filings.toolsItem 1. Financial Statements
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Item 1. Financial Statements
Invesco Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)
| As of | |||||||||||
| $ in millions, except per share data | June 30, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | 936.8 | 1,896.4 | |||||||||
| Accounts receivable | 747.4 | 785.0 | |||||||||
| Investments | 884.6 | 926.3 | |||||||||
| Assets of consolidated investment products (CIP): | |||||||||||
| Cash and cash equivalents of CIP | 196.0 | 250.7 | |||||||||
| Accounts receivable and other assets of CIP | 287.9 | 532.6 | |||||||||
| Investments of CIP | 8,720.0 | 9,042.5 | |||||||||
| Assets held for policyholders | 1,067.7 | 1,893.6 | |||||||||
| Other assets | 1,034.3 | 729.9 | |||||||||
| Property, equipment and software, net | 491.4 | 518.1 | |||||||||
| Intangible assets, net | 7,174.4 | 7,228.0 | |||||||||
| Goodwill | 8,646.2 | 8,882.5 | |||||||||
| Total assets | 30,186.7 | 32,685.6 | |||||||||
| LIABILITIES | |||||||||||
| Accrued compensation and benefits | 558.0 | 1,062.3 | |||||||||
| Accounts payable and accrued expenses | 1,352.9 | 1,157.1 | |||||||||
| Liabilities of CIP: | |||||||||||
| Debt of CIP | 6,731.1 | 7,336.1 | |||||||||
| Other liabilities of CIP | 443.0 | 846.3 | |||||||||
| Policyholder payables | 1,067.7 | 1,893.6 | |||||||||
| Debt | 1,671.2 | 2,085.1 | |||||||||
| Deferred tax liabilities, net | 1,675.2 | 1,626.3 | |||||||||
| Total liabilities | 13,499.1 | 16,006.8 | |||||||||
| Commitments and contingencies (See Note 12) | |||||||||||
| TEMPORARY EQUITY | |||||||||||
| Redeemable noncontrolling interests in consolidated entities | 892.8 | 510.8 | |||||||||
| PERMANENT EQUITY | |||||||||||
| Equity attributable to Invesco Ltd.: | |||||||||||
| Preferred shares ($0.20 par value; $1,000 liquidation preference; 4.0 million authorized, issued and outstanding as of June 30, 2022 and December 31, 2021) | 4,010.5 | 4,010.5 | |||||||||
| Common shares ($0.20 par value; 1,050.0 million authorized; 566.1 million shares issued as of June 30, 2022 and December 31, 2021) | 113.2 | 113.2 | |||||||||
| Additional paid-in-capital | 7,563.2 | 7,688.0 | |||||||||
| Treasury shares | (3,095.3) | (3,043.6) | |||||||||
| Retained earnings | 7,323.2 | 7,169.2 | |||||||||
| Accumulated other comprehensive income/(loss), net of tax | (801.1) | (441.5) | |||||||||
| Total equity attributable to Invesco Ltd. | 15,113.7 | 15,495.8 | |||||||||
| Equity attributable to nonredeemable noncontrolling interests in consolidated entities | 681.1 | 672.2 | |||||||||
| Total permanent equity | 15,794.8 | 16,168.0 | |||||||||
| Total liabilities, temporary and permanent equity | 30,186.7 | 32,685.6 |
See accompanying notes.
Invesco Ltd.
Condensed Consolidated Statements of Income
(Unaudited)
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| $ in millions, except per common share data | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Operating revenues: | |||||||||||||||||||||||
| Investment management fees | 1,113.5 | 1,247.4 | 2,294.0 | 2,454.0 | |||||||||||||||||||
| Service and distribution fees | 353.8 | 401.0 | 732.8 | 782.1 | |||||||||||||||||||
| Performance fees | 9.2 | 10.5 | 10.2 | 17.2 | |||||||||||||||||||
| Other | 53.9 | 62.5 | 122.8 | 127.8 | |||||||||||||||||||
| Total operating revenues | 1,530.4 | 1,721.4 | 3,159.8 | 3,381.1 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Third-party distribution, service and advisory | 475.0 | 539.6 | 987.6 | 1,062.4 | |||||||||||||||||||
| Employee compensation | 407.2 | 487.0 | 840.1 | 976.2 | |||||||||||||||||||
| Marketing | 33.8 | 24.5 | 55.5 | 40.3 | |||||||||||||||||||
| Property, office and technology | 135.0 | 127.2 | 267.0 | 256.5 | |||||||||||||||||||
| General and administrative | 119.7 | 103.3 | 221.9 | 199.9 | |||||||||||||||||||
| Transaction, integration and restructuring | 0.2 | (47.1) | 35.4 | (1.3) | |||||||||||||||||||
| Amortization of intangibles | 14.8 | 16.0 | 29.9 | 31.9 | |||||||||||||||||||
| Total operating expenses | 1,185.7 | 1,250.5 | 2,437.4 | 2,565.9 | |||||||||||||||||||
| Operating income | 344.7 | 470.9 | 722.4 | 815.2 | |||||||||||||||||||
| Other income/(expense): | |||||||||||||||||||||||
| Equity in earnings of unconsolidated affiliates | 24.7 | 37.2 | 58.1 | 64.7 | |||||||||||||||||||
| Interest and dividend income | 2.1 | 0.4 | 3.3 | 1.7 | |||||||||||||||||||
| Interest expense | (25.8) | (24.6) | (49.0) | (48.4) | |||||||||||||||||||
| Other gains/(losses), net | (90.0) | 43.4 | (135.5) | 77.5 | |||||||||||||||||||
| Other income/(expense) of CIP, net | 26.2 | 122.0 | 2.9 | 216.7 | |||||||||||||||||||
| Income before income taxes | 281.9 | 649.3 | 602.2 | 1,127.4 | |||||||||||||||||||
| Income tax provision | (63.0) | (154.2) | (145.8) | (260.7) | |||||||||||||||||||
| Net income | 218.9 | 495.1 | 456.4 | 866.7 | |||||||||||||||||||
| Net (income)/loss attributable to noncontrolling interests in consolidated entities | (38.7) | (67.6) | (19.3) | (112.2) | |||||||||||||||||||
| Dividends declared on preferred shares | (59.2) | (59.2) | (118.4) | (118.4) | |||||||||||||||||||
| Net income attributable to Invesco Ltd. | 121.0 | 368.3 | 318.7 | 636.1 | |||||||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| -basic | $0.27 | $0.80 | $0.70 | $1.38 | |||||||||||||||||||
| -diluted | $0.26 | $0.79 | $0.69 | $1.37 |
See accompanying notes.
Invesco Ltd.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| $ in millions | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Net income | 218.9 | 495.1 | 456.4 | 866.7 | |||||||||||||||||||
| Other comprehensive income/(loss), net of tax: | |||||||||||||||||||||||
| Currency translation differences on investments in foreign subsidiaries | (292.9) | 34.9 | (360.1) | 35.7 | |||||||||||||||||||
| Other comprehensive income/(loss), net of tax | 0.3 | 3.0 | 0.5 | (1.0) | |||||||||||||||||||
| Other comprehensive income/(loss) | (292.6) | 37.9 | (359.6) | 34.7 | |||||||||||||||||||
| Total comprehensive income/(loss) | (73.7) | 533.0 | 96.8 | 901.4 | |||||||||||||||||||
| Comprehensive loss/(income) attributable to noncontrolling interests in consolidated entities | (38.7) | (67.6) | (19.3) | (112.2) | |||||||||||||||||||
| Dividends declared on preferred shares | (59.2) | (59.2) | (118.4) | (118.4) | |||||||||||||||||||
| Comprehensive income/(loss) attributable to Invesco Ltd. | (171.6) | 406.2 | (40.9) | 670.8 |
See accompanying notes.
Invesco Ltd.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Six months ended June 30, | |||||||||||
| $ in millions | 2022 | 2021 | |||||||||
| Operating activities: | |||||||||||
| Net income | 456.4 | 866.7 | |||||||||
| Adjustments to reconcile net income to net cash provided by/(used in) operating activities: | |||||||||||
| Amortization and depreciation | 98.8 | 103.9 | |||||||||
| Common share-based compensation expense | 57.1 | 72.8 | |||||||||
| Other (gains)/losses, net | 135.5 | (77.5) | |||||||||
| Other (gains)/losses of CIP, net | 66.7 | (160.8) | |||||||||
| Equity in earnings of unconsolidated affiliates | (58.1) | (64.7) | |||||||||
| Distributions from equity method investees | 70.3 | 43.0 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| (Purchase)/sale of investments by CIP, net | (299.7) | (135.4) | |||||||||
| (Purchase)/sale of investments, net | (25.2) | (20.5) | |||||||||
| (Increase)/decrease in receivables | 509.3 | 4,090.1 | |||||||||
| Increase/(decrease) in payables | (1,263.4) | (4,236.8) | |||||||||
| Net cash provided by/(used in) operating activities | (252.3) | 480.8 | |||||||||
| Investing activities: | |||||||||||
| Purchase of property, equipment and software | (57.1) | (47.2) | |||||||||
| Purchase of investments by CIP | (1,709.2) | (3,224.5) | |||||||||
| Sale of investments by CIP | 1,653.9 | 3,076.1 | |||||||||
| Purchase of investments | (119.9) | (100.6) | |||||||||
| Sale of investments | 54.9 | 76.8 | |||||||||
| Capital distributions from equity method investees | 16.9 | 4.4 | |||||||||
| Net cash inflows/(outflows) upon consolidation/deconsolidation of CIP | 4.7 | (8.7) | |||||||||
| Net cash provided by/(used in) investing activities | (155.8) | (223.7) | |||||||||
| Financing activities: | |||||||||||
| Purchases of treasury shares | (234.4) | (47.6) | |||||||||
| Dividends paid - preferred | (118.4) | (118.4) | |||||||||
| Dividends paid - common | (163.4) | (150.1) | |||||||||
| Third-party capital invested into CIP | 446.8 | 247.3 | |||||||||
| Third-party capital distributed by CIP | (130.3) | (117.1) | |||||||||
| Borrowings of debt by CIP | 84.9 | 2,138.6 | |||||||||
| Repayments of debt by CIP | (2.8) | (1,872.3) | |||||||||
| Net borrowings/(repayments) under credit facility | 184.6 | — | |||||||||
| Repayments of senior notes | (600.0) | — | |||||||||
| Settlement of forward contracts on treasury shares | — | (309.4) | |||||||||
| Collateral received/(returned), net | — | (104.1) | |||||||||
| Payment of contingent consideration | — | (11.8) | |||||||||
| Net cash provided by/(used in) financing activities | (533.0) | (344.9) | |||||||||
| Increase/(decrease) in cash and cash equivalents | (941.1) | (87.8) | |||||||||
| Foreign exchange movement on cash and cash equivalents | (65.4) | (9.7) | |||||||||
| Foreign exchange movement on cash and cash equivalents of CIP | (7.8) | (4.7) | |||||||||
| Cash, cash equivalents and restricted cash, beginning of period | 2,147.1 | 1,839.3 | |||||||||
| Cash and cash equivalents, end of period | 1,132.8 | 1,737.1 | |||||||||
| Cash and cash equivalents | 936.8 | 1,333.0 | |||||||||
| Cash and cash equivalents of CIP | 196.0 | 404.1 | |||||||||
| Total cash and cash equivalents per condensed consolidated statement of cash flows | 1,132.8 | 1,737.1 |
See accompanying notes**.**
Invesco Ltd.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three months ended June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Attributable to Invesco Ltd. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ in millions, except share data | Preferred Shares | Common Shares | Additional Paid-in-Capital | Treasury Shares | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Total Equity Attributable to Invesco Ltd. | Nonredeemable Noncontrolling Interests in Consolidated Entities | Total Permanent Equity | Redeemable Noncontrolling Interests in Consolidated Entities Temporary Equity | |||||||||||||||||||||||||||||||||||||||||||||||||
| April 1, 2022 | 4,010.5 | 113.2 | 7,547.0 | (3,105.1) | 7,287.9 | (508.5) | 15,345.0 | 641.2 | 15,986.2 | 801.1 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | 180.2 | — | 180.2 | 60.9 | 241.1 | (22.2) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income/(loss) | — | — | — | — | — | (292.6) | (292.6) | — | (292.6) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Change in noncontrolling interests in consolidated entities, net | — | — | — | — | — | — | — | (21.0) | (21.0) | 113.9 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared - preferred ($14.75 per share) | — | — | — | — | (59.2) | — | (59.2) | — | (59.2) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared - common ($0.1875 per share) | — | — | — | — | (85.7) | — | (85.7) | — | (85.7) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Employee common share plans: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common share-based compensation | — | — | 27.6 | — | — | — | 27.6 | — | 27.6 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Vested common shares | — | — | (11.7) | 11.7 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other common share awards | — | — | 0.3 | — | — | — | 0.3 | — | 0.3 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of common shares | — | — | — | (1.9) | — | — | (1.9) | — | (1.9) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2022 | 4,010.5 | 113.2 | 7,563.2 | (3,095.3) | 7,323.2 | (801.1) | 15,113.7 | 681.1 | 15,794.8 | 892.8 |
| Three months ended June 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Attributable to Invesco Ltd. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ in millions, except share data | Preferred Shares | Common Shares | Additional Paid-in-Capital | Treasury Shares | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Total Equity Attributable to Invesco Ltd. | Nonredeemable Noncontrolling Interests in Consolidated Entities | Total Permanent Equity | Redeemable Noncontrolling Interests in Consolidated Entities Temporary Equity | |||||||||||||||||||||||||||||||||||||||||||||||||
| April 1, 2021 | 4,010.5 | 113.2 | 7,639.6 | (3,087.7) | 6,279.9 | (407.7) | 14,547.8 | 481.7 | 15,029.5 | 338.3 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | 427.5 | — | 427.5 | 51.8 | 479.3 | 15.8 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income/(loss) | — | — | — | — | — | 37.9 | 37.9 | — | 37.9 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Change in noncontrolling interests in consolidated entities, net | — | — | — | — | — | — | — | (14.9) | (14.9) | 9.8 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared - preferred $14.75 per share) | — | — | — | — | (59.2) | — | (59.2) | — | (59.2) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared - common ($0.17 per share) | — | — | — | — | (78.1) | — | (78.1) | — | (78.1) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Employee common share plans: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common share-based compensation | — | — | 34.2 | — | — | — | 34.2 | — | 34.2 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Vested common shares | — | — | (9.5) | 9.5 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other common share awards | — | — | — | 0.8 | — | — | 0.8 | — | 0.8 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of common shares | — | — | — | (2.9) | — | — | (2.9) | — | (2.9) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2021 | 4,010.5 | 113.2 | 7,664.3 | (3,080.3) | 6,570.1 | (369.8) | 14,908.0 | 518.6 | 15,426.6 | 363.9 |
See accompanying notes.
| Six months ended June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Attributable to Invesco Ltd. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ in millions, except share data | Preferred Shares | Common Shares | Additional Paid-in-Capital | Treasury Shares | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Total Equity Attributable to Invesco Ltd. | Nonredeemable Noncontrolling Interests in Consolidated Entities | Total Permanent Equity | Redeemable Noncontrolling Interests in Consolidated Entities Temporary Equity | |||||||||||||||||||||||||||||||||||||||||||||||||
| January 1, 2022 | 4,010.5 | 113.2 | 7,688.0 | (3,043.6) | 7,169.2 | (441.5) | 15,495.8 | 672.2 | 16,168.0 | 510.8 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | 437.1 | — | 437.1 | 52.7 | 489.8 | (33.4) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income/(loss) | — | — | — | — | — | (359.6) | (359.6) | — | (359.6) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Change in noncontrolling interests in consolidated entities, net | — | — | — | — | — | — | — | (43.8) | (43.8) | 415.4 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared - preferred ($29.50 per share) | — | — | — | — | (118.4) | — | (118.4) | — | (118.4) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared - common ($0.3575 per share) | — | — | — | — | (164.7) | — | (164.7) | — | (164.7) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Employee common share plans: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common share-based compensation | — | — | 57.1 | — | — | — | 57.1 | — | 57.1 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Vested common shares | — | — | (182.7) | 182.7 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other common share awards | — | — | 0.8 | — | — | — | 0.8 | — | 0.8 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of common shares | — | — | — | (234.4) | — | — | (234.4) | — | (234.4) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2022 | 4,010.5 | 113.2 | 7,563.2 | (3,095.3) | 7,323.2 | (801.1) | 15,113.7 | 681.1 | 15,794.8 | 892.8 |
| Six months ended June 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Attributable to Invesco Ltd. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ in millions, except share data | Preferred Shares | Common Shares | Additional Paid-in-Capital | Treasury Shares | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Total Equity Attributable to Invesco Ltd. | Nonredeemable Noncontrolling Interests in Consolidated Entities | Total Permanent Equity | Redeemable Noncontrolling Interests in Consolidated Entities Temporary Equity | |||||||||||||||||||||||||||||||||||||||||||||||||
| January 1, 2021 | 4,010.5 | 113.2 | 7,811.4 | (3,253.8) | 6,085.0 | (404.5) | 14,361.8 | 447.1 | 14,808.9 | 211.8 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | 754.5 | — | 754.5 | 94.6 | 849.1 | 17.6 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income/(loss) | — | — | — | — | — | 34.7 | 34.7 | — | 34.7 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Change in noncontrolling interests in consolidated entities, net | — | — | — | — | — | — | — | (23.1) | (23.1) | 134.5 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared - preferred ($29.50 per share) | — | — | — | — | (118.4) | — | (118.4) | — | (118.4) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared - common ($0.325 per share) | — | — | — | — | (151.0) | — | (151.0) | — | (151.0) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Employee common share plans: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common share-based compensation | — | — | 72.8 | — | — | — | 72.8 | — | 72.8 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Vested common shares | — | — | (219.9) | 219.9 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other common share awards | — | — | — | 1.2 | — | — | 1.2 | — | 1.2 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of common shares | — | — | — | (47.6) | — | — | (47.6) | — | (47.6) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2021 | 4,010.5 | 113.2 | 7,664.3 | (3,080.3) | 6,570.1 | (369.8) | 14,908.0 | 518.6 | 15,426.6 | 363.9 |
See accompanying notes.
Invesco Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
1. ACCOUNTING POLICIES
Corporate Information
Invesco Ltd. (Parent) and all of its consolidated entities (collectively, the company or Invesco) provide retail and institutional clients with an array of global investment management capabilities. The company operates globally, and its sole business is investment management.
Certain disclosures included in the company’s annual report on Form 10-K for the year ended December 31, 2021 (annual report or Form 10-K) are not required to be included on an interim basis in the company’s quarterly reports on Forms 10-Q (Report). The company has condensed or omitted these disclosures. Therefore, this Report should be read in conjunction with the company’s annual report.
Basis of Accounting and Consolidation
The unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with rules and regulations of the Securities and Exchange Commission and consolidate the financial statements of the Parent and all of its controlled subsidiaries. In the opinion of management, the financial statements reflect all adjustments, consisting of normal recurring accruals, which are necessary for the fair statement of the financial condition and results of operations for the periods presented. All significant intercompany transactions, balances, revenues and expenses are eliminated upon consolidation. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Certain reclassifications have been made to prior period amounts to conform to the current period presentation.
Accounting Pronouncements Recently Adopted
None.
Pending Accounting Pronouncements
None.
2. FAIR VALUE OF ASSETS AND LIABILITIES
The fair value of financial instruments are presented in the below summary table. The fair value of financial instruments held by CIP is presented in Note 13, "Consolidated Investment Products". See the company’s most recently filed Form 10-K for additional disclosures on valuation methodology and fair value.
| June 30, 2022 | December 31, 2021 | |||||||||||||
| $ in millions | Fair Value | Fair Value | ||||||||||||
| Cash and cash equivalents | 936.8 | 1,896.4 | ||||||||||||
| Equity investments | 284.5 | 337.9 | ||||||||||||
| Foreign time deposits (1) | 26.6 | 30.4 | ||||||||||||
| Assets held for policyholders | 1,067.7 | 1,893.6 | ||||||||||||
| Policyholder payables (1) | (1,067.7) | (1,893.6) | ||||||||||||
| Total return swaps related to deferred compensation plans | (56.0) | 1.6 | ||||||||||||
(1) These financial instruments are not measured at fair value. See the most recently filed Form 10-K for additional information about the carrying and fair values of these financial instruments. Foreign time deposits are measured at cost plus accrued interest, which approximates fair value. Policyholder payables are indexed to the value of the assets held for policyholders.
The following table presents, by hierarchy levels, the carrying value of the company’s assets and liabilities, including major security type for equity and debt securities, which are measured at fair value on the company’s Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021, respectively:
| As of June 30, 2022 | |||||||||||||||||||||||
| $ in millions | Fair Value Measurements | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Money market funds (1) | 482.5 | 482.5 | — | — | |||||||||||||||||||
| Investments (2): | |||||||||||||||||||||||
| Equity investments: | |||||||||||||||||||||||
| Seed money | 106.2 | 106.2 | — | — | |||||||||||||||||||
| Investments related to deferred compensation plans | 177.2 | 177.2 | — | — | |||||||||||||||||||
| Other equity securities | 1.1 | 1.1 | — | — | |||||||||||||||||||
| Assets held for policyholders (3) | 1,067.7 | 1,067.7 | — | — | |||||||||||||||||||
| Total | 1,834.7 | 1,834.7 | — | — | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Total return swaps related to deferred compensation plans | (56.0) | — | (56.0) | — | |||||||||||||||||||
| Total | (56.0) | — | (56.0) | — |
| As of December 31, 2021 | |||||||||||||||||||||||
| $ in millions | Fair Value Measurements | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Money market funds (1) | 1,270.0 | 1,270.0 | — | — | |||||||||||||||||||
| Investments (2): | |||||||||||||||||||||||
| Equity investments: | |||||||||||||||||||||||
| Seed money | 109.4 | 109.4 | — | — | |||||||||||||||||||
| Investments related to deferred compensation plans | 226.6 | 226.6 | — | — | |||||||||||||||||||
| Other equity securities | 1.9 | 1.9 | — | — | |||||||||||||||||||
| Assets held for policyholders (3) | 1,893.6 | 1,893.6 | — | — | |||||||||||||||||||
| Total return swaps related to deferred compensation plans | 1.6 | — | 1.6 | — | |||||||||||||||||||
| Total | 3,503.1 | 3,501.5 | 1.6 | — | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Contingent consideration liability | (1.3) | — | — | (1.3) | |||||||||||||||||||
| Total | (1.3) | — | — | (1.3) |
(1) The balance primarily represents cash held in affiliated money market funds.
(2) Foreign time deposits of $26.6 million (December 31, 2021: $30.4 million) are excluded from this table. Equity method and other investments of $567.9 million and $5.6 million, respectively, (December 31, 2021: $550.1 million and $7.9 million, respectively) are also excluded from this table. These investments are not measured at fair value, in accordance with applicable accounting standards.
(3) The majority of assets held for policyholders are held in affiliated funds.
Total Return Swaps
In addition to holding equity investments, the company has a total return swap (TRS) to hedge economically certain deferred compensation liabilities. The notional value of the total return swap at June 30, 2022 was $334.6 million, and the fair value of the TRS was a liability of $56.0 million (December 31, 2021 notional value was $343.1 million and the fair value was an asset of $1.6 million). The company’s net collateral paid balance related to the total return swap was $50.3 million at June 30, 2022 (December 31, 2021: $20.5 million). During the three months and six months ended June 30, 2022, market valuation losses related to the TRS of $50.3 million and $72.1 million were recognized in Other gains/(losses), net (three and six months ended June 30, 2021: $16.8 million net gains and $26.0 million net gains).
3. INVESTMENTS
The disclosures below include details of the company’s investments. Investments held by CIP are detailed in Note 13, "Consolidated Investment Products".
| $ in millions | June 30, 2022 | December 31, 2021 | |||||||||
| Equity investments: | |||||||||||
| Seed money | 106.2 | 109.4 | |||||||||
| Investments related to deferred compensation plans | 177.2 | 226.6 | |||||||||
| Other equity securities | 1.1 | 1.9 | |||||||||
| Equity method investments | 567.9 | 550.1 | |||||||||
| Foreign time deposits | 26.6 | 30.4 | |||||||||
| Other | 5.6 | 7.9 | |||||||||
| Total investments (1) | 884.6 | 926.3 |
(1) The majority of the company’s investment balances relate to balances held in affiliated funds and equity method investees.
Equity investments
The unrealized gains and losses for the three and six months ended June 30, 2022 that relate to equity investments still held at June 30, 2022, were $40.6 million net loss and $69.7 million net loss (three and six months ended June 30, 2021: $33.0 million net gain and $44.5 million net gain).
4. DEBT
The disclosures below include details of the company’s debt. Debt of CIP is detailed in Note 13, "Consolidated Investment Products".
| June 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
| $ in millions | Carrying Value (3) | Fair Value | Carrying Value (3) | Fair Value | |||||||||||||||||||
| $1.5 billion floating rate credit facility expiring April 26, 2026 | 184.6 | 184.6 | — | — | |||||||||||||||||||
| Unsecured Senior Notes (1): | |||||||||||||||||||||||
| $600 million 3.125% - due November 30, 2022 (2) | — | — | 599.4 | 613.8 | |||||||||||||||||||
| $600 million 4.000% - due January 30, 2024 | 598.3 | 600.7 | 597.8 | 633.7 | |||||||||||||||||||
| $500 million 3.750% - due January 15, 2026 | 497.6 | 494.0 | 497.3 | 541.2 | |||||||||||||||||||
| $400 million 5.375% - due November 30, 2043 | 390.7 | 403.3 | 390.6 | 536.8 | |||||||||||||||||||
| Debt | 1,671.2 | 1,682.6 | 2,085.1 | 2,325.5 |
(1) The company’s senior note indentures contain certain restrictions on mergers or consolidations. Beyond these items, there are no other restrictive covenants in the indentures.
(2) On May 6, 2022, Invesco Finance PLC, an indirect subsidiary of Invesco Ltd., completed redemption of the $600 million Senior Notes due on November 30, 2022.
(3) The difference between the principal amounts and the carrying values of the senior notes reflects the unamortized debt issuance costs and discounts.
5. SHARE CAPITAL
The preferred shares have a $0.20 par value, liquidation preference of $1,000 per share and fixed cash dividend rate of 5.90% per annum, payable quarterly on a non-cumulative basis. Shares of preferred stock are not redeemable prior to the 21st anniversary of their original issue date of May 24, 2019.
The number of preferred shares issued and outstanding is represented in the table below:
| As of | |||||||||||
| in millions | June 30, 2022 | December 31, 2021 | |||||||||
| Preferred shares issued (1) | 4.0 | 4.0 | |||||||||
| Preferred shares outstanding (1) | 4.0 | 4.0 |
(1) Preferred shares are held by MassMutual and are subject to a lock-up period of five years, which disallows the sale of preferred shares by MassMutual during the five-year period beginning on the original issue date of May 24, 2019.
The number of common shares and common share equivalents issued are represented in the table below:
| As of | |||||||||||
| in millions | June 30, 2022 | December 31, 2021 | |||||||||
| Common shares issued | 566.1 | 566.1 | |||||||||
| Less: Treasury shares for which dividend and voting rights do not apply | (111.2) | (104.9) | |||||||||
| Common shares outstanding | 454.9 | 461.2 |
6. OTHER COMPREHENSIVE INCOME/(LOSS)
The components of accumulated other comprehensive income/(loss) were as follows:
| For the three months ended June 30, 2022 | |||||||||||||||||||||||||||||
| $ in millions | Foreign currency translation | Employee benefit plans | Equity method investments | Available-for-sale investments | Total | ||||||||||||||||||||||||
| Other comprehensive income/(loss), net of tax: | |||||||||||||||||||||||||||||
| Currency translation differences on investments in foreign subsidiaries | (292.9) | — | — | — | (292.9) | ||||||||||||||||||||||||
| Other comprehensive income, net | — | 0.3 | — | — | 0.3 | ||||||||||||||||||||||||
| Other comprehensive income/(loss), net of tax | (292.9) | 0.3 | — | — | (292.6) | ||||||||||||||||||||||||
| Beginning balance | (419.8) | (89.4) | — | 0.7 | (508.5) | ||||||||||||||||||||||||
| Other comprehensive income/(loss), net of tax | (292.9) | 0.3 | — | — | (292.6) | ||||||||||||||||||||||||
| Ending balance | (712.7) | (89.1) | — | 0.7 | (801.1) |
| For the six months ended June 30, 2022 | |||||||||||||||||||||||||||||
| $ in millions | Foreign currency translation | Employee benefit plans | Equity method investments | Available-for-sale investments | Total | ||||||||||||||||||||||||
| Other comprehensive income/(loss), net of tax: | |||||||||||||||||||||||||||||
| Currency translation differences on investments in foreign subsidiaries | (360.1) | — | — | — | (360.1) | ||||||||||||||||||||||||
| Other comprehensive income/(loss), net | — | 0.5 | — | — | 0.5 | ||||||||||||||||||||||||
| Other comprehensive income/(loss), net of tax | (360.1) | 0.5 | — | — | (359.6) | ||||||||||||||||||||||||
| Beginning balance | (352.6) | (89.6) | — | 0.7 | (441.5) | ||||||||||||||||||||||||
| Other comprehensive income/(loss), net of tax | (360.1) | 0.5 | — | — | (359.6) | ||||||||||||||||||||||||
| Ending balance | (712.7) | (89.1) | — | 0.7 | (801.1) | ||||||||||||||||||||||||
| For the three months ended June 30, 2021 | |||||||||||||||||||||||||||||
| $ in millions | Foreign currency translation | Employee benefit plans | Equity method investments | Available-for-sale investments | Total | ||||||||||||||||||||||||
| Other comprehensive income/(loss), net of tax: | |||||||||||||||||||||||||||||
| Currency translation differences on investments in foreign subsidiaries | 34.9 | — | — | — | 34.9 | ||||||||||||||||||||||||
| Other comprehensive income, net | — | 3.1 | — | (0.1) | 3.0 | ||||||||||||||||||||||||
| Other comprehensive income/(loss), net of tax | 34.9 | 3.1 | — | (0.1) | 37.9 | ||||||||||||||||||||||||
| Beginning balance | (278.5) | (130.0) | 0.1 | 0.7 | (407.7) | ||||||||||||||||||||||||
| Other comprehensive income/(loss), net of tax | 34.9 | 3.1 | — | (0.1) | 37.9 | ||||||||||||||||||||||||
| Ending balance | (243.6) | (126.9) | 0.1 | 0.6 | (369.8) | ||||||||||||||||||||||||
| For the six months ended June 30, 2021 | |||||||||||||||||||||||||||||
| $ in millions | Foreign currency translation | Employee benefit plans | Equity method investments | Available-for-sale investments | Total | ||||||||||||||||||||||||
| Other comprehensive income/(loss), net of tax: | |||||||||||||||||||||||||||||
| Currency translation differences on investments in foreign subsidiaries | 35.7 | — | — | — | 35.7 | ||||||||||||||||||||||||
| Other comprehensive income, net | — | (0.9) | — | (0.1) | (1.0) | ||||||||||||||||||||||||
| Other comprehensive income/(loss), net of tax | 35.7 | (0.9) | — | (0.1) | 34.7 | ||||||||||||||||||||||||
| Beginning balance | (279.3) | (126.0) | 0.1 | 0.7 | (404.5) | ||||||||||||||||||||||||
| Other comprehensive income/(loss), net of tax | 35.7 | (0.9) | — | (0.1) | 34.7 | ||||||||||||||||||||||||
| Ending balance | (243.6) | (126.9) | 0.1 | 0.6 | (369.8) |
Net Investment Hedge
The company designated certain intercompany debt as a non-derivative net investment hedging instrument against foreign currency exposure related to its net investment in foreign operations. At June 30, 2022 and December 31, 2021, £130 million ($160.4 million and $176.1 million, respectively) of intercompany debt was designated as a net investment hedge. For the three and six months ended June 30, 2022, the company recognized foreign currency gains of $10.8 million and $15.7 million (three and six months ended June 30, 2021: losses of $2.2 million and $7.9 million) resulting from the net investment hedge within currency translation differences on investments in foreign subsidiaries in Other comprehensive income.
7. REVENUE
The geographic disaggregation of revenue for the three and six months ended June 30, 2022 and 2021 are presented below. There are no revenues attributed to the company’s country of domicile, Bermuda.
| For the three months ended June 30, | |||||||||||
| $ in millions | 2022 | 2021 | |||||||||
| Americas | 1,183.3 | 1,282.3 | |||||||||
| Asia Pacific | 70.3 | 90.2 | |||||||||
| EMEA ex UK (Europe, Middle East and Africa) | 142.0 | 184.2 | |||||||||
| UK | 134.8 | 164.7 | |||||||||
| Total operating revenues | 1,530.4 | 1,721.4 |
| For the six months ended June 30, | |||||||||||
| $ in millions | 2022 | 2021 | |||||||||
| Americas | 2,428.1 | 2,513.0 | |||||||||
| Asia Pacific | 155.5 | 179.3 | |||||||||
| EMEA ex UK (Europe, Middle East and Africa) | 295.8 | 360.5 | |||||||||
| UK | 280.4 | 328.3 | |||||||||
| Total operating revenues | 3,159.8 | 3,381.1 |
Money Market Fee Waivers
The company is currently providing voluntary yield support waivers of its revenues on certain money market funds to ensure that they maintain a minimum level of daily net investment income. During the three and six months ended June 30, 2022, yield support waivers resulted in a reduction of total gross operating revenues of $5.9 million and $32.3 million (three and six months ended June 30, 2021: $41.4 million and $70.4 million). A significant portion of our money market AUM arises from the institutional distribution channel, where relationships with our distribution partners allow us to share the waiver impact. Gross waivers are partially offset by a reduction of payments to these intermediaries, which are included in third-party distribution, service and advisory expenses.
8. COMMON SHARE-BASED COMPENSATION
The company recognized total expenses of $57.1 million and $72.8 million related to equity-settled common share-based payment transactions in the six months ended June 30, 2022 and 2021, respectively.
Movements on common share awards during the periods ended June 30, are detailed below:
| For the six months ended June 30, 2022 | For the six months ended June 30, 2021 | ||||||||||||||||||||||||||||||||||
| millions of common shares, except fair values | Time- Vested | Performance- Vested | Weighted Average Grant Date Fair Value ($) | Time- Vested | Performance- Vested | ||||||||||||||||||||||||||||||
| Unvested at the beginning of period | 13.5 | 1.9 | 18.88 | 18.1 | 1.6 | ||||||||||||||||||||||||||||||
| Granted during the period | 3.6 | 1.0 | 21.23 | 3.4 | 0.6 | ||||||||||||||||||||||||||||||
| Forfeited during the period | (0.2) | (0.1) | 19.44 | (0.2) | — | ||||||||||||||||||||||||||||||
| Vested and distributed during the period | (5.1) | (0.4) | 20.26 | (6.4) | (0.5) | ||||||||||||||||||||||||||||||
| Unvested at the end of the period | 11.8 | 2.4 | 19.09 | 14.9 | 1.7 |
The total fair value of common shares that vested during the six months ended June 30, 2022 was $116.8 million (six months ended June 30, 2021: $152.3 million). The weighted average grant date fair value of the common share awards that were granted during the six months ended June 30, 2022 was $21.23 (six months ended June 30, 2021: $22.60).
At June 30, 2022, there was $196.2 million of total unrecognized compensation cost related to non-vested common share awards; that cost is expected to be recognized over a weighted average period of 2.55 years.
9. RETIREMENT BENEFIT PLANS
On June 28, 2022, the company entered into a pension buy-in agreement for the UK defined benefit pension plan with a third party insurer. The agreement does not relieve the company of the primary responsibility to fund the pension obligations. The company transferred plan assets of £88.8 million ($107.4 million) in exchange for an insurance asset, which was recorded at fair value. The transaction did not have a material impact on the company’s results of operations or financial condition.
10. RESTRUCTURING
In 2020, the company initiated a strategic evaluation 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.
Restructuring expenses related to the strategic evaluation were $4.7 million and $27.0 million, respectively, for the three and six months ended June 30, 2022 (three and six months ended June 30, 2021: $20.1 million and $50.1 million, respectively). Restructuring expenses are recorded to transaction, integration and restructuring expenses on the Condensed Consolidated Statements of Income.
The company will continue to incur restructuring expenses related to the strategic evaluation through the end of 2022, primarily comprised of property, office and technology costs and general and administrative costs. These costs are not expected to be material.
The following table shows the rollforward of the restructuring liability as of June 30, 2022 and the total restructuring charges for the periods ending June 30, 2022 and December 31, 2021. The company recorded the liability to accrued compensation and benefits, and accounts payable and accrued liabilities on the Condensed Consolidated Balance Sheets.
| $ in millions | Employee Compensation | Other Expenses | Total | ||||||||||||||
| Balance as of July 1, 2020 | — | — | — | ||||||||||||||
| Accrued charges | 85.0 | 9.1 | 94.1 | ||||||||||||||
| Payments | (40.5) | (9.1) | (49.6) | ||||||||||||||
| Balance as of December 31, 2020 | 44.5 | — | 44.5 | ||||||||||||||
| Accrued charges | 63.7 | 14.3 | 78.0 | ||||||||||||||
| Payments | (75.2) | (12.5) | (87.7) | ||||||||||||||
| Balance as of December 31, 2021 | 33.0 | 1.8 | 34.8 | ||||||||||||||
| Accrued charges | 1.9 | 1.8 | 3.7 | ||||||||||||||
| Payments | (31.5) | (2.1) | (33.6) | ||||||||||||||
| Balance as of March 31, 2022 | 3.4 | 1.5 | 4.9 | ||||||||||||||
| Accrued charges | 1.8 | 1.3 | 3.1 | ||||||||||||||
| Payments | (3.9) | (1.8) | (5.7) | ||||||||||||||
| Balance as of June 30, 2022 | 1.3 | 1.0 | 2.3 | ||||||||||||||
| Non-cash charges (1) | |||||||||||||||||
| Six months ended December 31, 2020 | 19.5 | 5.4 | 24.9 | ||||||||||||||
| Twelve months ended December 31, 2021 | 13.7 | 8.8 | 22.5 | ||||||||||||||
| Six months ended June 30, 2022 | 4.7 | 15.5 | 20.2 | ||||||||||||||
| Total non-cash charges | 37.9 | 29.7 | 67.6 | ||||||||||||||
| Cumulative charges incurred through June 30, 2022 | 190.3 | 56.2 | 246.5 |
(1) Non-cash charges include stock-based compensation, accelerated depreciation of certain assets and location strategy costs (including impairment).
11. EARNINGS PER COMMON SHARE
The calculation of earnings per common share is as follows:
| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
| In millions, except per common share data | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Net income attributable to Invesco Ltd. | 121.0 | 368.3 | 318.7 | 636.1 | |||||||||||||||||||
| Invesco Ltd: | |||||||||||||||||||||||
| Weighted average common shares outstanding - basic | 456.5 | 462.8 | 458.0 | 462.2 | |||||||||||||||||||
| Dilutive effect of non-participating common share-based awards | 3.0 | 3.4 | 2.7 | 3.1 | |||||||||||||||||||
| Weighted average common shares outstanding - diluted | 459.5 | 466.2 | 460.7 | 465.3 | |||||||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| -basic | $0.27 | $0.80 | $0.70 | $1.38 | |||||||||||||||||||
| -diluted | $0.26 | $0.79 | $0.69 | $1.37 | |||||||||||||||||||
See Note 8, "Common Share-Based Compensation", for a summary of common share awards outstanding under the company’s common share-based payment programs. These programs could result in the issuance of common shares that would affect the measurement of basic and diluted earnings per common share.
12. COMMITMENTS AND CONTINGENCIES
Commitments and contingencies may arise in the ordinary course of business.
The company has committed to co-invest in certain investment products, which may be called in future periods. At June 30, 2022, the company’s undrawn co-invest capital commitments were $394.1 million (December 31, 2021: $488.8 million).
Certain of our managed investment products have entered into revolving credit facilities with financial institutions. Pursuant to these arrangements, the company provided equity commitments and guarantees to certain of these investment products that are temporary in nature. The revolving credit facilities look first to the respective investment products for repayment and servicing. The company’s equity commitment or guarantee would only be called in the event a particular investment product is unable to meet its obligation. The company believes the likelihood of being required to fund its equity commitments or guarantees under these arrangements to be remote. To date, the company has not been required to fund any equity commitments under these arrangements. The maximum amount of future payments under the commitments is $352.9 million and under the guarantees is $30 million. The fair value of the guarantee liability is not significant to the consolidated financial statements.
The company and various company subsidiaries have entered into agreements with financial institutions to guarantee certain obligations of other company subsidiaries. The company would be required to perform under these guarantees in the event of certain defaults. The company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
Legal Contingencies
The company is from time to time involved in pending or threatened litigation relating to claims arising in the ordinary course of its business. The nature and progression of litigation can make it difficult to predict the impact a particular lawsuit or claim will have on the company. There are many reasons that the company cannot make these assessments, including, among others, one or more of the following: the proceeding is in its early stages (or merely threatened); the damages sought are unspecified, unsupportable, unexplained or uncertain; the claimant is seeking relief other than compensatory damages; the matter presents novel legal claims or other meaningful legal uncertainties; discovery has not started or is not complete; there are significant facts in dispute; and there are other parties who may share in any ultimate liability.
In assessing the impact that a legal or regulatory matter will have on the company, management evaluates the need for an accrual on a case-by-case basis. If the likelihood of a loss is deemed probable and is reasonably estimable, the estimated loss is accrued. If the likelihood of a loss is assessed as less than probable, or an amount or range of loss cannot be reasonably estimated, a loss is not accrued. In management’s opinion, adequate accrual has been made as of June 30, 2022 to provide for any such losses that may arise from matters for which the company could reasonably estimate an amount and are deemed probable. Management is of the opinion that the ultimate resolution of such claims will not materially affect the company’s business, financial position, results of operation or liquidity.
The investment management industry also is subject to extensive levels of ongoing regulatory oversight and examination. In the United States, United Kingdom and other jurisdictions in which the company operates, governmental authorities regularly make inquiries, hold investigations and administer market conduct examinations with respect to the company’s compliance with applicable laws and regulations. Additional lawsuits or regulatory enforcement actions arising out of these inquiries may in the future be filed against the company and related entities and individuals in the United States, United Kingdom and other jurisdictions in which the company and its affiliates operate. Any material loss of investor and/or client confidence as a result of such inquiries and/or litigation could result in a significant decline in AUM, which would have an adverse effect on the company’s future financial results and its ability to grow its business.
13. CONSOLIDATED INVESTMENT PRODUCTS (CIP)
The balances related to CIP are identified on the Consolidated Balance Sheets. At June 30, 2022, the company’s net interests in CIP were $456.4 million (December 31, 2021: $461.2 million). The consolidation of investment products had no impact on net income attributable to the company during the three and six months ended June 30, 2022 and 2021.
Non-consolidated VIEs
At June 30, 2022, the company’s carrying value and maximum risk of loss with respect to variable interest entities (VIEs) in which the company is not the primary beneficiary was $116.5 million (December 31, 2021: $134.1 million).
Changes to consolidation of VIEs/VOEs
During the six months ended June 30, 2022, the company invested in and consolidated three new VIEs and one new voting rights entity (VOE) (June 30, 2021: the company invested in and consolidated six new VIEs and three new VOEs). Additionally, during the six months ended June 30, 2022, the company determined it was no longer the primary beneficiary of two VIEs and four VOEs (June 30, 2021: the company determined that it was no longer the primary beneficiary of five VIEs and four VOEs). The tables below illustrate the net impact of these consolidation changes to our condensed consolidated summary balance sheets.
| For the six months ended June 30, 2022 | For the six months ended June 30, 2021 | |||||||||||||||||||||||||
| $ in millions | VIEs | VOEs | VIEs | VOEs | ||||||||||||||||||||||
| Net increase (decrease) in assets of CIP | 101.6 | (22.2) | (38.3) | 104.6 | ||||||||||||||||||||||
| Net increase (decrease) in liabilities of CIP | 0.3 | — | (35.3) | 1.0 |
There was no net impact to the Condensed Consolidated Statements of Income as a result of new consolidations or deconsolidations of investment products during the six months ended June 30, 2022 and June 30, 2021.
The following tables present the fair value hierarchy levels of certain CIP balances which are measured at fair value as of June 30, 2022 and December 31, 2021:
| As of June 30, 2022 | |||||||||||||||||||||||||||||
| $ in millions | Fair Value Measurements | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Investments Measured at NAV as a practical expedient | ||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||
| Bank loans | 6,427.6 | — | 6,196.5 | 231.1 | — | ||||||||||||||||||||||||
| Bonds | 725.7 | 7.7 | 718.0 | — | — | ||||||||||||||||||||||||
| Equity securities | 259.9 | 129.2 | 39.6 | 91.1 | — | ||||||||||||||||||||||||
| Equity and fixed income mutual funds | 291.4 | 36.2 | 255.2 | — | — | ||||||||||||||||||||||||
| Investments in other private equity funds | 521.9 | — | — | 6.1 | 515.8 | ||||||||||||||||||||||||
| Real estate investments | 493.5 | — | — | — | 493.5 | ||||||||||||||||||||||||
| Total assets at fair value | 8,720.0 | 173.1 | 7,209.3 | 328.3 | 1,009.3 | ||||||||||||||||||||||||
| As of December 31, 2021 | |||||||||||||||||||||||||||||
| $ in millions | Fair Value Measurements | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Investments Measured at NAV as a practical expedient | ||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||
| Bank loans | 7,132.4 | — | 6,993.6 | 138.8 | — | ||||||||||||||||||||||||
| Bonds | 714.9 | 22.3 | 692.4 | 0.2 | — | ||||||||||||||||||||||||
| Equity securities | 219.1 | 103.9 | 29.7 | 85.5 | — | ||||||||||||||||||||||||
| Equity and fixed income mutual funds | 243.2 | 20.1 | 223.1 | — | — | ||||||||||||||||||||||||
| Investments in other private equity funds | 454.9 | — | — | 8.1 | 446.8 | ||||||||||||||||||||||||
| Real estate investments | 278.0 | — | — | — | 278.0 | ||||||||||||||||||||||||
| Total assets at fair value | 9,042.5 | 146.3 | 7,938.8 | 232.6 | 724.8 | ||||||||||||||||||||||||
See the company’s most recently filed Form 10-K for additional disclosures on valuation methodology and fair value.
14. RELATED PARTIES
MassMutual has an approximate 17.9% stake in the common stock of the company and owns all of the outstanding $4.0 billion in perpetual, non-cumulative preferred shares. Based on the level of shares owned by MassMutual and the corresponding customary minority shareholder rights, which includes representation on Invesco’s board of directors, the company considers MassMutual a related party.
Additionally, certain managed funds are deemed to be affiliated entities under the related party definition in ASC 850, “Related Party Disclosures.” Related parties include those defined in the company’s proxy statement.
Affiliated operating revenue, which includes investment management fees, service and distribution fees, performance fees and other revenue on the Condensed Consolidated Statements of Income is $1,395.9 million and $2,880.4 million for the three and six months ended June 30, 2022 ($1,572.3 million and $3,092.1 million three and six months ended June 30, 2021).
Due from affiliates, which is included within accounts receivable and other assets on the Condensed Consolidated Balance Sheets is $710.4 million and $681.4 million at June 30, 2022 and December 31, 2021 respectively, primarily comprised of receivables from affiliated Invesco funds, accrued income and other receivable balances from affiliates.
Due to affiliates, which is included within accounts payable and accrued compensation on the Condensed Consolidated Balance Sheets is $147.4 million and $146.5 million at June 30, 2022 and December 31, 2021, respectively, primarily comprised of payables to affiliated Invesco funds and other payables to all related parties, which mostly include balances due to employees (i.e., deferred compensation liabilities, vacation accruals, bonus accrual, etc.) and defined benefit pension obligations.
Refer to Note 2, "Fair Value of Assets and Liabilities" and Note 3, "Investments" for more information on balances invested in Invesco affiliated funds.
15. SUBSEQUENT EVENTS
On July 27, 2022, the company announced a second quarter 2022 dividend of $0.1875 per common share, payable on September 2, 2022, to common shareholders of record at the close of business on August 12, 2022 with an ex-dividend date of August 11, 2022.
On July 27, 2022, the company declared a preferred dividend of $14.75 per share representing the period from June 1, 2022 through August 31, 2022. The preferred dividend is payable on September 1, 2022 to preferred shareholders of record at the close of business on August 15, 2022.
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