Aberdeen Group Plc

Good morning everyone and welcome to Aberdeen's 2023 half year results presentation. It's great to see those of you who have joined us here in our new offices in London and welcome also to those listening remotely. I'm delighted to have our executive leadership team with us. We'll be taking you through our strategy and progress. Ian Jenkins, our interim CFO, will take you through the financials and then we'll open up for questions. At our full year results in February, I described 2022 as one of the hardest investing years in living memory. Well, 2023 has been a continuation of those challenging markets. We're facing geopolitical risks, stubborn inflation, driving interest rate rises, emerging credit risk, and the evolving industry dynamics in traditional asset management, such as the continuing growth of passive and index investing, the democratization of technology and finance, and the rapid expansion of alternatives. Against this backdrop, we are focusing on the things we can control in building a stronger business model. Our first half results for 2023 demonstrate the resilience that we built into the group. We've delivered a 4% increase in revenue and a 10% increase in profits, thanks to the six months contribution from IEA. We're committed to reducing costs as a percentage of revenues by streamlining and refocusing on our areas of strength in the investments business. We're on track to achieve our net £75 million cost reduction target with £30 million delivered in the first half. We've made significant progress in simplifying our business, closing or merging 43 funds, bringing the total to 101 out of an upsized target of 143. In our UK savings and wealth businesses, we've implemented two critical platform and technology upgrades to enhance the user experience for clients. A complete redesign of AI's front-end technology and a full platform upgrade within Advisor. We've also been diligent in managing our capital. We sold our remaining stakes in HDFC Life and HDFC Asset Management during the first half, generating £535 million in cash and further streamlining our group structure. The discounts on these transactions were kept tight at around 1%. As promised, we've continued to return excess capital with the initial £150 million buyback nearly complete, and today we're announcing an extension of this programme to a total of £300 million. With the shape of the group now settled through the acquisition of AI, our focus is on the investments business. We've made strategic moves such as the acquisition of US-based Tecla Capital and the sale of our non-core US private equity business. Changes in our portfolio will seek to capture the most attractive mega trends that will shape the future of the investment industry with health and biotech being one of them. Tekla Capital is positioned at the forefront of this trend and strengthens our closed end fund business where we are already a top three global player with 27 billion pounds of assets once the Tekla deal closes in the second half. You can expect to see us execute against strategic bolt-on investments like this as we seek to grow and strengthen our investments business. As you're aware, we're transforming Aberdeen from its traditional insurance and asset management heritage to a customer-centric investing business fit for the future. We have positioned ourselves for growth across the three businesses, investment, advisor, and personal. Our diversified model caters to our clients' needs and gives us many more ways to win their trust and help them be better investors. In another challenging year for investing, Investment flows, personal and advisor, have offset the reduced revenue within investments. II has already surpassed the original investment case that we set out at the time of the deal in 2022 and it has much more growth potential ahead of it. Together, personal and advisor, accounted for over 85% of Aberdeen's adjusted profits of £127 million in the half. Our investment to achieve this diversification has improved our operating margin mix as platforms have a considerably lower cost to serve than asset managers. We've had a busy year so far, making significant operational and strategic process across the group, as you can see here on the slide. Focusing on our investments business, we've continued to move swiftly, taking decisive action that was necessary to achieve a more satisfactory level of profitability and to establish a solid foundation upon which we can grow. Looking at our strategic and operational progress over the last six months, we've built a team of talented and driven leaders as we simplified and embedded our structure and we continue to attract top talent to the company. Rennie Bullman has been appointed as sole CEO of Investments, and Peter Branner has joined as chief investment officer. Xavier Meyer was appointed as head of UK and EMEA, as well as chief client officer. And we recently announced that Jason Windsor will join us as group CFO in October. The Tecla acquisition exemplifies our commitment to investing in solid businesses with strong track records of growth. The Tekla team has an impressive 20-year record in specialized healthcare and biotech thematic closed-end funds with $3.2 billion of assets and $32 million of revenues. The Tekla investment team will join us and support the launch of new products into this high-growth theme. Now I'll hand over to the Vector CEOs who will discuss their progress and future positioning, beginning with Reni.

Thank you, Stephen. Good morning, everyone. As this is my first results presentation since taking on the expanded role of the investment business, I'm glad to be here in person, not somewhere back on the screen anymore. The current environment is challenging for everyone, with the industry seeing well over $200 billion in outflows from cross-border mutual funds in the first half year of this year. I want to begin outlining how I think about this business. Firstly, how are we performing in terms of flows compared to peers? Secondly, are our capabilities and product pipeline competitive to succeed? Thirdly, are we improving our overall profitability and quality of earnings? Starting with the flows, our sales traction is in line or even outperforming the industry in some areas. The slide shows you our gross sales, redemptions, and net flows over the last two and a half years, excluding the historical Lloyd's withdrawals and liquidity flows. We have maintained consistent gross inflows, reaching $22.1 billion in the first half. Our largest gross inflows have been in specialist funds in our key areas of focus. 750 million gross inflows into our China specialist equity fund, which has a strong long-term performance and the recent Morningstar Silver rating. 300 million gross inflows into our APEC Sustainable Equity Fund and 350 million gross inflows into our Euro Corporate Bond Fund. Our Phoenix partnerships continue to produce results, with 3.2 billion of gross inflows in the first half year from their bulk purchase annuity spaces, and we expect this to continue. We are committed to Phoenix as our largest client. The strategic alignment between our firms is probably fair to say has never been better. Aberdeen is the leading beneficiary of Phoenix bulk purchase annuities and the new open business growth. Both areas that are strategic priorities for Phoenix and where they continue to make strong progress. Legacy products, including GARS, contributed to over 500 million of outflows in the first half. As part of our continuing rationalization that Stephen mentioned, we have announced merging the residual GARs assets into our top quartile diversified assets strategies. Total net outflows from investments excluding liquidity were 5.7 billion in the first half or 1.6% of opening OEM. However, and I want to stress that, we returned to a net inflow of 200 million in quarter two, evidencing our solid sales teams and client relationships. So in summary, we are selling well and we are defending our position effectively in a highly competitive market. Now, if we move to our offering shelf, at our full year results, we have outlined our strategy to reorganize the investment business into public markets and alternatives. We have a very robust pipeline across these core strengths, and we're confident in winning new business as we deliver value for our clients and the firm. In public markets, our most significant current growth opportunities lies in fixed income, where we manage 125 billion in assets, including assets managed for Phoenix. Fixed income is a core competency rooted in our heritage, and with the recent market shift towards fixed income as interest rates rose, our pipeline is encouraging. This has not been the case, quite frankly, for many years. Our confidence in our capabilities here is demonstrated by our investment performance, with 77% outperforming over three years. In credit, 99% of our assets are outperforming over three years. Key funds like emerging market debt, euro high yield, and our new climate transition bond were top quartile performers in the first half year. With the current high interest rate environment, we therefore see strong demand in credit where we have a robust pipeline. We have recent mandate wins in emerging market corporate debt and euro investment grade bonds that are yet to be funded. In specialist equities, we are focusing on our established strengths, Asia, emerging markets, small and mid-cap, equity income, and sustainability. 78% of our emerging market assets is outperforming over three years. We are also aiming to widen the distribution of our top quartile global emerging markets income capability. And we believe our strong sustainability credentials position us particularly well in this area of client demand. Now, our 81 billion alternatives franchise has scale and has recently undergone a repositioning to better serve client needs. In a market with variable performance, our listed real estate funds performed particularly in quarter two. So even as we restructure, we continue to win notable new business, such as the notable $4 billion allocation from the border to coast pension partnership, which also has not yet funded. As a matter of fact, real assets make up the majority of our one not-funded pipeline, including within our real estate multi-manager business. As a leading player in the logistics space through Tritax, we manage two of the largest listed logistics funds in the European market. Also, our private credit strategies amounting to 8 billion of AUM have built a very strong demand pipeline, including commercial real estate debt, fund finance, and tailored opportunities with insurers. To help drive this business forward, in particular, we have recently appointed a new head of private credit too. Our alternative investment solutions business includes our U.S. commodity ETF range with 5.7 billion assets, our funder funds and hedge fund indexes, and our emerging digital asset capabilities. In the first half, we have also reached a milestone in our digital asset strategy with Archax creating tokenized representations of interest in our Aberdeen Sterling flagship liquidity fund on their platform, which will actually start trading today. Pretty good timing, I have to say. As part of rationalization of our strengths, We have also reviewed our private equity business, which is largely a fund-to-fund business, and as a result, we have recently announced the sale of our U.S. private equity assets. So I hope these examples highlight for you the solid product and performance foundations that we are establishing, and we help us to grow our business going forward. Now, if we move to costs... As we pursue the simplification necessary to improve our cost income ratio, we are refocusing our business on areas of strengths through non-core exits and our ambitious fund rationalization program, which is on track. We recognize that there is still significant work to be done to address performance headwinds and subscale parts of our business, and we are taking appropriate actions. Let me illustrate this with two examples. We have consolidated our developed market equity strategies to focus on delivering in four areas of client demand. Sustainability, income, small cap, and thematics. This realignment helps our teams to concentrate on equity outcomes where clients continue to value an active approach. We've also reshaped and refocused our multi-asset offerings, an area of historical strength for Aberdeen. Our goal is to create products that meet today's market needs. As more wealth and saving responsibilities have devolved to private individuals or their advisors, there is a demand for outcome-oriented model portfolios, which we view as a key offering going forward. Our new CIO, Peter Brenner, will play a significant role in this process for sure. As Stephen mentioned, we are on track to deliver our net 75 million cost-saving targets. We have achieved 30 million of savings so far, partially driven by a 9% reduction in front and middle office headcounts. Additional actions in the second half are on track to deliver the full 75 million of savings this year. And we don't intend to stop here and are actively exploring further opportunities to simplify our business and improve efficiencies. I will now hand over to Noel to discuss the advisor business.

Thanks very much, Renee, and morning, everybody. Well, despite a challenging market, given the impact of the cost of living increases on savings and investment, we've achieved P&L growth for the business, with revenue up 12% at 103 million and adjusted operating profit up 29% at 49 million. Now, this success comes from a disciplined cost management and increased cash margin for Aberdeen and our customers. As a consequence, we achieved one of the best platform cost-income ratios in the market at 52%. In addition to this, we also maintained our A rating for financial strength from AKG and remain the only platform in the market to have this rating. Now, customer activity in the advice market has been significantly impacted by the shift from a low inflation, low interest rate environment to the high inflation, high interest rate environment. And this change has reduced both customers' propensity and also ability to save. In the first half, we saw a 25% decrease in infros from our large back book of existing customers. Additionally, we also experienced a 20% increase in outflows from customers in drawdown as they also adjusted to the increased cost of living. As a result, advisors have been focusing on assisting clients through the current economic challenges. But both of these trends align with the broader market dynamics. In February of this year, we launched the most significant technology upgrade since the RAP platform's debut in 2006, initiating the next stage of our advisor experience program. Now, this development has transformed our service proposition and has laid the foundation for future growth with a modern, modular tech stack that enables more frequent upgrades and improvements to get ahead of the market trends. So moving forward, the next stage of our advisor experience program will be the introduction of AdvisorOS later this year. This will be launched alongside our new on-platform pension proposition. What has already been delivered laid the technological groundwork for AdvisorOS, allowing us to launch without any substantial new investment. I'm confident that Advisor OS will reinforce our market-leading position in content and experience and act as a real differentiator for us. Replacing Wrap and Elevate, it will offer a single, flexible proposition to advisors. Advisor OS extends our existing services, allowing us to go well beyond traditional platform offerings to provide broader solutions for advisors to assist them to grow their businesses. We're also working very closely with our colleagues in investments to ensure our model portfolio service propositions are tailored to meet the needs of the advisor market. Despite the current market conditions, the mid-term market opportunity remains very attractive, with forecast market AUA growth of 11% per annum. So, through leveraging our technology upgrade and with the upcoming launch of our new on-platform pension, we're well positioned to drive new business through our three pillars of growth. Existing customers, new customers and new clients. Building on and reinforcing our leading position in this expanding market. With that, I'll now pass over to Richard to talk us through personal.