Aberdeen Group Plc (ABDN) Earnings Call Transcript & Summary

Good morning, and thank you for joining Aberdeen's 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. Okay. 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. Both of our wealth businesses, interactive investor and Aberdeen Adviser offer long-term savings and investments to U.K. customers. This market is 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 #1 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 is 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. 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. So 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. 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 6 months, our business has not only proven resilient from a profitability perspective, but also laid the foundations for the future. And I'd 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 3 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. 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. And pleasingly, net capital generation was up 7% in the half to GBP 111 million. This supports the dividend, which has been maintained at GBP 0.073 per share for the interim. 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. Earlier this month, we completed the integration of Jarvis' 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 and daily average retail trades were up 23% compared to the first half of last year. The sustained growth in customers has been supported by higher 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. We have now won Which?'s recommended SIPP award for 4 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, our 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. These enhancements, combined with the exceptional service and value that the platform offers means 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 as shown on the slide. 2025 is about completing the foundational work to return to growth. 3 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. And finally, service. As I highlighted on our Q1 call, service levels have been restored and indeed, they improved further in Q2. Net promoter score was plus 43 in the first half, up from plus 34 last year. Other processes, including average speed to answer have also improved as we continue to invest in the client experience. During the first half, we continued to refine our partnership strategy with IFAs 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. So while I would never celebrate outflows, the flow trend is showing some encouraging signs. 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. 3-year investment performance versus benchmark has improved to 71%, up from 60% at the full year '24, 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 Meyer, we have further strengthened the Investments leadership team with the appointment of John McCareins as the new Chief Client Officer. With the right leadership team in place, we are 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 are 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 & Retail Wealth, which represents almost 60% of our Investments business measured by AUM. Excluding liquidity, gross inflows in I&RW 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 2 years. 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 2 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. 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. And lastly, let me cover my strategic priorities and the group targets. This final slide shows the 3 priorities I set out 1 year ago, which are all about execution and delivery, and we've made good progress across all 3. I've already talked about how we're transforming performance, including focusing on where we have competitive advantage, growing fast and interactive investor, turning around flows in Adviser and targeting a step change in profitability in 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. And third, strengthening our talent and culture. This has been and will remain very important to me. 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. So 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. I'll now hand over to Siobhan, who will provide us more details on financial performance.

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. So 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 & Retail Wealth business has seen an encouraging gross 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 of 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. 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. And finally, we have maintained our dividend of GBP 0.073 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. 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 1 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 3 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. Net flows are up 29% to GBP 4 billion, with net flows of GBP 2.4 billion in the second quarter, benefiting from a strong tax year-end. This, along with the benefit of positive markets means AUMA 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 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. Higher expenses reflect investment in brand awareness, technology developments and the business' 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 basis points in half 1 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. Revenue was also impacted by the sale of threesixty last year. As a result of these factors, the revenue margin in the business was 4 basis points lower at 27.4 basis points. Treasury margin was 257 basis points compared with 263 basis points for the first half of 2024. We previously communicated that Adviser would see an end to 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 threesixty. Taken together, these factors resulted in a reduced operating profit of GBP 42 million. On to our Investments business. In our Institutional & 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. 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 1 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. 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. And now 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 IAS19 surplus as well as our GBP 0.7 billion stake in Phoenix from which we received GBP 56 million in dividends last year. And 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. We have clear plans to grow in our focus areas in Institutional & Retail Wealth and expect our business mix with Phoenix to evolve over time. Expenses in 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.

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 this morning. You can stay tuned to this feed to listen to the Q&A or you can listen later. [Break]

Good 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. But 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. 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. And 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. 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. And now I hand over to the operator to take your questions.

[Operator Instructions] Your first question today comes from Enrico Bolzoni from JPMorgan.

So one, couple actually 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? Redemption came down quite a lot. Do you see that improving further as we enter the third quarter? And 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? And then 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?

Enrico, thanks for the question. In Adviser, I mean, 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 the inflow side in terms of movement in the percentage sense. So you can see the little chart in the presentation, and it does show nicely the quarterly progression through pretty flat around GBP 1 billion out per quarter last year and then starting to improve this year. And we're not changing our target for '26. We still think it'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. And that's work with IFAs to build the confidence. It's just to get out there and strike the relationships. And it just -- it's a lot of shoe-leather, frankly, getting out around the country, meeting people, building confidence and getting them back on to the platform. On Investments, we've had a good first half. There were some ups and downs, as you've seen through that. So the net figure in I&RW, as we mentioned, was GBP 0.4 billion. But 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, [indiscernible] in front of you, but it's still in outflow. We're continuing to work on that. And as I've talked 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. And 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 products, building those long-term relationships and being really focused on growth over the next 3 to 5 years.

And just to add some color on the Adviser. Clearly, the focus on the NPS being plus 43%, getting that consistency will encourage the gross inflows. But as you see, it is a step change in the outflows that is driving this performance.

Your next question comes from Hubert Lam from Bank of America.

I've got 3 of them. Costs were better in the first half. Just wondering how should we think about the full year now in terms of costs? Can we -- can you analyze the first half? So just the outlook around costs? Second question is on fee margin and Adviser fell at 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? And lastly, Investment performance was a bit mixed. Equity is still pretty lackluster. Has that been deterrent in terms of new flows going into equities? And I know it's work in progress in terms of improving. Jason, what are your thoughts around performance and where do you think you can get?

I'll have a go 1 and 3. Siobhan, you can have a go at 2, if that's all right. Siobhan has been with us 10 whole days, but it's already absolutely up to speed. So on the cost side, look, we've hit GBP 137 million run rate. So that's not all through into the P&L. just to be clear. So that's -- of the GBP 150 million transformation target, that's a gross target. So it doesn't all flow through. And 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. So we've got momentum into the second half from the actions that we've already taken. So I think the second half broadly is going to be a repeat of the first in terms of trends. And you can see that in terms of profitability and trends through that with more cost out supporting the level of profitability. And we've got confidence in that. We are investing to grow though in our select areas. We're not pulling cost out everywhere. We're making a decision to be more efficient. We're reducing inefficiencies, taking out waste, being selective. But in ii, in Adviser and in our growth areas in Investments, we are supporting and growing the business. But I would expect a similar trend in 2025 second half to the first. But I would then see cost efficiency being absolutely critical to our success in '26 and beyond. There's going to be no slacking off of our focus on being an efficient platform. Why? That's what I see, and 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 as we look further forward, and we continue to invest in the business by being absolutely focused on efficiency. I'll do the performance one. So look, and 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. And Peter Branner, the CIO, has implemented numerous improvement initiatives 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 sort of parts of Asia. But we've got really good performance in our GEM income product, in our smaller companies product, in our U.S. -- both U.K. and Europe, in some of our thematic products. So equities are still a broad search 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're continuing to be faithful to our investment style and deliver to the client what they bought.

And just to touch on the revenue margin. So 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. And 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. So that gives you an indication of the impact on the revenue margin.

Your next question comes from Mandeep Jagpal from RBC.

Mandeep Jagpal, RBC. Three questions from me as well, please. First one is you stated today that you expect the business mix 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 that they have with another asset manager, which will attract a large portion of the higher-margin DC flows. And then on I&RW, kind of follow-up question, gross flows are particularly strong. Are you able to provide any details on which client channels these flows are coming from, sort of from retail versus institutional and regionally? Trying to get a sense here of where the improvement in flow performance is coming from. And then just kind of a modeling question, the GBP 35 million benefit to capital generation from the DB scheme, how should we model this in terms of 1H, 2H split in future years? And should we only expect half the amount in FY '25?

Okay. Thanks, Mandeep. Phoenix is continuing to implement its own strategy. We've seen an evolution of that over time. Big picture from equities, they've largely moved from active to passive. I think we'll see that probably continue. So that's part of the evolution. They've also got no appetite at all to run policyholder assets themselves. So 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. So that will be a feature as we look further forward. I've not got any specifics to guide you to, but I think we'll see directionally more on the policyholder side, slightly less on the shareholder side, just talking to you like an insurance guy, which, of course, I used to be. But it's not -- I don't think it's much to do with that other thing that you mentioned that I won't repeat. On the I&RW flows, the large wins in fixed income were in Europe from big institutions. So they were major institutional wins. And in the U.K., the quants 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 U.S. in equities, and we had some nice wins out of Asia, but they were more in the hundreds rather than the billion to give you a sense. I'm not going to name check everything, but the big flows were those European and U.K. institutional flows.

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

Your next question comes from Nicholas Herman from Citi.

Three questions from my side, please. So on Adviser, So on Advisor, I noted on the comment about this recent FY '26 target, clearly the momentum is very strong. Could you just talk about the competitive dynamics in that market and kind of where -- I guess where -- I mean, obviously, there's been a lot of self-help in your part, but has that kind of -- has there been any evolution in that competitive dynamics in that market? Is it also -- is it still as strong as it been in the past and therefore you are -- yes or you seem to see it also getting progressively easier as you've implemented that self-help? That's the first one. Second one, on costs, what -- can you remind us what areas you and Richard are working on to develop a 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? And then the final question I had is in interactive investor cash balances, what I can see around 8%. Beyond rates, can you remind us what are the same factors that will, first of all, I guess -- sorry on the margin, excuse me, drive the variance in your cash margin guidance, but then on the cash balances side, how are you thinking about the outlook on that 8% of AUA evolving today given tailwinds from growing SIPP penetration versus potentially evolving customer client allocations?

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 have got different strategies, whether they are offering more integrated propositions, which some do without getting into names, you can work out that is in a -- we pride ourselves on our independence, and we partner with IFAs as an independent partner, and that's our differentiation. We've got an NPS product that we will be seeking to expand through into that marketplace. We've undershot, I think, where we ought to be in that. So that's an opportunity for us to compete. But the sources of competition are clearly service, number one. And we've really got our act together in that regard. We invested in the platform. We've got a modern platform, and we've worked really hard the last 12 months to improve that, and we're going to go further. We want 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 don't mind saying that. So to get out there and win, you've got to be really good, and we're absolutely up for that. On the cost side, it's a little bit everywhere. What we've been -- with Richard's new leadership and new vigor to the program, we had a plan, the GBP 150 million plan, which we are pretty much through them, we haven't finished. And we always said it was at least GBP 150 million. The -- we've not been the sharp as we could have been with third parties, and that applies to some of our big outsourced providers to some IT arrangements to some market data, and that's where some of the big bills are. Head count is down a little bit in line with plans. But the big source of this is absolutely not head count. And we've been taking it out of operations, IT. And last year, we largely took out the functional cost. There might be a little bit more to do on that. And we'll continue to sort of ask ourselves 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. So the -- within transformation, it's not just about cost out, it is about better. We think we can do both, particularly on the automation and use of data side.

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

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 across the piece. I think you're right, SIPPs are slightly higher tilted to cash, probably more like 10% than just over 8% for the overall book. So I mean, obviously, SIPPs are growing at sort of 3x the overall book. So that will flow through slightly, but it's not going to be a huge factor. So 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. And 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. We're probably in the sort of 2.1% to 2.2% area for the second half. We would expect -- I mean, base rates could jump around a bit, but that would be our expectation as we sit here today.