(Alliance News) - Standard Life Aberdeen on Tuesday reported an improvement in net outflows as it unveiled details of its new strategy.
The investment and asset management firm reported fee-based income of GBP1.43 billion for 2020, down from GBP1.63 billion in 2019 and largely reflecting 2019 outflows. However, IFRS pretax profit of GBP838 million was up sharply on 2019's GBP243 million, reflecting lower impairments of goodwill and intangibles, as well as increased profit on disposal of interests in associates.
Net outflows reduced to GBP3.1 billion from GBP17.4 billion in 2019 excluding Lloyds Banking Group tranche withdrawals, driven by a "significant improvement" in Institutional and Wholesale net flows. Assets under management & administration edged down to GBP534.6 billion from GBP544.6 billion, reflecting GBP25.9 billion LBG tranche withdrawals, partially offset by improvements in markets.
"The board remains committed to delivering a dividend that is sustainable over the medium term. Reflecting current operating profitability, industry trends, and economic and market uncertainties, the board is rebasing the dividend to a level from which it can be grown," Standard Life said, recommending a final payout of 7.3p to bring the total for the year to 14.6p, down by a third from 21.6p for 2019.
On strategy, Standard Life said it is seeking to deliver client-led growth through Investments, Adviser and Personal, and it has a "clear growth strategy" for each of these areas. Growth in Asia, UK adviser and consumer markets, Solutions and Responsible investing have all be identified as strategic priorities.
Back in February, Standard Life Aberdeen had said it would sell the 'Standard Life' brand to Phoenix Group during the course of 2021. On Tuesday, Standard Life said rebranding activity is underway to bring the business under "one unifying brand". It said further details on this brand will come later in the year.
"We have seen growing momentum in the second half of 2020 with improved investment performance and flows which represent an inflection point as we pull out of the post-merger era. We remain on track to deliver targeted synergies and have identified more that we can deliver. We have exited some non-core businesses and made an acquisition that has extended our capabilities in private markets. We have simplified and clarified leadership structures across the business and placed a refreshed focus on Asia," said Chief Executive Stephen Bird.
He added: "At this reset point for this business, we have rebased to set firm foundations on which we can build something great. I'm excited about what's to come."
Standard Life Aberdeen shares were down 1.0% early Tuesday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.2% at 6,709.04
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Hang Seng: up 0.5% at 28,671.44
Nikkei 225: closed up 1.0% at 29,027.94
DJIA: closed up 306.14 points, or 1.0%, at 31,802.44
S&P 500: closed down 20.59 points, or 0.5%, at 3,821.35
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EUR: up at USD1.1879 (USD1.1862)
GBP: up at USD1.3873 (USD1.3810)
USD: flat at JPY108.85 (JPY108.82)
Gold: up at USD1,696.20 per ounce (USD1,682.85)
Oil (Brent): down at USD67.78 a barrel (USD68.55)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
1000 CET Germany foreign trade
1100 CET EU gross domestic product
1100 CET EU employment
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UK retail sales grew in February, numbers from an industry body showed on Tuesday, as a tough start to the year for the sector was alleviated by Prime Minister Boris Johnson's roadmap to exit lockdown. The British Retail Consortium said that putting the date of March 8 on the return of schools in England meant parents in their droves began shopping for uniform and supplies. What's more, a stay-at-home Valentine's Day holiday gave a boost to online sales. Total UK retail sales rose 1.0% annually in February, according to the BRC-KPMG monitor, following a 1.3% fall in January. In February 2020, total sales rose 0.1%. Like-for-like sales were 9.5% yearly in February, topping January's 7.5% rise and the 0.4% fall a year earlier. In-store sales of non-food items were 39% lower annually in the three months to February. The 12-month average decline is 31%. Food sales were 7.9% higher over the same period. Online non-food sales surged 82% yearly in February, topping the 12-month average jump of 49%.
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BROKER RATING CHANGES
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SOCGEN CUTS PEARSON TO 'HOLD' ('BUY') - TARGET 865 (650) PENCE
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MORGAN STANLEY INITIATES COMPUTACENTER WITH 'EQUAL-WEIGHT' - TARGET 2,300 PENCE
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MORGAN STANLEY INITIATES SOFTCAT WITH 'OVERWEIGHT' - TARGET 17,50 PENCE
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COMPANIES - FTSE 100
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Royal Dutch Shell has agreed to sell upstream assets in Egypt's Western Desert for a base amount of USD646 million, with additional payments of up to USD280 million through 2024. The disposal is to a consortium composed of Cairn Energy and Cheiron Petroleum. The package of assets consists of Shell Egypt's interest in 13 onshore concessions and its share in Badr El-Din Petroleum Co. Separately, Cairn said it has agreed to sell its 20% interest in the Catcher field and 29.5% interest in the Kraken field, both in the UK, to Waldorf Production for USD460 million in cash, plus additional payments contingent on oil prices through to the end of 2025.
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Broadcaster ITV reported a fall in 2020 profit but said it has seen recent encouraging trends in the television advertising market. Total group revenue for 2020 fell 16% to GBP3.26 billion, with ITV Studios revenue down 25% to GBP1.37 billion, while total advertising revenue fell 11% to GBP1.58 billion. Pretax profit slumped to GBP325 million from GBP530 million. ITV Studios revenue was hit by disruption to the majority of its productions from March onward, the company noted. "While total revenues and profits were down our financial performance was ahead of expectations driven by a strong end to Q4 and our firm control over costs," said Chief Executive Carolyn McCall. "We are seeing more positive trends in the advertising market in March and April and the majority of our programmes are now back in production." ITV declared no dividend for 2020 after paying out 8.0p for 2019. The firm said it intends to restore payouts "as soon as circumstances permit".
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Asset manager M&G reported IFRS pretax profit for 2020 of GBP1.14 billion, up from GBP1.07 billion in 2019; however adjusted operating profit was GBP788 million, down from GBP1.15 billion. M&G had GBP367.2 billion in assets under management and administration, lifted by its acquisition of Royal London's platform business Ascentric back in September. M&G suffered net outflows of GBP6.6 billion in Savings and Asset Management during 2020. It declared a 12.23 pence ordinary dividend.
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Avast has agreed to sell its Family Safety Mobile business to mobile software developer Smith Micro Software for USD66 million. The Prague-headquartered digital security and privacy products provider said the acquisition includes its portfolio of mobile parental controls services, including location features, content filtering and screen time management. The agreement will also see Pittsburgh, Pennsylvania-based Smith Micro pay a potential additional earn-out upon performance criteria being satisfied. Both companies will enter a preferred partner arrangement, in which they plan to respond to future carrier tenders requiring family mobile safety and Internet of Things, or digital security services.
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COMPANIES - FTSE 250
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Retailer WH Smith said it has extended its bank financing arrangements with its existing banks, adding that trading has been better than expected. The company has extended the maturity of its two existing GBP200 million term loans to October 2023 and agreed a new minimum liquidity covenant for both the August 2021 and February 2022 covenant tests. These changes have allowed it to cancel its existing GBP120 million liquidity loan which was undrawn and due to expire in November 2021. The stationery and magazines seller said that despite the current lockdown, it has delivered a better-than-expected trading performance. "We adapted well to the evolving trading environment on the high street, despite reduced footfall, with revenue in our High Street business in January 2021 at 74% of 2019 levels and 84% of 2019 levels in February 2021, ahead of our expectations," said WH Smith. As a result, cash burn has improved and is now expected to be around GBP12 million to GBP17 million a month for the January to March period versus the previously guided GBP15 million to GBP20 million.
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Ultra Electronics hailed an "excellent" performance in 2020. Revenue rose 4.2% to GBP859.8 million while pretax profit grew 14% to GBP103.7 million. "We enter 2021 with a record order book giving us strong visibility, and we remain well positioned in key growth areas to support customers' evolving priorities," said Chief Executive Simon Pryce. Ultra raised its dividend by 5.0% to 56.9p for the year. Pryce said: "This excellent performance gives us further confidence in Ultra's exciting potential and our ability to deliver exceptional value for all stakeholders over the longer term."
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COMPANIES - MAIN MARKET AND AIM
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The UK Competition & Markets Authority provided details on its decision to hand Vp a GBP11.2 million penalty for infringing competition law over the supply of groundworks products to the UK construction industry. The CMA also fined MGF (Trench Construction Systems) GBP3.8 million. The regulator had first announced the decision back in December and on Tuesday published the non-confidential version of its decision.
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Tuesday's Shareholder Meetings
CareTech Holdings PLC - AGM
Ecofin Global Utilies & Infrastructure Trust PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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