REG - abrdn PLC - Final Results - Part 7 of 8
01/03/2022 07:15
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RNS Number : 1198D abrdn PLC 01 March 2022
abrdn plc
Full Year Results 2021
Part 7 of 8
8. Company financial statements
Company statement of financial position
As at 31 December 2021
2021 2020
Notes £m £m
Assets
Investments in subsidiaries A 5,065 4,013
Investments in associates and joint ventures B 206 1,216
Deferred tax assets N 113 77
Loans to subsidiaries C 70 109
Derivative financial assets C 8 1
Equity securities and interests in pooled investment funds C 1,187 249
Debt securities C 227 326
Receivables and other financial assets C 30 50
Other assets F 83 -
Cash and cash equivalents C 20 47
Total assets 7,009 6,088
Equity
Share capital G 305 306
Shares held by trusts H (167) (161)
Share premium reserve G 640 640
Retained earnings I
Brought forward retained earnings 2,631 2,933
Profit/(loss) for the year attributable to equity shareholders of abrdn plc 990 (1,266)
Other movements in retained earnings (320) 964
Total retained earnings 3,301 2,631
Other reserves J 1,856 1,842
Equity attributable to equity shareholders of abrdn plc 5,935 5,258
Other equity K 207 -
Total equity 6,142 5,258
Liabilities
Subordinated liabilities L 644 638
Derivative financial liabilities D - 6
Other financial liabilities L 177 110
Provisions P 35 68
Other liabilities P 11 8
Total liabilities 867 830
Total equity and liabilities 7,009 6,088
The financial statements on pages 252 to 263 were approved by the Board and
signed on its behalf by the following
Directors:
Sir Douglas Flint Stephanie Bruce
Chairman Chief Financial Officer
28 February 2022 28 February 2022
Company registered number: SC286832
The Notes on pages 255 to 263 are an integral part of these financial
statements.
Company statement of changes in equity
For the year ended 31 December 2021
Share capital Shares held by trusts Share premium Retained earnings Other reserves Total equity attributable to equity shareholders of abrdn plc Other equity Total equity
reserve
2021 Notes £m £m £m £m £m £m £m £m
1 January 306 (161) 640 2,631 1,842 5,258 - 5,258
Profit for the year - - - 990 - 990 - 990
Other comprehensive income for the year - - - - 6 6 - 6
Total comprehensive income for the year - - - 990 6 996 - 996
Issue of other equity K - - - - - - 207 207
Dividends paid on ordinary shares - - - (308) - (308) - (308)
Share buyback G (1) - - - 1 - - -
Reserves credit for employee share-based payment J - - - - 43 43 - 43
Transfer to retained earnings for vested employee share-based payment J - - - 36 (36) - - -
Shares acquired by employee trusts - (52) - - - (52) - (52)
Shares distributed by employee and other trusts and related dividend - 46 - (48) - (2) - (2)
equivalents
31 December 305 (167) 640 3,301 1,856 5,935 207 6,142
The Notes on pages 255 to 263 are an integral part of these financial
statements.
Share Shares Share Retained Other Total
capital held by premium earnings reserves equity
reserve
trusts
2020 Notes £m £m £m £m £m £m
1 January 327 (119) 640 2,933 3,621 7,402
Loss for the year - - - (1,266) - (1,266)
Other comprehensive income for the year - - - - 8 8
Total comprehensive income for the year - - - (1,266) 8 (1,258)
Dividends paid on ordinary shares - - - (479) - (479)
Share buyback G (21) - - (402) 21 (402)
Reserves credit for employee share-based payment J - - - - 64 64
Transfer to retained earnings for vested employee share-based payment J - - - 38 (38) -
Transfer between reserves on impairment of investment in subsidiaries J - - - 1,834 (1,834) -
Shares acquired by employee trusts - (66) - - - (66)
Shares distributed by employee and other trusts and related dividend - 24 - (27) - (3)
equivalents
31 December 306 (161) 640 2,631 1,842 5,258
The Notes on pages 255 to 263 are an integral part of these financial
statements.
Company accounting policies
(a) Basis of preparation
These separate financial statements are presented as required by the Companies
Act 2006. The Company meets the definition of a qualifying entity under
Application of Financial Reporting Requirements 100 as issued by the Financial
Reporting Council. Accordingly, the financial statements
for period ended 31 December 2021 have been prepared in accordance with
Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) as
issued by the Financial Reporting Council.
The financial statements have been prepared on a going concern basis and under
the historical cost convention, as modified by the revaluation of financial
assets and financial liabilities (including derivative instruments) at fair
value through profit or loss (FVTPL).
As permitted by FRS 101, the Company has taken advantage of the following
disclosure exemptions available under that standard:
- A cash flow statement and related notes.
- Capital management.
- Effect of IFRSs issued but not effective.
- Related party transactions with wholly owned subsidiaries.
As equivalent disclosures are given in the consolidated financial statements,
we have also applied the disclosure exemptions for share based payments and
financial instruments.
The principal accounting policies adopted are the same as those given in the
consolidated financial statements, together with the Company specific policies
set out below. These accounting policies have been consistently applied to all
financial reporting periods presented in these financial statements.
The Company has taken advantage of the exemption in section 408 of the
Companies Act 2006 not to present its own income statement in these financial
statements. The auditors' remuneration for audit and other services is
disclosed in
Note 7 to the consolidated financial statements. The Company has no employees.
(i) Investment in subsidiaries, associates and joint ventures
The Company has certain subsidiaries which are investment vehicles such as
open-ended investment companies, unit trusts and limited partnerships whose
primary function is to generate capital or income growth through holding
investments. This category of subsidiary is held at FVTPL since they are
managed on a fair value basis.
Investments in subsidiaries (other than those measured at FVTPL), associates
(other than those measured at FVTPL) and joint ventures are initially
recognised at cost and subsequently held at cost less any impairment charge.
An impairment charge is recognised when the carrying amount of the investment
exceeds its recoverable amount. Any gain or loss on disposal of a subsidiary,
associate or joint venture is recognised in profit for the year.
Distributions received of non-cash assets, including investments in
subsidiaries, are recognised at fair value in the balance sheet and as
dividends in specie in the income statement.
(ii) Critical accounting estimates and judgements in
applying accounting policies
The preparation of financial statements requires management to make estimates
and assumptions and exercise judgements in applying the accounting policies
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses arising
during the year. Estimates and judgements are continually evaluated and based
on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
The areas where judgements have the most significant effect on the amounts
recognised in the Company financial statements are as follows:
Financial statement area Critical judgements in applying accounting policies Related notes
Investments in subsidiaries held at cost Given that the net assets attributable to shareholders of abrdn plc at 31 Note A
December 2021 were higher than the market capitalisation of the Company
judgement was required to determine for which subsidiaries this was considered
an indicator of impairment
The areas where assumptions and other sources of estimation uncertainty at the
end of the reporting period have a significant risk of resulting in a material
adjustment to the carrying amount of assets and liabilities within the next
financial year are as follows:
Financial statement area Critical accounting estimates and assumptions Related notes
Investments in subsidiaries held at cost Determination of the recoverable amount Note A
Notes to the Company financial statements
A. Investments in subsidiaries
2021 2020
Notes £m £m
Investments in subsidiaries measured at cost 3,737 3,568
Investments in subsidiaries measured at FVTPL C 1,328 445
Investments in subsidiaries 5,065 4,013
2021 2020
£m £m
At 1 January 4,013 6,027
Investment into existing subsidiaries measured at cost 210 26
Acquisition of subsidiaries via in specie dividend 4 -
Disposal of subsidiaries measured at cost - (50)
Impairment of subsidiaries measured at cost (45) (1,873)
Acquisition of subsidiaries at FVTPL 884 8
Disposal of subsidiaries at FVTPL (2) (126)
Gains on subsidiaries at FVTPL 1 1
At 31 December 5,065 4,013
Details of the Company's subsidiaries are given in Note 47 of the Group
financial statements.
(a) Acquisitions
During 2021, the Company made the following acquisitions of subsidiaries
measured at cost:
- The Company increased its investment in abrdn Financial Planning Ltd
(aFPL) through the purchase of 40,000,000 ordinary shares for a cash
consideration of £40m.
- The Company increased its investment in Aberdeen Asset Management PLC
(AAM PLC) by £165.3m through the purchase of 1,031,250 ordinary shares for a
cash consideration of £3.3m, the purchase of 21,350,600 ordinary shares for a
cash consideration of £68.3m, the purchase of 1,718,750 ordinary shares for a
cash consideration of £5.5m and the purchase of 27,562,500 ordinary shares
for a cash consideration of £88.2m.
- The Company increased its investment in Aberdeen Corporate Services
Limited (ACSL) through the purchase of 3,385 ordinary shares for a cash
consideration of £3.4m.
- The Company acquired Focus Business Solutions (FBS) via a dividend in
specie from Focus Solutions Group Limited and recognised this subsidiary at an
amount of £3.8m. The Company further increased its investment in FBS through
the purchase of 150,000,000 ordinary shares for a cash consideration of
£1.5m.
During 2020, the Company made the following acquisitions of subsidiaries measured at cost:
- The Company increased its investment in aFPL through the purchase of
17,000,000 ordinary shares for a cash consideration of £17m.
- The Company increased its investment in AAM PLC through the purchase
of 1,171,875 ordinary shares for a cash consideration of £3.8m and through
the purchase of 500,000 ordinary shares for a cash consideration of £1.6m.
- The Company increased its investment in ACSL through the purchase of
3,584 ordinary shares for a cash consideration of £3.6m.
See Section (d) below for details on investments in subsidiaries at FVTPL.
(b) Disposals
During 2020, the Company made the following disposals of subsidiaries measured
at cost:
- The Company redeemed £44.4m of equity capital in abrdn (Mauritius
Holdings) 2006 Limited through the cancellation of 553,336.19 Participating
shares.
- The Company received £5.2m by way of distribution of the unallocated
divisible surplus from the Standard Life Assurance Company 2006 (SLAC 06)
following its deauthorisation. The Company was the sole member of SLAC 06 and
this amount was previously held as a subsidiary measured at cost.
(c) Impairment
The Company's net assets attributable to shareholders of abrdn plc at 31
December 2021 of £5.9bn are higher than the Company's market capitalisation
of £5.3bn. This was considered to be an indicator of impairment of the
Company's largest investment in subsidiary AAM PLC (carrying value £2.1bn).
All other investments in subsidiaries (with the exception of abrdn Financial
Planning Limited discussed below) were supported by financial assets, or other
relevant analysis. The recoverable amount of AAM PLC was therefore determined
based on value in use and based on this assessment no impairment of AAM PLC
was required at 31 December 2021. The assumptions used in the value in use
were the same as those used for the value in use of the asset management group
of cash generating units as described in Note 14 of the Group financial
statements, with the cash flows being restricted to those related to the AAM
PLC group. Management do not consider that there is a significant risk of a
material adjustment to the carrying amount of the AAM PLC investment in
subsidiary asset within the next financial year.
In the year ended 31 December 2020, the Company impaired its investment in AAM
PLC by £1,834m. Following the impairment, £1,834m was transferred from the
merger reserve to retained earnings (refer Note J). There was no transfer from
the merger reserve in the year ended 31 December 2021.
The impairment of £1,834m was recognised at 30 June 2020, at the same time as
a further impairment of the asset management goodwill was recognised in the
Group financial statements. Refer Note 14 of the Group financial statements.
The Company's investment in its subsidiary abrdn Financial Planning Limited
(aFPL) was impaired during 2021 by £45m (2020: £39m). As detailed in Note A,
the Company had increased its investment in aFPL by £40m during the year
ended
31 December 2021.
The recoverable amount of aFPL which is its fair value less costs of disposal
(FVLCD) at 31 December 2021 was £110m. The FVLCD considered a number of
valuation approaches, with the primary approach being a multiples approach
based on price to revenue and price to assets under advice (AUAdv). Multiples
were based on recent transactions, adjusted to take into account profitability
where appropriate, and were benchmarked against trading multiples for aFPL's
peer companies. Revenue was based on actuals for the year ended 31 December
2021 and AUAdv was based on actuals at 31 December 2021. The expected cost of
disposal was based on past experience of previous transactions. This is a
level 3 measurement as it is measured using inputs which are not based on
observable market data. The impairment resulted from losses incurred by the
business during the year, the impact of the level of profitability on
valuation expectations for certain parts of the business, and an impairment of
internally developed software (refer Note 14 of the Group financial
statements). As the year end carrying value is the recoverable amount any
downside sensitivity will lead to a further future impairment loss.
A 20% reduction in recurring revenue and AUAdv would result in a further
impairment of £22m.
The recoverable amount at 31 December 2020 of £115m was also based on the
FVLCD which similarly considered a number of valuation approaches, with the
primary approach being a multiples approach based on price to revenue and
price to AUAdv.
(d) Investments in subsidiaries at FVTPL
Investments in subsidiaries at FVTPL, valued at £1,328m (2020: £445m),
relate to holdings in funds over which the Company has control.
B. Investments in associates and joint ventures
2021 2020
£m £m
Investment in associates measured at cost 10 1,020
Investment in joint venture measured at cost 196 196
Investments in associates and joint ventures 206 1,216
(a) Investment in associates
The Company has an interest of 25.3% (2020: 25.3%) in Tenet Group Limited, a
company incorporated in England and Wales which is measured at cost less
impairment.
With effect from 23 February 2021 the Company judged its investment in Phoenix
Group Holdings plc (Phoenix) was no longer classified as an associate. Further
details are provided in Note 15 of the Group Financial Statements. The
Company's shareholding in Phoenix, which remained at 14.4%, was therefore
reclassified from an investment in associate measured at cost less impairment
to equity securities and interests in pooled investment funds measured at fair
value. A reclassification gain of £13m was recognised for the year ended 31
December 2021 as the fair value on 22 February 2021 of £1,023m was higher
than the previous carrying value as an associate of £1,010m.
(b) Investment in joint venture
The Company has a 50% (2020: 50%) interest in Heng An Standard Life Insurance
Company Limited (HASL), a company incorporated in China. Further details on
this joint venture are provided in Note 15 of the Group financial statements.
C. Financial investments
Fair value through Derivative financial instruments used for hedging Amortised cost Total
profit or loss
2021 2020 2021 2020 2021 2020 2021 2020
Notes £m £m £m £m £m £m £m £m
Investments in subsidiaries measured at FVTPL A 1,328 445 - - - - 1,328 445
Loan to subsidiaries - - - - 70 109 70 109
Derivative financial assets D - - 8 1 - - 8 1
Equity securities and interests in pooled investment funds 1,187 249 - - - - 1,187 249
Debt securities 1 - - - 226 326 227 326
Receivables and other financial assets E - 28 - - 30 22 30 50
Cash and cash equivalents - - - - 20 47 20 47
Total 2,516 722 8 1 346 504 2,870 1,227
The amount of debt securities expected to be recovered or settled after more
than 12 months is £62m (2020: £231m). The amount of loans to subsidiaries
expected to be recovered or settled after more than 12 months is £70m (2020:
£100m). The amount of equity securities and interests in pooled investment
funds expected to be recovered or settled after more than 12 months is £708m
(2020: £249m).
Under IFRS 9 the Company calculates expected credit losses (ECL) on financial
assets which are measured at amortised cost (refer to Note 37 (c) of the Group
financial statements), including loans to subsidiaries (which are unrated). At
31 December 2021 the Company does not hold financial assets at amortised cost
that it regards as credit-impaired or for which it considers the probability
of default would result in material expected credit losses. The expected
credit losses recognised were less than £1m (2020: less than £1m). In making
this assessment the Company has considered if any evidence is available to
indicate the occurrence of an event which would result in a detrimental impact
on the estimated future cash flows of these assets.
D. Derivative financial instruments
The Company uses derivative financial instruments in order to reduce the risk
from potential movements in foreign exchange rates.
2021 2020
Contract Fair value Fair value Contract Fair value Fair value
amount
assets
amount
assets
liabilities liabilities
£m £m £m £m £m £m
Cash flow hedges 554 8 - 549 - 6
Foreign exchange forwards 64 - - 79 1 -
Derivative financial instruments 618 8 - 628 1 6
The derivative asset of £8m (2020: derivative liability of £6m) is expected
to be settled after more than 12 months.
On 18 October 2017, the Company issued subordinated notes with a principal
amount of US $750m. In order to manage the foreign exchange risk relating to
the principal and coupons payable on these notes the Company entered into
a cross-currency swap which is designated as a hedge of future cash flows.
The maturity profile of the contractual undiscounted cash flows in relation to
derivative financial instruments is as follows:
Within 2-5 6-10 11-15 Total
1 year
years
years
years
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
£m £m £m £m £m £m £m £m £m £m
Cash inflows
Cash flow hedges 24 23 94 93 589 607 - - 707 723
Foreign exchange forwards 55 62 - - - - - - 55 62
Total 79 85 94 93 589 607 - - 762 785
Cash outflows
Cash flow hedges (18) (18) (73) (73) (596) (614) - - (687) (705)
Foreign exchange forwards (55) (61) - - - - - - (55) (61)
Total (73) (79) (73) (73) (596) (614) - - (742) (766)
Net derivative financial instruments cash flows 6 6 21 20 (7) (7) - - 20 19
E. Receivables and other financial assets
2021 2020
£m £m
Amounts due from related parties 14 16
Contingent consideration asset - 28
Other financial assets 16 6
Total receivables and other financial assets 30 50
The carrying amounts disclosed above reasonably approximate the fair values at
the year end.
Receivables and other financial assets of £30m (2020: £43m) are expected to
be recovered within 12 months.
F. Other assets
2021 2020
£m £m
Prepayments 56 -
Other 27 -
Other assets 83 -
The amount of Other assets which are expected to be recovered within 12 months
is £35m (2020: £nil).
Prepayments of £56m (2020: £nil) relate to the Group's future purchase of
certain products in the Phoenix Group's savings business offered through
abrdn's Wrap platform together with the Phoenix Group's trustee investment
plan business for UK pension scheme clients (refer Note 1(c)(iii) of the Group
financial statements). Other includes £27m (2020: £nil) in respect of
amounts due from related parties.
G. Share capital and share premium
Details of the Company's share capital and share premium are given in Note 25
of the Group financial statements including details of the share buyback.
H. Shares held by trusts
Shares held by trusts relates to shares in abrdn plc that are held by the
Standard Life Aberdeen Employee Benefit Trust (SLA EBT) and Standard Life
Employee Trust (ET). Further details of these trusts are provided in Note 26
of the Group financial statements.
I. Retained earnings
Details of the dividends paid on the ordinary shares by the Company are
provided in Note 13 of the Group financial statements. Note 13 also includes
information regarding the final dividend proposed by the Directors for the
year ended
31 December 2021.
J. Movements in other reserves
The following tables show the movements in other reserves during the year:
Merger reserve Equity compensation reserve Special reserve Capital redemption reserve Cash flow hedges Total
2021 £m £m £m £m £m £m
At 1 January 578 79 115 1,058 12 1,842
Fair value gains on cash flow hedges - - - - 19 19
Realised gains on cash flow hedges transferred to income statement - - - - (10) (10)
Share buyback - - - 1 - 1
Reserves credit for employee share-based payments - 43 - - - 43
Transfer to retained earnings for vested employee share-based payments - (36) - - - (36)
Tax effect of items that may be reclassified subsequently to profit or loss - - - - (3) (3)
At 31 December 578 86 115 1,059 18 1,856
Merger reserve Equity compensation reserve Special reserve Capital redemption reserve Cash flow hedges Total
2020 £m £m £m £m £m £m
At 1 January 2,412 53 115 1,037 4 3,621
Fair value losses on cash flow hedges - - - - (3) (3)
Realised losses on cash flow hedges transferred to income statement - - - - 13 13
Share buyback - - - 21 - 21
Reserves credit for employee share-based payments - 64 - - - 64
Transfer to retained earnings for vested employee share-based payments - (38) - - - (38)
Transfer between reserves on impairment of investment in subsidiaries (1,834) - - - - (1,834)
Tax effect of items that may be reclassified subsequently to profit or loss - - - - (2) (2)
At 31 December 578 79 115 1,058 12 1,842
During 2021, £1m (2020: £21m) was recognised in the capital redemption
reserve for the share buyback (refer Note 25 of the Group financial
statements).
During 2020, following the impairment loss recognised in that period on the
Company's investment in AAM PLC (refer Note A) £1,834m was transferred from
the merger reserve to retained earnings.
K. Other Equity
5.25 % Fixed Rate Reset Perpetual Subordinated Contingent Convertible Notes
On 13 December 2021, the Company issued £210m of 5.25% Fixed Rate Reset
Perpetual Subordinated Contingent Convertible Notes (the Notes). The Notes are
classified as other equity and have been initially recognised at £207m (the
proceeds received less issuance costs of £3m, refer Note 29 (a) of the Group
financial statements).
L. Financial liabilities
Designated as at fair value through profit or loss Amortised cost Total
2021 2020 2021 2020 2021 2020
Notes £m £m £m £m £m £m
Subordinated liabilities M - - 644 638 644 638
Other financial liabilities O 9 - 168 110 177 110
Total 9 - 812 748 821 748
M. Subordinated liabilities
2021 2020
Principal Carrying Principal Carrying
value
value
amount amount
Subordinated notes:
4.25% US Dollar fixed rate due 30 June 2028 $750m £552m $750m £546m
5.5% Sterling fixed rate due 4 December 2042 £92m £92m £92m £92m
Total subordinated liabilities £644m £638m
Subordinated liabilities are considered current if the contractual re-pricing
or maturity dates are within one year. The principal amount of all the
subordinated liabilities is expected to be settled after more than 12 months.
The accrued interest on the subordinated liabilities of less than £1m (2020:
less than £1m) is expected to be settled within 12 months.
Further information including the terms and conditions of all subordinated
liabilities is given in Note 32 of the Group financial statements.
N. Deferred tax assets and liabilities
2021 2020
£m £m
Deferred tax assets 113 77
The amount of deferred tax assets expected to be recovered or settled after
more than 12 months are £113m (2020: £77m).
Recognised deferred tax
2021 2020
£m £m
Deferred tax assets comprise:
Unused tax losses 120 80
Unrealised losses on cash flow hedges - (2)
Gross deferred tax assets 120 78
Less: Offset against deferred tax liabilities (7) (1)
Deferred tax assets 113 77
Deferred tax liabilities comprise:
Unrealised gains on cash flow hedges 6 -
Unrealised gains on investments 1 1
Gross deferred tax liabilities 7 1
Less: Offset against deferred tax assets (7) (1)
Deferred tax liabilities - -
Net deferred tax asset at 31 December 113 77
Movements in net deferred tax assets comprise:
At 1 January 77 35
Amounts credited to profit or loss 39 44
Amounts charged to other comprehensive income (3) (2)
At 31 December 113 77
The deferred tax assets recognised are in respect of unrealised losses on cash
flow hedges and on unused tax losses including the impact of the revaluation
of these losses due to the future impact of the increase in the UK Corporation
Tax rate to 25% from 1 April 2023. The deferred tax assets are recognised to
the extent that it is probable that the losses will be capable of being offset
against future taxable profits (refer Note 9 (c) (ii) of the Group financial
statements).
O. Other financial liabilities
2021 2020
£m £m
Outstanding purchase of investment securities 5 6
Amounts due to related parties 137 47
Collateral held in respect of derivative contracts 15 7
Contingent consideration liability 9 -
Outstanding contractual obligation for share buyback - 40
Other 11 10
Other financial liabilities 177 110
Other financial liabilities of £172m (2020: £110m) are expected to be
settled within 12 months.
P. Provisions and other liabilities
Of Provisions of £35m (2020: £68m), £35m are expected to be settled within
12 months (2020: £58m). The provisions in 2021 and 2020 relate to separation
costs. Refer Note 36 of the Group financial statements for further information
and details of the provisions.
Of Other liabilities of £11m (2020: £8m), £11m are expected to be settled
within 12 months (2020: £8m) and include £11m (2020: £8m) in respect of
amounts due to related parties.
Q. Contingent liabilities, contingent assets, indemnities and guarantees
(a) Legal proceedings and regulations
The Company, like other financial organisations, is subject to legal
proceedings and complaints in the normal course of its business. All such
material matters are periodically reassessed, with the assistance of external
professional advisers where appropriate, to determine the likelihood of the
Company incurring a liability. Where it is concluded that it is more likely
than not that a material outflow will be made a provision is established based
on management's best estimate of the amount that will be payable. At 31
December 2021, there are no identified contingent liabilities expected to
lead to a material exposure.
(b) Indemnities and guarantees
Under the trust deed in respect of the UK Standard Life defined benefit
pension plan, ACSL, the principal employer, must pay contributions to the
pension plan as the trustees' actuary may certify necessary. The Company has
guaranteed the obligations of ACSL in relation to this plan. In addition the
Company has guaranteed similar obligations in respect of certain other
subsidiaries' UK and Ireland defined benefit pension plans.
None of these guarantees give rise to any liabilities at 31 December 2021
(2020: none).
R. Related party transactions
(a) Key management personnel
The Directors and key management personnel of the Company are considered to
be the same as for the Group. See Note 44 of the Group financial statements
for further information.
S. Events after the reporting date
On 28 January 2022, the Group announced that it had sold an aggregate of
39,981,442 ordinary shares of its shareholding in Phoenix, representing
approximately 4% of Phoenix's issued share capital, at a price of 660 pence
per share, raising aggregate gross sale proceeds of c£264 million. As a
result of the sale, the Company's shareholding has reduced to 10.4% and it
continues to be classified as equity securities and interests in pooled
investment funds, measured at fair value.
On 2 December 2021 the Group announced the proposed acquisition of 100% of the
issued share capital of Antler Holdco Limited, the holding company of
interactive investor Limited (interactive investor) for cash consideration of
£1.49bn, subject to certain adjustments. interactive investor is the leading
subscription-based, digitally enabled, direct investing platform in the UK
and, as the acquisition constitutes a Class 1 transaction under the Listing
Rules, a Class 1 Circular was published on 9 February 2022. Completion is
subject to the satisfaction of certain conditions, including relevant
regulatory approvals and the approval of the acquisition by the Group's
shareholders at a General Meeting on 15 March 2022.
9. Supplementary information
9.1 Alternative performance measures APM
We assess our performance using a variety of measures that are not defined
under IFRS and are therefore termed alternative performance measures (APMs).
The APMs that we use may not be directly comparable with similarly named
measures used by other companies. We have presented below reconciliations from
these APMs to the most appropriate measure prepared in accordance with IFRS.
All APMs should be read together with the IFRS consolidated income statement,
IFRS consolidated statement of financial position and IFRS consolidated
statement of cash flows, which are presented in the Group financial statements
section of this report and related metrics. Adjusted operating profit excludes
certain items which are likely to be recurring such as restructuring costs,
amortisation of certain intangibles, dividends from significant listed
investments and the share of profit or loss from joint ventures.
R
Metric used for executive remuneration in 2022. See page 104 for more
information.
Definition Purpose
Adjusted operating profit APM R
Adjusted operating profit before tax is the Group's key APM. Adjusted Adjusted operating profit has replaced adjusted profit before tax as the
operating profit includes the results of the Group's three growth vectors: Group's key APM. Adjusted operating profit reporting provides further analysis
Investments, Adviser and Personal, along with Corporate/Strategic. of the results reported under IFRS and the Directors believe it helps to give
shareholders a fuller understanding of the performance of the business by
It excludes the Group's adjusted net financing costs and investment return, identifying and analysing adjusting items.
and discontinued operations.
Segment reporting used in management information is reported to the level of
Adjusted operating profit also excludes the impact of the following items: adjusted operating profit, following the changes to adjusted profit before tax
discussed below.
- Restructuring costs and corporate transaction expenses. Restructuring
includes the impact of major regulatory change.
- Amortisation and impairment of intangible assets acquired in business
combinations and through the purchase of customer contracts.
- Profit or loss arising on the disposal of a subsidiary, joint venture
or equity accounted associate.
- Change in fair value of/dividends from significant listed investments.
- Share of profit or loss from associates and joint ventures.
- Impairment loss/reversal of impairment loss recognised on investments
in associates and joint ventures accounted for using the equity method.
- Fair value movements in contingent consideration.
- Items which are one-off and, due to their size or nature, are not
indicative of the long-term operating performance of the Group.
Further details are included in Note 12 of the Group financial statements.
Fee based revenue APM
Fee based revenue includes revenue we generate from asset management charges Fee based revenue is a component of adjusted operating profit and provides the
(AMCs), platform charges and other transactional charges. AMCs are earned on basis for reporting of the fee revenue yield financial ratio. Fee based
products such as mutual funds, and are calculated as a percentage fee based on revenue is also used to calculate the cost/income ratio.
the assets held. Investment risk on these products rests principally with the
client, with our major indirect exposure to rising or falling markets coming
from higher or lower AMCs. Fee based revenue is shown net of costs of sale,
such as commissions and similar charges.
Adjusted operating expenses APM
Adjusted operating expenses is a component of adjusted operating profit and Adjusted operating expenses is a component of adjusted operating profit and is
relates to the day-to-day expenses of managing our business. Adjusted used to calculate the cost/income ratio.
operating expenses excludes restructuring and corporate transaction expenses.
Adjusted operating expenses also excludes amortisation and impairment of
intangible assets acquired in business combinations and through the purchase
of customer contracts.
Adjusted profit before tax APM
In addition to the results included in adjusted operating profit above, Adjusted profit before tax is a key input to the adjusted earnings per share
adjusted profit before tax includes adjusted net financing costs and measure.
investment return. Previously adjusted profit included the pre-tax adjusted
results from the Group's associates and joint ventures accounted for using the
equity method. The reason for the change is to make the results more
understandable, following the reclassification of HDFC Life and Phoenix from
associates to equity investments.
Definition Purpose
Adjusted net financing costs and investment return APM
Adjusted net financing costs and investment return (previously named Capital Adjusted net financing costs and investment return is a component of adjusted
management) relates to the return from the net assets of the shareholder profit before tax.
business, net of costs of financing. This includes the net assets in defined
benefit staff pension plans and net assets relating to the financing of
subordinated liabilities.
Cost/income ratio APM
This is an efficiency measure that is calculated as adjusted operating This ratio is used by management to assess efficiency and reported to the
expenses divided by fee based revenue in the period. Board and executive leadership team.
Fee revenue yield (bps) APM
The fee revenue yield is calculated as annualised fee based revenue (excluding The average revenue yield on fee based business is a measure that illustrates
performance fees and revenue for which there are no attributable assets) the average margin being earned on the assets that we manage, administer or
divided by monthly average fee based assets. advise our clients on.
Adjusted diluted earnings per share APM
Adjusted diluted earnings per share is calculated on adjusted profit after Earnings per share is a commonly used financial metric which can be used to
tax. The weighted average number of ordinary shares in issue is adjusted measure the profitability and capital efficiency of a company over time. We
during the period to assume the conversion of all dilutive potential ordinary also calculate adjusted diluted earnings per share to illustrate the impact of
shares, such as share options granted to employees. adjusting items on the metric.
Details on the calculation of adjusted diluted earnings per share are set out This ratio is used by management to assess performance and reported to the
in Note 11 of the Group financial statements. Board and executive leadership team.
Adjusted capital generation APM
Adjusted capital generation is part of the analysis of movements in IFPR This measure aims to show how adjusted profit contributes to regulatory
regulatory capital. Adjusted capital generation is calculated as adjusted capital, and therefore provides insight into our ability to generate capital
profit after tax less returns relating to pension schemes in surplus, which do that is deployed to support value for shareholders.
not benefit regulatory capital. It also includes dividends from associates,
joint ventures and significant listed investments.
Adjusted diluted capital generation per share APM R
Adjusted diluted capital generation per share is calculated as adjusted This ratio is a measure used to assess performance for remuneration purposes.
capital generation divided by the weighted average number of diluted ordinary
shares outstanding.
Cash and liquid resources APM
Cash and liquid resources are IFRS cash and cash equivalents (netted down for The purpose of this measure is to demonstrate how much cash and invested
overdrafts), money market instruments and holdings in money market funds. It assets we hold and can be readily accessed.
also includes surplus cash that has been invested in liquid assets such as
high quality corporate bonds, gilts and pooled investment funds. Seed capital
and co-investments are excluded.
9.1.1 Adjusted operating profit and adjusted profit
Reconciliation of adjusted operating profit and adjusted profit to IFRS profit by component
The key components of adjusted operating profit are fee based revenue and
adjusted operating expenses. These components provide a meaningful analysis of
our adjusted results. The table below provides a reconciliation of movements
between adjusted operating profit component measures and relevant IFRS terms.
A reconciliation of Adjusted operating expenses to the IFRS item Total
administrative and other expenses, and a reconciliation of Adjusted net
financing costs and investment return to the IFRS item Net gains on financial
instruments and other income are provided in Note 2b(ii) of the Group
financial statements. A reconciliation of Fee based revenue to the IFRS item
Revenue from contracts with customers is provided in Note 3 of the Group
financial statements.
IFRS term IFRS Presentation differences Adjusting Adjusted Adjusted profit term
items
profit
2021 £m £m £m £m
Net operating revenue 1,543 - (28) 1,515 Fee based revenue
Total administrative and other expenses (1,556) (9) 373 (1,192) Adjusted operating expenses(1)
(13) (9) 345 323 Adjusted operating profit
Net gains on financial instruments and other income (183) (20) 203 - Adjusted net financing costs and investment return
Finance costs (30) 29 1 - N/A
Profit on disposal of subsidiaries and other operations 127 - (127) - N/A
Profit on disposal of interests in associates 1,236 - (1,236) - N/A
Share of profit or loss from associates and joint ventures (22) - 22 - N/A
Profit before tax from 1,115 - (792) 323 Adjusted profit before tax from continuing operations
continuing operations
Total tax expense (120) - 94 (26) Tax on adjusted profit
Profit for the year from 995 - (698) 297 Adjusted profit after tax from continuing operations
continuing operations
Profit for the year from - - - - Adjusted profit after tax from discontinued operations
discontinued operations
Profit for the year 995 - (698) 297 Adjusted profit after tax
1. Adjusted operating expenses includes staff and other related costs of
£643m compared with IFRS staff costs and other employee-related costs of
£604m. The difference primarily relates to the inclusion of contractor,
temporary agency staff and recruitment and training costs of £27m (IFRS
basis: Reported within other administrative expenses) and gains on funds to
hedge deferred bonus awards (£5m) (IFRS basis: Reported within other net
gains on financial instruments and other income) within staff and other
related costs. IFRS staff costs and other employee-related costs includes the
benefit from the net interest credit relating to the staff pension schemes of
£17m (Adjusted profit basis: Reported within adjusted net financing costs and
investment return).
IFRS term IFRS Presentation differences Adjusting Adjusted Adjusted profit term
items
profit
2020 £m £m £m £m
Net operating revenue 1,423 2 - 1,425 Fee based revenue
Total administrative and other expenses (2,716) 9 1,501 (1,206) Adjusted operating expenses
(1,293) 11 1,501 219 Adjusted operating profit
Net gains on financial instruments and other income 146 (41) (84) 21 Adjusted net financing costs and investment return
Finance costs (30) 30 - - N/A
Profit on disposal of subsidiaries and other operations 8 - (8) - N/A
Profit on disposal of interests in associates 1,858 - (1,858) - N/A
Share of profit or loss from associates and joint ventures 194 - (194) - N/A
Impairment of associates and joint ventures (45) - 45 - N/A
Profit before tax from 838 - (598) 240 Adjusted profit before tax from continuing operations
continuing operations
Total tax expense 15 - (53) (38) Tax on adjusted profit
Profit for the year from 853 - (651) 202 Adjusted profit after tax from continuing operations
continuing operations
Profit for the year from (15) - 15 - Adjusted profit after tax from discontinued operations
discontinued operations
Profit for the year 838 - (636) 202 Adjusted profit after tax
Presentation differences primarily relate to amounts presented in a different
line item of the consolidated income statement.
Analysis of adjusting items
The table below provides detail of the adjusting items made in the calculation
of adjusted profit before tax:
Continuing operations Discontinued operations Total
2021 2020 2021 2020 2021 2020
£m £m £m £m £m £m
Restructuring and corporate transaction expenses (259) (316) - - (259) (316)
Amortisation and impairment of intangible assets acquired in business (99) (1,180) - - (99) (1,180)
combinations and through the purchase of customer contracts
Profit on disposal of subsidiaries and other operations 127 8 - - 127 8
Profit on disposal of interests in associates 1,236 1,858 - - 1,236 1,858
Change in fair value of significant listed investments (298) 65 - - (298) 65
Dividends from significant listed investments 71 - - - 71 -
Share of profit or loss from associates and joint ventures (22) 194 - - (22) 194
Impairment of interests in joint ventures - (45) - - - (45)
Other 36 14 - (15) 36 (1)
Total adjusting items including results of associates and joint ventures 792 598 - (15) 792 583
An explanation for why individual items are excluded from adjusted profit is
set out below:
- Restructuring and corporate transaction expenses are excluded from
adjusted profit. Restructuring includes the impact of major regulatory change.
By highlighting and excluding these costs we aim to give shareholders a fuller
understanding of the performance of the business. Restructuring and corporate
transaction expenses include costs relating to the integration of businesses
acquired and our transformation programme. Other restructuring costs excluded
from adjusted profit relate to projects which have a significant impact on the
way the Group operates. Costs are only excluded from adjusted profit where
they are out with business as usual activities and the costs would not have
been incurred had the restructuring project not taken place. For headcount
related costs, where duplicate posts are identified as a result of an
integration or transformation plan, the duplicated cost will be treated as a
restructuring cost from the beginning of the process which eliminates the
duplicate cost. Branding costs which relate to future benefits such as
sponsorship, media and marketing are included in adjusted operating expenses,
with operational elements such as system changes and fund renaming included in
restructuring costs. The 2021 expenses mainly comprised of costs of £35m
(2020: £79m) in respect of integration and related synergies, £27m (2020:
£112m) in respect of Phoenix separation costs, £65m (2020: £30m) of other
headcount reduction related costs and property restructuring, £64m (2020:
£69m) of other transformation costs such as finance and platform
transformation, and £35m (2020: £4m) of corporate transaction related costs
including the proposed acquisition of interactive investor and the purchase of
certain products from Phoenix announced in February 2021.
- Amortisation and impairment of intangible assets acquired in business
combinations and through the purchase of customer contracts is included as an
adjusting item. This is consistent with peers and therefore excluding these
items aids comparability. Highlighting this as an adjusting item aims to give
a fuller understanding of these accounting impacts which arise where
businesses have been acquired but do not arise where businesses have grown
organically. Further details are provided in Note 14 of the Group financial
statements.
- Profit on disposal of subsidiaries and other operations of £127m
(2020: £8m), primarily relates to the sales of Parmenion and Bonaccord which
completed on 30 June 2021 and 30 September 2021 respectively. These items are
excluded from adjusted profit as they are non-recurring in nature.
- Profit on disposal of interests in associates of £1,236m (2020:
£1,858m), includes one-off accounting gains following the reclassification of
HDFC Asset Management (£897m) and Phoenix (£68m) from investment in
associates accounted for using the equity method to equity securities measured
at fair value and £271m from the sale of 5% of shares in HDFC Asset
Management. Details are provided in Note 15 of the Group financial statements.
These items are excluded from adjusted profit as they are volatile and the
accounting gains are non-recurring in nature.
- The change in fair value of significant listed investments was
negative £298m (2020: positive £65m) and represents the impact of market
movements on our holdings in HDFC Life (£52m reduction in value including
impact of stake sale in June 2021), in Phoenix (£82m reduction) from February
2021 and in HDFC Asset Management (£164m reduction) from September 2021.
Excluding fair value movements on significant listed investments for the
purposes of adjusted profit is aligned with our treatment of gains on disposal
for these holdings when they were classified as an associate, and reflects
that the fair value movements are not indicative of the long-term operating
performance of the Group.
- Dividends from significant listed investments relates to our
shareholdings in HDFC Life, Phoenix and HDFC Asset Management that were
previously associates and were reclassified on 3 December 2020, 23 February
2021 and
29 September 2021 respectively. Following the reclassification, dividends
received are now recognised as income within our financial statements. The
£71m in 2021 relates to dividends received from Phoenix (£69m) and HDFC Life
(£2m). Dividends from significant listed investments are included in
adjusting items, as such dividends result in fair value movements.
- Share of profit or loss from associates and joint ventures reduced to
a loss of £22m (2020: profit £194m). Following the reclassifications noted
above, only HASL and Virgin Money UTM are now classified as associates and
joint ventures. Associate and joint venture results are excluded from adjusted
profit to help in understanding the performance of our core business
separately from our strategic holdings.
- The impairment of associates and joint ventures in 2020 of £45m
relates to our joint venture with Virgin Money. More details are provided in
Note 15 of the Group financial statements.
- Details on items classified as 'Other' in the table above are provided
in Note 12 of the Group financial statements. In 2021 this includes a £25m
net release of deferred income, related to the 23 February 2021 announcement
of the simplification and extension of the strategic partnership with Phoenix.
Reconciliation to previously disclosed information
FY 2020 as previously disclosed Asset management associates and Insurance associates and FY 2020 on revised basis
joint ventures
joint ventures
£m £m £m £m
Fee based revenue 1,425 - - 1,425 Fee based revenue
Adjusted operating expenses (1,206) - - (1,206) Adjusted operating expenses
Adjusted operating profit 219 - - 219 Adjusted operating profit
Capital management 21 - - 21 Adjusted net financing costs and investment return
Share of associates' and joint ventures' profit before tax 247 (44) (203) - N/A
Adjusted profit before tax 487 (44) (203) 240 Adjusted profit before tax
Tax on adjusted profit (38) - - (38) Tax on adjusted profit
Share of associates' and joint ventures' tax expense (38) 12 26 - N/A
Adjusted profit after tax 411 (32) (177) 202 Adjusted profit after tax
Adjusted for the following items Adjusted for the following items
Restructuring and corporate transaction expenses (355) 10 29 (316) Restructuring and corporate transaction expenses
Amortisation and impairment of intangible assets acquired in business (1,287) - 107 (1,180) Amortisation and impairment of intangible assets acquired in business
combinations and through the purchase of customer contracts combinations and through the purchase of customer contracts
Profit on disposal of subsidiaries and other operations 8 - - 8 Profit on disposal of subsidiaries and other operations
Profit on disposal of interests in associates 1,858 - - 1,858 Profit on disposal of interests in associates
Impairment of associates and joint ventures (45) 45 - - N/A
Change in fair value of significant listed investments 65 - - 65 Change in fair value of significant listed investments
Investment return variances and economic assumption changes 46 - (46) - N/A
N/A - - - - Dividends from significant listed investments
N/A - 42 152 194 Share of profit or loss from associates and joint ventures
N/A - (45) - (45) Impairment of joint ventures
Other 78 - (64) 14 Other
N/A 368 52 178 598 Total adjusting items including results of associates and joint ventures
Tax on adjusting items 53 - - 53 Tax on adjusting items
Share of associates' and joint ventures' tax expense on adjusting items 21 (20) (1) - N/A
Profit attributable to non-controlling interests (preference shares) (5) - - (5) Profit attributable to non-controlling interests (preference shares)
Profit for the year attributable to equity shareholders of abrdn plc 848 - - 848 Profit for the year attributable to equity shareholders of abrdn plc
Profit attributable to non-controlling interests Profit attributable to non-controlling interests
Preference shares 5 - - 5 Preference shares
Profit for the year 853 - - 853 Profit for the year
9.1.2 Cost/income ratio
2021 2020
Adjusted operating expenses (£m) (1,192) (1,206)
Fee based revenue (£m) 1,515 1,425
Cost/income ratio (%) 79 85
9.1.3 Fee revenue yield (bps)
Average AUMA (£bn) Fee based revenue (£m) Fee revenue yield (bps)
2021 2020 2021 2020 2021 2020
Institutional and Wholesale(1) 250.1 235.1 979 922 38.8 38.8
Insurance 205.0 204.7 206 224 10.0 10.9
Investments(1) 455.1 439.8 1,185 1,146 25.9 25.8
Adviser 71.5 61.5 178 137 24.9 22.3
Personal(1) 14.0 12.6 92 80 61.0 58.5
Parmenion(2) 3.9 7.3 14 25 38.1 34.2
Eliminations (11.3) (10.2) N/A N/A N/A N/A
Fee revenue yield(1) 533.2 511.0 1,469 1,388 27.3 26.9
SL Asia - 7
Performance fees 46 30
Fee based revenue 1,515 1,425
Analysis of Institutional and Wholesale by asset class(1,3)
Average AUM (£bn) Fee based revenue (£m) Fee revenue yield (bps)
2021 2020 2021 2020 2021 2020
Equities 69.5 61.9 449 403 64.5 65.1
Fixed income 46.6 47.4 132 139 28.3 29.3
Multi-asset 35.1 33.6 118 125 33.7 37.3
Private equity 11.2 11.7 58 57 51.8 48.8
Real assets 36.1 31.5 170 149 47.2 47.6
Alternatives 20.4 19.0 25 20 12.3 10.4
Quantitative 5.8 6.6 4 4 6.8 5.6
Liquidity 25.4 23.4 15 16 6.0 6.8
Institutional and Wholesale 250.1 235.1 971 913 38.8 38.8
1. Institutional and Wholesale fee revenue yield excludes revenue of £8m
(2020: £9m) and Personal fee revenue yield excludes revenue of £7m (2020:
£7m) for which there are no attributable assets.
2. Parmenion is included in the Corporate/Strategic vector. The sale of
Parmenion completed on 30 June 2021 and the fee revenue yield reflects the
position as at the date of disposal.
3. Analysis by asset class has been revised following a strategic review of
our private markets capabilities. The changes reflect the creation of a real
assets franchise, which brings together our real estate and infrastructure
businesses, and consolidation of our private credit capabilities within fixed
income. Comparatives have been restated on this basis.
Analysis of Adviser revenue yield
Fee based revenue (gross basis) includes revenue passed to Phoenix as shown
below in other cost of sales. The cost of sales are netted against fee based
revenue as presented in 9.1.3 above. The fee revenue yield presented on a
gross basis in the table below represents the average bps charge payable by
clients.
Average AUMA (£bn) Fee based revenue (£m) Fee revenue yield (bps)
2021 2020 2021 2020 2021 2020
Fee based revenue (net of cost of sales) 71.5 61.5 178 137 24.9 22.3
Add: Other cost of sales - Note 3 (c) N/A N/A 2 27 N/A N/A
Fee based revenue (gross of cost of sales) 71.5 61.5 180 164 25.1 26.7
9.1.4 Adjusted capital generation
The table below provides a reconciliation of movements between adjusted profit
after tax and adjusted capital generation. A reconciliation of adjusted profit
after tax to IFRS profit for the year is included earlier in this section.
2021 2020
£m £m
Adjusted profit after tax(1) 297 202
Less net interest credit relating to the staff pension schemes (17) (20)
Add dividends received from associates, joint ventures and significant listed 86 80
investments
Adjusted capital generation 366 262
1. FY 2020 restated to exclude the share of associates and joint ventures
adjusted profit after tax.
Net interest credit relating to the staff pension schemes
The net interest credit relating to the staff pension schemes is the
contribution to adjusted profit before tax from defined benefit pension
schemes which are in surplus and reconciled below:
2021 2020
£m £m
Total income recognised in the consolidated income statement per Note 33 (c) 17 19
of the Group financial statements
Remove IFRS charge relating to schemes in deficit - 1
Net interest credit relating to the staff pension schemes 17 20
Dividends received from associates, joint ventures and significant listed investments
An analysis is provided below:
2021 2020
£m £m
Phoenix 69 67
HDFC Life 2 -
HDFC Asset Management 15 13
Dividends received from associates, joint ventures and significant listed 86 80
investments
The table below provides detail of dividend coverage on an adjusted capital
generation basis.
2021 2020
Adjusted capital generation (£m) 366 262
Full year dividend (£m) 309 313
Dividend cover on an adjusted capital generation basis (times) 1.18 0.84
9.1.5 Adjusted diluted capital generation per share
A reconciliation of adjusted capital generation to adjusted profit after tax
is included in 9.1.4 above.
2021 2020
Adjusted capital generation (£m) 366 262
Weighted average number of diluted ordinary shares outstanding (millions) - 2,159 2,239
Note 11
Adjusted diluted capital generation per share (pence) 17.0 11.7
9.1.6 Cash and liquid resources
The table below provides a reconciliation between IFRS cash and cash
equivalents and cash and liquid resources. Seed capital and co-investments are
excluded. Details of seed capital and co-investments are provided in Note 37
(b) in the Group financial statements.
2021 2020
£bn £bn
Cash and cash equivalents per Note 23 of the Group financial statements 1.9 1.5
Bank overdrafts - Note 23 (0.1) (0.2)
Debt securities excluding third party interests(1) - Note 37 (c)(i) 1.1 1.0
Corporate funds held in absolute return funds - Note 37 (b)(i)(i) 0.2 0.2
Cash and liquid resources 3.1 2.5
1. Excludes £76m (2020: £54m) relating to seeding, see Note 37(b).
9.2 Investment performance
Definition Purpose
Investment performance R
Investment performance has been aggregated using a money weighted average of As an asset managing business this measure demonstrates our ability to
our assets under management which are outperforming their respective generate investment returns for our clients.
benchmark. Calculations for investment performance are made gross of fees with
the exception of those for which the stated comparator is net of fees.
Benchmarks differ by fund and are defined in the investment management
agreement or prospectus, as appropriate. The investment performance
calculation covers all funds that aim to outperform a benchmark, with certain
assets excluded where this measure of performance is not appropriate or
expected, such as private markets and execution only mandates, as well as
replication tracker funds which aim to perform in line with a given index.
( ) 1 year 3 years 5 years
% of AUM ahead of benchmark 2021 2020 2021 2020 2021 2020
Equities 36 73 72 74 61 62
Fixed income 59 78 82 81 87 85
Multi-asset 41 61 39 33 44 36
Real assets 83 41 52 37 50 44
Alternatives 87 95 98 95 98 93
Quantitative 98 32 44 17 68 24
Liquidity 88 94 87 89 84 87
Total 57 71 67 66 67 68
9.3 Assets under management and administration and flows
Definition Purpose
AUMA
AUMA is a measure of the total assets we manage, administer or advise on The amount of funds that we manage, administer or advise directly impacts the
behalf of our clients. It includes assets under management (AUM), assets under level of fee based revenue that we receive.
administration (AUA) and assets under advice (AUAdv).
AUM is a measure of the total assets that we manage on behalf of individual
and institutional clients. AUM also includes captive assets managed on behalf
of the Group including assets managed for corporate purposes.
AUA is a measure of the total assets we administer for clients through
platform products such as ISAs and SIPPs.
AUAdv is a measure of the total assets we advise our clients on, for which
there is an ongoing charge.
Net flows R
Net flows represent gross flows less redemptions. Gross flows are new funds The level of net flows that we generate directly impacts the level of fee
from clients. Redemptions are the money withdrawn by clients during the based revenue that we receive.
period.
9.3.1 Analysis of AUMA
Opening Gross inflows Redemptions Net flows Market Corporate Closing
AUMA at
and other movements
actions(2)
AUMA at
1 Jan 2021
31 Dec 2021
12 months ended 31 December 2021 £bn £bn £bn £bn £bn £bn £bn
Institutional 171.7 22.5 (25.4) (2.9) 5.4 (0.2) 174.0
Wholesale 80.0 19.4 (21.6) (2.2) 1.3 - 79.1
Insurance 205.2 21.5 (27.0) (5.5) 10.8 - 210.5
Investments 456.9 63.4 (74.0) (10.6) 17.5 (0.2) 463.6
Adviser 67.0 9.1 (5.2) 3.9 5.3 - 76.2
Personal(1) 13.3 1.7 (1.1) 0.6 0.5 - 14.4
Parmenion 8.1 0.7 (0.4) 0.3 0.3 (8.7) -
Eliminations(1) (10.7) (2.6) 2.2 (0.4) (1.0) - (12.1)
Total AUMA 534.6 72.3 (78.5) (6.2) 22.6 (8.9) 542.1
Opening Gross inflows Redemptions Net flows Market Corporate Closing
AUMA at
and other movements
actions
AUMA at
1 Jan 2020
31 Dec 2020
12 months ended 31 December 2020 £bn £bn £bn £bn £bn £bn £bn
Institutional 160.6 26.6 (23.4) 3.2 7.9 - 171.7
Wholesale 76.1 23.2 (26.1) (2.9) 6.8 - 80.0
Insurance 235.8 17.6 (50.4) (32.8) 2.2 - 205.2
Investments 472.5 67.4 (99.9) (32.5) 16.9 - 456.9
Adviser 62.6 6.3 (4.4) 1.9 2.5 - 67.0
Personal(1) 12.8 1.1 (1.1) - 0.5 - 13.3
Parmenion 6.9 1.5 (0.5) 1.0 0.2 - 8.1
Eliminations(1) (10.2) (2.0) 2.6 0.6 (1.1) - (10.7)
Total AUMA 544.6 74.3 (103.3) (29.0) 19.0 - 534.6
1. Eliminations remove the double count reflected in Investments, Adviser and
Personal. The Personal vector includes assets that are reflected in both the
discretionary investment management and financial planning businesses. This
double count is also removed within Eliminations.
2. Corporate actions relate to the acquisition of a majority interest in
Tritax on 1 April 2021 (£5.8bn) and the disposals of our domestic real estate
business in the Nordics region on 31 May 2021 (£3.3bn) and Bonaccord/Hark on
30 September 2021 (£1.5bn). Corporate actions also include the impact of the
decision to exit the Total Return Bond strategy of £1.2bn. The sale of
Parmenion completed on 30 June 2021.
9.3.2 Quarterly net flows
3 months to 3 months to 3 months to 3 months to 3 months to
31 Dec 21
30 Sep 21
30 Jun 21
31 Mar 21
31 Dec 20
15 months ended 31 December 2021 £bn £bn £bn £bn £bn
Institutional 2.5 (2.0) (0.7) (2.7) 1.4
Wholesale (0.8) (0.3) (0.5) (0.6) (0.4)
Insurance (0.4) (1.3) (1.5) (2.3) (2.6)
Investments 1.3 (3.6) (2.7) (5.6) (1.6)
Adviser 1.1 0.8 0.9 1.1 0.5
Personal - 0.1 0.3 0.2 (0.1)
Parmenion - - 0.2 0.1 0.2
Eliminations (0.2) (0.1) - (0.1) 0.2
Total net flows 2.2 (2.8) (1.3) (4.3) (0.8)
9.4 Institutional and Wholesale AUM(1)
Detailed asset class split
Opening Gross inflows Redemptions Net flows Market Corporate actions Closing
AUM at
and other movements
AUM at
1 Jan 2021
31 Dec 2021
12 months ended 31 December 2021 £bn £bn £bn £bn £bn £bn £bn
Developed markets equities 14.7 3.0 (3.6) (0.6) 2.9 - 17.0
Emerging markets equities 19.0 2.0 (3.7) (1.7) (0.9) - 16.4
Asia Pacific equities 26.6 4.8 (5.7) (0.9) (0.4) - 25.3
Global equities 8.9 1.8 (1.6) 0.2 1.2 - 10.3
Total equities 69.2 11.6 (14.6) (3.0) 2.8 - 69.0
Developed markets credit 32.2 5.9 (6.6) (0.7) (2.0) (1.2) 28.3
Developed markets rates 2.8 0.6 (0.6) - 0.1 - 2.9
Emerging markets fixed income 12.2 3.5 (3.1) 0.4 (0.4) - 12.2
Private credit 1.0 1.5 - 1.5 0.8 (0.9) 2.4
Total fixed income 48.2 11.5 (10.3) 1.2 (1.5) (2.1) 45.8
Absolute return 11.5 0.8 (2.0) (1.2) (0.3) - 10.0
Diversified growth/income 0.6 0.1 (0.2) (0.1) - - 0.5
MyFolio 15.6 2.1 (2.5) (0.4) 2.5 - 17.7
Other multi-asset 10.0 1.2 (1.4) (0.2) (2.0) - 7.8
Total multi-asset 37.7 4.2 (6.1) (1.9) 0.2 - 36.0
Total private equity 10.9 1.5 (1.2) 0.3 1.7 (0.6) 12.3
UK real estate 9.2 0.9 (0.8) 0.1 4.8 5.8 19.9
European real estate 12.1 1.0 (0.4) 0.6 0.9 (3.3) 10.3
Global real estate 1.8 0.3 (0.4) (0.1) 0.1 - 1.8
Real estate multi-manager 1.6 0.1 (0.1) - (0.4) - 1.2
Infrastructure equity 5.3 1.0 (0.4) 0.6 0.3 - 6.2
Total real assets 30.0 3.3 (2.1) 1.2 5.7 2.5 39.4
Total alternatives 19.5 2.0 (1.9) 0.1 1.2 - 20.8
Total quantitative 6.4 1.2 (1.2) - (0.9) - 5.5
Total liquidity 29.8 6.6 (9.6) (3.0) (2.5) - 24.3
Total 251.7 41.9 (47.0) (5.1) 6.7 (0.2) 253.1
1. Analysis by asset class has been revised following a strategic review of
our private markets capabilities. The changes reflect the creation of a real
assets franchise, which brings together our real estate and infrastructure
businesses, and consolidation of our private credit capabilities within fixed
income. Comparatives have been restated on this basis.
Opening Gross inflows Redemptions Net flows Market Corporate actions Closing
AUM at
and other movements
AUM at
1 Jan 2020
31 Dec 2020
12 months ended 31 December 2020 £bn £bn £bn £bn £bn £bn £bn
Developed markets equities 14.7 3.6 (3.8) (0.2) 0.2 - 14.7
Emerging markets equities 21.6 1.6 (6.2) (4.6) 2.0 - 19.0
Asia Pacific equities 23.3 4.2 (4.8) (0.6) 3.9 - 26.6
Global equities 9.4 1.4 (2.7) (1.3) 0.8 - 8.9
Total equities 69.0 10.8 (17.5) (6.7) 6.9 - 69.2
Developed markets credit 32.2 6.8 (9.3) (2.5) 2.5 - 32.2
Developed markets rates 3.3 0.7 (0.9) (0.2) (0.3) - 2.8
Emerging markets fixed income 10.9 3.8 (2.5) 1.3 - - 12.2
Private credit - 0.6 - 0.6 0.4 - 1.0
Total fixed income 46.4 11.9 (12.7) (0.8) 2.6 - 48.2
Absolute return 12.7 0.7 (2.6) (1.9) 0.7 - 11.5
Diversified growth/income 1.9 0.2 (0.4) (0.2) (1.1) - 0.6
MyFolio 15.7 2.4 (2.9) (0.5) 0.4 - 15.6
Other multi-asset 4.2 1.0 (1.0) - 5.8 - 10.0
Total multi-asset 34.5 4.3 (6.9) (2.6) 5.8 - 37.7
Total private equity 11.8 1.6 (1.0) 0.6 (1.5) - 10.9
UK real estate 13.4 0.5 (1.3) (0.8) (3.4) - 9.2
European real estate 12.1 1.0 (1.0) - - - 12.1
Global real estate 1.0 0.3 (0.3) - 0.8 - 1.8
Real estate multi-manager 1.4 0.3 (0.1) 0.2 - - 1.6
Infrastructure equity 4.2 0.2 - 0.2 0.9 - 5.3
Total real assets 32.1 2.3 (2.7) (0.4) (1.7) - 30.0
Total alternatives 17.7 2.4 (1.1) 1.3 0.5 - 19.5
Total quantitative 7.8 1.3 (1.6) (0.3) (1.1) - 6.4
Total liquidity 17.4 15.2 (6.0) 9.2 3.2 - 29.8
Total 236.7 49.8 (49.5) 0.3 14.7 - 251.7
9.5 Analysis of Insurance
Opening Gross inflows Redemptions Net Market Corporate Closing
AUM at
flows
and other movements
actions
AUM at
1 Jan 2021
31 Dec 2021
12 months ended 31 December 2021 £bn £bn £bn £bn £bn £bn £bn
Phoenix 171.5 17.1 (20.3) (3.2) 7.2 - 175.5
Lloyds 31.8 4.4 (6.3) (1.9) 3.7 - 33.6
Other 1.9 - (0.4) (0.4) (0.1) - 1.4
Total 205.2 21.5 (27.0) (5.5) 10.8 - 210.5
Opening Gross inflows Redemptions Net Market Corporate Closing
AUM at
flows
and other movements
actions
AUM at
1 Jan 2020
31 Dec 2020
12 months ended 31 December 2020 £bn £bn £bn £bn £bn £bn £bn
Phoenix 169.7 13.0 (18.7) (5.7) 7.5 - 171.5
Lloyds 64.5 4.2 (31.5) (27.3) (5.4) - 31.8
Other 1.6 0.4 (0.2) 0.2 0.1 - 1.9
Total 235.8 17.6 (50.4) (32.8) 2.2 - 205.2
9.6 Analysis of total AUM (excluding Parmenion)
9.6.1 AUM by geography
31 Dec 2021 31 Dec 2020
Institutional and Wholesale Insurance Personal(1) Total Institutional Insurance Personal(1) Total
and Wholesale
£bn £bn £bn £bn £bn £bn £bn £bn
UK 120.3 210.5 8.9 339.7 116.5 205.2 7.8 329.5
Europe, Middle East and Africa (EMEA) 62.5 - - 62.5 65.9 - - 65.9
Asia Pacific (APAC) 19.2 - - 19.2 16.8 - - 16.8
Americas 51.1 - - 51.1 52.5 - - 52.5
Total AUM 253.1 210.5 8.9 472.5 251.7 205.2 7.8 464.7
9.6.2 AUM by asset class(2)
31 Dec 2021 31 Dec 2020
Institutional and Wholesale Insurance Personal(1) Total Institutional and Wholesale Insurance Personal(1) Total
£bn £bn £bn £bn £bn £bn £bn £bn
Equities 69.0 53.4 - 122.4 69.2 48.8 - 118.0
Fixed income 45.8 67.4 - 113.2 48.2 69.0 - 117.2
Multi-asset 36.0 8.8 8.9 53.7 37.7 7.0 7.8 52.5
Private equity 12.3 1.6 - 13.9 10.9 1.8 - 12.7
Real assets 39.4 8.3 - 47.7 30.0 8.3 - 38.3
Alternatives 20.8 - - 20.8 19.5 - - 19.5
Quantitative 5.5 50.8 - 56.3 6.4 45.0 - 51.4
Liquidity 24.3 20.2 - 44.5 29.8 25.3 - 55.1
Total AUM 253.1 210.5 8.9 472.5 251.7 205.2 7.8 464.7
1. Excludes assets under advice of £5.5bn at 31 December 2021 (2020:
£5.5bn).
2. Analysis by asset class has been revised following a strategic review of
our private markets capabilities. The changes reflect the creation of a real
assets franchise, which brings together our real estate and infrastructure
businesses, and consolidation of our private credit capabilities within fixed
income. Comparatives have been restated on this basis.
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