Final Results - Part 7 of 8

(b) Compensation of key management personnel

RNS Number : 0456B

Standard Life plc

27 February 2014

Standard Life plc

Full Year Results 2013

Part 7 of 8

Independent auditors' report to the members of Standard Life plc

Our opinion

· In our opinion the Company financial statements, defined below:

· give a true and fair view of the state of the Company's affairs as at 31 December 2013 and of its profit and cash flows for the year then ended;

· have been properly prepared in accordance with IFRSs as adopted by the European Union; and

· have been prepared in accordance with the requirements of the Companies Act 2006.

This opinion is to be read in the context of what we say in the remainder of this report.

What we have audited

The Company financial statements, which are prepared by Standard Life plc, comprise:

· the Company statement of financial position as at 31 December 2013

· the Company statement of comprehensive income for the year then ended

· the Company statement of changes in equity and statement of cash flows for the year then ended

· the Company accounting policies and the notes to the Company financial statements, which include other explanatory information.

The financial reporting framework that has been applied in their preparation comprises applicable law and IFRSs as adopted by the European Union.

In applying the financial reporting framework, the directors have made a number of subjective judgements, for example in respect of significant accounting estimates. In making such estimates, they have made assumptions and considered future events.

Certain disclosures required by the financial reporting framework have been presented elsewhere in the Annual Report and Accounts 2013 (the 'Annual Report'), rather than in the notes to the financial statements. These are cross-referenced from the financial statements and are identified as audited.

What an audit of financial statements involves

We conducted our audit in accordance with International Standards on Auditing (UK & Ireland) ('ISAs (UK & Ireland)'). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:

· whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed

· the reasonableness of significant accounting estimates made by the directors

· the overall presentation of the financial statements.

In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited Company financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinions on other matters prescribed by the Companies Act 2006
In our opinion:

· the information given in the Strategic report and the Directors' report for the financial year for which the Company financial statements are prepared is consistent with the Company financial statements

· the part of the Directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.

Other matters on which we are required to report by exception

Adequacy of accounting records and information and explanations received

Under the Companies Act 2006 we are required to report to you if, in our opinion:

· we have not received all the information and explanations we require for our audit; or

· adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or

· the Company financial statements and the part of the Directors' remuneration report to be audited are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Directors' remuneration

Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors' remuneration specified by law have not been made.

We have no exceptions to report arising from this responsibility.

Other information in the Annual Report

Under ISAs (UK & Ireland), we are required to report to you if, in our opinion, information in the Annual Reportis:

· materially inconsistent with the information in the audited Company financial statements

· apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Company acquired in the course of performing our audit

· is otherwise misleading.

We have no exceptions to report arising from this responsibility.

Responsibilities for the Company financial statements and the audit

Our responsibilities and those of the directors

As explained more fully in the Directors' Responsibilities Statement set out on page 48, the directors are responsible for the preparation of the Company financial statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the Company financial statements in accordance with applicable law and ISAs (UK & Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the Company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Other matters

We have reported separately on the Group financial statements of Standard Life plc for the year ended 31 December 2013.

Stephanie Bruce (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

Edinburgh

27 February 2014

(a) The maintenance and integrity of the Standard Life plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

(b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Company financial information

Company statement of comprehensive income

For the year ended 31 December 2013

		2013	2012
	Notes	£m	£m
Revenue
Investment return	A	714	578
Other income		2	-
Total revenue		716	578

Expenses
Administrative expenses	B	70	71
Finance costs		99	74
Total expenses		169	145

Profit before tax		547	433

Tax credit	F	19	15
Profit for the year		566	448
Other comprehensive income that may be reclassified subsequently to profit or loss
Net changes in financial assets designated as available-for-sale	R	(18)	-
Tax effect relating to items that may be reclassified subsequently to profit or loss	F	4	-
Total other comprehensive income for the year that may be reclassified subsequently to profit or loss		(14)	-
Total comprehensive income for the year		552	448

The Notes on pages 255 to 269 are an integral part of these financial statements.

Company statement of financial position

As at 31 December 2013

		2013	2012
	Notes	£m	£m
Assets
Investments in subsidiaries	G	5,271	5,174
Investments in associates and joint ventures	H	123	104
Loans to subsidiaries	J	644	630
Derivative financial assets	J	54	18
Equity securities and interests in pooled investment funds	J	12	15
Debt securities	J	724	301
Receivables and other financial assets	J	55	66
Other assets	M	23	13
Cash and cash equivalents	J	182	763
Total assets		7,088	7,084

Equity
Share capital	O	238	236
Shares held by trusts	P	(10)	(11)
Share premium reserve		1,110	1,110
Retained earnings	Q	601	650
Other reserves	R	3,383	3,418
Total equity		5,322	5,403

Liabilities
Subordinated liabilities	S	1,632	1,622
Deferred tax liabilities	I	1	1
Derivative financial liabilities	K	53	19
Other financial liabilities	S	80	39
Total liabilities		1,766	1,681

Total equity and liabilities		7,088	7,084

The financial statements on pages 245 to 248 were approved on behalf of the Board of Directors, on 27 February 2014, by the following Directors:

Gerry Grimstone,Chairman David Nish, Chief Executive

The Notes on pages 255 to 269 are an integral part of these financial statements.

Company statement of changes in equity

For the year ended 31 December 2013

		Share capital	Shares held by trusts	Share premium reserve	Retained earnings	Other reserves	Total equity
2013	Notes	£m	£m	£m	£m	£m	£m
1 January		236	(11)	1,110	650	3,418	5,403
Profit for the year		-	-	-	566	-	566
Other comprehensive income for the year		-	-	-	-	(14)	(14)
Total comprehensive income for the year		-	-	-	566	(14)	552
Distributions to equity holders		-	-	-	(636)	(20)	(656)
Issue of share capital other than in cash	O	2	-	-	-	-	2
Reserves credit for employee share-based payment schemes	R	-	-	-	-	32	32
Transfer to retained earnings for vested employee share-based payment schemes	Q,R	-	-	-	33	(33)	-
Shares acquired by employee trusts		-	(11)	-	-	-	(11)
Shares distributed by employee trusts	Q	-	12	-	(12)	-	-
31 December		238	(10)	1,110	601	3,383	5,322

		Share capital	Shares held by trusts	Share premium reserve	Retained earnings	Other reserves	Total equity
2012	Notes	£m	£m	£m	£m	£m	£m
1 January		235	(23)	1,110	525	3,418	5,265
Profit for the year		-	-	-	448	-	448
Other comprehensive income for the year		-	-	-	-	-	-
Total comprehensive income for the year		-	-	-	448	-	448
Distributions to equity holders		-	-	-	(331)	-	(331)
Issue of share capital other than in cash	O	1	-	-	-	-	1
Reserves credit for employee share-based payment schemes	R	-	-	-	-	25	25
Transfer to retained earnings for vested employee share-based payment schemes	Q,R	-	-	-	25	(25)	-
Shares acquired by employee trusts		-	(5)	-	-	-	(5)
Shares distributed by employee trusts	Q	-	17	-	(17)	-	-
31 December		236	(11)	1,110	650	3,418	5,403

The Notes on pages 255 to 269 are an integral part of these financial statements.

Company statement of cash flows

For the year ended 31 December 2013

		2013	2012
	Notes	£m	£m
Cash flows from operating activities
Profit before tax		547	433
Gains on financial instruments	A	(3)	(3)
Dividend income from subsidiaries	A	(629)	(499)
Interest income on loans to subsidiaries	A	(37)	(38)
Interest income on available-for-sale securities	A	(8)	-
Distributions from equity instruments	A	(34)	(34)
Interest payable on subordinated liabilities		99	74
Movements in operating assets and liabilities		89	44
Net cash flows from operating activities		24	(23)

Cash flows from investing activities
Loans issued to subsidiaries		(5)	(8)
Loans repaid by subsidiaries		-	54
Capital injections into existing subsidiaries	G	(97)	(131)
Interest received on loans to subsidiaries	A	37	38
Interest received on available-for-sale securities		10	-
Distributions from equity instruments	A	34	34
Dividends received from subsidiaries	A	629	499
Purchase of equity securities, debt securities and derivatives		(433)	(200)
Capital injections into associates and joint ventures		(19)	(16)
Net cash flows from investing activities		156	270

Cash flows from financing activities
Proceeds from issue of subordinated liabilities, net of transaction costs		-	497
Repayment of subordinated liabilities		-	(50)
Dividends paid		(656)	(331)
Interest paid		(96)	(72)
Funding of shares acquired by trusts		(9)	(5)
Net cash flows from financing activities		(761)	39

Net (decrease)/increase in cash and cash equivalents		(581)	286
Cash and cash equivalents at the beginning of the year	N	763	477
Cash and cash equivalents at the end of the year	N	182	763

Supplemental disclosures on cash flows from operating activities
Interest received	A	3	4

The Notes on pages 255 to 269 are an integral part of these financial statements.

Company accounting policies

(a) Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as endorsed by the European Union (EU), with interpretations issued by the IFRS Interpretations Committee and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared on a going concern basis and under the historical cost convention, as modified by the revaluation of available-for-sale financial assets and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

The principal accounting policies set out below have been consistently applied to all financial reporting periods presented in these financial statements.

(a)(i) New standards, interpretations and amendments to published standards that have been adopted by the Company

The Company has adopted the following new International Financial Reporting Standards (IFRS), International Accounting Standards (IASs) and amendments to existing standards which are effective by EU endorsement for annual periods beginning on or after 1 January 2013 unless otherwise stated:

IFRS 13 Fair Value Measurement

IFRS 13 replaces the guidance on fair value measurement in existing IFRSs with a single standard. The standard does not change requirements regarding which items should be measured at fair value but provides guidance on how to determine fair value. The standard has been applied prospectively and also requires specific disclosures on fair values. All fair values reported in the financial statements have been determined in accordance with IFRS 13. Additional disclosures have been provided in Note Y - Fair value of assets and liabilities.

Amendment to IAS 1 Presentation of Financial Instruments (effective for annual periods beginning on or after 1 July 2012)

The amendment to IAS 1 revised the way other comprehensive income is presented. As a result items that can subsequently be reclassified to profit or loss are presented separately from items that will never be reclassified to profit or loss in the statement of comprehensive income. The tax associated with each category is also shown separately. The amendment has affected presentation only.

Amendment to IFRS 7 Financial Instruments: Disclosures

The amendment to IFRS 7 requires additional disclosures for financial assets and liabilities which are offset in the financial statements or are subject to enforceable master netting agreements or similar arrangements. The additional disclosures are presented in Note V - Risk management.

Additionally the Company has adopted the following amendments to existing standards which are effective by EU endorsement from 1 January 2013 and management considers that the implementation of these amendments has had no significant impact on the Company's financial statements:

· Amendment to IAS 19 Employee Benefits

· Amendment to IAS 12 Income Taxes: Deferred Tax

· Annual Improvements to IFRS 2009-2011.

(a)(ii) Standards, interpretations and amendments to published standards that are not yet effective and have not been early adopted by the Company

Certain new standards, interpretations and amendments to existing standards have been published that are mandatory for the Company's annual accounting periods beginning on or after 1 January 2014. The Company has not early adopted the standards, interpretations and amendments described below:

Amendment to IAS 32 Financial Instruments: Presentation (effective for annual periods beginning on or after 1 January 2014)

The amendment to IAS 32 clarifies the circumstances in which financial assets and financial liabilities may be offset on the statement of financial position. The adoption of the amendment to IAS 32 is not expected to have a significant impact on the financial statements of the Company.

IFRS 9 Financial Instruments and subsequent amendments (amendments to IFRS 9 and IFRS 7: Mandatory Effective Date and Transition Disclosures andHedge accounting and amendments to IFRS 9, IFRS 7 and IAS 39) (no stated mandatory effective date)

IFRS 9 will replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 allows only two measurement categories for financial assets: amortised cost and fair value. All equity instruments are measured at fair value. A debt instrument is measured at amortised cost only if it is held to collect contractual cash flows and the cash flows represent principal and interest, otherwise it is measured at fair value through profit or loss (FVTPL). Financial liabilities may be designated as at FVTPL. The amortised cost measurement basis is applied to most other financial liabilities. For financial liabilities designated as at FVTPL, changes in the fair value due to changes in the liability's credit risk are recognised directly in other comprehensive income.

Company accounting policies continued

(a) Basis of preparation continued

(a)(ii) Standards, interpretations and amendments to published standards that are not yet effective and have not been early adopted by the Company conitnued

Hedge accounting and amendments to IFRS 9, IFRS 7 and IAS 39 removes and replaces the current requirements for hedge effectiveness in IAS 39 and therefore the requirements for the application of hedge accounting. The new requirements change what qualifies as a hedged item and some of the restrictions on the use of some hedging instruments. The accounting and presentation requirements remain largely unchanged. However, entities will now be required to reclassify the gains and losses accumulated in equity on a cash flow hedge to the carrying amount of a non-financial hedged item when it is initially recognised. Additional disclosures on hedge accounting are also required.

The mandatory effective date for IFRS 9 has been removed however the standard as amended permits entities to adopt certain elements early without the need to adopt the entire standard. The standard including subsequent amendments has not yet been endorsed by the EU.

The impact of the adoption of IFRS 9 on the financial statements of the Company is currently being reviewed by management but is not expected to have a significant impact.

(a)(iii) Standards, interpretations and amendments to existing standards that are not yet effective and are not relevant to the Company's operations or to the preparation of separate financial statements

· IFRS 10 Consolidated Financial Statements (effective for annual periods beginning on or after 1 January 2014)

· IFRS 11 Joint Arrangements (effective for annual periods beginning on or after 1 January 2014)

· IFRS 12 Disclosure of Interests in Other Entities (effective for annual periods beginning on or after 1 January 2014)

· IAS 27 Separate Financial Statements (2011) (effective for annual periods beginning on or after 1 January 2014)

· IAS 28 Investments in Associates and Joint Ventures (2011) (effective for annual periods beginning on or after 1 January 2014)

· Amendment to IAS 36 Impairment of Assets (effective for annual periods beginning on or after 1 January 2014)

· International Financial Reporting Interpretations Committee (IFRIC) Interpretation 21 Levies (effective for annual periods beginning on or after 1 January 2014)

· Amendments to IAS 39 Financial Instruments: Recognition and Measurement (effective for annual periods beginning on or after 1 January 2014)

· Amendments to IAS 19 Defined Benefit Plans: Employee Contributions (effective for annual periods beginning on or after

1 January 2014)

· Annual improvements 2010 - 2012 cycle and Annual Improvements 2011 - 2013 cycle (effective for annual periods beginning on or after 1 July 2014)

(a)(iv) Critical accounting estimates and judgement in applying accounting policies

The preparation of financial statements requires management to make estimates and assumptions and exercise judgements in applying the accounting policies that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses arising during the year. Estimates and judgements are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The area where judgements, estimates and assumptions have the most significant effect on the amounts recognised in the financial statements is:

Financial statement area	Critical accounting judgements, estimates or assumptions	Related accounting policies and notes
Assets whose carrying value is subject to impairment testing	Determination of the recoverable amount	(b), (e), (g) and Notes G, H and V

(b) Subsidiaries, associates and joint ventures

Subsidiaries are all entities, including special purpose entities, over which the Company has the power to govern the financial and operating policies. Such power, generally but not exclusively, accompanies a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity.

Associates are entities over which the Company has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights.

Joint ventures are entities whereby the Company and other parties undertake an economic activity, which is subject to joint control arising from contractual agreement.

Investments in subsidiaries, associates and joint ventures are initially recognised at cost and subsequently held at cost less any impairment charge. An impairment charge is recognised when the carrying amount of the investment exceeds its recoverable amount.

Investments in subsidiaries include loans to subsidiaries that meet the definition of equity instruments. Refer to (g) for more information on the measurement of loans to subsidiaries.

The financial statements are presented in millions pound Sterling, which is the Company's functional currency.

Foreign currency transactions are translated at the exchange rate prevailing at the date of the transaction. Gains and losses arising from such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.

Translation differences on non-monetary items, such as equity securities held at FVTPL, are reported as part of the fair value gain or loss within investment return in the statement of comprehensive income. Translation differences on financial assets and liabilities held at amortised cost are included in the relevant line in the statement of comprehensive income.

(d) Revenue recognition

Gains and losses resulting from changes in both market value and foreign exchange on investments classified as at FVTPL, including investment income received (such as dividends and interest payments), are recognised in the statement of comprehensive income in the period in which they occur.

Changes in the fair value of derivative financial instruments that are not hedging instruments are recognised immediately in the statement of comprehensive income.

For debt securities classified as available-for-sale (AFS), interest income recognised in the statement of comprehensive income is calculated using the effective interest rate (EIR) method.

Unrealised gains and losses on AFS financial assets are recognised in other comprehensive income unless an impairment loss is recognised. On disposal any accumulated gain or loss previously recognised in other comprehensive income is recycled to the income statement.

For loans measured at amortised cost, interest income recognised in the statement of comprehensive income is calculated using the EIR method.

Dividend income and distributions from securities that are classified by the issuer as equity instruments are recognised in the statement of comprehensive income when the right to receive payment is established.

(e) Impairment of non-financial assets

The carrying amounts of non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, at least at each reporting date. An impairment loss is recognised in the statement of comprehensive income for the amount by which the asset's carrying amount exceeds its recoverable amount.

The recoverable amount of an asset is the greater of its net selling price (fair value less costs to sell) and the value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit, or group of units, to which the asset belongs.

(f) Income tax

The income tax expense is based on the taxable profits for the year, after adjustments in respect of prior years.

Deferred tax is provided using the statement of financial position liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities.

Temporary differences arising from investments in subsidiaries and associates give rise to deferred tax only to the extent that it is probable that the temporary difference will reverse in the foreseeable future and the timing of the reversal of that difference cannot be controlled.

Current and deferred tax is recognised in the income statement except when it relates to items recognised in other comprehensive income or directly in equity, in which case it is credited or charged to other comprehensive income or directly in equity respectively.

The income tax expense is determined using rates enacted or substantively enacted at the reporting date.

Company accounting policies continued

(g) Loans

Loans are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market other than those that the Company intends to sell in the short term. Financial assets classified as loans include deposits with credit institutions and loans to subsidiaries when the loan is classified as a financial liability by the subsidiary.

Loans are initially measured at fair value plus directly attributable transaction costs. Subsequently, they are measured at amortised cost, using the EIR method, less any impairment losses. Revenue from financial assets classified as loans is recognised in the statement of comprehensive income on an EIR basis.

Impairment on individual loans is determined at each reporting date. Objective evidence that a financial asset or group of assets is impaired includes observable data that comes to the attention of the Company. This would include a measurable decrease in the estimated future cash flow from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the group. The Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant.

If there is objective evidence that an impairment loss has been incurred on loans carried at amortised cost, the amount of the impairment loss is calculated as the difference between the present value of future cash flows, discounted at the loan's original effective rate, and the loan's current carrying value. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the statement of comprehensive income. Subsequent recoveries are credited to the statement of comprehensive income.

(h) Equity securities, debt securities and derivatives

Management determines the classification of equity securities, debt securities and derivatives at initial recognition.

All of the Company's equity securities and certain debt securities are designated as at fair value through profit or loss (FVTPL) as they are part of groups of assets which are managed and whose performance is evaluated on a fair value basis so as to maximise returns either for equity holders. All other debt securities are designated as available-for-sale (AFS).

All derivative instruments are classified as held for trading (HFT).

Equity securities, debt securities and derivatives are recognised at fair value on the trade date of the transaction. In the case of derivatives, where no initial premium is paid or received, the initial measurement value is nil. For instruments classified as HFT or designated as at FVTPL, directly attributable transaction costs are not included in the initial measurement value but are recognised in the statement of comprehensive income. AFS debt securities are initially recognised at fair value plus directly related transaction costs.

Where a valuation technique is used to establish the fair value of a financial instrument, a difference could arise between the fair value at initial recognition and the amount that would be determined at that date using the valuation technique. When unobservable market data has an impact on the valuation of derivatives, the entire initial change in fair value indicated by the valuation technique is recognised over the life of the transaction on an appropriate basis, or when the inputs become observable, or when the derivative matures or is closed out.

Instruments classified as HFT or as at FVTPL are measured at fair value with changes in fair value recognised in the statement of comprehensive income.

Debt securities designated as AFS are measured at fair value. For these instruments interest calculated using the effective interest method is recognised in the statement of comprehensive income. Other changes in fair value and any related tax are recognised in other comprehensive income and recorded in a separate reserve within equity until disposal or impairment, when the cumulative gain or loss is recognised in the statement of comprehensive income with a corresponding movement through other comprehensive income. An AFS debt security is impaired if there is objective evidence that a loss event has occurred which has impaired the expected cash flows.

(i) Financial guarantee contracts

A financial guarantee contract is a contract that requires the Company to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

The Company recognises and measures financial guarantee contracts in accordance with IAS 39 Financial Instruments: Recognition and Measurement. The Company initially recognises and measures a financial guarantee contract at its fair value. At each subsequent reporting date, the Company measures the financial guarantee contract at the higher of the initial fair value recognised less, when appropriate, cumulative amortisation recognised in accordance with IAS 18 Revenue and the best estimate of the expenditure required to meet the obligations under the contract at the reporting date, determined in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

(j) Cash and cash equivalents

Cash and cash equivalents include demand and term deposits, and other short-term investments with less than three months to maturity from the date of acquisition. Cash and cash equivalents are categorised for measurement purposes as loans and receivables and are therefore measured at amortised cost.

(k) Equity

(k)(i) Share capital and shares held by trusts

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Shares are classified as equity instruments when there is no contractual obligation to deliver cash or other assets to another entity on terms that may be unfavourable. The difference between the proceeds received on issue of the shares and the nominal value of the shares issued is recorded in the share premium reserve. Incremental costs directly attributable to the issue of new equity instruments are shown in the share premium reserve as a deduction from the proceeds, net of tax. Incremental costs directly attributable to the issue of equity instruments in a business combination are excluded from the consideration transferred.

If the Company purchases any of its equity instruments the consideration paid is treated as a deduction from total equity. Where such shares are sold, if the proceeds are equal to or less than the purchase price paid, the proceeds are treated as a realised profit in equity. If the proceeds exceed the purchase price, the excess over the purchase price is transferred to the share premium account.

(k)(ii) Merger reserve

If the Company issues shares at a premium and the conditions for merger relief under section 612 of the UK Companies Act 2006 are met, a sum equal to the difference between the issue value and nominal value is transferred to a 'merger reserve'.

(l) Subordinated liabilities

Subordinated liabilities are initially recognised at the value of proceeds received net of issue expenses. The total finance costs are charged to the statement of comprehensive income over the relevant term of the instrument using the EIR method. The carrying amount of the debt is increased by the finance cost in respect of the reporting period and reduced by payments made in respect of the debt in the period.

(m) Pension costs and other post-retirement benefits

The Group operates a number of defined benefit and defined contribution plans, the assets of which are held in separate trustee administered funds. The pension plans are funded by payments from employees and by the Group companies, determined by periodic actuarial calculations.

The sponsoring employer for the defined benefit plan is Standard Life Assurance Limited (SLAL), and therefore the net defined benefit cost of the plan is recognised by SLAL. As a result, the Company treats its participation in the defined benefit plan as a defined contribution plan. Consequently the costs of this scheme and the UK defined contribution scheme represent the contributions payable for the accounting period.

For the defined contribution scheme, the Company pays contributions to separately administered pension insurance schemes. The contributions are recognised in staff costs and other employee-related costs when they are due.

(n) Provisions and contingent liabilities

Provisions for restructuring costs and legal claims are recognised when the Company has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole.

Contingent liabilities are disclosed if the future obligation is less than probable but greater than remote or if the obligation is probable but the amount cannot be reasonably estimated.

(o) Dividend distribution

Final dividends on share capital classified as equity instruments are recognised in equity when they have been approved by equity holders. Interim dividends on these shares are recognised in equity in the period in which they are paid.

(p) Employee share-based payments

The Company operates share incentive plans for all employees, share-based long-term incentive plans for senior employees and may award annual performance shares to all eligible employees when the Group's profit targets are met. Further details of the schemes are set out in Note 46 of the Group financial statements. For share-based payment employee transactions, services received are measured at fair value.

Fair value of options granted under share incentive schemes is determined using a relevant valuation technique, such as the Black Scholes option pricing model.

For cash-settled share-based payment transactions, services received are measured at the fair value of the liability using an option pricing model. The fair value of the liability is remeasured at each reporting date and any changes in fair value are recognised in the statement of comprehensive income for the year.

Company accounting policies continued

(p) Employee share-based paymentscontinued

For equity-settled share-based payment transactions, the fair value of services received is measured by reference to the fair value of the equity instruments granted. The fair value of those equity instruments is measured at the grant date, which is the date that the Group and the employees have a shared understanding of the terms and conditions of the award. If that award is subject to an approval process then the grant date is the date when that approval is obtained. Market vesting conditions and non-vesting conditions, such as the requirement of employees to save in the Save-as-you-earn scheme, are included in the calculation of the fair value of the instruments at the date of grant. Vesting conditions which are not market conditions are included in assumptions about the number of instruments that are expected to vest. The charge in respect of the services received is recharged by the Company to the subsidiary which receives the services of the employees.

If the equity instruments granted vest immediately, the employees become unconditionally entitled to those equity instruments. Therefore, the Company immediately recognises an amount due from subsidiaries in respect of the services received in full with a corresponding credit to the equity compensation reserve in equity.

If the equity instruments do not vest until the employee has fulfilled specified vesting conditions, the Group presumes that the services to be rendered by the employee as consideration for those equity instruments will be received in the future, during the period of those vesting conditions (vesting period). Therefore, the Company recognises an amount due from subsidiaries in respect of those services as they are rendered during the vesting period with a corresponding credit to the equity compensation reserve in equity.

Cancellations of awards granted arise where non-vesting conditions attached to the award are not met during the vesting period. Cancellations are accounted for as an acceleration of vesting and the remaining unrecognised expense in respect of the fair value of the award is recognised immediately.

At each period end the Company reassesses the number of equity instruments expected to vest and recognises any difference between the revised and original estimate in the statement of comprehensive income with a corresponding adjustment to the equity compensation reserve.

At the time the equity instruments vest, the amount recognised in the equity compensation reserve in respect of those equity instruments is transferred to retained earnings.

(q) Derecognition and offset of financial assets and liabilities

A financial asset (or a part of a group of similar financial assets) is derecognised where:

· The rights to receive cash flows from the asset have expired

· The Company retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a 'pass through' arrangement, or

· The Company has transferred its rights to receive cash flows from the asset and has either transferred substantially all the risks and rewards of the asset, or has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.

Financial assets and liabilities are offset and the net amount reported on the statement of financial position only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. When financial assets and liabilities are offset, any related interest income and expense is offset in the statement of comprehensive income.

Notes to the Company financial statements

A. Investment return

	2013	2012
	£m	£m
Interest and similar income
Cash and cash equivalents	3	4
Loans to subsidiaries	37	38
Debt securities	8	-
	48	42

Income from subsidiary undertakings
Dividend income	629	499
Distributions from equity instruments	34	34
	663	533
Gains on financial instruments
Equity securities and interests in pooled investment funds	1	3
Debt securities	1	-
Derivative financial instruments	1	-
	3	3
Investment return	714	578

B. Administrative expenses

		2013	2012
	Notes	£m	£m
Staff costs and other employee-related costs	C	51	57
Other administrative expenses		19	14
Total administrative expenses		70	71

C. Staff costs and other employee-related costs

		2013	2012
	Notes	£m	£m
The aggregate remuneration payable in respect of employees was:
Wages and salaries		41	44
Social security costs		5	7
Pension costs	D	4	5
Employee share-based payments		1	1
Total staff costs and other employee-related costs		51	57

		2013	2012
The average number of staff during the year was:
Group corporate centre		456	467
Asia and Emerging Markets¹		31	80
Total average number of staff		487	547

¹ Staff who work in the Group's Asia and Emerging Markets business based in the UK.

The staff who manage the affairs of the Company are employed by Standard Life Employee Services Limited (SLESL), a wholly owned subsidiary of the Company. These costs are recharged to the Company and the amounts recharged are set out above.

Information in respect of compensation of key management personnel is provided in Note 47 of the Group financial statements and the audited section of the Directors' remuneration report on pages 70 to 98.

Details of the employee share-based payment schemes operated by the Company are given in Note 46 of the Group financial statements.

D. Pension and other post-retirement benefit provisions

The staff who manage the affairs of the Company are members of a defined benefit pension plan and/or a defined contribution pension scheme operated by the Group for its employees in the UK. There is no contractual agreement or policy for charging the net defined benefit cost of the defined benefit plan across the participating UK companies. The sponsoring employer for the defined benefit plan is SLAL, and therefore the net defined benefit cost of the plan is recognised by SLAL. As a result, the Company treats its participation in the defined benefit plan as a defined contribution plan. Contributions to defined contribution plans are expensed when employees have rendered services in exchange for such contributions, generally in the year of contribution. The contributions to the defined contribution and the defined benefit plans recognised as an expense for the year ended 31 December 2013 were £4m (2012: £5m).

Further information on the Group's pension schemes is given in Note 37 of the Group financial statements.

E. Auditors' remuneration

In 2013 auditors' remuneration amounted to £0.3m (2012: £0.3m) in respect of the audit of the Company's individual and Group financial statements. Auditors' remuneration for services other than the statutory audit of the Company is disclosed in Note 9 of the Group financial statements.

F. Tax credit

(a) Current year tax credit

		2013	2012
	Notes	£m	£m
Current tax credit		19	13
Deferred tax credit arising from the current year	I	-	2
Total income tax credit		19	15

The standard rate of corporation tax in the UK changed from 24% to 23% with effect from 1 April 2013. Accordingly, the Company's UK profits for this accounting period are subject to tax at a rate of 23.25%.

The Finance Act 2013 further reduced the UK corporation tax rate to 21% with effect from 1 April 2014 and 20% with effect from 1 April 2015. These rates have been applied in calculating the UK deferred tax position at 31 December 2013.

(b) Tax relating to components of other comprehensive income

	2013	2012
	£m	£m
Profit before tax	547	433
Tax at UK corporation tax rate of 23.25% (2012: 24.5%)	(127)	(106)
Dividends not subject to UK corporation tax	146	122
Permanent differences	-	(1)
Total income tax credit	19	15

G. Investments in subsidiaries

	2013	2012
	£m	£m
At 1 January	5,174	5,043
Investment into existing subsidiaries	97	131
At 31 December	5,271	5,174

Details of the Company's principal subsidiaries are given in Note 49 of the Group financial statements.

H. Investments in associates and joint ventures

(a) Investments in associates

The Company has a 25.3% (2012: 25.3%) interest in Tenet Group Limited, a company incorporated in England. The reporting date for Tenet Group Limited is 30 September as this is its year end date. This is different from the Company's year end date of 31 December.

(b) Investments in joint ventures

The Company has a 50% (2012: 50%) interest in Heng An Standard Life Insurance Company Limited, a company incorporated in China.

I. Tax assets and liabilities

	2013	2012
	£m	£m
Deferred tax liabilities	1	1
Total tax liabilities	1	1

The amount of deferred tax liabilities expected to be settled after more than 12 months is £1m (2012: £1m).

There are no tax assets or current tax liabilities.

The Company has surrendered the benefit of its tax losses to underlying subsidiaries for a consideration of £23m (2012: £13m) which will be receivable within one year. Tax losses of £nil (2012: £8m) have been surrendered to a subsidiary for no consideration, resulting in an effective increase in the tax expense of £nil (2012: £2m). The Company has provided for deferred tax amounting to £1m (2012: £1m) in respect of unrealised gains on equity securities.

Recognised deferred tax

	2013	2012
	£m	£m
Deferred tax liabilities comprise:
Unrealised gains on investments	(1)	(1)
Net deferred tax liabilities	(1)	(1)

Movements in deferred tax liabilities comprise:
At 1 January	(1)	(3)
Amounts credited to net profit	-	2
At 31 December	(1)	(1)

J. Financial investments

		Designated at fair value through profit or loss	Held for trading	Available-for- sale	Loans and receivables	Total
2013	Notes	£m	£m	£m	£m	£m
Loans to subsidiaries		-	-	-	644	644
Derivative financial assets	K	-	54	-	-	54
Equity securities and interests in pooled investment funds		12	-	-	-	12
Debt securities		391	-	333	-	724
Receivables and other financial assets	L	-	-	-	55	55
Cash and cash equivalents	N	-	-	-	182	182
Total		403	54	333	881	1,671

		Designated at fair value through profit or loss	Held for trading	Available-for - sale	Loans and receivables	Total
2012	Notes	£m	£m	£m	£m	£m
Loans to subsidiaries		-	-	-	630	630
Derivative financial assets	K	-	18	-	-	18
Equity securities and interests in pooled investment funds		15	-	-	-	15
Debt securities		301	-	-	-	301
Receivables and other financial assets	L	-	-	-	66	66
Cash and cash equivalents	N	-	-	-	763	763
Total		316	18	-	1,459	1,793

The amount of debt securities expected to be recovered or settled after more than 12 months is £334m (2012: £1m). Due to the nature of the equity securities and interests in pooled investment funds, there is no fixed term associated with these securities.

The amount of loans and receivables expected to be recovered or settled after more than 12 months is £644m (2012: £630m).

K. Derivative financial instruments

The Company uses derivative financial instruments in order to reduce the risk from potential movements in foreign exchange rates, equity indices and interest rates, to reduce credit risk or to achieve efficient portfolio management. These instruments are designated as held for trading in the Company's financial statements.

Included within derivative financial instruments held for trading are certain forward foreign exchange contracts which for the Group hedge part of the currency translation risk of net investments in foreign operations. For details refer to Note 23 of the Group financial statements.

	2013			2012
	Contract amount	Fair value assets	Fair value liabilities	Contract amount	Fair value assets	Fair value liabilities
	£m	£m	£m	£m	£m	£m
Foreign exchange forwards	1,706	54	53	1,483	18	19

The derivative liabilities of £53m (2012: £19m) are expected to be settled within 12 months. The derivative assets of £54m (2012: £18m) are expected to be recovered within 12 months.

The maturity profile of the contractual undiscounted cash flows in relation to derivative financial instruments is as follows:

	Within 1 year	2-5 years	Total
2013	£m	£m	£m
Cash inflows
Derivative financial assets	880	5	885
Derivative financial liabilities	821	-	821
Total	1,701	5	1,706

Cash outflows
Derivative financial assets	829	5	834
Derivative financial liabilities	872	-	872
Total	1,701	5	1,706

Net derivative financial instruments cash flows	-	-	-

	Within 1 year	2-5 years	Total
2012	£m	£m	£m
Cash inflows
Derivative financial assets	743	10	753
Derivative financial liabilities	728	2	730
Total	1,471	12	1,483

Cash outflows
Derivative financial assets	728	10	738
Derivative financial liabilities	743	2	745
Total	1,471	12	1,483

Net derivative financial instruments cash flows	-	-	-

L. Receivables and other financial assets

	2013	2012
	£m	£m
Due from related parties	54	63
Other	1	3
Total receivables and other financial assets	55	66

The carrying amounts disclosed above reasonably approximate the fair values at the year end.

Receivables and other financial assets expect to be recovered within 12 months.

M. Other assets

Other assets comprise amounts due from related parties in respect of Group relief, which are expected to be received within 12 months.

N. Cash and cash equivalents

	2013	2012
	£m	£m
Demand and term deposits with original maturity of less than three months	40	22
Other short-term investments	142	741
Total cash and cash equivalents	182	763

Demand and term deposits with original maturity of less than three months are subject to variable interest rates.

Other short-term investments include the Company's investments in money market funds, which are subject to a mixture of fixed and variable interest rates.

O. Share capital

Details of the Company's share capital are given in Note 28 of the Group financial statements.

P. Shares held by trusts

Shares held by trusts represents the Company's funding of the Employee Share Trust (EST) in relation to the acquisition of shares of the Company for delivery to employees under various employee share schemes.

Q. Retained earnings

		2013	2012
	Notes	£m	£m
At 1 January		650	525
Profit for the year attributable to equity holders		566	448
Dividends and appropriations		(636)	(331)
Transfer from equity compensation reserve for vested employee share-based payments	R	33	25
Shares distributed by employee trusts		(12)	(17)
At 31 December		601	650

Details of the dividends paid during the year by the Company are provided in Note 14 of the Group financial statements. Note 14 also includes information regarding the final dividend proposed by the Directors for the year ended 31 December 2013.

In 2013, the total dividends and appropriations paid were £656m (2012: £331m). Of this, £636m (2012: £331m) was treated as a deduction from retained earnings and £20m (2012: £nil) was treated as a deduction from the special reserve.

R. Reconciliation of movements in other reserves

		Merger reserve	Equity compensation reserve	Special reserve	Available-for-sale financial assets	Total
2013	Notes	£m	£m	£m	£m	£m
At 1 January		3,108	49	261	-	3,418
Reserves credit for employee share-based payment schemes		-	32	-	-	32
Vested employee share-based payments	Q	-	(33)	-	-	(33)
Dividends and appropriations		-	-	(20)	-	(20)
Fair value losses on available-for-sale financial assets		-	-	-	(18)	(18)
Tax effect relating to items that may be reclassified subsequently to profit or loss	F	-	-	-	4	4
At 31 December		3,108	48	241	(14)	3,383

2012
At 1 January		3,108	49	261	-	3,418
Reserves credit for employee share-based payment schemes		-	25	-	-	25
Vested employee share-based payments	Q	-	(25)	-	-	(25)
At 31 December		3,108	49	261	-	3,418

Further information on the merger reserve and special reserve is given in Note 31 of the Group financial statements.

S. Financial liabilities

		Held for trading	Financial liabilities measured at amortised cost	Total
2013	Notes	£m	£m	£m
Subordinated liabilities	T	-	1,632	1,632
Derivative financial liabilities	K	53	-	53
Other financial liabilities	U	-	80	80
Total		53	1,712	1,765

		Held for trading	Financial liabilities measured at amortised cost	Total
2012	Notes	£m	£m	£m
Subordinated liabilities	T	-	1,622	1,622
Derivative financial liabilities	K	19	-	19
Other financial liabilities	U	-	39	39
Total		19	1,661	1,680

T. Subordinated liabilities

	2013		2012
	Principal	Carrying value	Principal	Carrying value
	amount	£m	amount	£m
Subordinated notes:
5.5% Sterling fixed/floating rate	£500,000,000	499	£500,000,000	498

Subordinated guaranteed bonds:
6.75% Sterling fixed rate perpetual	£500,000,000	502	£500,000,000	502

Mutual Assurance Capital Securities:
6.546% Sterling fixed rate perpetual	£300,000,000	316	£300,000,000	316
5.314% Euro fixed/floating rate perpetual	€360,000,000	315	€360,000,000	306
Subordinated liabilities		1,632		1,622

The principal amount of subordinated liabilities is expected to be settled after more than 12 months. The accrued interest on subordinated liabilities of £53m (2012: £52m) is expected to be settled within 12 months.

Further information on the terms and conditions of the subordinated liabilities is given in Note 36 of the Group financial statements.

U. Other financial liabilities

	2013	2012
	£m	£m
Collateral accepted in respect of derivative contracts	47	10
Loan notes arising on acquisition of subsidiary	6	6
Other	28	23
Total other financial liabilities	81	39

The amount of other financial liabilities expected to be settled after more than 12 months is £6m (2012: £6m).

V. Risk management

(a) Overview

An overview of the Group risk management framework and policies is provided in Note 41 of the Group financial statements.

The Company is exposed to market, credit and liquidity risks.

(b) Market risk

The Group defines market risk as the risk that arises from the Group's exposure to market movements which could result in the value of income, or the value of financial assets and liabilities, or the cash flows relating to these, fluctuating by different amounts.

The most significant element of market risk for the Company arises from its exposure to fluctuations in interest rates and equity markets. The Company is exposed to fluctuations in the fair value of future cash flows of financial instruments caused by changes in market interest rates. Financial assets and liabilities which are subject to the most significant exposure to interest rate risk include corporate bonds, money market instruments, derivative financial instruments and subordinated liabilities. The Company is also exposed to fluctuations in the equity securities markets, and as a result, changes in the value of its holdings and the return on those holdings.

Market risk is managed through the Group market risk policy. The Company is required to manage risk in accordance with the policy and to take mitigating action as appropriate to operate within defined risk appetites. The Company ensures that risks remain within the approved market risk appetite through the use of a number of specific controls and techniques, including defined lists of permitted securities and/or application of investment constraints and the active use of derivatives to improve the matching characteristics of assets and liabilities.

The Company's investments and liabilities are generally held in its functional currency. However, for strategic and capital reasons the Company may hold investments and liabilities in other currencies. In these cases, derivative financial instruments may be employed to manage currency exposure so that the Company has no remaining significant exposure to foreign exchange fluctuations.

Derivative instruments may also be utilised to reduce risk arising from exposure to fluctuations in interest rates and equity indices. Transactions in derivatives are undertaken on a regulated market or are with an approved counterparty. In employing derivatives, the Company must always have sufficient cash and cash equivalents or underlying assets to cover any potential obligation or exercise right following reasonably foreseeable adverse variations.

(b)(i) Market risk concentrations

The Group manages market risk concentrations by ensuring that exposure is divided among a number of instruments. For each type of asset within a portfolio, responsibility for setting adequately diversified benchmarks and for limiting the structure of market risk exposure is set by the Company.

The following table provides information regarding the market risk exposure of the Company at 31 December 2013 and 31 December 2012, showing diversification by asset type and geographic region.

The geographic classification for loans and cash and cash equivalents is determined by the currency of the underlying financial instruments.

	Geography
	UK		Europe		Other		Total
	2013	2012	2013	2012	2013	2012	2013	2012
	£m	£m	£m	£m	£m	£m	£m	£m
Loans to subsidiaries	316	316	315	306	13	8	644	630
Derivative financial assets	54	18	-	-	-	-	54	18
Equity securities and interests in pooled investment funds	-	4	-	-	12	11	12	15
Debt securities	519	181	150	120	55	-	724	301
Cash and cash equivalents	165	760	17	3	-	-	182	763
	1,054	1,279	482	429	80	19	1,616	1,727
Receivables and other financial assets							55	66
Financial investments							1,671	1,793

The market risk exposure to foreign currency assets is either matched by liabilities held in the same currency or managed using derivative financial instruments.

(b)(ii) Sensitivity analysis - market risk

The table below illustrates the sensitivity of profit after tax and equity to reasonably possible variations in the key assumptions made in relation to the Company's most significant market risk exposures. The sensitivity analysis has been performed by calculating the sensitivity of profit after tax and equity to changes in equity security prices and to changes in interest rates as at the reporting date, assuming other assumptions remain unchanged. When illustrating the impact of equity risk, the expectations of corporate earnings remain unchanged. Correlation between the different risks and/or other factors may mean that experience would differ from that expected if more than one risk event occurred simultaneously.

	Equity								Interest
	+20%		-20%		+10%		-10%		+1%		-1%
	2013	2012	2013	2012	2013	2012	2013	2012	2013	2012	2013	2012
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Impact on profit after tax	2	3	(2)	(3)	1	1	(1)	(1)	1	6	(1)	(6)

Equity sensitivity to market risk

The company classifies certain debt securities which back subordinated debt liabilities as AFS. These debt securities are measured at fair value. Interest is calculated using the effective interest method and recognised in the income statement. Other changes in fair value and the related tax are recognised in other comprehensive income. As a result the sensitivity of the Company's equity to variations in interest rate risk exposures differs from the sensitivity of the Company's profit after tax to variations in interest rate risk exposures.

The Company's equity sensitivity to a 1% increase in interest rates is (£17m) (2012: £6m) and to a 1% decrease in interest rates is £17m (2012: (£6m)).

The sensitivity of the Company's total equity to variations in equity markets in respect of each of the scenarios shown in the preceding tables is the same as the sensitivity of the Company's profit after tax.

Limitations

The sensitivity analysis is non-linear and larger or smaller impacts should not be derived from these results. The sensitivity analysis represents the impact on profits at the year end that the changes in assumptions can have. The sensitivity will vary with time, both due to changes in market conditions and changes in the actual asset mix, and this mix is being actively managed. The results of the sensitivity analysis may also have been different from those illustrated had the tests been applied at a date other than the reporting date.

The Group defines credit risk as the risk of exposure to loss if a counterparty fails to perform its financial obligations, including failure to perform these obligations in a timely manner. It also includes the risk of a reduction in the value of assets due to widening of mortgage, bond and swap spreads.

Credit risk is managed through the Group credit risk policy. The Company is required to manage risk in accordance with the Group policy and to take mitigating action as appropriate to operate within defined risk appetites.

In managing credit risk, maximum counterparty exposure limits are used for financial instruments where the Company has significant credit risk.

For cash and cash equivalents, the Company maintains exposures within limits that are set with reference to internal credit assessments. For derivative financial instruments, maximum counterparty exposure limits, net of collateral, are set with reference to internal credit assessments. The forms of collateral that may be accepted are also specified and minimum transfer amounts in respect of collateral transfers are documented. No credit limits are set in respect of loans to subsidiaries, where the main exposure is to SLAL, a wholly owned subsidiary undertaking, with long-term ratings of A+ from Standard & Poors' and A1 from Moody's. Any loans to subsidiaries require approval from the Group Enterprise Risk Management Committee prior to being transacted.

(c)(i) Credit exposure of financial assets

The following table provides an analysis of the quality of financial assets that are neither past due nor impaired at the reporting date and are exposed to credit risk. For those financial assets with credit ratings assigned by external rating agencies, classification is within the range of AAA to BBB. AAA is the highest possible rating and rated financial assets that fall outside the range of AAA to BBB have been classified as below BBB. For those financial assets that do not have credit ratings assigned by external rating agencies but where the Company has assigned internal ratings for use in managing and monitoring credit risk, the assets have been classified in the analysis that follows as 'internally rated'. If a financial asset is neither rated by an external agency nor 'internally rated', it is classified as 'not rated'. The total amounts presented represent the Company's maximum exposure to credit risk at the reporting date without taking into account any collateral held. The analysis also provides information on the concentration of credit risk.

The total amount in the table below represents the Company's credit exposure to financial investments (excluding equity securities) at the year end without taking into account any collateral held.

V. Risk management continued

(c)(i) Credit exposure of financial assets continued

	Loans to subsidiaries		Derivative financial assets		Debt Securities		Receivables and other financial assets		Cash and Cash equivalents		Total
	2013	2012	2013	2012	2013	2012	2013	2012	2013	2012	2013	2012
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
AAA	-	-	-	-	33	-	-	-	-	-	33	-
AA	-	-	-	-	122	25	-	-	2	2	124	27
A	-	-	-	-	478	275	-	-	36	18	514	293
BBB	-	-	-	-	90	-	-	-	2	2	92	2
Not rated	644	630	54	18	1	1	55	66	142	741	896	1,456
Total	644	630	54	18	724	301	55	66	182	763	1,659	1,778

The Company holds the majority of its cash and cash equivalents in a money market fund managed by a subsidiary company. This fund was previously internally rated as AAA, as it followed the guidelines prescribed by external rating agencies for money market funds seeking to achieve a AAA rating. The fund ceased to follow these guidelines in 2012 and, as a result, it is no longer considered appropriate to designate a AAA rating for this fund. However, the fund continues to invest in a range of counterparties that are externally rated, and uses concentration limits and maturity limits in managing its exposures.

Assets are deemed to be past due when a counterparty has failed to make a payment when contractually due. An allowance account is not used by the Company to record separately the impairment of assets by credit losses. Instead, the carrying amount of an asset subject to any impairment charge is directly reduced by the amount of the impairment. At 31 December 2013 and

31 December 2012, all financial assets were neither past due nor impaired.

(c)(ii) Collateral accepted and pledged in respect of financial instruments

Collateral in respect of derivative financial instruments is accepted from and provided to certain market counterparties to mitigate counterparty risk in the event of default. The use of collateral in respect of derivative financial instruments is governed by formal bilateral agreements between the parties. The amount of collateral required by either party is calculated daily based on the value of derivative transactions in accordance with these agreements and collateral is moved on a daily basis to ensure there is full collateralisation. Any collateral moved under the terms of these agreements is transferred outright. With regard to either collateral pledged or accepted the Company may request the return of, or be required to return, collateral to the extent it differs from that required under the daily margin calculations.

Where there is an event of default under the terms of the agreements, any collateral balances will be included in the close-out calculation of net counterparty exposure. At 31 December 2013, the Company had pledged £nil (2012: £nil) of cash as collateral for derivative financial liabilities and accepted £47m (2012: £10m) of cash as collateral for derivative financial assets.

None of the collateral accepted has been sold or repledged at the year end.

(c)(iii) Offsetting financial assets and liabilities

The Company offsets loans to/from subsidiaries where there is both an unconditional right of set off and an intention to settle on a net basis. The Company does not offset any other financial assets and liabilities in the statement of financial position, as there are no unconditional rights to set off.

The Company's over-the-counter (OTC) derivatives are all subject to an International Swaps and Derivative Association (ISDA) master agreement, which provide a right of set off that is enforceable only in the event of default, insolvency, or bankruptcy. An ISDA master agreement is considered a master netting agreement. The Company does not hold any other financial instruments which are subject to master netting agreements or similar arrangements.

				Related amounts not offset in the Company statement of financial position
As at 31 December 2013	Gross amounts of financial instruments recognised	Gross amounts of financial instruments offset in the Company statement of financial position	Net amounts of financial instruments as presented in the Company statement of financial position	Financial Instruments	Financial and cash collateral received	Net position
As at 31 December 2013	£m	£m	£m	£m	£m	£m
Financial assets
Derivatives¹	-	-	54	-	(47)	7
Loans to subsidiaries²	72	(72)	-	-	-	-
Total financial assets	72	(72)	54	-	(47)	7
Financial liabilities
Derivatives¹	-	-	(53)	-	-	(53)
Loans from subsidiaries²	(72)	72	-	-	-	-
Total financial liabilities	(72)	72	(53)	-	-	(53)

¹ Only derivatives subject to master netting agreements have been included above

² Only loans to/from subsidiaries that are offset are included above

				Related amounts not offset in the Company statement of financial position
As at 31 December 2012	Gross amounts of financial instruments recognised	Gross amounts of financial instruments offset in the Company statement of financial position	Net amounts of financial instruments as presented in the Company statement of financial position	Financial Instruments	Financial and cash collateral received	Net position
As at 31 December 2012	£m	£m	£m	£m	£m	£m
Financial assets
Derivatives¹	-	-	18	-	(10)	8
Loans to subsidiaries²	178	(178)	-	-	-	-
Total financial assets	178	(178)	18	-	(10)	8
Financial liabilities
Derivatives¹	-	-	(19)	-	-	(19)
Loans from subsidiaries²	(178)	178	-	-	-	-
Total financial liabilities	(178)	178	(19)	-	-	(19)

¹ Only derivatives subject to master netting agreements have been included above

² Only loans to/from subsidiaries that are offset are included above

V. Risk management continued

(d) Liquidity risk

The Group defines liquidity risk as the risk that the business units are unable to realise investments and other assets in order to settle their financial obligations when they fall due, or can do so only at excessive cost.

Liquidity risk is managed through the Group liquidity and capital management policy. The Company is required to manage risk in accordance with the Group policy and to take mitigating action as appropriate to operate within defined risk appetites.

Liquidity risk is managed by the Company in consultation with the central Group capital management function, which incorporates treasury management. Liquidity risk is primarily managed by placing limits on the value of financial assets held which are neither quoted nor regularly traded on a recognised exchange and by maintaining a portfolio of committed bank facilities. The Company maintains a £500m syndicated revolving credit facility which is currently undrawn and was renewed on 5 March 2013 with maturity due in March 2018. The Company is also responsible for the definition and management of the contingency funding plan which operates on a continuous basis and is fully documented.

(d)(i) Maturity analysis

The cash flows payable by the Company under its financial liabilities are analysed in the table that follows by remaining contractual maturities at the reporting date. The amounts shown are the contractual undiscounted cash flows.

	Within 1 year	2-5 years	6-10 years	11-15 years	16-20 years	Greater than 20 years	Total
2013	£m	£m	£m	£m	£m	£m	£m
Subordinated liabilities	97	363	427	408	278	757	2,330
Other financial liabilities	81	-	-	-	-	-	81
Total	178	363	427	408	278	757	2,411

2012
Subordinated liabilities	96	369	423	401	288	785	2,362
Other financial liabilities	39	-	-	-	-	-	39
Total	135	369	423	401	288	785	2,401

The principal amounts of financial liabilities where the counterparty has no right to repayment are excluded from the table along with interest payments on such instruments after 20 years.

The Company ensures that it can meet its financial obligations as they fall due by maintaining suitable levels of liquid assets. The obligations arising from subordinated liabilities are offset by receipts arising from loans to subsidiaries and investments in subsidiaries. Refer to Note K - Derivative financial instruments, for the maturity profile of undiscounted cash flows of derivative financial instruments.

W. Contingent liabilities, indemnities and guarantees

(a) Legal proceedings and regulations

The Company, like other financial organisations, is subject to legal proceedings and complaints in the normal course of its business. While it is not practicable to forecast or determine the final results of all pending or threatened legal proceedings, the Directors do not believe that such proceedings (including litigation) will have a material effect on the results and financial position of the Company.

(b) Issued share capital

The Scheme of Demutualisation of The Standard Life Assurance Company (SLAC) sets a 10-year time limit, ending in 2016, for those eligible members of SLAC who were not allocated shares at the date of demutualisation to claim their entitlement. As future issues of these shares are dependent upon the actions of eligible members, it is not practical to estimate the financial effect of this potential obligation.

During 2009, the Company provided an indemnity to the Standard Life Unclaimed Asset Trust (UAT) to cover any expenses, damages, losses and costs that cannot be recovered from the assets held within the UAT. The indemnity is for a maximum of £30m and gave rise to a liability of £nil at 31 December 2013 (2012: £nil).

Under the trust deed in respect of the Group's UK defined benefit pension plan, Standard Life Employee Services Limited (SLESL), the principal employer, must pay contributions to the pension scheme as the trustees' actuary may certify necessary. The Company has guaranteed the obligations of SLESL to the UK defined benefit pension plan for a period of 15 years from 10 July 2006, which gave rise to a liability of £nil at 31 December 2013 (2012: £nil).

X. Related party transactions

(a) Transactions with and balances from/(to) related parties

In the normal course of business, the Company enters into transactions with related parties. The year end balances arising from such transactions are as follows:

		2013	2012
	Notes	£m	£m
Due from related parties:
Subsidiaries		77	76
Loans to subsidiaries	J	644	630
		721	706

Transactions with related parties carried out by the Company during the year were as follows:

	2013	2012
	£m	£m
Revenues from related parties:
Subsidiaries	700	571
	700	571
Expenses to related parties:
Subsidiaries	66	71
	66	71

Where financial instruments arising from transactions with related parties are offset in the statement of financial position, the net position is presented in the tables above.

Current tax credit on net change of financial assets designated as available-for-sale

Tax relating to each component of other comprehensive income that may be reclassified subsequently to profit or loss

The Directors and key management personnel of the Company are considered to be the same as for the Group. Information on both Company and Group compensation paid to Directors and key management personnel can be found in Note 47 of the Group financial statements. Information on transactions with/from and balances from/to key management personnel and their close family members can also be found in Note 47 of the Group financial statements.

Y. Fair value of assets and liabilities

(a) Determination of fair value hierarchy

To provide further information on the approach used to determine and measure the fair value of certain assets and liabilities, the following fair value hierarchy categorisation has been used:

Level 1 Fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 Fair values measured using inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 Fair values measured using inputs that are not based on observable market data (unobservable inputs).

(b) Financial investments and financial liabilities

An analysis of the Company's financial investments and financial liabilities in accordance with the categories of financial instrument set out in IAS 39 Financial Instruments: Recognition and Measurement is presented in Notes J and S and includes those financial assets and liabilities held at fair value.

Information on the methods and assumptions used to determine fair values for each major category of instrument measured at fair value is given below.

Derivative financial assets - 2013: £54m (2012: £18m) and derivative financial liabilities - 2013: £53m (2012: £19m)

The Company's derivatives are over-the-counter (OTC) investments which are fair valued using valuation techniques based on observable market data and are therefore treated as level 2 investments within the fair value hierarchy.

Non-performance risk arising from the credit risk of each counterparty has been considered on a net exposure basis in line with the Group's risk management policies. At 31 December 2013 the residual credit risk is considered immaterial and no credit risk adjustment has been made.

Equity securities and interests in pooled investment funds - 2013: £12m (2012: £15m)

Equity instruments listed on a recognised exchange are valued using prices sourced from the primary exchange on which they are listed. These instruments are generally considered to be quoted in an active market and are therefore treated as level 1 instruments within the fair value hierarchy.

Y. Fair value of assets and liabilities continued

Unlisted equities are valued using an adjusted net asset value. The Company's exposure to unlisted equity securities primarily relates to private equity investments. The majority of the Company's private equity investments are carried out through European fund of funds structures, where the Company receives valuations from the investment managers of the underlying funds.

The valuations received from investment managers of the underlying funds are reviewed and where appropriate adjustments are made to reflect the impact of changes in market conditions between the date of the valuation and the end of the reporting period. The valuation of these securities is largely based on inputs that are not based on observable market data, and accordingly these instruments are treated as level 3 instruments within the fair value hierarchy. Where appropriate, reference is made to observable market data.

Debt securities - 2013: £724m (2012: £301m)

For debt securities, the Company has determined a hierarchy of pricing sources. The hierarchy consists of reputable external pricing providers who generally use observable market data. If prices are not available from these providers or are considered to be stale, the Company has established procedures to arrive at an internal assessment of the fair value. These procedures are based largely on inputs that are not based on observable market data. A further analysis by category of debt security is as follows:

· Government, including provincial and municipal, and supranational institution bonds

These instruments are valued using prices received from external pricing providers who generally base the price on quotes received from a number of market participants. They are treated as level 1 or level 2 instruments within the fair value hierarchy depending upon the nature of the underlying pricing information used for valuation purposes.

· Corporate bonds (listed or quoted in an established over the counter market including asset backed securities)

These instruments are generally valued using prices received from external pricing providers who generally consolidate quotes received from a panel of banks into a composite price. As the market becomes less active the quotes provided by some banks may be based on modelled prices rather than on actual transactions. These sources are based largely on observable market data, and therefore these instruments are treated as level 2 instruments within the fair value hierarchy. When prices received from external pricing providers are based on a single broker indicative quote the instruments are treated as level 3 instruments.

For instruments for which prices are either not available from external pricing providers or the prices provided are considered to be stale, the Company performs its own assessment of the fair value of these instruments. This assessment is largely based on inputs that are not based on observable market data, principally single broker indicative quotes, and accordingly these instruments are treated as level 3 instruments within the fair value hierarchy.

· Other corporate bonds including unquoted bonds, commercial paper and certificates of deposit

These instruments are valued using models. For unquoted bonds the model uses inputs from comparable bonds and includes credit spreads which are obtained from brokers or estimated internally. Commercial paper and certificates of deposit are valued using standard valuation formulas. The classification of these instruments within the fair value hierarchy will be either level 2 or 3 depending upon the nature of the underlying pricing information used for valuation purposes.

(c)(i) Fair value hierarchy for financial instruments measured at fair value in the statement of financial position

The following table sets out an analysis of financial assets and liabilities measured at fair value by level of the fair value hierarchy.

	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
	2013	2012	2013	2012	2013	2012	2013	2012
Assets	£m	£m	£m	£m	£m	£m	£m	£m
Derivative financial assets	-	-	54	18	-	-	54	18
Equity securities and interests in pooled investment funds	12	11	-	-	-	4	12	15
Debt securities	71	-	652	300	1	1	724	301
Total	83	11	706	318	1	5	790	334

Liabilities
Derivative financial liabilities	-	-	53	19	-	-	53	19
Total	-	-	53	19	-	-	53	19

There were no significant transfers between level 1 and level 2 in the year.

(c)(ii) Reconciliation of movements in level 3 instruments

During the year, there were £4m of disposals (2012: £nil) of level 3 equity securities.

(c)(iii) Sensitivity of level 3 financial instruments measured at fair value to changes in key assumptions

There is no significant sensitivity of level 3 financial instruments measured at fair value in relation to changes in key assumptions.

(d) Fair value of financial assets and liabilities measured at amortised cost

The table below presents estimated fair values of financial assets and liabilities whose carrying value does not approximate fair value. Fair values of financial assets and financial liabilities are based on observable market inputs where available, or are estimated using other valuation techniques.

		2013	2012	2013	2012
		Carrying value	Carrying value	Fair value	Fair value
	Notes	£m	£m	£m	£m
Assets
Loans to subsidiaries	J	644	630	687	662
Liabilities
Subordinated notes	T	499	498	557	533
Subordinated guaranteed bonds	T	502	502	571	553
Mutual Assurance Capital Securities	T	631	622	674	654

The estimated fair values of loans to subsidiaries are determined with reference to quoted market prices determined using observable market inputs. The fair values of subordinated liabilities are based on the quoted market offer price. The Company does not consider its loans to subsidiaries to be impaired.

The carrying value of all other financial assets and liabilities measured at amortised cost approximates their fair value.

The table below presents the instruments as detailed above measured at fair value by level of the fair value hierarchy.

	Level 1		Level 2		Level 3		Total
	2013	2012	2013	2012	2013	2012	2013	2012
	£m	£m	£m	£m	£m	£m	£m	£m
Assets
Loans to subsidiaries	-	-	674	654	13	8	687	662
Liabilities
Subordinated notes	-	-	557	533	-	-	557	533
Subordinated guaranteed bonds	-	-	571	553	-	-	571	553
Mutual Assurance Capital Securities	-	-	674	654	-	-	674	654

Supplementary information

1. Group assets under administration and net flows

Group assets under administration (AUA) represent the IFRS gross assets of the Group adjusted to include third party AUA, which are not included on the consolidated statement of financial position. In addition, certain assets are excluded, for example deferred acquisition costs, intangibles and reinsurance assets.

Group assets under administration (summary)

12 months ended 31 December 2013

	Opening AUA at 1 Jan 2013	Gross flows	Redemptions	Net flows	Market and other movements	Closing AUA at 31 Dec 2013
	£bn	£bn	£bn	£bn	£bn	£bn
Fee business
UK retail new	28.7	5.9	(2.8)	3.1	6.8	38.6
UK retail old	31.7	0.6	(3.2)	(2.6)	4.4	33.5
UK retail	60.4	6.5	(6.0)	0.5	11.2	72.1
Corporate	24.5	4.3	(2.3)	2.0	2.7	29.2
UK retail and corporate	84.9	10.8	(8.3)	2.5	13.9	101.3
Institutional pensions	21.3	5.2	(3.3)	1.9	2.1	25.3
Conventional with profits	4.1	0.1	(1.6)	(1.5)	0.3	2.9
UK total	110.3	16.1	(13.2)	2.9	16.3	129.5
Europe	13.6	2.4	(1.2)	1.2	0.9	15.7
Standard Life Investments third party	83.0	22.8	(12.7)	10.1	4.3	97.4
Canada	15.9	2.8	(2.2)	0.6	0.8	17.3
Asia and Emerging Markets (wholly owned)	0.2	0.1	(0.1)	-	0.1	0.3
Consolidation/eliminations¹	(42.3)	(10.5)	6.0	(4.5)	(3.3)	(50.1)
Total fee business	180.7	33.7	(23.4)	10.3	19.1	210.1
Spread/risk
UK	15.3	0.6	(1.3)	(0.7)	-	14.6
Europe	0.5	-	-	-	-	0.5
Canada	9.9	1.0	(1.2)	(0.2)	(1.3)	8.4
Total spread/risk business	25.7	1.6	(2.5)	(0.9)	(1.3)	23.5
Assets not backing products in long-term savings business	8.5	-	-	-	(1.1)	7.4
Joint ventures	1.5	0.4	(0.2)	0.2	(0.1)	1.6
Other corporate assets	2.0	-	-	-	-	2.0
Other consolidation/eliminations¹	(0.3)	-	-	-	(0.1)	(0.4)
Group assets under administration	218.1	35.7	(26.1)	9.6	16.5	244.2
Group assets under administration managed by:
Standard Life Group entities	176.0					194.7
Other third party managers	42.1					49.5
Total	218.1					244.2

¹ In order to be consistent with the presentation of new business information, certain products are included in both life and pensions AUA and investment operations. Therefore, at a Group level an elimination adjustment is required to remove any duplication, in addition to other necessary consolidation adjustments.

Group assets under administration (summary)

12 months ended 31 December 2012

	Opening AUA at 1 Jan 2012	Gross flows	Redemptions	Net flows	Market and other movements	Closing AUA at 31 Dec 2012
	£bn	£bn	£bn	£bn	£bn	£bn
Fee business
UK retail new	23.7	5.2	(2.4)	2.8	2.2	28.7
UK retail old	32.1	0.8	(3.9)	(3.1)	2.7	31.7
UK retail	55.8	6.0	(6.3)	(0.3)	4.9	60.4
Corporate	22.0	3.0	(1.8)	1.2	1.3	24.5
UK retail and corporate	77.8	9.0	(8.1)	0.9	6.2	84.9
Institutional pensions	17.5	4.2	(2.4)	1.8	2.0	21.3
Conventional with profits	5.3	0.1	(1.5)	(1.4)	0.2	4.1
UK total	100.6	13.3	(12.0)	1.3	8.4	110.3
Europe	11.5	2.1	(1.0)	1.1	1.0	13.6
Standard Life Investments third party	71.8	17.6	(11.5)	6.1	5.1	83.0
Canada	14.3	2.8	(2.0)	0.8	0.8	15.9
Asia and Emerging Markets (wholly owned)	0.1	0.1	-	0.1	-	0.2
Consolidation/eliminations¹	(35.5)	(8.3)	4.6	(3.7)	(3.1)	(42.3)
Total fee business	162.8	27.6	(21.9)	5.7	12.2	180.7
Spread/risk
UK	14.4	0.7	(1.2)	(0.5)	1.4	15.3
Europe	0.5	-	-	-	-	0.5
Canada	10.3	0.9	(1.3)	(0.4)	-	9.9
Total spread/risk business	25.2	1.6	(2.5)	(0.9)	1.4	25.7
Assets not backing products in long-term savings business	8.5	-	-	-	-	8.5
Joint ventures	1.2	0.4	(0.2)	0.2	0.1	1.5
Other corporate assets	1.6	-	-	-	0.4	2.0
Other consolidation/eliminations¹	(0.9)	-	-	-	0.6	(0.3)
Group assets under administration	198.4	29.6	(24.6)	5.0	14.7	218.1
Group assets under administration managed by:
Standard Life Group entities	163.3					176.0
Other third party managers	35.1					42.1
Total	198.4					218.1

1. Group assets under administration and net flows continued

Group assets under administration

12 months ended 31 December 2013

	Fee (F) - Spread/risk (S/R)	Opening AUA at 1 Jan 2013	Gross flows	Redemptions	Net flows	Market and other movements	Closing AUA at 31 Dec 2013
	Fee (F) - Spread/risk (S/R)	£bn	£bn	£bn	£bn	£bn	£bn
UK
UK retail new fee business	F	28.7	5.9	(2.8)	3.1	6.8	38.6
UK retail old fee business	F	31.7	0.6	(3.2)	(2.6)	4.4	33.5
UK retail fee business		60.4	6.5	(6.0)	0.5	11.2	72.1
Corporate pensions	F	24.5	4.3	(2.3)	2.0	2.7	29.2
UK retail and corporate fee business		84.9	10.8	(8.3)	2.5	13.9	101.3
Institutional pensions	F	21.3	5.2	(3.3)	1.9	2.1	25.3
Conventional with profits	F	4.1	0.1	(1.6)	(1.5)	0.3	2.9
UK total fee business	F	110.3	16.1	(13.2)	2.9	16.3	129.5
Annuities	S/R	15.3	0.6	(1.3)	(0.7)	-	14.6
Assets not backing products		6.5	-	-	-	(0.8)	5.7
UK long-term savings		132.1	16.7	(14.5)	2.2	15.5	149.8
Europe
Fee	F	13.6	2.4	(1.2)	1.2	0.9	15.7
Spread/risk	S/R	0.5	-	-	-	-	0.5
Europe long-term savings		14.1	2.4	(1.2)	1.2	0.9	16.2
UK and Europe long-term savings		146.2	19.1	(15.7)	3.4	16.4	166.0

Canada¹
Corporate pensions fee	F	12.0	1.8	(1.5)	0.3	0.7	13.0
Corporate pensions spread/risk	S/R	3.6	0.3	(0.4)	(0.1)	(0.3)	3.2
Corporate pensions		15.6	2.1	(1.9)	0.2	0.4	16.2
Corporate benefits	S/R	0.6	0.4	(0.3)	0.1	(0.2)	0.5
Retail fee	F	3.9	1.0	(0.7)	0.3	0.1	4.3
Retail spread/risk	S/R	5.7	0.3	(0.5)	(0.2)	(0.8)	4.7
Asset not backing products		2.0	-	-	-	(0.3)	1.7
Canada long-term savings		27.8	3.8	(3.4)	0.4	(0.8)	27.4

Asia and Emerging Markets
Wholly owned long-term savings	F	0.2	0.1	(0.1)	-	0.1	0.3
Joint ventures long-term savings		1.5	0.4	(0.2)	0.2	(0.1)	1.6
Asia and Emerging Markets long-term savings		1.7	0.5	(0.3)	0.2	-	1.9
Total worldwide long-term savings		175.7	23.4	(19.4)	4.0	15.6	195.3

Other corporate assets		2.0	-	-	-	-	2.0
Standard Life Investments third party assets under management		83.0	22.8	(12.7)	10.1	4.3	97.4
Consolidation and elimination adjustments^2,3		(42.6)	(10.5)	6.0	(4.5)	(3.4)	(50.5)
Group assets under administration		218.1	35.7	(26.1)	9.6	16.5	244.2

¹Canada categories have been revised to align with other business segments. The main changes are that group products are now referred to as corporate and individual products as retail.

² In order to be consistent with the presentation of new business information, certain products are included in both life and pensions AUA and investment operations. Therefore, at a Group level an elimination adjustment is required to remove any duplication, in addition to other necessary consolidation adjustments.

³Consolidation and elimination adjustments closing AUA includes Standard Life Investments third party insurance contracts of £35.3bn (31 December 2012: £31.4bn), UK mutual funds and other £13.0bn (31 December 2012: £8.9bn) and Canada mutual funds of £1.5bn (31 December 2012: £1.6bn).

2. Long-term savings operations net flows

12 months ended 31 December 2013

		Gross flows	Redemptions	Net flows	Gross flows	Redemptions	Net flows
	Fee (F) - Spread/risk (S/R)	12 months to 31 Dec 2013	12 months to 31 Dec 2013	12 months to 31 Dec 2013	12 months to 31 Dec 2012	12 months to 31 Dec 2012	12 months to 31 Dec 2012
	Fee (F) - Spread/risk (S/R)	£m	£m	£m	£m	£m	£m
UK
Retail new fee business	F	5,931	(2,862)	3,069	5,170	(2,417)	2,753
Retail old fee business	F	662	(3,304)	(2,642)	871	(3,928)	(3,057)
UK retail fee business		6,593	(6,166)	427	6,041	(6,345)	(304)
Corporate pensions	F	4,241	(2,260)	1,981	2,971	(1,747)	1,224
UK retail and corporate fee business		10,834	(8,426)	2,408	9,012	(8,092)	920
Institutional pensions	F	5,184	(3,277)	1,907	4,199	(2,367)	1,832
Conventional with profits	F	89	(1,539)	(1,450)	129	(1,576)	(1,447)
UK total fee business		16,107	(13,242)	2,865	13,340	(12,035)	1,305
Spread/risk	S/R	544	(1,198)	(654)	699	(1,229)	(530)
UK long-term savings		16,651	(14,440)	2,211	14,039	(13,264)	775
Europe
Fee	F	2,382	(1,228)	1,154	2,074	(936)	1,138
Spread/risk	S/R	27	(34)	(7)	41	(32)	9
Europe long-term savings		2,409	(1,262)	1,147	2,115	(968)	1,147
UK and Europe long-term savings		19,060	(15,702)	3,358	16,154	(14,232)	1,922

Canada
Corporate pensions fee	F	1,796	(1,548)	248	1,852	(1,352)	500
Corporate pensions spread/risk	S/R	240	(352)	(112)	197	(421)	(224)
Corporate pensions		2,036	(1,900)	136	2,049	(1,773)	276
Corporate benefits	S/R	436	(354)	82	452	(360)	92
Retail fee	F	1,046	(722)	324	943	(628)	315
Retail spread/risk	S/R	305	(471)	(166)	240	(516)	(276)
Canada long-term savings		3,823	(3,447)	376	3,684	(3,277)	407

Asia and Emerging Markets
Wholly owned long-term savings	F	105	(25)	80	76	(21)	55
Joint ventures long-term savings¹		411	(180)	231	410	(161)	249
Asia and Emerging Markets long-term savings		516	(205)	311	486	(182)	304
Total worldwide long-term savings		23,399	(19,354)	4,045	20,324	(17,691)	2,633

¹The method used by our Indian JV, HDFC Standard Life Insurance Company Limited, to calculate redemptions has been revised. The new method has been applied from April 2013 and implemented from Q4 2013 and has an impact of reducing redemptions in 2013 by £15m. Prior period comparatives have not been restated.

2. Long-term savings operations net flows continued

Three months ended 31 December 2013

		Gross flows	Redemptions	Net flows	Gross flows	Redemptions	Net flows
	Fee (F) - Spread/risk (S/R)	3 months to 31 Dec 2013	3 months to 31 Dec 2013	3 months to 31 Dec 2013	3 months to 31 Dec 2012	3 months to 31 Dec 2012	3 months to 31 Dec 2012
	Fee (F) - Spread/risk (S/R)	£m	£m	£m	£m	£m	£m
UK
Retail new fee business	F	1,298	(818)	480	1,233	(658)	575
Retail old fee business	F	147	(769)	(622)	178	(1,046)	(868)
UK retail fee business		1,445	(1,587)	(142)	1,411	(1,704)	(293)
Corporate pensions	F	1,635	(529)	1,106	708	(512)	196
UK retail and corporate fee business		3,080	(2,116)	964	2,119	(2,216)	(97)
Institutional pensions	F	875	(674)	201	1,067	(855)	212
Conventional with profits	F	19	(314)	(295)	28	(436)	(408)
UK total fee business		3,974	(3,104)	870	3,214	(3,507)	(293)
Spread/risk	S/R	106	(286)	(180)	215	(306)	(91)
UK long-term savings		4,080	(3,390)	690	3,429	(3,813)	(384)
Europe
Fee	F	707	(432)	275	637	(282)	355
Spread/risk	S/R	5	(8)	(3)	11	(8)	3
Europe long-term savings		712	(440)	272	648	(290)	358
UK and Europe long-term savings		4,792	(3,830)	962	4,077	(4,103)	(26)

Canada
Corporate pensions fee	F	511	(362)	149	470	(353)	117
Corporate pensions spread/risk	S/R	85	(86)	(1)	51	(105)	(54)
Corporate pensions		596	(448)	148	521	(458)	63
Corporate benefits	S/R	101	(82)	19	116	(92)	24
Retail fee	F	307	(193)	114	261	(175)	86
Retail spread/risk	S/R	96	(117)	(21)	60	(128)	(68)
Canada long-term savings		1,100	(840)	260	958	(853)	105

Asia and Emerging Markets
Wholly owned long-term savings	F	28	(7)	21	20	(8)	12
Joint ventures long-term savings¹		90	(39)	51	99	(45)	54
Asia and Emerging Markets long-term savings		118	(46)	72	119	(53)	66
Total worldwide long-term savings		6,010	(4,716)	1,294	5,154	(5,009)	145

15 months ended 31 December 2013

		Net flows
	Fee (F) - Spread/risk (S/R)	3 months to 31 Dec 2013	3 months to 30 Sept 2013	3 months to 30 Jun 2013	3 months to 31 Mar 2013	3 months to 31 Dec 2012
	Fee (F) - Spread/risk (S/R)	£m	£m	£m	£m	£m
UK
Retail new fee business	F	480	859	906	824	575
Retail old fee business	F	(622)	(663)	(692)	(665)	(868)
UK retail fee business		(142)	196	214	159	(293)
Corporate pensions	F	1,106	341	272	262	196
UK retail and corporate fee business		964	537	486	421	(97)
Institutional pensions	F	201	(143)	857	992	212
Conventional with profits	F	(295)	(465)	(388)	(302)	(408)
UK total fee business		870	(71)	955	1,111	(293)
Spread/risk	S/R	(180)	(164)	(157)	(153)	(91)
UK long-term savings		690	(235)	798	958	(384)
Europe
Fee	F	275	309	320	250	355
Spread/risk	S/R	(3)	(4)	(1)	1	3
Europe long-term savings		272	305	319	251	358
UK and Europe long-term savings		962	70	1,117	1,209	(26)

Canada
Corporate pensions fee	F	149	(8)	(15)	122	117
Corporate pensions spread/risk	S/R	(1)	9	(59)	(61)	(54)
Corporate pensions		148	1	(74)	61	63
Corporate benefits	S/R	19	21	21	21	24
Retail fee	F	114	79	65	66	86
Retail spread/risk	S/R	(21)	(39)	(45)	(61)	(68)
Canada long-term savings		260	62	(33)	87	105

Asia and Emerging Markets
Wholly owned long-term savings	F	21	20	21	18	12
Joint ventures long-term savings		51	55	27	98	54
Asia and Emerging Markets long-term savings		72	75	48	116	66
Total worldwide long-term savings		1,294	207	1,132	1,412	145

3. Investment operations

12 months ended 31 December 2013

Third party assets under management by geography

		Opening AUM at 1 Jan 2013	Gross flows	Redemptions	Net flows	Market and other movements	Net movement in AUM	Closing AUM at 31 Dec 2013
		£m	£m	£m	£m	£m	£m	£m
UK	Wholesale	14,815	7,157	(3,659)	3,498	1,980	5,478	20,293
	Institutional	39,437	5,919	(4,649)	1,270	2,210	3,480	42,917
		54,252	13,076	(8,308)	4,768	4,190	8,958	63,210
Europe	Wholesale	2,457	2,215	(1,144)	1,071	224	1,295	3,752
	Institutional	5,550	1,135	(407)	728	338	1,066	6,616
		8,007	3,350	(1,551)	1,799	562	2,361	10,368
Canada	Wholesale	3,626	824	(725)	99	149	248	3,874
	Institutional	9,397	1,759	(1,031)	728	(354)	374	9,771
		13,023	2,583	(1,756)	827	(205)	622	13,645
US	Institutional	1,997	2,694	(550)	2,144	107	2,251	4,248
Asia Pacific	Wholesale	416	921	(203)	718	(14)	704	1,120
	Institutional	823	48	(321)	(273)	132	(141)	682
		1,239	969	(524)	445	118	563	1,802
India	Wholesale	3,306	(46)	-	(46)	(363)	(409)	2,897
	Cash funds	1,196	129	-	129	(145)	(16)	1,180
		4,502	83	-	83	(508)	(425)	4,077
Total	Wholesale	24,620	11,071	(5,731)	5,340	1,976	7,316	31,936
	Institutional	57,204	11,555	(6,958)	4,597	2,433	7,030	64,234
	Cash funds	1,196	129	-	129	(145)	(16)	1,180
Total third party AUM		83,020	22,755	(12,689)	10,066	4,264	14,330	97,350

Third party assets under management by asset class

	Opening AUM at 1 Jan 2013	Gross flows	Redemptions	Net flows	Market and other movements	Net movement in AUM	Closing AUM at 31 Dec 2013
	£m	£m	£m	£m	£m	£m	£m
Equities	18,326	2,326	(3,216)	(890)	2,105	1,215	19,541
Fixed Income	27,342	4,513	(3,319)	1,194	(1,749)	(555)	26,787
Multi Asset¹	22,055	12,503	(4,661)	7,842	2,260	10,102	32,157
Real Estate	6,525	612	(334)	278	49	327	6,852
MyFolio	2,241	1,834	(364)	1,470	273	1,743	3,984
Other²	6,531	967	(795)	172	1,326	1,498	8,029
Total third party AUM	83,020	22,755	(12,689)	10,066	4,264	14,330	97,350

Third party investment products and insurance contracts and total AUM

	Opening AUM at 1 Jan 2013	Gross flows	Redemptions	Net flows	Market and other movements	Net movement in AUM	Closing AUM at 31 Dec 2013
	£m	£m	£m	£m	£m	£m	£m
Third party investment products	51,612	15,789	(8,400)	7,389	3,077	10,466	62,078
Third party insurance contracts	31,408	6,966	(4,289)	2,677	1,187	3,864	35,272
Total third party AUM	83,020	22,755	(12,689)	10,066	4,264	14,330	97,350
Total AUM	167,723						184,113

¹ Comprises suite of global absolute return strategies and balanced funds.

² Comprises cash and private equity.

Funds denominated in foreign currencies have been translated to Sterling using the closing exchange rates at 31 December 2013. Investment fund flows are translated at average exchange rates. Gains and losses arising from the translation of funds denominated in foreign currencies are included in the market and other movements column.

Three months ended 31 December 2013

Third party assets under management by geography

		Opening AUM at 1 Oct 2013	Gross flows	Redemptions	Net flows	Market and other movements	Net movement in AUM	Closing AUM at 31 Dec 2013
		£m	£m	£m	£m	£m	£m	£m
UK	Wholesale	18,370	1,837	(1,057)	780	1,143	1,923	20,293
	Institutional	42,791	1,199	(1,163)	36	90	126	42,917
		61,161	3,036	(2,220)	816	1,233	2,049	63,210
Europe	Wholesale	3,527	651	(334)	317	(92)	225	3,752
	Institutional	6,683	184	(297)	(113)	46	(67)	6,616
		10,210	835	(631)	204	(46)	158	10,368
Canada	Wholesale	3,818	212	(186)	26	30	56	3,874
	Institutional	9,622	575	(295)	280	(131)	149	9,771
		13,440	787	(481)	306	(101)	205	13,645
US	Institutional	3,863	491	(190)	301	84	385	4,248
Asia Pacific	Wholesale	1,128	134	(53)	81	(89)	(8)	1,120
	Institutional	674	12	(24)	(12)	20	8	682
		1,802	146	(77)	69	(69)	-	1,802
India	Wholesale	2,870	(233)	-	(233)	260	27	2,897
	Cash funds	853	297	-	297	30	327	1,180
		3,723	64	-	64	290	354	4,077
Total	Wholesale	29,713	2,601	(1,630)	971	1,252	2,223	31,936
	Institutional	63,633	2,461	(1,969)	492	109	601	64,234
	Cash funds	853	297	-	297	30	327	1,180
Total third party AUM		94,199	5,359	(3,599)	1,760	1,391	3,151	97,350

Third party assets under management by asset class

	Opening AUM at 1 Oct 2013	Gross flows	Redemptions	Net flows	Market and other movements	Net movement in AUM	Closing AUM at 31 Dec 2013
	£m	£m	£m	£m	£m	£m	£m
Equities	19,575	722	(942)	(220)	186	(34)	19,541
Fixed Income	27,000	965	(1,076)	(111)	(102)	(213)	26,787
Multi Asset¹	30,457	2,381	(1,213)	1,168	532	1,700	32,157
Real Estate	6,592	189	(99)	90	170	260	6,852
MyFolio	3,514	471	(95)	376	94	470	3,984
Other²	7,061	631	(174)	457	511	968	8,029
Total third party AUM	94,199	5,359	(3,599)	1,760	1,391	3,151	97,350

Third party investment products and insurance contracts and total AUM

	Opening AUM at 1 Oct 2013	Gross flows	Redemptions	Net flows	Market and other movements	Net movement in AUM	Closing AUM at 31 Dec 2013
	£m	£m	£m	£m	£m	£m	£m
Third party investment products	59,105	4,025	(2,661)	1,364	1,609	2,973	62,078
Third party insurance contracts	35,094	1,334	(938)	396	(218)	178	35,272
Total third party AUM	94,199	5,359	(3,599)	1,760	1,391	3,151	97,350
Total AUM	179,571						184,113

¹ Comprises suite of global absolute return strategies and balanced funds.

² Comprises cash and private equity.

4. Long-term savings operations new business

12 months ended 31 December 2013

		Single premiums			New regular premiums		PVNBP¹
	Fee (F) - Spread/risk (S/R)	12 months to 31 Dec 2013	12 months to 31 Dec 2012	12 months to 31 Dec 2013		12 months to 31 Dec 2012	12 months to 31 Dec 2013	12 months to 31 Dec 2012	Change	Change in constant currency
	Fee (F) - Spread/risk (S/R)	£m	£m	£m		£m	£m	£m	%	%
UK
Retail new fee business	F	5,277	4,483	71		84	5,666	4,909	15%	15%
Retail old fee business	F	197	358	18		17	243	396	(39%)	(39%)
UK retail fee business		5,474	4,841	89		101	5,909	5,305	11%	11%
Corporate pensions	F	1,956	892	882		535	5,885	3,397	73%	73%
UK retail and corporate fee business		7,430	5,733	971		636	11,794	8,702	36%	36%
Institutional pensions	F	4,871	3,896	12		2	4,918	3,897	26%	26%
UK total fee business		12,301	9,629	983		638	16,712	12,599	33%	33%
Spread/risk	S/R	334	462	-		-	335	463	(28%)	(28%)
UK long-term savings		12,635	10,091	983		638	17,047	13,062	31%	31%
Europe
Fee	F	1,567	1,370	39		40	2,003	1,838	9%	6%
Spread/risk	S/R	26	35	-		-	26	35	(26%)	(30%)
Europe long-term savings		1,593	1,405	39		40	2,029	1,873	8%	6%
UK and Europe long-term savings		14,228	11,496	1,022		678	19,076	14,935	28%	27%

Canada
Corporate pensions fee	F	484	602	26		57	1,051	1,612	(35%)	(34%)
Corporate pensions spread/risk	S/R	118	74	3		8	182	216	(16%)	(14%)
Corporate pensions		602	676	29		65	1,233	1,828	(33%)	(31%)
Corporate benefits	S/R	1	1	34		44	417	680	(39%)	(38%)
Retail fee	F	1,046	943	-		-	1,046	943	11%	13%
Retail spread/risk	S/R	198	133	-		-	198	133	49%	52%
Canada long-term savings		1,847	1,753	63		109	2,894	3,584	(19%)	(18%)

Asia and Emerging Markets
Wholly owned long-term savings	F	16	8	67		41	468	252	86%	84%
India		49	33	77		94	388	435	(11%)	(3%)
China		21	43	12		10	77	87	(11%)	(14%)
Joint ventures long-term savings		70	76	89		104	465	522	(11%)	(5%)
Asia and Emerging Markets long-term savings		86	84	156		145	933	774	21%	25%
Total worldwide long-term savings		16,161	13,333	1,241		932	22,903	19,293	19%	19%

New business gross sales for overseas operations are calculated using average exchange rates.

Three months ended 31 December 2013

		Single premiums		New regular premiums		PVNBP¹
	Fee (F) - Spread/risk (S/R)	3 months to 31 Dec 2013	3 months to 31 Dec 2012	3 months to 31 Dec 2013	3 months to 31 Dec 2012	3 months to 31 Dec 2013	3 months to 31 Dec 2012	Change	Change in constant currency
	Fee (F) - Spread/risk (S/R)	£m	£m	£m	£m	£m	£m	%	%
UK
Retail new fee business	F	1,102	1,063	15	15	1,196	1,134	5%	5%
Retail old fee business	F	35	58	5	4	43	68	(37%)	(37%)
UK retail fee business		1,137	1,121	20	19	1,239	1,202	3%	3%
Corporate pensions	F	1,014	174	230	112	2,192	690	218%	218%
UK retail and corporate fee business		2,151	1,295	250	131	3,431	1,892	81%	81%
Institutional pensions	F	795	919	-	2	795	919	(13%)	(13%)
UK total fee business		2,946	2,214	250	133	4,226	2,811	50%	50%
Spread/risk	S/R	66	156	-	-	66	156	(58%)	(58%)
UK long-term savings		3,012	2,370	250	133	4,292	2,967	45%	45%
Europe
Fee	F	420	408	13	17	559	685	(18%)	(20%)
Spread/risk	S/R	5	10	-	-	5	10	(50%)	(54%)
Europe long-term savings		425	418	13	17	564	695	(19%)	(21%)
UK and Europe long-term savings		3,437	2,788	263	150	4,856	3,662	33%	32%

Canada
Corporate pensions fee	F	209	154	7	17	340	419	(19%)	(15%)
Corporate pensions spread/risk	S/R	57	24	-	2	88	58	52%	57%
Corporate pensions		266	178	7	19	428	477	(10%)	(6%)
Corporate benefits	S/R	1	-	11	14	176	214	(18%)	(14%)
Retail fee	F	307	261	-	-	307	261	18%	24%
Retail spread/risk	S/R	74	33	-	-	74	33	124%	136%
Canada long-term savings		648	472	18	33	985	985	-	5%

Asia and Emerging Markets
Wholly owned long-term savings	F	5	2	21	14	158	89	78%	77%
India		8	6	16	25	77	111	(31%)	(18%)
China		2	7	3	3	16	18	(11%)	(11%)
Joint ventures long-term savings		10	13	19	28	93	129	(28%)	(17%)
Asia and Emerging Markets long-term savings		15	15	40	42	251	218	15%	23%
Total worldwide long-term savings		4,100	3,275	321	225	6,092	4,865	25%	26%

¹ Present value of new business premiums (PVNBP) is the industry measure of insurance new business sales under the EEV methodology, calculated as 100% of single premiums plus the expected present value of new regular premiums. The PVNBP figures for the three months to 31 December 2013 and 31 December 2012 exclude the full impact of year end changes to non-economic assumptions. The effect of changes to year end non-economic assumptions was a decrease in total PVNBP of £518m (2012: increase £6m).

New business gross sales for overseas operations are calculated using average exchange rates.

4. Long-term savings operations new business continued

15 months ended 31 December 2013

		PVNBP
	Fee (F) - Spread/risk (S/R)	3 months to 31 Dec 2013¹	3 months to 30 Sep 2013	3 months to 30 Jun 2013	3 months to 31 Mar 2013	3 months to 31 Dec 2012¹
	Fee (F) - Spread/risk (S/R)	£m	£m	£m	£m	£m
UK
Retail new fee business	F	1,196	1,512	1,527	1,437	1,134
Retail old fee business	F	43	48	60	83	68
UK retail fee business		1,239	1,560	1,587	1,520	1,202
Corporate pensions	F	2,192	1,200	1,499	1,319	690
UK retail and corporate fee business		3,431	2,760	3,086	2,839	1,892
Institutional pensions	F	795	1,003	1,434	1,686	919
UK total fee business		4,226	3,763	4,520	4,525	2,811
Spread/risk	S/R	66	82	95	92	156
UK long-term savings		4,292	3,845	4,615	4,617	2,967
Europe
Fee	F	559	481	504	450	685
Spread/risk	S/R	5	5	7	9	10
Europe long-term savings		564	486	511	459	695
UK and Europe long-term savings		4,856	4,331	5,126	5,076	3,662

Canada
Corporate pensions fee	F	340	159	189	386	419
Corporate pensions spread/risk	S/R	88	25	43	75	58
Corporate pensions		428	184	232	461	477
Corporate benefits	S/R	176	95	126	135	214
Retail fee	F	307	240	235	264	261
Retail spread/risk	S/R	74	49	45	30	33
Canada long-term savings		985	568	638	890	985

Asia and Emerging Markets
Wholly owned long-term savings	F	158	118	117	93	89
India		77	72	49	190	111
China		16	19	19	23	18
Joint ventures long-term savings		93	91	68	213	129
Asia and Emerging Markets long-term savings		251	209	185	306	218
Total worldwide long-term savings		6,092	5,108	5,949	6,272	4,865

¹ The three month period to 31 December 2013 and 31 December 2012 exclude the full impact of year end changes to non-economic assumptions. The effect of changes to year end non-economic assumptions was a decrease in total PVNBP of £518m (2012: increase £6m).

This information is provided by RNS

The company news service from the London Stock Exchange

END

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