Final Results - Part 3 of 5

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Aberdeen Group plc (ABDN)

UK 100

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		2011	2010¹
	Notes	£m	£m
Revenue
Gross earned premium		3,343	3,244
Premium ceded to reinsurers		(98)	(94)
Net earned premium		3,245	3,150
Net investment return		4,911	14,570
Fee and commission income		855	752
Other income		75	97
Total net revenue		9,086	18,569

Expenses
Claims and benefits paid		6,245	5,513
Claim recoveries from reinsurers		(620)	(619)
Net insurance benefits and claims		5,625	4,894
Change in policyholder liabilities		136	9,899
Change in reinsurance assets and liabilities		383	97
Expenses under arrangements with reinsurers		516	569
Administrative expenses	2.3	1,663	1,607
Change in liability for third party interest in consolidated funds		103	443
Finance costs		116	113
Total expenses		8,542	17,622

Share of profit from associates and joint ventures		51	24

Profit before tax		595	971

Tax expense attributable to policyholders' returns	2.4	217	400

Profit before tax attributable to equity holders' profits		378	571

Total tax expense	2.4	249	498
Less: Tax attributable to policyholders' returns	2.4	(217)	(400)
Tax expense attributable to equity holders' profits	2.4	32	98

Profit for the year from continuing operations		346	473

Profit for the year from discontinued operations		-	20
Profit for the year		346	493

Attributable to:
Equity holders of Standard Life plc		298	432
Non-controlling interests		48	61
		346	493
Earnings per share from continuing operations
Basic (pence per share)	2.5	13.0	18.4
Diluted (pence per share)	2.5	12.9	18.3

	2011	2010
	£m	£m
Profit for the year	346	493
Less: Profit from discontinued operations	-	(20)
Profit from continuing operations	346	473
Fair value losses on cash flow hedges	-	(2)
Actuarial (losses)/gains on defined benefit pension schemes	(88)	184
Revaluation of land and buildings	(5)	(14)
Net investment hedge	13	(39)
Exchange differences on translating foreign operations	(53)	122
Equity movements transferred to unallocated divisible surplus	11	(2)
Aggregate equity holder tax effect of items recognised in comprehensive income	27	(60)
Other comprehensive (expense)/income for the year from continuing operations	(95)	189
Total comprehensive income for the year from continuing operations	251	662

Profit from discontinued operations	-	20
Other comprehensive income from discontinued operations	-	24
Total comprehensive income for the year from discontinued operations	-	44

Total comprehensive income for the year	251	706

Attributable to:
Equity holders of Standard Life plc
From continuing operations	203	601
From discontinued operations	-	44
Non-controlling interests
From continuing operations	48	61
	251	706

		2011	2010¹
	Notes	£m	£m
Operating profit before tax from continuing operations
UK		220	234
Global investment management		125	103
Canada		187	110
International		40	15
Other		(28)	(37)
Operating profit before tax from continuing operations		544	425
Adjusted for the following items:
Short-term fluctuations in investment return and economic assumption changes²	2.6	(139)	157
Restructuring and corporate transaction expenses	2.3	(70)	(71)
Impairment of intangible assets		(5)	-
Impairment of investments in associates		-	(1)
Other operating profit adjustments²		-	-
Non-operating (loss)/profit before tax from continuing operations		(214)	85
Profit attributable to non-controlling interests		48	61
Profit before tax attributable to equity holders' profits		378	571
Tax (expense)/credit attributable to:
Operating profit		(87)	(89)
Adjusted items		55	(9)
Total tax expense attributable to equity holders' profits		(32)	(98)
Profit for the year from continuing operations		346	473
Profit for the year from discontinued operations		-	20
Profit for the year		346	493

		2011	2010
	Notes	£m	£m
Assets
Intangible assets		200	135
Deferred acquisition costs		920	881
Investments in associates and joint ventures	2.16	326	3,087
Investment property		8,743	8,410
Property, plant and equipment		160	164
Reinsurance assets	2.9	6,818	6,962
Loans		3,219	3,136
Derivative financial assets		2,212	1,343
Investment securities¹		125,707	121,671
Other assets		2,631	2,522
Cash and cash equivalents¹		9,187	5,805
Total assets		160,123	154,116

Equity
Share capital	2.8(a)	235	228
Shares held by trusts	2.8(b)	(19)	(21)
Share premium reserve		1,110	976
Retained earnings		1,030	1,094
Other reserves		1,605	1,626
Equity attributable to equity holders of Standard Life plc		3,961	3,903
Non-controlling interests		358	335
Total equity		4,319	4,238

Liabilities
Non-participating contract liabilities	2.9	102,558	99,164
Participating contract liabilities	2.9	32,553	33,474
Reinsurance liabilities	2.9	245	-
Deposits received from reinsurers		6,036	6,021
Third party interest in consolidated funds		8,428	5,454
Borrowings		170	245
Subordinated liabilities	2.17	1,186	1,799
Deferred income		388	382
Income and deferred tax liabilities		294	401
Derivative financial liabilities		1,102	924
Other liabilities		2,844	2,014
Total liabilities		155,804	149,878

Total equity and liabilities		160,123	154,116

	Share capital	Shares held by trusts	Share premium reserve	Retained earnings	Other reserves	Total equity attributable to equity holders of Standard Life plc	Non-controlling interests	Total equity
2011	£m	£m	£m	£m	£m	£m	£m	£m
1 January	228	(21)	976	1,094	1,626	3,903	335	4,238
Profit for the year	-	-	-	298	-	298	48	346
Other comprehensive income for the year	-	-	-	(61)	(34)	(95)	-	(95)
Total comprehensive income for the year	-	-	-	237	(34)	203	48	251
Distributions to equity holders	-	-	-	(303)	-	(303)	-	(303)
Issue of share capital other than in cash	7	-	134	-	-	141	-	141
Reserves credit for employee share-based payment schemes	-	-	-	-	24	24	-	24
Transfer to retained earnings for vested employee share-based payment schemes	-	-	-	11	(11)	-	-	-
Shares acquired by employee trusts	-	(7)	-	-	-	(7)	-	(7)
Shares distributed by employee trusts	-	9	-	(9)	-	-	-	-
Other movements in non-controlling interests in the year	-	-	-	-	-	-	(25)	(25)
31 December	235	(19)	1,110	1,030	1,605	3,961	358	4,319

	2011	2010
	£m	£m
Cash flows from operating activities
Profit before tax from continuing operations	595	971
Profit before tax from discontinued operations	-	17
	595	988
Change in operating assets^1,2	(2,056)	(17,505)
Change in operating liabilities	4,026	12,457
Non-cash and other items	122	240
Taxation paid	(297)	(262)
Net cash flows from operating activities¹	2,390	(4,082)

Cash flows from investing activities
Net acquisition of property, plant and equipment	(15)	(16)
Acquisition of subsidiaries net of cash acquired	(41)	(19)
Disposal of subsidiaries net of cash disposed²	-	(1,122)
Acquisition of investments in associates and joint ventures	(23)	(16)
Net acquisition of intangible assets	(39)	(45)
Net cash flows from investing activities	(118)	(1,218)

Cash flows from financing activities
Proceeds from other borrowings	5	33
Repayment of other borrowings	(35)	(33)
Repayment of subordinated liabilities	(591)	-
Capital flows from non-controlling interests and third party interest in consolidated funds	2,177	2,553
Distributions paid to non-controlling interests	(65)	(56)
Shares acquired by trusts	(7)	(35)
Interest paid	(125)	(117)
Ordinary dividends paid	(162)	(186)
Net cash flows from financing activities	1,197	2,159

Net increase/(decrease) in cash and cash equivalents¹	3,469	(3,141)
Cash and cash equivalents at the beginning of the year¹	5,701	8,840
Effects of exchange rate changes on cash and cash equivalents	(45)	2
Cash and cash equivalents at the end of the year ^1,3	9,125	5,701

Supplemental disclosures on cash flows from operating activities
Interest paid	11	11
Interest received	2,832	2,663
Dividends received	1,575	1,329
Rental income received on investment properties	634	605

	UK	Global investment management	Canada	International¹	Other	Elimination²	Total
2011	£m	£m	£m	£m	£m	£m	£m
Revenue
Net earned premium	1,178	2	1,129	936	-	-	3,245
Net investment return	3,266	-	1,364	298	-	(17)	4,911
Other segment income	494	252	141	51	28	(36)	930
Inter-segment revenue	22	114	2	-	559	(697)	-
Total net revenue	4,960	368	2,636	1,285	587	(750)	9,086

Expenses
Segment expenses	4,480	262	2,522	1,257	640	(735)	8,426
Finance costs	116	-	15	-	-	(15)	116
Total expenses	4,596	262	2,537	1,257	640	(750)	8,542

Share of profit from associates and joint ventures	20	15	14	2	-	-	51

Profit/(loss) before tax	384	121	113	30	(53)	-	595

Tax attributable to policyholders' returns	211	-	-	6	-	-	217
Tax attributable to equity holders' profits	(10)	29	12	5	(4)	-	32

Profit/(loss) for the year	183	92	101	19	(49)	-	346

Profit attributable to non-controlling interests	(48)	-	-	-	-	-	(48)
Profit/(loss) attributable to equity holders of Standard Life plc	135	92	101	19	(49)	-	298

Reconciliation to consolidated operating profit
Tax attributable to equity holders' profits	(10)	29	12	5	(4)	-	32
Non-operating loss before tax	95	4	74	16	25	-	214
Operating profit/(loss) before tax	220	125	187	40	(28)	-	544

Other income included in the income statement is as follows:
Interest income	98	1	174	22	1	-	296

Other expenses included in the income statement include:
Impairment losses (reversed)/recognised	(3)	-	(2)	-	5	-	-
Amortisation of intangible assets	11	-	1	2	4	-	18
Amortisation of deferred acquisition costs	79	1	9	43	-	-	132
Depreciation of property, plant and equipment	-	1	2	1	11	-	15
Interest expense³	169	-	21	1	117	(131)	177

Assets
Segment assets	120,996	417	25,393	12,697	1,129	(835)	159,797
Investments in associates and joint ventures	47	48	127	91	13	-	326
Total assets	121,043	465	25,520	12,788	1,142	(835)	160,123

Additions during the year
Intangible assets	51	3	1	3	30	-	88
Deferred acquisition costs	66	-	17	95	-	-	178
Property, plant and equipment	1	2	1	-	11	-	15
Investment properties	259	-	199	2	-	-	460
	377	5	218	100	41	-	741

	UK¹	Global investment management	Canada	International	Other	Elimination²	Total
2010	£m	£m	£m	£m	£m	£m	£m
Revenue
Net earned premium	1,319	3	919	909	-	-	3,150
Net investment return	11,553	-	2,077	937	9	(6)	14,570
Other segment income	464	209	136	46	23	(29)	849
Inter-segment revenue	11	111	3	-	544	(669)	-
Total net revenue	13,347	323	3,135	1,892	576	(704)	18,569

Expenses
Segment expenses	12,541	228	2,948	1,841	640	(689)	17,509
Finance costs	114	-	14	-	-	(15)	113
Total expenses	12,655	228	2,962	1,841	640	(704)	17,622

Share of profit/(loss) from associates and joint ventures	21	11	15	(23)	-	-	24

Profit/(loss) before tax	713	106	188	28	(64)	-	971

Tax attributable to policyholders' returns	385	-	-	16	(1)	-	400
Tax attributable to equity holders' profits	27	27	43	8	(7)	-	98

Profit/(loss) for the year from continuing operations	301	79	145	4	(56)	-	473

Profit for the year from discontinued operations¹	20	-	-	-	-	-	20
Profit/(loss) for the year	321	79	145	4	(56)	-	493

Profit attributable to non-controlling interests from continuing operations	(61)	-	-	-	-	-	(61)
Profit/(loss) attributable to equity holders of Standard Life plc	260	79	145	4	(56)	-	432

Reconciliation to consolidated operating profit¹
Tax attributable to equity holders' profits from continuing operations	27	27	43	8	(7)	-	98
Non-operating (profit)/loss before tax from continuing operations	(33)	(3)	(78)	3	26	-	(85)
Less: Profit for the year from discontinued operations	(20)	-	-	-	-	-	(20)
Operating profit/(loss) before tax from continuing operations	234	103	110	15	(37)	-	425

Other income included in the income statement is as follows:
Interest income³	73	1	164	21	1	-	260

Other expenses included in the income statement include:
Impairment losses (reversed)/recognised³	(9)	-	-	-	4	-	(5)
Amortisation of intangible assets:
From continuing operations	14	-	1	2	3	-	20
From discontinued operations	2	-	-	-	-	-	2
Amortisation of deferred acquisition costs:
From continuing operations	82	-	25	52	-	-	159
From discontinued operations	37	-	-	-	-	-	37
Depreciation of property, plant and equipment³	-	1	2	1	8	-	12
Interest expense^3,4	163	-	21	1	113	(128)	170

Assets
Segment assets	114,931	419	24,246	11,290	913	(770)	151,029
Investments in associates and joint ventures	2,697	42	123	211	14	-	3,087
Total assets	117,628	461	24,369	11,501	927	(770)	154,116

Additions during the year
Intangible assets	39	-	2	4	32	-	77
Deferred acquisition costs	110	1	17	90	-	-	218
Property, plant and equipment	-	-	1	1	16	-	18
Investment properties	758	-	73	-	-	-	831
	907	1	93	95	48	-	1,144

	2011	2010
	£m	£m
UK	7,647	7,437
Continental Europe	43	48
Canada	1,413	1,223
Total	9,103	8,708

	2011	2010
	£m	£m
Income tax:
UK	269	253
Double tax relief	(2)	(1)
Canada and International	31	42
Adjustment to tax expense in respect of prior years	12	4
Total income tax	310	298

Deferred tax:
Deferred tax (credit)/expense arising from the current year	(61)	197
Total deferred tax	(61)	197

Total tax expense	249	495
Add: Income tax credit attributable to discontinued operations	-	3
Total income tax expense attributable to continuing operations	249	498

Attributable to equity holders' profits	32	98

	2011	2010
	£m	£m
Tax on actuarial (losses)/gains on defined benefit pension schemes	(27)	59
Tax on revaluation of land and buildings	-	1
Tax on fair value gains on cash flow hedges attributable to discontinued operations	-	6
Tax relating to each component of other comprehensive income	(27)	66

	2011	2010
Profit from continuing operations (£m)	298	412
Profit from discontinued operations (£m)	-	20
Profit attributable to equity holders of Standard Life plc (£m)	298	432

Weighted average number of ordinary shares in issue (millions)	2,301	2,242

Basic earnings per share from continuing operations (pence per share)	13.0	18.4
Basic earnings per share from discontinued operations (pence per share)	-	0.9
Basic earnings per share (pence per share)	13.0	19.3

	2011	2010
	£m	£m
Non-participating insurance contract liabilities	25,048	23,564
Non-participating investment contract liabilities	77,510	75,600
Non-participating contract liabilities	102,558	99,164

Participating insurance contract liabilities	16,509	17,357
Participating investment contract liabilities	15,319	15,329
Unallocated divisible surplus	725	788
Participating contract liabilities	32,553	33,474

	Participating insurance contract liabilities	Non-participating insurance contract liabilities	Participating investment contract liabilities	Total insurance and participating contracts	Reinsurance contracts	Net
2011	£m	£m	£m	£m	£m	£m
At 1 January	17,357	23,564	15,329	56,250	(6,962)	49,288
Expected change	(1,014)	(523)	(658)	(2,195)	301	(1,894)
Methodology/modelling changes	(11)	(7)	14	(4)	-	(4)
Effect of changes in:
Economic assumptions	(37)	1,309	176	1,448	(292)	1,156
Non-economic assumptions	4	(245)	15	(226)	385	159
Effect of:
Economic experience	325	595	438	1,358	(23)	1,335
Non-economic experience	38	(507)	(51)	(520)	18	(502)
New business	30	1,013	76	1,119	(6)	1,113
Total change in contract liabilities	(665)	1,635	10	980	383	1,363
Foreign exchange adjustment	(183)	(151)	(20)	(354)	6	(348)
At 31 December	16,509	25,048	15,319	56,876	(6,573)	50,303
Reinsurance assets					(6,818)
Reinsurance liabilities					245
					(6,573)

	2011	2010
	£m	£m
Current service cost	(60)	(67)
Interest cost on benefit obligation	(107)	(110)
Expected return on plan assets	136	119
Past service cost	64	59
Credit recognised in the summary consolidated income statement	33	1

	2011			2010
	UK	Canada	UK	Canada
	%	%	%	%
Equity securities	6.49	8.60	7.11	8.60
Property	5.49	8.60	6.11	8.60

	2011	2011	2010	2010
	Number	£m	Number	£m
At 1 January	2,283,019,841	228	2,236,292,157	224
Shares issued in lieu of cash dividends	70,138,459	7	44,854,401	4
Shares issued in respect of share incentive plans	507,364	-	566,626	-
Shares issued in respect of share options	158	-	1,305,584	-
Demutualisation shares	-	-	490	-
Shares issued in respect of bonus issue	-	-	583	-
At 31 December	2,353,665,822	235	2,283,019,841	228

		2011			2010
	UK	Canada	Ireland	UK	Canada	Ireland
	%	%	%	%	%	%
Rate of increase in salaries	4.45-5.45	3.50	3.50	4.65-5.65	3.50	3.50
Rate of increase in pensions	2.85	1.33	1.00	3.05-3.65	1.33	1.00
Discount rate	4.60	4.50	5.10	5.30	5.50	5.25
Inflation assumption	2.85-3.45	2.00	2.00	3.05-3.65	2.00	2.00
Expected return on plan assets	5.45	5.75	4.00	6.15	7.00	5.00

	2011	2010
	£m	£m
Commitments to extend credit:
Original term to maturity of one year or less	109	51
Original term to maturity of more than one year	3	7
Other commitments	273	335

	2011	2010
	£m	£m
Not later than one year	29	26
Later than one year and no later than five years	93	55
Later than five years	120	129
Total operating lease commitments	242	210

	2011	2010
	£m	£m
Sale to:
Associates	8,397	17,340
Joint ventures	51	32
	8,448	17,372
Purchase from:
Associates	8,993	18,052
Joint ventures	24	19
	9,017	18,071

	UK regulated life business
	Heritage With Profits Fund¹	Proprietary business funds	Life business equity holders' funds	Total UK regulated life business	Overseas life operations	Total life business	Other activities	Group total
2011	£m	£m	£m	£m	£m	£m	£m	£m
Available capital resources

Equity holders' funds
Held outside life assurance funds	-	-	849	849	1,176	2,025	1,029	3,054
Held within life assurance funds	-	907	-	907	-	907	-	907

Equity attributable to ordinary equity holders of Standard Life plc	-	907	849	1,756	1,176	2,932	1,029	3,961

Unallocated divisible surplus	725	-	-	725	-	725	-	725

Other sources of capital
Subordinated liabilities	-	-	-	-	-	-	1,186	1,186
Internal subordinated liabilities	-	-	1,186	1,186	253	1,439	(1,439)	-
	-	-	1,186	1,186	253	1,439	(253)	1,186

Adjustments onto regulatory basis
Changes to the valuation of contract liabilities	3,409	2	-	3,411	-	3,411	-	3,411
Exclusion of deferred acquisition costs and other inadmissible assets	(89)	(657)	(62)	(808)	(92)	(900)	(96)	(996)
Exclusion of deferred income	98	248	-	346	(1)	345	-	345
Exclusion of non-qualifying subordinated liabilities	-	-	(54)	(54)	-	(54)	-	(54)
Changes to the valuation of other assets and liabilities	(22)	(311)	(232)	(565)	58	(507)	253	(254)
	3,396	(718)	(348)	2,330	(35)	2,295	157	2,452

Total available capital resources to meet regulatory requirement	4,121	189	1,687	5,997	1,394	7,391	933	8,324

Analysed as follows:
Capital not subject to constraints	-	-	1,637	1,637	375	2,012	850	2,862
Capital subject to constraints	4,121	189	50	4,360	1,019	5,379	83	5,462

Total available capital resources	4,121	189	1,687	5,997	1,394	7,391	933	8,324
Restricted assets within the long-term business fund								(999)
Regulatory capital resources								7,325
Regulatory capital resources requirement				3,426	776	4,202	37	4,239
Regulatory capital surplus								3,086

	UK regulated life business
	Heritage With Profits Fund	Proprietary business funds	Life business equity holders funds	Total UK regulated life business	Overseas life operations	Total life business	Other activities	Group total
2011	£m	£m	£m	£m	£m	£m	£m	£m
At 1 January	4,031	321	2,361	6,713	1,413	8,126	704	8,830
Methodology/modelling changes	(79)	(1)	-	(80)	-	(80)	-	(80)
Change in assumptions used to measure life assurance contract liabilities and experience differences	(24)	3	-	(21)	(218)	(239)	-	(239)
New business	(11)	(121)	-	(132)	(20)	(152)	-	(152)
Investment surplus	913	(87)	71	897	162	1,059	-	1,059
Equity holder/inter-fund transfers	(68)	68	9	9	29	38	(38)	-
Dividend transfers	-	-	(300)	(300)	(110)	(410)	248	(162)
Redemption of subordinated liabilities	-	-	(604)	(604)	-	(604)	-	(604)
Other factors	(641)	6	150	(485)	138	(347)	19	(328)
At 31 December	4,121	189	1,687	5,997	1,394	7,391	933	8,324

		£m
Purchase consideration
Cash paid		42
Loan notes issued		7
Total purchase consideration		49
Fair value of net assets acquired:
Intangible assets		22
Other assets		8
Cash and cash equivalents		1
Deferred tax assets		3
Other creditors		(6)
Deferred tax liabilities		(5)
		23
Goodwill		26