Scottish investment giant cuts dividend for first time since float in 2006

Mr Bird declared the company had reached a “turning point” in its bid to stem the outflows that have blighted it since the merger of Standard Life and Aberdeen Asset Management in 2017.

But investors reacted coolly to the move to “rebase” the dividend, with shares closing down 22.9p at 296.1p.

The company, which is poised to unveil a new corporate name in the coming weeks, reported a fall in adjusted profit before tax to £487 million from £584m for 2020, as fee based revenue dipped to £1.42 billion from £1.6bn.

But it pointed to a “significant improvement in institutional and wholesale net flows” in the second half. Its dominant fund management business reduced net outflows by £3.1bn in 2020, down from £17.4bn in 2019. This excluded £25.9bn of withdrawals linked to the end of its deal to manage the £109bn Scottish Widows mandate for Lloyds Banking Group. Assets under management and administration dropped to £534.6bn from £544.6bn.

Noting that the company’s adviser and financial planning businesses had grown assets in the second half, in addition to its “core” fund management division, Mr Bird declared: “I would not underestimate the importance of that turning point. When you look at the scale, since the merger, of outflows, we have really turned a corner there.”

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Mr Bird emphasised the company’s prospects for 2021, with its sales pipeline up 20 per cent on last year. “The pipeline is business that you have won, but you have not yet booked,” he said. “We are in the transition to growth, and it is exciting. The thing that gives us confidence is the investment performance. It is very broad based.”

He also dismissed the judgment of those who say the merger of Aberdeen and Standard Life had failed.

Recalling conversations he had with former joint chief executives Keith Skeoch and Martin Gilbert, he said: “I am lucky I am the re-set guy. I am lucky I have a fresh set of of eyes and I didn’t come from either Aberdeen or Standard Life. Our mission is to bring the company together – one firm, one brand and we will make it grow and we will make them proud. It is too early for people to say that it didn’t work. Our job is to prove that it can be greater than the sum of its parts.”

Mr Bird, who replaced Mr Skeoch when joined from Citi Group in September, defended the decision to rebase the dividend. It was the first cut since 2006, when former mutual Standard Life floated on the stock market.

The board recommended a final dividend of 7.3p per share, taking the total for the year to 14.6p, which compares with a total of 21.6p per share in 2019. The company said it would hold pay-outs at this level until it is covered by at last 1.5 times adjusted capital generation. Thereafter, it will seek to switch to a “progressive” dividend policy in line with earnings growth. Mr Bird pointed to the “scarcity” value of a stock offering yield of 4.6% in the current climate.

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The results came as Mr Bird unveiled a new strategy around three “vectors” of global asset management, its UK financial adviser technology platform, and its UK wealth and savings business. The UK and Asia are key areas of focus.

As part of the new approach, the company recently sold the Standard Life brand to Phoenix Group, ending a near-220 year association with the name. It paved the way for it to introduce a new single “unifying brand” for the whole business in the coming weeks. The moves comes three years after Phoenix acquired the company’s pension business that operates the Standard Life brand for £3.2bn, which followed the merger of the former Standard Life and Aberdeen Asset Management.

Mr Bird told journalists he was “only weeks away” from unveiling a new brand name for Standard Life Aberdeen, which he said would “differentiate” the company in the “crowded” financial services market. He said the new name has been “tested” with colleagues, some of whom had been with the business for decades, and said it was proving popular. People are looking forward to working for a single brand instead of five. “Why, because it is a more efficient thing to do," he said. "But it also unites people.

“When you see the answer, you will call me up and say: that made a lot of sense. That is what I am hoping for.”

A decision has still to be made on the future name of 1825, its financial planning business, Mr Bird said. “We will carefully evaluate that, but what we are going to have is a single plc name, a single band, a master brand for the whole company.”

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During 2020, Standard Life Aberdeen announced the proposed exit of its direct real estate businesses in the Nordics, and from Indonesia, while acquiring a 60 per cent stake in Tritax, a fund manager focused on the logistics sector, in a deal worth an initial £64m.

That price could rise to more than £200m if it decides to acquire the remaining 40%, which depends on Tritax founders achieving “earn out” and “earn up” targets.

Last year the company sold Parmenion, one of its three adviser platform businesses. It plans to integrate its two remaining adviser platforms, Wrap and Elevate, into a single infrastructure this year. The company also sold down a further stake in HDF Life, the Indian insurance business, during 2020.

Mr Bird said: “Simplicity is key. We are doing fewer things because by doing fewer things we can do them better and in a more efficient way.”

The period saw adjusted operating costs reduce by 10% to £1.2bn, though Mr Bird believes the cost to income ratio is too high. He said “smarter use of technology” would help reduce costs.