Aberdeen Group Plc · LSE:ABDN
Aberdeen — Standard Life Aberdeen — FY2017 Earnings Presentation
70 slides from Aberdeen's earnings presentation, February 2018
Slide 1: Building a world-class investment company
Standard Life Aberdeen plc Building a world-class investment company February 2018
Slide 2: Forward-looking statements
This presentation may contain certain “forward-looking statements” with respect to the financial condition, performance, results, strategy, objectives, plans, goals and expectations of Standard Life Aberdeen plc (“Standard Life Aberdeen”) and its affiliates. These forward-looking statements can be i
Slide 3: Completing our transformation to an investment company
Completing our transformation to an investment company Keith Skeoch | Building a world-class investment company | February 2018 3
Slide 4: Agenda
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Agenda • Completing our transformation to an investment company Keith Skeoch • Transaction overview and merger update Martin Gilbert • Strategy update Keith Skeoch •
Slide 5: Our vision: Building a world-class investment company
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Our vision: Building a world-class investment company • Accelerated in 2017 by merger to create Standard Life Aberdeen • Completed through sale of Standard Life Assur
Slide 6: Completing the transformation to a fee based and capital light investment company
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Completing the transformation to a fee based and capital light investment company Total adjusted operating income Adjusted profit before tax Capital requirements Stan
Slide 7: Transaction overview
Transaction overview Martin Gilbert | Building a world-class investment company | February 2018 7
Slide 8: Transaction overview
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Transaction overview • Enhancing strategic partnership with Phoenix Group with opportunities for wider collaboration • Sale of the capital-intensive insurance busines
Slide 9: We have retained fast growing retail platforms and financial advice businesses
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers We have retained fast growing retail platforms and financial advice businesses Strong growth in AUA, flows and revenue Retaining leading businesses £60bn £182m1 £200m
Slide 10: Enhanced long-term strategic partnership and valuable stake in Phoenix Group
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Enhanced long-term strategic partnership and valuable stake in Phoenix Group Valuable 19.99% stake Security over AUM Enhanced future growth opportunities in Phoenix G
Slide 11: Details of business subject to retention and sale
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Details of business subject to retention and sale Retained Sale Core of the Retail growth channel Largely insurance mature books and Workplace Retail Life and Pension
Slide 12: Combination of Phoenix Group and SLAL will deliver good outcomes for our customers
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Combination of Phoenix Group and SLAL will deliver good outcomes for our customers Includes large mature books that will run-off over time Workplace Retail Life 25% a
Slide 13: Merger update
Merger update Martin Gilbert | Building a world-class investment company | February 2018 13
Slide 14: Excellent progress made in the first months of the integration
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Excellent progress made in the first 6 months of the integration • Increase in targeted merger annual cost synergies from £200m to at least £250m • Distribution and I
Slide 15: Positive reaction from clients, investment consultants and our people
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Positive reaction from clients, investment consultants and our people Broad support from clients Ongoing support from consultants Positive reaction from our people Cl
Slide 16: Strategy update
Strategy update Keith Skeoch | Building a world-class investment company | February 2018 16
Slide 17: Building a diversified world-class investment company
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Building a diversified world-class investment company To invest for a better future Our purpose We do it to make a difference. To our clients, the lives of our custom
Slide 18: Well positioned for global trends shaping the investment landscape
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Well positioned for global trends shaping the investment landscape Impact Opportunities • Meeting needs of retail customers including simpler products and Individuals
Slide 19: Well positioned for global trends shaping the investment landscape
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Well positioned for global trends shaping the investment landscape Growing demand for “new active” Fee compression driven by passives Tailwinds in retail platforms an
Slide 20: Developing strong relationships with customers and clients
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Developing strong relationships with customers and clients Pensions • Continue to support IFAs through investment in our market-leading adviser platforms Developing •
Slide 21: Broadening and deepening our investment capability
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Broadening and deepening our investment capability #1 Strategic Product Priority For CEOs1 Real / private market 21% Attracting, Developing Solutions 21% retaining st
Slide 22: Well positioned against areas of industry focus
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Well positioned against areas of industry focus #1 Strategic Product Priority for CEOs1 Aberdeen Standard Investments Capabilities Leading European real estate platfo
Slide 23: Track record of innovation in new active propositions
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Track record of innovation in “new active” propositions AUM over 5 years since launch AUM 3 to 5 years since launch AUM 1 to 3 years since launch AUM <1 year since la
Slide 24: Building an efficient and effective business
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Building an efficient and effective business Avoiding the “squeezed middle” 50% 44% 40% EBITDA margin1 33% 31% Attracting, Developing retaining strong relationships a
Slide 25: Continued focus on financial discipline and driving down unit costs
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Continued focus on financial discipline and driving down unit costs 2017 Cost/income ratio (ex SLAL) 70% 60% Medium-term ambition • Integration progressing well givin
Slide 26: Growing and diversifying our revenue and profit
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Growing and diversifying our revenue and profit Attracting, Developing retaining strong relationships Capitalise on global opportunities and developing with customers
Slide 27: Democratisation of financial risk is driving growth in retail assets globally
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Democratisation of financial risk is driving growth in retail assets globally Consistently strong growth in UK platform AUA Further exposure to fast growing retail ma
Slide 28: Recognising the value of our Indian associates
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Recognising the value of our Indian associates Successful IPO of HDFC Life completed Proposed IPO of HDFC AMC – India’s leading asset manager 500 Largest 5 Indian Ass
Slide 29: Attracting, retaining and developing talented people
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Attracting, retaining and developing talented people Attracting, retaining Developing • Creating a world-class culture and developing strong relationships talented pe
Slide 30: Balancing investment for future growth with returns to shareholders
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Balancing investment for future growth with returns to shareholders Providing support to drive further growth Holding company cash and liquid resources • Allows inves
Slide 31: Building a diversified world-class investment company
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Building a diversified world-class investment company • Merger to create Standard Life Aberdeen accelerated our journey • Proposed transaction and new strategic partn
Slide 32: Full year results 2017
Full year results 2017 Bill Rattray | Building a world-class investment company | February 2018 32
Slide 33: Simple and consistent business model driving profit
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Simple and consistent business model driving profit Increasing assets Growing revenue Driving profit AUMA Fee based revenue Cost/income ratio Adjusted profit up 1% up
Slide 34: Adjusted profit before tax
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Adjusted profit before tax Driving profit Adjusted profit before tax (Pro forma basis) 2017 2016 £m £m Fee based revenue 2,763 2,686 Spread/risk margin 165 134 Total
Slide 35: Stable assets with positive market movements offsetting net outflows
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Stable assets with positive market movements Increasing assets offsetting net outflows Net outflows: (£31.0bn) £42.6bn £654.9bn £647.6bn (£4.3bn) £8.1bn (£22.1bn) £2.
Slide 36: Benefiting from diversification across our growth channels
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Benefiting from diversification across our growth channels Increasing assets Gross inflows Redemptions Net flows 2017 2016 2017 2016 2017 2016 £bn £bn £bn £bn £bn £bn
Slide 37: Aberdeen Standard Investments demonstrating improvement across most asset classes
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Aberdeen Standard Investments demonstrating Increasing assets improvement across most asset classes Movement in assets under management Analysis of growth net flows £
Slide 38: Continued strong growth in Pensions and Savings AUA
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Continued strong growth in Pensions and Savings AUA Increasing assets driven by Retail and Workplace £12.5bn £188.1bn Growth net flows: £8.1bn (7% of opening growth A
Slide 39: Aberdeen Standard Investments revenue benefiting from strong market levels
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Aberdeen Standard Investments revenue benefiting Growing revenue from strong market levels Aberdeen Standard Investments 2017 2016 • Modest reduction in growth revenu
Slide 40: Continuing growth in fee revenue in Standard Life Pension and Savings
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Continuing growth in fee revenue in Standard Life Growing revenue Pension and Savings Standard Life Pensions and Savings 2017 2016 • UK Retail and Workplace growth fe
Slide 41: Spread/risk margin benefited from asset liability management
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Spread/risk margin benefited from asset liability management Growing revenue and expectations of higher future mortality rates Spread/risk margin 2017 2016 • Existing
Slide 42: Cost/income ratio reflects impact of non-recurring items
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Lowering Cost/income ratio reflects impact of non-recurring items unit costs Modest growth in the underlying expense base Non-recurring items impacting cost/income ra
Slide 43: Cash generation supports our progressive dividend
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Cash generation supports our progressive dividend Adjusted cash generation Strong holding company cash and liquid resources £1,000m £893m £1.5bn £841m £1.2bn and liqu
Slide 44: Full year dividend up 7.5% to 21.30p
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Full year dividend up 7.5% to 21.30p 25p 21.30 19.82 18.36 +7.5% Full year dividend per share (p) 17.03 +8.0% 15.80 +7.8% 14.70 +7.8% 13.80 +7.5% 13.00 12.24 +6.5% 11
Slide 45: Our vision: Building a world-class investment company
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Our vision: Building a world-class investment company • Accelerated in 2017 by merger to create Standard Life Aberdeen • Completed through sale of SLAL and strengthen
Slide 46: Questions and answers
Questions and answers | Building a world-class investment company | February 2018 46
Slide 47: Appendix
Appendix | Building a world-class investment company | February 2018 47
Slide 48: Analysis of profit by business unit
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Analysis of profit by business unit (Pro forma and Reported basis) UK Europe Aberdeen Standard India and Pensions and Pensions and Other Eliminations Total Investment
Slide 49: Adjusted profit by business unit
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Adjusted profit by business unit (Pro forma and Reported basis) Pro forma basis Reported basis 2017 2016 2017 2016 £m £m £m £m Aberdeen Standard Investments 677 722 4
Slide 50: Lower net impact of adjusting items
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Lower net impact of adjusting items Reported basis 2017 2016 £m £m One-off: Gain on sale of 5.4ppts stake in HDFC Life 302 - Provision for annuity sales practices (10
Slide 51: AUMA and flows supplementary information
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers AUMA and flows supplementary information Adjusted operating Gross inflows Net flows AUMA Fee revenue yield1 income 2017 2016 2017 2016 2017 2016 2015 2017 2016 2017 2
Slide 52: Aberdeen Standard Investments demonstrating improvement across most asset classes
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Aberdeen Standard Investments demonstrating improvement across most asset classes Q1 2017 Q2 2017 Q3 2017 Q4 2017 2017 2016 Net flows £bn £bn £bn £bn £bn £bn Equities
Slide 53: Aberdeen Standard Investments growth AUM
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Aberdeen Standard Investments growth AUM Opening AUM Gross Markets and Corporate Closing AUM as Analysis by asset class as at 1 Jan 2017 inflows Redemptions Net flows
Slide 54: Aberdeen Standard Investments fee revenue
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Aberdeen Standard Investments fee revenue Average AUM Average AUM Revenue Fee revenue yield1 (ex. HDFC AMC) 2017 2016 2017 2016 2017 2016 2017 2016 £bn £bn £bn £bn £m
Slide 55: Aberdeen Standard Investments adjusted profit before tax
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Aberdeen Standard Investments adjusted profit before tax Aberdeen Standard Investments adjusted profit before tax • Stable fee revenue with performance fees of £26m 2
Slide 56: Standard Life UK Pensions and Savings adjusted profit before tax
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Standard Life UK Pensions and Savings adjusted profit before tax UK Pensions and Savings adjusted profit before tax • Fee based revenue up 14%, including 20% across g
Slide 57: UK Pensions and Savings adjusted profit contribution
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers UK Pensions and Savings adjusted profit contribution 2013 2014 2015 2016 2017 £m £m £m £m £m Workplace and Retail (ex. cash margin) 149 165 182 195 228 Revenue from c
Slide 58: Standard Life Europe Pensions and Savings
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Standard Life Europe Pensions and Savings Europe Pensions and Savings adjusted profit before tax 2017 2016 • Fee AUA up 8% benefiting from net inflows of £0.4bn £m £m
Slide 59: India and China life
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers India and China life India and China life adjusted profit before tax 2017 2016 • Successful IPO of HDFC Life completed in November £m £m 2017 resulting in net cash pr
Slide 60: Recognising the value of our Indian associates
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Recognising the value of our Indian associates HDFC Life – a leading private Indian life insurer HDFC AMC – a profitable and fast growing business 29.35% 38.24% stake
Slide 61: Well diversified new active product suite
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Well diversified “new active” product suite Higher growth Opport- unistic PE RE GEM Hedge Second- Equity Funds aries PE Smaller Minority EDGEM Cos GP Stakes PE Co- Hi
Slide 62: GARS: Well established track record of delivering long-term investment performance
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers GARS: Well established track record of delivering long-term investment performance Delivering returns with managed volatility over the last 11 years • Continuing to d
Slide 63: Subordinated capital instruments
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Subordinated capital instruments Rating Amount Issue date Issuer Status Currency Coupon First call date Maturity (Moody’s / S&P / Fitch) (m) Oct 2017 Standard Life Ab
Slide 64: Strong and stable solvency position
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Strong and stable solvency position Investor view Investor view1 surplus: £0.2bn 225% £6.8bn (2016: £6.2bn) £3.8bn (2016: £3.3bn) (2016: £0.2bn) entity level capital
Slide 65: Solvency II: Reconciliation of investor view to regulatory view
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Solvency II: Reconciliation of investor view to regulatory view Investor view Regulatory view 197% 225% £7.3bn £0.2bn £6.8bn (2016: £7.2bn) (2016: £0.2bn) (2016: £6.2
Slide 66: Solvency II: £6.2bn out of £7.3bn regulatory capital is tier 1
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Solvency II: £6.2bn out of £7.3bn regulatory capital is tier 1 Regulatory view 2017 Solvency II capital Tier 2 capital 15% £1.1bn Capital from subordinated debt Restr
Slide 67: Stable investor view surplus over a wide range of stress scenarios
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Stable investor view surplus over a wide range of stress scenarios £3.8bn £4.0bn £3.8bn £3.8bn £3.8bn £3.9bn £3.6bn £3.7bn £3.7bn £3.6bn Up 20% Down 20% Up 1.0% Down
Slide 68: Solvency II: Regulatory capital landscape
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Solvency II: Regulatory capital landscape Regulatory framework Entity level Contribution to Group SII position Standard Life Investments BIPRU BIPRU Aberdeen Asset Ma
Slide 69: Solvency II: Capital requirements reflect focus on fee business
Welcome Transaction overview Questions Strategy update Full year results 2017 Appendix and introduction and merger update and answers Solvency II: Capital requirements reflect focus on fee business and our strong pension scheme and with profits funds Investor view Regulatory view Spread Spread Other
Slide 70: Registered office and website details
Standard Life Aberdeen plc is registered in Scotland (SC286832) at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH. www.standardlifeaberdeen.com © 2018 Standard Life Aberdeen, images reproduced under licence. All rights reserved.
Standard Life Aberdeen — FY2017 Earnings Presentation on 6ix