Delivering sustainable global growth Driving profits by growing third party assets Keith Skeoch CEO, Standard Life Investments
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, 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 future 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 fluctuations in interest rates and exchange rates, and the performance of financial markets generally; the policies and actions of regulatory authorities, the impact of competition, inflation, and deflation; experience in particular with regard to mortality and morbidity trends, lapse rates and policy renewal rates; the timing, impact and other uncertainties of future 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 affiliates operate. This 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, and expectations set forth in the forward-looking statements. Standard Life undertakes no obligation to update the forwardlooking statements contained in this presentation or any other forward-looking statements it may make. BoAML Investor Presentation September 2013 2
Delivering sustainable global growth Driving profits by growing third party assets
About Standard Life Investments Our global operations Active asset manager Total assets under management (AUM) of 178.8bn Third party AUM of 93.4bn Broad and diversified range of capabilities: Equities Fixed income Real estate Headquartered in Edinburgh More than 1,000 talented professionals Offices in Edinburgh, London, Dublin, Montreal, Boston, Mumbai, Beijing, Hong Kong, Seoul, Sydney and Tokyo Private equity Multi-asset solutions Risk-based funds (MyFolio) Our investors rank among some of the world s most sophisticated and high profile institutions A leading asset manager with expanding global reach BoAML Investor Presentation September 2013 4
Track record of strong and profitable growth bn 9 8 7 6 5 4 3 2 1 0 Third party net inflows 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 bn 90 Third party AUM 80 70 60 50 40 30 20 10 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 m m 450 Revenue 160 EBIT 400 140 350 300 250 200 150 120 100 80 60 100 40 50 20 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sustained record of strong growth in constantly evolving markets BoAML Investor Presentation September 2013 5
H1 2013 Update Standard Life Group Group assets under administration of 232.8bn (FY 2012: 218.1bn) Group net flows of 6.5bn (H1 2012: 0.7bn) Fee based revenue increased by 14% to 694m (H1 2012: 610m) Operating profit before tax up 6% to 304m (H1 2012: 286m) including: UK operating profit up 28% to 161m Standard Life Investments operating profit up 37% to 93m with EBIT margin up to 38% Standard Life Investments Third party net flows of 7.1bn (H1 2012: 0.6bn) an annualised 17% of opening AUM, including: 3.6bn or 51% from outside the UK US net inflows of 1.4bn Third party AUM up 13% to a record 93.4bn (from just 5.9bn in 1998) Representing over 50% of total AUM of 178.8bn Average fee revenue on third party business up to 43bps (FY 2012: 40bps) Strong investment performance BoAML Investor Presentation September 2013 6
Our investment philosophy Focus on Change: the philosophy behind our investment decisions Helps analyse key factors driving market price of an investment and to identify the drivers that the wider market may have missed Five key questions: BoAML Investor Presentation September 2013 7
Our investment process is delivering results Robust and repeatable performance Funds above benchmark: 1 year: 92% 3 years: 91% 5 years: 82% Suite of multi-asset funds outperformed their cash benchmark over all key time periods since inception Two funds in the top three best performing in 2012 across 2,883 open ended funds available in the UK Strong and stable teams Our House View Risk management, controls and integrity Stewardship and ESG (environmental, social and governance issues) BoAML Investor Presentation September 2013 8
Broad and expanding investment capability 3 rd party net flows by asset class 3 rd party AUM by asset class 1 1. As at 30 June 2013 Asset class and channel diversity Improved net flow performance across all asset classes Good mix of net flows between wholesale (47%) and institutional (53%) business UK wholesale highest net sales in the industry in Q1 2013 and Q2 2013 Some of the best retention rates in the industry redemptions of just 14% of opening AUM Innovation and client demand driving new and upcoming fund launches Second local currency Global Emerging Markets Debt fund launched John Hancock Global Conservative Absolute Return Fund managed by Standard Life Investments launched in US in July 2013 US Monthly Income Fund launched in Canada in July 2013 Launches scheduled for later this year: Enhanced-Diversification Equities Fund (innovative approach to delivering a better risk/return balance aimed initially at institutional market) Enhanced-Diversification Growth Fund (multi-asset solution targeting the DC channel) Developing our multi-asset and risk-based funds products Investing in core operational and technology infrastructure to support growth BoAML Investor Presentation September 2013 9
Leveraging our investment expertise globally 3 rd party net flows by geography 3 rd party AUM by geography 1 Broadening geographic reach 3.6bn, or 51%, of net flows in H1 2013 from outside the UK Assets managed by John Hancock exceed US$3.5bn Increased institutional client base in UK and Europe by 9% Pipeline of institutional business across a range of asset classes remains good Extending our reach with expansion in Boston, Hong Kong and London Benefiting from strategic partnerships Our joint venture, HDFC AMC, is the largest mutual fund company in India Sumitomo Mitsui Trust Bank is one of the largest trust banks in Japan John Hancock Mutual Funds Standard Life Group leveraging internal distribution Key investment partner in the UK wholesale market and the corporate pensions market Global investment products for Canadian market Opportunities in Asia & Emerging Markets and Europe 1. As at 30 June 2013 BoAML Investor Presentation September 2013 10
Summary A leading asset manager with expanding global reach Sustained record of strong and profitable growth in constantly evolving markets Focus on Change philosophy driving investment performance Diversified and expanding investment capability through innovation Increasing channel diversity Leveraging our investment expertise globally across the Group and through partnerships Investing in our people and technology to support growth BoAML Investor Presentation September 2013 11
What has contributed to our recent success? Clients are increasingly recognising the benefits of managers who take a long-term approach to investing and provide investment solutions designed to meet their requirements. I am confident that Standard Life Investments will continue its global growth and am committed to providing clients with a range of innovative investments solutions designed to meet their investment goals. Keith Skeoch, CEO, Standard Life Investments 14 March 2013 BoAML Investor Presentation September 2013 12
Appendix
Strong revenue growth driving Standard Life Investments profit Operating profit before tax H1 2013 H1 2012 m m Fee based revenue 244 193 Maintenance expenses (164) (135) Share of JVs and associates operating profit before tax 13 10 Operating profit 93 68 Interest and exchange rate movements Earnings before interest and tax (EBIT) (1) - 92 68 EBIT 66m 68m 92m H1 2011 H1 2012 H1 2013 Third party net flows Third party AUM Third party revenue bps EBIT margin 0.6bn 7.1bn 83.0bn 93.4bn 40bps 43bps 35% 38% H1 2012 H1 2013 FY 2012 H1 2013 FY 2012 H1 2013 H1 2012 H1 2013 BoAML Investor Presentation September 2013 14