REG - abrdn PLC - Final Results - Part 5 of 7
04/03/2025 07:15
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RNS Number : 1950Z abrdn PLC 04 March 2025
abrdn plc
Full Year Results 2024
Part 5 of 7
Financial information
Contents
Independent auditor's report 152
Group financial statements 169
Company financial statements 270
Supplementary information 286
Note Page
1 Group structure 180
2 Segmental analysis 183
3 Net operating revenue 187
4 Net gains or losses on financial instruments and other income 190
5 Administrative and other expenses 191
6 Staff costs and other employee-related costs 191
7 Auditors' remuneration 192
8 Restructuring and corporate transaction expenses 192
9 Taxation 193
10 Earnings per share 197
11 Adjusted profit and adjusting items 198
12 Dividends on ordinary shares 199
13 Intangible assets 199
14 Investments in associates and joint ventures 206
15 Property, plant and equipment 209
16 Leases 211
17 Financial assets 214
18 Derivative financial instruments 216
19 Receivables and other financial assets 218
20 Other assets 218
21 Assets and liabilities held for sale 219
22 Cash and cash equivalents 220
Note Page
23 Unit linked liabilities and assets backing unit linked liabilities 221
24 Issued share capital and share premium 223
25 Shares held by trusts 223
26 Retained earnings 224
27 Movements in other reserves 225
28 Other equity and non-controlling interests 227
29 Financial liabilities 228
30 Subordinated liabilities 229
31 Pension and other post-retirement benefit provisions 230
32 Other financial liabilities 237
33 Provisions and other liabilities 238
34 Financial instruments risk management 239
35 Structured entities 246
36 Fair value of assets and liabilities 247
37 Statement of cash flows 252
38 Contingent liabilities and contingent assets 255
39 Commitments 255
40 Employee share-based payments and deferred fund awards 256
41 Related party transactions 259
42 Capital management 260
43 Events after the reporting date 261
44 Related undertakings 262
Independent auditor's report to the members of abrdn plc
1. Our opinion is unmodified
In our opinion:
- The financial statements of abrdn plc give a true and fair view of
the state of the Group's and of the Parent Company's affairs as of
31 December 2024, and of the Group's profit for the year then ended.
- The Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards.
- The Parent Company financial statements have been properly
prepared in accordance with UK accounting standards, including FRS 101 Reduced
Disclosure Framework.
- The Group and Parent Company financial statements have been
prepared in accordance with the requirements of the Companies Act 2006.
What our opinion covers
We have audited the Group and Parent Company financial statements of abrdn plc
(the Company) for the year ended 31 December 2024 (2024) included in the
Annual report and accounts, which comprise:
Group Parent Company (abrdn plc)
Consolidated income statement Company statement of financial position
Consolidated statement of comprehensive income Company statement of changes in equity
Consolidated statement of financial position Notes A to R to the Parent Company financial statements, including the
accounting policies in the Company accounting policies section.
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes 1 to 42(a) and 43 to the Group financial statements, including the
accounting policies in those notes and in the Presentation of consolidated
financial statements section.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities are described below.
We believe that the audit evidence we have obtained is a sufficient and
appropriate basis for our opinion. Our audit opinion and matters included in
this report are consistent with those discussed and included in our reporting
to the Audit Committee (AC).
We have fulfilled our ethical responsibilities under, and we remain
independent of the Group in accordance with, UK ethical requirements including
the FRC Ethical Standard as applied to listed public interest entities.
2. Overview of our audit
Factors driving our view of risks Following our prior year (2023) audit and considering developments affecting Key audit matters vs 2023 Item
the abrdn plc Group since then, we have updated our risk assessment.
Much of the uncertainty in the macro-economic environment that existed at the
end of 2023 remains. Continued performance challenges within the Investments
business have negatively contributed to fee-based revenue during the financial
year. This has been offset by continued growth in ii profits and the impact of
group wide cost savings from the transformation programme announced on 24
January 2024.
Overall, fee-based revenue has fallen slightly year on year and our
materiality levels have fallen to reflect this. Our consideration in respect
of Key Audit Matters identified are consistent with the prior year and are
explained below.
During 2023, given the challenging global economic environment as well as the
Group's wider financial performance, we identified that there was a
significant risk around the recoverability of certain of the Group's goodwill
balances and certain of the Parent Company's investments in subsidiaries.
As there continues to be market uncertainty and performance challenges for the
Group, we have again identified a significant risk in these areas for 2024.
Due to impairments of certain goodwill balances in the prior years, in the
current year the risk relates to the recoverability of ii goodwill only.
Given the substantial size of the carrying value of the Parent Company's
investment in abrdn Holdings Limited ("aHL") and the ongoing performance
challenges faced by the Investments business, we continue to recognise a
significant risk regarding the recoverability of this balance. In line with
our considerations of the ii goodwill balance, we have also identified a
significant risk in relation to the carrying value of the Parent Company's
investment in ii. We have not identified a significant risk over any other
parent company investment in subsidiary balances due to the limited estimation
uncertainty associated with these recoverable values. Due to the performance
of the ii business in the year we believe that this risk of impairment has
reduced compared to last year for both the Group goodwill and Parent Company
investment in subsidiary balances.
As part of our risk assessment, we maintained our focus on future economic and
operational assumptions used by the Group in its accounting estimates. The
most significant area that these could impact the financial statements
(outside of goodwill and investment in subsidiaries as noted above) is in the
valuation of the defined benefit pension obligation. As a result, this
continues to be a Key Audit Matter.
Recoverability of the ii goodwill (Group) and of certain of the parent ê 4.1
company's investments in subsidiaries (Parent company)
Valuation of the principal UK defined benefit pension scheme present value of çè 4.2
funded obligation (Group)
Revenue recognition: çè 4.3
management fee
revenue from contracts
with customers
Factors driving our view of risks continued The Group has a number of revenue streams. The area of revenue which had the
greatest effect on our overall Group audit and audit effort in the current
period is management fee income (institutional, retail wealth and insurance
partners), including associated rebates of investment management fees. The
nature of, and approach to calculating, management fees and rebates has
remained consistent year on year, while market volatility and uncertainty
continue to drive a revenue focus for users of the financial statements.
While not reported as Key Audit Matters, we also identified that the Group's
ongoing cost transformation programme and corporate transactions would have
financial reporting implications that would require consideration in the Group
and Parent Company financial statements.
Audit Committee interaction During the year, the AC met six times. KPMG are invited to attend all AC
meetings and are provided with an opportunity to meet with the AC in private
sessions without the Executive Directors being present. For each Key Audit
Matter, we have set out communications with the AC in section 4, including
matters that required particular judgment for each.
The matters included in the Audit Committee Chair's report on pages 105 - 113
are materially consistent with our observations of those meetings.
Our Independence We have fulfilled our ethical responsibilities under, and we remain Total audit fee £7.5m
independent of the Group in accordance with, UK ethical requirements including
the FRC Ethical Standard as applied to listed public interest entities.
We have not performed any non-audit services during 2024 or subsequently which
are prohibited by the FRC Ethical Standard.
We were first appointed as auditor by the shareholders for the year ended 31
December 2017. The period of total uninterrupted engagement is for the eight
financial years ended 31 December 2024.
The Group engagement partner is required to rotate every 5 years. As these are
the third set of the Group's financial statements signed by Richard Faulkner,
he will be required to rotate off after the FY26 audit.
The average tenure of component engagement partners is 2.5 years, with the
shortest being 1 year and the longest being 5 years.
Audit related fees (including interim review) £2.7m
Other services £0.9m
Non-audit fee as a % of total audit and audit related fee % 9%
Date first appointed 16 May 2017
Uninterrupted audit tenure 8 years
Next financial period which requires a tender FY27
Tenure of Group engagement partner 3 years
Average tenure of component engagement partners 2.5 year
Materiality (item 6 below) The scope of our work is influenced by our view of materiality and our Materiality levels used in our audit
assessed risk of material misstatement.
Diagram removed for the purposes of this announcement. However it can be
We have determined overall materiality for the Group financial statements as a viewed in full in the pdf document
whole at £13.2m (2023: £13.7m) and for the Parent Company financial
statements as a whole at £13.0m (2023: £13.0m).
Consistent with 2023, we determined that total revenue from contracts with
customers remains the benchmark for the Group as underlying performance is
such that a normalised profit benchmark would indicate materiality which is
inappropriate for the size and scale of the Group. As such, we based our Group
materiality on total revenue, of which it represents 1.0% (2023: 0.9%).
Materiality for the Parent Company financial statements was determined with
reference to a benchmark of Parent Company total assets, limited to be no more
than materiality for the group financial statements as a whole. It represents
0.2% (2023: 0.2%) of the stated benchmark.
Group Scope We have performed risk assessment procedures to determine which of the Group's Coverage of Group financial statements
components are likely to include risks of material misstatement to the Group
(Item 7 Below) financial statements, what audit procedures to perform at these components and Our audit procedures covered 86% of Group revenue from contracts with
the extent of involvement required from our component auditors around the customers:
world.
Diagram removed for the purposes of this announcement. However it can be
In total, we identified 313 components, having considered our evaluation of viewed in full in the pdf document
the Group's operational and legal structure and our ability to perform audit
procedures centrally.
Of those, we identified 7 quantitatively significant components which
contained the largest percentages of either total revenue or total assets of
the Group, for which we performed audit procedures. Of these, one component
was also identified as requiring special audit consideration, owing to the
Group risk relating to the UK Defined Benefit pension scheme residing in the Our audit procedures covered 91% of Group total assets:
component.
Diagram removed for the purposes of this announcement. However it can be
Additionally, having considered qualitative and quantitative factors, we viewed in full in the pdf document
selected 10 components with accounts contributing to the specific risks of
material misstatement of the Group financial statements.
For the remaining components for which we performed no audit procedures, we
performed analysis at an aggregated Group level to re-examine our assessment
that there is not a reasonable possibility of a material misstatement in these
components.
We consider the scope of our audit, as communicated to the Audit Committee, to
be an appropriate basis for our audit opinion. Our audit procedures covered 81% of Group profit before tax:
Diagram removed for the purposes of this announcement. However it can be
viewed in full in the pdf document
The impact of climate change on our audit In planning our audit we have considered the potential impacts of climate
change on the Group's business and its financial statements. Climate change
impacts the Group in a number of ways including the impact of climate risk on
investment valuations, potential reputational risk associated with the Group's
delivery of its climate related initiatives, and greater emphasis on climate
related narrative and disclosure in the annual report.
The Group's direct exposure to climate change in the financial statements is
primarily through its investment holdings, as the key valuation assumptions
and estimates may be impacted by climate risks. As part of our audit, we have
made enquiries of Directors and the Group's Corporate Sustainability team to
understand the extent of the potential impact of climate change risk on the
Group's financial statements and the Group's preparedness for this.
We have performed a risk assessment of how the impact of climate change may
affect the financial statements and our audit, in particular with respect to
investment holdings. We consider that the impact of climate risk on level 1
and level 2 investments is already reflected in the market prices used to
value these holdings at year end. As such, the impact of climate change was
limited to the valuation of level 3 investment holdings; taking into account
the relative size of the level 3 investments balance, we assessed that the
impact of climate change was not a significant risk for our audit nor does it
constitute a key audit matter. We did not consider the potential impact of
climate change on the sustainability of earnings or cashflow forecasts to be
material.
We held discussions with our own climate change professionals to challenge our
risk assessment. We have also read the Group's disclosure of climate related
information in the front half of the Annual report and accounts as set out on
pages 42 to 63 and considered consistency with the financial statements and
our audit knowledge.
3. Going concern, viability and principal risks and uncertainties
The Directors have prepared the financial statements on the going concern
basis as they do not intend to liquidate the Group or the Parent Company or to
cease their operations and as they have concluded that the Group's and the
Parent Company's financial position means that this is realistic. They have
also concluded that there are no material uncertainties that could have cast
significant doubt over their ability to continue as a going concern for at
least a year from the date of approval of the financial statements (the going
concern period).
Going Concern
We used our knowledge of the Group, its industry and operating model, and the Our conclusions
general economic environment to identify the inherent risks to its business
model and analysed how those risks might affect the Group's and the Parent - We consider that the Directors' use of the going concern basis of
Company's financial resources or ability to continue operations over the going accounting in the preparation of the financial statements is appropriate;
concern period. The risk that we considered most likely to adversely affect
the Group's and Parent Company's available financial resources over this - We have not identified, and concur with the Directors' assessment that
period was increased market volatility leading to reduced revenue for the there is not, a material uncertainty related to events or conditions that,
Group. individually or collectively, may cast significant doubt on the Group's or
Parent Company's ability to continue as a going concern for the going concern
We considered whether this risk could plausibly affect the liquidity in the period;
going concern period by assessing the degree of downside assumption that,
individually and collectively, could result in a liquidity issue, taking into - We have nothing material to add or draw attention to in relation to the
account the Group's and Parent Company's current and projected cash and Directors' statement in note (a)(r) to the financial statements on the use of
facilities (a reverse stress test). We also assessed the completeness of the the going concern basis of accounting with no material uncertainties that may
going concern disclosure. cast significant doubt over the Group's and Parent Company's use of that basis
for the going concern period, and we found the going concern disclosure in
Accordingly, based on those procedures, we found the Directors' use of the note (a)(r) to be acceptable; and
going concern basis of accounting without any material uncertainty for the
Group and Parent Company to be acceptable. - The related statement under the Listing Rules set out on page 148 is
materially consistent with the financial statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent with judgements
that were reasonable at the time they were made, the above conclusions are not
a guarantee that the Group or the Parent Company will continue in operation.
Disclosures of emerging and principal risks and longer-term viability
Our responsibility Our reporting
We are required to perform procedures to identify whether there is a material We have nothing material to add or draw attention to in relation to these
inconsistency between the Directors' disclosures in respect of emerging and disclosures.
principal risks and the viability statement, and the financial statements and
our audit knowledge. We have concluded that these disclosures are materially consistent with the
financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw attention
to in relation to:
- The Directors' confirmation within the Viability statement on page 80 that
they have carried out a robust assessment of the emerging and principal risks
facing the Group, including those that would threaten its business model,
future performance, solvency and liquidity;
- The Risk Management disclosures describing these risks and how emerging
risks are identified and explaining how they are being managed and mitigated;
and
- The Directors' explanation in the Viability Statement of how they have
assessed the prospects of the Group, over what period they have done so and
why they considered that period to be appropriate, and their statement as to
whether they have a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due over the
period of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
We are also required to review the Viability Statement set out on page 80
under the Listing Rules.
Our work is limited to assessing these matters in the context of only the
knowledge acquired during our financial statements audit. As we cannot predict
all future events or conditions and as subsequent events may result in
outcomes that are inconsistent with judgements that were reasonable at the
time they were made, the absence of anything to report on these statements is
not a guarantee as to the Group's and Parent Company's longer-term viability.
4. Key audit matters
What we mean
Key audit matters are those matters that, in our professional judgement, were
of most significance in the audit of the financial statements and include the
most significant assessed risks of material misstatement (whether or not due
to fraud) identified by us, including those which had the greatest effect on:
- The overall audit strategy.
- The allocation of resources in the audit.
- Directing the efforts of the engagement team.
We include below the Key Audit Matters in decreasing order of audit
significance together with our key audit procedures to address those matters
and our findings from those procedures in order that the Company's members, as
a body, may better understand the process by which we arrived at our audit
opinion. These matters were addressed, and our findings are based on
procedures undertaken, for the purpose of our audit of the financial
statements as a whole. We do not provide a separate opinion on these matters.
4.1 Recoverability of certain goodwill (Group) and of certain of the Parent
Company's investments in subsidiaries (Parent Company)
Financial Statement Elements Our assessment of risk vs 2023 Our findings
2024 2023 ê Due to impairments in previous years, the risk associated with the 2024: Balanced
recoverability of Goodwill and Investment in Subsidiary balances has declined.
Furthermore, the increased level of headroom on the interactive investor 2023: Balanced
('ii') goodwill investment in subsidiary indicates that there is a reduced
risk of impairment on these balances.
Goodwill - ii: £819m £819m
Investment in subsidiaries - ii: £1,512m £1,512m
Investment in subsidiaries - aHL: £1,113m £1,228m
Description of the Key Audit Matter Our response to the risk
The results in the Investments business have been impacted by the external We performed the procedures below rather than seeking to rely on any of the
market environment in addition to wider performance challenges. The abrdn Group's controls because the nature of the balances are such that we would
Holdings Limited ("aHL") subsidiary is the most material contributor to that expect to obtain audit evidence primarily through the detailed procedures
business and has been impaired in the current year by £15m. The performance described.
of the ii business is also very material to the Group, given the size of the
associated goodwill and investment in subsidiary balances that arose on Our procedures included:
acquisition. Further, the net assets attributable to equity holders of the
Parent Company and overall Group significantly exceeded the Group's market Our sector expertise: We critically assessed the Group's assessment of whether
capitalisation at the balance sheet date. there were any impairment indicators for the Parent Company's investment in
subsidiaries, including comparing the carrying value of Parent Company's net
These factors mean there is a heightened risk associated with the assets with the Group's market capitalisation and considering the
recoverability of the associated Parent Company investment in the ii and aHL subsidiaries' business performance.
subsidiaries and, in relation to ii, the goodwill balance allocated to the
corresponding cash generating unit (CGU) in the Group financial statements. Our valuation expertise: Using our own valuation specialists, we assessed the
appropriateness of the Group's FVLCD methodology and the appropriateness of
In the prior year, this Key Audit Matter included recoverability of the the input assumptions used in calculating the FVLCD of the CGUs to which
goodwill and investment in subsidiary balance associated with the Financial certain goodwill is allocated and of certain of the Parent Company's
Planning business. The impairments recognised in the prior and current periods investment in subsidiaries.
have reduced the carrying value of these balances to a level at which we have
determined that the recoverability of the balances is no longer part of the
Key Audit Matter.
Goodwill and investment in subsidiaries - subjective estimate Benchmarking assumptions: We compared the Group's assumptions to externally
derived data in relation to key inputs such as market multiples and discount
Goodwill is tested for impairment at least annually whether or not indicators rates.
of impairment exist. For goodwill, the impairment assessment is performed by
comparing the carrying amount of each CGU or group of CGUs to which goodwill Sensitivity analysis: We performed our own sensitivity analysis which included
is allocated with its recoverable amount being the higher of its value in use assessing the effect of reasonable alternative assumptions in respect of
(VIU) or fair value less costs of disposal (FVLCD). Similarly, for investments forecast cash flows, market multiples (including applicable
in subsidiaries the carrying value of the investment in the subsidiary is premiums/discounts) and discount rates (as applicable) to evaluate the impact
compared with the recoverable amount of that investment being the higher of on the FVLCD of the CGUs to which certain goodwill is allocated and of certain
its VIU or FVLCD. of the Parent Company's investment in subsidiaries.
In determining the FVLCD, the key assumptions are forecast cash flows, market Assessing transparency: We assessed whether the Group's disclosures (in
multiples (including applicable premiums/discounts) and discount rates (as respect of goodwill) and the Parent Company's disclosures (in respect of
applicable). investment in subsidiaries) about the sensitivity of the outcome of the
impairment assessment to changes in key assumptions reflect the risks inherent
The resulting recoverable amounts, in particular for the CGU and investments in the recoverable amount of goodwill and investment in subsidiaries.
in subsidiaries set out above, are subjective due to the inherent uncertainty
in determining these assumptions and are therefore also susceptible to
management bias.
The effect of these matters is that, as part of our risk assessment, we
determined that the recoverable amount of the ii goodwill and certain
investments in subsidiaries have a high degree of estimation uncertainty, with
a potential range of reasonable outcomes greater than our materiality for the
financial statements as a whole and possibly many times that amount. The
financial statements (notes 13 and A) disclose the sensitivity estimated by
the Group and Parent Company.
Communications with the abrdn plc Audit Committee
Our discussions with and reporting to the Audit Committee included:
- Our definition of the key audit matter relating to the recoverability of
the ii goodwill and certain of the Parent Company's investments in
subsidiaries including our assessment of the risks associated with individual
goodwill balances.
- Our audit response to the key audit matter which included the use of
specialists to challenge key aspects of the Group's and Parent Company's
determination of the recoverable amount and level of impairment.
- The findings of our procedures.
Areas of particular auditor judgement
We identified the following as the areas of particular auditor judgement:
- Subjective and complex auditor judgement was required in evaluating the
key assumptions used by the Group and Parent Company (including forecast cash
flows, market multiples (and applicable premiums/discounts) and discount rates
(as applicable)).
Our findings
We found the Group's estimated recoverable amount of the ii goodwill to be
balanced (2023: balanced) with proportionate (2023: proportionate) disclosures
of the related assumptions and sensitivities.
We found the Parent Company's estimated recoverable amount of certain of its
investments in subsidiaries and the related impairment charges to be balanced
(2023: balanced) with proportionate (2023: proportionate) disclosures of the
related assumptions and sensitivities.
Further information in the Annual Report and Accounts: See the Audit Committee
Report on page 105 to 113 for details on how the Audit Committee considered
recoverability of the ii goodwill and of certain of the Parent Company's
investments in subsidiaries as areas of significant attention, pages 199 to
205 for the accounting policy on goodwill and financial disclosures, page 273
for the investment in subsidiaries accounting policy and pages 275 to 278 for
the investment in subsidiaries financial disclosures.
4.2 Valuation of the principal UK defined benefit pension scheme present value
of funded obligation (Group)
Financial Statement Elements Our assessment of risk vs 2023 Our findings
2024 2023 çè Our assessment is that the risk is similar to 2023. Market volatility remains 2024: Optimistic
high and the risk associated with the selection of economic assumptions
remains similar to 2023. 2023: Balanced
Present value of funded obligation: £1,552m £1,784m
Description of the Key Audit Matter Our response to the risk
Subjective valuation We performed the procedures below rather than seeking to rely on any of the
Group's controls because the nature of the balance is such that we would
The present value of the Group's funded obligation for the principal UK expect to obtain audit evidence primarily through the detailed procedures
defined benefit pension scheme is an area that involves significant judgement described.
over the uncertain future settlement value. The Group is required to use
judgement in the selection of key assumptions covering both operating Our procedures included:
assumptions and economic assumptions.
Assessing actuaries' credentials: We evaluated the competency and objectivity
The key operating assumptions are base mortality and mortality improvement. of the Group's experts who assisted them in determining the actuarial
The key economic assumptions are the discount rate and inflation. The risk is assumptions used to calculate the defined benefit obligation.
that inappropriate assumptions are used in determining the present value of
the funded obligation. Benchmarking assumptions: We considered, with the support of our own actuarial
specialists, the appropriateness of the base mortality assumption by reference
The effect of these matters is that, as part of our risk assessment, we to scheme and industry data on historical mortality experience and the outcome
determined that the valuation of the pension scheme obligation has a high of the latest triennial report. We considered, with the support of our own
degree of estimation uncertainty, with a potential range of reasonable actuarial specialists, the appropriateness of the mortality improvement
outcomes greater than our materiality for the financial statements as a whole assumptions by reference to industry-based expectations of future mortality
and possibly many times that amount. The financial statements (note 31) improvements and the appropriateness of the discount rate and inflation
disclose the sensitivity estimated by the Group. assumptions by reference to industry practice.
Assessing transparency: In conjunction with our own actuarial specialists, we
considered whether the Group's disclosures in relation to the assumptions used
in the calculation of the present value of the funded obligation appropriately
represent the sensitivities of the obligation to the use of alternative
assumptions.
Communications with the abrdn plc Audit Committee
Our discussions with and reporting to the Audit Committee included:
- Our identification of the key audit matter relating to the valuation of
the defined benefit pension obligation.
- Our audit response to the key audit matter which included the use of our
own specialists to challenge key aspects of the Group's actuarial valuation.
- The findings of our procedures.
Areas of particular auditor judgement
We identified the following as the areas of particular auditor judgement:
- Subjective and complex auditor judgement was required in evaluating the
key assumptions used by the Group (including the discount rate, inflation and
mortality assumptions).
Our findings
We found the Group's valuation of the Principal UK defined benefit pension
scheme obligation to be optimistic (2023: balanced) with proportionate (2023:
proportionate) disclosures of the related assumptions and sensitivities.
Further information in the Annual report and accounts: See the Audit Committee
Report on pages 105 to 113 for details on how the Audit Committee considered
the valuation of the UK defined benefit pension scheme obligation as an area
of significant attention, page 230 for the accounting policy on the valuation
of the UK defined benefit pension scheme obligation, and note 31 for the
financial disclosures.
4.3 Revenue recognition: management fee revenue from contracts with customers
(Group)
Financial Statement Elements Our assessment of risk vs 2023 Our findings
2024 2023 çè Our assessment is that the risk is similar to 2023. 2024 and 2023: We found no significant items, either unadjusted or adjusted
for
The nature and complexity of management fee calculations remains at a similar
level to last year while market volatility and uncertainty remain.
Management fee income - Institutional and Retail Wealth £679m 769m
Management fee income - Insurance Partners £116m £132m
Description of the Key Audit Matter Our response to the risk
Data capture and calculation error Our procedures included:
Revenue from contracts with customers is the most significant item in the We performed the detailed procedures below rather than seeking to rely on the
consolidated income statement and represents one of the areas that had the Group's controls as our knowledge indicated that we would be unlikely to
greatest effect on the overall Group audit. In addition, market volatility and obtain the required evidence to support reliance on the controls.
uncertainty has driven increased revenue focus. The balance comprises various
revenue streams as outlined in note 3. We assessed the design and operating effectiveness of controls at third party
service providers over the production of AUM data that is used in calculating
The area of revenue which had the greatest effect on our overall Group audit management fees and associated rebates. This included inspecting the internal
and audit effort in the current period is management fee income controls reports prepared by relevant outsourced service organisations
(institutional, retail wealth and insurance partners), including associated covering the design and operation of key controls over the production of AUM
management fee rebates, which is the most significant and, in certain areas, data used in the calculation of management fees.
for example for segregated account management fee calculations, complex item.
The nature and complexity of management fee calculations has remained largely
stable year on year.
Tests of details and substantive analytical procedures
The two key components in calculating management fee income are fee rates to
be applied and the amount of assets under management (AUM) resulting in the We agreed a selection of fee rates and associated rebate rates used in the
following key risks: calculation to the investment management agreements (IMAs), fee letters or
fund prospectuses outlining the effective fee rates.
- Fee rates: There is a risk that fee rates have not been entered
appropriately into the fee calculation and billing systems when clients are
onboarded or agreements are amended.
Where AUM data was obtained from third party service organisations (and where
- AUM: There is a risk that AUM data from third-party service providers or we had tested the controls over the AUM data) we independently calculated
client appointed administrators and/or custodians does not exist and/or is not management fees. Where AUM data was obtained from a client appointed
accurate. administrator and/or custodian (and so we could not test controls over the AUM
data) we independently calculated management fees and/or agreed a selection of
- Calculation: There is a risk that management fee income, including amounts billed and received to invoice and bank statements.
associated rebates, is incorrectly calculated.
Communications with the abrdn plc Audit Committee
Our discussions with and reporting to the Audit Committee included:
- Our definition of the key audit matter relating to revenue recognition:
management fee revenue from contracts with customers.
- Our audit response to the key audit matter which included use of data and
analytics technology to complete certain of the recalculations.
- The findings of our procedures.
Our findings
- We found no significant items, either unadjusted or adjusted for, in the
Group's management fee revenue from contracts with customers (2023: no
significant items either unadjusted or adjusted for).
Further information in the Annual report and accounts: See page 187 for the
accounting policy on revenue from contracts with customers and note 3 for the
financial disclosures.
5. Our ability to detect irregularities, and our response
Fraud - Identifying and responding to risks of material misstatement due to
fraud
Fraud risk assessment To identify risks of material misstatement due to fraud (fraud risks) we
assessed events or conditions that could indicate an incentive or pressure to
commit fraud or provide an opportunity to commit fraud. Our risk assessment
procedures included:
- Enquiring of the Directors, the Audit Committee, Group Internal Audit and
the Group's Legal team and inspection of policy documentation as to the
Group's high-level policies and procedures to prevent and detect fraud,
including the internal audit function, and the Group's channel for
'whistleblowing', as well as whether they have knowledge of any actual,
suspected or alleged fraud.
- Reading Board and certain other committee minutes and attending Audit
Committee and Risk and Capital Committee meetings.
- Considering the findings of Group Internal Audit's reviews covering the
financial year.
- Considering remuneration incentive schemes and performance targets for
management and the Directors.
Risk communications We communicated identified fraud risks throughout the audit team and remained
alert to any indications of fraud throughout the audit. This included
communication from the Group auditor to component auditors of relevant fraud
risks identified at the Group level and requesting component auditors
performing procedures at the component level to report to the Group auditor
any identified fraud risk factors or identified or suspected instances of
fraud.
Fraud risks As required by auditing standards, and taking into account possible pressures
to meet profit targets and our overall knowledge of the control environment,
we performed procedures to address the risk of management override of
controls, in particular the risk that Group and component management may be in
a position to make inappropriate accounting entries, and the risk of bias in
accounting estimates and judgements such as impairment and pension
assumptions.
On this audit we do not believe there is a fraud risk related to revenue
recognition, given the lack of judgement involved in revenue recognition and
the segregation of duties between management and third party service
providers.
In the current year we also continued to identify a fraud risk related to the
recoverability of the Group's ii goodwill balance and Parent Company's ii
investment in subsidiary balance given the size of the associated goodwill and
investment in subsidiary balances that arose on acquisition and its
significance to Group strategy going forward.
Link to KAMs Further detail in respect of the risk of fraud over the recoverability of the
Group's ii goodwill balance and the Parent Company's ii investment in
subsidiary balance, including our procedure to compare certain key input
assumptions to external market data, is set out in the key audit matter
disclosures in section 4.1 of this report.
Procedures to address fraud risks In determining the audit procedures we took into account the results of our
evaluation and testing of the operating effectiveness of some of the
Group-wide fraud risk management controls.
We also performed substantive audit procedures including:
- Identifying journal entries and other adjustments to test for all Group
components based on risk criteria and comparing the identified entries to
supporting documentation. These included journal entries posted by senior
finance management and those posted to unusual accounts, as well as those
which comprised unexpected posting combinations.
- Evaluating the business purpose of significant unusual transactions.
- Assessing significant accounting estimates for bias, including whether the
judgements made in making accounting estimates are indicative of a potential
bias.
Laws and regulations - Identifying and responding to risks of material
misstatement RELATING TO compliance with laws and regulations
Laws and regulations risk assessment We identified areas of laws and regulations that could reasonably be expected
to have a material effect on the financial statements. For this risk
assessment matters considered included the following:
- Our general commercial and sector experience.
- Discussion with the Directors and other management (as required by
auditing standards).
- Inspection of the Group's regulatory and legal correspondence.
- Inspection of the policies and procedures regarding compliance with laws
and regulation.
As the Group and many of its subsidiaries are regulated, our assessment of
risks involved gaining an understanding of the control environment including
the Group's procedures for complying with regulatory requirements, how they
analyse identified breaches and assessing whether there were any implications
of identified breaches on our audit.
Risk communications We communicated identified laws and regulations throughout our team and
remained alert to any indications of non-compliance throughout the audit. This
included communication from the Group auditor to component auditors of
relevant laws and regulations identified at the Group level, and a request for
component auditors to report to the Group audit team any instances of
non-compliance with laws and regulations that could give rise to a material
misstatement at the Group level.
The potential effect of these laws and regulations on the financial statements
varies considerably.
Direct laws context and link to audit Firstly, the Group is subject to laws and regulations that directly affect the
financial statements including financial reporting legislation (including
related companies legislation), distributable profits legislation, taxation
legislation and pensions regulations and we assessed the extent of compliance
with these laws and regulations as part of our procedures on the related
financial statement items.
Most significant indirect law/ regulation areas Secondly, the Group is subject to many other laws and regulations where the
consequences of noncompliance could have a material effect on amounts or
disclosures in the financial statements, for instance through the imposition
of fines or litigation.
We identified the following areas as those most likely to have such an effect:
- Specific areas of regulatory capital and liquidity;
- Conduct, including Client Assets;
- Anti-money laundering; and
- Market abuse Regulation.
Auditing standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry of the Directors and
other management and inspection of regulatory and legal correspondence, if
any. Therefore, if a breach of operational regulations is not disclosed to us
or evident from relevant correspondence, an audit will not detect that breach.
Actual or suspected breaches discussed with AC We discussed with the Audit Committee matters related to actual or suspected
breaches of laws or regulations, for which disclosure is not necessary, and
considered any implications for our audit.
Context
Context of the ability of the audit to detect fraud or breaches of law or Owing to the inherent limitations of an audit, there is an unavoidable risk
regulation that we may not have detected some material misstatements in the financial
statements, even though we have properly planned and performed our audit in
accordance with auditing standards. For example, the further removed
non-compliance with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely the inherently limited
procedures required by auditing standards would identify it. In addition, as
with any audit, there remained a higher risk of non-detection of fraud, as
fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls. Our audit procedures
are designed to detect material misstatement. We are not responsible for
preventing non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulation
6. Our determination of materiality
The scope of our audit was influenced by our application of materiality. We
set quantitative thresholds and overlay qualitative considerations to help us
determine the scope of our audit and the nature, timing and extent of our
procedures, and in evaluating the effect of misstatements, both individually
and in the aggregate, on the financial statements as a whole.
£13.2m What we mean
(2023: £13.7m) A quantitative reference for the purpose of planning and performing our audit.
Materiality for the group financial statements as a whole
Basis for determining materiality and judgements applied
Materiality for the Group financial statements as a whole was set at £13.2m
(2023: £13.7m). This was determined with reference to a benchmark of total
revenue from contracts with customer
Consistent with 2023, we determined that total revenue from contracts with
customers remains the main benchmark for the Group as given the performance is
such that a normalised profit benchmark would indicate materiality which is
inappropriate for the size and scale of the Group.
Our Group materiality of £13.2m was determined by applying a percentage to
the total revenue from contracts with customers. When using a benchmark of
total revenue from contracts with customers to determine overall materiality,
KPMG's approach for listed entities considers a guideline range of 0.5% to
1.0% of the measure. In setting overall Group materiality, we applied a
percentage of 1.0% (2023: 0.9%) to the benchmark.
Materiality for the Parent Company financial statements as a whole was set at
£13.0m (2023: £13.0m), determined with reference to a benchmark of Parent
Company total assets, limited to be less than materiality for the group
financial statements as a whole (2023: no change). Our materiality was lower
than we would have determined with reference to a benchmark of parent company
total assets. It represents 0.2% (2023: 0.2%) of the stated benchmark.
£6.6m What we mean
(2023: £6.9m) Our procedures on individual account balances and disclosures were performed
to a lower threshold, performance materiality, so as to reduce to an
Performance materiality acceptable level the risk that individually immaterial misstatements in
individual account balances add up to a material amount across the financial
statements as a whole.
Basis for determining performance materiality and judgements applied
We have considered performance materiality at a level of 50% (2023: 50%) of
materiality for abrdn plc's Group financial statements as a whole to be
appropriate.
The Parent Company performance materiality was set at £6.5m (2023: £6.5m),
which equates to 50% (2023: 50%) of materiality for the Parent Company
financial statements as a whole.
We applied this reduced percentage in our determination of performance
materiality for the Group and Parent Company financial statements in the
current year as we identified specific factors indicating an elevated level of
aggregation risk. These factors included the ongoing level of transformation
and change impacting the Group's systems of internal control.
£0.66m What we mean
(2023: £0.69m) This is the amount below which identified misstatements are considered to be
clearly trivial from a quantitative point of view. We may become aware of
Audit misstatement posting threshold misstatements below this threshold which could alter the nature, timing and
scope of our audit procedures, for example if we identify smaller
misstatements which are indicators of fraud.
This is also the amount above which all misstatements identified are
communicated to the Audit Committee.
Basis for determining the audit misstatement posting threshold and judgements
applied
We set our audit misstatement posting threshold at 5% (2023: 5%) of our
materiality for the Group financial statements. We also report to the Audit
Committee any other identified misstatements that warrant reporting on
qualitative grounds.
The overall materiality for the Group financial statements of £13.2m (2023:
£13.7m) compares as follows to the main financial statement caption amounts:
Total Group revenue Group profit/(loss) before tax Total Group assets
2024 2023 2024 2023 2024 2023
Financial statement caption £1,370m £1,474m £251m (£6m) £7,721m £8,031m
Group materiality as % of caption 1.0% 0.9% 5.3% (228.3%) 0.2% 0.2%
7. The scope of our audit
Group Scope What we mean
How the Group auditor determined the procedures to be performed across the
Group.
Thi
s
yea
r,
we
app
lie
d
the
rev
ise
d
gro
up
aud
iti
ng
sta
nda
rd
in
our
aud
it
of
the
con
sol
ida
ted
fin
anc
ial
sta
tem
ent
s.
The
rev
ise
d
sta
nda
rd
cha
nge
s
how
an
aud
ito
r
app
roa
che
s
the
ide
nti
fic
ati
on
of
com
pon
ent
s,
and
how
the
aud
it
pro
ced
ure
s
are
pla
nne
d
and
exe
cut
ed
acr
oss
com
pon
ent
s.
In
par
tic
ula
r,
the
def
ini
tio
n
of
a
com
pon
ent
has
cha
nge
d,
shi
fti
ng
the
foc
us
fro
m
how
the
ent
ity
pre
par
es
fin
anc
ial
inf
orm
ati
on
to
how
we,
as
the
gro
up
aud
ito
r,
pla
n
to
per
for
m
aud
it
pro
ced
ure
s
to
add
res
s
gro
up
ris
ks
of
mat
eri
al
mis
sta
tem
ent
(RM
Ms)
.
Sim
ila
rly
,
the
gro
up
aud
ito
r
has
an
inc
rea
sed
rol
e
in
des
ign
ing
the
aud
it
pro
ced
ure
s
as
wel
l
as
mak
ing
dec
isi
ons
on
whe
re
the
se
pro
ced
ure
s
are
per
for
med
(ce
ntr
all
y
and
/or
at
com
pon
ent
lev
el)
and
how
the
se
pro
ced
ure
s
are
exe
cut
ed
and
sup
erv
ise
d.
As
a
res
ult
,
we
ass
ess
sco
pin
g
and
cov
era
ge
in
a
dif
fer
ent
way
and
com
par
iso
ns
to
pri
or
per
iod
cov
era
ge
fig
ure
s
are
not
mea
nin
gfu
l.
In
thi
s
rep
ort
we
pro
vid
e
an
ind
ica
tio
n
of
sco
pe
cov
era
ge
on
the
new
bas
is.
We
per
for
med
ris
k
ass
ess
men
t
pro
ced
ure
s
to
det
erm
ine
whi
ch
of
the
Gro
up'
s
com
pon
ent
s
are
lik
ely
to
inc
lud
e
ris
ks
of
mat
eri
al
mis
sta
tem
ent
to
the
Gro
up
fin
anc
ial
sta
tem
ent
s
and
whi
ch
pro
ced
ure
s
to
per
for
m
at
the
se
com
pon
ent
s
to
add
res
s
tho
se
ris
ks.
In
tot
al,
we
ide
nti
fie
d
313
com
pon
ent
s,
hav
ing
con
sid
ere
d
our
eva
lua
tio
n
of
the
Gro
up'
s
ope
rat
ion
al
and
leg
al
str
uct
ure
and
our
abi
lit
y
to
per
for
m
aud
it
pro
ced
ure
s
cen
tra
lly
.
Of
tho
se,
we
ide
nti
fie
d
qua
nti
tat
ive
ly
sig
nif
ica
nt
com
pon
ent
s
whi
ch
con
tai
ned
the
lar
ges
t
per
cen
tag
es
of
eit
her
tot
al
rev
enu
e
or
tot
al
ass
ets
of
the
Gro
up,
for
whi
ch
we
per
for
med
aud
it
pro
ced
ure
s.
Add
iti
ona
lly
,
hav
ing
con
sid
ere
d
qua
lit
ati
ve
and
qua
nti
tat
ive
fac
tor
s,
we
sel
ect
ed
add
iti
ona
l
com
pon
ent
s
wit
h
acc
oun
ts
con
tri
but
ing
to
the
spe
cif
ic
ris
ks
of
mat
eri
al
mis
sta
tem
ent
of
the
Gro
up
fin
anc
ial
sta
tem
ent
s.
The
bel
ow
sum
mar
ise
s
whe
re
we
per
for
med
aud
it
pro
ced
ure
s:
Component type Number of components where we performed audit procedures Range of materiality applied
Quantitatively significant components 7 £4.6m - £5.9m
Other components where we performed procedures 10 £1.3m - £5.2m
Total 17
We involved component auditors in performing the audit work on 11 components.
We set the component materialities having regard to the mix of size and risk
profile of the Group across the components. We performed the audit of the
parent Company.
Our audit procedures covered 86% of Group revenue from contracts with
customers. We performed audit procedures in relation to components that
accounted for 91% of Group total assets and 83% of Group profit before tax.
For the remaining components for which we performed no audit procedures, no
component represented more than 3% of Group total revenue from contracts with
customers, Group profit before tax or Group total assets. We performed
analysis at an aggregated Group level to re-examine our assessment that there
is not a reasonable possibility of a material misstatement in these
components. This included consideration of the work that had been performed
over certain balances at a group level, including over Staff Bonuses and
Taxation.
Controls approach for group audit
abrdn relies on the effectiveness of a number of IT systems and applications
to ensure that financial transactions are recorded completely and accurately.
The main financial accounting, reporting (including consolidation), invoice
and billing systems and the interactive investor (ii) and Adviser platforms
were identified as key IT systems relevant to our audit. The IT systems for
the Group and Investments business are primarily managed from the centralised
IT function in the UK and certain of these were evaluated by IT specialists
who were part of the Group audit team. Other relevant IT systems were
evaluated by component IT specialists to determine whether these could be
relied upon. These included the IT systems and applications for the Adviser
business and ii which have systems managed locally.
At certain components of the Group, we identified control deficiencies
relating to the posting, review and approval of manual journals. We modified
our audit approach by assessing compensating controls and by enhancing our
selection criteria in the testing of manual journal entries.
For the Investments business we tested and relied on key manual and automated
controls related to the billing process operated by third party service
organisations as well as the Group's oversight of relevant third-party service
organisations, as discussed in the "Revenue recognition: management fee
revenue from contracts with customers" key audit matter above. We assessed the
status of remediation of prior year findings in respect of internal controls
operated by the Group over invoicing and billing processes, ahead of the year
end, and subsequently concluded that we would not rely on these controls as
completion of strengthening and enhancing of these controls remained ongoing.
Our overall audit response was largely substantive due to the nature of the
identified key audit matters, and also deficiencies in certain controls in
place in areas that we may have sought to rely on controls.
The Audit Committee has discussed these internal control matters, and
management's actions to remediate them, on page 111. We performed incremental
procedures to respond to the deficiencies in the control environment as
outlined at 4.3 Revenue recognition: management fee revenue from contracts
with customers.
Group auditor oversight What we mean
The extent of the Group auditor's involvement in work performed by component
auditors.
As part of establishing the overall Group audit strategy and plan, we
conducted risk assessment and planning discussion meetings with component
auditors to discuss Group audit risks relevant to the components, including
the key audit matter in respect of recognition of management fee revenue from
contracts with customers.
We visited each of the four component auditors not located in the UK to
assesses the audit risks and strategy. Video and telephone conference meetings
were also held with these component auditors. At these visits and meetings,
the results of the planning procedures and further audit procedures
communicated to us were discussed in more detail, and any further work
required by us was then performed by the component auditors.
We inspected the work performed by the component auditors for the purpose of
the Group audit and evaluated the appropriateness of conclusions drawn from
the audit evidence obtained and consistencies between communicated findings
and work performed, with a particular focus on work performed over the
recognition of management fee revenue from contracts with customers.
8. Other information in the annual report and accounts
The Directors are responsible for the other information presented in the
Annual Report together with the financial statements. Our opinion on the
financial statements does not cover the other information and, accordingly, we
do not express an audit opinion or, except as explicitly stated below, any
form of assurance conclusion thereon.
All other information
Our responsibility Our reporting
Our responsibility is to read the other information and, in doing so, consider Based solely on that work we have not identified material misstatements or
whether, based on our financial statements audit work, the information therein inconsistencies in the other information.
is materially misstated or inconsistent with the financial statements or our
audit knowledge.
Strategic report and directors' report
Our responsibility and reporting
Based solely on our work on the other information described above we report to
you as follows:
- We have not identified material misstatements in the strategic report and
the Directors' report.
- In our opinion the information given in those reports for the financial
year is consistent with the financial statements.
- In our opinion those reports have been prepared in accordance with the
Companies Act 2006.
Directors' remuneration report
Our responsibility Our reporting
We are required to form an opinion as to whether the part of the Directors' In our opinion the part of the Directors' Remuneration Report to be audited
Remuneration Report to be audited has been properly prepared in accordance has been properly prepared in accordance with the Companies Act 2006.
with the Companies Act 2006.
Corporate governance disclosures
Our responsibility Our reporting
We are required to perform procedures to identify whether there is a material Based on those procedures, we have concluded that each of these disclosures is
inconsistency between the financial statements and our audit knowledge, and: materially consistent with the financial statements and our audit knowledge.
- The Directors' statement that they consider that the annual report and
financial statements taken as a whole is fair, balanced and understandable,
and provides the information necessary for shareholders to assess the Group's
position and performance, business model and strategy.
- The section of the annual report describing the work of the Audit
Committee, including the significant issues that the Audit Committee
considered in relation to the financial statements, and how these issues were
addressed.
- The section of the annual report that describes the review of the
effectiveness of the Group's risk management and internal control systems.
We are also required to review the part of the Corporate Governance Statement We have nothing to report in this respect.
relating to the Group's compliance with the provisions of the UK Corporate
Governance Code specified by the Listing Rules for our review.
Other matters on which we are required to report by exception
Our responsibility Our reporting
Under the Companies Act 2006, we are required to report to you if, in our We have nothing to report in these respects.
opinion:
- Adequate accounting records have not been kept by the Parent Company, or
returns adequate for our audit have not been received from branches not
visited by us; or
- The Parent Company financial statements and the part of the Directors'
Remuneration Report to be audited are not in agreement with the accounting
records and returns; or
- Certain disclosures of Directors' remuneration specified by law are not
made; or
- We have not received all the information and explanations we require for
our audit.
9. Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 149, the Directors
are responsible for: the preparation of the financial statements including
being satisfied that they give a true and fair view; such internal control as
they determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error;
assessing the Group and Parent Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern; and
using the going concern basis of accounting unless they either intend to
liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue our opinion in an auditor's report. Reasonable
assurance is a high level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC's website
at www.frc.org.uk/auditorsresponsibilities
The Company is required to include these financial statements in an annual
financial report prepared under Disclosure Guidance and Transparency Rule
4.1.17R and 4.1.18R. This auditor's report provides no assurance over whether
the annual financial report has been prepared in accordance with those
requirements.
10. The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and the terms of our
engagement by the Company. Our audit work has been undertaken so that we might
state to the Company's members those matters we are required to state to them
in an auditor's report, and the further matters we are required to state to
them in accordance with the terms agreed with the Company, and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members, as
a body, for our audit work, for this report, or for the opinions we have
formed.
Richard Faulkner (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Saltire Court
20 Castle Terrace
Edinburgh
EH1 2EG
3 March 2025
Group financial statements
Consolidated income statement
For the year ended 31 December 2024
2024 2023
Notes £m £m
Revenue from contracts with customers 3 1,370 1,474
Cost of sales 3 (65) (76)
Net operating revenue 1,305 1,398
Restructuring and corporate transaction expenses 5 (100) (152)
Impairment of intangibles acquired in business combinations and through the 5 (9) (63)
purchase of customer contracts
Amortisation of intangibles acquired in business combinations and through the 5 (120) (126)
purchase of customer contracts
Staff costs and other employee-related costs 5 (510) (529)
Other administrative expenses 5 (574) (593)
Total administrative and other expenses (1,313) (1,463)
Net gains or losses on financial instruments and other income
Fair value movements and dividend income on significant listed investments 4 29 (114)
Other net gains or losses on financial instruments and other income 4 131 116
Total net gains or losses on financial instruments and other income 160 2
Finance costs (25) (25)
Profit on disposal of subsidiaries and other operations 1 89 79
Profit on disposal of interests in associates 1 11 -
Reversal of impairment 14 - 2
Share of profit or loss from associates and joint ventures 14 24 1
Profit/(loss) before tax 251 (6)
Tax (expense)/credit 9 (3) 18
Profit for the year 248 12
Attributable to:
Equity shareholders of abrdn plc 237 1
Other equity holders 28 11 11
248 12
Earnings per share
Basic (pence per share) 10 13.2 0.1
Diluted (pence per share) 10 13.0 0.1
The Notes on pages 176 to 269 are an integral part of these consolidated
financial statements.
Consolidated statement of comprehensive income
For the year ended 31 December 2024
2024 2023
Notes £m £m
Profit for the year 248 12
Items that will not be reclassified subsequently to profit or loss:
Remeasurement gains/(losses) on defined benefit pension plans 31 24 (139)
Share of other comprehensive income of associates and joint ventures 14 6 (4)
Total items that will not be reclassified subsequently to profit or loss 30 (143)
Items that may be reclassified subsequently to profit or loss:
Fair value gains/(losses) on cash flow hedges 18 20 (40)
Exchange differences on translating foreign operations (2) (35)
Share of other comprehensive income of associates and joint ventures 14 (53) (27)
Items transferred to the consolidated income statement
Fair value (gains)/losses on cash flow hedges 18 (18) 28
Realised foreign exchange (gains) 1 - (1)
Equity holder tax effect of items that may be reclassified subsequently to 9 - 3
profit or loss
Total items that may be reclassified subsequently to profit or loss (53) (72)
Other comprehensive income for the year (23) (215)
Total comprehensive income for the year 225 (203)
Attributable to:
Attributable to:
Equity shareholders of abrdn plc 214 (214)
Other equity holders 28 11 11
225 (203)
The Notes on pages 176 to 269 are an integral part of these consolidated
financial statements.
Consolidated statement of financial position
As at 31 December 2024
2024 2023
Notes £m £m
Assets
Intangible assets 13 1,474 1,578
Pension and other post-retirement benefit assets 31 786 740
Investments in associates and joint ventures accounted for using the equity 14 205 229
method
Property, plant and equipment 15 135 163
Deferred tax assets 9 197 215
Financial investments 17 1,818 2,047
Receivables and other financial assets 19 1,024 1,071
Current tax recoverable 9 23 10
Other assets 20 54 77
Assets held for sale 21 17 19
Cash and cash equivalents 22 1,321 1,196
7,054 7,345
Assets backing unit linked liabilities 23
Financial investments 649 669
Receivables and other unit linked assets 4 4
Cash and cash equivalents 14 13
667 686
Total assets 7,721 8,031
2024 2023
Notes £m £m
Liabilities
Third party interest in consolidated funds 29 184 187
Subordinated liabilities 30 597 599
Pension and other post-retirement benefit provisions 31 8 12
Deferred tax liabilities 9 101 129
Current tax liabilities 9 3 6
Derivative financial liabilities 29 3 9
Other financial liabilities 32 1,048 1,241
Provisions 33 64 66
Other liabilities 33 7 4
Liabilities of operations held for sale 21 - 2
2,015 2,255
Unit linked liabilities 23
Investment contract liabilities 665 684
Other unit linked liabilities 2 2
667 686
Total liabilities 2,682 2,941
Equity
Share capital 24 257 257
Shares held by trusts 25 (123) (141)
Share premium reserve 24 640 640
Retained earnings 26 4,480 4,449
Other reserves 27 (427) (327)
Equity attributable to equity shareholders of abrdn plc 4,827 4,878
Other equity 28 207 207
Non-controlling interests - ordinary shares 28 5 5
Total equity 5,039 5,090
Total equity and liabilities 7,721 8,031
The Notes on pages 176 to 269 are an integral part of these consolidated
financial statements.
The consolidated financial statements on pages 169 to 269 were approved by the
Board and signed on its behalf by the following Directors:
Sir Douglas Flint Jason Windsor
Chair Chief Executive Officer
3 March 2025 3 March 2025
Consolidated statement of changes in equity
For the year ended 31 December 2024
Share capital Shares held by trusts Share premium reserve Retained earnings Other reserves Total equity attributable to equity Other equity Non-controlling interests - ordinary shares Total equity
shareholders of abrdn plc
Notes £m £m £m £m £m £m £m £m £m
1 January 2024 257 (141) 640 4,449 (327) 4,878 207 5 5,090
Profit for the year - - - 237 - 237 11 - 248
Other comprehensive income for the year - - - (23) - (23) - - (23)
Total comprehensive income for the year 26,27 - - - 214 - 214 11 - 225
Issue of share capital 24 - - - - - - - - -
Dividends paid on ordinary shares 12 - - - (260) - (260) - - (260)
Interest paid on other equity 28 - - - - - - (11) - (11)
Reserves credit for employee share-based payments 27 - - - - 26 26 - - 26
Transfer to retained earnings for vested employee share-based payments 26,27 - - - 32 (32) - - - -
Transfer between reserves on impairment of subsidiaries 26,27 - - - 94 (94) - - - -
Shares acquired by employee trusts 25 - (26) - - - (26) - - (26)
Shares distributed by employee and other trusts and related dividend 25,26 - 44 - (48) - (4) - - (4)
equivalents
Aggregate tax effect of items recognised directly in equity - - - (1) - (1) - - (1)
31 December 2024 257 (123) 640 4,480 (427) 4,827 207 5 5,039
Share capital Shares held by trusts Share premium reserve Retained earnings(1) Other reserves Total equity attributable to equity Other equity Non-controlling interests - ordinary shares Total equity(1)
shareholders of abrdn plc(1)
Notes £m £m £m £m £m £m £m £m £m
31 December 2022 280 (149) 640 4,986 (129) 5,628 207 7 5,842
Effect of application of IFRS 9 on Investments in associates and joint - - - 51 - 51 - - 51
ventures accounted for using the equity method(1)
1 January 2023 280 (149) 640 5,037 (129) 5,679 207 7 5,893
Profit for the year - - - 1 - 1 11 - 12
Other comprehensive income for the year - - - (170) (45) (215) - - (215)
Total comprehensive income for the year 26,27 - - - (169) (45) (214) 11 - (203)
Issue of share capital 24 - - - - - - - - -
Dividends paid on ordinary shares 12 - - - (279) - (279) - - (279)
Interest paid on other equity 28 - - - - - - (11) - (11)
Share buyback 24,26,27 (23) - - (302) 23 (302) - - (302)
Other movements in non-controlling interests in the year 28 - - - - - - - (2) (2)
Reserves credit for employee share-based payments 27 - - - - 24 24 - - 24
Transfer to retained earnings for vested employee share-based payments 26,27 - - - 31 (31) - - - -
Transfer between reserves on impairment of subsidiaries 26,27 - - - 169 (169) - - - -
Shares acquired by employee trusts 25 - (27) - - - (27) - - (27)
Shares distributed by employee and other trusts and related dividend 25,26 - 35 - (38) - (3) - - (3)
equivalents
31 December 2023 257 (141) 640 4,449 (327) 4,878 207 5 5,090
1. The Group implemented IFRS 9 in 2019. However, as permitted
under a temporary exemption granted to insurers in IFRS 4 Insurance Contracts,
the Group's insurance joint venture, Heng An Standard Life Insurance Company
Limited (HASL), applied IFRS 9 at 1 January 2023 following the implementation
of the new insurance contracts standard, IFRS 17. In line with the approach
adopted by the Group on its implementation of IFRS 9 on 1 January 2019, the
2022 comparatives were not restated for HASL's adoption of IFRS 9. The impact
of HASL adopting IFRS 9 was recognised in retained earnings at 1 January 2023.
The Notes on pages 176 to 269 are an integral part of these consolidated
financial statements.
Consolidated statement of cash flows
For the year ended 31 December 2024
2024 2023
Notes £m £m
Cash flows from operating activities
Profit/(loss) before tax 251 (6)
Change in operating assets 37 112 157
Change in operating liabilities 37 (202) (109)
Adjustment for non-cash movements in investment income - 3
Other non-cash and non-operating items 37 77 210
Taxation paid(1) (25) (34)
Net cash flows from operating activities 213 221
Cash flows from investing activities
Cash flows from investing activities
Purchase of property, plant and equipment (7) (18)
Proceeds from sale of property, plant and equipment 1 -
Acquisition of subsidiaries and unincorporated businesses net of cash acquired 1(b) - (108)
Disposal of subsidiaries net of cash disposed of 37 49 139
Acquisition of investments in associates and joint ventures 14 - (2)
Proceeds in relation to contingent consideration 36 7 21
Payments in relation to contingent consideration 36 (9) (12)
Disposal of investments in associates and joint ventures 1(c) 20 -
Purchase of financial investments (138) (445)
Proceeds from sale or redemption of financial investments 17 360 1,029
Taxation paid on sale or redemption of financial investments(1) - (41)
Prepayment in respect of potential acquisition of customer contracts 39(b) 1 20
Acquisition of intangible assets (26) (41)
Net cash flows from investing activities 258 542
Cash flows from financing activities
Payment of lease liabilities - principal (23) (24)
Payment of lease liabilities - interest (6) (6)
Shares acquired by trusts (26) (27)
Interest paid on subordinated liabilities and other equity (38) (20)
Other interest paid (3) (3)
Cash received relating to collateral held in respect of derivatives hedging 14 (50)
subordinated liabilities
Share buyback 24 - (302)
Ordinary dividends paid 12 (260) (279)
Net cash flows from financing activities (342) (711)
Net increase in cash and cash equivalents 129 52
Cash and cash equivalents at the beginning of the year 1,210 1,166
Effects of exchange rate changes on cash and cash equivalents (4) (8)
Cash and cash equivalents at the end of the year 22 1,335 1,210
Supplemental disclosures on cash flows from operating activities
Interest received 93 85
Dividends received 82 91
Rental income received on investment property 2 3
1. Total taxation paid was £25m in 2024 (2023: £75m).
The Notes on pages 176 to 269 are an integral part of these consolidated
financial statements.
Presentation of consolidated financial statements
The Group's significant accounting policies are included at the beginning of
the relevant notes to the consolidated financial statements. This section sets
out the basis of preparation, a summary of the Group's critical accounting
estimates and judgements in applying accounting policies, and other
significant accounting policies which have been applied to the financial
statements as a whole.
(a) Basis of preparation
These consolidated financial statements have been prepared in accordance with
UK-adopted international accounting standards. The consolidated financial
statements have been prepared on a going concern basis and under the
historical cost convention, as modified by the revaluation of owner-occupied
property, derivative instruments and other financial assets and financial
liabilities at fair value through profit or loss (FVTPL).
Climate risks have been taken into consideration in the preparation of the
consolidated financial statements, primarily in relation to fair value
calculations and impairment assessments. Refer Note 34(a) for further details
of our consideration of climate impact including our current assessment that
the impact on the consolidated financial statements is not material.
The principal accounting policies set out in these consolidated financial
statements have been consistently applied to all financial reporting periods
presented except as described below.
(a)(i) New standards, interpretations and amendments to existing standards
that have been adopted by the Group
The Group has adopted the following new International Financial Reporting
Standards (IFRSs), interpretations and amendments to existing standards, which
are effective for annual periods beginning on or after 1 January 2024.
Amendments to existing standards
- Classification of Liabilities as Current or Non-current and
Non-current Liabilities with Covenants - Amendments to IAS 1.
- Lease Liability in a Sale and Leaseback - Amendments to IFRS 16.
- Disclosures: Supplier Finance Arrangements - Amendments to IAS 7
and IFRS 7.
The Group's accounting policies have been updated to reflect these other
amendments. Management considers the implementation of the above amendments to
existing standards has had no significant impact on the Group's financial
statements.
(a)(ii) Standards, interpretations and amendments to existing standards that
are not yet effective and have not been early adopted by the Group
Certain new standards, interpretations and amendments to existing standards
have been published that are mandatory for the Group's annual accounting
periods beginning after 1 January 2024. The Group has not early adopted the
standards, amendments and interpretations described below.
IFRS 18 Presentation and Disclosure in Financial Statements (effective for
annual reporting periods beginning on or after 1 January 2027)
IFRS 18 was issued in April 2024 and will replace IAS 1 Presentation of
Financial Statements. This standard includes a number of changes to the
current presentation and disclosure requirements under IAS 1 including:
- The categorisation of income and expenses in the consolidated
income statement into five new categories: operating, investing, financing,
income taxes and discontinued operations based on an entity's main business
activities.
- The disclosure of new mandatory IFRS subtotals for operating
profit or loss, profit or loss before financing and income taxes and profit or
loss.
- The introduction of a new concept of management-defined
performance measure (MPM) with related disclosure requirements including the
disclosure of information on MPMs within a single note to the financial
statements.
- Additional guidance on whether to 'present' information in the
primary financial statements or 'disclose' in the notes and on the levels of
the aggregation permitted or disaggregation required.
Our assessment of the impact on the Group's future financial reporting from
the implementation of IFRS 18, which has not yet been endorsed by the UK
Endorsement Board, is currently ongoing. IFRS 18 will have no impact on the
Group's recognition or measurement.
IFRS 19 Subsidiaries without Public Accountability: Disclosures (effective for
annual reporting periods beginning on or after 1 January 2027)
IFRS 19 was issued in May 2024 and specifies the disclosure requirements that
allows eligible entities to apply reduced disclosures while still applying the
recognition, measurement and presentational requirements in other IFRS
accounting standards. The Company is not an eligible entity and will not be
permitted to apply IFRS 19, which has not yet been endorsed by the UK
Endorsement Board, to its Company or consolidated financial statements. The
Group's subsidiaries will, however, consider in due course if the application
of IFRS 19 would be beneficial where they qualify as eligible entities.
Other
There are no other new standards, interpretations and amendments to existing
standards that have been published that are expected to have a significant
impact on the consolidated financial statements of the Group.
(a)(iii) Critical accounting estimates and judgements in applying accounting
policies
The preparation of financial statements requires management to exercise
judgements in applying accounting policies and make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses arising
during the year. Judgements and sources of estimation uncertainty are
continually evaluated and based on historical experience and other factors,
including expectations of future events that are believed to be reasonable
under the circumstances.
The areas where judgements have the most significant effect on the amounts
recognised in the consolidated financial statements are as follows:
Financial statement area Critical judgements in applying accounting policies Related note
Defined benefit pension plans Assessment of whether the Group has an unconditional right to a refund of the Note 31
surplus.
Treatment of tax relating to the surplus.
The following changes have been made to the Group's critical judgements:
- As the Group has not made any significant acquisitions in 2024,
the identification and valuation of intangible assets arising from business
combinations, and the determination of useful lives is not considered as a
critical judgement in 2024.
There are no other changes to critical judgements in applying accounting
policies from the prior year.
The areas where assumptions and other sources of estimation uncertainty at the
end of the reporting period have a significant risk of resulting in a material
adjustment to the carrying amounts of assets and liabilities within the next
financial year are as follows:
Financial statement area Critical accounting estimates and assumptions Related note
Intangible assets Determination of the recoverable amount in relation to the impairment of Note 13
certain goodwill.
Financial instruments at fair value through profit or loss Determination of the fair value of contingent consideration Notes 34 and 36
liabilities relating to the acquisition of Tritax.
Defined benefit pension plans Determination of principal UK pension plan assumptions for mortality, discount Note 31
rate and inflation.
There are no changes to the critical accounting estimates and assumptions from
the prior year.
Further detail on critical accounting estimates and assumptions is provided in
the relevant note.
(a)(iv) Foreign currency translation
The consolidated financial statements are presented in million pounds
Sterling.
The statements of financial position of Group entities, including associates
and joint ventures accounted for using the equity method, that have a
different functional currency than the Group's presentation currency are
translated into the presentation currency at the year end exchange rate and
their income statements and cash flows are translated at average exchange
rates for the year. All resulting exchange differences arising are recognised
in other comprehensive income and the foreign currency translation reserve in
equity. On disposal of a Group entity the cumulative amount of any such
exchange differences recognised in other comprehensive income is reclassified
to profit or loss.
Foreign currency transactions are translated into the functional currency at
the exchange rate prevailing at the date of the transaction. Gains and losses
arising from such transactions and from the translation at year end exchange
rates of monetary assets and liabilities denominated in foreign currencies are
recognised in the relevant line in the consolidated income statement.
Translation differences on non-monetary items, such as equity securities held
at fair value through profit or loss, are reported as part of the fair value
gain or loss within Net gains or losses on financial instruments and other
income in the consolidated income statement. Translation differences on
financial assets and liabilities held at amortised cost are included in the
relevant line in the consolidated income statement.
(a)(v) Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and financial position, are set out in the
Strategic report. This includes details on our liquidity and capital
management and our viability statement in the Chief Financial Officer's
overview section and our principal risks in the Risk management section
including the impacts of the macroeconomic environment and global and regional
geopolitical events on these principal risks. In addition, these financial
statements include notes on the Group's subordinated liabilities (Note 30),
management of its risks including market, credit and liquidity risk (Note 34),
its contingent liabilities and commitments (Notes 38 and 39), and its capital
structure and position (Note 42).
In preparing these financial statements on a going concern basis, the
Directors have considered the following matters and have taken into account
market uncertainty:
- The Group has cash and liquid resources of £1.7bn at 31 December
2024. In addition, the Company has a revolving credit facility of £400m as
part of our contingency funding plans. This was refinanced on 5 February 2025
and is due to mature in 2028, with the option to extend for a further two
years. It remains undrawn.
- The Group's indicative regulatory Common Equity Tier 1 (CET1)
capital surplus on an IFPR basis was £875m in excess of capital requirements
at 31 December 2024. The regulatory CET1 capital surplus does not include the
value of the Group's significant listed investment in Phoenix Group Holdings
(Phoenix).
- The Group performs regular stress and scenario analysis as
described in the Annual report and accounts 2024 Viability statement. The
diverse range of management actions available meant the Group would be able to
withstand these extreme stresses.
- The Group's operational resilience processes have operated
effectively during the period including the provision of services by key
outsource providers.
Based on a review of the above factors the Directors are satisfied that the
Group and Company have and will maintain sufficient resources to enable them
to continue operating for at least 12 months from the date of approval of the
financial statements. Accordingly, the financial statements have been prepared
on a going concern basis. There were no material uncertainties relating to
this going concern conclusion.
(b) Basis of consolidation
The Group's financial statements consolidate the financial statements of the
Company and its subsidiaries.
Subsidiaries are all entities (including investment vehicles) over which the
Group has control. Control arises when the Group is exposed, or has rights, to
variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. For operating entities
this generally accompanies a shareholding of 50% or more in the entity. For
investment vehicles, including structured entities, the control assessment
also considers the removal rights of other investors and whether the Group
acts as principal or agent in assessing the link between power and variable
returns. In determining whether the Group acts as principal, and therefore
controls the entity, the removal rights of other investors and the magnitude
of the variability associated with the returns are also taken into account. As
a result, the Group often is considered to control investment vehicles in
which its shareholding is less than 50%.
Where the Group is considered to control an investment vehicle, such as an
open-ended investment company, a unit trust or a limited partnership, and it
is therefore consolidated, the interests of parties other than the Group are
assessed to determine whether they should be classified as liabilities or as
non-controlling interests. The liabilities are recognised in the third party
interest in consolidated funds line in the consolidated statement of financial
position and any movements are recognised in the consolidated income
statement. The financial liability is designated at fair value through profit
or loss (FVTPL) as it is implicitly managed on a fair value basis as its value
is directly linked to the market value of the underlying portfolio of assets.
The interests of parties other than the Group in all other types of entities
are recorded as non-controlling interests.
All intra-group transactions, balances, income and expenses are eliminated in
full.
The Group uses the acquisition method to account for acquisitions of
businesses. At the acquisition date the assets and liabilities of the business
acquired and any non-controlling interests are identified and initially
measured at fair value on the consolidated statement of financial position.
When the Group acquires or disposes of a subsidiary, the profits and losses of
the subsidiary are included from the date on which control was transferred to
the Group until the date on which it ceases, with consistent accounting
policies applied across all entities throughout.
Notes to the Group financial statements
1. Group structure
(a) Composition
The following diagram is an extract of the Group structure at 31 December
2024 and gives an overview of the composition of the Group.
Diagram removed for the purposes of this announcement. However it can be
viewed in full in the pdf document
A full list of the Company's subsidiaries is provided in Note 44.
(b) Acquisitions
(b)(i) Prior year acquisitions of subsidiaries
Healthcare fund management capabilities of Tekla Capital Management
On 27 October 2023, abrdn Inc. purchased the healthcare fund management
capabilities of Tekla Capital Management LLC (Tekla) through a purchase
agreement. Tekla's investment team transferred to the Group as part of the
agreement. The assets under management at the acquisition date were £2.3bn.
At acquisition the cash consideration was £108m and the fair value of
deferred and contingent consideration was £11m. The acquisition further
strengthens abrdn's closed-end fund business and allows the Group to draw on
Tekla's expertise in investing in the healthcare sector as it looks to build
out its offering in this area.
(c) Disposals
(c)(i) Current year disposal of subsidiaries and other operations
During 2024, the Group made three significant disposals of subsidiaries and
other operations:
- On 26 April 2024, the Group completed the sale of its
European-headquartered Private Equity business to Patria Investments.
- On 2 July 2024, the Group completed the sale of threesixty
services, its adviser support services business, to the Fintel group.
- On 13 December 2024, the Group completed the sale of 80% of the
share capital of Focus Business Solutions (FBS) to Focus Advice Technology
Holdings Limited. The sale included the operations of the Group's digital
innovation group.
The Group's European-headquartered Private Equity business and the threesixty
services were reported in the Investments and Adviser segments respectively.
DIG was reported within Other business operations and corporate costs.
Profit or (loss) on disposal of subsidiaries and other operations for the year
ended 31 December 2024 have been summarised below.
2024
£m
Disposal of European-headquartered Private Equity business 92
Disposal of threesixty services 9
Disposal of FBS (12)
Profit on disposal of subsidiaries and other operations for the year ended 89
31 December 2024
European-headquartered Private Equity business
The gain on sale, which is included in profit on disposals of subsidiaries and
other operations in the consolidated income statement for the year ended
31 December 2024 for the European-headquartered Private Equity business was
calculated as follows:
£m
Total assets of operations disposed of (29)
Total liabilities of operations disposed of 11
Net assets of operations disposed of (18)
Cash consideration (less transaction costs) and outstanding intercompany 74
balances(1,2)
Fair value of deferred/contingent consideration and retained interest(3) 36
Gain on sale before tax(4) 92
1. Included in cash consideration is £12m for additional
upfront consideration which was determined based on the net assets of the
European-headquartered Private Equity business following a number of
adjustments detailed in the sale price agreement and has now been agreed with
Patria Investments.
2. Following the completion of the sale, £5m relating to a
number of unsettled outstanding intercompany balances which previously
eliminated on consolidation are now recognised as an asset of the Group.
3. The Group has also retained certain carried interest
entitlements which have been recognised in the consolidated statement of
financial position at a fair value of £6m.
4. The provisional gain on sale reported in the Group's HY24
results was £88m. The Group has now agreed with Patria Investments an
additional £4m payment comprising of a £2m uplift in the additional upfront
consideration and a £2m payment of additional unsettled outstanding balances
which were previously intercompany balances.
Prior to the completion of the sale, the European-headquartered Private Equity
business was classified as an operation held for sale (refer Note 21).
threesixty services
The gain on sale, which is included in profit on disposals of subsidiaries and
other operations in the consolidated income statement for the year ended
31 December 2024 for threesixty services was calculated as follows:
£m
Total assets of operations disposed of (7)
Total liabilities of operations disposed of 2
Net assets of operations disposed of (5)
Cash consideration (less transaction costs) 14
Gain on sale before tax 9
FBS
The loss on sale, which is included in profit on disposals of subsidiaries and
other operations in the consolidated income statement for the year ended 31
December 2024 for FBS was calculated as follows:
£m
Total assets of operations disposed of (14)
Total liabilities of operations disposed of 2
Net assets of operations disposed of (12)
Cash consideration (less transaction costs) -
Fair value of retained holding(1) -
Loss on sale before tax (12)
1. The Group's 20% retained holding in FBS has been recognised
as an investment in an associate accounted for using the equity method at an
initial fair value of £nil.
(c)(ii) Current year disposal of joint ventures
Virgin Money Unit Trust Managers (Virgin Money UTM)
Profit on disposal of interests in joint ventures for the year ended
31 December 2024 of £11m relates to the sale of the Group's interest in
Virgin Money UTM to its joint venture partner, Clydesdale Bank, on 2 April
2024 for a cash consideration of £20m. Prior to the sale, the Group's
interest in Virgin Money UTM was classified as held for sale and had a
carrying value of £9m (refer Note 21). The interest in Virgin Money UTM did
not form part of the Group's reportable segments.
(c)(iii) Prior year disposal of subsidiaries and other operations
During 2023, the Group made two material disposals of subsidiaries and other
operations:
- On 1 September 2023, the Group completed the sale of abrdn Capital
Limited (aCL), its discretionary fund management business, to LGT UK Holdings
Limited.
- On 2 October 2023, the Group completed the sale of its US Private
Equity and Venture Capital capabilities to HighVista Strategies LLC.
aCL and the Group's US Private Equity and Venture Capital capabilities were
reported in the ii and Investments segments respectively.
Other disposals included the sale of abrdn Australia Ltd to Melbourne
Securities Corporation Limited on 1 July 2023. The disposal is not considered
material to the Group.
Profit on disposal of subsidiaries and other operations for the year ended
31 December 2023 have been summarised below.
2023
£m
Disposal of aCL 58
Disposal of US Private Equity and Venture Capital capabilities 22
Other disposals (1)
Profit on disposal of subsidiaries and other operations for the year ended 79
31 December 2023
On disposal, a net gain of £1m was recycled from the translation reserve and
was included in determining the profit on disposal of subsidiaries and other
operations for the year ended 31 December 2023.
2. Segmental analysis
The Group's reportable segments have been identified in accordance with the
way in which the Group is structured and managed. IFRS 8 Operating Segments
requires that the information presented in the financial statements is based
on information provided to the 'Chief Operating Decision Maker'.
(a) Basis of segmentation
Reportable segments
interactive investor (ii)
ii, our direct investing platform and our financial planning business, abrdn
Financial Planning and Advice. It also included the Group's discretionary fund
management business until the completion of the sale of aCL on 1 September
2023. Refer Note 1 (c)(iii) for further details.
Adviser
Our UK financial adviser business which provides platform services to wealth
managers and advisers along with the Group's Managed Portfolio Service (MPS)
business. It also included threesixty services until its sale on 2 July 2024.
Refer Note 1(c)(i) for further details.
Investments
Our global asset management business which provides investment solutions for
Institutional, Retail Wealth and Insurance Partners clients.
In addition to the Group's reportable segments above, the analysis of adjusted
profit in Section b(i) below also reports the following:
Other business operations and corporate costs (Other)
Other comprises Finimize along with certain corporate costs. It also included
the Group's digital innovation group until the partial sale of FBS on 13
December 2024. Refer Note 1(c)(i) for further details.
These are all reported to the level of adjusted operating profit.
(b) Reportable segments - adjusted profit and revenue information
(b)(i) Analysis of adjusted profit
Adjusted operating profit is presented by reportable segment in the table
below.
ii Adviser Investments Other Total
31 December 2024 Notes £m £m £m £m £m
Adjusted net operating revenue(1) 278 237 797 9 1,321
Adjusted operating expenses (162) (111) (736) (57) (1,066)
Adjusted operating profit 116 126 61 (48) 255
Adjusted net financing costs and investment return 99
Adjusted profit before tax 354
Tax on adjusted profit (70)
Adjusted profit after tax 284
Adjusted for the following items
Restructuring and corporate transaction expenses 5 (100)
Amortisation and impairment of intangible assets acquired in business 5 (129)
combinations
and through the purchase of customer contracts
Change in fair value of significant listed investments 4 (27)
Profit on disposal of subsidiaries and other operations 1 89
Profit on disposal of interests in joint ventures 11
Dividends from significant listed investments 4 56
Share of profit or loss from associates and joint ventures 14 24
Other 11 (27)
Total adjusting items including results of associates and joint ventures (103)
Tax on adjusting items 67
Profit attributable to other equity holders (11)
Profit for the year attributable to equity shareholders of abrdn plc 237
Profit attributable to other equity holders 11
Profit for the year 248
1. The measure of segmental revenue has been renamed from net operating
revenue to adjusted net operating revenue. See Note 3(c) for a reconciliation
of these revenue measures.
Adjusted net operating revenue is reported as the measure of revenue in the
analysis of adjusted operating profit and relates to revenues generated from
external customers.
In the year ended 31 December 2024, transactions with one external customer
amounted to more than 10% of adjusted net operating revenue (2023: one). This
adjusted net operating revenue(1) of £151m (2023: £150m) is included in the
Investments and Adviser segments.
Adjusted operating expenses includes depreciation and amortisation of £31m
(2023: £33m); £24m (2023: £26m) for the Investments segment; £5m (2023:
£5m) for the ii segment; and £2m (2023: £2m) for the Adviser segment.
Interest income, interest expense and income tax expense are not included in
adjusted operation profit and are not analysed by segment in the information
provided to the 'Chief Operating Decision Maker'.
Assets and liabilities by segment are not required to be presented as such
information is not presented on a regular basis to the 'Chief Operating
Decision Maker'.
ii Adviser Investments Other Total
31 December 2023 Notes £m £m £m £m £m
Adjusted net operating revenue(1) 287 224 878 9 1,398
Adjusted operating expenses (173) (106) (828) (42) (1,149)
Adjusted operating profit 114 118 50 (33) 249
Adjusted net financing costs and investment return 81
Adjusted profit before tax 330
Tax on adjusted profit (50)
Adjusted profit after tax 280
Adjusted for the following items
Restructuring and corporate transaction expenses 5 (152)
Amortisation and impairment of intangible assets acquired in business 5 (189)
combinations and through the purchase of customer contracts
Profit on disposal of subsidiaries and other operations 1 79
Change in fair value of significant listed investments 4 (178)
Dividends from significant listed investments 4 64
Share of profit or loss from associates and joint ventures 14 1
Reversal of impairment of interests in joint ventures 14 2
Other 11 37
Total adjusting items including results of associates and joint ventures (336)
Tax on adjusting items 68
Profit attributable to other equity holders (11)
Profit for the year attributable to equity shareholders of abrdn plc 1
Profit attributable to other equity holders 11
Profit for the year 12
1. The measure of segmental revenue has been renamed from net
operating revenue to adjusted net operating revenue. See Note 3(c) for a
reconciliation of these revenue measures.
(b)(ii) Reconciliation to the consolidated income statement
Adjusted net operating revenue
The reconciliation of adjusted net operating revenue, as presented in the
analysis of Group adjusted profit by segment to revenue from contracts with
customers, as presented in the consolidated income statement, is included in
Note 3.
Adjusted operating expenses
The following table provides a reconciliation of adjusted operating expenses,
as presented in the analysis of Group adjusted profit by segment, to total
administrative and other expenses, as presented in the consolidated income
statement.
2024 2023
£m £m
Total administrative and other expenses as presented in the consolidated (1,313) (1,463)
income statement
Restructuring and corporate transaction expenses included in adjusting items 100 152
Amortisation and impairment of intangible assets acquired in business 129 189
combinations and through the purchase of customer contracts included in
adjusting items
Administrative and other expenses relating to the unit linked business - 1
Other differences 18 (28)
Adjusted operating expenses as presented in the analysis of Group adjusted (1,066) (1,149)
profit by segment
Other differences relate to items presented in adjusted net financing costs
and investment return for segment reporting (see commentary under table below)
and other items classified as adjusting items (refer Note 11).
Adjusted net financing costs and investment return
The following table provides a reconciliation of adjusted net financing costs
and investment return, as presented in the analysis of Group adjusted profit
by segment, to Net gains or losses on financial instruments and other income,
as presented in the consolidated income statement.
2024 2023
£m £m
Net gains or losses on financial instruments and other income as presented in 160 2
the consolidated income statement
Finance costs separately disclosed in the consolidated income statement (25) (25)
Change in fair value of significant listed investments included in adjusting 27 178
items
Dividends from significant listed investments included in adjusting items (56) (64)
Net gains or losses on financial instruments and other income relating to the 1 (4)
unit linked business
Other differences (8) (6)
Adjusted net financing costs and investment return as presented in the 99 81
analysis of Group adjusted profit by segment
Other differences primarily relate to amounts presented in a different line
item of the consolidated income statement and other items classified as
adjusting items. This includes the net interest credit relating to the staff
pension schemes of £22m (2023: £34m) which is presented in total
administrative and other expenses in the consolidated income statement and in
adjusted net financing costs and investment return in the analysis of Group
adjusted profit by segment.
(c) Total adjusted net operating revenue by geographical location
Total adjusted net operating revenue(1) split by geographical location is as
follows:
2024 2023
£m £m
UK 985 1,037
Europe, Middle East and Africa 96 107
Asia Pacific 116 137
Americas 124 117
Total 1,321 1,398
1. Adjusted net operating revenue is allocated based on legal
entity revenue recognition.
(d) Non-current non-financial assets by geographical location
2024 2023
£m £m
UK 1,462 1,565
Europe, Middle East and Africa 10 33
Asia Pacific 10 13
Americas 127 130
Total 1,609 1,741
Non-current non-financial assets for this purpose consist of property, plant
and equipment and intangible assets.
3. Net operating revenue
Net operating revenue represents revenue from contracts with customers after
deduction of cost of sales.
Revenue from contracts with customers is recognised as services are provided
i.e. as the performance obligation is satisfied. Performance fees and carried
interest are only recognised once it is highly probable that a significant
reversal will not occur in future periods. Where revenue is received in
advance (front-end fees), this income is deferred and recognised as a deferred
income liability (refer Note 32) and released to the consolidated income
statement over the period services are provided.
Where revenue received relates to performance obligations whose fulfilment
involves another external party, for example fund accounting or custodian
services, the Group assesses if it is acting as a principal with full
responsibility for the performance obligation and control over its fulfilment
or solely responsible for arranging for the third party to fulfil the
performance obligation i.e. acting as an agent. Where the Group is acting as
an agent, only its share of the revenue for the arrangement of the relevant
service is recognised within revenue from contracts from customers, therefore
the revenue is recognised net of the revenue passed on to the third party.
This is not currently considered a significant judgement for the Group.
Commission and other fee expenses which relate directly to revenue are
presented as cost of sales. These expenses include ongoing commission expenses
payable to financial institutions, investment platform providers and financial
advisers that distribute the Group's products which are generally based on an
agreed percentage of AUM and are recognised in the consolidated income
statement as the service is received. Other cost of sales also includes
amounts payable to employees and others relating to carried interest and
performance fee revenue.
(a) Revenue from contracts with customers
The following table provides a breakdown of total revenue from contracts with
customers.
2024 2023
£m £m
ii
Fee income - Advice and Discretionary 25 57
Account fees 52 54
Trading transactions 70 48
Treasury income 138 134
Revenue from contracts with customers for the ii segment 285 293
Adviser
Platform charges 196 184
Treasury income 33 31
Other revenue from contracts with customers(1) 10 11
Revenue from contracts with customers for the Adviser segment 239 226
Investments
Management fee income - Institutional and Retail Wealth(2) 679 769
Management fee income - Insurance Partners(2) 116 132
Performance fees and carried interest 20 18
Other revenue from contracts with customers 22 27
Revenue from contracts with customers for the Investments segment 837 946
Revenue from contracts with customers for Other 9 9
Total revenue from contracts with customers 1,370 1,474
1. Other revenue from contracts with customers for the Adviser
segment includes £5m (2023: £4m) in relation to discretionary fund
management fee income.
2. In addition to revenues earned as a percentage of AUM,
management fee income includes certain other revenues not based on a
percentage of AUM.
ii
Through its subsidiary Interactive Investor Services Limited (ii), the Group
offers a subscription-based trading and direct investing platform. The
services that ii offers are provided on both a point in time and an over time
basis.
Customers pay monthly account fees as part of ii's subscription model. Account
fees are invoiced monthly and are payable immediately from the customer's
account, with receivables recognised if there are insufficient funds
available. The account fees cover the performance obligation to provide the
customer with access to the platform and custody services. For certain
subscription levels, the account fee also entitles the customer to receive
trading credits which can be redeemed against future trades. For these
subscription levels, the account fees also cover ii's performance obligation
to perform these future trades. In accordance with IFRS 15, the account fees
are allocated to the two performance obligations. Access to the platform and
custody services is provided over time and the account fees revenue allocated
to this performance obligation is recognised over the calendar month as the
customer receives the benefit of these services. Trading credits need to be
used by the customer within 31 days of the credit arising, therefore the
revenue is recognised over the calendar month as a reasonable approximation of
when the performance obligation is satisfied at a point in time within the
month.
In addition, ii performs additional trades and foreign exchange transactions
for its customers. These are performed at a point in time with the revenue
recognised at the trade date of the transaction. Trading fees for transactions
not covered by trading credits are generally charged on a flat-fee basis with
larger international share trades charged based on a percentage of the trade
value. These are added to the cost of purchasing shares or deducted from the
proceeds from the sale of shares with receivables recognised for unsettled
trades. For foreign exchange trades, ii receives a margin (varying depending
on the size of the transaction) via a third party in the month following the
transaction, with receivables recognised prior to the payment.
In addition, ii is entitled to receive treasury income in relation to its
performance obligations to the customer. Treasury income is the interest
earned on cash balances less the interest paid to customers based on the
client money balances held with third party banks and by reference to the
applicable interest rates. Treasury income is recognised on an over time basis
with accrued income recognised for unpaid interest.
Through its subsidiary abrdn Financial Planning and Advice Limited, the Group
also offers financial planning services. Financial planning is either provided
on a one-off basis or on an ongoing basis. The performance obligation for
one-off advice is performed at a point in time with the revenue recognised
when the advice is provided. The performance obligation for ongoing financial
planning is performed over time with the revenue recognised as the obligation
is performed. The Group generally receives ongoing financial planning fees
based on the percentage of the assets under advice. One-off financial planning
fees are invoiced to the customer following delivery of the advice. Ongoing
financial planning fees are invoiced to the customer or a designated financial
provider either monthly or quarterly. Receivables are recognised for unpaid
invoices. The payment terms for invoiced revenue vary but are typically 30
days from receipt of invoice. Accrued income is recognised to account for
income earned but not yet invoiced which is not dependent on any future
performance.
Adviser
Through a number of its subsidiaries, the Group offers customers access to
fund platforms. The platforms give customers the ongoing functionality to
manage and administer their investments. This performance obligation is
performed over time with the revenue recognised as the obligation is
performed. Customers pay a platform charge which is generally calculated as a
percentage of their assets. The percentage varies depending on the level of
assets on the specific platform. The main platform charges are calculated
either daily or monthly and are collected and recognised monthly. The charges
are collected directly from assets on the platform. There are no significant
payment terms.
In addition, Adviser receives treasury income for providing management and
administration of cash held in platform cash accounts. The performance
obligation for cash management and administration is performed over time with
the revenue recognised as the obligation is performed. The customer receives
interest on their cash balances after deduction of a cash management
administration charge which is generally calculated as a percentage of their
cash held in relevant accounts. The percentage varies depending on the
interest received from the banks used to provide the cash accounts. There are
no significant payment terms.
Through its subsidiary abrdn Portfolio Solutions Limited, the Group offers
discretionary fund management services via its Managed Portfolio Service. The
Managed Portfolio Service business has been reported in Adviser since its
transfer from aCL in May 2023. aCL, which was the Group's primary
discretionary fund management business, was reported in the ii segment until
the completion of its sale on 1 September 2023 (refer Note 1(c)(iii) for
further details).
The performance obligation for discretionary fund management services is
performed over time with the revenue recognised as the obligation is
performed. The Group generally receives discretionary fund management services
fees based on the percentage of the assets under management. The percentage
varies depending on the model selected. Discretionary fund management services
fees are deducted from assets. Deducted fees are generally calculated and
recognised daily and collected on a monthly or quarterly basis.
Investments
Through a number of its subsidiaries, the Group provides asset management
services to its customers. This performance obligation is performed over time
with the revenue recognised as the obligation is performed. The Group
generally receives asset management fees based on the percentage of the assets
under management. The percentage varies depending on the level and nature of
assets under management. Asset management fees are either deducted from assets
or invoiced. Deducted fees are generally calculated, recognised and collected
on a daily basis. Some larger clients separately receive rebates on these
fees. Other asset management fees are invoiced to the customer either monthly
or quarterly with receivables recognised for unpaid invoices. The payment
terms for invoiced revenue vary but are typically 30 days from receipt of
invoice. Accrued income is recognised to account for income earned but not yet
invoiced which is not dependent on any future performance.
There is also some use of performance fees and carried interest arrangements.
Performance fees and carried interest are earned from some investment mandates
when contractually agreed performance levels are exceeded within specified
performance measurement periods. Performance fees and carried interest are
only recognised once it is highly probable that a significant reversal will
not occur in future periods. Given the unpredictability of future performance,
the risk of a significant reversal occurring will typically only be considered
low enough to make recognition appropriate upon the crystallisation event
occurring.
(b) Cost of sales
The following table provides a breakdown of total cost of sales.
2024 2023
£m £m
Commission expenses 48 64
Other cost of sales 17 12
Total cost of sales 65 76
Other cost of sales includes amounts payable to employees and others relating
to carried interest and performance fee revenue. Cost of sales for each of the
Group's reportable segments is disclosed in Section (c) below.
(c) Reconciliation of revenue from contracts with customers to adjusted net
operating revenue as presented in the analysis of adjusted operating profit
The following table provides a reconciliation of revenue from contracts with
customers as presented in the consolidated income statement to adjusted net
operating revenue as presented in the analysis of adjusted operating profit
(see Note 2(b) for each of the Group's reportable segments).
ii Adviser Investments Other Total
2024 2023 2024 2023 2024 2023 2024 2023 2024 2023
£m £m £m £m £m £m £m £m £m £m
Revenue from contracts with customers 285 293 239 226 837 946 9 9 1,370 1,474
Cost of sales (7) (6) (2) (2) (56) (68) - - (65) (76)
Net operating revenue as presented in the consolidated income statement 278 287 237 224 781 878 9 9 1,305 1,398
Other differences - - - - 16 - - - 16 -
Adjusted net operating revenue as presented in the analysis of Group adjusted 278 287 237 224 797 878 9 9 1,321 1,398
profit by segment
In the current year, net operating revenue includes a reduction related to
revenue recognised in previous years. As this is not material, it has been
adjusted for prospectively rather than restating comparative amounts. Other
differences reflect the effect of removing this adjustment as it does not
relate to revenue recognised in the current year.
4. Net gains or losses on financial instruments and other income
Gains and losses resulting from changes in both market value and foreign
exchange on investments classified as fair value through profit or loss are
recognised in the consolidated income statement in the period in which they
occur. The gains and losses include investment income received such as
interest payments and dividend income. Dividend income is recognised when the
right to receive payment is established.
Interest income on financial instruments measured at amortised cost is
separately recognised in the consolidated income statement using the effective
interest rate method. The effective interest rate method allocates interest
and other finance costs at a constant rate over the expected life of the
financial instrument, or where appropriate a shorter period, by using as the
interest rate the rate that exactly discounts the future cash receipts over
the expected life to the net carrying value of the instrument.
Other income includes income related to vacant property and fair value
movements in contingent consideration.
2024 2023
Notes £m £m
Fair value movements and dividend income on significant listed investments
Fair value movements on significant listed investments (other than dividend (27) (178)
income)
Dividend income from significant listed investments 56 64
Total fair value movements and dividend income on significant listed 29 (114)
investments
Non-unit linked business - excluding significant listed investments
Net gains or losses on financial instruments at fair value through profit or 26 6
loss
Interest and similar income from financial instruments at amortised cost 87 76
Foreign exchange gains or losses on financial instruments at amortised cost - (7)
Other income 19 37
Net gains or losses on financial instruments and other income - non-unit 132 112
linked business - excluding significant listed investments
Unit linked business
Net gains or losses on financial instruments at fair value through profit or
loss
Net gains or losses on financial assets at fair value through profit or loss 56 69
Change in non-participating investment contract financial liabilities (58) (65)
Change in liability for third party interests in consolidated funds - (1)
Total net gains or losses on financial instruments at fair value through (2) 3
profit or loss
Interest and similar income from financial instruments at amortised cost 1 1
Net gains or losses on financial instruments and other income - unit linked 23 (1) 4
business(1)
Total other net gains or losses on financial instruments and other income 131 116
Total net gains or losses on financial instruments and other income 160 2
1. In addition to the Net gains or losses on financial
instruments and other income - unit linked business of £(1)m (2023: £4m),
there are administrative expenses of £nil (2023: £(1)m) and a policyholder
tax credit of £1m (2023: tax expense of £3m) relating to unit linked
business for the account of policyholders. The result attributable to unit
linked business for the year is £nil (2023: £nil). Refer Note 23 for further
details.
Fair value movements on significant listed investments (other than dividend
income) of losses of £27m for the year ended 31 December 2024 related to the
Group's investment in Phoenix. Fair value movements on significant listed
investments (other than dividend income) of losses of £178m for the year
ended 31 December 2023 comprised losses of £77m relating to Phoenix, losses
of £96m relating to HDFC Asset Management and losses of £5m relating to HDFC
Life.
Dividend income from significant listed investments of £56m for the year
ended 31 December 2024 related to the Group's investment in Phoenix. Dividend
income from significant listed investments of £64m for the year ended
31 December 2023 comprised £54m relating to Phoenix and £10m relating to
HDFC Asset Management.
5. Administrative and other expenses
2024 2023
Notes £m £m
Restructuring and corporate transaction expenses 8 100 152
Impairment of intangibles acquired in business combinations and through the
purchase of customer contracts
Impairment of intangibles acquired in business combinations 13 9 63
Total impairment of intangibles acquired in business combinations and through 9 63
the purchase of customer contracts
Amortisation of intangibles acquired in business combinations and through the
purchase of customer contracts
Amortisation of intangibles acquired in business combinations 13 109 115
Amortisation of intangibles acquired through the purchase of customer 13 11 11
contracts
Total amortisation of intangibles acquired in business combinations and 120 126
through the purchase of customer contracts
Staff costs and other employee-related costs 6 510 529
Other administrative expenses(1) 574 593
Total administrative and other expenses(2) 1,313 1,463
1. Other administrative expenses includes interest expense of
£3m (2023: £4m). In addition, interest expense of £19m (2023: £19m) was
incurred in respect of subordinated liabilities and the related cash flow
hedge (refer Note 18) and interest expense of £6m (2023: £6m) in respect of
lease liabilities (refer Note 16) which are included in Finance costs in the
consolidated income statement.
2. Total administrative and other expenses includes £nil (2023:
£1m) relating to unit linked business. Refer Note 23 for further details.
6. Staff costs and other employee-related costs
2024 2023
Notes £m £m
The aggregate remuneration payable in respect of employees:
Wages and salaries 411 443
Social security costs 47 51
Pension costs
Defined benefit plans (22) (39)
Defined contribution plans 48 55
Employee share-based payments and deferred fund awards 40 26 19
Total staff costs and other employee-related costs 510 529
In addition, wages and salaries of £5m (2023: £18m), social security costs
of £1m (2023: £4m), pension costs - defined benefit plans of £nil (2023:
£nil), pension costs - defined contribution plans of less than £1m (2023:
less than £1m), employee share-based payments and deferred fund awards
relating to transformation, leavers and corporate transactions of £10m (2023:
£12m) and termination benefits of £19m (2023: £44m) have been included in
restructuring and corporate transaction expenses. Refer Note 8. A further £8m
(2023: £4m) of expenses are included in other cost of sales in relation to
amounts payable to employees and former employees relating to carried interest
and performance fee revenue. Refer Note 3.
The following table provides an analysis of the average number of staff
employed by the Group during the year.
2024 2023
ii 1,165 1,138
Adviser 507 536
Investments 1,933 2,132
IT and support functions 1,014 1,252
Total employees 4,619 5,058
Information in respect of Directors' remuneration is provided in the
Directors' remuneration report on pages 130 to 151. In addition to the total
remuneration disclosed as paid to the Directors for the prior year are amounts
paid to those Directors who stepped down from the Board during 2023 being
£329k to Stephanie Bruce and £33k to Brian McBride. There were also payments
totalling £644k to Stephanie Bruce as a past director in 2023. This is as
disclosed in the 2023 Directors' remuneration report.
7. Auditors' remuneration
The following table shows the auditors' remuneration during the year.
2024 2023
£m £m
Fees payable to the Company's auditors for the audit of the Company's 2.2 2.1
individual and consolidated financial statements
Fees payable to the Company's auditors for other services
The audit of the Company's consolidated subsidiaries pursuant to legislation 5.3 5.1
Audit related assurance services 2.7 2.8
Total audit and audit related assurance fees 10.2 10.0
Other assurance services 0.9 1.0
Other non-audit fee services - -
Total non-audit fees 0.9 1.0
Total auditors' remuneration 11.1 11.0
Auditors' remuneration disclosed above excludes audit and non-audit fees
payable to the Group's principal auditor by Group managed funds which are not
controlled by the Group, and therefore not consolidated in the Group's
financial statements.
During the year ended 31 December 2024, £nil audit fees were payable in
respect of defined benefit plans to the Group's principal auditor (2023:
£nil).
For more information on non-audit services, refer to the Audit Committee
report in the Corporate governance statement.
8. Restructuring and corporate transaction expenses
Total restructuring and corporate transaction expenses during the year were
£100m (2023: £152m). Restructuring expenses of £88m (2023: £121m) mainly
consisted of costs to effect our cost transformation programme including
related severance expenses, and platform transformation expenses.
Restructuring expenses in 2023 were partly offset by a £32m release of the
provision for separation costs. Refer Note 33 for further details. Corporate
transaction expenses were £12m (2023: £31m) and include deal costs relating
to acquisitions for the year ended 31 December 2024 of £nil (2023: £2m).
Further information on restructuring and corporate transaction expenses can be
found in Section 1.1 of Supplementary information.
9. Taxation
The Group's tax expense comprises both current tax and deferred tax expense.
Current tax is the expected tax payable on taxable profit for the year and is
calculated using tax rates and laws substantively enacted at the balance sheet
date.
A deferred tax asset represents a tax deduction that is expected to arise in a
future period. It is only recognised to the extent that it is probable that
the tax deduction will be capable of being offset against taxable profits and
gains in future periods. A deferred tax liability represents taxes which will
become payable in a future period as a result of a current or prior year
transaction. Where local tax law allows, deferred tax assets and liabilities
are netted off on the consolidated statement of financial position. The tax
rates used to determine deferred tax are those enacted or substantively
enacted at the balance sheet date that are expected to apply when the deferred
tax asset or liability are realised. Any tax consequences of distributions on
other equity instruments are credited to the statement in which the profit
distributed originally arose.
Deferred tax is recognised on temporary differences arising from investments
in subsidiaries and associates unless the timing of the reversal is in our
control and it is expected that the temporary difference will not reverse in
the foreseeable future.
The Group applies the exception to recognising and disclosing information
about deferred tax assets and liabilities related to Pillar Two income taxes.
Current tax and deferred tax are recognised in the consolidated income
statement except when it relates to items recognised in other comprehensive
income or directly in equity, in which case it is credited or charged to other
comprehensive income or directly to equity respectively.
The Group operates in a number of territories and during the normal course of
business will be subject to audit or enquiry by local tax authorities. At any
point in time the Group will also be engaged in commercial transactions the
tax outcome of which may be uncertain due to their complexity or uncertain
application of tax law. Tax provisions, therefore, are subjective by their
nature and require management judgement based on the interpretation of
legislation, management experience and professional advice. As such, this may
result in the Group recognising provisions or disclosing contingent
liabilities for uncertain tax positions. Management will provide for uncertain
tax positions where they judge that it is probable there will be a future
outflow of economic benefits from the Group to settle the obligation. Where a
future outflow of economic benefits is judged as less than probable but more
than remote, a contingent liability will be disclosed, where material. In
assessing uncertain tax positions management considers each issue on its own
merits using their judgement as to the estimate of the most likely outcome.
When making estimates, management considers all available evidence. This may
include forecasts of future profitability, the frequency and severity of any
losses, and statutory carry forward and carry back provisions as well as
management experience of tax attributes expiring without use. Where the final
outcome differs from the amount provided this difference will impact the tax
charge in future periods. Management re-assesses provisions at each reporting
date based upon latest available information.
(a) Tax charge in the consolidated income statement
(a)(i) Current year tax expense
2024 2023
£m £m
Current tax:
UK 11 17
Pillar Two Top-up tax 1 -
Overseas 7 51
Adjustment to tax expense in respect of prior years (4) (2)
Total current tax 15 66
Deferred tax:
Deferred tax credit arising from the current year (5) (69)
Adjustment to deferred tax in respect of prior years (7) (15)
Total deferred tax (12) (84)
Total tax expense/(credit)(1) 3 (18)
1. The tax expense of £3m (2023: tax credit of £18m) includes
a tax credit of £1m (2023: tax expense of £3m) relating to unit linked
business. Refer Note 23 for further details.
In 2024 unrecognised tax losses from previous years were used to reduce the
current tax expense by £2m (2023: £2m).
Current tax recoverable and current tax liabilities at 31 December 2024 were
£23m (2023: £10m) and £3m (2023: £6m) respectively. In addition current
tax recoverable and current tax liabilities in relation to unit linked
business were £nil (2023: £nil) and £nil (2023: £nil) respectively.
Current tax assets and liabilities at 31 December 2024 are expected to be
recoverable or payable in less than 12 months (2023: less than 12 months).
(a)(ii) Reconciliation of tax expense
2024 2023
£m £m
Profit/(loss) before tax 251 (6)
Tax at 25% (2023: 23.5%) 63 (1)
Remeasurement of deferred tax due to rate changes 1 (5)
Permanent differences 4 1
Non-taxable dividends from significant listed investments (14) (13)
Non-taxable fair value movements on significant listed investments 7 18
Tax effect of accounting for share of profit or loss from associates and joint (6) -
ventures
Tax effect of distributions on other equity instruments (3) (3)
Impairment losses on goodwill 1 15
Differences in overseas tax rates (2) 4
Adjustment to current tax expense in respect of prior years (4) (2)
Recognition of previously unrecognised deferred tax credit (9) (1)
Deferred tax not recognised 1 2
Adjustment to deferred tax expense in respect of prior years (7) (15)
Non-taxable profit or loss on sale of subsidiaries, associates and significant (26) (18)
listed investments
Other (3) -
Total tax expense/(credit) for the year 3 (18)
The standard UK Corporation Tax rate for the accounting period is 25%. The
rate of UK Corporation Tax increased from 19% to 25% with effect from 1 April
2023.
The accounting for certain items in the consolidated income statement results
in certain reconciling items in the table above, the values of which vary from
year to year depending upon the underlying accounting values.
Details of significant reconciling items are as follows:
- Profits on the sale of our European-headquartered Private Equity
business not being subject to tax
- Dividend income and fair value movements from our investments in
Phoenix not being subject to tax.
- Overseas profits reducing the unrecognised deferred tax asset.
- Prior year adjustments reflecting the non taxable release of
accounting provisions.
(b) Tax relating to components of other comprehensive income
Tax relating to components of other comprehensive income is as follows:
2024 2023
£m £m
Tax relating to fair value gains and losses recognised on cash flow hedges 4 (10)
Tax relating to cash flow hedge gains and losses transferred to consolidated (4) 7
income statement
Equity holder tax effect relating to items that may be reclassified - (3)
subsequently to profit or loss
Tax relating to other comprehensive income - (3)
All of the amounts presented above are in respect of equity holders of abrdn
plc.
(c) Tax relating to items taken directly to equity
2024 2023
£m £m
Tax relating to share-based payments 1 -
Tax relating to items taken directly to equity 1 -
(d) Deferred tax assets and liabilities
(d)(i) Analysis of recognised deferred tax
2024 2023
£m £m
Deferred tax assets comprise:
Losses carried forward 167 160
Depreciable assets 24 35
Employee benefits 14 20
Provisions and other temporary timing differences 7 7
Gross deferred tax assets 212 222
Less: Offset against deferred tax liabilities (15) (7)
Deferred tax assets 197 215
Deferred tax liabilities comprise:
Unrealised gains on investments 6 4
Deferred tax on intangible assets acquired through business combinations 101 124
Other 9 8
Gross deferred tax liabilities 116 136
Less: Offset against deferred tax assets (15) (7)
Deferred tax liabilities 101 129
Net deferred tax asset at 31 December 96 86
A deferred tax asset of £167m (2023: £160m) has been recognised by the Group
in respect of losses of the parent company and various subsidiaries. The
increase reflects the conversion of part of the deferred tax asset held on
depreciable assets to recognised losses carried forward. This increase was
partially offset by the utilisation of brought forward losses against taxable
profits in the year.
Deferred tax assets are recognised to the extent that it is probable that the
losses will be capable of being offset against taxable profits and gains in
future periods. The value attributed to them takes into account the certainty
or otherwise of their recoverability. Their recoverability is measured against
the reversal of deferred tax liabilities and anticipated taxable profits and
gains based on business plans. The deferred tax asset recognised on losses
relates to UK entities where there is currently no restriction on the period
of time over which losses can be utilised. Recognition of this deferred tax
asset requires that management must consider if it is more likely than not
that this asset will be recoverable in future periods against future profits
arising in the UK. In making this assessment management have considered future
operating plans and forecast taxable profits and are satisfied that forecast
taxable profits will be sufficient to enable recovery of the UK tax losses.
The financial forecasts considered were consistent with those used for the
assessment of the Group's intangible assets (refer Note 13). Based upon the
level of forecast taxable profits management do not consider there is
significant risk of a material adjustment to the carrying amount of the
deferred tax asset on UK tax losses within the next financial year. Management
expect the deferred tax asset to be utilised over a period of between four and
six years.
Deferred tax assets of £180m (2023: £215m) and liabilities of £80m (2023:
£129m) are expected to be recovered or settled after more than 12 months.
(d)(ii) Movements in deferred tax assets and liabilities
Losses carried forward Depreciable assets Employee benefits Provisions and other temporary timing differences Unrealised gains on investments Deferred tax on intangible assets acquired through business combinations Other Net deferred tax asset
£m £m £m £m £m £m £m £m
At 1 January 2024 160 35 20 7 (4) (124) (8) 86
Credit or (charge) directly to equity - - (1) - - - - (1)
Amounts (expensed) in/credited to the consolidated income statement 8 (11) (5) 1 (3) 23 (1) 12
Tax on cash flow hedge - - - - - - - -
Other (1) - - (1) 1 - - (1)
At 31 December 2024 167 24 14 7 (6) (101) (9) 96
Losses carried forward Depreciable assets Employee benefits Provisions and other temporary timing differences Unrealised gains on investments Deferred tax on intangible assets acquired through business combinations Other Net deferred tax asset
£m £m £m £m £m £m £m £m
At 1 January 2023 170 33 26 5 (60) (162) (11) 1
Amounts (expensed) in/credited to the consolidated income statement (10) 2 (6) 2 56 38 2 84
Tax on cash flow hedge - - - - - - 3 3
Other - - - - - - (2) (2)
At 31 December 2023 160 35 20 7 (4) (124) (8) 86
(e) Unrecognised deferred tax
Due to uncertainty regarding recoverability, deferred tax assets have not been
recognised in respect of the following:
- Cumulative losses carried forward of £112m (2023: £91m) in the
UK and losses and other temporary differences of £343m (2023: £360m) in the
US, losses of £7m in China (2023: £10m), losses of £8m in Japan (2023:
£10m) and losses of £10m (2023: £9m) in other overseas jurisdictions.
Of these unrecognised deferred tax assets, certain losses have expiry dates as
follows:
- US losses of £136m (2023: £140m) with expiry dates between
2035-2037.
- Other overseas losses of £19m with expiry dates between 2025-2034
(2023: £21m with expiry dates between 2024-2033).
The following table provides an analysis of the losses with expiry dates for
unrecognised deferred tax assets.
2024 2023
£m £m
Less than 1 year 1 4
Greater than or equal to 1 year and less than 5 years 14 9
Greater than or equal to 5 years and less than 10 years 4 8
Greater than 10 years 136 140
Total losses with expiry dates 155 161
There is an unrecognised deferred tax asset of £6m (2023: liability of £18m)
relating to temporary timing differences associated with investments in
subsidiaries, branches and associates and interests in joint arrangements.
10. Earnings per share
Basic earnings per share is calculated by dividing profit or loss attributable
to ordinary equity holders by the weighted average number of ordinary shares
in issue during the period excluding shares owned by the employee trusts that
have not vested unconditionally to employees.
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares in issue during the period to assume the conversion
of all dilutive potential ordinary shares, such as share options granted to
employees. Details of the share options and awards issued under the Group's
employee plans are provided in Note 40.
Adjusted earnings per share is calculated on adjusted profit after tax
attributable to ordinary equity holders of the Company.
Basic earnings per share was 13.2p (2023: 0.1p) and diluted earnings per share
was 13.0p (2023: 0.1p) for the year ended 31 December 2024. The following
table shows details of basic, diluted and adjusted earnings per share.
2024 2023
£m £m
Adjusted profit before tax 354 330
Tax on adjusted profit (70) (50)
Adjusted profit after tax 284 280
Attributable to:
Other equity holders (11) (11)
Adjusted profit after tax attributable to equity shareholders of abrdn plc 273 269
Total adjusting items including results of associates and joint ventures (103) (336)
Tax on adjusting items 67 68
Profit attributable to equity shareholders of abrdn plc 237 1
2024 2023
Millions Millions
Weighted average number of ordinary shares outstanding 1,796 1,902
Weighted average number of ordinary shares outstanding
Dilutive effect of share options and awards 22 28
Weighted average number of diluted ordinary shares outstanding 1,818 1,930
2024 2023
Pence Pence
Basic earnings per share 13.2 0.1
Diluted earnings per share 13.0 0.1
Adjusted earnings per share 15.2 14.1
Adjusted diluted earnings per share 15.0 13.9
11. Adjusted profit and adjusting items
Adjusted profit excludes the impact of the following items:
- Restructuring and corporate transaction expenses. Restructuring includes the
impact of major regulatory change.
- Amortisation and impairment of intangible assets acquired in business
combinations and through the purchase of customer contracts.
- Profit or loss arising on the disposal of a subsidiary, joint venture or
equity accounted associate.
- Change in fair value of/dividends from significant listed investments (see
(a) below).
- Share of profit or loss from associates and joint ventures.
- Impairment loss/reversal of impairment loss recognised on investments in
associates and joint ventures accounted for using the equity method.
- Fair value movements in contingent consideration.
- Items which are one-off and, due to their size or nature, are not indicative
of the long-term operating performance of the Group.
The tax charge or credit allocated to adjusting items is based on the tax
treatment of each adjusting item.
The operating, investing and financing cash flows presented in the
consolidated statement of cash flows are for both adjusting and non-adjusting
items.
(a) Significant listed investments
Following the sale of the Group's final investments in HDFC Life and HDFC
Asset Management in May 2023 and June 2023 respectively (see below), the Group
has one remaining significant listed investment, Phoenix. There were no
additions or disposals of significant listed investments in 2024.
Fair value movements on significant listed investments are included as
adjusting items, which is aligned with our treatment of gains on disposal for
these holdings when they were classified as associates. Dividends from
significant listed investments are also included as adjusting items, as these
result in fair value movements.
(b) Other
Other adjusting items for the year ended 31 December 2024 include:
- £11m gain (2023: £23m gain) for net fair value movements in
contingent consideration.
- £(15)m negative release (2023: £nil) to other administrative
expenses of the prepayment recognised in relation to the Group's purchase of
Phoenix's trustee investment plan business for UK pension scheme clients.
Refer Note 20 for further details.
- £(16)m negative adjustment (2023: £nil) to Revenue from
contracts with customers recognised in prior periods which were not restated
as the impact was not considered material.
- Gain of £4m (2023: £4m gain) in relation to market movements on
the investments held by the abrdn Financial Fairness Trust which is
consolidated by the Group. The assets of the abrdn Financial Fairness Trust
are restricted to be used for charitable purposes.
- £(10)m net expense (2023: £(9)m) related to properties which are
not being used operationally.
Other adjusting items for the year ended 31 December 2023 included:
- £36m for an insurance liability recovery in relation to the
single process execution event in 2022. The £41m provision expense was
included in other adjusting items for the year ended 31 December 2022. Refer
Note 33.
- £21m provision expense relating to a potential tax liability.
Refer Note 33.
- £5m fair value loss on a financial instrument liability related
to a prior period acquisition.
12. Dividends on ordinary shares
Dividends are distributions of profit to holders of abrdn plc's share capital
and as a result are recognised as a deduction in equity. Final dividends are
announced with the Annual report and accounts and are recognised when they
have been approved by shareholders. Interim dividends are announced with the
Half year results and are recognised when they are paid.
2024 2023
Pence per £m(1) Pence per share £m
share
Prior year's final dividend paid 7.30 130 7.30 142
Interim dividend paid 7.30 130 7.30 137
Total dividends paid on ordinary shares 260 279
Current year final recommended dividend 7.30 130 7.30 130
1. Estimated for current year final recommended dividend.
The final recommended dividend will be paid on 13 May 2025 to shareholders on
the Company's register as at 28 March 2025, subject to approval at the 2025
Annual General Meeting. After the current year final recommended dividend, the
total dividend in respect of the year ended 31 December 2024 is 14.60p (2023:
14.60p).
13. Intangible assets
Goodwill is created when the Group acquires a business and the consideration
exceeds the fair value of the net assets acquired. In determining the net
assets acquired in business combinations, intangible assets are recognised
where they are separable or arise from contractual or legal rights. Intangible
assets acquired by the Group through business combinations consist mainly of
customer relationships and investment management contracts, technology and
brands. Any remaining value that cannot be identified as a separate intangible
asset on acquisition forms part of goodwill. Goodwill is not charged to the
consolidated income statement unless it becomes impaired.
In addition to intangible assets acquired through business combinations, the
Group recognises as intangible assets software which has been developed
internally and other purchased technology which is used in managing and
executing our business. Costs to develop software internally are capitalised
after the research phase and when it has been established that the project is
technically feasible and the Group has both the intention and ability to use
the completed asset.
Intangible assets are recognised at cost and amortisation is charged to the
consolidated income statement over the length of time the Group expects to
derive benefits from the asset. The allocation of the consolidated income
statement charge to each reporting period is dependent on the expected pattern
over which future benefits are expected to be derived. Where this pattern
cannot be determined reliably the charge is allocated on a straight-line
basis.
The Group also recognises the cost of obtaining customer contracts (refer Note
3) as an intangible asset. These costs primarily relate to the cost of
acquiring existing investment management contracts from other asset managers
and commission costs for initial investors into new closed-end funds where
these are borne by the Group. For the cost of obtaining customer contracts,
the intangible asset is amortised on the same basis as the transfer to the
customer of the services to which the intangible asset relates.
Refer to the estimates and assumptions section below for details of the
amortisation periods and methods applied.
Acquired through business combinations
Goodwill Brand Customer relationships and investment management contracts Technology & other Internally developed software(1) Purchased software and other Cost of obtaining customer contracts Total
£m £m £m £m £m £m £m £m
Gross amount
At 1 January 2023 4,665 110 1,483 101 137 5 105 6,606
Disposals and adjustments - 1 (4) - 2 - - (1)
Additions 41 - 78 - 8 - 33 160
Foreign exchange adjustment (2) - (4) - - - (1) (7)
At 31 December 2023 4,704 111 1,553 101 147 5 137 6,758
Disposals and adjustments - - (12) (5) (21) - - (38)
Additions - - - - 5 - 21 26
Foreign exchange adjustment 1 - 1 - - - 1 3
At 31 December 2024 4,705 111 1,542 96 131 5 159 6,749
Accumulated amortisation and impairment
At 1 January 2023 (3,730) (96) (874) (74) (130) (5) (78) (4,987)
Amortisation charge for the year(2) - (4) (99) (12) (2) - (11) (128)
Impairment losses recognised(3) (62) - (1) - (2) - - (65)
At 31 December 2023 (3,792) (100) (974) (86) (134) (5) (89) (5,180)
Disposals and adjustments - - 11 5 21 - - 37
Amortisation charge for the year(2) - (3) (96) (10) (3) - (11) (123)
Impairment losses recognised(3) (5) - (4) - - - - (9)
At 31 December 2024 (3,797) (103) (1,063) (91) (116) (5) (100) (5,275)
Carrying amount
At 1 January 2023 935 14 609 27 7 - 27 1,619
At 31 December 2023 912 11 579 15 13 - 48 1,578
At 31 December 2024 908 8 479 5 15 - 59 1,474
1. Included in the internally developed software of £15m (2023:
£13m) is £6m (2023: £10m) relating to intangible assets not yet ready for
use.
2. For the year ended 31 December 2024, £120m (2023: £126m)
of the amortisation charge is recognised in Amortisation of intangibles
acquired in business combinations and through the purchase of customer
contracts with £3m (2023: £2m) recognised in other administrative expenses.
3. For the year ended 31 December 2024, £9m (2023: £63m) of
impairment is recognised in Impairment of intangibles acquired in business
combinations and through the purchase of customer contracts with £nil (2023:
£2m) recognised in Restructuring and corporate transaction expenses.
At 31 December 2024, there was:
- £40m (2023: £39m) of goodwill attributable to the abrdn Inc.
cash-generating unit (CGU) in the Investments segment in relation to the
acquisition of the healthcare fund management capabilities of Tekla (refer
Note 1(b)(i) for further details).
- £819m (2023: £819m) and £24m (2023: £24m) of goodwill
attributable to the ii CGU and the abrdn financial planning business (aFP) CGU
respectively in the ii segment.
- £25m (2023: £25m) of goodwill is attributable to an Adviser
segment CGU.
At 31 December 2023, there was also £5m of goodwill attributable to the
Finimize CGU which is reported within Other business operations and corporate
costs. This goodwill is now fully impaired - see below.
In addition to goodwill, the Group has a number of customer related acquired
intangibles that are individually material.
Tekla investment management contract intangible assets
On acquisition of the healthcare fund management capabilities of Tekla, £78m
of customer relationships and investment management contract intangibles were
recognised. These assets primarily relate to investment management contracts
with the four NYSE listed funds. The description of the individually material
intangible assets including the estimated useful life at the acquisition date
of 27 October 2023 were as follows:
Investment management Description Useful life at acquisition date Fair value on acquisition date Carrying value Carrying value
contract intangible asset 2024 2023
£m £m £m
Tekla Healthcare Opportunities Fund Investment management contract with Tekla Healthcare Opportunities Fund 12.1 years 28 25 26
Tekla Healthcare Investors Investment management contract with Tekla Healthcare Investors 12.1 years 25 22 23
As the investment management contracts relate to closed-end funds, the
straight-line method of amortisation is considered appropriate for these
intangibles. There has been no change to the useful lives and therefore the
residual useful life of these investment management contract intangible assets
is 10.9 years.
ii intangible assets
On acquisition of ii, customer relationships, brand and technology and other
intangibles of £421m, £16m and £32m respectively were recognised.
Identification and valuation of intangible assets acquired in business
combinations was a key judgement. The description of the individually material
intangible asset including the estimated useful life at the acquisition date
of 27 May 2022 was as follows:
Customer relationship intangible asset Description Useful life at acquisition date Fair value on acquisition date Carrying value Carrying value
2024 2023
£m £m £m
Customer base ii's customer base at the date of acquisition 15 years 421 293 340
There has been no change to the useful life and therefore residual useful life
of the customer relationships intangible asset is 12.4 years. The reducing
balance method of amortisation is considered appropriate for this intangible,
consistent with the attrition rate being constant over time.
Following the valuation of the ii intangibles discussed above goodwill of
£993m was recognised. The allocation of this goodwill to cash-generating
units was a key judgement in 2022. The goodwill was allocated to
cash-generating units based on expected earnings contribution, including in
relation to revenue synergies, at the time of the transaction. We considered
an earnings contribution method of allocation to be appropriate as earnings
multiples are a primary valuation method for businesses such as ii. This
resulted in the goodwill being primarily allocated to the ii cash-generating
unit in the ii segment (£819m), with £132m and £42m allocated to the asset
management group of cash-generating units in the Investments segment and a
cash-generating unit in the ii segment respectively. The £132m allocated to
the asset management group of cash-generating units was subsequently impaired
in 2022. The £42m allocated to a cash-generating unit in the ii segment was
transferred to held for sale at 31 December 2022 and disposed of during 2023
as part of the sale of aCL.
Tritax investment management contract intangible assets
On acquisition of Tritax, £71m of customer relationships and investment
management contracts intangibles were recognised. These assets primarily
relate to Tritax's investment management contracts with Tritax Big Box REIT
plc which is a listed closed-end real estate fund and another closed-end real
estate fund, Tritax EuroBox plc, (EuroBox) which was delisted and renamed
Titanium Ruth Holdco PLC in December 2024. See the estimates and assumptions
section below for details of the recent developments in relation to the
EuroBox asset.
The description of the individually material intangible asset including the
estimated useful life at the acquisition date of 1 April 2021 was as follows:
Investment management contract intangible asset Description Useful life at acquisition date Fair value on acquisition date Carrying value Carrying value
2024 2023
£m £m £m
Tritax Big Box Investment management contract with Tritax Big Box REIT plc 13 years 50 36 40
REIT plc
As the investment management contracts relate to closed-end funds, the
straight-line method of amortisation is considered appropriate for these
intangibles. There has been no change to the useful lives and therefore the
residual useful life of these investment management contract intangible assets
is 9.25 years.
abrdn Holdings Limited (aHL) intangibles
On the acquisition of aHL in 2017, we identified intangible assets in relation
to customer relationships, brand and technology as being separable from
goodwill. Identification and valuation of intangible assets acquired in
business combinations is a key judgement.
The customer relationships acquired through aHL and its subsidiaries were
grouped where the customer groups have similar economic characteristics and
similar useful economic lives. This gave rise to three separate intangible
assets which we termed Lloyds Banking Group, Open ended funds, and Segregated
and similar.
The intangible asset for Lloyds Banking Group had a carrying value of £nil at
the end of 2019. The description of the remaining two separate intangible
assets including their estimated useful life at the acquisition date of 14
August 2017 was as follows:
Customer relationship Description Useful life at acquisition date Fair value on acquisition date Carrying value Carrying value
intangible asset 2024 2023
£m £m £m
Open ended funds Separate vehicle group - open ended investment vehicles 11 years 223 19 30
Segregated and similar All other vehicle groups dominated by segregated mandates which represent 75% 12 years 427 29 43
of this group
The reducing balance method of amortisation is considered appropriate for
these intangibles, consistent with the attrition pattern on customer
relationships which means that the economic benefits delivered from the
existing customer base will reduce disproportionately over time. There has
been no change to the useful lives of the Open ended funds and Segregated and
similar customer relationship intangible assets. Therefore the residual useful
life of the Open ended funds customer relationship intangible asset is 3.6
years and the residual life of the Segregated and similar customer
relationship intangible asset is 4.6 years.
Estimates and assumptions
The estimates and assumptions in relation to intangible assets primarily
relate to:
- Determination of the recoverable amount of goodwill and customer
intangibles.
- Determination of useful lives.
The determination of the recoverable amount of the interactive investor CGU is
a key area of estimation uncertainty at 31 December 2024, and further details
of assumptions and sensitivities are disclosed in this section.
Determination of the recoverable amount of goodwill and customer intangibles
For all intangible assets including goodwill, an assessment is made at each
reporting date as to whether there is an indication that the goodwill or
intangible asset has become impaired. If any indication of impairment exists
then the recoverable amount of the asset is determined. In addition, the
recoverable amount for goodwill must be assessed annually.
The recoverable amounts are defined as the higher of fair value less costs of
disposal (FVLCD) and the value in use (VIU) where the value in use is based on
the present value of future cash flows. Where the carrying value exceeds the
recoverable amount then the carrying value is written down to the recoverable
amount.
In assessing value in use or FVLCD measured using a discounted cash flow
approach, expected future cash flows are discounted to their present value
using a pre-tax discount rate for VIU or a post-tax discount rate for FVLCD.
Judgement is required in assessing both the expected cash flows and an
appropriate discount rate which is based on current market assessments of the
time value of money and the risks associated with the asset.
Goodwill
In 2024 impairments of goodwill of £5m (2023: £62m) have been recognised.
The goodwill impairment for the year ended 31 December 2024 relates to the
Finimize CGU which is reported within Other business operations and corporate
costs. The goodwill impairment for the year ended 31 December 2023 comprised
a further £26m relating to the Finimize CGU and £36m relating to the aFP CGU
which is included in the ii segment.
The impairments are included within Impairment of intangibles acquired in
business combinations and through the purchase of customer contracts in the
consolidated income statement.
Finimize
In 2024 the Group recognised an impairment of the goodwill relating to the
Finimize CGU of £5m. Following this impairment, the goodwill allocated to the
Finimize CGU is now fully impaired (2023: £5m). This impairment was
recognised at 30 June 2024. The impairment reflects higher anticipated losses
in the period prior to which abrdn anticipates Finimize is likely to achieve
profitability and the related Group support required in this period.
The recoverable amount of the Finimize CGU at 30 June 2024 was £10m which was
based on fair value less costs of disposal (FVLCD). The FVLCD considered a
number of valuation approaches, with the primary approach being a revenue
multiple approach. The key assumptions used in determining the revenue
multiple valuation were future revenue projections, which were based on
management forecasts and market multiples for broadly comparable listed
companies, with appropriate discounts applied to take into account
profitability, track record, revenue growth potential, and net premiums for
control. This is a level 3 measurement as they are measured using inputs which
are not based on observable market data.
The goodwill allocated to the Finimize CGU was also impaired in 2023 by £26m.
The recoverable amount of the Finimize CGU at 31 December 2023 was £10m which
was based on FVLCD. As above, the FVLCD considered a number of valuation
approaches, with the primary approach being a revenue multiple approach.
aFP
Goodwill of £24m (2023: £24m) is allocated to the aFP CGU which comprises
the Group's financial planning business. There was no impairment of the
goodwill attributable to this CGU in 2024.
The goodwill allocated to the aFP CGU was impaired in 2023 by £36m. The
recoverable amount of the aFP CGU at 31 December 2023 was £45m which was
based on FVLCD. The FVLCD considered a number of valuation approaches, with
the primary approach being a multiples approach based on price to revenue and
price to assets under advice (AUAdv). Multiples were based on trading
multiples for aFP's peer companies, adjusted to take into account
profitability where appropriate, and were benchmarked against recent
transactions. This was a level 3 measurement as they are measured using inputs
which are not based on observable market data.
Following this impairment, the residual goodwill attributable to the aFP CGU
is not significant in comparison to the total carrying amount of goodwill.
interactive investor
Goodwill of £819m (2023: £819m) is allocated to the interactive investor CGU
which comprises the interactive investor business in the ii segment. There was
no impairment of this goodwill attributable to this CGU in 2024 or 2023.
The recoverable amount of this CGU was determined based on FVLCD. The FVLCD
was based on an earnings multiple approach. This is a level 3 measurement as
it is measured using inputs which are not based on observable market data.
The key assumptions used in determining the earnings multiple valuation were
future post tax adjusted earnings, which were based on management's business
plan projections and reflected past experience and market price to earnings
multiples, which were based on multiples of a peer group of comparable listed
direct-to-consumer investment platform providers.
Sensitivities of key assumptions
The business plan projections used to determine the future earnings are based
on macroeconomic forecasts including interest rates and inflation, and
forecast levels of client activity, market pricing, the percentage of client
funds held in cash and expenses. The projections are therefore sensitive to
these assumptions. A 20% reduction in forecast earnings has been provided as a
sensitivity.
The market price to earnings multiple used in the valuation is 17x based on
multiples of a peer group of comparable listed direct-to-consumer investment
platform providers. This assumption is sensitive to general equity market
fluctuations and to market views on UK direct-to-consumer investment platform
companies. A 40% sensitivity to an earnings multiple has been provided as a
sensitivity.
The recoverable amount at 31 December 2024 exceeds the carrying amount of the
cash-generating unit by £692m. The impact of sensitivities to a single
variable and change required to reduce headroom to zero are shown in the
tables below.
Impact on goodwill carrying amount at 31 December 2024 £m
20% reduction in forecast post tax adjusted earnings -
40% reduction in market multiple (84)
Change required to reduce headroom to zero %
Change in forecast post tax adjusted earnings (36)
Reduction in market multiple (36)
We consider the 36% reduction in market multiple assumption to 11x to reduce
the headroom to zero to be a reasonably possible change. The sensitivity for
forecast post tax earnings has been included for illustrative purposes only.
Other goodwill
Goodwill of £40m (2023: £39m) is attributable to the abrdn Inc. CGU in the
Investments segment. This relates to the acquisition of healthcare fund
management capabilities of Tekla. Refer Note 1(b)(i) for further details.
Goodwill of £25m (2023: £25m) is attributable to an Adviser segment CGU.
There were no impairments of these goodwill balances in 2024 or 2023, both of
which are not significant in comparison to the total carrying amount of
goodwill.
Customer relationship and investment management contract intangibles
An impairment of £4m was recognised in 2024 in relation to the Investment
management contract intangible asset for EuroBox within the Investments
segment. The impairment resulted from the completion of the takeover of
EuroBox on 10 December 2024 by a Brookfield real estate private fund. At 31
December 2024 the Group was still managing the assets of EuroBox.
An impairment of customer relationship and investment management contract
intangibles of £1m was recognised in 2023.
Determination of useful lives
The determination of useful lives requires judgement in respect of the length
of time that the Group expects to derive benefits from the asset and considers
for example expected duration of customer relationships and when technology is
expected to become obsolete for technology based assets.
The amortisation period and method for each of the Group's intangible asset
categories is as follows:
- Customer relationships acquired through business combinations - generally
between 7 and 15 years, generally reducing balance method.
- Investment management contracts acquired through business combinations -
between 10 and 17 years, straight-line.
- Brand acquired through business combinations - between 2 and 5 years,
straight-line.
- Technology and other intangibles acquired through business combinations -
between 1 and 6 years, straight-line.
- Internally developed software - between 2 and 6 years. Amortisation is on a
straight-line basis and commences once the asset is available for use.
- Purchased software - between 2 and 6 years, straight-line.
- Costs of obtaining customer contracts - between 3 and 12 years, generally
reducing balance method.
Internally developed software
There was no impairment of internally developed software in 2024. An
impairment of internally developed software of £2m was recognised in 2023.
14. Investments in associates and joint ventures
Associates are entities where the Group can significantly influence decisions
made relating to the financial and operating policies of the entity but does
not control the entity. For entities where voting rights exist, significant
influence is presumed where the Group holds between 20% and 50% of the voting
rights. Where the Group holds less than 20% of voting rights, consideration is
given to other indicators and entities are classified as associates where it
is judged that these other indicators result in significant influence.
Joint ventures are strategic investments where the Group has agreed to share
control of an entity's financial and operating policies through a
shareholders' agreement and decisions can only be taken with unanimous
consent.
Associates, other than those accounted for at fair value through profit or
loss, and joint ventures are accounted for using the equity method from the
date that significant influence or shared control, respectively, commences
until the date this ceases.
Under the equity method, investments in associates and joint ventures are
initially recognised at cost. When an interest is acquired at fair value from
a third party, the value of the Group's share of the investee's identifiable
assets and liabilities is determined applying the same valuation criteria as
for a business combination at the acquisition date. This is compared to the
cost of the investment in the investee. Where cost is higher the difference is
identified as goodwill and the investee is initially recognised at cost which
includes this component of goodwill. Where cost is lower a bargain purchase
has arisen and the investee is initially recognised at the Group's share of
the investee's identifiable assets and liabilities unless the recoverable
amount for the purpose of assessing impairment is lower, in which case the
investee is initially recognised at the recoverable amount.
Subsequently the carrying value is adjusted for the Group's share of
post-acquisition profit or loss and other comprehensive income of the
associate or joint venture, which are recognised in the consolidated income
statement and other comprehensive income respectively. The Group's share of
post-acquisition profit or loss includes amortisation charges based on the
valuation exercise at acquisition. The carrying value is also adjusted for any
impairment losses.
The Group's share of post-acquisition profit or loss and other comprehensive
income of the associate or joint venture are determined using consistent
accounting policies. In relation to insurance contracts and contracts with
discretionary participating features for which the Group adopted IFRS 17
Insurance Contracts from 1 January 2023, the Group's primary exposure is
through its insurance joint venture, HASL (see Section C below). The Group has
no material direct exposure to insurance contracts and contracts with
discretionary participating features.
In relation to insurance contracts and contracts with discretionary
participating features, there are three main measurement models: the general
measurement model; the variable fee approach and the premium allocation
approach. HASL primarily uses the general measurement model for its
traditional insurance business and the variable fee approach for its direct
participating contracts and investment contracts with direct participation
features with some use of the premium allocation approach. HASL has elected to
take the other comprehensive income (OCI) options under IFRS 17 to take
elements of the movements in the measurement of insurance contract through
OCI. HASL also classifies some of its debt securities as fair value through
OCI.
On partial disposal of an associate, a gain or loss is recognised based on the
difference between the proceeds received and the equity accounted value of the
portion disposed of. Indicators of significant influence are reassessed based
on the remaining voting rights. Where significant influence is judged to have
been lost, the investment in associate is reclassified to interests in equity
securities and pooled investment funds measured at fair value. If an entity is
reclassified, the difference between the fair value and the remaining equity
accounted value is accounted for as a reclassification gain or loss on
disposal.
Where the Group has an investment in an associate, a portion of which is held
by, or is held indirectly through, a mutual fund, unit trust or similar
entity, including investment-linked insurance funds, that portion of the
investment is measured at FVTPL. In general, investment vehicles which are not
subsidiaries are considered to be associates where the Group holds more than
20% of the voting rights.
The level of future dividend payments and other transfers of funds to the
Group from associates and joint ventures accounted for using the equity method
could be restricted by the regulatory solvency and capital requirements of the
associate or joint venture, certain local laws or foreign currency transaction
restrictions.
(a) Investments in associates and joint ventures accounted for using the
equity method
2024 2023
Associates Joint ventures Total Associates Joint ventures Total
£m £m £m £m £m £m
Opening balance carried forward 15 214 229 14 218 232
Effect of application of IFRS 9(1) - - - - 51 51
Opening balance at 1 January 15 214 229 14 269 283
Reclassified as held for sale during the year - - - - (9) (9)
Exchange translation adjustments - (3) (3) - (19) (19)
Additions and adjustments - 2 2 2 - 2
(Loss)/profit after tax (1) 25 24 (1) 2 1
Other comprehensive income - (47) (47) - (31) (31)
Reversal of impairment/(impairment) - - - - 2 2
At 31 December 14 191 205 15 214 229
1. The Group implemented IFRS 9 in 2019. However, as permitted
under a temporary exemption granted to insurers in IFRS 4 Insurance Contracts,
the Group's insurance joint venture, Heng An Standard Life Insurance Company
Limited (HASL), applied IFRS 9 at 1 January 2023 following the implementation
of the new insurance contracts standard, IFRS 17. In line with the approach
adopted by the Group on its implementation of IFRS 9 on 1 January 2019, the
2022 comparatives were not restated for HASL's adoption of IFRS 9. The impact
of HASL adopting IFRS 9 was recognised in retained earnings at 1 January 2023.
The following joint venture is considered to be material to the Group as at
31 December 2024.
Name Nature of relationship Principal place of business Measurement method Interest held by the Group at 31 December 2024 Interest held by the Group at 31 December 2023
Heng An Standard Life Insurance Company Limited (HASL) Joint venture China Equity accounted 50% 50%
The country of incorporation or registration is the same as the principal
place of business. The interest held by the Group is the same as the
proportion of voting rights held. HASL is not listed.
(b) Investments in associates accounted for using the equity method
2024 2023
£m £m
Carrying value of associates accounted for using the equity method 14 15
Share of profit/(loss) after tax (1) (1)
Investments in associates accounted for using the equity method primarily
relates to the Group's interests in Archax Group Limited (Archax) (previously
named Archax Holdings Limited). The Group's interest in Archax was 10.77% at
31 December 2024 (31 December 2023: 11.00%). The classification of Archax as
an associate reflects the Group's additional rights under Archax's articles of
association as a large external investor.
There were no additional investment into Archax in 2024 (2023: £2m) and there
are no indicators of impairment at 31 December 2024.
(c) Investments in joint ventures accounted for using the equity method
HASL Other Total
2024 2023 2024 2023 2024 2023
£m £m £m £m £m £m
Carrying value of joint ventures accounted for using the equity method 190 214 1 - 191 214
Share of profit/(loss) after tax 26 3 (1) (1) 25 2
HASL
The Group has a 50% share in HASL, an insurance company in China offering life
and health insurance products. HASL is an investment which gives the Group
access to one of the world's largest markets. The table below provides
summarised financial information for HASL, the joint venture which is
considered to be material to the Group. HASL's year-end date is 31 December,
however, HASL is not adopting IFRS 17 and IFRS 9 for its local reporting until
2025. Consequently, HASL has provided additional financial information on an
IFRS 17 and IFRS 9 basis for the purposes of the preparation of the Group's
consolidated financial statements.
HASL
2024 2023
£m £m
Summarised financial information of joint venture:
Revenue 151 154
Depreciation and amortisation 5 6
Interest income 105 97
Interest expense 1 2
Income tax (expense)/credit (21) (1)
Profit after tax 51 6
Other comprehensive income (94) (62)
Total comprehensive income (43) (56)
Total assets(1) 6,906 5,267
Total liabilities(1) 6,526 4,839
Cash and cash equivalents 169 179
Net assets 380 428
Attributable to investee's shareholders 380 428
Interest held 50 % 50%
Share of net assets 190 214
1. As a liquidity presentation is used by insurance companies
when presenting their statement of financial position, an analysis of total
assets and total liabilities between current and non-current has not been
provided for HASL.
In relation to HASL, there are no indicators that the recoverable amount of
the Group's investment in HASL is less than the Group's share of net assets.
Virgin Money UTM
The Group's interest in Virgin Money UTM which was previously included in
other joint ventures accounted for using the equity method was transferred to
held for sale at 31 December 2023. The sale completed on 2 April 2024. Refer
Note 1(c)(ii) for further details. Prior to the transfer, a reversal of prior
impairment of the Group's interest of £2m was recognised. The reversal of
impairment was included in Reversal of impairment of interests in joint
ventures in the consolidated income statement for the year ended 31 December
2023. The interest in Virgin Money UTM did not form part of the Group's
reportable segments.
(d) Investments in associates measured at FVTPL
The aggregate fair value of associates accounted for at FVTPL included in
equity securities and interests in pooled investment funds (refer Note 17) at
31 December 2024 is £1m (2023: £10m) none of which are considered
individually material to the Group.
15. Property, plant and equipment
Property, plant and equipment consists primarily of property owned and
occupied by the Group and the computer equipment used to carry out the Group's
business along with right-of-use assets for leased property and equipment.
Owner occupied property: Owner occupied property is initially recognised at
cost and subsequently revalued to fair value at each reporting date.
Depreciation, being the difference between the carrying amount and the
residual value of each significant part of a building, is charged to the
consolidated income statement over its useful life. The useful life of each
significant part of a building is estimated as being between 30 and 50 years.
A revaluation surplus is recognised in other comprehensive income unless it
reverses a revaluation deficit which has been recognised in the consolidated
income statement.
Equipment: Equipment is initially recognised at cost and subsequently measured
at cost less depreciation. Depreciation is charged to the consolidated income
statement over 2 to 15 years depending on the length of time the Group expects
to derive benefit from the asset.
Right-of-use asset: Refer Note 16 below for the accounting policies for
right-of-use assets.
Owner occupied property Equipment Right of use assets - property Right of use assets - equipment Total
£m £m £m £m £m
Cost or valuation
At 1 January 2023 2 120 321 4 447
Additions - 18 30 1 49
Disposals and adjustments(1) - (8) (10) (1) (19)
Derecognition of right-of-use assets relating to subleases classified as - - (24) - (24)
finance leases
Foreign exchange adjustment - (2) (4) - (6)
At 31 December 2023 2 128 313 4 447
Additions - 7 4 1 12
Disposals and adjustments(1) (2) (7) (72) (2) (83)
Foreign exchange adjustment - - (1) - (1)
At 31 December 2024 - 128 244 3 375
Owner occupied property Equipment Right of use assets - property Right of use assets - equipment Total
£m £m £m £m £m
Accumulated depreciation and impairment
At 1 January 2023 (1) (65) (177) (3) (246)
Depreciation charge for the year(2) - (15) (16) (1) (32)
Disposals and adjustments(1) - 7 9 - 16
Derecognition of right-of-use assets relating to subleases classified as - - 20 - 20
finance leases
Impairment(3) - (11) (39) - (50)
Reversal of impairment(3) - - 3 - 3
Foreign exchange adjustment - 2 2 1 5
At 31 December 2023 (1) (82) (198) (3) (284)
Depreciation charge for the year(2) - (13) (15) (1) (29)
Disposals and adjustments(1) 1 4 65 2 72
Foreign exchange adjustment - - 1 - 1
At 31 December 2024 - (91) (147) (2) (240)
Carrying amount
At 1 January 2023 1 55 144 1 201
At 31 December 2023 1 46 115 1 163
At 31 December 2024 - 37 97 1 135
1. For the year ended 31 December 2024, £1m (2023: £5m) of
disposals and adjustments relates to equipment with net book value of £nil
which is no longer in use.
2. Included in other administrative expenses.
3. Included in restructuring and corporate transaction expenses.
Included in property right-of-use assets, are right-of-use assets that meet
the definition of investment property. Their carrying amount at 31 December
2024 is £22m (2023: £31m). This comprises a gross carrying value of £63m
(2023: £134m) and accumulated depreciation and impairment of £40m (2023:
£103m). Rental income received and direct operating expenses incurred to
generate that rental income in the year to 31 December 2024 were £2m (2023:
£3m) and £1m (2023: £2m) respectively. In addition, there were direct
expenses of £1m (2023: £1m) in relation to investment properties not
currently generating income.
The movements during the period of the carrying value of the Group's
investment property is analysed below.
2024 2023
£m £m
At start of period 31 14
Transfers to investment property - 63
Transfers from investment property - (3)
Depreciation (2) (4)
Derecognition related to new subleases classified as finance leases (2) (3)
Impairments - (39)
Reversal of impairment - 3
Disposals and adjustments (5) -
At end of period 22 31
The disposals and adjustments for the year ended 31 December 2024 of £5m
relate to the assignation of a lease relating to a floor within a property in
the UK. The assignation also resulted in the derecognition of related lease
liabilities of £10m and a gain of £3m has been recognised within Other
income in Net gains or losses on financial instruments and other income as a
result of the assignation.
There were no transfers to or from investment property in 2024 and no
impairments recognised.
The transfers to investment property in 2023 related to a number of properties
in the UK and the US that will no longer be used operationally by the Group.
The right-of-use assets were assessed for impairment at the point of transfer.
Impairments of £39m were recognised in the year ended 31 December 2023 in
relation to these properties and one other property in the UK previously
transferred to investment property. The right-of-use assets are related to the
Investments segment (£27m impairment), Other business operations and
corporate costs (£11m impairment) and ii segment (£1m impairment).
On transfers in 2023, the recoverable amount for the properties in the UK,
which was based on value in use, was £27m. The recoverable amount for the
properties in the US, which was based on value in use, was £4m. The cash
flows were based on the rental income expected to be received under subleases
during the term of the lease and the direct expenses expected to be incurred
in managing the leased property, discounted using a discount rate that
reflects the risks inherent in the cash flow estimates. The assessment of the
cash flows took into consideration climate related factors such as the energy
efficiency of the buildings. It was not based on valuations by an independent
valuer.
The transfers from investment property in 2023 related to a property in the UK
which was not being used operationally but following the review of properties
in the UK is being brought back into operational use. The right-of-use asset
was assessed for reversal of impairment at the point of transfer. The Group
recognised a reversal of impairment of £3m in the year ended 31 December 2023
in relation to this property. The recoverable amount for this property was its
carrying value at 30 June 2023 if it had not previously been impaired. The
right-of-use asset is also related to the Investments segment.
The fair value of investment property included within right-of-use assets at
31 December 2024 is £27m (2023: £36m). The valuation technique used to
determine the fair value considers the rental income expected to be received
under subleases during the term of the lease and the direct expenses expected
to be incurred in managing the leased property, discounted using a discount
rate that reflects the risks inherent in the cash flow estimates. It is not
based on valuations by an independent valuer. This is a level 3 valuation
technique as defined in Note 36.
The Group disposed of its last owned occupied property in 2024, recognising a
loss of less than £1m on the disposal. Prior to the disposal, the expected
residual value of owner occupied property was in line with the current fair
value and no depreciation was charged on owner occupied property.
Further details on the leases under which the Group's right-of-use assets are
recognised are provided in Note 16 below.
16. Leases
A contract is, or contains, a lease if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for
consideration. At inception of a contract, the Group assesses whether a
contract is, or contains, a lease. In 2019, on adoption of IFRS 16 the Group
used the practical expedient permitted to apply the new standard at transition
solely to leases previously identified in accordance with IAS 17 and IFRIC 4
Determining whether an Arrangement Contains a Lease.
Right-of-use assets are measured at cost less accumulated depreciation and
impairment losses and are presented in property, plant and equipment (refer
Note 15). The Group does not revalue its right-of-use assets. This applies to
all right-of-use assets, including those that are assessed as meeting the
definition of investment property. The cost comprises the amount of the
initial measurement of the lease liability plus any initial direct costs and
expected restoration costs not relating to wear and tear. Costs relating to
wear and tear are expensed over the term of the lease. Depreciation is charged
on right-of-use assets on a straight-line basis from the lease commencement
date to the earlier of the end of the useful life of the right-of-use asset or
the end of the lease term. The Group assesses right-of-use assets for
impairment when such indicators exist, and where required, reduces the value
of the right-of-use asset accordingly.
The related lease liability (included in other financial liabilities - refer
Note 32) is calculated as the present value of the future lease payments. The
lease payments are discounted using the rate implicit within the lease where
readily available or the Group's incremental borrowing rate where the implicit
rate is not readily available. Interest is calculated on the liability using
the discount rate and is charged to the consolidated income statement under
finance costs.
In determining the value of the right-of-use assets and lease liabilities, the
Group considers whether any leases contain lease extensions or termination
options that the Group is reasonably certain to exercise.
Where a leased property has been sublet, the Group assesses whether the
sublease has transferred substantially all the risk and rewards of the
right-of-use asset to the lessee under the sublease. Where this is the case,
the right-of-use asset is derecognised and a net investment in finance leases
(included in Receivables and other financial assets - refer Note 19) is
recognised, calculated as the present value of the future lease payments
receivable under the sublease. Where a property is only partially sublet, only
the portion of the right-of-use asset relating to the sublet part of the
property is derecognised and recognised as a net investment in finance leases.
Any difference between the initial value of the net investment in finance
leases and the right-of-use asset derecognised is recognised in the
consolidated income statement (within other income or expenses). Interest is
calculated on the net investment in finance lease using the discount rate and
is recognised in the consolidated income statement as interest income.
Where the sublease does not transfer substantially all the risk and rewards of
the right-of-use assets to the lessee under the sublease, the Group continues
to recognise the right-of-use asset. The sublease is accounted for as an
operating lease with the lease payments received recognised as property rental
income in other income in the consolidated income statement. Lease incentives
granted are recognised as an integral part of the property rental income and
are spread over the term of the lease.
The Group does not recognise right-of-use assets and lease liabilities for
short-term leases (less than one year from inception) and leases where the
underlying asset is of low value.
(a) Leases where the Group is lessee
The Group leases various offices and equipment used to carry out its business.
Leases are generally for fixed periods but may be subject to extensions or
early termination clauses. The remaining periods for current leases range from
less than 1 year to 14 years (2023: less than 1 year to 15 years). A number of
leases which are due to end in 2031 contain options that would allow the Group
to extend the lease term. The Group reviews its property use on an ongoing
basis and these extensions have not been included in the right-of-use asset or
lease liability calculations. The Group had not committed to any leases at
31 December 2024 which had not yet commenced.
The Group has recognised the following assets and liabilities in relation to
these leases where the Group is a lessee:
2024 2023
£m £m
Right-of-use assets:
Property 97 115
Equipment 1 1
Total right-of-use assets 98 116
Lease liabilities (193) (223)
Details of the movements in the Group's right-of-use assets including
additions and depreciation are included in Note 15.
The interest on lease liabilities is as follows:
2024 2023
£m £m
Interest on lease liabilities 6 6
The total cash outflow for lease liabilities recognised in the consolidated
statement of cash flows for the year ended 31 December 2024 was £29m (2023:
£30m). Refer Note 37(f) for further details.
The following table provides a maturity analysis of the contractual
undiscounted cash flows for the lease liabilities.
2024 2023
£m £m
Less than 1 year 27 26
Greater than or equal to 1 year and less than 2 years 27 25
Greater than or equal to 2 years and less than 3 years 26 26
Greater than or equal to 3 years and less than 4 years 24 26
Greater than or equal to 4 years and less than 5 years 23 25
Greater than or equal to 5 years and less than 10 years 72 91
Greater than or equal to 10 years and less than 15 years 19 32
Total undiscounted lease liabilities 218 251
The Group does not recognise right-of-use assets and lease liabilities for
short-term leases and leases where the underlying asset is of low value. The
expenses for these leases for the year ended 31 December 2024 were less than
£1m (2023: £1m). The Group has no lease commitments for short-term leases at
31 December 2024 (2023: none).
(b) Leases where the Group is lessor (subleases)
Where the Group no longer requires a leased property, the property may be
sublet to a third party. The sublease may be for the full remaining term of
the Group's lease or only part of the remaining term.
At 31 December 2024, the Group had a net investment in finance leases asset
of £32m (2023: £31m) for subleases which had transferred substantially all
the risk and rewards of the right-of-use assets to the lessee under the
sublease. All other subleases are accounted for as operating leases.
(b)(i) Finance leases
During the year ended 31 December 2024, the Group received finance income on
the net investment in finance leases asset of less than £1m (2023: less than
£1m). The Group recorded an initial gain of £2m in relation to new subleases
entered into during the year ended 31 December 2024 (2023: £6m). The
following table provides a maturity analysis of the future contractual
undiscounted cash flows for the net investment in finance leases and a
reconciliation to the net investment in finance leases asset.
2024 2023
£m £m
Less than 1 year 5 3
Greater than or equal to 1 year and less than 2 years 5 4
Greater than or equal to 2 years and less than 3 years 5 4
Greater than or equal to 3 years and less than 4 years 4 4
Greater than or equal to 4 years and less than 5 years 5 4
Greater than or equal to 5 years and less than 10 years 13 14
Greater than or equal to 10 years and less than 15 years - 1
Total contractual undiscounted cash flows under finance leases 37 34
Unearned finance income (5) (3)
Total net investment in finance leases 32 31
(b)(ii) Operating leases
During the year ended 31 December 2024, the Group received property rental
income from operating leases of £2m (2023: £3m).
The following table provides a maturity analysis of the future contractual
undiscounted cash flows for subleases classified as operating leases.
2024 2023
£m £m
Less than 1 year 2 2
Greater than or equal to 1 year and less than 2 years 1 2
Greater than or equal to 2 years and less than 3 years - 1
Total contractual undiscounted cash flows under operating leases 3 5
17. Financial assets
Financial assets are initially recognised at their fair value. Subsequently
all equity securities and interests in pooled investment funds and derivative
instruments are measured at fair value. All equity securities and interests in
pooled investment funds are classified as FVTPL on a mandatory basis. Changes
in their fair value are recognised in Net gains or losses on financial
instruments and other income in the consolidated income statement. The
classification of derivatives and the accounting treatment of derivatives
designated as a hedging instrument are set out in Note 18.
The subsequent measurement of debt instruments depends on whether their cash
flows are solely payments of principal and interest and the nature of the
business model they are held in as follows:
SPPI(1) test satisfied? Business model Classification
Yes A: Objective is to hold to collect contractual cash flows Amortised cost(2)
Yes B: Objective is achieved by both collecting contractual cash flows and selling Fair value through other comprehensive income (FVOCI)(2)
Yes C: Objective is neither A nor B FVTPL
No N/A FVTPL
1. Solely payments of principal and interest.
2. May be classified as FVTPL if doing so eliminates or significantly
reduces a measurement or recognition inconsistency (sometimes referred to as
an 'accounting mismatch') that would otherwise arise from measuring assets or
liabilities or recognising the gains and losses on them on different bases.
The Group has no direct holding in debt instruments that are managed within a
business model whose objective is achieved both by collecting contractual cash
flows and selling and therefore there are no debt instruments classified as
FVOCI. The Group's Chinese joint venture, HASL, does hold debt securities
classified as FVOCI. (refer Note 14). Debt instruments classified as FVTPL are
classified as such due to the business model they are managed under,
predominantly being held in consolidated investment vehicles.
The methods and assumptions used to determine fair value of financial assets
at FVTPL are discussed in
Note 36.
Amortised cost is calculated, and related interest is credited to the
consolidated income statement, using the effective interest method. Impairment
is determined using an expected credit loss impairment model which is applied
to all financial assets measured at amortised cost. Financial assets measured
at amortised cost attract a loss allowance equal to either:
- 12 month expected credit losses (losses resulting from possible default
within the next 12 months).
- Lifetime expected credit losses (losses resulting from possible defaults
over the remaining life of the financial asset).
Financial assets attract a 12 month ECL allowance unless the asset has
suffered a significant deterioration in credit quality or the simplified
approach for calculation of ECL has been applied. As permitted under IFRS 9
Financial Instruments, the Group has applied the simplified approach to
calculate the ECL allowance for trade receivables and contract assets
recognised under IFRS 15 Revenue from Contracts with Customers and lease
receivables recognised under IFRS 16 Leases. Under the simplified approach the
ECL is always equal to the lifetime expected credit loss.
The table below sets out an analysis of financial assets excluding those
assets backing unit linked liabilities which are set out in Note 23.
At fair value through profit or loss(1) Cash flow hedge(2) At amortised cost Total
2024 2023 2024 2023 2024 2023 2024 2023
Notes £m £m £m £m £m £m £m £m
Derivative financial assets 18 4 2 50 41 - - 54 43
Equity securities and interests in pooled investment funds 36 1,105 1,139 - - - - 1,105 1,139
Debt securities 36 659 740 - - - 125 659 865
Financial investments 1,768 1,881 50 41 - 125 1,818 2,047
Receivables and other financial assets 19 17 11 - - 1,007 1,060 1,024 1,071
Cash and cash equivalents 22 - - - - 1,321 1,196 1,321 1,196
Total 1,785 1,892 50 41 2,328 2,381 4,163 4,314
1. All financial assets measured at fair value through profit or
loss have been classified at FVTPL on a mandatory basis. The Group has not
designated any financial assets as FVTPL.
2. Changes in fair value are recognised in the Cash Flow Hedges
Reserve (refer Note 27) but may be reclassified subsequently to profit or
loss.
The amount of debt securities expected to be recovered or settled after more
than 12 months is £36m (2023: £8m). Due to the nature of equity securities
and interests in pooled investment funds, there is no fixed term associated
with these securities. The amount of equity securities and interests in pooled
investment funds expected to be recovered or settled after more than 12 months
is £1,105m (2023: £1,139m).
Financial assets at 31 December 2024 of £4,163m (2023: £4,314m) includes
£98m (2023: £94m) related to the abrdn Financial Fairness Trust whose assets
are restricted to be used for charitable purposes. Refer Note 44 for further
details.
18. Derivative financial instruments
A derivative is a financial instrument that is typically used to manage risk
and whose value moves in response to an underlying variable such as interest
or foreign exchange rates. The Group uses derivative financial instruments in
order to match subordinated debt liabilities and to reduce the risk from
potential movements in foreign exchange rates on seed capital and
co-investments and potential movements in market rates on seed capital.
Certain consolidated investment vehicles may also use derivatives to take and
alter market exposure, with the objective of enhancing performance and
controlling risk.
Management determines the classification of derivatives at initial
recognition. All derivative instruments are classified as at FVTPL except
those designated as part of a cash flow hedge or net investment hedge.
Derivatives at FVTPL are measured at fair value with changes in fair value
recognised in the consolidated income statement.
On adoption of IFRS 9 Financial instruments in 2019, the Group has elected to
continue applying the hedge accounting requirements of IAS 39. The accounting
treatment below applies to derivatives designated as part of a hedging
relationship.
Using derivatives to manage a particular exposure is referred to as hedging.
For a derivative to be considered as part of a hedging relationship its
purpose must be formally documented at inception. In addition, the
effectiveness of the hedge must be initially high and be able to be reliably
measured on a regular basis. Derivatives used to hedge variability in future
cash flows such as coupons payable on subordinated liabilities or revenue
receivable in a foreign currency are designated as cash flow hedges, while
derivatives used to hedge currency risk on investments in foreign operations
are designated as net investment hedges.
Where a derivative qualifies as a cash flow or net investment hedge, hedge
accounting is applied. The effective part of any gain or loss resulting from
the change in fair value is recognised in other comprehensive income, and in
the cash flow or net investment hedge reserve in equity, while any ineffective
part is recognised immediately in the consolidated income statement. If a
derivative ceases to meet the relevant hedging criteria, hedge accounting is
discontinued.
For cash flow hedges, the amount recognised in the cash flow hedge reserve is
transferred to the consolidated income statement (recycled) in the same period
or periods during which the hedged item affects profit or loss and is
transferred immediately if the cash flow is no longer expected to occur. For
net investment hedges, the amount recognised in the net investment hedge
reserve is transferred to the consolidated income statement on disposal of the
investment.
2024 2023
Contract amount Fair value Fair value liabilities Contract amount Fair value assets Fair value liabilities
assets
Notes £m
£m £m £m £m £m
Cash flow hedges 17 599 50 - 588 41 -
FVTPL 17, 29 555 4 3 628 2 9
Derivative financial instruments 36 1,154 54 3 1,216 43 9
Derivative financial instruments backing unit linked liabilities 23 - - - 2 - -
Total derivative financial instruments 1,154 54 3 1,218 43 9
Derivative assets of £50m (2023: £41m) are expected to be recovered after
more than 12 months. There are no derivative liabilities (2023: none) expected
to be settled after more than 12 months.
(a) Hedging strategy
The Group generally does not hedge the currency exposure relating to revenue
and expenditure, nor does it hedge translation of overseas profits in the
consolidated income statement. Where appropriate, the Group may use derivative
contracts to reduce or eliminate currency risk arising from individual
transactions or seed capital and co-investment activity.
(a)(i) Cash flow hedges
On 18 October 2017, the Group issued subordinated notes with a principal
amount of US$750m. In order to manage its foreign exchange risk relating to
the principal and coupons payable on these notes the Group entered into a
cross-currency swap which is designated as a cash flow hedge. The cash flow
hedge was fully effective during the year. The cross-currency swap has the
effect of swapping the 4.25% US Dollar fixed rate subordinated notes into 3.2%
Sterling fixed rate subordinated notes with a principal amount of £569m. The
cross-currency swap has a fair value asset position of £50m (2023: £41m
asset). During the year ended 31 December 2024 fair value gain of £20m
(2023: losses of £40m) were recognised in other comprehensive income in
relation to the cross-currency swap. Gains of £11m (2023: losses of £35m)
were transferred from other comprehensive income to Net gains or losses on
financial instruments and other income in the consolidated income statement in
relation to the cross-currency swap during the year. In addition, forward
points of £6m (2023: £6m) and gains of £1m (2023: gains of £1m) were
transferred from other comprehensive income to Finance costs in the
consolidated income statement.
(a)(ii) FVTPL
Derivative financial instruments classified as FVTPL include those that the
Group holds as economic hedges of financial instruments that are measured at
fair value. FVTPL derivative financial instruments are also held by the Group
to match contractual liabilities that are measured at fair value or to achieve
efficient portfolio management in respect of instruments measured at fair
value.
2024 2023
Contract amount Fair value Fair value liabilities Contract amount Fair value assets Fair value liabilities
assets
£m £m £m £m £m £m
Equity derivatives:
Futures 95 3 - 130 - 5
Swaps 6 - - 13 - -
Bond derivatives:
Futures 54 - - 46 - 2
Interest rate derivatives:
Swaps - - - 21 1 -
Foreign exchange derivatives:
Forwards 313 1 - 339 1 -
Other derivatives:
Credit default swaps 87 - 3 81 - 2
Derivative financial instruments at FVTPL 555 4 3 630 2 9
(b) Maturity profile
The maturity profile of the contractual undiscounted cash flows in relation to
derivative financial instruments is as follows:
Within 1-5
1 year years Total
2024 2023 2024 2023 2024 2023
£m £m £m £m £m £m
Cash inflows
Derivative financial assets 331 339 663 677 994 1,016
Derivative financial liabilities 11 25 - - 11 25
Total 342 364 663 677 1,005 1,041
Cash outflows
Derivative financial assets (319) (331) (614) (632) (933) (963)
Derivative financial liabilities (11) (25) (3) (2) (14) (27)
Total (330) (356) (617) (634) (947) (990)
Net derivative financial instruments cash inflows 12 8 46 43 58 51
Included in the above maturity profile are the following cash flows in
relation to cash flow hedge assets:
Within 1-5
1 year years Total
2024 2023 2024 2024 2024 2024
£m £m £m £m £m £m
Cash inflows 25 25 663 676 688 701
Cash outflows (18) (18) (614) (632) (632) (650)
Net cash flow hedge cash inflows 7 7 49 44 56 51
Cash inflows and outflows are presented on a net basis where the Group is
required to settle cash flows net.
19. Receivables and other financial assets
2024 2023
Notes £m £m
Amounts receivable from contracts with customers 115 110
Accrued income 333 310
Amounts due from counterparties and customers for unsettled trades and fund 371 477
transactions
Net investment in finance leases 32 31
Collateral pledged in respect of derivative contracts 34 12 19
Contingent consideration assets 36 17 11
Deferred consideration assets 21 -
Other 123 113
Receivables and other financial assets 1,024 1,071
The carrying amounts disclosed above reasonably approximate the fair values as
at the year end.
The amount of receivables and other financial assets expected to be recovered
after more than 12 months is £84m (2023: £67m).
Accrued income includes £329m (2023: £306m) of accrued income from contracts
with customers.
20. Other assets
2024 2023
£m £m
Prepayments 53 75
Other 1 2
Other assets 54 77
The amount of other assets expected to be recovered after more than 12 months
is £2m (2023: £24m).
Prepayments of £53m (2023: £75m) includes prepayments of £6m (2023: £23m)
which relate to the Group's purchase of certain products in Phoenix's savings
business offered through abrdn's Wrap platform together with Phoenix's trustee
investment plan (TIP) business for UK pension scheme clients. Refer Note 39(b)
for further details.
During 2024, the Group has released £15m of the £19m prepayment recognised
in relation to the TIP business to other administrative expenses in the
consolidated income statement following a review of the recoverability of
these costs from future profits from the TIP business. The transfer of this
business to the Group is now expected to occur in 2025.
21. Assets and liabilities held for sale
Assets and liabilities held for sale are presented separately in the
consolidated statement of financial position and consist of operations and
individual non-current assets whose carrying amount will be recovered
principally through a sale transaction (expected within one year) and not
through continuing use.
Operations held for sale, being disposal groups, and investments in associates
accounted for using the equity method are measured at the lower of their
carrying amount and their fair value less disposal costs. No depreciation or
amortisation is charged on assets in a disposal group once it has been
classified as held for sale.
Operations held for sale include newly established investment vehicles which
the Group has seeded but is actively seeking to divest from. For these
investment funds, which do not have significant liabilities or non-financial
assets, financial assets continue to be measured based on the accounting
policies that applied before they were classified as held for sale. The Group
classifies seeded operations as held for sale where the intention is to
dispose of the investment vehicle in a single transaction. Where disposal of a
seeded investment vehicle will be in more than one tranche the operations are
not classified as held for sale in the consolidated statement of financial
position.
Amounts seeded into newly established investment vehicles which are not
consolidated and are recognised as interests in pooled investment funds are
also classified as held for sale where the Group intends to dispose of its
investment in a single transaction. As above, they continue to be measured
based on the accounting policies that applied before they were classified as
held for sale.
2024 2023
Notes £m £m
Assets of operations held for sale
European-headquartered Private Equity business - 10
Investments in joint ventures accounted for using the equity method
Virgin Money UTM 14 - 9
Investment vehicles 17 -
Assets held for sale 17 19
Liabilities of operations held for sale
European-headquartered Private Equity business - 2
Liabilities of operations held for sale - 2
(a) European-headquartered Private Equity business
On 26 April 2024, the Group completed the sale of its European-headquartered
Private Equity business to Patria Investments. Refer Note 1(c)(i). The
European-headquartered Private Equity business was reported in the investments
segment.
At 31 December 2023, this disposal group was measured at its carrying amount
and comprised the following assets and liabilities:
2023
£m
Assets of operations held for sale
Receivables and other financial assets 9
Cash and cash equivalents 1
Total assets of operations held for sale 10
Liabilities of operations held for sale
Other financial liabilities 2
Total liabilities of operations held for sale 2
Net assets of operations held for sale 8
Net assets of operations held for sale were net of intercompany balances
between the European-headquartered Private Equity business and other group
entities, the net assets on a gross basis as at 31 December 2023 were £8m.
22. Cash and cash equivalents
Cash and cash equivalents include cash at bank, money at call and short notice
with banks, money market funds and any highly liquid investments with less
than three months to maturity from the date of acquisition. For the purposes
of the consolidated statement of cash flows, cash and cash equivalents also
include bank overdrafts which are included in other financial liabilities on
the consolidated statement of financial position where the overdraft is
repayable on demand and forms an integral part of the Group's cash management.
Where the Group has a legally enforceable right of set off and intention to
settle on a net basis, cash and overdrafts are offset in the consolidated
statement of financial position.
2024 2023
£m £m
Cash at bank and in hand 733 704
Cash at bank and in hand
Money at call, term deposits, reverse repurchase agreements and debt 415 301
instruments with less than three months to maturity from acquisition
Money market funds 173 191
Cash and cash equivalents 1,321 1,196
2024 2023
Notes £m £m
Cash and cash equivalents 1,321 1,196
Cash and cash equivalents backing unit linked liabilities 23 14 13
Cash and cash equivalents classified as held for sale 21 - 1
Total cash and cash equivalents for consolidated statement of cash flows 1,335 1,210
Cash at bank, money at call and short notice and deposits are subject to
variable interest rates.
Cash and cash equivalents in respect of unit linked funds (including third
party interests in consolidated funds) are held in separate bank accounts and
are not available for general use by the Group.
As at 31 December 2024, no cash and overdrafts were offset in the
consolidated statement of financial position (2023: none).
23. Unit linked liabilities and assets backing unit linked liabilities
The Group operates unit linked life assurance businesses through an insurance
subsidiary. This subsidiary provides investment products through a life
assurance wrapper. These products do not contain any features which transfer
significant insurance risk and therefore are classified as investment
contracts. Unit linked non-participating investment contracts are separated
into two components being an investment management services component and a
financial liability. All fees and related administrative expenses are deemed
to be associated with the investment management services component (refer Note
3). The financial liability component is designated at FVTPL as it is
implicitly managed on a fair value basis as its value is directly linked to
the market value of the underlying portfolio of assets.
Where the Group is deemed to control an investment vehicle as a result of
holdings in that vehicle by subsidiaries to back unit linked non-participating
investment contract liabilities, the assets and liabilities of the vehicle are
consolidated within the Group's statement of financial position. The liability
for third party interest in such consolidated funds is presented as a unit
linked liability.
Unit linked liabilities and assets backing unit linked liabilities are
presented separately in the consolidated statement of financial position
except for those held in operations held for sale, which are presented in
assets and liabilities held for sale in the consolidated statement of
financial position.
Contributions received on non-participating investment contracts and from
third party interest in consolidated funds are treated as deposits and not
reported as revenue in the consolidated income statement.
Withdrawals paid out to policyholders on non-participating investment
contracts and to third party interest in consolidated funds are treated as a
reduction to deposits and not recognised as expenses in the consolidated
income statement.
Investment return and related benefits credited in respect of
non-participating investment contracts and third party interest in
consolidated funds are recognised in the consolidated income statement as
changes in investment contract liabilities and changes in liability for third
party interest in consolidated funds respectively. Investment returns relating
to unit linked business are for the account of policyholders and have an equal
and opposite effect on income and expenses in the consolidated income
statement with no impact on profit or loss after tax.
Assets backing unit linked liabilities comprise financial investments, which
are all classified as FVTPL on a mandatory basis, and receivables and other
financial assets and cash and cash equivalents which are measured at amortised
cost.
(a) Result for the year attributable to unit linked business
2024 2023
Notes £m £m
Net gains or losses on financial instruments and other income 4 (1) 4
Other administrative expense 5 - (1)
(Loss)/profit before tax (1) 3
Tax credit/(expense) attributable to unit linked business 9 1 (3)
Profit after tax - -
(b) Financial instrument risk management
The shareholder is not directly exposed to market risk or credit risk in
relation to the financial assets backing unit linked liabilities. The
shareholder's exposure to market risk on these assets is limited to variations
in the value of future revenue as fees are based on a percentage of fund
value.
The shareholder is exposed to liquidity risk relating to unit linked funds.
For the unit linked business, liquidity risk is primarily managed by holding a
range of diversified instruments which are assessed against cash flow and
funding requirements. A core portfolio of assets is maintained and invested in
accordance with the mandates of the relevant unit linked funds. Given that
unit linked policyholders can usually choose to surrender, in part or in full,
their unit linked contracts at any time, the non-participating investment
contract unit linked liabilities are designated as payable within one year.
Such surrenders would be matched in practice, if necessary, by sales of
underlying assets. Policyholder behaviour and the trading position of asset
classes are actively monitored. The Group can delay settling liabilities to
unit linked policyholders to ensure fairness between those remaining in the
fund and those leaving the fund. The length of any such delay is dependent on
the underlying financial assets.
(c) Fair value measurement of unit linked financial liabilities and financial
assets backing unit linked liabilities
Each of the unit linked financial liabilities and the financial assets backing
unit linked liabilities has been categorised below using the fair value
hierarchy as defined in Note 36. Refer Note 36 for details of valuation
techniques used.
Level 1 Level 2 Level 3 Not at fair value Total
2024 2023 2024 2023 2024 2023 2024 2023 2024 2023
£m £m £m £m £m £m £m £m £m £m
Financial investments 349 396 300 273 - - - - 649 669
Receivables and other financial assets - - - - - - 4 4 4 4
Cash and cash equivalents - - - - - - 14 13 14 13
Total financial assets backing unit linked liabilities 349 396 300 273 - - 18 17 667 686
Investment contract liabilities - - 665 684 - - - - 665 684
Other unit linked financial liabilities - - - - - - 2 2 2 2
Total unit linked financial liabilities - - 665 684 - - 2 2 667 686
The financial investments backing unit linked liabilities comprise equity
securities and interests in pooled investment funds of £616m (2023: £667m)
and debt securities of £33m (2023: £2m).
The fair value of financial instruments not held at fair value approximates to
their carrying value at both 31 December 2024 and 31 December 2023.
There were no significant transfers between levels 1 and 2 during the years
ended 31 December 2024 and 31 December 2023. Transfers are deemed to have
occurred at the end of the calendar quarter in which they arose.
The movements during the period of level 3 unit linked assets and liabilities
held at fair value are analysed below.
Equity securities and interests in pooled investment funds Investment contract liabilities
31 Dec 2024 31 Dec 2023 31 Dec 2024 31 Dec 2023
£m £m £m £m
At start of period - 1 - (1)
Sales - (1) - 1
At end of period - - - -
Unit linked level 3 assets related to holdings in real estate funds. No
individual unobservable input is considered significant. Changing unobservable
inputs in the measurement of the fair value of these unit linked level 3
financial assets and liabilities to reasonably possible alternative
assumptions would have no impact on profit attributable to equity holders or
on total assets.
Transfers of unit linked assets and liabilities to level 3 generally arise
when external pricing providers stop providing prices for the underlying
assets and liabilities in the funds or where the price provided is considered
stale.
(d) Change in non-participating investment contract liabilities
The change in non-participating investment contract liabilities was as
follows:
2024 2023
£m £m
At 1 January 684 773
Contributions 59 54
Account balances paid on surrender and other terminations in the year (137) (206)
Change in non-participating investment contract liabilities recognised in the 58 65
consolidated income statement
Recurring management charges 1 (2)
At 31 December 665 684
24. Issued share capital and share premium
Shares are classified as equity instruments when there is no contractual
obligation to deliver cash or other assets to another entity on terms that may
be unfavourable. The Company's share capital consists of the number of
ordinary shares in issue multiplied by their nominal value. The difference
between the proceeds received on issue of the shares and the nominal value of
the shares issued is recorded in share premium.
Where the Company undertakes share buybacks, the reduction to retained
earnings is accounted for on the trade date of the transaction of each
repurchase with a liability recognised for unsettled trades, unless the
Company has an irrevocable contractual obligation with a third party. Where
the Company has an irrevocable contractual obligation, the full contractual
value of the buyback programme is recognised as a liability and as a reduction
to retained earnings on the date of the agreement. The reduction to share
capital for the cancellation of the shares and the related credit to the
capital redemption reserve is always accounted for on the settlement date for
the repurchases.
The movement in the issued ordinary share capital and share premium of the
Company was:
2024 2023
Ordinary share capital Share premium Ordinary share capital Share premium
Issued shares fully paid 13 61/63p each £m £m 13 61/63p each £m £m
At 1 January 1,840,740,364 257 640 2,001,891,899 280 640
Shares issued in respect of share incentive plans 2,265 - - 2,414 - -
Share buyback - - - (161,153,949) (23) -
At 31 December 1,840,742,629 257 640 1,840,740,364 257 640
All ordinary shares in issue in the Company rank pari passu and carry the same
voting rights and entitlement to receive dividends and other distributions
declared or paid by the Company.
In 2024 the Group has not undertaken any share buybacks.
During 2023, the Group undertook a £300m share buyback programme. The share
buyback commenced on 5 June 2023 and was completed on 19 December 2023. The
Company bought back and cancelled 161,153,949 shares for a total consideration
of £302m which included transaction costs.
The share buyback resulted in a reduction in retained earnings in the year
ended 31 December 2023 of £302m. In addition, £23m was credited to the
capital redemption reserve relating to the nominal value of the shares
cancelled.
The Company can issue shares to satisfy awards granted under employee
incentive plans which have been approved by shareholders. Details of the
Group's employee plans are provided in Note 40.
25. Shares held by trusts
Shares held by trusts relates to shares in abrdn plc that are held by the
abrdn Employee Benefit Trust (abrdn EBT), the abrdn Employee Trust (abrdn ET)
and the Aberdeen Asset Management Employee Benefit Trust 2003 (AAM EBT).
The abrdn EBT, abrdn ET and AAM EBT purchase shares in the Company for
delivery to employees under employee incentive plans. Purchased shares are
recognised as a deduction from equity at the price paid. Where new shares are
issued to the abrdn EBT, abrdn ET or AAM EBT the price paid is the nominal
value of the shares. When shares are distributed from the trust their
corresponding value is released to retained earnings.
2024 2023
Number of shares held by trusts
abrdn Employee Benefit Trust 30,362,961 34,076,343
abrdn Employee Trust 21,888,159 22,187,644
Aberdeen Asset Management Employee Benefit Trust 2003 1,707,127 2,080,853
26. Retained earnings
The following table shows movements in retained earnings during the year.
2024 2023
Notes £m £m
Opening balance carried forward 4,449 4,986
Effect of application of IFRS 9 on Investments in associates and joint - 51
ventures accounted for using the equity method(1)
Opening balance at 1 January 4,449 5,037
Recognised in comprehensive income
Recognised in profit/(loss) for the year attributable to equity holders 237 1
Recognised in other comprehensive income
Remeasurement losses on defined benefit pension plans 31 24 (139)
Share of other comprehensive income of associates and joint ventures 14 (47) (31)
Total items recognised in comprehensive income 214 (169)
Recognised directly in equity
Dividends paid on ordinary shares (260) (279)
Share buyback 24 - (302)
Transfer for vested employee share-based payments 32 31
Transfer between reserves on impairment of subsidiaries 27 94 169
Shares distributed by employee and other trusts (48) (38)
Aggregate tax effect of items recognised directly in equity 9 (1) -
Total items recognised directly in equity (183) (419)
At 31 December 4,480 4,449
1. The Group implemented IFRS 9 in 2019. However, as permitted
under a temporary exemption granted to insurers in IFRS 4 Insurance Contracts,
the Group's insurance joint venture, Heng An Standard Life Insurance Company
Limited (HASL), applied IFRS 9 at 1 January 2023 following the implementation
of the new insurance contracts standard, IFRS 17. In line with the approach
adopted by the Group on its implementation of IFRS 9 on 1 January 2019, the
2022 comparatives were not restated for HASL's adoption of IFRS 9. The impact
of HASL adopting IFRS 9 was recognised in retained earnings at 1 January 2023.
27. Movements in other reserves
In July 2006 Standard Life Group demutualised and during this process the
merger reserve, the reserve arising on Group reconstruction and the special
reserve were created.
Merger reserve: The merger reserve consists of two components. Firstly, at
demutualisation in July 2006 the Company issued shares to former members of
the mutual company. The difference between the nominal value of these shares
and their issue value was recognised in the merger reserve. The reserve
includes components attaching to each subsidiary that was transferred to the
Company at demutualisation based on their fair value at that date. Secondly,
following the completion of the merger of Standard Life plc and Aberdeen Asset
Management PLC on 14 August 2017, an additional amount was recognised in the
merger reserve representing the difference between the nominal value of shares
issued to shareholders of Aberdeen Asset Management PLC and their fair value
at that date. On disposal or impairment of a subsidiary any related component
of the merger reserve is released to retained earnings.
Reserve arising on Group reconstruction: The value of the shares issued at
demutualisation was equal to the fair value of the business at that date. The
business's assets and liabilities were recognised at their book value at the
time of demutualisation. The difference between the book value of the
business's net assets and its fair value was recognised in the reserve arising
on Group reconstruction. The reserve comprises components attaching to each
subsidiary that was transferred to the Company at demutualisation. On disposal
of such a subsidiary any related component of the reserve arising on Group
reconstruction is released to retained earnings.
Special reserve: Immediately following demutualisation and the related initial
public offering, the Company reduced its share premium reserve by court order
giving rise to the special reserve. Dividends can be paid out of this reserve.
Capital redemption reserve: In August 2018, as part of the return of capital
and share buyback the capital redemption reserve was created. In July 2022
there was a cancellation of the capital redemption reserve of £1,059m.
Additional capital redemption reserve is created by subsequent buybacks (refer
Note 24).
The following tables show the movements in other reserves during the year.
Cash flow hedges Foreign currency translation Merger reserve Equity compensation reserve Special reserve Reserve arising on Group reconstruction Capital redemption reserve Total
£m £m £m £m £m £m £m £m
1 January 2024 14 34 106 41 115 (685) 48 (327)
Recognised in other comprehensive income
Fair value losses on cash flow hedges 20 - - - - - - 20
Exchange differences on translating foreign operations - (2) - - - - - (2)
Items transferred to profit or loss (18) - - - - - - (18)
Total items recognised in other comprehensive income 2 (2) - - - - - -
Reserves credit for employee share-based payments - - - 26 - - - 26
Transfer to retained earnings for vested employee share-based payments - - - (32) - - - (32)
Transfer between reserves on impairment of subsidiaries - - (94) - - - - (94)
Total items recognised directly within equity - - (94) (6) - - - (100)
At 31 December 2024 16 32 12 35 115 (685) 48 (427)
As at 31 December 2024, none of the merger reserve relates to the Group's
asset management businesses. (2023: £94m). Following the impairment of the
Company's investment in abrdn Investments (Holdings) Limited (aIHL), £94m was
transferred from the merger reserve to retained earnings during the year ended
31 December 2024. £169m was also transferred from the merger reserve to
retained earnings in relation to aIHL during the year ended 31 December 2023.
Refer Note A in the Company financial statements for further details.
Cash flow hedges Foreign currency translation Merger reserve Equity compensation reserve Special reserve Reserve arising on Group reconstruction Capital redemption reserve Total
Notes £m £m £m £m £m £m £m £m
1 January 2023 23 70 275 48 115 (685) 25 (129)
Recognised in other comprehensive income
Fair value losses on cash flow hedges (40) - - - - - - (40)
Exchange differences on translating foreign operations - (35) - - - - - (35)
Items transferred to profit or loss 28 (1) - - - - - 27
Aggregate tax effect of items recognised in other comprehensive income 3 - - - - - - 3
Total items recognised in other comprehensive income (9) (36) - - - - - (45)
Recognised directly in equity
Share buyback 24 - - - - - - 23 23
Reserves credit for employee share-based payments - - - 24 - - - 24
Transfer to retained earnings for vested employee share-based payments - - - (31) - - - (31)
Transfer between reserves on impairment of subsidiaries - - (169) - - - - (169)
Total items recognised directly within equity - - (169) (7) - - 23 (153)
At 31 December 2023 14 34 106 41 115 (685) 48 (327)
28. Other equity and non-controlling interests
Perpetual subordinated notes issued by the Company are classified as other
equity where no contractual obligation to deliver cash exists.
(a) Other equity - perpetual subordinated notes
5.25% Fixed Rate Reset Perpetual Subordinated Contingent Convertible Notes
On 13 December 2021, the Company issued £210m of 5.25% Fixed Rate Reset
Perpetual Subordinated Contingent Convertible Notes (the Notes). These were
classified as other equity and initially recognised at £207m (proceeds
received less issuance costs of £3m).
The Notes initially bear interest on their principal amount at 5.25% per annum
payable semi-annually in arrears on 13 June and 13 December in each year. The
interest rate is subject to reset on 13 June 2027 and then every five years
thereafter. The payments of interest are discretionary and non-cumulative. The
interest paid is recognised as profit attributable to other equity when paid.
The profit for the year attributable to other equity was £11m (2023: £11m).
The Notes have no fixed redemption date. The Company has the option to redeem
the Notes (in full) between 13 December 2026 and 13 June 2027 and every five
years thereafter. The Notes are convertible to ordinary shares in the Company
at a conversion price of £1.6275 (fixed subject to adjustment for share
corporate actions e.g. share consolidations in accordance with the terms and
conditions of the Notes) if the Group IFPR CET1 Ratio falls below 70%. The
IFPR CET1 ratio at 31 December 2024 was 495% (2023: 467%).
(b) Non-controlling interests - ordinary shares
Non-controlling interests - ordinary shares of £5m were held at 31 December
2024 (2023: £5m). The profit for the year attributable to non-controlling
interests - ordinary shares was less than £1m (2023: less than £1m).
29. Financial liabilities
Management determines the classification of financial liabilities at initial
recognition. Financial liabilities which are managed and whose performance is
evaluated on a fair value basis are designated as at fair value through profit
or loss. Changes in the fair value of these financial liabilities are
recognised in the consolidated income statement.
Derivatives are also measured at fair value. Changes in the fair value of
derivatives are recognised in Net gains or losses on financial instruments and
other income in the consolidated income statement except for derivative
instruments that are designated as a cash flow hedge or net investment hedge.
The classification of derivatives and the accounting treatment of derivatives
designated as a hedging instrument are set out in Note 18.
Except for contingent consideration liabilities which are measured at fair
value, other financial liabilities are classified as being subsequently
measured at amortised cost. Amortised cost is calculated, and the related
interest expense is recognised in the consolidated income statement, using the
effective interest method.
All financial liabilities are initially recognised at fair value less, in the
case of financial liabilities subsequently measured at amortised cost,
transaction costs that are directly attributable to the issue of the
liability.
Where the terms of a financial liability measured at amortised cost are
modified and the modification does not result in the derecognition of the
liability, the liability is adjusted to the net present value of the future
cash flows less transaction costs with a modification gain or loss recognised
in the consolidated income statement.
The methods and assumptions used to determine fair value of financial
liabilities measured at fair value through profit or loss and derivatives are
discussed in Note 36.
The table below sets out an analysis of financial liabilities excluding unit
linked financial liabilities which are set out in Note 23.
At fair value through profit or loss(1) At amortised cost Total
2024 2023 2024 2023 2024 2023
Notes £m £m £m £m £m £m
Third party interest in consolidated funds 184 187 - - 184 187
Subordinated liabilities 30 - - 597 599 597 599
Derivative financial liabilities 18 3 9 - - 3 9
Other financial liabilities 32 111 129 937 1,112 1,048 1,241
Total 298 325 1,534 1,711 1,832 2,036
1. All financial liabilities measured at fair value through
profit or loss have been classified at FVTPL on a mandatory basis except for
third party interest in consolidated funds which the Group has designated as
at FVTPL.
30. Subordinated liabilities
Subordinated liabilities are debt instruments issued by the Company which rank
below its other obligations in the event of liquidation but above the share
capital. Subordinated liabilities are initially recognised at the value of
proceeds received after deduction of issue expenses. Subsequent measurement is
at amortised cost using the effective interest rate method.
2024 2023
Notes Principal Carrying value Principal amount Carrying value
amount
Subordinated notes
4.25% US Dollar fixed rate due 30 June 2028 $750m £597m $750m £599m
Total subordinated liabilities 36 £597m £599m
A description of the key features of the Group's subordinated liabilities as
at 31 December 2024 is as follows:
4.25% US Dollar fixed rate(1)
Principal amount $750m
Issue date 18 October 2017
Maturity date 30 June 2028
Callable at par at option of the Company from Not applicable
If not called by the Company interest will reset to Not applicable
1. The cash flows arising from the US dollar subordinated notes
give rise to foreign exchange exposure which the Group manages with a
cross-currency swap designated as a cash flow hedge. Refer Note 18 for further
details.
The difference between the fair value and carrying value of the subordinated
liabilities is presented in Note 36. A reconciliation of movements in
subordinated liabilities in the year is provided in Note 37.
The principal amount of the subordinated liabilities is expected to be settled
after more than 12 months. There was no accrued interest on the subordinated
liabilities at 31 December 2024 (2023: £13m). Any accrued interest is
expected to be settled within 12 months.
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