Standard Life Plc · LSE:SDLF
Standard Life — FY2013 Earnings Presentation
45 slides from Standard Life's earnings presentation, February 2014
Slide 1: Full year results 2013
Full year results 2013 Strong market positions delivering growth in assets, revenue and returns David Nish Chief Executive
Slide 2: Forward-looking statements
This presentation may contain certain “forward-looking statements” with respect to certain of Standard Life's plans and its current goals and expectations relating to its future financial condition, performance, results, strategy and objectives. Statements containing the words “believes”, “intends”,
Slide 3: Strong market positions delivering growth in assets, revenue and returns
Strong market positions delivering growth in assets, revenue and returns • Attracting more customers and clients • Leveraging the expertise of Standard Life Investments • Significant operational leverage • Supportive structural trends and leading positions in fast growing markets • Strong balance sh
Slide 4: Distribution capability accelerating asset growth
Distribution capability accelerating asset growth Total UK and Europe North America Asia £244bn £202bn £35bn £8bn Standard Life Standard Life Standard Life distribution Long-term UK Canada Retail Hong Kong savings Multi-channel including Singapore retail, corporate and direct Canada Corporate Dubai
Slide 5: 2013 operational highlights
2013 operational highlights Increasing Maximising assets revenue Lower unit costs: MyFolio AUA of £4bn 340,000 new customers in UK distribution Acquisition Long-term savings c25% of Wrap platform (improved 11bps to 145bps) Platform AUA of £19.4bn assets managed by SLI Market-leading retail Maintenan
Slide 6: 2013 financial highlights
2013 financial highlights Financial highlights 2013 20121 Assets and flows Assets under administration £244.2bn £218.1bn Standard Life Investments third party AUM £97.4bn £83.0bn Group AUA net inflows £9.6bn £5.0bn Profitability Fee based revenue £1,459m £1,271m Underlying Group performance £638m £5
Slide 7: Group operating profit
Group operating profit Group operating profit before tax 2013 20121 £m £m Business unit underlying performance 704 561 +25% Group centre costs (53) (50) Group centre capital management (13) 23 Group underlying performance 638 534 +19% UK professional indemnity insurance claim - 96 Operating assumpti
Slide 8: Revenue growth and cost control driving performance
Revenue growth and cost control driving performance +£110m £188m (£78m) +15% +7% £63m (£30m) £704m +£143m OR +25% 00 £561m 2012 Increase in fee Increase in Increase in Lower capital 2013 based revenue expenses spread/risk management margin and JV result Business unit underlying performance up 25% Fu
Slide 9: Lower unit costs with scope for further improvements
Lower unit costs with scope for further improvements Acquisition expense bps1 Maintenance expense bps2 225bps 215 208 Group 60bps Group 54 190 UK 52 UK ` 47 169 46 189 45 183 49 156 41 168 145 41 144 36 133 34 31 106 26 75bps 20bps 2008 2009 2010 2011 2012 2013 ` 2008 2009 2010 2011 2012 2013 • Furt
Slide 10: Business unit review
Business unit review Standard Life.
Slide 11: Business underlying performance up 25% to £704m
Business underlying performance up 25% to £704m UK SLI Canada Europe AEM +£34m (+13%) +£47m (+32%) +£73m (+67%) -£2m (-5%) -£9m £295m £261m £192m £182m £145m £109m £43m £41m £3m (£6m) 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 Full year results 2013 | February 2014 11
Slide 12: Continuing strong growth from the UK business
Continuing strong growth from the UK business 2013 20121 • Increasing assets with fee AUA2 up 19% to £101.3bn £m £m • 9% increase in fee based revenue Fee based revenue 727 667 • Expected reduction in revenue margins more than Spread/risk margin 114 113 offset by lower unit costs Total income 841 78
Slide 13: Sustained contribution from back book and annuities
Sustained contribution from back book and annuities Stable profit contribution from older propositions Stable underlying spread/risk £196m £200m £186m £188m £120m £179m £106m £100m £102m underlying contribution £79m contribution Spread/risk Retail old £0m £0m 2010 2011 2012 2013 2010 2011 2012 2013
Slide 14: Strong growth in our corporate business
Strong growth in our corporate business Growing customers Increasing assets Growing profit contribution 292k 300k £30bn £100m £29bn £88m £90m1 New customers Contribution 159k £25bn £49m AUA £47m 118k 70k £22bn £21bn 0k £20bn £0m 2010 2011 2012 2013 2010 2011 2012 2013 2010 2011 2012 2013 • Customer
Slide 15: Opportunities in the growing corporate market
Opportunities in the growing corporate market Growing market share Growing DC market2 Auto enrolment (AE) is just beginning3 £3.4tn 4.8m 20% £3.5tn 5m 17.2%1 £3.3tn Market staging profile 13.5% £2.2tn Pension assets Market share (employees) 2.2m £1.3tn 1.7m £1.2tn 1.4m DB DC 34k 46k 512k 661k £0.4tn
Slide 16: Retail business a winner in adviser market
Retail business a winner in adviser market Deepening relationships with more advisers Increasing assets Growing profit contribution 1,300 £40bn £39bn £100m 1,236 £80m1 1,137 £54m Adviser firms Contribution 999 £29bn AUA £10m £24bn 820 £21bn 750 £20bn (£20m) (£14m) 2010 2011 2012 2013 2010 2011 2012
Slide 17: Significant opportunities in the Retail market
Significant opportunities in the Retail market Growing market and our market share Concentration among fewer providers Focused multi-channel approach £600bn3 Advised Workplace Direct 33 platforms operate in Growing retail customer base today’s £231bn1 market £19bn Market share: Market £65bn c3% shar
Slide 18: Operational progress in Canada
Operational progress in Canada 2013 20121 • Growing revenues and managing expenses £m £m • Fee AUA up 9% to £17.3bn Fee based revenue 194 172 Spread/risk margin 285 221 • Revenue up 13% to £194m Total income 479 393 • Expenses down 3% to £310m Acquisition expenses (76) (79) • Increasing spread/risk
Slide 19: Growing Corporate and Retail fee business in Canada
Growing Corporate and Retail fee business in Canada Corporate fee business Retail fee business $7.6bn $25bn $22.7bn $8bn $2.6bn $19.5bn $6.3bn $17.2bn $5.4bn $5.5bn $2.5bn $16.7bn $2.5bn AUA (CAN$) AUA (CAN$) $2.6bn $5.0bn $3.8bn $2.8bn $3.0bn $0bn $0bn 2010 2011 2012 2013 2010 2011 2012 2013 Segreg
Slide 20: Strong flows and investment performance driving Standard Life Investments profit
Strong flows and investment performance driving Standard Life Investments profit 2013 2012 • Strong third party net inflows of £10.1bn (12% of £m £m opening AUM) Fee based revenue 521 408 • Third party revenue up 34% to £392m (2012: £292m) Expenses (351) (281) • Operating profit up 32%: Share of JVs
Slide 21: Standard Life Investments broad asset class diversity
Standard Life Investments broad asset class diversity Third party net flows by asset class Third party AUM by asset class £10.1bn £10.5bn 8% 4% 20% £6.1bn Equities 7% Fixed income Multi-asset £97.4bn MyFolio Other 33% 28% Real estate (£3.0bn) 2012 2013 Strong and diverse inflows • Gross inflows of £
Slide 22: Standard Life Investments broadening geographic reach and distribution capability
Standard Life Investments broadening geographic reach and distribution capability Third party net flows by geography Third party AUM by geography £10.5bn £10.1bn 6% UK 18% Europe £6.1bn North America £97.4bn Asia 11% 65% £0bn 2012 2013 Global growth Diverse distribution capability • Expansion in Bos
Slide 23: Innovating in response to changing client needs
Innovating in response to changing client needs Responding to Clients seeking Increasing liability Need for outcome changing client lower volatility awareness orientated solutions needs • Launched Enhanced-Diversification Growth Fund for fast growing DC pension market Outcome orientated • Absolute r
Slide 24: Cash and capital
Cash and capital Standard Life.
Slide 25: Strong improvement in Group underlying performance
Strong improvement in Group underlying performance £638m £534m £517m £494m £487m (£121m) (£47m) £417m (£77m) £337m £270m (£67m) 2010 2011 2012 2013 Group underlying performance before tax Tax on Group underlying performance Group underlying performance after tax Full year results 2013 | February 201
Slide 26: Underlying cash generation up 125% since 2010 and dividend coverage increased
Underlying cash generation up 125% since 2010 and dividend coverage increased 1.32x 1.33x 1.24x £517m £487m £497m (£20m) £454m (£33m) 0.75x £417m £398m (£19m) £375m £345m £322m £295m £273m £270m £157m £221m (£49m) £138m £49m 2010 2011 2012 2013 Group underlying performance after tax IFRS to operatin
Slide 27: Final dividend up 8.0% to 10.58p
Final dividend up 8.0% to 10.58p 15.80p 14.70p +7.5% 13.80p +6.5% 13.00p +6.2% 12.24p +6.2% 11.77p 11.50p +4.0% 10.80p +2.3% +6.5% 20061 2007 2008 2009 2010 2011 2012 2013 • Continuous dividend growth since IPO • Focused on delivering a progressive dividend • Special dividend of 12.80p paid in Q2 20
Slide 28: Responding to industry issues and changing customer needs
Responding to industry issues and changing customer needs • Track record of leading the way on transparency • Clear focus on value for customers • Innovative propositions to meet changing customer needs • Well positioned regarding areas of UK regulatory focus Delivering the right propositions and va
Slide 29: Opportunities for 2014
Opportunities for 2014 Increasing Maximising assets revenue 3,000 AE implementations for Transparent market pricing existing clients Continuing to drive down unit supports Wrap platform growth Driving profit distribution Long-term costs savings Growth in the SME market Providing value to customers O
Slide 30: Strong market positions delivering growth in assets, revenue and returns
Strong market positions delivering growth in assets, revenue and returns • Attracting more customers and clients • Leveraging the expertise of Standard Life Investments • Significant operational leverage • Supportive structural trends and leading positions in fast growing markets • Continuing strong
Slide 31: Appendix
Full Year Results 2013 Appendix
Slide 32: Operating profit by business unit
Operating profit by business unit Operating profit Asia and UK and Europe Standard Life Canada Emerging Other Eliminations Total Investments Markets 2013 20121 2013 2012 2013 20121 2013 2012 2013 2012 2013 2012 2013 20121 £m £m £m £m £m £m £m £m £m £m £m £m £m £m Fee based revenue 927 839 521 408 19
Slide 33: UK profit contribution
UK profit contribution UK profit contribution 2013 20121 £m £m Retail – new 80 54 Retail – old 188 179 Retail fee based business contribution 268 233 Corporate 90 88 Fee based business contribution 358 321 Spread/risk 102 100 Total profit contribution 460 421 Indirect expenses and capital management
Slide 34: Resilient net flows in Europe
Resilient net flows in Europe 2013 2012 • Fee based revenue up 16% driven by increased AUA and foreign exchange movements £m £m Fee based revenue 200 172 • Rise in acquisition expenses reflects higher commission costs and increased investment in Spread/risk margin 4 6 Germany Total income 204 178 •
Slide 35: Continuing progress in Asia and Emerging Markets
Continuing progress in Asia and Emerging Markets 2013 2012 • Fee based revenue up 17% driven by growth in new business: £m £m • Fee business net inflows up 45% to £80m Fee based revenue 54 46 • PVNBP sales up 86% to £468m Acquisition expenses (22) (10) Maintenance expenses (43) (41) • Ranked 3rd in
Slide 36: Standard Life Investments third party AUM
Standard Life Investments third party AUM £22.8bn (£12.7bn) £4.3bn £97.4bn £83.0bn £71.6bn £71.8bn £56.9bn 34bps 35bps 37bps1 40bps 44bps 31 Dec 2009 31 Dec 2010 31 Dec 2011 31 Dec 2012 Gross inflows Redemptions Market/other 31 Dec 2013 movements 1. Excludes fee from the external transfer of UK mone
Slide 37: Standard Life Investments delivering strong growth in constantly evolving markets
Standard Life Investments delivering strong growth in constantly evolving markets Third party net inflows Third party AUM £bn £bn 11 100 10 9 80 8 7 60 6 5 40 4 3 2 20 1 0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2
Slide 38: Spread/risk margin
Spread/risk margin Spread/risk margin UK and Europe Canada Total 2013 2012 2013 2012 2013 2012 £m £m £m £m £m £m New business 59 73 10 8 69 81 Existing business 44 37 226 185 270 222 103 110 236 193 339 303 Impact of regular management actions 15 9 49 28 64 37 Spread/risk margin (excl. other operati
Slide 39: Capital and cash
Capital and cash Group operating profit after tax1 £602m Impact of different treatment of (£36m) assets and actuarial reserves DAC and DIR, intangibles, £16m tax and other EEV operating capital and £582m cash generation 1. Group operating profit before tax of £751m, tax on operating profit of (£141m
Slide 40: EEV operating capital and cash generation
EEV operating capital and cash generation EEV operating capital and cash generation Core Gross Total Gross efficiency operating Gross NBS Total and back capital book and cash £m £m £m £m £m £m 2013 UK and Europe1 416 (174) 242 159 401 575 Canada 129 (30) 99 109 208 238 Asia and Emerging Markets 40 (
Slide 41: Fee based revenue
Fee based revenue Fee based revenue 2013 2012 Average Average Revenue Revenue Revenue Revenue AUA AUA £bn bps £m £bn bps £m UK 120.1 67 727 105.9 72 667 Europe 15.1 133 200 12.5 138 172 UK and Europe 927 839 Canada 17.1 113 194 15.1 113 172 Asia and Emerging Markets 54 46 Standard Life Investments t
Slide 42: EEV new business margins
EEV new business margins EEV new business margins 2013 2012 Undiscounted PVNBP IRR payback margin NBC PVNBP IRR NBC PVNBP % years % £m £m % £m £m Fee 14 7 0.9 157 16,712 15 178 12,599 Spread/risk N/A 0 14.5 49 335 N/A 71 463 UK 18 6 1.2 206 17,047 22 249 13,062 Europe 11 8 1.9 39 2,029 6 18 1,873 UK
Slide 43: Growing our embedded value
Growing our embedded value £9bn EEV operating profit £254m £9,079m (£656m) before tax £915m £9bn £595m (£232m) £8,423m £320m £8,423m £8,142m £4,995m £7bn •Jun £4bn 1 Jan 2013 New Other EEV Tax on EEV Non- 31 Dec 2013 Dividends 31 Dec 2013 IPO 31 Dec business operating operating operating before paid
Slide 44: Strong balance sheet
Strong balance sheet • IGD surplus of £3.8bn1 (2012: £4.1bn1) and leverage of 31%2 (2012: 31%2) after: • Payment of full year, interim and special dividends of £0.7bn • Acquisition of the private client division of Newton Management Limited • Capital position remains relatively insensitive to market
Slide 45: Capital tier structure
Capital tier structure Capital tier structure 20131 20121 £bn £bn Group core tier 1 7.4 7.0 Group innovative tier 1 0.7 0.6 Deductions from tier 1 (0.7) (0.7) Total Group tier 1 capital 7.4 6.9 Group upper tier 2 0.5 0.5 Group lower tier 2 0.7 0.7 Group capital resources before deductions 8.6 8.1 Gr