Standard Life Aberdeen - Final Results

Resilient performance against a challenging industry backdrop and weak investor sentiment

Profit from continuing operations broadly flat at £650m

Net outflows continued but were concentrated in a small number of strategies

Broad demand for our wider product suite with gross inflows up to £75.2bn (2017: £72.4bn)

Ahead of schedule in delivering cost efficiencies of at least £350m with actions already taken to deliver £175m of these savings

Focus on financial discipline resulting in a further reduction in expenses of £56m during the year

Offer for sale of up to 4.93% of HDFC Life with expected proceeds of c£0.4bn1

Final dividend unchanged - we intend to maintain the dividend per share at the 2018 level during the period of transformation

 

Building blocks in place to meet evolving client needs and to capitalise on a rapidly shifting industry

Growing importance of retail customers and 'new active' investing including private markets, real estate and solutions

Strengthened position in 'new active' with 32 new fund launches (2017: 22) supplemented by bolt-ons and JVs in ETFs, commodities, Asia real estate as well as private markets including infrastructure

Platforms attracted £5.3bn of net inflows helping to drive a 33% increase in adjusted profits to £24m

Enhanced strategic partnership with Phoenix and new joint venture with Virgin Money/CYBG to create a UK retail savings 'eco-system' with access to 16 million potential customers, and scope for further partnerships

 

 

 

2017

2018

 

 

Pro forma2

 

 

 

 

 

Continuing operations:

 

 

 

Adjusted profit before tax (£m)

 

660

650

Adjusted diluted EPS3 (p)

 

17.2

17.8

Assets under management and administration (£bn)

 

608.1

551.5

Gross inflows (£bn)

 

72.4

75.2

Net flows (£bn)

 

(32.9)

(40.9)

 

 

 

 

Total (including discontinued operations):

 

 

 

Adjusted profit before tax (£m)

 

1,039

860

Adjusted diluted EPS3 (p)

 

28.9

22.5

Full year dividend per share (p)

 

21.3

21.6

Keith Skeoch commented:

"We are working hard to deliver what is within our control. Our integration process is running ahead of schedule and is now roughly 75% complete even though we are less than halfway through the original timetable. We are encouraged by improvements in investment performance in key areas, and our 'new active' capabilities mean that we are set up well to capitalise on the trends and opportunities shaping our industry - while continuing to deliver value and returns for our shareholders."

Creating a world-class investment company

We have made a clear choice to build an investment company that will focus on global asset management and savings and advice services in the UK, as well as on our strategic investments. We are investing to build a modern and dynamic global business which has the talent, scale and high-performing investment solutions to compete against the leading investment companies across the world. We do it to invest for a better future - to make a difference to our clients, the lives of our customers, our people and our shareholders.

Sale of our UK and European insurance operations to Phoenix

The sale of our UK and European insurance operations for £3.3bn to Phoenix on 31 August 2018 completed our transformation to a fee based capital-light business. We received cash proceeds of £2.3bn from the sale (including a dividend from SLAL of £0.3bn) and generated an IFRS gain on disposal of £1.8bn. In addition to the cash proceeds, we also received a 19.98% stake in Phoenix which allows us to benefit from Phoenix's future profitability and growth. As a result of the sale we have classified the UK and European insurance business as a discontinued operation.

As part of the transaction we entered into an enhanced strategic partnership with Phoenix, strengthened by the 19.98% stake, providing us with an additional source of earnings, dividends and AUM growth as Phoenix's asset management partner of choice. We have retained our valuable and fast growing UK retail platforms Wrap and Elevate, as well as our financial planning and advice business 1825.

Outlook

Our resilient business and the actions we are taking, allow us to deal with market conditions which remain challenging, as macroeconomic and political uncertainties continue to affect investor sentiment. These uncertainties as well as the trends shaping our investment industry are driving investors to look for innovative and outcome orientated 'new active' investment solutions and these will continue to grow in importance in meeting the needs of institutional and increasingly retail customers. With our broad and diverse range of capabilities, Standard Life Aberdeen is well placed to take advantage of the opportunities and to deal with the challenges that these trends present.

As we look ahead we will maintain our focus on the things we can control. This includes delivering for our clients and customers by focusing on our investment performance and continuing to innovate in areas of market growth. We will also remain focused on driving operational efficiency and cost control as we move closer to completing the integration and the implementation of our simplified global operating model. This combined with our strong balance sheet will allow us to invest for growth, delivering on our strategy of creating a world-class investment company that maximises value and generates sustainable dividends and returns for shareholders.