REG - Standard Life Aberdn - Final Results - Part 4 of 8

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09/03/2021 07:00

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RNS Number : 5736R  Standard Life Aberdeen plc  09 March 2021

Standard Life Aberdeen plc

Full Year Results 2020

Part 4 of 8

 

4. Directors report

 

The Directors present their annual report on the affairs of the Standard Life
Aberdeen group of companies (the Group), together with the audited
International Financial Reporting Standards (IFRS) consolidated financial
statements for the Group, financial information for the Group and financial
statements for Standard Life Aberdeen plc (the Company) for the year ended 31
December 2020.

For clarity, some of the matters that would otherwise have been included in
the Directors' report have been included in the Strategic report on pages 1 to
41, as the Board considers they fit better within that report. Specifically,
these are:

·  Future business developments

·  Risk management

·  Total global greenhouse gas emissions

·  Information on how the Directors have had regard for the Company's
stakeholders (also covered in the Corporate governance statement on pages 50
and 51)

Reporting for the year ended 31 December 2020

During 2020, the Group operated primarily in the UK, rest of Europe, Asia and
the Americas. You can find out about the relevant activities of the Company's
principal subsidiary undertakings and their overseas branches in the Strategic
report on pages 1 to 41.

In his overview section of the Strategic report, Stephen Bird our Chief
Executive Officer outlines the main trends and factors likely to affect the
future development, performance and position of the Group. Reviews of the
operating and financial performance of the Group for the year ended 31
December 2020 are also given in the Strategic report.

The Chairman's statement, the Directors' responsibility statement and the
Corporate governance statement form part of this Directors' report. The
Corporate governance statement on pages 48 to 95 is submitted by the Board.

The results of the Group are presented in the Group financial statements on
pages 115 to 210. A detailed description of the basis of preparation of the
IFRS results (including adjusted profit) is set out in the Group financial
statements section. The Group uses derivative financial instruments in the
normal course of its business and information covering these instruments and
related financial risk management matters can be found in Note 20 and Note 38
to the Group financial statements. These notes are incorporated into this
report by reference.

This report was prepared by the executive leadership team together with the
Board and forms part of the management report for the purposes of the
Disclosure Guidance and Transparency Rules (DTR 4.1.8R) of the Financial
Conduct Authority (FCA) .

Dividends

The Board recommends paying a final dividend for 2020 of 7.30p per ordinary
share. This will be paid on 25 May 2021 to shareholders whose names are on the
register of members at the close of business on 16 April 2021.

The total payment is estimated at £154m for the final dividend and together
with the interim dividend of 7.30p per share totalling £159m paid on 29
September 2020, the total dividend for 2020 will be 14.60p per share (2019:
21.60p) totalling £313m (2019: £493m).

Share capital

The Company's issued share capital as at 31 December 2020 comprised a single
class of ordinary share. You can find full details of the Company's share
capital, including movements in the Company's issued ordinary share capital
during the year, in Note 26 to the Group financial statements, which is
incorporated into this report by reference. You can also find an analysis of
registered shareholdings by size, as at 31 December 2020, in the Shareholder
information section on page 238

On 7 February 2020, the Company announced the commencement of a share buyback
programme of the Company's ordinary shares up to a maximum aggregate
consideration of £400m. This programme completed on 10 February 2021. The
purpose of this programme was to return value to shareholders and reduce the
share capital of the Company. All shares purchased have been cancelled. In
total 158,003,158 shares were cancelled through this programme, of which
144,610,296 were purchased and cancelled between 10 February 2020 and 31
December 2020.

As at 31 December 2020, there were 2,194,115,616 ordinary shares in issue held
by 97,591 registered members. The Standard Life Aberdeen Share Account (the
Company-sponsored nominee) held 665,021,873 of those shares on behalf of
994,615 participants. No person has any special rights of control over the
Company's share capital and all issued shares are fully paid.

Between 1 January 2020 and the date this report was signed, the Company
received no notifications in respect of major shareholdings and major
proportions of voting rights in accordance with the Disclosure Guidance and
Transparency Rules of the FCA.

In accordance with the terms of the Standard Life Employee Trust Deed, the
trustees waived all entitlements to current or future dividend payments for
shares they hold.

Similarly, in accordance with the terms of The Aberdeen Asset Management
Employee Benefit Trust 2003 and The Standard Life Aberdeen Employee Benefit
Trust 2019, the trustees waived all entitlements to current or future dividend
payments for shares they hold other than dividends payable on any shares held
by the trustee as nominee for any other person.

The trustees of the Standard Life Aberdeen (Employee) Share Plan voted the
appropriate shares in accordance with any instructions received from
participants in the plan.

Restrictions on the transfer of shares and securities

Except as listed below, there are no specific restrictions on the size of a
holding or on the transfer of shares. Both are governed by the general
provisions of the Company's articles of association (the Articles) and current
legislation and regulation.

You can obtain a copy of the Articles from Companies House or by writing to
the Company Secretary at our registered address (details of which can be found
in the Contact us section). The Articles may only be amended by a special
resolution passed by the shareholders.

You can read the Articles on our website
www.standardlifeaberdeen.com/annualreport

 

The Board may decline to register the transfer of:

·  A share that is not fully paid

·  A certificated share, unless the instrument of transfer is duly stamped
or duly certified and accompanied by the relevant share certificate or other
evidence of the right to transfer, is in respect of only one class of share
and is in favour of a sole transferee or no more than four joint transferees

·  An uncertificated share, in the circumstances set out in the
uncertificated securities rules (as defined in the Articles) and, in the case
of a transfer to joint holders, where the number of joint holders to whom the
share is to be transferred does not exceed four

·  A certificated share by a person with a 0.25 per cent interest (as
defined in the Articles) in the Company, if that person has been served with a
restriction notice under the Articles, after failing to provide the Company
with information about interests in those shares as set out in the Companies
Act 2006 (unless the transfer is shown to the Board to be pursuant to an arm's
length sale under the Articles)

These restrictions are in line with the standards set out in the FCA's Listing
Rules and are considered to be standard for a listed company.

The Directors are not aware of any other agreements between holders of the
Company's shares that may result in restrictions on the transfer of securities
or on voting rights.

Rights attached to shares

Subject to applicable statutes, any resolution passed by the Company under the
Companies Act 2006 and other shareholders' rights, shares may be issued with
such rights and restrictions as the Company may decide by ordinary resolution,
or (if there is no such resolution or if it does not make specific provision)
as the Board may decide. Subject to the Articles, the Companies Act 2006 and
other shareholders' rights, unissued shares are at the disposal of the Board.

Every member and duly appointed proxy present at a general meeting or class
meeting has one vote on a show of hands, provided that where a proxy is
appointed by more than one shareholder entitled to vote on a resolution and is
instructed by one shareholder to vote 'for' the resolution and by another
shareholder to vote 'against' the resolution, then the proxy will be allowed
two votes on a show of hands - one vote 'for' and one vote 'against'. On a
poll, every member present in person or by proxy has one vote for every share
they hold. For joint shareholders, the vote of the senior joint shareholder
who tenders a vote, in person or by proxy, will be accepted and will exclude
the votes of the other joint shareholders. For this purpose, seniority is
determined by the order that the names appear on the register of members for
joint shareholders.

A member will not be entitled to vote at any general meeting or class meeting
in respect of any share they hold if any call or other sum then payable by
them for that share remains unpaid or if they have been served with a
restriction notice (as defined in the Articles) after failing to provide the
Company with information about interests in those shares required to be
provided under the Companies Act 2006.

The Company may, by ordinary resolution, declare dividends up to the amount
recommended by the Board. Subject to the Companies Act 2006, the Board may
also pay an interim dividend, and any fixed rate dividend, whenever the
financial position of the Company, in the opinion of the Board, justifies its
payment. If the Board acts in good faith, it is not liable to holders of
shares with preferred or pari passu rights for losses that arise from paying
interim or fixed dividends on other shares.

The Board may withhold payment of all or part of any dividends or other monies
payable in respect of the Company's shares from a person with a 0.25 per cent
interest (as defined in the Articles) if that person has been served with a
restriction notice (as defined in the Articles) after failure to provide the
Company with information about interests in those shares, which is required
under the Companies Act 2006.

Subject to the Companies Act 2006, rights attached to any class of shares may
be varied with the written consent of the holders of not less than
three-quarters in nominal value of the issued shares of that class (excluding
any shares held as treasury shares). These rights can also be varied with the
approval of a special resolution passed at a separate general meeting of the
holders of those shares. At every separate general meeting (except an
adjourned meeting) the quorum shall be two persons holding, or representing by
proxy, not less than one-third in nominal value of the issued shares of the
class (calculated excluding any shares held as treasury shares).

A shareholder's rights will not change if additional shares ranking pari passu
with their shares are created or issued - unless this is expressly provided in
the rights attaching to their shares.

Power to purchase the Company's own shares

At the 2020 Annual General Meeting (AGM), shareholders granted the Directors
limited powers to:

·  Allot ordinary shares in the Company up to a maximum aggregate amount of
£108,085,497

·  Disapply, up to a maximum total nominal amount of £16,212,824 of its
issued ordinary share capital, shareholders' pre-emption rights in respect of
new ordinary shares issued for cash

·  Make market purchases of the Company's ordinary shares up to a maximum of
232,139,068 of its issued ordinary shares

During 2020, under the authorities granted at the 2019 and 2020 AGMs, the
Company purchased 144,610,296 of its ordinary shares of 13 61/63 pence each,
paying an aggregate amount of £359,028,587. As at 31 December 2020, the
percentage of share capital represented by these purchased shares was
approximately 6.6%.

Significant agreements

Certain significant agreements to which the Company, or one of its
subsidiaries, is party entitle the counterparties to exercise termination or
other rights in the event of a change of control of the Company. These
agreements are noted in the paragraphs below.

Credit Facility - under a £400m revolving credit facility between the Company
and the banks and financial institutions named therein as lenders (Lender)
dated 22 May 2015 and refinanced on 12 February 2021 (the Facility), in the
event that (i) any persons or group of persons acting in concert, gain control
of the Company, then any Lender may elect within a prescribed time frame to
cancel its outstanding commitment under the Facility and declare its
participation in all outstanding loans, together with accrued interest and all
amounts accrued immediately due and payable, whereupon the commitment of that
Lender under the Facility will be cancelled and all such outstanding amounts
will become immediately due and payable.

China - under a joint venture agreement dated 12 October 2009 (as amended)
between the Company and Tianjin TEDA International Holding (Group) Co. Limited
(TEDA), pursuant to which the Company holds its interest in Heng An Standard
Life Insurance Company Limited (Heng An Standard Life), upon a change of
control of the Company, TEDA has the right to terminate the venture and to
purchase, or nominate a third party to purchase, the Company's shares in Heng
An Standard Life for a price determined in accordance with the agreement.

A number of other agreements contain provisions that entitle the
counterparties to exercise termination or other rights in the event of a
change of control of the Company. However, these agreements are not considered
to be significant in terms of their likely impact on the business of the Group
as a whole.

The Directors are not aware of any agreements with any employee that would
provide compensation for loss of office or employment resulting from a
takeover. The Company also has no agreement with any Director to provide
compensation for loss of office or employment resulting from a takeover.

Appointment and retirement of Directors

The appointment and retirement of Directors is governed by the Articles, the
Companies Act 2006, the UK Corporate Governance Code and related legislation.

Brian McBride was appointed as a non-executive Director on 1 May 2020 and
Martin Gilbert resigned from the Board following the conclusion of the AGM on
12 May 2020. Stephen Bird joined the Board on 1 July 2020 as Director and CEO
Designate and succeeded Keith Skeoch as CEO following Keith's resignation from
the Board on 1 September 2020.

Having been appointed since the 2020 AGM, Stephen Bird will retire and stand
for election at the 2021 AGM.

All remaining Directors as at the date of the 2021 AGM will retire and stand
for re-election.

The powers of the Directors can also be found in the Articles.

Directors and their interests

The Directors who served during the year were:

 Sir Douglas Flint (Chairman)    John Devine
 Keith Skeoch(4)                 Melanie Gee
 Martin Gilbert(2)               Martin Pike
 Stephen Bird(3)                 Cathleen Raffaeli
 Stephanie Bruce                 Cecilia Reyes
 Jonathan Asquith                Jutta af Rosenborg
 Brian McBride(1)

(1   ) Appointed 1 May 2020.

(2   ) Resigned 12 May 2020.

(3   ) Appointed 1 July 2020.

(4   ) Resigned 1 September 2020.

Biographies of the current Directors can be found on pages 44 to 47

Details of the Directors' interests in the Company's ordinary shares, the
Standard Life (Employee) Share Plan, the Standard Life Sharesave Plan and the
share-based discretionary plans are set out in the Directors' remuneration
report together with details of the executive Directors' service contracts and
non-executive Directors' appointment letters.

No Director has any interest in the Company's listed debt securities or in any
shares, debentures or loan stock of the Company's subsidiaries. No Director
has any material interest in any contract with the Company or a subsidiary
undertaking which was significant in relation to the Company's business,
except for the following:

·  The benefit of a continuing third party indemnity provided by the Company
(in accordance with company law and the Articles)

·  Service contracts between each executive Director and subsidiary
undertakings (Standard Life Employee Services Limited and Aberdeen Asset
Management PLC)

Ordinarily, copies of the following documents can be viewed at the Company's
registered office (details of which can be found in the Contact us section)
during normal business hours (9am to 5pm Monday to Friday) and are available
for inspection at the Company's AGM:

·  The Directors' service contracts or letters of appointment

·  The Directors' deeds of indemnity, entered into in connection with the
indemnification of Directors provisions in the Articles

·  The rules of the Standard Life plc Executive Long-Term Incentive Plan

·  The rules of the Standard Life Aberdeen plc Deferred Share Plan

·  The Company's Articles

Given the ongoing COVID-19 situation, this is not practicable at the moment.
Copies can be obtained by request from the Company Secretary.

Directors' liability insurance

During 2020, the Company maintained directors' and officers' liability
insurance on behalf of its directors and officers to provide cover should any
legal action be brought against them. The Company also maintained pension
trustee liability indemnity policies (which includes third party indemnity)
for the boards of trustees of the UK and Irish staff pension schemes where
required to do so.

Our people

Our people have always been central to delivering our strategy, and we remain
focused on helping them thrive.

You can read more on our people strategy in the Strategic report section of
this report.

Colleague engagement

This year, our Viewpoints employee attitude survey recorded a meaningful
increase in the overall engagement score from 56% in 2018 to 72%.While this
improvement is welcome in what was a very difficult year for all our
employees, given the impact of the pandemic on working practices, we strive to
do better. Colleagues fed back some clear areas of focus such as greater
clarity on our strategic direction, more leadership visibility, and minimising
barriers to delivery. These areas of focus are understandable given the change
of Chief Executive Officer and are all priority areas for attention by the
Executive leadership team. We are pleased that, in this difficult year,
colleagues were complimentary about the skills of managers as measured against
four key criteria and evidencing the importance of management skills,
colleague engagement was highest among those who scored their manager well
against all four criteria.

 

Employees fed back that they value spending time with leaders and each other
to understand and discuss Company priorities and progress, but in a year when
the majority of colleagues worked from home due to the pandemic, connecting
with each other has been even more critical. To support this, we increased the
frequency and interactivity of communications with leaders and across teams,
via digital collaboration platforms, question and answer applications, and the
social media functionality of the intranet. With home schooling affecting
many, we also recorded leader updates and events to allow playback at times
that worked for colleagues. From senior leaders, including our non-executive
Directors, hosting interactive town halls for colleagues globally through to
local line managers keeping their colleagues updated and involved on a
day-to-day basis, our Viewpoints' feedback and communications channel metrics
evidenced that this approach supported colleagues during a very difficult
year. Regular Board Employee Engagement (BEE) activities continued throughout
the year. You can read more about this in the Corporate governance statement
on page 49.

Talent

Attracting, nurturing and retaining high quality people is critical to meeting
our strategic objectives and future prosperity. We are fully committed to
attracting and developing the required pools of talent at all levels of the
organisation to meet both current and anticipated needs. We aim to create an
environment where people can achieve their full potential at every stage of
their career.

The Viewpoints survey highlighted the strong link between leadership
effectiveness and colleague engagement and, taking this into account, we have
recently developed a new Leadership Framework, which clearly articulates what
good leadership looks like at different levels in the organisation. This
framework provides a backbone for the core people processes - Succession,
Recruitment, Development and Performance.

As indicated in the Strategic report, we continued the focus on Early Careers
talent by taking on 22 new trainees in the UK and 37 new graduates across our
global programmes, in spite of the challenges of doing this in the midst of a
global pandemic. We took the opportunity to innovate our approach to
recruitment and onboarding, notably through the Early Careers Chat Bot which
provided candidates with 24/7 access to answers to key questions while
supporting the navigation of the application process. Success of the new
approach to trainee marketing materials, including a remotely-created Trainee
video, profiling current trainees, and increased use of social media platforms
and key inclusion partners, led to a 400% increase in applications for the
Trainee programme.

In 2020 we were recognised for our early careers provision, as covered in the
Strategic report - through a Top 50 Ranking for both the Undergraduate and
Apprenticeships programmes at the 'Rate My Placement' awards. The Rate My
Placement awards are based on feedback from individuals who participated in
the programme. We believe this success is underpinned by our focus on
supporting managers to ensure they deliver a positive experience for all
participants on programmes. This includes inter-generational awareness
training, a new hub with helpful resources and key dates, monthly development
updates and line manager skills training.

Developing our people

Our new learning and development system - My Development - has been
established now for a year. The system uses artificial intelligence to
recommend resources and development opportunities to our people based on the
topics they are interested in. It is available for all employees and underpins
our philosophy of individual-driven development.

Our People Management Academy is central to developing the skills and
capability of people managers. In 2020, over 500 line managers attended
courses and the global pandemic meant that we had to quickly adapt our
learning delivery, through the introduction of virtual classrooms which have
proved successful and popular.

All employees can benefit from the courses in the Learning Academy and in 2020
over 1,200 people attended courses involving technology skills,
industry-specific training, and personal effectiveness solutions.

This year we have also launched two new career development programmes,
Ambition and Accelerate. Ambition is primarily aimed at colleagues in the
early stages of their career (first three to five years) and focuses on core
skills that are fundamental to future career success, including confidence,
future fit and personal brand. Accelerate is aimed at colleagues at mid-career
stage, likely to be in management or more senior specialist roles, and aims to
enhance existing skills, including decision making, confidence and maximising
personal brand. In total, 260 colleagues signed up for the courses.

Mentoring supports personal development and professional growth across
generations, functions and regions and, in 2020, we launched a global
mentoring programme following a successful pilot. Everyone in the company can
request to have an internal mentor or become a mentor to others with support
offered in building the mentoring relationship. We are also using mentoring
relationships to explore and understand different cultural experiences,
through a Reverse Mentoring programme that forms part of the overall mentoring
approach. All members of the Executive leadership team and selected other
senior leaders are mentored by someone from our Unity network.

Structured succession planning helps to ensure that we have a strong pipeline
of talent, with both technical expertise and leadership capabilities assessed
to support the growth agenda and enable smooth succession into the most
critical roles. We actively monitor diversity within succession pipelines and
take necessary actions to ensure that we have balanced representation at all
levels in our workforce. The Board, through its Nomination and Governance
Committee and the Executive leadership team work together to ensure the talent
and succession agenda is effective in delivering the talent needed for future
success.

In 2020, we enhanced our succession processes by supporting named successors
through an independent external assessment to provide additional insight into
the strengths and gaps in pipelines, and to provide the individuals involved
with tailored development plans. All external candidates for executive roles
are assessed in the same way, ensuring we have a consistent means of
identifying the best candidates for senior roles.

Colleague wellbeing

2020 was a year when we needed to support colleagues flexibly and
empathetically in dealing with the global pandemic. There is no single way of
doing this so managers were empowered to work with their teams to come up with
flexible solutions which balanced issues arising from personal circumstances,
with the needs of our clients. We have been proud of the way colleagues
supported each other during this time. We maintained a strong focus on
wellbeing during this period of personal disruption and partnered with
external experts to provide a broad range of professional advice and support
to colleagues and their families.

In order to ensure the guidance and support made available was meeting the
needs of our colleagues, we ran a series of very short surveys to understand
whether colleagues were feeling well supported by the Company. Responses were
consistently positive and this view was reinforced in our Insights survey,
where we asked how people were feeling about work and their personal lives in
the light of the pandemic. We also gathered views on a future return to the
office in order to help with our ongoing planning.

Inclusion and diversity

To complement the Board's formal diversity statement, the Executive leadership
team put in place an internal Global Diversity and Inclusion policy in 2019.
It affirms that diversity and inclusion remain as fundamental pillars
supporting all our decisions. We have always considered diversity in the
broadest sense - in backgrounds, experience, strengths and thinking - with the
aim that everyone can be themselves as they perform and progress, regardless
of their background. By valuing diverse talent and enabling people to reach
their potential in an inclusive culture, we provide global clients with the
diversity of thought and creativity required to bring long-term value.

The 2020 Diversity and Inclusion report includes a refreshed diversity and
inclusion framework, which drives outcomes in four priority areas of both
diversity and inclusion. The framework reflects the expectations of clients,
regulators, colleagues (including feedback from Board engagement work) and
best practice. Progress against this is reviewed by the Nomination and
Governance Committee biannually.

Achieving gender balance at all levels remains a priority. We achieved the
published Board and senior level (CE-1 and CE-2) gender targets this year and
have set new gender targets running to the end of 2025. In our fourth gender
equality update, we reported a 5% reduction in mean gender pay gap in 2020 and
the actions we are taking to continue to improve this. The Board comprises 45%
female members, while at Executive level (CE-1 and CE-2) representation levels
are 37% (as at 31 December 2020) with women in the most senior CE-1 population
having increased by 10% since 2019 to 28%. Improving gender balance at all
levels continues to be a focus, as our gender pay gap primarily reflects the
more significant number of men in senior and more highly-remunerated roles, as
well as by the larger number of women in more junior roles.

We remain confident that the actions we are taking will meaningfully improve
representation of women at all levels and so improve gender balance. For
example, our UK parent leave policy introduced in January 2020, is seen as
market-leading and was designed as a tangible step to ensuring that becoming a
parent does not limit anyone's career progression.

As evidence of our commitment to ethnic diversity, we published an ethnicity
target for the first time this year, following the recommendations of the Sir
John Parker review. We already meet the Parker recommendation to have at least
one qualifying Board member and have set our target to have one additional
qualifying Board member by 2025. The Board Charter mandates appointments to be
based on merit, with due consideration given to the Board's gender and
ethnicity balance.

As one of the inaugural signatories to the Race at Work Charter, and CEO
signatory to an open letter on black and ethnic minority actions, we are
committed to tackling barriers that people who identify as ethnic minority
face. We continue to deliver against the ethnicity action plan published in
2018, developed with the ethnicity and multicultural network, Unity, and the
executive sponsor for ethnicity.

Through the Reverse Mentoring programme, senior leaders are building a deeper
understanding of lived experiences of minority ethnic colleagues, which will
flow through the decisions they make. The Black Lives Matter movement
heightened focus and discussion on racial diversity throughout the company
this year, and the approach remains to focus on actions which will have a
sustainable and systemic impact and will improve outcomes for black and ethnic
minority colleagues.

We all have a role to play in creating an inclusive environment and we empower
people to take individual and collective action. The employee network groups
and regional inclusion forums support members and allies of the diverse groups
they represent, raising awareness of issues that affect them. This was used to
good effect in understanding the impact of COVID-19 on working lives. With
around 2,000 members, the networks continue to expand globally. They focus on
gender, LGBT+, ethnicity, mental health, young people and the armed forces.

We have specific policies to ensure that colleagues with disabilities face no
discrimination or obstacles in relation to job applications, training,
promotion and career development. Reasonable adjustments are also made to
train and enable employees who become disabled to allow them to continue and
progress in their career.

Reward

At the end of 2019 in the UK we introduced a new, unified, set of terms and
conditions of employment. These were designed to be fair and consistent
amongst those who had become part of the Group from different heritages, and
to help us continue to attract and retain talented people. Implementing these
terms and conditions represented an important step towards unifying colleagues
as a single team, with consistent and competitive benefits, including pension,
life assurance, group income protection and private healthcare.

As a consequence of the pandemic, we adjusted benefits offered to take account
of lack of availability due to restrictions imposed as well as allowing for
one-off changes to certain benefits. We also worked with suppliers to offer
solutions to some of the key issues colleagues were facing, including remote
GP appointments and access to counselling for colleagues and families.

As we contemplate a return to work in more normal conditions, we continue to
look for ways to innovate employee benefits and look for new offerings that
fit with changes to the way people live and work and our business purpose. As
an example, from early 2021, colleagues will be able to lease an electric car
as part of their flexible benefits package, which would offer them potential
savings on tax, running costs and fuel, as well as being a greener, more
sustainable choice. In 2020, we introduced a new service which offers access
to mental and physical wellbeing support - such as counselling, nutritionists
and a pin prick health check - and supplements our existing wellbeing
resources which include financial wellbeing. This comprises regular
educational seminars on a range of personal finance topics as well as the
opportunity for a free consultation with an in-house adviser.

We believe that when employees own shares in the company, it increases their
understanding of the interests of our shareholders. We invited UK and
Ireland-based employees to participate in the Standard Life Aberdeen Sharesave
plan in 2020 and 1,243 (26%) employees accepted the invitation. They have the
opportunity to acquire Standard Life Aberdeen plc shares for £1.888 (UK) and
€2.113 (Ireland) with their accumulated savings when their savings contracts
end in three or five years' time. At 31 December 2020, 2,298 employees in UK
and Ireland were saving towards the purchase of Standard Life Aberdeen plc
shares through the current Sharesave plans, and 2,424 individuals were
shareholders through participation in the Standard Life Aberdeen (Employee)
Share Plan. Participation allows employees to buy ordinary shares in the
Company directly from their earnings up to a market value of £150 per month
(UK) or €175 (Ireland) per month. We match the shares purchased by
employees, matching up to £50 per month in the UK and €70 per month in
Ireland.

Sustainability

The commercial aims of our business are linked to its environmental, social
and governance responsibilities. You can find out more about how the business
is run sustainably throughout the Strategic report. The non-financial
information statement on page 29 summarises where you can find key information
on the approach. For details of greenhouse gas emissions, please see page 28.

Political donations

The Company has a long-standing policy of not making political donations. The
Company has limited authorisation from shareholders to make political
donations and incur political expenditure (Resolution 9, 2020 AGM). This is
requested as a precaution against any inadvertent breach of political
donations legislation. While Standard Life Aberdeen has regular interaction
with government and elected politicians in the UK and other jurisdictions in
which we operate, we are strictly apolitical.

Auditors

The Audit Committee is responsible for considering the Group's External audit
arrangements. Resolutions proposing the re-appointment of KPMG LLP as auditors
of the Company and giving authority to the Audit Committee to determine their
remuneration will be submitted at the 2021 AGM.

Disclosure of information to the auditors

The Directors who held office at the date of the approval of this Directors'
report confirm that, so far as they are each aware, there is no relevant audit
information of which the Company's auditor is unaware; and each Director has
taken all the steps that he or she ought to have taken as a Director to make
himself or herself aware of any relevant audit information and to establish
that the Company's auditor is aware of that information.

Annual General Meeting

The 2021 AGM is scheduled to take place on 18 May 2021. At present, we do not
expect the COVID-19 restrictions to have eased sufficiently to allow
shareholders to be able to attend this year's AGM in person. Instead
shareholders will be able to view the AGM live by webcast. Questions can be
submitted in advance or during the meeting and Directors will respond to as
many questions as possible during the meeting. Please visit
www.standardlifeaberdeen.com for more information.

Details of the meeting content can be found in our AGM guide 2021. The AGM
guide and other materials will be published online at
www.standardlifeaberdeen.com in advance of this year's AGM.

Post balance sheet events

(a) Acquisition of Tritax Management LLP

On 9 December 2020, the Group announced the proposed acquisition of 60% of the
equity of Tritax Management LLP, a specialist logistics real estate fund
manager. The initial cash consideration payable at completion for the
acquisition is £64m. Subject to the satisfaction of certain conditions, an
additional contingent deferred earn-out is expected to be payable to acquire
the remaining 40% of equity in Tritax Management LLP via three exercisable put
options in each of years ended 31 March 2024, 2025 and 2026. The Group will
also have the right to purchase any outstanding equity interests at the end of
the five-year period through exercising a call option. The amount payable
under the contingent deferred earn-out is dependent on the growth in future
profitability of the business and is a maximum of £140m. Completion is
subject to certain conditions including relevant regulatory approvals. The
assets under management of Tritax Management LLP at 31 December 2020 were
approximately £5.5bn.

(b) Simplification and extension of the strategic partnership between the Group and Phoenix

On 23 February 2021, the Group announced the purchase of certain products in
the Phoenix Group's savings business offered through the Standard Life
Aberdeen Wrap platform, comprising a self-invested pension plan (SIPP) and an
onshore bond product; together with the Phoenix Group's trustee investment
plan (TIP) business for UK pension scheme clients. The assets relating to
these Phoenix Group-administered businesses at 31 December 2020 are £38bn and
are currently included in Group AUMA. The transaction will be effected through
a Part VII transfer which is targeted to complete in late 2022. The upfront
consideration paid by the Group in February 2021 was £62.5m, which will be
offset in part by expected payments from Phoenix to the Group relating to
profits of the business prior to completion of the legal transfer. The
transaction will result in the Group earning adjusted profit in relation to
the acquired businesses post completion.

The Group have also agreed to sell the 'Standard Life' brand to Phoenix by
mid-2021, replacing the existing agreement to licence the brand for no fee to
Phoenix, and to transfer related employees to Phoenix. In addition the Group
will pay £32m to Phoenix later in 2021 in return for Phoenix bearing the
costs of workplace pensions marketing staff, who are currently employed by the
Group but provide services to Phoenix. The sale of the brand and transfer of
related marketing staff is not expected to materially impact on our results.

The strategic asset management partnership (under which the Group manages
£171.5bn of Phoenix assets at 31 December 2020) will be extended and will now
operate for at least 10 years up to February 2031.

The Group have also resolved legacy issues with Phoenix relating to the
operation of certain aspects of the agreements that were entered into at the
time of the sale of Standard Life Assurance Limited to Phoenix and which
impacted the value of certain indemnities and other payments under the
transaction terms. The impact of the resolution of these legacy matters is
included in the 2020 results and resulted in the Group receiving a cash inflow
of £34m in February 2021.

The Group's shareholding in Phoenix remains at 14.4%. Following the changes to
the commercial agreements set out above, in particular in relation to the
licencing of the 'Standard Life' brand, the Group concluded that Phoenix
should no longer be accounted for as an associate with effect from 23 February
2021, and should instead be accounted for as an investment at fair value. The
primary impact of this reclassification is that the Group will recognise
changes in fair value of the investment in the consolidated income statement
rather than the Group's share of Phoenix profits under the equity method.

Other information

Under Listing Rule 9.8.4.CR, a listed company must include all information
required by LR 9.8.4R in a single identifiable location or cross-reference
table. For the purposes of LR 9.8.4CR, the information required to be
disclosed can be found in the following locations. All the relevant
information cross-referenced below is hereby incorporated by reference into
this Directors' report.

                                                                               Location
 Topic                                                                         Directors' report  Directors'            None/

                                                                                                  remuneration report   Not applicable
 Interest capitalised                                                                                                   x
 Publication of unaudited financial information in a class 1 circular or in a                                           x
 prospectus, other than in accordance with Annexes 1 and 2 of the FCA's
 Prospectus Rules
 Details of long-term incentive schemes                                                           x
 Waiver of emoluments by a director                                                                                     x
 Waiver of future emoluments by a director                                                                              x
 Non pre-emptive issues of equity for cash                                                                              x
 Non pre-emptive issues of equity for cash in relation to major subsidiary                                              x
 undertakings
 Parent participation in a placing by a listed subsidiary                                                               x
 Contracts of significance                                                                                              x
 Provision of services by a controlling shareholder                                                                     x
 Shareholder waivers of dividends                                              x
 Shareholder waivers of future dividends                                       x
 Agreements with controlling shareholders                                                                               x

Going concern

The Group's business activities, together with the factors likely to affect
its future development, performance and position, are set out in the Strategic
report. This includes details on our liquidity and capital management and our
viability statement in the Chief Financial Officer's overview section and our
principal risks in the Risk management section. The Group financial statements
include additional information relating to going concern in the basis of
preparation section.

The Group continues to meet group and individual entity capital requirements
and day-to-day liquidity needs. The Company has a revolving credit facility of
£400m as part of our contingency funding plans and this is due to mature in
2024. The Group has considerable financial resources together with a
diversified business model, with a spread of business and geographical reach.
As a consequence, the Directors believe that the Group is well placed to
manage its business risks successfully.

After making enquiries and having assessed the principal risks, the Directors
are satisfied that the Group and Company have and will maintain sufficient
resources to enable them to continue operating for at least 12 months from the
date of approval of the financial statements and therefore consider it
appropriate to adopt the going concern basis of accounting in preparing the
financial statements. There are no material uncertainties relating to this
going concern conclusion. In addition, the Directors have assessed the Group's
viability over a period of three years.

The Directors' report was approved by the Board and signed on its behalf by

 

 

Kenneth A Gilmour

Company Secretary

9 March 2021

 

 

5. Directors responsibilities

 

The Directors are responsible for preparing the Annual report and accounts and
the Group and Company financial statements in accordance with applicable law
and regulations.

Company law requires the Directors to prepare Group and Company financial
statements for each financial year. Under that law they are required to
prepare the Group financial statements in accordance with international
accounting standards in conformity with the requirements of the Companies Act
2006 and applicable law and have elected to prepare the Company financial
statements in accordance with UK accounting standards and applicable law,
including FRS 101 Reduced Disclosure Framework. In addition the Group
financial statements are required under the UK Disclosure Guidance and
Transparency Rules to be prepared in accordance with International Financial
Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union ('IFRSs as adopted by the EU').

Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and Company and of the Group's profit or loss for that
period. In preparing each of the Group and Company financial statements, the
Directors are required to:

·  Select suitable accounting policies and then apply them consistently

·  Make judgements and estimates that are reasonable, relevant, reliable and
prudent

·  For the Group financial statements, state whether they have been prepared
in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006 and International Financial Reporting
Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in
the European Union ('IFRSs as adopted by the EU')

·  For the Company financial statements, state whether applicable UK
accounting standards have been followed, subject to any material departures
disclosed and explained in the Company financial statements

·  For the Group and Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern

·  Use the going concern basis of accounting unless they either intend to
liquidate the Group or the Company or to cease operations, or have no
realistic alternative but to do so

The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that its financial statements comply with the Companies
Act 2006. They are responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error, and have general
responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Group and to prevent and detect fraud and other
irregularities.

Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic report, Directors' report, Directors' remuneration
report and Corporate governance statement that complies with that law and
those regulations.

The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.

Responsibility statement of the Directors in respect of the annual financial report

We confirm that to the best of our knowledge:

·  The financial statements, prepared in accordance with the applicable set
of accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole

·  The Strategic report and Directors' report include a fair review of the
development and performance of the business and the position of the Company
and the undertakings included in the consolidation taken as a whole, together
with a description of the principal risks and uncertainties that they face

We consider the Annual report and accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the Group's position and performance, business model
and strategy.

 By order of the Board

 Sir Douglas Flint  Stephanie Bruce

 Chairman           Chief Financial Officer

 9 March 2021       9 March 2021

 

 

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