REG - abrdn PLC - Final Results
04/03/2025 07:15
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RNS Number : 1958Z abrdn PLC 04 March 2025
abrdn plc Full year results 2024
Part 1 of 7
4 March 2025
Growing in Wealth, Repositioning Investments
Creating solid foundations for growth as a leading Wealth & Investments
group
Increased profits in all three businesses in 2024, with strong progress in
transforming our cost base
Taking action to unlock value from our DB pension plan
Committing to new targets for FY 2026
Summary results
Performance indicators 2024 2023 Change
Adjusted net operating revenue £1,321m £1,398m (6)%
Adjusted operating expenses £(1,066)m £(1,149)m 7%
Adjusted operating profit £255m £249m 2%
Net capital generation £238m £178m 34%
IFRS profit/(loss) before tax £251m £(6)m
IFRS profit for the year £248m £12m
Adjusted diluted earnings per share 15.0p 13.9p 8%
Diluted earnings per share 13.0p 0.1p
AUMA £511.4bn £494.9bn 3%
Net flows £(1.1)bn £(17.6)bn 94%
Net flows excluding liquidity(1) £(6.1)bn £(13.9)bn 56%
Investment performance - 1 year(2) 77% 55% 22ppts
Investment performance - 3 years(2) 60% 51% 9ppts
Full year dividend per share 14.6p 14.6p -
1. Excludes Institutional & Retail Wealth liquidity net
inflows of £5.0bn (2023: outflows £3.7bn).
2. Percentage of AUM performing. Calculations for investment
performance use a closing AUM weighting basis and are made gross of fees
except where the stated comparator is net of fees. The scope of the investment
performance calculation has been extended to cover all funds that aim to track
or outperform a benchmark, with certain assets excluded where this measure of
performance is not appropriate or expected. 2023 comparative has been
restated. As at 31 December 2024, 80% (31 December 2023 restated: 75%) of
AUM is covered by this metric.
Jason Windsor, Chief Executive Officer, said:
"The Group grew profit in 2024 for the first time in three years, with each
business increasing its contribution. As our momentum shifts to growth, we
have a clear focus on improving client experience and shareholder returns. We
have strengthened and streamlined our senior leadership team and, with our
sharper focus, we are committing to better results again in 2025 and 2026.
"Our position in the fast-growing UK Wealth market is exciting. interactive
investor had excellent performance in 2024, achieving the number one position
in the UK D2C market for net flows, and we expect continuation of this growth.
Adviser is in the number two position in an attractive growth market. While
outflows persisted through 2024, we are working hard to re-establish market
leading service levels. We have a strengthened Adviser leadership team in
place, with a clear plan of action, to deliver necessary improvements to
return to growth.
"Investments saw a significant turnaround in flows compared to 2023, and
improved investment performance. Xavier Meyer is now leading the repositioning
of Investments to become a specialist asset manager, focused on its strengths
in Real Assets, Credit and Specialist Equities - in each of which we have good
competitive positions and clear growth prospects.
"Alongside our results, we are setting out our strategy to become a leading
Wealth & Investments group, with new 2026 targets that underline the
potential for the profitable growth we see in all of our businesses. Together
with active capital management - and by further lowering restructuring spend -
we are able to maintain the historic dividend per share from materially
higher, and sustainable capital generation.
"This is a Group to be proud of, with a promising future. We will deliver by
looking forward with confidence and removing distractions. To that end, we are
changing our name to aberdeen group plc. This is a pragmatic decision marking
a new phase for the organisation, as we focus on delivering for our customers,
people and shareholders."
Strategy overview
Leading Wealth & Investments group, enabling clients to be better
investors
· Three clear priorities: transforming performance; improving client
experience; and strengthening talent and culture.
· Each of our three businesses has scale positions and headroom for growth:
o interactive investor: Sustain efficient growth by building on our
differentiated proposition and investing in the ii brand.
o Adviser: Return to net inflows by enhancing our proposition and delivering
leading client service.
o Investments: Step change in profitability, specialising in areas of strength
and driving improved efficiency.
· Well-positioned for market growth opportunities in the fast-growing UK
wealth sector and growing global demand for specialist asset management
capabilities.
· New Group targets for FY 2026, reflecting growth potential and building
on our momentum:
o Adjusted operating profit to increase to at least £300m in FY 2026; an
increase of at least c.18% from 2024.
o Net capital generation expected to increase to c.£300m in FY 2026; an
increase of c.26% from 2024.
· Better performing businesses and a simplified Group will support
reinvestment into growth areas, improve capital generation and support our
current dividend policy.
2024 Business performance overview
interactive investor Strong growth in interactive investor, with investment to sustain momentum
· Adjusted net operating revenue 3% lower at £278m (2023: £287m) due
to the sale of abrdn Capital in 2023. Excluding this, revenue was up 7%, with
continued customer growth and increased engagement reflected in higher
treasury income, subscription fees, as well as trading and FX fees.
· Average cash margin was 229bps (2023: 236bps); average cash margin
for 2025 is expected to be in the region of 200-220bps.
· Adjusted operating profit up 2% at £116m (2023: £114m) despite
increased investment to improve brand awareness and create additional capacity
for continued growth.
· AUMA up 17% to £77.5bn (2023: £66.0bn), with net growth of 8% in
total customers to 439k (2023: 407k) and 29% in SIPP customers to 81k (2023:
62k).
· Net inflows almost doubled to £5.7bn (2023: £2.9bn), representing
8.6% of opening AUMA, with the business ranking as number one for UK D2C net
flows for the year.
Adviser Increased earnings in Adviser with service improvement a key priority to
return to net inflows
· Adjusted net operating revenue up 6% at £237m (2023: £224m),
reflecting the 12-month benefit of a revised distribution arrangement with
Phoenix for the Wrap SIPP (2024: £27m, 2023: £15m).
· Treasury income increased to £33m (2023: £31m), with an average
cash margin of 263bps
(2023: 228bps). Average cash margin in 2025 expected to be c.225bps.
· Adjusted operating profit up 7% to £126m (2023: £118m). Expenses
benefited from a third-party outsourcing discount of £17m (2023: £16m).
· AUMA up 2% to £75.2bn (2023: £73.5bn), with positive markets more
than offsetting net outflows, which remained elevated at £3.9bn (2023:
outflows £2.1bn).
Investments Cost savings in Investments leading to an uplift in profit, with significant
improvement in net flows
· Adjusted net operating revenue 9% lower at £797m (2023: £878m),
reflecting net outflows from higher margin products and changes in asset mix.
Net revenue margin of 21.3bps (2023: 23.5bps).
· Adjusted operating expenses were 11% lower at £736m (2023: £828m)
reflecting strong progress in transformation cost savings and the benefit of
disposals made in H2 2023 and H1 2024.
· Adjusted operating profit up 22% to £61m (2023: £50m). Revenue
headwinds offset by efficiency savings.
· Excluding liquidity, gross inflows in Institutional & Retail
Wealth 31% higher at £25.5bn
(2023: £19.5bn) reflecting strong inflows in quantitative strategies, real
assets and fixed income.
· Investments AUM up 1% to £369.7bn. Total net outflows improved to
£4.0bn (2023: outflows £19.0bn) with higher gross inflows and significant
reduction in redemptions. Institutional & Retail Wealth returned to a net
inflow in the year of £0.3bn (2023: outflows £17.9bn).
· Investment performance improved to 60% of AUM above benchmark over
three years (2023: 51%) and 77% over one year (2023: 55%).
Chief Executive's Overview
Overview
I was delighted to be appointed as CEO of the Group in September and stepped
into this role with a sense of determination and optimism about the challenges
and opportunities ahead.
Since taking the role, the depth of talent, and the commitment to our clients
and customers, has shone through. We are working hard to deliver better
outcomes for all of our stakeholders, and I would like to thank our clients,
colleagues and shareholders for their support.
In 2024, we reported adjusted operating profit of £255m (2023: £249m), with
all three businesses contributing higher profits than last year. This was
driven by cost discipline, better markets and a strong performance by
interactive investor.
The reasons for my optimism are clear. First, the performance in 2024 has
strengthened our foundations with significant headroom for growth. As we move
through 2025 and beyond, we are well positioned as a Wealth & Investments
group with two leading businesses in the fast-growing UK Wealth sector,
alongside a specialist asset management business that is repositioning its
focus on its strengths and where it sees opportunities to drive growth
globally. This is underpinned by a commitment to continuous improvements in
efficiency, technology and talent.
We intend to deliver through a relentless focus on execution, with clarified
accountabilities measured by extended KPIs. Across the Group, we are already
driving improvement by removing distractions, simplifying the business,
eliminating unnecessary drags on profitability, and focusing management time
on the right areas.
Our strategic priorities and FY 2026 targets
As part of our strategy update, each of our businesses has set a clear
strategic objective and targets for FY 2026:
· interactive investor: Sustain efficient growth by building on our
differentiated proposition and investing in the ii brand. Consistent with this
focus, we are targeting continued customer growth of 8% per year and further
improvement in our cost/AUMA ratio to less than 20bps (from 22bps in 2024).
· Adviser: Return to net inflows by enhancing our proposition and
delivering leading client service. For FY 2026 we are targeting a net promoter
score of at least +40 (up from +34 in 2024) and at least £1bn of net inflows.
· Investments: Step change in profitability by repositioning to
areas of strength and opportunity, and driving improved efficiency. Building
on the improvements already achieved, we are targeting 70% of our overall AUM
to be performing over three years in FY 2026 (up from 60% in 2024), with
adjusted operating profit increasing to at least £100m - an increase of over
60% compared to 2024.
Our three Group priorities that I set out at Half year remain unchanged. We
are focused on transforming performance, improving the client experience, and
strengthening talent and culture.
Alongside, we continue to simplify the business, focusing on where we have
competitive advantage. We made progress in 2024 with a number of non-core
divestments, and we have commenced a review of strategic options for our
Finimize business.
We are also announcing new Group targets for FY 2026, building on the momentum
achieved in 2024:
· Adjusted operating profit to increase to at least £300m in FY
2026; an increase of at least c.18% from 2024. This is expected to reflect a
significant uplift in contribution from interactive investor along with growth
in Investments, partly offset by the impact of the previously announced
repricing in Adviser.
· Net capital generation is expected to increase to c.£300m in FY
2026; an increase of c.26% from 2024.
Better performing businesses and a simplified Group will support reinvestment
into growth areas, improve capital generation and support our dividend policy.
Combined with the further strengthening of our capital position through the
deployment of our pension surplus, this presents what I believe is a
compelling route to creating greater value for the Group.
People and leadership
In the Annual report and accounts published today, Sir Douglas Flint's
Chairman's Statement includes an update on the commencement of a Chairman
succession plan. This follows the work Sir Douglas led to refresh the Board
last year, and the announcement last week of the appointment of Siobhan Boylan
as Group Chief Financial Officer ("CFO") (as noted below).
Delivering on our ambitions will take real determination. In November, I
reshaped the senior executive team, including setting up a streamlined Group
Operating Committee to improve the pace of decision-making, and an extended,
more commercial, Executive Leadership Team. By putting the right talent in the
right roles, we are now well placed to accelerate progress against our
strategic priorities.
As our new Chief Operating Officer, Richard Wilson is tasked with driving the
organisation harder, improving operational efficiency along with sustaining
the impressive growth in interactive investor. The first focus of our new CEO
of Investments, Xavier Meyer, is our clients - bringing them better
experience, service and product performance.
On 28 February, we announced the appointment of Siobhan Boylan as Group CFO,
subject to regulatory approval. Siobhan's skillset and experience are highly
relevant and complementary to the rest of the leadership team and I know she
will make a significant impact when she joins this summer.
New corporate name
We are announcing today that we will change the Company's name to aberdeen
group plc. We do not intend to make any changes to our subsidiary legal entity
names or the names of our underlying funds (including the CUSIPs or ISINs) at
this time, and our LSE ticker will remain ABDN. We will now start to use
"aberdeen" as the principal trading identity for our Investments and Adviser
businesses.
Overview of 2024 performance
Cost discipline, better markets and a strong performance by interactive
investor enabled us to improve adjusted operating profit to £255m (2023:
£249m), with all three businesses reporting higher profits than last year.
It is important to make clear, however, this is well below the level of
profitability we aspire to, and we see much more potential across the Group.
Overall, we reported a transformationally higher IFRS profit before tax of
£251m (2023: loss £6m) which includes higher adjusted operating profit, the
gain on sale of the European-headquartered Private Equity business of £92m
and lower restructuring and corporate transaction expenses of £100m (2023:
£152m).
AUMA is up 3% on last year to £511.4bn with total Group outflows of £1.1bn,
representing a substantial improvement on 2023 when outflows were £17.6bn. As
well as strong customer and AUMA growth in interactive investor, this was
supported by market conditions, which more than offset the impact of the sale
of our European-headquartered Private Equity business.
The transformation programme we launched in January 2024 has surpassed the
year one targets we set out, delivering £70m of in-year cost savings and over
£100m of savings on an annualised basis. We remain on track to deliver a
reduction in run-rate costs of at least £150m by the end of 2025, with a
commitment to continually seek further efficiencies.
interactive investor: Strong performance with excellent foundations for
sustained growth
interactive investor has undoubtedly delivered the strongest performance
across the Group this year. A focus on organic growth saw total customer
numbers increase by 8% to 439k. This helped to deliver net inflows totalling
£5.7bn compared to £2.9bn in 2023, making it number one in the UK for D2C
flows across the year, and contributed to a 17% increase in AUMA to £77.5bn.
Trading and FX revenues also rose sharply, with retail trades up by almost
30%. Around a quarter of all UK retail share trading and a third of UK retail
international trading last year were transacted through interactive investor.
Adjusted operating profit in interactive investor was £116m (2023: £114m),
an increase on last year despite the sale of the discretionary fund management
business and the transfer of MPS to Adviser.
A number of key actions contributed to interactive investor's growth in 2024.
Greater investment in the ii brand and marketing delivered improved customer
awareness. This was supported by strong structural growth across the D2C
market, which we expect to continue. Growth has also been driven by a series
of proposition enhancements. In 2024, we launched a new Managed ISA and
introduced ii Community, which offers a social platform for users to connect
with, and learn from, other investors. With a Managed SIPP (designed with
aberdeen Investments), ii advice (a digital advice service) and ii360 (an
advanced trading platform), all expected to launch in 2025, we look to further
broaden our customer appeal.
By leveraging our excellent technology base and disruptive pricing model to
deepen and widen customer engagement, we are well placed to enjoy the compound
effects of gaining a growing share of a growing market.
Adviser: Actions being taken to achieve client service leadership, reverse
outflows and return to growth
Adjusted operating profit in Adviser was up 7% to £126m (2023: £118m).
Markets also helped support a small rise in AUMA to £75.2bn (2023: £73.5bn).
While the increase in profit is welcome, the picture on flows was
disappointing, with elevated redemptions leading to net outflows of £3.9bn
(2023: outflows £2.1bn). Adviser remains at number two in the UK market by
AUA and serves over 50% of the UK's IFAs. Returning to growth is our key
priority and a range of actions has already been put in place to achieve this.
We made an important shift on pricing, becoming more competitive as we seek to
take advantage of a structurally growing market. We also made important
enhancements to our proposition, with the launch of our Money Market MPS
option in February 2024, followed by our cash savings solution on the Wrap
platform in July.
Adviser has also strengthened its sales and distribution capabilities. A new
Chief Distribution Officer has been appointed, one of several senior
appointments to strengthen the Adviser leadership team.
We have acknowledged that aspects of our client service have not been as
strong as they should and we have undertaken a range of measures to address
this. This work has resulted in much shorter delivery times in critical areas
like sign-ups and transfers. Our customer feedback scores have improved over
the year, and we expect to make further progress in 2025.
Adviser holds an enviable position in an attractive market and, through these
actions, we are focused on re-establishing a leadership position in the
market, with a growing and profitable business.
Investments: Significant growth in net flows, with cost discipline and markets
offsetting changes in asset mix
2024 brought more favourable market conditions than experienced in recent
years, helping Investments AUM to rise slightly from £366.7bn to £369.7bn,
despite the sale of the European-headquartered Private Equity business and
other corporate actions (£(6.6)bn).
Net outflows reduced significantly from £19.0bn in 2023 to £4.0bn, with
Institutional & Retail Wealth flows improving by over £18bn to an overall
net inflow of £0.3bn, reflecting a material reduction in redemptions and a
31% improvement in gross flows excluding liquidity to £25.5bn. While outflows
in equities remained a sectoral challenge, this was offset by good momentum in
our alternatives, quantitative and liquidity strategies. Insurance Partners
net outflows increased to £4.3bn (2023: outflows £1.1bn) principally
relating to run-off in the heritage business.
The ongoing trend toward passive strategies continues to put pressure on
margins. In this environment, cost discipline has been critical, and we have
delivered a reduction in adjusted operating expenses in Investments of 11%,
helping to deliver an increase in adjusted operating profit to £61m (2023:
£50m).
Investment performance is improving, with the overall percentage of AUM
performing over three years at 60% (2023: 51%), with even stronger performance
over one year at 77% (2023: 55%). Further work remains on equities
performance, largely due to the weighting of our business toward emerging
markets and Asia. Our programme of improvements is beginning to gain traction,
with performance in multi-asset and equities showing welcome increases over
the one-year period.
Momentum is shifting in Investments, and there is potential to unlock
substantial profitable growth over time. With the changes to the executive
team and a sharper strategic focus, we are now better placed to realise the
potential of our Investments business.
As we move ahead, we will preserve and optimise our offering in core areas,
while repositioning Investments to focus on the specific capabilities where we
have competitive advantage and clear market opportunities, namely Real Assets,
Credit and Specialist Equities. We also expect to build scale in important
areas of the business (e.g. Insurance, Closed End Funds and Institutional
Solutions), and expand further in Private Markets and Wholesale, where we see
attractive growth opportunities. At the same time, we will redouble efforts to
achieve greater efficiency, with automation of more processes, to drive better
results.
Capital allocation and dividend
Our commitment to disciplined capital management was maintained in 2024,
finishing the year with indicative CET1 of £1.5bn (2023: £1.5bn), and
coverage of 139% (2023: 139%). Part of delivering better performance lies in
simplifying the business, and the non-core divestments we made through the
year delivered an overall gain on disposals of £100m, which supported our
transformation.
Adjusted capital generation of £307m (2023: £299m) covered our dividend
1.2x. Net capital generation was £238m (2023: £178m), up by a significant
34%.
As we have previously highlighted, the Group's defined benefit pension plan
has been successfully managed over the years, resulting in a significant
surplus. We have now reached agreement with the Trustee to use part of the
surplus to fund the cost of providing defined contribution benefits to current
employees. We expect this to deliver a significant annual boost to capital
generation of c.£35m starting from July 2025 (we expect no impact on adjusted
operating profit). This agreement enables the Group to unlock value from the
plan, while largely maintaining the surplus and retaining optionality.
We understand the importance of the dividend to our shareholders. The Board's
intention is to pay a total annual dividend of 14.6p per share until it is
covered at least 1.5x by adjusted capital generation. Our commitment to
growing capital generation to support the dividend is evidenced by our new
target of c.£300m net capital generation in 2026, an increase of c.26% on
2024.
Sustainability
As an organisation of over 4,000 people, with clients and customers across the
globe, we have a responsibility to make a positive impact on the communities
we live and work in. With this in mind, we have refined our sustainability
strategy in 2024, with a focus on ensuring transparency, accountability and
clarity of purpose. Our approach is now based around three pillars:
environmental transition, inclusive growth and responsible business.
As an investor, we have been factoring sustainability into our approach for
many years. As well as considering ESG as part of our standard investment
processes, we offer a broad range of sustainability focused products, informed
by deep research and expertise.
Our commitment to inclusion saw our gender pay gap further reduce this year,
and we have also published ethnicity pay gap data for the first time. Going
into 2025, we plan to develop our inclusive growth pillar further with a
strategy focused on the "lifelong ladder" of saving and investment. Financial
education and employability are at the heart of this strategy as we believe
these are issues on which we and our partners can have the greatest impact.
Looking ahead
Across our markets there are compelling long-term structural growth drivers
which we are well placed to leverage - changing demographics, generational
wealth transfers, and the growing need for people to secure their own
financial futures - and these drivers are likely to continue for several years
to come.
Our ambition is to be the UK's leading Wealth & Investments group, with
fast growing direct and advised wealth platforms and a specialist asset
manager that operates worldwide with strength in areas of market growth, all
driven by excellent client service, technology and talent.
We have substantial headroom for growth in each of our businesses. In
parallel, we are simplifying our business, focusing on where we have
competitive advantage.
Success will demand a relentless focus on execution. I am confident we have
the right team to meet this challenge. We are setting out clear plans for all
three businesses, together with ambitious 2026 targets which will enable us to
provide evidence of our progress, as we transform the Group to achieve its
full potential.
Chief Financial Officer's Overview
"2024 was a year of significant progress, underpinned by consistent delivery
and execution. I am pleased by the success of the first year of our cost
transformation programme and the benefits this is already delivering. Looking
ahead, I am confident we can build on this progress and complete the
transformation plans we have in place, in turn helping us to unlock the
significant potential in the Group. Supported by our strong balance sheet and
diversified three-business model, we have strong foundations for sustainable
and profitable growth."
Ian Jenkins
Interim Chief Financial Officer
Overview
We have delivered an increase in adjusted operating profit, both at Group
level and across all three of our Wealth & Investment businesses. Notably,
this included our Investments business, despite the geopolitical and
structural challenges which impacted the sector as a whole, and disposals
which impacted both our Investments business and ii.
During the year, we also made significant progress in improving our efficiency
which remains a priority for the Group. The associated savings achieved in the
year, coupled with the clear strengths of our diversified business model, have
enabled us to deliver improved financial performance.
At the start of 2024, we announced our transformation programme with the
target of achieving at least £150m of annualised cost savings by the end of
2025. I am pleased to reaffirm my confidence in this target, and to highlight
some of the key benefits delivered by the programme during 2024. With improved
financial discipline now embedded in each of the businesses, we are seeing
benefits across the Group.
The programme has delivered £106m of annualised savings in 2024, with £70m
reflected in our financial performance for the year. This exceeded our initial
expectations and has driven a 7% reduction in our adjusted operating expenses
to £1,066m (2023: £1,149m).
Our transformation is not only about removing cost, but also about
strategically investing in technology, processes and our people. Amongst other
improvements, we have rationalised our fund range for our clients, focusing on
fewer, scalable products and removing small and unprofitable funds.
The clear progress we have made in transforming our cost base, particularly in
Investments, has created a leaner, more efficient business with a clear path
to profitable growth.
Our balance sheet remains strong. This has been crucial in enabling us to fund
our transformation programme and invest in the business while continuing to
support our dividend. Throughout 2024, we have continued to simplify our
business, including through disposals which generated gains on sale of £100m.
These included the sale of our Virgin Money joint venture and our
European-headquartered Private Equity business in April, threesixty in July
and the partial sale of Focus Business Solutions in December.
In summary, I am confident that the actions we have taken in 2024 are creating
stronger foundations to deliver better outcomes for our clients, colleagues
and shareholders.
Profit
Adjusted operating profit was up 2% to £255m (2023: £249m). This included a
2% increase in ii to £116m (2023: £114m), a 7% increase in Adviser to £126m
(2023: £118m) and a 22% increase in Investments to £61m (2023: £50m).
IFRS profit before tax was £251m, a significant improvement (2023: loss
£6m). This comprised adjusted operating profit of £255m, adjusted net
financing costs and investment return of £99m (2023: £81m), and an overall
loss from adjusting items of £103m (2023: loss of £336m).
Adjusting items in 2024 included restructuring and corporate transaction
expenses of £100m (2023: £152m), primarily relating to our transformation
programme. Adjusting items benefited from a £100m profit on disposal of
subsidiaries and interests in joint ventures (2023: £79m), principally
relating to the sale of our European-headquartered Private Equity business in
April 2024. Adjusting items also included a loss of £27m on the fair value of
significant listed investments (2023: loss of £178m), reflecting the 5%
reduction in the Phoenix share price in 2024. Our share of profit in the HASL
joint venture increased to £26m (2023: £3m) including investment-related
gains due to favourable investment market conditions.
Adjusted net operating revenue
Adjusted net operating revenue was 6% lower at £1,321m (2023: £1,398m). This
included the impact of net outflows and changes to asset mix in Investments,
and a net reduction from corporate actions in Investments and ii.
At ii, adjusted net operating revenue was 3% lower at £278m (2023: £287m),
or 7% (£19m) higher adjusting for the sale of abrdn Capital, which included
the MPS business that transferred to Adviser in May 2023.
The improvement in underlying revenue in ii was driven by strong organic
customer growth, increased trading activity, and stronger treasury income.
Trading revenue increased 46% to £70m (2023: £48m) reflecting higher trading
and FX activity. Subscription revenue, gross of marketing incentives, of £60m
(2023: £58m) reflected continued strong organic customer growth. Treasury
income increased 3% to £138m, reflecting continued growth in average cash
balances as well as the continued high interest rate environment. Fee income
reduced to £25m (2023: £57m) primarily as a result of the sale of abrdn
Capital and the associated transfer of MPS to Adviser.
In our Adviser business, adjusted net operating revenue was up 6% to £237m
(2023: £224m). This was primarily due to the full 12-month benefit from the
revised Wrap SIPP distribution agreement as well as higher treasury income.
Total Adviser revenue in 2024 comprised £169m of platform charges (2023:
£169m), £33m of treasury income (2023: £31m) and £37m of other income
(2023: £26m).
In Investments, adjusted net operating revenue was 9% lower at £797m (2023:
£878m), driven by a continuation of trends seen in recent years. These
included changes to asset mix, with net outflows from higher margin asset
classes, mainly equities, partially offset by strong inflows into lower margin
asset classes such as quantitative strategies and liquidity. Across our
Institutional & Retail Wealth business AUM amounted to £210.5bn at 31
December 2024 (2023: £211.2bn) with the small reduction driven by the sale of
our European-headquartered Private Equity business. Excluding this sale and
other corporate actions, AUM increased by 3% in the year, driven by positive
market movements and net inflows. Total net flows across our I&RW business
improved by over £18bn, with a small net inflow of £0.3bn in 2024 compared
to an outflow of £17.9bn in 2023.
Our relationship with Phoenix is significant to our Investments business, with
Insurance Partners AUM up 2% to £159.2bn. Underlying this trend, positive
market movements more than offset net outflows of £4.3bn principally relating
to run-off in the heritage business.
Adjusted operating expenses
Adjusted operating expenses decreased by 7% to £1,066m (2023: £1,149m).
This principally reflected transformation savings of £70m, which exceeded the
original £60m cost reduction target for 2024 given at the time the
transformation programme was announced.
The impact of the transformation programme is most evident in our Investments
business with adjusted operating expenses reducing by 11% to £736m (2023:
£828m). These cost savings were driven by lower staff costs, including the
net benefit from corporate transactions, lower outsourcing and professional
fees, project and change spend and property costs. These reductions were
partially offset by the impact of staff cost inflation.
At ii, operating expenses reduced 6% to £162m (2023: £173m), primarily
reflecting the sale of abrdn Capital. Excluding the impact of this sale,
expenses increased by £14m or 9%. This was driven by increased investment in
the ii brand, marketing, product development and our people to support
continued organic growth.
In Adviser, adjusted operating expenses increased 5% to £111m (2023: £106m)
reflecting continued investment in our proposition. Expenses in 2024 benefited
from a temporary third-party outsourcing discount of £17m.
The 2024 in-year savings result in annualised run-rate savings from our
transformation programme of over £100m. This gives us confidence in achieving
the programme's overall target of delivering total annualised run rate savings
of at least £150m by the end of 2025. However, the programme we have put in
place is cost-led rather than cost-only, and we will continue to strategically
invest in the business to deliver sustainable and profitable growth, as well
as better outcomes for our clients and colleagues.
Capital
We maintain a strong capital position. This provides us with resilience during
periods of economic uncertainty and volatility, such as those seen in the last
few years of heightened geopolitical risk and elevated inflation.
In 2024, we remained disciplined in our capital allocation, delivering
continued returns to our shareholders via dividends while strategically
investing in our businesses to support sustainable profitable growth.
We have continued to simplify our business through the sale of non-core
businesses, with disposals generating a total of £74m of capital in 2024. In
April, we completed the sale of our European-headquartered Private Equity
business for £92m and, in December completed the sale of 80% of Focus
Business Solutions via a management buyout. This follows significant
simplification in 2023, which included the further disposals of our listed
Indian stakes, and our US Private Equity and Venture Capital business. In
September 2024, we also completed the acquisition of closed-end funds from
First Trust Advisors to build further on our capabilities in the CEF market
where we have significant scale.
We intend to maintain our disciplined approach to capital:
· We are committed to delivering on the actions outlined in our
transformation programme including at least £150m of Group annualised cost
savings by the end of 2025. Associated implementation costs in 2024 were £73m
with total implementation costs expected to be around £150m by the time the
programme concludes. As in 2024, CET1 surplus capital will be deployed to fund
the restructuring in 2025.
· We will continue to invest in our business in a disciplined way,
with a high bar used to assess organic growth investments and a highly
selective approach to inorganic opportunities.
· It remains the Board's intention to pay a total annual dividend
of 14.6p (with interim and final dividends of 7.3p per share), until it is
covered at least 1.5 times by adjusted capital generation (currently covered
1.18 times).
· Over the short term, the dividend will largely be supported by
adjusted capital generation and our surplus capital.
Outlook
As reflected in our 2024 results, we have improved the efficiency of the
Group, making significant advances toward right-sizing our cost base,
particularly in the Investments business. Each of our businesses are at
different stages of their development and none has yet achieved its full
potential. However, we are pleased with the progress we have made.
Profitability has increased in all of our core businesses, and we are
confident in our growth plans for each.
Looking forward, we expect interest rates to reduce in 2025. While the pace of
that reduction remains uncertain, falling rates in the UK are expected to lead
to a gradual reduction of the cash margins earned in ii and Adviser.
Nevertheless, we expect growth in treasury income in ii helped by continued
growth in cash balances. Revenue in ii is also expected to benefit from
increased customer activity, including further use of the platform's global
trading and FX capabilities.
Other factors expected to impact revenue in 2025 include the previously
announced Adviser platform repricing to improve its competitive positioning.
We also expect the impact of changes in asset mix in 2024 and ongoing market
dynamics to result in a slight reduction in revenue margins in Investments in
2025.
Against this backdrop, we expect to make further progress in driving
efficiency improvements and right-sizing our cost base, principally through
our transformation programme.
Our balance sheet and capital generation benefit from our stake in Phoenix and
the surplus in our defined benefit staff pension plan.
We have reached agreement with the Trustee of the defined benefit pension plan
to utilise part of the existing surplus to fund the cost of providing defined
contribution benefits to current employees. This is expected to result in an
annual benefit of c.£35m to net capital generation from July 2025, with an
annual review of other options including an insurance buyout. This agreement
enables the Group to unlock value from the plan, while largely maintaining the
surplus and retaining optionality.
Looking beyond 2025, we continue to see long-term structural growth in the UK
savings and wealth industry, which we are well-positioned to capture. In
addition, while market conditions are expected to remain challenging for
active asset managers generally, we see a number of areas of attractive
opportunities that our Investments business is well-placed to serve.
New targets
We are announcing a number of FY 2026 targets, which reflect the increasing
momentum in the Group. This includes ambitious targets for adjusted operating
profit of at least £300m and net capital generation of c.£300m, reflecting
our confidence in the Group's potential for profit growth and sustainability
of the dividend. The Group targets are underpinned by ambitions for each of
our three Wealth & Investments businesses:
· At interactive investor, we will focus on sustaining organic
growth, with customer numbers continuing to increase by 8% per year, in line
with this year's impressive rate. As this growth is delivered, we expect key
measures of efficiency to improve, reflecting the scalability of the business.
We are therefore targeting a cost/AUMA ratio of less than 20bps in FY 2026.
· We aim to deliver over £1bn of net inflows at Adviser in FY 2026
while maintaining a Net Promoter Score of over +40, reflecting our focus on
delivering leading client service.
· Finally, we are targeting a step change in profitability in
Investments, aiming for adjusted operating profit of over £100m for FY 2026,
supported by investment performance of over 70% on a 3-year basis.
We believe none of our businesses is yet operating at its full potential,
despite 2024 having been a year of progress and positive realignment.
By continuing this momentum through 2025 and delivering on our 2026 targets, I
am confident we can deliver improved outcomes for our clients, colleagues and
shareholders.
Annual report and accounts 2024
The Annual report and accounts 2024 has been published today and is available
at www.abrdn.com/fyresults (http://www.abrdn.com/fyresults) . This press
release contains certain information that has been extracted from the Annual
report 2024.
Media and analyst calls
A conference call for media will take place today at 07:30am (GMT). To access
the conference call, you will need to pre-register at:
https://event.loopup.com/SelfRegistration/registration.aspx?booking=LtUQcY4WJrh3kfBguyWqxOtUFNaY0FcxHp4tLZe1wFI=&b=2389e96d-457b-46a8-bebb-fec356d5b031
(https://event.loopup.com/SelfRegistration/registration.aspx?booking=LtUQcY4WJrh3kfBguyWqxOtUFNaY0FcxHp4tLZe1wFI=&b=2389e96d-457b-46a8-bebb-fec356d5b031)
A presentation for analysts and investors will follow at 08:30am (GMT). To
view the webcast of the presentation please go to
www.abrdn.com/en-gb/corporate/investors
(http://www.abrdn.com/en-gb/corporate/investors)
For a PDF version of the full Annual Report and Accounts 2024, please click
here:
http://www.rns-pdf.londonstockexchange.com/rns/1958Z_1-2025-3-4.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/1958Z_1-2025-3-4.pdf)
For further information please contact:
Institutional equity investors and analysts 0207 1562 495 Retail equity investors *0371 384 2464
Duncan Heath
0788 4109 285
Equiniti
Media 0792 0868 865 Debt investors and analysts 0131 372 7760
Duncan Young
0797 6295 906 Graeme McBirnie
Iain Dey (Teneo)
*Calls may be monitored and/or recorded. Call charges will vary.
abrdn plc's LEI Code is 0TMBS544NMO7GLCE7H90
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