Standard Life disappoints below the line despite dividend hike

Standard Life delivered a better dividend than was expected but this was not enough to impress investors as several one-off charges took the sheen off half-year results from the life company-turned-asset manager.

Profit after tax fell 64% to £69m as the company took hits of £46m from Hong Kong deferred acquisition cost amortisation, £38m from a Singapore closure, £20m from the UK pension scheme restructure and £17m from Ignis.

On the upside, the increasingly asset-management focused group lifted fund under management (FUM) by 2% to £302.1bn since the year end, which missed some analyst estimates despite reasonable net inflows of £5.2bn and some uplift from market performance. The acquisition of Ignis in the second half of last year lifting FUM 35% year-on-year.

Group fee-based revenue rose 17% to £761m and now provides 95% of group income, after the sale of the Canadian life business.

This all helped underlying IFRS profits rise 9% to £299m, while a 17% increase in underlying cash generation to £223m helped boost the interim dividend 7.5% to 6.02p.

Yet this was still behind some analysts forecasts. Nomura said it missed its estimate by 3%, with the miss explained by the timing of asset liability actions in the UK, with FUM 2% below its number which was disappointing, but from a low-margin, single mandate outflow from Ignis.

However, the full year is still expected to see the contribution from annuity new business falling by £10m-£15m and the contribution from asset liability management to reduce by between £30m-£40m compared to full year 2014.

But as outgoing chief executive David Nish pointed out, the company is a fully focused asset management company now, with £250bn of assets across the globe, with its expanding distribution capabilities and strategic relationships driving 70% of net inflows from outside the UK.

"Our UK fee based propositions continue to build momentum with regular contributions into our workplace pensions up 15%," he said.

"The strength of these propositions, investment solutions and our market positioning means we have been able to help our customers with the new pensions regulations and continue to support them as saving for their futures becomes increasingly front of mind."

Nish, who surprised the City with his June resignation, will be replaced by promoted investments chief Keith Skeoch this month.

'Steady' as she goes, say analysts

Analyst Eamonn Flanagan at Shore Capital said that while the dividend was "a sweet leaving present from the outgoing CEO", the below-the-line charges were "large and disappointing".

However, in a year of material change and transition within the group, the underlying results were in line and the now-core asset management and asset gathering businesses performed well in the period.

Flanagan said valuing the company as an asset manager its share price looked "up with events".

Nomura said the results were "steady" despite the small misses, with performance in flow terms mostly being strong.

"Profits in the UK and Europe were 5% lower than our expectations, explained by a lower-than-expected contribution from asset liability management, where the company has reiterated its confidence in meeting previously guided for earnings from this source."

Looking forward, Panmure Gordon's Barrie Cornes said: "The outlook remains upbeat with the growth of SLI overseas and the UK Auto Enrolment performing well. We wonder if there is any M&A activity on the horizon but there is nothing ion these results to suggest that this might be the case."