The results of a three-year restructuring programme really shone through in the latest half-year figures from Standard Life, with operating profits up 15 per cent to £302m and substantially ahead of analysts' expectations. A strong performance in the UK was the main driver and, with the business well prepared for the retail distribution review (RDR), the high-yielding shares look attractive.
Standard Life's UK profits – which account for approaching half of the group's total – climbed 62 per cent to £141m, the result of an increase in fee-based business and a sharp drop in the cost of acquiring new customers. The so-called acquisition expenses fell £23m to £84m as a result of the improved IT systems it's invested in over the last few years, and management believes there's scope to drive further efficiencies.
In contrast, low bond yields saw profits in the group's Canadian business drop 30 per cent to £72m, but analysts believe that a new chief executive appointed there last year could deliver a turnaround by refocusing on more profitable fee-based savings products. Across the business, fee-based revenues now stand at £620m, or 70 per cent of the total, but just 40 per cent of Canadian revenues.
Broker Panmure Gordon expects underlying EPS of 18p this year (from 12.9p in 2011).
STANDARD LIFE (SL.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 274p | MARKET VALUE: | £6.45bn | |
| TOUCH: | 273-274p | 12-MONTH HIGH: | 274p | LOW: 182p |
| DIVIDEND YIELD: | 5.2% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 169p | EMBEDDED VALUE: | 331p | |
| Half-yearto 30 Jun | Gross premiums (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 1.68 | 363 | 8.7 | 4.6 |
| 2012 | 2.14 | 317 | 10.8 | 4.9 |
| % change | +27 | -13 | +24 | +7 |
Ex-div: 22 Aug Payment: 14 Nov | ||||
