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 plc1		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 Chairman	Jason Windsor 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 reserve	Retained earnings	Other reserves	Total equity attributable to equity shareholders of abrdn plc	Other equity	Total equity
	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 equivalents	H	-	35	-	(37)	-	(2)	-	(2)
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 reserve	Retained earnings	Other reserves	Total equity attributable to equity shareholders of abrdn plc	Other equity	Total equity
	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 equivalents	H	-	68	-	(69)	-	(1)	-	(1)
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 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	Note A

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 subsidiaries1		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 subsidiaries1		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 profit or loss		Derivative financial instruments used for hedging		Amortised cost		Total
		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	170	-	-	-	-	341	170
Loan to subsidiaries		-	-	-	-	-	110	-	110
Derivative financial assets	D	-	-	41	85	-	-	41	85
Equity securities and interests in pooled investment funds		574	709	-	-	-	-	574	709
Debt securities		1	1	-	-	125	210	126	211
Receivables and other financial assets	E	-	-	-	-	46	48	46	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 amount	Fair value assets	Fair value  liabilities	Contract amount	Fair value assets	Fair value  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 1 year		2-5 years		6-10 years		Total
	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	7	44	15	-	59	51	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 amount	Carrying value	Principal  amount	Carrying value
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 operating profit includes the results of the Group's three businesses: Investments, Adviser and ii2 along with Other business and corporate costs. It excludes the Group's adjusted net financing costs and investment return. Adjusted operating profit also excludes the impact of the following items: -    Restructuring and corporate transaction expenses. Restructuring includes the impact of major regulatory change. -    Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts. -    Profit or loss arising on the disposal of a subsidiary, joint venture or equity accounted associate. -    Change in fair value of/dividends from significant listed investments. -    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.		Adjusted operating profit reporting provides further analysis of the results reported under IFRS and the Directors believe it helps to give shareholders a fuller understanding of the performance of the business by identifying and analysing adjusting items. Segment reporting used in management information is reported to the level of adjusted operating profit.
Net operating revenue APM
Net operating revenue 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. Net operating revenue is shown net of cost of sales, such as commissions and similar charges.		Net operating revenue is a component of adjusted operating profit and provides the basis for reporting of the revenue yield financial ratio. Net operating revenue is also used to calculate the cost/income ratio.
Adjusted operating expenses APM
Adjusted operating expenses is a component of adjusted operating profit and relates to the day-to-day expenses of managing our business. Adjusted 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 operating expenses is a component of adjusted operating profit and is used to calculate the cost/income ratio.
Adjusted profit before tax APM
In addition to the results included in adjusted operating profit above, adjusted profit before tax includes adjusted net financing costs and investment return.		Adjusted profit before tax is a key input to the adjusted earnings per share measure.
Adjusted net financing costs and investment return APM
Adjusted net financing costs and investment return 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 net financing costs and investment return is a component of adjusted profit before tax.

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 expenses divided by net operating revenue in the period.		This ratio is used by management to assess efficiency and reported to the Board and executive leadership team.
Net operating revenue yield (bps) APM
The net operating revenue yield is calculated as annualised net operating revenue (excluding performance fees, ii1 and revenue for which there are no attributable assets) divided by monthly average fee based assets. ii1 is excluded from the calculation of net operating revenue yield as fees charged for this business are primarily from subscriptions and trading transactions.		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 ii1.
Adjusted diluted earnings per share APM
Adjusted diluted earnings per share is calculated on adjusted profit after tax. The weighted average number of ordinary shares in issue is adjusted during the period to assume the conversion of all dilutive potential ordinary shares, such as share options granted to employees. Details on the calculation of adjusted diluted earnings per share are set out in Note 10 of the Group financial statements.		Earnings per share is a commonly used financial metric which can be used to measure the profitability and capital efficiency of a company over time. We also calculate adjusted diluted earnings per share to illustrate the impact of adjusting items on the metric. This ratio is used by management to assess performance and reported to the Board and executive leadership team.
Adjusted capital generation APM
Adjusted capital generation is part of the analysis of movements in IFPR regulatory capital. Adjusted capital generation is calculated as adjusted profit after tax less returns relating to pension schemes in surplus and 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.		These measures aim to show how adjusted profit contributes to regulatory capital, and therefore provides insight into our ability to generate capital that is deployed to support value for shareholders.
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 capital generation divided by the weighted average number of diluted ordinary shares outstanding.		These ratios are measures used to assess performance for dividend paying capability.
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 overdrafts), money market instruments and holdings in money market funds. It 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.		The purpose of this measure is to demonstrate how much cash and invested assets we hold and can be readily accessed.

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 items	Adjusted profit		Adjusted profit term
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 expenses1
	(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	IFRS2	Presentation differences	Adjusting items2	Adjusted profit		Adjusted profit term
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	20221
	£m	£m
Restructuring and corporate transaction expenses	(152)	(214)
Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts	(189)	(494)
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 ventures	2	(9)
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 £5m¹). 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 Wealth1	220.0	236.2		716	851		32.6	36.1
Insurance Partners1	147.7	169.5		148	179		10.0	10.5
Investments	367.7	405.7		864	1,030		23.5	25.4
Adviser3	70.8	70.8		224	185		30.6	26.1
Personal Wealth3	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
Other2				9	10
Net operating revenue				1,398	1,456

Analysis of Institutional and Retail Wealth by asset class¹

 

	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 income5	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 credit5	23.8	24.7		31	35		13.1	14.0
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 ii¹ information

The results for ii¹ are included in the Group's results following the completion of the acquisition on 27 May 2022. The adjusted operating profit for ii¹ 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 ii¹ 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 ii1 profit	2023 12 months £m	2022 12 months £m	2022 7 months £m
Net operating revenue	230	176	114
Adjusted operating expenses	(103)	(82)	(47)
Adjusted operating profit	127	94	67

 

Analysis of ii1 net operating revenue	2023 12 months £m	2022 12 months £m	2022 7 months £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 investments	64	68
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 investments	64	68

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 interests2 - Note 34 (c)(i) of the Group financial statements	0.7	0.7
Corporate funds held in absolute return funds - Note 34 (b)(i)(i) of the Group financial statements	-	0.1
Other3	(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 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.			As an asset managing business this measure demonstrates our ability to generate investment returns for our clients.

 

	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 behalf of our clients. It includes assets under management (AUM), assets under 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.		The amount of funds that we manage, administer or advise directly impacts the level of net operating revenue that we receive.
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.		The level of net flows that we generate directly impacts the level of net operating revenue that we receive.

3.1      Analysis of AUMA

	Opening AUMA at 1 Jan 2023	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions4	Closing AUMA at 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 Wealth1	69.3	12.3	(18.3)	(6.0)	1.0	3.0	67.3
Insurance Partners1,2	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
Adviser3	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
ii1	67.1	10.2	(7.3)	2.9	4.1	(8.1)	66.0
Eliminations5	(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 AUMA at 1 Jan 2022	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions6	Closing AUMA at 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 Wealth1	79.1	16.4	(20.8)	(4.4)	(5.4)	-	69.3
Insurance Partners1,2	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
Adviser3	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
ii1	14.4	5.6	(3.7)	1.9	(4.6)	55.4	67.1
Eliminations5	(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 31 Dec 23	3 months to 30 Sep 23	3 months to 30 Jun 23	3 months to 31 Mar 23	3 months to 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
ii1	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-asset2				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 Wealth¹ AUM

Detailed asset class split

	Opening AUM at 1 Jan 2023	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions3	Closing AUM at 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 income2	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 AUM at 1 Jan 2022	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions2	Closing AUM at 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 income1	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 Partners	Total	Institutional and Retail Wealth	Insurance Partners	Total
	£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