Half Yearly Report - Part 5 of 5

RNS Number : 9311J

Standard Life plc

14 August 2012

Standard Life plc

Half Year Results 2012

Part 5 of 5

5 Independent auditors' review report

Introduction

We have been engaged by Standard Life plc (the Company) to review the financial information in the Half Year Results 2012 for the six months ended 30 June 2012, which comprises:

· The International Financial Reporting Standards (IFRS) condensed consolidated income statement, the IFRS consolidated statement of comprehensive income, the IFRS condensed consolidated statement of financial position, the IFRS consolidated statement of changes in equity, the IFRS condensed consolidated statement of cash flows and related notes prepared in accordance with the IFRS accounting policies set out in Note 3.1 (together the IFRS financial information), and

· The European Embedded Value (EEV) consolidated income statement, the EEV earnings per share statement, the EEV

consolidated statement of comprehensive income, the EEV consolidated statement of financial position, and related notes prepared on the EEV basis set out in Note 4.1 (together the EEV financial information).

We have read the other information contained in the Half Year Results 2012, including the pro forma reconciliation of consolidated Group operating profit to IFRS profit for the period, and considered whether it contains any apparent misstatements or material inconsistencies with either the IFRS financial information or the EEV financial information.

Directors' responsibilities

The Half Year Results 2012 is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Half Year Results 2012 in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in Note 3.1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The IFRS financial information included in the Half Year Results 2012 has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting, as adopted by the European Union. The Directors are responsible for preparing the EEV financial information in accordance with the EEV basis set out in Note 4.1.

Our responsibility

Our responsibility is to express to the Company a conclusion on the IFRS financial information included in the Half Year Results 2012 based on our review. This report on the IFRS financial information, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose.

Our responsibility on the EEV financial information in the Half Year Results 2012 is to express to the Company a conclusion based on our review. This report on the EEV financial information, including the conclusion, has been prepared for and only for the Company in accordance with our engagement letter dated 4 May 2012 and for no other purpose.

We do not, in producing this report, 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.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that:

· the IFRS financial information in the Half Year Results 2012 for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority, and

· the EEV financial information in the Half Year Results 2012 for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with the EEV basis set out in Note 4.1.

PricewaterhouseCoopers LLP

Chartered Accountants

Edinburgh

14 August 2012

(a)	The maintenance and integrity of the Standard Life 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.

6 Supplementary information

6.1 EEV and EEV operating profit

	Covered
	UK (and HWPF TVOG)	Canada	International	Total non-covered	Group elimination	Total	Pence per share
30 June 2012	£m	£m	£m	£m	£m	£m	p
Opening EEV	3,208	1,712	867	1,552	89	7,428	317
New business contribution	126	26	26	-	-	178
Contribution from in-force business	185	185	17	-	-	387
Non-covered business	-	-	-	39	-	39
EEV operating profit before tax	311	211	43	39	-	604

Tax on EEV operating profit	(71)	(52)	(11)	15	-	(119)
EEV operating profit after tax	240	159	32	54	-	485	21

EEV non-operating profit/(loss) after tax	65	107	27	(7)	(52)	140	6
EEV profit/(loss) after tax	305	266	59	47	(52)	625
Non-trading adjustments	(219)	106	8	(146)	-	(251)
Closing EEV	3,294	2,084	934	1,453	37	7,802	331

	Covered
	UK (and HWPF TVOG)	Canada	International	Total non-covered	Group elimination	Total	Pence per share
30 June 2011	£m	£m	£m	£m	£m	£m	p
Opening EEV	3,581	1,758	732	1,205	45	7,321	322
New business contribution	113	30	23	-	-	166
Contribution from in-force business	105	83	12	-	-	200
Non-covered business	-	-	-	10	-	10
EEV operating profit before tax	218	113	35	10	-	376

Tax on EEV operating profit	(54)	(30)	(7)	(5)	-	(96)
EEV operating profit after tax	164	83	28	5	-	280	12

EEV non-operating profit/(loss) after tax	(48)	117	(11)	(11)	(6)	41	2
EEV profit/(loss) after tax	116	200	17	(6)	(6)	321
Non-trading adjustments	(359)	1	40	194	-	(124)
Closing EEV	3,338	1,959	789	1,393	39	7,518	324

6.1 EEV and EEV operating profit continued

	Covered
	UK (and HWPF TVOG)	Canada	International	Total non-covered	Group elimination	Total	Pence per share
31 December 2011	£m	£m	£m	£m	£m	£m	p
Opening EEV	3,581	1,758	732	1,205	45	7,321	322
New business contribution	204	73	58	-	-	335
Contributions from in-force business	257	251	46	-	-	554
Non-covered business	-	-	-	100	-	100
EEV operating profit before tax	461	324	104	100	-	989

Tax on EEV operating profit	(115)	(80)	(26)	(44)	-	(265)
EEV operating profit after tax	346	244	78	56	-	724	31

EEV non-operating (loss)/profit after tax	(322)	(108)	53	(22)	44	(355)	(15)
EEV profit after tax	24	136	131	34	44	369
Non-trading adjustments	(397)	(182)	4	313	-	(262)
Closing EEV	3,208	1,712	867	1,552	89	7,428	317

6.2 Reconciliation of operating profit to EEV operating capital and cash generation

	UK	Global investment management	Canada	International	Other	Total
30 June 2012	£m	£m	£m	£m	£m	£m
Operating profit/(loss) before tax	141	68	72	28	(7)	302
Tax on operating profit	34	(18)	(13)	(2)	2	3
Operating profit/(loss) after tax	175	50	59	26	(5)	305

Impact of different treatment of assets and actuarial reserves	(13)	-	5	1	-	(7)
DAC and DIR¹, intangibles, tax and other	9	-	6	(18)	-	(3)
Look through to investment management	23	(25)	-	2	-	-
EEV operating capital and cash generation	194	25	70	11	(5)	295

EEV operating profit after tax - PVIF	87	-	88	15	-	190
EEV operating profit/(loss) after tax	281	25	158	26	(5)	485

¹ Deferred acquisition costs (DAC) and deferred income reserve (DIR).

	UK	Global investment management	Canada	International	Other	Total
30 June 2011	£m	£m	£m	£m	£m	£m
Operating profit/(loss) before tax	87	67	103	19	(14)	262
Tax on operating profit	(10)	(17)	(19)	(12)	6	(52)
Operating profit/(loss) after tax	77	50	84	7	(8)	210

Impact of different treatment of assets and actuarial reserves	4	-	(31)	(4)	-	(31)
DAC and DIR¹, intangibles, tax and other	14	-	4	(4)	-	14
Look through to investment management	25	(29)	2	2	-	-
EEV operating capital and cash generation	120	21	59	1	(8)	193

EEV operating profit after tax - PVIF	43	-	23	21	-	87
EEV operating profit/(loss) after tax	163	21	82	22	(8)	280

¹ Deferred acquisition costs (DAC) and deferred income reserve (DIR).

	UK	Global investment management	Canada	International	Other	Total
31 December 2011	£m	£m	£m	£m	£m	£m
Operating profit/(loss) before tax	220	125	187	40	(28)	544
Tax on operating profit	(16)	(30)	(31)	(8)	(2)	(87)
Operating profit/(loss) after tax	204	95	156	32	(30)	457

Impact of different treatment of assets and actuarial reserves	-	-	(11)	4	-	(7)
DAC and DIR¹, intangibles, tax and other	11	-	11	(34)	-	(12)
Look through to investment management	36	(41)	2	3	-	-
EEV operating capital and cash generation	251	54	158	5	(30)	438

EEV operating profit after tax - PVIF	138	-	82	66	-	286
EEV operating profit/(loss) after tax	389	54	240	71	(30)	724

¹ Deferred acquisition costs (DAC) and deferred income reserve (DIR).

6.3 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 in the statement of financial position. In addition, certain assets are excluded from the definition, for example deferred acquisition costs, intangibles and reinsurance assets.

Group assets under administration (summary)

Six months ended 30 June 2012

	Opening AUA at 1 Jan 2012	Gross flows	Redemptions	Net flows	Market and other movements	Closing AUA at 30 Jun 2012
	£bn	£bn	£bn	£bn	£bn	£bn
Fee business
UK retail new	23.7	2.7	(1.2)	1.5	0.7	25.9
UK retail old	32.1	0.5	(1.9)	(1.4)	0.7	31.4
UK retail	55.8	3.2	(3.1)	0.1	1.4	57.3
Corporate	22.0	1.6	(0.8)	0.8	0.3	23.1
UK retail and corporate	77.8	4.8	(3.9)	0.9	1.7	80.4
Institutional pensions	17.5	2.1	(1.2)	0.9	0.8	19.2
Conventional with profits	5.3	-	(0.7)	(0.7)	0.1	4.7
UK total	100.6	6.9	(5.8)	1.1	2.6	104.3
Standard Life Investments third party	71.8	7.9	(7.3)	0.6	1.9	74.3
Canada	14.3	1.4	(1.1)	0.3	0.1	14.7
International (wholly owned)	12.3	1.1	(0.4)	0.7	0.2	13.2
Consolidation/eliminations¹	(35.7)	(4.0)	2.4	(1.6)	(1.1)	(38.4)
Total fee business	163.3	13.3	(12.2)	1.1	3.7	168.1
Spread/risk
UK	14.4	0.3	(0.6)	(0.3)	0.6	14.7
Canada	10.3	0.4	(0.6)	(0.2)	0.1	10.2
Total spread/risk business	24.7	0.7	(1.2)	(0.5)	0.7	24.9
Assets not backing products in long-term savings business	8.5	-	-	-	0.7	9.2
Joint ventures	1.2	0.2	(0.1)	0.1	-	1.3
Other corporate assets	1.6	-	-	-	-	1.6
Other consolidation/eliminations¹	(0.9)	-	-	-	-	(0.9)
Group assets under administration	198.4	14.2	(13.5)	0.7	5.1	204.2

¹ In order to be consistent with the presentation of new business information, certain products are included in both Standard Life Investments third party AUM and other segments. Therefore, at a Group level an elimination adjustment is required to remove any duplication, in addition to other necessary consolidation adjustments.

6.3 Group assets under administration and net flows continued

Group assets under administration (summary)

Six months ended 30 June 2011

	Opening AUA at 1 Jan 2011	Gross flows	Redemptions	Net flows	Market and other movements	Closing AUA at 30 Jun 2011
	£bn	£bn	£bn	£bn	£bn	£bn
Fee business
UK retail new	21.0	3.1	(1.1)	2.0	0.1	23.1
UK retail old	34.5	0.5	(1.9)	(1.4)	0.7	33.8
UK retail¹	55.5	3.6	(3.0)	0.6	0.8	56.9
Corporate	21.0	2.2	(0.9)	1.3	-	22.3
UK retail and corporate	76.5	5.8	(3.9)	1.9	0.8	79.2
Institutional pensions	15.8	1.8	(1.0)	0.8	0.4	17.0
Conventional with profits	6.6	0.1	(0.7)	(0.6)	0.2	6.2
UK total	98.9	7.7	(5.6)	2.1	1.4	102.4
Standard Life Investments third party	71.6	7.6	(4.7)	2.9	(2.9)	71.6
Canada	14.0	1.3	(1.0)	0.3	0.4	14.7
International (wholly owned)	11.1	1.3	(0.4)	0.9	0.3	12.3
Consolidation/eliminations²	(32.2)	(3.9)	2.2	(1.7)	(0.8)	(34.7)
Total fee business	163.4	14.0	(9.5)	4.5	(1.6)	166.3

Spread/risk
UK	13.4	0.3	(0.6)	(0.3)	0.3	13.4
Canada	10.1	0.5	(0.7)	(0.2)	(0.3)	9.6
Total spread/risk business	23.5	0.8	(1.3)	(0.5)	-	23.0

Assets not backing products in long-term savings business¹	8.1	(0.1)	-	(0.1)	0.6	8.6
Joint ventures	1.2	0.2	(0.1)	0.1	-	1.3
Other corporate assets	1.4	-	-	-	0.3	1.7
Other consolidation/eliminations²	(0.8)	-	-	-	(0.1)	(0.9)
Group assets under administration	196.8	14.9	(10.9)	4.0	(0.8)	200.0

¹ Standard Life Wealth was disclosed separately for the first time in the results for the year ended 31 December 2011. The 2011 figures have been restated.

² In order to be consistent with the presentation of new business information, certain products are included in both Standard Life Investments third party AUM and other segments. 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 2011

	Opening AUA at 1 Jan 2011	Gross flows	Redemptions	Net flows	Market and other movements	Closing AUA at 31 Dec 2011
	£bn	£bn	£bn	£bn	£bn	£bn
Fee business
UK retail new	21.0	5.7	(2.0)	3.7	(1.0)	23.7
UK retail old	34.5	0.9	(3.7)	(2.8)	0.4	32.1
UK retail	55.5	6.6	(5.7)	(0.9)	(0.6)	55.8
Corporate	21.0	3.9	(1.9)	2.0	(1.0)	22.0
UK retail and corporate	76.5	10.5	(7.6)	2.9	(1.6)	77.8
Institutional pensions	15.8	3.2	(1.8)	1.4	0.3	17.5
Conventional with profits	6.6	0.2	(1.7)	(1.5)	0.2	5.3
UK total	98.9	13.9	(11.1)	2.8	(1.1)	100.6
Standard Life Investments third party	71.6	12.9	(8.6)	4.3	(4.1)	71.8
Canada	14.0	2.3	(1.7)	0.6	(0.3)	14.3
International (wholly owned)	11.1	2.5	(1.1)	1.4	(0.2)	12.3
Consolidation/eliminations¹	(32.2)	(7.7)	4.7	(3.0)	(0.5)	(35.7)
Total fee business	163.4	23.9	(17.8)	6.1	(6.2)	163.3

Spread/risk
UK	13.4	0.5	(1.2)	(0.7)	1.7	14.4
Canada	10.1	1.1	(1.4)	(0.3)	0.5	10.3
Total spread/risk business	23.5	1.6	(2.6)	(1.0)	2.2	24.7

Assets not backing products in long-term savings business	8.1	-	-	-	0.4	8.5
Joint ventures	1.2	0.4	(0.1)	0.3	(0.3)	1.2
Other corporate assets	1.4	-	-	-	0.2	1.6
Other consolidation/eliminations¹	(0.8)	-	-	-	(0.1)	(0.9)
Group assets under administration	196.8	25.9	(20.5)	5.4	(3.8)	198.4

6.3 Group assets under administration and net flows continued

Group assets under administration

Six months ended 30 June 2012

	Fee (F) - Spread/risk (S/R)	Opening AUA at 1 Jan 2012	Gross flows	Redemptions	Net flows	Market and other movements	Closing AUA at 30 Jun 2012
	Fee (F) - Spread/risk (S/R)	£bn	£bn	£bn	£bn	£bn	£bn
UK
Individual SIPP	F	16.4	1.5	(0.9)	0.6	0.5	17.5
Other individual pensions	F	22.6	0.4	(1.2)	(0.8)	0.6	22.4
Investment bonds	F	7.6	0.1	(0.6)	(0.5)	0.1	7.2
Mutual funds	F	6.1	0.8	(0.2)	0.6	-	6.7
Legacy life (excluding conventional with profits)	F	2.2	-	(0.2)	(0.2)	0.1	2.1
Wealth¹	F	0.9	0.4	-	0.4	0.1	1.4
UK retail fee business		55.8	3.2	(3.1)	0.1	1.4	57.3
Corporate pensions	F	22.0	1.6	(0.8)	0.8	0.3	23.1
UK retail and corporate fee business		77.8	4.8	(3.9)	0.9	1.7	80.4
Institutional pensions	F	17.5	2.1	(1.2)	0.9	0.8	19.2
Conventional with profits	F	5.3	-	(0.7)	(0.7)	0.1	4.7
UK total fee business		100.6	6.9	(5.8)	1.1	2.6	104.3
Annuities	S/R	14.4	0.3	(0.6)	(0.3)	0.6	14.7
Assets not backing products		7.0	-	-	-	0.5	7.5
UK long-term savings		122.0	7.2	(6.4)	0.8	3.7	126.5
Canada
Fee	F	10.9	0.8	(0.7)	0.1	0.1	11.1
Spread/risk	S/R	3.8	0.1	(0.2)	(0.1)	-	3.7
Group savings and retirement		14.7	0.9	(0.9)	-	0.1	14.8
Fee	F	1.9	0.4	(0.2)	0.2	-	2.1
Spread/risk	S/R	5.9	0.1	(0.2)	(0.1)	0.1	5.9
Individual insurance, savings and retirement		7.8	0.5	(0.4)	0.1	0.1	8.0
Group insurance	S/R	0.6	0.2	(0.2)	-	-	0.6
Mutual funds	F	1.5	0.2	(0.2)	-	-	1.5
Assets not backing products		1.5	-	-	-	0.2	1.7
Canada long-term savings		26.1	1.8	(1.7)	0.1	0.4	26.6
International
Ireland¹	F	6.6	0.7	(0.3)	0.4	-	7.0
Germany	F	5.6	0.4	(0.1)	0.3	0.1	6.0
Hong Kong	F	0.1	-	-	-	0.1	0.2
Wholly owned long-term savings		12.3	1.1	(0.4)	0.7	0.2	13.2
Joint ventures long-term savings		1.2	0.2	(0.1)	0.1	-	1.3
International long-term savings		13.5	1.3	(0.5)	0.8	0.2	14.5
Consolidation and elimination adjustments¹		(0.2)	(0.1)	-	(0.1)	0.1	(0.2)
Total worldwide long-term savings		161.4	10.2	(8.6)	1.6	4.4	167.4
Other corporate assets		1.6	-	-	-	-	1.6
Standard Life Investments third party assets under management		71.8	7.9	(7.3)	0.6	1.9	74.3
Consolidation and elimination adjustments^2,3		(36.4)	(3.9)	2.4	(1.5)	(1.2)	(39.1)
Group assets under administration		198.4	14.2	(13.5)	0.7	5.1	204.2
Group assets under administration managed by:
Standard Life Group entities		163.3					167.0
Other third party managers		35.1					37.2
Total		198.4					204.2

¹ The consolidation adjustment eliminates amounts shown in both Wealth and Ireland.

³ Consolidation and elimination adjustments closing AUA includes Standard Life Investments third party insurance contracts of £28.6bn (31 December 2011: £26.7bn), UK mutual funds and other of £7.7bn (31 December 2011: £6.8bn) and Canada mutual funds of £1.5bn (31 December 2011: £1.6bn).

Long-term savings operations net flows

Six months ended 30 June 2012

		Gross flows	Redemptions	Net flows	Gross flows	Redemptions	Net flows
	Fee (F) - Spread/risk (S/R)	6 months to 30 Jun 2012	6 months to 30 Jun 2012	6 months to 30 Jun 2012	6 months to 30 Jun 2011	6 months to 30 Jun 2011	6 months to 30 Jun 2011
	Fee (F) - Spread/risk (S/R)	£m	£m	£m	£m	£m	£m
UK
Individual SIPP^1,2	F	1,494	(929)	565	1,841	(843)	998
Other individual pensions	F	412	(1,177)	(765)	448	(1,279)	(831)
Investment bonds	F	79	(607)	(528)	116	(598)	(482)
Mutual funds¹	F	778	(225)	553	1,054	(211)	843
Legacy life (excluding conventional with profits)	F	56	(159)	(103)	63	(128)	(65)
Wealth²	F	415	(25)	390	215	(22)	193
UK retail fee business		3,234	(3,122)	112	3,737	(3,081)	656
Corporate pensions¹	F	1,583	(820)	763	2,180	(915)	1,265
UK retail and corporate fee business		4,817	(3,942)	875	5,917	(3,996)	1,921
Institutional pensions	F	2,054	(1,174)	880	1,786	(974)	812
Conventional with profits	F	70	(705)	(635)	92	(673)	(581)
UK total fee business		6,941	(5,821)	1,120	7,795	(5,643)	2,152
Annuities	S/R	281	(585)	(304)	217	(564)	(347)
Protection	S/R	35	(26)	9	39	(26)	13
UK long-term savings		7,257	(6,432)	825	8,051	(6,233)	1,818

Canada
Fee	F	807	(716)	91	858	(611)	247
Spread/risk	S/R	98	(211)	(113)	100	(216)	(116)
Group savings and retirement		905	(927)	(22)	958	(827)	131
Fee	F	353	(169)	184	271	(178)	93
Spread/risk	S/R	114	(257)	(143)	167	(267)	(100)
Individual insurance, savings and retirement		467	(426)	41	438	(445)	(7)
Group insurance	S/R	222	(178)	44	221	(178)	43
Mutual funds¹	F	143	(150)	(7)	120	(188)	(68)
Canada long-term savings		1,737	(1,681)	56	1,737	(1,638)	99

International
Ireland²	F	692	(352)	340	859	(323)	536
Germany	F	371	(124)	247	389	(97)	292
Hong Kong	F	38	(8)	30	43	(13)	30
Wholly owned long-term savings		1,101	(484)	617	1,291	(433)	858
Joint ventures long-term savings³		215	(75)	140	211	(71)	140
International long-term savings		1,316	(559)	757	1,502	(504)	998
Other consolidation/eliminations²		(69)	5	(64)	(41)	3	(38)
Total worldwide long-term savings		10,241	(8,667)	1,574	11,249	(8,372)	2,877

¹ Mutual funds net flows are also included within mutual funds net flows in investment operations. In addition, non-insured SIPP mutual funds net flows included within individual SIPP and corporate pensions are also included within UK mutual funds net flows in investment operations.

² Wealth was disclosed separately for the first time in the results for the year ended 31 December 2011. The consolidation adjustment eliminates amounts also shown within Ireland. Comparatives have been restated.

³ Includes net flows in respect of Standard Life's share of the India and China JV businesses.

6.3 Group assets under administration and net flows continued

Long-term savings operations net flows

Three months ended 30 June 2012

		Gross flows	Redemptions	Net flows	Gross flows	Redemptions	Net flows
	Fee (F) - Spread/risk (S/R)	3 months to 30 Jun 2012	3 months to 30 Jun 2012	3 months to 30 Jun 2012	3 months to 30 Jun 2011	3 months to 30 Jun 2011	3 months to 30 Jun 2011
	Fee (F) - Spread/risk (S/R)	£m	£m	£m	£m	£m	£m
UK
Individual SIPP^1,2	F	667	(469)	198	895	(408)	487
Other individual pensions	F	224	(586)	(362)	250	(609)	(359)
Investment bonds	F	39	(286)	(247)	53	(286)	(233)
Mutual funds¹	F	382	(111)	271	532	(98)	434
Legacy life (excluding conventional with profits)	F	27	(84)	(57)	32	(67)	(35)
Wealth²	F	219	(14)	205	88	(8)	80
UK retail fee business		1,558	(1,550)	8	1,850	(1,476)	374
Corporate pensions¹	F	858	(466)	392	1,145	(439)	706
UK retail and corporate fee business		2,416	(2,016)	400	2,995	(1,915)	1,080
Institutional pensions	F	881	(740)	141	864	(346)	518
Conventional with profits	F	34	(388)	(354)	44	(396)	(352)
UK total fee business		3,331	(3,144)	187	3,903	(2,657)	1,246
Annuities	S/R	140	(294)	(154)	108	(283)	(175)
Protection	S/R	17	(10)	7	19	(11)	8
UK long-term savings		3,488	(3,448)	40	4,030	(2,951)	1,079

Canada
Fee	F	398	(296)	102	346	(256)	90
Spread/risk	S/R	46	(98)	(52)	45	(103)	(58)
Group savings and retirement		444	(394)	50	391	(359)	32
Fee	F	166	(78)	88	128	(83)	45
Spread/risk	S/R	55	(123)	(68)	71	(133)	(62)
Individual insurance, savings and retirement		221	(201)	20	199	(216)	(17)
Group insurance	S/R	111	(88)	23	112	(90)	22
Mutual funds¹	F	66	(68)	(2)	54	(75)	(21)
Canada long-term savings		842	(751)	91	756	(740)	16

International
Ireland²	F	331	(166)	165	399	(157)	242
Germany	F	184	(59)	125	198	(46)	152
Hong Kong	F	18	(4)	14	26	(11)	15
Wholly owned long-term savings		533	(229)	304	623	(214)	409
Joint ventures long-term savings³		72	(35)	37	76	(38)	38
International long-term savings		605	(264)	341	699	(252)	447
Other consolidation/eliminations²		(22)	2	(20)	(16)	2	(14)
Total worldwide long-term savings		4,913	(4,461)	452	5,469	(3,941)	1,528

³ Includes net flows in respect of Standard Life's share of the India and China JV businesses.

Long-term savings operations net flows

15 months ended 30 June 2012

		Net flows
	Fee (F) - Spread/risk (S/R)	3 months to 30 Jun 2012	3 months to 31 Mar 2012	3 months to 31 Dec 2011	3 months to 30 Sep 2011	3 months to 30 Jun 2011
	Fee (F) - Spread/risk (S/R)	£m	£m	£m	£m	£m
UK
Individual SIPP¹	F	198	367	312	423	487
Other individual pensions	F	(362)	(403)	(385)	(407)	(359)
Investment bonds	F	(247)	(281)	(255)	(243)	(233)
Mutual funds	F	271	282	215	326	434
Legacy life (excluding conventional with profits)	F	(57)	(46)	(33)	(36)	(35)
Wealth¹	F	205	185	112	101	80
UK retail fee business		8	104	(34)	164	374
Corporate pensions	F	392	371	403	356	706
UK retail and corporate fee business		400	475	369	520	1,080
Institutional pensions	F	141	739	307	295	518
Conventional with profits	F	(354)	(281)	(401)	(466)	(352)
UK total fee business		187	933	275	349	1,246
Annuities	S/R	(154)	(150)	(164)	(164)	(175)
Protection	S/R	7	2	5	6	8
UK long-term savings		40	785	116	191	1,079

Canada
Fee	F	102	(11)	194	89	90
Spread/risk	S/R	(52)	(61)	(32)	(58)	(58)
Group savings and retirement		50	(72)	162	31	32
Fee	F	88	96	54	52	45
Spread/risk	S/R	(68)	(75)	(69)	(76)	(62)
Individual insurance, savings and retirement		20	21	(15)	(24)	(17)
Group insurance	S/R	23	21	23	20	22
Mutual funds	F	(2)	(5)	(24)	(19)	(21)
Canada long-term savings		91	(35)	146	8	16

International
Ireland¹	F	165	175	171	114	242
Germany	F	125	122	131	141	152
Hong Kong	F	14	16	18	15	15
Wholly owned long-term savings		304	313	320	270	409
Joint ventures long-term savings²		37	103	68	67	38
International long-term savings		341	416	388	337	447
Other consolidation/eliminations¹		(20)	(44)	(11)	(28)	(14)
Total worldwide long-term savings		452	1,122	639	508	1,528

¹ Wealth was disclosed separately for the first time in the results for the year ended 31 December 2011. The consolidation adjustment eliminates amounts also shown within Ireland. Comparatives have been restated.

² Includes net flows in respect of Standard Life's share of the India and China JV businesses.

6.4 Analysis of new business

Long-term savings operations new business

Six months ended 30 June 2012

		Single premiums			New regular premiums		PVNBP¹
	Fee (F) - Spread/risk (S/R)	6 months to 30 Jun 2012	6 months to 30 Jun 2011	6 months to 30 Jun 2012		6 months to 30 Jun 2011	6 months to 30 Jun 2012	6 months to 30 Jun 2011	Change²	Change in constant currency²
	Fee (F) - Spread/risk (S/R)	£m	£m	£m		£m	£m	£m	%	%
UK
Individual SIPP³	F	1,530	1,821	36		45	1,669	1,984	(16%)	(16%)
Other individual pensions	F	205	224	9		11	226	253	(11%)	(11%)
Investment bonds	F	74	105	-		-	74	105	(30%)	(30%)
Mutual funds³	F	798	1,039	15		15	916	1,152	(20%)	(20%)
UK retail fee business		2,607	3,189	60		71	2,885	3,494	(17%)	(17%)
Corporate pensions³	F	566	1,226	320		389	1,995	2,830	(30%)	(30%)
UK retail and corporate fee business		3,173	4,415	380		460	4,880	6,324	(23%)	(23%)
Institutional pensions	F	1,953	1,673	-		1	1,953	1,674	17%	17%
UK total fee business		5,126	6,088	380		461	6,833	7,998	(15%)	(15%)
Annuities	S/R	200	147	-		-	200	147	36%	36%
Protection	S/R	-	-	-		-	1	1	-	-
UK long-term savings		5,326	6,235	380		461	7,034	8,146	(14%)	(14%)

Canada
Fee	F	146	247	33		20	772	501	54%	56%
Spread/risk	S/R	43	34	6		3	151	70	116%	116%
Group savings and retirement		189	281	39		23	923	571	62%	63%
Fee	F	353	271	-		-	353	271	30%	31%
Spread/risk	S/R	60	113	-		1	60	131	(54%)	(54%)
Individual insurance, savings and retirement		413	384	-		1	413	402	3%	3%
Group insurance	S/R	-	2	20		30	301	486	(38%)	(38%)
Mutual funds³	F	143	120	-		-	143	120	19%	21%
Canada long-term savings		745	787	59		54	1,780	1,579	13%	14%

International
Ireland	F	656	817	4		5	675	836	(19%)	(17%)
Germany	F	15	17	11		11	179	162	10%	17%
Hong Kong	F	5	13	20		26	125	177	(29%)	(31%)
Wholly owned long-term savings		676	847	35		42	979	1,175	(17%)	(15%)
India⁴		21	29	47		44	233	212	10%	25%
China⁴		28	20	5		6	51	49	4%	(2%)
Joint ventures long-term savings		49	49	52		50	284	261	9%	19%
International long-term savings		725	896	87		92	1,263	1,436	(12%)	(9%)
Total worldwide long-term savings		6,796	7,918	526		607	10,077	11,161	(10%)	(9%)

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.

²% change is calculated on the figures rounded to millions.

³ Mutual funds new business is also included within mutual funds net flows in investment operations. In addition, non-insured SIPP mutual funds new business included within individual SIPP and corporate pensions is also included within UK mutual funds net flows in investment operations.

⁴ Standard Life's share of the joint venture company's new business.

⁵ New business gross sales for overseas operations are calculated using average exchange rates. The principal average rates for the six months to 30 June 2012 were £1: C$1.59 (2011: £1: C$1.58) and £1: €1.21 (2011: £1: €1.15).

Investment operations

Six months ended 30 June 2012

		Opening AUM at 1 Jan 2012	Gross flows	Redemptions	Net flows	Market and other movements	Net movement in AUM	Closing AUM at 30 Jun 2012
		£m	£m	£m	£m	£m	£m	£m
UK	Mutual funds^1,2	10,810	2,230	(1,264)	966	368	1,334	12,144
	Private equity	3,310	78	(48)	30	(119)	(89)	3,221
	Segregated funds	13,248	227	(2,605)	(2,378)	587	(1,791)	11,457
	Pooled property funds	1,953	30	-	30	(75)	(45)	1,908
Total UK		29,321	2,565	(3,917)	(1,352)	761	(591)	28,730
Canada	Mutual funds^1,3	1,647	147	(177)	(30)	(7)	(37)	1,610
	Separate mandates	3,815	186	(1,001)	(815)	11	(804)	3,011
Total Canada		5,462	333	(1,178)	(845)	4	(841)	4,621
International	Europe	5,316	1,266	(343)	923	156	1,079	6,395
	India⁴	2,711	194	-	194	104	298	3,009
	Other	1,009	727	(128)	599	44	643	1,652
Total International		9,036	2,187	(471)	1,716	304	2,020	11,056

Total worldwide investment products excluding money market and related funds		43,819	5,085	(5,566)	(481)	1,069	588	44,407
	UK money market funds⁵	52	-	-	-	(5)	(5)	47
	India cash funds⁵	1,222	(167)	-	(167)	236	69	1,291
Total worldwide investment products		45,093	4,918	(5,566)	(648)	1,300	652	45,745

Total third party assets under management comprise the investment business noted above together with third party insurance contracts. New business relating to third party insurance contracts is disclosed as insurance business for reporting purposes. An analysis of total third party assets under management is shown below.

	Opening AUM at 1 Jan 2012	Gross flows	Redemptions	Net flows	Market and other movements	Net movement in AUM	Closing AUM at 30 Jun 2012
	£m	£m	£m	£m	£m	£m	£m
Third party investment products	45,093	4,918	(5,566)	(648)	1,300	652	45,745
Third party insurance contracts (new business classified as insurance products)	26,684	2,952	(1,746)	1,206	674	1,880	28,564
Total third party assets under management	71,777	7,870	(7,312)	558	1,974	2,532	74,309
UK money market funds and India cash funds⁵	1,274	(167)	-	(167)	231	64	1,338
Total third party assets under management excluding money market and related funds	70,503	8,037	(7,312)	725	1,743	2,468	72,971

Standard Life Investments - total assets under management	154,876						157,570

¹Included within mutual funds net flows are amounts also included within UK and Canada mutual funds, UK individual SIPP and UK corporate pensions long-term savings operations net flows and new business.

² In the six months to 30 June 2011, UK mutual funds gross inflows were £2,766m and net inflows were £1,457m.

³ In the six months to 30 June 2011, Canada mutual funds gross inflows were £122m and net outflows were £69m.

⁴ International gross inflows include India where, due to the nature of the Indian investment sales market, the new business is shown as the net of sales less redemptions. India cash funds are included as money market and related funds in the table.

⁵ Due to the nature of the UK money market funds and India cash funds, the flows are calculated using average net client balances. Other movements are derived as the difference between these average net inflows and the movement in the opening and closing AUM.

⁶Funds denominated in foreign currencies have been translated to Sterling using the closing exchange rates at 30 June 2012. 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. The principal closing exchange rates used as at 30 June 2012 were £1: C$1.60 (31 December 2011: £1: C$1.58) and £1: €1.24 (31 December 2011: £1: €1.20). The principal average exchange rates for the six months to 30 June 2012 were £1: C$1.59 (2011: £1: C$1.58) and £1: €1.21 (2011: £1: €1.15).

6.4 Analysis of new business continued

Long-term savings operations new business

Three months ended 30 June 2012

		Single premiums		New regular premiums		PVNBP¹
	Fee (F) - Spread/risk (S/R)	3 months to 30 Jun 2012	3 months to 30 Jun 2011	3 months to 30 Jun 2012	3 months to 30 Jun 2011	3 months to 30 Jun 2012	3 months to 30 Jun 2011	Change²	Change in constant currency²
	Fee (F) - Spread/risk (S/R)	£m	£m	£m	£m	£m	£m	%	%
UK
Individual SIPP³	F	702	880	19	27	777	978	(21%)	(21%)
Other individual pensions	F	121	141	4	5	132	155	(15%)	(15%)
Investment bonds	F	36	51	-	-	36	51	(29%)	(29%)
Mutual funds³	F	389	524	9	8	462	584	(21%)	(21%)
UK retail fee business		1,248	1,596	32	40	1,407	1,768	(20%)	(20%)
Corporate pensions³	F	340	664	157	208	1,058	1,536	(31%)	(31%)
UK retail and corporate fee business		1,588	2,260	189	248	2,465	3,304	(25%)	(25%)
Institutional pensions	F	848	805	-	-	848	802	6%	6%
UK total fee business		2,436	3,065	189	248	3,313	4,106	(19%)	(19%)
Annuities	S/R	100	74	-	-	100	74	35%	35%
Protection	S/R	-	-	-	-	1	1	-	-
UK long-term savings		2,536	3,139	189	248	3,414	4,181	(18%)	(18%)

Canada
Fee	F	92	73	24	4	573	124	362%	365%
Spread/risk	S/R	25	14	5	1	112	22	409%	406%
Group savings and retirement		117	87	29	5	685	146	369%	371%
Fee	F	166	128	-	-	166	128	30%	31%
Spread/risk	S/R	29	45	-	-	29	54	(46%)	(46%)
Individual insurance, savings and retirement		195	173	-	-	195	182	7%	8%
Group insurance	S/R	-	1	8	9	137	162	(15%)	(15%)
Mutual funds³	F	66	54	-	-	66	54	22%	26%
Canada long-term savings		378	315	37	14	1,083	544	99%	101%

International
Ireland	F	303	379	2	2	313	386	(19%)	(16%)
Germany	F	8	8	5	6	84	90	(7%)	-
Hong Kong	F	2	7	9	11	54	78	(31%)	(33%)
Wholly owned long-term savings		313	394	16	19	451	554	(19%)	(16%)
India⁴		7	7	12	13	70	62	13%	38%
China⁴		10	9	2	3	19	23	(17%)	(21%)
Joint ventures long-term savings		17	16	14	16	89	85	5%	20%
International long-term savings		330	410	30	35	540	639	(15%)	(12%)
Total worldwide long-term savings		3,244	3,864	256	297	5,037	5,364	(6%)	(6%)

² % change is calculated on the figures rounded to millions.

³Mutual funds new business is also included within mutual funds net flows in investment operations. In addition, non-insured SIPP mutual funds new business included within individual SIPP and corporate pensions is also included within UK mutual funds net flows in investment operations.

⁴ Standard Life's share of the joint venture company's new business.

Investment operations

Three months ended 30 June 2012

		Opening AUM at 1 Apr 2012	Gross flows	Redemptions	Net flows	Market and other movements	Net movement in AUM	Closing AUM at 30 Jun 2012
		£m	£m	£m	£m	£m	£m	£m
UK	Mutual funds^1,2	12,303	1,115	(606)	509	(668)	(159)	12,144
	Private equity	3,271	77	(18)	59	(109)	(50)	3,221
	Segregated funds	13,378	188	(1,999)	(1,811)	(110)	(1,921)	11,457
	Pooled property funds	1,981	13	-	13	(86)	(73)	1,908
Total UK		30,933	1,393	(2,623)	(1,230)	(973)	(2,203)	28,730
Canada	Mutual funds^1,3	1,674	14	(40)	(26)	(38)	(64)	1,610
	Separate mandates	3,090	106	(220)	(114)	35	(79)	3,011
Total Canada		4,764	120	(260)	(140)	(3)	(143)	4,621
International	Europe	6,347	311	(159)	152	(104)	48	6,395
	India⁴	3,269	(25)	-	(25)	(235)	(260)	3,009
	Other	1,175	614	(121)	493	(16)	477	1,652
Total International		10,791	900	(280)	620	(355)	265	11,056

Total worldwide investment products excluding money market and related funds		46,488	2,413	(3,163)	(750)	(1,331)	(2,081)	44,407
	UK money market funds⁵	48	-	-	-	(1)	(1)	47
	India cash funds⁵	963	(108)	-	(108)	436	328	1,291
Total worldwide investment products		47,499	2,305	(3,163)	(858)	(896)	(1,754)	45,745

	Opening AUM at 1 Apr 2012	Gross flows	Redemptions	Net flows	Market and other movements	Net movement in AUM	Closing AUM at 30 Jun 2012
	£m	£m	£m	£m	£m	£m	£m
Third party investment products	47,499	2,305	(3,163)	(858)	(896)	(1,754)	45,745
Third party insurance contracts (new business classified as insurance products)	28,621	1,349	(1,076)	273	(330)	(57)	28,564
Total third party assets under management	76,120	3,654	(4,239)	(585)	(1,226)	(1,811)	74,309
UK money market funds and India cash funds⁵	1,011	(108)	-	(108)	435	327	1,338
Total third party assets under management excluding money market and related funds	75,109	3,762	(4,239)	(477)	(1,661)	(2,138)	72,971

Standard Life Investments - total assets under management	160,584						157,570

¹ Included within mutual funds net flows are amounts also included within UK and Canada mutual funds, UK individual SIPP and UK corporate pensions long-term savings operations net flows and new business.

² In the three months to 30 June 2011, UK mutual funds gross inflows were £1,295m and net inflows were £649m.

³ In the three months to 30 June 2011, Canada mutual funds gross inflows were £55m and net outflows were £22m.

⁶ Funds denominated in foreign currencies have been translated to Sterling using the closing exchange rates at 30 June 2012. 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. The principal closing exchange rates used as at 30 June 2012 were £1: C$1.60 (31 March 2012: £1: C$1.60) and £1: €1.24 (31 March 2012: £1: €1.20). The principal average exchange rates for the six months to 30 June 2012 were £1: C$1.59 (2011: £1: C$1.58) and £1: €1.21 (2011: £1: €1.15).

6.4 Analysis of new business continued

Long-term savings operations new business

15 months ended 30 June 2012

		PVNBP
	Fee (F) - Spread/risk (S/R)	3 months to 30 Jun 2012	3 months to 31 Mar 2012	3 months to 31 Dec 2011¹	3 months to 30 Sep 2011	3 months to 30 Jun 2011
	Fee (F) - Spread/risk (S/R)	£m	£m	£m	£m	£m
UK
Individual SIPP	F	777	892	730	857	978
Other individual pensions	F	132	94	53	71	155
Investment bonds	F	36	38	31	44	51
Mutual funds	F	462	454	376	455	584
UK retail fee business		1,407	1,478	1,190	1,427	1,768
Corporate pensions	F	1,058	937	666	1,028	1,536
UK retail and corporate fee business		2,465	2,415	1,856	2,455	3,304
Institutional pensions	F	848	1,105	711	643	802
UK total fee business		3,313	3,520	2,567	3,098	4,106
Annuities	S/R	100	100	82	83	74
Protection	S/R	1	-	-	-	1
UK long-term savings		3,414	3,620	2,649	3,181	4,181

Canada
Fee	F	573	199	248	132	124
Spread/risk	S/R	112	39	54	33	22
Group savings and retirement		685	238	302	165	146
Fee	F	166	187	146	123	128
Spread/risk	S/R	29	31	53	59	54
Individual insurance, savings and retirement		195	218	199	182	182
Group insurance	S/R	137	164	145	195	162
Mutual funds	F	66	77	51	47	54
Canada long-term savings		1,083	697	697	589	544

International
Ireland	F	313	362	403	290	386
Germany	F	84	95	185	81	90
Hong Kong	F	54	71	92	77	78
Wholly owned long-term savings		451	528	680	448	554
India²		70	163	96	106	62
China²		19	32	20	20	23
Joint ventures long-term savings		89	195	116	126	85
International long-term savings		540	723	796	574	639
Total worldwide long-term savings		5,037	5,040	4,142	4,344	5,364

¹ The three month period to 31 December 2011 excludes the full impact of year end changes to non-economic assumptions. The effect of changes to year end non-economic assumptions was an increase in total PVNBP of £91m in the final PVNBP results published in the 2011 Preliminary results.

² Amounts shown reflect Standard Life's share of the joint venture company's new business.

6.5 Exposure to investment property and financial assets

Group exposure to investment property and financial assets

The total Group external exposure to investment property and financial assets has been segmented below based on the stakeholder sub-group with which the market and credit risk relating to those assets lies.

	Exposure
	Shareholder	Policyholder (participating)	Policyholder (unit linked)	TPICF and NCI¹	Total
30 June 2012	£m	£m	£m	£m	£m
Investments in associates and joint ventures	20	-	30	12	62
Investment property	865	2,099	4,399	1,283	8,646
Equity securities	596	8,431	47,992	2,749	59,768
Debt securities	11,555	29,774	23,783	4,830	69,942
Loans	2,897	168	172	-	3,237
Other financial assets	952	1,786	1,908	584	5,230
Cash and cash equivalents	1,315	1,987	5,360	1,113	9,775
Total	18,200	44,245	83,644	10,571	156,660

¹ Third party interest in consolidated funds and non-controlling interests.

	Exposure
	Shareholder	Policyholder (participating)	Policyholder (unit linked)	TPICF and NCI¹	Total
30 June 2011	£m	£m	£m	£m	£m
Investments in associates and joint ventures	21	-	32	15	68
Investment property	920	2,171	4,275	1,303	8,669
Equity securities	582	10,653	49,647	2,370	63,252
Debt securities	11,078	28,553	21,486	3,526	64,643
Loans	2,850	195	137	-	3,182
Other financial assets^2,3	1,167	1,278	1,468	486	4,399
Cash and cash equivalents	1,445	1,704	4,552	1,051	8,752
Total	18,063	44,554	81,597	8,751	152,965

¹ Third party interest in consolidated funds and non-controlling interests.

² Adjusted to remove reinsurance assets.

³ There has been a reallocation between shareholder and policyholder (participating) in respect of inter-fund transactions.

	Exposure
	Shareholder	Policyholder (participating)	Policyholder (unit linked)	TPICF and NCI¹	Total
31 December 2011	£m	£m	£m	£m	£m
Investments in associates and joint ventures	15	-	27	13	55
Investment property	831	2,181	4,418	1,313	8,743
Equity securities	571	9,140	46,363	2,457	58,531
Debt securities	11,511	30,028	21,879	3,758	67,176
Loans	2,903	179	137	-	3,219
Other financial assets²	973	1,359	1,357	374	4,063
Cash and cash equivalents	1,085	1,657	5,122	1,323	9,187
Total	17,889	44,544	79,303	9,238	150,974

¹ Third party interest in consolidated funds and non-controlling interests.

² There has been a reallocation between shareholder and policyholder (participating) in respect of inter-fund transactions.

Shareholder exposure to investment property and financial assets

The total shareholder exposure to investment property and financial assets of £18.2bn (30 June 2011: £18.1bn; 31 December 2011: £17.9bn) includes £11.4bn (30 June 2011: £11.4bn; 31 December 2011: £11.4bn) of assets held by non-segregated funds of the Group's Canada operations. The effective exposure of shareholders to assets of the non-segregated funds in Canada was significantly lower than the nominal level of exposure presented below because changes in the value of assets are typically accompanied by offsetting changes in the value of related liabilities. The shareholder exposure is limited to the net impact on the shareholder surplus and the value of any guarantees which may be triggered.

6.5 Exposure to investment property and financial assets continued

	Canada non-segregated funds exposure			Other shareholder exposure			Total shareholder exposure
	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Investments in associates and joint ventures	20	21	15	-	-	-	20	21	15
Investment property	865	920	831	-	-	-	865	920	831
Equity securities	397	458	412	199	124	159	596	582	571
Debt securities	6,829	6,412	6,836	4,726	4,666	4,675	11,555	11,078	11,511
Loans	2,897	2,842	2,902	-	8	1	2,897	2,850	2,903
Other financial assets^1,2	180	511	163	772	656	810	952	1,167	973
Cash and cash equivalents	266	202	228	1,049	1,243	857	1,315	1,445	1,085
Total	11,454	11,366	11,387	6,746	6,697	6,502	18,200	18,063	17,889

¹ 30 June 2011 comparatives have been adjusted to remove reinsurance assets.

² Comparatives have been adjusted in respect of inter-fund transfers.

Shareholder exposure to debt securities excluding Canada non-segregated funds consists primarily of debt securities backing annuity liabilities and subordinated debt liabilities.

Group exposure to debt securities

The Group's exposure to debt securities has been further analysed in the tables below. The high quality of the debt security portfolio has been maintained, with 45% of debt securities rated AAA (30 June 2011: 47%; 31 December 2011: 48%) and 95% (30 June 2011: 94%; 31 December 2011: 95%) being rated as investment grade.

	Exposure
	Shareholder	Policyholder (participating)	Policyholder (unit linked)	TPICF and NCI¹	Total
30 June 2012	£m	£m	£m	£m	£m
Government, provincial and municipal	4,152	18,942	9,428	924	33,446
Banks	1,631	3,610	6,219	1,954	13,414
Other financial institutions	1,495	4,013	2,548	422	8,478
Other corporate	4,034	2,845	5,164	1,503	13,546
Other	243	364	424	27	1,058
Total	11,555	29,774	23,783	4,830	69,942

¹ Third party interest in consolidated funds and non-controlling interests.

	Exposure
	Shareholder	Policyholder (participating)	Policyholder (unit linked)	TPICF and NCI¹	Total
30 June 2011	£m	£m	£m	£m	£m
Government, provincial and municipal	3,711	16,521	9,208	1,430	30,870
Banks	2,069	4,515	4,773	1,106	12,463
Other financial institutions	1,644	4,285	2,664	222	8,815
Other corporate	3,400	2,953	4,478	753	11,584
Other	254	279	363	15	911
Total	11,078	28,553	21,486	3,526	64,643

¹ Third party interest in consolidated funds and non-controlling interests.

	Exposure
	Shareholder	Policyholder (participating)	Policyholder (unit linked)	TPICF and NCI¹	Total
31 December 2011	£m	£m	£m	£m	£m
Government, provincial and municipal	4,028	19,695	9,408	709	33,840
Banks	1,880	3,442	4,817	1,436	11,575
Other financial institutions	1,534	4,015	2,564	348	8,461
Other corporate	3,829	2,451	4,692	1,247	12,219
Other	240	425	398	18	1,081
Total	11,511	30,028	21,879	3,758	67,176

¹ Third party interest in consolidated funds and non-controlling interests.

Shareholder exposure to debt securities

At 30 June 2012, total shareholder exposure to debt securities was £11,555m (30 June 2011: £11,078m; 31 December 2011: £11,511m), of which 96% (30 June 2011: 95%; 31 December 2011: 96%) was rated as investment grade, showing the high quality of the debt securities held.

Shareholder exposure to debt securities by credit rating

	Government, Provincial and Municipal¹			Banks			Other financial institutions			Other corporate			Other			Total
	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
AAA	1,124	1,062	1,117	174	87	147	105	223	143	177	320	307	168	153	166	1,748	1,845	1,880
AA	1,501	1,371	1,405	565	955	729	210	389	378	390	249	352	-	-	-	2,666	2,964	2,864
A	1,522	1,273	1,501	774	913	893	787	767	650	2,616	2,142	2,384	-	-	-	5,699	5,095	5,428
BBB	-	-	-	81	51	70	58	9	54	798	612	727	-	-	-	937	672	851
Below BBB or not rated	5	5	5	37	63	41	335	256	309	53	77	59	75	101	74	505	502	488
Total	4,152	3,711	4,028	1,631	2,069	1,880	1,495	1,644	1,534	4,034	3,400	3,829	243	254	240	11,555	11,078	11,511

¹Government, Provincial and Municipal includes debt securities which are issued by or explicitly guaranteed by the national government. For Canada, this includes debt securities which are issued by or explicitly guaranteed by the Crown Corporations of the Government of Canada.

Shareholder exposure to debt securities by country

	Government, Provincial and Municipal¹			Banks			Other financial institutions			Other corporate			Other²			Total
	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
UK	464	285	384	422	576	482	793	918	824	584	410	512	75	65	74	2,338	2,254	2,276
Canada	3,658	3,361	3,610	160	254	278	285	249	513	2,259	1,997	2,307	-	-	-	6,362	5,861	6,708
Australia	-	1	-	60	11	12	6	6	5	-	-	1	-	-	-	66	18	18
Austria	-	2	-	-	-	-	-	-	-	-	-	-	-	-	-	-	2	-
Belgium	-	3	-	-	100	1	-	-	-	-	-	1	-	-	-	-	103	2
Denmark	-	-	-	7	17	66	-	-	-	4	15	17	-	-	-	11	32	83
Finland	-	2	-	20	-	50	-	-	-	-	-	-	-	-	-	20	2	50
France	-	5	-	126	319	103	1	50	2	326	283	315	-	-	-	453	657	420
Germany	21	29	24	93	6	104	19	1	3	268	207	250	-	-	-	401	243	381
Greece	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Ireland	-	-	-	-	-	2	3	3	3	-	1	2	-	-	-	3	4	7
Italy	-	7	-	25	142	24	-	-	-	69	66	67	-	-	-	94	215	91
Japan	1	-	-	95	-	50	27	28	27	20	1	5	-	-	-	143	29	82
Mexico	-	1	-	-	-	-	-	-	-	57	25	43	-	-	-	57	26	43
Netherlands	-	3	-	304	209	182	1	2	1	14	10	15	-	-	-	319	224	198
Norway	-	1	-	2	2	52	-	-	-	32	26	31	-	-	-	34	29	83
Portugal	-	-	-	-	-	-	-	-	-	-	-	1	-	-	-	-	-	1
Spain	-	2	-	8	18	17	-	-	-	31	40	39	-	-	-	39	60	56
Sweden	-	-	-	46	103	97	-	-	-	33	25	28	-	-	-	79	128	125
Switzerland	-	-	-	78	32	129	11	12	11	12	10	12	-	-	-	101	54	152
US	7	7	7	161	279	228	349	375	145	315	279	177	-	-	-	832	940	557
Other	1	2	3	24	1	3	-	-	-	10	5	6	168	189	166	203	197	178
Total	4,152	3,711	4,028	1,631	2,069	1,880	1,495	1,644	1,534	4,034	3,400	3,829	243	254	240	11,555	11,078	11,511

² This balance primarily consists of securities held in supranationals.

At 30 June 2012 and at 31 December 2011, the shareholder exposure to government securities issued by peripheral European countries was £nil. At 30 June 2011 the exposure was £9m.

6.5 Exposure to investment property and financial assets continued

Policyholder (participating) exposure to debt securities

At 30 June 2012, total policyholder (participating) exposure to debt securities was £29,774m (30 June 2011: £28,553m; 31 December 2011: £30,028m), of which 96% (30 June 2011: 95%; 31 December 2011: 96%) was rated as investment grade, showing the high quality of the debt securities held.

Policyholder (participating) exposure to debt securities by credit rating

	Government, Provincial and Municipal¹			Banks			Other financial institutions			Other corporate			Other			Total
	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
AAA	18,581	16,019	19,582	842	1,090	548	939	1,134	1,074	40	111	55	364	279	425	20,766	18,633	21,684
AA	348	483	111	653	882	673	841	778	822	268	226	262	-	-	-	2,110	2,369	1,868
A	5	19	2	1,594	2,036	1,607	1,282	1,425	1,251	1,377	1,252	1,162	-	-	-	4,258	4,732	4,022
BBB	8	-	-	309	228	351	403	466	362	766	791	593	-	-	-	1,486	1,485	1,306
Below BBB or not rated	-	-	-	212	279	263	548	482	506	394	573	379	-	-	-	1,154	1,334	1,148
Total	18,942	16,521	19,695	3,610	4,515	3,442	4,013	4,285	4,015	2,845	2,953	2,451	364	279	425	29,774	28,553	30,028

Policyholder (participating) exposure to debt securities by country

	Government, Provincial and Municipal¹			Banks			Other financial institutions			Other corporate			Other²			Total
	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
UK	14,685	14,440	16,326	1,133	1,824	1,115	2,879	2,859	2,751	1,255	1,210	1,078	-	-	-	19,952	20,333	21,270
Canada	19	2	17	10	25	-	49	50	34	2	8	4	-	-	-	80	85	55
Australia	63	30	65	175	218	187	67	51	62	25	28	23	-	-	-	330	327	337
Austria	279	72	225	52	-	-	-	63	66	6	-	1	-	-	-	337	135	292
Belgium	3	101	1	17	82	9	-	1	-	15	21	11	-	-	-	35	205	21
Denmark	6	3	6	26	46	48	1	1	1	55	53	37	-	-	-	88	103	92
Finland	201	90	218	87	42	133	25	-	-	9	-	2	-	-	-	322	132	353
France	931	347	876	361	434	210	138	178	92	481	465	394	-	-	-	1,911	1,424	1,572
Germany	2,121	727	1,337	427	360	512	124	155	161	262	270	178	-	-	-	2,934	1,512	2,188
Greece	-	-	-	-	-	-	-	-	-	3	5	2	-	-	-	3	5	2
Ireland	-	-	-	3	10	12	38	48	37	15	13	11	-	-	-	56	71	60
Italy	2	278	1	66	221	71	78	153	64	119	155	108	-	-	-	265	807	244
Japan	34	11	16	39	1	66	11	36	29	1	9	-	-	-	-	85	57	111
Mexico	1	19	1	-	-	-	-	-	-	55	30	34	-	-	-	56	49	35
Netherlands	409	111	374	436	353	303	33	55	137	49	63	107	-	-	-	927	582	921
Norway	91	27	82	156	89	64	14	8	54	28	19	20	-	-	-	289	143	220
Portugal	-	-	-	-	-	-	-	-	-	-	10	3	-	-	-	-	10	3
Spain	8	93	9	24	106	73	21	35	4	65	114	64	-	-	-	118	348	150
Sweden	66	115	71	113	115	108	7	32	10	29	22	13	-	-	-	215	284	202
Switzerland	-	-	-	78	81	170	35	46	64	27	34	12	-	-	-	140	161	246
US	6	55	69	397	452	336	321	422	308	258	242	204	-	-	-	982	1,171	917
Other	17	-	1	10	56	25	172	92	141	86	182	145	364	279	425	649	609	737
Total	18,942	16,521	19,695	3,610	4,515	3,442	4,013	4,285	4,015	2,845	2,953	2,451	364	279	425	29,774	28,553	30,028

² This balance primarily consists of securities held in supranationals.

At 30 June 2012, the policyholder (participating) exposure to government securities issued by peripheral European countries was £10m (30 June 2011: £371m; 31 December 2011: £10m).

Policyholder (unit linked) exposure to debt securities

At 30 June 2012, total policyholder (unit linked) exposure to debt securities was £23,783m (30 June 2011: £21,486m; 31 December 2011: £21,879m), of which 93% (30 June 2011: 93%; 31 December 2011: 94%) was rated as investment grade, showing the high quality of the debt securities held.

Policyholder (unit linked) exposure to debt securities by credit rating

	Government, Provincial and Municipal¹			Banks			Other financial institutions			Other corporate			Other			Total
	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
AAA	6,929	7,138	6,753	502	477	470	360	635	457	75	115	148	423	363	398	8,289	8,728	8,226
AA	1,477	1,381	1,776	1,452	1,814	1,492	613	626	710	247	189	326	1	-	-	3,790	4,010	4,304
A	1,002	568	875	3,800	2,122	2,382	935	716	749	1,659	1,750	1,536	-	-	-	7,396	5,156	5,542
BBB	20	1	1	280	214	299	465	460	468	1,961	1,445	1,657	-	-	-	2,726	2,120	2,425
Below BBB or not rated	-	120	3	185	146	174	175	227	180	1,222	979	1,025	-	-	-	1,582	1,472	1,382
Total	9,428	9,208	9,408	6,219	4,773	4,817	2,548	2,664	2,564	5,164	4,478	4,692	424	363	398	23,783	21,486	21,879

Policyholder (unit linked) exposure to debt securities by country

	Government, Provincial and Municipal¹			Banks			Other financial institutions				Other corporate				Other²		Total
	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012		30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m		£m	£m	£m	£m	£m	£m	£m	£m
UK	4,501	4,213	4,707	3,068	1,458	1,431	1,407	1,544	1,539	1,865		1,593	1,663	-	-	-	10,841	8,808	9,340
Canada	2,359	2,128	2,214	414	464	402	188	146	267	529		448	514	-	-	-	3,490	3,186	3,397
Australia	39	62	127	142	140	122	43	36	39	29		21	20	-	-	-	253	259	308
Austria	13	37	5	-	-	-	-	-	-	1		-	-	-	-	-	14	37	5
Belgium	95	61	8	16	38	9	-	-	-	36		42	41	-	-	-	147	141	58
Denmark	14	17	16	64	107	125	11	8	9	87		50	48	-	-	-	176	182	198
Finland	1	90	48	123	-	159	-	-	-	6		-	1	-	-	-	130	90	208
France	181	223	174	573	645	162	76	91	69	550		576	511	-	-	-	1,380	1,535	916
Germany	246	503	206	339	254	541	75	28	26	436		419	413	-	-	-	1,096	1,204	1,186
Greece	-	-	-	-	-	-	-	-	-	2		1	-	-	-	-	2	1	-
Ireland	-	-	-	10	7	9	58	94	82	15		10	15	-	-	-	83	111	106
Italy	94	243	118	51	310	63	23	30	19	204		300	229	-	-	-	372	883	429
Japan	482	541	576	118	-	133	31	49	14	-		1	-	-	-	-	631	591	723
Mexico	479	249	391	-	-	-	-	-	-	100		74	104	-	-	-	579	323	495
Netherlands	30	94	20	448	305	417	25	31	18	91		128	130	-	-	-	594	558	585
Norway	70	42	47	84	34	90	-	-	-	2		-	7	-	-	-	156	76	144
Portugal	-	2	3	-	-	-	-	-	-	-		3	1	-	-	-	-	5	4
Spain	18	67	47	30	81	54	-	-	-	111		105	99	-	-	-	159	253	200
Sweden	78	45	59	207	326	246	-	-	-	36		35	49	-	-	-	321	406	354
Switzerland	-	-	-	61	61	357	14	27	25	34		23	24	-	-	-	109	111	406
US	727	575	640	454	510	457	494	512	370	891		519	662	-	-	-	2,566	2,116	2,129
Other	1	16	2	17	33	40	103	68	87	139		130	161	424	363	398	684	610	688
Total	9,428	9,208	9,408	6,219	4,773	4,817	2,548	2,664	2,564	5,164		4,478	4,692	424	363	398	23,783	21,486	21,879

² This balance primarily consists of securities held in supranationals.

At 30 June 2012, the policyholder (unit linked) exposure to government securities issued by peripheral European countries was £112m (30 June 2011: £312m; 31 December 2011: £168m).

6.5 Exposure to investment property and financial assets continued

Shareholder exposure to loans

Shareholders are directly exposed to loans of £2,897m (30 June 2011: £2,850m; 31 December 2011: £2,903m) which primarily comprise the Canadian non-segregated funds commercial mortgage book. This mortgage book is deemed to be of very high quality.

	30 Jun 2012	30 Jun 2011	31 Dec 2011
	£m	£m	£m
Canada non-segregated funds commercial mortgage book	2,897	2,842	2,902
Other	-	8	1
Total	2,897	2,850	2,903

The Canada mortgage book has an average loan to value of 40% (30 June 2011: 45%; 31 December 2011: 44%).

6.6 Fair value hierarchy of financial instruments

To provide further information on the approach used to determine the fair value of certain financial assets and derivative financial liabilities measured as at fair value on the Group's IFRS statement of financial position, the fair value of these financial instruments has been categorised below to reflect the following fair value hierarchy:

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)

Total

	Fair value hierarchy
	Level 1			Level 2			Level 3			Total
	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Equity securities	58,555	61,976	57,286	-	-	-	1,213	1,276	1,245	59,768	63,252	58,531
Debt securities	26,629	24,012	27,699	41,948	39,038	38,095	1,365	1,593	1,382	69,942	64,643	67,176
Derivative financial assets	838	407	577	1,787	866	1,635	-	-	-	2,625	1,273	2,212
Derivative financial liabilities	(497)	(235)	(434)	(1,140)	(784)	(668)	-	-	-	(1,637)	(1,019)	(1,102)
Total	85,525	86,160	85,128	42,595	39,120	39,062	2,578	2,869	2,627	130,698	128,149	126,817

Included in the table above are £2,749m equity securities (six months ended 30 June 2011: £2,370m; 12 months ended 31 December 2011: £2,457m), £4,830m debt securities (six months ended 30 June 2011: £3,526m; 12 months ended 31 December 2011: £3,758m), £271m derivative financial assets (six months ended 30 June 2011: £136m; 12 months ended 31 December 2011: £223m) and £420m derivative financial liabilities (six months ended 30 June 2011: £247m; 12 months ended 31 December 2011: £236m) in relation to third party interest in consolidated funds and non-controlling interests.

Level 1 financial instruments principally include equity securities listed on a recognised exchange, certain government and supranational institution bonds and exchange traded futures and options.

Level 2 financial instruments principally include certain government bonds, listed or publicly quoted corporate bonds, commercial paper, certificates of deposit and derivative instruments which are not exchange traded. Corporate bonds have generally been classified as level 2 as the composite price provided by external pricing providers may include, as an input, quotes provided by some banks that are not based on actual transaction prices.

Level 3 financial instruments principally include unlisted equity securities, being predominantly interests in private equity funds, listed or publicly quoted corporate bonds for which prices are not available from external pricing providers or where such prices are considered to be stale (including some asset backed securities) or are based on single broker indicative quotes and unquoted bonds where credit spreads, being a significant input to the valuation technique, are obtained from a broker or estimated internally.

Shareholder exposure

	Fair value hierarchy
	Level 1			Level 2			Level 3			Total
	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Equity securities	584	570	560	-	-	-	12	12	11	596	582	571
Debt securities	635	499	555	9,918	9,519	9,967	1,002	1,060	989	11,555	11,078	11,511
Derivative financial assets	-	-	-	279	312	252	-	-	-	279	312	252
Derivative financial liabilities	(6)	(4)	(2)	(15)	(29)	(14)	-	-	-	(21)	(33)	(16)
Total	1,213	1,065	1,113	10,182	9,802	10,205	1,014	1,072	1,000	12,409	11,939	12,318

Policyholder (participating) exposure

	Fair value hierarchy
	Level 1			Level 2			Level 3			Total
	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Equity securities	7,691	9,858	8,388	-	-	-	740	795	752	8,431	10,653	9,140
Debt securities	18,757	16,140	19,861	10,774	12,051	9,887	243	362	280	29,774	28,553	30,028
Derivative financial assets	535	285	367	794	237	647	-	-	-	1,329	522	1,014
Derivative financial liabilities	(98)	(16)	(86)	(22)	(164)	(41)	-	-	-	(120)	(180)	(127)
Total	26,885	26,267	28,530	11,546	12,124	10,493	983	1,157	1,032	39,414	39,548	40,055

Policyholder (unit linked) exposure

	Fair value hierarchy
	Level 1			Level 2			Level 3			Total
	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011	30 Jun 2012	30 Jun 2011	31 Dec 2011
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Equity securities	47,918	49,601	46,286	-	-	-	74	46	77	47,992	49,647	46,363
Debt securities	6,589	6,504	6,806	17,079	14,820	14,963	115	162	110	23,783	21,486	21,879
Derivative financial assets	223	83	158	523	220	565	-	-	-	746	303	723
Derivative financial liabilities	(285)	(145)	(257)	(791)	(414)	(466)	-	-	-	(1,076)	(559)	(723)
Total	54,445	56,043	52,993	16,811	14,626	15,062	189	208	187	71,445	70,877	68,242

7 Glossary

Acquisition expenses

Expenses related to the procurement and processing of new business written, including a share of overheads.

Annuity

A periodic payment made for an agreed period of time (usually up to the death of the recipient) in return for a cash sum. The cash sum can be paid as one amount or as a series of premiums. If the annuity commences immediately after the payment of the sum, it is termed an immediate annuity. If it commences at some future date, it is termed a deferred annuity.

Assets under administration (AUA)

A measure of the total assets that the Group administers on behalf of customers and institutional clients. It includes those assets for which the Group provides investment management services, as well as those assets that the Group administers where the customer has made a choice to select an external third party investment manager. Assets under administration reflect the value of the IFRS gross assets of the Group adjusted, where appropriate, for consolidation adjustments, inter-company assets and intangible assets. In addition, the definition includes third party assets administered by the Group which are not included in the consolidated statement of financial position.

Assets under management (AUM)

A measure of the total assets that the global investment management business manages on behalf of customers and institutional clients, for which they receive a fee.

Assumptions

Variables applied to data used to project expected outcomes.

Back book management

We choose to analyse our EEV operating profit before tax in the three components which reflect the focus of our business effort - core, efficiency and back book management. Back book management includes all non-expense related operating variances and assumption changes for covered business plus those development costs directly related to back book management initiatives and, for non-covered business, specific costs attributed to back book management.

Board

The board of Directors of the Company.

Burnthrough costs

Burnthrough costs are an estimate of the value of the potential shareholder support that could be required to meet policyholder benefits in a participating fund. It is usually the case that shareholders participate in the profits or surpluses generated within a participating fund only to a limited extent. However, there could be unfavourable outcomes in the future when the assets of the participating fund are no longer sufficient to pay the benefits of the policyholders of that fund. This would be described as a 'burnthrough event' and could require some level of financial support from the shareholder. The burnthrough cost is normally calculated by projecting a large number of possible future economic outcomes, taking an average over all of these outcomes.

Capital resources (CR)

Capital resources include the assets in excess of liabilities, valued on a regulatory basis, and certain other components of capital.

Capital resources requirement (CRR)

A company must hold capital resources in excess of the capital resources requirement. The CRR represents the total of the individual capital resources requirements (ICRR) of each regulated company in the Group.

CFO Forum

A high-level discussion group formed and attended by the Chief Financial Officers of major European listed, and some non-listed, insurance companies.

Company

Standard Life plc.

Constant currency

Eliminates the effects of exchange rate fluctuations and is used when calculating financial performance on a range of measures.

Core

We choose to analyse our EEV operating profit before tax in the three components which reflect the focus of our business effort - core, efficiency and back book management. Core includes new business contribution, expected return and development costs for covered business, excluding those development costs directly related to back book management initiatives and, for non-covered business, operating profit excluding specific costs attributable to back book management.

Covered business

The business covered by the EEV methodology. This should include any contracts that are regarded by local insurance supervisors as long-term or life insurance business and may cover other long-term life insurance, short-term life insurance such as group risk business and long-term accident and health business. Where short-term healthcare is regarded as part of or ancillary to a company's long-term life insurance business, then it may be regarded as long-term business. For covered business within the Standard Life Group please refer to the EEV methodology within the EEV supplementary information.

Deferred acquisition costs (DAC)

The method of accounting whereby acquisition costs on long-term business are deferred in the statement of financial position as an asset and amortised over the life of those contracts. This leads to a smoothed recognition of up front expenses instead of the full cost in the year of sale.

Deferred income reserve (DIR)

The method of accounting whereby front end fees that relate to services to be provided in future periods are deferred in the statement of financial position as a liability and amortised over the life of those contracts. This leads to a smoothed recognition of up front income instead of the full income in the year of sale.

Development costs

Costs that are considered to be non-recurring and are reported separately from other expenses in the EEV movement analysis.

Director

A director of the Company.

Discounting

The reduction to present value at a given date of a future cash transaction at an assumed rate, using a discount factor reflecting the time value of money. The choice of a discount rate will usually greatly influence the value of insurance provisions, and may give indications on the conservatism of provisioning methods.

Dividend cover

This is a measure of how easily a company can pay its dividend from profit. It is calculated as operating profit after tax and minority interest divided by the total dividend for that financial period.

Earnings before interest and tax (EBIT)

EBIT is defined as earnings before interest, taxation, foreign exchange gains and losses, profit on partial disposal of investments in associates, divergence on financial guarantee costs, movement on contract for differences and restructuring costs.

EBIT margin

This is an industry measure of performance for investment management companies. It is calculated as EBIT divided by total revenue.

Earnings per share (EPS)

EPS is a commonly used financial metric which can be used to measure the profitability and strength of a company over time. EPS is calculated by dividing profit by the number of ordinary shares. Basic EPS uses the weighted average number of ordinary shares outstanding during the year. Diluted EPS adjusts the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares, for example share awards and share options awarded to employees.

Economic assumptions

Assumptions in relation to future interest rates, investment returns, inflation and tax. These assumptions, and variances in relation to these assumptions, are treated as non-operating profits/(losses) under EEV.

Efficiency

We choose to analyse our EEV operating profit before tax in the three components which reflect the focus of our business effort - core, efficiency and back book management. Efficiency includes covered business variances and assumption changes, which relate to maintenance expenses.

European Embedded Value (EEV)

The value to equity shareholders of the net assets plus the expected future profits on in-force business from a life assurance and pensions business. Prepared in accordance with the EEV Principles and Guidance issued in May 2004 by the CFO Forum and the Additional Guidance issued in October 2005. EEV reports the value of business in-force based on a set of best estimate assumptions, allowing for the impact of uncertainty inherent in future assumptions, the costs of holding required capital, the value of free surplus and TVOG (see TVOG).

EEV operating profit

Covered business EEV operating profit represents profit generated from new business sales and the in-force book of business, based on closing non-economic and opening economic assumptions.

Non-covered business EEV operating profit represents operating profit.

EEV operating profit capital and cash generation

This is a measure of the underlying shareholder capital and cash flow of the Group.

Covered business EEV operating capital and cash generation represents the EEV operating profit net worth (free surplus and required capital) on an after-tax basis.

Non-covered business EEV operating capital and cash generation represents non-covered operating profit after tax.

Executive Team

The Executive Team is responsible for the day-to-day running of the Group and comprises: the Chief Executive, Chief Executive - UK, President and Chief Executive Officer - Canada, Chief Executive - Standard Life Investments, Chief Executive - International, the Group Company Secretary and General Counsel, the Group Operations Officer and the Chief Financial Officer.

Expected return on EEV

Anticipated results based on applying opening assumptions to the opening EEV.

Experience variances

Current period differences between the actual experience incurred over the period and the assumptions used in the calculation of the embedded value, excluding new business non-economic experience variances which are captured in new business contribution.

Fee based business

Fee based business is a component of operating profit and is made up of products where we generate revenue primarily from asset management charges (AMCs), premium based charges and transactional charges. AMCs are earned on products such as SIPP, corporate pensions and mutual funds, and are calculated as a percentage fee based on the assets held. Investment risk on these products rests principally with the customer, with the major indirect Group exposure to rising or falling markets coming from higher or lower AMCs.

Financial options and guarantees

Terms relating to covered business conferring potentially valuable guarantees underlying, or options to change, the level and nature of policyholder benefits and exercisable at the discretion of the policyholder, whose potential value is impacted by the behaviour of financial variables.

Free surplus

The amount of capital and any surplus allocated to, but not required to support, the in-force business covered by the EEV.

Global Absolute Return Strategy (GARS)

A type of fund provided by Standard Life Investments, which is proving to be very popular with investors. The fund's key objective is to deliver an average annual return to investors that is 5% above UK six month LIBOR (London Interbank Offer Rate).

Group capital surplus

This is a regulatory measure of our financial strength and compares the Group's capital resources to its capital resources requirements in accordance with the Insurance Groups Directive.

Group, Standard Life Group or Standard Life

Prior to demutualisation on 10 July 2006, SLAC and its subsidiaries and, from demutualisation on 10 July 2006, the Company and its subsidiaries.

Heritage With Profits Fund (HWPF)

The Heritage With Profits Fund contains all existing business - both with profits and non profit - written before demutualisation in the UK, Irish or German branches, with the exception of the classes of business which the Scheme of Demutualisation allocated to the Proprietary Business Fund. This HWPF also contains increments to existing business.

Individual Capital Assessment (ICA)

The process by which the Financial Services Authority (FSA) requires insurance companies to make an assessment of the regulated company's own capital requirements, which is then reviewed and agreed by the FSA.

In-force

Long-term business which has been written before the period end and which has not terminated before the period end.

Internal rate of return (IRR)

A measure of rate of return on an investment and so an indicator of capital efficiency. The IRR is equivalent to the discount rate at which the present value of the after-tax cash flows expected to be earned over the lifetime of new business written is equal to the capital invested to support the writing of the business.

International Financial Reporting Standards (IFRS)

International Financial Reporting Standards are accounting standards issued by the International Accounting Standards Board (IASB). The Group's consolidated financial statements are required to be prepared in accordance with IFRS.

Key performance indicators (KPI)

This is a measure by reference to which the development, performance or position of the business can be measured effectively.

Maintenance expenses

Expenses related to the servicing of the in-force book of business (including investment management and termination expenses and a share of overheads).

Mutual fund

A collective investment vehicle enabling investors to pool their money, which is then invested in a diverse portfolio of stocks or bonds, enabling investors to achieve a more diversified portfolio than they otherwise might have done by making an individual investment.

Net flows

Net flows represent gross inflows less redemptions. For long-term savings business, gross inflows are premiums and deposits recognised in the period on a regulatory basis (excluding any switches between funds). Redemptions are claims and annuity payments (excluding any reinsurance transactions and switches between funds).

Net worth

The market value of shareholders' funds and the shareholders' interest in the surplus held in the non profit component of the long-term business funds, determined on a statutory solvency basis and adjusted to add back any non-admissible assets per regulatory returns.

New business contribution (NBC)

The expected present value of all future cash flows attributable to the equity holder from new business, as included within EEV operating profit.

New business strain (NBS)

Costs involved in acquiring new business (such as commission payments to intermediaries, expenses, reserves) affecting the insurance company's financial position at that point and where all of the income from that new business (including premiums and investment income) has not yet been received and will not be received until a point in the future. To begin with, therefore, a strain may be created where cash outflows exceed inflows.

NBS margin

New business strain as a percentage of PVNBP sales (see PVNBP).

Non-covered business

Mainly includes third party global investment management and other businesses not associated with the life assurance and pensions business. Non-covered business excludes the global investment management look through profits and the return on mutual funds which are recognised in covered business. Non-covered business is excluded from the EEV methodology and is included within the Group EEV on an IFRS basis.

Non-economic assumptions

Assumptions in relation to future levels of mortality, morbidity, persistency and expenses. These assumptions, and variances in relation to these assumptions, are included as operating profits/(losses) under EEV.

Non-participating/non-profit policy

A policy, including a unit linked policy, which is not a participating/with profits policy.

Operating profit

The Group's chosen supplementary measure of performance is operating profit. This is a non-Generally Accepted Accounting Principles (GAAP) measure. Operating profit excludes impacts arising from short-term fluctuations in investment return and economic assumption changes. It is calculated based on expected returns on investments backing equity holder funds, with consistent allowance for the corresponding expected movements in equity holder liabilities. Impacts arising from the difference between the expected return and actual return on investments, and the corresponding impact on equity holder liabilities except where they are directly related to a significant management action, are excluded from operating profit and are presented within profit before tax. The impact of certain changes in economic assumptions is also excluded from operating profit and is presented within profit before tax.

Operating profit also excludes the impact of the following items:

· Restructuring costs and significant corporate transaction expenses

· Impairment of intangible assets

· Profit or loss arising on the disposal of a subsidiary, joint venture or associate

· Amortisation of intangibles acquired in business combinations

· Items which are one-off in nature and outside the control of management and which, due to their size or nature, are not indicative of the long-term operating performance of the Group

Participating/with profits policy

A policy where, in addition to guaranteed benefits specified in the policy, additional bonuses may be payable from relevant surplus. The declaration of such bonuses (usually annually) reflects, amongst other things, the overall investment performance of the fund of which the policy forms part.

Personal pension plan

An individual pension arrangement with particular tax advantages whereby individuals who are self-employed or those who are not members of employer-sponsored pension scheme arrangements can make provision for retirement or provide benefits for their dependents in a tax efficient manner.

Present value of in-force business (PVIF)

The present value of the projected future distributable profits after tax attributable to equity holders from the covered business in-force at the valuation date, adjusted where appropriate to take account of TVOG (see TVOG).

Present value of new business premiums (PVNBP)

The industry measure of insurance new business sales under the EEV methodology. It is calculated as 100% of single premiums plus the expected present value of new regular premiums.

Profit contribution

Profit contribution reflects the income and expenses directly attributable to each of the UK lines of business. It differs from operating profit due to the exclusion of indirect expenses, such as overheads, and capital management.

Proprietary Business Fund

The Proprietary Business Fund in Standard Life Assurance Limited (SLAL) contains, among other things, certain classes of business - pension contribution insurance policies, income protection plan policies and a number of SIPP policies written before demutualisation, as well as most new insurance business written after demutualisation in the UK, Ireland and Germany.

PVNBP margin

PVNBP margin is NBC expressed as a percentage of PVNBP.

Recourse cash flow (RCF)

Certain cash flows arising in the HWPF on specified blocks of UK and Irish business, which are transferred out of the fund on a monthly basis and accrue to the ultimate benefit of equity holders, as determined by the Scheme of Demutualisation.

Regular premium

A regular premium contract (as opposed to a single premium contract), is one where the policyholder agrees at inception to make regular payments throughout the term of the contract.

Required capital

The amount of assets, over and above the value placed on liabilities in respect of covered business, whose distribution to equity holders is restricted.

Return on equity (RoE)

The annualised post-tax profit on an IFRS basis expressed as a percentage of the opening IFRS equity, adjusted for time apportioned dividends paid to equity holders. Operating RoE is based on operating profit after tax and total RoE is based on IFRS profit after tax attributable to equity holders.

Return on EEV (RoEV)

The annualised post-tax operating profit on an EEV basis expressed as a percentage of the opening embedded value, adjusted for time apportioned dividends paid to equity holders.

Scheme of Demutualisation (the Scheme)

The scheme pursuant to Part VII of, and Schedule 12 to, the Financial Services and Markets Act 2000, under which substantially all of the long-term business of SLAC was transferred to Standard Life Assurance Limited on 10 July 2006.

SICAV

A SICAV (société d'investissement à capital variable) is an open-ended collective investment scheme common in Western Europe. SICAVs can be cross-border marketed in the EU under the Undertakings for collective investment in transferable securities (UCITS) directive.

Single premium

A single premium contract (as opposed to a regular premium contract), involves the payment of one premium at inception with no obligation for the policyholder to make subsequent additional payments.

SIPP

A self invested personal pension which provides the policyholder with greater choice and flexibility as to the range of investments made, how those investments are managed, the administration of those assets and how retirement benefits are taken.

SLAC

The Standard Life Assurance Company (renamed The Standard Life Assurance Company 2006 on 10 July 2006).

Spread/risk based business

Spread/risk based business is a component of operating profit and mainly comprises products where we provide a guaranteed level of income for our customers in return for an investment. A good example of this product line is annuities. The 'spread' referred to in the title primarily relates to the difference between the guaranteed amount we pay to customers and the actual return on the assets over the period of the contract.

Spread/risk margin

Spread/risk margin reflects the margin earned on spread/risk business. This includes net earned premiums, claims and benefits paid, net investment return using long-term assumptions and reserving changes.

Time value of options and guarantees (TVOG)

Represents the potential additional cost to equity holders where a financial option or guarantee exists which affects policyholder benefits and is exercisable at the option of the policyholder.

Total shareholder return

This is a measure of the overall return to shareholders and includes the movement in the share price and any dividends paid and reinvested.

UK retail

This relates to business where we have a relationship with the customer either directly or through an independent financial adviser. We analyse this type of business into new and old categories. Retail new includes the products, platforms, investment solutions and services of our UK retail business that we continue to market actively to our customers. Retail old includes business that was predominantly written before demutualisation.

Undiscounted payback period

A measure of capital efficiency that measures the time at which the value of expected undiscounted cash flows (after tax) is sufficient to recover the capital invested to support the writing of new business.

Unit linked policy

A policy where the benefits are determined by reference to the investment performance of a specified pool of assets referred to as the unit linked fund.

Wrap platform

An investment platform which is essentially a trading platform enabling investment funds, pensions, direct equity holdings and some life assurance contracts to be held in the same administrative account rather than as separate holdings.

8 Shareholder information

Registered office

Company registration number: SC286832

Standard Life House

30 Lothian Road

Edinburgh

EH1 2DH

Scotland

Phone: 0800 634 7474 or 0131 225 2552

For shareholder services call 0845 113 0045

Registrar

Capita Registrars Limited

Auditors

PricewaterhouseCoopers LLP

Solicitors

Slaughter and May

Brokers

JP Morgan Cazenove

Deutsche Bank

Shareholder services

We offer a wide range of shareholder services, some details of which are set out below. If you need any further information about any of these services, please:

· Contact our registrar, Capita, on 0845 113 0045 if calling from the UK. International numbers for Capita can be found on the last page of this report.

· Visit our share portal at www.standardlifeshareportal.com

You can choose to receive your shareholder communications electronically - registering is easy and free. Just go to www.standardlifeshareportal.com to find out how. Signing up means:

· You'll receive an email when documents like the Annual Report and Accounts, Summary Financial Report and AGM guide are available on our website. You can then read these online in an easy-to-use, searchable format instead of receiving paper copies in the post.

· Voting instructions for the Annual General Meeting will be sent to you electronically

· You can download your dividend tax vouchers when you need them

· You can view your Standard Life Share Account statement online

Any information you receive electronically will be the same as the paper version - but you'll help us save money, and conserve natural resources.

Preventing unsolicited mail

By law, the Company has to make certain details from its share register publicly available. Because of this, it is possible that some registered shareholders could receive unsolicited mail. You could also be targeted by fraudulent 'investment specialists' using high-pressure cold-calling sales techniques - these are sometimes called 'boiler room scams'. You can find more information about this at the Financial Services Authority website www.moneyadviceservice.org.uk

If you are a certificated shareholder, your name and address may appear on a public register. Using a nominee company to hold your shares can help protect your privacy. You can transfer your shares into the Company-sponsored nominee - the Standard Life Share Account - by contacting Capita, or you could get in touch with your broker to find out about their nominee services.

If you want to limit the amount of unsolicited mail you receive generally, please contact:

Mailing Preference Service (MPS)

DMA House

70 Margaret Street

London

W1W 8SS

You can also register online at www.mpsonline.org.uk

Analysis of registered shareholdings as at 30 June 2012

Range of shares	Number of holders	% of total holders	Number of shares	% of total shares
1-1,000	63,320	54.73	30,005,832	1.27
1,001-5,000	45,540	39.36	97,057,287	4.12
5,001-10,000	4,061	3.51	27,703,470	1.17
10,001-100,000	2,274	1.97	50,586,354	2.15
*100,001+	495	0.43	2,152,424,547	91.29
Total	115,690	100.00	2,357,777,490	100.00

* These figures include the Company-sponsored nominee - the Standard Life Share Account - which had 1,242,597 participants holding 1,028,483,090 shares, and the Unclaimed Asset Trust, which had 74,514 participants holding 27,998,484 shares.

Financial calendar for 2012

Ex-dividend date for 2012 interim dividend	22 August 2012
Record date for 2012 interim dividend	24 August 2012
Last date for DRIP elections for 2012 interim dividend	24 October 2012
2012 Q3 trading results and interim management statement	31 October 2012
Interim dividend payment date	14 November 2012

Contact details

We want to make sure you have answers to all your questions.



UK and Ireland If you have any questions about voting at the Annual General Meeting, dividends or your shareholding, please contact our registrar:	www.standardlifeshareportal.com	questions@standardlifeshares.com Address: Standard Life Shareholder Services 34 Beckenham Road Beckenham Kent BR3 4TU	0845 113 0045 +44 (0)20 3367 8224 (01) 431 9829

Germany and Austria If you have any questions about voting at the Annual General Meeting, dividends or your shareholding, please contact our registrar:	www.standardlifeshareportal.com/de	fragen@standardlifeshares.de Address: Standard Life Aktionärsservice Postfach 20 01 43 60605 Frankfurt am Main Germany	+49 (0)6196 7693 130

Canada If you have any questions about voting at the Annual General Meeting, dividends or your shareholding, please contact our registrar:	www.standardlifeshareportal.com (English) www.standardlifeshareportal.com/fr (French Canadian)	questions@standardlifeshares.ca Address: Standard Life Shareholder Services PO Box 4636 Station A Toronto M5W 7A4	1-866-982-9939

This information is provided by RNS

The company news service from the London Stock Exchange

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