- Group Profit Growth: 2025 adjusted operating profit rose 4% to £264 million, nearing 2026 target of £300 million.
- Interactive Investor Surge: Revenue jumped 19% to £330 million, with adjusted profit up 34% to £155 million and 14% customer growth.
- Adviser Rebound: Net outflows improved 44%, though revenue fell 14% and profit dropped 32% to £86 million.
- Investments Margin Boost: Adjusted operating profit climbed 5% to £64 million despite lower revenue, with 80% three-year outperformance.
- Transformation Savings: £180 million annualized cost savings achieved, exceeding expectations and supporting future profitability targets.
Business Segment Performance
The interactive investor business continued to show strong growth, with customer numbers up 14% and net inflows increasing 28% to £7.3 billion. The Adviser business saw a 44% improvement in net outflows, while the Investments business reported a 55% improvement in gross flows and a material improvement in investment performance. Revenue in the Adviser business was down 14%, and adjusted operating profit was 32% lower at £86 million, largely due to strategic repricing.
Valuation and Outlook
Given the company's improved profitability and growth prospects, its valuation multiples appear reasonable. The Price-to-Book Ratio stands at 0.73, and the Dividend Yield is 7.34%. Analysts estimate revenue growth of 3.4% for the next year, and the company is confident in its ability to deliver sustainable growth beyond 2026, targeting net capital generation growth of 5% to 10% per annum on average. With a strong balance sheet and disciplined capital management, the company is well-positioned to drive long-term growth.
Investment Strategy and AI Adoption
The company is exploring opportunities in AI, implementing it in areas to create better efficiency, improve customer outcomes, and increase productivity. A pilot is up and running in Investments to improve investment performance, and the company is also looking to augment its advice business with AI. The new pricing structure announced for the interactive investor business is expected to have a positive impact, with profitability expected to be strong in 2026 and subscription revenues growing.
Guidance and Capital Management
The company expects to operate with a total capital coverage ratio within a range of 140% to 180% and aims to sustainably grow profit and net capital generation. Debt reduction is a strategic priority, with the company planning to pay down debt and invest in the business while maintaining discipline in achieving benefits from spend. The guidance for absolute cost for this year is around £30 million of annualized cost savings, with some of this expected to drop through to the bottom line.