Investing.com -- Shares of AJ Bell rose on Thursday following the company’s FY24 earnings release, which highlighted robust financial growth despite a one-off redress provision.
The company’s 29% year-over-year increase in pre-tax profit, which reached £113 million, was in line with consensus expectations.
However, when adjusted for a £6.2 million exceptional charge related to customer redress, underlying PBT came in 6% above consensus, offering a more optimistic view of the company's performance.
The company’s strong cash generation, supported by high interest income and custody fees, also paved the way for a £30 million share buyback program, which will return approximately 7.2p per share to shareholders.
Revenues for FY24 amounted to £269.4 million, a 23% increase compared to the previous year and 3% ahead of consensus.
This beat was driven mainly by higher-than-expected ad valorem revenues, as well as strong net interest income and custody fees. AJ Bell’s ability to maintain solid cash balances was a key factor in sustaining these revenue streams.
On the cost side, administrative expenses rose 23% year-over-year to £162.2 million, 6% higher than expected, although underlying expenses grew 19%, slightly above consensus estimates.
In terms of capital returns, the company declared a final dividend of 12.5p per share, 1% below consensus but still a positive signal to shareholders.
The £30 million buyback program was another highlight, representing a notable 7.2p return per share. This buyback, expected to be completed by the end of FY25, will bring the total capital return per share to 19.7p.
For FY25, AJ Bell has guided for revenue margins of 44bps on its direct-to-consumer (D2C) platform and 23bps on the advised platform, both above consensus estimates. The company also expects distribution costs to rise by around 12%, technology costs by 15%, and operational costs by 13%.
Analysts estimate that these factors will result in a PBT of about £123 million, 4% ahead of consensus. When factoring in the buyback, this translates to a forecasted FY25 earnings per share that is 5% above current consensus.