Standard Life plc · LSE:SDLF
Standard Life — H1 2010 Earnings Presentation
40 slides from Standard Life's earnings presentation, 2010
Slide 1: Half Year Results 2010
Half Year Results cd STANDARD LIFE 2010 “
Slide 2: Disclaimer
Disclaimer 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”,
Slide 3: Strong operating performance supporting investment for growth
Strong operating performance supporting investment for growth David Nish Chief Executive Half Year Results 2010 Standard Life plc 3
Slide 4: A clear strategy
A clear strategy Driving shareholder value through being a leading, Our customer-centric business focused on long-term goal savings and investment propositions in our chosen markets Trusted brand Technology and innovation Delivered through Customer insight, access and service capability Superior inv
Slide 5: Delivering against our strategic priorities - H1 2010
Delivering against our strategic priorities - H1 2010 • Continued success in winning • Strong growth in customers mandates: 5,000 member and assets Logica scheme • Launch of new retail • Launched a suite of new propositions: active money corporate propositions: Trust personal pension Based Pension,
Slide 6: Focusing our business and driving performance
Focusing our business and driving performance People • Strengthened leadership team in place • Redirected resources to focus on growth opportunities Transformation • Group-wide restructuring • Simplified lines of accountability; culture of decision making and delivery Efficiency • Ongoing focus on e
Slide 7: Operational and financial highlights
Operational and financial highlights Jackie Hunt Chief Financial Officer Half Year Results 2010 Standard Life plc 7
Slide 8: Our focus in 2010
Our focus in 2010 • Sustainable cash flow • Maintaining high levels of customer service • Increased focus on core markets • Transforming how we operate • Investing for future profitable growth • Progressive dividend Building increased momentum Half Year Results 2010 Standard Life plc 8
Slide 9: Financial highlights
Financial highlights H1 2010 H1 2009 Assets under administration1,2 £179.1bn £170.1bn Long-term savings net flows £2.5bn £0.8bn Investment management third party net flows £4.7bn £3.1bn IFRS operating profit before tax1 £182m £166m Growth investment included in operating profit £72m £44m Embedded va
Slide 10: Movement in assets under administration
Movement in assets under administration £14.2bn (£8.9bn) £3.7bn £179.1bn £170.1bn Opening AUA Inflows Outflows Market/other Closing AUA January 2010 movements June 2010 Positive net inflows across our markets Half Year Results 2010 Standard Life plc 10
Slide 11: UK long-term savings
UK long-term savings £7.1bn (£5.4bn) £1.5bn £108.8bn £105.6bn UK AUA Inflows Outflows Market/other UK AUA January 2010 movements June 2010 • Continued strong growth in SIPP, Wrap and Mutual Funds • Net outflows in traditional product lines such as endowments • Focus on corporate solutions: - Logica
Slide 12: Global investment management
Global investment management £7.3bn (£2.6bn) £1.4bn £63.0bn £56.9bn Third party AUA Inflows Outflows Market/other Third party AUA January 2010 movements June 2010 • Net third party flows up 52% in the first half of the year • Global Absolute Return Strategies (GARS) assets under management in excess
Slide 13: IFRS operating profit
IFRS operating profit £78m (£7m) (£33m) £6m £210m (£28m) £182m £166m H1 2009 Increased Increase in Reduction in Other H1 2010 Increased H1 2010 operating management other UK and operating growth operating profit before charge operating Canada profit before investment profit before tax from income co
Slide 14: Cash and capital conversion
Cash and capital conversion IFRS operating profit after tax from £134m continuing operations Impact of different treatment £17m of assets and liabilities DAC/DIR, intangibles and tax and other (£2m) EEV operating capital and cash generation £149m from continuing operations Close alignment of IFRS op
Slide 15: EEV capital and cash generation
EEV capital and cash generation H1 2010 H1 20091 £m £m Capital and cash generation from existing business2 300 246 New business strain (109) (72) Covered business capital and cash generation from new 191 174 business and expected return Covered business development expenses (21) (9) Non-covered busi
Slide 16: IFRS operating profit - pre and post demutualisation business
IFRS operating profit - pre and post demutualisation business RCF based 49% 47% profits1 55% Non-RCF based 45% 51% 52% 53% profits2 H1 2008 H1 2009 H1 2010 • Increasing proportion of IFRS operating profits from post demutualisation business • HWPF assets supporting shareholder cash flow have long ru
Slide 17: Run-off profile of legacy assets generating shareholder cash flow
Run-off profile of legacy assets generating shareholder cash flow 70 Assets not generating shareholder cash flow 60 Assets generating shareholder cash flow 50 40 £bn 30 20 10 0 Q2- 2010 2011 2012 2013 2014 2015 2016 2017 2018 2010 Assets generating shareholder cash are long-term Half Year Results 20
Slide 18: Continuing to drive for efficiency
Continuing to drive for efficiency £24m (£27m) £28m £454m £7m £426m £10m £412m H1 2009 Inflation Exchange Organic H1 Cost before Increased H1 2010 Cost base Rate Growth Efficiencies increased growth Cost base growth investment investment • Delivered £75m efficiency target • Making good progress towa
Slide 19: Group EEV operating profit
Group EEV operating profit1 H1 2010 Total EVOP £364m H1 2009 Total EVOP £328m H1 2010 Core (£8m) £161m £183m £336m H1 2009 Core (£16m) £114m £141m £239m H1 2010 Efficiency (£3m) H1 2009 Efficiency (£5m) H1 2010 Back book management £31m H1 2009 Back book management £94m NBC Expected return & develop
Slide 20: Growing returns – capital-lite products
Growing returns – capital-lite products • 41% increase in new business contribution to £161m (H1 2009: £114m)1 • PVNBP margin strengthened to 1.7% (H1 2009: 1.6%) • IRR strengthened to 19% (H1 2009: 16%) • Undiscounted payback shortened to 5 years2 (H1 2009: 6 years)2 (1) The results of the Hong Kon
Slide 21: Embedded value development
Embedded value development Opening EEV per share 1 Jan 2010 288p New business1 5p EEV operating profit1 11p Other operating profit1 6p Non-operating profit1 4p Other and non-trading 7p Cash dividend to equity holders (6p) Scrip issue (2p) Closing EEV per share 30 Jun 2010 302p (1) Profits are shown
Slide 22: Continued dividend growth
Continued dividend growth Final dividend (p) 12.24p 11.50p 11.77p Interim dividend (p) 10.80p 7.70 8.09 7.70 7.20 3.80 4.07 4.15 4.35 3.60 20061 2007 2008 2009 2010 • We have maintained our progressive dividend policy since listing • Interim dividend of 4.35p • Growth in interim dividend of 4.8% (1)
Slide 23: Financial summary
Financial summary • Positive net inflows across our markets • Record third party assets and strategic progress at Standard Life Investments • 10% increase in IFRS operating profit while investing for growth • EEV core capital and cash generation up with strong coverage of new business strain and div
Slide 24: Exciting growth opportunities
Exciting growth opportunities David Nish Chief Executive Half Year Results 2010 Standard Life plc 24
Slide 25: Drivers creating significant growth in UK
Drivers creating significant growth in UK • Total pensionable assets of £1.4 trillion Attractive asset pools • £2.3 trillion assets in our target retail customer segments • Movement from DB to DC; unbundled to bundled • Growth in core market segments • Retail Distribution Review Government intervent
Slide 26: Strategically positioned to benefit from UK market trends
Strategically positioned to benefit from UK market trends Key Trends Why we continue to win What we have delivered • Blended Funds Attractive asset pools • Trust Based Pensions Track record of anticipating & • Corporate ISA responding to market change • active money personal Government intervention
Slide 27: Attractive growth opportunities in India
Attractive growth opportunities in India Key trends What we are delivering • New CEO, Amitabh Chaudhry • Driving down costs Favourable demographics Life Joint Venture • Refocusing distribution with HDFC • Delivering strong business performance Changing legislative and regulatory environment • Increa
Slide 28: Recognising the value of our investment management business
Recognising the value of our investment management business Standard Life Investments Strong growth in third party assets 70 • Sustaining a higher margin business 60 AGR 24% C • Diversifying sources of revenue 50 • Increasing international balance 40 30 • Accelerating growth through broadening into
Slide 29: How we deliver value
How we deliver value Lowering unit costs Increasing Maximising Driving cash assets revenue profit • Delivering profitable growth • Increased resources for investment • Investment returns greater than 15% IRR and payback within 5 years • Progressive and sustainable dividend Driving a material increas
Slide 30: Strong operating performance supporting investment for growth
Strong operating performance supporting investment for growth Half Year Results 2010 Standard Life plc 30
Slide 31: Appendix
Appendix Half Year Results 2010 Standard Life plc 31
Slide 32: Movement in assets under administration
Movement in assets under administration £3.7bn £179.1bn £4.7bn (£1.9bn) £0.7bn £2.1bn £0.1bn £170.1bn (£0.5bn) £0.1bn Opening UK Legacy UK retail UK Canada International SLI Group Market/ Closing AUA life (exc legacy Corporate net flows net flows third party adjustments other AUA life) net flows mov
Slide 33: Growing returns – capital-lite products
Growing returns – capital-lite products H1 2010 H1 2009 Undiscounted PVNBP IRR NBC PVNBP NBC PVNBP payback1 margin % £m £m £m £m years % Individual pensions 11% 7 0.7% 14 2,173 14 1,829 Corporate pensions 12% 9 1.4% 24 1,751 29 1,517 Institutional pensions >40% <3 1.4% 25 1,842 7 944 Annuities Infin
Slide 34: IFRS profitability
IFRS profitability H1 2010 H1 2009 £m £m UK 76 80 Canada 62 74 International 8 (8) Global investment management 49 27 Other (13) (7) IFRS operating profit before tax from continuing operations 182 166 Adjusted for the following items: Short-term fluctuations in investment return and economic assumpt
Slide 35: Insurance Groups Directive
Insurance Groups Directive IGD Surplus 30 June 2010 31 December 2009 £3.5bn £3.6bn Sensitivity to equity market falls1,2 Fall in equities IGD Surplus 20% (FTSE 3,934) £3.4bn 30% (FTSE 3,442) £3.3bn 40% (FTSE 2,950) £3.1bn Sensitivity to yields1,2 100bps rise in yields £3.3bn (e.g. 3.93% to 4.93%) (1
Slide 36: Capital tier structure
Capital tier structure Jun 2010 Jun 2009 Dec 2009 £bn £bn £bn Group core tier 1 5.6 4.7 5.3 Group innovative tier 1 0.6 0.6 0.6 Deductions from tier 1 (0.8) (0.8) (0.8) Total Group tier 1 capital 5.4 4.5 5.1 Group upper tier 2 0.5 0.8 0.8 Group lower tier 2 0.7 0.7 0.7 Total Group tier 2 capital 1.2
Slide 37: Back book management
Back book management H1 2010 H1 20091 UK Canada International HWPF Total Total TVOG £m £m £m £m £m £m Lapses (9) - 3 - (6) (8) Mortality and morbidity 2 11 2 - 15 13 Tax (7) 2 (1) - (6) 21 Management actions to reduce market risk in UK and HWPF - - - - - 89 TVOG Other 29 3 (1) (3) 28 (21) Total 15 1
Slide 38: Capital and cash generation
Capital and cash generation Free Required Net worth PVIF Group EEV surplus capital £m £m £m £m £m 31 December 2009 2,095 956 3,051 3,384 6,435 Operating capital and cash generation 158 (9) 149 - 149 from continuing operations Non-operating capital and cash generation 150 15 165 - 165 from continuing
Slide 39: Canada
Canada £1.6bn (£1.5bn) £1.5bn £22.9bn £21.3bn Canada AUA Inflows Outflows Market/other Canada AUA January 2010 movements June 2010 • Net inflows into higher margin products increased 27% • Increased inflows and outflows as markets have improved • Continued strength in disability management Strong fl
Slide 40: International
International £1.1bn (£0.4bn) £0.0bn £10.6bn £9.9bn International AUA Inflows Outflows Market/other International AUA January 2010 movements June 2010 • Strong inflows in Ireland and Hong Kong due to popularity of unit-linked products • Asian joint ventures providing solid growth and future opportun