Summary

  • Standard Life Aberdeen plc became abrdn plc on 2 July 2021.
  • The company has wide geographical presence covering many countries in Europe, Middle East, Asia Pacific and Americas.
  • The company manage and administer £532 billion of assets for its clients, and Abrdn has over 1 million shareholders.

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Company Overview

Abrdn (OTC:SLFPF, LSE:ABDN) empower its clients to plan, save and invest for their futures.

Standard Life Aberdeen plc became abrdn plc on 2 July 2021.

The company structure its business into three areas – and together they reflect its focus on enabling its clients to be better investors:1

  • Investments: The company work with clients to create solutions across markets, asset classes and investment strategies – combining its global network of investment professionals with research, data and technology.
  • Adviser: The company offer market-leading platform technology and tools that enable UK wealth managers and financial advisers to look after the diverse needs of their clients.
  • Personal: The company help people throughout the UK plan for their financial futures – through its financial planning business and its digital investing services.

Through the expertise, insight and innovation of its team, the company aim to help clients create more ways for money to make an impact. The company set its sights on giving them more confidence to achieve their goals, and more clarity about what they need next. And the company focus on delivering outcomes that are more than just financial – by investing sustainably to build a better world.

Abrdn is a global business. The company manage and administer £532 billion of assets for its clients, and Abrdn has over 1 million shareholders.

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Locaitons

As a global asset manager Abrdn has operations in financial capitals and important regional centres, in countries around the world.2

Europe

  • Belgium
  • Denmark
  • France
  • Germany
  • Ireland
  • Italy
  • Luxembourg
  • Netherlands
  • Spain
  • Sweden
  • Switzerland
  • UK

Middle East

  • United Arab Emirates

Asia Pacific

  • Australia
  • China
  • Hong Kong
  • Japan
  • Malaysia
  • Singapore
  • South Korea
  • Taiwan
  • Thailand

Americas

  • Brazil
  • Canada
  • USA

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Business Segments

Investments

The company's Investments vector is a core growth engine for the group. The company's client led approach is to use its broad investment expertise to enable its clients to be better investors.3

The company do this through its global network of investment professionals with products and solutions spanning a broad range of markets, asset classes and investment strategies. In 2020, the company continued to provide a breadth of capabilities across key markets of growth and client needs whilst also reconfiguring and simplifying its business.

The company's client led strategy is underpinned by three enablers:

  • Innovative products and solutions, a relevant product and solution range is vital for its clients and the company continue to evolve its range with innovative solutions that are co-created with its clients. In 2020 the company enhanced its strategies further with global risk mitigation, passive hedge fund indices, and a key range of sustainable ESG funds. Abrdn is focused on simplifying its range as clients’ needs change and will continue to remove sub-scale funds.
  • Collaborative partnerships are important for client led growth, where deep understanding allows it to tailor its products and solutions to meet client needs. Abrdn has strengthened its relationship with its key partner Phoenix with over £170bn of their assets being managed by its skilled team. The company continue to innovate together to support their ongoing needs. In 2020, the company collaborated with several clients and platforms such as China Construction Bank International in Hong Kong, HUB24 in Australia, FAPES in Brazil and Skipton Building Society in the UK, to provide bespoke solutions.
  • Research, data and technology underpin its investment decision-making. The company continue to make improvements to its infrastructure, enhancing the way the company invest on behalf of clients to meet their desired outcomes. In the last year, Abrdn has integrated its operational investment systems, improved its research capabilities with its ESG House Score, and have launched its proprietary data capability to support its deep understanding of its clients.

Adviser

The company will become the easiest business for wealth managers and advisers. This will give wealth managers and advisers more time to spend with their clients, maximising their service and revenue streams.

The company do this by providing platform solutions based on different client and adviser needs:

  • Wrap enables advisers to deliver high-quality financial planning to large numbers of clients with complex investment requirements
  • Elevate is a lower-cost proposition which, through a range of investment options, offers advisers the core features they need to deliver their services at scale

The strategy is underpinned by its revised and extended strategic relationship with technology provider FNZ. This partnership allows it to combine best-in-class platform services with a commercial model that ensures sustainable growth.

In 2021, the company will continue to enhance its solutions so they become even more flexible, more efficient for clients and more insight-led. Advisers’ needs will be the starting point for all improvements and design.

Personal

From the moment its clients first consider their financial futures, its tailored products and solutions will be available to them in a seamless, technology-powered experience. From the start of their financial journey, all the way through to legacy planning, it will be easy, intuitive and integrated

To provide this whole financial life cycle service, the company offer:

  • Services directly through digital channels and through 1825, its financial planning business
  • Discretionary investment management to high-net-worth individuals through Aberdeen Standard Capital

Abrdn has grown its advice business substantially since 2015, through various acquisitions. This has given it a complete UKwide footprint, and improved its ability to deliver advice at scale

In 2020 the company embedded its digital retirement advice service. This automation significantly increases its capacity and effectiveness, and frees it up to focus on the human touchpoints that make a real difference to its clients.

Within its discretionary fund management business, Abrdn has seen substantial AUM growth. In its Charities business, for example, AUM is up over 60% in the last two years.

The company's Personal business seamlessly connects its capabilities to help clients be in a better position to achieve their goals. Where relevant, the company can also leverage the power of its adviser platforms and investment product range to help them achieve the best outcomes.

To reach clients who are at the very beginning of their financial journey, we’re launching new direct-to-consumer solutions. The company's new mobile app, Choices, helps clients to manage their money more effectively. Its open banking technology gives them a clear overview of all their finances in one place, and makes it easy for them to access and see the relevance of its own products as they plan for the future.

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Financial Highlights

The group reported the profit before tax for year ended December 2020 at £838m (2019: £243m) mainly reflects the profit on disposal of interests in associates partially offset by impairments of goodwill and intangibles. Adjusted profit before tax of £487m (2019: £584m) decreased by 17% largely due to the lower revenue.

Fee based revenue reduced by 13% to £1,425m (2019: £1,634m). The fall in revenue primarily reflects the full year impact of outflows during 2019 and LBG tranche withdrawals during 2019 and 2020, partly offset by a positive impact from higher average market levels following the recovery of equity markets in the second half of 2020.

Adjusted operating expenses decreased by 10% to £1,206m driven by the benefits of ongoing transformation activity, lower total staff costs, discretionary spend savings (including COVID-19 related savings) and lower change related spend.

Total staff and other related costs within adjusted operating expenses reduced by £73m to £643m (2019: £716m) mainly due to the planned reduction from transformation and lower spend on agency contractors, variable compensation and recruitment.

Total non-staff costs reduced by £54m to £563m (2019: £617m) including a c£20m benefit from lower discretionary spend including travel and events during this period of COVID-19 restrictions, and also lower consultancy and change costs.

At 31 December 2020, actions have been taken which are expected to deliver £351m of annualised synergies, benefiting 2020 operating expenses by £287m (2019: £234m) with further benefits expected in 2021. Cost synergies have been realised from a reduction in staff costs, rationalisation of premises, and efficiencies in supplier spend, including procurement and other actions to avoid cost increases the benefits of which are not included in the £287m above. The company remain on track to meet the overall synergy target of £400m in 2021.

Cash and liquid resources remained robust at £2.5bn at 31 December 2020 (2019: £2.7bn). These resources are high quality and mainly invested in cash, money market instruments and short-term debt securities. Cash and liquid resources is an APM, see Supplementary information for further details.

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Half year results 2021

Fee based revenue 7% higher and adjusted operating profit 52% higher than prior year which are the highest rates of growth since merger.4

  • Net outflows reduced to £5.6bn, including liquidity net outflows of £3.7bn. Excluding liquidity flows, which are volatile, net outflows were £1.9bn representing a significant improvement over prior periods and less than 10% of outflows at the low point in H2 2018.
  • Consequently the impact on revenue from net outflows (excluding LBG) is less than 0.5% compared with 3% in H1 2020.
  • AUMA of £532bn (FY 2020: £535bn) broadly flat as reductions due to flows and corporate actions were partially offset by positive market movements.
  • Delivered improved operational leverage with cost/income ratio of 79%, 6ppts lower than prior year
  • Higher adjusted operating profits in all vectors – 61% higher in Adviser, 33% higher in Investments and Personal has recorded a small profit for first time.
  • IFRS profit before tax of £113m, reflecting higher adjusted operating profit and significantly lower impairments than H1 2020.
  • Adjusted diluted EPS of 7.0p is 3.7p higher, benefiting from the increase in adjusted profit after tax and the share buybacks in 2020.
  • Adjusted capital generation increased by £73m to £176m, reflecting strong profit performance.
  • Strengthened capital position with surplus regulatory capital increasing to £2.8bn (FY 2020: £2.3bn), including £0.7bn benefit from sale of 4.99% in HDFC Life.
  • Interim dividend of 7.3p in line with its dividend policy.

References

  1. ^ https://www.abrdn.com/corporate/about-us
  2. ^ https://www.abrdn.com/corporate/about-us/our-locations
  3. ^ https://www.abrdn.com/docs?editionId=9eb45586-7568-427c-9aa1-161b26ebc524&_ga=2.148833143.1506384538.1639258699-102514667.1639258699
  4. ^ https://www.abrdn.com/docs?editionId=a8ddd1b9-6737-4570-bfa4-8c1f00b40a98
Created by Asif Farooqui on 2021/12/14 18:48
     

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