abrdn.com
Annual report
and accounts
2023
Three years ago, we set out to
fundamentally reshape our business.
Against a challenging backdrop, our
strategy has formed a company that is
better positioned for growth, driven by
the evolving needs of our clients and
customers.
Our reporting suite
This report forms part of our reporting suite.
This annual report and accounts 2023 for abrdn plc, and the
strategic report and financial highlights 2023 are published on
our website at www.abrdn.com/annualreport
Access to the website is available outside the UK, where
comparable information may be different.
Certain measures such as adjusted operating profit,
adjusted profit before tax, adjusted capital generation and
cost/income ratio, are not defined under International
Financial Reporting Standards (IFRS) and are therefore
termed alternative performance measures (APMs).
APMs should be read together with the Group’s consolidated
income statement, consolidated statement of financial position
and consolidated statement of cash flows, which are presented
in the Group financial statements section of this report. Further
details on APMs are included in Supplementary information.
See Supplementary information for details on assets under
management and administration (AUMA), net flows and the
investment performance calculation. Net flows in the Highlights
page excludes liquidity flows as they are volatile and lower
margin. It also excludes Lloyds Banking Group (LBG) tranche
withdrawals in 2022 relating to the settlement of arbitration
with LBG.
Sustainability and TCFD report
The focus of this report is to extend our
climate-related disclosure beyond our
Annual report and update on other
material sustainability topics for abrdn.
Stewardship report
Sets out our application of the 12
principles of the UK Stewardship Code,
as investors.
Modern slavery statement
Our disclosure in line with the UK Modern
Slavery Act, detailing our work to
mitigate related risks.
APM
Contents
Strategic report
At a glance 2
Chairman’s statement 6
Chief Executive Officer’s review 9
Our business model and strategy 12
Performance overview 18
Our businesses 20
Sustainability 38
Key performance indicators 60
Chief Financial Officer’s overview 62
Risk management 76
Governance
Board of Directors 82
Corporate governance statement 86
Audit Committee report 98
Risk and Capital Committee report 107
Nomination and Governance Committee report 111
Directors’ remuneration report 115
Directors’ report 135
Statement of Directors’ responsibilities 141
Financial information
Independent auditor’s report 144
Group financial statements 160
Company financial statements 271
Supplementary information 286
Other information
Glossary 300
Shareholder information 303
Forward-looking statements 304
Contact us IBC
This symbol indicates further information is available within
this document or on our corporate website.
Download this report from: www.abrdn.com/annualreport
Highlights
Adjusted operating profit
£249m
2022: £263m
IFRS loss before tax
(£6m)
2022: (£612m)
1
Full year dividend per share
14.6p
2022: 14.6p
Investment performance
(% of AUM above benchmark over three years)
42%
2022: 65%
Net flows
(Excl. liquidity and LBG)
£13.9bn
outflow
2022: £10.3bn outflow
MSCI ESG rating
AA
2022: AAA
1. Comparatives have been restated for the HASL
implementation of IFRS 17. Refer Basis of preparation
in the Group financial statements section.
APM
STRATEGIC REPORT
1abrdn.comAnnual report 2023
STRATEGIC REPORT
1abrdn.comAnnual report 2023
STRATEGIC REPORTSTRATEGIC REPORTSTRATEGIC REPORT
At a glance
1. Personal has been renamed ii and includes Personal Wealth unless otherwise stated.
Specialist asset management
Investments
Our capabilities in our Investments
business are built on the strength of
our insight – generated from wide-
ranging research, worldwide
investment expertise and local
market knowledge.
Our clients:
–
Insurance companies
–
Sovereign wealth funds
–
Independent wealth managers
–
Pension funds
–
Platforms
–
Banks
–
Family offices
Adjusted operating profit
£50m
AUM
£366.7bn
Cost/income ratio
94%
UK savings and wealth platforms
Adviser
Our Adviser business, the UK’s second
largest advised platform by AUA,
provides financial planning solutions
and technology for UK financial
advisers which enables them to
create value for their businesses and
their clients.
Our clients:
–
Financial advisers
–
Discretionary fund mana
g
ers
Adjusted operating profit
£118m
AUMA
£73.5bn
Cost/income ratio
47%
interactive investor (ii)
1
Powered by the UK’s second-largest
direct-to-consumer investment
platform, our interactive investor
business enables individuals in the UK
to plan, save and invest in the way
that works for them.
Our clients:
–
Individuals
Adjusted operating profit
£114m
AUMA
£66.0bn
Cost/income ratio
60%
Read more about our three businesses on pages 20 to 37. Overall performance
summary is included on page 70.
2 abrdn.com Annual report 2023
Our purpose
To enable our clients to be better investors
What sets us apart
A diversified business supporting clients at all financial stages
Shaped by our cultural commitments
We
p
ut the client first We are em
p
owered We are ambitious We are trans
p
arent
Industry-
leading platforms
enabling
enhanced client
service and value
Embedding
AI and
technology in
the business
Diversified, multi-
client segment
business model
creating a
resilient
organisation
Positive and
decisive action to
strengthen the
business model
Trusted brands
with strong
market positions
Strong
commitment to
sustainability and
climate action
Operating in
markets with
structural growth
characteristics
Strong balance
sheet and
shareholder
returns
Read more about our culture on pages 48 and 49.
3abrdn.comAnnual report 2023
STRATEGIC REPORT
December
2020
February
2021
March
2021
July
2021
September
2021
October
2021
December
2021
January
2022
December
2022
Acquisition of
majority interest in
Tritax, bringing
exposure and
expertise in the
fast-growing
logistics and
e-commerce
real estate
market.
Completed
April 2021.
Sale of Parmenion
Capital Partners
demonstrating
our commitment
to simplify our
operations and
reconfigure our
business for
growth.
Completed
June 2021.
Sale of Bonaccord
Capital Partners
and Hark Capital,
simplifying our
business in the
US.
Acquisition of
interactive
investor, the
UK’s leading
subscription
based D2C
investment
platform,
significantly
expanding our
Personal business.
Completed May
2022.
Purchase of
Macquarie
Delaware Funds,
adding
significant scale
to three of our
existing US
closed-end
funds.
Completed July
2023.
Reset our
relationship with
Phoenix Group
with a simplified
and extended
strategic
partnership to
manage their
assets until at
least 2031, and
sold them the
Standard Life
brand.
Standard Life
Aberdeen
officially becomes
abrdn plc, building
on our heritage
with a highly
differentiated
brand creating
unity across the
business.
Acquisition of
Finimize, with
the intention
to enable it to
become the
number one
information
platform for
modern
investors.
Monetised a 4%
holding in Phoenix,
raising £0.3bn with
the intention to
return this capital
to shareholders.
Our strategy in action
Our strategy
in action
At the start of 2021, we set out our three-year strategy to build a
diversified business that could be successful through market-cycles. We
have refocused on areas of strength, selling non-core elements with
lower growth and profitability, and making strategic and bolt-on
acquisitions to add high value capabilities.
abrdn has fundamentally transformed. We now have a differentiated
value proposition, providing full lifecycle service through our investment
content and wealth platforms.
4 abrdn.com Annual report 2023
December
2022
February
2023
February
2023
February
2023
May/
June
2023
June
2023
July/
October
2023
October
2023
December
2023
Completed
£300m share
buyback.
Commenced in
July 2022.
Delivery of Phase
2 of Adviser
Experience
Programme, one
of the largest and
most complex
changes since
we launched the
platform, making
it faster and more
flexible. Further
phases will
complete in 2024
and 2025.
Sale of remaining
shares in HDFC Life
and HDFC Asset
Management.
Since December
2020, total net
proceeds of
£2.1bn has been
generated
through these
stake sales.
Sale of US private equity
business followed by sale of
European headquartered
private equity business,
underlining our
commitment to exit
non-core businesses that
no longer align to our
overall product strategy.
US sale completed
October 2023. European
sale expected to
complete in the first half
of 2024.
Completed
£300m share
buyback.
Commenced
£150m share
buyback in June
2023, and
extended to
£300m in August
2023.
Sale of discretionary
fund management
business, concluding
that another owner
would be better
placed to invest to
deliver scale
in the business.
Completed
September 2023.
Managed Portfolio
Service team
moves to Adviser
from Personal,
unlocking greater
opportunity for
growth.
Acquisition of the
healthcare fund
management
capabilities of
Tekla, including
four NYSE listed
healthcare and
biotech thematic
closed-end funds.
Completed
October 2023.
Proposed acquisition
of four closed-end
funds from First
Trust, cementing
our position as the
third-largest
manager of
closed-end
funds globally.
Expected to
complete H1 2024.
5abrdn.comAnnual report 2023
STRATEGIC REPORT
Chairman’s statement
Adapting to
succeed in
an evolving
sector
Context is important when reviewing progress made
during 2023.
Last year, many of the headwinds facing active asset
managers grew stronger, accelerating our drive to
reshape abrdn to be more resilient within and across
economic cycles. Notably, the year saw continuation,
right across the market, of asset allocations trending
away from investment in equities, from emerging
markets and from commercial real estate, all reflecting
both changes in risk appetite as well as the re-
emergence of competing cash and liquidity products
with attractive yields, as interest rates rose markedly to
combat stubbornly high inflation.
This latter point was particularly relevant as, both in the
UK and in the US, investors could capture risk-free
returns in excess of 5% for the first time in 15 years at a
time of heightened economic uncertainty. Continuing
outflows from UK equity funds marked 43 consecutive
months of outflow, in part due to the change in risk
preference described above. Equally important was the
continuing run-off of closed defined benefit UK pension
schemes’ investment in UK listed equities, as they
completed their transition to liability driven strategies or
transferred their obligations to the insurance market.
Investment through defined contribution retirement
schemes compensated only partially, as contribution
rates are significantly lower than those of defined
benefit pension schemes and equity allocations there
are primarily to global equity products in which UK listed
companies are a very small component. Recently
released ONS figures illustrate the impact of these
structural shifts in asset allocation, evidencing that UK
pension schemes and insurers combined held only 4% of
UK listed equities, declining from around half in the early
1990s.
This structural shift in the relative importance of the UK
institutional market underlines the significance of our
recent diversification to get closer to the end investor
through investment in our Adviser and ii businesses. As
will be noted in our results for 2023, in a weak year for
our Investments business, in part due to continued
restructuring, our two platform businesses grew their
contribution to adjusted operating profit to £232m,
thereby contributing 93% of the Group total.
6 abrdn.com Annual report 2023
Macroeconomic and geopolitical backdrop
Investment activity in 2023 also faced challenges from
the macroeconomic and geopolitical environments. The
horrendous attack against Israel on October 7th
precipitated a powerful military response which is still
ongoing, with fears of a wider Middle East conflict
impacting investor sentiment. This added to concerns
over the continuing war in Ukraine. Economically, cost of
living burdens in the UK from continuing inflation
constrained the flow of funds into retail savings products
and indeed we saw some withdrawal from savings pots
as household budgets were stretched. With major
elections in 2024, notably in the US and the UK, but
extending into some 50 countries, the resulting politically
charged policy narratives added to investment
uncertainty. Helpfully, market levels improved in the final
quarter of 2023 as feared recessions seemed less likely
and inflationary threats were downgraded leading to
markets discounting earlier and larger interest rate
reductions than previously expected.
UK Capital Market restructuring initiatives and
demographic saving challenges
The decline in UK institutional participation in UK listed
equity markets referred to above, together with a
decline in new listings in London and UK listed company
departures to other listing venues deemed more
attractive, precipitated considerable attention from
within the financial industry, the media and government.
This led to a number of initiatives supported by
government, industry and the regulatory community to
remove barriers deemed to contribute to a lack of
competitiveness, as well as introducing reforms
designed to modernise UK capital markets. Of particular
note were the so-called Edinburgh Reforms, the
Mansion House Reforms as well as the work of the
Capital Markets Industry Taskforce and the FCA’s
proposed listing regime reforms.
As a leading investment business in the UK, we
supported these initiatives and believe adoption of the
measures contained within them are hugely important
to the delivery of a stronger UK economy and a more
competitive financial sector environment, through
which UK listed businesses can attract both the funding
and talent to be more successful. In 2023 we co-
sponsored a report by the think-tank New Financial that
provided an analysis of many of the key issues
underlying this agenda and we look forward to playing
our part in supporting adoption.
The Mansion House Reforms were also particularly
important in highlighting the relatively lower returns in
pooled retirement savings in the UK in defined
contribution schemes, as a consequence of both the
large number of small schemes and a lower risk
appetite within such schemes than seen in other leading
economies. The savings gap opening up from this low
risk tolerance, together with the lower mandatory
contribution rates in the UK, risk contributing to a
demographic timebomb as current generations of
scheme participants are likely to reach retirement with
inadequate funds to meet their expectations of a
comfortable retirement. Our industry along with our
regulators and policymakers need to work together to
ensure people are properly informed of the
responsibility increasingly placed on the individual to
build adequate funds to support retirement. This is a
theme where abrdn plans to have a leading voice and
we are positioning our Adviser and ii businesses to play a
prominent role; Stephen highlights the steps we are
taking in his review.
Progress on delivering on our strategic ambitions
and performance in the year
With revenue growth in 2023 expected to be very
challenging given the economic and geopolitical
backdrop described above, we set one of our priorities
for 2023 to eliminate some £75m of costs, excluding that
derived from business disposals. In part, this was
achieved through consolidating or closing sub-scale
funds and sharpening the focus of the investment
strategies offered to clients. All of this was achieved and
is discussed more fully in the Chief Executive Officer’s
review.
However, the scale of revenue reduction in 2023 as a
consequence of market levels, risk reduction by clients
to less remunerated strategies and net outflows in the
Investments business far exceeded the cost savings
achieved, leading to the continuation of an
unsatisfactory ratio of cost to revenues in the
Investments business. Performance in our other two
businesses was good and in line with our expectations
but that good performance was overshadowed by the
unsatisfactory profitability within Investments. As a
consequence, the Board spent the majority of its
meetings in 2023 analysing in detail the shape of the
Investments business against market trends and
determining what actions were necessary and within
our control to rebuild the profitability of the business on a
sustainable basis.
This culminated in the announcement made on
24 January that a more significant reorganisation
and simplification of the business than previously
contemplated was needed to address the ongoing
pressure on revenues from changing patterns of asset
allocation, in particular the greater institutional adoption
of passive and low cost thematic strategies. As
announced, the actions planned throughout 2024 and
2025 are designed to take at least £150m from the cost
base within the Investments business and from
functional costs. Stephen discusses the necessary
actions in more detail in his review.
To build a sustainable business and to grow we need to
invest at the same time and this requires reallocation of
capital resources within abrdn.
During 2023 we completed the disposal of our non-core
stakes in HDFC Life and HDFC Asset Management,
which augmented our capital position by £576m. The
sale of abrdn Capital which was announced alongside
our 2022 results completed in September 2023 at the
agreed price of £140m adding a further £124m to our
capital position. We also completed the sale of our US
private equity and venture capital business in October
and in the same month announced the sale of our
European-headquartered private equity business to
Nasdaq-listed Patria Investments. This reshaping of our
footprint and capabilities allowed us to focus on
7abrdn.comAnnual report 2023
STRATEGIC REPORT
Chairman’s statement continued
business areas where we have better growth prospects
and comparative advantage and by reducing
complexity, we are reducing costs.
As promised, we reinvested a portion of the capital
released through the above disposals to fill out gaps in
our Investments business and add technology
capabilities and marketing resources in our Adviser and
ii businesses. In October, we completed the acquisition
of the healthcare fund management capabilities of
Tekla Capital Management bringing into the Group
$2.8bn of funds under management and more
importantly, adding a distinctive capability in listed
healthcare and biotech thematic closed-end funds.
Together with other recent closed-end fund acquisitions
this positions abrdn as the third largest manager of
closed-end funds globally. Investment in our Adviser and
ii business during 2023 to build organic growth
opportunities are covered in Stephen’s review.
When we reported our results for 2022 we indicated
that our intention was to make a similar return of capital
in 2023 as had been delivered in 2022, dependent on
successful non-core stake realisation and retaining
necessary funds for investment; this we have delivered
through a further buyback of c£300m of shares and
the maintenance of the interim dividend at 7.3p per
share. The Board is recommending to shareholders a
final dividend of 7.3p per share subject to their
approval at the upcoming AGM to bring the total
return to shareholders in respect of 2023 to £567m
(2022: £595m).
We are updating one of our key performance indicators
moving forward, from adjusted capital generation to net
capital generation. This metric more closely aligns with
the dividend paying capability of the Company over the
long term.
Board
As previously announced, both Stephanie Bruce, our
CFO and Brian McBride, a non-executive director did
not seek re-election at the 2023 Annual General
Meeting at which their significant contributions to the
development of abrdn were recognised. We wish them
both well in the next stages of their careers.
In October last year, we welcomed Jason Windsor as
our new CFO. Jason joined from Persimmon plc having
spent the vast majority of his career hitherto in financial
services. His financial industry experience and expertise
were gained notably through 12 years at Aviva, latterly
as Group Chief Financial Officer. Prior to that, he spent
15 years at Morgan Stanley in both London and
Singapore, rising to be a Managing Director within its
Investment Banking Division. Jason has made an
excellent start at abrdn, and we all are looking forward
to working with him more closely in delivering our
strategy.
Catherine Bradley has advised that she will not seek re-
election at the Company’s Annual General Meeting on
24 April 2024 and will stand down from that date as a
Non-Executive Director and as Chair of the Audit
Committee. On behalf of the Board and all my
colleagues, I would like to thank Catherine for her
significant contribution to abrdn and our Board and
Committee discussions. Earlier this year Catherine took
on the chair of ii, our direct-to-consumer investments
business, and she has concluded she should dedicate
her available time commitment to this responsibility. I’m
delighted she will remain connected with abrdn through
her ii appointment where we will continue to benefit
from her breadth of consumer, financial and regulatory
experience as we continue to grow ii and the critical role
it plays within the Group.
Outlook
Given all current uncertainties, it is hard to form a clear
outlook for 2024 and beyond. Our base case assumes
no major escalation in global inflationary pressures
across the major global economies or an escalation of
geopolitical tensions and assumes policy interest rates in
the US and the UK have peaked. We assume that,
notwithstanding some harsh rhetoric inevitable in an
election year, the US-China mutually beneficial trade
relationship will remain intact. With the US appearing to
be successful in engineering a soft landing after an
aggressive succession of interest rate hikes, upside to
the global economy rests upon the US maintaining its
solid growth trajectory and China resuming its
contribution as a key driver of global growth and as a
major part of the supply chain in the transition to a lower
carbon future. Given other geopolitical tensions, the US-
China relationship remains a top issue in the investment
world. Their shared global economic leadership has led
to an understanding of mutual dependency and
notwithstanding tension over high-end semiconductors
and critical minerals, the resumption of trade dialogues
and senior visits are encouraging for the global
economy. Outlook for the UK and the rest of Europe is
more muted, with it recently being confirmed that the
UK had entered a modest recession; the investment
picture is likely to remain cautious given electoral
uncertainty and the lagging impact of wage increases
and tax changes on consumer confidence.
We enter 2024 with a clear plan of what we need to do
to build a sustainable business with good growth
prospects and an efficient cost structure; our industry is
evolving rapidly as technology enables the offer of ever
more sophisticated tailored investment themes and
solutions at low cost. Proximity to the end consumer and
an understanding of their investment preferences and
the route through which they choose to invest will be
critical. abrdn is well positioned for this evolution in terms
of the mix of our businesses and the talent and financial
resources needed to succeed.
Sir Douglas Flint
Chair
8 abrdn.com Annual report 2023
Chief Executive Officer’s review
Building a
modern
investment
company
We have continued with our determination to build a
modern investment company that is capable of thriving
in a changing marketplace. In January of 2024, we took
the next step in that process, announcing a £150m cost
transformation programme to accelerate the delivery
of a more sustainable cost base that can support
appropriate long-term profitability. The need to
continue applying downward pressure on costs was
underlined by another challenging year. Throughout
2023, the ‘higher for longer’ rate environment across
developed economies put sustained pressure on most
asset classes, and while the market now expects a
reversal over 2024, there is no doubt that we have felt
the effects in our Investments business. The upside is the
impact higher rates have had on income in Adviser and
ii, underscoring the benefits of our diversified business
model, which delivers through the economic cycle.
When we embarked on our transformation journey
back in 2021, not many would have foreseen the level of
global economic and geopolitical turmoil we have since
experienced. That has inevitably hindered our progress,
and directly impacted performance. Nonetheless, as
pages 4 and 5 demonstrate, we have moved at pace to
evolve the business and create a model that is better
suited to the modern investment landscape, better
aligned to the products and services clients will want in
the coming years and better positioned for future
growth.
A platform for growth
As we look ahead, we now have a platform to build on,
connecting our investment content capabilities on the
one hand, with our market leading wealth platforms on
the other. We are able to identify where demand is
going and react more quickly than ever, using data
sharing between businesses to design better products
and creating tailor-made solutions in Investments that
meet the needs of clients and customers in Adviser, ii,
and the wider market.
Sensitivity to rates and markets has been mitigated by
our more diverse business model. We are also well
positioned to take advantage across the group when
rates do start to come down, with a move to risk-on
giving oxygen to Investments, an easing of the cost-of-
living pressures that have impacted Adviser, and a
return of investor confidence supporting an increase in
subscriptions and trading volumes for ii.
9abrdn.comAnnual report 2023
STRATEGIC REPORT
Chief Executive Officer’s review continued
Our new transformation programme will deliver an
annualised cost reduction of at least £150m by the end
of 2025. Approximately 80% of the cost reduction
benefits will be in our core Investments business. The
programme is targeting the removal of management
layers, increasing spans of control, and reducing
overheads. We will implement this programme with
minimal impact to client service and at all times focusing
on investment performance.
2023 performance
At £249m (2022: £263m), adjusted operating profit is
down 5% on the previous year. While Adviser and ii both
increased profitability, this was more than offset by
falling revenue in Investments where market conditions
had a substantial impact, as seen across the sector.
Overall, we are reporting an IFRS profit for the year of
£12m (2022 restated: loss £546m), this improvement
reflects a reduction in impairment of intangible assets
and restructuring costs.
Our determination to manage our cost base is evident in
a 4% reduction in adjusted operating expenses, even
including a full 12 months of ii (compared to 7 months in
2022). We exceeded our target to remove £75m in cost
from the Investments business, delivering savings of
£102m in the year, and we have since set out plans for a
new transformation programme that will deliver a
material improvement to our cost/income ratio.
As detailed below, we have maintained our disciplined
approach to capital allocation in 2023. Jason outlines
our performance in detail in the Chief Financial Officer’s
overview.
A leaner and more relevant Investments business
After another year of substantial change, we finished
2023 with a leaner, more relevant Investments business.
With the sale of our US Private Equity franchise and
agreement to sell our European Private Equity franchise,
and having continued to deliver on our fund
rationalisation programme with the closure of a further
c60 funds in 2023, our more focused offering is based
upon areas of real strength and scale across public
markets and alternatives.
This simplification enabled us to go beyond our £75m
cost reduction target.
Investment performance over the three and five-year
time periods has weakened, with 42% (2022: 65%) and
52% (2022: 58%) of AUM covered by this metric ahead
of benchmark respectively. The drop in the three-year
performance reflects a challenging period for active
managers, particularly those with a quality equity
investment style with a bias towards Asia and Emerging
Markets. Our new Chief Investment Officer, Peter
Branner, who joined us in 2023, is leading a wide-ranging
programme of work to review and strengthen our
investment processes. You can read more about this
work in the Investments section on page 22.
The creation of a more focused Investments business
has been accompanied through the careful
deployment of capital in select areas where we see
good growth opportunities. Our acquisition of the fund
management capabilities of Boston-based Tekla
Capital Management has added specialist knowledge in
the healthcare and biotech sector, an area we have
identified as one of a small number of megatrends that
are expected to offer exciting investing opportunities in
the future. Alongside Tekla, the acquisition of other
closed-end funds from Macquarie and the proposed
acquisition of funds from First Trust, would collectively
add £3.6bn in AUM and strengthen abrdn’s position as
one of the world’s leading players in closed-end funds.
Leading positions in the structurally attractive UK
savings and wealth market
With an ageing population and the ongoing shift toward
individuals having to take a greater amount of
responsibility for their own financial futures, the long-
term structural growth factors underpinning the UK
savings and wealth market are well known. In that
context, owning two of the leading platform businesses
in the sector puts abrdn in a strong position, and the
work we have done this year to strengthen those
businesses for the future only adds to that potential.
While the continuation of difficult market conditions
through 2023 undoubtedly had some impact across
both our Adviser and ii businesses, this was mitigated by
increased treasury income that supported improved
adjusted operating profit in both Adviser and ii. We note
that the FCA has been considering the retention of
interest earned on cash balances and we have been
working with them to ensure they understand our
approach. We are confident that both Adviser and ii
offer clients and customers fair and transparent fee
structures.
In Adviser, 2023 saw the largest and most advanced
platform technology upgrade that we have undertaken.
As expected, this caused some disruption to service, but
by year-end service levels were returning to normal,
and we can now offer, and build upon, a far superior
user experience for our clients. As announced back in
May 2023, this will also see us roll out adviserOS this year
– a new way of delivering platform services to clients
that will enhance our proposition, extend client capacity,
and differentiate abrdn from the wider market.
The year saw our Managed Portfolio Services (MPS)
team shift to Adviser from our ii business. We anticipate
strong demand from advisers and believe there is a
significant opportunity for further growth here. The
same applies to the launch of our own on-platform SIPP
and Junior SIPP in 2024.
ii also benefited from a significant technology update in
2023 that allowed the platform to remain ahead in what
is a rapidly developing sector. While market conditions
dampened customer acquisition and trading activity,
we enjoyed the comparative resilience afforded by our
subscription model and proved our strength by
increasing our share of market trades over the year. ii
also delivered the highest net AUA inflows across UK
D2C platforms in 2023, according to Direct Matters.
Important work to optimise the business model within ii
was also delivered. The sale of our discretionary fund
management business to LGT in September underlined
our disciplined approach to capital allocation. The
simplification and integration of our Financial Planning
10 abrdn.com Annual report 2023
and ii teams showed that we can cut cost while creating
a model we can better leverage for our customers.
Another customer-led development was the launch of
our Investor Essentials and Pension Essentials products,
offering lower prices to customers with smaller
investment pots and widening out the breadth of the
market for whom ii becomes the best choice on price.
We expect these innovations, and investment in our
brand, will support higher customer acquisition over
time, especially as conditions begin to support improved
investor confidence.
Disciplined capital management
The indicative CET1 resources at 31 December 2023
were £1.5bn (2022: £1.3bn) with a coverage of 139%
(2022: 123%). This was facilitated by another year of
disciplined capital management, during which we
carefully balanced non-core divestments with a
combination of targeted investment in the business and
continued returns to shareholders.
Organic cash generation and efficient stake sales
generated £875m. Consistent with the previous year, we
returned c£600m to shareholders in the form of
dividends and share buybacks, and reinvested £152m
largely to continue growing our closed-end fund
business.
We plan to deploy surplus capital to fund the delivery of
the £150m cost savings we have outlined and may use
the proceeds from divestments to support bolt-on
acquisitions within key thematic markets. The Board’s
current intention is to pay a total annual dividend of
14.6p until it is covered at least 1.5 times by adjusted
capital generation, at which point the Board will seek to
grow the dividend in line with its assessment of the
underlying medium-term growth in profitability.
Playing our part in creating a more sustainable
world
The unfortunate sequence of global crises we have
experienced in recent years may have drawn some
attention away from the challenges we face on climate
change but the urgency around the need to respond is
only intensifying. Our Sustainable Investing team were
present for the COP28 meeting in the UAE in November
where we were encouraged by agreement for the first
time on a transition away from fossil fuels, which we
believe can be a catalyst for meaningful action. We
continue to contribute from two angles; careful
management of our own operations to limit our climate
impact, where we are exceeding our objective of a 50%
reduction in reported operational emissions by 2025
with currently a 69% reduction versus our 2018 base
year; and a deeply embedded approach to sustainable
investing that we have cultivated over many years with
an ongoing reduction being reported for 2023 in the
carbon intensity of in-scope public market and real
estate assets, meaning we are also on track to meet our
targets in this area (see page 45 for more detail).
Another key aspect of our sustainability agenda is our
commitment to offering an inclusive and supportive
working environment.
We have specific approaches in place to address
gender, ethnicity and social mobility imbalances and
recorded another successive year of reducing our
gender pay gap. You can read about our efforts in more
detail on page 53.
At a headline level, we saw overall employee
engagement remain at similar levels to last year, despite
a backdrop of challenging market conditions and
ongoing change within the business. The external
environment, coupled with the scale of change as we
transform our business, have undoubtedly been
challenging for our colleagues. Across the company
they have shown deep commitment to our clients and a
huge will to rebuild the firm’s success. On behalf of the
Board and the management team, I’d like to thank
everyone across the business for their hard work, skill
and determination.
The next phase of our progress
Over the last three years we have moved at pace to
reshape the company and create a business model that
is fit for the future. We now have more ways to win,
particularly through our enhanced exposure to the
highly attractive UK savings and wealth market, but also
with a more focused and more efficient Investments
business. This means we are already far better
equipped to address the well-known challenges facing
active asset management. However, we have also
recognised the need to go further still in transforming
our Investments business. The transformation
programme set out in January will deliver a leaner, more
profitable Investments business to go alongside our two
leading platform businesses. We are clear that there is
more work to do but we are confident in the trajectory
that we have created and the progress that we are
making. Our goal is for all three businesses to make their
appropriate contribution to Group earnings and in doing
so, create a sustainably profitable abrdn.
Stephen Bird
Chief Executive Officer
11abrdn.comAnnual report 2023
STRATEGIC REPORT
Our business model
Building a modern
investment company
Positioned for success through
the economic cycle
Driven by our purpose to enable our clients to
be better investors, we have strengthened our
business model through effective capital
management and investment to create strong
foundations for growth.
Our strengths and resources
Specialist asset manager
providing investment solutions to
meet complex needs.
Sustainable investment
considerations integral to our
investment process.
Strong UK adviser platform
offering, powered by leading
technology.
UK’s second largest direct-to-
consumer investment platform.
Strong balance sheet to drive
shareholder value.
Delivered through strong
operational processes
Controlled processes
Our control environment helps us
manage risk effectively, provide
business security and maintain
operational resilience.
Efficient operations
We are building our operating
model for agility, speed and
efficiency, supported by
technology which aims to deliver
the best possible experience.
An efficient, diversified
model
Strengthened, simplified business
– Strategic focus
– Robust governance
– Effective capital mana
g
ement
Driving investment in long-term
growth
– People
– Product
– Technolo
g
y
Structured around three
complementary businesses
Investments
Adviser
ii
Positioned to benefit from
key investment market
opportunities
Continued growth opportunities in
Asia and emerging markets, driven
by:
– Demographics
– Urbanisation
– Economic opportunity
– Wealth effect
Energy transition seen across
every industry including:
– Homes
– Transportation
– Construction
Democratisation of technology
and investment
– People empowered to shape
their own investment
decisions
1
2
3
12 abrdn.com Annual report 2023
Long-term value created
Diversified business and a strong
balance sheet support long-
term value creation
Investment in long-term growth
Payment of dividends and the
return of excess cash to
shareholders
Value shared with stakeholders
Clients
We focus on delivering outcomes that truly
matter to our clients. We draw on our expertise
and insight with the aim of delivering long-term
investment performance.
42%
Three-year investment performance
People
We aim to attract and develop the best people
for leadership roles, and to offer clear pathways
for career advancement.
54%
Employee engagement score
Society
We have important responsibilities to society
and the environment. We combine the power
of responsible investment with the positive
impact we can have through our operations.
No.1
Ranked asset manager by
World Benchmarking Alliance
Shareholders
We aim to create sustainable shareholder value
over the long term. We have a strong track
record of returning value to shareholders.
14.6p
Full year dividend
How we make money
We earn money mainly from asset
management and platform fees based
on AUMA. We also earn revenue from
subscription and trading fees, and earn
an interest margin on cash balances.
Read more in the Chief Financial Officer’s overview
on pages 62 to 75
Read more on Stakeholder engagement
on pages 54 to 56
13abrdn.comAnnual report 2023
STRATEGIC REPORT
Our strategy
A strategy for
client-led growth
A strong sustainable business means focusing on the areas where we
have the scale and expertise to win. We have four clear strategic
priorities where existing and emerging market opportunities, and the
evolving needs of our clients, align to our areas of strength.
Asia
Asia is an economic powerhouse – and there’s more to
come. Long-term economic growth requires three
things: an increasingly skilled workforce, investment in
infrastructure, equipment and technology, and
improving productivity. Asia’s emerging markets
demonstrate all three of these essential building blocks.
We remain deeply committed to growing our business
in Asia. Our track record in specialist equities, means we
are well placed to serve both clients in and outside of
Asia looking to invest in the region.
Progress
– In 2021, we launched the abrdn Sustainability
Institute in Singapore and hired René Buehlmann as
CEO Asia Pacific, and then CEO of the Investments
business in May 2023.
– In 2022, we celebrated 30 years of investing in Asia.
– We refocused our model in Asia Pacific exiting
Taiwan and Australia and introducing distribution
partnership models.
– In 2023, we launched Strength in Asia, a major brand
campaign in markets across APAC and Europe.
– We led the region on driving Sustainable investing
through the facilitation of Asia Sustainability Week.
Sustainable
investing
While scrutiny of Environment, Social and Governance
(ESG) approaches has intensified, clients still want to
invest in a way that has the potential to make a
difference as well as providing a financial return –
whether that be through powering the energy
transition, protecting biodiversity or driving positive
social change.
We have created a suite of sustainability-focused
solutions to meet client needs. We firmly believe that
active engaged investment management is integral to
providing the capital for positive change.
Progress
– In 2021, we launched our climate change fund
range. We also created a new Chief Sustainability
Officer position to ensure responsibility for this
integral theme was represented at the most senior
levels.
– In 2022, we launched our MyFolio Sustainable Index
range in support of clients’ ESG goals and our
Emerging Markets Sustainable Development
Corporate Bond passed through the $100m mark in
its first year.
– Over the course of the last two years, we have been
running an engagement programme with the
highest-financed emitters in our equity holdings,
identifying clear milestones on the path to
decarbonisation.
14 abrdn.com Annual report 2023
Alternatives
We believe we are in the foothills of the next tech
super-cycle which will see revolutions in biotech and
healthcare, clean tech, and digital assets. The best way
to access investment in these areas will be Alternatives.
Our Alternatives business includes our capabilities in
real assets, which comprises extensive global real
estate expertise, infrastructure and commodities. It also
offers clients access to major areas of European
Private Credit, as well as compelling and innovative
opportunities in the Hedge Fund sector.
Progress
– We have built out our Alternatives franchise to
significant scale with £76bn of assets, particularly in
real estate and logistics. Tritax, which we acquired in
2021 remains a leading player with two of the
biggest listed logistics funds in the market.
– In 2023, we were appointed by Border to Coast
Pensions Partnership, one of the UK’s largest asset
owner pools, to support the launch and
management of its UK Real Estate proposition.
– We have enhanced our talent and structure,
appointing new Heads of Private Credit and Real
Estate.
– We refocused the business through announcing the
sale of non-core US and European Private Equity
businesses.
UK savings
and wealth
The decline of defined benefit pensions, the significant
advice gap and an ageing society mean it is more
important than ever that UK investors have the tools
and appropriate guidance or advice.
With ii offering market-leading direct investing and our
platform providing a best-in-class proposition to the
adviser market, we have successfully repositioned our
business towards an increasingly attractive and
growing UK savings and wealth market.
Progress
– Acquisition of interactive investor brought 400,000
new customers to the abrdn group.
– Since the acquisition, ii has launched new products
and price points, including Investor Essentials and
Pensions Essentials, subscriptions at a lower price
point designed to appeal to investors with less to
invest. This makes ii the cheapest on the market for
anyone with £15,000 or more to invest.
– In 2023, we migrated 5,800 customers from
Investments to ii to better service their needs.
– In Adviser we have retained our ‘A’ rating for
financial strength from leading independent
consultancy firm AKG – with financial strength a key
consideration for advisers when selecting their
primary platform.
– In 2023, we delivered a major technology upgrade
to the platform to better service our adviser clients.
15abrdn.comAnnual report 2023
STRATEGIC REPORT
Our strategy continued
Our investments in action
As a specialist global investor with over £360bn of AUM, we
help capital meet opportunity to support the world’s ever-
changing needs. Informing our approach are a number of
megatrends that are set to influence the shaping of the
global economy, including decarbonisation, urbanisation and
infrastructure development and a shift in economic power
to the East.
London based private biopharmaceutical company
Quell Therapeutics are working to deliver
transformational and valued therapies addressing a
range of autoimmune and inflammatory diseases, as
well as preventing rejection in organ transplantation.
We are invested through two of the four closed-end
funds acquired from Boston based Tekla in 2023 to
build out our capabilities in the biotech and healthcare
sphere where technology advances and demographic
changes are set to drive growing opportunities in the
future.
Ten Boomgaard in Bruges is the first investment in
Belgium on behalf of investors in the abrdn Pan-
European Residential Property Fund (APER) which now
has assets in 30 cities across 10 countries. As demand
continues to rise for good quality housing in key
European cities, the fund successfully raised over
€100m in the last quarter of 2023.
16 abrdn.com Annual report 2023
The Mirasierra Gallery in Madrid has been recognised as
the Best Retail Park in Spain by leading industry body
Asociación Española de Centros y Parques Comerciales
(AECC). Purchased for an institutional mandate, the
Gallery brings together both retail and healthcare
centres and was constructed with a core commitment
to sustainable building management.
Power Grid Corporation of India is the country’s largest
electric power transmission utility, transmitting about
50% of the electricity used domestically. Invested in the
company through abrdn’s Asia Income fund, we see an
opportunity to benefit from infrastructure spending and
the massive push towards renewables and associated
infrastructure in India.
Wessex Internet Limited and its majority shareholder,
abrdn’s third Infrastructure Fund, ASCI III, announced
successfully securing an additional £35m funding in 2023
for the business’s long term growth plans, bolstering the
firm’s mission to provide high-speed fibre to the home,
and improved connectivity in rural areas of South-West
England.
17abrdn.comAnnual report 2023
STRATEGIC REPORT
Performance overview
1. Relates to ii (excluding Personal Wealth).
2. Comparatives have been restated for the HASL implementation of IFRS 17. Refer to Basis of preparation in the Group financial statements section.
Results impacted by continued
challenging market conditions
Market conditions remain
challenging and this is reflected
in our 2023 results.
We are taking actions to restore
our core Investments business
to a more acceptable level of
profitability.
Financial performance
summary
£1,398m
Net operating revenue
reduced by 4% to £1,398m (2022: £1,456m) with lower
revenue in Investments mainly reflecting the impact of net
outflows and adverse market conditions. This was partly
offset by growth in Adviser and ii.
£249m
Adjusted operating profit
reduced by 5% to £249m (2022: £263m) reflecting the
lower profitability in the Investments business, partly
offset by the benefit of the full 12 months contribution
from ii
1
of £127m. Excluding ii
1
, adjusted operating profit
was 38% lower than 2022 at £122m (2022: £196m).
82%
Cost/income ratio
was stable at 82% (2022: 82%) reflecting the benefit from
the efficient Adviser and ii cost models, offset by lower
revenue in Investments.
(£6m)
IFRS loss before tax
of £6m (2022: loss £612m
2
) was impacted by losses of
£178m from the change in fair value of significant listed
investments, restructuring and corporate transaction
expenses of £152m and goodwill impairments of £62m.
(£13.9bn)
Net outflows (excl. liquidity and LBG
tranche withdrawals)
of £13.9bn (2022: £10.3bn), representing (3%) of opening
AUMA, largely reflected by lower gross inflows which
included the impact of the uncertain market environment.
18 abrdn.com Annual report 2023
Capital performance
summary
£1,466m
CET1 capital resources
increased to £1,466m (2022: £1,301m), benefiting by
£576m from the remaining HDFC stake sales, partly offset
by the impact of the £300m share buyback in 2023.
£1.8bn
Cash and liquid resources
remained robust at £1.8bn (2022: £1.7bn). These
resources are high quality and mainly invested in cash,
money market instruments and short-term debt
securities.
£557m
Value of listed stakes
of £0.6bn (2022: £1.3bn) excluded from the CET1 capital
position. Reduction includes impact of final HDFC stake
sales which generated net proceeds of £0.5bn.
14.6p
Full year dividend per share
was maintained at 14.6p (2022: 14.6p). It remains the
Board’s current intention to pay a total annual dividend of
14.6p until it is covered at least 1.5 times by adjusted
capital generation.
Our capital resources provide
strength to allow investment
to grow the business and be
more efficient.
Read more about our financial and capital performance in the
Chief Financial Officer’s overview section of this report.
19abrdn.comAnnual report 2023
STRATEGIC REPORT
Our businesses – Investments
1. The investment performance calculation covers all funds that aim to outperform a benchmark, with certain assets excluded where this measure of
performance is not appropriate or expected. Further details about the calculation of investment performance are included in the Supplementary
information section.
A refocused Investments
business ready to capitalise
on areas of strength
The capabilities in our Investments business
are built on the strength of our insights, which
are generated from wide-ranging research,
worldwide investment expertise and local
market knowledge. While continuing to offer a
comprehensive range of solutions in public
markets and alternatives, we have simplified
our Investments business and refocused our
capabilities on areas where we have the scale
and specialism to capitalise on the key
themes shaping markets.
Highlights
£122.4bn
AUM from our fixed income capabilities
£23.7bn
AUM in our closed-end funds
£102m
Cost reduction in the Investments business,
exceeding the £75m target set for 2023
Investment performance
1
1 year
44%
(2022: 41%)
3 years
42%
(2022: 65%)
5 years
52%
(2022: 58%)
“Faced with industry headwinds and a challenging risk-off
environment for a second year in a row, 2023 was a difficult
year for the Investments business. However, we are taking
decisive action to stabilise flows, improve our cost/income
ratio and build the foundations for sustainable growth.
As a specialist asset manager, we continue to see compelling
opportunities across both public markets and alternatives, and
I remain confident that we can deliver value for our global
client base, particularly as markets normalise.”
René Buehlmann
CEO, Investments
Annual report 2023abrdn.com20
We are a specialist asset manager with £366.7bn in
AUM. We focus on areas where we have both the
strength and scale to capitalise on the key themes
shaping the market, through either public markets or
alternative asset classes.
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21abrdn.comAnnual report 2023
STRATEGIC REPORT
Our businesses – Investments continued
Positioning our business
to capitalise on
megatrends
Another challenging year for investors
We have continued to operate in a challenging, risk-off
environment with outflows seen across the market. The
notable drop in market values across emerging markets
(EM), fixed income and real assets has presented a
significant revenue challenge. Geopolitical and credit risk
persist, while rising interest rates have continued to drive
asset allocation into lower-risk, lower-margin debt
products and cash. With the growing adoption of passive
and index investing also disrupting traditional asset
management models, our business continues to take
active steps to not only mitigate these challenges but also
to position itself for a pivot back to growth.
Investment performance over the three-year time period
has weakened, with 42% of AUM covered by this metric
ahead of benchmark (2022: 65%). The drop in the three-
year performance reflects a challenging period for active
managers particularly those with a quality equity
investment style with a bias towards Asia and Emerging
Markets. To address these challenges, we are committed
to refining our processes by:
– Expanding our thematic equity offering and research
capabilities.
– Implementing asset class-specific process
enhancements, including refinement to valuation
approaches, portfolio construction techniques, and risk
analytics.
– Evolving our CIO governance structure and
introducing ‘Team Scans’ at asset class and desk levels
to facilitate peer review and to drive continuous
improvements.
– Focusing on strategic technology and data initiatives to
enhance analysis and process efficiency.
Despite current headwinds, clear megatrends have
developed that will dictate market dynamics in years to
come. In 2023, we continued to align ourselves to these
trends:
Urbanisation and infrastructure development: With rapid
urbanisation, and growing populations worldwide, the
demand for homes and infrastructure continues to grow,
driving capital expenditure and economic activity. We
have significant scale in real assets with £42.8bn of AUM as
at December 2023. In the logistics space, abrdn-owned
Tritax remains a leading player with two of the largest
listed logistics funds in the market. Throughout 2023, we
demonstrated momentum across infrastructure, living
and logistics, notably winning a significant mandate with
Border to Coast in June to support the launch and
management of its UK real estate proposition.
Climate change and the energy transition: Global carbon
emissions rose by another 1.1% last year, which was the
hottest year on record. However, the global energy
transition is well underway, supported by the COP28
agreement to triple renewable capacity and double
energy efficiency by 2030. We continue to evolve our
product range to capture climate commitments aiming to
respond to continued market interest in sustainable and
climate investing. In June 2023, our Climate Transition
Bond Fund secured Environmental Finance’s ‘ESG Fixed
Income Fund of the Year’ award, after being recognised
for its particular focus on climate adaptation.
Health and biotech: In October 2023, abrdn completed the
acquisition of the healthcare fund management
capabilities of Tekla Capital Management, a specialist
healthcare investment adviser. With the global healthcare
sector grappling with an ageing population and increasing
rates of chronic illnesses, such as diabetes and cancer, the
healthcare technology industry has grown rapidly. In the
United States alone, healthcare expenditure has grown at
an annual rate of 6% since the 1980s, as the US population
has surpassed 330 million and the obesity epidemic has
worsened.
Growth in Asia and emerging markets: Despite the
significant headwinds over the last two years we expect
Asia and emerging markets to remain important drivers of
global growth. Our estimates suggest that by 2035,
emerging markets will drive c75% of global growth, with
China and developing Asia alone accounting for 60% of
this. With a significant specialism in EM and Asia, where we
have operated for over 30 years, we are well positioned to
benefit from these structural growth opportunities. Despite
signs of recovery in Q4, Asia and EM performance was
subdued in 2023. However, we expect both Asia and EM to
deliver improved performances this year and next with
opportunities emerging to further capitalise on our strong
insurance heritage across the regions.
22 abrdn.com Annual report 2023
Our progress in 2023
Strengthening our team
In May 2023, we announced changes to the management
team of our Investments business with René Buehlmann
becoming sole CEO, Peter Branner joining as Chief
Investment Officer and Xavier Meyer being promoted to
Head of UK and EMEA and Chief Client Officer.
Strategic focus
In July and October we announced the sales of our US and
European Private Equity businesses, respectively with the
US sale completing in October and the European sale
expected to complete in H1 2024. These disposals will
raise over £105m for the business and reflect our strategy
to focus on areas of strength and invest in sectors with
attractive long-term dynamics.
Delivering significant cost savings
In 2022, we merged or closed c60 funds to simplify our
offering and refocus on scale. In 2023, we continued this
process closing a further c60 funds deemed to be sub-
scale, inefficient or no longer aligned with our core
strengths. While closing funds is never a simple exercise,
we have significantly progressed our fund rationalisation
programme, which was central in the cost savings
delivered across 2023. This process has also increased
scale for our existing funds, with 74% of our funds now with
over £100m in AUM (61% in 2022) and 55% with over
£200m in AUM (41% in 2022).
Our most significant headwinds this year have been in
emerging markets, Asia and Global Absolute Return
Strategies (GARS) where we have continued to see
outflows. Our EM range is well positioned to pivot to growth
once investor appetite for risk returns, and our GEM
Income fund continues its stellar track record, in which it
has performed in the top quartile of the market since
inception. We have taken action following a strategic
review to merge or close funds associated with our GARS
range, which completed in December 2023.
In addition to our fund rationalisation strategy, we
simplified our management structure, restructured our
Australian operations, and refocused our equities and
multi-asset franchises. These actions, taken in
combination, resulted in the Investments business
comfortably exceeding its £75m cost saving target with
£102m in savings delivered in 2023.
1. A subset of the abrdn product range in-scope for rationalisation.
Focusing on areas of strength
Simplifying our product range, exiting undifferentiated or
sub-scale areas, and reducing costs has allowed us to
intensify our focus on our areas of expertise in higher-
margin products and high-growth sectors with the highest
potential to deliver performance:
Fixed income: Our fixed income offering has considerable
scale with over £122bn AUM across credit, government
bond and money market funds in developed and
emerging markets. Fixed income opportunities have been
subdued in recent years by the low-yield environment, but
in 2023 we began to see this trend reverse and our
pipeline is now promising. This potential is underpinned by
performance with 81% of our fixed income capabilities
outperforming over three years, and in credit, where we
have particular strength, 99% of our assets outperforming
over the same period.
Alternatives: Real estate, infrastructure and logistics all
continue to show attractive annual growth rates and
compelling opportunities for scale players. In 2023, we
made a series of investments across European real estate
and infrastructure, with our third infrastructure fund, ASCI
III, investing in Spanish fibre networks, biomethane facilities
in Italy and regional heating and electricity in Finland. At
the end of 2023, our Alternatives business had £76.4bn in
AUM including £42.8bn in real assets, £8.8bn in private
credit and £17.1bn in funds of hedge funds and
commodity ETFs.
Closed-end funds: In 2023, we announced three significant
acquisitions in the closed-end fund (CEF) space, acquiring
five CEFs from Macquarie Asset Management, the four
listed CEFs of Tekla Capital and entering into an
agreement to acquire four CEFs from First Trust, which we
expect to complete in Q1 this year. Assuming the
completion of the First Trust funds, these acquisitions,
when taken in combination, would add £3.6bn in AUM,
strengthening our already robust CEF offering. We remain
the third largest CEF manager globally.
Significant insurance expertise: We have nearly 200 years of
heritage in pensions and insurance, and currently run
£45bn in pensions AUM globally and £179bn in insurance
assets. This expertise was recognised in the 2023 Asia
Asset Management Awards where we won ‘Best
Insurance Manager’. In 2023, our partnership with our
largest client, Phoenix Group, delivered £6bn of gross
inflows (£5.2bn net of reinsurance arrangements) from
their Bulk Purchase Annuities business and £4bn of inflows
from their Workplace Defined Contributions business.
Phoenix and abrdn continue to explore ways to mutually
benefit from and strengthen our partnership.
Funds at
the start of 2022
1
c700
Funds at
the end of
2023
1
c580
23abrdn.comAnnual report 2023
STRATEGIC REPORT
Our businesses – Investments continued
Our strategy in action in 2023
Throughout 2023 we took decisive action to simplify and refocus our
Investments business. By selectively disposing of non-core businesses, and
delivering significant cost savings, we have better positioned ourselves to
deliver growth as global market conditions normalise.
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our investment
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specialism & scale to
capitalise on key themes
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Annual report 2023abrdn.com24 Annual report 2023abrdn.com24
Jim O’Connor,
Head of the Americas
“CEF acquisitions follow our strategy of
building scale, focusing on asset classes
where we have strength, and bringing AUM
to the group in a perpetual capital
structure”
Spotlight on closed-end funds
In Q4 2023 we announced the proposed acquisition of
four CEFs from First Trust Advisors which, subject to
approval by the funds’ shareholders, represents c£600m in
additional AUM. The announcement of the deal followed
shortly after our acquisition of Tekla’s four listed CEFs
which, in combination with the five CEFs acquired from
Macquarie Asset Management earlier in the year, added
c£3bn in AUM. We spoke to Jim O’Connor, Head of the
Americas, who oversaw the Tekla deal about why abrdn
remains acquisitive in the CEF space.
Q: What was the attraction of Tekla Capital?
“As a specialist manager, we seek to deliver value in the
areas of the market where there are inefficiencies and
where active management can provide superior risk
adjusted returns.
This acquisition represents a strategic extension of our
thematics capabilities, enabling us to welcome a team of
talented investment professionals specialising in the
healthcare sector. We believe this to be an area of growth
underpinned by megatrends in the investable universe
with demographics and technological innovations driving
an ever-increasing demand for life science services.”
Q: In a year of fund rationalisation why has abrdn
been acquiring closed-end funds?
“CEFs are an area of specialism and vehicles which
support long-term investment outcomes for retail and
institutional investors that can’t be replicated by other
investment vehicles.
While CEFs are often regarded as complex structures, we
believe our experience and knowledge sets us apart from
our competitors. Our scaled operating model enables us
to look after existing CEF product ranges with the ability to
grow via the launch of new funds, secondary market
issuances, and corporate mergers and acquisitions of
funds.
In December 2023, abrdn announced that we would
invest an amount equal to up to six months’ worth of
management fees in the shares of our UK listed CEFs. The
total amount invested as part of this initiative will exceed
£30m. This exercise aims to demonstrate our strong
advocacy for the integrity of the CEF business, and our
desire to closely align ourselves with the shareholders of
the funds we manage.”
Q: abrdn has executed more listed CEF
acquisitions than any other investment manager in
the last 15 years, will this trend continue?
“Market headwinds have created a challenging
environment for CEFs, which have been trading at their
widest discount levels since the financial crisis. This has
contributed to an environment with opportunities to
acquire funds at attractive valuations. We continue to
review the marketplace for opportunities to drive
additional scale and efficiency in our key capabilities or to
add new capabilities of strategic significance.”
Our opportunities for growth
– UK pensions and global insurance: We will continue to leverage our strong partnerships and heritage to drive growth in
the pensions and insurance markets. The UK is the fourth largest pension fund market globally with £2.2tn in AUM.
– Fixed income: We have strong performance across our capabilities in this c£20tn market, we will look to leverage this
strength as market conditions become more conducive to fixed income and multi-asset products.
– Alternatives: We will bring our core capabilities across real estate, infrastructure and private credit to bear for clients
this year and beyond with our significant won not funded pipeline.
– Acquisitions: We will continue to scan the market for bolt-on acquisitions within key thematic markets, such as
biotech and healthcare.
– Group collaboration: interactive investor clients were provided early access to the IPO of the Short Dated Enhanced
Income Fund in July 2023. Building on this success, we aim to launch a range of thematic ETFs on ii in 2024.
STRATEGIC REPORT
25abrdn.comAnnual report 2023
STRATEGIC REPORT
25abrdn.comAnnual report 2023
STRATEGIC REPORTSTRATEGIC REPORT
Our businesses – Adviser
Empowering advisers to
deliver for their customers
Our Adviser business provides financial
planning solutions and technology for UK
financial advisers, enabling them to create
value for their businesses and their customers.
We offer a combination of tools and services
personalised to their needs, including access
to the full suite of investment solutions that
abrdn offers as well as a wide range of open
architecture investment options.
50%
of UK advice businesses use our platforms
420,000
Customers
2,600
Adviser firms
£73.5bn
AUMA
1
Platinum rated by
AdviserAsset
12%
AUA market share
90%
Customer satisfaction score
1. Includes Platform AUA of £70.9bn. The MPS businesses
moved from Personal Wealth to Adviser in May 2023.
Comparatives have not been restated.
“We remain committed to our strategic ambition - to be the
easiest partner for advisers do business with. We will achieve
this by providing frictionless technology and solutions that help
advisers to do business their way. Following the delivery of our
largest ever technology upgrade, our service experience is
back on track and strong foundations have been laid for faster
upgrades and deeper integrations. We have made strong
strides forward, but we’re never done. With adviserOS on the
horizon we’re just getting started.”
Noel Butwell
CEO, Adviser
Annual report 2023abrdn.com26 Annual report 2023abrdn.com26
1. The Investment Association, Investment Management in the UK 2022-2023.
Figures as at 31 December 2022 and inclusive of retail and institutional markets.
2. Fundscape Q4 Press Release, February 2024, AUMA as at 31 December 2023.
3. abrdn Adviser AUMA as at 31 December 2023. Platform AUA is £70.9bn.
4. The MPS businesses moved from Personal Wealth to Adviser in May 2023. Comparatives for 2021 and 2022 have not been restated.
5. The threesixty and MPS businesses moved from Personal Wealth to Adviser from January 2023 and May 2023 respectively.
Comparatives for 2021 and 2022 have not been restated.
A growing and dynamic market
Performance overview
Despite challenging market conditions throughout the
year, our Adviser business delivered a robust
performance, culminating in another year of revenue
and operating profit growth.
AUMA
4
Adjusted operating profit
5
Market overview
The UK adviser market is expected to grow at an annual
growth rate of 11% over the next five years
2
. With
c£590bn of advised customer assets currently on
platforms, this suggests c£995bn of assets will be on
adviser platforms in 2028. By leveraging our evolving
product and technology stack, our Adviser business is well
positioned to maintain its place as a market leader.
2021
£76.2bn
2022
£68.5bn
2021
£74m
2022
£86m
2023
£118m
2023
£73.5bn
£74bn
£590bn
£4.6tn
UK Savings and
Wealth Market
1
Adviser
Platforms
2
abrdn
Adviser
3
27abrdn.comAnnual report 2023
STRATEGIC REPORT
Our businesses – Adviser continued
Creating capacity through technology
Robust market dynamics
The rapid transition from a low inflation, low interest rate
environment to one of sustained high rates and stubbornly
high inflation has continued to impact the UK savings and
wealth market. A cost-of-living crisis has persisted
throughout the year, leading to many individuals reducing
their saving commitments, or drawing on their existing
savings to mitigate higher living costs, with off-platform
cash solutions also increasing in attractiveness.
Against this challenging backdrop it is possible to
underappreciate the significant opportunity that
continues to exist within the domestic savings and wealth
market. While savers’ propensity and ability to save has
been temporarily dampened, in times of market volatility,
high-quality advice from experienced advisers is
invaluable. Additionally, the core drivers of medium-term
flows into the market remain, including the need to invest
to counter the impact of inflation, a steady demand for
retirement planning, and the need to maximise tax
allowances in a challenging landscape. We will continue to
champion the role of independent advisers in delivering
advice and support, allowing more individuals and families
to plan, save and invest for their futures.
The democratisation of finance
There has been a continued shift in responsibility onto the
individual for their own financial affairs. Providing advisers
the flexibility to consolidate and control portfolios and
wrappers, and to access a suite of tools to manage their
customer’s finances on one platform meets this demand.
While savers now have more access to various asset
classes than ever, the complexity of their needs and a lack
of understanding of investment strategies underpins the
requirement for specialist advice.
The growing advice gap
In the UK savings and wealth market, demand for advice
continues to significantly outweigh supply, with this savings
and advice gap already running beyond 20 million people.
While just over 28,000 qualified financial advisers currently
practice in the UK, an ageing and growing population
means these advisers have faced significant capacity
constraints for many years. At abrdn, we understand that
the most efficient means of addressing this capacity
limitation is through strategic technology enhancements.
We want to empower our clients to grow their businesses
in line with their ambition. By providing an enhanced
technology solution that allows advisers to onboard and
regularly serve more customers, we not only increase their
personal capacity, but in turn address the wider advice
gap for their existing and potential customers. Research
from Investment Trends’ 2023 Adviser Technology and
Business Report noted that the average UK adviser is
currently targeting a c17% increase in their client base; our
solutions are designed to help facilitate this.
The evolution of platforms
Fragmented, archaic, and limited integration with the
advice process have made the lives of both customers
and advisers difficult. Our market-leading platform is
designed to remove technological pain-points and allow
advisers to not only onboard more customers, but also
provide them with more flexible, efficient, and
personalised services. We have built future-fit technology,
delivering a number of enhancements focused on areas
of the platform where we’ve had adviser feedback. In May,
we announced adviserOS, which we plan to launch to
market this year. adviserOS represents an extension of
services beyond platform functionality, offering additional
services to improve integration and reduce friction in the
advice process.
A vote of confidence from primary partners
We have built our significant market position by sourcing,
developing, and maintaining long-lasting relationships with
financial advice businesses of all sizes. Core to our growth
strategy is becoming the primary partner for an
increasing number of our existing and new clients. In 2023,
46% of our AUMA was held by primary partnership firms,
which highlights the confidence of our clients to place
their money with us for the long term and the benefit of
the technology updates the business has made across
the year.
28 abrdn.com Annual report 2023
Our progress in 2023
A year of transformation
This year, our Adviser business delivered the largest and
most advanced technology release we’ve ever
completed on the Wrap platform. This provided advisers
with a range of upgrades in technology, including
improved customer reporting with 30 customisable
features, a flexi-ISA product, and an improved user
interface. As with all technology upgrades of this scale, we
experienced a period of disruption as clients learned to
use the new platform. The platform is now operating as
expected, allowing advisers to fully benefit from the
improved functionality delivered.
Integration of MPS
Our Managed Portfolio Service (MPS) was previously part
of abrdn’s discretionary fund management business,
which was sold in September 2023. Our MPS range
leverages the global investment research capabilities and
expertise from the wider abrdn business, ensuring the
optimal asset allocation with componentry from the
whole market. There are three investment styles applied
across four portfolio ranges, with five risk assessed models
in each range, providing advisers with a range of solutions
to meet customer’s different investment preferences and
attitude to risk.
Over the course of the year, the MPS has now been fully
integrated into the Adviser business and with strong
demand from clients, we expect our solutions to provide a
significant growth opportunity starting this year. In
December 2023, we re-priced our abrdn MPS and
Sustainable MPS to drive this growth as we looked to
leverage our existing relationships with half of UK advice
businesses.
Preparing to launch adviserOS
In May 2023, we announced our strategic intentions for
Wrap and Elevate, upgrading our solutions to become
adviserOS. adviserOS is a new approach to platforms that
will enable advisers to achieve more for their customers. It
amplifies our position as the leader in terms of content and
experience, acting as our key differentiator in the market.
It is not a rebrand of Wrap or Elevate, but rather a new
technology-enabled solution sitting above a single
platform technology that will provide advisory firms with
access to a range of different services.
adviserOS will enable advisers to meet the challenges they
face by creating efficiency in the advice process through
better integration and workflow with the tools they
already use throughout their business. It will support
adviser businesses with tailored support and data-driven
insights, reduced keying of data and unlocking time in
front of their customers.
We have developed a prototype and are actively testing
and iterating the launch features of adviserOS with a
sample of client firms. The aim of this approach is to
ensure we’ve done enough research to genuinely
understand what works best and what matters most to
our clients before launching this year.
Delivering the abrdn SIPP
In line with adviser feedback, our next phase of platform
upgrades is to launch our new abrdn SIPP and Junior SIPP
this year. The launch of these products forms a core
element of our strategy to increase the number of
wrappers per customer amongst our existing base and
attract new clients and customers to our platform.
The new abrdn SIPP will build on the foundations laid in the
delivery of our technology upgrade and will bring the
same experience and efficiency enhancements, whilst
also enabling the bulk transfer of the existing Wrap SIPP
from Phoenix. Our SIPP will provide a significant
improvement in technology through digitisation of key
processes and straight through processing, removing
inefficiencies in client and customer journeys and the need
for paper forms.
The abrdn SIPP launch will strengthen our product offering
with a Junior SIPP, delivering an additional way for our
customers to help save for their children and
grandchildrens’ futures, whilst also laying the foundations
for relationships with the advised customers of tomorrow.
As with our Junior ISA, our Junior SIPP will be offered at nil
charge to encourage positive savings habits across
generations.
Consumer duty
As a business, we completed a thorough value for money
assessment on both abrdn Wrap and Elevate. The
assessment, which can be found on our website, confirms
that both platforms provide fair value to customers.
Financial performance
Difficult market conditions seen in 2022 persisted
throughout 2023 and, as such, flows have been impacted
market wide as inflation remained stubbornly high and as
interest rates steadily rose until August. Against these
conditions, our Adviser business saw outflows of £2.1bn
(2022: £1.6bn inflows). However, the business delivered
another year of revenue and operating profit growth,
supported by the impact of the increasing base rate
environment on cash margin throughout 2023.
Industry recognition
Our business continues to receive recognition from across
the industry. In 2023, we retained an ‘A’ rating for financial
strength from AKG, as well as a ‘Platinum’ rating from
AdviserAsset, and a ‘5 star’ rating from Defaqto for both
the Wrap and Elevate platform propositions. These
continued awards are not only a testament to the quality
of our team and solutions, but also form an important
reference point for the advisers who choose to partner
with us.
29abrdn.comAnnual report 2023
STRATEGIC REPORT
Our businesses – Adviser continued
Our strategy in action in 2023
After delivering comprehensive technology upgrades in 2023, we have
readied the Adviser business to capitalise on our position as a market
leader and to launch innovative products, including our SIPP, which will
support future growth.
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Annual report 2023abrdn.com30
Ashley Brooks,
Managing Director of DB Wood
“abrdn have a great balance of flexible
products, a well-priced distribution
platform and market leading reporting
functionality”
Why abrdn? We spoke to Ashley Brooks, the Managing
Director of DB Wood on what sets us apart from our peers.
A 44-year-old business located in Nottinghamshire, DB
Wood manages c£1bn on the behalf of around 1,500
households with over 65% of their AUA entrusted to abrdn.
Q: What are the critical factors in being a
successful financial adviser?
“Providing financial advice is essentially a people business.
In order to succeed you need to deliver high-quality,
proactive advice, set clear rules of engagement, and
maintain a commitment to doing the right thing for your
clients. Ultimately, you need to develop trust while
providing a highly personable service.”
Q: Why did you first choose abrdn to support your
business?
“We’ve been working with abrdn since 2006. We first
began working with abrdn due to your great balance of
flexible products, the well-priced distribution platform, and
your market leading reporting functionality, which allows
us to deliver on our client promises.”
Q: Why is abrdn now your primary platform
provider?
“abrdn understands our requirements and the challenges
that IFAs face in the UK. Because of this understanding, we
are able to work with you strategically to grow our
business and, more importantly, deliver the benefits of
scale that we can pass through to our client base via
reduced costs.”
Q: Is technology now the key growth driver within
the UK financial adviser market?
“Technology is an important component in delivering an
effective client service proposition. As ever, the most
important driver of growth in the market is the relationship
between client and adviser. Technology upgrades can
improve these relationships and also create capacity to
build new relationships.”
Q: How do you expect adviserOS will improve
client experience?
“We expect the adviserOS upgrade to assist our business
with its enhanced integration, personalisation,
administration efficiencies and enhanced client
proposition.”
Our opportunities for growth
– Launch of adviserOS: adviserOS will introduce a new approach to platforms, providing clients with a broader
set of tools and capabilities, in addition to the core platform technology, to drive efficiency in the advice process.
– Launch of our SIPP: Our SIPP launch is central to our strategy of increasing our wrappers per customer, with our
junior SIPP delivering an additional way for customers to help save for the futures of their families.
– Bulk transfer strategy: We will transfer existing Wrap SIPP customers from Phoenix to the abrdn platform pension,
enabling customers to benefit from the enhancements delivered.
– Grow our Managed Portfolio Service: We will leverage our reach in the UK Independent financial adviser market, in
which we hold a relationship with 50% of IFA firms in the UK, to drive growth in our MPS business.
– Group collaboration: We will leverage Finimize capability and content for our adviser partners as part of the
adviserOS upgrade.
STRATEGIC REPORT
31abrdn.comAnnual report 2023
STRATEGIC REPORT
31abrdn.comAnnual report 2023
STRATEGIC REPORTSTRATEGIC REPORT
Our businesses – ii
The UK’s leading subscription-based
D2C investment platform
The UK’s second largest direct-to-consumer
investment platform and number one flat fee
provider, interactive investor (ii), enables
individuals in the UK to plan, save and invest in
the way that works for them. The acquisition
of ii transformed abrdn, positioning us for
growth as one of the UK’s leading personal
wealth businesses with positive long-term
structural dynamics.
407,000
Total customers
1
£152,000
AUA per customer
1
£61.7bn
AUMA
1
19.3%
AUA market share
2
1. Relates to ii (excluding Personal Wealth).
2. Compeer Benchmarking Report Q3 2023.
“We are pleased with how ii has progressed this year and how
we’ve positioned ourselves to deliver better outcomes for our
growing customer base. Despite challenging conditions in the
UK savings and wealth market, through technology and
product upgrades, we have further empowered retail
investors to save for their futures.”
Richard Wilson
CEO, interactive investor
32 abrdn.com Annual report 2023
1. Investment Association, Investment Management in the UK 2022-2023.
Figures as at 31 December 2022 and inclusive of retail and institutional market.
2. Platforum D2C Market Update, September 2023, AUMA as at September 2023.
3. ii (excluding Personal Wealth) AUMA as at 31 December 2023.
4. Includes loss of £13m in Personal Wealth (2022: profit £5m).
5. Includes ii for 7 months.
Building a leading position in the UK savings and
wealth market
ii is set to benefit from structural drivers in the UK retail
investor market.
Performance overview
In its first full year as part of abrdn, ii continued to exceed
our initial expectations and displayed significant potential
for market capture and growth in 2024 and beyond.
AUMA
Adjusted operating profit
Personal Wealth
ii (excluding Personal Wealth)
£326bn
D2C
Platforms
2
£4.6tn
UK Savings and
Wealth Market
1
£62bn
Interactive
Investor
3
£13.1bn
£54.0bn
2022 Total
£67.1bn
£4.3bn
£61.7bn
2023 Total
£66.0bn
£67m
2022 Total
£72m
4,5
£127m
2023 Total
£114m
4
33abrdn.comAnnual report 2023
STRATEGIC REPORT
Our businesses – ii continued
The UK’s leading subscription-based provider
Empowering retail investors
The acquisition of ii in May 2022 fundamentally changed
abrdn as a business. ii is the UK’s second largest investment
platform for private investors and remains the leading
subscription-based provider. The business’s evolving
platform enables over 400,000 retail investors to access a
broad range of investment and savings products via
desktop, mobile app and over the phone.
ii’s subscription-based model provides a higher degree of
financial resilience than peers with percentage fee
models, however the business has not been immune from
the current subdued levels of investor confidence. ii
derives its revenue from subscription fees, trading
commissions, foreign exchange (FX) transactions and
treasury income, with trading commissions and FX most
impacted by the headwinds in the market.
A growing customer base
High inflation and interest rates affected investor
confidence throughout the year and consequently ii’s rate
of customer acquisition, however total customer numbers
grew from 402,000 to 407,000 in 2023.
Excluding the recently migrated customers from the
Investments business, Share Centre, EQi and customers
exiting due to the closure of our pension trading accounts,
customer numbers grew from 299,000 at the end of 2022
to 310,000 at the end of 2023, an increase of 4%.
As the market begins to show signs of recovery, ii intends
to attract net organic customer growth of over 5% in 2024,
driven by further platform developments, increasing SIPP
penetration, the development of our integrated Financial
Planning division and through continued investment in
brand and advertising.
Pleasingly, the business has continued to see inflows of
AUMA, with £2.9bn added in 2023, comprising £3.3bn of
inflows into ii and £0.4bn of net outflows from Personal
Wealth, which was largely due to restructuring activity
during the year. If outflows due to the exit of the pension
trading account product are excluded, ii’s net inflows
increased to £3.9bn, over 7% of opening AUA. According to
Direct Matters, ii delivered the highest net inflows across
UK D2C platforms in 2023.
Resilience in a challenging market
The cost-of-living crisis in the UK has not only lowered
customers’ propensity to save and invest but has also
contributed to a more risk-averse environment.
Investors are now more likely to move into fixed-income
securities and savings accounts, made more attractive by
a steady rise in interest rates, with the Bank of England’s
base rate peaking at 5.25% in August 2023, where it has
remained since.
Although the market as a whole saw decreased volumes,
ii’s market share of trades increased due to its active
customer base, pipeline of new services, and proposition
enhancements. While this market capture is encouraging,
transactional revenues fell 17% in 2023, reflecting lower
trade pricing from September 2023, which reduced the
charge for standard UK and US trades to just £3.99.
Growth potential
Despite relatively flat total customer numbers and
reduced trading revenue, increased treasury income and
our focus on simplification and digitalisation has supported
an increased operating margin and an improvement in
our cost efficiency. This highlights the significant growth
potential of the business. As and when the market
normalises, new customers can be onboarded at a very
low and decreasing marginal cost, so if customer numbers
grow as anticipated in the medium-term, this lean
operating model amplifies that potential for sustained
growth in profitability.
ii’s potential is further supported by the medium-to-long
term growth drivers underpinning the UK direct-to-
consumer market. The UK is the sixth largest economy in
the world and has a well-developed D2C investment
sector. The UK’s D2C industry is already worth over £300bn
and with a growing and ageing population, we are going
to see a significant intergenerational transfer of wealth
which will drive further momentum in the market.
A compelling sector
Despite some new entrants, the UK D2C platform market
retains high barriers to entry and better-known platforms
with scale and high numbers of active users, such as ii,
benefit from both economies of scale and better
developed technology stacks. UK savings and wealth
therefore remains a compelling industry to be in,
particularly as financial education and retail participation
increases.
34 abrdn.com Annual report 2023
Our progress in 2023
Introducing Financial Planning
ii’s offering has been repositioned during 2023, with the
transfer of Managed Portfolio Service to Adviser in May
2023, and the sale of the discretionary fund management
business to LGT in September 2023.
As ii has continued to grow, we have received numerous
requests for financial planning advice. One of the key
synergies outlined when abrdn acquired ii was to integrate
abrdn’s financial planning capabilities into the business.
Over the course of 2023, we have further integrated these
capabilities, and restructured our financial planning
offering, reducing headcount by 21% and closing four
offices.
Strengthening our platform
One of ii’s key growth drivers is the strength of our
platform. In a competitive market with both incumbents
and new entrants investing heavily in their technology, it is
essential that both our website and mobile app remain
ahead of the curve. In January 2023, we launched new
website infrastructure, modernising the design, improving
user experience, and making our news feed easier to
navigate.
An ever-increasing volume of trades are being made ‘in
app’, with new entrants to the market, in particular,
focusing on creating simple and engaging user interfaces.
While ii still sees the majority of investing activity taking
place via desktop rather than app, close to a fifth of all
mobile trades in the UK were done through our app,
highlighting not only the quality of our own user
experience, but the importance of continuing to invest in it.
In 2023, we continued to enhance our app capabilities,
including facilitating in-app currency conversion and
AGM/EGM voting capabilities.
– 50,000 new app downloads in 2023
– 26% increase year-on year of clients using our app
– 36% increase year-on-year of in app trades
In Q2 2023, we piloted ii community, a social trading
platform allowing users to discuss shares, compare
portfolios and get inspiration from high-performing retail
investors. The app, which will be fully rolled out in 2024 is a
social network encouraging investors to interact and to
learn from each other’s trading strategies.
Essential value
In February, ii launched Investor Essentials, an entry-level
ISA and/or trading account, designed for investors with
portfolios of under £50,000. Through the Essentials plan
customers below the £50,000 threshold pay a monthly fee
of £4.99 and benefit from free regular investing. At launch,
trading fees were £5.99, which we later reduced in
September 2023 to £3.99, to deliver further value.
Pension Essentials, which was launched in October 2023, is
an entry-level subscription plan for portfolios under
£50,000 and is now the best value pension in the UK for
saving pots over £15,000.
SIPP penetration
Increasing product penetration is a key pillar in our growth
strategy and central to this strategy is further market
capture of SIPPs. Currently, c15% of our customers hold a
SIPP account with us, an increase of 2.5% over the last
year. In 2023, for the second year running, ii was a Which
Recommended Provider of SIPPs with our growth in the
market underpinned by attractive low fees, including our
Pension Essentials plan, and our continuous development
of the customer tools and
content.
Introducing the ii’s
Despite being the UK’s second
largest investment platform for
private investors, we have
historically tracked behind our
peers in terms of brand
recognition. In 2023 we
increased investment in
marketing, culminating in Q4
with the launch of ii’s first
television advert and a
significant multi-media
campaign.
Award-winning value
In 2023, ii continued to receive
positive recognition from its
customers, partners, and
stakeholders. At year end, ii
had over 23,000 reviews on
Trustpilot, 81% of which were
five-star.
In yet another busy year for
awards, ii also won Investors
Chronicle’s Best ISA, the AIC’s
Shareholder Engagement Award for the third year
running and we were crowned ‘Investor Rights Champion’
for a second year running.
Consumer duty
In readiness for the FCA’s implementation deadline of
31 July 2023, ii ran a project to review all requirements in
alignment with the Duty’s ‘Customer Outcomes’. Areas of
focus included: customer journeys and testing of
customer communications; completion of ‘fair value’
assessments across the product range; and a review of
the ‘target market’. Changes to policy and process,
initiated by the project are now embedded within the day-
to-day operations of all functions, with ii well placed to
demonstrate compliance with Consumer Duty.
35abrdn.comAnnual report 2023
STRATEGIC REPORT
Our businesses – ii continued
Our strategy in action in 2023
In Q3 2023 over 25% of UK cash market trades in the D2C market were
made through our platform. By upgrading our technology, focusing on
delivering value and by increasing brand awareness with our first national
advertising campaign, in 2023 we laid the foundations for sustained
organic growth.
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36 abrdn.com Annual report 2023
Alain Courbebaisse,
Chief Commercial Officer
“Investment is not something that is
generally taught in schools, but it’s a life skill
that has the potential to provide financial
freedom much earlier in life.”
We asked Alain Courbebaisse, CCO of interactive
investor, about the driving factors behind launching
Investor Essentials and why he believes that investing
should be accessible to everyone. Alain joined ii in March
2023 and is responsible for leading the commercial team,
as well as leading ii’s business development and
integration activity.
Q: Why does ii use a subscription-pricing model?
“Long-term, a flat fee is just a simpler, fairer way of
providing an investment service. The beauty of flat-fee
pricing is that the more people save and grow their
investments, the more they keep. The wider market is
dominated by percentage fee-models, which see
customers paying more and more as their portfolios grow.
Direct feedback from customers and our own market
research confirms that flat-fee is savers’ preferred way to
invest, and from a business perspective, it also provides
financial resilience with our subscription revenue not being
linked to market levels.”
Q: Why did you launch Investor Essentials?
“Investment platforms can be a powerful force for positive
change when they put customer interests at the heart of
their pricing. Our flat fee has always been incredible value
for larger pots and we wanted our model to work for a
broader section of the investing public.”
Q: How have you found initial client feedback?
“Feedback from clients has been extremely positive and
became even more so in September when we increased
the maximum portfolio value to benefit from Essentials up
to £50,000 (from £30,000 at launch). We also made the
journey even simpler by onboarding all our customers
onto Essentials plans and then upgrading them when the
value of their portfolio exceeds £50,000.”
Q: What does the democratisation of investment
mean to you?
“Leaving savings sitting in a low-interest current account
or cash, particularly during periods of high inflation, means
that individuals and families across the UK are at best
missing out on the long-term potential of the stock market
and at worse seeing the value of their savings steadily
decline in real terms.
Investment is not something that is generally taught in
schools and can be quite daunting as a novice, but it’s a life
skill that has the potential to provide you financial freedom
much earlier in life. At ii we don’t just want to enable
investment; we want to actively encourage it and
you’ll certainly be seeing us continue to focus on education
this year.”
Our opportunities for growth
– Market penetration: ii continues to focus on organic growth through increased marketing and aims to continue
capturing market share, particularly from percentage-fee platforms.
– SIPP customers: Our strategy to increase SIPP market penetration continues and we are targeting 20% net growth
in SIPP customers, year-on-year.
– Implementing new solutions: New solutions including the ii Managed ISA and Managed SIPP, a digitally led financial
planning proposition, ii Community and ii360, a new platform for experienced traders, are being developed to
attract new customers to our platform.
– Group collaboration: ii will continue to collaborate with the wider abrdn business to share talent, skills, products, and
operational capability to improve the quality and breadth of investment products and services on offer to
customers right across the group.
37abrdn.comAnnual report 2023
STRATEGIC REPORT
Sustainability – Overview
Sustainability overview
Supporting our clients, our people, and a credible transition
toward a better world.
Our focus:
Environment
Climate and
nature impact
Social
People and
opportunities
Governance
Trust and
transparency
Investments
41%
In-scope public market portfolio
carbon intensity reduction versus
2019 baseline
(2022: 27%)
25%
In-scope real estate portfolio
carbon intensity reduction versus
2019 baseline
(2021: 7% increase)
Operations
69%
Operational emissions reduction
versus 2018 baseline
(2022: 70%)
Our people
54%
Employee engagement level
(2022: 50%)
43%
Female representation across
global workforce (2022: 43%)
Our communities
£2.1m
Contribution to charitable causes
(2022: £2.4m)
Our conduct
99%
Mandatory training completed
(2022: 99%)
External ratin
g
AA
MSCI ESG Rating
(2022: AAA)
38 abrdn.com Annual report 2023
ii business
Investments business
Adviser business
Operational impacts
2018
2019 20212020 2022
2024
2025
2030
2040
2023
Our operational
emissions
baseline.
69% reduction
in operational
emissions
versus baseline.
41% reduction for
in-scope public
market portfolio
carbon intensity
versus baseline.
25% reduction for
in-scope real estate
portfolio carbon
intensity versus
baseline.
ii wins AIC
Shareholder
engagement award,
supporting retail
investors to engage
with their investments.
Net Zero award from
the Scottish Financial
Enterprise for our
research papers
identifying climate
transition leaders.
'ESG fixed income fund
of the year' award from
Environmental Finance.
First
standalone
TCFD
reporting for
Adviser entity.
We intend to
publish our
Climate
Transition Plan.
Target date for
50% reduction
in operational
emissions
versus 2018.
Real estate net
zero studies
complete for
all in-scope
funds.
Target date for
50% reduction for
in-scope portfolio
carbon intensity
versus 2019
baseline.
Our portfolio
emissions
intensity
baseline.
Launched
operational
climate working
group.
Launched
investments
climate working
group.
Published our
interim operational
emissions reduction
target.
Initial pilot with the
eco-app Pawprint
to help colleagues
understand and
reduce their carbon
footprint.
Launch of our
carbon footprinting
tools for investment
desks.
Published our first
TCFD aligned
report.
First report portfolio
emissions intensity
for equities and
fixed income.
Climate performance
first included in
Executive Director
Remuneration policy.
10-year anniversary
of Environmental
Champions colleague
network.
ii integrated into
operational footprint.
ii ACE 40 list supports
retail investors to find
sustainable solutions.
Pilot biodiversity study
in partnership with
Natural History
Museum at Far Ralia
estate.
Publication of
credibility assessment
pilot research.
Launch of
engagement strategy
focused on highest
financed emitters.
Appointed Chief
Sustainability Officer
for Investments.
Target date for
operational net zero.
Published climate
change approach
document for
Investments.
Published our
long-term climate
targets for operations
and investments.
Appointed our Head
of Climate Change
Strategy and joined
the Net Zero Asset
Managers initiative.
Published our first-
year climate scenario
analysis research.
First rollout of carbon
metrics reporting for
clients, in-line with
SFDR.
Launched four climate
focused products
including our strategy
in partnership with the
Big Issue Group.
First published real
estate net zero
investment framework.
Climate - Introduction
Delivering our climate strategy
We are committed to enabling our clients and customers to achieve their
climate goals and to contribute to real world decarbonisation.
Learn more about our approach in our 2023 Sustainability and TCFD report.
39abrdn.comAnnual report 2023
STRATEGIC REPORT
Climate – Governance
Climate oversight and management
Information flow and climate-related actions during the year
Our governance framework
abrdn plc operates using a governance framework
aligned to the principles of the UK Corporate Governance
Code (2018) (page 86). Our Board of Directors oversee
the implementation of the company business model and
activities of our businesses: Investments, Adviser, and ii.
The role of our Board and Committees
The Board and Committees provide specific oversight in
relation to material business activities and challenge
management on matters, which includes climate-related
risks and opportunities. Examples of this oversight are
outlined on this page, with a focus during 2023 on non-
financial disclosure requirements and approach.
Our Executive Directors
Our Chief Executive Officer serves as the climate sponsor
for the business and bears delegated responsibility from
the Board for oversight of climate-related risks and
opportunities. Our Chief Financial Officer is incentivised
through our Executive Director Remuneration policy,
alongside our Chief Executive Officer, to achieve
sustained performance against our public targets.
Climate change working groups
Our Chief Executive Officer delegates authority from the
Board to our Executive Leadership Team, and in turn to
our climate working groups, to support the assessment of
climate-related risks and opportunities and to provide
related recommendations.
Our Head of Sustainability Insights & Climate Strategy and
Head of Corporate Environment Strategy chair two
climate-related working groups, which are key to our
climate governance structure and consist of subject
matter experts from across the business. The groups meet
to review and discuss material climate risks and
opportunities and shape strategic approaches to climate
change. These groups are key forums for identifying
matters to be escalated through the Executive Leadership
Team and to the Board for consideration. In 2023, we also
established a Climate Transition Plan Steering Group and
supporting taskforces to prepare for the publication of our
first Transition Plan. These forums supported engagement
across the business beyond our existing working group
activities.
Our wider sustainability governance
We continue to take a forward-looking view and have
taken steps to advance our governance beyond climate
and to sustainability as a whole. Additional information is
available in our Sustainability and TCFD report, available at
www.abrdn.com/annualreport
January 2023
Audit Committee review of strategy and approach for non-
financial disclosure, alongside regulatory requirements, and
forward-looking objectives.
February 2023
Audit Committee review of paper advising of controls and
processes for key sustainability disclosures related to the 2022
Annual report.
Remuneration Committee review of performance against
sustainability-related targets to inform Executive Director
remuneration.
Board noting of 2022 Sustainability and TCFD report.
June 2023
Remuneration Committee review of performance against
sustainability-related targets.
Strategic update from Chief Corporate Affairs and Investor
Relations Officer to the Board, including corporate sustainability
priorities.
October 2023
Remuneration Committee review of performance against
sustainability-related targets.
December 2023
Audit Committee review of paper advising of controls and
processes for key sustainability disclosures, as relates to the
2023 Annual report.
Strategic update from Chief Corporate Affairs and Investor
Relations Officer to the Board, including actions taken to prepare
our first Climate Transition Plan.
40 abrdn.com Annual report 2023
Climate – Strategy
Climate-related risks
and opportunities
Our climate risk and opportunity radar
Our sustainable investing opportunity
Many of our clients are interested in opportunities from
sustainable investing. This is a strategic focus for our
Investments business as we provide the solutions and insight
to enable these objectives. In early 2022 we appointed a
Chief Sustainability Officer for the business, alongside a newly
created Sustainability Group. Our focus has since been
recognised with external awards, such as Environmental
Finance’s ESG fixed income fund of the year, and the Scottish
Financial Services Award for Net Zero in 2023. We believe
there is a long-term opportunity to enable sustainable
investment for our clients and continue to invest in our people,
tools, and capabilities to support this. Conversely, we also
recognise the risk innate to shifting client preferences should
we not be positioned to meet evolving needs.
Our focus on reporting
The regulatory landscape for sustainability reporting
continues to move at pace. Due to the global nature of our
business, we are exposed to an array of emergent reporting
standards, and there is a risk of inadvertent non-compliance,
alongside costs to resource and report the required
disclosure. Our first and second-line teams continue to
monitor the regulatory landscape and we are alert to the
implications of frameworks such as ISSB and CSRD. We have
historically been an early adopter of sustainability reporting
frameworks, such as TCFD, so believe we have a strong
foundation to achieve implementation. Nevertheless, there is
a risk that we inadvertently fail to meet the expectations of
our stakeholders, with potential costs and reputational
impacts as the consequence.
Identified climate opportunities Potential financial impact to abrdn Applicability Time horizon Likelihood
Products
and services
Development of lower
carbon investment products
and services
Revenue opportunity from demand for lower-
carbon products and services
0-10 yrs Possible
Resource
efficiency
Use of more efficient
buildings, technology and
transport
Reduced operational costs
0-10 yrs Probable
Identified climate risks Potential financial impact to abrdn Applicability Time horizon Risk score
Policy
and legal
Burdensome costs and/or
regulatory non-compliance
due to enhanced reporting
regulations
Costs to gather, analyse, and publish data 0-5 yrs Medium
Costs of inadvertent non-compliance, due to
volume of global regulation
0-5 yrs High
Market
Not understanding shifts to
client and customer
preferences
Reduced revenue from decreased demand
for products and services
0-10 yrs Medium
Potential for missed opportunities due to lack
of suitable products and services
0-10 yrs Medium
Uncertainty regarding public
policy on climate change
Lack of clarity regarding the pace, direction
and evolution of public policy exacerbates
market uncertainties and associated returns
0-10 yrs Medium
Climate-related events
impact the financial markets
Volatility impacting clients and reducing
revenue and financial performance. Potential
for financial instability
0-10 yrs Medium/
High
Potential for financial market instability and
uncertainty
0-10 yrs
Medium/
High
Reputational
Increased stakeholder
concern or negative
sentiment
Reduced revenue from decreased demand
for products and services
0-5 yrs High
Costs associated with potential litigation due
to investment decisions
0-5 yrs High
Physical Increased severity of
extreme weather events
Costs associated with damage to
infrastructure, technology, and disruption to
power networks
Ongoing Medium
Costs and operational impact of non- office-
based disruption to colleagues/third party
suppliers
Ongoing Medium
Time periods for climate risk and opportunity radar:
Investments
ii
Adviser
Operational impacts
Short: 0-5 years Medium: 5-10 years Long: 10+ years
41abrdn.comAnnual report 2023
STRATEGIC REPORT
Climate – Strategy continued
Figure 1:
Estimated asset impairments
and uplifts from our latest
research
Probability weighted mean scenario,
February 2023.
Climate scenario analysis
Our approach to understanding transition pathways, within managed
investments.
Our beliefs driving our analysis
We believe climate scenario analysis is a critical tool to
enable a thorough understanding of climate-related risks
and opportunities. It is vital that we understand how
physical climate change, and the energy transition, may
potentially affect the investment returns of the companies
and markets in which we invest on behalf of clients. We
believe that doing so will support increased resilience,
enable us to encourage positive change at the companies
in which we invest, and support client objectives. However,
there is still uncertainty regarding exactly how policies,
technologies and physical impacts will unfold in the future.
Our bespoke approach
Climate scenario analysis provides the means to conduct
a forward-looking, quantitative assessment of potential
financial impacts arising from climate change. We use a
combination of 18 bespoke and industry standard
scenarios across a range of temperature rises (between
1.3 and 3.2˚C by 2100) and transition pathways up to a
time horizon of 2050. Our industry standard scenarios are
based upon those created by the Network for Greening
the Financial System (NGFS), with our bespoke approach
allowing us to incorporate plausible policy assumptions
across regions and sectors. This results in a mean scenario
that captures our view of the most plausible energy
transition. Our third-party modelling partner supports our
analysis and refinement of our insights on an annual basis.
Our approach goes further to consider the credibility of
company transition plans, using a six-factor scoring
framework developed in-house. This addresses one of the
primary challenges of scenario analysis in that companies
negatively exposed to the energy transition can also alter
their strategies and take advantage of transition
opportunities. Our credibility assessment covers
approximately 1,200 of the largest firms by sector, which
means that 79% of the 1,000 largest equities in our climate
scenario tool are covered by this assessment.
Limitations of modelling
Our framework has limitations inherent to forward-looking
analysis and assumptions. Our analysis is primarily focused
on equity and fixed income assets, and it is important to
acknowledge a reliance on external data, which though
improving, remains lacking across some regions and
sectors. Our climate scenario analysis cannot capture the
impacts from companies coming into and out of business
during the energy transition. Our baseline scenario also
assumes that the market has accurately priced transition
risks and does not account for market inefficiencies or
level of understanding of market participants. The
overriding limitation is that our exercise is a simplification of
the real world and must be reviewed alongside other
analysis to support effective decision-making.
Our insight and conclusions
Our latest insight suggests the world is not on track to
achieve Paris Agreement goals, with our analysis
suggesting that the most likely outcome is a 2.3°C world
by 2100. Our frameworkallowsus to generate forecasts on
the effects of our climate scenarios on over 24,000 equity
assets and 52,000 corporate bonds. This can be
aggregatedtosector,regional,and fund levels. However,
our core insight is that the impact from climate change is
mostly a micro phenomenon. This is because at an
aggregate level the negative impacts on individual
securities are largely offset by positive effects on others;
therefore, suggesting actionable insight comes from
looking at the dispersion across and within sectors. Figure
1 illustrates this and plots the dispersion of uplifts and
impairments across sectors using our mean scenario as
our most plausible view of the energy transition.
Resilience of abrdn as a firm
Our climate scenario analysis takes an external view to
inform our investment processes. The resilience of the
Group is explored in the Viability statement on page 74.
Health Care
Communication Services
Information Technology
Industrials
Financials
Consumer Staples
Consumer Discretionary
Utilities
Real Estate
Materials
Energy
-80% -60% -40% -20% 0% 20% 40% 60% 80% 100%
Valuation Impact
42 abrdn.com Annual report 2023
Climate – Risk management
STRATEGIC REPORT
Our climate change toolkit
Identifying and managing climate-related risks
Climate-related risk is integrated within our Enterprise Risk
Management Framework, which is subject to Board
oversight. We operate ‘three lines of defence’ with defined
roles and responsibilities across the business. Climate
change is considered amongst our principal risks and
uncertainties but is not defined as a principal risk due to its
close association with other risk categories.
In other words, we view climate risk to be material, but it is
better perceived through financial or regulatory and legal
risk categories at the enterprise level. More information on
our principal risks from pages 76-79.
Identifying and assessing climate-related risks
Our identification of climate-related risks and
opportunities is led by our first line sustainability teams, with
our Group risk assessment being based on our Enterprise
Risk Management risk impact matrix. Our Investments
business has a dedicated Sustainability Group, led by our
Chief Sustainability Officer, and we have a Corporate
Sustainability team which works closely with our
businesses to identify and manage sustainability risks and
opportunities, including those related to climate change.
Our climate risk and opportunity radar (page 41) reflects
our assessment. Climate change considerations are part
of our day-to-day risk management processes, but we
periodically revalidate our Group assessment. In January
2024, our Chief Risk Officer chaired a workshop with
representatives from across abrdn to refresh our radar.
The focus of the radar is the likelihood and impacts of risks
and opportunities, and we have mitigation, or realisation
strategies aligned to each risk or opportunity. We consider
inherent risk and quality of controls to determine a residual
risk score.
Our business is predominantly exposed to transition risk
(and opportunity) as markets, policy, and regulations
come to terms with alignment to a lower carbon world.
This is of particular significance for our Investments
business as we invest on behalf of our clients and
incorporate material climate-related risks and
opportunities into our investment processes. We believe
our Adviser and ii businesses face less direct exposure to
climate-risks, as platform versus investment management
businesses.
Managing risk with our climate change toolkit
In addition to the expertise of our sustainability and ESG
professionals, we have developed a range of tools to
integrate and inform both our internal decision-making
processes and those of our platform clients. These tools
support decision-making with data, research, and insight,
and in the case of our Investments business, are
integrated with our risk management processes.
1
It is
important to be clear that climate considerations are not
material to every investment decision, and integration
depends on the objective of the fund or strategy, nor are
tools without limitations. Supporting data is drawn from a
range of vendors with different levels of data coverage.
We aim to improve our capabilities each year.
Carbon metrics
Provides a baseline for measuring climate impact, providing an
understanding of portfolio carbon intensity and financed
emissions. This enables an understanding of climate-related
risks at portfolio, sector, and company levels.
Climate scenario analysis platform
Provides a forward-looking view on transition and physical risks
and opportunities. Enables assessment of potential financial
impacts by geography, sector, and company. Supports
portfolio construction and solution development.
Credibility assessment framework
Our framework assesses corporate net zero targets using a six-
factor scale, considering ambition, performance, readiness,
policy environment, market penetration, and governance. This
supports our identification of transition leaders.
Portfolio alignment
In 2023 we developed a portfolio alignment tool, which assesses
target design and emissions performance of 20,000+
companies. We translate the output to three alignment metrics,
with initial application to a subset of our funds.
Blueprint for Decarbonisation: Real Estate
Our direct real estate investment process is informed by 21
sustainability indicators, which include climate factors to
support the determination of risks and opportunities. This is an
input into our due diligence process.
ii ACE 40 investments
The ‘ACE 40’ list aims to support retail investors to find quality
choices among the available universe of sustainable funds
across asset classes, regions, and investment styles to allow
them to construct a global well–diversified portfolio.
Adviser platform enablement
Our platform provides access to a range of sustainable
investment options. We believe this is an increasing
consideration for advisers and provide information outlining
common types of sustainable investments on our website.
Investments
ii
Adviser
1. Further information on toolkit applicability in our 2023 Sustainability
and TCFD report, available at www.abrdn.com/annualreport
43abrdn.comAnnual report 2023
STRATEGIC REPORT
Climate – Risk management continued
Active ownership and solutions
Enabling decarbonisation through ownership and solutions
Focus on real-world decarbonisation
Our climate engagement strategy is focused on
understanding climate-related financial risks within our
holdings and driving real-world decarbonisation. One way
we can do this is through engaging with our largest
financed emitters to seek transparency on
decarbonisation milestones and to advocate for
increased disclosure. In 2022, for our public market
investments, we launched a two-year engagement
programme with our top 20 largest financed emitters. Our
expectation is that over two years we will observe
meaningful progress against climate-related milestones. If
we do not see sufficient progress against these
milestones, we will take voting action and/or consider
reducing our financial exposure, if we believe a lack of
progress represents a clear financial risk to our clients. Our
assessment of companies is informed by relevant
standards, such as the Climate Action 100+ net zero
benchmark, and our own credibility assessment
framework. We provide additional information on our
progress to date in our Stewardship report and
Sustainability and TCFD report. Available at
www.abrdn.com/annualreport
Exercising voting and ownership rights
In addition to encouraging improvement through targeted
engagement, we may take voting action at companies
that we identify as climate laggards and on climate-
related shareholder resolutions. Our public voting policy
outlines our expectations, and we disclose our voting
decisions on our website the day after a general meeting.
We use data from groups, such as CDP, to inform our
decisions and understanding.
Climate change resolutions 2023 2022
Resolutions voted 162 141
Votes in favour
40% 56%
Votes against management 55% 26%
‘Say on climate’ resolutions
We are supportive of ambitious corporate sustainability
strategies and targets but note an increasing trend
toward those strategies being tabled for shareholder
approval. While we welcome the intention of the
transparency, we believe they have the potential to dilute
board accountability and limit potential future investor
challenge. We have therefore taken the decision to
abstain from those resolutions, as we believe other
mechanisms offer more effective approaches.
Collaboration and advocacy
We are members of the Net Zero Asset Managers initiative,
the Institutional Investors Group on Climate Change (IIGCC),
the Powering Past Coal Alliance (PPCA) and Climate Action
100+. We are also research funding partners for the
Transition Pathway Initiative. Our belief is that industry
collaboration is an important mechanism to encourage
action and promote best practice. The Net Zero Investment
Framework (NZIF) from the IIGCC is the foundation for our
approach to climate solutions. We contributed toward NZIF
as part of our involvement with IIGCC.
Investment solutions in support
of climate goals
We are proactively developing climate transition and low
carbon investment solutions to align climate ambition with
investment opportunity, to help our clients achieve their
climate goals. We work with current and prospective clients
to understand and enable their objectives. Our focus is to
offer a range of options for clients, whether they have made
commitments to net zero, or are interested more broadly in
transition opportunities.
Climate considerations are incorporated to different extents
across our fund range, with our sustainability focused
solutions designed to meet four broad types of client needs.
We offer a small number of climate thematic funds, but also
apply climate-related screens, or decarbonisation targets to
other sustainability focused products. We also work directly
with clients on segregated mandates to outline how we can
support any climate-related objectives they may have. This is
in addition to using tools, such as climate scenario analysis,
and research capabilities to inform our wider investment
processes (pages 42 to 43) .
Many of our clients have set goals aligned to net zero but this
does not automatically translate to mandates. Markets and
policy environments need to align to support decarbonisation
at pace. Equally, terms like sustainability and ESG are
increasingly subject to public challenge. Against this
backdrop our Head of Sustainability Insights and Climate
Strategy spent time during 2023 speaking with clients in the
US, Australia, Singapore, Hong Kong, and at COP28; hearing
first-hand from investors as to their priorities, and highlighting
some of the risks and opportunities we have identified related
to climate change. We will continue to actively engage with
our clients in support of their objectives.
Targets & Transition
Say on Climate
Fossil Fuel Financing
Disclosure & Oversight
Lobbying
Just Transition
2023
2022
44 abrdn.com Annual report 2023
Climate – Metrics and targets
Further information available in our 2023 Sustainability and TCFD report, available at www.abrdn.com/annualreport
Strat
Portfolio decarbonisation
We are targeting a 50% reduction in the carbon intensity of in-scope
assets versus a 2019 baseline by 2030, within our Investments business.
In 2023 we report a 41% reduction in the carbon intensity of in-scope public market assets (2022: 27%), and a 25%
reduction to the carbon intensity of in-scope direct real estate assets (2021: 7% increase), versus our 2019 baselines.
Public markets: Progress to date
This is our second year of reporting against our target, with
a 41% reduction in the carbon intensity of in-scope public
market assets versus our 2019 baseline (2022: 27%). In-
scope assets include equities, fixed income, and active
quantitative strategies, with decarbonisation across each
asset class. Our progress to date is in-line with our initial
expectations, based on emission intensity trajectories from
climate scenario analysis, and we note a gradual increase
to client mandated decarbonisation in segregated
accounts, which is an important enabler to achieving our
target. We also note client inflows to low-carbon
quantitative strategies over the last three years, with these
products being a significant contributor to reducing public
market carbon intensity, due to targeting low-carbon
exposures as part of the product strategy mandate.
Real-world decarbonisation
There remain significant challenges to overcome to
achieve real-world decarbonisation, including favourable
policy environments, data availability, and client demand.
Reductions in portfolio carbon intensity may not be
attributable to real-world impact. Our strategy to drive this
change is supported by climate scenario analysis, work to
understand corporate credibility (page 42), active
ownership, and solutions development (page 44). Our
carbon target is an aggregate indicator and does not
reflect specific objectives of all clients and funds.
Additional portfolio emissions metrics
Our teams can monitor a range of carbon metrics, with
tools enabling disaggregation to specific holdings. These
metrics are not part of our target but can inform our
processes, and support climate-related risk management.
Real estate: Reporting a less volatile metric
In our 2022 disclosure we noted our intention to introduce
the calculation of real estate emissions intensity by floor
area (m
2
). This is a static denominator; whereas our
previous metric used valuation (£GAV), which can be
volatile and may less meaningfully represent the carbon
intensity of real estate assets. We are restating our data
using the floor area metric, as we believe this to be a more
credible basis to monitor our long-term target.
Drivers of change in carbon intensity
Between 2019 and 2022, we note a reduction in carbon
intensity by floor area of 25%. This can be attributed to
changes to property type composition of in-scope
portfolios, decarbonisation of UK and EU energy grids, and
more efficient management of assets. We note a
reduction by floor area of 35% to office assets, which
typically have a higher carbon intensity than other asset
types. This is often due to the proportion of landlord
procured energy (Scope 1 and 2) being higher for offices
than for retail and industrial parks, where tenants often
procure a higher proportion of energy. Changes to our
portfolio, such as this, mean that our reported reduction
cannot be directly attributed to real-world changes.
However, on a like-for-like basis (e.g. assets that were held
through 2019 and 2022), we note an 18% reduction in
carbon intensity, illustrating a carbon intensity reduction
irrespective of portfolio change.
Taking the long-term view
Our portfolio of assets is diverse, and we have a
framework to understand the actions required to support
our target. This is expected to outline transition pathways
for all our direct real estate funds by 2025, with supporting
actions to achieve real-world decarbonisation.
Public market decarbonisation 26% AUMA)
WACI: tCO
2
e/$m Revenue (Scope 1 and 2)
Real estate decarbonisation (2% AUMA)
Carbon intensity: kgCO
2
e/m
2
(Scope 1 and 2)
41% reduction
(2022: 27% reduction)
25% reduction (2021 : 7% increase)
Weighted average carbon intensity (WACI) is our method of
tracking public market decarbonisation, in line with the original
recommendations of TCFD. In-scope assets include equities, fixed
income, and active quantitative strategies.
Carbon intensity for in-scope direct real estate is normalised by
floor area and reported for the 2022 financial year. There is a
significant lag to the collection of real estate metrics from
individual assets, preventing reporting to 31 December 2023.
‘23
139.0
‘22
171.5
‘19
234.4
‘22
8.26
‘21
11.78
‘19
11.05
45abrdn.comAnnual report 2023
STRATEGIC REPORT
Climate – Metrics and targets continued
1. Operational net zero and interim reduction targets are based on reported Scope 1, 2, and 3 absolute emissions (tCO
2
e) reductions.
2. 2022 total restated to 9,550 tCO
2
e (previously 14,246 tCO
2
e) following the application of a revised method to estimate employees working from home.
3. Scope 1 emissions include natural gas, fluorinated gas, company-owned vehicles, and stationary fuel.
4. Scope 2 emissions include purchased electricity and district heating.
5. Scope 3 reported emissions do not include some emissions categories deemed to be material but where data is currently unavailable. Refer to page 47.
6. Rail and flight journeys for business travel are calculated using the GHG Protocol's distance-based method. Exclusions apply to countries in APAC, where
only Singapore and Australia are included.
7. 2022 estimate associated with employees working from home restated to 2,372 tCO
2
e (previously 7,068 tCO
2
e) due to methodology changes. Refer to
page 47.
8. Emissions intensity reporting based on FTE as of 31 December 2023 of 4,719 (2022: 5,130 and 2018: 6,192). We deem this the most applicable intensity
metric for our operational emissions footprint due to our impacts largely relating to how and where we work, e.g., offices, travel, and homeworking.
9. 2023 data subject to Independent Limited Assurance in accordance with ISAE(UK)3000 and ISAE3410 by KPMG. Assurance statement and detailed
reporting criteria included in the Sustainability and TCFD report at www.abrdn.com/annualreport
Operational targets and emissions
We are targeting operational net zero by 2040, with clear progress
versus our interim objective.
In 2023 we remained on track to meet our objective of a
50% reduction in reported operational emissions by 2025.
We report a 69% reduction versus our 2018 base year.
This is driven largely by a significant reduction to business
travel since 2018, which we attribute to the adoption of
hybrid working within abrdn, and amongst those we work
with. We also note significant declines in emissions
associated with energy use in our office since 2018, which
we have consolidated as part of wider organisational
change programmes. Year-on-year, we note an increase
in reported operational emissions by 4%.
Despite a fall in travel related emissions since our baseline
year, we note an uptick in business travel since 2022, which
is offset by reductions in energy use in our offices, and a
reduced estimate for employees working from home (see
page 47). This increased business travel demonstrates a
partial return to pre-COVID-19 working patterns, with our
challenge now to support behaviour change to address
these residual emissions. Our ways of working have
fundamentally changed, with this now fully reflected in our
corporate emissions profile. Further information, including
limitations, and reporting method provided on page 47.
Operational climate targets
1
in metric tonnes of CO
2
e (tCO
2
e)
2018
base year
2022 2023
% change
versus base year
Operational net zero by 2040
32,218 9,550
2
9,919 -69%
50% reduction in operational emissions by 2025
Scope 1 and 2 reported emissions
in metric tonnes of CO
2
e (tCO
2
e)
Scope 1
3
2,667 817 739
-72%
Scope 2 (Location based)
4
7,069 2,031 1,821
-74%
Total Scope 1 and 2 (Location based) 9,736 2,848 2,560 -74%
Scope 2 (Market based) 4,376 687 558 -87%
Scope 3 reported emissions
5
in metric tonnes of CO
2
e (tCO
2
e)
Fuel- and energy-related activities 451 150 135
Waste from operations - 5 7
Business travel
6
22,031 4,175 6,012
Employees working from home
7
- 2,372 1,205
Total Scope 3 22,482 6,702 7,359
-67%
Total energy consumption
in kilowatt-hours (kWh ‘000s)
UK energy consumption 26,658 10,639 10,746 -60%
Global energy consumption (excluding UK) 8,451 2,388 1,812 -79%
Total energy consumption 35,109 13,027 12,558
-64%
Emissions intensity metric
in metric tonnes of CO
2
e (tCO
2
e)
Scope 1 & 2 emissions intensity per full-time employee
equivalent (FTE)
8
1.57 0.56 0.54 -66%
Reported emissions by location
in metric tonnes of CO
2
e (tCO
2
e)
Scope 1
UK 2,629 776 702 -73%
Global (excluding UK) 38 41 37 -3%
Scope 2 (Location based)
UK 4,181 1,305 1,275 -70%
Global (excluding UK) 2,888 726 546 -81%
46 abrdn.com Annual report 2023
Emissions reporting
Method and supporting commentary
Operational reporting methodology
Our emissions inventory on page 46 is reported in line with
Greenhouse Gas (GHG) Protocol. We use an operational
control boundary and exclude any joint ventures and
associates. Emissions associated with our direct
operations are therefore representative of abrdn plc and
its wholly-owned and operated subsidiaries.
Scope 1 and 2 emissions categories
Scope 1 and Scope 2 emissions are captured and
converted from recorded metrics, such as kilowatt-hours
(kWh) to tonnes of carbon dioxide equivalent (tCO
2
e)
using regional guidance on conversion factors. If data is
unavailable for in-scope sites on 31 December, emissions
are estimated using comparative time periods or other
applicable methods.
Reported Scope 3 emissions categories
We report fuel and energy related activities (Category 3),
waste from operations (Category 5), business travel
(category 6), and an estimate for employees working
from home. For each category we follow GHG Protocol
guidance and prioritise the conversion of real data, such
as passenger kilometres travelled, to tCO
2
e using
applicable conversion factors. We are reliant on third
parties for the collection of some of this data, including
waste contractors and travel booking platforms. There
are also immaterial limitations linked to completeness in
that data may not always be available for our entire estate
or is subject to estimates or apportioning due to shared
offices. We prioritise reporting based on proportion FTE
and aim for continuous improvement year on year.
Other Scope 3 emissions categories
We do not currently report against all 15 categories of
Scope 3 defined by the GHG Protocol. Our assessment is
that some categories are not material due to the nature of
our operations. However, we acknowledge gaps related
to purchased goods and services (Category 1), capital
goods (Category 2), employee commuting (Category 7)
and investments (Category 15). During 2023 our
procurement function has worked to develop a Category
1 and 2 baseline, which we expect to report in future. We
also carried out an employee survey which will enable us
to establish a Category 7 baseline. Our focus for Category
15 has been to enable our clients to understand emissions
related to their portfolios and we disclose portfolio carbon
intensity metrics on page 45, with scope limited by data
coverage and availability. This does not currently include
financed emissions associated with the assets on the
abrdn balance sheet (pages 162-163). Our intention is to
disclose all material emissions categories over time.
However, our priority is to ensure the data capability to
enable client objectives. We will continue to allocate
resources with that view but expect to add to our
disclosure over time. This may result in adjustments to our
reported baseline and targets in future periods.
Restating emissions linked to homeworking
In 2022 we noted our intention to reflect on our approach to
estimating carbon emissions associated with colleagues
working from home. We continue to believe this is the right
thing to do but acknowledge the lack of an accepted
standard method to calculate those emissions. In 2023 we
have revised our approach in collaboration with our partners,
Pawprint, using an employee survey to inform the basis of the
calculation. Our 2023 figure (1,205 tCO
2
e) is significantly lower
than previous years’ estimations. This is due to a reduction in
homeworking, more nuanced analysis of home energy use
and the model now accounting for numbers of people
working from home and dividing the energy requirements per
individual. We have also restated our 2022 figures using our
new methodology with Pawprint to enable the reporting of
comparative figures.
Portfolio emissions metrics
As investors we do not have access to real-time emissions
data from companies and assets. There also remain
significant reporting gaps across some regions and sectors,
with Scope 3 reporting still to fully develop. We use Scope 1
and 2 data to track progress against our target and report
core portfolio level metrics (page 45). The source for this data
set in public markets is a specialist third-party provider,
whereas data for real estate is collected directly from those
assets. Both routes include a lag associated with data being
reported, collated, and made available to investors. Asset
classes other than listed equity, corporate credit, and real
estate remain difficult to accurately monitor due to data
availability and nascent methodologies. Our portfolio metrics
are based upon the original recommendations of TCFD, and
methods established by the Partnership for Carbon
Accounting Financials (PCAF), which we believe to be best
practice. It is also important to recognise that portfolio-
carbon metrics are subject to volatility not related to changes
in emissions, with revenues, asset values, and markets as key
drivers. We believe that tracking and reporting these metrics
is critical, but that tools such as climate scenario analysis
(page 42) are also essential to support decision-making.
47abrdn.comAnnual report 2023
STRATEGIC REPORT
People – Our commitments
Our commitments
We are:
Client first
From every seat in our business,
we understand our unique role in
enabling our clients to be better
investors, regardless of where we
fit in the organisation.
“I’m a problem solver – if I can’t find
the solution to a clients’ needs, I’ll
find someone who can (and see it
through to the end!)”
Kate Doyle
Empowered
We speak up, challenge and act.
We take ownership for our work,
we accept accountability for our
successes and, when they happen,
our failures too.
“Empowerment leads to trust and a
sense of ownership, and this can in
turn lead to increased speed of
delivery”
Will Lynch
Ambitious
We strive for exceptional
performance. We also know when
to balance pace with perfection to
get things done. We are
passionate about the positive
impact we can have on our
business.
“Ambition means constantly seeking
new and improved ways of doing
things”
Jacqueline Tan
Transparent
We have the honest and important
conversations that fuel our
performance and build trusted
relationships.
“Transparency is about being open
with people – it helps to build trust
and confidence in one another”
Jose Paulino
Meet
Kate
Meet
Will
Chief Information Security
Meet
Jacqueline
Head of Business Management
Investments, APAC
Meet
Jose
Head of Workplace & Property
Investments, Americas
48 abrdn.com Annual report 2023
People – Engagement
Embedding our commitments
Actions we are taking in support of colleague engagement
In early 2022 we set out to redefine our culture at abrdn,
which supports the delivery of our purpose and strategy.
This involved looking across the business to understand
what our colleagues feel proud of and reflecting on what
our clients need from us to deliver our strategy. Our
commitments are the output of this reimagining. Our
objective was to create an environment where colleagues
feel empowered to speak up, where we are ambitious in
what we do, but also transparent in how we go about it,
ensuring we enable our clients to be better investors.
During 2023 we have focused on integrating our
commitments into every stage of colleague experience,
supported by powerful storytelling and robust feedback
mechanisms. We have also been focused on taking
actions to improve transparency, communication, and
recognition across the organisation, with a series of
engagement programmes.
Our 2023 engagement results
Each year our annual engagement survey provides
colleagues with the opportunity to have their voices heard.
Our November 2023 survey saw 79% of our people take
part, with over 5,200 comments providing a rich picture of
how we are doing across areas of focus. Amidst a
challenging market, ongoing transformation, and
organisational change, overall colleague engagement
increased slightly to 54% (2022: 50%). We see positive
scores attributed to the roles people play, their sense of
inclusion, the nature of their work, and motivation levels.
Where we have focused, we see improvements across
2023, with increased scores around leadership, systems,
and processes. As we transform abrdn, we continue to
focus on our culture and the actions we need to take to
shape our overall colleague experience. Whilst we know
there is work to do, we are ambitious and committed to
making demonstrable progress for our people.
Talking talent series
We are focused on creating an environment where
colleagues feel abrdn is the place to grow their careers.
Building on our 2022 series we invited leaders and colleagues
to come together to share personal development stories
through ‘Talking talent’. This helps amplify our existing
learning and development programmes and illustrate
opportunities available at different career stages.
Awards and recognition
In 2022 only 44% of colleagues felt recognised for their work
in the business. We want colleagues to feel celebrated for the
extraordinary work they do, so we launched our first ‘abrdn
awards,’ with over 600 colleagues receiving a nomination
which was a great response as we came together in
celebration. In 2023 we saw an improvement to 64% of
colleagues feeling recognised for their work.
Leadership communication programme
Colleagues told us they needed to hear more from our
senior leaders. In response we launched six new
communication channels to facilitate authentic
conversations between colleagues and leaders. This
includes monthly CEO broadcasts, frequent townhalls,
and informal coffee sessions with targeted groups. We
collect feedback from these sessions and have seen
upticks to how colleagues feel about transparency and in
their understanding of our strategy.
“This is exactly what we need as staff –
honesty, transparency and the
opportunity to ask questions.”
Anonymous survey feedback
Between January 2023 and November 2023, we observed a
12% increase in collea
g
ue confidence in our leaders.
Leadership communication channels active during 2023 Leadership visibility Clarity of strategy Understanding and
connection to our
purpose
Building confidence
in our future
Equipping leaders
for success
As it is (CEO messaging)
Monthly broadcast to all colleagues
Let’s Hear It (colleagues)
Bi-monthly live Q&A with our leaders
Let’s Hear It (leaders)
Bi-monthly live Q&A with our leaders
Leader Essentials
Monthly email for all people leaders
Results
Live Q&A focused on performance
Executive Leadership Team (ELT) coffee sessions
Small informal group conversations
49abrdn.comAnnual report 2023
STRATEGIC REPORT
People – Diversity, equity & inclusion
Diversity, equity & inclusion (DEI)
We believe in the benefits of a diverse and inclusive workforce,
with different perspectives helping to improve decision making
Our strategy intends to make a positive impact across our
business and is led by our Executive Leadership Team, with
oversight from our Board. We are focused on delivering our
gender, ethnicity, and social mobility action plan, with four
guiding priorities. We also believe setting targets is an effective
way to make progress. Our targets to 2025 are outlined on
page 51, and we have introduced a senior leadership ethnicity
target, which we will begin reporting on from 2024, with the
aim to be delivered in 2027. This follows the recommendation
of the UK Government supported Parker Review. Our
approach is recognised externally, and we were delighted to
be named in the 2023 Financial Times Diversity Leader List
and be given recognition from Citywire, 100 Women in
Finance, and the Equality Group. Find out more at
www.abrdn.com/annualreport
Our four guiding priorities:
1
DEI is part of our purpose.
We embed our commitment to DEI through our
brand, culture, suppliers and partners we choose, and
the way we engage with companies we invest in.
2
Our ways of working are inclusive.
Our priority is to make sure people feel connected
and that all opportunities are equitable. Managers
lead inclusive working for hybrid teams.
3
We feel valued and included everyday.
We focus on building the capability and awareness
to drive inclusive conversations and active allyship.
4
We bring diverse talent through our organisation.
We focus on minimising any potential bias or barriers
in our processes, policies, and approach.
Our gender, ethnicity, and social mobility action plans
Gender
Achieve gender balance across all
levels of our organisation.
Ethnicity
Improving outcomes for ethnic
minority colleagues.
Social mobility
Positive outcomes for people facing
barriers in society.
What we have done:
Recruitment
Tools such as augmented writing
software for job adverts, returnship
programmes for women, and
partnerships with organisations such as
GAIN (Girls are Investors) help attract
more women into roles in our business.
Development
Introduction of development offerings for
women at early and mid-career stages.
Data
We promote accountability by providing
leaders with increasingly detailed data.
Capability
Actions taken to address barriers to
career progression, such as steps to build
our Career Framework, and creating
safe spaces to share and learn.
Colleague support
Our Balance colleague network provides
support and runs sessions on topics such
as mental health and career progression.
Policy
Our benefits policies and gender policies
are inclusive, including equal parent leave
in the UK.
What we have done:
Recruitment
Tools such as diverse interviewer pools,
and partnerships with organisations such
as 10000 Interns Foundation to help us
reach minority ethnic candidates.
Developing understanding
We produced a ‘Talk about race’ guide to
support colleagues talking openly about
race and to build inclusion.
Data
We believe industry transparency helps
drive progress and have published
ethnicity data on regional representation.
Capability
We run cultural awareness workshops
and promote ‘Human Library’ learning
opportunities.
Colleague support
Our Unity colleague network runs regular
events and provides learning
opportunities across the business.
Public commitments.
We were one of the inaugural signatories
to the Race At Work Charter in 2018 and
also joined the Corporate Call to Action
and Coalition for Equity and Opportunity.
What we have done:
Fair work
We are accredited UK Living Wage and
Living Hours employers.
Recruitment
We have partnerships with organisations
such as SEO London to help us reach
candidates from different economic
backgrounds.
Developing understanding
We produced a ‘Talk about class’ guide to
support colleagues talking openly about
social mobility issues.
Data
We have embedded social mobility
questions into our recruitment processes
to deepen our understanding.
Colleague support
Our NextGen colleague network runs
regular events across the business.
Working across our industry
We work collaboratively with groups
including the Living Wage Foundation.
These collaborations help us share best
practice and encourage cross industry
working.
Example actions from our business to support inclusivity:
Active ownership and gender diversity
In 2023 we wrote to 16 US companies to
outline our minimum expectation of 30%
female representation on boards of
companies with a market capitalisation
of $10bn or more. In total we took voting
action at 90 US companies due to board
gender diversity concerns.
Adviser
In 2023 our Client Engagement Hub
piloted the use of biometric technology,
which can monitor stress levels at work.
We hope to identify insights from the data
to support colleague wellbeing, and to
help us be client first, through increased
learning, or training, on common themes.
ii and Pension Essentials
In 2023 we launched Pension Essentials,
expanding our Which? Recommended
SIPP pension product to provide lower
fees for pots under £50,000. Our Great
British Retirement survey supports this
need, finding that 76% of self-employed
people are paying nothing into a pension.
50 abrdn.com Annual report 2023
1. Gender for Board members is self-reported.
2. Gender for executive management is obtained from self-reported employee records.
3. Senior positions on the abrdn plc Board are Chief Executive Officer, Chief Financial Officer, Senior Independent Director, and Chair.
4. Executive management team includes Executive Leadership Team and excludes administration roles.
5. Ethnicity data for Board and executive management is self-reported (using local census data categories and collected where legally possible).
6. Includes one individual based in a country where we do not collect diversity data.
7. Relates to Directors of the Company's direct subsidiaries as listed in Note 44(a) of the Group financial statements and not otherwise classified above.
8. Senior leadership includes Company Secretary but excludes administration roles, and individuals on garden leave.
9. 63 colleagues without gender data on our people system are excluded from the headcount data (2022: 60).
Diversity targets
We have set 2025 targets to
improve diversity across abrdn
Our diversity targets have been in place since 2020 and
those relating to our Board members are consistent with
the FCA reporting requirements introduced in 2022. We
go further and report additionally on gender
representation across our global business, and senior
leadership teams. We note that, as part of organisational
redesign, reductions in total headcount correlate with a
reduction in gender representation for our senior
leadership population. We know there is much more to do
and remain committed to our targets and actions.
Statement of the extent of consistency with the FCA
Listing Rules requirements for reporting Board
diversity
As of 31 December 2023, 40% of the abrdn plc Board
identified as women, with 1 Director identifying as from a
minority ethnic background. This information is self-reported
by Board members. No senior positions on the abrdn plc
Board, as defined by FCA LR 9.8.6 R(9), were held by women
on the reference date. This represents a change from 2022
due to a change of Chief Financial Officer during the period.
Other senior roles retain continuity between periods. abrdn
is committed to diversity, equity, and inclusion and Board
appointments are always with due regard to the benefits of
diversity. The Board continues to support its Diversity
Statement. Further detail on pages 92-93.
abrdn plc Board
Target: 40% women, 40%
men, 20% any gender by 2025
Women
Men
2022
45%
5 (of 11)
55%
6 (of 11)
2023
40%
4 (of 10)
60%
6 (of 10)
Senior leadership
8
Target: 40% women, 40%
men, 20% any gender by
2025 (CEO-1 and 2)
Women Men
2022 39%
(of 132)
61%
(of 132)
2023
34%
(of 96)
66%
(of 96)
Global workforce
9
Target: 50% gender balance
(+/-3% tolerance) by 2025
Women Men
2022
43%
(of 5,147)
57%
(of 5,147)
2023
43%
(of 4,742)
57%
(of 4,742)
abrdn plc Board
Ambition: 2 Directors
identifying as minority ethnic
by 2025
Minority Majorit
y
2022
9%
1 (of 11)
91%
1 (of 11)
2023
10%
1 (of 10)
90%
1 (of 10)
Board and executive management
gender representation
1,2
Number of
Board
members
Percentage
of the Board
Number of senior
positions on
the Board
3
Number
in executive
management
4
Percentage
of executive
management
Men 6 60% 4 12 86%
Women 4 40% - 2 14%
Board and executive management
ethnic representation
5
White British or other White (including minority-white groups) 9 90% 4 10 71%
Asian/Asian British 1 10% - 1 7%
Not specified/prefer not to say
6
- - - 3 21%
Subsidiary Director
gender representation
7
Number
of Subsidiary
Directors in 2023
Percentage
of Subsidiary
Directors in 2023
Number
of Subsidiary
Directors in 2022
Percentage
of Subsidiary
Directors in 2022
Men 16 (of 30) 53% 13 (of 25) 52%
Women 14 (of 30) 47% 12 (of 25) 48%
2023 data subject to Independent Limited Assurance in accordance with
ISAE(UK)3000 and ISAE3410 by KPMG. Assurance statement and
detailed reporting criteria included in the Sustainability and TCFD report
at www.abrdn.com/annualreport
2023
2022
2023
2022
2023
2022
2023
2022
51abrdn.comAnnual report 2023
STRATEGIC REPORT
People – Talent
Identifying, attracting
and retaining talent
We segment the approach we take to talent, which helps us focus
on specific DEI and development priorities for each career stage
Identifying, attracting and retaining the best talent for our
business is fundamental to our strategy. Through a period
of transformation, we have continued to prioritise the
importance of inclusive recruitment with our Hiring for
Success interviewer training programme. This equips our
hiring communities to identify and mitigate potential
biases. Colleagues can also volunteer to be part of our
Diverse Interviewer Pool, which we expanded during 2023.
Our role profiles are monitored for non-inclusive language
using technology, and we use personalised automated
onboarding to keep successful candidates engaged in
advance of their start dates.
Early careers
Our focus is to build and maintain diverse early careers
talent globally. We work with partners to reach talent who
may not be attracted to opportunities in our industry. In
2023 we became a corporate sponsor of GAIN and
provided internships to members. We also committed to
offering internships via the Able Intern Programme, which
seeks to address the underrepresentation of disabled
talent in the UK. In 2023 our graduate intake was 44%
identifying as female (2022: 61%) and 19% identifying as
from a minority ethnic background (2022: 26%). Also, 78%
of our UK trainees attended a state school (2022: 72%).
Mid-career
We aim to identify a strong talent pipeline and
demonstrate the value of growing our internal talent, with
around 31% of our roles being filled internally. We have
development programmes targeted toward mid-career
colleagues, also with courses run specifically for women.
We also continued to run our Returners Programme, for
the third-consecutive year.
Senior career
All our search partners for senior talent are obliged to
present diverse candidates as part of the recruitment
process. We also look to ensure our Executive Leadership
Team succession pipeline has the breadth and diversity of
experience needed to deliver our strategy. This has
shaped our ‘Future Leaders’ programme, which is entering
into its second cohort and is designed to include learning
tailored to strategic objectives.
Developing talent with our learning strategy
There is no one-size-fits-all approach to learning. We aim
to give all our colleagues the tools and resources they
need to take control of their development, and to support
the delivery of our strategy. Our aim is to:
– Develop skills and capabilities to support our strategy.
– Support colleagues to build successful careers.
– Create engagement in our organisation.
Technology is at the heart of our learning strategy,
allowing us to create an inclusive approach to
development while also managing costs and the
environmental impact of travel. Virtual classroom sessions
and digital resources are established mechanisms for
delivering courses and content.
Our Leadership Academy
Launched in 2023, our Leadership Academy takes a
segmented approach to ensure we develop leadership skills
at every career stage. We have developed programmes on
the following themes:
Leading self
Devoting time and energy to self-development. Topics
include: collaboration, creativity, and problem solving.
Leading others
Building the ability to get the best from others. Topics include:
coaching, developing others, and strategic thinking.
Leading the business
Inspiring others to build for the future. Topics include:
storytelling, personal impact, strategy, and empowering
inclusivity.
The development of our academy was informed directly by
colleague feedback, as we aim to amplify opportunities
available at all career stages. We collate continuous feedback
and track KPIs for our all programmes. We provide additional
detail in our Sustainability and TCFD report, available at
www.abrdn.com/annualreport
In addition to our Academies, we continue to provide
graduate, school leaver and internship programmes, each
of which have dedicated development support, including
apprenticeships and professional qualifications. We also
have a process for employees to apply for funding for
external courses and qualifications. We work across the
business to identify organisational needs on an ongoing
basis and colleague feedback is central to our approach.
Achieving the right blend of human and digital learning
opportunities continues to be a key focus as we support
colleagues to get the most from AI and technologies that
are being introduced through business transformation.
52 abrdn.com Annual report 2023
People – Equity and inclusivity
Equity and inclusivity
Our role in enabling a fairer, more inclusive, society through examples of
our actions supporting our people, clients, and communities
Our UK gender pay and bonus gaps
We have reduced our UK gender pay gaps in 2023 for the
sixth consecutive year and believe we have the
appropriate actions in place to address this long term. Our
mean bonus gap increased by 9.1 percentage points
during 2023. Average bonuses for both men and women
decreased but some types of bonus payments, such as
those associated with sales roles, were less impacted.
These roles currently have a higher proportion of men,
therefore driving an increase in the mean bonus gap.
UK gender pay and bonus gaps 2023 2022
Mean pay gap 24.8% 28.7%
Median pay gap 18.8% 24.2%
Mean bonus gap 55.3% 46.2%
Median bonus gap 34.6% 47.4%
We are committed to continued reductions in our gender pay
gap, with a key contributing factor being that more men
occupy senior roles than women. We have four actions in
place to address this imbalance:
1
Representation
targets
We set targets for representation of
women at all levels across the
organisation.
2
Gender action plan
We have a gender action plan in place
to focus actions on attraction, retention
and progression of women at early,
mid and senior career stages.
3
Industry
collaboration
We set a collective industry target to
reduce the industry gender pay gap by
50% by 2030, in partnership with the
Diversity Project.
4
Executive
accountability
We were one of the first signatories to
the HM Treasury Women in Finance
Charter, linking delivery of our targets
to pay through our Executive Director
scorecard.
We benchmark our progress every year through the
Bloomberg Global Gender Equality Index and have been
recognised on the index for the last five years.
Feeling valued and included everyday
Ethnicity, gender, and social mobility are our primary areas
of focus, but in 2023 we set out LGBTQ+ priorities for the
organisation and put more support in place for disability and
neurodiversity. We are working to create a culture where
everyone feels they belong and were proud to secure
‘Excellent’ rating for LGBTQ+ equality by the Human Rights
Campaign in 2022 (100%) and 2023 (95%). We also
became a Disability Confident employer in 2023, under the
UK Government Scheme.
Support for customers in vulnerable
circumstances
We support advisers to achieve the best outcomes for their
clients, which includes additional support for customers in
vulnerable circumstances. Anyone could find themselves in
vulnerable circumstances in their lives. The FCA identifies four
key drivers of vulnerability including: health, life events,
resilience, and capability.
Through our Client Engagement Hub, we can provide the
support and tools for clients with vulnerabilities and aim to
make processes as effortless as they would be for anyone. We
have a team of specialists who are trained to provide
additional help when a vulnerability is identified, and we tailor
our services in instances where the client may contact us
again. We do this using the data and advanced technology
behind our platform.
Our accessibility services also support additional needs. We
can translate certain documents into braille, or large print, and
can accept calls from registered Sign Language interpreters,
or through RelayUK, which enables users to type to talk. During
2023 we have also been working to identify third parties we
can engage with to help further support advisers and their
clients with vulnerabilities. With our proactive focus on training,
technology and collaboration, our goal is to lead the way, as
vulnerability could affect anyone at any time.
Supporting financial education with MyBnk
In 2022 we launched a three-year partnership with MyBnk,
whose mission is to empower young people to take
charge of their future by bringing money to life. We
expanded this partnership in 2023, with our total
commitment now over £1,300,000 via the abrdn
Charitable Foundation. Our support will enable MyBnk to
deliver financial education programmes and money
management workshops. Learn more about community
impact in our Sustainability and TCFD report at
www.abrdn.com/annualreport
“We are excited to be supporting
MyBnk, by working together we
can make a difference to the
financial confidence of young
people across the UK.”
Kirsty Brownlie
Sustainability Mana
g
er, Social impact
53abrdn.comAnnual report 2023
STRATEGIC REPORT
Stakeholder engagement and section 172 statement
Delivering our purpose in
collaboration with our stakeholders
We are driven to enable our clients to be better investors, and work with
all our stakeholders to achieve our purpose
Section 172 (1) statement
The Board recognises the requirements of reporting against matters set out in section 172 (1) (a) to (f) of the
Companies Act. The illustration on this page and information on pages 55 to 56 identifies key stakeholders and
summarises actions and engagement activities undertaken during 2023, in support of the success of the
company and for the benefit of members as a whole. Further information is also provided on pages 86 to 89 of
the
Owners of our
business
Support delivery
of our purpose
Deliver our purpose
and benefit from
our success
Direct relationships and indirect impacts
through investments
Promoting strong
financial markets
54 abrdn.com Annual report 2023
People – Equity and inclusivity
Engaging with our stakeholders
We recognise our responsibility to engage with our stakeholders and this
plays an important role in the long-term decisions we make
Examples of stakeholder engagement during 2023
Clients
How do we engage?
– Our purpose is to enable our clients to be better investors. We have client first
teams across the business, and we monitor specific success metrics to
holistically capture the experience of different client groups.
Related outcomes:
– Examples of our
investments in action on
pages 16 to 17.
– Learn more about our
Adviser client experience
on page 31.
– We are strengthening the ii
platform for our customers.
Learn more on page 35.
What did we learn?
– Our Investments business has a diverse client base. We monitor a range of
measures to track client experience, with independent client survey feedback
highlighting strong client service and account management.
– Listening to feedback is critical, with indicators, such as consistently ‘Excellent’
ratings from ii customers on Trustpilot, illustrating this in practice.
– Similarly for Adviser, we are targeting world-class customer satisfaction scores,
with a satisfaction score of 90% in our Adviser business.
Shareholders
How do we engage?
– Our Annual General Meetings (AGM) offer shareholders the opportunity to
interact directly with our Chair and Board.
– In November 2022 we delivered a ‘Spotlight on Adviser’ presentation to
investors, which received positive feedback. Following this, in July 2023 we held
an analyst day to spotlight the ii business and strategy.
– During 2023, we also carried out a comprehensive programme of meetings
with domestic and international investors.
Related outcomes:
– On 24 January 2024 we
confirmed our intention to
provide the market with a
trading update, including
AUMA and net flows, for the
first and third quarters of
the year. This reflects our
understanding of investor
appetite for an increase in
the frequency of our
communication.
– The business aims to
encourage all-employee
share ownership. Learn
more on page 127.
What did we learn?
– Feedback from our analyst day in July 2023 was positive, with
acknowledgement of the market opportunities for ii and benefits of the
subscription model for abrdn.
– Feedback from our programme of meetings reflects a broad range of investor
interests. Learn more on page 86.
Suppliers
How do we engage?
– All suppliers providing services within the scope of our third-party risk
management framework are engaged through due diligence assessment
and ongoing monitoring.
– Strategic supplier relationships have dedicated relationship managers to
support greater oversight and engagement.
– Environmental, social, and governance topics are included within our oversight
reviews.
Related outcomes:
– In 2023 the business
onboarded a new supplier
risk assessment and
monitoring platform to
better understand our
supply bases exposure and
approach to sustainability
related risks (environment,
labour and human rights,
business ethics, and supply
chain).
What did we learn?
– Through due diligence and ongoing monitoring, we are able to assess suppliers
against our third party expectations as outlined in our Global Third Party Code
of Conduct.
– Many of our suppliers align with our expectations and, in many cases,
demonstrate an established understanding of ESG related risks. However,
where suppliers do not align, we have discovered that we must establish
stronger controls to support them and monitor their performance.
Regulators
How do we engage?
– abrdn retains membership of various industry groups and forums, which
supports the development of a collective sector view.
– We proactively respond to consultations on major sustainability reporting
standards, which impact us both as investors and disclosers.
Related outcomes:
– During 2023 we responded
to the Transition Plan
Taskforce consultation on
its Disclosure Framework.
– Our Adviser business have
published a series of
insights to support
implementation of
Consumer Duty
requirements.
What did we learn?
– We are supportive of the regulatory focus on non-financial reporting as we
work towards common sustainability disclosure standards.
– We are also strong believers in client first outcomes and support the
implementation of requirements such as Consumer Duty.
55abrdn.comAnnual report 2023
STRATEGIC REPORT
Stakeholder engagement and section 172 statement continued
Examples of stakeholder engagement during 2023 continued
Communities
How do we engage?
– We conduct research and publish insights relating to topics such as financial
inclusion, savings and retirement, and the low carbon transition.
– The abrdn Charitable Foundation directs our community impact strategy, with
a focus on tomorrow’s generation.
– Our colleagues volunteer and fundraise for a variety of charitable causes. We
provide 3 paid volunteering days to abrdn colleagues to enable this.
Related outcomes:
– £2.1m contributed to
charitable causes in 2023
(2022: £2.4m).
– 3,248 hours spent
volunteering by colleagues
during 2023 (2022: 2,842).
– Insights from research can
inform product offering,
with ii launching its pension
essentials product in 2023.
What did we learn?
– Insights from our research such as, ii’s Great British Retirement survey shows
that 56% of those aged 41 to 55 believe they may never retire.
– Our colleagues have primarily chosen to volunteer for environmental and social
welfare causes, accounting for 50% of the total time disclosed.
Colleagues
How do we engage?
– Our annual colleague engagement survey (page 49).
– Pulse surveys throughout the year checking in with colleagues.
– Our Let’s Hear It sessions and townhalls provide candid Q&A opportunities with
our Executive Leadership Team.
Related outcomes:
– Focus on increased visibility
and communication from
senior leaders, with Let's
Hear It and As It Is sessions.
– Talking Talent internal
communications
campaign to highlight
learning and development
opportunities.
– Our first global abrdn
Awards to recognise teams
and individuals across the
business.
What did we learn?
– Where we have focused, we have driven improvements through 2023, with
increased scores around leadership, systems, and processes.
– With support from culture champions around the business our commitments
are now integrated into each stage of colleague experience.
– Colleagues’ sense of transparency and understanding of strategy have been
positively impacted by six new communication channels (page 49).
– Our Board Employee Engagement programme includes a number of
opportunities throughout the year for employees to engage with our
designated NED for employee engagement.
Board Employee Engagement (BEE) programme
Hannah Grove continued as our designated Non-
Executive Director for employee engagement.
BEE purpose
– Ensure that employee perspectives and sentiments
are heard and understood by the Board to help inform
decision-making.
– Develop an environment where colleagues
understand the role of the plc Board and have direct
access to our Non-Executive Directors (NEDs).
Programme pillars
1. Listening sessions
2. Meet the NEDs events
3. Employee network engagement
4. Reporting and measurement
“Without doubt the biggest highlight for me
is interacting with abrdn’s people.
The company has an extraordinary depth
of talent and it’s been a privilege to get to
know our colleagues better.”
Hannah Grove
BEE programme - 2023 in summary
Total employee
attendance Listening sessions
Meet the
NEDs events
Employee network
engagements
NEDs involved in the
programme Site visits Average event rating
797
11 6 9 100% 14
including in UK,
US and APAC
8.6/10
Find out more about our BEE engagement on page 87.
56 abrdn.com Annual report 2023
Non-financial and
sustainability information
Summary of climate disclosure
Climate and environment
Relevant policies
–
Policy outcomes
–
–
Related risks
–
Risk management
–
–
Selected non-financial KPIs
–
–
Recommended TCFD-aligned disclosure
1
Governance
Strategy
Risk management
Metrics and targets
Statement of the extent of consistency with FCA
LR 9.8.6R (8) for TCFD aligned disclosure
57abrdn.comAnnual report 2023
STRATEGIC REPORT
Non-financial and sustainability information statement
Summary of other matters
The information on this page addresses the requirements of Companies Act 414CA and 414CB with summary
information on other important non-financial matters. Our sustainability aspiration is to create long-term sustainable
value and we focus on those areas where we have significant impact or influence. This includes the areas outlined
below, with additional information also available in our Sustainability and TCFD report available at
www.abrdn.com/annualreport
Employees Social matters
Our people are essential to our success and our objective is to
create a transparent, inclusive, culture, where the best talent
from all backgrounds can succeed. In 2023 we have been
focused on embedding Our Commitments, increasing
transparency across the organisation, and enabling colleagues
to develop. We have targets to improve representation across
the business and continue to see reductions in our UK gender pay
gap. Our aspiration is that abrdn is a place where people love to
work but changes to our business have meant reductions in
headcount and resource pressures. We disclose detail relating to
colleague engagement on page 49.
We are committed to helping our customers build long-term
financial resilience and take control of their financial futures. Our
focus begins with our products and services and extends to our
communities through our focus on tomorrow’s generation. In
2023, ii published the fifth Great British Retirement survey, which
highlights common financial challenges and reinforces the role
our sector can play through education, financial planning, and
advice. ii also works with a peer-to-peer learning initiative to
support women to expand or start their investment journey. We
also expanded our partnership with MyBnk to support financial
education in the UK.
Relevant policies
– Diversity, equity and inclusion policy
– Global code of conduct
–
Client and customer policy
– Charitable giving strategy
Policy outcomes
– Colleague engagement survey
– Inclusive recruitment and development programmes
–
More inclusive products and services
– Charitable partnerships via the abrdn Charitable Foundation
Related risks
– Noted amongst principal risks and uncertainties – Lack of financial inclusion for our key stakeholders
Risk mana
g
ement
– Listening and responding to colleague feedback – More inclusive products and services
– Published research and insights
– Third sector partnerships
Selected non-financial KPIs
– Employee engagement scores
– Increased representation across abrdn by 2025
–
Client and customer satisfaction
– Impact reporting from our charitable partnerships
Further information
Pages 48-53. Pages 50 and 53.
58 abrdn.com Annual report 2023
Human ri
g
hts Anti-corru
p
tion and anti-briber
y
It is critical to embed respect for human rights throughout our
business. We take an active approach and work across our
operations and through our investments. Our annual Modern
Slavery Statement provides the opportunity to chart our progress
as we focus on the assessment of risk in our supply chain, with our
Stewardship report outlining actions we taken to influence the
companies and assets in our value chain. Our position is zero
tolerance for modern slavery and child labour in supply chains.
We have invested time and resources to better understand
related risks, amidst a complex global network of third party
suppliers and relationships.
abrdn and its people conduct business fairly, honestly,
transparently, and with integrity, and do not take part in acts of
corruption or pay or receive bribes, whether directly or indirectly
to gain business advantage. Employees are prohibited from
engaging in acts of corruption and from paying or accepting
bribes or kickbacks. We have a programme and procedures in
place to implement and support our Anti Bribery and Corruption
Policy. In particular, employees must refuse any bribe or
inducement in a manner which is not open to misunderstanding
or which may give rise to false expectations, report any offers of
bribes or inducements and report any suspicious behaviour.
Relevant policies
– Global code of conduct
– Third-party code of conduct
– Modern slavery statement
– Privacy and data protection
– Anti-Financial Crime policy
– Anti Bribery and Corruption standards
– Global code of conduct
Policy outcomes
– Human rights is a focus of our active equities engagement
strategy for our Investments business
– Evolving capability relating to our supply chain management
– Gifts and entertainments processes working effectively
– Anti Bribery and Corruption controls embedded within
operating procedures
Related risks
– Safe and secure work
– Data protection and security
–
Noted amongst principal risks and uncertainties
Risk management
– Influencing our value chain and developing further
understanding of the related risks in our supply chain
– Data protection procedures
– Colleague Anti-Financial crime and Anti Bribery and
Corruption training
– Controls to prevent and detect instances of bribery and
corruption
Selected non-financial KPIs
– Voting and engagement
– Third party risk assessments
– Data incidents and breaches
– Completion rates of staff training
– Gifts and entertainment incidents and breaches
Further information
Page 55. Page 79.
Our business model enables our clients to be better investors
Illustration on pages 12-13.
59abrdn.comAnnual report 2023
STRATEGIC REPORT
Key performance indicators
1. 2022 results have been restated for the HASL implementation of IFRS 17. 2021 results have not been restated. Refer Basis of preparation in the Group
financial statements section.
Our key performance indicators
Net operating revenue
£1,398m
Cost/income ratio
82%
This measure is a component of adjusted operating
profit and includes revenue we generate from asset
management charges, platform charges and other
transactional/advice charges and treasury income.
This ratio measures our efficiency. We are focused on
improving our cost/income ratio by increasing revenue
and continued cost discipline.
Adjusted operating profit
£249m
Adjusted diluted earnings per share
13.9
p
Adjusted operating profit is our key alternative
performance measure and is how our results are
measured and reported internally.
This measure shows on a per share basis our profitability
and capital efficiency, calculated using adjusted profit
after tax.
IFRS (loss)/profit before tax
1
(
£6m
)
Full year dividend per share
14.6
p
IFRS profit/loss before tax is the measure of profitability
set out in our financial statements. As well as adjusted
profit, it includes items such as restructuring costs, profit
on disposal of interests in associates and goodwill
impairment.
The total annual dividend (interim and final) is an
important part of the returns that we deliver to
shareholders and is assessed each year in line with our
stated policy to hold at 14.6p until it is covered at least
1.5 times by adjusted capital generation.
Adjusted capital generation
£299m
This measure aims to show how adjusted profit
contributes to regulatory capital.
‘23
£1,398m
‘22
£1,456m
‘21 £1,515m
‘23
82%
‘22
82%
‘21 79%
‘23
£249m
‘22
£263m
‘21
£323m
‘23
13.9p
‘22
10.5p
‘21
13.7p
‘23
(£6m)
‘22
(£612m)
‘21 £1,115m
‘23
14.6p
‘22
14.6p
‘21
14.6p
‘23
£299m
‘22
£259m
‘21 £366m
APMKPI APMKPI
APMKPIAPMKPI
APMKPI
KPI KPI
60 abrdn.com Annual report 2023
1. 2022 results have been restated for the HASL implementation of IFRS 17. 2021 results have not been restated. Refer Basis of preparation in the Group
financial statements section.
STRAT
Investment performance
(Percentage of AUM above benchmark over
three years)
42%
Employee engagement survey
54%
This measures our performance in generating
investment return against benchmark. Calculations for
investment performance are made gross of fees except
where the stated comparator is net of fees.
This measure is important in gauging the engagement
and motivation of our people in their roles. It also enables
our managers at all levels to take local action in
response to what their teams are telling them.
Other indicators
AUMA
£494.9bn
Gross inflows
£64.1bn
Net flows — Total
(
£17.6bn
)
Net flows – Excl liquidity and LBG
tranche withdrawals
(
£13.9bn
)
IFRS diluted earnings per share
1
0.1
p
Alternative performance measures
We assess our performance using a variety of
performance measures including APMs such as
cost/income ratio, adjusted operating profit, adjusted
profit before tax and adjusted capital generation.
APMs should be read together with the Group’s IFRS
financial statements. Further details of all our APMs are
included in Supplementary information.
‘23
42%
‘22
65%
‘21 78%
‘23
54%
‘22
50%
‘21
51%
‘23
£494.9bn
‘22
£500.0bn
‘21
£542.1bn
‘23
£64.1bn
‘22
£69.0bn
‘21
£72.3bn
‘23
(£17.6bn)
‘22
(£37.9bn)
‘21
(£6.2bn)
(£13.9bn)
‘22
‘23
(£10.3bn)
(£3.2bn)
‘21
‘23
0.1p
‘22
(26.6p)
‘21
46.0p
KPI KPI
APM
61abrdn.comAnnual report 2023
STRATEGIC REPORT
Chief Financial Officer’s overview
Taking action
to rebuild
profitability
and growth
Our diversified business and
strong balance sheet are clear
strengths but we need to
deliver a step change in our
cost base in order to lay the
foundation for future growth.
I am proud to join a company
with a strong conviction to
enable clients at all financial
stages to be better investors.
Jason Windsor
Chief Financial Officer
Overview
2023 was a challenging macro environment for the
investment industry. This is evident in lower adjusted
operating profit, largely reflecting lower revenues in
Investments, which is closely related to the market
context.
Despite this, the advantage of our three business model
is clear in these results. We have built resilience into the
Group and the benefits of diversification are already
evident with Adviser and ii on a stronger trajectory of
growth, with more efficient operating margins and clear
opportunities for the future. We exceeded expectations
on our net £75m cost reduction target, with savings of
£102m achieved.
ln addition to this £102m reduction, we are now
targeting further annualised cost savings of at least
£150m across the Group by the end of 2025, with the
majority of actions to be taken this year.
62 abrdn.com Annual report 2023
1. Comparatives have been restated for the HASL implementation of IFRS 17. Refer Basis of preparation in the Group financial statements section.
We have undertaken a comprehensive review of our
operating model. The programme is targeting the
removal of management layers, increasing spans of
control, and reducing overheads particularly from
Group functions and support services. Approximately
80% of the cost reduction benefits will be seen in the
Investments business. The total implementation costs
are estimated to be around £150m.
This transformation programme will drive improved
profitability and allow for reinvestment into growth
areas, which is fundamental to improving performance.
Initial work to deliver these efficiencies is already well
underway and we will provide further updates over the
course of the programme.
In 2023, we delivered on our commitment to return a
significant proportion of capital generated from our
Indian stake sales to shareholders: £300m by way of
share buybacks and the remainder via dividends. We
also generated capital following the sales of our
discretionary fund management and US private equity
businesses which supported the strategic moves to
acquire closed-end funds from Macquarie, Tekla, and
First Trust to further strengthen our capabilities in this
area.
Our balance sheet remains strong, and this enables us
to fund the implementation costs of our transformation
programme from our balance sheet. We will continue to
be disciplined in our allocation of capital to invest in the
business in order to drive growth and to support
continued returns to shareholders.
I believe the actions that we have taken to build
resilience into our business and move towards improved
profitability, despite industry headwinds, combined with
the significant additional cost savings we are now
targeting, will put us in a stronger position to deliver on
our commitment to enable our clients to be better
investors.
Profit
Adjusted operating profit for 2023 was down 5% to
£249m (2022: £263m). This includes a reduction of £80m
in Investments principally due to a significant decline in
revenue in this business. This was partly offset by an
increase in adjusted operating profit in both our Adviser
and ii businesses, to £118m (2022: £86m) and £114m
(2022: £72m) respectively. ii includes the benefit of a full
12 months contribution compared to 7 months in 2022.
The IFRS loss before tax was £6m (2022: loss £612m
1
)
including adjusting items of £336m (2022: £865m
1
), with
a decrease in the impairment of intangible assets and
restructuring costs compared to 2022. The goodwill
impairments in 2023 of £62m (2022: £340m) include the
impact of lower projected revenues as a result of
adverse markets and macroeconomic conditions, and
for Finimize the impact of lower short-term projected
growth following a strategic shift that prioritises
profitability over revenue growth.
The cost/income ratio was stable at 82% (2022: 82%)
reflecting the benefit from the efficient Adviser and ii
cost models, offset by lower revenue in Investments.
Net operating revenue
Net operating revenue of £1,398m (2022: £1,456m) was
down 4%, including the impact of the challenging
market conditions in Investments. This was partially
offset by increases in revenue in both Adviser and ii,
reflecting higher treasury income for both businesses,
and the benefit of a full 12 months of ii.
In Investments, net operating revenue was 17% lower
than in 2022 largely due to net outflows and lower
market performance impacting average AUM, and
changes to the asset mix. While redemptions were
lower, gross flows were also lower reflecting the client
response to the uncertain market environment,
particularly in equities and multi-asset. Net outflows and
market performance in multi-asset and equities
resulted in a reduction in average AUM of 16% and 14%
respectively. Our Phoenix partnership continues to
produce results with £6.0bn (2022: £2.9bn) of gross
inflows from their bulk purchase annuity business,
reflecting our insurance asset management capabilities
and proprietary techniques.
In our Adviser business, net operating revenue was 21%
higher than 2022 at £224m (2022: £185m) comprising
£167m Platform charges (2022: £174m), £31m treasury
income (2022: £11m) and £26m other (2022: £nil). The
higher revenue included the c£15m benefit of a revised
distribution agreement with Phoenix and c£11m from
threesixty/MPS following the transfer from the Personal
Wealth business.
In our ii business (excluding Personal Wealth), net
operating revenue increased to £230m (2022: £114m),
largely reflecting the benefit of a full 12 months of
revenue. Revenue continues to benefit from diverse
streams. Treasury income on client cash balances
contributed £134m, benefiting from the continued rise in
interest rates. Trading revenue of £48m was impacted
by muted levels of customer activity given the uncertain
market conditions. Revenue from subscriptions was
£54m.
In Personal Wealth, net operating revenue of £57m
(2022: £87m) reduced by £30m due to a c£19m impact
from the transfer of the MPS business to Adviser and the
sale of abrdn capital to LGT, c£6m from the transfer of
threesixty to Adviser, and the impact of adverse market
movements.
63abrdn.comAnnual report 2023
STRATEGIC REPORT
Chief Financial Officer’s overview continued
1. Relates to ii (excluding Personal Wealth).
Adjusted operating expenses
Adjusted operating expenses decreased by 4% to
£1,149m (2022: £1,193m), reflecting management
actions to reduce costs, mostly offset by the inclusion of
£103m (2022: £47m) of ii
1
expenses for the full 12 month
period. Excluding ii
1
, expenses were 9% lower at
£1,046m (2022: £1,146m).
In the Investments business, we exceeded the targeted
£75m reduction that we outlined previously. The £102m
cost reduction in Investments was driven by lower staff
costs reflecting 8% lower front/middle office FTEs and
reduced market data and outsourcing costs, partly
offset by the impact of staff cost inflation.
In Adviser, the cost/income ratio improved to 47%,
benefiting from higher treasury income and the revised
distribution agreement with Phoenix.
For ii overall, expenses increased reflecting the full 12
months of ii (excluding Personal Wealth). The
cost/income ratio improved from 64% to 60%, despite
the impact on profitability in Personal Wealth due to the
revenue impacts on this business outlined above.
As I have touched on already, further significant cost
savings across the business are targeted to improve
efficiency and profitability.
Capital
Our capital position provides us with resilience during
periods of economic uncertainty and volatility.
In 2023, we have been disciplined in our allocation of
capital with a combination of investment in the business
to drive growth and continued returns to shareholders.
We generated a total of £713m capital from the sales of
our listed Indian stakes (£576m), and the disposals of our
discretionary fund management and US private equity
businesses (£137m). We have now completed the sale
of our remaining stakes in HDFC Life and HDFC Asset
Management, which further simplifies our group
structure.
We have continued to invest in the business through
strategic bolt-on acquisitions, building out our global top
three position in closed-end funds. In 2023, we
completed the acquisition of four closed-end funds
from Macquarie and acquired the healthcare fund
management capabilities of Tekla for a total of £152m.
We also used the proceeds from our non-core disposals
to support restructuring costs of £121m, including the
reshaping of the Investments business.
We returned £300m by way of share buybacks in line
with our commitment to return a significant proportion
of the proceeds of our stake sales. As we outlined in our
FY 2022 results, we returned £0.6bn of capital in total to
shareholders in 2023 by way of dividends and share
buybacks.
Going forward, we will continue to have a disciplined
approach to generation and allocation of our capital:
– We are committed to taking significant cost actions to
restore our core Investments business to a more
acceptable level of profitability. To achieve the
desired simplification and cost savings, total
implementation costs are estimated to be around
£150m. We will deploy CET1 surplus capital to fund
this restructuring over 2024 and 2025.
– We will continue to scan the market for bolt-on
acquisitions within key thematic markets, such as the
most recent acquisition of the healthcare fund
management capabilities of Tekla.
– As part of our approach to allocating capital, we hold
a buffer over regulatory capital to provide a level of
management flexibility and capital strength and
resilience during periods of volatility.
– It remains the Board’s current intention to pay a total
annual dividend of 14.6p (with the interim and final
both at 7.3p per share), until it is covered at least 1.5
times by adjusted capital generation. Over the short
term, the dividend will largely be supported by
adjusted capital generation and our surplus capital.
Outlook
As demonstrated in our 2023 results, we have reshaped
the business. The resulting diversification in sources of
revenue and inherent cost efficiency within Adviser and
ii partly offset the revenue impact from net outflows and
adverse market movements within Investments. Looking
forward, we expect inflation to moderate slowly, and we
have assumed a stable interest rate environment. This
will continue to benefit ii and Adviser where we expect
the average cash margin for 2024 to be broadly in line
with 2023. The outlook for global markets remains
uncertain. Where market conditions, structural and
cyclical, remain challenging for active asset managers
we continue to expect headwinds arising from changing
client demand and preferences. Within Insurance in
particular, we expect the asset rotation from active
equity and fixed income strategies to passive
quantitative strategies experienced in 2023 to continue
into 2024. This together with related pricing changes,
may result in a further contraction of revenue margin.
Notwithstanding this backdrop we are taking action to
restore profitability and to transform the way we
operate, through simplification and leveraging
technology across the Group, particularly in
Investments. As we have said, the work to achieve at
least £150m of cost savings is now underway. While 80%
of the cost savings is expected to benefit Investments,
we anticipate cost growth in ii and Adviser to be
approximately 3-5% per annum over 2024-2026
reflecting continued growth and reinvestment in these
businesses. Implementation of the transformation
programme is expected to take place primarily in 2024,
with c£60m benefit from lower adjusted operating
expenses expected in 2024, and will be completed by
the end of 2025. We expect total restructuring costs of
less than £150m in 2024, to support the group cost
transformation programme, and further investment in
the Adviser platform.
The strength of our balance sheet allows us to fund
these restructuring expenses, and to maintain the
dividend. Our balance sheet is further strengthened by
our Phoenix stake and the staff pension scheme which
has a significant surplus. Our focus remains to be
disciplined in our allocation of capital to drive growth,
and to maintain the dividend payment until capital
generation improves.
64 abrdn.com Annual report 2023
1. Comparatives have been restated for the HASL implementation of IFRS 17. Refer Basis of preparation in the Group financial statements section.
2. Relates to ii (excluding Personal Wealth).
3. Reflects the estimated impact on net operating revenue as a result of net outflows in both the current and prior period, as a percentage of prior
period revenue.
4. See Supplementary information for a reconciliation to IFRS staff and other employee related costs.
Results summary
Analysis of profit
2023
£m
2022
1
£m
Net operating revenue 1,398 1,456
Adjusted operating expenses (1,149) (1,193)
Adjusted operating profit
249 263
Adjusted net financing costs and investment return 81 (10)
Adjusted profit before tax
330 253
Adjusting items including results of associates and joint ventures (336) (865)
IFRS loss before tax
(6) (612)
Tax credit 18 66
IFRS profit/(loss) for the year 12 (546)
The IFRS loss before tax was £6m (2022: loss £612m) including an adjusted operating profit of £249m (2022:
£263m). Adjusting items were £336m (2022: £865m) including:
– Losses of £178m (2022: losses £187m) from the change in fair value of significant listed investments (HDFC Asset
Management, HDFC Life and Phoenix) as a result of the fall in the share price of these companies in 2023.
– Restructuring and corporate transaction expenses were £152m (2022: £214m), mainly consisting of property
related impairments, severance, platform transformation and specific costs to effect savings in Investments.
Adjusted operating profit was £14m lower than 2022 largely due to the revenue impact of continued net outflows
and adverse market movements, which particularly impacted high yielding equities. The 2023 results included a
contribution from ii
2
for the full 12 months (2022: seven months) which benefited net operating revenue by £230m
(2022: £114m) and adjusted operating profit by £127m (2022: £67m). Removing ii
2
, adjusted operating profit was
38% lower than 2022 at £122m (2022: £196m).
Net operating revenue
Net operating revenue decreased by 4% reflecting:
– Impact from net outflows
3
of c4%, and adverse
Investments margin movements.
– Although the market declines seen in 2022 began to
reverse in 2023, the lower average AUMA compared
with 2022 impacted revenue by c4%.
– Benefit of £116m from the full 12 months of ii
2
in 2023.
– Performance fees reduced by £16m mainly within
real assets, where 2022 saw a number of funds
coming to the end of their natural lifecycle, triggering
performance fees at maturity.
The diversification that now drives our sources of revenue
has helped to mitigate the impact of market volatility,
including the benefit from ii’s subscription model and the
higher total treasury income of £165m (2022: £69m).
Net operating revenue reduced by 13% excluding ii
2
.
Adjusted operating expenses
2023
£m
2022
£m
Staff costs excluding variable
compensation
511 527
Variable compensation 75 85
Staff and other related costs
4
586 612
Non-staff costs 563 581
Adjusted operating expenses
1,149 1,193
Adjusted operating expenses decreased by 4%
reflecting management actions to reduce costs, mostly
offset by the inclusion of £103m (2022: £47m) of ii
2
expenses for the full 12 month period. Excluding ii
2
,
expenses were 9% lower at £1,046m (2022: £1,146m)
reflecting:
– 7% lower staff costs (excluding variable
compensation), with the benefit of lower FTEs (13%),
partly offset by wage inflation.
– Lower variable compensation reflecting business
performance.
– 9% lower non-staff costs, with cost savings partly
offset by the impact of inflation.
The Group cost/income ratio was stable at 82%
(2022: 82%) reflecting the benefit from the efficient
Adviser and ii cost models, offset by lower revenue in
Investments.
Investments
margin
2023ii 2022
£1,456m
£1,398m
(£65m)
(£51m)
(£30m)
£116m
(£59m)
Net flows Markets
Perf fees
and other
£31m
Other
margin
65abrdn.comAnnual report 2023
STRATEGIC REPORT
Chief Financial Officer’s overview continued
1. Wholesale has been renamed Retail Wealth, Insurance has been renamed Insurance Partners.
2. Finimize and our digital innovation group have moved from Investments to Other. Comparatives have been restated.
3. Includes performance fees of £14m (2022: £30m).
4. Institutional/Retail Wealth liquidity net flows excluded.
5. Flows excluding LBG do not include the final tranche withdrawals in 2022 of £24.4bn relating to the settlement of arbitration with LBG.
Investments
Adjusted
operating profit
£50m
Net operating
revenue
£878m
Net operating
revenue yield
23.5bps
Net flows
(Excl. liquidity)
(
£15.3bn
)
Total Institutional and Retail Wealth
1
Insurance Partners
1
2023 2022 2023 2022 2023 2022
Net operating revenue
2,3
£878m £1,060m
Adjusted operating expenses
2
(£828m) (£930m)
Adjusted operating profit
2
£50m £130m
Cost/income ratio
2
94% 88%
Net operating revenue yield
23.5bps 25.4bps 32.6bps 36.1bps 10.0bps 10.5bps
AUM
£366.7bn £376.1bn £211.2bn £231.2bn £155.5bn £144.9bn
Gross flows
£50.3bn £59.3bn £28.1bn £36.5bn £22.2bn £22.8bn
Redemptions
(£69.3bn) (£100.3bn) (£46.0bn) (£48.1bn) (£23.3bn) (£52.2bn)
Net flows
(£19.0bn) (£41.0bn) (£17.9bn) (£11.6bn) (£1.1bn) (£29.4bn)
Net flows excluding liquidity
4
(£15.3bn) (£37.8bn) (£14.2bn) (£8.4bn) (£1.1bn) (£29.4bn)
Net flows excluding liquidity and LBG
4,5
(£15.3bn) (£13.4bn) (£14.2bn) (£8.4bn) (£1.1bn) (£5.0bn)
Adjusted operating profit
–
Profit reduced by £80m (62%) to £50m, reflecting 17%
lower revenue, partly offset by 11% lower costs.
–
Results in our Investments business reflect the
challenging economic environment and market
turbulence that has impacted across the industry.
Net operating revenue
–
17% lower than 2022 largely due to net outflows and
lower market performance impacting average AUM,
and changes to the asset mix.
–
Performance fees of £14m (2022: £30m) were
earned mainly from Asian equities and Insurance
Partners.
Adjusted operating expenses
–
Whilst there is a reduction in profitability in the year,
we exceeded the £75m net cost reduction target.
–
Adjusted operating expenses reduced by £102m (11%)
to £828m (2022: £930m
2
) driven by lower staff costs
reflecting 8% lower front/middle office FTEs and
reduced market data and outsourcing costs, which
was partly offset by the impact of staff cost inflation.
–
Adjusted operating expenses also benefited from
reduced brand marketing activity and lower project
change costs compared to 2022.
Institutional and Retail Wealth
Net operating revenue
–
17% lower at £724m (2022: £868m
2
) due to a 7%
reduction in average AUM to £220.0bn (2022: £236.2bn).
Multi-asset and equities average AUM down 16% and
14% respectively.
–
Reduction in average AUM primarily relates to net
outflows and market performance.
Gross flows
–
Excluding liquidity, £6.8bn (26%) lower at £19.5bn
(2022: £26.3bn) mainly in equities, multi-asset and
alternative investment solutions. This reflected the
client response to the uncertain market environment
which impacted the wider industry, as many clients
delayed investment decisions.
Revenue yield
–
3.5bps lower at 32.6bps largely due to the decrease in
the higher margin equities average AUM impacting
the asset mix. Equities are 22% (2022: 24%) of average
AUM at a yield of 60.7bps (2022: 62.5bps).
–
The reduction in the multi-asset yield reflects the
growing proportion of lower yielding MyFolio in this
asset class.
Net flows
–
Net outflows were £5.8bn higher than 2022 at £14.2bn
(excluding liquidity) due to lower gross flows.
–
Excluding liquidity, net outflows represent 7% of
opening AUM compared with 4% in 2022.
–
Redemptions (excluding liquidity) were £1bn lower
than 2022 at £33.7bn due to lower real asset outflows.
66 abrdn.com Annual report 2023
1. Calculations for investment performance use a closing AUM weighting basis and are made gross of fees except where the stated comparator is net
of fees. Benchmarks differ by fund and are defined in the investment management agreement or prospectus, as appropriate. These benchmarks
are primarily based on indices or peer groups. The investment performance calculation covers all funds that aim to outperform a benchmark, with
certain assets excluded where this measure of performance is not appropriate or expected. Further details about the calculation of investment
performance are included in the Supplementary information section.
2. Morningstar category peer group average over 3 years to 31 December 2023.
Insurance Partners
Net operating revenue
–
20% lower in 2023 at £154m (2022: £192m), reflecting
the impact of 13% reduction in average AUM to
£147.7bn primarily due to net outflows, market
declines in 2022 and the impact of the final LBG
tranche withdrawal of £24.4bn in 2022.
Gross flows
–
£0.6bn lower than 2022 at £22.2bn (2022: £22.8bn).
–
Our Phoenix partnership continues to produce results
with £6.0bn (2022: £2.9bn) of gross inflows from their
bulk purchase annuity business, reflecting our
insurance asset management capabilities and
proprietary techniques.
AUM
–
Insurance AUM increased by £10.6bn to £155.5bn with
net outflows offset by positive market movements.
Revenue yield
–
Net operating revenue yield decreased to 10.0bps
(2022: 10.5bps). We expect the asset rotation from
active equity and fixed income strategies to passive
quantitative strategies experienced in 2023 to
continue into 2024, this together with related pricing
changes, is expected to result in a further contraction
of yields.
Net flows
–
Net outflows improved by £3.9bn in 2023 at £1.1bn
(2022: £5.0bn outflow excluding LBG tranche
withdrawals), representing (0.8%) of opening AUM
compared with (2.4%) in 2022.
Investment performance
% of AUM ahead of benchmark
1
1 year 3 years 5 years
2023 2022 2023 2022 2023 2022
Equities 27 30 17 63 48 65
Fixed income 81 65 75 72 84 79
Multi-asset
12 13 15 50 22 22
Real assets
30 57 56 63 45 52
Alternatives
100 88 100 100 100 100
Quantitative
100 17 100 27 37 29
Liquidity
100 84 95 97 97 97
Total 44 41 42 65 52 58
Investment performance over the three-year time
period has weakened, with 42% of AUM covered by this
metric ahead of benchmark (2022: 65%). The drop in
the three-year performance reflects a challenging
period for active managers, particularly those with a
quality equity investment style with a bias towards Asia
and Emerging Markets.
Performance for fixed income, quantitative, alternative
investment strategies, and liquidity remains consistently
strong and illustrates the resilience of our performance
delivery in these asset classes. Key outperforming
strategies include Emerging Market Debt, Euro
Investment Grade, Euro High Yield, Money Markets, Ultra
Short Munis and our full range of Quantitative Enhanced
Index strategies.
Equities has been impacted by our AUM bias towards
Asia and Emerging Markets and the quality growth style
which have both struggled when compared to the
exceptionally narrow performance of the Magnificent 7
stocks in the US. The faltering recovery in China has
been a headwind for our larger Asia, Emerging Markets
and China strategies due to our domestic overweight.
However, there are strong areas of outperformance in
Emerging Market Income, Emerging Market Small Cap,
UK Value and European Small Cap strategies.
2023 was also a challenging backdrop for our multi-
asset strategies. However, our Multi-Manager range,
while behind long term cash based composite
benchmarks used in the calculation above, is
performing well versus peers with 67% ahead of peer
group
2
.
Real estate valuations experienced some of the
sharpest corrections in history in late 2022/early 2023
which impacted returns over all periods. However, after
the sharp de-rating in our favoured sectors of logistics
and industrials we have seen some performance
recovery coming through YTD to Q3 2023, with funds
benefiting from being underweight to UK offices and
continued robust performance from German
Residential. Our Listed Real Estate funds are
outperforming over 1, 3 and 5 years.
67abrdn.comAnnual report 2023
STRATEGIC REPORT
Chief Financial Officer’s overview continued
1. The threesixty and MPS businesses moved from Personal Wealth to Adviser from January 2023 and May 2023 respectively. Comparatives have not
been restated.
2. Includes Platform AUA of £70.9bn (2022: £68.5bn).
Adviser
Adjusted
operating profit
£118m
Net operating
revenue
£224m
Net operating
revenue yield
30.6bps
Net flows
(£2.1bn)
2023
1
2022
Net operating revenue £224m £185m
Adjusted operating expenses (£106m) (£99m)
Adjusted operating profit
£118m £86m
Cost/income ratio 47% 54%
Net operating revenue yield
30.6bps 26.1bps
AUMA
2
£73.5bn £68.5bn
Gross flows
£5.8bn £6.6bn
Redemptions
(£7.9bn) (£5.0bn)
Net flows
(£2.1bn) £1.6bn
Adjusted operating profit
–
Strong earnings performance with profit up 37% to
£118m, against a backdrop of challenging market
conditions.
–
Cost/income ratio improved to 47%, benefiting from
higher revenue as detailed below, and outsource
costs savings.
Net operating revenue
–
21% higher than 2022 at £224m, comprising £167m
Platform charges (2022: £174m), £31m treasury
income (2022: £11m) and £26m other (2022: £nil).
–
Rise in interest rates resulted in an increase in treasury
income on client balances to £31m and increase in
cash interest paid to clients.
–
H2 2023 includes c£15m benefit of a revised
distribution agreement with Phoenix, relating to the
SIPP product that we will be taking legal ownership of
in 2024.
–
2023 revenue also included c£11m from
threesixty/MPS following the transfer from the
Personal Wealth business.
–
The average margin earned on client cash balances
during 2023 was c228bps and the indicative Adviser
average cash margin for 2024 is expected to be
broadly in line with 2023.
Revenue yield
–
Increased to 30.6bps due to the higher revenue
explained above, with average AUMA in line with
2022 at £70.8bn.
AUMA
–
7% increase in 2023 due to inclusion of AUM of c£2.6bn
relating to our Managed Portfolio Service (MPS)
business and favourable market movements.
–
Our MPS business, which was part of the discretionary
fund management business, has been retained and
moved to the Adviser business from the Personal
Wealth business in May 2023 in order to maximise
opportunities available through the Adviser distribution
model. Our platforms have a footprint with 50% of UK
adviser firms, resulting in a significant opportunity for
the MPS business.
Gross flows
–
Inflow activity (including MPS) reduced by 12% in
2023, reflecting muted client activity across the
industry due to ongoing market uncertainty and the
cost of living impact on customers’ ability to save. This
has a heightened impact on our Adviser business
where gross flows are primarily driven by existing
customers.
Net flows
–
Net outflows of £2.1bn reflect the market conditions,
customer behaviours in response to the increased
cost of living and the short-term impact in 2023
resulting from the technology upgrade.
68 abrdn.com Annual report 2023
1. The threesixty and MPS businesses moved from Personal Wealth to Adviser from January 2023 and May 2023 respectively. Comparatives have not
been restated.
2. Results for interactive investor (excluding Personal Wealth) included following the completion of the acquisition on 27 May 2022.
3. Net operating revenue yield is shown for Personal Wealth only. Revenue for ii
4
is not aligned with AUA and therefore revenue yield is not presented.
4. Relates to ii (excluding Personal Wealth).
ii
Adjusted
operating profit
£114m
Net operating
revenue
£287m
Net operating
revenue yield
58.8bps
Net flows
£2.9bn
Total
1
ii (excluding Personal Wealth) Personal Wealth
1
2023 2022
12 months to
31 Dec 2023
7 months to
31 Dec 2022
2
2023 2022
Net operating revenue £287m £201m £230m £114m £57m £87m
Adjusted operating expenses (£173m) (£129m) (£103m) (£47m) (£70m) (£82m)
Adjusted operating profit/(loss)
£114m £72m £127m £67m (£13m) £5m
Cost/income ratio 60% 64% 45% 41% 123% 94%
Net operating revenue yield
3
58.8bps 59.2bps
AUMA
£66.0bn £67.1bn £61.7bn £54.0bn £4.3bn £13.1bn
Gross flows
£10.2bn £5.6bn £9.5bn £4.1bn £0.7bn £1.5bn
Redemptions
(£7.3bn) (£3.7bn) (£6.2bn) (£2.5bn) (£1.1bn) (£1.2bn)
Net flows
£2.9bn £1.9bn £3.3bn £1.6bn (£0.4bn) £0.3bn
Adjusted operating profit
–
Higher profit reflects the inclusion of £127m for the full
12 month result for ii
4
, compared to only seven months
in 2022.
–
ii
4
has continued to perform well against an uncertain
market environment.
–
Personal Wealth restructured during 2023, with
transfers of business to Adviser and the sale of abrdn
Capital to LGT. The loss of £13m in 2023 was mainly
due to the lower revenue detailed below and the
impact of inflation on expenses.
Net operating revenue
–
Revenue
4
of £230m continues to benefit from
diverse revenue streams. Treasury income
contributed £134m (2022: £58m), benefiting from the
continued rise in interest rates. Trading revenue of
£48m (2022: £27m) was impacted by muted levels of
customer activity in uncertain market conditions.
Revenue from subscriptions was £54m (2022: £32m).
–
Average cash margin was 236bps in 2023 and
the indicative ii average cash margin for 2024 is
expected to be broadly in line with 2023.
–
Personal Wealth revenue reduced by £30m due to a
c£19m impact from the transfer of the MPS business
to Adviser and the sale of abrdn capital to LGT, c£6m
from the transfer of threesixty to Adviser, and the
impact of adverse market movements.
Revenue yield
–
Personal Wealth revenue yield was broadly flat at
58.8bps with average AUMA of £9.7bn, 28% lower
than 2022.
AUMA
–
ii
4
AUA increased to £61.7bn (2022: £54.0bn) including
£0.5bn from internal customer transfers in December
2023, with the industry leading AUA per customer up
13% to £152k.
–
Personal Wealth AUMA decreased to £4.3bn
(2022: £13.1bn) mainly due to the sale of abrdn
Capital, (AUM of c£6bn) to LGT, which completed on
1 September 2023 and MPS AUM of c£2.5bn moving to
the Adviser business in H1 2023.
Gross and net flows
–
ii
4
net inflows remained strongly positive in 2023 at
£3.3bn despite a subdued retail market across the
year.
–
Personal Wealth net outflows of £0.4bn include the
impact of client uncertainty following the
announcement of the sale of our discretionary
fund management business.
ii
4
operational metrics
2023
12 Months
2022
12 Months
Total customers at year end 407k 402k
Total customers excluding EQi and
Share Centre migrated customers
and pension trading accounts
310k 299k
Customers holding a SIPP account
62.4k 51.5k
Customer cash balances
£5.5bn £6.0bn
AUA per customer
£152k £134k
New customers
30.2k 29.2k
Daily average retail trading
volumes
15.7k 17.3k
69abrdn.comAnnual report 2023
STRATEGIC REPORT
Chief Financial Officer’s overview continued
1. Adjusted operating loss consists of net operating revenue £9m (2022: £10m) and adjusted operating expenses £42m (2022: £35m). Finimize and our
digital innovation group have moved from Investments to Other. Comparatives have been restated. Refer Note 2 in the Group financial statements
section.
2. Investments net flows exclude Institutional/Retail Wealth liquidity and LBG tranche withdrawals.
3. Personal has been renamed ii and includes Personal Wealth unless otherwise stated.
4. Comparatives have been restated for the HASL implementation of IFRS 17. Refer Basis of preparation in the Group financial statements section.
Overall performance
Adjusted
operating profit
£249m
IFRS loss
before tax
(£6m)
Adjusted capital
generation
£299m
Net flows
(£17.6bn)
Adjusted operating profit AUMA Net flows
Segmental summary
2023
£m
2022
£m
2023
£bn
2022
£bn
2023
£bn
2022
£bn
Investments
1,2
50 130 366.7 376.1 (15.3) (13.4)
Adviser 118 86 73.5 68.5 (2.1) 1.6
ii
3
114 72 66.0 67.1 2.9 1.9
Other
1
(33) (25) - - - -
Eliminations
- - (11.3) (11.7) 0.6 (0.4)
Total
249 263 494.9 500.0 (13.9) (10.3)
Liquidity net flows (3.7) (3.2)
LBG tranche withdrawals - (24.4)
Total net flows (including liquidity and LBG)
(17.6) (37.9)
Assets under management and administration
Assets under management reduced by 1% to £494.9bn (2022: £500.0bn):
– Net outflows excluding liquidity of (£13.9bn), with outflows in Investments and Adviser partly offset by positive
flows of £2.9bn in ii.
– Market and other movements of £19.4bn mainly reflecting positive movements in Investments, driven by Insurance
partners.
– Net impact of corporate actions of (£6.9bn) primarily due to the sales of the discretionary fund management and
US private markets businesses, partly offset by the acquisition of the specialist healthcare fund management
business of Tekla.
Analysis of profit
2023
£m
2022
4
£m
Net operating revenue 1,398 1,456
Adjusted operating expenses (1,149) (1,193)
Adjusted operating profit 249 263
Adjusted net financing costs and investment return 81 (10)
Adjusted profit before tax
330 253
Adjusting items including results of associates and joint ventures (336) (865)
IFRS loss before tax (6) (612)
Tax credit 18 66
IFRS profit/(loss) for the year 12 (546)
Adjusted net financing costs and investment return
Adjusted net financing costs and investment return resulted in a gain of £81m (2022: loss £10m):
– Investment losses, including from seed capital and co-investment fund holdings reduced to £3m (2022: loss £34m).
– Net finance income of £50m (2022: costs £5m) reflecting a higher rate of interest on cash and liquid assets
and the benefit from the redemption of the 5.5% Sterling fixed rate subordinated notes in December 2022.
– Higher net interest credit relating to the staff pension schemes of £34m (2022: £29m) reflecting an increase in
the opening discount rate due to a rise in corporate bond yields.
70 abrdn.com Annual report 2023
1. Comparatives have been restated for the HASL implementation of IFRS 17. Refer Basis of preparation in the Group financial statements section
(page 167).
Adjusting items
2023
£m
2022
1
£m
Restructuring and corporate transaction expenses (152) (214)
Amortisation and impairment of intangible assets acquired in business combinations
and through the purchase of customer contracts
(189) (494)
Profit on disposal of subsidiaries and other operations
79 –
Profit on disposal of interests in associates
- 6
Change in fair value of significant listed investments
(178) (187)
Dividends from significant listed investments
64 68
Share of profit or loss from associates and joint ventures
1 5
Reversal of impairment/(impairment) of interests in associates and joint ventures
2 (9)
Other
37 (40)
Total adjusting items including results of associates and joint ventures
(336) (865)
Restructuring and corporate transaction expenses were
£152m, comprising restructuring costs of £121m
(2022: £169m) in property related impairments,
severance, platform transformation, and specific costs
to effect savings in Investments, offset in part by a £32m
release of provision for separation costs, with further
details provided in Note 33 of the Group financial
statements. Corporate transaction costs of £31m
(2022: £45m) primarily related to prior year transactions
and the sale of our European-headquartered private
equity business.
Amortisation and impairment of intangible assets acquired
in business combinations and through the purchase of
customer contracts reduced to £189m, mainly due to the
lower impairments of £63m (2022: £369m).
Impairments of goodwill in 2023 of £62m (2022: £340m),
comprising £36m (2022: £nil) for our financial planning
business and £26m (2022: £41m) for Finimize. In 2022,
there was also a goodwill impairment of £299m in
Investments. The impairments in 2023 include the
impact of lower projected revenues as a result of
adverse markets and macroeconomic conditions, and
for Finimize the impact of lower short-term projected
growth following a strategic shift that prioritises
profitability over revenue growth. Further details are
provided in Note 13 of the Group financial statements.
Profit on disposal of interests in subsidiaries and other
operations relates to the sales of our discretionary fund
management business and our US private equity and
venture capital business. See Note 1 for further details.
Profit on disposal of interests in associates was £nil.
The 2022 profit of £6m related to the sale of our stake in
Origo Services Limited.
Change in fair value of significant listed investments of
(£178m) from market movements is analysed in the
table below:
2023
£m
2022
£m
Phoenix (77) (44)
HDFC Asset Management (96) (105)
HDFC Life
(5) (38)
Change in fair value of significant
listed investments
(178) (187)
The final HDFC Life and HDFC Asset Management
stakes were sold on 31 May 2023 and 20 June 2023
respectively.
Dividends from significant listed investments relates to
our shareholdings in Phoenix (£54m) and HDFC Asset
Management (£10m).
Share of profit or loss from associates and joint ventures
reduced to a profit of £1m (2022: £5m). The results for
HASL have been impacted by the adoption of IFRS 17 on
1 January 2023. As required by IFRS 17, the standard has
been applied retrospectively with a resulting
restatement of the carrying value of the joint venture
and opening retained earnings as at 1 January 2022.
This change resulted in our 2022 share of HASL profit
increasing from the £7m previously reported to £10m.
2023
£m
2022
1
£m
HASL 3 10
Virgin Money UTM/Other (2) (5)
Share of profit or loss from associates
and joint ventures
1 5
Reversal of impairment/(impairment) of interests in
associates and joint ventures was £2m in 2023 relating to
a reversal of impairment on Virgin Money UTM. See Note
14 for further details. The £9m in 2022 related to an
impairment of Tenet Group Ltd.
Other adjusting items in 2023 includes the £36m
liability insurance recovery of the £41m single process
execution event provision reflected at 2022, net of a
£5m excess. Other adjusting items in 2023 also includes
a £21m provision expense for a potential tax liability. See
Note 11 for further details of other adjusting items and
Note 33 for further details on provisions.
See pages 179 and 194 for further details on adjusted
operating profit and reconciliation of adjusted operating
profit to IFRS profit. Further details on adjusting items are
included in the Supplementary information section.
71abrdn.comAnnual report 2023
STRATEGIC REPORT
Chief Financial Officer’s overview continued
1. Comparatives have been restated for the HASL implementation of IFRS 17. Refer Basis of preparation in the Group financial statements section.
Tax policy
We have important responsibilities in paying and
collecting taxes in the countries in which we operate.
Our tax strategy is therefore, guided by a commitment
to high ethical, legal and professional standards and
being open and transparent about what we are doing
to meet those standards.
Tax expense
The tax credit attributable to the IFRS loss for the year,
excluding amounts relating to prior periods, is £1m
which gives rise to an effective tax rate of 17%. The
overall IFRS tax credit, including tax credits relating to
prior periods of £17m, is £18m (2022: credit £66m)
which results in an effective tax rate of 300% (2022:
11%) due to the relative scale of the loss in the year. The
difference to the UK Corporation Tax rate of 23.5% is
mainly driven by:
– Dividend income and fair value movements from our
investments in Phoenix not being subject to tax.
– Movements in the fair value of our investment in HDFC
Asset Management being tax effected at the Indian
long-term capital gains tax rate, which is lower than
the UK Corporation Tax rate.
– Profit on the sale of abrdn Capital not being subject
to tax.
– Goodwill impairments not deductible for tax
purposes.
– Prior year adjustments to deferred tax liabilities on
intangibles.
The tax expense attributable to adjusted profit is £50m
(2022: £22m), an effective tax rate of 15% (2022: 9%).
This is lower than the 23.5% UK rate primarily due to
changes in the applicable deferred tax rates on
temporary differences and pension scheme surplus
movements included on a net of tax basis.
Total tax contribution
Total tax contribution is a measure of all the taxes abrdn
pays to and collects on behalf of governments in the
territories in which we operate. Our total tax
contribution was £449m (2022: £443m). Of the total,
£201m (2022: £186m) was borne by abrdn whilst
£248m (2022: £257m) represents tax collected by
abrdn on behalf of the tax authorities. Taxes borne
mainly consist of corporation tax, employer’s national
insurance contributions and irrecoverable VAT. The
taxes collected figure is mainly comprised of pay-as-
you-earn deductions from employee payroll payments,
employees’ national insurance contributions, VAT
collected and income tax collected on behalf of HMRC
on platform pensions business.
Earnings per share
– Adjusted diluted earnings per share increased to
13.9p (2022: 10.5p) due to the higher adjusted profit
after tax and the benefit from share buybacks in 2022
and 2023.
– Diluted earnings per share was a profit of 0.1p
(2022: loss 26.6p
1
) reflecting the factors above,
impairments and fair value losses of significant listed
investments.
Dividends
The Board has recommended a final dividend for 2023
of 7.3p (2022: 7.3p) per share. This is subject to
shareholder approval and will be paid on 30 April 2024
to shareholders on the register at close of business on
15 March 2024. The dividend payment is expected to be
£130m.
External dividends are funded from the cumulative
dividend income that abrdn plc receives from its
subsidiaries and associates (see below for details of
cash and distributable reserves). The need to hold
appropriate regulatory capital is the primary restriction
on the Group’s ability to pay dividends. Further
information on the principal risks and uncertainties that
may affect the business and therefore dividends is
provided in the Risk management section.
The adjusted capital generation trend and related
dividend coverage is shown below:
Return of capital
On 5 June 2023 we commenced a £150m share
buyback which was extended to £300m on 8 August
2023. This completed on 19 December 2023 with a total
of 161m shares repurchased at an average price of
£1.86 per share.
Capital and liquidity
Adjusted capital generation
Adjusted capital generation which shows how adjusted
profit contributes to regulatory capital increased by
15% to £299m.
2023
£m
2022
£m
Adjusted profit after tax 280 231
Less net interest credit relating to
the staff pension schemes
(34) (29)
Less AT1 debt interest
(11) (11)
Add dividends received from
associates, joint ventures and
significant listed investments
64 68
Adjusted capital generation
299 259
Restructuring and corporate
transaction expenses (net of tax)
(121) (178)
Net capital generation 178 81
You can read our tax report on our website
www.abrdn.com/annualreport
‘22
‘23
‘21 £447m
£443m
£449m
‘22
‘23
‘21 £366m
£259m
£299m
1.18x
0.88x
1.12x
72 abrdn.com Annual report 2023
4. Comparatives have been restated for the HASL implementation of IFRS 17. Refer Basis of preparation in the Group financial statements section.
IFPR surplus CET1 capital
The indicative surplus CET1 capital at 31 December
2023 was £876m (2022: £711m). Disposal of our
remaining HDFC Life and HDFC Asset Management
stakes, in May and June 2023 respectively, benefited
regulatory capital by £576m.
Key movements in surplus CET1 capital are shown in
the table below.
Analysis of movements in surplus CET1 capital (IFPR
basis)
2023
£m
2022
£m
Opening surplus regulatory capital 711 1,799
Sources of capital
Adjusted capital generation
299 259
HDFC Life, HDFC Asset
Management
1
and Phoenix sales 576 789
Disposals
2
137 -
Uses of capital
Restructuring and corporate
transaction expenses (net of tax)
(121) (178)
Dividends
(267) (295)
Share buyback
(302) (302)
Acquisitions
3
(152) (1,364)
Other
(5) 3
Closing surplus CET1 capital
876 711
1. Capital benefit of HDFC Asset Management sales reflects the pre-tax
proceeds.
2. Discretionary fund management and US private equity businesses.
Capital benefit of discretionary fund management disposal includes
derecognition of related intangibles (£58m).
3. ii (excluding Personal Wealth) in 2022 and Tekla and Macquarie funds
in 2023.
The full value of the Group’s significant listed
investments is excluded from the capital position under
IFPR.
A summary of our CET1 coverage is shown in the table
below.
CET1 coverage
2023
£m
2022
£m
CET1 capital resources 1,466 1,301
Total regulatory capital requirements 1,054 1,054
CET1 coverage 139% 123%
Note 42 of the Group financial statements includes a
reconciliation between IFRS equity and surplus regulatory
capital and details of our capital management policies.
Cash and liquid resources and distributable
reserves
Cash and liquid resources remained robust at £1.8bn at
31 December 2023 (2022: £1.7bn). These resources are
high quality and mainly invested in cash, money market
instruments and short-term debt securities. Cash and
liquid resources held in abrdn plc were £0.4bn at
31 December 2023 (2022: £0.3bn).
Further information on cash and liquid resources, and a
reconciliation to IFRS cash and cash equivalents, are
provided in Supplementary information.
At 31 December 2023 abrdn plc had £3.1bn
(2022: £3.2bn) of distributable reserves.
IFRS net cash flows
– Net cash inflows from operating activities were
£221m (2022: £110m) which includes outflows from
restructuring and corporate transaction expenses,
net of tax, of £78m (2022: £149m).
– Net cash inflows from investing activities were £542m
(2022: outflows £86m) and primarily reflected £535m
net proceeds from the final HDFC Asset Management
and HDFC Life stake sales.
– Net cash outflows from financing activities were
£711m (2022: £761m) with the decrease mainly due
to the repayment of subordinated liabilities in 2022.
The cash inflows and outflows described above resulted
in closing cash and cash equivalents of £1,210m as at 31
December 2023 (2022: £1,166m).
IFRS net assets
IFRS net assets attributable to equity holders decreased
to £4.9bn (2022: £5.6bn
4
) mainly due to the share
buyback and dividends paid in the year:
– Intangible assets remained at £1.6bn (2022: £1.6bn)
due to additions being offset by amortisation and
impairments. Further details are provided in Note 13.
– The principal defined benefit staff pension scheme,
which is closed to future accrual, continues to have a
significant surplus of £0.7bn (2022: £0.8bn). Further
details are provided in Note 31. As part of ongoing
actions taken in recent years to reduce risk in abrdn’s
principal defined benefit pension plan, the trustee
submitted a petition to the Court of Session in March
2023 seeking a direction on the destination of any
residual surplus assets that remain after all plan-
related obligations are settled or otherwise provided
for. On 1 August 2023, the Court of Session, among
other things, confirmed that if a buy-out were to be
completed and sufficient provision made for: (i) any
remaining liabilities; and (ii) expenses of completing
the winding-up of the pension scheme, there would
be a resulting trust in respect of any residual surplus
assets in favour of the employer. We are continuing to
work with the trustee on next steps. Any residual
surplus will be determined on a different basis to IAS
19 or funding measures of the plan surplus. The timing
of release of any surplus remains a matter for the
trustee. The IAS 19 defined benefit plan asset is not
included in abrdn’s regulatory capital.
– Financial investments decreased to £2.0bn
(2022: £2.9bn) primarily due to the final stake sales in
HDFC Asset Management and HDFC Life, which
completed in H1 2023. At 31 December 2023 financial
investments included £0.6bn (2022: £1.3bn) in relation
to significant listed investments (Phoenix).
73abrdn.comAnnual report 2023
STRATEGIC REPORT
Chief Financial Officer’s overview continued
Viability statement
Longer-term prospects
The Directors have determined that three years is an
appropriate period over which to assess the Group’s
prospects. In addition to aligning with our business
planning horizon, this reflects the timescale over which
changes to major regulations and the external
landscape affecting our business typically take place.
The Group’s prospects are primarily assessed through
the strategic and business planning process. These
prospects have been enhanced as a result of actions
taken during the year, including through actions to
simplify the business.
The assessment reflects (i) the Group’s focus on its
strategic priorities as set out on pages 14 to 15 and how
this is expected to drive client-led growth in abrdn’s
three businesses and (ii) the expected impact of
the transformation programme announced in
January 2024.
In forming their assessment of the Group’s longer-term
prospects, the Directors have also taken into account:
– The Group’s capital position as set out on page 73.
– The Group’s substantial holdings of cash and liquid
resources as well as holdings in listed equity
investments, as set out on page 73.
– The Group’s principal and emerging risks as set out on
pages 76 to 79.
Assessment of prospects
The Directors consider the Group’s focus on its
strategic priorities will deliver growth while
allowing the Group to maintain its regulatory
capital position and the dividend policy described
on page 64.
Viability
The Directors consider that three years is an
appropriate period for assessing viability as this is in line
with the horizon used for our business planning and
stress testing and scenario analysis processes.
In considering the viability statement, the Board has
reviewed and assessed the Group’s principal risks in
order to understand potential vulnerabilities for the
business. In addition to this, the Directors assessed the
Group’s viability taking into account:
– Output from the Group’s business planning process.
– Results from the Group’s stress testing and scenario
analysis programme.
– Results from the Group’s reverse stress testing
exercise.
– Work performed in connection with the UK’s FCA and
PRA rules on operational resilience.
The business planning process includes the projection of
profitability, regulatory capital and liquidity over a three-
year period, based on a number of assumptions. This
includes assumptions regarding the economic outlook
which reflects various factors, including the changing
market conditions following the significant geopolitical
and economic developments in recent years.
The Group has no debt maturing over the next three
years and based on business planning projections, there
is no expectation that the Group will need to draw down
on its £400m revolving credit facility described on page
241.
The Group’s stress testing and scenario analysis
programme develops financial projections over a three-
year horizon in response to a range of severe but
plausible stresses to the business plan to understand the
Group’s financial resilience. This includes exploring (i)
the impacts of market-wide stresses, (ii) stresses that
are specific to abrdn, and (iii) stresses that combine
both these elements. Whilst all of the Group’s principal
risks could potentially impact on the Group’s financial
resilience, our combined stress testing scenarios
focused on those risks expected to have the most
significant impact:
– Financial risk was considered through stresses to
market levels, flows, and margins. The scenarios that
were explored included stressing flows over all three
years and assuming a market shock in 2024 with an
impact that might be expected around 1-in-20 years.
This included equity markets falling approximately
24% in Q1 2024 with recovery occurring from Q3
2024 through 2026 and the UK Base rate falling to
0.1% by Q1 2025 where it remains.
– Operational risks were considered in the context of
the Group incurring £90m of operational losses which
were assumed to represent the cumulative impact of
a number of severe losses across a range of principal
risk categories, such as: process execution and trade
errors, technology risk, security and resilience risk, or
fraud and financial crime risks.
74 abrdn.com Annual report 2023
All the scenarios explored resulted in the Group
experiencing reduced profitability and, in some cases,
losses over the planning horizon. Projections of capital
and liquid resources fell as a result of these losses.
Given the strength and quality of the Group’s financial
position, the Group had sufficient capital and liquid
resources to remain above its regulatory requirements
without needing to take any management actions
other than those assumed within the business plan.
In the event that the Group was to experience more
severe stresses than those explored under the Group’s
stress testing and scenario analysis programme, the
Group has a range of management actions it would be
able to take, including a number of sizeable
management actions wholly within the Group’s control.
This includes drawing down on the revolving credit
facility, reducing discretionary expenditure, and
dividend management actions.
The Group is considered to be resilient to adverse
climate change over the three-year horizon; the
stresses to market levels and flows explored under the
stress testing and scenario analysis programme are
deemed to capture the possible consequences of
climate change over this period.
Reverse stress testing involves exploring the quantitative
and/or qualitative impacts of extreme scenarios which
could threaten the viability of our business model. For
this year’s exercise, we investigated the potential for
cyber-attacks to impact on the Group’s viability.
Initial analysis highlighted that, given the diversification
of revenues arising from the Group’s three businesses,
the Group’s viability was most likely to be threatened
where significant disruption was experienced by more
than one business.
The Group’s IT architecture and related controls were
found to reduce the risk of a single cyber-attack having
a material impact on more than one business. As a
result, it was concluded that significant disruption was
only likely to be experienced by more than one business
where the Group suffered more than one cyber-attack.
Based on the above, the reverse stress test scenario
that was explored focused on a ransomware cyber-
attack impacting on the abrdn Group, followed a few
months later by a cyber-attack impacting FNZ’s ability
to serve abrdn. In exploring this extreme scenario,
consideration was given to understanding the possible
disruption that could arise in the Investments and
Adviser business such that the abrdn Group could
become non-viable.
The investigations concluded that the Group’s non-
viability was most likely to arise due to (i) a significant
outflow of AUMA from the Investments business
following the cyber-attack on the abrdn Group and (ii)
the Adviser business reaching a point of non-viability
following disruption caused by the cyber-attack on FNZ.
The Group operates extensive controls to protect the
business against cyber-attacks and engages actively
with third parties to understand and, where necessary,
request improvement in the controls they operate.
The likelihood of two cyber-attacks arising in the
manner described is considered to be very remote. This,
and the controls in place to mitigate the impact of such
cyber-attacks, supports the assessment of viability and
no qualification is considered necessary.
Over recent years the Group has also explored reverse
stress tests including the failure of a critical third-party
administrator in the Investments business, the loss of
critical staff and extreme financial market shocks. The
work performed concluded that these events had a low
likelihood of occurrence and were not considered likely
to threaten the Group’s viability. These conclusions are
considered to remain valid.
Operational resilience reflects the ability of firms and the
financial sector as a whole to prevent, adapt and
respond to, and recover and learn from operational
disruptions. In addition to causing potential harm to
customers and threatening market integrity, such
operational disruptions and the unavailability of
important business services have the potential to
threaten viability.
To support the Group’s operational resilience, and in line
with UK regulatory expectations, the Group reviews and
approves important business services, impact tolerance
thresholds, and operational resilience self-assessments
on an annual basis. The Group also undertakes
measures where relevant to comply with operational
resilience regulations in overseas jurisdictions, for
example Singapore and Ireland.
The Group continues to enhance its operational
resilience and defences against risks through
enhancement programmes. This is to ensure the Group
complies with UK regulatory expectations around
operational resilience that must be met by March 2025
and helps to further reduce risks of non-viability.
Assessment of viability
The Directors confirm that they have a
reasonable expectation that abrdn plc will be
able to continue in operation and meet its
liabilities as they fall due over the next three years.
75abrdn.comAnnual report 2023
STRATEGIC REPORT
Risk management
1. See Note 34 for disclosure relating to the financial impact of climate-related risk on the Group financial statements.
Managing risk for better outcomes
Our approach to risk management
A strong risk and compliance culture underpins our
commitment to put client and customers first and
safeguard the interests of our shareholders. Our Board
has ultimate responsibility for risk management and
oversees the effectiveness of our Enterprise Risk
Management (ERM) framework.
ERM framework
The ERM framework supports risk management
throughout our business. We operate ‘three lines of
defence’ with defined roles and responsibilities. We
continually evolve our framework to meet the changing
needs of the company and to make sure it keeps pace
with industry best practice. In 2023, improvements to the
framework included:
– Delivering a new approach to Risk and Control Self
Assessments, focused on key business outcomes and
executive accountability.
– Improving abrdn’s risk acceptance process.
– Improved management information to better
measure how the framework is applied in practice.
– Reviewing our risk taxonomy.
– Strengthening capabilities within Enterprise Risk.
– Further embedding of capabilities to support
Operational Resilience and Consumer Duty outcomes.
– Updating our Global Code of Conduct.
Business risk environment
The commercial environment remained challenging
during 2023 given the market and economic
environment and geopolitical events and risks. Inflation
remained high, accompanied by the continued
tightening of monetary policy. These conditions
adversely impacted market levels and client flows over
the year.
We have continued to simplify our business model,
delivering on recent transformation projects and
continued diversification of the Group’s revenue,
following the acquisition of ii in 2022.
We have simplified and focused our investment
capabilities on areas where we have both the skill and
the scale to capitalise on the key theme shaping the
market, through either public markets or alternative
asset classes. We have completed the sales of our US
private equity and discretionary fund management
businesses and announced the sale of our European
private equity business. We have also acquired the
healthcare fund management capabilities of Tekla, as
part of our journey to refocus our business to become a
‘specialist’ manager.
We continue to manage a lot of change across the
business, to simplify and achieve sustainable growth.
The volume of change may create bandwidth issues
and operational stretch on top of our core activities,
whilst we balance the demands of the business
simplification and growth agendas. We continue to
monitor how we attract, retain and develop our
colleagues and engage regularly on colleague
engagement.
Client and customer interests are at the heart of our
business. We continue to focus on good outcomes
which we deliver across our business. During 2023, we
implemented the FCA’s new Consumer Duty
requirements, which came into force on 31
July. This is
embedded in our Global Code of Conduct and
supported by our Consumer Duty mandatory training
and our Client and Customer Policy.
The Consumer Duty requirements place specific
obligations on the abrdn Group’s businesses to
demonstrate Value for Money for its clients. This is
achieved by avoiding biased incentive schemes and by
our Value for Money framework, underpinned by our
culture and strategy.
Evolving and emerging risks
We are vigilant to risks that could crystallise over
different horizons and impact our strategy, operations
and our clients. These risks vary in nature as they cover
geopolitical, economic, societal, technological, legal,
regulatory and environmental themes. We distil internal
and external research to consider how risks could
emerge and evolve.
We provide our clients and customers fair and
transparent fee structures and are engaged with the
FCA (in the UK) on retention of interest earned on cash
balances. Some notable risks (and opportunities) for our
business include adoption of modern technologies,
uncertainty driven by geopolitics, unprecedented
market shifts, evolving cyber threats and climate
change.
Sustainability risks
1
We have a responsibility to shareholders, clients,
customers and all stakeholders to assess, report on,
manage and mitigate our sustainability risks. As an
investment firm, we need to consider the impact of our
corporate activities while making investments in line with
client mandates. We are mindful of the increasing
challenges around providing consistent ESG disclosures
across multiple geographies.
During 2023, we continued to deliver against a number
of key milestones. These included regulatory disclosure
requirements under the EU SFDR and UK TCFD and
enhancing our climate and carbon analytical tools. We
completed the integration of ESG data into our
investment data platform to support 2024 regulatory
reporting and transitioned to a new ESG screening and
exclusion tool. We have commenced a review of the
UK SDR reporting and disclosure requirement for
delivery in 2024.
76 abrdn.com Annual report 2023
Principal risks and uncertainties
We categorise our risks across 12 principal risk categories which have both internal and external drivers. Within our
ERM framework, we have developed more detailed taxonomy of risks under these principal risk categories. This
allows us to systematically monitor the risk profile of our business. Principal and emerging risks are subject to active
oversight and robust assessment by the Board. These risks are described in the following table.
Risk to our business How we manage this risk
Strategic risk
–
The current external geopolitical and
macroeconomic environment presents a wide
range of risks that could impact our business plan
and the implementation of our strategy.
–
The volume of internal change also poses a risk to
the delivery of our plans.
–
Risks could include failing to meet client
expectations, poor strategic decision-making or
failure to adapt.
We continued to simplify our business model, increase
efficiency and improve the blend of capabilities,
technology and processes.
We successfully completed key acquisitions and
disposals to simplify our business and strengthen our
capabilities for future growth. Each business has a clear
growth strategy. We rigorously assess inorganic
opportunities for their contribution to our core strategy
and client needs. Market and competitor intelligence has
aided decision-making.
We have maintained focus on geopolitical and
macroeconomic developments to understand and
manage implications.
Financial risk
–
This is the risk of having insufficient financial
resources, suffering losses from adverse markets or
the failure or default of counterparties. It is
impacted by our flows experience, global market
conditions and the fees we charge on investment
mandates, platforms and wealth management
services.
–
Our strong capital and liquidity position enabled the
continuation of returning capital to shareholders
through share buybacks, while still maintaining a
strong capital position.
Business planning and stress testing is used to project our
financial resources under a range of scenarios and
confirm the financial resilience of our business. During
2023, we continued to operate to the UK Investment
Firms Prudential Regime which determines regulatory
capital and liquidity requirements for the group and its
key entities. Our UK regulator completed a planned
Supervisory Review and Evaluation Process during 2023,
as standard for the industry.
Our Treasury Policy includes minimum standards for
managing liquidity, market and counterparty risks,
including the credit quality of our counterparties.
Conduct risk
–
Our business relies on our ability to deliver good
service and fair client and customer outcomes.
–
There is a risk that we fail to achieve this through our
operational activities and the implementation of our
change programmes.
–
This could lead to customer and client harm,
reputational damage and loss of income.
Being client and customer-led is a commitment and an
essential aspect of our culture. This means the
continuous focus on client and customer outcomes in all
that we do.
Our ERM framework supports the management of
conduct risk with clear expectations around conduct
goals and responsibilities. In 2023, we updated our Global
Code of Conduct and implemented the FCA’s Consumer
Duty. Work is continuing to embed the new framework,
improve management information and ensure
compliance of closed book products, required by
31 July 2024.
1
2
3
77abrdn.comAnnual report 2023
STRATEGIC REPORT
Risk management continued
Risk to our business How we manage this risk
Regulatory and legal risk
–
High volumes of regulatory change can create
interpretation and implementation risks.
–
Compliance failures can lead to poor customer and
client outcomes, sanctions, reputation damage and
income loss.
–
During 2023 the company continued to respond to
and implement regulatory change, including in
relation to ESG and the new Consumer Duty
requirements in the UK.
–
Potential risks of changing capital and liquidity
requirements.
–
Tax risk is inherent in the nature of our global
business. This could lead to reputational risk and/or
financial loss for our business.
We actively monitor developments and engage with our
regulators on the regulatory landscape, given the broad
and complex rules that the firms’ operations must apply
globally, including the implementation of new regulatory
policy initiatives. We also invest in compliance and
monitoring activity across the business. The evolution of
regulatory divergence between the UK and EU rulebooks is
a particular focus for the group in view of our business
footprint.
We work with our regulators and tax authorities, to
address requirements and expectations.
Our relationships with key regulators are based on trust
and transparency while our compliance and legal teams
support senior mana
g
ers across our business.
Operational risks (5-12)
Process execution and trade errors
–
This is the risk that processes, systems or external
events could produce operational errors.
–
During 2023 there was continued management
focus on process execution and trade errors.
We have established processes for reporting and
managing incidents, risk events and issues. We monitor
underlying causes of error to identify areas for action,
promoting a culture of accountability and continuously
improving how we address issues.
People
–
Our people are our greatest asset. Business change
has the potential to impact engagement and
morale.
–
Engaging with our people, and supporting their
wellbeing, is critical to our strategy and the success
of our business.
We invest considerable time listening to and
communicating with our staff and have well-established
approaches to engaging at all levels.
We continue to monitor and have responded to market
pressures and increased competition for talent in our
industry. We use targeted approaches to support
retention and recruitment for our key business functions.
Technology
–
There is a risk that our technology may fail to keep
pace with business needs. There is also the
significant risk of unauthorised access of our
systems and cyber-attack.
–
These risks are relevant to a wide range of potential
threats to the business including internal failure,
external intrusion, supplier failure and weather
events.
–
Our current IT estate is complex and there are
dependencies on third party suppliers that need to
be managed in a dedicated way.
We have an ongoing programme to invest in and
enhance our IT infrastructure controls. We benchmark
our IT systems environment to identify areas for
improvement and further investment.
We delivered our Adviser platform technology upgrade
in February, to allow abrdn to deliver better adviser and
customer outcomes, greater operational efficiency, and
exit transitional services with Phoenix.
We maintain heightened vigilance for cyber intrusion,
with dedicated teams monitoring and managing cyber
security risks. We carry out regular testing on penetration
and crisis management.
4
5
6
7
78 abrdn.com Annual report 2023
Risk to our business How we manage this risk
Security and resilience
–
Incidents that can impact business resilience and
continuity include environmental issues, terrorism,
economic instabilities, cyber-attacks and
operational incidents.
–
The risk of disruption from inside the organisation is
broadly stable. However, tools for exploiting IT
vulnerabilities are becoming more widely available
globally and are frequently used by criminal groups
to enable ransomware attacks.
We continue to strengthen our operational resilience.
Crisis management and contingency planning processes
are regularly reviewed and tested, to strengthen our
resilience and response. We are preparing to implement
changes in relation to the new EU Digital Operational
Resilience Act, to be implemented by January 2025.
Fraud and financial crime
–
As a business that handles clients’ money, we are
exposed to the risk of fraudulent and dishonest
activity.
–
As we engage with a wide number of external
parties, we have to be vigilant to the risk that these
parties are connected with criminal behaviour, or
subject to sanctions by national or global
authorities.
We have improved the control environment for anti-
money laundering. Processes are in place to identify
client activity linked with financial crime, globally. These
include controls for anti-money laundering, anti-bribery,
fraud and other areas of financial crime.
We continue to work with the financial authorities and our
industry peers to assist those targeted by scams.
Change management
–
As a diverse, global investment firm, we are
continually implementing change to improve our
business or meet regulatory expectations. As well
as being costly, failure to deliver change effectively
can lead to poor client and customer outcomes
and/or regulatory non-compliance.
The ongoing simplification of our business model enables
us to be more agile and respond at pace to changes in
the economic environment.
In our commitment to transformation, we are positioning
our business for a longer-term sustainable future and
have committed to actions to align our resources and
capabilities. We have established governance processes
with project resources and clearly defined roles across
the three lines of defence.
Third party management
–
We outsource various activities to third party
suppliers and are exposed to a variety of delivery,
regulatory and reputational risks as a result.
Our Third-Party Risk Management framework continues
to evolve in line with external developments, industry
practice and regulatory developments.
Financial management process
–
We have extensive financial reporting obligations to
clients, customers, shareholders, regulators and
other stakeholders. Failures in these processes
could impact decision-making and lead to
regulatory and litigation risk.
Our financial reporting activities align to external
reporting standards and industry best practice. These
activities are subject to extensive internal control and
external assurance.
The cover to page 79 constitute the Strategic report which was approved by the Board and signed on its behalf by:
Stephen Bird
Chief Executive Officer
abrdn plc
(SC286832)
26 February 2024
8
9
10
11
12
79abrdn.comAnnual report 2023
STRATEGIC REPORT
Governance
80 abrdn.com Annual report 2023
Contents
Board of Directors
82
Corporate governance statement
86
1. Audit Committee report
98
2. Risk and Capital Committee report
107
3. Nomination and Governance Committee report
111
4. Directors’ remuneration report
115
Directors’ report
135
Statement of Directors’ responsibilities
141
81abrdn.comAnnual report 2023
GOVERNANCE
Board of Directors
Our business is overseen by our Board of Directors. Biographical details (and shareholdings)
of the Directors as at 26 February 2024 are listed below.
Sir Douglas Flint CBE –
Chairman
Stephen Bird –
Chief Executive Officer
Jason Windsor –
Chief Financial Officer
Appointed to the Board
November 2018
Age
68
Nationality
British
Shares
200,000
Board committees:
NC
Appointed to the Board
July 2020
Age
57
Nationality
British
Shares
782,355
Appointed to the Board
October 2023
Age
51
Nationality
British
Shares
Nil
Sir Douglas’ extensive experience of board
leadership in global financial services has
shaped a collaborative approach which
helps to facilitate open and constructive
boardroom discussion. He maintains a keen
interest and involvement in international,
financial and governance matters, retaining
an expertise which is an important asset to
abrdn. This expertise, together with his prior
board experience, help to focus board
attention on their stewardship responsibilities
as well as guiding discussion and challenge
on the design and delivery of our strategy.
In other current roles, Sir Douglas is Chairman
of IP Group plc and Chairman of the Royal
Marsden Hospital and Charity. He is a
member of a number of advisory boards and
trade associations through which he keeps
abreast of industry, regulatory and
international affairs of relevance to his public
company responsibilities.
Previously, Sir Douglas served as Group
Chairman of HSBC Holdings plc from 2010 to
2017. For 15 years prior to this he was HSBC’s
group finance director, joining from KPMG
where he was a partner, and from 2005 to
2011 he served as a non-executive director
of BP plc. He has extensive experience of
business in Asia, having been a member of
both the Mayor of Shanghai and Mayor of
Beijing’s Advisory Boards and currently serves
on the International Advisory Panel of the
Monetary Authority of Singapore.
Sir Douglas was awarded the CBE in 2006
and his knighthood in 2018, both in
recognition of his service to the finance
industry. In June 2022, he was awarded an
honorary degree by the University of
Glasgow, his alma mater, in recognition of his
services to the business community.
Stephen brings a track record of delivering
exceptional value to clients, creating high-
quality revenue and earnings growth in
complex financial markets, and deep
experience of business transformation during
periods of technological disruption and
competitive change.
Stephen joined the Board in July 2020 as
Chief Executive-Designate, becoming Chief
Executive Officer in September 2020. He is an
abrdn representative director to the US
closed-end fund boards and the SICAV fund
boards where abrdn is the appointed
investment manager.
Previously, Stephen served as Chief Executive
Officer of global consumer banking at
Citigroup from 2015, retiring from the role in
November 2019. His responsibilities
encompassed all consumer and commercial
banking businesses in 19 countries, including
retail banking and wealth management, and
operations and technology supporting these
businesses. Prior to this, he was Chief
Executive for Citigroup’s Asia-Pacific business
across 17 markets, including India and China.
Stephen joined Citigroup in 1998. Over 21
years he held leadership roles in banking,
operations and technology across its Asian
and Latin American businesses. Before this,
he held management positions at GE Capital,
where he was director of UK operations from
1996 to 1998, and at British Steel.
Stephen is a member of the Investment
Association’s board of directors, and the
Financial Services Growth and Development
Board in Scotland. He holds an MBA in
Economics and Finance from University
College Cardiff and is an Honorary Fellow.
Jason joined abrdn as Chief Financial Officer
in October 2023, bringing over twenty-five
years of experience in the financial services
industry. Having held senior finance roles in
investments, insurance and banking, Jason
has established a strong track record of
leadership in finance, asset management,
M&A, and strategy.
His most recent role before joining abrdn was
Chief Financial Officer of Persimmon plc. Prior
to this, Jason was Group Chief Financial
Officer of Aviva plc between 2019 and 2022.
He had previously been Chief Financial
Officer of Aviva’s UK General Insurance and
UK Life businesses, Chief Capital &
Investments Officer, and a director on the
board of Aviva Investors.
Before joining Aviva in 2010, Jason spent 15
years at Morgan Stanley in London and
Singapore, latterly as a Managing Director
within its Investment Banking Division, where
he advised UK and international banks,
insurers and asset managers on M&A, capital
raising and strategy.
Jason is a governor of Felsted School in Essex.
Jason holds a BA (Hons) from the University of
Oxford, with a Part II thesis in Atmospheric
chemistry.
82 abrdn.com Annual report 2023
Key to Board committees
Remuneration Committee
Risk and Capital Committee
Audit Committee
Nomination and Governance Committee
Committee Chair
R
RC
A
NC
Jonathan Asquith –
Non-executive Director and Senior
Independent Director
Catherine Bradley CBE –
Non-executive Director
John Devine –
Non-executive Director
Appointed to the Board
September 2019
Age
67
Nationality
British
Shares
205,864
Board committees:
R NC
Appointed to the Board
January 2022
Age
64
Nationality
British and French
Shares
12,181
Board committees:
A
NC RC
Appointed to the Board
July 2016
Age
65
Nationality
British
Shares
52,913
Board committees:
RC
A NC
Jonathan has considerable experience as a
non-executive director within the investment
management and wealth industry. This
brings important insight to his roles as Senior
Independent Director and Chair of our
Remuneration Committee.
Jonathan is a non-executive director of
CiCap Limited and its regulated subsidiary
Coller Capital Limited. He is also a non-
executive director of B-FLEXION Group
Holdings SA and subsidiaries including
Vantage Infrastructure Holdings and Capital
Four Holding A/S. At the end of 2020 he
stepped down as Deputy Chair of 3i Group
plc after nearly 10 years as a board member.
Previously, he has been Chair of Citigroup
Global Markets Limited, Citibank International
Limited, Dexion Capital plc and AXA
Investment Managers. He has also been a
director of Tilney, Ashmore Group plc and
AXA UK plc.
In his executive career Jonathan worked at
Morgan Grenfell for 18 years, rising to
become group finance director of Morgan
Grenfell Group, before going on to take the
roles of Chief Financial Officer and Chief
Operating Officer at Deutsche Morgan
Grenfell. From 2002 to 2008 he was a director
of Schroders plc, during which time he was
Chief Financial Officer and later Executive
Vice Chairman.
He holds an MA from the University of
Cambridge.
Catherine has more than 30 years’executive
experience advising global financial
institutions and industrial companies on
complex transactions and strategic
opportunities. She brings knowledge from
working across Europe and Asia, serving on
the boards of leading consumer-facing
companies, and working with regulators
which provides valuable input to her roles as
Chair of our Audit Committee and non-
executive Chair of interactive investor, a
wholly owned subsidiary of the group.
Catherine is a non-executive director of
Johnson Electric Holdings Limited, and
easyJet plc, where she chairs the finance
committee. She is also senior independent
director of Kingfisher plc.
Previously, Catherine served on the boards of
leading industrial and consumer-facing
companies in the UK, France, and Hong Kong.
She was appointed by HM Treasury to the
board of the Financial Conduct Authority in
2014 and played an important role in
establishing the FICC Markets Standards
Board in 2015. Catherine stepped down from
these boards in 2020. Between 2021 and
2022 she was also a board member of the
Value Reporting Foundation, where she co-
chaired the audit committee.
In her executive career, Catherine has held a
number of senior finance roles in investment
banking and risk management: in the US with
Merrill Lynch, in the UK and Asia with Credit
Suisse, and in Asia with Société Générale. She
returned to Europe in 2014 to start her non-
executive career.
Catherine graduated from the HEC Paris
School of Management with a major in
Finance and International Economics. She
was awarded a CBE in 2019.
John’s previous roles in asset management,
his experience in the US and Asia, and his
background in finance, operations and
technology are all areas of importance to our
strategy. John’s experience is important to
the board’s discussions of financial reporting
and risk management. He is Chair of our Risk
& Capital Committee.
John was appointed a director of our
business in July 2016, at that time Standard
Life plc. From April 2015 until August 2016, he
was non-executive Chair of Standard Life
Investments (Holdings) Limited.
He is non-executive Chair of Credit Suisse
International and of Credit Suisse Securities
(Europe) Limited, and a non-executive
director of Citco Custody Limited and Citco
Custody (UK) Limited.
From 2008 to 2010, John was Chief
Operating Officer of Threadneedle Asset
Management Limited. Prior to this, he held a
number of senior executive positions at Merrill
Lynch in London, New York, Tokyo and Hong
Kong.
He holds a BA (Hons) from Preston
Polytechnic, and MBA in Banking from
Bangor University and is a Fellow of the
Chartered Institute of Public Finance and
Accounting.
83abrdn.comAnnual report 2023
GOVERNANCE
Board of Directors continued
Hannah Grove –
Non-executive Director
Pam Kaur –
Non-executive Director
Appointed to the Board
September 2021
Age
60
Nationality
British and American
Shares
33,000
Board committees:
NC R
Appointed to the Board
June 2022
Age
60
Nationality
British
Shares
Nil
Board committees:
A RC
Hannah brings more than 20 years of
leadership experience in the global financial
services industry. Her expertise includes
leading brand, client and digital marketing
and communications strategies, including
those for major acquisitions, which she
combines with deep knowledge of regulatory
and governance matters. She is also our
designated non-executive director for board
employee engagement and sits as a non-
executive director on the boards of Standard
Life Savings Limited and Elevate Portfolio
Services Limited, wholly owned subsidiaries of
abrdn group.
Before joining our Board, Hannah enjoyed a
22-year career at State Street. This included
12 years as Chief Marketing Officer, retiring
from the role in November 2020. She was a
member of the company’s management
committee, its business conduct & risk, and
conduct standards committees, and a board
member for its China legal entity.
Before joining State Street, Hannah was
marketing director for the Money Matters
Institute, supported by the United Nations, the
World Bank and private sector companies to
foster sustainable development in emerging
economies.
In other current roles, Hannah is a member of
the advisory board of Irrational Capital. She
has also received significant industry
recognition as a champion of diversity and
inclusion and is a member of the board of
advisors for reboot, an organisation that aims
to enhance dialogue around race both at
work and across society.
Pam has more than 20 years’ experience of
leadership roles in business, risk, compliance,
and internal audit within several of the world’s
largest and most complex financial
institutions during periods of significant
change and public scrutiny. She brings
considerable expertise in leading the
development and implementation of
compliance, audit and risk frameworks and
adapting these to changing regulatory
expectations.
Pam currently holds the role of Group Chief
Risk and Compliance Officer at HSBC and is
also a director of the Hong Kong Shanghai
Banking Corporation. Between 2019 and
2022, she served as a non-executive director
on the board of Centrica, where she was also
a member of the audit and risk committee,
the nomination committee and the safety,
environment and sustainability committee.
Since qualifying as a chartered accountant
with Ernst & Young, Pam has progressed
through a range of technical, compliance,
anti-fraud and risk roles with Citigroup, Lloyds
TSB, Royal Bank of Scotland, Deutsche Bank
and HSBC. These positions have given her
extensive insight into the benefits of effective
internal control systems that recognise
external regulatory requirements.
She holds an MBA and B.Comm in
Accountancy from Punjab University, and is a
fellow of the Institute of Chartered
Accountants of England and Wales.
84 abrdn.com Annual report 2023
Key to Board committees
Remuneration Committee
Risk and Capital Committee
Audit Committee
Nomination and Governance Committee
Committee Chair
R
RC
A
NC
Michael O’Brien –
Non-executive Director
Cathleen Raffaeli –
Non-executive Director
Appointed to the Board
June 2022
Age
60
Nationality
Irish
Shares
173,780
Board committees:
A RC
Appointed to the Board
Au
g
ust 2018
Age
67
Nationality
American
Shares
9,315
Board committees:
R RC
Mike has held executive leadership roles
within a number of leading global asset
managers in London and New York. He brings
extensive asset management experience,
with a key focus throughout his career on
innovation and technology-driven change in
support of better client outcomes. A qualified
actuary, during his executive career with JP
Morgan Asset Management, BlackRock
Investment Management and Barclays
Global Investors, he was responsible for
developing and leading global investment
solutions, distribution and relationship
management strategies.
Mike is a non-executive director of Carne
Global Financial Services Limited, and he is a
senior adviser to Osmosis Investment
Management. He is also an investment
adviser to the British Coal Pension Funds.
Previously, Mike served on the board of the UK
NAPF and was a member of the UK NAPF
Defined Benefit Council. He retired in 2020
from his role as Co-Head, Global Investment
Solutions at JP Morgan Asset Management.
Prior to his move to BlackRock in 2000, Mike
qualified as an actuary with Towers Watson,
where he served as an investment and risk
consultant.
Mike graduated from Limerick University with
a BSc in Applied Mathematics. He is also a
Chartered Financial Analyst and a Fellow of
the Institute of Actuaries.
Cathi has strong experience in the financial
technology, wealth management and
banking sectors with a background in the
platforms sector, as well as international
board experience. She brings these insights
as non-executive Chair of the boards of
Standard Life Savings Limited and Elevate
Portfolio Services Limited, wholly owned
subsidiaries of abrdn group. Her role
provides a direct link between the board and
the platform businesses that help us
connect with clients and their advisers.
Cathi is managing partner of Hamilton
White Group, LLC which offers advisory
services, including business development, to
companies in financial services growth
markets. In addition, she is managing
partner of Soho Venture Partners Inc, which
offers third-party business advisory services.
Previously, Cathi was lead director of
E*Trade Financial Corporation, non-
executive director of Kapitall Holdings, LLC
and President and Chief Executive Officer of
ProAct Technologies Corporation. She was
also a non-executive director of Federal
Home Loan Bank of New York, where she
was a member of the executive committee,
and Vice Chair of both the technology
committee and the compensation and
human resources committee.
She holds an MBA from New York University
and a BS from the University of Baltimore.
85abrdn.comAnnual report 2023
GOVERNANCE
86 abrdn.com Annual report 2023
Corporate governance statement
The Corporate governance statement and the Directors’
remuneration report, together with the cross references to
the relevant other sections of the Annual report and
accounts, explain the main aspects of the Company’s
corporate governance framework and seek to give a
greater understanding as to how the Company has
applied the principles and reported against the provisions
of the UK Corporate Governance Code 2018 (the Code).
Statement of application of and compliance
with the Code
For the year ended 31 December 2023, the Board has
carefully considered the principles and provisions of the
Code (available at www.frc.org.uk) and has concluded
that its activities during the year and the disclosures made
within the Annual report and accounts comply with the
requirements of the Code. The statement also explains the
relevant compliance with the FCA’s Disclosure Guidance
and Transparency Rules Sourcebook. The table on page
140 sets out where to find each of the disclosures required
in the Directors’ report in respect of all of the information
required by Listing Rule 9.8.4 R, and our statement on Board
diversity is on page 92.
(i) Board leadership and company purpose
Purpose and Business model
The Board ratifies the Company’s purpose set out on page
3 of the Strategic report, and oversees implementation of
the Group’s business model, which it has approved, and
which is set out on pages 12 and 13. Pages 2 to 79 show
how the development of the business model in 2023
supports the protection and generation of shareholder
value over the long term, as well as underpinning our
strategy for growth. A significant development in 2023
supporting these objectives was the continued
diversification of the business model through relentless
focus on costs within the Investments business, continued
investment in the Adviser business and the integration of ii
and the Personal Wealth business. The Board’s
consideration of current and future risks to the success of
the Group is set out on pages 76 to 79, complemented by
the report of the Risk and Capital Committee on pages 107
to 110.
Oversight of culture
The Board and the Nomination and Governance
Committee play a key role in overseeing how the
management of the Group assesses and monitors the
Group’s culture. Through engagement surveys and the
Board Employee Engagement programme, the Board
acquires a clear view on the culture evident within the
Group’s businesses and how successfully expected
behaviour is being embedded across the group in ways
that will contribute to our success.
The Board holds management to account for a range of
engagement and diversity, equity and inclusion outcomes,
which are seen as important indicators of culture, and
which form a key part of the executive scorecard.
The Board and the executive leadership team (ELT) have
defined a set of Commitments – Client First, Empowered,
Ambitious and Transparent - which embody our cultural
aspirations at abrdn and are designed to create the best
working environment for our colleagues, so contributing to
better customer experience and outcomes. Our culture is
defined by these Commitments and the behaviours which
underpin them, which are set out on page 48.
Stakeholder engagement
The Annual report and accounts explains how the Directors
have complied with their duty to have regard to the
matters set out in section 172 (1) (a)-(f) of the Companies
Act 2006. These matters include responsibilities with regard
to the interests of customers, employees, suppliers, the
community and the environment, all within the context of
promoting the success of the Company. The table on
pages 88 and 89 sets out the Board’s focus on its key
relationships and shows how the relevant stakeholder
engagement is reported up to the Board or Board
Committees.
Engaging with investors
The Group’s Investor Relations and Secretariat teams
support the direct investor engagement activities of the
Chairman, Senior Independent Director (SID), CEO, CFO
and, as relevant, Board Committee chairs. During 2023, we
carried out a comprehensive programme of meetings with
domestic and international investors, via a range of 1:1,
group, conference and reporting related engagements.
Investors had broad interests including progress on cost
reduction targets, synergies between the three business
units, progress on strategy to drive revenue growth,
investment performance, financial performance and share
price, capital allocation and strategy for returns to
shareholders, the relationship with Phoenix and the role of
the share stake, customer cash balances and the
regulatory focus on this area given high interest rates, and
corporate governance, including approach to ESG and
sustainability. The Chairman, SID, CEO and CFO bring
relevant feedback from this engagement to the attention
of the Board.
The Board ensures its outreach activities encompass the
interests of the Company’s circa one million individual
shareholders. Given the nature of this large retail
shareholder base, it is impractical to communicate with all
shareholders using the same direct engagement model
followed for institutional investors. Shareholders are
encouraged to receive their communications electronically
and around 400,000 shareholders receive all
communications this way. The Company actively
promotes self service via the share portal, and more than
203,000 shareholders have signed up to this service.
Shareholders have the option to hold their shares in the
abrdn Share Account where shares are held electronically
and around 91% of individual shareholders hold their shares
in this way.
To give all shareholders easy access to the Company’s
announcements, all information reported via the London
Stock Exchange’s regulatory news service is published on
the Company’s website. The CEO and CFO continue to
host formal presentations to support both the full year and
half year financial results with the related transcript and
webcast available from the Investors’ section of the
Company’s website. For 2024, the Company published a
Q4 2023 update in mid-January and intends to publish Q1
and Q3 2024 updates after the close of these periods.
87abrdn.comAnnual report 2023
GOVERNANCE
The 2023 Annual General Meeting (AGM) was held in
Edinburgh on 10 May 2023. The meeting was arranged as a
‘hybrid’ meeting. This allowed shareholders to participate in
the meeting remotely, as well as in person. For those
participating remotely, questions could be submitted
during the meeting via a ‘chat box’, many of which were
then posed to the Chair by a moderator. The Chair and
CEO presentations addressed the main themes of the
questions which had been submitted at the meeting. 45%
of the shares in issue were voted. Although all resolutions
were passed, a number of resolutions received less than
80% of votes cast in favour of the resolution. The results of
the vote were primarily driven by a small number of
shareholders, and the significant majority of shareholders
who voted did so in favour of the resolutions. Following the
AGM, the Company Chair and Jonathan Asquith, abrdn’s
Senior Independent Director, met with shareholders
representing more than 80% of the shares voted against
the five resolutions, to understand their views.
The resolution to re-elect Catherine Bradley CBE as a
Director received 75.89% of votes in favour. One major
shareholder applies more stringent requirements than
prevailing proxy advisor guidelines in relation to the number
of external mandates held, and the number of external
mandates held by each Director are within the
requirements of the proxy advisor guidelines and in line with
market practice. As noted, Catherine has decided not to
stand for re-election at the 2024 AGM.
The other resolutions which received less than 80% of votes
cast in favour of them related to authority to allot shares,
disapply pre-emption rights, buy back issued ordinary
shares, and to allot shares in relation to the issuance of
Convertible Bonds. The key area of concern cited by
shareholders voting against the resolutions related to
shareholder dilution and, in relation to share buybacks,
shareholdings breaching certain thresholds. While the
majority of our shareholders are supportive of the
authorities sought the Board have recognised the concerns
raised and will reflect these in the resolutions to be
proposed at the 2024 AGM. Our 2024 AGM will be held on
24 April in Edinburgh. The AGM Guide 2024 will be published
online at www.abrdn.com in advance of this year’s meeting.
The voting results, including the number of votes withheld,
will be published on the website at www.abrdn.com after
the meeting.
Engaging with employees
Hannah Grove continued as our designated non-executive
Director for employee engagement for a second year.
abrdn's Board Employee Engagement (BEE) programme is
designed to ensure that employees’ perspectives and
sentiments are heard and understood by the Board to help
inform decision-making, and to support colleagues’
understanding about the role of the plc Board and ability to
have direct access to our Non-Executive Directors (NEDs).
During 2023, the programme comprised four pillars: (i)
Listening Sessions, an opportunity for colleagues to share
their perspectives and feedback in smaller group settings
throughout the year, (ii) Meet the NEDs sessions, for larger
groups of colleagues to interact with Board members and
ask questions directly, (iii) Employee Network engagement,
focused on both gathering perspectives from abrdn’s
Diversity and Inclusion cohorts, and recognising them for
their contributions, and lastly (iv) Reporting and
measurement, including regular thematic updates to the
Board and abrdn's ELT, feedback gathered about the
programming specifically via post event surveys, and
measurement compared to wider abrdn colleague
sentiment through the engagement survey.
Based on this strategy, the following are some example
activities from 2023:
– Eleven Listening Sessions were held with groups across
various levels, businesses and geographies, including
Culture Champions, the Future Leaders cohort,
Investment teams, Finimize and interactive investor
colleagues.
– Five Meet the NEDs sessions took place including events
with all colleagues in London and Boston, as well as a
specific session held by our subsidiary Adviser board
directors for Adviser colleagues in Edinburgh.
– Nine Employee Network engagements: including a
recognition event for network chairs with plc Board
members in Edinburgh, a session with the newly
launched NextGen network in Tokyo, and a roundtable
discussion with our US network chairs in Philadelphia.
In 2023, BEE activity spanned eight abrdn locations across
the UK, US and APAC, with sessions and events delivered in
a combination of in-person, virtual or hybrid formats.
Overall, colleague sentiment garnered was broad in reach
in terms of geography, as well as business areas. The BEE
programme received positive and constructive feedback
from colleagues that participated in the programme.
Hannah provided regular updates from the BEE
programme to the Board covering themes raised by
colleagues including compensation, strategy, the pace of
change, technology and empowerment.
In 2024, the BEE programme will maintain its core
objectives, gathering feedback and demonstrating
actionable outcomes, and focusing on key themes
including culture, strategy and connecting the dots across
abrdn. Communication and measurement will continue to
underpin activity with plans to increase the frequency of
updates on the programme to all colleagues throughout
the year. We will also continue to benchmark the
programme externally to understand best practices and
new approaches.
On 24 January 2024 the Company announced a
transformation programme. In the first half of 2024, a
number of BEE initiatives will be focused on employee
listening and engagement with opportunity to discuss the
commitments made. In addition, we will look to capture
insights from the BEE programme to support the Board in its
assessment of how the Company’s desired culture has
been embedded in accordance with the updated
requirements of the recently published UK Corporate
Governance Code.
88 abrdn.com Annual report 2023
Corporate governance statement continued
Summary of Stakeholder engagement activities
In line with their obligations under s.172 of the Companies Act 2006, the Directors consider their responsibilities to
stakeholders in their discussions and decision-making. The table below illustrates direct and indirect Board engagement
with various stakeholders. More details of stakeholder engagement activities can be found on pages 55 and 56.
Key stakeholders Direct Board engagement Indirect Board engagement Outcomes
Clients
– The CEO meets with key clients
as required and reports to the
Board on such meetings.
– The CEO takes part in key client
pitches to hear directly from
clients on their requirements.
– The Chair meets with peers and
key clients at conferences and
industry membership and
advisory boards where he
represents the Group.
– Board members feed into Board
discussions any feedback
received directly from clients.
– The CEOs of the businesses
report at Board meetings on key
client engagement, support
programmes and client
strategies.
– Market share data and
competitor activity are reported
to the Board.
– Results of client perceptions
survey/customer sentiment
index are reported.
– Engagement supported the
development of the key client
management process, and our
client solutions and ESG
approaches.
– The businesses position the
business around client needs
with performance
accountability measured on
that basis.
– Investment processes are driven
by understanding client needs
and designing appropriate
solutions taking into account
client risk appetite and
sophistication.
Our people
– ‘Meet the NEDs’ BEE sessions for
a diverse mix of staff at all levels
allows direct feedback in
informal settings.
– Employee engagement NED in
place and active with the
employee diversity networks as
well as with employees through
their representatives. The BEE
NED reports regularly to the
CEO and the Board.
– Each year, the Chair and NEDs
all mentor one or two CEO-1 or -
2 level emerging talent.
– The CEO and CFO run ‘Town
Hall’ sessions.
– The Chief People Officer (CPO)
reports to the Nomination and
Governance Committee
meeting on key hires and
employee issues including
development needs to support
succession planning.
– The CPO produces reporting for
the Board drawing out key
factors influencing staff
turnover, morale and
engagement.
– Viewpoints and employee
surveys collect aggregate,
regional and functional trend
data which is reported to the
Board.
– Engagement feedback
recognised in Board discussions.
– Engagement feedback is a key
input to talent and development
programmes and the design of
reward philosophy.
89abrdn.comAnnual report 2023
GOVERNANCE
Key stakeholders Direct Board engagement Indirect Board engagement Outcomes
Community
Business
partners/ supply
chain
– CEO oversees the Phoenix, FNZ
and Citigroup relationships and
meets with his opposite
numbers as required.
– ED direct meetings with core
suppliers.
– The Risk and Capital
Committee reviews the
dependency on critical
suppliers and how they are
managed.
– The Audit Committee leads an
assessment of external audit
performance and service
provision.
– The Board received detailed
papers supporting the
outsourcing of technology and
business services.
– The Board hears reports on first
line key supplier relationships
and their role in transition and
transformation activities.
– Supplier due diligence surveys
are undertaken.
– Tendering process includes
smaller level firms.
– Access and audit rights in place
with key suppliers.
– Modern slavery compliance
process in place.
– Procurement/payment
principles and policies in place.
– Certain key suppliers regularly
discussed at Audit Committee,
Risk and Capital Committee
and Board.
– Oversight of key outsourcing
arrangements reported to the
Board.
– The development of our
business through our
relationships with partners is a
critical element of the Board’s
strategy.
– Transformation discussions
have included a focus on the
quality, service provision,
availability and costs of relevant
suppliers.
– The overriding guidelines for
business partnerships have
been established as working for
both parties and creating
efficient operations.
– The Board sought executive
assurance on the operation and
working practice of key
suppliers.
Communities
– Board members present at
relevant events and
conferences.
– Chair/CEO/CFO represent the
Group on public policy and
industry organisations.
– Board is kept up to date with the
activities of the abrdn Financial
Fairness Trust and the abrdn
Charitable Foundation
– Stewardship/sustainability
teams report regularly to the
Board and Committees.
– Feedback on annual
Stewardship and Sustainability
and TCFD reports.
– Review of charitable giving
strategy.
– ESG presentations to the Board.
– Considered as input to the
Group’s charitable giving
programmes.
– Engagement drives the
expression of our purpose.
Regulators/
policymakers/
governments
– Regular engagement by CEO,
CFO, Chair and Committee
Chairs.
– FCA has access to the Board.
– ‘Dear Board/CEO’ letters issued
from regulators.
– Relevant engagement with
regulators in overseas
territories.
– CFO and Chief Risk Officer
(CRO) update the Board
regularly.
– Board hears reports on the
results of active participation
through industry groups.
– Relevant Board decisions
recognise regulatory impact
and environment.
Shareholders
– Results, AGM presentations and
Q&A.
– Chair, CEO and CFO meetings
with investors.
– Chair, Committee Chairs,
Senior Independent Director
and BEE NED round table with
governance commentators.
– Remuneration Committee
Chair meetings with institutional
investors.
– Chair/CEO direct shareholder
correspondence.
– Regular updates from the EDs/
Investor Relations Director/
Chair/Chair of Remuneration
Committee summarising the
output from their programmes
of engagement.
– Analyst/Investor reports
distributed to the Board.
– As relevant, feedback from
corporate brokers.
– Dedicated mailbox and
shareholder call centre team.
There has been continued
dialogue with shareholders on
remuneration matters including
in the period to the 2023 AGM in
respect of the Directors'
Remuneration Policy.
Shareholders
90 abrdn.com Annual report 2023
Corporate governance statement continued
Speaking up
The workforce has the means to raise concerns in
confidence and anonymously, and these means are well
communicated. The Audit Committee’s oversight of the
whistleblowing policy and the Audit Committee Chair’s role
to report to the Board on whistleblowing matters is covered
in the Audit Committee report on page 99.
Outside appointments and conflicts of interest
The Board’s policy encourages executive Directors to take
up one external non-executive director role, as the
Directors consider this can bring an additional perspective
to the Director’s contribution. Stephen Bird has
representative director roles, on fund boards where abrdn
is the appointed investment manager and on the
Investment Association. Jason Windsor is a Governor of
Felsted School and a Director of Felsted School Trustees
Limited.
Any proposed additional appointments of the non-
executive Directors are firstly discussed with the Chair and
then reported to the Nomination and Governance
Committee prior to being considered for approval. The
Senior Independent Director takes that role in relation to the
Chair’s outside appointments. The register of the Board’s
collective outside appointments is reviewed annually by the
Board. Directors’ principal outside appointments are
included in their biographies on pages 82 to 85. These
appointments form part of the Chair’s annual performance
review of individual non-executive Directors’ contribution
and time commitment, and similarly that of the Senior
Independent Director of the Chair.
The Directors continued to review and authorise Board
members’ actual and potential conflicts of interest on a
regular and ad hoc basis in line with the authority granted
to them in the Company’s Articles. As part of the process to
approve the appointment of a new Director, the Board
considers and, where appropriate, authorises their
potential or actual conflicts. The Board also considers
whether any new outside appointment of any current
Director creates a potential or actual conflict before, where
appropriate, authorising it. All appointments are approved
in accordance with the relevant group policies. At the start
of every Board and Committee meeting, Directors are
requested to declare any actual or potential conflicts of
interests and in the event a declaration is made, conflicted
Directors can be excluded from receiving information,
taking part in discussions, and making decisions that relate
to the potential or actual conflict.
91abrdn.comAnnual report 2023
GOVERNANCE
(ii) Division of responsibilities
The Group operates the following governance framework.
Governance framework
Board
The Board’s role is to organise and direct the affairs of the Company and the Group in accordance with the Company’s constitution, all relevant
laws, regulations, corporate governance, and stewardship standards. The Board’s role and responsibilities, collectively and for individual Directors,
are set out in the Board Charter. The Board Charter also identifies matters that are specifically reserved for decision by the Board. During 2023, the
Board’s key activities included approving, overseeing and challenging:
– The updated strategy and the 2024 to 2026 business plan to
implement the strategy.
– Capital adequacy and allocation decisions including the decision to
sell stakes in HDFC Asset Management.
– Oversight of culture, our standards and ethical behaviours.
– Dividend policy including the decision framework governing when to
return the dividend to growth.
– Financial reporting.
– Risk management, including the Enterprise Risk Management (ERM)
framework, risk strategy, risk appetite limits and internal controls and
in particular how this was adapted for blended working including
working from home.
– Significant corporate transactions.
– Succession planning, in particular in the appointment of Jason Windsor.
– The quarterly performance of the Investments business.
– The ESG approach, both as a corporate and as an asset manager.
– Significant external communications.
– The work of the Board Committees.
– Appointments to the Board and to Board Committees.
– Matters escalated from subsidiary boards to the Board for approval.
The Board regularly reviews reports from the Chief Executive Officer and from the Chief Financial Officer on progress against approved strategies
and the business plan, as well as updates on financial market and global economic conditions. There are also regular presentations from the
Business CEOs and business functional leaders.
Chair
– Leads the Board and ensures that its
principles and processes are maintained.
– Promotes high standards of corporate
governance.
– Together with the Company Secretary, sets
agendas for meetings of the Board.
– Ensures Board members receive accurate,
timely and quality information on the Group
and its activities.
– Encourages open debate and constructive
discussion and decision-making.
– Leads the performance assessments and
identification of training needs for the Board
and individual Directors.
– Speaks on behalf of the Board and
represents the Board to shareholders and
other stakeholders.
Chief Executive Officer (CEO)
The CEO operates within authorities delegated by
the Board to:
– Develop strategic plans and structures for
presentation to the Board.
– Make and implement operational decisions.
– Lead the other executive Director and the ELT in
the day-to-day running of the Group.
– Report to the Board with relevant and timely
information.
– Develop appropriate capital, corporate,
management and succession structures to
support the Group’s objectives.
– Together with the Chair, represent the Group to
external stakeholders, including shareholders,
customers, suppliers, regulatory and
governmental authorities, and the local and
wider communities.
Senior Independent Director (SID)
The SID is available to talk with our
shareholders about any concerns
that they may not have been able to
resolve through the channels of the
Chair, the CEO or Chief Financial
Officer, or where a shareholder was
to consider these channels as
inappropriate.
The SID leads the annual review of
the performance of the Chair.
Non-executive Directors (NEDs)
The role of our NEDs is to participate
fully in the Board’s decision-making
work including advising, supporting
and challenging management as
appropriate.
Nomination and Governance
Committee (N&G)
– Board and Committee
composition and appointments.
– Succession planning.
– Governance framework.
– Culture, Diversity, Equity &
Inclusion (DEI).
Audit Committee (AC)
– Financial reporting.
– Internal audit.
– External audit.
– Whistleblowing.
– Regulatory financial reporting.
– Non-financial reporting (ESG).
Remuneration Committee (RC)
– Development and
implementation of
remuneration philosophy and
policy.
– Incentive design and setting of
executive Director targets.
– Employee benefit structures.
Risk and Capital Committee (RCC)
– Risk management framework.
– Compliance reporting.
– Risk appetites and tolerances.
– Transactional risk assessments.
– Capital adequacy.
– Anti-financial crime.
Executive leadership team (ELT)
The ELT supports the CEO by providing clear leadership, line of sight and accountability throughout the business. The ELT is responsible to the CEO
for the development and delivery of strategy and for leading the organisation through challenges and opportunities.
Businesses
Business CEOs support the CEO to
deliver growth across the business:
– Investments.
– Adviser.
– ii.
Talent
The Chief People Officer (CPO)
supports the CEO in developing
talent management and
succession planning and
culture initiatives.
Efficient Operations
Strategy, Technology, Legal and
Finance ELT members, including
the CFO, support the CEO by
overseeing global functions and
the delivery of functional
priorities.
Control
The Chief Risk Officer (CRO)
supports the ELT and the CEO in
their first line management of risk.
The Chief Internal Audit Officer
attends ELT controls meetings.
Corporate governance statement continued
The framework is formally documented in the Board
Charter which also sets out the Board’s relationship with the
boards of the key subsidiaries in the Group. In particular, it
specifies the matters which these subsidiaries refer to the
Board or to a Committee of the Board for approval or
consultation.
You can find the Board Charter on our website
www.abrdn.com
Board balance and director independence
The Directors believe that at least half of the Board should
be made up of independent non-executive Directors. As at
26 February 2024, the Board comprises the Chair, seven
independent non-executive Directors and two executive
Directors. The Board is made up of six men (60%) and four
women (40%) (2022: men 55%, women 45%). Brian
McBride stepped down from the Board on 10 May 2023
and Stephanie Bruce stepped down on 11 May 2023. Jason
Windsor was appointed to the Board on 23 October 2023.
The Chair was independent on his appointment in
December 2018. The Board carries out a formal review of
the independence of non-executive Directors annually. The
review considers relevant issues including the number and
nature of their other appointments, any other positions they
hold within the Group, any potential conflicts of interest they
have identified and their length of service. Their individual
circumstances are also assessed against independence
criteria, including those in the Code. The Nomination and
Governance Committee, on behalf of the Board, conducts
a particularly rigorous review for any non-executive
director whose term exceeds six years. In addition to the
above, this review includes any feedback from the Board
effectiveness review, ongoing overall contribution, and the
output from individual annual performance discussions
with each NED conducted by the Chair. John Devine is the
only non-executive Director to have served beyond six
years, with Cathi Raffaeli and Sir Douglas Flint passing this
timeline later in 2024. No issues or considerations were
raised through this assessment.
Following the review, the Board has concluded that all the
non-executive Directors are independent and
consequently, the Board continues to comprise a majority
of independent non-executive Directors.
Jonathan Asquith served as Senior Independent Director
throughout 2023. In this role, he is available to provide a
sounding board to the Chair and serve as an intermediary
for the other Directors and the shareholders. He also led the
process to review the Chair’s performance.
The roles of the Chair and the CEO are separate and are
summarised on page 91. Each has clearly defined
responsibilities, which are described in the Board Charter.
The Directors have access to the governance advice of the
Company Secretary whose appointment and removal is a
matter reserved to the Board.
You can find out more about our Directors in their biographies
on pages 82 to 85.
(iii) Board composition, succession, diversity and
evaluation
The Board’s policy is to appoint and retain non-executive
Directors who bring relevant expertise as well as a wide
perspective to the Group and its decision-making
framework. The Board continues to support its Board
Diversity statement which states that the Board:
– Believes in equity and supports the principle that the
best person should always be appointed to the role with
due regard given to the benefits of diversity, including
gender, ethnicity, age, and educational and
professional background when undertaking a search
for candidates, both executive and non-executive.
– Recognises that diversity can bring insights and
behaviours that make a valuable contribution to its
effectiveness.
– Believes that it should have a blend of skills, experience,
independence, knowledge, ethnicity and gender
amongst its individual members that is appropriate to its
needs.
– Believes that it should be able to demonstrate with
conviction that any new appointee can make a
meaningful contribution to its deliberations.
– Is committed to maintaining its diverse composition.
– Supports the CEO’s commitment to achieve and
maintain a diverse workforce and an inclusive
workplace, both throughout the Group, and within
the ELT.
– Has a zero-tolerance approach to unfair treatment or
discrimination of any kind, both throughout the Group
and in relation to clients and individuals associated with
the Group.
Board Diversity
Gender
Nationality
Diversity activities and progress to meet our targets are
covered in the People – Diversity, equity & inclusion section
of the Strategic report on page 50. The ELT’s diversity policy
is covered in the Diversity, equity and inclusion section of the
Directors’ report on page 138.
Male: 6
Female: 4
British and French: 1
Irish: 1
British: 6
American: 1
British and American: 1
92 abrdn.com Annual report 2023
Board changes during the period are covered above and in
the Directors’ report on page 137.
Ethnicity
In accordance with Listing Rule 9.8.6(9), as at 31 December
2023:
– at least 40% of the individuals on the board
of directors are women;
– at least one individual on the board of directors is from
a minority ethnic background;
During 2023, we applied our policy on diversity when
searching for a successor to Stephanie Bruce, with Jason
Windsor ultimately appointed, as CFO. Consequently, we
do not currently meet the requirement under Listing Rule
9.8.6(9)(a)(ii) to have a woman represented in the
identified Board leadership positions (Chair, Senior
Independent Director, CEO or CFO).
The Board supports the principle that the person best
qualified, in the particular circumstances of the role, should
always be appointed to the role with due regard given to
the benefits of diversity, including the full range of protected
characteristics, as well as cognitive diversity. This principle
applies to the search for and appointment of all candidates,
both executive and non-executive. In reviewing the
composition of the Board, the Committee regards the
Committee Chair roles as equal in importance to the
designated roles, which is reflected in their current
composition.
Board appointment process, terms of service and role
Board appointments are overseen by the Nomination and
Governance Committee and more information can be
found on page 113.
Each non-executive Director is appointed for a three-year
fixed term and shareholders vote on whether to elect/re-
elect them at every AGM. Once a three-year term has
ended, a non-executive Director can continue for a
maximum of two further terms, if the Board is satisfied with
the non-executive Director’s performance, independence
and ongoing time commitment. Taking account of their
appointment dates the current average length of service of
the non-executive Directors is three years. For any non-
executive Directors who have already served two three-
year terms, the Nomination and Governance Committee
considers any factors which have the potential to impact
their independence or time commitment prior to making
any recommendation to the Board. No Directors came to
the end of a three-year term during 2023.
External search consultants may be used to support Board
appointments. The Group has used the services of MWM
Consulting to support senior management searches. MWM
Consulting has no other connection to the Group or the
Directors.
Time commitment
The letter of appointment confirms that the amount of time
each non-executive Director is expected to commit to
each year, once they have met all of the approval and
induction requirements, is a minimum of 35 days.
When appointing a non-executive Director, the Nomination
and Governance Committee carefully considers time
commitments, investor guidelines and voting policies and
their application on current directorships. The Committee
also reviews in detail the planned c
hanges to a non-
executive Director’s portfolio and overall capacity, including
the balance of listed and non-listed non-executive Director
roles. This is also reviewed by the Chairman as part of a
formal sequence of bilateral conversations with each
Board member during the Company’s annual Board
Effectiveness process. This covers: time commitment and
the impact of any anticipated changes to external
appointments over the next 12 months; conflicts of interest
and; any training requirements that would support the
Board member in their role during the year. The Company
supports plc Directors taking active roles on the main group
subsidiary boards. Cathi Raffaeli chairs the Standard Life
Savings Limited and Elevate Portfolio Services Limited
boards, and Hannah Grove also sits on these boards.
Catherine Bradley was appointed as the chair of the
interactive investor Limited board on 1 January 2024. Time
commitment for their roles on these group boards are also
considered as part of the annual evaluation process.
Having carefully reviewed various inputs, including those
outlined above and each non-executive Director’s
contribution and capacity in 2023
, the Nomination and
Governance Committee concluded that all non-executive
Directors continue to have sufficient time to dedicate
to their role as independent non-executive Directors of
abrdn plc.
The service agreements/letters of appointment for
Directors are available to shareholders to view on request
from the Company Secretary at the Company’s registered
address (which can be found in the Shareholder
information section) and will be accessible for the 2024
AGM. Non-executive Directors are required to confirm that
they can allocate sufficient time to carry out their duties
and responsibilities effectively. Their letters of appointment
confirm that their primary roles include challenging and
holding to account the executive Directors as well as
appointing and removing executive Directors.
Director election and re-election
At the 2024 AGM, all of the Directors
will retire
and stand for election or re-election. As
well as in the Board of Directors section, the AGM Guide
2024 includes background information about the Directors,
including the reasons why the Chair
, following the Directors’
annual reviews, believes that their individual skills and
contribution support their election or re-election.
White: 9
Asian: 1
93abrdn.comAnnual report 2023
GOVERNANCE
94 abrdn.com Annual report 2023
Corporate governance statement continued
Details of Directors’ outside appointments can be found
in their biographies on pages 82 to 85.
Advice
Directors may sometimes need external professional
advice to carry out their responsibilities. The Board’s policy is
to allow them to seek this where appropriate and at the
Group’s expense. Directors also have access to the advice
and services of the Company Secretary. With the
exception of professional advice obtained by the
Remuneration Committee, as detailed in page 133, no
independent professional advice was sought in 2023.
Board effectiveness
Review process
Following the externally facilitated review in 2022, the 2023
effectiveness review was conducted internally, on behalf of
the Board, by the Chairman and supported by the
Company Secretary. A questionnaire was issued to each
Board member, which allowed individual feedback on a
confidential basis. This was supplemented by any matters a
Director wished to raise as part of their year-end 1:1
discussion with the Chairman.
The tone of the review was positive and concluded that the
Board and its Committees continued to operate effectively
during 2023, with no material issues or concerns raised and
priorities for the coming year clarified. Good progress was
noted on those matters identified in the 2022 review,
including greater focus on the Company’s talent pipeline,
the refresh of the NED mentoring programme and work
undertaken to improve the flow of information across the
Group. As part of this initiative, the Chairman hosted an
inaugural conference in September 2023 to bring together
non-executive directors from the Group’s subsidiary
companies and EMEA-based fund boards. The main areas
arising from the 2023 review on which the Board looked to
see continued improvement in 2024, both in respect of its
own effectiveness and that of its Committees, were in
relation to improving the insights within and brevity of
materials presented, the continued development of
management information to support its oversight of the
Company’s transformation programme and avoiding
duplication across the agendas of the Board and its
subsidiary companies where this could be achieved. This
included the planned use of more joint sessions on matters
of shared interest, such as on operational resilience, cyber
security and the Company’s capital management policies.
The report also acknowledged that given the criticality of
human talent and technology to future sustainable
success, succession planning would remain a core focus
for the Board as would technology development given its
impact on the future of asset and wealth management.
As in prior years, the report noted the strong levels of Board
engagement and participation, both in formal meetings
and other Board initiatives, such as the BEE programme.
The report also recognised positively Board dynamics, the
effectiveness of Board Committees and the breadth of
knowledge and experience of Board members.
Maintaining these attributes was seen as essential to the
Company’s successful navigation of current macro-
economic challenges and the delivery of its desired
strategic outcomes.
Chair
The review of Sir Douglas’s performance as Chair was led
by the SID, Jonathan Asquith, supported by the Company
Secretary. It was based on feedback given in returned
questionnaires specifically regarding the Chairman’s
performance and discussions between the SID and the
other non-executive Directors. The feedback was
summarised into a report which was considered by the
Directors in a meeting led by Jonathan Asquith and without
Sir Douglas being present. It was agreed that the Chair’s
industry experience, style and development of the Board
continued to be of significant benefit to the Group. As with
the main Board evaluation, the continued focus on delivery
for shareholders and other stakeholders was a key priority
and the important role that the Chairman plays in
supporting the execution of the Group’s strategy was
recognised. Jonathan Asquith met with Sir Douglas to pass
on feedback from the review directly and his final report
was made available to all non-executive Directors.
Directors
An important part of the annual effectiveness review
process is the individual evaluation of each member of the
Board. This process is undertaken personally by the Chair
and this year was conducted through year-end bilateral
discussions with each Board member to a specific agenda.
These discussions ran alongside the broader effectiveness
process and fed into Nomination and Governance
Committee’s consideration of director re-election and
ongoing succession planning. In addition to discussing
individual performance, consideration was also given to
Non-Executive Directors’ time commitment and capacity,
conflicts of interest, any individual training and
development needs and broader Company engagement
opportunities.
Director induction and development
The Chair, supported by the Company Secretary, is
responsible for arranging a comprehensive preparation
and induction programme for all new Directors. The
programme takes their background, knowledge and
experience into account. If relevant, Directors are required
to complete the FCA’s approval process before they are
appointed and Directors self-certify annually that they
remain competent to carry out this aspect of their role.
These processes continue to adapt to meet evolving best
practice in respect of the Senior Managers and
Certification Regime.
The formal preparation and Induction programme
includes:
– Meetings with the executive Directors and the
members of the ELT.
– Focused technical meetings with internal experts on
specific areas including the three businesses, regulatory
reporting, ESG, conduct risk, risk and capital
management, and financial reporting.
– Visits to business areas to meet our people and gain a
better insight into the operation of the business and its
culture.
– Meetings with the external auditors and contact with
the FCA supervisory teams.
– Meetings with the Company Secretary on the Group’s
corporate governance framework and the role of the
Board and its Committees.
95abrdn.comAnnual report 2023
GOVERNANCE
– Meetings with the Chief Risk Officer on the risk
management framework as well as meetings on their
individual responsibilities as holders of a Senior
Management Function role.
Background information is also provided including:
– Key Board materials and information, stakeholder and
shareholder communications and financial reports.
– The Group’s organisational structure, strategy, business
activities and operational plans.
– The Group’s key performance indicators, financial and
operational measures and industry terminology.
The induction programme provides the background
knowledge new Directors need to perform to a high level as
soon as possible after joining the Board and its Committees
and to support them as they build their knowledge and
strengthen their performance further.
When Directors are appointed to the Board, they make a
commitment to broaden their understanding of the
Group’s business. The Secretariat, Finance, Risk and
Reward teams monitor relevant external governance and
risk management, financial and regulatory developments
and keep the ongoing Board training and information
programme up to date. Specific Board and Committee
awareness and deep-dive sessions took place on:
– Geopolitics.
– Cyber resilience.
– abrdn’s Internal Capital and Risk Assessment (being a
risk management process introduced by the
Investment Firms Prudential Regime).
– Operational resilience self-assessment.
– Sustainability.
– Technology.
– FCA Consumer Duty.
– Anti-Financial Crime.
– Vulnerable Customers.
– Asset class deep dives:
o Fixed income.
o Equities.
o Multi-asset Investment Solutions.
o Real Estate.
o Real Assets and Alternatives.
(iv) Audit, risk and internal control
The Directors retain the responsibility to state that they
consider the Annual report and accounts, taken as a whole,
is fair, balanced and understandable, presents an
assessment of the Company’s position and prospects and
presents the necessary information for shareholders to
assess the business and strategy. They also recognise their
responsibility to establish procedures to manage risk and
oversee the internal control framework. The Directors’
responsibilities statement is on page 141. The reports from
the Audit Committee and the Risk and Capital Committee
Chairs show how the Committees have supported the
Board in meeting these responsibilities.
The Board’s view of its principal and emerging risks
and how they are being managed is contained in the
Risk management section of the Strategic report on
pages 76 to 79.
Annual review of internal control
The Directors have overall responsibility for the governance
structures and systems of the group, which includes the
ERM framework and system of internal control, and for the
ongoing review of their effectiveness. The framework is
designed to manage, rather than eliminate, risk and can
only provide reasonable, not absolute, assurance against
material misstatement or loss. The framework covers all of
the risks as set out in the Risk management section of the
Strategic report.
In line with the requirements of the Code, the Board has
reviewed the effectiveness of the system of internal control.
The Audit Committee undertook the review on behalf of
the Board and reported the results of its review to the
Board. The system was in place throughout the year and
up to the date of approval of the Annual report and
accounts 2023.
The review of abrdn’s risk management and internal
control systems was carried out drawing on inputs across
the three lines of defence taking into account the operation
of each component of the Enterprise Risk Management
Framework.
The business continues to make control improvements to
meet increasing regulatory expectations, particularly, in the
areas of operational resilience and third-party oversight.
2023 has seen the business continue to strengthen controls
within its operating model through better definition of
accountability and processes. Technology advances and
the implementation of actions around the Consumer Duty
and Operational Resilience regulations continue to drive
further improvements in the control environment. The
Finance function operates a set of defined processes which
operate over all aspects of financial reporting, which
includes the senior review and approval of financial results,
controlled processes for the preparation of the IFRS
consolidation, and the monitoring of external policy
developments to ensure these are adequately addressed.
These processes include the operation of a Technical
Review Committee and the Financial Reporting Executive
Review Group to provide senior review, challenge and
approval of relevant disclosures, accounting policies, and
changes required to comply with external developments.
The Board’s going concern statement is on page 140 and
the Board’s viability statement is on page 74.
(v) Remuneration
The Directors’ remuneration report (DRR) on pages 115 to
134 sets out the work of the Remuneration Committee and
its activities during the year, the levels of Directors’
remuneration and the shareholder approved
remuneration policy. The Company’s approach to investing
in and rewarding its workforce is set out on page 129 of the
DRR. The Board believes that its remuneration policies and
practices are designed to support the Company’s strategy
and long-term sustainable success. More information
about the policies and practices can be found in the DRR.
Corporate governance statement continued
Other information
You can find details of the following, as required by FCA Disclosure and Transparency Rule 7.2.6, in the Directors’ report and
in the Directors’ remuneration report:
Share capital
– Significant direct or indirect holdings of the Company’s securities.
– Confirmation that there are no securities carrying special rights with regard to control of the Company.
– Confirmation that there are no restrictions on voting rights in normal circumstances.
– How the Articles can be amended.
– The powers of the Directors, including when they can issue or buy back shares.
Directors
– How the Company appoints and replaces Directors.
– Directors’ interests in shares.
Board meetings and meeting attendance
The Board and its Committees meet regularly, operating to an agreed timetable. Meetings are usually held in Edinburgh or
London. During the year, the Board held specific sessions to consider the Group’s strategy and business planning. The Chair
and the non-executive Directors also met during the year, formally at each Board meeting, and informally, without the
executive Directors present and where matters including executive performance and succession and Board effectiveness
were discussed. The Board scheduled eight formal meetings and a focused strategy meeting in 2023.
Directors are required to attend all meetings of the Board and the Committees they serve on, and to devote enough time
to the Company to perform their duties. Board and Committee papers are distributed before meetings other than, by
exception, urgent papers which may need to be tabled at the meeting. If Directors are not able to attend a meeting
because of conflicts in their schedules, they receive all the relevant papers and have the opportunity to submit their
comments in advance to the Chair or to the Company Secretary. If necessary, they can follow up with the Chair of the
meeting. Recognising that some Directors may have existing commitments they cannot change at very short notice, the
Board has established the Standing Committee as a formal procedure for holding unscheduled meetings. The Standing
Committee meets when, exceptionally, decisions on matters specifically reserved for the Board need to be taken urgently.
All Directors are invited to attend Standing Committee meetings. The Standing Committee did not meet during 2023.
The Company Chair is not a member of the Audit, Risk and Capital, or Remuneration Committees. He is invited to attend
meetings of all Committees, by invitation, in order to keep abreast of their discussions and routinely does so. The table
below reflects the composition of the Board and Board Committees during 2023 and records the number of meetings and
members’ attendance.
Board Audit Committee
Nomination and
Governance
Committee
Remuneration
Committee
Risk and Capital
Committee
Chair
Sir Douglas Flint 9/9 4/4 – –
Executive Directors
Stephen Bird 9/9 – – – –
Jason Windsor
1
2/2 - - - -
Non-executive Directors
Jonathan Asquith 9/9 – 4/4 7/7 –
John Devine
9/9 6/6 4/4 - 6/6
Hannah Grove
9/9 - 4/4 7/7 -
Pam Kaur
9/9 6/6 – – 6/6
Cathleen Raffaeli
9/9 – – 7/7 6/6
Catherine Bradley
9/9 6/6 4/4 - 6/6
Mike O’Brien 9/9 6/6 – – 6/6
Former members
Stephanie Bruce (stood down 11 May 2023) 3/3 - – – –
Brian McBride (stood down 10 May 2023)
3/3 – – 3/3 –
1. Jason Windsor was appointed on 23 October 2023.
96 abrdn.com Annual report 2023
Tenure as at February 2024 Executive and Non-executive mix
Board Committees
The Board has established Committees that oversee,
consider and make recommendations to the Board on
important issues of policy and governance. At each Board
meeting, the Committee chairs provide reports of the key
issues considered at recent Committee meetings, and
minutes of Committee meetings are circulated to the
appropriate Board members. This includes reporting from
the Chair of the Audit Committee on any whistleblowing
incidents which have been escalated to them. The
Committees operate within specific terms of reference
approved by the Board and kept under review by each
Committee.
All Board Committees are authorised to engage the
services of external advisers at the Company’s expense,
whenever they consider this necessary. With the
exception of fees paid to external advisers of the
Remuneration Committee, as detailed on page 133, no
such expense was incurred during 2023.
Committee reports
This statement includes reports from the chairs of the
Audit Committee, the Risk and Capital Committee and the
Nomination and Governance Committee. The report on
the responsibilities and activities of the Remuneration
Committee can be found in the Directors’ remuneration
report section.
The Committee Chairs are happy to engage with you on their
reports. Please contact them via questions@abrdnshares.com
These terms of reference are published within the
Board Charter on our website at www.abrdn.com
abrdn plc Board
Remuneration
Committee
Nomination
and
Governance
Committee
Risk and
Capital
Committee
Audit
Committee
0-3 years: 4
3-5 years: 3
5+ years: 3
Executive: 2
Non-executive: 8
97abrdn.comAnnual report 2023
GOVERNANCE
Corporate governance statement continued
1. Audit Committee report
The Audit Committee assists the Board in discharging its
responsibilities for external financial reporting, internal
controls over financial reporting and the relationship with
the external auditors.
I am pleased to present my report as Audit Committee
(the Committee) Chair.
While the Committee focuses its attention primarily on the
Company’s financial and non-financial control framework,
during 2023 it has also put specific governance emphasis
on:
– the integration of Internal Audit as a key, seamless
partner to the Committee.
– better differentiation, sequencing, and
complementarity between the Risk and Capital
Committee and the Audit Committee.
– the governance around internal controls, in particular as
the Enterprise Risk Management framework evolves.
– the introduction of deep-dives on key subject areas to
expand the Committee’s knowledge.
– oversight of the Group’s evolution as it continues its
transition to align its resources and capabilities to meet
client needs.
– significant changes in senior personnel in the Finance
function.
The Committee also continued to focus on the quality of
financial reporting.
While ensuring we fulfil our delegated responsibilities on
behalf of the Board, the Audit Committee is a dynamic
forum which benefits from a high degree of transparency
from management, enabling effective discussion and
decision making. This will remain fundamental to the
Committee’s effectiveness and its oversight of the
Company’s financial and non-financial reporting and
control environment during 2024.
The report is structured in four parts:
(i) Governance
(ii) Report on the year
(iii) Internal audit
(iv) External audit
Catherine Bradley
Chair, Audit Committee
(i) Governance
Membership
All members of the Audit Committee are independent non-
executive Directors. For their names, the number of
meetings and committee member attendance during
2023, please see the table on page 96.
The Board believes Committee members have the
necessary range of financial, risk, control and commercial
expertise required to provide effective challenge to
management and have competence in accounting and
auditing as well as recent and relevant financial experience.
Catherine Bradley is a non-executive director of Johnson
Electric Holdings Limited and of easyJet plc, where she
chairs the finance committee. She is also senior
independent director of Kingfisher plc. Catherine has
previously chaired the audit committees of Groupe
Peugeot Citroen and of the Financial Conduct Authority.
John Devine is a member of the Chartered Institute of
Public Finance and Accounting. Pam Kaur is a qualified
chartered accountant. Mike O’Brien is a fellow of the
Institute and Faculty of Actuaries. The Committee
members are also members of audit committees related
to their other non-executive Director roles.
Invitations to attend Committee meetings are extended to
the Chair, the Chief Executive Officer, the Chief Financial
Officer, the Group Financial Controller, the Chief Internal
Audit Officer and the Group Chief Risk Officer, as well as the
External auditors.
The Audit Committee meets privately for part of its
meetings and also has regular private meetings separately
with the external auditors and the Chief Internal Audit
Officer. These meetings address the level of co-operation
and information exchange and provide an opportunity for
participants to raise any concerns directly with the
Committee.
98 abrdn.com Annual report 2023
Key responsibilities
The Audit Committee’s responsibilities are to oversee, and
report to the Board on:
– The appropriateness of the Group’s accounting and
accounting policies, including the going concern
presumption and viability statement.
– The findings of its reviews of the financial information in
the Group’s annual and half year financial reports.
– The clarity of the disclosures relating to accounting
judgements and estimates.
– Its view of the ‘fair, balanced and understandable’
reporting obligation.
– The findings of its review of certain Group prudential
external disclosures.
– Internal controls over financial reporting.
– ESG disclosures relating to financial and quantitative
information.
– Liaison with the Remuneration Committee on any
financial reporting matters related to the achievement
of targets and measures.
– Outcomes of investigations resulting from
whistleblowing.
– The appointment or dismissal of the Chief Internal Audit
Officer, the approved internal audit work programme,
key audit findings and the quality of internal audit work.
– The skills of the external audit team and their
compliance with auditor independence requirements,
the approved audit plan, the quality of the firm’s
execution of the audit, and the agreed audit and non-
audit fees.
In carrying out its duties, the Committee is authorised by the
Board to obtain any information it needs from any Director
or employee of the Group. It is also authorised to seek, at
the expense of the Group, appropriate external
professional advice whenever it considers this necessary.
The Committee did not need to take any independent
advice during the year.
In accordance with the Senior Managers and Certification
Regime the Audit Committee Chair is responsible for the
oversight of the independence, autonomy and
effectiveness of our policies and procedures on
whistleblowing including the procedures for the protection
of employees who raise concerns related to detrimental
treatment. Throughout the year the Audit Committee
Chair met regularly with the Chief Internal Auditor, the Chief
Sustainability Officer - Investments and the Global Head of
Corporate Sustainability to discuss their work, findings and
current developments.
Committee effectiveness
The Committee reviews its remit and effectiveness each
year. Following the externally facilitated review in 2022, the
2023 review was conducted internally, on behalf of the
Board, by the Company Secretary. The review concluded
that the Committee continued to operate effectively during
2023 with no material issues or concerns raised. More
information about the process involved, and its outcomes,
can be found on page 94.
(ii) Report on the year
Audit agenda
As well as regular reporting, agenda items were aligned to
the annual financial cycle as set out below:
–
Annual report and accounts 2022.
–
Strategic report and financial highlights 2022.
–
Financial reporting judgements.
–
Process execution event in the Investments
business.
–
Liaison with the Remuneration Committee on
any financial reporting matters related to the
achievement of targets and measures.
–
External auditor’s review of Full year results.
–
Whistleblowing.
–
Sustainability reporting.
–
Effectiveness of the Internal Audit function.
–
Internal audit findings.
–
Prudential and Regulatory reporting.
–
Initial financial reporting matters for Half year
2023.
–
Whistleblowing.
–
External auditor’s management letter, and
audit strategy.
–
Risk and Control Self-Assessment (RCSA)
reform.
–
Half year results 2023.
–
External auditors’ review of Half year results.
–
External auditors’ independence.
–
Internal audit findings.
–
Whistleblowing.
–
Initial financial reporting matters for Full year
2023, including pension scheme assumptions.
–
Non-audit services policy.
–
The internal audit plan and charter.
–
Internal audit findings.
–
Effectiveness of the external auditors and
related non-audit services.
–
Whistleblowing.
–
Sustainability and ESG reporting.
–
Risk management and internal control system
annual review and future plans.
–
CASS reporting update.
–
Corporate and Audit Reform update.
Jan-Mar
Apr-Jun
Jul-Sep
Oct-Dec
99abrdn.comAnnual report 2023
GOVERNANCE
Corporate governance statement continued
The indicative proportion of time spent on the business of
the Committee is illustrated below:
Detail of work
The focus of work in respect of 2023 is described below.
Financial and non-financial reporting
Our accounts are prepared in accordance with
International Financial Reporting Standards (IFRS). The
Committee believes that some Alternative Performance
Measures (APMs), which are also called non-GAAP
measures, can add insight to the IFRS reporting and help to
give shareholders a fuller understanding of the
performance of the business. The Committee considered
the presentation of APMs and related guidance as
discussed further in the ‘Fair, balanced and
understandable’ section below.
The Committee reviewed the Group accounting policies
and confirmed they were appropriate to be used for the
2023 Group financial statements. IFRS 17 Insurance
Contracts was adopted in 2023. This primarily impacted
our HASL joint venture business. Read more in the Basis of
preparation in the Group financial statements section.
The Committee reviewed the basis of accounting and in
particular the appropriateness of adopting the going
concern basis of preparation of the financial statements. In
doing so, it considered the Group’s cash flows resulting
from its business activities and factors likely to affect its
future development, performance and position together
with related risks, as set out in more detail in the Strategic
report. The Committee recommended the going concern
statement to the Board.
In addition, the Committee considered the form of the
viability statement and in particular whether the three-year
period remained appropriate, and concluded that it did.
This reflects both our internal planning cycle and the
timescale over which changes to major regulations and the
external landscape affecting our business typically take
place. In formulating the statement, the Committee
considered the result of stress testing and reverse stress
testing presented to the Risk and Capital Committee. The
Committee recommended the viability statement to the
Board.
During 2023, the Committee reviewed the Annual report
and accounts 2022 and the Half year results 2023. For both
periods it received written and/or oral reports from the
Chief Financial Officer, the interim Chief Financial Officer,
the Company Secretary, the Chief Internal Audit Officer
and the external auditors. The Committee used these
reports to aid its understanding of the composition of the
financial statements, to confirm that the specific reporting
standards and compliance requirements had been met
and to support the accounting judgements and estimates.
Following its reviews, the Committee was able to
recommend the approval of each of the reports to the
Board, being satisfied that the full and half year financial
statements complied with laws and regulations and had
been appropriately compiled.
The Committee recognises the importance of sustainability
and ESG reporting. During 2023 the Committee discussed
and reviewed the sustainability reporting landscape and
the related governance framework at a number of
meetings. In particular, as part of the review of the Annual
report and accounts, the Committee reviewed Task Force
on Climate-Related Financial Disclosures (TCFD). The
Committee’s review focused on ensuring metrics and
outcomes were appropriately explained and validated.
KPMG in their role as auditor have reviewed our TCFD
disclosures as part of their audit engagement. More
information can be found on page 105.
Other matters (incl. whistleblowing, review
of external developments and internal controls)
Financial reporting (incl. ESG reporting)
Internal audit
External audit
100 abrdn.com Annual report 2023
Accounting estimates and judgements
The Audit Committee considered all estimates and judgements that Directors understood could be material to the 2023
financial statements. The Committee also focused on disclosure of these key accounting estimates and judgements.
Significant accounting estimates, judgements and assumptions
for the year ended 31 December 2023
How the Audit Committee addressed these significant
accounting estimates and assumptions
Goodwill impairment reviews
Goodwill is required to be tested annually for impairment and the
determination of recoverable amounts for this impairment assessment
is a key area of estimation. The impairment assessment is performed by
comparing the carrying amount of each cash-generating unit (CGU)
with its recoverable amount, being the higher of its value in use (VIU) and
fair value less costs of disposal (FVLCD). In 2023 impairments of goodwill
were recognised in relation to the abrdn financial planning CGU
(impairment of £36m) in the ii segment and in relation to the Finimize
CGU (impairment of £26m) within Other business operations and
corporate costs (previously in Investments) and therefore the
determination of the recoverable amount for these CGUs was a key
j
udgement which directly impacted the amount of the impairment. The
impairments include the impact of lower projected revenues as a result
of adverse markets and macroeconomic conditions, and for Finimize
the impact of lower short-term projected growth following a strategic
shift that prioritises profitability over revenue growth.
The recoverable amount for abrdn financial planning was determined
based on FVLCD, with the primary approach being a multiples valuation
approach based on price to revenue and price to assets under advice.
The recoverable amount for Finimize was also determined based on
FVLCD, with the primary approach being a revenue multiple valuation
approach.
Goodwill relating to the interactive investor CGU was also tested for
impairment and the recoverable amount, based on FVLCD, indicated
that no impairment was required.
The Committee spent time reviewing and
challenging recoverable amount assumptions at
three meetings. For abrdn financial planning the
Committee considered several different valuation
approaches and discussed the valuation assessment
with management and agreed that recoverable
amount was within the reasonable range.
For Finimize the Committee noted that the business is
inherently difficult to value as there are few directly
comparable companies and therefore there are a
range of reasonable valuations. The Committee
discussed the valuation assessment with
management and agreed that recoverable amount
was within the reasonable range.
The Committee agreed with management’s view
that the goodwill for the interactive investor CGU was
not impaired. The Committee noted the inherent
sensitivity of the recoverable amounts and supported
the disclosure of appropriate sensitivities.
Further details on goodwill impairment reviews are
disclosed in Note 13 of the Group financial
statements.
UK defined benefit pension plan
In compiling a set of financial statements, it is necessary to make some
j
udgements and estimates about outcomes that are dependent on future
events. This is particularly relevant to the defined benefit pension plan
surplus which is inherently dependent on how long people live and future
economic outcomes.
For the principal UK defined benefit pension plan, the Committee
reviewed the assumptions for mortality, discount rate and inflation.
The Committee considered the proposed
assumptions taking into account market data and
information from pension scheme advisors. The
Committee concurred with management and their
actuarial advisors that appropriate adjustments are
required to avoid the mortality assumptions being
skewed by excess COVID-19 deaths and to allow
for the ongoing uncertainty around the pandemic’s
impact on future mortality improvement.
Note 31 of the Group financial statements provides
further details on the actuarial assumptions used,
and sets out the impact of mortality, discount rate
and inflation sensitivities. Note 31 also provides
details on the accounting policy applied and
accounting policy judgements relating to the
Group’s assessment that it has an unconditional
right to a refund of a surplus, and the treatment of
tax relating to this surplus.
Tritax contingent consideration fair value
In 2021, the abrdn group purchased 60% of the membership interests in
Tritax Management LLP. Subject to 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
partners choose to exercise put options in respect of each of the years
ended 31 March 2024, 31 March 2025 and 31 March 2026. The amount
payable is linked to the EBITDA of the Tritax business in the relevant period.
abrdn has the right to purchase any outstanding interests at the end of
2026 through exercising a call option.
The contingent consideration liability is required to be recognised at fair
value, which is primarily dependant on future earnings projections.
The Committee analysed and discussed
management’s assumptions underlying the fair
value of the contingent consideration at
31 December 2023 and agreed that the fair value
was within the reasonable range. The Committee
reviewed and supported that disclosure of
sensitivities to key assumptions should be provided
given the inherent uncertainties in the valuation. See
Note 36 of the Group financial statements for
further details.
101abrdn.comAnnual report 2023
GOVERNANCE
102 abrdn.com Annual report 2023
Corporate governance statement continued
Significant accounting estimates, judgements and assumptions
for the year ended 31 December 2023
How the Audit Committee addressed these significant
accounting estimates and assumptions
Investments in subsidiaries
In relation to the abrdn plc Company only accounts, an assessment is made
at each reporting date as to whether there are any indicators of
impairment in relation to investments in subsidiaries. At year end 2023
management noted that the Company’s net assets attributable to
shareholders of £4.6bn (post impairments) continues to be higher than the
Company’s market capitalisation of £3.3bn. Taking this into account along
with the continued headwinds facing active asset managers, it was
assessed that there were indicators of impairments in relation to the
Company’s asset management holding companies, abrdn Investment
Holdings Limited (aIHL) and abrdn Holdings Limited (aHL). aIHL had also
paid up significant dividends in 2023 following the sale of abrdn Capital
Limited and the sale of its subsidiary’s holding in HDFC Asset Management.
Following the performance of valuation exercises, impairments of aIHL and
aHL of £169m and £40m respectively have been recognised.
Indicators of impairment were also identified in relation to abrdn Financial
Planning Limited (aFPL). The goodwill relating to aFPL had been impaired at
the consolidated level in 2023. Following the performance of the valuation
which also supported the assessment of goodwill above, an impairment of
the Company carrying value of £52m has been recognised.
The Company’s investment in its subsidiary abrdn (Mauritius Holdings) 2006
Limited (aMH06) was impaired during 2023 by £43m. The impairment
resulted from the payment of dividends from aMH06 to the Company in
2023. Following the payment of the dividends, the recoverable amount of
aMH06 was less than £1m.
No other indicators of impairment were identified on any material
investment in subsidiaries including ii which, as noted above, is also fully
supported by a valuation exercise performed for goodwill purposes.
Indicators of reversal of impairment must also be considered and in relation
to Aberdeen Corporate Services Limited, following the recent Court of
Session ruling on the surplus for the UK principal plan, it is considered
appropriate to recognise a reversal of impairment of £13m.
The Committee discussed the investment in
subsidiaries impairment assessment with
management and noted that the judgements in
relation to these assessments were materially the
same as the judgements relating to the goodwill
impairment reviews. The Committee supported that
relevant disclosures were made in the Company
only accounts including disclosure that appropriate
consideration had been given to the Company net
assets being higher than the abrdn market
capitalisation. The Committee noted that the
Company’s distributable profits were £3.1bn
following the 2023 impairments which continued to
provide support for the dividend policy.
Further details on the assessment of investments in
subsidiaries are set out in Note A of the Company
financial statements section.
Principal risks are disclosed in the Strategic report and recommended to the Board by the Risk and Capital Committee. The
Committee was satisfied that the estimates and quantified risk disclosures in the financial statements were consistent with
the Strategic report. The Committee concluded that appropriate judgements had been applied in determining the
estimates and that sufficient disclosure had been made to allow readers to understand the uncertainties surrounding
outcomes.
103abrdn.comAnnual report 2023
GOVERNANCE
Fair, balanced and understandable
The Committee supported management’s continued aim
to compile the Annual report and accounts to be ‘fair,
balanced and understandable’.
abrdn’s principles
To create clarity on fair, balanced and understandable for
abrdn a set of principles is applied, as set out below:
Fair
‘We are being open
and honest in the
way we present our
discussions and
analysis, and are
providing what we
believe to be an
accurate
assessment of
business and
economic realities.’
–
The narrative contained in the
Annual report and accounts is
honest, accurate and
comprehensive.
–
The key messages in the
narrative in the Strategic
report and Governance
sections of the Annual report
and accounts reflect the
financial reporting contained
in the financial statements.
–
The Key Performance
Indicators (KPIs) for the period
are consistent with the key
messages outlined in the
Strategic report.
Balanced
‘We are fully
disclosing our
successes, the
challenges we have
faced in the period,
and the challenges
and opportunities
we anticipate in the
future; all with equal
importance and at a
level of detail that is
appropriate for our
stakeholders.’
–
The Annual report and
accounts presents both
successes and challenges
experienced during the year
and, as appropriate, reflects
those expected in the future.
–
The level of prominence we
give to successes in the year
versus challenges faced is
appropriate.
–
The narrative and analysis
contained in the Annual report
and accounts effectively
balances the information
needs and interests of each of
our key stakeholder groups.
Understandable
‘The language we
use and the way we
structure our report
is helping us present
our business and its
performance
clearly; in a way that
someone with a
reasonably
informed
knowledge of
financial statements
and our industry
would understand.’
–
The layout is clear and
consistent and the language
used is simple and easy to
understand (industry specific
terms are defined where
appropriate).
–
There is a consistent tone
across and good linkage
between all sections in a
manner that reflects a
complete story and clear
signposting to where
additional information can be
found.
Activities
An Internal Review Group (IRG) is in place which reviews
the Annual report and accounts specifically from a fair,
balanced and understandable perspective and provides
feedback to our financial reporting team on whether it
conforms to our standards. The members of the IRG are
independent of the financial reporting team and include
colleagues from Investor Relations, ESG reporting,
Risk, Internal Audit, Communications and Strategy.
The key points discussed by the IRG covered:
– The impact of markets on business performance,
particularly in relation to the Investments business.
– The balance of reporting relating to the business risk
environment.
– How previously reported matters had been updated.
Fair, balanced and understandable guidance was
provided to relevant stakeholders involved in the Annual
report and accounts production process.
The Audit Committee, reviewed the messaging in the
Annual report and accounts, taking into account material
received and Board discussions during the year.
Three drafts of the Annual report and accounts 2023 were
reviewed by the Audit Committee at three meetings. The
Committee complemented its knowledge with that of
executive management and internal audit. An interactive
process allowed each draft to embrace contributions.
The Annual report and accounts goes through an
extensive internal verification process of all content to
verify accuracy.
The Committee also reviewed the use and presentation of
APMs which complement the statutory IFRS results. This
review considered guidelines issued by the European
Securities and Markets Authority in 2016 and the thematic
reviews by the Financial Reporting Council (FRC). A
Supplementary information section is included in the
Annual report and accounts to explain the rationale for
using these metrics and to provide reconciliations of these
metrics to IFRS measures where relevant. This section also
provides increased transparency over the calculation of
reported financial ratios.
Adjusted operating profit and adjusted profit before tax
are key profit APMs. The Committee considered whether
the allocation of items to adjusted operating profit was in
line with the defined accounting policies, consistent with
previous practice and appropriately disclosed. Where
there were judgemental areas, such as in relation to
certain interactive investor related costs, the Committee
specifically reviewed the proposed treatments and
ensured that the Annual report and accounts provided
appropriate disclosures.
The Audit Committee agreed to recommend to the Board
that the Annual report and accounts 2023, taken as a
whole, is fair, balanced and can be understood by
someone with a reasonably informed knowledge of
financial statements and our industry.
104 abrdn.com Annual report 2023
Corporate governance statement continued
Prudential reporting
The Committee also considered disclosures relating to
IFPR (Investment Firms Prudential Regime) results included
in the Strategic report and notes sections of the Annual
report and accounts and half year reporting, together with
related assurance over these disclosures.
Internal controls
As noted earlier, the Directors have overall responsibility for
abrdn’s internal controls and for ensuring their ongoing
effectiveness. This does not extend to associates and joint
ventures. Together with the Risk and Capital Committee,
the Committee provides comfort to the Board of their
ongoing effectiveness.
Internal audit regularly reviews the effectiveness of internal
controls and reports to the Committee and the Risk and
Capital Committee.
The Finance function sets formal requirements for
financial reporting which apply to the Group as a whole,
defines the processes and detailed controls for the
consolidation process and reviews and challenges
reporting submissions. Further, the Finance function runs a
Technical Review Committee and is responsible for
monitoring external technical developments. The
Committee focuses on ensuring appropriate sign-offs on
financial results are provided, and a mechanism for the
escalation of issues from major regulated subsidiary
Boards is in place.
The control environment around financial and non-
financial reporting will continue to be monitored closely.
In early 2023, the Committee discussed the implications of
a significant process execution event and this was
reflected in 2022 financial reporting.
Whistleblowing
Our people are trained via mandatory training modules to
detect the signs of possible fraudulent or improper activity
and how to report concerns either directly or via our
independent whistleblowing hotline. The Committee Chair
is the designated whistleblower’s champion and the
Committee receives regular updates on the operation of
the whistleblowing procedures (Speak Up) from the
Conduct and Conflicts Oversight Manager. The
anonymised reports include a summary of the incidents
raised as whistleblowing, and information on
developments of the arrangements in place, to ensure
concerns can be raised in confidence about possible
malpractice, wrongdoing and other matters.
The Committee oversees the findings of investigations and
required follow-up action. If there is any allegation against
the Risk or internal audit functions, the Committee directs
the investigation. The Committee is satisfied that the
Group’s procedures are currently operating effectively.
The Committee Chair reports to the Board on the updates
the Committee receives.
(iii) Internal audit
The role and mandate of the internal audit function is set
out in its Charter, which is reviewed and approved by the
Committee annually. Whilst internal audit maintains a
relationship with the external auditors, in accordance with
relevant independence standards, the external auditors
do not place reliance on the work of internal audit. The
internal audit plan is reviewed and approved by the
Committee at least annually and is flexed during the year
to respond to internal and external developments. The
function’s coverage aligns to the Group’s activities and
footprint, taking account of local internal audit
requirements. Regular reporting is provided to the
Committee to illustrate plan progress, any emerging risks
or themes and the status of implementation of
recommendations.
The Committee assesses the independence and quality
assurance practices of the Internal Audit function and
agrees the effectiveness of the function, aligned to the
Group’s objectives on an annual basis. Independent
external reviews are also undertaken at regular intervals.
The most recent one was completed in H2 2021 by
Deloitte who assessed the abrdn internal audit function as
having the highest overall rating with conformance against
all aspects of the Institute of Internal Auditors’ International
Professional Practices Framework (IPPF) and the Internal
Audit Financial Services Code of Practice (the Standards).
The Committee’s own review of the function in 2023 was
positive and supports the continuous evolution and
enhancement of Internal Audit.
The Committee Chair meets the Chief Internal Audit
Officer periodically, without management being present.
105abrdn.comAnnual report 2023
GOVERNANCE
(iv) External auditors
The appointment
The Committee has responsibility for making
recommendations to the Board on the reappointment of
the external auditors, determining their independence
from the Group and its management and agreeing the
scope and fee for the audit. Following its review of KPMG’s
performance, the Committee concluded that there should
be a resolution to shareholders to recommend the
reappointment of KPMG at the 2024 AGM.
The Committee complies with the UK Corporate
Governance Code, the FRC Guidance on Audit
Committees with regard to the external audit tendering
timetable, the provisions of the EU Regulation on Audit
Reform, and the Competition and Markets Authority
Statutory Audit Services Order with regard to mandatory
auditor rotation and tendering. The Committee will
continue to follow the annual appointment process but
does not currently anticipate re-tendering the audit before
2026. This is currently considered to be in the best interests
of the Company taking into account the results of the
formal review of the effectiveness of the KPMG audit
discussed in this section.
The audit was last subject to a tender during the first half of
2016, and on 17 May 2016 the Company announced its
intention to appoint KPMG as its auditor for the year ending
31 December 2017, replacing PwC who were the
Company’s previous auditors.
In March 2017, the proposed acquisition of Aberdeen Asset
Management PLC was announced. Consequently, the
Standard Life plc Audit Committee (now abrdn plc) sought
assurance that KPMG’s independence would not be
compromised as a result of their previous position as
external auditor of Aberdeen Asset Management PLC,
from its incorporation in 1983 until 30 September 2015.
While recognising that the KPMG tenure had ceased
nearly two years prior to the proposed acquisition, a paper
outlining the matters which had been considered was
brought to the Committee and, following review, the
Committee was satisfied that there were no impacting
issues.
KPMG’s independence has subsequently been regularly
reviewed by the Committee and we remain satisfied of
their independence. Further detail on this assessment is set
out below. We consider KPMG’s tenure for abrdn plc and
its group of companies to run from the completion of the
2016 tender exercise and their appointment for year end
in 2017. The audit for the year ended 31 December 2023 is,
therefore, KPMG’s 7th year as auditor. The Senior Statutory
Auditor is Richard Faulkner.
Auditor independence
The Board has an established policy (the Policy) setting out
which non-audit services can be purchased from the firm
appointed as external auditors. The Committee monitors
the implementation of the Policy on behalf of the Board.
The aim of the Policy, which is reviewed annually, is to
support and safeguard the objectivity and independence
of the external auditors and to comply with the revised FRC
Ethical standards for auditors (Ethical Standards). It does
this by prohibiting the auditors from carrying out certain
types of non-audit services, and by setting out which non-
audit services are permitted. It also ensures that where
fees for approved non-audit services are significant, they
are subject to the Committee Chair’s prior approval. KPMG
has implemented its own policy preventing the provision
by KPMG of most non-audit services to FTSE 350
companies which are audit clients. A 70% fee cap on non-
audit services to audit clients is in place.
The services prohibited by the Policy are as set out in the
FRC Revised Ethical Standard 2019.
The Policy permits non-audit services to be purchased,
following approval, when they are closely aligned to the
external audit service and when the external audit firm’s
skills and experience make it the most suitable supplier.
These include:
– Audit related services, such as regulatory reporting.
– Investment circular reporting accountant
engagements.
– Attesting to services not required by statute or
regulation (e.g. controls reports).
– Other reports required by a regulator or assurance
services relating to regulatory returns.
– Sustainability and TCFD report audits/reviews.
– Fund merger assurance engagements, where the
engagement is with the manager and the external
auditor is also the auditor of the fund.
KPMG has reviewed its own independence in line with
these criteria and its own ethical guideline standards.
KPMG has confirmed to the Committee that following its
review it is satisfied that it has acted in accordance with
relevant regulatory and professional requirements and
that its objectivity is not impaired.
Having considered compliance with our Policy and the
fees paid to KPMG, the Committee is satisfied that KPMG
has remained independent.
Audit and non-audit fees
The Group audit fee payable to KPMG in respect of 2023
was £7.2m (2022: KPMG £6.2m). In addition, £2.8m
(2022: £2.3m) was incurred on audit related assurance
services. Fees for audit related assurance services are
primarily in respect of client money reporting and the half
year review. The Committee is satisfied that the audit fee is
commensurate with permitting KPMG to provide a quality
audit and monitors regularly the level of audit and non-
audit fees. Non-audit work can only be undertaken if the
fees have been approved in advance in accordance with
the Policy for non-audit fees. Unless fees are small (which
we have defined as less than £75,000), the approval of the
Committee Chair is required.
Corporate governance statement continued
Non-audit fees amounted to £1.0m (2022: £1.3m), of
which £1.0m (2022: £1.0m) related to other assurance
services and £nil (2022: £0.3m) related to other non-audit
fee services. Other assurance services in 2023 primarily
related to control assurance reports, which are closely
associated with audit work. The external auditors were
considered the most suitable supplier for these services
taking into account the alignment of these services to the
work undertaken by external audit and the firm’s skill sets.
The Committee also monitors audit and non-audit
services provided to non-consolidated funds and were
satisfied fees for those services did not impact auditor
independence.
Further details of the fees paid to the external auditors for
audit and non-audit work carried out during the year are
set out in Note 7 of the Group financial statements.
The ratio of non-audit fees to audit and audit related
assurance fees is 10% (2022: 15%). The total of audit
related assurance fees (£2.8m) and non-audit fees
(£1.0m) is £3.8m, and the ratio of these audit related
assurance fees and non-audit fees to audit fees is 53%
(2022: 58%). As noted above the audit related assurance
fees are primarily fees in relation to required regulatory
reporting, where it is normal practice for the work to be
performed by the external auditor.
The Committee is satisfied that the non-audit fees do not
impair KPMG’s independence.
Audit quality and materiality
The Committee places great importance on the quality of
the external audit and carries out a formal annual review
of its effectiveness.
The Committee looks to the audit team’s objectivity,
professional scepticism, continuing professional education
and its relationship with management, all in the context of
regulatory requirements and professional standards.
Specifically:
– The Committee discussed the scope of the audit prior
to its commencement.
– The Committee reviewed the annual findings of the
Audit Quality Review team of the FRC in respect of
KPMG’s audits. The Committee was satisfied insofar as
the issues might be applicable to abrdn’s audit, that
KPMG had proper and adequate procedures in place
for our audit.
– The Committee approved a formal engagement with
the auditor and agreed its audit fee.
– The Committee Chair had regular meetings with the
lead audit partner to discuss Group developments.
– The Committee receives updates on KPMG’s work and
its findings and compliance with auditor independence
requirements.
– The Committee reviewed and discussed the audit
findings including audit differences prior to the
approval of the financial statements. See the discussion
on materiality in the following paragraphs for more
detail.
– The Committee also continued to monitor and discuss
relevant external matters in relation to KPMG as a firm.
The Committee discussed the accuracy of financial
reporting with KPMG both as regards accounting errors
that would be brought to the Committee’s attention and as
regards amounts that would need to be adjusted so that
the financial statements give a true and fair view.
Differences can arise for many reasons ranging from
deliberate errors (fraud etc.) to good estimates that were
made at a point in time that, with the benefit of more time,
could have been more accurately measured. KPMG have
set overall audit materiality at £13.7m (2022: £14m) based
on revenue (as set out in the KPMG independent auditors’
report). This is within the range in which audit opinions are
conventionally thought to be reliable. To manage the risk
that aggregate uncorrected differences become
material, the Committee supported that audit testing
would be performed to a lower materiality threshold for
individual reporting units. Furthermore, KPMG agreed to
draw the Committee’s attention to all identified
uncorrected misstatements greater than £0.7m
(2022: £0.7m). The aggregated net difference between
the reported pre-tax profit and the auditor’s judgement of
pre-tax profit was less than £5m which was less than audit
materiality. The gross differences were attributable to
various individual components of the consolidated income
statement and balance sheet. No audit difference was
material to any line item in either the income statement or
the balance sheet. Accordingly, the Committee did not
require any adjustment to be made to the financial
statements as a result of the audit differences reported by
the external auditors.
KPMG has confirmed to the Committee that the audit
complies with their independent review procedures.
106 abrdn.com Annual report 2023
2. Risk and Capital Committee report
I am pleased to present my report as Chair of the Risk and
Capital Committee (or the “Committee” for the purpose of
this report).
The Risk and Capital Committee supports the Board in
providing effective oversight and challenge of risk
management and the use of capital across the Group so
as to ensure that we meet the expectations of our
shareholders, regulators, and clients.
During 2023 the Committee ensured there was a client first
focus in the management of risk and capital matters.
Particular focus was placed on client and conduct risk, and
operational and financial resilience. Throughout 2023, the
Committee considered the financial and strategic
considerations of the challenging market and economic
environment and deepened focus on sustainability and
geopolitical risks. The Committee continued to review and
challenge key activities undertaken by the business and
advise the Board on these, including:
– Evolution of the Enterprise Risk Management (ERM)
framework.
– Delivery of the Group’s ICARA and capital and liquidity.
– Conduct risks across our three businesses and
implementation of the new Consumer Duty and
continued support of vulnerable customers.
– Key project delivery updates from the transformation
activity across the Group.
– The progress to strengthen anti-financial crime and
anti-money laundering activity across the Group.
– Work to mature our approach to managing cyber
resilience in line with the US National Institute of
Standards and Technology (NIST) framework.
– The simplification and diversification of the business
model.
– The Group’s exposure to emerging risks, including client,
sustainability and geopolitical risks and events.
Furthermore, the Committee has closely monitored
developments from our regulators across the world as
they have progressed the regulatory agenda, including the
areas of ESG, operational resilience and innovation in
technologies (AI).
Further details on these and other activities carried out by
the Committee during the year can be found in the report
that follows.
John Devine
Chair, Risk and Capital Committee
Membership
All members of the Risk and Capital Committee are
independent non-executive Directors. For their names, the
number of meetings and Committee member
attendance during 2023, please see the table on page 96.
The Committee meetings are attended by the Chief Risk
Officer. Others invited to attend on a regular basis include
the Chief Executive Officer, the Chief Financial Officer,
Group General Counsel and the Chief Internal Auditor, as
well as the External auditors.
Regular private meetings of the Committee’s members
have been held during the year, providing an opportunity
to raise any issues or concerns with the Chair of the
Committee. The Committee’s members have also held
regular private meetings with the Chief Risk Officer and
access to management and subject matter experts
outside of the Committee meetings, to support them in
gaining an in-depth understanding of specific topics.
Key responsibilities
The Company’s purpose results in opportunities and
exposure to a range of risks and uncertainties.
Understanding and actively managing the sources and
scale of these opportunities and risks are key to fulfilling this
purpose.
The role of the Committee is to provide oversight and
advice to the Board, and where appropriate, the Board of
each relevant Group company on the following:
– The Group’s current risk strategy, material risk
exposures and their impact on the levels and allocations
of capital.
– The structure and implementation of the Group’s ERM
framework and its ability to react to forward-looking
issues and the changing nature of risks.
– Changes to the risk appetite framework and
quantitative risk limits.
– Risk aspects of major investments, major product
developments and corporate transactions.
– Regulatory compliance across the Group.
– Specific deep dives including asset classes and the
treatment of vulnerable customers.
Further detail on the work performed in each of these
areas is set out in the report below.
In addition, the Committee acts as the Board Risk
Committee for the Group’s two main UK investment
companies, abrdn Investment Management Limited
(aIML) and abrdn Investments Limited (aIL). Accordingly,
the CEO of these entities is also invited to attend the
Committee meetings.
107abrdn.comAnnual report 2023
GOVERNANCE
Corporate governance statement continued
In carrying out its duties, the Committee is authorised by
the Board to obtain any information it requires from any
Director or employee of the Group. It is also authorised to
seek, at the expense of the Group, appropriate external
professional advice whenever it considers this necessary.
The Committee did not need to take any independent
advice during the year.
The Committee’s work in 2023
Overview
The Committee operates a dynamic agenda and uses
each meeting to consider a range of recurring items as
well as other items that are more ad hoc and/or more
forward-looking in nature. An indicative breakdown as to
how the Committee spent its time is shown below:
The key recurring items which were considered by the
Committee are:
– The ‘Views on Risk’ report - this provides an independent
holistic assessment from the Chief Risk Officer of the
key risks and uncertainties faced by the Group’s
businesses and the monitoring against risk appetites.
– Conduct risks in each of abrdn’s three main businesses
and, in particular, implementation of the Consumer
Duty rules.
– Ongoing activity to enhance and develop abrdn’s ERM
framework, including the process for risk identification
and conformance with the ERM and Policy framework.
– Performance of the Group’s ICARA processes in
accordance with IFPR, including the firm’s stress and
scenario testing programme. The ICARA supports the
Committee in understanding changes to the risk profile
of the Group and the capital position over time.
Through these recurring activities the Committee was
able to challenge management’s assessment of risks and
oversee the key actions being taken to manage these
risks.
In addition to reviewing these recurring items, the
Committee provided oversight of a broad range of topics
in 2023. This included consideration of:
–
Advice provided to the Remuneration
Committee regarding the delivery of
performance relative to risk appetites.
–
Conduct risks for the Investments business.
–
Findings from the abrdn Investment
Management business internal controls report.
–
Stress testing results from the ICARA process.
–
Operational resilience annual self-assessment.
–
Review of abrdn’s principal risks and risk
disclosures for the Annual report and accounts.
–
Conduct risks for the ii business.
–
Consumer Duty implementation update.
–
Real Assets and Alternative investments.
–
Anti-financial crime related activity.
–
Trade and Transaction Reporting.
–
Conduct risks for the Adviser business.
–
ICARA 2023 approach.
–
Digital Assets Products.
–
Management of IT obsolescence.
–
ICARA process and FCA supervisory review.
–
The remit of the Risk & Compliance function.
–
Consumer Duty implementation progress.
–
Vulnerable Customers.
–
Cyber Risk and Cyber Security.
–
Conflicts of Interest.
–
2024 Monitoring & Oversight assurance plan.
After each meeting, the Committee Chair reports to the
Board, summarising the key points from the Committee’s
discussions and any specific recommendations.
Capital adequacy
Other
ERM framework incl. risk policies and appetites
Operational risks (incl. cyber risk)
Conduct and Compliance risks
Jan-Mar
Apr-Jun
Jul-Sep
Oct-Dec
108 abrdn.com Annual report 2023
Risk exposures and risk strategy
abrdn’s risk appetite framework enables the
communication, understanding and control of the types
and levels of risk that the Board is willing to accept in its
pursuit of the strategy of the Group. This includes the
business plan objectives and the capital and liquidity it
requires.
The Committee has received regular reporting through
the ‘Views on Risk’ report on each of the Group’s 12
principal risks, including risk dashboards, commentary and
management information.
The Committee continued to monitor the risk appetite
measures and limits against the approved Board risk
appetites, revised in Q4, 2022. The Committee considered
changes to the risk profile in view of the external
environment and ongoing transformation of the business.
Through reviewing the Views on Risk reporting, the
Committee supports the Board by monitoring risk
exposures and the resilience of the capital position under
current and stressed conditions. Key items that the
Committee discussed during the year in this context
included:
– The risks associated with the delivery of the business
plan.
– Components of the Group’s risk appetite framework.
– The process of completion of the abrdn ICARA and its
results.
– Improvements to anti-financial crime processes.
– Deepening the focus on conduct risks and embedding
Consumer Duty.
– The management of cyber risk and operational
resilience across the Group.
Results from regular stress testing and scenario analysis
has supported the Committee in understanding,
monitoring, and in managing the capital and liquidity risk
profile of the business under stressed conditions. These
results provided the Committee with a forward-looking
assessment of the Group’s financial resilience in response
to potentially significant adverse events affecting key risk
exposures. The material presented to the Committee
included combined stress scenarios which looked at
simultaneous stresses impacting on economic conditions,
flows and idiosyncratic factors specific to the Group.
From reviewing the stress testing and scenario analysis
results, the Committee concluded that the Group was
financially resilient and there was no requirement for the
business to reduce its risk exposures.
The Committee has also considered the results of reverse
stress testing to explore extreme but plausible events that
have the potential to cause the business to become
unviable. This allowed the Committee to assess the risk of
business failure and the ability of the Group to prevent and
mitigate this risk. The reverse stress testing considered the
impact of a combination of cyber-attacks resulting in the
non-viability of the Group.
From reviewing the reverse stress testing results, the
Committee concluded that the risk of the Group having to
wind down due to this scenario was remote. The
Committee also noted that the Group has strengthened
controls and resilience and actively manages its
relationships with third parties. The Committee receives
regular reporting on cyber risks and third party
management.
Enterprise Risk Management (ERM) framework
During the year, the business continued to evolve the ERM
framework used to identify, assess, control, and monitor
the Group’s risks.
The Committee has obtained assurance regarding the
operation of the ERM framework through its review of
regular content within the Views on Risk report. In particular
we have used our review of the various risk and capital
dashboards, including the consolidated dashboard on key
conduct risk indicators and Board risk appetite metrics to
understand the Group’s risk profile and the conformance
and effectiveness of the framework in supporting the
management of these risks.
The Committee receives reporting from the Risk and
Compliance function on the results of the quarterly risk
management survey of regional and functional executives
which is used to support identification of key risks facing
the business. The completion of this survey, along with
subsequent discussion of the results by the Executive
Leadership Team, helps to drive greater risk awareness
and accountability. Furthermore, through reviewing the
results of the survey, the Committee has been able to
ensure there is appropriate focus on the key risks facing
the business.
Exceptions-based reporting is provided to the Committee
through the Views on Risk report. This sets out any matters
of significance in respect of the results of Policy
compliance reporting and actions being taken in response
to risk events. These two items also support the Committee
in performing its oversight of the ERM framework.
109abrdn.comAnnual report 2023
GOVERNANCE
Corporate governance statement continued
Regulatory developments and compliance
The Committee reviews and assesses regulatory
compliance plans detailing the planned schedule of
monitoring activities to be performed by the Risk and
Compliance function to ensure there is appropriate
coverage. Regular updates on key findings from
regulatory compliance activity and progress against the
plans were reported to the Committee through the Views
on Risk report.
As a Committee we have closely monitored global
regulatory developments to understand and anticipate
potential implications for the Group and the wider financial
services sector. In particular the Committee paid close
attention to geopolitical risks and resulting operational
implications. The Committee has also closely followed
regulatory developments and implementation activity in
relation to the new Consumer Duty, operational resilience,
and new sustainability regulations globally.
Governance arrangements
The Committee has continued to refer to the work of those
non-executive risk committees operating in subsidiary
companies to provide oversight and challenge of risks
within those subsidiaries. This has included the risk
committees in place for abrdn Life and Pensions Limited,
Standard Life Savings Limited, and Elevate Portfolio
Services Limited.
The Committee receives updates from, and reviews the
minutes of, these committees in order to maintain
awareness and oversight of risks across the Group. In
addition to the Committee reviewing reporting from the
subsidiary risk committees, arrangements also exist for the
Committee’s Chair to attend these subsidiary risk
committees on request.
In its capacity since January 2022 as the board risk
committee to the Group’s two main UK investment firms,
the Committee routinely considered the implications of
Group risk management activities for these two firms and
identified any significant risk concerns to be brought to the
attention of the respective Boards, The Chair of the two
investment firm Boards has a standing invitation to attend
the Risk and Capital Committee.
During the year, the Committee provided advice to the
Remuneration Committee regarding the delivery of
performance in the context of incentive packages. In
particular, the Committee considered whether
performance had been delivered in a manner that was
consistent with the Group’s strategy, risk appetite and
tolerances, and capital position. The provision of this advice
helps to ensure that the Group’s overall remuneration
practices are aligned to the business strategy, objectives,
culture and long-term interests of the Group and that
individual remuneration is consistent with, and promotes,
effective risk management.
Committee effectiveness
The Committee reviews its remit and effectiveness each
year. Following the externally facilitated review in 2022, the
2023 review was conducted internally, on behalf of the
Board, by the Company Secretary. The review concluded
that the Committee continued to operate effectively
during 2023 with no material issues or concerns raised.
More information about the process involved, and its
outcomes, can be found on page 94.
110 abrdn.com Annual report 2023
3. Nomination and Governance Committee
report
I am pleased to present the Nomination and Governance
Committee (the Committee) report for the year ended
31 December 2023.
The Committee’s key priorities this year were to maintain
effective board governance processes while the group
continued to transition to a more sustainable business
model and to support succession planning for the Board
and the executive, particularly in relation to the
recruitment of our new Chief Financial Officer and Chief
Investment Officer, together with the reconfiguration of
the leadership team within the Investments business.
Additionally, we continued to oversee initiatives supporting
the development of talent, leadership, diversity, equity and
inclusion. Monitoring the embedding of the Company’s
values within our expectations of employee and employer
behaviours to reinforce our cultural commitments,
became an important regular agenda item. This followed
the expansion of the remit of the Committee in 2022 to
include oversight of culture, recognising the contribution
this would make as an important enabler within the
Company's transformation programmes. Further detail on
this can be found on pages 48 to 53.
Governance Framework
We continued to review our governance framework
against the Code principles and provisions and welcomed
the revisions made to the Code in early 2024. There were
no material changes proposed to our governance
framework during 2023.
Board evaluation
Following the externally-facilitated review in 2022, our
2023 Board review was conducted internally and
concluded the Board was operating effectively and
highlighted areas where further progress could be made
in 2024. More information about what the process involved,
and its outcomes, can be found on page 94.
Culture, Diversity, Equity and Inclusion
The Committee received regular updates on the work
being done to implement the Group’s culture, diversity,
equity and inclusion programmes. Having worked through
four distinct phases of activity regarding embedding
culture change from activation to hardwiring, we
completed the formal programmatic element of the work
in 2023. Diversity, Equity and Inclusion remained a key
focus and commitment of the Board, especially given the
challenge of historic under-representation of women and
minority ethnic colleagues within the fund management
industry.
While the Committee fully supported the recruitment and
promotion of the person best qualified for individual roles, it
challenged the modest deterioration in DEI progress
against established targets and was reassured that there
was no systematic bias. On the positive side, we made
progress in reducing UK gender pay and median bonus
gaps and achieved better DEI representation within early
careers and talent pipelines when compared with our
global workforce statistics. Within this, I was pleased our
2023 graduate intake was 44% female, which provides a
building block for a more balanced future talent pipeline
while we continue to focus on inclusive recruitment actions
to maintain this progress.
The Committee recognised there is still more to do and
remains focused and committed to holding the executive
to account for delivery of tangible actions.
There is more detail about this below and on pages 50 and
51.
In my statement last year, I reported the sad passing of
Lynne Connolly in early 2023 after living with incurable
cancer for many years. Lynne headed our DEI
programmes for six years and was an inspiration to all of
our colleagues. Lynne not only worked hard to make DEI
progress in abrdn, she was passionate about working
across the business community to make collective efforts.
She supported the GenAnalytics/Herald awards (and their
Diversity Conference) over the years. I reported last year
that we planned to establish an award scheme in her
memory and was therefore delighted that we agreed with
her family and the organisers of the Scottish Diversity
Awards that a special award would be established in her
name (The Lynne Connolly Achievement in Diversity
Award). The inaugural award was presented at the annual
GenAnalytics/Herald awards ceremony on 12 October
2023.
Talent and Leadership
The Committee received regular reports from teams
involved with Talent and Organisation Effectiveness,
oversighting their plans to deliver effective leadership,
talent and performance management across the Group.
During the year we have spent particular time on the talent
pipeline. It is pleasing that since the last report the
Company’s approach to talent has continued to develop
and become more targeted and systematic. This was
particularly reflected in the establishment of various
leadership and readiness cohorts and the frequency and
detail of the talent discussions occurring at both executive
level and with the Committee. Following the launch of a
new 18-month long future leaders programme this has
111abrdn.comAnnual report 2023
GOVERNANCE
Corporate governance statement continued
already led to the role expansion/promotion of 34% of the
introductory cohort.
Board composition
The Committee, on behalf of the Board, assesses the
balance of executive and non-executive Directors, and the
composition of the Board in terms of the skills, experience,
diversity and capacity needed for the Company to be
successful. These factors are important to the Board when
reviewing overall composition and during the year were
reviewed by the Committee, covered in my 1:1 discussions
with Directors, all of which fed in to the Board effectiveness
review.
As I have covered already in my Chairman’s statement,
both Stephanie Bruce, our previous CFO and Brian
McBride did not seek re-election at the 2023 Annual
General Meeting at which their significant contributions to
the development of abrdn were recognised. In October
2023 we welcomed Jason Windsor as our new CFO. Jason
joined from Persimmon plc having spent the vast majority
of his career prior to that in financial services, notably
through 12 years at Aviva, latterly as Group Chief Financial
Officer.
Our policy on diversity was applied when searching for
Stephanie’s successor at the long list and short list stage.
Whilst we recognise the appointment of Jason means we
do not currently meet the requirement to have a woman
represented in the identified Board leadership positions
prescribed by the UK Listing Rules (Chair, Senior
Independent Director, CEO or CFO) the Board, with the
support of the Committee, continues to support the
principle that the person best qualified, in the particular
circumstances of the role, should always be appointed
with due regard given to the benefits of diversity, including
the full range of protected characteristics as well as
cognitive diversity. This principle applies to the search for
and appointment of all candidates, both executive and
non-executive, and will continue to form an important part
of future Board succession considerations. In reviewing the
composition of the Board, the Committee regards the
Committee Chair roles as equal in importance to the
designated roles, which is reflected in their current
composition.
Catherine Bradley has advised that she will not seek re-
election at the Company’s Annual General Meeting on 24
April 2024 and will stand down from that date. She will
remain Chair of interactive investor (ii), a wholly owned
subsidiary of the Group. An announcement regarding her
successor following the AGM will be made in due course.
There were no other Board or Committee composition
changes during the year.
Sir Douglas Flint
Chairman and Chair of the Nomination and Governance
Committee
Membership
The members of the Committee are the Chairman, the
Chairs of Board Committees and the NED responsible for
Employee Engagement. For their names, the number of
meetings and committee member attendance during
2023, please see the table on page 96.
Stephen Bird, in his CEO role, is invited to Committee
meetings to discuss relevant topics, such as the roles within
and membership of the ELT, talent development and
management succession.
Key responsibilities
The Committee’s primary role is to support the
composition and effectiveness of the Board, and to
oversee the Group’s activities to strengthen its talent
pipeline. It also oversees ongoing development and
implementation of the Group’s governance framework
and its work to embed appropriate diversity and inclusion
policies.
The Committee’s key responsibilities are:
– Identifying and recommending Directors to be
appointed to the Board and the Board Committees
and ensuring relevant training is provided on
appointment and throughout their tenure.
– Reviewing and assisting in the development and
implementation of initiatives to embed the Board’s
desired outcomes for diversity, equity and inclusion
within the Group and to define, monitor and
performance manage the behaviours expected of all
employees that will be seen to represent the Group’s
culture.
– Reviewing Board diversity, skills and experience.
– Supporting the process and output of the Board’s
effectiveness review.
– Overseeing succession planning, and leadership and
talent management development throughout the
Group.
– Considering how the Group should comply with
current and upcoming corporate governance
requirements, guidance and best practice and
relevant directors’ duties.
The Committee reports regularly to the Board so that all
Directors can be involved in discussing these topics as
appropriate.
112 abrdn.com Annual report 2023
The Committee’s work in 2023
An indicative breakdown as to how the Committee spent
its time is shown below:
–
Reviewed compliance with the UK Corporate
Governance Code for the 2022 ARA.
–
Reviewed the results of the Committee
Effectiveness Review.
–
Reviewed progress on Talent and Leadership
development activities.
–
Recommended the appointment of Jason
Windsor as CFO and Peter Branner as CIO.
–
Reviewed the recommendations to shareholders
to re/elect Directors at the AGM.
–
Received an update on the 2022 year-end annual
performance process.
–
Received the results of the staff engagement
survey.
–
Reviewed the Group’s Culture and Talent
Strategy plan.
–
Reviewed the management structure and talent
pipeline in the Investments business following the
dissolution of the Co-CEO model.
–
Received an update on Diversity, Equity and
Inclusion progress and action plans.
–
Reviewed ELT succession planning.
–
Reviewed the Group’s annual Stewardship
Code Report.
–
Received an update on Diversity, Equity and
Inclusion progress and action plans.
–
Reviewed response to the UK Corporate
Governance Code Consultation.
–
Received an update on ELT and critical role
succession plans.
–
Received a diagnostic on Group governance and
opportunities.
–
Received an update on Diversity, Equity and
Inclusion progress and 2023-24 priorities.
–
Reviewed progress on Talent and Leadership
development activities.
–
Received the regular update on the activities of
the abrdn Financial Fairness Trust.
An indicative breakdown as to how the Committee spent
its time is shown below:
Board and committee appointments and
composition
The Committee keeps under constant review the skills,
experience and capabilities needed for particular Board
roles. This recognises the need to secure a pipeline of
potential successors to be able to chair the Board
Committees, and also the need to plan ahead to take
account of the length of time served on the Board by the
current independent non-executive Directors. In addition, it
also recognises the skills which the Board will need as it
moves forward to oversee the implementation of the
Group’s approved strategy and takes account of the
Group’s commitments to achieve and maintain its
published Board diversity targets.
Where Board augmentation is needed, an external search
consultant is then requested to prepare a list of suitable
candidates. From that, the Committee agrees a shortlist.
Following interviews with potential candidates, the
Committee makes recommendations to the Board on any
proposed appointment, subject always to the satisfactory
completion of all background checks and regulatory
notifications or approvals. Part of this includes considering
existing or planned external commitments of candidates
to assess their ability to meet the necessary time
commitment and whether there are any conflicts of
interest to address.
The Committee also oversees the process that
recommends continuation of appointments; members of
the Committee do not, however, take part in discussions
when their own performance – or continued appointment
– is being considered.
During the year the Committee considered the
appointment of Catherine Bradley as Chair of interactive
investor (ii), a wholly owned subsidiary of the Group. As
part of the appointment to the ii Board, the Committee
reviewed Catherine’s time commitment and capacity, and
agreed that this was complementary to her roles on the
plc Board. Catherine has advised that she will not seek re-
election at the Company’s Annual General Meeting on 24
April 2024 and will stand down from that date as a Non-
Executive Director of abrdn plc. She will remain Chair of
interactive investor.
Succession planning and talent management
activities
The Committee regularly reviews succession planning
activities, including identifying key person and retention
risk, and talent development programmes across the
Group.
During 2023, in particular, the Committee discussed the
future leadership and talent needs of the Group and how
the current programmes could be revised to take account
of the skills and expertise required by both the Board and
the ELT. These programmes are designed to recognise the
changing shape of the Group, and also to identify both the
talent available within the Group and the need/benefits of
external recruitment. Diversity was considered as a core
part of these discussions, and progress was reviewed
against our diversity goal to achieve minimum 40%
women on ELT succession plans.
Jan-Mar
Apr-Jun
Jul-Oct
Nov-Dec
Corporate governance
Succession planning and talent development
Board, committee appointments and composition
Culture, diveristy and inclusion
113abrdn.comAnnual report 2023
GOVERNANCE
Corporate governance statement continued
The Talent and Change agenda is led by the CPO, in
conjunction with the CEO.
The Committee spent time during 2023 building on the
foundations built in 2022 and looking at the strategic
priorities of the talent team to:
– Bring the best possible people into the organisation and
continue to develop our colleagues.
– Enable people to be the best they can and
encouraging movement of talent across our
organisation.
– Create the best possible environment for our people to
thrive.
The Committee discussed the team’s progress to deliver
initiatives to support early careers, talent acquisition, future
talent, core capabilities and behaviours and effective
performance management. The Committee discussed
the inclusive design of the initiatives such as early careers,
talent acquisition and future talent and considered the
diversity of talent this achieved.
The Committee reviewed the effectiveness of its NED
mentoring programme which allows each NED to get to
know members of the next generation of talent through
individual meetings which take place over the course of
the year and evolve based on the needs of each individual
being mentored. Having received positive feedback from
both mentors and mentees, the mentoring relationships
were refreshed in 2023 to continue the Board’s exposure
to our top talent and the programme will continue in 2024.
In addition, we created a new talent group focused on our
Executive Succession Talent. The group is our most senior
talent group with the purpose of ensuring engagement,
retention, and readiness of our identified Executive
Leadership Team successors.
During the year, the Committee reviewed the succession
and contingency planning for our top performing fund
managers. In addition, 47 enterprise-wide roles were
identified which are considered as critical to delivering
business results and revenue growth. The identification of
successors for these roles will create opportunities for
talent development as well as ensuring better business
continuity.
The Committee regards all of these initiatives as helpful in
supporting its oversight of the development of the
Company’s key talent. Continuing to focus on those
commercial roles and those that manage key client and
revenue generating relationships will remain an important
focus of the Committee.
Board evaluation
The Committee has a key role in supporting the Board
evaluation process. Details of the 2023 review are on
page 94.
Culture, Diversity, Equity and inclusion
The Committee and the Board spent time with both the
CEO and the Chief People Officer understanding their
progress against plans to strengthen meaningful
measurement and reporting of culture across the Group,
including the introduction of the abrdn index, focusing
attention on those things that shape culture and tracking
progress through our transformation.
The Board and the ELT previously defined a set of
commitments which define the Group’s culture – Client
First, Empowered, Ambitious and Transparent. Information
on our cultural commitments can be found on page 48.
During 2023 the Committee have overseen the launch and
embedding of these commitments against a detailed plan
of activities to hardwire these commitments into all key
aspects of colleague experience. We measure overall
progress against our cultural ambitions through our
listening strategy and our employee engagement online
platform. Insight and progress is shared and discussed with
the Committee.
The Board’s diversity statement is on page 92. The
Committee has a key role in supporting publication of this
statement through its oversight of DEI activities. DEI
activities are presented at the Committee at least twice a
year to report on progress to deliver against Committee-
approved framework, action plans and initiatives. The
Committee reviewed progress against the Group’s DEI
framework priorities, being:
– Making diversity, equity and inclusion part of our
purpose.
– Maintaining inclusive and equitable ways of working.
– Attracting and developing diverse talent.
– Ensuring colleagues feel included and valued every
day.
The committee further reviewed relevant DEI trends, data
points, and regulation including:
– Internal colleague sentiment in relation to DEI themes
such as data collection and inclusive experience.
– External landscape and regulation including the FCA
and PRA consultation papers related to DEI within
financial services.
– Target setting discussion in line with the UK
Government-backed Parker Review.
ESG reporting
During the year, ESG reporting in 2023 - including the UK
Stewardship report, and the Sustainability and TCFD report
- was predominantly considered by the Board and the
Audit Committee. With the publication of the Company’s
Climate Transition Plan expected in the first half of 2024,
the Committee’s role and remit of how it can best support
the Board’s oversight of the delivery of the Company’s
commitments and the reporting thereof, will be reviewed.
Committee effectiveness
The effectiveness review was conducted internally in 2023
following the external review undertaken in 2022.
Details of the 2023 review are on page 94 and reflect the
themes raised across the Board and its Committees.
114 abrdn.com Annual report 2023
4. Directors’ remuneration report
Remuneration Committee Chair’s statement
This report sets out what the Directors of abrdn were paid in
2023 together with an explanation of how the Remuneration
Committee reached its recommendations.
Where tables and charts in this report have been audited by
KPMG LLP, we have marked them as ‘audited’ for clarity.
The report is structured in the following sections and
corresponding page numbers:
Page
At a glance – 2023 remuneration outcomes 119
At a glance – 2024 Policy implementation 120
Directors’ remuneration in 2023
121
Shareholdings and outstanding share awards
124
Executive Directors’ remuneration in context 128
Remuneration for non-executive Directors and the
Chairman
131
The Remuneration Committee
133
Approval
The Directors’ remuneration report was approved by the
Board and signed on its behalf by:
Jonathan Asquith
Chair of the Remuneration Committee
26 February 2024
Dear shareholder
On behalf of the Board I am pleased to present the Directors’
remuneration report for the year ended 31 December 2023.
Introduction
At the 2023 AGM our directors’ remuneration report for 2022
received a 93% vote in favour and our new Directors’
remuneration policy (Policy) was approved with a 94% vote in
favour. I would like to thank all shareholders for your
continued strong level of support and constructive dialogue
on remuneration matters, particularly in the period leading up
to the 2023 AGM in respect of the Policy.
2023 was another year of significant change for abrdn. While
the headwinds facing active asset managers only grew
stronger, we reshaped our footprint and took steps to reduce
complexity. As set out in the Chairman’s statement and the
Chief Executive Officer’s review, a number of strategic
actions were taken to streamline our businesses and set up a
platform for growth. These included reducing costs through
the consolidation and closure of sub-scale funds, investing in
technology capabilities and marketing resources, selling our
US Private Equity franchise, securing the agreement to sell our
European Private Equity franchise and acquiring the
healthcare fund management capabilities of Tekla Capital
Management, increasing our holding of closed-end funds.
In a year of continued challenge for the active investment
industry, flows and investment performance were
disappointing in our Investments business, while rising profits in
Adviser and ii were insufficient to counter the decline in
revenues in Investments, despite strong cost-cutting in the
area. As a result, financial performance metrics came out
towards the bottom end of the range. There were better
outcomes against non-financial targets, which measured
progress on strategic actions taken by management to set
the stage for growth while maintaining our focus on our
people, culture and customers as we transform our business
and continue our efforts to advance sustainable investing and
limit our own climate impact.
115abrdn.comAnnual report 2023
GOVERNANCE
116 abrdn.com Annual report 2023
Corporate governance statement continued
New Chief Financial Officer’s remuneration
We were delighted to welcome Jason Windsor to the Board
and the executive team on his appointment as Chief Financial
Officer on 23 October 2023. Jason is a highly experienced
Chief Financial Officer bringing demonstrable expertise and
significant knowledge of our industry from over a decade
within Aviva plc, latterly as Group Chief Financial Officer. His
deep knowledge and experience in our sector together with
his broader financial markets experience provide an ideal
complement to the capabilities of the existing executive
team.
The remuneration arrangements for Jason Windsor’s
appointment and Stephanie Bruce’s exit were agreed by the
Remuneration Committee in conformity with the Policy
agreed at the 2023 AGM. As detailed in the announcement
on 27 July 2023, Jason’s remuneration package comprises:
– A base salary of £675,000 per annum.
– A pension allowance of 18% of salary aligned to the
maximum contribution available to abrdn's UK-based
employees and other benefits in line with our Policy.
– An Annual Bonus up to a maximum of 150% of salary
subject to performance (with 50% of any bonus earned
being deferred for three years into abrdn shares, which
will vest in three equal annual tranches). The award for
performance year 2023 was prorated to reflect his
joining the Company part way through the performance
year.
– An annual Long Term Incentive award of 225% of salary
(final vesting percentage is based on stretching financial
and shareholder return targets over the three-year
performance period and the award is subject to a
further two-year holding period after vesting).
The structure and quantum of the Chief Financial Officer’s
remuneration package is consistent with our Policy and falls
below the maximum levels permitted under the Policy.
Jason’s package was calibrated in the context of an
assessment of what it would take to attract the required skills
and expertise from the market (utilising benchmarking data
for similar roles across FTSE Financial Services peer group
companies), the expectations of other candidates put
forward for the role and Jason’s previous remuneration
packages.
The Remuneration Committee is confident that the
remuneration package, which was shared with the market at
the time, has been set at a level that takes into account the
skills and experience that Jason brings.
In line with our Policy and standard practice, Jason also
received buy-out awards to compensate for remuneration
he forfeited on leaving his previous employer. All such awards
reflect the value and structure of awards foregone, including
the vesting and/or holding periods. Where relevant, these
awards include abrdn performance conditions enabling
immediate alignment to abrdn performance. Further details
are set out on pages 126 and 127.
How our Policy was applied in 2023
Strategic advances in 2023 to enable a leaner Investments
business, generate capacity for Adviser clients and generate
organic customer growth in ii were balanced by shortfalls in
the Investments business’s financial performance as the
macro environment continued to be challenging for abrdn.
With 35% of the annual bonus and 100% of the LTIP driven
directly by profit and total shareholder return measures, low
rewards for executive Directors reflected the low returns for
shareholders balanced by a recognition of the progress
made in developing ii and Adviser and in addressing cost
issues in Investments.
In this context, the Remuneration Committee is comfortable
that the Policy operated as intended.
Annual bonus (detail on pages 121 to 123)
Financial performance (65%)
Financial targets were set with reference to the Board-
approved plan including measures on net flows, investment
performance and adjusted operating profit before tax.
Against the backdrop of a ‘higher for longer’ rate environment
and continued significant macroeconomic and geopolitical
headwinds, financial performance was subdued.
Investment performance: performance for fixed income,
quantitative, alternative investment strategies and liquidity
remained strong. However, Equities were impacted by our
AUM bias towards Asia and Emerging Markets and the quality
growth style. 2023 was also challenging for multi-asset
strategies and real estate valuations experienced early on
some of the sharpest corrections for many years and
impacted returns over all periods. Overall, performance did
not meet the threshold required for a payout under the
annual bonus plan.
Net flows: continued challenging asset allocation trends had
an adverse impact on flows, with Institutional and Retail
Wealth experiencing lower gross flows while net flows
improved in Insurance Partners. Although Adviser and
Personal Wealth proved more resilient, market conditions and
cost of living pressures contributed to net outflows there too,
while ii net inflows remained strong despite a subdued retail
market. In aggregate, performance on net flows fell below
the threshold required to qualify for payouts under the annual
bonus plan.
Adjusted operating profit before tax: this came in 5% lower
than the prior year, at £249m. ii and the Adviser business
increased profitability, with ii including the benefit of a full 12
months’ contribution compared to 7 months in 2022.
However, this was offset by reduced revenue in the
Investments business reflecting net outflows and adverse
market conditions. The overall outcome was between
threshold and target.
The outcomes for the financial element of the 2023 annual
bonus are summarised below.
Financial performance measure
Weighting
(% of total scorecard)
2023 outcome
(% of total scorecard)
Investment performance
15%
0%
Net flows
15%
0%
Adjusted operating profit
before tax
35%
9.42%
117abrdn.comAnnual report 2023
GOVERNANCE
This resulted in an overall assessment of 9.42% out of a
maximum of 65% on financial measures.
Non-financial performance (35%)
In 2023, we assessed non-financial performance against
three baskets of measures: Strategic (three measures
aligned to each of our businesses), ESG (comprising
Environment and Social categories) and Customer.
Strategic: the Investments business closed or merged over
100 funds, sold the US Private Equity franchise and delivered
savings of £102m, generating a leaner business although
revenues still fell faster than costs. Adviser delivered its largest
and most complex technology upgrade, despite early
implementation headwinds, enhancing our platform
proposition in advance of the impending launch of adviserOS
in 2024. ii enriched its offering in the year with its pilot of ii
community, the launch of Investor Essentials and Pension
Essentials, alongside further expansion in its SIPP programme
and a new approach to brand development, increasing
customers by 4% organic growth and gaining market share
despite subdued market conditions. ii also launched new
website infrastructure in January 2023, modernising the
design and improving user experience. The Remuneration
Committee took into account these significant strategic
actions to better position the businesses for future growth and
determined the final outcome of 8% out of 10%.
Environment: targeted engagement continued with our
largest financed emitters (162 resolutions voted on in 2023).
Tracking at a 41% carbon intensity reduction in in-scope
public market portfolios compared to our 2019 baseline (25%
reduction in in-scope real estate portfolio), we are on track for
our target of a 50% reduction by 2030. For our own
operational net zero, we remain well-placed to meet our
long-term net zero carbon emission target. The
Remuneration Committee took into account more than 5
separate qualitative and quantitative performance indicators
in agreeing the outcome at 5% out of 5%.
Social/people: engagement levels held steady despite
continued large-scale transformation and organisational
change. Sense of inclusion, the nature of each individual’s
work and personal motivation levels all continue to score well,
although we recognise that there is more work to do. 2023
saw noteworthy steps taken to transform the culture of
abrdn, with the culture programme work completing and the
final phase of our ‘Commitments’ work delivered. DEI levers of
change held steady. Taking into account more than 15
qualitative and quantitative performance indicators and
noting minimal traction on employee engagement levels, the
Remuneration Committee determined the final outcome of
6% out of 10%.
Customer: in the Investments business, strong relationships
with clients persisted with independent client survey
feedback highlighting good client service and account
management. In Adviser, delivering the recent technology
release for the Wrap platform disrupted service for clients in
the short term, although our ‘Return to Green’ activity in H2
2023 saw service levels and client satisfaction improve. For ii,
the Remuneration Committee recognised the organic
growth in customer numbers, the increase in market share
and the continued positive feedback from customers
regarding their experience with ii. Taking into account more
than 20 qualitative and quantitative performance indicators,
the Remuneration Committee determined the final outcome
of 7.5% out of 10%.
Considering all components together, this resulted in an
overall assessment of 26.5% out of a maximum of 35% on
non-financial measures.
Remuneration Committee assessment
To assess whether the outcomes generated by the
scorecard were fair in the broader performance and risk
context, the Remuneration Committee reviewed the
individual components which contributed to the delivery of
this performance and the alignment of scorecard outcomes
with the experience of a range of stakeholders. Further
components the Remuneration Committee considered are
set out on page 123.
In particular, the Remuneration Committee carefully
considered the experience of employees and how executive
Director incentive outcomes compared to employee
incentive outcomes. External market conditions have been
challenging for abrdn in recent years and this has heavily
impacted both executive Director and employee pay
outcomes. By design, there are differences in the priorities
which drive how these two populations are remunerated; as a
result, their relative experiences can be different.
Executive Directors’ annual bonus levels reduced from 80.5%
(2021) to 30.25% (2022) of maximum opportunity. The
increase to 35.92% for 2023 represents an important but
limited reversal of that move, recognising the progress that
the executive Directors are making in reshaping abrdn to
cope with the challenges facing the company and the wider
asset management industry.
For key staff below Board level, we have implemented various
other reward changes, including granting restricted stock
awards and increasing salaries, which have not been
awarded to our executive Directors. In this context, the
Remuneration Committee concluded that executive Director
outcomes reflected the overall employee experience.
The Remuneration Committee concluded that the outcomes
delivered by the scorecard were a fair and balanced
assessment of performance and no adjustment to them was
needed or made.
Summarising these results, the Remuneration Committee
approved the following outcomes based on performance
against targets:
Executive Director
Final outcome
(% of max)
2023 total bonus
(£000s)
Stephen Bird
35.92% 786
Jason Windsor
35.92% 70
1
Stephanie Bruce
35.92% 103
2
he 2023 total bonus for Jason Windsor is prorated to reflect his appointment
to the Board effective 23 October 2023.
he 2023 total bonus for Stephanie Bruce is prorated to reflect her stepping
down from the Board effective 11 May 2023.
Corporate governance statement continued
Long-term incentives (detail on pages 123 to 127)
Vesting of the 2021 Long-Term Incentive Plan (LTIP) award
granted to Stephen Bird and Stephanie Bruce is based on
performance over the three-year period ending on 31
December 2023. A proportion of Jason Windsor’s 2021 Long-
Term Incentive Buyout is also subject to the performance
conditions of the 2021 LTIP (see pages 126 and 127 for more
detail). After review, the Remuneration Committee
concluded that the performance for the Adjusted Diluted
Capital Generation per share metric was between threshold
and target and the overall award should vest at 18.75%.
Policy implementation in 2024
Following a review, no change has been made to salaries for
the executive Directors or fees for the non-executives for
2024.
In line with previous practice, we will continue to set stretch
targets for the annual bonus and the LTIP to ensure that the
maximum opportunity will only be earned for exceptional
performance.
The scorecard for the 2024 annual bonus is detailed on page
120 and the targets, which are commercially sensitive, will be
disclosed at the end of this performance year in the 2024
Annual report and accounts. The scorecard continues to
focus the majority of the opportunity on the achievement of
financial targets as set out in our Policy (65%), with the
balance measured against non-financial performance
including Strategic, ESG and Customer objectives. The
Remuneration Committee has agreed a Strategic measure
and a basket of key indicators in the other areas which will
allow a rounded assessment of performance to be made.
Details on these metrics, including how the Remuneration
Committee assessed performance against them, will be
disclosed retrospectively.
As outlined in the Chairman’s statement, the Group is
updating one of its key performance indicators moving
forward, from adjusted capital generation (ACG) to net
capital generation (NCG).
The Remuneration Committee reviewed the impact of this
change and agreed that the 2024 LTIP will consist of two
equally weighted targets, Net Capital Generation per share
Compound Annual Growth Rate (NCG CAGR) and Relative
TSR. The new metric of NCG CAGR more closely aligns to the
dividend paying capability of the Company over the long
term, compared to ACG CAGR, and incentivises the phasing
out of restructuring costs in the long term as targeted in the
Board-approved business plan. NCG is defined as ACG less
restructuring and corporate costs (net of tax). The three-year
NCG per share target range has been set at 15%-25% CAGR,
which is aligned with the business plan agreed with the Board.
The annual development of this measure is not linear and
target ranges for any future grants will be calibrated to allow
for this. The Remuneration Committee also reviewed the TSR
peer group for the Relative TSR metric. Details of the 2024 LTIP
grant can be found on page 120.
During the year, the Remuneration Committee remained
mindful of the debate and discussions led by the Capital
Markets Industry Taskforce on resetting the approach to
executive pay for UK listed firms. We continue to welcome the
debate on the use of restricted share awards and the
promised review of the Investment Association Principles of
Remuneration. The Remuneration Committee will review any
future guidelines and consider whether there is a beneficial
role for restricted share awards in the abrdn remuneration
structure.
To help you navigate the report effectively, I would like to
draw your attention to the sections on pages 119 and 120
which summarise both the outcomes for 2023 and how the
Policy will be implemented in 2024. Further detailed
information is then set out in the rear section of the report for
your reference as required.
On behalf of the Board, I invite you to read our remuneration
report. As always, the Remuneration Committee and I are
open to hearing your views on this year’s report and our Policy
in general.
118 abrdn.com Annual report 2023
At a glance – 2023 remuneration outcomes
Outcome of performance measures ending in the financial year
The following charts show performance against the target range for the annual bonus and commentary on the 2021-2023 LTIP.
Further detail on the assessment of the performance conditions can be found on pages 121 to 123.
% AUM above benchmark average of three-year for all asset classes.
Excl. cash/liquidity and Insurance.
2023 annual bonus scorecard outcome
The following table sets out the final outcome for the 2023 annual bonus. A detailed breakdown of the assessment of
performance conditions can be found on pages 121 to 123.
Bonus Scorecard Outcome Total Bonus Outcome
Financial metrics
(minimum 65%)
Non-financial
metrics (maximum
35%)
Board approved
outcome
(% of maximum)
Salary received
in year
(£000s)
Maximum
opportunity
(% of salary)
Total award
(% of salary)
Total award
(£000s)
Stephen Bird
9.42% 26.5% 35.92%
875 250% 89.80% 786
Jason Windsor
1
130 150% 53.88% 70
Stephanie Bruce
2
192 150% 53.88% 103
ason Windsor was appointed to the Board effective 23 October 2023. The salary received in year and total 2023 annual bonus awarded value is prorated
to reflect the proportion of the 2023 performance year for which he served at abrdn. For further information, see pages 121 to 127.
Stephanie Bruce stepped down from the Board effective 11 May 2023. The salary received in year and total 2023 annual bonus awarded value is prorated
to reflect the proportion of the 2023 performance year for which she served at abrdn. For further information, see pages 121 to 126.
2021-2023 LTIP outcome
The performance period for the 2021-2023 LTIP concluded on 31 December 2023. Performance was assessed against two
measures: Adjusted Diluted Capital Generation per share (CAGR) and Relative TSR performance. The performance for the
Adjusted Diluted Capital Generation per share (CAGR) metric fell between threshold and target and, therefore, the overall
award will vest at 18.75%. Detail of the performance assessment for the 2021-2023 LTIP can be found on page 123.
Total remuneration outcomes in 2023
The chart below shows the remuneration outcomes for the CEO in 2023 based on performance compared to the maximum
opportunity.
Salary, pension and benefits
Stephen
Bird
Max
Actual
2023
All figures in £000s
Annual bonus - cash
1,034
1,034
1,094 1,094
£6,285
£2,143
3,063
393 393
323
Annual bonus - deferred
LTIP
Investment performance (15%)
Net flows (15%)
Adjusted operating profit
before tax (35%)
0%
1
0%
Performance vs Maximum (%) – Financial measures
0
10
20
30
40
50
60
70
80
90
100
41%
27%
2
0 102030405060708090100
Environment (5%)
Social/people (10%)
Customer (10%)
100%
Performance vs Maximum (%) – Non-financial measures
75%
92%
Strategic (10%)
80%
75%
60%
119abrdn.comAnnual report 2023
GOVERNANCE
120 abrdn.com Annual report 2023
Corporate governance statement continued
At a glance – 2024 Policy implementation
This section sets out how we propose to implement our Policy in 2024. The full Policy, which remains unchanged for 2024
from the Policy approved by shareholders at the 2023 AGM, including detail on how it addresses the principles as set out in
the 2018 Corporate Governance Code, can be found in the 2022 Annual report and accounts on pages 120 – 130.
Element of remuneration Key features of operation 2024 implementation
Salary
Core reward for
undertaking the role
Normally reviewed annually, taking into account a range of
internal and external factors.
Stephen Bird: £875,000
Jason Windsor: £675,000
Pension
Competitive
retirement benefit
Aligned to the current maximum employer contribution
available to the UK wider workforce (18% of salary).
Stephen Bird: 18% of salary
Jason Windsor 18% of salary
Benefits
Competitive benefits
Includes (i) private healthcare; (ii) death in service protection
(iii) income protection (iv) reimbursement of membership fees
of professional bodies; and (v) eligibility for the all-employee
share plan.
No change to benefits provision
Annual bonus
To reward the delivery
of the Company’s
business plan
Annual performance assessed against a range of key financial
and non-financial measures. At least 65% will be based on
financial measures. At least 50% will be deferred into shares
vesting in equal tranches over a three-year period.
Awards are subject to malus and clawback terms.
No change to quantum
Stephen Bird: 250% of salary
Jason Windsor: 150% of salary
See below for 2024
performance conditions
Long-term incentive
plan
To align with our
shareholders and
reward the delivery of
long-term growth
Awards are subject to a three-year performance period, with
a subsequent two-year holding period. Dividend equivalents
accrue over the performance and holding period.
Awards are subject to two equally weighted performance
metrics linked to long-term strategic priorities and the creation
of long-term shareholder value.
Awards are subject to malus and clawback terms.
No change to quantum
Stephen Bird: 350% of salary
Jason Windsor: 225% of salary
2024 performance metrics are
set out below
Shareholding
requirements
Executive Directors are required to build up a substantial
interest in Company shares. The share ownership policy for
executive Directors requires shares up to the value of the
shareholding requirement to be held for a period of two years
following departure from the Board.
Stephen Bird: 350% of salary
Jason Windsor: 225% of salary
Performance conditions for 2024 annual bonus
Financial (65% weighting) Investment performance (15%), Adjusted operating profit (35%) and Net flows
(15%)
Non-financial (35% weighting) Performance against Customer (10%) and ESG objectives (incorporating people
engagement and diversity metrics, and environmental measures) (15%) and
progress on a key strategic initiative (10%)
Due to commercial sensitivity, actual targets and ranges will be disclosed at the end of the performance period. The
Remuneration Committee retains an appropriate level of flexibility to apply discretion to ensure that remuneration
outcomes reflect a holistic view of overall performance, including conduct and culture.
Performance conditions for 2024 Long-term incentive plan
Target range
1
Net Capital Generation per share (50% weighting)
2
15% - 25% CAGR
Relative TSR (50% weighting)
3
Equal to median – equal to upper quartile
traight line vesting occurs between threshold and maximum. 25% vesting for threshold performance.
See the Remuneration Committee Chair’s letter on page 118 for an explanation of the Net Capital Generation per share (CAGR) metric.
The peer group is made up of the following global asset management peers: AJ Bell, Alliance Bernstein, Amundi, Ashmore Group, DWS Group,
Hargreaves Lansdown, IntegraFin Holdings, Janus Henderson Group, Jupiter Fund Management, Liontrust Asset Management, M&G, Ninety One, Quilter,
Rathbones Group, Schroders and St James’s Place.
121abrdn.comAnnual report 2023
GOVERNANCE
Directors’ remuneration in 2023
This section reports remuneration awarded and paid at the end of 2023 in further detail, including payments to past
Directors.
Single total figure of remuneration – executive Directors (audited)
The following table sets out the single total figure of remuneration for each of the individuals who served as an executive
Director at any time during the financial year ending 31 December 2023:
Executive
Directors
Basic
salary for
year
£000s
Taxable
benefits
in year
£000s
1
Pension
allowance
paid in year
£000s
Bonus
paid in
cash
£000s
Bonus
deferred
£000s
2
LTIP with period
ending
in the year
£000s
3
2019 EIP
£000s
Buyout
Awards
£000s
Total
for the
year
£000s
Total fixed
£000s
Total
variable
£000s
Stephen Bird 2023 875 1 158 393 393 323 - - 2,143 1,034 1,109
2022 875 1 158 331 331 - - - 1,696 1,034 662
Jason
Windsor
4
2023 130 - 23 35 35 4 - 712 939 153 786
Stephanie
Bruce
5
2023 192 - 34 51.5 51.5 -
6
- - 329 226 103
2022 538 1 97 122 122 791 (139) - 1,532 636 896
his includes the taxable value of all benefits paid in respect of the relevant year. Included for 2023 are medical premiums at a cost to the group of
£606 per annum for executive Directors.
This represents 50% of the total bonus award and is delivered in shares which will vest in equal tranches over a three-year period.
The values reported for 2023 are the market values of the LTIP awards that will vest, at 18.75% of maximum, based on the three-year
performance measurement period ending on 31 December 2023. The share price at the date of vesting is not known at the date of publication of
this report. Therefore, the number of abrdn plc shares that will vest (excluding dividend equivalent shares accrued) has been multiplied by the
average share price over the quarter ending 31 December 2023 (166.52 pence). This amount will be restated in the 2024 Annual report and
accounts once the share price at date of vesting is known.
Jason Windsor was appointed to the Board effective 23 October 2023. All figures reflect amounts paid/awarded since the date of appointment. The
value of buyout awards above represents the buyout awards granted without performance conditions. The value of the LTIP with period ending in
the year relates to the proportion of his 2021
Long-Term Incentive Buyout award subject to abrdn performance conditions. For further information,
see pages 126 and 127.
Stephanie Bruce stepped down from the Board effective 11 May 2023. All figures reflect amounts paid/awarded until this point. See pages 123 and
124 for further information on payments made to Stephanie Bruce as a past director.
Details of the 2021-2023 LTIP outturn for Stephanie Bruce are presented on page 124.
Base Salary (audited)
There was no change to the base salaries of executive Directors in 2023.
Pension (audited)
Under the Policy approved at the 2023 AGM, the executive Directors received a cash allowance in lieu of pension
contribution of 18% of base salary.
Annual Bonus Plan
The following section contains details on the targets and the Remuneration Committee’s assessment of outcomes for the
period 1 January 2023 to 31 December 2023 against each of the elements of the executive Director bonus scorecard.
Financial performance metrics – 65% of total scorecard outcome
Weighting
(% of overall
scorecard)
Threshold
(25% of
maximum)
Stretch
(100% of
maximum)
Actual Result
(% of overall
outcome)
1
Investment performance – % AUM above
benchmark average of three-year for all asset
classes
15% 50% 70% 42% 0%
Core Investment net flows
2
(£bn) 9.75% (8.4) 2.8 (14.1) 0%
UK Savings & Wealth (Adviser & ii) net flows (£bn)
5.25% 3.5 9.7 0.7 0%
Adjusted operating profit before tax
3
(£m)
35% 247 324 249 9.42%
traight-line vesting between threshold and stretch targets.
Excluding cash/liquidity and Insurance.
Targets and actual outcome exclude US Private Equity franchise for Q4 2023 in line with completion of sale of the US Private Equity franchise in Q4 2023.
122 abrdn.com Annual report 2023
Corporate governance statement continued
Non-financial performance metrics – 35% of total scorecard outcome
Category Highlights from assessment
Result
(% of overall
outcome)
Strategic (10%):
Achievement of
key strategic
actions across
our businesses
There were a number of strategic initiatives across our three businesses that were
critical to the long-term success of the Group. Three key strategic measures were
chosen; one for each of our businesses.
– Investments: through a number of actions to simplify the business, including closing or
merging over 100 funds and the sale of our US Private Equity franchise, we went beyond our
£75m cost reduction target to deliver savings of £102m.
– Adviser: delivered the largest and most advanced technology release ever completed
on the Wrap platform., setting us up to further enhance our platform proposition with
the impending launch of adviserOS in 2024.
– ii: excluding recently migrated customers, customer numbers of ii increased by 4%,
despite a subdued market. ii’s market share also increased over 2023 and its
proposition was significantly enhanced with the launch of Investor Essentials, Pension
Essentials and the pilot of ii community. ii also launched new website infrastructure in
January 2023, modernising the design and improving user experience.
8%
Environment
(5%):
Progress
towards
portfolio
decarbonisation
and Operational
Net Zero targets
The environmental measures we selected focused on the important contribution our
Company has to make as a global institutional investor and a responsible Company. The
Remuneration Committee considered more than five quantitative and qualitative
measures. Our Sustainability and TCFD report, available on our website, contains further
detail on our performance in this area. Key factors in the determination were:
– Targeted engagement continued with our largest financed emitters and encouraged
improvement through 162 resolutions voted on in 2023.
– We continue to enhance the tools to measure carbon intensity and in 2023, we were
tracking at a 41% carbon intensity reduction in in-scope public market portfolios
compared to our 2019 baseline (25% reduction in in-scope real estate portfolio),
remaining on track for our target of a 50% reduction versus our 2019 baseline by 2030.
– For our own operational net zero, we remain well on track to meet our long-term net
zero carbon emission target of 50% less than our 2018 baseline by 2025, with a 69%
reduction versus our 2018 baseline in 2023.
5%
Social/people
(10%):
Noteworthy
steps taken to
transform the
culture at abrdn,
maintenance of
engagement
score and
sustained
progress on
gender
representation
and ethnicity
diversity targets
abrdn is a people business and we believe that in order to succeed it needs to embed
diversity, equity and inclusion within a strong and shared cultural framework, enabling us
to continue to attract and maintain an engaged and diverse talent base. The
Remuneration Committee considered more than 15 quantitative and additional
qualitative measures, including data points relating to gender representation across the
workforce, employee engagement, gender and ethnicity data and new hire statistics.
– Despite difficult market conditions and continued large-scale transformation and
organisational change, our People engagement levels held steady at 54% (2022:
50%). We recognise that there is still more to do to improve employee engagement
levels in our business.
– 2023 saw noteworthy steps taken to transform the culture at abrdn, with the culture
programme work completing and the final phase of our ‘Commitments’ work
delivered.
– Our Gender Pay Gap has been reduced for the sixth consecutive year.
– Females and individuals identifying as minority ethnic in total new hires both increased
year on year to 44% and 9% respectively.
– Maintained strong scores on employee perceptions of abrdn as an inclusive
organisation and whether people from diverse backgrounds can succeed at abrdn.
6%
123abrdn.comAnnual report 2023
GOVERNANCE
Category Highlights from assessment
Result
(% of overall
outcome)
Customer
(10%):
Measured
across the
Adviser, ii and
Investments
businesses
Our three-business model gives us a diverse customer base, from institutional to adviser
to retail. We measure our success in delivering for our customers with reference to
business-specific quantitative and qualitative metrics that holistically capture the
experience of our different client groups. The Remuneration Committee considered
more than 20 quantitative and qualitative measures from internal and external sources.
Key factors in the determination were:
– In the Investments business, good relationships with clients persisted with
independent client survey feedback highlighting good client service and account
management. Client relationship meetings with Phoenix highlighted transparency,
trust and responsiveness via high-quality resolutions as key attributes of the
partnership.
– In Adviser, our ‘Return to Green’ activity in H2 2023 saw service levels and client
satisfaction improve from the early disruption caused by the technology upgrade
implementation headwinds. AdviserAsset, which provides an external view of our
client service and user experience, rated Elevate and Wrap as Platinum for the 6th
and 9th consecutive years respectively.
– In ii, there was an increase in customer numbers, an increase in market share and
continued positive feedback from customers regarding their customer experience
with ii.
7.5%
In considering whether the bonus outcomes derived from the scorecards were fair in the context of the overall results, the
Remuneration Committee took into account the feedback received from the Audit Committee and the Risk and Capital
Committee on material accounting, reporting and disclosure matters and the management of risk within the business.
2021-2023 LTIP outcome
The following table details the targets and assessment of outcomes for the 2021-2023 LTIP. The performance period for
this award concluded on 31 December 2023. The Remuneration Committee concluded that the performance for the
Adjusted Diluted Capital Generation per share (CAGR) metric was between threshold and target and, therefore, the
overall award will vest at 18.75%.
Threshold (25%) Maximum (100%) Actual outcome % vesting
Adjusted Diluted Capital Generation
per share (CAGR) (50%)
8% 20% 10% 37.5%
Relative TSR (50%)
1
Median Upper quartile Below median 0%
he peer group was made up of the following global peers: Man Group, Ameriprise, M&G, Affiliated Managers, Alliance Bernstein, Franklin Resources, SEI
Investments, DWS Group, Amundi, Janus Henderson Group, Invesco, Schroders, T Rowe Price, St James’ Place, Quilter, Ashmore and Jupiter Fund
Management.
As a result of the above outcomes, details of the awards that vested are as follows:
Executive
Directors
Number of shares
granted
Proportion of award
vesting
Number of shares
vesting
1
Value of vested shares
(£)
2
Stephen Bird 1,033,650 18.75% 193,809 322,731
Jason Windsor
3
11,530
4
18.75% 2,162 3,600
xcluding dividend equivalents.
Based on average abrdn plc share price over the quarter ending 31 December 2023 (166.52). The amount attributable to share price appreciation is £nil.
Values for Jason Windsor reflect the proportion of his 2021 Long-Term Incentive Buyout award subject to abrdn performance conditions. See pages 126
and 127 for further information.
Number of shares granted to Jason Windsor is the number of abrdn plc shares granted under his 2021 Long-Term Incentive Buyout, which is 183,024,
multiplied by the proportion of his 2021 Long-Term Incentive Buyout subject to abrdn performance conditions, which is 6.3%. See pages 126 and 127 for
further information.
Payments to past Directors and payments for loss of office (audited)
Payments made to former executive Directors that have not been previously reported elsewhere are reported if they are
in excess of £20,000.
Stephanie Bruce stepped down from the Board effective 11 May 2023 and went on garden leave effective 11 May 2023 to
her termination date of 31 December 2023. Between 11 May 2023 and 31 December 2023, Stephanie received salary,
pension allowance and taxable benefits, totalling £409,218.
The Company has also made a payment in lieu of notice of basic salary, pension allowance and taxable benefits, in
monthly instalments (subject to mitigation) over the remainder of Stephanie Bruce’s contract (being a further two months
124 abrdn.com Annual report 2023
Corporate governance statement continued
and eight days to 8 March 2024). The final monthly instalment is due to be paid in March 2024. The total of the three
payments will be £121,071.
Stephanie Bruce was entitled to a capped contribution towards legal fees incurred in connection with her exit
arrangements. The contribution towards legal fees did not exceed £20,000.
The table below summarises total payments to Stephanie Bruce as a past director for 2023:
Payment element
Amount (£)
Salary, pension allowance and taxable benefits whilst on garden leave 409,218
Payment in lieu of notice of basic salary, pension allowance and taxable benefits 121,071
2021 – 2023 LTIP
113,417
1
ased on average abrdn plc share price over the quarter ending 31 December 2023 (166.52 pence). The amount attributable to share price appreciation
is £nil.
For Stephanie’s outstanding incentive awards, in accordance with the relevant plan rules, the following treatment applied:
– Unvested deferred bonus awards (including the pro-rated 2023 bonus) will continue to vest on normal vesting dates and
will remain subject to malus and clawback.
– Unvested LTIP awards will continue to vest on normal vesting dates and will remain subject to the satisfaction of the
relevant performance conditions (measured over the full performance period), holding periods and malus and
clawback. All LTIP awards will be prorated based on the proportion of the performance period completed to Stephanie’s
termination date.
– The Company's post-cessation shareholding requirements apply for a two-year period from Stephanie’s date of
departure from the Board on 11 May 2023.
Shareholdings and outstanding share awards
This section reports our executive Directors’ interests in shares.
Directors’ interests in shares (audited)
Our shareholding requirements for executive Directors are detailed on page 120. The Policy requires executive Directors to
accumulate and maintain a material long-term investment in abrdn plc shares. The Remuneration Committee reviews
progress against the requirements annually. Personal investment strategies (such as hedging arrangements) are not
permitted for the purposes of reducing the economic exposure arising from the shareholding requirements.
The following table shows the total number of abrdn plc shares held by the executive Directors and their connected
persons:
Unvested shares
Total number of
shares owned at 1
January 2023
Shares acquired
during the period 1
January 2023 and
31 December 2023
Total shares
owned as at 31
December 2023
Options exercised
during the period 1
January 2023 and
31 December 2023
Vested but
unexercised
share
options
Subject to
performance
conditions
1
Not subject to
performance
conditions
2
Shares lapsed
3
Stephen
Bird
782,355 - 782,355 - 190,610 3,992,940 532,499 945,765
Jason
Windsor
- - - - - 1,320,515 450,611 -
Stephanie
Bruce
4
606,633 41,757 648,390 81,879 9,496 879,438 234,742 1,092,457
ncludes: 2021, 2022 and 2023 LTIP awards for Stephen Bird and Stephanie Bruce (awards subject to performance targets over three-year periods) and
Long-Term Incentive Buyout awards for Jason Windsor (see details on pages 126 and 127). The number of share options presented under awards subject to
performance conditions exclude shares to be awarded in lieu of dividend equivalents.
ncludes: deferred bonus awards for Stephen Bird and Stephanie Bruce and Bonus Award Buyouts for Jason Windsor. The number of share options
presented under awards not subject to performance conditions include shares to be awarded in lieu of dividend equivalents.
or Stephen Bird, the share options lapsed relate to the outcome of the 2020 LTIP award – see page 109 of the 2022 Annual report and accounts. For
Stephanie Bruce, the share options lapsed relate to the outcome of the 2020 LTIP award, the 2019 Executive Incentive Plan (EIP) and the prorating of her
2022 and 2023 LTIP awards for time employed during the performance periods.
On 30 November 2023, Stephanie Bruce exercised the second tranche of the deferred portion of her 2020 annual bonus award and the first tranche of the
deferred portion of her 2021 annual bonus award. The vested but unexercised share options for Stephanie are the share options under the first tranche of her
2019 EIP award, p
rorated for the vesting outcome – see page 111 of the 2022 Annual report and accounts.
125abrdn.comAnnual report 2023
GOVERNANCE
The following table shows the number of qualifying awards included in assessing achievement towards the shareholding
requirement, as at 31 December 2023. The total Qualifying holding includes shares held outright (which derive from vested
and exercised awards plus any purchased shares) as well as Qualifying unvested or unexercised awards. Purchased
shares are valued at the higher of the cost of the purchase as disclosed in RNS announcements or the closing market price
on 31 December 2023. Qualifying unvested or unexercised awards include 50% of the value (as a proxy for the payment of
tax due on the exercise of the awards) of awards not subject to performance conditions and which have not yet vested.
Qualifying unvested or unexercised
awards
Number of shares
under the
deferred share
plan which are
not subject to
performance
conditions
Number of shares
under option under
long-term incentive
plans which are no
longer subject to
performance
conditions
Total Qualifying
holding (shares
owned from table
above and 50% of
Qualifying unvested
or unexercised
awards)
1
Value of
holding
2
Shareholding
requirement
(as % salary)
Basic
salary
Total of the value of
shares owned and
50% of the value of
qualifying awards
at 31 December
2023 as a % of
salary
Shareholding
requirement
met?
Stephen Bird
723,109 – 1,143,910 £2,408,664 350%
£875,000 275% In progress
Jason
Windsor
450,611 - 225,306 £402,508 225% £675,000 60% In progress
Stephanie
Bruce
3
225,248 18,990 770,509 £1,458,340 300% £538,125 271% In progress
f the total number of shares shown, Stephen Bird purchased 750,000 shares at a total cost of £1,705k and Stephanie Bruce purchased 238,571 shares at
a total cost of £508k.
The closing market price at 31 December 2023 used to determine the value of non-purchased shares was 178.65 pence.
The 18,990 shares under option under long-term incentive plans which are no longer subject to performance conditions, for Stephanie Bruce, are the
second and third tranches of her 2019 EIP award, prorated for the vesting outcome – see page 111 of the 2022 Annual report and accounts.
Executive Directors who have not yet satisfied the shareholding requirement are expected to accumulate shares until they
have fully met their shareholding requirement. They are required to hold 100% of vested shares (post-tax) granted under
the Company’s share plans (including any dividend equivalents) until they have met their shareholding requirement. All
other shares acquired and held by the executive Director or owned indirectly by a partner or family trust also count
towards the shareholding requirement.
Stephen Bird and Jason Windsor, who were appointed during 2020 and 2023 respectively, have not yet met the
shareholding requirement. However, the Remuneration Committee is satisfied with the progress they have made towards
their respective requirements given their tenure.
Under the Policy, an executive Director is required to hold shares up to the value of their shareholding requirement for 24
months following departure from the Board. However, if at the date of departure from the Board, the executive Director
holds shares with a value lower than the value of the requirement, the number of shares held at the date of departure from
the Board must be retained for 24 months thereafter. Any self-purchased shares are not subject to this requirement.
Accordingly, Stephanie Bruce is required to retain any shares (excluding self-purchased shares) until 11 May 2025.
126 abrdn.com Annual report 2023
Corporate governance statement continued
Awards granted in 2023 (audited)
The table below shows the key details of the LTIP, deferred and buyout awards granted in 2023:
Participant
Type of
award Basis of award
% of
salary
Face value
at grant
Number of
shares
awarded
% payable
for threshold
performance
Details on performance
conditions
Stephen
Bird
Nil-cost
option
LTIP
1
350% £3,062,500
1,512,121 25%
Award is subject to
performance against
targets measured over
three years as set out
on page 107 of the
2022 Annual report
and accounts
Nil-cost
option
Deferred Bonus
1
Not
applicable
£330,859 163,363
Not
applicable
Not applicable
Jason
Windsor
Nil-cost
option
2021 Long-Term
Incentive Buyout
2
Not
applicable
£289,233 183,024
See ‘Chief Financial
Officer buyout awards’
section below
Nil-cost
option
2022 Long-Term
Incentive Buyout
2
£816,441 516,637
Nil-cost
option
2023 Long-Term
Incentive Buyout
2
£981,136 620,854
Nil-cost
option
2021 Bonus Award
Buyout (bought-out)
2
Not
applicable
£85,697 54,228
Not applicable
Nil-cost
option
2021 Bonus Award
Buyout
2
£257,860 163,171
Nil-cost
option
2022 Bonus Award
Buyout
2
£368,545 233,212
Stephanie
Bruce
Nil-cost
option
LTIP
1, 3
200% £1,076,250 531,402 25%
Award is subject to
performance against
targets measured over
three years as set out
on page 107 of the
2022 Annual report
and accounts
Nil-cost
option
Deferred Bonus
1
Not
applicable
£122,087 60,281
Not
applicable
Not applicable
he share price used to calculate the number of shares for the LTIP and Deferred Bonus awards was 202.53 pence (the five-day average price over the five
dealing days prior to the grant date of 11 April 2023).
The share price used to calculate the number of shares for the Buyout awards was 158.03 pence (the five-day average price over the five dealing days
prior to Jason Windsor’s date of appointment on 23 October 2023).
As set out in the announcement on 12 April 2023, time pro-rating will be applied to the number of shares (if any) over which the Stephanie Bruce’s 2023 LTIP
award vests by reference to the proportion of the award performance period that had elapsed at her termination date of 31 December 2023.
Chief Financial Officer buyout awards
Jason Windsor was granted buyout awards to compensate for remuneration he forfeited on leaving his previous employer
to join abrdn. As set out in the announcement on 6 November 2023, buyout awards granted to replace forfeited awards
that were subject to performance conditions remain subject to performance conditions. The relevant proportion of each
buyout award will be adjusted to reflect the actual vesting of the relevant forfeited awards they replace.
The following principles were applied in agreeing these buyout awards:
– The buyout awards do not exceed the value of the awards forfeited. A conversion rate was used to calculate the number
of abrdn plc shares awarded using the five-day average abrdn plc and Persimmon Plc share prices over the five dealing
days prior to Jason Windsor’s date of appointment to the Board.
– The vesting timelines of the buyout awards are the same as those which applied to the forfeited awards.
– Buyout awards granted to replace forfeited awards that were subject to performance conditions remain subject to
performance conditions. These awards are subject to:
o abrdn performance conditions for the proportion of the original performance period for which Jason Windsor is
an abrdn employee.
o Performance conditions set by his previous employers for the proportion of the original performance period for
which Jason Windsor was not an abrdn employee.
– The buyout awards were granted subject to continued employment and the malus and clawback conditions in the
Policy approved at the 2023 AGM.
127abrdn.comAnnual report 2023
GOVERNANCE
Jason is eligible to receive a buyout award in relation to the potential bonus foregone for the period 1 January to 13
October 2023 as a result of leaving his previous employer. This buyout award will reflect the performance outcome of his
previous employer (Persimmon plc) and will be determined by the Remuneration Committee following the publication of
the Persimmon plc 2023 Annual report and accounts. Any buyout award will be made 50% in cash and 50% in deferred
shares and will be disclosed in the 2024 Annual report and accounts.
For the awards granted in respect of the forfeited Long Term Incentive awards, the following proportion of each award is
subject to abrdn / previous relevant employer performance conditions respectively.
Award
Proportion subject to performance conditions set by
previous employer
1
Proportion subject to abrdn performance conditions
2021 Long-Term Incentive Buyout 93.7% (Aviva performance conditions) 6.3% (2021-2023 performance conditions)
2022 Long-Term Incentive Buyout 60.3% (Persimmon performance conditions) 39.7% (2022-2024 performance conditions)
2023 Long-Term Incentive Buyout
26.9% (Persimmon performance conditions) 73.1% (2023-2025 performance conditions)
wards will vest subject to the Remuneration Committee’s assessment of the extent to which the original performance conditions set by previous employers
would have vested. The assessment will be informed by the previous employers’ public disclosures.
Share dilution limits
All share plans operated by the Company which permit awards to be satisfied by issuing new shares contain dilution limits
that comply with the guidelines produced by the Investment Association (IA). On 31 December 2023, the Company’s
standing against these dilution limits was 0.00% where the guideline is no more than 5% in any 10 years under all
discretionary share plans in which the executive Directors participate and 0.51% where the guideline is no more than 10%
in any 10 years under all share plans.
As is normal practice, there are employee trusts that operate in conjunction with the Executive LTIP, the abrdn
Discretionary Plan, the deferred elements of the abrdn plc annual bonus plan, the Aberdeen Asset Management deferred
plans and the abrdn all-employee plans. On 31 December 2023, the trusts held 58,344,840 shares acquired to satisfy these
awards. Of these shares, 11,469,400 committed to satisfying vested but unexercised option awards. The percentage of
share capital held by the employee trusts is 3.17% of the issued share capital of the Company – within the 5% best practice
limit endorsed by the IA.
Promoting all-employee share ownership
The Company promotes employee share ownership with a range of initiatives, including:
– The abrdn plc (Employee) Share Plan which allows eligible UK employees (our largest jurisdiction) to buy abrdn plc
shares directly from earnings. A similar tax-approved plan is used in Ireland. At 31 December 2023, 1,338 individuals in the
UK and Ireland were actively making monthly contributions averaging £74. At 31 December 2023, 1,632 individuals were
abrdn plc shareholders through participation in the Plan.
– The Sharesave Plan which was offered in 2023 to eligible employees in the UK. This plan allows UK tax resident employees
to save towards the exercise of options over abrdn plc shares with the option price set at the beginning of the savings
period at a discount of up to 20% of the market price. At 31 December 2023, 1,472 employees were saving towards one
or more of the Sharesave offers.
Executive Directors’ service contracts
Service contracts for both executive Directors are not for a fixed term but have notice periods in line with the executive
Director’s role:
– Six months by the executive Director to the employer.
– Up to 12 months by the employer to the executive Director.
Executive Directors’ external appointments
Executive Directors can accept a limited number of external appointments to the boards of other organisations and can
retain any fees paid for these services. Stephen Bird and Stephanie Bruce held representative directorships on behalf of the
Group during the year. Jason Windsor is a Governor of Felsted School and a Director of Felsted School Trustees Limited.
The executive Directors received no fees for their external appointments in 2023. Significant external positions held during
the year are set out below.
Executive Director Role and Organisation 2023 Fees
Stephen Bird Member of the Financial Services Growth & Development Board
1
Board member at the Investment Association
2
Member of the President’s Committee for the Confederation of British Industry
3
Member of the Lord Mayor’s Strategic Advisory Board for the Finance for Growth Project
4
£nil
£nil
£nil
£nil
ppointed on 17 January 2022.
Appointed on 27 April 2022.
Appointed on 3 February 2023.
Appointed on 18 April 2023.
Corporate governance statement continued
Executive Directors’ remuneration in context
Pay compared to
performance
The graph shows the
difference in the total
shareholder return at
31 December 2023 if, on
1 January 2014, £100 had
been invested in abrdn
plc and in the FTSE 350
respectively. It is
assumed dividends are
reinvested in both. The
FTSE 350 has been
chosen as abrdn plc has
been a member of this
index for the full 10-year
period.
Total shareholder return of abrdn plc compared to the FTSE 350 index
The following table shows the single figure of total remuneration for the Director in the role of Chief Executive Officer for the
same 10 financial years as shown in the graph above. Also shown are the annual incentive awards and LTIP awards which
vested based on performance in those years.
Year ended
31 December
Chief Executive
Officer
Chief Executive Officer single total
figure of remuneration (£000s)
Bonus outcome/ annual incentive rates
against maximum opportunity (%)
Long-term incentive plan vesting rates
against maximum opportunity (%)
2023 Stephen Bird 2,143 35.92 18.75
2022 Stephen Bird 1,696 30.25 -
2021 Stephen Bird 2,795 80.5 -
2020
Stephen Bird 1,044 48 –
Keith Skeoch 1,075 48 –
2019
1
Keith Skeoch 1,050 9 –
2018
1,2
Keith Skeoch 814 10 –
Martin Gilbert 814 10 –
2017
2
Keith Skeoch 3,028 82 70
Martin Gilbert 1,317 56 –
2016 Keith Skeoch 2,746 81 31.02
2015 Keith Skeoch 1,411 87 40.77
2015 David Nish 2,143 90 40.77
2014 David Nish 6,083 95 100
he outcome has been updated to reflect the EIP vesting.
Co-CEOs.
Relative importance of spend on pay
The following table compares what the Company spent on employee remuneration to what is paid in the form of
dividends to the Company’s shareholders. Also shown is the Company’s adjusted profit before tax which is provided for
context as it is one of our key performance measures:
2023 % change 2022
Remuneration payable to all Group employees (£m)
1
529 -4% 549
Dividends paid in respect of financial year (£m) 267 -9% 295
Share buybacks and return of capital (£m) 302 0% 302
Adjusted profit before tax (£m) 330 30% 253
n addition, staff costs and other employee related costs of £78m (2022: £88m) and £4m (2022: £11m) are included in restructuring and corporate
transaction expenses and in cost of sales respectively. See Note 6 of the Group financial statements for further information.
FTSE 350 abrdn
Source: Datastream
Va l ue
(£
)
00
100
150
200
Dec-23Dec-22Dec-21Dec-20Dec-19Dec-18Dec-17Dec-16Dec-15Dec-14Dec-13
250
300
128 abrdn.com Annual report 2023
Annual percentage change in remuneration of Directors compared to UK based employees
The table below shows the percentage year-on-year change in salary, benefits and annual bonus in the relevant year for
the executive Directors, along with any percentage change in fees for the non-executive Directors, compared to the
average Group employee. Year-on-year movement on base salaries or Director fees is primarily attributable to part-year
appointment changes.
% Base salary/fee Annual bonus outcome % Benefits
1
2023 2022 2021 2020 2023 2022 2021 2020 2023 2022 2021 2020
Executive
Directors
Stephen Bird - - 100% – 19% -62% 234% – - - - –
Jason Windsor
2
- - - - - - - - - - - -
Stephanie Bruce
3
-64% - - 74% -58% -62% 69% 54% -100% - - 100%
Non-executive
Directors
4, 5
Sir Douglas Flint - - - - - - – – - - - -
Jonathan Asquith - - - 202% - - – – - - – –
Catherine Bradley
20% - - - - - - - - - - -
John Devine
- 6% -3% -2% - - – – - -100% – -100%
Hannah Grove
21% 334% - - - - - - - - - -
Pam Kaur 72% - - - - - - - - - - -
Brian McBride -69% -13% 59% – - - – – - - – –
Michael O’Brien 72% - - - - - - - - - - -
Cathleen Raffaeli 1% 10% - - - - – – - - – -100%
Group employees
6
5.4%
- - 2.5%
-20%
-47% 50% -52.5%
-
- - 17%
he change in benefits figures for employees (including executive Directors) are based on the change in medical premium paid by the Group on their
behalf. Benefits do not include pension contributions for these purposes.
Jason Windsor was appointed to the Board effective 23 October 2023. Therefore, there are no prior years’ remuneration figures to use for comparison.
Stephanie Bruce stepped down from the Board effective 11 May 2023. 2023 remuneration figures for Stephanie used for the purposes of year-on-year
comparison reflect amounts paid until the date on which she stepped down from the Board.
Remuneration for non-executive Directors and the Chairman is disclosed on page 131.
Brian McBride stepped down from the Board effective 10 May 2023. Catherine Bradley was appointed to the Board effective 4 January 2022 and Pam Kaur
and Michael O’Brien were appointed to the Board effective 1 June 2022. See the single total figure of remuneration – non-executive Directors table on page
131 for more detail on differences in year-on-year remuneration.
Disclosure is made on the basis of the period 1 April 2022 to 1 April 2023.
How pay was set across the wider workforce in 2023
Our principles for setting pay across the wider workforce are consistent with those for our executive Directors, in that the
proportion of the remuneration package which is linked to performance increases for more senior roles within the
Company as responsibility and accountability increase.
Base salaries are targeted at an appropriate level in the relevant markets in which the Group competes for talent. The
Remuneration Committee considers the base salary percentage increases for the Group’s broader UK and international
employee populations when determining any annual salary increases for the executive Directors. In 2023, Group-wide pay
was determined with a focus on factors such as individual skills and experience and position relative to market. Having
considered the market position of our executive Director pay, the Remuneration Committee determined that there was
limited scope to make any adjustment and, therefore, no increases were applied in 2023.
The eligibility criteria for participation in variable pay plans is set so that more senior individuals have a greater proportion of
their pay linked to performance. For roles where variable remuneration eligibility is retained, our clear approach is designed
to support and reward performance at a Company, team and individual level. Performance related variable remuneration
includes deferred variable compensation at a suitable level for the employee’s role, ensuring a performance link over a
longer time horizon than a single year. Variable remuneration for employees, including executive Directors, is determined
as a total pool which is distributed across the business based on the performance of each business line and function.
Individuals are then considered for a bonus payment on the basis of their individual performance objectives and goals,
taking into account conduct.
The Group operates a Compensation Committee comprising the Chief People Officer (Chair), Chief Financial Officer and
Chief Risk Officer, the role of which is to consider the implementation of the remuneration policy across the Group. The
terms of reference of the Compensation Committee are set by the Remuneration Committee and the Chair of the
Compensation Committee formally reports to the Remuneration Committee on all matters which fall within the
Compensation Committee’s remit.
Pay ratio
The table below sets out the ratio of CEO pay to the median, 25
th
and 75
th
percentile total remuneration of full-time
equivalent UK employees. We have identified the relevant employees for comparison using our gender pay gap data set
129abrdn.comAnnual report 2023
GOVERNANCE
130 abrdn.com Annual report 2023
Corporate governance statement continued
(snapshot data from 5 April 2023), referred to as Methodology B in the legislation. This was chosen by the Remuneration
Committee as it utilised a data set which had already been processed and thoroughly reviewed and this enabled timely
reporting for disclosure purposes. Some employing entities are excluded from the gender pay gap calculation in line with
the regulations due to the number of individuals employed by these entities being less than 250. The Remuneration
Committee considered this would not have a material impact on the outcome of the pay ratio calculation given the limited
number of individuals this excludes, relative to the total population being captured, and the range of the remuneration for
those excluded individuals, which was spread across quartiles.
The remuneration paid to each of the individuals identified under methodology B was reviewed against other individuals
within the quartile both above and below. The individuals identified at the 50
th
and 75
th
percentiles had been promoted in
the year; therefore, the next identified individuals were selected. Benefits figures were based on the medical premium paid
by the Company on behalf of employees.
The ratio has increased from 2022, which reflects the fact that the CEO has a greater level of remuneration at risk which is
dependent on Company performance; based on both financial and non-financial performance in 2023, the bonus for the
CEO paid out at 35.92% of maximum, compared to 30.25% of maximum in 2022 and the LTIP vested at 18.75% of
maximum in 2023 compared to it lapsing in its entirety in 2022. External market conditions have been challenging for abrdn
in recent years and this has heavily impacted both executive and employee pay outcomes. By design, there are
differences in the priorities which drive how these two populations are remunerated; as a result, their relative experiences
can be different.
The Remuneration Committee is comfortable that the pay ratio reflects the pay and progression policies and
Remuneration Philosophy across the Company as set out above. Further detail on the make up of workforce pay is set out
below.
Year Method 25
th
percentile 50
th
percentile 75
th
percentile
Stephen Bird 2023 Option B 39 27 19
Stephen Bird 2022 Option B 35 25 16
Stephen Bird 2021 Option B 62 45 25
Stephen Bird/Keith Skeoch 2020 Option B 49 30 18
Keith Skeoch 2019 Option B 34 23 13
Keith Skeoch 2018 Option B 30 19 12
Base salary
(£000s)
Total pay
(£000s)
CEO remuneration 875 2,143
25
th
percentile employee 46 55
50
th
percentile employee 66 78
75
th
percentile employee 80 113
131abrdn.comAnnual report 2023
GOVERNANCE
Remuneration for non-executive Directors and the Chairman
Single total figure of remuneration – non-executive Directors (audited)
The following table sets out the single total figure of remuneration for each of the non-executive Directors who served as a
Director at any time during the financial year ending 31 December 2023. Non-executive Directors do not participate in
bonus or long-term incentive plans and do not receive pension funding.
Non-executive Directors
Fees for year ended
31 December
£000s
Taxable benefits in
year ended
31 December
£000s
Total remuneration
for the year ended
31 December
£000s
Sir Douglas Flint
1
2023 475 - 475
2022 475 - 475
Jonathan Asquith
2023 139 - 139
2022 139 – 139
Catherine Bradley
2
2023 131 - 131
2022 109 - 109
John Devine
2023 131 - 131
2022 131 - 131
Hannah Grove
3
2023 159 - 159
2022 126 - 126
Pam Kaur
4
2023 109 - 109
2022 63 - 63
Brian McBride
5
2023 33 - 33
2022 105 - 105
Michael O’Brien
4
2023 109 - 109
2022 63 - 63
Cathleen Raffaeli
6
2023 166 - 166
2022 164 – 164
ir Douglas Flint is eligible for life assurance of 4x his annual fee. This is a non-taxable benefit.
Catherine Bradley was appointed to the Board effective 4 January 2022, appointed to the Nomination and Governance Committee and as Chair of the Audit
Committee effective 18 May 2022 and appointed to the Risk and Capital Committee effective 1 October 2022.
The subsidiary Board fees for a member of the Standard Life Savings Limited and Elevate Portfolio Services Limited Boards increased from £37,500 to £50,000
p.a. effective 1 August 2023. Total fees include subsidiary Board fees of £50,000 p.a. (previously £37,500 p.a.) as a member of the Standard Life Savings Limited
and Elevate Portfolio Services Limited Boards and Board Employee Engagement fee of £15,000 p.a. Hannah Grove was also appointed to the Remuneration
Committee effective 1 October 2022.
Pam Kaur and Michael O’Brien were appointed to the Board and the Audit and Risk and Capital Committees effective 1 June 2022.
Brian McBride stepped down from the Board effective 10 May 2023.
The subsidiary Board fees as Chair of the Standard Life Savings Limited and Elevate Portfolio Services Limited Boards increased from £55,000 p.a. to £60,000
p.a. effective 1 August 2023.Total fees include subsidiary Board fees of £60,000 p.a. (previously £55,000 p.a.) as Chair of the Standard Life Savings Limited and
Elevate Portfolio Services Limited Boards.
The non-executive Directors, including the Chairman, have letters of appointment that set out their duties and
responsibilities. The key terms are set out in the Policy which can be found in the 2022 Annual report and accounts on
pages 120 - 130. The service agreements/letters of appointment for Directors are available to shareholders to view on
request from the Company Secretary at the Company’s registered address (which can be found in the Shareholder
information section) and will be accessible for the 2024 AGM. Details of the date of appointment to the Board and date of
election by shareholders are set out below:
Chairman/ non-executive Director Initial appointment to the Board Initial election by shareholders
Chairman
Sir Douglas Flint 1 November 2018 AGM 2019
Senior Independent Director
Jonathan Asquith 1 September 2019 AGM 2020
Non-executive Directors
Catherine Bradley 4 January 2022 AGM 2022
John Devine 4 July 2016 AGM 2017
Hannah Grove 1 September 2021 AGM 2022
Brian McBride 1 May 2020 AGM 2020
Cathleen Raffaeli 1 August 2018 AGM 2019
Pam Kaur 1 June 2022 AGM 2022
Michael O’Brien 1 June 2022 AGM 2022
Corporate governance statement continued
Implementation of policy for non-executive Directors in 2024
The following table sets out abrdn non-executive Director fees to be paid in 2024. Fees for 2024 remain at the current level.
Role 2024 fees 2023 fees
Chairman’s fees
1
£475,000 £475,000
Non-executive Director fee
2
£73,500 £73,500
Additional fees:
Senior Independent Director £25,000 £25,000
Chair of the Audit Committee £30,000 £30,000
Chair of the Risk and Capital Committee
£30,000 £30,000
Chair of the Remuneration Committee
£30,000 £30,000
Committee membership (Audit, Risk and Capital and Remuneration Committees)
£17,500 £17,500
Committee membership (Nomination Committee)
£10,000 £10,000
Employee engagement
£15,000 £15,000
he Chairman’s fees are inclusive of the non-executive Directors’ core fees and no additional fees are paid to the Chairman where he chairs, or is a
member of, other committees/boards. The Chairman is eligible to receive life assurance, which is a non-taxable benefit.
For non-executive Directors, individual fees are constructed by taking the core fee and adding extra fees for being the Senior Independent Director, chair
or member of committees and/or subsidiary boards where a greater responsibility and time commitment is required.
Non-executive Directors’ interests in shares (audited)
The following table shows the total number of abrdn plc shares held by each of the non-executive Directors and their
connected persons:
Total number of shares owned
at 1 January 2023 or date of
appointment if later
Shares acquired during the period
1 January 2023 to
31 December 2023
Total number of shares owned at
31 December 2023 or date of
cessation if earlier
Sir Douglas Flint 200,000 - 200,000
Jonathan Asquith 153,714 52,150 205,864
Catherine Bradley
12,181 - 12,181
John Devine 28,399 24,514 52,913
Hannah Grove
33,000 - 33,000
Pam Kaur
- - -
Brian McBride
1
- - -
Michael O’Brien
- 173,780 173,780
Cathleen Raffaeli
9,315 - 9,315
1. Stepped down from the Board effective 10 May 2023.
Sir Douglas Flint, as Chairman, is subject to a shareholding guideline of 100% of the value of his annual fee in abrdn plc
shares to be reached within four years of appointment. The total investment cost of Sir Douglas Flint’s shareholding was
£495k, equivalent to 104% of his annual fee.
132 abrdn.com Annual report 2023
The Remuneration Committee
Membership
During 2023, the Remuneration Committee was made up of independent non-executive Directors. For their names, the
number of meetings and committee member attendance during 2023, please see the table on page 96.
The role of the Remuneration Committee
To consider and make recommendations to the Board in respect of the total remuneration policy across the Company,
including:
– Rewards for the executive Directors, senior employees and the Chairman.
– The design and targets for any employee share plan.
– The design and targets for annual cash bonus plans throughout the Company.
– Changes to employee benefit structures (including pensions) throughout the Company.
The Remuneration Committee’s work in 2023
– 2022 Directors’ remuneration report and Policy.
– Approve performance for the 2022 bonus targets and 2020 LTIP targets.
– Set 2023 annual bonus scorecard targets and 2023 LTIP targets.
– Updates from the Risk and Audit Committees on relevant matters for the Committee’s consideration
when determining pay outcomes.
– Approve Stephanie Bruce’s exit remuneration arrangements.
– Review remuneration outcomes for executive Directors and the Material Risk Taker population.
– Review and update the Group Remuneration Policy to reflect regulatory changes.
– Approve Jason Windsor’s remuneration package.
– Update on external market trends.
– Review regulatory remuneration disclosures and documentation.
– Agree pay ratios with regard to the relevant regulations.
– Remuneration decisions for senior employees within the Remuneration Committee’s remit.
– Mid-year review of performance against targets for annual bonus and in-flight LTIP awards for the
executive Directors.
– Update the Remuneration Committee and Compensation Committee’s Terms of Reference.
– Review gender pay gap data.
– Review Group Remuneration Policy for 2024 implementation.
– Review bonus pool allocation principles and approve overall funding.
– Review 2023 remuneration proposals.
At various points throughout the year the Remuneration Committee also:
– Made remuneration decisions for the executive leadership team and other senior employees within the Remuneration
Committee’s remit, including approving the design of one-off incentive plans linked to transformation projects.
– Received updates relating to regulatory changes and market best practice.
– Reviewed minutes of subsidiary Committee meetings and their governance documents.
External advisers
During the year, the Remuneration Committee took advice from PwC LLP (a member of the Remuneration Consultants
Group (RCG)) who were appointed by the Remuneration Committee after a retender process was conducted in 2022, as
disclosed in the 2022 Annual report and accounts on page 118. As PwC LLP is a member of the RCG, the Remuneration
Committee is satisfied that the advice given from PwC LLP during the year was objective and independent. The
remuneration advisors do not have connections with abrdn that might impair their independence.
A representative from our external adviser attends, by invitation, all Remuneration Committee meetings to provide
information and updates on external developments affecting remuneration as well as specific matters raised by the
Remuneration Committee. Outside the meetings, the Remuneration Committee’s Chair seeks advice on remuneration
matters on an ongoing basis. As well as advising the Remuneration Committee, PwC LLP also provided tax, accounting
support, risk management, consultancy and assurance services to the Company during the year.
Fees paid to PwC LLP during 2023 for professional advice to the Remuneration Committee were £130,250.
Where appropriate, the Remuneration Committee receives input from the Chairman, Chief Executive Officer, Chief
Financial Officer, Chief People Officer, Global Head of Reward and the Chief Risk Officer. This input never relates to their
own remuneration. The Remuneration Committee also receives input from the Risk and Capital Committee and the Audit
Committee.
Jan-Mar
Apr-Jun
Jul-Sep
Oct-Dec
133abrdn.comAnnual report 2023
GOVERNANCE
134 abrdn.com Annual report 2023
Corporate governance statement continued
Remuneration Committee effectiveness
The Remuneration Committee reviews its remit and effectiveness each year. Following the externally facilitated review in
2022, the 2023 review was conducted internally, on behalf of the Board, by the Company Secretary. As part of the review
the views of the Board were sought on the performance of the Remuneration Committee and how Directors felt they were
updated on its activities following each meeting. This was supplemented by any matters a Director wished to raise as part
of their year-end 1:1 discussion with the Chairman.
The review concluded that the Remuneration Committee continued to operate effectively during 2023 with no material
issues or concerns raised. The main areas in which the Remuneration Committee looked to see continued improvement in
2024 were in relation to the insight and brevity of materials presented and avoiding duplication across agendas of this
Committee and others. More information about the process involved, and its outcomes, can be found on page 94.
Shareholder voting
We remain committed to ongoing shareholder dialogue and take an active interest in voting outcomes.
The Policy was last subject to a vote at the 2023 AGM on 10 May 2023 and the following table sets out the outcome.
Policy 2023 AGM For Against Withheld
% of total votes 94.29% 5.71%
No. of votes cast 675,020,934 40,860,480 189,168,584
The Directors’ remuneration report was subject to a vote at the 2023 AGM on 10 May 2023 and the following table sets out
the outcome.
2022 Directors’ remuneration report For Against Withheld
% of total votes 93.76% 6.24%
No. of votes cast 666,444,586 44,325,192 194,280,220
135abrdn.comAnnual report 2023
GOVERNANCE
Directors’ report
The Directors present their annual report on the affairs of
the abrdn group of companies (the Group), together with
the audited International Financial Reporting Standards
(IFRS) consolidated financial statements for the Group,
financial information for the Group and financial
statements for abrdn plc (the Company) for the year
ended 31 December 2023.
For clarity, some of the matters that would otherwise have
been included in the Directors’ report have been included
in the Strategic report on pages 2 to 79, as the Board
considers they fit better within that report. Specifically,
these are:
– Future business developments.
– Risk management.
– Our approach to managing, and reporting, on our
global greenhouse gas emission impact(s).
– Information on how the Directors have had regard for
the Company’s stakeholders (also covered in the
Corporate governance statement on pages 88 and 89).
– Information on our people including employee
engagement, diversity and inclusion, and talent and
reward (details of the Board’s diversity statement can
be found in the Corporate governance statement on
page 92).
Reporting for the year ended 31 December 2023
During 2023, the Group operated primarily in the UK, rest of
Europe, Asia and the Americas. More information about
the relevant activities of the Company’s principal
subsidiary undertakings are in the Strategic report on
pages 2 to 79.
The Chief Executive Officer’s overview in the Strategic
report outlines the main trends and factors likely to affect
the future development, performance and position of
the Group. Reviews of the operating and financial
performance of the Group for the year ended
31 December 2023 are also given in the Strategic report.
The Chair’s statement, the Directors’ responsibility
statement and the Corporate governance statement
form part of this Directors’ report. The Corporate
governance statement on pages 86 to 134 is submitted by
the Board.
The results of the Group are presented in the Group
financial statements on pages 160 to 270. A detailed
description of the basis of preparation of the IFRS results
(including adjusted profit) is set out in the Group financial
statements section. The Group uses derivative financial
instruments in the normal course of its business and
information covering these instruments and related
financial risk management matters can be found in Note
18 and Note 34 to the Group financial statements. These
notes are incorporated into this report by reference.
This report forms part of the management report for the
purposes of the Disclosure Guidance and Transparency
Rules (DTR 4.1.8R) of the Financial Conduct Authority
(FCA).
Dividends
The Board recommends paying a final dividend for 2023 of
7.30p per ordinary share. This will be paid on 30 April 2024
to shareholders whose names are on the register of
members at the close of business on 15 March 2024,
subject to shareholder approval at the 2024 AGM.
The total payment is estimated at £130m for the final
dividend and together with the interim dividend of 7.30p
per share totalling £137m paid on 26 September 2023,
the total dividend for 2023 will be 14.60p per share
(2022: 14.60p) totalling £267m (2022: £295m).
Share capital
The Company’s issued share capital as at 31 December
2023 comprised a single class of ordinary share. Full details
of the Company’s share capital, including movements in
the Company’s issued ordinary share capital during the
year, are in Note 24 to the Group financial statements,
which is incorporated into this report by reference. An
analysis of registered shareholdings by size, as at
31 December 2023, can be found in the Shareholder
information section on page 303.
On 5 June 2023, the Company announced the
commencement of a share buyback programme of the
Company’s ordinary shares up to a maximum aggregate
consideration of £150m. On 8 August 2023, the Company
extended the programme such that the maximum
consideration was increased from £150m to £300m. The
purpose of this programme was to return value to
shareholders, reduce the share capital of the Company
and increase the earnings per share as a result. A share
buyback was considered the most efficient method to
achieve this. All shares purchased have been cancelled. In
total 161,153,949 shares were cancelled through this
programme.
As at 31 December 2023, there were 1,840,740,364
ordinary shares in issue held by 85,184 registered
members. The abrdn Share Account (the Company-
sponsored nominee) held 629,199,041 of those shares on
behalf of 872,299 participants. No person has any special
rights of control over the Company’s share capital and all
issued shares are fully paid.
Between 1 January 2023 and the date this report was
signed, the Company received the following notification in
respect of major shareholdings and major proportions of
voting rights in accordance with the Disclosure Guidance
and Transparency Rules of the FCA:
Shareholder
Date of
transaction
Type of
transaction
Number of
voting rights
following the
transaction
Percentage of
voting rights
following the
transaction
Blackrock
Inc
17 March
2023
Disposal
of voting
rights
197,569,201 9.85%
Blackrock
Inc
31 August
2023
Disposal
of voting
rights
139,928,114 7.25%
Directors’ report continued
In accordance with the terms of the abrdn Employee Trust
(formerly named the Standard Life Employee Trust) Deed,
the trustees waived all entitlements to current or future
dividend payments for shares they hold.
Similarly, in accordance with the terms of The Aberdeen
Asset Management Employee Benefit Trust 2003 and The
abrdn Employee Benefit Trust 2019 (formerly named the
Standard Life Aberdeen Employee Benefit Trust 2019), the
trustees waived all entitlements to current or future
dividend payments for shares they hold other than
dividends payable on any shares held by the trustee as
nominee for any other person.
The trustees of the abrdn plc (Employee) Share Plan voted
the appropriate shares in accordance with any
instructions received from participants in the plan.
Restrictions on the transfer of shares and
securities
Except as listed below, there are no specific restrictions on
the size of a holding or on the transfer of shares. Both are
governed by the general provisions of the Company’s
articles of association (the Articles) and current legislation
and regulation. There are no restrictions on voting rights.
A copy of the Articles can be obtained from Companies
House or by writing to the Company Secretary at our
registered address (details of which can be found in the
Contact us section). The Articles may only be amended by
a special resolution passed by the shareholders.
The Articles are on our website at
www.abrdn.com/annualreport
The Board may decline to register the transfer of:
– A share that is not fully paid.
– A certificated share, unless the instrument of transfer is
duly stamped or duly certified and accompanied by the
relevant share certificate or other evidence of the right
to transfer, is in respect of only one class of share and is
in favour of a sole transferee or no more than four joint
transferees.
– An uncertificated share, in the circumstances set out in
the uncertificated securities rules (as defined in the
Articles) and, in the case of a transfer to joint holders,
where the number of joint holders to whom the share is
to be transferred does not exceed four.
– A certificated share by a person with a 0.25 per cent
interest (as defined in the Articles) in the Company, if
that person has been served with a restriction notice
under the Articles, after failing to provide the Company
with information about interests in those shares as set
out in the Companies Act 2006 (unless the transfer is
shown to the Board to be pursuant to an arm’s length
sale under the Articles).
These restrictions are in line with the standards set out in
the FCA’s Listing Rules and are considered to be standard
for a listed company.
The Directors are not aware of any other agreements
between holders of the Company’s shares that may result
in restrictions on the transfer of securities or on voting
rights.
Rights attached to shares
Subject to applicable statutes, any resolution passed by
the Company under the Companies Act 2006 and other
shareholders’ rights, shares may be issued with such rights
and restrictions as the Company may decide by ordinary
resolution, or (if there is no such resolution or if it does not
make specific provision) as the Board may decide. Subject
to the Articles, the Companies Act 2006 and other
shareholders’ rights, unissued shares are at the disposal of
the Board.
Every member and duly appointed proxy present at a
general meeting or class meeting has one vote on a show
of hands, provided that where a proxy is appointed by
more than one shareholder entitled to vote on a resolution
and is instructed by one shareholder to vote ‘for’ the
resolution and by another shareholder to vote ‘against’ the
resolution, then the proxy will be allowed two votes on a
show of hands – one vote ‘for’ and one vote ‘against’. On a
poll, every member present in person or by proxy has one
vote for every share they hold. For joint shareholders, the
vote of the senior joint shareholder who tenders a vote, in
person or by proxy, will be accepted and will exclude the
votes of the other joint shareholders. For this purpose,
seniority is determined by the order that the names
appear on the register of members for joint shareholders.
A member will not be entitled to vote at any general
meeting or class meeting in respect of any share they hold
if any call or other sum then payable by them for that
share remains unpaid or if they have been served with a
restriction notice (as defined in the Articles) after failing to
provide the Company with information about interests in
those shares required to be provided under the
Companies Act 2006.
The Company may, by ordinary resolution, declare
dividends up to the amount recommended by the Board.
Subject to the Companies Act 2006, the Board may also
pay an interim dividend, and any fixed rate dividend,
whenever the financial position of the Company, in the
opinion of the Board, justifies its payment. If the Board acts
in good faith, it is not liable to holders of shares with
preferred or pari passu rights for losses that arise from
paying interim or fixed dividends on other shares.
The Board may withhold payment of all or part of any
dividends or other monies payable in respect of the
Company’s shares from a person with a 0.25 per cent
interest (as defined in the Articles) if that person has been
served with a restriction notice (as defined in the Articles)
after failure to provide the Company with information
about interests in those shares, which is required under the
Companies Act 2006.
Subject to the Companies Act 2006, rights attached to any
class of shares may be varied with the written consent of
the holders of not less than three-quarters in nominal value
of the issued shares of that class (excluding any shares
held as treasury shares). These rights can also be varied
with the approval of a special resolution passed at a
separate general meeting of the holders of those shares.
At every separate general meeting (except an adjourned
meeting) the quorum shall be two persons holding, or
representing by proxy, not less than one-third in nominal
136 abrdn.com Annual report 2023
value of the issued shares of the class (calculated
excluding any shares held as treasury shares).
A shareholder’s rights will not change if additional shares
ranking pari passu with their shares are created or issued –
unless this is expressly provided in the rights attaching to
their shares.
Power to purchase the Company’s own shares
At the 2023 Annual General Meeting (AGM), shareholders
granted the Directors limited powers to:
– Allot ordinary shares in the Company up to a maximum
aggregate amount of £140,209,795.
– Disapply, up to a maximum total nominal amount of
£60,981,469 of its issued ordinary share capital,
shareholders’ pre-emption rights in respect of new
ordinary shares issued for cash.
– Make market purchases of the Company’s ordinary
shares up to a maximum of 300,083,639 of its issued
ordinary shares which represented 14.99% of the share
capital at the time.
During 2023, under the authority granted at the 2023 AGM,
the Company purchased 161,153,949 of its ordinary
shares of 13
61
/
63
pence each, paying an aggregate
amount of £299,999,999. As at 31 December 2023, the
percentage of share capital represented by these
purchased shares was approximately 9%.
Significant agreements
Certain significant agreements to which the Company, or
one of its subsidiaries, is party entitle the counterparties to
exercise termination or other rights in the event of a
change of control of the Company. These agreements are
noted in the paragraphs below.
Credit Facility
Under a £400m revolving credit facility between the
Company and the banks and financial institutions named
therein as lenders (Lender) dated 12 February 2021 (the
Facility), in the event that any persons or group of persons
acting in concert, gain control of the Company, then any
Lender may elect within a prescribed time frame to cancel
its outstanding commitment under the Facility and declare
its participation in all outstanding loans, together with
accrued interest and all amounts accrued, immediately
due and payable, whereupon the commitment of that
Lender under the Facility will be cancelled and all such
outstanding amounts will become immediately due and
payable.
China
Under a joint venture agreement dated 12 October 2009
(as amended) between the Company and Tianjin TEDA
International Holding (Group) Co. Limited (TEDA),
pursuant to which the Company holds its interest in Heng
An Standard Life Insurance Company Limited (Heng An
Standard Life), upon a change of control of the Company,
TEDA has the right to terminate the venture and to
purchase, or nominate a third party to purchase, the
Company’s shares in Heng An Standard Life for a price
determined in accordance with the agreement.
Other agreements
A number of other agreements contain provisions that
entitle the counterparties to exercise termination or other
rights in the event of a change of control of the Company.
However, these agreements are not considered to be
significant in terms of their likely impact on the business of
the Group as a whole.
The Directors are not aware of any agreements with any
employee that would provide compensation for loss of
office or employment resulting from a takeover. The
Company also has no agreement with any Director to
provide compensation for loss of office or employment
resulting from a takeover.
Appointment and retirement of Directors
The appointment and retirement of Directors is governed
by the Articles, the Companies Act 2006, the UK Corporate
Governance Code and related legislation.
Brian McBride stepped down from the Board on 10 May
2023 and Stephanie Bruce stepped down on 11 May 2023.
As announced, Catherine Bradley will not stand for re-
election at the 2024 AGM on 24 April 2024 and will stand
down from the Board from that date.
All remaining Directors as at the date of the 2024 AGM, will
retire and stand for election or re-election.
The powers of the Directors can also be found in the
Articles.
Directors and their interests
The Directors who served during the year, and up to the
date the report was signed were:
Sir Douglas Flint
(Chair) John Devine
Stephen Bird Hannah Grove
Stephanie Bruce
2
Pam Kaur
Jason Windsor
3
Brian McBride
1
Jonathan Asquith
Michael O’Brien
Catherine Bradley Cathi Raffaeli
1. Retired 10 May 2023.
2. Retired 11 May 2023
3. Appointed 23 October 2023.
Biographies of the current Directors can be found on pages 82
to 85.
Details of the Directors’ interests in the Company’s ordinary
shares, the abrdn plc (Employee) Share Plan, the abrdn
Sharesave Plan and the share-based discretionary plans
are set out in the Directors’ remuneration report together
with details of the executive Directors’ service contracts
and non-executive Directors’ appointment letters.
137abrdn.comAnnual report 2023
GOVERNANCE
Directors’ report continued
No Director has any interest in the Company’s listed debt
securities or in any shares, debentures or loan stock of the
Company’s subsidiaries. No Director has any material
interest in any contract with the Company or a subsidiary
undertaking which was significant in relation to the
Company’s business, except for the following:
– The benefit of a continuing third party indemnity
provided by the Company (in accordance with
company law and the Articles).
– Service contracts between each executive Director
and subsidiary undertakings (Aberdeen Corporate
Services Limited and abrdn Holdings Limited).
Copies of the following documents can be viewed at the
Company’s registered office (details of which can be
found in the Contact us section) during normal business
hours (9am to 5pm Monday to Friday) and are available
for inspection at the Company’s AGM:
– The Directors’ service contracts or letters of
appointment.
– The Directors’ deeds of indemnity, entered into in
connection with the indemnification of Directors
provisions in the Articles.
– The rules of the abrdn plc Executive Long-Term
Incentive Plan.
– The rules of the abrdn plc Deferred Share Plan.
– The Company’s Articles.
Directors’ liability insurance
During 2023, the Company maintained directors’ and
officers’ liability insurance on behalf of its Directors and
officers to provide cover should any legal action be
brought against them. The Company also maintained
pension trustee liability indemnity policies (which includes
third party indemnity) for the boards of trustees of the UK
and Irish staff pension schemes where required to do so.
Our people
Our people are central to delivering our strategy, and we
are focused on helping them thrive.
More on our people strategy can be found in the Strategic
report section of this report.
Communicating with and engaging employees
In 2022 we set out to redefine our culture at abrdn, which
supports the delivery of our purpose and strategy. This
involved looking across the business to understand what
our colleagues feel proud of and reflecting on what our
clients need from us. Our Commitments were the output
of this work.
During 2023 we have focussed on integrating our
commitments into every stage of colleague experience,
supported by powerful storytelling and robust feedback
mechanisms. Our objective was to create an environment
where colleagues feel empowered to speak up, where we
are ambitious in what we do, but also transparent in how
we go about it, ensuring we enable our clients to be better
investors. We have been focussed on taking actions to
improve transparency, communication, and recognition
across the organisation, with a series of engagement
programmes. We continue to intentionally focus on
building a tone of openness and honesty where we talk to
our people, hear their questions and respond in real time.
Colleagues come together regularly in our all-colleague
‘Let’s Hear It’ events to hear directly from the ELT, have
their say and get their questions answered. In 2023 we
rolled out ‘Engage’, a new technology tool enabling
colleagues to have direct and open communication with
each other and leadership teams across the business. We
inform and engage colleagues on key topics through a
regular drum beat of messaging, from strategy and
external context, to day-to-day activity that supports our
business.
We listen closely to our colleagues – via our regular Pulse
surveys and anecdotal feedback - continuously shaping
our activity. Colleague recognition has been a focus in
2023. We launched our in-house ‘abrdn awards’ this year
in line with our culture Commitments, building greater
momentum and supporting positive change. Colleagues
have the opportunity to be recognised for excellence and
contribution both to abrdn and our clients and for the work
they do in their wider communities and with charities they
support outside the organisation. Our ‘Praise Board’ has
also been well used this year, with thousands of colleagues
taking time out to nominate colleagues and provide ‘in the
moment’ recognition for their peers and teams for the
great work they are doing. We continue to support our
performance culture – guiding leaders and colleagues
through meaningful conversations, as well through our mid
and end of year reviews. This includes a goal aligned to our
culture Commitments, where every colleague globally
sets a goal directly related to their role in making abrdn a
great place to work.
Diversity, equity and inclusion
Disability statement
We have specific policies to ensure that colleagues with
disabilities face no discrimination or obstacles in relation to
job applications, training, promotion and career
development. Reasonable adjustments are also made to
train and enable employees who become disabled to
allow them to continue and progress in their career.
In 2023 abrdn became a Disability Confident employer
under the UK Government’s scheme. Although we had
always offered candidates the ability to make adjustments
they needed to our recruitment process for their disability,
by joining this scheme we further committed to visibly
removing barriers for people with disabilities. We revised
the diversity statement on our interview letters and
templates to include specific wording and guidance for
candidates with a disability or who are neurodivergent.
DEI policy, how it is implemented, progress made against it
To complement the Board’s formal diversity statement
www.abrdn.com/corporate/about-us/governance, the
executive leadership team put in place a Global Diversity,
Equity and Inclusion policy in 2019
www.abrdn.com/corporate/about-us/diversity-and-
inclusion It affirms that diversity, equity and inclusion remain
as fundamental pillars supporting all our decisions. We
have always considered diversity in the broadest sense –
all the ways we differ and are similar; both our visible and
invisible characteristics, as well as how we think, how we
work, and the experience we bring. By valuing a diverse
and inclusive workplace, we enable and empower our
people to be themselves and deliver the best possible
outcomes for our clients and customers.
138 abrdn.com Annual report 2023
We are making good progress against our DEI objectives
and are focused on building on this because we know
there is more to do at abrdn and across our industry. Our
2023 Sustainability and TCFD report describes our
progress, priorities, and additional detail against out DEI
objectives. Our 2023 report can be found on our website at
www.abrdn.com/en-gb/corporate/corporate-
sustainability Progress against our diversity, equity and
inclusion framework is reviewed twice a year by the
Nomination and Governance Committee.
Gender representation
Gender Diversity 31 December 2023 Target by 2025
Women at plc
Board
40%
(4 of 10)
40% women | 40%
men | 20% any
gender
Women in senior
leadership
1
34%
(33 of 96)
40% women | 40%
men | 20% any
gender
Women in global
workforce
2
43%
(2049 of 4742)
50% (+/- 3%
tolerance)
1. Relates to leaders one and two levels below the Chief Executive Officer,
including Company Secretary, excluding administration roles, and
individuals on garden leave.
2. 63 colleagues without gender data on our people system are excluded
from the headcount data.
Ethnicity recommendations
As evidence of our commitment to ethnic diversity, we
introduced an ethnicity target for the first time which took
effect on 1 January 2021, following the recommendations
of the Sir John Parker review. Since 2019 we have met the
recommendation to have at least one Board member
who identifies as ethnic minority. The Board Charter
mandates appointments to be based on merit, with due
consideration given to the Board’s gender and ethnicity
balance.
Sustainability
The commercial aims of our business are linked to its
environmental, social and governance responsibilities.
More details about how we aim to run the business
sustainably can be found throughout the Strategic report.
The non-financial information statement on page 57
summarises where key information on the approach can
be found. For details of greenhouse gas emissions, please
see pages 46 and 47.
Political donations
The Company has a long-standing policy of not making
political donations. The Company has limited authorisation
from shareholders to make political donations and incur
political expenditure. This is requested as a precaution
against any inadvertent breach of political donations
legislation. While abrdn has regular interaction with
government and elected politicians in the UK and other
jurisdictions in which we operate, we are strictly apolitical.
Auditors
The Audit Committee is responsible for considering the
Group’s external audit arrangements. Resolutions
proposing the re-appointment of KPMG LLP as auditors of
the Company and giving authority to the Audit Committee
to determine their remuneration will be submitted at the
2024 AGM.
Disclosure of information to the auditors
The Directors who held office at the date of the approval of
this Directors’ report confirm that, so far as they are each
aware, there is no relevant audit information of which the
Company’s auditor is unaware; and each Director has
taken all the steps that he or she ought to have taken as a
Director to make himself or herself aware of any relevant
audit information and to establish that the Company’s
auditor is aware of that information.
Annual General Meeting
The 2024 AGM is scheduled to take place on 24 April 2024
in Edinburgh. Details of the meeting content can be found
in our AGM guide 2024. The AGM guide and other
materials will be published online at www.abrdn.com in
advance of this year’s AGM.
Post balance sheet events
On 24 January 2024, the Group announced a new
transformation programme targeting an annualised
cost reduction of at least £150m by the end of 2025. The
bulk of the savings will be in non-staff costs. However,
the programme is expected to result in the reduction of
approximately 500 roles. To achieve the desired
simplification and cost savings, total implementation
costs are estimated to be around £150m.
On 14 February 2024, the agreed sale of the Group’s
interest in Virgin Money UTM to its joint venture partner,
Clydesdale Bank, was announced. The interest in Virgin
Money UTM does not form part of the Group’s reportable
segments. The sale is expected to complete in H1 2024.
The Group’s interest in Virgin Money UTM was classified as
held for sale at 31 December 2023 (refer Note 21). The
sale is expected to result in an IFRS profit on disposal of
interests in joint ventures of approximately £11m.
139abrdn.comAnnual report 2023
GOVERNANCE
Directors’ report continued
Other information
Under Listing Rule 9.8.4.CR, a listed company must include all information required by LR 9.8.4R in a single identifiable
location or cross-reference table. For the purposes of LR 9.8.4CR, the information required to be disclosed can be found in
the following locations. All the relevant information cross-referenced below is hereby incorporated by reference into this
Directors’ report.
Location
Topic Directors’ report
Directors’
remuneration report
None/
Not applicable
Interest capitalised
x
Publication of unaudited financial information in a class 1 circular or in a
prospectus, other than in accordance with Annexes 1 and 2 of the FCA’s
Prospectus Rules
x
Details of long-term incentive schemes
x
Waiver of emoluments by a Director
x
Waiver of future emoluments by a Director
x
Non pre-emptive issues of equity for cash x
Non pre-emptive issues of equity for cash in relation to major subsidiary
undertakings
x
Parent participation in a placing by a listed subsidiary x
Contracts of significance
x
Provision of services by a controlling shareholder
x
Shareholder waivers of dividends
x
Shareholder waivers of future dividends x
Agreements with controlling shareholders x
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 Strategic report. This includes details on our liquidity and capital management and our viability
statement in the Chief Financial Officer’s overview section and our principal risks in the Risk management section. The
Group financial statements include additional information relating to going concern in the basis of preparation section on
page 173.
The Group continues to meet group and individual entity capital requirements and day-to-day liquidity needs. The
Company has a revolving credit facility of £400m as part of our contingency funding plans and this is due to mature in 2026.
The Group has considerable financial resources together with a diversified business model, with a spread of business and
geographical reach. As a consequence, the Directors believe that the Group is well placed to manage its business risks
successfully.
After making enquiries and having assessed the principal risks and all other available information, 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 financial statements and therefore consider it appropriate to adopt the going
concern basis of accounting in preparing the financial statements. There are no material uncertainties relating to this going
concern conclusion. In addition, the Directors have assessed the Group’s viability over a period of three years.
The Directors’ report was approved by the Board and signed on its behalf by:
Julian Baddeley
Company Secretary
26 February 2024
140 abrdn.com Annual report 2023
Statement of Directors’ responsibilities in respect of the
Annual report and the financial statements
The Directors are responsible for preparing the Annual
report and accounts and the Group and Company
financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare Group
and Company financial statements for each financial
year. Under that law they are required to prepare the
Group financial statements in accordance with UK-
adopted international accounting standards and
applicable law and have elected to prepare the Company
financial statements in accordance with UK accounting
standards and applicable law, including FRS 101 Reduced
Disclosure Framework.
Under company law the Directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and
Company and of the Group’s profit or loss for that period.
In preparing each of the Group and Company financial
statements, the Directors are required to:
– Select suitable accounting policies and then apply them
consistently.
– Make judgements and estimates that are reasonable,
relevant, reliable and prudent.
– For the Group financial statements, state whether they
have been prepared in accordance with UK-adopted
international accounting standards.
– For the Company financial statements, state whether
applicable UK accounting standards have been
followed, subject to any material departures disclosed
and explained in the Company financial statements.
– Assess the Group’s and Company’s ability to continue
as a going concern, disclosing, as applicable, matters
related to going concern.
– Use the going concern basis of accounting unless they
either intend to liquidate the Group or the Company or
to cease operations, or have no realistic alternative but
to do so.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the
Company and enable them to ensure that its financial
statements comply with the Companies Act 2006. They
are responsible for such internal control as they determine
is necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error, and have general
responsibility for taking such steps as are reasonably open
to them to safeguard the assets of the Group and to
prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are
also responsible for preparing a Strategic report, Directors’
report, Directors’ remuneration report and Corporate
governance statement that complies with that law and
those regulations.
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.
In accordance with Disclosure Guidance and
Transparency Rule 4.1.16R, the financial statements will
form part of the annual financial report prepared under
DTR 4.1.17R and 4.1.18R. The auditor’s report on these
financial statements provides no assurance over whether
the annual financial report has been prepared in
accordance with those requirements.
Responsibility statement of the Directors in
respect of the annual financial report
We confirm that to the best of our knowledge:
– The financial statements, prepared in accordance with
the applicable set of accounting standards, give a true
and fair view of the assets, liabilities, financial position
and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole.
– The Strategic report and Directors’ report include a fair
review of the development and performance of the
business and the position of the Company and the
undertakings included in the consolidation taken as a
whole, together with a description of the principal risks
and uncertainties that they face.
We consider the Annual report and accounts, taken as a
whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the
Group’s position and performance, business model and
strategy.
By order of the Board
Sir Douglas Flint
Chairman
26 February 2024
Jason Windsor
Chief Financial Officer
26 February 2024
141abrdn.comAnnual report 2023
GOVERNANCE
142 abrdn.com Annual report 2023
Financial information
143abrdn.comAnnual report 2023
FINANCIAL INFORMATION
Contents
Independent auditor’s report 144
Group financial statements 160
Company financial statements 271
Supplementary information
286
Note Page Note Page
1 Group structure
175
24 Issued share capital and share premium
220
2 Segmental analysis
178
25 Shares held by trusts
220
3 Net operating revenue
182
26 Retained earnings
221
4
Net gains or losses on financial instruments
and other income
186
27 Movements in other reserves
221
28 Other equity and non-controlling interests
224
5 Administrative and other expenses
187
29 Financial liabilities
224
6
Staff costs and other employee–related
costs
187
30 Subordinated liabilities
225
31
Pension and other post-retirement benefit
provisions
226
7 Auditors’ remuneration
188
8
Restructuring and corporate transaction
expenses
188
32 Other financial liabilities
233
33 Provisions and other liabilities
234
9 Taxation
189
34 Financial instruments risk management
235
10 Earnings per share
193
35 Structured entities
242
11 Adjusted profit and adjusting items
194
36 Fair value of assets and liabilities
243
12 Dividends on ordinary shares
195
37 Statement of cash flows
248
13 Intangible assets
196
38 Contingent liabilities and contingent assets
250
14 Investments in associates and joint ventures
203
39 Commitments
251
15 Property, plant and equipment
206
40
Employee share-based payments and
deferred fund awards
252
16 Leases
208
17 Financial assets
211
41 Related party transactions
256
18 Derivative financial instruments
212
42 Capital management
257
19 Receivables and other financial assets
214
43 Events after the reporting date
258
20 Other assets
214
44 Related undertakings
259
21 Assets and liabilities held for sale
215
22 Cash and cash equivalents
216
23
Unit linked liabilities and assets backing unit
linked liabilities
217
How to navigate our Group financial statements
The Group’s significant accounting policies are included at the beginning
of the relevant notes to the Group financial statements with this
background colour. Critical judgements in applying accounting policies
are summarised in the Presentation of consolidated financial
statements section which follows the primary financial statements.
Accounting policies that are relevant to the financial statements as a
whole are also set out in that section.
The Group’s critical accounting estimates and assumptions are
summarised in the Presentation of consolidated financial statements
section which follows the primary financial statements. Further detail on
these critical accounting estimates and assumptions is provided in the
relevant note with this background colour.
144 abrdn.com Annual report 2023
Independent auditor’s report to the members
of abrdn plc
1. Our opinion is unmodified
In our opinion:
– The financial statements of abrdn plc give a true and fair view of the state of the Group’s and of the Parent Company’s
affairs as of 31 December 2023, and of the Group’s profit for the year then ended.
– The Group financial statements have been properly prepared in accordance with UK-adopted international
accounting standards.
– The Parent Company financial statements have been properly prepared in accordance with UK accounting standards,
including FRS 101 Reduced Disclosure Framework.
– The Group and Parent Company financial statements have been prepared in accordance with the requirements of
the Companies Act 2006.
What our opinion covers
We have audited the Group and Parent Company financial statements of abrdn plc (‘the Parent Company’ or ‘the
Company’) for the year ended 31 December 2023 (FY23) included in the Annual report and accounts, which comprise:
Group Parent Company (abrdn plc)
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes 1 to 42(a) and 43 to 44 to the Group financial
statements, including the accounting policies in those notes
and in the Presentation of consolidated financial statements
section.
Company statement of financial position
Company statement of changes in equity
Notes A to R to the Parent Company financial statements,
including the accounting policies in the Company accounting
policies section.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate
basis for our opinion. Our audit opinion and matters included in this report are consistent with those discussed and included
in our reporting to the Audit Committee (AC).
We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK ethical
requirements including the FRC Ethical Standard as applied to listed public interest entities.
145abrdn.comAnnual report 2023
FINANCIAL INFORMATION
2. Overview of our audit
Factors
driving our
view of risks
Following our prior year (FY22) audit and considering
developments affecting the abrdn plc Group since then, we have
updated our risk assessment.
Much of the uncertainty in the macro-economic environment
that existed at the end of FY22 remains. Increased market
turbulence and continued performance challenges within the
Investments business have negatively contributed to fee-based
revenue and profit during the financial year. This has been offset
in part by the first full year inclusion of the interactive investor
results and the increased contribution of that component to the
overall Group’s results.
As a result, fee-based revenue has remained broadly flat year on
year and our materiality levels have remained at a similar level.
Our consideration in respect of Key Audit Matters identified are in
large part consistent with the prior year and are explained below.
– During FY22, given the challenging global economic
environment as well as the Group’s wider financial
performance, we identified that the risks around the
recoverability of certain of the Group’s goodwill balances and
certain of the Parent Company’s investments in subsidiaries
had increased. Due to continued market uncertainty and
performance challenges in FY23, we believe that the risk of
impairments to both Investment in Subsidiaries or Goodwill
balances remains significant. We identified the risks
associated with the key assumptions used in determining the
estimated recoverable amount for the applicable cash
generating units supporting certain recognised goodwill and
the estimated recoverable amount of certain investments in
subsidiaries (including forecast cash flows, market multiples
(and applicable premiums/discounts) and discount rates (as
applicable)) as significant.
– As part of our risk assessment, we maintained our focus on
future economic and operational assumptions used by the
Group in estimates. The most significant area that these could
impact the financial statements (outside of goodwill and
investment in subsidiaries as noted above) is in the valuation of
the defined benefit pension obligation. As a result, this was
maintained as a Key Audit Matter.
– Revenue from contracts with customers is comprised of
various different revenue streams. The area of revenue which
had the greatest effect on our overall Group audit and audit
effort in the current period is management fee income
(institutional, retail wealth and insurance partners). In our view,
the nature and complexity of management fee calculations
has remained consistent year on year, while market volatility
and uncertainty continue to drive an increased revenue focus
for users of the financial statements.
– The FY22 Key Audit Matter over the Accounting implications
of the acquisition of interactive investor was event driven and
as such is no longer relevant during FY23.
While not reported as Key Audit Matters, we also identified that
the Group’s ongoing cost control transformation programme and
corporate transactions would have financial reporting
implications that would require consideration in the Group and
Parent Company financial statements.
Key audit matters vs FY22 Item
Recoverability of certain
goodwill and certain of the
Parent Company’s
investments in subsidiaries
4.1
Valuation of the principal
UK defined benefit
pension scheme present
value of funded obligation
4.2
Revenue recognition:
management fee
revenue from contracts
with customers
4.3
146 abrdn.com Annual report 2023
Independent auditor’s report to the members of abrdn plc continued
Audit
Committee
interaction
During the year, the AC met six times. KPMG are invited to attend all AC meetings and are provided with an
opportunity to meet with the AC in private sessions without the Executive Directors being present. The Group
engagement partner met with the Audit Committee Chair privately before each AC and also attended all Risk
and Capital Committee meetings held during the year. For each Key Audit Matter, we have set out
communications with the AC in section 6, including matters that required particular judgement for each.
The matters included in the Audit Committee Chair’s report on pages 98 to 106 are materially consistent with our
observations of those meetings.
Our
Independence
We have fulfilled our ethical responsibilities under, and we
remain independent of the Group in accordance with, UK
ethical requirements including the FRC Ethical Standard as
applied to listed public interest entities.
We have not performed any non-audit services during FY23
or subsequently which are prohibited by the FRC Ethical
Standard.
We were first appointed as auditor by the shareholders for the
year ended 31 December 2017. The period of total
uninterrupted engagement is for the seven financial years
ended 31 December 2023.
The Group engagement partner is required to rotate every
five years. As these are the second set of the Group’s financial
statements signed by Richard Faulkner, he will be required to
rotate off after the FY26 audit.
The average tenure of partners responsible for component
audits as set out in section 7 below is 2 years, with the shortest
being one year and the longest being four years.
Total audit fee £7.2m
Audit related fees (including
interim review)
£2.8m
Other services £1.0m
Non-audit fee as a % of total
audit and audit related fee %
10%
Date first appointed 16 May 2017
Uninterrupted audit tenure 7 years
Next financial period which
requires a tender
FY27
Tenure of Group engagement
partner
2 years
Average tenure of component
signing partners
2 years
Materiality
(item 6 below)
The scope of our work is influenced by our view of
materiality and our assessed risk of material
misstatement.
We have determined overall materiality for the Group
financial statements as a whole at £13.7m (FY22: £14.0m)
and for the Parent Company financial statements as a
whole at £13.0m (FY22: £5.6m).
Consistent with FY22, we determined that total revenue
remains the benchmark for the Group as underlying
performance is such that a normalised profit benchmark
would indicate materiality which is inappropriate for the
size and scale of the Group. As such, we based our Group
materiality on total revenue, of which it represents 0.9%
(FY22: 0.9%).
Materiality for the parent company financial
statements was determined with reference to a
benchmark of parent company total assets, limited to
be less than materiality for the group financial
statements as a whole. In 2022, we applied the
component materiality to our audit of the parent
company balance sheet. Our materiality in both
periods was lower than we would have determined
with reference to a benchmark of parent company
total assets. It represents 0.2% (2022: 0.1%) of the
stated benchmark.
FY23 £m
FY22 £m
Group
Materiality
Group
Performance
Materiality
Highest
Component
Materiality
Parent
Company
Materiality
Lowest
Component
Materiality
Audit
Misstatement
Posting
Threshold
Materiality levels used in our audit
13.7
14
6.9
9.1
6.9
6.3
13.0
5.6
0.69
0.7
1.4
0.7
147abrdn.comAnnual report 2023
FINANCIAL INFORMATION
Group Scope
(Item 7 Below)
We have performed risk assessment and planning
procedures to determine which of the Group’s components
are likely to include risks of material misstatement to the
Group financial statements, the type of procedures to be
performed at these components and the extent of
involvement required from our component auditors around
the world.
Of the Group’s 313 (FY22: 311) reporting components, we
subjected 13 (FY22: 19) to full scope audits for Group
purposes, and 6 (FY22: 2) to specified risk focused audit
procedures. The latter were not financially significant enough
to require an audit for Group reporting purposes but did
present specific individual risks that needed to be addressed.
The components within the scope of our work accounted for
the percentages illustrated opposite.
In addition, we have performed Group level analysis on the
remaining components to determine whether further risks of
material misstatement exist in those components.
We consider the scope of our audit, as communicated to the
Audit Committee, to be an appropriate basis for our audit
opinion.
The impact of
climate change
on our audit
In planning our audit we have considered the potential impacts of climate change on the Group’s business and
its financial statements. Climate change impacts the Group in a number of ways: through its own operations
(including potential reputational risk associated with the Group’s delivery of its climate related initiatives), through
its portfolio of investments and its stewardship role, and the greater emphasis on climate related narrative and
disclosure in the Annual report and accounts.
As disclosed in note 31, the Group’s direct exposure to climate change in the financial statements is primarily
through its investment holdings, as the key valuation assumptions and estimates may be impacted by climate
risks. As part of our audit, we have made enquiries of Directors and the Group’s Corporate Sustainability team to
understand the extent of the potential impact of climate change risk on the Group’s financial statements and
the Group’s preparedness for this.
We have performed a risk assessment of how the impact of climate change may affect the financial
statements and our audit, in particular with respect to investment holdings. We consider that the impact of
climate risk on level 1 and level 2 investments is already reflected in the market prices used to value these
holdings at year end. As such, the impact of climate change was limited to the valuation of level 3 investment
holdings; taking into account the relative size of the level 3 investments balance, we assessed that the impact of
climate change was not a significant risk for our audit nor does it constitute a key audit matter. We did not
consider the potential impact of climate change on the sustainability of earnings or cashflow forecasts to be
material.
We held discussions with our own climate change professionals to challenge our risk assessment. We have also
read the Group’s disclosure of climate related information in the front half of the Annual report and accounts as
set out on pages 38 to 47 and considered consistency with the financial statements and our audit knowledge.
Full scope audit
Specified risk-focused audit procedures
Remaining components
80%
4%
16%
Profit/loss
before tax
71%
21%
8%
Total assets
80%
4%
16%
Total revenue
Coverage of Group financial statements
148 abrdn.com Annual report 2023
Independent auditor’s report to the members of abrdn plc continued
3. Going concern, viability and principal risks and uncertainties
The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or
the Parent Company or to cease their operations, and as they have concluded that the Group’s and the Parent Company’s
financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast
significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the financial
statements (the going concern period).
Going Concern
We used our knowledge of the Group, its industry and operating
model, and the general economic environment to identify the inherent
risks to its business model and analysed how those risks might affect
the Group’s and the Parent Company’s financial resources or ability to
continue operations over the going concern period. The risk that we
considered most likely to adversely affect the Group’s and Parent
Company’s available financial resources over this period was
increased market volatility.
We considered whether these risks could plausibly affect the liquidity
in the going concern period by assessing the degree of downside
assumption that, individually and collectively, could result in a liquidity
issue, taking into account the Group’s and Parent Company’s current
and projected cash and facilities (a reverse stress test). We also
assessed the completeness of the going concern disclosure.
Accordingly, based on those procedures, we found the Directors’ use of
the going concern basis of accounting without any material uncertainty
for the Group and Parent Company to be acceptable. However, as we
cannot predict all future events or conditions and as subsequent events
may result in outcomes that are inconsistent with judgements that were
reasonable at the time they were made, the above conclusions are not a
guarantee that the Group or the Parent Company will continue in
operation.
Our conclusions
–
We consider that the Directors’ use of the going
concern basis of accounting in the preparation of
the financial statements is appropriate;
–
We have not identified, and concur with the
Directors’ assessment that there is not, a material
uncertainty related to events or conditions that,
individually or collectively, may cast significant
doubt on the Group’s or Parent Company
's ability to
continue as a going concern for the going concern
period;
–
We have nothing material to add or draw attention
to in relation to the Directors’ statement in section
(a)(v) of the presentation of consolidated financial
statements on the use of the going concern basis of
accounting with no material uncertainties that may
cast significant doubt over the Group’s and Parent
Company’s use of that basis for the going concern
period, and we found the going concern disclosure
in section (a)(v) to be acceptable; and
–
The related statement under the Listing Rules set
out on page 140 is materially consistent with the
financial statements and our audit knowledge.
Disclosures of emerging and principal risks and longer-term viability
Our responsibility
We are required to perform procedures to identify whether there is a material inconsistency between
the Directors’ disclosures in respect of emerging and principal risks and the viability statement, and the
financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw attention to in relation to:
–
The Directors’ confirmation within the Risk Management disclosures on page 77 that they have carried
out a robust assessment of the emerging and principal risks facing the Group, including those that would
threaten its business model, future performance, solvency and liquidity;
–
The Risk Management disclosures describing these risks and how emerging risks are identified and
explaining how they are being managed and mitigated; and
–
The Directors’ explanation in the Viability Statement of how they have assessed the prospects of the
Group, over what period they have done so and why they considered that period to be appropriate, and
their statement as to whether they have a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due over the period of their assessment, including
any related disclosures drawing attention to any necessary qualifications or assumptions.
We are also required to review the Viability Statement set out on page 74 under the Listing Rules.
Our
work is limited to assessing these matters in the context of only the knowledge acquired during our
financial statements audit. As we cannot predict all future events or conditions and as subsequent events
may result in outcomes that are inconsistent with judgements that were reasonable at the time they were
made, the absence of anything to report on these statements is not a guarantee as to the Group’s and
Parent Company’s longer-term viability.
Our reporting
We have nothing
material to add or
draw attention to
in relation to these
disclosures.
We have
concluded that
these disclosures
are materially
consistent with the
financial
statements and
our audit
knowledge.
149abrdn.comAnnual report 2023
FINANCIAL INFORMATION
4. Key audit matters
What we mean
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the
financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by us, including those which had the greatest effect on:
–
The overall audit strategy.
–
The allocation of resources in the audit.
–
Directing the efforts of the engagement team.
We summarise below the Key Audit Matters in decreasing order of audit significance, in arriving at our audit opinion above,
together with our key audit procedures to address those matters and our findings from those procedures in order that the
Company’s members, as a body, may better understand the process by which we arrived at our audit opinion. These
matters were addressed, and our findings are based on procedures undertaken, in the context of, and solely for the
purpose of, our audit of the financial statements as a whole and in forming our opinion thereon, and consequently are
incidental to that opinion, and we do not provide a separate opinion on these matters.
4.1 Recoverability of certain goodwill (Group) and of certain of the Parent Company’s investments in
subsidiaries (Parent Company)
Financial Statement Elements Our assessment of risk vs FY22 Our findings
FY23
FY22
Our assessment is that the risk has
slightly increased relative to FY22.
This reflects the continued market
volatility and resulting impact on the
performance of the Group, in
addition to the wider performance
challenges the Group continues to
face (in particular within the
Investments business)
FY23: Balanced
FY22: Balanced
Goodwill of: £843m
£879m
Impairment of goodwill
1
(£36m)
(£0m)
Investment in subsidiaries: £3,594m
£
3,843
m
Impairment of investments
in subsidiaries
2
(£261m)
(£
923
m)
Description of the Key Audit Matter Our response to the risk
As noted in the Strategic report, the results in the Investments business
have been impacted by the external market environment in addition to
wider performance challenges. Subsidiaries aligned to that business
experienced indicators of impairment (abrdn Holdings Limited FY23:
£1,218m, FY22: £1,258m; abrdn Investment Holdings Limited FY23:
£819m, FY22: £988m).
In addition to the Investments business, there is focus on the following
businesses:
–
interactive investor (FY23: £1,512m, FY22: £1,512m), given the size of
the acquisition which occurred in the prior period and its
significance to Group strategy going forward.
–
The financial planning business (abrdn Financial Planning Limited,
FY23: £45m, FY22: £85m), given its performance.
Further, the net assets attributable to equity holders of the Parent
Company exceeded the Group’s market capitalisation at the balance
sheet date.
These factors mean there is an increased risk associated with the
recoverability of the associated Parent Company investments in these
subsidiaries and, in relation to interactive investor and the financial
planning business, goodwill balances allocated to the corresponding
cash generating units (CGUs) in the Group financial statements
(interactive investor goodwill FY23: £819m, FY22: £819m; financial
planning business goodwill FY23: £24m, FY22: £60m).
In the prior year, this Key Audit Matter included recoverability of the
goodwill associated with the Finimize CGU. The impairment recognised
in that period reduced the carrying value of this goodwill to a level at
which we have determined that the recoverability of this balance is no
longer part of the Key Audit Matter.
We performed the procedures below rather
than seeking to rely on any of the Group’s
controls because the nature of the balances are
such that we would expect to obtain audit
evidence primarily through the detailed
procedures described.
Our procedures included:
Our sector expertise: We critically assessed the
Group’s assessment of whether there were any
impairment indicators for the Parent Company’s
investment in subsidiaries, including comparing
the carrying value of Parent Company’s net
assets with the Group’s market capitalisation
and considering the subsidiaries’ business
performance.
Our sector expertise: We assessed the
appropriateness of the Group’s conclusion that
the recoverable amount of goodwill and
investment in subsidiaries should be based on
FVLCD.
Our valuation expertise: Using our own valuation
specialists, we assessed the appropriateness of
the Group’s FVLCD methodology and the
appropriateness of the input assumptions used
in calculating the FVLCD of the CGUs or groups
of CGUs to which certain goodwill is allocated
and of certain of the Parent Company’s
investment in subsidiaries.
1. Financial planning business impairment: £36m (FY22: £nil).
2. aHL im
p
airment: £40m
(
FY22: £847m
);
aIHL im
p
airment: £169m
(
FY22: £51m
);
aFPL im
p
airment: £52m
(
FY22: £25m
)
.
150 abrdn.com Annual report 2023
Independent auditor’s report to the members of abrdn plc continued
Goodwill and Investment in Subsidiaries - subjective estimate
Goodwill is tested for impairment at least annually whether or not
indicators of impairment exist.
For goodwill, the impairment assessment is performed by comparing
the carrying amount of each CGU or group of CGUs to which goodwill
is allocated with its recoverable amount being the higher of its value in
use (VIU) or fair value less costs of disposal (FVLCD). Similarly, for
investments in subsidiaries the carrying value of the investment in the
subsidiary is compared with the recoverable amount of that
investment being the higher of its VIU or FVLCD.
In determining the FVLCD the key assumptions are forecast cashflows,
market multiples (including applicable premiums/discounts) and
discount rates (as applicable). In determining the VIU, which is
calculated using a discounted cash flow method, the key assumptions
are forecast cash flows and discount rates.
The resulting recoverable amounts, in particular for the CGUs, groups of
CGUs and investments in subsidiaries set out above, are subjective due
to the inherent uncertainty in determining these assumptions and are
therefore also susceptible to management bias.
The effect of these matters is that, as part of our risk assessment, we
determined that the recoverable amount of certain goodwill and of
certain investments in subsidiaries have a high degree of estimation
uncertainty, with a potential range of reasonable outcomes greater
than our materiality for the financial statements as a whole and
possibly many times that amount. The financial statements (notes 13
and A) disclose the sensitivity estimated by the Group and Parent
Company.
Benchmarking assumptions: We compared the
Group’s assumptions to externally derived data
in relation to key inputs such market multiples
and discount rates.
Sensitivity analysis: We performed our own
sensitivity analysis which included assessing the
effect of reasonable alternative assumptions in
respect of forecast cash flows, market multiples
(and applicable premiums/discounts) and
discount rates (as applicable) to evaluate the
impact on the FVLCD of the CGUs or groups of
CGUs to which certain goodwill is allocated and
of certain of the Parent Company’s investment in
subsidiaries.
Assessing transparency: We assessed whether
the Group’s disclosures (in respect of goodwill)
and the Parent Company’s disclosures (in
respect of investment in subsidiaries) about the
sensitivity of the outcome of the impairment
assessment to changes in key assumptions
reflect the risks inherent in the recoverable
amount of goodwill and investment in
subsidiaries.
Communications with the abrdn plc Audit Committee
Our discussions with and reporting to the Audit Committee included:
– Our definition of the key audit matter relating to the recoverability of certain goodwill and certain investments in subsidiaries
including our assessment of the risks associated with individual goodwill balances.
– Our audit response to the key audit matter which included the use of specialists to challenge key aspects of the Group’s and
Parent Company’s determination of the recoverable amount and level of impairment.
– The findings of our procedures.
Areas of particular auditor judgement
We identified the following as the areas of particular auditor judgement:
– Subjective and complex auditor judgement was required in evaluating the key assumptions used by the Group and Parent
Company (including forecast cash flows, market multiples (and applicable premiums/discounts) and discount rates (as
applicable)).
Our findings
We found the Group’s estimated recoverable amount of certain goodwill and the related impairment charges to be balanced
(FY22: balanced) with proportionate (FY22: proportionate) disclosures of the related assumptions and sensitivities.
We found the Parent Company’s estimated recoverable amount of certain of its investments in subsidiaries and the related
impairment charges to be balanced (FY22: balanced) with proportionate (FY22: proportionate) disclosures of the related
assumptions and sensitivities.
Further information in the Annual Report and Accounts: See the Audit Committee Report on pages 98 to 106 for details on
how the Audit Committee considered the Group’s goodwill and the Parent Company’s Investment in Subsidiaries as areas
of significant attention, pages 196 to 202 for the accounting policy on goodwill and financial disclosures, page 275 for the
investment in subsidiaries accounting policy and pages 276 to 279 for the investment in subsidiaries financial disclosures.
151abrdn.comAnnual report 2023
FINANCIAL INFORMATION
4.2 Valuation of the principal UK defined benefit pension scheme present value of funded obligation
(Group)
Financial Statement Elements Our assessment of risk vs FY22 Our findings
FY23
FY22
Our assessment is that the risk is
similar to FY22. Market volatility
remains high and the risk
associated with the selection of
economic assumptions remains
similar to FY22.
FY23: Balanced
FY22: Balanced
Present value of funded
obligation:
£1,784m
£
1,755
m
Description of the Key Audit Matter Our response to the risk
Subjective valuation
The present value of the Group’s funded obligation for
the principal UK defined benefit pension scheme (“abrdn
UK Group (SLSPS) plan") is an area that involves
significant judgement over the uncertain future
settlement value. The Group is required to use
j
udgement in the selection of key assumptions covering
both operating assumptions and economic assumptions.
The key operating assumptions are base mortality and
mortality improvement. The key economic assumptions
are the discount rate and inflation. The risk is that
inappropriate assumptions are used in determining the
present value of the funded obligation.
The effect of these matters is that, as part of our risk
assessment, we determined that the valuation of the
pension scheme obligation has a high degree of
estimation uncertainty, with a potential range of
reasonable outcomes greater than our materiality for
the financial statements as a whole and possibly many
times that amount. The financial statements (note 31)
disclose the sensitivity estimated by the Group.
We performed the procedures below rather than seeking to rely on
any of the Group’s controls because the nature of the balance is
such that we would expect to obtain audit evidence primarily
through the detailed procedures described.
Our procedures included:
Assessing actuaries’ credentials: We evaluated the competency and
objectivity of the Group’s experts who assisted them in determining
the actuarial assumptions used to calculate the defined benefit
obligation.
Benchmarking assumptions: We considered, with the support of our
own actuarial specialists, the appropriateness of the base mortality
assumption by reference to scheme and industry data on historical
mortality experience and the outcome of the latest triennial report.
We considered, with the support of our own actuarial specialists, the
appropriateness of the mortality improvement assumptions by
reference to industry-based expectations of future mortality
improvements and the appropriateness of the discount rate and
inflation assumptions by reference to industry practice.
Assessing transparency: In conjunction with our own actuarial
specialists, we considered whether the Group’s disclosures in relation
to the assumptions used in the calculation of the present value of the
funded obligation appropriately represent the sensitivities of the
obligation to the use of alternative assumptions.
Communications with the abrdn plc Audit Committee
Our discussions with and reporting to the Audit Committee included:
– Our identification of the key audit matter relating to the valuation of the defined benefit pension obligation.
– Our audit response to the key audit matter which included the use of our own specialists to challenge key aspects of the
Group’s actuarial valuation.
– The findings of our procedures.
Areas of particular auditor judgement
We identified the following as the areas of particular auditor judgement:
– Subjective and complex auditor judgement was required in evaluating the key assumptions used by the Group (including the
discount rate, inflation and mortality assumptions).
Our findings
We found the Group’s valuation of the UK defined benefit pension scheme obligation to be balanced (FY22: balanced) with
proportionate (FY22: proportionate) disclosures of the related assumptions and sensitivities.
Further information in the Annual report and accounts: See the Audit Committee Report on pages 98 to 106 for details on
how the Audit Committee considered the valuation of the UK defined benefit pension scheme obligation as an area of
significant attention, page 226 for the accounting policy on the valuation of the UK defined benefit pension scheme
obligation, and note 31 for the financial disclosures.
152 abrdn.com Annual report 2023
Independent auditor’s report to the members of abrdn plc continued
4.3 Revenue recognition: management fee revenue from contracts with customers (Group)
Financial Statement Elements Our assessment of risk vs FY22 Our findings
Management fee
revenue from
contracts with
customers:
FY23
FY22
Our assessment is that the risk is similar to FY22.
The nature and complexity of management fee
calculations remains at a similar level to last year
whilst market volatility and uncertainty mean a
continued revenue focus.
FY23 and FY22: We
found no significant
items, either unadjusted
or adjusted for.
£901m
£1,068m
Description of the Key Audit Matter Our response to the risk
Data capture and calculation error
Revenue from contracts with customers is the most
significant item in the consolidated statement of
comprehensive income and represents one of the
areas that had the greatest effect on the overall Group
audit. In addition, market volatility and uncertainty has
driven increased revenue focus. The balance
comprises various different revenue streams as
outlined in note 3.
The area of revenue which had the greatest effect on
our overall Group audit and audit effort in the current
period is management fee income (institutional, retail
wealth and insurance partners) which is the most
significant and, in certain areas, for example for
segregated account management fee calculations,
complex item. The nature and complexity of
management fee calculations has largely remained
stable year on year.
The two key components in calculating management
fee income are fee rates to be applied and the amount
of assets under management (AUM) resulting in the
following key risks:
–
Fee rates: There is a risk that fee rates have not
been entered appropriately into the fee calculation
and billing systems when the Group’s clients are
onboarded or agreements are amended.
–
AUM: There is a risk that AUM from third-party
service providers or client appointed administrators
and/or custodians does not exist and/or is
inaccurate.
–
Calculation: There is a risk that management fee
income, including accrued income balances, is
incorrectly calculated.
Our procedures included:
Procedures in relation to fee rates
We performed the detailed procedures below in relation to fee rates
rather than seeking to rely on the Group’s controls as our knowledge
indicated that we would be unlikely to obtain the required evidence to
support reliance on the controls.
Test of details: We agreed a selection of fee rates used in the
calculation to the investment management agreements (IMAs), fee
letters or fund prospectuses outlining the effective fee rates.
Procedures in relation to AUM Control design and operation: We assessed
the design and operating effectiveness of controls at third party
service providers over the production of AUM data that is used in
calculating management fees. This included inspecting the internal
controls reports prepared by relevant outsourced service
organisations covering the design and operation of key controls over
the production of AUM data used in the calculation of management
fees.
Enquiry of clients: Where AUM data is produced by a client appointed
administrator and/or custodian we obtained AUM data directly from
the client, client appointed administrator or custodian and used this in
our management fee recalculations and tests of detail below.
Calculation Procedures
Tests of details and substantive analytical procedures: Where AUM data
was obtained from third party service organisations (and where we
had tested the controls over the AUM data) we independently
recalculated management fees. Where AUM data was obtained
from a client appointed administrator and/or custodian (and so we
could not test controls over the AUM data) we independently
recalculated management fees and/or agreed a selection of
amounts billed and received to invoice and bank statements.
Communications with the abrdn plc Audit Committee
Our discussions with and reporting to the Audit Committee included:
– Our definition of the key audit matter relating to
revenue recognition: management fee revenue from contracts with
customers
.
– Our audit response to the key audit matter which included use of data and analytics technology to complete certain of the
recalculations.
– The findings of our procedures.
Our findings
– We found no significant items, either unadjusted or adjusted for, in the Group’s management fee revenue from contracts with
customers (FY22: no significant items either unadjusted or adjusted for).
Further information in the Annual report and accounts: See page 182 for the accounting policy on revenue from contracts
with customers and note 3 for the financial disclosures.
We continue to perform procedures over the recoverable value of the investment in subsidiary (Parent Company) and
goodwill (Group) balances recognised on the acquisition of interactive investor. However, as the acquisition occurred in the
prior year we do not need to perform procedures this year over the fair value of intangible assets recognised on the
acquisition of interactive investor and as a result, the accounting implications of the acquisition of interactive investor are
not separately identified as a Key Audit Matter in our report this year.
153abrdn.comAnnual report 2023
FINANCIAL INFORMATION
5. Our ability to detect irregularities, and our response
Fraud - identifying and responding to risks of material misstatement due to fraud
Fraud risk
assessment
To identify risks of material misstatement due to fraud (fraud risks) we assessed events or conditions that could
indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk
assessment procedures included:
–
Enquiring of the Directors, the Group Audit Committee, Group Internal Audit and the Group’s Legal team
and inspection of policy documentation as to the Group’s high-level policies and procedures to prevent and
detect fraud, including the internal audit function, and the Group’s channel for ‘whistleblowing’, as well as
whether they have knowledge of any actual, suspected or alleged fraud.
–
Reading Board and certain other committee minutes and attending Group Audit Committee and Risk and
Capital Committee meetings.
–
Considering the findings of Group Internal Audit’s reviews covering the financial year.
–
Considering remuneration incentive schemes and performance targets for management and the
Directors.
Risk
communications
We communicated identified fraud risks throughout the audit team and remained alert to any indications of
fraud throughout the audit. This included communication from the Group audit team to full scope component
audit teams of relevant fraud risks identified at the Group level and request to full scope component audit teams
to report to the Group audit team any instances of fraud that could give rise to a material misstatement at the
Group level.
Fraud risks
As required by auditing standards, and taking into account possible pressures to meet profit targets and our
overall knowledge of the control environment, we perform procedures to address the risk of management
override of controls, in particular the risk that Group and component management may be in a position to
make inappropriate accounting entries, and the risk of bias in accounting estimates and judgements such as
impairment and pension assumptions.
On this audit we do not believe there is a fraud risk related to revenue recognition, given the relative simplicity of
the most significant revenue streams and the segregation of duties between management and third party
service providers.
We also identified fraud risks related to:
–
The recoverability of certain of the Group’s goodwill and certain of the Parent Company’s investment in
subsidiaries in response to the high degree of estimation uncertainty due to increased market volatility and
business performance in the year, and the impact of these on the profit or loss of the Group, and the
susceptibility of these estimates to management bias.
–
The classification of certain expenses as restructuring, given the extent of restructuring in the Group’s cost
base, and the level of market interest in the delivery of both transformation programmes and cost savings,
the impact of these on both the incentive to classify items as restructuring expenses and the consequences
of an error or deliberate misstatement in classification on the adjusted operating profit reported.
Link to KAMs
Further detail in respect of the risk of fraud over the recoverability of certain of the Group’s goodwill and certain
of the Parent Company’s investment in subsidiaries, including our procedure to compare certain key input
assumptions to external market data, is set out in the key audit matter disclosures in section 4.1 of this report.
Procedures to
address fraud
risks
Our audit procedures included evaluating the design, implementation, and where relevant operating
effectiveness of internal controls relevant to mitigate these risks.
To address the risk of fraud over the classification of restructuring expenses we tested a sample of expenses
and challenged finance management in relation to the classification of those selected expenses against the
Group’s adjusted profit methodology. Based on the evidence obtained, we assessed whether each sampled
expense related to a transaction or event that met the definition of restructuring, to determine whether there
were indications of inconsistent classification or indicators of management bias.
We also performed substantive audit procedures including:
–
Identifying journal entries and other adjustments to test for all Group components based on risk criteria and
comparing the identified entries to supporting documentation. These included journal entries posted by
senior finance management and those posted to unusual accounts, as well as those which comprised
unexpected posting combinations.
–
Evaluating the business purpose of significant unusual transactions.
–
Assessing significant accounting estimates for bias, including whether the judgements made in making
accounting estimates are indicative of a potential bias.
154 abrdn.com Annual report 2023
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Laws and regulations - identifying and responding to risks of material misstatement relating to compliance with laws and regulations
Laws and
regulations risk
assessment
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the
financial statements. For this risk assessment matters considered included the following:
–
Our general commercial and sector experience.
–
Discussion with the Directors and other management (as required by auditing standards).
–
Inspection of the Group’s regulatory and legal correspondence.
–
Inspection of the policies and procedures regarding compliance with laws and regulation.
As the Group and many of its subsidiaries are regulated, our assessment of risks involved gaining an
understanding of the control environment including the entity’s procedures for complying with regulatory
requirements, how they analyse identified breaches and assessing whether there were any implications of
identified breaches on our audit.
Risk
communications
We communicated identified laws and regulations throughout the audit team and remained alert to any
indications of non-compliance throughout the audit. This included communication from the Group audit team
to full scope component audit teams of relevant laws and regulations identified at Group level, and a request for
full scope component auditors to report to the Group audit team any instances of non-compliance with laws
and regulations that could give rise to a material misstatement at the Group level.
The potential effect of these laws and regulations on the financial statements varies considerably.
Direct laws
context and link to
audit
Firstly,
the Group is subject to laws and regulations that directly affect the financial statements including
financial reporting legislation (including related companies legislation), distributable profits legislation, taxation
legislation and pensions regulations and we assessed the extent of compliance with these laws and regulations
as part of our procedures on the related financial statement items.
Most significant
indirect law/
regulation areas
Secondly, the Group is subject to many other laws and regulations where the consequences of non-
compliance could have a material effect on amounts or disclosures in the financial statements, for instance
through the imposition of fines or litigation.
We identified the following areas as those most likely to have such an effect:
–
Specific areas of regulatory capital and liquidity.
–
Conduct, including Client Assets.
–
Anti-money laundering, and market abuse regulations.
–
Certain aspects of company legislation recognising the financial and regulated nature of the Group’s
activities and its legal form.
Auditing standards limit the required audit procedures to identify non-compliance with these laws and
regulations to enquiry of the Directors and other management and inspection of regulatory and legal
correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Actual or
suspected
breaches
discussed with
AC
We discussed with the Audit Committee matters related to actual or suspected breaches of laws or
regulations, for which disclosure is not necessary, and considered any implications for our audit.
Context
Context of the
ability of the audit
to detect fraud or
breaches of law
or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some
material misstatements in the financial statements, even though we have properly planned and performed our
audit in accordance with auditing standards. For example, the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the financial statements, the less likely the inherently
limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained
a higher risk of non-detection of fraud, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material
misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to
detect non-compliance with all laws and regulations.
155abrdn.comAnnual report 2023
FINANCIAL INFORMATION
6. Our determination of materiality
The scope of our audit was influenced by our application of materiality. We set quantitative thresholds and overlaid
qualitative considerations to help us determine the scope of our audit and the nature, timing and extent of our procedures,
and in evaluating the effect of misstatements, both individually and in the aggregate, on the financial statements as a
whole.
£13.7m
(FY22: £14.0m)
Materiality for the
group financial
statements as a
whole
What we mean
A quantitative reference for the purpose of planning and performing our audit.
Basis for determining materiality and judgements applied
Materiality for the Group financial statements as a whole was set at £13.7m (FY22: £14.0m). This was
determined with reference to a benchmark of total revenue.
Consistent with FY22, we determined that total revenue remains the benchmark for the Group given the
performance is such that a normalised profit benchmark would indicate materiality which is inappropriate for
the size and scale of the Group.
Our Group materiality of £13.7m was determined by applying a percentage to the total revenue. When using a
benchmark of total revenue to determine overall materiality, KPMG’s approach for listed entities considers a
guideline range of 0.5% to 1% of the measure. In setting overall Group materiality, we applied a percentage of
0.9% (FY22: 0.9%) to the benchmark.
Materiality for the Parent Company financial statements as a whole was set at £13.0m (FY22: £5.6m),
determined with reference to a benchmark of parent company total assets, limited to be less than
materiality for the group financial statements as a whole. In 2022, we applied the component materiality
to our audit of the parent company balance sheet. Our materiality in both periods was lower than we
would have determined with reference to a benchmark of parent company total assets. It represents
0.2% (2022: 0.1%) of the stated benchmark.
£6.9m
(FY22: £9.1m)
Performance
materiality
What we mean
Our procedures on individual account balances and disclosures were performed to a lower threshold,
performance materiality, so as to reduce to an acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a material amount across the financial statements as a
whole.
Basis for determining performance materiality and judgements applied
We have considered performance materiality at a level of 50% (FY22: 65%) of materiality for abrdn plc’s Group
financial statements as a whole to be appropriate.
The Parent Company performance materiality was set at £6.5m (FY22: £3.6m), which equates to 50% (FY22:
65%) of materiality for the Parent Company financial statements as a whole.
We applied this reduced percentage in our determination of performance materiality for the Group and Parent
Company financial statements in the current year as we identified specific factors indicating an elevated level
of aggregation risk. These factors included the ongoing level of restructuring and change impacting the Group.
£0.69m
(FY22: £0.7m)
Audit
misstatement
posting threshold
What we mean
This is the amount below which identified misstatements are considered to be clearly trivial from a quantitative
point of view. We may become aware of misstatements below this threshold which could alter the nature,
timing and scope of our audit procedures, for example if we identify smaller misstatements which are indicators
of fraud.
This is also the amount above which all misstatements identified are communicated to abrdn plc’s Audit
Committee.
Basis for determining the audit misstatement posting threshold and judgements applied
We set our audit misstatement posting threshold at 5% (FY22: 5%) of our materiality for the Group financial
statements. We also report to the Audit Committee any other identified misstatements that warrant reporting
on qualitative grounds.
156 abrdn.com Annual report 2023
Independent auditor’s report to the members of abrdn plc continued
The overall materiality for the Group financial statements of £13.7m (FY22: £14.0m) compares as follows to the main
financial statement caption amounts:
Total Group revenue Group profit/(loss) before tax
1
Total Group assets
1
FY23
FY22
FY23
FY22
FY23
FY22
Financial statement caption
£1,474m
£1,538m
(£6m)
(£612m)
£8,031m
£9,212m
Group materiality as % of caption
0.9%
0.9%
(228.3%)
2.3%
0.2%
0.2%
1. Comparatives for FY22 have been restated for the implementation of IFRS 17.
7. Scope of our audit
Group scope
What we mean
How the Group audit team determined the procedures to be performed across the Group.
The Group has 313 (FY22: 311) reporting components. In order to determine the work performed at the
reporting component level, we identified those components that we considered to be of individual financial
significance, those which were significant due to risk and those remaining components on which we required
procedures to be performed to provide us with the evidence we required in order to conclude on the Group
financial statements as a whole.
We determined individually financially significant components as those contributing at least 10% (FY22: 10%) of
Group total revenue, Group net assets or total profits and losses that made up Group loss before tax. We
selected these metrics because these are the most representative of the relative size of the components. We
identified 8 (FY22: 7) components as individually financially significant components and performed full scope
audits on all of these components.
In addition to the individually financially significant components, we identified 2 (FY22: 2) components as
significant, owing to significant risks of material misstatement affecting the Group financial statements. We
performed full scope audits for these 2 components (FY22: 2).
In addition, to enable us to obtain sufficient appropriate audit evidence for the Group financial statements as a
whole, we selected 9 (FY22: 12) further components on which to perform procedures. Of these components,
we performed full scope audits for 3 components (FY22: 10) and performed specific risk-focused audit
procedures over revenue on 2 components (FY22: 1) and over investment and unit-linked liability valuation and
fair value gains and losses on 4 components (FY22: 1).
The components within the scope of our work accounted for the following percentages of the Group’s results,
with the prior year comparatives indicated in brackets:
Scope
Number of
components
Range of
materiality applied Group revenue
Total profits and losses
that made up Group PBT Group net assets
Full scope audit 13 (19) £2.7m - £6.9m
(£0.7m - £8.6m)
80% (83%) 80% (82%) 84% (89%)
Specific audit
procedures
6 (2) £5.5m - £1.4m
(£1.4m - £2.8m)
4% (3%) 4% (2%) 6% (4%)
Total 19 (21) 84% (86%) 84% (84%) 90% (93%)
In addition, we instructed one component team to perform specific procedures to inform our risk assessment of
accounting adjustments required for the first-year implementation of IFRS 17 by a Joint Venture. As these
procedures did not identify material risks to our audit we did not scope the component in for further audit
procedures.
The remaining 16% (FY22: 14%) of total Group revenue, 16% (FY22: 16%) of total profits and losses that made up
Group profit before tax and 10% (FY22: 7%) of Group net assets is represented by 294 (FY22: 290) reporting
components, none of which individually represented more than 2.5% (FY22: 2.0%) of any of total Group revenue,
total profits and losses that made up Group profit before tax or Group net assets. For these components, we
performed analysis at an aggregated Group level to re-examine our assessment that there were no significant
risks of material misstatement within these.
The work on 11 of the 19 components (FY22: 17 of the 21 components) was performed by component auditors
and the rest, including the audit of the Parent Company, was performed by the Group team.
Testing over all KAMs included in Section 4 was performed by the Group team, with the exception of testing over
management fee revenue from contracts with customers, which is performed by our component auditors. In
addition, the Group team has also performed audit procedures on the following key areas on behalf of the
components:
157abrdn.comAnnual report 2023
FINANCIAL INFORMATION
–
Testing of IT Systems in those instances where Group and components use common systems.
–
Testing over the completeness of journal postings in the period in those instances where Group and
components use common systems.
–
Testing of cash bonus and deferred bonus award charges in the period.
These items were audited by the Group team because the consistency of these systems and processes meant
that this was the most effective way to obtain audit evidence. The Group team communicated the results of
these procedures to the component teams.
The Group team instructed component auditors as to the significant areas to be covered, including the relevant
risks detailed above and the information to be reported back. The Group team approved the component
materialities, as detailed in the table above, having regard to the mix of size and risk profile of the Group across
the components.
The scope of the audit work performed was predominately substantive as we placed limited reliance upon the
Group's internal control over financial reporting.
Group audit team
oversight
What we mean
The extent of the Group audit team’s involvement in component audits.
In working with component auditors, the Group audit team:
–
Held a virtual global planning and risk assessment meeting led by the Group audit engagement
partner to discuss key audit risks and obtain input from component teams.
–
Held planning calls and meetings with component audit teams to discuss the significant areas of the
audit relevant to the components, including the key audit matter identified in respect of recognition of
management fee revenue from contracts with customers.
–
Issued Group audit instructions to component auditors, on the scope of their work, including specifying
the minimum procedures to perform in their audit of revenue within the Investments business and
cash.
–
Visited four (FY22: three) of the four (FY22: four) component teams not located in the UK, to assess the
audit risk and strategy. Video and telephone conference meetings were also held with these
component auditors. At these subsequent virtual meetings, the findings reported to the Group team
were discussed in more detail, and any further work required by the Group team was then performed
by the component audit teams.
–
Inspected component audit team’s key working papers within component audit files (using remote
technology capabilities) to understand and challenge the audit approach and audit findings of each
component.
8. Other information in the Annual report and accounts
The Directors are responsible for the other information presented in the Annual report together with the financial
statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do
not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.
All other information
Our responsibility
Our responsibility is to read the other information and, in doing so, consider whether,
based on our financial statements audit work, the information therein is materially
misstated or inconsistent with the financial statements or our audit knowledge.
Our reporting
Based solely on that work we
have not identified material
misstatements or inconsistencies
in the other information.
Strategic report and Directors’ report
Our responsibility and reporting
Based solely on our work on the other information described above we report to you as
follows:
–
We have not identified material misstatements in the Strategic report and the
Directors’ report.
–
In our opinion the information given in those reports for the financial year is consistent
with the financial statements.
–
In our opinion those reports have been prepared in accordance with the Companies
Act 2006.
158 abrdn.com Annual report 2023
Independent auditor’s report to the members of abrdn plc continued
Directors’ remuneration report
Our responsibility
We are required to form an opinion as to whether the part of the Directors’
remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
Our reporting
In our opinion the part of the
Directors’ remuneration report
to be audited has been properly
prepared in accordance with
the Companies Act 2006.
Corporate governance disclosures
Our responsibility
We are required to perform procedures to identify whether there is a material
inconsistency between the financial statements and our audit knowledge, and:
–
The Directors’ statement that they consider that the annual report and financial
statements taken as a whole is fair, balanced and understandable, and provides the
information necessary for shareholders to assess the Group’s position and
performance, business model and strategy.
–
The section of the annual report describing the work of the Audit Committee,
including the significant issues that the Audit Committee considered in relation to the
financial statements, and how these issues were addressed.
–
The section of the annual report that describes the review of the effectiveness of the
Group’s risk management and internal control systems.
Our reporting
Based on those procedures, we
have concluded that each of
these disclosures is materially
consistent with the financial
statements and our audit
knowledge.
We are also required to review the part of the Corporate Governance Statement
relating to the Group’s compliance with the provisions of the UK Corporate
Governance Code specified by the Listing Rules for our review.
We have nothing to report in
this respect.
Other matters on which we are required to report by exception
Our responsibility
Under the Companies Act 2006, we are required to report to you if, in our opinion:
–
Adequate accounting records have not been kept by the Parent Company or
returns adequate for our audit have not been received from branches not visited by
us; or
–
The Parent Company financial statements and the part of the Directors’
remuneration report to be audited are not in agreement with the accounting
records and returns; or
–
Certain disclosures of Directors’ remuneration specified by law are not made; or
–
We have not received all the information and explanations we require for our audit.
Our reporting
We have nothing to report in
these respects.
9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 141, the Directors are responsible for: the preparation of the
financial statements including being satisfied that they give a true and fair view; such internal control as they determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error; assessing the Group and Parent Company’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 they either intend to liquidate the
Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial statements in an annual financial report prepared
under
Disclosure Guidance and Transparency Rule 4.1.17R and 4.1.18R
. This auditor’s report provides no assurance over
whether the annual financial report has been prepared in accordance with
those requirements
.
159abrdn.comAnnual report 2023
FINANCIAL INFORMATION
10. The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006 and the terms of our engagement by the Company. Our audit work has been undertaken so
that we might state to the Company’s members those matters we are required to state to them in an auditor’s
report, and the further matters we are required to state to them in accordance with the terms agreed with the
Company, 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 and the Company’s members, as a body, for our audit work, for this
report, or for the opinions we have formed.
Richard Faulkner (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Saltire Court
20 Castle Terrace
Edinburgh
EH1 2EG
26 February 2024
160 abrdn.com Annual report 2023
Group financial statements
Consolidated income statement
For the year ended 31 December 2023
2023 | 2022 | ||
restated 1 | |||
Notes | £m | £m | |
Revenue from contracts with customers | 3 | ||
Cost of sales | 3 | ( | ( |
Net operating revenue | |||
Restructuring and corporate transaction expenses | 5 | ( | ( |
Impairment of intangibles acquired in business combinations and through the purchase of customer contracts | 5 | ( | ( |
Amortisation of intangibles acquired in business combinations and through the purchase of customer contracts | 5 | ( | ( |
Staff costs and other employee-related costs | 5 | ( | ( |
Other administrative expenses | 5 | ( | ( |
Total administrative and other expenses | ( | ( | |
| Net gains or losses on financial instruments and other income | |||
Fair value movements and dividend income on significant listed investments | 4 | ( | ( |
Other net gains or losses on financial instruments and other income | 4 | ( | |
Total net gains or losses on financial instruments and other income | ( | ||
Finance costs | ( | ( | |
Profit on disposal of subsidiaries and other operations | 1 | ||
Profit on disposal of interests in associates | 1 | ||
Reversal of impairment/(impairment) of interests in associates and joint ventures | 14 | ( | |
Share of profit or loss from associates and joint ventures | 14 | ||
Loss before tax | ( | ( | |
Tax credit | 9 | ||
Profit/(loss) for the year | ( | ||
| Attributable to: | |||
Equity shareholders of abrdn plc | ( | ||
Other equity holders | 28 | ||
| Non-controlling interests – ordinary shares | 28 | ||
( | |||
| Earnings per share | |||
Basic (pence per share) | 10 | ( | |
Diluted (pence per share) | 10 | ( |
1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.
The Notes on pages 167 to 270 are an integral part of these consolidated financial statements.
161abrdn.comAnnual report 2023
FINANCIAL INFORMATION
Consolidated statement of comprehensive income
For the year ended 31 December 2023
2023 | 2022 | ||
| restated | |||
Notes | £m | £m | |
Profit/(loss) for the year | ( | ||
| Items that will not be reclassified subsequently to profit or loss: | |||
Remeasurement losses on defined benefit pension plans | 31 | ( | ( |
Share of other comprehensive income of associates and joint ventures | 14 | ( | |
| Total items that will not be reclassified subsequently to profit or loss | ( | ( | |
| Items that may be reclassified subsequently to profit or loss: | |||
Fair value (losses)/gains on cash flow hedges | 18 | ( | |
| Exchange differences on translating foreign operations | ( | ||
Share of other comprehensive income of associates and joint ventures | 14 | ( | ( |
| Items transferred to the consolidated income statement | |||
Fair value losses/(gains) on cash flow hedges | 18 | ( | |
Realised foreign exchange (gains) | 1 | ( | |
Equity holder tax effect of items that may be reclassified subsequently to profit or loss | 9 | ( | |
| Total items that may be reclassified subsequently to profit or loss | ( | ( | |
Other comprehensive income for the year | ( | ( | |
Total comprehensive income for the year | ( | ( | |
| Attributable to: | |||
| Equity shareholders of abrdn plc | ( | ( | |
Other equity holders | 28 | ||
Non-controlling interests – ordinary shares | 28 | ||
( | ( |
1
1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.
The Notes on pages 167 to 270 are an integral part of these consolidated financial statements.
162 abrdn.com Annual report 2023
Group financial statements continued
Consolidated statement of financial position
As at 31 December 2023
2023 | 2022 | ||
restated 1 | |||
Notes | £m | £m | |
| Assets | |||
Intan g ible assets | 13 | ||
Pension and other p ost-retirement benefit assets | 31 | ||
Investments in associates and j oint ventures accounted for usin g the e q uit y method | 14 | ||
Pro p ert y , p lant and e q ui p ment | 15 | ||
Deferred tax assets | 9 | ||
Financial investments | 17 | ||
Receivables and other financial assets | 19 | ||
Current tax recoverable | 9 | ||
Other assets | 20 | ||
Assets of o p erations held for sale | 21 | ||
Cash and cash e q uivalents | 22 | ||
Assets backin g unit linked liabilities | 23 | ||
Finan cial investments | |||
| Receivables and other unit linked assets | |||
Cash and cash e q uivalents | |||
Total assets |
163abrdn.comAnnual report 2023
FINANCIAL INFORMATION
| 2023 2022 | |||
| restated | |||
| Notes | £m | £m | |
| Liabilities | |||
Third p art y interest in consolidated funds | 29 | ||
Subordinated liabilities | 30 | ||
Pension and other p ost-retirement benefit p rovisions | 31 | ||
Deferred tax liabilities | 9 | ||
Current tax liabilities | 9 | ||
Derivative financial liabilities | 29 | ||
| Other financial liabilities | 32 | ||
Provisions | 33 | ||
Other liabilities | 33 | ||
Liabilities of o p erations held for sale | 21 | ||
Unit linked liabilities | 23 | ||
Inves tment contract liabilities | |||
Third p art y interest in consolidated funds | |||
| Other unit linked liabilities | |||
Total liabilities | |||
E q uit y | |||
Share ca p ital | 24 | ||
Shares held b y trusts | 25 | ( ) | ( ) |
Share p remium reserve | 24 | ||
Retained earnin g s | 26 | ||
Other reserves | 27 | ( ) | ( ) |
E q uit y attributable to e q uit y shareholders of abrdn p lc | |||
Other e q uit y | 28 | ||
Non-controllin g interests - ordinar y shares | 28 | ||
Total e q uit y | |||
Total e q uit y and liabilities |
1
2
1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.
2. The Group has made a presentational change to show Deferred income within Other financial liabilities. Refer Note 32.
The Notes on pages 167 to 270 are an integral part of these consolidated financial statements.
The consolidated financial statements on pages 160 to 270 were approved by the Board and signed on its behalf by the
following Directors:
Sir Douglas Flint Jason Windsor
Chairman
26 February 2024
Chief Financial Officer
26 February 2024
164 abrdn.com Annual report 2023
Group financial statements continued
Consolidated statement of changes in equity
For the year ended 31 December 2023
1
| Total equity | Non- | |||||||||
| attributable | controlling | |||||||||
| Share | to equity | interests - | ||||||||
| Share | Shares held | premium | Retained | Other | shareholders | Other | ordinary | Total | ||
| capital | by trusts | reserve | earnings | reserves | of abrdn plc | equity | shares | equity | ||
Notes | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
31 December 2022 | ( | ( | ||||||||
Effect of application of IFRS 9 on Investments in associates and j oint ventures accounted for using the equity method | ||||||||||
1 January 2023 | ( | ( | ||||||||
Profit for the year | ||||||||||
| Other comprehensive income | ||||||||||
| for the year | ( | ( | ( | ( | ||||||
T otal comprehensive income for the year | 26, 27 | ( ) | ( | ( ) | ( ) | |||||
Issue of share capital | 24 | |||||||||
Divid ends paid on ordinary | ||||||||||
| shares | 12 | ( ) | ( ) | ( | ||||||
Interest paid on other equity | 28 | ( | ( | |||||||
Share buyback | 24, 26, 27 | ( | ( ) | ( ) | ( | |||||
Other movements in non- controlling interests in the year | 28 | ( | ( ) | |||||||
R eserves credit for employee | ||||||||||
share-based payments | 27 | |||||||||
T ransfer to retained earnings for vested employee share-based | ||||||||||
| payments | 26, 27 | ( | ||||||||
Transfer between reserves on impairment of subsidiaries | 26, 27 | ( | ||||||||
| Shares acquired by employee | ||||||||||
| trusts | 2 5 | ( | ( | ( | ||||||
| Shares distributed by employee | ||||||||||
| and other trusts and related | ||||||||||
| dividend equivalents | 25, 26 | ( | ( | ( ) | ||||||
31 December 2023 | ( ) | ( |
1
1
1
1. The Group implemented IFRS 9 in 2019. However, as permitted under a temporary exemption granted to insurers in IFRS 4 Insurance Contracts, the Group’s
insurance joint venture, Heng An Standard Life Insurance Company Limited, applied IFRS 9 at 1 January 2023 following the implementation of the new
insurance standard, IFRS 17. Refer Basis of preparation.
165abrdn.comAnnual report 2023
FINANCIAL INFORMATION
1, 2
2
| Total equity | ||||||||||
| attributable | Non- | |||||||||
| to equity | controlling | |||||||||
| Shares | Share | Retained | shareholders | interests - | Total | |||||
| Share | held by | premium | earnings | Other | of abrdn plc | Other | ordinary | equity | ||
| capital | trusts | reserve | restated | reserves | restated 1 | equity | shares | restated | ||
Notes | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
1 January 2022 | ( | |||||||||
(Loss)/profit for the year | ( | ( | ( | |||||||
| Other comprehensive income | ||||||||||
| for the year | ( | ( | ( | |||||||
Total comprehensive income for the year | ( | ( | ( | |||||||
Issue of share capital | 24 | |||||||||
| Dividends paid on ordinary | ||||||||||
shares | 12 | ( | ( | ( | ||||||
Interest paid on other equity | ( | ( | ||||||||
Share buyback | 24, 26, 27 | ( | ( | ( | ( | |||||
| Cancellation of capital | ||||||||||
redemption reserve | 26, 27 | ( | ||||||||
Other movements in non- controlling interests in the year | ||||||||||
| Reserves credit for employee | ||||||||||
| share-based payments | 27 | |||||||||
Transfer to retained earnings for vested employee share-based | ||||||||||
payments | 26, 27 | ( | ||||||||
Transfer between reserves on disposal of subsidiaries | ( | |||||||||
Transfer between reserves on impairment of subsidiaries | 26, 27 | ( | ||||||||
| Shares acquired by employee | ||||||||||
trusts | 25 | ( | ( | ( | ||||||
| Shares distributed by employee | ||||||||||
| and other trusts and related | ||||||||||
dividend equivalents | 25, 26 | ( | ( | ( | ||||||
| Other movements | 26, 27 | ( | ( | ( | ||||||
31 December 2022 | ( | ( |
1
2
1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.
2. Other movements for 2022 included the transfer of (£17 m) previously recognised in the foreign currency translation reserve (which is part of Other reserves)
to Retained earnings. In prior periods we had considered the functional currency of an intermediate subsidiary holding the Group’s investment in HDFC Life to
be US Dollars. We now consider that the functional currency should have been GBP, resulting in the transfer between reserves. Prior periods were not restated
as the impact on prior periods was not considered material. There was no impact on net assets for any period presented.
The Notes on pages 167 to 270 are an integral part of these consolidated financial statements.
166 abrdn.com Annual report 2023
Group financial statements continued
Consolidated statement of cash flows
For the year ended 31 December 2023
2023 | 2022 | ||
restated 1 | |||
Notes | £m | £m | |
| Cash flows from operating activities | |||
Loss before tax | ( | ( | |
Change in operating assets | 37 | ||
Change in operating liabilities | 37 | ( | ( |
| Adjustment for non-cash movements in investment income | |||
Other non-cash and non-operating items | 37 | ||
| Taxation paid | ( | ( | |
| Net cash flows from operating activities | |||
| Cash flows from investing activities | |||
P urchase of property, plant and equipment | ( | ( | |
Acquisition of subsidiaries and unincorporated businesses net of cash acquired | 1(b) | ( | ( |
Disposal of subsidiaries net of cash disposed of | 37 | ||
Acquisition of investments in associates and joint ventures | 14 | ( | ( |
| Proceeds in relation to contingent consideration | 36 | ||
Payments in relation to contingent consideration | 36 | ( | ( |
Disposal of investments in associates and joint ventures | 1(c) | ||
| Purchase of financial investments | ( | ( | |
Proceeds from sale or redemption of financial investments | 17 | ||
| Taxation paid on sale or redemption of financial investments | ( | ( | |
Prepayment in respect of potential acquisition of customer contracts | 39(b) | ||
| Acquisition of intangible assets | ( | ( | |
| Net cash flows from investing activities | ( | ||
| Cash flows from financing activities | |||
Repayment of subordinated liabilities | 30 | ( | |
| Payment of lease liabilities – principal | ( | ( | |
| Payment of lease liabilities - interest | ( | ( | |
| Shares acquired by trusts | ( | ( | |
| Interest paid on subordinated liabilities and other equity | ( | ( | |
| Other interest paid | ( | ( | |
| Cash received relating to collateral held in respect of derivatives hedging | |||
| subordinated liabilities | ( | ||
Share buyback | 24 | ( | ( |
Ordinary dividends paid | 12 | ( | ( |
| Net cash flows from financing activities | ( | ( | |
Net increase/(decrease) in cash and cash equivalents | ( | ||
Cash and cash equivalents at the beginning of the year | |||
Effects of exchange rate changes on cash and cash equivalents | ( | ||
| Cash and cash equivalents at the end of the year | 22 | ||
| Supplemental disclosures on cash flows from operating activities | |||
Interest received | |||
| Dividends received | |||
| Rental income received on investment property |
2
2
1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.
2. Total taxation paid was £75 m in 2023 (2022: £64 m).
The Notes on pages 167 to 270 are an integral part of these consolidated financial statements.
167abrdn.comAnnual report 2023
FINANCIAL INFORMATION
Presentation of consolidated financial statements
The Group’s significant accounting policies are included at the beginning of the relevant notes to the consolidated
financial statements. This section sets out the basis of preparation, a summary of the Group’s critical accounting
estimates and judgements in applying accounting policies, and other significant accounting policies which have been
applied to the financial statements as a whole.
(a) Basis of preparation
These consolidated financial statements have been prepared in accordance with UK-adopted international accounting
standards. The consolidated financial statements have been prepared on a going concern basis and under the historical
cost convention, as modified by the revaluation of owner-occupied property, derivative instruments and other financial
assets and financial liabilities at fair value through profit or loss (FVTPL).
Climate risks have been taken into consideration in the preparation of the consolidated financial statements, primarily in
relation to fair value calculations and impairment assessments. Refer Note 34(a) for further details of our consideration of
climate impact including our current assessment that the impact on the consolidated financial statements is not material.
The current inflationary environment has also been taken into consideration in the preparation of the consolidated
financial statements. Again this primarily relates to fair value calculations and impairment assessments. The impact of
inflation has been factored into budgeted cash flows used in these calculations and assessment. However, terminal growth
rates are still based on longer term inflation expectations which are largely unchanged.
The principal accounting policies set out in these consolidated financial statements have been consistently applied to all
financial reporting periods presented except as described below.
168 abrdn.com Annual report 2023
Group financial statements continued
| 31 December | |||
| 2021 as | |||
| previously | Impact | 1 January 2022 as | |
| presented | of IFRS 17 | restated | |
£m | £m | £m | |
| Consolidated statement of financial position | |||
Carrying value of HASL | 258 | (9) | 249 |
Inves tments in associates and joint ventures accounted for using the equity method | 274 | (9) | 265 |
Total assets | 11 ,418 | (9) | 11 ,409 |
Re tained earnings | 5, 775 | (9) | 5, 766 |
Total equity attributable to equity shareholders of abrdn plc | 7,643 | (9) | 7,634 |
Total equity | 7, 856 | (9) | 7, 847 |
Total equit y and liabilities | 11,418 | (9) | 11,409 |
169abrdn.comAnnual report 2023
FINANCIAL INFORMATION
| 2022 as | |||
| previously | Impact | ||
| presented | of IFRS 17 | 2022 as restated | |
£m | £m | £m | |
| Consolidated income statement | |||
Share of profit or loss from associates and joint ventures | 2 | 3 | 5 |
| Loss before tax | (615) | 3 | (612) |
Loss for th e year | (549) | 3 | (546) |
A ttributable to: | |||
E quity shareholders of abrdn plc | (561) | 3 | (558) |
| Earnings per share | |||
B asic (pence per share) | (26.8) | 0.2 | (26.6) |
Diluted (pence per share) | (26.8) | 0.2 | (26.6) |
| Consolidated statement of comprehensive income | |||
| Loss for the year | (549) | 3 | (546) |
Share of other comprehensive income of associates and joint ventures | (28) | (29) | (57) |
Total items that may be reclassified subsequently to profit or loss | 13 | (29) | (16) |
Other comprehensive income for the year | (780) | (29) | (809) |
Total comprehensive income for the year | (1,329) | (26) | (1,355) |
A ttributable to: | |||
E quity shareholders of abrdn plc | (1,341) | (26) | (1,367) |
A nalysis of adjusted profit | |||
Adjus ted for the following items | |||
Sha re of profit or loss from associates and joint ventures | 2 | 3 | 5 |
Total adjusting items including results of associates and joint ventures | (868) | 3 | (865) |
Lo ss for the year attributable to equity shareholders of abrdn plc | (561) | 3 | (558) |
Loss for th e year | (549) | 3 | (546) |
170 abrdn.com Annual report 2023
Group financial statements continued
| 31 December | |||
| 2022 as | |||
| previously | Impact | 31 December | |
| presented | of IFRS 17 | 2022 as restated | |
£m | £m | £m | |
| Consolidated statement of financial position | |||
Carrying value of HASL | 245 | (35) | 210 |
Inves tments in associates and joint ventures accounted for using the equity method | 267 | (35) | 232 |
Total assets | 9, 247 | (35) | 9, 212 |
Re tained earnings | 5, 021 | (35) | 4, 986 |
Total equity attributable to equity shareholders of abrdn plc | 5,663 | (35) | 5,628 |
Total equity | 5, 877 | (35) | 5, 842 |
Total equit y and liabilities | 9,247 | (35) | 9,212 |
Con solidated statement of changes in equity | |||
O pening retained earnings | 5,775 | (9) | 5,766 |
| Loss for the year | (561) | 3 | (558) |
Oth er comprehensive income for the year | (821) | (29) | (850) |
Total comprehensive income for the year | (1,382) | (26) | (1,408) |
Closing retained earnings | 5,021 | (35) | 4,986 |
Op ening total equity attributable to equity shareholders of abrdn plc | 7,643 | (9) | 7,634 |
| Loss for the year | (561) | 3 | (558) |
Oth er comprehensive income for the year | (780) | (29) | (809) |
Total comprehensive income for the year | (1,341) | (26) | (1,367) |
Closing total equity attributable to equity shareholders of abrdn plc | 5,663 | (35) | 5,628 |
Op ening total equity | 7, 856 | (9) | 7, 847 |
Loss for th e year | (549) | 3 | (546) |
Oth er comprehensive income for the year | (780) | (29) | (809) |
Total comprehensive income for the year | (1,329) | (26) | (1,355) |
Closing total equity | 5, 877 | (35) | 5, 842 |
| The restatement has no overall impact on the cash flows of the Group but does impact certain line items in the |
| 31 December | |||
| 2022 as | |||
| previously | Impact | 31 December | |
| presented | of IFRS 17 | 2022 as restated | |
£m | £m | £m | |
| Consolidated statement of cash flows | |||
Loss before tax | (615) | 3 | (612) |
Oth er non-cash and non-operating items | 570 | (3) | 567 |
171abrdn.comAnnual report 2023
FINANCIAL INFORMATION
| 31 December | |||
| 2022 as restated | Impact | ||
| for IFRS 17 | of IFRS 9 | 1 January 2023 | |
£m | £m | £m | |
| Consolidated statement of financial position | |||
Carrying value of HASL | 210 | 51 | 261 |
Inves tments in associates and joint ventures accounted for using the equity method | 232 | 51 | 283 |
Total assets | 9, 212 | 51 | 9, 263 |
Re tained earnings | 4, 986 | 51 | 5, 037 |
Total equity attributable to equity shareholders of abrdn plc | 5,628 | 51 | 5,679 |
Total equity | 5, 842 | 51 | 5,893 |
Total equity and liabilities | 9,212 | 51 | 9,263 |
172 abrdn.com Annual report 2023
Group financial statements continued
Financial statement area | Critical judgements in applying accounting policies | Related note |
| Defined benefit pension plans | Assessment of whether the Group has an unconditional right to a refund of | Note 31 |
| the surplus. | ||
| Treatment of tax relating to the surplus. | ||
Intangible assets | Identification and valuation of intangible assets arising from business | Note 13 |
| combinations, and the determination of useful lives. |
Financial statement area | Critical accounting estimates and assumptions | Related note |
Intangible assets | Determination of the recoverable amount in relation to the impairment of | Note 13 |
| goodwill. | ||
| Financial instruments at fair value | Determination of the fair value of contingent consideration | Notes 34 and 36 |
| through profit or loss | liabilities relating to the acquisition of Tritax. | |
Defined benefit pension plans | Determination of principal UK pension plan assumptions for mortality, | Note 31 |
| discount rate and inflation. |
173abrdn.comAnnual report 2023
FINANCIAL INFORMATION
174 abrdn.com Annual report 2023
Group financial statements continued
175abrdn.comAnnual report 2023
FINANCIAL INFORMATION
Notes to the Group financial statements
1. Group structure
(a) Composition
The following diagram is an extract of the Group structure at 31 December 2023 and gives an overview of the composition
of the Group.
A full list of the Company’s subsidiaries is provided in Note 44.
27 October 2023 | £m |
Cash consideration | 108 |
Fair value of deferred and contingent consideration | 11 |
| Consideration | 119 |
| Fair value of net assets acquired | |
| Intangible assets | |
Cus tomer relationships and investment management contracts | 78 |
| Total assets | 78 |
Total liabilities | – |
Goodwill | 41 |
Trust Managers
Funds Limited
Heng An
abrdn plc
abrdn Financial
Planning Limited
abrdn Holdings
abrdn Alternative
Limited
Standard Life Insurance
Company Limited
(China JV - 50%)
Virgin Money Unit
Limited
(UK JV - 50%)
Tritax
Management LLP
Finimize
Limited
Asia Limited
abrdn
abrdn
Investments
Management
Limited
abrdn Investment
abrdn
Private Equity
(Europe) Limited
abrdn Life
and Pensions Limited
abrdn
Hong Kong
Limited
abrdn Inc
Interactive Investor
Limited
Interactive Investor
Services Limited
abrdn Investments
Limited
(Holdings) Limited
Standard Life
Savings Limited
Elevate Portfolio
Services Limited
abrdn
Investments
Luxembourg SA
abrdn
Investments Ireland
Limited
abrdn
Fund Managers
Limited
abrdn
Investment Group
Limited
Aberdeen Corporate
Services Limited
Focus Business
Solutions Limited
abrdn
(Mauritius Holdings)
2006 Limited
176 abrdn.com Annual report 2023
Group financial statements continued
| 2023 | |
| £m | |
Disposal of aCL | 58 |
Disposal of US Private Equity and Venture Capital capabilities | 22 |
| Other disposals | (1) |
| Profit on disposal of subsidiaries and other operations for the year ended 31 December 2023 | 79 |
177abrdn.comAnnual report 2023
FINANCIAL INFORMATION
On disposal, a net gain of £1m was recycled from the translation reserve and was included in determining the profit on
disposal of subsidiaries and other operations for the year ended 31 December 2023.
aCL
The gain on sale, which is included in profit on disposals of subsidiaries and other operations in the consolidated income
statement for the year ended 31 December 2023 for aCL was calculated as follows:
| 1 September 2023 | £m |
| Total assets of operations disposed of | (85) |
| Total liabilities of operations disposed of | 10 |
| Net assets of operations disposed of | (75) |
| Cash consideration (less transaction costs) and amount receivable from aCL | 133 |
| Gain on sale before tax |
1
58
1. Following the completion of the sale, an intercompany receivable due from aCL to abrdn Investments (Holdings) Limited of £3m which previously eliminated
on consolidation is now recognised as an asset of the Group.
Prior to the completion of the sale, aCL was classified as an operation held for sale (refer Note 21).
US Private Equity and Venture Capital capabilities
The gain on sale, which is included in profit on disposals of subsidiaries and other operations in the consolidated income
statement for the year ended 31 December 2023 for US Private Equity and Venture Capital capabilities was calculated as
follows:
| 2 October 2023 | £m |
| Total assets of operations disposed of | (1) |
Total liabilities of operations disposed of | 2 |
| Net assets of operations disposed of | 1 |
| Cash consideration (less transaction costs) | 17 |
| Fair value of earn-out payments and retained interest | 2 |
| Gain recycled from the translation reserve | 2 |
| Gain on sale before tax | 22 |
1
1. Following the sale, the Group has retained certain carried interest entitlements which was been recognised in the consolidated statement of financial position
at fair value.
(c)(ii) Prior year disposal of associates
Profit on disposal of interests in associates for the year ended 31 December 2022 of £6m relates to the sale of the Group’s
interest in Origo Services Limited in May 2022.
178 abrdn.com Annual report 2023
Group financial statements continued
together our businesses which provide services to wealth managers and advisers and prior to the completion of the sale of
aCL, our MPS business, which was retained, moved from aCL to the Adviser business in order to maximise opportunities
available through the Adviser distribution model. The impact of these changes on the Adviser and ii segments is not
material and comparative amounts for the year ended 31 December 2022 have not been restated.
179abrdn.comAnnual report 2023
FINANCIAL INFORMATION
(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.
Investments | Adviser | ii | Other | Total | ||
31 December 2023 | Notes | £m | £m | £m | £m | £m |
Net operating revenue | 878 | 224 | 287 | 9 | 1,398 | |
Adjusted operating expenses | (828) | (106) | (173) | (42) | (1,149) | |
| Adjusted operating profit | 50 | 118 | 114 | (33) | 249 | |
| Adjusted net financing costs and investment | ||||||
| return | 81 | |||||
Ad justed profit before tax | 330 | |||||
Tax on adjusted profit | (50) | |||||
| Adjusted profit after tax | 280 | |||||
| Adjusted for the following items | ||||||
| Restructuring and corporate transaction | ||||||
| expenses | 5 | (152) | ||||
Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts | 5 | (189) | ||||
Profit on disposal of subsidiaries and other operations | 1 | 79 | ||||
| Change in fair value of significant listed | ||||||
| investments | 4 | (178 ) | ||||
Divid ends from significant listed investments | 4 | 64 | ||||
| Share of profit or loss from associates and joint | ||||||
| ventures | 14 | 1 | ||||
| Reversal of impairment of interests in joint | ||||||
| ventures | 14 | 2 | ||||
Other Total adjusting items including results of associates | 11 | 37 | ||||
| and joint ventures | (336 ) | |||||
Tax on adjusting items | 68 | |||||
Profit attributable to other equity holders | (11) | |||||
| Profit attributable to non-controlling interests – | ||||||
ordinary shares | – | |||||
Pro fit for the year attributable to equity | ||||||
shareholders of abrdn plc | 1 | |||||
Profit attributable to other equity holders | 11 | |||||
| Profit attributable to non-controlling interests – | ||||||
ordinary shares | – | |||||
Pro fit for the year | 12 | |||||
| 1. Previously named Personal. |
1
2
2. 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) and Tenet Group Limited (Tenet).
Net operating revenue is reported as the measure of revenue in the analysis of adjusted operating profit and relates to
revenues generated from external customers.
In the year ended 31 December 2023, transactions with one external customer amounted to more than 10% of net
operating revenue (2022: one). This net operating revenue of £150m (2022: £180m) is included in the Investments and
Adviser segments.
Adjusted operating expenses includes depreciation and amortisation of £33m (2022: £41m); £26m (2022: £36m) for the
Investments segment; £2m (2022: £2m) for the Adviser segment; and £5m (2022: £3m) for the ii segment. Interest income,
interest expense and income tax expense are not analysed by segment in the information provided to the executive
leadership team.
Assets and liabilities by segment is not required to be presented as such information is not presented on a regular basis to
the executive leadership team.
180 abrdn.com Annual report 2023
Group financial statements continued
Investments | Adviser | ii | Other | Total | ||
| restated | restated | restated | ||||
31 December 2022 | Notes | £m | £m | £m | £m | £m |
Net operating revenue | 1,060 | 185 | 201 | 10 | 1,456 | |
Adjusted operating expenses | (930) | (99) | (129) | (35) | (1,193) | |
| Adjusted operating profit | 130 | 86 | 72 | (25) | 263 | |
| Adjusted net financing costs and investment | ||||||
| return | (10) | |||||
| Adjusted profit before tax | 253 | |||||
Tax on adjusted profit | (22) | |||||
Adjusted profit after tax | 231 | |||||
| Adjusted for the following items | ||||||
| Restructuring and corporate transaction | ||||||
| expenses | 5 | (214) | ||||
Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts | 5 | (494) | ||||
Profit on disposal of interests in associates | 1 | 6 | ||||
| Change in fair value of significant listed | ||||||
investments | 4 | (187) | ||||
Dividends from significant listed investments | 4 | 68 | ||||
| Share of profit or loss from associates and joint | ||||||
| ventures | 14 | 5 | ||||
Impairment of interests in associates | 14 | (9) | ||||
Other Total adjusting items including results of associates | 11 | (40) | ||||
| and joint ventures | (865) | |||||
Tax on adjusting items | 88 | |||||
Profit attributable to other equity holders | (11) | |||||
Profit attributable to non-controlling interests - ordinary shares | (1) | |||||
| Loss for the year attributable to equity | ||||||
| shareholders of abrdn plc | (558) | |||||
Profit attributable to other equity holders | 11 | |||||
| Profit attributable to non-controlling interests – | ||||||
| ordinary shares | 1 | |||||
| Loss for the year | (546) |
181abrdn.comAnnual report 2023
FINANCIAL INFORMATION
2023 | 2022 | |
£m | £m | |
Total administrative and other expenses as presented in the Consolidated income statement | (1,463) | (1,919) |
Restructuring and corporate transaction expenses included in adjusting items | 152 | 214 |
Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts included in adjusting items | 189 | 494 |
Administrative and other expenses relating to the unit linked business | 1 | 1 |
Other differences | (28) | 17 |
Adjusted operating expenses as presented in the analysis of Group adjusted profit by segment | (1,149) | (1,193) |
Other differences relate to items presented in adjusted net financing costs and investment return for segment reporting
(see commentary under table below) and other items classified as adjusting items (refer Note 11).
Adjusted net financing costs and investment return
The following table provides a reconciliation of adjusted net financing costs and investment return, as presented in the
analysis of Group adjusted profit by segment, to Net gains or losses on financial instruments and other income, as
presented in the Consolidated income statement.
2023 | 2022 | |
£m | £m | |
| Net gains or losses on financial instruments and other income as presented in the Consolidated | ||
income statement | 2 | (122) |
Finance costs separately disclosed in the Consolidated income statement | (25) | (29) |
Change in fair value of significant listed investments included in adjusting items | 178 | 187 |
Dividends from significant listed investments included in adjusting items | (64) | (68) |
| Net gains or losses on financial instruments and other income relating to the unit linked | ||
business | (4) | (5) |
Other differences | (6) | 27 |
| Adjusted net financing costs and investment return as presented in the analysis of Group | ||
| adjusted profit by segment | 81 | (10) |
Other differences primarily relate to amounts presented in a different line item of the Consolidated income statement and
other items classified as adjusting items. This includes the net interest credit relating to the staff pension schemes of £34m
(2022: £29m) which is presented in total administrative and other expenses in the Consolidated income statement and in
adjusted net financing costs and investment return in the analysis of Group adjusted profit by segment.
2023 | 2022 | |
£m | £m | |
UK | 1,037 | 1,041 |
Europe, Middle East and Africa | 107 | 114 |
Asia Pacific | 137 | 164 |
Americas | 117 | 137 |
Total | 1,398 | 1,456 |
2023 | 2022 | |
£m | £m | |
UK | 1,565 | 1,745 |
Europe, Middle East and Africa | 33 | 10 |
Asia Pacific | 13 | 8 |
Americas | 130 | 57 |
Total | 1,741 | 1,820 |
182 abrdn.com Annual report 2023
Group financial statements continued
2023 | 2022 | |
| restated | ||
£m | £m | |
| Investments | ||
| Management fee income – Institutional and Retail Wealth | 769 | 901 |
| Management fee income – Insurance Partners | 132 | 167 |
| Performance fees and carried interest | 18 | 41 |
| Other revenue from contracts with customers | 27 | 28 |
| Revenue from contracts with customers for the Investments segment | 946 | 1,137 |
| Adviser | ||
P latform charges | 184 | 176 |
| Treasury income | 31 | 11 |
| Other revenue from contracts with customers | 11 | – |
| Revenue from contracts with customers for the Adviser segment | 226 | 187 |
| ii | ||
Fee income – Advice and Discretionary | 57 | 87 |
| Account fees | 54 | 32 |
| Trading transactions | 48 | 27 |
| Treasury income | 134 | 58 |
| Revenue from contracts with customers for the ii segment | 293 | 204 |
Revenue from contracts with customers for Other | 9 | 10 |
Total revenue from contracts with customers | 1,474 | 1,538 |
183abrdn.comAnnual report 2023
FINANCIAL INFORMATION
184 abrdn.com Annual report 2023
Group financial statements continued
2023 | 2022 | |
£m | £m | |
| Cost of sales | ||
Commission expenses | 64 | 66 |
| Other cost of sales | 12 | 16 |
| Total cost of sales | 76 | 82 |
Investments | Adviser | ii | Other | Total | |
2023 | £m | £m | £m | £m | £m |
Revenue from contracts with customers | 946 | 226 | 293 | 9 | 1,474 |
Cost of sales | (68) | (2) | (6) | – | (76) |
| Net operating revenue | 878 | 224 | 287 | 9 | 1,398 |
| Investments | Adviser | ii | Other | Total | |
| restated | restated 1 | ||||
2022 | £m | £m | £m | £m | £m |
Revenue from contracts with customers | 1,137 | 187 | 204 | 10 | 1,538 |
Cost of sales | (77) | (2) | (3) | – | (82) |
Net operating revenue | 1, 060 | 185 | 201 | 10 | 1, 456 |
| 1. The breakdown for the year ended 31 December 2022 has been restated in line with the changes to the Group’s reportable segments. Refer Note 2 for |
185abrdn.comAnnual report 2023
FINANCIAL INFORMATION
| 31 December | 31 December | 1 January | ||
| 2023 | 2022 | 2022 | ||
Notes | £m | £m | £m | |
Deferred Income | 32 | 4 | 3 | 5 |
Total contract liabilities | 4 | 3 | 5 |
186 abrdn.com Annual report 2023
Group financial statements continued
(178) | (187) | ||
187abrdn.comAnnual report 2023
FINANCIAL INFORMATION
5. Administrative and other expenses
2023 | 2022 | ||
Notes | £m | £m | |
Restructuring and corporate transaction expenses | 8 | 152 | 214 |
Impairment of intangibles acquired in business combinations and through the purchase of customer contracts | |||
Impairment of intangibles acquired in business combinations | 13 | 63 | 368 |
| Impairment of intangibles acquired through the purchase of customer | |||
contracts | 13 | – | 1 |
Total impairment of intangibles acquired in business combinations and through the purchase of customer contracts | 63 | 369 | |
Amortisation of intangibles acquired in business combinations and through the purchase of customer contracts | |||
Amortisation of intangibles acquired in business combinations | 13 | 115 | 115 |
| Amortisation of intangibles acquired through the purchase of customer | |||
contracts | 13 | 11 | 10 |
Total amortisation of intangibles acquired in business combinations and through the purchase of customer contracts | 126 | 125 | |
Staff costs and other employee-related costs | 6 | 529 | 549 |
| Other administrative expenses | 593 | 662 | |
| Total administrative and other expenses | 1,463 | 1,919 |
1,2
3
1. Other administrative expenses in 2022 included expense relating to a single process execution event provision. Other administrative expenses in 2023
includes a related credit for the recovery from the Group’s liability insurance for this provision which was received in 2023. Refer Note 33 for further details.
2. Other administrative expenses includes interest expense of £4m (2022: £2m). In addition, interest expense of £19m (2022: £23m) was incurred in respect of
subordinated liabilities and the related cash flow hedge (refer Note 18) and interest expense of £6m (2022: £6m) in respect of lease liabilities (refer Note 16)
which are included in Finance costs in the consolidated income statement.
3. Total administrative and other expenses includes £1m (2022: £1m) relating to unit linked business. Refer Note 23 for further details.
6. Staff costs and other employee-related costs
2023 | 2022 | ||
Notes | £m | £m | |
| The aggregate remuneration payable in respect of employees: | |||
Wages and salaries | 443 | 452 | |
| Social security costs | 51 | 50 | |
| Pension costs | |||
| Defined benefit plans | (39) | (29) | |
| Defined contribution plans | 55 | 56 | |
Employee share-based payments and deferred fund awards | 40 | 19 | 20 |
| Total staff costs and other employee-related costs | 529 | 549 |
In addition, wages and salaries of £18m (2022: £25m), social security costs of £4m (2022: £3m), pension costs – defined
benefit plans of £nil (2022: less than £1m), pension costs – defined contribution plans of less than £1m (2022: £1m),
employee share-based payments and deferred fund awards relating to transformation, leavers and corporate
transactions of £12m (2022: £6m) and termination benefits of £44m (2022: £53m) have been included in restructuring and
corporate transaction expenses. Refer Note 8. A further £4m (2022: £11m) of expenses are included in other cost of sales in
relation to amounts payable to employees and former employees relating to carried interest and performance fee
revenue. Refer Note 3.
The following table provides an analysis of the average number of staff employed by the Group during the year.
2023 | 2022 | |
Investments | 2,132 | 2,344 |
Adviser | 536 | 658 |
| ii (previously named Personal) | 1,138 | 928 |
IT and support functions 1 | 1,252 | 1,369 |
| Total employees | 5,058 | 5,299 |
1. Previously named Operations, IT and support functions. All roles classified as Operations have been allocated directly to the reportable segment since 2022.
188 abrdn.com Annual report 2023
Group financial statements continued
Information in respect of Directors’ remuneration is provided in the Directors’ remuneration report on pages 115 to 134. In
addition to the total remuneration disclosed as paid to the Director for the prior year are amounts paid to those Directors
who stepped down from the Board during 2022 being £50,000 to Martin Pike, £42,000 to Jutta af Rosenberg and £81,000 to
Cecilia Reyes. This is as disclosed in the 2022 Directors’ remuneration report.
7. Auditors’ remuneration
The following table shows the auditors’ remuneration during the year.
2023 | 2022 | |
£m | £m | |
Fees payable to the Company’s auditors for the audit of the Company’s individual and consolidated financial statements | 2.1 | 1.5 |
| Fees payable to the Company’s auditors for other services | ||
The audit of the Company’s consolidated subsidiaries pursuant to legislation | 5.1 | 4.7 |
Audit related assurance services | 2.8 | 2.3 |
Total audit and audit related assurance fees | 10.0 | 8.5 |
Other assurance services | 1.0 | 1.0 |
Other non-audit fee services | – | 0.3 |
Total non-audit fees | 1.0 | 1.3 |
Total auditors’ remuneration | 11.0 | 9.8 |
Auditors’ remuneration disclosed above excludes audit and non-audit fees payable to the Group’s principal auditor by
Group managed funds which are not controlled by the Group, and therefore not consolidated in the Group’s financial
statements.
During the year ended 31 December 2023 no audit fees were payable in respect of defined benefit plans to the Group’s
principal auditor (2022: £nil).
For more information on non-audit services, refer to the Audit Committee report in the Corporate governance statement.
8. Restructuring and corporate transaction expenses
Total restructuring and corporate transaction expenses during the year were £152m (2022: £214m). Restructuring
expenses of £121m (2022: £169m) mainly consisting of property related impairments, severance, platform transformation
and specific costs to effect savings in Investments. This was partly offset by a £32m release of the provision for separation
costs. Refer Note 33 for further details. Corporate transaction expenses were £31m (2022: £45m) and include deal costs
relating to acquisitions for the year ended 31 December 2023 of £2m (2022: £14m). Further information on restructuring
and corporate transaction expenses can be found in Section 1.1 of Supplementary information.
189abrdn.comAnnual report 2023
FINANCIAL INFORMATION
2023 | 2022 | |
£m | £m | |
| Current tax: | ||
UK | 17 | 5 |
| Overseas | 51 | 45 |
| Adjustment to tax expense in respect of prior years | (2) | (8) |
| Total current tax | 66 | 42 |
| Deferred tax: | ||
Deferred tax credit arising from the current year | (69) | (104) |
| Adjustment to deferred tax in respect of prior years | (15) | (4) |
| Total deferred tax | (84) | (108) |
| Total tax credit | (18) | (66) |
190 abrdn.com Annual report 2023
Group financial statements continued
2023 | 2022 | |
| restated | ||
£m | £m | |
Loss before tax | (6) | (612) |
Tax at 23.5% (2022: 19%) | (1) | (116) |
Remeasurement of deferred tax due to rate changes | (5) | (15) |
| Permanent differences | 1 | 1 |
| Non-taxable dividends from significant listed investments | (13) | (13) |
| Non-taxable fair value movements on significant listed investments | 18 | 21 |
| Tax effect of accounting for Share of profit or loss from associates and joint ventures | – | (2) |
| Tax effect of distributions on other equity instruments | (3) | (2) |
| Impairment losses on goodwill | 15 | 65 |
| Impairment of investment in associates and joint ventures | – | 2 |
| Differences in overseas tax rates | 4 | 5 |
| Adjustment to current tax expense in respect of prior years | (2) | (8) |
| Recognition of previously unrecognised deferred tax credit | (1) | (3) |
| Deferred tax not recognised | 2 | 4 |
| Adjustment to deferred tax expense in respect of prior years | (15) | (4) |
| Non-taxable profit or loss on sale of subsidiaries, associates and significant listed investments | (18) | (5) |
| Other | - | 4 |
| Total tax credit for the year | (18) | (66) |
2023 | 2022 | |
£m | £m | |
Tax relating to fair value gains and losses recognised on cash flow hedges | (10) | 21 |
Tax relating to cash flow hedge gains and losses transferred to consolidated income statement | 7 | (19) |
| Equity holder tax effect relating to items that may be reclassified subsequently to profit or loss | (3) | 2 |
Tax relating to other comprehensive income | (3) | 2 |
191abrdn.comAnnual report 2023
FINANCIAL INFORMATION
(c) Deferred tax assets and liabilities
(c)(i) Analysis of recognised deferred tax
2023 | 2022 | |
£m | £m | |
| Deferred tax assets comprise: | ||
Losses carried forward | 160 | 170 |
Depreciable assets | 35 | 33 |
Employee benefits | 20 | 26 |
Provisions and other temporary timing differences | 7 | 5 |
Gross deferred tax assets | 222 | 234 |
Less: Offset against deferred tax liabilities | (7) | (22) |
Deferred tax assets | 215 | 212 |
| Deferred tax liabilities comprise: | ||
Unrealised gains on investments | 4 | 60 |
Deferred tax on intangible assets acquired through business combinations | 124 | 162 |
Other | 8 | 11 |
Gross deferred tax liabilities | 136 | 233 |
Less: Offset against deferred tax assets | (7) | (22) |
Deferred tax liabilities | 129 | 211 |
Net deferred tax asset at 31 December | 86 | 1 |
A deferred tax asset of £160m (2022: £170m) has been recognised by the Group in respect of losses of the parent
company and various subsidiaries. The decrease in this deferred tax asset in 2023 reflects the utilisation of brought forward
losses against taxable profits in the year.
Deferred tax assets are recognised to the extent that it is probable that the losses will be capable of being offset against
taxable profits and gains in future periods. The value attributed to them takes into account the certainty or otherwise of their
recoverability. Their recoverability is measured against the reversal of deferred tax liabilities and anticipated taxable profits
and gains based on business plans. The deferred tax asset recognised on losses relates to UK entities where there is currently
no restriction on the period of time over which losses can be utilised. Recognition of this deferred tax asset requires that
management must consider if it is more likely than not that this asset will be recoverable in future periods against future profits
arising in the UK. In making this assessment management have considered future operating plans and forecast taxable
profits and are satisfied that, following completion of transformation activities, forecast taxable profits will be sufficient to
enable recovery of the UK tax losses. The financial forecasts considered were consistent with those used for the assessment
of the Group’s intangible assets (refer Note 13). Based upon the level of forecast taxable profits management do not consider
there is significant risk of a material adjustment to the carrying amount of the deferred tax asset on UK tax losses within the
next financial year. Management expect the deferred tax asset to be utilised over a period of between five and seven years.
Deferred tax liabilities relating to unrealised gains on investments at 31 December 2022 of £60m included £52m relating to
the Group’s investment in HDFC Asset Management. This investment was sold in 2023 (refer Note 11(a) for further details).
Deferred tax assets of £215m (2022: £212m) and liabilities of £129m (2022: £211m) are expected to be recovered or
settled after more than 12 months.
(c)(ii) Movements in deferred tax assets and liabilities
| Deferred tax | ||||||||
| on intangible | ||||||||
| Provisions and | assets | |||||||
| other | acquired | |||||||
| temporary | Unrealised | through | ||||||
| Losses carried | Depreciable | Employee | timing | gains on | business | Net deferred | ||
| forward | assets | benefits | differences | investments | combinations | Other | tax asset | |
£m | £m | £m | £m | £m | £m | £m | £m | |
At 1 January 2023 | 170 | 33 | 26 | 5 | (60) | (162) | (11) | 1 |
Amounts (expensed) in/credited to the consolidated income statement | (10) | 2 | (6) | 2 | 56 | 38 | 2 | 84 |
Tax on cash flow hedge | – | – | – | – | – | – | 3 | 3 |
Other | – | – | – | – | – | – | (2) | (2) |
At 31 December 2023 | 160 | 35 | 20 | 7 | (4) | (124) | (8) | 86 |
192 abrdn.com Annual report 2023
Group financial statements continued
Deferred tax | ||||||||
on intangible | ||||||||
| Provisions | assets | |||||||
| and other | acquired | |||||||
| Losses | temporary | Unrealised | through | |||||
| carried | Depreciable | Employee | timing | gains on | business | Net deferred | ||
| forward | assets | benefits | differences | investments combinations | Other | tax asset | ||
£m | £m | £m | £m | £m | £m | £m | £m | |
At 1 January 2022 | 129 | 25 | 30 | 4 | (104) | (72) | (9) | 3 |
| Acquired through business | ||||||||
| combinations | – | 5 | – | – | – | (114) | – | (109) |
Amounts (expensed) in/credited to the consolidated income statement | 41 | 3 | (5) | 1 | 44 | 24 | – | 108 |
Tax on cash flow hedge | – | – | – | – | – | – | (2) | (2) |
Other | – | – | 1 | – | – | – | – | 1 |
At 31 December 2022 | 170 | 33 | 26 | 5 | (60) | (162) | (11) | 1 |
(d) Unrecognised deferred tax
Due to uncertainty regarding recoverability, deferred tax assets have not been recognised in respect of the following:
– Cumulative losses carried forward of £91m (2022: £81m) in the UK and losses and other temporary differences of
£360m (2022: £275m) in the US, losses of £10m in China (2022: £11m), losses of £10m in Japan (2022: £13m) and losses
of £9m (2022: £19m) in other overseas jurisdictions.
Of these unrecognised deferred tax assets, certain losses have expiry dates as follows:
– US losses of £140m with expiry dates between 2035-2037 (2022: £79m).
– Other overseas losses of £21m with expiry dates between 2024-2033 (2022: £27m).
The following table provides an analysis of the losses with expiry dates for unrecognised deferred tax assets.
2023 | 2022 | |
£m | £m | |
Less than 1 year | 4 | 5 |
Greater than or equal to 1 year and less than 5 years | 9 | 11 |
Greater than or equal to 5 years and less than 10 years | 8 | 11 |
| Greater than 10 years | 140 | 79 |
| Total losses with expiry dates | 161 | 106 |
There is unrecognised deferred tax of £18m (2022: £nil) relating to temporary timing differences associated with
investments in subsidiaries, branches and associates and interests in joint arrangements.
193abrdn.comAnnual report 2023
FINANCIAL INFORMATION
2023 | 2022 | |
| restated | ||
£m | £m | |
Adjusted profit before tax | 330 | 253 |
Tax on adjusted profit | (50) | (22) |
| Adjusted profit after tax | 280 | 231 |
| Attributable to: | ||
Other equity holders | (11) | (11) |
| Non-controlling interests – ordinary shares | – | (1) |
| Adjusted profit after tax attributable to equity shareholders of abrdn plc | 269 | 219 |
Total adjusting items including results of associates and joint ventures | (336) | (865) |
Tax on adjusting items | 68 | 88 |
| Profit/(loss) attributable to equity shareholders of abrdn plc | 1 | (558) |
2023 | 2022 | |
Millions | Millions | |
Weighted average number of ordinary shares outstanding | 1,902 | 2,094 |
Dilutive effect of share options and awards | 28 | 16 |
| Weighted average number of diluted ordinary shares outstanding | 1,930 | 2,110 |
| restated | ||
Pence | Pence | |
Basic earnings per share | 0.1 | (26.6) |
Diluted earnings per share | 0.1 | (26.6) |
Adjusted earnings per share | 14.1 | 10.5 |
Adjusted diluted earnings per share | 13.9 | 10.5 |
194 abrdn.com Annual report 2023
Group financial statements continued
195abrdn.comAnnual report 2023
FINANCIAL INFORMATION
2023 | 2022 | |||
Pence per share | £m | Pence per share | £m | |
Prior year’s final dividend paid | 7.30 | 142 | 7.30 | 154 |
Interim dividend paid | 7.30 | 137 | 7.30 | 153 |
Tota l dividends paid on ordinary shares | 279 | 307 | ||
Current year final recommended dividend | 7.30 | 130 | 7.30 | 142 |
196 abrdn.com Annual report 2023
Group financial statements continued
13. Intangible assets
| Acquired through business combinations | ||||||||
| Customer | ||||||||
| relationships and | Cost of | |||||||
| investment | Internally | Purchased | obtaining | |||||
| management | Technology | developed | software | customer | ||||
Goodwill | Brand | contracts | and other | software | and other | contracts | Total | |
£m | £m | £m | £m | £m | £m | £m | £m | |
| Gross amount | ||||||||
At 1 January 2022 | 3,721 | 94 | 1,088 | 69 | 131 | 5 | 104 | 5,212 |
| Reclassified as held for sale during the year | (49) | – | (28) | – | – | – | – | (77) |
Disp osals and adjustments | – | – | 2 | – | – | – | 1 | 3 |
Additions – ii | 993 | 16 | 421 | 32 | – | – | – | 1,462 |
Addi tions – other | – | – | – | – | 6 | – | – | 6 |
At 31 December 2022 | 4,665 | 110 | 1,483 | 101 | 137 | 5 | 105 | 6,606 |
Disposals and adjustments | – | 1 | (4) | – | 2 | – | – | (1) |
Additions | 41 | – | 78 | – | 8 | – | 33 | 160 |
Foreign exchange adjustment | (2 ) | – | (4) | – | – | – | (1) | (7) |
At 31 December 2023 | 4,704 | 111 | 1,553 | 101 | 147 | 5 | 137 | 6,758 |
| Accumulated amortisation and impairment | ||||||||
At 1 January 2022 | (3,390) | (82) | (774) | (64) | (127) | (4) | (67) | (4,508) |
Rec lassified as held for sale during the year | – | – | 19 | – | – | – | – | 19 |
| Amortisation charge for the year | – | (14) | (91) | (10) | (3) | (1) | (10) | (129) |
Impair ment losses recognised | (340) | – | (28) | – | – | – | (1) | (369) |
At 31 December 2022 | (3 ,730) | (96) | (874) | (74) | (130) | (5) | (78) | (4,987) |
| Amortisation charge for the year | – | (4) | (99) | (12) | (2) | – | (11) | (128) |
| Impairment losses recognised | (62) | – | (1) | – | (2) | – | – | (65) |
At 31 December 2023 | (3,792) | (100 ) | (974) | (86) | (134) | (5) | (89) | (5,180) |
| Carrying amount | ||||||||
At 1 January 2022 | 331 | 12 | 314 | 5 | 4 | 1 | 37 | 704 |
At 31 December 2022 | 935 | 14 | 609 | 27 | 7 | – | 27 | 1,619 |
At 31 December 2023 | 912 | 11 | 579 | 15 | 13 | – | 48 | 1,578 |
1
2
3
2
3
1. Included in the internally developed software of £13m (2022: £7m) is £10m (2022: £5m) relating to intangible assets not yet ready for use.
2. For the year ended 31 December 2023, £126m (2022: £125m) of the amortisation charge is recognised in Amortisation of intangibles acquired in business
combinations and through the purchase of customer contracts with £2m (2022: £4m) recognised in Other administrative expenses.
3. For the year ended 31 December 2023, £63m (2022: £369m) of impairment is recognised in Impairment of intangibles acquired in business combinations and
through the purchase of customer contracts with £2m (2022: £nil) recognised in Restructuring and corporate transaction expenses.
197abrdn.comAnnual report 2023
FINANCIAL INFORMATION
At 31 December 2023, there was:
– £39m (2022: £nil) of goodwill attributable to the abrdn Inc. cash-generating unit (CGU) in the Investments segment in
relation to the acquisition of the healthcare fund management capabilities of Tekla (refer Note 1(b)(i) for further
details).
– £819m (2022: £819m) and £24m (2022: £60m) of goodwill attributable to the ii CGU and abrdn financial planning
business CGU respectively in the ii segment (previously named Personal). At 31 December 2022 goodwill of £49m
relating to the ii segment was classified as held for sale in relation to the sale of aCL which completed in 2023 (refer Note
1(c)(i) for further details).
– £25m (2022: £25m) of goodwill is attributable to an Adviser segment CGU. Prior to January 2023, this goodwill which
relates to the acquisition of threesixty was attributable to a CGU in the ii segment.
– £5m (2022: £31m) of goodwill attributable to the Finimize CGU which is reported within Other business operations and
corporate costs. Finimize was previously included within the Investments segment.
Tekla investment management contract intangible assets
On acquisition of the healthcare fund management capabilities of Tekla, £78m of customer relationships and investment
management contract intangibles were recognised. These assets primarily relate to investment management contracts
with the four NYSE listed funds. The description of the individually material intangible assets including the estimated useful
life at the acquisition date of 27 October 2023 were as follows:
| Investment management | Description | Useful life at | Fair value on | Carrying | Carrying |
| contract intangible asset | acquisition date | acquisition date | value | value | |
| 2023 | 2022 | ||||
£m | £m | £m | |||
| Tekla Healthcare | Investment management contract with | 12.1 years | 28 | 26 | N/A |
| Opportunities Fund | Tekla Healthcare Opportunities Fund | ||||
| Tekla Healthcare | Investment management contract with | 12.1 years | 25 | 23 | N/A |
| Investors | Tekla Healthcare Investors |
The key assumptions, other than the useful life, in measuring the fair value of the investment contract intangible assets at
acquisition date were as follows:
– Revenue growth – this assumption was based on past experience of growth for each fund in prior periods before
reverting to a long term growth in line with inflation estimates. Management fee rates are assumed to stay in line with
current rates.
– Operating margin – this assumption was based on the expected EBITDA of each acquired investment management
contract.
– Discount rate – this assumption was based on a risk adjusted internal rate of return (IRR) of the transaction.
As with prior significant acquisitions, the Group made use of assistance from a third-party valuation specialist in
determining the value of the customer intangibles.
As the investment management contracts relate to closed-end funds, the straight-line method of amortisation is
considered appropriate for these intangibles. There has been no change to the useful lives and therefore the residual useful
life of these investment management contract intangible assets is 11.9 years.
ii intangible assets
On acquisition of ii, customer relationships, brand and technology and other intangibles of £421m, £16m and £32m
respectively were recognised. Identification and valuation of intangible assets acquired in business combinations is a key
judgement. The description of the individually material intangible asset including the estimated useful life at the acquisition
date of 27 May 2022 was as follows:
| Customer relationship | Description | Useful life at | Fair value on | Carrying value | Carrying value |
| intangible asset | acquisition date | acquisition date | 2023 | 2022 | |
£m | £m | £m | |||
Customer base | ii’s customer base at the date of acquisition | 15 years | 421 | 340 | 390 |
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.
198 abrdn.com Annual report 2023
Group financial statements continued
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. There has been no change to the useful life and therefore the residual useful life
of the customer relationships intangible asset is 13.4 years. 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 ii brand and has been valued based on applying an
assumed royalty rate to revenue forecasts.
Following the valuation of the ii intangibles discussed above goodwill of £993m was recognised. The allocation of this
goodwill to cash-generating units was a key judgement in 2022. The goodwill was allocated to cash-generating units
based on expected earnings contribution, including in relation to revenue synergies, at the time of the transaction. We
considered an earnings contribution method of allocation to be appropriate as earnings multiples are a primary valuation
method for businesses such as ii. This resulted in the goodwill being primarily allocated to the ii cash-generating unit in the ii
segment (£819m), with £132m and £42m allocated to the asset management group of cash-generating units in the
Investments segment and a cash-generating unit in the ii segment respectively. As noted below, the £132m allocated to
the asset management group of cash-generating units was subsequently impaired in 2022. The £42m allocated to a cash-
generating unit in the ii segment was transferred to held for sale at 31 December 2022 and disposed of during 2023. Refer
Note 21 for further details.
Tritax investment management contract intangible assets
On acquisition of Tritax, £71m of customer relationships and investment management contracts intangibles were
recognised. These assets primarily relate to Tritax’s investment management contracts with Tritax Big Box REIT plc and
Tritax Euro Box plc which are listed closed-end real estate funds. The description of the individually material intangible asset
including the estimated useful life at the acquisition date of 1 April 2021 was as follows:
| Investment management | Description | Useful life at | Fair value on | Carrying | Carrying |
| contract intangible asset | acquisition date | acquisition date | value | value | |
| 2023 | 2022 | ||||
£m | £m | £m | |||
Tritax Big Box REIT plc | Investment management contract with | 13 years | 50 | 40 | 43 |
| Tritax Big Box REIT plc |
The key assumptions, other than the useful life, in measuring the fair value of the investment contract intangible assets at
acquisition date were as follows:
– Revenue growth – this assumption was based on the fund growth (from markets and investment performance)
included in the Tritax business plan as adjusted for the impact of fund raisings which commenced prior to the acquisition
date. Management fee rates are assumed to stay in line with current rates.
– Operating margin – this assumption was based on the current operating margins adjusted for expected cost synergies.
– Discount rate – this assumption was based on a market participant weighted average cost of capital.
As the investment management contracts relate to closed-end funds, the straight-line method of amortisation is
considered appropriate for these intangibles. There has been no change to the useful lives and therefore the residual useful
life of these investment management contract intangible assets is 10.25 years.
abrdn Holdings Limited (aHL) intangibles
On the acquisition of aHL in 2017, we identified intangible assets in relation to customer relationships, brand and technology
as being separable from goodwill. Identification and valuation of intangible assets acquired in business combinations is a
key judgement.
The customer relationships acquired through aHL were grouped where the customer groups have similar economic
characteristics and similar useful economic lives. This gave rise to three separate intangible assets which we termed Lloyds
Banking Group, Open ended funds, and Segregated and similar.
In relation to the Open ended funds we considered that it was most appropriate to recognise an intangible asset relating to
customer relationships between aHL and open ended fund customers, rather than an intangible asset relating to
investment management agreements between aHL and aHL’s open ended funds. Our judgement was that the value
associated with the open ended fund assets under management was predominantly derived from the underlying
customer relationships, taking into account that a significant proportion of these assets under management are from
institutional clients.
199abrdn.comAnnual report 2023
FINANCIAL INFORMATION
The intangible asset for Lloyds Banking Group had a carrying value of £nil at the end of 2019. The description of the
remaining two separate intangible assets including their estimated useful life at the acquisition date of 14 August 2017 was
as follows:
| Carrying | Carrying | ||||
| Customer relationship | Useful life at | Fair value on | value | value | |
intangible asset | Description | acquisition date | acquisition date | 2023 | 2022 |
£m | £m | £m | |||
Open ended funds | Separate vehicle group – open ended | 11 years | 223 | 30 | 45 |
| investment vehicles | |||||
| Segregated and | All other vehicle groups dominated by | 12 years | 427 | 43 | 63 |
| similar | segregated mandates which represent 75% of | ||||
| this group |
Measuring the fair value of intangible assets acquired in business combinations required further assumptions and
judgements. Customer relationships were valued using discounted cash flow projections. The key assumptions in
measuring the fair value of the customer relationships at the acquisition date were as follows:
– Net attrition – net attrition represents the expected rate of outflows of assets under management net of inflows from
existing customers. This assumption was primarily based on recent experience.
– Market growth – a market growth adjustment was applied based on the asset class.
– Operating margin – this assumption was consistent with forecast margins and included the impact of synergies that
would be expected by any market participant and impacted the customer relationship cash flows.
– Discount rate – this assumption was based on the internal rate of return (IRR) of the transaction and is consistent with a
market participant discount rate.
The above assumptions, and in particular the net attrition assumption, were also used to determine the useful economic life
at the acquisition date of each asset used for amortisation. The reducing balance method of amortisation is considered
appropriate for these intangibles, consistent with the attrition pattern on customer relationships which means that the
economic benefits delivered from the existing customer base will reduce disproportionately over time.
There has been no change to the useful lives of the Open ended funds and Segregated and similar customer relationship
intangible assets. Therefore the residual useful life of the Open ended funds customer relationship intangible asset is 4.6
years and the residual life of the Segregated and similar customer relationship intangible asset is 5.6 years.
200 abrdn.com Annual report 2023
Group financial statements continued
201abrdn.comAnnual report 2023
FINANCIAL INFORMATION
Finimize
202 abrdn.com Annual report 2023
Group financial statements continued
| Reduction in headroom for illustrative sensitivities £m | |
| 20% reduction in forecast post tax adjusted earnings | (346) |
| 25% reduction in market multiple | (433) |
Change required to reduce headroom to zero | % |
| Change in forecast post tax adjusted earnings | (24) |
| Reduction in market multiple | (24) |
203abrdn.comAnnual report 2023
FINANCIAL INFORMATION
204 abrdn.com Annual report 2023
Group financial statements continued
2023 | 2022 | |||||
Associates | Joint ventures | Total | Associates | Joint ventures | Total | |
| restated | restated | |||||
£m | £m | £m | £m | £m | £m | |
Opening balance carried forward | 14 | 218 | 232 | 10 | 255 | 265 |
| Effect of application of IFRS 9 | – | 51 | 51 | – | – | – |
| Opening balance at 1 January | 14 | 269 | 283 | 10 | 255 | 265 |
Reclassified as held for sale during the year | – | (9) | (9) | – | – | – |
| Exchange translation adjustments | – | (19) | (19) | – | 8 | 8 |
| Additions | 2 | – | 2 | 18 | 2 | 20 |
| Profit/(loss) after tax | (1) | 2 | 1 | (5) | 10 | 5 |
| Other comprehensive income | – | (31) | (31) | – | (57) | (57) |
| Reversal of impairment/(impairment) | – | 2 | 2 | (9) | – | (9) |
| At 31 December | 15 | 214 | 229 | 14 | 218 | 232 |
| Interest held by | Interest held by | ||||
| Principal place of | the Group at 31 | the Group at 31 | |||
Name | Nature of relationship | business | Measurement method | December 2023 | December 2022 |
| Heng An Standard Life Insurance | Joint venture | China | Equity | 50.00% | 50.00% |
| Company Limited (HASL) | accounted |
2023 | 2022 | |
£m | £m | |
Carrying value of associates accounted for using the equity method | 15 | 14 |
Share of profit/(loss) after tax | (1) | (5) |
HASL | Other | Total | ||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| restated | restated 1 | |||||
£m | £m | £m | £m | £m | £m | |
Carrying value of joint ventures accounted for using the equity method | 214 | 210 | – | 8 | 214 | 218 |
| Dividends received | – | – | – | – | – | – |
| Share of profit/(loss) after tax | 3 | 10 | (1) | - | 2 | 10 |
205abrdn.comAnnual report 2023
FINANCIAL INFORMATION
| HASL | ||
2023 | 2022 | |
| restated | ||
£m | £m | |
| Summarised financial information of joint venture: | ||
| Revenue | 154 | 162 |
| Depreciation and amortisation | 6 | 6 |
| Interest income | 97 | 93 |
| Interest expense | 2 | 2 |
| Income tax (expense)/credit | (1) | 6 |
| Profit after tax | 6 | 20 |
| Other comprehensive income | (62) | (114) |
| Total comprehensive income | (56) | (94) |
| Total assets | 5,267 | 4,348 |
| Total liabilities | 4,839 | 3,928 |
| Cash and cash equivalents | 179 | 130 |
| Net assets | 428 | 420 |
| Attributable to investee’s shareholders | 428 | 420 |
| Interest held | 50% | 50% |
| Share of net assets | 214 | 210 |
(d) Investments in associates measured at FVTPL
The aggregate fair value of associates accounted for at FVTPL included in equity securities and interests in pooled
investment funds (refer Note 17) at 31 December 2023 is £10m (2022: £46m) none of which are considered individually
material to the Group.
206 abrdn.com Annual report 2023
Group financial statements continued
| Right-of-use | |||||
| Owner occupied | Right-of-use | assets – | |||
| property | Equipment | assets – property | equipment | Total | |
£m | £m | £m | £m | £m | |
| Cost or valuation | |||||
At 1 January 2022 | 2 | 104 | 322 | 3 | 431 |
Rec lassified as held for sale during the year | – | – | (1) | – | (1) |
Addi tions | – | 24 | 36 | 1 | 61 |
Disp osals and adjustments 1 | – | (11) | (41) | – | (52) |
Derec ognition of right-of-use assets relating to subleases classified as finance leases | – | – | (6) | – | (6) |
Foreign exchange adjustment | – | 3 | 11 | – | 14 |
At 31 December 2022 | 2 | 120 | 321 | 4 | 447 |
Additions | – | 18 | 30 | 1 | 49 |
Disposals and adjustments 1 | – | (8) | (10) | (1) | (19) |
Derecognition of right-of-use assets relating to subleases classified as finance leases | – | – | (24) | – | (24) |
| Foreign exchange adjustment | – | (2) | (4) | – | (6) |
| At 31 December 2023 | 2 | 128 | 313 | 4 | 447 |
| Accumulated depreciation and impairment | |||||
At 1 January 2022 | (1) | (54) | (187) | (2) | (244) |
Rec lassified as held for sale during the year | – | – | 1 | – | 1 |
Depre ciation charge for the year | – | (18) | (20) | (1) | (39) |
Disp osals and adjustments 1 | – | 10 | 38 | – | 48 |
Derec ognition of right-of-use assets relating to subleases classified as finance leases | – | – | 3 | – | 3 |
Impair ment 3 | – | – | (7) | – | (7) |
F oreign exchange adjustment | – | (3) | (5) | – | (8) |
At 31 December 2022 | (1) | (65) | (177) | (3) | (246) |
| Depreciation charge for the year | – | (15) | (16) | (1) | (32) |
Disposals and adjustments 1 | – | 7 | 9 | – | 16 |
Derecognition of right-of-use assets relating to subleases classified as finance leases | – | – | 20 | – | 20 |
Impairment 3 | – | (11) | (39) | – | (50) |
| Reversal of impairment | - | – | 3 | – | 3 |
| Foreign exchange adjustment | – | 2 | 2 | 1 | 5 |
| At 31 December 2023 | (1) | (82) | (198) | (3) | (284) |
| Carrying amount | |||||
At 1 January 2022 | 1 | 50 | 135 | 1 | 187 |
At 31 December 2022 | 1 | 55 | 144 | 1 | 201 |
At 31 December 2023 | 1 | 46 | 115 | 1 | 163 |
207abrdn.comAnnual report 2023
FINANCIAL INFORMATION
Included in property right-of-use assets, are right-of-use assets that meet the definition of investment property. Their
carrying amount at 31 December 2023 is £31m (2022: £14m). This comprises a gross carrying value of £134m (2022:
£49m) and accumulated depreciation and impairment of £103m (2022: £35m). Rental income received and direct
operating expenses incurred to generate that rental income in the year to 31 December 2023 were £3m (2022: £3m) and
£2m (2022: £3m) respectively. In addition, there were direct expenses of £1m (2022: £1m) in relation to investment
properties not currently generating income.
The movements during the period of the carrying value of the Group’s investment property is analysed below.
2023 | 2022 | |
£m | £m | |
At start of period | 14 | 21 |
Transfers to investment property | 63 | – |
| Transfers from investment property | (3) | – |
| Depreciation | (4) | (2) |
| Derecognition related to new subleases classified as finance leases | (3) | (1) |
| Impairments | (39) | (3) |
| Reversal of impairment | 3 | – |
| Disposals and adjustments | – | (1) |
| At end of period | 31 | 14 |
The transfers to investment property relate to a number of properties in the UK and the US that will no longer be used
operationally by the Group. The right-of-use assets were assessed for impairment at the point of transfer. Impairments of
£39m have been recognised in the year ended 31 December 2023 in relation to these properties and one other property in
the UK previously transferred to investment property. The right-of-use assets are related to the Investments segment
(£27m impairment) ii segment (£1m impairment) and Other business operations and corporate costs (£11m impairment).
The recoverable amount for the properties in the UK, which was based on value in use, was £27m using a pre-tax discount
rate of 6%. The recoverable amount for the properties in the US, which was based on value in use, was £4m using a pre-tax
discount rate of 7%. The cash flows were based on the rental income expected to be received under subleases during the
term of the lease and the direct expenses expected to be incurred in managing the leased property, discounted using a
discount rate that reflects the risks inherent in the cash flow estimates. The assessment of the cash flows takes into
consideration climate related factors such as the energy efficiency of the buildings. It is not based on valuations by an
independent valuer.
The transfers from investment property relate to a property in the UK which was not being used operationally but following
the review of properties in the UK is being brought back into operational use. The right-of-use asset was assessed for
reversal of impairment at the point of transfer. The Group has recognised a reversal of impairment of £3m in the year
ended 31 December 2023 in relation to this property. The recoverable amount for this property was its carrying value at 30
June 2023 if it had not previously been impaired. The right-of-use asset is also related to the Investments segment.
The fair value of investment property included within right-of-use assets at 31 December 2023 is £36m (2022: £14m). The
valuation technique used to determine the fair value considers the rental income expected to be received under subleases
during the term of the lease and the direct expenses expected to be incurred in managing the leased property, discounted
using a discount rate that reflects the risks inherent in the cash flow estimates. It is not based on valuations by an
independent valuer. This is a Level 3 valuation technique as defined in Note 36.
If owner occupied property was measured using the cost model, the historical cost before impairment would be £1m
(2022: £1m). As the expected residual value of owner occupied property is in line with the current fair value, no depreciation
is currently charged.
Further details on the leases under which the Group’s right-of-use assets are recognised are provided in Note 16 below.
208 abrdn.com Annual report 2023
Group financial statements continued
209abrdn.comAnnual report 2023
FINANCIAL INFORMATION
2023 | 2022 | |
£m | £m | |
| Right-of-use assets: | ||
Property | 115 | 144 |
| Equipment | 1 | 1 |
| Total right-of-use assets | 116 | 145 |
Lease liabilities | (223) | (224) |
2023 | 2022 | |
£m | £m | |
Interest on lease liabilities | 6 | 6 |
2023 | 2022 | |
£m | £m | |
Less than 1 year | 26 | 29 |
Greater than or equal to 1 year and less than 2 years | 25 | 24 |
| Greater than or equal to 2 years and less than 3 years | 26 | 23 |
| Greater than or equal to 3 years and less than 4 years | 26 | 24 |
| Greater than or equal to 4 years and less than 5 years | 25 | 23 |
| Greater than or equal to 5 years and less than 10 years | 91 | 99 |
| Greater than or equal to 10 years and less than 15 years | 32 | 38 |
| Greater than or equal to 15 years | – | 4 |
| Total undiscounted lease liabilities | 251 | 264 |
210 abrdn.com Annual report 2023
Group financial statements continued
2023 | 2022 | |
£m | £m | |
Less than 1 year | 3 | 3 |
Greater than or equal to 1 year and less than 2 years | 4 | 3 |
| Greater than or equal to 2 years and less than 3 years | 4 | 4 |
| Greater than or equal to 3 years and less than 4 years | 4 | 4 |
| Greater than or equal to 4 years and less than 5 years | 4 | 4 |
| Greater than or equal to 5 years and less than 10 years | 14 | 12 |
| Greater than or equal to 10 years and less than 15 years | 1 | 2 |
| Total contractual undiscounted cash flows under finance leases | 34 | 32 |
Unearned finance income | (3) | (3) |
| Total net investment in finance leases | 31 | 29 |
2023 | 2022 | |
£m | £m | |
Less than 1 year | 2 | 1 |
Greater than or equal to 1 year and less than 2 years | 2 | 1 |
| Greater than or equal to 2 years and less than 3 years | 1 | 1 |
| Greater than or equal to 3 years and less than 4 years | – | 1 |
| Total contractual undiscounted cash flows under operating leases | 5 | 4 |
211abrdn.comAnnual report 2023
FINANCIAL INFORMATION
SPPI 1 test satisfied? | Business model | Classification |
Yes | A: Objective is to hold to collect contractual cash flows | Amortised cost |
| Yes | B: Objective is achieved by both collecting contractual cash | Fair value through other comprehensive |
| flows and selling | income (FVOCI) | |
Yes | C: Objective is neither A nor B | FVTPL |
No | N/A | FVTPL |
| At fair value through profit | Cash flow | ||||||||
| or loss | hedge | At amortised cost | Total | ||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||
Notes | £m | £m | £m | £m | £m | £m | £m | £m | |
Derivative financial assets | 18 | 2 | 19 | 41 | 85 | – | – | 43 | 104 |
Equity securities and interests in pooled investment funds | 36 | 1,139 | 2,033 | – | – | – | – | 1,139 | 2,033 |
Debt securities | 36 | 740 | 592 | – | – | 125 | 210 | 865 | 802 |
| Financial investments | 1,881 | 2,644 | 41 | 85 | 125 | 210 | 2,047 | 2,939 | |
| Receivables and other financial | |||||||||
assets | 19 | 11 | 19 | – | – | 1,060 | 888 | 1,071 | 907 |
Cash and cash equivalents | 22 | – | – | – | – | 1,196 | 1,133 | 1,196 | 1,133 |
| Total | 1,892 | 2,663 | 41 | 85 | 2,381 | 2,231 | 4,314 | 4,979 |
212 abrdn.com Annual report 2023
Group financial statements continued
The amount of debt securities expected to be recovered or settled after more than 12 months is £8m (2022: £2m). Due to
the nature of equity securities and interests in pooled investment funds, there is no fixed term associated with these
securities. The amount of equity securities and interests in pooled investment funds expected to be recovered or settled
after more than 12 months is £1,139m (2022: £669m).
Included in Proceeds from sale or redemption of financial investments of £1,029m (2022: £1,633m) within the consolidated
statement of cash flows are £576m (2022: £789m) in relation to sales of significant listed investments. Refer Note 11 for
further details of the sales in 2023.
2023 | 2022 | ||||||
Contract amount | Fair value assets | Fair value liabilities | Contract amount | Fair value assets | Fair value liabilities | ||
Notes | £m | £m | £m | £m | £m | £m | |
Cash flow hedges | 17,29 | 588 | 41 | – | 623 | 85 | – |
FVTPL | 17,29 | 628 | 2 | 9 | 638 | 19 | 1 |
Derivative financial instruments | 36 | 1,216 | 43 | 9 | 1,261 | 104 | 1 |
| Derivative financial | |||||||
| instruments backing unit linked | |||||||
| liabilities | 23 | 2 | – | – | 258 | 1 | 2 |
| Total derivative financial | |||||||
| instruments | 1,218 | 43 | 9 | 1,519 | 105 | 3 |
213abrdn.comAnnual report 2023
FINANCIAL INFORMATION
2023 | 2022 | |||||
Contract amount | Fair value assets | Fair value liabilities | Contract amount | Fair value assets | Fair value liabilities | |
£m | £m | £m | £m | £m | £m | |
| Equity derivatives: | ||||||
Futures | 130 | – | 5 | 137 | 3 | – |
| Swaps | 13 | – | – | – | – | – |
| Bond derivatives: | ||||||
| Futures | 46 | – | 2 | – | – | – |
| Interest rate derivatives: | ||||||
| Swaps | 21 | 1 | – | 18 | 1 | – |
| Foreign exchange derivatives: | ||||||
| Forwards | 339 | 1 | – | 678 | 16 | 3 |
| Other derivatives: | ||||||
| Credit default swaps | 81 | – | 2 | 63 | – | – |
| Derivative financial instruments at FVTPL | 630 | 2 | 9 | 896 | 20 | 3 |
| Within 1 | 1-5 | 5-10 | ||||||
| year | years | years | Total | |||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
£m | £m | £m | £m | £m | £m | £m | £m | |
| Cash inflows | ||||||||
Derivative financial assets | 339 | 569 | 677 | 107 | – | 637 | 1,016 | 1,313 |
| Derivative financial liabilities | 25 | 138 | – | – | – | – | 25 | 138 |
| Total | 364 | 707 | 677 | 107 | – | 637 | 1,041 | 1,451 |
| Cash outflows | ||||||||
| Derivative financial assets | (331) | (541) | (632) | (91) | – | (578) | (963) | (1,210) |
Derivative financial liabilities | (25) | (141) | (2) | – | – | – | (27) | (141) |
| Total | (356) | (682) | (634) | (91) | – | (578) | (990) | (1,351) |
| Net derivative financial | ||||||||
| instruments cash inflows | 8 | 25 | 43 | 16 | – | 59 | 51 | 100 |
214 abrdn.com Annual report 2023
Group financial statements continued
| Within 1 | 1-5 | 5-10 | ||||||
| year | years | years | Total | |||||
2023 | 20222 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
£m | £m | £m | £m | £m | £m | £m | £m | |
Cash inflows | 25 | 26 | 676 | 106 | – | 637 | 701 | 769 |
Cash outflows | (18) | (18) | (632) | (91) | – | (578) | (650) | (687) |
| Net cash flow hedge cash | ||||||||
| inflows | 7 | 8 | 44 | 15 | – | 59 | 51 | 82 |
2023 | 2022 | ||
Notes | £m | £m | |
Amounts receivable from contracts with customers | 3(d) | 110 | 161 |
Accrued income | 310 | 278 | |
Amounts due from counterparties and customers for unsettled trades and fund transactions | 477 | 317 | |
| Net investment in finance leases | 31 | 29 | |
Collateral pledged in respect of derivative contracts | 34 | 19 | 14 |
Contingent consideration assets | 36 | 11 | 19 |
| Other | 113 | 89 | |
| Receivables and other financial assets | 1,071 | 907 |
2023 | 2022 | |
£m | £m | |
Prepayments | 75 | 89 |
Deferred acquisition costs | – | 1 |
| Other | 2 | 2 |
| Other assets | 77 | 92 |
215abrdn.comAnnual report 2023
FINANCIAL INFORMATION
2023 | 2022 | ||
£m | £m | ||
| Assets of operations held for sale | |||
abrdn Capital Limited | – | 87 | |
European-headquartered Private Equity business | 10 | – | |
| Investments in joint ventures accounted for using the equity method | |||
Virgin Money UTM | 14, 43 | 9 | – |
Assets held for sale | 19 | 87 | |
| Liabilities of operations held for sale | |||
abrdn Capital Limited | – | 14 | |
European-headquartered Private Equity business | 2 | – | |
Liabilities of operations held for sale | 2 | 14 |
| 2023 | |
| £m | |
| Assets of operations held for sale | |
Receivables and other financial assets | 9 |
Cash and cash equivalents | 1 |
Total assets of operations held for sale | 10 |
| Liabilities of operations held for sale | |
Other financial liabilities | 2 |
Total liabilities of operations held for sale | 2 |
Net assets of operations held for sale | 8 |
216 abrdn.com Annual report 2023
Group financial statements continued
(b) abrdn Capital Limited (aCL)
On 1 September 2023, the Group completed the sale of aCL. Refer Note 1 (c)(i). aCL was reported in the ii segment
(previously named Personal).
At 31 December 2022, this disposal group was measured at its carrying amount and comprised the following assets and
liabilities:
| 2022 | |
| £m | |
| Assets of operations held for sale | |
Intangible assets | 58 |
Property, plant and equipment | – |
Receivables and other financial assets | 15 |
Other assets | 1 |
Cash and cash equivalents | 13 |
Total assets of operations held for sale | 87 |
| Liabilities of operations held for sale | |
Other financial liabilities | 14 |
Total liabilities of operations held for sale | 14 |
Net assets of operations held for sale | 73 |
Net assets of operations held for sale were net of intercompany balances between abrdn Capital Limited and other group
entities, the net assets of abrdn Capital Limited on a gross basis as at 31 December 2022 were £70m.
2023 | 2022 | |
£m | £m | |
Cash at bank and in hand | 704 | 783 |
| Money at call, term deposits, reverse repurchase agreements and debt instruments with less | ||
| than three months to maturity from acquisition | 301 | 236 |
| Money market funds | 191 | 114 |
| Cash and cash equivalents | 1,196 | 1,133 |
2023 | 2022 | ||
Notes | £m | £m | |
Cash and cash equivalents | 1,196 | 1,133 | |
Cash and cash equivalents backing unit linked liabilities | 23 | 13 | 23 |
Cash and cash equivalents classified as held for sale | 21 | 1 | 13 |
Bank overdrafts | 32 | – | (3) |
| Total cash and cash equivalents for consolidated statement of cash flows | 1,210 | 1,166 |
217abrdn.comAnnual report 2023
FINANCIAL INFORMATION
2023 | 2022 | ||
Notes | £m | £m | |
Net gains or losses on financial instruments and other income | 4 | 4 | 5 |
Other administrative expense | 5 | (1) | (1) |
| Profit before tax | 3 | 4 | |
Tax expense attributable to unit linked business | 9 | (3) | (4) |
Profit after tax | – | – |
218 abrdn.com Annual report 2023
Group financial statements continued
Level 1 | Level 2 | Level 3 | Not at fair value | Total | ||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
Financial investments | 396 | 601 | 273 | 322 | – | 1 | – | – | 669 | 924 |
Receivables and other financial assets | – | – | – | – | – | – | 4 | 5 | 4 | 5 |
Cash and cash equivalents | – | – | – | – | – | – | 13 | 23 | 13 | 23 |
| Total financial assets backing unit linked | ||||||||||
liabilities | 396 | 601 | 273 | 322 | – | 1 | 17 | 28 | 686 | 952 |
Investment contract liabilities | – | – | 684 | 772 | – | 1 | – | – | 684 | 773 |
Third party interest in consolidated funds | – | – | – | 173 | – | – | – | – | – | 173 |
Other unit linked financial liabilities | – | – | – | 2 | – | – | 2 | 4 | 2 | 6 |
Total unit linked financial liabilities | – | – | 684 | 947 | – | 1 | 2 | 4 | 686 | 952 |
| Equity securities and interests in pooled | Investment contract | |||
| investment funds | liabilities | |||
| 31 Dec | 31 Dec | 31 Dec | 31 Dec | |
| 2023 | 2022 | 2023 | 2022 | |
£m | £m | £m | £m | |
At start of period | 1 | 1 | (1) | (1) |
Sales | (1) | – | 1 | – |
At end of period | – | 1 | – | (1) |
219abrdn.comAnnual report 2023
FINANCIAL INFORMATION
2023 | 2022 | |
£m | £m | |
At 1 January | 773 | 1,088 |
Contributions | 54 | 36 |
| Account balances paid on surrender and other terminations in the year | (206) | (237) |
| Change in non-participating investment contract liabilities recognised in the consolidated income | ||
| statement | 65 | (112) |
| Recurring management charges | (2) | (2) |
| At 31 December | 684 | 773 |
| Related amounts not offset on the consolidated | ||||||||
| statement of financial position | ||||||||
| Gross amounts of financial | ||||||||
| instruments as presented on the | ||||||||
| consolidated statement of financial | Financial | Financial collateral | ||||||
| position | instruments | pledged/(received) | Net position | |||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
£m | £m | £m | £m | £m | £m | £m | £m | |
| Financial assets | ||||||||
| Derivatives | – | 1 | – | – | – | – | – | 1 |
| Total financial | ||||||||
| assets | – | 1 | – | – | – | – | – | 1 |
| Financial liabilities | ||||||||
| Derivatives | – | (1) | – | – | – | – | – | (1) |
| Total financial | ||||||||
| liabilities | – | (1) | – | – | – | – | – | (1) |
220 abrdn.com Annual report 2023
Group financial statements continued
2023 | 2022 | |||||
Ordinary share capital | Share premium | Ordinary share capital | Share premium | |||
Issued shares fully paid | 13 61/63p each | £m | £m | 13 61/63p each | £m | £m |
At 1 January | 2,001,891,899 | 280 | 640 | 2,180,724,786 | 305 | 640 |
| Shares issued in respect of share incentive | ||||||
| plans | 2,414 | – | – | 2,381 | – | – |
| Share buyback | (161,153,949) | (23) | – | (178,835,268) | (25) | – |
| At 31 December | 1,840,740,364 | 257 | 640 | 2,001,891,899 | 280 | 640 |
2023 | 2022 | |
| Number of shares held by trusts | ||
abrdn Employee Benefit Trust | 34,076,343 | 36,112,240 |
| abrdn Employee Trust | 22,187,644 | 22,629,035 |
| Aberdeen Asset Management Employee Benefit Trust 2003 | 2,080,853 | 2,264,591 |
221abrdn.comAnnual report 2023
FINANCIAL INFORMATION
26. Retained earnings
The following table shows movements in retained earnings during the year.
2023 | 2022 | ||
| restated | |||
Notes | £m | £m | |
Opening balance carried forward | 4,986 | 5,766 | |
| Effect of application of IFRS 9 on Investments in associates and joint ventures accounted | |||
| for using the equity method | 51 | – | |
| Opening balance at 1 January | 5,037 | 5,766 | |
| Recognised in comprehensive income | |||
| Recognised in profit/(loss) for the year attributable to equity holders | 1 | (558) | |
| Recognised in other comprehensive income | |||
Remeasurement losses on defined benefit pension plans | 31 | (139) | (793) |
| Share of other comprehensive income of associates and joint ventures | (31) | (57) | |
| Total items recognised in comprehensive income | (169) | (1,408) | |
| Recognised directly in equity | |||
| Dividends paid on ordinary shares | (279) | (307) | |
Share buyback | 24 | (302) | (302) |
Cancellation of capital redemption reserve | 27 | – | 1,059 |
| Transfer for vested employee share-based payments | 31 | 63 | |
| Transfer between reserves on disposal of subsidiaries | – | 1 | |
Transfer between reserves on impairment of subsidiaries | 27 | 169 | 207 |
| Shares distributed by employee and other trusts | (38) | (70) | |
| Other movements | – | (23) | |
| Total items recognised directly in equity | (419) | 628 | |
At 31 December | 4,449 | 4,986 |
1
2
1
1
3
1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.
2. The Group implemented IFRS 9 in 2019. However, as permitted under a temporary exemption granted to insurers in IFRS 4 Insurance Contracts, the Group’s
insurance joint venture, Heng An Standard Life Insurance Company Limited, applied IFRS 9 at 1 January 2023 following the implementation of the new
insurance standard, IFRS 17. Refer Basis of preparation.
3. Other movements in 2022 included the transfer of (£17m) previously recognised in the foreign currency translation reserve (which is part of Other reserves)
to Retained earnings. In prior years we have considered the functional currency of an intermediate subsidiary holding the Group’s investment in HDFC Life to
be 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.
222 abrdn.com Annual report 2023
Group financial statements continued
The following tables show the movements in other reserves during the year.
| Foreign | Equity | Capital | |||||||
| Cash flow | currency | Merger | compensation | Special | Reserve arising on | redemption | |||
| hedges | translation | reserve | reserve | reserve | Group reconstruction | reserve | Total | ||
Notes | £m | £m | £m | £m | £m | £m | £m | £m | |
1 January 2023 | 23 | 70 | 275 | 48 | 115 | (685) | 25 | (129) | |
Recognised in other comprehensive income | |||||||||
| Fair value losses on cash | |||||||||
| flow hedges | (40) | – | – | – | – | – | – | (40) | |
Exchange differences on translating foreign | |||||||||
operations | – | (35) | – | – | – | – | – | (35) | |
| Items transferred to profit | |||||||||
| or loss | 28 | (1) | – | – | – | – | – | 27 | |
Aggregate tax effect of items recognised in other comprehensive income | 3 | – | – | – | – | – | – | 3 | |
Total items recognised in other comprehensive income | (9) | (36) | – | – | – | – | – | (45) | |
Recognised directly in equity | |||||||||
Share buyback | 24 | – | – | – | – | – | – | 23 | 23 |
Reserves credit for employee share-based | |||||||||
| payments | – | – | – | 24 | – | – | – | 24 | |
| Transfer to retained | |||||||||
| earnings for vested | |||||||||
| employee share-based | |||||||||
payments | – | – | – | (31) | – | – | – | (31) | |
Transfer between reserves on impairment of subsidiaries | – | – | (169) | – | – | – | – | (169) | |
| Total items recognised | |||||||||
| directly within equity | – | – | (169) | (7) | – | – | 23 | (153) | |
At 31 December 2023 | 14 | 34 | 106 | 41 | 115 | (685) | 48 | (327) |
The merger reserve includes £94m (2022: £263m) in relation to the Group’s asset management businesses. During 2023,
following the impairment of the Company’s investment in abrdn Investments (Holdings) Limited, £169m was transferred
from the merger reserve to retained earnings. During 2022, following the impairment of the Company’s investments in
abrdn Holdings Limited and abrdn Investments (Holdings) Limited, £207m was transferred from the merger reserve to
retained earnings. Refer to the Company financial statements for further details on these impairments.
223abrdn.comAnnual report 2023
FINANCIAL INFORMATION
| Foreign | Equity | Reserve arising on | Capital | ||||||
| Cash flow | currency | Merger | compensation | Special | Group | redemption | |||
| hedges | translation | reserve | reserve | reserve | reconstruction | reserve | Total | ||
Notes | £m | £m | £m | £m | £m | £m | £m | £m | |
1 January 2022 | 18 | 17 | 483 | 87 | 115 | (685) | 1,059 | 1,094 | |
Recognised in other comprehensive income | |||||||||
| Fair value gains on cash | |||||||||
flow hedges | 85 | – | – | – | – | – | – | 85 | |
Exchange differences on translating foreign | |||||||||
operations | – | 36 | – | – | – | – | – | 36 | |
| Items transferred to profit | |||||||||
| or loss | (78) | – | – | – | – | – | – | (78) | |
Aggregate tax effect of items recognised in other comprehensive income | (2) | – | – | – | – | – | – | (2) | |
Total items recognised in other comprehensive income | 5 | 36 | – | – | – | – | – | 41 | |
Recognised directly in equity | |||||||||
Share buyback | 24 | – | – | – | – | – | – | 25 | 25 |
| Cancellation of capital | |||||||||
redemption reserve | – | – | – | – | – | – | (1,059) | (1,059) | |
Reserves credit for employee share-based | |||||||||
payments | – | – | – | 24 | – | – | – | 24 | |
| Transfer to retained | |||||||||
| earnings for vested | |||||||||
| employee share-based | |||||||||
| payments | – | – | – | (63) | – | – | – | (63) | |
Transfer between reserves on disposal of subsidiaries | – | – | (1) | – | – | – | – | (1) | |
Transfer between reserves on impairment of subsidiaries | – | – | (207) | – | – | – | – | (207) | |
| Other movements | – | 17 | – | – | – | – | – | 17 | |
| Total items recognised | |||||||||
| directly within equity | – | 17 | (208) | (39) | – | – | (1,034) | (1,264) | |
At 31 December 2022 | 23 | 70 | 275 | 48 | 115 | (685) | 25 | (129) |
1
1. Other movements included the transfer of (£17m) previously recognised in the foreign currency translation reserve to Retained earnings. In prior periods we
had considered the functional currency of an intermediate subsidiary holding the Group’s investment in HDFC Life to be US Dollars. We now consider that the
functional currency should have been GBP, resulting in the transfer between reserves. Prior periods were not restated as the impact on prior periods was not
considered material. There was no impact on net assets for any period presented.
On 1 July 2022, the Company’s capital redemption reserve at this date was cancelled in accordance with section 649 of
the Companies Act 2006 resulting in a transfer of £1,059m to retained earnings.
224 abrdn.com Annual report 2023
Group financial statements continued
| At fair value through profit or loss | At amortised cost | Total | |||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||
Notes | £m | £m | £m | £m | £m | £m | |
Third party interest in consolidated funds | 187 | 242 | – | – | 187 | 242 | |
Subordinated liabilities | 30 | – | – | 599 | 621 | 599 | 621 |
Derivative financial liabilities | 18 | 9 | 1 | – | – | 9 | 1 |
| Other financial liabilities | 32 | 129 | 143 | 1,112 | 1,058 | 1,241 | 1,201 |
Total | 325 | 386 | 1,711 | 1,679 | 2,036 | 2,065 |
225abrdn.comAnnual report 2023
FINANCIAL INFORMATION
2023 | 2022 | ||||
| Principal | Carrying | Principal | Carrying | ||
| Notes | amount | value | amount | value | |
| Subordinated notes | |||||
4.25% US Dollar fixed rate due 30 June 2028 | $750m | £599m | $750m | £621m | |
Total subordinated liabilities | 36 | £599m | £621m |
| 4.25% US Dollar fixed rate | |
Principal amount | $750m |
Issue date | 18 October 2017 |
Maturity date | 30 June 2028 |
Callable at par at option of the Company from | Not applicable |
If not called by the Company interest will reset to | Not applicable |
| 5.5% Sterling fixed rate | |
Principal amount | £92m |
Issue date | 4 December 2012 |
Maturity date | 4 December 2042 |
| 4 December 2022 and on every interest | |
| Callable at par at option of the Company from | payment date (semi-annually) thereafter |
| 4.85% over the five-year gilt rate | |
| If not called by the Company interest will reset to | (and at each fifth anniversary) |
226 abrdn.com Annual report 2023
Group financial statements continued
227abrdn.comAnnual report 2023
FINANCIAL INFORMATION
228 abrdn.com Annual report 2023
Group financial statements continued
2023 | 2022 | |
£m | £m | |
Current service cost | 55 | 56 |
Past service cost | (5) | – |
Net interest income | (38) | (32) |
Administrative expenses | 4 | 3 |
Expense recognised in the consolidated income statement | 16 | 27 |
2023 | 2022 | |||||
| Principal | Principal | |||||
plan | Other | Total | plan | Other | Total | |
£m | £m | £m | £m | £m | £m | |
Present value of funded obligation | (1,784) | (234) | (2,018) | (1,755) | (228) | (1,983) |
| Present value of unfunded | ||||||
obligation | – | (2) | (2) | – | (3) | (3) |
Fair value of plan assets | 2,912 | 233 | 3,145 | 3,001 | 251 | 3,252 |
| Net asset/(liability) before the limit | ||||||
on plan surplus | 1,128 | (3) | 1,125 | 1,246 | 20 | 1,266 |
Effect of limit on plan surplus 1, 2 | (394) | (3) | (397) | (436) | (11) | (447) |
Net asset/(liability) | 734 | (6) | 728 | 810 | 9 | 819 |
229abrdn.comAnnual report 2023
FINANCIAL INFORMATION
| Net asset/(liability) | ||||||||||
| Present value | Fair value of | before the limit on plan | Effect of limit on plan | |||||||
| of obligation | plan assets | surplus | surpluses | Net asset/(liability) | ||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
At 1 January | (1,986) | (3,252) | 3,252 | 5,686 | 1,266 | 2,434 | (447) | (865) | 819 | 1,569 |
| Total expense | ||||||||||
Current service cost | – | – | – | – | – | – | – | – | – | – |
Past service cost | 5 | – | – | – | 5 | – | – | – | 5 | – |
Interest (expense)/income | (88) | (65) | 146 | 115 | 58 | 50 | (20) | (18) | 38 | 32 |
Administrative expenses | (4) | (3) | – | – | (4) | (3) | – | – | (4) | (3) |
| Total (expense)/income | ||||||||||
| recognised in consolidated income | ||||||||||
| statement | (87) | (68) | 146 | 115 | 59 | 47 | (20) | (18) | 39 | 29 |
| Remeasurements | ||||||||||
| Return on plan assets, excluding | ||||||||||
| amounts included in interest | ||||||||||
income | – | – | (186) | (2,473) | (186) | (2,473) | – | – | (186) | (2,473) |
Gain from change in demographic assumptions | 31 | 5 | – | – | 31 | 5 | – | – | 31 | 5 |
(Loss)/gain from change in financial assumptions | (56) | 1,450 | – | – | (56) | 1,450 | – | – | (56) | 1,450 |
Experience gains/(losses) | 2 | (211) | – | – | 2 | (211) | – | – | 2 | (211) |
| Change in effect of limit on plan | ||||||||||
surplus | – | – | – | – | – | – | 70 | 436 | 70 | 436 |
| Remeasurement (losses)/gains | ||||||||||
recognised in other comprehensive income | (23) | 1,244 | (186) | (2,473) | (209) | (1,229) | 70 | 436 | (139) | (793) |
Exchange differences | 4 | (6) | (4) | 5 | – | (1) | – | – | – | (1) |
Employer contributions | – | – | 8 | 14 | 8 | 14 | – | – | 8 | 14 |
Benefit payments | 72 | 96 | (71) | (95) | 1 | 1 | – | – | 1 | 1 |
At 31 December | (2,020) | (1,986) | 3,145 | 3,252 | 1,125 | 1,266 | (397) | (447) | 728 | 819 |
230 abrdn.com Annual report 2023
Group financial statements continued
Principal plan | Other | Total | ||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
£m | £m | £m | £m | £m | £m | |
| Assets measured at fair value based on level 1 inputs | ||||||
Derivatives | – | 9 | – | – | – | 9 |
Equity securities | – | 55 | – | – | – | 55 |
Debt securities | 1,403 | 2,186 | – | 93 | 1,403 | 2,279 |
Total assets measured at fair value based on level 1 inputs | 1,403 | 2,250 | – | 93 | 1,403 | 2,343 |
| Assets measured at fair value based on level 2 or 3 inputs | ||||||
Derivatives | (3) | (7) | (2) | (3) | (5) | (10) |
Equity securities | 44 | 55 | – | – | 44 | 55 |
| Interests in pooled investment funds | ||||||
Debt | 286 | 284 | 19 | 16 | 305 | 300 |
Equity | – | – | 7 | 6 | 7 | 6 |
Multi-asset private markets | 230 | 224 | – | – | 230 | 224 |
Property | 82 | 95 | 11 | 12 | 93 | 107 |
Absolute return | – | – | 9 | 24 | 9 | 24 |
Cash | 9 | 39 | 73 | 41 | 82 | 80 |
Debt securities | 1,110 | 581 | 2 | 12 | 1,112 | 593 |
Qualifying insurance policies | 2 | 2 | 125 | 45 | 127 | 47 |
Total assets measured at fair value based on level 2 or 3 inputs | 1,760 | 1,273 | 244 | 153 | 2,004 | 1,426 |
Cash and cash equivalents | 103 | 160 | 4 | 5 | 107 | 165 |
Liability in respect of collateral held | (354) | (682) | (15) | – | (369) | (682) |
Total | 2,912 | 3,001 | 233 | 251 | 3,145 | 3,252 |
231abrdn.comAnnual report 2023
FINANCIAL INFORMATION
2023 | 2022 | |
% | % | |
Discount rate | 4.60 | 4.85 |
| Rates of inflation | ||
Consumer Price Index (CPI) | 2.65 | 2.75 |
Retail Price Index (RPI) | 3.00 | 3.10 |
| Expectation of life from NRA | ||||||||
Male age today | Female age today | |||||||
2023 | Table | Improvements | NRA | 40 | NRA | 40 | ||
| Plan specific basis | Core parameterisation of the CMI | 60 | 27 | 28 | 29 | 31 | ||
| (calibrated by Club | 2021 mortality improvements model | |||||||
| Vita) reflecting | (SK parameter of 7.0), with an initial | |||||||
| membership | improvement (or ‘A’) parameter of | |||||||
| demographics | +0.5% for males and females, and a | |||||||
| long-term rate of improvement of | ||||||||
| 1.5%. | ||||||||
| Expectation of life from NRA | ||||||||
| Normal Retirement | Male age today | Female age today | ||||||
2022 | Table | Improvements | Age (NRA) | NRA | NRA | 40 | 40 | |
| Plan specific basis | Core parameterisation of the CMI | 60 | 27 | 29 | 29 | 31 | ||
| (calibrated by Club | 2019 mortality improvements model | |||||||
| Vita) reflecting | (SK parameter of 7.0), with an initial | |||||||
| membership | improvement (or ‘A’) parameter of | |||||||
| demographics | +0.5% for males and females, and a | |||||||
| long-term rate of improvement of | ||||||||
| 1.5%. | ||||||||
232 abrdn.com Annual report 2023
Group financial statements continued
2023 | 2022 | |
Weighted average duration | years | years |
Current pensioner | 11 | 11 |
Non-current pensioner | 22 | 22 |
0
20
40
60
80
100
120
140
Non-current pensioner
Current pensioner
2024 2030 2040 2090 2110
2100
2070 2120208020602050
233abrdn.comAnnual report 2023
FINANCIAL INFORMATION
2023 | 2022 | ||||
| (Increase)/decrease | Increase/(decrease) | (Increase)/decrease | Increase/(decrease) | ||
| in present value | in fair value of | in present value | in fair value of | ||
| Change in assumption | of obligation | plan assets | of obligation | plan assets | |
£m | £m | £m | £m | ||
Yield/discount rate | Decrease by 1% (e.g. from | ||||
4.60% to 3.60%) | (342) | 566 | (341) | 698 | |
Increase by 1% | 266 | (432) | 268 | (525) | |
Rates of inflation | Decrease by 1% | 233 | (371) | 235 | (445) |
Increase by 1% | (306) | 485 | (305) | 591 | |
Life expectancy | Decrease by 1 year | 54 | N/A | 60 | N/A |
Increase by 1 year | (54) | N/A | (60) | N/A |
2023 | 2022 | ||
Notes | £m | £m | |
Accruals | 284 | 326 | |
| Amounts due to counterparties and customers for unsettled | |||
trades and fund transactions | 464 | 300 | |
Lease liabilities | 16 | 223 | 224 |
Cash collateral held in respect of derivative contracts | 34 | 40 | 109 |
Bank overdrafts | 22 | – | 3 |
Contingent consideration liabilities | 36 | 114 | 132 |
Deferred income 1 | 4 | 3 | |
Other | 112 | 104 | |
Other financial liabilities | 1,241 | 1,201 |
234 abrdn.com Annual report 2023
Group financial statements continued
Separation costs | Process execution | Tax related provisions | Other provisions | Total provisions | ||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
At 1 January | 33 | 35 | 41 | – | – | – | 23 | 14 | 97 | 49 |
Reclassified as held for sale during the year | – | – | – | – | – | – | – | (2) | – | (2) |
Charged/(credited) to the consolidated income statement | ||||||||||
Additional provisions | – | – | – | 41 | 42 | – | 33 | 18 | 75 | 59 |
Release of unused provision | (32) | – | – | – | – | – | (4) | (1) | (36) | (1) |
Used during the year | (1) | (2) | (41) | – | – | – | (28) | (6) | (70) | (8) |
At 31 December | – | 33 | – | 41 | 42 | – | 24 | 23 | 66 | 97 |
(b) Other liabilities
As at 31 December 2023, other liabilities totalled £4m (2022: £8m). The amount of other liabilities expected to be settled
after more than 12 months is £nil (2022: £3m).
235abrdn.comAnnual report 2023
FINANCIAL INFORMATION
34. Financial instruments risk management
(a) Overview
The principal risks and uncertainties that affect the Group’s business model and the Group’s approach to risk
management are set out in the Risk management section of the Strategic report.
The Group’s exposure to financial instrument risk is derived from the financial instruments that it holds directly, the assets
and liabilities of the unit linked funds of the life operations of the Group and the Group’s defined benefit pension plans. In
addition due to the nature of the business, the Group’s secondary exposure extends to the impact on treasury income and
investment management and other fees that are determined on the basis of a percentage of AUMA and are therefore
impacted by financial risks borne by third party investors. In this Note, exposures and sensitivities provided relate to the
financial instrument assets and liabilities, in scope of IFRS 7, to which the shareholder is directly exposed.
For the purposes of this Note:
– Shareholder business refers to the assets and liabilities to which the shareholder is directly exposed. The shareholder
refers to the equity holders of the Company.
– Unit linked funds refers to the assets and liabilities of the unit linked funds of the life operations of the Group. It does not
include the cash flows (such as asset management charges or investment expenses) arising from the unit linked fund
contracts. These cash flows are included in shareholder business.
– Third party interest in consolidated funds and non-controlling interests refers to the assets and liabilities recorded on the
Group’s consolidated statement of financial position which belong to third parties. The Group controls the entities which
own the assets and liabilities but the Group does not own 100% of the equity or units of the relevant entities.
Unit linked funds are excluded from the analysis in this Note. Details regarding the financial risks of instruments relating to
the Group’s unit linked funds can be found in Note 23 and the risks relating to the Group’s principal defined benefit pension
plan are explained in Note 31.
Third party interests in consolidated funds do not expose the shareholder to market, credit or liquidity risk since the financial
risks from the assets and obligations are borne by third parties. As a result equity risk, interest rate risk and credit risk
quantitative disclosures in this Note exclude these assets.
Under IFRS 7 the following financial instruments are excluded from scope:
– Interests in subsidiaries, associates and joint ventures.
– Rights and obligations arising from employee benefit plans.
– Insurance contracts as defined by IFRS 17.
– Share-based payment transactions.
For the purposes of managing risks to the Group’s financial instrument assets and liabilities, the Group considers the
following categories:
Risk | Definition and exposure |
Market | The risk of financial loss as a result of adverse financial market movements. The shareholder is directly |
| exposed to the impact of movements in equity prices, interest rates and foreign exchange rates on the value | |
| of assets held by the shareholder business. | |
Credit | The risk of financial loss as a result of the failure of a counterparty, issuer or borrower to meet their obligations |
| or perform them in a timely manner. The shareholder is directly exposed to credit risk from holding cash, debt | |
| securities, derivative financial instruments and receivables and other financial assets. | |
| Liquidity | The risk of financial loss as a result of being unable to settle financial obligations when they fall due, as a result |
| of having insufficient liquid resources or being unable to realise investments and other assets other than at | |
| excessive costs. The shareholder is directly exposed to the liquidity risk from the shareholder business if it is | |
| unable to realise investments and other assets in order to settle its financial obligations when they fall due, or | |
| can do so only at excessive cost. |
As set out in the Risk management section of the Strategic report, the Group reviews and manages climate related risks.
We continue to assess the potential impacts on our business with a view to the resilience of our operations and investment
strategies. This is monitored through our climate risk and opportunity radar to ensure we are well positioned to realise
opportunities and mitigate risks. Our day-to-day business is predominantly exposed to transition risk as markets, policy,
and reputations come to terms with alignment to net zero. We have a critical role to play as stewards of clients’ capital and
this is reflected in our business strategy and our commitment to reduce the carbon intensity of our portfolios and absolute
emissions from our direct operations. The Group is also exposed to climate risk in relation to its investment property which
are primarily properties which are no longer being used operationally by the Group and are being sublet. Refer Note 15 for
details of the Group’s consideration of climate related factors in relation to investment property. We have considered the
implications of climate related risk, including transition risks, for the 2023 financial statements, and have concluded that
there are no material impacts on the valuation of the Group’s assets and liabilities including the valuation of financial
instruments held at fair value through profit or loss (in particular in relation to level 3 investments) or at amortised cost (in
particular in relation to expected credit losses).
236 abrdn.com Annual report 2023
Group financial statements continued
| 2023 2022 | ||
£m | £m | |
Equity securities and interests in pooled investment funds at FVTPL | 209 | 213 |
Debt securities | 86 | 76 |
Total seed capital | 295 | 289 |
Equity securities and interests in pooled investment funds at FVTPL | 116 | 107 |
Total co-investments | 116 | 107 |
237abrdn.comAnnual report 2023
FINANCIAL INFORMATION
| UK | US | Singapore | Other | ||||||||||||
Sterling | Indian Rupee | Euro | Dollar | Dollar | currencies | Total | |||||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||
Notes | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
Financial assets | 17 | 3,280 | 3,237 | – | 680 | 204 | 219 | 612 | 585 | 59 | 48 | 159 | 210 | 4,314 | 4,979 |
| Financial | |||||||||||||||
| liabilities | 29 | (1,130) | (1,205) | – | – | (48) | (53) | (823) | (776) | (15) | (8) | (20) | (23) | (2,036) | (2,065) |
| Cash flow | |||||||||||||||
hedges | (588) | (623) | – | – | – | – | 588 | 623 | – | – | – | – | – | – | |
Non- designated | |||||||||||||||
derivatives | 296 | 296 | – | – | (66) | (68) | (186) | (182) | – | – | (44) | (46) | – | – | |
1,858 | 1,705 | – | 680 | 90 | 98 | 191 | 250 | 44 | 40 | 95 | 141 | 2,278 | 2,914 | ||
| 1. The Group has made a presentational change to show Deferred income within Other financial liabilities which is part of Financial liabilities. Refer Note 32. |
238 abrdn.com Annual report 2023
Group financial statements continued
31 December 2023 | 31 December 2022 | |||||
| A reasonable change in the | A reasonable change in | |||||
| variable within the next | Increase/(decrease) in | the variable within the | Increase/(decrease) in | |||
| calendar year | post-tax profit | next calendar year | post-tax profit | |||
% | £m | % | £m | |||
Equity prices | Increase | 10 | 74 | 10 | 148 | |
Decrease | 10 | (74) | 10 | (148) | ||
US Dollar against Sterling | Strengthen | 10 | 12 | 10 | 14 | |
Weaken | 10 | (9) | 10 | (11) | ||
Euro against Sterling | Strengthen | 10 | 10 | 10 | 11 | |
Weaken | 10 | (8) | 10 | (9) |
Financial instrument with credit risk exposure | Control |
Cash and cash equivalents | Maximum counterparty exposure limits are set with reference to internal credit |
| assessments. | |
| Derivative financial instruments | Maximum counterparty exposure limits, net of collateral, are set with reference to internal |
| credit assessments. The forms of collateral that may be accepted are also specified and | |
| minimum transfer amounts in respect of collateral transfers are documented. | |
Debt securities | The Group’s policy is to set exposure limits by name of issuer, sector and credit rating. |
Other financial instruments | Appropriate limits are set for other financial instruments to which the Group may have |
| exposure at certain times. |
| 12 month ECL (losses resulting from | No significant increase in credit risk since initial recognition. |
| possible default within the next 12 | Trade receivables or contract assets with significant financing component, or lease |
| months) | receivables if lifetime ECL measurement has not been elected. |
| Lifetime ECL (losses resulting from | Significant increase in credit risk since initial recognition. |
| possible defaults over the remaining | Trade receivables or contract assets with no significant financing component. |
| life of the financial asset) | Trade receivables or contract assets with significant financing component, or lease |
| receivables for which lifetime ECL measurement has been elected. | |
| Changes in Lifetime ECL | Credit-impaired at initial recognition. |
239abrdn.comAnnual report 2023
FINANCIAL INFORMATION
| Amortised cost | ||||||||||
| Fair value through | 12 month | |||||||||
profit or loss | Cash flow hedge | ECL | Lifetime ECL | Total | ||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
AAA | 30 | – | – | – | 115 | 89 | – | – | 145 | 89 |
AA+ to AA- | 169 | 164 | – | – | 76 | 162 | – | – | 245 | 326 |
A+ to A- | 405 | 327 | 41 | 85 | 977 | 953 | – | – | 1,423 | 1,365 |
BBB | 86 | 76 | – | – | 127 | 126 | – | – | 213 | 202 |
BB | – | – | – | – | – | – | – | – | – | – |
Not rated | 12 | 21 | – | – | 610 | 429 | 452 | 463 | 1,074 | 913 |
Gross carrying amount | 702 | 588 | 41 | 85 | 1,905 | 1,759 | 452 | 463 | 3,100 | 2,895 |
Loss allowance | – | – | – | – | – | – | (2) | (3) | (2) | (3) |
Carrying amount | 702 | 588 | 41 | 85 | 1,905 | 1,759 | 450 | 460 | 3,098 | 2,892 |
Derivative financial assets | 2 | 19 | 41 | 85 | – | – | – | – | 43 | 104 |
Debt securities | 689 | 550 | – | – | 125 | 210 | – | – | 814 | 760 |
Receivables and other financial assets | 11 | 19 | – | – | 610 | 428 | 450 | 460 | 1,071 | 907 |
Cash and cash equivalents | – | – | – | – | 1,170 | 1,121 | – | – | 1,170 | 1,121 |
Carrying amount | 702 | 588 | 41 | 85 | 1,905 | 1,759 | 450 | 460 | 3,098 | 2,892 |
240 abrdn.com Annual report 2023
Group financial statements continued
| Related amounts not offset on the consolidated | ||||||||
| statement of financial position | ||||||||
| Gross amounts of financial | ||||||||
| instruments as presented on the | ||||||||
| consolidated statement of | Financial | Financial collateral | ||||||
| financial position | instruments | pledged/(received) | Net position | |||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
£m | £m | £m | £m | £m | £m | £m | £m | |
| Financial assets | ||||||||
| Derivatives | 43 | 102 | (2) | (1) | (39) | (100) | 2 | 1 |
| Reverse repurchase | ||||||||
agreements | 35 | - | – | – | (35) | - | – | – |
Total financial assets | 78 | 102 | (2) | (1) | (74) | (100) | 2 | 1 |
| Financial liabilities | ||||||||
| Derivatives | (2) | (1) | 2 | 1 | – | – | – | - |
Total financial liabilities | (2) | (1) | 2 | 1 | – | – | – | - |
241abrdn.comAnnual report 2023
FINANCIAL INFORMATION
| Within | 1-5 | 5-10 | 10-15 | 15-20 | Greater than | |||||||||
| 1 year | years | years | years | years | 20 years | Total | ||||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
| Subordinated | ||||||||||||||
| liabilities | 24 | 24 | 647 | 94 | – | 577 | – | – | – | – | – | – | 671 | 695 |
| Other financial | ||||||||||||||
| liabilities | 950 | 894 | 185 | 198 | 97 | 105 | 46 | 48 | 6 | 6 | – | 15 | 1,284 | 1,266 |
Total | 974 | 918 | 832 | 292 | 97 | 682 | 46 | 48 | 6 | 6 | – | 15 | 1,955 | 1,961 |
242 abrdn.com Annual report 2023
Group financial statements continued
2023 | 2022 | |
£m | £m | |
| Financial investments | ||
Equity securities and interests in pooled investment funds | 482 | 558 |
Debt securities | – | – |
Total financial investments | 482 | 558 |
Receivables and other financial assets | 196 | 215 |
Other financial liabilities | 114 | 95 |
243abrdn.comAnnual report 2023
FINANCIAL INFORMATION
| Equities and interests in pooled investment funds | Debt securities | Derivatives 3 | |
Level 1 | Equity instruments listed on a recognised exchange valued using prices | Debt securities listed | Exchange traded |
| sourced from their primary exchange. | on a recognised | derivatives | |
| exchange valued using | valued using | ||
| prices sourced from | prices sourced | ||
| their primary | from the relevant | ||
| exchange. | exchange. | ||
Level 2 | Pooled investment funds where daily unit prices are available and reference | Debt securities valued | Over-the- |
| is made to observable market data. | using prices received | counter | |
| from external pricing | derivatives | ||
| providers based on | measured using | ||
| quotes received from | a range of | ||
| a number of market | valuation models | ||
| participants. | including | ||
| discounting | |||
| Debt securities valued | future cash flows | ||
| using models and | and option | ||
| standard valuation | valuation | ||
| formulas based on | techniques. | ||
| observable market | |||
data 4 . | |||
Level 3 | These relate primarily to interests in private equity, real estate and | Debt securities valued | N/A |
| infrastructure funds which are valued at net asset value. Underlying real | using prices received | ||
| estate and private equity investments are generally valued in accordance | from external pricing | ||
| with independent professional valuation reports or International Private | providers based on a | ||
| Equity and Venture Capital Valuation Guidelines where relevant. The | single broker indicative | ||
| underlying investments in infrastructure funds are generally valued based | quote. | ||
| on the phase of individual projects forming the overall investment and | |||
| discounted cash flow techniques based on project earnings. | Debt securities valued | ||
| using models and | |||
| Where net asset values are not available at the same date as the reporting | standard valuation | ||
| date, the latest available valuations are reviewed and, where appropriate, | formulas based on | ||
| adjustments are made to reflect the estimated impact of changes in | unobservable market | ||
| market conditions between the date of the valuation and the end of the | data 4 . | ||
| reporting period. | |||
| Other unlisted equity securities are generally valued using a calibration to | |||
| the price of a recent investment. |
244 abrdn.com Annual report 2023
Group financial statements continued
| Fair value hierarchy | ||||||||
Total | Level 1 | Level 2 | Level 3 | |||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
£m | £m | £m | £m | £m | £m | £m | £m | |
Owner occupied property | 1 | 1 | – | – | – | – | 1 | 1 |
Derivative financial assets | 43 | 104 | – | 3 | 43 | 101 | – | – |
Equity securities and interests in pooled investment vehicles 1 | 1,139 | 2,033 | 769 | 1,621 | 137 | 181 | 233 | 231 |
Debt securities | 740 | 592 | 7 | 2 | 732 | 588 | 1 | 2 |
Contingent consideration assets | 11 | 19 | – | – | – | – | 11 | 19 |
Total assets at fair value | 1,934 | 2,749 | 776 | 1,626 | 912 | 870 | 246 | 253 |
245abrdn.comAnnual report 2023
FINANCIAL INFORMATION
| Fair value hierarchy | ||||||||
Total | Level 1 | Level 2 | Level 3 | |||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
£m | £m | £m | £m | £m | £m | £m | £m | |
| Liabilities in respect of third party | ||||||||
| interest in consolidated funds | 187 | 242 | – | – | 117 | 168 | 70 | 74 |
Derivative financial liabilities | 9 | 1 | 7 | - | 2 | 1 | – | – |
| Contingent consideration | ||||||||
liabilities | 114 | 132 | – | – | – | – | 114 | 132 |
| Other financial liabilities | 15 | 11 | – | – | – | – | 15 | 11 |
Total liabilities at fair value | 325 | 386 | 7 | - | 119 | 169 | 199 | 217 |
| Equity securities | ||||||||
| and interests in | ||||||||
| pooled investment | Liabilities in respect of third party | |||||||
funds | Debt securities | interest in consolidated funds | ||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
£m | £m | £m | £m | £m | £m | £m | £m | |
At 1 January | 1 | 1 | 231 | 106 | 2 | 1 | (74) | – |
Total gains recognised in the consolidated income | ||||||||
| statement | – | – | 1 | 2 | – | (2) | – | – |
Purchases | – | – | 18 | 139 | – | 3 | – | (70) |
Sales and other adjustments | – | – | (17) | (16) | (1) | – | 4 | (4) |
At 31 December | 1 | 1 | 233 | 231 | 1 | 2 | (70) | (74) |
| Contingent | Contingent | |||||
| consideration assets | consideration liabilities | Other financial liabilities | ||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
£m | £m | £m | £m | £m | £m | |
At 1 January | 19 | 31 | (132) | (165) | (11) | – |
Total amounts recognised in the consolidated income statement | 7 | 3 | 16 | 32 | (5) | (11) |
Additions | 7 | 1 | (11) | (6) | – | – |
Settlements | (21) | (18) | 12 | 7 | 1 | – |
Other movements | (1) | 2 | 1 | – | – | – |
At 31 December | 11 | 19 | (114) | (132) | (15) | (11) |
246 abrdn.com Annual report 2023
Group financial statements continued
| Fair value | |||||
| 2023 | 2022 | ||||
| £m | £m | Valuation technique | Unobservable input | Range (weighted average) | |
| Private equity, | 221 | 219 | Net asset value | Net asset value statements provided for a | A range of unobservable inputs |
| real estate, | large number of funds including nine | is not applicable as we have | |||
| hedge and | significant funds (fair value >£5m). | determined that the reported | |||
| infrastructure | NAV represents fair value at the | ||||
| funds | end of the reporting period. | ||||
| Other unlisted | 12 | 12 Indicative share | Calibration to the price of a recent | A range of unobservable inputs | |
| equity | price | investment. | is not applicable as we have | ||
| securities | determined that the calibration | ||||
| to the price of a recent | |||||
| investment represents fair value | |||||
| at the end of the reporting | |||||
| period. |
| Fair value | ||||||
2023 | 2022 | |||||
£m | £m | Valuation technique | Unobservable input | Input used | ||
| Contingent | (118) | (124) Probability | Unobservable inputs relate to probability | |||
| consideration | weighted cash | weighted cash flows and, where relevant, | ||||
| assets and | flow and where | discount rates. | ||||
| liabilities and | applicable | The most significant unobservable inputs | The base scenario for Tritax | |||
| other financial | discount rates | relate to assumptions used to value the | contingent consideration used | |||
| instrument | contingent consideration liability related to | a revenue compound annual | ||||
| liabilities | the acquisition of Tritax of £90m (2022: | growth rate (CAGR) from 31 | ||||
| £112m). For Tritax a number of scenarios | March 2023 to 31 March 2026 | |||||
| were prepared, around a base case, with | of 9% (2022: CAGR from 31 | |||||
| probabilities assigned to each scenario | March 2022 to 31 March 2026 | |||||
| (based on an assessment of the likelihood | of 14%) with other scenarios | |||||
| of each scenario). The value of the | using a range of revenue | |||||
| contingent consideration was determined | growth rates around this base. | |||||
| for each scenario, and these were then | The base scenario used a | |||||
| probability weighted, with this probability | cost/income ratio of c56% | |||||
| weighted valuation then discounted from | (2022: c52%) with other | |||||
| the payment date to the balance sheet | scenarios using a range of | |||||
| date. It was assumed that the timing of the | cost/income ratios around this | |||||
| exercise of the earn out put options | base. | |||||
between 2024, 2025 | and 2026 would be | The risk adjusted contingent | ||||
| that which is most beneficial to the holders | consideration cash flows have | |||||
| of the put options. | been discounted using a | |||||
| primary discount rate of 4% | ||||||
(2022: | 4.5%). | |||||
247abrdn.comAnnual report 2023
FINANCIAL INFORMATION
(4) |
| consolidated statement | As recognised in the | ||||||||||
| of financial position line | |||||||||||
item | Fair value | Level 1 | Level 2 | Level 3 | |||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||
Notes | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
| Assets | |||||||||||
Debt securities | 125 | 210 | 125 | 211 | – | - | 125 | 210 | – | 1 | |
| Liabilities | |||||||||||
Subordinated liabilities | 30 | 599 | 621 | 534 | 550 | – | – | 534 | 550 | – | – |
248 abrdn.com Annual report 2023
Group financial statements continued
2023 | 2022 | |
£m | £m | |
Equity securities and interests in pooled investment funds | 314 | 680 |
Debt securities | 13 | 89 |
Derivative financial instruments | 30 | (11) |
Receivables and other financial assets and other assets | (184) | 174 |
Assets held for sale | (16) | (16) |
Change in operating assets | 157 | 916 |
2023 | 2022 | |
£m | £m | |
| Other financial liabilities, provisions and other liabilities | 76 | (179) |
Pension and other post-retirement benefit provisions | (48) | (44) |
Investment contract liabilities | (90) | (315) |
Change in liability for third party interest in consolidated funds | (53) | (196) |
Liabilities held for sale | 6 | 9 |
Change in operating liabilities | (109) | (725) |
249abrdn.comAnnual report 2023
FINANCIAL INFORMATION
(c) Other non-cash and non-operating items
2023 | 2022 | |
restated 1 | ||
£m | £m | |
Gain on sale of subsidiaries and other operations | (79) | – |
Profit on disposal of interests in associates | – | (6) |
(Gain)/loss on disposal or derecognition of property, plant and equipment | (6) | 7 |
Depreciation of property, plant and equipment | 32 | 39 |
Amortisation of intangible assets | 128 | 129 |
Impairment losses on intangible assets | 65 | 369 |
(Reversal of impairment)/impairment of interests in associates and joint ventures | (2) | 9 |
Impairment losses recognised on property, plant and equipment | 50 | 7 |
Reversal of impairment losses recognised on property, plant and equipment | (3) | – |
Movement in contingent consideration assets/liabilities | (23) | (35) |
Equity settled share-based payments | 24 | 24 |
Finance costs | 25 | 29 |
Share of profit or loss from associates and joint ventures accounted for using the equity method | (1) | (5) |
Other non-cash and non-operating items | 210 | 567 |
1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.
(d) Disposal of subsidiaries and other operations
2023 1 | ||
Notes | £m | |
Intangibles | 59 | |
Other assets of operations disposed of | 30 | |
Other liabilities of operations disposed of | (12) | |
Net assets disposed of | 77 | |
Items transferred to profit or loss on disposal of subsidiaries | 1 | (1) |
Fair value of deferred and contingent consideration | (5) | |
Non-cash consideration | 1 | (3) |
| Gain on sale | 1 | 79 |
Transaction costs | 13 | |
Total cash consideration | 160 | |
Cash and cash equivalents disposed of | (21) | |
Cash inflow from disposal of subsidiary | 139 |
1. Relates to a number of 2023 disposals. Refer Note 1(c)(i) for further details.
There were no operations disposed of in the year ended 31 December 2022.
(e) Movement in subordinated liabilities
The following table reconciles the movement in subordinated liabilities in the year, split between cash and non-cash items.
2023 | 2022 | |
£m | £m | |
At 1 January | 621 | 644 |
| Cash flows from financing activities | ||
Repayment of subordinated liabilities | – | (92) |
| Interest paid | (13) | (31) |
Cash flows from financing activities | (13) | (123) |
| Non-cash items | ||
Interest expense | 26 | 30 |
Foreign exchange adjustment | (35) | 70 |
At 31 December | 599 | 621 |
1
1. Interest paid on subordinated liabilities and other equity in the consolidated statement of cash flows of £20m (2022: £34m) includes an inflow of £4m (2022:
£8m) in relation to the related cash flow hedge (refer Note 18) and an outflow of £11m (2022: £11m) in relation to other equity (refer Note 28). Other
movements in the fair value of the cash flow hedge relate to non-cash movements. Cash collateral held in respect of derivative contracts of £40m (2022:
£109m) in Other financial liabilities (refer Note 32) includes collateral held in respect of the cash flow hedge of £39m (2022: £89m).
250 abrdn.com Annual report 2023
Group financial statements continued
(f) Movement in lease liabilities
The following table reconciles the movement in lease liabilities in the year, split between cash and non-cash items.
2023 | 2022 | |
£m | £m | |
At 1 January | 224 | 225 |
| Cash flows from financing activities | ||
Payment of lease liabilities – principal | (24) | (46) |
Payment of lease liabilities – interest | (6) | (6) |
Cash flows from financing activities | (30) | (52) |
| Non-cash items | ||
Additions | 28 | 46 |
Disposals and adjustments | (2) | (8) |
Interest capitalised | 6 | 6 |
Foreign exchange adjustment | (3) | 7 |
At 31 December | 223 | 224 |
251abrdn.comAnnual report 2023
FINANCIAL INFORMATION
252 abrdn.com Annual report 2023
Group financial statements continued
| Conditional | Restricted | Typical vesting | Contractual life | Conditions which must be met prior to | |||
Plan | Options | awards | shares | period (years) | for options | Recipients | vesting |
| abrdn plc | Yes | Yes | No | 1-3 years | Up to 10 | Executives | Service, or service and |
| Deferred Share | (3 years for | years from | and senior | performance conditions. | |||
| Plan/ | Executive | date of | management | These can be tailored to the | |||
| Discretionary | LTIP) | grant | individual award. | ||||
| Share | |||||||
| Plan/Executive | |||||||
| LTIP Plan | |||||||
| Sharesave (Save- | Yes | No | No | 3 or 5 | Up to six | UK and Irish | Service only |
| as-you-earn) | months | employees | |||||
| after vesting | |||||||
| Share incentive | No | No | Yes | 3 years | Not | UK and Irish | Service only |
| plan | applicable | employees |
253abrdn.comAnnual report 2023
FINANCIAL INFORMATION
| Conditional | Restricted | Typical vesting | Contractual life | Conditions which must be met prior to | ||||
Plan | Options | awards | shares | period (years) | for options | Recipients | vesting | |
| Aberdeen Asset | Yes | No | No | 1-3 | (3-5 for | Up to 10 | Executives and | Service only. There are no |
| Management | executive | years from | senior | outstanding performance | ||||
| Deferred Share | management) | date of grant | management | conditions at date of grant. | ||||
| Plan 2009 | ||||||||
| Aberdeen Asset | No | Yes | No | 1-3 | (3-5 for | Not | US based | Service only. There are no |
| Management | executive | applicable | executives and | outstanding performance | ||||
| USA Deferred | management) | senior | conditions at date of grant. | |||||
| Share Award | management | |||||||
| Plan | ||||||||
| Conditional | Restricted | Typical vesting | Contractual life | Conditions which must be met prior to | |||
Plan | Options | awards | shares | period (years) | for options | Recipients | vesting |
| Standard Life | Yes | No | No | 1-3 | Up to six | Executives (other | Service, or service and |
| Restricted stock | months after | than executive | performance conditions. | ||||
| plan (RSP) | vesting | Directors) and | These are tailored to the | ||||
| senior | individual award. | ||||||
| management |
2023 | 2022 | |
£m | £m | |
| Share options and share awards granted under deferred and discretionary share plans | 22 | 22 |
Share options granted under Sharesave | 1 | 1 |
Matching shares granted under share incentive plans | 1 | 1 |
Equity-settled share-based payments | 24 | 24 |
| Cash-settled deferred fund awards | 7 | 2 |
Total expense | 31 | 26 |
254 abrdn.com Annual report 2023
Group financial statements continued
(b) Options and conditional awards granted
(b)(i) Deferred and discretionary share plans
The number and remaining contractual life for options outstanding and the share price at exercise of options exercised
during the year are as follows:
2023 | 2022 | |||
| Deferred and | Annual bonus | Deferred and | ||
| discretionary share | deferred share | discretionary share | Annual bonus deferred | |
| plans | options | plans | share options | |
Outstanding at 1 January | 61,117,377 | 5,574,422 | 37,133,812 | 6,604,504 |
Granted | 7,847,719 | – | 45,752,914 | – |
Forfeited | (15,690,306) | (58,611) | (3,540,675) | – |
Exercised | (9,904,530) | (1,662,020) | (18,228,674) | (1,030,082) |
Outstanding at 31 December | 43,370,260 | 3,853,791 | 61,117,377 | 5,574,422 |
Exercisable at 31 December | 6,840,715 | 3,853,791 | 3,907,131 | 5,418,292 |
| Remaining contractual life of options outstanding (years) | 5.96 | 2.70 | 6.45 | 3.56 |
Options exercised during the year | – | – | – | – |
Share price at time of exercise 1 | 198p | 204p | 194p | 189p |
1
1. Weighted average.
The options granted under the deferred and discretionary share plans were made throughout the year ended 31
December 2023 with a main grant date of 11 April 2023 and had a £nil exercise price. The weighted average option term
was 2.52 years. The weighted average share price at grant date was 194p and the weighted average fair value at grant
date was 172p. The options include an entitlement to the receipt of dividends in respect of awards that ultimately vest
between the date of grant and the vesting date.
In addition to nil costs options, 357,888 nil cost conditional awards were also granted under the deferred and discretionary
share plans (2022: 2,464,050) with a weighted average share price at grant date of 194p which was also the weighted
average fair value at grant date.
(b)(ii) Standard Life RSP
As noted above the final RSP options were exercised in 2022.
| 2022 | |
| RSP | |
| Outstanding at 1 January | 3,372 |
| Granted | – |
Forfeited | – |
| Exercised | (3,372) |
| Outstanding at 31 December | – |
Exercisable at 31 December | – |
| Options exercised during the year | |
Share price at time of exercise 1 | 241p |
1. Weighted average.
255abrdn.comAnnual report 2023
FINANCIAL INFORMATION
(b)(iii) Sharesave
The number, exercise price and remaining contractual life for options outstanding and the share price at exercise of
options exercised during the year are as follows:
2023 | 2022 | |||
| Weighted average | Weighted average | |||
| exercise price for | exercise price for | |||
| Sharesave | Sharesave | Sharesave | Sharesave | |
Outstanding at 1 January | 9,981,563 | 143p | 7,862,031 | 203p |
Granted | 1,864,914 | 132p | 6,997,665 | 118p |
Forfeited | (501,929) | 154p | (165,551) | 191p |
Exercised | (440,123) | 186p | (46,727) | 200p |
Expired | (1,045,470) | 205p | (759,965) | 235p |
Cancelled | (749,465) | 154p | (3,905,890) | 197p |
Outstanding at 31 December | 9,109,490 | 130p | 9,981,563 | 143p |
Exercisable at 31 December | 774,894 | 173p | 1,390,636 | 206p |
| Remaining contractual life of options outstanding (years) | 2.85 | 3.12 | ||
| Options exercised during the year | ||||
| Share price at time of exercise | 201p | 223p |
1. Weighted average.
The Sharesave options were granted on 10 October 2023 with an exercise price of 132p. The weighted average option
term was 3.50 years. The weighted average share price at grant date was 161p and the weighted average fair value at
grant date was 28p. Sharesave options have no dividend entitlement. In determining the fair value of options granted under
the Sharesave scheme the historic volatility of the share price over a period of up to five years and a risk-free rate
determined by reference to swap rates was also considered.
The following table shows the range of exercise prices of Sharesave options outstanding.
2023 | 2022 | |
| Number of options | Number of options | |
| outstanding | outstanding | |
117p-188p | 7,980,740 | 6,930,983 |
189p-199p | 742,875 | 2,390,606 |
200p-327p | 385,875 | 587,801 |
328p-345p | – | 72,173 |
Outstanding at 31 December | 9,109,490 | 9,981,563 |
(c) Matching shares granted under share incentive plans
During the year ended 31 December 2023, 338,001 matching shares were granted under the share incentive plan (2022:
490,814). The weighted average share price at grant date was 192p which was also the weighted average fair value at
grant date. The plans include the entitlement to the receipt of dividends in respect of awards that ultimately vest between
the date of grant and the vesting date.
(d) Deferred fund awards and cash settled share based payments
(d)(i) Deferred fund awards
At 31 December 2023, the liability recognised for cash-settled deferred fund awards was £27m (2022: £44m). There is no
liability (2022: £9m) for deferred fund awards relating to funds which are consolidated. The intrinsic value for vested
deferred fund awards related to funds which were consolidated at 31 December 2022 was £6m.
(d)(ii) Cash settled share based payments
At 31 December 2023, the liability recognised for cash-settled share based payments was £nil (2022: £nil).
256 abrdn.com Annual report 2023
Group financial statements continued
41. Related party transactions
(a) Transactions and balances with related parties
In the normal course of business, the Group enters into transactions with related parties that relate to investment
management and insurance businesses. In the year ended 31 December 2023, there have been no changes in the nature
of these transactions.
During the year, the Group recognised management fees of £2m (2022: £3m) from the Group’s defined benefit pension
plans. The Group’s defined benefit pension plans have assets of £748m (2022: £847m) invested in investment vehicles
managed by the Group.
During the year, there were no sales to associates accounted for using the equity method in relation to management fees
(2022: £nil) and no purchases in relation to services received (2022: £nil).
During the year ended 31 December 2023, there were sales to joint ventures accounted for using the equity method of
£4m (2022: £4m) and no purchases from joint ventures (2022: £nil). During the year ended 31 December 2023, the Group
contributed no capital to a joint venture (2022: £2m). At 31 December 2023, there was no outstanding funding
commitment to this joint venture (2022: £nil).
The Group had no balances due to or from associates accounted for using the equity method as at 31 December 2023
(2022: £nil). The Group had no balances due from joint ventures as at 31 December 2023 (2022: £1m). There were no
balances due to joint ventures (2022: £nil). During the year ended 31 December 2023, the Group contributed capital of £2m
to an associate (2022: £3m). At 31 December 2023, the Group had no commitments to make capital contributions to an
associate (2022: £2m).
In addition to these transactions between the Group and the above related parties during the year, in the normal course of
business the Group made a number of investments into/divestments from investment vehicles managed by the Group
which may be considered to be related parties including investment vehicles which are classified as investments in
associates measured at FVTPL. Group entities paid amounts for the issue of shares or units and received amounts for the
cancellation of shares or units. Information in relation to unconsolidated structured entities can be found in Note 35.
2023 | 2022 | |
£m | £m | |
Salaries and other short-term employee benefits | 10 | 11 |
Post-employment benefits | – | – |
Share-based payments and deferred fund awards | 7 | 6 |
Termination benefits | 1 | 2 |
Total compensation of key management personnel | 18 | 19 |
257abrdn.comAnnual report 2023
FINANCIAL INFORMATION
42. Capital management
(a) Capital and risk management policies and objectives
Managing capital is the ongoing process of determining and maintaining the quantity and quality of capital appropriate for
the Group and ensuring capital is deployed in a manner consistent with the expectations of our stakeholders. For these
purposes, the Board considers our key stakeholders to be our clients, the providers of capital (our equity holders and
holders of our subordinated liabilities) and the Financial Conduct Authority (FCA) as the lead prudential supervisor for the
Group.
There are two primary objectives of capital management within the Group. The first objective is to ensure that capital is,
and will continue to be, adequate to maintain the required level of financial stability of the Group and hence to provide an
appropriate degree of security to our stakeholders. The second objective is to create equity holder value by driving profit
attributable to equity holders.
The treasury and capital management policy, which is subject to review at least annually, forms one element of the
Group’s overall management framework. Most notably, it operates alongside and complements the strategic investment
policy and the Group risk policies. Integrating policies in this way enables the Group to have a capital management
framework that robustly links the process of capital allocation, value creation and risk management.
Capital requirements are forecast on a periodic basis and assessed against the forecast available capital resources. In
addition, rates of return achieved on capital invested are assessed against hurdle rates, which are intended to represent
the minimum acceptable return given the risks associated with each investment. Ongoing monitoring of investments is
incorporated into the Group’s established performance management process. The capital planning process is the
responsibility of the Chief Financial Officer. Capital plans are ultimately subject to approval by the Board.
The formal procedures for identifying and assessing risks that could affect the capital position of the Group are described
in the Risk management section of the Strategic report. Information on financial instruments risk is also provided in Note 34.
(b) Regulatory capital
(b)(i) Regulatory capital framework (unaudited)
The Group is supervised under the Investment Firms Prudential Regime (IFPR). The Group’s regulatory capital position
under IFPR is determined by consolidating the eligible capital and reserves of the Group (subject to a number of
deductions) to derive regulatory capital resources, and comparing this to the Group’s regulatory capital requirements.
Stress testing is completed to inform the appropriate level of regulatory capital and liquidity that the Group must hold, with
results shared with the FCA at least annually. In addition, the Group monitors a range of capital and liquidity statistics on a
daily, monthly or less frequent basis as required. Surplus capital levels are forecast, taking account of projected dividends
and investment requirements, to ensure that appropriate levels of capital resources are maintained.
The Group is required to hold capital resources to cover both the Own Funds Requirement and the Own Funds Threshold
Requirement described below in complying with the Overall Financial Adequacy Rule.
Own Funds Requirement
The Own Funds Requirement focuses on the Group’s permanent minimum capital requirement, its fixed overhead
requirement and its K-factor requirement with the own funds requirement being the highest of the three. At 31 December
2023, the Group’s indicative Own Funds Requirement was £314m.
Own Funds Threshold Requirement
The Own Funds Threshold Requirement supplements the own funds requirement via the Internal Capital Adequacy and
Risk Assessment (ICARA), which is the means by which the Group assesses the level of capital that adequately supports all
of the relevant current and future risks in its business, taking into account potential periods of financial stress during the
economic cycle as well as a potential wind-down scenario with the own funds threshold requirement being the highest of
the two, as per the Overall Financial Adequacy Rule. The results of the Group’s ICARA process is subject to periodic review
by the FCA under the Supervisory Review and Evaluation Process (SREP). The first review was conducted in 2023.
Under IFPR the Group fully excludes the value of its holding in significant listed investments from its capital resources. IFPR
also includes constraints on the proportion of the minimum capital requirement that can be met by each tier of capital. As a
result, approximately £275m of Tier 2 capital, whilst continuing to be reported within the Group’s capital resources, is not
available to meet the minimum capital requirement.
258 abrdn.com Annual report 2023
Group financial statements continued
(b)(ii) IFPR (unaudited)
| 2023 | 2022 | |
£m | £m | |
IFRS equity attributable to equity holders of abrdn plc | 4,878 | 5,628 |
Deductions for intangibles and defined benefit pension assets, net of related deferred tax liabilities | (2,168) | (2,319) |
Deductions for significant investments in financial sector entities | (780) | (1,366) |
Deductions for non-significant investments in financial sector entities | (12) | (229) |
Other deductions and adjustments, including provision for foreseeable dividend | (452) | (413) |
Common Equity Tier 1 capital resources | 1,466 | 1,301 |
Additional Tier 1 capital resources | 207 | 207 |
Total Tier 1 capital resources | 1,673 | 1,508 |
Tier 2 capital resources | 539 | 621 |
Total regulatory capital resources | 2,212 | 2,129 |
Total regulatory capital requirement | (1,054) | (1,054) |
| CET1 capital requirement | (590) | (590) |
Surplus CET1 regulatory capital | 876 | 711 |
Own Funds Requirement | 314 | 319 |
CET1 ratio (CET1 as % of Own Funds Requirement) | 467% | 408% |
1
2
1. 2023 draft position on 26 February 2024 following finalisation of the Annual report and accounts.
2. 56% of total regulatory capital requirement.
The Group has complied with all externally imposed capital requirements during the year.
43. Events after the reporting date
On 24 January 2024, the Group announced a new transformation programme targeting an annualised cost reduction of
at least £150m by the end of 2025. The bulk of the savings will be in non-staff costs. However, the programme is expected
to result in the reduction of approximately 500 roles. To achieve the desired simplification and cost savings, total
implementation costs are estimated to be around £150m.
On 14 February 2024, the agreed sale of the Group’s interest in Virgin Money UTM to its joint venture partner, Clydesdale
Bank, was announced. The interest in Virgin Money UTM does not form part of the Group’s reportable segments. The sale is
expected to complete in H1 2024. The Group’s interest in Virgin Money UTM was classified as held for sale at 31 December
2023 (refer Note 21). The sale is expected to result in an IFRS profit on disposal of interests in joint ventures of approximately
£11m.
259abrdn.comAnnual report 2023
FINANCIAL INFORMATION
Name of related undertaking | Share class | % interest held |
| 30 STMA 1 Limited | Ordinary shares | 100% |
| 30 STMA 2 Limited | Ordinary shares | 100% |
| 30 STMA 3 Limited | Ordinary shares | 100% |
| 30 STMA 4 Limited | Ordinary shares | 100% |
| 30 STMA 5 Limited | Ordinary shares | 100% |
| 6 SAS 3 Limited | Ordinary shares | 100% |
Aberdeen Corporate Services Limited | Ordinary shares | 100% |
| abrdn Charitable Foundation | N/A | 100% |
abrdn Client Management Limited | Ordinary shares | 100% |
abrdn Finance Limited | Ordinary shares | 100% |
abrdn Financial Fairness Trust | N/A | 100% |
| abrdn Financial Planning Limited | Ordinary shares | 100% |
| abrdn Holdings Limited | Ordinary shares | 100% |
abrdn Investments (Holdings) Limited | Ordinary shares | 100% |
| abrdn (Mauritius Holdings) 2006 Limited | Ordinary shares | 100% |
| Antler Holdco Limited | Ordinary shares | 100% |
| Interactive Investor Limited | Ordinary shares | 100% |
| Focus Business Solutions Limited | Ordinary shares | 100% |
Standard Life Aberdeen Trustee Company Limited | Ordinary shares | 100% |
Standard Life Savings Limited | Ordinary shares | 100% |
The abrdn Company 2006 | N/A | 100% |
| Threesixty Services LLP | Limited Liability Partnership | 100% |
| Threesixty Support LLP | Limited Liability Partnership | 100% |
Name of related undertaking | Share class | % interest held |
6 SAS 1 Limited | Ordinary shares | 100% |
6 SAS 2 Limited | Ordinary shares | 100% |
Aberdeen ACM Team LP 4 | Limited Partnership | 0% |
Aberdeen ACP LLP 4 | Limited Liability Partnership | 100% |
Aberdeen Asia III Property Fund Of Funds 10 | SIF fund with only Class A1 | 2% |
| Units | ||
Aberdeen Asia IV (General Partner) S.a.r.l. 11 | Ordinary shares | 100% |
Aberdeen Asia Pacific Fund, LP 12 | Limited Partnership | 0% |
| Aberdeen Asia Pacific Fund II, LP | Limited Partnership | 0% |
| Aberdeen Asia Pacific II (Offshore), LP | Limited Partnership | 0% |
| Aberdeen Asia Pacific III Ex-Co-Investment (Offshore), LP | Limited Partnership 0% |
260 abrdn.com Annual report 2023
Group financial statements continued
Name of related undertaking | Share class 1 | % interest held |
| Aberdeen Asia Pacific III Ex-Co-Investment, LP | Limited Partnership | 0% |
| Aberdeen Asia Pacific III, LP | Limited Partnership | 0% |
| Aberdeen Asia Partners III, LP | Limited Partnership | 0% |
| Aberdeen ASIF Carry LP | Limited Partnership | 25% |
Aberdeen Asset Management (Thailand) Ltd 14 | Ordinary shares | 100% |
Aberdeen Asset Management Denmark A/S 15 | Ordinary shares | 100% |
Aberdeen Asset Management Finland Oy 16 | Ordinary shares | 100% |
Aberdeen Claims Administration, Inc. 17 | Ordinary shares | 100% |
Aberdeen Co-Investment Mandate LP 4 | Limited Partnership | 0% |
Aberdeen Direct Property (Holding) Limited 3 | Ordinary shares | 100% |
Aberdeen Emerging Asia Fund, LP 12 | Limited Partnership | 0% |
Aberdeen Emerging Asia Pacific II (Offshore), LP 12 | Limited Partnership | 0% |
Aberdeen Emerging Asia Pacific III Ex-Co-Investments, LP 12 | Limited Partnership | 0% |
| Aberdeen Energy & Resource Company IV, LLC | Limited Liability | 73% |
| Company | ||
Aberdeen Energy & Resources Company V, LLC 13 | Limited Liability | 93% |
| Company | ||
Aberdeen Energy & Resources Partners II, LP 13 | Limited Partnership | 0% |
Aberdeen Energy & Resources Partners III, LP 13 | Limited Partnership | 0% |
Aberdeen Energy & Resources Partners IV, LP 13 | Limited Partnership | 1% |
Aberdeen Energy & Resources Partners V, LP 13 | Limited Partnership | 2% |
| Aberdeen European Infrastructure Carry GP Limited | Ordinary shares | 100% |
| Aberdeen European Infrastructure Carry Limited | Ordinary shares | 100% |
Aberdeen European Infrastructure Co-Invest II LP 3 | Limited Partnership | 0% |
Aberdeen European Infrastructure GP II Limited 3 | Ordinary shares | 100% |
Aberdeen European Infrastructure GP III Limited 3 | Ordinary shares | 100% |
| Aberdeen European Infrastructure GP Limited | Ordinary shares | 100% |
Aberdeen European Infrastructure III A Limited 3 | Ordinary shares | 100% |
| Aberdeen European Infrastructure III B Limited | Ordinary shares | 100% |
Aberdeen European Infrastructure IV Ltd 3 | Ordinary shares | 100% |
Aberdeen European Infrastructure Partners Carry LP 4 | Limited Partnership | 25% |
Aberdeen European Infrastructure Partners Carry II LP 4 | Limited Partnership | 25% |
Aberdeen European Infrastructure Partners Carry III LP 4 | Limited Partnership | 25% |
Aberdeen European Infrastructure Partners LP 3 | Limited Partnership | 3% |
Aberdeen European Infrastructure Partners II LP 3 | Limited Partnership | 2% |
Aberdeen European Infrastructure Partners III LP 3 | Limited Partnership | 5% |
Aberdeen European Opportunities Property Fund of Funds LLC 18 | Limited Liability | 3% |
| Company | ||
| Aberdeen European Residential Opportunities Fund SCSp | Limited Partnership | 0% |
| Aberdeen Fund Distributors LLC | Limited Liability | 100% |
| Company | ||
| Aberdeen Fund Management II Oy | Ordinary shares | 100% |
| Aberdeen General Partner 1 Limited | Ordinary shares | 100% |
| Aberdeen General Partner 2 Limited | Ordinary shares | 100% |
Aberdeen General Partner CAPELP Limited 12 | Ordinary shares | 100% |
Aberdeen General Partner CGPLP Limited 12 | Ordinary shares | 100% |
Aberdeen General Partner CMENAPELP Limited 12 | Ordinary shares | 100% |
Aberdeen General Partner CPELP II Limited 12 | Ordinary shares | 100% |
Aberdeen General Partner CPELP Limited 12 | Ordinary shares | 100% |
| Aberdeen Global ex-Japan Property Fund of Funds LP | Limited Partnership | 5% |
Aberdeen Global ex-Japan GP Limited 12 | Ordinary shares | 100% |
Aberdeen Global Infrastructure Carry GP Limited 4 | Ordinary shares | 100% |
Aberdeen Global Infrastructure GP II Limited 19 | Ordinary shares | 100% |
Aberdeen Global Infrastructure GP Limited 19 | Ordinary shares | 100% |
Aberdeen Global Infrastructure Partners II Carry LP 4 | Limited Partnership | 25% |
| Aberdeen Global Infrastructure Partners II LP | Limited Partnership | 0% |
261abrdn.comAnnual report 2023
FINANCIAL INFORMATION
Name of related undertaking | Share class | % interest held |
| Aberdeen GP 1 LLP | Limited Liability | 100% |
| Partnership | ||
| Aberdeen GP 2 LLP | Limited Liability | 100% |
| Partnership | ||
| Aberdeen GP 3 LLP | Limited Liability | 100% |
| Partnership | ||
| Aberdeen Indirect Property Partners II FCP-FIS | Class A1, A2 and A3 units | 1% |
| Aberdeen Infrastructure Feeder GP Limited | Ordinary shares | 100% |
| Aberdeen Infrastructure Finance GP Limited | Ordinary shares | 100% |
| Aberdeen Infrastructure GP II Limited | Ordinary shares | 100% |
| Aberdeen Infrastructure Partners II Carry LP | Limited Partnership | 25% |
Aberdeen Infrastructure Partners II LP 3 | Limited Partnership | 0% |
| Aberdeen Infrastructure Partners LP Inc | Limited Partnership | 0% |
| Aberdeen Investment Company Limited | Ordinary shares | 100% |
| Aberdeen Keva Asia IV Property Partners SCSp | Limited Partnership | 1% |
| Aberdeen Pension Trustees Limited | Ordinary shares | 100% |
| Aberdeen Pooling II GP AB | Ordinary shares | 100% |
| Aberdeen Property Fund Management Estonia Ou | Ordinary shares | 100% |
| Aberdeen Property Investors (General Partner) S.a.r.l. | Ordinary shares | 100% |
| Aberdeen Property Investors Estonia Ou | Ordinary shares | 100% |
| Aberdeen Property Investors Limited Partner Oy | Ordinary shares | 100% |
| Aberdeen Property Investors The Netherlands BV | Ordinary shares | 100% |
| Aberdeen Property Secondaries Partners II | Limited Partnership | 23% |
| Aberdeen Real Asset Partners, LP | Limited Partnership | 0% |
| Aberdeen Real Estate Fund Finland II LP | Limited Partnership | 100% |
Aberdeen Real Estate Partners II, LP 13 | Limited Partnership | 0% |
| Aberdeen Real Estate Partners III, LP | Limited Partnership | 0% |
| Aberdeen Secondaries II GP S.a.r.l. | Ordinary shares | 100% |
| Aberdeen Sidecar LP Inc | Limited Partnership | 0% |
Aberdeen Standard 2019 European PE A Carry LP | Limited Partnership | 40% |
Aberdeen Standard 2019 European PE B Carry LP | Limited Partnership | 40% |
| Aberdeen Standard Carlsbad Carry LP | Limited Partnership | 25% |
| Aberdeen Standard Carlsbad GP Limited | Ordinary shares | 100% |
| Aberdeen Standard Carlsbad LP | Limited Partnership | 0% |
| Aberdeen Standard Global Infrastructure Partners III LP | Limited Partnership | 5% |
Aberdeen Standard Core Infrastructure III LTP LP | Limited Partnership | 25% |
| Aberdeen Standard Core Infrastructure III SCSp | Limited Partnership | 1% |
Aberdeen Standard ECF II GP LP | Limited Partnership | 40% |
| Aberdeen Standard European Infrastructure GP IV Limited | Ordinary shares | 100% |
Aberdeen Standard European Infrastructure Partners Carry IV LP | Limited Partnership | 25% |
| Aberdeen Standard European Infrastructure Partners Co-invest IV LP | Limited Partnership | 0% |
| Aberdeen Standard European Infrastructure Partners IV LP | Limited Partnership | 5% |
| Aberdeen Standard European Long Income Real Estate Fund SCSp | Limited Partnership | 0% |
| Aberdeen Standard Global Infrastructure GP III Ltd | Ordinary shares | 100% |
Aberdeen Standard Global Infrastructure Partners I (2021) Carry LP | Limited Partnership | 25% |
| Aberdeen Standard Gulf Carry GP Limited | Ordinary shares | 100% |
| Aberdeen Standard Gulf Carry LP | Limited Partnership | 12% |
| Aberdeen Standard Investments Sweden AB | Ordinary shares | 100% |
| Aberdeen Standard Private Real Assets Co-Investment Fund I GP, LLC | Limited liability company | 80% |
| Aberdeen Standard Private Real Assets Co-Investment Fund I, LLC | Limited Liability Company | 79% |
| Aberdeen Standard Private Real Assets Co-Investment Fund I, LP | Limited Partnership | 1% |
Aberdeen Standard SOF IV Feeder LP | Limited Partnership | 0% |
Aberdeen Standard SOF IV GP LP | Limited Partnership | 25% |
Aberdeen Standard SOF IV LP | Limited Partnership | 0% |
Aberdeen Standard SOF Evergreen GP LP | Limited Partnership | 40% |
Aberdeen Standard SOF Evergreen LP | Limited Partnership | 0% |
| Aberdeen Trust Limited | Ordinary shares | 100% |
| Aberdeen UK Infrastructure Carry GP Limited | Ordinary shares | 100% |
262 abrdn.com Annual report 2023
Group financial statements continued
Name of related undertaking | Share class 1 | % interest held |
Aberdeen UK Infrastructure Carry Limited 4 | Ordinary shares | 100% |
Aberdeen Unit Trust Managers Limited 4 | Ordinary shares | 100% |
abrdn – Emerging Markets Equity ADR Fund 13 | Corporate Fund | 100% |
abrdn - US SMID Cap Equity Fund 13 | Corporate Fund | 100% |
abrdn III ICAV - abrdn Global Real Estate Active Thematics UCITS ETF 27 | ICAV | 91% |
abrdn Alternative Funds Limited | Ordinary shares | 100% |
abrdn Alternative Holdings Limited 4 | Ordinary shares | 100% |
abrdn Alternative Investments Limited 3 | Ordinary shares | 100% |
abrdn APAC PE 4 Executive Co-investment LP | Limited Partnership | 0% |
| abrdn APAC Private Equity 4 LP | Limited Partnership | 0% |
abrdn Asia Limited 28 | Ordinary shares | 100% |
abrdn Bloomberg Industrial Metals Strategy K-1 Free ETF 29 | ETF | 72% |
abrdn Brasil Investimentos Ltda 30 | Limited Liability Company | 100% |
abrdn Canada Funds - Global Smaller Companies Equity Fund 31 | Private Commingled Fund | 100% |
abrdn Canada Limited 32 | Ordinary shares | 100% |
abrdn Capital Partners LLP | Limited Liability | 100% |
| Partnership | ||
| abrdn Colombia SAS | Ordinary shares | 100% |
abrdn Commercial Real Estate Debt LP 3 | Limited Partnership | 0% |
abrdn Commercial Real Estate Debt II LP | Limited Partnership | 0% |
abrdn Corporate Secretary Limited | Ordinary shares | 100% |
abrdn CP (Holdings) Limited | Ordinary shares | 100% |
abrdn (CRED II) GP Limited | Ordinary shares | 100% |
| abrdn Eclipse HFRI 500 SP | Private Commingled Fund | 36% |
abrdn ETFs Advisors LLC 13 | Limited liability company | 100% |
| abrdn ETFs Sponsor LLC | Limited liability company | 100% |
| abrdn European Property Growth Fund LP | Limited Partnership | 0% |
abrdn Financial Planning & Advice Limited 3 | Ordinary A shares | 100% |
| Ordinary B shares | ||
abrdn Founder Co Limited | Ordinary shares | 100% |
abrdn Fund Managers Limited 3 | Ordinary shares | 100% |
abrdn (General Partner CRED) Limited 3 | Ordinary shares | 100% |
| abrdn (General Partner ELIREF) S.a.r.l. | Ordinary shares | 100% |
abrdn (General Partner EPGF) Limited | Ordinary shares | 100% |
abrdn (General Partner PFF 2018) S.a.r.l. 10 | Ordinary shares | 100% |
abrdn (General Partner SCF 1) Limited | Ordinary shares | 100% |
abrdn Global Absolute Return Strategies Offshore Feeder Fund Limited 12 | Ordinary shares | 100% |
abrdn Global Absolute Return Strategies Onshore Feeder Fund, LP 13 | Limited Partnership | 0% |
abrdn Global Risk Mitigation Fund 34 | Unit Trust | 38% |
abrdn Hong Kong Limited 35 | Ordinary shares | 100% |
abrdn (IL Infrastructure Debt) GP Limited 3 | Ordinary shares | 100% |
abrdn Inc. 13 | Ordinary shares | 100% |
abrdn Inflation-Linked Infrastructure Debt LP 3 | Limited Partnership | 0% |
abrdn Infrastructure Fibre Co-Investment SCSp 10 | Limited Partnership | 100% |
abrdn Investment Management Limited | Ordinary shares | 100% |
abrdn Investments Beteiligungs GmbH 36 | Limited Liability | 90% |
| Company | ||
abrdn Investments Deutschland AG 36 | Ordinary shares | 90% |
| abrdn Investments (General Partner UK Shopping Centre Feeder Fund LP) | Ordinary shares | 100% |
| Limited | ||
abrdn Investments Group Limited 3 | Ordinary shares | 100% |
abrdn Investments Holdings Europe Limited 3 | Ordinary shares | 100% |
| abrdn Investments Ireland Limited | Ordinary shares | 100% |
| abrdn Investments Jersey Limited | Ordinary shares | 100% |
| abrdn Investments Limited | Ordinary shares | 100% |
abrdn Investments Luxembourg Corporate Manager S.a.r.l. 10 | Ordinary shares | 100% |
| abrdn Investments Luxembourg S.A. | Ordinary shares | 100% |
abrdn Investments Middle East Limited 39 | Ordinary shares | 100% |
263abrdn.comAnnual report 2023
FINANCIAL INFORMATION
264 abrdn.com Annual report 2023
Group financial statements continued
Name of related undertaking | Share class | % interest held |
| Airport Industrial GP Limited | Ordinary shares | 60% |
| Airport Industrial Limited Partnership | Limited Partnership | 0% |
Airport Industrial Nominees B Limited 53 | Ordinary shares | 60% |
| Airport Industrial Nominees Limited | Ordinary shares | 60% |
Aldwych Capital Partners, LP | Limited Partnership | 0% |
Alliance Trust Savings Limited | Ordinary shares | 100% |
Andean Social Infrastructure (No. 1) Limited 3 | Ordinary shares | 100% |
| Andean Social Infrastructure Fund I LP | Limited Partnership | 5% |
| Andean Social Infrastructure GP Limited | Ordinary shares | 100% |
aPE NewCo 1 Limited | Ordinary shares | 100% |
aPE NewCo 2 Limited | Ordinary shares | 100% |
| Arden Garden State NJ Fund, LP | Limited Partnership | 0% |
| Arden Institutional Advisers, LP | Limited Partnership | 0% |
| Arthur House (No.6) Limited | Ordinary shares | 100% |
| Artio Global Investors Inc. | Ordinary shares | 100% |
ASI Direct RE GP LLP | Limited Liability Partnership | 100% |
| ASI European Private Equity 2019 B LP | Limited Partnership | 0% |
ASI (General Partner 2019 European PE A Carry) Limited | Ordinary shares | 100% |
| ASI (General Partner 2019 European PE A) S.a.r.l. | Ordinary shares | 100% |
ASI (General Partner 2019 European PE B) Limited | Ordinary shares | 100% |
ASI (General Partner 2019 European PE B) LLC 13 | Ordinary shares | 0% |
ASI (General Partner ECF II) Limited | Ordinary shares | 100% |
ASI (General Partner PE2) Limited | Ordinary shares | 100% |
ASI (General Partner SOF IV) Limited | Ordinary shares | 100% |
ASI Han Co-Investment LP | Limited Partnership | 93% |
ASI (KFAS) RE GP LLP | Limited Liability Partnership | 100% |
| ASI Little Mill Carry LP | Limited Partnership | 0% |
| ASI Little Mill Co-Invest LP | Limited Partnership | 0% |
| ASI Little Mill LP | Limited Partnership | 0% |
| ASI Mid-Market 1 LP | Limited Partnership | 0% |
| ASI MM Executive Co Investment LP | Limited Partnership | 0% |
ASI (NWPE 2021) Carry LP | Limited Partnership | 0% |
ASI PE 1 Carry LP 4 | Limited Partnership | 40% |
ASI (PGPE III) GP LP | Limited Partnership | 40% |
ASI Phoenix Global Private Equity III LP | Limited Partnership | 0% |
| ASI Private Equity 1 LP | Limited Partnership | 0% |
ASI Private Equity 2 GP LP | Limited Partnership | 40% |
ASI Private Equity 2 LP | Limited Partnership | 0% |
| ASI REMM GP LLP | Limited Liability Partnership | 100% |
| ASI Shin Co-Investment LP | Limited Partnership | 100% |
| ASI Shin Global Investment GP Limited | Ordinary shares | 100% |
ASI (SOF E GP) Limited | Ordinary shares | 100% |
| ASIF Sidecar Carry LP | Limited Partnership | 25% |
| ASPER (Luxembourg) GP S.a.r.l. | Ordinary shares | 100% |
| BOSEMP Feeder LP | Limited Partnership | 0% |
Brain Co-Invest General Partner LLP | Limited Liability Partnership | 100% |
Brain Co-Invest LP | Limited Partnership | 0% |
Coutts Asian Private Equity Limited Partnership 12 | Limited Partnership | 0% |
| Coutts Global Property Limited Partnership | Limited Partnership | 0% |
| Coutts Middle East and North Africa Private Equity Limited Partnership | Limited Partnership | 0% |
| Coutts Private Equity Limited Partnership | Limited Partnership | 0% |
Coutts Private Equity Limited Partnership II 12 | Limited Partnership | 0% |
CPP General Partner Limited Partnership | Limited Partnership | 20% |
| Edinburgh Fund Managers Group Limited | Ordinary shares | 100% |
Edinburgh Fund Managers Plc | Ordinary shares | 100% |
| Edinburgh Unit Trust Managers Limited | Ordinary shares | 100% |
| Deferred shares |
265abrdn.comAnnual report 2023
FINANCIAL INFORMATION
Name of related undertaking | Share class | % interest held | |
Elevate Portfolio Services Limited 3 | Ordinary shares | 100% | |
| Emerging Markets ex-China Equity Fund, a series of the aICF, LLC | Private Commingled Fund | 91% | |
| Emerging Markets Income Equity Fund, a series of the aICF, LLC | Private Commingled Fund | 99% | |
ESF I Executive Co Investment Limited Partnership | Limited Partnership | 0% | |
ESP 2004 | Co Investment Limited Partnership | Limited Partnership | 0% |
ESP 2004 | Conduit LP | Limited Partnership | 0% |
ESP 2004 | General Partner Limited Partnership | Limited Partnership | 0% |
ESP 2006 | Co Investment Limited Partnership | Limited Partnership | 0% |
ESP 2006 | Conduit LP | Limited Partnership | 0% |
ESP 2006 | General Partner Limited Partnership | Limited Partnership | 5% |
ESP 2008 | Conduit LP | Limited Partnership | 0% |
ESP 2008 | Executive Co Investment Limited Partnership | Limited Partnership | 0% |
ESP 2008 | General Partner Limited Partnership | Limited Partnership | 0% |
ESP CPPIB European Mid Market Fund | Limited Partnership | 1% | |
ESP General Partner Limited Partnership | Limited Partnership | 0% | |
ESP Golden Bear Europe Fund | Limited Partnership | 3% | |
ESP Golden Bear General Partner Limited Partnership | Limited Partnership | 0% | |
ESP II Co Investment Limited Partnership | Limited Partnership | 0% | |
ESP II Conduit LP | Limited Partnership | 0% | |
ESP II General Partner Limited Partnership | Limited Partnership | 0% | |
ESP Tidal Reach General Partner Limited Partnership | Limited Partnership | 20% | |
ESP Tidal Reach LP | Limited Partnership | 1% | |
European Strategic Partners | Limited Partnership | 0% | |
European Strategic Partners - I LP 55 | Limited Partnership | 0% | |
European Strategic Partners 2004 ‘A’ | Limited Partnership | 0% | |
European Strategic Partners 2004 ‘B’ | Limited Partnership | 0% | |
European Strategic Partners 2006 ‘A’ | Limited Partnership | 0% | |
European Strategic Partners 2006 ‘B’ | Limited Partnership | 0% | |
European Strategic Partners 2008 ‘A’ | Limited Partnership | 0% | |
European Strategic Partners 2008 ‘B’ | Limited Partnership | 0% | |
European Strategic Partners II ‘A’ | Limited Partnership | 0% | |
European Strategic Partners II ‘B’ | Limited Partnership | 0% | |
European Strategic Partners II ‘C’ | Limited Partnership | 0% | |
European Strategic Partners II ‘D’ | Limited Partnership | 0% | |
European Strategic Partners II ‘E’ | Limited Partnership | 0% | |
European Strategic Partners Scottish ‘B’ | Limited Partnership | 0% | |
European Strategic Partners Scottish ‘C’ | Limited Partnership | 0% | |
| Finimize Limited | Ordinary shares | 100% | |
| Flag Asia Company III, LLC | Limited liability company | 100% | |
| Flag Asia Company III, LP | Limited Partnership | 0% | |
| Flag Energy & Resource Company II, LLC | Limited liability company | 0% | |
| Flag Energy & Resource Company III, LLC | Limited liability company | 0% | |
| Flag Real Assets Company LLC | Limited liability company | 0% | |
| Flag Real Asset Company, LP | Limited Partnership | 0% | |
| Flag Real Estate Company II, LLC | Limited liability company | 0% | |
Flag Real Estate Company III, LLC 13 | Limited liability company | 0% |
266 abrdn.com Annual report 2023
Group financial statements continued
N | |||
267abrdn.comAnnual report 2023
FINANCIAL INFORMATION
Name of related undertaking | Share class | % interest held |
| SL Capital Infrastructure II SCSp | Limited Partnership | 1% |
SL Capital Infrastructure Secondary I GP LP | Limited Partnership | 25% |
SL Capital Infrastructure Secondary I LP | Limited Partnership | 0% |
SL Capital Infrastructure Secondary II LP | Limited Partnership | 0% |
SL Capital NASF I A LP | Limited Partnership | 2% |
SL Capital NASF I Carry LP | Limited Partnership | 0% |
SL Capital NASF I GP LP | Limited Partnership | 0% |
| SL Capital NASF I LP | Limited Partnership | 0% |
SL Capital Pearl Private Equity GP LP | Limited Partnership | 0% |
SL Capital Pearl Strategic Credit GP LP | Limited Partnership | 1% |
SL Capital SOF I Feeder LP | Limited Partnership | 0% |
SL Capital SOF II Feeder LP | Limited Partnership | 1% |
SL Capital SOF III Feeder LP | Limited Partnership | 0% |
SL Capital SOF I GP LP | Limited Partnership | 0% |
SL Capital SOF II GP LP | Limited Partnership | 0% |
SL Capital SOF III GP LP | Limited Partnership | 0% |
SL Capital SOF I LP | Limited Partnership | 0% |
SL Capital SOF II LP | Limited Partnership | 0% |
SL Capital SOF III LP | Limited Partnership | 0% |
SLC EC I Executive Co Investment Limited Partnership | Limited Partnership | 0% |
SLCI I Executive Co Investment Limited Partnership | Limited Partnership | 0% |
SLCI II Executive Co-Investment LP | Limited Partnership | 0% |
SLCI Rail Co-Invest LP | Limited Partnership | 0% |
SLCP (Founder Partner Ignis Private Equity) Limited | Ordinary shares | 100% |
SLCP (Founder Partner Ignis Strategic Credit) Limited | Ordinary shares | 100% |
SLCP (General Partner) Limited | Ordinary shares | 100% |
SLCP (General Partner II) Limited | Ordinary shares | 100% |
SLCP (General Partner 2016 Co-investment) Limited | Ordinary shares | 100% |
SLCP (General Partner CPP) Limited | Ordinary shares | 100% |
SLCP (General Partner EC) Limited | Ordinary shares | 100% |
SLCP (General Partner ESF I) Limited | Ordinary shares | 100% |
SLCP (General Partner ESP 2004) Limited | Ordinary shares | 100% |
SLCP (General Partner ESP 2006) Limited | Ordinary shares | 100% |
SLCP (General Partner ESP 2008) Limited | Ordinary shares | 100% |
SLCP (General Partner ESP CAL) Limited | Ordinary shares | 100% |
SLCP (General Partner Infrastructure I) Limited | Ordinary shares | 100% |
SLCP (General Partner Infrastructure Secondary I) Limited | Ordinary shares | 100% |
SLCP (General Partner NASF I) Limited | Ordinary shares | 100% |
SLCP (General Partner NASP 2006) Limited | Ordinary shares | 100% |
SLCP (General Partner NASP 2008) Limited | Ordinary shares | 100% |
SLCP (General Partner Pearl Private Equity) Limited | Ordinary shares | 100% |
SLCP (General Partner Pearl Strategic Credit) Limited | Ordinary shares | 100% |
SLCP (General Partner SOF I) Limited | Ordinary shares | 100% |
SLCP (General Partner SOF II) Limited | Ordinary shares | 100% |
SLCP (General Partner SOF III) Limited | Ordinary shares | 100% |
SLCP (General Partner Tidal Reach) Limited | Ordinary shares | 100% |
SLCP (General Partner USA) Limited | Ordinary shares | 100% |
SLIPC (General Partner Infrastructure II LTP 2017) Limited | Ordinary shares | 100% |
| SLIPC (General Partner Infrastructure II) S.a.r.l. | Ordinary shares | 100% |
| SLIPC (General Partner Infrastructure III) S.a.r.l. | Ordinary shares | 100% |
SLTM Limited | Ordinary shares | 100% |
SOF I Executive Co Investment Limited Partnership | Limited Partnership | 0% |
SOF II Executive Co Investment Limited Partnership | Limited Partnership | 0% |
SOF III Executive Co Investment Limited Partnership | Limited Partnership | 0% |
SOF IV Carry LP | Limited Partnership | 25% |
SOF IV Executive Co Investment Limited Partnership | Limited Partnership | 0% |
| Squadron Asia Pacific Fund, LP | Limited Partnership | 0% |
268 abrdn.com Annual report 2023
Group financial statements continued
Name of related undertaking | Share class | % interest held |
| Squadron Asia Pacific Fund II, LP | Limited Partnership | 0% |
Squadron Capital Asia Pacific GP, LP 12 | Limited Partnership | 100% |
Squadron Capital Asia Pacific II GP LP 12 | Limited Partnership | 100% |
Squadron Capital Partners Limited 12 | Ordinary shares | 100% |
Squadron GP Participation, LP 12 | Limited Partnership | 0% |
| Squadron GP Participation II, LP | Limited Partnership | 0% |
Standard Life Investments Brent Cross General Partner Limited | Ordinary shares | 100% |
Standard Life investments Brent Cross LP | Limited Partnership | 0% |
Standard Life Investments European Real Estate Club II LP 3 | Limited Partnership | 1% |
Standard Life Investments European Real Estate Club III LP 3 | Limited Partnership | 2% |
Standard Life Investments (General Partner European Real Estate Club) Limited 3 | Ordinary shares | 100% |
Standard Life Investments (General Partner European Real Estate Club II) Limited 3 | Ordinary shares | 100% |
| Standard Life Investments (General Partner European Real Estate Club III) Limited | Ordinary shares | 100% |
Standard Life Investments (General Partner GARS) Limited | Ordinary shares | 100% |
Standard Life Investments (General Partner GFS) Limited | Ordinary shares | 100% |
Standard Life Investments (General Partner Global Tactical Asset Allocation) Limited | Ordinary shares | 100% |
Standard Life Investments (General Partner MAC) Limited | Ordinary shares | 100% |
Tenon Nominees Limited 4 | Ordinary shares | 100% |
The Share Centre (Administration Services) Ltd 7 | Ordinary shares | 100% |
| The Share Centre Limited | Ordinary shares | 100% |
| Touchstone Insurance Company Limited | Ordinary shares | 100% |
TPIF (No. 1) GP LLP 60 | Limited Liability | 60% |
| Partnership | ||
TPIF (No. 1) LP 60 | Limited Partnership | 0% |
TPIF (Portfolio No. 1) GP LLP 53 | Limited Liability | 60% |
| Partnership | ||
| TPIF (Portfolio No. 1) LP | Limited Partnership | 0% |
| TPIF (Portfolio No. 1) Nominee Limited | Ordinary shares | 60% |
| Tritax abrdn Supply Chain Carry GP LLP | Limited Liability | 60% |
| Partnership | ||
| Tritax abrdn Supply Chain Carry LP | Limited Partnership | 0% |
| Tritax abrdn Supply Chain GP LLP | Limited Liability | 60% |
| Partnership | ||
Tritax abrdn Supply Chain LP 54 | Limited Partnership | 0% |
Tritax Assets LLP 53 | Limited Liability | 60% |
| Partnership | ||
Tritax LMR Carry GP LLP 60 | Limited Liability | 60% |
| Partnership | ||
| Tritax LMR Carry Limited Partnership | Limited Partnership | 7% |
| Tritax Management LLP | Limited Liability | 60% |
| Partnership | ||
| Tritax PowerBox Limited | Ordinary shares | 60% |
| Tritax Securities LLP | Limited Liability | 60% |
| Partnership | ||
UK PRS Opportunities General Partner Limited 3 | Ordinary shares | 100% |
UK PRS Opportunities LP 3 | Limited Partnership | 0% |
| VZWL Bestandsimmobilien GmbH & Co geschlossene Investment KG | Limited Partnership | 0% |
VZWL Private Equity GmbH & Co geschlossene Investment KG 36 | Limited Partnership | 0% |
269abrdn.comAnnual report 2023
FINANCIAL INFORMATION
Name of related undertaking | Share class | % interest held |
| abrdn Investcorp Infrastructure Investments Manager Limited | Ordinary shares | 50% |
abrdn SICAV I - Short Dated Enhanced Income Fund 10 | SICAV | 25% |
| Archax Holdings Limited | Ordinary shares | 11% |
| Criterion Tec Holdings Ltd | Ordinary shares | 21% |
| Heng An Standard Life Insurance Company Limited | Ordinary shares | 50% |
| PURetail Luxembourg Management Company S.a.r.l. | Class A shares | 50% |
| Tenet Group Limited | Ordinary B shares | 25% |
| Virgin Money Unit Trust Managers Limited | Ordinary shares | 50% |
270 abrdn.com Annual report 2023
Group financial statements continued
271abrdn.comAnnual report 2023
FINANCIAL INFORMATION
Company financial statements
Company statement of financial position
As at 31 December 2023
2023 2022
Notes £m £m
Assets
Investments in subsidiaries A 4,402 4,482
Investments in associates and joint ventures B 196 196
Deferred tax assets N 150 143
Loans to subsidiaries C – 110
Derivative financial assets C 41 85
Equity securities and interests in pooled investment funds C 574 709
Debt securities C 126 211
Receivables and other financial assets C 46 48
Other assets F 47 48
Cash and cash equivalents C 21 27
Total assets 5,603 6,059
Liabilities
Subordinated liabilities L 599 621
Current tax liabilities N 1 –
Derivative financial liabilities D – 1
Other financial liabilities L 166 272
Provisions P – 33
Total liabilities 766 927
Equity
Share capital G 257 280
Shares held by trusts H (137) (145)
Share premium reserve G 640 640
Retained earnings I
Brought forward retained earnings 3,665 3,301
Profit/(loss) for the year attributable to equity shareholders of abrdn plc
1
300
(402)
Other movements in retained earnings (418) 766
Total retained earnings 3,547 3,665
Other reserves J 323 485
Equity attributable to equity shareholders of abrdn plc 4,630 4,925
Other equity K 207 207
Total equity 4,837 5,132
Total equity and liabilities 5,603 6,059
1. The Company’s total profit for the year was £311m (2022: loss of £391m) of which a profit of £11m was attributable to other equity holders (2022: profit of
£11m).
The financial statements on pages 271 to 285 were approved by the Board and signed on its behalf by the following
Directors:
Sir Douglas Flint Jason Windsor
Chairman
26 February 2024
Chief Financial Officer
26 February 2024
Company registered number: SC286832
The Notes on pages 274 to 285 are an integral part of these financial statements.
272 abrdn.com Annual report 2023
Company financial statements continued
Company statement of changes in equity
For the year ended 31 December 2023
Share capital
Shares held by
trusts
Share
premium
reserve
Retained
earnings
Other
reserves
Total equity
attributable to
equity
shareholders
of abrdn plc Other equity Total equity
Notes £m £m £m £m £m £m £m £m
1 January 2023 280 (145) 640 3,665 485 4,925 207 5,132
Profit for the year – – – 300 – 300 11 311
Other comprehensive
income for the year – – – – (9) (9) – (9)
Total comprehensive income
for the year
– – – 300 (9) 291 11 302
Interest paid on other equity K – – – – – – (11) (11)
Dividends paid on ordinary
shares I – – – (279) – (279) – (279)
Share buyback G (23) – – (302) 23 (302) – (302)
Reserves credit for employee
share-based payment J – – – – 24 24 – 24
Transfer to retained earnings
for vested employee share-
based payment J – – – 31 (31) – – –
Transfer between reserves
on impairment of subsidiaries
J – – – 169 (169) – – –
Shares acquired by
employee trusts H – (27) – – – (27) – (27)
Shares distributed by
employee and other trusts
and related dividend
equivalents H – 35 – (37) – (2) – (2)
31 December 2023 257 (137) 640 3,547 323 4,630 207 4,837
The Notes on pages 274 to 285 are an integral part of these financial statements.
273abrdn.comAnnual report 2023
FINANCIAL INFORMATION
Share capital
Shares held
by trusts
Share
premium
reserve
Retained
earnings
Other
reserves
Total equity
attributable
to equity
shareholders
of abrdn plc Other equity Total equity
Notes £m £m £m £m £m £m £m £m
1 January 2022 305 (167) 640 3,301 1,856 5,935 207 6,142
Loss for the year – – – (402) – (402) 11 (391)
Other comprehensive
income for the year
– – – – 5 5 – 5
Total comprehensive income
for the year – – – (402) 5 (397) 11 (386)
Interest paid on other equity K – – – – – – (11) (11)
Dividends paid on ordinary
shares I – – – (307) – (307) – (307)
Share buyback G (25) – – (302) 25 (302) – (302)
Cancellation of the capital
redemption reserve
J – – – 1,059 (1,059) – – –
Reserves credit for employee
share-based payment J – – – – 24 24 – 24
Transfer to retained earnings
for vested employee share-
based payment J – – – 63 (63) – – –
Transfer between reserves
on disposal of subsidiaries
J – – – 1 (1) – – –
Transfer between reserves
on impairment of subsidiaries J – – – 302 (302) – – –
Shares acquired by
employee trusts H – (46) – – – (46) – (46)
Shares distributed by
employee and other trusts
and related dividend
equivalents
H – 68 – (69) – (1) – (1)
Other movements I – – – 19 – 19 – 19
31 December 2022 280 (145) 640 3,665 485 4,925 207 5,132
The Notes on pages 274 to 285 are an integral part of these financial statements.
274 abrdn.com Annual report 2023
Company financial statements continued
Company accounting policies
(a) Basis of preparation
These separate financial statements are presented as required by the Companies Act 2006. The Company meets the
definition of a qualifying entity under Application of Financial Reporting Requirements 100 as issued by the Financial
Reporting Council. Accordingly, the financial statements for period ended 31 December 2023 have been prepared in
accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) as issued by the Financial
Reporting Council.
The financial statements have been prepared on a going concern basis (see the Basis of preparation section of the Group
financial statements for further details) and under the historical cost convention, as modified by the revaluation of financial
assets and financial liabilities (including derivative instruments) at fair value through profit or loss (FVTPL). Climate risks have
been taken into consideration in the preparation of the financial statements, primarily in relation to fair value calculations
and impairment assessments.
As permitted by FRS 101, the Company has taken advantage of the following disclosure exemptions available under that
standard:
– A cash flow statement and related notes.
– Capital management.
– Effect of IFRSs issued but not effective.
– Related party transactions with wholly owned subsidiaries.
As equivalent disclosures are given in the consolidated financial statements, we have also applied the disclosure
exemptions for share based payments, financial instruments and OECD Pillar Two legislation enacted or substantively
enacted but not yet effective.
The principal accounting policies adopted are the same as those given in the consolidated financial statements, together
with the Company specific policies set out below. These accounting policies have been consistently applied to all financial
reporting periods presented in these financial statements.
The Company has taken advantage of the exemption in section 408 of the Companies Act 2006 not to present its own
statement of comprehensive income in these financial statements. The auditors’ remuneration for audit and other services
is disclosed in Note 7 to the consolidated financial statements. The Company has no employees.
(i) Investment in subsidiaries, associates and joint ventures
The Company has certain subsidiaries which are investment vehicles such as open-ended investment companies, unit
trusts and limited partnerships whose primary function is to generate capital or income growth through holding
investments. This category of subsidiary is held at FVTPL since they are managed on a fair value basis.
Investments in subsidiaries (other than those measured at FVTPL), associates (other than those measured at FVTPL) and
joint ventures are initially recognised at cost and subsequently held at cost less any impairment charge. An impairment
charge is recognised when the carrying amount of the investment exceeds its recoverable amount. Any gain or loss on
disposal of a subsidiary, associate or joint venture is recognised in profit for the year.
Distributions received of non-cash assets, including investments in subsidiaries, are recognised at fair value in the balance
sheet and as dividends in specie in income or other comprehensive income as appropriate in the statement of
comprehensive income.
275abrdn.comAnnual report 2023
FINANCIAL INFORMATION
(ii) Critical accounting estimates and judgements in applying accounting policies
The preparation of financial statements requires management to make estimates and assumptions and exercise
judgements in applying the accounting policies that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses arising during the year. Estimates and
judgements are continually evaluated and based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.
The areas where judgements have the most significant effect on the amounts recognised in the Company financial
statements are as follows:
Financial statement area Critical judgements in applying accounting policies Related notes
Investments in subsidiaries held at cost Given that the net assets attributable to
shareholders of abrdn plc at 31 December
2023 were higher than the market
capitalisation of the Company judgement was
required to determine for which subsidiaries
this was considered an indicator of impairment
Note A
The areas where assumptions and other sources of estimation uncertainty at the end of the reporting period have a
significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial
year are as follows:
Financial statement area Critical accounting estimates and assumptions Related notes
Investments in subsidiaries held at cost Determination of the recoverable amount Note A
276 abrdn.com Annual report 2023
Company financial statements continued
Notes to the Company financial statements
A. Investments in subsidiaries
Investments in subsidiaries
measured at cost
Investments in subsidiaries
measured at FVTPL Total
£m £m £m
Cost
At 1 January 2022 8,523 1,328 9,851
Acquisition of subsidiaries
1
1,519 2 1,521
Disposal of subsidiaries (1,450) (1,159) (2,609)
Gains/(losses) on subsidiaries at FVTPL
– (1) (1)
At 31 December 2022
8,592 170 8,762
Acquisition of subsidiaries
1
40 180 220
Disposal of subsidiaries - (9) (9)
Gains/(losses) on subsidiaries at FVTPL
- - -
At 31 December 2023
8,632 341 8,973
Impairment
At 1 January 2022 (4,786) – (4,786)
Impairment of subsidiaries measured at cost
(927) – (927)
Disposal of subsidiaries measured at cost 1,433 – 1,433
At 31 December 2022
(4,280) – (4,280)
Impairment of subsidiaries measured at cost (304) - (304)
Reversal of impairment of subsidiaries measured
at cost
13 - 13
At 31 December 2023
(4,571) - (4,571)
Carrying amount
At 1 January 2022 3,737 1,328 5,065
At 31 December 2022
4,312 170 4,482
At 31 December 2023
4,061 341 4,402
1. Includes investment into existing subsidiaries measured at cost of £40m (2022: £139m).
Details of the Company’s subsidiaries are given in Note 44 of the Group financial statements.
(a) Acquisitions
During 2023, the Company made the following acquisitions of subsidiaries measured at cost:
– The Company increased its investment in Aberdeen Corporate Services Limited (ACSL) through the purchase of
26,278 ordinary shares for a cash consideration of £26.3m.
– The Company increased its investment in abrdn Financial Planning Limited (aFPL) through the purchase of 12,150,000
ordinary shares for a cash consideration of £12.2m.
– The Company increased its investment in abrdn Client Management Limited (aCM) through the purchase of 1,500,000
ordinary shares for a cash consideration of £1.5m.
During 2022, the Company made the following acquisitions of subsidiaries measured at cost:
– The Company acquired 100% of the issued share capital of Antler Holdco Limited (Antler), the parent company for the
interactive investor (ii) group of companies for a cash consideration of £1,380.2m. Further details are provided in Note
1(b)(ii) of the Group financial statements. The Company’s consideration was lower than the £1,485m cash
consideration recognised in the Group financial statements as it did not include funding of £118.8m provided to Antler
to facilitate the acquisition of minority interests in Interactive Investor Limited (IIL) prior to the acquisition of Antler. The
Company’s consideration included transaction costs of £14m which were included in Restructuring and corporate
transaction expenses in the Group Consolidated income statement.
– The Company subsequently increased its investment in Antler by £139.2m through the purchase of 139,163,986
ordinary shares.
– The Company then acquired IIL via a dividend in specie from Antler and recognised IIL at an amount of £1,512m, with
the carrying value of Antler reduced correspondingly to £7m and therefore no impact on investment in subsidiaries in
the Company Statement of financial position. The dividend in specie was recognised at £nil in the Company’s total
comprehensive income for the year due to the reduction in the Antler carrying value.
See Section (d) below for details on investments in subsidiaries at FVTPL.
277abrdn.comAnnual report 2023
FINANCIAL INFORMATION
(b) Disposals
During 2022, the Company made the following disposals of subsidiaries measured at cost:
– Standard Life Oversea Holding (SLOH) was liquidated. Prior to liquidation, the carrying value of the Company’s interest
in SLOH was £18m and the Company received final liquidation proceeds of £20m in the form of a distribution in specie
of its intercompany balance due to SLOH. Refer Note J for details of the transfer from the merger reserve to retained
earnings in relation to the disposal of SLOH.
(c) Impairment
The Company’s net assets attributable to shareholders of abrdn plc at 31 December 2023 of £4.6bn are higher than the
Company’s market capitalisation of £3.3bn. Taking this into account along with the continued headwinds facing active
asset managers, it was assessed that there were indicators of impairments in relation to the Company’s asset
management holding companies, abrdn Investment Holdings Limited (aIHL) and abrdn Holdings Limited (aHL). aIHL had
also paid up significant dividends in 2023 following the sale of abrdn Capital Limited and the sale of its subsidiary’s holding in
HDFC Asset Management. Following the performance of valuation exercises, impairments of aIHL and aHL of £169m and
£40m respectively have been recognised.
Indicators of impairment were also identified in relation to abrdn Financial Planning Limited (aFPL). The goodwill relating to
aFPL had been impaired at the consolidated level at 30 June 2023. Following the performance of the valuation which also
supported the assessment of goodwill above, an impairment of the Company carrying value of £52m has been
recognised.
No other indicators of impairment were identified on any material investment in subsidiaries including IIL for which
illustrative sensitivities have been provided below.
Indicators of reversal of impairment have also been considered and a reversal of impairment of £13m has been
recognised in relation to Aberdeen Corporate Services Limited.
aIHL
The Company’s investment in its subsidiary aIHL was impaired during 2023 by £169m (2022: £51m). The impairment
primarily resulted from the payment of dividends from aIHL to the Company following the sale of its interest in HDFC Asset
Management held by its subsidiary, abrdn Investment Management Limited and abrdn Capital Limited (aCL) (refer Note
21 of the Group financial statements) during the year.
The recoverable amount of aIHL which is its FVLCD at 31 December 2023 was £819m. The FVLCD considered a number of
valuation approaches, with the primary approach based on the net assets of aIHL and its subsidiaries excluding those held
for sale as part of the proposed sale of the European-headquartered Private Equity business. The recoverable amount also
included the valuation of European-headquartered Private Equity business which was based on an estimated price from
the current sale process (refer Note 21 of the Group financial statements). This is a level 3 measurement as they are
measured using inputs which are not based on observable market data.
As the year end carrying values are the recoverable amount, any downside sensitivity will lead to a further future
impairment loss. As the primary approach was net assets as set out above, the valuation is not considered sensitive to
significant change. However, a 20% reduction in the net assets of aIHL and its subsidiaries excluding those held for sale as
part of the proposed sale of the European-headquartered Private Equity business would result in a further impairment of
£147m.
The Company’s investment in aIHL was also impaired during 2022 by £51m. The impairment primarily resulted from lower
future revenue projections and further work being required to reduce Investments costs given this level of revenue along
with the impact of dividends paid to the Company during 2022 and fair value movements relating to the interest in HDFC
Asset Management.
The recoverable amount of aIHL which was its FVLCD at 31 December 2022 was £988m. The FVLCD considered a number
of valuation approaches, with the primary approach being a discounted cash flow approach. The recoverable amount for
aIHL also included the value of its subsidiaries not included in the discounted cash flow valuation. These primarily included
aCL. The valuation of aCL was based on FVLCD and was based on an estimated sale price at 31 December 2022. The
recoverable amount also included the fair value of the interest in HDFC Asset Management at this date.
aHL
The Company’s investment in its subsidiary aHL was impaired during 2023 by £40m (2022: £847m). The impairment
primarily resulted from lower future cash flow projections reflecting the continued headwinds facing active asset
managers noted above.
278 abrdn.com Annual report 2023
Company financial statements continued
The recoverable amount of aHL which is its FVLCD at 31 December 2023 was £1,218m. The recoverable amount was
based on FVLCD. The FVLCD considered a number of valuation approaches, applied to the elements of aHL’s business as
appropriate. The primary approach was discounted cash flow with cash flows which were based on the three year
financial budgets approved by management split by region. Revenue in the management forecasts reflects past
experience and modelling based on assets under management and fee revenue yields by asset class. Assets under
management is modelled from future net flow assumptions and market movements. Expenses in the management
forecasts were based on past experience adjusted for planned expense savings and inflation impacts.
Cash flow projections were extrapolated using a 5% revenue growth and 2% increase in expenses in years 4 and 5, and
then a 1.9% terminal rate profit growth based on long-term inflation forecasts. Post tax discount rates of between 13.35%
and 14.60% were used based on the peer companies cost of equity adjusted for forecasting risk and relative size. However,
where the net assets of a significant element of aHL’s business were higher, the valuation included the net asset value
rather than the discounted cash flow value. The recoverable amount for aHL also included the value of its subsidiaries,
associates and joint ventures not included in the discounted cash flow valuation. These primarily include Finimize Limited,
Archax Holdings Limited and Virgin Money UTM. This is a level 3 measurement as they are measured using inputs which are
not based on observable market data.
As the year end carrying values are the recoverable amount, any downside sensitivity will lead to a further future
impairment loss. As noted above, net assets are not considered sensitive to significant change. However, earnings and the
discount rate are more subject to change and the table below gives sensitivities for the carrying amount of aHL at 31
December 2023 in relation to these assumptions.
Impact on carrying amount at 31 December 2023 £m
25% reduction in forecast post tax adjusted earnings
(170)
2% increase in the post-tax discount rate
(109)
The Company’s investment in its subsidiary aHL was impaired during 2022 by £847m. The impairment in 2022 resulted
from lower future revenue projections and further work being required to reduce Investments cost savings given this level
of revenue.
The recoverable amount of aHL which was its FVLCD at 31 December 2022 was £1,258m. As with aIHL above, the FVLCD
considered a number of valuation approaches, with the primary approach being a discounted cash flow approach. As
above, the recoverable amount for aHL also included the value of its subsidiaries, associates and joint ventures not included
in the discounted cash flow valuation.
aFPL
The Company’s investment in its subsidiary aFPL was impaired during 2023 by £52m (2022: £25m). The impairment
resulted from lower projected revenues as a result of lower markets and macroeconomic conditions and the impact of
business restructuring.
The recoverable amount of aFPL which is its FVLCD at 31 December 2023 was £45m (2022: £85m). The recoverable
amount was determined at 31 December 2023. The FVLCD considered a number of valuation approaches, with the
primary approach being a multiples approach based on price to revenue and price to assets under advice (AUAdv).
Multiples were based on trading multiples for aFPL’s peer companies, adjusted to take into account profitability where
appropriate, and were benchmarked against recent transactions. Revenue was based on actual 2023 and forecast 2024
revenue and AUAdv were based on forecast 2024 AUAdv. The expected cost of disposal was based on past experience of
previous transactions. This is a level 3 measurement as they are measured using inputs which are not based on observable
market data.
As the year end carrying value is the recoverable amount, any downside sensitivity will lead to a further future impairment
loss. A 20% reduction in recurring revenue and AUAdv would result in a further impairment of £11m. A 20% reduction in
multiples would result in a further impairment of £11m.
The recoverable amount of aFPL at 31 December 2022 of £85m was also based on FVLCD which similarly considered a
number of valuation approaches, with the primary approach also being a multiples approach based on price to revenue
and price to AUAdv.
aCM
The carrying amount of the Company’s investment in aCM is £1.5m (2022: £nil). No impairment of aCM has been
recognised in 2023. The Company’s investment in its subsidiary aCM was impaired during 2022 by £4m. The impairment
resulted from the payment of a dividend from aCM to the Company.
279abrdn.comAnnual report 2023
FINANCIAL INFORMATION
abrdn (Mauritius Holdings) 2006 Limited (aMH06)
The Company’s investment in its subsidiary aMH06 was impaired during 2023 by £43m (2022: £nil). The impairment
resulted from the payment of dividends from aMH06 to the Company in 2023. These dividends primarily related to the sale
of aMH06’s final investment in HDFC Life (refer Note 11 of the Group financial statements for further details). Following the
payment of the dividends, the recoverable amount of aMH06 was less than £1m.
IIL
The carrying amount of the Company’s investment in IIL is £1,512m (2022: £1,512m). No impairment was recognised on
the Company’s investment in IIL in 2023 and there were no indicators of impairment at 31 December 2023.
The recoverable amount of IIL was determined at 31 December 2023 based on FVLCD and used the same approach and
key assumptions as used in the impairment review for interactive investor goodwill set out in Note 13 of the Group financial
statements. The basis for sensitivities of key assumptions is also set out in Note 13 of the Group financial statements. The
impact of these illustrative sensitivities on the carrying amount of IIL at 31 December 2023 is as follows:
Impact on carrying amount at 31 December 2023 £m
20% reduction in forecast post tax adjusted earnings
(106)
25% reduction in market multiple (192)
ACSL
At 31 December 2023, the Company has recognised a reversal of impairment in its investments in subsidiaries of £13m
(2022: £nil). The Company’s investment in ACSL had previously been impaired by £13m in the year ended 31 December
2017. Following the reversal of the impairment, the carrying value of ACSL is £102m (2022: £62m). Refer Section (a) for
details of the capital injections during the year.
On 1 August 2023, the Court of Session confirmed that any residual surplus assets that remain after all plan-related
obligations of the Group’s main defined benefit plan, the abrdn UK Group (SLSPS) plan, are settled or otherwise provided
for would be available to ACSL as sponsoring employer (see Note 31 of the Group financial statements for further details).
Following this confirmation, the Directors of the Company have assessed that it is now appropriate to consider ACSL’s
pension scheme asset in determining the recoverable amount of ACSL. The recoverable amount for ACSL has been
assessed based on the net assets of ACSL at 31 December 2023 which were £733m including a defined benefit asset of
£734m. This value of £734m was determined on an IAS 19 basis net of an authorised surplus payments charge of 35%. The
residual surplus assets that ACSL would realise would be significantly lower than this surplus as would be expected
following a buy-out transaction. However, even allowing for a prudent haircut to the net assets for this, the net assets of
ACSL would still be significantly in excess of ACSL’s carrying value before any reversal of impairment of £13m and the
reversal of impairment has been recognised. This is a level 3 assessment as it is measured using inputs which are not based
on observable market data.
(d) Investments in subsidiaries at FVTPL
Investments in subsidiaries at FVTPL, valued at £341m (2022: £170m), relate to holdings in funds over which the Company
has control.
280 abrdn.com Annual report 2023
Company financial statements continued
B. Investments in associates and joint ventures
2023 2022
£m £m
Investment in associates measured at cost – –
Investment in joint venture measured at cost 196 196
Investments in associates and joint ventures 196 196
(a) Investment in associates
The Company has an interest of 25.3% (2022: 25.3%) in Tenet Group Limited (Tenet), a company incorporated in England
and Wales which is measured at cost less impairment. The carrying amount of the Company’s investment in Tenet is £nil.
(2022: £nil).
There were no capital contributions or impairments in relation to Tenet during the year ended 31 December 2023. During
the year ended 31 December 2022, the Company increased its interest in Tenet by £3.8m. The Company also recognised
an impairment of £14m in its interest during 2022.
(b) Investment in joint ventures
The Company has a 50% (2022: 50%) interest in Heng An Standard Life Insurance Company Limited (HASL), a company
incorporated in China. Further details on this joint venture are provided in Note 14 of the Group financial statements.
C. Financial investments
Fair value through
profit or loss
Derivative financial
instruments used for hedging Amortised cost Total
2023 2022 2023 2022 2023 2022 2023 2022
Notes £m £m £m £m £m £m £m £m
Investments in subsidiaries
measured at FVTPL A 341
170 –
– –
– 341
170
Loan to subsidiaries – – – – – 110 – 110
Derivative financial assets D – – 41 85 – – 41 85
Equity securities and interests
in pooled investment funds
574
709
–
–
–
–
574
709
Debt securities 1 1 – – 125 210 126 211
Receivables and other
financial assets E –
– –
– 46
48 46
48
Cash and cash equivalents – – – – 21 27 21 27
Total 916 880 41 85 192 395 1,149 1,360
The amount of debt securities expected to be recovered or settled after more than 12 months is £1m (2022: £1m). The
amount of loans to subsidiaries expected to be recovered or settled after more than 12 months is £nil (2022: £110m). The
amount of equity securities and interests in pooled investment funds expected to be recovered or settled after more than
12 months is £574m (2022: £25m).
Under IFRS 9 the Company calculates expected credit losses (ECL) on financial assets which are measured at amortised
cost (refer to Note 34 (c) of the Group financial statements), including loans to subsidiaries (which are unrated). At
31 December 2023 the Company does not hold financial assets at amortised cost that it regards as credit-impaired or for
which it considers the probability of default would result in material expected credit losses. The expected credit losses
recognised were less than £1m (2022: less than £1m). In making this assessment the Company has considered if any
evidence is available to indicate the occurrence of an event which would result in a detrimental impact on the estimated
future cash flows of these assets.
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FINANCIAL INFORMATION
D. Derivative financial instruments
The Company uses derivative financial instruments in order to reduce the risk from potential movements in foreign
exchange rates.
2023 2022
Contract
amount
Fair value
assets
Fair value
liabilities
Contract
amount
Fair value
assets
Fair value
liabilities
£m £m £m £m £m £m
Cash flow hedges 588 41 – 623 85 –
Foreign exchange forwards 40 – – 48 – 1
Derivative financial instruments 628 41 – 671 85 1
The derivative asset of £41m (2022: derivative asset of £85m) is expected to be settled after more than 12 months.
On 18 October 2017, the Company issued subordinated notes with a principal amount of US $750m. In order to manage
the foreign exchange risk relating to the principal and coupons payable on these notes the Company entered into
a cross-currency swap which is designated as a hedge of future cash flows.
The maturity profile of the contractual undiscounted cash flows in relation to derivative financial instruments is as follows:
Within
1 year
2-5
years
6-10
years Total
2023 2022 2023 2022 2023 2022 2023 2022
£m £m £m £m £m £m £m £m
Cash inflows
Cash flow hedges 25 26 676 106 – 637 701 769
Foreign exchange forwards 40 47 – – – – 40 47
Total 65 73 676 106 – 637 741 816
Cash outflows
Cash flow hedges (18) (18) (632) (91) – (578) (650) (687)
Foreign exchange forwards (40) (48) – – – – (40) (48)
Total (58) (66) (632) (91) – (578) (690) (735)
Net derivative financial
instruments cash flows 7
7 44
15 –
59 51
81
E. Receivables and other financial assets
2023 2022
£m £m
Amounts due from related parties 43 45
Other financial assets 3 3
Total receivables and other financial assets 46 48
The carrying amounts disclosed above reasonably approximate the fair values at the year end.
Receivables and other financial assets of £nil (2022: £nil) are expected to be recovered after more than 12 months.
F. Other assets
2023 2022
£m £m
Prepayments 23 43
Other 24 5
Other assets 47 48
The amount of Other assets which are expected to be recovered after more than 12 months is £21m (2022: £20m).
Prepayments of £23m (2022: £43m) relate to the Group’s future purchase of certain products in the Phoenix Group’s
savings business offered through abrdn’s Wrap platform together with the Phoenix Group’s trustee investment plan
business for UK pension scheme clients (refer Note 39(b) of the Group financial statements). Other includes £24m (2022:
£5m) in respect of amounts due from related parties.
282 abrdn.com Annual report 2023
Company financial statements continued
G. Share capital and share premium
Details of the Company’s share capital and share premium are given in Note 24 of the Group financial statements including
details of the share buyback.
H. Shares held by trusts
Shares held by trusts relates to shares in abrdn plc that are held by the abrdn Employee Benefit Trust and the abrdn
Employee Trust (formerly named the Standard Life Employee Trust). Further details of these trusts are provided in Note 25
of the Group financial statements.
I. Retained earnings
Details of the dividends paid on the ordinary shares by the Company are provided in Note 12 of the Group financial
statements. Note 12 also includes information regarding the final dividend proposed by the Directors for the year ended
31 December 2023.
Refer Note J for details of the transfers from the merger reserve to retained earnings during the year ended 31 December
2023 and from the capital redemption reserve and the merger reserve to retained earnings during the year ended 31
December 2022.
Other movements in retained earnings during 2022 include a movement of £19m relating to the interactive investor
employee benefit trust becoming part of the abrdn employee benefit trust sponsored by the Company.
J. Movements in other reserves
The following tables show the movements in other reserves during the year:
Merger reserve
Equity compensation
reserve Special reserve
Capital
redemption
reserve
Cash flow
hedges Total
£m £m £m £m £m £m
At 1 January 2023 275 47 115 25 23 485
Fair value losses on cash flow hedges – – – – (40) (40)
Realised losses on cash flow hedges
transferred to income statement
– – – – 28 28
Share buyback – – – 23 – 23
Reserves credit for employee share-based
payments – 24 – – – 24
Transfer to retained earnings for vested
employee share-based payments
– (31) – – – (31)
Transfer between reserves on impairment of
subsidiaries (169) – – – – (169)
Tax effect of items that may be reclassified
subsequently to profit or loss – – – – 3 3
At 31 December 2023 106 40 115 48 14 323
283abrdn.comAnnual report 2023
FINANCIAL INFORMATION
Merger reserve
Equity compensation
reserve
Special reserve
Capital
redemption
reserve
Cash flow
hedges
Total
£m £m £m £m £m £m
At 1 January 2022 578 86 115 1,059 18 1,856
Fair value gains on cash flow hedges – – – – 85 85
Realised gains on cash flow hedges
transferred to income statement – – – – (78) (78)
Share buyback – – – 25 – 25
Cancellation of the capital redemption
reserve – – – (1,059) – (1,059)
Reserves credit for employee share-based
payments – 24 – – – 24
Transfer to retained earnings for vested
employee share-based payments
– (63) – – – (63)
Transfer between reserves on disposal of
subsidiaries (1) – – – – (1)
Transfer between reserves on impairment of
subsidiaries (302) – – – – (302)
Tax effect of items that may be reclassified
subsequently to profit or loss
– – – – (2) (2)
At 31 December 2022 275 47 115 25 23 485
Following the impairment loss recognised in 2023 on the Company’s investment in aIHL, £169m was transferred from the
merger reserve to retained earnings. Following the impairment loss recognised in 2022 on the Company’s investments in
aHL and aIHL, £302m was transferred from the merger reserve to retained earnings. Refer Note A for details of these
impairments.
During 2023, £23m (2022: £25m) was recognised in the capital redemption reserve for the share buyback (refer Note 24 of
the Group financial statements).
On 1 July 2022, the Company’s capital redemption reserve at this date was cancelled in accordance with section 649 of
the Companies Act 2006 resulting in a transfer of £1,059m to retained earnings.
K. Other equity
5.25 % Fixed Rate Reset Perpetual Subordinated Contingent Convertible Notes
In 2021, the Company issued £210m of 5.25% Fixed Rate Reset Perpetual Subordinated Contingent Convertible Notes (the
Notes). The Notes are classified as other equity and were initially recognised at £207m (the proceeds received less
issuance costs of £3m). Refer Note 28 (a) of the Group financial statements for further details.
The profit for the year attributable to other equity was £11m (2022: £11m).
L. Financial liabilities
Designated as at fair value through
profit or loss Amortised cost Total
2023 2022 2023 2022 2023 2022
Notes £m £m £m £m £m £m
Subordinated liabilities M – – 599 621 599 621
Derivative financial liabilities D – 1 – - – 1
Other financial liabilities O 8 14 158 258 166 272
Total 8 15 757 879 765 894
284 abrdn.com Annual report 2023
Company financial statements continued
M. Subordinated liabilities
2023 2022
Principal
amount
Carrying
value
Principal
amount
Carrying
value
Subordinated notes:
4.25% US Dollar fixed rate due 30 June 2028 $750m £599m
$750m £621m
Total subordinated liabilities £599m £621m
The principal amount of the subordinated liabilities is expected to be settled after more than 12 months. The accrued
interest on the subordinated liabilities of £13m (2022: £nil) is expected to be settled within 12 months.
During the year ended 31 December 2022 the Company redeemed its 5.5% Sterling fixed rate notes.
Further information on the subordinated liabilities including the terms and conditions and the redemption is given in Note 30
of the Group financial statements.
N. Taxation
(a) Current tax
Current tax liabilities at 31 December 2023 were £1m (2022: £nil) and are expected to be payable in less than 12 months.
(b) Deferred tax
2023 2022
£m £m
Deferred tax assets 150 143
The amount of deferred tax assets expected to be recovered or settled after more than 12 months are £150m
(2022: £143m).
Recognised deferred tax
2023 2022
£m £m
Deferred tax assets comprise:
Losses carried forward 155 151
Unrealised losses on cash flow hedges – –
Gross deferred tax assets 155 151
Less: Offset against deferred tax liabilities (5) (8)
Deferred tax assets 150 143
Deferred tax liabilities comprise:
Unrealised gains on investments – –
Unrealised gains on cash flow hedges 5 8
Gross deferred tax liabilities 5 8
Less: Offset against deferred tax assets (5) (8)
Deferred tax liabilities – –
Net deferred tax asset at 31 December 150 143
Movements in net deferred tax assets comprise:
At 1 January 143 113
Amounts credited to profit or loss 4 32
Amounts charged to other comprehensive income 3 (2)
At 31 December 150 143
The deferred tax assets and liabilities recognised are in respect of unused tax losses and unrealised gains on cash flow
hedges respectively. The deferred tax assets are recognised to the extent that it is probable that the losses will be capable
of being offset against future taxable profits (refer Note 9(c)(i) of the Group financial statements).
There is no unrecognised deferred tax relating to temporary timing differences associated with investments in subsidiaries,
branches and associates and interests in joint arrangements (2022: none).
Due to uncertainty regarding recoverability, deferred tax assets have not been recognised in respect of capital losses
carried forward of £8m (2022: £nil). UK capital losses can be carried forward indefinitely.
285abrdn.comAnnual report 2023
FINANCIAL INFORMATION
Movements in deferred tax assets and liabilities
Losses carried forward
Unrealised gains on
investments
Unrealised gains or losses on
cash flow hedges Net deferred tax asset
£m £m £m £m
At 1 January 2023 151 – (8) 143
Amounts credited to the income
statement
4 – – 4
Tax on cash flow hedge – – 3 3
At 31 December 2023 155 – (5) 150
Losses carried forward
Unrealised gains on
investments
Unrealised gains or losses on
cash flow hedges Net deferred tax asset
£m £m £m £m
At 1 January 2022
120
(1) (6)
113
Amounts credited to the income
statement 31 1 – 32
Tax on cash flow hedge
– –
(2) (2)
At 31 December 2022
151 –
(8)
143
O. Other financial liabilities
2023 2022
£m £m
Outstanding purchase of investment securities 1 –
Amounts due to related parties 109 161
Collateral held in respect of derivative contracts 39 89
Contingent consideration liability 8 14
Other 9 8
Other financial liabilities 166 272
Other financial liabilities of £5m (2022: £nil) are expected to be settled after more than 12 months.
P. Provisions
The provision of £33m at 31 December 2022 related to separation costs. The remaining provision for separation costs was
released in 2023. Refer Note 33 of the Group financial statements for further information.
Q. Contingent liabilities, contingent assets, indemnities and guarantees
(a) Legal proceedings and regulations
The Company, like other financial organisations, is subject to legal proceedings and complaints in the normal course of its
business. All such material matters are periodically reassessed, with the assistance of external professional advisers where
appropriate, to determine the likelihood of the Company incurring a liability. Where it is concluded that it is more likely than
not that a material outflow will be made a provision is established based on management’s best estimate of the amount
that will be payable. At 31 December 2023, there are no identified contingent liabilities expected to lead to a material
exposure.
(b) Indemnities and guarantees
Under the trust deed in respect of the abrdn UK Group (SLSPS) plan, ACSL, the principal employer, must pay contributions
to the pension plan as the trustees’ actuary may certify necessary. The Company has guaranteed the obligations of ACSL
in relation to this plan. In addition, the Company has guaranteed similar obligations in respect of certain other subsidiaries’
UK and Ireland defined benefit pension plans.
None of the guarantees issued by the Company give rise to any significant liabilities at 31 December 2023 (2022: none).
R. Related party transactions
(a) Key management personnel
The Directors and key management personnel of the Company are considered to be the same as for the Group.
See Note 41 of the Group financial statements for further information.
Supplementary information
1
1. Alternative performance measures
We assess our performance using a variety of measures that are not defined under IFRS and are therefore termed
alternative performance measures (APMs). The APMs that we use may not be directly comparable with similarly named
measures used by other companies. We have presented below reconciliations from these APMs to the most appropriate
measure prepared in accordance with IFRS. All APMs should be read together with the consolidated income statement,
consolidated statement of financial position and consolidated statement of cash flows, which are presented in the Group
financial statements section of this report, and related metrics. Adjusted operating profit excludes certain items which are
likely to be recurring such as restructuring costs, amortisation of certain intangibles, dividends from significant listed
investments and the share of profit or loss from associates and joint ventures.
Metric used for executive remuneration in 2024. See page 120 for more information.
Definition Purpose
Adjusted operating profit
Adjusted operating profit before tax is the Group’s key APM. Adjusted operating profit
includes the results of the Group’s three businesses: Investments, Adviser and ii
2
along
with Other business and corporate costs.
It excludes the Group’s adjusted net financing costs and investment return.
Adjusted operating profit also excludes the impact of the following items:
– Restructuring and corporate transaction expenses. Restructuring includes the
impact of major regulatory change.
– Amortisation and impairment of intangible assets acquired in business combinations
and through the purchase of customer contracts.
– Profit or loss arising on the disposal of a subsidiary, joint venture or equity accounted
associate.
– Change in fair value of/dividends from significant listed investments.
– Share of profit or loss from associates and joint ventures.
– Impairment loss/reversal of impairment loss recognised on investments in
associates and joint ventures accounted for using the equity method.
– Fair value movements in contingent consideration.
– Items which are one-off and, due to their size or nature, are not indicative of the
long-term operating performance of the Group.
Further details are included in Note 11 of the Group financial statements.
Adjusted operating profit reporting
provides further analysis of the
results reported under IFRS and
the Directors believe it helps to
give shareholders a fuller
understanding of the
performance of the business by
identifying and analysing adjusting
items.
Segment reporting used in
management information is
reported to the level of adjusted
operating profit.
Net operating revenue
Net operating revenue includes revenue we generate from asset management
charges (AMCs), platform charges, treasury income and other transactional charges.
AMCs are earned on products such as mutual funds, and are calculated as a
percentage fee based on the assets held. Investment risk on these products rests
principally with the client, with our major indirect exposure to rising or falling markets
coming from higher or lower AMCs. Net operating revenue is shown net of cost of sales,
such as commissions and similar charges.
Net operating revenue is a
component of adjusted operating
profit and provides the basis for
reporting of the revenue yield
financial ratio. Net operating
revenue is also used to calculate
the cost/income ratio.
Adjusted operating expenses
Adjusted operating expenses is a component of adjusted operating profit and relates
to the day-to-day expenses of managing our business. Adjusted operating expenses
excludes restructuring and corporate transaction expenses. Adjusted operating
expenses also excludes amortisation and impairment of intangible assets acquired in
business combinations and through the purchase of customer contracts.
Adjusted operating expenses is a
component of adjusted operating
profit and is used to calculate the
cost/income ratio.
Adjusted profit before tax
In addition to the results included in adjusted operating profit above, adjusted profit
before tax includes adjusted net financing costs and investment return.
Adjusted profit before tax is a key
input to the adjusted earnings per
share measure.
Adjusted net financing costs and investment return
Adjusted net financing costs and investment return relates to the return from the net
assets of the shareholder business, net of costs of financing. This includes the net assets
in defined benefit staff pension plans and net assets relating to the financing of
subordinated liabilities.
Adjusted net financing costs and
investment return is a component
of adjusted profit before tax.
1. Supplementary information is unaudited in line with previous years.
2. Personal has been renamed ii and includes Personal Wealth unless otherwise stated.
286 abrdn.com Annual report 2023
APM
APM
APM
APM
APM
APM
R
R
Definition Purpose
Cost/income ratio
This is an efficiency measure that is calculated as adjusted operating expenses divided
by net operating revenue in the period.
This ratio is used by management
to assess efficiency and reported
to the Board and executive
leadership team.
Net operating revenue yield (bps)
The net operating revenue yield is calculated as annualised net operating revenue
(excluding performance fees, ii
1
and revenue for which there are no attributable
assets) divided by monthly average fee based assets. ii
1
is excluded from the
calculation of net operating revenue yield as fees charged for this business are
primarily from subscriptions and trading transactions.
The net operating revenue yield is
a measure that illustrates the
average margin being earned on
the assets that we manage,
administer or advise our clients on,
excluding ii
1
.
Adjusted diluted earnings per share
Adjusted diluted earnings per share is calculated on adjusted profit after tax. The
weighted average number of ordinary shares in issue is adjusted during the period to
assume the conversion of all dilutive potential ordinary shares, such as share options
granted to employees.
Details on the calculation of adjusted diluted earnings per share are set out in Note 10 of
the Group financial statements.
Earnings per share is a commonly
used financial metric which can be
used to measure the profitability
and capital efficiency of a
company over time. We also
calculate adjusted diluted
earnings per share to illustrate the
impact of adjusting items on the
metric.
This ratio is used by management
to assess performance and
reported to the Board and
executive leadership team.
Adjusted capital generation
Adjusted capital generation is part of the analysis of movements in IFPR regulatory
capital. Adjusted capital generation is calculated as adjusted profit after tax less returns
relating to pension schemes in surplus and interest paid on other equity which do not
benefit regulatory capital. It also includes dividends from associates, joint ventures and
significant listed investments. At 31 December 2023, Phoenix is the only significant listed
investment.
These measures aim to show how
adjusted profit contributes to
regulatory capital, and therefore
provides insight into our ability to
generate capital that is deployed
to support value for shareholders.
Net capital generation
Net capital generation is calculated as adjusted capital generation less restructuring
and corporate transaction expenses (net of tax).
Adjusted diluted capital generation per share
Adjusted diluted capital generation per share is calculated as adjusted capital
generation divided by the weighted average number of diluted ordinary shares
outstanding.
These ratios are measures used to
assess performance for dividend
paying capability.
Net diluted capital generation per share
Net diluted capital generation per share is calculated as net capital generation divided
by the weighted average number of diluted ordinary shares outstanding.
Cash and liquid resources
Cash and liquid resources are IFRS cash and cash equivalents (netted down for
overdrafts), money market instruments and holdings in money market funds. It also
includes surplus cash that has been invested in liquid assets such as high-quality
corporate bonds, gilts and pooled investment funds. Seed capital and co-investments
are excluded. Cash collateral, cash held for charitable funds and cash held in employee
benefit trusts are excluded from cash and liquid resources.
The purpose of this measure is to
demonstrate how much cash and
invested assets we hold and can
be readily accessed.
1. Relates to ii (excluding Personal Wealth).
287abrdn.comAnnual report 2023
FINANCIAL INFORMATION
APM
APM
APM
APM
APM
APM
APM
APM R
288 abrdn.com Annual report 2023
Supplementary information continued
1.1 Adjusted operating profit and adjusted profit
Reconciliation of adjusted operating profit and adjusted profit to IFRS profit by component
The components of adjusted operating profit are net operating revenue and adjusted operating expenses. These
components provide a meaningful analysis of our adjusted results. The table below provides a reconciliation of movements
between adjusted operating profit component measures and relevant IFRS terms.
A reconciliation of Adjusted operating expenses to the IFRS item Total administrative and other expenses, and a
reconciliation of Adjusted net financing costs and investment return to the IFRS item Net gains on financial instruments and
other income are provided in Note 2b(ii) of the Group financial statements. A reconciliation of Net operating revenue to the
IFRS item Revenue from contracts with customers is provided in Note 3 of the Group financial statements.
IFRS term IFRS
Presentation
differences
Adjusting
items
Adjusted
profit
Adjusted profit term
2023 £m £m £m £m
Net operating revenue 1,398 - - 1,398 Net operating revenue
Total administrative and other
expenses
(1,463) (29) 343 (1,149) Adjusted operating expenses
1
(65) (29) 343 249 Adjusted operating profit
Net gains or losses on financial
instruments and other income
2 6 73 81
Adjusted net financing costs and
investment return
Finance costs (25) 23 2 - N/A
Profit on disposal of subsidiaries
and other operations
79 - (79) - N/A
Share of profit or loss from
associates and joint ventures 1 - (1) - N/A
Reversal of impairment of
interests in joint ventures 2 - (2) - N/A
Loss before tax (6) - 336 330 Adjusted profit before tax
Total tax credit 18 - (68) (50) Tax on adjusted profit
Profit for the year 12 - 268 280 Adjusted profit after tax
1. Adjusted operating expenses includes staff and other related costs of £586m compared with IFRS staff costs and other employee-related costs of £529m.
The difference primarily relates to the inclusion of contractor, temporary agency staff and recruitment and training costs of £20m (IFRS basis: Reported within
other administrative expenses) and gains on funds to hedge deferred bonus awards of £2m (IFRS basis: Reported within other net gains on financial
instruments and other income) within staff and other related costs. IFRS staff costs and other employee-related costs includes the benefit from the net
interest credit relating to the staff pension schemes of £34m and past service costs of £5m (Adjusted profit basis: Reported within adjusted net financing costs
and investment return and other adjusting items respectively).
IFRS term IFRS
2
Presentation
differences
Adjusting
items
2
Adjusted
profit
Adjusted profit term
2022 £m £m £m £m
Net operating revenue 1,456 - - 1,456 Net operating revenue
Total administrative and other
expenses
(1,919) (35) 761 (1,193)
Adjusted operating expenses
(463) (35) 761 263 Adjusted operating profit
Net gains or losses on financial
instruments and other income
(122
) 8 104 (10)
Adjusted net financing costs and
investment return
Finance costs (29) 27 2 - N/A
Profit on disposal of interests in
associates
6 - (6) -
N/A
Share of profit or loss from
associates and joint ventures
5 - (5) -
N/A
Impairment of interests in
associates
(9) - 9 -
N/A
Loss before tax (612) - 865 253 Adjusted profit before tax
Total tax credit 66 - (88) (22) Tax on adjusted profit
Loss for the year (546) - 777 231 Adjusted profit after tax
2. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation in the Group financial statements section.
Presentation differences primarily relate to amounts presented in a different line item of the consolidated income
statement.
289abrdn.comAnnual report 2023
FINANCIAL INFORMATION
Analysis of adjusting items
The table below provides detail of the adjusting items made in the calculation of adjusted profit before tax:
2023 2022
1
£m £m
Restructuring and corporate transaction expenses (152) (214)
Amortisation and impairment of intangible assets acquired in business combinations and through the
purchase of customer contracts (189) (494)
Profit on disposal of subsidiaries and other operations 79 -
Profit on disposal of interests in associates - 6
Change in fair value of significant listed investments (178) (187)
Dividends from significant listed investments 64 68
Share of profit or loss from associates and joint ventures 1 5
Reversal of impairment/(impairment) of interests in associates and joint ventures 2 (9)
Other 37 (40)
Total adjusting items including results of associates and joint ventures (336) (865)
1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation in the Group financial statements section.
An explanation for why individual items are excluded from adjusted profit is set out below:
- Restructuring and corporate transaction expenses are excluded from adjusted profit. Restructuring includes the
impact of major regulatory change. By highlighting and excluding these costs we aim to give shareholders a fuller
understanding of the performance of the business. Restructuring and corporate transaction expenses include costs
relating to acquisitions and our transformation programmes. Other restructuring costs excluded from adjusted profit
relate to projects which have a significant impact on the way the Group operates. Costs are only excluded from
adjusted profit where they are out-with business as usual activities and the costs would not have been incurred had the
restructuring project not taken place. The 2023 expenses mainly comprised of £97m (2022: £66m) headcount
reduction related costs and property restructuring expenses, £37m (2022: £51m) of other transformation costs such as
finance and platform transformation and £17m (2022: £43m) in respect of specific costs to effect savings in
Investments, partially offset by a credit of £30m (2022: expense £7m) in respect of Phoenix separation costs following
the £32m release of a related provision. Corporate transaction costs of £31m (2022: £45m) included the sale of our
European-headquartered private equity business and the acquisition of the healthcare fund management capabilities
of Tekla. Total restructuring expenses (excluding corporate transaction costs) are expected to be c.£150m in 2024,
primarily relating to our transformation programme that was announced in January 2024. Restructuring expenses in
2024 are expected to include costs of c.£30m relating to the multi-year Platform transformation which is now expected
to complete in 2025.
– Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of
customer contracts is included as an adjusting item. This is consistent with peers and therefore excluding these items
aids comparability. Highlighting this as an adjusting item aims to give a fuller understanding of these accounting
impacts which arise where businesses have been acquired but do not arise where businesses have grown organically.
Further details are provided in Note 13 of the Group financial statements.
– Profit on disposal of subsidiaries and other operations in 2023 mainly relates to the sales of our discretionary fund
management business of £58m and our US private equity and venture capital business of £22m. These items are
excluded from adjusted profit as they are non-recurring in nature.
– Profit on disposal of interests in associates of £6m in 2022 related to the sale of our stake in Origo Services Limited in May
2022. These items are excluded from adjusted profit as they are volatile, and the accounting gains are non-recurring in
nature.
– The change in fair value of significant listed investments was negative £178m (2022: negative £187m) and represents
the impact of market movements on our holdings in HDFC Asset Management (£96m reduction in value including
impact of final stake sale in June 2023), Phoenix (£77m reduction in value), and HDFC Life (£5m reduction in value
including impact of final stake sale in May 2023). Excluding fair value movements on significant listed investments for the
purposes of adjusted profit is aligned with our treatment of gains on disposal for these holdings when they were
classified as an associate, and reflects that the fair value movements are not indicative of the long-term operating
performance of the Group.
– Dividends from significant listed investments relates to our shareholdings in HDFC Life, Phoenix and HDFC Asset
Management. The £64m in 2023 relates to dividends received from Phoenix (£54m) and HDFC Asset Management
(£10m). Dividends from significant listed investments are included in adjusting items, as such dividends result in fair value
movements.
– Share of profit or loss from associates and joint ventures was a profit of £1m (2022: profit £5m
1
). In 2023, this mainly
comprises of the share of profit or loss from our holdings in HASL, Virgin Money UTM and Archax. Associate and joint
venture results are excluded from adjusted profit to help in understanding the performance of our core business
separately from these holdings.
290 abrdn.com Annual report 2023
Supplementary information continued
– The reversal of impairment of interests in associates and joint ventures in 2023 of £2m relates to our joint venture Virgin
Money UTM. See Note 14 of the Group financial statements. The impairment of interests in associates and joint ventures
in 2022 of £9m related to our associate holding in Tenet.
– Details on items classified as ‘Other’ in the table above are provided in Note 11 of the Group financial statements. Other
adjusting items in 2023 primarily relates to a £36m insurance liability recovery in relation to the single process execution
event in 2022. 2023 also included a £23m gain for net fair value movements in contingent consideration and a £21m
provision expense for a potential tax liability.
1.2 Cost/income ratio
2023 2022
Adjusted operating expenses (£m) (1,149) (1,193)
Net operating revenue (£m) 1,398 1,456
Cost/income ratio (%) 82 82
1.3 Net operating revenue yield (bps)
Average AUMA (£bn) Net operating revenue (£m)
2
Net operating revenue yield (bps)
2023 2022
2023 2022
2023 2022
Institutional and Retail Wealth
1
220.0 236.2 716 851 32.6 36.1
Insurance Partners
1
147.7 169.5 148 179
10.0 10.5
Investments 367.7 405.7
864 1,030
23.5 25.4
Adviser
3
70.8 70.8
224 185
30.6 26.1
Personal Wealth
3
9.7 13.5 57 87 58.8 59.2
Eliminations (11.4) (11.8)
N/A N/A N/A N/A
Net operating revenue yield 436.8 478.2
1,145 1,302
26.0 27.1
ii (excluding Personal Wealth)
4
230 114
Performance fees 14 30
Other
2
9 10
Net operating revenue
1,398 1,456
Analysis of Institutional and Retail Wealth by asset class
1
Average AUM (£bn) Net operating revenue (£m)
2
Net operating revenue yield (bps)
2023 2022
2023 2022
2023 2022
Equities 49.1 57.3
298 357
60.7 62.5
Fixed income
5
35.2 38.6
89 109
25.1 28.3
Multi-asset 26.5 31.5
61 93
23.1 29.4
Private equity 10.7 12.4
48 52
44.7 42.2
Real assets 39.5 42.0
171 187 43.4 44.4
Alternative investment solutions including
private credit
5
23.8
24.7
31 35
13.1
14.0
Quantitative 15.9 9.7
5 5 3.1 5.0
Liquidity 19.3 20.0
13 13
6.9 6.7
Institutional and Retail Wealth 220.0 236.2
716 851 32.6 36.1
1. Wholesale has been renamed Retail Wealth, Insurance has been renamed Insurance Partners.
2. Net operating revenue for Finimize and our digital innovation group moved from Investments to Other from January 2023. Comparatives have been
restated. Refer Note 2 of the Group financial statements for further details.
3. Adviser net operating revenue yield excludes revenue of £7m (2022: £nil) and Personal Wealth net operating revenue yield excludes revenue of £nil (2022:
£7m) for which there are no attributable assets.
4. ii (excluding Personal Wealth) is excluded from the calculation of net operating revenue yield as fees charged for this business are primarily from
subscriptions and trading transactions.
5. Alternative investment solutions includes £1.9bn (2022: £2.6bn) average AUMA and £4m (2022: £6m) net operating revenue relating to private credit assets
previously classified as fixed income.
291abrdn.comAnnual report 2023
FINANCIAL INFORMATION
1.4 Additional ii
1
information
The results for ii
1
are included in the Group’s results following the completion of the acquisition on 27 May 2022. The
adjusted operating profit for ii
1
for the 12 months to 31 December 2023 of £127m is included in our overall 2023 adjusted
operating profit of £249m.
The tables below provide detail of the performance of ii
1
for the 12 months ended 31 December 2023 and 31 December
2022 to provide a fuller understanding of the performance of this business.
Analysis of ii
1
profit
2023
12 months
£m
2022
12 months
£m
2022
7 months
£m
Net operating revenue 230 176 114
Adjusted operating expenses (103) (82) (47)
Adjusted operating profit 127 94 67
Analysis of ii
1
net operating revenue
2023
12 months
£m
2022
12 months
£m
2022
7 months
£m
Trading transactions 48 55 27
Subscription/account fees 54 56 32
Treasury income 134 71 58
Less: Cost of sales (6) (6) (3)
Net operating revenue 230 176 114
1. Relates to ii (excluding Personal Wealth).
1.5 Net capital generation
The table below provides a reconciliation of movements between adjusted profit after tax and net capital generation. A
reconciliation of adjusted profit after tax to IFRS profit for the year is included earlier in this section.
2023 2022
£m £m
Adjusted profit after tax 280 231
Less net interest credit relating to the staff pension schemes (34) (29)
Less interest paid on other equity (11) (11)
Add dividends received from associates, joint ventures and significant listed investments 64 68
Adjusted capital generation 299 259
Less restructuring and corporate transaction expenses (net of tax) (121) (178)
Net capital generation 178 81
Net interest credit relating to the staff pension schemes
The net interest credit relating to the staff pension schemes is the contribution to adjusted profit before tax from defined
benefit pension schemes which are in surplus.
Dividends received from associates, joint ventures and significant listed investments
An analysis is provided below:
2023 2022
£m £m
Phoenix 54 52
HDFC Life - 1
HDFC Asset Management 10 15
Dividends received from associates, joint ventures and significant listed investments 64 68
The table below provides detail of dividend coverage on an adjusted capital generation basis.
2023 2022
Adjusted capital generation (£m) 299 259
Full year dividend (£m) 267 295
Dividend cover on an adjusted capital generation basis (times) 1.12 0.88
292 abrdn.com Annual report 2023
Supplementary information continued
1.6 Net diluted capital generation per share
A reconciliation of net capital generation to adjusted profit after tax is included in 1.5 above.
2023 2022
Adjusted capital generation (£m) 299 259
Net capital generation (£m) 178 81
Weighted average number of diluted ordinary shares outstanding (millions)
1
1,930 2,094
Adjusted diluted capital generation per share (pence) 15.5 12.4
Net diluted capital generation per share (pence) 9.2 3.9
1. In accordance with IAS 33, no share options and awards have been treated as dilutive for the 12 months ended 31 December 2022 due to the loss attributable
to equity holders of abrdn plc in the period. Refer Note 10 of the Group financial statements for further details.
1.7 Cash and liquid resources
The table below provides a reconciliation between IFRS cash and cash equivalents and cash and liquid resources. Seed
capital and co-investments are excluded.
2023 2022
£bn £bn
Cash and cash equivalents per the consolidated statement of financial position 1.2 1.1
Debt securities excluding third party interests
2
– Note 34 (c)(i) of the Group financial statements 0.7 0.7
Corporate funds held in absolute return funds – Note 34 (b)(i)(i) of the Group financial statements - 0.1
Other
3
(0.1) (0.2)
Cash and liquid resources 1.8 1.7
2. Excludes £86m (2022: £76m) relating to seeding.
3. Cash collateral, cash held for charitable funds and cash held in employee benefit trusts are excluded from cash and liquid resources.
2. Investment performance
Definition Purpose
Investment performance
Investment performance has been aggregated using a money weighted average of
our assets under management which are outperforming their respective benchmark.
The calculation of investment performance uses a closing AUM weighting basis.
Calculations for investment performance are made gross of fees with the exception
of those for which the stated comparator is net of fees. Benchmarks differ by fund and
are defined in the relevant investment management agreement or prospectus, as
appropriate. The investment performance calculation covers all funds that aim to
outperform a benchmark, with certain assets excluded where this measure of
performance is not appropriate or expected, such as private markets and execution
only mandates, as well as replication tracker funds which aim to perform in line with a
given index.
As an asset managing business this
measure demonstrates our ability to
generate investment returns for our
clients.
1 year 3 years
5 years
% of AUM ahead of benchmark 2023 2022
2023 2022
2023 2022
Equities 27 30
17 63
48 65
Fixed income 81 65
75 72
84 79
Multi-asset 12 13
15 50
22 22
Real assets 30 57
56 63
45 52
Alternatives 100 88
100 100
100 100
Quantitative 100 17
100 27
37 29
Liquidity 100 84
95 97
97 97
Total
44
41
42
65
52
58
293abrdn.comAnnual report 2023
FINANCIAL INFORMATION
3. Assets under management and administration and flows
Definition Purpose
AUMA
AUMA is a measure of the total assets we manage, administer or advise on behalf of our clients. It
includes assets under management (AUM), assets under administration (AUA) and assets under
advice (AUAdv).
AUM is a measure of the total assets that we manage on behalf of individual and institutional
clients. AUM also includes fee generating assets managed for corporate purposes.
AUA is a measure of the total assets we administer for clients through platform products such as
ISAs, SIPPs and general trading accounts.
AUAdv is a measure of the total assets we advise our clients on, for which there is an ongoing
charge.
The amount of funds that we
manage, administer or
advise directly impacts the
level of net operating
revenue that we receive.
Net flows
Net flows represent gross inflows less gross outflows or redemptions. Gross inflows are new
funds from clients. Redemptions is the money withdrawn by clients during the period. Cash
dividends which are retained on the ii platform are included in net flows for the ii business only.
Cash dividends are included in market movements for other parts of the Group including the
Investments and Adviser platform businesses. We consider that this different approach is
appropriate for the ii business as cash dividend payments which are retained result in additional
income for ii but are largely revenue neutral for the rest of the Group.
The level of net flows that we
generate directly impacts
the level of net operating
revenue that we receive.
3.1 Analysis of AUMA
Opening
AUMA at
1 Jan 2023 Gross inflows Redemptions Net flows
Market
and other
movements
Corporate
actions
4
Closing
AUMA at
31 Dec 2023
12 months ended 31 December 2023 £bn £bn £bn £bn £bn £bn £bn
Institutional 161.9 15.8 (27.7) (11.9) (2.0) (4.1) 143.9
Retail Wealth
1
69.3 12.3 (18.3) (6.0) 1.0 3.0 67.3
Insurance Partners
1,2
144.9 22.2 (23.3) (1.1) 11.7 - 155.5
Investments 376.1 50.3 (69.3) (19.0) 10.7 (1.1) 366.7
Adviser
3
68.5 5.8 (7.9) (2.1) 4.6 2.5 73.5
ii (excluding Personal Wealth) 54.0 9.5 (6.2) 3.3 3.9 0.5 61.7
Personal Wealth 13.1 0.7 (1.1) (0.4) 0.2 (8.6) 4.3
ii
1
67.1 10.2 (7.3) 2.9 4.1 (8.1) 66.0
Eliminations
5
(11.7) (2.2) 2.8 0.6 - (0.2) (11.3)
Total AUMA 500.0 64.1 (81.7) (17.6) 19.4 (6.9) 494.9
Opening
AUMA at
1 Jan 2022 Gross inflows Redemptions Net flows
Market
and other
movements
Corporate
actions
6
Closing
AUMA at
31 Dec 2022
12 months ended 31 December 2022 £bn £bn £bn £bn £bn £bn £bn
Institutional 174.0 20.1 (27.3) (7.2) (12.4) 7.5 161.9
Retail Wealth
1
79.1 16.4 (20.8) (4.4) (5.4) - 69.3
Insurance Partners
1,2
210.5 22.8 (52.2) (29.4) (28.7) (7.5) 144.9
Investments 463.6 59.3 (100.3) (41.0) (46.5) - 376.1
Adviser
3
76.2 6.6 (5.0) 1.6 (9.3) - 68.5
ii (excluding Personal Wealth) - 4.1 (2.5) 1.6 (3.0) 55.4 54.0
Personal Wealth 14.4 1.5 (1.2) 0.3 (1.6) - 13.1
ii
1
14.4 5.6 (3.7) 1.9 (4.6) 55.4 67.1
Eliminations
5
(12.1) (2.5) 2.1 (0.4) 1.7 (0.9) (11.7)
Total AUMA 542.1 69.0 (106.9) (37.9) (58.7) 54.5 500.0
1. Wholesale has been renamed Retail Wealth, Insurance has been renamed Insurance Partners and Personal has been renamed ii and includes Personal
Wealth unless otherwise stated.
2. Insurance Partners AUM at 31 December 2023 includes £154.4bn (2022: £143.7bn) relating to Phoenix and £1.1bn (2022: £1.2bn) of other AUM.
3. Includes Platform AUA at 31 December 2023 of £70.9bn (2022: £68.5bn).
4. Corporate actions in 2023 relate to the acquisition of Macquarie closed-end funds in March and July 2023 (£0.5bn and £0.2bn) and Tekla healthcare fund
management capabilities (£2.3bn) in October 2023, and the disposals of our discretionary fund management business (£6.1bn) in September 2023 and US
private equity business (£4.1bn) in October 2023. Corporate actions also include the transfer of the MPS business from Personal Wealth to Adviser in May 2023
of £2.5bn, and investment share plan and ISA customers who moved on to the ii platform in December 2023 (£0.5bn), and resulting impact on eliminations.
5. Eliminations remove the double count reflected in Investments, Adviser and ii.
6. Corporate actions in 2022 relate to the acquisition of ii on 27 May 2022 and also reflect the transfer of retained LBG AUM of c£7.5bn from Insurance Partners
into Institutional (quantitatives), to better reflect how the relationship is being managed. The eliminations are to remove the double count for the assets that
are reflected in both ii and Investments.
294 abrdn.com Annual report 2023
Supplementary information continued
3.2 Quarterly net flows
3 months to
31 Dec 23
3 months to
30 Sep 23
3 months to
30 Jun 23
3 months to
31 Mar 23
3 months to
31 Dec 22
15 months ended 31 December 2023 £bn £bn £bn £bn £bn
Institutional (3.4) (3.6) (0.7) (4.2) 2.2
Retail Wealth (2.4) (1.8) (0.8) (1.0) (2.0)
Insurance Partners 0.3 (1.6) 1.7 (1.5) (6.3)
Investments (5.5) (7.0) 0.2 (6.7) (6.1)
Adviser (1.0) (0.5) (0.5) (0.1) -
ii (excluding Personal Wealth) 0.6 0.8 1.0 0.9 0.6
Personal Wealth (0.1) (0.2) 0.1 (0.2) 0.2
ii
1
0.5 0.6 1.1 0.7 0.8
Eliminations 0.3 0.2 0.2 (0.1) (0.1)
Total net flows (5.7) (6.7) 1.0 (6.2) (5.4)
1. Personal has been renamed ii and includes Personal Wealth unless otherwise stated.
4. Public markets and Alternatives investment capability
We have simplified and focused our investment capabilities on areas where we have both the skill and the scale to
capitalise on the key themes shaping the market, through either public markets or alternative asset classes. This analysis
includes Institutional, Retail Wealth and Insurance Partners.
Analysis of AUM and net operating revenue
AUM (£bn)
Net operating revenue (£m)
3
2023 2022
2023 2022
Equities
67.8
78.1
341
415
Fixed income (including Liquidity)
1,2
122.4 129.8
156 186
Multi-asset
2
32.3 27.5
81 117
Quantitative 67.8 53.6 18 18
Public markets
290.3 289.0
596 736
Real assets
42.8 47.7
188 223
Private credit
8.8 7.9
15 14
Alternative investment solutions
17.1 18.6
28 33
Private equity
7.7 12.9 51 54
Alternatives
76.4 87.1 282 324
Total Investments
366.7 376.1
878
1,060
1. Total liquidity AUM at 31 December 2023 was £35.3bn (2022: £38.3bn). Total liquidity net operating revenue was £23m (2022: £24m).
2. Fixed income at 31 December 2023 includes £9.6bn of Liability aware funds AUM previously managed as a multi-asset capability (2022: £9.7bn).
3. Net operating revenue for Finimize and our digital Innovation group moved from Investments to Other from January 2023. Comparatives have been restated.
Refer Note 2 of the Group financial statements for further details.
295abrdn.comAnnual report 2023
FINANCIAL INFORMATION
5. Institutional and Retail Wealth
1
AUM
Detailed asset class split
Opening
AUM at
1 Jan 2023 Gross inflows Redemptions Net flows
Market
and other
movements
Corporate
actions
3
Closing
AUM at
31 Dec 2023
12 months ended 31 December 2023 £bn £bn £bn £bn £bn £bn £bn
Developed markets equities 11.1 1.1 (3.5) (2.4) 0.8 2.3 11.8
Emerging markets equities 12.5 0.7 (2.2) (1.5) 0.1 - 11.1
Asia Pacific equities 20.5 2.1 (4.7) (2.6) (1.6) - 16.3
Global equities 8.2 1.3 (2.0) (0.7) 0.6 0.4 8.5
Total equities 52.3 5.2 (12.4) (7.2) (0.1) 2.7 47.7
Developed markets credit 22.5 3.1 (5.7) (2.6) 1.4 0.1 21.4
Developed markets rates 2.0 1.1 (0.8) 0.3 0.8 0.2 3.3
Emerging markets fixed income 11.3 1.4 (3.1) (1.7) 0.2 - 9.8
Total fixed income
2
35.8 5.6 (9.6) (4.0) 2.4 0.3 34.5
Absolute return 5.7 0.1 (1.6) (1.5) (0.8) - 3.4
Diversified growth/income 0.3 0.1 (0.3) (0.2) 0.1 - 0.2
MyFolio 15.6 1.8 (2.7) (0.9) 1.5 - 16.2
Other multi-asset 6.7 0.8 (1.4) (0.6) (0.8) - 5.3
Total multi-asset 28.3 2.8 (6.0) (3.2) - - 25.1
Total private equity 12.3 0.1 (0.5) (0.4) (0.6) (4.1) 7.2
UK real estate 19.3 0.2 (1.0) (0.8) (2.6) - 15.9
European real estate 14.3 0.3 - 0.3 (1.0) - 13.6
Global real estate 1.6 0.3 (0.6) (0.3) (0.1) - 1.2
Real estate multi-manager 1.4 0.2 - 0.2 (0.1) - 1.5
Infrastructure equity 6.1 0.4 (0.1) 0.3 (0.3) - 6.1
Total real assets 42.7 1.4 (1.7) (0.3) (4.1) - 38.3
Total alternative investment solutions
(including private credit)
2
24.0 1.3 (1.5) (0.2) 0.2 - 24.0
Total quantitative 15.0 3.1 (2.0) 1.1 1.0 - 17.1
Total liquidity 20.8 8.6 (12.3) (3.7) 0.2 - 17.3
Total 231.2 28.1 (46.0) (17.9) (1.0) (1.1) 211.2
1. Wholesale has been renamed Retail Wealth.
2. Alternative investment solutions include opening AUM of £1.8bn, net inflows of £0.2bn and closing AUM of £1.9bn relating to private credit assets previously
classified as fixed income.
3. Corporate actions in 2023 relate to the acquisition of Macquarie closed-end funds in March and July 2023 (£0.5bn and £0.2bn) and Tekla healthcare fund
management capabilities (£2.3bn) in October 2023 and the disposal of US private equity and venture capital business (£4.1bn) in October 2023.
296 abrdn.com Annual report 2023
Supplementary information continued
Opening
AUM at
1 Jan 2022
Gross inflows Redemptions Net flows
Market
and other
movements
Corporate
actions
2
Closing
AUM at
31 Dec 2022
12 months ended 31 December 2022 £bn £bn £bn £bn £bn £bn £bn
Developed markets equities 17.0 2.1 (3.4) (1.3) (4.6) - 11.1
Emerging markets equities 16.4 1.9 (2.9) (1.0) (2.9) - 12.5
Asia Pacific equities 25.3 2.5 (4.8) (2.3) (2.5) - 20.5
Global equities 10.3 1.2 (1.6) (0.4) (1.7) - 8.2
Total equities 69.0 7.7 (12.7) (5.0) (11.7) - 52.3
Developed markets credit 28.3 3.8 (5.8) (2.0) (3.8) - 22.5
Developed markets rates 2.9 0.3 (0.6) (0.3) (0.6) - 2.0
Emerging markets fixed income 12.2 2.4 (2.4) - (0.9) - 11.3
Total fixed income
1
43.4 6.5 (8.8) (2.3) (5.3) - 35.8
Absolute return 10.0 0.4 (1.9) (1.5) (2.8) - 5.7
Diversified growth/income 0.5 0.1 (0.2) (0.1) (0.1) - 0.3
MyFolio 17.7 1.7 (2.0) (0.3) (1.8) - 15.6
Other multi-asset 7.8 1.7 (1.1) 0.6 (1.7) - 6.7
Total multi-asset 36.0 3.9 (5.2) (1.3) (6.4) - 28.3
Total private equity 12.3 0.5 (1.1) (0.6) 0.6 - 12.3
UK real estate 19.9 0.4 (1.7) (1.3) 0.7 - 19.3
European real estate 10.3 0.8 (0.4) 0.4 3.6 - 14.3
Global real estate 1.8 0.3 (0.3) - (0.2) - 1.6
Real estate multi-manager 1.2 0.2 (0.2) - 0.2 - 1.4
Infrastructure equity 6.2 0.4 (0.9) (0.5) 0.4 - 6.1
Total real assets 39.4 2.1 (3.5) (1.4) 4.7 - 42.7
Total alternative investment solutions
(including private credit)
1
23.2 2.4 (1.7) 0.7 0.1 - 24.0
Total quantitative
5.5 3.2 (1.7) 1.5 0.5 7.5 15.0
Total liquidity 24.3 10.2 (13.4) (3.2) (0.3) - 20.8
Total
253.1 36.5 (48.1) (11.6) (17.8) 7.5 231.2
1. Alternative investment solutions include opening AUM of £2.4bn, net inflows of £0.1bn and closing AUM of £1.8bn relating to private credit assets previously
classified as fixed income.
2. Corporate actions include the transfer of retained LBG AUM of c£7.5bn from Insurance Partners into Institutional (quantitatives), to better reflect how the
relationship is being managed.
297abrdn.comAnnual report 2023
FINANCIAL INFORMATION
6. Investments AUM by geography
31 Dec 2023 31 Dec 2022
Institutional and
Retail Wealth
Insurance
Partners Total
Institutional and
Retail Wealth
Insurance
Partners Total
£bn £bn £bn £bn £bn £bn
UK 102.0 155.5 257.5 111.2 144.9 256.1
Europe, Middle East and Africa (EMEA) 51.9 - 51.9 57.5 - 57.5
Asia Pacific (APAC) 15.7 - 15.7 16.4 - 16.4
Americas 41.6 - 41.6 46.1 - 46.1
Total AUM 211.2 155.5 366.7 231.2 144.9 376.1
298 abrdn.com Annual report 2023
Other information
299abrdn.comAnnual report 2023
OTHER INFORMATION
Contents
Glossary
300
Shareholder information 303
Forward-looking statements 304
Contact us IBC
300 abrdn.com Annual report 2023
Glossary
1. Personal has been renamed ii and includes Personal Wealth unless otherwise stated.
Adjusted capital generation
Adjusted capital generation is part of the analysis of
movements in IFPR regulatory capital. Adjusted capital
generation is calculated as adjusted profit after tax less
returns relating to pension schemes in surplus and interest
paid on other equity which do not benefit regulatory
capital. It also includes dividends from associates, joint
ventures and significant listed investments.
Adjusted net financing costs and investment
return
Adjusted net financing costs and investment return is a
component of adjusted profit and relates to the return
from the net assets of the shareholder business, net of
costs of financing. This includes the net assets in defined
benefit staff pension plans and net assets relating to the
financing of subordinated liabilities.
Adjusted operating expenses
Adjusted operating expenses is a component of adjusted
operating profit and relates to the day-to-day expenses of
managing our business.
Adjusted operating profit
Adjusted operating profit before tax is the Group’s key
APM. Adjusted operating profit includes the results of the
Group’s three businesses: Investments, Adviser and ii
1
,
along with Other business and corporate costs.
It excludes the Group’s adjusted net financing costs and
investment return.
Adjusted operating profit also excludes the impact of the
following items:
– Restructuring and corporate transaction expenses.
Restructuring includes the impact of major regulatory
change.
– Amortisation and impairment of intangible assets
acquired in business combinations and through the
purchase of customer contracts.
– Profit or loss arising on the disposal of a subsidiary, joint
venture or equity accounted associate.
– Change in fair value of/dividends from significant listed
investments.
– Share of profit or loss from associates and joint
ventures.
– Impairment loss/reversal of impairment loss
recognised on investments in associates and joint
ventures accounted for using the equity method.
– Fair value movements in contingent consideration.
– Items which are one-off and, due to their size or nature,
are not indicative of the long-term operating
performance of the Group.
Adjusted profit before tax
In addition to the results included in adjusted operating
profit above, adjusted profit before tax includes adjusted
net financing costs and investment return.
Assets under management and administration
(AUMA)
AUMA is a measure of the total assets we manage,
administer or advise on behalf of our clients. It includes
assets under management (AUM), assets under
administration (AUA) and assets under advice (AUAdv).
AUMA does not include assets for associates and joint
ventures.
AUM is a measure of the total assets that we manage on
behalf of individual and institutional clients. AUM also
includes assets managed for corporate purposes.
AUA is a measure of the total assets we administer for
clients through our Platforms.
AUAdv is a measure of the total assets we advise our
clients on, for which there is an ongoing charge.
Board
The Board of Directors of the Company.
Carbon intensity
Weighted-Average Carbon Intensity (WACI) is calculated
by summing the product of each company’s weight in the
portfolio or loan book with that company’s carbon-to-
revenue intensity. Carbon-to-revenue intensity is
calculated by dividing the sum of all apportioned
emissions, with the sum of all apportioned revenues across
an investment portfolio or loan book. This metric gives an
indication of how efficient companies in a portfolio or loan
book are at generating revenues per tonne of carbon
emitted.
Carbon offsetting
Carbon offsetting is an internationally recognised way to
take responsibility for carbon emissions. The aim of carbon
offsetting is that for every one tonne of offsets purchased
there will be one less tonne of carbon dioxide in the
atmosphere than there would otherwise have been. To
offset emissions we purchase the equivalent volume of
carbon credits (independently verified emissions
reductions) to compensate for our operational carbon
emissions. We have been reviewing our use of offsetting,
and although we continue to use offsets as a means of
addressing our residual emissions, our prime objective is
always to reduce our environmental impact before
compensating for it.
Chief Operating Decision Maker
The executive leadership team.
Company
abrdn plc.
Cost/income ratio
This is an efficiency measure that is calculated as adjusted
operating expenses divided by net operating revenue.
Director
A director of the Company.
301abrdn.comAnnual report 2023
OTHER INFORMATION
Earnings per share (EPS)
EPS is a commonly used financial metric which can be
used to measure the profitability and strength of a
company over time. EPS is calculated by dividing profit by
the number of ordinary shares. Basic EPS uses the
weighted average number of ordinary shares outstanding
during the year. Diluted EPS adjusts the weighted average
number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares, such as
share options awarded to employees.
Effective tax rate
Tax expense/(credit) attributable to equity holders’ profit
divided by profit before tax attributable to equity holders’
profits expressed as a percentage.
Executive leadership team (ELT)
Our ELT leads across our businesses and supporting
functions globally and is responsible for executing and
monitoring progress on the delivery of our business plans.
The ELT also ensures we meet our obligations to our
clients, people, shareholders, regulators and partners.
Fair value through profit or loss (FVTPL)
FVTPL is an IFRS measurement basis permitted for assets
and liabilities which meet certain criteria. Gains or losses on
assets or liabilities measured at FVTPL are recognised
directly in the income statement.
FCA
Financial Conduct Authority of the United Kingdom.
Greenhouse gases
Greenhouse gases are the atmospheric gases responsible
for causing global warming (i.e. the greenhouse effect)
and climate change. These gases, both natural and
anthropogenic in origin include carbon dioxide, methane
and nitrous oxide. Other greenhouse gases which are less
prevalent but with a greater Global Warming Potential
include hydrofluorocarbons (HFCs), perfluorocarbons
(PFCs) and sulphur hexafluoride (SF6).
Group or abrdn
Relates to the Company and its subsidiaries.
Internal Capital Adequacy and Risk
Assessment (ICARA)
The ICARA is the means by which the Group assesses the
levels of capital and liquidity that adequately support all of
the relevant current and future risks in its business.
International Financial Reporting Standards
(IFRS)
International Financial Reporting Standards are
accounting standards issued by the International
Accounting Standards Board (IASB).
Investment Firms Prudential Regime (IFPR)
The Investment Firms Prudential Regime is the FCA’s new
prudential regime for MiFID investment firms. The regime
came into force on 1 January 2022.
Investment performance
Investment performance has been aggregated using a
money weighted average of our assets under
management which are outperforming their respective
benchmark. The calculation of investment performance
uses a closing AUM weighting basis. Calculations for
investment performance are made gross of fees with the
exception of those for which the stated comparator is net
of fees. Benchmarks differ by fund and are defined in the
relevant investment management agreement or
prospectus, as appropriate. The investment performance
calculation covers all funds that aim to outperform a
benchmark, with certain assets excluded where this
measure of performance is not appropriate or expected,
such as private markets and execution only mandates, as
well as replication tracker funds which aim to perform in
line with a given index.
LBG tranche withdrawals
On 24 July 2019, the Group announced that it had agreed
a final settlement in relation to the arbitration proceedings
between the parties concerning LBG’s attempt to
terminate investment management arrangements under
which assets were managed by members of the Group
for LBG entities. In its decision of March 2019, the arbitral
tribunal found that LBG was not entitled to terminate these
investment management contracts. The Group had
continued to manage approximately £104bn (as at
30 June 2019) of assets under management (AUM) for
LBG entities during the period of the dispute.
Approximately two thirds of the total AUM (the transferring
AUM) will be transferred to third party managers
appointed by LBG through a series of planned tranches
from 24 July 2019. The Group continued to be
remunerated for its services in relation to the transferring
AUM until the final tranche withdrawal was completed in
H1 2022.
Market Disclosure
This IFPR disclosure complements the Own funds
requirement and Own funds threshold requirement with
the aim of improving market discipline by requiring
companies to publish certain details of their risks, capital
and risk management. Relevant disclosures are made in
the abrdn plc consolidated annual report and accounts
and in the accounts of the Group’s individual IFPR-
regulated entities, all of which can be found on the abrdn
plc Group’s website.
Net capital generation
Net capital generation is calculated as adjusted capital
generation less restructuring and corporate transaction
expenses (net of tax).
302 abrdn.com Annual report 2023
Glossary continued
1. Relates to ii (excluding Personal Wealth).
Net flows
Net flows represent gross inflows less gross outflows or
redemptions. Gross inflows are new funds from clients.
Redemptions is the money withdrawn by clients during the
period. Cash dividends which are retained on the ii
platform are included in net flows for the ii business only.
Cash dividends are included in market movements for
other parts of the group including the Investments and
Adviser platform businesses. We consider that this
different approach is appropriate for the ii business as
cash dividend payments which are retained result in
additional income for ii, but are largely revenue neutral for
the rest of the group.
Net operating revenue
Net operating revenue is a component of adjusted
operating profit and includes revenue we generate from
asset management charges (AMCs), platform charges,
treasury income and other transactional charges. AMCs
are earned on products such as mutual funds, and are
calculated as a percentage fee based on the assets held.
Investment risk on these products rests principally with the
client, with our major indirect exposure to rising or falling
markets coming from higher or lower AMCs. Treasury
income is the interest earned on cash balances less the
interest paid to customers. Net operating revenue is shown
net of fees, cost of sales, commissions and similar charges.
Cost of sales include revenue from fund platforms which is
passed to the product provider.
Net operating revenue yield (bps)
The net operating revenue yield is a measure that
illustrates the average margin being earned on the assets
that we manage, administer or advise our clients on
excluding interactive investor. It is calculated as annualised
net operating revenue (excluding performance fees, ii
1
and revenue for which there are no attributable assets)
divided by monthly average fee based assets. ii
1
is
excluded from the calculation of net operating revenue
yield as fees charged for this business are primarily from
subscriptions and trading transactions.
Net zero
It is generally accepted that net zero is the target of
completely negating the amount of greenhouse gases
produced by human activity, to be achieved by reducing
emissions to the lowest possible amount and offsetting
(see carbon offsetting) only the remainder as a last resort.
Net Zero Directed Investing
Net Zero Directed Investing means moving towards the
goal of net zero in the real world - not just in specific
investment portfolios. At abrdn we seek to achieve this
goal through a holistic set of actions, including rigorous
research into net-zero trajectories, developing net-zero-
directed investment solutions and active ownership to
influence corporates and policy makers.
Operational emissions
Operational emissions are the greenhouse gas emissions
related to the operations of our business. They are
categorised into three groups or ‘scopes’ in alignment with
the Greenhouse Gas Protocol. Corporate Accounting and
Reporting Standard. Scope 1 covers direct emissions from
owned or controlled sources. Scope 2 covers indirect
emissions from the generation of purchased electricity,
steam, heating and cooling consumed by the reporting
company. Scope 3 includes all other indirect emissions that
occur in a company’s value chain. At abrdn we report on
Scope 1 and Scope 2 emissions, and a selection of Scope 3
categories, where deemed material, which includes our
working from home emissions.
Own Funds Requirement
Under IFPR, the Own Funds Requirement is the higher of
the permanent minimum capital requirement, the fixed
overhead requirements, and the K-factor requirement.
The K-factor requirement is the sum of: Risk-to-Client,
Risk-to-Market, and Risk-to-Firm K-factors.
Own Funds Threshold Requirement
Under IFPR, the Own Funds Threshold Requirement is the
higher of Own funds required on an ongoing basis and
Own funds required on a wind-down basis. The firm
identifies and measures risks of harm and determines the
degree to which systems and controls alone mitigate
those risks of harm (or risks of disorderly wind-down). Any
additional own funds needed, over and above the Own
funds requirement, to cover this identified residual risk is
held under the Own Funds Threshold Requirement.
Paris alignment
‘Paris alignment’ refers to the alignment of public and
private financial flows with the objectives of the Paris
Agreement on climate change. Article 2.1c of the Paris
Agreement defines this alignment as making finance flows
consistent with a pathway towards low greenhouse gas
emissions and climate-resilient development. Alignment in
this way will help to scale up the financial flows needed to
strengthen the global response to the threat of climate
change.
Phoenix or Phoenix Group
Phoenix Group Holdings plc or Phoenix Group Holdings plc
and its subsidiaries.
Significant listed investments
Relates to our investments in HDFC Asset Management,
HDFC Life and Phoenix. Fair value movements and
dividend income relating to these investments are treated
as adjusting items for the purpose of determining the
Group’s adjusted profit. Our remaining stakes in HDFC
Asset Management and HDFC Life were sold during H1
2023. At 31 December 2023, Phoenix is the only significant
listed investment.
Subordinated liabilities
Subordinated liabilities are debts of a company which, in
the event of liquidation, rank below its other debts but
above share capital. The 5.25% Fixed Rate Reset Perpetual
Subordinated Contingent Convertible Notes issued by the
Company in December 2021 are classified as other equity
as no contractual obligation to deliver cash exists.
303abrdn.comAnnual report 2023
OTHER INFORMATION
Shareholder information
Registered office
1 George Street
Edinburgh
EH2 2LL
Scotland
Company registration number: SC286832
Secretary: Julian Baddeley
Registrar: Equiniti
Auditors: KPMG LLP
Solicitors: Slaughter and May
Brokers: JP Morgan Cazenove, Goldman Sachs
Shareholder services
We offer a wide range of shareholder services. For more
information, please:
– Contact our registrar, Equiniti, who manage this service
for us. Their full details can be found on the inside back
cover.
– For shareholder services call: +44 (0)371 384 2464*
– Visit our share portal at www.abrdnshares.com
* Calls are monitored/recorded to meet regulatory obligations and for
training and quality purposes. Call charges will vary.
A Dividend Reinvestment Plan (DRIP) is provided by Equiniti
Financial Services Limited. The DRIP enables the
Company’s shareholders to elect to have their cash
dividend payments used to purchase the Company’s
shares. More information can be found at
www.abrdnshares.com
Sign up for Ecommunications
Signing up means:
– You’ll receive an email when documents like the annual
report and accounts, Half year results and AGM guide
are available on our website.
– Voting instructions for the Annual General Meeting will
be sent to you electronically.
Set up a share portal account
Having a share portal account means you can:
– Manage your account at a time that suits you.
– Download your documents when you need them.
To find out how to sign up, visit www.abrdnshares.com
Preventing unsolicited mail
By law, the Company has to make certain details from its
share register publicly available. As a result it is possible that
some registered shareholders could receive unsolicited
mail, emails or phone calls. You could also be targeted by
fraudulent ‘investment specialists’, clone firms or
scammers posing as government bodies e.g. HMRC, FCA.
Frauds are becoming much more sophisticated and may
use real company branding, the names of real employees
or email addresses that appear to come from the
company. If you get a social or email message and you’re
unsure if it is from us, you can send it to
emailscams@abrdn.com and we’ll let you know.
You can also check the FCA warning list and warning from
overseas regulators, however, please note that this is not
an exhaustive list and do not assume that a firm is
legitimate just because it does not appear on the list as
fraudsters frequently change their name and it may not
have been reported yet.
www.fca.org.uk/consumers/unauthorised-firms-individuals
www.iosco.org/investor_protection/?subsection=investor_
alerts_portal
You can find more information about share scams at the
Financial Conduct Authority website
www.fca.org.uk/consumers/scams
If you are a certificated shareholder, your name and
address may appear on a public register. Using a nominee
company to hold your shares can help protect your
privacy. You can transfer your shares into the Company-
sponsored nominee – the abrdn Share Account – by
contacting Equiniti, or you could get in touch with your
broker to find out about their nominee services. If you want
to limit the amount of unsolicited mail you receive
generally, please visit www.mpsonline.org.uk
Financial calendar
Full year results 2023 27 February
Ex-dividend date for 2023 final dividend 14 March
Record date for 2023 final dividend 15 March
Last date for DRIP elections for 2023 final dividend 10 April
Annual General Meeting – Edinburgh 24 April
Dividend payment date for 2023 final dividend 30 April
Half year results 2024 6 August
Ex-dividend date for 2024 interim dividend 15 August
Record date for 2024 interim dividend 16 August
Last date for DRIP elections for 2024
interim dividend
4 September
Dividend payment date for 2024 interim dividend 24 September
Analysis of registered shareholdings at
31 December 2023
Range of shares
Number of
holders
% of total
holders
Number of shares
% of total
shares
1-1,000 56,092 65.85 22,351,080 1.22
1,001-5,000 24,547 28.82 51,574,473 2.80
5,001-10,000 2,692 3.16 18,227,034 0.99
10,001-100,000 1,484 1.74 34,854,883 1.89
#
100,001+ 369 0.43 1,713,732,894 93.10
Total 85,184 100.00 1,840,740,364 100.00
# These figures include the Company-sponsored nominee – the abrdn
Share Account – which had 872,299 participants holding 629,199,041
shares.
304 abrdn.com Annual report 2023
Forward-looking statements
This document may contain certain ‘forward-looking statements’ with respect to the financial condition, performance,
results, strategies, targets (including ESG targets), objectives, plans, goals and expectations of the Company and its
affiliates. These forward-looking statements can be identified by the fact that they do not relate only to historical or current
facts.
Forward-looking statements are prospective in nature and are not based on historical or current facts, but rather on
current expectations, assumptions and projections of management of the abrdn Group about future events, and are
therefore subject to known and unknown risks and uncertainties which could cause actual results to differ materially from
the future results expressed or implied by the forward-looking statements.
For example but without limitation, statements containing words such as ‘may’, ‘will’, ‘should’, ‘could’, ‘continues’, ‘aims’,
‘estimates’, ‘projects’, ‘believes’, ‘intends’, ‘expects’, ‘hopes’, ‘plans’, ‘pursues’, ‘ensure’, ‘seeks’, ‘targets’ and ‘anticipates’, and
words of similar meaning (including the negative of these terms), may be forward-looking. These statements are based on
assumptions and assessments made by the Company in light of its experience and its perception of historical trends,
current conditions, future developments and other factors it believes appropriate.
By their nature, all forward-looking statements involve risk and uncertainty because they are based on information
available at the time they are made, including current expectations and assumptions, and relate to future events and/or
depend on circumstances which may be or are beyond the Group’s control, including, among other things: UK domestic
and global political, economic and business conditions (such as the UK’s exit from the EU, the ongoing conflict between
Russia and Ukraine and the ongoing conflicts in the Middle East); market related risks such as fluctuations in interest rates
and exchange rates, and the performance of financial markets generally; the impact of inflation and deflation; the impact
of competition; the timing, impact and other uncertainties associated with future acquisitions, disposals or combinations
undertaken by the Company or its affiliates and/or within relevant industries; experience in particular with regard to
mortality and morbidity trends, lapse rates and policy renewal rates; the value of and earnings from the Group’s strategic
investments and ongoing commercial relationships; default by counterparties; information technology or data security
breaches (including the Group being subject to cyberattacks); operational information technology risks, including the
Group’s operations being highly dependent on its information technology systems (both internal and outsourced); natural
or man-made catastrophic events; the impact of pandemics; climate change and a transition to a low-carbon economy
(including the risk that the Group may not achieve its relevant ESG targets); exposure to third-party risks including as a
result of outsourcing; the failure to attract or retain necessary key personnel; the policies and actions of regulatory
authorities and the impact of changes in capital, solvency or accounting standards, ESG disclosure and reporting
requirements, and tax and other legislation and regulations (including changes to the regulatory capital requirements) that
the Group is subject to in the jurisdictions in which the Company and its affiliates operate. As a result, the Group’s actual
future financial condition, performance and results may differ materially from the plans, goals, objectives and expectations
set forth in the forward-looking statements.
Neither the Company, nor any of its associates, directors, officers or advisers, provides any representation, assurance or
guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will
actually occur. Persons receiving this document should not place reliance on forward-looking statements. All forward-
looking statements contained in this document are expressly qualified in their entirety by the cautionary statements
contained or referred to in this section. Each forward-looking statement speaks only as at the date of the particular
statement. Neither the Company nor its affiliates assume any obligation to update or correct any of the forward-looking
statements contained in this document or any other forward-looking statements it or they may make (whether as a result
of new information, future events or otherwise), except as required by law. Past performance is not an indicator of future
results and the results of the Company and its affiliates in this document may not be indicative of, and are not an estimate,
forecast or projection of, the Company’s or its affiliates’ future results.
Contact us
Got a shareholder question? Contact our shareholder services team.
UK and overseas (excluding Germany and Austria)
phone +44 (0)371 384 2464*
email questions@abrdnshares.com
visit www.abrdnshares.com
mail abrdn Shareholder Services
Aspect House
Spencer Road
Lancing, West Sussex
BN99 6DA, United Kingdom
Germany and Austria
phone +44 (0)371 384 2493*
email fragen@abrdnshares.com
visit www.abrdnshares.com
mail abrdn Shareholder Services
Aspect House
Spencer Road
Lancing, West Sussex
BN99 6DA, United Kingdom
* Calls are monitored/recorded to meet regulatory obligations and for training and quality purposes. Call charges will vary. s. Call charges will vary.
Extensive information, including many answers to frequently asked questions, can also be found online at www.abrdnshares.com
Designed by Black Sun (Strategic report) and abrdn plc
(rest of Annual report and accounts)
Published by Adare SEC (Nottingham) Limited
Please remember that the value of shares can go down as well as up
and you may not get back the full amount invested or any income
from it. All figures and share price information have been calculated
as at 31 December 2023 (unless otherwise indicated).
This document has been published by abrdn plc
only. It is based on our understanding as at February 2024 and does
not provide financial or legal advice.
abrdn plc is registered in Scotland 1 George Street,
www.abrdn.com © 2024 abrdn, images reproduced under licence.
All rights reserved.
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