Preliminary Results 2007

Standard Life plc
12 March 2008


                          Standard Life plc
                 2007 Preliminary Results - 12 March 2008

      Record results beating operational and profitability targets for 2007
          Strong outperformance lays the foundations for further growth

Financial Highlights:

• EEV operating profit before tax up 43% to £881m (2006: £614m), with
  diluted EEV operating EPS up 37% to 28.3p (2006: 20.7p)

• Return on embedded value increased by 2.6% pts to 11.5% (2006: 8.9%)

• EEV capital and cash generation after tax up 129% to £600m (2006: £262m)

• Group EEV up 11% to £6,211m (31 December 2006: £5,608m), equivalent
  to 285p per share (2006: 258p)

• New business contribution before tax up 68% to £345m (2006: £205m)

• PVNBP1 margin increased by 0.7% pts to 2.1% (2006: 1.4%)

• IFRS underlying profit before tax up 32% to £714m (2006: £540m),
  with diluted IFRS underlying EPS up 53% to 33.3p (2006: 21.8p)

• IFRS profit before tax attributable to equity holders up 12% to £509m 
  (2006: £453m)

• Full year dividend of 11.5p, implying growth of 6.5%

Group Chief Executive Sandy Crombie said:

'Standard Life has delivered a very strong set of results in its first full year
as a listed company.  We have beaten all our profitability and efficiency
targets for 2007 and achieved record sales, a platform which we will build upon
for further growth in years to come.

'Our distinctive 'capital lite' approach to designing and distributing products
has allowed us to more than double the capital and cash generated in the
business.

'Against an uncertain economic backdrop we have made a good start to 2008 and
are working to improve our core profitability. Our confidence is based on our
expertise in managing assets, industry-leading customer service and on-going
initiatives to improve efficiency.'

EEV operating profit                                                                2007   Pro forma 2006
                                                                                      £m               £m
Covered business by region
UK                                                                                   606              372
Canada                                                                               178              163
Europe                                                                                26               45
Other                                                                               (12)              (8)
HWPF TVOG                                                                             42               44

Covered business operating profit                                                    840              616

Covered business by source
New business contribution                                                            345              205

In-force business
                expected return                                                      401              392
                experience variance                                                 (48)              122
                assumption changes                                                   148             (58)
Other covered                                                                        (6)             (45)

Total covered business operating profit                                              840              616

Investment management                                                                 48               42
Banking                                                                               32               38
Healthcare                                                                            13               12
Group Corporate Centre costs                                                        (57)             (89)
Other                                                                                  5              (5)

Operating profit before tax                                                          881              614

Tax on operating profit                                                            (264)            (185)

Operating profit after tax                                                           617              429

Diluted EEV operating EPS                                                          28.3p            20.7p


IFRS underlying profit                                                              2007   Pro forma 2006
                                                                                      £m               £m
Life and pensions by region
UK                                                                                   395              230
Canada                                                                               168              168
Europe                                                                                63              108
Other                                                                               (12)              (9)

Total life and pensions underlying profit                                            614              497


Investment Management                                                                 83               70
Banking                                                                               32               38
Healthcare                                                                            13               12
Group Corporate Centre costs                                                        (57)             (89)
Other                                                                                 29               12
Total underlying profit before tax                                                   714              540

Tax on underlying profit                                                              11             (66)

Underlying profit after tax                                                          725              474

Diluted IFRS underlying EPS                                                        33.3p            21.8p

Basis of preparation

The results for the year ended 31 December 2006 have been calculated 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 (the Scheme) throughout the year. The Scheme did not
take effect until 10 July 2006. For further information please refer to the
basis of preparation in section 1.7 of the full Preliminary Results document.

Profitability targets exceeded

In 2007, European Embedded Value (EEV) operating profit before tax increased by
43% to £881m (2006: £614m), delivering a return on embedded value (RoEV) of
11.5% (2006: 8.9%) that has significantly exceeded the 9-10% target set for the
year.  This strong increase in RoEV has been driven by growth in new business
profitability, the successful achievement of our cost efficiency targets and a
resilient performance from our investment management business.

Going forward, we intend to report our RoEV under three key components: core,
efficiency and back book management.  This categorisation is in line with how we
focus our business effort and the key value drivers.  We have seen an
improvement in each component during the year, with core rising by 2.1% points
to 10.2% in 2007.


Breakdown of RoEV                                2007                 2006             Movement
Core                                            10.2%                 8.1%                 2.1%
Efficiency                                       1.5%                 1.2%                 0.3%
Back book management                           (0.2%)               (0.4%)                 0.2%
RoEV                                            11.5%                 8.9%                 2.6%

Core return

Core comprises new business contribution, expected return on in-force business,
development costs for covered business2 and IFRS underlying profit for
non-covered business3.  The core RoEV of 10.2% in 2007 (2006: 8.1%) demonstrates
the strength of our business model.

2007 was a record-breaking year for new business volumes.  Worldwide PVNBP
increased by 13% to £16.4bn (2006: £14.6bn), driven by strong growth in our UK,
European and Asia Pacific joint venture life and pensions operations.  Worldwide
investment net inflows in our investment management business increased by 39% to
£6.4bn (2006: £4.6bn) and gross mortgage lending increased by 22%.

This strong growth and a continued shift towards both improved new business cost
efficiencies and a more profitable product mix have led to a further increase in
new business margin to 2.1% (2006: 1.4%).  Our UK life and pensions operations
have produced a margin of 2.1%, beating the 2008 margin target of 2.0% one year
early.  The 68% increase in new business contribution to £345m (2006: £205m) and
reduced Group Corporate Centre costs have been the key drivers behind the 44%
increase in our core result to £791m (2006: £550m).

All efficiency targets exceeded

Efficiency comprises covered business maintenance expense variances and
assumption changes.

We have exceeded each of the three cost efficiency targets that were set for the
year:

  • We targeted a reduction in Group Corporate Centre costs to the
    pre-demutualisation level of £58m.  We successfully reduced these costs to
    £57m in 2007 from £89m in the prior year.  As highlighted above, this has
    been reflected in our core return.

  • We have reduced UK life and pensions expenses by £31m compared to 2005
    levels, exceeding the target of £30m which we set at the time of
    demutualisation. This reduction in the UK cost base excludes the cost of new
    products launched since flotation, including Wrap.

  • At our Preliminary Results last year we announced a Continuous Improvement
    Programme to reduce underlying costs by a further £100m by the end of 2009.
    In 2007 we achieved savings of £27m compared with a target of £15m.  A key
    initiative was the establishment of a UK financial services division which
    integrated our UK life and pensions, banking and healthcare operations.
    This will help drive future synergies across the Group and deliver higher
    profitability.

The achievement of our cost savings targets in respect of UK covered business
along with additional efficiency initiatives across our Canadian and European
operations have been reflected in a £109m benefit to embedded value operating
profit during the year (2006: £95m benefit) arising from maintenance expense
experience variances and operating assumption changes.

Looking ahead, we remain on track to deliver against the remaining cost savings
targets of our Continuous Improvement Programme.

Active back book management

We are committed to driving increased value from management of our back book.
This category 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.  In total, management of our
in-force book had a negative financial impact of £19m (2006: negative £31m), and
reduced RoEV by 0.2% points.

We have significantly strengthened our persistency assumptions in the UK and
Europe.  Adverse lapse experience and strengthened operating assumptions have
reduced embedded value operating profit by £249m (2006: £266m charge), after an
offsetting positive effect in Canada.

Lapse trends across our pensions and with profits life portfolios reflecting the
changes resulting from A-day and demutualisation have now been established.  As
a consequence we have considered it prudent to strengthen our lapse assumptions
up to the level of our current experience.

In recent months, and in line with the industry, we have experienced an upturn
in lapse activity in UK onshore unit-linked bonds, reflecting concerns about the
outlook for commercial property, general market volatility and uncertainty
regarding capital gains tax proposals.  We have therefore significantly
strengthened onshore unit-linked bond long-term lapse assumptions and have set
up a short-term provision to cover the current period of uncertainty until
longer-term lapse trends have been established.

We have strengthened our mortality assumptions across our UK and Canadian
operations by £100m to reflect a more prudent view of future improvements in
life expectancy.  Significantly, on 14 February 2008 we reinsured £6.7bn of UK
immediate annuity liabilities.  As outlined at the time, this transaction will
deliver a one-off increase in embedded value operating profit of at least £100m4
and a release of cash from reserves in 2008, a significant reduction in
longevity risk for shareholders, a reduction in our capital requirements and an
enhancement to the Heritage With Profits Fund estate.

A review of UK group deferred annuity data and valuation methodology resulted in
a £191m net benefit to embedded value operating profit. The review of bulk
buy-out annuities and group deferred annuities arising from discontinued final
salary schemes mainly written during the 1970s and 1980s identified that the
reserves proved to be overly prudent when considered in light of the improved
data and the more precise modelling now available.

Other positive variances include £42m arising from the reduction in the Heritage
With Profits Fund time value of options and guarantees (HWPF TVOG).

A differentiated capital and cash generative strategy

A central component of our strategy is to write capital-efficient new business.
We have reduced new business strain by 26% to £225m (2006: £303m) while growing
sales volumes by 13%. New business strain as a proportion of PVNBP has improved
to 1.4% (2006: 2.2%) and was comfortably covered by capital and cash flows from
our existing business, which increased by 26% to £549m (2006: £436m). These
factors have contributed to the 176% increase in EEV capital and cash flow
generation from our core operating activities of £334m (2006: £121m).

Including back book management, where we have been able to accelerate the
emergence of cash from future years and efficiency, total EEV capital and cash
flow generation increased 129% to £600m (2006: £262m).

We have proposed a final dividend of 7.7p per share, making a total dividend of
11.5p per share for 2007. This represents implied growth of 6.5%, consistent
with the Group's progressive dividend policy.

Balance sheet strength

At the end of 2007, Group embedded value had increased by 11% to £6,211m (2006:
£5,608m) or to 285p per share (2006: 258p per share) in spite of volatile
financial markets during the latter half of the year.

Within the Heritage With Profits Fund (HWPF), an extensive hedging program was
established at the time of demutualisation to help stabilise the balance sheet
impact of guarantees incorporated in certain with profits contracts. The use of
equity options and futures, and interest rate swaps, helps mitigate the
otherwise adverse consequences that falling equity prices or declines in
long-term interest rates would have on the fund because of these guarantees. The
strategy had its first real test during the market volatility and weakness that
characterised the latter part of 2007 and it proved extremely helpful in
protecting the fund's estate.  The residual estate of the HWPF at 31 December
2007 was £1.5bn (2006: £1.3bn).

Standard Life's total investment (including third party funds) in the asset
backed securities markets across both short-term treasury instruments and
long-term fixed interest is approximately £7.7bn or 5.4% of total funds under
management, predominantly in UK securities.  Active management has resulted in a
high quality credit portfolio with no direct exposures to the US mortgage
market, minimal exposure to leveraged structures, no current direct exposure to
the Monolines and very modest exposure to credit within a Monoline wrapper.  The
credit ratings underlying the Monoline wrapper are either AA or A rated with no
exposure to the US or leveraged structures. Shareholder funds have a total
exposure of £27m5 to these assets or 0.02% of total funds under management.

A provision of £10m has been set up in respect of a guarantee to an associate
for one cash fund to maintain the pricing structure for investors in the fund
given current liquidity conditions.  The investments backing this fund are
principally AAA rated, and accordingly could, if necessary, be taken on balance
sheet without a deterioration in the overall credit quality of the Group's
investments.

Increased IFRS profit

Underlying profit before tax on an IFRS basis increased by 32% to £714m (2006:
£540m).  Underlying profits in both 2006 and 2007 were impacted by significant
one-off items.  In 2007 these included reserve releases following the adoption
of PS06/14 (Prudential changes for insurers) and in respect of UK deferred
annuity business, the effects of which were partly offset by strengthened
mortality assumptions in the UK and Canada.  In 2006 one-off items included SIPP
and deferred annuity reserve releases of £53m in the UK and profits on
exceptional German sales of £51m.

Excluding one-off items, underlying profit before tax increased by 7% to £476m
(2006: £443m), reflecting increased investment management charges and the
reduction in Group Corporate Centre costs to 2005 levels.  The positive impact
of these factors was partially offset by new business development costs which
were incurred in respect of our Wrap, offshore bond and recently launched
Standard Life Wealth business.

Outlook

Having beaten our RoEV target in 2007, and despite an uncertain economic
background, we are working to increase our core return on embedded value, aided
by continued improvement in volumes, mix and product profitability.

The reinsurance of UK immediate annuities will deliver a one-off increase in
embedded value operating profit of at least £100m in 2008. In addition, we
expect to benefit from further efficiency gains in 2008 and are on track to
deliver the £100m of annual efficiency savings by 2009 announced last year.

Our confidence in continuing profitable growth is based on our key strengths of
expertise in managing assets, industry-leading customer service and on-going
initiatives to improve efficiency.

Paste the following link into your web browser to download the PDF document 
related to this announcement:

http://www.rns-pdf.londonstockexchange.com/rns/8975p_-2008-3-12.pdf

For further information please contact:

Institutional Equity Investors:
Gordon Aitken                                   0131 245 6799
Duncan Heath                                    0131 245 4742

Retail Equity Investors:
Computershare                                   0845 113 0045

Media:
Barry Cameron                                   0131 245 6165 / 07712 486 463
Neil Bennett (Maitland)                         020 7379 5151 / 07900 000 777

Debt Investors:
Andy Townsend                                   0131 245 7260

Newswires and online publications

A conference call will take place for newswires and online publications from
8.00-9.00am.  Participants should dial 020 7162 0125 and quote Standard Life
Preliminary Results. The conference ID number is 785538.

Investors and Analysts

A presentation to investors and analysts will take place at 9.30am at UBS Ground
Floor Conference Centre, 1 Finsbury Avenue, London. A live webcast of the
presentation and the presentation slides will be available on the Group's
website.  In addition a replay will be available on this website later today.

There will also be a live listen only teleconference to the investor and analyst
presentation at 9.30am.  UK investors should dial 0800 6942586, and overseas
investors should dial [phone].  Callers should quote Standard Life
Preliminary Results.  The conference ID number is 36889487. A replay facility
will be available for two weeks on [phone]. The pass code is 36889487#.

Notes to Editors:

1.  Present value of new business premiums.

2.  Excludes development costs directly related to back book management
    initiatives.

3.  Excludes specific costs attributable to back book management.

4.  The expected one-off benefit to pre-tax embedded value operating profit
    has been calculated on the basis of the EEV methodology used by Standard 
    Life as at the end of 2007.

5.
As at 31 December 2007               Shareholder     Policyholder     Policyholder
                                                      Unit-Linked    Participating      Third Party         Total
                                              £m               £m               £m               £m            £m
US Sub-Prime RMBS                              -                -                -                -             -
US Alt-A                                       -                -                -                -             -
CDO/CSO/CLO1                                   -                -                6                -             6
Wrapped Credit2                               22               25              201              178           426
Direct Monoline3                               -                -                -                3             3
SIVs4                                          5               17               32               71           125
Total                                         27               42              239              252           560
% Asset backed securities                   0.4%             0.5%             3.1%             3.3%          7.3%
% Total funds under management             0.02%            0.03%            0.17%            0.18%         0.39%


1 Entire Exposure to AAA rated CSO underlying collateral investment grade
  corporate exposure.

2 Post Balance Sheet re-structuring of annuity book in February 2008 resulted in
  reduction to wrapped credit of £120m to give total exposure of £306m.  No
  underlying exposure to US credit.

3 Exposure of $5m nominal CDS to AMBAC at 31 December 2007.  This has been sold
  since the year end.

4 Includes Whistlejacket exposure of £15m held in Medium Term Notes (MTN) and
  senior notes.  Other SIV exposure is either bank sponsored or Sigma (Gordian
  Knot).


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