City round-up: AJ Bell: GB Group

Manchester-based investment platform, AJ Bell, saw customer numbers and assets increase in the second quarter period ended March 31, 2023, it revealed today.

The Platform business achieved a 13% increase in customer numbers for the last year and five per cent in the quarter, to 455,008. Total advised customers of 153,400 showed a 12% improvement in the last year and three per cent in the quarter. Total D2C customers of 301,608 were up 13% in the last year and six per cent in the quarter

Assets under administration (AUA) closed at £68.6bn, up three per cent over the last year and three per cent in the quarter.

There was strong momentum for AUA flows in the run up to the end of the tax year, with £1.2bn of gross inflows and £0.6bn of net inflows achieved across the platform in the month of March

Favourable market movements contributed two per cent to AUA growth in the quarter.

AJ Bell Investments saw assets under management (AUM) increase to £3.9bn, up 70% over the last year and up 15% in the quarter.

There were record net inflows in the quarter of £0.5bn, more than double the level achieved during the comparative period last year (2022: £0.2bn).

Chief executive, Michael Summersgill, said: “I am pleased to report another quarter of robust trading performance which once again demonstrates the strength of our dual-channel business model. We have continued to grow customer numbers and assets under administration across the platform, building on our latest market share gains in both the advised and D2C markets.

“We added over 20,000 customers during the quarter and now have over 150,000 advised customers and over 300,000 DIY investors on our platform. The strength of our platform propositions continues to attract and retain high quality customers, with average customer portfolio sizes of £309,000 and £70,000 in the advised and D2C markets, respectively, and a customer retention rate in excess of 95%.

“After a slightly subdued start to 2023, there was strong momentum in the run up to the tax year end, with £1.2bn of gross inflows and £0.6bn of net inflows in March alone as customers and advisers took advantage of annual pension and ISA allowances.”

He added: “Our investments business continues to go from strength to strength and delivered £0.5bn of net inflows in the quarter. Our investment solutions offer advisers and retail investors great choice and clear communication and have delivered strong long term performance compared to their peer group. Momentum remained strong heading into the new tax year with AUM passing £4bn in early April.

“We enter the second half of our financial year in a strong position. Our diversified revenue streams and profitable business model support our recent step up in brand investment, whilst also enabling us to continually reinvest in pricing, service and functionality to benefit our customers.

“Recently announced changes in respect of pensions are further positive news for the platform market, which already benefits from significant long term structural growth drivers. Our focus remains on continuing to capitalise on the long term growth opportunity ahead of us in both the advised and D2C markets.”

Rae Maile, analyst with investment bank Panmure Gordon, maintained his ‘Buy’ call on AJ Bell’s shares after today’s update, saying: “There have been obvious concerns about the strength of investor sentiment as the end of the tax year approached, with the combined issues of inflation, cost of living issues and market volatility hardly the most conducive of backdrops.

“AJ Bell has, however, enjoyed a strong performance in the period to end March, and a particularly strong month of March itself which accounted for half of the flows recorded for the quarter.

“The company’s marketing is paying back it appears, with D2C customer numbers +16k in the period. New investors may start with small sums, but those grow over time, supporting future growth expectations. In a growing market, AJ Bell is growing its market share.”

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Chris Clark

GB Group, the Chester-based identification verification specialist, said its results for the year to March 31, 2023, are in line with expectations, in a trading update this morning.

It confirmed it will deliver its full year results in line with the trading update provided on February 21, 2023, and expects reported revenue to be £278.8m (FY22: £242.5m), representing growth of 15%.

On a pro forma basis, organic constant currency revenue growth was 3.7%. This fully adjusts for the impact of the two prior year acquisitions, including the associated FY23 deferred revenue haircut adjustment.

It also adjusts for £4.2m of revenue from US stimulus customers in the prior period and the full £15.4m impact from the year-on-year decline in cryptocurrency customer revenues.

Adjusted operating profit is expected to be £59.8m (FY22: £58.8m), representing a margin of 21.5%. Within this, gains on foreign exchange are expected to be approximately £3m.

Net debt at March 31, 2023, was approximately £106m (FY22: £107m), despite a negative £8.6m retranslation impact since FY22 from the conversion of US dollar-denominated debt into pound sterling.

GBG’s full year 2023 results will be published in mid-June.

Chief executive, Chris Clark, said: “As noted in our February update, the difficult global macroeconomic environment has impacted performance in certain parts of the group, particularly our GBG Americas Identity business.

“Despite this, the wider group has displayed resilience, including double digit growth in both Location and Fraud. GBG’s ability to continue to deliver growth, maintain strong operating margins and cash generation against the difficult backdrop, is in no small part due to our team and their dedication throughout the year to deliver for our valued customers.”

Alasdair Young, analyst with invetment bank Panmure Gordon, said: “GBG is trading in line with expectations, and is now a top pick.

“We think this is a classic case of paying a trough multiple whilst growth and margins are also at trough levels. PE made an approach in September when the shares were c60% higher.

“We think the fact that things have ceased ‘getting worse’ could provide a catalyst for improving sentiment towards this former stock market darling. BUY.”