REG - abrdn PLC - Half-year Report - Part 2 of 3
06/08/2024 07:00
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RNS Number : 2629Z abrdn PLC 06 August 2024
abrdn plc
Half Year Results 2024
Part 2 of 3
2. Statement of Directors' responsibilities
Each of the Directors, whose names and functions are listed on the abrdn plc
website, www.abrdn.com, confirms to the best of his or her knowledge and
belief that:
- The condensed consolidated income statement, the condensed
consolidated statement of comprehensive income, the condensed consolidated
statement of financial position, the condensed consolidated statement of
changes in equity and the condensed consolidated statement of cash flows and
associated notes, have been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted for use in the UK.
- The interim management report includes a fair review of the
information required by:
- DTR 4.2.7R of the FCA's Disclosure Guidance and Transparency Rules
Sourcebook, being an indication of important events that have occurred during
the first six months of the financial year and their impact on the condensed
consolidated financial information and a description of the principal risks
and uncertainties for the remaining six months of the year.
- DTR 4.2.8R of the FCA's Disclosure Guidance and Transparency Rules
Sourcebook, being related party transactions that have taken place in the
first six months of the current financial year and that have materially
affected the financial position or performance of the entity during that
period; and any changes in the related party transactions described in the
last annual report that could do so.
- As per principle N of the UK Corporate Governance Code, the Half year
results 2024 taken as a whole, present a fair, balanced and understandable
assessment of the Company's position and prospects.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Changes to Directors during the period
As announced on 27 February, Catherine Bradley retired from the Board at the
conclusion of the AGM on 24 April. Stephen Bird stepped down from the Board on
24 May. The Company also announced the appointment of Jason Windsor as Interim
Group CEO on 24 May following the commencement of a formal CEO search process.
By order of the Board
Sir Douglas Flint Jason Windsor
Chairman Interim Chief Executive Officer
5 August 2024 5 August 2024
3. Independent review report to abrdn plc
Conclusion
We have been engaged by abrdn plc ('the Company' or 'the Group') to review the
condensed set of financial statements in the half-yearly financial report for
the six months ended 30 June 2024 which comprises condensed consolidated
income statement, condensed consolidated statement of comprehensive income,
condensed consolidated statement of financial position, condensed consolidated
statement of changes in equity, condensed consolidated statement of cash flows
and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2024 is not prepared, in all
material respects, in accordance with IAS 34 Interim Financial Reporting as
adopted for use in the UK and the Disclosure Guidance and Transparency Rules
('the DTR') of the UK's Financial Conduct Authority ('the UK FCA')
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ('ISRE (UK) 2410') issued for use in the UK.
A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. We read the other information
contained in the half-yearly financial report and consider whether it contains
any apparent misstatements or material inconsistencies with the information in
the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
The annual financial statements of the Group are prepared in accordance with UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the directors are responsible for assessing the Group'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 the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Richard Faulkner
for and on behalf of KPMG LLP
Chartered Accountants
Saltire Court
20 Castle Terrace
Edinburgh
EH1 2EG
5 August 2024
4. Financial information
Condensed consolidated income statement
For the six months ended 30 June 2024
6 months 6 months Full Year
2024 2023 2023
Notes £m £m £m
Revenue from contracts with customers 4.4(a) 697 763 1,474
Cost of sales 4.4(b) (30) (42) (76)
Net operating revenue 667 721 1,398
Restructuring and corporate transaction expenses 4.6 (51) (113) (152)
Impairment of intangibles acquired in business combinations and through the 4.6 (5) (63)
purchase of customer contracts
(37)
Amortisation of intangibles acquired in business combinations and through the 4.6 (59) (126)
purchase of customer contracts
(65)
Staff costs and other employee-related costs 4.6 (263) (275) (529)
Other administrative expenses 4.6 (295) (274) (593)
Total administrative and other expenses (673) (764) (1,463)
Net gains or losses on financial instruments and other income
Fair value movements and dividend income on significant listed investments 4.5 13 (114)
(144)
Other net gains or losses on financial instruments and other income 4.5 72 26 116
Total net gains or losses on financial instruments and other income 85 (118) 2
Finance costs (12) (12) (25)
Profit on disposal of subsidiaries and other operations 4.2(b) 88 - 79
Profit on disposal of interests in joint ventures 4.2(b) 11 - -
Reversal of impairment of interests in joint ventures 4.12 - - 2
Share of profit or loss from associates and joint ventures 4.12 21 4 1
Profit/(loss) before tax 187 (169) (6)
Tax (expense)/credit 4.7 (16) 24 18
Profit/(loss) for the period 171 (145) 12
Attributable to:
Equity shareholders of abrdn plc 165 (151) 1
Other equity holders 6 6 11
Non-controlling interests - ordinary shares - - -
171 (145) 12
Earnings per share
Basic (pence per share) 4.8 9.2 (7.7) 0.1
Diluted (pence per share) 4.8 9.1 (7.7) 0.1
The Notes on pages 25 to 49 are an integral part of this condensed
consolidated financial information.
Condensed consolidated statement of comprehensive income
For the six months ended 30 June 2024
6 months 6 months Full Year
2024 2023 2023
Notes £m £m £m
Profit/(loss) for the period 171 (145) 12
Items that will not be reclassified subsequently to profit or loss:
Remeasurement gains/(losses) on defined benefit pension plans 4.17 72 (81) (139)
Share of other comprehensive income of associates and joint ventures 4.12 1 - (4)
Total items that will not be reclassified subsequently to profit or loss 73 (81) (143)
Items that may be reclassified subsequently to profit or loss:
Fair value gains/(losses) on cash flow hedges 9 (13) (40)
Exchange differences on translating foreign operations (7) (42) (35)
Share of other comprehensive income of associates and joint ventures 4.12 (50) (18) (27)
Items transferred to the condensed consolidated income statement
Fair value (gains)/losses on cash flow hedges (9) 30 28
Realised foreign exchange (gains) 4.2 - - (1)
Equity holder tax effect of items that may be reclassified subsequently to 4.7 - 3
profit or loss
(4)
Total items that may be reclassified subsequently to profit or loss (57) (47) (72)
Other comprehensive income for the period 16 (128) (215)
Total comprehensive income for the period 187 (273) (203)
Attributable to:
Equity shareholders of abrdn plc 181 (279) (214)
Other equity holders 6 6 11
Non-controlling interests - ordinary shares - - -
187 (273) (203)
The Notes on pages 25 to 49 are an integral part of this condensed
consolidated financial information.
Condensed consolidated statement of financial position
As at 30 June 2024
30 Jun 30 Jun 31 Dec
2024 2023(1) 2023
Notes £m £m £m
Assets
Intangible assets 4.11 1,514 1,548 1,578
Pension and other post-retirement benefit assets 4.17 821 772 740
Investments in associates and joint ventures accounted for using the equity 4.12 198 229
method
245
Property, plant and equipment 4.13 150 162 163
Deferred tax assets 202 220 215
Financial investments 4.19 1,919 2,080 2,047
Receivables and other financial assets 1,262 1,238 1,071
Current tax recoverable 7 11 10
Other assets 4.14 74 100 77
Assets held for sale 4.15 11 83 19
Cash and cash equivalents 1,397 1,407 1,196
7,555 7,866 7,345
Assets backing unit linked liabilities 4.19
Financial investments 655 873 669
Receivables and other unit linked assets 8 8 4
Cash and cash equivalents 15 13 13
678 894 686
Total assets 8,233 8,760 8,031
Liabilities
Third party interest in consolidated funds 4.19 206 212 187
Subordinated liabilities 604 588 599
Pension and other post-retirement benefit provisions 4.17 12 9 12
Deferred tax liabilities 120 145 129
Current tax liabilities 5 6 6
Derivative financial liabilities 4.19 4 2 9
Other financial liabilities(1) 1,393 1,461 1,241
Provisions 4.18 62 58 66
Other liabilities 4 10 4
Liabilities of operations held for sale 4.15 2 6 2
2,412 2,497 2,255
Unit linked liabilities 4.19
Investment contract liabilities 670 724 684
Third party interest in consolidated funds - 165 -
Other unit linked liabilities 8 5 2
678 894 686
Total liabilities 3,090 3,391 2,941
Equity
Share capital 4.16(a) 257 274 257
Shares held by trusts 4.16(b) (132) (147) (141)
Share premium reserve 4.16(a) 640 640 640
Retained earnings 4,509 4,547 4,449
Other reserves (343) (159) (327)
Equity attributable to equity shareholders of abrdn plc 4,931 5,155 4,878
Other equity 207 207 207
Non-controlling interests - ordinary shares 5 7 5
Total equity 5,143 5,369 5,090
Total equity and liabilities 8,233 8,760 8,031
1. The Group has made a presentational change to show Deferred income within
Other financial liabilities.
The Notes on pages 25 to 49 are an integral part of this condensed
consolidated financial information.
Condensed consolidated statement of changes in equity
For the six months ended 30 June 2024
Share capital Shares held by trusts Share premium reserve Retained earnings Other reserves Total equity attributable Other equity Non-controlling interests - ordinary shares Total equity
to 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 period - - - 165 - 165 6 - 171
Other comprehensive income for the period - - - 23 (7) 16 - - 16
Total comprehensive income for the period - - - 188 (7) 181 6 - 187
Issue of share capital 4.16(a) - - - - - - - - -
Dividends paid on ordinary shares 4.10 - - - (130) - (130) - - (130)
Interest paid on other equity - - - - - - (6) - (6)
Reserves credit for employee share-based payments - - - - 15 15 - - 15
Transfer to retained earnings for vested employee share-based payments - - - 24 (24) - - - -
Shares acquired by employee trusts - (10) - - - (10) - - (10)
Shares distributed by employee and other trusts and related dividend - 19 - (21) - (2) - - (2)
equivalents
Aggregate tax effect of items recognised directly in equity 4.7 - - - (1) - (1) - - (1)
30 June 2024 257 (132) 640 4,509 (343) 4,931 207 5 5,143
Share capital Shares held by trusts Share premium reserve Retained earnings(1) Other reserves Total equity attributable Other equity Non-controlling interests - ordinary shares Total equity(1)
to equity
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
(Loss)/profit for the period - - - (151) - (151) 6 - (145)
Other comprehensive income for the period (99) (29) (128) (128)
- - - - -
Total comprehensive income for the period (250) (29) (279) 6 - (273)
- - -
Issue of share capital 4.16(a) - - - - - - - - -
Dividends paid on ordinary shares 4.10 (142) - (142) (142)
- - - - -
Interest paid on other equity - - - - - - (6) - (6)
Share buyback 4.16(a) (6) - - (98) 6 (98) - - (98)
Reserves credit for employee share-based payments 13 13 13
- - - - - -
Transfer to retained earnings for vested employee share-based payments 20 (20)
- - - - - - -
Shares acquired by employee trusts - (19) (19) (19)
- - - - -
Shares distributed by employee and other trusts and related dividend 21 (22) (1) (1)
equivalents
- - - - -
Aggregate tax effect of items recognised directly in equity 4.7 - 2 2 2
- - - - -
30 June 2023 274 (147) 640 4,547 (159) 5,155 207 7 5,369
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
comparatives have not been restated for HASL's adoption of IFRS 9. The impact
of HASL adopting IFRS 9 is recognised in retained earnings at 1 January 2023.
Share capital Shares held by trusts Share premium reserve Retained earnings(1) Other reserves Total equity attributable Other equity Non-controlling interests - ordinary shares Total equity(1)
to equity
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
ventures accounted for using the equity method(1)
- - - 51 - 51 - - 51
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
- - - (169) (45) (214) 11 - (203)
Issue of share capital 4.16(a) - - - - - - - - -
Dividends paid on ordinary shares 4.10
- - - (279) - (279) - - (279)
Interest paid on other equity - - - - - - (11) - (11)
Share buyback 4.16(a) (23) - - (302) 23 (302) - - (302)
Other movements in non-controlling interests in the year
- - - - - - - (2) (2)
Reserves credit for employee share-based payments
- - - - 24 24 - - 24
Transfer to retained earnings for vested employee share-based payments
- - - 31 (31) - - - -
Transfer between reserves on impairment of subsidiaries 4.16(c)
- - - 169 (169) - - - -
Shares acquired by employee trusts
- (27) - - - (27) - - (27)
Shares distributed by employee and other trusts and related dividend
equivalents
- 35 - (38) - (3) - - (3)
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, 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 comparatives have not been restated for HASL's adoption
of IFRS 9. The impact of HASL adopting IFRS 9 is recognised in retained
earnings at 1 January 2023.
The Notes on pages 25 to 49 are an integral part of this condensed
consolidated financial information.
Condensed consolidated statement of cash flows
For the six months ended 30 June 2024
6 months 6 months Full Year
2024 2023 2023
Notes £m £m £m
Cash flows from operating activities
Profit/(loss) before tax 187 (169) (6)
Change in operating assets (129) (86) 157
Change in operating liabilities 147 181 (109)
Adjustment for non-cash movements in investment income (5) (1) 3
Other non-cash and non-operating items (21) 175 210
Taxation paid(1) (9) (23) (34)
Net cash flows from operating activities 170 77 221
Cash flows from investing activities
Purchase of property, plant and equipment (7) (9) (18)
Proceeds from sale of property, plant and equipment 1 - -
Acquisition of subsidiaries and unincorporated businesses net of cash acquired - - (108)
Disposal of subsidiaries net of cash disposed of 44 - 139
Acquisition of investments in associates and joint ventures - (2) (2)
Proceeds in relation to contingent consideration 2 2 21
Payments in relation to contingent consideration (4) (4) (12)
Disposal of investments in associates and joint ventures 20 - -
Purchase of financial investments (49) (291) (445)
Proceeds from sale or redemption of financial investments 197 871 1,029
Taxation paid on sale or redemption of financial investments(1) - (41) (41)
Prepayment in respect of potential acquisition of customer contracts 4.21(b) 1 13 20
Acquisition of intangible assets (3) (35) (41)
Net cash flows from investing activities 202 504 542
Cash flows from financing activities
Payment of lease liabilities - principal (12) (13) (24)
Payment of lease liabilities - interest (3) (3) (6)
Shares acquired by trusts (9) (19) (27)
Interest paid on subordinated liabilities and other equity (15) (16) (20)
Other interest paid (1) (2) (3)
Cash received relating to collateral held in respect of derivatives hedging 8 (50)
subordinated liabilities
(11)
Share buyback - (98) (302)
Ordinary dividends paid 4.10 (130) (142) (279)
Net cash flows from financing activities (162) (304) (711)
Net increase in cash and cash equivalents 210 277 52
Cash and cash equivalents at the beginning of the period 1,210 1,166 1,166
Effects of exchange rate changes on cash and cash equivalents (5) (16) (8)
Cash and cash equivalents at the end of the period(2) 1,415 1,427 1,210
Supplemental disclosures on cash flows from operating activities
Interest received 42 37 85
Dividends received 40 53 91
Rental income received on investment property 2 2 3
1. Total taxation paid for the six months ended 30 June 2024 was £9m (six
months ended 30 June 2023: £64m, 12 months ended 31 December 2023: £75m).
2. Comprises cash and cash equivalents, including cash and cash equivalents
backing unit linked liabilities, and overdrafts which are reported in other
financial liabilities in the condensed consolidated statement of financial
position. Cash and cash equivalents at 30 June 2024 were £1,415m (30 June
2023: £1,427m, 31 December 2023: £1,210m) of which £3m (30 June 2023: £7m,
31 December 2023: £1m) is included in assets of operations held for sale in
the condensed consolidated statement of financial position (refer Note 4.15).
The Group had no overdrafts at 30 June 2024 (30 June 2023: £nil, 31 December
2023: £nil).
The Notes on pages 25 to 49 are an integral part of this condensed
consolidated financial information.
Notes to the condensed consolidated financial statements
4.1 Presentation of the condensed consolidated financial statements
(a) Basis of preparation
The condensed consolidated half year financial information has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted for use in
the UK and the Disclosure Guidance and Transparency Rules of the UK's
Financial Conduct Authority.
The accounting policies for recognition, measurement, consolidation and
presentation as set out in the Annual report and accounts for the year ended
31 December 2023 have been applied in the preparation of the condensed
consolidated half year financial information except as noted below.
(a)(i) New standards, interpretations and amendments to existing standards that have been adopted by the Group
The Group has adopted the following new International Financial Reporting
Standards (IFRSs), interpretations and amendments to existing standards, which
are effective 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 amendments.
Management considers the implementation of the above amendments to have no
significant impact on the Group's financial statements.
(b) 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
Management report and in the Annual report and accounts 2023 Strategic report.
This includes details on our liquidity and capital positions and our principal
risks, including the impacts of the macroeconomic environment and global and
regional geopolitical events on these principal risks.
In preparing these half year results 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 £1.8bn at 30 June 2024. In
addition, the Company has a revolving credit facility of £400m as part of our
contingency funding plans which is due to mature in 2026 and remains undrawn.
- The Group's indicative regulatory Common Equity Tier 1 (CET1) capital
surplus on an IFPR basis was £954m in excess of capital requirements at 30
June 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 2023 Viability statement. The diverse range
of management actions available meant the Group was 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
condensed consolidated 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.
(c) Condensed consolidated half year financial information
This condensed consolidated half year financial information does not comprise
statutory accounts within the meaning of Section 434 of the Companies Act
2006. Additionally, the comparative figures for the financial year ended 31
December 2023 are not the Company's statutory accounts for that financial
year. The statutory accounts have been reported on by the Company's auditor
and delivered to the Registrar of Companies. The report of the auditor was (i)
unqualified, (ii) did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their report, and
(iii) did not contain a statement under Section 498 (2) or (3) of the
Companies Act 2006. The condensed consolidated half year financial information
has been reviewed, not audited.
4.2 Acquisitions and disposals
(a) Acquisitions
(a)(i) Prior period acquisitions of subsidiaries and other operations
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.
(b) Disposals
(b)(i) Current period disposal of subsidiaries and other operations
European-headquartered Private Equity business
Profit on disposal of subsidiaries and other for the six months ended 30 June
2024 relates to the sale of the Group's European-headquartered Private Equity
business to Patria Investments. The sale completed on 26 April 2024. The
European-headquartered Private Equity business was reported in the Investments
segment.
The gain on sale before tax, which is included in profit on disposals of
subsidiaries and other operations in the condensed consolidated income
statement for the six months ended 30 June 2024 for the European-headquartered
Private Equity business was calculated as follows:
26 April 2024 £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 70
balances(1,2)
Fair value of deferred/contingent consideration and retained interest(3) 36
Gain on sale before tax 88
1. Following the completion of the sale, £3m relating to a number of
unsettled outstanding intercompany balances which previously eliminated on
consolidation are now recognised as an asset of the Group.
2. Included in cash consideration is £10m for additional upfront
consideration which is determined based on the net assets of the
European-headquartered Private Equity business following a number of
adjustments detailed in the sale price agreement. The additional consideration
of £10m is a provisional figure and remains subject to agreement with Patria
Investments.
3. The Group has also retained certain carried interest entitlements which
has been recognised in the condensed consolidated statement of financial
position at a fair value of £6m.
Prior to the completion of the sale, the European-headquartered Private Equity
business was classified as an operation held for sale (refer Note 4.15).
(b)(ii) Current period disposal of joint ventures
Virgin Money Unit Trust Managers (Virgin Money UTM)
Profit on disposal of interests in joint ventures for the six months ended 30
June 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 4.15). The interest in Virgin Money UTM did not form part of the
Group's reportable segments.
(b)(iii) Prior period disposal of subsidiaries and other operations
There were no disposals of subsidiaries and other operations during the six
months ended 30 June 2023.
During the 12 months ended 31 December 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 (previously named Personal) 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 12 months
ended 31 December 2023 have been summarised below.
£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 12 months 79
ended 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 12 months ended 31 December 2023.
4.3 Segmental analysis
The Group's reportable segments have been identified in accordance with the
way in which the Group is structured and managed. IFRS 8 Operating Segments
requires that the information presented in the financial statements is based
on information provided to the 'Chief Operating Decision Maker' which for the
Group is the executive leadership team.
(a) Basis of segmentation
(a)(i) Current reportable segments
Investments
Our global asset management business which provides investment solutions for
Institutional, Retail Wealth and Insurance Partners clients.
Adviser
Our UK financial adviser business which provides platform services to wealth
managers and advisers.
interactive investor (ii) (previously named Personal)
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 4.2(b)(iii) for further details.
In addition to the Group's reportable segments above, the analysis of adjusted
profit in Section 4.3(b)(i) below also reports the following:
Other business operations and corporate costs (Other)
Other comprises of Finimize and our digital innovation group along with
certain corporate costs.
(a)(ii) Changes to basis of segmentation
As noted above, the Group reports Other in addition to its reportable
segments. For the six months ended 30 June 2023, the Group had previously only
reported certain corporate costs in addition to its reportable segments
(reported as Corporate/strategic). These costs are now reported within Other
along with Finimize and our digital innovation group which were previously
reported within Investments. Including Finimize and our digital innovation
group within Other rather than the Investments reportable segment is
considered to provide a clearer depiction of business structure and
performance. Comparative amounts for the six months ended 30 June 2023 have
now been prepared on a consistent basis. Comparative amounts for the 12 months
ended 31 December 2023 were already prepared on this basis.
(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.
Investments Adviser ii Other Total
6 months 2024 Notes £m £m £m £m £m
Net operating revenue 4.4 406 119 137 5 667
Adjusted operating expenses (372) (54) (82) (31) (539)
Adjusted operating profit 34 65 55 (26) 128
Adjusted net financing costs and investment return 42
Adjusted profit before tax 170
Tax on adjusted profit (41)
Adjusted profit after tax 129
Adjusted for the following items
Restructuring and corporate transaction expenses 4.6 (51)
Amortisation and impairment of intangible assets acquired in business 4.6 (64)
combinations and through the purchase of customer contracts
Change in fair value of significant listed investments 4.5 (15)
Profit on disposal of subsidiaries and other operations 88
Profit on disposal of interests in joint ventures 11
Dividends from significant listed investments 4.5 28
Share of profit or loss from associates and joint ventures 21
Other 4.9 (1)
Total adjusting items including results of associates and joint ventures 17
Tax on adjusting items 25
Profit attributable to other equity holders (6)
Profit attributable to non-controlling interests - ordinary shares -
Profit for the period attributable to equity shareholders of abrdn plc 165
Profit attributable to other equity holders 6
Profit attributable to non-controlling interests - ordinary shares -
Profit for the period 171
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.
Investments Adviser ii(2) Other Total
restated(1) restated(1)
6 months 2023 Notes £m £m £m £m £m
Net operating revenue 4.4 461 103 152 5 721
Adjusted operating expenses (427) (54) (91) (22) (594)
Adjusted operating profit 34 49 61 (17) 127
Adjusted net financing costs and investment return
24
Adjusted profit before tax 151
Tax on adjusted profit (24)
Adjusted profit after tax 127
Adjusted for the following items
Restructuring and corporate transaction expenses 4.6
(113)
Amortisation and impairment of intangible assets acquired in business 4.6
combinations and through the purchase of customer contracts
(102)
Change in fair value of significant listed investments 4.5
(181)
Dividends from significant listed investments 4.5
37
Share of profit or loss from associates and joint ventures
4
Other 4.9 35
Total adjusting items including results of associates and joint ventures
(320)
Tax on adjusting items 48
Profit attributable to other equity holders (6)
Profit attributable to non-controlling interests - ordinary shares
-
Loss for the period attributable to equity shareholders of abrdn plc
(151)
Profit attributable to other equity holders 6
Profit attributable to non-controlling interests - ordinary shares
-
Loss for the period (145)
1. The breakdown of Investments and Other for the six months ended 30 June
2023 has been restated in line with the changes to the Group's reportable
segments. Refer Note 4.3(a)(ii) for further details.
2. Previously named Personal.
Full Year 2023 Notes Investments Adviser ii Other Total
£m £m £m £m £m
Net operating revenue 4.4 878 224 287 9 1,398
Adjusted operating expenses (828) (106) (173) (42) (1,149)
Adjusted operating profit 50 118 114 (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 4.6
(152)
Amortisation and impairment of intangible assets acquired in business 4.6
combinations and through the purchase of customer contracts
(189)
Profit on disposal of subsidiaries and other operations 4.2(b)
79
Change in fair value of significant listed investments 4.5
(178)
Dividends from significant listed investments 4.5
64
Share of profit or loss from associates and joint ventures
1
Reversal of impairment of interests in joint ventures 4.12
2
Other 4.9 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 attributable to non-controlling interests - ordinary shares
-
Profit for the year attributable to equity shareholders of abrdn plc
1
Profit attributable to other equity holders 11
Profit attributable to non-controlling interests - ordinary shares
-
Profit for the year 12
4.4 Net operating revenue
(a) Revenue from contracts with customers
The following table provides a breakdown of total revenue from contracts with
customers.
6 months 6 months Full Year
2024
2023 2023
restated(2)
£m £m £m
Investments
Management fee income - Institutional and Retail Wealth(1) 344 399 769
Management fee income - Insurance Partners(1) 70 75 132
Performance fees and carried interest 7 12 18
Other revenue from contracts with customers 11 13 27
Revenue from contracts with customers for the Investments segment 432 499 946
Adviser
Platform charges 97 85 184
Treasury income 17 15 31
Other revenue from contracts with customers 6 4 11
Revenue from contracts with customers for the Adviser segment 120 104 226
ii(3)
Fee income - Advice and Discretionary 13 37 57
Account fees 26 27 54
Trading transactions 33 25 48
Treasury income 68 66 134
Revenue from contracts with customers for the ii segment(3) 140 155 293
Revenue from contracts with customers for Other 5 5 9
Total revenue from contracts with customers 697 763 1,474
1. In addition to revenues earned as a percentage of AUM, management fee
income includes certain other revenues not based on a percentage of AUM.
2. The breakdown of revenue from contracts with customers for the six months
ended 30 June 2023 has been restated in line with the changes to the Group's
reportable segments. Refer Note 4.3(a)(ii) for further details.
3. Previously named Personal.
(b) Cost of sales
The following table provides a breakdown of total cost of sales.
6 months 6 months Full Year
2024
2023 2023
£m £m £m
Cost of sales
Commission expenses 22 33 64
Other cost of sales 8 9 12
Total cost of sales 30 42 76
Other cost of sales includes amounts payable to employees and others relating
to carried interest and performance fee revenue.
(c) Reconciliation of revenue from contracts with customers to 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 condensed consolidated income statement to net
operating revenue, as presented in the analysis of adjusted operating profit
(refer Note 4.3(b)(i) for each of the Group's reportable segments).
Investments Adviser ii Other Total
6 months 2024 6 months 2023 Full Year 2023 6 months 2024 6 months 2023 Full Year 2023 6 months 2024 6 months 2023 Full Year 2023 6 months 2024 6 months 2023 Full Year 2023 6 months 2024 6 months 2023 Full Year 2023
restated(1) restated(1)
£m £m £m £m £m £m £m £m £m £m £m £m £m £m £m
Revenue from contracts with customers 432 499 946 120 104 226 140 155 293 5 5 9 697 763 1,474
Cost of sales (26) (38) (68) (1) (1) (2) (3) (3) (6) - - - (30) (42) (76)
Net operating revenue 406 461 878 119 103 224 137 152 287 5 5 9 667 721 1,398
1. The breakdown of Investments and Other for the six months ended 30 June
2023 has been restated in line with the changes to the Group's reportable
segments. Refer Note 4.3(a)(ii) for further details.
There are no differences between net operating revenue as presented in the
condensed consolidated income statement and the analysis of Group adjusted
profit by segment.
4.5 Net gains or losses on financial instruments and other income
6 months 6 months Full Year
2024 2023 2023
£m £m £m
Fair value movements and dividend income on significant listed investments
Fair value movements on significant listed investments (other than dividend (15) (178)
income)
(181)
Dividend income from significant listed investments 28 37 64
Total fair value movements and dividend income on significant listed 13 (144) (114)
investments
Non-unit linked business - excluding significant listed investments
Net gains or losses on financial instruments at fair value through profit or 23 (11) 6
loss
Interest and similar income from financial instruments at amortised cost 37 30 76
Foreign exchange gain or losses on financial instruments at amortised cost (2) (5) (7)
Other income 15 9 37
Net gains or losses on financial instruments and other income - non-unit 73 112
linked business - excluding significant listed investments
23
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 43 44 69
Change in non-participating investment contract financial liabilities (44) (36) (65)
Change in liability for third party interests in consolidated funds - (6) (1)
Total net gains or losses on financial instruments at fair value through (1) 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 (1) 3 4
business(1)
Total other net gains or losses on financial instruments and other income 72 26 116
Total net gains or losses on financial instruments and other income 85 (118) 2
1. In addition to the Net gains or losses on financial instruments and other
income - unit linked business of £(1)m (six months ended 30 June 2023: £3m,
12 months ended 31 December 2023: £4m), there are administrative expenses and
policyholder tax of less than £1m (six months ended 30 June 2023: less than
£1m, 12 months ended 31 December 2023: £1m) and £(1)m (six months ended 30
June 2023: £3m, 12 months ended 31 December 2023: £3m) respectively. The
result attributable to unit linked business for the period is therefore £nil
(six months ended 30 June 2023: £nil, 12 months ended 31 December 2023:
£nil).
4.6 Administrative and other expenses
6 months 6 months Full Year
2024 2023 2023
£m £m £m
Restructuring and corporate transaction expenses 51 113 152
Impairment of intangibles acquired in business combinations and through the
purchase of customer contracts
Impairment of intangibles acquired in business combinations 5 37 63
Amortisation of intangibles acquired in business combinations and through the
purchase of customer contracts
Amortisation of intangibles acquired in business combinations 54 59 115
Amortisation of intangibles acquired through the purchase of customer 5 11
contracts
6
Total amortisation of intangibles acquired in business combinations and 59 126
through the purchase of customer contracts
65
Staff costs and other employee-related costs 263 275 529
Other administrative expenses 295 274 593
Total administrative and other expenses(1) 673 764 1,463
1. Total administrative and other expenses includes less than £1m (six
months ended 30 June 2023: less than £1m, 12 months ended 31 December 2023:
£1m) relating to unit linked business.
There were restructuring expenses of £45m (six months ended 30 June 2023:
£90m, 12 months ended 31 December 2023: £121m), mainly consisting of costs
to effect our cost transformation programme, including related severance
expenses, and platform transformation expenses. The restructuring expenses for
the 12 months ended 31 December 2023 were partly offset by a £32m release of
the provision for separation costs. Refer Note 4.18 for further details.
Corporate transaction expenses were £6m (six months ended 30 June 2023:
£23m, 12 months ended 31 December 2023: £31m).
4.7 Tax expense
6 months 6 months Full Year
2024 2023 2023
£m £m £m
Current tax:
UK 10 8 17
Pillar Two Top-up tax 1 - -
Overseas 3 47 51
Adjustment to tax expense in respect of prior years (1) - (2)
Total current tax 13 55 66
Deferred tax:
Deferred tax credit arising from the current period(1) 2 (65) (69)
Adjustment to deferred tax in respect of prior years 1 (14) (15)
Total deferred tax 3 (79) (84)
Total tax expense/(credit)(2) 16 (24) (18)
1. The Group applies the exception to recognising and disclosing information
about deferred tax assets and liabilities related to Pillar Two income taxes.
2. The tax expense of £16m (six months ended 30 June 2023: tax credit of
£24m, 12 months ended 31 December 2023: tax credit of £18m) includes a tax
credit of £1m (six months ended 30 June 2023: tax expense of £3m, 12 months
ended 31 December 2023: tax expense of £3m) relating to unit linked business.
Tax relating to components of other comprehensive income is as follows:
6 months 6 months Full Year
2024 2023 2023
£m £m £m
Tax relating to fair value gains and losses recognised on cash flow hedges 2 (3) (10)
Tax relating to cash flow hedge gains and losses transferred to condensed (2) 7
consolidated income statement
7
Equity holder tax effect relating to items that may be reclassified - (3)
subsequently to
profit or loss 4
Tax relating to other comprehensive income - 4 (3)
All of the amounts presented above are in respect of equity holders of abrdn
plc.
Tax relating to items taken directly to equity is as follows:
6 months 6 months Full Year
2024 2023 2023
£m £m £m
Tax relating to share-based payments 1 (2) -
Tax relating to items taken directly to equity 1 (2) -
4.8 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.
Adjusted earnings per share is calculated on adjusted profit after tax
attributable to ordinary equity holders of the Company.
The following table shows details of basic, diluted and adjusted earnings per
share.
6 months 6 months Full Year
2024 2023 2023
£m £m £m
Adjusted profit before tax 170 151 330
Tax on adjusted profit (41) (24) (50)
Adjusted profit after tax 129 127 280
Attributable to:
Other equity holders (6) (6) (11)
Non-controlling interests - ordinary shares - - -
Adjusted profit after tax attributable to equity shareholders of abrdn plc 123 121 269
Total adjusting items including results of associates and joint ventures 17 (320) (336)
Tax on adjusting items 25 48 68
Profit/(loss) attributable to equity shareholders of abrdn plc 165 (151) 1
6 months 6 months Full Year
2024 2023 2023
Millions Millions Millions
Weighted average number of ordinary shares outstanding 1,794 1,949 1,902
Dilutive effect of share options and awards 22 25 28
Weighted average number of diluted ordinary shares outstanding 1,816 1,974 1,930
In accordance with IAS 33, no share options and awards were treated as
dilutive for the six months ended 30 June 2023 due to the loss attributable to
equity holders of abrdn plc in this period. This resulted in the diluted
earnings per share and adjusted diluted earnings per share for the six months
ended 30 June 2023 being calculated using a weighted average number of
ordinary shares of 1,949 million.
6 months 6 months Full Year
2024 2023 2023
Pence Pence Pence
Basic earnings per share 9.2 (7.7) 0.1
Diluted earnings per share 9.1 (7.7) 0.1
Adjusted earnings per share 6.9 6.2 14.1
Adjusted diluted earnings per share 6.8 6.2 13.9
4.9 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
(refer Section 4.9(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 expense 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 condensed
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, the Group has one
remaining significant listed investment, Phoenix.
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 six months ended 30 June 2024 include:
- A £12m gain (six months ended 30 June 2023: £5m gain, 12 months
ended 31 December 2023: £23m gain) for net fair value movements in contingent
consideration.
- A £2m fair value gain (six months ended 30 June 2023: £5m loss, 12
months ended 31 December 2023: £5m loss) on a financial instrument liability
related to a prior period acquisition.
- A gain of £5m (six months ended 30 June 2023: £nil, 12 months ended
31 December 2023: gain of £4m) in relation to market gains and losses 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.
- A £15m release 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 4.14 for further
details.
Other adjusting items for the six months ended 30 June 2023 and the 12 months
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 12 months ended 31 December 2022.
Other adjusting items for the 12 months ended 31 December 2023 also included:
- £21m for provision expense relating to a potential tax liability.
Refer Note 4.18.
4.10 Dividends on ordinary shares
6 months 2024 6 months 2023 Full Year 2023
Pence per £m(1) Pence per £m Pence per £m
share
share
share
Dividends paid in reporting period
Current year interim dividend - - - - 7.30 137
Final dividend for prior year 7.30 130 7.30 142 7.30 142
Total dividends paid in reporting period 130 142 279
Dividends relating to reporting period
Interim dividend 7.30 130 7.30 137 7.30 137
Final dividend - - - - 7.30 130
Total dividends relating to reporting period 130 137 267
1. Estimated for the current period interim recommended dividend.
Subsequent to 30 June 2024, the Board has declared an interim dividend for
2024 of 7.30 pence per ordinary share (interim 2023: 7.30 pence), an estimated
£130m in total (interim 2023: £137m). The dividend is expected to be paid on
24 September 2024 and will be recorded as an appropriation of retained
earnings in the financial statements for the year ended 31 December 2024.
4.11 Intangible assets
30 Jun 30 Jun 31 Dec
2024 2023 2023
£m £m £m
Acquired through business combinations
Goodwill 907 898 912
Brand 10 12 11
Customer relationships and investment management contracts 530 555 579
Technology and other 10 20 15
Internally developed software 14 12 13
Cost of obtaining customer contracts 43 51 48
Total intangible assets 1,514 1,548 1,578
Goodwill at 30 June 2024 comprises a gross carrying value of £4,704m (30 June
2023: £4,665m, 31 December 2023: £4,704m) and accumulated impairment of
£3,797m (30 June 2023: £3,767m, 31 December 2023: £3,792m).
There were no additions to intangibles acquired through business combinations
in the six months ended 30 June 2024 or the six months ended 30 June 2023. The
additions to intangibles acquired through business combinations for the 12
months ended 31 December 2023 related to the acquisition of the healthcare
fund management capabilities of Tekla. Refer Note 4.2(a)(i) for further
details.
During the six months ended 30 June 2024, the Group recognised an impairment
of the goodwill relating to the Finimize cash-generating unit (CGU) which is
reported within Other business operations and corporate costs of £5m.
Following this impairment, the goodwill allocated to the Finimize CGU is now
fully impaired (30 June 2023: £17m, 31 December 2023: £5m). 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.
During the 12 months ended 31 December 2023 and six months ended 30 June 2023,
the Group recognised impairments of goodwill of £62m and £37m respectively.
In the 12 months ended 31 December 2023, the Group also recognised an
impairment of the goodwill relating to the Finimize CGU of £26m for the 12
months ended 31 December 2023 of which £14m was also recognised for the six
months ended 30 June 2023. In addition, the Group recognised an impairment of
the goodwill relating to the abrdn Financial Planning Limited (aFPL) CGU which
is included in the ii segment of £36m of which £23m was also recognised for
the six months ended 30 June 2023.
4.12 Investments in associates and joint ventures accounted for using the
equity method
30 Jun 30 Jun 31 Dec
2024 2023 2023
£m £m £m
Associates
Other 15 15 15
Joint ventures
HASL 183 223 214
Other - 7 -
Total investments in associates and joint ventures accounted for using the 198 245 229
equity method
There were no additions to associates accounted for using the equity method
during the six months ended 30 June 2024. During the six months ended 30 June
2023 and the 12 months ended 31 December 2023, the Group made additions to
Other associates accounted for using the equity method of £2m.
There were no additions to joint ventures accounted for using the equity
method (six months ended 30 June 2023: none, 12 months ended 31 December 2023:
none).
The share of profit or loss and other comprehensive income from associates and
joint ventures for the six months ended 30 June 2024 of £21m (six months
ended 30 June 2023: £4m, 12 months ended 31 December 2023: £1m) and £(49)m
(six months ended 30 June 2023: £(18)m, 12 months ended 31 December 2023:
£(31)m) respectively primarily relates to HASL.
The carrying value of joint ventures accounted for using the equity method for
Other at 30 June 2023 primarily related to the Group's interest in Virgin
Money UTM which was transferred to held for sale at 31 December 2023. Refer
Note 4.15 below. 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
condensed consolidated income statement for the 12 months ended 31 December
2023 (six months ended 30 June 2024: £nil, six months ended 30 June 2023:
£nil). The interest in Virgin Money UTM did not form part of the Group's
reportable segments.
4.13 Property, plant and equipment
30 Jun 30 Jun 31 Dec
2024 2023 2023
£m £m £m
Owner occupied property - 1 1
Equipment 44 45 46
Right-of-use assets - property 105 115 115
Right-of-use assets - equipment 1 1 1
Total property, plant and equipment 150 162 163
No impairments of or reversal of impairments for right-of-use assets for
property have been recognised in the six months ended 30 June 2024.
For the six months ended 30 June 2023 and the 12 months ended 31 December 2023
impairments of £35m and £39m were recognised respectively. The impairments
related to a number of properties in the UK and the US that are no longer
being used operationally by the Group. The right-of-use assets are related to
the Investments segment (six months ended 30 June 2023 and 12 months ended 31
December 2023: £27m impairment), the ii segment (six months ended 30 June
2023 and 12 months ended 31 December 2023: £1m impairment) and Other business
operations and corporate costs (six months ended 30 June 2023: £7m
impairment, 12 months ended 31 December 2023: £11m impairment).
For the six months ended 30 June 2023 and the 12 months ended 31 December 2023
the Group also recognised a reversal of impairment of £3m in relation to a
property in the UK which was not being used operationally but following the
review of properties in the UK was brought back into operational use. The
right-of-use asset is related to the Investments segment.
4.14 Other assets
Other assets of £74m (30 June 2023: £100m, 31 December 2023: £77m) includes
prepayments of £7m (30 June 2023: £30m, 31 December 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
4.21(b) for further details.
During the six months ended 30 June 2024, the Group has released £15m of the
£19m prepayment recognised in relation to the TIP business to Other
administrative expenses in the condensed 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.
4.15 Assets and liabilities held for sale
30 Jun 30 Jun 31 Dec
2024 2023 2023
£m £m £m
Assets of operations held for sale
threesixty services 6 - -
abrdn Capital Limited - 83 -
European-headquartered Private Equity business - - 10
Investment Vehicles 5 - -
Investments in joint ventures accounted for using the equity method
Virgin Money UTM - - 9
Assets held for sale 11 83 19
Liabilities of operations held for sale
threesixty services 2 - -
abrdn Capital Limited - 6 -
European-headquartered Private Equity business - - 2
Liabilities of operations held for sale 2 6 2
The assets and liabilities of operations held for sale (excluding investment
vehicles) at 30 June 2024 relate to the sale of the Group's threesixty
services business which completed on 2 July 2024. Refer Note 4.23 for further
details. The threesixty services business net assets classified as held for
sale which were measured at their carrying values were net of intercompany
balances between the business and other Group entities. The net assets on a
gross basis were also £4m.
In relation to assets and liabilities held for sale at 31 December 2023 and 30
June 2023.
- The sale of the Group's European-headquartered Private Equity business
completed on 26 April 2024. Refer Note 4.2(b)(i) for further details.
- The sale of the Group's interest in Virgin Money UTM completed on 2
April 2024. Refer Note 4.2(b)(ii) for further details.
- The sale of abrdn Capital Limited completed on 1 September 2023. Refer
Note 4.2(b)(iii) for further details.
4.16 Issued share capital and share premium, shares held by trusts, retained earnings and other reserves
(a) Issued share capital and share premium
The movement in the issued ordinary share capital and share premium of the
Company was:
6 months 2024 6 months 2023 Full Year 2023
Ordinary share capital Share premium 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 13 61/63p each £m £m
At start of period 1,840,740,364 257 640 2,001,891,899 280 640 2,001,891,899 280 640
Shares issued in respect of share incentive plans 1,120 - - 2,414
1,023 - - - -
Shares bought back on-market and cancelled - - - (161,153,949) (23) -
(39,587,562) (6) -
At end of period 1,840,741,484 257 640 1,962,305,360 274 640 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.
During the six months to 30 June 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.
- During the six months to 30 June 2023, the Company had bought back and
cancelled 39,587,562 shares for a total consideration of £98m which included
transaction costs and unsettled purchases for 6,138,236 shares.
- During the 12 months ended 31 December 2023, the Company had 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 six
months ended 30 June 2023 and the 12 months ended 31 December 2023 of £98m
and £302m respectively. In addition, £6m and £23m respectively were
credited to the capital redemption reserve relating to the nominal value of
the shares cancelled for these periods.
The Company can issue shares to satisfy awards granted under employee
incentive plans which have been approved by shareholders.
(b) 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), 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 for them. 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.
The number of shares held by trusts was as follows:
30 Jun 30 Jun 31 Dec
2024 2023 2023
Number of shares held by trusts
abrdn Employee Benefit Trust 32,299,515 35,540,771 34,076,343
abrdn Employee Trust 22,032,503 22,270,081 22,187,644
Aberdeen Asset Management Employee Benefit Trust 2003 1,926,756 2,194,934 2,080,853
(c) Retained earnings and other reserves
The merger reserve includes £94m (30 June 2023: £263m, 31 December 2023:
£94m) in relation to the Group's asset management businesses. Following the
impairment of the Company's investment in abrdn Investments (Holdings)
Limited, £169m was transferred from the merger reserve to retained earnings
during the 12 months ended 31 December 2023.
There were no transfers from the merger reserve to retained earnings during
the six months ended 30 June 2024 and the six months ended 30 June 2023.
4.17 Pension and other post-retirement benefit provisions
The Group operates a number of defined benefit pension plans, the largest of
which is the abrdn UK Group plan (principal plan) which is closed to future
accrual. The Group also operates two other UK defined benefit plans, which are
closed to future accrual, the abrdn ROI plan, which has two employees accruing
future benefits, and a number of smaller funded and unfunded defined benefit
plans in other countries.
For the UK plans, the trustees set the plan investment strategies to protect
the ratio of plan assets to the trustees' measure of the value of assets
needed to meet the trustees' objectives. The investment strategies do not aim
to protect an IAS 19 surplus or ratio of plan assets to the IAS 19 measure of
liabilities.
(a) Analysis of amounts recognised in the condensed consolidated income statement
The amounts recognised in the condensed consolidated income statement for
defined contribution and defined benefit plans are as follows:
6 months 6 months Full Year
2024 2023 2023
£m £m £m
Current service cost 24 28 55
Past service cost - (5) (5)
Net interest income (16) (18) (38)
Administrative expenses 9 2 4
Expense recognised in the condensed consolidated income statement 17 7 16
In addition, for the six months ended 30 June 2024, gains of £72m (six months
ended 30 June 2023: losses of £81m, 12 months ended 31 December 2023: losses
of £139m) have been recognised in other comprehensive income in the condensed
consolidated statement of comprehensive income in relation to remeasurement of
the defined benefit plans.
(b) Analysis of amounts recognised in the condensed consolidated statement of financial position
Pension and other post-retirement benefit assets at 30 June 2024 of £821m (30
June 2023: £772m, 31 December 2023: £740m) includes the following amounts in
relation to the principal plan:
30 Jun 30 Jun 31 Dec
2024 2023 2023
£m £m £m
Present value of funded obligation (1,650) (1,664) (1,784)
Fair value of plan assets 2,736 2,819 2,912
Net asset before the limit on plan surplus 1,086 1,155 1,128
Effect of limit on plan surplus(1) (271) (404) (394)
Net asset 815 751 734
1. UK recoverable surpluses are reduced to reflect an authorised surplus
payments charge of 25% that would arise on a refund. This charge was reduced
from 35% to 25% effective from 6 April 2024 and this is reflected in the net
asset at 30 June 2024. The comparative figures at 30 June 2023 and 31 December
2023 are shown with a 35% surplus charge.
A pension plan surplus is considered to be recoverable where an unconditional
right to a refund exists.
We are continuing to work with the trustee on the long-term strategy for the
plan, including steps relating to any residual surplus assets that remain
after all plan related obligations are settled or otherwise provided for. The
timing for implementing any strategy, including the release of any surplus,
remains a matter for the trustee. See Note 31 in the Annual report and
accounts 2023 for more information.
(c) Principal assumptions
Determination of the valuation of principal plan liabilities is a key estimate
as a result of the assumptions made relating to both economic and non-economic
factors.
The key economic assumptions for the principal plan, which are based in part
on current market conditions, are shown below:
30 Jun 30 Jun 31 Dec
2024 2023 2023
% % %
Discount rate 5.25 5.25 4.60
Rates of inflation
Consumer Price Index (CPI) 2.80 2.80 2.65
Retail Price Index (RPI) 3.15 3.15 3.00
The changes in economic assumptions over the period reflect changes in both
corporate bond prices and market implied inflation. The underlying methodology
used to set these key economic assumptions has not changed over the reporting
period. The population of corporate bond prices excludes bonds issued by UK
universities. The inflation assumption reflects the future reform of RPI
effective from 2030.
The determination of the present value of the funded obligation at 30 June
2024 includes a methodology change for post-retirement pension increases on
'post 6th April 88' GMP pensions in the principal plan. The previous
methodology used a deterministic approach in line with the relevant CPI index.
The updated methodology allows for the contractual pension increase cap and
floor when deriving the pension increase assumption, using an assumed CPI
inflation volatility of 2% p.a. The impact of this methodology change is to
reduce the closing obligation by c.£6m.
4.18 Provisions
30 Jun 30 Jun 31 Dec
2024 2023 2023
£m £m £m
Provisions
Separation costs - 32 -
Tax related provisions 42 - 42
Other provisions 20 26 24
Total provisions 62 58 66
The separation cost provision recognised at 30 June 2023 of £32m was in
respect of costs expected to be incurred following the sale of the UK and
European insurance business to Phoenix. Following the completion of the
separation programme during the 12 months ended 31 December 2023 the Group
expected no further costs to be incurred and £32m was released from the
provision.
The provision for a potential liability of £42m relates to a disputed tax
matter which is the subject of an ongoing appeal. Any resolution is not
expected to be until 2025 at the earliest. A reimbursement asset has been
recognised within receivables and other financial assets for £18m (30 June
2023: £nil, 31 December 2023: £18m) which is an expected recovery in the
event of any settlement.
4.19 Fair value of assets and liabilities
(a) Fair value hierarchy
In determining fair value, the following fair value hierarchy categorisation
has been used:
- Level 1: Fair values measured using quoted prices (unadjusted) in active
markets for identical assets or liabilities. An active market exists where
transactions take place with sufficient frequency and volume to provide
pricing information on an ongoing basis.
- Level 2: Fair values measured using inputs other than quoted prices
included within level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: Fair values measured using inputs that are not based on
observable market data (unobservable inputs).
Information on the methods and assumptions used to determine fair values for
equity securities and interests in pooled investment funds, debt securities
and derivatives measured at fair value is given below:
Equities and interests in pooled investment funds(1,2) Debt securities Derivatives(3)
Level 1 Equity instruments listed on a recognised exchange valued using prices sourced Debt securities listed on a recognised exchange valued using prices sourced Exchange traded derivatives valued using prices sourced from the relevant
from their primary exchange. from their primary exchange. exchange.
Level 2 Pooled investment funds where daily unit prices are available and reference is Debt securities valued using prices received from external pricing providers Over-the-counter derivatives measured using a range of valuation models
made to observable market data. based on quotes received from a number of market participants. including discounting future cash flows and option valuation techniques.
Debt securities valued using models and standard valuation formulas based on
observable market data(4).
Level 3 These relate primarily to interests in private equity, real estate and Debt securities valued using prices received from external pricing providers N/A
infrastructure funds which are valued at net asset value. Underlying real based on a single broker indicative quote.
estate and private equity investments are generally valued in accordance with
independent professional valuation reports or International Private Equity and
Venture Capital Valuation Guidelines where relevant. The underlying
investments in infrastructure funds are generally valued based on the phase of Debt securities valued using models and standard valuation formulas based on
individual projects forming the overall investment and discounted cash flow unobservable market data(4).
techniques based on project earnings.
Where net asset values are not available at the same date as the reporting
date, the latest available valuations are reviewed and, where appropriate,
adjustments are made to reflect the estimated impact of changes in market
conditions between the date of the valuation and the end of the reporting
period.
Other unlisted equity securities are generally valued using a calibration to
the price of a recent investment.
1. Investments in associates at fair value through profit or loss are valued
in the same manner as the Group's equity securities and interests in pooled
investment funds.
2. Where pooled investment funds have been seeded and the investment in the
funds have been classified as held for sale, the costs to sell are assumed to
be negligible. The fair value of pooled investment funds held for sale is
calculated as equal to the observable unit price.
3. Non-performance risk arising from the credit risk of each counterparty is
also considered on a net exposure basis in line with the Group's risk
management policies. At 30 June 2024, 30 June 2023 and 31 December 2023, the
residual credit risk is considered immaterial and no credit risk adjustment
has been made.
4. If prices are not available from the external pricing providers or are
considered to be stale, the Group has established procedures to arrive at an
internal assessment of the fair value.
The fair value of liabilities in respect of third party interest in
consolidated funds and non-participating investment contracts are calculated
equal to the fair value of the underlying assets and liabilities.
Thus, the value of these liabilities is dependent on the methods and
assumptions set out above in relation to the underlying assets and
liabilities:
- For third party interest in consolidated funds, when the underlying
assets and liabilities are valued using readily available market information
the liabilities in respect of third party interest in consolidated funds are
treated as level 2. Where the underlying assets and liabilities are not valued
using readily available market information the liabilities in respect of third
party interest in consolidated funds are treated as level 3.
- For non-participating investment contracts, the underlying assets and
liabilities are predominately categorised as level 1 or 2 and as such, the
inputs into the valuation of the liabilities are observable and these
liabilities are predominately categorised within level 2 of the fair value
hierarchy. Where the underlying assets are categorised as level 3, the
liabilities are also categorised as level 3.
In addition, contingent consideration assets and contingent consideration
liabilities are also categorised as level 3 in the fair value hierarchy.
Contingent consideration assets and liabilities have been recognised in
respect of acquisitions and disposals. Generally valuations are based on
unobservable assumptions regarding the probability weighted cash flows and,
where relevant, discount rate.
(b) Fair value hierarchy for assets and liabilities measured at fair value other than assets backing unit linked liabilities and unit linked liabilities
(b)(i) Fair value hierarchy for assets measured at fair value in the
statement of financial position other than assets backing unit linked
liabilities
The table below presents the Group's non-unit linked assets measured at fair
value by level of the fair value hierarchy (refer Section 4.19(c) for fair
value analysis in relation to assets backing unit linked liabilities).
Fair value hierarchy
As recognised in the condensed consolidated statement of financial position Classified as held for sale Total Level 1 Level 2 Level 3
30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec
2024 2023 2023 2024 2023 2023 2024 2023 2023 2024 2023 2023 2024 2023 2023 2024 2023 2023
£m £m £m £m £m £m £m £m £m £m £m £m £m £m £m £m £m £m
Derivative financial assets 46 78 43 - - - 46 78 43 - - - 46 78 43 - - -
Equity securities and interests in pooled investment vehicles(1) 1,138 1,167 1,139 6 - - 1,144 1,139 743 769 140 137 261 233
1,167 808 128 231
Debt securities(2) 735 734 740 - - - 735 734 740 6 2 7 728 731 732 1 1 1
Financial investments 1,919 1,979 1,922 6 - - 1,925 1,979 1,922 749 810 776 914 937 912 262 232 234
Owner occupied property(3) - 1 1 - - - - 1 1 - - - - - - - 1 1
Contingent consideration assets(4) 21 24 11 - - - 21 24 11 - - - - - - 21 24 11
Total assets at fair value 1,940 2,004 1,934 6 - - 1,946 2,004 1,934 749 810 776 914 937 912 283 257 246
1. Includes £542m (30 June 2023: £554m, 31 December 2023: £557m) for the
Group's listed equity investment in Phoenix which is classified as a
significant listed investment. The Group's listed equity investments in HDFC
Asset Management and HDFC Life which were also classified as significant
listed investments were sold in the six months ended 30 June 2023.
2. There were no debt securities measured at amortised cost at 30 June 2024.
Debt securities at fair value at 30 June 2023 and 31 December 2023 excluded
debt securities measured at amortised cost of £101m and £125m respectively -
refer Section 4.19(d).
3. Presented in Property, plant and equipment in the condensed consolidated
statement of financial position.
4. Presented in Receivables and other financial assets in the condensed
consolidated statement of financial position.
There were no significant transfers between level 1 and level 2 during the six
months ended 30 June 2024 (six months ended 30 June 2023 and 12 months ended
31 December 2023: none). Transfers are deemed to have occurred at the end of
the calendar quarter in which they arose.
Refer Section 4.19(b)(iii) below for details of movements in level 3.
(b)(ii) Fair value hierarchy for liabilities measured at fair value in the statement of financial position other than unit linked liabilities
The table below presents the Group's non-unit linked liabilities measured at
fair value by level of the fair value hierarchy.
Fair value hierarchy
Total Level 1 Level 2 Level 3
30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec
2024 2023 2023 2024 2023 2023 2024 2023 2023 2024 2023 2023
£m £m £m £m £m £m £m £m £m £m £m £m
Liabilities in respect of third party interest in consolidated funds 206 187 - 137 117 69 70
212 - - 141 71
Derivative financial liabilities 4 2 9 1 1 7 3 1 2 - - -
Contingent consideration liabilities(1) 100 129 114 - - - - - - 100 129 114
Other financial liabilities(2) 13 16 15 - - - - - - 13 16 15
Total liabilities at fair value 323 359 325 1 1 7 140 142 119 182 216 199
1. Presented in Other financial liabilities in the condensed consolidated
statement of financial position.
2. Excluding contingent consideration liabilities.
There were no significant transfers between level 1 and level 2 during the six
months ended 30 June 2024 (six months ended 30 June 2023 and 12 months ended
31 December 2023: none).
Refer Section 4.19(b)(iii) below for details of movements in level 3.
(b)(iii) Reconciliation of movements in level 3 instruments
The movements during the period of level 3 assets and liabilities held at fair
value, excluding unit linked assets and liabilities and assets and liabilities
held for sale, are analysed below.
Owner occupied property Equity securities and interests in Debt securities Liabilities in respect of third party interest in consolidated funds
pooled investment funds
30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec
2024 2023 2023 2024 2023 2023 2024 2023 2023 2024 2023 2023
£m £m £m £m £m £m £m £m £m £m £m £m
At start of period 1 1 1 233 231 231 1 2 2 (70) (74) (74)
Total gains recognised in the condensed consolidated income statement - - - 3 1 1 - - - - - -
Purchases - - - 28 7 18 - - - - - -
Sales and other adjustments (1) - - (2) (2) (17) - (1) (1) 1 3 4
Foreign exchange adjustment - - - (1) (6) - - - - - - -
At end of period - 1 1 261 231 233 1 1 1 (69) (71) (70)
Contingent consideration assets Contingent consideration liabilities Other financial liabilities(1)
30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec
2024 2023 2023 2024 2023 2023 2024 2023 2023
£m £m £m £m £m £m £m £m £m
At start of period 11 19 19 (114) (132) (132) (15) (11) (11)
Total amounts recognised in the condensed consolidated income statement 2 7 10 16 2 (5)
7 (2) (5)
Additions 10 - 7 - - (11) - - -
Settlements (2) (2) (21) 4 4 12 - - 1
Other movements - - (1) - 1 1 - - -
At end of period 21 24 11 (100) (129) (114) (13) (16) (15)
1. Excluding contingent consideration liabilities.
For the six months ended 30 June 2024, gains of £17m (six months ended 30
June 2023: gains of £1m, 12 months ended 31 December 2023: gains of £19m)
were recognised in the condensed consolidated income statement in respect of
non-unit linked assets and liabilities held at fair value classified as level
3 at the period end, excluding assets and liabilities held for sale. All gains
were recognised in Net gains or losses on financial instruments and other
income.
Transfers of equity securities and interests in pooled investment funds and
debt securities into level 3 generally arise when external pricing providers
stop providing a price or where the price provided is considered stale.
Transfers of equity securities and interests in pooled investment funds and
debt securities out of level 3 arise when acceptable prices become available
from external pricing providers.
(b)(iv) Significant unobservable inputs in level 3 instrument valuations
The table below identifies the significant unobservable inputs in relation to
equity securities and interests in pooled investment funds categorised as
level 3 instruments at 30 June 2024 with a fair value of £261m (30 June 2023:
£231m, 31 December 2023: £233m).
Fair value
30 Jun 2024 30 Jun 2023 31 Dec 2023 Valuation technique Unobservable input Range (weighted average)
£m £m £m
Private equity, real estate, hedge and infrastructure funds 249 219 221 Net asset value Net asset value statements provided for ten significant funds (fair value A range of unobservable inputs is not applicable as we have determined that
>£5m) and a large number of smaller funds the reported NAV represents fair value at the end of the reporting period
Other unlisted equity securities 12 12 12 Indicative share price Calibration to the price of a recent investment. A range of unobservable inputs is not applicable as we have determined that
the calibration to the price of a recent investment represents fair value at
the end of the reporting period.
The unobservable input for the Group's related liabilities in respect of third
party interest in consolidated funds categorised as level 3 instruments at 30
June 2024 with a fair value of £(69)m (30 June 2023: £(71)m, 31 December
2023: £(70)m) are the same as for the private equity, real estate, hedge and
infrastructure funds above. There are no single significant funds in relation
to liabilities in respect of third party interest in consolidated funds.
The table below identifies the significant unobservable inputs in relation to
contingent consideration assets and liabilities and other financial instrument
liabilities categorised as level 3 instruments at 30 June 2024 with a fair
value of £(92)m (30 June 2023: £(121)m, 31 December 2023: £(118)m).
Fair value
30 Jun 2024 30 Jun 2023 31 Dec 2023 Valuation technique Unobservable input Range (weighted average)
£m £m £m
Contingent consideration assets and liabilities and other financial instrument (92) (121) (118) Probability weighted cash flow and where applicable discount rates Unobservable inputs relate to probability weighted cash flows and, where The base scenario for Tritax contingent consideration used a revenue compound
liabilities relevant, discount rates. annual growth rate (CAGR) from 31 March 2023 to 31 March 2026 of 9% (30 June
2023: CAGR from 31 March 2022 to 31 March 2026 of 14% and 31 December 2023:
The most significant unobservable inputs relate to assumptions used to value CAGR from 31 March 2023 to 31 March 2026 of 9%) with other scenarios using a
the contingent consideration liability related to the acquisition of Tritax of range of revenue growth assumptions around this base. The base scenario used a
£82m (30 June 2023: £109m, 31 December 2023: £90m). For Tritax a number of cost/income ratio of c57% (30 June 2023: c52% and 31 December 2023: c56%) with
scenarios were prepared, around a base case, with probabilities assigned to other scenarios using a range of cost/income ratios around this base.
each scenario (based on an assessment of the likelihood of each scenario). The
scenarios allow for adjustments to the profit used to determine the contingent The risk adjusted contingent consideration cash flows have been discounted
consideration under the sale purchase agreement. The value of the contingent using a primary discount rate of 4% (30 June 2023: 5% and 31 December 2023:
consideration was determined for each scenario, and these were then 4%).
probability weighted, with this probability weighted valuation then discounted
from the payment date to the balance sheet date. It was assumed that the
timing of the exercise of the earn out put options between 2024, 2025 and 2026
would be that which is most beneficial to the holders of the put options.
(b)(v) Sensitivity of the fair value of level 3 instruments to changes in key assumptions
At 30 June 2024, the shareholder is directly exposed to movements in the value
of all non-unit linked level 3 instruments. Refer Section 4.19(c) for unit
linked level 3 instruments.
Sensitivities for material level 3 assets and liabilities are provided below.
Changing unobservable inputs in the measurement of the fair value of the other
level 3 financial assets and financial liabilities to reasonably possible
alternative assumptions would not have a material impact on profit
attributable to equity holders or on total assets.
(b)(v)(i) Equity securities and interests in pooled investment funds
As noted above, of the level 3 equity securities and interests in pooled
investment funds, £249m relates to private equity, real estate, hedge and
infrastructure funds (30 June 2023: £219m, 31 December 2023: £221m) which
are valued using net asset value statements. A 10% increase or decrease in the
net asset value of these investments would increase or decrease the fair value
of the investments by £25m.
(b)(v)(ii) Liabilities in respect of third party interest in consolidated funds
As noted above, £69m of liabilities in respect of third party interest in
consolidated funds of the level 3 equity securities and interests in pooled
investment funds (30 June 2023: £71m, 31 December 2023: £70m) are also
valued using net asset value statements. A 10% increase or decrease in the net
asset value of these investments would increase or decrease the fair value of
the liability by £7m.
(b)(v)(iii) Contingent consideration assets and liabilities and other financial instrument liabilities
As noted above, the most significant unobservable inputs for level 3
instruments relate to assumptions used to value the contingent consideration
related to the purchase of Tritax. Sensitivities for reasonably possible
changes to key assumptions are provided in the table below.
Assumption Change in assumption Consequential increase/(decrease) in contingent consideration liability
30 Jun
2024
£m
Revenue compound annual growth rate (CAGR) from 31 March 2023 to 31 March 2026 Decreased by 5% (14)
Increased by 10% 33
Cost/income ratio Decreased by 5% 13
Increased by 5% (13)
Discount rate Decreased by 2% 3
Increased by 2% (3)
(c) Fair value hierarchy for assets backing unit linked liabilities and unit linked liabilities measured at fair value
The table below presents the Group's assets backing unit linked liabilities
and unit linked liabilities measured at fair value by level of the fair value
hierarchy.
Total Fair value hierarchy
Level 1 Level 2 Level 3
30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec
2024 2023 2023 2024 2023 2023 2024 2023 2023 2024 2023 2023
£m £m £m £m £m £m £m £m £m £m £m £m
Financial investments 655 873 669 362 590 396 293 283 273 - - -
Total assets at fair value backing unit linked liabilities 655 669 362 396 293 273 -
873 590 283 - -
Investment contract liabilities 670 724 684 - - - 670 724 684 - - -
Third party interest in consolidated funds - - - -
165 - - - 165 - - -
Other unit linked liabilities(1) - 1 - - - - - 1 - - - -
Total unit linked liabilities at fair value 670 684 - 670 684 -
890 - - 890 - -
1. Excludes other unit linked liabilities not measured at fair value of £8m
(30 June 2023: £4m, 31 December 2023: £2m).
The financial investments backing unit linked liabilities comprise equity
securities and interests in pooled investment funds of £652m (30 June 2023:
£764m, 31 December 2023: £667m), debt securities of £3m (30 June 2023:
£107m, 31 December 2023: £2m) and derivative financial assets of £nil (30
June 2023: £2m, 31 December 2023: £nil).
There were no significant transfers between level 1 and level 2 during the six
months ended 30 June 2024 (six months ended 30 June 2023 and 12 months ended
31 December 2023: none).
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 Investment contract liabilities
pooled investment funds
30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec
2024 2023 2023 2024 2023 2023
£m £m £m £m £m £m
At start of period - 1 1 - (1) (1)
Sales - (1) (1) - 1 1
At end of period - - - - - -
Unit linked level 3 assets related to holdings in real estate funds.
(d) Assets and liabilities not carried at fair value
The table below presents estimated fair values of non-unit linked financial
assets and liabilities whose carrying value does not approximate fair value.
Fair values of assets and liabilities are based on observable market inputs
where available or are estimated using other valuation techniques.
As recognised in condensed consolidated statement of financial position line Fair value
item
30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec
2024 2023 2023 2024 2023 2023
£m £m £m £m £m £m
Assets
Debt securities - 101 125 - 101 125
Liabilities
Subordinated liabilities 604 588 599 555 515 534
The estimated fair values for subordinated liabilities are based on the quoted
market offer price. The carrying value of all other financial assets and
liabilities measured at amortised cost approximates their fair value.
4.20 Contingent liabilities and contingent assets
Legal proceedings, complaints and regulations
The Group is subject to regulation in all of the territories in which it
operates investment management, asset administration and insurance
businesses. In the UK, where the Group primarily operates, the FCA has broad
powers, including powers to investigate marketing and sales practices.
The Group, like other financial organisations, is subject to legal
proceedings, complaints and regulatory and tax authority discussions and
reviews in the normal course of its business. All such material matters are
periodically reassessed, with the assistance of external professional advisers
where appropriate, to determine the likelihood of the Group incurring a
liability. Where it is concluded that it is more likely than not that a
material outflow will be made a provision is established based on management's
best estimate of the amount that will be payable. A subsidiary of the Group is
currently responding to certain information requests from an overseas Tax
Authority in connection with its Income Tax Returns. Interpretation of tax
legislation is complex and therefore, as part of the normal course of
business, local tax authorities may sometimes request further information in
order to clarify facts and technical approach. These types of enquiries can
sometimes be prolonged due to inherent complexity. At this stage of enquiry,
it is not possible to reliably predict the outcome.
There are no other identified contingent liabilities expected to lead to a
material exposure.
4.21 Commitments
(a) Unrecognised financial instruments
As at 30 June 2024, the Group has committed to investing an additional £52m
(30 June 2023: £74m, 31 December 2023: £67m) into funds in which it holds a
co-investment interest.
(b) Capital and other commitments
As at 30 June 2024, the Group has no capital commitments other than in
relation to financial instruments (30 June 2023: £nil, 31 December 2023:
£nil).
In addition, the Group has commitments relating to future acquisitions:
- In February 2021, the Group announced the purchase of certain products
in Phoenix's savings business offered through abrdn's Wrap platform,
comprising a self-invested pension plan (SIPP) and an onshore bond product;
together with Phoenix's trustee investment plan business for UK pension scheme
clients. The transfers to the Group of the majority of the SIPP contracts and
the TIP business are expected to be completed during 2025, subject to
regulatory and court approvals. The upfront consideration paid by the Group in
February 2021 was £62.5m, which is offset in part by payments from Phoenix to
the Group relating to profits of the products prior to completion of the legal
transfer. The net amount of consideration paid is included in prepayments in
the condensed consolidated statement of financial position with cash movements
in relation to the consideration included in prepayment in respect of
potential acquisition of customer contracts in the condensed consolidated
statement of cash flows. Refer Note 4.14 for details of the release of the
prepayments to expenses in the six months ended 30 June 2024.
- At 30 June 2024, the Group had other commitments for the cost of
obtaining customer contracts for £22m. These commitments were subject to the
satisfaction of certain conditions.
4.22 Related party transactions
In the normal course of business, the Group enters into transactions with
related parties that relate to investment management and insurance businesses.
There have been no changes in the nature of these transactions during the
period to those reported in the Annual report and accounts for the year ended
31 December 2023. There were no transactions with related parties during the
six months ended 30 June 2024 which had a material effect on the results or
financial position of the Group.
4.23 Events after the reporting period
On 2 July 2024, the Group completed the sale of its adviser support services
business, threesixty services, to the Fintel group. The threesixty services
business was reported within our Adviser segment. The sale involved the
transfer of 70 employees and resulted in an IFRS profit on disposal of
subsidiaries and other operations of £9m which will be recognised in the
second half of 2024.
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