REG - Standard Life Aberdn - Final Results - Part 7 of 8
09/03/2021 07:00
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RNS Number : 5732R Standard Life Aberdeen plc 09 March 2021
Standard Life Aberdeen plc
Full Year Results 2020
Part 7 of 8
8. Company financial statements
Company statement of financial position
As at 31 December 2020
2020 2019
Notes £m £m
Assets
Investments in subsidiaries A 4,013 6,027
Investments in associates and joint ventures B 1,216 1,229
Deferred tax assets M 77 35
Loans to subsidiaries C 109 -
Derivative financial assets C 1 3
Equity securities and interests in pooled investment funds C 249 218
Debt securities C 326 603
Receivables and other financial assets C 50 15
Other assets F - 14
Cash and cash equivalents C 47 19
Total assets 6,088 8,163
Equity
Share capital G 306 327
Shares held by trusts H (161) (119)
Share premium reserve G 640 640
Retained earnings I
Brought forward retained earnings 2,933 2,035
(Loss)/profit for the year attributable to equity shareholders of Standard (1,266) 1,020
Life Aberdeen plc
Other movements in retained earnings 964 (122)
Total retained earnings 2,631 2,933
Other reserves J 1,842 3,621
Total equity 5,258 7,402
Liabilities
Subordinated liabilities K 638 655
Derivative financial liabilities D 6 -
Other financial liabilities K 110 25
Provisions O 68 77
Other liabilities O 8 4
Total liabilities 830 761
Total equity and liabilities 6,088 8,163
The financial statements on pages 211 to 221 were approved by the Board and
signed on its behalf by the following Directors:
Sir Douglas Flint Stephanie Bruce
Chairman Chief Financial Officer
9 March 2021 9 March 2021
The Notes on pages 214 to 221 are an integral part of these financial
statements.
Company statement of changes in equity
For the year ended 31 December 2020
Share capital Shares held by trusts Share premium Retained earnings Other reserves Total equity
reserve
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 214 to 221 are an integral part of these financial
statements.
Share capital Shares held by trusts Share premium Retained earnings Other reserves Total equity
reserve
2019 Notes £m £m £m £m £m £m
1 January 353 (88) 640 2,035 4,505 7,445
Profit for the year - - - 1,020 - 1,020
Other comprehensive income for the year - - - - 10 10
Total comprehensive income for the year - - - 1,020 10 1,030
Dividends paid on ordinary shares - - - (518) - (518)
Share buyback G (26) - - (390) (100) (516)
Reserves credit for employee share-based payment J - - - - 43 43
Transfer to retained earnings for vested employee share-based payment J - - - 57 (57) -
Transfer between reserves on impairment of investment in subsidiaries J - - - 780 (780) -
Shares acquired by employee trusts - (76) - - - (76)
Shares distributed by employee and other trusts and related dividend - 45 - (52) - (7)
equivalents
Transfer from the Standard Life Unclaimed Asset Trust - - - 1 - 1
31 December 327 (119) 640 2,933 3,621 7,402
The Notes on pages 214 to 221 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 2020 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 8 to the consolidated financial statements. The Company has
no employees.
(a) 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.
(b) 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 financial statements are as follows:
Financial statement area Critical judgements in applying accounting policies Related notes
Investments in subsidiaries Determining the cash-generating unit to be used in relation to the recoverable Note A
amount of investments in subsidiaries
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, associates Determination of the recoverable amount Note A and B
and joint ventures held at cost
Notes to the Company financial statements
A. Investments in subsidiaries
2020 2019
Notes £m £m
Investments in subsidiaries measured at cost 3,568 5,465
Investments in subsidiaries measured at FVTPL C 445 562
Investments in subsidiaries 4,013 6,027
2020 2019
£m £m
At 1 January 6,027 6,467
Investment into existing subsidiaries measured at cost 26 150
Acquisition of subsidiaries at cost - -
Disposal of subsidiaries measured at cost (50) (139)
Impairment of subsidiaries measured at cost (1,873) (795)
Acquisition of subsidiaries at FVTPL 8 344
Disposal of subsidiaries at FVTPL (126) -
Gains on subsidiaries at FVTPL 1 -
At 31 December 4,013 6,027
Details of the Company's subsidiaries are given in Note 48 of the Group
financial statements.
(a) Acquisitions
During 2020, the Company made the following acquisitions of subsidiaries
measured at cost:
· The Company increased its investment in 1825 Financial Planning Ltd
(1825) through the purchase of 17,000,000 ordinary shares for a cash
consideration of £17m
· The company increased its investment in Aberdeen Asset Management PLC
(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 Standard Life Employee Services
Limited (SLESL) through the purchase of 3,584 ordinary shares for a cash
consideration of £3.6m
During 2019, the Company made the following acquisitions of subsidiaries
measured at cost:
· The Company increased its investment in AAM PLC through the purchase of
100,000,000 ordinary shares for a non-cash consideration of £10m and through
the purchase of 22,010,558 ordinary shares for a cash consideration of £70.4m
· The Company increased its investment in 1825 through the purchase of
63,600,000 ordinary shares for a cash consideration of £63.6m
· The Company increased its investment in Focus Solutions Group Limited
through the purchase of 30,000,000 ordinary shares for a cash consideration of
£3m
· The Company increased its investment in SLESL through the purchase of
3,389 ordinary shares for a cash consideration of £3.4m
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 Standard Life
(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.
During 2019, the Company made the following disposals of subsidiaries measured
at cost:
· The Company redeemed £139m of equity capital in Standard Life (Mauritius
Holdings) 2006 Limited through the cancellation of 1,779,047.32 Participating
shares
(c) Impairment
The Company holds investments in AAM PLC and Standard Life Investments
(Holdings) Limited (SLIH). As AAM PLC and SLIH are managed and reported
together within the Asset management, Platforms and Wealth segment, and the
synergies from the merger of these entities are expected to benefit both
entities, we judge that it is appropriate to consider the recoverable amount
of these entities on a combined basis. The Company impaired its investments in
AAM PLC and SLIH by £1,834m in 2020 (2019: £780m). Following the impairment,
£1,834m (2019: £780m) was transferred from the merger reserve to retained
earnings (refer Note J).
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 15 of the Group financial statements.
The recoverable amount at 30 June 2020 was £3,074m which is based on fair
value less cost of disposal (FVLCD). The FVLCD includes the fair value of HDFC
Asset Management which is an associate of SLIH. The approach and key
assumptions in determining the FVLCD are the same as used in the impairment
review for asset management goodwill set out in Note 15 of the Group financial
statements. Following the impairment loss recognised at 30 June 2020, the
recoverable amount was equal to the carrying amount. At 31 December 2020,
there is no indication that the Company's investments in AAM PLC and SLIH have
become further impaired. The recoverable amount is impacted by changes in the
fair value of HDFC AMC, which was £1,321m at 31 December 2020 (£1,204m at 30
June 2020), and the key assumptions used in determining the FVLCD of the asset
management group of cash generating units at 30 June 2020 which are detailed
in Note 15 of the Group financial statements. As for the valuation of the
asset management goodwill set out in Note 15 of the Group financial
statements, the primary valuation approach was within a range of reasonable
outcomes and reflected market conditions and uncertainties at 30 June 2020,
including significant uncertainties relating to the impact of COVID-19 at that
point. An impairment of an investment in subsidiaries can be reversed due to
changes in circumstances; however, no indicators of reversal were identified
during the course of the second half of the year.
The recoverable amount at 31 December 2019 of £4,808m was based on value in
use, which was assessed by management as being higher than the FVLCD at this
date. As set out in Note 15 of the Group financial statements, management has
now assessed that the FVLCD is higher.
The Company's investment in its subsidiary 1825 Financial Planning Limited
(1825 FPL) was impaired during 2020 by £39m (2019: £nil). The recoverable
amount which is its FVLCD at 31 December 2020 was £115m. 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 acquisitions, adjusted to take into account
profitability where appropriate, and were benchmarked against other recent
external transactions. Revenue and AUAdv were based on December 2020 actuals.
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 and the impact of the level of
profitability on valuation expectations for certain parts of the business. As
the year end carrying value is the recoverable amount any downside sensitivity
will lead to a further future impairment loss. A 10% reduction in recurring
revenue and AUAdv would result in a further impairment of £13m.
The Company's investment in its subsidiary Focus Solutions Group Limited
(Focus) was impaired during 2019 by £15m. The carrying amount of the
Company's investment in Focus is £nil (2019: £nil).
(d) Investments in subsidiaries at FVTPL
Investments in subsidiaries at FVTPL, valued at £445m (2019: £562m), relate
to holdings in funds over which the Company has control.
B. Investments in associates and joint ventures
2020 2019
£m £m
Investment in associates measured at cost 1,020 1,033
Investment in joint venture measured at cost 196 196
Investments in associates and joint ventures 1,216 1,229
(a) Investment in associates
The Company's investments in associates are measured at cost less impairment.
The Company has an interest of 14.4% (2019: 19.97%) in Phoenix Group Holdings
plc (Phoenix), a company incorporated in England and Wales. On 22 July 2020,
Phoenix announced the completion of its acquisition of ReAssure Group plc.
Under the terms of the transaction, Phoenix issued 277,277,138 new ordinary
shares as part consideration for the acquisition. Completion of the
transaction resulted in the Company's holding in Phoenix becoming 14.4% of the
enlarged Phoenix Group.
For Phoenix, we consider that the market value of Phoenix represents the best
estimate of the present value of future dividends and therefore this market
value is used as the VIU for determining any impairment or reversal of
impairment of the Company's investment in Phoenix. As the VIU is based on the
market value, a discount rate is not determined. At 31 December 2020 the
market value of the Company's interest in Phoenix was £1,010m (31 December
2019: £1,079m) and a £13m impairment has been recognised in 2020 (2019:
reversal of impairment £211m). Further details of this associate are
provided in Note 16 of the Group financial statements.
The Company has an interest of 25.3% (2019: 25.3%) in Tenet Group Limited, a
company incorporated in England and Wales.
(b) Investment in joint venture
The Company has a 50% (2019: 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 16 of the Group financial statements.
C. Financial investments
Fair value through Derivative financial instruments used for hedging Amortised cost Total
profit or loss
2020 2019 2020 2019 2020 2019 2020 2019
Notes £m £m £m £m £m £m £m £m
Investments in subsidiaries measured at FVTPL A 445 562 - - - - 445 562
Loan to subsidiaries - - - - 109 - 109 -
Derivative financial assets D - - 1 3 - - 1 3
Equity securities and interests in pooled investment funds 249 218 - - - - 249 218
Debt securities - - - - 326 603 326 603
Receivables and other financial assets E 28 1 - - 22 14 50 15
Cash and cash equivalents - - - - 47 19 47 19
Total 722 781 1 3 504 636 1,227 1,420
The amount of debt securities expected to be recovered or settled after more
than 12 months is £231m (2019: £266m). The amount of loans to subsidiaries
expected to be recovered or settled after more than 12 months is £100m (2019:
£nil).
Under IFRS 9 the Company calculates expected credit losses (ECL) on financial
assets which are measured at amortised cost (refer to Note 38 (c) of the Group
financial statements), including loans to subsidiaries (which are unrated). At
31 December 2020 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 (2019: £nil). 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.
2020 2019
Contract Fair value Fair value liabilities Contract Fair value Fair value liabilities
amount
assets
amount
assets
£m £m £m £m £m £m
Cash flow hedges 549 - 6 566 3 -
Foreign exchange forwards 79 1 - 74 - -
Derivative financial instruments 628 1 6 640 3 -
The derivative liability of £6m (2019: derivative asset of £3m) 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
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
£m £m £m £m £m £m £m £m £m £m
Cash inflows
Cash flow hedges 23 24 93 96 607 650 - - 723 770
Foreign exchange forwards 62 57 - - - - - - 62 57
Total 85 81 93 96 607 650 - - 785 827
Cash outflows -
Cash flow hedges (18) (18) (73) (73) (614) (632) - - (705) (723)
Foreign exchange forwards (61) (56) - - - - - - (61) (56)
Total (79) (74) (73) (73) (614) (632) - - (766) (779)
Net derivative financial instruments cash flows 6 7 20 23 (7) 18 - - 19 48
E. Receivables and other financial assets
2020 2019
£m £m
Amounts due from related parties 16 12
Contingent consideration asset 28 1
Other financial assets 6 2
Total receivables and other financial assets 50 15
The carrying amounts disclosed above reasonably approximate the fair values at
the year end.
Receivables and other financial assets of £43m (2019: £15m) are expected to
be recovered within 12 months.
F. Other assets
Other assets of £14m in 2019 comprised amounts due from related parties which
were expected to be recovered within 12 months.
G. Share capital and share premium
Details of the Company's share capital and share premium are given in Note 26
of the Group financial statements including details of the share buyback.
H. Shares held by trusts
Shares held by trusts relates to shares in Standard Life Aberdeen plc that are
held by the Standard Life Aberdeen Employee Benefit Trust (SLA EBT), Standard
Life Employee Trust (ET) and, prior to SLA issuing its closure instructions to
the Trustees on 13 December 2019, the Standard Life Unclaimed Asset Trust
(UAT). The SLA EBT was established on 28 March 2019. Further details of these
trusts are provided in Note 27 of the Group financial statements.
I. Retained earnings
Details of the dividends paid on the ordinary shares by the Company are
provided in Note 14 of the Group financial statements. Note 14 also includes
information regarding the final dividend proposed by the Directors for the
year ended 31 December 2020.
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
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
Merger reserve Equity compensation reserve Special reserve Capital redemption reserve Cash flow hedges Total
2019 £m £m £m £m £m £m
At 1 January 3,192 67 241 1,011 (6) 4,505
Fair value losses on cash flow hedges - - - - (10) (10)
Realised losses on cash flow hedges transferred to income statement - - - - 22 22
Share buyback - - (126) 26 - (100)
Reserves credit for employee share-based payments - 43 - - - 43
Transfer to retained earnings for vested employee - (57) - - - (57)
share-based payments
Transfer between reserves on impairment of investment in subsidiaries (780) - - - - (780)
Tax effect of items that may be reclassified subsequently to profit or loss - - - - (2) (2)
At 31 December 2,412 53 115 1,037 4 3,621
During 2020, £21m (2019: £26m) was recognised in the capital redemption
reserve for the share buyback (refer Note 26 of the Group financial
statements).
Following the impairment loss recognised in the period on the Company's
investments in AAM PLC and SLIH (refer Note A), £1,834m (2019: £780m) was
transferred from the merger reserve to retained earnings.
K. Financial liabilities
Amortised cost Total
2020 2019 2020 2019
2020 Notes £m £m £m £m
Subordinated liabilities L 638 655 638 655
Other financial liabilities N 110 25 110 25
Total 748 680 748 680
L. Subordinated liabilities
2020 2019
Principal Carrying Principal amount Carrying
value
value
amount
Subordinated notes:
4.25% US Dollar fixed rate due 30 June 2028 $750m £546m $750m £563m
5.5% Sterling fixed rate due 4 December 2042 £92m £92m £92m £92m
Total subordinated liabilities £638m £655m
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 (2019:
less than £1m) is expected to be settled within 12 months.
On 26 March 2019, the Company repurchased 5.5% Sterling fixed rate
subordinated notes with a principal amount of £408m (out of a total principal
amount of £500m).
Further information including the terms and conditions of all subordinated
liabilities is given in Note 33 of the Group financial statements.
M. Deferred tax assets and liabilities
2020 2019
£m £m
Deferred tax assets 77 35
The amount of deferred tax assets expected to be recovered or settled after
more than 12 months are £77m (2019: £35m).
Recognised deferred tax
2020 2019
£m £m
Deferred tax assets comprise:
Unused tax losses 80 36
Unrealised losses on cash flow hedges (2) -
Gross deferred tax assets 78 36
Less: Offset against deferred tax liabilities (1) (1)
Deferred tax assets 77 35
Deferred tax liabilities comprise:
Unrealised gains on investments 1 1
Gross deferred tax liabilities 1 1
Less: Offset against deferred tax assets (1) (1)
Deferred tax liabilities - -
Net deferred tax asset at 31 December 77 35
Movements in net deferred tax assets comprise:
At 1 January 35 22
Amounts credited to profit or loss 44 15
Amounts charged to other comprehensive income (2) (2)
At 31 December 77 35
The deferred tax assets recognised are in respect of unused tax losses arising
in the year and unrealised losses on cash flow hedges. 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.
N. Other financial liabilities
2020 2019
£m £m
Outstanding purchase of investment securities 6 -
Amounts due to related parties 47 2
Collateral held in respect of derivative contracts 7 13
Outstanding contractual obligation for share buyback 40 -
Other 10 10
Other financial liabilities 110 25
Other financial liabilities of £110m (2019: £25m) are expected to be settled
within 12 months.
O. Provisions and other liabilities
Of Provisions of £68m (2019: £77m), £58m are expected to be settled within
12 months (2019: £48m). The provisions in 2020 and 2019 relate to separation
costs. Refer Note 37 of the Group financial statements for further information
and details of the provisions.
Of Other liabilities of £8m (2019: £4m), £8m are expected to be settled
within 12 months (2019: £4m) and include £8m (2019: £2m) in respect of
amounts due to related parties.
P. 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. In some
cases it will not be possible to form a view, for example because the facts
are unclear or because further time is needed to properly investigate, and no
provisions are held for such matters. It is not possible to predict with
certainty the extent and timing of the financial impact of legal proceedings,
complaints and related regulatory matters.
(b) Indemnities and guarantees
Under the trust deed in respect of the UK Standard Life defined benefit
pension plan, Standard Life Employee Services Limited (SLESL), the principal
employer, must pay contributions to the pension plan as the trustees' actuary
may certify necessary. The Company has guaranteed the obligations of SLESL 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 2020
(2019: none).
Q. 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 45 of the Group financial statements for
further information.
R. Events after the reporting date
On 23 February 2021, the Group announced a simplification and extension of the
strategic partnership between the Group and Phoenix. Further information is
given in Note 47 of the Group financial statements.
The Company's shareholding in Phoenix remains at 14.4%. Following the changes
to the commercial agreements between the Group and Phoenix, the Group
concluded that Phoenix should no longer be accounted for as an associate with
effect from 23 February 2021. From this date, the Company has reclassified its
investment in Phoenix from an investment in associates measured at cost less
impairment to equity securities measured at fair value.
9. Supplementary information
9.1 Key performance indicators
Key performance indicators (KPIs) are defined as the measures by which the
development, performance or position of the business can be measured
effectively. The KPIs that we use may not be directly comparable with
similarly named measures used by other companies. The addition of adjusted
capital generation was the only change to our KPIs in 2020, reflecting the
linkage with our dividend policy.
9.2 Alternative performance measures
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.
Ratios are presented in Section 9.4.
KPI Key performance indicators (KPIs) are defined as the measures by which
the development, performance or position of the business can be measured
effectively.
R Metric used for executive remuneration in 2020. See pages 78 and 83 for
more information.
Definition Purpose
Adjusted profit before tax KPI
Adjusted profit before tax is the Group's key alternative performance measure. Adjusted profit reporting provides further analysis of the results reported
Adjusted profit excludes the impact of the following items: under IFRS and the Directors believe it helps to give shareholders a fuller
understanding of the performance of the business by identifying and analysing
· Restructuring costs and corporate transaction expenses. Restructuring adjusting items.
includes the impact of major regulatory change.
Adjusted profit before tax is consistent with the way that financial
· Amortisation and impairment of intangible assets acquired in business performance is measured by management and reported to the Board and executive
combinations and through the purchase of customer contracts leadership team. Adjusted profit before tax is also a key input to the
adjusted earnings per share measure which is used to assess performance for
· Profit or loss arising on the disposal of a subsidiary, joint venture or remuneration purposes.
associate
Fee based revenue is shown net of commission, costs of sale and similar
· Impairment loss/reversal of impairment loss recognised on investments in charges so as to show the net charges received on AUMA and provides the basis
associates and joint ventures accounted for using the equity method for reporting of the fee revenue yield financial ratio.
· Changes in fair value of significant listed investments and related
dividend income
· 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
· Impacts arising from investment return variances and economic assumption
changes in the Group's associate and joint venture insurance entities where
they have a policy for determining investment return variances and economic
assumption changes
· Dividends payable on preference shares classified as non-controlling
interests are excluded from adjusted profit in line with the treatment of
ordinary shares. Similarly to preference shares, coupons paid on perpetual
debt instruments classified as equity for which interest is only accounted for
when paid is excluded from adjusted profit. This includes our share of
interest payable on Tier 1 debt instruments held by associates.
Further details are included in Note 13 of the Group financial statements.
Fee based revenue is a component of adjusted profit and includes revenue we
generate from asset management charges (AMCs), platform charges and other
transactional charges. Fee based revenue is shown net of fees, costs of sale,
commissions and similar charges. Refer to Note 4 of the Group financial
statements.
Adjusted capital generation KPI
Adjusted capital generation is part of the analysis of movements in CRDIV 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 excludes the Group's share of
associates and joint ventures profit after tax which is replaced by dividends
received from these entities. Dividends from significant listed investments
are also included. Adjusted diluted capital generation per share is calculated
as adjusted capital generation divided by the weighted average number of
diluted ordinary shares outstanding.
Cash and liquid resources
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.
Adjusted profit before tax
Reconciliation of adjusted profit to IFRS profit by component
The key components of adjusted profit before tax are fee based revenue,
adjusted operating expenses and share of associates' and joint ventures'
profit before tax. These components provide a meaningful analysis of our
adjusted results.
The table below provides a reconciliation of movements between adjusted profit
component measures and relevant IFRS terms. A reconciliation of Fee based
revenue to the IFRS item Revenue from contracts with customers is provided in
Note 4 of the Group financial statements.
Adjusted profit term Group adjusted profit Presentation differences Adjusting items Capital management Share of associates' and joint ventures' tax expense Non-controlling interests Group IFRS IFRS term
2020 £m £m £m £m £m £m £m
Fee based revenue KPI R 1,425 214 1,949 21 - - 3,609 Total income
Adjusted operating expenses (1,206) (214) (1,500) - - - (2,920) Total expenses
Capital management 21 - - (21) - - - N/A
Share of associates' and joint ventures' profit before tax 247 - (81) - (17) - 149 Share of profit from associates and JVs(1)
Adjusted profit before tax from continuing operations 487 - 368 - (17) - 838 Profit before tax
Tax on adjusted profit (38) - 53 - - - 15 Total tax expense
Share of associates' and joint ventures' tax (38) - - - 38 - - N/A
Adjusted profit after tax from continuing operations 411 - 421 - 21 - 853 Profit for the year from continuing operations
Adjusted profit after tax from discontinued operations - - (15) - - - (15) Profit for the year from discontinued operations
Adjusted profit after tax 411 - 406 - 21 - 838 Profit for the year
(1 ) Includes £45m impairment of interests in joint ventures.
Adjusted profit term Group adjusted profit Presentation differences Adjusting items Capital management Share of associates' and joint ventures' tax expense Non-controlling interests Group IFRS IFRS term
2019 £m £m £m £m £m £m £m
Fee based revenue 1,634 619 1,703 37 - - 3,993 Total income
Adjusted operating expenses (1,333) (619) (2,120) - - - (4,072) Total expenses
Capital management 37 - - (37) - - - N/A
Share of associates' and joint ventures' profit before tax 246 - 84 - (8) - 322 Share of profit from associates and JVs(2)
Adjusted profit before tax from continuing operations 584 - (333) - (8) - 243 Profit before tax
Tax on adjusted profit (69) - 41 - - - (28) Total tax expense
Share of associates' and joint ventures' tax (46) - - - 46 - - N/A
Adjusted profit after tax from continuing operations 469 - (292) - 38 - 215 Profit for the year from continuing operations
Adjusted profit after tax from discontinued operations - - 56 - - - 56 Profit for the year from discontinued operations
Adjusted profit after tax 469 - (236) - 38 - 271 Profit for the year
(2 ) Includes £243m reversal of impairment of interests in associates.
This reconciliation includes a number of reconciling items which arise due to
presentation differences between IFRS reporting requirements and the
determination of fee based revenue and adjusted operating expenses. Fee based
revenue and adjusted operating expenses exclude items which have an equal and
opposite effect on IFRS income and IFRS expenses in the consolidated income
statement. This particularly relates to income and expenses of unit linked
funds, where investment returns are for the account of policyholders.
Investment return from unit linked business in 2020 was £49m (2019: £392m).
Other presentation differences also include commission and other cost of sales
expenses which are presented in expenses in the consolidated income statement
but are netted against fee based revenue in the analysis of Group adjusted
profit by segment.
The table below provides a summarised reconciliation of adjusted profit before
tax (split by continuing operations, discontinued operations and Total) to
Profit before tax:
Continuing operations Discontinued operations Total
2020 2019 2018 2020 2019 2018 2020 2019 2018
£m £m £m £m £m £m £m £m £m
Adjusted profit before tax 487 584 650 - - 210 487 584 860
Share of associates' and joint ventures' tax expense (17) (8) (40) - - (17) (8) (40)
-
Total adjusting items 368 (333) (1,397) (15) 56 1,519 353 (277) 122
Profit attributable to non-controlling interests - ordinary shares - - - - - 5 - - 5
Profit before tax(1) 838 243 (787) (15) 56 1,734 823 299 947
(1 ) Discontinued operations shown as (loss)/profit before tax expense
attributable to equity holders.
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
2020 2019 2018 2020 2019 2018 2020 2019 2018
£m £m £m £m £m £m £m £m £m
Restructuring and corporate transaction expenses (355) (407) (239) - - (264) (355) (407) (503)
Amortisation and impairment of intangible assets acquired in business (1,287) (1,844) (1,155) - - - (1,287) (1,844) (1,155)
combinations and through the purchase of customer contracts
Profit on disposal of subsidiaries - - - - - 1,780 - - 1,780
Profit on disposal of interests in associates 1,858 1,542 185 - - - 1,858 1,542 185
(Loss on)/reversal of impairment of associates and joint ventures (45) 243 (228) - - - (45) 243 (228)
Change in fair value of significant listed investments 65 - - - - - 65 - -
Investment return variances and economic assumption changes 46 (25) 54 - - (41) 46 (25) 13
Other 86 158 (14) (15) 56 44 71 214 30
Total adjusting items 368 (333) (1,397) (15) 56 1,519 353 (277) 122
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. 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 outwith 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. The 2020
expenses included costs relating to integration and implementing our
simplified operating model of £79m (2019: £214m), £112m (2019: £37m) in
respect of Phoenix separation costs, and £69m (2019: £41m) of other
transformation related restructuring costs. 2020 also included £39m (2019:
£33m) relating to our share of the restructuring costs of joint ventures and
associates (primarily Phoenix). 2019 also included £49m relating to the
repurchase of subordinated debt and £20m variable compensation expense
related to the receipt of £140m LBG compensation.
· 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 15 of the Group financial
statements.
· Profits on the disposal of a subsidiary, joint venture or associate are
also removed to assist comparability of results period on period. Profit on
disposal of interests in associates in 2020 of £1,858m (2019: £1,542m),
includes a one-off accounting gain of £1,051m following the reclassification
of HDFC Life from an investment in associates accounted for using the equity
method to equity securities measured at fair value (see Note 16), £540m from
the sale of 5.83% of shares in HDFC Life (2019: £1,337m, 14.49%) and £263m
from the sale of 5.64% of shares in HDFC Asset Management (2019: £204m,
3.02%). Details are provided in Note 1 of the Group financial statements.
· The impairment of associates and joint ventures of £45m relates to our
joint venture with Virgin Money. The reversal of impairment of associates in
2019 of £243m reflected the recovery of the Phoenix share price and reversed
the impairment recognised in 2018. These impairment losses/reversals are
considered one-off items and not indicative of the long-term operating
performance of the Group and have therefore been excluded from adjusted profit
to assist comparability of results period to period. More details are provided
in Note 16 of the Group financial statements.
· The change in fair value of significant listed investments of £65m
represents the impact of movements in the listed share price on our 8.89%
holding in HDFC Life from 3 December 2020 to 31 December 2020. 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.
· Investment return variances and economic assumption changes in the
Group's associate and joint venture insurance entities are excluded from
adjusted profit. Where associates and joint ventures have a policy for
determining investment return variances and economic assumption changes, the
Group uses the policy of the associate or joint venture for including their
results in the Group's adjusted profit. This currently applies only to the
Group's investment in Phoenix. Details of the Phoenix policy are included in
Note 13 of the Group financial statements.
· Details on items classified as 'Other' in the table on the previous page
are provided in Note 13 of the Group financial statements. In 2020 this
includes £66m relating to our share of Phoenix gains relating to the
acquisition of ReAssure and the completion of the Part VII transfer of the
Legal and General mature savings business. Also included is the gain on
disposal of SL Asia of £8m.
The table below provides a breakdown for the calculation of our share of
adjusted profit before tax from Phoenix of £163m which is included in the
Insurance associates and joint ventures reportable segment total of £203m.
Phoenix use an operating profit alternative performance measure which is
before finance costs, while the Group's adjusted profit is after deducting
finance costs.
2020 2020 2019 2019
100% 14.42%(1) 100% 19.97%
£m £m £m £m
Operating profit before tax (Phoenix APM) 1,199 196 810 162
Finance costs (191) (33) (127) (26)
Adjusted profit before tax (Standard Life Aberdeen APM) 1,008 163 683 136
(1 ) Our holding in the enlarged Phoenix Group reduced from 19.97% to
14.43% following the completion of its acquisition of ReAssure Group plc on 22
July 2020 (31 December 2020: 14.42%) and therefore the results shown above are
based on 19.97% until 21 July 2020.
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.
2020 2019
£m £m
Adjusted profit after tax 411 469
Remove staff pension scheme returns (20) (29)
Remove associates' and joint ventures' adjusted profit after tax (209) (200)
Add associates' and joint ventures' dividends received 80 93
Adjusted capital generation 262 333
Staff pension scheme returns
Staff pension scheme returns are the contribution to adjusted profit before
tax from defined benefit pension schemes which are in surplus and reconciled
below:
2020 2019
£m £m
Total income recognised in the consolidated income statement per Note 34 (c) 19 40
of the Group financial statements
Past service costs (included in adjusting items) - (13)
Remove IFRS charge relating to schemes in deficit 1 2
20 29
Share of associates' and joint ventures' adjusted profit after tax
An analysis is provided below:
2020 2019
£m £m
Share of associates' and joint ventures' adjusted profit before tax - Note 2 247 246
(b)(i)
Share of associates' and joint ventures' adjusted tax expense - Note 2 (b)(i) (38) (46)
Share of associates' and joint ventures' adjusted profit after tax 209 200
Associates' and joint ventures' dividends received
This information is disclosed in Note 16 of the Group financial statements. An
analysis is provided below:
2020 2019
£m £m
Phoenix 67 67
HDFC Life - 9
HDFC Asset Management 13 17
Associates' and joint ventures' dividends received 80 93
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 38
(b).
2020 2019
£bn £bn
Cash and cash equivalents per Note 24 of the Group financial statements 1.5 1.6
Bank overdrafts - Note 24 (0.2) (0.3)
Debt securities excluding third party interests(1) - Note 38 (c)(i) 1.0 1.2
Corporate funds held in absolute return funds - Note 38 (b)(i)(i) 0.2 0.2
Cash and liquid resources 2.5 2.7
(1 ) Excludes £54m (2019: £78m) relating to seeding, see Note 38 (b).
9.3 Surplus regulatory capital
The £2.3bn indicative capital surplus below includes a deduction to allow for
the proposed final dividend which will be paid in May 2021.
At 31 December 2020, the indicative regulatory capital position was as
follows:
2020 FY 2019
CRD IV Group regulatory capital position £bn £bn
Common Equity Tier 1 capital resources 2.9 2.2
Tier 2 capital resources 0.5 0.6
Total regulatory capital resources 3.4 2.8
Total regulatory capital requirements (1.1) (1.1)
Surplus regulatory capital 2.3 1.7
The Group's capital resources include c£0.8bn (2019: c£0.3bn) from holdings
in insurance entities that it is expected will no longer be eligible following
the implementation of the Investment Firm Prudential Regime (IFPR) from 1
January 2022. The IFPR is also expected to introduce constraints on the
proportion of the minimum capital requirement that can be met by each tier of
capital. As a result, it is estimated that c£0.3bn of existing Tier 2
capital, whilst continuing to be reported within the Group's capital
resources, would not be available to meet the current minimum capital
requirement from 1 January 2022.
9.4 Financial ratios
We also use a number of financial ratios to help assess our performance and
these are also not defined under IFRS. Details of our main financial ratios
and how they are calculated are presented below:
Definition Purpose and changes
Cost/income ratio KPI R
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.
This ratio is also a measure used to assess performance for remuneration
purposes.
For 2020, we changed the KPI basis for the cost/income ratio to exclude the
share of associates' and joint ventures' profit before tax. This change better
links revenue to expenses.
Adjusted diluted earnings per share KPI R
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 12 of the Group financial statements. Board and executive leadership team.
Fee revenue yield (bps)
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, SL Asia, Focus and Threesixty) divided by monthly average the average margin being earned on the assets that we manage, administer or
fee based assets. advise our clients on.
Fee revenue yield is now presented on a vector basis reflecting changes in our
strategy. This includes changes in the allocation of fee based revenue, a
reconciliation is provided in Section 9.4.3.
Investment performance KPI 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. 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, execution only mandates
and Aberdeen Standard Capital, as well as replication tracker funds which aim
to perform in line with a given index.
9.4.1 Cost/income ratio
2020 2019
Adjusted operating expenses (£m) (1,206) (1,333)
Fee based revenue (£m) 1,425 1,634
Share of associates' and joint ventures' profit before tax (£m) 247 246
Cost/income ratio (%) 85 82
Cost/income ratio including our share of associates' and joint ventures' 72 71
profit before tax (%)
9.4.2 Fee revenue yield (bps)(1)
Average AUMA (£bn) Fee based revenue (£m) Fee revenue yield (bps)
2020 2019 2020 2019 2020 2019
Investments
Institutional and Wholesale(2) 235.1 239.0 922 1,027 38.8 42.8
Insurance 204.7 258.5 224 317 10.9 12.2
Adviser 61.5 59.3 137 150 22.3 25.3
Personal(2) 12.6 10.6 80 70 58.5 59.2
Parmenion 7.3 6.2 25 21 34.2 34.8
Eliminations (10.2) (10.1) N/A N/A N/A N/A
Fee revenue yield(2) 511.0 563.5 1,388 1,585 26.9 27.9
SL Asia 7 12
Performance fees 30 37
Fee based revenue 1,425 1,634
Analysis of Institutional and Wholesale by asset class(3)
Average AUM (£bn) Fee based revenue (£m) Fee revenue yield (bps)
2020 2019 2020 2019 2020 2019
Equities 61.9 71.8 403 472 65.1 65.7
Fixed income 47.1 47.5 137 131 29.0 27.6
Multi-asset 33.5 39.3 125 173 37.4 44.0
Private markets 16.5 15.4 79 71 47.9 46.5
Real estate 27.1 29.3 129 142 47.8 48.3
Alternatives(4) 19.0 13.0 20 17 10.5 12.9
Quantitative 6.6 5.5 4 3 5.6 5.5
Cash/Liquidity 23.4 17.2 16 12 6.8 7.1
Institutional and Wholesale 235.1 239.0 913 1,021 38.8 42.8
Analysis of Adviser revenue yield
Fee based revenue (gross basis) includes revenue passed to the product
provider as shown below in other cost of sales. The cost of sales are netted
against fee based revenue as presented in 9.4.2 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)
2020 2019 2020 2019 2020 2019
Fee based revenue (net of cost of sales) 61.5 59.3 137 150 22.3 25.3
Add: Other cost of sales - Note 4 (a) N/A N/A 27 26 N/A N/A
Fee based revenue (gross of cost of sales) 61.5 59.3 164 176 26.7 29.6
(1 )Fee revenue yield is now presented on a vector basis and 2019
comparatives have been restated on this basis. See Section 9.4.3 for more
information.
(2 ) Institutional and Wholesale fee revenue yield excludes revenue of
£9m (2019: £6m) and Personal fee revenue yield excludes revenue of £7m
(2019: £7m), for which there are no attributable assets.
(3 ) Excludes revenue of £9m (2019: £6m), for which there are no
attributable assets.
(4 ) Alternatives average AUM includes c£12bn (2019: c£7bn) of lower
margin advisory mandates. At 31 December 2020 the closing AUM of these
mandates was c£12bn.
9.4.3 Fee based revenue - reconciliation to previously disclosed information
Fee based revenue Methodology change Reallocation of technology business and Virgin Money revenue Parmenion Fee based revenue
reallocation
2019 as previously disclosed £m £m £m £m £m 2019 on revised basis
Investments
Institutional and Wholesale 1,011 9 7 - 1,027 Institutional and Wholesale
Strategic insurance partners 317 - - - 317 Insurance
Platforms and Wealth
Wrap and Elevate 150 - - - 150 Adviser
Wealth 107 (9) (7) (21) 70 Personal
- - - 21 21 Parmenion
Eliminations N/A - - - N/A Eliminations
1,585 - - - 1,585
SL Asia 12 - - - 12 SL Asia
Performance fees 37 - - - 37 Performance fees
Fee based revenue 1,634 - - - 1,634 Fee based revenue
9.4.4 Investment performance
( ) 1 year 3 years 5 years
% of AUM ahead of benchmark(1) 2020 2019 2020 2019 2020 2019
Equities 73 59 74 31 62 31
Fixed income 78 83 81 86 85 72
Multi-asset 61 68 33 46 36 61
Real estate 41 39 37 48 44 36
Alternatives 95 89 95 98 93 100
Quantitative 32 44 17 52 24 58
Cash/Liquidity 94 91 89 88 87 88
Total 71 74 66 60 68 67
(1 ) The investment performance calculation covers all funds (including
Insurance) that aim to outperform a benchmark, with certain assets excluded
where this measure of performance is not appropriate or expected. Calculations
for investment performance are made gross of fees except where the stated
comparator is net of fees. Further details about the calculation of investment
performance are included in the Glossary.
9.5 Assets under management and administration and flows
Definition Purpose and changes
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).
AUMA is now presented on a vector basis and 2019 comparatives have been
AUM is a measure of the total assets that we manage on behalf of individual restated on this basis.
and institutional clients. AUM also includes captive assets managed on behalf
of the Group including assets managed for corporate purposes. See Section 9.9 for a reconciliation to previously disclosed information.
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
Net flows represent gross inflows less gross outflows or redemptions. Gross The level of net flows that we generate directly impacts the level of fee
inflows are new funds from clients. Gross outflows or redemptions is the money based revenue that we receive.
withdrawn by clients during the period.
Net flows are now presented on a vector basis and 2019 comparatives have been
restated on this basis.
9.5.1 Analysis of AUMA(1)
Opening AUMA at Gross inflows Redemptions Net flows Market Corporate Closing AUMA at
1 Jan 2020
and other movements
actions
31 Dec 2020
12 months ended 31 December 2020 £bn £bn £bn £bn £bn £bn £bn
Investments
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
Adviser 62.6 6.3 (4.4) 1.9 2.5 - 67.0
Personal(2) 12.8 1.1 (1.1) - 0.5 - 13.3
Parmenion 6.9 1.5 (0.5) 1.0 0.2 - 8.1
Eliminations(2) (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
Opening AUMA at Gross inflows Redemptions Net flows Market Corporate Closing AUMA at
1 Jan 2019
and other movements(3)
actions(4)
31 Dec 2019
12 months ended 31 December 2019 £bn £bn £bn £bn £bn £bn £bn
Investments
Institutional 166.7 27.1 (41.3) (14.2) 8.1 - 160.6
Wholesale 72.5 23.8 (27.6) (3.8) 6.7 0.7 76.1
Insurance 255.0 26.9 (71.3) (44.4) 25.2 - 235.8
Adviser 54.2 7.0 (4.7) 2.3 6.1 - 62.6
Personal(2) 5.7 1.1 (1.0) 0.1 5.2 1.8 12.8
Parmenion 5.2 2.4 (1.3) 1.1 0.6 - 6.9
Eliminations(2) (7.8) (2.1) 2.6 0.5 (2.9) - (10.2)
Total AUMA 551.5 86.2 (144.6) (58.4) 49.0 2.5 544.6
(1 ) AUMA is now presented on a vector basis and 2019 comparatives have
been restated on this basis. See Section 9.9 for more information.
(2 ) Eliminations remove the double count reflected in Investments,
Adviser and Personal. The Personal vector includes assets that are reflected
in both Aberdeen Standard Capital and Advice businesses. This double count is
also removed within Eliminations.
(3 ) Personal market and other movements include 1825 opening assets
under advice of £4.0bn.
(4 ) Corporate actions in Wholesale relate to the acquisition of Orion
Partners (£0.7bn). Personal corporate actions include £1.8bn of assets under
advice following 1825's acquisition of Grant Thornton's wealth advisory
business and BDO Northern Ireland's wealth management business.
9.5.2 Quarterly net flows(1)
3 months to 3 months to 3 months to 3 months to 3 months to
31 Dec 20
30 Sep 20
30 Jun 20
31 Mar 20
31 Dec 19
15 months ended 31 December 2020 £bn £bn £bn £bn £bn
Investments
Institutional 1.4 0.4 2.4 (1.0) -
Wholesale (0.4) (0.5) (0.2) (1.8) 2.3
Insurance (2.6) (4.0) 0.3 (26.5) (10.8)
Adviser 0.5 0.3 0.4 0.7 0.6
Personal (0.1) - 0.2 (0.1) 0.1
Parmenion 0.2 0.2 0.3 0.3 0.3
Eliminations 0.2 0.2 - 0.2 -
Total net flows (0.8) (3.4) 3.4 (28.2) (7.5)
9.6 Institutional and Wholesale AUM
Detailed asset class split
Opening AUM at Gross inflows Redemptions Net flows Market Corporate actions Closing
1 Jan 2020
and other movements
AUM at
31 Dec 2020
12 months ended 31 December 2020(1) £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) 3.0 - 32.7
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
Total fixed income 46.4 11.3 (12.7) (1.4) 2.7 - 47.7
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 4.1 0.9 (1.0) (0.1) 5.7 - 9.7
Total multi-asset 34.4 4.2 (6.9) (2.7) 5.7 - 37.4
Private equity 12.1 1.9 (1.0) 0.9 (1.8) - 11.2
Private credit and solutions - 0.5 - 0.5 0.3 - 0.8
Infrastructure equity 4.0 0.1 - 0.1 0.9 - 5.0
Total private markets 16.1 2.5 (1.0) 1.5 (0.6) - 17.0
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
Total real estate 27.9 2.1 (2.7) (0.6) (2.6) - 24.7
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 cash/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
(1 ) AUMA is now presented on a vector basis and 2019 comparatives have
been restated on this basis. See Section 9.9 for more information.
Opening AUM at Gross inflows Redemptions Net flows Market Corporate actions Closing
1 Jan 2019
and other movements
AUM at
31 Dec 2019
12 months ended 31 December 2019(1) £bn £bn £bn £bn £bn £bn £bn
Developed markets equities 12.9 2.7 (3.4) (0.7) 2.5 - 14.7
Emerging markets equities 25.0 2.1 (9.5) (7.4) 4.0 - 21.6
Asia Pacific equities 22.5 3.8 (5.3) (1.5) 2.3 - 23.3
Global equities 12.5 1.0 (5.6) (4.6) 1.5 - 9.4
Total equities 72.9 9.6 (23.8) (14.2) 10.3 - 69.0
Developed markets credit 32.1 6.0 (7.8) (1.8) 1.9 - 32.2
Developed markets rates 5.2 0.6 (2.8) (2.2) 0.3 - 3.3
Emerging markets fixed income 9.4 3.7 (2.5) 1.2 0.3 - 10.9
Total fixed income 46.7 10.3 (13.1) (2.8) 2.5 - 46.4
Absolute return 21.9 1.1 (12.8) (11.7) 2.5 - 12.7
Diversified growth/income 1.7 0.5 (0.3) 0.2 - - 1.9
MyFolio 13.9 2.5 (2.4) 0.1 1.7 - 15.7
Other multi-asset 5.5 0.8 (2.2) (1.4) - - 4.1
Total multi-asset 43.0 4.9 (17.7) (12.8) 4.2 - 34.4
Private equity 12.3 2.1 (2.8) (0.7) 0.5 - 12.1
Private credit and solutions - - (0.1) (0.1) 0.1 - -
Infrastructure equity 3.7 0.4 - 0.4 (0.1) - 4.0
Total private markets 16.0 2.5 (2.9) (0.4) 0.5 - 16.1
UK real estate 15.3 0.9 (2.3) (1.4) (0.5) - 13.4
European real estate 12.2 1.6 (0.8) 0.8 (0.9) - 12.1
Global real estate 0.8 0.1 (0.2) (0.1) (0.4) 0.7 1.0
Real estate multi-manager 1.4 0.3 (0.2) 0.1 (0.1) - 1.4
Total real estate 29.7 2.9 (3.5) (0.6) (1.9) 0.7 27.9
Total alternatives 12.3 7.7 (1.7) 6.0 (0.6) - 17.7
Total quantitative 2.1 5.2 (0.8) 4.4 1.3 - 7.8
Total cash/liquidity 16.5 7.8 (5.4) 2.4 (1.5) - 17.4
Total 239.2 50.9 (68.9) (18.0) 14.8 0.7 236.7
9.7 Analysis of Insurance
Opening AUM at Gross inflows Redemptions Net Market Corporate Closing
1 Jan 2020
flows
and other movements
actions
AUM at
31 Dec 2020
12 months ended 31 December 2020 £bn £bn £bn £bn £bn £bn £bn
Phoenix(2) 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(2) 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
Opening AUMA at Gross inflows Redemptions Net flows Market Corporate Closing AUMA at
1 Jan 2019
and other movements
actions
31 Dec 2019
12 months ended 31 December 2019 £bn £bn £bn £bn £bn £bn £bn
Phoenix(2) 154.8 16.3 (17.3) (1.0) 15.9 - 169.7
Lloyds 98.6 10.6 (53.7) (43.1) 9.0 - 64.5
Other(2) 1.6 - (0.3) (0.3) 0.3 - 1.6
Total 255.0 26.9 (71.3) (44.4) 25.2 - 235.8
(1 ) AUMA is now presented on a vector basis and 2019 comparatives have
been restated on this basis. See Section 9.9 for more information.
(2 ) Following the acquisition of ReAssure by the Phoenix Group in 2020,
ReAssure is now included within Phoenix for the analysis of Insurance AUM.
2019 has been restated on the same basis.
9.8 Analysis of total AUM (excluding Parmenion)(1)
9.8.1 AUM by geography
31 Dec 2020 31 Dec 2019
Institutional and Wholesale Insurance Personal(2) Total Institutional and Wholesale Insurance Personal(2) Total
£bn £bn £bn £bn £bn £bn £bn £bn
UK 116.5 205.2 7.8 329.5 112.2 235.8 7.1 355.1
Europe, Middle East and Africa (EMEA) 65.9 - - 65.9 55.8 - - 55.8
Asia Pacific (APAC) 16.8 - - 16.8 16.9 - - 16.9
Americas 52.5 - - 52.5 51.8 - - 51.8
Total AUM 251.7 205.2 7.8 464.7 236.7 235.8 7.1 479.6
9.8.2 AUM by asset class
31 Dec 2020 31 Dec 2019
Institutional and Wholesale Insurance Personal(2) Total Institutional and Wholesale Insurance Personal(2) Total
£bn £bn £bn £bn £bn £bn £bn £bn
Equities 69.2 48.8 - 118.0 69.0 50.3 - 119.3
Fixed income 47.7 69.0 - 116.7 46.4 88.5 - 134.9
Multi-asset 37.4 7.0 7.8 52.2 34.4 10.2 7.1 51.7
Private markets 17.0 1.8 - 18.8 16.1 0.8 - 16.9
Real estate 24.7 8.3 - 33.0 27.9 9.2 - 37.1
Alternatives 19.5 - - 19.5 17.7 0.6 - 18.3
Quantitative 6.4 45.0 - 51.4 7.8 46.7 - 54.5
Cash/Liquidity 29.8 25.3 - 55.1 17.4 29.5 - 46.9
Total AUM 251.7 205.2 7.8 464.7 236.7 235.8 7.1 479.6
(1 ) AUMA is now presented on a vector basis and 2019 comparatives have
been restated on this basis. See Section 9.9 for more information.
(2 ) Excludes assets under advice of £5.5bn at 31 December 2020 (2019:
£5.7bn).
9.9 AUMA - Reconciliation to previously disclosed information
Closing AUMA Parmenion Virgin Money Closing AUMA
reallocation
reallocation
2019 as previously disclosed £bn £bn £bn £bn 2019 on revised basis
Investments
Institutional 160.6 - - 160.6 Institutional
Wholesale 72.4 - 3.7 76.1 Wholesale
Strategic insurance partners 235.8 - - 235.8 Insurance
Platforms and Wealth
Wrap and Elevate 62.6 - - 62.6 Adviser
Wealth 23.4 (6.9) (3.7) 12.8 Personal
- 6.9 - 6.9 Parmenion
Eliminations (10.2) - - (10.2) Eliminations
Total AUMA 544.6 - - 544.6 Total AUMA
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