Slide 1: Half Year Results 2011
UKPR10A.indd 1 Analyst and Investor Presentation Standard Life plc Half Year Results 2011 www.standardlife.com Standard Life plc is registered in Scotland (SC286832) at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH. UKIR11A 0811 © 2011 Standard Life
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: Delivering increased profits and cash flow
Delivering increased profits and cash flow Setting up for future strategic success Execution and delivery Step-up in performance 2010 2011 2012 Half Year Results 2011 | August 2011 2
Slide 4: Half Year Results 2011 - Jackie Hunt, CFO
Half Year Results 2011 Delivering increased profits and cash flow Jackie Hunt Chief Financial Officer
Slide 5: Group financial results - highlights
Group financial results - highlights H1 2011 H1 2010 IFRS operating profit £262m £182m Assets under administration1 £200.0bn £196.8bn Long-term savings net flows £2.8bn £2.5bn Investment management third party net flows £2.9bn £4.7bn EEV operating capital and cash generation after tax £193m £149m EE
Slide 6: Group IFRS operating profit up 44%
op H1 2 er 0 at 10 in IF gp R ro S fit In £182m cr ea se re in v e fe m Inc nu e b ai re e as nt a ed en se an in £69m ce ac an qu d isi GC ti In C on, co tra cre st ns as s fo e i rm n +£34m (£27m) at inv io es Fee business n tm Half Year Results 2011 | August 2011 an e d nt gr f ow or th Lo (£8m)
Slide 7: 14% increase in UK IFRS operating profit
14% increase in UK IFRS operating profit IFRS operating profit H1 2011 H1 2010 • Fee business AUA exceeds £100bn £m £m • Sustained momentum in fee business, Fee based revenue 309 277 revenue up 12% Spread/risk margin 52 83 • Spread/risk margin: Total income 361 360 • £18m reserve release in prior ye
Slide 8: 37% increase in SLI IFRS operating profit
37% increase in SLI IFRS operating profit IFRS operating profit • Third party assets of £71.6bn H1 2011 H1 2010 £m £m • Transfer of UK money market funds Fee based revenue 193 157 • £7m revenue benefit • AUM reduced by £4bn Maintenance expenses (106) (91) • Higher revenue yield on new business Inves
Slide 9: 66% increase in Canada IFRS operating profit
66% increase in Canada IFRS operating profit IFRS operating profit H1 2011 H1 2010 • AUA up to £26bn £m £m • 14%1 increase in fee based revenue Fee based revenue 84 72 • Enhanced investment yield on assets Spread/risk margin 155 115 contributing £31m to spread/risk Total income 239 187 margin, up £1
Slide 10: Increase in International IFRS operating profit
Increase in International IFRS operating profit IFRS operating profit H1 2011 H1 2010 £m £m • AUA up to £13.6bn Fee based revenue 108 105 • Acquisition expenses higher due to Spread/risk margin - - strong growth in Hong Kong and Total income 108 105 Ireland Acquisition expenses (18) (12) • Maintenan
Slide 11: Capital-lite model lowering unit cost of new business
Capital-lite model lowering unit cost of new business Acquisition expense bps1 180bps 171bps 149bps 166bps 163bps Group UK 130bps 133bps 104bps 2008 2009 2010 H1 2011 1 Acquisition expenses / PVNBP (excluding JV PVNBP) Half Year Results 2011 | August 2011 10
Slide 12: Benefits of our scalable business model
Benefits of our scalable business model Maintenance expense bps1 49bps 47bps Group 45bps UK 42bps 38bps 40bps 34bps 31bps 2008 2009 2010 H1 2011 1 Maintenance expenses / average AUA Half Year Results 2011 | August 2011 11
Slide 13: 30% increase in EEV operating capital and cash generation
30% increase in EEV operating capital and cash generation • Gross operating EEV capital and cash generation up 19% to £358m • Funding: • New business strain of £119m with IRR of 16% and 6 year payback • Investment for transformation and growth of £46m1 • Resulting in 30% increase in EEV operating ca
Slide 14: Strongly capitalised business
Strongly capitalised business • IGD surplus up £0.1bn to £3.9bn in volatile markets • Significant action taken to de-risk balance sheet • Reduced shareholder exposure to ABS from £1.2bn at 30 June 2010 to £0.6bn • Reduced liquidity risk through disposal of Standard Life Bank and transfer of UK money
Slide 15: Embedded value per share of 324p
Embedded value per share of 324p Opening EEV per share 1 Jan 2011 322p New business 5p EEV operating profit 12p Other operating profit 7p Non-operating profit 2p Other and non-trading (3p) Dividends (9p) Closing EEV per share 30 Jun 2011 324p Half Year Results 2011 | August 2011 14
Slide 16: Continued dividend growth
Continued dividend growth Final dividend (pence) Interim dividend (pence) 13.00 12.24 11.77 11.50 8.65 8.09 10.80 7.70 7.70 7.20 4.60 4.35 4.07 4.15 3.80 3.60 20061 2007 2008 2009 2010 2011 • Five years of continued dividend growth since IPO • Focused on delivering a progressive dividend • Replaceme
Slide 17: Delivering increased profits and cash flow
Delivering increased profits and cash flow • £200bn of assets • 14% increase in fee based revenue • Improved operational efficiency • 44% increase in IFRS operating profit • 30% increase in EEV operating capital and cash generation • Dividend up 5.7% to 4.60p UK SLI Canada International Continued St
Slide 18: Half Year Results 2011 - David Nish, Chief Executive
Half Year Results 2011 Delivering increased profits and cash flow David Nish Chief Executive
Slide 19: Our focus: delivering increased profits and cash
Our focus: delivering increased profits and cash • Well placed to exploit opportunities created by market and regulatory change • Strong range of existing propositions • New differentiated propositions to enhance market share • Driving cost efficiency • Improving capital efficiency and returns On tr
Slide 20: Delivering increased profits and cash flow
Delivering increased profits and cash flow Delivering a step up in profit through our simple business model Lowering unit costs Increasing Maximising Driving cash assets revenue profit • Benefiting from customer and market changes • Investing in leading propositions and to drive efficiency • Buildin
Slide 21: Growing quantity and quality of assets
Growing quantity and quality of assets Assets under Examples of shift administration 31 Dec 30 Jun 2006 2011 Increased n £200.0bn SIPP £4.3bn £16.4bn .4b £46 Platforms £0.2bn £10.8bn + £153.6bn UK Corporate Pensions £14.4bn £22.3bn Standard Life Wealth Nil £0.7bn Asia £0.4bn £1.4bn SLI third party A
Slide 22: Maximising revenue across the Group
Maximising revenue across the Group Increasing our access to margin Tax Wrappers Point of Sale Adviser Fund Platforms and Risk Solutions Support Management Products Intermediary Direct Intermediary Direct Intermediary Direct Retail customers Corporate customers Institutional customers Benefits to ma
Slide 23: Example - MyFolio funds
Example - MyFolio funds Meeting needs of end Flows Into SLI customers and advisers • Risk based funds • AUA of £0.6bn in less than 8 • Capturing maximum margin • Simple and easy investment months • 60% AUA in SLI managed choices – guided • c30% of UK net flows in H1 funds architecture • £350m from d
Slide 24: Investing to grow profits
Investing to grow profits Investing in transformation and growth GCC £5m (5%) H1 2011 • New and enhanced International £96m1 propositions driving volume £4m (4%) of assets and premium pricing • Further spend on efficiency to Canada lower unit costs £17m (18%) • Disciplined investment approach with c
Slide 25: Example - Lifelens
Example - Lifelens Meeting needs of Using unique strength of And employees employers the Group • Clearly demonstrating total • Intuitive user experience • Combining market leading reward to employees • Tools and educational corporate pensions and • Bundling pension and flexible material flexible ben
Slide 26: Lowering unit costs
Lowering unit costs Delivered • Further £30m of efficiencies in H1 • Group FTE down 3901 • Contractor numbers reduced by 1401 • Acquisition and maintenance expense bps reduced • Platform propositions improve straight through processing • Migration towards online self service Ongoing programme of cos
Slide 27: Benefiting from customer and market changes
Benefiting from customer and market changes Unprecedented change and Why we continue to win growth opportunities • Baby boomer generation entering • Market-leading platform propositions - c£400bn retirement phase and consolidating platform asset flows over next 5 years assets • Customer focus and br
Slide 28: On track to deliver ongoing improvement in profit and cash generation
On track to deliver ongoing improvement in profit and cash generation • £200bn of assets • 14% increase in fee based revenue • Improved operational efficiency • 44% increase in IFRS operating profit • 30% increase in EEV operating capital and cash generation • Dividend up 5.7% to 4.60p Half Year Res
Slide 29: Appendix
Half Year Results 2011 Delivering increased profits and cash flow Appendix
Slide 30: IFRS operating profit by business unit
IFRS operating profit by business unit UK Canada International SLI Other Eliminations Total H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 2011 2010 2011 2010 2011 2010 2011 2010 2011 H1 2010 2011 2010 2011 2010 £m £m £m £m £m £m £m £m £m £m £m £m £m £m Fee based revenue 309 277 84 72 108 105 193 157 - - (8
Slide 31: Fee business revenue
Fee business revenue H1 2011 FY 2010 FY 2010 H1 2010 Average AUA Revenue Revenue Average AUA Revenue Revenue £bn bps £m £bn bps £m UK 96.2 76 309 90.6 77 277 Canada 13.5 118 84 12.5 118 72 International 10.9 196 108 10.0 212 105 Standard Life Investments 70.1 361 136 64.6 35 101 Eliminations/adjustm
Slide 32: Spread/risk business margin
Spread/risk business margin UK Canada Total H1 2011 H1 2010 H1 2011 H1 2010 H1 2011 H1 2010 £m £m £m £m £m £m New business 28 36 3 12 31 48 Existing business 24 29 115 97 139 126 52 65 118 109 170 174 Impact of specific management actions - - 31 17 31 17 Operating assumption and one-off reserving ch
Slide 33: Standard Life Investments third party AUM
Standard Life Investments third party AUM £7.6bn (£4.7bn) (£2.9bn) £71.6bn £71.6bn £56.9bn £45.5bn 36bps1 35bps 34bps 31 Dec 2008 31 Dec 2009 31 Dec 2010 Gross inflows Redemptions Market/other 30 Jun 2011 movements 1 Excludes fee from the transfer of the money market funds Half Year Results 2011 | A
Slide 34: Continuing to drive for efficiency
Continuing to drive for efficiency £49m (£30m) £8m £499m £16m £2m £454m H1 2010 Inflation Exchange Organic Efficiencies Investment for H1 2011 cost base rate growth transformation cost base and growth Half Year Results 2011 | August 2011 33
Slide 35: Investment for transformation and growth
Investment for transformation and growth H1 2011 H1 2010 £m £m Investment for transformation and growth in operating cost base 80 72 Investment capitalised under IFRS 16 5 96 77 Additional investment in joint venture businesses 23 12 Total 119 89 Investment for transformation and growth in operating
Slide 36: Linkage of cost base to total expenses
Linkage of cost base to total expenses £4,911m (£3,997m) (£358m) £101m (£13m) £6m £593m (£57m) GCC costs £20m Investment for £499m transformation and growth £80m Maintenance expenses £351m Acquisition expenses £142m H1 2011 Claims, IFRS adjustments Finance H1 2011 Commission DAC/DIR Investment H1 20
Slide 37: EEV new business margins
EEV new business margins H1 2011 H1 2010 Undiscounted PVNBP IRR NBC PVNBP NBC PVNBP payback margin % years % £m £m £m £m Individual pensions 11 7 0.6 13 2,237 14 2,173 Corporate pensions 13 9 1.4 40 2,830 24 1,751 Institutional pensions >40 <3 1.5 25 1,674 25 1,842 Annuities Infinite Immediate 18.7
Slide 38: Capital and cash conversion
Capital and cash conversion IFRS operating profit after tax from continuing operations £210m Impact of different treatment of (£31m) assets and liabilities DAC & DIR, intangibles, £14m tax and other EEV operating capital and cash generation from continuing £193m operations Half Year Results 2011 | A
Slide 39: Group EEV capital and cash movements
Group EEV capital and cash movements NBS Investment for Cash dividend (£119m) transformation and growth (£105m) (£46m) Gross operating EEV capital and cash generation £358m IGD surplus as at 31 Dec 2010: £3.8bn UK Canada International Non-covered £201m £72m £64m £21m Remove movement in sub debt liab
Slide 40: Insurance Groups Directive
Insurance Groups Directive IGD Surplus 30 June 2011 31 December 2010 £3.9bn £3.8bn Sensitivity to equity market falls1,2 Sensitivity to yields1,2 Fall in equities IGD Surplus 100bps rise in yields 20% (FTSE 4,757) £3.8bn (e.g. 3.45% to 4.45%) £3.8bn 30% (FTSE 4,162) £3.7bn 40% (FTSE 3,568) £3.7bn 1
Slide 41: Capital tier structure
Capital tier structure Jun 20111 Dec 20101 £bn £bn Group core tier 1 6.9 6.4 Group innovative tier 1 0.6 0.6 Deductions from tier 1 (0.7) (0.7) Total Group tier 1 capital 6.8 6.3 Group upper tier 2 0.5 0.5 Group lower tier 2 0.7 0.7 Total Group tier 2 capital 1.2 1.2 Group capital resources before d
Slide 42: Half Year Results 2011
UKPR10A.indd 1 Analyst and Investor Presentation Standard Life plc Half Year Results 2011 www.standardlife.com Standard Life plc is registered in Scotland (SC286832) at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH. UKIR11A 0811 © 2011 Standard Life