Negative investment returns and restructuring costs dented headline profits at Standard Life last year. But group IFRS operating profit, adjusted for short-term market fluctuations, actually rose 28 per cent in the period to £544m, while the shares trade at too harsh a discount to embedded value.
Moreover, fee-based revenue rose 8 per cent to £1.22bn, thanks to net fund inflows of £5.4bn – although the tough investment climate meant that total group assets under administration were up just 1 per cent at £198.4bn. Acquisition expenses, which are the costs incurred writing new business, were flat at £270m, while strong sales growth meant that costs expressed as a proportion of sales improved from 149 basis points to 140 basis points.
Standard Life is now two years into a three-year programme to revive the business and efforts to drive down costs have already resulted in savings of £79m, with a target of £100m expected in the first half of this year. Group finances remain in reasonably good shape, too, and the capital surplus over the minimum regulatory requirement reached a robust £3.2bn – although that is down from last year's £3.8bn.
Prior to these figures, Charles Stanley was expecting EPS of 16.3p for 2012.
| STANDARD LIFE (SL.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 238p | MARKET VALUE: | £5.6bn | |
| TOUCH: | 237-238p | 12-MONTH HIGH: | 246p | LOW: 162p |
| DIVIDEND YIELD: | 5.8% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 168p | EMBEDDED VALUE: | 317p | |
| Year to 31 Dec | Gross premiums (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 3.73 | 620 | 21.7 | 11.5 |
| 2008 | 3.56 | -406 | 6.90 | 11.8 |
| 2009 | 3.30 | 410 | 7.50 | 12.2 |
| 2010 | 3.24 | 971 | 18.4 | 13.0 |
| 2011 | 3.34 | 595 | 13.0 | 13.8 |
| % change | +3 | -39 | -29 | +6 |
Ex-div: 21 Mar Payment: 31 May | ||||
