Standard Life Investments has this morning published its last set of results before the completion of its merger with Aberdeen Asset Management. This will create the UK’s largest active asset manager and the second largest in Europe.
CEO Keith Skeoch, who will be joint CEO of the merged company alongside AAM's Martin Gilbert, said that Edinburgh-based Standard Life has delivered a strong performance in the first half of 2017 with fee-based revenue up 5% and operating profit up 6%.
“We continue to see the benefits of targeted investments to further our diversification agenda, the success of our newer investment solutions and the ongoing focus on operational efficiency,” said Skeoch.
CEO Keith Skeoch, courtesy of Standard Life Investments
Accelerating strategic delivery
“With the proposed merger with Aberdeen on track for completion on 14 August we are ready to accelerate the pace of strategic delivery as we open the next chapter of our transformation to a diversified world-class investment company.
“The combined leadership team of Standard Life and Aberdeen has been working well together to ensure Day 1 readiness. We are well placed to continue to meet changing client and customer needs globally, and to generate growing and sustainable returns for our shareholders.”
Selected highlights include
- Assets under administration (AUA) increased by 1% to £361.9bn. Gross inflows were resilient at £20.7bn (H1 2016: £21.8bn) but redemptions increased to £24.4bn (H1 2016: £20.9bn) resulting in net outflows of £3.7bn.
- Growth channels AUA up 3% to £244.0bn with net outflows of £0.6bn, including £5.6bn from GARS (global absolute return strategies), offset by an increase of 32% in net inflows into other products to £5.0bn (H1 2016: £3.8bn)
- Institutional and Wholesale benefiting from client and channel diversification with net inflows ex GARS of £1.2bn (H1 2016: £1.2bn)
- Workplace and Retail net inflows of £4.2bn (H1 2016: £2.8bn) included record net inflows on to the Standard Life Investments adviser platforms driving total platform AUA up 11% to £49.2bn (FY 2016: £44.2bn)
- Third-party funds above benchmark over 1 year: 85%; 3 years: 74%; 5 years: 85%
- Fee-based revenue up 5% to £836m with growth channels revenue up 7% to £616m (H1 2016: £577m)
- Cost/income ratio stable at 62% (FY 2016: 62%) and excluding financial planning business 1825 and the Elevate wealth platform down 1 percentage point to 60%
- Operating profit before tax up 6% to £362m driven by 13% increase in profit excluding spread/risk
- Underlying cash generation up 1% to £256m and strong holding company cash position of £0.8bn (FY 2016: £0.9bn; H1 2016: £0.8bn)
- Announced proposed initial public offering of Indian associate HDFC Life with offer for sale of up to 5.43ppts of Standard Life's 35% stake
- Interim dividend per share up 8.2% to 7.00p
Uncertainty rears ugly head
Uncertainty duly reared its ugly head. The commentary accompanying the official release says that optimism across financial markets has increased. But it is clear that the uncertainty that affects economies, markets and politics remains, including Brexit.
This will continue to reinforce the global trends that are shaping the savings and investment landscape. The company claims the combined business will be even better placed to take advantage of the opportunities and deal with the challenges presented.
The slowdown in gross inflows seen in the first half of the year is expected to ease as the merger integration progresses. It also expects to benefit from strong demand for our retail platforms and improving investment performance.
Standard Life says it expects the merger to accelerate to create a world-class investment company with compelling benefits including
- Highly complementary investment capabilities with improved choice and service to clients
- Being positioned to meet global demand for next generation investment solutions
- Global distribution with enhanced proximity to clients
- Scale to invest, attract talent and deliver value for clients
- Truly diversified business and compelling financial benefits
One final important point for the record is that the plc holding company will be Standard Life Aberdeen plc. The new combined asset management business will be Aberdeen Standard Life Investments. The Standard Life Investments share price fell 7.30p to 436p.