Half-year Report - Part 4 of 4

RNS Number : 9875W

Standard Life Aberdeen plc

07 August 2018

 

Standard Life Aberdeen plc

Half year results 2018

Part 4 of 4

5. Supplementary information

5.1   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 condensed consolidated income statement, IFRS condensed consolidated statement of financial position and IFRS condensed consolidated statement of cash flows, which are presented in the Financial information section of this report.

The merger of Standard Life plc and Aberdeen completed on 14 August 2017, with the merger accounted for as an acquisition of Aberdeen by Standard Life plc on that date. The Reported basis results reflect this accounting treatment with Aberdeen results included from 14 August 2017 only. Therefore, Aberdeen is excluded from the H1 2017 results on a Reported basis. In our Management report we have also presented comparative results on a Pro forma basis to assist in explaining trends by showing performance for the combined Group as if Standard Life plc and Aberdeen had always been merged. The difference between the Reported results and Pro forma results is the results of Aberdeen in the period prior to completion of the merger.

KPI	Key performance indicators (KPIs) are defined as the measures by which the development, performance or position of the business can be measured effectively.

	Definition	Purpose and changes made
Adjusted profit before tax KPI	Adjusted profit before tax is the Group's key alternative performance measure. Adjusted profit excludes impacts arising from short-term fluctuations in investment return and economic assumption changes in the Group's wholly owned insurance entities which in the current period are all classified as held for sale. It is calculated based on expected returns on investments backing equity holder funds, with consistent allowance for the corresponding expected movements in equity holder liabilities. Impacts arising from the difference between the expected return and actual return on investments, and the corresponding impact on equity holder liabilities except where they are directly related to a significant management action, are excluded from adjusted profit and are presented within profit before tax. The impact of certain changes in economic assumptions is also excluded from adjusted profit and is presented within profit before tax. Adjusted profit also excludes the impact of the following items: ·  Restructuring costs and corporate transaction expenses. Restructuring includes the impact of major regulatory change. ·  Impairment and amortisation of intangible assets acquired in business combinations and through the purchase of customer contracts ·  Profit or loss arising on the disposal of a subsidiary, joint venture or associate ·  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 Coupons payable on perpetual notes classified as non-controlling interests are included in adjusted profit before tax. For IFRS purposes, these are recognised directly in equity. Prior to these instruments being reclassified as a subordinated liability on 18 December 2017, this gave rise to an adjusting item relating to 'coupons payable on perpetual notes classified as equity'. Dividends payable on preference shares classified as non-controlling interests are excluded from adjusted profit in line with the treatment of ordinary dividends.	Adjusted profit reporting provides further analysis of the results reported under IFRS and the Directors believe it helps to give shareholders a fuller understanding of the performance of the business by identifying and analysing adjusting items. Adjusted profit before tax is consistent with the way that financial performance is measured by management and reported to the Board and executive committee. Adjusted profit before tax is also a key measure used to assess performance for remuneration purposes. As disclosed in our Annual report and accounts 2017, the Group changed the calculation of adjusted profit in 2017. Short-term fluctuations in investment return and economic assumption changes are now only adjusted for insurance entities. Previously these adjustments also applied to holding companies and other non-insurance entities. Comparatives for the six months to 30 June 2017 have been restated to reflect this change. The reason for the change in methodology was to align the approach with that used by Aberdeen and to improve consistency with other asset management peers. We provide a reconciliation to previously published financial information in the adjusted profit section below. There have been no changes made in 2018.

	Definition	Purpose and changes
Adjusted cash generation	Adjusted cash generation presents a shareholder view of cash generation. The calculation of this measure was amended following the merger and is presented for continuing operations only. For the Aberdeen Standard Investments segment, adjusted cash generation adjusts IFRS net cash flows from operating activities for restructuring and corporate transaction expenses paid. For the Standard Life Pensions and Savings segment and Other, adjusted cash generation removes certain non-cash items from adjusted profit before tax. Adjustments are made for deferred acquisition costs/deferred income and fixed/intangible assets. Adjusted cash generation is stated net of current (cash) tax. IFRS net cash flows from operating activities is not used as the basis for these segments as it includes policyholder cash flows, and therefore does not present a shareholder view. For the India and China life segment, adjusted cash generation reflects dividends received in the period.	This APM presents a shareholder view of cash generation and removes adjusting items to make this cash metric more comparable to adjusted profit after tax. Adjusted cash generation provides insight into our ability to generate cash that supports further investment in the business and the payment of dividends to shareholders. The IFRS consolidated statement of cash flows includes policyholder cash flows for the Standard Life Pension and Savings business, and therefore does not present a shareholder view, and does not exclude adjusting items. As disclosed in our Annual report and accounts 2017, the Group changed the methodology in 2017 for the Aberdeen Standard Investments segment to more directly align adjusted cash generation for this segment with the cash flow statement. The reason for the change was to align the approach with that used by Aberdeen and to improve consistency with other asset management peers. The methodology for the Standard Life Pensions and Savings segment was also amended in 2017 to remove underlying adjustments (primarily spread/risk actuarial assumption changes) to better align with the adjusted profit measure. We provide a reconciliation to previously published financial information in the adjusted cash generation section on page 59.

Adjusted profit before tax

The table below reconciles adjusted profit before tax from continuing operations to Profit before tax.

	Pro forma basis			Remove Aberdeen results pre-merger completion			Reported basis
	H1 2018	H1 2017	FY 2017	H1 2018	H1 2017	FY 2017	H1 2018	H1 2017	FY 2017
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Fee based revenue	966	1,041	2,099	-	(521)	(652)	966	520	1,447
Spread/risk margin	-	-	-	-	-	-	-	-	-
Total adjusted operating income	966	1,041	2,099	-	(521)	(652)	966	520	1,447
Total adjusted operating expenses	(712)	(739)	(1,551)	-	349	467	(712)	(390)	(1,084)
Adjusted operating profit	254	302	548	-	(172)	(185)	254	130	363
Capital management	(3)	-	13	-	9	-	(3)	9	13
Share of associates' and joint ventures' profit before tax	60	53	99	-	-	-	60	53	99
Adjusted profit before tax from continuing operations	311	355	660	-	(163)	(185)	311	192	475
Share of associates' and joint ventures' tax expense							(18)	(7)	(41)
Total adjusting items from continuing operations							(166)	(91)	4
Profit before tax							127	94	438

The table below provides a summarised reconciliation of adjusted profit before tax (split by Continuing operations, Discontinued operations and Total) to Profit before tax. Comparatives are shown on a Reported basis.

	Continuing operations			Discontinued operations			Total
	H1 2018	H1 2017	FY 2017	H1 2018	H1 2017	FY 2017	H1 2018	H1 2017	FY 2017
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Adjusted profit before tax	311	192	475	167	166	379	478	358	854
Share of associates' and joint ventures' tax expense	(18)	(7)	(41)	-	-	-	(18)	(7)	(41)
Total adjusting items	(166)	(91)	4	(74)	55	(44)	(240)	(36)	(40)
Profit attributable to non-controlling interests - ordinary shares	-	-	-	5	6	25	5	6	25
Profit before tax1	127	94	438	98	227	360	225	321	798

¹    Discontinued operations shown as 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
	H1 2018	H1 2017	FY 2017	H1 2018	H1 2017	FY 2017	H1 2018	H1 2017	FY 2017
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Restructuring and corporate transaction expenses	(59)	(57)	(162)	(51)	(4)	(11)	(110)	(61)	(173)
Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts	(108)	(10)	(138)	-	-	-	(108)	(10)	(138)
Provision for annuity sales practices	-	-	-	-	-	(100)	-	-	(100)
Coupons payable on perpetual notes classified as equity	-	-	10	-	-	-	-	-	10
Profit on disposal of interests in associates	6	-	319	-	-	-	6	-	319
Short-term fluctuations in investment return and economic assumption changes	-	-	-	(61)	59	67	(61)	59	67
Other	(5)	(24)	(25)	38	-	-	33	(24)	(25)
Total adjusting items	(166)	(91)	4	(74)	55	(44)	(240)	(36)	(40)

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. Restructuring and corporate transaction expenses in H1 2018 mainly related to integration and merger related costs of £52m included within continuing operations and £38m of transaction and separation costs relating to the proposed sale of the UK and European Insurance business to Phoenix which are included within discontinued operations. H1 2018 also included £14m of costs in relation to Brexit which we consider to be a major regulatory change. The residual costs of £6m relate to other corporate transaction expenses and Pensions and Savings/corporate centre restructuring.

·  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 the vast majority of 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.

·  Items which are one-off and due to their size or nature are not indicative of the long-term operating performance of the Group are also excluded from adjusted profit. This aims to assist comparability of results period on period. The provision for annuity sales practices falls under this category. Any future changes to the provision will be treated consistently.

·  Profits on the disposal of a subsidiary, joint venture or associate are also removed to assist comparability of results period on period

·  Short-term fluctuations in investment return and economic assumption changes in the Group's wholly owned insurance entities are excluded from adjusted profit. For annuities this means that all fluctuations in liabilities and the assets backing those liabilities due to market interest rate (including credit risk) movements over the period are excluded from adjusted profit. Removing these short-term fluctuations and economic assumption changes is consistent with many of our insurance peers and aims to ensure that adjusted profit reflects a long-term view aligned to the maturity profile and economic matching of the corresponding assets and liabilities. In relation to certain subordinated liabilities this adjustment also excludes an accounting mismatch that arises where subordinated liabilities are measured at amortised cost and certain assets backing the liabilities are measured at fair value. In the current period, the wholly owned insurance entities are all classified as held for sale. More details on this adjustment are provided in Note 4.8 of the Financial information section.

·  Details on items classified as 'Other' in the table above are provided in Note 4.8 of the Financial information section. In H1 2018 this balance primarily relates to a held for sale accounting adjustment. Following the classification of the UK and European insurance business as held for sale on the announcement of the proposed transaction on 23 February 2018, no amortisation or depreciation is recognised. This increase to profit has been classified as an adjusting item as it relates to the disposal of a subsidiary.

·  In 2017 we also made an adjustment for coupons payable on perpetual notes classified as equity to remove the finance cost. This adjustment was required because the finance cost for these notes were included within adjusted profit so that, for adjusted profit purposes, perpetual notes classified as equity and our other subordinated debt classified as liabilities were treated consistently. These perpetual notes were reclassified to liabilities prior to 31 December 2017 and therefore this adjustment is no longer required.

Restructuring and corporate transaction expenses used to determine adjusted profit before tax in H1 2017 were £67m on a Pro forma basis compared to £61m on a Reported basis. The Pro forma basis in H1 2017 included merger related costs of £6m incurred by Aberdeen. The results for H1 2018 are the same on a Pro forma basis as on a Reported basis.

Reconciliation to previously published financial information

The table below provides a reconciliation of H1 2017 adjusted profit on a Pro forma basis to the operating profit and underlying profit financial information previously disclosed by Standard Life plc and Aberdeen Asset Management PLC.

	H1 2017			Adjustments				H1 2017
	Standard Life Group as reported	Aberdeen as reported HY 31 Mar 20171		Calendarisation adjustments2	Other Aberdeen adjustments3	Standard Life Group adjustments4		Restated
	£m	£m		£m	£m	£m		£m
Fee based revenue	836	535		(14)	-	-		1,357
Spread/risk margin	49	-		-	-	-		49
Total adjusted operating income	885	535		(14)	-	-		1,406
Total adjusted operating expenses	(581)	(346)		(3)	-	(1)		(931)
Adjusted operating profit	304	189		(17)	-	(1)		475
Capital management	5	6		(1)	(14)	(3)		(7)
Share of associates' and joint ventures' profit before tax	53	-		-	-	-		53
Adjusted profit before tax5	362	195		(18)	(14)	(4)		521
Continuing operations								355
Discontinued operations								166
Adjusted profit before tax								521

¹    Figures are 'underlying profit' which was an alternative performance measure presented by the Aberdeen Group as reported in the unaudited financial statements for the period ended 31 March 2017.

²    Adjusted to bring into line with Standard Life Group accounting practice to prepare financial results for the period 1 January to 30 June.

³    Adjusted to align the presentation of the Aberdeen Group's underlying profit alternative performance measure to adjusted profit of the Standard Life Aberdeen Group. Coupon payments on perpetual notes classified as equity were excluded from the Aberdeen Group underlying profit metric. The Group now includes these coupons payable within adjusted profit. This resulted in a reduction in the adjusted profit before tax of the Aberdeen Group within capital management, and the corresponding inclusion of an adjustment for 'Coupons payable on perpetual notes classified as equity' within adjusting items.

⁴    Following the completion of the merger, the Group changed the calculation of adjusted profit (previously named operating profit). Short-term fluctuations in investment return and economic assumption changes are now only adjusted for insurance entities. Previously these adjustments also applied to non-insurance entities. For the period ended 30 June 2017, this resulted in a £3m reduction to the adjusted profit of the Other segment within capital management, and a £1m reduction to the adjusted profit of the Standard Life Investments segment within operating expenses.

⁵    Following the merger, the Group renamed 'operating profit' as 'adjusted profit'. Line items were changed accordingly.

Reconciliation of adjusted profit to IFRS profit by component

The key components of adjusted profit before tax are total adjusted operating income (which is broken down into fee based revenue and spread/risk margin), total 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 their closest IFRS equivalent.

Adjusted profit term	Group adjusted profit	Presentation differences	Adjusting items	Capital management	Share of associates' and joint ventures' tax expense	Non-controlling interests -ordinary shares	Group IFRS	IFRS term
H1 2018	£m	£m	£m	£m	£m	£m	£m
Adjusted operating income	966	112	9	(3)	-	-	1,084	Total income
Adjusted operating expenses	(712)	(112)	(172)	-	-	-	(996)	Total expenses
Capital management	(3)	-	-	3	-	-	-	N/A
Share of associates' and joint ventures' profit before tax	60	-	(3)	-	(18)	-	39	Share of profit from associates and JVs
Adjusted profit before tax from continuing operations	311	-	(166)	-	(18)	-	127	Profit before tax
Tax on adjusted profit	(48)	-	35	-	-	-	(13)	Total tax expense
Share of associates' and joint ventures' tax	(18)	-	-	-	18	-	-	N/A
Adjusted profit after tax from continuing operations	245	-	(131)	-	-	-	114	Profit for the period from continuing operations
Adjusted profit after tax from discontinued operations	138	-	(64)	-	-	5	79	Profit for the period from discontinued operations
Adjusted profit after tax	383	-	(195)	-	-	5	193	Profit for the period

This reconciliation includes a number of reconciling items which arise due to presentation differences between IFRS reporting requirements and the determination of adjusted operating income and adjusted operating expenses. Adjusted operating income and expenses exclude items which have an equal and opposite effect on IFRS income and IFRS expenses in the consolidated income statement. Other presentation differences also include Aberdeen Standard Investment's commission expenses which are presented in expenses in the consolidated income statement but are netted against adjusted operating income in the analysis of Group adjusted profit by segment. Further details of presentation differences are included Note 4.3(b)(ii) of the Financial information section of this report.

Adjusted profit term	Group adjusted profit (Reported basis)	Presentation differences	Adjusting items	Capital management	Share of associates' and JVs' tax expense	Non-controlling interests - ordinary shares	Group IFRS	IFRS term
H1 2017	£m	£m	£m	£m	£m	£m	£m
Adjusted operating income	520	126	-	9	-	-	655	Total income
Adjusted operating expenses	(390)	(126)	(91)	-	-	-	(607)	Total expenses
Capital management	9	-	-	(9)	-	-	-	N/A
Share of associates' and joint ventures' profit before tax	53	-	-	-	(7)	-	46	Share of profit from associates and JVs
Adjusted profit before tax from continuing operations	192	-	(91)	-	(7)	-	94	Profit before tax
Tax on adjusted profit	(31)	-	21	-	-	-	(10)	Total tax expense
Share of associates' and joint ventures' tax	(7)	-	-	-	7	-	-	N/A
Adjusted profit after tax from continuing operations	154	-	(70)	-	-	-	84	Profit for the period from continuing operations
Adjusted profit after tax from discontinued operations	167	-	41	-	-	6	214	Profit for the period from discontinued operations
Adjusted profit after tax	321	-	(29)	-	-	6	298	Profit for the period

 

Adjusted profit term	Group adjusted profit (Reported basis)	Presentation differences	Adjusting items	Capital management	Share of associates' and JVs' tax expense	Non-controlling interests - ordinary shares	Group IFRS	IFRS term
FY 2017	£m	£m	£m	£m	£m	£m	£m
Adjusted operating income	1,447	679	26	13	-	-	2,165	Total income
Adjusted operating expenses	(1,084)	(679)	(9)	-	-	-	(1,772)	Total expenses
Capital management	13	-	-	(13)	-	-	-	N/A
Share of associates' and joint ventures' profit before tax	99	-	(13)	-	(41)	-	45	Share of profit from associates and JVs
Adjusted profit before tax from continuing operations	475	-	4	-	(41)	-	438	Profit before tax
Tax on adjusted profit	(77)	-	49	-	-	-	(28)	Total tax expense
Share of associates' and joint ventures' tax	(41)	-	-	-	41	-	-	N/A
Adjusted profit after tax from continuing operations	357	-	53	-	-	-	410	Profit for the period from continuing operations
Adjusted profit after tax from discontinued operations	348	-	(51)	-	-	25	322	Profit for the period from discontinued operations
Adjusted profit after tax	705	-	2	-	-	25	732	Profit for the period

Adjusted cash generation from continuing operations

Adjusted cash generation provides insight into our ability to generate cash that supports further investment in the business and the payment of dividends to shareholders. The IFRS consolidated statement of cash flows includes policyholder cash flows, and therefore does not present a shareholder view, and does not exclude adjusting items.

Analysis of adjusted cash generation (Comparatives shown on a Pro forma basis)			6 months 2018	6 months 2017	Full year 2017
			£m	£m	£m
Aberdeen Standard Investments	(a)		225	241	551
Standard Life Pensions and Savings (continuing operations)	(b)		6	4	6
India and China life			-	-	10
Other	(b)		(32)	(23)	(62)
Adjusted cash generation (continuing operations)			199	222	505

Further details of the segmental calculation of adjusted cash generation are included below.

(a)     Aberdeen Standard Investments

	Per Group financial statements		6 months 2018	6 months 2017	Full year 2017
			£m	£m	£m
IFRS Net cash flow from operating activities - Total Group	Consolidated statement of cash flows		1,147	1,339	2,194
Less: Net cash flows from operating activities - Standard Life Pensions and Savings, India and China life and Other			(964)	(1,249)	(1,846)
Net cash flow from operating activities - Aberdeen Standard Investments			183	90	348
Pro forma adjustment for pre-merger results1			-	136	140
Restructuring and corporate transaction expenses paid - Aberdeen Standard Investments			42	15	63
Adjusted cash generation - Aberdeen Standard Investments (Pro forma basis)			225	241	551

¹    The Pro forma adjustment adds pre-merger results for Aberdeen which are excluded from the consolidated statement of cash flows.

(b)     Pensions and Savings and Other - continuing operations

		6 months 2018		6 months 2017		Full year 2017
		Standard Life Pensions and Savings	Other	Standard Life Pensions and Savings	Other	Standard Life Pensions and Savings	Other
		£m	£m	£m	£m	£m	£m
Adjusted profit/(loss) before tax - continuing operations		1	(42)	-	(30)	1	(77)
Current tax adjustment		4	5	4	4	8	8
Other non-cash adjustments		1	5	-	3	(3)	7
Adjusted cash generation - Standard Life Pensions and Savings and Other		6	(32)	4	(23)	6	(62)

Reconciliation to previously published financial information

The table below provides a reconciliation of adjusted cash generation on a Pro forma basis to the financial information previously disclosed by Standard Life plc and Aberdeen Asset Management PLC.

	H1 2017			Adjustments					H1 2017
	Standard Life Group as reported	Aberdeen as reported HY 31 Mar 20171		Calendarisation adjustments2	Other Aberdeen adjustments3	Standard Life Group adjustments4	Adjustment to remove discontinued operations		Restated (Pro forma basis from continuing operations)
	£m	£m		£m	£m	£m	£m		£m
Aberdeen Standard Investments	144	153		19	(29)	(46)	-		241
Standard Life Pensions and Savings	128	-		-	-	-	(124)		4
India and China life	-	-		-	-	-	-		-
Other	(16)	-		-	-	(2)	(5)		(23)
Adjusted cash generation	256	153		19	(29)	(48)	(129)		222

¹    Figures are 'core cash generated from operating activities' which was an APM presented by the Aberdeen Group as reported in the unaudited financial statements for the period ended 31 March 2017.

²    Adjusted to bring into line with Standard Life Group accounting practice to prepare financial results for the period 1 January to 30 June.

³    Adjusted to align the calculation of the Aberdeen Group's core cash generated from operating activities APM to adjusted cash generation of the Standard Life Aberdeen Group. Core cash generated from operating activities was on a pre-tax basis and included adjustments for short-term timing differences on open end fund settlements and net interest received. Adjusted cash generation is on a post-tax basis and is not adjusted for short-term timing differences on open end fund settlements or net interest received.

⁴    For the Aberdeen Standard Investments segment, the Standard Life Investments component of underlying cash generation was previously derived from operating profit but is now derived from net cash flows from operating activities in the IFRS statement of cash flows. For the Standard Life Pensions and Savings segment and Other, adjusted cash generation is impacted by the changes to adjusted profit as set out in the reconciliation of H1 2017 adjusted profit above, and no longer includes an underlying adjustment to remove spread/risk operating assumption changes. For the India and China life segment, adjusted cash generation reflects dividends received in the period and therefore no longer includes any contribution from the wholly owned Hong Kong business.

5.2   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.

As disclosed in our Annual report and accounts 2017, certain financial ratios that we use were revised following the merger with Aberdeen to reflect the increased asset management focus of the Group as described further below.

	Definition	Purpose and changes
Cost/income ratio KPI	This is an efficiency measure that is calculated as adjusted operating expenses divided by adjusted operating income in the period, and includes the share of associates' and joint ventures' profit before tax.	This ratio is used by management to assess efficiency and reported to the Board and executive committee. This ratio is also a measure used to assess performance for remuneration purposes. This ratio is now calculated on a YTD basis. Previously this was calculated on a rolling 12-month basis. The reason for the change is that the previously volatile spread/risk margin component is no longer applicable for continuing operations.
Adjusted diluted earnings per share KPI	Adjusted diluted earnings per share is calculated on adjusted profit after tax. The weighted average number of ordinary shares in issue is adjusted during the period to assume the conversion of all dilutive potential ordinary shares, such as share options granted to employees. Details on the calculation of adjusted diluted earnings per share are set out in Note 4.7 in the Financial information section.	Earnings per share is a commonly used financial metric which can be used to measure the profitability and capital efficiency of a company over time. We also calculate adjusted diluted earnings per share to illustrate the impact of adjusting items on the metric. This ratio is used by management to assess performance and reported to the Board and executive committee.
Fee revenue yield (bps)	The fee revenue yield is calculated as annualised fee based revenue (excluding performance fees) divided by monthly average fee based AUM/AUA (excluding HDFC AMC).	The average revenue yield on fee based business is a measure that illustrates the average margin being earned on the assets that we manage or administer. As disclosed in our Annual report and accounts 2017, the Group changed the methodology in 2017 to exclude performance fees from the fee revenue yield calculation. The reason for the change was to align the approach with that used by Aberdeen and to improve consistency with other asset management peers. There have been no changes made in 2018.

Cost/income ratio from continuing operations

			Pro forma basis			Reported basis
	H1 2018		H1 2017	FY 2017		H1 2017	FY 2017
Adjusted operating expenses (£m)	(712)		(739)	(1,551)		(390)	(1,084)
Fee based revenue (£m)	966		1,041	2,099		520	1,447
Share of associates' and joint ventures' profit before tax (£m)	60		53	99		53	99
Total adjusted operating income and share of associates' and joint ventures' profit before tax (£m)	1,026		1,094	2,198		573	1,546
Cost/income ratio (%)	69		68	71		68	70

Adjusted diluted earnings per share from continuing operations

			Pro forma basis			Reported basis
	H1 2018		H1 2017	FY 2017		H1 2017		FY 2017
	£m		£m	£m		£m		£m
Adjusted profit after tax	245		291	516		154		357
Dividend paid on preference shares	(3)		(3)	(5)		-		-
Adjusted profit after tax attributable to equity holders of the Company	242		288	511		154		357
Profit attributable to equity holders of the Company	111		N/A	N/A		84		402
	Million		Million	Million			Million	Million
Weighted average number of ordinary shares outstanding	2,937		2,945	2,943			1,972	2,343
Dilutive effect of share options and awards	28		23	29			3	17
Weighted average number of diluted ordinary shares outstanding	2,965		2,968	2,972			1,975	2,360
	Pence		Pence	Pence			Pence	Pence
Basic earnings per share	3.8		N/A	N/A			4.3	17.1
Adjusted diluted earnings per share	8.2		9.7	17.2			7.8	15.1

Fee revenue yield (bps)

Fee revenue yield (Pro forma basis)		Average AUMA (£bn)1			Fee based revenue (£m)1			Fee revenue yield (bps)1
		H1 2018	FY 2017		H1 2018	FY 2017		H1 2018	FY 2017
Aberdeen Standard Investments	Equities	92.6	98.1		311	666		67.1	67.9
	Fixed income	46.8	49.0		65	144		27.9	29.4
	Multi-asset	69.3	74.7		188	432		54.2	57.7
	Private markets/alternatives	25.2	23.8		41	96		32.3	40.6
	Real estate	28.3	29.2		76	159		53.7	54.4
	Quantitative	2.2	2.2		1	3		10.1	12.1
	Cash/liquidity	18.1	19.1		7	14		8.3	7.4
	Growth	282.5	296.1		689	1,514		48.7	51.1
	Mature	266.2	271.1		179	372		13.5	13.7
	Total	548.7	567.2		868	1,886		31.6	33.3
Average AUM from HDFC Asset Management		13.2	12.0		N/A	N/A		N/A	N/A
Revenue from performance fees		N/A	N/A		3	26		N/A	N/A
Total Aberdeen Standard Investments		561.9	579.2		871	1,912		N/A	N/A
Pensions and Savings (continuing)2		54.9	49.2		89	175		32.5	35.7
India and China life		N/A	N/A		6	12		N/A	N/A
Total continuing operations		N/A	N/A		966	2,099		N/A	N/A
Discontinued		N/A	N/A		395	800		N/A	N/A
Discontinued eliminations		N/A	N/A		(69)	(136)		N/A	N/A
Total discontinued operations		N/A	N/A		326	664		N/A	N/A
Total		N/A	N/A		1,292	2,763		N/A	N/A

¹    Fee revenue yield is calculated excluding AUM from HDFC Asset Management from average AUMA and excluding performance fees from revenue. Average AUMA above excludes £13.2bn (FY 2017: £12.0bn) of average AUM relating to HDFC Asset Management and fee based revenue excludes £3m (H1 2017: £2m; FY 2017: £26m) of performance fees.

²    Pensions and Savings continuing AUMA includes only our Wrap, Elevate and Fundzone platforms. Fee based revenue for Pensions and Savings continuing includes revenue from these platforms as well as from 1825.

5.3   Assets under management and administration and net flows (Pro forma basis)

	Definition	Purpose and changes made
Assets under management and administration KPI	AUMA is a measure of the total assets we manage or administer on behalf of our clients and customers. It includes Aberdeen Standard Investments assets under management (AUM) and Standard Life Pensions & Savings assets under administration (AUA), as well as AUM and AUA from our associate and joint venture businesses in India and China based on our ownership percentages. AUM is a measure of the total assets that Aberdeen Standard Investments manages on behalf of individual customers and institutional clients. AUM also includes captive assets managed on behalf of Standard Life Aberdeen Group including assets managed for corporate purposes. These corporate assets are eliminated from Group AUMA. AUA is a measure of the total assets we administer for customers through products such as pensions, platforms and ISAs, as well as assets backing our Spread/risk products such as annuities.	As an investment company, AUMA and net flows are key drivers of shareholder value. As disclosed in our Annual report and accounts 2017, certain items previously included in AUA for Standard Life plc are now no longer included. These items are other corporate assets and assets which do not generate revenue from products. Comparatives have been restated. A reconciliation of AUMA and net flows to previously disclosed information is provided in section 5.5. There have been no changes made in 2018.
Net flows KPI	Net flows represent gross inflows less gross outflows or redemptions. Gross inflows are new funds from clients and customers. Gross outflows or redemptions is the money withdrawn by clients or customers during the period, including annuity payments.	As an investment company, AUMA and net flows are key drivers of shareholder value.

5.3.1 Assets under management and administration

6 months ended 30 June 2018

			Opening AUMA at 1 Jan 2018	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions and business rationalisation1	Closing AUMA at 30 Jun 2018
			£bn	£bn	£bn	£bn	£bn	£bn	£bn
Aberdeen Standard Investments	Equities		104.5	7.1	(14.7)	(7.6)	(4.0)	1.2	94.1
	Fixed income		51.4	3.2	(5.3)	(2.1)	(0.3)	0.9	49.9
	Multi-asset		72.4	5.0	(9.4)	(4.4)	(1.4)	-	66.6
	Private markets/alternatives		24.5	1.0	(1.9)	(0.9)	1.5	2.1	27.2
	Real estate		28.5	1.6	(1.8)	(0.2)	-	0.6	28.9
	Quantitative		2.2	0.1	(0.1)	-	-	-	2.2
	Cash/liquidity		20.4	4.8	(3.2)	1.6	0.1	-	22.1
	Growth		303.9	22.8	(36.4)	(13.6)	(4.1)	4.8	291.0
	Mature		271.8	11.0	(16.6)	(5.6)	(0.1)	-	266.1
	Total assets under management		575.7	33.8	(53.0)	(19.2)	(4.2)	4.8	557.1
Pensions and Savings (continuing)			54.0	4.7	(2.2)	2.5	(0.2)	-	56.3
India and China life			4.8	0.6	(0.3)	0.3	(0.2)	-	4.9
Eliminations			(8.0)	(1.1)	0.9	(0.2)	-	-	(8.2)
Total AUMA (continuing)			626.5	38.0	(54.6)	(16.6)	(4.6)	4.8	610.1
Discontinued2			134.1	4.4	(5.6)	(1.2)	0.3	-	133.2
Discontinued eliminations			(105.7)	(2.3)	3.0	0.7	1.0	-	(104.0)
Total AUMA (discontinued)			28.4	2.1	(2.6)	(0.5)	1.3	-	29.2
Total AUMA			654.9	40.1	(57.2)	(17.1)	(3.3)	4.8	639.3

¹    Corporate actions relate to the acquisition of £4.8bn of AUM in transactions with Alpine Woods, ETF Securities and Hark Capital.

²    Discontinued excludes AUMA and flows from products such as Wrap SIPP, where the SIPP product is moving to Phoenix but will continue to be administered via the Wrap platform. To avoid a double count, this AUMA is included in Pensions and Savings continuing only. The total AUMA from such products is £26.2bn (FY 2017: £24.5bn).

Assets under management and administration

6 months ended 30 June 2017

			Opening AUMA at 1 Jan 2017	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions and business rationalisation1	Closing AUMA at 30 Jun 2017
			£bn	£bn	£bn	£bn	£bn	£bn	£bn
Aberdeen Standard Investments	Equities		97.4	8.2	(11.6)	(3.4)	9.8	-	103.8
	Fixed income		55.1	3.7	(5.3)	(1.6)	0.8	(1.3)	53.0
	Multi-asset		79.1	7.2	(11.0)	(3.8)	1.4	(2.4)	74.3
	Private markets/alternatives		25.7	0.9	(1.4)	(0.5)	(0.2)	-	25.0
	Real estate		27.5	1.9	(2.6)	(0.7)	1.3	-	28.1
	Quantitative		2.4	0.1	(0.5)	(0.4)	0.2	-	2.2
	Cash/liquidity		21.9	4.5	(3.1)	1.4	(0.6)	-	22.7
	Growth		309.1	26.5	(35.5)	(9.0)	12.7	(3.7)	309.1
	Mature		271.5	8.2	(15.6)	(7.4)	6.5	-	270.6
	Total assets under management		580.6	34.7	(51.1)	(16.4)	19.2	(3.7)	579.7
Pensions and Savings (continuing)			44.2	5.5	(1.8)	3.7	1.3	-	49.2
India and China life			4.6	0.6	(0.3)	0.3	0.3	-	5.2
Eliminations			(6.4)	(1.3)	1.3	-	(0.7)	-	(7.1)
Total AUMA (continuing)			623.0	39.5	(51.9)	(12.4)	20.1	(3.7)	627.0
Discontinued2			127.4	4.8	(6.2)	(1.4)	5.1	-	131.1
Discontinued eliminations			(102.8)	(2.3)	3.4	1.1	(1.4)	-	(103.1)
Total AUMA (discontinued)			24.6	2.5	(2.8)	(0.3)	3.7	-	28.0
Total AUMA			647.6	42.0	(54.7)	(12.7)	23.8	(3.7)	655.0

¹    Corporate actions include the closure of an uneconomic multi-manager fund range and the rationalisation of the US fixed income business.

²    Discontinued excludes AUMA and flows from products such as Wrap SIPP, where the SIPP product is moving to Phoenix but will continue to be administered via the Wrap platform. To avoid a double count, this AUMA is included in Pensions and Savings continuing only. The total AUMA from such products is £21.5bn (FY 2016: £18.4bn).

5.3.2 AUMA growth and mature split

	Opening AUMA at 1 Jan 2018	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions and business rationalisation	Closing AUMA at 30 Jun 2018
6 months ended 30 June 2018	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Aberdeen Standard Investments growth	303.9	22.8	(36.4)	(13.6)	(4.1)	4.8	291.0
Pensions and Savings (continuing)	54.0	4.7	(2.2)	2.5	(0.2)	-	56.3
Eliminations	(8.0)	(1.1)	0.9	(0.2)	-	-	(8.2)
Total growth channels	349.9	26.4	(37.7)	(11.3)	(4.3)	4.8	339.1
Aberdeen Standard Investments mature	271.8	11.0	(16.6)	(5.6)	(0.1)	-	266.1
India and China life	4.8	0.6	(0.3)	0.3	(0.2)	-	4.9
Total continuing operations	626.5	38.0	(54.6)	(16.6)	(4.6)	4.8	610.1
Discontinued	28.4	2.1	(2.6)	(0.5)	1.3	-	29.2
Total AUMA	654.9	40.1	(57.2)	(17.1)	(3.3)	4.8	639.3

	Opening AUMA at 1 Jan 2017	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions and business rationalisation	Closing AUMA at 30 Jun 2017
6 months ended 30 June 2017	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Aberdeen Standard Investments growth	309.1	26.5	(35.5)	(9.0)	12.7	(3.7)	309.1
Pensions and Savings (continuing)	44.2	5.5	(1.8)	3.7	1.3	-	49.2
Eliminations	(6.4)	(1.3)	1.3	-	(0.7)	-	(7.1)
Total growth channels	346.9	30.7	(36.0)	(5.3)	13.3	(3.7)	351.2
Aberdeen Standard Investments mature	271.5	8.2	(15.6)	(7.4)	6.5	-	270.6
India and China life	4.6	0.6	(0.3)	0.3	0.3	-	5.2
Total continuing operations	623.0	39.5	(51.9)	(12.4)	20.1	(3.7)	627.0
Discontinued	24.6	2.5	(2.8)	(0.3)	3.7	-	28.0
Total AUMA	647.6	42.0	(54.7)	(12.7)	23.8	(3.7)	655.0

5.3.3 Quarterly net flows

	3 months to 30 Jun 18	3 months to 31 Mar 18	3 months to 31 Dec 17	3 months to 30 Sep 17	3 months to 30 Jun 17
	£bn	£bn	£bn	£bn	£bn
Aberdeen Standard Investments:
Equities	(3.9)	(3.7)	(2.9)	(1.9)	(1.9)
Fixed income	(0.9)	(1.2)	(0.6)	(1.1)	(1.4)
Multi-asset	(2.9)	(1.5)	(1.3)	(1.8)	(1.8)
Private markets/alternatives	(0.6)	(0.3)	(0.1)	(0.2)	(0.3)
Real estate	-	(0.2)	(0.1)	(0.2)	(0.6)
Quantitative	-	-	-	(0.1)	(0.4)
Cash/liquidity	1.4	0.2	(0.7)	(2.1)	0.1
Growth	(6.9)	(6.7)	(5.7)	(7.4)	(6.3)
Mature	(3.1)	(2.5)	(3.5)	(4.3)	(3.8)
Aberdeen Standard Investments net flows	(10.0)	(9.2)	(9.2)	(11.7)	(10.1)
Pensions and Savings (continuing)	1.0	1.5	1.6	1.7	1.8
India and China life	0.1	0.2	0.1	0.1	0.1
Eliminations	(0.1)	(0.1)	(0.1)	(0.4)	-
Total net flows (continuing)	(9.0)	(7.6)	(7.6)	(10.3)	(8.2)
Discontinued	(0.7)	(0.5)	(0.7)	(0.9)	(0.6)
Discontinued eliminations	0.4	0.3	0.3	2.3	(0.4)
Total net flows (discontinued)	(0.3)	(0.2)	(0.4)	1.4	(1.0)
Total net flows	(9.3)	(7.8)	(8.0)	(8.9)	(9.2)

 

5.4   Aberdeen Standard Investments assets under management and net flows (Pro forma basis)

5.4.1 Growth AUM detailed asset class split and total AUM by channel

6 months ended 30 June 2018	Opening AUM at 1 Jan 2018	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions and business rationalisation	Closing AUM at 30 Jun 2018
Breakdown of growth channel asset classes	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Developed markets equities	16.3	1.0	(1.3)	(0.3)	-	-	16.0
Emerging markets equities	37.0	3.0	(7.6)	(4.6)	(2.8)	-	29.6
Asia Pacific equities	27.7	2.1	(3.9)	(1.8)	(0.8)	-	25.1
Global equities	23.5	1.0	(1.9)	(0.9)	(0.4)	1.2	23.4
Total equities	104.5	7.1	(14.7)	(7.6)	(4.0)	1.2	94.1
Developed markets credit	32.9	1.7	(3.3)	(1.6)	0.1	0.9	32.3
Developed markets rates	5.7	0.4	(0.6)	(0.2)	(0.2)	-	5.3
Emerging markets fixed income	12.8	1.1	(1.4)	(0.3)	(0.2)	-	12.3
Total fixed income	51.4	3.2	(5.3)	(2.1)	(0.3)	0.9	49.9
Absolute return	39.8	1.1	(6.3)	(5.2)	(0.8)	-	33.8
Diversified growth/income	1.5	0.3	(0.2)	0.1	-	-	1.6
MyFolio	13.3	1.5	(0.7)	0.8	-	-	14.1
Other multi-asset	6.5	0.6	(1.1)	(0.5)	(0.6)	-	5.4
Parmenion	4.4	1.1	(0.5)	0.6	0.1	-	5.1
Standard Life Wealth	6.9	0.4	(0.6)	(0.2)	(0.1)	-	6.6
Total multi-asset	72.4	5.0	(9.4)	(4.4)	(1.4)	-	66.6
Private equity	12.4	0.4	(1.0)	(0.6)	0.2	-	12.0
Private credit and solutions	0.3	0.2	-	0.2	(0.4)	-	0.1
Alternative investment solutions	8.0	0.4	(0.6)	(0.2)	1.7	2.1	11.6
Infrastructure equity	3.8	-	(0.3)	(0.3)	-	-	3.5
Total private markets/alternatives	24.5	1.0	(1.9)	(0.9)	1.5	2.1	27.2
UK real estate	15.8	0.7	(1.1)	(0.4)	-	-	15.4
European real estate	11.1	0.9	(0.6)	0.3	(0.1)	-	11.3
Global real estate	0.1	-	-	-	0.1	0.6	0.8
Real estate multi-manager	1.5	-	(0.1)	(0.1)	-	-	1.4
Total real estate	28.5	1.6	(1.8)	(0.2)	-	0.6	28.9
Total quantitative	2.2	0.1	(0.1)	-	-	-	2.2
Total cash/liquidity	20.4	4.8	(3.2)	1.6	0.1	-	22.1
Total growth assets under management	303.9	22.8	(36.4)	(13.6)	(4.1)	4.8	291.0

	Opening AUM at 1 Jan 2018	Gross inflows	Redemptions	Net  flows	Market and other movements	Corporate actions and business rationalisation	Closing AUM at 30 Jun 2018
6 months ended 30 June 2018	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Institutional	192.5	10.9	(21.5)	(10.6)	0.5	-	182.4
Wholesale	100.2	10.5	(13.8)	(3.3)	(4.6)	4.8	97.1
Wealth/Digital	11.2	1.4	(1.1)	0.3	-	-	11.5
Growth channels	303.9	22.8	(36.4)	(13.6)	(4.1)	4.8	291.0
Mature channels	271.8	11.0	(16.6)	(5.6)	(0.1)	-	266.1
Total assets under management	575.7	33.8	(53.0)	(19.2)	(4.2)	4.8	557.1

6 months ended 30 June 2017	Opening AUM at 1 Jan 2017	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions and business rationalisation	Closing AUM at 30 Jun 2017
Breakdown of growth channel asset classes	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Developed markets equities	15.8	1.2	(1.8)	(0.6)	0.6	-	15.8
Emerging markets equities	33.9	3.2	(3.3)	(0.1)	3.7	-	37.5
Asia Pacific equities	26.1	2.1	(4.2)	(2.1)	3.3	-	27.3
Global equities	21.6	1.7	(2.3)	(0.6)	2.2	-	23.2
Total equities	97.4	8.2	(11.6)	(3.4)	9.8	-	103.8
Developed markets credit	37.8	2.2	(4.2)	(2.0)	0.9	(1.3)	35.4
Developed markets rates	5.5	0.4	(0.5)	(0.1)	(0.2)	-	5.2
Emerging markets fixed income	11.8	1.1	(0.6)	0.5	0.1	-	12.4
Total fixed income	55.1	3.7	(5.3)	(1.6)	0.8	(1.3)	53.0
Absolute return	48.9	3.1	(8.3)	(5.2)	0.3	-	44.0
Diversified growth/income	0.7	0.9	(0.1)	0.8	-	-	1.5
MyFolio	10.6	1.7	(0.7)	1.0	0.2	-	11.8
Other multi-asset	9.1	0.4	(1.2)	(0.8)	0.6	(2.4)	6.5
Parmenion	3.0	0.8	(0.1)	0.7	-	-	3.7
Standard Life Wealth	6.8	0.3	(0.6)	(0.3)	0.3	-	6.8
Total multi-asset	79.1	7.2	(11.0)	(3.8)	1.4	(2.4)	74.3
Private equity	14.6	0.6	(0.6)	-	(0.1)	-	14.5
Private credit and solutions	-	-	-	-	-	-	-
Alternative investment solutions	8.9	0.3	(0.8)	(0.5)	(0.1)	-	8.3
Infrastructure equity	2.2	-	-	-	-	-	2.2
Total private markets/alternatives	25.7	0.9	(1.4)	(0.5)	(0.2)	-	25.0
UK real estate	15.2	0.5	(1.1)	(0.6)	0.8	-	15.4
European real estate	10.5	1.3	(1.3)	-	0.5	-	11.0
Global real estate	0.2	-	-	-	-	-	0.2
Real estate multi-manager	1.6	0.1	(0.2)	(0.1)	-	-	1.5
Total real estate	27.5	1.9	(2.6)	(0.7)	1.3	-	28.1
Total quantitative	2.4	0.1	(0.5)	(0.4)	0.2	-	2.2
Total cash/liquidity	21.9	4.5	(3.1)	1.4	(0.6)	-	22.7
Total growth assets under management	309.1	26.5	(35.5)	(9.0)	12.7	(3.7)	309.1

	Opening AUM at 1 Jan 2017	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions and business rationalisation	Closing AUM at 30 Jun 2017
6 months ended 30 June 2017	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Institutional	202.4	13.1	(20.6)	(7.5)	8.2	(1.3)	201.8
Wholesale	96.9	12.3	(14.2)	(1.9)	4.3	(2.4)	96.9
Wealth/Digital	9.8	1.1	(0.7)	0.4	0.2	-	10.4
Growth channels	309.1	26.5	(35.5)	(9.0)	12.7	(3.7)	309.1
Mature channels	271.5	8.2	(15.6)	(7.4)	6.5	-	270.6
Total assets under management	580.6	34.7	(51.1)	(16.4)	19.2	(3.7)	579.7

5.4.2 Aberdeen Standard Investments growth assets under management by geography

	30 Jun 2018	31 Dec 2017
	£bn	£bn
UK	139.8	145.6
Europe, Middle East and Africa (EMEA)	61.0	61.8
India	13.1	13.6
Asia Pacific (APAC)	20.1	22.7
North America	57.0	60.2
Total growth channels	291.0	303.9

5.4.3 Aberdeen Standard Investments total assets under management by asset class

	30 Jun 2018			31 Dec 2017
	Growth	Mature	Total	Growth	Mature	Total
	£bn	£bn	£bn	£bn	£bn	£bn
Equities	94.1	50.1	144.2	104.5	53.1	157.6
Fixed income	49.9	88.7	138.6	51.4	92.6	144.0
Multi-asset	66.6	20.3	86.9	72.4	17.6	90.0
Private markets/alternatives	27.2	1.1	28.3	24.5	1.2	25.7
Real estate	28.9	10.2	39.1	28.5	10.7	39.2
Quantitative	2.2	64.5	66.7	2.2	66.3	68.5
Cash/liquidity	22.1	31.2	53.3	20.4	30.3	50.7
Total assets under management	291.0	266.1	557.1	303.9	271.8	575.7

5.5   Assets under management and administration - reconciliation to previously disclosed information (Pro forma basis)

6 months ended 30 June 2017

	Opening AUMA at 1 Jan 2017	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions and business rationalisation	Closing AUMA at 30 Jun 2017
	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Standard Life plc AUA as reported	357.1	20.7	(24.4)	(3.7)	8.5	-	361.9
Add: Aberdeen AUM	302.7	21.3	(30.3)	(9.0)	14.5	(3.7)	304.5
Less: eliminations between Aberdeen AUM and UK Pensions & Savings AUA	(0.6)	-	-	-	-	-	(0.6)
Less: changes due to new AUMA methodology1	(11.6)	-	-	-	0.8	-	(10.8)
Adjustment to remove Discontinued operations	(24.6)	(2.5)	2.8	0.3	(3.7)	-	(28.0)
Total Standard Life Aberdeen AUMA (continuing)	623.0	39.5	(51.9)	(12.4)	20.1	(3.7)	627.0

¹    Some assets which were formerly included in Standard Life plc's AUA are now excluded under the definition of AUMA for Standard Life Aberdeen plc. These assets largely comprise Assets which do not generate revenue from products and Other corporate assets.

6. Glossary

Aberdeen Asset Management or Aberdeen

Aberdeen Asset Management PLC, or Aberdeen Asset Management PLC and its subsidiaries.

Adjusted cash generation

Adjusted cash generation presents a shareholder view of cash generation. The calculation of this measure has been amended following the merger and is presented for continuing operations only. For the Aberdeen Standard Investments segment, adjusted cash generation adjusts IFRS net cash flows from operating activities for restructuring and corporate transaction expenses paid. For the Standard Life Pensions and Savings segment and Other, adjusted cash generation removes certain non-cash items from adjusted profit before tax. Adjustments are made for deferred acquisition costs/deferred income reserve and fixed/intangible assets. Adjusted cash generation is stated net of current (cash) tax. IFRS net cash flows from operating activities is not used as the basis for these segments as it includes policyholder cash flows, and does not exclude adjusting items. For the India and China life segment, adjusted cash generation reflects dividends received in the period.

Adjusted operating expenses

Adjusted operating expenses is a component of adjusted profit and relates to the day-to-day expenses of managing our business.

Adjusted operating income

Adjusted operating income is a component of adjusted profit and consists of fee based revenue and spread/risk margin.

Adjusted profit

Adjusted profit before tax is the Group's key alternative performance measure. Adjusted profit excludes impacts arising from short-term fluctuations in investment return and economic assumption changes in the Group's wholly owned insurance entities. It is calculated based on expected returns on investments backing equity holder funds, with consistent allowance for the corresponding expected movements in equity holder liabilities. Impacts arising from the difference between the expected return and actual return on investments, and the corresponding impact on equity holder liabilities except where they are directly related to a significant management action, are excluded from adjusted profit and are presented within profit before tax. The impact of certain changes in economic assumptions is also excluded from adjusted profit and is presented within profit before tax.

Adjusted profit also excludes the impact of the following items:

·  Restructuring costs and corporate transaction expenses. Restructuring includes the impact of major regulatory change.

·  Impairment and amortisation of intangible assets acquired in business combinations and through the purchase of customer contracts

·  Profit or loss arising on the disposal of a subsidiary, joint venture or associate

·  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

Coupons payable on perpetual notes classified as non-controlling interests are included in adjusted profit before tax. For IFRS purposes, these are recognised directly in equity. Prior to these instruments being reclassified as a subordinated liability on 18 December 2017, this gave rise to an adjusting item relating to 'coupons payable on perpetual notes classified as equity'. Dividends payable on preference shares classified as non-controlling interests are excluded from adjusted profit in line with the treatment of ordinary dividends.

Annuity

A periodic payment made for an agreed period of time (usually up to the death of the recipient) in return for a cash sum. The cash sum can be paid as one amount or as a series of premiums. If the annuity commences immediately after the payment of the sum, it is called an immediate annuity. If it commences at some future date, it is called a deferred annuity.

Assets under management and administration (AUMA)

AUMA is a measure of the total assets we manage or administer on behalf of our clients and customers. For continuing operations it includes Aberdeen Standard Investments assets under management (AUM) and assets under administration (AUA) within Standard Life Pensions and Savings, as well as AUM and AUA from our associate and joint venture businesses in India and China based on our ownership percentages.

AUM is a measure of the total assets that Aberdeen Standard Investments manages on behalf of individual customers and institutional clients. AUM also includes captive assets managed on behalf of Standard Life Aberdeen Group including assets managed for corporate purposes. These corporate assets are eliminated from Group AUMA.

AUA is a measure of the total assets we administer for customers through products such as pensions, platforms and ISAs, as well as assets backing our Spread/risk products such as annuities.

Board

The Board of Directors of the Company.

Capital management

Capital management is a component of adjusted profit and relates to the return from the net assets of the shareholder business, net of costs of financing. This includes the net assets in defined benefit staff pension plans and net assets relating to the financing of subordinated liabilities. Coupons payable on perpetual notes classified as non-controlling interests are recognised in capital management. For IFRS purposes, these are directly recognised in equity. Capital management excludes short-term fluctuations in investment return in the Group's wholly owned insurance entities.

Capital surplus

This is a regulatory measure of our financial strength and is measured on a Solvency II basis.

Chief Operating Decision Maker

The executive committee.

Company

Standard Life Aberdeen plc. Prior to the merger Standard Life plc.

Cost/income ratio

This is an efficiency measure that is calculated as adjusted operating expenses divided by adjusted operating income, and includes the share of associates' and joint ventures' profit before tax.

CRD IV

CRD IV is the European regulatory capital regime that applies to investment firms. The Group expects that, post completion of the sale of the UK and European insurance business, the retained Group will be subject to the CRD IV regime for group-level prudential regulatory capital purposes. This is subject to receiving regulatory approval.

Director

A Director of the Company.

Earnings per share (EPS)

EPS is a commonly used financial metric which can be used to measure the profitability and strength of a company over time. EPS is calculated by dividing profit by the number of ordinary shares. Basic EPS uses the weighted average number of ordinary shares outstanding during the year. Diluted EPS adjusts the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares, such as share options awarded to employees.

Effective tax rate

Tax expense/(credit) attributable to equity holders' profit divided by profit before tax attributable to equity holders' profits expressed as a percentage.

Elevate

Elevate adviser platform acquired through the purchase of the entire share capital of AXA Portfolio Services Limited, subsequently renamed Elevate Portfolio Services Limited.

Executive committee

Responsible for supporting the Co-Chief Executives in the day-to-day running of the business and comprises: Co-Chief Executives and the functional/regional leaders for UK, Finance, Distribution, Americas, EMEA, Asia Pacific, People and Investment Management.

Fair value through profit or loss (FVTPL)

FVTPL is an IFRS measurement basis permitted for assets and liabilities which meet certain criteria. Gains or losses on assets or liabilities measured at FVTPL are recognised directly in the income statement.

Fee based business/revenue

Fee based business is a component of adjusted profit and includes products where we generate revenue primarily from asset management charges (AMCs), premium based charges and transactional charges. AMCs are earned on products such as SIPP, corporate pensions and mutual funds, and are calculated as a percentage fee based on the assets held. Investment risk on these products rests principally with the customer, with our major indirect exposure to rising or falling markets coming from higher or lower AMCs. Fee based revenue is shown net of fees, commissions and similar charges (e.g. rebates and initial charges).

Fee revenue yield (bps)

The average revenue yield on fee based business is a measure that illustrates the average margin being earned on the assets that we manage or administer. It is calculated as annualised fee based revenue (excluding performance fees) divided by monthly average fee based assets under administration.

Global absolute return strategies (GARS)

A discretionary multi-asset fund provided under several regulated pooled and segregated structures globally by Aberdeen Standard Investments. The investment objective is to target a level of return over a rolling three-year period equivalent to cash plus 5% a year (gross of fees), and to do so with as little risk as possible.

Group, Standard Life Aberdeen Group or Standard Life Aberdeen

Relates to the Company and its subsidiaries following the completion of the merger of Standard Life plc and Aberdeen Asset Management PLC on 14 August 2017.

Growth channels

We aim to drive the increase in our assets, revenue and profit via our growth channels. This comprises Aberdeen Standard Investments (excluding mature business) and the Pensions and Savings continuing operations business which includes Wrap, Elevate and 1825.

Heritage With Profits Fund (HWPF)

The Heritage With Profits Fund contains all business - both with profits and non-profit - written in the UK, Irish or German branches within the Standard Life Group before demutualisation, with the exception of the classes of business which the Scheme of Demutualisation allocated to funds outside the HWPF. The HWPF also contains increments to this business.

International Financial Reporting Standards (IFRS)

International Financial Reporting Standards are accounting standards issued by the International Accounting Standards Board (IASB). The Group's consolidated financial statements are prepared in accordance with IFRS as endorsed by the EU.

Investment performance

Investment performance has been aggregated using a money weighted average of our assets under management which are outperforming their respective benchmarks on a gross of fees basis. Benchmarks differ by fund and are defined in each fund's Investment Management Agreement (for example, the benchmark for our GARS unit trust fund is six-month GBP LIBOR). For total AUM, the investment performance calculation covers 83% of Aberdeen Standard Investments AUM, with certain assets excluded such as our share of AUM from HDFC AMC where we do not directly manage the assets, non-discretionary portfolios or funds where no suitable benchmark is available.

Investor view

The investor view of Solvency II adjusts the regulatory position for the impact from unrecognised capital and with profit funds/defined benefit pension plans.

Key performance indicators (KPI)

A measure by reference to which the development, performance or position of the business can be measured effectively.

Mature book/business

The mature books represent the management of assets by Aberdeen Standard Investments on behalf of strategic partner life businesses including Standard Life and a number of third party strategic partners such as Lloyds Banking Group and Phoenix.

Net flows

Net flows represent gross inflows less gross outflows or redemptions. Gross inflows are new funds from clients and customers. Gross outflows or redemptions is the money withdrawn by clients or customers during the period, including annuity payments.

Own funds

Under Solvency II, the capital resources available to meet solvency capital requirements are called own funds.

Phoenix

Phoenix Group plc and its subsidiaries.

Platform

An investment platform (e.g. Wrap or Elevate) which is essentially a trading platform enabling investment funds, pensions, direct equity holdings and some life assurance contracts to be held in the same administrative account rather than as separate holdings.

Pro forma basis

The merger of Standard Life plc and Aberdeen completed on 14 August 2017, with the merger accounted for as an acquisition of Aberdeen by Standard Life plc on that date. Results on a Pro forma basis are prepared as if Standard Life plc and Aberdeen had always been merged and are included on this basis to assist in explaining trends in financial performance for the combined Group. This is applicable to the results of the Group and Aberdeen Standard Investments.

Reported basis

The merger of Standard Life plc and Aberdeen completed on 14 August 2017, with the merger accounted for as an acquisition of Aberdeen by Standard Life plc on that date. The financial statements for 2017 have been prepared on this basis, with Aberdeen results included only from the date of merger onwards. This is being referred to as the Reported basis.

Scheme of Demutualisation or the Scheme

The scheme pursuant to Part VII of, and Schedule 12 to, the Financial Services and Markets Act 2000, under which substantially all of the long-term business of the Standard Life Assurance Company (SLAC) was transferred to Standard Life Assurance Limited on 10 July 2006.

SIPP

A self invested personal pension which provides the policyholder with greater choice and flexibility as to the range of investments made, how those investments are managed, the administration of those assets and how retirement benefits are taken.

SLAL

Standard Life Assurance Limited.

Solvency II

Solvency II is an EU-wide initiative that brings consistency to how EU insurers manage capital and risk. Solvency II was implemented on
1 January 2016.

Solvency capital requirement (SCR)

Under Solvency II, insurers are required to identify their key risks - for example that equity markets fall - and hold sufficient capital to withstand adverse outcomes from those risks. This amount of capital is referred to as the Solvency capital requirement or SCR.

Solvency cover

Solvency II Own funds divided by the Solvency capital requirement.

Spread/risk business

Spread/risk business mainly comprises products where we provide a guaranteed level of income for our customers in return for an investment, for example, annuities. The 'spread' referred to in the title primarily relates to the difference between the guaranteed amount we pay to customers and the actual return on the assets over the period of the contract.

Spread/risk margin

Spread/risk margin is a component of adjusted profit and reflects the margin earned on spread/risk business. This includes net earned premiums, claims and benefits paid, net investment return using long-term assumptions and reserving changes. Spread/risk margin excludes the impact of economic assumption changes, which are not included in determining adjusted profit.

Standard Life

The brand name for our Pensions and Savings business, operating in the UK and Europe.

Standard Life Group

Prior to demutualisation on 10 July 2006, SLAC and its subsidiaries and, from demutualisation on 10 July 2006 to 13 August 2017, Standard Life plc and its subsidiaries.

Strategic partner life business

A measure of the assets that Aberdeen Standard Investments manages on behalf of Standard Life Aberdeen Group companies and under other long-term life book partnership agreements with third party companies such as Phoenix.

Subordinated liabilities

Subordinated liabilities are debts of a company which, in the event of liquidation, rank below its other debts but above share capital.

Technical provisions

The best estimate market consistent value of our policyholder liabilities is referred to as technical provisions. The calculation is discounted to recognise the time value of money and includes a risk margin, calculated in accordance with Solvency II regulations.

UK Retail

This relates to business where we have a relationship with the customer either directly or through an independent financial adviser. We analyse this type of business into growth and mature categories. Retail growth includes the products, platforms, investment solutions and services of our UK Retail business that we continue to market actively to our customers. Retail mature includes business that was predominantly written before demutualisation.

UK Workplace

UK Workplace pensions, savings and benefits to UK employers and employees. These are sold through corporate benefit consultants, independent financial advisers, or directly to employers.

7. Shareholder information

Registered office

Standard Life House
30 Lothian Road
Edinburgh
EH1 2DH
Scotland

Company registration number: SC286832

Phone: [phone]* or 0131 225 2552*

For shareholder services call:

0345 113 0045*

*Calls may be monitored and/or recorded to protect both you and us and help with our training. Call charges will vary.

Secretary

Kenneth A Gilmour

Registrar

Link Market Services Limited (Link)

Auditors

KPMG LLP

Solicitors

Slaughter and May

Brokers

JP Morgan Cazenove

Goldman Sachs

Cenkos Securities

Shareholder services

We offer a wide range of shareholder services. For more information, please:

·  Contact our registrar, Link, who manage this service for us. Their details can be found on the inside back cover.

·  Visit our share portal at www.standardlifeaberdeenshares.com

Sign up for Ecommunications

Signing up means:

·  You'll receive an email when documents like the Annual report and accounts, Half year results and AGM guide are available on our website

·  Voting instructions for the Annual General Meeting will be sent to you electronically

Set up a share portal account

Having a share portal account means you can:

·  Manage your account at a time that suits you

·  Download your documents when you need them  

To find out how to sign up, visit www.standardlifeaberdeenshares.com

Preventing unsolicited mail

By law, the Company has to make certain details from its share register publicly available. Because of this, it is possible that some registered shareholders could receive unsolicited mail or phone calls. You could also be targeted by fraudulent 'investment specialists'. Remember, if it sounds too good to be true, it probably is.

You can find more information about share scams at the Financial Conduct Authority website www.fca.org.uk/consumers/scams

If you are a certificated shareholder, your name and address may appear on a public register. Using a nominee company to hold your shares can help protect your privacy. You can transfer your shares into the Company-sponsored nominee - the Standard Life Aberdeen Share Account - by contacting Link, or you could get in touch with your broker to find out about their nominee services.

If you want to limit the amount of unsolicited mail you receive generally, please visit www.mpsonline.org.uk

Financial calendar

2018	Half year results 2018	7 August
	Ex-dividend date for 2018 interim dividend	16 August
	Record date for 2018 interim dividend	17 August
	Last date for DRIP elections for 2018 interim dividend	5 September
	Dividend payment date for 2018 interim dividend	25 September

Analysis of registered shareholdings at 30 June 2018

Range of shares	Number of holders	% of total holders	Number of shares	% of total shares
1-1,000	61,976	60.96	26,016,450	0.87
1,001-5,000	34,313	33.75	70,097,454	2.35
5,001-10,000	3,032	2.98	20,378,300	0.69
10,001-100,000	1,705	1.68	41,643,132	1.40
#100,001+	643	0.63	2,821,352,675	94.69
Total	101,669	100	2,979,488,011	100

#              These figures include the Company-sponsored nominee - the Standard Life Aberdeen Share Account - which had 1,029,839 participants holding 738,976,854 shares.

 

END

 

 

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