Standard Life plc. (Incorporated and registered in Scotland with registered number SC286832)

Transcription

1 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you are recommended to seek your own financial advice immediately from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser duly authorised under the Financial Services and Markets Act 2000, if you are in the United Kingdom, or from another appropriately authorised independent financial adviser. If you sell or transfer or have sold or otherwise transferred all of your Shares, please forward this document and the accompanying documents as soon as possible to the purchaser or transferee or to the bank, stockbroker or other agent through or to whom the sale or transfer was effected, for onward transmission to the purchaser or transferee. If you receive this Circular from another Shareholder, as a purchaser or transferee, please contact the Registrar for a Voting Form. Any person (including, without limitation, custodians, nominees and trustees) who may have a contractual or legal obligation or may otherwise intend to forward this document to any jurisdiction outside the United Kingdom should seek appropriate advice before taking any action. The distribution of this Circular and any accompanying documents into jurisdictions other than the United Kingdom may be restricted by law. Any person not in the United Kingdom into whose possession this Circular and any accompanying documents come should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Standard Life plc (Incorporated and registered in Scotland with registered number SC286832) Proposed disposal of Standard Life s Canadian business and Notice of General Meeting A notice convening a General Meeting of Standard Life to be held at 2pm on 3 October 2014 at 155 Bishopsgate, London EC2 is set out at the end of this document. Where you have received this document from Standard Life in hard copy, a Voting Form for use at the General Meeting is enclosed. Otherwise, a Voting Form will either have been sent to you in hard copy or is available electronically through Whether or not you intend to attend the General Meeting in person, please complete, sign and return the Voting Form in accordance with the instructions printed on it as soon as possible but, in any event, so as to be received by the Registrar no later than 6pm on 1 October Alternatively, a Voting Form can be completed electronically through If you hold your Shares in uncertificated form (i.e. in CREST) you may appoint a proxy by completing and transmitting a CREST Proxy Instruction in accordance with the procedures set out in the CREST Manual so that it is received by the Registrar (under CREST participant ID RA10) by no later than 6pm on 1 October The time of receipt will be taken to be the time from which the Registrar is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.

2 Completion and submission of the Voting Form or completing and transmitting a CREST Proxy Instruction will not prevent Shareholders from attending and voting in person at the General Meeting if they wish to do so. Members of the Standard Life Share Account who wish to attend and vote in person at the General Meeting must complete, sign and return the Voting Form with their own name in the nominated proxy box. This document is a circular relating to the Disposal which has been prepared in accordance with the Listing Rules and approved by the Financial Conduct Authority. For a discussion of the risks relating to the Disposal, see the discussion of risks and uncertainties set out in Part II (Risk Factors) of this document. This document should be read as a whole. Your attention is drawn to the letter from Sir Gerry Grimstone, the Chairman of Standard Life, which is set out in Part I (Letter from the Chairman of Standard Life) of this document in which the Board of Standard Life unanimously recommends that you vote in favour of the resolution to be proposed at the General Meeting referred to below. No person has been authorised to give any information or make any representations other than those contained in this document and, if given or made, such information or representations must not be relied on as having been so authorised. The delivery of this document shall not, under any circumstances, create any implication that there has been no change in the affairs of Standard Life since the date of this document or that the information in it is correct as of any subsequent time. J.P. Morgan Limited (which conducts its UK investment banking activities as J.P. Morgan Cazenove), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Standard Life and for no one else in connection with the Disposal and will not regard any other person (whether or not a recipient of this document) as a client in relation to the Disposal and will not be responsible to anyone other than Standard Life for providing the protections afforded to clients of J.P. Morgan Cazenove or for affording advice in relation to the Disposal, the contents of this document or any transaction, arrangement or other matter referred to in this document. This document contains certain forward-looking statements relating to the Group, the Retained Group, the Target Group and the Disposal, including with respect to certain of Standard Life s plans and its current goals and expectations relating to its future financial condition, performance, results, strategy and objectives. Statements containing the words believes, intends, should, expects, plans, pursues, seeks and anticipates (or negatives thereof), and variations thereof or words of similar meaning, are forwardlooking. By their nature, all forward-looking statements involve assumptions, risk and uncertainty because they relate to future events and circumstances which are beyond Standard Life s control including, among other things, United Kingdom domestic and global economic and business conditions, market-related risks such as fluctuations in interest rates and exchange rates, and the performance of financial markets generally; the policies and actions of regulatory authorities, the impact of competition, inflation and deflation; experience in particular with regard to mortality and morbidity trends, lapse rates and policy renewal rates; the timing, impact and other uncertainties of future acquisitions or combinations within relevant industries; and the impact of changes in capital, solvency or accounting standards, and tax and other legislation and regulations in the jurisdictions in which Standard Life and its affiliates operate. As a result, Standard Life s actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in the forward-looking statements and no assurances can be given that the forwardlooking statements in this document will be realised. No representation or warranty is made as to the achievement or reasonableness of such forward-looking statements. Any forward-looking statements made herein speak only as of the date they are made. Except as required by the Financial Conduct Authority, the London Stock Exchange or applicable law, Standard Life expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this document to reflect any change in Standard Life s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Capitalised terms have the meaning ascribed to them in Part VII (Definitions) of this document. 2

3 CONTENTS EXPECTED TIMETABLE OF PRINCIPAL EVENTS 4 PART I LETTER FROM THE CHAIRMAN OF STANDARD LIFE 5 PART II RISK FACTORS 16 PART III PRINCIPAL TERMS OF THE DISPOSAL 19 PART IV FINANCIAL INFORMATION RELATING TO THE TARGET GROUP 24 PART V UNAUDITED PRO FORMA FINANCIAL INFORMATION RELATING TO THE GROUP 28 PART VI ADDITIONAL INFORMATION 33 PART VII DEFINITIONS 43 NOTICE OF GENERAL MEETING 47 3

4 EXPECTED TIMETABLE OF PRINCIPAL EVENTS Posting of this Circular 10 September 2014 Latest time and date for receipt of Voting Forms or CREST Proxy Instructions from Shareholders and members of the Standard Life Share Account for the General Meeting 6pm on 1 October 2014 General Meeting 2pm on 3 October 2014 Expected date of completion of Share Disposal (subject to approvals) First quarter of 2015 NOTES: Unless otherwise stated, references to times in this Circular are to London time. Future dates are indicative only and are subject to change by Standard Life, in which event details of the new times and dates will be notified to the Financial Conduct Authority and, where appropriate, Shareholders. 4

5 PART I LETTER FROM THE CHAIRMAN OF STANDARD LIFE (Incorporated and registered in Scotland with registered number SC286832) Directors Sir Gerry Grimstone, Chairman David Nish, Executive Director and Chief Executive Keith Skeoch, Executive Director and Chief Executive of Standard Life Investments Luke Savage, Executive Director and Chief Financial Officer Pierre Danon, Non-Executive Director Crawford Gillies, Non-Executive Director David Grigson, Non-Executive Director Noel Harwerth, Non-Executive Director John Paynter, Senior Independent Non-Executive Director Lynne Peacock, Non-Executive Director Martin Pike, Non-Executive Director Registered Office Standard Life House 30 Lothian Road Edinburgh EH1 2DH 8 September 2014 To: Standard Life Shareholders Dear Shareholder, 1. Introduction Proposed disposal of Standard Life s Canadian business On 3 September 2014, the Board announced that Standard Life had entered into an agreement with respect to the sale of its Canadian business, comprising Standard Life Group s Canadian long-term savings and retirement, individual and group insurance business (Standard Life Financial) and Canadian investment management business (Standard Life Investments Inc.), to the Purchaser, a wholly-owned subsidiary of Manulife, for a total cash consideration of C$4.0bn (equivalent to 2.2bn) payable on completion of the sale. The principal terms of this agreement are described in more detail in Section 4 below. Standard Life Group s global asset management business, Standard Life Investments, has also entered into a Global Collaboration Agreement with Manulife. The Disposal is conditional upon the approval of Shareholders at the General Meeting, and is also conditional upon, inter alia, approval from certain Canadian regulatory authorities, including OSFI, the Canadian Minister of Finance and the Canadian Competition Bureau. Following completion of the Disposal, Standard Life expects to return 1.75bn of capital (equivalent to 73p 1 per share) to Shareholders by way of a B/C share scheme (the Return of Capital ). Following the Return of Capital, Standard Life intends to carry out a share consolidation. The Return of Capital will require Shareholder approval, which the Board is expecting to seek in Q2 2015, following the completion of the 1 The per share figure is based on the current issued share capital. If the shares in issue increase prior to the Return of Capital, then the per share figure may reduce. 5

6 Disposal. The Return of Capital is not subject to regulatory approval but Standard Life will seek nonobjection from the relevant regulators. The Disposal, if completed, is of sufficient size relative to the Group to constitute a class 1 transaction for Standard Life under the Listing Rules and is therefore conditional upon, among other things, the approval of Shareholders. A General Meeting is to be held at 155 Bishopsgate, London EC2 at 2pm on 3 October 2014 for the purpose of seeking such approval. A notice convening the General Meeting, at which the Disposal Resolution will be proposed, is set out at the end of this Circular. This Circular sets out the proposed terms of the Disposal, including the background to and reasons for the Disposal, and explains why the Board considers the approval of the Disposal Resolution to be in the best interests of Standard Life and Shareholders as a whole. 2. Background to and reasons for the Disposal Standard Life Group s global investment expertise supported by its own distribution and strategic alliances globally means it is ideally positioned to deliver value for customers and clients and grow returns for Shareholders. The Group s simple business model remains unchanged: increasing assets, maximising revenue and lowering unit costs while optimising the balance sheet. Standard Life Group has been present in Canada for over 180 years and the Canadian long-term savings business is one of the oldest and most successful in the country. In recent years, management has been pursuing a strategy to re-orientate the business of Standard Life Financial towards a less capital intensive, fee-based revenue business, which has been consistent with the Group s overall strategy. Excellent progress has been made against this strategy recently. Standard Life Financial s total assets under administration were C$52bn at 30 June 2014, with fee-based assets under administration of C$33bn, up 10% over the last six months. Standard Life Financial s operating profit before tax in H was 69m, up 37%, with fee-based revenue up 21% compared with H (both in constant currency). Disciplined cost management has allowed continued investment for growth in fee based business without compromising profitability. Standard Life Financial has also had a strong track record of cash generation for the Group, with cumulative net dividends of C$1,054m paid since The Board believes that the corporate pensions and retail savings businesses in Canada are attractive but highly competitive, where a broad offering, strong distribution and low unit costs are increasingly critical to continued success. The Board believes the Disposal to a domestic Canadian party that can fully benefit from the combination with the Target Group is more likely to maximise value for Shareholders than retaining the business and pursuing an independent strategy in Canada. The Disposal includes the disposal of Standard Life Investments Inc., reflecting its operational interdependence with the insurance business. The Disposal is consistent with Standard Life Group s strategy and continued focus on growing fee-based businesses. The Disposal reduces Standard Life Group s exposure to spread risk business and the expanded relationship with Manulife deepens Standard Life Investments access to global distribution. The Global Collaboration Agreement with Manulife will seek to strengthen Standard Life Investments global distribution presence in Canada, the US and Asia. Standard Life expects that the relationship will more than treble Standard Life Investments assets under management distributed by Manulife (H1 2014: C$6bn) within three years of completion of the Disposal, accelerating growth in assets and high quality fee-based revenues. Following the Disposal and the acquisition of Ignis earlier this year, Standard Life Investments will manage 156bn of third party assets under management globally, 174% up from the start of

7 3. Key benefits of the Disposal - Achieves highly attractive value for Shareholders The agreed sale price of C$4.0bn ( 2.2bn) represents significant value for Shareholders and realises a oneoff IFRS gain on sale of 1.2bn 2. The price implies a price earnings multiple to forecast 2014 operating profit after tax of 19.5x 3 and a price to book value multiple of 1.9x. 4 These multiples compare favourably with comparable listed peers in Canada. - Global Collaboration Agreement significantly deepens Standard Life Investments global distribution reach As part of the Disposal, Standard Life Investments has entered into a Global Collaboration Agreement with Manulife. Through this relationship, Manulife will seek to distribute Standard Life Investments funds in Canada, the US and Asia, deepening Standard Life Investments distribution reach. The relationship is expected to treble Standard Life Investments assets under management distributed by Manulife (H1 2014: C$6bn) within three years. The new Global Collaboration Agreement builds on Standard Life Investments existing, highly successful relationship with John Hancock in the US, which has generated assets under management of US$5.6bn over the last three years. Standard Life Group and Manulife will also explore other potential opportunities for collaboration between their respective investment capabilities and distribution platforms. It is expected there may be opportunities for Standard Life Group to seek to generate up to C$3bn of assets under management for Manulife. Following completion of the Disposal, Standard Life Investments intends to set up a new office in Toronto to continue to serve its institutional clients locally. - Strengthened capital position enables an expected 1.75bn Return of Capital The Disposal strengthens the Group s capital position following receipt of expected net proceeds of 2.2bn. This will enable the Group to: (A) (B) return an expected 1.75bn of capital to Shareholders; and retain the remaining net proceeds for general corporate purposes. Standard Life Financial s business includes a relatively capital-intensive book of legacy spread risk business; as a result, the Disposal will substantially reduce the Group s overall capital requirements, volatility and exposure to market risk. 2 IFRS gain on sale estimated based on the book value as at 30 June 2014 and the estimated net proceeds. The actual IFRS gain on sale will depend on the book value as at the closing of the Disposal and the actual net proceeds received. 3 Based on the guidance for operating profit before tax of 155m in 2014 given at the time of the results for the half year ended 30 June 2014 and an assumed tax rate of 26.5%. 4 Based on book value of 1,146m as at 30 June

8 Standard Life Group s IGD surplus is expected to be enhanced by the Disposal. As at 1 July 2014, the Group s estimated IGD surplus following the acquisition of Ignis was 3.4bn; assuming the Disposal and Return of Capital had occurred on 1 July 2014, the Group s estimated IGD surplus would have been 3.2bn. - Enhances Standard Life Group s growth, earnings and cash profile The Disposal enhances the Group s medium-term earnings profile. (A) (B) The Group s fee-based revenue model will be enhanced by the Disposal. Since 2010, feebased revenues (excluding the Canadian business) have grown at an annual growth rate of 9%, 5 and would have represented 89% of total Group revenues for the six months ended 30 June 2014, had the Disposal occurred prior to this period. The Board believes that the Disposal and Return of Capital, together with the acquisition of Ignis announced earlier this year, will be accretive to Group operating earnings per share. 6 Following the proposed share consolidation, the Disposal and Return of Capital together are expected to be broadly neutral to operating earnings per share. 7 The growth prospects of Standard Life Group s core businesses are strong, and will be further enhanced by the new Global Collaboration Agreement with Manulife. (A) (B) (C) Standard Life Investments continues to deliver excellent investment performance for its clients, while expanding its investment capabilities and distribution reach, both globally and across a wider client base. The UK business is positioned to benefit from regulatory, market and demographic changes through its advanced technology, platforms and investment propositions which meet the needs of its retail and corporate customers and their advisers. The Group s joint ventures in India and China are well positioned for growth. Standard Life Group s simple business model of global investment expertise supported by its own distribution and strategic alliances globally means it is ideally positioned to deliver value for customers and clients and grow returns for Shareholders. - Standard Life intends to maintain its progressive dividend policy Following the Disposal and Return of Capital (and subsequent share consolidation), it is the Board s intention that Standard Life s progressive dividend policy of growth in dividend per share will be maintained. This is consistent with Standard Life s unbroken record of annual growth in dividend per share since listing in 2006 and underpinned by the Group s growth prospects. 5 Compound annual growth rate based on fee based revenue (excluding Standard Life Financial) for the half year ended 30 June 2014 of 654m compared with the full year ended 31 December 2010 of 973m. 6 Calculated as if the Disposal and Return of Capital had both completed at the beginning of the relevant financial period with the share consolidation ratio set by reference to the current share price of 383 pence as at 2 September See footnote 6 above. 8

9 4. Principal terms and conditions of the Disposal The Share Disposal Agreement between Standard Life, the Seller (one of Standard Life s wholly-owned subsidiaries) and the Purchaser has been entered into, pursuant to which the Seller has agreed to sell shares in Standard Life Financial and Standard Life Investments Inc., the Group s asset management subsidiary in Canada. Pursuant to the Share Disposal Agreement, a Business Transfer Agreement is to be entered into between Standard Life Assurance and the Purchaser and one or more affiliates of Manulife under which Standard Life Assurance would agree to transfer the business of its Canadian branch to the Purchaser and one or more subsidiaries of Manulife. The Standard Life Assurance Canadian Business is currently fully reinsured to Standard Life Assurance Canada. The Share Disposal is not conditional upon the Business Transfer completing but the Business Transfer is conditional on the Share Disposal completing. The total consideration payable in cash to the Seller by the Purchaser in respect of the Disposal is C$4.0bn ( 2.2bn). The total consideration payable on completion is subject to limited closing adjustments only. The Share Disposal is expected to complete in the first quarter of Completion of the Share Disposal is conditional upon, among other things, obtaining the relevant regulatory approvals in Canada, including from OSFI, the Canadian Minister of Finance, the Canadian Competition Bureau and Ontario and Quebec securities authorities and the approval of the Shareholders at the General Meeting of Standard Life. The Purchaser has committed to making commercially reasonable efforts to obtain such approvals. In the case of the approval by the Canadian Competition Bureau, the Purchaser has agreed to negotiate and implement by way of a consent agreement any remedy required to obtain clearance. In return for the Purchaser agreeing to take such action, and in the event that remedies of a material nature are required by the Canadian Competition Bureau, Standard Life has agreed to pay to the Purchaser an amount related to the cost to the Purchaser of such remedies up to a maximum of 10% of the total consideration for the Disposal. Further details of the Disposal Agreements are set out in Part III (Principal Terms of the Disposal) of this Circular. 5. Key information on the Global Collaboration Agreement As part of the Disposal, Standard Life Investments has entered into a Global Collaboration Agreement with Manulife. Through this relationship, Manulife will seek to distribute Standard Life Investments funds in Canada, the US and Asia, deepening Standard Life Investments distribution reach. The relationship will seek to cover a broad range of Standard Life Investments investment capabilities including global absolute return, equities and fixed income, which are expected to be distributed through Manulife s retail and wholesale channels, but also has the potential to include investments by Manulife s general account. Standard Life Investments and Manulife will also explore other potential opportunities for collaboration between their respective investment capabilities and distribution platforms and it is expected there may be opportunities for Standard Life Investments to seek to generate up to C$3bn of assets under management for Manulife. The Global Collaboration Agreement is expected to more than treble Standard Life Investments assets under management distributed by Manulife within three years of completion of the Disposal. Currently, Standard Life Investments manages US$5.6bn of assets under management through its existing, highly successful relationship with John Hancock, the US unit of Manulife. 6. Financial effects of the Disposal and use of proceeds On completion of the Disposal, the Group is expected to receive net cash proceeds (after estimated transaction costs) of approximately 2.2bn, representing approximately 24% of Standard Life s market capitalisation as at 2 September

10 Standard Life intends to return 1.75bn (equivalent to 73p 8 per share) to Shareholders based in the UK by means of a B/C share scheme alongside a share consolidation. The expected remaining net proceeds of 0.45bn will be retained for general corporate purposes. The planned Return of Capital to Shareholders follows the special dividend of 302m in respect of 2012, the acquisition of Newton s private client business in 2013 and Ignis in These steps, and the continuation of the Group s progressive dividend policy, further demonstrate Standard Life s focus on disciplined deployment of capital resources. The Group will continue to monitor regularly its balance sheet, including the appropriate level of capital, liquidity and debt, but also taking into account opportunities to further invest in and grow the Group s businesses. The Disposal is expected to generate a one off IFRS gain on sale of 1.2bn. 9 Had the Disposal and the Return of Capital occurred on 30 June 2014, the pro forma net assets of the Group would have been 3.8bn compared with 4.6bn. The Disposal is expected to enhance the capital strength of the Group, thus enabling Standard Life to effect the Return of Capital to Shareholders. Standard Life Group s IGD surplus is expected to be enhanced by the Disposal. As at 1 July 2014, the Group s estimated IGD surplus following the acquisition of Ignis was 3.4bn; assuming the Disposal and Return of Capital had occurred on 1 July 2014, the Group s estimated IGD surplus would have been 3.2bn. On the same basis, the Group s debt leverage ratio would rise from 31% to 32% of total capital as at 30 June The Board believes that the Disposal and Return of Capital, together with the acquisition of Ignis announced earlier this year, will be accretive to Group operating earnings per share 10. Following the proposed share consolidation, the Disposal and Return of Capital together are expected to be broadly neutral to operating earnings per share Information on the Canadian business Standard Life Financial provides long-term savings, investment and insurance solutions to more than 1.4 million Canadians, including group retirement and insurance plan members. Standard Life Financial is Standard Life s largest regional operation outside the UK with assets under administration of 28.3bn as at 30 June The Disposal also comprises Standard Life Investments domestic operations in Canada with 19.1bn of assets under management, of which 12.7bn are managed on behalf of third parties, as at 30 June Summary financial information with respect to the Canadian business (including Standard Life Investments domestic operations in Canada) is set out below: m HY Fee-based revenue Spread risk margin Total income Operating profit before tax Operating profit after tax Profit for the period attributable to equity holders of Standard Life Gross assets 12 28,093 27,312 Net assets 1,146 1,292 Assets under administration ( bn) See footnote 1 above. 9 See footnote 2 above. 10 See footnote 6 above. 11 See footnote 6 above. 12 Gross assets presented for the year ended 31 December 2013 have been restated to show the effect of the change in accounting policy due to the adoption of IFRS 10 Consolidated financial statements and IFRS 11 Joint arrangements for the financial period beginning on 1 January

11 8. Information on Manulife Manulife is a leading Canada-based financial services group with principal operations in Asia, Canada and the US. Clients look to Manulife for strong, reliable, trustworthy and forward-thinking solutions for their most significant financial decisions. Manulife s international network of employees, agents and distribution partners offers financial protection and wealth management products and services to millions of clients. Manulife also provides asset management services to institutional customers. Funds under management by Manulife and its subsidiaries were approximately C$637 billion as at 30 June Manulife s group operates as Manulife in Canada and Asia and primarily as John Hancock in the US. Manulife Financial Corporation trades as MFC on the TSX, NYSE and PSE, and under 945 on the SEHK. Manulife can be found on the Internet at manulife.com. 9. Board, management and employees There are not expected to be any changes to the Board as a result of the Disposal. The Canadian business has, for many years, been run by its local management team, currently including Charles Guay (President and Chief Executive Officer of Standard Life Assurance Canada) and Roger Renaud (President of Standard Life Investments Inc.), who will transfer with the business as part of the Disposal. There are no senior management or employees of the Target Group who are key to the operation of the Retained Group s businesses. The Target Group employed 2,148 members of staff as at 30 June Following the Disposal, it is expected that the total number of employees of the Retained Group will be 6, Return of Capital If the Disposal is approved at the General Meeting and becomes effective, the Board is proposing to return a proportion of the proceeds from the Disposal to Shareholders by way of a B/C share scheme. The Board considered a number of methods for returning capital to Shareholders and, having regard to the differing positions of the Shareholders, concluded that a B/C share scheme would be the most favourable method. In reaching this conclusion, the Board considered in particular the position of retail shareholders and the benefits of completing the Return of Capital to Shareholders within a fixed time frame. In conjunction with the Return of Capital, the Board proposes to implement a share consolidation. Under the B/C share scheme as it is currently to be implemented, all Shareholders will be issued unlisted, non-voting bonus shares, which will either be redeemed by Standard Life for cash or the holders will receive a special dividend (those shares thereafter being cancelled or repurchased), depending on Shareholder elections and subject to applicable securities laws. There will be no difference in the amount of cash received by Shareholders as a result of their election, although the tax treatment may differ. Given the scale of the Disposal and the intended Return of Capital, Standard Life intends to effect a consolidation of its ordinary share capital. The intended Return of Capital is subject to Shareholders approving the relevant resolutions at the time they are proposed and the obtaining of customary clearances. The Return of Capital will require Shareholder approval, which the Board is expecting to seek in Q2 2015, following the completion of the Disposal. The Return of Capital is not subject to regulatory approval but Standard Life will seek the non-objection of the relevant regulators. 11

12 11. Dividend policy Following the Disposal, Standard Life will continue to pursue a progressive dividend policy, by reference to the per share dividend paid in recent years, taking account of market conditions and the Group s financial performance at the time. As a result of the proposed share consolidation in connection with the Return of Capital, the number of shares in issue will reduce, such that the aggregate cost of the dividend will reduce. The Group intends to announce its 2014 final dividend, the amount of which has yet to be determined, with the Group s full year results for 2014, on 20 February Standard Life declared an interim dividend of 5.60 pence per share with its interim results on 5 August 2014 which will be paid to Shareholders on 21 October 2014 to Shareholders on the register on 12 September Exchange rate The Consideration will be received by the Seller in Canadian Dollars. References in this Circular to the expected proceeds and other items relating to the Disposal in Sterling have been converted from the Canadian Dollar amount applying an exchange rate of 1.80:1, being the closing UK rate as published by close of business on 2 September Standard Life pursues a hedging strategy in relation to its Canadian business, to manage associated exchange rate volatility. In line with this strategy, 100% of the expected transaction proceeds have been hedged. 13. Current trading and future prospects Standard Life Group issued its results for the half year ended 30 June 2014 on 5 August It contained the following statement on current trading and future prospects: Our UK business is capitalising on being shaped and positioned to benefit from regulatory, market and demographic changes. This, combined with our investment expertise and focus on providing value for our customers, is driving demand for our propositions across the retail, workplace, institutional and wholesale channels. Our auto enrolment propositions continue to prove popular and we expect to add over 300,000 new corporate customers in 2014, establishing new valued and lasting relationships. Standard Life Investments remains focused on delivering excellent investment performance, expanding its investment capabilities and increasing its distribution channels and geographic reach. This is reflected in a robust pipeline of institutional business and continued demand for our wholesale propositions. For guidance, we expect two large very low revenue margin mandates, totalling c 2.3bn of AUM, to disinvest in Q with a negligible impact on both revenue and profit. The integration of lgnis has started well and although it is at an early stage we see good momentum in the business. The acquisition enhances the strategic position of Standard Life Investments and will be earnings accretive in its first full year. Canada continues to build momentum in its fee based propositions. Its reported profitability will continue to be impacted by the weakness in the Canadian Dollar. Should the Canadian Dollar exchange rate seen in the first half of the year persist for the duration of the year we expect a negative impact of c 25m on previous guidance of 180m annual operating profit in Canada. Our Asia and Emerging Markets business is well positioned for further growth in the attractive international markets in which it operates. We continue to monitor developments in respect of foreign direct investment rules in India. 12

13 We look forward to the future with confidence as we continue to capitalise on the strong distribution capabilities of our long-term savings businesses and our global investment expertise. We are innovating and driving efficiency to deliver the right propositions and value for our customers. These strengths, combined with our strong balance sheet, mean we can continue to deliver value for customers and grow returns for our shareholders. Profit forecast for the year ended 31 December 2014 The Chief Executive of the Group issued guidance on 5 August 2014 that the operating profit of Standard Life s Canadian business is expected to be around 155m for the full year ended 31 December 2014: In the past we have provided guidance that our on-going run-rate for operating profit in Standard Life s Canadian business of around 180 million would be appropriate. We would repeat that guidance, but would note that performance in 2014 will obviously be impacted by the continued weakness in the Canadian dollar. Average exchange rates were 14% lower in 2014 compared to 2013, and so our guidance of 180 million should translate and be reduced by around 25 million if exchange rates continue to be seen in the second half as existed in the first half. (the Profit Forecast ). Basis of preparation The Profit Forecast has been properly compiled based on the assumptions stated below, on a basis consistent with the accounting policies of the Group and in accordance with the operating profit methodology anticipated to be applicable for the full year ended 31 December The Directors have prepared the Profit Forecast based on the unaudited interims for the six months ended 30 June 2014 and the unaudited forecast results for the six months ended 31 December Assumptions The Directors have prepared the Profit Forecast based on the following assumptions: (A) Factors outside the influence or control of the Directors (i) (ii) (iii) (iv) (v) There will be no material change to macroeconomic, political or legal conditions in the markets or regions in which Standard Life s Canadian business operates that materially affect Standard Life s Canadian business during the six months ended 31 December 2014; There will be no material changes to market conditions within the long term savings and investment sector in which Standard Life s Canadian business operates in the six months ended 31 December 2014 in relation to customer demand or competitive environment; The exchange rates and inflation and tax rates in relation to Standard Life s Canadian business will remain materially unchanged from the prevailing rates; There will be no material change in the operating expenses of Standard Life s Canadian business driven by external parties or regulations; There will be no business disruption that will have a significant impact on Standard Life s Canadian business s operations, customers or financial performance; and 13

14 (vi) There will be no material change in legislation or regulatory requirements impacting Standard Life s Canadian business s operations or accounting policies. (B) Factors within the influence or control of the Directors (i) Aside from the usual trading activities of Standard Life s Canadian business there are no material changes to Standard Life s Canadian business s book of business during the six months ended 31 December Risk factors For a discussion of the risks and uncertainties which you should take into account when considering whether to vote in favour of the Disposal Resolution, please refer to Part II (Risk Factors) of this Circular. 15. General Meeting A notice convening the General Meeting to be held at 2 p.m. on 3 October 2014 at 155 Bishopsgate, London EC2 is set out at the end of this Circular. As a class 1 transaction for the purposes of the Listing Rules, Standard Life requires the approval of Shareholders to proceed with the Disposal. The completion of the Disposal is therefore conditional, among other conditions set out in Part III (Principal Terms of the Disposal) of this Circular, on the passing of the Disposal Resolution at the General Meeting. 16. Action to be taken A Voting Form for use in connection with the Disposal Resolution to be proposed at the General Meeting is enclosed for those Shareholders or members of the Standard Life Share Account who have received this Circular in hard copy. Otherwise, a Voting Form will either have been sent to you in hard copy or is available electronically through Whether or not you intend to be present in person at the General Meeting, you are requested to complete the Voting Form and return it in accordance with the instructions printed on it and as set out in note (a) on page 48 of this Circular. Alternatively, Voting Forms can be completed electronically through Shareholders holding their Shares in uncertificated form (i.e. in CREST) may appoint a proxy by completing and transmitting a CREST Proxy Instruction as set out in notes (a) and (c) on page 48 of this Circular. Apart from completing and submitting the Voting Form (and CREST Proxy Instruction if applicable), you need take no further action. The submission of a Voting Form or CREST Proxy Instruction will not prevent Shareholders from attending the General Meeting and voting in person if they wish. Members of the Standard Life Share Account who wish to attend and vote in person at the General Meeting must complete, sign and return the Voting Form with their own name in the nominated proxy box. 17. Additional information Your attention is drawn to the additional information set out in Part VI (Additional Information) of this Circular. You are advised to read the whole document and not merely to rely on the key summarised information in this letter. 18. Financial Advice The Board has received financial advice from J.P. Morgan Cazenove in relation to the Disposal. In providing their financial advice to the Board, J.P. Morgan Cazenove has relied upon the Board s commercial assessment of the Disposal. 14

15 19. Directors recommendation The Board considers the Disposal and the Disposal Resolution to be in the best interests of Standard Life and the Shareholders as a whole. Accordingly, the Board unanimously recommends that you vote in favour of the Disposal Resolution to be proposed at the General Meeting, as the Directors intend to do in respect of their own beneficial holdings of Shares, being in aggregate 4,594,796 Shares, representing approximately 0.19% of Standard Life s issued ordinary share capital, in each case at 5 September 2014 (the latest practicable date prior to the publication of this Circular). Yours sincerely Sir Gerry Grimstone Chairman Standard Life 15

16 PART II RISK FACTORS Prior to making any decision to vote in favour of the Disposal Resolution at the General Meeting, Shareholders should carefully consider, together with all other information contained in this Circular, the specific factors and risks described below. Standard Life considers these to be the known material risk factors relating to the Disposal for Shareholders to consider. The risks described below relate only to the Disposal and are not set out in any particular order of priority. There may be other risks of which the Board is not aware or which it believes to be immaterial which may, in the future, be connected to the Disposal and have a material and adverse effect on the business, financial condition, results of operations or future prospects of the Retained Group after the Disposal (or the Group if the Share Disposal does not take place). 1. Risks related to the Disposal taking place 1.1 Warranties and indemnities given by the Seller The Share Disposal Agreement contains warranties, undertakings and indemnities given by the Seller (and guaranteed by Standard Life) in favour of the Purchaser, which could cause the Retained Group to incur liabilities and obligations to make payments which would not have arisen had the Share Disposal Agreement not been entered into. In particular, the Seller has indemnified the Purchaser against breaches of certain warranties and undertakings. The Business Transfer Agreement is expected to contain warranties, undertakings and indemnities given by Standard Life Assurance in favour of the Purchaser when entered into, which could cause the Retained Group to incur liabilities and obligations to make payments which would not have arisen had the Business Transfer Agreement not been entered into. In particular, Standard Life Assurance is expected to indemnify the Purchaser against breaches of certain warranties and undertakings. If the Seller and/or Standard Life Assurance are required in the future to make payments in respect of these warranties, undertakings or indemnities, this would have an adverse effect on the Retained Group s cash flow and financial situation. The aggregate liability of the Seller and Standard Life Assurance under the indemnification provisions set out in the Share Disposal Agreement and the Business Transfer Agreement is capped at 20% of the Consideration (other than in relation to certain tax liabilities). Further details of the warranties, undertakings and indemnities given are set out in Part III (Principal Terms of the Disposal) of this Circular, including in relation to Standard Life s agreement to pay to the Purchaser an amount related to the cost to the Purchaser of complying with remedies of a material nature required by the Canadian Competition Bureau up to a maximum of 10% of the total consideration for the Disposal. 1.2 Warranties and indemnities given by the Purchaser The Share Disposal Agreement contains certain warranties, undertakings and indemnities given by the Purchaser in favour of the Seller. The Business Transfer Agreement is expected to contain certain warranties, undertakings and indemnities given by the Purchaser (or an associated entity) in favour of Standard Life Assurance. The extent to which the Purchaser will, if at all, be required to make payments in respect of these warranties, undertakings and indemnities is unpredictable. If, however, the entity providing the indemnity suffers financial distress, any payments due to the Seller and/or Standard Life Assurance in respect of such warranties, undertakings and indemnities may be put at risk. 16

17 1.3 Conditions The completion of the Share Disposal is subject to certain conditions as listed in Sections 1.3 of Part III (Principal Terms of the Disposal) of this Circular. The completion of the Business Transfer is expected to be subject to similar conditions (to the extent applicable to the transactions contemplated by the Business Transfer Agreement). There can be no assurance that these conditions will be satisfied or, where relevant, waived. If any condition is not either satisfied or waived, the Share Disposal and/or the Business Transfer (as applicable) will not proceed. 1.4 The Retained Group s operations will be less diversified Following the Disposal, the Retained Group s business will be less diversified, and in particular will have greater reliance on its United Kingdom business. Weak performance in the remaining businesses, or in any particular part of these businesses, may therefore have a proportionately greater adverse impact on the financial condition and credit rating of the Retained Group. 1.5 Pre-closing changes in the Target Group During the period from the signing of the Share Disposal Agreement and Business Transfer Agreement to completion of the Share Disposal and Business Transfer (as applicable), events or developments may occur which could make the terms of the Share Disposal Agreement and/or Business Transfer Agreement less attractive for Standard Life. In particular, a Consideration adjustment mechanism is included in the Share Disposal Agreement. Further details on this mechanism are set out in Section 1.2 of Part III (Principal Terms of the Disposal) of this Circular. The Seller may be obliged to complete the Share Disposal and Standard Life Assurance may be obliged to complete the Business Transfer notwithstanding such events or developments. This may have an adverse effect on the business, financial condition and results of the Retained Group. 1.6 Standard Life may not realise the perceived benefits of the Disposal Standard Life may not realise all of the anticipated benefits of the Disposal set out in Part I (Letter from the Chairman of Standard Life) of this Circular. Standard Life may encounter unforeseen difficulties in achieving these anticipated benefits and/or these anticipated benefits may not materialise. 1.7 Global Collaboration Agreement The Global Collaboration Agreement provides that Standard Life Investments and Manulife will work together in good faith to expand existing collaboration efforts and develop and implement new initiatives of collaboration. However, no assurance can be given that the parties will be able to find such opportunities to collaborate and either party may terminate the agreement without cause or penalty. 2. Risks relating to the Disposal not taking place 2.1 Potentially disruptive effect on the Group If the Share Disposal does not proceed, the Target Group s management and employees may be affected and key management or employees may choose to leave the Target Group. This may have a negative effect on the performance of the Target Group under Standard Life s ownership. There may also be uncertainty for customers of the Target Group as to Standard Life s future intentions for the Target Group. To maintain shareholder value, Standard Life s management would be required to continue to allocate time and resources to the ongoing supervision and development of the Target Group. 17

18 2.2 Loss of shareholder value The Board believes that the Disposal is in the best interests of the Shareholders taken as a whole and that it currently provides the best opportunity to realise an attractive and certain value for the Target Group. If the Disposal does not complete, the value to Standard Life of the Target Group may be lower than can be realised by way of the Disposal and Standard Life s ability to deliver additional tangible shareholder value may be delayed or prejudiced. 2.3 Break Fee If the Share Disposal does not complete, the Seller may, in certain circumstances (as set out in Section 1.7 of Part III (Principal Terms of the Disposal) of this Circular), be liable to pay to the Purchaser certain sums to compensate the Purchaser for the non-completion of the Share Disposal. 2.4 Completion of the Share Disposal before the Business Transfer Completion of the Share Disposal is not conditional on completion of the Business Transfer. It is possible that completion of the Business Transfer may be delayed or may not occur, resulting in potential continuing exposure of Standard Life to the Canadian insurance market and alternative arrangements being required in respect of the Standard Life Assurance Canadian Business. For any period following completion of the Share Disposal where the Business Transfer has not completed, transitional services arrangements will be put in place. 18

19 PART III PRINCIPAL TERMS OF THE DISPOSAL The following is a summary of the principal terms of the Disposal Agreements. As set out in Section 15 of Part VI (Additional Information) of this Circular, the Disposal Agreements are available for inspection by Shareholders. 1. Share Disposal Agreement 1.1 Parties and structure The Share Disposal Agreement was entered into on 3 September 2014 between the Seller, the Purchaser and Standard Life for the sale and purchase, subject to the satisfaction of certain conditions, of the Target Shares. 1.2 Consideration The consideration for the purchase of the Target Shares (the Consideration ) is the sum of C$4.0bn ( 2.2bn), subject to adjustments for: (A) (B) (C) the payment of an additional amount referable to the period between 3 February 2014 and completion of the Share Disposal which is calculated by reference to the prime rate offered from time to time by the Bank of Montreal; the injection of capital into, or payment of distributions by, the Target Group; and the resolution of existing tax litigation in excess or below a targeted settlement amount. 1.3 Conditions to completion The Share Disposal is conditional upon: (A) (B) certain fundamental warranties given by the Seller and the Purchaser (dealing with matters including (but not limited to) title to shares, capacity and solvency) being true and correct at the time of completion of the Share Disposal, except where the failure to be true and correct would not give rise to a Material Adverse Effect in the case of the Seller, or a Purchaser Material Effect in the case of the Purchaser (with each such term having the meaning given to it in the Share Disposal Agreement); compliance by the Seller and the Purchaser with the covenants contained in the Share Disposal Agreement to be performed or complied with before completion of the Share Disposal, except where the failure to do so would not give rise to a Material Adverse Effect in the case of the Seller, or a Purchaser Material Effect in the case of the Purchaser (with each such term having the meaning given to it in the Share Disposal Agreement); (C) no governmental authority of competent jurisdiction having enacted, issued or promulgated or revised any law that would have a material adverse effect on the ability of the parties to consummate the proposed transactions; (D) (E) no change of law taking place between signing and closing that would have a material adverse effect on the ability of the parties to the Share Disposal Agreement to consummate the proposed transaction; the Share Disposal Competition Approval; 19

20 (F) (G) (H) (I) (J) the Share Disposal Insurance Approval; the Share Disposal Ontario and Quebec Securities Approvals; there being no order of a governmental authority enjoining, materially restricting or prohibiting the consummation of the transactions contemplated under the Share Disposal Agreement, nor any legal proceeding pending that would reasonably be expected to enjoin, materially restrict or prohibit consummation of the proposed transactions; the support principle letter delivered by Standard Life to OSFI in respect of the Canadian operations of the Target Group being returned to the Target Group by the Superintendent or OSFI confirming in writing that such letter having been terminated; and the passing of the Disposal Resolution by Shareholders. In the case of the Share Disposal Competition Approval, the Purchaser has agreed to negotiate and implement by way of a consent agreement any remedy required to obtain clearance. In return for the Purchaser agreeing to take such action, and in the event that remedies of a material nature are required by the Canadian Competition Bureau, Standard Life has agreed to pay to the Purchaser an amount related to the cost to the Purchaser of such remedies up to a maximum of 10% of the total consideration for the Disposal. Completion of the Share Disposal is expected to occur on the last business day of that calendar month in which the satisfaction of all of the conditions (other than those which by their nature are to be satisfied at completion) takes place, unless there are less than seven business days until such date, in which case completion will take place on the last business day of the following calendar month. A different completion date may be agreed to in writing by the Purchaser and the Seller. Completion of the Share Disposal is not conditional on completion of the Business Transfer. 1.4 Warranties, indemnities and limitations on liability The Seller has provided such general warranties as are customary for a transaction of this kind to the Purchaser with respect to itself, Standard Life and the Target Group. These warranties relate to, among other things, title, capacity, authority and solvency matters, together with such additional business warranties as are customary for a transaction of this nature. The Seller has agreed to indemnify the Purchaser for: (i) any breach of any representation or warranty of the Seller prior to the date of the Share Disposal Agreement; (ii) any breach of certain fundamental warranties (dealing with matters including title, capacity and solvency) on or prior to completion of the Share Disposal; (iii) certain pre-closing taxes and taxes related to the closing; and (iv) any breach or any non-fulfilment of any covenant or agreement on the part of the Seller contained in the Share Disposal Agreement. The Seller shall not be liable to indemnify any losses (i) in respect of breaches of representations and warranties (other than certain fundamental representations and warranties) for which a notice of claim has not been served on or before the end of the eighteen (18) month period following completion of the Share Disposal, or (ii) in respect of breaches of fundamental representations and warranties for which a notice of claim has not been served on or before the end of the fifth (5th) anniversary of the completion of the Share Disposal or (iii) in respect of breaches of covenants, for which a notice of claim has not been served on or before the offend of the eighteen (18) month period following the date the covenant is to be performed by the Seller. 20

21 No loss will give rise to any individual claim for indemnification against the Seller unless it exceeds C$250,000. No losses will give rise to an indemnification obligation on the Seller unless aggregate losses exceed 1.5% of the Consideration (and then only to the amount of such excess). There is also an aggregate cap on Standard Life s indemnification liability equal to 20% of the Consideration. The thresholds and cap on indemnification apply to all indemnity claims made by the Purchaser under both the Share Disposal Agreement and the Business Transfer Agreement, except that certain tax indemnities are not subject to the threshold or the cap and the threshold and the cap shall not apply to the extent losses arise as a result of wilful breach of this Agreement. Standard Life has guaranteed the payment of all indemnification obligations of the Seller pursuant to the Share Disposal Agreement. 1.5 Termination The Share Disposal Agreement may be terminated: (A) (B) (C) by the mutual written agreement of the Seller and the Purchaser; by written notice from the Purchaser to the Seller where certain conditions to completion have not been fulfilled or waived prior to the Outside Date; by written notice from the Purchaser in the event that: (i) (ii) (iii) (iv) the Board fails to recommend or withdraws, amends, modifies or qualifies any recommendation of the proposed transactions in a manner adverse to the Purchaser; the Board or a committee thereof shall have approved and recommended any alternative proposal from a third party; the Parent breaches its obligations with respect to obtaining approval of the Shareholders and such breach would result in the General Meeting not being held ((c)(i), (ii) and (iii) together being the Board Actions ); or the approval of Shareholders has not been obtained by the Outside Date; (D) (E) by written notice from the Seller to the Purchaser where certain conditions to completion (including approval of Shareholders) have not been fulfilled prior to the Outside Date or a superior proposal from a third party is to be accepted and the Purchaser has not exercised its right to match this proposal under the Share Disposal Agreement; or by written notice from either party to the other parties if the Required Regulatory Approvals have not been obtained on or before the Outside Date or if the approval of Shareholders is not obtained at the meeting at which a vote on the Shareholder approval is taken. 1.6 Exclusive dealings During the period between the date of the Share Disposal Agreement and completion of the Share Disposal, the Seller has undertaken that it and its representatives and affiliates shall (subject to the duties under applicable law of the directors of the Seller or Standard Life) not negotiate with third parties in relation to the sale of the Target Group or its business. The Seller can enter into discussions with an entity that makes an unsolicited alternative offer to that set out in the Share 21

22 Disposal Agreement to clarify the terms of the alternative offer. If the Board determines that an alternative offer is superior to the proposed Disposal, the Purchaser will have the right to match the alternative offer. 1.7 Break Fee If the Share Disposal Agreement is terminated: (A) (B) by the Purchaser as a result of any Board Actions or approval of the Shareholders has not been obtained by the Outside Date but in specific circumstances only in the case where the only condition not fulfilled is the condition regarding approval of the Shareholders; by the Seller if a condition in favour of the Seller is not fulfilled or the approval of Shareholders has not been obtained by the Outside Date, but only in the circumstances where the only condition not fulfilled is the condition regarding the approval of Standard Life s Shareholders; and this is as a result of: (i) (ii) (iii) any Board Actions; Standard Life or the Seller wishing to enter into or entering into a binding written agreement with respect to a superior proposal; or Standard Life or the Seller breaching its obligations with respect to exclusive dealings set out in paragraph 1.6 above; (C) (D) by the Seller if the Seller wishes to enter into or enters into a written agreement with respect to a superior proposal; or by either party if the approval of Standard Life s Shareholders is not obtained at the Shareholders meeting but only in circumstances where the only condition not fulfilled is the condition in the Seller s favour regarding the approval of Shareholders and only if the failure to obtain such approval arises as a result of: (i) (ii) Board Actions; or Standard Life wishing to enter into or entering into a binding agreement with respect to a superior proposal, a fee of 2.5% of the Consideration is payable by the Seller to the Purchaser. Standard Life has agreed to pay the Purchaser a fee equal to a maximum of 2% of the total consideration ( Initial Payment ) if the Share Disposal Agreement is terminated because the approval of the Shareholder of Standard Life is not obtained, this is the only condition that is not satisfied and the circumstances in Section 1.7(B)(i) to (iii) and 1.7(D)(i) to (ii) of this Circular do not apply. If within twelve (12) months following the date of such termination, any of Standard Life, the Seller or any of their affiliates enters into a definitive agreement in respect of or completes one or more alternative proposals in respect of the business the subject of the Share Disposal Agreement from a third party where the alternative proposal was made or publicly announced in good faith before the termination an additional fee equal to 2.5% of the Consideration less the Initial Payment is payable by the Seller to the Purchaser. 1.8 Pre-completion reorganisation Standard Life Investments Inc. is currently owned by Standard Life Investments. Prior to completion of the Share Disposal, Standard Life has undertaken to procure the transfer of all of the shares of Standard Life Investments Inc. to the Seller. 22

23 The Seller currently holds 100% of the Standard Life Financial Shares. Prior to completion of the Share Disposal, the Seller intends to transfer to 10% of the common shares in the capital of Standard Life Financial to Standard Life Assurance. The Seller has undertaken to procure that Standard Life Assurance will transfer any Standard Life Financial Shares it holds to the Purchaser at the same time as the Seller transfers its holding of Standard Life Financial Shares to the Purchaser. 1.9 Pre-completion undertakings The Seller has undertaken to cause the Target Group to operate in the ordinary course of business during the period from the date of the Share Disposal Agreement to completion of the Share Disposal. The Seller has also given a number of specific undertakings to the Purchaser regarding the conduct of business and affairs of the Target Group during the period from the date of the Share Disposal Agreement to completion of the Share Disposal. The parties have also agreed to enter into a Business Transfer Agreement shortly following signing of the Share Disposal Agreement and subject to external confirmation as to structure, that will provide for the assumption reinsurance by one or more subsidiaries of Manulife of all of the policy liabilities in the Standard Life Assurance Canadian Business. A substantially complete form of the Business Transfer Agreement has been attached to the Share Disposal Agreement. Amendments may be required to the form of Business Transfer Agreement depending on final structure. It is intended that the Business Transfer Agreement will have similar conditions of completion (including separate approvals of the Superintendent under the Insurance Companies Act (Canada)) and similar representations and warranties as the Share Disposal Agreement (to the extent applicable to the transactions contemplated by the Business Transfer Agreement). The purchase price for the assets conveyed pursuant to the Business Transfer Agreement will be the fair market value thereof on the completion date of the transactions contemplated by the Business Transfer Agreement, which shall be satisfied by the assumption by one or more subsidiaries of Manulife of the assumed liabilities, including the policy liabilities Non-compete obligations The Share Disposal Agreement includes a covenant from Standard Life not to (without the prior consent of the Purchaser) own, manage or operate any business in Canada or Bermuda for a period of five (5) years after completion of the Share Disposal which competes with the Target Group as it exists on the completion of the Share Disposal. There is an exemption from this covenant for certain asset management activities that can continue to be carried on in Canada and Bermuda. These permitted activities are subject to certain restrictions with respect to existing customers that can be targeted and existing products that can be marketed. There are also certain other customary exceptions from this non-compete obligation, including where Standard Life acquires less than 20% of a business Governing law The Share Disposal Agreement is governed by the laws of the Province of Ontario and the laws of Canada applicable in such Province. 23

24 PART IV FINANCIAL INFORMATION RELATING TO THE TARGET GROUP The financial information presented below relates to the Target Group and has been extracted without material adjustment from the consolidation schedules that support the published audited consolidated financial statements of the Group for the three years ended 31 December 2013 and the unaudited financial statements for the six months ended 30 June The financial information in this Part IV (Financial Information relating to the Target Group) of this Circular has been prepared under IFRS as endorsed by the EU. The accounting policies used are consistent with the accounting policies adopted in Standard Life s published consolidated financial statements for each of the financial years presented. Comparative information has been restated when there has been a change in accounting policy as follows: Š the financial information presented for the year ended 31 December 2013 has been restated to show the effect of the change in accounting policy due to the adoption of IFRS 10 Consolidated financial statements and IFRS 11 Joint arrangements for the financial period beginning on 1 January 2014; and Š the financial information presented for the year ended 31 December 2012 has been restated to show the effect of the change in accounting policy due to the adoption of IAS 19 Employee benefits (revised) for the financial period beginning on 1 January The financial information reflects, therefore, the Target Group s contribution to the Group during this period, applying the relevant accounting policies. The Target Group publishes its own audited financial statements separately and certain of its accounting policies differ from those of Standard Life. Accordingly, the financial information presented below may differ from the equivalent information published by the Target Group. The financial information contained in this Part IV (Financial Information relating to the Target Group) of this Circular does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985 or, as the case may be, section 434(3) of the Companies Act The consolidated statutory accounts of Standard Life in respect of the years ended 31 December 2011, 31 December 2012 and 31 December 2013 have been delivered to the Registrar of Companies. The auditors reports in respect of those statutory accounts for the three years ended 31 December 2013 were unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985 or, as the case may be, section 498(2) or (3) of the Companies Act PricewaterhouseCoopers LLP were the auditors of the Group in respect of the three years to 31 December 2013 and reviewed the financial statements for the six months ended 30 June Shareholders should read the whole of this Circular and not rely solely on the financial information contained in this Part IV (Financial Information relating to the Target Group) of this Circular. 24

25 (A) Historical income statements for the Target Group, prepared under IFRS as endorsed by the EU for the three years to 31 December 2013 and 6 months to 30 June 2014 HY 2014 published m 2013 published m 2013 restated m 2012 published m 2012 restated m 2011 published m Revenue Gross earned premium 773 1,480 1,480 1,309 1,309 1,171 Premium ceded to reinsurers (18) (46) (46) (42) (42) (42) Net earned premium 755 1,434 1,434 1,267 1,267 1,129 Investment return 1,810 2,252 2,258 1,964 1,964 1,364 Fee and commission income Other income Total revenue 2,633 3,837 3,843 3,374 3,374 2,643 Expenses Claims and benefits paid 528 1,141 1,141 1,090 1,090 1,104 Claim recoveries from reinsurers (14) (38) (38) (29) (29) (43) Net insurance benefits and claims 514 1,103 1,103 1,061 1,061 1,061 Change in reinsurance assets and liabilities (51) (58) (58) Change in insurance and participating contract liabilities Change in non-participating investment contract liabilities 902 1,845 1,845 1,025 1, Administrative expenses Restructuring and corporate transaction expenses Other administrative expenses Total administrative expenses Change in liability for third party interest in consolidated funds Finance costs Total expenses 2,509 3,674 3,681 3,069 3,071 2,543 Share of profit from associates and joint ventures (5) Profit before tax Tax expense attributable to policyholders returns Profit before tax expense attributable to equity holders profits Total tax expense Less: Tax attributable to policyholders returns Tax expense/(credit) attributable to equity holders profits Profit for the period Attributable to: Equity holders of Standard Life Non-controlling interests

26 Notes The Group s chosen supplementary measure of performance is operating profit. The Board believes that operating profit provides a more useful indication of the long-term operating performance of the Group. To align the measure of the Group s performance with the long-term nature of the business, operating profit excludes items which create short-term volatility. Operating profit includes the impact of significant actions taken by management during the year. The historical reconciliations of operating profit before tax to profit for the period for the Target Group are presented below for the three years to 31 December 2013 and 6 months to 30 June 2014: HY 2014 published m 2013 published m 2013 restated m 2012 published m 2012 restated m 2011 published m Fee-based revenue Spread/risk margin Total income Acquisition expenses (33) (76) (76) (79) (79) (78) Maintenance expenses (112) (243) (243) (249) (249) (229) Capital management Operating profit/(loss) before tax Tax on operating profit (17) (50) (50) (75) (75) (31) Share of joint ventures and associates tax expense - (1) (1) (4) (4) - Operating profit/(loss) after tax Adjusted for the following items: Short-term fluctuations in investment return and economic assumption changes 50 (70) (70) (19) (19) (72) Restructuring and corporate transaction expenses (1) (2) (2) (3) (3) (2) Other changes in Canada insurance contract liabilities due to resolution of prior years tax matters - (15) (15) Total non-operating items 49 (87) (87) (22) (22) (74) Tax on non-operating items (14) Profit for the period attributable to equity holders of Standard Life

27 (B) Historical statement of net assets for the Target Group, prepared under IFRS as endorsed by the EU for the three years to 31 December 2013 and 6 months to 30 June 2014 HY 2014 published m 2013 published m 2013 restated m 2012 published m 2012 restated m 2011 published m Assets Intangible assets Deferred acquisition costs Investments in associates and joint ventures Investment property 1,316 1,237 1,297 1,356 1,356 1,379 Property, plant and equipment Deferred tax assets Reinsurance assets Loans 2,433 2,682 2,682 2,983 2,983 2,951 Derivative financial assets Equity securities and interests in pooled investment funds 12,502 11,867 11,832 10,673 10,673 9,555 Debt securities 10,384 9,949 10,010 10,710 10,710 10,193 Receivables and other financial assets Other assets Cash and cash equivalents Total assets 28,093 27,259 27,312 27,135 27,133 25,529 Liabilities Non-participating insurance contract liabilities 8,683 8,135 8,135 8,676 8,676 8,564 Non-participating investment contract liabilities 15,522 15,098 15,098 14,409 14,409 13,510 Participating contract liabilities Reinsurance liabilities Third party interest in consolidated funds Borrowings Subordinated liabilities Pension and other post-retirement benefit provisions Deferred income Deferred tax liabilities Current tax liabilities Derivative financial liabilities Other financial liabilities Other liabilities Total liabilities 26,947 25,967 26,020 25,624 25,619 24,224 Net assets 1,146 1,292 1,292 1,511 1,514 1,305 27

28 PART V UNAUDITED PRO FORMA FINANCIAL INFORMATION RELATING TO THE GROUP (A) Unaudited pro forma financial information relating to the Group The unaudited pro forma statement of the net assets of the Group set out below (the Pro Forma Financial Information ) is based on: Š Standard Life Group s unaudited interim financial statements for the six months ended 30 June 2014; and Š the financial information relating to the Target Group set out in Part IV (Financial Information relating to the Target Group) of this Circular. The Pro Forma Financial Information has been prepared pursuant to Listing Rule R and on the basis of the notes set out below, to illustrate the effect of the Disposal on the IFRS financial position of the Group as if the Disposal had occurred on 30 June The Pro Forma Financial Information is shown for illustrative purposes only. Due to its nature, it addresses a hypothetical situation and, therefore, does not represent the Retained Group s actual financial position following the Disposal. Shareholders should read the whole of this Circular and not rely solely on the Pro Forma Financial Information contained in this part (A) of Part V (Unaudited pro forma financial information relating to the Group) of this Circular. PricewaterhouseCoopers LLP s report on the Pro Forma Financial Information is set out in part (B) of this Part V (Unaudited pro forma financial information relating to the Group) of this Circular. 28

29 Unaudited pro forma statement of the net assets of the Group as at 30 June 2014 Group m (Notes1 6&7) Target Group m Net proceeds m Adjustments Intercompany adjustments m Return of Capital m (Note 2) (Note 3) (Note 4) (Note 5) Pro forma net assets m Assets Intangible assets 299 (2) 297 Deferred acquisition costs 897 (106) 791 Investments in associates and joint ventures 1,885 (97) 1,788 Investment property 9,302 (1,316) 7,986 Property, plant and equipment 206 (37) 169 Pension and other post-retirement benefit assets Deferred tax assets 91 (64) 27 Reinsurance assets 6,088 (188) 5,900 Loans 2,645 (2,433) 212 Derivative financial assets 2,648 (30) 2,618 Equity securities and interests in pooled investment funds 87,732 (12,502) 75,230 Debt securities 72,602 (10,384) 62,218 Receivables and other financial assets 1,891 (213) 1,678 Other assets 329 (42) 287 Assets held for sale Cash and cash equivalents 9,675 (679) 2,217 9 (1,750) 9,472 Total assets 196,765 (28,093) 2,217 9 (1,750) 169,148 Liabilities Non-participating insurance contract liabilities 29,309 (8,683) 1 20,627 Non-participating investment contract liabilities 100,716 (15,522) 85,194 Participating contract liabilities 30,705 (689) 30,016 Reinsurance liabilities 257 (257) - Deposits received from reinsurers 5,538-5,538 Third party interest in consolidated funds 17,994 (957) 17,037 Borrowings 136 (55) 81 Subordinated liabilities 1,841 (221) 1,620 Pension and other post-retirement benefit provisions 119 (97) 22 Deferred income 300 (1) 299 Deferred tax liabilities 194 (13) 181 Current tax liabilities 94 (2) 92 Derivative financial liabilities 1,101 (19) 1,082 Other financial liabilities 3,778 (390) ,426 Other liabilities 126 (41) 85 Total liabilities 192,208 (26,947) ,300 Net assets 4,557 (1,146) 2,187 - (1,750) 3,848 Key regulatory metric (bn): Group capital surplus (Note 8) 3.7 (0.6) (1.8) 3.5 Notes 1. The net assets of the Group have been extracted, without material adjustment, from Standard Life s interim financial statements, and prepared under IFRS as endorsed by the EU. 2. These adjustments remove the assets and liabilities relating to the Target Group, reflecting the fact that, following the Disposal, the Group will no longer consolidate the results of the Target Group. The financial information has been extracted, without material adjustment, from the historical financial information on the Target Group set out in Part IV (Financial Information relating to the Target Group) of this Circular. 29

30 3. The adjustment reflects the cash proceeds of 2,217m to be received from the Disposal, less associated costs of the Disposal of an estimated 30m (disclosed as payables and other financial liabilities), such amounts, where relevant, converted to Sterling at a Canadian Dollar-Sterling exchange rate of :1, being the closing UK rate as published by close of business on 2 September The cash proceeds of 2,217m are presented net of a 4m tax charge which will crystallise and be settled at the time of the Disposal. 4. Intercompany adjustments remove intercompany liabilities of 9m, reflecting the settlement of intercompany balances between the Target Group and the Retained Group on completion of the Disposal. 5. The Group s cash position has been adjusted to reflect the expected return of 1,750m to shareholders by way of a B/C share scheme. 6. No account has been taken of the trading results of the Group or the Target Group for the period since 30 June On 1 July 2014, Standard Life Investments (Holdings) Limited, a wholly-owned subsidiary of Standard Life acquired the entire share capital of Ignis. The purchase consideration will be between 370m and 390m. The final purchase consideration will be determined through a completion process which is expected to be finalised by the end of October The Group s unaudited interim financial statements at 30 June 2014 do not include Ignis as the acquisition occurred on 1 July 2014 and it is not directly attributable to the Disposal. 8. Group capital surplus is calculated in accordance with the Insurance Groups Directive. The first adjustment of 0.6bn removes the portion of the capital surplus of the Target Group which contributed to the Group capital surplus reflecting the fact that, following the Disposal, the Retained Group s capital surplus will no longer include the Target Group. The second adjustment of 2.2bn reflects the cash proceeds to be received from the Disposal less associated costs of the disposal as set out in Note 3. The third adjustment reflects the expected equity return as set out in note 5. The acquisition of Ignis, as set out in Note 7, will reduce the Group capital surplus by approximately 0.3bn. The Group capital surplus at 30 June 2014 does not include the impact of the acquisition of Ignis as it occurred on 1 July 2014 and is not directly attributable to the Disposal. 30

31 (B) Accountants report on the unaudited pro forma financial information relating to the Group The Directors Standard Life plc 30 Lothian Road Edinburgh EH1 2DH J.P. Morgan Limited 25 Bank Street London E14 5JP 8 September 2014 Dear Sirs Standard Life plc (the Company ) We report on the pro forma financial information (the Pro Forma Financial Information ) set out in section A of Part V of the Company s circular dated 8 September 2014 (the Circular ) which has been prepared on the basis described in the notes to the Pro Forma Financial Information, for illustrative purposes only, to provide information about how the proposed disposal of the Company s Canadian business might have affected the financial information presented on the basis of the accounting policies to be adopted by the Company in preparing the financial statements for the year ended 31 December This report is required by item R of the Listing Rules of the UK Listing Authority (the Listing Rules ) and is given for the purpose of complying with that Listing Rule and for no other purpose. Responsibilities It is the responsibility of the directors of the Company to prepare the Pro Forma Financial Information in accordance with item R of the Listing Rules. It is our responsibility to form an opinion, as required by item R of the Listing Rules, as to the proper compilation of the Pro Forma Financial Information and to report our opinion to you. In providing this opinion we are not updating or refreshing any reports or opinions previously made by us on any financial information used in the compilation of the Pro Forma Financial Information, nor do we accept responsibility for such reports or opinions beyond that owed to those to whom those reports or opinions were addressed by us at the dates of their issue. PricewaterhouseCoopers LLP, 1 Embankment Place, London, WC2N 6RH T: +44 (0) , F: +44 (0) , PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC The registered office of PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH. PricewaterhouseCoopers LLP is authorised and regulated by the Financial Conduct Authority for designated investment business. 31

32 Save for any responsibility which we may have to those persons to whom this report is expressly addressed and which we may have to shareholders of the Company as a result of the inclusion of this report in the Circular, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with item R(6) of the Listing Rules, consenting to its inclusion in the Circular. Basis of opinion We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. The work that we performed for the purpose of making this report, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Pro Forma Financial Information with the directors of the Company. We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Pro Forma Financial Information has been properly compiled on the basis stated and that such basis is consistent with the accounting policies of the Company. Opinion In our opinion: a) the Pro Forma Financial Information has been properly compiled on the basis stated; and b) such basis is consistent with the accounting policies of the Company. Yours faithfully PricewaterhouseCoopers LLP Chartered Accountants 32

33 PART VI ADDITIONAL INFORMATION 1. Responsibility Standard Life and the Directors, whose names appear in Section 3 below, accept responsibility for the information contained in this Circular. To the best of the knowledge and belief of Standard Life and the Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this Circular is in accordance with the facts and does not omit anything likely to affect the import of such information. 2. Standard Life Standard Life was incorporated and registered in Scotland as a private limited company on 30 June 2005 under the Companies Act 1985 with number SC and the name SLGC Limited. On 26 May 2006, Standard Life was re-registered as a public company and its name was changed to Standard Life. The principal legislation under which Standard Life operates is the Companies Acts and the regulations made thereunder. Standard Life is headquartered in the United Kingdom with its registered office at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH. The telephone number of Standard Life s registered office is +44 (0) The Directors and senior managers The Directors of Standard Life are: Š Sir Gerry Grimstone, Chairman; Š David Nish, Executive Director and Chief Executive; Š Keith Skeoch, Executive Director and Chief Executive of Standard Life Investments; Š Luke Savage, Executive Director and Chief Financial Officer; Š Pierre Danon, Non-Executive Director; Š Crawford Gillies, Non-Executive Director; Š David Grigson, Non-Executive Director; Š Noel Harwerth, Non-Executive Director; Š John Paynter, Senior Independent Non-Executive Director; Š Lynne Peacock, Non-Executive Director; and Š Martin Pike, Non-Executive Director. The senior managers of Standard Life are: Š Sandy Begbie, Group Operations Officer; 33

34 Š Charles Guay, President, Canadian Operations; Š Paul Matthews, CEO, UK & Europe; and Š Raj Singh, Group Chief Risk Officer. The business address of each Director and senior manager (other than Charles Guay, Keith Skeoch and John Paynter) is Standard Life s registered office. The business address for Charles Guay is The Standard Life Assurance Company of Canada, 1245 Sherbrooke Street West, Montréal, Québec H3G 1G3, Canada. The business address for Keith Skeoch and John Paynter is Standard Life Investments Limited, 1 George St, Edinburgh EH2 2LL. 4. Directors and senior managers interests in Shares 4.1 Holdings in Shares As at 5 September 2014 (being the latest practicable date prior to the publication of this Circular), the interests of each Director and senior manager in the share capital of Standard Life, including interests arising pursuant to any transaction notified to Standard Life pursuant to rule of the Disclosure and Transparency Rules made by the Financial Conduct Authority pursuant to FSMA, are as follows: Name of Director Number of Shares held Percentage of the issued Shares Sir Gerry Grimstone 252, David Nish 2,230, Keith Skeoch 1,881, Luke Savage 0 0 Pierre Danon 54, Crawford Gillies 50, David Grigson 15, Noel Harwerth 10, John Paynter 45, Lynne Peacock 15, Martin Pike 40, Name of senior manager Number of Shares held Percentage of the issued Shares Sandy Begbie 79, Charles Guay 0 0 Paul Matthews 212, Raj Singh

35 4.2 Other interests Certain Directors and senior managers have the following interests in Shares under a number of incentive plans: Name of Director Name of Share Plan and Award type Grant Date No. of shares subject to award/ option Exercise price ( ) Vesting/first exercisable date David Nish 2012 LTIP Award 29/03/ ,750 Nil 29/03/ LTIP Award 25/03/ ,050 Nil 25/03/ LTIP Award 20/05/ ,645 Nil 20/05/ STIP (2012 Bonus) 28/03/ ,751 Nil 28/03/ STIP (2013 Bonus) 28/03/ ,991 Nil 28/03/ Sharesave (5 year) 15/09/2011 9, /11/2016 1,794,856 Keith Skeoch 2012 LTIP Award 29/03/ ,088 Nil 29/03/ LTIP Award 25/03/ ,634 Nil 25/03/ LTIP Award 20/05/ ,469 Nil 20/05/ STIP (2012 Bonus) 28/03/ ,907 Nil 28/03/ STIP (2013 Bonus) 28/03/ ,503 Nil 28/03/2016 SLI LTIP /03/ ,088 Nil 29/03/2015 SLI LTIP /03/ ,634 Nil 25/03/2016 SLI LTIP /03/ ,818 Nil 28/03/2017 1,706,141 Name of Senior Manager Award type Grant Date No of shares subject to award/ option Exercise price (pence) Vesting/first exercisable date Charles Guay 2012 LTIP Award 29/03/ ,416 Nil 29/03/ LTIP Award 25/03/ ,884 Nil 25/03/ LTIP Award 20/05/ ,603 Nil 20/05/ STIP (2012 Bonus) 28/03/ ,040 Nil 28/03/ STIP (2013 Bonus) 28/03/ ,087 Nil 28/03/ RSP (Parts 2 and 3) 25/06/ ,251 Nil 08/12/2013; 07/12/ ,281 Sandy Begbie 2011 LTIP Award 31/03/ ,886 Nil 31/03/ LTIP Award 29/03/ ,088 Nil 29/03/ LTIP Award 25/03/ ,628 Nil 25/03/ LTIP Award 20/05/ ,450 Nil 20/05/ STIP (2011 Bonus) 29/03/ ,780 Nil 29/03/ STIP (2012 Bonus) 28/03/ ,908 Nil 28/03/ STIP (2013 Bonus) 28/03/ ,738 Nil 28/03/ Sharesave (3 year) 15/09/2011 4, /11/ ,050 Paul Matthews 2012 LTIP Award 29/03/ ,053 Nil 29/03/ LTIP Award 25/03/ ,953 Nil 25/03/ LTIP Award 20/05/ ,744 Nil 20/05/ STIP (2012 Bonus) 28/03/ ,135 Nil 28/03/ STIP (2013 Bonus) 28/03/ ,265 Nil 28/03/ Sharesave (3 year) 15/09/2011 5, /11/ ,865 Raj Singh 2013 LTIP Award 25/03/ ,963 Nil 25/03/ LTIP Award 20/05/ ,137 Nil 20/05/ STIP (2013 Bonus) 28/03/ ,976 Nil 28/03/ RSP Award 28/03/ ,120 Nil 28/03/ ,196 (1) The awards to Sandy Begbie under the 2011 LTIP Award and 2012 STIP (2011 Bonus) have vested but have not yet been exercised. (2) The award to Charles Guay under the 2012 RSP (Part 2) has vested but not yet been exercised. (3) Where an exercise price has been stated as Nil, there is no exercise price for this award. 35

36 5. Details of the service contracts of the Directors Details of the service contracts of the Directors (other than Luke Savage) are set out on page 81 of Standard Life s 2013 Annual Report and Accounts. Luke Savage was appointed to the Board as an executive Director and Chief Financial Officer on 18 August He is employed by a member of the Retained Group (the Employer ) pursuant to a service contract dated 24 April His salary, pension and core benefits are specified in the service contract. There is no contractual entitlement to participate in the annual bonus plan or receive long-term incentive awards. Individuals are notified of these discretionary schemes at the beginning of each year. Non-compete provisions apply during the term of the service contract and for up to six months after leaving at the Employer s discretion. The service contract can be terminated by Luke Savage by giving 6 months notice or by the Employer by giving 12 months notice. The service contract provides that the Employer may terminate the contracts with immediate effect by making a payment in lieu of the notice period to Luke Savage of an amount equivalent to his salary, pension contributions and the value of other contractual benefits for that notice period. A duty to mitigate applies. The payment may be made in phased instalments. Rights to bonus and existing long-term incentive awards upon such termination are governed by the rules of the respective plans. 6. Key individuals of the Target Group The following individuals are deemed by Standard Life to be key to the operations of the Target Group and will transfer with the Target Group: Name Position Charles Guay President and Chief Executive Officer of The Standard Life Assurance Company of Canada. Roger Renaud President of Standard Life Investments Inc. and Executive Director of The Standard Life Assurance Company of Canada. 7. Major interests in Shares Set out in the table below are the names of those persons who, so far as Standard Life is aware, are interested, directly or indirectly, in 3% or more of the total voting rights attaching to the issued Shares as at 5 September 2014 (being the latest practicable date prior to the publication of this Circular): Name of Shareholder Percentage of the total voting rights BlackRock, Inc. Less than 5% 8. Material contracts 8.1 No contracts have been entered into (other than contracts entered into in the ordinary course of business) by any member of the Retained Group either: (i) within the period of two years immediately preceding the date of this Circular which are or may be material to the Retained Group; or (ii) which contain any provisions under which any member of the Retained Group has any 36

37 obligation or entitlement which is, or may be, material to the Retained Group as at the date of this Circular, save as disclosed below. (A) Disposal Agreements Details of the terms of the Disposal Agreements are set out in Part lli (Principal Terms of the Disposal) of this Circular. (B) Ignis acquisition agreement On 25 March 2014, Standard Life Investments (Holdings) Limited (a wholly-owned subsidiary of Standard Life) entered into an agreement with a subsidiary of Phoenix Group Holdings to acquire Ignis, the asset management business of Phoenix Group Holdings. The acquisition completed on 1 July 2014 following approval from the Financial Conduct Authority. (C) Newton master purchase agreement On 26 February 2013, Standard Life and Standard Life Wealth Management (a whollyowned subsidiary of Standard Life) entered into a master purchase agreement with Newton Management Limited, Newton Investment Management Limited and The Bank of New York Mellon Corporation to acquire Newton s private client business. The acquisition completed on 30 September (D) EMTN Programme Standard Life has established a Euro Medium Term Note Programme pursuant to which it may from time to time issue notes, denominated in any currency, the maximum aggregate amount of which shall not exceed 3,000,000,000. In December 2012, Standard Life issued 500,000,000 in principal amount of 5.5% fixed rate subordinated notes due 2042 to external investors under this Euro Medium Term Note Programme. (E) Other Subordinated Debt Standard Life has also issued the following subordinated debt: (i) (ii) (iii) on 12 July 2002, 500,000,000 in principal amount of 6.75% fixed rate perpetual reset subordinated guaranteed bonds, unconditionally and irrevocably guaranteed on a subordinated basis by Standard Life Assurance; on 4 November 2004, 360,000,000 in principal amount of 5.314% perpetual fixed/floating rate mutual assurance capital securities, unconditionally and irrevocably guaranteed on a subordinated basis by Standard Life Assurance; and on 4 November 2004, 300,000,000 in principal amount of 6.546% perpetual fixed/floating rate mutual assurance capital securities unconditionally and irrevocably guaranteed on a subordinated basis by Standard Life Assurance. (F) Revolving Credit Facility On 5 March 2013, Standard Life entered into a new 500,000,000 five-year multi-currency revolving credit facility (the RCF ). The new facility can be used for the general corporate purposes of the Group and for any refinancing of Standard Life s previous 500,000,000 revolving credit facility. As at the date of this Circular, the RCF remained undrawn. 37

38 8.2 No contracts have been entered into (other than contracts entered into in the ordinary course of business) by any member of the Target Group either: (i) within the period of two years immediately preceding the date of this Circular which are or may be material to the Target Group; or (ii) which contain any provisions under which any member of the Target Group has any obligation or entitlement which is, or may be, material to the Target Group as at the date of this Circular, save as disclosed below. (A) Subordinated Debt In September 2012, Standard Life Assurance Canada issued C$400,000,000 in principal of 3.938% fixed/floating Series A subordinated debentures due (B) Castan Joint Venture Arrangements On 28 August 2014, Standard Life Assurance Canada entered into an agreement to purchase certain interests of other co-owners (collectively, Castan ) in four joint venture arrangements in respect of which Standard Life Assurance Canada holds a co-ownership interest. The joint ventures hold real property interests in Toronto, Ontario and Brampton, Ontario. In respect of the joint venture arrangement relating to the Brampton property, Standard Life Assurance Canada is acquiring a 25% interest, bringing its total interest to 50%. In respect of the other three joint venture arrangements, Standard Life Assurance Canada is acquiring a 50% interest, bringing its total interest to 100%. The consideration to be paid to Castan is a combination of cash and the forgiveness by Standard Life Assurance Canada of certain indebtedness owed by Castan to Standard Life Assurance Canada under the joint venture arrangements and/or other related loan agreements, which includes the release by Standard Life Assurance Canada of personal guarantees given by the principals at Castan to Standard Life Assurance Canada. The transaction is subject to usual due diligence conditions in Standard Life Assurance Canada s favour and is scheduled to close on 30 October (C) Change of control consent agreement Under a software licence agreement between Standard Life Assurance Canada (a member of the Target Group) and the London Life Insurance Company ( London Life ), originally entered into by the Standard Life Assurance Company and the Prudential Insurance Company of America, London Life s consent is required to any change of control of Standard Life Assurance Canada should Standard Life Assurance Canada wish to retain the benefit of the software licence agreement following such change of control. On 15 August 2014, Standard Life Assurance Canada entered into a consent letter (the Consent Letter ) with London Life, under which London Life granted its consent to a change of control of Standard Life Assurance Canada subject to certain conditions, including the payment by Standard Life Assurance Canada of C$20m (exclusive of applicable taxes) to London Life in exchange for such consent and the entry into a consent agreement by Standard Life Assurance Canada, the acquirer of Standard Life Assurance Canada, and London Life, in accordance with the terms set out in the Consent Letter. 38

39 9. Litigation There are no, nor have there been any, governmental, legal or arbitration proceedings (nor is Standard Life aware of any such proceedings being pending or threatened) which may have, or during the last 12 months prior to the date of this Circular have had, a significant effect on the financial position or profitability of the Retained Group. There are no, nor have there been any, governmental, legal or arbitration proceedings (nor is Standard Life aware of any such proceedings being pending or threatened) which may have, or during the last 12 months prior to the date of this Circular have had, a significant effect on the financial position or profitability of the Target Group, save as disclosed below. (A) Tax Litigation A case is currently ongoing in the Tax Court of Canada between Standard Life Assurance Canada and Her Majesty the Queen in Right of Canada, represented by the Minister of National Revenue. The issue in the case is whether subsection 138 (11.3) of the Income Tax Act (Canada) applies to certain investments owned by Standard Life Assurance Canada at the end of the 2005 taxation year to step up the tax cost of such property to its fair market value at the end of that taxation year. For each of the taxation years, Standard Life Assurance Canada has filed its corporate income tax returns on the basis that this step-up occurred. The Canada Revenue Agency has consistently reassessed on the basis that the step-up did not occur, resulting in additional income/gain from the disposition or deemed disposition of the affected investment properties being added by the Canada Revenue Agency to Standard Life Assurance Canada s taxable income. However, the Canada Revenue Agency has agreed to allow Standard Life Assurance Canada to claim additional policy reserve deductions in each affected taxation year in order to reduce the taxable income to a similar level to the taxable income before the Canada Revenue Agency adjustments, meaning no material amount of tax was actually reassessed. The reassessments in relation to the 2006 and 2007 taxation years are the subject of the current Tax Court of Canada case. Where applicable, objections have been filed by Standard Life Assurance Canada relating to subsequent taxation years where a similar reassessment has been made. These are currently being held in abeyance pending the outcome of the case. Standard Life Assurance Canada s tax accounting has been completed on the conservative basis that no step-up occurred. An examination on discovery was held on 20, 21 and 22 March 2013 and an additional examination on discovery was held on 16 April Hearing of the appeal is scheduled for 6 October 2014, for a duration of 4.5 days. The outcome of the tax case is not expected to result in any additional tax becoming payable or recoverable for prior years. The outcome will impact the quantum of deferred tax assets which the business can recognise and carry forward for utilisation in future 39

40 10. Working Capital years. The value that can be placed upon deferred tax assets is subject to the conditions that will exist in future years and so no reliable quantification can be placed upon them. Standard Life and the Directors are of the opinion that, taking into account the cash and other facilities available to the Retained Group, the Retained Group has sufficient working capital available to it for its present requirements, that is, for at least the next 12 months from the date of publication of this Circular. 11. Consents J.P. Morgan Cazenove has given, and has not withdrawn, its written consent to the inclusion in this Circular of the references to its name in the form and context in which they are included. PricewaterhouseCoopers LLP is a member firm of the Institute of Chartered Accountants in England and Wales and has given, and not withdrawn, its written consent to the inclusion of its report on the unaudited pro forma financial information in Part V (Unaudited pro forma financial information relating to the Group) of this Circular in the form and context in which it is included. 12. Significant change Save for the acquisition of Ignis by Standard Life Investments (Holdings) Limited (as outlined in note 7 to the unaudited pro forma financial information included in Section A of Part V of this Circular) there has been no significant change in the financial or trading position of the Retained Group since 30 June 2014, being the date to which the last published unaudited interim financial statements for the Group have been prepared. The acquisition affected the Group s cash position and Group capital surplus (as outlined in the second paragraph of note 8 to the unaudited pro forma financial information included in Section A of Part V of this Circular). There has been no significant change in the financial or trading position of the Target Group since 30 June 2014, being the date to which the financial information in Part IV (Financial information relating to the Target Group) of this Circular has been prepared. 13. Related party transactions Details of related party transactions (which for these purposes are those set out in the standards adopted according to Regulation (EC) No 1606/2002) Standard Life has entered into: (A) (B) (C) (D) during the financial year ended 31 December 2011 are disclosed in accordance with the respective standard adopted according to Regulation (EC) No 1606/2002 in note 48 on pages 196 and 197 of Standard Life s 2011 Annual Report and Accounts; during the financial year ended 31 December 2012 are disclosed in accordance with the respective standard adopted according to Regulation (EC) No 1606/2002 in note 47 on pages 192 and 193 of Standard Life s 2012 Annual Report and Accounts; during the financial year ended 31 December 2013 are disclosed in accordance with the respective standard adopted according to Regulation (EC) No 1606/2002 in note 47 on page 211 of Standard Life s 2013 Annual Report and Accounts; and from 1 January 2014 to 30 June 2014, are disclosed in accordance with the respective standard adopted according to Regulation (EC) No 1606/2002 in note 3.16 on page 76 of Standard Life s 2014 Half Year Results. 40

41 14. Information incorporated by reference Information from the following documents has been incorporated into this Circular by reference: Documents containing information incorporated by reference Section of this Circular which refers to the document containing information incorporated by reference Where the information can be accessed by Shareholders Standard Life s 2011 Annual Report and Accounts Part VI, Section 13 investor/ Standard Life s 2012 Annual Report and Accounts Part VI, Section 13 investor/ Standard Life s 2013 Annual Report and Accounts Part VI, Sections 5 and 13 investor/ Standard Life s 2014 Half Year Results Part VI, Section 13 investor/ A copy of each of the documents listed above is available for inspection in accordance with Section 15 below. 15. Documents available for inspection Copies of the following documents will be available for inspection at the offices of Standard Life at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH and at the offices of Standard Life s solicitors, Slaughter and May, One Bunhill Row, London EC1Y 8YY during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted) up to and including the date of the General Meeting, and at the place of the General Meeting from 15 minutes prior to its commencement until its conclusion: (A) the articles of association of Standard Life; (B) the articles of incorporation of Standard Life Financial; (C) the articles of incorporation of Standard Life Investments Inc.; (D) Standard Life Group s 2011 Annual Report and Accounts; (E) Standard Life Group s 2012 Annual Report and Accounts; (F) Standard Life Group s 2013 Annual Report and Accounts; (G) Standard Life Group s 2014 Half Year Results; (H) the report of PricewaterhouseCoopers LLP on the unaudited pro forma financial information relating to the Group set out in Section B of Part V (Unaudited pro forma financial information relating to the Group) of this Circular; 41

42 (I) (J) (K) the Share Disposal Agreement; the consent letters of J.P. Morgan Cazenove and PricewaterhouseCoopers LLP referred to in Section 11 above; and this Circular and the Voting Form. 8 September

43 PART VII DEFINITIONS The following terms have the following meanings in this Circular: or Sterling Board Board Actions Business Transfer Business Transfer Agreement C$ or Canadian Dollars means pound sterling; means the board of directors of Standard Life; has the meaning given to it in Section 1.5(C) of Part III of this Circular; means the proposed assumption of policies and related policy liabilities in the Standard Life Assurance Canadian Business by one or more subsidiaries of Manulife; means the business transfer agreement to be entered into between Standard Life Assurance and the Purchaser pursuant to the Share Disposal Agreement; means Canadian dollars; Companies Acts has the meaning given in section 2 of the Companies Act 2006; Company Consideration CREST Manual CREST Proxy Instructions CREST Directors Disposal Disposal Agreements Disposal Resolution Employer means Standard Life; has the meaning given to it in Section 1.2 of Part III (Principal Terms of the Disposal) of this Circular; means the manual, as amended from time to time, produced by Euroclear UK & Ireland Limited describing the CREST system and supplied by Euroclear UK & Ireland Limited to users and participants thereof; means the instruction whereby CREST members send a CREST message appointing a proxy for the meeting and instructing the proxy on how to vote; means the system of paperless settlement of trades in securities and the holding of uncertificated securities operated by Euroclear UK & Ireland Limited in accordance with Uncertificated Securities Regulations 2001 (SI 2001/3755); means the directors of Standard Life; means the Share Disposal and the Business Transfer; means the Share Disposal Agreement and the Business Transfer Agreement; means the ordinary resolution as set out in the notice of General Meeting at page 47 of this Circular; has the meaning given to it in Section 5 of Part VI (Additional Information) of this Circular; 43

44 Financial Conduct Authority FSMA General Meeting Global Collaboration Agreement means the Financial Conduct Authority of the United Kingdom; means the Financial Services and Markets Act 2000, as amended; means the general meeting of Standard Life convened by the notice which is set out at the end of this Circular to be held at 155 Bishopsgate, London EC2 on 3 October 2014 at 2 p.m. or any reconvened meeting following any adjournment thereof; means the global collaboration agreement entered into between Standard Life Investments and Manulife dated 3 September 2014; Group means Standard Life and its subsidiaries and subsidiary undertakings; IFRS Ignis Initial Payment means International Financial Reporting Standards, as issued by the International Accounting Standards Board and endorsed by the European Union; means Ignis Asset Management Limited and its subsidiaries and subsidiary undertakings; has the meaning given to it in Section 1.7 of Part III (Principal Terms of the Disposal) of this Circular; Insurance Groups Directive J.P. Morgan Cazenove Listing Rules London Life London Stock Exchange Manulife OSFI Outside Date Pro Forma Financial Information Purchaser RCF means the Insurance Groups Directive (98/78/EC); means J.P. Morgan Limited (which conducts its UK investment banking activities as J.P. Morgan Cazenove); means the Listing Rules made by the Financial Conduct Authority pursuant to FSMA governing, inter alia, admission of securities to the Official List of the Financial Conduct Authority; has the meaning given to it in Section 8.2(c) of Part VI (Additional Information) of this Circular; means London Stock Exchange plc or any recognised investment exchange for the purposes of FSMA which may take over the functions of London Stock Exchange plc; means Manulife Financial Corporation; means the Office of the Superintendent of Financial Institutions (Canada); means the date that is nine (9) months from the date of the Share Disposal Agreement; has the meaning given to it in Section (A) of Part V (Unaudited pro forma financial information relating to the Group) of this Circular; means The Manufacturers Life Insurance Company; has the meaning given to it in Section 8.1(F) of Part VI (Additional Information) of this Circular; 44

45 Registrar means Capita Asset Services a trading name of Capita Registrars Limited; Required Regulatory Approvals means Share Disposal Competition Approval, Share Disposal Insurance Approval and Share Disposal Ontario and Quebec Securities Approvals; Retained Group means Standard Life and its subsidiaries and subsidiary undertakings following the Share Disposal, and shall not include the Target Group; Return of Capital Seller Share Disposal has the meaning given to it in Section 1 of Part I (Letter from the Chairman of Standard Life) of this Circular; means Standard Life Oversea Holdings Limited; means the proposed disposal of the Target Shares pursuant to the Share Disposal Agreement. A full description of the key terms of the Share Disposal is set out in Part III (Principal Terms of the Disposal) of this Circular; Share Disposal Agreement means the share purchase agreement dated 3 September 2014, between Standard Life, the Seller and the Purchaser. A summary of the key terms of the Share Disposal is set out in Part III (Principal Terms of the Disposal) of this Circular; Share Disposal Competition Approval Share Disposal Insurance Approval Share Disposal Ontario and Quebec Securities Approvals Shareholders Shares Standard Life means the applicable waiting period under section 123 of the Competition Act, R.S.C. 1985, c.c-34 of Canada having expired, been terminated or waived in respect of the Share Disposal and the Business Transfer; means the approvals of the Canadian Minister of Finance in respect of: (i) the acquisition by the Purchaser of a significant interest in each class of shares of Standard Life Assurance Canada and control, within the meaning of section 3(1)(d) of the Insurance Companies Act (Canada), of Standard Life Assurance Canada; and (ii) the acquisition by the Purchaser of a significant interest in each class of shares of Standard Life Trust Company and control, within the meaning of section 3(1)(d) of the Trust and Loan Companies Act (Canada), of Standard Life Trust Company; means the approvals of the Ontario and Quebec securities authorities pursuant to National Instrument Mutual Funds and National Instrument Registration Requirements, Exemptions and Ongoing Registrant Responsibilities as applicable, in respect of the transactions pursuant to or in connection with the Share Disposal Agreement; means holders of Shares; means the ordinary shares of 0.10 each in the capital of Standard Life; means Standard Life plc, a public limited company incorporated in Scotland with registered number SC and with its registered office at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH; 45

46 Standard Life Assurance Standard Life Assurance Canada Standard Life Assurance Canadian Business Standard Life Financial Standard Life Financial Shares Standard Life Group Standard Life Investments Standard Life Investments Inc. Standard Life Investments Inc. Shares Standard Life s 2011 Annual Report and Accounts Standard Life s 2012 Annual Report and Accounts Standard Life s 2013 Annual Report and Accounts Standard Life s 2014 Half Year Results subsidiary and subsidiary undertaking Superintendent Target Group Target Shares UK or United Kingdom US Voting Form means Standard Life Assurance Limited; means The Standard Life Assurance Company of Canada; means the policies, policy liabilities and other rights and obligations of the Canadian branch of Standard Life Assurance to be transferred pursuant to the Business Transfer Agreement; means Standard Life Financial Inc.; means all of the common and preferred shares in the share capital of Standard Life Financial Inc; means the Group; means Standard Life Investments Limited; means Standard Life Investments Inc.; means all of the shares in the share capital of Standard Life Investments Inc.; means the annual report and accounts prepared by Standard Life for the financial year ended 31 December 2011; means the annual report and accounts prepared by Standard Life for the financial year ended 31 December 2012; means the annual report and accounts prepared by Standard Life for the financial year ended 31 December 2013; means the half year results prepared by Standard Life for the period from 1 January 2014 to 30 June 2014; have the meanings given to them in sections 1159 and 1162 (respectively) of the Companies Act 2006; means the Superintendent of Financial Institutions (Canada); means Standard Life Financial, Standard Life Investments Inc., and their subsidiaries and subsidiary undertakings; means the Standard Life Financial Shares and the Standard Life Investments Inc. Shares; means the United Kingdom of Great Britain and Northern Ireland; and means the United States of America; means: (i) the voting form for use by Shareholders in connection with the General Meeting; or (ii) the voting form for use by members of the Standard Life Share Account in connection with the General Meeting. 46

47 Standard Life plc (Registered in Scotland no. SC286832) NOTICE OF GENERAL MEETING NOTICE IS HEREBY GIVEN that a General Meeting (the GM ) of the shareholders of Standard Life plc (the Company ) will be held at 155 Bishopsgate, London EC2 on 3 October 2014 at 2pm to consider and, if thought fit, to pass the following resolution as an ordinary resolution of the Company: Ordinary Resolution THAT the disposal of all issued shares in Standard Life Financial Inc. and all issued shares in Standard Life Investments Inc. held (or to be held) by the Company s wholly-owned subsidiaries, Standard Life Oversea Holdings Limited and Standard Life Assurance Limited, being 100% of the issued share capital of Standard Life Financial Inc. and Standard Life Investments Inc. respectively, and the connected business transfer by Standard Life Assurance Limited, and all agreements entered into pursuant to or in connection with such disposal and/or business transfer (together, the Disposal ) as described in the circular to shareholders dated 8 September 2014 of which this Notice forms part (the Circular ) on the terms and subject to the conditions set out in the Circular with such modifications (if any) as may be made to them in the manner specified below be and are hereby approved for the purposes of Chapter 10 of the Listing Rules of the Financial Conduct Authority and the Board of Directors of the Company be and are hereby authorised to conclude and implement the Disposal in accordance with such terms and conditions and to make such modifications to and such variations, waivers and extensions of any of the terms and conditions of the Disposal as they may deem necessary, expedient or appropriate, provided that any such modifications to, or variations, waivers and extensions of, the terms and conditions of the Disposal are not material. By order of the Board Malcolm Wood Group Company Secretary and General Counsel Standard Life plc Standard Life House 30 Lothian Road Edinburgh EH1 2DH 8 September

48 NOTES: a. To be entitled to attend and vote at the GM (and for the purpose of determination by the Company of the votes they may cast), shareholders who have a certificate for their shares or hold them through CREST must be on the Company s register at 6 p.m. (UK time) on 1 October 2014 or, if the GM is adjourned, at the time which is 48 hours before the time of the adjourned meeting. For shareholders who hold their shares in the Standard Life Share Account, to be entitled to attend in person you must be registered as a member of the Standard Life Share Account and return your Voting Form with your own name in the nominated proxy box by no later than 6 p.m. (UK time) on 1 October 2014 or, if the GM is adjourned by the time which is 48 hours before the time of the adjourned meeting. Changes to either register after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting. b. Shareholders may appoint another person (a proxy ) to exercise all or any of their rights to attend and to speak and vote on their behalf at the GM. A shareholder may appoint more than one proxy in relation to the GM provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. A proxy does not need to be a shareholder in Standard Life plc. c. A Voting Form (either online or in paper form) which may be used to make a proxy appointment and give voting instructions has been provided to you along with this notice. In order for such appointment to be made and/or instructions given using the CREST electronic proxy appointment service, the appropriate CREST message (a CREST Proxy Instruction ) must be properly authenticated in accordance with Euroclear UK & Ireland Limited s specifications, and must contain the information required for such instruction, as described in the CREST Manual. d. Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 (the Act ) to enjoy information rights (a Nominated Person ) may, under an agreement between him or her and the shareholder by whom he or she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the GM. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he or she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights. e. The statement of the rights of shareholders in relation to the appointment of proxies in note b. above does not apply to Nominated Persons. The rights described in note b. can only be exercised by shareholders of the Company. f. On 5 September 2014 the latest practicable business day before the printing and publication of the Notice of General Meeting the Company s issued share capital consisted of 2,391,420,641 ordinary shares, carrying one vote each. No shares were held in treasury. Therefore, the total voting rights in the Company as at 5 September 2014 were 2,391,420,641. g. Any shareholder (or their appointed proxy) attending the GM has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information, (b) the answer has already been given on a website in the form of an answer to a question, or (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. h. A copy of this notice, and other information required by section 311A of the Companies Act 2006, can be found at Printed by RR Donnelley,