REG - abrdn PLC - Final Results - Part 8 of 8

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28/02/2023 07:16

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RNS Number : 2277R  abrdn PLC  28 February 2023

abrdn plc

Full Year Results 2022

Part 8 of 8

 

10. Glossary

Adjusted net financing costs and investment return

Adjusted net financing costs and investment return is a component of adjusted
profit and relates to the return from the net assets of the shareholder
business, net of costs of financing. This includes the net assets in defined
benefit staff pension plans and net assets relating to the financing of
subordinated liabilities.

Adjusted operating expenses

Adjusted operating expenses is a component of adjusted operating profit and
relates to the day-to-day expenses of managing our business.

Adjusted operating profit

Adjusted operating profit before tax is the Group's key APM. Adjusted
operating profit includes the results of the Group's three growth vectors:
Investments, Adviser and Personal, along with Corporate/strategic.

It excludes the Group's adjusted net financing costs and investment return,
and discontinued operations.

Adjusted operating profit also excludes the impact of the following items:

-     Restructuring costs 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.

-     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.

Adjusted profit before tax

In addition to the results included in adjusted operating profit above,
adjusted profit before tax includes adjusted net financing costs and
investment return.

Assets under management and administration (AUMA)

AUMA is a measure of the total assets we manage, administer or advise on
behalf of our clients. It includes assets under management (AUM), assets under
administration (AUA) and assets under advice (AUAdv). AUMA does not include
assets for associates and joint ventures.

AUM is a measure of the total assets that we manage on behalf of individual
and institutional clients. AUM also includes assets managed for corporate
purposes.

AUA is a measure of the total assets we administer for clients through our
Platforms.

AUAdv is a measure of the total assets we advise our clients on, for which
there is an ongoing charge.

Board

The Board of Directors of the Company.

Carbon intensity

Weighted-Average Carbon Intensity (WACI) is calculated by summing the product
of each company's weight in the portfolio or loan book with that company's
carbon-to-revenue intensity. Carbon-to-revenue intensity is calculated by
dividing the sum of all apportioned emissions, with the sum of all apportioned
revenues across an investment portfolio or loan book. This metric gives an
indication of how efficient companies in a portfolio or loan book are at
generating revenues per tonne of carbon emitted.

Carbon neutral

Being carbon neutral means that carbon released through our operational
emissions is balanced by an equivalent amount being removed through carbon
offsetting.

Carbon offsetting

Carbon offsetting is an internationally recognised way to take responsibility
for carbon emissions. The aim of carbon offsetting is that for every one tonne
of offsets purchased there will be one less tonne of carbon dioxide in the
atmosphere than there would otherwise have been. To offset emissions we
purchase the equivalent volume of carbon credits (independently verified
emissions reductions) to compensate for our operational carbon emissions. We
have been reviewing our use of offsetting, and although we continue to use
offsets as a means of addressing our residual emissions, our prime objective
is always to reduce our environmental impact before compensating for it.

Chief Operating Decision Maker

The executive leadership team.

Company

abrdn plc.

Cost/income ratio

This is an efficiency measure that is calculated as adjusted operating
expenses divided by net operating revenue.

CRD IV

CRD IV is the European regulatory capital regime (comprising the Capital
Requirements Directive and Capital Requirements Regulation) that applied to
investment firms up to and including 31 December 2021. The new IFPR regime
came into force on 1 January 2022.

Director

A director of the Company.

Earnings per share (EPS)

EPS is a commonly used financial metric which can be used to measure the
profitability and strength of a company over time. EPS is calculated by
dividing profit by the number of ordinary shares. Basic EPS uses the weighted
average number of ordinary shares outstanding during the year. Diluted EPS
adjusts the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares, such as share options
awarded to employees.

Effective tax rate

Tax expense/(credit) attributable to equity holders' profit divided by profit
before tax attributable to equity holders' profits expressed as a percentage.

Executive leadership team (ELT)

Our ELT leads across our businesses and supporting functions globally and is
responsible for executing and monitoring progress on the delivery of our
business plans. The ELT also ensures we meet our obligations to our clients,
people, shareholders, regulators and partners.

Fair value through profit or loss (FVTPL)

FVTPL is an IFRS measurement basis permitted for assets and liabilities which
meet certain criteria. Gains or losses on assets or liabilities measured at
FVTPL are recognised directly in the income statement.

FCA

Financial Conduct Authority of the United Kingdom.

Greenhouse gases

Greenhouse gases are the atmospheric gases responsible for causing global
warming (i.e. the greenhouse effect) and climate change. These gases, both
natural and anthropogenic in origin include carbon dioxide, methane and
nitrous oxide. Other greenhouse gases which are less prevalent but with a
greater Global Warming Potential include hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs) and sulphur hexafluoride (SF6).

Group or abrdn

Relates to the Company and its subsidiaries.

Growth vectors

We provide services across three growth vectors:

-     Investments: Asset management investment solutions for
institutional, wholesale and insurance clients.

-     Adviser: Our UK adviser platform business.

-     Personal: Comprises of Personal Wealth which includes our financial
planning business and our direct-to-consumer services, and interactive
investor following the completion of the acquisition in May 2022.

Internal Capital Adequacy and Risk Assessment (ICARA)

The ICARA is the means by which the Group assesses the levels of capital and
liquidity that adequately support all of the relevant current and future risks
in its business.

International Financial Reporting Standards (IFRS)

International Financial Reporting Standards are accounting standards issued by
the International Accounting Standards Board (IASB).

Investment Firms Prudential Regime (IFPR)

The Investment Firms Prudential Regime is the FCA's new prudential regime for
MiFID investment firms. The regime came into force on 1 January 2022.

Investment performance

Investment performance has been aggregated using a money weighted average of
our assets under management which are outperforming their respective
benchmark. The calculation of investment performance has been revised to use a
closing AUM weighting basis. In prior periods investment performance was
weighted based on AUM at the start of the performance period. 2021
comparatives have been restated. We believe that this approach provides a more
representative view of current investment performance, given the significant
changes to business mix over the investment time frame, and provides
investment performance data which is more comparable with peers. Calculations
for investment performance are made gross of fees with the exception of those
for which the stated comparator is net of fees. Benchmarks differ by fund and
are defined in the relevant investment management agreement or prospectus, as
appropriate. The investment performance calculation covers all funds that aim
to outperform a benchmark, with certain assets excluded where this measure of
performance is not appropriate or expected, such as private markets and
execution only mandates, as well as replication tracker funds which aim to
perform in line with a given index.

LBG tranche withdrawals

On 24 July 2019, the Group announced that it had agreed a final settlement in
relation to the arbitration proceedings between the parties concerning LBG's
attempt to terminate investment management arrangements under which assets
were managed by members of the Group for LBG entities. In its decision of
March 2019, the arbitral tribunal found that LBG was not entitled to terminate
these investment management contracts. The Group had continued to manage
approximately £104bn (as at 30 June 2019) of assets under management (AUM)
for LBG entities during the period of the dispute. Approximately two thirds of
the total AUM (the transferring AUM) will be transferred to third party
managers appointed by LBG through a series of planned tranches from 24 July
2019. During this period, the Group will continue to be remunerated for its
services in relation to the transferring AUM. The final tranche withdrawal was
completed in H1 2022.

Market Disclosure

This IFPR disclosure complements the Own funds requirement and Own funds
threshold requirement with the aim of improving market discipline by requiring
companies to publish certain details of their risks, capital and risk
management. Relevant disclosures are made in the abrdn plc consolidated annual
report and accounts and in the accounts of the Group's individual
IFPR-regulated entities, all of which can be found on the abrdn plc Group's
website.

Net flows

Net flows represent gross inflows less gross outflows or redemptions. Gross
inflows are new funds from clients. Redemptions is the money withdrawn by
clients during the period. Cash dividends which are retained on the ii
platform are included in net flows for the ii business only. Cash dividends
are included in market movements for other parts of the group including the
Investments and Adviser platform businesses. We consider that this different
approach is appropriate for the ii business as cash dividend payments which
are retained result in additional income for ii, but are largely revenue
neutral for the rest of the group.

Net operating revenue

The Group's measure of segmental revenue has been renamed from fee based
revenue to net operating revenue. There are no differences between Net
operating revenue as presented in the IFRS consolidated income statement and
the analysis of Group adjusted profit by segment for the year ended 31
December 2022. This measure of segmental revenue excludes £28m of net
operating revenue as presented in the IFRS consolidated income statement for
the year ended 31 December 2021 which was classified as adjusting items. The
adjusting items primarily related to the net release of deferred income of
£25m (refer Note 32).

Net operating revenue is a component of adjusted operating profit and includes
revenue we generate from asset management charges (AMCs), platform charges,
treasury income and other transactional charges. AMCs are earned on products
such as mutual funds, and are calculated as a percentage fee based on the
assets held. Investment risk on these products rests principally with the
client, with our major indirect exposure to rising or falling markets coming
from higher or lower AMCs. Treasury income is the interest earned on cash
balances less the interest paid to customers. Net operating revenue is shown
net of fees, costs of sale, commissions and similar charges. Costs of sale
include revenue from fund platforms which is passed to the product provider.

Net operating revenue yield (bps)

The net operating revenue yield (previously named fee revenue yield) is a
measure that illustrates the average margin being earned on the assets that we
manage, administer or advise our clients on excluding interactive investor. It
is calculated as annualised net operating revenue (excluding performance fees,
interactive investor and revenue for which there are no attributable assets)
divided by monthly average fee based assets. interactive investor is excluded
from the calculation of Personal and total net operating revenue yield as fees
charged for this business are primarily from subscriptions and trading
transactions.

Net zero

It is generally accepted that net zero is the target of completely negating
the amount of greenhouse gases produced by human activity, to be achieved by
reducing emissions to the lowest possible amount and offsetting (see carbon
offsetting) only the remainder as a last resort.

Net Zero Directed Investing

Net Zero Directed Investing means moving towards the goal of net zero in the
real world - not just in specific investment portfolios. At abrdn we seek to
achieve this goal through a holistic set of actions, including rigorous
research into net-zero trajectories, developing net-zero-directed investment
solutions and active ownership to influence corporates and policy makers.

Operational emissions

Operational emissions are the greenhouse gas emissions related to the
operations of our business. They are categorised into three groups or 'scopes'
in alignment with the Greenhouse Gas Protocol. Corporate Accounting and
Reporting Standard. Scope 1 covers direct emissions from owned or controlled
sources. Scope 2 covers indirect emissions from the generation of purchased
electricity, steam, heating and cooling consumed by the reporting company.
Scope 3 includes all other indirect emissions that occur in a company's value
chain. At abrdn we report on Scope 1 and Scope 2 emissions, and a selection of
Scope 3 categories, where deemed material, which includes our working from
home emissions.

Own Funds Requirement

Under IFPR, the Own Funds Requirement is the higher of the permanent minimum
capital requirement, the fixed overhead requirements, and the K-factor
requirement. The K-factor requirement is the sum of: Risk-to-Client,
Risk-to-Market, and Risk-to-Firm K-factors.

Own Funds Threshold Requirement

Under IFPR, the Own Funds Threshold Requirement is the higher of Own funds
required on an ongoing basis and Own funds required on a wind-down basis. The
firm identifies and measures risks of harm and determines the degree to which
systems and controls alone mitigate those risks of harm (or risks of
disorderly wind-down). Any additional own funds needed, over and above the Own
funds requirement, to cover this identified residual risk is held under the
Own Funds Threshold Requirement.

Paris alignment

'Paris alignment' refers to the alignment of public and private financial
flows with the objectives of the Paris Agreement on climate change. Article
2.1c of the Paris Agreement defines this alignment as making finance flows
consistent with a pathway towards low greenhouse gas emissions and
climate-resilient development. Alignment in this way will help to scale up the
financial flows needed to strengthen the global response to the threat of
climate change.

Phoenix or Phoenix Group

Phoenix Group Holdings plc or Phoenix Group Holdings plc and its subsidiaries.

Significant listed investments

Relates to our investments in HDFC Asset Management, HDFC Life and Phoenix.
Fair value movements and dividend income relating to these investments are
treated as adjusting items for the purpose of determining the Group's adjusted
profit.

Subordinated liabilities

Subordinated liabilities are debts of a company which, in the event of
liquidation, rank below its other debts but above share capital. The 5.25%
Fixed Rate Reset Perpetual Subordinated Contingent Convertible Notes issued by
the Company in December 2021 are classified as other equity as no contractual
obligation to deliver cash exists.

11. Shareholder information

Registered office

1 George Street

Edinburgh

EH2 2LL

Scotland

Company registration number: SC286832

For shareholder services call: 0371 384 2464*

* Calls are monitored/recorded to meet regulatory obligations and for training
and quality purposes. Call charges will vary.

Secretary: Julian Baddeley
Registrar: Equiniti
Auditors: KPMG LLP
Solicitors: Slaughter and May
Brokers: JP Morgan Cazenove, Goldman Sachs
Shareholder services

We offer a wide range of shareholder services. For more information, please:

-     Contact our registrar, Equiniti, who manage this service for us.
Their details can be found on the inside back cover.

-     Visit our share portal at www.abrdnshares.com

Sign up for Ecommunications

Signing up means:

-     You'll receive an email when documents like the annual report and
accounts, Half year results and AGM guide are available on our website.

-     Voting instructions for the Annual General Meeting will be sent to
you electronically.

Set up a share portal account

Having a share portal account means you can:

-     Manage your account at a time that suits you.

-     Download your documents when you need them.

To find out how to sign up, visit www.abrdnshares.com
(http://www.abrdnshares.com)

Preventing unsolicited mail

By law, the Company has to make certain details from its share register
publicly available. As a result it is possible that some registered
shareholders could receive unsolicited mail, emails or phone calls. You could
also be targeted by fraudulent 'investment specialists', clone firms or
scammers posing as government bodies e.g. HMRC, FCA. Frauds are becoming much
more sophisticated and may use real company branding, the names of real
employees or email addresses that appear to come from the company. If you get
a social or email message and you're unsure if it is from us, you can send it
to emailscams@abrdn.com (mailto:emailscams@abrdn.com) and we'll let you know.

You can also check the FCA warning list and warning from overseas regulators,
however, please note that this is not an exhaustive list and do not assume
that a firm is legitimate just because it does not appear on the list as
fraudsters frequently change their name and it may not have been reported yet.

www.fca.org.uk/consumers/unauthorised-firms-individuals

www.iosco.org/investor_protection/?subsection=investor_alerts_portal
(http://www.iosco.org/investor_protection/?subsection=investor_alerts_portal)

You can find more information about share scams at the Financial Conduct
Authority website www.fca.org.uk/consumers/scams

If you are a certificated shareholder, your name and address may appear on a
public register. Using a nominee company to hold your shares can help protect
your privacy. You can transfer your shares into the Company-sponsored nominee
- the abrdn Share Account - by contacting Equiniti, or you could get in touch
with your broker to find out about their nominee services.

If you want to limit the amount of unsolicited mail you receive generally,
please visit www.mpsonline.org.uk

Financial calendar
 Full year results 2022                                28 February
 Ex-dividend date for 2022 final dividend              30 March
 Record date for 2022 final dividend                   31 March
 Last date for DRIP elections for 2022 final dividend  26 April
 Annual General Meeting - Edinburgh                    10 May
 Dividend payment date for 2022 final dividend         16 May
 Half year results 2023                                8 August
 Ex-dividend date for 2023 interim dividend            17 August
 Record date for 2023 interim dividend                 18 August
 Last date for DRIP elections for 2023                 6 September

interim dividend
 Dividend payment date for 2023 interim dividend       26 September

Analysis of registered shareholdings at 31 December 2022
 Range of shares  Number of holders  % of total holders  Number of shares  % of total shares
 1-1,000          58,446             65.56               23,403,697        1.17
 1,001-5,000      26,027             29.19               54,067,044        2.70
 5,001-10,000     2,732              3.06                18,432,881        0.92
 10,001-100,000   1,495              1.68                35,094,093        1.75
 (#)100,001+      455                0.51                1,870,894,184     93.46
 Total            89,155             100.00              2,001,891,899     100.00

#   These figures include the Company-sponsored nominee - the abrdn Share
Account - which had 914,644 participants holding 648,559,822 shares.

12. Forward-looking statements

This document may contain certain 'forward-looking statements' with respect to
the financial condition, performance, results, strategies, targets,
objectives, plans, goals and expectations of the Company and its affiliates.
These forward-looking statements can be identified by the fact that they do
not relate only to historical or current facts.

Forward-looking statements are prospective in nature and are not based on
historical or current facts, but rather on current expectations, assumptions
and projections of management of the abrdn Group about future events, and are
therefore subject to known and unknown risks and uncertainties which could
cause actual results to differ materially from the future results expressed or
implied by the forward-looking statements.

For example but without limitation, statements containing words such as 'may',
'will', 'should', 'could', 'continues', 'aims', 'estimates', 'projects',
'believes', 'intends', 'expects', 'hopes', 'plans', 'pursues', 'ensure',
'seeks', 'targets' and 'anticipates', and words of similar meaning (including
the negative of these terms), may be forward-looking. These statements are
based on assumptions and assessments made by the Company in light of its
experience and its perception of historical trends, current conditions, future
developments and other factors it believes appropriate.

By their nature, all forward-looking statements involve risk and uncertainty
because they are based on information available at the time they are made,
including current expectations and assumptions, and relate to future events
and/or depend on circumstances which may be or are beyond the Group's control,
including among other things: UK domestic and global political, economic and
business conditions, (such as the UK's exit from the EU and the ongoing
conflict between Russia and Ukraine); market related risks such as
fluctuations in interest rates and exchange rates, and the performance of
financial markets generally; the impact of inflation and deflation; the impact
of competition; the timing, impact and other uncertainties associated with
future acquisitions, disposals or combinations undertaken by the Company or
its affiliates and/or within relevant industries; experience in particular
with regard to mortality and morbidity trends, lapse rates and policy renewal
rates; the value of and earnings from the Group's strategic investments and
ongoing commercial relationships; default by counterparties; information
technology or data security breaches (including the Group being subject to
cyberattacks); operational information technology risks, including the Group's
operations being highly dependent on its information technology systems (both
internal and outsourced); natural or man-made catastrophic events; the impact
of pandemics, such as the COVID-19 (coronavirus) outbreak; climate change and
a transition to a low-carbon economy (including the risk that the Group may
not achieve its targets); exposure to third party risks including as a result
of outsourcing; the failure to attract or retain necessary key personnel; the
policies and actions of regulatory authorities and the impact of changes in
capital, solvency or accounting standards, and tax and other legislation and
regulations (including changes to the regulatory capital requirements that the
Group is subject to in the jurisdictions in which the Company and its
affiliates operate. As a result, the Group's actual future financial
condition, performance and results may differ materially from the plans,
goals, objectives and expectations set forth in the forward-looking
statements.

Neither the Company, nor any of its associates, directors, officers or
advisers, provides any representation, assurance or guarantee that the
occurrence of the events expressed or implied in any forward-looking
statements in this document will actually occur. Persons receiving this
document should not place reliance on forward-looking statements. All
forward-looking statements contained in this document are expressly qualified
in their entirety by the cautionary statements contained or referred to in
this section. Each forward-looking statement speaks only as at the date of the
particular statement. Neither the Company nor its affiliates assume any
obligation to update or correct any of the forward-looking statements
contained in this document or any other forward-looking statements it or they
may make (whether as a result of new information, future events or otherwise),
except as required by law. Past performance is not an indicator of future
results and the results of the Company and its affiliates in this document may
not be indicative of, and are not an estimate, forecast or projection of, the
Company's or its affiliates' future results.

 

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