7th Aug 2018 12:00
LONDON (Alliance News) - FTSE 100- listed investment company Standard Life Aberdeen PLC on Tuesday reported a drop in interim profit as its outflows increased, but it nevertheless declared an increased interim dividend and started its planned share buyback.
Shares in Standard Life Aberdeen were up 3.8% at 318.30 pence each Tuesday, the best performer in the FTSE 100.
Pretax profit for half year ended June 30 was GBP127 million, up 35% from GBP94 million in the year ago period, on a total income of GBP1.08 billion and GBP655 million, respectively. The rise in reported profit was attributed to inclusion of profit from Aberdeen Asset Management in the recent period.
Standard Life PLC purchased Aberdeen Asset Management PLC in March 2017.
However, adjusted pretax profit from continuing operations - a key profit measure for the company - totalled GBP311 million in the recent half-year, down 12% than the GBP355 million recorded a year ago.
The drop was attributed to lower fee-based revenue, which reduced by 7% to GBP966 million from GBP1.04 billion. Standard Life Aberdeen said this drop reflected continued net outflows and adverse market movements.
The adjusted profit loss was partially offset by a decrease in adjusted operating expenses to GBP712 million from GBP739 million the previous year.
The adjusted pretax profit from continuing operations of GBP311 million in the recent half-year still was an improvement over the GBP305 million recorded in the second half of 2017, due to "improved operational efficiency".
The fund manager recorded assets under management and administration from continuing operations of GBP610.1 billion as at June 30, down 2.6% from GBP626.5 billion as at December 31 and down 2.7% from the GBP627.0 million in the first half of 2017.
Standard Life Aberdeen attributed the fall in total assets to business net outflows at Aberdeen Standard Investments increasing 17% to GBP19.2 billion from GBP16.4 billion a year before. The investment company also blamed "adverse market movements".
Assets managed by Aberdeen Standard Investments decreased 3.2% to GBP557.1 billion from GBP575.7 billion the previous year. Standard Life Pensions & Savings assets under administration increased 4.3% to GBP56.3 billion from GBP54.0 billion.
Net fund outflows from continuing operations totalled GBP16.6 billion versus GBP12.4 billion outflows recorded in the comparative year-ago period.
Standard Life Aberdeen's total gross inflows decreased 3.8% to GBP38.0 billion from GBP39.5 billion. The drop was attributed to inflows slowing at Aberdeen Standard Investments and Pensions & Savings.
Aberdeen Standard Investments growth-channel gross inflows decreased to GBP22.8 billion from GBP26.5 billion the previous year. This dip was largely offset by the increased mature-channel gross inflows of GBP11.0 billion from GBP8.2 billion.
Gross inflows in Pensions & Savings continuing operations of GBP4.7 billion, slowing from GBP5.5 billion but continuing to benefit from the boost in the UK pensions market.
The Scottish investment company declared a 7.30 pence per share interim dividend, up 4.3% from 7.00p paid a year ago. It also intends to initially buyback GBP175 million worth of shares in the next few days, as part of its previously announced GBP1.75 billion capital return.
The FTSE 100-listed investor said it continues to focus on reducing its cost-to-income ratio to 60% over the medium term.
It continues to make good progress on its integration programme of Standard Life and Aberdeen and is now targeting over GBP350 million in cost savings.
With a target of 2020 for these efficiencies, Standard Life Aberdeen has implemented GBP135 million of "targeted merger synergies" benefiting the interim period's adjusted operating expenses by GBP40 million.
Standard Life Aberdeen said market conditions remain challenging, but the company remains well placed to take advantage of opportunities and to deal with challenges.
The company maintains that net outflows remain a challenge in a "tough market", it is concentrated on a "narrow range of strategies".
Chief Executive Officers Martin Gilbert and Keith Skeoch said: "Conditions for the asset management industry continue to be challenging. However, our gross inflows remain robust and are spread across a diverse range of investment capabilities, and our market-leading adviser platforms continue to grow. Our investment and distribution teams are winning new mandates and we have a good and diverse pipeline of business from around the world. We are actively taking steps to improve our investment performance in key areas and are encouraged by the impact of these initiatives.
"We are also pleased by progress on the integration programme and achievement of cost synergies. The sale of our UK and European insurance operations will complete our transformation to a capital light business and enhances our strategic partnership with Phoenix. We still have one of the strongest balance sheets in the sector, which enables us to continue to develop and broaden our areas of strength and focus on delivering long-term performance for our clients."
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