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Standard Life benefits from pension reforms with strong surge in new customers

Standard LifeStandard Life continued to benefit from changes in the pensions industry, attracting 340,000 new customers last year through the auto-enrolment programme. The inflow of business helped lift profits and allow the company to hike its dividend.

The acquisition of Ignis Asset Management and sale of its Canada business made a substantial change to the structure of the group which said it has a strong and resilient balance sheet.

Keith Skeoch, chief executive of Standard Life Investments revealed this morning that the integration of Ignis will boost the payroll.  There will 650 further jobs at SLI, taking the total to 1,700 as the division expands in Edinburgh and London.

Assets under management from continuing operations increased by 38% to £296.6bn, driven by net inflows, positive market movements and the acquisition of Ignis.

He added that “the euro area is clearly in need of reform to make sure it is a stable place in which to live, work and retire” and with reference to Sweden that “the world doesn’t know how to cope with negative interest rates”. He said there was no evidence of any flight of capital resulting from such policies.

Group chief executive David Nish told a media conference call that following the recent acquisition of Pearson Jones the advice business would possible double with further add-ons to handle changes in the market place relating to the government’s legislative changes coming into effect in April.

Looking ahead to the General Election he said: “All I would ask is that the political parties give us clarity. It is appropriate to balance the books but it is all about how you invest for the future to create opportunities.

“There is a need for the parties to focus on long term savings. How do parties come up with policies that are sustainable beyond parliamentary periods? They have to give consumers confidence to invest for the future.”

Operating profit before tax from continuing operations rose 19% to £604 million. The company is on track to return £1.75 bn to shareholders following the sale of its Canada business. A proposed final dividend of 11.43p will make a total of 17.03p for the year, up 7.8%. Fee based revenue is up 14% to £1.4 billion.

The market was generally positive on the statement and the shares closed up 11.1p or 2.72% at 419.6p after touching 425p.

As a result of the pensions reforms being introduced from April the company is expecting profits from its annuity business to fall by up to £15 million, although this is not a big part of its business. Mr Nish said many customers had been deferring decisions.

The statement reveals that Mr Nish earned a pay and benefits package of £5.473 million (2013: £4.2m) of which £806,000 was base salary. Mr Skeoch earned £5.272m (2013: £4.356m), and chief financial officer Luke Savage, who joined the company last August, £1.3m. This included a cash award of £540,000 in recognition of long-term awards and £141,165 in respect of short-term awards awarded by his previous employer which were forfeited on joining Standard Life.

“We have made good strategic progress during the year with the acquisition of Ignis Asset Management and the sale of our Canadian operations increasing focus on fee business and enabling a £1.75bn return to shareholders. We are also well positioned to deal with the far-reaching reforms to the savings and retirement income rules in the UK and to support customers through these changes. Standard Life Investments has continued to perform strongly and expand internationally.

“Although investment markets are unsettled and may affect the near-term pace of asset and revenue growth, we are very well placed for the future. We have an excellent track record of succeeding in evolving markets and have the products, experience and proven investment performance to help our customers and clients in all of our markets to save and invest, so that they can look forward to their financial futures with confidence.”

Non-executive director David Grigson will retire from the board after the AGM on 12 May. He has been a non-executive director since November 2009 and during that time he has served as chairman of the audit committee and as a member of the risk and capital committee and the nomination and governance committee.

 >> Terry Murden: Business Comment

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