Earnings Call: H2 2016

Mar 17, 2017

And welcome to Standard Life's Results Presentation. With me on the platform are Luke Savage, our Chief Financial Officer Colin Clark, our Head of our Global Client Group and Paul Matthews, Chief Executive of Pensions and Savings. Unfortunately, the last time, Paul has chosen to retire after twenty eight years at Standard Life. So I thought I'd give you plenty of advance notice. This is your last chance to ask questions of Paul. We'd be grateful if you can make sure your phones and other devices are switched off. And once you've read the compliance slide, I'll get the presentations underway. Over the next forty minutes or so, I'll give a brief overview of our twenty sixteen. Luke will then go through the results in some detail, and I'll come back and set 2016 in its strategic context. We'll then move to question and answer, where Luke, Paul, myself and a whole bunch of executives in the front row will do our level best to answer your questions. 2016 was a year when Standard Life made good progress towards creating a world class investment company. As we promised at the interims, we increased our pace of strategic delivery. We continued with our targeted investments in diversification and growth. We improved our financial discipline with a focus on driving greater cost efficiencies. We also strengthened our long term relationships with clients and customers, including the long standing customers in our mature books. Our focus on strategic delivery strengthened the resilience and sustainability of our simple capital light business model, which continued to deliver for clients, customers, our people and shareholders. Okay. Grew assets by 16% and fee based income by 5%. But the benefits of the investments we made in diversification were most visible in our growth channels. Here, we saw asset growth of 20%, revenue growth of 10% and net inflows of £4,100,000,000 This robust and well diversified growth was more than enough to offset the impact on revenues of both the £4,300,000,000 outflows from GARS and the continued long term runoff of our mature book of business. We also improved our financial discipline. We lowered the cost income ratio to 62% through careful cost management. We delivered the integration of Ignis early enabling standard life investments to deliver the 45% EBITDA margin one year ahead of schedule. The benefits of a well diversified customer and client base combined with the improvements in our operating leverage helped us deliver a 9% increase in operating profit and cash generation. That provided support for continued dividend growth. Our final dividend of £13.35 takes the total to the year to 19.82 p and marks a decade of unbroken dividend growth at Standard Life. With that, I'll hand over to Luke, who will go through the detail, and I'll come back and talk about 2016 in its strategic context. Luke? Thank you, and good morning, ladies and gentlemen. As Keith said, this is a strong set of results. And if we turn first to the summary P and L, you can see in the first two rows that, that growth in income has been driven by our fee business, which represented 95% of our GBP 1,750,000,000.00 of underlying income. Income from our spread risk business remained steady at GBP 92,000,000 and it's reflection of our move towards a capital light business that doesn't tie up balance sheet that the PRA have recategorized Standard Life from a major life group to a retail life group. We'll look at the individual components of our profit in more detail later. But before I move on, I would point out how the growth in fee revenue combined with a sharpened focus on efficiency has allowed us to increase the underlying performance by 8% to GBP681 million. And behind that sits an 11% increase in the underlying performance of our fee business now standing at £596,000,000 You can see we continue to benefit from favorable assumption changes, largely with respect to longevity, adding £42,000,000 and almost unchanged on last year and helping to drive that operating profit, as Keith said, up 9% to £723,000,000 So a strong set of results. What about our non operating? We said a year ago, we expected non operating costs to fall in 2016 and annuity provision aside, which I'll come back to, you can see that we've delivered on that with an operating cost down £158,000,000 from £257,000,000 down to £99,000,000 this year. So in terms of the annuity provision, you remember that we announced in October that the FCA's review of annuity sales showed that a number of sales that we made since July 2008 did not adequately explain to customers that they may have been eligible for an enhanced annuity. Now to us, that is obviously disappointing. What we also said at the time was that we'd be undertaking a past business review of these non advised annuity sales. And as a result of that commitment, we've made a provision of GBP 175,000,000 to cover both the possible customer address, together with the sizable program costs of undertaking review itself. I would, however, stress that we are not at this point taking credit for any PI insurance recovery, but we are aiming to recoup up to £100,000,000 Let's look now in more detail at the first component of our business model, increasing assets. Despite volatile markets, we gathered over GBP 4,000,000,000 in net new flows through our growth channels, helped by the diversity of our business. We also competed on the acquisition of Elevate, adding a further GBP 11,000,000,000 of assets, while our mature fee businesses, are in long term structural runoff, saw net outflows of £6,200,000,000 down from £8,000,000,000 last year, helped by the winning of a £1,200,000,000 mandate from Phoenix in the fourth quarter. A combination of rising markets and the weak pound helped add over £40,000,000,000 through market movements to give us total assets under administration of £357,000,000,000 up 16% on the year. And within that market movement, roughly one third was FX and two thirds from other market movements. Sorry, before we take a look at the drivers behind the £4,000,000,000 of net inflows across our growth channels, we can see how they break down here. And we've shown not just the strong net flows, but the strong gross inflows that we generated by channel at £38,600,000,000 little changed year on year. So if we turn now to Institutional and Wholesale, it's worth starting off by saying that gross flows here have also remained strong at £27,700,000,000 this year compared to 30,500,000,000 last year. And at the net level, we've delivered GBP 1,100,000,000.0 of net institutional flows from a business increasingly diversified by geography, by customer type and by investment solution. In wholesale, along with most of the entire industry, which according to the Pridham Report was the worst the industry has seen for twenty years, we've had a challenging time. The uncertainty of the euro, the U. S. Elections and so on has driven a trend of investors taking off risk off the table with us seeing net outflows of £1,700,000,000 But to put that into context, that is against closing wholesale assets of £50,000,000,000 and UK market share that remains strong at 4.7%, a testament to the strength of our franchise across a broad range of asset classes. We're seeing the benefits of our investment in our capabilities and global distribution that we've been making with growing demand for increasing broad range of investment solutions. So whilst demand for GARS was weak in 2016, as Keith said, 4,300,000,000.0 of net outflows, largely from the more active wholesale channel, demand for our other products continued to grow. In 2016 alone, we launched 16 new funds, many in the new active space and attracting average margins broadly in line with the rest of the book of business. And as you can see from the chart on the left, we've more than doubled both gross and net flows into products other than GARS over the past three years. Despite the challenging environment, in 2016, we saw gross inflows into those products increased by 30% to GBP 17,500,000,000.0 with strong net flows of GBP 3,700,000,000.0. On the right hand side, you can see that we delivered strong gross net inflows in areas such as other multi asset, fixed income, private equity in MyFolio, and MyFolio is now broken through the 10,000,000,000 mark of assets under management. So our long term diversification agenda is clearly delivering. Let's turn now to our workplace and retail channels, which continue to attract steady and resilient net flows. In 2016, these amounted some 7% of opening assets and were also boosted by the acquisition of Elevate and the GBP 11,000,000,000 of assets that came with it. Our total AUA is up an impressive 33% year on year, breaking through the £100,000,000,000 mark, up from just £45,000,000,000 five years ago. In terms of bit of color, we continued to sign up new auto enrollment schemes, around 8,000 in total and that has increased our regular workplace contributions to £3,100,000,000 per annum. Now these are very sticky and very steady flows and they now constitute about 75% of our gross flows into workplace. And as the minimum contribution rates in auto enrolment increased in April 2018 and then again in April 2019, we expect that to perpetuate the ongoing growth. Furthermore, our workplace business continues to feed assets into our retail business, some £2,200,000,000 in 2016 alone, 300,000,000.0 of which went into drawdown. And in total, we've now grown our assets in drawdown by 21% to GBP 16,400,000,000.0. In retail, our award winning platform continues to attract strong net flows and in 2017, we expect our already leading market position to be boosted by acquisition of Elevate, itself another award winning platform. Now as we've indicated previously, the total cost of acquisition integration for Elevate will be in the order of GBP 100,000,000 and that is a little over GBP 30,000,000 for the acquisition and the balance for the integration. As we said before, we expect that to take about two years. And by the time we finish, we have turned around a business, which had been losing close to £20,000,000 a year into a business making a profit of a similar amount, largely through cost reduction and we're already making progress in that direction. The second component of our business model is also delivering. In 2016, we grew revenue by 5% with growth channel revenue up 10%, while fee revenue on our mature books was 8% lower, impacted by lower performance fees down £14,000,000 as well as lower premium based income in Europe. That said, our mature fee business in the second half was 6% up on the first half off the back of market movements and FX, which also helped drive closing assets in our mature books, up by some 8% versus opening AUA. And over time, revenues from our growth channels, the dark blue bars on the left, are up over 70% in the past four years, whilst revenue from our mature books in the light blue bars has remained relatively constant, boosted a little by the Ignis acquisition in 2014. And in terms of revenue margin across our growth channels, we continue to see little pricing pressure and that comes through in stable margins on the right hand side of the chart with the small year on year movements being up one basis point for both SLI and Workplace and down one basis point in Retail. And so the small moves we do see a function of mix, not of pricing. By channel, we expect SLI third party revenues to remain stable in the low 50 bps. Workplace has stabilized as a function of our success in the auto enrollment market. And retail margins are supported by increasing volumes of drawdown and the build out of 1825. Now it is worth noting that the Elevate pricing, as we've said before, is lower than our own pricing. So all other things being equal, we can expect the average retail yield to drift down by about two basis points in 2017. Turning to spread risk margin. As I said earlier, it's only 5% of our underlying income comes from spread risk activities. As announced at the half year, we had a one off gain of 22,000,000 from changes to the scheme of demutualization arising from the adoption of Solvency II. We'd guided ALM activity to be down from £30,000,000 last year to around half that this year. But as it was, we took advantage of periods of market volatility to generate GBP 25,000,000 of income, so only down GBP 5,000,000 in the end. But once again, we would guide towards up to GBP 15,000,000 of ALM activity in 2017, although as in 2016, that will be very much subject to market conditions. Finally, this slide, the negative other at 26,000,000 is made up of a host of small items, the most notable being related to negative mortality experience in the year of £8,000,000 The third component of our business model is our focus on lowering unit costs, where we previously articulated a commitment to see the cost income ratio trend down to below 60% over time. On the left is the result of our efforts in 2016, down one percentage point to 62%. And that improvement is after the drag from taking on Elevate and building out 1825, our advisory proposition. In part, that reduction has been achieved by strong cost discipline in SLI as we responded to the challenging market conditions over the course of the year. On the right hand side, you can see we've broken out Elevate and 1825, excluding which you can see that our underlying costs are up just 2%. And let's not forget that, that 2% includes significant ongoing investment in other aspects of our business beyond 1825 and Elevate. And if you pull all that together, we've driven an 11% increase in our fee based performance. Within the second and third bars, you can see a drop through rate for between revenue down to profits of over 60%, and that's the GBP 64,000,000 in blue versus the GBP 24,000,000 in grey. It's a sign of our financial discipline and operational leverage in our scalable business and proving that we are delivering results. If we look back over five years, we can see that our fee revenue has grown by 60% to GBP 1,700,000,000.0, driven by near doubling in our fee revenue from our growth channels now standing at £1,200,000,000 And that revenue growth, combined with our scalable business model, has fueled a threefold increase in profits from our fee business, which now stands at almost GBP 600,000,000. And it's this fee business growth that is the drive for underlying performance more than doubling to GBP $681,000,000. Let's look now at how this breaks out by business units. I'll go into SLI and UK pension savings in more detail on the subsequent slides, so let's just deal with other minor items before moving on. In Europe, we saw a £4,000,000 gain on the move to Solvency II, together with £5,000,000 of positive experience in the year. In combination, they helped drive profits to £39,000,000 but the Solvency II gain will not repeat and we do not presume to gain from positive experience. So over the medium term, we will continue to guide towards a £30,000,000 profit level for Europe, although this is a market where we do see good long term growth opportunities. Our associates and joint ventures included on the slide here are our Life businesses because we include HCFC Asset Management within SLI. And you can see underlying performance is up over 60%. HDFC Life benefited from both our stake increase from 26% up to 35% as well as us growing underlying premium income by 18%. While in Heng An Standard Life, our Chinese joint venture, sales were up 39%, helping to drive increasing profitability. And in both of these markets, we see strong growth opportunities going forward given both demographic changes and the nascent pensions markets in each of those countries. Turning to our major business units. In SLI, we've grown assets by 10% to GBP $278,000,000,000 on the top right hand corner. And fee revenue is up GBP 42,000,000, a 5% increase. Our discipline in pricing and focus on new active investment solutions has enabled us to lift revenue yield up one basis point to 53 basis points, three quarters of way down the right hand side. And importantly, through the effective integration of Ignis and strong cost discipline, we've delivered that target EBITDA margin, as Keith said, of 45%, a year ahead of our original guidance. Now as we said before, we don't expect revenue yields to go any higher. And alongside our ongoing investment in growing the business, it means we maintain our previous guidance that the EBITDA margin should track in the low to mid-forty basis points going forward. Finally, across the bottom of the slide in the yellow dots, our short term investment performance has been mixed, although it remains strong at the all important three and five year time horizons that our focus on change methodology targets so effectively. In our Pensions and Savings business, we've grown total fee AUA up by 23% in part through the acquisition of Elevate, in part through sustained strong net inflows into our growth channels and in part through favorable market movements, and that is despite the long term runoff of the mature books of business within those figures. Again, good pricing discipline and a more favorable mix of business, including the success of things like Good2Go, the build out of 1825 and things like Tip2Switch has allowed us to maintain the average revenue yield across our growth channels with the overall total coming down by just one basis point. And the proportion of fee assets from growth channels has increased from 69% to 74%. And while the headline cost to income ratio in the bottom right hand corner of the slide has nudged up from 59% to 62%, if you exclude the impact of our start up activities in 1825 and Elevate, the cost to income ratio of our underlying business has remained largely flat and would have come down if not for the reduction in spread risk margin. And Keith will touch on some of the initiatives we have in place to continue that downward drive when he comes back to speak in a moment. When it comes to balance sheet, we continue to run a strong Solvency surplus. Now as we explained back in August, we focus on the investor view of capital, which eliminates dilutions arising from the anomalies within the Solvency II framework. Now we've repeatedly said that given the fee based nature of our business, that our surplus was relatively insensitive to markets, and that's demonstrating the result unchanged year on year at £3,300,000,000 and a ratio of some 214%. From a pure regulatory perspective, much of the capital that we previously did not recognize at group is now recognized off the back of our work to agree methodology changes with the PRA, together with changes to the Companies Act that recognize the Solvency II regime. And as a result, we've increased our regulatory surplus view by GBP 1,000,000,000 to GBP 3,100,000,000.0. The lack of volatility in our surplus is demonstrated here. When we apply the same univariate stresses that we've used in previous reporting, the surplus is stable across a wide range of scenarios. You can see it moves by a maximum of GBP 200,000,000 in the second blue bar along, which is equities down and in the penultimate bar on the right hand side, which is a reduction in mortality rates. So as we've said, we believe it's very stable. However, as we've also repeatedly said, regulatory cap is not a constraint on us. Our focus is on cash generation. It is cash generation that funds reinvestment in organic growth. It is cash generation that funds inorganic growth. And importantly, it's cash generation that underpins our progressive dividend policy. On the left, we show that we tripled the cash generated in just the past six years, now breaking through the GBP 500,000,000 mark. And as you would expect from a fee based business, our cash generation is closely aligned to our IFRS earnings. On the right, our PLC level liquid reserves at GBP 900,000,000.0 remained strong, down a little on 2015, primarily because of our stake increase in HDFC Life. And it's the strength of our cash generation, the strength of our cash reserves that once again enable us to increase the dividend by 8% for the full year to 19.82p per share. That gives us an unbroken record of a decade of progressive dividends and confidence that our fee based model should enable us to maintain that policy going forwards. Thank you. And Keith, back to you. Thanks, Luke. So despite all the headwinds that buffeted industry and the markets in 2016, we continued to deliver growth in assets, revenue and through our increased financial discipline profits that was most visible in our growth channels that increasingly drive long term value at Standard Life. Our strategic focus, I believe has positioned us well to benefit from the global trends we see as shaping the savings and investment market. The big four trends I identified a year ago have, if anything, intensified and reinforced, I think, three important elements of Standard Life's strategy. First, Standard Life's purpose to invest for a better future, to make a difference for clients, customers, our people and our shareholders. Second, the importance of innovative investment management and our new active componentry at a time when I think active management is going to become more important. Finally, the importance of a global approach. We need to compete at home with world class as well as abroad. So as we move into 2017, I and my executive team are intensely focused on our strategic priorities, because we believe it's those strategic priorities that will deliver a world class investment company. And it's a world class investment company that will sustain growth in assets, revenues and profits and deliver value for shareholders and actually a promising future for our people. So, we will continue to invest in diversification and growth by broadening and deepening our investment capabilities and attracting and retaining talented people. We will continue to improve our financial discipline by building an efficient and effective business. So we will continue to grow, but also diversify our sources of revenue and profit. By ensuring the strong relationships we develop with clients and customers are right at the center of everything we do. That's how we'll improve the resilience and sustainability of our capital light business model. So over the next ten minutes or so, I'm going to look at each of these strategic priorities in turn, so I can set 2016 in its strategic context. We're making good progress, I believe on deepening and broadening our investment capability. As you can see from the chart on the left hand side, we continue to roll out a suite of new active funds throughout the risk return spectrum. We launched 16 new funds in 2016, including the CCIVE version of MyFolio for the German market. We have a good track record, not just of extending our product range, but also commercializing it. So if you look beyond the GARS outflows of £4,300,000,000 for a moment, we saw net inflows of £3,700,000,000 from elsewhere in our product range. And indeed, if we want to look back as far as 2012, we've attracted gross inflows of £58,300,000,000 in funds other than GARs, 150% increase over the previous five years. Put another way, GARs accounted for 40% of gross flows in 2013, its peak. In 2016, it was 26%. So there's evidence in my view that the investments we've been making in diversification are paying off. For example, we've attracted £19,000,000,000 into the new active funds we've launched over the last six years. More importantly, these funds have an average revenue yield of above 50 basis points that allows us to maintain our mantra, a premium product for a premium price, a key part of our financial discipline. Ensuring we have an innovative pipeline to meet changing client needs has been the bedrock of our diversification agenda for some time. And we saw the benefits continue to emerge in 2016. I say continue advisedly. And that's because as I've said many times, the product cycle asset management is a lot longer than people think. It can take up to seven years to get full scale in terms of profitability, so you can reinvest in the rest of the business. Have a good idea? Two to three years to develop a track record. Years three, four, five, you'll see flow. Years four and five, you'll generate profitability. Years five and six, you get payback. By year seven, you have enough scale to be throwing off profit to reinvest in the business. So little surprise, if you look on that slide, the bulk of the 19,000,000,000 is from product that was launched five and six years ago. I would expect momentum to continue to build over the next couple of years in the new active funds we have recently launched. And I think we will make progress in private markets, the insurance segment of the market, and we'll continue to build out our integrated liability plus solutions. But let there be no doubt, I and the team are equally focused on the other component of financial discipline, driving down unit costs to unlock the operating leverage inside a world class investment company. This focus ensured the early delivery of the 45% EBITDA margin associated with the integration of Ignis. With the acquisition of the Elevate platform complete, the integration of the platform and the business is underway. And we will apply a similar focus to the delivery of both the strategic and the financial benefits. So far, actually so good. Business has been good with better than expected flow and better than expected asset levels. But we will also continue to search out greater efficiencies across the rest of our business. We are streamlining our customer operations through the continued use of automation and straight through processing, we continue to make progress on the reengineering of our legacy IT systems. As we build an efficient and effective business, we will push our cost income ratio below 60% in the medium term. Now investing in our diversification agenda and improving our financial discipline requires not just focus, but high levels of cooperation and collaboration throughout our organization. World class companies have world class people and they need to invest in their talent and standard life investments and standard life are no different. We have made I think good progress in 2017. Our strategic delivery in part reflects increased cooperation and collaboration across the group. Our engagement scores did improve, especially on respect and recognition, which suggests our efforts to improve diversity are being recognized. We also have made progression, I think on the world class front. Our sponsorships can speak for themselves. One of the things that I and the team are particularly proud of was the fact that the Boston office was named as the best place to work in The United States for a medium sized asset manager. No mean feat when you look at the track record of most UK firms operating in one of the toughest markets in the world. So our particular blend of global and local, I believe all goes well for the Singapore and Tokyo offices that we opened in 2016. One area where we expect to make a good deal of progress in 2017 is across the distribution teams at Standard Life. Colin Clark has been leading the drive to greater levels of cooperation, collaboration and improved efficiency across our distribution networks to help even stronger relationships with clients and customers. So whilst 2016 undoubtedly brought its challenges for active managers, we actually continued to see strong levels of activity, where either through pitches or RFIs. And a notable beneficiary of that activity has been our broad multi asset offering. And that's already resulted in a new partnership with Challenger announced a week ago. Challenger is a major Australian post retirement house. The partnership with Challenger comes on top of the benefit that we're receiving from the partnership with Bacera, which was announced earlier in 2016. So we have an increasing global presence, 29 locations serving clients and customers in 45 countries. And our increasingly well diversified customer and client base is a major strength for Standard Life. I think as 2016 illustrated, clients and customers react in different ways to the same set of events. That was clearest in our pensions and savings business. Consolidation is accelerating. Low interest rates and historically high transfer values are triggering increased activity by wealthy individuals and they're moving from DB to DC to take advantage of pension freedoms. The advice market is now almost totally platform based and we are a clear beneficiary, because our Wrap and Elevate platforms lead the market and serve over 3,000 advisor firms. We also continue to see regular and predictable flows into workplace. We've also enrolled more than a million employees since 2012. Interestingly, we're also seeing some evidence that that so called pensions fatigue is ending. And it's pleasing that even the biggest schemes appear to be impressed with the breadth of the functionality that Standard Life can offer. It might be too early to claim a major change in client attitudes, but it does feel like the workplace pensions market is changing in a way that plays to standard life strengths. So as Luke and I have said many times, the benefits of our strong relationships are most visible in the growth channels that drive long term value. Here, assets grew by 20% to 2 and £37,600,000,000 and represent two thirds of assets under administration. More importantly, fee based revenue rose 10% to £1,200,000,000 and that is 73% of total fee based revenue. Furthermore, as you can see from this chart, revenue is well distributed across our four largest channels. The largest channel Institutional represents £360,000,000 out of £1,200,000,000 so around about 30%. Wholesale and retail are around 20% each. Wholesale of course was where we experienced the bulk of GAAR's outflows £3,900,000,000 of the 4,300,000,000.0 But note that total outflows were £1,700,000,000 only 4% of opening assets. As we continued to see inflows into areas where we had good performance, in particular, MyFolio and GILB, global index linked bonds. It's also I think quite important to note that not all channels are as sensitive to short term performance as wholesale. The institutional channel where we saw positive inflows, we saw positive inflows in five out of seven asset classes. That reflects the strength and depth of our ratings from consultants. So one of the great benefits of our well diversified business and strengthening relationship with clients is the stability of our revenue yield. The investments we have made in diversification and growth, together with our improved financial discipline is delivering well diversified growth across our business. The strength of the growth channels, which you can see on the left hand side is offsetting the runoff in our mature books. This is a feature I'd expect to persist over the next couple of years. We also get diversification benefits from our life associate and JVs, which you can also see from the chart on the left hand side. These now account for 10% of operating profit and we'll see further progress when HDFC Life is able to merge with MaxLife. So in summary, 2016 was a year when once again Standard Life increased assets, grew revenue, lowered unit costs. We generated a 9% increase in operating profit and cash flow to support our progressive dividend. Our strategic focus has helped us make good progress in delivering a world class investment company. And that's where the focus of I and my executive team will remain in 2017. When it comes to targeting investments and diversification and growth, I can ensure you we are as focused as we ever were on investment performance. Investment performance is recovering and that does include GARs. We are due to launch around about 12 fund a month in 2017 and we'll probably hit the 16 number again as we continue to build out private markets and integrated liability plus solutions. Focusing on driving cost efficiency, you should be in no doubt, absolutely no doubt, we are very firmly focused on delivering a cost income ratio, which falls below 60% in the medium term. Strengthening long term relationships with clients and customers. Well, it started, I think, pretty well in 2017. Better than expected flows on the Elevate platform, better retention. And of course, we've announced a new relationship in the post retirement market down in Australia. Making world class our standard, I think 2017 has also started well, very dangerous to extrapolate from a single month. But so far, reflecting markets, reflecting the pickup in performance, we have seen positive net flows across our business. I can assure you that rather than focusing on the long term, that my focus and that of my team will remain on delivering for customers, clients and shareholders. Thank you. And with that, Luke, Colin, myself, the executive team, and particularly Paul will be more than happy to try and answer your questions. Thank you. John, I think Mike will come around in a moment. I'll go in the center, move over here and then move. John? You. Morning. I'm John Harkin from Morgan Stanley. I've got three questions, please. Firstly, on performance. Can you update us on where GAARS is tracking versus benchmark? And also the funds you highlighted on the slide that are relatively recent launches, how are they tracking relative to their respective benchmarks? That's the first question. The second question, what are the you should be adding a lot of complexity to the platform given the number of fund launches. Is there a sort of negative cost implication here that you end up with a cluttered platform and actually distribution finds it hard to focus on your best product? And then the third question, what are the potential cost implications of MiFID next year? Thank you. Thanks. Giles is actually tracking reasonably well. But with Rod in the front row, Chief Investment Officer, think it's sensible for Rod to pick up the questions on the performance. Can we have a mic, Daniel? Yes. First one was in terms of GaAs performance. It is actually tracking well. In effect, we've been raising our risk levels post Trump and I think we're seeing the return of more fundamentally driven markets, which actually plays to our focus on change philosophy, which is a fundamentally driven philosophy. So that is definitely starting to come through. I would say performance not just of GARS, but across the entire franchise. I think these markets are much kinder to, as I said, active fundamentally driven approaches. I think going back on GARS, we ran quite low levels of risk actually going into Trump as you might imagine at that stage. And I think only now are we starting to see those risk levels getting back to an area where we will start to regain our performance momentum. You asked, I think, very pertinent question about performance as it impacted some of our new active solutions. And there I'm actually pleased to say performance is actually very is holding up very well from 2016 and into this year. That would be around a lot of our absolute return bond funds, which are selling well, our total return credit. Those sorts of activities which have played to, if you like, volatility controlled new active solutions are very much on target and are performing. And that's precisely what the relationship with Challenger is about. An interesting question about the complexity of the platform. One of the great things that we've done over time is built an effective and scalable platform. So these funds do not bring massive additional cost in terms of the delivery of the administration behind them or the manufacture of a new wrapper, whether it's institutional or wholesale, we're already manufacturing in most of the key wrappers around the world. So marginal costs are relatively light and fully worked into clearly our business plans for those new product launches. Costs of MiFID, I think in terms of man hours quite expensive given all the things that we need to do. We're on track. There's a little bit of MiFID that has to be completed. I don't think MiFID is going to have a meaningful impact on the cost profile at Standard Life investments. It's something we can easily cope with. Sorry, Ravi. Oliver? Thank you. It's Ravi Tanner here from Goldman Sachs. I had three questions, please. The first one was on your reference to the EBITDA margin from SLI, which I think you correct me if I've misheard, but I think you'd referenced low to mid-40s. And I wanted to understand a bit more about how you plan to get there or what the moving parts are. Clearly, the group cost income target is to come down below 60%. And so I just wonder, have we exhausted the cost reductions within SLI? Or is this more a statement around declining revenues margins going forward? The second one was just around Elevate. And if you could perhaps talk a little bit about how the adviser market has responded since that acquisition and generally what experience you've had there? And the third one was just a clarification really on the annuity provision that's been taken. If you could give any sense around pending sensitivities to that £175,000,000 and what's assumed in that calculation? Thank you. Okay. So I do the EBITDA. Paul, if you do elevate and then Luke, annuity question. The guidance on the EBITDA margin at Standard Life Investments is relatively straightforward. We don't think it's structurally going to get any higher, because we don't think the revenue yield will structurally get a lot higher. There'll be some years when actually it could bounce a little bit above, because markets are favorable and beneficial. There may be other years when markets are more difficult or we need to accelerate investment in our platform. But by and large, I think what we're trying to signal is will oscillate somewhere around current levels. So some years, it will be lower, some years, it may be a bit higher. So I think that's where we are. Paul, Elevate? Elevate has gone exceptionally well actually. I think one of the things the AXA advisors themselves have been impressed with as well as the IFAs is we've got a greater investment choice. So they get a far more range of investment options and at far better pricing than AXA managed to negotiate. They have greater functionality options now with both Wrap and the Elevate platforms, they've got more choice. They have greater support. And we expected probably to go about £1,000,000,000 less than we got. So got £1,000,000,000 more come across. We thought some would flow off with the purchase. And we had expected probably negative outflows to start with because some these IFAs traditionally haven't dealt with standard life. We did think there might be some issue about the ownership. But in fact, we've had very strong inflows. So I think the whole financial stability and the whole support around what we provide has been much better than we had anticipated. And then on mild sensitivity, it's probably the easiest thing for me to do is to refer you to the annual report accounts, Page 175. We list out there all of the key assumptions and a table with the sensitivity of those assumptions in there. So rather than me reading it out, Page 175. Oliver? Oliver Steel, Deutsche Bank. One of your sort of key tenets is rebuilding trust in financial services, but the FCA seems to be doing quite a lot to actually sort of kick out the margins being taken by fund managers at the moment. I just wonder if you're seeing any impact from that at all or how you're thinking about it? And particularly, you're making quite a strong case for active fund management, whereas actually they're making a strong case for passive, it seems. Secondly, what percentage of the GARs outflows are you actually winning back in some of the new funds? And then thirdly, perhaps Luke, could you just remind us of the transitionals? Think that's a £1,500,000,000 of transitionals. Is that all relating to the annuity book or is there something else in there? Okay. I'll do the trust question. Colin, if you can do the GARs and then Luke obviously the transitionals. We're not you can see from that launch of new products, we're not actually seeing any impact on revenue yield. So it is absolutely clear to us that in the market, clients and customers will pay for the combination of performance and innovation. There was a survey a few years ago that looked at I think it was about 400 fund buyers and they made exactly that point. Price is a bit further down on the list. I think where the FCA is having a go and quite rightly in my view is where there's lack of transparency, there are old fashioned closet index or benchmark plus and they're big high commodity funds and they're still charging active funds and they don't have an active componentry then that's going to come under pressure. That's just not simply the business we've been in nor is it the set of funds that we're launching. So we're not seeing any pressure. Colin, on Yes. I think it's in its early stages now that we're increasing the multi asset platform to include more different products. And we are benefiting from some switching from GARs, as you sort of alluded to. I think two examples that spring to my mind in the last six months. One of the interesting things we've done is we've taken GFS to The U. S. Marketplace in the Cayman structure. And one of our bigger clients in The U. S. Had a large exposure to GAARS has actually seeded that Cayman fund through the switching from one to the other. So they're looking to rebalance their portfolio or re blend their portfolio now that they have an exposure to LIBOR plus five and now LIBOR plus seven in the shape of GFS. So that's happening. Another good example, I think, that's just beginning. In the last six months, we've launched the Integrated Liability Plus solution in The UK market, which is our response to define benefit plans that want to hedge or derisk. And I think a number of the clients in The UK institutional market in DB plans that have had GARS exposure for the last seven, ten years are looking now to switch out of that into ILS. So another example of where that switching is taking place. The first example is about re blending in multi asset. The second is about switching into something that's more appropriate for de risk scheme. In terms of the actual pounds number, I'll come back to you on that. Luke? Then in terms of transitionals, yes, it does relate predominantly to annuities. It was recalculated as at the year end off the back of some model changes that we got approved during the second half of the year. And we've also taken the first annual deduction, as you go as it winds down over sixteen years, we've effectively taken off onesixteen, which technically we could have waited to the January 1. So if you're trying to compare us with others, you need to look at what date did they recalculate their transitionals and have they not taken that deduction. Hi, good morning. Just three questions. First of all, can you give us some clarity on UK cost? It went up around £12,000,000 which you flagged as around 23%. I mean, is that sort of a cost level increase in UK pension business that we should expect? Because I remember in past, you are kind of saying that you are trying to maintain it on a flat on absolute cost basis. So any thoughts on that? Second thing is flows into workplace pension and retail was relatively lighter compared to last year. What's going on there because it should be a bit higher given the growth in the asset side? And thirdly, any color on cross selling from your pensions flows into MyFolio into SLI? Thank you. Luke, do you want to do UK cost and then Paul can pick up So I think the story of The U. K. Cost is that we have been building out the 1825 proposition. And we've said that as we build that out, it's initially loss making, so that adds to the cost. And we've also taken on Elevate. And within the cost base for Elevate, we've both got a couple months of operating costs plus some of the costs in the run up to that acquisition closing. If you look behind at the underlying business, for example, the running costs of our back book over the course of the year have gone down 5%. Some of the indirect costs of running our technology across the pensions and savings platform generally that Keith alluded to, multiyear program. We took out, I think it was 90 heads in 2016 out of our technology team off the back of some of those initiatives coming through. So in the short term, depending upon timing of programs and where things like Elevate cost come through, you do see some bumps in the road or some noise. But we're confident the underlying trend is downwards. Paul? I think I got the question. Was that less flow through on Workplace, you were looking at whether Okay. So on the workplace side, we've seen still the regular premiums through. So our regular premiums are coming through quite strongly still. We saw less single premium lumps of business come across. We're starting to see a number of inquiries this year, but last year, we didn't see as many lumps come through as the previous year. I've said the regular premium, our regular premium business was up in Workplace. On the Retail side, again, it was impacted a bit by Retail and Workplace on Pensions Freedom. So we see a number of people taking tax free cash. So in some areas here, where people are exercising their Pensions Freedom monies, they are taking some of their tax out. If you take on things like net flows, etcetera, I think the last statistics I saw was sort like 50% up on any other company. If you combine all the net asset flows onto wrap, we would look pretty strongly when I think you'll see the results. The other question I think was selling into SLI. Cross selling into SLI funds. So to give you an example, in Wrap, something like 20% of our funds on Wrap would go into MyFolio. I was looking at some figures the other day, I think it's something like of the we've got over 200,000 customers on our Wrap platform, where we've got sort of 142,000 of those will be in my folio type proposition. The cross opportunities for us with Elevate is a good example. So Elevate typically have had around 2% of investments with Standard Life investments. Already, the account managers that come across with them are now seeing the opportunities that Standard Life Investments offers. So I think it's quite a big opportunity for us to offer the clients of Elevate far greater fund capability of our Standard Life Investments. So it's a good opportunity there. Andy? Andy Hughes from Macquarie. Three questions, if I could. The first one, just some clarification on kind of capital. So the £100,000,000 recovery, if you get it, presumably that net of tax would just be added to the capital Solvency II position. It's not you've not included that in the capital, so that would be a one off benefit when you get the insurance recovery. And then if I understand correctly on Page 53, there's no capital in India. So if you were to progress the MaxLife merger and ultimately sell your shares, the 90 or so you get back would be all capital. There'll be no because there's nothing no credit in the group capital now from India Life. And I guess the third question is really about how we should think about GARS. So obviously, GARS outflows picked up in Q4. We can all see that. And you're distinguishing between the wholesale parts, is the retail part and the institutional part. I'm just curious, absence any recovery in GAR's performance, which may happen as you've highlighted, how we should think about the GAR's flows going forward? Should we think of the institutional as a relatively sticky part of GAR's? And should we think about the kind of wholesale as a less sticky part, which is where the so effectively the pattern of outflows should slow down over time as the kind of wholesale bit runs off faster if things don't change? Thank you. So Luke takes the first two and then what sounds like a piece of very complex guidance, Colin. So on the insurance point, you're right, we haven't taken any credit for it. If we do recover, that will come to us as credit through non operating, that will translate into cash and that will flow into capital. On India, India is on our books at cost. I think it's a little preemptive to talk about selling our shareholding in a joint in a combined entity where we're still working on getting the regulatory approvals. But technically, you're right in terms of how that would flow through, but perhaps a little premature. Colin? You make a couple of points, interesting The first thing is in terms of institutional outflows towards the end of last I should note that we categorize the John Hancock relationship as an institutional relationship. That's the way we manage it. That's the way we handle it. And that's the nature of that relationship. But clearly, of the flows have the characteristics of Retail. And so I think in that sense, we're slightly understating the strength of the institutional picture on GARS. I think to your second point, I think the institutional franchise is very strong. Generally, we've got very strong consultant support, not only across the board, we've got 22 products that are categorized as buy. And within the multi asset suite, we've got four buyers and six holes from investment consultants. So I think there's a lot about that institutional franchise that is very stable and is very strong. And as we see recovery, I think we're already seeing it in terms of the nature of the client relationship discussions we're having as we're starting to see some stability come back into the performance and some improvement in the performance, I think that franchise ought to move forward quite well. I don't think we're at all planning or see the world in the same way as you're alluding to in terms of wholesale outflows. I think last year, the vast majority of the outflow was to do with the wholesale retreat. We see that stabilizing and combining that with a stabilization of investment performance in gas, I think we could see the wholesale exposure both in The U. K. And elsewhere around the world start to recover. Whether it's going to go back to the heydays of where we were eighteen months, two years ago, I don't know. But we're starting I think we're planning on seeing some sort of stability and recovery in that market as well. So clearly, much more sticky and institutional, clearly well endorsed by consultants and a recovering picture in wholesale, I think. Andy. It's Andy Sinclair from BofA Merrill Lynch. Three questions, if that's okay. So firstly, it was on India, which has become an increasingly important part of valuation, but relatively small portion of the update today. Just wanted to give us any update on the merger process, how things are going along? And finally, if you could say how much of a lockup there would be after the merger completes? Second point was on development expenses. You mentioned that these have been reducing year on year. Just wonder if you've got any guidance for that going down further in 2017. I know you mentioned some development IT costs that might be coming through. And third and finally, I realize it's a small part of the business, but on the spread risk book, you mentioned an adverse mortality experience of negative £8,000,000 I was a little bit surprised. I thought that most annuity writers were seeing positive mortality experience at the moment. Just wondered if could give us any update on what you've seen that might be different there? So if I do India, I spoke to colleagues in India two days ago. We are waiting for the approvals to come through for the structure, which would allow the merger of HDFC Life and MaxLife to come through. We've always said that getting regulatory approval in India is a long, slow, sometimes tortuous process and it's living up to expectations. My colleagues in India tell me there's nothing to worry about. It's on track. Luke? Expenses in 2017, we have a lot of moving parts around investments, which is why we have not and are not giving specific guidance for any one year and why we talk about driving cost income ratio below 60% in the medium term, recognizing that it isn't going to be kind of a straight line reduction and we're going to we would stick with that guidance. On the mortality point, there's a difference between the experience we've seen in the year, which was £8,000,000 negative versus assumption changes looking forward, which was a large part of the £42,000,000 positive. So in terms of the overall longevity expectations, we are I think in line with the market and seeing positive numbers coming through. The in year experience is largely a function of particular policies during the year. And it's amazing how a few people with high annuities or high life cover can actually shift that number within a year. Just one final point going back on India. Are you able to say what sort of lockup there would be after the merger complete? Sorry, there's a lockup on the 9% that we acquired to take us to 35%. And I think LoopNet lockups Yes. The proposed merger structure sort of hasn't been envisaged in any of the regulations. So it's actually not quite clear around the merger what lockup that will create. So once the approval comes through, assuming the approval comes through as we expect, there is then a point for us to clarify how the rules get interpreted around that lockup period. Gordon? Thanks. It's Gordon Aitken from RBC. Three questions, please. First, just to follow-up on the mortality point. You're now using CMI-fourteen. You were using CMI-thirteen. You're already coming from a more prudent place, The UK livestock, so last year we're using CMI 14. Now when you move to CMI 15, that's got a four month drop in life expectancy. Move to CMI 16 when it's published, that's going be another three month drop. So should we expect another positive in twelve months' time and then another positive in two years after that? Second question for Paul. Budget's less than two weeks away. What do you expect the chancellor to say? And finally, for Keith, you mentioned active fund management, you feel, will now become more important. I just wonder how to square that with the interim asset management study. The FCA seems to have a problem with all sorts of areas in fund management and what effect do you think that survey and the FCA will have? So on the mortality, I would perhaps refer you to Jonathan after the meeting for the detail. But we don't just use and I know some of our peers just go straight to the tables, we don't. We have our own cause of death model. Mortality improvements that come through in those tables are just one of the inputs to that model. And we believe that our modeling approach is prudent. So if you get a sudden jump from one table to the next, it's unlikely that you'll see all that come through in our numbers straightaway because we're being prudent. But I wouldn't want to say any more than that without it becoming forward guidance. On the budget, we're not expecting a huge amount. We've been signaled that they're going to give us an update on pharma. So I think on the whole area of advice and guidance, we're expecting to have some clarity as to the sales process of how we might be able to go forward with providing more information on a simplified guidance approach versus an advice approach. Other than that, I don't think we're expecting too much at the moment. On the asset management review, a couple of takes on that. I think they're quite rightly asking people to make sure that where you have active management that and you're charging a premium price for a premium product, you get that in place advisedly, get that the wrong way around, you've got problems. So all I can say is the contact we have continue with clients and customers is as long as you're innovating, as long as you're doing things to meet their liability and their changing needs, then you can price that appropriately. And of course, you need the innovation and the performance in the right place. So if there's an increased spotlight on that, I actually have no problem at all with that issue. The other thing the management review is focusing on is the governance of some of the mutual of really some of the mutual funds and pointing out that they need also to be focused on customer benefit. Now for those that are familiar with what went on in The United States, there was a large leap from active to passive, because the DOL legislation said that you had to demonstrate a fiduciary duty of care. And actually quite a lot of IFAs in The United States did that by basically moving the same way as everybody else and that generated an increase in passive. One of the things that Trump is talking about rolling back is precisely that DOL legislation. So it will be quite interesting to see whether he does that and actually whether that starts to have an impact in The UK. The one thing I can say is whether it's our CCAV funds, whether it's our OIC funds, we already have mutual fund boards in place that take really seriously their fiduciary duty of care to the customers in our mutual funds range. So, yes, it raises issues, but it's life and you need to get on with it. I actually think that the more volatility, the more clients will actually start to want. As Rob says, absolute return volatility dampening solutions. And our experience is you can see from the £19,000,000,000 we've launched that actually clients are quite attracted by those solutions. If I can just follow-up with a few words about Paul. It's not often in our sector that we have the benefit of someone on the podium with your sort of years of experience. And I'm not just talking about reading about insurance or managing people who do it, but you've worked right through the heart of it. It's And been a huge benefit to us. I've been lucky enough to work with you, and I particularly remember the credit crunch period where financial services companies were getting a bashing. And the work that you did with the IFAs, the work you did with the customers of Standard Life, but also probably more importantly, the people enabled Standard Life to come through that period even stronger. So I think, on behalf of all the analysts here, just wish you all the best in your retirement. You, Gordon. Gentlemen. Colm Kelly from UBS. Thank you for taking my question. Just on GARS, and you talked about the strength of pension consultant ratings, which obviously will be a key determinant to institutional flow resilience for the fund. Can you just in the context of one large consultant changing their rating in the second half of last year. Can you give us some color on how the broader ratings of pension consultants have moved through the year? And maybe just some color on dialogue that you're having with them vis a vis what type of concerns they have or what areas they're confident in? Thank you. Colin? Certainly. Just looking for my list of ratings. I mentioned that we have 22 across the house. We have four multi asset ratings and we have six hold ratings. We only had one downgrade to sell last year and that was from an important but not leading, if I can put it that way, not large investment consultants in The UK. Clearly, that was disappointing. I think the nature of the conversations that we're having with investment consultants is ongoing. They focus on the things I think that are important, which are about people and processes and methodology and risk construction in the portfolio. I think as ever, if they have endorsed a product and got clients in that product over a number of years, then they want to see a continuation of those processes and people and product. And I think we've been able to demonstrate that and that's why we've continued to enjoy their support. I think as Keith has sort of alluded to earlier, it's a little early to tell over the last three or four months that performance has stabilized. But I think that sticking to our knitting, sticking to our processes is definitely to some degree being vindicated. And I don't detect in any of the consultant conversations that we've had that there's any imminent change to that sort of picture. Barry? Morning. It's Barry Collins, Premier Gordon. Just one question really. I'm thinking about your cost income ratio and your PI potential PI claim. You had one a few years ago, as I recall, a very large one as well. Do you think the renewal going forward is going have a material impact given the likely cost? Sorry, I missed the actual question at the end of The professional indemnity, your renewal going forward having had to particularly large claims. Will it have any impact on your your cost income your that impact on the cost income ratio? That will be a discussion we and our brokers will be having with the underwriters. Is there any coinsurance or any large excess being introduced? No. There is a £25,000,000 excess on the policy. Okay, thank you. Ben Bathurst from SocGen. I was just wondering, could you give us your view on what the demonetization impact might be on your JVs in India, the Life and Asset Management businesses there? And secondly, in The UK, Keith, you made quite a positive comment about Workplace. I think you said you thought the market was starting to play more to your strengths. I wondered revenues have been stabilizing there. Do you think that we can think positively about revenue margins as well going forward? Or maybe just give some color on outlook on revenue margins for Workplace? Thanks. If Paul takes that demonetization in India for those that are not aware was this announcement by Modi that suddenly removed some rupee notes from circulation. For those of us that travel to India, it was quite a difficult period. You had a load of wadge of money that you could no longer use. Actually, I think one of the people the charities benefited quite a lot from that. In terms of the impact on the insurance business, in terms of flow, I don't think it's having a major impact. Where it will start to have an impact is that one of the real issues in India has been the constant battle against fraud. And one of the things demonetization is doing is creating a competitive advantage with those that are strong adopters of digital technology and HDFC Life is in the front of that. So when you go and you look at the way in which they sell life insurance now, they will take a tablet. And if you have a pen number, which is a national insurance number, you have a fingerprint and it has a camera, they will get security from that. You can get an electronic signature with ID verification on an iPad. And actually it does away with all the issues that people have had to cope with over the years. And actually, if you think about that in terms of cost benefit and cost income ratios, actually it helps have a major improvement. So as far as I can see, and I'm quite impressed with the digital suite of technology at HDFC Life, they should be a major beneficiary. And I think you will see in the life assurance market there more flow probably going to the bigger players. The workplace one is interesting, I've been sitting here for quite a few years talking about the potential opportunities here. I mean, there's £950,000,000,000 I think in DB, about 43% of that is unbundled. So that means the admin is done separately to the investment. And Keith mentioned there are some inquiries in the market today. I think you're now starting to see now comes through auto enrollment, a focus on costs. I think the cost of running unbundled is high relative to what you can get in the market today. Are you paying an administrative and you're paying an investment manager? So I think you will start to see £300,000,000,000 in DC. The predictions are there'll be £900,000,000,000 in DC in the next ten years. So I think you're to see some big lumps and chunks moving. I think as far as margin is concerned, I don't think the pricing is going to change hugely, but I think the cost to serve is going to reduce. And I'll give you an example here. We've taken, I think, thousand to 7,000 schemes over the last few years of Autoromont. They're all self served. We have about 28 people looking after that. Over the next two years, the work we're doing on simplification of our systems, we'll be putting around 14,000 employees through that same system and that will be looked after by 10 people. So the movement in what we can do in how we service employers is moving well. And the demand, I think, for large employers to reduce their cost base by simplifying their pension solutions as to why it's run, I think is something that the market's been talking about for a number of years. And we're just starting to see a few inquiries at the moment, the company is starting to look at that. Lady up at the back. Louisa Santos from Goldman Sachs Asset Management. So a couple of questions. The first one is, I was wondering if you could give us some more guidance on the development of the regulatory view of Dysolvency II ratio. So I think you said that a large part of that was due to approval and changes by the regulator. And also, are the sensitivities similar to those shown for the shareholder view? And then the second question is just on the development in the AUA. So a large part of that was due to market movements. And I think you said that a third of it was due to FX. Can you give us some clarity on the other two thirds of it? Was that mostly from UK rates decreasing? Okay. So on the first point on the regulatory view of the solvency ratio. From our perspective, I've said it before, will say it again. We have a strong solvency ratio, but it is not something we focus on. It's distorted by a number of anomalies, such as the stronger our pension scheme gets and the more asset risk there is in our pension scheme surplus, the more the ratio gets diluted. So there are a few things within it, which are anomalous and end up providing a distortion to any comparison whatsoever strength between us and our peers. It has improved substantially because of the recognition of the capital that was previously trapped down within Stand Life Assurance Limited that we didn't recognize at group. So whilst the number has bounced significantly, I would steer people away from using it as any kind of measure and certainly looking at how that measure moves over time. If you want to think about any kind of solvency strength, look at the investor view. And our strong preference is that you look at us like you would any other fee based business, look at our ability to generate cash because that's what funds investment and dividends and so on. And on the AUAs? A question was about markets and if I understood correctly the impacts of currency on Yes. Currency was about one third. Off the top of my head, I can't I haven't memorized the breakdown of the other movements. But that's something which we can give you a rough feel for afterwards. I think it's actually the details pretty much in the back of the press notice in the annual report and accounts. Andy? Hi, guys. Andy Hughes, Macquarie. Sort of I guess the question I don't the bit I don't really understand about the kind of comments about the 45% cost income ratio, so EBIT margin guidance in SLI moderating. Because if I think about SLI's assets during the year shown on Page 21 sorry, the fee revenue, obviously, grew with markets during 2016. And obviously, one of the components in there is HDFC asset management, which I'm expecting to grow very rapidly next year as well. Given you've launched these 16 funds last year, is and you're saying that GAR's outflows are going to moderate from the wholesale side. What am I missing? Why are the costs presumably, it's the costs that are going to increase next year in SLI? Is not MiFID II, you've ruled that out. So what's the kind of missing element here? I think you're missing the point. That's why I asked the question. It is extreme. So I made the point that structurally, it wasn't going to go much higher. Structurally, as much as I'd love to and I think I've said this before, it is very, very difficult on a six monthly basis to control all of the elements that allow you tightly to target an EBITDA margin. What you can get yourself in is the appropriate level and territory. So we if you look at a 45% EBITDA margin, is it sustainable around those levels? It probably is. But actually, for our mix of business, institutional, wholesale, standard life investments, that's pretty close to up well, it is in the upper quartile, if not the upper decile. So the actual movements are going to depend on the blend of the mix of business and revenue yield that comes in. Will there be a significant disturbance away from that? We think not. We think it's sustainable and it will fluctuate. Hi, it's Anastasia here from Jefferies. My first question was just on MyFolio. I think you launched a CCAV a few months ago. I just want to understand if there's any significant impact you could see from that? Or for example, if you could tell us how flows changed when you launched your gas CCAV after the Oi? The second question was just on platform consolidation. Do you think there's more platform consolidation that could happen in The UK? And if so, will you participate? Or do you need to focus on the Elevate acquisition? Thanks. Colin on Myfolio and then Paul on platform consolidation. Yes. You're quite right. We launched it a couple of months ago. We're in the early stages of discussions in one particular country, which is Germany, where we see some disruption to the adviser market and we think we can help that disruption with a product like MyFoldio, which has been very successful. Although I should emphasize, of course, that it's MyFoldio CCAV and therefore it's available in multiple Canada, Asia, all sorts of different places. So I think that's a very good example of taking an existing capability, an existing sort of innovation that was some years ago now, five or six years ago, and taking it into a pooled vehicle in an efficient way in The U. K. Market for the adviser market, and then thinking about taking that same intellectual capital, if you like, and rewrapping it into other products that you can then take to lots of other markets. And I think that's a characteristic of our new product development activity over the last couple of years. Last year, for example, in addition to MyFolio CCAV, we had the enhanced diversified growth fund, which we put into CCAV. We had emerging market debt unconstrained into a CCAV. We took GFS, as I was mentioning earlier, and put it into a Cayman fund. We took GFS and put it into the Hancock platform. So these are multiple examples. And back to the earlier point about efficiency in the platform, these are multiple examples of where you can take a capability and rewrap it into different markets. Specifically, I think my folio CCAV in Germany could be quite interesting if we can extrapolate what we've been doing in The UK with it. Paul, platform consolidation. Platform market, yes, there are too many platforms out there, I suspect, to survive. And we look after around 3,000 firms, IFA firms today. I think there's about a crossover of about 300 between the Elevate platform and ourselves that we both served. So what you will see today is number of IFAs that have multiple platforms, maybe two or three, maybe have some of the old fashioned supermarkets. So they've typically had some clients on certain platforms and some on others. I think the old fashioned supermarkets will cease to exist. I think you'll need a full wrap functionality. So I think you will see IFAs just reduce the number of platforms they're using to use a fully functional one platform. The other markets worth keeping on is the DFM market. I think there's probably around £500,000,000,000 £600,000,000,000 out there in DFMs. I think we have 71 DFMs now use our wrap platform to market their portfolios. So I think, again, the wrap platforms do offer a lot to the market. And I think if you've got a strong business with a platform, you're in a good place. If you've got a weak platform and a weak business, you're in a poor place. Probably room for a couple of questions. Hi, David here from Santander. I'd like to know a little bit more about your strategy in The U. S. Given your earlier comments as well on the relaxation potentially of the regulation. How do you see that benefiting SLI? We really have I think a dual strategy in The United States, where we have worked with platforms and wholesalers like Hancock. And I think Colin we now have four funds on the Hancock platform and we're looking at putting a couple of more on. So that helps us extend. That's platform, not only to put your funds on, but as you work with these people, you get a really good understanding of changing client needs. We have extended onto other platforms as So we have some emerging markets funds on the nationwide platform. And as well as working with wholesalers, we are also working quite hard with consultants and going direct to institutions as well, because one of the benefits of the retail and wholesale platforms is it gets your brand name out there. And that's really what the Ryder Cup sponsorship was all about. If you'd have been at Hazeltyne, you'd have seen standard life investments plastered all over the course made me quite proud. Actually, what made me even happier was the fact the name recognition was getting out amongst American institutions. And we ran seminars and investment seminars around that time. So one of the things that's perhaps less visible is some of the flow that comes from the big institutions around The United States. So we run money for several large, what here would be described public sector pension funds. And they typically are in a combination of stuff including multi asset strategies and that stuff is actually quite stable. So we'll continue to work, grow, build up the Boston office. Boston office has raised about £13,000,000,000 of flow over the last four or five years. It now employs 100 people. We will continue to build it out. But let me stress, we are firmly focused on taking the world to The United States and very firmly focused on a medium term outlook rather than chasing flow in what's one of the more competitive markets in the world. Just two things to add really. Keith's given you a flavor of the channel diversification, if you like, moving away from wholesale into institutional. We've won clients in the Taft Hartley Insurance sector and in the Endowment and Foundation. So beginnings of quite a nice spread in terms of channels of distribution. But the other thing I think is that don't lose sight of the fact we now I think have nine products investment products live in The U. S. With U. S. Investors. And clearly, things have moved on quite a bit from three or four years ago when the entry point was with GARS and was with Hancock. It's now a much more diversified client footprint and a much more diversified product exposure into The U. S. No, okay. Well, I think it just remains for me to do two things. One, thank you for coming and listening. And in particular, thank you for your questions. And also to add my plaudits to that of Gordon's for Paul. I've been at Standard Life eighteen years. It's been a pleasure to work with Paul. And actually, I think we're working out, we've been on the platform together here since 02/2008. So it's been a real pleasure. I should add, Paul is retiring. So he's stepping down off the board. He will be around at Standard Life for a few more months to help both me and Barry. So we're not totally losing his expertise in the short run, but it is the last time he'll be appearing on this platform. So on behalf of your colleagues, Paul, thank you very much for all your.