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abrdn PLC Half-year Report - Part 2 of 3

09/08/2022 7:00am

UK Regulatory (RNS & others)


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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

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August 09, 2022 02:00 ET (06:00 GMT)

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