Aberdeen Group Plc · LSE:ABDN
Aberdeen — Aberdeen Asset Management — H1 2016 Earnings Presentation
42 slides from Aberdeen's earnings presentation, May 3, 2016
Slide 1: Interim results to 31 March 2016
Aberdeen Asset Management Interim results to 31 March 2016 Martin Gilbert, Chief Executive and Bill Rattray, Finance Director 3 May 2016
Slide 2: Operational highlights
Operational highlights Market conditions remained difficult for much of the period We remain focused on our fundamental investment processes and on delivering long term returns Equity performance has recovered strongly in recent months Management team strengthened with senior appointments in distrib
Slide 3: Financial highlights
Financial highlights 1H 2015 2H 2015 1H 2016 Operating margin 44.7% 40.5% 32.2% Underlying pre-tax profit £270.2m £221.4m £162.9m Underlying diluted EPS 16.2p 13.8p 9.6p Interim dividend 7.5p 7.5p Regulatory capital headroom £221m £238m £218m Period end AUM £330.6bn £283.7bn £292.8bn 2 Aberdeen Asse
Slide 4: New business flows – by asset class
New business flows – by asset class 2nd Half 2015 1st Half 2016 3Q 2015 4Q 2015 2H 2015 1Q 2016 2Q 2016 1H 2016 £m £m £m £m £m £m Inflows Equities 3,428 2,477 5,905 2,121 2,992 5,113 Fixed income 3,751 3,920 7,671 5,559 3,568 9,127 Aberdeen solutions 1,706 2,449 4,155 2,444 2,198 4,642 Property 675
Slide 5: Management team strengthened
Management team strengthened • Leadership of investment division simplified – Hugh Young, Head of Investments, now has oversight of all investment teams – Andrew McCaffery appointed Group Head of Solutions – Devan Kaloo appointed Global Head of Equities • Campbell Fleming appointed Global Head of Di
Slide 6: Full service capability
Full service capability Equities Fixed Income Property Alternatives Quantitative Multi-asset Digital • Specialist • Global reach • Bond-like risk; • Counter- • Index • Unconstrained • User-friendly markets • Wide range equity-like cyclical • Low cost • Open access and • Proprietary returns • Liquidi
Slide 7: Building and developing our enhanced capabilities
Building and developing our enhanced capabilities • Bespoke offering for insurers, wealth managers, pension schemes and institutions Multi asset £84.9 bn • Products (eg Diversified Growth Fund & Multi Asset Income Fund) • Attractive asset class for a number of channels Quantitative £21.3 bn investme
Slide 8: Focus on increasing longer term business efficiency
Focus on increasing longer term business efficiency • Target for efficiency savings increased to £70 million • Limited impact for FY 2016, £50 million of savings in place by start of FY 2017 • Focus to date: – Headcount reductions achieved by management of turnover in middle and back office – Discre
Slide 9: Financial results
Financial results 8 Aberdeen Asset Management PLC
Slide 10: Key points
Key points Revenue and margin impacted by net outflows and subdued markets Blended fee rate reduced due to product mix Focus on business efficiencies to deliver significant cost savings Robust regulatory capital headroom 9 Aberdeen Asset Management PLC
Slide 11: Reconciliation of changes in AuM
Reconciliation of changes in AuM Equities Fixed Aberdeen Property Total income solutions £bn £bn £bn £bn £bn AuM at 30 September 15 80.1 65.6 119.0 19.0 283.7 Net new business flows (9.8) (2.3) (5.6) 1.0 (16.7) Corporate transactions - - 9.5 (1.7) 7.8 Markets and performance 4.3 1.4 3.8 0.6 10.1 FX
Slide 12: Profit before tax
Profit before tax 350 300 270.2 -47.7 250 +6.3 -1.1 -6.3 221.4 -70.2 200 +13.7 162.9 -10.0 +8.0 150 100 50 0 PBT 1H2015 Management Transaction & Operating Finance & PBT 2H2015 Management Transaction & Operating Finance & PBT 1H2016 fees performance costs other costs fees performance costs other cost
Slide 13: Income statement progression
Income statement progression 1H 2015 2H 2015 FY 2015 1H 2016 £m Margin £m Margin £m Margin £m Margin Revenue 605.2 563.8 1,169.0 483.6 Staff costs 209.1 34.6% 195.2 34.6% 404.3 34.6% 205.5 42.5% Other costs 125.5 20.7% 140.5 24.9% 266.0 22.7% 122.2 25.3% Total operating costs 334.6 55.3% 335.7 59.5%
Slide 14: Cost efficiencies – target increased to £70 million
Cost efficiencies – target increased to £70 million Annualised 1H 2016 2H 2016 1H 2017 2H 2017 2018 £m £m £m £m £m £m Phasing of savings 70 12 28 50 70 70 • Majority of savings to be achieved in 2017 • Includes savings from exiting certain low margin property management services • Costs of implement
Slide 15: Cashflow
Cashflow 1H 2016 £m Operating cashflow, after interest and tax 94.6 Capital expenditure and long term investment (19.4) Net increase in seed capital (11.1) (30.5) Hedging of deferred variable remuneration EBT purchases of Aberdeen shares (33.8) (33.8) Coupon payments on capital securities & preferen
Slide 16: Regulatory capital
Regulatory capital Sep 15 Regulatory Mar 15 Sep 15 Mar 16 Pro forma status £m £m £m £m Ordinary shareholders’ funds – as 1,736 1,736 1,736 1,690 reported Less: provision for dividend (98) (154) (154) (96) CET1 1,638 1,582 1,582 1,594 5.0 % Preference shares AT1 - 100 100 100 Tier 1 1,638 1,682 1,682
Slide 17: Summary
Summary • Efficiencies remain on track. Annualised Rigorous cost management efficiencies of £70 million • Now have a full service offering. Committed Distinctive and strong capabilities to growing alternatives and solutions, but our traditional strengths remain equally important • Expanded growth op
Slide 18: Appendix
Appendix Supplementary financials EPS calculation New business flows AUM breakouts Performance
Slide 19: Revenue analysis
Revenue analysis 1H 2015 2H 2015 FY 2015 1H 2016 £m £m £m £m Management fees 597.3 99% 549.6 97% 1,146.9 98% 479.4 99% Transaction fees 4.5 1% 4.1 1% 8.6 1% 2.7 1% 601.8 100% 553.7 98% 1,155.5 99% 482.1 100% Performance fees 3.4 0% 10.1 2% 13.5 1% 1.5 0% 605.2 100% 563.8 100% 1,169.0 100% 483.6 100%
Slide 20: Performance fees
Performance fees 1H 2015 2H 2015 FY 2015 1H 2016 £m £m £m £m Equities 1.2 35% 4.9 48% 6.1 45% 0.2 13% Fixed income 0.4 12% - - 0.4 3% - - Aberdeen solutions 1.2 35% 3.4 34% 4.6 34% 0.3 20% Property 0.6 18% 1.8 18% 2.4 18% 1.0 67% Revenue 3.4 100% 10.1 100% 13.5 100% 1.5 100% 19 Aberdeen Asset Manage
Slide 21: Blended fee rate
Blended fee rate Actual Actual Actual 1H 2016 2015 1H 2015 2H 2015 Equities 66.4 65.8 66.4 65.9 Fixed income 21.1 21.2 20.9 18.8 Aberdeen solutions 17.4 17.8 16.9 18.2 Property 49.4 50.0 48.8 47.6 Blended average management fee 36.1 36.5 35.5 33.4 20 Aberdeen Asset Management PLC
Slide 22: Revenues, costs and margin
Revenues, costs and margin Revenue Operating costs Operating margin 700 50% 614.1 605.2 45% 600 563.8 562.5 40% 516.0 503.5 483.6 500 35% 456.1 398.1 413.1 385.9 30% 400 343.3 25% 294.9 300 20% 229.0 229.7 185.3 201.8 192.2 15% 200 166.0 162.6 147.4 10% 100 5% 0 0% 1H 06 2H 06 1H 07 2H 07 1H 08 2H 0
Slide 23: Analysis of operating expenses
Analysis of operating expenses 1H 2015 2H 2015 FY 2015 1H 2016 £m £m £m £m Staff costs 209.1 195.2 404.3 205.5 Third party admin 30.9 30.5 61.4 34.0 Accommodation 13.9 16.6 30.5 13.9 IT 20.8 19.1 39.9 22.7 Marketing 12.8 16.1 28.9 9.2 Depreciation 4.1 4.5 8.6 3.8 Other 43.0 53.7 96.7 38.6 Non staff
Slide 24: Seed capital used to support launch of new funds
Seed capital used to support launch of new funds FY 2015 1H 2016 £m £m Equities 40.4 22.1 Fixed income 36.0 52.0 Multi asset 38.2 34.8 Alternatives 29.7 57.5 Accounting adjustment for consolidation rules 4.6 34.0 Total 148.9 200.4 Increased commitment to seed capital, both number and value of funds
Slide 25: Share count for EPS calculations
Share count for EPS calculations FY 2015 1H 2016 Average shares in issue (million) 1,329.2 1,317.9 Less: shares held by EBT to match deferred share awards (35.6) (33.2) Share count for basic EPS calculation 1,293.6 1,284.7 Dilution shares re options & deferred share awards 28.8 20.4 Share count for
Slide 26: New business flows
New business flows 25 Aberdeen Asset Management PLC
Slide 27: New business flows – by asset class
New business flows – by asset class Group 1H 2015 2H 2015 FY 2015 1H 2016 £m £m £m £m Inflows Equities 9,928 5,905 15,833 5,113 Fixed income 7,903 7,671 15,574 9,127 Aberdeen solutions 4,049 4,155 8,204 4,642 Property 1,566 1,302 2,868 2,575 23,446 19,033 42,479 21,457 Outflows Equities 13,872 18,31
Slide 28: New business flows
New business flows Group 1Q 2016 2Q 2016 1H 2016 £m £m £m Inflows Equities 2,121 2,992 5,113 Fixed income 5,559 3,568 9,127 Aberdeen solutions 2,444 2,198 4,642 Property 791 1,784 2,575 10,915 10,542 21,457 Outflows Equities 8,470 6,462 14,932 Fixed income 5,127 6,255 11,382 Aberdeen solutions 5,713
Slide 29: New business flows – Equities
New business flows – Equities Group 1Q 2016 2Q 2016 1H 2016 Inflows £m £m £m Asia Pacific 1,099 806 1,905 Global emerging markets 710 1,637 2,347 Europe 9 145 154 Global & EAFE 136 218 354 UK 51 40 91 US 116 146 262 2,121 2,992 5,113 Outflows Asia Pacific 2,969 2,205 5,174 Global emerging markets 1,
Slide 30: New business flows – Fixed income
New business flows – Fixed income Group 1Q 2016 2Q 2016 1H 2016 Inflows £m £m £m Asia Pacific 16 19 35 Australia 96 96 192 Convertibles 52 10 62 Emerging markets 174 231 405 Europe 60 26 86 Global 54 204 258 High yield 223 200 423 Money market 3,573 2,373 5,946 UK 1,181 346 1,527 US 130 63 193 5,559
Slide 31: New business flows – Aberdeen solutions
New business flows – Aberdeen solutions Group 1Q 2016 2Q 2016 1H 2016 Inflows £m £m £m Quantitative investments 429 215 644 Multi asset 1,936 1,711 3,647 Alternatives 79 272 351 2,444 2,198 4,642 Outflows Quantitative investments 1,015 1,165 2,180 Multi asset 4,451 3,090 7,541 Alternatives 247 314 5
Slide 32: AuM breakouts
AuM breakouts 31 Aberdeen Asset Management PLC
Slide 33: A diversified asset base
A diversified asset base 31 March 16 £bn By asset class Property Equities 78.3 6% Equities Fixed Income 66.9 27% Aberdeen solutions Aberdeen Solutions 128.0 44% Property 19.6 Fixed income Total 292.8 23% Our strategy for diversification has progressed further 32
Slide 34: Broad distribution base to support more capabilities
Broad distribution base to support more capabilities Assets by client type AuM by client domicile Central banks government Middle East Closed-end agencies Asia & Africa funds 3% Pacific 2% 6% 6% Other institutional United 7% Americas Kingdom 16% 58% Pension funds Insurance 15% 44% Europe ex UK 18% O
Slide 35: Equities & Fixed income analysis
Equities & Fixed income analysis Equities Fixed income US Europe Asia European UK 2% 2% Global 3% 5% 3% 4% High yield Asia Pacific 3% 33% Australian Global 8% UK 22% 41% EMD 8% US 9% Emerging markets Money market 36% 21% 31 March 16 £bn 31 March 16 £bn Asia Pacific 26.0 UK 27.1 Emerging markets 28.4
Slide 36: Aberdeen solutions and Property analysis
Aberdeen solutions and Property analysis Aberdeen Solutions Property Global Alternatives Continental 1% 17% Europe 22% Quantitative investments Multi UK 17% asset 55% 66% Nordic 22% 31 March 16 £bn 31 March 16 £bn Multi asset 84.9 UK 10.7 Quantitative investments 21.3 Nordics 4.4 Alternatives 21.8 C
Slide 37: International reach: 38 offices across the world
International reach: 38 offices across the world AuM by client domicile Sales & Distribution Head Office Investment centres Sales & Distribution Boston Aberdeen Edinburgh London Bandung Miami Budapest Paris Bangkok New York Sales & Distribution Hong Kong Philadelphia Amsterdam Budapest Property cent
Slide 38: Performance
Performance 37 Aberdeen Asset Management PLC
Slide 39: Equity performance
Equity performance To 31 March 2016 YTD 1 year 3 years 5 years 10 years Aberdeen Benchmark Aberdeen Benchmark Aberdeen Benchmark Aberdeen Benchmark Aberdeen Benchmark % pa % pa % pa % pa % pa % pa % pa % pa % pa % pa Asia Pacific ex Japan Equity 1 3.63 4.52 -12.76 -8.42 -2.26 0.83 2.19 2.33 8.45 7.6
Slide 40: Fixed income performance
Fixed income performance To 31 March 2016 1 year 3 years 5 years 10 years Aberdeen Benchmark Aberdeen Benchmark Aberdeen Benchmark Aberdeen Benchmark % pa % pa % pa % pa % pa % pa % pa % pa Global Government 1 (USD) 4.86 5.92 0.74 0.49 1.13 1.16 4.47 4.19 Global Aggregate Core 2 (USD) 3.27 4.57 1.12
Slide 41: Aberdeen UK Property Performance
Aberdeen UK Property Performance Fund Performance Aberdeen UK Property Fund 15 10 5 0 -5 -10 -15 -20 -25 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 1 yr 2 yrs 3 yrs 5 yrs 7 yrs 10 yrs Since 2016 p.a. p.a. p.a. p.a. p.a. Launch p.a. YTD Since Mar 2 yrs 3 yrs 5 yrs 7 yrs 10 yrs Launch 2007 2008
Slide 42: Important information
Important information These presentation slides may contain forward-looking statements with respect to the financial condition and results of the operations and businesses of Aberdeen Asset Management PLC. These statements and forecasts involve risk and uncertainty because they relate to events and
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