Standard Life Equity Income boosted by asset manager stakes – Standard Life Equity Income has published results for the year to 30 September 2017. The Net Asset Value total return for the year was 14.7%, which compares with 11.9% from the All-Share Index. The discount narrowed slightly from 4.4% to 4.0%. This resulted in a share price total return to shareholders of 15.9%. Earnings per share for the year were 19.23p which equates to a 10% increase from last year’s earnings of 17.48p. The total dividend for the year is 17.1p, an increase for the year of 11.0%.
The manager says that performance benefited from holdings in asset management businesses River & Mercantile and Premier Asset Management whose shares responded to evidence of very strong fund flows and revenue growth. River & Mercantile’s share price increased by 48% during the year and Premier Asset Management’s share price increased by 36% since it was first purchased in early October 2016. Holdings in the Travel & Leisure sector benefited performance. Cruise ship operator Carnival was a significant contributor to performance as the market responded to evidence of strengthening pricing and on-board spending, partly resulting from management initiatives. Online gambling operator GVC also benefited performance as management’s focus on player retention and yield improvement helped the business to deliver double digit revenue growth. GVC’s share price has increased by 27% since the company first purchased the holding in January 2017. Performance also benefited from the holdings in the industrials sector, notably packaging business DS Smith, whose share price was up 28% in the year, having benefited from the announcement of a US acquisition, and heat treatment business Bodycote, which benefited from improving demand in its major end markets of automotive and aerospace & defence, increasing its share price by 56% over the year. The Pharmaceuticals sector performed poorly during the period as the sector was blighted with high-profile disappointments including increased generic competition and poor drug trial results. Avoiding GlaxoSmithKline and Shire proved particularly helpful to performance relative to the wider UK market.
Top 5 Stock Level Contributions
Rio Tinto 1.33
River & Mercantile 1.24
Aviva 0.94
Prudential 0.90
Carnival 0.84
Bottom 5 Stock Level Contributions
BT Group* -0.81
Imperial Brands -0.55
Babcock International -0.44
Sage -0.39
Connect -0.29
SLET : Standard Life Equity Income boosted by asset manager stakes