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Partnership half year profits hit by £28m IPO costs

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Partnership chief executive Steve Groves

Partnership saw its pre-tax IFRS profits drop more than 50 per cent in the six months to 30 June 2013, from £17.4m in the same period last year to £8.6m this year, primarily due to costs associated with its IPO.

In May, the enhanced annuity specialist confirmed it planned to float on the London Stock Exchange in a move which valued the company at £1.5bn. The IPO was completed in June and Partnership is currently valued at almost £1.7bn.

Partnership’s half yearly report, published this morning, reveals a substantial dip in profits as the firm absorbed costs linked to the IPO of £28m.

Total operating profit, which does not include costs related to the IPO, increased 31 per cent year-on-year, from £45m to £59m.

While Partnership’s new business premiums for retirement annuities were up 16 per cent during the period, from £518m to £601m, they were down 38 per cent in the care market, from £45m to £28m.

Partnership chief executive Steve Groves says the implementation of the RDR and gender-neutral pricing for annuities caused “disruption” in the market at the start of 2013.

He says: “Despite the distraction that an IPO can bring, it is pleasing to note that the business has remained on track to deliver growth ahead of the market. 

“However, changes in the insurance regulatory environment that came into effect late in 2012 and in the first half of 2013 have resulted in some temporary disruption to the strong market growth we have experienced to date.

“Whilst we expected some short term disruption to the market from the introduction of gender neutral pricing and the Retail Distribution Review, we have only recently seen a return to normal market activity levels in the non-standard annuity market.” 

However, Groves says “confusion” over Government plans to cap long-term care costs has hit sales of immediate needs annuities.

He says: “Government announcements on the provision for social care continue to lead to confusion over the actual level of government support for individuals, and this is also having an effect on the market for selling immediate needs annuities.

“However, our lead indicators are now suggesting a return to normal activity.”

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