Standard Life Aberdeen plc

Full Year Results 2019

Part 7 of 8

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8. Company financial statements

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Company statement of financial position

As at 31 December 2019

The financial statements on pages 232 to 242 were approved by the Board and signed on its behalf, by the following Directors:

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Sir Douglas Flint�� �������������������������������������������������������������� Stephanie Bruce

Chairman�������������������������������������������������������������������������������� Chief Financial Officer

10 March 2020����������������������������������������������������������������������� 10 March 2020

The Notes on pages 235 to 242 are an integral part of these financial statements.

Company statement of changes in equity

For the year ended 31 December 2019

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The Notes on pages 235 to 242 are an integral part of these financial statements.

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The Notes on pages 235 to 242 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 Financial Reporting Standard 100 (FRS 100) issued by the Financial Reporting Council (FRC). In the year ended 31 December 2018 the Company adopted Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) as issued by the FRC and transitioned from reporting under International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as endorsed by the European Union (EU) to FRS 101. The transition to FRS 101 had no impact on measurement or recognition in the financial statements. 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. Other than in relation to IFRS 16 Leases, which was adopted by the Group on 1 January 2019 and did not have a material impact on the Company, these accounting policies have been consistently applied to all financial reporting periods presented in these financial statements. The Company adopted IFRS 9 Financial Instruments: Recognition and Measurement on 1 January 2018.

The Company has taken advantage of the exemption in section 408 of the Companies Act 2006 not to present its own income statement in these financial statements. The auditors' remuneration for audit and other services is disclosed in Note 8 to the consolidated financial statements. The Company has no employees.

(a) ��� Investment in subsidiaries, associates and joint ventures

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

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

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

(b)���� Critical accounting estimates and judgement in applying accounting policies

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

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

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:

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Notes to the Company financial statements

A.��� Investments in subsidiaries���������

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Details of the Company's subsidiaries are given in Note 48 of the Group financial statements.

(a)��� Acquisitions

During 2019, the Company made the following acquisitions of subsidiaries measured at cost:

�� On 1 January 2019 the Company increased its investment in Aberdeen Asset Management PLC (AAM PLC) through the purchase of 100,000,000 ordinary shares for a non-cash consideration of �10m

�� On 11 February 2019 the Company increased its investment in AAM PLC through the purchase of 3,128,485 ordinary shares for a cash consideration of �10m

�� On 26 March 2019 the Company increased its investment in 1825 Financial Planning Limited through the purchase of 17,600,000 ordinary shares for a cash consideration of �17.6m

�� On 17June 2019 the Company increased its investment in 1825 Financial Planning Limited through the purchase of 46,000,000 ordinary shares for a cash consideration of �46m

�� On 30 July 2019 the Company increased its investment in AAM PLC through the purchase of 15,783,294 ordinary shares for a cash consideration of �50.5m

�� On 11 September 2019 the Company increased its investment in Focus Solutions Group Limited through the purchase of 30,000,000 ordinary shares for a cash consideration of �3m

�� On 19 November 2019 the Company increased its investment in AAM PLC through the purchase of 3,098,779 ordinary shares for a cash consideration of �9.9m

�� On 12 December 2019 the Company increased its investment in Standard Life Employee Services Limited through the purchase of 3,389 ordinary shares for a cash consideration of �3.4m

During 2018, the Company made the following acquisitions of subsidiaries measured at cost:

�� On 8 August 2018, Standard Life Savings Limited, 1825 Financial Planning Limited and Standard Life Client Management Limited were acquired via dividends in specie from Standard Life Assurance Limited (SLAL) and recognised at amounts of �320m, �50m and �4m respectively

�� On 11 May 2018 the Company increased its investment in Focus Solutions Group Limited through the purchase of 200,000,000 ordinary shares for a cash consideration of �20m

�� On 11 May 2018 the Company increased its investment in Standard Life Oversea Holdings Limited through the purchase of 1,750,000 ordinary shares for a cash consideration of �2m

�� On 18 May 2018 the Company increased its investment in AAM PLC through the purchase of 31,547,174 ordinary shares for a cash consideration of �101m

�� On 16 August 2018 the Company acquired control of The Standard Life Assurance Company 2006 for a cash consideration of �5m

�� On 15 October 2018 the Company increased its investment in 1825 Financial Planning Limited through the purchase of 23,000,000 ordinary shares for a cash consideration of �11m and the capitalisation of a loan of �12m

�� On 21 December 2018 the Company increased its investment in Standard Life Employee Services Limited through the purchase of 21,386 ordinary shares for the capitalisation of the intercompany receivable due from its subsidiary of �21m

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

(b)��� Disposals

During 2019, the Company made the following disposals of subsidiaries measured at cost:

�� On 20 March 2019, 13 May 2019, 21 August 2019 and 5 November 2019 the Company redeemed �40.6m, �16.3m, �34.2m and �47.9m of equity capital in Standard Life (Mauritius Holdings) 2006 Limited through the cancellation of 535,985.12, 211,759.58, 415,221.68 and 616,080.94 Participating shares respectively

During 2018, the Company made the following disposals of subsidiaries measured at cost:

�� On 30 August 2018, SLAL repaid a loan from the Company with the principal amount of �500m. This bond had been classified as an equity investment in SLAL and its repayment reduced the Company's investment in SLAL by �486m.

�� On 19 April 2018 the Company redeemed �2m of equity capital in Standard Life (Mauritius Holdings) 2006 Limited through the cancellation of 30,000 Participating shares

(c)��� Operations held for sale

On 23 February 2018, the Company's investments in SLAL, excluding the loan to SLAL classified as an equity investment, and Vebnet (Holdings) Limited (Vebnet) were classified as held for sale and measured at their carrying amount following the Group's announcement of the proposed sale of the UK and European insurance business to Phoenix Group Holdings (the Sale).

On 9 August 2018, the Company transferred its investment in Vebnet of �27m to SLAL, which increased the carrying value of SLAL by the same amount.

The Sale completed on 31 August 2018.

(d)��� Impairment

The Company holds investments in AAM PLC and Standard Life Investments (Holdings) Limited (SLIH). As AAM PLC and SLIH are managed and reported together within the Asset management, Platforms and Wealth segment (formerly Asset management and platforms), and the synergies from the merger of these entities are expected to benefit both entities, we judge that it is appropriate to consider the recoverable amount of these entities on a combined basis. The Company impaired its investments in AAM PLC and SLIH by �780m (2018: �570m). The recoverable amount was �4,808m which was its value in use and was determined using a pre-tax discount rate of 11.9% (2018:11.1%). The value in use includes the fair value of HDFC Asset Management which is an associate of SLIH. Other assumptions used in the value in use are the same as the assumptions used in the impairment review for asset management (Aberdeen Standard Investments) goodwill set out in Note 15 of the Group financial statements. The impairments are as a result of a decrease in projected future revenues of the entities. Following the impairment loss recognised in the period, the recoverable amount was equal to the carrying amount. Therefore any adverse movement in a key assumption would lead to further impairment. The sensitivity of the carrying value of the investments in AAM PLC and SLIH to changes in key assumptions is the same as the sensitivity of Aberdeen Standard Investments goodwill to changes in discount rate, growth and forecast cash flow assumptions provided in Note 15 of the Group financial statements. The carrying value of the investments in AAM PLC and SLIH is also sensitive to reductions in the fair value of HDFC Asset Management.

At 31 December 2019, the net assets of the Company of �7,402m (2018: �7,445m) are higher (2018: lower) than the net assets of the Group of �6,666m (2018: �7,539m). This primarily arises because, as set out above, the value in use of the Company's investments in AAM PLC and SLIH includes the fair value of HDFC Asset Management which was �1,937m (2018: �1,077m) at 31 December 2019. In the Group accounts the value in use of asset management goodwill excludes HDFC Asset Management, as HDFC Asset Management generates independent cash flows. HDFC Asset Management is carried in the Group accounts under equity accounting at �120m (2018: �110m).

The Company's investment in its subsidiary Focus Solutions Group Limited (Focus) was impaired during 2019 by �15m (2018: �19m). The recoverable amount of Focus is �nil (2018: �13m) which is its value in use and has been determined using a discount rate of 12% (2018: 12%). The impairment resulted from revenue projections being lower than those previously forecast as a result of lower projected new business.

(e)��� Investments in subsidiaries at FVTPL

Investments in subsidiaries at FVTPL, valued at �562m (2018: �218m), relate to a holding in money market funds over which the Company has control. During 2018, holdings in two further funds were reclassified to equity securities and interests in pooled investment funds, following the Sale.

B.��� Investments in associates and joint ventures

(a)���� Investment in associates

Following the completion of the Sale in August 2018, as part of the total consideration, the Company was issued with new Phoenix shares representing 19.98% of the issued share capital of Phoenix, a company incorporated in England and Wales (refer Note 1 and Note 16 of the Group financial statements). The cost of this investment was considered to be the fair value of the shares issued at 31 August 2018.

The Company's investments in associates are measured at cost less impairment. At 31 December 2018 an impairment of �211m was recognised in relation to the Company's associate investment in Phoenix. The impairment resulted from the fall in the Phoenix share price between 31 August 2018 and 31 December 2018. The recoverable amount was �812m which is the fair value of the Company's interest in Phoenix at 31 December 2018. At 31 December 2019 the fair value of the Company's interest in Phoenix was �1,079m, on this basis a reversal of the impairment recognised in 2018 of �211m has been recognised.

The Company has an interest of 25.3% (2018: 25.3%) in Tenet Group Limited, a company incorporated in England and Wales. The year end date for Tenet Group Limited is 30 September which is different from the Company's year end date of 31 December. For the purposes of the preparation of the Company's financial statements, financial information for the year ended 31 December is used.

(b)���� Investment in joint venture

The Company has a 50% (2018: 50%) interest in Heng An Standard Life Insurance Company Limited (HASL), a company incorporated in China. On 19 April 2018, the Company made a US$95m (�72m) capital contribution to HASL. Further details on this joint venture are provided in Note 16 of the Group financial statements.

C.��� Financial investments

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The amount of debt securities expected to be recovered or settled after more than 12 months is �266m (2018: �270m). The amount of loans to subsidiaries expected to be recovered or settled after more than 12 months is �nil (2018: �6m).

D.��� Derivative financial instruments

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

The derivative asset of �3m (2018: derivative asset of �13m) 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:

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E.���� Receivables and other financial assets

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

Amounts due from related parties are expected to be recovered within 12 months.

F.���� Other assets

Other assets of �14m (2018: �35m) comprise amounts due from related parties in respect of Group relief, which are expected to be recovered within 12 months.

G.��� Share capital and share premium

Details of the Company's share capital and share premium are given in Note 26 of the Group financial statements including details of the return of capital, the share consolidation and the share buyback. Details of events after the reporting date relating to share buybacks are set out in Note 47 of the Group financial statements.

H.��� Shares held by trusts

Shares held by trusts relates to shares in Standard Life Aberdeen plc that are held by the Standard Life Aberdeen Employee Benefit Trust (SLA EBT), Standard Life Employee Trust (ET) and Standard Life Unclaimed Asset Trust (UAT). The SLA EBT was established on 28 March 2019. On 13 December 2019 the Group instructed the Trustees to formally close the UAT and all assets in the UAT were transferred to Standard Life Aberdeen plc on 20 December 2019.

Further details of these trusts are provided in Note 27 of the Group financial statements.

I.����� Retained earnings

Details of the dividends paid on the ordinary shares by the Company are provided in Note 14 of the Group financial statements. Note 14 also includes information regarding the final dividend proposed by the Directors for the year ended 31 December 2019.

J.���� Movements in other reserves

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

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During 2019 �26m (2018: �11m) was recognised in the capital redemption reserve for the share buyback (refer Note 26 of the Group financial statements).

Following the impairment loss recognised in the period on the Company's investments in AAM PLC and SLIH (refer Note A), �780m (2018: �570m) was transferred from the merger reserve to retained earnings.

During 2018, on completion of the Sale, (refer Note A) �1,290m was transferred from the merger reserve to retained earnings. As part of the return of capital, �1,000m was transferred from the merger reserve to the capital redemption reserve.

K.��� Other equity

On 30 August 2018, the Company's subordinated guaranteed bonds and Mutual Assurance Capital Securities (MACS) were reclassified as other equity from subordinated liabilities. Following a tender and mandatory redemption process which completed on 25 October 2018, the Company repurchased/redeemed the guaranteed bonds and MACS. Further information is given in Note 30 of the Group financial statements.

L.���� Financial liabilities

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M.��� Subordinated liabilities

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 �nil (2018: �2m) is expected to be settled within 12 months.

On 26 March 2019, the Company repurchased 5.5% Sterling fixed rate subordinated notes with a principal amount of �408m (out of a total principal amount of �500m).

Further information including the terms and conditions of all subordinated liabilities is given in Note 33 of the Group financial statements.

N.��� Deferred tax assets and liabilities

The amount of deferred tax assets expected to be recovered or settled after more than 12 months are �35m (2018: �22m).

The Company has surrendered the benefit of its tax losses to underlying subsidiaries for a consideration of �14m (2018: �35m).

Recognised deferred tax

The deferred tax assets recognised are in respect of unused tax losses arising in the year and unrealised losses on cash flow hedges. The deferred tax assets are recognised to the extent that it is probable that the losses will be capable of being offset against future taxable profits.

O.��� Other financial liabilities

Other financial liabilities are expected to be settled within 12 months (2018: �69m).

P.��� Provisions and other liabilities

Of Provisions of �77m (2018: �80m), �48m are expected to be settled within 12 months (2018: �80m). Of Other liabilities of �4m (2018: �6m), �4m are expected to be settled within 12 months (2018: �6m). The provisions in 2019 and 2018 relate to separation costs. Refer Note 37 of the Group financial statements for further information and details of the provisions.

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. In some cases it will not be possible to form a view, for example because the facts are unclear or because further time is needed to properly investigate, and no provisions are held for such matters. It is not possible to predict with certainty the extent and timing of the financial impact of legal proceedings, complaints and related regulatory matters.

(b)���� Indemnities and guarantees

Under the trust deed in respect of the UK Standard Life defined benefit pension plan, Standard Life Employee Services Limited (SLESL), the principal employer, must pay contributions to the pension plan as the trustees' actuary may certify necessary. The Company guarantees the obligations of certain subsidiaries' UK and Ireland defined benefit pension plans, which did not give rise to any liabilities at 31 December 2019 (2018: �nil).

R.��� Related party transactions

(a) ��� Compensation of key management personnel

The Directors and key management personnel of the Company are considered to be the same as for the Group. See Note 45 of the Group financial statements for further information.

9. Supplementary information

9.1�� Key performance indicators

Key performance indicators (KPIs) are defined as the measures by which the development, performance or position of the business can be measured effectively. The KPIs that we use may not be directly comparable with similarly named measures used by other companies. We have reviewed our KPIs in 2019 and made the following changes.

We have increased our focus on revenue quality, rather than the volume of new business, in 2019. This is the reason for the inclusion of the Fee based revenue KPI and the removal of the KPIs relating to flows and AUMA. We have also added IFRS profit before tax as a KPI - this KPI includes key items such as restructuring costs and profits on disposal of interests in associates. IFRS profit before tax is the closest IFRS equivalent to adjusted profit before tax.

9.2�� Alternative performance measures

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

We have presented below reconciliations from these APMs to the most appropriate measure prepared in accordance with IFRS. All APMs should be read together with the IFRS consolidated income statement, IFRS consolidated statement of financial position and IFRS consolidated statement of cash flows, which are presented in the Group financial statements section of this report. Ratios are presented in Section 9.3.

In 2019, we are no longer reporting an alternative performance measure for cash generation. Following the sale of the UK and European insurance business the IFRS condensed consolidated statement of cash flows provides a shareholder view of the Group's cash generation. We are now, however, reporting an adjusted capital generation APM as discussed below.

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

R� Metric used for executive remuneration in the proposed 2020 remuneration policy. See pages 83 to 84 for more information.

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Adjusted profit before tax

Reconciliation of adjusted profit to IFRS profit by component

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

The table below provides a reconciliation of movements between adjusted profit component measures and relevant IFRS terms. A reconciliation of Fee based revenue to the IFRS item Revenue from contracts with customers is provided in Note 4 of the Group financial statements.

^1��� Includes �243m reversal of impairment of interest in associates.

^2��� Includes �228m loss on 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 adjusted operating income 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 accounts of policyholders. The increase in presentation differences in 2019 reflects higher such policyholder investment returns.

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. Further details of presentation differences are included in Note 2(b)(ii) of the Group financial statements.

The table below provides a summarised reconciliation of adjusted profit before tax (split by continuing operations, discontinued operations and Total) to Profit before tax

^1��� Discontinued operations shown as profit before tax expense attributable to equity holders.

Analysis of adjusting items

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

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

�� Restructuring and corporate transaction expenses are excluded from adjusted profit. Restructuring includes the impact of major regulatory change. By highlighting and excluding these costs we aim to give shareholders a fuller understanding of the performance of the business. Restructuring and corporate transaction expenses include costs relating to the integration of businesses acquired. Other restructuring costs excluded from adjusted profit relate to projects which have a significant impact on the way the Group operates. Costs are only excluded from adjusted profit where they are outwith business as usual activities and the costs would not have been incurred had the restructuring project not taken place. For headcount related costs, where duplicate posts are identified as a result of an integration or transformation plan, the duplicated cost will be treated as a restructuring cost from the beginning of the process which eliminates the duplicate cost. For continuing operations, the 2019 expenses included costs relating to integration and the implementation of our simplified operating model of �214m (2018: �175m), �37m (2018: �133m included in discontinued operations) in respect of separation costs following the sale of the UK and European insurance business, and �41m of other transformation related restructuring costs. 2019 also included �49m relating to the repurchase of subordinated debt and �33m relating to our share of the restructuring costs of joint ventures and associates (primarily Phoenix). An additional �20m has been included in restructuring expenses related to variable compensation that was linked to the receipt of the �140m LBG compensation. This expense has been treated as an adjusting item in line with the receipt of the income (included in 'Other' below).

�� Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts is included as an adjusting item. This is consistent with peers and therefore excluding these items aids comparability. Highlighting this as an adjusting item aims to give a fuller understanding of these accounting impacts which arise where businesses have been acquired but do not arise where businesses have grown organically. Further details are provided in Note 15 of the Group financial statements.

�� Profits on the disposal of a subsidiary, joint venture or associate are also removed to assist comparability of results period on period. Profit on disposal of interests in associates in 2019 of �1,542m includes �1,337m in relation to the sale of 14.49% of shares in HDFC Life and �204m in relation to the sale of 3.02% of shares in HDFC Asset Management. Details are provided in Note 1 of the Group financial statements.

�� The reversal of impairment of associates of �243m relates to our investment in Phoenix. The Phoenix share price recovered in 2019 and the impairment recognised in 2018 has therefore been reversed. In 2018, an impairment loss of �243m was recognised on the Group's interest in Phoenix, of which �15m arose at acquisition and was offset against the bargain purchase gain giving a loss on impairment in the consolidated income statement of �228m. The reversal of impairment/impairment loss of Phoenix are considered one-off items and not indicative of the long-term operating performance of the Group and have therefore been excluded from adjusted profit to assist comparability of results period to period. More details are provided in Note 16 of the Group financial statements.

�� Investment return variances and economic assumption changes in the Group's insurance entities are excluded from adjusted profit. The Group's UK and European insurance business was sold during 2018 and classified as discontinued operations in 2018. The Group's other wholly owned insurance business, SL Asia, is classified as held for sale. For annuities, all fluctuations in liabilities and the assets backing those liabilities due to market interest rate (including credit risk) movements over the period are excluded from adjusted profit. Removing these investment return variances and economic assumption changes is consistent with many of our insurance peers and aims to ensure that adjusted profit reflects a long-term view aligned to the maturity profile and economic matching of the corresponding assets and liabilities. Where associates and joint ventures have a policy for determining investment return variances and economic assumption changes, the Group uses the policy of the associate or joint venture for including their results in the Group's adjusted profit. This currently applies only to the Group's investment in Phoenix. The Phoenix policy is similar to that used by the wholly owned insurance entities. Details of the main differences are included in Note 13 of the Group financial statements.

�� Details on items classified as 'Other' in the table on the previous page are provided in Note 13 of the Group financial statements. In 2019 this balance primarily relates to �140m relating to the settlement of arbitration with LBG, (�16m) impairment losses on property-right-of-use assets and �12m in relation to the alignment of the reporting period of HDFC Asset Management. For discontinued operations, the 2019 item reflects a change in the value of indemnities relating to the sale of the UK and European insurance business to Phoenix.

Phoenix profitability

The table below provides a breakdown for the calculation of our share of adjusted profit before tax from Phoenix of �136m which is included in the Insurance associates and joint ventures reportable segment total of �189m. Phoenix use an operating profit alternative performance measure which is before finance costs, while the Group's adjusted profit is after deducting finance costs.

^1��� Four months ended 31 December 2018.

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.

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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.

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

An analysis is provided below.

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Associates' and joint ventures' dividends received

This information is disclosed in Note 16 of the Group financial statements. An analysis is provided below.

9.3�� 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.

9.3.1 Cost/income ratio from continuing operations

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9.3.2 Fee revenue yield (bps)

Analysis of AUMA by channel

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Analysis of Institutional and Wholesale by asset class

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^1��� Wealth fee revenue yield calculation excludes revenue of �13m (2018: �16m) 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�7bn (2018: c�6bn) of lower margin advisory mandates. At 31 December 2019 the closing AUM of these mandates was c�12bn.

9.4�� Assets under management and administration and flows

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9.4.1 AUMA by channel

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^1��� Wealth channel market and other movements include 1825 opening assets under advice of �4.0bn.

^2��� Corporate actions in the Wholesale channel relate to the acquisition of Orion Partners (�0.7bn). Wealth channel corporate actions include �1.8bn of assets under advice following 1825's acquisition of Grant Thornton's wealth advisory business and BDO Northern Ireland's wealth management business.

^3��� Corporate actions relate to the acquisition of �4.8bn of AUM in transactions with Alpine Woods, ETF Securities and Hark Capital.

9.4.2 Quarterly net flows by channel

9.5�� Institutional and Wholesale AUM

9.5.1 Detailed asset class split

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9.6 Analysis of Strategic insurance partners

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9.7 Analysis of total AUM

9.7.1 AUM by geography

9.7.2 Total AUM by asset class

^1��� Excludes assets under advice of �5.7bn at 31 December 2019.

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