Focus on fee business driving growth and performance

Focus on fee business driving growth and performance

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. Autumn 2015 2

We have a simple and consistent business model Increasing assets Maximising revenue Driving profit Group AUA (H1 2015: 302.1bn) (FY 2014: 296.6bn) Fee based revenue (H1 2015: 761m) (FY 2014: 1,433m) Total expense costs (H1 2015: 41bps 1 ) (FY 2014: 46bps 2 ) Lowering unit costs Group underlying performance (H1 2015: 299m) (FY 2014: 561m) Optimising the balance sheet, generating cash and growing the dividend (up 7.5% in H1 2015) 1. Excluding 9m contribution to with-profits business in Germany. 2. Excluding 17m HWPF adjustment. All figures are reported on a continuing operations basis. Autumn 2015 3

We have three principal businesses Global Investment Management UK and Europe Savings India and China 1 Profitability Fee revenue 402m in H1 2015 Underlying performance 154m H1 2015 Active global asset manager Total AUM of 250bn Third party AUM of 166bn (including 42bn for Phoenix Group) Increasing global reach Serving clients in 48 countries Offices in 14 countries across Europe, North America, Asia and Australia Broad investment capabilities Equities, fixed income, multi-asset, real estate, private equity and funds-of-funds Profitability Fee revenue 396m in H1 2015 Underlying performance 156m H1 2015 Leading UK savings and investments business 107bn in fee based unit linked products 4.3 million customers Leading UK provider of: Workplace DC pensions with AUA of 33.2bn and 1.6 million customers Retail savings and technology platforms to IFAs with AUA of 40.4bn Pension drawdown Securing additional assets and revenues for Standard Life Investments Profitability Underlying performance 21m H1 2015 26% stake in HDFC Life Leading Indian life insurance business 16% share of private market and c20 million customers Set to increase our stake by 9% to 35% 40% stake in HDFC Asset Management 1 Largest Indian asset manager AUM of 15.8bn and c5million customers 50% stake in Heng An Standard Life 300,000 policies 1. The results of HDFC Asset Management are reported within Standard Life Investments. Autumn 2015 4

We are building on our successful transformation Demutualisation Transformation Growth Demutualised in 2006 Valued at 4.6bn Raised over 1bn in equity capital Proceeds used to strengthen balance sheet and to transform into scalable fee based business UK business no longer dependent on commission Disposal of capital intensive spread/risk business in Canada Sold subscale health insurance business and mortgage bank in 2010 Investments at the heart of what we do Focus on innovation and strong investment performance Increasing collaboration across the whole of Standard Life Leveraging best in class distribution in the UK Expanding global reach of Standard Life Investments 2005 2010 2015 2020 Autumn 2015 5

Transforming into a fast growing fee business 350bn 302.1bn 275.4bn Group AUA more than doubled since 2009 Group AUA 146.5bn 125.3bn Fee AUA of 275.4bn now 91% of total AUA 250.0bn or 83% of AUA actively managed by Standard Life Investments 0bn 13.1bn 8.1bn 15.4bn 11.3bn 2009 H1 2015 Fee AUA Spread/risk AUA Other AUA All figures are reported on a continuing operations basis. Autumn 2015 6

Growth in fee business driving increase in profit 2009 Group income 2014 Group income H1 2015 Group income Spread/risk 15% ( 153m) 2009 1,009m Spread/risk 9% ( 140m) 2014 1,573m Spread/risk 5% ( 40m) H1 2015 801m Fee 85% ( 856m) Fee 91% ( 1,433m) Fee 95% ( 761m) 1,433m 856m 761m 199m 46m 2009 561m 421m 2014 299m 259m H1 2015 All figures are reported on a continuing operations basis. Fee revenue Underlying performance Underlying performance (excl. spread/risk margin) Autumn 2015 7

Strong and consistent growth from investment management

Consistent track record of growing third party assets 250bn 245.9bn 250.0bn 43.8bn 42.1bn SLI total AUM 134.8bn 60.2bn 149.8bn 72.6bn 170.1bn 89.8bn 117.5bn 124.4bn 50bn FY 2011 FY 2012 FY 2013 FY 2014 H1 2015 SLI 3 rd party AUM (excl. strategic partner life business) Standard Life Group 3 rd party strategic partner life business All figures are reported on a continuing operations basis. Autumn 2015 9

building an increasingly global client base Asia 2 1.3bn (18%) UK 2.1bn North America 9.7bn (9%) Asia 2 9.2bn (8%) North America 1.5bn (21%) H1 2015 SLI 3 rd party net inflows 1 7.1bn (30%) Europe 12.5bn (11%) H1 2015 SLI 3 rd party AUM 1 111.5bn UK 80.1bn Europe (72%) 2.2bn (31%) UK Rest of the world 70% of net inflows from outside of the UK 1. Excluding Ignis. 2. Asia Pacific and India. Autumn 2015 10

and benefiting from an increasing global presence and strong distribution relationships Edinburgh HQ Brussels Amsterdam Los Angeles Toronto Dublin London Paris Boston Hub Madrid New York Zurich Milan Munich Stockholm Frankfurt Mumbai Seoul Tokyo Beijing Hong Kong Hub Regional Hubs Offices Office - new openings 2014/15 Sydney Utilising best in class Standard Life distribution capability across the UK workplace and retail channels Joint venture, HDFC Asset Management, located in Mumbai Strategic partnerships with Sumitomo Mitsui, Phoenix Group, John Hancock and now Manulife Autumn 2015 11

Diversified product offering and consistently strong investment performance Other Investment performance 1 MyFolio 3% 14% Equities 25% 1 year 91% 99% 69% 79% Real estate 6% H1 2015 SLI total AUM 250.0bn 3 years 81% 94% 98% 95% Multi-asset 19% 5 years 82% 96% 88% 97% Fixed income 33% 2012 2013 2014 H1 2015 1. Third party AUM above benchmark (excluding strategic partner life business). Autumn 2015 12

Our broad range of investment capabilities in 2009 Smaller Cos Private Equity Unconstrained Equity Listed Property Core Equity RETURN GARS Core Real Estate Hybrid Re High Yield Credit Equities Cash Govt Bonds Fixed income Multi-asset Real estate RISK Autumn 2015 13

has expanded considerably over the last 5 years as we meet the evolving needs of our clients Smaller Cos RETURN Cash ARGBS My Folio I Govt Bonds GARS ARGBF Corp RE Lending Inv Grade Credit My Folio II High Yield Credit GFS EM Debt EDGF Core My Real Folio Estate III Value Add Re Hybrid Re My Folio IV Listed Property Equity Income Infra Equity My Folio V Private Equity Core Equity Unconstrained Equity GEM Equity Equities Fixed income Multi-asset MyFolio RISK Real estate Autumn 2015 14

Growing fee based assets in our UK savings business

UK savings business uniquely positioned during a period of unprecedented change and growth Launch of UK Financial Advice business Non-commission Focus Solutions Introduction of Launch of Discretionary Plus model adopted acquired RDR RDR Pension Launched our announced MyFolio Launched Good to freedoms 2004 SIPP 2007 launched 2010 Go 2013 2015 ready enhancing and launching innovative new propositions and building technology to drive scale IPO Launched Wrap 2006 2008 Auto enrolment announced Vebnet acquired Auto enrolment commenced 2012 2014 Discounted share classes 2016 ready 2014 budget annuity changes End to compulsory annuitisation announced in the 2014 Budget Standard Life is the leader in flexible drawdown with AUM of 12.9bn UK Platform of the Year New D2C ISA Uniquely positioned during a period of unprecedented change and growth Autumn 2015 16

UK savings fee business assets over 107bn New style propositions building momentum Stable book of mature business 75bn Retail new and workplace AUA 52bn 63bn 69bn 66bn 74bn 75bn Retail old AUA 32bn 34bn 34bn 34bn 33bn 20bn 2012 2013 Full Year 2014 H1 2014 Half Year H1 2015 20bn 2012 2013 Full Year 2014 H1 2014 Half Year H1 2015 Net inflows 3.3bn 4.8bn 5.1bn 2.4bn 2.9bn Net outflows 3.1bn 2.6bn 2.2bn 1.1bn 1.2bn Fast growing business with net flows representing annualised 8% of opening AUA Growing regular premiums into workplace through auto enrolment Retail new benefiting from market-leading Wrap platform Stable mature book of business Benefiting from transfers of leavers from workplace and increments into existing products Provides steady flow of customers for retail new propositions including drawdown Autumn 2015 17

Growing contribution from UK savings new style fee business UK savings new style propositions 2 building momentum 400m Profit contribution 1 236m 40m 196m 249m 63m 186m 321m 142m 179m 353m 165m 188m 370m 181m 189m 178m 83m 186m 92m New fee propositions 2 Mature fee business 95m 94m 0m FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 H1 2014 H1 2015 Full Year Half Year Scalable business and new style propositions driving profit contribution 1. Profit contribution reflects the income and expenses directly attributable to each of the UK lines of business. It differs from operating profit due to the exclusion of indirect expenses and capital management. 2. New style propositions includes workplace and retail new. Autumn 2015 18

Demand for our propositions is set to continue to grow Continuing growth in DC pensions Strong growth in platform assets Growing demand for advice/guidance 10% Minimum auto enrolment contribution rate 0% 2% 1% 1% 5% 3% 2% Pre- 1 Oct 2017 30 Sept 2017 30 Sept 2018 8% 5% 3% Post- 1 Oct 2018 Employee Employer 900bn 0bn UK platform market AUA 174bn 1 2011 382bn 2 H1 2015 > 800bn 3 2019E 1.1m need advice 3.2m actively engaged Our 3.8m UK customers Face-to-face advice Robo-advice Guidance Shift from DB to DC and auto enrolment driving growth in DC pensions DC assets invested for longer as customers prefer drawdown over annuities Professional financial advisers continue to consolidate assets on to platforms We work with the most progressive and professional advisers Complexity of taxation and retirement options driving demand for advice Innovative approaches required for the mass market We are a leading provider of workplace pensions and largest provider of Self Invested Personal Pensions and Drawdown Our Wrap platform continues to lead the adviser platform market with highest net inflows We are building our own advice business as well as guided retail direct propositions 1. Fundscape Platform Report Q4 2011. 2. Fundscape Platform Report Q2 2015. 3. Fundscape Platform Report Q3 2014. Autumn 2015 19

Growing joint ventures in India and China

HDFC Life is a leading private insurance business HDFC Life s growing share of the private market Key facts 20% HDFC Life share of private market 1 5% 14.2% 13.7% 13.0% 11.9% 8.0% 2009 8.6% 2010 2011 2012 2013 2014 15.8% 2015 Established in 2000 with HDFC, one of India s premier financial services brands 20 million customers in a highly attractive fast growing market Strong distribution over 400 own branches and access to 8,300 partner branches Wide product range covering protection, savings, pensions, health and annuities Generating dividends since 2013 26% stake with agreement to increase investment to 35% subject to regulatory approval Strong brand and distribution and award-winning innovative products Leader in the fast growing digital market with over 50% share of online sales Ranked 2 nd for new business sales in the private life insurance market 1 1. Financial year from 1 April. Autumn 2015 21

while HDFC AMC is the largest mutual fund company in India HDFC AMC 1 : 5m customers and AUM of 16bn 25% HDFC AMC AUM and market share 5% AUM (INR bn) 12.9% 11.9% 2009 855 15.8% 13.6% 2010 850 19.2% 13.3% 2011 811 20.4% 13.2% 2012 1,003 19.6% 12.6% 2013 1,040 19.3% 14.1% 2014 1,484 Key facts 5m customers with total AUM of 15.8bn at H1 2015 AUM 60% retail / 40% institutional Operating out of over 200 cities and towns across India Strong distribution via private and public banks; IFAs; D2C and through national distributors Broad asset class mix 41% Indian Equity Securities; 32% Fixed Income and 27% Money Market instruments Generating dividends since 2002 Equities Total 40% stake in HDFC Asset Management Company Ongoing strong growth in AUM with a 5 year CAGR of 13.8% Opportunity to leverage HDFC AMC s Indian investment expertise and Standard Life Investments increasingly global distribution Further distribution possibilities for Standard Life Investments in India 1. The results of HDFC Asset Management are reported within Standard Life Investments. Autumn 2015 22

Ongoing reduction in unit costs 65bps 62 Group operating expense bps 1 59 54 50 46 41 40bps FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 H1 2015 1. Includes acquisition, maintenance and group corporate central costs (excludes 17m HWPF adjustment in FY 2014 and 9m contribution to with-profits business in Germany in H1 2015). All figures are reported on a continuing operations basis. Autumn 2015 23

Underlying cash generation up 17% 500m Group underlying cash generation 162m 203m 304m 347m 419m 191m 223m 0m FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 H1 2014 H1 2015 Full Year Half Year All figures are reported on a continuing operations basis. Autumn 2015 24

Interim dividend up 7.5% to 6.02p Final dividend (pence) Interim dividend (pence) 13.80 14.70 9.80 15.80 10.58 17.03 11.43 10.80 7.20 3.60 11.50 7.70 3.80 11.77 7.70 4.07 12.24 8.09 4.15 13.00 8.65 4.35 9.20 4.60 4.90 5.22 5.22 5.60 6.02 2006 1 2007 2008 2009 2010 2011 2012 2013 2014 2015 Progressive dividend policy 1.75bn return of capital following sale of Canadian business Strong balance sheet with IGD surplus of 2.6bn 2 (FY 2014: 2.9bn 2 ) and well positioned for Solvency 2 1. Implied interim and final dividends based on 5.40p dividend for period from demutualisation to 31 December 2006. 2. H1 2015 based on estimated regulatory position. FY 2014 based on final regulatory returns. Autumn 2015 25

Continuing to deliver our clear and consistent strategy Meeting the investment needs of customers at the heart of what we do Continuing focus on innovation and strong investment performance Expanding global reach of Standard Life Investments Leveraging best in class distribution in the UK Increasing collaboration across the whole of Standard Life Ongoing focus on driving down unit costs and benefits of a scalable business model Strategic momentum delivering ongoing growth and value Autumn 2015 26

Appendix

Operating profit by business unit Standard Life Investments H1 2015 H1 2014 H1 2015 UK Europe India and China Other Eliminations H1 2014 H1 2015 H1 2014 H1 2015 Total (continuing operations) Discontinued operations 1 Autumn 2015 28 H1 2014 H1 2015 m m m m m m m m m m m m m m m m m m Fee based revenue 402 288 314 303 82 86 23 26 - - (60) (51) 761 652 21 106 782 758 Spread/risk margin - - 38 75 2 4 - - - - - - 40 79 9 103 49 182 Total income 402 288 352 378 84 90 23 26 - - (60) (51) 801 731 30 209 831 940 Total operating expenses (263) (197) (172) (173) (56) (57) (17) (23) (25) (23) - - (533) (473) (29) (152) (562) (625) Investment management fees to SLI - - (47) (41) (13) (10) - - - - 60 51 - - - - - - Capital management - - 8 1 - - - - (7) (5) - - 1 (4) 2 8 3 4 Share of associates and joint ventures profit before tax 2 15 11 - - - - 15 9 - - - - 30 20 - - 30 20 Group underlying performance 154 102 141 165 15 23 21 12 (32) (28) - - 299 274 3 65 302 339 Underlying adjustments - - - - (9) - - - - - - - (9) - - - (9) - Operating profit/(loss) before tax 154 102 141 165 6 23 21 12 (32) (28) - - 290 274 3 65 293 339 Tax on operating profit/(loss) (28) (20) (19) (27) 1 (4) - - 9 5 - - (37) (46) - (27) (37) (73) Share of joint ventures and associates tax expense (5) (3) - - - - - 2 - - - - (5) (1) - - (5) (1) Operating profit/(loss) after tax 121 79 122 138 7 19 21 14 (23) (23) - - 248 227 3 38 251 265 Non-operating items (24) (3) (57) (24) (17) - (47) (1) (13) (8) - - (158) (36) 1,119 49 961 13 Tax on non-operating items 4-9 10 (2) - 5-3 1 - - 19 11 (20) (14) (1) (3) Singapore/Dubai included in discontinued segment 1 - - - - - - (40) (6) - - - - (40) (6) 40 6 - - Profit for the period attributable to equity holders of Standard Life plc 101 76 74 124 (12) 19 (61) 7 (33) (30) - - 69 196 1,142 79 1,211 275 1. Under IFRS 5, Dubai and Singapore do not constitute discontinued operations and are included under continuing operations in the consolidated income statement. Therefore the analysis of Group operating profit by segment above includes the reclassification of Singapore and Dubai results between discontinued and continuing operations. 2. Share of associates and joint ventures profit before tax comprises the Group s share of results of HDFC Standard Life Insurance Company Limited, Heng An Standard Life Insurance Company Limited and HDFC Asset Management Company Limited. H1 2014 H1 2015 H1 2014 H1 2015 H1 2014 H1 2015 H1 2014 H1 2015 Total H1 2014

Group operating profit Group operating profit before tax continuing operations H1 2015 H1 2014 m m Fee revenue 761 652 Spread/risk margin 40 79 Total income 801 731 Total operating expenses (533) (473) Capital management 1 (4) Share of associates and JVs 30 20 Group underlying performance 299 274 One-off contribution to with-profits business in Germany (9) - Group operating profit before tax 290 274 Fee revenue up 17% with 95% of income now fee based Autumn 2015 29

Growth in assets driving strong increase in fee revenue 54m 69m +11% 761m + 109m +17% Maximising revenue ( 6m) ( 8m) 652m H1 2014 All figures are reported on a continuing operations basis. Ignis Reduction in UK revenue from cash balances Impact of strength of Sterling on Europe revenue Growth in underlying revenue H1 2015 Underlying fee revenue up 11% Autumn 2015 30

Spread/risk margin reduced in line with expectations Maximising revenue 79m ALM 34m New business 14m ( 11m) ( 28m) 40m ALM 6m New business 4m Reduction in annuity new business profit in line with expectations Lower level of asset liability management expect full year contribution in 2015 of 30m- 40m (2014: 70m) in line with previous guidance Existing business 31m Existing business 30m H1 2014 Underlying spread/risk margin Lower and declining contribution from new and existing business Lower benefit from asset liability management H1 2015 Underlying spread/risk margin All figures are reported on a continuing operations basis. Autumn 2015 31

Ongoing reduction in unit costs Lowering unit costs 32m 533m 473m 34m ( 6m) 60bps Group operating expense bps 1 54 50 46 41 40bps H1 2014 Ignis Impact of strength of Sterling on Europe expenses Growth in underlying expenses H1 2015 1 FY 2012 FY 2013 FY 2014 H1 2015 Increase in expenses more than offset by growth in AUA with unit costs down 5bps 1 Integration of Ignis on track to achieve 50m of annual cost savings by 2017 Continued investment in new propositions, geographic reach and capabilities to support growth 1. Includes acquisition, maintenance and group corporate central costs (excludes 17m HWPF adjustment in FY 2014 and 9m contribution to with-profits business in Germany in H1 2015). All figures are reported on a continuing operations basis. Autumn 2015 32

Fee revenue growth and cost control driving performance +19% Driving profit 274m 55m 5m 10m 279m 20m 299m ( 26m) ( 39m) 235m H1 2014 underlying performance Reduction in spread/risk margin Increase in fee business revenue Increase in operating expenses Increase in capital management Increase in share of associates and JVs PBT Ignis underlying performance H1 2015 underlying performance All figures are reported on a continuing operations basis. Autumn 2015 33

Consistent delivery in asset management Underlying performance Total AUM 60m 20m 154m 245.9bn 250.0bn FY 2014 H1 2015 4m 134m 102m EBITDA 1 margin 36% ( 32m) EBITDA 1 margin 40% Third party AUM 2 117.5bn 124.4bn FY 2014 H1 2015 Third party revenue bps 2 53bps 53bps H1 2014 Increase in fee revenue Increase in expenses HDFC AMC Ignis underlying performance H1 2015 FY 2014 H1 2015 Investment performance 3 On track to achieve EBITDA margin of 45% by 2017 79% 95% 97% 1 year 3 years 5 years 1. Earnings before interest, tax, depreciation and amortisation. 2. Excluding strategic partner life business. 3. Third party AUM above benchmark (excluding strategic partner life business). Autumn 2015 34

Continuing growth in UK fee business Underlying performance Total AUA 165m 128.1bn 130.4bn FY 2014 H1 2015 17m 1m 7m 141m Retail new & workplace net inflows ( 37m) 128m ( 6m) ( 6m) 2.4bn 2.9bn H1 2014 H1 2015 Fee revenue bps 62bps 61bps H1 2014 Reduction in spread/risk margin Reduction in revenue from cash balances Increase in fee revenue Decrease in expenses (excl. fees to SLI) Increase in investment management fees to SLI Increase in capital management H1 2015 FY 2014 H1 2015 Operating expense bps 1 40bps 39bps FY 2014 H1 2015 1. Excluding 17m HWPF adjustment. Autumn 2015 35

Scale of growth opportunity is significant Institutional Wholesale Workplace Retail Satisfying customer and client asset needs Growth, yield, preservation, decumulation Through our investment solutions Active management, absolute return, MyFolio, liability aware Underpinned by investment expertise Multi-asset, equity, fixed income, real estate, private equity Supported by global strategic partnerships Manulife, John Hancock, Sumitomo Mitsui, HDFC, TEDA, Phoenix, Advisers Autumn 2015 36

Standard Life Investments driving growth in revenue bn SLI third party AUM 1 m SLI revenue 1 180 800 160 700 140 600 120 500 100 80 60 400 300 40 200 20 100 0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 H1 2015 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 H1 H1 2014 2015 Third party ex strategic life partner Third party strategic life partner Strong organic growth in third party assets Acquisitions of Ignis ( 61bn) and private client division of Newton ( 3bn) added 64bn of third party AUM Strong organic and inorganic growth in AUM Flows into higher margin propositions with third party revenue margin up to 53bps Includes Ignis from 1 July 2014 1. Figures for 2013 and 2014 exclude Canadian investment operations. Autumn 2015 37

Increasingly global SLI third party net inflows 10.0bn 9.6bn 52% SLI 3 rd party net inflows 4.3bn 60% 7.3bn 41% 59% 48% 6.0bn 31% 69% 4.0bn 45% 7.1bn 30% 70% 40% 55% 0bn Net inflows 1 as % of opening AUM FY 2011 FY 2012 FY 2013 FY 2014 H1 2014 H1 2015 Full Year Half Year 7% 12% 13% 7% 9% 14% 1. On an annualised basis. All figures are reported on a continuing operations basis. UK Rest of the world Autumn 2015 38

UK savings fee propositions continue to build momentum Auto enrolment success driving regular premium growth Wrap continues to lead the advised platform market 2.5bn 2.5bn 2.1bn Workplace regular premiums 1.0bn 1.1bn 1.3bn 1.4bn +15% Wrap net inflows 1 1.3bn 1.6bn 1.8bn +17% 0bn H1 2012 H1 2013 H1 2014 H1 2015 0bn H1 2012 H1 2013 H1 2014 H1 2015 Strong customer demand driving growth in workplace and retail new 1. Includes Wrap International Portfolio Bond reported within Europe AUA. Autumn 2015 39