Standard Life share price falls as drop in annuity sales dent H1 profits

on Aug 4, 2015
Updated: Oct 21, 2019

Standard Life Plc’s (LON:SL) annuities business has suffered significantly under recent pension reforms introduced in the UK, which have impacted the company’s financial performance during the first six months of the year. Announcing its half-yearly results earlier today, the Edinburgh-based company revealed that it had seen a 66-percent decrease in annuity sales during the period. The company reported a pre-tax operating profit of £141 million in the UK, down from a pre-tax operating profit of £165 million in the first half of 2014. Standard Life also posted a 39 million pound reduction in its margin from “spread/risk” business such as annuities in the six months to 30 June compared with the previous year.

However, Standard Life’s growing focus on fee-based business has helped the company achieve a sic-percent increase in first-half operating profit, which came in at£290 million. Including Ignis Asset Management, which was acquired last year, Standard Life’s fee-based revenue increased 17 percent to £761 million. The FTSE 100 firm said that 95 percent of its income was now fee-based.
Helped by the acquisition of Ignis and strong demand for its investment products, Standard Life increased its assets under administration to £302.1 billion, from £223.9 billion in H1, 2014. The figure also represented a two-percent increase from December.

The company’s chief executive officer, David Nish commented: “Standard Life has performed well during the first half of 2015 driven by a focus on providing value for our customers, clients and shareholders.” He added: “We have increased the assets that we administer on behalf of our customers to £302bn helped by strong demand for our propositions.”
Nish is set to step down from the CEO role tomorrow, when he will be replaced by Keith Skeoch, the head of Standard Life’s asset management arm, Standard Life Investments (SLI). Speaking to reporters today, Skeoch said he would continue to run SLI for the foreseeable future”.
In today’s trading, Standard Life shares were down 2.7 percent at 442.10p, as of 09:34 BST. The stock has fallen 9.5 percent since the start of the year and the company’s market valuation currently stands at £8.7 billion.
The 19 analysts offering 12 month price targets for Standard Life have a median target of 470.00p, with a high estimate of 546.00p and a low estimate of 376.00p.
As of 12:53 BST, Tuesday, 04 August, Standard Life Plc share price is 442.05p.

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