Standard Life Plc · LSE:SDLF
Standard Life — FY2015 Earnings Presentation
62 slides from Standard Life's earnings presentation, February 2016
Slide 1: Full year results 2015
Standard Life plc Full year results 2015 Driving performance and growth
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: Agenda
Agenda Annual results presentation • Driving performance and growth • Full year results 2015 • Building a simplified and well diversified investment company • Questions & answers Solvency II insight session Standard Life plc | Full year results 2015 | February 2016 3
Slide 4: Driving performance and growth
Driving performance and growth • Growth channels gross inflows up 28% to £40.8bn (2014: £31.8bn) with net inflows up 144% to £14.9bn (2014: £6.1bn) • Launched 13 new investment propositions and MyFolio AUM now over £8bn • Helped over 50,000 people through pension freedoms in 2015 and have now added
Slide 5: Building a simplified and well diversified investment company
Building a simplified and well diversified investment company Demutualisation Transformation Sustainable Growth Strengthening the balance sheet Simplifying our business Building a simplified and well and raising capital to fund through disposals of subscale diversified world-class transformation int
Slide 6: Well positioned to capitalise on major global trends
Well positioned to capitalise on major global trends shaping the savings and investments landscape Democratisation of Innovation, technology financial risk and digitalisation Slow growth, low inflation, Rebuilding trust in compressed return financial services environment Standard Life plc | Full yea
Slide 7: Our vision for a world-class investment company
Our vision for a world-class investment company • World-class investment company • Putting long-term client and customer needs at our heart • Trusted to look after client and customer assets • Business that people aspire to work for and be associated with • A common culture built on teamwork, respec
Slide 8: How we think about our business
How we think about our business • Growth channels driving increase in assets, revenue and profit Primarily: • Standard Life Investments Institutional and Wholesale • UK Pensions and Savings Workplace and Retail new style propositions • Mature books providing stable and consistent contribution to pro
Slide 9: Growth channels driving increase in fee AUA
Growth channels driving increase in fee AUA £225bn £198.3bn £180.7bn £147.1bn fee based assets Growth channel £120.7bn £100.0bn £102.6bn £0bn 2010 2011 2012 2013 2014 2015 Growth channels with almost £200bn of assets and 5 year CAGR of 15% All figures are reported on a continuing operations basis. S
Slide 10: Growth channels driving increase in revenue and profit
Growth channels driving increase in revenue and profit Group underlying income Group underlying performance £2,000m £1,000m £5.2bn £0.8bn £1,680m Group underlying income underlying performance £101m £483m £630m £1,114m £101m Group £148m £1,096m £529m £439m +108% +394% £255m £527m £148m £107m £0m £0m
Slide 11: Full year results 2015
Full year results 2015 Driving performance and growth Luke Savage
Slide 12: Delivering across our simple business model
Delivering across our simple business model Increasing assets Maximising revenue Driving profit Group AUA Fee based revenue Total expense costs Group underlying up 4% to £307.4bn up 10% to £1,579m down 6 bps to 40bps1 performance (2014: £296.6bn) (2014: £1,429m) (2014: 46bps2) up 12% to £630m (2014:
Slide 13: Group operating profit
Group operating profit Group operating profit before tax – continuing operations 2015 2014 £m £m Fee revenue 1,579 1,429 Spread/risk margin 101 140 Total income 1,680 1,569 Total operating expenses (1,115) (1,045) Capital management 9 2 Share of associates and JVs 56 39 Group underlying performance
Slide 14: Non-operating items
Non-operating items Total non-operating items – continuing and discontinued operations 2015 2014 £m £m One-off Gain on sale of Canadian business 1,102 - Closure of Singapore insurance business (40) - Acceleration of DAC amortisation in Hong Kong (46) - Impairment of intangible assets (7) (47) Define
Slide 15: Continuing growth in assets in volatile markets
Continuing growth in assets in volatile markets … Increasing assets +£14.9bn +£5.8bn (£1.3bn) +£12.6bn (£2.2bn) +£4.5bn £307.4bn +£0.2bn (£7.9bn) (£0.9bn) £296.6bn 2014 Growth channels Mature Associate Spread/risk Market/other 2015 Institutional & Workplace & Other (Ignis, Eliminations fee books and
Slide 16: Strong net inflows across our growth channels
… driven by strong net inflows across our Increasing assets growth channels … Institutional and Wholesale Workplace and Retail £15.0bn £15.0bn £12.6bn £9.3bn Net inflows Net inflows Wholesale Workplace £6.0bn Institutional £5.8bn Retail £5.1bn £5.2bn £1.9bn £2.2bn £3.9bn £3.3bn £2.9bn £0bn £0.8bn £0
Slide 17: Institutional and Wholesale global client base
… with Institutional and Wholesale benefiting from an Increasing assets increasingly global client base … Asia1 £15.0bn £10.3bn (9%) North £12.6bn America Institutional and Wholesale 33% £11.7bn (10%) £9.1bn net inflows 49% 67% 2015 Institutional £6.6bn Europe 35% £6.0bn £14.2bn and Wholesale 32% (1
Slide 18: Workplace and Retail customer demand
… and Workplace and Retail continuing to Increasing assets see strong customer demand AE success driving regular premium growth Wrap continues to lead the advised platform market £5.0bn £5.0bn £4.4bn Workplace regular premiums +27% £3.5bn Wrap net inflows1 £3.2bn £2.9bn £2.7bn £2.4bn +9% £2.4bn £2.2
Slide 19: Growth in assets driving strong increase in fee revenue
Growth in assets driving strong Maximising revenue increase in fee revenue £177m1 £1,579m +12% +£150m +10% £1,429m (£11m) (£16m) 2014 Reduction in Impact of Growth in 2015 UK fee revenue strength of underlying from cash Sterling on fee revenue balances Europe revenue 1. Includes increase in revenue
Slide 20: Spread/risk margin reduced in line with expectations
Spread/risk margin reduced in line with expectations Maximising revenue £140m • Reduction in annuity new business profit in line with expectations ALM £70m £1m £101m (£40m) • Lower level of asset liability management – in ALM £30m New line with previous guidance for 2015 of business New business £6m
Slide 21: Ongoing reduction in unit costs
Ongoing reduction in unit costs Lowering unit costs £83m1 £1,115m 60bps +£70m £1,045m operating expense bps2 54 (£13m) +7% 50 Group 46 40 40bps 2014 Impact of strength Growth in 20151 2012 2013 2014 2015 of Sterling on underlying Europe expenses expenses • Increase in expenses more than offset by gr
Slide 22: Fee revenue growth and scalability driving profit
Fee revenue growth and scalability driving profit Driving profit +24% £101m £630m £565m £150m £17m £529m1 £7m (£70m) £425m (£140m) 2014 2014 Increase in Increase in Increase in Increase in 2015 2015 underlying underlying fee revenue operating capital share of underlying underlying performance spread
Slide 23: Group underlying performance by business unit
Group underlying performance by business unit 2015 2014 £m £m Standard Life Investments 342 257 UK spread/risk margin 100 134 UK excluding spread/risk margin 191 174 UK Pensions and Savings 291 308 Europe Pensions and Savings 31 39 India and China (including associate and joint venture life business
Slide 24: Institutional and Wholesale driving profit in SLI
Institutional and Wholesale driving profit in SLI Standard Life Investments underlying performance Total AUM £157m1 £245.9bn £253.2bn 2014 2015 £10m £342m (£82m)2 +33% Third party AUM4 £257m £117.5bn £130.5bn 2014 2015 Third party revenue bps4 53bps 52bps 2014 Increase in Increase in HDFC AMC 2015 2
Slide 25: Continuing growth in Workplace and Retail
Continuing growth in Workplace and Retail UK Pensions and Savings underlying performance Total AUA £128.1bn £131.6bn £308m +10% £100m £291m 2014 2015 +6% Workplace & Retail net inflows £23m £5m £4m £191m £174m (£4m) £5.1bn £5.8bn (£134m) 2014 2015 (£11m) Fee revenue bps 62bps 59bps 2014 Reduction In
Slide 26: Delivering for our customers in the new pensions world
Delivering for our customers in the new pensions world Increased encashment offset by fall in outflows to annuities Building on our leading position in the drawdown market £1bn • New inflows into drawdown up 60% to £1.7bn and £865m drawdown AUA up 18% to £13.6bn (2014: £11.5bn) encashment and annuit
Slide 27: Solvency II, cash generation and dividend
Solvency II, cash generation and dividend
Slide 28: Well capitalised with a stable Solvency II surplus
Well capitalised with a stable Solvency II surplus £1.2bn Entity level SII capital not recognised £2.1bn Group regulatory surplus 162% Group regulatory solvency ratio £5.5bn Group • Position reflects our focus on fee business Solvency II £3.4bn and supports our progressive dividend policy Group capi
Slide 29: Stable regulatory surplus
Stable regulatory surplus Regulatory £1.2bn capital not £1.4bn £1.4bn £1.0bn £1.2bn £1.2bn recognised in £1.0bn £1.2bn £1.2bn £1.1bn Group position £Xbn £Xbn £Xbn Stable regulatory £2.1bn Group surplus £2.1bn £2.1bn £2.0bn £2.2bn £2.0bn £2.2bn £2.2bn £2.0bn £2.1bn X% X% X% Up 20% Down 20% Up 1.0% Do
Slide 30: Group underlying cash generation
Underlying cash generation and methodology unaffected by Solvency II £500m £447m Group underlying cash generation • Underlying cash generation continues to be £419m aligned to IFRS earnings with 94% of underlying income from fee business £347m £304m • Excludes share of operating profit from JVs of £
Slide 31: How we think about capital
How we think about capital Dividends not constrained by regulatory capital Continued focus on SL plc liquid resources £1.5bn £1.1bn £1.1bn and liquid resources £0.9bn SL plc cash Dividends to Cash £0.7bn IFRS profit SL plc and £0.6bn generation shareholders £0bn 2011 2012 2013 2014 2015 Driving divi
Slide 32: Dividend per share
Full year dividend up 7.8% to 18.36p 20p 18.36 17.03 +7.8% 15.80 +7.8% Dividend per share 14.70 +7.5% 13.80 13.00 +6.5% 12.24 +6.2% 11.50 11.77 +6.2% 10.80 +4.0% +6.5% +2.3% 5p 20061 2007 2008 2009 2010 2011 2012 2013 2014 2015 • £1.75bn return of value following sale of Canadian business • Cash gen
Slide 33: Building a simplified and well diversified investment company
Building a simplified and well diversified investment company Keith Skeoch Standard Life
Slide 34: Our simple business model continues to serve us well
Our simple business model continues to serve us well Increasing assets Maximising revenue Driving profit Lowering unit costs Optimising the balance sheet, generating cash and growing the dividend Standard Life plc | Full year results 2015 | February 2016 34
Slide 35: Building a simplified and well diversified investment company
Building a simplified and well diversified investment company Demutualisation Transformation Sustainable Growth Strengthening the balance sheet Simplifying our business Growth channels: and raising capital to fund through disposals of subscale transformation into a scalable and capital intensive uni
Slide 36: Our vision for a world-class investment company
Our vision for a world-class investment company • World-class investment company • Putting long-term client and customer needs at our heart • Trusted to look after client and customer assets • Business that people aspire to work for and be associated with • A common culture built on teamwork, respec
Slide 37: Well positioned to capitalise on major global trends
Well positioned to capitalise on major global trends shaping the savings and investments landscape • Regulatory change driving evolution of customer needs Democratisation of • Shift from DB to DC and auto enrolment driving growth in DC pensions financial risk • End of compulsory annuitisation increa
Slide 38: Simplified business driven forward by one team
Simplified business driven forward by one team Keith Skeoch Chief Executive Raj Singh Colin Walklin Paul Matthews Luke Savage Colin Clark Rod Paris Sandy Begbie Chief Chief Chief Executive, Chief Global Chief Chief Risk Officer Operating Officer UK & Europe Financial Officer Client Director Investme
Slide 39: One company, one culture, one vision
One company, one culture, one vision Simplified and well diversified investment company Growth channels Stable Institutional Wholesale Workplace Retail mature books India and China One team – increased co-operation, collaboration and efficiency associate and JV Clients and customers Standard Life pl
Slide 40: Institutional – meeting the needs of clients globally
Institutional – meeting the needs of clients globally Institutional market opportunity is large Leveraging Institutional distribution capability £70bn £67.0bn £61.4bn Institutional AUM £55.1bn Standard Life Global Investments share of £48.4bn institutional global institutional AUM AUM $45tn1 = 0.2%
Slide 41: Wholesale – benefiting from growing demand from individuals
Wholesale – benefiting from growing demand from individuals Fastest growing market segment globally 2016-20201 Our market share of higher margin Wholesale is growing £70bn Wholesale AUM Global New active ($2.0tn) wholesale £45.9bn Traditional active ($0.1tn) 2016-20 net inflows Passive ($1.0tn) £35.
Slide 42: Backed by consistently strong investment performance
Backed by consistently strong investment performance Investment performance1 1 year 91% 99% 69% 88% 3 years 81% 94% 98% 95% 5 years 82% 96% 88% 90% 2012 2013 2014 2015 1. Third party AUM above benchmark (excluding strategic partner life business). Standard Life plc | Full year results 2015 | Februar
Slide 43: Range of proven investment solutions
We have a range of proven investment solutions to drive sustainable long-term growth Smaller Cos Equities Multi-asset Fixed income Real estate Private Equity Uncon- strained Equity Core Listed Equity Property GARS Hybrid Re Core Real Estate High Yield Credit RETURN Govt Bonds Cash RISK Standard Life
Slide 44: Range of proven investment solutions
We have a range of proven investment solutions to drive sustainable long-term growth Smaller Cos Equities Multi-asset MyFolio EDGEM GEM Equity Fixed income Real estate Private Equity Uncon- strained Infra Equity Equity GFS My Core Listed Folio Equity Property V My GARS EDGF Hybrid Folio Equity Re IV
Slide 45: Range of proven investment solutions
We have a range of proven investment solutions to drive sustainable long-term growth Smaller Cos Equities Multi-asset MyFolio EDGEM GEM Equity Fixed income Real estate Private Equity Uncon- strained Infra Equity Equity GFS My Core Listed Folio Equity Property V My GARS EDGF Hybrid Folio Equity Re IV
Slide 46: Increasingly global presence and strong strategic partners
Benefiting from an increasingly global presence and strong strategic partners Edinburgh HQ Brussels Tianjin Dublin Amsterdam Seoul London Stockholm Beijing Toronto Tokyo Paris Frankfurt Munich Mumbai Boston Hub Los Angeles Madrid Zurich Milan Graz New York Regional Hubs Hong Kong Hub Offices Office
Slide 47: Workplace – positioned to benefit from DC market growth
Workplace – positioned to benefit from DC market growth DC workplace pensions market expected to grow strongly We are a leading provider of workplace pensions £1,000bn c£950bn £45bn workplace DC assets1 Projected growth in Workplace AUA c£575bn £33.0bn £32.0bn £29.2bn c£300bn c£225bn £24.5bn £0bn £2
Slide 48: Retail – growth benefiting from success of our platform
Retail – growth benefiting from success of our platform Advisers turning to platforms to drive scalability and efficiency We have the leading platform in the advised retail market £1,000bn £45bn £42.6bn c£770bn UK advised platform £37.3bn Retail AUA £33.8bn market1 £27.6bn c£230bn £0bn £20bn 2015 20
Slide 49: Workplace and Retail – further opportunities for engagement
Workplace and Retail – further opportunities for greater engagement with our customers Growing demand for guidance and advice We have the solutions to meet our customers’ needs £10bn 1.1m Face-to-face £8.1bn need advice advice MyFolio AUM £5.9bn 3.2m actively Robo-advice engaged £4.0bn £2.2bn Our 3.
Slide 50: India is a rich source of opportunity for growth
India is a rich source of opportunity for growth HDFC Life is a leading private life insurer HDFC AMC is the largest mutual funds company in India HDFC Life share of private life insurance premiums1 HDFC AMC AUM INR bn1 15.8% 1,506 14.4% 13.7% 13.0% 11.9% 1,089 863 934 744 8.6% 7.6% 2009 2010 2011 2
Slide 51: Delivering strong organic asset and revenue growth
Delivering strong organic asset and revenue growth AUA: £100bn >>> £198bn 20% +16% Growth Almost £200bn or over 2/3rds of our fee Fee revenue growth 15% channels assets in fast growing growth channels (5 year CAGR) • 5 year annual asset growth of 15% • 5 year annual revenue growth of 16% 10% Stable
Slide 52: Continuing to reduce unit costs and invest for growth
Continuing to reduce unit costs and invest for growth Growing investments business while managing costs Highly scalable Workplace and Retail business 100% £150bn 100% £150bn Standard Life Investments Workplace and Retail AUA UK Pensions and Savings £131bn Growth channel AUM cost/income ratio2 cost/i
Slide 53: Our simple business model will continue to serve us well under Solvency II
Our simple business model will continue to serve us well under Solvency II • Standard Life is well capitalised with a stable Solvency II surplus • Solvency II regulatory capital position reflects our focus on fee business • We continue to think about capital in the same way • Our business model and
Slide 54: Building a simplified and well diversified investment company
Building a simplified and well diversified investment company • Delivering strong organic asset and revenue growth • c£200bn of assets in Growth Channels with 15% AUA and 16% revenue CAGR (2010-2015) • Stable revenue from Mature Books • Meeting the investment needs of clients and customers is at the
Slide 55: Questions and answers
Questions and answers Standard Life
Slide 56: Appendix
Appendix Standard Life
Slide 57: Operating profit by business unit
Operating profit by business unit Total Standard Life Discontinued UK Europe India and China Other Eliminations (continuing Total Investments operations1 operations) 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 £m £m £m £m £m £m £m £m £m £m £m £m £m £m £m
Slide 58: Growth and mature channel supplementary information
Growth and mature channel supplementary information Fee revenue Gross flows Net flows AUA Fee based revenue yield 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2015 £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn £m £m £m £m £m bps Institutional 9.4 11.1 1.5 2.
Slide 59: UK profit contribution
UK profit contribution 2011 2012 2013 2014 2015 £m £m £m £m £m Workplace and retail (ex cash margin) 50 127 149 165 182 Revenue from cash balances 13 15 16 16 5 Workplace and retail contribution 63 142 165 181 187 Mature Retail 186 179 188 189 186 Fee based business contribution1 249 321 353 370 373
Slide 60: Ongoing growth in fee AUA in Europe
Ongoing growth in fee AUA in Europe Europe Pensions and Savings underlying performance • Increased fee AUA by 5% to £18.0bn driven by net inflows of £1.1bn offsetting adverse FX movements £50m • German unit-linked net inflows doubled and now represent £39m c30% of Germany net inflows (2014: 12%) £31
Slide 61: Continued progress in India and China associate and joint venture businesses
Continued progress in India and China associate and joint venture life businesses India and China underlying performance • Agreed to increase stake in HDFC Life from 26% to 35% for £175m1 (subject to regulatory approval) £30m £27m £23m HK £2m • Existing 26% stake valued at c£0.5bn compared to origin
Slide 62: Standard Life plc | Full year results 2015 | February 2016
Standard Life plc | Full year results 2015 | February 2016 62