Standard Life Aberdeen plc
Full Year Results 2017
Part 8 of 8
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11. Glossary
Aberdeen Asset Management or Aberdeen
Aberdeen Asset Management PLC, or Aberdeen Asset Management PLC and its subsidiaries.
Adjusted cash generation
Adjusted cash generation (previously named underlying cash generation) presents a shareholder view of cash generation. The calculation of this measure has been amended following the merger. For the Aberdeen Standard Investments segment, adjusted cash generation adjusts IFRS net cash flows from operating activities for restructuring and corporate transaction expenses paid. For the Standard Life Pensions and Savings segment and Other, adjusted cash generation removes certain non-cash items from adjusted profit before tax. Adjustments are made for deferred acquisition costs/deferred income reserve and fixed/intangible assets. Adjusted cash generation is stated net of current (cash) tax. IFRS net cash flows from operating activities is not used as the basis for these segments as it includes policyholder cash flows, and does not exclude adjusting items. For the India and China life segment, adjusted cash generation reflects dividends received in the period.
Adjusted operating expenses
Adjusted operating expenses is a component of adjusted profit and relates to the day-to-day expenses of managing our business.
Adjusted operating income
Adjusted operating income is a component of adjusted profit and consists of fee based revenue and spread/risk margin.
Adjusted profit
Adjusted profit before tax (previously named operating profit before tax) is the Group's key alternative performance measure. Adjusted profit excludes impacts arising from short-term fluctuations in investment return and economic assumption changes in the Group's wholly owned insurance entities. It is calculated based on expected returns on investments backing equity holder funds, with consistent allowance for the corresponding expected movements in equity holder liabilities. Impacts arising from the difference between the expected return and actual return on investments, and the corresponding impact on equity holder liabilities except where they are directly related to a significant management action, are excluded from adjusted profit and are presented within profit before tax. The impact of certain changes in economic assumptions is also excluded from adjusted profit and is presented within profit before tax.
Adjusted profit also excludes the impact of the following items:
· Restructuring costs and corporate transaction expenses. Restructuring includes the impact of major regulatory change.
· Impairment and amortisation of intangible assets acquired in business combinations
· Profit or loss arising on the disposal of a subsidiary, joint venture or associate
· Fair value movements in contingent consideration
· Items which are one-off and, due to their size or nature, are not indicative of the long-term operating performance of the Group
Coupons payable on perpetual notes classified as non-controlling interests are included in adjusted profit before tax. For IFRS purposes, these are recognised directly in equity. This gives rise to an adjusting item relating to 'coupons payable on perpetual notes classified as equity'. Dividends payable on preference shares classified as non-controlling interests are excluded from adjusted profit in line with the treatment of ordinary dividends.
Annuity
A periodic payment made for an agreed period of time (usually up to the death of the recipient) in return for a cash sum. The cash sum can be paid as one amount or as a series of premiums. If the annuity commences immediately after the payment of the sum, it is called an immediate annuity. If it commences at some future date, it is called a deferred annuity.
Articles
The Articles of Association detail the provisions relating to the regulation of a company in terms of the rights of its members and the authority of its directors.
Assets under management and administration (AUMA)
AUMA is a measure of the total assets we manage or administer on behalf of our clients and customers. It includes Aberdeen Standard Investments assets under management (AUM) and Standard Life Pensions and Savings assets under administration (AUA), as well as AUM and AUA from our associate and joint venture businesses in India and China based on our ownership percentages.
AUM is a measure of the total assets that Aberdeen Standard Investments manages on behalf of individual customers and institutional clients. AUM also includes captive assets managed on behalf of Standard Life Aberdeen Group including assets managed for corporate purposes. These corporate assets are eliminated from Group AUMA.
AUA is a measure of the total assets we administer for customers through products such as pensions, platforms and ISAs, as well as assets backing our Spread/risk products such as annuities. Certain items previously included in AUA for Standard Life plc are now no longer included. These items are other corporate assets and assets which do not generate revenue from products. Comparatives have been restated.
Auto enrolment
The UK Government introduced auto enrolment to help people save for their retirement. Employers have to automatically enrol eligible employees into a qualifying workplace pension scheme. This pension scheme needs to meet the standards set by the Pensions Regulator.
Board
The Board of Directors of the Company.
Capital management
Capital management is a component of adjusted profit and relates to the return from the net assets of the shareholder business, net of costs of financing. This includes the net assets in defined benefit staff pension plans and net assets relating to the financing of subordinated liabilities. Coupons payable on perpetual notes classified as non-controlling interests are recognised in capital management. For IFRS purposes, these are directly recognised in equity. Capital management excludes short-term fluctuations in investment return in the Group's wholly owned insurance entities.
Capital surplus
This is a regulatory measure of our financial strength and is measured on a Solvency II basis.
Chief Operating Decision Maker
The executive committee.
Company
Standard Life Aberdeen plc. Prior to the merger Standard Life plc.
Cost/income ratio
This is an efficiency measure that is calculated as adjusted operating expenses divided by adjusted operating income, and includes the share of associates' and joint ventures' profit before tax.
Deferred acquisition costs (DAC)
The method of accounting whereby acquisition costs on long-term business are deferred on the consolidated statement of financial position as an asset and amortised over the life of those contracts. This leads to a smoothed recognition of up front expenses instead of the full cost in the year of sale.
Deferred income reserve (DIR)
The method of accounting whereby front end fees that relate to services to be provided in future periods are deferred on the consolidated statement of financial position as a liability and amortised over the life of those contracts. This leads to a smoothed recognition of up front income instead of the full income in the year of sale.
Director
A Director of the Company.
Discounting
The reduction to present value at a given date of a future cash transaction at an assumed rate, using a discount factor reflecting the time value of money. The choice of a discount rate will usually greatly influence the value of insurance provisions, and may give indications on the conservatism of provisioning methods.
Earnings per share (EPS)
EPS is a commonly used financial metric which can be used to measure the profitability and strength of a company over time. EPS is calculated by dividing profit by the number of ordinary shares. Basic EPS uses the weighted average number of ordinary shares outstanding during the year. Diluted EPS adjusts the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares, such as share options awarded to employees.
Effective tax rate
Tax expense/(credit) attributable to equity holders' profit divided by profit before tax attributable to equity holders' profits expressed as a percentage.
Elevate
Elevate adviser platform acquired through the purchase of the entire share capital of AXA Portfolio Services Limited, subsequently renamed Elevate Portfolio Services Limited.
Executive committee
Responsible for the day-to-day running of the business and comprises: Co-Chief Executives, Chief Financial Officer, Chief Investment Officer, Chief People Officer, Chief Executive - Pensions and Savings, Joint Head of Integration and Chief Operations Officer and Joint Head of Integration.
Fair value through profit or loss (FVTPL)
FVTPL is an IFRS measurement basis permitted for assets and liabilities which meet certain criteria. Gains or losses on assets or liabilities measured at FVTPL are recognised directly in the income statement.
Fee based business/revenue
Fee based business is a component of adjusted profit and includes products where we generate revenue primarily from asset management charges (AMCs), premium based charges and transactional charges. AMCs are earned on products such as SIPP, corporate pensions and mutual funds, and are calculated as a percentage fee based on the assets held. Investment risk on these products rests principally with the customer, with our major indirect exposure to rising or falling markets coming from higher or lower AMCs. Fee based revenue is shown net of fees, commissions and similar charges (e.g. rebates and initial charges).
Fee revenue yield (bps)
The average revenue yield on fee based business is a measure that illustrates the average margin being earned on the assets that we manage or administer. It is calculated as annualised fee based revenue (excluding performance fees) divided by monthly average fee based assets under administration.
Global absolute return strategies (GARS)
A discretionary multi-asset fund provided under several regulated pooled and segregated structures globally by Aberdeen Standard Investments. The investment objective is to target a level of return over a rolling three-year period equivalent to cash plus 5% a year (gross of fees), and to do so with as little risk as possible.
Group, Standard Life Aberdeen Group or Standard Life Aberdeen
Relates to the Company and its subsidiaries following the completion of the merger of Standard Life plc and Aberdeen Asset Management PLC on 14 August 2017.
Growth channels
We aim to drive the increase in our assets, revenue and profit via our growth channels. This comprises Aberdeen Standard Investments (excluding mature business), UK Workplace and Retail, Europe (excluding Germany with profits), Hong Kong and Standard Life Wealth.
Heritage With Profits Fund (HWPF)
The Heritage With Profits Fund contains all business - both with profits and non-profit - written in the UK, Irish or German branches within the Standard Life Group before demutualisation, with the exception of the classes of business which the Scheme of Demutualisation allocated to funds outside the HWPF. The HWPF also contains increments to this business.
Ignis
Ignis Asset Management Limited and its subsidiaries.
International Financial Reporting Standards (IFRS)
International Financial Reporting Standards are accounting standards issued by the International Accounting Standards Board (IASB). The Group's consolidated financial statements are prepared in accordance with IFRS as endorsed by the EU.
Investment performance
Investment performance has been aggregated using a money weighted average of our assets under management which are outperforming their respective benchmarks on a gross of fees basis. Benchmarks differ by fund and are defined in each fund's Investment Management Agreement (for example, the benchmark for our GARS unit trust fund is six-month GBP LIBOR). For total AUM, the investment performance calculation covers 83% of Aberdeen Standard Investments AUM, with certain assets excluded such as our share of AUM from HDFC AMC where we do not directly manage the assets, non-discretionary portfolios or funds where no suitable benchmark is available.
Investor view
The investor view of Solvency II adjusts the regulatory position for the impact from unrecognised capital and with profit funds/defined benefit pension plans.
Key performance indicators (KPI)
A measure by reference to which the development, performance or position of the business can be measured effectively.
Liability aware
Liability aware is a framework for proactively managing the various liability risks and requirements that are faced by defined benefit pension plans and insurance companies.
Mature book/business
For Aberdeen Standard Investments, mature books represent the management of assets on behalf of strategic partner life businesses including Standard Life Group and a number of third party strategic partners such as Lloyds Banking Group and Phoenix. For Standard Life Pensions and Savings, mature books include UK mature Retail, UK and Europe spread/risk based business and the with profits business in Germany which closed to new business in April 2015.
Net flows
Net flows represent gross inflows less gross outflows or redemptions. Gross inflows are new funds from clients and customers. Gross outflows or redemptions is the money withdrawn by clients or customers during the period, including annuity payments.
Own funds
Under Solvency II, the capital resources available to meet solvency capital requirements are called own funds.
Platform
An investment platform (e.g. Wrap or Elevate) which is essentially a trading platform enabling investment funds, pensions, direct equity holdings and some life assurance contracts to be held in the same administrative account rather than as separate holdings.
Pro forma basis
The merger of Standard Life plc and Aberdeen completed on 14 August 2017, with the merger accounted for as an acquisition of Aberdeen by Standard Life plc on that date. Results on a pro forma basis are prepared as if Standard Life plc and Aberdeen had always been merged and are included on this basis to assist in explaining trends in financial performance by showing a full 12 months performance for the combined Group for both the current year and prior year. This is applicable to the results of the Group and Aberdeen Standard Investments.
Recourse cash flows (RCF)
Certain cash flows arising in the HWPF on specified blocks of UK and Ireland business, which are transferred out of the fund annually and accrue to the ultimate benefit of equity holders, as determined by the Scheme of Demutualisation.
Regular premium
A regular premium contract (as opposed to a single premium contract) is one where the policyholder agrees at inception to make regular payments throughout the term of the contract.
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 have been prepared on this basis, with Aberdeen results included only from the date of merger onwards. This is being referred to as the Reported basis. A reconciliation between profitability on a Pro forma basis and the Reported results is included on page 282.
Scheme of Demutualisation or the Scheme
The scheme pursuant to Part VII of, and Schedule 12 to, the Financial Services and Markets Act 2000, under which substantially all of the long-term business of SLAC was transferred to Standard Life Assurance Limited on 10 July 2006.
Single premium
A single premium contract (as opposed to a regular premium contract), which involves the payment of one premium at inception with no obligation for the policyholder to make subsequent additional payments.
SIPP
A self invested personal pension which provides the policyholder with greater choice and flexibility as to the range of investments made, how those investments are managed, the administration of those assets and how retirement benefits are taken.
SLAC
The Standard Life Assurance Company (renamed The Standard Life Assurance Company 2006 on 10 July 2006).
SLAL
Standard Life Assurance Limited.
Solvency II
Solvency II is an EU-wide initiative that brings consistency to how EU insurers manage capital and risk. Solvency II was implemented on
1 January 2016.
Solvency capital requirement (SCR)
Under Solvency II, insurers are required to identify their key risks - for example that equity markets fall - and hold sufficient capital to withstand adverse outcomes from those risks. This amount of capital is referred to as the Solvency capital requirement or SCR.
Solvency cover
Solvency II Own funds divided by the Solvency capital requirement.
Spread/risk business
Spread/risk business mainly comprises products where we provide a guaranteed level of income for our customers in return for an investment, for example, annuities. The 'spread' referred to in the title primarily relates to the difference between the guaranteed amount we pay to customers and the actual return on the assets over the period of the contract.
Spread/risk margin
Spread/risk margin is a component of adjusted profit and reflects the margin earned on spread/risk business. This includes net earned premiums, claims and benefits paid, net investment return using long-term assumptions and reserving changes. Spread/risk margin excludes the impact of economic assumption changes, which are not included in determining adjusted profit.
Standard Life
The brand name for our Pensions and Savings business, operating in the UK and Europe.
Standard Life Group
Prior to demutualisation on 10 July 2006, SLAC and its subsidiaries and, from demutualisation on 10 July 2006 to 13 August 2017, Standard Life plc and its subsidiaries.
Strategic partner life business
A measure of the assets that Aberdeen Standard Investments manages on behalf of Standard Life Aberdeen Group companies and under other long-term life book partnership agreements with third party companies such as Phoenix Group.
Subordinated liabilities
Subordinated liabilities are debts of a company which, in the event of liquidation, rank below its other debts but above share capital.
Technical provisions
The best estimate market consistent value of our policyholder liabilities is referred to as technical provisions. The calculation is discounted to recognise the time value of money and includes a risk margin, calculated in accordance with Solvency II regulations.
UK Retail
This relates to business where we have a relationship with the customer either directly or through an independent financial adviser. We analyse this type of business into growth and mature categories. Retail growth includes the products, platforms, investment solutions and services of our UK Retail business that we continue to market actively to our customers. Retail mature includes business that was predominantly written before demutualisation.
UK Workplace
UK Workplace pensions, savings and benefits to UK employers and employees. These are sold through corporate benefit consultants, independent financial advisers, or directly to employers.
Underpin
In relation to remuneration, refers to a further performance condition that is required to be met in addition to the performance targets when determining the vesting of an award.
Unit linked policy
A policy where the benefits are determined by reference to the investment performance of a specified pool of assets referred to as the unit linked fund.
12. Shareholder information
Registered office
Standard Life House
30 Lothian Road
Edinburgh
EH1 2DH
Scotland
Company registration number: SC286832
Phone: 0800 634 7474* or 0131 225 2552*
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.
Kenneth A Gilmour
Link Market Services Limited (Link)
KPMG LLP
Slaughter and May
JP Morgan Cazenove
Goldman Sachs
We offer a wide range of shareholder services. For more information, please:
· Contact our registrar, Link, who manage this service for us. Their details can be found on the inside back cover.
· Visit our share portal at www.standardlifeaberdeenshares.com
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
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
|
2018 |
Full year results 2017 |
23 February |
|
Ex-dividend date for 2017 final dividend |
19 April |
|
|
Record date for 2017 final dividend |
20 April |
|
|
Last date for DRIP elections for 2017 final dividend |
09 May |
|
|
Dividend payment date for 2017 final dividend |
30 May |
|
|
Half year results 2018 |
07 August |
|
|
Ex-dividend date for 2018 interim dividend |
16 August |
|
|
Record date for 2018 interim dividend |
17 August |
|
|
Last date for DRIP elections for 2018 |
05 September |
|
|
Dividend payment date for 2018 interim dividend |
25 September |
Analysis of registered shareholdings at 31 December 2017
|
Range of shares |
Number of holders |
% of total holders |
Number of shares |
% of total shares |
|
1-1,000 |
62,796 |
61.11 |
26,483,000 |
0.89 |
|
1,001-5,000 |
34,613 |
33.68 |
70,528,561 |
2.37 |
|
5,001-10,000 |
2,980 |
2.90 |
19,993,611 |
0.67 |
|
10,001-100,000 |
1,738 |
1.69 |
42,330,605 |
1.42 |
|
#100,001+ |
636 |
0.62 |
2,819,601,100 |
94.65 |
|
Total |
102,763 |
100 |
2,978,936,877 |
100 |
# These figures include the Company-sponsored nominee - the Standard Life Aberdeen Share Account - which had 1,039,617 participants holding 736,555,571 shares.