REG - abrdn PLC - Final Results - Part 7 of 8
27/02/2024 07:00
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RNS Number : 5262E abrdn PLC 27 February 2024
abrdn plc
Full Year Results 2023
Part 7 of 8
Company financial statements
Company statement of financial position
As at 31 December 2023
2023 2022
Notes £m £m
Assets
Investments in subsidiaries A 4,402 4,482
Investments in associates and joint ventures B 196 196
Deferred tax assets N 150 143
Loans to subsidiaries C - 110
Derivative financial assets C 41 85
Equity securities and interests in pooled investment funds C 574 709
Debt securities C 126 211
Receivables and other financial assets C 46 48
Other assets F 47 48
Cash and cash equivalents C 21 27
Total assets 5,603 6,059
Liabilities
Subordinated liabilities L 599 621
Current tax liabilities N 1 -
Derivative financial liabilities D - 1
Other financial liabilities L 166 272
Provisions P - 33
Total liabilities 766 927
Equity
Share capital G 257 280
Shares held by trusts H (137) (145)
Share premium reserve G 640 640
Retained earnings I
Brought forward retained earnings 3,665 3,301
Profit/(loss) for the year attributable to equity shareholders of abrdn plc(1) 300 (402)
Other movements in retained earnings (418) 766
Total retained earnings 3,547 3,665
Other reserves J 323 485
Equity attributable to equity shareholders of abrdn plc 4,630 4,925
Other equity K 207 207
Total equity 4,837 5,132
Total equity and liabilities 5,603 6,059
1. The Company's total profit for the year was £311m (2022: loss of £391m)
of which a profit of £11m was attributable to other equity holders (2022:
profit of £11m).
The financial statements on pages 271 to 285 were approved by the Board and
signed on its behalf by the following Directors:
Sir Douglas Flint Jason Windsor
Chairman Chief Financial Officer
26 February 2024 26 February 2024
Company registered number: SC286832
The Notes on pages 274 to 285 are an integral part of these financial
statements.
Company statement of changes in equity
For the year ended 31 December 2023
Share capital Shares held by trusts Share premium Retained earnings Other reserves Total equity attributable to equity shareholders of abrdn plc Other equity Total equity
reserve
Notes £m £m £m £m £m £m £m £m
1 January 2023 280 (145) 640 3,665 485 4,925 207 5,132
Profit for the year - - - 300 - 300 11 311
Other comprehensive income for the year - - - - (9) (9) - (9)
Total comprehensive income for the year - - - 300 (9) 291 11 302
Interest paid on other equity K - - - - - - (11) (11)
Dividends paid on ordinary shares I - - - (279) - (279) - (279)
Share buyback G (23) - - (302) 23 (302) - (302)
Reserves credit for employee share-based payment J - - - - 24 24 - 24
Transfer to retained earnings for vested employee share-based payment J - - - 31 (31) - - -
Transfer between reserves on impairment of subsidiaries J - - - 169 (169) - - -
Shares acquired by employee trusts H - (27) - - - (27) - (27)
Shares distributed by employee and other trusts and related dividend H - 35 - (37) - (2) - (2)
equivalents
31 December 2023 257 (137) 640 3,547 323 4,630 207 4,837
{symbol here} The Notes on pages 274 to 285 are an integral part of these
financial statements.
Share capital Shares held by trusts Share premium Retained earnings Other reserves Total equity attributable to equity shareholders of abrdn plc Other equity Total equity
reserve
Notes £m £m £m £m £m £m £m £m
1 January 2022 305 (167) 640 3,301 1,856 5,935 207 6,142
Loss for the year - - - (402) - (402) 11 (391)
Other comprehensive income for the year - - - - 5 5 - 5
Total comprehensive income for the year - - - (402) 5 (397) 11 (386)
Interest paid on other equity K - - - - - - (11) (11)
Dividends paid on ordinary shares I - - - (307) - (307) - (307)
Share buyback G (25) - - (302) 25 (302) - (302)
Cancellation of the capital redemption reserve J - - - 1,059 (1,059) - - -
Reserves credit for employee share-based payment J - - - - 24 24 - 24
Transfer to retained earnings for vested employee share-based payment J - - - 63 (63) - - -
Transfer between reserves on disposal of subsidiaries J - - - 1 (1) - - -
Transfer between reserves on impairment of subsidiaries J - - - 302 (302) - - -
Shares acquired by employee trusts H - (46) - - - (46) - (46)
Shares distributed by employee and other trusts and related dividend H - 68 - (69) - (1) - (1)
equivalents
Other movements I - - - 19 - 19 - 19
31 December 2022 280 (145) 640 3,665 485 4,925 207 5,132
The Notes on pages 274 to 285 are an integral part of these financial
statements.
Company accounting policies
(a) Basis of preparation
These separate financial statements are presented as required by the Companies
Act 2006. The Company meets the definition of a qualifying entity under
Application of Financial Reporting Requirements 100 as issued by the Financial
Reporting Council. Accordingly, the financial statements
for period ended 31 December 2023 have been prepared in accordance with
Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) as
issued by the Financial Reporting Council.
The financial statements have been prepared on a going concern basis (see the
Basis of preparation section of the Group financial statements for further
details) and under the historical cost convention, as modified by the
revaluation of financial assets and financial liabilities (including
derivative instruments) at fair value through profit or loss (FVTPL). Climate
risks have been taken into consideration in the preparation of the financial
statements, primarily in relation to fair value calculations and impairment
assessments.
As permitted by FRS 101, the Company has taken advantage of the following
disclosure exemptions available under that standard:
- A cash flow statement and related notes.
- Capital management.
- Effect of IFRSs issued but not effective.
- Related party transactions with wholly owned subsidiaries.
As equivalent disclosures are given in the consolidated financial statements,
we have also applied the disclosure exemptions for share based payments,
financial instruments and OECD Pillar Two legislation enacted or substantively
enacted but not yet effective.
The principal accounting policies adopted are the same as those given in the
consolidated financial statements, together with the Company specific policies
set out below. These accounting policies have been consistently applied to all
financial reporting periods presented in these financial statements.
The Company has taken advantage of the exemption in section 408 of the
Companies Act 2006 not to present its own statement of comprehensive income in
these financial statements. The auditors' remuneration for audit and other
services is disclosed in Note 7 to the consolidated financial statements. The
Company has no employees.
(i) Investment in subsidiaries, associates and joint ventures
The Company has certain subsidiaries which are investment vehicles such as
open-ended investment companies, unit trusts and limited partnerships whose
primary function is to generate capital or income growth through holding
investments. This category of subsidiary is held at FVTPL since they are
managed on a fair value basis.
Investments in subsidiaries (other than those measured at FVTPL), associates
(other than those measured at FVTPL) and joint ventures are initially
recognised at cost and subsequently held at cost less any impairment charge.
An impairment charge is recognised when the carrying amount of the investment
exceeds its recoverable amount. Any gain or loss on disposal of a subsidiary,
associate or joint venture is recognised in profit for the year.
Distributions received of non-cash assets, including investments in
subsidiaries, are recognised at fair value in the balance sheet and as
dividends in specie in income or other comprehensive income as appropriate in
the statement of comprehensive income.
(ii) Critical accounting estimates and judgements in applying
accounting policies
The preparation of financial statements requires management to make estimates
and assumptions and exercise judgements in applying the accounting policies
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses arising
during the year. Estimates and judgements are continually evaluated and based
on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
The areas where judgements have the most significant effect on the amounts
recognised in the Company financial statements are as follows:
Financial statement area Critical judgements in applying accounting policies Related notes
Investments in subsidiaries held at cost Given that the net assets attributable to shareholders of abrdn plc at 31 Note A
December 2023 were higher than the market capitalisation of the Company
judgement was required to determine for which subsidiaries this was considered
an indicator of impairment
The areas where assumptions and other sources of estimation uncertainty at the
end of the reporting period have a significant risk of resulting in a material
adjustment to the carrying amount of assets and liabilities within the next
financial year are as follows:
Financial statement area Critical accounting estimates and assumptions Related notes
Investments in subsidiaries held at cost Determination of the recoverable amount Note A
Notes to the Company financial statements
A. Investments in subsidiaries
Investments in subsidiaries measured at cost Investments in subsidiaries measured at FVTPL Total
£m £m £m
Cost
At 1 January 2022 8,523 1,328 9,851
Acquisition of subsidiaries(1) 1,519 2 1,521
Disposal of subsidiaries (1,450) (1,159) (2,609)
Gains/(losses) on subsidiaries at FVTPL - (1) (1)
At 31 December 2022 8,592 170 8,762
Acquisition of subsidiaries(1) 40 180 220
Disposal of subsidiaries - (9) (9)
Gains/(losses) on subsidiaries at FVTPL - - -
At 31 December 2023 8,632 341 8,973
Impairment
At 1 January 2022 (4,786) - (4,786)
Impairment of subsidiaries measured at cost (927) - (927)
Disposal of subsidiaries measured at cost 1,433 - 1,433
At 31 December 2022 (4,280) - (4,280)
Impairment of subsidiaries measured at cost (304) - (304)
Reversal of impairment of subsidiaries measured at cost 13 - 13
At 31 December 2023 (4,571) - (4,571)
Carrying amount
At 1 January 2022 3,737 1,328 5,065
At 31 December 2022 4,312 170 4,482
At 31 December 2023 4,061 341 4,402
1. Includes investment into existing subsidiaries measured at cost of £40m
(2022: £139m).
Details of the Company's subsidiaries are given in Note 44 of the Group
financial statements.
(a) Acquisitions
During 2023, the Company made the following acquisitions of subsidiaries
measured at cost:
- The Company increased its investment in Aberdeen Corporate Services
Limited (ACSL) through the purchase of 26,278 ordinary shares for a cash
consideration of £26.3m.
- The Company increased its investment in abrdn Financial Planning
Limited (aFPL) through the purchase of 12,150,000 ordinary shares for a cash
consideration of £12.2m.
- The Company increased its investment in abrdn Client Management
Limited (aCM) through the purchase of 1,500,000 ordinary shares for a cash
consideration of £1.5m.
During 2022, the Company made the following acquisitions of subsidiaries
measured at cost:
- The Company acquired 100% of the issued share capital of Antler Holdco
Limited (Antler), the parent company for the interactive investor (ii) group
of companies for a cash consideration of £1,380.2m. Further details are
provided in Note 1(b)(ii) of the Group financial statements. The Company's
consideration was lower than the £1,485m cash consideration recognised in the
Group financial statements as it did not include funding of £118.8m provided
to Antler to facilitate the acquisition of minority interests in Interactive
Investor Limited (IIL) prior to the acquisition of Antler. The Company's
consideration included transaction costs of £14m which were included in
Restructuring and corporate transaction expenses in the Group Consolidated
income statement.
- The Company subsequently increased its investment in Antler by
£139.2m through the purchase of 139,163,986 ordinary shares.
- The Company then acquired IIL via a dividend in specie from Antler and
recognised IIL at an amount of £1,512m, with the carrying value of Antler
reduced correspondingly to £7m and therefore no impact on investment in
subsidiaries in the Company Statement of financial position. The dividend in
specie was recognised at £nil in the Company's total comprehensive income for
the year due to the reduction in the Antler carrying value.
See Section (d) below for details on investments in subsidiaries at FVTPL.
(b) Disposals
During 2022, the Company made the following disposals of subsidiaries measured
at cost:
- Standard Life Oversea Holding (SLOH) was liquidated. Prior to
liquidation, the carrying value of the Company's interest in SLOH was £18m
and the Company received final liquidation proceeds of £20m in the form of a
distribution in specie of its intercompany balance due to SLOH. Refer Note J
for details of the transfer from the merger reserve to retained earnings in
relation to the disposal of SLOH.
(c) Impairment
The Company's net assets attributable to shareholders of abrdn plc at 31
December 2023 of £4.6bn are higher than the Company's market capitalisation
of £3.3bn. Taking this into account along with the continued headwinds facing
active asset managers, it was assessed that there were indicators of
impairments in relation to the Company's asset management holding companies,
abrdn Investment Holdings Limited (aIHL) and abrdn Holdings Limited (aHL).
aIHL had also paid up significant dividends in 2023 following the sale of
abrdn Capital Limited and the sale of its subsidiary's holding in HDFC Asset
Management. Following the performance of valuation exercises, impairments of
aIHL and aHL of £169m and £40m respectively have been recognised.
Indicators of impairment were also identified in relation to abrdn Financial
Planning Limited (aFPL). The goodwill relating to aFPL had been impaired at
the consolidated level at 30 June 2023. Following the performance of the
valuation which also supported the assessment of goodwill above, an impairment
of the Company carrying value of £52m has been recognised.
No other indicators of impairment were identified on any material investment
in subsidiaries including IIL for which illustrative sensitivities have been
provided below.
Indicators of reversal of impairment have also been considered and a reversal
of impairment of £13m has been recognised in relation to Aberdeen Corporate
Services Limited.
aIHL
The Company's investment in its subsidiary aIHL was impaired during 2023 by
£169m (2022: £51m). The impairment primarily resulted from the payment of
dividends from aIHL to the Company following the sale of its interest in HDFC
Asset Management held by its subsidiary, abrdn Investment Management Limited
and abrdn Capital Limited (aCL) (refer Note 21 of the Group financial
statements) during the year.
The recoverable amount of aIHL which is its FVLCD at 31 December 2023 was
£819m. The FVLCD considered a number of valuation approaches, with the
primary approach based on the net assets of aIHL and its subsidiaries
excluding those held for sale as part of the proposed sale of the
European-headquartered Private Equity business. The recoverable amount also
included the valuation of European-headquartered Private Equity business which
was based on an estimated price from the current sale process (refer Note 21
of the Group financial statements). This is a level 3 measurement as they are
measured using inputs which are not based on observable market data.
As the year end carrying values are the recoverable amount, any downside
sensitivity will lead to a further future impairment loss. As the primary
approach was net assets as set out above, the valuation is not considered
sensitive to significant change. However, a 20% reduction in the net assets of
aIHL and its subsidiaries excluding those held for sale as part of the
proposed sale of the European-headquartered Private Equity business would
result in a further impairment of £147m.
The Company's investment in aIHL was also impaired during 2022 by £51m. The
impairment primarily resulted from lower future revenue projections and
further work being required to reduce Investments costs given this level of
revenue along with the impact of dividends paid to the Company during 2022 and
fair value movements relating to the interest in HDFC Asset Management.
The recoverable amount of aIHL which was its FVLCD at 31 December 2022 was
£988m. The FVLCD considered a number of valuation approaches, with the
primary approach being a discounted cash flow approach. The recoverable amount
for aIHL also included the value of its subsidiaries not included in the
discounted cash flow valuation. These primarily included aCL. The valuation of
aCL was based on FVLCD and was based on an estimated sale price at 31 December
2022. The recoverable amount also included the fair value of the interest in
HDFC Asset Management at this date.
aHL
The Company's investment in its subsidiary aHL was impaired during 2023 by
£40m (2022: £847m). The impairment primarily resulted from lower future cash
flow projections reflecting the continued headwinds facing active asset
managers noted above.
The recoverable amount of aHL which is its FVLCD at 31 December 2023 was
£1,218m. The recoverable amount was based on FVLCD. The FVLCD considered a
number of valuation approaches, applied to the elements of aHL's business as
appropriate. The primary approach was discounted cash flow with cash flows
which were based on the three year financial budgets approved by management
split by region. Revenue in the management forecasts reflects past experience
and modelling based on assets under management and fee revenue yields by asset
class. Assets under management is modelled from future net flow assumptions
and market movements. Expenses in the management forecasts were based on past
experience adjusted for planned expense savings and inflation impacts.
Cash flow projections were extrapolated using a 5% revenue growth and 2%
increase in expenses in years 4 and 5, and then a 1.9% terminal rate profit
growth based on long-term inflation forecasts. Post tax discount rates of
between 13.35% and 14.60% were used based on the peer companies cost of equity
adjusted for forecasting risk and relative size. However, where the net assets
of a significant element of aHL's business were higher, the valuation included
the net asset value rather than the discounted cash flow value. The
recoverable amount for aHL also included the value of its subsidiaries,
associates and joint ventures not included in the discounted cash flow
valuation. These primarily include Finimize Limited, Archax Holdings Limited
and Virgin Money UTM. This is a level 3 measurement as they are measured using
inputs which are not based on observable market data.
As the year end carrying values are the recoverable amount, any downside
sensitivity will lead to a further future impairment loss. As noted above, net
assets are not considered sensitive to significant change. However, earnings
and the discount rate are more subject to change and the table below gives
sensitivities for the carrying amount of aHL at 31 December 2023 in relation
to these assumptions.
Impact on carrying amount at 31 December 2023 £m
25% reduction in forecast post tax adjusted earnings (170)
2% increase in the post-tax discount rate (109)
The Company's investment in its subsidiary aHL was impaired during 2022 by
£847m. The impairment in 2022 resulted from lower future revenue projections
and further work being required to reduce Investments cost savings given this
level of revenue.
The recoverable amount of aHL which was its FVLCD at 31 December 2022 was
£1,258m. As with aIHL above, the FVLCD considered a number of valuation
approaches, with the primary approach being a discounted cash flow approach.
As above, the recoverable amount for aHL also included the value of its
subsidiaries, associates and joint ventures not included in the discounted
cash flow valuation.
aFPL
The Company's investment in its subsidiary aFPL was impaired during 2023 by
£52m (2022: £25m). The impairment resulted from lower projected revenues as
a result of lower markets and macroeconomic conditions and the impact of
business restructuring.
The recoverable amount of aFPL which is its FVLCD at 31 December 2023 was
£45m (2022: £85m). The recoverable amount was determined at 31 December
2023. The FVLCD considered a number of valuation approaches, with the primary
approach being a multiples approach based on price to revenue and price to
assets under advice (AUAdv). Multiples were based on trading multiples for
aFPL's peer companies, adjusted to take into account profitability where
appropriate, and were benchmarked against recent transactions. Revenue was
based on actual 2023 and forecast 2024 revenue and AUAdv were based on
forecast 2024 AUAdv. The expected cost of disposal was based on past
experience of previous transactions. This is a level 3 measurement as they are
measured using inputs which are not based on observable market data.
As the year end carrying value is the recoverable amount, any downside
sensitivity will lead to a further future impairment loss. A 20% reduction in
recurring revenue and AUAdv would result in a further impairment of £11m. A
20% reduction in multiples would result in a further impairment of £11m.
The recoverable amount of aFPL at 31 December 2022 of £85m was also based on
FVLCD which similarly considered a number of valuation approaches, with the
primary approach also being a multiples approach based on price to revenue and
price to AUAdv.
aCM
The carrying amount of the Company's investment in aCM is £1.5m (2022:
£nil). No impairment of aCM has been recognised in 2023. The Company's
investment in its subsidiary aCM was impaired during 2022 by £4m. The
impairment resulted from the payment of a dividend from aCM to the Company.
abrdn (Mauritius Holdings) 2006 Limited (aMH06)
The Company's investment in its subsidiary aMH06 was impaired during 2023 by
£43m (2022: £nil). The impairment resulted from the payment of dividends
from aMH06 to the Company in 2023. These dividends primarily related to the
sale of aMH06's final investment in HDFC Life (refer Note 11 of the Group
financial statements for further details). Following the payment of the
dividends, the recoverable amount of aMH06 was less than £1m.
IIL
The carrying amount of the Company's investment in IIL is £1,512m (2022:
£1,512m). No impairment was recognised on the Company's investment in IIL in
2023 and there were no indicators of impairment at 31 December 2023.
The recoverable amount of IIL was determined at 31 December 2023 based on
FVLCD and used the same approach and key assumptions as used in the impairment
review for interactive investor goodwill set out in Note 13 of the Group
financial statements. The basis for sensitivities of key assumptions is also
set out in Note 13 of the Group financial statements. The impact of these
illustrative sensitivities on the carrying amount of IIL at 31 December 2023
is as follows:
Impact on carrying amount at 31 December 2023 £m
20% reduction in forecast post tax adjusted earnings (106)
25% reduction in market multiple (192)
ACSL
At 31 December 2023, the Company has recognised a reversal of impairment in
its investments in subsidiaries of £13m (2022: £nil). The Company's
investment in ACSL had previously been impaired by £13m in the year ended 31
December 2017. Following the reversal of the impairment, the carrying value of
ACSL is £102m (2022: £62m). Refer Section (a) for details of the capital
injections during the year.
On 1 August 2023, the Court of Session confirmed that any residual surplus
assets that remain after all plan-related obligations of the Group's main
defined benefit plan, the abrdn UK Group (SLSPS) plan, are settled or
otherwise provided for would be available to ACSL as sponsoring employer (see
Note 31 of the Group financial statements for further details). Following this
confirmation, the Directors of the Company have assessed that it is now
appropriate to consider ACSL's pension scheme asset in determining the
recoverable amount of ACSL. The recoverable amount for ACSL has been assessed
based on the net assets of ACSL at 31 December 2023 which were £733m
including a defined benefit asset of £734m. This value of £734m was
determined on an IAS 19 basis net of an authorised surplus payments charge of
35%. The residual surplus assets that ACSL would realise would be
significantly lower than this surplus as would be expected following a buy-out
transaction. However, even allowing for a prudent haircut to the net assets
for this, the net assets of ACSL would still be significantly in excess of
ACSL's carrying value before any reversal of impairment of £13m and the
reversal of impairment has been recognised. This is a level 3 assessment as it
is measured using inputs which are not based on observable market data.
(d) Investments in subsidiaries at FVTPL
Investments in subsidiaries at FVTPL, valued at £341m (2022: £170m), relate
to holdings in funds over which the Company has control.
B. Investments in associates and joint ventures
2023 2022
£m £m
Investment in associates measured at cost - -
Investment in joint venture measured at cost 196 196
Investments in associates and joint ventures 196 196
(a) Investment in associates
The Company has an interest of 25.3% (2022: 25.3%) in Tenet Group Limited
(Tenet), a company incorporated in England and Wales which is measured at cost
less impairment. The carrying amount of the Company's investment in Tenet is
£nil. (2022: £nil).
There were no capital contributions or impairments in relation to Tenet during
the year ended 31 December 2023. During the year ended 31 December 2022, the
Company increased its interest in Tenet by £3.8m. The Company also recognised
an impairment of £14m in its interest during 2022.
(b) Investment in joint ventures
The Company has a 50% (2022: 50%) interest in Heng An Standard Life Insurance
Company Limited (HASL), a company incorporated in China. Further details on
this joint venture are provided in Note 14 of the Group financial statements.
C. Financial investments
Fair value through Derivative financial instruments used for hedging Amortised cost Total
profit or loss
2023 2022 2023 2022 2023 2022 2023 2022
Notes £m £m £m £m £m £m £m £m
Investments in subsidiaries measured at FVTPL A 341 - - 341
170 - - 170
Loan to subsidiaries - - - - - 110 - 110
Derivative financial assets D - - 41 85 - - 41 85
Equity securities and interests in pooled investment funds 574 - - 574
709 - - 709
Debt securities 1 1 - - 125 210 126 211
Receivables and other financial assets E - - 46 46
- - 48 48
Cash and cash equivalents - - - - 21 27 21 27
Total 916 880 41 85 192 395 1,149 1,360
The amount of debt securities expected to be recovered or settled after more
than 12 months is £1m (2022: £1m). The amount of loans to subsidiaries
expected to be recovered or settled after more than 12 months is £nil (2022:
£110m). The amount of equity securities and interests in pooled investment
funds expected to be recovered or settled after more than 12 months is £574m
(2022: £25m).
Under IFRS 9 the Company calculates expected credit losses (ECL) on financial
assets which are measured at amortised cost (refer to Note 34 (c) of the Group
financial statements), including loans to subsidiaries (which are unrated). At
31 December 2023 the Company does not hold financial assets at amortised cost
that it regards as credit-impaired or for which it considers the probability
of default would result in material expected credit losses. The expected
credit losses recognised were less than £1m (2022: less than £1m). In making
this assessment the Company has considered if any evidence is available to
indicate the occurrence of an event which would result in a detrimental impact
on the estimated future cash flows of these assets.
D. Derivative financial instruments
The Company uses derivative financial instruments in order to reduce the risk
from potential movements in foreign exchange rates.
2023 2022
Contract Fair value Fair value Contract Fair value Fair value
amount
assets
amount
assets
liabilities liabilities
£m £m £m £m £m £m
Cash flow hedges 588 41 - 623 85 -
Foreign exchange forwards 40 - - 48 - 1
Derivative financial instruments 628 41 - 671 85 1
The derivative asset of £41m (2022: derivative asset of £85m) is expected to
be settled after more than 12 months.
On 18 October 2017, the Company issued subordinated notes with a principal
amount of US $750m. In order to manage the foreign exchange risk relating to
the principal and coupons payable on these notes the Company entered into a
cross-currency swap which is designated as a hedge of future cash flows.
The maturity profile of the contractual undiscounted cash flows in relation to
derivative financial instruments is as follows:
Within 2-5 6-10 Total
1 year
years
years
2023 2022 2023 2022 2023 2022 2023 2022
£m £m £m £m £m £m £m £m
Cash inflows
Cash flow hedges 25 26 676 106 - 637 701 769
Foreign exchange forwards 40 47 - - - - 40 47
Total 65 73 676 106 - 637 741 816
Cash outflows
Cash flow hedges (18) (18) (632) (91) - (578) (650) (687)
Foreign exchange forwards (40) (48) - - - - (40) (48)
Total (58) (66) (632) (91) - (578) (690) (735)
Net derivative financial instruments cash flows 7 44 - 51
7 15 59 81
E. Receivables and other financial assets
2023 2022
£m £m
Amounts due from related parties 43 45
Other financial assets 3 3
Total receivables and other financial assets 46 48
The carrying amounts disclosed above reasonably approximate the fair values at
the year end.
Receivables and other financial assets of £nil (2022: £nil) are expected to
be recovered after more than 12 months.
F. Other assets
2023 2022
£m £m
Prepayments 23 43
Other 24 5
Other assets 47 48
The amount of Other assets which are expected to be recovered after more than
12 months is £21m (2022: £20m).
Prepayments of £23m (2022: £43m) relate to the Group's future purchase of
certain products in the Phoenix Group's savings business offered through
abrdn's Wrap platform together with the Phoenix Group's trustee investment
plan business for UK pension scheme clients (refer Note 39(b) of the Group
financial statements). Other includes £24m (2022: £5m) in respect of amounts
due from related parties.
G. Share capital and share premium
Details of the Company's share capital and share premium are given in Note 24
of the Group financial statements including details of the share buyback.
H. Shares held by trusts
Shares held by trusts relates to shares in abrdn plc that are held by the
abrdn Employee Benefit Trust and the abrdn Employee Trust (formerly named the
Standard Life Employee Trust). Further details of these trusts are provided in
Note 25 of the Group financial statements.
I. Retained earnings
Details of the dividends paid on the ordinary shares by the Company are
provided in Note 12 of the Group financial statements. Note 12 also includes
information regarding the final dividend proposed by the Directors for the
year ended 31 December 2023.
Refer Note J for details of the transfers from the merger reserve to retained
earnings during the year ended 31 December 2023 and from the capital
redemption reserve and the merger reserve to retained earnings during the year
ended 31 December 2022.
Other movements in retained earnings during 2022 include a movement of £19m
relating to the interactive investor employee benefit trust becoming part of
the abrdn employee benefit trust sponsored by the Company.
J. Movements in other reserves
The following tables show the movements in other reserves during the year:
Merger reserve Equity compensation reserve Special reserve Capital redemption reserve Cash flow hedges Total
£m £m £m £m £m £m
At 1 January 2023 275 47 115 25 23 485
Fair value losses on cash flow hedges - - - - (40) (40)
Realised losses on cash flow hedges transferred to income statement - - - - 28 28
Share buyback - - - 23 - 23
Reserves credit for employee share-based payments - 24 - - - 24
Transfer to retained earnings for vested employee share-based payments - (31) - - - (31)
Transfer between reserves on impairment of subsidiaries (169) - - - - (169)
Tax effect of items that may be reclassified subsequently to profit or loss - - - - 3 3
At 31 December 2023 106 40 115 48 14 323
Merger reserve Equity compensation reserve Special reserve Capital redemption reserve Cash flow hedges Total
£m £m £m £m £m £m
At 1 January 2022 578 86 115 1,059 18 1,856
Fair value gains on cash flow hedges - - - - 85 85
Realised gains on cash flow hedges transferred to income statement - - - - (78) (78)
Share buyback - - - 25 - 25
Cancellation of the capital redemption reserve - - - (1,059) - (1,059)
Reserves credit for employee share-based payments - 24 - - - 24
Transfer to retained earnings for vested employee share-based payments - (63) - - - (63)
Transfer between reserves on disposal of subsidiaries (1) - - - - (1)
Transfer between reserves on impairment of subsidiaries (302) - - - - (302)
Tax effect of items that may be reclassified subsequently to profit or loss - - - - (2) (2)
At 31 December 2022 275 47 115 25 23 485
Following the impairment loss recognised in 2023 on the Company's investment
in aIHL, £169m was transferred from the merger reserve to retained earnings.
Following the impairment loss recognised in 2022 on the Company's investments
in aHL and aIHL, £302m was transferred from the merger reserve to retained
earnings. Refer Note A for details of these impairments.
During 2023, £23m (2022: £25m) was recognised in the capital redemption
reserve for the share buyback (refer Note 24 of the Group financial
statements).
On 1 July 2022, the Company's capital redemption reserve at this date was
cancelled in accordance with section 649 of the Companies Act 2006 resulting
in a transfer of £1,059m to retained earnings.
K. Other equity
5.25 % Fixed Rate Reset Perpetual Subordinated Contingent Convertible Notes
In 2021, the Company issued £210m of 5.25% Fixed Rate Reset Perpetual
Subordinated Contingent Convertible Notes (the Notes). The Notes are
classified as other equity and were initially recognised at £207m (the
proceeds received less issuance costs of £3m). Refer Note 28 (a) of the Group
financial statements for further details.
The profit for the year attributable to other equity was £11m (2022: £11m).
L. Financial liabilities
Designated as at fair value through profit or loss Amortised cost Total
2023 2022 2023 2022 2023 2022
Notes £m £m £m £m £m £m
Subordinated liabilities M - - 599 621 599 621
Derivative financial liabilities D - 1 - - - 1
Other financial liabilities O 8 14 158 258 166 272
Total 8 15 757 879 765 894
M. Subordinated liabilities
2023 2022
Principal Carrying Principal Carrying
value
value
amount amount
Subordinated notes:
4.25% US Dollar fixed rate due 30 June 2028 $750m £599m $750m £621m
Total subordinated liabilities £599m £621m
The principal amount of the subordinated liabilities is expected to be settled
after more than 12 months. The accrued interest on the subordinated
liabilities of £13m (2022: £nil) is expected to be settled within 12 months.
During the year ended 31 December 2022 the Company redeemed its 5.5% Sterling
fixed rate notes.
Further information on the subordinated liabilities including the terms and
conditions and the redemption is given in Note 30 of the Group financial
statements.
N. Taxation
(a) Current tax
Current tax liabilities at 31 December 2023 were £1m (2022: £nil) and are
expected to be payable in less than 12 months.
(b) Deferred tax
2023 2022
£m £m
Deferred tax assets 150 143
The amount of deferred tax assets expected to be recovered or settled after
more than 12 months are £150m (2022: £143m).
Recognised deferred tax
2023 2022
£m £m
Deferred tax assets comprise:
Losses carried forward 155 151
Unrealised losses on cash flow hedges - -
Gross deferred tax assets 155 151
Less: Offset against deferred tax liabilities (5) (8)
Deferred tax assets 150 143
Deferred tax liabilities comprise:
Unrealised gains on investments - -
Unrealised gains on cash flow hedges 5 8
Gross deferred tax liabilities 5 8
Less: Offset against deferred tax assets (5) (8)
Deferred tax liabilities - -
Net deferred tax asset at 31 December 150 143
Movements in net deferred tax assets comprise:
At 1 January 143 113
Amounts credited to profit or loss 4 32
Amounts charged to other comprehensive income 3 (2)
At 31 December 150 143
The deferred tax assets and liabilities recognised are in respect of unused
tax losses and unrealised gains on cash flow hedges respectively. The deferred
tax assets are recognised to the extent that it is probable that the losses
will be capable of being offset against future taxable profits (refer Note
9(c)(i) of the Group financial statements).
There is no unrecognised deferred tax relating to temporary timing differences
associated with investments in subsidiaries, branches and associates and
interests in joint arrangements (2022: none).
Due to uncertainty regarding recoverability, deferred tax assets have not been
recognised in respect of capital losses carried forward of £8m (2022: £nil).
UK capital losses can be carried forward indefinitely.
Movements in deferred tax assets and liabilities
Losses carried forward Unrealised gains on investments Unrealised gains or losses on cash flow hedges Net deferred tax asset
£m £m £m £m
At 1 January 2023 151 - (8) 143
Amounts credited to the income statement 4 - - 4
Tax on cash flow hedge - - 3 3
At 31 December 2023 155 - (5) 150
Losses carried forward Unrealised gains on investments Unrealised gains or losses on cash flow hedges Net deferred tax asset
£m £m £m £m
At 1 January 2022 120 (1) (6) 113
Amounts credited to the income statement 31 1 - 32
Tax on cash flow hedge - - (2) (2)
At 31 December 2022 151 - (8) 143
O. Other financial liabilities
2023 2022
£m £m
Outstanding purchase of investment securities 1 -
Amounts due to related parties 109 161
Collateral held in respect of derivative contracts 39 89
Contingent consideration liability 8 14
Other 9 8
Other financial liabilities 166 272
Other financial liabilities of £5m (2022: £nil) are expected to be settled
after more than 12 months.
P. Provisions
The provision of £33m at 31 December 2022 related to separation costs. The
remaining provision for separation costs was released in 2023. Refer Note 33
of the Group financial statements for further information.
Q. Contingent liabilities, contingent assets, indemnities and guarantees
(a) Legal proceedings and regulations
The Company, like other financial organisations, is subject to legal
proceedings and complaints 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
Company 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. At 31
December 2023, there are no identified contingent liabilities expected to
lead to a material exposure.
(b) Indemnities and guarantees
Under the trust deed in respect of the abrdn UK Group (SLSPS) plan, ACSL, the
principal employer, must pay contributions to the pension plan as the
trustees' actuary may certify necessary. The Company has guaranteed the
obligations of ACSL in relation to this plan. In addition, the Company has
guaranteed similar obligations in respect of certain other subsidiaries' UK
and Ireland defined benefit pension plans.
None of the guarantees issued by the Company give rise to any significant
liabilities at 31 December 2023 (2022: none).
R. Related party transactions
(a) Key management personnel
The Directors and key management personnel of the Company are considered to be
the same as for the Group. See Note 41 of the Group financial statements for
further information.
Supplementary information
1. Alternative performance measures APM
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 consolidated income statement,
consolidated statement of financial position and consolidated statement of
cash flows, which are presented in the Group financial statements 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 associates and joint
ventures.
R Metric used for executive remuneration in 2024. See page 120 for more
information.
Definition Purpose
Adjusted operating profit APM R
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 ii(2) along with Other business and corporate costs. 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.
Segment reporting used in management information is reported to the level of
Adjusted operating profit also excludes the impact of the following items: adjusted operating profit.
- 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.
- 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 11 of the Group financial statements.
Net operating revenue APM
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 cost of sales, such as commissions and similar
charges.
Adjusted operating expenses APM
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 APM
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 APM
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.
1. Supplementary information is unaudited in line with previous years.
2. Personal has been renamed ii and includes Personal Wealth unless
otherwise stated.
Definition Purpose
Cost/income ratio APM
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) APM
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(1) 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(1) is clients on, excluding ii(1).
excluded from the calculation of net operating revenue yield as fees charged
for this business are primarily from subscriptions and trading transactions.
Adjusted diluted earnings per share APM
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 10 of the Group financial statements. Board and executive leadership team.
Adjusted capital generation APM
Adjusted capital generation is part of the analysis of movements in IFPR These measures aim 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. At 31 December 2023, Phoenix is the only significant listed
investment.
Net capital generation APM
Net capital generation is calculated as adjusted capital generation less
restructuring and corporate transaction expenses (net of tax).
Adjusted diluted capital generation per share APM
Adjusted diluted capital generation per share is calculated as adjusted These ratios are measures used to assess performance for dividend paying
capital generation divided by the weighted average number of diluted ordinary capability.
shares outstanding.
Net diluted capital generation per share APM R
Net diluted capital generation per share is calculated as net capital
generation divided by the weighted average number of diluted ordinary shares
outstanding.
Cash and liquid resources APM
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.
1. Relates to ii (excluding Personal Wealth).
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 Adjusted operating expenses to the IFRS item Total
administrative and other expenses, and a reconciliation of Adjusted net
financing costs and investment return to the IFRS item Net gains on financial
instruments and other income are provided in Note 2b(ii) of the Group
financial statements. A reconciliation of Net operating revenue to the IFRS
item Revenue from contracts with customers is provided in Note 3 of the Group
financial statements.
IFRS term IFRS Presentation differences Adjusting Adjusted Adjusted profit term
items
profit
2023 £m £m £m £m
Net operating revenue 1,398 - - 1,398 Net operating revenue
Total administrative and other expenses (1,463) (29) 343 (1,149) Adjusted operating expenses(1)
(65) (29) 343 249 Adjusted operating profit
Net gains or losses on financial instruments and other income 2 6 73 81 Adjusted net financing costs and investment return
Finance costs (25) 23 2 - N/A
Profit on disposal of subsidiaries and other operations 79 - (79) - N/A
Share of profit or loss from associates and joint ventures 1 - (1) - N/A
Reversal of impairment of interests in joint ventures 2 - (2) - N/A
Loss before tax (6) - 336 330 Adjusted profit before tax
Total tax credit 18 - (68) (50) Tax on adjusted profit
Profit for the year 12 - 268 280 Adjusted profit after tax
1. Adjusted operating expenses includes staff and other related costs of
£586m compared with IFRS staff costs and other employee-related costs of
£529m. The difference primarily relates to the inclusion of contractor,
temporary agency staff and recruitment and training costs of £20m (IFRS
basis: Reported within other administrative expenses) and gains on funds to
hedge deferred bonus awards of £2m (IFRS basis: Reported within other net
gains on financial instruments and other income) within staff and other
related costs. IFRS staff costs and other employee-related costs includes the
benefit from the net interest credit relating to the staff pension schemes of
£34m 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
2022 £m £m £m £m
Net operating revenue 1,456 - - 1,456 Net operating revenue
Total administrative and other expenses (1,919) (35) 761 (1,193) Adjusted operating expenses
(463) (35) 761 263 Adjusted operating profit
Net gains or losses on financial instruments and other income (122) 8 104 (10) Adjusted net financing costs and investment return
Finance costs (29) 27 2 - N/A
Profit on disposal of interests in associates 6 - (6) - N/A
Share of profit or loss from associates and joint ventures 5 - (5) - N/A
Impairment of interests in associates (9) - 9 - N/A
Loss before tax (612) - 865 253 Adjusted profit before tax
Total tax credit 66 - (88) (22) Tax on adjusted profit
Loss for the year (546) - 777 231 Adjusted profit after tax
2. Comparatives for 2022 have been restated for the implementation of IFRS
17. Refer Basis of preparation in the Group financial statements section.
Presentation differences primarily relate to amounts presented in a different
line item of the consolidated income statement.
Analysis of adjusting items
The table below provides detail of the adjusting items made in the calculation
of adjusted profit before tax:
2023 2022(1)
£m £m
Restructuring and corporate transaction expenses (152) (214)
Amortisation and impairment of intangible assets acquired in business (189) (494)
combinations and through the purchase of customer contracts
Profit on disposal of subsidiaries and other operations 79 -
Profit on disposal of interests in associates - 6
Change in fair value of significant listed investments (178) (187)
Dividends from significant listed investments 64 68
Share of profit or loss from associates and joint ventures 1 5
Reversal of impairment/(impairment) of interests in associates and joint 2 (9)
ventures
Other 37 (40)
Total adjusting items including results of associates and joint ventures (336) (865)
1. Comparatives for 2022 have been restated for the implementation of IFRS
17. Refer Basis of preparation in the Group financial statements section.
An explanation for why individual items are excluded from adjusted profit is
set out below:
- Restructuring and corporate transaction expenses are excluded from
adjusted profit. Restructuring includes the impact of major regulatory change.
By highlighting and excluding these costs we aim to give shareholders a fuller
understanding of the performance of the business. Restructuring and corporate
transaction expenses include costs relating to acquisitions and our
transformation programmes. Other restructuring costs excluded from adjusted
profit relate to projects which have a significant impact on the way the Group
operates. Costs are only excluded from adjusted profit where they are out-with
business as usual activities and the costs would not have been incurred had
the restructuring project not taken place. The 2023 expenses mainly comprised
of £97m (2022: £66m) headcount reduction related costs and property
restructuring expenses, £37m (2022: £51m) of other transformation costs such
as finance and platform transformation and £17m (2022: £43m) in respect of
specific costs to effect savings in Investments, partially offset by a credit
of £30m (2022: expense £7m) in respect of Phoenix separation costs following
the £32m release of a related provision. Corporate transaction costs of £31m
(2022: £45m) included the sale of our European-headquartered private equity
business and the acquisition of the healthcare fund management capabilities of
Tekla. Total restructuring expenses (excluding corporate transaction costs)
are expected to be c.£150m in 2024, primarily relating to our transformation
programme that was announced in January 2024. Restructuring expenses in 2024
are expected to include costs of c.£30m relating to the multi-year Platform
transformation which is now expected to complete in 2025.
- Amortisation and impairment of intangible assets acquired in business
combinations and through the purchase of customer contracts is included as an
adjusting item. This is consistent with peers and therefore excluding these
items aids comparability. Highlighting this as an adjusting item aims to give
a fuller understanding of these accounting impacts which arise where
businesses have been acquired but do not arise where businesses have grown
organically. Further details are provided in Note 13 of the Group financial
statements.
- Profit on disposal of subsidiaries and other operations in 2023 mainly
relates to the sales of our discretionary fund management business of £58m
and our US private equity and venture capital business of £22m. These items
are excluded from adjusted profit as they are non-recurring in nature.
- Profit on disposal of interests in associates of £6m in 2022 related
to the sale of our stake in Origo Services Limited in May 2022. These items
are excluded from adjusted profit as they are volatile, and the accounting
gains are non-recurring in nature.
- The change in fair value of significant listed investments was
negative £178m (2022: negative £187m) and represents the impact of market
movements on our holdings in HDFC Asset Management (£96m reduction in value
including impact of final stake sale in June 2023), Phoenix (£77m reduction
in value), and HDFC Life (£5m reduction in value including impact of final
stake sale in May 2023). Excluding fair value movements on significant listed
investments for the purposes of adjusted profit is aligned with our treatment
of gains on disposal for these holdings when they were classified as an
associate, and reflects that the fair value movements are not indicative of
the long-term operating performance of the Group.
- Dividends from significant listed investments relates to our
shareholdings in HDFC Life, Phoenix and HDFC Asset Management. The £64m in
2023 relates to dividends received from Phoenix (£54m) and HDFC Asset
Management (£10m). Dividends from significant listed investments are included
in adjusting items, as such dividends result in fair value movements.
- Share of profit or loss from associates and joint ventures was a
profit of £1m (2022: profit £5m(1)). In 2023, this mainly comprises of the
share of profit or loss from our holdings in HASL, Virgin Money UTM and
Archax. Associate and joint venture results are excluded from adjusted profit
to help in understanding the performance of our core business separately from
these holdings.
- The reversal of impairment of interests in associates and joint
ventures in 2023 of £2m relates to our joint venture Virgin Money UTM. See
Note 14 of the Group financial statements. The impairment of interests in
associates and joint ventures in 2022 of £9m related to our associate holding
in Tenet.
- Details on items classified as 'Other' in the table above are provided
in Note 11 of the Group financial statements. Other adjusting items in 2023
primarily relates to a £36m insurance liability recovery in relation to the
single process execution event in 2022. 2023 also included a £23m gain for
net fair value movements in contingent consideration and a £21m provision
expense for a potential tax liability.
1.2 Cost/income ratio
2023 2022
Adjusted operating expenses (£m) (1,149) (1,193)
Net operating revenue (£m) 1,398 1,456
Cost/income ratio (%) 82 82
1.3 Net operating revenue yield (bps)
Average AUMA (£bn) Net operating revenue (£m) (2) Net operating revenue yield (bps)
2023 2022 2023 2022 2023 2022
Institutional and Retail Wealth(1) 220.0 236.2 716 851 32.6 36.1
Insurance Partners(1) 147.7 169.5 148 179 10.0 10.5
Investments 367.7 405.7 864 1,030 23.5 25.4
Adviser(3) 70.8 70.8 224 185 30.6 26.1
Personal Wealth(3) 9.7 13.5 57 87 58.8 59.2
Eliminations (11.4) (11.8) N/A N/A N/A N/A
Net operating revenue yield 436.8 478.2 1,145 1,302 26.0 27.1
ii (excluding Personal Wealth)(4) 230 114
Performance fees 14 30
Other(2) 9 10
Net operating revenue 1,398 1,456
Analysis of Institutional and Retail Wealth by asset class(1)
Average AUM (£bn) Net operating revenue (£m) (2) Net operating revenue yield (bps)
2023 2022 2023 2022 2023 2022
Equities 49.1 57.3 298 357 60.7 62.5
Fixed income(5) 35.2 38.6 89 109 25.1 28.3
Multi-asset 26.5 31.5 61 93 23.1 29.4
Private equity 10.7 12.4 48 52 44.7 42.2
Real assets 39.5 42.0 171 187 43.4 44.4
Alternative investment solutions including private credit(5) 24.7 31 35 14.0
23.8 13.1
Quantitative 15.9 9.7 5 5 3.1 5.0
Liquidity 19.3 20.0 13 13 6.9 6.7
Institutional and Retail Wealth 220.0 236.2 716 851 32.6 36.1
1. Wholesale has been renamed Retail Wealth, Insurance has been renamed
Insurance Partners.
2. Net operating revenue for Finimize and our digital innovation group moved
from Investments to Other from January 2023. Comparatives have been restated.
Refer Note 2 of the Group financial statements for further details.
3. Adviser net operating revenue yield excludes revenue of £7m (2022:
£nil) and Personal Wealth net operating revenue yield excludes revenue of
£nil (2022: £7m) for which there are no attributable assets.
4. ii (excluding Personal Wealth) is excluded from the calculation of net
operating revenue yield as fees charged for this business are primarily from
subscriptions and trading transactions.
5. Alternative investment solutions includes £1.9bn (2022: £2.6bn) average
AUMA and £4m (2022: £6m) net operating revenue relating to private credit
assets previously classified as fixed income.
1.4 Additional ii(1) information
The results for ii(1) are included in the Group's results following the
completion of the acquisition on 27 May 2022. The adjusted operating profit
for ii(1) for the 12 months to 31 December 2023 of £127m is included in our
overall 2023 adjusted operating profit of £249m.
The tables below provide detail of the performance of ii(1) for the 12 months
ended 31 December 2023 and 31 December 2022 to provide a fuller understanding
of the performance of this business.
Analysis of ii(1) profit 2023 2022 2022
12 months
12 months
7 months
£m
£m
£m
Net operating revenue 230 176 114
Adjusted operating expenses (103) (82) (47)
Adjusted operating profit 127 94 67
Analysis of ii(1) net operating revenue 2023 2022 2022
12 months
12 months
7 months
£m
£m
£m
Trading transactions 48 55 27
Subscription/account fees 54 56 32
Treasury income 134 71 58
Less: Cost of sales (6) (6) (3)
Net operating revenue 230 176 114
1. Relates to ii (excluding Personal Wealth).
1.5 Net capital generation
The table below provides a reconciliation of movements between adjusted profit
after tax and net capital generation. A reconciliation of adjusted profit
after tax to IFRS profit for the year is included earlier in this section.
2023 2022
£m £m
Adjusted profit after tax 280 231
Less net interest credit relating to the staff pension schemes (34) (29)
Less interest paid on other equity (11) (11)
Add dividends received from associates, joint ventures and significant listed 64 68
investments
Adjusted capital generation 299 259
Less restructuring and corporate transaction expenses (net of tax) (121) (178)
Net capital generation 178 81
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:
2023 2022
£m £m
Phoenix 54 52
HDFC Life - 1
HDFC Asset Management 10 15
Dividends received from associates, joint ventures and significant listed 64 68
investments
The table below provides detail of dividend coverage on an adjusted capital
generation basis.
2023 2022
Adjusted capital generation (£m) 299 259
Full year dividend (£m) 267 295
Dividend cover on an adjusted capital generation basis (times) 1.12 0.88
1.6 Net diluted capital generation per share
A reconciliation of net capital generation to adjusted profit after tax is
included in 1.5 above.
2023 2022
Adjusted capital generation (£m) 299 259
Net capital generation (£m) 178 81
Weighted average number of diluted ordinary shares outstanding (millions)(1) 1,930 2,094
Adjusted diluted capital generation per share (pence) 15.5 12.4
Net diluted capital generation per share (pence) 9.2 3.9
1. In accordance with IAS 33, no share options and awards have been treated
as dilutive for the 12 months ended 31 December 2022 due to the loss
attributable to equity holders of abrdn plc in the period. Refer Note 10 of
the Group financial statements for further details.
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.
2023 2022
£bn £bn
Cash and cash equivalents per the consolidated statement of financial position 1.2 1.1
Debt securities excluding third party interests(2) - Note 34 (c)(i) of the 0.7 0.7
Group financial statements
Corporate funds held in absolute return funds - Note 34 (b)(i)(i) of the Group - 0.1
financial statements
Other(3) (0.1) (0.2)
Cash and liquid resources 1.8 1.7
2. Excludes £86m (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.
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 2023 2022 2023 2022 2023 2022
Equities 27 30 17 63 48 65
Fixed income 81 65 75 72 84 79
Multi-asset 12 13 15 50 22 22
Real assets 30 57 56 63 45 52
Alternatives 100 88 100 100 100 100
Quantitative 100 17 100 27 37 29
Liquidity 100 84 95 97 97 97
Total 44 41 42 65 52 58
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.
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
31 Dec 2023
12 months ended 31 December 2023 £bn £bn £bn £bn £bn £bn £bn
Institutional 161.9 15.8 (27.7) (11.9) (2.0) (4.1) 143.9
Retail Wealth(1) 69.3 12.3 (18.3) (6.0) 1.0 3.0 67.3
Insurance Partners(1,2) 144.9 22.2 (23.3) (1.1) 11.7 - 155.5
Investments 376.1 50.3 (69.3) (19.0) 10.7 (1.1) 366.7
Adviser(3) 68.5 5.8 (7.9) (2.1) 4.6 2.5 73.5
ii (excluding Personal Wealth) 54.0 9.5 (6.2) 3.3 3.9 0.5 61.7
Personal Wealth 13.1 0.7 (1.1) (0.4) 0.2 (8.6) 4.3
ii(1) 67.1 10.2 (7.3) 2.9 4.1 (8.1) 66.0
Eliminations(5) (11.7) (2.2) 2.8 0.6 - (0.2) (11.3)
Total AUMA 500.0 64.1 (81.7) (17.6) 19.4 (6.9) 494.9
Opening Gross inflows Redemptions Net flows Market Corporate Closing
AUMA at
and other movements
actions(6)
AUMA at
1 Jan 2022
31 Dec 2022
12 months ended 31 December 2022 £bn £bn £bn £bn £bn £bn £bn
Institutional 174.0 20.1 (27.3) (7.2) (12.4) 7.5 161.9
Retail Wealth(1) 79.1 16.4 (20.8) (4.4) (5.4) - 69.3
Insurance Partners(1,2) 210.5 22.8 (52.2) (29.4) (28.7) (7.5) 144.9
Investments 463.6 59.3 (100.3) (41.0) (46.5) - 376.1
Adviser(3) 76.2 6.6 (5.0) 1.6 (9.3) - 68.5
ii (excluding Personal Wealth) - 4.1 (2.5) 1.6 (3.0) 55.4 54.0
Personal Wealth 14.4 1.5 (1.2) 0.3 (1.6) - 13.1
ii(1) 14.4 5.6 (3.7) 1.9 (4.6) 55.4 67.1
Eliminations(5) (12.1) (2.5) 2.1 (0.4) 1.7 (0.9) (11.7)
Total AUMA 542.1 69.0 (106.9) (37.9) (58.7) 54.5 500.0
1. Wholesale has been renamed Retail Wealth, Insurance has been renamed
Insurance Partners and Personal has been renamed ii and includes Personal
Wealth unless otherwise stated.
2. Insurance Partners AUM at 31 December 2023 includes £154.4bn (2022:
£143.7bn) relating to Phoenix and £1.1bn (2022: £1.2bn) of other AUM.
3. Includes Platform AUA at 31 December 2023 of £70.9bn (2022: £68.5bn).
4. Corporate actions in 2023 relate to the acquisition of Macquarie
closed-end funds in March and July 2023 (£0.5bn and £0.2bn) and Tekla
healthcare fund management capabilities (£2.3bn) in October 2023, and the
disposals of our discretionary fund management business (£6.1bn) in September
2023 and US private equity business (£4.1bn) in October 2023. Corporate
actions also include the transfer of the MPS business from Personal Wealth to
Adviser in May 2023 of £2.5bn, and investment share plan and ISA customers
who moved on to the ii platform in December 2023 (£0.5bn), and resulting
impact on eliminations.
5. Eliminations remove the double count reflected in Investments, Adviser
and ii.
6. Corporate actions in 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
Partners 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.
3.2 Quarterly net flows
3 months to 3 months to 3 months to 3 months to 3 months to
31 Dec 23
30 Sep 23
30 Jun 23
31 Mar 23
31 Dec 22
15 months ended 31 December 2023 £bn £bn £bn £bn £bn
Institutional (3.4) (3.6) (0.7) (4.2) 2.2
Retail Wealth (2.4) (1.8) (0.8) (1.0) (2.0)
Insurance Partners 0.3 (1.6) 1.7 (1.5) (6.3)
Investments (5.5) (7.0) 0.2 (6.7) (6.1)
Adviser (1.0) (0.5) (0.5) (0.1) -
ii (excluding Personal Wealth) 0.6 0.8 1.0 0.9 0.6
Personal Wealth (0.1) (0.2) 0.1 (0.2) 0.2
ii(1) 0.5 0.6 1.1 0.7 0.8
Eliminations 0.3 0.2 0.2 (0.1) (0.1)
Total net flows (5.7) (6.7) 1.0 (6.2) (5.4)
1. Personal has been renamed ii and includes Personal Wealth unless
otherwise stated.
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)(3)
2023 2022 2023 2022
Equities 67.8 78.1 341 415
Fixed income (including Liquidity)(1,2) 122.4 129.8 156 186
Multi-asset(2) 32.3 27.5 81 117
Quantitative 67.8 53.6 18 18
Public markets 290.3 289.0 596 736
Real assets 42.8 47.7 188 223
Private credit 8.8 7.9 15 14
Alternative investment solutions 17.1 18.6 28 33
Private equity 7.7 12.9 51 54
Alternatives 76.4 87.1 282 324
Total Investments 366.7 376.1 878 1,060
1. Total liquidity AUM at 31 December 2023 was £35.3bn (2022: £38.3bn).
Total liquidity net operating revenue was £23m (2022: £24m).
2. Fixed income at 31 December 2023 includes £9.6bn of Liability aware
funds AUM previously managed as a multi-asset capability (2022: £9.7bn).
3. Net operating revenue for Finimize and our digital Innovation group moved
from Investments to Other from January 2023. Comparatives have been restated.
Refer Note 2 of the Group financial statements for further details.
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
31 Dec 2023
12 months ended 31 December 2023 £bn £bn £bn £bn £bn £bn £bn
Developed markets equities 11.1 1.1 (3.5) (2.4) 0.8 2.3 11.8
Emerging markets equities 12.5 0.7 (2.2) (1.5) 0.1 - 11.1
Asia Pacific equities 20.5 2.1 (4.7) (2.6) (1.6) - 16.3
Global equities 8.2 1.3 (2.0) (0.7) 0.6 0.4 8.5
Total equities 52.3 5.2 (12.4) (7.2) (0.1) 2.7 47.7
Developed markets credit 22.5 3.1 (5.7) (2.6) 1.4 0.1 21.4
Developed markets rates 2.0 1.1 (0.8) 0.3 0.8 0.2 3.3
Emerging markets fixed income 11.3 1.4 (3.1) (1.7) 0.2 - 9.8
Total fixed income(2) 35.8 5.6 (9.6) (4.0) 2.4 0.3 34.5
Absolute return 5.7 0.1 (1.6) (1.5) (0.8) - 3.4
Diversified growth/income 0.3 0.1 (0.3) (0.2) 0.1 - 0.2
MyFolio 15.6 1.8 (2.7) (0.9) 1.5 - 16.2
Other multi-asset 6.7 0.8 (1.4) (0.6) (0.8) - 5.3
Total multi-asset 28.3 2.8 (6.0) (3.2) - - 25.1
Total private equity 12.3 0.1 (0.5) (0.4) (0.6) (4.1) 7.2
UK real estate 19.3 0.2 (1.0) (0.8) (2.6) - 15.9
European real estate 14.3 0.3 - 0.3 (1.0) - 13.6
Global real estate 1.6 0.3 (0.6) (0.3) (0.1) - 1.2
Real estate multi-manager 1.4 0.2 - 0.2 (0.1) - 1.5
Infrastructure equity 6.1 0.4 (0.1) 0.3 (0.3) - 6.1
Total real assets 42.7 1.4 (1.7) (0.3) (4.1) - 38.3
Total alternative investment solutions (including private credit)(2) 24.0 1.3 (1.5) (0.2) 0.2 - 24.0
Total quantitative 15.0 3.1 (2.0) 1.1 1.0 - 17.1
Total liquidity 20.8 8.6 (12.3) (3.7) 0.2 - 17.3
Total 231.2 28.1 (46.0) (17.9) (1.0) (1.1) 211.2
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 in 2023 relate to the acquisition of Macquarie
closed-end funds in March and July 2023 (£0.5bn and £0.2bn) and Tekla
healthcare fund management capabilities (£2.3bn) in October 2023 and the
disposal of US private equity and venture capital business (£4.1bn) in
October 2023.
Opening Gross inflows Redemptions Net flows Market Corporate actions(2) Closing
AUM at
and other movements
AUM at
1 Jan 2022
31 Dec 2022
12 months ended 31 December 2022 £bn £bn £bn £bn £bn £bn £bn
Developed markets equities 17.0 2.1 (3.4) (1.3) (4.6) - 11.1
Emerging markets equities 16.4 1.9 (2.9) (1.0) (2.9) - 12.5
Asia Pacific equities 25.3 2.5 (4.8) (2.3) (2.5) - 20.5
Global equities 10.3 1.2 (1.6) (0.4) (1.7) - 8.2
Total equities 69.0 7.7 (12.7) (5.0) (11.7) - 52.3
Developed markets credit 28.3 3.8 (5.8) (2.0) (3.8) - 22.5
Developed markets rates 2.9 0.3 (0.6) (0.3) (0.6) - 2.0
Emerging markets fixed income 12.2 2.4 (2.4) - (0.9) - 11.3
Total fixed income(1) 43.4 6.5 (8.8) (2.3) (5.3) - 35.8
Absolute return 10.0 0.4 (1.9) (1.5) (2.8) - 5.7
Diversified growth/income 0.5 0.1 (0.2) (0.1) (0.1) - 0.3
MyFolio 17.7 1.7 (2.0) (0.3) (1.8) - 15.6
Other multi-asset 7.8 1.7 (1.1) 0.6 (1.7) - 6.7
Total multi-asset 36.0 3.9 (5.2) (1.3) (6.4) - 28.3
Total private equity 12.3 0.5 (1.1) (0.6) 0.6 - 12.3
UK real estate 19.9 0.4 (1.7) (1.3) 0.7 - 19.3
European real estate 10.3 0.8 (0.4) 0.4 3.6 - 14.3
Global real estate 1.8 0.3 (0.3) - (0.2) - 1.6
Real estate multi-manager 1.2 0.2 (0.2) - 0.2 - 1.4
Infrastructure equity 6.2 0.4 (0.9) (0.5) 0.4 - 6.1
Total real assets 39.4 2.1 (3.5) (1.4) 4.7 - 42.7
Total alternative investment solutions (including private credit) (1) 23.2 2.4 (1.7) 0.7 0.1 - 24.0
Total quantitative 5.5 3.2 (1.7) 1.5 0.5 7.5 15.0
Total liquidity 24.3 10.2 (13.4) (3.2) (0.3) - 20.8
Total 253.1 36.5 (48.1) (11.6) (17.8) 7.5 231.2
1. Alternative investment solutions include opening AUM of £2.4bn, net
inflows of £0.1bn and closing AUM of £1.8bn 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 Partners into Institutional (quantitatives), to better reflect
how the relationship is being managed.
6. Investments AUM by geography
31 Dec 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 102.0 155.5 257.5 111.2 144.9 256.1
Europe, Middle East and Africa (EMEA) 51.9 - 51.9 57.5 - 57.5
Asia Pacific (APAC) 15.7 - 15.7 16.4 - 16.4
Americas 41.6 - 41.6 46.1 - 46.1
Total AUM 211.2 155.5 366.7 231.2 144.9 376.1
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