Half year results 2014 Continuing delivery of growth and performance David Nish Chief Executive Standard Life Group
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 f ture fi nancial condition, performance, results, strategy and objectives. Statements containing the words “believes”, “intends”, “expects”, “plans”, “pursues”, “seeks” and “anticipates”, and words of similar meaning, are forward-looking. By their nature, all forward-looking statements involve risk and uncertainty because they relate to f ture events and circumstances which are beyond Standard Life's control including among other things, UK domestic and global economic and business conditions, market related risks such as fl uctuations in interest rates and exchange rates, and the performance of fi nancial markets generally; the policies and actions of regulatory authorities, the impact of competition, in fl ation, and de fl ation; experience in particular with regard to mortality and morbidity trends, lapse rates and policy renewal rates; the timing, impact and other uncertainties of f ture acquisitions or combinations within relevant industries; and the impact of changes in capital, solvency or accounting standards, and tax and other legislation and regulations in the jurisdictions in which Standard Life and its a ffi liates operate. This may for example result in changes to assumptions used for determining results of operations or re-estimations of reserves for f ture policy bene fi ts. As a result, Standard Life’s actual f ture fi nancial condition, performance and results may di ff er materially from the plans, goals, and expectations set forth in the forward-looking statements. Standard Life undertakes no obligation to update the forward-looking statements contained in this presentation or any other forward-looking statements it may make. Half year results 2014 | August 2014 2
Continuing delivery of growth and performance • UK leading the market in meeting rapidly evolving customer needs • Canada increasing fee based business and improving performance • Standard Life Investments delivering global growth and enhancing capabilities • Further improvement in Group-wide operational e ff ectiveness • Strong balance sheet and cash generation supports dividend growth Half year results 2014 | August 2014 3
Simple and consistent business model Maximising Driving profit Increasing revenue Acquisition costs assets Operating pro fi t down 6bps to up 12% to £339m 139bps Cash generation Group AUA up 4% to Fee revenue up 12% Maintenance costs up 8% to £250m £254bn to £758m down 2bps to 39bps Interim dividend up 7.3% to 5.60p Lowering unit costs Half year results 2014 | August 2014 4
Distribution capability supporting asset growth Total UK and Europe North America Asia £313bn £267bn £37bn £9bn Standard Life Investments Strategic relationships John Hancock, HDFC, Sumitomo Mitsui, Phoenix Multi-asset, global, emerging markets, real estate, wealth, Expanded client offering liability aware offering for DB schemes and outsourcing of insurance assets UK, Europe, US, Canada, India, Hong Kong, China, South Korea, Global reach Australia Standard Life Standard Life Standard Life distribution Long-term savings UK Canada Retail Hong Kong Multi-channel including Singapore Canada Corporate retail, corporate and direct Dubai Germany and Ireland JVs HDFC Life Heng An SL Half year results 2014 | August 2014 5
H1 2014 financial highlights Financial highlights H1 2014 H1 2013 Assets and fl ows Assets under administration £254.1bn £244.2bn Standard Life Investments third party AUM £108.0bn £102.4bn Group AUA net in fl ows £4.6bn £6.5bn Pro fi tability Fee based revenue £758m £694m Group underlying performance £339m £313m Operating pro fi t before tax £339m £304m Cash and dividends Group underlying cash generation £250m £238m Cash generation a f er tax £250m £231m Dividend – interim 5.60p (H1 2013: 5.22p) £134m £124m Half year results 2014 | August 2014 6
Group operating profit Group operating profit before tax H1 2013 H1 2014 £m £m Business unit underlying performance 367 342 +7% +7% Group centre costs (23) (23) Group centre capital management (5) (6) Group underlying performance 339 313 +8% +8% Operating assumption and one-o ff reserving changes (spread/risk margin) - (9) Speci fi c management actions - - - (9) Group operating pro fi t before tax 339 304 +12% +12% Half year results 2014 | August 2014 7
Revenue growth and cost control driving performance +£41m £80m (£39m) +12% +6% (£8m) £4m £339m +£26m OR +8% £313m (£11m) H1 2013 H1 2013 Increase in Increase in Decrease in Higher Impact of H1 2014 H1 2014 fee based expenses spread/risk capital weaker CAN$ revenue margin management on Canada and JV result Group underlying performance up 8% Half year results 2014 | August 2014 8
Lower unit costs with scope for further improvement Acquisition expense bps Maintenance expense bps 215 225bps 225bp Group 60bp 60bps Group 208 54 UK UK 52 190 ` ` 47 169 46 189 45 183 49 156 41 39 168 145 139 41 144 36 133 34 31 110 106 25 75bps 75bp 20bps 20bp 24 2008 2009 2010 2011 2012 H1 2014 2013 2008 2009 2010 2011 2012 2013 H1 2014 ` ` • Acquisition expenses are largely fi xed and scalable • Platform propositions with industrial strength • Lower Group unit costs • Focus on productivity and improving e ffi ciency • Small increase in UK unit costs largely re fl ects lower • Scope for ongoing improvements SLI institutional pension sales Half year results 2014 | August 2014 9
Business unit review
Business unit underlying performance up 7% to £367m Asia and Emerging UK SLI Canada Europe Markets +£6m ( +4%) +£9m ( +9%) +£1m ( +1%) +£2m (+10%) +£7m or +£12m (+18%) in £165m constant £159m currency £104m £95m £69m £68m £23m £21m £6m (£1m) H1 2013 H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 Half year results 2014 | August 2014 11
Continuing growth from the UK business • 5% increase in fee based revenue H1 2014 H1 2014 H1 2013 H1 2013 • Annuity new business contribution £19m (59%) £m £m £m £m lower o ff set by bene fi t of ongoing asset and liability Fee based revenue 358 341 management Spread/risk margin 75 78 • Lower maintenance unit costs and delivery of new Total income 433 419 propositions such as “Good to Go” Acquisition expenses (88) (86) • Total maintenance and acquisition expenses up Maintenance expenses (85) (84) just 2% Investment management fees to SLI (96) (87) • Investment management fees retained by SLI up Capital management 1 (3) 10% to £96m Busine iness u underly nderlying per ing perform ormanc ance e 165 165 159 159 AUA Tot otal A £145.0bn £149.3bn FY 2013 H1 2014 AUA enue bps e bps Fee b ee based sed A Fee r ee rev evenue bp Maint ainten enanc ance bp £96.5bn £99.1bn 66bps 64bps 25bps 24bps FY 2013 H1 2014 FY 2013 H1 2014 FY 2013 H1 2014 Half year results 2014 | August 2014 12
Addressing the needs of our UK customers Winning corporate schemes Growing corporate customers Growing platform assets £25bn £25bn 1,200 1,200 200k 200k 180k 180k 1,018 1,018 £21bn £21bn £19bn £19bn New scheme wins New corporate Platform AUA 135k 135k customers £15bn £15bn £11bn £11bn 60 60 0 0 0 0 £0bn £0bn 2011 2012 2013 H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 Corporate business meeting demand for auto enrolment Retail business with a leading platform and investment solutions • Secured 1,018 new schemes, including 892 “Good to Go” • First major advised platform ready for all forthcoming regulatory changes – well ahead of the 2016 deadline • Strong growth in customer numbers with 180,000 joiners (H1 2013: 135,000) including 173,000 (H1 2013: 98,000) from • Secured discounted share classes from 14 leading f nd auto enrolment management groups on almost 300 leading f nds • Expecting to attract over 300,000 new customers this year • MyFolio AUA up 20% to £4.8bn (FY 2013: £4.0bn) • Broadening distribution including strategic arrangement with • 1,286 adviser fi rms on Wrap, including fi rms with assets over Barclays for its SME clients £20m up 28% year-on-year to 245 fi rms Half year results 2014 | August 2014 13
Continued growth in UK fee business assets to £99bn Corporate Retail new Retail old £40bn £40bn £40bn £40bn £40bn £40bn £36bn £36bn £34bn £34bn £34bn £34bn £33bn £33bn £32bn £32bn £32bn £32bn AUA AUA AUA £30bn £30bn £29bn £29bn £29bn £29bn £25bn £25bn £24bn £24bn £22bn £22bn £20bn £20bn £20bn £20bn £20bn £20bn 2011 2012 2013 H1 2014 2011 2012 2013 H1 2014 2011 2012 2013 H1 2014 • 61% increase in net in fl ows to £860m • Another good period with net in fl ows of • Stable mature book of business with £1.5bn in line with last year 15% reduction in net out fl ows to • 15% increase in regular contributions £1.1bn helped by retention activity • SLI manages c25% of Wrap AUA • Continued transfer of assets from securing additional revenue margin for • Bene fi ts from transfers of leavers from corporate scheme leavers to retail old the group corporate and new • Provides steady fl ow of customers for retail new propositions Half year results 2014 | August 2014 14
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