For all businesses, it’s more important than ever to be a good corporate citizen as governments and people around the world rightly more closely scrutinise how companies carry out their business affairs. In today’s digital world, there is nowhere to hide. Businesses must be open and transparent on their strategy, decision making and how they operate if they are to succeed for the long term. We have redesigned our reporting this year with this in mind.
Leading through collaboration Co-operation and collaboration across the business bore fruit in 2015. MyFolio, our leading multi-manager fund run by Standard Life Investments, saw its assets under management rise to £8.1bn with approximately 85% sourced from the UK businesses’ distribution channels. This is a great demonstration of an enhanced level of co-operation and collaboration between our asset management and our UK pensions and savings businesses and a reflection of the demand from clients looking to invest in a multi-asset offering.
Standard Life Wealth provides a discretionary fund management service with a range of specialist investment solutions. They work with private clients, charities, financial advisers and other professional intermediaries.
Slow growth, low inflation, compressed return environment: As the world economy continues to struggle to deliver growth, active investment management offers opportunities to deliver superior returns. Low inflation and interest rates in developed economies have made guaranteed products unattractive to customers and clients, who are instead turning to simple, transparent and outcome-oriented solutions.
A commitment to excellence and a talented team are needed to ensure potential and success is delivered in New Zealand in 2017. It is testament to the breadth of our talent and the scale of our potential that The Lions have decided to partner with Standard Life Investments.
‘We have continued to deliver strong growth with operating profit up 9% and AUA up 4% against a backdrop of volatile markets. Shareholder value was also delivered by the return of £1.75bn to shareholders.’
Group operating expense bps1 40bps 50bps 47bps 1 Operating expenses as a proportion of average AUA.
Group own funds £5.5bn Group solvency capital requirement (SCR) (£3.4bn) Group Solvency II capital surplus £2.1bn
Group IFRS profit £503m 2 After tax attributable to equity holders of Standard Life plc. 3 Dubai and Singapore are presented as discontinued operations in the Strategic report and in the Group operating profit by segment in line with internal management presentation. However, under IFRS 5, Dubai and Singapore do not constitute discontinued operations and are included in continuing operations in the consolidated income statement. Therefore, a reclassification of these results between discontinued and continuing operations is required. For further information see Note 2 in the Group financial statements section.
Proposed dividend The Board is recommending a final dividend for 2015 of 12.34p per ordinary share – an increase of 8.0% on last year’s final dividend. This will be paid on 24 May 2016 to shareholders on the register at close of business on 15 April 2016.
The final dividend, combined with the 2015 interim dividend of 6.02p which was paid in October 2015, will bring the total dividend for the year to 18.36p – an increase of 7.8% on the 2014 full year dividend.
The Group’s reportable segments have been identified in accordance with the way the Group is structured and managed.
2 India and China segment was formerly known as Asia and Emerging Markets. Dubai and Singapore are included in discontinued operations in Section 1.4.4. 3 Other primarily relates to corporate centre costs and head office related activities. 4 Eliminations primarily relate to revenue and expenses included in the UK and Europe segment and Standard Life Investments. Therefore, at a Group level an elimination adjustment is required to remove intra Group impacts. 5 Relates to operating assumption changes of £44m (2014: £43m), included in spread/risk margin and principally in respect of mortality assumption changes, and to shareholder support provided to the German with profits business of £9m (2014: £nil), included in operating expenses.
We offer market-leading investment funds and solutions to our third party clients through two main distribution channels:  Institutional: selling to institutions either directly or through intermediaries
We remain focused on meeting the needs of our institutional and wholesale clients globally and securing new business backed by consistently strong investment performance and exceptional levels of client service.
Operating return on equity reduced to 36.3% (2014: 36.7%) reflecting that although profitability increased there was also increased equity following the Ignis acquisition.
SIPP AUA rose to £29.7bn (2014: £26.2bn) with £13.6bn (2014: £11.5bn)
Spread/risk UK and Europe spread/risk AUA decreased to £14.9bn (2014: £16.1bn), with net outflows of £0.9bn (2014: £0.9bn) as annuity sales were impacted by pension freedoms.
Lowering unit costs UK operating expenses decreased £1m to £455m. Expressed as a proportion of average AUA, operating expenses decreased to 39bps (2014: 42bps) as we continue to benefit from the scalability of our business model and cost discipline.
The broader risk environment remains challenging and in particular the current level of political and regulatory engagement with our industry remains very high. There are a number of policy areas which have the potential to lead to a material impact on our business, for example in the areas of pension tax relief, the full implementation of MiFID II, as well as ongoing industry reviews such as the FCA’s Asset Management Market Study and the Financial Advice Market Review.
Quantitative stress and scenario testing which consider liquidity and capital positions under single and combined financial scenarios.
The failure of a material outsourcing partner could lead to significant costs and disruption to our operations until we recover the situation or put alternative solutions in place.
 We maintain appropriate business continuity and contingency plans which are regularly reviewed
Detail about diversity and our Board is included in Section 4
Award-winning customer experience We also created a new online retirement journey to allow customers to access their savings. Through better content and user experience design, it’s now easier for customers to compare, contrast and select their chosen options as well as transact online. This proposition won the 2015 Customer Experience Award for Best New Product / Product Improvement.
As at 31 December 2015, approximately 75% of the Group's employees were shareholders through participation in the Standard Life (Employee) Share Plan (the Plan). The Plan allows employees to buy ordinary shares in the Company directly from their earnings up to a market value of £125 per month, or an equivalent sum in a relevant currency. These are called partnership shares. For each partnership share that an employee buys under the Plan, the Company matches the purchase by allocating them ordinary shares up to a maximum total value of £25 per month, or an equivalent sum in the relevant currency. As at 31 December 2015, 3,796 of eligible employees in the UK were making a monthly average contribution of £45. A similar tax approved plan is used in Ireland and has a 47% take-up. Even though the Plan cannot be structured on a tax favourable basis in Germany or Austria, at the end of the year, more than 126 employees in these countries were buying shares on a monthly basis.
Annual General Meeting Details of the meeting content can be found in our AGM guide 2016 which will be available online at www.standardlife.com from 17 March 2016. This is the first time that the AGM is being held in London. The intention is that the AGM will be held in Edinburgh and London in alternate years.
 Believes that it should be able to demonstrate with conviction that any new appointee can make a meaningful contribution to its deliberations
The 2015 review was facilitated internally. It comprised an online selfassessment questionnaire, followed up by individual meetings between each Director and the Company Secretary. Directors completed questionnaires about the Board, each Committee they sit on, the Chairman’s performance and their own individual performance. They were encouraged to provide open and honest feedback, explain the ratings they gave and suggest how the Board or Committee could improve.
Director induction and development The Chairman, supported by the Company Secretary, is responsible for arranging a comprehensive preparation and induction programme for all new Directors. The programme is tailored to their individual requirements and takes their background knowledge and experience into account. All Directors are required to complete the Financial Conduct Authority’s (FCA) and Prudential Regulation Authority’s (PRA) Approved Persons approval programme before they are appointed and to selfcertify annually that they remain competent to carry out this aspect of their role. These processes are being adapted to ensure the requirements of the Senior Insurance Managers Regime will be met. The formal preparation and induction programme includes:  Meetings with the executive Directors, key members of senior management, the heads of the operating businesses and our corporate centre functions
Key responsibilities The Audit Committee’s responsibilities are to oversee and report to the Board on:  The appropriateness of the Group’s accounting and its accounting policies, including the going concern presumption and viability
 The appointment or dismissal of the Chief Internal Auditor, the approved internal audit work programme, key audit findings and the quality of internal audit work
October to December  Q3 AUA and flows update  Initial findings from the Financial
During 2015, approximately 85 internal audits were completed. The Committee considered the reports on data governance, end user applications and Solvency II assurance were particularly insightful and contributed to the strengthening of the control environment.
 The Committee reviewed and discussed the audit findings including audit differences prior to the approval of the financial statements. See materiality below for more detail.
In our meetings the Committee reviews and discusses:  Matters escalated from the Group
The decision to acquire Pearson Jones during the year as part of the process to build a UK-advice business was also subject to scrutiny by the Committee. This included reviewing the business case and risk assessment relating to the proposed acquisition and considering the transaction in the context of the Group’s risk strategy, material risk exposures and allocation of capital. A key focus for the Committee centred on customer considerations, including conduct and compliance risks within the business being acquired and how these were proposed to be mitigated. On 6 April the UK and Europe business launched its response to the pension flexibility and choice regime introduced by the UK government. This gave customers the ability through either an online or phone-based service to access their pension money as:  Full cash withdrawal  Flexible drawdown  A guaranteed income option
Recognising the importance of risk culture and good risk governance within the ERM Framework, the Committee received an overview of risk governance within the investment business. The Committee noted the governance arrangements in place within the business and the interaction of the governance committees across the Group.
Reporting on regulatory compliance was covered in Group Views on Risk reporting and included:  Updates on activities detailed in the regulatory compliance plans  Significant regulatory developments, such as those relating to the Markets in Financial Instruments Directive’s impact on investment management and the Group’s planned response to those regulatory developments
In light of the growth in assets under management as a result of organic growth and the acquisition of Ignis, the Committee received a presentation on the processes and procedures in place to monitor and manage any investment capacity or liquidity issues within the investment business. This provided the Committee with assurance regarding the range of activities in place to support the investment business in meeting client expectations in the face of reduced trading capacity at many banks and the increase in “crowded trades” where many market participants were following the same strategy.
Executive, Standard Life Investments before his appointment to his new role  Group Long-term Incentive Plan – was replaced by the Executive LTIP at the 2014 Annual General Meeting and the last awards under this plan were made in March 2013
Directors’ remuneration report; and the maximum level of bonus and long-term incentive awards which may be awarded to a new executive Director (excluding the Chief Executive, Standard Life Investments) at or shortly following recruitment shall be limited to 475% of salary. The maximum level for the Chief Executive, Standard Life Investments will be 865% of salary. These limits exclude buyout awards and are in line with the policy table approved by shareholders.
Remuneration Salary, pension contributions and core benefits are specified in the contracts and are treated as described above. 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.
Loss of office remuneration The Remuneration Committee will consider the following factors when considering remuneration for loss of office:  The individual’s service contract and the rules of the relevant incentive plans  Circumstances of the loss of office  Performance during office  The commercial justification for any payments
Key achievements Strong financial performance including:  Group operating profit before tax of £663m – above maximum  Operating return on equity of 14.5% – above maximum
Directors’ interests in the Company’s shares through the medium of the Group’s share plans, granted after appointment to executive Director are shown below.
Group, Executive and Standard Life Investments LTIPs Awards are subject to vesting conditions that are based on continuous employment and on satisfying corporate performance targets over the performance period. All awards lapse six months after the expected first date of exercise and carry the right to receive rolled-up dividends, but only to the extent awards vest. All awards were granted under the Executive LTIP unless otherwise noted.
Keith Skeoch Director of the Investment Association (until 9 September 2015) Non-executive Director of the Financial Reporting Council £nil
Paul Matthews Member of the board of the Association of British Insurers £nil
Percentage change in remuneration of the director in the position of Chief Executive The table below shows the percentage year-on-year change in salary, benefits and annual bonus earned between the year ended 31 December 2014 and the year ended 31 December 2015 for the Chief Executive compared to the average UK based Group employee: % change in base salary % change in bonus % change in benefits
Remuneration Fees (as set out on the following page) . Reimbursement of travel and other reasonable expenses incurred in the performance of their duties. No pension, annual bonus or other incentive payment permitted.
Meeting when he will retire from the Board, having concluded nine years' service. 4 Stepped down from the Board following the conclusion of the AGM on 12 May 2015. 5 Stepped down from the Board with effect 28 April 2015.
2 The Chairman’s fee is inclusive of the non-executive Directors core fee and no additional fees are paid to the Chairman where he chairs, or is a member of, other committees/boards. In 2016 the Chairman will also receive £15,000 (2015: £15,000) as an allowance towards his business related accommodation costs in Edinburgh.
Investigation (‘CMI’) model against the outputs of management's internal cause of death model, wider market data from benchmarking and regulatory feedback
Our audit work in respect of the valuation of commercial mortgages included:  Evaluating the assumptions over the credit risk of the borrowers used in formulating the discount rate for the future cash flows against our own expectations for similar borrowers
 Meeting with management’s property experts to establish whether the valuation approach was in accordance with our expectations based on our own experience of the investment property industry
We determined that data had been completely and accurately migrated to the new general ledger. We also evaluated the design and tested the operational effectiveness of the post-migration IT and financial reporting control environment to establish the extent of detailed substantive testing that would be required to support our audit. To assess whether the new IT and financial reporting controls were designed and operating effectively our audit work included:  Testing the key controls over the transaction flows from the policy and claims administration systems to the new general ledger, for example, by testing that key automated controls functioned as designed
We checked that the forecasts used had been through management’s internal challenge and approval process and considered the sensitivity of forecasts relative to the historical accuracy of management’s forecasting.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £2m (2014: £2m) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Under ISAs (UK & Ireland) we are required to report to you if, in our opinion: Information in the Annual report and accounts is:  Materially inconsistent with the information in the audited financial statements  Apparently materially incorrect based on, or materially inconsistent with, our knowledge of the
Other comprehensive income for the year from continuing operations 156 311
Shares acquired by employee trusts - (3) - - - (3) - (3) Shares distributed or sold by employee and other trusts 30 - 10 - (10) - - - - Other movements in non-controlling interests in the year - - - - - - (59) (59) Aggregate tax effect of items recognised directly in equity 11 - - - 6 (1) 5 - 5
Non-cash items relating to investing and financing activities 44 (1,017) 189
Instruments, IFRS 10 Consolidated Financial Statements and IFRS 11 Joint Arrangements • Investments in associates and joint ventures within scope of IAS 28 Investments in Associates and Joint Ventures
IFRS 16 Leases (effective for annual periods beginning on or after 1 January 2019) The IASB issued the new standard on leases in January 2016. Management are currently reviewing the new requirements and the impact on the Group’s financial statements will be assessed in due course. The standard has not yet been endorsed by the EU.
Prior year acquisition On 1 July 2014, Standard Life Investments (Holdings) Limited, a wholly owned subsidiary of the Company acquired the entire share capital of Ignis Asset Management Limited (Ignis). The consideration transferred included a contingent consideration asset which was measured at fair value at £20m at the acquisition date. The contingent consideration relates to withdrawals of certain AUM acquired through the business combination. If AUM is withdrawn under certain circumstances, and outwith the expected run-off profile of the assets, then the seller will repay part of the purchase consideration for a period of up to 10 years from the acquisition date. The fair value of the asset at 31 December 2015 is £15m (2014: £20m). The movement in fair value of the contingent consideration asset has been recognised in other income in the consolidated income statement.
2. Segmental analysis continued (b) Reportable segments – Group operating profit, revenue and asset information continued (b)(i) Analysis of Group operating profit by segment continued
This reconciliation includes a number of reconciling items which arise due to presentation differences between IFRS reporting requirements and the determination of operating income and expenses. Operating income and expenses exclude items which have an equal and opposite effect on IFRS revenue and IFRS expenses in the consolidated income statement, such as investment returns which are for the account of policyholders. Other presentation differences in the above reconciliation generally relates to items included in administrative expenses which are borne by policyholders, for example investment property management expenses, or are directly related to fee income.
(c) Total revenue by geographical location Total revenue from continuing operations as presented in the consolidated income statement split by geographical location in which it was earned is as follows: UK 6,628 12,740 Rest of the world 2,264 3,848 Total 8,892 16,588
(a)(iii) Canada The Canadian business was included as discontinued operations following the announcement on 3 September 2014. The main entity in the Canada reportable segment that issued insurance and investment contracts was The Standard Life Assurance Company of Canada (SLCC) which has been renamed SCDA (2015) Inc. since its disposal. SLCC operated a fund structure under which certain recognised assets and associated liabilities were allocated to either segregated funds or a participating fund. Its remaining recognised assets were managed together to support other contract liabilities and to contribute to equity holders surplus. Where a customer chose to invest on a segregated fund basis, the assets and associated liabilities for such segregated fund investment elements were held in the segregated funds. SLCC’s segregated funds operated on a similar basis to SLAL’s unit linked funds. Any liabilities for insurance features or financial guarantees contained within a contract that had a segregated fund investment element were held outside the segregated funds. Deferred income and deferred acquisition costs arising on contracts that had a segregated fund investment element were also held outside the segregated funds.
Asset shares are used as a tool to determine fair treatment. The calculation of asset shares varies between products, for example calculations can be on the basis of representative policies or on an individual policy basis.
The significant options and guarantees under these contracts are the following: • Contracts where, subject to specified conditions, it is guaranteed on death and maturity either that the unit price will rise at an annual rate of at least 3% a year or that the unit price will not fall, and, that there will be no UPA at maturity • For bonds it is guaranteed that no UPA will apply on regular withdrawals up to certain specified limits
Fee income from investment contracts and fund platforms 622 619 Fee income from third party funds under management 438 305 Fee income deferred during the year 38 (25) (35) Amortisation of deferred income 38 63 66 Release of deferred income 38 - 5 Other fee income 22 25 Total fee income from continuing operations 1,120 985 6. Expenses under arrangements with reinsurers Expenses, including interest, arising under elements of contracts with reinsurers that do not transfer significant insurance risk are recognised on an accruals basis in the consolidated income statement as expenses under arrangements with reinsurers.
The average number of staff employed by the Group during the year: Standard Life Investments1 1,496 1,322
Total average number of staff employed 6,431 8,335 1 Includes all staff employed by the Canadian business including Standard Life Investments Inc. until its sale on 30 January 2015. 2 Includes staff in group corporate centre and group information technology.
Tax relating to each component of other comprehensive income from continuing operations (2) 6
(e) Unrecognised deferred tax Due to uncertainty regarding recoverability, deferred tax has not been recognised in respect of the following assets: • Cumulative losses carried forward of £215m (2014: £126m) • Tax reserves of the German branch of Standard Life Assurance Limited of £26m (2014: £37m) • Unrealised investment losses of £20m (2014: £17m)
Revenue Gross earned premium 138 1,720 Premium ceded to reinsurers (43) (36) Net earned premium 95 1,684 Investment return 1,166 2,914 Fee income 11 124 Gain on sale of subsidiaries 1 1,102 - Other income 1 17 Total revenue from discontinued operations 2,375 4,739
13. Earnings per share Basic earnings per share is calculated by dividing profit attributable to ordinary equity holders by the weighted average number of ordinary shares in issue during the year excluding shares owned by the employee trusts that have not vested unconditionally to employees.
Internally developed software Purchased software Total Notes £m £m £m £m £m £m
During 2014, subsequent to the acquisition of Ignis, there was a significant change in the management structure of the Absolute Return Government Bond Fund, which made up the majority of the institutional client contracts cash-generating unit carrying value. This resulted in outflows of assets under management and reduced projections of inflows and revenue, a consequential fall in the recoverable amount of this cash-generating unit, and an impairment loss of £43m in the year to 31 December 2014. During 2015, there were further outflows resulting in a further fall in recoverable amount and an impairment charge of £5m. The recoverable amount at 31 December 2015 has been calculated using a discount rate of 14% and an operating margin of 40%. The discount rate reflects the level of risk for these contracts and the operating margin is based on current experience.
17. Deferred acquisition costs The Group incurs costs to obtain and process new business. These are accounted for as follows: UK and Europe – insurance and participating investment contracts Acquisition costs incurred in issuing insurance or participating investment contracts are not deferred where such costs are borne by a with profits fund that was subject to the Prudential Regulation Authority (PRA) realistic capital regime. For other participating investment contracts, incremental costs directly attributable to the issue of the contracts are deferred. For other insurance contracts both incremental acquisition costs and other indirect costs of acquiring and processing new business, are deferred.
Country of incorporation and registration India India 2015 2014 2015 2014 31 December £m £m £m £m
19. Investment property Property held for long-term rental yields or investment gain that is not occupied by the Group and property being constructed or developed for future use as investment property are classified as investment property. Investment property is initially recognised at cost and subsequently measured at fair value. Gains or losses arising from changes in fair value are recognised in the consolidated income statement.
The amount of debt securities expected to be recovered or settled after more than 12 months is £46,814m (2014: £49,896m). Due to the nature of equity securities and interests in pooled investment funds, there is no fixed term associated with these securities.
Certain amounts seeded into funds are classified as investments in associates at FVTPL. Investment property held for sale relates to property for which contracts have been exchanged but the sale had not completed during the current financial year. Investments in associates at FVTPL and investment property held for sale continue to be measured based on the accounting policies that applied before they were classified as held for sale.
(a) Issued share capital The movement in the issued ordinary share capital of the Company was: 2015 2015 2015 2014 2014
Some participating contracts are issued by a non-participating fund with a with profits investment element then transferred to a with profits fund within SLAL falling within the scope of the PRA’s realistic capital regime. The with profits investment element of such contracts is measured as described above. Any liability for insurance features retained in the nonparticipating fund is measured using the gross premium method applicable to non-participating contracts (see policy (v)).
(vi) Measurement – liability adequacy test The Group applies a liability adequacy test at each reporting date to ensure that the insurance and participating contract liabilities (less related deferred acquisition costs) are adequate in the light of the estimated future cash flows. This test is performed by comparing the carrying value of the liability and the discounted projections of future cash flows.
Expenses The assumptions for future policy expense levels are determined from the Group’s recent expense analyses. No allowance has been made for potential expense improvement and the costs of projects to improve expense efficiency have been ignored. The assumed future expense levels incorporate an annual inflation rate allowance of 3.12% (2014: 3.61%) for UK business derived from the expected RPI implied by current investment yields and an additional allowance for earnings inflation.
• Defined contribution plans where the Group has agreed to contribute to a member’s pension plan but has no further payment obligations once the contributions have been paid
Canada All assets and liabilities relating to the defined benefit plan were included in the sale of the Canadian business which completed on 30 January 2015, and the net liability was classified as held for sale at 31 December 2014.
Expected contributions to the defined benefit plans in 2016 are as follows: 2016 £m
Reportable segment Shareholder business Participating business Unit linked and segregated funds1 UK and Europe SLAL – SHF
The shareholder is also exposed to certain risks relating to defined benefit pension plans operated by the Group. These risks are explained in Note 37.
Equity markets Property markets Interest rates 2014 +10% -10% +20% -20% +10% -10% +20% -20% +1% -1% Increase/(decrease) in profit after tax from continuing operations £m £m £m £m £m £m £m £m £m £m Shareholder business UK and Europe: Assets backing non-participating liabilities - - - - - - - - (595) 721 Non-participating insurance contract liabilities - - - - - - - - 567 (702) Non-participating investment contract liabilities - - - - - - - - - -
Quantitative credit risk disclosures are not provided in respect of the assets of the unit linked and segregated funds since the shareholder is not directly exposed to credit risks from these assets. The unit linked business includes £3,228m (2014: £3,523m) of assets that are held as reinsured external funds links. Under certain circumstances the shareholder may be exposed to losses relating to the default of the reinsured external fund links. These exposures are actively monitored and managed by the Group and the Group considers the circumstances under which losses may arise to be very remote.
41. Risk management continued (c) Credit risk continued (c)(i) Credit exposure continued Participating business An analysis of financial assets by credit rating is as follows: Reinsurance assets Loans
(c)(ii) Credit spreads As at 31 December 2015, it is expected that an adverse movement in credit spreads of 50 basis points, with no change to default allowance, would result in a reduction to profit for the year from continuing operations of £23m (2014: £24m). A further reduction of £46m (2014: £39m) would arise as a result of a change in assumed default rates of 12.5 basis points per annum (25% of the spread change).
The Group does not hold any other financial instruments which are subject to master netting agreements or similar arrangements. The following table presents the effect of master netting agreements and similar arrangements.
(c)(v) Credit risk on loans and receivables and financial liabilities designated as at fair value through profit or loss
Participating business UK and Europe Recourse cash flows (13) 12 (3) 3 - - (3) 3 Total participating business (13) 12 (3) 3 - - (3) 3 Total (130) 122 (10) 9 1 (1) (3) 3
Investment property (hotels) 312 Income capitalisation Equivalent yield Estimated rental value per room per annum
Items transferred to profit or loss on disposal of subsidiaries 12 (237)
Conversely, contingent assets are possible benefits to the Group. Contingent assets are only disclosed if it is probable that the Group will receive the benefit.
The year end balances arising from transactions carried out by the Group with related parties are as follows: 2015 2014 £m £m
The Group’s capital position is analysed between UK regulated life business, overseas life operations and other activities. The UK regulated life business is analysed by the nature of the underlying funds and includes German and Irish business written by branches of UK regulated companies. Other activities mainly comprise investment management and group corporate centre. The Group’s capital position, based on draft regulatory returns, is set out in the following table. For the year ended 31 December 2014, this includes the capital position and contract liabilities of the Canadian business classified as held for sale on the consolidated statement of financial position.
Unit linked Insurance contracts - 6,094 - 6,094 359 6,453 - 6,453 Investment contracts - 92,830 - 92,830 60 92,890 - 92,890 Total unit linked liabilities - 98,924 - 98,924 419 99,343 - 99,343
Pearson Jones plc United Kingdom Ordinary A Shares Ordinary B Shares
Select Japan (GK Holdings UK) Limited United Kingdom Ordinary Shares 60%
Standard Life Global Equity Trust II United Kingdom Unit Trust 100%
Standard Life Investment Company: Investment Grade Corporate Bond Fund United Kingdom OEIC 54%
Standard Life Investments (Trustee No 8 UK PDF) Limited United Kingdom Ordinary Shares 100%
Standard Life Investments Liability Aware Absolute Return III Nominal Profile Fund
1 OEIC = Open-ended investment company SICAV = Société d’investissement à capital variable ICAV = Irish collective asset-management vehicle
Adequacy of accounting records and information and explanations received Under the Companies Act 2006 we are required to report to you if, in our opinion:  We have not received all the information and explanations we require for our audit  Adequate accounting records have not been kept by the
10. Company financial statements Company statement of comprehensive income For the year ended 31 December 2015
For the defined contribution plan, the Company pays contributions to separately administered pension insurance plans. The contributions are recognised in staff costs and other employee-related costs when they are due.
D. Pension and other post-retirement benefit provisions The staff who manage the affairs of the Company are members of a defined benefit pension plan and/or a defined contribution pension scheme operated by the Group for its employees in the UK. There is no contractual agreement or policy for charging the net defined benefit cost of the defined benefit plan across the participating UK companies. The sponsoring employer for the defined benefit plan is SLAL, and therefore the net defined benefit cost of the plan is recognised by SLAL. As a result, the Company treats its participation in the defined benefit plan as a defined contribution plan. Contributions to defined contribution plans are expensed when employees have rendered services in exchange for such contributions, generally in the year of contribution. The contributions to the defined contribution and the defined benefit plans recognised as an expense for the year ended 31 December 2015 were £2m (2014: £4m).
H. Investments in associates and joint ventures 2015 2014 Notes £m £m
Details of the dividends paid on ordinary shares and the 73p per ordinary share returned to the shareholders through a ‘B/C’ share scheme by the Company are provided in Notes 15 and 28 of the Group financial statements. Note 15 also includes information regarding the final dividend proposed by the Directors for the year ended 31 December 2015.
Derivative instruments may also be utilised to reduce risk arising from exposure to fluctuations in interest rates and equity indices. Transactions in derivatives are undertaken on a regulated market or are with an approved counterparty. In employing derivatives, the Company must always have sufficient cash and cash equivalents or underlying assets to cover any potential obligation or exercise right following reasonably foreseeable adverse variations.
Equity sensitivity to market risk The Company classifies certain debt securities which back subordinated debt liabilities as available-for-sale. These debt securities are measured at fair value. Interest is calculated using the effective interest method and recognised in the income statement. Other changes in fair value and the related tax are recognised in other comprehensive income. As a result, the sensitivity of the Company's equity to variations in interest rate risk exposures differs from the sensitivity of the Company's profit after tax to variations in interest rate risk exposures.
W. Risk management continued (c) Credit risk continued (c)(iii) Offsetting financial assets and liabilities continued
Non-performance risk arising from the credit risk of each counterparty has been considered on a net exposure basis in line with the Group’s risk management policies. At 31 December 2015 the residual credit risk is considered immaterial and no credit risk adjustment has been made.
Third party strategic partner life business M - - (1.6) (1.6) 45.4 43.8
Effectiveness The Committee reviews its remit and effectiveness annually. The 2015 review was carried out by means of a selfassessment questionnaire and the Committee discussed the results of the review formally at one of its meetings. The WPC members concluded that they had used their available time effectively, focusing on the key issues and providing appropriate challenge.
The members are appointed by the SLAL Board on the recommendation of the Nomination and Governance Committee. The IGC’s first meeting was in May 2015. The Head of Pensions Strategy routinely attends these meetings and the Managing Director for Corporate, Retail and Wholesale has had regular interactions with the Committee.
 As part of this assessment, where the Committee finds problems, to raise concerns (as it sees fit) with the SLAL board
Similar to the IGC, SLMTC has a duty to assess whether members of these schemes are receiving good value. Alongside their trustee duties, they are following a similar programme to the IGC to carry out this assessment.
Group underlying cash generation This is a non-Generally Accepted Accounting Principles (GAAP) measure which presents a shareholder view of underlying cash generation. The IFRS Consolidated statement of cash flows includes policyholder cashflows, and does not exclude non-recurring and nonoperating items.
Capital resources requirement (CRR) A company must hold capital resources in excess of the capital resources requirement. The CRR represents the total of the individual capital resources requirements (ICRR) of each regulated company in the Group.