Earnings Call: H1 2018

Aug 7, 2018

Just to kick off, sorry, I should introduce the top table or whatever it's called in a presentation. Campbell Fleming, Global Head of Distribution Barry O'Dwyer, Chief Executive of Standard Life Bill Ratfried, CFO and Keith, who as I said is lucky to be here and myself, Martin Gilbert, the Co Chief Executive of Standard Life Aberdeen. I'm sure those of you who have been following all the recent asset management releases need no reminding that the industry is in a pretty tough place at the moment and we're no different from the industry. The pressure on flows and fees and traditional active asset management, growth of passives, ETFs, all pose a threat to our industry. And of course, the huge impact of technology and disruption in our industry is also having its effect. Now while we do face our own challenges and outflows from strategies that have historically been hugely strong drivers of growth for us, the merger Create Standard Life Aberdeen has created a business which together is stronger and better placed for the future. The sale of the insurance operations has transformed our balance sheet and crystallized significant surplus capital, allowing us to focus on our strengths, where we see the best opportunities to achieve long term growth and our world class ambitions. We have a diverse range of investment capabilities, 1,000 investment professionals. We're also working hard, which Keith will come back to, to improve performance in our strong capabilities of for JEM, emerging markets, GARS, global equities. And as I say, Keith will discuss that in more detail later. Importantly, we also have scale, including in distribution where our combined team is one of the largest in the industry with global reach, local presence in 46 locations. Importantly, it is building momentum as I'll come back to later in with growing inflows returning to pre merger levels. And also we shouldn't forget our leading advisor platforms and our promising strategic partnership with Phoenix provide further diversification and access to the growing retail market. This scale and believe me scale is important in our industry. We feel we're ahead of the game in terms of scale by doing this merger a year ago is also underpinned by one of the strongest balance sheets in the industry. And as we've shown with the capital return, including the acceleration of buyback this morning, we are very focused on maximizing value and return for shareholders. So how have we done this in this tough market environment? Turning to the highlights, we can see that the profit has fallen to €478,000,000 However, we have increased adjusted profit from continuing operations to £311,000,000 compared to the second half of last year. And I think that is the true comparison rather than the first half, which is pre merger. Bill will be in touched with more detail on earnings per share figures as clearly these are not as representative on the go forward business which will benefit from the earnings from Phoenix, the capital return and the ongoing delivery of efficiencies from the merger. This gives us confidence in our progressive dividend policy. So the interim dividend has been increased to 7.3p. It's got X, X, X on my sheet here helpfully, but luckily I managed to find the figure. Assets under management and turning to the next slide. Net flows remain a challenge for us And we can see that these have total assets, I should say, let's start with total assets, remain a robust €610,000,000,000 in what has been a very tough market. As we mentioned in May, we continue to see outflows, although these have been reduced compared to the second half of last year as have sales. Encouragingly, when we look across all our asset classes, about 80% of the flows come from 80% of sales, gross sales come from our non blockbuster for want of a better word products. What else on flows? Continued growth in wrap, elevate and advice with net inflows of 2 point €6,000,000,000 I think encouragingly, if we look at flows and we exclude what we would term our growth, our blockbuster products. The rest of the business is broadly in neutral flows, which is very encouraging. Moving on to diverse gross inflows. While the net flow picture, as I say, continues to be challenging, our integrated distribution teams led by Campbell are upping the rate of activity to improve retention and to capture new opportunities across our very diverse offering. The net outflows amounted to about 2.6% of opening assets. As I've said, encouragingly, the gross inflows on the other hand are very diverse, with over 80% coming from other areas than those traditional strengths that I'd mentioned earlier. Our momentum is returning to pre merger levels. We're beginning to see some good traction across a very wide range of capabilities and credit, Myfolio, Parmenian, Private Markets and Real Estate. It's also really pleasing to see that the strategic relationship with Phoenix is already working well. We've secured a new fixed income mandate following Phoenix's says, 1st bulk annuity deal earlier this year, and we are working to secure £7,000,000,000 of Phoenix mandates not presently managed by ASI. Turning now to the platforms which As you know, we made a deliberate decision to retain as part of the sale of the business to Phoenix. So the diversity of flows is our diversity of flows are also helped by these very strong retail platforms. And with the combined assets under management of over €60,000,000,000 as you can see. We're one of the largest, if not the largest platform operator in the U. K. And as I said earlier, this was helped by the strong inflows of about 3,000,000,000 coming in, in the first half of twenty eighteen. These platforms are profitable, And we've reduced the cost income ratio to 82%, as you can see here from 88%. And as Barry will answer in any questions. We do think there is further scope to improve efficiency and drive down that cost income ratio towards our target of 60%. With that, I will hand over to Bill, who will be followed by Keith. Bill will go through the results in detail. And Bill, I've even turned the page right in there. Thank you, Martin. Good morning, everyone. We'll touch briefly on the overview of the figures 1st half. Martin's already touched them in the passing. The overall adjusted profit before tax is down slightly on 2nd half last year. But at the continuing operations level, slightly ahead at 311,000,000 compared to 305,000,000 Try and get this right. If we then turn Turnover, looking at the taking it down to post tax and EPS level, fairly normal Rate of tax charge, around about 19%, as you might expect. That's reduced from second half last year. Those of you who looked at it closely, there was a catch up tax charge in relation to the Indian investments that we took had a bit of a mismatch in timing last year. So I think no surprises in this period and no surprises on the on the tax rate going forward. Looking down to the EPS level, you can see that Overall, EPS for the period, 12.8p compared to 13.6p second half last year. But on continuing operations, slightly up in last year. Again, part of that benefit is the discrepancy in tax states that I mentioned second half last year. So the interesting thing here is, as we've said at the bottom of the slide, if you look at that 8.2p of adjusted EPS for the half year period. And we then look at that pro form a for the impact post completion of the sale to Phoenix. And recognizing that sale and recognizing pro form a the intended capital return of €1,750,000,000 that would be an adjusted pro form a EPS figure of 12p under the under the new regime. In terms of the revenue margins, A little bit reduction this half year compared to last. A lot of it down to the mix of the asset classes. There is a little bit of slippage in equities, for example, where surprisingly, the second half of last year was up in the first half, I think largely due to the impact of strong markets in that period. But at 67 basis points, it's So very much within our expected range that we've seen historically. So I think the theme as we've talked about in previous discussions is that we may still see some small reduction in the overall blended fee rate in the short term. But longer term, medium term, longer term, the gross new business we're selling is coming in at A pretty decent rates of sort of 45, 50 basis points. So medium and longer term, we don't see material pressure to that sort of level. On adjusted operating expenses, we've seen a small improvement in the cost income ratio to Just over 69% this half year compared to 70.6% for financial year 2017. I mean, clearly, we're all aware that cost income ratio is driven both by costs and by revenues. And in the context of a tough period, a challenging period For revenues, we've achieved quite a lot on the cost side to begin to reduce that margin. Clearly, as the cost efficiencies begin to work through more fully, we'd expect that number to continue to trend downwards towards for our medium term target of 60%. Now on the cost efficiencies, as Martin I think has already touched on, We now have a headline figure of £350,000,000 in total. You'll recall that we announced an expected £250,000,000 from the merger synergies and a further £100,000,000 of efficiencies as we move to a more efficient operating model Post the sale to Phoenix. Now of that 350,000,000 we've already implemented £135,000,000 worth. That's not to say it's all in place in the first half. Action has been taken and these will phase in as we go forward. The benefit of that of those efficiencies to date, we've seen a £40,000,000 beneficial impact in the first half results. So clearly £80,000,000 on an annual basis and we'll begin to see the further improvement come through in the second half Based on that €135,000,000 And then finally, the remaining €270,000,000 out of the €350,000,000 that we will we are still in course of implementing. Put it very simply, if we work that through on the same pro form a share count basis post the capital return, That's effectively equal to 0.9p of earnings per share on that basis. I mean, clearly, before any reinvestment in the business or inflation and so on. And then finally, on the interim dividend, we've continued the policy of a progressive dividend at the interim, an increase of just over 4% to 7.3p per share. And again, looking at the sort of annualized EPS on the The pro form a basis, that would effectively give us dividend cover of 1.1x from continuing operations based Based on the last 12 months dividend payments. And with that, I'll pass over to Keith. Thanks, Bill, and good morning. As Martin has already pointed out, the current operating environment for asset managers is tough. The 4 global trends that we've long talked about, The democratization of financial trust, the lack of trust, digitalization and compressed returns continue to buffet the industry and are intensifying. The political and economic background is also unsettling markets. And this isn't just having an impact on the level of volatility of markets. It's also affecting the structure of return within markets. The spread between growth and value on almost any measure you care to choose is at levels It's not seen since the TMT bubble in the late 1990s. While equity markets value growth very highly, What is valued is highly concentrated. In the U. S, for instance, 60% of the market's performance is driven by the top 20 stocks. This is a very odd market when I've only seen a couple of times in a career spanning nearly 40 years and it does make life difficult for active asset managers, particularly those who are very disciplined in their approach to identifying long term value. As the largest player in the U. K. And one of the largest active managers in the world, Standard Life Aberdeen is inevitably affected by these headwinds and that's clearly reflected in our interim results today. What I want to do in the in our interim results today. What I want to do in the remainder of this short presentation is concentrate on 3 specific areas: Investment performance, investment innovation and capital strengths. The actions we're taking in these areas will not only help us Whether the tempestuous environment facing the industry, but also leave us well placed to deal with the long term disruption shaping the savings and investment landscape. Our rigorous and long term approach to delivering investment returns for clients It's being challenged by this strange environment that currently pervades financial markets. This has been particular case, as you're aware, for our absolute return funds and some of our equity funds, especially those orientated towards value and emerging markets. While history strongly suggests that these return environments don't last forever, I think it's also very important that we learn the lessons from periods of underperformance. So at the same time, as we brought our 1,000 high quality investment professionals together, We also instituted a comprehensive review of investment performance. We focused on idea generation, idea capture And idea implementation to improve to generate improved investment outcomes. And we've put in place a number Of important management actions outlined on the slide and put in the form of performance investment performance enhancement plans. We are investing in enhanced risk analytics. We are investing in new investment talent. And alongside these improvements to our processes, we are confident that this will deliver improved performance across the house. And it's also visible beginning to be visible in some areas. So as The last couple of months, as I'm sure you're aware, we've had a minor turn in the value growth and we can see that being reflected in improved performance in some of those equity asset classes. However, I have to tell you it's going to take a bit of time for the full benefit of these improvements to be felt. The JEM 3 year track record may remain challenged until 2020, Unless of course there's a very dramatic reversal in that growth versus value chart. Gas could return to a positive 3 year absolute return actually in 2019 if it delivers an absolute return for the rest of the year. How that affects client appetite will to some extent depend on the state of the markets. Gas tends to do well when equity markets are under pressure. While it will take some time for investment performance to have a positive direct impact on those redemptions, the same difficult markets we've been talking about are having an immediate influence on client demands. Is. Given that we have critical mass across alternatives, private markets, multi asset and solution, Our active approach leaves us well positioned for the growing demand for new active solutions, which according To the Boston Consulting Group will account for 2 thirds or €23,000,000,000,000 of the increase in industry AUM over the next 4 years. So a very Significant opportunity indeed. Our conversations with clients, which Campbell can talk about, At the strategic level have emphasized the importance of investment outcomes, the new active to their risk budgets. And of course, a focus on investment outcomes has been a key feature of our innovation agenda as we've looked at outcomes in accumulation preservation and the income space. We where we have good performance track records and can deliver investment innovation to meet those demands. This creates an opportunity to have a positive impact on gross inflows. It's an area where we have a strong record enhanced by bringing together our investment capabilities across the merger. Over 10% of our AUM is sourced from funds launched over the last 8 years, but that rises to 20% if we exclude the more traditional insurance assets. We have launched 20 new funds or strategies in the first half of twenty eighteen And they're spread throughout the risk return spectrum. We've got plans to launch another 20 by early 2019. These fund launches are designed to improve as well as diversify our product suite. I firmly believe This is territory where Aberdeen Standard Investments is a leader in the industry. While the markets and operating environment have created some serious challenges for both us and the rest of the industry, I think Martin and I both believe those challenges have reinforced the strategic logic behind the merger. The need for scale, not only to weather the storm, but also to invest in the business and reshape it for the future is even clearer today Than it was 18 months ago. In the 12 months since completion, a lot has been done to reshape The business integration, as Martin pointed out, is progressing well. We're simplifying our business and we're putting in place A new global operating model that embraces modern working practices, lays the foundations for a common culture and helps deliver The GBP 350,000,000 of cost efficiencies that Bill talked about and that will ensure we are right sized for the future. As we reshape our business, we also continue to simplify our balance sheet and make sure That it's appropriate for not just our business model, but also our shareholders. We have a long and proud Track record of reshaping our business and our balance sheet and returning capital to shareholders. And we continue We intend to continue in that tradition. The first phase of this is to return, as Bill said, up to £1,750,000,000 of capital as we shift from Solvency II to CRD IV and optimize our regulatory balance sheet. And of course, we've announced the acceleration of the buyback program today with initial tranche of £175,000,000 starting in the next couple of days. Even after this strong this significant return of capital, we will have one of the strongest balance sheets in the industry, buttressed by the value of our investments in India and in China as well as the strategic partnership with Phoenix. We are deeply aware these investments are held ultimately to create value for shareholders. And as we continue to reshape our business, we will remain focused on ensuring the assets on the balance sheet are an important source of benefit to shareholders. In summary, over the last 12 months, We've made good progress in integrating and reshaping our business. We've taken actions to improve investment performance And continue to invest in innovation through increasing our new active offerings and growing our adviser platforms. This together with the enhanced partnership with Phoenix makes us confident that this will be reflected in flows Over time. There's still work to be done, but the foundations are in place for a modern dynamic world class investment company that's well placed to deal with the disruptive forces reshaping the industry. And all of that will enable us to deliver €350,000,000 of cost inefficiencies and return €1,750,000,000 of capital to shareholders. As we do all of that, we will continue with our long track record of ensuring the assets on our balance sheet An important source of benefit for our shareholders. Our focus on shareholder value is even sharper than ever. Thank you. With that, myself, Martin, Bill, Barry, Campbell and some of the executive team in the audience We'll be delighted to answer your questions. Thank you. Yes. Do we have a microphone? They're coming into the room as we speak. Thank you. Can we have one just on the 5th row at the left. Great. Thank you. Thanks. It's Gordon Aitken from RBC. Three questions please. First on platforms generated 1,000,000 this year and nothing last year. I mean the actuary in me tells me that's infinite growth, but we certainly expected quite a bit more and why not more and when do you think say triple digit PBT is likely from the 3 platforms? And second on cars and equities, those are where the big outflows are. Can you you updated us before on the consultant view, given us a number of sort of buyer ratings and you Can you just tell us where we are with consultants at the moment? And finally on costs, I mean the costs are 27,000,000 lower year on year And revenue is down, so the sort of cost savings are going to be lower than 27%. Can you just square that with the 135 you see already implemented? Thanks. Sounds like Barry Campbell, Bill. Okay. If I start off with the platforms, the numbers you're quoting Gordon are the continued operation, includes the advice business and other things such as the return on the pension fund surplus. As Martin in the presentation, if you strip out and look just at platforms, the profit was €14,000,000 up from €12,000,000 So not quite the infinite growth, but 17% growth. And as you know, we've got operational leverage there. We've got a very scalable model. About half of the revenue growth is falling through to the bottom line. We think we can improve that as we become more cost efficient. So I suspect you'll just have to model when we'll get to triple digits on that basis, but it is a model that's it's obviously a business that's growing strongly and it does have operational leverage. So we will get there relatively fast. On the consultant piece, we remain in a very good shape with our consultants. You'll see the gross flows in Gaza still we're still Acting money in that and we're still attracting money in our core equity propositions as well. So Confidence by from our consultants and clients in those core strategies have been reinforced by this very thorough and frank assessment of what we need to do to turn performance around And we're encouraged in the outlook in that regard. On the costs, The £27,000,000 you referred to half year on half year is obviously correct. I mean, the £40,000,000 that I referred to earlier is based on the full year 2017 rather than individual halves. And I mean, clearly, you'll see there was a bit of a mismatch first half, second half in 2017. Couple of reasons for that. I mean, clearly in the first half, we were in the run up to the merger. A number of potential projects were probably deferred pending the merger because there was so much going on. And as we reported at the year end, there was a one off charge of around £20,000,000 in the second half of last year Just relating to aligning the accounting treatment for the Aberdeen deferred compensation. So the how that relates to the £135,000,000 as I mentioned, clearly the £40,000,000 benefit in the first Half this year is £80,000,000 annualized. The £135,000,000 is to try to be clear is where we have taken action to implement a saving, but It hasn't actually begun to benefit yet. So give a simple example, if we've set up notice on The contract, but there's a notice period. We have taken the action to end the contract, but the saving doesn't begin for a few months. So that 135, we put very simply, the extra 55 over the 80, You're entitled to expect that will phase in during the course of the second half. So probably get, say, 50% benefit The second half in addition to the 40 and then the full benefit in 2019. Okay. Stick with this side of the room. Thank you. It's Johnny Vo from Goldman Sachs. Just three questions please. Just again On the margins, I noticed that your margins on the platform appear to be higher than your competitors. So is it fair to assume that any sort of Cost saves that you'll make will be washed away by margin decline on platform and therefore your operating leverage that you hope for maybe not As much as you think, that's the first question. And then related to that as well, given the critical mass of your platform at 60,000,000,000 Is there already critical mass there where net inflows affect or gross inflows matched by outflows and therefore it's very difficult to grow beyond that point. And the final question is just in regards to the Phoenix flows, what type of margins are you expecting on that Phoenix flow? Okay. I think that's Barry and then probably Martin. On the platforms, we don't Anticipate margin decline. In fact, we've held the revenue margin pretty stable since well for the last 3 years. We haven't seen the margin on wrap declining. We've had a margin improvement in Elevate since we acquired it. So we increased the cost of the platform for new clients coming on. So if anything we've seen a little improvement if you like in the gross margin. As clients fund accounts get our account sizes get bigger And then we pass some discounts on to clients and so we see a little bit of movement, but it's you'll see in the numbers Today the movement is tiny. It's around about a bit difference year on year. So we're not anticipating margin decline. We've got a very differentiated premium proposition in the market and we have attracted a lot of flow particularly at the top end of the market into very large SIP cases for instance benefiting from DB to DC transfers. So we think we can maintain that. On your second question in terms of whether we got to get to the point Gross inflows are matched by outflows and not really. I mean if you look at our outflow performance about 70% of our outflows from SIP on ramp for instance goes back to the customer in terms of regular income or in some cases deaths because our book is sufficiently mature. Only 30% of our outflows actually leave the platform to go to a competitor. I think we're well away from that side yet. I mean what's driving growth in our platform, But in the platform market more generally is the movement from back books of typically insurance companies Onto modern platforms. So there are 100 of 1,000,000,000 left in that market to transfer yet. So we're well away from reaching that point. And I'll pass then to Martin for the Phoenix. Just on Phoenix, I think we would guide you towards 10 basis points just across the board on Phoenix. Some will come in higher and more recent alternatives have come in higher. But just to be conservative, I would just take 10 basis points across the whole of the inflows and hopefully we can improve on that. Arnaud Anojira from Exane. Three questions, please. Firstly, on India. Could you perhaps give us an update as to whether you're seeing any interest Some potential strategic buyers for your Indian Insurance or Asset Management Business. Secondly, on cost savings, the guidance is pretty clear. How does that how are you thinking about investment? Is there anything any quantum you're guiding towards there? And finally, On capital surplus, you hopefully updated us on the capital surplus and Solvency II. How is that looking under the new CRD4 regime? Okay. Yes, on India, I've been absolutely clear that we're deeply aware these investments are ultimately held create value for shareholders. And we remain focusing on sharing the assets on the balance sheet are an important source of benefit To shareholders and yes, we do from time to time get some inbound inquiries. Bill? Yes, I mean on the Also, there's not a specific number we're going to mention in terms of investment into the business, but clearly we are committed To ensure that we take every opportunity to achieve organic growth. So whether it's by specific expenditure project type expenditure or By provision of additional seed capital, etcetera, we'll look at this and update you as and when. And in terms of capital surplus, clearly, we moved to a very different sort of dynamic CRD IV as opposed to Solvency II, I mean, on the one hand, we released quite a lot of capital, But against that, as you know, we lose the benefit of the debt which currently ranks as capital under Solvency II. That's part of our The strategy is to sort of reengineer that debt, you sort of redeem part of it and perhaps restructure, repaper another part. But I mean, as we've mentioned before, it's the absolute figure in terms of the capital requirement It won't be clear until we have more formal approval from the regulator. But the indication we've given before is that The total capital requirement for the group under CRE4 is going to be something of the order of 1,000,000,000 to 1,200,000,000 And at that level, we would expect to have high 100 of 1,000,000 of headroom over that, which Clearly, a much smaller number than you're used to seeing on the Solvency II, but of course, Asset Management is a very different business. Good morning. It's Hubert Lam from Bank of America Merrill Lynch. Three questions for me. Firstly, on fee margins for your blockbuster products, just given the outflows you've seen in GARs and the EM Equities, Just wondering if you had to reduce fees to try to keep the assets on board? First question. 2nd question on the cost savings. Maybe if you can Bill, if you remind us on the phasing of the $350,000,000 of cost saves. Does that mean the $135,000,000 does that mean that is that what you expect in 2019 Or should we expect more than that? Just maybe if you can just remind us on the phasing? And the third question in regards to your management structure, You've seen that the other Burj Asset Manager recently lost one of their co CEOs. Wondering if longer term I just lost one last one. Wondering longer term, you still think that this is saying that one first. Luckily for Keith and I, it's not our decision. It's up to the Board. So we'll continue to serve the Board as long as they want us both there or whatever. What I would say is that it's probably the structure has probably exceeded most people's expectations. We think it works very well because we have different personalities, different strengths, and we have different areas of responsibility in the business. But as I say, look, it's not as the co CEOs at Henderson's found it wasn't their decision either. So maybe we get on better than they do. We're having fun. That's the most important. Anyway, back to more important matters such as fees. You will do whatever we need to, to retain our clients and we are looking at that as and when it's appropriate. I don't know if you want to add anything to that Campbell, But we obviously model, yes, it's better to retain a client on a reduced fee than lose the client. So it's simple math. The only thing I'd add Martin is that as you pointed out, 19% of our gross is still coming into those traditional blockbuster products. And you know, we're doing well at maintaining fees there. You know, so significant mandates and we could go through a list of those that we've won. We are maintaining and sustaining good pricing on them across the globe as our clients want to do more with fewer Providers and the strength of the merger as you've seen by the diversity of the flows has been around providing more choice and more products to those clients. And I think as you see as we're moving to pre merger Levels. And let's remember last year that first half strong first quarter then we announced the merger. Second half was we were on hold. We went through the consolidation of our client facing efforts and activities were low. And the second the first half of this year as Rod has put the investment structures in place and we've settled down our distribution effort, We're back in business, back to pre better than pre merger activity rates. And I'd just point you to the 81% of flows That are coming in new actives coming through Barry's businesses and coming through those strategic partnerships. And We're sustaining prices and getting back to hopefully better levels. On the fees and of cost savings, The £135,000,000 I referred to earlier, we're actually ahead of the game, ahead of where we expected to be at this stage. You recall on the £250,000,000 of merger synergies, we said we'd achieve 75% of that within 2 years closing, so by August 2019. And we're still on track to do that. So you can see we expect to be at 190 by that stage compared to the 135,000,000. In terms of the additional £100,000,000 of efficiencies post the sale to Phoenix, that will largely impact begin to impact 2019 and we said we'll have the £100,000,000 in place by the end of 2020. Andrew? Good morning. It's Andrew Crean with Autonomous. A couple of questions. On the Indian Ventures where you're ultimately held for the benefit of shareholders, could you tell us whether you'd be Looking to sell those on the release of the handcuffs or whether you'll still respect the suggestion you made with HCFC that you'd Look to open the float, I think sometime in 2020 2021, whether that's still your timing? Then secondly, Could you go into a little bit more detail on the €100,000,000 of cost savings or cost efficiencies? How much of that is cost savings at the center? How much of it is trying to boost the profitability of the platforms and the distribution businesses? Could you give us a little bit more detail there? Is. Bill, would you want to? Yes, I mean, just on that cost savings point, I mean, it's we would answer that question in a slightly different way. I mean, it's very about moving away from the idea of having separate business streams. I mean, clearly, we will still operate a platform business. We will still operate an asset management business, but we will very much be a single company as opposed to 2 separate divisions With group at the center. So I think the only meaningful answer I can give you is it's a little bit of all of those. I mean, what we're looking to do is Remove unnecessary duplication of costs. Some of it is also, as we referred to last time, It's avoiding costs that we might otherwise have had to incur in the future had we not simplified the business. So very difficult to split it down in granular form. And on India, we will stick to the statement I said. And as far as the mechanics are concerned, Anything we do will is really for us to do. Oliver? Oliver Steel, Deutsche Bank. I'm just wondering how large the retail, the old Standard Life with Profits members stake is in you today. It may be perhaps one of the reasons why the shares have been so weak if they've been selling. And perhaps you can give the comparative period for year end 2017. Secondly, if you believe the market, it That's a very, very low valuation indeed on your fund management business. You've twice, Keith, mentioned that you recognize the value Of the Indian JVs, etcetera, for shareholders. Does that mean that when you sell those businesses, You will actually be returning the money to shareholders rather than investing them into the fund management business. I think that's quite a key issue. Thirdly, Bill, you talked about a 1.1x pro form a dividend cover. Now not all of your IFRS earnings are cash. So I'm wondering how you interpret that dividend cover to us. Should I pick that one up first, Steve? Yes. I mean, the comparison I gave, The dividend cover I gave was on adjusted earnings per share, which as you know is before the main non cash item amortization of intangibles. So yes, except we've got some depreciation in there, but it's a relatively small item in the scheme of things. So without having actually done the detailed calculation, you would still be looking at sort of one times, just ahead of one times. We're not happy with that in the longer term. We're looking to regrow from that basis. On the question of retail Shareholders is an interesting one. I didn't think there's been a significant change in our retail shareholding base, Which largely reflects the with profits holders between the two halves of the year, but we'll check and get Back to Kenneth Gilmore and Paul McKenna, Oliver, at the back of the room from COSEC, they would be able to give you more detail. On India, I'm going to stick to the high level principles and say we're not going to look around too many corners. We do have a long and proud track record of as we reshape the business, we've reshaped our balance sheet. And as part of that, we have returned capital to shareholders. And as I said in the presentation, That's a long and proud tradition we intend to continue with. Hi, good morning. Gurjeet Campbell, JPMorgan. I think this is one for Campbell. Just in terms of distribution, obviously you've launched Funds, you're looking to launch another 20. How are you thinking about what funds you're launching? Is it looking at competencies you have in the business or is it really driven by demand? And secondly, as you become more diversified with lots of more funds, how are you positioning those funds in the market in terms of distribution? Yes, great question. So Let me give you an example. Keith and Martin have touched upon this new active and also what we're doing driving the quant innovation. So For instance, our global corporate bond tracker was one of the top 10 selling index funds in Europe. We've launched the smart beta low volatility global equity fund. We're working on $4,000,000,000 of other quant type strategies for some of our strategic partners. So it's this mixture of responding to some of the secular industry trends For lower volatility, lower cost funds where we believe we can provide a better proposition in that space. And it's also responding to how we industrialize and democratize some of our Institutional capabilities, whether that be in multi asset and our multi asset business now is not just Gas, we've got an award winning high performing diversified growth fund. We're winning we won a £500,000,000 mandate from the United States to provide tactile asset allocation to a very large public institution there. We're launching products in Taiwan to take advantage of this outcome piece and we're also working Very hard with our strategic partners, especially Phoenix and others to bring new solutions and strategies into that place. So it's this mixture of taking out the new active capabilities, responding to the threat and challenge of passive And also starting to take into the mainstream some of our other long standing and other capabilities. Even in the equity space where we've had some tough performance, we're winning big mandates and launching products there. And I'd point you to the small cap flows. I'd point you to Latin American flows. And I'd also point you to things like our China A share performance, where we've also launched our first Wufy product onshore in China. So this diversity As the mix of our business from strategic partners, Barry's platform and the opportunities from our distribution effort. Just on that, the combined distribution effort pre merger was 700 people, we're down to 500 with the combination of the Platform business, we've got another 150. So we've got a 6 50 person strong sales force now operating, working hand in glove With our investments team as they've set out their stores. And as I said before, it's a contact sport. It's spending time with clients and talking about those opportunities and also at the same time defending the book of business we have. Greg Paddison, KBW. If you look at the emerging markets and the equity mandates, I was wondering in terms of 1 year performance What desal you'll be sitting in on average in the league table performance, so we can get a feel of where you are there? Second question is when you spoke about the 9P pro form a Benefit from cost savings. You said that is before any reinvestment in the business. I wonder if you can give us an idea of what your sort of Annual run rate of reinvestment in the business will be so we can see the net cost saving benefits. And then also just to get a feel for sort of The staffing at the Asset Management Business in terms of investment professionals. I wonder if you could just tell us how many you've lost over the last 6 months How many new hires you've had over the last 6 months? So we can get a sort of feel for the morale and the new capacity or lost capacity? So we'll get Martin, Bill then me, I think. Yes. I think your question on if I pick this up wrongly, please correct me was on the performance of emerging market equities. I think we've seen a sharp improvement over the last a couple of months as the market dynamics that Keith was alluding to have come back. And in fact, Asian equities are ahead of benchmark now. And as the issue we've had in performance numbers as being more value orientated than growth. So for instance, in Asian equities not earning Ali Alibaba, to take an example, down to the stock specific level was really a major detractor from performance. So the fact that Alibaba has reversed, shall we say, 20%, I think it was 20%, 25% has really helped performance. So in equities, it can shift very, very quickly, glee, especially if the market dynamics that we were alluding to change. Well, the segregated mandates don't tend to work on league tables. They tend to work relative a benchmark. So we're behind benchmark over 1 year. But as I said on Asia, which is a large component of emerging, we're ahead of benchmark year to date and I think over 1 year, but certainly to date. And year to date numbers tend to be very important in our business. But I do stress that we do need to see we want to see that change in the market dynamic that we get more down to a more fundamentally driven market, more of a stock pickers market rather than a liquidity driven market, Which is what we've seen in equities just globally in terms of as I say in terms of equities, But especially in U. S, large cap is where we've really seen the battle between passive and active. Yes. On reinvestment into the business, I mean, it's not really that easy to give you a specific number. I mean, We haven't set aside a specific amount for that purpose. As I mentioned earlier, I mean, we will invest in the future growth in a number of ways. I mean, some of it may be projects which will be a cost through profit and loss, some of them may be capital expenditure, Some may well be the provision of additional seed capital. So it's one that the Board will take The decision at the appropriate time in the planning stage and clearly, we will update the market as we think of something meaningful to say. But Bill, I think it's worth making the point that asset management traditionally has not been a capital heavy business. It's been very capital light. In fact, it's fairly normal to see about 100% conversion into cash. I think the area we probably will need to see some investment is probably in the plat forms to continue that growth in the platform business. I think it's difficult to separate that from the activity being undertaken to Change the operating model to create the merger efficiencies. I mean, if you look back a bit further, I guess maybe something in the order of £50,000,000 and a half year historically, but it's such a changing landscape. On the investment people, I realize there's a huge amount of noise around. I would say a couple of things. The first is really important. The number of people we've lost that we'd have liked to have kept, you can count on the fingers of one hand. And that is really quite important. We've had a very proactive approach to these performance enhancing plans. We're investing in our new talent and we're investing staying in our new talent. And we're investing in the people that we think are fit for purpose for the future. The other thing is we are out there. We are actively hiring in the market and that's Say regular phenomena, which Rod and I are engaged with, we have no sense, no sense Whatsoever that investment professionals don't want to come and work for Aberdeen Standard Investments, quite the reverse. They recognize the scale. They recognize we're ahead of the game. And actually they recognize the importance of what we're doing. So actually We're getting really good traction with some talent and that's not just in the UK, that's Around the world and that's quite important to us. We'll give we'll get that too if it's important. Sorry, any other questions over here? No, one at the back. And then probably we should make that the final question because I'm aware there are other presentations to go to this morning. Thanks. Mike Werner here, UBS. I'll try to make this quick. You say on Slide 4 that you have a good pipeline of business that's been won but not yet funded. Any indication of the quantum around that figure or at least how that Compared to previous years? It's definitely up on previous half year. I was going to say €8,000,000,000 We'll come back to I think it's roundabout €8,000,000,000 I've got it somewhere. And then just a quick follow-up. In terms of flows Q1 versus Q2 Or at least kind of the exit rate in the at the end of the first half. Any indication as to what momentum is in terms of flows during the first half of the year? Yes, I mean if we straight line the first half to the second half then we'd be €76,000,000,000 for this year plays €66,000,000,000 last in terms of growth. So we're hoping to sustain that momentum. And as we said, the pipeline, the one not funded looks strong. There are other opportunities as well with Phoenix that Martin and Keith has told you about. And we continue to work hard to Convert that significant pipeline which is across the globe over a couple of 100,000,000,000. Now we won't convert all of that of course, but we're working hard on doing it as much as possible while we Defend as hard as we possibly can and that's hand to hand combat at the moment. I think the number just to confirm was €8,000,000,000 of 1 and then another 3.6 of already won but not funded and that would tend to be something like a property mandate where the money comes in when you've invested it or an alternative mandate. Great. So thank you very much. I hope what you've heard this morning is that we've made really good progress in integrating and reshaping our business. We are taking action to improve investment performance. We're investing In innovation and of course, we are very focused on delivering through that high quality balance sheet, strong shareholder returns over the medium term. Thank you very much and have a very good day.