Abrn announces first revenue increase since merger

Abrdn announced an increase in fee-based revenue for the first time since the merger of Aberdeen Asset Management and Standard Life in 2017.

As part of its annual results, released this morning (March 1), the fund house formerly known as Standard Life Aberdeen recorded a 6% rise in fee-based income to £1.5bn in 2021.

That pushed adjusted operating profit up 47% to £323m from 2020, and pre-tax profit rose 33% to £1.1bn.

The group’s cost-to-income ratio rose six percentage points to 79%, and earnings per share rose to 46 pence.

Although the company did not see any net inflows, net redemptions slowed from £29bn in 2020 to £6.2bn in 2021.

Assets under management rose 1% to £542 billion.

Stephen Bird, chief executive of Abrn, said 2021 was the group’s “reset year”.

“In 2021, we have set out a clear strategy on how we are going to create long-term sustainable growth and stop the revenue decline,” he said.

Bird said the company has made “tremendous progress” in simplifying and expanding its relationship with its biggest customer, Phoenix, by successfully renaming and divesting non-core assets.

“More broadly, we have sharpened the focus of our investment activities to identify key areas where we have a real competitive advantage.”

The results do not include the acquisition of Interactive Investor, which was announced in December.

Bird said the £1.5 billion acquisition will be transformational, diversifying the group’s revenue and “significantly” expanding customer reach.

“As indicated during our announcement, this acquisition is expected to generate double-digit earnings in the first full year following its completion,” he said.

Impact of Russia

Speaking about the impact of economic sanctions on Russia following its invasion of Ukraine, Bird said the company had less than half a percent of customer money invested in Russia.

“We haven’t had to suspend any funds yet either, as the exposure to Russia, Ukraine and Belarus is a limited component of the funds and so there is plenty of cash that can cope. at the normal level of redemptions.”

He added that the group has yet to see a rush of redemption requests for these funds.

Abrn’s wrap and lift rigs generated £178m in paid revenue, a 30% year-on-year increase, but operating expenses rose from a loss of £89m in 2020 to a loss of £104m in 2021.

Struggling after merger

The fund house changed its name in April last year after selling the Standard Life brand to Phoenix Group.

The group had struggled since the merger of Aberdeen Asset Management and Standard Life in 2017, with co-chief executives Martin Gilbert and Keith Skeoch both leaving the company in the following years.

The company’s 2020 accounts showed net outflows of £29bn, with adjusted pre-tax profits down 17% to £487m.

Bird has previously hinted that he wants to grow the business through acquisitions and, as of June 30, the business had £2.8bn of regulatory capital, according to its results.

Sallie R. Loera