at least GBP 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 GBP 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.

[Jason Windsor, CEO at Aberdeen]

I'll now hand over to Siobhan, who will provide us more details on financial performance.

[Siobhan Boylan, CFO at Aberdeen]

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. Let me provide a summary of the key financial highlights from the first half. We're seeing good progress across the group. In Interactive Investor, we have sustained the strong performance reported in recent periods. In Adviser, we have seen a significant improvement in flows, and in Investments, our institutional and retail wealth business has seen 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 GBP 125 million has been broadly steady, with strong growth in ii and continued cost discipline in Investments offsetting the impact of the strategic repricing in Adviser.

[Siobhan Boylan, CFO at Aberdeen]

Net capital generation is up 7% to GBP 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 GBP 35 million of annual benefit from the second half onwards. 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 GBP 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 Adviser. Adjusted net operating revenue is 6% lower at GBP 628 million, with strong growth in II being offset by Adviser and a continued change in the asset mix in Investments.

[Siobhan Boylan, CFO at Aberdeen]

Progress in the transformation program has helped deliver a 7% reduction in adjusted operating expenses to GBP 503 million after taking into account increased investment in ii to support long-term growth. IFRS profit before tax of GBP 271 million is 45% higher than in half one last year. This significant improvement principally reflects a gain in the market value of our Phoenix stake. Adjusted capital generation is up 1% to GBP 145 million, with net capital generation up 7% to GBP 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 SIPP, which we know tend to be higher value on average.

[Siobhan Boylan, CFO at Aberdeen]

Net flows are up 29% to GBP 4 billion, with net flows GBP 2.4 billion in the second quarter benefiting from a strong tax year end. This, along with the benefit of positive markets, means AUM is up 9% compared to the end of 2024. Revenue is up 12% to GBP 154 million. Within this, trading revenue was up 36% to GBP 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 GBP 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 GBP 12 million.

[Siobhan Boylan, CFO at Aberdeen]

Higher expenses reflect investment in brand awareness, technology developments, and the business's capacity to support future growth. Operating profit has increased by GBP 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 Adviser, restored service levels, enhanced platform functionality, and our competitive repricing have led to a significant improvement in net outflows, which are lower by GBP 1.1 billion compared to the first half last year. As a result of the actions taken, revenue was 14% lower at GBP 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.

[Siobhan Boylan, CFO at Aberdeen]

Revenue was also impacted by the sale of 360 last year. As a result of these factors, the revenue margin in the business was 4 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 Adviser 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 GBP 42 million. Onto our Investments business. In our Institutional and Retail Wealth business, net flows, excluding liquidity, were up GBP 3.8 billion versus the first half of last year at GBP 1.8 billion.

[Siobhan Boylan, CFO at Aberdeen]

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 GBP 371 million, revenue in Investments was 9% lower than half one 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 GBP 1 million higher at GBP 35 million. Turning now to capital. Net capital generation is up 7% at GBP 111 million. Breaking that down, adjusted capital generation is up 1% at GBP 145 million, while net restructuring and corporate transaction expenses were down 15% to GBP 34 million compared to GBP 40 million in the first half of last year.

[Siobhan Boylan, CFO at Aberdeen]

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 GBP 35 million annual increase in net capital generation starting in the second half of this year. If we turn to look at our capital base, we continue to benefit from strong capital position with a CET1 of GBP 1.5 billion, covering 139% of our regulatory requirement. This is further enhanced by GBP 0.8 billion of gross AT1 and Tier 2 debt, GBP 0.5 billion of which contributes to that regulatory capital. In addition, we have GBP 1.5 billion of net assets not included in capital. This comprises a GBP 0.8 billion IAS 19 surplus, as well as our GBP 0.7 billion stake in Phoenix, from which we received GBP 56 million in dividends last year.

[Siobhan Boylan, CFO at Aberdeen]

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 Adviser 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 asset mix.

[Siobhan Boylan, CFO at Aberdeen]

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 GBP 150 million of annualized cost savings by the end of this year. Thank you, and I'll now pass you back to Jason.

[Jason Windsor, CEO at Aberdeen]

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 A.M. this morning. You can stay tuned to this feed to listen along to the Q&A, or you can listen later. 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. 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.

[Jason Windsor, CEO at Aberdeen]

We're delivering through a focus on execution, simplifying the business, and strengthening our talent. Operating profit was broadly flat at GBP 125 million in the half, and net capital generation was up 7%. Taking the businesses, the headlines in turn, Interactive Investor had sustained organic growth with record net inflows. In Adviser, net inflows improved or net flows rather improved significantly with lower profitability, reflecting the strategic decision to reprice the book to improve competitiveness. In Investments, greater efficiency has supported profitability with some encouraging gross flows, particularly in quants and fixed income. Our transformation program is on track to deliver at least GBP 150 million of annualized savings by the end of this year. As at the end of H1, we've achieved GBP 137 million of that. As we head into the second half of 2025, we remain focused on realizing the significant potential of this group.

[Jason Windsor, CEO at Aberdeen]

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. Now, I'll hand over to the operator to take your questions.

[Operator]

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 speaker phone, please pick up the headset 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 Bolzoni from JPMorgan, please go ahead.

[Enrico Bolzoni, Executive Director of Equity Research at JP Morgan]

Thank you. Thanks for taking my questions. One question on Adviser. 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? Redemptions came down quite a lot. Do you see that improving further as we enter the third quarter? With respect to that, how do you see your target of achieving at least GBP 1 billion in flows by next year? Do you think you are maybe running a bit ahead of schedule there? My second question was on the investment vector. Good performance. Performance seems to be improving. The flow momentum seems to have improved as well. 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.

[Jason Windsor, CEO at Aberdeen]

Okay. Morning, Enrico. Thanks for the question. In Adviser, we've seen steady progress this year month-on-month, actually. We've seen lower outflows and slightly higher inflows, more on the outflows and inflow side in terms of movement in the % sense. You can see the little chart in the presentation. It does show nicely the quarterly progression in it through, pretty flat around GBP 1 billion out per quarter last year and then starting to improve this year. We're not changing our target for 2026. We still think that's actually quite ambitious to go from a business that was losing GBP 1 billion a quarter into a net inflow position next year. There's still a lot of work to do, and it takes time. That's work with IFRS to build the confidence. It's just to get out there and strike the relationships.

[Jason Windsor, CEO at Aberdeen]

It's just a lot of shoe leather, 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. The net figure in IRW, as we mentioned, was GBP 0.4 billion. Gross 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 know that's out in front of you, but it's still in outflow. We're continuing to work on that. 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.

[Jason Windsor, CEO at Aberdeen]

We see that the pipeline is good. I wouldn't say spectacular. We're continuing to, again, I use the term shoe leather again. It's about getting out there, being proud about our performance, our product, building those long-term relationships, and being really focused on growth over the next three to five years.

[Siobhan Boylan, CFO at Aberdeen]

To add some color on the Adviser, clearly the focus on the MPS at being +43, getting that consistency will encourage the gross inflows. As you see, it is a step change in the outflows that is driving this performance.

[Operator]

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

[Hubert Lam, Research Analyst at Bank of America]

Hi. Thanks for taking my questions. I've got three of them. Costs were better in the first half. I'm just wondering how should we think about the full year now in terms of costs? Can you analyze the first half? Just so I'll look around costs. The second question is on fee margin. In Adviser, it fell to 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? Lastly, investment performance was a bit mixed. Equities still pretty lackluster. Has that been a deterrent in terms of new flows going into equities? I know it's work in progress in terms of improving. Just Jason, what are your thoughts around performance and where do you think it can get? Thanks.

[Jason Windsor, CEO at Aberdeen]

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, you know, absolutely up to speed. On the cost side, we've hit GBP 137 million run rate. That's not all through into the P&L, just to be clear. That's of the GBP 150 million transformation target. That's a gross target, so it doesn't all flow through. 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. We've got momentum into the second half from the actions that we've already taken. I think that the second half broadly is going to be a repeat of the first in terms of trends.

[Jason Windsor, CEO at Aberdeen]

You can see that in terms of profitability and trends through that, with more costs out supporting the level of profitability. We've got confidence in that. We are investing to grow, though, in our select areas. We're not pulling costs out everywhere. We're making decisions to be more efficient. We're reducing inefficiencies, taking out waste, being selective. In ii, in Adviser, and in our growth areas in Investments, we are supporting and growing the business. I would expect a similar trend in 2025, second half, to the first. I would then see cost efficiency being absolutely critical to our success in 2026 and beyond. There's going to be no slacking off of our focus on being an efficient platform. That's what I see. 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.

[Jason Windsor, CEO at Aberdeen]

As we look further forward, we can continue to invest in the business by being absolutely focused on efficiency. I'll do the performance one. On equities, you're right. Clearly we're not sitting still. 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 Branner, the CIO, has implemented numerous improvement initiatives in working with the equity team, which are working. Quality has underperformed as a style and as a factor in the last 12 months or so, particularly in China and across parts of Asia. We've got really good performance in our GEM income product, in our smaller companies product, in our U.S. smaller, both U.K. and Europe, in some of our thematic products.

[Jason Windsor, CEO at Aberdeen]

Equities are 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 we continue to be faithful to our investment style and deliver to the client what they bought.

[Siobhan Boylan, CFO at Aberdeen]

To touch on the revenue margin, as we indicated at the beginning of the year, we did expect to see some repricing to the back book. That was about 3 basis points, so you can see that coming through in the numbers. If I look forward, I'd expect the 27 bps to be, and we've given guidance on that, that would be through into 2025 and onwards. That gives you an indication of the impact on the revenue margin.

[Enrico Bolzoni, Executive Director of Equity Research at JP Morgan]

Thank you.

[Operator]

Thank you. Your next question comes from Mandeep Jagpal from RBC. Please go ahead.

[Mandeep Jagpal, Director and Co-head of Insurance Equity Research at RBC]

Hey, good morning. Mandeep Jagpal, RBC Capital Markets. Three questions from me as well, please. First one is, you stated today that you expect the business next with 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. On ii and RW, kind of follow-up question, close flows are particularly strong. Are you able to provide any details on which client channels these flows are coming from, so from retail versus institutional and regionally, trying to get a sense here of where the improvement in flow performance is coming from? Just a kind of a modeling question.

[Mandeep Jagpal, Director and Co-head of Insurance Equity Research at RBC]

The GBP 35 million benefit to capital generation from the DB scheme, should we model this in terms of 1H, 2H split in future years, and should we only expect half the amount in FY 2025? Thank you.

[Jason Windsor, CEO at Aberdeen]

Okay. Thanks, Mandeep. With Phoenix continuing in its implement its own strategy, we've seen an evolution of that over time. A big picture from equities, you know, they've largely moved from active to passive. I think we'll see that probably continue. That's part of the evolution. They've also got no appetite at all to run policyholder assets themselves. 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. That will be a feature as we look further forward.

[Jason Windsor, CEO at Aberdeen]

I've not got any specifics to guide you to, but I think we'll see directionally more on the policyholder 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 were in fixed income or in Europe from big institutions. There were major institutional wins. In the U.K., the quants are mainly in the U.K. 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 more in the hundreds rather than the billions, to give you a sense.

[Jason Windsor, CEO at Aberdeen]

I'm not going to name check everything, but the big flows were those European and U.K. institutional flows.

[Siobhan Boylan, CFO at Aberdeen]

On the modeling of the DB pension scheme surplus, it should be GBP 35 million. That's the full year effect. The second half, you'd expect to see half of that come through.

[Operator]

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

[Nicholas Herman, Director of Equity Research at Citi]

Yeah, morning. I hope you can hear me okay.

[Jason Windsor, CEO at Aberdeen]

Yeah, loud and clear.

[Nicholas Herman, Director of Equity Research at Citi]

Three questions from my side, please. On Adviser, I noted the comment about the recent FY 2026 target, clearly the momentum is very strong. Could you talk about the competitive dynamics in that market and kind of where we are? I mean, obviously, there's a lot of self-help on your part, but has there been any evolution in the competitive dynamics in that market? Is it still as strong as it has been in the past and therefore, you are, or are you seeing this thing as getting progressively easier as you've implemented that self-help? That's the first one. Second one, on costs, can you remind us, 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?

[Nicholas Herman, Director of Equity Research at Citi]

The final question I had is, in Interactive Investor, the cash balances, what I can see are around 8%. Beyond rates, can you remind us what are the same factors that will, first of all, also on the margin, excuse me, drive the variance in your cash margin guidance? Then on the cash balance side, how are you thinking about the outlook from that 8% of AUA evolving today, given tailwinds from growing SIPP penetration, versus potentially evolving customer client allocations? Thank you.

[Jason Windsor, CEO at Aberdeen]

Okay. I'll start. I haven't got any great statement of insight, unfortunately, on the Adviser competitive dynamics. I mean, there are some qualified competitors, people who've 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, and we partner with IFRS as an independent partner, and that's our, you know, our differentiation. We've got an MPS product that we would be seeking to expand through into that marketplace. We've undershot, I think, you know, where we ought to be in that. That's an opportunity for us to compete. The sources of competition are clearly service, number one. 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.

[Jason Windsor, CEO at Aberdeen]

We're going to go further. We're going 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 wouldn't, I don't mind saying that. To get out there and win, you've got to be really good, and you know, we're absolutely up for that. On the cost side, it's a little bit everywhere. With Richard's new leadership and new vigor to the program, we had a plan, the 150 plan, which we are, you know, pretty much through. We haven't finished. We always said it was at least 150.

[Jason Windsor, CEO at Aberdeen]

We've not been as sharp as we could have been with third parties, and that applies to some of our big outsource providers, to some, you know, IT arrangements, to some market data, and that's where some of the big bills are. The 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. We'll continue to sort of ask ourselves, you know, 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? Within transformation, it's not just about cost out. It is about better.

[Jason Windsor, CEO at Aberdeen]

We think we can do both, particularly on the automation and use of data side.

[Siobhan Boylan, CFO at Aberdeen]

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

[Jason Windsor, CEO at Aberdeen]

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, you know, across the piece. I think you're right. SIPPs are slightly higher, tilted to cash, you know, probably more like 10% than just over 8% for the overall book. Obviously, SIPPs 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. 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. 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.

[Jason Windsor, CEO at Aberdeen]

We're probably in the sort of 2.1% -2.2% area for the second half. We would expect, I mean, the base rates could jump around a bit, but that would be our expectation as we sit here today.

[Nicholas Herman, Director of Equity Research at Citi]

That's helpful. Thank you. I just wanted to circle back on the cost point. When you announced your GBP 150 million plan, you have at least GBP 150 million targets. You were pretty insistent that you could deliver those with very limited revenue attrition. It sounds like any incremental cost saves, you're kind of retweaking that message as well.

[Jason Windsor, CEO at Aberdeen]

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

[Nicholas Herman, Director of Equity Research at Citi]

Very helpful. Thank you.

[Operator]

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

[Charles Bendit, Equity Research Analyst at Rothschild & Co Redburn]

Hello. Good morning. Thank you for taking my questions. I had a follow-up, please, on the Phoenix relationship. 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? The second question was on flows. Besides quants, 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. Was it single mandate-driven, broad-based demand? Is the strategy meaningfully outperforming peers, or is the category just strongly in favor at the moment? Thank you.

[Jason Windsor, CEO at Aberdeen]

Yeah. I don't know exactly the answer to your first question. I think that, you know, they've got about GBP 30 billion of annuities. We probably run half of that, give or take. So it's about 10%-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 just 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. You know, there were a number of wins that were smaller. There was a couple that were in the sort of, or was it just one, just over GBP 1 billion? And then the rest were in the sort of hundreds of millions through that.

[Jason Windsor, CEO at Aberdeen]

If you just took, was your question just on DM Credit, just to be clear? I think it was.

[Charles Bendit, Equity Research Analyst at Rothschild & Co Redburn]

Yeah, my question was on DM Credit just because it looked like, unlike the other categories, it's sort of GBP 5 billion gross inflow in the period.

[Jason Windsor, CEO at Aberdeen]

There was a GBP 1 billion mandate, and then a number in the half a billion or several hundred million category.

[Operator]

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

[Gregory Simpson, Equity Research Analyst at BNP Paribas]

Hi. Good morning. The first question is ii costs, which were at 4% year-on-year, and the cost income now at 55%. Can you talk a bit more about the outlook for cost growth given there's a pipeline for new products and some of your peers have talked about not wanting to overrun too much on margins? Just any thoughts on whether II is doing the right amount of marketing, for instance? That's the first question. Check on II again. If I look at the account fee line, it's been this kind of GBP 26 million per half level for the last three and a half years. That's about good customer growth. Can you maybe flesh out a bit more what's going on and when we expect that to converge better with customer growth? Thirdly, on investments, you've got $13 billion of U.S. ETF AUM.

[Gregory Simpson, Equity Research Analyst at BNP Paribas]

I think a lot of that is in commodities, a big gold ETF. Can you maybe talk a bit about the kind of competitive positions and how Aberdeen is seeing the outlook in what's a very quite a competitive marketplace? Thank you.

[Jason Windsor, CEO at Aberdeen]

Okay. 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. In the second half and into 2026, I expect that number to trend more in line with customer growth. We talked, or Richard more precisely and his team talked in Manchester about the brand and marketing investment that we've made. We stepped that up materially last year and then a little bit further this year.

[Jason Windsor, CEO at Aberdeen]

We're broadly comfortable with the level that we're at. We continue to see real upside in the brand awareness of Interactive Investor across the whole marketplace in different areas. We do see real return on that investment in brand from the base that we're at. That will be a good fillip to the growth outlook of the business. On your specific question around the prop growth, that's already kind of in the numbers. There's nothing new. We've been building them. We don't capitalize a lot, so that's actually already in the figures. We'll continue to spend money as they go for on build to operate. That's what you'd expect. I'm not expecting a step up. In fact, as I sort of touched on this without saying it explicitly, efficiency, and we measure that in Interactive Investor by the cost-to-asset ratio, is absolutely a core part of our success.

[Jason Windsor, CEO at Aberdeen]

The business is very, very good at managing its efficiency, and we'll continue to do that. We think that places us well, and that allows us to offer that very attractive price point for customers. On the U.S. side, you're right. Most of that is in the commodity product. It's been a remarkable success for us. We've, at points during Q2, we were taking in $80 million-$100 million a day, as it was, it's been tracking up quite nicely. I don't have a lot to say about it. It is clearly playing in a market with real tailwind, and it's a well-structured, well-managed product at a good price point.

[Operator]

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

[Bruce Hamilton, Managing Director at Morgan Stanley]

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

[Jason Windsor, CEO at Aberdeen]

Yeah, sure. Synergies across, I know you ask this every call. The revenue side of the synergies across the business are on the managed ISA side, where 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. They provide the skill in the multi-asset structuring and provide some of the componentry. That will be a similar product structure for the SIPP, 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 Adviser, I touched on this a moment ago.

[Jason Windsor, CEO at Aberdeen]

We've got an MPS offering, which is now, I'm not quite sure why this was the case, but we had MPS within Adviser and Investments. We moved it all into Investments. That is now where the skill set sits, and we definitely got plenty of runway to improve our MPS. The team at Adviser 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. That's an opportunity that we can't assess properly until it comes up. I think, as I've said to you, that might lead to some capital being released from the surplus, TBD. I think that's part of the objectives that the chancellor is trying to achieve.

[Jason Windsor, CEO at Aberdeen]

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. We're quite comfortable with the arrangement that we reached. We're not inclined to chop and change. 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.

[Bruce Hamilton, Managing Director at Morgan Stanley]

Yeah. I was just understanding you to just remind me that the two products and what the pipeline and how excited you are about, you know, further launches or whether you're going to be really quite selective in terms of what you do there.

[Jason Windsor, CEO at Aberdeen]

Yeah. You've got to differentiate this. 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 were a future supply chain ETF and a future raw materials product. They're both run by the equity team here in the U.K.. We continue to be keen to provide that product to those that want to invest in an ETF. We still see a lot of demand for [UCITS or OEICs] in Europe, to be clear. Distribution is more teed up around that. Whilst it's important that we have that offering, we'll continue with the more classic products as well.

[Operator]

Perfect. Thanks very much. Thank you. Your next question comes from Michael Werner from UBS ,Please go ahead.

[Michael Werner, Equity Research Analyst at UBS]

Thank you. Thank you very much, and 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. As we exit Q2 and enter Q3, has there been sign of or evidence of trading fatigue? Where do you see the trading activity as we go through the second half of this year as a result? Thanks.

[Jason Windsor, CEO at Aberdeen]

You're right. We did see quite a pickup in that period. I think we were up about, you know, Q2, Q3, I think 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. We do see, you know, which is therefore 10%-ish growth, and depending on the customers, slightly below, assets slightly above that. 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.

[Michael Werner, Equity Research Analyst at UBS]

Thank you.

[Operator]

Thank you. This does conclude our question and answer session. I'll now, at the time of the conference, turn it back to Jason for any closing remarks.

[Jason Windsor, CEO at Aberdeen]

Thank you very much, everybody, for joining. I 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, and we're absolutely focused on delivering the growth ambition that we've set out into those targets. Expect to hear more from us on that topic. I look forward to seeing you all in due course.

Participants

Analysts

• Siobhan Boylan, CFO at Aberdeen
• Charles Bendit, Equity Research Analyst at Rothschild & Co Redburn
• Hubert Lam, Research Analyst at Bank of America
• Enrico Bolzoni, Executive Director of Equity Research at JP Morgan
• Bruce Hamilton, Managing Director at Morgan Stanley
• Michael Werner, Equity Research Analyst at UBS
• Nicholas Herman, Director of Equity Research at Citi
• Gregory Simpson, Equity Research Analyst at BNP Paribas
• Jason Windsor, CEO at Aberdeen
• Mandeep Jagpal, Director and Co-head of Insurance Equity Research at RBC