Aberdeen Group Plc · LSE:ABDN
Aberdeen — FY 2020 Earnings Presentation
46 slides from Aberdeen's earnings presentation, Mar 9, 2021
Slide 1: Standard Life Aberdeen plc FY 2020 Results Presentation
Standard Life Aberdeen plc FY 2020 Results Presentation 9 March 2021
Slide 2: Welcome
Welcome 09:45 Strategy for growth – Stephen Bird FY 2020 Results and outlook – Stephanie Bruce Delivering returns for shareholders – Stephen Bird Comfort break (5min) Q&A session Stephen Bird Stephanie Bruce Chief Executive Officer Chief Financial Officer Joining for Q&A session 11:45 End latest Noe
Slide 3: Agenda - Pathway to growth
Agenda - Pathway to growth Initial assessment Creating momentum through action Strategic priorities for growth Structuring for growth Investments Adviser Personal Growth ambitions Standard Life Aberdeen plc 3
Slide 4: Initial assessment
Initial assessment Opportunities Strengths Opportunities Breadth of global capabilities Client led growth across all vectors Improving investment performance Simplifying the business Strong balance sheet Clarifying the brand Opportunities Weaknesses ! Threats Historic reliance on ‘hero’ funds Margin
Slide 5: Creating momentum through action
Creating momentum through action Specific actions taken to set the path for growth Improving investment performance 66% over three years1 Strong balance sheet Sale of Indian stakes Transformation and cost focus Synergy targets achieved in 2020 Focus on clients Listening and responding to our clients
Slide 6: Strategic priorities and execution enablers
Strategic priorities and execution enablers Clarified strategic priorities, underpinned by a simplified model Strategic priorities Growth in Asia Client ecosystems Solutions Technology Private markets UK adviser and consumer markets Execution enablers Finish Business Brand Operating Stewardship tran
Slide 7: Our three vectors
Our three vectors Investments Adviser Personal • Pension funds • Companies • Regional and national financial • Individual clients • Governments • Charities advisers • Intermediaries • Banks • Individuals • Discretionary fund managers • Charities and trustees • Insurers • IFAs/DFMs £456.9bn £67.0bn £
Slide 8: Client led growth - Investments
Client led growth - Investments Prioritising the growth opportunities Growth in Asia Private markets • Reconfigure footprint for growth markets • Enhancing our capabilities in Infrastructure, Private Credit and Direct Private Equity • Focus on two-way flow of investor capital into and out of Asia •
Slide 9: Client led growth - Investments
Client led growth - Investments Prioritising the growth opportunities Solutions Responsible investing • Building on our existing investment, technology and • Target sustainability outcomes to improve our client ecosystem for bespoke and ‘whole of portfolio clients’ long term returns solutions’ • Com
Slide 10: Client led growth - Investments
Client led growth - Investments Prioritising the growth opportunities ETFs Technology and data • Expanding our existing ETF capabilities outside of • Invest in agile technology, advanced data analytics the US and next generation computing to enhance outcomes and efficiencies • Combining our active a
Slide 11: Client led growth - Adviser
Client led growth - Adviser Positive UK market dynamics Market trends Advice business • Over next 5-10 years number of advice firms 1 could reduce by up to 50%2 consolidation UK Savings Market1 £3.7tn • Longevity 2 The 100 Year Life • £327bn will transfer via inheritance over next Adviser Market² £1
Slide 12: Client led growth - Adviser
Client led growth - Adviser Powering growth through technology, market leadership and consolidation In 2020 we launched our Platform Experience Programme to deliver our Adviser strategy Redesigning Operational Strategic Simplified Compete on adviser and separation partnership operating content and c
Slide 13: Client led growth - Personal
Client led growth - Personal A significant market opportunity emerging UK Household # UK Total Asset Pool Wealth Households (avg. investible assets) Market trends >£1m 1m £1.8tn (£1.8m) • Retail savings growing from 31% to 36% From Institutions to of UK assets by 20231 1 Individuals £500k-£1m 1.5m £
Slide 14: Client led growth - Personal
Client led growth - Personal Bringing together established businesses to serve the UK savings and wealth market Mass Affluent Ultra High-Net-Worth Clients Distribution Private Client Execution Only Guidance Financial Planning Approach Management Savings Platform (Pensions, ISAs, general investment a
Slide 15: Growth ambitions
Growth ambitions A multi-year growth journey 2017-2020 2020-2023E • Negative operating leverage • Improving operating leverage • 3 year average revenue CAGR • Arresting decline in near term, (12%) inflecting to a high single digit 3 year revenue CAGR over the 15% period to 2023 profit • 3 year avera
Slide 16: FY 2020 Results and outlook
FY 2020 Results and outlook Stephanie Bruce, CFO
Slide 17: Introducing our new segmentation by vector
Introducing our new segmentation by vector Current New financial segmentation Asset management, platforms and Corporate/ wealth Investments Adviser Personal Strategic Institutional Wrap ASC Parmenion1 Insurance associates and joint Wholesale Elevate 1825 Corporate centre ventures Insurance Threesixt
Slide 18: Our clients
Clients across our vectors Investments Adviser Personal • Pension funds • Companies • Regional and national financial • Individual clients • Governments • Charities advisers • Intermediaries • Banks • Individuals • Discretionary fund managers • Charities and trustees • Insurers • IFAs/DFMs • Institu
Slide 19: FY 2020 Results summary
FY 2020 Results summary 2019 2020 Change Investment performance – 3 years1 60% 66% 6pps Gross inflows £86.2bn £74.3bn (14%) Net flows (excl. LBG)2 (£17.4bn) (£3.1bn) 82% AUMA £544.6bn £534.6bn (2%) Fee based revenue £1,634m £1,425m (13%) Adjusted operating expenses £1,333m £1,206m (10%) Adjusted ope
Slide 20: Fee based revenue
Fee based revenue (£209m) (13%) £1,800m £1,634m 2019 (c£148m) 2020 (c£34m) £89m £1,425m (£182m) (£77m) (£30m) (£9m) £30m performance fees (2019: £37m) £1,000m 2019 Net flows LBG tranche Revenue Other (incl. Market 2020 impact (excl. withdrawal yield impact perf fees)1 impact LBG) impact Improving tr
Slide 21: Profit before tax
Profit before tax £1,000m Profit on disposals2 £1.9bn Impairment and (£1.3bn) Adjusted diluted amortisation (£97m) £351m £838m earnings per share (17%) Other (£0.2bn) £584m 18.1p (2019: 19.3p) £127m £1m £487m (£16m) Diluted (£209m) earnings per share 37.9p £0m (2019: 8.8p) 2019 Fee based Adjusted Ca
Slide 22: Net flows (excl. LBG) by vector
Net flows (excl. LBG) by vector Investments Adviser Personal Other1 Institutional Insurance and Wholesale (excl. LBG) £5bn £2.3bn £1.9bn £1.6bn £1.6bn £0bn £0.3bn £0.1bn £0.0bn 2019 2020 YoY Gross inflows £86.2bn £74.3bn (14%) (£3.4bn) Redemptions (£103.6bn) (£77.4bn) 25% (excl. LBG) (£6.9bn) Net fl
Slide 23: Revenue yield
Revenue yield Group Institutional and Wholesale Equities 65.7 65.1 • Personal: (0.7bps) due to lower average UK markets during 2020 Personal 59.2 58.5 • Equities broadly flat • Institutional and Wholesale: (4.0bps) Real estate from outflows in higher margin • Private markets and Equity/Multi-asset a
Slide 24: Investments
Investments Performance £125bn 2019 2020 Change £77.8bn £67.4bn Fee based revenue1 £1,344m £1,146m (15%) Gross inflows AUM £472.5bn £456.9bn (3%) £0bn Redemptions (excl. Net flows (excl. LBG)2 (£21.4bn) (£6.6bn) 69% LBG withdrawals) (£6.6bn) Net flows (excl. LBG 2019 AUM LBG tranche Net flows Market
Slide 25: Investments
Investments Net flows (excl. LBG) 2019 2020 Change Momentum across asset classes: Equities (£14.2bn) (£6.7bn) 53% • Largest contribution to improvement driven by Multi- asset, notably Absolute Return (£9.8bn improvement YoY) Fixed income (£2.8bn) (£1.4bn) 50% • Improvement in Equities driven by Glob
Slide 26: Investments
Investments Investment performance Investments AUM ahead of benchmark1 80% 1 year 3 years 5 years 71% 66% 68% 74% (2019: 74%) (2019: 60%) (2019: 67%) 71% 67% 68% 66% • Equities 73%, 74% and 62% ahead of benchmark over 1, 3 and 5 62% 60% years (2019: 59%, 31%, 31%) • Ongoing strength in European, Sma
Slide 27: Adviser
Adviser Performance 2019 2020 Change Gross inflows £2.2bn Fee based revenue £150m £137m (9%) AUMA £62.6bn £67.0bn 7% Net flows £2.3bn £1.9bn (17%) £0bn Market and other 2019 AUMA Net flows movements 2020 AUMA Q1 Q2 Q3 Q4 2019 2020 £62.6bn £1.9bn £2.5bn £67.0bn • Reduction in revenue reflects impact
Slide 28: Personal
Personal Performance 2019 2020 Change ASC Fee based revenue £70m £80m 14% £10bn £7.1bn £7.8bn £6.9bn AUMA £12.8bn £13.3bn 4% £5.7bn Net flows £0.1bn - NA £0bn Market and other 2019 AUMA Net flows movements 2020 AUMA 2017 2018 2019 2020 • Highest ever AUMA of £7.8bn £12.8bn - £0.5bn £13.3bn • Key dev
Slide 29: Continued focus on efficiency and costs
Continued focus on efficiency and costs (10%) £1,600m • £351m of annualised synergies achieved, on track to deliver additional c£50m in 2021 £1,333m £22m £25m £9m £4m £1,206m (£90m) (£24m) • £287m of cumulative benefit to P&L; £53m in 2020 (£19m) (£8m) (£8m) (£25m) (£13m) £617m • Reduction in staff
Slide 30: Continued improvement in capital strength
Continued improvement in capital strength Sources of capital Uses of capital Adjusted capital generation £3.0bn £0.3bn £m £0.9bn Adjusted profit before tax 487 Surplus regulatory capital (£0.3bn) £0.3bn £2.3bn Tax on adjusted profit (38) (£0.4bn) Share of associates’ and JVs’ tax expense (38) £1.7bn
Slide 31: Financial outlook - revenue evolution
Financial outlook - revenue evolution Arresting decline in revenue and focusing on growth • As business transitions to growth through generation of 27bps positive flows, expect to arrest decline in near term • Inflecting to a high single digit three year revenue CAGR Invest- ments over the period to
Slide 32: Financial outlook – evolving efficiently
Financial outlook – evolving efficiently Reducing our cost/income ratio – targeting to exit 2023 at c70% • Reduction in costs in near term as transformation completes Non- Inflation Invest- Growth- CIR target • Reduction in FTE in 2021-2022 53% CIR FTE staff & & Inflation ment in related c60% c70% •
Slide 33: Evolution of regulatory capital surplus
Evolution of regulatory capital surplus Expected impact of IFPR (c£1bn) • Intention to further strengthen capital position £2.3bn by monetising remaining stake in HDFC Life • Adjusted capital generation • Adjusted capital generation Potential HDFC • Successful execution of strategic plan would • • P
Slide 34: Delivering returns for shareholders
Delivering returns for shareholders Stephen Bird, CEO
Slide 35: Disciplined approach to capital allocation
Disciplined approach to capital allocation Focus on building returns for shareholders Shareholder returns Capital resources Focus on creating returns for Capital structure £3.4bn regulatory capital shareholders resources •Shareholder distributions Majority of total £3.7bn1 value of •Debt/equity list
Slide 36: Our goal is to pursue efficient and sustainable client led growth
Our goal is to pursue efficient and sustainable client led growth Undervalued set of capabilities, Capital resources Right business great history and strong Clear growth and talent and trusted Generate value balance sheet to opportunities to execute legacy deployed for shareholders invest in the and
Slide 37: Enablers
Client led growth Our strategic priority drives what we do for our clients across all vectors We are futurists The curiosity of our talent We harness the power of time We leverage technology to connect creates opportunity enabling our clients to be better investors Investments Adviser Personal Techn
Slide 38: Appendix
, - | % Standard Life’ Aberdeen
Slide 39: Changes to segmental reporting
Changes to segmental reporting Effective from Half year 2021 Corporate/ Structure of segments: FY 2020 Investments Adviser Personal Strategic Total £m £m £m £m £m • Investments - Institutional, Wholesale, Insurance • Adviser - Wrap, Elevate Fee based revenue 1,176 137 80 32 1,425 • Personal - 1825,
Slide 40: Fee revenue yield
Fee revenue yield1 Average AUMA Fee based revenue Fee revenue yield 2019 2020 2019 2020 2019 2020 £bn £bn £m £m bps bps Investments Institutional and Wholesale2 239.0 235.1 1,027 922 42.8 38.8 Insurance 258.5 204.7 317 224 12.2 10.9 Adviser 59.3 61.5 150 137 25.3 22.3 Personal2 10.6 12.6 70 80 59.2
Slide 41: Assets under management and administration
Assets under management and administration (2%) £650bn £74.3bn £544.6bn £19.0bn £534.6bn LBG: (£25.9bn) (£103.3bn) £450bn 2019 Gross flows Redemptions Market 2020 and other movements Standard Life Aberdeen plc 41
Slide 42: Analysis of AUMA
Analysis of AUMA1 Market and Opening AUMA other Corporate Closing AUMA at 1 Jan 2020 Gross inflows Redemptions Net flows movements actions at 31 Dec 2020 2019 2020 2019 2020 2019 2020 2019 2020 20193 2020 20194 2020 2019 2020 £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn Investments Instit
Slide 43: Total AUM by asset class
Total AUM by asset class1 31 December 2019 31 December 2020 Institutional Institutional and and Wholesale Insurance Personal2 Total Wholesale Insurance Personal2 Total £bn £bn £bn £bn £bn £bn £bn £bn Equities 69.0 50.3 - 119.3 69.2 48.8 - 118.0 Fixed income 46.4 88.5 - 134.9 47.7 69.0 - 116.7 Multi-
Slide 44: Institutional and Wholesale AUM
Institutional and Wholesale AUM1 Opening AUM Gross Market and Closing AUM at1 Jan 2020 inflows Redemptions Net flows other movements at 31 Dec 2020 12 months ended 31 December 2020 £bn £bn £bn £bn £bn £bn Developed markets equities 14.7 3.6 (3.8) (0.2) 0.2 14.7 Emerging markets equities 21.6 1.6 (6.
Slide 45: Forward-looking statements
Forward-looking statements This document may contain certain ‘forward-looking statements’ with respect to the financial condition, performance, results, strategy, targets, objectives, plans, goals and expectations of the Company and its affiliates. These forward-looking statements can be identified
Slide 46: Standard Life Aberdeen plc is registered in Scotland (SC286832) at 1 George Street, Edinburgh,
Standard Life Aberdeen plc is registered in Scotland (SC286832) at 1 George Street, Edinburgh, EH2 2LL www.standardlifeaberdeen.com © 2021 Standard Life Aberdeen. All rights reserved.