Abrdn’s net operating revenue for the first six months of 2024 came in at £667m – a 7% decrease compared to revenue of £721m over the same time period last year.
According to its results published on the London Stock Exchange today (6 August), this fall was the result of outflows, “expected” lower margins within the Investments arm of the business, and the “net impact of corporate actions”. Total administrative expenses for the business, including restructuring, stood at £673m for the six months – a decrease on the £764m of expenses occurred over the same time period last year.
The reduction in revenue was also partially offset by an increase in revenue from the Adviser arm of its business, with net revenue coming in at £103m, compared to a net loss of £54m last year.
Adjusted operating expenses for the overall business fell by 9% to £539m, while adjusted operating profit rose by 1% to £128m.
IFRS pre-tax profit stood at £187m, a far cry from the business’s £169m loss over the same time frame last year, which abrdn said was partially the result of the sale of its private equity business, as well as lower losses from the fall in value of listed stakes held on the firm’s balance sheet. These losses stood at £181m in H1 2023, but came in at just £15m during the first six months of this year.
Assets under management and advice (AUMA) rose by 2% to £505.9bn due to positive market movements and flows.
The Investments arms of the business struggled during the first half of this year, with net operating revenue coming in 12% lower than H1 last year at £406m.
However, adjusted operating expenses fell by 13% to £372m, which abrdn said was the result of both staff and non-staff expense savings.
Adjusted operating profit remained unchanged at £34m, while net outflows stood at £1bn. This is a significant decrease in net outflows during H1 2023, which stood at £6.5bn, which the company said was due to higher gross inflows of £31.3bn, a 15.9% uptick compared to last year. These inflows were largely seen across fixed income, liquidity and quantitative products. In contrast, net outflows were suffered across multi-asset and equity products.
Some 54% of portfolios beat their benchmarks over three years to the end of H1 2024, a three percentage-point increase compared to the end of H1 2023.
In terms of the Adviser arm of abrdn, net operating revenue came in 16% higher than the same period in 2023 at £119m – £13m of which came from a “revised distribution arrangement” for services provided to Phoenix for its Wrap Sipp.
However, net outflows more than doubled to £2bn, which abrdn said was due to “the continued impact of the higher cost of living, further IFA consolidation and inflation-beating cash-saving options in the market”.
The company said it is already taking steps to stem these outflows, including launching a new cash savings solution and a “strategic reprice” to increase competitiveness.
For the interactive investor platform, which abrdn acquired in 2022, net operating revenue came in 10% lower at £137m, while net customer growth increased by 4% to 424,000 due to increased demand for Sipps. Net inflows increased from £1.8bn in H1 2023, to £3.1bn in H1 2024, due to customer growth.
Jason Windsor, interim chief executive officer of abrdn, said: “In the first half of the year we have made an encouraging start as we become more efficient, and we enhance our propositions to lay the foundations for growth.
“We have three core businesses, with strong, scale positions in attractive markets and each has headroom to grow. While market conditions remain challenging, we are firmly on track to realise at least £150m of annualised cost savings by the end of 2025.
“These are solid foundations, positioning us for a step-change in performance and allowing us to invest further in growth.”
He added: “I am excited about the potential in abrdn, and confident that by delivering against our priorities, we can deliver better outcomes for our clients, more attractive performance for our shareholders and nurture a culture that sustains long-term success.”
