Half-year Report - Part 3 of 3

RNS Number : 4319V

Standard Life Aberdeen plc

07 August 2020

 

Standard Life Aberdeen plc

Half year results 2020

Part 3 of 3

5. Supplementary information

5.1  Alternative performance measures

We assess our performance using a variety of measures that are not defined under IFRS and are therefore termed alternative performance measures (APMs). The APMs that we use may not be directly comparable with similarly named measures used by other companies.

We have presented below reconciliations from these APMs to the most appropriate measure prepared in accordance with IFRS. All APMs should be read together with the IFRS condensed consolidated income statement, IFRS condensed consolidated statement of financial position and IFRS condensed consolidated statement of cash flows, which are presented in the Financial information section of this report. Ratios are presented in Section 5.3.

Definition				Purpose
Adjusted profit before tax
Adjusted profit before tax is the Group's key alternative performance measure. Adjusted profit 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 associate · Fair value movements in contingent consideration · Items which are one-off and, due to their size or nature, are not indicative of the long-term operating performance of the Group · Impacts arising from investment return variances and economic assumption changes in the Group's insurance entities and also in the Group's associate and joint venture insurance entities where they have a policy for determining investment return variances and economic assumption changes · Dividends payable on preference shares classified as non-controlling interests are excluded from adjusted profit in line with the treatment of ordinary shares. Similarly to preference shares, coupons paid on perpetual debt instruments classified as equity for which interest is only accounted for when paid is excluded from adjusted profit. This includes our share of interest payable on Tier 1 debt instruments held by associates. Further details are included in Note 4.9 of the Financial information section. Fee based revenue is a component of adjusted profit and includes revenue we generate from asset management charges (AMCs), platform charges and other transactional charges. Fee based revenue is shown net of fees, costs of sale, commissions and similar charges. Refer to Note 4.5 of the Financial information section.				Adjusted profit reporting provides further analysis of the results reported under IFRS and the Directors believe it helps to give shareholders a fuller understanding of the performance of the business by identifying and analysing adjusting items. Adjusted profit before tax is consistent with the way that financial performance is measured by management and reported to the Board and executive leadership team. Adjusted profit before tax is also a key input to the adjusted earnings per share measure which is used to assess performance for remuneration purposes. Fee based revenue is shown net of commission, costs of sale and similar charges so as to show the net charges received on AUMA and provides the basis for reporting of the fee revenue yield financial ratio.
Adjusted capital generation
Adjusted capital generation is part of the analysis of movements in CRD IV 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 excludes the Group's share of associates and joint ventures profit after tax which is replaced by dividends received from these entities.				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 profit before tax

Reconciliation of adjusted profit to IFRS profit by component

The key components of adjusted profit before tax are fee based revenue, adjusted operating expenses and share of associates' and joint ventures' profit before tax. These components provide a meaningful analysis of our adjusted results.

The table below provides a reconciliation of movements between adjusted profit component measures and relevant IFRS terms. A reconciliation of Fee based revenue to the IFRS item Revenue from contracts with customers is provided in Note 4.5 of the Financial information section.

Adjusted profit term		Group adjusted profit	Presentation differences	Adjusting items	Capital management	Share of associates' and joint ventures' tax expense	Group IFRS	IFRS term
H1 2020		£m	£m	£m	£m	£m	£m
Fee based revenue		706	4	663	(13)	-	1,360	Total income
Adjusted operating expenses		(601)	(4)	(1,259)	-	-	(1,864)	Total expenses
Capital management		(13)	-	-	13	-	-	N/A
Share of associates' and joint ventures' profit before tax		103	-	(77)	-	(20)	6	Share of profit from associates and JVs1
Adjusted profit before tax from continuing operations		195	-	(673)	-	(20)	(498)	Profit before tax
Tax on adjusted profit		(13)	-	7	-	-	(6)	Total tax expense
Share of associates' and joint ventures' tax		(19)	-	-	-	19	-	N/A
Adjusted profit after tax from continuing operations		163	-	(666)	-	(1)	(504)	Profit for the period from continuing operations
Adjusted profit after tax from discontinued operations		-	-	-	-	-	-	Profit for the period from discontinued operations
Adjusted profit after tax		163	-	(666)	-	(1)	(504)	Profit for the period

¹  Includes £130m impairment of interest in associates and joint ventures.

Adjusted profit term	Group adjusted profit	Presentation differences	Adjusting items	Capital management	Share of associates' and joint ventures' tax expense	Group IFRS	IFRS term
H1 2019	£m	£m	£m	£m	£m	£m
Fee based revenue	815	374	467	22	-	1,678	Total income
Adjusted operating expenses	(673)	(374)	(283)	-	-	(1,330)	Total expenses
Capital management	22	-	-	(22)	-	-	N/A
Share of associates' and joint ventures' profit before tax	116	-	164	-	1	281	Share of profit from associates and JVs2
Adjusted profit before tax from continuing operations	280	-	348	-	1	629	Profit before tax
Tax on adjusted profit	(31)	-	41	-	-	10	Total tax expense
Share of associates' and joint ventures' tax	(27)	-	-	-	27	-	N/A
Adjusted profit after tax from continuing operations	222	-	389	-	28	639	Profit for the period from continuing operations
Adjusted profit after tax from discontinued operations	-	-	25	-	-	25	Profit for the period from discontinued operations
Adjusted profit after tax	222	-	414	-	28	664	Profit for the period

²  Includes £243m reversal of impairment of interest in associates.

This reconciliation includes a number of reconciling items which arise due to presentation differences between IFRS reporting requirements and the determination of fee based revenue and adjusted operating expenses. Fee based revenue and adjusted operating expenses exclude items which have an equal and opposite effect on IFRS income and IFRS expenses in the consolidated income statement. This particularly relates to income and expenses of unit linked funds, where investment returns are for the account of policyholders. Investment return from unit linked business in H1 2020 was (£88m) (H1 2019: £271m). Other presentation differences also include commission and other cost of sales expenses which are presented in expenses in the consolidated income statement but are netted against fee based revenue in the analysis of Group adjusted profit by segment.

The FY 2019 reconciliation of movements between adjusted profit component measures and their closest IFRS equivalent is included on page 244 of the Annual report and accounts 2019.

Phoenix profitability

The table below provides a breakdown for the calculation of our share of adjusted profit before tax from Phoenix of £57m which is included in the Insurance associates and joint ventures reportable segment total of £81m. Phoenix use an operating profit alternative performance measure which is before finance costs, while the Group's adjusted profit is after deducting finance costs.

	H1 2020	H1 2020	H1 2019	H1 2019
	100%	19.97%	100%	19.98%
	£m	£m	£m	£m
Operating profit before tax (Phoenix APM)	361	72	325	65
Finance costs	(76)	(15)	(63)	(12)
Adjusted profit before tax (Standard Life Aberdeen APM)	285	57	262	53

 

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 period is included earlier in this section.

	H1 2020	H1 2019
	£m	£m
Adjusted profit after tax	163	222
Remove staff pension scheme returns	(10)	(14)
Remove associates' and joint ventures' adjusted profit after tax	(84)	(89)
Add associates' and joint ventures' dividends received	34	51
Adjusted capital generation	103	170

 

Staff pension scheme returns

Staff pension scheme returns are the contribution to adjusted profit before tax from defined benefit pension schemes which are in surplus and reconciled below.

	H1 2020	H1 2019
	£m	£m
Total income recognised in the consolidated income statement	10	14
Past service costs (included in adjusting items)	-	-
Remove IFRS charge relating to schemes in deficit	-	-
	10	14

 

Share of associates' and joint ventures' adjusted profit after tax

An analysis is provided below.

	H1 2020	H1 2019
	£m	£m
Share of associates' and joint ventures' adjusted profit before tax - Note 4.3(b)(i)	103	116
Share of associates' and joint ventures' adjusted tax expense - Note 4.3(b)(i)	(19)	(27)
Share of associates' and joint ventures' adjusted profit after tax	84	89

Associates' and joint ventures' dividends received

An analysis is provided below.

	H1 2020	H1 2019
	£m	£m
Phoenix	34	34
HDFC Life	-	9
HDFC Asset Management	-	8
Associates' and joint ventures' dividends received	34	51

5.2  Surplus regulatory capital

The £1.8bn indicative capital surplus below includes a deduction to allow for the interim dividend which will be paid in September 2020, and a deduction of £400m for the share buyback announced in February 2020.

At 30 June 2020, the indicative regulatory capital position was as follows:

CRD IV Group regulatory capital position	H1 2020	FY 2019
	£bn	£bn
Common Equity Tier 1 capital resources	2.3	2.2
Tier 2 capital resources	0.6	0.6
Total regulatory capital resources	2.9	2.8
Total regulatory capital requirements	(1.1)	(1.1)
Surplus regulatory capital	1.8	1.7

Capital resources includes c£0.3bn from holdings in insurance associates and JVs that will no longer be eligible following changes to the capital regime during 2021.

5.3  Financial ratios

We also use a number of financial ratios to help assess our performance and these are also not defined under IFRS. Details of our main financial ratios and how they are calculated are presented below.

Definition				Purpose and changes
Cost/income ratio
This is an efficiency measure that is calculated as adjusted operating expenses divided by fee based revenue in the period, and includes the share of associates' and joint ventures' profit before tax.				This ratio is used by management to assess efficiency and reported to the Board and executive leadership team. This ratio is also a measure used to assess performance for remuneration purposes.
Adjusted diluted earnings per share
Adjusted diluted earnings per share is calculated on adjusted profit after tax. The weighted average number of ordinary shares in issue is adjusted during the period to assume the conversion of all dilutive potential ordinary shares, such as share options granted to employees. Details on the calculation of adjusted diluted earnings per share are set out in Note 4.8 of the Financial information section				Earnings per share is a commonly used financial metric which can be used to measure the profitability and capital efficiency of a company over time. We also calculate adjusted diluted earnings per share to illustrate the impact of adjusting items on the metric. This ratio is used by management to assess performance and reported to the Board and executive leadership team.
Fee revenue yield (bps)
The fee revenue yield is calculated as annualised fee based revenue (excluding performance fees, SL Asia, Focus and Threesixty) 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 customers on. Fee revenue yield has been restated to include revenue and assets under advice relating to our 1825 advice business.

 

5.3.1 Cost/income ratio from continuing operations

	H1 2020	H1 2019
Adjusted operating expenses (£m)	(601)	(673)
Fee based revenue (£m)	706	815
Share of associates' and joint ventures' profit before tax (£m)	103	116
Total adjusted operating income and share of associates' and joint ventures' profit before tax (£m)	809	931
Cost/income ratio (%)	74	72
Cost/income ratio excluding our share of associates' and joint ventures' profit before tax (%)	85	83

5.3.2 Fee revenue yield (bps)

Analysis by channel

	Average AUMA (£bn)			Fee based revenue (£m)			Fee revenue yield (bps)
	H1 2020	H1 2019		H1 2020	H1 2019		H1 2020	H1 2019
Institutional and Wholesale	226.8	238.4		445	513		39.5	43.4
Strategic insurance partners	210.7	262.7		115	166		11.0	12.7
Platforms and Wealth
Wrap and Elevate	60.0	57.3		69	73		23.1	25.6
Wealth1	22.6	17.9		58	51		45.1	50.6
Eliminations	(9.9)	(10.1)		N/A	N/A		N/A	N/A
Fee revenue yield1,2	510.2	566.2		687	803		26.8	28.6
SL-Asia				7	6
Performance fees				12	6
Fee based revenue				706	815

Analysis of Institutional and Wholesale by asset class

	Average AUM (£bn)			Fee based revenue (£m)			Fee revenue yield (bps)
	H1 2020	H1 2019		H1 2020	H1 2019		H1 2020	H1 2019
Equities	61.2	73.2		198	243		65.1	66.9
Fixed income	46.8	47.0		68	64		29.2	27.6
Multi-asset	32.1	41.4		60	86		37.6	41.7
Private markets	16.6	15.1		38	32		46.9	43.4
Real estate	27.6	29.5		64	71		46.6	48.3
Alternatives3	18.5	12.5		9	10		9.5	16.2
Quantitative	3.7	2.4		1	1		5.5	10.5
Cash/Liquidity	20.3	17.3		7	6		7.0	7.3
Institutional and Wholesale	226.8	238.4		445	513		39.5	43.4

¹  Fee revenue yield calculation excludes revenue of £7m (H1 2019: £6m) for which there are no attributable assets.

²  Restated to include revenue and assets under advice relating to our 1825 advice business. Previously AUMA excluded assets under advice.

³  Alternatives average AUM includes c£12bn (H1 2019: c£7bn) of lower margin advisory mandates. At 30 June 2020 the closing AUM of these mandates was c£13bn.

5.4  Assets under management and administration and flows

Definition		Purpose and changes
AUMA
AUMA is a measure of the total assets we manage, administer or advise on behalf of our clients and customers. 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 customers 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 customers through platform products such as ISAs and SIPPs. AuAdv is a measure of the total assets we advise our customers on, for which there is an ongoing charge.		At FY 2019, we changed our definition of AUMA to include AUAdv as we continue to build scale in the 1825 business. H1 2019 AUMA has been restated and therefore 2019 market and other movements include 1825 AUAdv of £4.0bn as at 1 January 2019.
Net flows
Net flows represent gross inflows less gross outflows or redemptions. Gross inflows are new funds from clients and customers. Gross outflows or redemptions is the money withdrawn by clients or customers during the period.		At FY 2019, we changed our definition of AUMA to include AUAdv. H1 2019 net flows have been restated to include flows relating to 1825 AUAdv.

5.4.1 AUMA by channel

	Opening AUMA at 1 Jan 2020	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions	Closing AUMA at 30 Jun 2020
6 months ended 30 June 2020	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Institutional	160.6	14.0	(12.6)	1.4	0.5	-	162.5
Wholesale	72.4	11.5	(13.5)	(2.0)	0.7	-	71.1
Strategic insurance partners	235.8	9.2	(35.4)	(26.2)	(5.5)	-	204.1
Platforms and Wealth						-
Wrap and Elevate	62.6	3.2	(2.1)	1.1	(2.5)	-	61.2
Wealth	23.4	1.4	(0.7)	0.7	(0.9)	-	23.2
Eliminations1	(10.2)	(1.1)	1.3	0.2	(0.3)	-	(10.3)
Total AUMA	544.6	38.2	(63.0)	(24.8)	(8.0)	-	511.8

	Opening AUMA at 1 Jan 2019	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions3	Closing AUMA at 30 Jun 2019
6 months ended 30 June 2019	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Institutional	166.7	13.9	(20.8)	(6.9)	10.1	-	169.9
Wholesale	72.5	5.4	(14.0)	(8.6)	5.3	0.7	69.9
Strategic insurance partners	255.0	9.7	(15.4)	(5.7)	20.5	-	269.8
Platforms and Wealth
Wrap and Elevate	54.2	3.4	(2.3)	1.1	4.5	-	59.8
Wealth2	10.9	5.1	(1.2)	3.9	5.4	-	20.2
Eliminations1	(7.8)	(1.1)	1.4	0.3	(2.7)	-	(10.2)
Total AUMA	551.5	36.4	(52.3)	(15.9)	43.1	0.7	579.4

¹  Eliminations remove the double count reflected in the asset management and platforms and wealth businesses.

²  Wealth channel market and other movements include 1825 opening assets under advice of £4.0bn.

³  Corporate actions in the Wholesale channel relate to the acquisition of Orion Partners (£0.7bn).

5.4.2 Quarterly net flows by channel

	3 months to 30 Jun 20	3 months to 31 Mar 20	3 months to 31 Dec 19	3 months to 30 Sep 19	3 months to 30 Jun 19
15 months ended 30 June 2020	£bn	£bn	£bn	£bn	£bn
Institutional	2.4	(1.0)	-	(7.3)	(4.9)
Wholesale	(0.2)	(1.8)	2.3	(1.0)	(2.8)
Strategic insurance partners	0.3	(26.5)	(10.8)	(27.9)	(2.7)
Platforms and Wealth
Wrap and Elevate	0.4	0.7	0.6	0.6	0.5
Wealth	0.5	0.2	0.4	0.4	0.3
Eliminations	-	0.2	-	0.2	0.2
Total net flows	3.4	(28.2)	(7.5)	(35.0)	(9.4)

5.5  Institutional and Wholesale AUM

5.5.1 Detailed asset class split

	Opening AUM at 1 Jan 2020	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions	Closing AUM at 30 Jun 2020
6 months ended 30 June 2020	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Developed markets equities	14.7	2.0	(2.0)	-	(1.6)	-	13.1
Emerging markets equities	21.6	0.9	(4.0)	(3.1)	(1.9)	-	16.6
Asia Pacific equities	23.3	1.9	(2.5)	(0.6)	(0.2)	-	22.5
Global equities	9.4	0.6	(1.9)	(1.3)	-	-	8.1
Total equities	69.0	5.4	(10.4)	(5.0)	(3.7)	-	60.3
Developed markets credit	32.2	3.7	(4.3)	(0.6)	2.1	-	33.7
Developed markets rates	3.3	0.3	(0.6)	(0.3)	0.2	-	3.2
Emerging markets fixed income	10.9	2.1	(1.7)	0.4	(0.1)	-	11.2
Total fixed income	46.4	6.1	(6.6)	(0.5)	2.2	-	48.1
Absolute return	12.7	0.3	(1.5)	(1.2)	0.6	-	12.1
Diversified growth/income	1.9	0.1	(0.3)	(0.2)	-	-	1.7
MyFolio	15.7	1.3	(1.1)	0.2	(1.0)	-	14.9
Other multi-asset	4.0	0.1	(0.5)	(0.4)	0.1	-	3.7
Total multi-asset	34.3	1.8	(3.4)	(1.6)	(0.3)	-	32.4
Private equity	12.1	0.4	(0.7)	(0.3)	1.1	-	12.9
Private credit and solutions	-	0.3	-	0.3	-	-	0.3
Infrastructure equity	4.0	-	-	-	0.1	-	4.1
Total private markets	16.1	0.7	(0.7)	-	1.2	-	17.3
UK real estate	13.4	0.3	(0.9)	(0.6)	-	-	12.8
European real estate	12.1	0.6	(0.3)	0.3	0.7	-	13.1
Global real estate	1.0	0.1	(0.1)	-	0.6	-	1.6
Real estate multi-manager	1.4	-	(0.1)	(0.1)	-	-	1.3
Total real estate	27.9	1.0	(1.4)	(0.4)	1.3	-	28.8
Total alternatives	17.7	1.2	(0.5)	0.7	1.3	-	19.7
Total quantitative	4.2	0.3	(1.0)	(0.7)	0.3	-	3.8
Total cash/liquidity	17.4	9.0	(2.1)	6.9	(1.1)	-	23.2
Total	233.0	25.5	(26.1)	(0.6)	1.2	-	233.6

	Opening AUM at 1 Jan 2019	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions	Closing AUM at 30 Jun 2019
6 months ended 30 June 2019	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Developed markets equities	12.9	1.0	(2.0)	(1.0)	2.2	-	14.1
Emerging markets equities	25.0	1.0	(5.9)	(4.9)	3.4	-	23.5
Asia Pacific equities	22.5	1.9	(3.3)	(1.4)	2.2	-	23.3
Global equities	12.5	0.4	(2.4)	(2.0)	1.3	-	11.8
Total equities	72.9	4.3	(13.6)	(9.3)	9.1	-	72.7
Developed markets credit	32.1	2.5	(3.1)	(0.6)	2.0	-	33.5
Developed markets rates	5.2	0.2	(1.4)	(1.2)	0.4	-	4.4
Emerging markets fixed income	9.4	1.3	(1.2)	0.1	0.8	-	10.3
Total fixed income	46.7	4.0	(5.7)	(1.7)	3.2	-	48.2
Absolute return	21.9	0.4	(6.7)	(6.3)	0.7	-	16.3
Diversified growth/income	1.7	0.3	(0.1)	0.2	0.3	-	2.2
MyFolio	13.9	1.3	(1.1)	0.2	1.1	-	15.2
Other multi-asset	5.5	0.3	(1.0)	(0.7)	1.7	-	6.5
Total multi-asset	43.0	2.3	(8.9)	(6.6)	3.8	-	40.2
Private equity	12.3	0.7	(2.1)	(1.4)	0.4	-	11.3
Private credit and solutions	-	-	-	-	0.1	-	0.1
Infrastructure equity	3.7	0.2	-	0.2	(0.1)	-	3.8
Total private markets	16.0	0.9	(2.1)	(1.2)	0.4	-	15.2
UK real estate	15.3	0.6	(1.2)	(0.6)	(0.1)	-	14.6
European real estate	12.2	0.6	(0.4)	0.2	-	-	12.4
Global real estate	0.8	0.1	(0.1)	-	0.1	0.7	1.6
Real estate multi-manager	1.4	0.1	(0.2)	(0.1)	-	-	1.3
Total real estate	29.7	1.4	(1.9)	(0.5)	-	0.7	29.9
Total alternatives	12.3	1.5	(0.5)	1.0	(0.1)	-	13.2
Total quantitative	2.1	0.3	(0.3)	-	0.5	-	2.6
Total cash/liquidity	16.5	4.6	(1.8)	2.8	(1.5)	-	17.8
Total	239.2	19.3	(34.8)	(15.5)	15.4	0.7	239.8

5.6 Analysis of Strategic insurance partners

	Opening AUM at 1 Jan 2020	Gross inflows	Redemptions	Net  flows	Market and other movements	Corporate actions	Closing AUM at 30 Jun 2020
6 months ended 30 June 2020	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Phoenix	145.9	3.8	(5.2)	(1.4)	2.9	-	147.4
Lloyds	64.5	2.2	(27.5)	(25.3)	(7.3)	-	31.9
Other	25.4	3.2	(2.7)	0.5	(1.1)	-	24.8
Total	235.8	9.2	(35.4)	(26.2)	(5.5)	-	204.1

 

	Opening AUM at 1 Jan 2019	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate  actions	Closing AUM at 30 Jun 2019
6 months ended 30 June 2019	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Phoenix	131.6	4.7	(6.5)	(1.8)	11.0	-	140.8
Lloyds	98.6	4.1	(6.6)	(2.5)	7.4	-	103.5
Other	24.8	0.9	(2.3)	(1.4)	2.1	-	25.5
Total	255.0	9.7	(15.4)	(5.7)	20.5	-	269.8

5.7 Analysis of total AUM

5.7.1 AUM by geography

	30 Jun 2020				31 Dec 2019
	Institutional and Wholesale	Strategic insurance partners	Wealth1	Total	Institutional and Wholesale	Strategic insurance partners	Wealth1	Total
	£bn	£bn	£bn	£bn	£bn	£bn	£bn	£bn
UK	106.3	204.1	17.9	328.3	108.5	235.8	17.7	362.0
Europe, Middle East and Africa (EMEA)	60.3	-	-	60.3	55.8	-	-	55.8
Asia Pacific (APAC)	16.3	-	-	16.3	16.9	-	-	16.9
Americas	50.7	-	-	50.7	51.8	-	-	51.8
Total AUM	233.6	204.1	17.9	455.6	233.0	235.8	17.7	486.5

5.7.2 Total AUM by asset class

	30 Jun 2020				31 Dec 2019
	Institutional and Wholesale	Strategic insurance partners	Wealth1	Total	Institutional and Wholesale	Strategic insurance partners	Wealth1	Total
	£bn	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Equities	60.3	46.5	-	106.8	69.0	50.3	-	119.3
Fixed income	48.1	72.1	-	120.2	46.4	88.5	-	134.9
Multi-asset	32.4	6.2	14.9	53.5	34.3	10.2	14.2	58.7
Private markets	17.3	0.8	-	18.1	16.1	0.8	-	16.9
Real estate	28.8	8.2	-	37.0	27.9	9.2	-	37.1
Alternatives	19.7	-	-	19.7	17.7	0.6	-	18.3
Quantitative	3.8	45.0	3.0	51.8	4.2	46.7	3.5	54.4
Cash/Liquidity	23.2	25.3	-	48.5	17.4	29.5	-	46.9
Total AUM	233.6	204.1	17.9	455.6	233.0	235.8	17.7	486.5

¹  Excludes assets under advice of £5.3bn at 30 June 2020 (31 Dec 2019: £5.7bn).

6. Glossary

Aberdeen Asset Management or Aberdeen

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

Adjusted operating expenses

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

Adjusted profit

Adjusted profit before tax is the Group's key alternative performance measure. Adjusted profit 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 associate

· Fair value movements in contingent consideration

· Items which are one-off and, due to their size or nature, are not indicative of the long-term operating performance of the Group

Adjusted profit also excludes impacts arising from investment return variances and economic assumption changes in the Group's insurance entities and also in the Group's associate and joint venture insurance entities where they have a policy for determining investment return variances and economic assumption changes. It is calculated based on expected returns on investments backing equity holder funds, with consistent allowance for the corresponding expected movements in equity holder liabilities. Impacts arising from the difference between the expected return and actual return on investments, and the corresponding impact on equity holder liabilities except where they are directly related to a significant management action, are excluded from adjusted profit and are presented within profit before tax. The impact of certain changes in economic assumptions is also excluded from adjusted profit and is presented within profit before tax.

Dividends payable on preference shares classified as non-controlling interests are excluded from adjusted profit in line with the treatment of ordinary shares. Similarly to preference shares, coupons paid on perpetual debt instruments classified as equity for which interest is only accounted for when paid is excluded from adjusted profit. This includes our share of interest payable on Tier 1 debt instruments held by associates. Coupons payable on perpetual debt instruments classified as equity for which interest is accrued are included in adjusted profit before tax.

Assets under management and administration (AUMA)

AUMA is a measure of the total assets we manage, administer or advise on behalf of our clients and customers. It includes assets under management (AUM), assets under administration (AUA) and assets under advice (AUAdv). AUMA does not include assets for associates and joint ventures.

AUM is a measure of the total assets that Aberdeen Standard Investments manages on behalf of individual customers and institutional clients. AUM also includes assets managed for corporate purposes.

AUA is a measure of the total assets we administer for customers through our Platforms. AuAdv is a measure of the total assets we advise our customers on, for which there is an ongoing charge.

Board

The Board of Directors of the Company.

Capital management

Capital management is a component of adjusted profit and relates to the return from the net assets of the shareholder business, net of costs of financing. This includes the net assets in defined benefit staff pension plans and net assets relating to the financing of subordinated liabilities.

Chief Operating Decision Maker

The executive leadership team.

Company

Standard Life Aberdeen plc.

Cost/income ratio

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

CRD IV

CRD IV is the European regulatory capital regime (comprising the Capital Requirements Directive and Capital Requirements Regulation) that applies to investment firms.

Director

A director of the Company.

Earnings per share (EPS)

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

Effective tax rate

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

Executive leadership team

Responsible for providing overall leadership of the business and comprises: Chief Executive, General Counsel, Chief Financial Officer, Global Head of Distribution, Head of EMEA, Chief of Staff, Chief Investment Officer, Chief HR Officer, Chief Operating Officer, Chief Corporate Affairs Officer, Head of Americas and Head of Asia Pacific.

Fair value through profit or loss (FVTPL)

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

FCA

Financial Conduct Authority of the United Kingdom.

Fee based revenue

Fee based revenue is a component of adjusted profit and includes revenue we generate from asset management charges (AMCs), platform charges and other transactional charges. 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 customer, with our major indirect exposure to rising or falling markets coming from higher or lower AMCs. Fee based revenue is shown net of fees, costs of sale, commissions and similar charges. Costs of sale include revenue from fund platforms which is passed to the product provider.

Fee revenue yield (bps)

The average revenue yield on fee based business is a measure that illustrates the average margin being earned on the assets under management, administration or advice. It is calculated as annualised fee based revenue (excluding performance fees, SL Asia, Focus and Threesixty) divided by monthly average fee based assets.

Global absolute return strategies (GARS)

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

Group, Standard Life Aberdeen Group or Standard Life Aberdeen

Relates to the Company and its subsidiaries.

ICAAP

Internal Capital Adequacy Assessment Process. The ICAAP is the means by which the Group assesses the level of capital that adequately supports all of the relevant current and future risks in its business.

International Financial Reporting Standards (IFRS)

International Financial Reporting Standards are accounting standards issued by the International Accounting Standards Board (IASB).

Investment performance

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 each fund's Investment Management Agreement (for example, the benchmark for our GARS unit trust fund is six-month GBP LIBOR). The investment performance calculation covers all funds that aim to outperform a benchmark, with certain assets excluded where this measure of performance is not appropriate or expected, such as private markets, execution only mandates and Aberdeen Standard Capital, as well as replication tracker funds which aim to perform in line with a given index. Investment performance is calculated as if Standard Life Group and Aberdeen had always been merged.

Net flows

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

Phoenix or Phoenix Group

Phoenix Group Holdings plc or Phoenix Group Holdings plc and its subsidiaries.

Pillar 1

Under CRD IV, Pillar 1 focuses on fixed overhead requirements and the Group's exposure to credit and market risks in respect of risk-weighted assets, and sets a minimum requirement for capital based on these measures.

Pillar 2

The requirement for companies to assess the level of additional capital held against risks not covered in Pillar 1.

Pillar 3

This complements Pillar 1 and Pillar 2 with the aim of improving market discipline by requiring companies to publish certain details of their risks, capital and risk management. The Group's Pillar 3 disclosures are available at www.standardlifeaberdeen.com/annualreport

Platform

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

Pro forma basis

The merger of Standard Life plc and Aberdeen completed on 14 August 2017, with the merger accounted for as an acquisition of Aberdeen by Standard Life plc on that date. Pro forma results for the Group are prepared as if Standard Life Group and Aberdeen had always been merged and are included for comparative periods to assist in explaining trends in financial performance by showing a full 12 months performance for the combined Group for all years.

Reported basis

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

Standard Life

Following completion of the sale of our UK and European insurance business to Phoenix in August 2018, we have retained ownership of the Standard Life brand while also licensing it to Phoenix. The Standard Life brand continues to be a prominent feature of our retail platforms.

Strategic insurance partners

A measure of the assets managed on behalf of a number of strategic partners such as Lloyds Banking Group and Phoenix.

Subordinated liabilities

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

7. Shareholder information

Registered office

1 George Street
Edinburgh
EH2 2LL

Scotland

Company registration number: SC286832

For shareholder services call:

0345 113 0045*

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

Secretary

Kenneth A Gilmour

Registrar

Link Market Services Limited (Link)

Auditors

KPMG LLP

Solicitors

Slaughter and May

Brokers

JP Morgan Cazenove

Goldman Sachs

Shareholder services

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

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

· Visit our share portal at www.standardlifeaberdeenshares.com

Sign up for Ecommunications

Signing up means:

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

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

Set up a share portal account

Having a share portal account means you can:

· Manage your account at a time that suits you

· Download your documents when you need them

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

Preventing unsolicited mail

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

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

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

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

Financial calendar

Half year results 2020	7 August
Ex-dividend date for 2020 interim dividend	20 August
Record date for 2020 interim dividend	21 August
Last date for DRIP elections for 2020 interim dividend	9 September
Dividend payment date for 2020 interim dividend	29 September

Analysis of registered shareholdings at 30 June 2020

Range of shares	Number of holders	% of total holders	Number of shares	% of total shares
1-1,000	64,116	65.26	25,911,515	1.14
1,001-5,000	29,259	29.78	59,460,197	2.62
5,001-10,000	2,744	2.79	18,216,847	0.80
10,001-100,000	1,574	1.60	37,506,925	1.66
#100,001+	557	0.57	2,127,797,474	93.78
Total	98,250	100.00	2,268,892,958	100.00

# These figures include the Company-sponsored nominee - the Standard Life Aberdeen Share Account - which had 999,362 participants holding 661,193,838 shares.

Notes

Forward-looking statements

This document may contain certain 'forward-looking statements' with respect to the financial condition, performance, results, strategy, targets, objectives, plans, goals and expectations of the Company and its affiliates. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts.

Forward-looking statements are prospective in nature and are not based on historical or current facts, but rather on current expectations, assumptions and projections of management about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. For example but without limitation, statements containing words such as 'may', 'will', 'should', 'could', 'continue', 'aims', 'estimates', 'projects', 'believes', 'intends', 'expects', 'hopes', 'plans', 'pursues', 'ensure', 'seeks', 'targets' and 'anticipates', and words of similar meaning (including the negative of these terms), may be forward-looking. These statements are based on assumptions and assessments made by the Company in light of its experience and its perception of historical trends, current conditions, future developments and other factors it believes appropriate.

By their nature, all forward-looking statements involve risk and uncertainty because they are based on information available at the time they are made, including current expectations and assumptions, and relate to future events and/or depend on circumstances which may be or are beyond the Group's control, including among other things: the direct and indirect impacts and implications of the coronavirus COVID-19 on the economy, nationally and internationally, and on the Group, its operations and prospects; UK domestic and global political, economic and business conditions (such as the UK's exit from the EU); market related risks such as fluctuations in interest rates and exchange rates, and the performance of financial markets generally; the impact of inflation and deflation; the impact of competition; the timing, impact and other uncertainties associated with future acquisitions, disposals or combinations undertaken by the Company or its affiliates and/or within relevant industries; the value of and earnings from the Group's strategic investments and ongoing commercial relationships; default by counterparties; information technology or data security breaches (including the Group being subject to cyberattacks); operational information technology risks, including the Group's operations being highly dependent on its information technology systems (both internal and outsourced); natural or man-made catastrophic events (including the impact of the coronavirus COVID-19); climate change and a transition to a low-carbon economy (including the risk that the Group may not achieve its targets); exposure to third party risks including as a result of outsourcing; the failure to attract or retain necessary key personnel; the policies and actions of regulatory authorities (including changes in response to the coronavirus COVID-19 and its impact on the economy); and the impact of changes in capital, solvency or accounting standards, and tax and other legislation and regulations (including changes to the regulatory capital requirements that the Group is subject to or changes in connection with the coronavirus COVID-19) in the jurisdictions in which the Company and its affiliates operate. As a result, the Group's actual future financial condition, performance and results may differ materially from the plans, goals, objectives and expectations set forth in the forward-looking statements.

Persons receiving this document should not place reliance on forward-looking statements. Neither the Company nor its affiliates assume any obligation to update or correct any of the forward-looking statements contained in this document or any other forward-looking statements it or they may make (whether as a result of new information, future events or otherwise), except as required by law. Past performance is not an indicator of future results and the results of the Company and its affiliates in this document may not be indicative of, and are not an estimate, forecast or projection of, the Company's or its affiliates' future results.

 

END

 

 

IR PFMMTMTBMTPM