REG - abrdn PLC - Half-year Report - Part 3 of 3
08/08/2023 07:15
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RNS Number : 5699I abrdn PLC 08 August 2023
abrdn plc
Half year results 2023
Part 3 of 3
8 August 2023
5. Supplementary information
5.1 Alternative performance measures
We assess our performance using a variety of measures that are not defined
under IFRS and are therefore termed alternative performance measures (APMs).
The APMs that we use may not be directly comparable with similarly named
measures used by other companies. We have presented below reconciliations from
these APMs to the most appropriate measure prepared in accordance with IFRS.
All APMs should be read together with the condensed consolidated income
statement, condensed consolidated statement of financial position and
condensed consolidated statement of cash flows, which are presented in the
Financial information section of this report and related metrics. Adjusted
operating profit excludes certain items which are likely to be recurring such
as restructuring costs, amortisation of certain intangibles, dividends from
significant listed investments and the share of profit or loss from joint
ventures.
Definition Purpose
Adjusted operating profit
Adjusted operating profit before tax is the Group's key APM. Adjusted Adjusted operating profit reporting provides further analysis of the results
operating profit includes the results of the Group's three businesses: reported under IFRS and the Directors believe it helps to give shareholders a
Investments, Adviser and Personal, along with Corporate/strategic. fuller understanding of the performance of the business by identifying and
analysing adjusting items.
It excludes the Group's adjusted net financing costs and investment return,
and discontinued operations. Segment reporting used in management information is reported to the level of
adjusted operating profit.
Adjusted operating profit also excludes the impact of the following items:
- Restructuring costs and corporate transaction expenses. Restructuring
includes the impact of major regulatory change.
- Amortisation and impairment of intangible assets acquired in business
combinations and through the purchase of customer contracts.
- Profit or loss arising on the disposal of a subsidiary, joint venture
or equity accounted associate.
- Change in fair value of/dividends from significant listed investments.
- Share of profit or loss from associates and joint ventures.
- Impairment loss/reversal of impairment loss recognised on investments
in associates and joint ventures accounted for using the equity method.
- Fair value movements in contingent consideration.
- Items which are one-off and, due to their size or nature, are not
indicative of the long-term operating performance of the Group.
Further details are included in Note 4.9 of the Financial information section.
Net operating revenue
Net operating revenue includes revenue we generate from asset management Net operating revenue is a component of adjusted operating profit and provides
charges (AMCs), platform charges, treasury income and other transactional the basis for reporting of the revenue yield financial ratio. Net operating
charges. AMCs are earned on products such as mutual funds, and are calculated revenue is also used to calculate the cost/income ratio.
as a percentage fee based on the assets held. Investment risk on these
products rests principally with the client, with our major indirect exposure
to rising or falling markets coming from higher or lower AMCs. Net operating
revenue is shown net of costs of sale, such as commissions and similar
charges.
Adjusted operating expenses
Adjusted operating expenses is a component of adjusted operating profit and Adjusted operating expenses is a component of adjusted operating profit and is
relates to the day-to-day expenses of managing our business. Adjusted used to calculate the cost/income ratio.
operating expenses excludes restructuring and corporate transaction expenses.
Adjusted operating expenses also excludes amortisation and impairment of
intangible assets acquired in business combinations and through the purchase
of customer contracts.
Adjusted profit before tax
In addition to the results included in adjusted operating profit above, Adjusted profit before tax is a key input to the adjusted earnings per share
adjusted profit measure.
before tax includes adjusted net financing costs and investment return.
Adjusted net financing costs and investment return
Adjusted net financing costs and investment return relates to the return from Adjusted net financing costs and investment return is a component of adjusted
the net assets of the shareholder business, net of costs of financing. This profit before tax.
includes the net assets in defined benefit staff pension plans and net assets
relating to the financing of subordinated liabilities.
Definition Purpose
Cost/income ratio
This is an efficiency measure that is calculated as adjusted operating This ratio is used by management to assess efficiency and reported to the
expenses divided by net operating revenue in the period. Board and executive leadership team.
Net operating revenue yield (bps)
The net operating revenue yield is calculated as annualised net operating The net operating revenue yield is a measure that illustrates the average
revenue (excluding performance fees, ii and revenue for which there are no margin being earned on the assets that we manage, administer or advise our
attributable assets) divided by monthly average fee based assets. ii is clients on, excluding ii.
excluded from the calculation of Personal and total net operating revenue
yield as fees charged for this business are primarily from subscriptions and
trading transactions.
Adjusted diluted earnings per share
Adjusted diluted earnings per share is calculated on adjusted profit after Earnings per share is a commonly used financial metric which can be used to
tax. The weighted average number of ordinary shares in issue is adjusted measure the profitability and capital efficiency of a company over time. We
during the period to assume the conversion of all dilutive potential ordinary also calculate adjusted diluted earnings per share to illustrate the impact of
shares, such as share options granted to employees. adjusting items on the metric.
Details on the calculation of adjusted diluted earnings per share are set out This ratio is used by management to assess performance and reported to the
in Note 4.8 of the Financial information section. Board and executive leadership team.
Adjusted capital generation
Adjusted capital generation is part of the analysis of movements in IFPR This measure aims to show how adjusted profit contributes to regulatory
regulatory capital. Adjusted capital generation is calculated as adjusted capital, and therefore provides insight into our ability to generate capital
profit after tax less returns relating to pension schemes in surplus and that is deployed to support value for shareholders.
interest paid on other equity which do not benefit regulatory capital. It also
includes dividends from associates, joint ventures and significant listed
investments.
Adjusted diluted capital generation per share
Adjusted diluted capital generation per share is calculated as adjusted This ratio is a measure used to assess performance for remuneration purposes.
capital generation divided by the weighted average number of diluted ordinary
shares outstanding.
Cash and liquid resources
Cash and liquid resources are IFRS cash and cash equivalents (netted down for The purpose of this measure is to demonstrate how much cash and invested
overdrafts), money market instruments and holdings in money market funds. It assets we hold and can be readily accessed.
also includes surplus cash that has been invested in liquid assets such as
high-quality corporate bonds, gilts and pooled investment funds. Seed capital
and co-investments are excluded. Cash collateral, cash held for charitable
funds and cash held in employee benefit trusts are excluded from cash and
liquid resources.
5.1.1 Adjusted operating profit and adjusted profit
Reconciliation of adjusted operating profit and adjusted profit to IFRS profit by component
The components of adjusted operating profit are net operating revenue and
adjusted operating expenses. These components provide a meaningful analysis of
our adjusted results. The table below provides a reconciliation of movements
between adjusted operating profit component measures and relevant IFRS terms.
A reconciliation of Net operating revenue to the IFRS item Revenue from
contracts with customers is provided in Note 4.4 of the Financial information
section.
IFRS term IFRS Presentation differences Adjusting Adjusted Adjusted profit term
items
profit
H1 2023 £m £m £m £m
Net operating revenue 721 - - 721 Net operating revenue
Total administrative and other expenses (764) (13) 183 (594) Adjusted operating expenses(1)
(43) (13) 183 127 Adjusted operating profit
Net gains or losses on financial instruments and other income (118) 2 140 24 Adjusted net financing costs and investment return
Finance costs (12) 11 1 - N/A
Profit on disposal of interests in associates - - - - N/A
Share of profit or loss from associates and joint ventures 4 - (4) - N/A
Impairment of interests in associates - - - - N/A
Loss before tax (169) - 320 151 Adjusted profit before tax
Total tax credit 24 - (48) (24) Tax on adjusted profit
Loss for the period (145) - 272 127 Adjusted profit after tax
1. Adjusted operating expenses includes staff and other related costs of
£305m compared with IFRS staff costs and other employee-related costs of
£275m. The difference primarily relates to the inclusion of contractor,
temporary agency staff and recruitment and training costs of £9m (IFRS basis:
Reported within other administrative expenses). IFRS staff costs and other
employee-related costs includes the benefit from the net interest credit
relating to the staff pension schemes of £16m and past service costs of £5m
(Adjusted profit basis: Reported within adjusted net financing costs and
investment return and other adjusting items respectively).
IFRS term IFRS(2) Presentation differences Adjusting Adjusted Adjusted profit term
items(2)
profit
H1 2022 £m £m £m £m
Net operating revenue 696 - - 696 Net operating revenue
Total administrative and other expenses (706) (22) 147 (581) Adjusted operating expenses
(10) (22) 147 115 Adjusted operating profit
Net gains or losses on financial instruments and other income (298) 8 274 (16) Adjusted net financing costs and investment return
Finance costs (15) 14 1 - N/A
Profit on disposal of interests in associates 6 - (6) - N/A
Share of profit or loss from associates and joint ventures - - - - N/A
Impairment of interests in associates (9) - 9 - N/A
Loss before tax (326) - 425 99 Adjusted profit before tax
Total tax credit 31 - (44) (13) Tax on adjusted profit
Loss for the period (295) - 381 86 Adjusted profit after tax
2. Comparatives for the six months ended 30 June 2022 have been restated for
the implementation of IFRS 17. Refer Note 4.1(a)(i).
Presentation differences primarily relate to amounts presented in a different
line item of the consolidated income statement.
5.1.2 Cost/income ratio
H1 2023 H1 2022
Adjusted operating expenses (£m) (594) (581)
Net operating revenue (£m) 721 696
Cost/income ratio (%) 82 83
5.1.3 Net operating revenue yield (bps)
Average AUMA (£bn) Net operating revenue (£m) Net operating revenue yield (bps)
H1 2023 H1 2022 H1 2023 H1 2022 H1 2023 H1 2022
Institutional and Retail Wealth(1,2) 225.5 239.4 382 446 33.7 37.1
Insurance Partners(1) 147.0 184.3 77 90 10.6 9.9
Investments(2) 372.5 423.7 459 536 24.6 25.3
Adviser(2) 70.3 72.3 103 92 28.8 25.5
Personal Wealth(2) 12.5 13.8 37 45 60.0 60.0
Eliminations (11.7) (11.8) N/A N/A N/A N/A
Net operating revenue yield(3) 443.6 498.0 599 673 26.9 26.9
interactive investor(3) 115 13
Performance fees 7 10
Net operating revenue 721 696
Analysis of Institutional and Retail Wealth by asset class(1)
Average AUM (£bn) Net operating revenue (£m) Net operating revenue yield (bps)
H1 2023 H1 2022 H1 2023 H1 2022 H1 2023 H1 2022
Equities 51.1 60.7 156 193 61.8 64.0
Fixed income(4) 35.5 40.9 48 57 27.2 28.3
Multi-asset 27.7 33.4 34 52 24.8 31.5
Private equity 11.8 12.3 26 25 45.2 40.5
Real assets 40.3 40.9 88 89 43.9 44.0
Alternative investment solutions including private credit(4) 23.7 24.4 16 17 13.4 13.9
Quantitative 15.7 6.2 3 2 3.2 6.5
Liquidity 19.7 20.6 6 6 6.5 6.0
Institutional and Retail Wealth 225.5 239.4 377 441 33.7 37.1
1. Wholesale has been renamed Retail Wealth, Insurance has been renamed
Insurance Partners.
2. Institutional and Retail Wealth net operating revenue yield excludes
revenue of £5m (H1 2022: £5m), Adviser net operating revenue yield excludes
revenue of £3m (H1 2022: £nil) and Personal Wealth net operating revenue
yield excludes revenue of £nil (H1 2022: £4m) for which there are no
attributable assets.
3. ii is excluded from the calculation of Personal and total net operating
revenue yield as fees charged for this business are primarily from
subscriptions and trading transactions.
4. Alternative investment solutions includes £1.9bn (H1 2022: £2.5bn)
average AUMA and £1.8m (H1 2022: £2.8m) net operating revenue relating to
private credit assets previously classified as fixed income.
5.1.4 Additional ii information
The results for ii are included in the Group's results following the
completion of the acquisition on 27 May 2022. The adjusted operating profit
for ii for the six months to 30 June 2023 of £67m is included in our overall
H1 2023 adjusted operating profit of £127m.
The tables below provide detail of the performance of ii for the six months
ended 30 June 2023 and the six months ended 30 June 2022 to provide a fuller
understanding of the performance of this business.
Analysis of ii profit H1 2023 H1 2022
6 months
6 months
£m
£m
Net operating revenue 115 75
Adjusted operating expenses (48) (42)
Adjusted operating profit 67 33
Analysis of ii net operating revenue H1 2023 H1 2022
6 months 6 months
£m
£m
Trading transactions 25 34
Subscription/account fees 27 27
Treasury income 66 17
Less: Cost of sales (3) (3)
Net operating revenue 115 75
5.1.5 Adjusted capital generation
The table below provides a reconciliation of movements between adjusted profit
after tax and adjusted capital generation. A reconciliation of adjusted profit
after tax to IFRS loss for the period is included earlier in this section.
H1 2023 H1 2022
£m £m
Adjusted profit after tax 127 86
Less net interest credit relating to the staff pension schemes (16) (15)
Less interest paid on other equity (6) (6)
Add dividends received from associates, joint ventures and significant listed 37 42
investments
Adjusted capital generation 142 107
Net interest credit relating to the staff pension schemes
The net interest credit relating to the staff pension schemes is the
contribution to adjusted profit before tax from defined benefit pension
schemes which are in surplus.
Dividends received from associates, joint ventures and significant listed investments
An analysis is provided below:
H1 2023 H1 2022
£m £m
Phoenix 27 26
HDFC Life - 1
HDFC Asset Management 10 15
Dividends received from associates, joint ventures and significant listed 37 42
investments
The table below provides detail of dividend coverage on an adjusted capital
generation basis.
H1 2023 H1 2022
Adjusted capital generation (£m) 142 107
Interim dividend (£m) 137 153
Dividend cover on an adjusted capital generation basis (times) 1.04 0.70
5.1.6 Adjusted diluted capital generation per share
A reconciliation of adjusted capital generation to adjusted profit after tax
is included in 5.1.5 above.
H1 2023 H1 2022
Adjusted capital generation (£m) 142 107
Weighted average number of diluted ordinary shares outstanding (millions)(1) - 1,949 2,130
Note 4.8
Adjusted diluted capital generation per share (pence) 7.3 5.0
1. In accordance with IAS 33, no share options and awards have been treated as
dilutive for the six months ended 30 June 2023 and the six months ended
30 June 2022 due to the loss attributable to equity holders of abrdn plc in
those periods. See Note 4.8 for further details.
5.1.7 Cash and liquid resources
The table below provides a reconciliation between IFRS cash and cash
equivalents and cash and liquid resources. Seed capital and co-investments are
excluded.
H1 2023 FY 2022
£bn £bn
Cash and cash equivalents per the condensed consolidated statement of 1.4 1.1
financial position
Bank overdrafts - -
Debt securities excluding third party interests(2) 0.7 0.7
Corporate funds held in absolute return funds - 0.1
Other(3) (0.2) (0.2)
Cash and liquid resources 1.9 1.7
2. Excludes £90m (FY 2022: £76m) relating to seeding.
3. Cash collateral, cash held for charitable funds and cash held in employee
benefit trusts are excluded from cash and liquid resources.
5.2 Investment performance
Definition Purpose
Investment performance
Investment performance has been aggregated using a money weighted average of As an asset managing business this measure demonstrates our ability to
our assets under management which are outperforming their respective generate investment returns for our clients.
benchmark. The calculation of investment performance uses a closing AUM
weighting basis. Calculations for investment performance are made gross of
fees with the exception of those for which the stated comparator is net of
fees. Benchmarks differ by fund and are defined in the relevant investment
management agreement or prospectus, as appropriate. The investment performance
calculation covers all funds that aim to outperform a benchmark, with certain
assets excluded where this measure of performance is not appropriate or
expected, such as private markets and execution only mandates, as well as
replication tracker funds which aim to perform in line with a given index.
( ) 1 year 3 years 5 years
% of AUM ahead of benchmark H1 2023 FY 2022 H1 2023 FY 2022 H1 2023 FY 2022
Equities 40 30 36 63 62 65
Fixed income 65 65 77 72 84 79
Multi-asset 10 13 44 50 17 22
Real assets 25 57 52 63 45 52
Alternatives 94 88 100 100 100 100
Quantitative 87 17 22 27 25 29
Liquidity 86 84 94 97 96 97
Total 41 41 58 65 56 58
5.3 Assets under management and administration and flows
Definition Purpose
AUMA
AUMA is a measure of the total assets we manage, administer or advise on The amount of funds that we manage, administer or advise directly impacts the
behalf of our clients. It includes assets under management (AUM), assets under level of net operating revenue that we receive.
administration (AUA) and assets under advice (AUAdv).
AUM is a measure of the total assets that we manage on behalf of individual
and institutional clients. AUM also includes fee generating assets managed for
corporate purposes.
AUA is a measure of the total assets we administer for clients through
platform products such as ISAs, SIPPs and general trading accounts.
AUAdv is a measure of the total assets we advise our clients on, for which
there is an ongoing charge.
Net flows
Net flows represent gross inflows less gross outflows or redemptions. Gross The level of net flows that we generate directly impacts the level of net
inflows are new funds from clients. Redemptions is the money withdrawn by operating revenue that we receive.
clients during the period. Cash dividends which are retained on the ii
platform are included in net flows for the ii business only. Cash dividends
are included in market movements for other parts of the group including the
Investments and Adviser platform businesses. We consider that this different
approach is appropriate for the ii business as cash dividend payments which
are retained result in additional income for ii, but are largely revenue
neutral for the rest of the group.
5.3.1 Analysis of AUMA
Opening Gross inflows Redemptions Net flows Market Corporate Closing
AUMA at
and other movements
actions(4)
AUMA at
1 Jan 2023
30 Jun 2023
6 months ended 30 June 2023 £bn £bn £bn £bn £bn £bn £bn
Institutional 161.9 9.0 (13.9) (4.9) (5.2) - 151.8
Retail Wealth(1) 69.3 6.8 (8.6) (1.8) (0.8) 0.5 67.2
Insurance Partners(1,2) 144.9 11.2 (11.0) 0.2 3.5 - 148.6
Investments 376.1 27.0 (33.5) (6.5) (2.5) 0.5 367.6
Adviser(3) 68.5 2.9 (3.5) (0.6) 1.4 2.5 71.8
interactive investor 54.0 4.9 (3.0) 1.9 0.9 - 56.8
Personal Wealth 13.1 0.7 (0.8) (0.1) 0.1 (2.5) 10.6
Personal 67.1 5.6 (3.8) 1.8 1.0 (2.5) 67.4
Eliminations(5) (11.7) (1.3) 1.4 0.1 0.5 - (11.1)
Total AUMA 500.0 34.2 (39.4) (5.2) 0.4 0.5 495.7
Opening Gross inflows Redemptions Net flows Market Corporate Closing
AUMA at
and other movements
actions(6)
AUMA at
1 Jan 2022
30 Jun 2022
6 months ended 30 June 2022 £bn £bn £bn £bn £bn £bn £bn
Institutional 174.0 7.7 (16.8) (9.1) (11.6) 7.5 160.8
Retail Wealth(1) 79.1 8.9 (10.8) (1.9) (5.7) - 71.5
Insurance Partners(1,2) 210.5 8.8 (35.1) (26.3) (22.7) (7.5) 154.0
Investments 463.6 25.4 (62.7) (37.3) (40.0) - 386.3
Adviser 76.2 4.0 (2.6) 1.4 (9.3) - 68.3
interactive investor - 0.6 (0.4) 0.2 (3.3) 55.4 52.3
Personal Wealth 14.4 0.8 (0.7) 0.1 (1.2) - 13.3
Personal 14.4 1.4 (1.1) 0.3 (4.5) 55.4 65.6
Eliminations(5) (12.1) (1.4) 1.1 (0.3) 1.5 (0.9) (11.8)
Total AUMA 542.1 29.4 (65.3) (35.9) (52.3) 54.5 508.4
1. Wholesale has been renamed Retail Wealth, Insurance has been renamed
Insurance Partners.
2. Insurance AUM at 30 June 2023 includes £147.5bn (31 Dec 2022: £143.7bn,
30 Jun 2022: £152.8bn) relating to Phoenix and £1.1bn (31 Dec 2022: £1.2bn,
30 Jun 2022: £1.2bn) of other AUM.
3. Includes Platform AUA at 30 June 2023 of £69.3bn (31 December 2022:
£68.5bn, 30 June 2022: £68.3bn).
4. Corporate actions in H1 2023 relates to the transfer of the MPS business
from Personal Wealth to Adviser in May 2023 of £2.5bn and £0.5bn relating to
the acquisition of Macquarie closed-end funds in March 2023.
5. Eliminations remove the double count reflected in Investments, Adviser and
Personal. The Personal vector includes assets that are reflected in both the
discretionary investment management and financial planning businesses. This
double count is also removed within Eliminations.
6. Corporate actions in H1 2022 relate to the acquisition of ii on 27 May 2022
and also reflect the transfer of retained LBG AUM of c£7.5bn from Insurance
into Institutional (quantitatives), to better reflect how the relationship is
being managed. The eliminations are to remove the double count for the assets
that are reflected in both ii and Investments.
5.3.2 Quarterly net flows
3 months to 3 months to 3 months to 3 months to 3 months to
30 Jun 23
31 Mar 23
31 Dec 22
30 Sep 22
30 Jun 22
15 months ended 30 June 2023 £bn £bn £bn £bn £bn
Institutional (0.7) (4.2) 2.2 (0.3) (7.8)
Retail Wealth (0.8) (1.0) (2.0) (0.5) -
Insurance Partners 1.7 (1.5) (6.3) 3.2 (4.6)
Investments 0.2 (6.7) (6.1) 2.4 (12.4)
Adviser (0.5) (0.1) - 0.2 0.5
interactive investor 1.0 0.9 0.6 0.8 0.2
Personal Wealth 0.1 (0.2) 0.2 - -
Personal 1.1 0.7 0.8 0.8 0.2
Eliminations 0.2 (0.1) (0.1) - (0.1)
Total net flows 1.0 (6.2) (5.4) 3.4 (11.8)
5.4 Public markets and Alternatives investment capability
We have simplified and focused our investment capabilities on areas where we
have both the skill and the scale to capitalise on the key themes shaping the
market, through either public markets or alternative asset classes. This
analysis includes Institutional, Retail Wealth and Insurance Partners.
Analysis of AUM and net operating revenue
AUM (£bn) Net operating revenue (£m)
H1 2023 H1 2022 H1 2023 H1 2022
Equities 73.4 88.8 184 225
Fixed income (including Liquidity)(1,2) 125.0 134.7 81 93
Multi-asset(2) 30.0 29.3 43 64
Quantitative 58.3 43.2 8 9
Other N/A N/A 5 5
Public markets 286.7 296.0 321 396
Real assets 43.7 50.3 96 104
Private credit 8.1 8.6 7 6
Alternative investment solutions 16.8 18.0 14 14
Private equity 12.3 13.4 28 26
Alternatives 80.9 90.3 145 150
Total Investments 367.6 386.3 466 546
1. Total liquidity AUM at 30 June 2023 was £38.1bn (30 June 2022: £38.4bn).
Total liquidity net operating revenue in H1 2023 was £12m (H1 2022: £15m).
2. Fixed income at 30 June 2023 includes £9.4bn of Liability aware funds AUM
previously managed as a multi-asset capability (30 June 2022: £10.8bn,
31 December 2022: £9.7bn).
5.5 Institutional and Retail Wealth(1) AUM
Detailed asset class split
Opening Gross inflows Redemptions Net flows Market Corporate actions(3) Closing
AUM at
and other movements
AUM at
1 Jan 2023
30 Jun 2023
6 months ended 30 June 2023 £bn £bn £bn £bn £bn £bn £bn
Developed markets equities 11.1 0.6 (1.7) (1.1) 0.2 - 10.2
Emerging markets equities 12.5 0.4 (1.1) (0.7) (0.2) - 11.6
Asia Pacific equities 20.5 1.4 (2.5) (1.1) (1.5) - 17.9
Global equities 8.2 0.7 (0.9) (0.2) 0.2 0.4 8.6
Total equities 52.3 3.1 (6.2) (3.1) (1.3) 0.4 48.3
Developed markets credit 22.5 1.6 (2.4) (0.8) (0.2) 0.1 21.6
Developed markets rates 2.0 0.8 (0.4) 0.4 0.8 - 3.2
Emerging markets fixed income 11.3 0.7 (1.7) (1.0) (0.3) - 10.0
Total fixed income(2) 35.8 3.1 (4.5) (1.4) 0.3 0.1 34.8
Absolute return 5.7 0.1 (0.8) (0.7) (0.4) - 4.6
Diversified growth/income 0.3 - (0.1) (0.1) 0.1 - 0.3
MyFolio 15.6 0.8 (1.2) (0.4) 0.7 - 15.9
Other multi-asset 6.7 0.4 (0.7) (0.3) (1.1) - 5.3
Total multi-asset 28.3 1.3 (2.8) (1.5) (0.7) - 26.1
Total private equity 12.3 0.1 (0.5) (0.4) (0.1) - 11.8
UK real estate 19.3 0.1 (0.7) (0.6) (2.2) - 16.5
European real estate 14.3 0.2 - 0.2 (0.9) - 13.6
Global real estate 1.6 0.1 (0.2) (0.1) (0.2) - 1.3
Real estate multi-manager 1.4 0.1 - 0.1 (0.3) - 1.2
Infrastructure equity 6.1 0.3 (0.1) 0.2 (0.1) - 6.2
Total real assets 42.7 0.8 (1.0) (0.2) (3.7) - 38.8
Total alternative investment solutions (including private credit)(2) 24.0 1.0 (0.9) 0.1 (0.8) - 23.3
Total quantitative 15.0 1.5 (0.9) 0.6 0.2 - 15.8
Total liquidity 20.8 4.9 (5.7) (0.8) 0.1 - 20.1
Total 231.2 15.8 (22.5) (6.7) (6.0) 0.5 219.0
1. Wholesale has been renamed Retail Wealth.
2. Alternative investment solutions include opening AUM of £1.8bn, net
inflows of £0.2bn and closing AUM of £1.9bn relating to private credit
assets previously classified as fixed income.
3. Corporate actions of £0.5bn in H1 2023 relates to the acquisition of
Macquarie closed-end funds in March 2023.
Opening Gross inflows Redemptions Net flows Market Corporate actions(2) Closing
AUM at
and other movements
AUM at
1 Jan 2022
30 Jun 2022
6 months ended 30 June 2022 £bn £bn £bn £bn £bn £bn £bn
Developed markets equities 17.0 1.1 (1.6) (0.5) (4.8) - 11.7
Emerging markets equities 16.4 1.1 (1.5) (0.4) (2.4) - 13.6
Asia Pacific equities 25.3 1.4 (2.6) (1.2) (2.9) - 21.2
Global equities 10.3 0.7 (0.8) (0.1) (2.1) - 8.1
Total equities 69.0 4.3 (6.5) (2.2) (12.2) - 54.6
Developed markets credit 28.3 1.6 (2.8) (1.2) (2.9) - 24.2
Developed markets rates 2.9 0.2 (0.3) (0.1) (0.6) - 2.2
Emerging markets fixed income 12.2 1.6 (1.4) 0.2 (1.0) - 11.4
Total fixed income(1) 43.4 3.4 (4.5) (1.1) (4.5) - 37.8
Absolute return 10.0 0.2 (0.7) (0.5) (2.0) - 7.5
Diversified growth/income 0.5 0.1 (0.1) - (0.1) - 0.4
MyFolio 17.7 0.9 (1.0) (0.1) (1.8) - 15.8
Other multi-asset 7.8 0.5 (0.4) 0.1 (1.5) - 6.4
Total multi-asset 36.0 1.7 (2.2) (0.5) (5.4) - 30.1
Total private equity 12.3 0.2 (0.5) (0.3) 0.7 - 12.7
UK real estate 19.9 0.2 (0.5) (0.3) 0.8 - 20.4
European real estate 10.3 0.2 - 0.2 2.8 - 13.3
Global real estate 1.8 0.1 (0.1) - (0.1) - 1.7
Real estate multi-manager 1.2 0.1 (0.1) - - - 1.2
Infrastructure equity 6.2 0.3 (0.5) (0.2) 0.1 - 6.1
Total real assets 39.4 0.9 (1.2) (0.3) 3.6 - 42.7
Total alternative investment solutions (including private credit) (1) 23.2 1.5 (0.8) 0.7 1.6 - 25.5
Total quantitative 5.5 1.5 (1.1) 0.4 (1.1) 7.5 12.3
Total liquidity 24.3 3.1 (10.8) (7.7) - - 16.6
Total 253.1 16.6 (27.6) (11.0) (17.3) 7.5 232.3
1. Alternative investment solutions include opening AUM of £2.4bn, net
inflows of £0.1bn and closing AUM of £2.9bn relating to private credit
assets previously classified as fixed income.
2. Corporate actions include the transfer of retained LBG AUM of c£7.5bn from
Insurance into Institutional (quantitatives), to better reflect how the
relationship is being managed.
5.6 Investments AUM by geography
30 Jun 2023 31 Dec 2022
Institutional and Retail Wealth Insurance Total Institutional and Retail Wealth Insurance Partners Total
Partners
£bn £bn £bn £bn £bn £bn
UK 107.4 148.6 256.0 111.2 144.9 256.1
Europe, Middle East and Africa (EMEA) 52.7 - 52.7 57.5 - 57.5
Asia Pacific (APAC) 15.2 - 15.2 16.4 - 16.4
Americas 43.7 - 43.7 46.1 - 46.1
Total AUM 219.0 148.6 367.6 231.2 144.9 376.1
5.7 Surplus regulatory capital
The £1,017m indicative capital surplus below includes a deduction to allow
for the declared interim dividend which will be paid in September 2023.
H1 2023 FY 2022
IFPR Group regulatory capital position £m £m
Common Equity Tier 1 capital resources 1,601 1,302
Additional Tier 1 capital resources 207 207
Total Tier 1 capital resources 1,808 1,509
Tier 2 capital resources 588 621
Total regulatory capital resources 2,396 2,130
Subordinated debt restrictions (325) (358)
Total regulatory capital resources available to meet total regulatory capital 2,071 1,772
requirements
Total regulatory capital requirements (1,054) (1,054)
Surplus regulatory capital 1,017 718
6. Glossary
Adjusted net financing costs and investment return
Adjusted net financing costs and investment return is a component of adjusted
profit and relates to the return from the net assets of the shareholder
business, net of costs of financing. This includes the net assets in defined
benefit staff pension plans and net assets relating to the financing of
subordinated liabilities.
Adjusted operating expenses
Adjusted operating expenses is a component of adjusted operating profit and
relates to the day-to-day expenses of managing our business.
Adjusted operating profit
Adjusted operating profit before tax is the Group's key APM. Adjusted
operating profit includes the results of the Group's three businesses:
Investments, Adviser and Personal, along with Corporate/strategic.
It excludes the Group's adjusted net financing costs and investment return,
and discontinued operations.
Adjusted operating profit also excludes the impact of the following items:
- Restructuring costs and corporate transaction expenses. Restructuring
includes the impact of major regulatory change.
- Amortisation and impairment of intangible assets acquired in business
combinations and through the purchase of customer contracts.
- Profit or loss arising on the disposal of a subsidiary, joint venture
or equity accounted associate.
- Change in fair value of/dividends from significant listed investments.
- Share of profit or loss from associates and joint ventures.
- Impairment loss/reversal of impairment loss recognised on investments
in associates and joint ventures accounted for using the equity method.
- Fair value movements in contingent consideration.
- Items which are one-off and, due to their size or nature, are not
indicative of the long-term operating performance of the Group.
Adjusted profit before tax
In addition to the results included in adjusted operating profit above,
adjusted profit before tax includes adjusted net financing costs and
investment return.
Assets under management and administration (AUMA)
AUMA is a measure of the total assets we manage, administer or advise on
behalf of our clients. It includes assets under management (AUM), assets under
administration (AUA) and assets under advice (AUAdv). AUMA does not include
assets for associates and joint ventures.
AUM is a measure of the total assets that we manage on behalf of individual
and institutional clients. AUM also includes assets managed for corporate
purposes.
AUA is a measure of the total assets we administer for clients through our
Platforms.
AUAdv is a measure of the total assets we advise our clients on, for which
there is an ongoing charge.
Board
The Board of Directors of the Company.
Chief Operating Decision Maker
The executive leadership team.
Company
abrdn plc.
Cost/income ratio
This is an efficiency measure that is calculated as adjusted operating
expenses divided by net operating revenue.
Director
A director of the Company.
Earnings per share (EPS)
EPS is a commonly used financial metric which can be used to measure the
profitability and strength of a company over time. EPS is calculated by
dividing profit by the number of ordinary shares. Basic EPS uses the weighted
average number of ordinary shares outstanding during the year. Diluted EPS
adjusts the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares, such as share options
awarded to employees.
Effective tax rate
Tax expense/(credit) attributable to equity holders' profit divided by profit
before tax attributable to equity holders' profits expressed as a percentage.
Executive leadership team (ELT)
Our ELT leads across our businesses and supporting functions globally and is
responsible for executing and monitoring progress on the delivery of our
business plans. The ELT also ensures we meet our obligations to our clients,
people, shareholders, regulators and partners.
Fair value through profit or loss (FVTPL)
FVTPL is an IFRS measurement basis permitted for assets and liabilities which
meet certain criteria. Gains or losses on assets or liabilities measured at
FVTPL are recognised directly in the income statement.
FCA
Financial Conduct Authority of the United Kingdom.
Group or abrdn
Relates to the Company and its subsidiaries.
Internal Capital Adequacy and Risk Assessment (ICARA)
The ICARA is the means by which the Group assesses the levels of capital and
liquidity that adequately support all of the relevant current and future risks
in its business.
International Financial Reporting Standards (IFRS)
International Financial Reporting Standards are accounting standards issued by
the International Accounting Standards Board (IASB).
Investment Firms Prudential Regime (IFPR)
The Investment Firms Prudential Regime is the FCA's new prudential regime for
MiFID investment firms. The regime came into force on 1 January 2022.
Investment performance
Investment performance has been aggregated using a money weighted average of
our assets under management which are outperforming their respective
benchmark. The calculation of investment performance uses a closing AUM
weighting basis. Calculations for investment performance are made gross of
fees with the exception of those for which the stated comparator is net of
fees. Benchmarks differ by fund and are defined in the relevant investment
management agreement or prospectus, as appropriate. The investment performance
calculation covers all funds that aim to outperform a benchmark, with certain
assets excluded where this measure of performance is not appropriate or
expected, such as private markets and execution only mandates, as well as
replication tracker funds which aim to perform in line with a given index.
LBG tranche withdrawals
On 24 July 2019, the Group announced that it had agreed a final settlement in
relation to the arbitration proceedings between the parties concerning LBG's
attempt to terminate investment management arrangements under which assets
were managed by members of the Group for LBG entities. In its decision of
March 2019, the arbitral tribunal found that LBG was not entitled to terminate
these investment management contracts. The Group had continued to manage
approximately £104bn (as at 30 June 2019) of assets under management (AUM)
for LBG entities during the period of the dispute. Approximately two thirds of
the total AUM (the transferring AUM) will be transferred to third party
managers appointed by LBG through a series of planned tranches from 24 July
2019. During this period, the Group continued to be remunerated for its
services in relation to the transferring AUM. The final tranche withdrawal was
completed in H1 2022.
Market Disclosure
This IFPR disclosure complements the Own funds requirement and Own funds
threshold requirement with the aim of improving market discipline by requiring
companies to publish certain details of their risks, capital and risk
management. Relevant disclosures are made in the abrdn plc consolidated annual
report and accounts and in the accounts of the Group's individual
IFPR-regulated entities, all of which can be found on the abrdn plc Group's
website.
Net flows
Net flows represent gross inflows less gross outflows or redemptions. Gross
inflows are new funds from clients. Redemptions is the money withdrawn by
clients during the period. Cash dividends which are retained on the ii
platform are included in net flows for the ii business only. Cash dividends
are included in market movements for other parts of the group including the
Investments and Adviser platform businesses. We consider that this different
approach is appropriate for the ii business as cash dividend payments which
are retained result in additional income for ii, but are largely revenue
neutral for the rest of the group.
Net operating revenue
Net operating revenue is a component of adjusted operating profit and includes
revenue we generate from asset management charges (AMCs), platform charges,
treasury income and other transactional charges. AMCs are earned on products
such as mutual funds, and are calculated as a percentage fee based on the
assets held. Investment risk on these products rests principally with the
client, with our major indirect exposure to rising or falling markets coming
from higher or lower AMCs. Treasury income is the interest earned on cash
balances less the interest paid to customers. Net operating revenue is shown
net of fees, costs of sale, commissions and similar charges. Costs of sale
include revenue from fund platforms which is passed to the product provider.
Net operating revenue yield (bps)
The net operating revenue yield is a measure that illustrates the average
margin being earned on the assets that we manage, administer or advise our
clients on excluding interactive investor. It is calculated as annualised net
operating revenue (excluding performance fees, interactive investor and
revenue for which there are no attributable assets) divided by monthly average
fee based assets. interactive investor is excluded from the calculation of
Personal and total net operating revenue yield as fees charged for this
business are primarily from subscriptions and trading transactions.
Own Funds Requirement
Under IFPR, the Own Funds Requirement is the higher of the permanent minimum
capital requirement, the fixed overhead requirements, and the K-factor
requirement. The K-factor requirement is the sum of: Risk-to-Client,
Risk-to-Market, and Risk-to-Firm K-factors.
Under IFPR, the Own Funds Threshold Requirement is the higher of Own funds
required on an ongoing basis and Own funds required on a wind-down basis. The
firm identifies and measures risks of harm and determines the degree to which
systems and controls alone mitigate those risks of harm (or risks of
disorderly wind-down). Any additional own funds needed, over and above the Own
funds requirement, to cover this identified residual risk is held under the
Own Funds Threshold Requirement.
Phoenix or Phoenix Group
Phoenix Group Holdings plc or Phoenix Group Holdings plc and its subsidiaries.
Significant listed investments
Relates to our investments in HDFC Asset Management, HDFC Life and Phoenix.
Fair value movements and dividend income relating to these investments are
treated as adjusting items for the purpose of determining the Group's adjusted
profit. Our remaining stakes in HDFC Asset Management and HDFC Life were sold
during H1 2023. At 30 June 2023, Phoenix is the only significant listed
investment.
Subordinated liabilities
Subordinated liabilities are debts of a company which, in the event of
liquidation, rank below its other debts but above share capital. The 5.25%
Fixed Rate Reset Perpetual Subordinated Contingent Convertible Notes issued by
the Company in December 2021 are classified as other equity as no contractual
obligation to deliver cash exists.
7. Shareholder information
Registered office
1 George Street
Edinburgh
EH2 2LL
Scotland
Company registration number: SC286832
For shareholder services call: +44 (0)371 384 2464*
* Calls are monitored/recorded to meet regulatory obligations and for training
and quality purposes. Call charges will vary.
Secretary: Julian Baddeley
Registrar: Equiniti
Auditors: KPMG LLP
Solicitors: Slaughter and May
Brokers: JP Morgan Cazenove, Goldman Sachs
Shareholder services
We offer a wide range of shareholder services. For more information, please:
- Contact our registrar, Equiniti, who manage this service for us. Their
details can be found on the inside back cover.
- Visit our share portal at www.abrdnshares.com
Sign up for Ecommunications
Signing up means:
- You'll receive an email when documents like the annual report and
accounts, Half year results and AGM guide are available on our website.
- Voting instructions for the Annual General Meeting will be sent to you
electronically.
Set up a share portal account
Having a share portal account means you can:
- Manage your account at a time that suits you.
- Download your documents when you need them.
To find out how to sign up, visit www.abrdnshares.com
(http://www.abrdnshares.com)
Preventing unsolicited mail
By law, the Company has to make certain details from its share register
publicly available. As a result it is possible that some registered
shareholders could receive unsolicited mail, emails or phone calls. You could
also be targeted by fraudulent 'investment specialists', clone firms or
scammers posing as government bodies e.g. HMRC, FCA. Frauds are becoming much
more sophisticated and may use real company branding, the names of real
employees or email addresses that appear to come from the company. If you get
a social or email message and you're unsure if it is from us, you can send it
to emailscams@abrdn.com (mailto:emailscams@abrdn.com) and we'll let you know.
You can also check the FCA warning list and warning from overseas regulators,
however, please note that this is not an exhaustive list and do not assume
that a firm is legitimate just because it does not appear on the list as
fraudsters frequently change their name and it may not have been reported yet.
www.fca.org.uk/consumers/unauthorised-firms-individuals
www.iosco.org/investor_protection/?subsection=investor_alerts_portal
(http://www.iosco.org/investor_protection/?subsection=investor_alerts_portal)
You can find more information about share scams at the Financial Conduct
Authority website www.fca.org.uk/consumers/scams
If you are a certificated shareholder, your name and address may appear on a
public register. Using a nominee company to hold your shares can help protect
your privacy. You can transfer your shares into the Company-sponsored nominee
- the abrdn Share Account - by contacting Equiniti, or you could get in touch
with your broker to find out about their nominee services.
If you want to limit the amount of unsolicited mail you receive generally,
please visit www.mpsonline.org.uk
Financial calendar
Half year results 2023 8 August
Ex-dividend date for 2023 interim dividend 17 August
Record date for 2023 interim dividend 18 August
Last date for DRIP elections for 2023 6 September
interim dividend
Dividend payment date for 2023 interim dividend 26 September
Analysis of registered shareholdings at 30 June 2023
Range of shares Number of holders % of total holders Number of % of total shares
shares
1-1,000 57,268 65.77 22,871,837 1.17
1,001-5,000 25,200 28.94 52,648,807 2.68
5,001-10,000 2,684 3.08 18,154,006 0.93
10,001-100,000 1,493 1.72 36,008,557 1.83
(#)100,001+ 429 0.49 1,832,622,153 93.39
Total 87,074 100.00 1,962,305,360 100
# These figures include the Company-sponsored nominee - the abrdn Share
Account - which had 891,802 participants holding 634,281,155 shares.
8. Forward-looking statements
This document may contain certain 'forward-looking statements' with respect to
the financial condition, performance, results, strategies, targets,
objectives, plans, goals and expectations of the Company and its affiliates.
These forward-looking statements can be identified by the fact that they do
not relate only to historical or current facts.
Forward-looking statements are prospective in nature and are not based on
historical or current facts, but rather on current expectations, assumptions
and projections of management of the abrdn Group about future events, and are
therefore subject to known and unknown risks and uncertainties which could
cause actual results to differ materially from the future results expressed or
implied by the forward-looking statements.
For example but without limitation, statements containing words such as 'may',
'will', 'should', 'could', 'continues', 'aims', 'estimates', 'projects',
'believes', 'intends', 'expects', 'hopes', 'plans', 'pursues', 'ensure',
'seeks', 'targets' and 'anticipates', and words of similar meaning (including
the negative of these terms), may be forward-looking. These statements are
based on assumptions and assessments made by the Company in light of its
experience and its perception of historical trends, current conditions, future
developments and other factors it believes appropriate.
By their nature, all forward-looking statements involve risk and uncertainty
because they are based on information available at the time they are made,
including current expectations and assumptions, and relate to future events
and/or depend on circumstances which may be or are beyond the Group's control,
including among other things: UK domestic and global political, economic and
business conditions (such as the UK's exit from the EU and the ongoing
conflict between Russia and Ukraine); market related risks such as
fluctuations in interest rates and exchange rates, and the performance of
financial markets generally; the impact of inflation and deflation; the impact
of competition; the timing, impact and other uncertainties associated with
future acquisitions, disposals or combinations undertaken by the Company or
its affiliates and/or within relevant industries; experience in particular
with regard to mortality and morbidity trends, lapse rates and policy renewal
rates; the value of and earnings from the Group's strategic investments and
ongoing commercial relationships; default by counterparties; information
technology or data security breaches (including the Group being subject to
cyberattacks); operational information technology risks, including the Group's
operations being highly dependent on its information technology systems (both
internal and outsourced); natural or man-made catastrophic events; the impact
of pandemics, such as the COVID-19 (coronavirus) outbreak; climate change and
a transition to a low-carbon economy (including the risk that the Group may
not achieve its targets); exposure to third-party risks including as a result
of outsourcing; the failure to attract or retain necessary key personnel; the
policies and actions of regulatory authorities and the impact of changes in
capital, solvency or accounting standards, and tax and other legislation and
regulations (including changes to the regulatory capital requirements) that
the Group is subject to in the jurisdictions in which the Company and its
affiliates operate. As a result, the Group's actual future financial
condition, performance and results may differ materially from the plans,
goals, objectives and expectations set forth in the forward-looking
statements.
Neither the Company, nor any of its associates, directors, officers or
advisers, provides any representation, assurance or guarantee that the
occurrence of the events expressed or implied in any forward-looking
statements in this document will actually occur. Persons receiving this
document should not place reliance on forward-looking statements. All
forward-looking statements contained in this document are expressly qualified
in their entirety by the cautionary statements contained or referred to in
this section. Each forward-looking statement speaks only as at the date of the
particular statement. Neither the Company nor its affiliates assume any
obligation to update or correct any of the forward-looking statements
contained in this document or any other forward-looking statements it or they
may make (whether as a result of new information, future events or otherwise),
except as required by law. Past performance is not an indicator of future
results and the results of the Company and its affiliates in this document may
not be indicative of, and are not an estimate, forecast or projection of, the
Company's or its affiliates' future results.
Contact us
Got a shareholder question? Contact our shareholder services team.
UK and overseas (excluding Germany and Austria)
phone +44 (0)371 384 2464*
email questions@abrdnshares.com
(mailto:questions@abrdnshares.com)
visit www.abrdnshares.com
(http://www.abrdnshares.com/)
mail abrdn Shareholder Services
Aspect House
Spencer Road
Lancing, West Sussex
BN99 6DA, United
Kingdom
Germany and Austria
phone +44 (0)371 384 2493*
email fragen@abrdnshares.com
(mailto:fragen@abrdnshares.com)
visit www.abrdnshares.com
(http://www.abrdnshares.com/)
mail abrdn Shareholder Services
Aspect House
Spencer Road
Lancing, West Sussex
BN99 6DA, United
Kingdom
* Calls are monitored/recorded to meet regulatory obligations and for training
and quality purposes. Call charges will vary. s. Call charges will vary.
Please remember that the value of shares can go down as well as up and you may
not get back the full amount invested or any income from it. All figures and
share price information have been calculated as at 30 June 2023 (unless
otherwise indicated).
This document has been published by abrdn plc for information only. It is
based on our understanding as at August 2023 and does not provide financial or
legal advice.
abrdn plc is registered in Scotland (SC286832) at 1 George Street, Edinburgh
EH2 2LL.
www.abrdn.com (http://www.abrdn.com/) © 2023 abrdn, images reproduced under
licence. All rights reserved.
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