Annual Financial Report - Part 4 of 8

RNS Number : 5220F

Standard Life Aberdeen plc

10 March 2020

 

Standard Life Aberdeen plc

Full Year Results 2019

Part 4 of 8

4. Directors' report

The Directors present their annual report on the affairs of the Standard Life Aberdeen group of companies (the Group), together with the audited International Financial Reporting Standards (IFRS) consolidated financial statements for the Group, financial information for the Group and financial statements for Standard Life Aberdeen plc (the Company) for the year ended 31 December 2019.

Reporting for the year ended 31 December 2019

The Company is the holding company of the Group. You can find out about the relevant activities of the Company's principal subsidiary undertakings and their overseas branches in the Strategic report. During 2019, the Company's principal undertakings operated branches in Europe, together with Hong Kong and India.

The main trends and factors likely to affect the future development, performance and position of the Group are outlined in the Chief Executive's overview section of the Strategic report. Reviews of the operating and financial performance of the Group for the year ended 31 December 2019 are given in the Strategic report.

The Chairman's statement, the Directors' responsibility statement and the Corporate governance statement form part of the Directors' report. The Corporate governance statement is submitted by the Board.

Using the IFRS basis, the results of the Group are presented in the Group financial statements. A detailed description of the basis of preparation of the IFRS results (including adjusted profit) is set out in the Group financial statements section. More information about the Group's use of derivative financial instruments and related financial risk management matters can be found in Note 20 and Note 38 to the Group financial statements.

This report was prepared by the executive leadership team together with the Board and forms part of the management report.

Dividends

The Board recommends paying a final dividend for 2019 of 14.30p per ordinary share. This will be paid on 19 May 2020 to shareholders whose names are on the register of members at the close of business on 3 April 2020.

The total payment is estimated at £322m for the final dividend and together with the interim dividend of 7.30p per share totalling £173m paid on 24 September 2019, the total dividend for 2019 will be 21.60p per share (2018: 21.60p) totalling £495m (2018: £559m).

Share capital

You can find full details of the Company's share capital, including movements in the Company's issued ordinary share capital during the year, in Note 26 to the Group financial statements. You can also find an analysis of registered shareholdings by size, as at 31 December 2019, in the Shareholder information section.

On 25 June 2018, shareholders voted at a general meeting for a return of capital of up to £750 million to be returned by way of a share buyback programme.

On 9 August 2018 the Company announced the commencement of an initial share buyback programme of the Company's ordinary shares up to a maximum aggregate consideration of £175m. This was followed by announcements on 20 November 2018, 1 April 2019 and 16 August 2019 of the commencement of further tranches of the share buyback programme up to a maximum aggregate consideration of £200m, £175m and £200m respectively. The final tranche of this programme completed on 27 December 2019. The purpose of this programme was to reduce the share capital of the Company. All shares purchased have been cancelled. In total, 273,282,699 shares were cancelled through this programme, of which 190,689,614 were purchased and cancelled between 1 January 2019 and 31 December 2019.

As at 31 December 2019, there were 2,338,723,724 ordinary shares in issue held by 98,984 registered members. The Standard Life Aberdeen Share Account (the Company-sponsored nominee) held 651,170,271 of those shares on behalf of 1,005,103 participants. No person has any special rights of control over the Company's share capital and all issued shares are fully paid.

Between 1 January 2019 and until the date this report was signed, the Company received the following notifications in respect of major shareholdings and major proportions of voting rights in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority (FCA). The companies detailed below notified their positions.

Shareholder	Date of transaction	Type of transaction	Number of voting rights following the transaction	Percentage of voting rights following the transaction
Mitsubishi UFJ Trust and Banking Corporation	8 February 2019	Decrease of common shares outstanding by the issuer	150,500,406	6.002%
	15 February 2019	Disposal	-	Below 3%

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

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

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

Restrictions on the transfer of shares and securities

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

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

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

The Board may decline to register the transfer of:

· A share that is not fully paid

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

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

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

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

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

Rights attached to shares

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

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

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

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

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

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

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

Power to purchase the Company's own shares

At the 2019 Annual General Meeting (AGM), shareholders granted the Directors limited powers to:

· Allot ordinary shares in the Company up to a maximum aggregate amount of £115,557,697

· Disapply, up to a maximum total nominal amount of £17,333,654 of its issued ordinary share capital, shareholders' pre-emption rights in respect of new ordinary shares issued for cash

· Make market purchases of the Company's ordinary shares up to a maximum of 248,186,418 of its issued ordinary shares

As noted earlier in the share capital section, at the general meeting on 25 June 2018, shareholders authorised directors to undertake a share buyback programme. During 2019, under the authorities granted at the 2018 general meeting and the 2019 AGM, the Company has purchased 190,689,614 of its ordinary shares of 13 61/63 pence each, paying an aggregate amount of £515,099,546. As at 31 December 2019, the percentage of share capital represented by these purchased shares was approximately 8.2%.

Significant agreements

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

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

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

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

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

Appointment and retirement of Directors

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

The UK Corporate Governance Code recommends that directors of FTSE 350 companies should stand for election every year. During the year, Simon Troughton and Richard Mully retired as Directors on 14 May 2019, and on 31 May 2019 Bill Rattray retired as Director and CFO. Stephanie Bruce was appointed to the Board on 1 June 2019 as Director and CFO after shareholders were given and took the opportunity to vote on her election at the 2019 AGM. Jonathan Asquith was appointed to the Board on 1 September 2019. Cecilia Reyes was appointed to the Board on 1 October 2019. Rod Paris stood down from the Board on 31 December 2019 but remains as the Company's Chief Investment Officer. As announced, Brian McBride will join the Board on 1 May 2020.

Having been appointed since the 2019 AGM, Jonathan Asquith, Cecilia Reyes and Brian McBride will stand for election at the 2020 AGM.

All remaining Directors as at the date of the 2020 AGM will retire and, if they wish to continue in office, will stand for re-election. As announced by the Company on 2 October 2019, Martin Gilbert will not stand for election at the 2020 AGM and will retire from the Company on 30 September 2020.

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

Directors and their interests

The Directors who served during the year were:

Sir Douglas Flint (Chairman)		Melanie Gee
Keith Skeoch		Richard Mully1
Martin Gilbert		Martin Pike
Bill Rattray2		Cathleen Raffaeli
Stephanie Bruce3		Cecilia Reyes5
Rod Paris6		Jutta af Rosenborg
Jonathan Asquith4		Simon Troughton1
John Devine

¹  Retired 14 May 2019.

²  Retired 31 May 2019.

³  Appointed 1 June 2019.

⁴  Appointed 1 September 2019.

⁵  Appointed 1 October 2019.

⁶  Resigned 31 December 2019.

Biographies of the current Directors can be found on pages 52 to 55.

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

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

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

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

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

· The Directors' service contracts or letters of appointment

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

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

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

· The Company's Articles

Directors' liability insurance

During 2019, the Company maintained directors' and officers' liability insurance on behalf of its directors and officers to provide cover should any legal action be brought against them. The Company also maintained pension trustee liability indemnity policies (which includes third party indemnity) for the boards of trustees of the UK and Irish staff pension schemes where required to do so.

Our people

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

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

Reward

We have developed our employment proposition in the UK, where the majority of our people are based, and this has provided the foundation for a new, unified, set of UK terms and conditions of employment. These were designed to be fair and consistent, and to help us continue to attract and retain talented people.

Since these changes included pensions, we formally consulted with employees and their representatives for more than the required minimum of 60 days (under Regulation 6 of the Occupational and Personal Pension Schemes 2006). We also opted to engage with employee representatives on all the other proposed changes to terms and conditions and they had an opportunity to help shape them.

As a result, UK employees now have consistent and competitive benefits, including pension, life assurance, group income protection and healthcare. Our new My Benefits platform gives our people information at their fingertips, as well as seamless access to provider sites.

As well as the harmonisation of benefits, we have also focused on education to ensure employees fully understand their benefits. We have delivered a large number of educational communications throughout 2019 and will continue with this financial, health and wellbeing education and engagement programme through 2020 and beyond.

We believe that when our employees own shares in the Company it increases their understanding of the interests of our shareholders.

We invited UK and Ireland based employees to participate in the Standard Life Aberdeen Sharesave plan in 2019 and 1,736 (36%) employees accepted the invitation. They will have the opportunity to acquire Standard Life Aberdeen plc shares for £1.994 (UK) and €2.197 (Ireland) with their accumulated savings when their savings contracts end in three or five years' time. At 31 December 2019, 2,479 employees in UK and Ireland were saving towards the purchase of Standard Life Aberdeen plc shares through the current Sharesave plans.

As at 31 December 2019, 2,188 individuals were shareholders through participation in the Standard Life Aberdeen (Employee) Share Plan. This is now available to a greater number of our people - as a result of the harmonisation of terms and conditions - and we expect participation to increase in 2020. Participation allows employees to buy ordinary shares in the Company directly from their earnings up to a market value of £150 per month (UK) or €175 (Ireland) per month. We match the shares purchased by employees, matching up to £50 per month in the UK and €70 per month in Ireland.

Employee engagement

The Board takes employee engagement at all levels very seriously. As noted in the Annual report and accounts 2018, Melanie Gee accepted the role as the designated non-executive Director to support workforce engagement. During 2020, we will continue to develop her role to ensure it remains effective. You can find out more about this in the Corporate governance statement on page 58.

In addition, during 2019 we took action on the key themes which emerged from the engagement survey we ran in Q4 2018. That survey provided an overall engagement score of 56% with some obvious areas of focus for us to consider. These included the need for further clarity on our strategic direction, more leadership visibility, as well as minimising barriers to delivery. Positive feelings centred on our managers leading through change, employees feeling able to be themselves and our continued focus on inclusion.

We engaged our people in discussions about what would further enhance Standard Life Aberdeen as a great place to work. Drawing on what we learned, we drove forward a series of activities at a local and company-wide level, such as local engagement committees and a range of leadership initiatives.

Employees place significant value on seeing and hearing from our leaders, and being given the opportunity to directly engage with them. In 2019 we also held more than twenty 'In conversation with …' sessions, using our global video conference facilities to connect our people across the world with our senior leaders. They had the opportunity to hear and discuss strategic messages directly with leaders thereby helping to embed these messages and encourage collaboration across our global business. We received great feedback on the sessions: 76% of attendees told us that they feel they have a better understanding of our strategy and 91% found the leaders to be open and honest during the sessions.

Recognising that our people want more clarity on our direction, we will continue with a programme of work, started at the end of 2019, to engage our people with our case for change, our purpose, strategic drivers and behaviours. We will rely heavily on our leadership population to deliver and ensure understanding of these strategic messages so that we can create the commitment and belief across every employee to power the business forwards.

As part of our commitment to understanding how people feel about working in Standard Life Aberdeen, we will conduct a short 'pulse' survey in the first quarter of 2020, and all employees globally will have an opportunity to participate. The survey will provide us with further organisational insight, allow us to track progress against the key organisational themes and give us an updated measurement of employee engagement.

Talent

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

Continuing our focus on Early Careers talent, in the last 12 months we have hired a total of 151 employees - comprising university graduates, interns and school leavers - into our Early Careers programmes in the UK, Europe, Asia and the U.S. Our Early Careers programmes are a major component of our broader commitment to hiring a diverse global workforce. In 2019, we set up a one year development programme for school leavers which is open to any school leaver, regardless of their background or qualification level. We hire people with the attitude and skills to help our business succeed. In 2019 we hired 20 individuals into this programme and they are working in the Investments, Distribution and Operations functions with plans to track their progress and hire an additional 22 individuals into the programme in 2020.

Our programmes, alongside other sustainability work, have received external recognition: we were ranked 21^st amongst the top 75 employers in the UK Social Mobility index. We have also maintained our presence in the Top 100 UK Undergraduate Employers for 2019 (ranked 77^th at the National Undergraduate Employer Awards) based on participant feedback.

Structured succession planning helps us ensure we have a strong pipeline of talent, with both the technical expertise and leadership capabilities to support our growth agenda and enable smooth succession into our most critical roles. Our Board and Executive leadership team are highly engaged in our talent and succession agenda and in mentoring future talent.

Where gaps are identified in our succession plans, we are proactive in enhancing our talent pool through selective and focused external hiring, as well as through development. Our recruitment effectiveness has improved, through a combination of active market intelligence, innovative candidate attraction/assessment technology and a skilled in-house recruitment team that is increasingly able to source the highest quality of candidates directly rather than via search firms.

Diversity of succession pipelines is closely monitored as part of our succession review to create appropriately diverse talent pools from which future leaders are drawn. In particular our Women in Finance Charter commitments mean we must ensure balanced representation at all levels of our workforce. We have launched female leadership development programmes at senior and mid-career levels, with more than 200 participants in 2019 which have been well-received by participants and their managers.

Developing our people

During 2019 we constructed My Development as the primary learning and development system for the whole Company and this was launched in early January 2020. The system uses artificial intelligence to recommend resources and development opportunities to our people based on the topics they are interested in. It's available for all employees and underpins our philosophy of individual-driven development.

Our People Management Academy is central to developing the skills and capability of our people managers. In 2019, over 700 line managers attended courses across the globe, focusing on topics such as Inclusive Leadership, Coaching and Great Conversations. We recently communicated our new People Manager Commitments, highlighting what we expect from people managers and supported this with bite-sized workshops that included a selection of the support tools available. People Management Academy content in 2020 will be curated to address the expectations laid out in the People Manager Commitments.

All employees can benefit from the courses in our Learning Academy and in 2019 over 900 of our people attended a diverse range of courses, including technology skills, industry-specific training, and personal effectiveness solutions.

We have continued to upskill our people through vocational qualifications, supporting new and experienced hires through Modern and Graduate level apprenticeships. We have also been an active voice along with Scottish Government and other industry leaders to modernise apprenticeship frameworks currently used in our sector, as well as lobbying for improvements to the apprenticeship levy policy in devolved nations.

Our efforts have been recognised at the Learning and Performance Institute's Learning Awards where we won a Bronze Award for our digital learning initiative, The Leading Edge Challenge Series, which saw over 50,000 learning resources consumed across the campaign.

Inclusion and diversity

At Standard Life Aberdeen we consider diversity in the broadest sense - in our backgrounds, experiences, strengths and thinking. Our aim is to create a workplace where everyone can be themselves and can perform and progress, regardless of their background. By building and sustaining a diverse talent pipeline and enabling people to reach their potential, we provide our global customers with the diversity of thought and creativity required to bring long-term value.

We have an inclusion direction, which was co-created with our people, and which defines our priorities over the next two to four years. Progress against this is reviewed by the Nomination and Governance Committee bi-annually. This year we have worked with our most senior leaders to create and publish action plans relevant to their business areas and regions, which will build more inclusive workplaces. Transparency is key to how we talk about and report our inclusion and diversity progress and our transparency was recognised again this year by Bloomberg, who included us for the second time in their Gender Equality Index.

We empower people to take individual and collective action as we all have a role to play in creating an inclusive environment. For example, our six employee network groups and three regional inclusion forums support members and allies of the diverse groups they represent, and raise awareness of issues that affect them. With over 1,700 members, our networks continue to expand their global reach, and focus on gender, LGBT+, ethnicity, mental health, young people, and armed forces. In addition to supporting these groups, we treat those with disabilities fairly in relation to job applications, training, promotion and career development. Reasonable adjustments are made to train and enable employees who become disabled while working at Standard Life Aberdeen to allow them to continue and progress in their career. Our commitment to support people with disabilities is included within our internal Global Diversity and Inclusion Policy, published in 2019.

Achieving a better gender balance at all levels remains a priority for us. Last year we published our gender update, including gender pay gap figures, an update on our HM Treasury Women in Finance Charter targets, and progress against our gender actions. We know we have more to do to improve representation of women but welcome the progress made over the past 12 months at Board and Executive (CE-1 and CE-2) levels. Our Board is currently comprised of 45% female members; surpassing our 33% target for June 2020 and our pledge to the 30% Club. At Executive (CE-1 and CE-2) levels we have improved female representation from 34%, as at 31 December 2018 to 36% as at 7 January 2020¹. Our progress was recognised by the
Hampton-Alexander Review which ranked us 10 in the FTSE 100 in 2019, up from ranking 92 in 2018. Following analysis last year into how men and women join, progress and leave our organisation, we have prioritised actions to address the differences we uncovered. The actions we have in place to improve representation of women at all levels in our organisation are stretching, benchmarked and sponsored by our CE. Increasing women in our senior roles will also improve our gender pay gap, which is heavily influenced by the significant number of men in senior and most highly remunerated roles, and by the larger number of women in more junior roles.

As one of the inaugural signatories to the Race at Work Charter, we are committed to tackling barriers that ethnic minority people face in recruitment and progression. We published an ethnicity action plan and during 2019 we have improved understanding and awareness of experiences of ethnic minority employees, improved attraction and outreach to ethnically diverse candidates and built the capability for us to know more about the ethnicity of our employees. At Board level, appointments are made based on merit and with due consideration for the Board's gender and ethnicity composition, as outlined in our Board Charter.

¹  Data shown as at 7 January 2020. Data has been reported as at 31 December in previous years but due to data impacts associated with migrating HR systems on 6 January 2020, data is shown as at 7 January for this reporting cycle only.

You can read the Board Charter on our website www.standardlifeaberdeen.com

Sustainability

The commercial aims of our business are linked to our environmental, social and governance responsibilities. You can find out more about how we run our business sustainably throughout the Strategic report. Our non-financial information statement on page 27 summarises where you can find key information on our approach. For details of our greenhouse gas emissions, please see page 25.

Political donations

We have a long-standing policy of not making political donations. The Company has limited authorisation from shareholders to make political donations and incur political expenditure (Resolution 8, 2019 AGM). We request this as a precaution against any inadvertent breach of political donations legislation. While Standard Life Aberdeen has regular interaction with government and elected politicians in the UK and other jurisdictions in which we operate, we are strictly apolitical.

Auditors

The Audit Committee is responsible for considering the Group's External audit arrangements. Resolutions proposing the re-appointment of KPMG LLP as auditors of the Company and giving authority to the Audit Committee to determine their remuneration will be submitted at the 2020 AGM.

Disclosure of information to the auditors

Each Director confirms that he or she has taken all reasonable steps necessary, in his or her role as a Director, to be made aware of any relevant audit information and to establish that KPMG LLP is made aware of that information.

As far as each Director is aware, there is no relevant audit information that KPMG LLP is not aware of as at the date this report was approved.

Annual General Meeting

The 2020 AGM will be held in Edinburgh on 12 May. Details of the meeting content can be found in our AGM guide 2020. The AGM guide and other materials will be published online at www.standardlifeaberdeen.com in advance of this year's AGM.

Post balance sheet events

On 7 February 2020, the Company announced a share buyback of up to £400m through on-market purchases commencing on 10 February 2020 and ending no later than 30 September 2020. As at 6 March 2020, the Company had repurchased 20,214,403 shares for a consideration of £60m.

In early 2020, the existence of a new coronavirus, now known as COVID-19, was confirmed and since this time COVID-19 has spread across China and to a significant number of other countries. COVID-19 has caused disruption to businesses and economic activity which has been reflected in recent fluctuations in global stock markets. The Group considers the emergence and spread of COVID-19 to be a non-adjusting post balance sheet event. Given the inherent uncertainties, it is not practicable at this time to determine the impact of COVID-19 on the Group or to provide a quantitative estimate of this impact.

Other information

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

	Location
Topic	Directors' report	Directors' remuneration report	None/ Not applicable
Interest capitalised			x
Publication of unaudited financial information in a class 1 circular or in a prospectus, other than in accordance with Annexes 1 and 2 of the FCA's Prospectus Rules			x
Details of long-term incentive schemes		x
Waiver of emoluments by a director			x
Waiver of future emoluments by a director			x
Non pre-emptive issues of equity for cash			x
Non pre-emptive issues of equity for cash in relation to major subsidiary undertakings			x
Parent participation in a placing by a listed subsidiary			x
Contracts of significance			x
Provision of services by a controlling shareholder			x
Shareholder waivers of dividends	x
Shareholder waivers of future dividends	x
Agreements with controlling shareholders			x

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Strategic report. This includes details on our liquidity and capital management and our viability statement in the Chief Financial Officer's overview section and our principal risks in the Risk management section. In addition, the Group financial statements section includes notes on the Group's subordinated liabilities (Note 33), management of its risks including market, credit and liquidity risk (Note 38), its contingent liabilities and commitments (Notes 42 and 43), and its capital structure and position (Note 46).

The Group continues to meet group and individual entity capital requirements and day-to-day liquidity needs. The Company has a revolving credit facility of £400m as part of our contingency funding plans and this is due to mature in 2022. The Group has considerable financial resources together with a diversified business model, with a spread of business and geographical reach. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully.

After making enquiries and having assessed the principal risks, the Directors are satisfied that the Group has and will maintain sufficient resources to enable it to continue operating for at least 12 months from the date of approval of the financial statements and therefore consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements. In addition, the Directors have assessed the Group's viability over a period of three years.

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

Kenneth A Gilmour

Company Secretary

10 March 2020

5. Statement of Directors' responsibilities in respect of the Annual report and the financial statements

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

Company law requires the Directors to prepare Group and Company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS as adopted by the EU) and applicable law and have elected to prepare the parent company financial statements in accordance with UK accounting standards, including FRS 101 Reduced Disclosure Framework.

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

· Select suitable accounting policies and then apply them consistently

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

· For the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU

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

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

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

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

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

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

We confirm that to the best of our knowledge:

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

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

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

By order of the Board

Sir Douglas Flint Chairman 10 March 2020

Stephanie Bruce Chief Financial Officer 10 March 2020

 

END

 

 

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