Final Results - Part 1 of 3

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Aberdeen Group plc (ABDN)

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EEV operating profit		2009 £m	2008 £m
Covered business by region
UK		506	658
Canada		192	215
Europe		23	68
Asia⁴		6	(35)
HWPF TVOG		143	11
Covered business operating profit		870	917
Covered business by source
New business contribution		213	264
Contribution from in-force business:
Expected return on existing business		375	431
Experience variances		277	64
Operating assumption changes		68	195
Other covered		(63)	(37)
Covered business operating profit		870	917

Non-covered business
Global investment management		42	48
UK		57	5
Group corporate centre costs		(50)	(50)
Other		-	13
Non-covered business operating profit		49	16

Operating profit before tax		919	933

Tax on operating profit		(279)	(284)

Operating profit after tax		640	649

Profit/(loss) after tax		305	(134)

Diluted EEV operating EPS		29.1p	29.8p
IFRS underlying profit	2009 £m		2008 £m
UK	259		238
Canada	(7)		(102)
Europe	45		48
Asia	(27)		(35)
Global investment management	66		42
Other	(45)		(37)
Underlying profit before tax	291		154

Tax on underlying profit	(26)		100

Underlying profit after tax	265		254

Profit attributable to equity holders after tax	213		100

Diluted IFRS underlying EPS	12.0p		11.7p

	Breakdown of RoEV⁴		Breakdown of EEV operating profit⁴
	2009 %	2008 %	2009 £m	2008 £m
Core	6.7	8.0	584	685
Efficiency	(0.1)	0.8	(14)	64
Back book management	4.0	2.1	349	184
Total	10.6	10.9	919	933

Institutional Equity Investors		Retail Equity Investors
Gordon Aitken	0131 245 6799	Capita Registrars	0845 113 0045
Duncan Heath	0131 245 4742
Paul De'Ath	0131 245 9893
Media		Debt Investors
Barry Cameron	0131 245 6165/07712 486 463	Andy Townsend	0131 245 7260
Nicola McGowan	0131 245 4016/07872 191 341	Scott Forrest	0131 245 6045
Paul Keeble	020 7872 4481/07712 486 387
Neil Bennett (Maitland)	020 7379 5151/07900 000 777

1	Worldwide life and pensions net flows include net flows in respect of our Asia joint ventures and our Hong Kong subsidiary for the first time. Prior year figures have been restated accordingly.
2	Assets under administration (AUA) and net flows have been adjusted to exclude discontinued banking operations for both 2009 and 2008.
3	AUA are gross assets that the Group administers for customers, including both those managed by the Group and those placed with third party managers.
4	The Asia life and pensions operations have been included on an EEV basis for the first time. Comparative figures for 2008 have not been restated.
5	Core elements comprise new business contribution (NBC), expected return on in-force business, non-covered business profits and development costs for covered business other than those directly related to back book. Core EEV capital and cash generation reflects the after tax net worth impact of the core EEV result attributable to shareholders.
6	Certain items are included in both life and pensions and investment flows. Therefore, at Group level, an elimination adjustment is required to remove any duplication.
7	The only difference between IFRS normalised underlying profit and IFRS underlying profit for non-covered business arises within global investment management. Net negative fair value movements in respect of the liability remaining following the restructuring of a sub-fund of Standard Life Investments (Global Liquidity Funds) plc and the 'Contract for Differences' written in September 2008 which limited this liability for Standard Life Investments and fair value movements of the corresponding assets which were brought directly on to the statement of financial position, are included within IFRS underlying profit, but are excluded from IFRS normalised underlying profit.
8	The daily average level of the FTSE All share index was 15% lower over the twelve months to 31 December 2009 when compared to the same period in 2008. On the same basis the UK IPD All Property Index was 22% lower and the Sterling 5-10 Yr Corporate Securities Index was down 6%.
9	FGD surplus based on draft regulatory returns
10	The Preliminary Results 2009 are available on the Financial Results page of the Standard Life website at www.standardlife.com

Section	Contents	Page
1	Business review	11
1.1	Group overview	12
1.2	EEV - Group	14
1.3	IFRS - Group	17
1.4	Business segment performance	19
	1.4.1 UK	19
	1.4.2 Canada	24
	1.4.3 Europe	26
	1.4.4 Asia	28
	1.4.5 Global investment management	29
1.5	Capital and cash generation	31
1.6	Risk management	38
1.7	Our customers	41
1.8	Our people	43
1.9	Basis of preparation	44
2	European Embedded Value (EEV)	45
	EEV primary statements	46
	EEV notes	49
3	International Financial Reporting Standards (IFRS)	83
	IFRS primary statements	84
	IFRS notes	90
4	Supplementary information	115
4.1	Group assets under administration and net flows	116
4.2	Exposure to investment property and financial assets	118
4.3	Fair value hierarchy of financial instruments	121
4.4	Total expenses and operating cost base	123

	2009	2008¹	Movement
EEV operating profit before tax	£919m	£933m	(2%)
Return on embedded value²	10.6%	10.9%	(0.3% points)
Diluted EEV operating EPS^2,3	29.1p	29.8p	(2%)
EEV profit/(loss) before tax	£474m	(£158m)	400%
New business PVNBP	£14,546m	£15,679m	(7%)
Internal rate of return	14%	16%	(2% points)
Discounted payback period	9 years	8 years	(1 year)
EEV	£6,435m	£6,245m	3%
EEV per share⁴	288p	286p	1%

New business profitability PVNBP £m			NBC £m		PVNBP margin %¹		IRR %		Discounted payback (years)
	2009	2008	2009	2008	2009	2008	2009	2008	2009	2008
UK²	10,180	11,267	139	199	1.4	1.8	16	18	8	7
Canada	2,460	2,240	46	34	1.9	1.5	14	17	10	8
Europe²	1,289	1,677	13	31	1.0	1.9	8	12	18	12
Asia³	617	495	15		2.5		12		10
Total	14,546	15,679	213	264	1.5	1.7	14	16	9	8

	PVNBP £m¹		NBC £m²		PVNBP margin %³		IRR %		Discounted payback (years)
	2009	2008	2009	2008	2009	2008	2009	2008	2009	2008
Individual pensions	3,366	4,334	7	56	0.2	1.3	7	16	18	8
Group pensions	2,662	2,600	34	55	1.3	2.1	10	13	14	12
Institutional pensions	2,296	1,826	25	20	1.1	1.1	>40	>40	<3	<3
Savings and investments^4,5	1,406	2,029	(3)	(7)	(0.2)	(0.3)	5	6	n/a	n/a
Annuities⁶	448	471	76	74	17.1	15.8	Infinite	Infinite	-	-
UK Total	10,180	11,267	139	199	1.4	1.8	16	18	8	7

	2009¹	2008²	Movement
Net flows	£869m	£1,252m	(31%)
Assets under administration	£9.1bn	£8.3bn	10%
New business PVNBP	£1,289m	£1,677m	(23%)
New business contribution	£13m	£31m	(58%)
Internal rate of return	8%	12%	(4% points)
Discounted payback period	18 years	12 years	(6 years)
EEV covered business operating profit before tax	£23m	£68m	(66%)
EEV non-covered business operating loss before tax	(£4m)	-	-
IFRS underlying profit before tax	£45m	£48m	(6%)

		2009			2008
	Free surplus movement	Required capital movement	Net worth movement	Free surplus movement	Required capital movement	Net worth movement
	£m	£m	£m	£m	£m	£m
Capital and cash generation from existing business	567	(21)	546	546	-	546
New business strain	(252)	64	(188)	(266)	42	(224)
Covered business capital and cash generation from new business and expected return	315	43	358	280	42	322
Covered business development expenses	(32)	-	(32)	(27)	-	(27)
Non-covered business core, capital and cash generation	24	-	24	8	-	8
Core	307	43	350	261	42	303
Efficiency	(8)	1	(7)	9	(2)	7
Back book management	65	6	71	107	6	113
Operating profit capital and cash generation	364	50	414	377	46	423
Capital and cash generation from non-operating items	(388)	12	(376)	(131)	44	(87)
Total capital and cash generation	(24)	62	38	246	90	336

All figures are net of tax. Net income directly recognised in the EEV statement of financial position, including exchange differences and distributions to and injections from shareholders, is not included as these are not trading related cash flows. The Group's IFRS statement of cash flows is included in the IFRS Group financial statements section of this report. This statement combines cash flows relating to both policyholders and equity holders, but the practical management of cash within the Group maintains a distinction between the two, as well as taking into account regulatory and other restrictions on availability and transferability of capital. An analysis of the movement in the EEV shareholders' net worth is representative of underlying shareholder capital and cash flow. Under existing EEV principles, we are also required to identify required capital for all covered business. Increases/(decreases) in required capital will not reduce the shareholders' net worth because no external cash flows are made, but will decrease/(increase) the free surplus.

	2009	2008
	£m	£m
Opening capital 1 January	623	502
Dividends received from subsidiaries	190	436
Additional investments in subsidiaries	(20)	(54)
Group corporate centre costs	(50)	(50)
Cash dividends paid to shareholders	(158)	(257)
Other	17	46
Closing capital 31 December	602	623

Financial Groups Directive
	2009	2008
	£bn	£bn
Shareholders' capital resources	2.7	2.6
Capital resources arising from subordinated debt	2.1	2.2
SLAL long-term business funds	1.6	1.7
FGD Group capital resources	6.4	6.5
FGD Group capital resource requirement	(2.8)	(3.0)
FGD Group capital surplus	3.6	3.5
FGD Group solvency cover	230%	219%

	2009	2008
	£m	£m
Recourse cash flows arising on UK and Irish unitised contracts	191	243
Recourse cash flows arising on UK and Irish non-unitised contracts	65	124
Additional expenses charged on German unitised with-profit contracts	25	39
Amount arising under a contingent loan agreement	588	-
Transfer out of HWPF	869	406

Definition	The risk that arises from the Group's exposure to market movements which could result in the value of income, or the value of financial assets and liabilities, or the cash flows relating to these, fluctuating by differing amounts.
Appetite	The Group has no appetite for market risk exposures except where exposures arise as a consequence of core strategic activity, principally as a consequence of exposure of revenue streams to market risks.

Definition	The risk of exposure to loss if a counterparty fails to perform its financial obligations, including failure to perform those obligations in a timely manner. It also includes the risk of a reduction in the value of corporate bonds due to a widening of corporate bond spreads.
Appetite	The Group has an appetite for credit risk to the extent that acceptance of this risk optimises the Group risk adjusted return. However, the Group has limited appetite for significant losses arising from counterparty failures and will therefore establish robust risk limits which must be adhered to by Group companies.

	2009	2008	Movement
Mortgages under management	£7.7bn	£9.7bn	(21%)
Gross lending	£281m	£1,101m	(74%)
Savings and deposits	£5.8bn	£5.0bn	16%
IFRS underlying profit before tax	£60m	£26m	131%
Return on equity after tax	14.6%	6.1%	8.5% points
Interest margin	88bps	54bps	34bps
Cost income ratio¹	32%	58%	26% points

	2009	2008	Movement
New business	£21m	£25m	(16%)
In-force premium income	£290m	£295m	(2%)
IFRS underlying profit before tax	£15m	£11m	36%
Underwriting profit	£13m	£12m	8%
Return on equity after tax	10.3%	8.6%	1.7% points
Claims ratio	68.9%	68.8%	(0.1% points)

	2009	2008	Movement
Third party assets under management (AUM)	£56.9bn	£45.5bn	25%
Total assets under management	£138.7bn	£123.8bn	12%
Third party gross inflows	£9,747m	£7,551m¹	29%
Third party net inflows	£5,674m	£3,395m	67%
Earnings before interest and tax (EBIT)	£80m	£82m	(2%)
IFRS normalised underlying profit before tax²	£75m	£93m	(19%)
IFRS profit before tax	£64m	-	-
EBIT margin	32%	30%	2% points

Employee engagement
	2009	2008
UK	3.94	3.87
Canada	4.12	4.04
Germany	3.74	3.70
Ireland	3.89	3.83
Investments	4.07	4.00
Group*	3.99	3.91
* Including central Group functions

Definition	The risk that arises from the inherent uncertainties as to the occurrence, amount and timing of future cash flows due to demographic and expense experience differing from that expected, which for the purpose of risk management includes liabilities of insurance and investment contracts.
Appetite	The Group has an appetite for such risks since we expect acceptance of the risk to be value additive. Appetites will be established to reflect planned business activities in line with the Group's overall strategic objectives.

Definition	The risk that businesses are unable to realise investments and other assets in order to settle their financial obligations when they fall due, or can do so only at excessive cost.
Appetite	The Group has no appetite to fail to meet its liabilities as they fall due.

		Continuing operations 2009	Discontinued operations¹ 2009	Total 2009	Continuing operations 2008	Discontinued operations¹ 2008	Total 2008
	Notes	£m	£m	£m	£m	£m	£m
Covered business
UK		506	-	506	658	-	658
Canada		192	-	192	215	-	215
Europe		23	-	23	68	-	68
Asia		6	-	6	(35)	-	(35)
HWPF TVOG		143	-	143	11	-	11
Covered business operating profit	2.2(a)	870	-	870	917	-	917

Global investment management²	2.6(b)	42	-	42	48	-	48
UK		(3)	60	57	(21)	26	5
Group corporate centre costs		(50)	-	(50)	(50)	-	(50)
Other	2.6(c)	-	-	-	13	-	13
Non-covered business operating profit		(11)	60	49	(10)	26	16

Operating profit before tax		859	60	919	907	26	933

Non-operating items
Long-term investment return and tax variances		70	-	70	(849)	-	(849)
Effect of economic assumption changes		(539)	-	(539)	48	-	48
Impairment loss on discontinued banking operations		-	(10)	(10)	-	-	-
Restructuring and corporate transaction expenses³		(58)	(1)	(59)	(70)	(2)	(72)
Volatility arising on different asset and liability valuation bases		-	40	40	(15)	(94)	(109)
Impairment of intangible assets		-	(5)	(5)	-	-	-
Other non-operating items		(9)	-	(9)	(51)	-	(51)
Consolidation adjustment for different accounting bases⁴		67	-	67	(58)	-	(58)
Profit/(loss) before tax		390	84	474	(88)	(70)	(158)
Tax attributable to:
Operating profit		(251)	(28)	(279)	(278)	(6)	(284)
Non-operating items		124	(14)	110	281	27	308
Profit/(loss) after tax		263	42	305	(85)	(49)	(134)

	2009	2008
EEV operating profit after tax from continuing operations (£m)¹	608	629
EEV operating profit after tax from discontinued operations (£m)²	32	20
EEV operating profit after tax attributable to equity holders of Standard Life plc (£m)	640	649

Weighted average number of ordinary shares in issue (millions)	2,201	2,176
Basic EPS (pence) from continuing operations	27.6	28.9
Basic EPS (pence) from discontinued operations	1.5	0.9
Basic EPS (pence)	29.1	29.8

Weighted average number of ordinary shares on a diluted basis (millions)	2,203	2,180
Diluted EPS (pence) from continuing operations	27.6	28.9
Diluted EPS (pence) from discontinued operations	1.5	0.9
Diluted EPS (pence)	29.1	29.8

		31 December 2009	31 December 2008
	Notes	£m	£m
Covered business
Free surplus		925	1,235
Required capital		956	844
Net worth		1,881	2,079

Present value of in-force		3,775	3,345
Cost of required capital		(391)	(292)
Total embedded value of covered business	2.2(c)	5,265	5,132

Non-covered business
Global investment management		195	143
UK		78	129
Group corporate centre		389	417
Other		255	255
Discontinued operations		246	211
Total net assets of non-covered business	2.6(a)	1,163	1,155

Consolidation adjustment for different accounting bases¹		7	(42)

Total Group embedded value	2.7	6,435	6,245

Equity
Share capital		224	218
Share premium reserve		888	792
Other reserves		1,660	1,623
Retained earnings on an IFRS basis		685	774
Additional retained earnings on an EEV basis		2,978	2,838
Total equity²		6,435	6,245