Standard Life profits rise despite market volatility

THE insurance and investment group Standard Life has withstood recent market volatility to post healthy growth in profits, beating analyst forecasts.

Pre-tax profits at the FTSE 100 firm increased by 9.4pc to £665m, compared with analyst expectations of £616m. Keith Skeoch, chief executive, said that “while the difficult conditions in global financial markets may persist for some time, Standard Life remains well positioned to meet the needs of clients and customers”.

Earnings from UK pensions and savings slipped 5.5pc to £291m while regulator contributions rose 9pc, following new workplace pension rules that brought in 250,000 customers.

The company has itself felt the effects of the changing pensions landscape, and has booked a £35m cost linked to its decision to close its own defined benefit pension scheme.

The assets that the company manages grew by 4pc to £307.4bn, helping take fee income up 10pc to £1.58bn.

Mr Skeoch said the firm’s flagship investments were holding up well amid volatile markets, with the Global Absolute Return Strategies fund enduring 6pc value swings this year.

The company increased its final dividend by 7.8pc to 18.36p a share.

Meanwhile Sir Gerry Grimstone, chairman of Standard Life, reiterated the company’s opposition to Britain leaving the EU. He wrote in the annual report that while the firm was officially staying neutral, “we believe that access to the EU Single Market is in the best interests of our customers and clients”.

In the run-up to the Scottish referendum, Standard Life became somewhat of a political football. After warning it could pull some of its operations out of Scotland were independence to become a reality after the September 2014 plebiscite, its name became somewhat synonymous with companies threatening to quit.

So much so that Alex Salmond, the first minister at the time, namechecked the FTSE 100 insurance and investment conglomerate in the Scottish Parliament, saying: “Standard Life will find Scotland a good place to do business as it, indeed, does business in 10 countries around the world.”

The company was unlucky because it happened to be the first big company to come out in such a forceful way, and, given that it employs 5,000 people north of the border, its message was heeded.

It was not alone of course – others, including Lloyds Banking Group, issued similar warnings – but, rightly or wrongly, Standard Life became something of a cause célèbre during the heated referendum debate.

Unsurprisingly it was being somewhat more careful yesterday in its approach to its views on Britain’s place in the EU. Although it disseminated its views in the same way as it did over Scotland, via a note in its annual report, the insurer was somewhat more cautious in its approach.

Sir Gerry Grimstone, Standard Life’s chairman, said in its report and accounts yesterday that “access to the EU single market is in the best interests of our customers and clients”. He continued: “The principle behind the Single Market — to encourage the free movement of goods and services — has created an environment that gives individuals and businesses the confidence to invest for the long term.”

But rather than raise heckles by using inflammatory language, Keith Skeoch, the company’s chief executive, was at pains to emphasise that were there to be a Brexit, it would not be a disaster for the company.

Mr Skeoch stressed that Standard Life is a “non-political organisation” which will “continue to act in the best interests of customers and clients”.

He pointed out that any change would be largely behind the scenes, and centre on investment “wrappers” operated out of Luxembourg and Dublin for overseas clients, creating more work for the company secretariat rather than moving staff to continental locations.

The slightly more calm approach perhaps reflects the fact that in the context of the European debate, Standard Life is less of a significant player than it was during the Scottish independence referendum.

But it also reflects the way in which the company has managed its message, with spinners strongly pointing out yesterday that it is an “apolitical” company.

That should be a lesson that other large companies heed when considering how they respond to the EU referendum question.

Putting the colourful high jinks that have been going on in Brussels for the last 48 hours to one side, boards must tread a careful line between saying what they actually think, and appearing as overly political.

The Financial Reporting Council has already reminded the country’s biggest companies that they must set out their thoughts on the referendum in the “risks” section of their annual report if they believe leaving the EU is a risk to their business.

Standard Life is somewhat unusual in that it publishes its annual report alongside its preliminary results, and as such is one of the first out of the traps. But over the coming months, as the political debate intensifies, so will the pressure on boards to let investors know what they think.

And when they do, they need to be careful that it is couched in such a way that it does not leave the company accused of scaremongering or coming out too strongly on one side of the debate or the other.

Public companies have a duty to inform staff and shareholders of their views on specific risks to their businesses, and rightly so.

But they do not have a duty to campaign in referendums, and should stay out of the political back and forth as the respective “Remain” and “Leave” campaigns intensify.

As the debate intensifies, so will the pressure on boards to say what they think