Financial results

Full year results 2016

24 February 2017

Growing assets by meeting the evolving and diverse needs of our clients and customers

  • Increased assets under administration by 16% to £357.1bn with modest net outflows of £2.6bn, 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 £237.6bn) driven by gross inflows of £38.6bn, net inflows of £4.1bn, the acquisition of Elevate and positive market movements:
    • Institutional and Wholesale AUM up 11% to £137.1bn benefiting from product and client diversification:
      • Institutional net inflows of £1.1bn and Wholesale net outflows of £1.7bn in the most challenging market for the UK mutual fund industry for over 20 years
      • Resilient gross inflows of £27.7bn (2015: £30.5bn) with lower demand for GARS partly offset by a 30% increase in gross inflows to £17.5bn (net inflows £3.7bn) into a broad range of other products
    • Workplace and Retail AUA up 33% to over £100bn benefiting from net inflows of £5.4bn (2015: £5.8bn) and the acquisition of Elevate
  • Third party 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 £1,651m (95% of total income) with growth channels revenue up 10% to £1,205m (2015: £1,096m) and average revenue yield maintained at 59bps (2015: 59bps)
  • Reduced cost/income ratio by 1ppt to 62% and continuing to target a reduction below 60% over the medium term
  • Operating profit before tax up 9% to £723m with diluted operating EPS up 13% to 29.5p
  • Non-operating items include a provision for non-advised annuity sales practices of £175m but take no account of a possible insurance recovery of up to £100m

Generating cash to drive sustainable growth and returns to shareholders

  • Underlying cash generation up 9% to £502m 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 £0.9bn (2015: £1.0bn) 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."