Investment platform AJ Bell rewards shareholders following record financial year

AJ Bell, the Manchester-based investment platform, has achieved a record financial year for the period ending September 30, 2024, with revenues rising by 23% and pre-tax profits surging by 29%.

The group posted a turnover of £269.4m, up from £218.2m, and a pre-tax profit of £113.3m, compared with £87.7m the previous year.

Shareholders will be rewarded with a 16% improvement in a final dividend of 12,50p per share, the 20th consecutive year of ordinary dividend growth, as well as a £30m share buyback programme which commenced today, reflecting the group’s strong cash generation, healthy capital position and its commitment to return surplus capital to its shareholders.

During the year the group also added a further 66,000 customers to its dual-channel platform, closing the period at 542,000 customers, a 14% improvement on 2023.

And it hit record assets under administration (AUA) levels of £86.5bn, compared with £70.9bn a year ago, up 22%, driven by net inflows of £6.1bn (FY23: £4.2bn) and favourable market movements of £9.5bn.

The AJ Bell Investments assets under management (AUM) were up 45% in the year to a record £6.8bn (FY23: £4.7bn) following strong net inflows of £1.5bn (FY23: £1.6bn).

CEO, Michael Summersgill, said: “I am pleased to report on another excellent year for AJ Bell.

“Backed by our strong profitability and highly cash-generative business model, we have accumulated significant surplus capital above our regulatory requirements. We have today announced a record level of shareholder returns, reflecting the board’s confidence in the long term outlook for AJ Bell.”

And he said further returns are likely, in addition to the £30m share buyback programme announced today: “This level of buyback reflects our current capital position; however we see opportunities for further shareholder returns in future, over and above a progressive ordinary dividend, as we continue to deliver on our growth strategy.”

He added: “We remain committed to our purpose of helping people invest, focusing on our three strategic drivers: trust, ease of use, and low-cost. Over the past year, we have reduced fees for our customers and invested in our platform with a focus on ease of use, while sustaining our multi-year strategy to increase brand awareness.

“These factors, together with our market-leading customer service levels, have all contributed to our organic growth in the year, driving further market share gains in the growing UK investment platform market.”

And he called on the Government to support the investment community. He said: “Across the industry, the run up to the recent Autumn Budget saw some customers making significant decisions in response to speculation about tax reform. While Capital Gains and Inheritance Tax changes announced at the Budget will impact some customers, the fundamental features of the pension and investment tax system remain unchanged.

“The Government now has an opportunity to galvanise the retail investment market through a long term commitment to tax stability, allowing more people to invest for the future with certainty. We will continue to campaign for stability and simplicity for retail investors, helping to make it easy for people to invest and plan for the long-term.”

He concluded: “Looking ahead, I am confident in the outlook for both AJ Bell and the broader platform market. The long term structural growth drivers of the market remain strong, as more individuals recognise the importance of taking control of their financial future.

“Platforms offer an excellent solution for managing long term finances, and we remain very well positioned to capitalise on this growing demand.”

Investment bank, Panmure Liberum, shifted its call on AJ Bell stock from buy to hold, after today’s results.

A note by analysts James Allen, Rae Maile and Ross Luckman, said: “AJ Bell’s FY 24 results showed strong flows and excellent customer numbers, both of which were pre-announced.

“Earnings were in line with consensus, or c.seven per cent ahead if we strip out the unexpected exceptional redress cost all the way to EPS.

“Slightly higher FY 25 revenue margin guidance versus our estimates, albeit still showing moderation y-o-y, helps to offset higher cost guidance, driving a five per cent EPS upgrade.

“With AUA having recovered, stockbroking volumes having normalised, redress risk introduced, muted earnings growth and shares at record highs, we pause for breath. Move from BUY to HOLD, TP increased from 520p to 540p.”