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Sources close to David Nish, CEO of Standard Life (LSE:SL.)have reported hearing him sing a new version of an old song behind his closed office doors of late. Today, he sang his song in public on the occasion of the publication of the company’s full year’s results for 2013. Standard’s share price fell by 1.17% today to 380.7.
O ye’ll tak’ the high road, and Ah’ll tak’ the low
And Ah’ll be leavin’ Scotlan’ afore ye
Fir me an’ Edinburgh will ne’er meet again
Near the bonnie, bonnie banks o’ Loch Lomon‘
That’s right, there is a possibility that Nish could be leading Standard Life out of it 189-year-old roots and into the heart of London. Nish is clearly demonstrating leadership and wisdom in several respects.
Reporting Results
The opening statement in the company’s report said that Standard Life has “strong market positions delivering growth in assets, revenue and returns.” The results speak for themselves.
- Assets under administration grew by 12% during 2013 to £244.2 billion
- Cash inflow of £9.6 billion reflect 92% growth
- Fee revenues increased 15% to £1.6 billion
- Business unit underlying performance was up 25% to £704 million
- An 8% growth in annual dividends
The only major pock was a 13% decline in pretax profit, which the company readily admitted was due to failing to obtain the maximum from their operating profit.
Preparing for the Future
Nish deserves respect for shouldering the responsibility that is his, when so many others are looking for someone or something else to blame. Even more so, perhaps, he should be admired for taking appropriate measures to prepare for a potential departure of Scotland from the UK.
Because the matter is stilled mired in debate, the potential for an independent Scotland is not yet clear. What is clear, however, is that the impact would be far more than political, to the extent that it could have significant effect on many commercial endeavors, especially for companies in the financial sector. In fact, Nish said that “doubts over [a new] currency is among several unresolved issues” that also include the need for legislation regarding “arrangements for financial services regulation and consumer price protection and the approach to individual taxation.” The latter matter is significant for Standard Life, particularly relative to personal savings and pensions.
Standard Life execs have been developing contingent strategies for the insurer in the event that Scotland strikes out on its own. Nish warned that, if Scottish independence were to become disruptive, he would “take whatever action we consider necessary, including transferring parts of our operations from Scotland in order to ensure continuity and to protect the interests of our stakeholders.”
Nish addressed the seriousness of the issue, indicating that Standard has already “started work to establish additional, registered companies to operate outside Scotland into which we could transfer parts of our operations.”
Political Leverage
Standard has yet to take a public position on the political issue. I doubt that it will. While others may join in the debate, Nish has wisely chosen to focus on protecting his company and its stakeholders. Given the strength of his position, he is able to put a warning shot across the government’s bow without actually joining the fight.
Here’s the Message
Standard Life is not going to let outside circumstances undermine the nearly two centuries of success that it has enjoyed. By sharing his intentions and staying out of the fray, Nish will secure his company’s future by hitting the highway if necessary. He’s taking the high road now, but if things begin to go awry, you can bet that he and Standard Life will be travelling by the low road and getting out of Scotland ‘afore ye.
