Aberdeen Group Plc · LSE:ABDN
Aberdeen — FY2023 Earnings Presentation
38 slides from Aberdeen's earnings presentation, Feb 27, 2024
Slide 1: abrdn plc Full year results 2023
abrdn plc Full year results 2023 27 February 2024
Slide 2: Building a modern investment company
Building a modern investment company Stephen Bird 2 | abrdn plc
Slide 3: Welcome
Welcome Agenda: • Welcome and overview – Stephen Bird • Financial results – Jason Windsor • Strategic overview – Stephen Bird • Q&A session – Stephen Bird & Jason Windsor 3 | abrdn plc
Slide 4: Building a modern investment company
Building a modern investment company Scaling up our leading UK savings Refocusing Investments to and wealth businesses capitalise on areas of strength Focusing on client-led growth, Taking action to improve leveraging data and technology efficiency and profitability Creating a sustainable and more p
Slide 5: Our corporate strategy in action
Our corporate strategy in action Operational delivery Capital reallocation Reset our relationship with Phoenix Group 2020 Tritax 2021 2021 Parmenion 2022 Fund rationalisation programme 2022 interactive investor Monetised a 4% holding in Phoenix 2023 Set £75m cost target Macquarie Delaware funds Sign
Slide 6: Our diversified business creates resilience
Our diversified business creates resilience Growing ii and Adviser contribution offsets weakness in Investments as it restructures Movement in adjusted operating profit Adjusted operating profit £263m £42m £249m £(8)m £50m £32m £(80)m £114m CIR CIR CIR CIR CIR £249m1 82% 94% 47% 60% 82% £118m 2 Inve
Slide 7: Full year 2023 Financial results
Full year 2023 Financial results Jason Windsor 7 | abrdn plc
Slide 8: Action to build and grow profitability
Action to build and grow profitability Revenue impacted by volatility and allocation away from emerging markets into Net Adjusted Adjusted IFRS profit cash/liquidity with higher rates operating operating operating for the year revenue expenses profit £12m Delivered £102m cost reduction £1,398m £1,14
Slide 9: Group AUMA and flows
Group AUMA and flows Movement in group AUMA £501.8bn Net outflows driven by lower £500.0bn £19.4bn £494.9bn gross inflows reflective of risk off environment £(6.9)bn £(13.9)bn £(3.7)bn Redemptions stable (ex liquidity and LBG2) 1 Positive markets driven by Insurance partners, Adviser and ii 1 2022 N
Slide 10: Revenue decline in Investments, offset by a full year of ii
Revenue decline in Investments, offset by a full year of ii Revenue margin 2023 2022 Change Movement in group net operating revenue by segment bps bps bps Investments 23.5 25.4 (1.9) £1,456m £116m £1,398m £31m Adviser 30.6 26.1 4.5 £(65)m £(59)m £(51)m £(30)m Personal Wealth2 58.8 59.2 (0.4) Net ope
Slide 11: Adjusted operating expenses
Adjusted operating expenses Movement in adjusted operating expenses in 2023 £1,193m £56m £1,149m £(37)m £(50)m Reduction driven by: £(13)m Benefit of 13% lower FTEs (excluding ii) £930m Investments cost reduction £102m £828m Cost efficiencies across most categories of spend Reduced IT and third part
Slide 12: New transformation programme
New transformation programme To deliver annualised cost reduction of at least £150m by the end of 2025 Supplier & technology Removing management layers Simplifying support functions efficiency Increasing spans of control Effective and greater Streamlining back-office Moving to a more agile and enhan
Slide 13: Achieving sustainable cost efficiencies
Achieving sustainable cost efficiencies £150m annualised cost reduction £1,149m Expect net £60m lower for the Group in 2024 Plan would reduce Investments adjusted Sustainable cost savings operating expenses by c24% compared to 2022 Implementation costs of around £150m recognised over 2024-2025 2023
Slide 14: Investments
Investments Net Adjusted Net Lower revenue and profit stemming operating from client allocation and higher rates operating operating revenue profit revenue £878m £50m margin 23.5bps (17%) (62%) (1.9bps) Delivered £102m cost reduction, exceeding £75m target Gross Lower gross inflows reflect the Net f
Slide 15: interactive investor
interactive investor (Renamed from Personal; includes interactive investor and abrdn Personal wealth) Net Adjusted Average operating operating cash ii continues to outperform our revenue profit margin expectations despite subdued levels of investor activity £287m £114m 236bps 2022 2022 2022: pro for
Slide 16: Adviser
Possibly move Adviser forward in deck Net Adjusted Net operating operating operating Strong earnings performance with revenue profit revenue profit up 37% compared to 2022 £224m £118m margin 30.6bps 21% 37% 4.5bps Revenue growth reflects revised distribution agreement with Phoenix and increase in tr
Slide 17: Financial management discipline and lowering restructuring
Financial management discipline and lowering restructuring 2023 2022 Change Adjusted operating profit £249m £263m (5)% Adjusted net financing costs and investment return £81m £(10)m n/a Adjusted profit before tax £330m £253m 30% Adjusted diluted EPS 13.9p 10.5p 32% Adjusted capital generation £299m
Slide 18: Approach to capital generation and allocation
Approach to capital generation and allocation Adjusted capital generation Non-core disposal proceeds Strong balance sheet Annual dividend 2024 & 2025 Supporting bolt-on of 14.6p transformation costs acquisitions Medium term dividend coverage target remains 1.5x adjusted capital generation 18 | abrdn
Slide 19: Strong balance sheet
Strong balance sheet Assets Capital Cash and £1.8bn CET1 resources £1,466m liquid resources Seed capital and co-investment £0.4bn CET1 coverage 139% (CET1 resources/Total regulatory capital requirement) Other assets AT1 and Tier 2 debt £471m (£746m of qualifying debt before T2 restriction) Phoenix l
Slide 20: Financial outlook
Financial outlook Diversity of group Higher for longer interest rate environment revenue Structural and cyclical headwinds in active asset management Long-term structural growth in UK savings Action to build and and wealth benefiting ii and Adviser grow profitability Restoring Investments to an acce
Slide 21: Strategic overview
Strategic overview Stephen Bird 21 | abrdn plc
Slide 22: Building a modern investment company
Building a modern investment company We will continue to provide world class solutions and service to clients across the investment management client base, in line with our competitive strengths. Adviser Leading UK adviser platform World class fund content and MPS to wealth customers Expert Full spe
Slide 23: Building a modern investment company
Building a modern investment company We seek to provide world class solutions and service to clients across the investment management client base Market opportunity Competitive advantage Measuring our progress in 2023 • Refocused business aligned to • AUM (Public Markets £290bn 1, • Disruption to ac
Slide 24: Investments – Structural shifts and cyclicality in EM/Asia
Investments – Structural shifts and cyclicality in EM/Asia Market Net flows abrdn Gross inflows • Challenging risk off environment with 57% of our £41.7bn2 Equities book exposed to EM / Asia Gross flow in £(7.2)bn cross-border industry • Quality style bias underperforming 23% below 3 year average1 •
Slide 25: Investments – Ready to capitalise on areas of strength
Investments – Ready to capitalise on areas of strength Public Markets 3 year Our capabilities AUM Inv Perf Strengths & opportunities (£bn)1 (%) 1 Strong investment performance over 1, 3 and 5 years Global Fixed Income 122 81 Specialist in global credit and emerging markets, sustainability and (incl.
Slide 26: Investments – Ready to capitalise on areas of strength
Investments – Ready to capitalise on areas of strength Alternatives 3 year AUM Inv Perf Strengths & opportunities Our capabilities 1 1 (£bn) (%) UK Real Estate Border to Coast mandate win Real Estate 56 Compelling opportunities for scale players 43 Conviction in logistics sector with Tritax managing
Slide 27: Investments – Streamlining the business
Investments – Streamlining the business Non-core exits Fund rationalisation Opportunities for growth US and European headquartered private equity Total funds reduced Strong capabilities and heritage in fixed income businesses from c.700 to c.5801 Australian operations Pensions and insurance mark
Slide 28: interactive investor - Scaling up our leading UK savings and wealth businesses
interactive investor - Scaling up our leading UK savings and wealth businesses KPIs and drivers1 Opportunities for growth Total customer numbers 407k % growth ex. run off 3.6% Market penetration through focus on organic growth in customers SIPP customers 62.4k % growth 21% Targeting 20% net growth i
Slide 29: Adviser – Enabling advisers to deliver for their clients
Adviser – Enabling advisers to deliver for their clients Sources of growth and flows Opportunities for growth 1. Existing customers Showcase the strength of our post-upgrade proposition to maximise our distribution reach 1.62 Wrappers per customer (2)% adviserOS to launch in 2024 2. Existing adviser
Slide 30: Building a modern investment company
Building a modern investment company Scaling up our leading UK savings Refocused Investments to and wealth businesses capitalise on areas of strength Focusing on client-led growth, Taking action to improve leveraging data and technology efficiency and profitability Creating a sustainable and more pr
Slide 31: Q&A
Q&A 31 | abrdn plc
Slide 32: Forward-looking statements
Forward-looking statements This document may contain certain ‘forward-looking statements’ with respect to the financial operational information technology risks, including the Group’s operations being highly dependent on condition, performance, results, strategies, targets (including ESG targets), o
Slide 33: Appendix
Appendix 33 | abrdn plc
Slide 34: Analysis of profit
Analysis of profit 2023 20221 £m £m Net operating revenue 1,398 1,456 Adjusted operating expenses (1,149) (1,193) Adjusted operating profit 249 263 Adjusted net financing costs and investment return 81 (10) Adjusted profit before tax 330 253 Adjusting items including results of associates and joint
Slide 35: Analysis of adjusting items
Analysis of adjusting items 2023 20221 Change £m £m Adjusted operating profit 249 263 (5)% Adjusted net financing costs and investment return 81 (10) >100% Adjusted profit before tax 330 253 30% Restructuring and corporate transaction expenses (152) (214) (29)% Amortisation and impairment of intangi
Slide 36: Capital
Capital Movement in capital Development of CET1 resources Value of listed Sources Uses£137m of capital £576m of capital stakes1 £1,314m (£267m) Value of Phoenix £2,000m £299m £1,600m (£302m) stake2 (£121m) £557m (£152m) (£5m) CET1 resources CET1 £1,466m resources £1,301m Value of listed investments2
Slide 37: Investor Relations programme
Investor Relations programme abrdn plc financial calendar Upcoming investor conferences 12-14 March 2024 Morgan Stanley European Financials (London) Annual General Meeting 24 April 2024 Q1 trading update 8-10 April 2024 HSBC Global Investment Summit (Hong Kong) Citi European Diversified Financials C
Slide 38: abrdn plc registered office
abrdn plc is registered in Scotland (SC286832) at 1 George Street, Edinburgh, EH2 2LL www.abrdn.com © 2024 abrdn. All rights reserved. 38 | abrdn plc