Standard Life enjoyed a solid performance that saw IFRS operating profit rise from last year's £166m to £182m. That reflected increased fee and commission income - from £314m to £359m - thanks in part to a 5 per cent rise in assets under administration to £179bn, with net inflows rising from £3.1bn to £5.3bn. The picture was also transformed by the investment book's performance having recovered - the net return reached £2.86bn from just £5m last year.
Operating profits on a European embedded value (EEV) basis, which includes an element of projected premium income, rose 11 per cent year-on-year to £364m. The core element of operating profits rose 41 per cent to £336m, partly reflecting a sharply higher contribution of £161m from new business. The turnaround from last year was particularly pronounced in the UK, where an EEV pre-tax loss of £45m was turned into a profit of 357m, largely due to a much improved investment return.
On an IFRS basis, UBS expects a full-year pre-tax profit of £230m and EPS of 8p (2009:£204m/7.35p).
|STANDARD LIFE (SL.)|
|ORD PRICE:||209p||MARKET VALUE:||£4,723m|
|TOUCH:||208-209p||12-MONTH HIGH:||237p||LOW: 170p|
|DIVIDEND YIELD:||5.9%||PE RATIO:||11|
|NET ASSET VALUE:||161p||EMBEDDED VALUE:||301p|
|Half-year to 30 Jun||Gross premiums (£bn)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Standard Life has delivered a decent first-half performance and the yield certainly looks tasty. Still, the group remains focused on fairly mature markets, such as in the UK, where long-term growth prospects may be modest. While the shares, even though they trade well below embedded value, are also rated on a hefty 26 times expected earnings - compared with a peer group average of nearer 15 times. Fairly priced.
Last IC view:Fairly priced, 204p, 10 March 2010