Aberdeen Group Plc · LSE:ABDN
Aberdeen — abrdn — Investor Presentation (July 2023)
33 slides from Aberdeen's investor presentation, Jul 6, 2023
Slide 1: Spotlight on Personal
Spotlight on Personal 6 July 2023
Slide 2: abrdn strategy
abrdn strategy Stephen Bird 2 | abrdn.com
Slide 3: Agenda
Agenda Introduction Stephen Bird Personal and ii Richard Wilson ii Technology John Tumilty Stephen Bird Richard Wilson CEO, abrdn plc CEO, Personal ii Financial model Deborah Byard Close Richard Wilson Q&A All Deborah Byard John Tumilty CFO, Personal COO, interactive investor 3 | abrdn.com
Slide 4: Our strategy
Our strategy We enable our clients to be To deliver abrdn plc better investors client-led growth Three vectors addressing different client groups supported by content Investments Adviser Personal Regional and national financial advisers Institutional Wholesale Insurance Individuals Discretiona
Slide 5: Building a leading position in high-growth UK personal wealth market
Building a leading position in high-growth UK personal wealth market Acquisition of ii achieved scale in high-growth D2C investing market, accessing new customer segments ii is a unique asset as the UK’s leading subscription-based direct investing platform Transforms our Personal vector, significant
Slide 6: Compelling market dynamics
Compelling market dynamics Large and growing market with strong underlying growth drivers and high barriers to entry Large total UK market of £4.6tn1 of which £287bn1 is on D2C platforms UK Savings Market Attractive underlying demographics: Ageing population with ongoing £4.6tn1 inter-generational w
Slide 7: abrdn Personal
abrdn Personal Richard Wilson 7 | abrdn.com
Slide 8: Our ambition
Our ambition To build a leading position in the UK’s personal wealth market Ambition Making investing and financial planning accessible and personal Approach To serve customers at all life stages by harnessing our capabilities 2023 transformation interactive Legacy Personal Transformed Personal inve
Slide 9: Crowded and competitive UK market
Crowded and competitive UK market. US Banks Neo-banks Neo-brokers Banks D2C Platforms Lifecos 9 | abrdn.com
Slide 10: Who we are
Who we are. The UK’s leading subscription-based digitally enabled consumer champion in the direct investing market UK’s no.2 D2C platform1 and no.1 subscription-based platform 24% market share of UK Cash Market Trades & Active Traders2 Growth momentum underpinned by three drivers: Compelling pricing
Slide 11: What we do
What we do. Account Types General Investment Account (GIA) Stocks & Shares ISA SIPP Junior ISA Cash Savings ii’s differentiated offering Best-in-market International direct market Multi-currency FX service Which Recommended SIPP Instruments and wrappers access Award-winning ii Super 60, Ace 40 Perso
Slide 12: Subscription fee and 'bundle' pricing model
Subscription fee and ‘bundle’ pricing model. Benefits for the customer Investor Easy to understand and offers better Investor Super Investor Pension Builder Essentials value Lowest price for £30k+ portfolios Invest up to Our most popular For our lowest A simple low cost plan trading fees SIPP New en
Slide 13: Levers for growth
Levers for growth. 1 New customers 2 Product penetration 3 New services 4 abrdn opportunities 13 | abrdn.com
Slide 14: Strategic vision – Why we will win
Strategic vision – Why we will win. We provide a differentiated investment service… …that will win due to the following strategic enablers Pricing A market leading DIY investment service • Simple, transparent subscription model • Reaching broader range of customers through targeted pricing models •
Slide 15: Customer growth is organic plus M&A
Customer growth is organic plus M&A. • 2018 – 2022 CAGR in total customers = 12% • Subdued outlook in 2023 due to market conditions • Targeting mid-single digit CAGR in total customer base over next 5 years Organic & M&A customer evolution Total customers 2022 402k 23% 2021 403k Total 19% customers
Slide 16: AUA & net flows
AUA & net flows. 2019 2020 2021 2022 Net flows Net flows Net flows Net flows £1.8bn £4.2bn £5.8bn £3.6bn 10% 13% 15% 6% of opening opening opening opening AUA AUA AUA AUA 16 | abrdn.com
Slide 17: KPIs & market shares
KPIs & market shares. Average AUA per customer Total AUA = 19% £140k1 Highest in the market. 2.5x average2 0.3ppts YoY increase Total UK cash market trades = 24% Higher trading activity per customer 1.4ppts YoY increase 2x Compared with leading listed peers Mobile trading = 27% 8.2ppts YoY increase
Slide 18: Our technology and data capabilities
Our technology and data capabilities. John Tumilty 18 | abrdn.com
Slide 19: Fully invested and scalable digital operating platform
Fully invested and scalable digital operating platform. Digital State-of-the-art digital platform Front End Differentiating where it counts Experience Adaptable and easy-to-use APIs Processing Middle Office FNZ Platform Minimal hardware footprint or internal dependencies Platform Fully scalable and
Slide 20: Clear pipeline for new services
Clear pipeline for new services. New Website “ii Community” Mobile Features Portfolio Partner 2023 2024 In development – further initiatives to drop in 2023 / 2024 Financial Investor Essentials Planning Leads Research Hub 20 | abrdn.com
Slide 21: Our scalable, efficient financial model
Our scalable, efficient financial model. Deborah Byard 21 | abrdn.com
Slide 22: Simple, resilient and scalable financial model
Simple, resilient and scalable financial model. Customers AUA High quality, diversified and predictable revenue base Customers x average fee Trades x commission FX transactions x average margin Cash AUA x net yields Subscription fees Trading revenue FX revenue Treasury income Administered by Efficie
Slide 23: Diversified revenue model
Diversified revenue model. High quality, diversified and predictable revenue base. Increasing coverage of costs by subscription fees. Total revenue1 (£m) & subscription fee coverage (%) of total costs Revenue CAGR 2019-2022 Subscription fees Trading transactions2 Treasury income 68% 70 200 176 27% 1
Slide 24: Resilient revenue model
Resilient revenue model. Ebb & flow of trading and treasury revenues often offset in part. Average revenue per customer steadily growing with quality of book. Revenue per customer (RPC) & daily trades per customer Base Rate: 0.75% 0.25% then 0.10% 3.5% at end Dec 22 700 0.100 Treasury income 600 0.0
Slide 25: Subscription fees revenue – drivers and dynamics
Subscription fees revenue – drivers and dynamics. Tailwinds Subscriptions fees revenue1 (£m) vs customers (k) • Acquisitions have built scale – now pivot to organic 403 402 with investment in brand / advertising 272 277 56 Subscription fees revenue • Strong organic customer growth 48 Total customers
Slide 26: Trading transactions revenue – drivers and dynamics
Trading transactions revenue – drivers and dynamics. Tailwinds Trading transactions revenue1 (£m) vs daily average revenue trades (DARTs k) • Acquisitions have built scale – now pivot to organic 21.9 with investment in brand 19.0 71 17.3 Trading transaction revenue • Strong growth in organic custome
Slide 27: Treasury income – drivers and dynamics
Treasury income – drivers and dynamics. 2019 2020 2021 2022 Treasury income (£m)1 28 22 9 71 Client cash (£bn) (y/e) 3.3 3.8 5.2 6.0 • Recent cash levels have been 9-11% of total Total AUA (£bn) (y/e) 32.0 38.3 58.6 54.0 AUA. Prudent to expect 9-10% going forward Cash % of AUA 10 10 9 11 • Base rate
Slide 28: Highly efficient operating platform driving margin expansion
Highly efficient operating platform driving margin expansion. Significant operating leverage given largely fixed cost base and new customers onboarded at very low and decreasing marginal cost Costs / Average AUA (bps) ii’s average contribution per customer is expected to increase despite reduced tra
Slide 29: Structure and evolution of cost base
Structure and evolution of cost base. Total FTE (y/e) High operating leverage from largely fixed cost base. 472 523 656 615 Scalable platform with continuous investment in new Costs1 technology – Salesforce, new website – no tech debt 90 83 450 82 80 400 Strong cost discipline – efficient cost contr
Slide 30: Transformed Personal vector positioned for growth
Transformed Personal vector positioned for growth Transformation of Personal vector Financial Planning restructure ii’s scalable and efficient financial model Combined to deliver growth with CIR <60% 30 | abrdn plc
Slide 31: abrdn Personal
abrdn Personal Richard Wilson 31 | abrdn.com
Slide 32: Accelerating growth by being part of abrdn
Accelerating growth by being part of abrdn Offering abrdn products and services to a wider client base Leveraging data for product engineering and innovation Integrating personal wealth capability including Financial Planning Leveraging full abrdn group scale and capabilities 32 | abrdn.com
Slide 33: Forward-looking statements
Forward-looking statements This document may contain certain ‘forward-looking statements’ with respect to the financial COVID-19 (coronavirus) outbreak; climate change and a transition to a low carbon economy condition, performance, results, strategies, targets, objectives, plans, goals and expectat