Final Results - Part 5 of 5

RNS Number : 2065Z

Standard Life plc

13 March 2012

 



Standard Life plc

Preliminary Results 2011

Part 5 of 5

4  Supplementary information

4.1 Analysis of Group operating profit by segment

	UK	Global investment management1	Canada	International	Other	Elimination	Total
2011	£m	£m	£m	£m	£m	£m	£m
Fee based revenue	625	383	166	221	-	(172)	1,223
Spread/risk margin	75	-	281	-	-	-	356
Total income	700	383	447	221	-	(172)	1,579
Acquisition expenses	(169)	-	(61)	(40)	-	-	(270)
Maintenance expenses	(332)	(227)	(201)	(132)	(3)	172	(723)
Investment for transformation and growth	(53)	(31)	(36)	(12)	(5)	-	(137)
Group corporate centre costs	-	-	-	-	(45)	-	(45)
Capital management	10	-	38	1	25	-	74
India and China JV businesses	-	-	-	2	-	-	2
Other	64	-	-	-	-	-	64
Operating profit/(loss) before tax from continuing operations	220	125	187	40	(28)	-	544
Tax on operating profit	(16)	(30)	(31)	(8)	(2)	-	(87)
Operating profit/(loss) after tax from continuing operations	204	95	156	32	(30)	-	457
Non-operating items	(95)	(4)	(74)	(16)	(25)	-	(214)
Tax on non-operating items	26	1	19	3	6	-	55
IFRS profit/(loss) for the year from continuing operations	135	92	101	19	(49)	-	298
Profit from discontinued operations	-	-	-	-	-	-	-
IFRS profit/(loss) after tax attributable to equity holders	135	92	101	19	(49)	-	298
Other movements in equity							(240)
Total movements in equity							58
Opening IFRS shareholder net assets							3,903
Closing IFRS shareholder net assets							3,961

¹   Global investment management fee based revenue includes share of profits from HDFC Asset Management Company Limited.

	UK	Global investment management1	Canada	International	Other	Elimination	Total
2010	£m	£m	£m	£m	£m	£m	£m
Fee based revenue	593	331	150	212	-	(155)	1,131
Spread/risk margin	148	-	222	-	-	-	370
Total income	741	331	372	212	-	(155)	1,501
Acquisition expenses	(172)	-	(64)	(31)	-	-	(267)
Maintenance expenses	(312)	(194)	(193)	(129)	-	155	(673)
Investment for transformation and growth	(61)	(34)	(35)	(15)	(4)	-	(149)
Group corporate centre costs	-	-	-	-	(50)	-	(50)
Capital management	(21)	-	30	1	17	-	27
India and China JV businesses	-	-	-	(23)	-	-	(23)
Other	59	-	-	-	-	-	59
Operating profit/(loss) before tax from continuing operations	234	103	110	15	(37)	-	425
Tax on operating profit	(36)	(27)	(20)	(8)	2	-	(89)
Operating profit/(loss) after tax from continuing operations	198	76	90	7	(35)	-	336
Non-operating items	33	3	78	(3)	(26)	-	85
Tax on non-operating items	9	-	(23)	-	5	-	(9)
IFRS profit/(loss) for the year from continuing operations	240	79	145	4	(56)	-	412
Profit from discontinued operations	20	-	-	-	-	-	20
IFRS profit/(loss) after tax attributable to equity holders	260	79	145	4	(56)	-	432
Other movements in equity							14
Total movements in equity							446
Opening IFRS shareholder net assets							3,457
Closing IFRS shareholder net assets							3,903

¹   Global investment management fee based revenue includes share of profits from HDFC Asset Management Company Limited.

4.2 EEV and EEV operating profit

	Covered
	UK (and HWPF TVOG)	Canada	International			Total non-covered	Group elimination	Total	Pence per share
2011	£m	£m	£m			£m	£m	£m	p
Opening EEV	3,581	1,758	732			1,205	45	7,321	322
Opening adjustments	-	-	-			-	-	-
Adjusted opening EEV	3,581	1,758	732			1,205	45	7,321
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 from continuing operations	461	324	104			100	-	989
Tax on EEV operating profit	(115)	(80)	(26)			(44)	-	(265)
EEV operating profit after tax from continuing operations	346	244	78			56	-	724	31
EEV non-operating (loss)/profit after tax and EEV profit after tax from discontinued operations	(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

	Covered
	UK (and HWPF TVOG)	Canada	International		Total non-covered		Group elimination	Total		Pence per share
2010	£m	£m	£m		£m		£m	£m		p
Opening EEV	3,054	1,553	658		1,163		7	6,435		288
Opening adjustments	-	-	-		-		-	-
Adjusted opening EEV	3,054	1,553	658		1,163		7	6,435
New business contribution	173	68	67		-		-	308
Contributions from in-force business	255	182	26		-		-	463
Non-covered business	-	-	-		16		-	16
EEV operating profit before tax from continuing operations	428	250	93		16		-	787
Tax on EEV operating profit	(117)	(64)	(21)		(47)		-	(249)
EEV operating profit/(loss) after tax from continuing operations	311	186	72		(31)		-	538		24
EEV non-operating profit/(loss) after tax and EEV profit after tax from discontinued operations	250	(33)	21		2		38	278		12
EEV profit/(loss) after tax	561	153	93		(29)		38	816
Non-trading adjustments	(34)	52	(19)		71		-	70
Closing EEV	3,581	1,758	732		1,205		45	7,321		322

4.3 Reconciliation of operating profit to EEV capital and cash generation

	UK	Investment management	Canada	International	Other	Total
2011	£m	£m	£m	£m	£m	£m
Operating profit/(loss) before tax from continuing operations	220	125	187	40	(28)	544
Tax on EEV operating profit	(16)	(30)	(31)	(8)	(2)	(87)
Operating profit/(loss) after tax from continuing operations	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 from continuing operations	251	54	158	5	(30)	438
EEV operating profit after tax - PVIF	138	-	82	66	-	286
EEV operating profit/(loss) after tax from continuing operations	389	54	240	71	(30)	724

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

	UK	Investment management	Canada	International	Other	Total
2010	£m	£m	£m	£m	£m	£m
Operating profit/(loss) before tax from continuing operations	234	103	110	15	(37)	425
Tax on EEV operating profit	(36)	(27)	(20)	(8)	2	(89)
Operating profit/(loss) after tax from continuing operations	198	76	90	7	(35)	336
Impact of different treatment of assets and actuarial reserves	(20)	-	4	2	-	(14)
DAC and DIR1, intangibles, tax and other	(6)	-	12	(41)	-	(35)
Look through to investment management	47	(52)	3	2	-	-
EEV operating capital and cash generation from continuing operations	219	24	109	(30)	(35)	287
EEV operating profit after tax - PVIF	83	-	74	94	-	251
EEV operating profit/(loss) after tax from continuing operations	302	24	183	64	(35)	538

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

4.4 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, for example deferred acquisition costs, intangibles and reinsurance assets.

Group assets under administration (summary)

12 months ended 31 December 2011

	Opening AUA at 1 Jan 2011	Gross inflows	Redemptions	Net inflows	Market and other movements	Closing AUA at 31 Dec 2011
	£bn	£bn	£bn	£bn	£bn	£bn
Fee business
UK1	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 (excluding annuities)	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 party2	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/eliminations3	(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 products1	8.1	-	-	-	0.4	8.5
Joint ventures	1.2	0.4	(0.1)	0.3	(0.3)	1.2
Non-life assets	1.4	-	-	-	0.2	1.6
Other consolidation/eliminations3	(0.8)	-	-	-	(0.1)	(0.9)
Group assets under administration	196.8	25.9	(20.5)	5.4	(3.8)	198.4

¹   Standard Life Wealth has been disclosed separately from Individual SIPP for the first time. The 2010 comparatives have not been restated.

²    Market and other movements include the external transfer of the UK money market funds.

³    In order to be consistent with the presentation of new business information, certain products are included in both life and pensions AUA and investment operations. Therefore, at a Group level an elimination adjustment is required to remove any duplication, in addition to other necessary consolidation adjustments.

4.4 Group assets under administration and net flows continued

Group assets under administration (summary)

12 months ended 31 December 2010

	Opening AUA at 1 Jan 2010	Gross inflows	Redemptions	Net inflows	Market and other movements	Closing AUA at 31 Dec 2010
	£bn	£bn	£bn	£bn	£bn	£bn
Fee business
UK	66.6	9.4	(7.3)	2.1	7.5	76.2
Institutional pensions	12.0	3.6	(1.2)	2.4	1.4	15.8
Conventional with profits (excluding annuities)	6.9	0.2	(1.1)	(0.9)	0.6	6.6
UK total	85.5	13.2	(9.6)	3.6	9.5	98.6
Standard Life Investments third party	56.9	12.4	(6.2)	6.2	8.5	71.6
Canada	11.3	2.2	(1.8)	0.4	2.3	14.0
International (wholly owned)	9.1	2.2	(0.8)	1.4	0.6	11.1
Consolidation/eliminations1	(23.9)	(6.7)	3.0	(3.7)	(4.6)	(32.2)
Total fee business	138.9	23.3	(15.4)	7.9	16.3	163.1
Spread/risk
UK	13.1	0.5	(1.1)	(0.6)	0.9	13.4
Canada	9.2	0.9	(1.3)	(0.4)	1.3	10.1
Total spread/risk business	22.3	1.4	(2.4)	(1.0)	2.2	23.5
Assets not backing products	7.8	-	-	-	0.6	8.4
Joint ventures	0.8	0.4	(0.1)	0.3	0.1	1.2
Non-life assets	1.6	-	-	-	(0.2)	1.4
Other consolidation/eliminations1	(1.3)	-	-	-	0.5	(0.8)
Group assets under administration	170.1	25.1	(17.9)	7.2	19.5	196.8

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

Group assets under administration

12 months ended 31 December 2011

	Fee (F) - Spread/risk (S/R)	Opening AUA at 1 Jan 2011	Gross inflows	Redemptions		Net inflows	Market and other movements	Closing AUA at 31 Dec 2011
		£bn	£bn	£bn		£bn	£bn	£bn
UK
Individual SIPP1	F	14.9	3.3	(1.6)		1.7	(0.2)	16.4
Other individual pensions	F	23.6	0.7	(2.3)		(1.6)	0.6	22.6
Investment bonds	F	8.7	0.2	(1.2)		(1.0)	(0.1)	7.6
Mutual funds	F	5.3	1.8	(0.4)		1.4	(0.6)	6.1
Annuities	S/R	13.4	0.5	(1.2)		(0.7)	1.7	14.4
Legacy life	F	9.1	0.3	(1.8)		(1.5)	(0.1)	7.5
Wealth1	F	0.5	0.5	(0.1)		0.4	-	0.9
UK retail		75.5	7.3	(8.6)		(1.3)	1.3	75.5
Corporate pensions	F	21.0	3.9	(1.9)		2.0	(1.0)	22.0
Institutional pensions	F	15.8	3.2	(1.8)		1.4	0.3	17.5
UK corporate		36.8	7.1	(3.7)		3.4	(0.7)	39.5
Assets not backing products1		6.9	-	-	-		0.1	7.0
UK long-term savings		119.2	14.4	(12.3)		2.1	0.7	122.0
Canada
Fee	F	10.7	1.6	(1.1)		0.5	(0.3)	10.9
Spread/risk	S/R	3.6	0.2	(0.4)		(0.2)	0.4	3.8
Group savings and retirement		14.3	1.8	(1.5)		0.3	0.1	14.7
Fee	F	1.7	0.5	(0.3)		0.2	-	1.9
Spread/risk	S/R	5.9	0.4	(0.6)		(0.2)	0.2	5.9
Individual insurance, savings and retirement		7.6	0.9	(0.9)		-	0.2	7.8
Group insurance	S/R	0.6	0.5	(0.4)		0.1	(0.1)	0.6
Mutual funds	F	1.6	0.2	(0.3)		(0.1)	-	1.5
Assets not backing products		1.2	-	-		-	0.3	1.5
Canada long-term savings		25.3	3.4	(3.1)		0.3	0.5	26.1
International
Ireland	F	6.0	1.6	(0.8)		0.8	(0.2)	6.6
Germany	F	5.0	0.8	(0.3)		0.5	0.1	5.6
Hong Kong	F	0.1	0.1	-		0.1	(0.1)	0.1
Wholly owned long-term savings		11.1	2.5	(1.1)		1.4	(0.2)	12.3
Joint ventures long-term savings		1.2	0.4	(0.1)		0.3	(0.3)	1.2
International long-term savings		12.3	2.9	(1.2)		1.7	(0.5)	13.5
Total worldwide long-term savings		156.8	20.7	(16.6)		4.1	0.7	161.6
Non-life assets		1.4	-	-		-	0.2	1.6
Standard Life Investments third party assets under management2		71.6	12.9	(8.6)		4.3	(4.1)	71.8
Consolidation and elimination adjustments3		(33.0)	(7.7)	4.7		(3.0)	(0.6)	(36.6)
Group assets under administration		196.8	25.9	(20.5)		5.4	(3.8)	198.4
Group assets under administration managed by:
Standard Life Group entities		164.0						163.3
Other third party managers		32.8						35.1
Total		196.8						198.4

¹      Standard Life Wealth has been disclosed separately from Individual SIPP for the first time. The 2010 comparatives have not been restated.

²    Market and other movements include the external transfer of the UK money market funds.

³      In order to be consistent with the presentation of new business information, certain products are included in both life and pensions AUA and investment operations. Therefore, at a Group level an elimination adjustment is required to remove any duplication, in addition to other necessary consolidation adjustments.

4.4 Group assets under administration and net flows continued

Long-term savings operations net flows (regulatory basis)

12 months ended 31 December 2011

		Gross inflows	Redemptions	Net inflows	Gross inflows	Redemptions	Net inflows
	Fee (F) - Spread/risk (S/R)	12 months to 31 Dec 2011	12 months to 31 Dec 2011	12 months to 31 Dec 2011	12 months to 31 Dec 2010	12 months to 31 Dec 2010	12 months to 31 Dec 2010
		£m	£m	£m	£m	£m	£m
UK
Individual SIPP1,2	F	3,329	(1,596)	1,733	3,436	(1,493)	1,943
Other individual pensions	F	748	(2,371)	(1,623)	827	(2,486)	(1,659)
Investment bonds	F	203	(1,183)	(980)	247	(1,054)	(807)
Mutual funds1	F	1,790	(406)	1,384	1,647	(355)	1,292
Annuities	S/R	459	(1,134)	(675)	491	(1,133)	(642)
Protection	S/R	76	(52)	24	85	(57)	28
Legacy life	F	294	(1,876)	(1,582)	345	(1,333)	(988)
Wealth2	F	453	(47)	406	n/a	n/a	n/a
UK retail		7,352	(8,665)	(1,313)	7,078	(7,911)	(833)
Corporate pensions1	F	3,904	(1,880)	2,024	2,994	(1,604)	1,390
Institutional pensions	F	3,209	(1,795)	1,414	3,631	(1,191)	2,440
UK corporate		7,113	(3,675)	3,438	6,625	(2,795)	3,830
UK long-term savings3		14,465	(12,340)	2,125	13,703	(10,706)	2,997
Canada
Fee	F	1,626	(1,096)	530	1,483	(1,063)	420
Spread/risk	S/R	229	(435)	(206)	176	(403)	(227)
Group savings and retirement		1,855	(1,531)	324	1,659	(1,466)	193
Fee	F	540	(341)	199	438	(280)	158
Spread/risk	S/R	312	(557)	(245)	296	(624)	(328)
Individual insurance, savings and retirement		852	(898)	(46)	734	(904)	(170)
Group insurance	S/R	442	(356)	86	411	(332)	79
Mutual funds1	F	218	(329)	(111)	313	(352)	(39)
Canada long-term savings		3,367	(3,114)	253	3,117	(3,054)	63
International
Ireland	F	1,582	(761)	821	1,349	(638)	711
Germany	F	823	(259)	564	796	(130)	666
Hong Kong	F	81	(18)	63	43	(8)	35
Wholly owned long-term savings		2,486	(1,038)	1,448	2,188	(776)	1,412
Joint ventures long-term savings4		415	(140)	275	378	(124)	254
International long-term savings		2,901	(1,178)	1,723	2,566	(900)	1,666
Other consolidation/eliminations2		(85)	8	(77)	n/a	n/a	n/a
Total worldwide long-term savings		20,648	(16,624)	4,024	19,386	(14,660)	4,726

¹    The mutual funds net flows are also included within mutual funds net flows in the third party investment operations. In addition, an element of the UK non-insured SIPP is included within UK mutual funds net flows in the third party investment operations.

²    Standard Life Wealth has been disclosed separately from Individual SIPP for the first time in 2011 and an elimination line has been added to remove the double count between Wealth and Ireland. The 2010 comparatives have not been restated. 

³    UK long-term savings include a total net outflow of £2,341m in relation to conventional with profits business (2010: net outflow £1,778m). Of this, a net outflow of £839m is in relation to annuities business (2010: net outflow £855m).

⁴    Includes net flows in respect of Standard Life's share of the India and China JV businesses.

Long-term savings operations net flows (regulatory basis)

Three months ended 31 December 2011

		Gross inflows	Redemptions	Net inflows	Gross inflows	Redemptions	Net inflows
	Fee (F) - Spread/risk (S/R)	3 months to 31 Dec 2011	3 months to 31 Dec 2011	3 months to 31 Dec 2011	3 months to 31 Dec 2010	3 months to 31 Dec 2010	3 months to 31 Dec 2010
		£m	£m	£m	£m	£m	£m
UK
Individual SIPP1,2	F	687	(375)	312	795	(356)	439
Other individual pensions	F	140	(525)	(385)	154	(565)	(411)
Investment bonds	F	36	(291)	(255)	67	(268)	(201)
Mutual funds1	F	316	(101)	215	453	(23)	430
Annuities	S/R	119	(283)	(164)	98	(282)	(184)
Protection	S/R	19	(14)	5	22	(14)	8
Legacy life	F	68	(502)	(434)	82	(331)	(249)
Wealth2	F	126	(14)	112	n/a	n/a	n/a
UK retail		1,511	(2,105)	(594)	1,671	(1,839)	(168)
Corporate pensions1	F	771	(368)	403	643	(362)	281
Institutional pensions	F	746	(439)	307	955	(327)	628
UK corporate		1,517	(807)	710	1,598	(689)	909
UK long-term savings3		3,028	(2,912)	116	3,269	(2,528)	741
Canada
Fee	F	427	(233)	194	380	(336)	44
Spread/risk	S/R	75	(107)	(32)	50	(103)	(53)
Group savings and retirement		502	(340)	162	430	(439)	(9)
Fee	F	146	(92)	54	129	(89)	40
Spread/risk	S/R	77	(146)	(69)	96	(156)	(60)
Individual insurance, savings and retirement		223	(238)	(15)	225	(245)	(20)
Group insurance	S/R	112	(89)	23	104	(86)	18
Mutual funds1	F	51	(75)	(24)	65	(84)	(19)
Canada long-term savings		888	(742)	146	824	(854)	(30)
International
Ireland	F	420	(249)	171	458	(214)	244
Germany	F	241	(110)	131	237	(37)	200
Hong Kong	F	20	(2)	18	20	(3)	17
Wholly owned long-term savings		681	(361)	320	715	(254)	461
Joint ventures long-term savings4		99	(31)	68	102	(41)	61
International long-term savings		780	(392)	388	817	(295)	522
Other consolidation/eliminations2		(14)	3	(11)	n/a	n/a	n/a
Total worldwide long-term savings		4,682	(4,043)	639	4,910	(3,677)	1,233

¹    The mutual funds net flows are also included within mutual funds net flows in the third party investment operations. In addition, an element of the UK non-insured SIPP is included within UK mutual funds net flows in the third party investment operations.

²    Standard Life Wealth has been disclosed separately from Individual SIPP for the first time in 2011 and an elimination line has been added to remove the double count between Wealth and Ireland. The 2010 comparatives have not been restated.

³    UK long-term savings include a total net outflow of £622m in relation to conventional with profits business (2010: net outflow £449m). Of this, a net outflow of £207m is in relation to annuities business (2010: net outflow £209m).           

⁴    Includes net flows in respect of Standard Life's share of the India and China JV businesses. 

4.4 Group assets under administration and net flows continued

Long-term savings operations net flows (regulatory basis)

15 months ended 31 December 2011

		Net flows
	Fee (F) - Spread/risk (S/R)	3 months to 31 Dec 2011	3 months to 30 Sep 2011	3 months to 30 Jun 2011	3 months to 31 Mar 2011	3 months to 31 Dec 2010
		£m	£m	£m	£m	£m
UK
Individual SIPP1	F	312	423	487	511	439
Other individual pensions	F	(385)	(407)	(359)	(472)	(411)
Investment bonds	F	(255)	(243)	(233)	(249)	(201)
Mutual funds	F	215	326	434	409	430
Annuities	S/R	(164)	(164)	(175)	(172)	(184)
Protection	S/R	5	6	8	5	8
Legacy life	F	(434)	(502)	(387)	(259)	(249)
Wealth1	F	112	101	80	113	n/a
UK retail		(594)	(460)	(145)	(114)	(168)
Corporate pensions	F	403	356	706	559	281
Institutional pensions	F	307	295	518	294	628
UK corporate		710	651	1,224	853	909
UK long-term savings		116	191	1,079	739	741
Canada
Fee	F	194	89	90	157	44
Spread/risk	S/R	(32)	(58)	(58)	(58)	(53)
Group savings and retirement		162	31	32	99	(9)
Fee	F	54	52	45	48	40
Spread/risk	S/R	(69)	(76)	(62)	(38)	(60)
Individual insurance, savings and retirement		(15)	(24)	(17)	10	(20)
Group insurance	S/R	23	20	22	21	18
Mutual funds	F	(24)	(19)	(21)	(47)	(19)
Canada long-term savings		146	8	16	83	(30)
International
Ireland	F	171	114	242	294	244
Germany	F	131	141	152	140	200
Hong Kong	F	18	15	15	15	17
Wholly owned long-term savings		320	270	409	449	461
Joint ventures long-term savings2		68	67	38	102	61
International long-term savings		388	337	447	551	522
Other consolidation/eliminations1		(11)	(28)	(14)	(24)	-
Total worldwide long-term savings		639	508	1,528	1,349	1,233

¹    Standard Life Wealth has been disclosed separately from Individual SIPP for the first time in 2011 and an elimination line has been added to remove the double count between Wealth and Ireland. The 2010 comparatives have not been restated.

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

4.5 Analysis of new business

Long-term savings operations new business

12 months ended 31 December 2011

		Single premiums			New regular premiums		PVNBP
	Fee (F) - Spread/risk (S/R)	12 months to 31 Dec 2011	12 months to 31 Dec 2010	12 months to 31 Dec 2011		12 months to 31 Dec 2010	12 months to 31 Dec 2011	12 months to 31 Dec 2010	Change3	Change in constant currency3
		£m	£m	£m		£m	£m	£m	%	%
UK
Individual SIPP1	F	3,278	3,201	77		69	3,570	3,461	3%	3%
Other individual pensions	F	320	338	22		23	366	397	(8%)	(8%)
Investment bonds	F	179	202	-		-	179	202	(11%)	(11%)
Mutual funds	F	1,794	1,625	24		23	1,972	1,795	10%	10%
Annuities	S/R	312	341	-		-	312	341	(9%)	(9%)
Protection	S/R	-	-	-		1	1	1	-	-
UK retail		5,883	5,707	123		116	6,400	6,197	3%	3%
Corporate pensions1	F	1,889	1,225	620		508	4,607	3,287	40%	40%
Institutional pensions	F	3,027	3,472	1		-	3,028	3,472	(13%)	(13%)
UK corporate		4,916	4,697	621		508	7,635	6,759	13%	13%
UK long-term savings		10,799	10,404	744		624	14,035	12,956	8%	8%
Canada
Fee	F	458	465	33		68	937	1,297	(28%)	(29%)
Spread/risk	S/R	99	51	4		10	164	169	(3%)	(4%)
Group savings and retirement		557	516	37		78	1,101	1,466	(25%)	(26%)
Fee	F	540	438	-		-	540	438	23%	22%
Spread/risk	S/R	203	186	4		4	243	224	8%	7%
Individual insurance, savings and retirement		743	624	4		4	783	662	18%	17%
Group insurance	S/R	4	2	53		38	826	607	36%	34%
Mutual funds	F	218	313	-		-	218	313	(30%)	(31%)
Canada long-term savings		1,522	1,455	94		120	2,928	3,048	(4%)	(5%)
International
Ireland	F	1,496	1,260	8		9	1,531	1,298	18%	17%
Germany	F	47	39	29		24	424	337	26%	25%
Hong Kong	F	24	14	49		44	320	294	9%	13%
Wholly owned long-term savings		1,567	1,313	86		77	2,275	1,929	18%	18%
India2		46	34	89		104	414	444	(7%)	(1%)
China2		36	40	11		15	86	106	(19%)	(20%)
Joint ventures long-term savings		82	74	100		119	500	550	(9%)	(5%)
International long-term savings		1,649	1,387	186		196	2,775	2,479	12%	13%
Total worldwide long-term savings		13,970	13,246	1,024		940	19,738	18,483	7%	7%

¹    Included within non-insured SIPP is an element which is also included within UK mutual funds net flows in the third party investment operations figure.

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

³      % change is calculated on the figures rounded to millions. 

⁴    New business gross sales for overseas operations are calculated using average exchange rates. The principal average rates for the twelve months to 31 December 2011 were £1: C$1.58 (2010: £1: C$1.60) and £1: €1.15 (2010: £1: €1.17).

4.5 Analysis of new business continued 

Investment operations

12 months ended 31 December 2011

		Opening AUM at 1 Jan 2011	Gross inflows	Redemptions	Net inflows	Market and other movements	Net movement in AUM	Closing AUM at 31 Dec 2011
		£m	£m	£m	£m	£m	£m	£m
UK	Mutual funds1,2	9,179	4,346	(2,703)	1,643	(12)	1,631	10,810
	Private equity	3,437	87	(136)	(49)	(78)	(127)	3,310
	Segregated funds	13,979	262	(1,486)	(1,224)	493	(731)	13,248
	Pooled property funds	1,702	296	-	296	(45)	251	1,953
Total UK		28,297	4,991	(4,325)	666	358	1,024	29,321
Canada	Mutual funds1,3	1,789	219	(332)	(113)	(29)	(142)	1,647
	Separate mandates	3,443	577	(510)	67	305	372	3,815
Total Canada		5,232	796	(842)	(46)	276	230	5,462
International	Europe	3,806	1,842	(708)	1,134	376	1,510	5,316
	India4	3,392	306	-	306	(987)	(681)	2,711
	Other	1,131	144	(9)	135	(257)	(122)	1,009
Total International		8,329	2,292	(717)	1,575	(868)	707	9,036
Total worldwide investment products excluding money market and related funds		41,858	8,079	(5,884)	2,195	(234)	1,961	43,819
	UK money market funds5	3,953	-	-	-	(3,901)	(3,901)	52
	India cash funds5	1,435	(120)	-	(120)	(93)	(213)	1,222
Total worldwide investment products		47,246	7,959	(5,884)	2,075	(4,228)	(2,153)	45,093

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 2011	Gross inflows	Redemptions	Net inflows	Market and other movements	Net movement in AUM	Closing AUM at 31 Dec 2011
	£m	£m	£m	£m	£m	£m	£m
Third party investment products	47,246	7,959	(5,884)	2,075	(4,228)	(2,153)	45,093
Third party insurance contracts (new business classified as insurance products)	24,367	4,959	(2,754)	2,205	112	2,317	26,684
Total third party assets under management	71,613	12,918	(8,638)	4,280	(4,116)	164	71,777
UK money market funds and India cash funds5	5,388	(120)	-	(120)	(3,994)	(4,114)	1,274
Total third party assets under management excluding money market and related funds	66,225	13,038	(8,638)	4,400	(122)	4,278	70,503
Standard Life Investments - total assets under management	156,874						154,876

¹      Included within mutual funds are cash inflows which have also been reflected in UK and Canada mutual funds new business sales and net flows for UK mutual funds, an element of UK non-insured SIPP and Canada mutual funds.

²    In the 12 months to 31 December 2010, UK mutual funds gross inflows were £3,838m and net inflows were £2,221m. 

³    In the 12 months to 31 December 2010, Canada mutual funds gross inflows were £309m and net outflows were £38m.

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. Market and other movements include the transfer of UK money market funds in Global Liquidity Fund, as a result of Standard Life Investments withdrawal from constant net asset value money market funds.

⁶      Funds denominated in foreign currencies have been translated to Sterling using the closing exchange rates at 31 December 2011. 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 31 December 2011 were £1: C$1.58 (31 December 2010: £1: C$1.56) and £1:€1.20 (31 December 2010: £1: €1.17). The principal average exchange rates for the 12 months to 31 December 2011 were £1: C$1.58 (2010: £1: C$1.60) and £1: €1.15 (2010: £1: €1.17). 

Long-term savings operations new business

Three months ended 31 December 2011

		Single premiums		New regular premiums		PVNBP5
	Fee (F) - Spread/risk (S/R)	3 months to 31 Dec 2011	3 months to 31 Dec 2010	3 months to 31 Dec 2011	3 months to 31 Dec 2010	3 months to 31 Dec 2011	3 months to 31 Dec 2010	Change3	Change in constant currency3
		£m	£m	£m	£m	£m	£m	%	%
UK
Individual SIPP1	F	674	723	14	15	730	770	(5%)	(5%)
Other individual pensions	F	39	39	6	5	53	54	(2%)	(2%)
Investment bonds	F	31	62	-	-	31	62	(50%)	(50%)
Mutual funds	F	339	449	4	5	376	483	(22%)	(22%)
Annuities	S/R	82	60	-	-	82	60	37%	37%
Protection	S/R	-	-	-	-	-	-	-	-
UK retail		1,165	1,333	24	25	1,272	1,429	(11%)	(11%)
Corporate pensions1	F	248	174	95	87	666	502	33%	33%
Institutional pensions	F	711	875	-	-	711	875	(19%)	(19%)
UK corporate		959	1,049	95	87	1,377	1,377	-	-
UK long-term savings		2,124	2,382	119	112	2,649	2,806	(6%)	(6%)
Canada
Fee	F	137	103	9	7	248	185	34%	35%
Spread/risk	S/R	41	17	-	1	54	26	108%	105%
Group savings and retirement		178	120	9	8	302	211	43%	44%
Fee	F	146	129	-	-	146	129	13%	14%
Spread/risk	S/R	49	67	-	1	53	76	(30%)	(31%)
Individual insurance, savings and retirement		195	196	-	1	199	205	(3%)	(3%)
Group insurance	S/R	1	-	10	11	145	174	(17%)	(17%)
Mutual funds	F	51	65	-	-	51	65	(22%)	(22%)
Canada long-term savings		425	381	19	20	697	655	6%	6%
International
Ireland	F	392	423	2	3	403	438	(8%)	(8%)
Germany	F	22	20	12	7	185	113	64%	64%
Hong Kong	F	3	7	13	18	92	124	(26%)	(24%)
Wholly owned long-term savings		417	450	27	28	680	675	1%	1%
India2		9	11	21	21	96	95	1%	16%
China2		8	12	3	5	20	41	(51%)	(53%)
Joint ventures long-term savings		17	23	24	26	116	136	(15%)	(6%)
International long-term savings		434	473	51	54	796	811	(2%)	-
Total worldwide long-term savings		2,983	3,236	189	186	4,142	4,272	(3%)	(3%)

¹    Included within non-insured SIPP is an element which is also included within UK mutual funds net flows in the third party investment operations figures.       

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

³      % change is calculated on the figures rounded to millions.          

⁴    New business gross sales for overseas operations are calculated using average exchange rates. The principal average rates for the 12 months to 31 December 2011 were £1: C$1.58 (2010: £1: C$1.60) and £1: €1.15 (2010: £1: €1.17).                                                                       

⁵    The PVNBP figures for the three months to 31 December 2011 and to 31 December 2010 exclude the full impact of the 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 (2010: increase £171m).

4.5 Analysis of new business continued

Investment operations

Three months ended 31 December 2011

			Opening AUM at 1 Oct 2011	Gross inflows	Redemptions	Net inflows	Market and other movements	Net movement in AUM	Closing AUM at 31 Dec 2011
			£m	£m	£m	£m	£m	£m	£m
UK	Mutual funds1,2		10,637	763	(688)	75	98	173	10,810
	Private equity		3,462	23	(72)	(49)	(103)	(152)	3,310
	Segregated funds		12,627	23	(97)	(74)	695	621	13,248
	Pooled property funds		1,976	60	-	60	(83)	(23)	1,953
Total UK			28,702	869	(857)	12	607	619	29,321
Canada	Mutual funds1,3		1,554	53	(78)	(25)	118	93	1,647
	Separate mandates		3,583	103	(160)	(57)	289	232	3,815
Total Canada			5,137	156	(238)	(82)	407	325	5,462
International	Europe		4,857	602	(155)	447	12	459	5,316
	India4		3,002	110	-	110	(401)	(291)	2,711
	Other		845	121	(9)	112	52	164	1,009
Total International			8,704	833	(164)	669	(337)	332	9,036
Total worldwide investment products excluding money market and related funds			42,543	1,858	(1,259)	599	677	1,276	43,819
	UK money market funds5		53	-	-	-	(1)	(1)	52
	India cash funds5		1,538	(307)	-	(307)	(9)	(316)	1,222
Total worldwide investment products			44,134	1,551	(1,259)	292	667	959	45,093

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 Oct 2011	Gross inflows	Redemptions	Net inflows	Market and other movements	Net movement in AUM	Closing AUM at 31 Dec 2011
	£m	£m	£m	£m	£m	£m	£m
Third party investment products	44,134	1,551	(1,259)	292	667	959	45,093
Third party insurance contracts (new business classified as insurance products)	24,962	1,199	(651)	548	1,174	1,722	26,684
Total third party assets under management	69,096	2,750	(1,910)	840	1,841	2,681	71,777
UK money market funds and India cash funds5	1,591	(307)	-	(307)	(10)	(317)	1,274
Total third party assets under management excluding money market and related funds	67,505	3,057	(1,910)	1,147	1,851	2,998	70,503
Standard Life Investments - total assets under management	149,838						154,876

¹    Included within mutual funds are cash inflows which have also been reflected in UK and Canada mutual funds new business sales and net flows for UK mutual funds, an element of UK non-insured SIPP and Canada mutual funds.

²    In the three months to 31 December 2010 UK mutual funds gross inflows were £1,239m and net inflows were £750m. 

³    In the three months to 31 December 2010 Canada mutual funds gross inflows were £68m and net outflows were £19m.  

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.

⁶    Funds denominated in foreign currencies have been translated to Sterling using the closing exchange rates at 31 December 2011. 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 31 December 2011 were £1: C$1.58 (30 September 2011: £1: C$1.62) and £1:€1.20 (30 September 2011: £1: €1.16). The principal average exchange rates for the 12 months to 31 December 2011 were £1: C$1.58 (2010: £1: C$1.60) and £1: €1.15 (2010: £1: €1.17). 

Long-term savings operations new business

15 months ended 31 December 2011

		PVNBP
	Fee (F) - Spread/risk (S/R)	3 months to 31 Dec 20111	3 months to 30 Sep 2011	3 months to 30 Jun 2011	3 months to 31 Mar 2011	3 months to 31 Dec 20101
		£m	£m	£m	£m	£m
UK
Individual SIPP	F	730	857	978	1,006	770
Other individual pensions	F	53	71	155	98	54
Investment bonds	F	31	44	51	54	62
Mutual funds	F	376	455	584	568	483
Annuities	S/R	82	83	74	73	60
Protection	S/R	-	-	1	-	-
UK retail		1,272	1,510	1,843	1,799	1,429
Corporate pensions	F	666	1,028	1,536	1,294	502
Institutional pensions	F	711	643	802	872	875
UK corporate		1,377	1,671	2,338	2,166	1,377
UK long-term savings		2,649	3,181	4,181	3,965	2,806
Canada
Fee	F	248	132	124	377	185
Spread/risk	S/R	54	33	22	48	26
Group savings and retirement		302	165	146	425	211
Fee	F	146	123	128	143	129
Spread/risk	S/R	53	59	54	77	76
Individual insurance, savings and retirement		199	182	182	220	205
Group insurance	S/R	145	195	162	324	174
Mutual funds	F	51	47	54	66	65
Canada long-term savings		697	589	544	1,035	655
International
Ireland	F	403	290	386	450	438
Germany	F	185	81	90	72	113
Hong Kong	F	92	77	78	99	124
Wholly owned long-term savings		680	448	554	621	675
India2		96	106	62	150	95
China2		20	20	23	26	41
Joint ventures long-term savings		116	126	85	176	136
International long-term savings		796	574	639	797	811
Total worldwide long-term savings		4,142	4,344	5,364	5,797	4,272

¹    The three month period to 31 December 2011 and to 31 December 2010 exclude 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
(2010: increase £171m).

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

4.6 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.

As explained in Note 2.1 - Accounting policies - (a) Basis of preparation, there has been a reallocation between cash and cash equivalents and debt securities at 31 December 2010. The information presented in this Note reflects the position after this reallocation.

	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 assets	536	1,796	1,357	374	4,063
Cash and cash equivalents	1,085	1,657	5,122	1,323	9,187
Total	17,452	44,981	79,303	9,238	150,974

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

	Exposure
	Shareholder	Policyholder (participating)	Policyholder  (unit linked)	TPICF and NCI1	Total
31 December 2010	£m	£m	£m	£m	£m
Investments in associates and joint ventures	32	1,557	1,143	117	2,849
Investment property	862	2,297	4,147	1,104	8,410
Equity securities	564	9,335	48,449	1,959	60,307
Debt securities	10,594	29,884	18,596	2,290	61,364
Loans	2,823	207	106	-	3,136
Other financial assets2	960	959	935	232	3,086
Cash and cash equivalents	1,623	221	3,538	423	5,805
Total	17,458	44,460	76,914	6,125	144,957

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

²    Adjusted to remove reinsurance assets.

Shareholder exposure to investment property and financial assets

The total shareholder exposure to investment property and financial assets of £17.5bn (2010: £17.5bn) includes £11.4bn (2010: £10.8bn) 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.

	Canada non-segregated funds exposure		Other shareholder exposure		Total shareholder exposure
	31 Dec  2011	31 Dec 2010	31 Dec 2011	31 Dec 2010	31 Dec 2011	31 Dec 2010
	£m	£m	£m	£m	£m	£m
Investments in associates and joint ventures	15	21	-	11	15	32
Investment property	831	862	-	-	831	862
Equity securities	412	459	159	105	571	564
Debt securities	6,836	6,359	4,675	4,235	11,511	10,594
Loans	2,902	2,811	1	12	2,903	2,823
Other financial assets1	163	116	373	844	536	960
Cash and cash equivalents	228	184	857	1,439	1,085	1,623
Total	11,387	10,812	6,065	6,646	17,452	17,458

¹    Comparatives have been adjusted to remove reinsurance assets.

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 48% of debt securities rated AAA (2010: 51%) and 95% (2010: 94%) being rated as investment grade.

	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.

	Exposure
	Shareholder	Policyholder (participating)	Policyholder (unit linked)	TPICF and NCI1	Total
31 December 2010	£m	£m	£m	£m	£m
Government, provincial and municipal	4,063	18,380	8,173	1,024	31,640
Banks	1,616	3,895	3,491	111	9,113
Other financial institutions	1,664	4,118	2,572	598	8,952
Other corporate	3,045	3,167	4,016	552	10,780
Other	206	324	344	5	879
Total	10,594	29,884	18,596	2,290	61,364

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

4.6 Exposure to investment property and financial assets continued

Shareholder exposure to debt securities

At 31 December 2011, total shareholder exposure to debt securities was £11,511m (2010: £10,594m), of which 96% (2010: 95%) 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
	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
AAA	1,117	1,166	147	82	143	421	307	290	166	135	1,880	2,094
AA	1,405	1,519	729	1,002	378	382	352	232	-	-	2,864	3,135
A	1,501	1,378	893	483	650	494	2,384	1,928	-	-	5,428	4,283
BBB	-	-	70	36	54	16	727	517	-	-	851	569
Below BBB or not rated	5	-	41	13	309	351	59	78	74	71	488	513
Total	4,028	4,063	1,880	1,616	1,534	1,664	3,829	3,045	240	206	11,511	10,594

¹      Government, 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
	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
UK	384	365	482	453	824	1,007	512	320	74	63	2,276	2,208
Canada	3,610	3,631	278	198	513	433	2,307	1,986	-	-	6,708	6,248
Australia	-	-	12	11	5	6	1	-	-	-	18	17
Austria	-	2	-	-	-	-	-	-	-	-	-	2
Belgium	-	3	1	-	-	-	1	-	-	-	2	3
Denmark	-	-	66	79	-	-	17	15	-	-	83	94
Finland	-	-	50	-	-	-	-	-	-	-	50	-
France	-	5	103	291	2	1	315	244	-	-	420	541
Germany	24	27	104	66	3	1	250	154	-	-	381	248
Greece	-	-	-	-	-	-	-	-	-	-	-	-
Ireland	-	-	2	1	3	73	2	-	-	-	7	74
Italy	-	12	24	45	-	1	67	53	-	-	91	111
Japan	-	-	50	-	27	8	5	-	-	-	82	8
Mexico	-	-	-	-	-	-	43	-	-	-	43	-
Netherlands	-	3	182	133	1	21	15	12	-	-	198	169
Norway	-	-	52	1	-	-	31	27	-	-	83	28
Portugal	-	-	-	-	-	-	1	-	-	-	1	-
Spain	-	3	17	86	-	-	39	23	-	-	56	112
Sweden	-	-	97	61	-	-	28	26	-	-	125	87
Switzerland	-	-	129	-	11	-	12	10	-	-	152	10
US	7	5	228	159	145	98	177	167	-	-	557	429
Other	3	7	3	32	-	15	6	8	166	143	178	205
Total	4,028	4,063	1,880	1,616	1,534	1,664	3,829	3,045	240	206	11,511	10,594

¹      Government, 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.

²    This balance primarily consists of securities held in supranationals.

At 31 December 2011 the shareholder exposure to government securities issued by peripheral European countries was £nil (2010: £15m).

Shareholder exposure to loans

Shareholders are directly exposed to loans of £2.9bn (2010: £2.8bn) which primarily comprise the Canadian non-segregated funds commercial mortgage book. This mortgage book is deemed to be of very high quality.

	31 Dec 2011	31 Dec  2010
	£m	£m
Canada non-segregated funds commercial mortgage book	2,902	2,811
Other	1	12
Total	2,903	2,823

The Canadian mortgage book has an average loan to value of 44% (2010: 45%).

4.7 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)

As explained in Note 2.1 - Accounting policies - (a) Basis of preparation, there has been a reallocation between cash and cash equivalents and debt securities at 31 December 2010. The information presented in this Note reflects the position after this reallocation.

Total

	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
	31 Dec 2011	31 Dec 2010	31 Dec 2011	31 Dec 2010	31 Dec 2011	31 Dec 2010	31 Dec 2011	31 Dec 2010
	£m	£m	£m	£m	£m	£m	£m	£m
Equity securities	57,286	59,059	-	40	1,245	1,208	58,531	60,307
Debt securities	27,699	25,147	38,095	34,731	1,382	1,486	67,176	61,364
Derivative financial assets	577	435	1,635	908	-	-	2,212	1,343
Derivative financial liabilities	(434)	(95)	(668)	(829)	-	-	(1,102)	(924)
Total	85,128	84,546	39,062	34,850	2,627	2,694	126,817	122,090

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
	31 Dec 2011	31 Dec 2010	31 Dec 2011	31 Dec 2010	31 Dec 2011	31 Dec 2010	31 Dec 2011	31 Dec 2010
	£m	£m	£m	£m	£m	£m	£m	£m
Equity securities	560	555	-	-	11	10	571	565
Debt securities	555	551	9,967	9,075	989	968	11,511	10,594
Derivative financial assets	-	-	252	298	-	-	252	298
Derivative financial liabilities	(2)	(2)	(14)	(30)	-	-	(16)	(32)
Total	1,113	1,104	10,205	9,343	1,000	978	12,318	11,425

4.7 Fair value hierarchy of financial instruments continued

Policyholder (participating) exposure

	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
	31 Dec 2011	31 Dec 2010	31 Dec 2011	31 Dec 2010	31 Dec 2011	31 Dec 2010	31 Dec 2011		31 Dec 2010
	£m	£m	£m	£m	£m	£m	£m		£m
Equity securities	8,388	8,605	-	-	752	729	9,140		9,334
Debt securities	19,861	17,969	9,887	11,543	280	371	30,028		29,883
Derivative financial assets	367	334	647	271	-	-	1,014		605
Derivative financial liabilities	(86)	(8)	(41)	(122)	-	-	(127)		(130)
Total	28,530	26,900	10,493	11,692	1,032	1,100	40,055		39,692

Policyholder (unit linked) exposure

	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
	31 Dec 2011	31 Dec 2010	31 Dec 2011	31 Dec 2010	31 Dec 2011	31 Dec 2010	31 Dec 2011	31 Dec 2010
	£m	£m	£m	£m	£m	£m	£m	£m
Equity securities	46,286	48,341	-	40	77	68	46,363	48,449
Debt securities	6,806	5,943	14,963	12,522	110	132	21,879	18,597
Derivative financial assets	158	72	565	263	-	-	723	335
Derivative financial liabilities	(257)	(62)	(466)	(507)	-	-	(723)	(569)
Total	52,993	54,294	15,062	12,318	187	200	68,242	66,812

Third party interest in consolidated funds and non-controlling interests exposure

	Fair value hierarchy
	Level 1		Level 2		Level 3		Total
	31 Dec 2011	31 Dec 2010	31 Dec 2011	31 Dec 2010	31 Dec 2011	31 Dec 2010	31 Dec 2011	31 Dec 2010
	£m	£m	£m	£m	£m	£m	£m	£m
Equity securities	2,052	1,558	-	-	405	401	2,457	1,959
Debt securities	477	684	3,278	1,591	3	15	3,758	2,290
Derivative financial assets	52	29	171	76	-	-	223	105
Derivative financial liabilities	(89)	(23)	(147)	(170)	-	-	(236)	(193)
Total	2,492	2,248	3,302	1,497	408	416	6,202	4,161

4.8 Total expenses and operating cost base

		2011	2010
		£m	£m
Total expenses per IFRS income statement		8,542	17,622
Less: Claims, commissions and changes in provisions and liabilities		(6,640)	(15,694)
Less: IFRS adjustments and amortisation		(803)	(892)
Less: Finance costs		(116)	(113)
Total operating cost base in respect of continuing operations		983	923

Movement in the operating cost base

	UK	Global investment management	Canada	International	Other	Total
2011	£m	£m	£m	£m	£m	£m
Opening operating cost base in respect of continuing operations	369	229	171	96	58	923
Inflation1	11	11	5	2	1	30
Foreign exchange impact2	-	-	2	1	-	3
Organic growth3	53	18	2	11	-	84
Efficiency savings4	(40)	2	9	(8)	(8)	(45)
Movement in investing for transformation and growth costs5	(8)	(3)	1	(3)	1	(12)
Closing operating cost base in respect of continuing operations	385	257	190	99	52	983

	UK	Global investment management	Canada	International	Other	Total
2010	£m	£m	£m	£m	£m	£m
Opening operating cost base	426	189	147	97	55	914
Remove costs relating to discontinued businesses	(87)	-	-	-	-	(87)
Opening operating cost base in respect of continuing operations	339	189	147	97	55	827
Inflation1	7	9	3	1	3	23
Foreign exchange impact2	-	-	16	(3)	-	13
Organic growth3	30	31	9	8	-	78
Efficiency savings4	(27)	(20)	(8)	(7)	1	(61)
Movement in investing for transformation and growth costs5	20	20	4	-	(1)	43
Closing operating cost base in respect of continuing operations	369	229	171	96	58	923

¹    Notional level of inflation that would have impacted the operating cost base during the year. Blended rate used for staff and non-staff costs of 3.3% for 2011 (2010: 2.5%).

²    Adjustment to opening cost base as a result of movement in the average exchange rate.

³      Movement in the cost base implied by the growth of the organisation - a combination of PVNBP and policies in-force movements used for the life and pensions businesses and assets under management used for Standard Life Investments.

⁴      Difference between the movement in the cost base implied by the organic growth calculation and the actual change that has taken place, plus realised savings from cost initiatives and other reductions.

⁵      Movements in the operating cost base, which are specifically identifiable and relate to investing for transformation and growth.

4.9 Investment for transformation and growth

	2011	2010	Movement
	£m	£m	£m
Investment in operating cost base	137	149	(12)
Investment capitalised	36	36	-
Additional investment in joint venture businesses	23	16	7
Total investment for transformation and growth	196	201	(5)

 

END

 

 

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