Abrdn plc Half year results 2021 - 10 August 2021 - Aberdeen Standard Investments
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abrdn plc Half year results 2021 10 August 2021
Stephen Bird Stephanie Bruce
Chief Executive Officer Chief Financial Officer
Welcome
Agenda
Creating momentum Stephen Bird
for our growth
ambitions
Half year 2021 Stephanie Bruce
Financial results
Chris Demetriou René Buehlmann Noel Butwell
CEO, UK, EMEA and Americas CEO, Asia Pacific CEO, Adviser & Interim CEO,
Personal
Investing to drive Stephen Bird
sustainable growth
and returns
Q&A session Stephen Bird
Stephanie Bruce
René Buehlmann
Noel Butwell
Chris Demetriou
1 | abrdn plc
Creating momentum
for our growth ambitions Arresting revenue decline and
improving operating leverage
H1 2021 Movement
Fee based revenue £755m +7%
Adjusted operating profit £160m +52%
15% 21% c30%
profit profit profit
margin margin margin
Cost/income ratio 6ppts
79%
better
2017 FY H1 2023
2020 2021
Adjusted diluted EPS 7.0p +3.7p
Fee based revenue
Adjusted operating expenses
2 | abrdn plc
All movements shown in this presentation are compared to H1 2020 unless otherwise stated Illustrative only – Not to scale
Net flows
Creating Institutional and Wholesale1
Investments
Insurance2
momentum £0bn £5bn
by vector £0bn
(£13bn)
(£5bn)
Institutional and Wholesale -
best half for net flows since (£25bn) (£10bn)
H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1
Investments merger1 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021
Insurance - low bulk
purchase annuity and
deal flows Adviser Personal
£4.0bn £0.6bn
Adviser
Highest net flows in DB-DC
transfers
£0.3bn
3 years
£2.0bn £0.0bn
(£0.3bn)
Personal Record net flows
£0.0bn (£0.6bn)
H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1
3 | abrdn plc 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021
1 Excluding liquidity
2 Excluding LBG tranche withdrawals
Update on
our strategic Strategic priorities
priorities
Growth in Asia Client ecosystems
Solutions Technology
UK adviser and
Private markets
consumer markets
Responsible investing
4 | abrdn plcGrowth in Growth strategy
Asia
Accelerate
regional AUM of regionally
Region represents significant growth domiciled clients
distribution of
opportunity
global products
René Buehlmann joined as CEO Asia
Pacific in March £18bn
£46bn AUM managed regionally Strengthening
Asian investment
expertise,
10% increase in AUM of regionally particularly
domiciled clients to £18bn sustainability
Aiming to significantly grow our Asian
business through our own regional
presence and distribution partnerships, Leverage
e.g. Citibank strong digital AUM managed
distribution and £46bn
regionally
platform
capabilities
5 | abrdn plcGrowth Private markets AUM1
£75bn
momentum £71bn
in private £66bn
£3.2bn
10x
increase
markets and £63bn
£58bn
£62bn £61bn
net flows on prior
year
alternatives H1 2021
£50bn
H1 2019 FY 2019 H1 2020 FY 2020 H1 2021
Private market capabilities play a key
role in our growth strategy
Enhancing and modernising our
Real £0.9bn net flows Private
capabilities to match client demand Moving from more traditional £0.7bn net flows
and focus on growth areas e.g. assets credit
assets into new growth areas
acquisition of Tritax
Private £0.8bn net flows £0.8bn net flows
Alts Includes $7bn AUM
equity Exiting non-core activities
precious metals ETFs
6 | abrdn plc
1 Includes Institutional and Wholesale AUM for real assets, private
equity, private credit and alternativesAccelerating
our market H1 2021
Client engagement hub
Integrated e-signature capabilities
leading position
in UK adviser Adviser
experience
Adviser portal
H2 2021 Reporting suite
market programme Secure messaging
Enhanced and more efficient digital drawdown journeys
No.1 for AUA and gross flows1 2022
New tax wrappers – junior suite
in UK adviser market Acquisition of Wrap products from Phoenix
Embedded stockbroking capability
8% increase in AUA2
26% increase in fee based revenue
Pursuit of primary position with our advisers
6% increase in firms in Sources of
Being the easiest business for advisers to partner with
primary position growth
Differentiating based on content and experience
7 | abrdn plc
1 Adviser platform AUA and gross flows, Fundscape Q1 21
2 Comparative as at 31 December 2020Responsible Net Zero commitments with 50% Joined Net Zero Asset Managers
behaviour, reduction by 2025 initiative
Top 2% in Dow Jones
Responsible Carbon neutral across all operations
responsible behaviour 98% of sourced electricity is renewable
Sustainability Index
13th in Hampton-Alexander Review
investing Included in Bloomberg Gender
Equality Index
Building on established leadership in
ESG of asset classes Sustainable
£34bn
100% employ integration of AUM investing
We are accelerating our sustainable ESG issues1 outcome funds
investing activity to deliver better risk-
adjusted returns for our clients
Increase in SFDR Article 8&9 SICAV funds in next
x4 12 months to c80 funds
Responsible
investing Accelerated specific ESG fund launches
Multi-Asset
Climate & Climate
Climate
Environment Transition
Opportunities
Equity Fund Bond Fund
Fund
Driving Asian opportunities – APAC Sustainability Institute
8 | abrdn plc
1We employ ESG integration for 100% of our asset classes apart from our
quantitative funds that track a market index and our indirect multi-manager
business from third party managersHalf year 2021
Financial results
Stephanie Bruce, CFO
9 | abrdn plcHalf year 2021 results
Adj. Adj.
Fee based Fee revenue Cost/income Adj. capital
operating operating
revenue yield ratio generation
expenses profit
£755m 27.6bps £595m £160m 79% £176m
1% 6ppts
+7% +0.8bps +52% +£73m
lower better
Net flows
Net flows1 AUMA2
ex. liquidity1
(£5.6bn) (£1.9bn) £532bn
(£5.7bn) +£4.9bn
H1 2020: (0.5%)
£0.1bn +72%
10 | abrdn plc
1 Net flows excluding LBG tranche withdrawals
2 Comparative as at 31 December 2020Arresting Fee based revenue
decline in
revenue £103m £819m
£815m
+7%
Improving impact of yield with £755m
£38m
continued demand for higher margin
(£62m) (£10m)
products
LBG £75m £719m £7m
(£88m) (c£35m)
£706m
Benefit from markets and £10m higher (£11m)
(£9m)
(£41m)
performance fees in H1 2021 LBG
(c£15m)
LBG
(c£7m)
Reducing impact of outflows on
revenue (Improving Impact of flows on revenue
revenue impact £20m
from flows
£0m
(£2m)
Revenue benefitting from improved
momentum in flows into higher margin (£20m)
Institutional and Wholesale (ex.
liquidity), Adviser and Personal
Minimal revenue impact from liquidity (£40m)
flows (c£1m)
(£60m)
(£80m)
H1 2019 vs H2 2019 H2 2019 vs H1 2020 H1 2020 vs H2 2020 H2 2020 vs H1 2021
1 2
Higher margin growth areas Liquidity Insurance Corporate
12 | abrdn plc
1 Includes Institutional and Wholesale (ex. liquidity), Adviser and Personal
2 Excludes impact of LBG tranche withdrawalsImproving Adjusted operating expenses
variability of
cost base 1%
lower
2% increase in staff costs reflecting
£601m
higher compensation accruals partially
£6m £595m
offset by lower staff numbers
£2m
£6m
4% reduction in non-staff costs due to Non-staff
Non-staff
£282m
savings on outsourcing, travel and (£20m) £271m
premises offset by inflation and FX Staff
Staff
impacts £319m
£324m
Resulting in 8% improvement in
annualised non-staff costs bps (of
average AUMA) H1 2020 Underlying Inflation Corporate FX H1 2021
savings actions
£382m of annualised synergies
achieved, on target for £400m 11.1 8% 10.2
bps better bps
Annualised non-staff costs as bps of average AUMA
13 | abrdn plcVector
performance
14 | abrdn plcInvestments
Fee based revenue increased 6%
reflecting favourable market conditions,
increase in performance fees and Adj.
Fee based Fee revenue Cost/income
increase in yields operating
revenue1 yield ratio
profit
Cost discipline contributed to 5ppts £613m 26.3bps 79%
improvement to cost/income ratio £126m
33% improvement in adjusted +6% +0.5bps
5ppts
better
+33%
operating profit
13% improvement in gross flows (ex.
liquidity) and together with improvement
in redemptions, net flows are £4.2bn
better than prior year
Gross flows Net flows
AUM3
ex. liquidity ex. liquidity2
Low level of bulk purchase annuity and
£29.1bn (£4.6bn) £457bn
other deal flows in Insurance
c£34bn low margin LBG AUM exiting +£3.4bn +£4.2bn Flat
in H1 2022 +13% +48%
15 | abrdn plc
1 Includes performance fees of £22m (H1 2020: £12m)
2 Net flows excluding LBG tranche withdrawals
3 Comparative as at 31 December 2020Investments
Institutional and Wholesale H1 2021
Fee based
revenue
Fee based
revenue yield
Revenue
movement
Yield
movement
Institutional and +£36m
Revenue before performance fees 8% Wholesale1
£490m 39.4bps
+8%
+0.1bp
higher reflecting growth in all asset
classes except fixed income and multi-
asset
Yield at 39.4bps is stable
Improving momentum in gross flows and
21% higher gross flows (ex. liquidity) redemptions (ex. liquidity)
(£24.0bn)
13% lower redemptions (ex. liquidity)
Creating the strongest net flows (ex. (£20.8bn)
liquidity) since merger of (£0.8bn) (£7.5bn) (£0.8bn)
£20.0bn
Net flows Net flows
(ex. liquidity) (ex. liquidity)
£16.5bn
H1 2020 H1 2021
16 | abrdn plc Gross flows (ex. liquidity) Redemptions (ex. liquidity)
1 Fee based revenue excluding performance feesInvestment 3 years FY 2020 H1 2021
performance
Investments1 66% 66% Flat reflecting change in mix
Strategies positively rated
54 by consultants Equities 74% 65%
Reflects recent recovery led by
(FY 2020: 52) emphasis on value
Morningstar 4/5 star
rated funds 125 Fixed income 81% 85% Performance remains strong
(FY 2020: 117)
Largely driven by
AUM ahead of benchmark underperformance in balanced
Multi-asset 33% 31% funds
1 year 3 years 5 years
Improved performance from
MyFolio
65% 66% 65% Improvement reflects stronger
Real assets 37% 56% UK direct real estate
performance
17 | abrdn plc
1 Total Investments also includes alternatives, quantitative and liquidityAdviser
Fee based revenue 26%, £18m,
higher driven by:
Adj.
Fee based Fee revenue Cost/income
Positive market movements operating
revenue yield ratio
Increased levels of average AUMA
profit
and continued positive net flow in £87m 25.3bps 57% £37m
both platforms
10ppts
Structural half year benefit of £12m +26% +2.2bps
better
+61%
due to new Phoenix agreement
Overall improved yield reflecting Phoenix
benefit, more than offsetting impact of
repricings
Higher revenue has delivered 10ppts Gross flows Net flows AUMA1
improvement in cost/income ratio and
61% higher adjusted operating profit
£4.6bn £2.0bn £72bn
H1 2021 net flows surpassed FY 2020 -
best period in 3 years +£1.4bn +£0.9bn +8%
+44% +82%
Record level of AUMA, representing 8%
growth on opening AUMA
18 | abrdn plc
1 Comparative as at 31 December 2020Personal
Fee based revenue 8% higher
reflecting increased customer activity
and positive markets Adj.
Fee based Fee revenue Cost/income
operating
Small profit for first time, including a revenue yield ratio
profit
one-off benefit of c£3m
£41m 55.9bps 90% £4m
x5 fold increase in net flows (H1
2020: £0.1bn), which is a record level +8%
0.2bps 21ppts +£8m
of flows lower better +>100%
Record £8.7bn AUM in ASC
6% increase in ASC client numbers
to c15,000 Gross flows Net flows AUMA1,2
£1.0bn £0.5bn £14bn
+£0.4bn +£0.4bn +8%
+67% +>100%
19 | abrdn plc
1 Includes assets that are reflected in both Aberdeen Standard Capital and
Advice businesses. This impact of £1.2bn is removed within eliminations
2 Comparative as at 31 December 2020Capital Adjusted capital generation
generation
aligned to profit £200m £159m
£176m
£150m £103m
H1 2021 Movement
Adjusted profit after tax
£123m £150m
Adjusted £100m
diluted 7.0p +3.7p Dividends received from
£79m assocs./JVs and significant
EPS listed investments
Adj. PAT
+90% £50m
Net interest credit relating to
staff pension schemes
Adjusted £46m
£34m £35m
diluted capital 8.2p +3.6p £0m
generation (£10m) (£10m) (£9m)
per share
(£50m)
H1 2020 H2 2020 H1 2021
Interim 7.3p
dividend Dividend
0.65x 1.02x 1.14x
cover
20 | abrdn plcFurther Surplus regulatory capital
strengthened +22%
capital position Sources Uses of
of capital capital
£0.7bn £0.1bn
(£0.1bn)
£2.8bn
Sale of 4.99% HDFC Life in June (£0.2bn)
£0.2bn (£0.2bn)
£2.3bn
Proceeds from disposals largely relate
to the sale of Parmenion completed on
30 June
£0.2bn investment in Tritax reflecting
potential total consideration
Majority of value of listed stakes
FY 2020 Adjusted capital HDFC Life sale Disposals Restructuring and Dividends Acquisitions H1 2021
excluded from capital position generation proceeds corp. expenses
Indicative pro forma regulatory capital
surplus post IFPR of c£1.7bn, before
any further stake sales, 42% higher Total regulatory Total regulatory
than FY 2020 pro forma view £3.9bn capital resources
£1.1bn capital requirement
21 | abrdn plcInvesting to drive
sustainable growth
and returns
Stephen Bird, CEO
22 | abrdn plcInvesting Disciplined approach to capital allocation
to drive
sustainable
Capital structure
growth and Regulatory
Shareholder distributions
Investment inorganic
Strategic acquisitions
Scale in Personal
returns Balance sheet optimisation
£3.9bn
Regulatory
Each of the three growth vectors have capital resources
a distinct investment plan
Continuing to actively explore Investment organic
Asia
inorganic opportunities
Digital distribution
Next generation real assets
Committed to our sustainable Wholesale distribution
dividend policy
Growth priority Creates returns Builds scale
23 | abrdn plcWe are
futurists Stage One Next stage
Investing for growth in each of
A strong start to our three-year strategy
the three vectors
We harness the power of time
Sharpening our investment capabilities and
52% growth in adjusted operating profits
addressing investment performance
We leverage technology to
connect
Building our digital distribution and
Arrested the decline in revenue
The curiosity of our talent improving wholesale capabilities
creates opportunity
Delivered record profit performance in our
Enabling our clients to be better Adviser business
Upgrading our adviser experience
investors
Record flows into Personal Investing in our talent
24 | abrdn plcQ&A 25 | abrdn plc
Forward-looking statements
This document may contain certain ‘forward-looking statements’ with respect to the financial the Group may not achieve its targets); exposure to third party risks including as a result of outsourcing; the
condition, performance, results, strategy, targets, objectives, plans, goals and expectations of the failure to attract or retain necessary key personnel; the policies and actions of regulatory authorities
Company and its affiliates. These forward-looking statements can be identified by the fact that they (including changes in response to the coronavirus COVID-19 and its impact on the economy); and the
do not relate only to historical or current facts. impact of changes in capital, solvency or accounting standards, and tax and other legislation and
regulations (including changes to the regulatory capital requirements that the Group is subject to or changes
Forward-looking statements are prospective in nature and are not based on historical or current facts, but in connection with the coronavirus COVID-19) in the jurisdictions in which the Company and its affiliates
rather on current expectations, assumptions and projections of management about future events, and are operate. As a result, the Group’s actual future financial condition, performance and results may differ
therefore subject to risks and uncertainties which could cause actual results to differ materially from the materially from the plans, goals, objectives and expectations set forth in the forward-looking statements.
future results expressed or implied by the forward-looking statements. For example but without limitation,
statements containing words such as ‘may’, ‘will’, ‘should’, ‘could’, ‘continue’, ‘aims’, ‘estimates’, ‘projects’, Persons receiving this document should not place reliance on forward-looking statements. Neither the
‘believes’, ‘intends’, ‘expects’, ‘hopes’, ‘plans’, ‘pursues’, ‘ensure’, ‘seeks’, ‘targets’ and ‘anticipates’, and Company nor its affiliates assume any obligation to update or correct any of the forward-looking statements
words of similar meaning (including the negative of these terms), may be forward-looking. These statements contained in this document or any other forward-looking statements it or they may make (whether as a result
are based on assumptions and assessments made by the Company in light of its experience and its of new information, future events or otherwise), except as required by law. Past performance is not an
perception of historical trends, current conditions, future developments and other factors it believes indicator of future results and the results of the Company and its affiliates in this document may not be
appropriate. indicative of, and are not an estimate, forecast or projection of, the Company’s or its affiliates’ future results.
By their nature, all forward-looking statements involve risk and uncertainty because they are based on
information available at the time they are made, including current expectations and assumptions, and relate
to future events and/or depend on circumstances which may be or are beyond the Group’s control, including
among other things: the direct and indirect impacts and implications of the coronavirus COVID-19 on the
economy, nationally and internationally, and on the Group, its operations and prospects; UK domestic and
global political, economic and business conditions (such as the UK’s exit from the EU); market related risks
such as fluctuations in interest rates and exchange rates, and the performance of financial markets
generally; the impact of inflation and deflation; the impact of competition; the timing, impact and other
uncertainties associated with future acquisitions, disposals or combinations undertaken by the Company or
its affiliates and/or within relevant industries; the value of and earnings from the Group’s strategic
investments and ongoing commercial relationships; default by counterparties; information technology or
data security breaches (including the Group being subject to cyberattacks); operational information
technology risks, including the Group’s operations being highly dependent on its information technology
systems (both internal and outsourced); natural or man-made catastrophic events (including the impact of
the coronavirus COVID-19); climate change and a transition to a low carbon economy (including the risk that
26 | abrdn plcabrdn plc is registered in Scotland (SC286832) at 1 George Street, Edinburgh, EH2 2LL www.abrdn.com © 2021 abrdn. All rights reserved. 27 | abrdn plc
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