SLA.L Regulatory News (SLA)

Standard Life Aberdeen plc

Half year results 2019

Part 3 of 4

2. Statement of Directors' responsibilities

Each of the Directors, whose names and functions are listed on the Standard Life Aberdeen plc website, www.standardlifeaberdeen.com, confirms to the best of his or her knowledge and belief that:

·; The International Financial Reporting Standards (IFRS) condensed consolidated income statement, the IFRS condensed consolidated statement of comprehensive income, the IFRS condensed consolidated statement of financial position, the IFRS condensed consolidated statement of changes in equity and the IFRS condensed consolidated statement of cash flows and associated notes, have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU

·; The interim management report includes a fair review of the information required by:

- DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the IFRS condensed consolidated financial information and a description of the principal risks and uncertainties for the remaining six months of the year

- DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so

·; As per principle N of the UK Corporate Governance Code, the Half year results 2019 taken as a whole, present a fair, balanced and understandable assessment of the Company's position and prospects

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

Changes to Directors during the period

As previously announced, Simon Troughton and Richard Mully retired as non-executive Directors at the conclusion of the Company's Annual General Meeting on 14 May 2019. Bill Rattray retired on 31 May 2019 and was succeeded as Chief Financial Officer and executive Director by Stephanie Bruce who was appointed on 1 June 2019. In addition, the Company announced Jonathan Asquith's appointment to the Board, as a non-executive Director, Chair of the Remuneration Committee and Senior Independent Director, with effect from 1 September 2019.

By order of the Board

3. Independent review report to Standard Life Aberdeen plc

Conclusion

We have been engaged by the Company to review the condensed set of financial statements in the Half year results for the six months ended 30 June 2019 which comprises the:

·; IFRS condensed consolidated income statement

·; IFRS condensed consolidated statement of comprehensive income

·; Reconciliation of consolidated adjusted profit before tax to IFRS profit for the period

·; IFRS condensed consolidated statement of financial position

·; IFRS condensed statement of changes in equity

·; IFRS condensed consolidated statement of cash flows and the related explanatory notes

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Half year results for the six months ended 30 June 2019 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ('the DTR') of the UK's Financial Conduct Authority ('the UK FCA').

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the Half year results and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

The impact of uncertainties due to the UK exiting the European Union on our review

Uncertainties related to the effects of Brexit are relevant to understanding our review of the condensed financial statements. Brexit is one of the most significant economic events for the UK, and at the date of this report its effects are subject to unprecedented levels of uncertainty of outcomes, with the full range of possible effects unknown. An interim review cannot be expected to predict the unknowable factors or all possible future implications for a company and this is particularly the case in relation to Brexit.

Directors' responsibilities

The Half year results is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Half year results in accordance with the DTR of the UK FCA.

As disclosed in Note 4.1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The Directors are responsible for preparing the IFRS condensed consolidated financial information included in the Half year results in accordance with IAS 34 as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the IFRS condensed consolidated financial information in the Half year results based on our review.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Jonathan Mills

for and on behalf of KPMG LLP

Chartered AccountantsSaltire Court20 Castle TerraceEdinburghEH1 2EG

7 August 2019

4. Financial information

IFRS condensed consolidated income statement

For the six months ended 30 June 2019

1 The Group has initially applied IFRS 9 and IFRS 16 at 1 January 2019. Under the transition methods chosen, comparative information is not restated. Refer Note 4.1.

The Notes on pages 19 to 43 are an integral part of this IFRS condensed consolidated financial information.

IFRS condensed consolidated statement of comprehensive income

For the six months ended 30 June 2019

1 The Group has initially applied IFRS 9 and IFRS 16 at 1 January 2019. Under the transition methods chosen, comparative information is not restated. Refer Note 4.1.

The Notes on pages 19 to 43 are an integral part of this IFRS condensed consolidated financial information.

Reconciliation of consolidated adjusted profit before tax to IFRS profit for the period

For the six months ended 30 June 2019

1 The Group has initially applied IFRS 9 and IFRS 16 at 1 January 2019. Under the transition methods chosen, comparative information is not restated. Refer Note 4.1. Comparatives for the six months ended 30 June 2018 have been restated to reflect changes in the reportable segments. Refer Note 4.3.

2 The Other adjusting item for the six months ended 30 June 2018 relating to discontinued operations is a held for sale accounting adjustment relating to the amortisation of intangible assets (primarily deferred acquisition costs) and depreciation of tangible assets of £38m. Following the classification of the UK and European Insurance business as held for sale, no amortisation or depreciation is recognised in accordance with applicable financial reporting standards.

3 For discontinued operations profit before tax expense attributable to equity holders consists of profit before tax of £25m (six months ended 30 June 2018: £122m) less tax expense attributable to policyholders' returns of £nil (six months ended 30 June 2018: £24m).

1 The Group has initially applied IFRS 9 and IFRS 16 at 1 January 2019. Under the transition methods chosen, comparative information is not restated. Refer Note 4.1.

2 The Other adjusting item for the 12 months ended 31 December 2018 relating to discontinued operations is a held for sale accounting adjustment relating to the amortisation of intangible assets (primarily deferred acquisition costs) and depreciation of tangible assets of £44m. Following the classification of the UK and European insurance business as held for sale, no amortisation or depreciation was recognised in accordance with applicable financial reporting standards.

3 For discontinued operations profit before tax expense attributable to equity holders consists of profit before tax of £1,780m less tax expense attributable to policyholders' returns of £46m.

The Group's key alternative performance measure is adjusted profit before tax. Refer Note 4.8 for further details.

The Notes on pages 19 to 43 are an integral part of this IFRS condensed consolidated financial information.

IFRS condensed consolidated statement of financial position

As at 30 June 2019

1 The Group has initially applied IFRS 9 and IFRS 16 at 1 January 2019. Under the transition methods chosen, comparative information is not restated. Refer Note 4.1.

The Notes on pages 19 to 43 are an integral part of this IFRS condensed consolidated financial information.

IFRS condensed consolidated statement of changes in equity

For the six months ended 30 June 2019

1 The Group has initially applied IFRS 9 and IFRS 16 at 1 January 2019. Under the transition methods chosen, comparative information is not restated and the cumulative effect of initially applying these standards is recognised in retained earnings at the date of initial application. Refer Note 4.1.

1 The presentation of amounts attributable to certain perpetual debt instruments in 2018 has been corrected to show these amounts separately as related to other equity holders rather than as part of non-controlling interests.

The Notes on pages 19 to 43 are an integral part of this IFRS condensed consolidated financial information.

IFRS condensed consolidated statement of cash flows

For the six months ended 30 June 2019

1 The Group has initially applied IFRS 9 and IFRS 16 at 1 January 2019. Under the transition methods chosen, comparative information is not restated. Refer Note 4.1.

2 Comprises £1,315m (30 June 2018: £9,790m; 31 December 2018: £1,173m) of cash and cash equivalents, including cash and cash equivalents held for sale and (£278m) (30 June 2018: (£340m); 31 December 2018: (£216m)) of overdrafts which are reported in other financial liabilities and liabilities of operations held for sale in the IFRS condensed consolidated statement of financial position.

The Notes on pages 19 to 43 are an integral part of this IFRS condensed consolidated financial information.

Notes to the IFRS condensed consolidated financial information

4.1 Accounting policies

(a) Basis of preparation

The IFRS condensed consolidated half year financial information has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and IAS 34 Interim Financial Reporting issued by the International Accounting Standards Board as endorsed by the European Union (EU).

The accounting policies for recognition, measurement, consolidation and presentation as set out in the Group's Annual report and accounts for the year ended 31 December 2018 have been applied in the preparation of the IFRS condensed consolidated half year financial information except as noted below.

(a)(i) New standards, interpretations and amendments to existing standards that have been adopted by the Group

The Group has adopted the following new International Financial Reporting Standards (IFRSs), interpretations and amendments to existing standards, which are effective by EU endorsement for annual periods beginning on or after 1 January 2019 and IFRS 9 whose adoption has previously been deferred (see the Group's Annual report and accounts for the year ended 31 December 2018 for further details).

IFRS 9 Financial Instruments 

On 1 January 2019 the Group adopted IFRS 9 Financial Instruments. Financial assets are classified at initial recognition based on whether their contractual cash flows are solely payments of principal and interest (SPPI) and the nature of the business model they are managed under. This has resulted in the Group's equity securities and interests in pooled investment funds and certain debt securities being classified as fair value through profit or loss (FVTPL) and the Group's receivables, other financial assets, cash and other debt securities being measured at amortised cost. Derivative instruments are measured at fair value.

Financial liabilities are measured at amortised cost using the effective interest method unless they are derivatives or they are designated as FVTPL.

Changes in fair value of all financial instruments classified as FVTPL and derivative instruments are recognised in profit or loss except for derivative instruments that are designated as a hedging instrument in a cash flow hedge. Interest is credited to profit or loss using the effective interest rate method for financial instruments measured at amortised cost.

An expected credit loss impairment model is applied to financial assets measured at amortised cost. Impairment losses representing the expected credit loss in the next 12 months are recognised unless there has been a significant increase in credit risk from initial recognition in which case lifetime expected losses are recognised.

Where the terms of a financial liability are modified and the modification does not result in the derecognition of the liability, the liability is adjusted to the net present value of the future cash flows less transaction costs with a modification gain or loss recognised in the income statement.

The Group has elected to continue applying the hedge accounting requirements of IAS 39. Therefore the hedge accounting policy is the same as that given in the Group's Annual report and accounts for the year ended 31 December 2018.

The main impacts of adopting IFRS 9 are as follows:

·; The Group's debt securities which were previously classified as available-for-sale (AFS) and therefore measured at fair value are now measured at amortised cost. At 31 December 2018 the fair value of AFS securities was £862m with a corresponding AFS financial assets reserve balance of £7m and deferred tax liability of £1m. On reclassification, the Company's debt securities were recognised at 1 January 2019 at their amortised cost (less expected credit losses) of £854m. The available-for-sale financial assets reserve balance and the related deferred tax liability were no longer recognised. The expected credit losses at 1 January 2019 were less than £1m.

·; At 31 December 2018, the Group had subordinated liabilities of £1,081m. Under IFRS 9, where the terms of a financial liability are modified and the modification does not result in the derecognition of the liability, the liability is adjusted to the net present value of the future cash flows less transaction costs with a modification gain or loss recognised in the income statement. During the year ended 31 December 2018, the terms of the 4.25% US Dollar fixed rate subordinated notes were modified. Consequently, on adoption of IFRS 9, these subordinated liabilities have been recognised at 1 January 2019 at a revised amortised cost of £1,086m. The impact on retained earnings is £5m.

As permitted by IFRS 9 comparatives have not been restated.

IFRS 16 Leases 

On 1 January 2019 the Group adopted IFRS 16 Leases. IFRS 16 replaces IAS 17 Leases and introduces a new single accounting approach for lessees for all leases (with limited exceptions). As a result there is no longer a distinction between operating leases and finance leases, and lessees will recognise a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term. The accounting for leases by lessors remains largely unchanged.

Transition

The Group has applied the cumulative catch up approach to IFRS 16 and therefore no comparatives have been restated. On transition to IFRS 16, the Group recognised right-of-use assets and lease liabilities. Right-of-use assets for property have been calculated as if IFRS 16 has always been applied, recognising the difference between the assets and liabilities in retained earnings. For non-property leases, the right-of-use assets initially recognised was equal to the lease liability calculated with no impact on retained earnings.

Practical expedients

The Group has used the following practical expedients permitted under IFRS 16:

·; To apply the new standard solely to leases previously identified in accordance with IAS 17 and IFRIC 4 Determining whether an Arrangement Contains a Lease

·; To not recognise leases with a low value or short-term leases including those whose term ends within 12 months at 1 January 2019

·; To apply a single discount rate to leases with similar characteristics

In addition, as at 31 December 2018 the Group recognised an onerous lease provision of £12m under IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The Group has applied the practical expedient to utilise the assessment that the lease was onerous under IAS 37 and therefore adjust the right of use asset at the date of initial application by the onerous lease provision rather than conduct an impairment test.

Impact of transition

The impact on opening retained earnings at 1 January 2019 is summarised below:

1 Additional right-of-use assets of £5m and additional lease liabilities for £5m were recognised within Assets held for sale and Liabilities of operations held for sale respectively.

When measuring lease liabilities for leases previously classified as operating leases, the Group used discount rates determined on a portfolio basis depending on the geographic location and term of the lease. The weighted average rate used at initial application was 2.6%. The lease commitments for operating leases as previously disclosed in the Group's Annual report and accounts for the year ended 31 December 2018 is reconciled to the lease liabilities at 1 January 2019 below:

Accounting policies

Right-of-use assets are measured at cost less accumulated depreciation and impairment losses. Depreciation is charged over the term of the lease (remaining term in the case of non-property right-of-use assets recognised at 1 January 2019 - see transition above).

The lease liability is calculated as the present value of the future lease payments. The lease payments are discounted using the rate implicit within the lease where readily available or the Group's incremental borrowing rate where the implicit rate is not readily available (see above for transitional arrangements). Interest is calculated on the liability using the discount rate and is charged to the income statement under finance costs.

In determining the value of the right-of-use assets and lease liabilities, the Group considers whether any leases contain lease extensions or termination options that the Group is reasonably certain to exercise.

Disclosure

IFRS 16 introduces new disclosure requirements for lessees and lessors. The objective of the disclosures is for lessees and lessors to disclose information in the notes that, together with the information provided in the statement of financial position, statement of profit or loss and statement of cash flows, gives a basis for users of financial statements to assess the effect that leases have on the financial position, financial performance and cash flows. These disclosures are not required under IAS 34 for interim reporting and will be included in the Group's Annual report and accounts for the year ended 31 December 2019.

Statement of cash flows: Classification

From 1 January 2019 the Group has changed the classification of cash flows arising from the sale and purchase of debt securities and equity securities and interests in pooled investment funds, with the exception of those related to unit linked funds. Such cash flows are now classified as cash flows arising from investing activities. During 2018 and in prior periods, the Group's cash flows predominantly related to insurance business. Consistent with other insurers, cash flows arising from the sale and purchase of debt securities and equity securities and interests in pooled investment funds, other than for seeding investments, were classified as arising from operating activities. In 2019, following the disposal of the UK and European insurance business in 2018, the Group's operating cash flows no longer predominantly relate to insurance business operating activities. In addition, from 1 January 2019 the Group has changed the classification of capital flows arising to/from third party interest in consolidated funds from cash flows arising from financing activities to cash flows arising from operating activities. The reason for the changes in accounting policy is to make the financial statements more relevant to users as it is more consistent with asset management peers. Comparative amounts have not been restated as we consider that the 2018 and prior period cash flow presentation was appropriate for the predominantly insurance business cash flows in those periods.

Interpretations and amendments to other standards

·; IFRIC 23: Uncertainty over Income Tax Treatments

·; Amendments to IFRS 9 Prepayment Features with Negative Compensation

·; Amendments to IAS 19 Amendment, Curtailment or Settlement

·; Amendments to IAS 28 Long-term interests in associates and joint ventures

·; Annual Improvements 2015-2017 cycle

The Group's accounting policies have been updated to reflect these. Management considers the implementation of the above interpretations and amendments to existing standards has had no significant impact on the Group's financial statements.

(b) IFRS condensed consolidated half year financial information

This IFRS condensed consolidated half year financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act. Additionally, the comparative figures for the financial year ended 31 December 2018 are not the Company's statutory accounts for that financial year. The statutory accounts have been reported on by the Company's auditor and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The IFRS condensed consolidated half year financial information has been reviewed, not audited.

(c) Exchange rates

The income statements and cash flows, and statements of financial position of Group entities that have a different functional currency from the Group's presentation currency have been translated using the following principal exchange rates:

4.2 Acquisitions and disposals

(a) Acquisitions

(a)(i) Subsidiaries

On 15 February 2019, Aberdeen Asset Management PLC completed the purchase of the entire share capital of Orion Partners Holding Limited and Orion Partner Services Inc. The assets under management were US$0.9bn (£0.7bn) at the acquisition date.

(a)(ii) Prior year acquisitions

On 27 April 2018, Aberdeen Asset Management Inc. purchased the US business of specialist commodity exchange traded product provider ETF Securities by purchasing the entire members' interests of ETF Securities USA LLC, ETF Securities (US) LLC and ETF Securities Advisers LLC. In addition, the Group's UK wide financial advice business, 1825, completed the purchase of the entire share capital of Fraser Heath Financial Management Ltd and Cumberland Place Financial Management Ltd on 1 March 2018 and 6 April 2018 respectively.

(b) Current period disposals

(b)(i) Associates

HDFC Life Insurance Company Limited (HDFC Life)

On 12 and 13 March 2019 and 3 to 6 May 2019 through Offers for Sale on the National Stock Exchange of India Limited and BSE Limited, the Group sold 92,181,992 and 33,032,381 equity shares in HDFC Life, respectively (in total 6.21% of the issued equity share capital of HDFC Life), for a combined total consideration net of taxes and expenses of Rs 47,063m (£510m). The combined gain on sale of £442m was calculated using the weighted-average cost method. On disposal a loss of £1m was recycled from the translation reserve and was included in determining the gain on sale. The Group's shareholding in HDFC Life at 30 June 2019 is 464,411,893 equity shares or 23.02% of the issued equity share capital of HDFC Life.

(c) Prior year disposals

(c)(i) Subsidiaries

UK and European insurance business

On 23 February 2018, the Group announced the proposed sale of the UK and European insurance business to Phoenix (the Sale), conditional on shareholder and relevant regulatory approvals. The Sale was completed on 31 August 2018 and was implemented by the sale to Phoenix of the entire issued share capital of Standard Life Assurance Limited (SLAL).

Under the transaction the following businesses were retained by the Group:

·; UK retail platforms, including Wrap and Elevate

·; 1825, our financial advice business

In addition, the assets and liabilities of both the UK and Ireland Standard Life staff defined benefit pension plans were retained by the Group.

Following the announcement on 23 February 2018 the UK and European insurance business was classified as held for sale and measured at its carrying amount. The results of the UK and European insurance business to 31 August 2018 were classified as discontinued operations.

Total consideration received comprised cash of £2.0bn, a dividend received from SLAL of £312m in March 2018 and new shares issued at completion representing approximately 19.98% of the then issued share capital of Phoenix. The shareholding in Phoenix is subject to a lock-up of 12 months from completion. The Group recognised a gain on disposal in respect of the Sale which is included in profit from discontinued operations in the consolidated condensed income statement for the year ended 31 December 2018 of £1,780m. On disposal £43m was recycled from the translation reserve and was included in determining the gain on sale. £99m (net) of other reserves were also released directly to retained earnings.

(c)(ii) Associates

HDFC Asset Management Company Limited (HDFC AMC)

HDFC AMC, the Group's associate Indian asset management business announced in November 2017 that its board of directors had approved initiation of an IPO with the Group offering up a portion of the paid up capital of HDFC AMC. On 6 August 2018, HDFC AMC listed on the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited following completion of the IPO. Through the IPO, the Group sold 16,864,585 equity shares in HDFC AMC for a total net consideration of Rs.16,212m (£180m). The gain on sale from the IPO of £177m (£156m after tax) was calculated using the weighted-average cost method. On disposal £2m was recycled from the translation reserve and was included in determining the gain on sale. The Group's shareholding in HDFC AMC at 30 June 2019 is 63,650,615 equity shares or 29.94% of the issued share capital of HDFC AMC.

(d) Assets and liabilities of operations held for sale

Standard Life (Asia) Limited

On 29 March 2017, the Group announced the proposed sale of its wholly owned Hong Kong insurance business, Standard Life (Asia) Limited (SL Asia) to the Group's Chinese joint venture business, Heng An Standard Life Insurance Company Limited. Standard Life (Asia) Limited is reported in the Asset management and platforms segment and Heng An Standard Life Insurance Company Limited is reported within the Insurance associates and joint ventures segment. The transaction is subject to obtaining local regulatory and other approvals in mainland China and Hong Kong.

At 30 June 2019, this disposal group was measured at fair value less cost to sell and comprised the following assets and liabilities:

An impairment loss of £2m (30 June 2018: £nil; 31 December 2018: £2m) has been included in Other administrative expenses in the IFRS condensed consolidated income statement. Fair value has been determined by reference to the expected sale price.

Net assets of operations held for sale are net of intercompany balances between Standard Life (Asia) Limited and the rest of the Group.

(e) Discontinued operations

The consolidated income statement profit, other comprehensive income and cash flows from discontinued operations relate solely to the UK and European insurance business which was sold in 2018. Refer Note 4.2 (c)(i).

For the six months ended 30 June 2019, the profit from discontinued operations of £25m reflects a change in the value of contingent consideration relating to the sale of the UK and European insurance business to Phoenix.

4.3 Segmental analysis

The Group's reportable segments have been identified in accordance with the way in which the Group is structured and managed. IFRS 8 Operating Segments requires that the information presented in the financial statements is based on information provided to the 'Chief Operating Decision Maker'. The Chief Operating Decision Maker for the Group is the Executive team.

(a) Basis of segmentation

The Group's reportable segments are as follows:

Continuing operations:

Asset management and platforms

This segment primarily relates to our asset management and platform businesses. Aberdeen Standard Investments and its asset management associate in India, HDFC AMC, provide a range of investment products and services for individuals and institutional customers through a number of different investment vehicles. The segment includes the Group's three UK adviser platform businesses which provide administration services to advisers: Wrap and Elevate which are Standard Life branded, and the Parmenion digital platform. The segment also includes other wholly owned activities of the Group including the 1825 financial planning and advice business, corporate centre and related activities and the UK and Ireland Standard Life staff defined benefit pension plans.

Insurance associates and joint ventures

This segment comprises our life insurance associates and joint ventures in India (HDFC life), the UK (Phoenix) and China (HASL). These businesses offer a range of pension, insurance and savings products to the Indian, UK, European and Chinese markets. Phoenix is also the largest life and pensions consolidator in Europe.

Discontinued operations:

UK and European insurance

On 23 February 2018, the Group announced the proposed sale of the UK and European insurance business. Refer Note 4.2 for further details. As a consequence, the results of this business have been presented as discontinued operations. The UK and European insurance business provided a broad range of long-term savings and investment products to individual and corporate customers in the UK, Germany, Austria and Ireland.

Changes to reporting segments

As noted above, the segments are based on information provided to the Executive team. Prior to the sale of the UK and European insurance business, management information was provided separately for our asset management business and our pensions and savings business. Following the completion of the sale, the Group is being managed as a single company and this is reflected in our new combined Asset management and platforms segment. HDFC Life and HASL, which were previously reported in the India and China life segment, are included in the Insurance associates and joint ventures segment together with Phoenix.

Comparative amounts for the six months ended 30 June 2018 have been prepared on the same basis as the six months ended 30 June 2019 and the 12 months ended 31 December 2018 to allow more meaningful comparison.

(b) Reportable segments - Group adjusted profit before tax and revenue information

(b)(i) Analysis of Group adjusted profit before tax

Adjusted profit before tax is the key alternative performance measure utilised by the Group's management in their evaluation of segmental performance and is therefore also presented by reportable segment.

1 Share of associates' and joint ventures' profit before tax comprises the Group's share of results of HDFC Life, HDFC AMC, Phoenix and HASL.

2 Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts includes £89m included in Other administrative expenses, and £55m relating to intangibles recognised on the part acquisition of associates and included in Share of profit from associates and joint ventures in the condensed consolidated income statement.

Each reportable segment reports total adjusted operating income as its measure of revenue in its analysis of adjusted profit before tax. For the six months ended 30 June 2019, fee based revenue is the same as adjusted operating income. Fee based revenue consists of income generated primarily from asset management charges, premium based charges and transactional charges.

Adjusted operating income for the six months ended 30 June 2019 relates to revenues generated from external customers. The adjusted operating income of the Asset management and platforms segment for the six months ended 30 June 2018 and the full year ended 31 December 2018 included £69m and £94m respectively which related to investment management fees arising from intra-group transactions with the UK and European insurance segment classified as discontinued operations. At a Group level an elimination adjustment was required to remove intra-group impacts.

1 Share of associates' and joint ventures' profit before tax comprises the Group's share of results of HDFC Life, HDFC AMC and HASL.

2 Amortisation and impairment of intangible assets acquired in business combinations includes £105m included in Other administrative expenses, and £3m relating to intangibles recognised on the part acquisition of associates and included in Share of profit from associates and joint ventures in the condensed consolidated income statement.

Spread/risk margin for the six months ended 30 June 2018 and the full year ended 31 December 2018 reflected the margin earned on spread/risk business and includes net earned premiums, claims and benefits paid, net investment return using long-term assumptions and actuarial reserving changes.

1 Share of associates' and joint ventures' profit before tax comprises the Group's share of results of HDFC Life, HDFC AMC, Phoenix and HASL.

2 Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts includes £1,117m included in administrative expenses and £38m relating to intangibles recognised on the part acquisition of associates and included in Share of profit from associates and joint ventures in the consolidated income statement.

(b)(ii) Total income and expenses

The following table provides a reconciliation of total adjusted operating income and total adjusted operating expenses from continuing operations, as presented in the analysis of Group adjusted profit by segment, to total revenue and total expenses from continuing operations respectively, as presented in the IFRS condensed consolidated income statement:

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. Adjusted operating income and expenses exclude items which have an equal and opposite effect on IFRS income and IFRS expenses in the consolidated income statement, such as investment returns which are for the account of policyholders. Other presentation differences include Aberdeen Standard Investments commission expenses which are presented in expenses in the consolidated income statement but are netted against adjusted operating income in the analysis of Group adjusted profit by segment.

4.4 Revenue from contracts with customers

The following table provides a breakdown of total revenue from contracts with customers:

1 In addition to revenues earned as a percentage of AUM, management fee income includes certain other revenues such as registration fees.

The revenue from contracts with customers is reported within the Asset management and platforms segment. The following table provides a reconciliation of Revenue from contracts with customers as presented in the condensed consolidated income statement to fee based revenue, as presented in the analysis of adjusted profit before tax for the Asset management and platforms segment.

Commission expenses are netted against fee based revenue in the segment reporting but are included within expenses in the consolidated income statement. Other presentation differences relates to amounts presented in a different income line item of the consolidated income statement and intra-group revenue which is eliminated in the consolidated income statement but grossed up for the purposes of segmental reporting.

4.5 Administrative expenses

The 2019 restructuring and corporate transaction expenses mainly relate to merger integration, implementing our simplified global operating model and the repurchase of subordinated liabilities (refer Note 4.14).

4.6 Tax expense

The share of associates' and joint ventures' tax expense is (£1m) (six months ended 30 June 2018: £18m; 12 months ended 31 December2018: £40m) and is included in profit before tax in the IFRS condensed consolidated income statement in Share of profit from associates and joint ventures.

The standard UK corporation tax rate for the accounting period is 19% (six months ended 30 June 2018: 19%; 12 months ended 31 December 2018: 19%). The UK corporation tax rate will reduce to 17% from 1 April 2020. These changes have been taken into account in the calculation of the UK deferred tax balance at 30 June 2019.

The Group operates in a large number of territories and during the normal course of business will be subject to audit or enquiry by local tax authorities. At any point in time the Group will also be engaged in commercial transactions the tax outcome of which may be uncertain due to their complexity or uncertain application of tax law. Tax provisions, therefore, are subject to a level of estimation and judgement and may result in the Group recognising provisions for uncertain tax positions. Management will provide for uncertain tax positions where they judge that it is probable there will be a future outflow of economic benefits from the Group to settle the obligation. In assessing uncertain tax positions management considers each issue on its own merits using their judgement as to the estimate of the most likely outcome. Where the final outcome differs from the amount provided this difference will impact the tax charge in future periods. Management reassesses provisions at each reporting date based upon latest available information.

Tax relating to components of other comprehensive income is as follows:

All of the amounts presented above are in respect of equity holders of Standard Life Aberdeen plc.

Tax relating to items taken directly to equity is as follows:

4.7 Earnings per share

Basic earnings per share is calculated by dividing profit attributable to ordinary equity holders by the weighted average number of ordinary shares in issue during the period excluding shares owned by the employee trusts that have not vested unconditionally to employees.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue during the period to assume the conversion of all dilutive potential ordinary shares, such as share options granted to employees.

Adjusted earnings per share is calculated on adjusted profit after tax attributable to ordinary equity holders of the Company i.e. adjusted profit net of dividends paid on preference shares.

The following table shows details of basic, diluted and adjusted earnings per share for the period: