TIDMSL.
RNS Number : 7418X
Standard Life plc
24 February 2017
Standard Life plc
Full Year Results 2016
Part 1 of 8
24 February 2017
Delivering diversified and sustainable growth
2016 2015
==================================================== ====== ====== =====
Assets under administration (GBPbn) 357.1 307.4 16%
Fee based revenue (GBPm) 1,651 1,579 5%
Operating profit before tax (GBPm)(1) 723 665 9%
Diluted operating EPS (p)(2,3) 29.5 26.1 13%
Underlying cash generation (GBPm)(4) 502 459 9%
Profit for the year attributable to equity holders
of Standard Life plc (GBPm) 368 276 33%
Full year dividend per share (p) 19.82 18.36 8.0%
====================================================== ====== ====== =====
More detail on our financial performance is available within the
supplementary section on page 2 of this release. Unless otherwise
stated, all figures are presented on a continuing operations
basis(5) .
Growing assets by meeting the evolving and diverse needs of our
clients and customers
-- Increased assets under administration by 16% to GBP357.1bn
with modest net outflows of GBP2.6bn, representing less than 1% of
opening assets, driven largely by our mature books of business
-- Growth channels AUA up 20% (up 132% over the last five years
to GBP237.6bn) driven by gross inflows of GBP38.6bn, net inflows of
GBP4.1bn, the acquisition of Elevate and positive market
movements:
o Institutional and Wholesale AUM up 11%(6) to GBP137.1bn
benefiting from product and client diversification:
-- Institutional net inflows of GBP1.1bn and Wholesale net
outflows of GBP1.7bn in the most challenging market for the UK
mutual fund industry for over 20 years
-- Resilient gross inflows of GBP27.7bn (2015: GBP30.5bn(6) )
with lower demand for GARS partly offset by a 30%(6) increase in
gross inflows to GBP17.5bn (net inflows GBP3.7bn) into a broad
range of other products
o Workplace and Retail AUA up 33% to over GBP100bn benefiting
from net inflows of GBP5.4bn (2015: GBP5.8bn) and the acquisition
of Elevate
-- Third party(7) funds above benchmark over 1 year: 20%; 3 years: 76%; 5 years: 88%
Revenue growth and sharpened focus on efficiency driving
operational leverage
-- Fee based revenue up 5% to GBP1,651m (95% of total income)
with growth channels revenue up 10% to GBP1,205m (2015: GBP1,096m)
and average revenue yield maintained at 59bps (2015: 59bps)
-- Reduced cost/income ratio(8) by 1ppt to 62% and continuing to
target a reduction below 60% over the medium term
-- Operating profit before tax up 9% to GBP723m with diluted operating EPS up 13% to 29.5p
-- Non-operating items include a provision for non-advised
annuity sales practices of GBP175m but take no account of a
possible insurance recovery of up to GBP100m
Generating cash to drive sustainable growth and returns to
shareholders
-- Underlying cash generation up 9% to GBP502m funding further
investment in our business, including our investment capabilities
and geographic reach as well as the acquisition of Elevate and
ongoing buildout of 1825
-- Strong holding company cash position of GBP0.9bn (2015:
GBP1.0bn) after increasing our stake in HDFC Life which is pursuing
a combination with Max Life to create the leading private life
insurance business in India
-- Unbroken 10 year track record of progressive dividends with
full year dividend per share up 8.0% to 19.82p
Keith Skeoch, Chief Executive, commented:
"Standard Life continues to make good progress towards creating
a world-class investment company. We have increased the pace of
strategic delivery, against a backdrop of volatile investment
markets, with growth in assets, profits, cash flows and returns to
shareholders.
"Despite industry headwinds, we are benefiting from our
strengthening global brand and strong long-term relationships with
a well diversified range of clients and customers. The acquisition
of Elevate has strengthened our leading position in the advised
platform market while the increase in the stake in HDFC Life and
the proposed combination with Max Life will increase our exposure
to the attractive and fast growing Indian market.
"We are already seeing the benefits of targeted investments to
further our diversification agenda, including the success of our
newer investment solutions, and the sharpened focus on operational
efficiency. This increased pace of strategic delivery will ensure
that we continue to meet changing client and customer needs, and
generate growing and sustainable returns for our shareholders."
Supplementary information
Financial highlights
2016 2015
Profitability GBPm GBPm
==================================================== ===== ===== ========= ========
Fee based revenue 1,651 1,579
Spread/risk margin 92 101
================================================================== ========= ========
Total income 1,743 1,680
Total expenses (1,159) (1,115)
Capital management 21 9
Share of associates' and joint ventures' profit
before tax 76 56
================================================================== ========= ========
Underlying performance(9) 681 630
================================================================== ========= ========
Operating assumption and actuarial reserving changes
(spread/risk margin) 42 44
One-off contribution to with profits business in Germany
(operating expenses) - (9)
================================================================== ========= ========
Operating profit before tax 723 665
================================================================== ========= ========
Tax on operating profit (127) (114)
Share of associates' and joint ventures' tax
expense (13) (13)
================================================================== ========= ========
Operating profit after tax 583 538
Non-operating items (274) (257)
Tax on non-operating items 59 37
Singapore included in discontinued operations
segment(2) - (42)
================================================================== ========= ========
Profit for the year attributable to equity holders
of Standard Life plc 368 276
================================================================== ========= ========
IFRS profit from discontinued operations(2,5) - 1,147
===================================================== ==== ===== ========= ========
Total IFRS profit for the year attributable to equity
holders of Standard Life plc 368 1,423
================================================================== ========= ========
2016 2015
Underlying performance by business unit GBPm GBPm
================================================================== ========= ========
Standard Life Investments 383 342
UK spread/risk(10) 74 92
UK excluding spread/risk 207 199
===================================================== ==== ===== ========= ========
UK Pensions and Savings 281 291
Europe Pensions and Savings 39 31
Hong Kong (5) 2
Share of associates' and joint ventures' profit
before tax 41 25
===================================================== ==== ===== ========= ========
India and China 36 27
Other (58) (61)
----------------------------------------------------- ---- ----- --------- --------
Underlying performance 681 630
----------------------------------------------------- ---- ----- --------- --------
Other performance indicators 2016 2015
===================================================== ==== ===== ========= ========
Operating profit before tax (GBPm) 723 665
Underlying cash generation (GBPm)(4) 502 459
Assets under administration (GBPbn) 357.1 307.4
Net flows (GBPbn) (2.6) 6.3
===================================================== ==== ===== ========= ========
Other financial highlights 2016 2015
===================================================== ==== ===== ========= ========
Solvency II capital surplus (GBPbn): Investor
view 3.3(11) 3.3
Regulatory view 3.1(11) 2.1
Solvency II solvency ratio: Investor view 214%(11) 222%
Regulatory view 176%(11) 162%
Profit for the year attributable to equity holders
of Standard Life plc (GBPm) 368 276
Diluted operating EPS (p)(2,3) 29.5 26.1
Diluted EPS (p)(2,3) 18.6 13.4
Basic EPS (p)(2,3) 18.7 13.5
Final dividend per share (p) 13.35 12.34
Full year dividend per share (p) 19.82 18.36
===================================================== ====== ========= ========
Creating a world-class investment company
Our ambition is to create a world-class investment company: a
global business that manages, administers and advises on
investments for our customers and clients.
Our business model is simple. We attract assets by meeting the
investment needs of our customers and clients. This includes
individual investors in our mutual funds and pensions and savings
products, as well as financial advisers, employers and a wide range
of institutional clients. By growing the assets we look after for
our clients and customers we also grew revenue, which combined with
tight cost control, allowed us to grow our profits.
Our business is well positioned for the global trends that are
shaping the savings and investments landscape. This means we are
able to invest for the future to continue to meet the needs of our
customers and clients and to generate growing and sustainable
returns for our shareholders.
Continuing growth in assets in volatile markets
Assets under administration (AUA) increased by 16% to GBP357.1bn
driven by market movements, including the benefit of weaker
Sterling. Gross inflows were resilient at GBP42.1bn (2015:
GBP43.0bn) but redemptions increased to GBP44.7bn (2015: GBP36.7bn)
reflecting wholesale markets which were affected by weaker investor
sentiment and our short-term investment performance which was
impacted by the market reaction to macro-economic and geopolitical
events.
Over 90% of these gross inflows came via our growth channels
including GBP39.9bn into our key growth channels. Gross inflows
into Institutional and Wholesale were resilient at GBP27.7bn (2015:
GBP30.5bn(6) ) with lower demand for GARS partly offset by
continued growth across a broad range of other products which saw
gross inflows up 30%(6) to GBP17.5bn. Since 2012, gross inflows
across those asset classes grew by 150% from GBP7.0bn to GBP17.5bn,
while GARS gross inflows increased 21% to GBP10.2bn. Gross inflows
into Workplace and Retail continued to grow steadily, increasing by
5% to GBP12.2bn in 2016, and by 58% since 2012.
Key growth channels gross
inflows 2012 2013 2014(6) 2015(6) 2016
GBPbn GBPbn GBPbn GBPbn GBPbn
------------------------------------------------- ------ ------ -------- -------- ------
Institutional and Wholesale
(excluding GARS) 7.0 8.1 12.2 13.5 17.5
GARS 8.4 11.8 10.9 17.0 10.2
---------------------------------------------------- ------ ------ -------- -------- ------
Institutional and Wholesale 15.4 19.9 23.1 30.5 27.7
Workplace and Retail 7.7 9.8 9.9 11.6 12.2
---------------------------------------------------- ------ ------ -------- -------- ------
Total key growth channels (before eliminations) 23.1 29.7 33.0 42.1 39.9
---------------------------------------------------- ------ ------ -------- -------- ------
Total net outflows of GBP2.6bn (2015: net inflows GBP6.3bn)
included net inflows of GBP4.1bn (2015: GBP14.9bn) from our growth
channels. This was offset by net outflows of GBP6.2bn (2015:
GBP7.9bn) from our mature fee books which are in slow long-term
run-off but included a new GBP1.2bn mandate secured from the
Phoenix Group. Flows also reflected ongoing progress in our India
and China associate and joint venture life businesses which
generated net inflows of GBP0.4bn (2015: GBP0.2bn). Scheduled net
outflows from annuities amounted to GBP0.9bn (2015: GBP0.9bn).
Capitalising on our strengths and opportunities in key
markets
Our results for 2016 demonstrate the benefits of a well
diversified business, with our broad range of customers and clients
responding in different ways to the changing market environment.
Looking at each of our key growth channels:
Institutional - delivers record gross inflows
Institutional AUM increased by 13%(6) to GBP87.0bn helped by net
inflows of GBP1.1bn (2015: GBP3.3bn) and positive market
movements.
Net inflows included record gross inflows of GBP15.6bn (2015:
GBP11.1bn), demonstrating the quality and breadth of our investment
capabilities. We saw strong demand across our broad range of asset
classes including fixed income, private equity, real estate and
multi-asset although gross inflows into GARS were lower.
Fee based revenue increased by 10%(6) to GBP360m benefiting from
higher AUM. Average revenue yield reduced to 43bps (2015: 48bps)
reflecting the transfer of GBP9.8bn of assets, previously
classified as Ignis, into the Institutional channel at an average
yield of 19bps.
Wholesale - relatively resilient in a challenging environment
for mutual funds
Wholesale AUM increased by 6%(6) to GBP50.1bn with net outflows
of GBP1.7bn (2015: net inflows GBP9.3bn) in a challenging
environment for mutual funds.
Weaker investor sentiment due to market volatility, the EU
referendum result, other political uncertainty and short-term
investment performance have impacted global wholesale markets with
the UK market seeing the worst net retail sales for 20 years
according to Pridham. As a result, our Wholesale channel attracted
lower gross inflows and saw an increase in redemptions. Despite
this, we have achieved a top 5 gross sales position(12) in the UK
market for 17 consecutive quarters and remain well positioned with
a share of 4.7%(13) (2015: 5.4%). This included continued strong
demand for MyFolio driving AUM up 30% to GBP10.5bn with c80%
distributed via our Pensions and Savings business.
Fee based revenue increased by 8%(6) to GBP271m with higher AUM
and a revenue yield of 68bps(14) (2015: 69bps(14) ).
Workplace - growth benefiting from increased regular
contributions
Workplace AUA grew 13% to GBP37.4bn benefiting from net inflows
of GBP1.7bn (2015: GBP1.9bn) and positive market movements. We also
reclassified GBP1.9bn (2015: GBP1.6bn) of assets from Workplace to
our retail channels during the year to reflect the retail
relationship we now have with those customers.
While we have seen fewer large scheme transfers as employers
adapt to new pension regulations, our Workplace channel is
benefiting from growing contributions into existing schemes which
provide a steady and long-term source of growth. Regular
contributions into the workplace pensions we administer have
increased by 5% to GBP3.1bn, reflecting our success in attracting
new flows through auto enrolment.
Fee based revenue increased by 5% to GBP185m (2015: GBP176m)
reflecting the growth in AUA while revenue yield increased slightly
to 54bps (2015: 53bps) benefiting from the success of Good to Go,
our workplace pension solution for SMEs.
Retail - benefiting from our leading adviser platform
business
Retail AUA increased by 48% to GBP62.9bn (2015: GBP42.6bn)
benefiting from net inflows of GBP3.7bn (2015: GBP3.9bn) and
positive market movements. Growth in Retail AUA also reflects the
acquisition of Elevate which added GBP11.1bn to AUA on
completion.
Retail benefited from continued strong net inflows onto our
leading Wrap adviser platform of GBP4.1bn (2015: GBP4.4bn) with
Wrap AUA up 25% to GBP31.9bn (2015: GBP25.5bn). These flows were
driven by growing demand for pensions offset by lower demand for
ISAs and other investments as a result of weaker investor
sentiment. We saw more of our customers moving into our drawdown
proposition following pension freedoms, with total assets invested
increasing by 21% to GBP16.4bn (2015: GBP13.6bn).
Fee based revenue increased by 16% to GBP228m (2015: GBP196m)
due to higher AUA while revenue yield was broadly stable at
46bps(15) (2015: 47bps(15) ).
Growth in assets driving increase in fee based revenue
Fee based revenue increased by 5% to GBP1,651m (2015:
GBP1,579m), benefiting from asset growth across all of our key
growth channels - Institutional, Wholesale, Workplace and
Retail.
Overall, revenue generated from our growth channels increased by
10% to GBP1,205m (2015: GBP1,096m) and benefited from an 11%
increase in average assets and a 20% increase in closing assets to
GBP237.6bn (2015: GBP198.3bn). This more than offset the reduction
in revenue from mature books to GBP446m (2015: GBP483m). Average
fee based revenue yield across our key growth channels remained
stable with Standard Life Investments third party(7) business at
53bps(14) (2015: 52bps(14) ), Workplace at 54bps (2015: 53bps) and
Retail at 46bps(15) (2015: 47bps(15) ).
Increased focus on efficiency
During the year, our operating expenses increased by just 3% to
GBP1,159m (2015: GBP1,124m) while we lowered our cost/income
ratio(8) by 1ppt to 62%. This was achieved while continuing to
invest in expanding the distribution and global reach of Standard
Life Investments, building out 1825 and absorbing the acquisition
of the currently loss making Elevate adviser platform acquired in
November 2016.
Standard Life Investments has achieved its 45% EBITDA margin
target one year early helped by delivery of over GBP50m of annual
cost synergies following the successful integration of Ignis.
Delivering growth in profits, cash generation and dividend
Underlying performance(9) was up 8% to GBP681m (2015: GBP630m)
and operating profit before tax increased by 9% to GBP723m (2015:
GBP665m). Given close alignment of operating profit with cash
generation, this drove underlying cash generation up 9% to GBP502m
(2015: GBP459m).
Profit for the year attributable to equity holders was GBP368m
(2015: GBP276m) reflecting increased operating profit and an
increase in non-operating costs. These included recognition of a
provision of GBP175m following the outcome of the FCA's thematic
review into non-advised annuity sales. We are working with the FCA
to put in place a process to ensure we provide affected customers
with appropriate redress.
The Board has proposed a final dividend of 13.35p per share
making a total of 19.82p (2015: 18.36p), an increase of 8.0%. We
continue to apply our existing progressive pence per share dividend
policy taking account of market conditions and the Group's
financial performance.
Solvency position remains strong
We remain strongly capitalised, with a stable Solvency II
investor view surplus of GBP3.3bn(11) (2015: GBP3.3bn),
representing solvency cover of 214%(11) (2015: 222%). Our investor
view surplus is net of the GBP0.2bn cost of increasing our stake in
HDFC Life during 2016 and the provision for non-advised annuity
sales. Regulatory surplus increased to GBP3.1bn(11) (2015:
GBP2.1bn) following management efforts and changes to the Companies
Act allowing us to recognise additional capital from our
subsidiaries at Group level.
Our capital surplus is also resilient and largely insensitive to
market movements. For example, the investor view surplus of
GBP3.3bn(11) would change by GBP0.2bn or less following a 20% rise
or fall in equities; 100bps rise or fall in fixed interest yields;
or a 50bps rise or fall in credit spreads.
Delivering against our strategic objectives
Our strategic objectives are designed to help us capitalise on
the global trends shaping the savings and investments landscape and
allow us to achieve our world-class ambitions.
Broadening and deepening our investment capability
We have a long-established programme of innovation and product
development. During 2016 we continued to broaden and deepen our
investment capability to meet client needs and drive sustainable
long-term growth:
-- Launched 16 new funds across a range of investment capabilities including:
o European versions of our leading MyFolio fund range and the
Enhanced Diversification Growth Fund
o Emerging Markets Debt and Global Emerging Markets Equity funds
launched for Nationwide in the US
o Global Focused Solutions launched for John Hancock and US
institutional clients
-- Continued to strengthen our private markets capability and
now manage GBP31bn of assets across private credit, private equity,
infrastructure and real estate
-- Our Integrated Liability Plus Solutions (ILPS) for small and
medium-sized defined benefit pension schemes launched in April 2016
and has already secured over GBP220m of assets from 34 clients and
8 different consultants
Building an efficient and effective business
We have an established track record of improving both the
scalability and efficiency of our business. During 2016, we
improved the cost/income ratio(8) by 1ppt to 62% and we continue to
sharpen our focus on efficiency to drive further reductions in unit
costs and to unlock greater operational leverage.
We believe there are further opportunities to drive down unit
costs and add value - for example, through streamlining our
customers operations, increasing automation and straight-through
processing.
The integration of Elevate into our platform business is also
expected to result in efficiencies through leveraging the common
services provided to both Wrap and Elevate by FNZ, as well as
increasing the Standard Life Investments content available to
advisers and their clients on Elevate.
Attracting, retaining and developing talented people
Our people are central to building long-term customer and client
relationships, contributing to our businesses' performance, our
reputation, profitability and long-term shareholder value. We
continued to make progress in 2016:
-- Standard Life Investment's Boston office was ranked best
medium-sized employer in the 2016 Pensions & Investments' Best
Place to Work in Money Management awards
-- Recruited over 200 young people through our graduate and
youth employment initiatives and 8% of our employees in the UK and
Ireland are now aged 25 years old or under, compared with 0.5% in
2010
-- Developing the next generation of financial planning
professionals with the second intake to our 1825 academy
-- Qualified for the Dow Jones Sustainability Index and received
a silver rating which puts us among the top 7% of companies
globally
Developing strong relationships with customers and clients
We are focused on developing strong relationships with customers
and clients both globally through Standard Life Investments and
closer to home within our Pensions and Savings business:
-- Continued to expand our global reach and now have a presence
in 29 locations worldwide and clients in 45 countries:
o New Tokyo office supports our growth ambitions in Japan,
particularly our liability aware offering for insurers
o The addition of a Singapore office enhances our real estate
investment capabilities and regional distribution
-- Entered new strategic partnerships with Bosera International
and Challenger, allowing us to reach more customers and clients in
the growing Chinese and Australian markets respectively
-- Our Workplace business has now added over 1 million new
customers through auto enrolment since 2012
-- Following the acquisition of Elevate, our Retail business now
supports over 3,000 adviser businesses with total platform AUA of
GBP44.2bn and net inflows of GBP4.8bn over the last 12 months
-- 1825 completed the acquisitions of a further three quality
adviser firms and now has 65 financial planners, advising 8,600
clients on assets of GBP3.2bn
Growing and diversifying our revenue and profit
Our results for 2016 have demonstrated the benefits of our
diversified business model, with our broad range of customers and
clients responding in different ways to the changing market
environment.
We are well positioned to capture revenue across the value chain
by providing our customers and clients with asset management,
administration and advice. Our range of investment capabilities
continues to expand and we are increasing our penetration into
other global markets too. We have also further diversified our
sources of revenue and profit with the acquisition of Elevate,
growth of 1825 and the increased stake in HDFC Life.
Our associate and joint venture businesses in Asia are becoming
an increasingly important contributor to profitability and are a
further source of diversification. During the year our share of
operating profit before tax from these businesses increased by 36%
to GBP76m (2015: GBP56m).
Outlook
While optimism across financial markets has recently increased
it is clear that the uncertainty that always accompanies economies,
politics and markets will remain elevated. This will continue to
reinforce the global trends that are shaping the savings and
investment landscape, which Standard Life's long-term strategy is
designed to take advantage of.
We are already benefiting from our strong long-term
relationships with a broad and well diversified range of clients
and customers who are responding in different ways to the changing
market environment. Targeted investments to further our
diversification agenda, together with a sharpened focus on
operational efficiency as we drive our cost income ratio to below
its current level, will increase our pace of strategic delivery.
This will ensure we continue to meet changing client and customer
needs, and generate growing and sustainable returns for our
shareholders.
For a PDF version of the full Annual report and accounts, please
click here:
http://www.rns-pdf.londonstockexchange.com/rns/7418X_1-2017-2-23.pdf
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Newswires and online publications
A conference call for newswires and online publications will
take place on Friday 24 February at 7.30am (UK time). Participants
should dial +44 (0)20 3059 8125 and quote Standard Life full year
results 2016. A replay facility will be available for seven days
after the event. To access the replay please dial +44 (0)121 260
4861 followed by the pass code 5121315#.
Investors and analysts
The full year results 2016 analyst and investor presentation
will take place on Friday 24 February at 9.00am (UK time). The
presentation will take place at Goldman Sachs International, River
Court, 120 Fleet Street, London EC4A 2BE. There will also be a live
webcast and teleconference starting at 9.00am, both of which will
have the facility to ask questions at the end of the formal
presentation. Participants should dial +44 (0)20 3059 8125 and
quote Standard Life full year results 2016. A replay facility will
be available for seven days after the event. To access the replay
please dial +44 (0)121 260 4861 followed by 5120542#.
Footnotes
1. Operating profit is IFRS profit before tax adjusted to remove
the impact of short-term market driven fluctuations in investment
return and economic assumption changes, restructuring costs,
amortisation and impairment of intangible assets acquired in
business combinations, gain or loss on the sale of a subsidiary,
associate or joint venture and other significant one-off items
which are not indicative of the long-term operating performance of
the Group.
2. Under IFRS 5, Singapore did not constitute a discontinued
operation and was included under continuing operations in the IFRS
consolidated income statement. Therefore the analysis of Group
operating profit includes the reclassification of Singapore results
between discontinued and continuing operations. The 2015 Group
diluted operating earnings per share from continuing operations
excludes Singapore while the Group diluted and basic earnings per
share from continuing operations includes Singapore.
3. The Company undertook a share consolidation in 2015 followed
by a return of value to shareholders. In accordance with IAS 33,
earnings per share were not restated following the share
consolidation as there was an overall corresponding change in
resources. As a result of the share consolidation, earnings per
share from continuing operations for the year ended 31 December
2016 are not directly comparable with the prior year.
4. Underlying cash generation now includes dividends received
from our Indian associates. Prior period figures have been
restated.
5. Continuing operations excludes the Canadian and Singapore
operations reported as discontinued operations in 2015.
6. Adjusted for impact of Ignis which was transferred into
Institutional and Wholesale during 2016.
7. Excluding strategic partner life business.
8. Rolling 12 months basis, operating expenses divided by
operating income (including share of associates' and joint
ventures' profit before tax).
9. Underlying performance is operating profit before tax after
excluding the impact of spread/risk operating actuarial assumption
changes and specific management actions. A full reconciliation to
profit for the year attributable to equity holders of Standard Life
plc is presented on page 2 of this release.
10. UK spread/risk margin of GBP81m (2015: GBP100m) less
spread/risk direct costs of GBP7m (2015: GBP8m).
11. Based on draft regulatory returns.
12. Source: Pridham market report Q4 2016.
13. Source: Investment Association Q4 2016.
14. Excludes AUM from HDFC AMC.
15. Excludes revenue from cash balances.
Forward-looking statements
This document may contain certain "forward-looking statements"
with respect to Standard Life's plans and its current goals and
expectations relating to its future financial condition,
performance, results, strategy and objectives. For example,
statements containing words such as "may", "will", "should",
"continue", "aims", "estimates", "projects", "believes", "intends",
"expects", "plans", "pursues", "seeks", "targets" and
"anticipates", and words of similar meaning, may be
forward-looking. By their nature, all forward-looking statements
involve risk and uncertainty because they are based on information
available at the time they are made, including current expectations
and assumptions, and relate to future events and circumstances
which may be or are beyond Standard Life's control, including among
other things: UK domestic and global political, economic and
business conditions (such as the United Kingdom's exit from the
European Union); market related risks such as fluctuations in
interest rates and exchange rates, and the performance of financial
markets generally; the impact of inflation and deflation;
experience in particular with regard to mortality and morbidity
trends, lapse rates and policy renewal rates; the impact of
competition; the timing, impact and other uncertainties of future
acquisitions or combinations within relevant industries; default by
counterparties; information technology or data security breaches;
natural or man-made catastrophic events; the failure to attract or
retain necessary key personnel; the policies and actions of
regulatory authorities; 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
affiliates operate. These may for example result in changes to
assumptions used for determining results of operations or
re-estimations of reserves for future policy benefits. As a result,
Standard Life's actual future financial condition, performance and
results may differ materially from the plans, goals, strategy and
expectations set forth in the forward-looking statements. Persons
receiving this document should not place undue reliance on
forward-looking statements. Standard Life undertakes no obligation
to update any of the forward-looking statements contained in this
document or any other forward-looking statements it may make. Past
performance is not an indicator of future results and the results
of Standard Life in this document may not be indicative of, and are
not an estimate, forecast or projection of, Standard Life's future
results.
Inside Information
This announcement contains inside information which is disclosed
in accordance with the Market Abuse Regulation which came into
effect on 3 July 2016.
Standard Life plc's LEI Code is 0TMBS544NMO7GLCE7H90
Analysis of flows, AUA and revenue by channel
We analyse our simplified business in three distinct
components:
-- Growth channels which are sources of strong scalable growth
and diversification by geography, asset class, product, client and
customer. These primarily comprise the Institutional and Wholesale
channels of Standard Life Investments, and the Workplace and Retail
channels of UK Pensions and Savings.
-- Mature books of largely legacy pension and insurance business
that provide a stable contribution to revenue and profit as well as
being a source of financial strength
-- Our strategic associate and joint venture life businesses in
India and China that are sources of future potential growth and
diversification
Fee based
Fee based revenue
Gross inflows Net flows AUA revenue yield
2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn GBPm GBPm bps bps
========================== ======= ======= ====== ====== ======= ======= ====== ====== ===== =====
Institutional 15.6 11.1 1.1 3.3 87.0 67.0 360 314 43 48
Wholesale 12.1 16.8 (1.7) 9.3 50.1 45.9 271 239 68 69
Workplace 4.1 4.1 1.7 1.9 37.4 33.0 185 176 54 53
Retail 8.1 7.5 3.7 3.9 62.9 42.6 228 196 46 47
Wealth 0.8 0.9 (0.1) 0.2 6.8 6.5 49 46 73 73
Ignis(1) - 2.6 - (2.5) - 11.1 - 25 - 19
Europe growth 1.3 1.6 0.5 0.9 11.2 9.6 95 62 93 67
Hong Kong 0.1 0.1 - 0.1 0.6 0.5 17 38 - -
Eliminations (3.5) (3.9) (1.1) (2.2) (18.4) (17.9) - - - -
-------------------------- ------- ------- ------ ------ ------- ------- ------ ------ ----- -----
Total growth channels 38.6 40.8 4.1 14.9 237.6 198.3 1,205 1,096 59 59
-------------------------- ------- ------- ------ ------ ------- ------- ------ ------ ----- -----
UK mature Retail 0.6 0.7 (2.5) (2.4) 34.3 32.7 251 259 77 77
Europe mature fee 0.7 0.7 (0.1) 0.2 10.1 8.4 102 115 104 137
Third party strategic
partner life business 1.2 0.2 (2.7) (4.8) 43.8 39.6 69 81 16 19
Other fee including
CWP(2) - - (0.9) (0.9) 0.6 1.3 24 28 - -
-------------------------- ------- ------- ------ ------ ------- ------- ------ ------ ----- -----
Total mature books fee 2.5 1.6 (6.2) (7.9) 88.8 82.0 446 483 52 57
-------------------------- ------- ------- ------ ------ ------- ------- ------ ------ ----- -----
Total fee 41.1 42.4 (2.1) 7.0 326.4 280.3 1,651 1,579 - -
-------------------------- ------- ------- ------ ------ ------- ------- ------ ------ ----- -----
Spread/risk 0.2 0.2 (0.9) (0.9) 16.1 14.9 - - - -
Associate and joint
venture life businesses 0.8 0.4 0.4 0.2 4.0 2.3 - - - -
Other - - - - 11.2 10.4 - - - -
Other eliminations - - - - (0.6) (0.5) - - - -
-------------------------- ------- ------- ------ ------ ------- ------- ------ ------ ----- -----
Total 42.1 43.0 (2.6) 6.3 357.1 307.4 1,651 1,579 - -
========================== ======= ======= ====== ====== ======= ======= ====== ====== ===== =====
1. During 2016 Ignis funds were merged into Standard Life
Investments funds and are now reported within Institutional and
Wholesale. This has resulted in a transfer of GBP11.1bn AUM out of
Ignis into Institutional (GBP9.8bn) and Wholesale (GBP1.3bn)
through Market and other movements.
2. Fee based revenue income from investment management expenses
charged directly to internal policyholder funds managed by Standard
Life Investments for the Standard Life Group. These policyholder
funds largely comprise assets across both growth channels and
mature books as well as conventional with profits. AUA and flows
comprise conventional with profits only.
Assets under administration and net flows
Assets under administration (AUA) is a measure of the total
assets administered on behalf of individual customers and
institutional clients. It includes those assets for which we
provide investment management services, as well as those assets we
administer where the customer has made a choice to select an
external third party investment manager. As an investment company,
AUA and net flows are key drivers of shareholder value.
Assets under administration
12 months ended 31 December 2016
Closing
Opening Market AUA at
AUA at Gross Net and other 31 Dec
1 Jan 2016 flows Redemptions flows movements 2016
GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn
------------------------------------- ----- ----------- -------- ------------ ------- ----------- -----------
Total growth channels 198.3 38.6 (34.5) 4.1 35.2 237.6
Total mature books fee 82.0 2.5 (8.7) (6.2) 13.0 88.8
Total mature books spread/risk 14.9 0.2 (1.1) (0.9) 2.1 16.1
Total other 12.2 0.8 (0.4) 0.4 2.0 14.6
===================================== ===== =========== ======== ============ ======= =========== ===========
Total AUA 307.4 42.1 (44.7) (2.6) 52.3 357.1
------------------------------------- ----- ----------- -------- ------------ ------- ----------- -----------
Growth
channels Institutional 67.0 15.6 (14.5) 1.1 18.9 87.0
-----------
Wholesale 45.9 12.1 (13.8) (1.7) 5.9 50.1
Wealth 6.5 0.8 (0.9) (0.1) 0.4 6.8
Ignis(1) 11.1 - - - (11.1) -
=============================== =========== ======== ============ ======= =========== ===========
Standard Life Investments 130.5 28.5 (29.2) (0.7) 14.1 143.9
Workplace 33.0 4.1 (2.4) 1.7 2.7 37.4
Retail(2) 42.6 8.1 (4.4) 3.7 16.6 62.9
=============================== =========== ======== ============ ======= =========== ===========
UK Pensions and Savings 75.6 12.2 (6.8) 5.4 19.3 100.3
------------------------------- ----------- -------- ------------ ------- ----------- -----------
Europe growth(2) 9.6 1.3 (0.8) 0.5 1.1 11.2
=============================== =========== ======== ============ ======= =========== ===========
Pensions and Savings 85.2 13.5 (7.6) 5.9 20.4 111.5
------------------------------- ----------- -------- ------------ ------- ----------- -----------
Hong Kong 0.5 0.1 (0.1) - 0.1 0.6
Eliminations(3) (17.9) (3.5)) 2.4 (1.1) 0.6 (18.4)
=============================== =========== ======== ============ ======= =========== ===========
Total growth channels 198.3 38.6 (34.5) 4.1 35.2 237.6
------------------------------- ----------- -------- ------------ ------- ----------- -----------
Mature
books UK mature Retail 32.7 0.6 (3.1) (2.5) 4.1 34.3
-----------
Europe mature fee 8.4 0.7 (0.8) (0.1) 1.8 10.1
Third party strategic partner
life business 39.6 1.2 (3.9) (2.7) 6.9 43.8
Other fee including CWP 1.3 - (0.9) (0.9) 0.2 0.6
=============================== =========== ======== ============ ======= =========== ===========
Total mature books fee 82.0 2.5 (8.7) (6.2) 13.0 88.8
------------------------------- ----------- -------- ------------ ------- ----------- -----------
Spread/risk 14.9 0.2 (1.1) (0.9) 2.1 16.1
=============================== =========== ======== ============ ======= =========== ===========
Total mature books 96.9 2.7 (9.8) (7.1) 15.1 104.9
------------------------------- ----------- -------- ------------ ------- ----------- -----------
Associate and joint venture life
businesses(4) 2.3 0.8 (0.4) 0.4 1.3 4.0
Other(5) 10.4 - - - 0.8 11.2
Other eliminations(3) (0.5) - - - (0.1) (0.6)
====================================== ==== =========== ======== ============ ======= =========== ===========
Total 307.4 42.1 (44.7) (2.6) 52.3 357.1
-------------------------------------- ---- ----------- -------- ------------ ------- ----------- -----------
1. During 2016 Ignis funds were merged into Standard Life
Investments funds and are now reported within Institutional and
Wholesale. This has resulted in a transfer of GBP11.1bn AUM out of
Ignis into Institutional (GBP9.8bn) and Wholesale (GBP1.3bn)
through Market and other movements.
2. Platform AUA (Wrap, Elevate and Fundzone) of GBP44.2bn (2015:
GBP26.5bn) comprises GBP41.7bn (2015: GBP24.4bn) reported within UK
Retail and GBP2.5bn (2015: GBP2.1bn) relating to Wrap International
Bond reported within Europe growth fee.
3. Certain products are included in both Pensions and Savings
growth AUA and Standard Life Investments growth AUM. Therefore, at
a Group level an elimination adjustment is required to remove any
duplication, in addition to other necessary consolidation
adjustments. Comprises GBP18.4bn (2015: GBP17.9bn) related to
growth channels business eliminations and GBP0.6bn (2015: GBP0.5bn)
related to other consolidation/eliminations.
4. Market and other movements includes GBP0.8bn relating to
stake increase in HDFC Life in April 2016.
5. Other comprises Assets that do not generate revenue from
products of GBP8.9bn (2015: GBP7.7bn) and Other corporate assets of
GBP2.3bn (2015: GBP2.7bn).
Assets under administration and net flows (continued)
Assets under administration
12 months ended 31 December 2015
Closing
Opening Market AUA at
AUA at Gross Net and other 31 Dec
1 Jan 2015 flows Redemptions flows movements 2015
--------
GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn
--------------------------------- ------------ ----------- ------- ------------ ------- ----------- -----------
Total growth channels 180.7 40.8 (25.9) 14.9 2.7 198.3
Total mature books fee 87.9 1.6 (9.5) (7.9) 2.0 82.0
Total mature books spread/risk 16.1 0.2 (1.1) (0.9) (0.3) 14.9
Total other 11.9 0.4 (0.2) 0.2 0.1 12.2
--------------------------------- ------------ ----------- ------- ------------ ------- ----------- -----------
Total AUA 296.6 43.0 (36.7) 6.3 4.5 307.4
--------------------------------- ------------ ----------- ------- ------------ ------- ----------- -----------
Growth
channels Institutional 61.4 11.1 (7.8) 3.3 2.3 67.0
------------
Wholesale 35.5 16.8 (7.5) 9.3 1.1 45.9
Wealth 6.1 0.9 (0.7) 0.2 0.2 6.5
Ignis 14.5 2.6 (5.1) (2.5) (0.9) 11.1
Standard Life Investments 117.5 31.4 (21.1) 10.3 2.7 130.5
--------------------------------- ----------- ------- ------------ ------- ----------- -----------
Workplace 32.0 4.1 (2.2) 1.9 (0.9) 33.0
Retail(1) 37.3 7.5 (3.6) 3.9 1.4 42.6
UK Pensions and Savings 69.3 11.6 (5.8) 5.8 0.5 75.6
--------------------------------- ----------- ------- ------------ ------- ----------- -----------
Europe growth(1) 8.7 1.6 (0.7) 0.9 - 9.6
Pensions and Savings 78.0 13.2 (6.5) 6.7 0.5 85.2
--------------------------------- ----------- ------- ------------ ------- ----------- -----------
Hong Kong 0.4 0.1 - 0.1 - 0.5
Eliminations(2) (15.2) (3.9) 1.7 (2.2) (0.5) (17.9)
--------------------------------- ----------- ------- ------------ ------- ----------- -----------
Total growth channels 180.7 40.8 (25.9) 14.9 2.7 198.3
--------------------------------- ----------- ------- ------------ ------- ----------- -----------
Mature
books UK mature Retail 33.5 0.7 (3.1) (2.4) 1.6 32.7
------------
Europe mature fee 8.5 0.7 (0.5) 0.2 (0.3) 8.4
Third party strategic partner
life business 43.8 0.2 (5.0) (4.8) 0.6 39.6
Other fee including CWP 2.1 - (0.9) (0.9) 0.1 1.3
--------------------------------- ----------- ------- ------------ ------- ----------- -----------
Total mature books fee 87.9 1.6 (9.5) (7.9) 2.0 82.0
--------------------------------- ----------- ------- ------------ ------- ----------- -----------
Spread/risk 16.1 0.2 (1.1) (0.9) (0.3) 14.9
--------------------------------- ----------- ------- ------------ ------- ----------- -----------
Total mature books 104.0 1.8 (10.6) (8.8) 1.7 96.9
--------------------------------- ----------- ------- ------------ ------- ----------- -----------
Associate and joint venture life
businesses 2.1 0.4 (0.2) 0.2 - 2.3
Other(3) 10.2 - - - 0.2 10.4
Other eliminations(2) (0.4) - - - (0.1) (0.5)
------------------------------------------- ----------- ------- ------------ ------- ----------- -----------
Total 296.6 43.0 (36.7) 6.3 4.5 307.4
------------------------------------------- ----------- ------- ------------ ------- ----------- -----------
1. Platform AUA (Wrap, Elevate and Fundzone) of GBP26.5bn
comprises GBP24.4bn reported within UK Retail and GBP2.1bn relating
to Wrap International Bond reported within Europe growth fee.
2. Certain products are included in both Pensions and Savings
growth AUA and Standard Life Investments growth AUM. Therefore, at
a Group level an elimination adjustment is required to remove any
duplication, in addition to other necessary consolidation
adjustments. Comprises (GBP17.9bn) related to growth channels
business eliminations and (GBP0.5bn) related to other
consolidation/eliminations.
3. Other comprises Assets that do not generate revenue from
products of GBP7.7bn and Other corporate assets of GBP2.7bn.
Standard Life Investments assets under management and net
flows
12 months ended 31 December Opening Closing
2016 AUM at Market AUM at
1 Jan Gross Net and other 31 Dec
2016 flows Redemptions flows movements 2016
------------------------------------
GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn
-------- -------------------------- -------- ------- ------------ ------- ----------- --------
Growth
AUM UK 83.2 17.3 (17.2) 0.1 17.3 100.6
--------
Europe 14.2 4.0 (5.5) (1.5) 3.5 16.2
North America 11.7 4.8 (5.5) (0.7) 1.7 12.7
Asia Pacific 3.3 0.9 (1.0) (0.1) 0.6 3.8
India 7.0 1.5 - 1.5 2.1 10.6
Ignis(1) 11.1 - - - (11.1) -
----------------------------------- -------- ------- ------------ ------- ----------- --------
By geography of client 130.5 28.5 (29.2) (0.7) 14.1 143.9
----------------------------------- -------- ------- ------------ ------- ----------- --------
Equities 16.9 3.8 (4.1) (0.3) 1.3 17.9
Fixed income 21.8 5.4 (4.3) 1.1 9.1 32.0
Multi-asset(2) 50.3 11.3 (15.1) (3.8) 5.0 51.5
Real estate 8.6 1.1 (1.4) (0.3) 2.0 10.3
MyFolio 8.1 2.5 (0.9) 1.6 0.8 10.5
Other(3) 13.7 4.4 (3.4) 1.0 7.0 21.7
Ignis(1) 11.1 - - - (11.1) -
----------------------------------- -------- ------- ------------ ------- ----------- --------
By asset class 130.5 28.5 (29.2) (0.7) 14.1 143.9
----------------------------------- -------- ------- ------------ ------- ----------- --------
Institutional 67.0 15.6 (14.5) 1.1 18.9 87.0
Wholesale 45.9 12.1 (13.8) (1.7) 5.9 50.1
Wealth 6.5 0.8 (0.9) (0.1) 0.4 6.8
Ignis(1) 11.1 - - - (11.1) -
----------------------------------- -------- ------- ------------ ------- ----------- --------
By channel 130.5 28.5 (29.2) (0.7) 14.1 143.9
----------------------------------- -------- ------- ------------ ------- ----------- --------
Standard Life Group 83.1 3.5 (5.6) (2.1) 9.2 90.2
Phoenix Group 39.6 1.2 (3.9) (2.7) 6.9 43.8
------------------------------------ -------- ------- ------------ ------- ----------- --------
Strategic partner life business
AUM 122.7 4.7 (9.5) (4.8) 16.1 134.0
------------------------------------ -------- ------- ------------ ------- ----------- --------
Standard Life Investments AUM 253.2 33.2 (38.7) (5.5) 30.2 277.9
------------------------------------ -------- ------- ------------ ------- ----------- --------
12 months ended 31 December Opening Closing
2015 AUM at Market AUM at
1 Jan Gross Net and other 31 Dec
2015 flows Redemptions flows movements 2015
------------------------------------
GBPbn GBPbn GBPbn GBPbn GBPbn GBPbn
-------- -------------------------- -------- ------- ------------ ------- ----------- --------
Growth
AUM UK 75.5 15.2 (10.8) 4.4 3.3 83.2
--------
Europe 11.3 5.4 (2.0) 3.4 (0.5) 14.2
North America 8.1 5.3 (2.3) 3.0 0.6 11.7
Asia Pacific 2.0 2.1 (0.9) 1.2 0.1 3.3
India 6.1 0.8 - 0.8 0.1 7.0
Ignis 14.5 2.6 (5.1) (2.5) (0.9) 11.1
----------------------------------- -------- ------- ------------ ------- ----------- --------
By geography of client 117.5 31.4 (21.1) 10.3 2.7 130.5
----------------------------------- -------- ------- ------------ ------- ----------- --------
Equities 15.5 2.6 (2.6) - 1.4 16.9
Fixed income 22.0 3.1 (2.8) 0.3 (0.5) 21.8
Multi-asset(2) 38.6 17.3 (7.8) 9.5 2.2 50.3
Real estate 7.4 1.1 (0.8) 0.3 0.9 8.6
MyFolio 5.9 2.6 (0.7) 1.9 0.3 8.1
Other(3) 13.6 2.1 (1.3) 0.8 (0.7) 13.7
Ignis 14.5 2.6 (5.1) (2.5) (0.9) 11.1
----------------------------------- -------- ------- ------------ ------- ----------- --------
By asset class 117.5 31.4 (21.1) 10.3 2.7 130.5
----------------------------------- -------- ------- ------------ ------- ----------- --------
Institutional 61.4 11.1 (7.8) 3.3 2.3 67.0
Wholesale 35.5 16.8 (7.5) 9.3 1.1 45.9
Wealth 6.1 0.9 (0.7) 0.2 0.2 6.5
Ignis 14.5 2.6 (5.1) (2.5) (0.9) 11.1
----------------------------------- -------- ------- ------------ ------- ----------- --------
By channel 117.5 31.4 (21.1) 10.3 2.7 130.5
----------------------------------- -------- ------- ------------ ------- ----------- --------
Standard Life Group 84.6 4.1 (6.1) (2.0) 0.5 83.1
Phoenix Group 43.8 0.2 (5.0) (4.8) 0.6 39.6
------------------------------------ -------- ------- ------------ ------- ----------- --------
Strategic partner life business
AUM 128.4 4.3 (11.1) (6.8) 1.1 122.7
------------------------------------ -------- ------- ------------ ------- ----------- --------
Standard Life Investments AUM 245.9 35.7 (32.2) 3.5 3.8 253.2
------------------------------------ -------- ------- ------------ ------- ----------- --------
1. During 2016 Ignis funds were merged into Standard Life
Investments funds, transferring GBP11.1bn AUM through Market and
other movements into the following categories - by geography: UK
(GBP11.1bn), by asset class: Fixed income (GBP5.3bn), Multi-asset
(GBP0.2bn), Real estate (GBP1.7bn) and Other (GBP3.9bn), by
channel: Institutional (GBP9.8bn) and Wholesale (GBP1.3bn).
2. Comprises absolute return strategies, enhanced
diversification strategies, risk-based portfolios and traditional
balanced portfolios.
3. Comprises cash, private equity, liquidity funds and Wealth.
Net inflows from India cash funds GBP0.4bn (2015: GBP0.6bn), net
inflows from liquidity funds of GBP0.3bn (2015: GBP0.7bn).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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