Final Results - Part 7 of 8

RNS Number : 1198D

abrdn PLC

01 March 2022

 

abrdn plc

Full Year Results 2021

Part 7 of 8

8. Company financial statements

Company statement of financial position

As at 31 December 2021

		2021	2020
	Notes	£m	£m
Assets
Investments in subsidiaries	A	5,065	4,013
Investments in associates and joint ventures	B	206	1,216
Deferred tax assets	N	113	77
Loans to subsidiaries	C	70	109
Derivative financial assets	C	8	1
Equity securities and interests in pooled investment funds	C	1,187	249
Debt securities	C	227	326
Receivables and other financial assets	C	30	50
Other assets	F	83	-
Cash and cash equivalents	C	20	47
Total assets		7,009	6,088
Equity
Share capital	G	305	306
Shares held by trusts	H	(167)	(161)
Share premium reserve	G	640	640
Retained earnings	I
Brought forward retained earnings		2,631	2,933
Profit/(loss) for the year attributable to equity shareholders of abrdn plc		990	(1,266)
Other movements in retained earnings		(320)	964
Total retained earnings		3,301	2,631
Other reserves	J	1,856	1,842
Equity attributable to equity shareholders of abrdn plc		5,935	5,258
Other equity	K	207	-
Total equity		6,142	5,258
Liabilities
Subordinated liabilities	L	644	638
Derivative financial liabilities	D	-	6
Other financial liabilities	L	177	110
Provisions	P	35	68
Other liabilities	P	11	8
Total liabilities		867	830
Total equity and liabilities		7,009	6,088

The financial statements on pages 252 to 263 were approved by the Board and signed on its behalf by the following Directors: 

Sir Douglas Flint Chairman 28 February 2022

Stephanie Bruce Chief Financial Officer 28 February 2022

Company registered number: SC286832

The Notes on pages 255 to 263 are an integral part of these financial statements.

Company statement of changes in equity

For the year ended 31 December 2021

		Share capital	Shares held by trusts	Share premium reserve	Retained earnings	Other reserves	Total equity attributable to equity shareholders of abrdn plc	Other equity	Total equity
2021	Notes	£m	£m	£m	£m	£m	£m	£m	£m
1 January		306	(161)	640	2,631	1,842	5,258	-	5,258
Profit for the year		-	-	-	990	-	990	-	990
Other comprehensive income for the year		-	-	-	-	6	6	-	6
Total comprehensive income for the year		-	-	-	990	6	996	-	996
Issue of other equity	K	-	-	-	-	-	-	207	207
Dividends paid on ordinary shares		-	-	-	(308)	-	(308)	-	(308)
Share buyback	G	(1)	-	-	-	1	-	-	-
Reserves credit for employee share-based payment	J	-	-	-	-	43	43	-	43
Transfer to retained earnings for vested employee share-based payment	J	-	-	-	36	(36)	-	-	-
Shares acquired by employee trusts		-	(52)	-	-	-	(52)	-	(52)
Shares distributed by employee and other trusts and related dividend equivalents		-	46	-	(48)	-	(2)	-	(2)
31 December		305	(167)	640	3,301	1,856	5,935	207	6,142

The Notes on pages 255 to 263 are an integral part of these financial statements.

		Share capital	Shares  held by  trusts	Share premium reserve	Retained earnings	Other reserves	Total equity
2020	Notes	£m	£m	£m	£m	£m	£m
1 January		327	(119)	640	2,933	3,621	7,402
Loss for the year		-	-	-	(1,266)	-	(1,266)
Other comprehensive income for the year		-	-	-	-	8	8
Total comprehensive income for the year		-	-	-	(1,266)	8	(1,258)
Dividends paid on ordinary shares		-	-	-	(479)	-	(479)
Share buyback	G	(21)	-	-	(402)	21	(402)
Reserves credit for employee share-based payment	J	-	-	-	-	64	64
Transfer to retained earnings for vested employee share-based payment	J	-	-	-	38	(38)	-
Transfer between reserves on impairment of investment in subsidiaries	J	-	-	-	1,834	(1,834)	-
Shares acquired by employee trusts		-	(66)	-	-	-	(66)
Shares distributed by employee and other trusts and related dividend equivalents		-	24	-	(27)	-	(3)
31 December		306	(161)	640	2,631	1,842	5,258

The Notes on pages 255 to 263 are an integral part of these financial statements.

Company accounting policies

(a)  Basis of preparation

These separate financial statements are presented as required by the Companies Act 2006. The Company meets the definition of a qualifying entity under Application of Financial Reporting Requirements 100 as issued by the Financial Reporting Council. Accordingly, the financial statements for period ended 31 December 2021 have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) as issued by the Financial Reporting Council.

The financial statements have been prepared on a going concern basis and under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss (FVTPL).

As permitted by FRS 101, the Company has taken advantage of the following disclosure exemptions available under that standard:

-  A cash flow statement and related notes.

-  Capital management.

-  Effect of IFRSs issued but not effective.

-  Related party transactions with wholly owned subsidiaries.

As equivalent disclosures are given in the consolidated financial statements, we have also applied the disclosure exemptions for share based payments and financial instruments.

The principal accounting policies adopted are the same as those given in the consolidated financial statements, together with the Company specific policies set out below. These accounting policies have been consistently applied to all financial reporting periods presented in these financial statements.

The Company has taken advantage of the exemption in section 408 of the Companies Act 2006 not to present its own income statement in these financial statements. The auditors' remuneration for audit and other services is disclosed in
Note 7 to the consolidated financial statements. The Company has no employees.

(i)   Investment in subsidiaries, associates and joint ventures

The Company has certain subsidiaries which are investment vehicles such as open-ended investment companies, unit trusts and limited partnerships whose primary function is to generate capital or income growth through holding investments. This category of subsidiary is held at FVTPL since they are managed on a fair value basis.

Investments in subsidiaries (other than those measured at FVTPL), associates (other than those measured at FVTPL) and joint ventures are initially recognised at cost and subsequently held at cost less any impairment charge. An impairment charge is recognised when the carrying amount of the investment exceeds its recoverable amount. Any gain or loss on disposal of a subsidiary, associate or joint venture is recognised in profit for the year.

Distributions received of non-cash assets, including investments in subsidiaries, are recognised at fair value in the balance sheet and as dividends in specie in the income statement.

(ii)  Critical accounting estimates and judgements in applying accounting policies

The preparation of financial statements requires management to make estimates and assumptions and exercise judgements in applying the accounting policies that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses arising during the year. Estimates and judgements are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The areas where judgements have the most significant effect on the amounts recognised in the Company financial statements are as follows:

Financial statement area	Critical judgements in applying accounting policies	Related notes
Investments in subsidiaries held at cost	Given that the net assets attributable to shareholders of abrdn plc at 31 December 2021 were higher than the market capitalisation of the Company judgement was required to determine for which subsidiaries this was considered an indicator of impairment	Note A

The areas where assumptions and other sources of estimation uncertainty at the end of the reporting period have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year are as follows:

Financial statement area	Critical accounting estimates and assumptions	Related notes
Investments in subsidiaries held at cost	Determination of the recoverable amount	Note A

Notes to the Company financial statements

A.  Investments in subsidiaries 

		2021	2020
	Notes	£m	£m
Investments in subsidiaries measured at cost		3,737	3,568
Investments in subsidiaries measured at FVTPL	C	1,328	445
Investments in subsidiaries		5,065	4,013

		2021	2020
		£m	£m
At 1 January		4,013	6,027
Investment into existing subsidiaries measured at cost		210	26
Acquisition of subsidiaries via in specie dividend		4	-
Disposal of subsidiaries measured at cost		-	(50)
Impairment of subsidiaries measured at cost		(45)	(1,873)
Acquisition of subsidiaries at FVTPL		884	8
Disposal of subsidiaries at FVTPL		(2)	(126)
Gains on subsidiaries at FVTPL		1	1
At 31 December		5,065	4,013

Details of the Company's subsidiaries are given in Note 47 of the Group financial statements.

(a)  Acquisitions

During 2021, the Company made the following acquisitions of subsidiaries measured at cost:

-  The Company increased its investment in abrdn Financial Planning Ltd (aFPL) through the purchase of 40,000,000 ordinary shares for a cash consideration of £40m.

-  The Company increased its investment in Aberdeen Asset Management PLC (AAM PLC) by £165.3m through the purchase of 1,031,250 ordinary shares for a cash consideration of £3.3m, the purchase of 21,350,600 ordinary shares for a cash consideration of £68.3m, the purchase of 1,718,750 ordinary shares for a cash consideration of £5.5m and the purchase of 27,562,500 ordinary shares for a cash consideration of £88.2m.

-  The Company increased its investment in Aberdeen Corporate Services Limited (ACSL) through the purchase of 3,385 ordinary shares for a cash consideration of £3.4m.

-  The Company acquired Focus Business Solutions (FBS) via a dividend in specie from Focus Solutions Group Limited and recognised this subsidiary at an amount of £3.8m. The Company further increased its investment in FBS through the purchase of 150,000,000 ordinary shares for a cash consideration of £1.5m.

During 2020, the Company made the following acquisitions of subsidiaries measured at cost:

-  The Company increased its investment in aFPL through the purchase of 17,000,000 ordinary shares for a cash consideration of £17m.

-  The Company increased its investment in AAM PLC through the purchase of 1,171,875 ordinary shares for a cash consideration of £3.8m and through the purchase of 500,000 ordinary shares for a cash consideration of £1.6m.

-  The Company increased its investment in ACSL through the purchase of 3,584 ordinary shares for a cash consideration of £3.6m.

See Section (d) below for details on investments in subsidiaries at FVTPL.

(b)  Disposals

During 2020, the Company made the following disposals of subsidiaries measured at cost:

-  The Company redeemed £44.4m of equity capital in abrdn (Mauritius Holdings) 2006 Limited through the cancellation of 553,336.19 Participating shares.

-  The Company received £5.2m by way of distribution of the unallocated divisible surplus from the Standard Life Assurance Company 2006 (SLAC 06) following its deauthorisation. The Company was the sole member of SLAC 06 and this amount was previously held as a subsidiary measured at cost.

(c)  Impairment

The Company's net assets attributable to shareholders of abrdn plc at 31 December 2021 of £5.9bn are higher than the Company's market capitalisation of £5.3bn. This was considered to be an indicator of impairment of the Company's largest investment in subsidiary AAM PLC (carrying value £2.1bn). All other investments in subsidiaries (with the exception of abrdn Financial Planning Limited discussed below) were supported by financial assets, or other relevant analysis. The recoverable amount of AAM PLC was therefore determined based on value in use and based on this assessment no impairment of AAM PLC was required at 31 December 2021. The assumptions used in the value in use were the same as those used for the value in use of the asset management group of cash generating units as described in Note 14 of the Group financial statements, with the cash flows being restricted to those related to the AAM PLC group. Management do not consider that there is a significant risk of a material adjustment to the carrying amount of the AAM PLC investment in subsidiary asset within the next financial year.

In the year ended 31 December 2020, the Company impaired its investment in AAM PLC by £1,834m. Following the impairment, £1,834m was transferred from the merger reserve to retained earnings (refer Note J). There was no transfer from the merger reserve in the year ended 31 December 2021.

The impairment of £1,834m was recognised at 30 June 2020, at the same time as a further impairment of the asset management goodwill was recognised in the Group financial statements. Refer Note 14 of the Group financial statements.

The Company's investment in its subsidiary abrdn Financial Planning Limited (aFPL) was impaired during 2021 by £45m (2020: £39m). As detailed in Note A, the Company had increased its investment in aFPL by £40m during the year ended
31 December 2021.

The recoverable amount of aFPL which is its fair value less costs of disposal (FVLCD) at 31 December 2021 was £110m. The FVLCD considered a number of valuation approaches, with the primary approach being a multiples approach based on price to revenue and price to assets under advice (AUAdv). Multiples were based on recent transactions, adjusted to take into account profitability where appropriate, and were benchmarked against trading multiples for aFPL's peer companies. Revenue was based on actuals for the year ended 31 December 2021 and AUAdv was based on actuals at 31 December 2021. The expected cost of disposal was based on past experience of previous transactions. This is a level 3 measurement as it is measured using inputs which are not based on observable market data. The impairment resulted from losses incurred by the business during the year, the impact of the level of profitability on valuation expectations for certain parts of the business, and an impairment of internally developed software (refer Note 14 of the Group financial statements). As the year end carrying value is the recoverable amount any downside sensitivity will lead to a further future impairment loss.
A 20% reduction in recurring revenue and AUAdv would result in a further impairment of £22m.

The recoverable amount at 31 December 2020 of £115m was also based on the FVLCD which similarly considered a number of valuation approaches, with the primary approach being a multiples approach based on price to revenue and price to AUAdv.

(d)  Investments in subsidiaries at FVTPL

Investments in subsidiaries at FVTPL, valued at £1,328m (2020: £445m), relate to holdings in funds over which the Company has control.

B.  Investments in associates and joint ventures

		2021	2020
		£m	£m
Investment in associates measured at cost		10	1,020
Investment in joint venture measured at cost		196	196
Investments in associates and joint ventures		206	1,216

(a)  Investment in associates

The Company has an interest of 25.3% (2020: 25.3%) in Tenet Group Limited, a company incorporated in England and Wales which is measured at cost less impairment.

With effect from 23 February 2021 the Company judged its investment in Phoenix Group Holdings plc (Phoenix) was no longer classified as an associate. Further details are provided in Note 15 of the Group Financial Statements. The Company's shareholding in Phoenix, which remained at 14.4%, was therefore reclassified from an investment in associate measured at cost less impairment to equity securities and interests in pooled investment funds measured at fair value. A reclassification gain of £13m was recognised for the year ended 31 December 2021 as the fair value on 22 February 2021 of £1,023m was higher than the previous carrying value as an associate of £1,010m.

 (b)  Investment in joint venture

The Company has a 50% (2020: 50%) interest in Heng An Standard Life Insurance Company Limited (HASL), a company incorporated in China. Further details on this joint venture are provided in Note 15 of the Group financial statements.

C.  Financial investments

		Fair value through profit or loss		Derivative financial instruments used for hedging		Amortised cost		Total
		2021	2020	2021	2020	2021	2020	2021	2020
	Notes	£m	£m	£m	£m	£m	£m	£m	£m
Investments in subsidiaries measured at FVTPL	A	1,328	445	-	-	-	-	1,328	445
Loan to subsidiaries		-	-	-	-	70	109	70	109
Derivative financial assets	D	-	-	8	1	-	-	8	1
Equity securities and interests in pooled investment funds		1,187	249	-	-	-	-	1,187	249
Debt securities		1	-	-	-	226	326	227	326
Receivables and other financial assets	E	-	28	-	-	30	22	30	50
Cash and cash equivalents		-	-	-	-	20	47	20	47
Total		2,516	722	8	1	346	504	2,870	1,227

The amount of debt securities expected to be recovered or settled after more than 12 months is £62m (2020: £231m). The amount of loans to subsidiaries expected to be recovered or settled after more than 12 months is £70m (2020: £100m). The amount of equity securities and interests in pooled investment funds expected to be recovered or settled after more than 12 months is £708m (2020: £249m).

Under IFRS 9 the Company calculates expected credit losses (ECL) on financial assets which are measured at amortised cost (refer to Note 37 (c) of the Group financial statements), including loans to subsidiaries (which are unrated). At
31 December 2021 the Company does not hold financial assets at amortised cost that it regards as credit-impaired or for which it considers the probability of default would result in material expected credit losses. The expected credit losses recognised were less than £1m (2020: less than £1m). In making this assessment the Company has considered if any evidence is available to indicate the occurrence of an event which would result in a detrimental impact on the estimated future cash flows of these assets.

D.  Derivative financial instruments

The Company uses derivative financial instruments in order to reduce the risk from potential movements in foreign exchange rates.

	2021			2020
	Contract amount	Fair value assets	Fair value  liabilities	Contract amount	Fair value assets	Fair value  liabilities
	£m	£m	£m	£m	£m	£m
Cash flow hedges	554	8	-	549	-	6
Foreign exchange forwards	64	-	-	79	1	-
Derivative financial instruments	618	8	-	628	1	6

The derivative asset of £8m (2020: derivative liability of £6m) is expected to be settled after more than 12 months.

On 18 October 2017, the Company issued subordinated notes with a principal amount of US $750m. In order to manage the foreign exchange risk relating to the principal and coupons payable on these notes the Company entered into
a cross-currency swap which is designated as a hedge of future cash flows.

The maturity profile of the contractual undiscounted cash flows in relation to derivative financial instruments is as follows:

	Within 1 year		2-5 years		6-10 years		11-15 years		Total
	2021	2020	2021	2020	2021	2020	2021	2020	2021	2020
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Cash inflows
Cash flow hedges	24	23	94	93	589	607	-	-	707	723
Foreign exchange forwards	55	62	-	-	-	-	-	-	55	62
Total	79	85	94	93	589	607	-	-	762	785
Cash outflows
Cash flow hedges	(18)	(18)	(73)	(73)	(596)	(614)	-	-	(687)	(705)
Foreign exchange forwards	(55)	(61)	-	-	-	-	-	-	(55)	(61)
Total	(73)	(79)	(73)	(73)	(596)	(614)	-	-	(742)	(766)
Net derivative financial instruments cash flows	6	6	21	20	(7)	(7)	-	-	20	19

E.  Receivables and other financial assets

		2021	2020
		£m	£m
Amounts due from related parties		14	16
Contingent consideration asset		-	28
Other financial assets		16	6
Total receivables and other financial assets		30	50

The carrying amounts disclosed above reasonably approximate the fair values at the year end.

Receivables and other financial assets of £30m (2020: £43m) are expected to be recovered within 12 months.

F.  Other assets

	2021	2020
	£m	£m
Prepayments	56	-
Other	27	-
Other assets	83	-

The amount of Other assets which are expected to be recovered within 12 months is £35m (2020: £nil).

Prepayments of £56m (2020: £nil) relate to the Group's future purchase of certain products in the Phoenix Group's savings business offered through abrdn's Wrap platform together with the Phoenix Group's trustee investment plan business for UK pension scheme clients (refer Note 1(c)(iii) of the Group financial statements). Other includes £27m (2020: £nil) in respect of amounts due from related parties.

G.  Share capital and share premium

Details of the Company's share capital and share premium are given in Note 25 of the Group financial statements including details of the share buyback.

H.  Shares held by trusts

Shares held by trusts relates to shares in abrdn plc that are held by the Standard Life Aberdeen Employee Benefit Trust (SLA EBT) and Standard Life Employee Trust (ET). Further details of these trusts are provided in Note 26 of the Group financial statements.

I.  Retained earnings

Details of the dividends paid on the ordinary shares by the Company are provided in Note 13 of the Group financial statements. Note 13 also includes information regarding the final dividend proposed by the Directors for the year ended
31 December 2021.

J.  Movements in other reserves

The following tables show the movements in other reserves during the year:

	Merger reserve	Equity compensation reserve	Special reserve	Capital redemption reserve	Cash flow hedges	Total
2021	£m	£m	£m	£m	£m	£m
At 1 January	578	79	115	1,058	12	1,842
Fair value gains on cash flow hedges	-	-	-	-	19	19
Realised gains on cash flow hedges transferred to income statement	-	-	-	-	(10)	(10)
Share buyback	-	-	-	1	-	1
Reserves credit for employee share-based payments	-	43	-	-	-	43
Transfer to retained earnings for vested employee share-based payments	-	(36)	-	-	-	(36)
Tax effect of items that may be reclassified subsequently to profit or loss	-	-	-	-	(3)	(3)
At 31 December	578	86	115	1,059	18	1,856
	Merger reserve	Equity compensation reserve	Special reserve	Capital redemption reserve	Cash flow hedges	Total
2020	£m	£m	£m	£m	£m	£m
At 1 January	2,412	53	115	1,037	4	3,621
Fair value losses on cash flow hedges	-	-	-	-	(3)	(3)
Realised losses on cash flow hedges transferred to income statement	-	-	-	-	13	13
Share buyback	-	-	-	21	-	21
Reserves credit for employee share-based payments	-	64	-	-	-	64
Transfer to retained earnings for vested employee share-based payments	-	(38)	-	-	-	(38)
Transfer between reserves on impairment of investment in subsidiaries	(1,834)	-	-	-	-	(1,834)
Tax effect of items that may be reclassified subsequently to profit or loss	-	-	-	-	(2)	(2)
At 31 December	578	79	115	1,058	12	1,842

During 2021, £1m (2020: £21m) was recognised in the capital redemption reserve for the share buyback (refer Note 25 of the Group financial statements).

During 2020, following the impairment loss recognised in that period on the Company's investment in AAM PLC (refer Note A) £1,834m was transferred from the merger reserve to retained earnings.

K.  Other Equity

5.25 % Fixed Rate Reset Perpetual Subordinated Contingent Convertible Notes

On 13 December 2021, the Company issued £210m of 5.25% Fixed Rate Reset Perpetual Subordinated Contingent Convertible Notes (the Notes). The Notes are classified as other equity and have been initially recognised at £207m (the proceeds received less issuance costs of £3m, refer Note 29 (a) of the Group financial statements).

L.   Financial liabilities

		Designated as at fair value through profit or loss		Amortised cost		Total
		2021	2020	2021	2020	2021	2020
	Notes	£m	£m	£m	£m	£m	£m
Subordinated liabilities	M	-	-	644	638	644	638
Other financial liabilities	O	9	-	168	110	177	110
Total		9	-	812	748	821	748

M.  Subordinated liabilities

	2021		2020
	Principal amount	Carrying value	Principal  amount	Carrying value
Subordinated notes:
4.25% US Dollar fixed rate due 30 June 2028	$750m	£552m	$750m	£546m
5.5% Sterling fixed rate due 4 December 2042	£92m	£92m	£92m	£92m
Total subordinated liabilities		£644m		£638m

Subordinated liabilities are considered current if the contractual re-pricing or maturity dates are within one year. The principal amount of all the subordinated liabilities is expected to be settled after more than 12 months. The accrued interest on the subordinated liabilities of less than £1m (2020: less than £1m) is expected to be settled within 12 months.

Further information including the terms and conditions of all subordinated liabilities is given in Note 32 of the Group financial statements.

N.  Deferred tax assets and liabilities

		2021	2020
		£m	£m
Deferred tax assets		113	77

The amount of deferred tax assets expected to be recovered or settled after more than 12 months are £113m (2020: £77m).

Recognised deferred tax

		2021	2020
		£m	£m
Deferred tax assets comprise:
Unused tax losses		120	80
Unrealised losses on cash flow hedges		-	(2)
Gross deferred tax assets		120	78
Less: Offset against deferred tax liabilities		(7)	(1)
Deferred tax assets		113	77
Deferred tax liabilities comprise:
Unrealised gains on cash flow hedges		6	-
Unrealised gains on investments		1	1
Gross deferred tax liabilities		7	1
Less: Offset against deferred tax assets		(7)	(1)
Deferred tax liabilities		-	-
Net deferred tax asset at 31 December		113	77
Movements in net deferred tax assets comprise:
At 1 January		77	35
Amounts credited to profit or loss		39	44
Amounts charged to other comprehensive income		(3)	(2)
At 31 December		113	77

The deferred tax assets recognised are in respect of unrealised losses on cash flow hedges and on unused tax losses including the impact of the revaluation of these losses due to the future impact of the increase in the UK Corporation Tax rate to 25% from 1 April 2023. The deferred tax assets are recognised to the extent that it is probable that the losses will be capable of being offset against future taxable profits (refer Note 9 (c) (ii) of the Group financial statements).

O.  Other financial liabilities

		2021	2020
		£m	£m
Outstanding purchase of investment securities		5	6
Amounts due to related parties		137	47
Collateral held in respect of derivative contracts		15	7
Contingent consideration liability		9	-
Outstanding contractual obligation for share buyback		-	40
Other		11	10
Other financial liabilities		177	110

Other financial liabilities of £172m (2020: £110m) are expected to be settled within 12 months.

P.  Provisions and other liabilities

Of Provisions of £35m (2020: £68m), £35m are expected to be settled within 12 months (2020: £58m). The provisions in 2021 and 2020 relate to separation costs. Refer Note 36 of the Group financial statements for further information and details of the provisions.

Of Other liabilities of £11m (2020: £8m), £11m are expected to be settled within 12 months (2020: £8m) and include £11m (2020: £8m) in respect of amounts due to related parties.

Q.  Contingent liabilities, contingent assets, indemnities and guarantees

(a)  Legal proceedings and regulations

The Company, like other financial organisations, is subject to legal proceedings and complaints in the normal course of its business. All such material matters are periodically reassessed, with the assistance of external professional advisers where appropriate, to determine the likelihood of the Company incurring a liability. Where it is concluded that it is more likely than not that a material outflow will be made a provision is established based on management's best estimate of the amount that will be payable. At 31 December 2021, there are no identified contingent liabilities expected to lead to a material exposure. 

(b)  Indemnities and guarantees

Under the trust deed in respect of the UK Standard Life defined benefit pension plan, ACSL, the principal employer, must pay contributions to the pension plan as the trustees' actuary may certify necessary. The Company has guaranteed the obligations of ACSL in relation to this plan. In addition the Company has guaranteed similar obligations in respect of certain other subsidiaries' UK and Ireland defined benefit pension plans.

None of these guarantees give rise to any liabilities at 31 December 2021 (2020: none).

R.  Related party transactions

(a)   Key management personnel

The Directors and key management personnel of the Company are considered to be the same as for the Group.  See Note 44 of the Group financial statements for further information.

S.  Events after the reporting date

On 28 January 2022, the Group announced that it had sold an aggregate of 39,981,442 ordinary shares of its shareholding in Phoenix, representing approximately 4% of Phoenix's issued share capital, at a price of 660 pence per share, raising aggregate gross sale proceeds of c£264 million. As a result of the sale, the Company's shareholding has reduced to 10.4% and it continues to be classified as equity securities and interests in pooled investment funds, measured at fair value. 

On 2 December 2021 the Group announced the proposed acquisition of 100% of the issued share capital of Antler Holdco Limited, the holding company of interactive investor Limited (interactive investor) for cash consideration of £1.49bn, subject to certain adjustments. interactive investor is the leading subscription-based, digitally enabled, direct investing platform in the UK and, as the acquisition constitutes a Class 1 transaction under the Listing Rules, a Class 1 Circular was published on 9 February 2022. Completion is subject to the satisfaction of certain conditions, including relevant regulatory approvals and the approval of the acquisition by the Group's shareholders at a General Meeting on 15 March 2022.

9. Supplementary information

9.1  Alternative performance measures APM

We assess our performance using a variety of measures that are not defined under IFRS and are therefore termed alternative performance measures (APMs). The APMs that we use may not be directly comparable with similarly named measures used by other companies. We have presented below reconciliations from these APMs to the most appropriate measure prepared in accordance with IFRS. All APMs should be read together with the IFRS consolidated income statement, IFRS consolidated statement of financial position and IFRS consolidated statement of cash flows, which are presented in the Group financial statements section of this report and related metrics. Adjusted operating profit excludes certain items which are likely to be recurring such as restructuring costs, amortisation of certain intangibles, dividends from significant listed investments and the share of profit or loss from joint ventures.

R	Metric used for executive remuneration in 2022. See page 104 for more information.
Definition		Purpose
Adjusted operating profit APM  R
Adjusted operating profit before tax is the Group's key APM. Adjusted operating profit includes the results of the Group's three growth vectors: Investments, Adviser and Personal, along with Corporate/Strategic. It excludes the Group's adjusted net financing costs and investment return, and discontinued operations. Adjusted operating profit also excludes the impact of the following items: -  Restructuring costs and corporate transaction expenses. Restructuring includes the impact of major regulatory change. -  Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts. -  Profit or loss arising on the disposal of a subsidiary, joint venture or equity accounted associate. -  Change in fair value of/dividends from significant listed investments. -  Share of profit or loss from associates and joint ventures. -  Impairment loss/reversal of impairment loss recognised on investments in associates and joint ventures accounted for using the equity method. -  Fair value movements in contingent consideration. -  Items which are one-off and, due to their size or nature, are not indicative of the long-term operating performance of the Group. Further details are included in Note 12 of the Group financial statements.		Adjusted operating profit has replaced adjusted profit before tax as the Group's key APM. Adjusted operating 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. Segment reporting used in management information is reported to the level of adjusted operating profit, following the changes to adjusted profit before tax discussed below.
Fee based revenue APM
Fee based revenue includes revenue we generate from asset management charges (AMCs), platform charges and other transactional charges. AMCs are earned on products such as mutual funds, and are calculated as a percentage fee based on the assets held. Investment risk on these products rests principally with the client, with our major indirect exposure to rising or falling markets coming from higher or lower AMCs. Fee based revenue is shown net of costs of sale, such as commissions and similar charges.		Fee based revenue is a component of adjusted operating profit and provides the basis for reporting of the fee revenue yield financial ratio. Fee based revenue is also used to calculate the cost/income ratio.
Adjusted operating expenses APM
Adjusted operating expenses is a component of adjusted operating profit and relates to the day-to-day expenses of managing our business. Adjusted operating expenses excludes restructuring and corporate transaction expenses. Adjusted operating expenses also excludes amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts.		Adjusted operating expenses is a component of adjusted operating profit and is used to calculate the cost/income ratio.
Adjusted profit before tax APM
In addition to the results included in adjusted operating profit above, adjusted profit before tax includes adjusted net financing costs and investment return. Previously adjusted profit included the pre-tax adjusted results from the Group's associates and joint ventures accounted for using the equity method. The reason for the change is to make the results more understandable, following the reclassification of HDFC Life and Phoenix from associates to equity investments.		Adjusted profit before tax is a key input to the adjusted earnings per share measure.

Definition		Purpose
Adjusted net financing costs and investment return APM
Adjusted net financing costs and investment return (previously named Capital management) 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.		Adjusted net financing costs and investment return is a component of adjusted profit before tax.
Cost/income ratio APM
This is an efficiency measure that is calculated as adjusted operating expenses divided by fee based revenue in the period.		This ratio is used by management to assess efficiency and reported to the Board and executive leadership team.
Fee revenue yield (bps) APM
The fee revenue yield is calculated as annualised fee based revenue (excluding performance fees and revenue for which there are no attributable assets) divided by monthly average fee based assets.		The average revenue yield on fee based business is a measure that illustrates the average margin being earned on the assets that we manage, administer or advise our clients on.
Adjusted diluted earnings per share APM
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 11 of the Group financial statements.		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 leadership team.
Adjusted capital generation  APM
Adjusted capital generation is part of the analysis of movements in IFPR regulatory capital. Adjusted capital generation is calculated as adjusted profit after tax less returns relating to pension schemes in surplus, which do not benefit regulatory capital. It also includes dividends from associates, joint ventures and significant listed investments.		This measure aims to show how adjusted profit contributes to regulatory capital, and therefore provides insight into our ability to generate capital that is deployed to support value for shareholders.
Adjusted diluted capital generation per share APM R
Adjusted diluted capital generation per share is calculated as adjusted capital generation divided by the weighted average number of diluted ordinary shares outstanding.		This ratio is a measure used to assess performance for remuneration purposes.
Cash and liquid resources APM
Cash and liquid resources are IFRS cash and cash equivalents (netted down for overdrafts), money market instruments and holdings in money market funds. It also includes surplus cash that has been invested in liquid assets such as high quality corporate bonds, gilts and pooled investment funds. Seed capital and co-investments are excluded.		The purpose of this measure is to demonstrate how much cash and invested assets we hold and can be readily accessed.

9.1.1  Adjusted operating profit and adjusted profit

Reconciliation of adjusted operating profit and adjusted profit to IFRS profit by component

The key components of adjusted operating profit are fee based revenue and adjusted operating expenses. These components provide a meaningful analysis of our adjusted results. The table below provides a reconciliation of movements between adjusted operating profit component measures and relevant IFRS terms.

A reconciliation of Adjusted operating expenses to the IFRS item Total administrative and other expenses, and a reconciliation of Adjusted net financing costs and investment return to the IFRS item Net gains on financial instruments and other income are provided in Note 2b(ii) of the Group financial statements. A reconciliation of Fee based revenue to the IFRS item Revenue from contracts with customers is provided in Note 3 of the Group financial statements.

IFRS term	IFRS	Presentation differences	Adjusting items	Adjusted profit		Adjusted profit term
2021	£m	£m	£m	£m
Net operating revenue	1,543	-	(28)	1,515		Fee based revenue
Total administrative and other expenses	(1,556)	(9)	373	(1,192)		Adjusted operating expenses1
	(13)	(9)	345	323		Adjusted operating profit
Net gains on financial instruments and other income	(183)	(20)	203	-		Adjusted net financing costs and investment return
Finance costs	(30)	29	1	-		N/A
Profit on disposal of subsidiaries and other operations	127	-	(127)	-		N/A
Profit on disposal of interests in associates	1,236	-	(1,236)	-		N/A
Share of profit or loss from associates and joint ventures	(22)	-	22	-		N/A
Profit before tax from continuing operations	1,115	-	(792)	323		Adjusted profit before tax from continuing operations
Total tax expense	(120)	-	94	(26)		Tax on adjusted profit
Profit for the year from continuing operations	995	-	(698)	297		Adjusted profit after tax from continuing operations
Profit for the year from discontinued operations	-	-	-	-		Adjusted profit after tax from discontinued operations
Profit for the year	995	-	(698)	297		Adjusted profit after tax

1.  Adjusted operating expenses includes staff and other related costs of £643m compared with IFRS staff costs and other employee-related costs of £604m. The difference primarily relates to the inclusion of contractor, temporary agency staff and recruitment and training costs of £27m (IFRS basis: Reported within other administrative expenses) and gains on funds to hedge deferred bonus awards (£5m) (IFRS basis: Reported within other net gains on financial instruments and other income) within staff and other related costs. IFRS staff costs and other employee-related costs includes the benefit from the net interest credit relating to the staff pension schemes of £17m (Adjusted profit basis: Reported within adjusted net financing costs and investment return).

IFRS term	IFRS	Presentation differences	Adjusting items	Adjusted  profit		Adjusted profit term
2020	£m	£m	£m	£m
Net operating revenue	1,423	2	-	1,425		Fee based revenue
Total administrative and other expenses	(2,716)	9	1,501	(1,206)		Adjusted operating expenses
	(1,293)	11	1,501	219		Adjusted operating profit
Net gains on financial instruments and other income	146	(41)	(84)	21		Adjusted net financing costs and investment return
Finance costs	(30)	30	-	-		N/A
Profit on disposal of subsidiaries and other operations	8	-	(8)	-		N/A
Profit on disposal of interests in associates	1,858	-	(1,858)	-		N/A
Share of profit or loss from associates and joint ventures	194	-	(194)	-		N/A
Impairment of associates and joint ventures	(45)	-	45	-		N/A
Profit before tax from continuing operations	838	-	(598)	240		Adjusted profit before tax from continuing operations
Total tax expense	15	-	(53)	(38)		Tax on adjusted profit
Profit for the year from continuing operations	853	-	(651)	202		Adjusted profit after tax from continuing operations
Profit for the year from discontinued operations	(15)	-	15	-		Adjusted profit after tax from discontinued operations
Profit for the year	838	-	(636)	202		Adjusted profit after tax

Presentation differences primarily relate to amounts presented in a different line item of the consolidated income statement.

Analysis of adjusting items

The table below provides detail of the adjusting items made in the calculation of adjusted profit before tax:

	Continuing operations		Discontinued operations		Total
	2021	2020	2021	2020	2021	2020
	£m	£m	£m	£m	£m	£m
Restructuring and corporate transaction expenses	(259)	(316)	-	-	(259)	(316)
Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts	(99)	(1,180)	-	-	(99)	(1,180)
Profit on disposal of subsidiaries and other operations	127	8	-	-	127	8
Profit on disposal of interests in associates	1,236	1,858	-	-	1,236	1,858
Change in fair value of significant listed investments	(298)	65	-	-	(298)	65
Dividends from significant listed investments	71	-	-	-	71	-
Share of profit or loss from associates and joint ventures	(22)	194	-	-	(22)	194
Impairment of interests in joint ventures	-	(45)	-	-	-	(45)
Other	36	14	-	(15)	36	(1)
Total adjusting items including results of associates and joint ventures	792	598	-	(15)	792	583

An explanation for why individual items are excluded from adjusted profit is set out below:

-  Restructuring and corporate transaction expenses are excluded from adjusted profit. Restructuring includes the impact of major regulatory change. By highlighting and excluding these costs we aim to give shareholders a fuller understanding of the performance of the business. Restructuring and corporate transaction expenses include costs relating to the integration of businesses acquired and our transformation programme. Other restructuring costs excluded from adjusted profit relate to projects which have a significant impact on the way the Group operates. Costs are only excluded from adjusted profit where they are out with business as usual activities and the costs would not have been incurred had the restructuring project not taken place. For headcount related costs, where duplicate posts are identified as a result of an integration or transformation plan, the duplicated cost will be treated as a restructuring cost from the beginning of the process which eliminates the duplicate cost. Branding costs which relate to future benefits such as sponsorship, media and marketing are included in adjusted operating expenses, with operational elements such as system changes and fund renaming included in restructuring costs. The 2021 expenses mainly comprised of costs of £35m (2020: £79m) in respect of integration and related synergies, £27m (2020: £112m) in respect of Phoenix separation costs, £65m (2020: £30m) of other headcount reduction related costs and property restructuring, £64m (2020: £69m) of other transformation costs such as finance and platform transformation, and £35m (2020: £4m) of corporate transaction related costs including the proposed acquisition of interactive investor and the purchase of certain products from Phoenix announced in February 2021.

-  Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts is included as an adjusting item. This is consistent with peers and therefore excluding these items aids comparability. Highlighting this as an adjusting item aims to give a fuller understanding of these accounting impacts which arise where businesses have been acquired but do not arise where businesses have grown organically. Further details are provided in Note 14 of the Group financial statements.

-  Profit on disposal of subsidiaries and other operations of £127m (2020: £8m), primarily relates to the sales of Parmenion and Bonaccord which completed on 30 June 2021 and 30 September 2021 respectively. These items are excluded from adjusted profit as they are non-recurring in nature.

-  Profit on disposal of interests in associates of £1,236m (2020: £1,858m), includes one-off accounting gains following the reclassification of HDFC Asset Management (£897m) and Phoenix (£68m) from investment in associates accounted for using the equity method to equity securities measured at fair value and £271m from the sale of 5% of shares in HDFC Asset Management. Details are provided in Note 15 of the Group financial statements. These items are excluded from adjusted profit as they are volatile and the accounting gains are non-recurring in nature.

-  The change in fair value of significant listed investments was negative £298m (2020: positive £65m) and represents the impact of market movements on our holdings in HDFC Life (£52m reduction in value including impact of stake sale in June 2021), in Phoenix (£82m reduction) from February 2021 and in HDFC Asset Management (£164m reduction) from September 2021. Excluding fair value movements on significant listed investments for the purposes of adjusted profit is aligned with our treatment of gains on disposal for these holdings when they were classified as an associate, and reflects that the fair value movements are not indicative of the long-term operating performance of the Group.

-  Dividends from significant listed investments relates to our shareholdings in HDFC Life, Phoenix and HDFC Asset Management that were previously associates and were reclassified on 3 December 2020, 23 February 2021 and
29 September 2021 respectively. Following the reclassification, dividends received are now recognised as income within our financial statements. The £71m in 2021 relates to dividends received from Phoenix (£69m) and HDFC Life (£2m). Dividends from significant listed investments are included in adjusting items, as such dividends result in fair value movements.

-  Share of profit or loss from associates and joint ventures reduced to a loss of £22m (2020: profit £194m). Following the reclassifications noted above, only HASL and Virgin Money UTM are now classified as associates and joint ventures. Associate and joint venture results are excluded from adjusted profit to help in understanding the performance of our core business separately from our strategic holdings.

-  The impairment of associates and joint ventures in 2020 of £45m relates to our joint venture with Virgin Money. More details are provided in Note 15 of the Group financial statements.

-  Details on items classified as 'Other' in the table above are provided in Note 12 of the Group financial statements. In 2021 this includes a £25m net release of deferred income, related to the 23 February 2021 announcement of the simplification and extension of the strategic partnership with Phoenix.

Reconciliation to previously disclosed information

FY 2020 as previously disclosed		Asset management associates and joint ventures	Insurance associates and joint ventures			FY 2020 on revised basis
	£m	£m	£m	£m
Fee based revenue	1,425	-	-	1,425		Fee based revenue
Adjusted operating expenses	(1,206)	-	-	(1,206)		Adjusted operating expenses
Adjusted operating profit	219	-	-	219		Adjusted operating profit
Capital management	21	-	-	21		Adjusted net financing costs and investment return
Share of associates' and joint ventures' profit before tax	247	(44)	(203)	-		N/A
Adjusted profit before tax	487	(44)	(203)	240		Adjusted profit before tax
Tax on adjusted profit	(38)	-	-	(38)		Tax on adjusted profit
Share of associates' and joint ventures' tax expense	(38)	12	26	-		N/A
Adjusted profit after tax	411	(32)	(177)	202		Adjusted profit after tax
Adjusted for the following items						Adjusted for the following items
Restructuring and corporate transaction expenses	(355)	10	29	(316)		Restructuring and corporate transaction expenses
Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts	(1,287)	-	107	(1,180)		Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts
Profit on disposal of subsidiaries and other operations	8	-	-	8		Profit on disposal of subsidiaries and other operations
Profit on disposal of interests in associates	1,858	-	-	1,858		Profit on disposal of interests in associates
Impairment of associates and joint ventures	(45)	45	-	-		N/A
Change in fair value of significant listed investments	65	-	-	65		Change in fair value of significant listed investments
Investment return variances and economic assumption changes	46	-	(46)	-		N/A
N/A	-	-	-	-		Dividends from significant listed investments
N/A	-	42	152	194		Share of profit or loss from associates and joint ventures
N/A	-	(45)	-	(45)		Impairment of joint ventures
Other	78	-	(64)	14		Other
N/A	368	52	178	598		Total adjusting items including results of associates and joint ventures
Tax on adjusting items	53	-	-	53		Tax on adjusting items
Share of associates' and joint ventures' tax expense on adjusting items	21	(20)	(1)	-		N/A
Profit attributable to non-controlling interests (preference shares)	(5)	-	-	(5)		Profit attributable to non-controlling interests (preference shares)
Profit for the year attributable to equity shareholders of abrdn plc	848	-	-	848		Profit for the year attributable to equity shareholders of abrdn plc
Profit attributable to non-controlling interests						Profit attributable to non-controlling interests
Preference shares	5	-	-	5		Preference shares
Profit for the year	853	-	-	853		Profit for the year

9.1.2  Cost/income ratio

	2021	2020
Adjusted operating expenses (£m)	(1,192)	(1,206)
Fee based revenue (£m)	1,515	1,425
Cost/income ratio (%)	79	85

9.1.3  Fee revenue yield (bps)

	Average AUMA (£bn)			Fee based revenue (£m)			Fee revenue yield (bps)
	2021	2020		2021	2020		2021	2020
Institutional and Wholesale1	250.1	235.1		979	922		38.8	38.8
Insurance	205.0	204.7		206	224		10.0	10.9
Investments1	455.1	439.8		1,185	1,146		25.9	25.8
Adviser	71.5	61.5		178	137		24.9	22.3
Personal1	14.0	12.6		92	80		61.0	58.5
Parmenion2	3.9	7.3		14	25		38.1	34.2
Eliminations	(11.3)	(10.2)		N/A	N/A		N/A	N/A
Fee revenue yield1	533.2	511.0		1,469	1,388		27.3	26.9
SL Asia				-	7
Performance fees				46	30
Fee based revenue				1,515	1,425

Analysis of Institutional and Wholesale by asset class^1,3

	Average AUM (£bn)			Fee based revenue (£m)			Fee revenue yield (bps)
	2021	2020		2021	2020		2021	2020
Equities	69.5	61.9		449	403		64.5	65.1
Fixed income	46.6	47.4		132	139		28.3	29.3
Multi-asset	35.1	33.6		118	125		33.7	37.3
Private equity	11.2	11.7		58	57		51.8	48.8
Real assets	36.1	31.5		170	149		47.2	47.6
Alternatives	20.4	19.0		25	20		12.3	10.4
Quantitative	5.8	6.6		4	4		6.8	5.6
Liquidity	25.4	23.4		15	16		6.0	6.8
Institutional and Wholesale	250.1	235.1		971	913		38.8	38.8

1.  Institutional and Wholesale fee revenue yield excludes revenue of £8m (2020: £9m) and Personal fee revenue yield excludes revenue of £7m (2020: £7m) for which there are no attributable assets.

2.  Parmenion is included in the Corporate/Strategic vector. The sale of Parmenion completed on 30 June 2021 and the fee revenue yield reflects the position as at the date of disposal.

3.  Analysis by asset class has been revised following a strategic review of our private markets capabilities. The changes reflect the creation of a real assets franchise, which brings together our real estate and infrastructure businesses, and consolidation of our private credit capabilities within fixed income. Comparatives have been restated on this basis.

Analysis of Adviser revenue yield

Fee based revenue (gross basis) includes revenue passed to Phoenix as shown below in other cost of sales. The cost of sales are netted against fee based revenue as presented in 9.1.3 above. The fee revenue yield presented on a gross basis in the table below represents the average bps charge payable by clients.

	Average AUMA (£bn)			Fee based revenue (£m)			Fee revenue yield (bps)
	2021	2020		2021	2020		2021	2020
Fee based revenue (net of cost of sales)	71.5	61.5		178	137		24.9	22.3
Add: Other cost of sales - Note 3 (c)	N/A	N/A		2	27		N/A	N/A
Fee based revenue (gross of cost of sales)	71.5	61.5		180	164		25.1	26.7

9.1.4  Adjusted capital generation

The table below provides a reconciliation of movements between adjusted profit after tax and adjusted capital generation. A reconciliation of adjusted profit after tax to IFRS profit for the year is included earlier in this section.

	2021	2020
	£m	£m
Adjusted profit after tax1	297	202
Less net interest credit relating to the staff pension schemes	(17)	(20)
Add dividends received from associates, joint ventures and significant listed investments	86	80
Adjusted capital generation	366	262

1.  FY 2020 restated to exclude the share of associates and joint ventures adjusted profit after tax.

Net interest credit relating to the staff pension schemes

The net interest credit relating to the staff pension schemes is the contribution to adjusted profit before tax from defined benefit pension schemes which are in surplus and reconciled below:

	2021	2020
	£m	£m
Total income recognised in the consolidated income statement per Note 33 (c) of the Group financial statements	17	19
Remove IFRS charge relating to schemes in deficit	-	1
Net interest credit relating to the staff pension schemes	17	20

Dividends received from associates, joint ventures and significant listed investments

An analysis is provided below:

	2021	2020
	£m	£m
Phoenix	69	67
HDFC Life	2	-
HDFC Asset Management	15	13
Dividends received from associates, joint ventures and significant listed investments	86	80

The table below provides detail of dividend coverage on an adjusted capital generation basis.

	2021	2020
Adjusted capital generation (£m)	366	262
Full year dividend (£m)	309	313
Dividend cover on an adjusted capital generation basis (times)	1.18	0.84

 

9.1.5  Adjusted diluted capital generation per share

A reconciliation of adjusted capital generation to adjusted profit after tax is included in 9.1.4 above.

	2021	2020
Adjusted capital generation (£m)	366	262
Weighted average number of diluted ordinary shares outstanding (millions) - Note 11	2,159	2,239
Adjusted diluted capital generation per share (pence)	17.0	11.7

9.1.6  Cash and liquid resources

The table below provides a reconciliation between IFRS cash and cash equivalents and cash and liquid resources. Seed capital and co-investments are excluded. Details of seed capital and co-investments are provided in Note 37 (b) in the Group financial statements.

	2021	2020
	£bn	£bn
Cash and cash equivalents per Note 23 of the Group financial statements	1.9	1.5
Bank overdrafts - Note 23	(0.1)	(0.2)
Debt securities excluding third party interests1 - Note 37 (c)(i)	1.1	1.0
Corporate funds held in absolute return funds - Note 37 (b)(i)(i)	0.2	0.2
Cash and liquid resources	3.1	2.5

1.  Excludes £76m (2020: £54m) relating to seeding, see Note 37(b).

9.2    Investment performance

Definition			Purpose
Investment performance  R
Investment performance has been aggregated using a money weighted average of our assets under management which are outperforming their respective benchmark. Calculations for investment performance are made gross of fees with the exception of those for which the stated comparator is net of fees. Benchmarks differ by fund and are defined in the investment management agreement or prospectus, as appropriate. The investment performance calculation covers all funds that aim to outperform a benchmark, with certain assets excluded where this measure of performance is not appropriate or expected, such as private markets and execution only mandates, as well as replication tracker funds which aim to perform in line with a given index.			As an asset managing business this measure demonstrates our ability to generate investment returns for our clients.

	1 year			3 years			5 years
% of AUM ahead of benchmark	2021	2020		2021	2020		2021	2020
Equities	36	73		72	74		61	62
Fixed income	59	78		82	81		87	85
Multi-asset	41	61		39	33		44	36
Real assets	83	41		52	37		50	44
Alternatives	87	95		98	95		98	93
Quantitative	98	32		44	17		68	24
Liquidity	88	94		87	89		84	87
Total	57	71		67	66		67	68

9.3  Assets under management and administration and flows

Definition			Purpose
AUMA
AUMA is a measure of the total assets we manage, administer or advise on behalf of our clients. It includes assets under management (AUM), assets under administration (AUA) and assets under advice (AUAdv). AUM is a measure of the total assets that we manage on behalf of individual and institutional clients. AUM also includes captive assets managed on behalf of the Group including assets managed for corporate purposes. AUA is a measure of the total assets we administer for clients through platform products such as ISAs and SIPPs. AUAdv is a measure of the total assets we advise our clients on, for which there is an ongoing charge.			The amount of funds that we manage, administer or advise directly impacts the level of fee based revenue that we receive.
Net flows R
Net flows represent gross flows less redemptions. Gross flows are new funds from clients. Redemptions are the money withdrawn by clients during the period.			The level of net flows that we generate directly impacts the level of fee based revenue that we receive.

9.3.1  Analysis of AUMA

	Opening AUMA at 1 Jan 2021	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions2	Closing AUMA at 31 Dec 2021
12 months ended 31 December 2021	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Institutional	171.7	22.5	(25.4)	(2.9)	5.4	(0.2)	174.0
Wholesale	80.0	19.4	(21.6)	(2.2)	1.3	-	79.1
Insurance	205.2	21.5	(27.0)	(5.5)	10.8	-	210.5
Investments	456.9	63.4	(74.0)	(10.6)	17.5	(0.2)	463.6
Adviser	67.0	9.1	(5.2)	3.9	5.3	-	76.2
Personal1	13.3	1.7	(1.1)	0.6	0.5	-	14.4
Parmenion	8.1	0.7	(0.4)	0.3	0.3	(8.7)	-
Eliminations1	(10.7)	(2.6)	2.2	(0.4)	(1.0)	-	(12.1)
Total AUMA	534.6	72.3	(78.5)	(6.2)	22.6	(8.9)	542.1

	Opening AUMA at 1 Jan 2020	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions	Closing AUMA at 31 Dec 2020
12 months ended 31 December 2020	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Institutional	160.6	26.6	(23.4)	3.2	7.9	-	171.7
Wholesale	76.1	23.2	(26.1)	(2.9)	6.8	-	80.0
Insurance	235.8	17.6	(50.4)	(32.8)	2.2	-	205.2
Investments	472.5	67.4	(99.9)	(32.5)	16.9	-	456.9
Adviser	62.6	6.3	(4.4)	1.9	2.5	-	67.0
Personal1	12.8	1.1	(1.1)	-	0.5	-	13.3
Parmenion	6.9	1.5	(0.5)	1.0	0.2	-	8.1
Eliminations1	(10.2)	(2.0)	2.6	0.6	(1.1)	-	(10.7)
Total AUMA	544.6	74.3	(103.3)	(29.0)	19.0	-	534.6

1. Eliminations remove the double count reflected in Investments, Adviser and Personal. The Personal vector includes assets that are reflected in both the discretionary investment management and financial planning businesses. This double count is also removed within Eliminations.

2. Corporate actions relate to the acquisition of a majority interest in Tritax on 1 April 2021 (£5.8bn) and the disposals of our domestic real estate business in the Nordics region on 31 May 2021 (£3.3bn) and Bonaccord/Hark on 30 September 2021 (£1.5bn). Corporate actions also include the impact of the decision to exit the Total Return Bond strategy of £1.2bn. The sale of Parmenion completed on 30 June 2021.

9.3.2  Quarterly net flows

	3 months to 31 Dec 21	3 months to 30 Sep 21		3 months to 30 Jun 21	3 months to 31 Mar 21	3 months to 31 Dec 20
15 months ended 31 December 2021	£bn	£bn		£bn	£bn	£bn
Institutional	2.5	(2.0)		(0.7)	(2.7)	1.4
Wholesale	(0.8)	(0.3)		(0.5)	(0.6)	(0.4)
Insurance	(0.4)	(1.3)		(1.5)	(2.3)	(2.6)
Investments	1.3	(3.6)		(2.7)	(5.6)	(1.6)
Adviser	1.1	0.8		0.9	1.1	0.5
Personal	-	0.1		0.3	0.2	(0.1)
Parmenion	-	-		0.2	0.1	0.2
Eliminations	(0.2)	(0.1)		-	(0.1)	0.2
Total net flows	2.2		(2.8)	(1.3)	(4.3)	(0.8)

9.4  Institutional and Wholesale AUM¹

Detailed asset class split

	Opening AUM at 1 Jan 2021	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions	Closing AUM at 31 Dec 2021
12 months ended 31 December 2021	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Developed markets equities	14.7	3.0	(3.6)	(0.6)	2.9	-	17.0
Emerging markets equities	19.0	2.0	(3.7)	(1.7)	(0.9)	-	16.4
Asia Pacific equities	26.6	4.8	(5.7)	(0.9)	(0.4)	-	25.3
Global equities	8.9	1.8	(1.6)	0.2	1.2	-	10.3
Total equities	69.2	11.6	(14.6)	(3.0)	2.8	-	69.0
Developed markets credit	32.2	5.9	(6.6)	(0.7)	(2.0)	(1.2)	28.3
Developed markets rates	2.8	0.6	(0.6)	-	0.1	-	2.9
Emerging markets fixed income	12.2	3.5	(3.1)	0.4	(0.4)	-	12.2
Private credit	1.0	1.5	-	1.5	0.8	(0.9)	2.4
Total fixed income	48.2	11.5	(10.3)	1.2	(1.5)	(2.1)	45.8
Absolute return	11.5	0.8	(2.0)	(1.2)	(0.3)	-	10.0
Diversified growth/income	0.6	0.1	(0.2)	(0.1)	-	-	0.5
MyFolio	15.6	2.1	(2.5)	(0.4)	2.5	-	17.7
Other multi-asset	10.0	1.2	(1.4)	(0.2)	(2.0)	-	7.8
Total multi-asset	37.7	4.2	(6.1)	(1.9)	0.2	-	36.0
Total private equity	10.9	1.5	(1.2)	0.3	1.7	(0.6)	12.3
UK real estate	9.2	0.9	(0.8)	0.1	4.8	5.8	19.9
European real estate	12.1	1.0	(0.4)	0.6	0.9	(3.3)	10.3
Global real estate	1.8	0.3	(0.4)	(0.1)	0.1	-	1.8
Real estate multi-manager	1.6	0.1	(0.1)	-	(0.4)	-	1.2
Infrastructure equity	5.3	1.0	(0.4)	0.6	0.3	-	6.2
Total real assets	30.0	3.3	(2.1)	1.2	5.7	2.5	39.4
Total alternatives	19.5	2.0	(1.9)	0.1	1.2	-	20.8
Total quantitative	6.4	1.2	(1.2)	-	(0.9)	-	5.5
Total liquidity	29.8	6.6	(9.6)	(3.0)	(2.5)	-	24.3
Total	251.7	41.9	(47.0)	(5.1)	6.7	(0.2)	253.1

1. Analysis by asset class has been revised following a strategic review of our private markets capabilities. The changes reflect the creation of a real assets franchise, which brings together our real estate and infrastructure businesses, and consolidation of our private credit capabilities within fixed income. Comparatives have been restated on this basis.

	Opening AUM at 1 Jan 2020	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions	Closing AUM at 31 Dec 2020
12 months ended 31 December 2020	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Developed markets equities	14.7	3.6	(3.8)	(0.2)	0.2	-	14.7
Emerging markets equities	21.6	1.6	(6.2)	(4.6)	2.0	-	19.0
Asia Pacific equities	23.3	4.2	(4.8)	(0.6)	3.9	-	26.6
Global equities	9.4	1.4	(2.7)	(1.3)	0.8	-	8.9
Total equities	69.0	10.8	(17.5)	(6.7)	6.9	-	69.2
Developed markets credit	32.2	6.8	(9.3)	(2.5)	2.5	-	32.2
Developed markets rates	3.3	0.7	(0.9)	(0.2)	(0.3)	-	2.8
Emerging markets fixed income	10.9	3.8	(2.5)	1.3	-	-	12.2
Private credit	-	0.6	-	0.6	0.4	-	1.0
Total fixed income	46.4	11.9	(12.7)	(0.8)	2.6	-	48.2
Absolute return	12.7	0.7	(2.6)	(1.9)	0.7	-	11.5
Diversified growth/income	1.9	0.2	(0.4)	(0.2)	(1.1)	-	0.6
MyFolio	15.7	2.4	(2.9)	(0.5)	0.4	-	15.6
Other multi-asset	4.2	1.0	(1.0)	-	5.8	-	10.0
Total multi-asset	34.5	4.3	(6.9)	(2.6)	5.8	-	37.7
Total private equity	11.8	1.6	(1.0)	0.6	(1.5)	-	10.9
UK real estate	13.4	0.5	(1.3)	(0.8)	(3.4)	-	9.2
European real estate	12.1	1.0	(1.0)	-	-	-	12.1
Global real estate	1.0	0.3	(0.3)	-	0.8	-	1.8
Real estate multi-manager	1.4	0.3	(0.1)	0.2	-	-	1.6
Infrastructure equity	4.2	0.2	-	0.2	0.9	-	5.3
Total real assets	32.1	2.3	(2.7)	(0.4)	(1.7)	-	30.0
Total alternatives	17.7	2.4	(1.1)	1.3	0.5	-	19.5
Total quantitative	7.8	1.3	(1.6)	(0.3)	(1.1)	-	6.4
Total liquidity	17.4	15.2	(6.0)	9.2	3.2	-	29.8
Total	236.7	49.8	(49.5)	0.3	14.7	-	251.7

9.5  Analysis of Insurance

	Opening AUM at 1 Jan 2021	Gross inflows	Redemptions	Net  flows	Market and other movements	Corporate actions	Closing AUM at 31 Dec 2021
12 months ended 31 December 2021	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Phoenix	171.5	17.1	(20.3)	(3.2)	7.2	-	175.5
Lloyds	31.8	4.4	(6.3)	(1.9)	3.7	-	33.6
Other	1.9	-	(0.4)	(0.4)	(0.1)	-	1.4
Total	205.2	21.5	(27.0)	(5.5)	10.8	-	210.5

 

	Opening AUM at 1 Jan 2020	Gross inflows	Redemptions	Net  flows	Market and other movements	Corporate actions	Closing AUM at 31 Dec 2020
12 months ended 31 December 2020	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Phoenix	169.7	13.0	(18.7)	(5.7)	7.5	-	171.5
Lloyds	64.5	4.2	(31.5)	(27.3)	(5.4)	-	31.8
Other	1.6	0.4	(0.2)	0.2	0.1	-	1.9
Total	235.8	17.6	(50.4)	(32.8)	2.2	-	205.2

9.6  Analysis of total AUM (excluding Parmenion)

9.6.1   AUM by geography

	31 Dec 2021				31 Dec 2020
	Institutional and Wholesale	Insurance	Personal1	Total	Institutional and Wholesale	Insurance	Personal1	Total
	£bn	£bn	£bn	£bn	£bn	£bn	£bn	£bn
UK	120.3	210.5	8.9	339.7	116.5	205.2	7.8	329.5
Europe, Middle East and Africa (EMEA)	62.5	-	-	62.5	65.9	-	-	65.9
Asia Pacific (APAC)	19.2	-	-	19.2	16.8	-	-	16.8
Americas	51.1	-	-	51.1	52.5	-	-	52.5
Total AUM	253.1	210.5	8.9	472.5	251.7	205.2	7.8	464.7

9.6.2   AUM by asset class²

	31 Dec 2021				31 Dec 2020
	Institutional and Wholesale	Insurance	Personal1	Total	Institutional and Wholesale	Insurance	Personal1	Total
	£bn	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Equities	69.0	53.4	-	122.4	69.2	48.8	-	118.0
Fixed income	45.8	67.4	-	113.2	48.2	69.0	-	117.2
Multi-asset	36.0	8.8	8.9	53.7	37.7	7.0	7.8	52.5
Private equity	12.3	1.6	-	13.9	10.9	1.8	-	12.7
Real assets	39.4	8.3	-	47.7	30.0	8.3	-	38.3
Alternatives	20.8	-	-	20.8	19.5	-	-	19.5
Quantitative	5.5	50.8	-	56.3	6.4	45.0	-	51.4
Liquidity	24.3	20.2	-	44.5	29.8	25.3	-	55.1
Total AUM	253.1	210.5	8.9	472.5	251.7	205.2	7.8	464.7

1.  Excludes assets under advice of £5.5bn at 31 December 2021 (2020: £5.5bn).

2. Analysis by asset class has been revised following a strategic review of our private markets capabilities. The changes reflect the creation of a real assets franchise, which brings together our real estate and infrastructure businesses, and consolidation of our private credit capabilities within fixed income. Comparatives have been restated on this basis.

 

END

 

 

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