Standard Life Aberdeen bullish after slashing divi amid drop in profit
Standard Life Aberdeen (SLA) has cut its dividend by a third after profits fell and clients pulled more cash from the fund manager in 2020.
The firm – which is undergoing a rebranding – however also outlined its aim to return the business to revenue and earnings growth. It revealed that adjusted pre-tax profit amounted to £487 million, a drop from £584m, on the back of lower revenue.
Fee-based revenue came in at £1.4bn, down from £1.6bn, and net outflows amounted to £29 billion, down from £58.4bn in 2019 – while assets under management and administration totalled £534.6bn, down from £544.6bn – including £25.9bn withdrawn by Lloyds Banking Group.
The board is recommending a final dividend in respect of 2020 of 7.3p per share, bringing the total dividend for the year to 14.6p per share – compared to 21.6p in 2019.
SLA – created when Standard Life and Aberdeen Asset Management merged in 2017 – explained that the board intends to maintain the total dividend at this level until covered at least 1.5 times by adjusted capital generation.
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The group also highlighted its acquisition, announced in December, of logistics real estate fund manager Tritax, and laid out aims to grow in part via acquisition opportunities to boost its firepower in growth areas such as exchange traded funds.
Chief executive Stephen Bird said: "We have seen growing momentum in the second half of 2020 with improved investment performance and flows which represent an inflection point as we pull out of the post-merger era. We have exited some non-core businesses and made an acquisition that has extended our capabilities in private markets. We have simplified and clarified leadership structures across the business and placed a refreshed focus on Asia.
“We have a clear vision; we will focus on the future to enable our clients to be better investors. Our pursuit of client-led growth, combined with focus on efficiency and careful deployment of capital, will enable us to generate sustainable value for our shareholders.
“At this reset point for this business, we have rebased to set firm foundations on which we can build something great. I'm excited about what's to come."
John Moore, senior investment manager at Brewin Dolphin, noted that SLA had been undergoing a “significant transition” before the outbreak of the pandemic. “Nevertheless, the investment house is beginning to see the benefits of making tough decisions and is emerging on the other side in a stronger position than it was.
“Through disposals and simplification of its business, [SLA] is sitting on a very strong surplus capital position, but has taken the sensible decision to rebase its dividend as part of a balance of investing and capturing future opportunities at this time of change – shareholders will still be rewarded for their patience with an above-average yield.
"The acquisition of Tritax is indicative of a new direction of travel in the post-Skeoch and Gilbert world, and it seems likely that other specialist asset managers and investment boutiques will be of interest as part of a twin strategy of continued improvement at the core and capturing niche growth opportunities. There is still work to do, but Standard Life Aberdeen appears to be building solid foundations for the future.”