Standard Life enjoying inflows and strong corporate demand in H1
- AuM up 4% to £254bn
- Operating profit up 12% to £339m
- Dividend up 7.3% to 5.6p
Strong net inflows helped Standard Life grow assets under administration (AUM) 4% to £254.1bn in the first half of the year, with revenues, profits and cash all increasing as the investment group's core UK and Europe arm continues to benefit from regulatory, market and demographic changes.
The increase in Standard Life Investments' third-party AUM was driven by net inflows of £4.2bn, with the rest of the group gaining from a 61% increase in net flows of corporate pensions in the UK and stable net inflows into retail propositions.
Group operating profit before tax climbed 12% to £339m, despite the adverse effect of foreign exchange movements impacting operating profit from Canada, while group cash generation rose 8% to £250m and allowed the board to hike the interim dividend 7.3% per share to 5.60p.
Profit growth was driven by strong performance from the corporate-facing businesses, with strong demand resulting from the UK's new national auto-enrolment pension policy driving a 12% increase in fee revenue to £758m.
There were 1,018 new corporate schemes and 180,000 joiners during the period and the company expects to add over 300,000 new corporate customers across the whole of 2014.
Chief executive David Nish is confident the business is set up to capitalise from such government changes. "We have an excellent track record of succeeding in evolving markets and we are well placed to deal with the far-reaching reforms to the savings and retirement income rules, announced earlier this year by the UK government," he said.
The acquisition of smaller UK rival Ignis has progressed well, with expected benefit to earnings in the full year and encouraging management to targeting an operating margin of 45% by 2017.
The Canadian business lifted fee-based revenue 21% to £99m, half of total income from the country. Profitability remains impacted by the weakness in the Canadian dollar, with a £25m hit to previous guidance of £180m full-year operating profit in Canada expected.
The small Asia and Emerging Markets business is remains "well positioned for future growth", with management monitoring developments in respect of foreign direct investment rules in India.
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