April 19, 2021

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INVESCO : Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

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Management has elected to apply the FAST Act Modernization and Simplification of
Regulation S-K, which provides the option to limit the discussion to the two
most recent calendar years. The discussion and analysis disclosed herein apply
to material changes in the consolidated financial statements for 2020 and 2019.
For the comparison of 2019 and 2018, see the Management's Discussion and
Analysis of Financial Condition and Results of Operations in Part II, Item 7 of
the company's 2019 Annual Report on Form 10-K, filed with the Securities and
Exchange Commission on March 2, 2020. The following discussion and analysis of
the results of operations and financial condition of Invesco Ltd. and its
subsidiaries (collectively, the "company" or "Invesco") should be read in
conjunction with the "Forward-looking Statements" disclosure set forth in Part I
and the "Risk Factors" set forth in Item 1A of Part I of this Annual Report on
Form 10­K, each of which describe our risks, uncertainties and other important
factors in more detail.

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Executive Overview

The following executive overview summarizes the significant trends affecting our
results of operations and financial condition for the periods presented. This
overview and the remainder of this management's discussion and analysis
supplements and should be read in conjunction with the Consolidated Financial
Statements of Invesco and the notes thereto contained elsewhere in this Annual
Report on Form 10-K.

Throughout 2020, global markets experienced record levels of volatility,
transitioning quickly from highs in the beginning of the year to extreme lows as
global markets first reacted to the COVID-19 pandemic. The pandemic had a severe
impact on the economy, increasing unemployment and decreasing consumer spending
throughout the global markets. However, beginning in April 2020, equity markets
in many major indices experienced near continual gains throughout the remainder
of 2020, more than reversing losses earlier in the year. The increasing equity
markets were driven by the softening of social containment measures and
reopening of businesses following shut-downs earlier in the year, accommodative
fiscal and monetary policies enacted by many central governments and the
authorization of multiple COVID-19 vaccines. Despite the increase in equity
markets, the economy contracted in many developed and developing countries in
2020.

The table below summarizes the year ended December 31 returns based on price
appreciation/(depreciation) of several major market indices for 2020 and 2019:

                                                                                         Year ended December 31,
                                                      Index expressed in
Equity Index                                               currency                   2020                       2019
S&P 500                                               U.S. Dollar                    16.3%                      28.9%
FTSE 100                                              British Pound                 (14.3)%                     12.1%
FTSE 100                                              U.S. Dollar                   (11.8)%                     16.7%
Nikkei 225                                            Japanese Yen                   16.0%                      18.2%
Nikkei 225                                            U.S. Dollar                    22.4%                      19.9%
MSCI Emerging Markets                                 U.S. Dollar                    15.8%                      15.4%
Bond Index
Barclays U.S. Aggregate Bond                          U.S. Dollar                     7.5%                       8.7%



The company's financial results are impacted by the fluctuations in exchange
rates against the U.S. Dollar. Our revenues are directly influenced by the level
and composition of our AUM. Therefore, movements in global capital market
levels, net new business inflows (or outflows) and changes in the mix of
investment products between asset classes and geographies may materially affect
our revenues from period to period. As fee rates differ across geographic
locations, changes to exchange rates have an impact on the net revenue yields.

Invesco benefits from our long-term efforts to ensure a diversified base of AUM.
One of Invesco's core strengths, and a key differentiator for the company within
the industry, is our broad diversification across client domiciles, asset
classes and distribution channels. Our geographic diversification recognizes
growth opportunities in different parts of the world. This broad diversification
mitigates the impact on Invesco of different market cycles and enables the
company to take advantage of growth opportunities in various markets and
channels.

Update on significant events and transactions

Over the past decade, we've been highly focused on investing ahead of shifts in
client demand, putting us in a strong position to take advantage of key industry
tailwinds in the future. During 2020, we continued to invest in capabilities
where we see client demand or future opportunities by hiring strong talent,
further upgrading our technology platform and launching new products. We believe
the ability to leverage the capabilities developed by our investment teams to
meet client demand across the globe is a significant differentiator for our
firm.

As previously disclosed, we are undertaking a strategic evaluation of our
business focusing on four key areas of our expense base: our organizational
model, our real estate footprint, management of third party spend, and
technology and operations efficiency. We plan to invest in key areas of growth
aligned with our strategic plan, including ETFs, Fixed Income, China, Solutions,
Alternatives and Global Equities, while creating permanent annual net operating
expense improvements of $200 million. A significant element of the savings will
be generated from realigning our workforce to support key areas of growth as
well as repositioning some of our workforce to lower cost locations. We expect
$150 million of the savings to be achieved by
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the end of 2021 with the remainder by the end of 2022. Remaining restructuring
costs related to the strategic evaluation are estimated to be in a range of $150
to $175 million over the next two years, with $119.0 million incurred in 2020.

In 2019, Invesco completed the acquisition of OppenheimerFunds (OFI), and the
integration of our two firms. Building on the combination with OFI, in 2020 we
further deepened our relationships with clients in the US, expanded the
capabilities we offered globally and further scaled our business for the benefit
of clients and shareholders. The firm is also highly focused on delivering the
additional capabilities achieved through the combination to institutional and
non-US markets.

Managing our business and meeting client needs through COVID-19

Invesco is committed to helping our employees, our clients and our communities
navigate the challenges presented by the impacts of COVID-19. The primary focus
of our efforts is to ensure the health and safety of our employees while
preserving our ability to serve clients and manage assets in a highly dynamic
market environment. As always, we are committed to helping our clients achieve
their investment objectives through disciplined long-term investing. To this
end, we continue to proactively engage with our clients virtually to help them
better navigate market volatility by providing thought leadership and other
value-added services. We believe our client centric approach will enable our
clients to emerge from this crisis stronger.

To ensure we continue to meet client needs in a primarily remote-working
environment, small select teams are working at alternate sites or operating in
split shifts to mitigate the risks associated with the virus. Some of our
offices in locations across the globe have begun staged re-openings. We will
continue to be responsive to the evolving threat of the virus and may re-close
if necessary. Decisions regarding openings and closings of our offices are
supported by information from local government and health officials, as well as
our own internal research regarding the needs of our employees and clients.

Our portfolio managers, research analysts and traders are successfully working
remotely or in secure locations with access to all systems necessary to do their
jobs and an ability to connect with their teams in managing client assets.
Additionally, our operational, control and support teams are primarily working
in a remote environment. In light of the remote working environment, we continue
to assess and enhance our business continuity plans as well as our internal
controls with appropriate adjustments made to address the environment. This
thoughtful, coordinated approach helps ensure our ability to continue to meet
client needs and to run our business.

Other External Factors Impacting Invesco

Invesco has a larger global presence in key markets than most of our peers. As
one of the leading investment managers in the UK and Europe, we were more
impacted by continuing uncertainties surrounding Brexit. Additionally, our
strong position in Asia-Pacific meant that Invesco was more affected than others
by market uncertainties over the trade issues between China and the U.S.

On December 24, 2020, the UK and the EU (European Union) announced a trade deal
after months of negotiations. The deal came into force effective December 31,
2020. While the deal announced largely covers goods, details related to the
financial services industry are not specifically outlined within the agreement.
The UK and the EU aim to agree by March 2021 to a memorandum of understanding
establishing a framework for regulatory cooperation on financial services. The
Brexit outcome at the end of 2020 was largely anticipated by the market.

Invesco is a global business and has been committed for many years to meeting
clients' needs across Europe in both EU and non-EU countries. Invesco has local
teams of experts focused on servicing local clients and fund ranges in different
countries to meet a variety of local, country and regional client needs. We
currently have a presence in 12 countries across Europe. Our staff will be able
to continue to reside and work across the relevant regions. The change in the
UK's status from an EU to a non-EU country will not change Invesco's focus or
commitment to serve its clients across Europe. We are fully prepared to continue
to operate and deliver for our clients with minimal disruption.

Investment exposure to the London Interbank Offered Rate (LIBOR) based interest
rates could impact our client portfolios. The UK Financial Conduct Authority
(FCA), which regulates LIBOR, has made it clear that the publication of LIBOR is
not guaranteed beyond 2021. The ICE Benchmark Administration (IBA), which
administers LIBOR, recently consulted on the extension of five of the seven
total settings (overnight and one, three, six and twelve month) USD-LIBOR, with
a possible cessation extension date to June 30, 2023. As a result, firms must
transition away from LIBOR to alternative risk-free rates. Working groups and
regulators across various jurisdictions have put forth LIBOR transition plan
guidance, including recommendations related to the potential cessation extension
date of five of seven settings of US Dollar (USD) LIBOR. Invesco continues to
actively monitor and adjust the LIBOR transition strategy and timeline as
necessary, such as choosing to adhere to the recent International Swaps &
Derivatives Association (ISDA) protocol that provides a clear fallback rate for
legacy LIBOR-
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linked derivative contracts upon LIBOR cessation. The discontinuance of LIBOR
may adversely affect the amount of interest or other amounts payable or
receivable on certain portfolio investments. These changes may also impact the
market liquidity and market value of these portfolio investments. Invesco
finalized its global assessment of exposure in relation to funds holding LIBOR
based instruments and funds utilizing LIBOR as a benchmark and/or performance
target. Invesco is prioritizing the mitigation of risks associated with
financial instruments held and benchmarks/performance targets used that
reference existing LIBOR rates, as well as any impact on Invesco portfolios and
investment strategies. Invesco continues to monitor overall industry transition
progress and completes ongoing analysis of the suitability of alternative
risk-free rates.

Presentation of Management’s Discussion and Analysis of Financial Condition and
Results of Operations — Impact of Consolidated Investment Products

The company provides investment management services to, and has transactions
with, various retail mutual funds and similar entities, private equity, real
estate, fund-of-funds, collateralized loan obligation products (CLOs), and other
investment entities sponsored by the company for the investment of client assets
in the normal course of business. The company serves as the investment manager,
making day-to-day investment decisions concerning the assets of the products.
The company is required to consolidate certain of these managed funds from
time-to-time, as discussed more fully in Item 8, Financial Statements and
Supplementary Data, Note 1, "Accounting Policies -- Basis of Accounting and
Consolidation." Investment products that are consolidated are referred to in
this Form 10-K (Report) as consolidated investments products (CIP). The
company's economic risk with respect to each investment in CIP is limited to its
equity ownership and any uncollected management and performance fees.

The majority of the company's CIP balances are CLO-related. The collateral
assets of the CLOs are held solely to satisfy the obligations of the CLOs. The
company has no right to the benefits from, nor does it bear the risks associated
with, the collateral assets held by the CLOs, beyond the company's direct
investments in, and management and performance fees generated from, the CLOs. If
the company were to liquidate, the collateral assets would not be available to
the general creditors of the company, and as a result, the company does not
consider them to be company assets. Likewise, the investors in the CLOs have no
recourse to the general credit of the company for the notes issued by the CLOs.
The company therefore does not consider this debt to be a company liability.

The impact of CIP is so significant to the presentation of the company's
Consolidated Financial Statements that the company has elected to deconsolidate
these products in its non-GAAP disclosures. The following discussion therefore
combines the results presented under U.S. generally accepted accounting
principles (U.S. GAAP) with the company's non-GAAP presentation. This
Management's Discussion and Analysis of Financial Condition and Results of
Operations contains four distinct sections, which follow after the Assets Under
Management discussion:

•Results of Operations (year ended December 31, 2020 compared to December 31,
2019);
•Schedule of Non-GAAP Information;
•Balance Sheet Discussion; and
•Liquidity and Capital Resources.

To assess the impact of CIP on the company's Results of Operations and Balance
Sheet Discussion, refer to Part II, Item 8, Financial Statements, Note
21, "Consolidated Investment Products." The impact on the company's results of
operations is illustrated by a column which shows the dollar-value change in the
consolidated figures, as caused by the consolidation of CIP. For example, the
impact of CIP on operating revenues for the year ended December 31, 2020 was a
reduction of $39.8 million. This indicates that their consolidation reduced
consolidated revenues by this amount, reflecting the elimination upon their
consolidation of the operating revenues earned by Invesco for managing these
investment products.

Wherever a non-GAAP measure is referenced, a disclosure will follow in the
narrative or in the note referring the reader to the Schedule of Non-GAAP
Information, where additional details regarding the use of the non-GAAP measure
by the company are disclosed, along with reconciliations of the most directly
comparable U.S. GAAP measures to the non-GAAP measures. To further enhance the
readability of the Results of Operations section, separate tables for each of
the revenue, expense, and other income and expenses (non-operating
income/expense) sections of the income statement introduce the narrative that
follows, providing a section-by-section review of the company's income
statements for the periods presented.

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Summary Operating Information

Summary operating information for 2020, 2019 and 2018 is presented in the table
below.
$ in millions, other than per common share amounts,
operating margins and AUM                                                    Year ended December 31,
U.S. GAAP Financial Measures Summary                        2020                      2019                      2018
Operating revenues                                            6,145.6                   6,117.4                   5,314.1
Operating income                                                920.4                     808.2                   1,204.9
Operating margin                                                 15.0  %                   13.2  %                   22.7  %
Net income attributable to Invesco Ltd.                         524.8                     564.7                     882.8
Diluted EPS                                                      1.13                      1.28                      2.14

Non-GAAP Financial Measures Summary
Net revenues (1)                                              4,501.0                   4,415.1                   3,818.1
Adjusted operating income (2)                                 1,664.5                   1,655.8                   1,391.7
Adjusted operating margin (2)                                    37.0  %                   37.5  %                   36.5  %
Adjusted net income attributable to Invesco Ltd. (3)            892.9                   1,124.0                   1,002.7
Adjusted diluted EPS (3)                                         1.93                      2.55                      2.43

Assets Under Management
Ending AUM (billions)                                         1,349.9                   1,226.2                     888.2
Average AUM (billions)                                        1,194.9                   1,094.4                     958.7


_________

(1)Net revenues is a non-GAAP financial measure. Net revenues are operating
revenues plus the net revenues of our Great Wall joint venture; less
pass-through revenue adjustments to investment management fees, service and
distribution fees and other; plus management and performance fees earned from
CIP. See "Schedule of Non-GAAP Information" for the reconciliation of operating
revenues to net revenues.
(2)Adjusted operating income and adjusted operating margin are non-GAAP
financial measures. Adjusted operating margin is adjusted operating income
divided by net revenues. Adjusted operating income includes operating income
plus the net operating income of our joint venture investments, the operating
income impact of the consolidation of investment products, transaction,
integration and restructuring adjustments, compensation expense related to
market valuation changes in deferred compensation plans and other reconciling
items. See "Schedule of Non-GAAP Information," for the reconciliation of
operating income to adjusted operating income.
(3)Adjusted net income attributable to Invesco Ltd. and adjusted diluted EPS are
non-GAAP financial measures. Adjusted net income attributable to Invesco Ltd. is
net income attributable to Invesco Ltd. adjusted to exclude the net income of
CIP, transaction, integration and restructuring adjustments, the net income
impact of deferred compensation plans and other reconciling items. Adjustments
made to net income attributable to Invesco Ltd. are tax-affected in arriving at
adjusted net income attributable to Invesco Ltd. By calculation, adjusted
diluted EPS is adjusted net income attributable to Invesco Ltd. divided by the
weighted average number of common shares outstanding (for diluted EPS). See
"Schedule of Non-GAAP Information," for the reconciliation of net income
attributable to Invesco Ltd. to adjusted net income attributable to Invesco Ltd.
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Investment Capabilities Performance Overview

Invesco's first strategic objective is to achieve strong investment performance
over the long-term for our clients. As of December 31, 2020, 55%, 58%, 61%, and
70% of measured ranked actively managed assets performed in the top half of peer
groups on a one-, three-, five- and ten-year basis, respectively. The table
below presents the one-, three-, five- and ten-year performance of our measured
ranked actively managed investment products measured by the percentage of AUM
ahead of benchmark and AUM in the top half of peer group. (1)
                                                    Benchmark Comparison                                         Peer Group Comparison
                                                 % of AUM Ahead of Benchmark                              % of AUM In Top Half of Peer Group
                                         1yr            3yr          5yr          10yr                1yr           3yr          5yr          10yr
Equities (2)
U.S. Core (5%)                                16  %        12  %         8  %        12  %                28  %        28  %        24  %        17  %
U.S. Growth (7%)                              87  %        87  %        53  %        53  %                87  %        87  %        87  %        53  %
U.S. Value (7%)                               27  %        11  %         3  %         3  %                 4  %         0  %         0  %         0  %
Sector (2%)                                   99  %        97  %        76  %        96  %                62  %        59  %        79  %        60  %
UK (1%)                                       13  %        25  %        18  %        40  %                16  %         6  %         9  %        26  %
Canadian (<1%)                                 0  %         0  %         0  %        12  %                11  %         0  %         0  %        11  %
Asian (3%)                                    79  %        79  %        92  %        88  %                53  %        46  %        78  %        79  %
Continental European (2%)                     14  %         5  %         9  %        90  %                13  %         5  %         9  %        68  %
Global (7%)                                   71  %        71  %        72  %        87  %                78  %        29  %        32  %        47  %
Global Ex U.S. and Emerging
Markets (13%)                                 89  %        89  %        89  %        98  %                29  %        87  %        71  %        88  %

Fixed Income (2)
Money Market (15%)                            81  %        99  %       100  %       100  %                78  %        78  %        78  %        99  %
U.S. Fixed Income (11%)                       67  %        82  %        84  %        95  %                65  %        63  %        88  %        92  %
Global Fixed Income (6%)                      84  %        84  %        87  %        96  %                53  %        54  %        60  %        70  %
Stable Value (5%)                            100  %       100  %       100  %       100  %                97  %       100  %       100  %       100  %

Other (2)
Alternatives (8%)                             26  %        34  %        73  %        37  %                35  %        33  %        40  %        56  %
Balanced (8%)                                 79  %        75  %        53  %        60  %                55  %        52  %        54  %        91  %


____________
Note:
(1) Excludes passive products, closed-end funds, private equity limited
partnerships, non-discretionary funds, unit investment trusts, fund of funds
with component funds managed by Invesco, stable value building block funds and
CDOs. Certain funds and products were excluded from the analysis because of
limited benchmark or peer group data. Had these been available, results may have
been different. These results are preliminary and subject to revision. AUM
measured in the one, three, five and ten-year quartile rankings represents 53%,
52%, 51% and 47% of total Invesco AUM, respectively, and AUM measured versus
benchmark on a one, three, five and ten year basis represents 63%, 62%, 60% and
55% of total Invesco AUM as of 12/31/20. Peer group rankings are sourced from a
widely-used third party ranking agency in each fund's market (Lipper,
Morningstar, IA, Russell, Mercer, eVestment Alliance, SITCA, Value Research) and
asset-weighted in USD. Rankings are as of prior quarter-end for most
institutional products and prior month-end for Australian retail funds due to
their late release by third parties. Rankings are calculated against all funds
in each peer group. Rankings for the primary share class of the most
representative fund in each composite are applied to all products within each
composite. Performance assumes the reinvestment of dividends. Past performance
is not indicative of future results and may not reflect an investor's
experience.

(2) Numbers in parenthesis reflect percentage of 5-year total ranked AUM. As of
December 31, 2020, total ranked AUM is $711.0 billion (53% of total Invesco AUM)
for 1 year, $700.5 billion (52% of total Invesco AUM) for 3 years, $694.0
billion (51% of Invesco AUM) for 5 years, and $631.5 billion (47% of total
Invesco AUM) for 10 years.

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Assets Under Management

The following presentation and discussion of AUM includes Passive and Active
AUM. Passive AUM include index-based ETFs, unit investment trusts (UITs),
non-management fee earning AUM and other passive mandates. Active AUM is total
AUM less Passive AUM.

Non-management fee earning AUM includes non-management fee earning ETFs, UIT and
product leverage. The net flows in non-management fee earning AUM can be
relatively short-term in nature and, due to the relatively low revenue yield,
these can have a significant impact on overall net revenue yield.

The AUM tables and the discussion below refer to certain AUM as long-term.
Long-term inflows and the underlying reasons for the movements in this line item
include investments from new clients, existing clients adding new accounts/funds
or contributions/subscriptions into existing accounts/funds. Long-term outflows
reflect client redemptions from accounts/funds and include the return of
invested capital on the maturity. We present net flows into money market funds
separately because shareholders of those funds typically use them as short-term
funding vehicles and because their flows are particularly sensitive to
short-term interest rate movements.

Changes in AUM were as follows:

                                                         2020                                                        2019                                                       2018
$ in billions                       Total AUM            Active            Passive             Total AUM             Active            Passive             Total AUM            Active            Passive
January 1                          1,226.2               929.2             297.0                 888.2               667.2             221.0                937.6               738.8             198.8
Long-term inflows                    310.9               204.3             106.6                 227.5               146.8              80.7                209.8               139.4              70.4
Long-term outflows                  (326.6)             (236.1)            (90.5)               (261.9)             (196.5)            (65.4)              (248.8)             (176.4)            (72.4)
Long-term net flows                  (15.7)              (31.8)             16.1                 (34.4)              (49.7)             15.3                (39.0)              (37.0)             (2.0)
Net flows in non-management fee
earning AUM                           (5.1)                  -              (5.1)                  9.2                (0.1)              9.3                  2.5                   -               2.5
Net flows in money market funds       14.3                14.3                 -                  (2.0)               (2.0)                -                  7.6                 7.6                 -
Total net flows                       (6.5)              (17.5)             11.0                 (27.2)              (51.8)             24.6                (28.9)              (29.4)              0.5
Reinvested distributions              16.9                16.9                 -                  17.9                17.9                 -                 11.4                11.4                 -
Market gains and losses              103.0                40.8              62.2                 120.4                73.5              46.9                (67.0)              (52.1)            (14.9)

Acquisitions (1)                         -                   -                 -                 224.4               219.9               4.5                 47.6                10.5              37.1
Foreign currency translation          10.3                 9.9               0.4                   2.5                 2.5                 -                (12.5)              (12.0)             (0.5)
December 31                        1,349.9               979.3             370.6               1,226.2               929.2             297.0                888.2               667.2             221.0
Average AUM
Average long-term AUM                952.0               784.6             167.4                 887.1               734.7             152.4                785.5               646.5             139.0
Average AUM                        1,194.9               893.0             301.9               1,094.4               830.1             264.3                958.7               726.6             232.1
Revenue yield
Gross revenue yield on AUM (2)        53.7                65.4              21.0                  57.8                69.1              23.9                 56.3                66.2              26.3
Gross revenue yield on AUM before
performance fees (2)                  53.1                64.6              21.0                  56.8                67.8              23.9                 55.7                65.4              26.3
Net revenue yield on AUM (3)          37.7                46.4              12.0                  40.3                48.6              14.6                 39.8                47.5              15.9
Net revenue yield on AUM before
performance fees (3)                  36.8                45.2              12.0                  39.4                47.2              14.6                 39.2                46.7              15.9



(1) The acquisition of OppenheimerFunds business on May 24, 2019 added $224.4
billion in AUM at that date. The acquisition of Guggenheim Investments' ETF
business on April 6, 2018 added $38.1 billion in AUM at that date. As of July 1,
2018, we began including 100% of Invesco Great Wall, which added $9.5 billion in
AUM during the third quarter of 2018.
(2) Gross revenue yield on AUM is equal to annualized total operating revenues
divided by average AUM, excluding Invesco Great Wall AUM. Prior to the third
quarter 2018, management reflected its interests in Invesco Great Wall on a
proportional consolidation basis, which was consistent with the presentation of
our share of the AUM from these investments. Given the company's influence on
Invesco Great Wall, a change in regulation allowing increased foreign ownership
and reaching oral agreement in principle to obtain majority stake of the joint
venture, the company began reporting 100% of the flows and AUM for Invesco Great
Wall beginning in the third quarter of 2018. Average AUM in 2020 for our JVs in
China was $50.0 billion (2019: $35.6 billion, 2018: $16.2 billion). It is
appropriate to exclude the average AUM of our JVs for purposes of computing
gross revenue yield on AUM, because the revenues resulting from
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these AUM are not presented in our operating revenues. Under U.S. GAAP, our
share of the net income of the JVs is recorded as equity in earnings of
unconsolidated affiliates on our Consolidated Statements of Income.
Additionally, the numerator of the gross revenue yield measure, operating
revenues, excludes the management fees earned from CIP and our JVs in China;
however, the denominator of the measure includes the AUM of these investment
products. Therefore, the gross revenue yield measure is not considered
representative of the company's true effective fee rate from AUM.
(3)  Net revenue yield on AUM is equal to annualized net revenues divided by
average AUM. See "Schedule of Non-GAAP Information" for a reconciliation of
operating revenues to net revenues.

Flows

There are numerous drivers of AUM inflows and outflows, including individual
investor decisions to change investment preferences, fiduciaries and other
gatekeepers making broad asset allocation decisions on behalf of their clients
and reallocation of investments within portfolios. We are not a party to these
asset allocation decisions, as the company does not generally have access to the
underlying investor's decision-making process, including their risk appetite or
liquidity needs. Therefore, the company is not in a position to provide
meaningful information regarding the drivers of inflows and outflows.

Market Returns

Market gains and losses include the net change in AUM resulting from changes in
market values of the underlying securities from period to period. As discussed
in the "Executive Overview" section of this Management's Discussion and
Analysis, during 2020, global equity markets saw significant volatility due to
the COVID-19 pandemic beginning in March 2020 and continuing through 2020. The
resulting decline in AUM adversely impacted our revenues during the first half
of the year, but market recovery increased our average AUM and revenues during
the second half of the year. However, market dynamics have also changed the AUM
product mix, which has an effect on our revenue yield, as discussed further
below.

Foreign Exchange Rates

During the year ended December 31, 2020, we experienced increases in AUM of
$10.3 billion due to changes in foreign exchange rates (December 31, 2019: AUM
increased by $2.5 billion).

Acquisitions

There were no acquisitions during the year ended December 31, 2020. For the year
ended December 31, 2019, we completed the acquisition of OppenheimerFunds on
May 24, 2019, which added $224.4 billion in AUM during the year.

Revenue Yield

As a significant proportion of our AUM is based outside of the U.S., changes in
foreign exchange rates result in a change to the mix of U.S. Dollar denominated
AUM with AUM denominated in other currencies. As fee rates differ across
geographic locations, changes to exchange rates have an impact on the net
revenue yields. Changes in our AUM mix also significantly impact our net revenue
yield. Passive AUM generally earn a lower effective fee rate than active asset
classes, and changes in the mix of products therefore have an impact on our net
revenue yield. At the industry level, investors continue to shift towards
passive products and away from active, and Invesco is able to participate in
this trend due to the breadth, strength and diversified nature of our business.

In the year ended December 31, 2020, the net revenue yield was 37.7 basis points
compared to 40.3 basis points in the year ended December 31, 2019, a decrease of
2.6 basis points.

In 2019, yields improved after the second quarter acquisition of
OppenheimerFunds, which contributed AUM of $224.4 billion comprised of $219.9
billion of active and $4.5 billion of passive AUM, increasing the proportion of
active AUM and positively impacting net revenue yield. However, AUM mix in 2020
was impacted by flows into lower fee products, from the market impact of the
COVID-19 pandemic and from the growth in our QQQ fund, all of which increased
the proportion of lower-fee AUM, which has lowered net revenue yield in 2020. As
passive products generally have lower fees than active products, the AUM shift
towards passive has contributed to the declining net revenue yield. Passive AUM
includes our QQQ ETF, for which we do not receive a management fee but which
delivers significant marketing and brand value and increases Invesco's
footprint, leadership and relevance in the ETF market. At December 31, 2020,
passive AUM were $370.6 billion, representing 27.5% of total AUM at that date;
whereas at December 31, 2019, passive AUM were $297.0 billion, representing
24.2% of our total AUM at that date.
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Also contributing to the overall decline, the net revenue yield specific to
passive AUM has declined, particularly from the impact of the growth of the QQQ
fund. At December 31, 2020, the QQQ fund represented $152.5 billion, or 41.1% of
passive AUM. At December 31, 2019, the QQQ fund represented $86.9 billion, or
29.3% of passive AUM. In the year ended December 31, 2020, the net revenue yield
on passive AUM was 12.0 basis points compared to 14.6 basis points in the year
ended December 31, 2019, a decrease of 2.6 basis points.

Market volatility in 2020 also contributed to investors moving into lower risk
assets, such as money market and stable
value funds, which are active funds with lower fees. We saw outflows from equity
products and alternatives and inflows into fixed income and other relatively
lower fee products. These changes have decreased the net revenue yield on active
AUM. At December 31, 2020, active AUM were $979.3 billion, representing 72.5% of
total AUM at that date; whereas at December 31, 2019, active AUM were $929.2
billion, representing 75.8% of our total AUM at that date. In the year ended
December 31, 2020, the net revenue yield on active AUM was 46.4 basis points
compared to 48.6 basis points in the year ended December 31, 2019, a decrease of
2.2 basis points.

The changes described above have adversely impacted our revenue and resulting
revenue yields, and we expect they will continue to pressure revenues and yields
in the near term.

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Changes in our AUM by channel, asset class, and client domicile, and average AUM
by asset class, are presented below:

Total AUM by Channel (1)
$ in billions                                      Total          Retail         Institutional
December 31, 2019                                1,226.2          878.2             348.0
Long-term inflows                                  310.9          221.6              89.3
Long-term outflows                                (326.6)        (267.6)            (59.0)
Long-term net flows                                (15.7)         (46.0)             30.3
Net flows in non-management fee earning AUM         (5.1)           7.2     

(12.3)

Net flows in money market funds                     14.3            2.0              12.3
Total net flows                                     (6.5)         (36.8)             30.3
Reinvested distributions                            16.9           16.3               0.6
Market gains and losses                            103.0           85.4              17.6

Foreign currency translation                        10.3            4.0               6.3
December 31, 2020                                1,349.9          947.1             402.8

December 31, 2018                                  888.2          566.7             321.5
Long-term inflows                                  227.5          175.2              52.3
Long-term outflows                                (261.9)        (210.4)            (51.5)
Long-term net flows                                (34.4)         (35.2)              0.8
Net flows in non-management fee earning AUM          9.2            4.9     

4.3

Net flows in money market funds                     (2.0)           4.2              (6.2)
Total net flows                                    (27.2)         (26.1)             (1.1)
Reinvested distributions                            17.9           17.6               0.3
Market gains and losses                            120.4          102.4              18.0

Acquisitions (4)                                   224.4          215.8               8.6
Foreign currency translation                         2.5            1.8               0.7
December 31, 2019                                1,226.2          878.2             348.0

December 31, 2017                                  937.6          607.6             330.0
Long-term inflows                                  209.8          158.8              51.0
Long-term outflows                                (248.8)        (194.1)            (54.7)
Long-term net flows                                (39.0)         (35.3)             (3.7)
Net flows in non-management fee earning AUM          2.5            2.7     

(0.2)

Net flows in money market funds                      7.6            9.0              (1.4)
Total net flows                                    (28.9)         (23.6)             (5.3)
Reinvested distributions                            11.4           11.4                 -

Market gains and losses                            (67.0)         (62.4)             (4.6)
Acquisitions (4)                                    47.6           42.6               5.0
Foreign currency translation                       (12.5)          (8.9)             (3.6)
December 31, 2018                                  888.2          566.7             321.5


____________

See accompanying notes immediately following these AUM tables.

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Passive AUM by Channel (1)
  $ in billions                                     Total         Retail        Institutional
  December 31, 2019                                297.0         275.8              21.2
  Long-term inflows                                106.6          93.6              13.0
  Long-term outflows                               (90.5)        (89.0)             (1.5)
  Long-term net flows                               16.1           4.6              11.5
  Net flows in non-management fee earning AUM       (5.1)          7.3             (12.4)

  Total net flows                                   11.0          11.9              (0.9)

  Market gains and losses                           62.2          57.9               4.3

  Foreign currency translation                       0.4           0.4                 -
  December 31, 2020                                370.6         346.0              24.6

  December 31, 2018                                221.0         204.6              16.4
  Long-term inflows                                 80.7          80.1               0.6
  Long-term outflows                               (65.4)        (65.4)                -
  Long-term net flows                               15.3          14.7               0.6
  Net flows in non-management fee earning AUM        9.3           5.1               4.2

  Total net flows                                   24.6          19.8               4.8

  Market gains and losses                           46.9          46.9                 -

  Acquisitions (4)                                   4.5           4.5                 -

  December 31, 2019                                297.0         275.8              21.2

  December 31, 2017                                198.8         181.9              16.9
  Long-term inflows                                 70.4          70.4                 -
  Long-term outflows                               (72.4)        (72.4)                -
  Long-term net flows                               (2.0)         (2.0)                -
  Net flows in non-management fee earning AUM        2.5           2.7              (0.2)

  Total net flows                                    0.5           0.7              (0.2)

  Market gains and losses                          (14.9)        (14.5)             (0.4)

  Acquisitions (4)                                  37.1          37.1                 -
  Foreign currency translation                      (0.5)         (0.6)              0.1
  December 31, 2018                                221.0         204.6              16.4


____________

See accompanying notes immediately following these AUM tables.

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Total AUM by Asset Class (2)
$ in billions                               Total                 Equity               Fixed Income             Balanced             Money Market               Alternatives
December 31, 2019                            1,226.2                 598.8                    283.5                 67.3                      91.4                       185.2
Long-term inflows                              310.9                 134.6                    102.9                 30.5                         -                        42.9
Long-term outflows                            (326.6)               (167.4)                   (76.8)               (29.7)                        -                       (52.7)
Long-term net flows                            (15.7)                (32.8)                    26.1                  0.8                         -                        (9.8)
Net flows in non-management fee
earning AUM                                     (5.1)                 17.2                    (22.3)                   -                         -                           -
Net flows in money market funds                 14.3                     -                        -                    -                      14.3                           -
Total net flows                                 (6.5)                (15.6)                     3.8                  0.8                      14.3                        (9.8)
Reinvested distributions                        16.9                  11.5                      2.3                  1.8                         -                         1.3
Market gains and losses                        103.0                  92.2                      4.7                  7.1                       1.2                        (2.2)

Foreign currency translation                    10.3                   2.7                      2.1                  1.9                       1.6                         2.0
December 31, 2020                            1,349.9                 689.6                    296.4                 78.9                     108.5                       176.5
Average AUM                                  1,194.9                 573.1                    275.3                 65.1                     108.4                       173.0
% of total average AUM                         100.0  %               48.0  %                  23.0  %               5.4  %                    9.1  %                     14.5  %

December 31, 2018                              888.2                 369.1                    208.6                 55.4                      89.9                       165.2
Long-term inflows                              227.5                 100.9                     68.0                 18.8                       0.2                        39.6
Long-term outflows                            (261.9)               (132.4)                   (53.9)               (20.4)                     (0.1)                      (55.1)
Long-term net flows                            (34.4)                (31.5)                    14.1                 (1.6)                      0.1                       (15.5)
Net flows in non-management fee
earning AUM                                      9.2                   2.9                      6.3                    -                         -                           -
Net flows in money market funds                 (2.0)                    -                        -                    -                      (2.0)                          -
Total net flows                                (27.2)                (28.6)                    20.4                 (1.6)                     (1.9)                      (15.5)
Reinvested distributions                        17.9                  12.9                      1.6                  1.9                         -                         1.5
Market gains and losses                        120.4                  94.0                      9.9                  7.6                         -                         8.9

Acquisitions (4)                               224.4                 149.7                     42.5                  3.7                       3.7                        24.8
Foreign currency translation                     2.5                   1.7                      0.5                  0.3                      (0.3)                        0.3
December 31, 2019                            1,226.2                 598.8                    283.5                 67.3                      91.4                       185.2
Average AUM                                  1,094.4                 503.9                    253.8                 62.1                      95.4                       179.2
% of total average AUM                         100.0  %               46.0  %                  23.2  %               5.7  %                    8.7  %                     16.4  %

December 31, 2017                              937.6                 412.6                    204.3                 62.3                      78.6                       179.8
Long-term inflows                              209.8                  96.8                     51.4                 13.1                       6.9                        41.6
Long-term outflows                            (248.8)               (126.0)                   (53.6)               (15.1)                     (5.4)                      (48.7)
Long-term net flows                            (39.0)                (29.2)                    (2.2)                (2.0)                      1.5                        (7.1)
Net flows in non-management fee
earning AUM                                      2.5                   3.1                     (0.6)                   -                         -                           -
Net flows in money market funds                  7.6                     -                        -                    -                       7.6                           -
Total net flows                                (28.9)                (26.1)                    (2.8)                (2.0)                      9.1                        (7.1)
Reinvested distributions                        11.4                   8.4                      1.0                  1.4                         -                         0.6
Market gains and losses                        (67.0)                (49.5)                    (3.8)                (7.0)                      0.6                        (7.3)
Acquisitions (4)                                47.6                  29.5                     11.5                  3.1                       2.2                         1.3
Foreign currency translation                   (12.5)                 (5.8)                    (1.6)                (2.4)                     (0.6)                       (2.1)
December 31, 2018                              888.2                 369.1                    208.6                 55.4                      89.9                       165.2
Average AUM                                    958.7                 422.8                    209.9                 62.1                      85.6                       178.3
% of total average AUM                         100.0  %               44.1  %                  21.9  %               6.5  %                    8.9  %                     18.6  %


____________

See accompanying notes immediately following these AUM tables.

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Passive AUM by Asset Class (2)
$ in billions                              Total                Equity              Fixed Income              Balanced           Money Market            Alternatives
December 31, 2019                            297.0                217.1                      58.9                   0.9                   -                       20.1
Long-term inflows                            106.6                 73.4                      12.6                   0.1                   -                       20.5
Long-term outflows                           (90.5)               (63.0)                    (11.5)                    -                   -                      (16.0)
Long-term net flows                           16.1                 10.4                       1.1                   0.1                   -                        4.5
Net flows in non-management fee
earning AUM                                   (5.1)                17.2                     (22.3)                    -                   -                          -

Total net flows                               11.0                 27.6                     (21.2)                  0.1                   -                        4.5

Market gains and losses                       62.2                 61.4                      (0.8)                    -                   -                        1.6

Foreign currency translation                   0.4                  0.3                       0.1                     -                   -                          -
December 31, 2020                            370.6                306.4                      37.0                   1.0                   -                       26.2
Average AUM                                  301.9                237.5                      40.8                   0.8                   -                       22.9
% of total average AUM                       100.0  %              78.6  %                   13.5  %                0.3  %                -  %                     7.6  %

December 31, 2018                            221.0                155.3                      47.2                   0.7                   -                       17.8
Long-term inflows                             80.7                 57.9                      10.9                   0.1                   -                       11.8
Long-term outflows                           (65.4)               (48.2)                     (6.0)                    -                   -                      (11.2)
Long-term net flows                           15.3                  9.7                       4.9                   0.1                   -                        0.6
Net flows in non-management fee
earning AUM                                    9.3                  3.0                       6.3                     -                   -                          -

Total net flows                               24.6                 12.7                      11.2                   0.1                   -                        0.6

Market gains and losses                       46.9                 44.7                       0.4                   0.1                   -                        1.7

Acquisitions (4)                               4.5                  4.5                         -                     -                   -                          -
Foreign currency translation                     -                 (0.1)                      0.1                     -                   -                          -
December 31, 2019                            297.0                217.1                      58.9                   0.9                   -                       20.1
Average AUM                                  264.3                189.2                      55.7                   0.8                   -                       18.6
% of total average AUM                       100.0  %              71.6  %                   21.1  %                0.3  %                -  %                     7.0  %

December 31, 2017                            198.8                134.7                      42.4                   0.8                   -                       20.9
Long-term inflows                             70.4                 49.3                      10.8                     -                   -                       10.3
Long-term outflows                           (72.4)               (47.4)                    (12.0)                    -                   -                      (13.0)
Long-term net flows                           (2.0)                 1.9                      (1.2)                    -                   -                       (2.7)
Net flows in non-management fee
earning AUM                                    2.5                  3.1                      (0.6)                    -                   -                          -

Total net flows                                0.5                  5.0                      (1.8)                    -                   -                       (2.7)

Market gains and losses                      (14.9)               (11.1)                     (1.9)                 (0.1)                  -                       (1.8)
Acquisitions (4)                              37.1                 27.1                       8.7                     -                   -                        1.3
Foreign currency translation                  (0.5)                (0.4)                     (0.2)                    -                   -                        0.1
December 31, 2018                            221.0                155.3                      47.2                   0.7                   -                       17.8
Average AUM                                  232.1                162.2                      47.4                   0.8                   -                       21.7
% of total average AUM                       100.0  %              69.9  %                   20.4  %                0.3  %                -  %                     9.3  %


____________

See accompanying notes immediately following these AUM tables.

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Total AUM by Client Domicile (3)
$ in billions                                     Total               Americas              UK              EMEA ex UK             Asia
December 31, 2019                                1,226.2               879.5                74.4              143.7                128.6
Long-term inflows                                  310.9               176.2                13.0               57.6                 64.1
Long-term outflows                                (326.6)             (206.7)              (19.6)             (55.5)               (44.8)
Long-term net flows                                (15.7)              (30.5)               (6.6)               2.1                 19.3
Net flows in non-management fee earning AUM         (5.1)                3.6                 0.2               (9.6)                 0.7
Net flows in money market funds                     14.3                10.9                 0.1                0.2                  3.1
Total net flows                                     (6.5)              (16.0)               (6.3)              (7.3)                23.1
Reinvested distributions                            16.9                16.6                 0.2                  -                  0.1
Market gains and losses                            103.0                79.3                (2.7)              12.7                 13.7

Foreign currency translation                        10.3                 0.5                 1.3                2.7                  5.8
December 31, 2020                                1,349.9               959.9                66.9              151.8                171.3

December 31, 2018                                  888.2               581.6                76.6              125.5                104.5
Long-term inflows                                  227.5               124.6                 9.1               51.7                 42.1
Long-term outflows                                (261.9)             (158.2)              (20.2)             (49.7)               (33.8)
Long-term net flows                                (34.4)              (33.6)              (11.1)               2.0                  8.3
Net flows in non-management fee earning AUM          9.2                 6.3                 0.2                2.4                  0.3
Net flows in money market funds                     (2.0)               (3.9)                  -               (2.3)                 4.2
Total net flows                                    (27.2)              (31.2)              (10.9)               2.1                 12.8
Reinvested distributions                            17.9                17.5                 0.4                  -                    -
Market gains and losses                            120.4                88.1                 5.5               15.3                 11.5
Transfer                                               -                (1.3)               (0.3)               1.6                    -
Acquisitions (4)                                   224.4               223.7                 0.7                  -                    -
Foreign currency translation                         2.5                 1.1                 2.4               (0.8)                (0.2)
December 31, 2019                                1,226.2               879.5                74.4              143.7                128.6

December 31, 2017                                  937.6               610.4                93.6              144.5                 89.1
Long-term inflows                                  209.8               108.3                13.6               58.3                 29.6
Long-term outflows                                (248.8)             (139.3)              (18.6)             (65.7)               (25.2)
Long-term net flows                                (39.0)              (31.0)               (5.0)              (7.4)                 4.4
Net flows in non-management fee earning AUM          2.5                 2.7                (0.1)              (0.2)                 0.1
Net flows in money market funds                      7.6                (2.1)                  -                0.9                  8.8
Total net flows                                    (28.9)              (30.4)               (5.1)              (6.7)                13.3
Reinvested distributions                            11.4                10.8                 0.6                  -                    -
Market gains and losses                            (67.0)              (44.7)               (7.3)              (8.6)                (6.4)
Transfer                                               -                (0.4)               (0.4)               0.7                  0.1
Acquisitions (4)                                    47.6                38.1                   -                  -                  9.5
Foreign currency translation                       (12.5)               (2.2)               (4.8)              (4.4)                (1.1)
December 31, 2018                                  888.2               581.6                76.6              125.5                104.5


____________

See accompanying notes immediately following these AUM tables.

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Passive AUM by Client Domicile (3)
$ in billions                                     Total             Americas              UK              EMEA ex UK             Asia
December 31, 2019                                 297.0              240.0                 0.7               51.4                  4.9
Long-term inflows                                 106.6               67.6                 0.7               35.5                  2.8
Long-term outflows                                (90.5)             (59.5)               (0.9)             (27.9)                (2.2)
Long-term net flows                                16.1                8.1                (0.2)               7.6                  0.6
Net flows in non-management fee earning AUM        (5.1)               3.6                 0.2               (9.6)                 0.7

Total net flows                                    11.0               11.7                   -               (2.0)                 1.3

Market gains and losses                            62.2               51.4                 0.1                9.0                  1.7

Foreign currency translation                        0.4               (0.1)                  -                0.5                    -
December 31, 2020                                 370.6              303.0                 0.8               58.9                  7.9

December 31, 2018                                 221.0              184.0                 0.7               32.6                  3.7
Long-term inflows                                  80.7               48.6                 0.5               29.7                  1.9
Long-term outflows                                (65.4)             (42.6)               (0.4)             (20.3)                (2.1)
Long-term net flows                                15.3                6.0                 0.1                9.4                 (0.2)
Net flows in non-management fee earning AUM         9.3                6.4                 0.2                2.4                  0.3

Total net flows                                    24.6               12.4                 0.3               11.8                  0.1

Market gains and losses                            46.9               39.1                (0.3)               7.0                  1.1
Acquisitions (4)                                    4.5                4.5                   -                  -                    -

December 31, 2019                                 297.0              240.0                 0.7               51.4                  4.9

December 31, 2017                                 198.8              160.1                 0.8               34.7                  3.2
Long-term inflows                                  70.4               40.1                 0.4               28.4                  1.5
Long-term outflows                                (72.4)             (42.5)               (0.5)             (28.3)                (1.1)
Long-term net flows                                (2.0)              (2.4)               (0.1)               0.1                  0.4
Net flows in non-management fee earning AUM         2.5                2.7                (0.1)              (0.2)                 0.1

Total net flows                                     0.5                0.3                (0.2)              (0.1)                 0.5

Market gains and losses                           (14.9)             (13.3)                0.1               (1.6)                (0.1)
Acquisitions (4)                                   37.1               36.9                   -                  -                  0.2
Foreign currency translation                       (0.5)                 -                   -               (0.4)                (0.1)
December 31, 2018                                 221.0              184.0                 0.7               32.6                  3.7


____________
(1)  Channel refers to the internal distribution channel from which the AUM
originated. Retail AUM represents AUM distributed by the company's retail sales
team. Institutional AUM represents AUM distributed by our institutional sales
team. This aggregation is viewed as a proxy for presenting AUM in the retail and
institutional markets in which the company operates.
(2)  Asset classes are descriptive groupings of AUM by common type of underlying
investments.
(3)  Client domicile disclosure groups AUM by the domicile of the underlying
clients.
(4)  The acquisition of OppenheimerFunds business on May 24, 2019 added $224.4
billion in AUM at that date. The acquisition of Guggenheim Investments' ETF
business on April 6, 2018 added $38.1 billion in AUM during the second quarter
of 2018. As of July 1, 2018, we began including 100% of Invesco Great Wall,
which added $9.5 billion in AUM during the third quarter of 2018.

Results of Operations for the Year Ended December 31, 2020 compared to
December 31, 2019

The discussion below includes the use of non-GAAP financial measures. See
“Schedule of Non-GAAP Information” for additional details and reconciliations of
the most directly comparable U.S. GAAP measures to the non-GAAP measures.

The results of the OppenheimerFunds acquisition are included from May 24, 2019
(date of acquisition), the results of Guggenheim Investments' ETF business are
included from April 6, 2018 (date of acquisition) and the results of Intelliflo
are included from June 4, 2018 (date of acquisition).
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Operating Revenues and Net Revenues

The main categories of revenues, and the dollar and percentage change between
the periods, are as follows:
                                                                                                                                            Variance
                                                    Years ended December 31,                                       2020 vs 2019                                  2019 vs 2018
$ in millions                         2020                     2019                   2018                 $ Change               % Change               $ Change               % Change
Investment management fees           4,451.0                 4,506.3                 4,082.3                    (55.3)                (1.2) %                 424.0                 10.4  %
Service and distribution fees        1,419.0                 1,276.5                   968.5                    142.5                 11.2  %                 308.0                 31.8  %
Performance fees                        65.6                   102.2                    56.9                    (36.6)               (35.8) %                  45.3                 79.6  %
Other                                  210.0                   232.4                   206.4                    (22.4)                (9.6) %                  26.0                 12.6  %
Total operating revenues             6,145.6                 6,117.4                 5,314.1                     28.2                  0.5  %                 803.3                 15.1  %

Invesco Great Wall                     263.2                   157.2                    83.6                    106.0                 67.4  %                  73.6                 88.0  %
Revenue Adjustments:
 Investment management fees           (779.8)                 (814.4)                 (817.9)                    34.6                 (4.2) %                   3.5                 (0.4) %
 Service and distribution fees        (986.1)                 (886.3)                 (629.7)                   (99.8)                11.3  %                (256.6)                40.7  %
 Other                                (181.7)                 (192.3)                 (160.6)                    10.6                 (5.5) %                 (31.7)                19.7  %
Total Revenue Adjustments (1)       (1,947.6)               (1,893.0)               (1,608.2)                   (54.6)                 2.9  %                (284.8)                17.7  %
CIP                                     39.8                    33.5                    28.6                      6.3                 18.8  %                   4.9                 17.1  %

Net revenues (2)                     4,501.0                 4,415.1                 3,818.1                     85.9                  1.9  %                 597.0                 15.6  %


_________

(1)  Total revenue adjustments includes passed through investment management,
service and distribution, and other revenues and equal the same amount as the
third party distribution, service and advisory expenses.
(2)  Net revenues are operating revenues less revenue adjustments, plus net
revenues from Invesco Great Wall, plus management and performance fees earned
from CIP. See "Schedule of Non-GAAP Information" for additional important
disclosures regarding the use of net revenues.

The impact of foreign exchange rate movements increased operating revenues by
$13.2 million, equivalent to 0.2% of total operating revenues during the year
ended December 31, 2020 when compared to the year ended December 31, 2019 ($63.9
million decrease in 2019 or 1.0% of 2019 total operating revenues).

Additionally, our revenues are directly influenced by the level and composition
of our AUM. Therefore, movements in global capital market levels, net business
inflows (or outflows) and changes in the mix of investment products between
asset classes and geographies may materially affect our revenues from period to
period. As discussed in the "Executive Overview" section above, equity markets
showed extreme volatility as global markets reacted to the COVID-19 pandemic in
the year ended December 31, 2020, with all time highs at the beginning of the
period, followed by an extreme downturn and a subsequent recovery resulting in
record highs in equity values by the end of the period. The 2020 results were
also impacted by shifts in the mix of AUM, resulting both from flows and from
the market impact of the COVID-19 pandemic, which has adversely impacted our
revenue and resulting revenue yields in 2020.

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Investment Management Fees

Investment management fees decreased by $55.3 million (1.2%) in the year ended
December 31, 2020, to $4,451.0 million (year ended December 31, 2019: $4,506.3
million). The impact of foreign exchange rate movements increased investment
management fees by $11.1 million during the year ended December 31, 2020 as
compared to the year ended December 31, 2019. After allowing for foreign
exchange movements, investment management fees decreased by $66.4 million
(1.5%). Average AUM increased 9.2% when compared to the 2019 period primarily
driven by the acquired OppenheimerFunds business (acquired May 24, 2019).
However, shifts in the mix of AUM, resulting both from flows and from the market
impact of the COVID-19 pandemic, resulted in a lower revenue yield on AUM in
2020, which resulted in lower revenues.

See the company's disclosures regarding the changes in AUM and revenue yields
during the years ended December 31, 2020 and December 31, 2019 in the "Assets
Under Management" section above for additional information regarding the impact
of changes in AUM on management fee yields.

Service and Distribution Fees

In the year ended December 31, 2020, service and distribution fees increased by
$142.5 million (11.2%) to $1,419.0 million (year ended December 31, 2019:
$1,276.5 million). The impact of foreign exchange rate movements increased
service and distribution fees by $0.3 million in the year ended December 31,
2020 as compared to the year ended December 31, 2019. After allowing for foreign
exchange movements, service and distribution fees increased by $142.2 million.
The total increase is made up of higher distribution fees of $85.1 million,
transfer agency fees of $43.6 million, custody fees of $6.1 million and
administrative fees of $4.6 million. The increase is primarily a result of
revenues earned from the acquired OppenheimerFunds business (acquired May 24,
2019).

Performance Fees

Of our $1,349.9 billion in AUM at December 31, 2020, approximately $59.1 billion
or 4.4%, could potentially earn performance fees, including carried interests
and performance fees related to partnership investments and separate accounts.
Of our $1,226.2 billion in AUM at December 31, 2019, approximately $48.5 billion
or 4.0%, could potentially earn performance fees, including carried interests
and performance fees related to partnership investments and separate accounts.

In the year ended December 31, 2020, performance fees decreased by $36.6 million
(35.8%) to $65.6 million (year ended December 31, 2019: $102.2 million).
Performance fees in 2020 were primarily generated by $52.1 million from real
estate, $7.1 million from fixed income, $3.5 million from UK closed end funds,
and $3.0 million from institutional funds. Performance fees in 2019 were
primarily generated by $59.2 million from real estate, $20.1 million from fixed
income, $11.4 million from private equity funds, $7.1 million from UK closed end
funds, and $4.4 million from institutional funds.

Other Revenues

In the year ended December 31, 2020, other revenues decreased by $22.4 million
(9.6%) to $210.0 million (year ended December 31, 2019: $232.4 million). The
impact of foreign exchange rate movements increased other revenues by $0.5
million during the year ended December 31, 2020 as compared to the year ended
December 31, 2019. The decrease in other revenues was primarily driven by
decreases in UIT front end fees of $19.6 million, front end fees of $2.5 million
and real estate transaction fees of $2.4 million, partially offset by an
increase in other transaction fees of $1.5 million.

Invesco Great Wall

The company's most significant joint venture arrangement is our 49% investment
in Invesco Great Wall Fund Management Company Limited (the "Invesco Great Wall"
joint venture). Management believes that the net revenues from Invesco Great
Wall should be added to total operating revenues to arrive at net revenues, as
it is important to evaluate the contribution to the business that Invesco Great
Wall is making. See "Schedule of Non-GAAP Information" for additional
disclosures regarding the use of net revenues.

The company began reporting 100% of Invesco Great Wall in its net revenues and
adjusted operating expenses in the third quarter of 2018. As a result, the
company's non-GAAP operating results reflect the economics of these holdings on
a basis consistent with the underlying AUM and flows. Adjusted net income is
reduced by the amount of earnings attributable to non-controlling interests.

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Net revenues from Invesco Great Wall were $263.2 million and average AUM was
$50.0 billion for the year ended December 31, 2020 (net revenues were $157.2
million and average AUM was $35.6 billion, for the year ended December 31,
2019). The impact of foreign exchange rate movements for the year ended
December 31, 2020 increased net revenues from Invesco Great Wall by $3.0 million
as compared to the year ended December 31, 2019. After allowing for foreign
exchange movements, net revenues from Invesco Great Wall were $260.2 million.
The increase in revenue is driven by a 58.5% increase in management fees,
reflective of a 40.4% increase in average AUM in the year ended December 31,
2020 when compared to the prior period as well as increased performance fees of
$34.4 million compared to $6.2 million in 2019.

Management, performance and other fees earned from CIP

Management believes that the consolidation of investment products may impact a
reader's analysis of our underlying results of operations and could result in
investor confusion or the production of information about the company by
analysts or external credit rating agencies that is not reflective of the
underlying results of operations and financial condition of the company.
Accordingly, management believes that it is appropriate to adjust operating
revenues for the impact of CIP in calculating net revenues. As management and
performance fees earned by Invesco from the consolidated products are eliminated
upon consolidation of the investment products, management believes that it is
appropriate to add these operating revenues back in the calculation of net
revenues. See "Schedule of Non-GAAP Information" for additional disclosures
regarding the use of net revenues.

Management and performance fees earned from CIP increased by $6.3 million to
$39.8 million in the year ended December 31, 2020 (year ended December 31, 2019:
$33.5 million). The increase is primarily due to the increase in management fees
earned from newly launched CLOs.

Operating Expenses

The main categories of operating expenses, and the dollar and percentage changes
between periods, are as follows:

                                                                                                                                           Variance
                                                    Years ended December 31,                                     2020 vs 2019                                   2019 vs 2018
$ in millions                            2020                   2019                 2018                $ Change               % Change               $ Change               % Change
Third-party distribution, service
and advisory                           1,947.6               1,893.0               1,608.2                     54.6                  2.9  %                 284.8                  17.7  %
Employee compensation                  1,807.9               1,709.3               1,494.4                     98.6                  5.8  %                 214.9                  14.4  %
Marketing                                 83.3                 135.6                 134.8                    (52.3)               (38.6) %                   0.8                   0.6  %
Property, office and technology          512.3                 494.1                 410.5                     18.2                  3.7  %                  83.6                  20.4  %
General and administrative               480.8                 404.2                 324.4                     76.6                 19.0  %                  79.8                  24.6  %
Transaction, integration and
restructuring                            393.3                 673.0                 136.9                   (279.7)               (41.6) %                 536.1                 391.6  %
Total operating expenses               5,225.2               5,309.2               4,109.2                    (84.0)                (1.6) %               1,200.0                  29.2  %


The table below sets forth these expense categories as a percentage of total
operating expenses and operating revenues, which we believe provides useful
information as to the relative significance of each type of expense.

                                                  % of Total                                                       % of Total                                                       % of Total
                                                  Operating            % of Operating                              Operating            % of Operating                              Operating            % of Operating
$ in millions                   2020               Expenses               Revenues               2019               Expenses               Revenues               2018               Expenses               Revenues
Third-party distribution,
service and advisory          1,947.6                   37.3  %                31.7  %         1,893.0                   35.7  %                30.9  %         1,608.2                   39.1  %                30.3  %
Employee compensation         1,807.9                   34.6  %                29.4  %         1,709.3                   32.2  %                27.9  %         1,494.4                   36.4  %                28.1  %
Marketing                        83.3                    1.6  %                 1.4  %           135.6                    2.6  %                 2.2  %           134.8                    3.3  %                 2.5  %
Property, office and
technology                      512.3                    9.8  %                 8.3  %           494.1                    9.3  %                 8.1  %           410.5                   10.0  %                 7.7  %
General and administrative      480.8                    9.2  %                 7.8  %           404.2                    7.6  %                 6.6  %           324.4                    7.9  %                 6.1  %
Transaction, integration
and restructuring               393.3                    7.5  %                 6.4  %           673.0                   12.7  %                11.0  %           136.9                    3.3  %                 2.6  %
Total operating expenses      5,225.2                  100.0  %                85.0  %         5,309.2                    100  %                86.8  %         4,109.2                  100.0  %                77.3  %


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During the year ended December 31, 2020, operating expenses decreased by $84.0
million (1.6%) to $5,225.2 million (year ended December 31, 2019: $5,309.2
million). The impact of foreign exchange rate movements decreased operating
expenses by $4.0 million, or 0.1% of total operating expenses, during the year
ended December 31, 2020 as compared to the year ended December 31, 2019.

Third-Party Distribution, Service and Advisory

Third-party distribution, service and advisory expenses include periodic
"renewal" commissions paid to brokers and independent financial advisors for the
continuing oversight of their clients' assets over the time they are invested
and are payments for the servicing of client accounts. Renewal commissions are
calculated based upon a percentage of the AUM value and apply to much of the
company's non-U.S. retail operations. As discussed above, the revenues from the
company's U.S. retail operations include 12b-1 distribution fees, which are
largely passed through to brokers who sell the funds as third-party distribution
expenses along with additional marketing support distribution costs. Both the
revenues and the costs are dependent on the underlying AUM of the brokers'
clients. Third-party distribution expenses also include the amortization of
upfront commissions paid to broker-dealers for sales of fund shares with a
contingent deferred sales charge (a charge levied to the investor for client
redemption of AUM within a certain contracted period of time). The upfront
distribution commissions are amortized over the redemption period. Also included
in third-party distribution, service and advisory expenses are sub-transfer
agency fees that are paid to third parties for processing client common share
purchases and redemptions, call center support and client reporting. These costs
are reimbursed by the related funds.

Third party distribution service and advisory expenses increased by $54.6
million (2.9%) in the year ended December 31, 2020 to $1,947.6 million (year
ended December 31, 2019: $1,893.0 million). The impact of foreign exchange rate
movements increased third party costs by $1.0 million during the year ended
December 31, 2020 as compared to the year ended December 31, 2019. After
allowing for foreign exchange rate changes, the increase in costs was $53.6
million. Included are increases of $97.1 million in service fees (primarily
12b-1 and transfer agent fees), $22.9 million in sales commissions, $12.2
million in fund expenses, $4.4 million in unitary fees and $4.2 million in front
end load commissions. These increases were partially offset by decreases of
$53.8 million in transaction fees and $40.1 million in renewal commissions. The
increase is primarily a result of increased AUM from the acquired
OppenheimerFunds business (acquired May 24, 2019). See "Schedule of Non-GAAP
Information" for additional disclosures.

Employee Compensation

Employee compensation includes salary, cash bonuses and common share-based
payment plans designed to attract and retain the highest caliber employees.
Employee staff benefit plan costs and payroll taxes are also included in
employee compensation.

Employee compensation increased $98.6 million (5.8%) to $1,807.9 million in
the year ended December 31, 2020 (year ended December 31, 2019: $1,709.3
million). The impact of foreign exchange rate movements increased employee
compensation by $3.0 million during the year ended December 31, 2020 as compared
to the year ended December 31, 2019. After allowing for foreign exchange rate
changes, the increase in employee compensation was $95.6 million. The increase
was related to an increase of $57.3 million in base salaries and $47.3 million
in staff bonus and commissions, partially offset by $9.0 million in other
variable compensation. The increase was driven by increased average headcount
for the year ended December 31, 2020 versus December 31, 2019 as a result of the
OppenheimerFunds acquisition (acquired May 24, 2019).

Headcount at December 31, 2020 was 8,512 (December 31, 2019; 8,821), with the
decrease primarily due to the strategic evaluation initiative impacts in the
fourth quarter of 2020 as well as realized synergies occurring after the
OppenheimerFunds acquisition.

Marketing

Marketing expenses include the cost of direct advertising of our products
through trade publications, television and other media, and public relations
costs, such as the marketing of the company's products through conferences or
other sponsorships, and the cost of marketing-related employee travel.

Marketing expenses decreased by $52.3 million (38.6%) in the year ended
December 31, 2020 to $83.3 million (year ended December 31, 2019: $135.6
million). The impact of foreign exchange rate movements increased marketing
expenses by $0.2 million. After allowing for foreign exchange rate movements,
marketing expenses decreased $52.5 million during the year ended December 31,
2020 as compared to the year ended December 31, 2019. The decrease was related
to decreased travel, client events and advertising as a result of the COVID-19
pandemic.
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Property, Office and Technology

Property, office and technology expenses include rent and utilities for our
various leased facilities, depreciation of company-owned property, capitalized
software and computer equipment costs, minor non-capitalized computer equipment
and software purchases and related maintenance payments, and costs related to
externally provided operations, technology, middle office and back office
management services.

Property, office and technology expenses increased by $18.2 million (3.7%) to
$512.3 million in the year ended December 31, 2020 (year ended December 31,
2019: $494.1 million). The impact of foreign exchange rate movements decreased
property, office and technology expenses by $0.3 million during the year ended
December 31, 2020 as compared to the year ended December 31, 2019. After
allowing for foreign exchange rate movements, expenses increased $18.5 million.
This increase was primarily comprised of lease expenses, software maintenance
and depreciation. The increase is primarily a result of the acquired
OppenheimerFunds business (acquired May 24, 2019).

General and Administrative

General and administrative expenses include professional services costs, such as
information service subscriptions, irrecoverable indirect taxes, non-marketing
related employee travel expenditures, consulting fees, audit, tax and legal
fees, professional insurance costs and recruitment and training costs.

General and administrative expenses increased by $76.6 million (19.0%) to $480.8
million in the year ended December 31, 2020 (year ended December 31, 2019:
$404.2 million). The impact of foreign exchange rate movements decreased general
and administrative expenses by $7.9 million during the year ended December 31,
2020 as compared to the year ended December 31, 2019. After allowing for foreign
exchange rate movements, the increase was $84.5 million. The increase was
primarily driven by the previously disclosed S&P 500 equal weight funds
rebalancing correction of $105.3 million. (See Note 20, "Commitments and
Contingencies", for additional details). The remaining increase in general and
administrative expense was a result of the acquired OppenheimerFunds business
(acquired May 24, 2019) with increases in professional services and regulatory
costs, fund expenses, market data services costs and irrecoverable indirect
taxes and temporary labor expenses, partially offset by decreases in travel
expenses and fund expenses incurred by CIP.

Transaction, Integration and Restructuring

The transaction, integration and restructuring charges reflect legal,
regulatory, advisory, valuation and other professional services or consulting
fees, and travel costs related to a business combination transaction or
restructuring initiatives related to changes in the scope of the business or the
manner in which the business is conducted. Also included in these charges are
severance-related expenses and any contract termination costs associated with
these efforts. Additionally, these charges reflect the costs of temporary staff
involved in executing the transaction or initiative, and the costs of amortizing
acquired intangible assets and integrating an acquired business into the
company's existing operations, including incremental costs associated with
achieving expense savings following a business combination or restructuring
initiative.

Transaction, integration and restructuring charges were $393.3 million in the
year ended December 31, 2020 (year ended December 31, 2019: $673.0 million).
Transaction and integration related costs were $245.5 million during the year
ended December 31, 2020 (year ended December 31, 2019: $659.8 million) primarily
related to the OppenheimerFunds acquisition. Transaction and integration costs
include $78.4 million of compensation related expenses, $62.5 million of
amortization of management contracts and other intangible assets, $59.1 million
of professional services costs, $17.8 million related to lease charges, $8.0
million related to accelerated amortization and $15.3 million of other expenses.
Restructuring costs were $147.8 million for the year ended December 31, 2020
(year ended December 31, 2019: $13.2 million). Restructuring costs related to
the strategic evaluation initiative announced in the third quarter of 2020 were
$119.0 million, which is primarily composed of severance and other
personnel-related charges. (See Note 14, "Restructuring", for additional
details). Other restructuring costs related to additional cost-saving
initiatives were $28.8 million which included compensation related expenses of
$14.7 million and non-compensation related expenses of $14.1 million.

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Operating Income, Adjusted Operating Income, Operating Margin and Adjusted
Operating Margin

Operating income increased by $112.2 million (13.9%) to $920.4 million in the
year ended December 31, 2020 (year ended December 31, 2019: $808.2 million).
Operating margin (operating income divided by operating revenues), increased to
15.0% in the year ended December 31, 2020 from 13.2% in the year ended
December 31, 2019. Adjusted operating income increased by $8.7 million (0.5%) to
$1,664.5 million in the year ended December 31, 2020 from $1,655.8 million in
the year ended December 31, 2019. Adjusted operating margin decreased to 37.0%
in the year ended December 31, 2020 from 37.5% in the year ended December 31,
2019. See "Schedule of Non-GAAP Information" for a reconciliation of operating
revenues to net revenues, a reconciliation of operating income to adjusted
operating income and additional important disclosures regarding net revenues,
adjusted operating income and adjusted operating margin.

Other Income and Expenses

The main categories of other income and expenses, and the dollar and percentage
changes between periods are as follows:

                                                                                                                                              Variance
                                                      Years ended December 31,                                      2020 vs 2019                                   2019 vs 2018
$ in millions                             2020                   2019                   2018                $ Change               % Change               $ Change               % Change
Equity in earnings of unconsolidated
affiliates                                 72.7                   56.4                   33.8                     16.3                 28.9  %                  22.6                  66.9  %
Interest and dividend income               20.5                   28.5                   21.3                     (8.0)               (28.1) %                   7.2                  33.8  %
Interest expense                         (129.3)                (135.7)                (111.5)                     6.4                 (4.7) %                 (24.2)                 21.7  %
Other gains and losses, net                44.9                   65.7                  (40.0)                   (20.8)               (31.7) %                 105.7                      N/A
Other income/(expense) of CIP, net        139.9                  149.8                   29.6                     (9.9)                (6.6) %                 120.2                 406.1  %

Total other income and expenses           148.7                  164.7                  (66.8)                   (16.0)                (9.7) %                 231.5                (346.6) %


Equity in earnings of unconsolidated affiliates

Equity in earnings of unconsolidated affiliates increased by $16.3 million
(28.9%) to $72.7 million in the year ended December 31, 2020 (year ended
December 31, 2019: $56.4 million). The increase in is primarily driven by our
joint venture investments in China, real estate and other investments.

Interest expense

Interest expense decreased by $6.4 million (4.7%) to $129.3 million in the year
ended December 31, 2020 (year ended December 31, 2019: $135.7 million), driven
by the lower average balance on the credit facility during the year ended
December 31, 2020 compared to the year ended December 31, 2019.

Other gains and losses, net

Other gains and losses, net were a gain of $44.9 million in the year ended
December 31, 2020, compared to a net gain of $65.7 million in the year ended
December 31, 2019. Included in the 2020 gain were $57.5 million of gains on the
appreciation of investments and instruments related to our deferred compensation
plans, $15.3 million of gains on the mark-to-market of acquisition-related
contingent consideration liabilities, and $2.5 million of gains related to our
defined benefit pension plan. These gains were partially offset by losses during
the period of $15.8 million related to the mark-to-market on seed money
investments, net realized investment losses of $9.8 million, an investment
impairment charge of $3.6 million and $2.4 million of net foreign exchange
losses on intercompany loans. See Item 8, Financial Statements and Supplementary
Data, - Note 16, "Other Gains and Losses, Net," for additional information.

Other income/(expense) of CIP

In the year ended December 31, 2020, interest and dividend income of CIP
decreased by $43.1 million (12.5%) to $302.3 million (year ended December 31,
2019: $345.4 million). Interest expense of CIP decreased by $34.0 million
(14.9%) to $194.5 million (year ended December 31, 2019: $228.5 million). The
decrease in interest income and interest expense of CIP is primarily due to less
net interest income for CLOs in 2020.

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Included in other gains/(losses) of CIP, net, are realized and unrealized gains
and losses on the underlying investments and debt of CIP. In the year ended
December 31, 2020, other gains and losses of CIP were a net gain of $32.1
million, compared to a net gain of $32.9 million in the year ended December 31,
2019. The net gain during 2020 was attributable to market-driven gains of
investments held by consolidated funds.

Net impact of CIP and related noncontrolling interests in consolidated entities

The net impact to net income attributable to Invesco Ltd. in each period
primarily represents the changes in the value of the
company's holding in its consolidated CLOs, which is reclassified into other
gains/(losses) from accumulated other comprehensive income upon consolidation.
The consolidation of investment products during the year ended December 31, 2020
resulted in a net increase to net income attributable to Invesco Ltd. of $9.4
million (year ended December 31, 2019: $1.6 million net decrease).

Noncontrolling interests in consolidated entities represent the profit or loss
amounts attributed to third party investors in CIP. The impact of any gains or
losses resulting from valuation changes in the investments of non-CLO CIP
attributable to the interests of third parties are offset by resulting changes
in gains and losses attributable to noncontrolling interests in consolidated
entities and therefore do not have a material effect on the financial condition,
operating results (including earnings per common share), liquidity or capital
resources of the company's common shareholders. Similarly, any gains or losses
resulting from valuation changes in the investments of CLOs attributable to the
interests of third parties are offset by the calculated value of the notes
issued by the CLOs (offsetting in other gains/(losses) of CIP) and therefore
also do not have a material effect on the financial condition, operating results
(including earnings per common share), liquidity or capital resources of the
company's common shareholders.

Additionally, CIP represent less than 1% of the company’s AUM. Therefore, the
net gains or losses of CIP are not indicative of the performance of the
company’s aggregate AUM.

Income Before Taxes

Total income before taxes includes income/losses of CIP; however, the company's
operating revenues earned from CIP are not included in operating revenues under
U.S. GAAP, as such operating revenues are eliminated upon consolidation.
Therefore, Foreign operating revenues in Item 8. Financial Statements and
Supplementary Data, Note 19, "Geographic Information," in which CIP has been
eliminated, may not correlate.

Total U.S. income before taxes increased $334.7 million during the year ended
December 31, 2020 to $845.8 million from $511.1 million for the year ended
December 31, 2019 and includes U.S. income of CIP of $40.1 million (December 31,
2019: $24.2 million). U.S. income from CIP increased $15.9 million (65.7%) from
2019 primarily due to the impact of gains on consolidated retail products.
Excluding CIP, U.S. income before taxes in 2020 increased $318.8 million (65.5%)
from December 31, 2019 due to a larger increase in U.S. operating revenues than
operating expenses.

Total Foreign income before taxes decreased $238.5 million during the year ended
December 31, 2020 to $223.3 million from $461.8 million during the year ended
December 31, 2019 and includes foreign income of CIP of $15.2 million
(December 31, 2019: foreign income of CIP of $23.7 million). Foreign income from
CIP decreased $8.5 million (35.6%) from 2019 primarily due to lower net gains on
consolidated retail products. Excluding CIP, foreign income decreased by $230.0
million (52.5%) from 2019 due to a larger decrease in foreign operating revenues
and other income than operating expenses.

Income Tax Expense

Our effective tax rate increased to 24.5% for the year ended December 31, 2020
from 24.2% for the year ended December 31, 2019 primarily due to the increase in
income generated in higher taxing jurisdictions relative to total income and an
increase in the unfavorable adjustment for common share-based compensation. For
additional income tax information, refer to Note 17, "Taxation," in Item 8.
Financial Statements and Supplementary Data.

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Schedule of Non-GAAP Information

We utilize the following non-GAAP performance measures: net revenue (and by
calculation, net revenue yield on AUM), adjusted operating income, adjusted
operating margin, adjusted net income attributable to Invesco Ltd. and adjusted
diluted earnings per common share (EPS). The company believes the adjusted
measures provide valuable insight into the company's ongoing operational
performance and assist in comparisons to its competitors. These measures also
assist the company's management with the establishment of operational budgets
and forecasts and assist the Board of Directors and management of the company in
determining incentive compensation decisions. The most directly comparable U.S.
GAAP measures are operating revenues (and by calculation, gross revenue yield on
AUM), operating income, operating margin, net income attributable to Invesco
Ltd. and diluted EPS. Each of these measures is discussed more fully below.

The following are reconciliations of operating revenues, operating income (and
by calculation, operating margin), and net income attributable to Invesco Ltd.
(and by calculation, diluted EPS) on a U.S. GAAP basis to a non-GAAP basis of
net revenues, adjusted operating income (and by calculation, adjusted operating
margin), and adjusted net income attributable to Invesco Ltd. (and by
calculation, adjusted diluted EPS). These non-GAAP measures should not be
considered as substitutes for any U.S. GAAP measures and may not be comparable
to other similarly titled measures of other companies. Additional reconciling
items may be added in the future to these non-GAAP measures if deemed
appropriate. The tax effects related to the reconciling items have been
calculated based on the tax rate attributable to the jurisdiction to which the
transaction relates. Notes to the reconciliations follow the tables.

Reconciliation of Operating revenues to Net revenues:
$ in millions

                                       2020               2019               2018               2017               2016
Operating revenues, U.S. GAAP basis               6,145.6            6,117.4            5,314.1            5,160.3            4,734.4
Invesco Great Wall (1)                              263.2              157.2               83.6               48.7               43.7
Revenue Adjustments: (2)
 Investment management fees                        (779.8)            (814.4)            (817.9)            (914.2)            (840.1)
 Service and distribution fees                     (986.1)            (886.3)            (629.7)            (551.2)            (547.6)
 Other                                             (181.7)            (192.3)            (160.6)             (21.1)             (19.5)
Total Revenue Adjustments                        (1,947.6)          (1,893.0)          (1,608.2)          (1,486.5)          (1,407.2)
CIP (3)                                              39.8               33.5               28.6               32.4               22.3

Net revenues                                      4,501.0            4,415.1            3,818.1            3,754.9            3,393.2


Reconciliation of Operating income to Adjusted operating income:
$ in millions

                                       2020                2019                2018                2017                2016
Operating income, U.S. GAAP basis                       920.4               808.2             1,204.9             1,279.1             1,152.4
Invesco Great Wall (1)                                  143.7                76.5                31.1                18.4                15.9
CIP (3)                                                  62.0                61.6                44.8                42.9                51.0
Transaction, integration and restructuring (4)          393.3               673.0               136.9               101.8                69.0
Compensation expense related to market
valuation changes in deferred compensation
plans (5)                                                39.8                36.5               (3.2)                20.3                 8.1
Other reconciling items (6)                             105.3                   -              (22.8)                19.7                 1.0
Adjusted operating income                             1,664.5             1,655.8             1,391.7             1,482.2             1,297.4

Operating margin*                                     15.0  %             13.2  %             22.7  %             24.8  %             24.3  %
Adjusted operating margin**                           37.0  %             37.5  %             36.5  %             39.5  %             38.2  %




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Reconciliation of Net income attributable to Invesco Ltd. to Adjusted net income
attributable to Invesco Ltd.:
$ in millions, except per common share data          2020             2019              2018              2017              2016
Net income attributable to Invesco Ltd., U.S.
GAAP basis                                          524.8             564.7             882.8           1,127.3            854.2
CIP (3)                                              (9.4)              1.6              (8.8)             (2.3)            (3.0)
Transaction, integration and restructuring, net
of tax (4)                                          339.7             558.1             138.6              91.9             68.3
Deferred compensation plan market valuation
changes and dividend income less compensation
expense, net of tax (5)                             (20.1)             (7.9)             15.4              (4.6)            (2.5)
Other reconciling items, net of tax (6)              57.9               7.5             (25.3)           (106.4)             7.1
Adjusted net income attributable to Invesco Ltd.    892.9           1,124.0           1,002.7           1,105.9            924.1

Average common shares outstanding - diluted         462.5             440.5             412.5             409.9            415.0
Diluted EPS                                         $1.13$1.28$2.14$2.75$2.06
Adjusted diluted EPS***                             $1.93$2.55$2.43$2.70$2.23


____________
*  Operating margin is equal to operating income divided by operating revenues.
**  Adjusted operating margin is equal to adjusted operating income divided by
net revenues.
***   Adjusted diluted EPS is equal to adjusted net income attributable to
Invesco Ltd. divided by the weighted average number of common and restricted
common shares outstanding. There is no difference between the calculated
earnings per common share amounts presented above and the calculated earnings
per common share amounts under the two class method.

(1)  Invesco Great Wall
Prior to the third quarter of 2018, management reflected its interests in
Invesco Great Wall on a proportional consolidation basis, which was consistent
with the presentation of our share of the AUM from these investments. Given the
company's influence on Invesco Great Wall, a change in regulation allowing
increased foreign ownership, and reaching oral agreement in principle in the
third quarter of 2018 to obtain a majority stake of the joint venture, the
company began reporting 100% of the flows and AUM for Invesco Great Wall. Also
beginning in the third quarter of 2018, the company's non-GAAP operating results
reflect the economics of these holdings on a basis consistent with the
underlying AUM and flows. Adjusted net income is reduced by the amount of
earnings attributable to non-controlling interests.

(2)  Revenue Adjustments
Management believes that adjustments to investment management fees, service and
distribution fees and other revenues from operating revenues appropriately
reflect these revenues as being passed through to external parties who perform
functions on behalf of, and distribute, the company's managed funds. Further,
these adjustments vary by geography due to the differences in distribution
channels. The net revenue presentation assists in identifying the revenue
contribution generated by the business, removing distortions caused by the
differing distribution channel fees and allowing for a fair comparison with U.S.
peer investment managers and within Invesco's own investment units.
Additionally, management evaluates net revenue yield on AUM, which is equal to
net revenues divided by average AUM during the reporting period. This financial
measure is an indicator of the basis point net revenues we receive for each
dollar of AUM we manage and is useful when evaluating the company's performance
relative to industry competitors and within the company for capital allocation
purposes.

Investment management fees are adjusted by renewal commissions and certain
administrative fees. Service and distribution fees are primarily adjusted by
distribution fees passed through to broker dealers for certain share classes and
pass through fund-related costs. Other is primarily adjusted by transaction fees
passed through to third parties. While the terms used for these types of
adjustments vary by geography, they are all costs that are driven by the value
of AUM and the revenue earned by Invesco from AUM. Since the company has been
deemed to be the principal in the third-party arrangements, the company must
reflect these revenues and expenses gross under U.S. GAAP on the consolidated
statements of income.

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(3)  CIP
See Item 8, Financial Statements and Supplementary Data, Note 21, "Consolidated
Investment Products," for a detailed analysis of the impact to the company's
Consolidated Financial Statements from the consolidation of CIP. The reconciling
items add back the management and performance fees earned by Invesco from the
consolidated products and remove the revenues and expenses recorded by the
consolidated products that have been included in the U.S. GAAP Consolidated
Statements of Income.
Management believes that the consolidation of investment products may impact a
reader's analysis of our underlying results of operations and could result in
investor confusion or the production of information about the company by
analysts or external credit rating agencies that is not reflective of the
underlying results of operations and financial condition of the company.
Accordingly, management believes that it is appropriate to adjust operating
revenues, operating income and net income for the impact of CIP in calculating
the respective net revenues, adjusted operating income and adjusted net income.

CIP Revenue:
                                                                             Year ended December 31,
$ in millions, except per common share data        2020              2019              2018              2017              2016
Management fees earned from CIP, eliminated
upon consolidation                                  39.8              33.5              28.6              25.5             20.8
Performance fees earned from CIP, eliminated
upon consolidation                                     -                 -                 -               6.9              1.5

CIP related adjustments in arriving at net
revenues                                            39.8              33.5              28.6              32.4             22.3



(4)  Transaction, integration and restructuring related adjustments
The transaction, integration and restructuring charges reflect legal,
regulatory, advisory, valuation and other professional services or consulting
fees, and travel costs related to a business combination transaction or
restructuring initiatives related to changes in the scope of the business, or
manner in which the business is conducted. Also included in these charges are
severance-related expenses and any contract termination costs associated with
these efforts. Additionally, these charges reflect the costs of temporary staff
involved in executing the transaction or initiative, and the costs of amortizing
acquired intangible assets and integrating an acquired business into the
company's existing operations, including incremental costs associated with
achieving synergy savings following a business combination or restructuring
initiative.

Management believes it is useful to investors and other users of our
Consolidated Financial Statements to adjust for the transaction, integration and
restructuring charges in arriving at adjusted operating income, adjusted
operating margin and adjusted diluted EPS, as this will aid comparability of our
results period to period, and aid comparability with peer companies that may not
have similar acquisition and restructuring related charges. See "Results of
Operations for the Year Ended December 31, 2020 compared to December 31, 2019 --
Transaction, Integration and Restructuring" for additional details.

(5) Market movement on deferred compensation plan liabilities

Certain deferred compensation plan awards are linked to the appreciation
(depreciation) of specified investments, typically managed by the company.
Invesco hedges economically the exposure to market movements by holding these
investments on its balance sheet and through total return swap financial
instruments. U.S. GAAP requires the appreciation (depreciation) in the
compensation liability to be expensed over the award vesting period in
proportion to the vested amount of the award as part of compensation expense.
The full value of the investment and financial instrument appreciation
(depreciation) are immediately recorded below operating income in other gains
and losses. This creates a timing difference between the recognition of the
compensation expense and the investment gain or loss impacting net income
attributable to Invesco Ltd. and diluted EPS which will reverse over the life of
the award and net to zero at the end of the multi-year vesting period. During
periods of high market volatility, these timing differences impact compensation
expense, operating income and operating margin in a manner which, over the life
of the award, will ultimately be offset by gains and losses recorded below
operating income on the Consolidated Statements of Income. The non-GAAP measures
exclude the mismatch created by differing U.S. GAAP treatments of the market
movement on the liability and the investments.

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Since these plans are hedged economically, management believes it is useful to
reflect the offset ultimately achieved from hedging the investment market
exposure in the calculation of adjusted operating income (and by calculation,
adjusted operating margin) and adjusted net income (and by calculation, adjusted
diluted EPS), to produce results that will be more comparable period to period.
The related fund shares or swaps will have been purchased on or around the date
of grant, eliminating any ultimate cash impact from market movements that occur
over the vesting period.

Additionally, dividend income from investments held to hedge economically
deferred compensation plans is recorded as dividend income and as compensation
expense on the company's Consolidated Statements of Income on the record dates.
This dividend income is passed through to the employee participants in the plan
and is not retained by the company. The non-GAAP measures exclude this dividend
income and related compensation expense.

See below for a reconciliation of deferred compensation related items:
$ in millions

                                        2020              2019              2018             2017              2016
Market movement on deferred compensation plan
liabilities:
Compensation expense related to market valuation
changes in deferred compensation liability            39.8              36.5             (3.2)             20.3              8.1
Adjustments to operating income                       39.8              36.5             (3.2)             20.3              8.1
Market valuation changes and dividend income from
investments and instruments held related to
deferred compensation plans in other
income/(expense)                                     (65.8)            (46.8)            23.1             (27.6)           (12.1)

Taxation:

Taxation on deferred compensation plan market
valuation changes and dividend income less
compensation expense                                   5.9               2.4             (4.5)              2.7              1.5
Adjustments to net income attributable to Invesco
Ltd.                                                 (20.1)             (7.9)            15.4              (4.6)            (2.5)



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(6)  Other reconciling items

Each of these other reconciling items has been adjusted from U.S. GAAP to arrive
at the company's non-GAAP financial measures for the reasons either outlined in
the paragraphs above, due to the unique character and magnitude of the
reconciling item, or because the item represents a continuation of a reconciling
item adjusted from U.S. GAAP in a prior period.
$ in millions                                           2020              2019              2018               2017               2016
Other non-GAAP adjustments:
Fund rebalancing correction (a)                         105.3                 -                                     -

Prior period impact of multi-year VAT tax recovery
(b)

                                                         -                 -             (22.8)                  -                 -
Senior executive retirement and related costs (c)           -                 -                 -                19.7                 -
Regulatory charge                                           -                 -                 -                   -               1.0
Adjustments to operating income                         105.3                 -             (22.8)               19.7               1.0
Foreign exchange hedge (d)                               (1.2)              0.9              (8.2)               20.6             (14.2)
Change in contingent consideration estimates (e)        (15.2)              7.8              (0.9)               (7.6)              7.4
Foreign exchange gain related to business
acquisitions (f)                                            -                 -                 -               (12.1)                -
Other-than-temporary impairment (g)                         -                 -                 -                   -              17.8
Employee benefit plan termination (h)                       -                 -                 -                   -              (8.6)

Taxation:

Taxation on fund rebalancing correction (a)             (25.3)                -                 -                   -                 -
Taxation on foreign exchange hedge amortization (d)       0.3              (0.2)              2.1                (7.8)              5.0
Taxation on change in consideration estimates (e)         3.7              (1.0)              0.2                 2.9              (2.8)
State tax uncertain tax position (i)                     (9.0)                -                 -                12.2                 -
Impact of tax rate changes (j)                           (0.7)                -                 -              (130.7)                -

Taxation on prior period impact of multi-year VAT
tax recovery (b)

                                            -                 -               4.3                   -                 -

Taxation on senior executive retirement and related
costs (c)

                                                   -                 -                 -                (5.9)                -
Taxation on foreign exchange gain related to
business acquisitions (f)                                   -                 -                 -                 2.3                 -
Taxation on employee benefit plan termination (h)           -                 -                 -                   -               3.3
Taxation on regulatory-related charges                      -                 -                 -                   -              (1.8)
Adjustments to net income attributable to Invesco
Ltd.                                                     57.9               7.5             (25.3)             (106.4)              7.1


____________

(a)The company recorded a charge of $105.3 million in the second quarter of 2020
due to a previously disclosed S&P 500 equal weight funds rebalancing correction.
Due to the unique character and magnitude of this item, it has been adjusted
from U.S. GAAP to arrive at the company's non-GAAP financial measures.
(b)As a result of an increase in our recoverable VAT from applying additional
regulatory guidance, a credit was recorded in the third quarter of 2018. The
portion of the cumulative adjustment representing 2015 through 2017 has been
removed for non-GAAP purposes.
(c)Operating expenses for 2017 reflect the cost of multiple senior executive
retirements. The costs incurred in one quarter were unprecedented, and the
company deemed it appropriate to adjust these costs from the U.S. GAAP total
compensation in an effort to isolate and evaluate our level of compensation
going forward. The result of this adjustment was $19.7 million related to
accelerated vesting of deferred compensation and other separation costs.
(d)Included within other gains and losses, net is the mark-to-market of foreign
exchange put option contracts intended to provide protection against the impact
of a significant decline in the Pound Sterling/U.S. Dollar and the Euro/U.S.
Dollar foreign exchange rates. The Pound Sterling contracts provided coverage
through June 30, 2020, and the Euro contracts provided coverage through
December 27, 2017. The adjustment from U.S. GAAP to non-
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GAAP earnings removes the impact of market volatility; therefore, the company's
non-GAAP results include only the amortization of the cost of the contracts
during the contract period.
(e)In 2019, the company made digital wealth acquisitions, which resulted in a
contingent consideration liability. Adjustment to the fair value of the digital
wealth acquisitions contingent consideration liability is a decrease of $6.2
million in 2020. In 2015, the company acquired investment management contracts
from Deutsche Bank, and the purchase price was solely comprised of contingent
consideration payable in future periods. Remaining adjustments represent the
change in the fair value of the Deutsche Bank contingent consideration
liability.
(f)Other gains and losses for 2017 includes a realized gain of $12.1 million
related to revaluation of Euros held in the UK in anticipation of payment for
the European ETF business acquisition.
(g)Other-than-temporary impairment includes an impairment charge of $17.8
million in 2016 that is related to the acquisition of Invesco Asset Management
(India) Private Limited.
(h)Employee benefit plan termination: Operating expenses for 2016 include an
incremental credit of $8.6 million related to an employee benefit plan
termination.
(i)The income tax provision for 2020 includes a tax benefit of $9.0 million
resulting from the reversal of the accrual for uncertain tax positions which was
included in the $12.2 million of expense related to uncertain tax positions
originally reflected in the income tax provision in 2017. Both the 2017 expense
and the 2020 benefit have been removed from the company's non-GAAP results in
the respective periods.
(j)2020 included both a non-cash income tax benefit of $4.3 million arising from
the revaluation of certain intangible deferred tax liabilities due to tax rate
changes partially offset by a non-cash income tax expense of $3.6 million
arising from the revaluation of certain deferred tax liabilities due to the
increase in the UK corporate tax rate. 2017 included a $130.7 million tax
benefit due to the revaluation of deferred tax assets and liabilities to reflect
the impacts of the 2017 Tax Cut and Jobs Act enacted in the United States.




























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Balance Sheet Discussion (1)

The following table represents a reconciliation of the balance sheet information
presented on a U.S. GAAP basis to the balance sheet information excluding the
impact of CIP and policyholder balances for the reasons outlined in footnote 1
to the table:
                                                                            As of December 31, 2020                                                                                           As of December 31, 2019
Balance sheet information
$ in millions                         U.S. GAAP                 Impact of CIP               Impact of Policyholders            As Adjusted               U.S. GAAP                Impact of CIP               Impact of Policyholders            As Adjusted

ASSETS

Cash and cash equivalents               1,408.4                         -                                 -                      1,408.4                  1,049.0                         -                                 -                     1,049.0
Unsettled fund receivables                109.4                         -                                 -                        109.4                    162.7                         -                                 -                       162.7
Investments                               826.8                    (421.4)                                -                      1,248.2                    829.5                    (640.2)                                -                     1,469.7
Assets of CIP:
Investments and other assets of
CIP                                     8,085.5                   8,085.5                                 -                            -                  7,980.9                   7,980.9                                 -                           -
Cash and cash equivalents of CIP          301.7                     301.7                                 -                            -                    652.2                     652.2                                 -                           -
Assets held for policyholders           7,582.1                         -                           7,582.1                            -                 10,835.6                         -                          10,835.6                           -
Goodwill and intangible assets,
net                                    16,221.9                         -                                 -                     16,221.9                 15,867.7                         -                                 -                    15,867.7
Other assets (2)                        1,968.3                      (5.1)                                -                      1,973.4                  2,042.7                      (5.6)                                -                     2,048.3
Total assets                           36,504.1                   7,960.7                           7,582.1                     20,961.3                 39,420.3                   7,987.3                          10,835.6                    20,597.4
LIABILITIES
Liabilities of CIP:
Debt of CIP                             6,714.1                   6,714.1                                 -                            -                  6,234.6                   6,234.6                                 -                           -
Other liabilities of CIP                  588.6                     588.6                                 -                            -                    949.6                     949.6                                 -                           -
Policyholder payables                   7,582.1                         -                           7,582.1                            -                 10,835.6                         -                          10,835.6                           -
Unsettled fund payables                    98.4                         -                                 -                         98.4                    154.2                         -                                 -                       154.2
Long-term debt                          2,082.6                         -                                 -                      2,082.6                  2,080.3                         -                                 -                     2,080.3
Other liabilities (3)                   4,417.6                         -                                 -                      4,417.6                  4,464.2                     (35.2)                                -                     4,499.4
Total liabilities                      21,483.4                   7,302.7                           7,582.1                      6,598.6                 24,718.5                   7,149.0                          10,835.6                     6,733.9
EQUITY
Total equity attributable to
Invesco Ltd.                           14,361.8                      (0.1)                                -                     14,361.9                 13,862.5                      (0.1)                                -                    13,862.6
Noncontrolling interests (4)              658.9                     658.1                                 -                          0.8                    839.3                     838.4                                 -                         0.9
Total equity                           15,020.7                     658.0                                 -                     14,362.7                 14,701.8                     838.3                                 -                    13,863.5
Total liabilities and equity           36,504.1                   7,960.7                           7,582.1                     20,961.3                 39,420.3                   7,987.3                          10,835.6                    20,597.4


____________
(1) These tables include non-GAAP presentations. Assets of CIP are not available
for use by Invesco. Additionally, there is no recourse to Invesco for CIP
debt. Policyholder assets and liabilities are equal and offsetting and have no
impact on Invesco's shareholder's equity.
(2)  Amounts include restricted cash, accounts receivable, prepaid assets,
property, equipment and software, right-of-use assets and other assets.
(3)  Amounts include accrued compensation and benefits, accounts payable and
accrued expenses, lease liability and deferred tax liabilities.
(4)  Amounts include redeemable noncontrolling interests in consolidated
entities and equity attributable to nonredeemable noncontrolling interests in
consolidated entities.





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Cash and cash equivalents

Cash and cash equivalents increased by $359.4 million from $1,049.0 million at
December 31, 2019 to $1,408.4 million at December 31, 2020. See "Cash Flows
Discussion" in the following section within this Management's Discussion and
Analysis for additional discussion regarding the movements in cash flows during
the periods. See Item 8, Financial Statements and Supplementary Data - Note 1,
"Accounting Policies - Cash and Cash Equivalents," regarding requirements to
retain liquid resources in certain jurisdictions.

Investments

As of December 31, 2020, we had $826.8 million in investments (December 31,
2019: $829.5 million). Included in investments are $153.5 million of seed money
investments in affiliated funds used to seed funds as we launch new products,
and $202.7 million of investments related to assets held for deferred
compensation plans, which are also held primarily in affiliated funds. Seed
investments decreased by a net $82.0 million during the year ended December 31,
2020. The decreases in the period were redemptions of $311.5 million and $17.1
million of market valuation changes and foreign exchange movements. The decrease
in the period was partially offset by purchases of $56.5 million and a non-cash
increase of $190.1 million due to the deconsolidation of certain CIP in the
period (restoring the company's formerly eliminated investment balances).
Investments related to deferred compensation awards increased by a net
$10.3 million during the period due to purchases of $25.1 million and $17.1
million of market valuation changes and foreign exchange movements. The increase
in the period was partially offset by dispositions of $31.9 million.

Included in investments are $426.1 million in equity method investments in
Invesco Great Wall and in certain of the company's private equity partnerships,
real estate partnerships and other co-investments (December 31, 2019: $350.8
million). The increase of $75.3 million in equity method investments was driven
by an increase from partnership contributions of $53.2 million, $72.7 million in
current period earnings and a non-cash increase of $49.4 million related to the
deconsolidation of certain investments during the period (restoring the
company's formerly eliminated investment balances). This increase was partially
offset by a decrease of $71.8 million due to distributions from partnership
investments, $27.6 million due to the Invesco Great Wall dividend and $0.6
million in market valuation changes and foreign exchange rates. Also included in
investments are foreign time deposits of $29.9 million, a decrease of $2.1
million from the December 31, 2019 balance of $32.0 million.

Assets held for policyholders and policyholder payables

One of our subsidiaries, Invesco Pensions Limited, is an insurance company that
was established to facilitate retirement savings plans in the UK. The entity
holds assets that are managed for its clients on its balance sheet with an equal
and offsetting liability. The decrease in the balance of these accounts from
$10,835.6 million at December 31, 2019 to $7,582.1 million at December 31, 2020,
was the result of net business outflows of $3,357.5 million and negative market
movements of $3.6 million, partially offset by positive foreign exchange rate
movements of $107.6 million.

Liquidity and Capital Resources

Our capital structure, together with available cash balances, cash flows
generated from operations, existing capacity under our credit facility and
further capital market activities, if necessary, should provide us with
sufficient resources to meet present and future cash needs, including operating,
debt and other obligations as they come due and anticipated future capital
requirements. Material changes in the company's capital structure over the last
two years include:

2020: In an effort to maintain financial flexibility and maintain capital
strength, the company reduced our common dividend to $0.155 per common share
beginning with the dividend paid in the second quarter of 2020. Also, on April
23, 2020, the company announced its plan to redeem approximately $200 million of
seed capital investments where appropriate from certain of our investment
products. As of December 31, 2020, the company has redeemed $232 million of seed
capital investments.

As the company’s focus is on increasing financial strength and building
liquidity, the company did not repurchase any of its shares in the open market
during 2020. An aggregate of 3.4 million common shares were withheld in the
amount of $47.1 million related to tax withholding requirements on employee
share vestings during the year ended December 31, 2020.

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In regard to its previously completed forward contracts, the company prepaid
$191 million against the forward payable, resulting in a remaining forward
contract liability of $309 million as of December 31, 2020. The $117 million
liability related to the forward contract entered into on May 13, 2019 was
settled on January 4, 2021. The remaining amounts owed on the forward contracts
entered into in July and August of 2019 will settle on April 1, 2021 for $177
million ($192 million liability net of $15 million of collateral paid). Refer to
Note 10, "Share Capital," for additional details.

As of December 31, 2020 the balance on the $1.5 billion capacity credit facility
was zero.

2019: As discussed in Note 2, "Business Combinations, the company completed its
acquisition of OppenheimerFunds on May 24, 2019. Consideration for the
acquisition included 81.9 million shares, which were composed of 75.7 million
newly issued common shares and 6.2 million employee restricted common stock
awards. The company also issued $4.0 billion in perpetual, non-cumulative
preferred shares with a 21-year non-call period and a fixed rate of 5.9%. See
"Dividends" section below for a discussion of the preferred and common
dividends.

The company repurchased 5.6 million common shares in open market transactions
utilizing $110.8 million in cash and entered into three forward contracts during
2019, whereby the counterparty purchased $500.0 million (25.8 million shares) of
the company's common shares. See Note 10, "Share Capital," for details of these
forward contracts and the related treasury shares recorded as of December 31,
2019. Additionally, during the year, 3.3 million common shares were withheld on
vesting events in the amount of $59.0 million relating to purchases of common
shares from employees to satisfy tax withholding requirements at the time of
common share vesting. The forward contract completed in the fourth quarter of
2018 for $300 million of common shares settled on July 1, 2019.

During 2019, the company paid $330.8 million towards the outstanding balance on
the credit facility. As of December 31, 2019 the remaining balance on the credit
facility was zero.

Capital Management

Our capital management priorities have evolved with the growth and success of
our business and include:

•Reinvestment in the business;
•Maintain strong balance sheet;
•Moderate growth of dividends (as further discussed in the "Dividends" section
below); and
•Share repurchases.

These priorities are executed in a manner consistent with our desire to maintain
strong, investment grade credit ratings. As of the filing of the Report, Invesco
held credit ratings of BBB+/Stable, A3/Stable and A-/Stable from Standard &
Poor's Ratings Service ("S&P"), Moody's Investor Services ("Moody's") and Fitch
Ratings ("Fitch"), respectively. Our ability to continue to access the capital
markets in a timely manner depends on several factors, including our credit
ratings, the condition of the global economy including the impact of COVID-19,
investors' willingness to purchase our securities, interest rates, credit
spreads and the valuation levels of equity markets. If we are unable to access
capital markets in a timely manner, our business could be adversely impacted.
See also Item 1A - "Risk Factors," for more detailed discussion on reliance on
credit ratings.

Certain of our subsidiaries are required to maintain minimum levels of capital.
Such requirements may change from time-to-time as additional guidance is
released based on a variety of factors, including balance sheet composition,
assessment of risk exposures and governance, and review from regulators. These
and other similar provisions of applicable laws and regulations may have the
effect of limiting withdrawals of capital, repayment of intercompany loans and
payment of dividends by such entities. Our financial condition or liquidity
could be adversely affected if certain of our subsidiaries are unable to
distribute funds to us.

All of our regulated EU and UK subsidiaries are subject to consolidated capital
requirements under applicable EU and UK requirements, including those arising
from the EU's Capital Requirements Directive and the UK'sInternal Capital
Adequacy Assessment Process (ICAAP), and we maintain capital within this
European sub-group to satisfy these regulations. We meet these requirements in
part by holding cash and cash equivalents. This retained cash can be used for
general business purposes in the European sub-group in the countries where it is
located. Due to the capital restrictions, the ability to transfer cash between
certain jurisdictions may be limited. In addition, transfers of cash between
international jurisdictions may have adverse tax consequences. We are in
compliance with all regulatory minimum net capital requirements. As of
December 31, 2020, the company's minimum regulatory capital requirement was
$763.6 million (December 31, 2019: $753.6 million); the increase was primarily
driven by the strengthening of the Pound Sterling against the U.S. Dollar
partially offset by lower AUM in the UK.
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The total amount of non-U.S. cash and cash equivalents was $1,034.8 million at
December 31, 2020 (December 31, 2019: $847.0 million).

The consolidation of $8,387.2 million and $6,714.1 million of total assets and
long-term debt of CIP as of December 31, 2020, respectively, did not impact the
company's liquidity and capital resources. The majority of CIP balances related
to consolidated CLOs. The collateral assets of the CLOs are held solely to
satisfy the obligations of the CLOs. The company has no right to the benefits
from, nor does it bear the risks associated with, the collateral assets held by
the CLOs, beyond the company's direct investments in, and management and
performance fees generated from these products, which are eliminated upon
consolidation. If the company were to liquidate, the collateral assets would not
be available to the general creditors of the company, and as a result, the
company does not consider them to be company assets. Likewise, if the CLOs were
to liquidate, their investors would have no recourse to the general credit of
the company. The company therefore does not consider this debt to be an
obligation of the company. See Item 8, Financial Statements and Supplementary
Data - Note 21, "Consolidated Investment Products," for additional details.

Cash Flow Discussion

The ability to consistently generate cash flow from operations in excess of
dividend payments, common share repurchases, capital expenditures and ongoing
operating expenses is one of our company's fundamental financial strengths.
Operations continue to be financed from current earnings and borrowings. Our
principal uses of cash, other than for operating expenses, include dividend
payments, capital expenditures, acquisitions, purchase of our common shares in
the open market and investments in certain new investment products.

The following table represents a reconciliation of the cash flow information
presented on a U.S. GAAP basis to the cash flow information, excluding the
impact of the cash flows of Consolidated Investment Products for the reasons
outlined in footnote 1 to the table:
Cash Flow Information (1)                                                    Year ended December 31, 2020                                                        Year ended December 31, 2019                                                        Year ended December 31, 2018
$ in millions                                            U.S. GAAP                 Impact of CIP                 Excluding CIP               U.S. GAAP                  Impact of CIP                Excluding CIP               U.S. GAAP                 Impact of CIP                 Excluding CIP

Cash and cash equivalents, beginning of the period 1,701.2

            652.2                          1,049.0                  1,805.4                      657.7                         1,147.7                  2,517.7                     511.3                          2,006.4
Cash flows from operating activities (1)                   1,230.3                     (72.7)                         1,303.0                  1,116.6                     (158.3)                        1,274.9                    828.8                    (234.2)                         1,063.0
Cash flows from investing activities                        (865.1)                   (735.4)                          (129.7)                (1,425.4)                  (1,507.4)                           82.0                 (2,898.7)                 (1,248.0)                        (1,650.7)
Cash flows from financing activities                        (285.9)                    426.3                           (712.2)                   201.3                    1,674.6                        (1,473.3)                 1,540.0                   1,767.2                           (227.2)
Increase/(decrease) in cash and cash equivalents              79.3                    (381.8)                           461.1                   (107.5)                       8.9                          (116.4)                  (529.9)                    285.0                           (814.9)
Foreign exchange movement on cash and cash
equivalents                                                   53.3                      25.8                             27.5                     10.7                       (7.0)                           17.7                    (44.8)                     (1.0)                           (43.8)
Net cash inflows (outflows) upon
consolidation/deconsolidation of CIP                           5.5                       5.5                                -                     (7.4)                      (7.4)                              -                   (137.6)                   (137.6)                               -
Cash, cash equivalents and restricted cash, end of
the period                                                 1,839.3                     301.7                          1,537.6                  1,701.2                      652.2                         1,049.0                  1,805.4                     657.7                          1,147.7
Cash and cash equivalents                                  1,408.4                         -                          1,408.4                  1,049.0                          -                         1,049.0                  1,147.7                         -                          1,147.7
Restricted cash                                              129.2                         -                            129.2                        -                          -                               -                        -                         -                                -
Cash and cash equivalents of CIP                             301.7                     301.7                                -                    652.2                      652.2                               -                    657.7                     657.7                                -

Total cash, cash equivalents and restricted cash per
consolidated statement of cash flows

                       1,839.3                     301.7                          1,537.6                  1,701.2                      652.2                         1,049.0                  1,805.4                     657.7                          1,147.7


____________
(1)  These tables include non-GAAP presentations. Cash held by CIP is not
available for use by Invesco. Additionally, there is no recourse to Invesco for
CIP debt. The cash flows of CIP do not form part of the company's cash flow
management processes, nor do they form part of the company's significant
liquidity evaluations and decisions. Policyholder assets and liabilities are
equal and offsetting and have no impact on Invesco's shareholder's equity. The
impact of cash inflows/outflows from policyholder assets and liabilities are
reflected within cash flows from operating activities as changes in receivables
and/or payables, as applicable.
As discussed in Note 2, "Business Combinations," the OppenheimerFunds
acquisition purchase price was allocated to the
assets acquired and liabilities assumed at fair value as of the date of the
transaction. The issuance of common stock and preferred stock consideration
represents a non-cash financing activity related to the statement of cash flows.
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Operating Activities

Operating cash flows include the receipt of investment management and other fees
generated from AUM, offset by operating expenses and changes in operating assets
and liabilities. Although some receipts and payments are seasonal, particularly
bonus payments which are paid out during the first quarter, in general, after
allowing for the change in cash held by CIP, and investment activities, our
operating cash flows move in the same direction as our operating income.

During 2020, cash provided by operating activities was $1,230.3 million compared
to $1,116.6 million provided during 2019 (an increase of $113.7 million). As
shown in the tables above, the impact of CIP to operating activities was $72.7
million of cash used during 2020 compared to $158.3 million of cash used during
2019. Excluding the impact of CIP, cash provided by operations was $1,303.0
million during 2020 compared to $1,274.9 million of cash provided by operations
during 2019. Cash inflows for the year ended December 31, 2020, excluding the
impact of CIP, included a $112.2 million increase in operating income as well as
net investment redemptions of $293.8 million, including seed money and deferred
compensation investments (year ended December 31, 2019: net investment
redemptions of $156.4 million). Inflows were partially offset by net outflows
from the changes in payables and receivables due to the timing of payments and
receipts compared to net inflows in the year ended December 31, 2019.

Investing Activities

Net cash used in investing activities totaled $865.1 million for the year ended
December 31, 2020 (2019: net cash used in $1,425.4 million). As shown in the
tables above, the impact of CIP on investing activities, including investment
purchases, sales and returns of capital, was $735.4 million used (2019: $1,507.4
million used). Excluding the impact of CIP cash flows, net cash used in
investing activities was $129.7 million (2019: net cash provided of $82.0
million).

Cash outflows for the year ended December 31, 2020, excluding the impact of CIP,
included purchases of investments of $200.3 million (year ended December 31,
2019: $325.7 million), partially offset by collected proceeds of $185.6 million
from sales and returns of capital of investments (year ended December 31, 2019:
$215.5 million). Investing inflows for the year ended December 31, 2019 also
included net cash acquired of $290.5 million primarily related to the
OppenheimerFunds acquisition (See Note 2, "Business Combinations," for
additional information regarding cash acquired as a result of the acquisition)
as well as net collateral received of $26.0 million on the forward contracts. As
of December 31, 2019, the collateral was in a net receivable position.

During the year ended December 31, 2020, the company had capital expenditures of
$115.0 million (2019: $124.3 million). Our capital expenditures related
principally in each period to technology initiatives, including enhancements to
platforms from which we maintain our portfolio management systems and fund
accounting systems, improvements in computer hardware and software desktop
products for employees, new telecommunications products to enhance our internal
information flow and tools to prevent security breaches from external threats.
Also, in each period, a portion of these costs related to leasehold improvements
made to the various buildings and workspaces used in our offices. These projects
have been funded with proceeds from our operating cash flows. In 2020, our
capital expenditures also included remaining technology integrations related to
the OppenheimerFunds acquisition.

Financing Activities

Net cash used in financing activities totaled $285.9 million for the year ended
December 31, 2020 (2019: cash provided of $201.3 million). As shown in the
tables above, the impact of CIP on financing activities provided cash of $426.3
million during the year (2019: cash provided of $1,674.6 million). Excluding the
impact of CIP, financing activities used cash of $712.2 million in the year
ended December 31, 2020 (2019: cash used of $1,473.3 million).

Financing cash outflows during the year ended December 31, 2020 included $357.4
million of dividend payments for the common dividends declared in January,
April, July and October 2020 (year ended December 31, 2019: dividends paid of
$529.1 million), $236.8 million of preferred dividend payments for dividends
declared in January, April, July and October 2020 (year ended December 31, 2019:
$123.6 million for dividends declared in July and November 2019), a $190.6
million prepayment on the forward contracts, the payment of $47.1 million to
meet employees' withholding tax obligations on common share vestings (year ended
December 31, 2019: $59.0 million) and a payment of $22.3 million of contingent
consideration (year ended December 31, 2019: $20.0 million). These outflows were
partially offset by inflows of $142.0 million of net collateral received on the
forward contracts. As of December 31, 2020, the collateral was in a net payable
position. Financing outflows for the year ended December 31, 2019 also included
net repayment on the credit facility of $330.8 million, $300 million
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settlement of the forward contract completed in the fourth quarter of 2018, and
purchases of common shares through open market transactions totaling $110.8
million
.

Dividends

When declared, Invesco pays dividends on a quarterly basis in arrears. Holders
of our preferred shares are eligible to receive dividends at an annual rate of
5.9% of the liquidation preference of $1,000 per share, or $59 per share per
annum. The preferred stock dividend is payable quarterly on a non-cumulative
basis when, if and as declared by our board of directors. However, if we have
not declared and paid or set aside for payment full quarterly dividends on the
preferred stock for a particular dividend period, we may not declare or pay
dividends on, or redeem, purchase or acquire, our common stock or other junior
securities in the next succeeding dividend period. In addition, if we have not
declared and paid or set aside for payment quarterly dividends on the preferred
stock for six quarterly periods, whether or not consecutive, the number of
directors of the company will be increased by two and the holders of the
preferred shares shall have the right to elect such two additional members of
the Board of Directors.

On January 26, 2021, the company announced a preferred dividend of $14.75 per
preferred share to the holders of preferred shares, representing the period from
December 1, 2020 through February 28, 2021, payable on March 1, 2021, to
shareholders of record at the close of business on February 16, 2021.

On January 26, 2021, the company declared a fourth quarter 2020 dividend of
$0.155 per common share, payable on March 2, 2021, to shareholders of record at
the close of business on February 16, 2021 with an ex-dividend date of
February 12, 2021.

The declaration, payment and amount of any future dividends will be declared by
our Board of Directors and will depend upon, among other factors, our earnings,
financial condition and capital requirements at the time such declaration and
payment are considered. The Board has a policy of managing dividends in a
prudent fashion, with due consideration given to profit levels, overall debt
levels, and historical dividend payouts.

Common Share Repurchase Plan

During the year ended December 31, 2020, no common shares were repurchased in
the open market (December 31, 2019: 5.6 million shares at a cost of $110.8
million). Separately, an aggregate of 3.4 million common shares were withheld on
vesting events during the year ended December 31, 2020 to meet employees'
withholding tax obligations (December 31, 2019: 3.3 million). The fair value of
these shares withheld at the respective withholding dates was $47.1 million
(December 31, 2019: $59.0 million).

During the year ended December 31, 2019, the company entered into three forward
contracts to repurchase $500.0 million of shares as part of its announced $1.2
billion common stock buyback program. Under these contracts, the counterparty
purchased 25.8 million shares during the year ended December 31, 2019. See Note
10, "Share Capital," for details of these forward contracts. At December 31,
2020, approximately $732.2 million remained authorized under the company's
common share repurchase authorization approved by the Board on July 22, 2016
(December 31, 2019: $732.2 million).

The forward contract completed on May 13, 2019 for $200 million of common shares
settled on January 4, 2021. Remaining contracts settle on April 1, 2021.

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Long-term debt

The carrying value of our long-term debt at December 31, 2020 was $2,082.6
million
(December 31, 2019: $2,080.3 million) and was comprised of the
following:
$ in millions

                                                 December 31, 2020December 31, 2019

$1.5 billion floating rate credit facility expiring
August 11, 2022

                                                           -                               -
Unsecured Senior Notes:
$600 million 3.125% - due November 30, 2022                           598.7                           598.1
$600 million 4.000% - due January 30, 2024                            596.8                           595.8
$500 million 3.750% - due January 15, 2026                            496.7                           496.1
$400 million 5.375% - due November 30, 2043                           390.4                           390.3
Long-term debt                                                      2,082.6                         2,080.3


For the year ended December 31, 2020, the company’s weighted average cost of
debt was 3.77% (year ended December 31, 2019: 3.93%).

Financial covenants under the credit agreement include: (i) the quarterly
maintenance of an adjusted debt/EBITDA leverage ratio, as defined in the credit
agreement, of not greater than 3.25:1.00, (ii) an interest coverage ratio
(EBITDA, as defined in the credit agreement/interest payable for the four
consecutive fiscal quarters ended before the date of determination) of not less
than 4.00:1.00. As of December 31, 2020, we were in compliance with our
financial covenants. At December 31, 2020, our leverage ratio was 1.37:1.00
(December 31, 2019: 1.31:1.00), and our interest coverage ratio was 11.83:1.00
(December 31, 2019: 11.76:1.00).

The December 31, 2020 and 2019 coverage ratio calculations are as follows:

                                                                                       Last four quarters ended
$ millions                                                              December 31, 2020                     December 31, 2019
Net income attributable to Invesco Ltd.                                          524.8                                     564.7
Dividends on preferred shares                                                    236.8                                     123.6
Impact of CIP on net income attributable to Invesco Ltd.                          (9.4)                                      1.6
Tax expense                                                                      261.6                                     235.1
Amortization/depreciation                                                        203.5                                     177.6
Interest expense                                                                 129.3                                     135.7
Common share-based compensation expense                                          188.5                                     207.5
Unrealized (gains)/losses from investments, net (1)                               (5.6)                                    (37.1)
Pre-acquisition EBITDA of acquired business                                          -                                        186.6
EBITDA (2)                                                                     1,529.5                                   1,595.3
Adjusted debt (2)                                                             $2,094.2$2,091.5
Leverage ratio (Adjusted debt/EBITDA - maximum 3.25:1.00)                         1.37                                      1.31
Interest coverage (EBITDA/Interest Expense - minimum 4.00:1.00)                  11.83                                     11.76


____________

(1)Adjustments for unrealized gains and losses from investments, as defined in
our credit facility, may also include non-cash gains and losses on investments
to the extent that they do not represent anticipated future cash receipts or
expenditures.
(2)EBITDA and Adjusted debt are non-GAAP financial measures that are used by
management in connection with certain debt covenant calculations under our
credit agreement. The calculation of EBITDA above (a reconciliation from net
income attributable to Invesco Ltd.) is defined by our credit agreement, and
therefore net income attributable to Invesco Ltd. is the most appropriate GAAP
measure from which to reconcile to EBITDA. The calculation of Adjusted debt is
defined in our credit facility and equals long-term debt of $2,082.6 million
plus $11.6 million in letters of credit.

The discussion that follows identifies risks associated with the company’s
liquidity and capital resources. The Item 1. Business — Risk Management section
contains a broader discussion of the company’s overall approach to risk
management.

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Credit and Liquidity Risk

Capital management involves the management of the company's liquidity and cash
flows. The company manages its capital by reviewing annual and projected cash
flow forecasts and by monitoring credit, liquidity and market risks, such as
interest rate and foreign currency risks (as discussed in Item 7A, "Quantitative
and Qualitative Disclosures About Market Risk"), through measurement and
analysis. The company is primarily exposed to credit risk through its cash and
cash equivalent deposits, which are held by external firms. The company invests
its cash balances in its own institutional money market products, as well as
with external high credit-quality financial institutions. These arrangements
create exposure to concentrations of credit risk.

Credit Risk

Credit risk is the risk that one party to a financial instrument will cause a
financial loss for the other party by failing to meet an obligation. All cash
and cash equivalent balances are subject to credit risk, as they represent
deposits made by the company with external banks and other institutions. As of
December 31, 2020, our maximum exposure to credit risk related to our cash and
cash equivalent balances is $1,408.4 million. See Item 8, Financial Statements
and Supplementary Data - Note 22, "Related Parties," for information regarding
cash and cash equivalents invested in affiliated money market funds.

The company does not utilize credit derivatives or similar instruments to
mitigate the maximum exposure to credit risk. The company does not expect any
counterparties to its financial instruments to fail to meet their obligations.

Liquidity Risk

Liquidity risk is the risk that the company will encounter difficulty in meeting
obligations associated with its financial liabilities as the same become due.
The company is exposed to liquidity risk through its $2,082.6 million in total
debt. The company actively manages liquidity risk by preparing cash flow
forecasts for future periods, reviewing them regularly with senior management,
maintaining a committed credit facility, scheduling significant gaps between
major debt maturities and engaging external financing sources in regular
dialogue.

Effects of Inflation

Inflation can impact our organization primarily in two ways. First, inflationary
pressures can result in increases in our cost structure, especially to the
extent that large expense components such as compensation are impacted. To the
degree that these expense increases are not recoverable or cannot be
counterbalanced through pricing increases due to the competitive environment,
our profitability could be negatively impacted. Secondly, the value of the
assets that we manage may be negatively impacted when inflationary expectations
result in a rising interest rate environment. Declines in the values of these
AUM could lead to reduced revenues as management fees are generally calculated
based upon the size of AUM.

Off Balance Sheet Commitments

See Item 8, Financial Statements and Supplementary Data – Note 20, “Commitments
and Contingencies – Off Balance Sheet Commitments,” for more information
regarding undrawn capital commitments.

Contractual Obligations

We have various financial obligations that require future cash payments. The
following table outlines the timing of payment requirements related to our
commitments as of December 31, 2020:
$ in millions                                Total (4,5,6,7)          Within 1 Year           1-3 Years            3-5 Years          More Than 5 

Years

Long-term debt (1)                             2,082.6                       -                  598.7               596.8                   887.1
Estimated interest payments on long-term
debt (1)                                         719.1                    83.0                  147.2                92.5                   396.4
Operating leases (2)                             584.1                    81.2                  144.1                98.8                   260.0
Purchase obligations (3)                         874.3                   568.2                  157.1                70.0                    79.0

Total                                          4,260.1                   732.4                1,047.1               858.1                 1,622.5


____________

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(1)  Long-term debt includes $2,082.6 million of fixed rate debt. Fixed interest
payments are reflected in the table above in the periods they are due, and
include any issuance discounts. The table above includes the company's debt;
debt of CIP is excluded from the table above, as the company is not obligated
for these amounts. See Item 8, Financial Statements and Supplementary Data -
Note 21, "Consolidated Investment Products," for additional information.

(2) Operating leases reflect obligations for leased building space and other
assets.

Included in the table above is an additional operating lease the company entered
into during the third quarter of 2019, but has not yet commenced. The expected
lease obligations are approximately $232.5 million which will be paid over an
expected lease term of 15 years. This operating lease will commence in fiscal
year 2022. See Item 8, Financial Statements and Supplementary Data - Note 15,
"Operating Leases," for additional information.

(3)  In the ordinary course of business, Invesco enters into contracts or
purchase obligations with third parties whereby the third parties provide
services to or on behalf of Invesco. Purchase obligations included in the
contractual obligations table above represent fixed-price contracts, which are
either non-cancelable or cancelable with a penalty. At December 31, 2020, the
company's obligations primarily reflect standard service contracts for
portfolio, market data, office-related services and third-party marketing and
promotional services. In addition, the company is a party to certain
variable-price contractual arrangements (e.g., contingent future payments based
on AUM levels, number of accounts, transaction volume, etc.) for which the
company is reimbursed by affiliated funds and as such are not included in the
table above. Purchase obligations are recorded as liabilities in the company's
Consolidated Financial Statements when services are provided. Purchase
obligations also include contingent consideration liabilities.

During the year ended December 31, 2019, the company entered into three forward
contracts to repurchase $500.0 million of shares as part of its announced $1.2
billion common stock buyback program. At December 31, 2020 the payable was
$309.0 million and is included in other liabilities. See Item 8, Financial
Statements and Supplementary Data - Note 10, "Share Capital," for additional
details.

(4)  The company has capital commitments into co-invested funds that are to be
drawn down over the life of the partnership as investment opportunities are
identified. At December 31, 2020, the company's undrawn capital and purchase
commitments were $453.5 million. These are not included in the above table. See
Item 8, Financial Statements and Supplementary Data - Note 20, "Commitments and
Contingencies," for additional details.

(5)  The company had $61.9 million of gross unrecognized tax benefits at
December 31, 2020. Due to the uncertainty with respect to the timing and amounts
that will ultimately be paid, this amount has been excluded from the contractual
obligations table above. See Item 8, Financial Statements and Supplementary
Data, Note 17, "Taxation," for a discussion regarding income taxes.

(6)  In addition to the contractual obligations in the table above, we
periodically make contributions to defined benefit pension plans. For the years
ended December 31, 2020 and 2019, we contributed $25.5 million and $24.0
million, respectively, to these plans. In 2021, we expect to contribute $15.2
million to our defined benefit pension plans. See Item 8, Financial Statements
and Supplementary Data - Note 13, "Retirement Benefit Plans," for detailed
benefit pension plan information. The company has various other compensation and
benefit obligations, including bonuses, commissions and incentive payments
payable, defined contribution plan matching contribution obligations, and
deferred compensation arrangements, that are excluded from the table above.

(7)  In addition to the contractual obligations in the table above, and pursuant
to an agreement entered into at the consummation of the acquisition of
OppenheimerFunds, MassMutual, as the holder of seed capital investments in
certain funds and accounts included in the acquisition, has the right to redeem
its seed capital investments in accordance with an agreed upon schedule. In the
event MassMutual exercises its redemption rights and the applicable fund or
account is unable to meet such redemption (for example, due to illiquid
investments or the need to maintain a level of investment in the fund), the
company would be required to fund such redemption to MassMutual and seek
reimbursement from the applicable fund or account at a later time when the fund
or account is able to fulfill a redemption request. MassMutual has exercised its
redemption rights and redeemed a portion of the seed capital per the agreed upon
schedule. At December 31, 2020, the total amount of seed capital subject to this
agreement is approximately $357.8 million. As of the date of this report, the
company was not required to fund these redemptions nor does the company
anticipate having to fund any of the seed capital subject to this agreement.

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Critical Accounting Policies and Estimates

Our significant accounting policies are disclosed in Item 8, Financial
Statements and Supplementary Data - Note 1, "Accounting Policies." Critical
accounting policies and estimates are those that require complex management
judgment regarding matters that are highly uncertain at the time policies were
applied and estimates were made. Different estimates reasonably could have been
used in the current period that would have had a material effect on these
Consolidated Financial Statements, and changes in these estimates are likely to
occur from period-to-period in the future. The discussion below provides
information on the significant judgments and assumptions applied in each area
and should be read in conjunction with the significant accounting policies
footnote previously referenced.

Goodwill

Our goodwill impairment testing conducted during 2020 and 2019 indicated that
the fair value of the reporting unit more likely than not exceeded its carrying
value. During our annual impairment test in 2020 and 2019, management performed
the optional qualitative approach which indicated that a quantitative assessment
of the goodwill impairment test was not necessary. Due to the decline in our
assets under management resulting from COVID-19, management also performed a
quantitative goodwill impairment test which indicated no impairment. The company
cannot predict the occurrence of future events that might adversely affect the
reported value of goodwill that totaled $8,916.3 million and $8,509.4 million at
December 31, 2020 and December 31, 2019, respectively. Such events include, but
are not limited to, strategic decisions made in response to economic and
competitive conditions, the impact of the economic environment on the company's
AUM or any other material negative change in AUM and related effective fee
rates.

When management utilizes the option to first assess goodwill impairment on a
qualitative basis, the totality of certain events and circumstances are assessed
to determine if it is not more likely than not that the fair value of the
reporting unit is less than its carrying amount. Such events and circumstances
include macroeconomic conditions, industry and market considerations, overall
financial performance of the company and or significant changes in share price.
If the qualitative assessment indicates that an impairment may be likely or
management elected to not perform the qualitative assessment, management
performs a quantitative test to determine the fair value of the reporting unit.
The fair value of the reporting unit is generally determined using an income
approach where estimated future cash flows are discounted to arrive at a single
present value amount. The income approach includes inputs that require
significant management judgment, including AUM growth rates, projected effective
fee rates, pre-tax profit margins, effective tax rates and discount rates.

The quantitative test includes assumptions updated for current market
conditions, including the company's updated forecasts for changes in AUM due to
market gains or losses and long-term net flows and the corresponding changes in
revenue and expenses. Market gains are based upon historical returns of the S&P
500 index, treasury bond returns and treasury bill returns, as applicable to the
company's AUM mix on the testing date. The most sensitive of these assumptions
are the AUM growth rate, fee rates, operating expense and the discount rate to
determine present value. The discount rates used are estimates of the weighted
average cost of capital for the investment management sector reflecting the
overall industry risks associated with future cash flows and have been
calculated consistently from period to period. While the company believes all
assumptions utilized in our assessment are reasonable and appropriate, changes
in these estimates could produce different fair value amounts and therefore
different goodwill impairment assessments.

Intangible Assets

Where evidence exists that the underlying arrangements have a high likelihood of
continued renewal at little or no cost to the company, the intangible asset is
assigned an indefinite life and reviewed for impairment on an annual basis.
Similar to Goodwill, management has the option to first assess indefinite-lived
intangible assets for qualitative factors to determine whether it is necessary
to perform a quantitative impairment test. Definite-lived intangible assets are
reviewed for impairment whenever events or changes in circumstances indicate
that their carrying amount may not be recoverable (i.e., the carrying amount
exceeds the fair value of the intangible asset). In addition, management's
judgment is required to estimate the period over which definite-lived intangible
assets will contribute to the company's cash flows and the pattern in which
these assets will be consumed. A change in the remaining useful life of any of
these assets, or the reclassification of an indefinite-lived intangible asset to
a definite-lived intangible asset, could have a significant impact on the
company's amortization expense, which was $62.5 million, $52.7 million and $29.7
million for the years ended December 31, 2020, 2019 and 2018, respectively.

Intangible assets not subject to amortization are tested for impairment annually
as of October 1 or more frequently if events or changes in circumstances
indicate that the asset might be impaired. If a quantitative assessment is
required, the impairment test consists of a comparison of the fair value of an
intangible asset with its carrying amount. If the carrying amount of the
intangible asset exceeds its fair value, an impairment loss is recognized in an
amount equal to that excess. If required, fair value
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is generally determined using an income approach where estimated future cash
flows are discounted to arrive at a single present value amount. The income
approach includes inputs that require significant management judgment, including
AUM growth rates, product mix, projected effective fee rates, pre-tax profit
margins, effective tax rates and discount rates. The most sensitive of these
assumptions to the determination of the estimated fair value are the AUM growth
rate, fee rates, operating expense and discount rate, which is a weighted
average cost of capital including consideration of company size premiums.
Changes in these estimates could produce different fair value amounts and
therefore different impairment conclusions. During 2020 and 2019, our annual
impairment reviews of indefinite-lived intangible assets determined that no
impairment existed at the respective review dates, the classifications of
indefinite-lived and definite-lived remain appropriate, and no changes to the
expected lives of the definite-lived intangible assets were required. Due to the
decline in our assets under management resulting from COVID-19, management also
performed a quantitative impairment test on certain indefinite-lived intangible
assets in the first quarter of 2020 which indicated no impairment.

Income Taxes

We operate in numerous countries, states and other taxing jurisdictions. The
income tax laws are complex and subject to different interpretations by the
taxpayer and the relevant taxing authorities. Significant judgment is required
in the determination of our annual income tax provisions, which includes the
assessment of deferred tax assets and uncertain tax positions, as well as the
interpretation and application of existing and newly enacted tax laws,
regulation changes, and new judicial rulings. Therefore, it is possible that
actual results will vary from those recognized in our Consolidated Financial
Statements due to changes in the interpretation of applicable guidance or as a
result of examinations by taxing authorities.

Deferred tax assets, net of any associated valuation allowance, have been
recognized based on management's belief that taxable income of the appropriate
character, more likely than not, will be sufficient to realize the benefits of
these assets over time. In the event that actual results differ from our
expectations, or if our historical trends of positive operating income changes,
we may be required to record a valuation allowance on some or all of these
deferred tax assets, which may have a significant effect on our financial
condition and results of operations. In assessing whether a valuation allowance
should be established against a deferred income tax asset, the company considers
all available evidence, which includes the nature, frequency and severity of
recent losses, forecasts of future profitability, the duration of statutory
carry back and carry forward periods, among other factors.

In the assessment of uncertain tax positions, significant judgment is required
to estimate the range of possible outcomes and determine the probability, on a
more likely than not basis, of favorable or unfavorable outcomes upon ultimate
settlement of an issue. Unrecognized tax benefits as well as the related
interest and penalties, are regularly evaluated and adjusted as appropriate to
reflect changes that could impact the relative merits and risks of tax
positions. The company recognizes any interest and penalties related to
unrecognized tax benefits on the Consolidated Statements of Income as components
of income tax expense.

CIP

Assessing if an entity is a variable interest entity (VIE) or voting interest
entity (VOE) involves judgment and analysis on a structure-by-structure basis.
Factors assessed as part of the analysis include the legal organization of the
entity, the company's contractual involvement with the entity and any related
party or de facto agent implications of the company's involvement with the
entity. A VIE, in the context of the company and its managed funds, is a fund
that does not have sufficient equity to finance its operations without
additional subordinated financial support, or a fund for which the risks and
rewards of ownership are not directly linked to voting interests. If the company
is deemed to have the power to direct the activities of the fund that most
significantly impact the fund's economic performance, and the obligation to
absorb losses/right to receive benefits from the fund that could potentially be
significant to the fund, then the company is deemed to be the fund's primary
beneficiary and is required to consolidate the fund. Assessing if the company
has the power to direct the activities that most significantly impact the fund's
economic results may involve significant judgment.

As of December 31, 2020, the company consolidated CIP that held investments of
$7,910.0 million (December 31, 2019: $7,808.0 million).

Contingencies

Contingencies arise when we have a present obligation as a result of a past
event that is both probable and reasonably estimable. We must from time to time
make material estimates with respect to legal and other contingencies. The
nature of our business requires compliance with various laws and regulations, as
well as various contractual obligations, and exposes us to a variety of legal
proceedings and matters in the ordinary course of business. While the outcomes
of matters such as these are inherently uncertain and difficult to predict, we
maintain reserves reflected in accounts payable and accrued expenses, as
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appropriate, for identified losses that are, in our judgment, probable and
reasonably estimable. We expense any related legal fees as they are incurred.
Management's judgment is based on the advice of legal counsel, ruling on various
motions by the applicable court, review of the outcome of similar matters, if
applicable, and review of guidance from governmental and other regulatory
authorities, if applicable. Contingent consideration payable in relation to a
business acquisition is recorded as of the acquisition date as part of the fair
value transferred in exchange for the acquired business.

As described in Item 8, Financial Statements and Supplementary Data - Note 20,
"Commitments and Contingencies," the company has accrued an estimated liability
of $387.8 million related to a restatement of certain historical fund financial
statements. The liability represents the expected reimbursement to fund
shareholders and excludes any amounts that may be recovered through
indemnification and insurance recoveries, as well as other remediation costs
related to the matter, such as legal and consulting costs, or the costs of
communicating with fund shareholders. Uncertainties remain as of the date of
this report regarding the nature, scope and amounts of such costs, as well as
the degree to which the company will ultimately be financially responsible for
bearing such costs.

Regarding the estimated liability, the primary source of uncertainty is the
activity of the underlying fund shareholders in omnibus accounts, the majority
of which data the company has not yet received. The determination of the
liability due to each fund shareholder will be based on a number of factors,
including:

•The timing of fund shareholder transactions,
•The frequency and magnitude of fund shareholder transactions,
•The dates on which each fund shareholder opened and closed his or her account,
and
•The difference between the historical net asset value of the Funds and the
corrected price on the dates when a fund shareholder engaged in transaction
activity and the Funds made distributions

The calculation of the liability depends on these variables in the aggregate;
therefore, it is not possible to evaluate the impact of possible trends in each
variable on the overall calculation. Additionally, given the unique nature of
each outstanding third-party data set, we are not able to determine a range of
reasonably possible outcomes at this time.

Recent Accounting Standards

See Item 8, Financial Statements and Supplementary Data - Note 1, "Accounting
Policies - Accounting Pronouncements Recently Adopted and Pending Accounting
Pronouncements."

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