Aberdeen Corporate Services LimitedLiquidiert

Standard Life Employee Services Limited

Frankfurt am Main

Jahresabschluss zum Geschäftsjahr vom 01.01.2012 bis zum 31.12.2012

Annual report and accounts for the year ended 31 December 2012

Registration no: Scotland Number 271355

Certified that this and the following 35 page(s) are true copies of a document kept and registered on 28/05/2013 at the office for the registration of Companies.

Signature

Authorised by the Registrar of Companies

Date: 19/09/2013

Beglaubigte Teilübersetzung aus der englischen Sprache:

Die Übereinstimmung dieser Kopie sowie der folgenden 35 Kopieseite(n) mit dem bei der Handelsregisterbehörde hinterlegten und am 28.05.2013 eingereichten Dokument wird beglaubigt.

Unterschrift << Unterschrift unleserlich >>

Bevollmächtigt vom Registrar of Companies ¹

Datum: 19.09.2013

¹ Enspricht Leiter der Handelsregisterbehörde (Anm. d. Übers.)

Die Richtigkeit und Vollständigkeit der vorstehenden Übersetzung wird beglaubigt. Der in englischer Sprache abgefasste Ursprungstext hat im Original vorgelegen, welches dieser Übersetzung beigefügt ist.

Contents

Statutory information

Directors' report

Statement of directors' responsibilities

Independent auditors' report

Income statement

Statement of comprehensive income

Statement of financial position

Statement of changes in equity

Statement of cash flows

Accounting Policies

Notes to the financial statements

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Signature

Authorised by the Registrar of Companies

Date: 19/09/2013

Statutory Information

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Signature

Authorised by the Registrar of Companies

Date: 19/09/2013

Directors' report

The directors submit their audited Report and Accounts of Standard Life Emplovee Services Limited (the Company), registration no: Scotland Number 271355, for the year ended 31 December 2012.

Principal activities

The Company's principal activities are the provision of staff, physical infrastructure and associated support services to other companies within the Standard Life Group (the Group), primarily in the UK. Branches in Ireland, Germany, Hong Kong, Singapore and Dubai provide services to the Group's operations in those locations.

Business review

The Company made a profit for the year ended 31 December 2012 of £2,250K (2011: £8,746k). The directors do not recommend the recommend the payment of a dividend for the year (2011: £nil).

During the period, branches were opened in Hong Kong, Singapore and Dubai to provide services to the Group's local operations in line with those provided for the UK, Ireland and Germany.

Given the straightforward nature of the business, the Company's directors are of the opinion that analysis using key performance indicators is not necessary for an understanding of the development, performance or position of the business.

The principal risks to which the Company is most specifically exposed are credit risk, liquidity risk, foreign currency risk and operational risk. From the perspective of the Company, the principal risks and uncertainties are integrated with the principal risks of the Group, which include those of the Company, are discussed in the Group's annual report and accounts which does not form part of this report. The Company's objective when managing capital is to safeguard the entity's ability to continue as a going concern.

The intention of the Company is to ensure, wherever possible, that all costs incurred are recharged throughout the Group.

Financial risk management

The Company manages its various financial risks as outlined in note 18 of the financial statements.

Creditor payment policy

It is the Company's policy to pay creditors when they fall due for payment. Terms of payments are agreed with suppliers when negotiating each transaction and the policy is to abide by those terms, provided that the suppliers also comply with all relevant terms and conditions. The average duration of amounts owing to trade creditors at 31 December 2012 was 36 days (2011: 35 days), based on the average daily amount invoiced by suppliers during the year.

Directors

The names of the current directors are listed on page 2.

The directors are not subject to retirement by rotation.

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Authorised by the Registrar of Companies

Date: 19/09/2013

Employees

The Company is committed to an equal opportunities policy. The sole criterion for selection or promotions is the suitability of any applicant for the job regardless of ethnic origin, religion, religious belief, sex, sexual orientation, marital status or disablement. The Company will continue to employ, arrange for retraining, or retire on disability pension, any member of staff who becomes disabled, as may be appropriate. The Company communicates with its employees on a regular basis, either through the Company's intrantet facility or through regular meetings with management. All employees are encouraged to participate in the Group's share scheme.

Statement on disclosure of information to the independent auditors

So far as each director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditors in connection with preparing their report, of which the auditors are unaware. Having made enquiries of fellow directors and the Company's auditors, each of the directors have taken all the steps that ought to have taken as a director in order to make himself aware of any relevant audit information an to establish that the auditors are aware of that information.

Independent Auditors

The auditors, PricewaterhouseCoopers LLP, have indicated their willingness to continue in office and will be deemed to be re-appoirted as auditors of the Company under section 487(2) of the Companies Act 2006.

On behalf of the Board of Directors on

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Signature

Authorised by the Registrar of Companies

Date: 19/09/2013

Statement of directors' responsibilities

The directors are responsible for preparing the Directors' Report an the financial statements in accordance with applicable law an regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the Company financial statements in accordance with international Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company an of the profit or loss of the company for that period.

In preparing these financial statements the directors are required to:

The directors are responsible for keeping adequate accounting record that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company an hence for taking reasonable steps for the prevention an detection of fraud an other irregularities.

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Signature

Authorised by the Registrar of Companies

Date: 19/09/2013

Independent Auditors' report to the members of Standard Life Employee Services Limited

We have audited the financial statements of Standard Life Employees Services Limited for the year ended 31 December 2012 which comprise the Income statement, the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the Statement of Cash Flows, the Accounting Policies an the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Respective responsibilities of directors and auditors

As explained more fully in the Directors' Responsibilities Statement set out on page 5, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 an for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to wham this report is shown or info whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient the give reasonable assurance that the financial statements are from material misstatement, whether caused by fraud or error. This includes an assessment of whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements, in addition, we read all the financial and non-financial information in the Annual Report and Accounts to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

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Authorised by the Registrar of Companies

Date: 19/09/2013

Income statement for the year ended 31 December 2012

Statement of comprehensive income for the year ended 31 December 2012

The notes on pages 11 to 35 form an integral part of these financial statements.

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Authorised by the Registrar of Companies

Date: 19/09/2013

Statement of financial position as at 31 December 2012

Approved on behalf of the Board of Directors on

The notes on pages 11 to 35 form an integral part of these financial statements.

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Authorised by the Registrar of Companies

Date: 19/09/2013

Statement of changes in equity for the year ended 31 December 2012

The notes on pages 11 to 35 form an integral part of these financial statements.

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Signature

Authorised by the Registrar of Companies

Date: 19/09/2013

Statement of cash flows for the year ended 31 December 2012

The notes on pages 11 to 35 form an integral part of these financial statements.

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Signature

Authorised by the Registrar of Companies

Date: 19/09/2013

Accounting Policies

(a) Basis of preparation

The Company's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS)issued by the International Accounting Standards Board (IASB) as endorsed by the European Union (EU), with interpretations issued by the International Financial Reporting Standards Interpretations Committee an with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The principal accounting policies set out below have been consistently applied to all financial reporting periods presented in these financial statements unless otherwise stated.

(a)(i) Critical accounting estimates and judgements in applying accounting policies

The preparation of financial statements, in conformity with generally accepted accounting principles (GAAP), requires management to make estimates an exercise judgements in applying the accounting policies that affect the reported amounts of assets an liabilities at the date of the financial statements and the reported amounts of revenues an expenses arising during the period. The area where those judgements have the most significant effect on the amounts recognised in the financial statements is accruals.

(a)(ii) New standards, interpretations and amendments to published standards that have been adopted by the Company

The Company has adopted the following amendments to IFRSs an interpretations which are effective from 1 January 2011 and management considers that the implementation of these amendments and interpretations has had no significant impact on the Company's financial statements:

(a)(iii) Standards, interpretations an amendments to published standards that are not yet effective and have not been early adopted by the Company

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Company's accounting periods beginning on or after 1 January 2013 or later periods. The Company has not early adopted the standards, amendments and interpretations described below:

Amendment to IAS 1 Presentation of Financial Instruments (effective for annual periods beginning on or after 1 July 2012)

The amendment to IAS 1 revises the way other comprehensive income (OCI) is presented. The key changes are as follows:

The adoption of the amendment to IAS 1 may change the presentation of the statement of comrehensive income in the financial statements of the Company.

Amendment to IAS 12 Income Taxes - Deffered Tax (effective for annual periods beginning on or after 1 January 2013)

IAS 12 requires an entity to measure the defered tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use for sale. This amendment to IAS 12 introduces a presumption that the recovery of the carrying amount of an asset measured using the fair value model in IAS 40 - Investment Property will, normally, be through sale. The adoption of the amendments to IAS 12 will have no impact on the financial statements of the Company.

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Authorised by the Registrar of Companies

Date: 19/09/2013

Amendment to IAS 19 Employee Benfits (effective for annual periods beginning on or after 1 January 2013)

IAS 19 amendment revises requirements for pensions and other post retirement benefits, termination benefits and other employee benefits. The key changes which effect defined benefit plans are as follows:

Ther is no contractual agreement or policy in place for charging the net defined benefit cost of the defined benefit scheme across the participating companies and as such the amendment will have no impact on the financial statements of the Company.

Consolidation standards

IFRS 10 Consolidated Financial Statements (effective for annual periods beginning on or after 1 January 2014)

IFRS 10 introduces a single consolidation model to be applied to all entities an replaces previous requirements on control an consolidation in IAS 27 Consolidated and Separate Financial Statements and Standing Interpretations Comittee (SIC) 12 Consolidation - Special Purpose Entities. IFRS 10 defines control, determines how to identity if an investor controls an investee and requires an investor to consolidate entities it controls under the new standard. IFRS 10 identifies three elements which must be present for an investor to control an investee, which are as fallows:

IFRS 11 Joint Arrangements (effective for periods beginning on or after 1 January 2014)

IFRS 11 defines and establishes accounting principles for joint arrangements and replaces previous requirements in IAS 31 Interests in Joint Ventures and SIC 13 Jointly Controlled Entities - Non-Monetary Contributions by Venturers. The standard distinguihed between two types of joint arrangements - Joint Ventures an Joint Operations - based on how rights an obligations are shared be the parties to the arrangement. Joint operators should recognise their share of the assets, liabilities, revenue and expenses of the interest in accordance with applicable IFRSs. Joint venturers should apply the equity method of accounting prescribed in IAS 28 (revised 2011) Investment in Associates an Joint Ventures to account for their interest.

IFRS 12 Disclosure of Interests in Other Entities (effective for annual periods beginning on or after 1 January 2014)

IFRS 12 is a single disclosure standard which applies to all entities that have an interest in a subsidiary, a joint arrangement, an associate or an unconsolidated structured entity. IFRS 12 requires entities to disclose information to enable users of the financial statements to evaluate the nature, risks and financial effects associated with interests in other entities. The required disclosures are grouped into the following main categories:

IAS 27 Separate Financial Statements (2011) (effective for annual periods beginning on or after 1 January 2014)

IAS 27 is revised to remove the requirements for consolidated financial statements which are superreded by the issue of IFRS 10.

IAS 28 Investments in Associates and Joint Ventures (2011) (effective for annual periods beginning on or after 1 January 2014)

IAS 28 is revised to include joint ventures as well as associates. Joint ventures are required to be equity accounted following the issue of IFRS 11.

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Authorised by the Registrar of Companies

Date: 19/09/2013

Adoption of the consolidation standards

IRRS 10, IFRS 11, IFRS 12, IAS 27 (2011) and IAS 28 (2011) as amented by IFRS 10, IFRS 11 and IFRS 12 Consolidated Financial Statements, Joint Arrangements and Disclosure of interests in other entities: transition guidance must be adopted concurrently. IFRS 10, IFRS 12 and IAS 27 will be amended on 1 January 2014 by Investment Entities ( (Amendments to IFRS 10, IFRS 12 and IAS 27). The adoption of IFRS 10, IFRS 11, IFRS 12, IAS 27 (2011) and IAS 28 (2011) is not expected to have a significant impact on the financial statements of the Company.

IFRS 13 Fair Value Measurement (effective for annual periods beginning on or after 1 January 2013)

IFRS 13 replaces the guidance on fair value measurement in existing IFRSs with a single standard. The standard does not change requirements regarding which items should be measured at fair value but provides guidance on how to determine fair value an enhances disclosures about fair value measurement.

Entities are required to make various quantitative an qualitative disclosures about fair value measurements an their classification within the hierarchy. The adoption of the IFRS 13 is not expected to result in additional disclosures in the financial statements of the Company.

Amendment to IFRS 7 Finacial Instruments: Disclosure (effective for annual periods beginning on or after 1 January 2013)

The amendment to IFRS 7 enhances the disclosure requirement where financial assets an liabilities are offset on the statement of financial position. The new requirements focus on enhancing quantitative disclosures about recognised financial instruments that are offset. Additionally enhanced disclosure are required on financial instruments subject to master netting or similar arrangements regardless of whether they are offset. The impact of the adoption of the amendment to IFRS 7 is not expected to have a significant impact on the financial statements of the Company.

Annual improvements to IFRSs 2009-2011 Cycle (effective for annual periods beginning on or after 1 January 2013)

The publication issued in May 2012 amends five standards. The amendments have not yet been endorsed by the EU.

Amendment to IAS 32 Financial Instruments: Presentation (effective for annual periods beginning on or after 1 January 2014)

The amendment to IAS 32 clarifies the circumstance in which financial assets and financial liabilities may be offset on the statement of financial position. The impact of the adoption of the amendment to IAS 32 on the financial statements of the Company is currently being reviewed by management but is not expected to have a significant impact.

IFRS 9 Financial Instruments (effective for annual periods beginning on or after 1 January 2015)

IFRS 9 will replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 allows only two measurement categories for financial assets: amortised cost and fair value. All equity instruments are measured at fair value. A debt instrument is measured at amortised cost only if it is held to collect contractual cash flows and the cash flows represent principal and interest, otherwise it is measured at fair value through profit or loss (FVTPL). For financial liabilities designed as at FVTPL, changes in the fair value due to changes in the liability's credit risk are recognised directly in other comprehensive income. Financial liabilities that are held for trading are measurement at FVTPL. The adoption of IFRS 9 is not expected to have a significant impact on the measurement and presentation of financial instruments and related balances in the financial statements of the Company. The standard has not yet been endorsed by the EU.

(b) Basis of consolidation

Under s400 of the Companies Act 2006 the Company has taken the exemption from preparing consolidated financial statements since it is a wholly owned subsidiary of Standard Life plc.

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Authorised by the Registrar of Companies

Date: 19/09/2013

(c) Revenue recognition

Expenses incurred on behalf of other companies in the Group are invoiced to those companies, and recognised as revenue, in the month that the expense is incurred.

Services provided to other companies are invoiced to those companies, and recognised as revenue, in the month that the services are used. Such revenue represents amounts charged to companies within the Group, and also companies outside the Group, in respect of the provision of physical infrastructure and associated support services.

Interest income recognised in the income statement is calculated using the effective interest rate (EIR) method.

(d) Expense recognition

Expenditure incurred by the Company is recognised in the month to which it relates. Expenses relating to a month that have not been invoiced are accrued, white invoices recaived an paid for expenses relating to future periods are recognised as prepayments.

(e) Impairment of non-financial assets

The carrying amounts of non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, at least at each reporting date. An impairment loss is recognised in the income statement for the amount by which the asset's carrying amount exceeds its recoverable amount.

The recoverable amount of an asset is the greater of its net selling price (fair value less costs to sell) and value in use. In assessing value in use the estimated future cash flows are discounted to heir present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely, independent cash inflows, the recoverable amount is determinded for the cash-generating unit, or of units, to which the asset belongs.

(f) Foreign currency translation

The financial statements are presented in thousands pounds Sterling, which is the Company's presentation currency.

The statement of financial position of the Company's branches that have a different functional currency than the Company's presentation currency are translated into the presentation currency at the year-end exchange rate an their income statements and cash flows are translated at average exchange rates for the year. All resulting exchange differences are recognised in the foreign exchange reserve in equity through other comprehensive income.

Foreign currency transactions are translated info the functional currency at the exchange rate prevailing at the date of the transaction. Gains an losses arising form such transactions an from the translation at year-end exchange rates of monetary assets an liabilities denominated in foreign currencies are recognised in the income statement.

(g) Property, plant and equipment

Computer equipment, machinery and equipment, furniture and fittings and tenants improvements are measured at historical cost less depreciation. Depreciation is charged to the income statement, within administrative expenses, on a straight-line basis, over their estimated useful lives of:

The residual values and useful lives of the assets are reviewed at each statement of financial position date and adjusted if appropriate.

Assets under construction are not depreciated.

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Authorised by the Registrar of Companies

Date: 19/09/2013

(h) Intangible assets

Intangible assets, including internalty developed software and software purchased from third parties, are recognised in the statement of financial position if it is probable that the relevant future economic benefits attributable to the assets will flow to the Company an their costs can be measured reliably and are either identified as separable (i.e. capable of being separated from the entity and sold, transferred, rented, or exchanged) or they arise from contractual or other legal rights, regardless of whether those rights are transferable or separable.

Intangible assets are carried at cost less accumulated amortisation and any accumulated impairment losses. Amortisation commences at the time from which an intangible asset is avaitable for use. Amortisation is charged to the income statement on a straight-line basis over the estimated useful life of the intangible asset, of between two and six years.

The carrying amounts of intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, at least at each statement of financial position date. Am Impairment loss is recognised in the income statement for the amount by which the asset's carrying amount exceeds its recoverable amount.

(i) Loans

Loans are initialy measured at fair value less directly attributable transaction costs. Subsequantly, they are measured at amortised cost, using the EIR method, less any impairment losses.

(j) Investment securities

Management determines the classification of investments securities at initial recognition. The Company has designated its investment securities at fair value through profit or loss.

Fair values are based upon the current quoted bid price where an active market exists: Where a quoted price in an active market cannot be obtained an appropriate market consistent valuation technique (for example discounted cash flows and recent market transactions) is used to determine fair value. If a price/technique is not available to provide a refiable fair value the investment is carried at cost less a provision for impairment.

Where a valution technique is used to establish the fair value of a financial instrument, a difference could arise between the fair value at initial recognition an the amount that would be determined at that date using the valuation technique. When unobservable market data has an impact on the valuation of derivatives, the entire initial change in fain value indicated by the valuation technique is recognised over the me of the transaction on an appropriate basis, or when the inputs become observable, or when the derivative matures or is closed out.

(k) Cash an cash equivalents

Cash and cash equivalents include cash in hand and any highly liquid investments which have a maturity date within three months of the date of acquisition. For the purposes of the statement of cash flows, cash an cash equivalents also include bank overdrafts that are repayable on demand an form an integral part of the Company's cash management. Cash and cash equivalents are measured at amortised cost.

(l) Equity

An equity instrument is any contract that evidanches a residual interest in the assets of an entity after deducting all of its liabilities. Shares are classified as equity instruments when there is no contractual obligation to deliver cash or other assets to another entity on terms that may be unfavourable. The difference between the proceeda recelved on issue of the shares and the nominal value of the shares issued is recorded in the share premium reserve. Incremental costs directly attributable to the issue of new equity instruments are shown as a deduction from the procoods, net of tax. Incremental costs directly attributable to the issue of equity instruments in a business combination are excluded in the cost of acquisition.

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Authorised by the Registrar of Companies

Date: 19/09/2013

(m) Income tax

The income tax expense is based on the taxable profits for the year, after adjustments in respect for prior years. Amounts are charged or credited tho the income statement or other comprehensive income as appropriate.

Deferred tax is provided using the statement of financial position liability method, on temporary differences arising between the tax bases of assets an liabilities and their carrying amounts in the financial statements. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be uhlised. Deferred tax is recognised in the income statement. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets an liabilities.

The income expense is determined using rates enacted or substantively enacted at the statement of financial position date.

(n) Pension costs

The Group operates a number of defined benefit and defined contribution plans, the assets of which are held in separate trustee-administered funds. The pension plans are funded by payments from employees and by the relevant Group companies, determined by periodic actuarial calculations.

For the defined contribution scheme, the Company pays contributions to separately administered pension insurance schemes. The contributions ale recognised in staff expenses when they are due.

(o) Borrowings

Borrowings are recognised initially, at fair value, loss attributable transaction costs. Subsequent to initial recongnition, borrowings are carried at amortised cost with any difference between the carrying value and redemption value being recongnised in the statement of comprehensive income over the period of the borrowings on an effective interest rate basis.

(p) Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost.

(q) Leases

Leases, where a significant portion of the risks an rewards of ownership are retained by the lessor, are classified as operating leases. Payments made as leases under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

The Company has not entered into any material finance lease arrangement as either the lessor or lessee.

(r) Provisions an contingend liabilities

Provisions for legal are recongnised when the Company has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of recources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operation losses. Where there are a number of similar obligations, the likelhood that an outflow will be required in settlement is determined considering the class of obligations as a whole.

Contingent liabilitions are disclosed it the future obligation is not probable but geater than remote and the amount cannot be reasonably estimated.

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Authorised by the Registrar of Companies

Date: 19/09/2013

(s) Employee share-based payments

The Group operates share incentive plans for all employees, share-based long-term incentive plans and restricted stock for senior employees an may award annual performance shares to all eligible employees when the Group's profit exceeds certain targets. Further details of the schemes are set out in Note 21. For share-based payment employee transactions, services received are measured at fair value.

Fair value of options granted under share incentive schemes is determined using a relevant valuation technique, such as the Black Scholes option pricing model.

For cash-settled share-based payment transactions, services received are measured at the fair value of the liability. The fair value of the liability is remeasured at each reporting date and any changes in fair value are recognised in profit an loss for the period.

If the equity instruments granted vest immediately, the employees become unconditionally entitled to those equity instruments. Therefore, the Group immediately recognises the charge in respect of the services received in full in the income statement with a corresponding credit to the equity compensation reserve in equity.

If the equity instruments do not vest until the employee has fulfilled specified vesting conditions, the Group presumes that the services to be rendered by the employee as consideration for those equity instruments will be received in the future, during the period of those vesting conditions ("vesting period"). Therefore, the Group recognises the charge in respect of those services as they are rendered during the vesting period with a corresponding credit to the equity compensation reserve in equity.

Cancellations of award granted arise where non-vesting conditions attached to the award are not net during the vesting period. Cancellations are accounted for as an acceleration of vesting an the remaining unrecognised expense in respect of the fair value of the awards is recognised immedaitely.

At each period end the Group reassesses the number of equity instruments expected to vest and recognises any difference between the revised an original estimate in the income statement with a corresponding adjustment to the equity compensation reserve.

At the time the equity instruments vest, the amount recognised in the equity compensation reserve in respect of those equity instruments is transferred to retained earnings.

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Signature

Authorised by the Registrar of Companies

Date: 19/09/2013

Notes to the financial statements

1. Fee income

2. Interest income

Interest income of £ 175k (2011: £ 111k) relates to cash and cash equivalents.

3. Administrative expenses

4. Staff costs and other employee related costs

The majority of staff employed by the Company manages the affairs of other companies within the Group. Their costs are therefore recharged to the companies that they manage.

Included within Other are employees of Group information and technology and Group corporate centre.

5. Auditors' remuneration

Auditors' remuneration amounted to £62,514 (2010: £65,113) in respect of the audit of the Company's financial statements. There are no audit fees for services other than the statutory audit of the Company (2011: none).

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Signature

Authorised by the Registrar of Companies

Date: 19/09/2013

6. Tax credit

The Finance Act 2012 (the Act) reduced the UK corporation tax rate to 26% to 24% until 31 March 2013 and to 23% with effect from 1 April 2013. This rate changes have been included in the calculation of UK current and deferred tax. In the 2012 Autumn statement, the UK Government announced its intention to make a further reduction in the rate of UK corporation tax to 21% in 2014. These reduction has not been included in the calculation of deferred tax as it is subject to legislation being enacted in future years.

(a) Current year tax credit

Income tax balances are expected to be settled within 12 months (2011: within 12 months).

(b) Tax credit taken to equity

Tax credit taken to equity in the period of £1,850k (2011: £nil) is in relation to deferred tax relating to employee benefits.

(c) Reconciliation of tax credit

The tax charge for the year has been reduced by £1,706k due to no payment being made for losses surrended by other group companies.

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Signature

Authorised by the Registrar of Companies

Date: 19/09/2013

7. Intangible assets

¹ Following a review of the Group's IT strategy in 2011 it was concluded that a portion of software development previously capitalised was not currently being used and has been impaired.

In 2012, £1,536k (2011: £nil) has been reaflocated to acquired intangible assets. Acquired intangible assets include further costs incurred to bring intangible assets into a useable state. Included in disposals and adjustments are £nil (2011: £1,571k) of equipment with net book value of £nil and no longer in use.

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8. Property, plant and equipment

Included in disposals and adjustments are £nil (2011: £9,069k) of equipment with net book value of £nil and no longer in use.

9. Tax assets

Recognised deferred tax is analysed in the table below.

Deferred tax assets are expected to be settled after more than 12 months.

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10. Receivables an other financial assets

All receivables an other financial assets are expected to be settled within 12 months (2011: all within 12 months). The carrying amounts disclosed above reasonably approximate the fair values at the year end. No interest is applied to other receivables an other financial assets.

11. Other assets

All other assets expected to be settled within 12 months (2011: all within 12 months). No interest is applied to other assets.

12. Cash and cash equivalents

Cash and cash equivalents of £44,829k (2011: £23,628k) comprised cash held at bank and short term investments. Interest at a variable rate is applied to cash an cash equivalents. The average variable rate in 2012 was 0.7% (2011: 0.7%).

13. Share Capital

14. Borrowings

Borrowings of £52,800k (2011: £47,800k) represent loans from other Group entities. Interest is applied at a variable rate. All borrowings are expected to be settled after more than 12 months (2011: more than 12 months).

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15. Pensions

The employees who manage the affairs of the Company are members of defined benefit pension schemes and defined contribution pension schemes operated by the Group for its employees in the United Kingdom an the Republic of Ireland. There is no contractual agreement or policy for charging the net defined benefit cost of the defined benefit schemes across the participating companies. The sponsoring employer for the defined benefit schemes is Standard Life Assurance Limited (SLAL) and therefore the net defined benefit cost for the schemes is recongnised by SLAL. As a result the Company records its contributions to the defined benefit schemes as an expense in the period they are payable. The contributions to the defined contribution and the defined benefit plans recognised as an expense for the year ended 31 December 2012 were £40,081k (2010: £32,826k).

The Company is required, under IAS 19 Employee Benefits, to provide the following disclosures on the Group's UK, Republic of Ireland and Germany defined benefit schemes:

Contributions to UK and Republic of Ireland defined benefit schemes

The following table shows the actual contributions made to the plans in 2011 and 2012:

Expected contributions to the plans in 2013 are as follows:

Total contributions to the UK defined benefit scheme in the year to 31 December 2012 did not include any additional contributions (2011: £20m) in accordance with an existing agreement with the scheme trustees. The competion of the funding valuation at the start of 2012 showed the scheme had returned to surples on the trustees' funding basis. As a result the Schedule of Contributions was revised and additional contributions are no longer required to be made by the SLAL.

(a) Analysis of amounts recognised in the Group statement of financial position for the UK, Republic of Ireland and Germany defined benefit schemes

The present value of the defined benefit obligation less the fair value of gross scheme assets is as follows:

The Group also recognises a net liability of £7m (2011: £6m) arising from a scheme with a total defined benefit obligation of £7m (2011: £6m) administered for the benefit of employees in Germany, resulting in a combined net asset presented in the statement of financial position of SLAL of £324m (2011: net asset of £336m) for the UK, Republic of Ireland an Germany defined benefit schemes.

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(b) Defined benefit obligation

The movement in the present value of defined benefit obligation is as follows:

The UK and Republic of Ireland defined benefit schemes are wholly funded schemes.

(c) Plan assets

The changes in the fair value of plan assets are as follows:

The distribution of the fair value of the plan assets at year end is as follows:

Derivative instruments are used by the UK scheme to modify the profile of the assets of the scheme to better match the scheme's liabilities and to execute specific strategies as defined within the scheme's Investment Guidelines.

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(d) Principal assumptions

The principal economic assumptions used in determining pension benefit obligation for the UK an Republic of Ireland defined benefit schemes are as follows:

The valuation of scheme liabilities is sensitive primarily to both the assumed discount and inflation rates an in particular to the difference between these two rates. A reduction of ten basis points in the discount rate used to value the UK scheme would increase the defined benefit obligation by £51m (2010: £49m).

The most significant non-economic assumption is that made in respect of mortality post retirement. The mortality tables (along with sample complete expectations of life) are illustrated below:

The expected return on plan assets is based on market expectations at the beginning of the period for returns over the entire life of the related benefits obligations. The expected return by geography is as follows:

16. Other financial liabilities

All other financial liabilities expected to be settled within 12 months (2011: within 12 months). The carrying amounts disclosed above reasonably approximate the fair values at the end of the year. No interest is applied to the other financial liabilities.

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17. Other liabilities

The Group is in the process of vacating office buildings. It is not possible to predict with certainty when the buildings will be sub-jet and the terms of any such agreement, therefore it is expected that the unavoidable obligations under the leases will exceed the economic benefits and as such an onerous contract provision has been recognised. The movement during the year was as follows:

The amount of other liabilities expected to be settled after more than twelve months is £2,939k (2011: £4,342k). The carrying amounts disclosed above reasonably approximate the fair value at the end of the year. No interest is applied to the other liabilities.

18. Risk management

(a) Group overview

The Group recognises the need to manage long-term value creation, cash flow and risk in a holistic manner in order to make informed decisions to create an protect value in the Group's activities. The Group is proactive in understanding an managing the risks to its objectives at every level and ensuring that capital is delivered to areas where most value can be created for the risks taken.

The Group has developed an embedded an Enterprise Risk Management Framework (ERM framework) to enable the risks of the Group to be identified, assessed, controlled and monitored consistently, objectively and holistically. The ERM framework is built around a robust governance structure. The "Three Lines of Defence" are an important part of this structure providing clearly defined roles an responsibilities:

The CEO and the Group's senior management are responsible for ensuring that the ERM framework is operating effectively across the Group. The Group's risk profile is assessed regularly against the Board approved risk appetite, an reviewed by the relevant executives and Group risk committees. Risk appetites and limits are established following due consideration of:

The ERMC supports the CEO in the management of risks across the Group. The ERMC is responsible for overseeing compliance with the Group's ERM Framework and is supported by Group Risk Forums and Group Risk Management. The ERMC meets at least monthly, and usually in conjunction with the Executive team.

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Company overview

The business of the Company is the provision of staff, physical infrastructure and support services to other companies of the Group. This involves the payments to staff and third party suppliers, and the recharging and collection of these costs from the Group entity receiving the services. The Company also provides support services, under transitional service agreements, to external parties in respect of operations which previously formed part of the Group.

The Company is most specifically exposed to credit risk, liquidity risk an operational risk.

The Company has no significant exposure to market risk, other than interest rate risk. The majority of the Company's assets an liabilities are denominated in sterling. The Company has no exposure to insurance risk as it does not hold any insurance liabilities. Strategic an group risks are managed by the Group on behalf of the Company.

(b) Credit Risk

The Group defines credit risk as the risk of exposure to loss it a counterparty fais 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 widening of corporate bond spreads.

Appetites for credit risk are managed through the Group Credit Risk Policy. The Company defines its own Credit Risk Policy adopting relevant minimum standards an limits contained within the Group Policy. The Company is required to manage risk in accordance with the Group policy and to take mitigating action as appropriate to operate within defined risk appetites.

In managing credit risk, the Company sets maximum exposure limits to types of financial instruments an counterparties. The limits are established using the following controls:

Credit exposure of financial assets

The following table provides an analysis of the quality of financial assets that are neither past due nor impaired at the reporting date are exposed to credit risk. For those financial assets with credit ratings assigned by external rating agencies, classification is within the range of AAA to BBB. AAA is the highest possible rating and rated financial assets that fall outside the range of AAA to BBB have been classified as below BBB. For those financial assets that do not have credit ratings assigned by external rating agencies but where the Company has assigned internal ratings for use in managing an monitoring credit risk, the assets have been classified in the analysis that follows as 'internally rated'. If a financial asset is neither rated by an external agency nor 'internally rated', it is classified as 'not rated'. The total amounts presented represent the Company's maximum exposure to credit risk at the reporting date without taking into account any collateral held. The analysis also provides information on the concentration of credit risk.

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The total amount in the tables below represents the Company's maximum exposure to credit risk at the year end.

The Company holds the majority of its cash equivalents in a money market fund managed by Standard Life Investment. This fund was previously internally rated AAA, as it followed the guidelines prescribed by external rating agencies for money market funds seeking to achieve a AAA rating. The fund ceased to follow these guidelines in 2012 and, as a result, it is no longer considered appropriate to designate a AAA rating for this fund. However, the fund continues to invest in a range of counterparties that are externally rated, and uses concentration limits and maturity limits in managing its exposure.

Assets are deemed to be past due when a counterparty has failed to make a payment when contractually due. An allowance account is not used by the Company to record separately the impairment of assets by credit losses. Instead, the carrying amount of an asset subject to any impairment charge is directly reduced by the amount of the impairment. At the reporting date, all financial assets were neither past due nor impaired.

(c) Liquidity risk

The Group defines liquidity risk as the risk that the Group or individual Group companies, although solvent, do not have sufficient financial resources avaliable to meet their obligations as they fall due, or can secure them only at excessive cost.

Appetites for liquidity risk are managed through the Group Liquidity Risk Policy. The Company defines its own Liquidity Risk Policy adopting relevant minimum standards an limits contained within the Group Policy. The Company is required to manage risk in accordance with the Group policy and to take mitigating action as appropriate to operate within defined risk appetites.

At the reporting date, the cash flows payable by the Company under other financial liabilities (refer to note 16) have a remaining contractual maturity of within 1 year and the cash flows payable by the Company under borrowings (refer to note 14) have a remaining contractual maturity of greater than 1 year an less than 5 years.

(d) Foreign currency risk

The company defines foreign currency risk as the risk that the value of overseas operations and profits generated by them falls in Sterling terms.

The Company's financial assets are held in local currency of its operational gegraphic locations, primarily to assist with the matching of liabilities.

The Company's principle sources of foreign currency risk arises from the Company'S branch operations in Ireland, Dubai, Hong Kong and Singapore. These branches transact with the UK branch and in the case of Hong Kong and Singapore are expected to make a profit which will be exposed to interest rate fluctuations. The branch in Germany does not transact directly with the UK branch and is not expected to make profits.

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(e) Operational risk

The Group defines operational risk as the risk of loss, or adverse consequences for the Company business, resulting from inadequate or failed internal processes, people or systems, or from external events.

Operation risk is managed through the Group Operational Risk Policy. The Company has adopted the relevant minimum standards and limits contained within the Group policy. The Company is required to manage risk in accordance with the policy and to take mitigating action as appropriate to operate within appetites.

The types of operational risk that the Company is exposed to are identified using the following operational risk categories:

Activities undertaken to ensure the practical operation of controls over financial risks, that is, market, credit liquidity and demographic an expense risk, are treated as an operational risk.

Operational risk exposures are controlled using one or a combination of the following: modifying operations such that there is no exposure to the risk, accepting exposure to the risk an choosing not to control the risk, or accepting exposure to the risk an controlling the exposure by risk transfer or risk treatment. The factors on which the level of control an nature of the controls implemented are based include:

Control Self Assessment (CSA) is a monitoring activity where business managers assess the operation of the controls for which they are responsible an the adequacy of these controls to manage key operational risks and associated business processes. The assessment completed by business managers is validated an challenged by the 'second line of defence'. Independent assurance as to the effectiveness of the CSA process is provided by Group Internal Audit in its role of 'third line of defence'. The results of CSA are reported through the risk governance structure.

The assessment of operational risk exposures is performed on a qualitative basis using a combination of impact an likelhood, and on a quantitative basis using objective an verifiable measures. The maximum amount of operational risk the Group is willing to retain is defined using both quantitative limits, for example financial impact, and also qualitative statements of principle that articulate the event, or effect, that needs to be limited.

The operational risks faced by each business unit and its exposure to these risks forms its operational risk profile. Each business unit is required to understand and review its profile based on a combination of the estimated impact and likelihood of risk events occurring in the future, the results of CSA and a review of risk exposure relative to approved limits.

The impact of a new product, a signifacant change, or any one-off transaction on the operational risk profile of each business unit is assessed and managed in accordance with established guidelines or standards.

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19. Change in operating assets and liabilities

20. Commitments

The Company has entered into commercial non-cancellable leases on certain equipment where it is not in the best interest of the Company to purchase these assets. Such leases have varying terms, escalation clauses and renewal rights.

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

21. Employee share-based payments

The Company does not operate any share-based payment schemes. During the year the Company's ultimate parent company. Standard Life plc, operated a number of share-based payment schemes, the majority of which are equity settled. Details of these arrangements effecting the Company are as follows:

(i) Long Term Incentive Plan (LTIP) and Restricted Stock Plan (RSP)

Long Term Incentive Plan (LTIP)

Details of the LTIP are set out in the Directors' remuneration report in the Group's annual report and accounts. Under the terms of the plan, share options are awarded to executives and senior management based on performance results of the Group over a three year period.

The performance period and grant date for the active LTIP schemes are as follows:

The performance target for the 2010 plan is based on the Group's operating profit for the year ended 31 December 2012.

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The performance targets for the three years of the 2011 and 2012 plans are in two parts. Part I is based on the Group's operating profit for the year ended 31 December 2013 or 31 December 2014. Part II is based on the Group's performance against its 2013 or 2014 Group scorecard. The plans also have personal performance targets.

Restricted Stock Plan (RSP)

RSP is an additional share option plan which can be awarded to executives and senior management. The conditions and vesting period attached to RSP grants are tailored to the individual award. RSP may be granted at any time during the year.

(ii) Share incentive plans

The Group operates share incentive plans, allowing employees the opportunity to buy shares from their salary each month. The maximum purchase that an employee can make in any year is £1,500. The Group offers to match the first £25 of shares bought each month. The matching shares awarded under the share incentive plan are granted at the end of each month. The matching shares are generally subject to a three year service period and an employee may forfeit some or all of the matching shares if they leave the Group prior to completing three years of service from the date of grant.

(iii) Annual bonus deferred shares

Details of the annual bonus are set out in the Director's remuneration report of the Group Annual Report and Accounts. The majority of the members of the executive and senior management including Executive Directors participate in the Group annual bonus. Under the terms of the 2011 and 2012 annual bonus, half of any bonus earned by the executive Directors and members of the Executive team above 25% of salary will be settled in shares which are deferred for a period of two years, subject to the deferred amount being worth 10% or more of salary.

The value of any dividends paid on those shares over the two year deferred period will be added to the value of the deferred bonus. Should an employee resign during the two year deferral period, some or all of the deferred shares will be forfeited.

The share-based payment expense in respect of the deferred shares has been measured with reference to the proportion of the annual bonus entitlement to be settled in deferred shares an will be recognised over the vesting period, which includes a two year deferred period. The share-based payment expense in respect of annual bonus deferred shares amounted to £703k (2011: £1,557k).

The number of instruments granted in relation to the year to 31 December 2012 was 365,172 (2011:1,016,890) and has been calculated with reference to the mentary value of the annual bonus to be settled in deffered shares, divided by the average Standard Life plc share price during the month of December 2012.

(iv) Save-as-you-earn

The Group operates Save-as-you-earn (SAYE) plans, which allow eligible employees in the UK and Ireland the opportunity to save a monthly amount from their salaries, over either a three or five year period, which can be used to purchase shares in the Company. The shares can only be purchased at the end of the saving period at a Standard predetermined price. Employees are granted a predetermined number of options based on the monthly savings amount and duration of their contract. The conditions attached to the options are that the employee remains in employment for three years after the grant date of the options and that the employee satisfies the monthly savings requirement. Settlement will be made in the form of shares.

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(a) Long Term Incentive Plan (LTIP) and Restricted Stock Plan (RSP)

The terms an conditions attaching to each of the ongoing arrangements are set out in the table below. The assumptions disclosed are based on the weighted average number of awards.

The share options granted under LTIP and RSP will have a nil exercise price and settlement will be made in the form of shares. Both the weighted average contractual life and expected option life a grant date is 3.5 years. No departures are expected at the grant date, with any leavers being accounted for on departure.

The plans include the entitlement to the receipt of dividends in respect of awards that ultimately vest between the date of grant and the vesting date.

As at 31 December 2012, 13,480,456 (2011: 13,345,825) options were outstanding under LTIP and RSP. The weighted average remaining expected life at 31 December 2012 was 1.29 years (2011: 1.36 years), while the weighted average remaining contractual life was 1.79 years (2011: 1.86 years).

A reconciliation of movements in the number of share options granted to executives and senior management employed by the Company is set out in the table below.

The options exercised during 2012 relate to the 2009 plan. The performance conditions attached to the 2008 LTIP plan were not met and therefore the outstanding options under this plan did not vest during 2011 as scheduled.

The weighted average share price at the time of exercise of options which were exercised during the year was 227p (2011: 204p). The weighted average exercise price was nil.

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(b) Share Incentive plans

The terms and conditions attaching to each of the ongoing arrangements are set out in the table below and are based on the weighted average number to awards.

¹ Included in the number of instruments granted are 13,976 (2011: 19,482) rights to shares granted to eligible employees in Germany and Austria

At the grant date all awards are expected to vest. No departures are expected at the grant date, with leavers being accounted for on departure.

(c) Sharesave

As at 13 September 2012 further share options were granted under new sharesave schemes. On this date ther were 759,504 (2011: 5,997,056) options granted with a fair value of 58p (2011: 34p).

As at 31 December 2012, 6,280,928 (2011: 5,956,480) options were outstanding. The remaining expected and contractual lives ere 2.80 years (2011: 3.71 years) and 3.30 years (2011: 4.21 years) respectively. All are exercisable within six months of vesting; as at 31 December 2012, exercise prices ranged from 157p to 228p.

The fair value of options granted in 2012 was determined using a standard Black Scholes option-pricing model that included: expected volatility of shares determined at the grant date based on historic volatility over a period of up to 5 years, option term equal to the vesting period of each scheme (either 3 or 5 years), a dividend yield assumption (given that the employee forgoes all rights to dividends); and a risk free interest rate determined fromm the UK GBP swap rate (or local currency equivalent).

A reconciliation of movements in the number of share options granted to eligible employees under sharesave is set out in the tabel below:

(d) Employee share-based payment expense

The amounts recognised as an expense in the Company's financial statements in relation to the share options granted to executives and senior management are as follows:

Additionally, the Group incurred an expense for cash-settled share-based payment schemes of £460k in 2012 (2011: £nil). The liability for cash-settled share-based payments outstanding at 31 December 2012 is £760k (2011: £nil).

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22. Related party transactions

(a) Parent and ultimate controlling party

The Company's parent and ultimate controlling party is Standard Life plc which owns 100% of the Company's shares. Copies of the Annual Report and Accounts of the ultimate controlling party can be obtained at www.standardlife. com.

(b) Transactions with and balances from/to related parties

In the normal course of business, the Company enters into transactions with related parties that relate to the provisions of staff, physical infrastructure and support services to other companies within the Group.

Details of transactions carried out by the Company during the year with related parties are as follows:

The majority of transactions shown as purchases from Group companies relate to rental costs.

The year end balances arising from transaction carried out by the Company with related parties are as follows:

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(c) Compensation of key management personnel

Key management personnel, being those having authority and responsibility for planning, directing and controlling the activities of the Company, comprise 4 people (2011: 5 people) and include all directors of the Company.

Compensation of key management personnel is:

A number of the key management personnel of the Company are also key management personnel of a number of entities within the Standard Life Group. For the purposes of this note an apportionment of the total compensation has been made based on an estimate of the services rendered.

Of the amounts disclosed above the following is in respect of directors of the Company:

There are no directors with retirement benefits accruing under a defined benefit scheme operated by the parent undertaking.

(d) Transactions with/from and balances from/to key management personnel

All transactions between the key management and the Company during the year are on commercial terms which are equivalent to those available to all employees of the Company.

During the year to 31 December 2012 key management personnel contributed £424k to products sold by the Group (2011: £396k). These contributions relate primarily to life and pensions premiums.

Key management personnel hat no outstanding loans at 31 December 2012 (2011: £nil).

23. Contingent liabilities

The Company is subject to legal proceedings in the normal course of business. White it is not practicable to forecast or determine the final results of all pending or threatened legal proceedings, management does not believe that such proceedings (including litigations) will have a material effect on the results and financial position at the Company.

24. Investments in subsidiaries

The Company has one subsidiary, Standard Life Premises Limited, a property services company incorporated in Scotland of which 100% of interest is held.

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