TIDMABDN
RNS Number : 3267V
abrdn PLC
09 August 2022
abrdn plc
Half year results 2022
Part 2 of 3
9 August 2022
2. Statement of Directors' responsibilities
Each of the Directors, whose names and functions are listed on
the abrdn plc website, www.abrdn.com, confirms to the best of his
or her knowledge and belief that:
-- The condensed consolidated income statement, the condensed
consolidated statement of comprehensive income, the condensed
consolidated statement of financial position, the condensed
consolidated statement of changes in equity and the condensed
consolidated statement of cash flows and associated notes, have
been prepared in accordance with IAS 34 Interim Financial Reporting
as adopted for use in the UK.
-- The interim management report includes a fair review of the information required by:
-- DTR 4.2.7R of the FCA's Disclosure Guidance and Transparency
Rules Sourcebook, being an indication of important events that have
occurred during the first six months of the financial year and
their impact on the condensed consolidated financial information
and a description of the principal risks and uncertainties for the
remaining six months of the year.
-- DTR 4.2.8R of the FCA's Disclosure Guidance and Transparency
Rules Sourcebook, being related party transactions that have taken
place in the first six months of the current financial year and
that have materially affected the financial position or performance
of the entity during that period; and any changes in the related
party transactions described in the last annual report that could
do so.
-- As per principle N of the UK Corporate Governance Code, the
Half year results 2022 taken as a whole, present a fair, balanced
and understandable assessment of the Company's position and
prospects.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Changes to Directors during the period
As announced on 1 March 2022, Martin Pike and Jutta af Rosenborg
retired from the Board at the conclusion of the AGM on 18 May, and
Pam Kaur and Mike O'Brien were appointed to the Board on 1 June
2022.
By order of the Board
Sir Douglas Flint Stephanie Bruce
Chairman Chief Financial Officer
8 August 2022 8 August 2022
3. Independent review report to abrdn plc
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the Half year results for the six months
ended 30 June 2022 which comprises the condensed consolidated
income statement, condensed consolidated statement of comprehensive
income, condensed consolidated statement of financial position,
condensed consolidated statement of changes in equity, condensed
consolidated statement of cash flows and the related explanatory
notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Half year results for the six months ended 30 June 2022 is
not prepared, in all material respects, in accordance with IAS 34
Interim Financial Reporting as adopted for use in the UK and the
Disclosure Guidance and Transparency Rules ('the DTR') of the UK's
Financial Conduct Authority ('the UK FCA') .
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity ('ISRE (UK) 2410') issued for use in the UK. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. We
read the other information contained in the Half year results and
consider whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis of conclusion
section of this report, nothing has come to our attention that
causes us to believe that the directors have inappropriately
adopted the going concern basis of accounting, or that the
directors have identified material uncertainties relating to going
concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the group to cease to continue as a going
concern, and the above conclusions are not a guarantee that the
group will continue in operation.
Directors' responsibilities
The Half year results is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the Half year results in accordance with the DTR of the
UK FCA.
The annual financial statements of the group are prepared in
accordance with UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of
financial statements included in the Half year results in
accordance with IAS 34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the
directors are responsible for assessing the group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the Half year results
based on our review. Our conclusion, including our conclusions
relating to going concern, are based on procedures that are less
extensive than audit procedures, as described in the Basis for
conclusion section of this report.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Richard Faulkner
for and on behalf of KPMG LLP
Chartered Accountants
Saltire Court
20 Castle Terrace
Edinburgh
EH1 2EG
8 August 2022
4. Financial Information
Condensed consolidated income statement
For the six months ended 30 June 2022
6 months 6 months Full Year
2022 2021(1) 2021
Notes GBPm GBPm GBPm
------------------------------------------------------------------------------- ------ -------- -------- ---------
Revenue from contracts with customers 4.4(a) 731 853 1,685
Cost of sales 4.4(b) (35) (76) (142)
------------------------------------------------------------------------------- ------ -------- -------- ---------
Net operating revenue 696 777 1,543
------------------------------------------------------------------------------- ------ -------- -------- ---------
Restructuring and corporate transaction expenses 4.6 (88) (113) (259)
Amortisation and impairment of intangibles acquired in business combinations
and through the
purchase of customer contracts 4.6 (52) (51) (99)
Staff costs and other employee-related costs 4.6 (266) (305) (604)
Other administrative expenses 4.6 (300) (290) (594)
------------------------------------------------------------------------------- ------ -------- -------- ---------
Total administrative and other expenses (706) (759) (1,556)
------------------------------------------------------------------------------- ------ -------- -------- ---------
Net gains or losses on financial instruments and other income
Fair value movements and dividend income on significant listed investments 4.5 (271) (37) (227)
Other net gains or losses on financial instruments and other income 4.5 (27) 28 44
------------------------------------------------------------------------------- ------ -------- -------- ---------
Total net gains or losses on financial instruments and other income (298) (9) (183)
Finance costs (15) (15) (30)
Profit on disposal of subsidiaries and other operations 4.2(b) - 84 127
Profit on disposal of interests in associates 4.2(b) 6 68 1,236
Loss on impairment of interests in associates 4.12 (9) - -
Share of profit or loss from associates and joint ventures 4.12 6 (33) (22)
------------------------------------------------------------------------------- ------ -------- -------- ---------
(Loss)/profit before tax (320) 113 1,115
------------------------------------------------------------------------------- ------ -------- -------- ---------
Tax credit/(expense) 4.7 31 (11) (120)
------------------------------------------------------------------------------- ------ -------- -------- ---------
(Loss)/profit for the period (289) 102 995
------------------------------------------------------------------------------- ------ -------- -------- ---------
Attributable to:
Equity shareholders of abrdn plc (296) 102 994
Other equity holders 6 - -
Non-controlling interests - ordinary shares 1 - 1
(289) 102 995
------------------------------------------------------------------------------- ------ -------- -------- ---------
Earnings per share
Basic (pence per share) 4.8 (13.9) 4.8 46.8
Diluted (pence per share) 4.8 (13.9) 4.7 46.0
------------------------------------------------------------------------------- ------ -------- -------- ---------
1. The Group made changes to the presentation of the
consolidated income statement in the Annual report and accounts for
the year ended 31 December 2021. The comparatives for the six
months ended 30 June 2021 have been re-presented on the same basis.
Refer Section 4.1(a)(ii) of the Basis of preparation for further
details.
The Notes on pages 24 to 49 are an integral part of this
condensed consolidated financial information.
Condensed consolidated statement of comprehensive income
For the six months ended 30 June 2022
6 months 6 months Full Year
2022 2021 2021
Notes GBPm GBPm GBPm
---------------------------------------------------------------------------- ------- -------- -------- ---------
(Loss)/profit for the period (289) 102 995
---------------------------------------------------------------------------- ------- -------- -------- ---------
Items that will not be reclassified subsequently to profit or loss:
Remeasurement (losses)/gains on defined benefit pension plans 4.14 (386) (33) 117
Share of other comprehensive income of associates and joint ventures 4.12 - 12 12
Equity holder tax effect of items that will not be reclassified subsequently
to profit or
loss 4.7 - 4 3
---------------------------------------------------------------------------- ------- -------- -------- ---------
Total items that will not be reclassified subsequently to profit or loss (386) (17) 132
---------------------------------------------------------------------------- ------- -------- -------- ---------
Items that may be reclassified subsequently to profit or loss:
Fair value gains/(losses) on cash flow hedges 61 (2) 19
Exchange differences on translating foreign operations 37 (25) (2)
Share of other comprehensive income of associates and joint ventures 4.12 (7) (8) (4)
Items transferred to the condensed consolidated income statement
Fair value (gains)/losses on cash flow hedges (68) 3 (10)
Realised foreign exchange losses 4.2(b) - 1 18
Share of other comprehensive income of associates and joint ventures 4.12 - (9) (9)
Equity holder tax effect of items that may be reclassified subsequently to
profit or loss 4.7 2 (1) (3)
---------------------------------------------------------------------------- ------- -------- -------- ---------
Total items that may be reclassified subsequently to profit or loss 25 (41) 9
---------------------------------------------------------------------------- ------- -------- -------- ---------
Other comprehensive income for the period (361) (58) 141
---------------------------------------------------------------------------- ------- -------- -------- ---------
Total comprehensive income for the period (650) 44 1,136
---------------------------------------------------------------------------- ------- -------- -------- ---------
Attributable to:
Equity shareholders of abrdn plc (657) 44 1,135
Other equity holders 6 - -
Non-controlling interests - ordinary shares 1 - 1
---------------------------------------------------------------------------- ------- -------- -------- ---------
(650) 44 1,136
---------------------------------------------------------------------------- ------- -------- -------- ---------
The Notes on pages 24 to 49 are an integral part of this
condensed consolidated financial information.
Condensed consolidated statement of financial position
As at 30 June 2022
6 months 6 months Full Year
2022 2021 2021
Notes GBPm GBPm GBPm
------------------------------------------------------------------------------ ------- -------- -------- ---------
Assets
Intangible assets 4.11 2,116 674 704
Pension and other post-retirement benefit assets 4.14 1,221 1,454 1,607
Investments in associates and joint ventures accounted for using the equity
method 4.12 282 381 274
Property, plant and equipment 193 208 187
Deferred tax assets 184 146 168
Financial investments 4.15 2,940 3,152 4,316
Receivables and other financial assets 1,237 1,521 680
Current tax recoverable 2 8 2
Other assets 115 134 105
Cash and cash equivalents 1,433 1,341 1,904
------------------------------------------------------------------------------ ------- -------- -------- ---------
9,723 9,019 9,947
Assets backing unit linked liabilities 4.15
Financial investments 1,114 1,396 1,430
Receivables and other unit linked assets 17 13 8
Cash and cash equivalents 25 32 33
------------------------------------------------------------------------------ ------- -------- -------- ---------
1,156 1,441 1,471
------------------------------------------------------------------------------ ------- -------- -------- ---------
Total assets 10,879 10,460 11,418
------------------------------------------------------------------------------ ------- -------- -------- ---------
Liabilities
Third party interest in consolidated funds 4.15 130 101 104
Subordinated liabilities 707 632 644
Pension and other post-retirement benefit provisions 4.14 17 51 38
Deferred income 6 10 5
Deferred tax liabilities 248 83 165
Current tax liabilities 21 22 27
Derivative financial liabilities 4.15 17 15 5
Other financial liabilities 1,507 1,341 1,046
Provisions 52 63 49
Other liabilities 11 8 8
2,716 2,326 2,091
Unit linked liabilities 4.15
Investment contract liabilities 890 1,034 1,088
Third party interest in consolidated funds 256 399 378
Other unit linked liabilities 10 8 5
------------------------------------------------------------------------------ ------- -------- -------- ---------
1,156 1,441 1,471
------------------------------------------------------------------------------ ------- -------- -------- ---------
Total liabilities 3,872 3,767 3,562
------------------------------------------------------------------------------ ------- -------- -------- ---------
Equity
Share capital 4.13(a) 305 305 305
Shares held by trusts 4.13(b) (152) (173) (171)
Share premium reserve 4.13(a) 640 640 640
Retained earnings 4,906 4,877 5,775
Other reserves 1,094 1,041 1,094
------------------------------------------------------------------------------ ------- -------- -------- ---------
Equity attributable to equity shareholders of abrdn plc 6,793 6,690 7,643
Other equity 207 - 207
Non-controlling interests - ordinary shares 7 3 6
Total equity 7,007 6,693 7,856
------------------------------------------------------------------------------ ------- -------- -------- ---------
Total equity and liabilities 10,879 10,460 11,418
------------------------------------------------------------------------------ ------- -------- -------- ---------
The Notes on pages 24 to 49 are an integral part of this
condensed consolidated financial information.
Condensed consolidated statement of changes in equity
For the six months ended 30 June 2022
Total
equity
attributable
Shares to equity Non-controlling
held Share shareholders interests
Share by premium Retained Other of abrdn Other - ordinary Total
capital trusts reserve earnings(1) reserves(1) plc equity shares equity
Notes GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ------- ------- ------ ------- ----------- ----------- ------------ ------ --------------- ------
1 January 2022 305 (171) 640 5,775 1,094 7,643 207 6 7,856
-------------- ------- ------- ------ ------- ----------- ----------- ------------ ------ --------------- ------
(Loss)/profit
for
the period - - - (296) - (296) 6 1 (289)
Other
comprehensive
income for
the period - - - (393) 32 (361) - - (361)
-------------- ------- ------- ------ ------- ----------- ----------- ------------ ------ --------------- ------
Total
comprehensive
income for
the period - - - (689) 32 (657) 6 1 (650)
Issue of share
capital 4.13(a) - - - - - - - - -
Dividends paid
on
ordinary
shares 4.10 - - - (154) - (154) - - (154)
Interest paid
on
other equity - - - - - - (6) - (6)
Reserves
credit for
employee
share-based
payments - - - - 11 11 - - 11
Transfer to
retained
earnings for
vested
employee
share-based
payments - - - 60 (60) - - - -
Shares
acquired by
employee
trusts - (41) - - - (41) - - (41)
Shares
distributed
by employee
and other
trusts and
related
dividend
equivalents - 60 - (62) - (2) - - (2)
Other
movements - - - (23) 17 (6) - - (6)
Aggregate tax
effect
of items
recognised
directly in
equity - - - (1) - (1) - - (1)
-------------- ------- ------- ------ ------- ----------- ----------- ------------ ------ --------------- ------
30 June 2022 305 (152) 640 4,906 1,094 6,793 207 7 7,007
-------------- ------- ------- ------ ------- ----------- ----------- ------------ ------ --------------- ------
1. Other movements includes the transfer of (GBP17m) previously
recognised in the foreign currency translation reserve (which is
part of Other reserves) to Retained earnings. In prior periods we
considered that the functional currency of an intermediate
subsidiary which holds the Group's investment in HDFC Life was US
Dollars. We now consider that the functional currency should have
been GBP, resulting in the current period transfer between
reserves. Prior periods have not been restated as the impact on
prior periods is not considered material. There is no impact on net
assets for any period presented.
Total
equity
attributable
to equity Non-controlling
Shares Share shareholders interests
Share held premium Retained Other of abrdn - ordinary Total
capital by trusts reserve earnings reserves plc shares equity
Notes GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ------- -------- --------- -------- --------- --------- ------------ --------------- -------
1 January 2021 306 (170) 640 4,970 1,064 6,810 3 6,813
---------------- ------- -------- --------- -------- --------- --------- ------------ --------------- -------
Profit for the
period - - - 102 - 102 - 102
Other
comprehensive
income for the
period - - - (34) (24) (58) - (58)
---------------- ------- -------- --------- -------- --------- --------- ------------ --------------- -------
Total
comprehensive
income for the
period - - - 68 (24) 44 - 44
Issue of share
capital 4.13(a) - - - - - - - -
Dividends paid
on
ordinary shares 4.10 - - - (154) - (154) - (154)
Share buyback (1) - - - 1 - - -
Other movements
in
non-controlling
interests
in the period - - - 5 - 5 - 5
Reserves credit
for
employee
share-based
payments - - - - 24 24 - 24
Transfer to
retained
earnings for
vested
employee
share-based
payments - - - 24 (24) - - -
Shares acquired
by
employee trusts - (37) - - - (37) - (37)
Shares
distributed
by employee and
other
trusts and
related
dividend
equivalents - 34 - (37) - (3) - (3)
Aggregate tax
effect
of items
recognised
directly in
equity - - - 1 - 1 - 1
---------------- ------- -------- --------- -------- --------- --------- ------------ --------------- -------
30 June 2021 305 (173) 640 4,877 1,041 6,690 3 6,693
---------------- ------- -------- --------- -------- --------- --------- ------------ --------------- -------
Total
equity
attributable
Shares to equity Non-controlling
held Share shareholders interests
Share by premium Retained Other of abrdn Other - ordinary Total
capital trusts reserve earnings reserves plc equity shares equity
Notes GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ------- ------- ------ ------- -------- -------- ------------ ------ --------------- ------
1 January 2021 306 (170) 640 4,970 1,064 6,810 - 3 6,813
---------------- ------- ------- ------ ------- -------- -------- ------------ ------ --------------- ------
Profit for the
year - - - 994 - 994 - 1 995
Other
comprehensive
income for the
year - - - 119 22 141 - - 141
---------------- ------- ------- ------ ------- -------- -------- ------------ ------ --------------- ------
Total
comprehensive
income for the
year - - - 1,113 22 1,135 - 1 1,136
Issue of share
capital 4.13(a) - - - - - - - - -
Issue of other
equity - - - - - - 207 - 207
Dividends paid
on
ordinary shares 4.10 - - - (308) - (308) - - (308)
Share buyback (1) - - - 1 - - - -
Other movements
in
non-controlling
interests
in the year - - - 6 - 6 - 2 8
Reserves credit
for
employee
share-based
payments - - - - 43 43 - - 43
Transfer to
retained
earnings for
vested
employee
share-based
payments - - - 36 (36) - - - -
Shares acquired
by
employee trusts - (41) - - - (41) - - (41)
Shares
distributed
by employee and
other
trusts and
related
dividend
equivalents - 40 - (42) - (2) - - (2)
Aggregate tax
effect
of items
recognised
directly in
equity - - - - - - - - -
---------------- ------- ------- ------ ------- -------- -------- ------------ ------ --------------- ------
31 December 2021 305 (171) 640 5,775 1,094 7,643 207 6 7,856
---------------- ------- ------- ------ ------- -------- -------- ------------ ------ --------------- ------
The Notes on pages 24 to 49 are an integral part of this
condensed consolidated financial information.
Condensed consolidated statement of cash flows
For the six months ended 30 June 2022
6 months 6 months Full Year
2022 2021 2021
Notes GBPm GBPm GBPm
----------------------------------------------------------------- ------------ -------- -------- ---------
Cash flows from operating activities
(Loss)/profit before tax (320) 113 1,115
Change in operating assets 581 (184) 214
Change in operating liabilities (272) (46) (209)
Adjustment for non-cash movements in investment income (7) 5 -
Other non-cash and non-operating items 92 (2) (1,099)
Dividends received from associates and joint ventures - - 15
Taxation paid(1) (18) (14) (22)
------------------------------------------------------------------ ----------- -------- -------- ---------
Net cash flows from operating activities 56 (128) 14
------------------------------------------------------------------ ----------- -------- -------- ---------
Cash flows from investing activities
Purchase of property, plant and equipment (12) (4) (12)
Proceeds from sale of property, plant and equipment - 3 -
Acquisition of subsidiaries and unincorporated businesses net of
cash acquired (1,378) (61) (145)
Disposal of subsidiaries net of cash disposed of - 81 112
Acquisition of investments in associates and joint ventures (2) (7) (11)
Proceeds in relation to contingent consideration(2) - 54 54
Payments in relation to contingent consideration (4) (26) (28)
Disposal of investments in associates and joint ventures 6 - 304
Taxation paid on disposal of investments in associates and joint
ventures(1) - - (33)
Purchase of financial investments (90) (58) (368)
Proceeds from sale or redemption of financial investments 1,151 321 938
Prepayment in respect of potential acquisition of customer
contracts 4.2(b)(iii) 5 (60) (56)
Acquisition of intangible assets (1) - -
------------------------------------------------------------------ ----------- -------- -------- ---------
Net cash flows from investing activities (325) 243 755
------------------------------------------------------------------ ----------- -------- -------- ---------
Cash flows from financing activities
Proceeds from issue of perpetual subordinated notes - - 208
Payment of lease liabilities - principal (15) (12) (27)
Payment of lease liabilities - interest (3) (3) (6)
Shares acquired by trusts (41) (37) (41)
Interest paid on subordinated liabilities and other equity (21) (14) (28)
Share buyback - (40) (41)
Ordinary dividends paid 4.10 (154) (154) (308)
------------------------------------------------------------------ ----------- -------- -------- ---------
Net cash flows from financing activities (234) (260) (243)
------------------------------------------------------------------ ----------- -------- -------- ---------
Net increase in cash and cash equivalents (503) (145) 526
------------------------------------------------------------------ ----------- -------- -------- ---------
Cash and cash equivalents at the beginning of the period 1,875 1,358 1,358
Effects of exchange rate changes on cash and cash equivalents 23 (11) (9)
------------------------------------------------------------------ ----------- -------- -------- ---------
Cash and cash equivalents at the end of the period(3) 1,395 1,202 1,875
------------------------------------------------------------------ ----------- -------- -------- ---------
Supplemental disclosures on cash flows from operating activities
Interest paid 1 1 1
Interest received 16 10 22
Dividends received 61 54 122
Rental income received on investment property 2 2 2
------------------------------------------------------------------ ----------- -------- -------- ---------
1. Total taxation paid for the six months ended 30 June 2022 was
GBP18m (six months ended 30 June 2021: GBP14m, 12 months ended 31
December 2021: GBP55m).
2. Proceeds in relation to contingent consideration for the six
months ended 30 June 2021 and 12 months ended 31 December 2021
included GBP34m in relation to discontinued operations (six months
ended 30 June 2022: GBPnil).
3. Comprises GBP1,458m (30 June 2021: GBP1,373m; 31 December
2021: GBP1,937m) of cash and cash equivalents, including cash and
cash equivalents backing unit linked liabilities and (GBP63m) (30
June 2021: (GBP171m); 31 December 2021: (GBP62m)) of overdrafts
which are reported in other financial liabilities in the condensed
consolidated statement of financial position.
The Notes on pages 24 to 49 are an integral part of this
condensed consolidated financial information.
Notes to the condensed consolidated financial statements
4.1 Presentation of the condensed consolidated financial statements
(a) Basis of preparation
The condensed consolidated half year financial information has
been prepared in accordance with IAS 34 Interim Financial Reporting
as adopted for use in the UK and the Disclosure Guidance and
Transparency Rules of the UK's Financial Conduct Authority.
The accounting policies for recognition, measurement,
consolidation and presentation as set out in the Annual report and
accounts for the year ended 31 December 2021 have been applied in
the preparation of the condensed consolidated half year financial
information except as noted below.
(a)(i) New standards, interpretations and amendments to existing
standards that have been adopted by the Group
The Group has adopted the following new International Financial
Reporting Standards (IFRSs), interpretations and amendments to
existing standards, which are effective for annual periods
beginning on or after 1 April 2021 and 1 January 2022.
Amendments to existing standards
-- Covid-19-Related Rent Concessions beyond 30 June 2021 - Amendment to IFRS 16.
-- Reference to the Conceptual Framework - Amendments to IFRS 3.
-- Property, Plant and Equipment: Proceeds before Intended Use - Amendments to IAS 16.
-- Onerous Contracts - Costs of Fulfilling a Contract - Amendments to IAS 37.
-- Annual Improvements 2018-2020 cycle.
The Group's accounting policies have been updated to reflect
these amendments. Management considers the implementation of the
above amendments to have no significant impact on the Group's
financial statements.
(a)(ii) Income statement presentational change
The presentation of the Group's consolidated income statement
was revised in the Annual report and accounts for the year ended 31
December 2021 following a review of the financial statements. The
reason for the change was to make the financial statements more
relevant to users as the revised presentation of the consolidated
income statement is now more consistent with asset management
peers. The change included a revised presentation of the unit
linked business returns which we consider makes the results easier
to understand. The comparatives for the six months ended 30 June
2021 have been re-presented on the same basis.
The table below sets out the impact of adopting the revised
income statement format on the comparatives for the six months
ended 30 June 2021:
H1 2021 H1 2021
as previously Presentation revised
presented changes format
GBPm GBPm GBPm Notes
----------------------------------------------------------------------- -------------- ------------ -------- -----
Income
Investment return 71 (71) - b
Revenue from contracts with customers 853 - 853
Cost of sales - (76) (76) a
--------
Net operating revenue 777 a
--------
Insurance contract premium income - - - b
Profit on disposal of interests in associates 68 (68) - e
Other income 92 (92) - b
--------------
Total income 1,084
--------------
Expenses
Insurance contracts claims and change in liabilities - - - b
Change in non-participating investment contract liabilities (66) 66 - b
Administrative and other expenses
Restructuring and corporate transaction expenses (106) (7) (113) d
Amortisation and impairment of intangibles acquired in business
combinations and through the
purchase of customer contracts - (51) (51) c
Staff costs and other employee-related costs - (305) (305) c
Other administrative expenses (729) 439 (290) c
-------------- --------
Total administrative and other expenses (835) (759)
Net gains or losses on financial instruments and other income
Fair value movements and dividend income on significant listed
investments - (37) (37) b
Other net gains or losses on financial instruments and other income - 28 28 b
-------------- --------
Total net gains or losses on financial instruments and other income - (9) (9) b
Change in liability for third party interest in consolidated funds (22) 22 - b
Finance costs (15) - (15)
Total expenses (938)
--------------
Profit on disposal of subsidiaries and other operations - 84 84 f
Profit on disposal of interests in associates - 68 68 e
Share of profit or loss from associates and joint ventures (33) - (33)
Profit before tax 113 113
----------------------------------------------------------------------- -------------- ------------ -------- -----
Note a: A new income statement line Net operating revenue is
presented (six months ended 30 June 2021: GBP777m). Net operating
revenue is the net of revenue from contracts with customers and
cost of sales. Cost of sales includes commission expenses and other
cost of sales which were previously presented within other
administrative expenses.
Note b: A new income statement line of Net gains or losses on
financial instruments and other income is also presented (six
months ended 30 June 2021: (GBP9m)). This combines a number of line
items previously shown separately on the face of the income
statement with a more detailed breakdown disclosed in Note 4.5 of
the financial statements.
Given the significance of the Fair value movements and dividend
income on significant listed investments, these have been disclosed
separately from Other net gains or losses on financial instruments
and other income on the face of the condensed consolidated income
statement.
The table below reconciles Net gains or losses on financial
instruments and other income to previous line items:
30 June 2021 GBPm
-------------------------------------------------------- ---------- ---------
Income items previously disclosed on the face of
the condensed consolidated income statement
Investment return 71
Insurance contract premium income -
Other income 92
------------------------------------------------------------------- ---------
Total income items previously disclosed on the face of
the condensed consolidated income statement 163
------------------------------------------------------------------- ---------
Expense items previously disclosed on the face of the
condensed consolidated income statement
Insurance contract claims and change in liabilities -
Change in non-participating investment contract liabilities (66)
Change in liability for third party interest in consolidated
funds (22)
------------------------------------------------------------------- ---------
Total expense items previously disclosed on the face of
the condensed consolidated income statement (88)
------------------------------------------------------------------- ---------
Total net gains or losses on financial instruments and
other income before reclassifications 75
------------------------------------------------------------------- ---------
Less: Other income now separately disclosed as Profit on
disposal of subsidiaries and other operations (84)
------------------------------------------------------------------- ---------
Total net gains or losses on financial instruments and
other income after reclassifications (9)
------------------------------------------------------------------- ---------
Split as:
Fair value movements and dividend income on significant
listed investments (37)
Net gains or losses on financial instruments and other
income - non-unit linked business - excluding significant
listed investments 24
Net gains or losses on financial instruments and other
income - unit linked business 4
------------------------------------------------------------------- ---------
Total other net gains or losses on financial instruments
and other income 28
------------------------------------------------------------------- ---------
Total net gains or losses on financial instruments and
other income (9)
------------------------------------------------------------------- ---------
The expense items included in the table above relate to unit
linked business. We consider that offsetting the net gains or
losses on unit linked financial assets (included in investment
return in the table above) and the net gains or losses on unit
linked financial liabilities (included in change in
non-participating investment contract liabilities in the table
above) on the face of the condensed consolidated income statement
reflects the substance of the transactions, as changes in the value
of the unit linked assets results in corresponding changes in the
value of unit linked liabilities with no net impact on profit after
tax.
Profit on disposal of subsidiaries and other operations is now
shown separately due to materiality.
Note c: Presentational changes have also been made to
Administrative and other expenses. The following table reconciles
Other administrative expenses as previously presented at 30 June
2021 to the re-presented 30 June 2021 Other administrative
expenses.
30 June 2021 GBPm
------------------------------------------------------------- --------- ---------
Other administrative expenses as previously presented 729
Less:
Cost of sales now included in net operating revenue (see
Note a above) (76)
Staff costs and other employee-related costs now presented
separately in the condensed consolidated income statement (305)
Amortisation and impairment of intangibles acquired in
business combinations and through the purchase of customer
contracts now presented separately in the condensed consolidated
income statement (51)
Other administrative expenses reclassified to restructuring
and corporate transaction expenses (see Note d below) (7)
----------------------------------------------------------------------- ---------
Re-presented other administrative expenses 290
----------------------------------------------------------------------- ---------
Note d: Restructuring and corporate transaction expenses was
already separately presented but, as shown above, we have
reclassified GBP7m of other administrative expenses for the six
months ended 30 June 2021 to restructuring and corporate
transaction expenses:
30 June 2021 GBPm
---------------------------------------------------------- ---------- ---------
Restructuring and corporate transaction expenses
as previously presented 106
Add: Impairment of internally developed software and right-of-use
assets as a result of restructuring 7
--------------------------------------------------------------------- ---------
Re-presented restructuring and corporate transaction expenses 113
--------------------------------------------------------------------- ---------
This additional element of restructuring costs was disclosed in
Note 4.7 of the 30 June 2021 Group condensed consolidated financial
statements, but has now been included on the face of the condensed
consolidated income statement.
Note e: The Profit on disposal of interests in associates line
item (six months ended 30 June 2021: GBP68m) is unchanged, but is
now presented with the Profit on disposal of subsidiaries and other
operations and the other income statement items relating to
associates and joints ventures, namely Loss on impairment of
interests in associates and Share of profit or loss from associates
and joint ventures.
Note f: As described in Note b above, Profit on disposal of
subsidiaries and other operations (six months ended 30 June 2021:
GBP84m) which was previously included in Other income is now
separately disclosed on the face of the condensed consolidated
income statement.
(b) Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and financial
position, are set out in the Management report and in the Annual
report and accounts 2021 Strategic report. This includes details on
our liquidity and capital positions and our principal risks,
including the impacts of the macroeconomic environment and rising
inflation, the Ukraine conflict and COVID-19 on these principal
risks.
In preparing these half year results on a going concern basis,
the Directors have considered the following matters and have taken
into account market uncertainty.
-- The Group has cash and liquid resources of GBP1.7bn at 30
June 2022. In addition the Company has a revolving credit facility
of GBP400m as part of our contingency funding plans which is due to
mature in 2025 and remains undrawn.
-- The Group's indicative regulatory capital surplus on an IFPR
basis was GBP0.6bn in excess of capital requirements at
30 June 2022. The regulatory capital surplus does not include
the value of the Group's significant listed investments HDFC Asset
Management, HDFC Life and Phoenix.
-- The Group performs regular stress and scenario analysis as
described in the Annual report and accounts 2021 Viability
statement. The diverse range of management actions available meant
the Group was able to withstand these extreme stresses.
-- The Group's operational resilience processes have operated
effectively during the period including the provision of services
by key outsource providers.
Based on a review of the above factors the Directors are
satisfied that the Group and Company have and will maintain
sufficient resources to enable them to continue operating for at
least 12 months from the date of approval of the condensed
consolidated financial statements. Accordingly, the financial
statements have been prepared on a going concern basis. There were
no material uncertainties relating to this going concern
conclusion.
(c) Condensed consolidated half year financial information
This condensed consolidated half year financial information does
not comprise statutory accounts within the meaning of Section 434
of the Companies Act 2006. Additionally, the comparative figures
for the financial year ended 31 December 2021 are not the Company's
statutory accounts for that financial year. The statutory accounts
have been reported on by the Company's auditor and delivered to the
Registrar of Companies. The report of the auditor was (i)
unqualified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement
under Section 498 (2) or (3) of the Companies Act 2006. The
condensed consolidated half year financial information has been
reviewed, not audited.
4.2 Acquisitions and disposals
(a) Acquisitions
(a)(i) Current period acquisitions of subsidiaries
Interactive Investor (ii)
On 27 May 2022, abrdn plc purchased 100% of the issued share
capital of Antler Holdco Limited (Antler), the parent company for
the interactive investor group of companies. ii is the no.1 UK
subscription-based trading platform and the no.2 UK direct
investing platform, by assets under administration. The cash
outflow at the completion of the acquisition was GBP1,496m, which
comprised consideration of GBP1,485m and payments made by abrdn to
fund the settlement of ii transaction liabilities as part of the
transaction of GBP11m. The acquisition of ii provides abrdn with
direct entry to the high-growth digitally enabled direct investing
market, accessing new customer segments and capabilities. This will
allow abrdn customers to choose from a wide spectrum of wealth
services, spanning self-directed investing through to high-touch
financial advice, depending on their specific needs over their
financial life.
At the acquisition date the consideration, net assets acquired
and resulting goodwill were as follows:
27 May 2022 GBPm
-------------------------------------------- -----
Cash consideration(1,2) 1,485
Fair value of net assets acquired
Intangible assets
Customer relationships 421
Brand 16
Technology and other intangibles 32
Property, plant and equipment 8
Deferred tax assets 5
Receivables and other financial assets(3) 411
Other assets 7
Cash and cash equivalents 107
Total assets 1,007
--------------------------------------------- -----
Other financial liabilities (400)
Provisions (1)
Deferred tax liabilities (114)
--------------------------------------------- -----
Total liabilities (515)
--------------------------------------------- -----
Goodwill 993
--------------------------------------------- -----
1. Cash consideration includes GBP61m paid by abrdn to redeem
discount notes issued by Antler as part of the acquisition
transaction. Not included in the cash consideration is GBP11m of
payments made by abrdn to fund the settlement of ii transaction
liabilities. These liabilities are included within other financial
liabilities of ii at the acquisition date. This GBP11m cash
outflow, together with the cash consideration, is included in
Acquisition of subsidiaries and unincorporated businesses net of
cash acquired in the consolidated statement of cash flows.
2. Cash consideration includes GBP10m paid to Richard Wilson the
CEO of ii which is subject to a Reinvestment Agreement. Under the
Reinvestment Agreement Mr Wilson was required to invest at least
GBP5m in abrdn shares and at least a further GBP3m in abrdn shares
or funds managed by the abrdn group. The Reinvestment Agreement
contains restrictions on the sale of abrdn shares and fund units
acquired which fall away in three equal tranches over a three-year
period following completion.
3. The estimated contractual cash flow not expected to be
collected is not material and therefore the gross contractual
amounts receivable is materially in line with the fair value.
The customer relationships intangible asset relates to ii's
customer base at the date of acquisition. The key assumptions in
measuring the fair value of this intangible asset at acquisition
date were as follows:
-- Revenue per customer growth - comprises expected growth in
account fees, treasury income and trading transactions revenue from
ii business plans. Treasury income is the interest earned on cash
balances less the interest paid to customers and was assumed to
grow in line with assets under administration. Market interest
rates were assumed to remain at or above 1%.
-- Customer attrition - customer attrition represents the
expected rate of existing customers leaving ii. This assumption was
primarily based on historical attrition rates and was assumed to
remain constant over time.
-- Operating margin - this assumption was based on the current
operating margins adjusted for marketing costs which are not
attributable to the servicing of existing customers. Expected
future operating margins are adjusted to take into account that
increased treasury income does not result in higher costs.
-- Discount rate - this assumption was based on a market
participant weighted average cost of capital.
The above assumptions, and in particular the customer attrition
assumption, were also used to determine the 15-year useful economic
life at the acquisition date. The reducing balance method of
amortisation is considered appropriate for this intangible,
consistent with the attrition rate being constant over time.
The technology intangible asset relates to ii's internally
generated technology which has been valued based on the replacement
cost method. The brand intangible asset relates to the interactive
investor brand and has been valued based on applying an assumed
royalty rate to revenue forecasts.
The goodwill arising on acquisition of ii is mainly attributable
to expected future cash flows from new customers, the quality and
experience of the ii executive team and employees, and revenue
synergies in our Investments and Personal segments. The goodwill is
not expected to be deductible for tax purposes.
The revenue from contracts with customers and profit contributed
to the Group's condensed consolidated income statement for the six
months ended 30 June 2022 from the acquired ii business were GBP13m
and GBP3m respectively. The profit contributed excludes
amortisation of intangible assets acquired through business
combinations. If the acquisition had occurred on 1 January 2022,
the Group's total revenue from contracts with customers for the
period would have increased by GBP65m to GBP796m and the loss would
have increased by GBP4m to GBP293m. This increase in the loss
includes increased amortisation of intangible assets acquired
through business combinations (net of deferred tax) of GBP24m.
As part of the transaction, abrdn plc has also agreed the
following retention incentive schemes which are not recognised as
part of the business combination:
-- A retention scheme for senior ii executives. These are awards
over abrdn plc shares with a vesting period of up to 3 years and
are subject to pre-determined performance metrics. The value of
abrdn plc shares subject to these awards was cGBP25m at date of
grant. The awards are accounted for as post completion share based
payments and spread over the relevant vesting periods and will be
recognised in Restructuring and corporate transaction expenses in
the condensed consolidated income statement.
-- Cash and share incentive retention awards to the wider ii
workforce with vesting periods of up to c3 years. These awards are
funded by the proceeds received by the ii employee benefit trust as
part of the transaction. These are accounted for as post completion
share based payments and remuneration and are spread over the
relevant vesting periods and will be recognised in Restructuring
and corporate transaction expenses in the condensed consolidated
income statement.
Corporate transaction deal costs amounted to GBP27m of which
GBP13m and GBP14m were included within Restructuring and corporate
transaction expenses in the 6 months ended 30 June 2022 and 12
months ended 31 December 2021 respectively (6 months ended 30 June
2021: GBPnil).
(a)(ii) Prior period acquisitions of subsidiaries
On 1 April 2021, Aberdeen Asset Management PLC (AAM PLC)
purchased 60% of the membership interests in Tritax, a specialist
logistics real estate fund manager (the acquisition of Tritax). The
initial cash consideration payable at the completion of the
acquisition was GBP64m. Subject to the satisfaction of certain
conditions, an additional contingent deferred earn-out is expected
to be payable to acquire the remaining 40% of membership interests
in Tritax should the selling Tritax partners choose to exercise
three put options in each of years ended 31 March 2024, 2025 and
2026. The amount payable is linked to the EBITDA of the Tritax
business in the relevant period. The Group will also have the right
to purchase any outstanding membership interests at the end of the
five-year period through exercising a call option. Based on the
transaction terms, Tritax has been fully consolidated from 1 April
2021 and no non-controlling interest is recognised in the Group's
total equity in relation to the 40% of the membership interests in
Tritax subject to the put and call options. A contingent
consideration financial liability is recognised at fair value in
relation to the earn-out payments (under the put and call options)
and the expected non-discretionary allocation of profit payments to
the holders of the 40% membership interests up to the date of the
exercise of the options. Refer Note 4.15(b)(iv) for further details
on the contingent consideration liability.
In addition, on 29 October 2021, AAM PLC purchased 100% of the
issued share capital of the investing insights platform
Finimize.
(b) Disposals
(b)(i) Prior period disposal of subsidiaries and other operations
During 2021, the Group made two material disposals of
subsidiaries and other operations:
-- On 30 June 2021, the Group completed the sale of Parmenion
Capital Partners LLP (Parmenion) to Preservation Capital
Partners.
-- On 30 September 2021, the Group completed the sale of its
Bonaccord US private market business (Bonaccord) to P10 Holdings
Inc. (P10).
Other disposals included the sale of the Nordics real estate
business to DEAS Asset Management A/S on 31 May 2021, and the sale
of Hark Capital US private market business to P10 on 30 September
2021.
Profit on disposal of subsidiaries and other operations in prior
periods have been summarised below.
2021
GBPm
-------------------------------------------------------- -----
Disposal of Parmenion 73
Other disposals 11
-------------------------------------------------------- -----
Profit on disposal of subsidiaries and other operations
for the six months ended 30 June 2021 84
-------------------------------------------------------- -----
Disposal of Bonaccord 39
Other disposals 4
-------------------------------------------------------- -----
Profit on disposal of subsidiaries and other operations
for the 12 months ended 31 December 2021 127
-------------------------------------------------------- -----
On disposal, a loss of GBP1m was recycled from the translation
reserve and was included in determining the profit on disposal of
subsidiaries and other operations for the six months ended 30 June
2021 and the 12 months ended 31 December 2021.
(b)(ii) Current period disposal of associates
Profit on disposal of interests in associates for the six months
ended 30 June 2022 of GBP6m relates to the sale of the Group's
interest in Origo Services Limited in May 2022.
(b)(iii) Prior period disposal and reclassification of
associates
Profit on disposal of associates in prior periods have been
summarised below.
2021
GBPm
-------------------------------------------------------------------- -----
Reclassification of Phoenix Group Holdings plc (Phoenix) 68
Profit on disposal of interests in associates for the
six months ended 30 June 2021 68
-------------------------------------------------------------------- -----
Sale of equity shares in HDFC Asset Management and reclassification 1,168
Profit on disposal of interests in associates for the
12 months ended 31 December 2021 1,236
-------------------------------------------------------------------- -----
On disposal and reclassification, a loss of GBP17m was recycled
from the translation reserve and was included in determining the
profit on disposal of interests in associates for the 12 months
ended 31 December 2021 (six months ended 30 June 2021: GBPnil). In
addition, other comprehensive income gains of GBP9m were recycled
from retained earnings and were included in determining the profit
on disposal of interests in associates for the six months ended 30
June 2021 and the 12 months ended 31 December 2021.
Phoenix
On 23 February 2021, the Group announced details of the
simplification and extension of the strategic partnership between
the Group and Phoenix. Following the changes to the commercial
agreements, in particular in relation to the licencing of the
'Standard Life' brand, our judgement was that Phoenix should no
longer be accounted for as an associate with effect from 23
February 2021. The Group's shareholding in Phoenix, which remained
at 14.4%, was therefore reclassified from an investment in
associates accounted for using the equity method to equity
securities and interests in pooled investment funds measured at
fair value.
As part of the agreement, the Group announced the purchase of
certain products in the Phoenix Group's savings business offered
through abrdn's Wrap platform, comprising a self-invested pension
plan (SIPP) and an onshore bond product; together with the Phoenix
Group's trustee investment plan (TIP) business for UK pension
scheme clients. The transaction is not expected to complete before
2024 and is subject to regulatory and court approvals. The upfront
consideration paid by the Group in February 2021 was GBP62.5m,
which is offset in part by payments from Phoenix to the Group
relating to profits of the products prior to completion of the
legal transfer. The net amount of consideration paid is included in
prepayments in the condensed consolidated statement of financial
position with cash movements in relation to the consideration
included in prepayment in respect of potential acquisition of
customer contracts in the condensed consolidated statement of cash
flows.
HDFC Asset Management
On 29 September 2021, the Group completed a sale of equity
shares in HDFC Asset Management on the National Stock Exchange of
India Limited and BSE Limited. The gain on sale and the gain on
reclassification from an associate to an equity investment can be
summarised as follows:
2021
GBPm
------------------------------------------------------------------ -----
Gain on sale of 10,650,000 equity shares in HDFC Asset Management
sold through a Bulk Sale on 29 September 2021 271
Gain on reclassification of remaining 34,578,305 equity
shares in HDFC Asset Management from an associate to equity
investment on 29 September 2021 897
------------------------------------------------------------------- -----
Gains on disposal and reclassification of HDFC Asset Management
for the 12 months ended 31 December 2021 1,168
------------------------------------------------------------------- -----
Following the sale, the Group's shareholding in HDFC Asset
Management was 34,578,305 equity shares or 16.22% and HDFC Asset
Management was therefore no longer considered to be an associate of
the Group. The Group's investment in HDFC Asset Management was
reclassified from an investment in associates accounted for using
the equity method to equity securities and interests in pooled
investment funds measured at fair value.
The Group's shareholdings in Phoenix and HDFC Asset Management
are now considered, along with HDFC Life, as significant listed
investments for the purpose of determining the Group's adjusted
profit. Refer Note 4.9(a) for changes in the Group's significant
listed investments in the period ended 30 June 2022 .
4.3 Segmental analysis
The Group's reportable segments have been identified in
accordance with the way in which the Group is structured and
managed. IFRS 8 Operating Segments requires that the information
presented in the financial statements is based on information
provided to the 'Chief Operating Decision Maker' which for the
Group is the executive leadership team.
(a) Basis of segmentation
(a)(i) Current reportable segments
Investments
Our global asset management business which provides investment
solutions for Institutional, Wholesale and Insurance clients. The
Investment segment includes the Tritax and Finimize businesses
following their acquisitions during 2021.
Adviser
Our market-leading UK financial adviser business which provides
services through the Wrap and Elevate platforms to wealth managers
and advisers.
Personal
Our Personal business comprises Personal Wealth (which combines
our financial planning business abrdn Financial Planning, our
digital direct-to-consumer services and discretionary fund
management services provided by abrdn Capital) and interactive
investor following the completion of the acquisition in the six
months ended 30 June 2022. Refer Note 4.2(a)(i) for further
details.
In addition to the Group reportable segments above, the analysis
of adjusted profit in Section b(i) below also reports the
following:
Corporate/strategic
Corporate/strategic mainly comprises certain corporate costs.
The comparative periods also include a business held for sale
(Parmenion, the sale of which completed on 30 June 2021).
The segments are reported to the level of adjusted operating
profit.
(b) Reportable segments - adjusted profit and revenue information
(b)(i) Analysis of adjusted profit
Adjusted operating profit is presented by reportable segment in
the table below.
Corporate/
Investments Adviser Personal strategic Total
6 months 2022 Notes GBPm GBPm GBPm GBPm GBPm
---------------------------------- ------ ----------- ------- -------- ---------- -----
Fee based revenue 546 92 58 - 696
Adjusted operating expenses (470) (54) (51) (6) (581)
---------------------------------- ------ ----------- ------- -------- ---------- -----
Adjusted operating profit 76 38 7 (6) 115
Adjusted net financing
costs and investment return (16)
---------------------------------- ------ ----------- ------- -------- ---------- -----
Adjusted profit before
tax 99
Tax on adjusted profit (13)
---------------------------------- ------ ----------- ------- -------- ---------- -----
Adjusted profit after
tax 86
---------------------------------- ------ ----------- ------- -------- ---------- -----
Adjusted for the following
items
Restructuring and corporate
transaction expenses 4.6 (88)
Amortisation and impairment
of intangible assets acquired
in business combinations
and through the purchase
of customer contracts (52)
Profit on disposal of interests
in associates 4.2(b) 6
Change in fair value of
significant listed investments (313)
Dividends from significant
listed investments 42
Share of profit or loss
from associates and joint
ventures(1) 6
Impairment of interests
in associates (9)
Other 4.9 (11)
---------------------------------- ------ ----------- ------- -------- ---------- -----
Total adjusting items
including results of associates
and joint ventures (419)
---------------------------------- ------ ----------- ------- -------- ---------- -----
Tax on adjusting items 44
Profit attributable to
other equity holders (6)
Profit attributable to
non-controlling interests
- ordinary shares (1)
---------------------------------- ------ ----------- ------- -------- ---------- -----
Loss for the period attributable
to equity shareholders
of abrdn plc (296)
---------------------------------- ------ ----------- ------- -------- ---------- -----
Profit attributable to
other equity holders 6
Profit attributable to
non-controlling interests
- ordinary shares 1
---------------------------------- ------ ----------- ------- -------- ---------- -----
Loss for the period (289)
---------------------------------- ------ ----------- ------- -------- ---------- -----
1. Share of associates' and joint ventures' profit or loss
primarily comprises the Group's share of results of HASL and Virgin
Money Unit Trust Managers (Virgin Money UTM).
Fee based revenue is reported as the measure of revenue in the
analysis of adjusted operating profit and relates to revenues
generated from external customers.
Corporate/
Investments Adviser Personal strategic Total
6 months 2021 Notes GBPm GBPm GBPm GBPm GBPm
------------------------------------- ------ ----------- ------- -------- ---------- -----
Fee based revenue 613 87 41 14 755
Adjusted operating expenses (487) (50) (37) (21) (595)
------------------------------------- ------ ----------- ------- -------- ---------- -----
Adjusted operating profit 126 37 4 (7) 160
Adjusted net financing
costs and investment return 3
------------------------------------- ------ ----------- ------- -------- ---------- -----
Adjusted profit before
tax 163
Tax on adjusted profit (13)
------------------------------------- ------ ----------- ------- -------- ---------- -----
Adjusted profit after
tax 150
------------------------------------- ------ ----------- ------- -------- ---------- -----
Adjusted for the following
items
Restructuring and corporate
transaction expenses 4.6 (113)
Amortisation and impairment
of intangible assets acquired
in business combinations
and through the purchase
of customer contracts (51)
Profit on disposal of subsidiaries
and other operations 4.2(b) 84
Profit on disposal of interests
in associates 4.2(b) 68
Change in fair value of
significant listed investments (72)
Dividends from significant
listed investments 35
Share of profit or loss
from associates and joint
ventures(1) (33)
Other 4.9 32
------------------------------------- ------ ----------- ------- -------- ---------- -----
Total adjusting items
including results of associates
and joint ventures (50)
------------------------------------- ------ ----------- ------- -------- ---------- -----
Tax on adjusting items 2
Profit for the period 102
------------------------------------- ------ ----------- ------- -------- ---------- -----
1. Share of associates' and joint ventures' profit or loss
primarily comprises the Group's share of results of HASL, Virgin
Money Unit Trust Managers (Virgin Money UTM), HDFC Asset Management
and Phoenix (until 22 February 2021).
Corporate/
Investments Adviser Personal strategic Total
Full Year 2021 Notes GBPm GBPm GBPm GBPm GBPm
------------------------------------- ------ ----------- ------- -------- ---------- -------
Fee based revenue 1,231 178 92 14 1,515
Adjusted operating expenses (978) (104) (84) (26) (1,192)
------------------------------------- ------ ----------- ------- -------- ---------- -------
Adjusted operating profit 253 74 8 (12) 323
Adjusted net financing
costs and investment return -
------------------------------------- ------ ----------- ------- -------- ---------- -------
Adjusted profit before
tax 323
Tax on adjusted profit (26)
------------------------------------- ------ ----------- ------- -------- ---------- -------
Adjusted profit after
tax 297
------------------------------------- ------ ----------- ------- -------- ---------- -------
Adjusted for the following
items
Restructuring and corporate
transaction expenses 4.6 (259)
Amortisation and impairment
of intangible assets acquired
in business combinations
and through the purchase
of customer contracts (99)
Profit on disposal of subsidiaries
and other operations 4.2(b) 127
Profit on disposal of interests
in associates 4.2(b) 1,236
Change in fair value of
significant listed investments (298)
Dividends from significant
listed investments 71
Share of profit or loss
from associates and joint
ventures(1) (22)
Other 4.9 36
------------------------------------- ------ ----------- ------- -------- ---------- -------
Total adjusting items
including results of associates
and joint ventures 792
------------------------------------- ------ ----------- ------- -------- ---------- -------
Tax on adjusting items (94)
Profit attributable to
non-controlling interests
- ordinary shares (1)
------------------------------------- ------ ----------- ------- -------- ---------- -------
Profit for the year attributable
to equity shareholders
of abrdn plc 994
------------------------------------- ------ ----------- ------- -------- ---------- -------
Profit attributable to
non-controlling interests
- ordinary shares 1
------------------------------------- ------ ----------- ------- -------- ---------- -------
Profit for the year 995
------------------------------------- ------ ----------- ------- -------- ---------- -------
1. Share of associates' and joint ventures' profit or loss
primarily comprises the Group's share of results of HASL, Virgin
Money Unit Trust Managers (Virgin Money UTM), Phoenix (until 22
February 2021) and HDFC Asset Management (until 29 September
2021).
4.4 Net operating revenue
(a) Revenue from contracts with customers
The following table provides a breakdown of total revenue from
contracts with customers.
6 months 6 months Full Year
2022 2021 2021
GBPm GBPm GBPm
---------------------------------------------- -------- -------- ---------
Investments
Management fee income - Institutional and
Wholesale (1) 463 525 1,043
Management fee income - Insurance(1) 89 97 200
Performance fees and carried interest 12 51 99
Other revenue from contracts with customers 16 34 54
---------------------------------------------- -------- -------- ---------
Revenue from contracts with customers for
the investments segment 580 707 1,396
---------------------------------------------- -------- -------- ---------
Adviser 93 88 180
Personal 58 41 92
Corporate/strategic - Parmenion fund platform
fee income - 17 17
---------------------------------------------- -------- -------- ---------
Total revenue from contracts with customers 731 853 1,685
---------------------------------------------- -------- -------- ---------
1. In addition to revenues earned as a percentage of AUM,
management fee income includes certain other revenues such as
registration fees.
(b) Cost of sales
The following table provides a breakdown of total cost of
sales.
6 months 6 months Full Year
2022 2021 2021
GBPm GBPm GBPm
---------------------- -------- -------- ---------
Cost of sales
Commission expenses 32 46 87
Other cost of sales 3 30 55
---------------------- -------- -------- ---------
Total cost of sales 35 76 142
---------------------- -------- -------- ---------
Other cost of sales includes amounts payable to employees and
others relating to carried interest and performance fee
revenue.
(c) Reconciliation of revenue from contracts with customers to fee based revenue
The following table provides a reconciliation of revenue from
contracts with customers as presented in the condensed consolidated
income statement to fee based revenue, as presented in the analysis
of adjusted operating profit (see Note 4.3(b)(i) for each of the
Group's reportable segments).
Investments Adviser Personal Corporate/strategic Total
----------------------- ------------------- ---------------- ----------------------- -----------------
30 30 30 30 30 30 31 30 30 30 30 31
Jun Jun Jun Jun 31 Dec Jun Jun Dec Jun Jun Jun Jun Dec
2022 2021 31 Dec 2021 2022 2021 2021 2022 2021 2021 2022 2021 31 Dec 2021 2022 2021 2021
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ---- ---- ----------- ---- ---- ------- ---- ---- ---- ---- ---- ----------- ---- ---- -----
Revenue from
contracts
with
customers 580 707 1,396 93 88 180 58 41 92 - 17 17 731 853 1,685
Cost of sales (34) (72) (137) (1) (1) (2) - - - - (3) (3) (35) (76) (142)
Net operating
revenue 546 635 1,259 92 87 178 58 41 92 - 14 14 696 777 1,543
Other
differences - (22) (28) - - - - - - - - - - (22) (28)
-------------- ---- ---- ----------- ---- ---- ------- ---- ---- ---- ---- ---- ----------- ---- ---- -----
Fee based
revenue 546 613 1,231 92 87 178 58 41 92 - 14 14 696 755 1,515
-------------- ---- ---- ----------- ---- ---- ------- ---- ---- ---- ---- ---- ----------- ---- ---- -----
Other differences primarily relate to amounts presented in a
different line item of the condensed consolidated income statement
and items classified as adjusting items. There were no other
differences for the six months ended 30 June 2022. For the six
months ended 30 June 2021 and 12 months ended 31 December 2021,
these primarily relate to the net release of deferred income of
GBP25m following the transfer of workplace pensions marketing staff
to Phoenix in May 2021.
4.5 Net gains or losses on financial instruments and other income
6 months 6 months Full Year
2022 2021(1) 2021
GBPm GBPm GBPm
------------------------------------------------------ -------- -------- ---------
Fair value movements and dividend income
on significant listed investments
Fair value movements on significant listed
investments (other than dividend income) (313) (72) (298)
Dividend income from significant listed investments 42 35 71
------------------------------------------------------ -------- -------- ---------
Total fair value movements and dividend
income on significant listed investments (271) (37) (227)
------------------------------------------------------ -------- -------- ---------
Non-unit linked business - excluding significant
listed investments
Net gains or losses on financial instruments
at fair value through profit or loss (54) 13 20
Interest and similar income from financial
instruments at amortised cost 8 5 10
Foreign exchange losses on financial instruments
at amortised cost 10 (2) (1)
Other income 6 8 8
Net gains or losses on financial instruments
and other income - non-unit linked business
- excluding significant listed investments (30) 24 37
------------------------------------------------------ -------- -------- ---------
Unit linked business
Net gains or losses on financial instruments
at fair value through profit or loss
Net gains or losses on financial assets at
fair value through profit or loss (156) 92 174
Change in non-participating investment contract
financial liabilities 129 (66) (124)
Change in liability for third party interests
in consolidated funds 30 (22) (43)
------------------------------------------------------ -------- -------- ---------
Total net gains or losses on financial instruments
at fair value through profit or loss 3 4 7
Net gains or losses on financial instruments
and other income - unit linked business(2) 3 4 7
------------------------------------------------------ -------- -------- ---------
Total other net gains or losses on financial
instruments and other income (27) 28 44
------------------------------------------------------ -------- -------- ---------
Total net gains or losses on financial instruments
and other income (298) (9) (183)
------------------------------------------------------ -------- -------- ---------
1. The Group made changes to the presentation of the
consolidated income statement in the Annual report and accounts for
the year ended 31 December 2021. The comparatives for the six
months ended 30 June 2021 have been re-presented on the same basis.
Refer Section 4.1(a)(ii) of the Basis of preparation for further
details.
2. In addition to the Net gains or losses on financial
instruments and other income - unit linked business of GBP3m (six
months ended 30 June 2021: GBP4m, 12 months ended 31 December 2021:
GBP7m), there are administrative expenses and policyholder tax of
GBP1m (six months ended 30 June 2021: GBP2m, 12 months ended 31
December 2021: GBP3m) and GBP2m (six months ended 30 June 2021:
GBP2m, 12 months ended 31 December 2021: GBP4m) respectively. The
result attributable to unit linked business for the year is
therefore GBPnil (six months ended 30 June 2021: GBPnil, 12 months
ended 31 December 2021: GBPnil).
4.6 Administrative and other expenses
6 months 6 months Full Year
2022 2021(1) 2021
GBPm GBPm GBPm
------------------------------------------------- -------- -------- ---------
Restructuring and corporate transaction
expenses(2) 88 113 259
Amortisation and impairment of intangibles
acquired in business combinations and through
the purchase of customer contracts
Amortisation of intangibles acquired in
business combinations 47 44 87
Amortisation of intangibles acquired through
the purchase of customer contracts 5 7 12
------------------------------------------------- -------- -------- ---------
Total amortisation and impairment of intangibles
acquired in business combinations and through
the purchase of customer contracts 52 51 99
Staff costs and other employee-related
costs 266 305 604
Other administrative expenses(2) 300 290 594
------------------------------------------------- -------- -------- ---------
Total administrative and other expenses(3) 706 759 1,556
------------------------------------------------- -------- -------- ---------
1. The Group made changes to the presentation of the
consolidated income statement in the Annual report and accounts for
the year ended 31 December 2021. The comparatives for the six
months ended 30 June 2021 have been re-presented on the same basis.
Refer Section 4.1(a)(ii) of the Basis of preparation for further
details.
2. For the period ended 30 June 2021, GBP7m of expenses
previously presented in other administrative expenses have been
reclassified as restructuring and corporate transaction expenses.
Refer Section 4.1(a)(ii) of the Basis of preparation for further
details.
3. Total administrative and other expenses includes GBP1m (six
months ended 30 June 2021: GBP2m, 12 months ended 31 December 2021:
GBP3m) relating to unit linked business.
The restructuring and corporate transaction expenses for the six
months ended 30 June 2022 mainly relate to ongoing transformation
costs including severance, platform transformation and business
integration. Expenses for the six months ended 30 June 2022 also
includes GBP13m of ii corporate transaction deal costs.
4.7 Tax expense
6 months 6 months Full Year
2022 2021 2021
GBPm GBPm GBPm
----------------------------------------------- -------- -------- ---------
Current tax:
UK 2 3 5
Overseas 11 13 60
Adjustment to tax expense in respect of prior
years (3) 6 11
----------------------------------------------- -------- -------- ---------
Total current tax 10 22 76
----------------------------------------------- -------- -------- ---------
Deferred tax:
Deferred tax expense/(credit) arising from the
current period (42) (13) 36
Adjustment to deferred tax in respect of prior
years 1 2 8
----------------------------------------------- -------- -------- ---------
Total deferred tax (41) (11) 44
----------------------------------------------- -------- -------- ---------
Total tax (credit)/expense(1) (31) 11 120
----------------------------------------------- -------- -------- ---------
1. The tax credit of GBP31m (six months ended 30 June 2021: tax
expense of GBP11m, 12 months ended 31 December 2021: tax expense
GBP120m) includes a tax expense of GBP2m (six months ended 30 June
2021: GBP2m, 12 months ended 31 December 2021: GBP4m) relating to
unit linked business.
Tax relating to components of other comprehensive income is as
follows:
6 months 6 months Full Year
2022 2021 2021
GBPm GBPm GBPm
------------------------------------------------- -------- -------- ---------
Tax relating to defined benefit pension plan
deficits - (4) (3)
------------------------------------------------- -------- -------- ---------
Equity holder tax effect relating to items
that will not be reclassified subsequently to
profit or loss - (4) (3)
------------------------------------------------- -------- -------- ---------
Tax relating to fair value gains and losses
recognised on cash flow hedges 15 - 6
Tax relating to cash flow hedge gains and losses
transferred to condensed consolidated income
statement (17) 1 (3)
------------------------------------------------- -------- -------- ---------
Equity holder tax effect relating to items
that may be reclassified subsequently to profit
or loss (2) 1 3
------------------------------------------------- -------- -------- ---------
Tax relating to other comprehensive income (2) (3) -
------------------------------------------------- -------- -------- ---------
All of the amounts presented above are in respect of equity
holders of abrdn plc.
4.8 Earnings per share
Basic earnings per share is calculated by dividing profit
attributable to ordinary equity holders by the weighted average
number of ordinary shares in issue during the period excluding
shares owned by the employee trusts that have not vested
unconditionally to employees.
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares in issue during the
period to assume the conversion of all dilutive potential ordinary
shares, such as share options granted to employees.
Adjusted earnings per share is calculated on adjusted profit
after tax attributable to ordinary equity holders of the
Company.
The following table shows details of basic, diluted and adjusted
earnings per share.
6 months 6 months Full Year
2022 2021 2021
GBPm GBPm GBPm
------------------------------------------------------ -------- -------- ---------
Adjusted profit before tax 99 163 323
Tax on adjusted profit (13) (13) (26)
------------------------------------------------------ -------- -------- ---------
Adjusted profit after tax 86 150 297
------------------------------------------------------ -------- -------- ---------
Attributable to:
Other equity holders (6) - -
Non-controlling interests - ordinary shares (1) - (1)
------------------------------------------------------ -------- -------- ---------
Adjusted profit after tax attributable to equity
shareholders of abrdn plc 79 150 296
------------------------------------------------------ -------- -------- ---------
Total adjusting items including results of associates
and joint ventures (419) (50) 792
Tax on adjusting items 44 2 (94)
------------------------------------------------------ -------- -------- ---------
(Loss)/profit attributable to equity shareholders
of abrdn plc (296) 102 994
------------------------------------------------------ -------- -------- ---------
6 months 6 months Full Year
2022 2021 2021
Millions Millions Millions
-------------------------------------------- -------- -------- ---------
Weighted average number of ordinary shares
outstanding 2,130 2,115 2,123
Dilutive effect of share options and awards 17 41 36
-------------------------------------------- -------- -------- ---------
Weighted average number of diluted ordinary
shares outstanding 2,147 2,156 2,159
-------------------------------------------- -------- -------- ---------
In accordance with IAS 33, no share options and awards have been
treated as dilutive for the six months ended 30 June 2022 due to
the loss attributable to equity holders of abrdn plc in that
period. This resulted in the adjusted diluted earnings per share
being calculated using a weighted average number of ordinary shares
of 2,130 million.
6 months 6 months Full Year
2022 2021 2021
Pence Pence Pence
------------------------------------ -------- -------- ---------
Basic earnings per share (13.9) 4.8 46.8
------------------------------------ -------- -------- ---------
Diluted earnings per share (13.9) 4.7 46.0
------------------------------------ -------- -------- ---------
Adjusted earnings per share 3.7 7.1 13.9
------------------------------------ -------- -------- ---------
Adjusted diluted earnings per share 3.7 7.0 13.7
------------------------------------ -------- -------- ---------
4.9 Adjusted profit and adjusting items
Adjusted profit excludes the impact of the following items:
-- Restructuring costs and corporate transaction expenses.
Restructuring includes the impact of major regulatory change.
-- Amortisation and impairment of intangible assets acquired in
business combinations and through the purchase of customer
contracts.
-- Profit or loss arising on the disposal of a subsidiary, joint
venture or equity accounted associate.
-- Change in fair value of/dividends from significant listed investments (see (a) below).
-- Share of profit or loss from associates and joint ventures.
-- Impairment loss/reversal of impairment loss recognised on
investments in associates and joint ventures accounted for using
the equity method.
-- Fair value movements in contingent consideration.
-- Items which are one-off and, due to their size or nature, are
not indicative of the long-term operating performance of the
Group.
The tax charge or credit allocated to adjusting items is based
on the tax treatment of each adjusting item.
The operating, investing and financing cash flows presented in
the condensed consolidated statement of cash flows are for both
adjusting and non-adjusting items.
(a) Significant listed investments
During 2021, the Group's investments in Phoenix and HDFC Asset
Management were reclassified from associates to equity securities.
Refer Note 4.2(b)(iii) for further details. The Group's investment
in HDFC Life was similarly reclassified in 2020 and all three are
now considered significant listed investments of the Group. Fair
value movements on these investments are included as adjusting
items, which is aligned with our treatment of gains on disposal for
these holdings when they were classified as associates. Dividends
from significant listed investments are also included as adjusting
items, as these result in fair value movements.
During the six months ended 30 June 2022, the Group's holding in
Phoenix was reduced by 4% to 10.4% following the sale of 39,981,442
ordinary shares on 28 January 2022. The total consideration net of
taxes and expenses was GBP263 million.
(b) Other
Other adjusting items for the six months ended 30 June 2022
includes a gain of GBP6m (six months ended 30 June 2021: GBPnil, 12
months ended 31 December 2021: loss of GBP3m) for net fair value
movements in contingent consideration. Other adjusting items for
the six months ended 30 June 2022 also includes a loss of GBP12m
(six months ended 30 June 2021: profit of GBP5m, 12 months ended 31
December 2021: profit of GBP10m) in relation to market losses on
the investments held by the abrdn Financial Fairness Trust which is
consolidated by the Group. The assets of the abrdn Financial
Fairness Trust are restricted to be used for charitable
purposes.
Other adjusting items for the six months ended 30 June 2021 and
12 months ended 31 December 2021 also included a net release of
deferred income of GBP25m (30 June 2022: GBPnil) following the
transfer of workplace pensions marketing staff to Phoenix in May
2021 and GBP5m and GBP8m respectively for initial gains on
derecognition of right-of-use assets relating to subleases
classified as finance leases.
4.10 Dividends on ordinary shares
6 months 2022 6 months 2021 Full Year 2021
Pence Pence Pence
per per per
share GBPm(1) share GBPm share GBPm
-------------------------------------- ------ ------- -------- ----- --------- -----
Dividends paid in reporting period
Current year interim dividend - - - - 7.30 154
Final dividend for prior year 7.30 154 7.30 154 7.30 154
-------------------------------------- ------ ------- -------- ----- --------- -----
Total dividends paid in reporting
period 154 154 308
-------------------------------------- ------ ------- -------- ----- --------- -----
Dividends relating to reporting
period
Interim dividend 7.30 153 7.30 154 7.30 154
Final dividend - - - - 7.30 154
-------------------------------------- ------ ------- -------- ----- --------- -----
Total dividends relating to reporting
period 153 154 308
-------------------------------------- ------ ------- -------- ----- --------- -----
1. Estimated for the current period interim recommended
dividend.
Subsequent to 30 June 2022, the Board has declared an interim
dividend for 2022 of 7.30 pence per ordinary share (interim 2021:
7.30 pence), an estimated GBP153m in total (interim 2021: GBP154m).
The dividend is expected to be paid on 27 September 2022 and will
be recorded as an appropriation of retained earnings in the
financial statements for the year ended 31 December 2022.
4.11 Intangible assets
30 Jun 30 Jun 31 Dec
2022 2021 2021
GBPm GBPm GBPm
--------------------------------------------------- ------ ------ ------
Acquired through business combinations
Goodwill 1,324 249 331
Brand 18 20 12
Customer relationships and investment management
contracts 701 346 314
Technology and other 36 - 5
Internally developed software 3 15 4
Purchased software and other 1 1 1
Cost of obtaining customer contracts 33 43 37
--------------------------------------------------- ------ ------ ------
Total intangible assets 2,116 674 704
--------------------------------------------------- ------ ------ ------
Goodwill at 30 June 2022 comprises a gross carrying value of
GBP4,714m (30 June 2021: GBP3,639m; 31 December 2021: GBP3,721m)
and accumulated impairment of GBP3,390m (30 June 2021: GBP3,390m;
31 December 2021: GBP3,390m). During the period to 30 June 2022,
there were additions to goodwill of GBP993m and no other movements
in the carrying value (six months ended 30 June 2021: GBP164m
additions, 12 months ended 31 December 2021: GBP246m additions).
The additions in intangible assets acquired through business
combinations in the six months ended 30 June 2022 predominately
relate to the acquisition of interactive investor. Refer Note
4.2(a)(i) for further details.
4.12 Investments in associates and joint ventures accounted for
using the equity method
30 Jun 30 Jun 31 Dec
2022 2021 2021
GBPm GBPm GBPm
--------------------------------------------------- ------ ------ ------
Associates
HDFC Asset Management Company Limited (HDFC
Asset Management) - 127 -
Other - 10 10
Joint ventures
Heng An Standard Life Insurance Company Limited
(HASL) 275 237 258
Other 7 7 6
--------------------------------------------------- ------ ------ ------
Total investments in associates and joint ventures
accounted for using the equity method 282 381 274
--------------------------------------------------- ------ ------ ------
During the period to 30 June 2022, the Group recognised an
impairment of GBP9m in relation to its interest in Tenet Group
Limited which is included in other associates accounted for using
the equity method.
The Group's interest in HDFC Asset Management was reclassified
from investments in associates accounted for using the equity
method to equity securities measured at fair value on 29 September
2021. Refer Note 4.2(b)(iii) for further details.
4.13 Issued share capital and share premium, shares held by
trusts, retained earnings and other reserves
(a) Issued share capital and share premium
The movement in the issued ordinary share capital and share
premium of the Company was:
6 months 2022 6 months 2021 Full Year 2021
----------------------------- ----------------------------- -----------------------------
Ordinary share Share Ordinary share Share Ordinary share Share
capital premium capital premium capital premium
Issued shares 13 61/63p 13 61/63p 13 61/63p
fully paid each GBPm GBPm each GBPm GBPm each GBPm GBPm
----------------- ------------- ---- -------- ------------- ---- -------- ------------- ---- --------
At start of
period 2,180,724,786 305 640 2,194,115,616 306 640 2,194,115,616 306 640
Shares issued
in respect of
share incentive
plans 1,174 - - 960 - - 2,032 - -
Shares bought
back on-market
and cancelled - - - (13,392,862) (1) - (13,392,862) (1) -
----------------- ------------- ---- -------- ------------- ---- -------- ------------- ---- --------
At end of period 2,180,725,960 305 640 2,180,723,714 305 640 2,180,724,786 305 640
----------------- ------------- ---- -------- ------------- ---- -------- ------------- ---- --------
All ordinary shares in issue in the Company rank pari passu and
carry the same voting rights and entitlement to receive dividends
and other distributions declared or paid by the Company.
The Company can issue shares to satisfy awards granted under
employee incentive plans which have been approved by
shareholders.
(b) Shares held by trusts
Shares held by trusts relates to shares in abrdn plc that are
held by the abrdn Employee Benefit Trust (formerly named the
Standard Life Aberdeen Employee Benefit Trust) (abrdn EBT),
Standard Life Employee Trust (ET) and the Aberdeen Asset Management
Employee Benefit Trust 2003 (AAM EBT).
The abrdn EBT, ET and AAM EBT purchase shares in the Company for
delivery to employees under employee incentive plans. Purchased
shares are recognised as a deduction from equity at the price paid
for them. Where new shares are issued to the arbdn EBT, ET or AAM
EBT the price paid is the nominal value of the shares. When shares
are distributed from the trust their corresponding value is
released to retained earnings.
The number of shares held by trusts was as follows:
6 months 6 months Full Year
2022 2021 2021
----------------------------------- ---------- ---------- ----------
Number of shares held by trusts
abrdn Employee Benefit Trust 36,702,940 39,279,020 39,630,532
Standard Life Employee Trust 22,635,206 23,083,609 22,688,815
Aberdeen Asset Management Employee
Benefit Trust 2003 2,316,847 3,294,476 2,647,359
------------------------------------ ---------- ---------- ----------
4.14 Pension and other post-retirement benefit provisions
The Group operates a number of defined benefit pension plans,
the largest of which is the UK Standard Life Group plan (principal
plan) which is closed to future accrual. The Group also operates
two other UK defined benefit plans, which are closed to future
accrual, the Ireland Standard Life plan, which has fewer than 10
employees accruing future benefits, and a number of smaller funded
and unfunded defined benefit plans in other countries.
For the UK plans, the trustees set the plan investment
strategies to protect the ratio of plan assets to the trustees'
measure of the value of assets needed to meet the trustees'
objectives. The investment strategies do not aim to protect an IAS
19 surplus or ratio of plan assets to the IAS 19 measure of
liabilities.
(a) Analysis of amounts recognised in the condensed consolidated income statement
The amounts recognised in the condensed consolidated income
statement for defined contribution and defined benefit plans are as
follows:
6 months 6 months Full Year
2022 2021 2021
GBPm GBPm GBPm
------------------------------------------------- -------- -------- ---------
Current service cost 26 28 53
Net interest income (16) (10) (21)
Administrative expenses 2 2 4
------------------------------------------------- -------- -------- ---------
Expense recognised in the condensed consolidated
income statement 12 20 36
------------------------------------------------- -------- -------- ---------
In addition, for the six months ended 30 June 2022, losses of
GBP386m (six months ended 30 June 2021: losses of GBP33m; 12 months
ended 31 December 2021: gains of GBP117m) have been recognised in
other comprehensive income in the condensed consolidated statement
of comprehensive income in relation to remeasurement of the defined
benefit plans.
(b) Analysis of amounts recognised in the condensed consolidated
statement of financial position
Pension and other post-retirement benefit assets at 30 June 2022
of GBP1,221m (30 June 2021: GBP1,454m; 31 December 2021: GBP1,607m)
includes the following amounts in relation to the principal
plan:
6 months 6 months Full Year
2022 2021 2021
GBPm GBPm GBPm
----------------------------------- -------- -------- ---------
Present value of funded obligation (1,932) (2,775) (2,899)
Fair value of plan assets 3,763 4,987 5,337
Effect of limit on plan surplus (641) (774) (853)
----------------------------------- -------- -------- ---------
Net asset 1,190 1,438 1,585
----------------------------------- -------- -------- ---------
(c) Principal assumptions
Determination of the valuation of principal plan liabilities is
a key estimate as a result of the assumptions made relating to both
economic and non-economic factors.
The key economic assumptions for the principal plan, which are
based in part on current market conditions, are shown below:
30 Jun 30 Jun 31 Dec
2022 2021 2021
% % %
----------------------------- ------ ------ ------
Discount rate 4.00 2.00 2.05
Rates of inflation
Consumer Price Index (CPI) 2.60 2.65 2.85
Retail Price Index (RPI) 3.00 3.15 3.25
----------------------------- ------ ------ ------
The changes in economic assumptions over the period reflect
changes in both corporate bond prices and market implied inflation.
The population of corporate bond prices excludes bonds issued by UK
universities. The inflation assumption reflects the future reform
of RPI effective from 2030.
4.15 Fair value of assets and liabilities
(a) Fair value hierarchy
In determining fair value, the following fair value hierarchy
categorisation has been used:
-- Level 1: Fair values measured using quoted prices
(unadjusted) in active markets for identical assets or liabilities.
An active market exists where transactions take place with
sufficient frequency and volume to provide pricing information on
an ongoing basis.
-- Level 2: Fair values measured using inputs other than quoted
prices included within level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).
-- Level 3: Fair values measured using inputs that are not based
on observable market data (unobservable inputs).
Information on the methods and assumptions used to determine
fair values for equity securities and interests in pooled
investment funds, debt securities and derivatives measured at fair
value is given below:
Equities and interests in pooled investment
funds(1,2) Debt securities Derivatives(3)
----- ------------------------------------------------ ---------------------- -------------------
Level Equity instruments listed on a recognised Debt securities Exchange
1 exchange valued using prices sourced from listed on a traded derivatives
their primary exchange. recognised exchange valued using
valued using prices sourced
prices sourced from the
from their primary relevant
exchange. exchange.
----- ------------------------------------------------ ---------------------- -------------------
Level Pooled investment funds where daily unit Debt securities Over-the-counter
2 prices are available and reference is made valued using derivatives
to observable market data. prices received measured
from external using a range
pricing providers of valuation
based on quotes models including
received from discounting
a number of future cash
market participants. flows and
option valuation
Debt securities techniques.
valued using
models and standard
valuation formulas
based on observable
market data(4)
.
----- ------------------------------------------------ ---------------------- -------------------
Level These relate primarily to interests in Debt securities N/A
3 private equity, real estate and infrastructure valued using
funds which are valued at net asset value. prices received
Underlying real estate and private equity from external
investments are generally valued in accordance pricing providers
with independent professional valuation based on a single
reports or International Private Equity broker indicative
and Venture Capital Valuation Guidelines quote.
where relevant. The underlying investments
in infrastructure funds are generally valued Debt securities
based on the phase of individual projects valued using
forming the overall investment and discounted models and standard
cash flow techniques based on project earnings. valuation formulas
based on unobservable
Where net asset values are not available market data(4)
at the same date as the reporting date, .
these valuations are reviewed and, where
appropriate, adjustments are made to reflect
the impact of changes in market conditions
between the date of the valuation and the
end of the reporting period.
Other unlisted equity securities are generally
valued at indicative share prices from
off market transactions.
----- ------------------------------------------------ ---------------------- -------------------
1. Investments in associates at FVTPL are valued in the same
manner as the Group's equity securities and interests in pooled
investment funds.
2. Where pooled investment funds have been seeded and the
investment in the funds have been classified as held for sale, the
costs to sell are assumed to be negligible. The fair value of
pooled investment funds held for sale is calculated as equal to the
observable unit price.
3. Non-performance risk arising from the credit risk of each
counterparty is also considered on a net exposure basis in line
with the Group's risk management policies. At 30 June 2022, 30 June
2021 and 31 December 2021, the residual credit risk is considered
immaterial and no credit risk adjustment has been made.
4. If prices are not available from the external pricing
providers or are considered to be stale, the Group has established
procedures to arrive at an internal assessment of the fair
value.
The fair value of liabilities in respect of third party interest
in consolidated funds and non-participating investment contracts
are calculated equal to the fair value of the underlying assets and
liabilities.
Thus, the value of these liabilities is dependent on the methods
and assumptions set out above in relation to the underlying assets
and liabilities:
-- For third party interest in consolidated funds, when the
underlying assets and liabilities are valued using readily
available market information the liabilities in respect of third
party interest in consolidated funds are treated as level 2. Where
the underlying assets and liabilities are not valued using readily
available market information the liabilities in respect of third
party interest in consolidated funds are treated as level 3.
-- For non-participating investment contracts, the underlying
assets and liabilities are predominately categorised as level 1 or
2 and as such, the inputs into the valuation of the liabilities are
observable and these liabilities are predominately categorised
within level 2 of the fair value hierarchy. Where the underlying
assets are categorised as level 3, the liabilities are also
categorised as level 3.
In addition, contingent consideration assets and contingent
consideration liabilities are also categorised as level 3 in the
fair value hierarchy. Contingent consideration assets and
liabilities have been recognised in respect of acquisitions and
disposals. Generally valuations are based on unobservable
assumptions regarding the probability weighted cash flows and,
where relevant, discount rate.
(b) Fair value hierarchy for assets and liabilities measured at
fair value other than assets backing unit linked liabilities and
unit linked liabilities
(b)(i) Fair value hierarchy for assets measured at fair value in
the statement of financial position other than assets backing unit
linked liabilities
The table below presents the Group's non-unit linked assets
measured at fair value by level of the fair value hierarchy (refer
Section 4.15(c) for fair value analysis in relation to assets
backing unit linked liabilities).
Fair value hierarchy
-------------------------------------------------------------
Total Level 1 Level 2 Level 3
--------------------- ------------------- ------------------- -------------------
30 30 31 30 30 31 30 30 31 30 30 31
Jun Jun Dec Jun Jun Dec Jun Jun Dec Jun Jun Dec
2022 2021 2021 2022 2021 2021 2022 2021 2021 2022 2021 2021
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ----- ------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Derivative financial
assets 70 6 14 2 - - 68 6 14 - - -
Equity securities and
interests in pooled
investment vehicles(1) 2,513 2,259 3,115 2,057 1,749 2,600 340 414 409 116 96 106
Debt securities(2) 218 626 961 1 2 1 216 623 959 1 1 1
--------------------------- ----- ------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Financial investments 2,801 2,891 4,090 2,060 1,751 2,601 624 1,043 1,382 117 97 107
Owner occupied property(3) 1 1 1 - - - - - - 1 1 1
Contingent consideration
asset(4) 35 21 31 - - - - - - 35 21 31
--------------------------- ----- ------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total assets at fair
value 2,837 2,913 4,122 2,060 1,751 2,601 624 1,043 1,382 153 119 139
--------------------------- ----- ------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
1. Includes GBP615m (30 June 2021: GBP975m, 31 December 2021:
GBP941m), GBP646m (30 June 2021: GBPnil, 31 December 2021: GBP840m)
and GBP451m (30 June 2021: GBP526m, 31 December 2021: GBP508m) for
the Group's listed equity investments in Phoenix, HDFC Asset
Management and HDFC Life respectively, which are classified as
significant listed investments (refer Note 4.9(a)).
2. Excludes debt securities measured at amortised cost of
GBP139m (30 June 2021: GBP261m, 31 December 2021: GBP226m) - refer
Note 4.15(d).
3. Presented in Property, plant and equipment in the condensed
consolidated statement of financial position.
4. Presented in Receivables and other financial assets in the
condensed consolidated statement of financial position.
There were no significant transfers between level 1 to level 2
during the period ended 30 June 2022 (30 June 2021: GBPnil, 31
December 2021: GBPnil). Transfers are deemed to have occurred at
the end of the calendar quarter in which they arose.
Refer Section 4.15(b)(iii) below for details of movements in
level 3.
(b)(ii) Fair value hierarchy for liabilities measured at fair
value in the statement of financial position other than unit linked
liabilities
The table below presents the Group's non-unit linked liabilities
measured at fair value by level of the fair value hierarchy.
Fair value hierarchy
-------------------------------------------------------------
Total Level 1 Level 2 Level 3
------------------- ------------------- ------------------- -------------------
30 30 31 30 30 31 30 30 31 30 30 31
Jun Jun Dec Jun Jun Dec Jun Jun Dec Jun Jun Dec
2022 2021 2021 2022 2021 2021 2022 2021 2021 2022 2021 2021
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Liabilities in respect
of third party interest
in consolidated funds 130 101 104 - - - 130 101 104 - - -
Derivative financial
liabilities 17 15 5 - - 3 17 15 2 - - -
Contingent consideration
liabilities(1) 163 164 165 - - - - - - 163 164 165
------------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total liabilities at
fair value 310 280 274 - - 3 147 116 106 163 164 165
------------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
1. Presented in Other financial liabilities in the condensed
consolidated statement of financial position.
There were no significant transfers between levels 1 and 2
during the year (30 June 2021: GBPnil, 31 December 2021: GBPnil).
Refer Section 4.15(b)(iii) below for details of movements in level
3.
(b)(iii) Reconciliation of movements in level 3 instruments
The movements during the year of level 3 assets and liabilities
held at fair value, excluding unit linked assets and liabilities
and assets and liabilities held for sale, are analysed below.
Equity securities
and interests
in
Owner occupied pooled investment
property funds Debt securities
---------------------- ----------------------
30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec
2022 2021 2021 2022 2021 2021 2022 2021 2021
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
At start of period 1 1 1 106 101 101 1 1 1
Total gains recognised
in the condensed consolidated
income statement - - - 4 5 8 - - -
Purchases - - - 17 5 24 - - -
Sales and other adjustments - - - (16) (11) (27) - - -
Foreign exchange adjustment - - - 5 (4) - - - -
Transfers in to level 3(1) - - - - - - - - -
------------------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
At end of period 1 1 1 116 96 106 1 1 1
------------------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
1. Transfers are deemed to have occurred at the end of the
calendar quarter in which they arose.
Contingent consideration Contingent consideration
asset liabilities
---------------------------- ----------------------------
30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec
2022 2021 2021 2022 2021 2021
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- -------- -------- -------- -------- -------- --------
At start of period 31 28 28 (165) (6) (6)
Total amounts recognised in
the income statement 2 - - 4 - (3)
Additions 1 21 31 (6) (155) (155)
Settlements - (34) (34) 4 6 8
Other movements 1 (3) (3) - - -
Transfer to contingent consideration
liability - 9 9 - (9) (9)
------------------------------------- -------- -------- -------- -------- -------- --------
At end of period 35 21 31 (163) (164) (165)
------------------------------------- -------- -------- -------- -------- -------- --------
For the six months ended 30 June 2022, gains of GBP10m (30 June
2021: gains of GBP5m; 31 December 2021: gains of GBP5m) were
recognised in the condensed consolidated income statement in
respect of non-unit linked assets and liabilities held at fair
value classified as level 3 at the period end, excluding assets and
liabilities held for sale. All gains were recognised in net gains
or losses on financial instruments and other income.
Transfers of equity securities and interests in pooled
investment funds and debt securities into level 3 generally arise
when external pricing providers stop providing a price or where the
price provided is considered stale. Transfers of equity securities
and interests in pooled investment funds and debt securities out of
level 3 arise when acceptable prices become available from external
pricing providers.
(b)(iv) Significant unobservable inputs in level 3 instrument valuations
The table below identifies the significant unobservable inputs
in relation to equity securities and interests in pooled investment
funds categorised as level 3 instruments at 30 June 2022 with a
fair value of GBP116m (30 June 2021: GBP96m, 31 December 2021:
GBP106m).
Fair value
----------------------
30 Jun 30 Jun 31 Dec
2022 2021 2021 Unobservable Range (weighted
GBPm GBPm GBPm Valuation technique input average)
------------------- ------ ------ ------ ------------------- -------------------- -------------------------
Net asset value A range of unobservable
statements provided inputs is not applicable
for six significant as we have determined
funds (fair that the reported
Private equity, value >GBP5m) NAV represents
real estate and and a large fair value at the
infrastructure number of smaller end of the reporting
funds 104 80 91 Net asset value funds period
------------------- ------ ------ ------ ------------------- -------------------- -------------------------
A range of unobservable
inputs is not applicable
as we have determined
that the indicative
share price from
off market transactions
represents fair
Recent off market value at the end
Other unlisted Indicative capital raising of the reporting
equity securities 12 16 15 share price transactions period
------------------- ------ ------ ------ ------------------- -------------------- -------------------------
The table below identifies the significant unobservable inputs
in relation to contingent consideration assets and liabilities
categorised as level 3 instruments at 30 June 2022 with a fair
value of (GBP128m) (30 June 2021: (GBP143m), 31 December 2021:
(GBP134m)).
Fair value
--------------------
30 31
30 Jun Jun Dec
2022 2021 2021 Valuation Range (weighted
GBPm GBPm GBPm technique Unobservable input average)
--------------- ------ ----- ----- ----------------- -------------------------------- -------------------------
Unobservable inputs relate
to probability weighted
cash flows and, where
relevant, discount rates.
The most significant
unobservable inputs relate The base scenario
to assumptions used to for Tritax contingent
value the contingent consideration
consideration related used a revenue
to the acquisition of compound annual
Tritax. For Tritax a growth rate (CAGR)
number of scenarios were from 2021 to 2026
prepared, around a base of 21%, with other
case, with probabilities scenarios using
assigned to each scenario a range of revenue
(based on an assessment growth rates around
of the likelihood of this base. The
each scenario). The value base scenario
of the contingent consideration used a cost/income
was determined for each ratio of c50%
scenario, and these were with other scenarios
then probability weighted, using a range
with this probability of cost/income
weighted valuation then ratios around
discounted from the payment this base.
date to the balance sheet The risk adjusted
date. It was assumed contingent consideration
that the timing of the cash flows have
exercise of the earn been discounted
Probability out put options between using a primary
Contingent weighted cash 2024, 2025 and 2026 would discount rate
consideration flow and where be that which is most of 3.1%. (30 June
assets and applicable beneficial to the holders 2021 and 31 December
liabilities (128) (143) (134) discount rates of the put options. 2021: 1.9%)
--------------- ------ ----- ----- ----------------- -------------------------------- -------------------------
(b)(v) Sensitivity of the fair value of level 3 instruments to changes in key assumptions
At 30 June 2022, the shareholder is directly exposed to
movements in the value of all non-unit linked level 3 instruments.
No level 3 instruments are held in in consolidated structured
entities. See Section 4.15(c) for unit linked level 3
instruments.
Sensitivities for material level 3 assets and liabilities are
provided below. Changing unobservable inputs in the measurement of
the fair value of the other level 3 financial assets and financial
liabilities to reasonably possible alternative assumptions would
not have a significant impact on profit attributable to equity
holders or on total assets.
(b)(v)(i) Equity securities and interests in pooled investment
funds
As noted above, of the level 3 equity securities and interests
in pooled investment funds, GBP104m relates to private equity, real
estate and infrastructure funds (30 June 2021: GBP80m, 31 December
2021: GBP91m) which are valued using net asset value statements. A
10% increase or decrease in the net asset value of these
investments would increase or decrease the fair value of the
investments by GBP10m (30 June 2021: GBP8m, 31 December 2021:
GBP9m).
(b)(v)(ii) Contingent consideration assets and liabilities
As noted above, the most significant unobservable inputs for
level 3 instruments relate to assumptions used to value the
contingent consideration related to the purchase of Tritax.
Sensitivities for reasonably possible changes to key assumptions
are provided in the table below.
Consequential increase/(decrease)
Assumption Change in assumption in contingent consideration liability
-------------------------- --------------------- ------------------------------------------
30 Jun 30 Jun 31 Dec
2022 2021 2021
GBPm GBPm GBPm
------------------------- ---------------------- ------------- ------------- ------------
Revenue compound annual
growth rate (CAGR) from Decreased by
2021 to 2026 5% (24) (25) (26)
Increased by
5% 17 18 19
Decreased by
Cost/income ratio 5% 9 9 10
Increased by
5% (11) (12) (12)
Decreased by
Discount rate 1% 5 7 6
Increased by
1% (5) (7) (6)
---------------------- ------------- ------------- ------------
(c) Fair value hierarchy for assets backing unit linked
liabilities and unit linked liabilities measured at fair value
The table below presents the Group's assets backing unit linked
liabilities and unit linked liabilities measured at fair value by
level of the fair value hierarchy.
Fair value hierarchy
----------------------------------------------------------------------
Total Level 1 Level 2 Level 3
30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec
2022 2021 2021 2022 2021 2021 2022 2021 2021 2022 2021 2021
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Financial investments 1,114 1,396 1,430 844 908 974 269 488 455 1 - 1
---------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total assets at
fair value backing
unit linked
liabilities 1,114 1,396 1,430 844 908 974 269 488 455 1 - 1
---------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Investment contract
liabilities 890 1,034 1,088 - - - 889 1,034 1,087 1 - 1
Third party interest
in consolidated funds 256 399 378 - - - 256 399 378 - - -
Other unit linked
liabilities(1) 5 7 3 - 2 1 5 5 2 - - -
---------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total unit linked
liabilities at fair
value 1,151 1,440 1,469 - 2 1 1,150 1,438 1,467 1 - 1
---------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
1. Excludes other unit linked liabilities not measured at fair
value of GBP5m (30 June 2021: GBP1m; 31 December 2021: GBP2m).
The financial investments backing unit linked liabilities
comprise equity securities and interests in pooled investment funds
of GBP977m (30 June 2021: GBP1,240 m; 31 December 2021: GBP1,232 m)
, debt securities of GBP135m (30 June 2021: GBP152 m; 31 December
2021: GBP191 m) and derivative financial assets of GBP2 m (30 June
2021: GBP4m; 31 December 2021: GBP7m) .
There were no significant transfers between levels 1 to level 2
during the six months ended 30 June 2022 (30 June 2021: GBPnil; 31
December 2021: GBPnil).
The movements during the period of level 3 unit linked assets
and liabilities held at fair value are analysed below.
Equity securities and
interests in Investment contract
pooled investment funds liabilities
---------------------------- -----------------------
30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec
2022 2021 2021 2022 2021 2021
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- -------- -------- -------- ------- ------ ------
At start of period 1 18 18 (1) (18) (18)
Total gains/(losses) recognised
in the condensed consolidated
income statement - - - - - -
Purchases - - 1 - - (1)
Sales - (18) (18) - 18 18
Transfers in to level 3(1) - - - - - -
-------------------------------- -------- -------- -------- ------- ------ ------
At end of period 1 - 1 (1) - (1)
-------------------------------- -------- -------- -------- ------- ------ ------
1. Transfers are deemed to have occurred at the end of the
calendar quarter in which they arose.
Unit linked level 3 assets relate to holdings in real estate
funds. No individual unobservable input is considered significant.
Changing unobservable inputs in the measurement of the fair value
of these unit linked level 3 financial assets and liabilities to
reasonably possible alternative assumptions would have no impact on
profit attributable to equity holders or on total assets.
Transfers of unit linked assets and liabilities to level 3
generally arise when external pricing providers stop providing
prices for the underlying assets and liabilities in the funds or
where the price provided is considered stale.
(d) Assets and liabilities not carried at fair value
The table below presents estimated fair values by level of the
fair value hierarchy of non-unit linked financial assets and
liabilities whose carrying value does not approximate fair value.
Fair values of assets and liabilities are based on observable
market inputs where available, or are estimated using other
valuation techniques.
As recognised in condensed
consolidated statement
of financial position
line item Fair value
------------------------------ ----------------------
30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec
2022 2021 2021 2022 2021 2021
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- --------- --------- -------- ------ ------ ------
Assets
Debt securities 139 261 226 140 267 230
Liabilities
Subordinated liabilities 707 632 644 671 683 683
------------------------- --------- --------- -------- ------ ------ ------
The estimated fair values for subordinated liabilities are based
on the quoted market offer price. The carrying value of all other
financial assets and liabilities measured at amortised cost
approximates their fair value.
4.16 Contingent liabilities and contingent assets
Legal proceedings, complaints and regulations
The Group is subject to regulation in all of the territories in
which it operates investment management and insurance businesses.
In the UK, where the Group primarily operates, the FCA has broad
powers, including powers to investigate marketing and sales
practices.
The Group, like other financial organisations, is subject to
legal proceedings, complaints and regulatory discussions, reviews
and challenges in the normal course of its business. All such
material matters are periodically reassessed, with the assistance
of external professional advisers where appropriate, to determine
the likelihood of the Group incurring a liability. Where it is
concluded that it is more likely than not that a material outflow
will be made a provision is established based on management's best
estimate of the amount that will be payable. At 30 June 2022, there
are no identified contingent liabilities expected to lead to a
material exposure.
4.17 Commitments
(a) Unrecognised financial instruments
As at 30 June 2022, the Group has committed to investing an
additional GBP112m (30 June 2021: GBP50m, 31 December 2021:
GBP105m) into funds in which it holds a co-investment interest.
(b) Capital and other commitments
As at 30 June 2022, the Group has no capital commitments other
than in relation to financial instruments (30 June 2021: GBP6m, 31
December 2021: GBP2m). In addition, commitments relating to future
acquisitions are disclosed in Note 4.2(b)(iii).
4.18 Related party transactions
In the normal course of business, the Group enters into
transactions with related parties that relate to investment
management and insurance businesses. There have been no changes in
the nature of these transactions during the period to those
reported in the Annual report and accounts for the year ended 31
December 2021.
In the six months ended 30 June 2022, there were no sales to
associates accounted for using the equity method (six months ended
30 June 2021: GBP36m, 12 months ended 31 December 2021: GBP 36 m)
and no purchases in relation to services received (six months ended
30 June 2021: GBP2m, 12 months ended 31 December 2021: GBP 2 m).
Purchases and sales in 2021 related to Phoenix prior to its
reclassification (refer Note 4.2(b)(iii) for further details).
Management fees were included in sales where the selection of the
Group as the asset manager had been made by the underlying
policyholder.
There were sales to joint ventures accounted for using the
equity method of GBP2m, (six months ended 30 June 2021: GBP2m, 12
months ended 31 December 2021: GBP 4 m). There were no purchases
from joint ventures ( six months ended 30 June 2021: GBPnil, 12
months ended 31 December 2021: GBP nil) . During the six months
ended 30 June 2022, the Group contributed capital of GBP2m ( six
months ended 30 June 2021: GBP7m, 12 months ended 31 December 2021:
GBP11m ) to a joint venture. At 30 June 2022, there was no
outstanding funding commitment to this joint venture (30 June 2021:
GBP6m, 31 December 2021: GBP2m).
4.19 Events after the reporting period
On 1 July 2022, the Company's capital redemption reserve was
cancelled in accordance with section 649 of the Companies Act 2006
resulting in a transfer of GBP1,059m to retained earnings.
On 6 July 2022 the Company announced that it would commence a
GBP300m return to shareholders. The Company announced a first phase
share buyback of up to GBP150m through on market purchases
commencing on 6 July 2022 and ending no later than 30 December
2022. As at 5 August 2022, the Company had repurchased 19,494,168
shares for a consideration of GBP31m.
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END
IR EANPPESKAEFA
(END) Dow Jones Newswires
August 09, 2022 02:00 ET (06:00 GMT)
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