Annual Financial Report (Part

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Aberdeen Group plc (ABDN)

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	2008 £m	2007 £m
Domestic government	6,181	9,519
Domestic corporate	982	112
Domestic equity	-	310
International fixed income	1	113
International equity	44	518
Total	7,208	10,572

	At fair value through profit or loss
2008	Held for trading £m	Designated on initial recognition £m	Held to maturity £m	Loans and receivables £m	Insurance assets £m	Cash and cash equivalents £m	Total £m
Reinsurance assets	-	-	-	-	6,076	-	6,076
Loans and receivables	-	-	-	12,069	-	-	12,069
Derivative financial assets	2,800	-	-	-	-	-	2,800
Investment securities	-	90,716	-	-	-	-	90,716
Other assets (excluding non-financial assets)	-	629	-	1,323	-	-	1,952
Cash and cash equivalents	-	-	-	-	-	10,052	10,052
Total financial assets	2,800	91,345	-	13,392	6,076	10,052	123,665
Non-financial assets							13,315
Total assets							136,980

2007
Reinsurance assets	-	-	-	-	476	-	476
Loans and receivables	-	-	-	13,056	-	-	13,056
Derivative financial assets	491	29	-	-	-	-	520
Investment securities	-	102,304	-	-	-	-	102,304
Other assets (excluding non-financial assets)	-	1,569	-	-	-	-	1,569
Cash and cash equivalents	-	-	-	-	-	9,335	9,335
Total financial assets	491	103,902	-	13,056	476	9,335	127,260
Non-financial assets							16,720
Total assets							143,980

	At fair value through profit or loss
2008	Held for trading £m	Designated on initial recognition £m	Financial liabilities at amortised cost £m	Insurance and participating investment contract liabilities £m	Cash and cash equivalents £m	Total £m
Non-participating contract liabilities	-	43,147	9,126	19,635	-	71,908
Participating contract liabilities	-	-	-	34,163	-	34,163
Deposits received from reinsurers	-	-	5,968	-	-	5,968
Third party interest in consolidated funds	-	1,603	-	-	-	1,603
Borrowings	-	-	3,126	-	101	3,227
Subordinated liabilities	-	-	2,204	-	-	2,204
Customer accounts related to banking activities and deposits by banks	-	-	6,991	-	-	6,991
Derivative financial liabilities	1,348	-	-	-	-	1,348
Other liabilities (excluding non-financial liabilities)	-	-	5,044	-	-	5,044
Total financial liabilities	1,348	44,750	32,459	53,798	101	132,456
Non-financial liabilities						783
Total liabilities						133,239

2007
Non-participating contract liabilities	-	49,435	9,327	20,980	-	79,742
Participating contract liabilities	-	-	-	37,888	-	37,888
Deposits received from reinsurers	-	-	53	-	-	53
Third party interest in consolidated funds	-	1,501	-	-	-	1,501
Borrowings	-	-	5,903	-	215	6,118
Subordinated liabilities	-	-	1,908	-	-	1,908
Customer accounts related to banking activities and deposits by banks	-	-	6,080	-	-	6,080
Derivative financial liabilities	633	9	-	-	-	642
Other liabilities (excluding non-financial liabilities)	-	-	4,985	-	-	4,985
Total financial liabilities	633	50,945	28,256	58,868	215	138,917
Non-financial liabilities						1,390
Total liabilities						140,307

	Reinsurance assets	Loans and receivables	Derivative financial assets	Investment securities	Other assets	Cash and cash equivalents	Total
2008	£m	£m	£m	£m	£m	£m	£m
UK and Europe life and pensions Heritage With Profits Fund:
Equity securities	-	-	-	7,703	-	-	7,703
Debt securities	-	-	-	29,136	-	-	29,136
Loans and receivables	-	250	-	-	-	-	250
Cash and cash equivalents	-	-	-	-	-	3,148	3,148
Derivative financial assets	-	-	1,643	-	-	-	1,643
Reinsurance assets - external	5,732	-	-	-	-	-	5,732
Other assets	-	-	-	-	517	-	517
Proprietary Business Fund:
Equity securities	-	-	-	13	-	-	13
Debt securities	-	-	-	106	-	-	106
Cash and cash equivalents	-	-	-	-	-	111	111
Derivative financial assets	-	-	3	-	-	-	3
Reinsurance assets - external	4	-	-	-	-	-	4
Other assets	-	-	-	-	213	-	213
Standard Life Investment Funds:
Equity securities	-	-	-	2	-	-	2
Debt securities	-	-	-	1,464	-	-	1,464
Cash and cash equivalents	-	-	-	-	-	577	577
Derivative financial assets	-	-	96	-	-	-	96
Other assets	-	-	-	-	52	-	52
Other with profits funds:
Equity securities	-	-	-	103	-	-	103
Debt securities	-	-	-	130	-	-	130
Cash and cash equivalents	-	-	-	-	-	25	25
Derivative financial assets	-	-	14	-	-	-	14
Other assets	-	-	-	-	13	-	13
Shareholder Fund:
Debt securities	-	-	-	544	-	-	544
Cash and cash equivalents	-	-	-	-	-	835	835
Derivative financial assets	-	-	386	-	-	-	386
Other assets	-	-	-	-	262	-	262
Unit linked business:
Equity securities	-	-	-	24,026	-	-	24,026
Debt securities	-	-	-	11,244	-	-	11,244
Loans and receivables	-	114	-	-	-	-	114
Cash and cash equivalents	-	-	-	-	-	2,441	2,441
Interests in pooled investment funds	-	-	-	987	-	-	987
Derivative financial assets	-	-	336	-	-	-	336
Other assets	-	-	-	-	469	-	469
Canada - non-segregated funds
Equity securities	-	-	-	347	-	-	347
Debt securities	-	-	-	5,420	-	-	5,420
Loans and advances	-	2,137	-	-	-	-	2,137
Cash and cash equivalents	-	-	-	-	-	23	23
Reinsurance assets	337	-	-	-	-	-	337
Other assets	-	-	-	-	98	-	98
Canada - segregated funds
Equity securities	-	-	-	5,231	-	-	5,231
Debt securities	-	-	-	2,198	-	-	2,198
Loans and advances	-	35	-	-	-	-	35
Cash and cash equivalents	-	-	-	-	-	133	133
Other assets	-	-	-	-	37	-	37

	Reinsurance assets	Loans and receivables	Derivative financial assets	Investment securities	Other assets	Cash and cash equivalents	Total
2008	£m	£m	£m	£m	£m	£m	£m
Standard Life Bank
Treasury bills	-	-	-	-	-	60	60
Loans and advances to customers	-	9,517	-	-	-	-	9,517
Loans and advances to banks	-	-	-	-	-	273	273
Certificates of deposit	-	-	-	-	-	584	584
Floating rate notes	-	-	-	59	-	-	59
Derivative financial assets	-	-	297	-	-	-	297
Cash and cash equivalents	-	-	-	-	-	553	553
Other assets	-	-	-	-	79	-	79
Other
Equity securities	-	-	-	259	-	-	259
Debt securities	-	-	-	291	-	-	291
Cash and cash equivalents	-	-	-	-	-	1,149	1,149
Derivative financial assets	-	-	2	-	-	-	2
Reinsurance assets	3	-	-	-	-	-	3
Other assets	-	16	-	-	149	-	165

Financial assets	6,076	12,069	2,777	89,263	1,889	9,912	121,986

Minority interest and third party interest in consolidated funds	-	-	23	1,453	63	140	1,679

Total financial assets	6,076	12,069	2,800	90,716	1,952	10,052	123,665

Non-financial assets
Other assets							307
Intangible assets							112
Deferred acquisition costs							892
Investments in associates and joint ventures							3,098
Investment property							7,738
Property, plant and equipment							740
Deferred tax assets							428

Total non-financial assets							13,315

Total assets							136,980

	2008	2007
	£m	£m
Decrease/(increase) in operating assets:
Investment property	3,276	1,045
Investment securities	17,476	(2,585)
Derivative net assets/(liabilities)	(1,541)	15
Reinsurance assets	(5,563)	309
Investment in associates*	124	(288)
Other assets	(285)	461
Prepayments and accrued income	(5)	-
Deferred acquisition costs	(306)	(365)
Loans and receivables	1,210	(804)
	14,386	(2,212)

(Decrease)/increase in operating liabilities:
Customer accounts related to banking activities	899	1,008
Other liabilities	(175)	112
Deposits received from reinsurers	5,968	-
Pension and other post retirement benefit provisions	(7)	(28)
Deferred income	35	82
Insurance contract liabilities	(4,918)	(1,171)
Investment contract liabilities	(9,808)	5,389
Certificate of deposits, commercial paper, medium term notes and securitisations	(2,816)	(371)
Change in liability for third party interest in consolidated funds	(598)	(78)
	(11,420)	4,943

Net decrease in operating assets and liabilities	2,966	2,731

	2008	2007
	£m	£m
Authorised and contracted for but not provided and incurred:
Investment properties	127	75
Property, plant and equipment	357	462
Funding of associates	1	-

	2008	2007
	£m	£m
Guarantees and stand by letter of credit	4	7
Commitments to extend credit:
Original term to maturity of one year or less	83	55
Original term to maturity of more than one year	2,165	2,237
Other commitments	964	773

	2008	2007
	£m	£m
Not later than one year	17	12
Later than one year and no later than five years	26	7
Later than five years	29	6
Total operating lease commitments	72	25

	2008	2007	2005/2006
Nature of arrangement	Grant of share options	Grant of share options	Grant of share options
Date of Grant	21 April 2008 1 May 2008 5 May 2008 2 June 2008 7 October 2008 15 October 2008 6 November 2008 17 November 2008 24 November 2008	1 May 2007 28 May 2007 18 June 2007 11 September 2007 1 November 2007	4 August 2006 1 November 2006
Number of instruments granted	4,755,073 33,797 51,482 41,118 60,836 37,450 239,762 10,964 50,849	3,170,676 21,758 28,824 161,002 30,190	7,285,761 118,729
Exercise price	nil	nil	nil
Share price at date of grant	249.50p 252.75p 261.50p 252.50p 255.00p 235.50p 237.25p 229.00p 266.50p	330.75p 340.75p 345.00p 292.25p 278.50p	258.75p 284.5p
Contractual life (years)	3.5 years	3.5 years	3.75 years
Vesting conditions	3 year service period; specified Group performance; total shareholder return	3 year service period; specified Group performance	3 year service period; specified Group performance
Settlement	Shares	Shares	Shares
Expected option life at grant date (years)	3.5 years	3.5 years	2.19 years
Risk free interest rate	n/a	5.83%	4.92%
Expected dividend (dividend yield)	n/a	3.41%	2.67%
Expected departures (grant date)	None at grant date. Leavers accounted for on departure	None at grant date. Leavers accounted for on departure	None at grant date. Leavers accounted for on departure
Expected outcome of meeting performance criteria (at the grant date)	50%	50%	75%
Fair value per granted instrument determined at the grant date	217p	297p	244p

2008
Range of exercise prices	Weighted average exercise price	Number of options	Weighted average remaining life
			Expected	Contractual
Nil	Nil	11,326,541	1.51	2.01

Arrangement	Share incentive plans 2008	Share incentive plans 2007	Share incentive plans 2006	Performance shares 2008	Performance shares 2007
Nature of arrangement	Grant of shares	Grant of Shares	Grant of Shares	-	Grant of shares
Date of Grant	Monthly	Monthly	Monthly	-	19 February 2008
Number of instruments granted	685,909*	521,837*	126,383*	-	1,082,950
Share price at date of grant	230p	296p	291p	-	209p
Vesting conditions	3 year service period	3 year service period	3 year service period	-	-
Settlement	Shares	Shares	Shares	-	Shares
Expected departures (grant date)	None at grant date. Leavers accounted for on departure	None at grant date. Leavers accounted for on departure	None at grant date. Leavers accounted for on departure	-	-
Expected outcome of meeting performance criteria (at the grant date)	At grant date all awards expected to vest	At grant date all awards expected to vest	At grant date all awards expected to vest	-	-
Fair value per granted instrument determined at the grant date	230p	296p	291p	-	209p

	2008	2007
	£m	£m
Share options granted under long-term incentive plans	7	7
Matching shares granted under share incentive plans	1	-
Shares granted as annual performance awards	-	2
	8	9

	2008	2007
	£m	£m
Sale to:
Associates	17,022	11,233
Joint ventures	3	96
	17,025	11,329
Purchase from:
Associates	17,095	11,764
Joint ventures	62	158
	17,157	11,922

	2008	2007
	£m	£m
Due from related parties:
Associates	2	-
Joint ventures	88	77
	90	77

	2008
		Number of options	Weighted average exercise price
Outstanding at start of year		9,976,747	-
Granted		5,281,331	-
Forfeited		(722,049)	-
Exercised		(3,209,488)	-
Outstanding at end of year		11,326,541	-

	2007
	Number of options	Weighted average exercise price
Outstanding at start of year	6,900,828	-
Granted	3,412,450	-
Forfeited	(336,531)	-
Exercised	-	-
Outstanding at end of year	9,976,747	-

	2008	2007
	£m	£m
Salaries and other short-term employee benefits	8	8
Post-employment benefits	2	1
Other long-term benefits	-	1
Termination benefits	1	1
Share-based payments	3	2
Total compensation of key management personnel	14	13

		2008	2008
		Carrying value	Fair value
	Notes	£m	£m
Financial assets
Loans secured by mortgages	19	9,012	9,336
Loans secured by mortgages subject to securitisation	19	2,823	2,874

Financial liabilities
Loan notes backing securitisations	33	2,411	2,171
Subordinated guaranteed bonds	34	1,243	960
Subordinated notes	34	285	191
Mutual Assurance Capital Securities	34	676	415
Non-linked investment contracts		9,126	9,418

	UK regulated life business
	Heritage With Profits Fund*	Proprietary business funds	Life business shareholders' funds	Total UK regulated life business	Overseas life operations	Total life business	Other activities	Group total
2008	£m	£m	£m	£m	£m	£m	£m	£m
Available capital resources

Shareholders' funds
Held outside life assurance funds	-	-	1,034	1,034	1,075	2,109	652	2,761
Held within life assurance funds	-	646	-	646	-	646	-	646

Equity attributable to ordinary equity holders of Standard Life plc	-	646	1,034	1,680	1,075	2,755	652	3,407

Unallocated divisible surplus	864	-	-	864	-	864	-	864

Other qualifying capital
Subordinated liabilities	-	-	266	266	-	266	1,938	2,204
Internal subordinated liabilities	-	-	2,000	2,000	225	2,225	(2,225)	-
	-	-	2,266	2,266	225	2,491	(287)	2,204

Adjustments onto regulatory basis
Changes to the valuation of contract liabilities	2,198	19	-	2,217	15	2,232	-	2,232
Exclusion of deferred acquisition costs and other inadmissible assets	(162)	(511)	(517)	(1,190)	(52)	(1,242)	(64)	(1,306)
Exclusion of deferred income	154	199	-	353	2	355	-	355
Changes to the valuation of other assets and liabilities	(78)	(86)	(27)	(191)	(77)	(268)	257	(11)
	2,112	(379)	(544)	1,189	(112)	1,077	193	1,270

Total available capital resources to meet regulatory requirement	2,976	267	2,756	5,999	1,188	7,187	558	7,745

Analysed as follows:
Capital not subject to constraints	-	-	2,380	2,380	436	2,816	424	3,240
Capital subject to constraints	2,976	267	376	3,619	752	4,371	134	4,505

Total available capital resources	2,976	267	2,756	5,999	1,188	7,187	558	7,745

Regulatory capital requirement				2,186	685	2,871	83	2,954

Analysis of contract liabilities

Participating
Insurance contracts	17,087	-	-	17,087	538	17,625	-	17,625
Investment contracts	15,669	-	-	15,669	5	15,674	-	15,674

Total participating contract liabilities	32,756	-	-	32,756	543	33,299	-	33,299

Unit linked
Insurance contracts	1,141	22	-	1,163	1,142	2,305	-	2,305
Investment contracts	29,784	13,335	-	43,119	6,684	49,803	-	49,803

Total unit linked liabilities	30,925	13,357	-	44,282	7,826	52,108	-	52,108

Other non-participating
Insurance contracts	10,549	1,725	-	12,274	4,893	17,167	163	17,330
Investment contracts	19	290	-	309	2,161	2,470	-	2,470

Total other non-participating liabilities	10,568	2,015	-	12,583	7,054	19,637	163	19,800

Total contract liabilities	74,249	15,372	-	89,621	15,423	105,044	163	105,207

	UK regulated life business
	Heritage With Profits Fund	Proprietary business funds	Life business shareholders' funds	Total UK regulated life business	Overseas life operations	Total life business	Other activities	Group total
2008	£m	£m	£m	£m	£m	£m	£m	£m
At 1 January 2008	6,158	54	3,047	9,259	1,149	10,408	555	10,963

Annuity reinsurance impact	108	105	-	213	-	213	-	213
Methodology/modelling changes	120	18	-	138	15	153	-	153
Change in assumptions used to measure life assurance contract liabilities and experience differences	81	26	-	107	(55)	52	-	52
Change in regulatory requirements	-	-	-	-	15	15	-	15
New business	(46)	(182)	-	(228)	(9)	(237)	-	(237)
Investment surplus	(2,374)	74	(165)	(2,465)	43	(2,422)	-	(2,422)
Shareholder/inter-fund transfers	(406)	377	29	-	26	26	(26)	-
Dividend transfers	-	-	(400)	(400)	(40)	(440)	183	(257)
Other factors	(665)	(205)	245	(625)	44	(581)	(154)	(735)

At 31 December 2008	2,976	267	2,756	5,999	1,188	7,187	558	7,745

		2008
		£m
Purchase consideration
Cash paid		26
Direct costs relating to the acquisition		1
Total purchase consideration		27
Fair value of net assets acquired		(8)
Goodwill		19

	Fair value	Vebnet's carrying amount
	£m	£m
Assets
Intangible assets	7	1
Other assets	2	2
Cash and cash equivalents	3	3
	12	6
Liabilities
Other creditors	2	2
Deferred tax liabilities	2	-
	4	2

Net assets acquired	8	4

Purchase consideration settled in cash		27
Cash and cash equivalents in subsidiary acquired		(3)
Cash outflow on acquisition		24

Name of subsidiary	Country of incorporation or residence	% of interest held	Nature of business
Standard Life Assurance Limited	Scotland	100	Life assurance
Standard Life Investment Funds Limited	Scotland	100	Life assurance
Standard Life Bank plc	Scotland	100	Banking
Standard Life Healthcare Limited	England	100	Health insurance
Standard Life Investment Holdings Limited	Scotland	100	Holding company
Standard Life Investments Limited	Scotland	100	Investment management
Standard Life (Mauritius Holdings) 2006 Limited	Mauritius	100	Holding company
Standard Life Oversea Holdings Limited	Scotland	100	Holding company
Standard Life Employee Services Limited	Scotland	100	Employee support services
Standard Life Lifetime Mortgages Limited	Scotland	100	Mortgage finance
Standard Life Pension Funds Limited	Scotland	100	Life assurance
Standard Life Savings Limited	Scotland	100	Investment management
Standard Life European Private Equity Trust PLC *	Scotland	51	Investment trust
The Standard Life Assurance Company 2006* ***	Scotland	100	Life assurance
Standard Life International Limited	Ireland	100	Life assurance
The Standard Life Assurance Company of Canada	Canada	100	Life assurance
Standard Life Client Management Limited	Scotland	100	Direct sales
Standard Life Wealth Limited	Scotland	100	Investment management
Vebnet (Holdings) plc***	England	100	Holding company