Interim Results

Standard Life plc
27 September 2006


Standard Life plc

Half Year Results Ended 30 June 2006


27 September 2006



•  Worldwide insurance PVNBP1 sales of £5,763m (Full Year 2005:
   £9,367m), worldwide insurance APE2 sales up 19% to £745m (six months to June
   2005: £624m)

•  Group new business contribution before tax of £91m (FY 2005: £33m),
   PVNBP margin up to 1.6% (FY 2005: 0.4%)

•  EEV3 operating profit before tax of £206m (FY 2005: £395m), after a
   £100m increase in lapse provisions

•  IFRS4 underlying profit before tax of £243m (FY 2005: £145m)

•  Group EEV before IPO5 proceeds up 3% to £3,875m (31 December 2005:
   £3,744m), Group EEV including IPO proceeds per share of 246p (31 December 
   2005: 239p)

•  Standard Life Investments funds under management £123.4bn 
   (31 December 2005: £118.8bn)

There are no H1 2005 financial comparisons for EEV or IFRS results. The basis of
preparation of the EEV operating profit and of the IFRS underlying profit is set
out in the Standard Life Half Year Report 2006 below, which is published on the
Group's website at www.standardlife.com ('the Half Year Report 2006').  These
results have been calculated for the half year ended 30 June 2006 using
assumptions to show the results which would have been attributable to
shareholders had the company been owned by shareholders under the terms of the
Scheme of demutualisation throughout H1 2006. The Scheme of demutualisation did
not take effect until 10 July 2006.  Surplus cashflows from the Company's life
assurance business prior to that date will therefore accrue for the benefit of
with profits policyholders rather than shareholders in Standard Life plc.  The
Group's results as a mutual entity, prepared on an IFRS basis, for the half year
are included in full in the Half Year Report 2006.



Chairman, Sir Brian Stewart, commented:



'Following the successful demutualisation and IPO, Standard Life is making good
progress against the background of rapid change within the industry.  Our share
of the UK life and pensions market rose in the first half6 and profits improved.
We look forward with confidence.'



Group Chief Executive, Sandy Crombie, said:



'Our financial results for the first half of the year show strong sales growth
and improved new business profitability.  New business contribution of £91m,
almost three times the value for the whole of 2005, reflects the continued
success of our strategy of concentrating on higher margin products which require
lower capital investment.



'We have been net winners from the heightened activity in the UK pensions
market.  However, we have seen in recent weeks an increase in lapses and have
deemed it prudent to set aside a provision until lapse levels return to normal.



'We remain on track to hit both our UK Life and Pensions cost-cutting target of
£30m and our 2007 ROEV7 target of 9-10%.'



Notes: (1) Present Value of New Business Premium, (2) Annual Premium Equivalent,
(3) European Embedded Value, (4) International Financial Reporting Standards,
(5) Initial Public Offering, (6) Relative to FY 2005, (7) Return on Embedded
Value






Financial Highlights


                                                              EEV basis     EEV basis         IFRS basis     IFRS basis
                                                               H1 2006       FY 2005           H1 2006        FY 2005
Operating profit before tax/IFRS underlying profit before       £206m         £395m             £243m          £145m
tax1
Profit before tax/IFRS proforma profit before tax1              £266m         £770m             £186m          £204m
Life and Pensions PVNBP                                        £5,763m       £9,367m              -              -
New business contribution                                       £91m          £33m                -              -
New business contribution / PVNBP                               1.6%          0.4%                -              -
Embedded value before IPO proceeds                             £3,875m       £3,744m              -              -
Embedded value including IPO proceeds                          £5,171m       £5,040m              -              -
Embedded value per share including IPO proceeds2                246p          239p                -              -
Earnings per share 2 3                                          7.4p          14.3p             10.3p           6.0p
Return on embedded value including IPO proceeds4                6.8%          7.4%                -              -



Notes: (1) The profit amounts included in the IFRS basis column represent IFRS
underlying profit before tax and IFRS proforma profit before tax as defined in
the Half Year Report 2006 below and do not represent the results of the mutual
entity. (2) These are estimates calculated assuming shareholders owned the Group
and the Scheme of demutualisation was in effect during this reporting period.
Shares in issue used in the per share calculations are 2,106m.  (3) Uses EEV
operating profit after tax, adjusted for interest on IPO proceeds, of £155m
(2005: £301m) and IFRS underlying profit after tax of £216m (2005: £127m).  (4)
Uses £1.3bn and £1.1bn assumed proceeds for H1 2006 and FY 2005 respectively.
2005 reported RoEV has not been restated from previously published information.







Group IFRS (mutual basis)



Throughout the first half of 2006, The Standard Life Assurance Company (SLAC)
was a mutual company operated for the benefit of its with profits policyholders.
The statutory accounts of the SLAC Group recorded neither a profit nor a loss
on the operations of its long-term business because, under the mutual structure,
all surpluses from the business accrued to the benefit of with profits
policyholders through bonuses declared, or through transfers to the unallocated
divisible surplus.



On a mutual basis, the Group's total net revenue was £4,437m (FY 2005: £18,406m)
and operating expenses before finance costs of £57m (FY 2005: £109m) were
£3,877m (FY 2005: £16,782m).  The Group's total assets increased to £124,042m at
30 June 2006 (£120,260m at 31 December 2005).  The decline in net revenue was a
result of a lower net investment return reflecting primarily the impact of
adverse bond market movements and smaller rises in equity market indices in H1
2006 compared with FY 2005.  The return on investment property was strong in
both periods.  Overall investment return in H1 2006 was broadly in line with
market returns.  Similarly the reduction in operating expenses reflected the
impact of market movements on policyholder liabilities.



The Summarised Consolidated Income Statement for the six months ended 30 June
2006 (IFRS mutual basis) is published in Part 6 of the Half Year Report 2006.







Group EEV and IFRS headlines



The first half of 2006 was characterised by strong sales growth assisted by
A-Day and sharply improved new business profitability. Worldwide sales on a
PVNBP basis were £5,763m (FY 2005: £9,367m), driven by continuing strong sales
of SIPP and Investment Bonds. UK PVNBP was £4,330m (FY 2005: £6,455m), with UK
pensions business the largest contributor at £3,249m (FY 2005: £4,987m). Canada
was also a material contributor with PVNBP of £1,025m (FY 2005: £1,882m).



As previously reported, worldwide insurance sales on an APE basis increased by
19% to £745m compared with the first half of 2005, reflecting strong performance
in UK Life and Pensions where APE sales increased by 25%.



The result of this strong sales performance was an increase in Standard Life's
UK market share in the second quarter of 2006 to 9.2%, compared with 8.4% for
full year 2005.



The transition towards more profitable products with lower acquisition costs has
continued. The new business contribution, after cost of capital, was £91m,
approximately three times both the first quarter figure and the total for the
2005 year as a whole (2006 Q1: £30m, FY 2005: £33m). The margin at 1.6% of PVNBP
compares favourably to the level in 2006 Q1 (1.1%) and full year 2005 (0.4%).



Group EEV operating profit before tax was £206m (FY 2005: £395m), with profits
of £250m (FY 2005: £454m) from Life and Pensions after net negative operating
assumption changes of £38m (FY 2005: positive £37m), including a £100m increase
in lapse provisions relating to both demutualisation and A-Day. Standard Life
Investments, Standard Life Bank and Standard Life Healthcare together produced
operating profits of £34m on an EEV basis (FY 2005: £46m).



The costs incurred by the Corporate Centre, net funding of subordinated debt and
other non-covered business in total amounted to £78m (FY 2005: £105m).  Within
this figure, Corporate Centre costs for the first six months of 2006 were £42m
(FY 2005: £58m), which included costs in relation to preparatory work in advance
of conversion to a listed company.  Standard Life has undertaken a number of
initiatives to maintain Corporate Centre costs in 2007 at 2005 levels.



Group EEV was up 3% to £3,875m as at 30 June 2006 (£3,744m as at 31 December
2005). This figure has been calculated before taking account of the £1.3bn of
net new capital raised from the IPO. Allowing for the capital raised, the pro
forma Group EEV rose to £5,171m at 30 June 2006.



The IFRS underlying profit amounted to £243m, substantially ahead of the £145m
profit for 2005 as a whole, with Life and Pensions IFRS underlying profit of
£273m (FY 2005: £175m) benefiting from the absence of £189m of reserve
strengthening which impacted the 2005 result. The UK, Canadian and European Life
and Pensions businesses all made substantial improvements in their underlying
IFRS results.



In Life and Pensions there was a decrease in new business strain (H1 2006:
£136m, FY 2005: £332m) both in absolute terms and also relative to new business
volumes (H1 2006: 18% of APE sales, FY 2005: 27% of APE sales) reflecting a
reduction in acquisition costs and favourable changes in product mix. As a
result, the Life and Pensions covered businesses generated positive cash flow on
an EEV basis of £156m before foreign exchange and capital movements. In addition
the Group had indicative net cash outflows (on an after-tax IFRS basis) from
non-covered entities of £33m for H1 2006 (FY 2005: outflows of £39m).  Cashflow
generation remains a clear focus of the Group.




UK Life and Pensions



Both PVNBP (£4,330m) and APE sales (£594m) for UK covered life business
continued to grow strongly during the period, largely reflecting pro-active
changes in product mix, the beneficial impact of A-Day on new business volumes
and continued focus on customer service. SIPP and investment bond sales were key
contributors to this performance, in line with the strategy to focus on more
profitable product lines. We continue to develop our product range with the roll
out of our Wrap platform to advisers.



EEV operating profit was £148m (FY 2005: £272m) benefiting from the substantial
increase in new business contribution from UK Life and Pensions of £78m (FY
2005: £27m) due to changes in product mix, increased sales of lower commission
group pensions and lower initial expenses. As a result the PVNBP margin on UK
Life and Pensions products increased significantly from 0.4% for FY 2005 to 1.8%
for H1 2006, with improved margins in all key product categories. The largest
improvement in profitability was in pensions where the new business contribution
increased to £44m in H1 2006 from £11m in FY 2005, with the new business margin
increasing to 1.4% in H1 2006 from 0.2% in FY 2005.



In FY 2005 we witnessed lower with profits lapse volumes in advance of
demutualisation. To take account of this, a pre-tax provision of £23m was
established at 31 December 2005 in anticipation of these deferred lapses
occurring after demutualisation. Lapse volumes similarly ran at a reduced level
in H1 2006. After demutualisation we saw an increase in lapses of life with
profits products which, as expected, since early August, have declined. However,
in light of the extent of the lapses overall, the pre-tax provision has been
increased by £21m to £44m.



We have seen a different experience in pensions. Customers have consolidated
their pensions arrangements as a result of A-Day. This has resulted in an
increase in pensions lapses.  For Standard Life this impact has only occurred in
recent weeks.  We have therefore set up a pre-tax provision of £79m in respect
of expected A-Day related lapses.  We expect this A-Day related lapse experience
to revert to normal levels in 2007.  A proportion of these future lapses may
transfer to other Standard Life products, although this benefit has not been
taken into account.



UK Life and Pensions operating profit was favourably impacted by £27m due to
updated valuation assumptions, resulting in an overall UK pre-tax charge for
operating assumption changes of £73m (FY 2005: negative £22m).



IFRS underlying profit improved to £155m for the first 6 months of 2006 from
£16m for 12 months to December 2005. The strong performance was significantly
helped by higher profits from the unitised life and pensions business.





Canadian Life and Pensions



The Canadian Life and Pensions business achieved PVNBP sales of £1,025m (FY
2005: £1,882m) with APE increasing in local currency terms by 3% to £99m in line
with the strategy to prioritise retention and maintain focus on margin instead
of volume. The increase in new business contribution to £11m from a loss of £2m
in FY 2005 relates mainly to the repricing of the previously loss-making
Universal Life product.  Losses for this product in H1 2006 were £5m (FY 2005:
£36m).



The Canadian Life and Pensions business contributed £79m (FY 2005: £131m) to
Group EEV operating profits with the result boosted by the turnaround in new
business contribution and lower maintenance expense assumptions reflecting
ongoing cost reduction measures.



Canada IFRS underlying profit increased on a pro-rata basis to £68m in the first
half of 2006 (FY 2005: £86m) due to continued growth in funds under management
and the repositioning of the individual insurance offering.



Market share in H1 2006 in group savings and retirement, the largest product
segment in our Canadian insurance business, rose to 23.9% (FY 2005: 23.2%),
while market share in individual life fell to 1.5% (FY 2005: 4.8%).  Overall
market share decreased to 7.8% (FY 2005: 9.8%).





Standard Life Investments (SLI)



Following continued strong investment performance, SLI experienced large mutual
fund inflows and enjoyed a good ISA season. Operating profits grew both on an
EEV basis (non-covered profits only: £14m in H1 2006, £24m in FY 2005) and an
IFRS basis (total profits: £28m in H1 2006, £44m in FY 2005).



At 30 June 2006, total SLI funds under management were £123.4bn, up from
£118.8bn at the end of 2005. Within this, third party funds under management
stood at £31.5bn, up from £28.1bn at the end of 2005. Net inflows for investment
products were £3,120m (H1 2005: £2,643m).



In a survey of global fund managers based on net assets accumulated outside the
US in the first six months of 2006, SLI was ranked sixth overall and first for
active managers.





Standard Life Bank (SLB)



During the first six months of 2006, the UK fixed rate mortgage market has been
extremely competitive. Mortgages under management at SLB were £10.4bn at end
June 2006 (end December 2005: £10.7bn).  Average market share by completions in
the first half of 2006 at 0.8% was lower than the average during 2005 (1.1%).



SLB delivered an IFRS underlying profit of £17m (FY 2005: £24m). The effect of
the decrease on lending related income was more than offset by increased fees.
Costs have reduced compared with 2005, mainly due to a fall in commission and
selling expenses.  This is consistent with the reduction in new lending
business.  Cost control remains a priority within SLB to enable it to compete
effectively within this market.





Standard Life Healthcare



Healthcare and General Insurance operating profit of £3m (FY 2005: £7m) and
sales of £10m (H1 2005: £11m) reflected competitive pressure in both the small
and medium enterprise and individual markets.



This operating figure excludes a £9m write-down against the FirstAssist
acquisition and a £5m provision for restructuring expenses. The former reflects
the write-off of purchased software, higher than expected lapse experience and a
reduction in sales of FirstAssist products.



The integration of FirstAssist remains on track and the combined market share
for Standard Life Healthcare and FirstAssist is estimated to be 8.5% of the PMI
market.





Outlook



Standard Life sees opportunities for continuing profitable growth in the UK,
following the boost provided by Pensions A-Day, and for good progress in its
other major markets.  In Life and Pensions the first class service, leading
product range and strong relationships with intermediaries combine to underpin
prospects for profitable growth.  In Asset Management excellent investment
performance provides a solid basis for further gains, while in the other
businesses improved efficiencies will assist margins.







To view the full Half Year Report please cut and paste the attached link into
the address bar of your web browser.



http://www.rns-pdf.londonstockexchange.com/rns/5336j_-2006-9-27.pdf





Ends




For further information please contact:



Media:

Scott White                               0131 245 5422 / 0771 248 5738
Barry Cameron                             0131 245 6165 / 07712 486 463
Emma Wylie                                0207 872 4154 / 07712 486 444
Neil Bennett (Maitland)                   0207 379 5151 / 07900 000 777

Equity Investors:

Gordon Aitken                             0131 245 6799
Gillian Bailey                            0131 245 1110

Debt Investors:

John Cummins                              0131 245 5195
Georgina Marshall                         0131 245 9798




Notes to Editors



 1. A presentation to investors and analysts will take place at 9.30am (BST) at
    UBS, 1 Finsbury Avenue, London EC2M 2PP. An audio cast of the presentation
    and the presentation slides will be available on the Group's website,
    www.standardlife.com



 2. There will also be a live teleconference link to the investor and analyst
    presentation.  UK investors should dial 0845 245 5000, and overseas
    investors should dial [phone].  Callers should quote Standard Life
    plc Half Year Results 2006.  The conference ID number is 6984275.



 3. Standard Life aims to work to the highest ethical, legal and professional
    standards.  The group's first stand-alone Corporate Responsibility Report is
    published today and reports on performance in this area during 2005.  During
    2006, Standard Life has continued to demonstrate its commitment to corporate
    responsibility during a period of significant change.  The company intends
    to publish its 2006 Corporate Responsibility Report at the time the 2006
    Annual Report is issued to shareholders.  A full copy of the report can be
    found on www.standardlife.com/CR



 4. Period on period percentage increases are in sterling unless otherwise
    stated.




                      This information is provided by RNS
            The company news service from the London Stock Exchange