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."

Half year results 2016

  • Assets under administration up 7% to £328.0bn (FY 2015: £307.4bn) helped by gross inflows into our growth channels of £20.6bn (H1 2015: £20.5bn) and net inflows of £4.1bn (H1 2015: £7.4bn)
  • Institutional and Wholesale channels benefiting from diversification:
    • Global Institutional business AUM up to £78.1bn helped by net inflows of £2.0bn representing an annualised 6% of opening AUM
    • Wholesale AUM up to £47.3bn with net outflows of £0.4bn in a challenging environment for mutual funds, representing an annualised outflow of 2% of opening AUM
    • Third party investment performance ahead of benchmark over 1 year: 29%; 3 years: 85%; 5 years: 84%
  • Workplace and Retail channels continuing to see steady growth with net inflows of £2.8bn (H1 2015: £2.9bn), representing an annualised 7% of opening AUA:
    • Assets on our leading adviser Wrap platform up 20% year-on-year to £28.0bn (FY 2015: £25.5bn; H1 2015: £23.3bn) with net inflows in H1 2016 up 3% to £2.1bn
    • Regular contributions into workplace pensions up 4% to £1.5bn
  • Fee based revenue up 4% to £794m representing 93% of total operating income, with revenue across growth channels up 8% to £577m
  • Underlying performance up 14% and operating profit before tax up 18% to £341m with diluted operating EPS up 16% to 13.5p (H1 2015: 11.6p)
  • Profit for the period attributable to equity holders of £226m (H1 2015: £69m) and basic EPS of 11.5p (H1 2015: 3.2p)
  • Underlying cash generation up 10% to £254m and a strong and stable Solvency II surplus of £2.2bn
  • Creating shareholder value in India:
    • Increased our stake in HDFC Life from 26% to 35% for £179m
    • HDFC Life has agreed terms that, subject to approvals, will see the combination of the life insurance businesses of HDFC Life and Max Life, creating the leading private sector life insurer in India
    • The enlarged HDFC Life in which Standard Life would hold a 24.1% stake will, as a result of the combination and subject to approvals, have listings on the Bombay Stock Exchange and the National Stock Exchange of India
  • Interim dividend up 7.5% to 6.47p